IPD GROUP LTD — Interim / Quarterly Report 2023

Feb 23, 2023

HALF YEAR RESULTS | 2023

Presenters

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Michael Sainsbury Executive Director & CEO

Mohamed Yoosuff Executive Director Strategic Development

Jason Boschetti Chief Financial Officer

IPD GROUP HY23 RESULTS PRESENTATION

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Executive management change

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Jason Boschetti Chief Financial Officer

Formally General Manager of Finance Jason Boschetti has been appointed as new Chief Financial Officer as of 1 January 2023

Jason was selected two years ago as a strategic CFO succession plan appointment and he has already successfully managed many key projects, including acquisitions and integrations. His outstanding leadership played an integral role in the company’s successful 2021 ASX listing.

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What we’ll share today

– Overview

HY23 RESULTS PRESENTATION |

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– Financial performance

– Highlights

– Our focus

– Outlook

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HY23 RESULTS PRESENTATION |

Overview

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We power, automate and connect infrastructure to build a better world

As more countries take action to reduce carbon emissions, demand continues to grow for the products and services essential to deliver responsible economic development. IPD Group is a vertically integrated provider of end-to-end solutions to the Australian electrical market that help make it possible.

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IPD GROUP HY23 RESULTS PRESENTATION

Successfully navigating market changes

Improving global supply chains

Inflationary impacts

Appetite for digital transformation continues to increase

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Skills shortage

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Positive environment for continued growth

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IPD GROUP HY23 RESULTS PRESENTATION

Corporate snapshot

[1] Capital structure

Capital structure 1
ASX Code	IPG
ASX Shareprice	$2.75
IPO Date	17th December 2021
Shares on issue	86,365,798
Debt	Nil
Market capitalisation	$237M

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Board of Directors

David Rafter	Non-Executive Chair
Andrew Moffat	Non-Executive Director
Michael Sainsbury	Executive Director & CEO
Mohamed Yoosuff	Executive Director - Strategic Development

Share holders breakdown[1]

[1] Share price

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39% 61% External Board, Management and Employees

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1. Data based on 22 February, 2023

IPD GROUP HY23 RESULTS PRESENTATION

Changing electrical landscape

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Australia is undergoing a distributed energy revolution[2] Expected energy transition to 2050 [3]

Industry drivers

Economic:

• Inflation and soaring electricity prices

• Rising demand for renewable electricity to drive industry expansion

Political:

• Government renewable energy schemes and incentives

• Installation expansion into corporate and residential buildings

• Development of large scale energy storage infrastructure

Environmental:

• Impacts of population growth on the environment

• Growing environmental consciousness

• More companies are establishing environmental, social and governance (ESG) criteria

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Storage capacity to increase by a factor of 30

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NOW 2030 2050
2 GW 15 GW 61 GW
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Distributed
solar PV
to increase
5-fold
NOW 2030 2050
15 GW 35 GW 69 GW
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Grid-scale
wind and solar
to increase
9-fold
NOW 2030 2050
16 GW 44 GW 141 GW
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Electricity usage
from the grid
to nearly
double
NOW 2030 2050
180 TWh 184 TWh 320 TWh
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1. the-distributed-energy-resources-revolution-paper.pdf (cleanenergycouncil.org.au)

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IPD GROUP HY23 RESULTS PRESENTATION

1. https://aemo.com.au/newsroom/media-release/aemo-releases-30-year-electricity-market-roadmap

1H FY23 Overview

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Financial perfomance Strong revenue growth demonstrates value of proposition

$110.9m

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Revenue up 35.7% (PCP $81.7m)

$68.5m

Net assets ($63.4m as at 30 June 2022)

$13.4m

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EBITDA up 28.8% (underlying[4] PCP $10.4m)

Zero

No borrowings

$11.5m

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EBIT up 33.7% (underlying[4] PCP $8.6m)

$21.3m

Net cash

($25.4m as at 30 June 2022)

$8.0m

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NPAT up 33.3% (underlying[4] PCP $6.0m)

4.6 cents Interim dividend per share fully franked

9.3 cents

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Equivalent EPS up 34.8%

(Equivalent[5] underlying[4] PCP mm6.9cents)

50%

Payout ratio

1. Underlying 1H FY22 EBITDA and EBIT have been arrived at by adding back IPO related costs totalling $1.6 million. NPAT has been arrived at by adding back IPO related costs after tax totalling $1.2 million.

2. Due to the IPO capital raise on the 17th December 2021 the weighted average number of ordinary shares for 31 December 2021 was 68,846,052. For comparative purposes the underlying PCP has been recalculated on the weighted average number of ordinary shares for 31 December 2022 of 86,326,215

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IPD GROUP HY23 RESULTS PRESENTATION

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HY23 RESULTS PRESENTATION |

Financial performance

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H1 FY23: Results

$m	H1 FY23	Underlying 4 H1 FY22	% Variance
Revenue	110.9	81.7	35.7%
Gross profit	41.7	31.3	33.2%
EBITDA	13.4	10.4	28.8%
EBIT	11.5	8.6	33.7%
NPAT	8.0	6.0	33.3%
Operating expenses as % of revenue	25.6%	26.2%	(0.6%)
Gross profit margin	37.6%	38.3%	(0.7%)
EBITDA margin	12.1%	12.7%	(0.6%)
EBIT margin	10.4%	10.5%	(0.1%)
NPAT margin	7.2%	7.3%	(0.1%)

• Sales revenue of $110.9 million was up 35.7% on the pcp. The business continues to gather momentum and gain market share as we successfully execute our growth strategy. Our customers have returned to normal operating capacity as Covid related restrictions are lifted resulting in increased customer activity and orders.

• Operating expenses as a percentage of revenue reduced by 0.6% on the underlying prior corresponding period (excluding IPO costs).

• Continued investment into resources to support strong revenue growth, expand Gemtek and recruit specification focused business development managers across the country

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Sales Growth – Statutory revenue ($m)
$110.9m
$95.0m
$81.7m
$65.0m
H2 FY21 H1 FY22 H2 FY22 H1 FY23
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Statutory EBITDA ($m) and EBITDA margin (%)
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$13.4m
$11.3m
$8.8m
$6.9m
11.9% 12.1%
10.6% 10.8%
H2 FY21 H1 FY22 H2 FY22 H1 FY23
EBITDA ($m) EBITDA margin
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1. Underlying 1H FY22 EBITDA and EBIT have been arrived at by adding back IPO related costs totalling $1.6 million. NPAT has been arrived at by adding back IPO related costs after tax totalling $1.2 million.

IPD GROUP HY23 RESULTS PRESENTATION

H1 FY23: Balance sheet

	30 Dec 2022	30 Jun 2022
$m
Totalcurrent assets	108.8	97.0
Total non-current assets	27.4	27.8
Total assets	136.2	124.8
Totalcurrentliabilities	57.1	50.7
Total non-currentliabilities	10.6	10.7
Total liabilities	67.7	61.4
Net assets	68.5	63.4

• Inventory increased by $9.5 million on the prior corresponding period. Strategic investment into inventory has been used to support current revenue growth. Additionally some components with long lead times, ordered during the period of global supply chain disruption, were delivered on time by suppliers causing a one-off increase in inventory.

• On the 1st of January 2023, a new long-term lease commenced for a second NSW warehouse at Eastern Creek. The 4,000sqm site is now fully operational. Initially a portion of the new facility is being sublet, allowing for measured future expansion.

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Net assets ($m)
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$68.5m
$63.4m
$57.2m
$39.2m
30 Jun 2021 30 Dec 2021 30 Jun 2022 30 Dec 2022
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• As at 31 December 2022, the Group has $68.5 million of net assets on its balance sheet, $21.3 million in net cash, no borrowings and is well capitalized to execute on its strategic priorities.

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IPD GROUP HY23 RESULTS PRESENTATION

H1 FY23: Capital management & interim dividend

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	30 Dec 2021	30 Dec 2022	% variance
$m
Current assets excluding cash	67.7	87.5	29.2%
Current Liabilities excl debt (Lease & tax liabilities)	(42.7)	(53.9)	26.2%
Net working capital (NWC)	25.1	33.6	34.2%
Revenue (rolling 12 months)	146.7	205.9	40.3%
NWC as a percentage of revenue	17.1%	16.3%	(0.7%)

• NWC as a percentage of revenue declined by 0.7% compared to the same time last year.

• The Group was not materially impacted by the RBA increases to the Australian cash rate target during the half year ended 31 December 2022 as the Group continues to have no debt and $21.3 million in net cash on the balance sheet.

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Dividend (cents per share)
4.6c
3.7c
30-Jun-22 30 Dec 2022
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• Fully franked interim dividend of 4.6 cents per share declared for the first half of FY23.

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1. Underlying 1H FY22 EBITDA and EBIT have been arrived at by adding back IPO related costs totalling $1.6 million. NPAT has been arrived at by adding back IPO related costs after tax totalling $1.2 million.

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HY23 RESULTS PRESENTATION |

Highlights

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Business highlights

Delta exclusive distribution agreement signed

• Industry leading energy efficient power solutions

• Protects mission critical systems by maintaining energy under adverse circumstances

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Achieved R.Stahl product assembly partner certification

• Custom hazardous area equipment solutions

▪ Improved customer experience through reduced delivery times

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Warehouse addition

Additional business development

• Eastern Creek, Sydney

• Successfully creating demand by driving specification into commercial buildings, hospitals & data centres

• 4000m[2] size

• Frees up 30% capacity in main distribution centre

• Efficiency gains through proximity to head office

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IPD GROUP HY23 RESULTS PRESENTATION

Increased support locations

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Nine offices and warehouses in six Australian states – plus our support teams in Sri Lanka[6] and the addition of the Philippines ensure IPD seamlessly service customers Australia-wide.

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Sri Lanka
Colombo
QLD
Sites: 1
Size (sqm): ~1,300
WA
Sites: 1
Size (sqm): ~1,700 SA
Sites: 1 Brisbane
Size (sqm): ~650 Philippines
Perth NSW Manila
HQ Sites: 3
Adelaide Sydney Size (sqm): ~17,000
Bendigo
Melbourne
VIC Burnie TAS
Sites: 2 Sites: 1
Size (sqm): Size (sqm): ~800
~1,800
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1. Sri-Lanka is a fully owned subsidiary

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IPD GROUP HY23 RESULTS PRESENTATION

IPD are exposed to a number of high growth areas

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Electric vehicles

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Industrial Renewable communication energy systems

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Data centres

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Modular switchboard systems

• IPD Group electrifying ▪ IPD Group supplied hundreds of sites for two numerous energy large Australian petroleum management systems companies

  • Thousands of industrial assets rely on public cellular infrastructure for machineto-machine (M2M) communications

• Assisting companies with communications

• compliance measures regarding ‘green buildings’ ▪ 3G networks to make way including NABERS and for 4G/5G technologies Greenstar ratings

• Multiple train station upgrades in Western Australia

• IPD Group performed services such as site audits, design, hardware supply, and installations

• IPD Group’s unique offer

• ▪ IPD Group secured reduces deployment and business to supply a global operation costs while supermarket chain with enhancing cybersecurity our power monitoring ▪ IPD Group succeeding with solution for all of their a strategy of targeting

• Australian stores critical infrastructure such as power and water utilities, transport and resources

• Opportunities to provide maintenance, repair and operation (MRO) services

• Changes to the low voltage switchboard standards

• Secured multiple projects with global data centre developers and operators

• Resulting in a significant market push to modular switchboard systems

• IPD Group performed market push to modular design, hardware supply, switchboard systems installation and ▪ IPD Group invested heavily commissioning services in design and testing to

• ▪ High voltage (HV) provide a comprehensive transformers & cabling modular electrical switchboard solution

• ▪ High voltage (HV) and low voltage (LV) switchboards & ▪ Increased investment into switchgear personnel and software

• ▪ Battery systems ▪ Year-on-year growth ▪ Energy saving power monitoring equipment

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IPD GROUP HY23 RESULTS PRESENTATION

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HY23 RESULTS PRESENTATION |

Our focus

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IPD GROUP HY23 RESULTS PRESENTATION

Strategic priorities

Become a significant end to end solution provider to the EV charger market

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Expand product range

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EV hardware distribution agreement with ABB Design and project delivery skills – Gemtek Appointment of an experienced leader to the EV business unit – David Sullivan Increase the scale of business development, engineering and project delivery staff Establish a nationwide network of licensed EV installers Build a national maintenance, repair and operations (MRO) team

Uninterruptible power supplies (UPS) Renewables – Rural electrification with solar off grid solution Industrial cyber security for OT environments BESS – Battery Energy Storage Systems

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Strategic priorities

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Acquisitions Proven track record of successful acquisitions Numerous opportunities have been identified, assessed and considered not a good strategic fit Additional targets have been identified and preliminary discussions are taking place Mohamed Yoosuff’s new role in Strategic Development provides experience and a focus on mergers and acquisitions

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Strategic sales focus

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Investment in resources over and above the current pool to create pull-through demand by driving specification of IPD solutions through key influencers and identify significant opportunities early in the project life cycle Promote “packaged” solutions covering all products, create and deliver an education program for consultants, become a trusted advisor for relevant solutions to end users in key targeted vertical markets

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HY23 RESULTS PRESENTATION |

Outlook

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IPD GROUP HY23 RESULTS PRESENTATION

Trading update & outlook

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FY23 outlook

Operating environment remains buoyant.

Addelec Power Services business previously affected by COVID-19 related shutdowns is experiencing a significant improvement with a pipeline of large projects.

The effect of recent interest rate increases is minimal on IPD Group business as our exposure to the residential building sector is small and the group has a net cash position with no borrowings.

Trading performance for January and February, the first two months of the 2H FY23, has been strong.

COVID-19 related issues such as long supply lead times, uncertain deliveries by overseas factories, expensive overseas freight and site shutdowns are returning to normal in most cases.

The outlook for the business remains positive.

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IPD GROUP HY23 RESULTS PRESENTATION

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HY23 RESULTS PRESENTATION |

Summary

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IPD edge

Our agility

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Enabling us to respond quickly and effectively to opportunities and threats (internal and external)

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Our highly skilled workforce

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Cost advantages Economies of scale

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Our broad, long-standing customer relationships

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Our network of leading supply partners

Our vertically integrated & customised solutions

Our strong health & safety track record

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IPD GROUP HY23 RESULTS PRESENTATION

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HY23 RESULTS PRESENTATION |

Q&A

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IPD GROUP HY23 RESULTS PRESENTATION

Important notice & disclaimer

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NO RELIANCE

The information contained in this document is not investment or financial product advice and is not intended to be relied upon as the basis for an investment decision, and is not, and should not be assumed to be, complete. The information provided in this presentation may not be suitable for your specific needs and should not be relied upon by you in substitution for obtaining independent advice.

To the maximum extent permitted by law, neither the Company nor any other party guarantees or makes any representations or warranties, express or implied, as to, or takes responsibility for, the accuracy or reliability of the information contained in this document or as to any other matter, or takes any responsibility for any loss or damage suffered as a result of any inadequacy, incompleteness or inaccuracy in any statement or information in this document including, without limitation, any financial information, any estimate or projections or any other financial information.

Past performance information provided in this document may not be a reliable indication of future performance. No representation is being made that any investment will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided. Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions, and beliefs of the Company. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon.

FORWARD LOOKING STATEMENTS

This document contains certain forward-looking statements and comments about future events. Forward-looking statements involve known and unknown risks, significant uncertainties, assumptions, contingencies, and other factors, many of which are outside the control of the Company, are subject to change without notice, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct, and which may cause the actual results or performance of the Company to be materially different from any results or performance expressed or implied by such forward-looking statements. Such forward-looking statements speak only as of the date of this document. Forward looking statements should not be relied on as an indication or guarantee of future performance. No representation, warranty or undertaking is made that any projection, forecast, assumption or estimate contained in this document should or will be achieved. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements in this document to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statement is based.

MISCELLANEOUS

No person, especially those who do not have professional experience in matters relating to investments, may rely on the contents of this document. If you are in any doubt as to the matters contained in this document you should seek independent advice and/or consult your stockbroker, bank manager, solicitor, accountant, or other financial adviser.

A number of figures and calculations in this presentation are subject to the effects of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation. All dollar figures within this document represent Australian Dollars unless otherwise specifically stated.

PRESENTATION AUTHORISED BY THE BOARD

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