IVE GROUP LIMITED — Interim / Quarterly Report 2017

Feb 26, 2017

HALF YEAR RESULTS PRESENTATION 6 MONTHS ENDING DECEMBER 31, 2016 / FEBRUARY 27, 2017

Geoff Selig – Executive Chairman Darren Dunkley – Chief Financial Offi cer

Table of �CONTENTS

• 03 Business Overview

• 04 Financial Performance Highlights

• 06 Balance Sheet

• 07 Business Highlights

• 09 Acquisition of Franklin Web and AIW Printing

• 12 Outlook 13 Appendix

3

Half Year Results Presentation – 6 months ending December 31, 2016

BUSINESS OVERVIEW

IVE is a vertically integrated marketing services and print communications provider. IVE enables its customers to communicate more effectively with their customers by creating, managing, producing and distributing content across multiple channels.

The marketing services and print communications industry is dynamic and constantly evolving. IVE’s response to this evolution has been to maintain relevance with our customers through ongoing investment and expansion of our product and service offering.

==> picture [143 x 21] intentionally omitted <==

==> picture [103 x 11] intentionally omitted <==

==> picture [95 x 12] intentionally omitted <==

This has been achieved through an effective combination of both organic growth initiatives and strategic acquisitions.

IVE has an unparalleled product and service offering in Australia and holds leading positions across multiple industry sectors. IVE delivers its products and service through four operating divisions:

==> picture [144 x 71] intentionally omitted <==

==> picture [110 x 11] intentionally omitted <==

==> picture [117 x 11] intentionally omitted <==

==> picture [124 x 10] intentionally omitted <==

==> picture [124 x 11] intentionally omitted <==

4

Half Year Results Presentation – 6 months ending December 31, 2016

FINANCIAL PERFORMANCE HIGHLIGHTS

PROFIT AND LOSS

	Pro Forma	Pro Forma	Pro Forma	Pro Forma
	Actual H1 FY2017	Actual H1 FY2016	Variance $M	Variance %
Revenue	207.7	196.1	11.6	5.9%
Gross Prof t	110.1	102.9	7.2	7.0%
% of Revenue	53.0%	52.5%	0.0	1.0%
EBITDA	24.0	22.2	1.8	8.1%
% of Revenue	11.6%	11.3%	0.0	2.0%
EBIT	18.2	17.6	0.6	3.3%
% of Revenue	8.8%	9.0%	0.0	–2.5%
Prof t before tax	16.8	16.5	0.3	1.7%
NPAT	11.6	11.4	0.2	2.2%
NPATA	12.6	12.2	0.4	3.0%

KEY METRICS

KEY METRICS
	Actual H1 FY2017
Revenue growth	5.9%
Gross prof t margin	53.0%
EBITDA growth	8.1%
EBITDA margin	11.6%
EBIT growth	3.3%
EBIT margin	8.8%
NPAT growth	2.2%
NPATA growth	3.0%

H1 FY2017 excludes key restructuring and acquisition expenses (refer Appendix).

5

Half Year Results Presentation – 6 months ending December 31, 2016

FINANCIAL PERFORMANCE HIGHLIGHTS

• Revenue growth on PCP 5.9% refl ects increased revenue through a combination of new business, existing customer base, expanded service offering and acquisitions.

• Gross profi t margin at 53.0% compared to 52.5% PCP has remained stable as a result of managing inputs, continued leverage of supply chain, reducing outsourced expenditure wherever possible, and workmix change.

• EBITDA growth of 8.1% over PCP achieved through revenue growth, stable gross profi t and the continued management of production and administration costs, continuing to expand EBITDA margin.

• Result has negligible contribution from Franklin Web/AIW Printing – acquisitions completed 13 December 2016.

• Interim dividend of 6.3 cents per share fully franked. This equates to a pre capital raise dividend of 8.5 cents per share. Consistent with the company’s stated dividend policy, the payout ratio is 65% of NPAT (before key restructure and acquisition costs).

==> picture [369 x 202] intentionally omitted <==

6

Half Year Results Presentation – 6 months ending December 31, 2016

BALANCE SHEET

STATUTORY BALANCE SHEET

==> picture [330 x 400] intentionally omitted <==

----- Start of picture text -----

Actual Actual
Dec-16 Jun-16
$’M $’M
CURRENT ASSETS
Cash and cash equivalents 23.8 14.4
Trade, prepayments and others 121.4 74.1
Inventories 44.2 12.5
Total Current Assets 189.5 101.0
NON CURRENT ASSETS
Deferred tax assets 17.4 17.2
Property, plant and equipment 93.3 41.8
Intangible assets and goodwill 128.6 70.3
Other non current assets 0.0 1.0
Total Non Current Assets 239.3 130.3
Total Assets 428.8 231.3
CURRENT LIABILITIES
Trade payables and provisions 128.7 80.0
Finance lease liabilities 2.6 2.6
Current tax payable 0.8 3.7
Total Current Liabilities 132.1 86.3
NON CURRENT LIABILITIES
Trade payables and provisions 24.4 15.1
Finance lease liabilities 10.5 11.7
Bank loans 125.4 36.7
Total Non Current Liabilities 160.3 63.5
Total Liabilities 292.4 149.8
NET ASSETS 136.4 81.5
EQUITY
Share Capital 98.8 39.8
Share based payment reserve 0.1 –
Retained Earnings 37.5 41.7
Total Equity 136.4 81.5
----- End of picture text -----

• The increase in senior facilities of $90.6M relates to the acquisitions of both Franklin Web and AIW Printing on the 13th December 2016.

• The Franklin Web and AIW Printing acquisitions were funded through a combination of new equity via issue of shares to vendors ($20.3M), a share placement and entitlement offer ($40.0M), and a new 3 year senior debt facility of $145.0M. At 31 December the facility was drawn to $127.4M.

• The asset base has signifi cantly expanded over the period primarily as a result of the Franklin and AIW acquisitions.

NET DEBT

	Actual H1 FY2017	Actual June FY2016
Short-Term – Finance Leases	2.6	2.6
LongTerm Debt – Finance Leases	10.5	11.7
Senior Facilities	127.4	36.8
Sub Total	140.5	51.1
Cash	–23.8	–14.5
Net Debt	116.7	36.5

• Net debt of $116.7M is in line with December 5, 2016 capital raising investor presentation.

• Based on FY16 EBITDA pro forma (including Franklin and AIW FY2016 pro forma EBITDA) net debt is 1.9X EBITDA.

• Senior facilities is the actual balance outstanding, gross of capitalised transaction costs.

7

Half Year Results Presentation – 6 months ending December 31, 2016

BUSINESS HIGHLIGHTS

REVENUE

• IVE’s pro forma revenue increased on the PCP by 5.9% to $208M.

• Strong new business performance across a broad cross section of customers building on a solid FY16 fi nancial year result.

• Major new contract wins of note:

• º[ L’Oréal, Diageo, BP and Blackmores in our IVEO Division]

• º[ Norwegian Cruise Lines, Globus, HelloWorld, Nestle, Suncorp, Lovatts Media Group in ] our Blue Star Division

• º[ Foxtel, Just Group, AXA and Treasury Wine Estates in our Kalido Division.]

• Signifi cant new business win with Franklin Web securing the Coles Supermarkets catalogue printing contract.

• Successful implementation of the Westpac managed solutions contract in our IVEO division.

• Successfully rolled over a number of key contracts across the Group –Commonwealth Bank, Travelcorp, The Australian Electoral Commission (AEC), Fairfax, Glaxo Smith Kline (GSK), Bauer Media, Next Media, Flight Centre.

• IVE has transacted with over 2,200 customers, demonstrating the Groups stability and scalability as a reliable partner in the marketing services and print communications sector.

• IVE is well placed heading into H2 to benefi t from new business secured in H1 whilst continuing to grow market share in H2 through a mature prospect pipeline.

• IVE’s customer spend profile is very well spread with the largest customer accounting for only 6% of the Group’s revenue, with the top 20 comprising 35% of the Group’s total revenue.

==> picture [534 x 141] intentionally omitted <==

==> picture [223 x 141] intentionally omitted <==

8

Half Year Results Presentation – 6 months ending December 31, 2016

BUSINESS HIGHLIGHTS

KEY INITIATIVES

• Our Kalido Division continues its growth trajectory into Asia through a growing presence in Singapore. In early 2017 IVE will open a Kalido operation in Hong Kong to further support and realise the new business and revenue opportunities that exist (specifi cally in the data analytics, marketing automation and the website optimisation space).

• Our Kalido, Pareto and IVEO teams based in Melbourne relocated from multiple locations to new premises in Richmond.

• Our Blue Star CONNECT business in NSW relocated from 3 existing premises to a new facility in Erskine Park. The 20000sqm facility has the capacity for 17000 pallets, further supporting the growth of our logistics and fulfi lment offer. This coincided with the upgrade of our warehouse management system to support further automation and growing activity levels. Our logistics and fulfi lment capability continues to play a signifi cant part in our success securing large managed solutions customers.

ACQUISITION PROGRAM

The Group maintained its disciplined acquisition strategy with fi ve businesses acquired throughout H1 FY 2017.

• The period saw the successful integration of 3 acquisitions into existing businesses building on their strong operational foot print and market position. The Mailing House (completed September 2016), Display Bay and R25 (completed December 2016).

• All key metrics and synergies from these acquisitions are in line with business cases.

The Group continues to leverage its strong foundation, further expanding its product and service offering with the signifi cant acquisition(s) of Franklin Web and AIW Printing on 13 December 2016.

==> picture [360 x 342] intentionally omitted <==

9

Half Year Results Presentation – 6 months ending December 31, 2016

ACQUISITION OF FRANKLIN WEB AND AIW PRINTING

DIVERSIFYING AND GROWING OUR RETAIL OFFER

IVE has continued to grow its diversifi ed offer to the retail sector over the last fi ve years. Both globally and domestically catalogues remain a proven media channel to drive revenue for retailers, and strategically IVE was attracted to a part of the sector that it had not previously operated in. The acquisition of Franklin Web and AIW Printing results in a further expansion of IVE’s capabilities in the retail sector to support a retailer’s full marketing program from creative, online, to offl ine, to instore. Both acquisitions are highly complementary to our existing offer.

STRATEGIC RATIONALE AND HIGHLIGHTS

Combining IVE, Franklin and AIW will create a competitive advantage and opportunities for future growth

• 1 Large Format Web Offset ( LFWO) sector is an attractive and complementary sector for IVE Catalogues continue to be a core part of retailers’ marketing strategies due to their audience reach and affordability.

• 2 Franklin is considered a market leading, low cost catalogue producer and the cornerstone acquisition for IVE’s expansion into the LFWO sector IVE integrating AIW into Franklin and leveraging its low cost production environment is expected to deliver operational synergies of a minimum $11.5 million per annum. Establishing a greenfi elds catalogue production operation in Sydney will signifi cantly enhance IVE’s ability to service national retailers.

• 3 Signifi cant opportunity to cross sell across the broader combined customer base Broadening IVE’s customer base across a range of leading retailers. Minimal overlap between IVE’s existing customers and the customers of Franklin and AIW.

• 4 Diversifi es IVE’s revenue base through expanding the range of value added products and services 5 Financially compelling with expected EPS accretion of over 20%[1] through unlocking operational synergies Post-synergies, the Acquisitions represent an enterprise value/FY16 pro forma normalised EBITDA of 3.8x.

• 6 Strengthens management capabilities to support integration and growth

==> picture [290 x 229] intentionally omitted <==

1. Once synergies are fully realised and excludes one off restructuring costs and one off capital expenditures.

10

Half Year Results Presentation – 6 months ending December 31, 2016

ACQUISITION OF FRANKLIN WEB AND AIW PRINTING

TRANSACTION SUMMARY

• Overview • Franklin is the third largest LFWO operator in the Australian market by revenue[1] of Franklin with pro forma revenues of $151.2 million[2] and EBITDA of $21.2 million[2] in FY16 (FY16 EBITDA margin of 14%).

• • Owned by Phil Taylor, who now leads the combined Franklin and AIW business.

• Overview • AIW is the fourth largest LFWO operator in the Australian market by revenue[1] with of AIW pro forma revenues of $76.8 million[2] and an EBITDA loss of $1.8 million[2] in FY16. Synergies • Operational synergies of a minimum $11.5 million per annum (full run rate) expected to be realised within 12 months post completion.

• • Implementation costs include one off restructuring expected to be between $8 million and $10 million.

• • One off capital expenditures expected to be $30 million. Capital expenditure has increased since completion as a result of securing the Coles Supermarkets catalogue printing contract and to ensure we are able to pursue other opportunities.

• Expected • EPS accretion of over 20% expected once synergies are fully realised (excluding one fi nancial off restructuring costs and capital expenditures). impact • The Acquisitions will result in a pro forma net debt/pro forma FY16 EBITDA of approximately 1.8x at completion

• – debt levels are expected to reduce from high cash generation and synergies. • IVE intends to maintain its stated dividend policy of a payout ratio between 65% and 75% of NPAT.

==> picture [307 x 197] intentionally omitted <==

1. Based on IVE’s management estimates of FY16 LFWO revenues

2. The pro forma historical combined profi t and loss statement has been prepared by IVE based on the audited fi nancial statements for IVE for the fi nancial year ended 30 June 2016 and adjusting for the impact of the acquisitions of AIW and Franklin and the Offer. The fi nancial information for AIW has been extracted from the audited fi nancial statements of AIW for the fi nancial year ended 30 June 2016 and the fi nancial information for Franklin has been extracted from the unaudited statutory accounts of Franklin for the fi nancial year ended 30 June 2016. A number of pro forma adjustments have been made to the Franklin and AIW fi nancial information. The primary adjustment is to refl ect the terms of the new Franklin lease agreement to be entered into in relation to the Franklin property and the terms of the sale and lease back of the AIW property on 30 June 2015.

11

Half Year Results Presentation – 6 months ending December 31, 2016

ACQUISITION OF FRANKLIN WEB AND AIW PRINTING

KEY COMPONENTS OF OUR PLAN

UPDATE SINCE COMPLETION

Outlined below is an overview of the initial phase of our investment and transition plans for the balance of 2017:

• AIW operations at Springvale will be progressively wound down and integrated into Franklin Web at Sunshine .

• Further enhancement to Franklin’s post press capability through the installation of a high speed perfect binding line.

• A greenfi elds large format web offset operation will be established in Sydney by the middle of the year.

• Signifi cant press upgrade in Blue Star WEB based in Sydney

• Expansion of our retail display capacity in Victoria. Blue Star’s retail display business in Victoria will be integrated into Franklin Web’s retail display operation at Sunshine.

• Total investment $30 million.

==> picture [358 x 163] intentionally omitted <==

• Customers

• A very positive response with all customers of both Franklin and AIW being retained and keen to explore the broader IVE offer.

• Signifi cant new business win securing the Coles Supermarkets catalogue printing contract.

• People

• All key staff retained.

• Integration

• The integration of AIW and Franklin is well progressed and in line with business plan.

• Synergies

• The operational synergies as outlined in the capital raising presentation dated December 5, 2016 have now been validated. We can confi rm the synergies will be a minimum of $11.5M per annum (full run rate).

• Capital Expenditure

• The proposed capital expenditure as outlined in the capital raising presentation dated December 5, 2016 has now been refi ned. As a result of securing the Coles contract and to ensure we are able to pursue other opportunities, total capital expenditure will be $30 million.

• As a result of expenditure above, FY18 expenditure will be signifi cantly less than prior years.

• Market Update

• The ACCC announced on February 17, 2017 that it would not oppose the merger of ASX listed PMP and IPMG (Independent Print Media Group). The merger once completed will result in 2 major industry participants in the LFWO sector – IVE and PMP/IPMG.

• IVE continues to offer the most diversifi ed value proposition in the region.

12

Half Year Results Presentation – 6 months ending December 31, 2016

OUTLOOK

• All key components of the LFWO integration and expansion plan are on track and will be completed in less than 12 months of acquisition.

• Expected synergies validated with a minimum of $11.5m per annum ( full run rate).

• EBITDA range of $54–$57m (before restructure & acquisition costs) for FY2017.

• Business very well positioned for a strong FY2018.

• Dividend policy unchanged with a payout ratio of 65–75% of NPAT.

For further information contact:

Geoff Selig Executive Chairman

Darren Dunkley Chief Financial Officer

• 61 2 9089 8550

• 61 2 8020 4400

==> picture [360 x 272] intentionally omitted <==

13

Half Year Results Presentation – 6 months ending December 31, 2016

APPENDIX

STATUTORY RESULTS

	Statutory	Statutory	Statutory	Statutory
Revenue	Actual H1 FY2017	Actual H1 FY2016	Variance $M	Variance %
	207.7	184.6	23.1	12.5%
Gross Prof t	110.1	95.5	14.6	15.3%
% of Revenue	53.0%	51.7%	0.0	2.4%
EBITDA	12.8	7.6	5.2	67.6%
% of Revenue	6.2%	4.1%	0.0	48.9%
EBIT	7.0	3.4	3.5	102.5%
% of Revenue	3.4%	1.9%	0.0	80.0%
Prof t before tax	5.2	1.9	3.3	171.8%
NPAT	3.5	–0.8	4.3	546.1%
NPATA	4.4	–0.3	4.7	1567.4%

H1 FY2017 PRO FORMA ADJUSTMENTS

Restructure and Acquisitions items	Restructure and Acquisitions items
Restructure – Blue Star Connect warehouse relocation – Other expense	–0.6
Restructure – AIW redundancies and relocation costs – Other expense	–5.5
Acquisition – Franklin/AIW transaction costs – Other expense	–5.2
Interest expense – expense of previous facility set up costs	–0.3
Total	–11.6

14

Half Year Results Presentation – 6 months ending December 31, 2016

==> picture [153 x 96] intentionally omitted <==

==> picture [367 x 96] intentionally omitted <==

==> picture [238 x 96] intentionally omitted <==

==> picture [244 x 174] intentionally omitted <==

==> picture [295 x 174] intentionally omitted <==

==> picture [216 x 174] intentionally omitted <==

==> picture [165 x 140] intentionally omitted <==

==> picture [304 x 140] intentionally omitted <==

==> picture [184 x 140] intentionally omitted <==

==> picture [113 x 140] intentionally omitted <==

15

Half Year Results Presentation – 6 months ending December 31, 2016

==> picture [65 x 11] intentionally omitted <==

Kalido is IVE’s creative and digital services agency, which provides creative development, content creation, digital platforms, customer analytics and marketing automation. Kalido provides innovative solutions to its customers by bringing together strategy, data, creativity, design and technology to simplify processes, optimise brand experience and facilitate speed to market.

Market leading strategy development and execution of direct fundraising programs for the not for profi t sector. The Pareto Group has two businesses that deliver unique solutions.

Blue Star is Australia’s leading provider of integrated print, display, personalised communications, promotional products, warehousing and logistics services.

Operating across six specialist businesses, the Blue Star Division is Australia’s most diversifi ed business of its kind. Continual focus on technology, innovation and effi ciency, coupled with our highly experienced and passionate team creates a nimble and fl exible environment dedicated to delivering a responsive service to the market.

Pareto Fundraising

Pareto Fundraising is Australia and New Zealand’s largest fundraising strategy and data driven solutions company serving the not-for-profi t sector. It has market leading capability across analytics, direct mail and on line channels. It is also internationally recognised and well-respected for its Benchmarking program, which provides whole of sector analytics, strategic consultancy and industry thought leadership.

Pareto Phone

A telephone fundraising agency that helps non-profi t organisations change the world for the better. Pareto Phone uses the best and latest technology to ensure that charities maximise contact with their most valuable supporters while securely handling sensitive payment details.

IVEO is IVE’s managed solutions Division. IVEO bundles the Group’s broad range of products and services into multi-channel communication solutions for customers.

IVEO’s engagements typically involve dedicated teams being located on or near customers’ sites. Using IVE’s technology platform HIVE, these dedicated teams provide the customer with a single point of access to IVE’s product and service offering spanning creative through to distribution.

Through effi ciency, simplicity and consistent quality, IVEO improves communications speed to market whilst maintaining brand integrity, enabling our customers to maximise their competitive advantage and return on investment.

==> picture [216 x 140] intentionally omitted <==

==> picture [437 x 140] intentionally omitted <==

==> picture [105 x 140] intentionally omitted <==

16

Half Year Results Presentation – 6 months ending December 31, 2016

IMPORTANT NOTICE

No recommendation, offer, invitation or advice

This presentation contains general information about the activities of IVE Group Limited (IVE) which is current as at 31 December 2016. It is in summary form and does not purport to be complete. It presents fi nancial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standards (IFRS) as well as information provided on a non-IFRS basis. This presentation is not a recommendation or advice in relation to IVE or any product or service offered by IVE’s subsidiaries.

This presentation is not intended to be relied upon as advice to investors or potential investors, and does not contain all information relevant or necessary for an investment decision. It should be read in conjunction with IVE’s other periodic and continuous disclosure announcements fi led with the Australian Securities Exchange, and in particular the Half Year to 31 December 2015. These are also available at www.ivegroup.com.au. Investors and potential investors should make their own independent assessment of the information in this presentation and obtain their own independent advice from a qualifi ed adviser having regard to their objectives, fi nancial situation and needs before taking any action.

Disclaimer

No representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this presentation. To the maximum extent permitted by law, IVE, its subsidiaries and their respective directors, offi cers, employees and agents disclaim all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through use of or reliance on anything contained in or omitted from this presentation. No recommendation is made as to how investors should make an investment decision. Investors must rely on their own examination of IVE, including the merits and risks involved. Investors and potential investors should consult with their own professional advisors in connection with any investment decision in relation to IVE securities.

Forward looking statements

The information in this presentation is for general information only. To the extent that certain statements contained in this presentation may constitute “forward-looking statements” or statements about “future matters”, the information refl ects IVE’s intent, belief or expectations at the date of this presentation. Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, IVE disclaims any obligation or undertaking to disseminate any updates or revisions to this information over time. Any forward-looking statements, including projections, guidance on future

revenues, earnings and estimates, are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause IVE’s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

Investment risk

Any investment in IVE securities is subject to investment and other known and unknown risks, some of which are beyond the control of IVE. Any forward-looking statements, opinions and estimates in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. For example, the factors that are likely to affect the results of IVE include, but are not limited to, general economic conditions in Australia, exchange rates, competition in the markets in which IVE operates or may operate and the inherent regulatory risks in the businesses of IVE. Neither IVE, nor any other person, gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this presentation will actually occur. In addition, please note that past performance is no guarantee or indication of future performance.

Jurisdiction

This presentation does not constitute an offer to issue or sell, or solicitation of an offer to buy, any securities or other fi nancial products in any jurisdiction. The distribution of this presentation outside Australia may be restricted by law. Any recipient of this presentation outside Australia must seek advice on and observe any such restrictions. This presentation may not be reproduced or published, in whole or in part, for any purpose without the prior written permission of IVE.

This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. Any such securities have not been, and will not be, registered under the U.S. Securities Act of 1933 (Securities Act), or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold, directly or indirectly, in the United States or to, or for the account or benefi t of, persons in the United States, except in a transaction exempt from, or not subject to, registration under the Securities Act and applicable US state securities laws.

359534[_] 02/17