ENERO GROUP LIMITED — Annual Report 2021

Aug 17, 2021

Enero Group Limited ABN 97 091 524 515 Level 2, 100 Harris Street Pyrmont NSW 2009 Australia t. +61 2 8213 3031

ASX ANNOUNCEMENT

2021 Full Year Results Announcement

Enero Group Limited delivers FY21 underlying NPAT growth of 77%

18 August 2021: Enero Group Limited (ASX: EGG) today announced its results for the year ended 30 June 2021.

Enero reported net revenue of $160.6 million, up 18.3% on the prior year and an underlying Operating EBITDA of $45.6 million, up 87.1% on the prior year. Underlying net profit after tax was $22.8 million up 76.7% on prior year. Statutory (reported 4E) net loss after tax to equity holders of $0.4 million included a significant non-cash accounting charge of $23.2 million relating to the transfer of Foreign Currency Translation Reserves (FCTR) to the income statement on disposal of dormant foreign subsidiaries and the disposal of Frank PR.

Enero’s underlying results (excluding significant times) ²

($M)	FY21	FY20	% Change
Net Revenue	160.6	135.8	18.3%
Operating EBITDA¹	45.6	24.4	87.1%
Operating EBITDA margin	28.0%	18.0%	10.0bps
Net profit after tax attributable to equity holders	22.8	12.9	76.7%
Earnings per share (EPS)	26.4 cents	15.0 cents	76.0%

Notes:

1. Operating EBITDA is net profit before interest, taxes, depreciation of plant and equipment, amortisation, impairment of intangibles, contingent consideration fair value gains/losses and gains/losses on disposal of controlled entities. Operating EBITDA includes depreciation of Right of Use Assets recognised in accordance with AASB16. Operating EBITDA is the primary measure used by management and the directors in assessing the performance of the Group. It provides information on the Group’s cash flow generation excluding significant transactions and non-cash items, which are not representative of the Group’s ongoing operations.

2. The results announcement and attached presentation includes the following measures used by the Directors and management in assessing the ongoing performance and position of the Group: Operating EBITDA, NPAT before significant items and EPS before significant items. These measures are non-IFRS and have not been audited nor reviewed. Refer to attached results presentation for detailed analysis on significant items and a reconciliation to statutory results.

Enero Group Chair, Ann Sherry said: “FY21 has been an exciting year of change and progress for Enero. Under the new leadership of CEO Brent Scrimshaw, the company has begun a transition into a forward looking, progressive global business, with a refined operating model that responds to the enormous changes underway in the worldwide environment.

“Despite the ongoing challenges of the COVID-19 pandemic, Enero delivered underlying organic net revenue growth of 14%, and significant profit growth for the year. The group benefited from its unique positioning within high growth global verticals – technology, healthcare and consumer – and the hard work and commitment of our talented global teams. The client-focus and creativity of our people have delivered world-class work, new client wins, and recognition through numerous global awards for creativity, effectiveness and culture”.

Enero Group CEO, Brent Scrimshaw said: “It is pleasing to see Enero Group’s progress in the last twelve months as we have accelerated the sustainable growth opportunities available to us around the globe. It has been our utmost priority to establish a new operating framework, supported by our new executive leadership team, strong culture and diverse talent pool, to deliver on that growth vision. Client expectations are changing in today’s world, and Enero is delivering new solutions that drive smarter and more effective outcomes.

“We have also implemented a new framework for investment that has already resulted in the acquisition of McDonald Butler Associates in the UK. We now have a structure and dedicated leadership that will support our future M&A.

“It is particularly encouraging to see these efforts translating into Enero’s strong performance for the year. Our diversified client portfolio has delivered EBITDA growth in every region and business, and is well positioned for the future.”

Business Operating Performance:

Net Revenue increased 18.3% and Operating EBITDA was up 87.1% on the prior reporting period. International markets represented 55% of the Group’s Net Revenue and 67% of the Group’s Operating EBITDA on an economic interest basis.

Despite the backdrop of COVID conditions across our global network at different points of the year, we delivered strong results across all three geographic regions. The stronger Australian dollar negatively impacted reported net revenue by $5.4 million with constant currency growth of 23% year-on-year, compared with reported revenue growth of 18%. Currency had a negative impact of $1.4 million on operating EBITDA, with constant currency growth of 78% (before corporate costs), compared with 75% on a reported basis.

USA

The global acceleration in technology adoption and industry transformation provided a strong benefit to the US business which delivered a 52% increase in net revenue and 146% growth in operating EBITDA on a reported basis. Adjusting for negative translation impact of a higher Australian dollar, constant currency growth was even higher.

Adjusting for Enero’s 51% ownership of OBMedia, revenue was up 28% and Operating EBITDA increased 103%, with an even stronger performance on a constant currency basis. OBMedia’s contribution to group profitability benefited from an accelerating structural shift in consumer behaviour to digital channels and e-commerce. OBMedia’s strong performance underpinned operating margin expansion from 29% to 46% for the year.

Hotwire’s solid performance was supported by its strong technology client base, and COVID-related operational savings. The business invested in its strategy and digital skillsets to enhance its integrated solutions for clients, finishing the year with pleasing momentum in new client wins including Pinterest, Klarna and Cloudera.

Australia

In Australia the business delivered a strong FY21 performance, with net revenue increasing 11% and EBITDA up 13.9%. BMF traded strongly with new business wins including Transport for NSW, mastheads The Sydney Morning Herald , The Age and Financial Review and Petbarn. Orchard also traded strongly, with client wins including Boston Scientific, GSK and Palmerbet. Profitability was impacted by a one-time vendor incentive and the foreign exchange impact on US clients.

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UK/Europe

In a very challenging economic environment, the UK and Europe reported a net revenue decline of 5.8% and Operating EBITDA growth of 33%. The reported revenue decline was impacted by currency headwinds and the sale of 75% owned Frank PR which was divested to focus on Enero’s areas of specialist expertise. Adjusting for the sale of Frank, and the contribution from McDonald Butler Associates from the date of acquisition, continuing business net revenue growth on a constant currency basis of 7.5% was a solid outcome in the circumstances. The operating EBITDA increase reflected stable expenses due to COVID-related discretionary cost savings. Hotwire was recognised as PRovoke’s EMEA Technology Agency of the Year, and the business also won three silver Cannes Lions awards in conjunction with UK partner, Elvis.

Balance Sheet and Cash Flow:

Operating cash flow for the year was $53.2m and the Group is in a Net Cash position (allowing for contingent consideration payable) of $30.6m as at 30 June 2021.

Dividend:

The Directors declared a final dividend of 4.4 cents per share, fully franked. The final dividend will have a record date of 23 September 2021 and a payment date of 6 October 2021.

Trading Update:

• Enero continues its 5-year track record of sustainable revenue and EBITDA growth.

• The first six weeks of FY22 continue to deliver strong year-on-year revenue momentum.

• We remain focused on maintaining Enero’s high margins across our strong and diversified portfolio.

• Organic and inorganic opportunities will remain a strong focus in FY22 to continue the growth and transformation of Enero’s portfolio.

• There remains ongoing uncertainty around COVID conditions globally which may lead to wage cost pressure.

Investor Conference Call details

An investor webcast conference call with Brent Scrimshaw (CEO) and Carla Webb-Sear (CFO) will be held today at 10.30am AEST.

Participants may register here: https://s1.c-conf.com/DiamondPass/10015023-js85r9.html. Registered participants will be able to participate in the Q&A.

Unregistered participants may join here: https://www.openbriefing.com/OB/4318.aspx. Unregistered participants will not be able to participate in the Q&A.

This announcement was authorised for release by the Board of Directors.

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About Enero:

Enero Group is a creative technology company operating a global collective of marketing and communications specialist agencies listed on the Australian Stock Exchange (ASX). Its portfolio includes: digital agency Orchard; creative agency BMF; brand, marketing and PR comms consultancy Hotwire; programmatic marketing platform OBMedia; issues management comms advisory CPR; and strategic data consultancies The Leading Edge and The Digital Edge. www.enero.com

For further information, please contact:

Investors: Media: Jolanta Masojada Lu Borges Investor Relations Group Communications Director m. +61 417 261 367 d. +61 2 8985 7210 ir@enero.com m. +61 422 755 492l lu.borges@enero.com

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18 August 2021

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Agenda

2

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Brent Scrimshaw - CEO

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FY21 Highlights

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PEOPLE

New leadership New operating structure Strong culture

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PORTFOLI ~~O~~

New approach to investment Acquisition of McDonald Butler Associates Divestment of Frank

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PERFORMANCE

Client diversification and longevity EBITDA growth in every region and business

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Group Trading Performance

($M)	FY21	FY20	% Change
Net Revenue	160.6	135.8	18.3%
Expenses	116.6	112.6	3.6%
Operating EBITDA1	45.6	24.4	87.1%
Operating EBITDA margin²	28%	18%	10 bpt
Net Profit before significant items attributable to equity owners³	22.8	12.9	76.7%
Earnings per share before significant items (EPS) ³	26.4 cents	15.0 cents	76.0%
Dividend per share (interim and final) – fully franked	14.9 cents	6.0 cents	148%

1. Operating EBITDA is net profit before interest, taxes, depreciation of plant & equipment, amortisation, contingent consideration fair value losses and losses on disposal of controlled entities. Operating EBITDA includes depreciation of Right of Use Assets recognition in accordance with AASB16.

2. Operating EBITDA Margin is Operating EBITDA / Net Revenue.

3. Refer to Slide 23 for a reconciliation to statutory results. .

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A strong track record of sustainable growth

HIGHLIGHTS

GROWING OPERATING EBITDA (A$M) AND MARGIN (%)*

GROWING NET REVENUE (A$M)*

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150
35 25.0%
130
30
20.0%
110
25
90 15.0%
20
70
15
10.0%
50
10
5.0%
30
5
10
- 0.0%
FY17 FY18 FY19 FY20 FY21
FY17 FY18 FY19 FY20 FY21
-10 Operating EBITDA (economic interest)
Operating EBITDA margin (economic interest)
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• Net revenue has grown both organically and through acquisitions over the past 5 years. Acquisitions include MBA in FY21, Orchard in FY18 and Eastwick in FY17.

• Underlying organic revenue grew 14% in FY21.

• Operating EBITDA growth has generated capital for growth allocated to the larger brands and future M&A.

• Operating EBITDA margin expansion from 11% to 22.0%* driven through growth in higher margin businesses such as OB Media, efficient operating cost base and continued leverage of corporate centres of excellence.

*Revenue and Operating EBITDA reflect 51% economic interest in OB Media

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A refined global operating model

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Strategic Priorities & Achievements

STRATEGIC PRIORITIES + + + TALENT CAPABILITY PRODUCTIVITY INNOVATION Undertake M&A to Implement technology Create an innovation strengthen current and processes to engine to drive new to drive organic portfolio improve productivity business growth growth and profitability

Enhance leadership and diversify skillsets to drive organic growth

Create an innovation engine to drive new business growth

FY21 ACHIEVEMENTS

Leadership refresh and diverse talent delivered underlying 14% organic net revenue growth

Acquisition of McDonald Butler to expand Hotwire’s capabilities and scale

EBITDA growth in every geographic region and business line

Established a new framework to accelerate investment in technology and data

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Key portfolio assets

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THE GLOBAL TECH COMMUNICATIONS CONSULTANCY

LOCATION/S US, UK/Europe, Australia

KEY CLIENTS INCLUDE:

CLIENT WINS INCLUDE:

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AWARDS

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2021 Global Technology Agency of the Year Unilad campaign in conjunction with UK partner Elvis America’s Best PR
2021 EMEA Technology Agency of the Year PR Silver Lion for Best use of Events and Stunts Agencies Ranking
2020 North America Technology Agency of the Year PR Silver Lion for Media Relations
Best Agencies to Work for in PR Media Silver Lion for Best Use of Stunts
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BRAND
TRANSFORMATION
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CREATIVE AGENCY: HOME OF THE LONG IDEA – ENDURING, EFFECTIVE, EMOTIVE END TO END IDEAS

LOCATION/S Australia

KEY CLIENTS INCLUDE:

CLIENT WINS INCLUDE:

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AWARDS

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2020 Creative Agency of the Year 2020 Grand Effie Award (Aldi)
2020 Culture Award 2020 APAC Grand Effie Award (Aldi)
2020 Agency of the Year 2020 Radio Campaign of the Year (Tourism Tasmania)
2020 OOH Campaign of the Year (Tourism Tasmania)
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CREATIVE DATA
AND TECHNOLOGY
Key portfolio assets
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Key portfolio assets

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DIGITALLY FOCUSED AGENCY: TRANSFORMING BUSINESSES THROUGH BETTER CONNECTED EXPERIENCES

PROGRAMMATIC MARKETING PLATFORM: HELPING BUSINESSES ACCESS ONLINE ADVERTISING MARKETS

LOCATION/S US, Australia

LOCATION/S

US

KEY CLIENTS INCLUDE:

CLIENT WINS

REVENUE BY INDUSTRY (FY20)

REVENUE BY INDUSTRY (FY21)

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AWARDS

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Other
Home & Garden Other
Jobs Finance Home & Garden Finance
Real Estate
Jobs
Insurance
Real Estate
Senior
Insurance
Auto Senior
Health and
Pharma
Auto
Retail
Health and
Pharma
Retail
Misc.
Legal
Misc.
Legal
Education Education
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AWARDS

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2020 Digital Agency of the Year 2020 Creativity in Communication
2020 Culture Award (finalist) (Consumer)
2020 Best Customer Centric Experience
2020 Specialist Agency of the Year finalist 2020 Webby Awards Honoree (Hyundai)
2020 Award for Culture finalist
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2021 Advertising Recognition – Excellence in Quality
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Client Analysis

REVENUE DIVERSIFICATION

• Strong client diversification with mix of clients across market industries and sectors.

• Top 10 clients represent 42% of total revenue. Efforts across the Group to maximise larger clients with more touchpoints.

• Highest growth in Health Care and Online Media sectors while retaining significant share in Technology consistent with strategy and sector expertise.

• Revenue by industry reflects the Group’s economic interest of OB Media revenue at 51%.

*Includes 51% economic interest in OB Media

REVENUE BY INDUSTRY (FY21)*

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Utilities & Energy
Telecommunications 1%
Banking, Finance & Insurance 3%
6%
Technology
Transportation/Airlines/Auto 26%
4%
Manufacturing
4%
Services
8%
Health Care
13%
Online Media
21%
Retailing
14%
REVENUE BY INDUSTRY (FY20)
Telecommunications Utilities & Energy
Banking, Finance 4% 1%
& Insurance
5%
Transportation/Airlines/
Auto Technology
5% 28%
Manufacturing
8%
Services
8%
Online Media
Health Care 15%
11%
Retailing
15%
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Creating repeatable revenue

HIGHLIGHTS

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ATTRACTIVE CLIENT LONGEVITY BALANCED REVENUE CONTRIBUTION
6 years or more 32%
4 years or more 28% Project
based, 46%
2 years or more 18%
Less than 2 years 22%
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Retainer,
54%
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• The longevity of clients is reflected in 60% having a duration of 4 years or more, supported by Enero’s broad offering of services and capabilities which support client retention.

• The progressive nature of our service offering supports and accelerates high-growth businesses by transforming brands and deploying creative data and technology solutions.

• The consulting nature of our services spans both retainer and project based work depending on clients needs.

*Excludes OB Media

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Results by Geography

($M) Net Revenue	FY21	FY20	% Change	Constant Currency Variance
USA Australia	60.1 65.0	39.5 58.6	52.2% 10.9%	69.4% 10.9%
UK and Europe	35.5	37.7	(5.8)%	(1.4)%
Total	160.6	135.8	18.3%	23.0%
Operating EBITDA
USA Australia	32.4 13.1	13.2 11.5	146.0% 13.8%	173.7% 13.8%
UK and Europe	7.6	5.7	33.2%	44.2%
Total Corporate costs	53.1 (7.5)	30.4 (6.0)	74.6% (25.0)%	77.9%
Group Operating EBITDA	45.6	24.4	87.1%

HIGHLIGHTS

• Delivery of strong results across all three geographic regions despite the backdrop of COVID lockdown conditions at different points of the year.

• Stronger Australian dollar negatively impacting reported Net Revenue by $5.4m and reported EBITDA by $1.4m on a constant currency yearon-year basis.

• Australia results reflect the Orchard US Health sales where client referrals are initiated from New York and delivered and billed from Australia.

• UK includes Frank until date of sale, and contribution from McDonald Butler Associates from date of acquisition.

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Results by Geography Geographical contribution from operating companies*

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FY21 FY20
26%
30%
NET 45% NET 45%
REVENUE REVENUE
29%
25%
33%
36%
43%
48% OPERATING OPERATING
EBITDA EBITDA
USA
Australia
19%
21%
UK and
Europe
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HIGHLIGHTS

• In FY21 International operations accounted for 55% of total revenue and 67% of Operating Companies EBITDA.

• Strong growth in the US businesses increased their contribution to group revenue. On an economic interest basis, net revenue increased to 30% of total from 26% in FY20. Operating EBITDA increased to 48% of total from 36% in FY20, reflecting high margins.

• Includes 51% economic interest in OB Media

|. 14

USA

				Constant Currency
AS REPORTED ($M)	FY21	FY20	% Change	Variance
Net Revenue	60.1	39.5	52.2%	69.4%
Operating EBITDA	32.4	13.2	146.0%	173.7%
Operating EBITDA margin	53.8%	33.3%	20.5bp	-
ENERO ECONOMIC INTEREST* ($M)	FY21	FY20	% Change	Constant Currency Variance
Net Revenue	42.7	33.3	28.2%	42.7%
Operating EBITDA	19.5	9.6	103.1%	125.1%
Operating EBITDA margin	45.7%	28.8%	16.9bp	-

HIGHLIGHTS

• Strong revenue performance despite currency headwinds, with significant margin acceleration.

• OBMedia significantly increased revenue and margin, benefiting from an accelerating structural shift in consumer behaviour to digital channels and e-commerce.

• Hotwire saw positive momentum with key client wins and organic growth in existing strong technology client base.

US PORTFOLIO

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*Reflects Enero’s owns 51% ownership of OB Media

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Leveraging proprietary technology to deliver high-intent consumers to brands

KEY METRICS

OB MEDIA’S BUSINESS DRIVERS

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130M +45% Consumers delivered to FY21 vs FY20 advertiser websites

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ACCELERATING
E-COMMERCE CONSUMERS DIGITAL ADVERTISERS
AND DIGITAL PUBLISHERS
ADOPTION
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5,000+ +84% Number of advertising FY21 vs FY20 campaigns

Uses AI to deliver relevant marketing content to consumers

Maximises Delivers high the value of intent customers advertising to advertisers, inventory for maximizing return publishers on adspend

OB MEDIA’S PROPRIETARY ADVERTISING TECHNOLOGY PLATFORM

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PROGRAMMATIC PLATFORM

Uses AI and automation to enhance advertising efficiency in monetizing web traffic

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DATA WAREHOUSE

Automated customer acquisition, real-time reporting and revenue attribution platform

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PRIVACY COMPLIANT

Well positioned for the future of online privacy with first party data, not reliant on third-party cookies

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Australia

HIGHLIGHTS

• Revenue growth year-on-year and increased margin from simplified business portfolio in Australian market.

• BMF traded strongly with new client wins, and high exposure to consumer sector.

($M)	FY21	FY20	% Change	Constant Currency Variance
Net Revenue	65.0	58.6	10.9%	-
Operating EBITDA	13.1	11.5	13.8%	-
Operating EBITDA margin	20.2%	19.7%	0.5bp	-

• Orchard also performed strongly with new client wins and high exposure to healthcare sector. Negative forex impact on US health clients billed in Australia. FY21 H2 cost base reflects a one-off vendor incentive for the final year of earn out.

• Smaller agencies (The Leading Edge, Hotwire, CPR) also contributed to growth for the year.

AUSTRALIA PORTFOLIO

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UK and Europe

	AS REPORTED ($M)	FY21	FY20	% Change	Constant Currency Variance
	Net Revenue	35.5	37.7	(5.8)%	(1.4)%
	Operating EBITDA	7.6	5.7	33.2%	44.2%
	Operating EBITDA margin	21.4%	15.1%	6.3bp	-
	CONTINUING BUSINESSES* ($M)	FY21	FY20	% Change	Constant Currency Variance
	Net Revenue	30.2	28.4	6.4%	7.5%
	Operating EBITDA	5.9	4.4	34.1%	43.3%
	Operating EBITDA margin	19.5%	15.5%	4.0bp	-

HIGHLIGHTS

• In a very challenging market environment, the business delivered organic revenue growth of 1.1% on a constant currency basis.

• Currency headwinds and the sale of Frank in FY21 H2 saw reported revenue decline 5.8% for the year.

• Cost containment underpinned EBITDA growth of 33% and solid margin gains.

• Tech sector specialist, McDonald Butler, was acquired in April 2021 and fully integrated into Hotwire UK.

UK/EUROPE PORTFOLIO

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*excludes Frank which was divested in March 2021

|. 18

Brent Scrimshaw - CEO

|. 19

Trading Update

• Enero continues its 5-year track record of sustainable revenue and EBITDA growth.

• The first six weeks of FY22 continue to deliver strong year-on-year revenue momentum.

• We remain focused on maintaining Enero’s high margins across our strong and diversified portfolio.

• Organic and inorganic opportunities will remain a strong focus in FY22 to continue the growth and

transformation of Enero’s portfolio.

• There remains ongoing uncertainty around COVID conditions globally which may lead to wage cost

pressure.

|. 20

Carla Webb-Sear, CFO

|. 21

FY21 Group Financial Performance

Profit and Loss Summary ($M) Net Revenue	FY21 160.6	FY20 135.8
Other Revenue	1.6	1.2
Staff costs	(98.4)	(93.6)
Operating expenses EBITDA before significant items Depreciation ROUA	(13.9) 49.9 (4.3)	(14.2) 29.2 (4.8)
Operating EBITDA before significant items Depreciation & Amortisation	45.6 (2.8)	24.4 (3.4)
EBIT before significant items Net Finance Costs	42.8 (1.4)	21.0 (1.7)
Net Profit Before Tax before significant items	41.4	19.3
Tax (Expense)/ Benefit	(8.5)	(3.4)
Non-controlling interests	(10.1)	(3.0)
NPAT before significant items to equity owners Significant items	22.8 (23.2)	12.9 (2.2)
Statutory Net profit/(loss) after tax to equity owners	(0.4)	10.7

HIGHLIGHTS

• 14% Organic revenue growth. 1HFY21 and 2HFY21 demonstrated consistently strong delivery.

• Staff costs ratio lower at 61% (FY20 - 69%) driven mainly by OB Media. Staff costs includes all fulltime employees and freelance/contractors.

• Operating costs ratio (including rightof-use asset charge) down to 11% (FY20: 14%) with continued strong cost discipline across all businesses and general reduction in operating cost categories (travel, office related) during COVID-19.

• Group net revenue and operating EBITDA before significant items represents OB Media consolidated at 100%

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Reconciliation of statutory (4E) to continuing business results

FY21		Less Significant	Statutory excluding	Less	Continuing
($M)	4E	items	Significant items	Disposals	business
Net Revenue	160.6		160.6	(5.3)	155.3
Other income	1.6		1.6	(0.2)	1.4
Expenses	(135.5)	23.2	(112.3)	3.5	(108.8)
Depreciation ROUA	(4.3)		(4.3)	0.3	(4.0)
Operating EBITDA	22.4		45.6	(1.7)	43.9
Depreciation & Amortisation	(2.8)		(2.8)	0.1	(2.7)
EBIT	19.6		42.8	(1.6)	41.2
Net Finance Costs	(1.4)		(1.4)	-	(1.4)
Net Profit/(Loss) Before Tax	18.2		41.4	(1.6)	39.8
Tax (Expense)/Benefit	(8.5)		(8.5)	0.3	(8.2)
Net Profit/(Loss) After Tax	9.7		32.9	(1.3)	31.6
Net Profit attributable to Non Controlling Interest	(10.1)		(10.1)	0.3	(9.8)
Net (Loss)/ Profit attributable to equity owners	(0.4)		22.8	(1.0)	21.8
Earnings per share (EPS)	(0.5) cents		26.4 cents		25.2 cents

1. Significant items relate to the loss on sale of Frank ($10m) and FCTR reversal on commencing liquidation of several overseas dormant companies ($13m)

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Reconciliation of statutory (4E) to continuing business results

FY20		Less Significant	Statutory excluding	Less	Continuing
($M)	4E	items	Significant items	Disposals	business
Net Revenue	135.8		135.8	(9.3)	126.5
Other income	1.2		1.2	(0.2)	1.0
Expenses	(110.0)	2.2	(107.8)	7.6	(100.2)
Depreciation ROUA	(4.8)		(4.8)	0.6	(4.2)
Operating EBITDA	22.2	2.2	24.4	(1.3)	23.1
Depreciation & Amortisation	(3.4)		(3.4)	0.2	(3.2)
EBIT	18.8	2.2	21.0	(1.1)	19.9
Net Finance Costs	(1.7)		(1.7)	-	(1.7)
Net Profit/(Loss) Before Tax	17.1	2.2	19.3	(1.1)	18.2
Tax (Expense)/Benefit	(3.4)		(3.4)	0.2	(3.2)
Net Profit/(Loss) After Tax	13.7	2.2	15.9	(0.9)	15.0
Net Profit attributable to Non Controlling Interest	(3.0)		(3.0)	0.2	(2.8)
Net (Loss)/ Profit attributable to equity owners	10.7	2.2	12.9	(0.7)	12.2
Earnings per share (EPS)	12.5 cents		15.0 cents		14.2 cents

Significant items relate to the re-estimate of expected payments contingent consideration payments (fair value loss)

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Significant items

HIGHLIGHTS

($M)	FY21	FY20
Loss on sale of Frank PR	(9.9)	-
Loss on disposal of dormant foreign subsidiaries	(13.1)	-
Contingent consideration fair value loss Incidental acquisition costs	- (0.2)	(2.2) -
Tax benefit	-	-
Total significant items	(23.2)	(2.2)

• Significant items are non cash and non recurring in nature.

• In March 2021, the Group sold its entire shareholding in Frank PR. The Group recognised an accounting loss on sale of $9.9m.

The Group commenced liquidation of 12 historically dormant foreign subsidiaries and recognised an accounting loss of $13.1m as it transferred the Foreign Currency Translation Reserve (FCTR) relating to these subsidiaries to the income statement for FY21.

Incidental costs of $0.2m related to acquisition of McDonald Butler Associates.

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Balance Sheet

($M)	FY21	FY20
Cash	50.7	47.6
Trade and Other Receivables	46.9	34.6
Other assets	4.9	3.8
Current Assets	102.5	86.0
Deferred tax asset	2.0	2.6
Intangible Assets	118.1	109.1
Property,Plant and Equipment	3.8	4.9
Non-current Lease Assets	8.0	11.8
Other non-current assets	0.3	0.1
Non- Current Assets	132.2	128.5
Total Assets Other current Liabilities Lease liabilities Contingent considerationpayable Current Liabilities	234.7 70.0 5.6 10.8 86.4	214.5 46.3 6.4 15.1 67.8
Lease Liabilities Contingent considerationpayable	6.3 9.2	10.5 10.4
Provisions	0.7	0.9
Non Current Liabilities	16.2	21.8
Total Liabilities	102.6	89.6
Net Assets	132.1	124.9
Contributed Equity	100.4	99.5
Reserves	44.4	23.4
Retained Profit/(Losses)	(16.4)	(0.3)
Total Parent Equity Interest	128.4	122.6
Non-ControllingInterest	3.7	2.3
Total Equity	132.1	124.0

HIGHLIGHTS

• Increase in intangibles resulting from the MBA acquisition of $15m offset by the Frank PR sale of $6m.

• Reserve movement due to the FCTR transfer recorded as a significant item.

• Final dividend of 4.4 cps fully franked payable on 6 October 2021. Total dividend for FY21 of 14.9 cps, a payout ratio of 56%.

• $11.7m franking credit balance.

• Balance sheet retains flexibility to pursue further acquisitions enhancing geographical presence in hubs or expansion of services.

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Balance Sheet & Capital Management

HIGHLIGHTS

CASH AND CONTINGENT CONSIDERATION ($M) Contingent consideration Opening 1 July (at present value)	FY21 25.6	FY20 33.8
Recognition on acquisition - MBA	8.9	-
FX revaluations/ present value interest unwind Re-estimate of expected payments (fair value loss)	0.5 -	1.5 2.2
Payments	(14.9)	(11.9)
Contingent consideration balance at 30 June	20.1	25.6
Cash	50.7	47.6
Net cash adjusted for contingent consideration	30.6	22.0

• Recognised contingent consideration relating to the McDonald Butler (MBA) acquisition.

• Actual payments are subject to performance subsequent to the reporting date and capped on the total purchase price with minimum thresholds. Actual future payments may therefore differ from the estimated liability at reporting date.

• The differential between present value and gross value is the future present value interest unwind over the remaining term of the agreements.

• Maturity profile is over the FY22 to FY25 periods.

• Net Cash of $30.6m (30 June 2020 - $22.0m) at balance date.

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Cash Flow & Working Capital

($M)	FY21	FY20
Operating EBITDA	45.6	24.4
Right-of-use asset depreciation charge	4.3	4.8
Movement in working capital	9.5	4.1
Equity incentive expense Gross Cash Flow	0.9 60.3	0.6 33.9
Net interest received	-	0.2
Tax paid	(7.1)	(3.2)
Operating cash flow	53.2	30.9
Cash funded capex	(1.0)	(1.4)
Lease liability payments Free cash flow	(6.1) 46.1	(7.0) 22.5

HIGHLIGHTS

• Working capital reduction linked with strong cash conversion. Expect some unwind in FY22 as working capital position excluding cash is negative.

• Cash conversion at 121% of EBITDA (excludes right-of-use asset depreciation charge). Strong cash conversion demonstrated in FY21 from 116% in FY20.

• Tax payments made primarily in relation to overseas tax jurisdictions with the increase predominantly in the USA. Australian operations commencing to pay tax in H2 FY21.

• Capex lower than prior period as capex projects continued to be put on hold in due to Covid-19. Investment in

systems are expected to commence in FY22 and be cloud based which will not allow capitalisation under AASB 138.

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Disclaimer

NON-IFRS PERFORMANCE MEASURES

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