Slide 1: FY17 Results and Capital Raising
FY17 RESULTS AND CAPITAL RAISING August 28, 2017 Geoff Selig - Executive Chairman Warwick Hay - Managing Director Darren Dunkley - Chief Financial Officer
Slide 2: Important Notices
IMPORTANT NOTICES This investor presentation (Presentation) has been prepared by IVE Group Limited (ABN 62 606 or legal advice) or any recommendation to acquire entitlements or New Shares and does not 252 644) (IVE). This Presentation has been prepared in relation to a pro-rata accelerated and will
Slide 3: Important Notices continued
IMPORTANT NOTICES continued Investors should also note that this Presentation does not include the financial of certain general and IVE specific risk factors that may affect IVE. statements of SEMA. While this Presentation includes a pro forma balance sheet for There can be no assurance that actual
Slide 4: Important Notices continued
IMPORTANT NOTICES continued To the maximum extent permitted by law, IVE, the underwriters and their respective advisers, affiliates, related bodies corporate, directors, officers, partners, employees and agents make no representation or warranty, express or implied, as to the currency, accuracy, rel
Slide 5: Table of Contents
TABLE OF CONTENTS 01 Business overview 02 Highlights & outlook 04 Capital raising 05 Acquisition of SEMA and strategic rationale 09 Capacity expansion - Franklin WEB (NSW) 13 FY17 Results 19 Acquisition & integration update 20 Offer summary 25 Appendices 29 Key risks FY17 Results and Capital Raising
Slide 6: Business Overview
BUSINESS OVERVIEW A leading product and service offering IVE is a vertically integrated marketing services and print communications provider. IVE enables its customers to communicate more effectively with A customer experience agency that helps brands their customers by creating, managing, producing
Slide 7: Highlights and Outlook
HIGHLIGHTS AND OUTLOOK FY17 Results and Capital Raising - Not for distribution or release in the United States Page 02
Slide 8: Highlights and Outlook
HIGHLIGHTS AND OUTLOOK IVE continues to enhance its position as one of Australia’s leading diversified marketing communications businesses FY17 results highlights Strong outlook • Revenue growth of 30.1% over FY16 pro forma revenue • FY18 EBITDA expected to be approximately $70 – 75 million • EBITDA
Slide 9: Capital Raising
CAPITAL RAISING Capital raising to support initiatives to drive further growth beyond FY18 Acquisition and integration Expansion of IVE’s direct marketing and data analytics capability through the acquisition of SEMA of SEMA, and growth capex • Further consolidates Blue Star DIRECT’s position as the
Slide 10: Acquisition of SEMA and Strategic Rationale
ACQUISITION OF SEMA AND STRATEGIC RATIONALE FY17 Results and Capital Raising - Not for distribution or release in the United States Page 05
Slide 11: Acquisition of SEMA
ACQUISITION OF SEMA Further enhancing IVE´s position as one of the leaders in data driven personalised communications Business overview Broad service offering • Established over 35 years ago • Multi-channel marketing – including personalised direct mail, email, social media and mobile • FY17 revenue
Slide 12: SEMA Financial Performance
SEMA FINANCIAL PERFORMANCE SEMA has a record of strong REVENUE AND EBITDA ($m) (1) growth and margin expansion 50 3.5 40 2.8 30 2.1 FINANCIAL PERFORMANCE 20 1.4 REVENUE 10 0.7 • Revenue has increased by approximately 9.6% between FY15 and FY17 0 0 to $40.1 million, primarily as a result of: FY15 FY1
Slide 13: SEMA Transaction and Strategic Rationale
SEMA TRANSACTION AND STRATEGIC RATIONALE SEMA will be integrated into Blue Star DIRECT unlocking significant integration and synergy benefits Transaction overview Strategic rationale • Up to $14.5 million in total consideration (1) • Highly complementary to Blue Star DIRECT — $11.15 million on compl
Slide 14: Capacity Expansion to Support Revenue Growth - Franklin WEB (NSW)
CAPACITY EXPANSION TO SUPPORT REVENUE GROWTH - FRANKLIN WEB (NSW) FY17 Results and Capital Raising - Not for distribution or release in the United States Page 09
Slide 15: Strategic Rationale
STRATEGIC RATIONALE The capacity expansion at Franklin WEB ( NSW ) is underwritten by additional revenue secured • Since the acquisition of Franklin and AIW in December 2016, IVE has successfully won contracts totalling $70 million in annual incremental revenue including: — Coles (Coles Supermarkets
Slide 16: Reduced Capacity Drives Higher Utilisation
REDUCED CAPACITY DRIVES HIGHER UTILISATION Recent consolidation in the LFWO sector has resulted in a significant reduction in capacity • Both major large format web offset operators have undertaken significant REDUCED SECTOR CAPACITY rationalisation of press capacity since late 2016 • IVE management
Slide 17: IVE's Rationalised Press Fleet
IVE´s RATIONALISED PRESS FLEET Significant investment to support additional secured revenue • Since the Franklin / AIW transaction, IVE has undertaken an integration plan to: IVE HEATSET WEB OFFSET PRESS FLEET — consolidate the Franklin / AIW press fleet; and — re-balance capacity to NSW through the
Slide 18: FY17 Results
FY17 RESULTS FY17 Results and Capital Raising - Not for distribution or release in the United States Page 13
Slide 19: Revenue
REVENUE • IVE’s FY17 revenue increased by 30.1% on PCP to $496.9 million • IVE’s unique and diverse offering remains appealing to new and prospective customers as they look to explore the full diversity of our value proposition • Strong new business performance across a broad cross section of custom
Slide 20: Key Initiatives
KEY INITIATIVES • Kalido Expansion The Kalido division continues its growth trajectory into Asia (specifically in the data analytics, marketing automation and website optimisation space) with strong new business wins in Indonesia, Thailand and China. Kalido Hong Kong opened in April 2017 to compleme
Slide 21: Profit and Loss
PROFIT AND LOSS • Revenue growth - Revenue increase of $114.8 million or 30.1% over PCP, this reflects the impact of Franklin and AIW acquisition, as well as PRO FORMA(1) increased revenue from new customer wins and the existing customer Actual Actual base through expanded service offering FY2017 FY
Slide 22: Statutory Balance Sheet
STATUTORY IVE GROUP LIMITED Actual June 2017 Actual June 2016 Statutory Balance Sheet $’M $’M CURRENT ASSETS Cash and cash equivalents 23.9 14.5 Trade receivables, prepayments and others 101.3 74.2 Inventories 46.6 12.5 Current tax receivable 3.0 – • The increase in drawn senior facilities of $99.3
Slide 23: Cash Flow
CASH FLOW PRO FORMA(1) STATUTORY FY2017 FY2017 $M $M EBITDA 55.2 35.9 Movement in NWC/non cash items in EBITDA 10.2 12.9 Free Cash Flow 65.4 48.8 Capital expenditure (net) -20.1 -20.1 Payments for acquisitions & deferred consideration -122.8 -122.8 Net cash flow before financing and taxation -77.5 -
Slide 24: Acquisition and Integration Update
Acquisition and integration update The Group continued its disciplined acquisition program with five businesses • It is expected that the synergies will be a minimum of $11.5 million per acquired during the period. Three acquisitions (excluding Franklin WEB and annum (full run rate effective January
Slide 25: Offer Summary
OFFER SUMMARY FY17 Results and Capital Raising - Not for distribution or release in the United States Page 20
Slide 26: Sources and Uses of Funds
OFFER SUMMARY Sources and uses of funds SEMA acquisition terms Purchase price IVE has entered into binding agreements to acquire shares in SEMA for up to $14.5 million(1) Closing conditions The Acquisition is subject to customary conditions precedent Completion date The Acquisition is expected to co
Slide 27: Details of the Entitlement Offer
OFFER SUMMARY Details of the entitlement offer Offer structure and size Fully underwritten 1 for 4.4 pro-rata, accelerated, non-renounceable Entitlement Offer to raise gross proceeds of approximately $55.6 million Approximately 27.1 million New Shares to be issued Entitlement Offer will be conducted
Slide 28: Offer Timetable
OFFER SUMMARY Offer timetable EVENT DATE (1) Trading halt and announcement of the Entitlement Offer Monday, 28 August 2017 Institutional Entitlement Offer opens Monday, 28 August 2017 Institutional Entitlement Offer closes Tuesday, 29 August 2017 Institutional Shortfall Bookbuild Tuesday, 29 August
Slide 29: Pro Forma Balance Sheet
OFFER SUMMARY Pro Forma Balance Sheet June 2017 Pro Forma Balance Sheet (1) $ million Capital Raise / Impact of Second press IVE Statutory Dividend Pro Forma transaction costs acquisition (2) capex (3) Cash and cash equivalents 23.9 (9.5) 52.8 (7.8) (22.0) 37.4 Trade and other receivables 94.8 – – 7
Slide 30: Appendices
APPENDICES FY17 Results and Capital Raising - Not for distribution or release in the United States Page 25
Slide 31: Statutory Results
APPENDIX A Statutory Results STATUTORY FY2017 PRO FORMA ADJUSTMENTS Actual Actual FY2017 FY2016 Variance Variance FY2017 Restructure & Acquisitions costs $M $M $M % $M Revenue 496.9 369.2 127.6 34.6% Restructure - IVE other -1.5 Gross Profit 248.1 192.0 56.1 29.2% % of Revenue 49.9% 52.0% - -4.0% Re
Slide 32: International Offer Restrictions
APPENDIX B INTERNATIONAL OFFER RESTRICTIONS This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or s
Slide 33: International Offer Restrictions continued
APPENDIX B INTERNATIONAL OFFER RESTRICTIONS continued United Kingdom New Zealand Neither the information in this document nor any other document relating to the offer has This document has not been registered, filed with or approved by any New Zealand regulatory been delivered for approval to the Fi
Slide 34: Key Risks - Acquisition and Offer Risks
APPENDIX C Key Risks - Acquisition and Offer Risks TOPIC SUMMARY TOPIC SUMMARY Reliance on IVE undertook a due diligence process in respect of SEMA, which Analysis of IVE has undertaken financial, business and other analyses of SEMA information provided relied mostly on the review of financial and o
Slide 35: Key Risks - Acquisition and Offer Risks continued
APPENDIX C Key Risks - Acquisition and Offer Risks continued TOPIC SUMMARY TOPIC SUMMARY SEMA specific risks Reduced demand for marketing communications products – The Underwriting risk The acquisition does not proceed for a number of reasons including if post-acquisition performance of IVE will be
Slide 36: Key Risks - Acquisition and Offer Risks continued
APPENDIX C Key Risks - Acquisition and Offer Risks continued TOPIC SUMMARY TOPIC SUMMARY Integration risk The Acquisition involves the integration of SEMA, which has Risks associated Entitlements cannot be traded on ASX or privately transferred. If previously operated independently from IVE. As a re
Slide 37: Key Risks - Operational Risks
APPENDIX C Key Risks -Operational Risks TOPIC SUMMARY TOPIC SUMMARY Competition in the The marketing and print communications industry in Australia is Acquisition strategy IVE intends to selectively pursue acquisitions to complement its marketing and print competitive. IVE faces competition in all m
Slide 38: Key Risks - Operational Risks continued
APPENDIX C Key Risks - Operational Risks continued TOPIC SUMMARY TOPIC SUMMARY Availability of inputs and IVE relies on various procurement relationships for the steady supply Protection of Through the ordinary course of business, IVE collects a range of input costs of raw materials, finished goods
Slide 39: Key Risks - General Market Risk
APPENDIX C Key Risks - General Market Risk TOPIC SUMMARY TOPIC SUMMARY Risks associated with There are risks associated with any investment in a company listed on Taxation Future changes in taxation law, including changes in interpretation investment in the ASX. The value of shares may rise above or
Slide 40: FY17 Results and Capital Raising
FY17 Results and Capital Raising - Not for distribution or release in the United States 385909/0817