IVE GROUP LIMITED — Interim / Quarterly Report 2022

Feb 23, 2022

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IVE Group Limited FY22 H1 Results Presentation

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ASX : IGL 24 February 2022

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Contents

Contents
Financial performance dashboard	3
Financials	4
Profit & Loss	5
Net debt	7
Capital expenditure	7
Cash flow and interim dividend	8
Business updates	9
Active Display Group (ADG) and
AFI Branding Solutions acquisitions
and integration	10
Supply chain	11
Lasoo	12
Track record of strategy execution,
capital management and future
growth initiatives	13
Outlook and guidance	16
Appendices	18

2 IVE Group Limited FY22 H1 Results Presentation

Financial performance dashboard

Significant uplift in EPS over prior corresponding period (PCP) as a result of solid revenue growth, stable margins, and leverage of recalibrated cost base

GROSS PROFIT REVENUE EBITDA NPAT MARGIN $382.6m $55.2m $20.9m 47.5% ↑12.2% on PCP ↑24.7% on PCP ↑99% on PCP 47.3% PCP NET DEBT EARNINGS OPERATING CASH INTERIM DIVIDEND PER SHARE CONVERSION TO $78.7m EBITDA OF 14.6c 8.5c CASH ON HAND PER SHARE FULLY 78% FRANKED $51.6m ↑104% on PCP

— The underlying financial results are on a non IFRS basis and are not audited or reviewed

— The underlying results are on a continuing operations basis and exclude non-operating items (refer Appendix A) — The comparison of underlying results to PCP excludes net JobKeeper receipts (H1 FY2021)

3 IVE Group Limited FY22 H1 Results Presentation

Financials

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4

IVE Group Limited FY22 H1 Results Presentation

Profit & Loss

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Actual H1 Actual H1
Variance Variance
FY2022 FY2021
$m %
$m $m
Revenue 382.6 340.8 41.7 12.2%
Gross Profit 181.7 161.3 20.3 12.6%
% of Revenue 47.5% 47.3% 0.3%
EBITDA 55.2 44.3 10.9 24.7%
% of Revenue 14.4% 13.0% 1.4%
EBIT 33.8 20.1 13.7 68.5%
NPAT 20.9 10.5 10.4 98.9%
EPS (CPS) 14.6 7.2 104.0%
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• The underlying financial results are on a non IFRS basis and are not audited or reviewed

• The underlying results are on a continuing operations basis and exclude non-operating items (refer Appendix A)

• T he comparison of underlying results to PCP excludes net JobKeeper receipts (H1 FY2021)

Revenue

Revenue uplift over PCP of $41.7m ($382.6m H1 FY22 to PCP of $340.8m)

Existing clients

• Revenue increases over PCP across all parts of the business and across most sectors

• Top 20 clients circa 12% up over PCP

• Travel & tourism, and merchandise for events remained at similar levels to PCP, however currently rebounding as expected

• We have been the beneficiary of clients moving revenue onshore from Asia due to supply chain issues, particularly in retail display. We expect this to continue in the medium term

• A number of retail catalogues clients reduced volumes to some extent due to lack of predictability across their product supply chain.

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• We have also seen a number of existing retail clients return to the catalogue and letterbox distribution channel

• No material client losses through the period with client retention remaining consistently high

• Continued revenue growth as a result of effectively cross selling broader offer to existing clients

New business

• Continued to focus on growing market share through harnessing the power and uniqueness of IVE’s go-to-market proposition

• New business momentum across all parts of the business remains strong with a number of new clients on-boarded during the period

• Letterbox distribution revenue up 17% over PCP, predominantly as result of significant new business wins (Aldi, Officeworks and Bunnings) and the closure of competitor walker network in Australia

• 2 high profile clients (each circa $10m annual revenue) recently secured and awaiting contract execution

ADG and AFI (businesses acquired 1 November 2021) revenue for the period was $8.2m

5 IVE Group Limited FY22 H1 Results Presentation

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Gross profit

• Gross profit margin of 47.5% to PCP of 47.3%

• strong revenue uplift over PCP

• stable market conditions excluding current supply chain challenges

• tight management of COGS

NPAT and earnings per share (EPS)

• NPAT of $20.9m to PCP of $10.5m

• EPS of 14.6 cents per share to PCP of 7.2 cents per share

• EPS growth driven by revenue uplift, stable margins, lower finance costs, and the benefit of recalibrating the cost base further over the last 12-18 months as previously outlined

• Depreciation and amortisation of $21.4m to PCP of $24.2m (H1 FY22 pre AASB16 depreciation of $8.7m)

• Net finance costs of $3.7m to PCP of $5m (H1 FY22 pre AASB16 net finance cost of $2.0m to PCP $3.3m)

• $3.4m of non-operating items excluded from underlying earnings, predominantly redundancies and business relocations of $1.0m, employee share issue of $1.2M, and software as a service costs for MIS system not yet implemented of $0.9m.

6 IVE Group Limited FY22 H1 Results Presentation

Net debt

Capital expenditure

Continued balance sheet strength as a result of strong cash generation maintains low gearing, further enhancing our flexibility and capacity to pursue a range of earnings accretive initiatives

Our operational asset base is in excellent condition which continues to result in lower capital expenditure than recent years of investment on the back of meaningful acquisitions and growth initiatives

	Actual H1 FY2022 $m	Actual FY2021 $m
Loans & borrowings* – sub total	130.3	183.8
Less Cash	51.6	106.5
Net Debt	78.7	77.3

* Loans & borrowings are gross of facility establishment costs

• Excludes right of use liabilities impacts from adopting AASB16

• Net debt of $78.7m to PCP of $90.1m ($77.3m at 30 June 2021)

• cash at bank $51.6m at 31st December 2021 with working capital facility of $30.0m remaining fully undrawn

• $50.0m of senior debt facility was repaid in August 2021

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H1
FY2022
$m
Group wide targeted investment and maintenance 3.5
Lasoo investment 2.7
Total 6.2
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• H1 capital expenditure of $3.5m (excluding Lasoo investment)

• Full year capital expenditure expected to be circa $13m (excluding $3.5m to re-platform and transition the Lasoo business as previously communicated)

• $10m Group wide targeted investment and maintenance as communicated at the time of FY21 full year results in August 2021

• $3m growth/acquisition to support the integration of ADG and AFI into our retail display operations in Victoria

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7 IVE Group Limited FY22 H1 Results Presentation

Cash flow and interim dividend

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Underlying IFRS
H1 FY2022 H1 FY2022
$m $m
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	Underlying H1 FY2022 $m	IFRS H1 FY2022 $m
EBITDA	55.2	52.1
Movement in NWC/non cash items in EBITDA	(12.1)	(10.5)
Operating Cash Flow	43.1	41.6
Operatingcash conversion to EBITDA	78%	80%

• The underlying financial results are on a non IFRS basis and are not audited or reviewed

• The underlying results are on a continued operations basis and excluded nonoperating items (refer Appendix A)

Operating cash flow conversion of 78% to EBITDA on underlying basis reflecting

• Seasonal increase in working capital

• Disciplined management of the business, working capital and debt underpins continued strong dividend payment for the period

• Interim dividend of 8.5 cents per share fully franked

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8 IVE Group Limited FY22 H1 Results Presentation

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Business updates

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9 IVE Group Limited FY22 H1 Results Presentation

Active Display Group (ADG) and AFI Branding Solutions acquisitions and integration

• The integration of both the ADG & AFI businesses is progressing well and will be complete by the end of June 2022

• Post integration, we remain confident of achieving $45m annualised revenue, EBITDA of $6.5m and NPAT of $4m

• ADG’s operations across 4 sites are currently being fully integrated into our Retail Display facility in Braeside Victoria where meaningful synergies will be unlocked (refer to page 13/14 of the CEO’s presentation at our AGM on 23 November 2021 for detailed overview of IVE’s Victorian site consolidation initiative which is due to complete by 30 June 2022)

• Our Group sales teams are already cross selling the broader IVE offer to ADG/AFI clients, and existing IVE clients the new products and services acquired including printed fabric and dedicated third party logistics (3PL)

• All key customers and staff have made the transition to IVE successfully

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10 IVE Group Limited FY22 H1 Results Presentation

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Supply chain

Global supply chain disruption for both raw materials and finished goods requires ongoing close management. The Company has been, and remains, well placed to manage this prevailing dynamic expected to continue for the foreseeable future

• We have been the beneficiary of clients moving revenue onshore from Asia which has been an upside for the business, particularly in retail display. We expect this to continue in the medium term

• Global supply chain challenges, primarily paper, continue to require ongoing focus

• We maintain strong relationships with our global suppliers which is important given the prevailing dynamics

• We continue to maintain our focus on building inventory levels as previously communicated

• Longer term impacts of any upward price movements have been factored in to contract terms and renewals, albeit we continue to work closely with clients in the short term to manage/mitigate potential impacts as required

11 IVE Group Limited FY22 H1 Results Presentation

• The Company has over the last 12 months committed to investing in the enhancement and amplification of Lasoo. We intend to continue our investment in Lasoo over the next 2 years to further enhance the consumer experience, and work closely with our retail clients to unlock opportunities to drive further revenue for their business

• Phase 1 investment of $3.5m to re-platform, develop new logo/brand identity, and update the app and browser is progressing according to plan

• Enhanced user experience has been completed in collaboration with 8 major Australian retailers and panel of consumers

• New platform is now in the final stages of development and testing

• On track for a comprehensive go to market launch within the next 6 months as previously communicated

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12

IVE Group Limited FY22 H1 Results Presentation

Track record of strategy execution, capital management and future growth initiatives

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13 IVE Group Limited FY22 H1 Results Presentation

Track record of strategy execution, capital management and future growth initiatives

A clearly defined and well executed strategy over the long term has cemented IVE as the largest integrated marketing communications business in Australia, holding leading market positions across all sectors in which we operate.

Execution of our strategy has resulted in a diversified resilient business with a consistently high dividend yield, and strong balance sheet from which to pursue further growth opportunities in the short to medium term.

Investment, expansion and growth since IPO

• The execution of our long term strategy has resulted in the compelling value proposition IVE takes to market

• Listing in December 2015, strong free cashflows and access to capital has enabled the Company to execute a transformational investment program that has further expanded our diversified integrated marketing communications offer

• IVE holds leading market positions across the marketing communications sector, has a stable and diverse client base and revenue mix across a range of sectors, stable margins, and has generated reliable cashflows that have resulted in a strong balance sheet to support ongoing growth opportunities

• The disciplined execution of our strategic investment program over the last 5 years has resulted in significant increases in both revenue and earnings, albeit FY20/21 were COVID impacted

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FY17-FY21 operating and free cashflow
$m
100 97.1 100
90 88.1 90
83.9
80 80
74.4
70 70
65.4 65.8
62.5
60 60
50 50
45.3 43.9
40 40
35.2
30 27.3 30
20.1 21.9
20 20
9.5 9
10 10
0 0
FY17 FY18 FY19 FY20 FY21
Operating cashflow Capex Free cashflow
Note: Free cashflow is equivalent to operating cashflow net of capital expenditure
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• Track record of high operating and free cashflow – FY17-FY21

• operating cashflow of $375m

• free cashflow of $279m

• delivered an average of 105% operating cash conversion to pre AASB16 EBITDA

• elevated capital expenditure in FY17-FY19 to support significant revenue growth and expansion initiatives. Capital expenditure has now returned to more normal levels as previously communicated, and moving forward is expected to be approximately 60% of depreciation (pre AASB16)

14 IVE Group Limited FY22 H1 Results Presentation

Dividends and capital management

• The Company’s dividend policy seeks to pay strong dividends at sustainable levels, targeting a full year payout ratio of 65-75% of NPAT

• Since listing, the Company has paid a total of $104.3m in fully franked dividends (including declared H1 FY22 interim dividend)

• Dividends have averaged 7.6% on an annual yield basis* from FY17 – FY21 (excluding FY20 where, to be prudent, no dividend was paid as a result of the COVID-19 pandemic)

• The Company completed a successful share buyback program in 2021, acquiring a total of 5.4m shares (3.6% of the issued capital) at a total cost of $7.4m (average price of $1.37 per share)

• The Company has no plans to initiate a further buyback program given current share price ($1.92 at 23 February 2022) and our strategic priority to pursue further earnings growth opportunities as outlined below

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Growth opportunities

• Continue to organically grow the revenues and earnings of the business on the back of the strength of our integrated offer, world class operations, market position and competitive advantage

• The strength of our balance sheet places us in a very good position post COVID-19 to invest across a range of strategic organic initiatives together with opportunities that may present in terms of attractive acquisitions

  • based on FY22 full year earnings guidance, we expect net debt at 30 June 2022 to be circa 1x pre AASB16 EBITDA, below our stated leverage target of 1.5x pre AASB16 EBITDA

  • the Company has allocated $30-40m to invest in a range of earnings accretive opportunities

    • as a component of our drive to grow our fibre based packaging offer, we intend to seek an appropriate acquisition to expedite this strategy

    • we expect a number of ‘bolt on’ acquisition opportunities will present over the coming 12-24 months. We have a demonstrable track record over many years of successfully acquiring and integrating businesses to unlock synergies

    • our current investment to enhance and amplify Lasoo

• Annual dividend yield = total annual dividend/share price at 30 June of that financial year (excludes franking credit benefit)

15 IVE Group Limited FY22 H1 Results Presentation

Outlook and guidance

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16 IVE Group Limited FY22 H1 Results Presentation

Outlook and guidance

A solid H1 result and continued momentum across the business place us in a strong position to deliver a healthy full year result, well up on FY21

• As illustrated by the strength of our H1 earnings, heightened operating leverage across the business has contributed to a significant uplift over our H1 FY21 performance, as existing client revenue rebounds and recently secured new business phases in

• Revenue momentum continues and we remain optimistic this will continue over the remainder of the FY22 year

• FY22 full year

• earnings guidance

  • underlying EBITDA expected to be $98-101m

  • underlying NPAT expected to be $33-35m

  • H2 NPAT impacted by $3m as a result of the one-off contractual timing differences of recent paper price increases

• restructure and acquisition costs expected to be approximately $4m

• capital expenditure expected to be $13m (excluding Lasoo investment of $3.5m)

• net debt at 30 June 2022 expected to be circa $85m

• We will continue to closely manage paper supply chain pressures which we expect to continue through the remainder of 2022

> Initiatives

• complete the Victorian business relocations and Braeside (Victoria) site consolidation by 30 June 2022

• successfully complete the integration of ADG and AFI into the broader IVE business by 30 June 2022

• final stage development and go to market launch of phase 1 enhanced Lasoo platform by 30 June 2022

• finalise strategy and plan to build fibre based packaging capability

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17 IVE Group Limited FY22 H1 Results Presentation

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Appendices

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18 IVE Group Limited FY22 H1 Results Presentation

Appendix A

IFRS Profit and Loss

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Actual H1 Actual H1
Variance Variance
FY2022 FY2021
$m %
$m $m
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	Actual H1 FY2022 $m	Actual H1 FY2021 $m	Variance $m	Variance %
Revenue	382.6	340.8	41.7	12.2%
Gross Proft	181.7	161.3	20.3	12.6%
% of Revenue	47.5%	47.3%		0.3%
EBITDA	52.1	56.6	(4.5)	(8.0%)
Depreciation and amortisation	21.4	24.2	(2.8)	(11.6%)
EBIT	30.6	32.4	(1.8)	(5.5%)
Net fnance costs	3.9	5.0	(1.1)	(22.5%)
NPBT	26.8	27.4	(0.7)	(2.4%)
Income tax expense	8.6	8.5	0.1	1.3%
NPAT from continungoperations	18.2	19.0	(0.8)	(4.0%)
NPATA continuingoperations	20.1	21.1	(1.0)	(4.7%)

IFRS to underlying NPAT reconciliation

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Year to Date
Dec 21 $m
IFRS NPAT (continuing) 18.2
Restructure costs 0.5
Acquistion costs 0.5
Software as a service (still in development stage) 0.9
Financial asset write down 0.2
Employee share issue 1.2
Sub total non operating items 3.4
Tax effect of adjustments (0.6)
Underlying NPAT 20.9
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19 IVE Group Limited FY22 H1 Results Presentation

Appendix B

IVE Group Limited Balance Sheet

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Actual Actual
Dec 21 $m Jun 21 $m
Current Assets
Cash and cash equivalents 51.6 106.5
Trade receivables, prepayments and others 122.8 106.3
Inventories 53.7 43.8
Intangible assets and goodwill 1.6 1.8
Total Current Assets 229.7 258.3
Non Current Assets
Deferred tax assets 16.5 15.3
Property, plant and equipment 98.9 100.2
Property, plant and equipment (ROUA) 85.9 96.2
Intangible assets and goodwill 133.2 130.2
Other assets 3.7 0.0
Total Non Current Assets 338.2 341.8
Total Assets 567.9 600.1
Current Liabilities
Trade payables and provisions 136.6 119.9
Loans and borrowings 2.8 2.8
Lease liability (ROUA) 24.5 27.9
Current tax payable 5.2 3.3
Total Current Liabilities 169.1 153.9
Non Current Liabilities
Trade payables and provisions 13.6 11.4
Loans and borrowings 115.6 167.0
Lease liability (ROUA) 84.0 91.8
Total Non Current Liabilities 213.2 270.2
Total Liabilities 382.3 424.1
Net Assets 185.6 176.0
Equity
Share Capital 150.1 149.1
Other reserves 0.1 (0.2)
Retained Earnings 35.4 27.1
Total Equity 185.6 176.0
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20 IVE Group Limited FY22 H1 Results Presentation

Appendix C

Disclaimer

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 2021. It is in summary form and does not purport to be complete. It presents financial 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 filed with the Australian Securities Exchange, and in particular the year to 31 December 2021. 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 qualified adviser having regard to their objectives, financial 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, officers, 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 “forwardlooking statements” or statements about “future matters”, the information reflects 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 financial 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 benefit 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.

21 IVE Group Limited FY22 H1 Results Presentation

IVE Group Limited ABN 62 606 252 644

Level 3, 35 Clarence Street Sydney NSW 2000

Geoff Selig Executive Chairman

Matt Aitken Chief Executive Officer

Darren Dunkley Chief Financial Officer

ivegroup.com.au

Authorised by the IVE Board

Contact:

Richard Nelson Investor Relations richard.nelson@ivegroup.com.au +61 2 8064 5425