IVE GROUP LIMITED — Interim / Quarterly Report 2020

Feb 25, 2020

IVE Group Limited ABN 62 606 252 644 Level 3, 35 Clarence Street Sydney NSW 2000 P+61 2 9089 8550 ivegroup.com.au ASX: IGL

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APPENDIX 4D

For the Half Year Ended 31 December 2019

Company Information

Current Reporting Period: For the half year ended 31 December 2019 Previous Corresponding Period: For the half year ended 31 December 2018

This information should be read in conjunction with the 31 December 2019 Half Year Financial Report of IVE Group Limited and its controlled entities and any public announcements made in the period by IVE Group Limited in accordance with the continuous disclosure requirements of the Corporations Act 2001 and Listing Rules.

Additional Appendix 4D disclosure requirements can be found in the Directors’ Report and the consolidated financial statements for the half year ended 31 December 2019.

This report is based on the consolidated financial statements for the half year ended 31 December 2019 of IVE Group Limited and its controlled entities, which have been reviewed by KPMG. The Independent Auditor’s Review Report provided by KPMG is included in the consolidated financial statements for the half year ended 31 December 2019.

Results for announcement to the market

In accordance with the ASX Listing Rule 4.3, the board and management of IVE Group Limited has enclosed an Appendix 4D for the half year ended 31 December 2019.

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Results – Post AASB 16 31 Dec 2019 31 Dec 2018
Post AASB 16 $’000
$’000
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Results – Post AASB 16	Results – Post AASB 16	31 Dec 2019 Post AASB 16 $’000	31 Dec 2018 $’000
Revenue from continuing operations	Down 4%	360,151	375,603
Proft (loss) from ordinary activities after tax attributable to members	Down 33%	12,368	18,383
Net proft (loss) for the period attributable to members	Down 33%	12,368	18,383

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Results – Pre AASB 16 31 Dec 2019 31 Dec 2018
Pre AASB 16 $’000
$’000
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Results – Pre AASB 16	Results – Pre AASB 16	31 Dec 2019 Pre AASB 16 $’000	31 Dec 2018 $’000
Revenue from continuing operations	Down 4%	360,151	375,603
Proft (loss) from ordinary activities after tax attributable to members	Down 28%	13,322	18,383
Net proft (loss) for the period attributable to members	Down 28%	13,322	18,383

– All comparisons are on a statutory basis unless stated.

– The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of the initial application. Further details on AASB 16 can be found in Note 2 of the Interim Consolidated Financial Report.

Refer to the attached Directors’ Report and Operating and Financial Review for commentary and explanation of results.

Net Tangible Assets per Security

	31 Dec 2019	31 Dec 2018
Net Tangible Assetper security (cents) –post AASB 16	21.6	26.1
Net Tangible Assetper security (cents) –pre AASB 16	31.1	26.1

Dividend Amount per Security

	Amount per Security (cents)	Franked Amount per Security(cents)
Interim dividend for the halfyear ended 31 December 2019	8.6	8.6
Interim dividend for the halfyear ended 31 December 2018	8.6	8.6

Record date for determining entitlements to the dividend

– Interim dividend entitlement date: close of business 12 March 2020; and payment date: 22 April 2020.

Audit review

The Independent Auditor’s Review Report provided by KPMG is included in the IVE Group Limited Interim Financial Report for the half year ended 31 December 2019.

Attachments

Interim Financial Report for the half year ended 31 December 2019 for IVE Group Limited.

Authorised for release: The Board

IVE GROUP LIMITED INTERIM CONSOLIDATED FINANCIAL REPORT

31 December 2019 ABN 62 606 252 644

IVE Group Limited

Contents

Operating and fnancial review	1
Directors’ report	8
Lead auditor’s independence declaration	9
Condensed consolidated fnancial statements	10
Notes to the consolidated fnancial statements	14
Directors’ declaration	28
Independent auditor’s review report	29

1

IVE Group Limited Interim Consolidated Financial Report – 31 December 2019

1 Introduction

The Directors are pleased to present the Operating and Financial Review (OFR) for IVE Group Limited (IVE) for the half year ended 31st December 2019.

The OFR is provided to assist shareholders understanding of IVE’s business performance and factors underlying its results and financial position.

This year IGL is reporting its results in accordance with the new leasing standard AASB16 which has resulted in a change to the Company’s reported IFRS result. There is no change to the fundamental economic performance and cash generation of the business. The results presented are on a pre and post AASB16 basis.

2 Summary

IVE H1 FY2020 results reflect the impacts of reduced revenue for the period, primarily due to subdued activity from certain clients in the retail sector. The reduced volumes impacted EBITDA and NPAT, while gross profit margin remained stable and the cost base continued to be well managed.

Revenue for H1 FY2020 was $360.2M down 4.1% compared to the prior corresponding period (‘PCP’).The revenue decrease was impacted by macroeconomic conditions with retail spend in particular lower than expected.

IVE achieved pro forma[1] EBITDA of $40.1M which compares to $43.4M PCP, the reduced EBITDA over PCP was directly attributable to the reduction in revenue, with gross profit stable. Pro forma NPAT decrease of 7.3% on prior period reflecting decreased EBITDA as noted above, partly offset by the impact of a decrease in interest expense in the period.

IFRS EBITDA of $34.3M (pre AASB16) compares to PCP of $42.6M, impacted by transaction costs associated with the acquisition of Salmat Marketing Solutions as well as redundancy costs and the relocation of our Victorian logistics facility during the period. NPAT is lower by 27.5% than PCP, again reflecting the reduced revenue impacting profitability as well the impact of increase restructure and acquisition costs, offset by reduced interest expense.

3 Strategy and operating overview

Our strategy of diversification and innovation over the years has resulted in a marketing communications value proposition that is unparalleled in this country, and one that is compelling for our customers and prospective customers. The power of our vertically integrated multi-channel product and service offering and the success we’ve had in cross selling is evidenced by the material increase over the last 4 years in customers engaging IVE across multiple parts of the business.

The structure of our sector has improved significantly over the last decade, with IVE taking a leading role in driving rationalisation and consolidation. This consolidation has resulted in fewer but stronger operators like IVE across many of the sectors in which we operate.

1 Pro forma results are on a non IFRS and pre AASB16 basis that are not audited or reviewed. They exclude all restructuring and acquisition expenses (see table 1).

2

IVE Group Limited Interim Consolidated Financial Report – 31 December 2019

IVE’s evolution and growth strategy has been focused on the following key initiatives:

• A cohesive, talented and stable leadership team

• A very stable, diverse and inclusive workforce

• New customer origination driven by a highly customer centric culture

• Effective cross selling to drive growth in share of wallet with existing customers

• The execution of a disciplined acquisition program

• Expansion of the value proposition through the addition of new products and services

• Continuing to strengthen and leverage our existing operational platforms through targeted productivity investment programs

Further information on IVE’s strategy, operations and markets are set out in our 30 June 2019 Annual Report.

4 Overview of results for half year FY2020

IVE’s Financial Report for H1 FY2020 is presented in accordance with Australian Accounting Standards which comply with International Financial Reporting Standards (IFRS).

In this OFR, certain non-IFRS financial information has also been included to allow investors to understand the underlying performance of IVE. The non-IFRS financial information relates to H1 FY2020 and H1 FY2019 results presented before the impact of restructuring and acquisition costs as, and before the impacts of adoption of AASB16, which allow for a direct comparison to H1 FY2019. The Directors believe the non-IFRS pro forma results better reflect the underlying operating performance and is consistent with prior year reporting, this differs from the IFRS presentation.

The non-IFRS Pro Forma financial information has not been audited or reviewed.

Financial information in this OFR is expressed in millions and has been rounded to one decimal place. This differs from the interim Financial Report where numbers are expressed in thousands. As a result, some minor rounding discrepancies occur.

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IVE Group Limited Interim Consolidated Financial Report – 31 December 2019

4.1 Half Year ended FY2020 Non IFRS pro forma financial information

The H1 FY2020 results are presented before restructuring and acquisition costs and on a pre and post AASB16 basis. This compares to H1 FY2019 on a Pro Forma basis also excluding restructure and acquisition costs to allow investors to make a comparison on a like for like basis.

Table 1: H1 FY2020 non IFRS Pro Forma financial information, H1 FY2019 results on a Pro Forma basis, and H1 FY2020 IFRS results pre and post impacts of adoption of AASB16

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Statutory Pro Forma (ex restructure & acquistion)
Post Pre
AASB 16 Post AASB 16 Pre AASB 16
AASB 16 AASB 16
Actual H1 Impact H1 Actual H1 Actual H1 Impact H1 Actual Actual Variance Variance
FY2020 FY2020 FY2020 FY2020 FY2020 FY2020 FY2019 $’M %
Revenue 360.2 0.0 360.2 360.2 0.0 360.2 375.6 -15.5 -4.1%
Gross Profit 173.4 1.4 172.0 173.4 1.4 172.0 180.9 -8.9 -4.9%
% of Revenue 48.2% 47.8% 48.2% 47.8% 48.2% -0.9%
EBITDA 45.4 11.1 34.3 51.1 11.1 40.1 43.4 -3.4 -7.8%
% of Revenue 12.6% 9.5% 14.2% 11.1% 11.6% -3.8%
EBIT 23.4 0.5 22.9 29.2 0.5 28.7 32.1 -3.4 -10.6%
% of Revenue 6.5% 6.4% 8.1% 8.0% 8.5% -6.8%
Profit before tax 18.2 -1.4 19.5 24.0 -1.4 25.3 27.4 -2.1 -7.7%
NPAT 12.4 -1.0 13.3 16.6 -0.9 17.6 19.0 -1.4 -7.3%
NPATA 14.2 -0.9 15.2 18.5 -0.9 19.5 20.8 -1.4 -6.7%
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The key variances on a non IFRS pro forma and pre AASB16 basis between H1 FY2020 and H1 FY2019 as follows:

• Revenue

Revenue decrease of ($15.5M) or 4.1% below PCP, reflecting softness in H1 due to broader macro-economic conditions particularly relating to certain sections of the retail sector. Revenue continues to be realised through the successful execution of IVE’s growth strategy initiatives. This has led to a number of new customers partnering with the Group throughout the year, the continued success of cross selling to existing and acquired customers, and the ability to achieve several key contract renewals/extensions.

• Gross profit

Gross profit as a ‘%’ of revenue of 47.8% was similar to PCP of 48.2% with margin on the whole remaining stable. The decline of ($8.9M) on PCP directly attributable to reduced revenue rather than impacts of changes in input costs. Timing of passing on paper price increases still impacted H1, however the global paper market is less volatile with pricing more stable than FY19.

• EBITDA (Earnings before interest, tax, depreciation and amortisation)

EBITDA of $40.1M represents a decrease of ($3.4M) or (7.8%) over PCP, primarily due to revenue reduction over PCP. EBITDA margin of 11.1% compared to PCP of 11.6% and consistent with FY19 full year of 11.1%.

4

IVE Group Limited Interim Consolidated Financial Report – 31 December 2019

Production expenses is a decrease on PCP relating to the management of direct labour. Direct labour also impacted by a combination of reduced revenue and production efficiencies. Administration expenses reduction, reflecting tight management of cost base and efficiency gains which will further benefit the business moving forward.

• NPAT (Net profit after tax)

NPAT of $17.6M compares to PCP of $19.0M a decrease of ($1.4M) for the period primarily related to the reduced EBITDA. This reduction was partly offset by reduced finance costs reflecting the benefits of refinanced senior facilities in H2 of FY2019.

4.2 IFRS results per the Financial Report

Table 2 outlines the IFRS results for H1 FY2020 and H1 FY2019 on a comparable basis pre and post impacts of adoption of AASB16.

Table 2: IFRS results

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IFRS
Post AASB 16 Pre AASB 16
Actual H1 Impact H1 Actual H1 Actual Variance Variance
FY2020 FY2020 FY2020 FY2019 $’M %
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	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
	Post AASB 16		Pre AASB 16
	Actual H1 FY2020	Impact H1 FY2020	Actual H1 FY2020	Actual FY2019	Variance $’M	Variance %
Revenue	360.2	0.0	360.2	375.6	-15.5	-4.1%
Gross Proft	173.4	1.4	172.0	180.9	-8.9	-4.9%
% of Revenue	48.2%		47.8%	48.2%		-0.9%
EBITDA	45.4	11.1	34.3	42.6	-8.3	-19.4%
% of Revenue	12.6%		9.5%	11.3%		-16.0%
EBIT	23.4	0.5	22.9	31.2	-8.3	-26.6%
% of Revenue	6.5%		6.4%	8.3%		-23.5%
Proft before tax	18.2	-1.4	19.5	26.6	-7.0	-26.4%
NPAT	12.4	-1.0	13.3	18.4	-5.1	-27.5%
NPATA	14.2	-0.9	15.2	20.2	-5.1	-25.0%

Table 3: H1 FY2020 IFRS NPAT reconciliation to Pro Forma NPAT

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Post AASB 16 Pre AASB 16
IFRS to pro forma NPAT reconciliation
H1 FY20 Actual H1 FY20 Actual
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IFRS to pro forma NPAT reconciliation	Post AASB 16 H1 FY20 Actual	Pre AASB 16 H1 FY20 Actual
IFRS NPAT	12.4	13.3
Restructure costs	2.8	2.8
Acquistion costs	2.9	2.9
Tax efect of adjustments	-1.4	-1.4
Pro forma NPAT	16.6	17.6

On adoption of AASB 16, the Group’s EBITDA result has increased significantly compared to prior year. The new accounting standard requires operating leases previously expensed within EBITDA to be brought on the balance sheet as a right-of-use asset and lease liability. These balances reduce over the lease term as depreciation and interest expense.

5

IVE Group Limited Interim Consolidated Financial Report – 31 December 2019

4.3 Balance sheet and cash flow

Table 4 sets out the indebtedness of IVE on a IFRS basis as at 31st December 2019 as a comparison to 30th June 2019 on a pre AASB16 basis.

Table 4: H1 FY2020 IFRS indebtedness

Table 4: H1 FY2020 IFRS indebtedness
	Actual Dec 2020	Actual June 2019
Borrowings – short term	7.2	6.3
Borrowings – longterm	166.6	168.9
Borrowings* – Sub Total	173.8	175.2
Cash	-23.7	-31.5
Net Debt	150.1	143.7

• Loans & borrowings are gross of facility establishment costs. Excludes right of use liabilities impacts from adopting AASB 16.

Net debt increase on Y/E June 2019 from $143.7M to $150.1M primarily due to increase in working capital for the period relating to seasonality. As in prior years working capital is expected to reduce in H2 of FY2020.

H1 capital expenditure of $6.3M with full year expected to circa $10.0M as communicated in August 2019 excluding ERP/MIS enhancement.

IFRS free cash conversion to EBITDA of 67.4% impacted by increased working capital as outlined above. The cash flow also reflects higher tax expense due to increase in tax instalment rates to that of PCP.

6

IVE Group Limited Interim Consolidated Financial Report – 31 December 2019

5 FY20 outlook

Outlook

• Full year FY20 pro forma and pre AASB16 EBITDA guidance is in the range of $75-79M

• Continuing softer macro-economic conditions with soft retail environment impacting revenue

• The impacts of the COVID-19 virus on our Asian supply chain and broader customer base remain uncertain

• Gross profit margin expected to remain stable

• Key inputs cost of paper and energy have stabilised, albeit remain elevated

Strategic Focus

• Continue to unlock value from the strategic investment program over the last 3 years

• Communicate effectively under one brand our diversified powerful value proposition and reaffirm the strength of our market leading position across the sectors we operate in

• The successful integration of the recent acquisitions of Salmat Marketing Solutions and Reach Media NZ

• Finalise integration plans

• Commit to ‘industry changing’ catalogue collation investment. Estimated cost of $25-30M funded through a combination of cash reserves and existing facilities

• Medium term:

• The continued solid and stable performance of the business will generate strong free cashflow over the years ahead

• Capital expenditure (excluding FY21 catalogue collation equipment) over the next 2 years expected to reduce significantly on prior years

• No deferred consideration remains payable on prior acquisitions

• No expected change to dividend policy with resulting solid dividend profile to continue

6 Additional information

For further information contact:

Geoff Selig Darren Dunkley Executive Chairman Chief Financial Officer + 61 2 9089 8550 + 61 2 8020 4400

7

IVE Group Limited

The directors present their report together with the interim consolidated financial statements of the Group comprising of IVE Group Limited (the Company), and its subsidiaries (the Group) for the six months ended 31 December 2019 and the auditor’s review report thereon.

Directors

The names of the Company’s directors in office during the interim period and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Geoff Bruce Selig

Warwick Leslie Hay (Ceased 5 August 2019)

Gavin Terence Bell Paul Stephen Selig James Scott Charles Todd Sandra Margaret Hook Carole Louise Campbell

Operating and financial review

This is the first set of the Group’s financial statements in which AASB 16 Leases has been applied. Under the transition method chosen, comparative information has not been restated. The 31 December 2019 results are therefore not directly comparable to prior years. Changes to significant accounting policies and the impact of applying the new standards are described in Note 2.

The profit after tax of the Group for the six months ended 31 December 2019 was $12,368 thousand (for six months ended 31 December 2018 was $18,383 thousand). A review of operations and results of the Group for the six months ended 31 December 2019 are set out in the Operating and Financial Review, which forms part of the interim consolidated financial report.

Dividends

The directors have declared an interim dividend of 8.6 Australian cents per share, fully franked, to be paid on 22 April 2020 to shareholders on the register at 12 March 2020. The interim dividend declared by the Company to members for the six months ended 31 December 2019 was $12,745 thousand (for the six months ended 31 December 2018: $12,743 thousand).

Rounding off

The Group is of a kind referred to in ASIC Corporations Instrument 2016/191 dated 24 March 2016 and in accordance with that legislative instrument, amounts in the interim consolidated financial statements and directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Lead auditor’s independence declaration

The Lead auditor’s independence declaration is set out on page 9 and forms part of the directors’ report for the six months ended 31 December 2019.

This report is made in accordance with a resolution of the directors:

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Geoff Selig Director

Dated at Sydney this 26th day of February 2020

8

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Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To the Directors of IVE Group Limited

I declare that, to the best of my knowledge and belief, in relation to the review of IVE Group Limited for the half-year ended 31 December 2019 there have been:

• i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• ii. no contraventions of any applicable code of professional conduct in relation to the review.

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KPMG

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John Wigglesworth Partner

Sydney

26 February 2020

9

9

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

IVE Group Limited

Condensed consolidated statement of profit or loss and other comprehensive income

For the six months ended 31 December 2019

In thousands of AUD Note Revenue 4 Cost of sales Gross proft Other income Production expenses Administrative expenses Other expenses Results from operating activities 5, 6 Finance income Finance costs Net fnance costs 7 Proft before tax Income tax expense 8 Proft/(loss) for the year Other comprehensive income Cash flow hedges – efective portion of changes in fair value Cash flow hedges – reclassifed to proft or loss Total comprehensive income for the period Proft/(loss) attributable to: Owners of the Company Proft/(loss) for the period Total comprehensive income attributable to: Owners of the Company Total comprehensive income for the period Earnings per share Basic earnings per share (cents per share) Diluted earnings per share (cents per share)	31 December 2019 31 December 2018* 360,151 375,603 (186,730) (194,658)
	173,421 180,945 35 19 (90,803) (90,232) (53,900) (58,503) (5,378) (941)
	23,375 31,288
	79 102 (5,268) (4,820)
	(5,189) (4,718)
	18,186 26,570 (5,818) (8,187)
	12,368 18,383
	(486) (518) 284 298
	12,166 18,163
	12,368 18,383
	12,368 18,383
	12,166 18,163
	12,166 18,163
	8.3 12.4 8.3 12.4

• The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of the initial application. See Note 2.

The notes on pages 14 to 27 are an integral part of these interim consolidated financial statements.

10

IVE Group Limited Condensed consolidated statement of financial position

As at 31 December 2019

In thousands of AUD Note Assets Cash and cash equivalents 9 Trade and other receivables 10 Contract assets Inventories 11 Prepayments Other current assets Total current assets Deferred tax assets Property, plant and equipment 12 Right of use assets 12 Intangible assets and goodwill 13 Total non-current assets Total assets Liabilities Trade and other payables 14 Lease liabilities Loan and borrowings 15 Employee benefts 16 Current tax payable Contract liabilities Provisions 17 Total current liabilities Loan and borrowings 15 Lease liabilities* Employee benefts 16 Provisions 17 Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves 18 Retained earnings Total equity	31 December 2019 30 June 2019* 23,698 31,501 114,240 113,586 199 47 60,997 66,016 3,265 3,076 3,588 3,901
	205,987 218,127
	14,330 13,536 114,663 135,278 111,203 - 161,461 163,612
	401,657 312,426
	607,644 530,553
	84,797 100,957 30,156 - 3,003 6,192 17,949 18,882 678 2,864 4,671 6,734 - 2,006
	141,254 137,635
	153,207 167,349 110,349 - 6,244 6,182 3,174 13,580
	272,974 187,111
	414,228 324,746
	193,416 205,807
	156,502 156,468 (729) (493) 37,643 49,832
	193,416 205,807

• The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of the initial application. See Note 2.

The notes on pages 14 to 27 are an integral part of these interim consolidated financial statements.

11

IVE Group Limited

Condensed consolidated statement of changes in equity

For the six months ended 31 December 2019

In thousands of AUD Note Balance at 1 July 2018 Initial application of AASB 9 Adjusted balance 1 July 2018 Total comprehensive income for the period Proft for the period Other comprehensive income Total comprehensive income for the period Transactions with owners of the Company Issue of share capital 18 Dividends to owners of the Company 18 Performance share rights 19 Total transactions with owners of the Company Balance at 31 December 2018 Balance at 1 July 2019 Initial application of AASB 16* 2 Adjusted balance 1 July 2019 Total comprehensive income for the period Proft for the period Other comprehensive income Total comprehensive income for the period Transactions with owners of the Company Issue of share capital 18 Dividends to owners of the Company 18 Performance share rights 19 Total transactions with owners of the Company Balance at 31 December 2019	Share capital Share based payment reserve Hedging reserve Retained earnings Total equity 156,318 173 (148) 42,998 199,341 - - - (619) (619) 156,318 173 (148) 42,379 198,722 - - - 18,383 18,383 - - (220) - (220)
	- - (220) 18,383 18,163
	- - - - - - - - (11,108) (11,108) 150 84 - - 234
	150 84 - (11,108) (10,874)
	156,468 257 (368) 49,654 206,011
	156,468 119 (612) 49,832 205,807 - - - (13,145) (13,145)
	156,468 119 (612) 36,687 192,662 - - - 12,368 12,368 - - (202) - (202)
	- - (202) 12,368 12,166
	- - - - - - - - (11,412) (11,412) 34 (34) - - -
	34 (34) - (11,412) (11,412)
	156,502 85 (814) 37,643 193,416

• The Group has initially applied AASB 9 as at 1 July 2018.

** The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of the initial application. See note 2.

The notes on pages 14 to 27 are an integral part of these consolidated financial statements.

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IVE Group Limited

Condensed consolidated statement of cash flows

For the six months ended 31 December 2019

In thousands of AUD Note Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operating activities Interest received Interest paid Income tax paid Payment of costs in relation to acquisitions Restructure and make good Net cash from operating activities Cash flows from investing activities Proceeds from sale of property, plant and equipment Acquisition of property, plant and equipment and intangible assets Deferred and contingent consideration paid on acquired business Net cash used in investing activities Cash flows from fnancing activities Proceeds from bank loans Repayment of bank loans Dividends paid Payment of lease liabilities (2018: Payment of fnance lease liabilities) Net cash from fnancing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 July Cash and cash equivalents at 31 December 9	31 December 2019 31 December 2018* 395,440 403,797 (354,033) (368,426)
	41,407 35,371 38 102 (4,955) (3,957) (7,437) (3,693) (388) (88) (3,100) (953)
	25,565 26,782
	449 25 (6,670) (16,624) - (6,000)
	(6,221) (22,599)
	- 19,934 - (5,000) (11,412) (11,108) (15,735) (3,182)
	(27,147) 644
	(7,803) 4,827 31,501 22,325
	23,698 27,152

• The Group has initially applied AASB 16 at 1 July 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying AASB 16 is recognised in retained earnings at the date of the initial application. See Note 2. ** The Group has classified:

• cash payments for the principal portion of lease payments as financing activities.

• cash payments for the interest portion as operating activities consistent with the presentation of interest payments of bank loans.

• short-term lease payments, payments for leases of low value assets and variable lease payments not included in the measurement of the lease liability within operating activities.

The notes on pages 14 to 27 are an integral part of these consolidated financial statements.

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IVE Group Limited

Notes to the interim condensed consolidated financial statements

For the six months ended 31 December 2019

1 Reporting entity

IVE Group Limited (the ultimate parent entity or the Company) is a company domiciled in Australia. Its registered address is Level 3, 35 Clarence Street, Sydney NSW 2000.

These interim consolidated financial statements, as at and for the six months ended 31 December 2019 comprises the Company and its subsidiaries (IVE or Group).

The Group is a for-profit entity. The Group is primary involved in:

• Conceptual and creative design across print, mobile and interactive media;

• Printing of magazines, catalogues, marketing and corporate communications materials and stationery;

• Manufacturing of point of sale display material and large format banners for retail applications;

• Personalised communications including marketing mail, publication mail, eCommunications, multichannel solutions and call centre services;

• Data analytics, customer experience strategy, and CRM; and

• Outsourced communications solutions for large organisations including development of customised multi-channel management models covering creative and digital services, supply chain optimisation, inventory management, warehousing and logistics.

The Group services all major industry sectors in Australia including financial services, publishing, retail, communications, property, clubs and associations, not-for-profit, utilities, manufacturing, education and government.

2 Basis of preparation

This interim consolidated financial report has been prepared in accordance with AASB 134 Interim Financial Reporting, the Corporations Act 2001 and IAS 34 Interim Financial Reporting. It does not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual consolidated financial statements as at and for the year ended 30 June 2019.

The interim consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.

The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 dated 24 March 2016 and in accordance with that legislative instrument, all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated.

Significant accounting policies

The accounting policies applied in these interim consolidated financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended 30 June 2019, except for the adoption of new accounting standards noted over the page.

The interim consolidated financial statements were authorised for issue by the Board of Directors on 26th February 2020.

14

IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

2 Basis of preparation (continued)

Changes in Accounting Policies

Adoption of new accounting standards

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended 30 June 2019.

The changes in accounting policies are also expected to be reflected in the Group’s consolidated financial statements as at and for the year ending 30 June 2020.

The Group has initially adopted AASB 16 Leases from 1 July 2019. A number of other standards are effective from 1 July 2019 but they do not have a material effect on the Group’s financial statements.

AASB 16 introduced a single, on-balance sheet accounting model for lessees. As a result, the Group, as a lessee, has recognised right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligations to make lease payments. Lessor accounting remains similar to previous accounting policies.

The Group has applied AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 has not been restated – i.e. it is presented, as previously reported, under AASB 117 and related interpretations. The details of the changes in accounting policies are disclosed below.

a. Definition of a lease

Previously, the Group determined at contract inception whether an arrangement was or contained a lease under Interpretation 4 Determining Whether an Arrangement contains a Lease. The Group now assesses whether a contract is or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

On transition to AASB 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied AASB 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under AASB 117 and Interpretation 4 were not reassessed. Therefore, the definition of a lease under AASB 16 has been applied only to contracts entered into or changed on or after 1 July 2019.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative standalone prices.

b. As a lessee

The Group leases many assets, including properties, production equipment and IT equipment. As a lessee, the Group previously classified operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, the Group recognises right-of-use assets and lease liabilities for most leases – i.e. these leases are on-balance sheet.

However, the Group has elected not to recognise right-of use-assets and lease liabilities for some short-term leases and low value assets (e.g. IT equipment). The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

The Group presents right-of-use assets that do not meet the definition of investment property in the statement of financial position. Right-of-use assets that meet the definition of investment property are presented within lease receivable. The carrying amounts of right-of-use assets are as below.

15

IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

• 2 Basis of preparation (continued)

Basis of preparation (continued)
In thousands of AUD Balance as at 1 July 2019 Balance as at 31 December 2019	Property, plant and equipment Property Production equipment* Total
	93,725 26,215 119,940 85,406 25,797 111,203

• Includes amounts in plant and equipment re-classed to right-of-use assets as at 1 July 2019.

The Group presents lease liabilities in the statement of financial position.

i. Significant accounting policies

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability. When a right-of-use asset meets the definition of investment property, it is presented in investment property. The right-of-use asset is initially measured at cost, and subsequently measured at fair value, in accordance with the Group’s accounting policies.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payment made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.

ii. Transition

Previously, the Group classified property leases as operating leases under AASB 117. These include warehouse and factory facilities. The leases typically run for a period up to 10 years. Some leases include an option to renew the lease after the end of the non-cancellable period. Some leases provide for additional rent payments that are based on changes in local price indices.

At transition, for leases classified as operating leases under AASB 117, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at 1 July 2019. Right-of-use assets are measured at either:

• their carrying amount as if AASB 16 had been applied since the commencement date, discounted using the lessee’s incremental borrowing rate at the date of initial application – the Group applied this approach to its property leases; or

• an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied this approach to all other leases.

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IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

2 Basis of preparation (continued)

The Group used the following exemptions and practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117.

• Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months lease term, or low value.

• Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

The Group leases a number of items of production equipment. These leases were classified as finance leases under AASB 117. For these finance leases, the carrying amount of the right-of-use asset and the lease liability at 1 July 2019 were determined at the carrying amount of the lease asset and lease liability under AASB 117 immediately before that date.

c. As a lessor

The accounting policies applicable to the Group as a lessor are not different from those under AASB 117. However, when the Group is an intermediate lessor the sub-leases are classified with reference to the rightof-use asset arising from the head lease, not with reference to the underlying asset.

The Group is not required to make any adjustments on transition to AASB 16 for leases in which it acts as a lessor. However, the Group has applied AASB 15 Revenue from Contracts with Customers to allocate consideration in the contracts to each lease and non-lease component.

The Group sub-leases some of its properties. Under AASB 117, the head lease and sub-lease contracts were classified as operating leases. On transition to AASB 16, some of these leases have been classified as a finance lease, and the investment in the sub-lease recognised from the head leases are presented as lease receivables.

d. Impacts on financial statements

i. Impacts on transition

On transition to AASB 16, the Group recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below.

In thousands of AUD	1 July2019
Right-of-use assets presented in lease receivable	701
Property, plant and equipment	(18,560)
Right-of-use assets	119,940
Deferred tax liability (net)	1,275
Trade and other payables	5,596
Lease liabilities	(150,112)
Finance lease liabilities	15,733
Provisions	12,282
Retained earnings	13,145

When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at 1 July 2019 of between 2.21% and 3.42% depending on the lease term.

17

IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

• 2 Basis of preparation (continued)

Basis of preparation (continued)
In thousands of AUD	1 July2019
Operating lease commitment at 30 June 2019 as disclosed in the Group’s consolidated fnancial statements	125,348
Discounted using the incremental borrowing rate at 1 July 2019	(15,521)
Finance lease liabilities recognised as at 30 June 2019	15,733
• Recognition of exemption for leases of low-value assets	(1,237)
• Recognition of exemption for leases with less than 12 months of lease term at transition	(419)
• Extension options reasonably certain to be exercised	24,725
New leases recognised and other adjustments	1,483
Lease liabilities recognised at 1 July 2019	150,112

ii. Impacts for the period

In relation to those leases under AASB 16, the Group has recognised depreciation and interest costs, instead of an operating lease expense. During the six months ended 31 December 2019, the Group recognised $12,620 thousand of depreciation charges and $2,803 thousand of interest costs from these leases. No depreciation is recognised for right of use asset that meets the definition of lease receivable.

3 Use of estimates and judgements

In preparing these interim consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2019, except for the adoption of new accounting standards (refer note 2).

Measurement of fair values

When measuring the fair value of an asset or a liability, the group uses market observable data where possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Further information about the assumptions made in measuring fair values is included in Note 22 Financial instruments.

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IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

4 Revenue

The Group’s operations and main revenue streams are those described in the last annual financial statements. The tables below provide information on the Group’s revenue and contract balances derived from contracts with customers.

a) Disaggregation of revenue

• 5

a) Disaggregation of revenue
In thousands of AUD Products transferred at a point in time Products and services transferred over time b) Contract balances In thousands of AUD Receivables, which are included in ‘Trade and other receivables’ Contract assets Contract liabilities Personnel expenses In thousands of AUD Wages and salaries Contributions to defned contribution plans Share-based payment expense	31 December 2019 31 December 2018 325,418 342,385 34,733 33,218
	360,151 375,603
	31 December 2019 30 June 2019 112,647 113,306 199 47 4,671 6,734
	31 December 2019 31 December 2018 89,567 93,393 6,483 6,513 91 234
	96,141 100,140

b) Contract balances

Personnel expenses

6 Expenses

Included in the interim condensed consolidated statement of profit or loss and other comprehensive income:

In thousands of AUD	31 December 2019	31 December 2018
Depreciation and amortisation	21,956	11,335
Restructuring costs	2,844	779
Acquisition expenses	2,924	88

19

IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

7	Finance income and fnance costs
	In thousands of AUD	31 December 2019	31 December 2018
	Interest income	50	102
	Net foreign exchange gains	29	-
	Finance income	79	102
	Interest expense	(5,268)	(4,763)
	Net foreign exchange losses	-	(57)
	Finance costs	(5,268)	(4,820)
	Net fnance costs	(5,189)	(4,718)
8	Tax expense
	In thousands of AUD	31 December 2019	31 December 2018
	Current tax expense
	Current year	4,716	5,664
	Changes in estimates related to prior years Deferred tax beneft	255	-
	Origination and reversal of temporary diferences	847	2,523
	Total tax expense	5,818	8,187
	Numerical reconciliation between tax expense and pre-tax accounting proft
	In thousands of AUD	31 December 2019	31 December 2018
	Proft before tax	18,186	26,570
	Tax using the Company’s domestic tax rate of 30%	5,456	7,971
	Non-deductible expenses	107	217
	Changes in estimates related to prior years	255	(1)
		5,818	8,187
9	Cash and cash equivalents
	In thousands of AUD	31 December 2019	30 June 2019
	Bank balances	23,688	31,491
	Petty cash	10	10
	Cash and cash equivalents	23,698	31,501

20

IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

10 Trade and other receivables

Trade and other receivables
In thousands of AUD Current Trade receivables Allowance for doubtful debts Lease receivable Other receivables	31 December 2019 30 June 2019 112,647 113,306 (1,760) (1,814)
	110,887 111,492 518 - 2,835 2,094
	114,240 113,586

Allowance for doubtful debts Lease receivable Other receivables	(1,760) (1,814) 110,887 111,492 518 - 2,835 2,094 114,240 113,586
11 Inventories In thousands of AUD Finished goods Work in progress Raw materials Allowance for inventory obsolescence	31 December 2019 30 June 2019 3,303 3,404 12,451 9,677 46,011 53,723 (768) (788)
	60,997 66,016

12 Property, plant and equipment, and Right-of-use assets

Acquisitions

During the six months ended 31 December 2019 the Group acquired property, plant and equipment with a cost of $8,615 thousand (six months ended 31 December 2018: $22,593 thousand).

During the six months ended 31 December 2019, the Group entered into new lease agreements for the use of production equipment’s for up to 5 years. The Group makes fixed payments and additional variable payments depending on the usage of the asset during the contract period. On lease commencement, the Group recognised $1,429 thousand of right of use asset and lease liability.

21

IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

13 Intangible assets and goodwill

Intangible assets and goodwill
In thousands of AUD Note Cost Balance at 1 July 2018 (restated) Other additions Balance at 31 December 2018 Balance at 1 July 2019 Other additions Balance at 31 December 2019 Amortisation and impairment losses Balance at 1 July 2018 Amortisation for the period Balance at 31 December 2018 Balance at 1 July 2019 Amortisation for the period Balance at 31 December 2019 Carrying amounts At 31 December 2018 (restated) At 31 December 2019	Goodwill Computer software Customer relationships Total 143,617 11,113 28,616 183,346 - 62 - 62
	143,617 11,175 28,616 183,408
	143,617 11,862 28,616 184,095 - 760 - 760
	143,617 12,622 28,616 184,855
	- 6,195 8,410 14,605 1,090 1,861 2,951
	- 7,285 10,271 17,556
	- 8,355 12,128 20,483 - 1,053 1,858 2,911
	- 9,408 13,986 23,394
	143,617 3,890 18,345 165,852
	143,617 3,214 14,630 161,461

• Refer to note 33 of the 2019 Annual Financial Report on restatement.

For the six months ending 31 December 2019, the Group performed an impairment test for all cash generating units. The estimated recoverable amount for the ‘Franklin Web’ CGU exceeded its carrying amount by approximately $6.4 million. Franklin WEB operates in a competitive environment and is subject to cost of goods sold fluctuations. Certain positive forecast EBITDA assumptions have been made relating to these impacts. Management has identified that a reasonably possible change in these assumptions could cause the carrying amount to exceed the recoverable amount. A decrease of forecast EBITDA over the 5 year projection period of 3% would reduce the recoverable amount to be equal to the carrying amount.

There are no other reasonable possible changes in assumptions that would give rise to impairment.

14 Trade and other payables

Trade and other payables
In thousands of AUD Current Trade payables Accrued expenses Forward exchange contracts used for hedging Interest rate swaps	31 December 2019 30 June 2019 63,645 72,010 20,456 28,772 696 - - 175
	84,797 100,957

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IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

15 Loans and borrowings

15 Loans and borrowings
In thousands of AUD Current Finance lease liabilities Equipment fnance – secured Non-current Bank loan Finance lease liabilities Equipment fnance – secured 16 Employee benefts In thousands of AUD Current Liability for long service leave Liability for annual leave Non-current Liability for long service leave 17 Provisions In thousands of AUD Balance at 1 July 2018 Initial application of AASB 16* Adjusted balance 1 July 2019 Provisions made during the year Provisions reversed and utilised during the year Balance at 31 December 2019 Current Non-current		31 December 2019 30 June 2019 - 3,147 3,003 3,045
		3,003 6,192
		141,170 141,042 - 12,586 12,037 13,721
		153,207 167,349
		31 December 2019 30 June 2019 8,448 8,463 9,501 10,419
		17,949 18,882
		6,244 6,182
		6,244 6,182
		Restructuring Make good Acquired lease liability Total 628 3,304 11,654 15,586 (628) - (11,654) (12,282) - 3,304 - 3,304 - - - - - (130) - (130)
		- 3,174 - 3,174
		- - - - - 3,174 - 3,174
		- 3,174 - 3,174

*Refer to note 2.

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IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

18 Capital and reserves

Issued and paid up capital

Issued and	aid up capital	31 December 2019		30 June 2019
148,207,285 (June 2019: 148,179,157) ordinary shares fully paid		156,502		156,468
Movement in ordinary share capital
Date	Details	Number of	Issue	Total $’000
		shares	Price
1 Jul 18	Opening balance	148,103,655		156,318
4 Oct 18	Issue of shares under the Equity Incentive Plan	75,502	$1.98	150
31 Dec 18	Closing balance	148,179,157		156,468
1 Jul 18	Opening balance	148,179,157		156,468
4 Sep 19	Issue of shares under the Equity Incentive Plan	28,128	$1.21	34
31 Dec 19		148,207,285		156,502

Dividends

The following dividends were declared by the Group:

For the six months ended 31 December 2018

In thousands of AUD

In thousands of AUD	31 December 2019	31 December 2018
8.6 cents per share (31 December 2018: 8.6 cents per share)	12,745	12,743

On 26 February 2020, the directors have declared a fully franked interim dividend of 8.6 cents per share to be paid on 22 April 2020 to shareholders on the register at 12 March 2020. The interim dividend payout is $12,745 thousand (for the six months ended 31 December 2018: $12,743 thousand). A liability has not been recognised as the interim dividend was declared after the reporting date.

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IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

19 Share-based payments reserve

During the six months ended 31 December 2019, the company granted Performance Share Rights (Rights) under the Equity Incentive Plan (EIP). The Rights are an entitlement to receive fully paid ordinary IVE Group Limited Shares on a one-for-one basis. Further details on the Rights are described below.

	Type of arrangement	Senior LeadershipTeam Award
	Date ofgrant	26 November 2019*
	Numbergranted	880,000
	Contractual life	3years and 2 months
	Vesting conditions	The Rights are subject to the following Performance Conditions: sixty percent of the Rights are referenced against achieving Earnings Per Share Target (EPS), and forty percent are referenced against achieving Relative Shareholder Return (TSR) target. The performance period is 1 July 2019 to 30 June 2022 inclusive. The vesting date is expected to be on or soon after the approval of IVE’s 2022 Annual Financial Report.
	Weighted average fair value	$1.36
	Valuation methodology	The EPS target was calculated using a risk-neutral assumption, whereas the TSR target has been valued usinga Monte Carlo simulation approach.
	Expected dividend	Holders of performance share rights are not entitled to receive dividendsprior to vesting.
	Other key valuation assumptions
	Share price at valuation date	$2.05
	Expected volatility	19.1%
	Risk free interest rate	0.98%
	Dividendyield	8.64%

*Share rights issued to Directors required shareholder approval. This occurred at the Group’s 2019 Annual General Meeting. Total expense relating to Share-based Payments has been disclosed in Note 5 of this interim consolidated financial statements.

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IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

20 Acquisitions

There have been no acquisitions during the six months ended 31 December 2019.

21 Operating segments

The Group has identified one operating segment (whole of business) based on the internal reports that are reviewed and used by the Board (Chief Operating Decision Maker or “CODM”) in assessing performance and in determining the allocation of resources. The Board reviews the internal reports on a monthly basis.

The key measure of performance used by the CODM to assess performance is earnings before interest, tax, depreciation and amortisation (EBITDA).

A reconciliation of the reportable segment’s EBITDA to profit before income tax expense is shown below. Profit and loss, total assets and liabilities for the reportable segment is consistent with the primary statements included in this consolidated interim financial report.

In thousands of AUD EBITDA Depreciation and amortisation Net fnance costs Proft before income tax	31 December 2019 Post AASB 16 31 December 2019 Pre AASB 16 31 December 2018 45,331 34,265 42,623 (21,956) (11,372) (11,335) (5,189) (3,344) (4,718)
	18,186 19,549 26,570

*The Group has applied AASB 16 at 1 July 2019. Refer to note 2.

22 Financial instruments

Measurement of fair values

The table below gives information on the valuation technique and unobservable inputs of financial assets or liabilities categorised as a Level 2 or Level 3 in the fair value hierarchy.

Type	Valuation technique	Signifcant	Relationship between the fair value
		unobservable	and unobservable inputs
		inputs
Interest rate	The fair value is calculated	Not applicable	Not applicable
swaps	using the present value of the
	estimated future cash flow
	based on observable yield
	curves.
Forward	The fair value is determined	Not applicable	Not applicable
exchange	using quoted forward
contracts	exchange rates and
	present value of estimated
	future cash flow based on
	observable yield curves.

Fair values versus carrying amounts

As at 31 December 2019, the carrying value of other financial assets and liabilities as at the end of the financial year are considered to approximate their fair value.

26

IVE Group Limited

Notes to the interim condensed consolidated financial statements (continued)

For the six months ended 31 December 2019

23 Group entities

	Ownership	interest %
Ultimate parent entity	31 December 2019	31 December	2018
IVE Group Limited
Controlled entities
Caxton Print Group Holdings Pty Limited	100		100
Caxton Print Group Pty Limited	100		100
IVE Group Australia Pty Limited	100		100
IVE Group Victoria Pty Limited	100		100
Task 2 Pty Ltd	100		100
Pareto Fundraising Pty Ltd	100		100
Pareto Phone Pty Ltd	100		100
James Bennett & Associates Pty Limited	100		100
IVE Employment (Australia) Pty Ltd	100		100
IVE Employment (Victoria) Pty Ltd	100		100
Taverners No. 13 Pty Ltd	100		100
AIW Printing (Aust) Pty Ltd	100		100
AIW Printing Unit Trust	100		100
IVE Group Asia Limited	100		100
Guangzhou IVE Trading Company Limited	100		100
IVE Singapore Pte Limited	100		100
SEMA Holdings Pty Ltd	100		100
SEMA Infrastructure Pty Ltd	100		100
SEMA Operations Pty Ltd	100		100
John W Gage & Co Pty Ltd	100		100

24 Events after the reporting period

Other than the acquisition noted below, there has not arisen in the interval between the end of the financial period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect significantly the operations or state of affairs of the Group in the future.

On 1 January 2020, the Group acquired Salmat Marketing Solutions, the Australian catalogue distribution business of Salmat Limited, for a consideration of $25.4 million. The transaction includes the acquisition of Reach Media NZ Limited, Salmat’s catalogue distribution business in New Zealand.

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IVE Group Limited

Directors’ declaration

• 1 In the opinion of the directors of IVE Group Limited (the Company):

• (a) the condensed consolidated financial statements and notes, set out on pages 10 to 27, are in accordance with the Corporations Act 2001, including:

  • (i) giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its performance for the six months ended on that date; and

  • (ii) complying with Australian Accounting Standards AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors.

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Geoff Selig Director

Dated at Sydney this 26th day of February 2020

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Independent Auditor’s Review Report

To the shareholders of IVE Group Limited

Report on the Interim Financial Report

Conclusion

We have reviewed the accompanying Interim Financial Report of IVE Group Limited.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Interim Financial Report of IVE Group Limited is not in accordance with the Corporations Act 2001, including:

• giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its performance for the Interim Period ended on that date; and

• complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

The Interim Financial Report comprises:

• Consolidated statement of financial position as at 31 December 2019.

• Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity and Consolidated statement of cash flows for the Interim Period ended on that date.

• Notes 1 to 24 comprising a summary of significant accounting policies and other explanatory information.

• The Directors’ Declaration.

The Group comprises IVE Group Limited (the Company) and the entities it controlled at the Interim Period’s end or from time to time during the Interim Period.

The Interim Period is the 6 months ended on 31 December 2019.

Responsibilities of the Directors for the Interim Financial Report

The Directors of the Company are responsible for:

• the preparation of the Interim Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001

• such internal control as the Directors determine is necessary to enable the preparation of the Interim Financial Report that is free from material misstatement, whether due to fraud or error.

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KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

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Auditor’s responsibility for the review of the Interim Financial Report

Our responsibility is to express a conclusion on the Interim Financial Report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the Interim Financial Report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s financial position as at 31 December 2019 and its performance for the interim period ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As auditor of IVE Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an Interim Period Financial Report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

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KPMG

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John Wigglesworth Partner

Sydney

26 February 2020

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