IVE GROUP LIMITED — Investor Presentation 2016

Aug 28, 2016

RESULTS PRESENTATION 12 MONTHS ENDING JUNE 30, 2016 / AUGUST 29, 2016

Geoff Selig – Executive Chairman Warwick Hay – Managing Director Darren Dunkley – Chief Financial Offi cer

Table of �CONTENTS

• 03 Business Overview

• 06 Financial Performance Highlights

• 07

• 08 Balance Sheet

• 09 IVE’s Approach to the Market

• 11 Business Highlights

• 13 Outlook

• 14

Appendix – Reconciliation Statutory Revenue and NPAT to Pro Forma

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Results Presentation – 12 months ending June 30, 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.

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:

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Results Presentation – 12 months ending June 30, 2016

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Results Presentation – 12 months ending June 30, 2016

Kalido

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.

Pareto Group

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.

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.

Blue Star Group

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.

IVEO

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.

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Results Presentation – 12 months ending June 30, 2016

FINANCIAL PERFORMANCE HIGHLIGHTS

FINANCIAL HIGHLIGHTS PROFIT AND LOSS

		Pro Forma	Pro Forma
	Actual FY2016 $’M	Prospectus Forecast FY2016 $’M	Variance %	Actual FY2015 $’M	Variance %
Revenue	382.0	381.0	0.3%	337.4	13.2%
EBITDA	42.8	42.5	0.8%	30.9	38.7%
EBIT	32.8	32.0	2.6%	17.3	90.1%
NPAT	20.9	20.3	2.9%	9.6	117.5%
NPATA	22.5	22.0	2.5%	10.9	106.7%

• IVE exceeded its full year prospectus forecast at a revenue, EBITDA, EBIT, NPAT and NPATA level.

KEY METRICS

	Pro Forma	Pro Forma
	FY2016 Actual	Prospectus FY2016
Revenue growth	13.2%	12.9%
Organic growth	2.6%	2.3%
Gross prof t margin	52.2%	52.3%
EBITDA growth	38.7%	37.6%
EBITDA margin	11.2%	11.2%
EBIT growth	90.1%	85.1%
EBIT margin	8.6%	8.4%
NPAT Growth	117.5%	109.5%
NPATA growth	106.7%	100.2%

• High cash generation refl ecting strong operating performance with a continued focus on working capital.

• Dividend of 8.6 cents per share fully franked, compared to Prospectus forecast of 8.4 cents per share.

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Results Presentation – 12 months ending June 30, 2016

PROFIT AND LOSS

FINANCIAL PROFIT AND LOSS

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Statutory Pro Forma
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	Statutory	Statutory	Pro Forma	Pro Forma	Pro Forma
	Actual FY2016 $’M	Actual FY2015 $’M	Actual FY2016 $’M	Actual FY2015 $’M	Prospectus Forecast FY2016 $’M
Revenue	369.2	307.7	382.0	337.4	381.0
Gross Prof t	192.0	161.1	199.6	179.9	199.2
% of Revenue	52.0%	52.4%	52.2%	53.3%	52.3%
EBITDA	26.5	17.8	42.8	30.9	42.5
% of Revenue	7.2%	5.8%	11.2%	9.2%	11.2%
EBIT	16.9	5.1	32.8	17.3	32.0
% of Revenue	4.6%	1.7%	8.6%	5.1%	8.4%
Prof t before tax	14.2	3.2	30.6	15.2	29.7
NPAT	15.1	1.5	20.9	9.6	20.3
NPATA	16.4	2.2	22.5	10.9	22.0

• Pro Forma revenue increase of 13.2% over PCP refl ects the impacts of continued organic growth, increased revenue from the existing customer base through expanded service offering, and the contribution from acquisitions undertaken in H2 FY2015 and in FY2016.

• On a Pro Forma basis achieved gross profi t of 52.2% to revenue is in line with prospectus forecast and compares to 53.3% PCP, which largely refl ects the sales mix including the contribution from acquisitions.

• Pro Forma EBITDA increase of 38.7% over PCP achieved through revenue growth, stable gross profi t margin, effi ciency gains through capital expenditure, and closely managed cost base resulting in an expanded EBITDA margin.

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Results Presentation – 12 months ending June 30, 2016

BALANCE SHEET

IVE GROUP LIMITED BALANCE SHEET

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Actual Actual Pro Forma
Jun-15 Jun-15 Jun-15
$’M $’M $’M
CURRENT ASSETS
Cash and cash equivalents 14.4 6.7 12.3
Trade, prepayments and others 74.1 60.2 63.5
Inventories 12.5 14.4 14.9
Total Current Assets 101.0 81.3 90.7
NON CURRENT ASSETS
Deferred tax assets 17.2 11.7 13.1
Property, plant and equipment 41.8 35.4 36.0
Intangible assets and goodwill 70.3 25.3 43.4
Other non current assets 1.0 0.2 0.2
Total Non Current Assets 130.3 72.6 92.7
Total Assets 231.3 153.9 183.4
CURRENT LIABILITIES
Trade payables and provisions 80.0 65.9 66.7
Finance lease liabilities 2.6 2.7 2.7
Bank loans 0.0 22.0 0.0
Current tax payable 3.7 3.1 3.4
Total Current Liabilities 86.3 93.7 72.8
NON CURRENT LIABILITIES
Trade payables and provisions 15.1 11.5 16.5
Finance lease liabilities 11.7 6.8 6.8
Bank loans 36.7 0.0 32.7
Total Non Current Liabilities 63.5 18.3 56.0
Total Liabilities 149.8 112.0 128.8
NET ASSETS 81.5 41.9 54.6
EQUITY
Share Capital 39.8 15.3 39.8
Retained Earnings 41.7 26.6 14.8
Total Equity 81.5 41.9 54.6
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• Cash increase refl ects strong operating result and working capital focus.

• Intangibles increase on PCP refl ects goodwill impact of FY2016 acquisitions Oxygen8, Pareto, LCS, Fineline, Frost and JBA.

• Capital expenditure (PPE) of $13.2M (excluding business acquisitions capital expenditure of $1.1M).

• Deferred tax asset increase refl ecting impact of tax consolidation and tax base uplift.

• Current trade payables and provisions refl ects deferred acquisition provisions.

NET DEBT

	Actual FY2016 $’M	Actual FY2015 $’M
Short-Term – Finance Leases	2.6	2.7
Long Term Debt – Finance Leases	11.7	6.8
Trade Receivable Facility	26.0	22.0
Acquisition Facility	10.8	0.0
Sub Total	51.1	31.5
Cash	–14.5	–6.7
Net Debt	36.6	24.8

• The fi nance lease facility has increased due to capital investment to drive additional productivity and effi ciency.

• The acquisition facility has been partially utilised to fund both recent acquisitions and deferred consideration from previous acquisitions.

• Based on FY2016 Pro Forma, net debt represents 0.9 times EBITDA.

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Results Presentation – 12 months ending June 30, 2016

IVE’S APPROACH TO THE MARKET

IVE adopts a solutions-based strategy with its customers. Solutions typically involve the bundling of various products and services to deliver a tailored customer outcome.

IVE provides many of its major customers with managed communication solutions that enable a total cost of ownership focus. Ultimately we improve our customer’s return on total supply chain or ‘ownership’ cost.

This approach has resulted in strong, long-term relationships with customers and provides the opportunity to further expand the range of value added products and services offered to customers.

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3.
• Centrally managed, consolidated
communications supply chain
• Focus on total supply chain cost, return
on marketing spend drives decisions
• Multi-channel campaign management
• Supply chain and inventory management
• Customers typically spend greater
than $2m per annum
2.
• Solutions for target industry
verticals (e.g. retailing)
• Components of product and
service offering bundled to
provide a tailored solution
• Customers typically spend
greater than $0.5m per annum
1.
• Simple transactional relationships
• Limited engagement on ‘value-add’ opportunities
• Fragmented print procurement with unit cost focus
LOW Value to customers HIGH
Trend in customer buying
Total managedsolutions
Bundled product
and service offering
Transactional
FEW
Number of providers
MANY
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Results Presentation – 12 months ending June 30, 2016

IVE’S APPROACH TO THE MARKET

This solution based strategy creates a differentiated market position

Revenue generated by customers using multiple products and services

IVE’s business is differentiated by its vertically integrated product and service offering and its solutions-based customer focused strategy. This enables IVE to:

• service all stages of the marketing process and reduce its reliance on commoditised and transactional relationships;

• bring scale and provide managed solutions;

• evolve its offering to maintain and grow customer relationships.

Unparalleled market offering

IVE has an unparalleled product and service offering that spans multiple sectors within the marketing and print communications industry. IVE is a market leader in most of the sectors in which it operates.

IVE’s customer centric approach, scale and capability, together with fi nancial strength, are key drivers of choice for major customers in sectors characterised as highly fragmented.

IVE’s solution –based strategy and differentiated market position is demonstrated by 64% of the Group revenues being generated by customer using multiple products and services. This is also evidenced by the average length of IVE’s relationships with its top 20 customers being approximately 8 years. Across the entire customer base 77% of the Groups revenue is contracted or in established relationships.

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34%
9%
9%
1 Product/Service
2 Products/Services
21% 3 Products/Services
29%
4 Products/Services
5 or more Products/Services
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Results Presentation – 12 months ending June 30, 2016

BUSINESS HIGHLIGHTS

REVENUE

ACQUISITION PROGRAM

• Group’s pro forma revenue increase on the PCP by 13.2% to $382m

• Strong new business performance across a broad cross section of customers building on a solid half year result. Major new contracts wins of note:

• Westpac, Vodafone Australia and McDonald’s Australia managed solution contracts in our IVEO division.

• The Group maintained its disciplined acquisition strategy with six businesses acquired throughout the year.

• The period saw the successful integration of 4 acquisitions into existing businesses building on their strong operational foot print and market position. Oxygen8 (completed July 31, 2015), Laser Computer Services (completed February 2016), Fineline (completed April 2016) and Frost Promotions (completed May 2016)

• Successfully rolled over a number of key contracts across the Group:

• Tabcorp. American Express, TAL, Foxtel, RACV, Bupa, QBE Insurance, AMP, Beyond Blue, Bauer Media, Next Media.

• IVE has transacted with over 2,260 customers an increase over PCP of 12% proving our business model’s stability and scalability as a reliable partner in the marketing service and print communication sector.

• IVE’s customer spend profi le is very well positioned with the largest customer accounting for only 4% of the Group’s revenue with the top 20 comprising 32% of the Group total revenue.

• The Group continues to leverage its strong foundation and expanded its product and service offering with the acquisition of 2 uniquely positioned businesses, Pareto Group (completed in October 2015) and JBA Digital (completed May 2016)

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

• The Group continues to explore a number of potential complementary and strategic acquisitions.

• The Group has delivered on its strategy of ongoing and diversifi ed growth.

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Results Presentation – 12 months ending June 30, 2016

BUSINESS HIGHLIGHTS

EXPANDED SUPPLY CHAIN

• IVE’s diversifi ed offer relies on a strategic and ethically managed supply base that now covers four countries Australia, New Zealand, Singapore and China.

• Through the blending of this supply base with sourcing best practice, IVE is able to realise the optimal level of cost effi ciency and product/service effectiveness in a sustainable, inclusive and socially ethical manner while maintaining the greatest fl exibility to respond to our customers’ needs.

• This commitment is exemplifi ed by our Supplier Code of Conduct that requires our suppliers to support and comply with

• the principles of the United Nations Global Compact (“UNGC”),

• the UN Universal Declaration of Human Rights and

• the 1998 International Labour Organization Declaration on Fundamental Principles and Rights at Work

and is further supported by our active memberships and participations with Supply Nation and SEDEX (Supplier Ethical Data Exchange and our comprehensive supplier audit and governance framework).

• A key part of our sourcing and operational strategy has been our geographic expansion into lower cost-to-manufacture countries such as China where we have a company owned offi ce that manages all of our in-country production.

• In addition, IVE has expanded into Singapore through its Kalido division offering expertise and capability in data analytics, marketing automation and website optimisation.

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Results Presentation – 12 months ending June 30, 2016

OUTLOOK

• Continue to execute the Group’s strategy to further diversify and grow

• Further targeted capital investment to refi ne cost base and enhance offering

• Integration of recent acquisitions and the continuation of a disciplined acquisition program

• The Group is well positioned to grow revenue and EBITDA in 2017.

For further information contact:

Geoff Selig Executive Chairman

Darren Dunkley Chief Financial Officer

• 61 2 9089 8550 + 61 2 8020 4400

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Results Presentation – 12 months ending June 30, 2016

APPENDIX RECONCILIATION STATUTORY REVENUE AND NPAT TO PRO FORMA

	Actual FY2016 $’M	Prospectus FY2016 $’M
Statutory revenue	369.2	368.2
Pareto Group statutory revenue	12.8	12.8
Pro Forma revenue	382.0	381.0
Statutory NPAT	15.1	8.3
Pareto Group statutory PBT	2.1	2.1
Pareto Group acquisition costs	0.7	0.5
Discontinued operations	0.2	0.0
Public company costs	–0.5	–0.5
Management equity plan	6.2	6.2
Equity Incentive Plan	0.7	0.0
Offer costs	6.6	5.9
Net f nance costs	0.4	0.4
Deferred consideration on acquisition	0.3	0.3
Tax effect of reset tax cost base on consolidation	–7.1	0.0
Tax effect of adjustments	–3.7	–2.9
Pro forma NPAT	20.9	20.3

Main reconciliation items statutory to Pro Forma:

• Pareto revenue and PBT for pre-acquisition period (July – October 15) as per prospectus.

• Close out of Management Equity Plan (MEP) and issue of Equity Incentive Plan.

• Costs associated with IPO.

• Tax impact of tax consolidation and uplift of tax cost base – benefi t to statutory tax expense.

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Results Presentation – 12 months ending June 30, 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 29 August 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 Results for 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.

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