IVE Group Annual Report 2017

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FY2017 Annual Report · IVE Group

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ANNUAL
REPORT
2017

CONTENTS

Our Business

FY17 Highlights

FY17 Financial Overview

Executive Chairman’s Report

Managing Director’s Report

IVE’s Divisions

Kalido

Blue Star Group
Pareto Group

IVEO

Case Studies

Operating and financial review

Directors’ report

Lead auditor’s independence declaration

Financial report contents

Consolidated financial statements

Notes to the consolidated financial statements

14
22

Directors’ declaration

106

Independent audit report

107

ASX additional information

112

ORCHESTRATING
COMMUNICATIONS

Registered Office and
Principal Administrative Office
IVE Group Limited
Building B, 350 Parramatta Road
Homebush NSW 2140
Telephone: +61 2 8020 4400
ACN 606 252 644

The 2017 Annual General Meeting of
shareholders of the company will be
held at 10am on Thursday 16 November
2017 at The Mint, 10 Macquarie Street,
Sydney NSW 2000.

Annual Report 2017

2
2

IVE Group Limited

OUR
BUSINESS

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 levels.

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 a leading product and service offering in
Australia and holds leading positions across multiple
industry sectors. IVE delivers its products and services
through four operating divisions.

A customer experience agency that helps brands
prosper through creative concept development,
digital services, customer analytics & marketing
automation

Integrated print, point of sale, personalised
communications, promotional products,
warehouse & logistics services

Fundraising strategy, data-driven solutions
and telephone fundraising agency serving
the not-for-profit sector

Managed solutions. Bundles the Group’s broad
range of products and services into multi-channel
solutions for customers

Annual Report 2017IVE Group Limited4

HIGHLIGHTS

Highlights of the year

• Revenue growth of 30.1% over FY16 pro-forma
revenue
• EBITDA of $55.2* million (up 23.0% over PCP), before
acquisition and restructure costs
• Final dividend of 6.4 cents per share (on increased
shares on offer following the capital raising and issue
of shares to the vendors of SEMA)
• Strategically entered the Large Format Web Offset
(LFWO) sector through the acquisition of Franklin

WEB and AIW Printing in December 2016
— Incremental $70.0 million of LFWO revenue

secured since entering the sector, this has
resulted in a phased shutdown of the AIW site

— All major clients have been retained
— Investment in NSW greenfield site and re-balancing
of capacity between Sydney and Melbourne have

been instrumental in achieving growth

• Successful integration of smaller acquisitions
completed during the year
• New client wins across all other business units
• Strong growth in the share of wallet (SOW) for
existing customers through expansion of the Group’s
product and service offering.

FINANCIAL
OVERVIEW

PRO-FORMA RESULTS FOR THE FULL YEAR
COMPARED WITH THE PREVIOUS YEAR

Revenue

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

Earnings before interest, tax ( EBIT )

Net profit after tax ( NPAT )

Net profit after tax and before customer contracts
amortisation ( NPATA )

Dividend ( cents ) – fully franked

(*) FY17 Pro-forma results exclude all restructure and acquisition costs
(**) FY17 dividend based on post capital raise SOI – pre capital raise of 7.9 cents

PRO-FORMA(*)

Actual
FY2017*
$M

Actual
FY2016
$M

Variance
%

496.9

382.0

30.1%

55.2

41.4

24.6

27.3

6.4**

44.9

34.8

22.3

23.9

8.6

23.0%

18.9%

10.5%

14.0%

PRO-FORMA & STATUTORY RESULTS
FOR THE FULL YEAR COMPARED
WITH THE PREVIOUS YEAR

Revenue

Gross Profit

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

Earnings before interest, tax ( EBIT )

Profit before tax

Net profit after tax ( NPAT )

Net profit after tax and before customer
contracts amortisation ( NPATA )

PRO-FORMA(*)

STATUTORY(*)

Actual
FY2017*
$M

496.9

248.1

55.2

41.4

36.0

24.6

27.3

Actual
FY2016
$M

382.0

199.6

44.9

34.8

32.6

22.3

23.9

Actual
FY2017*
$M

496.9

248.1

35.9

22.2

16.4

12.1

14.8

Actual
FY2016
$M

369.2

192.0

26.5

16.9

14.2

15.0

16.4

(*) FY17 Pro-forma results exclude all restructure and acquisition costs

Annual Report 2017IVE Group Limited

EXECUTIVE
CHAIRMAN’S
REPORT

It gives me great pleasure to present my report as
Executive Chairman of IVE Group in our first full fiscal
year as a listed entity, a year in which we consolidated
our position as one of Australia’s leading marketing
communications providers.

We achieved strong year-on-year growth and
continued to execute our strategy of expansion
through diversification by entering the Large Format
Web Offset (LFWO) market, acquiring Melbourne-
based catalogue printers Franklin WEB (Franklin), and
AIW Printing (AIW) in December 2016.

Momentum remains strong across the Group,
positioning us well for a solid performance over the
year ahead.
Strong Year-on-Year Result
The part year positive impact of Franklin and AIW
was reflected in our FY17 result, helping drive a 30%
increase in revenue over the prior year to $496.9
million, which was also supported by new customer
wins and growing our offering to existing customers.
The combination of strong revenue growth and
highly efficient operations saw EBITDA grow 23% to
$55.21 million, consistent with guidance given to
the market at the half year.

It was also pleasing to declare a final dividend
for shareholders of 6.4 cents per share, fully franked2
representing a payout ratio of 73% of NPAT3.
A More Diverse Customer Base
Catalogues continue to be a core part of retailers’
marketing strategies due to their effectiveness
and affordability, and our acquisition of Franklin and
AIW represented an attractive opportunity for
IVE to enter a complementary sector by acquiring
two of the four operators in the sector.

The response from customers and staff has been
overwhelmingly positive, with the expanded customer
base now actively exploring other components of the
broader IVE Group offer.

Since acquiring Franklin and AIW we have secured
some $70 million in incremental contracted revenue –

a significant achievement which requires us to expand
our capacity to better service national retailers.

In January 2017 we made a commitment to replicate

in NSW, Franklin’s existing world class operation in
Victoria. The Franklin NSW operation across a 20,000
sqm facility will house two brand new Man-Roland
highly automated 80-page web offset presses, one
16-page web offset press, and ancillary equipment
including a high speed perfect binding line and
stitching capability. This significant investment into
Franklin NSW coincides with the final close down of
AIW by December 2017 and the rationalisation of
capacity in Victoria as we look to more optimally
rebalance production capacity between the two states.

It was also a strong year for our creative and
digital services division, Kalido, which continued its
growth trajectory into Asia, securing new business
in Indonesia, Thailand, and China in data analytics,
marketing automation, and website optimisation.
The opening of Kalido Hong Kong in April was also a
key milestone for the division, expanding our Asian
footprint from Singapore where we opened an office
in May 2016.

Talented and Committed Team
Having a talented and committed team of employees
is critical to the success of any business and I am
proud to say our people are core to the underlying
strength of our Group.

We employ 1,800 people across the Group who

deliver results for our customers on a daily basis,
supported by a highly experienced and stable
leadership team with average industry experience
of 20 years and an average tenure of nine years.
In December 2015 we launched our ‘IVE Plus’

program, ‘a better you, a better workplace’. This Group
wide staff wellness and benefits program provides
access for all our people to a range of initiatives
across four key areas of Health & Wellbeing; Lifestyle
Benefits; Wealth & Security; and Personal, Family,
& Community.

(1) Pro-forma before acquisition and restructure costs (2) FY2017 dividend based on post capital raise shares on issue – pre capital raise of 7.9 cents per share
(3) FY2017 H2 Pro forma before acquisition and restructure costs

In December 2017, we will build further on ‘IVE
Plus’ by launching an expanded ‘Diversity & Inclusion’
program which will reinforce the importance of diversity
in our workplace and reaffirm IVE as company where
‘everyone’ feels comfortable working.
Looking Ahead
The marketing communications landscape continues
to evolve and our market leading positions across
the sectors in which we operate place us in a very strong
position to leverage and respond, with a proven track
record of anticipating changing market conditions
and ensuring our offering remains relevant to customers.
A key component of the successfully completed
$55.6 million capital raising in August of this year was to
fund the acquisition and integration of well-established
customer data management business, SEMA. This
acquisition further enhances our position as one of the
leaders in data–driven personalised communications.
The announcement of our acquisition has been very well
received with integration planning now near final for a
January–March 2018 integration with our existing Blue
Star DIRECT businesses in Brisbane, Sydney
and Melbourne.

We anticipate another strong year for FY18 and have
forecast EBITDA of approximately $70–75 million before
restructure costs, estimated to be between $2.5–3.5
million. This forecast excludes any contribution from the
SEMA acquisition or further bolt-on acquisitions should
they occur in FY18.

Thank You
I would like to take this opportunity to thank our
shareholders for their support as we strive to continue
delivering strong returns, and our customers and supply
partners whom we have worked with over many years.

On behalf of the board I would also like to acknowledge

the hard work and commitment of our leadership team
and all staff whose individual efforts have helped deliver
a very strong result for the entire Group.

Geoff Selig
Executive Chairman

Annual Report 2017IVE Group Limited8

MANAGING
DIRECTOR’S
REPORT

New customers were secured across every
operating division and included many blue-chip
organisations from L’Oréal, Diageo, BP, and Blackmores,
to AXA Asia, Johnson & Johnson, Kalbe, The Mall
Group, Foxtel, Coles, Pacific Magazines, Kmart,
Lovatts, Globus Travel, Nestle, Suncorp, Red Cross,
and Greenpeace.

Nearly 70% of our revenue was generated by

customers engaged across multiple IVE products and
services, underscoring the continued strength of our
integrated business model.

Our revenue was also well spread across our customer

base, with our largest customer accounting for a
little more than 4% of Group revenue, with the top 20
comprising just over 30%.

While our gross profit margin reduced to 49.9% of

revenue from 52.2% a year earlier, once normalised
for the different margin mix of catalogue revenue
compared to IVE’s existing revenue, margin remained
consistent with prior years.

Development and Investment Opportunities
During the year we embarked on a significant capital
expenditure program as we targeted investment
to ensure we remain highly efficient and continued
to expand our product and service offering
geographically.

Actual capital expenditure in the year combined

with commitments for FY18 relate primarily to
the expansion of Franklin into NSW through the
establishment of a greenfield site in Huntingwood,
press upgrade at Blue Star WEB in Sydney, and
the expansion of our Blue Star DISPLAY operation
in Victoria.

Replicating the world class Franklin operation
in Victoria, Franklin NSW is a 20,000 sqm facility that
will house two new highly automated 80-page web
offset presses, one 16-page web offset press, and
ancillary equipment including a perfect binding line
and stitching capability.

This project is particularly exciting for us as it
will accommodate growth; rebalance our capacity
between NSW and Victoria, where we consolidated
sites and rationalised capacity during the year to
enable us to better service national retailers.

Significant new revenue growth since December

2016 (as previously communicated to the market)
in secured revenue effectively underwrites our
investment to expand Franklin into NSW. The Franklin
NSW operation will be fully operational by the end
of October 2017.

Looking to FY19, we have indicated to the market
that our annual capital expenditure will return to more
‘normal’ levels, forecasting around $7.5 million in
predominantly growth-led investments.

The past year has been a very successful and eventful
one for IVE Group as the diversity of our offering
and our increased scale helped to deliver a strong
performance across all divisions.

Key Initiatives
We acquired five businesses during the year including
AIW Printing (AIW) and, most significantly, Franklin WEB
(Franklin) which marked our entry into the complementary
Large Format Web Offset (LFWO) sector.

We secured major new contracts with blue-chip
customers, explored new opportunities and grew our
share of wallet (SOW) with our existing customers,
and renewed key contracts, all of which drove revenue
sharply higher.

Our data analytics, marketing automation and digital

services division, Kalido, continued to grow strongly
in Asia where we secured new business in Indonesia,
Thailand, and China. As the only Salesforce Marketing
Cloud Platinum Partner in Asia Pacific, Kalido’s growth
prospects in the region remain promising.

We consolidated and relocated our logistics operation,

Blue Star CONNECT (NSW), from three premises into
a new 20,000 square metre, purpose-built facility in
Erskine Park to support continued growth in the Group’s
logistics and fulfilment offer.

Coinciding with a meaningful investment, we also
relocated and expanded our retail display operation Blue
Star DISPLAY, in Victoria, merging it with Franklin’s
retail display business into a dedicated facility adjacent
to Franklin in Sunshine.

Strong Financial Performance
IVE performed strongly on a number of key financial
metrics in FY17 with a 23% increase in EBITDA to
$55.21 million which was within guidance provided to
the market at the half-year.

We reported a 30.1% increase in revenue to $496.9
million, driven by part year contributions from Franklin
and AIW, expanding our offering to existing customers,
and new customer wins.

(1) Pro forma before acquisition and restructure costs

Annual Report 2017IVE Group Limited10

MANAGING DIRECTOR’S
REPORT

Strong Outlook
IVE is set for another strong year, with expected
EBITDA of $70–75 million in FY18 (before restructure
costs) as the positive impact of synergies post
the Franklin and AIW integration take full effect from
January 2018, the Franklin NSW operation ramps
up and customers continue to explore and realise the
value of our diversified offering.

In August 2017 we successfully completed a $55.6

million capital raising to support a range of initiatives
that will further enhance our position as one of the
leaders in data-driven personalised communications.
Initiatives to be funded from the raise include the
acquisition and integration of well-established customer
data management business, SEMA (to be integrated
into Blue Star DIRECT), the second 80-page press for
Franklin WEB (NSW), and potential bolt-on acquisitions
we identify that meet our investment criteria.

We have a clear and well-defined growth strategy
to help ensure we maintain the relevance of our value
proposition to our customers, who remain keen to
explore cost-effective solutions whether via a single
product or across the breadth of our offering.

In reflecting on the success of FY17, I would like to
acknowledge all staff across the IVE business whose
commitment and talent are the drivers of this success.

Warwick Hay
Managing Director

Annual Report 2017IVE Group Limited12

BOARD OF
DIRECTORS

GEOFF SELIG
Executive Chairman

Appointed 10 June 2015

Geoff has been a director of the Group since November
2012 and has over 25 years’ experience in the marketing
communications sector. He is a former CEO of Blue
Star Group’s Australian operations (2001–2007) after
the Selig family printing business (Link Printing) was
acquired by Blue Star in 1997.

Geoff re-entered the sector in 2010 leading the Selig
family acquisition of CaxtonWeb, followed by partnering
with Wolseley Private Equity to acquire the Australian
operations of Blue Star in late 2012.

Geoff is a director of Caxton Group, Caxton Property

Investments and Caxton Print Holdings.

Geoff currently sits on the board of the National Heart

Foundation of Australia (N.S.W Division), The Pinnacle
Foundation, and The Lysicrates Foundation. He was the
State President of the NSW Liberal Party from 2005–8.
Geoff holds a Bachelor of Economics from Macquarie

University. He is a member of the Australian Institute of
Company Directors.

WARWICK HAY
Managing Director

Appointed 25 November 2015

After joining the Group in 2009 as CEO of Blue Star WEB,
Warwick was appointed managing director of the Group
in 2014. Having worked in senior leadership roles within
the business since 2009, Warwick has been a key
influence in the growth and the strategic positioning of
the Company.

Warwick has 20 years of management experience
across all business operations in complex business-to-
business environments.

Prior to joining IVE, Warwick was General Manager

of Huhtamaki Flexibles Packaging Oceania. His
prior work history includes 15 years within Carter Holt
Harvey’s packaging division across a broad range
of senior roles. Warwick completed a Graduate Diploma
in Packaging Technology from Massey University in
New Zealand and a Post Graduate Diploma in Business
from Auckland University.

GAVIN BELL
Independent Non-executive Director

Appointed 25 November 2015

Gavin was the Chief Executive Officer of law firm Herbert
Smith Freehills, a role he held from 2005 until he retired
from the role in 2014.

Gavin is an experienced non-executive director. He

is currently a non-executive director of Smartgroup
Corporation and Insurance and Care NSW.

Gavin holds a Bachelor of Laws from the University

of Sydney and a Master of Business Administration
(Exec) from AGSM, University of New South Wales.

SANDRA HOOK
Independent Non-executive Director

Appointed 1 June 2016

Sandra has extensive operational, financial management
and strategic experience built over 25 years in senior
executive roles as a Chief Executive Office, Chief Operating
Officer, Group Publisher, Marketing Director, and
General Manager for some of Australia’s largest media
companies including Foxtel, Federal Publishing
Company, Murdoch Magazines, Fairfax, ACP and News
Limited. She has a track record in driving transformation
and transitioning traditional businesses in rapidly
evolving environments.

She currently holds a number of directorships
including Non-executive director at RXP Services,
MedAdvisor, auDA, and Sydney Fish Markets, and is a
Trustee, Royal Botanic Gardens and Sydney Harbour
Federation Trust. She is also a Member of the Australian
Institute of Company Directors (GAICD).

ANDREW HARRISON
Independent Non-executive Director

Appointed 25 November 2015

Andrew is an experienced company director and
corporate adviser.

Andrew has previously held senior executive positions

and non-executive directorships with public, private
and private equity owned companies, including as
Chief Financial Officer of Seven Group Holdings, Group

(L to R) Warwick Hay Managing Director / Gavin Bell Non-Executive Director /
James Todd Non-Executive Director / Paul Selig Executive Director / Sandra Hook Non-Executive Director /
Andrew Harrison Non-Executive Director / Geoff Selig Executive Chairman

Finance Director of Landis and Gyr, and Chief Financial
Officer and a director of Alesco. Andrew is currently a
non-executive director of Burson Group, Estia Health,
Xenith and WiseTech Global. Andrew was previously a
Senior Manager at Ernst & Young (Sydney and London)
and Gresham Partners Ltd, and an Associate at Chase
Manhattan Bank (New York). Andrew holds a Bachelor of
Economics from the University of Sydney and a Master
of Business Administration from Wharton, and is a
chartered accountant.

PAUL SELIG
Executive Director

Appointed 10 June 2015

Paul has over 25 years’ experience in the industry
and is currently Managing Director of Caxton Group.
Paul is a former CEO of Blue Star’s Australian operations
(1997–2001)

In 2010, he was appointed a director of CaxtonWeb

following its acquisition by Caxton Group and was
appointed non-executive director of the Group following
the purchase of the Australian operations of Blue Star
Group in 2012. Paul is a director of Caxton Group,
Caxton Property Investments and Caxton Print Holdings.
Paul Holds a Bachelor of Economics (Hons) from
Macquarie University.

JAMES TODD
Independent Non-executive Director

Appointed 10 June 2015

James was appointed non-executive chairman of the
Group in November 2012 and moved to non-executive
director in 2015 when Geoff Selig was appointed
executive chairman.

James is an experienced company director, corporate

adviser and investor.

James is Managing Director of Wolseley Private Equity,
an independent private equity firm which he co-founded
in 1999.

He commenced his career in investment banking

working with Hambros Bank, both in Sydney and
London, and has taken active roles with, and invested in,
a range of public and private companies.

James also served as Council Member of the

Australian Private Equity and Venture Capital Association
(AVCAL), where he was chair of the AVCAL Growth Funds
Committee.

James holds a Bachelor of Commerce and Bachelor

of Laws from the University of New South Wales,
and a Graduate Diploma from the Financial Services
Institute of Australia (FINSIA), where he is a Fellow.
He is a member of the Australian Institute of Company
Directors.

Annual Report 2017IVE Group Limited14

HARNESSING CUSTOMER DATA
FOR BETTER BUSINESS OUTCOMES

Craveable Brands
Lifecycle Marketing
Craveable partnered with Kalido to transform the customer
experience, leveraging Salesforce Marketing Cloud to enable
a truly customer-centric, omni-channel and automated
solution. Kalido implemented a series of lifecycle journeys
to increase the number of loyalty members and improve the
on-boarding process, drive repeat purchase and reactivate
lapsed customers.

IVE Group’s specialist agency, Kalido, is a new breed
of customer experience firm shaping better business
outcomes for clients by putting customers at the
centre of every decision.

While most brands know their target audiences, we

believe it’s those who know their customers who will
enjoy a competitive advantage and sustained business
success. Our strategic consulting, implementation and
ongoing managed services help businesses to plan,
execute and optimise data-driven customer journeys.
By bringing together strategy, data and technology
with the magic of creativity and design, Kalido provides
solutions designed to optimise brand experiences,
facilitate speed to market and unlock value at
every touch point.

Working closely with clients, our collaborative,

multi-disciplinary teams provide innovative and
effective brand solutions. Our services include:
Customer analytics
Our Strategic Reporting Framework, predictive
modelling and Customer Data Platform create
actionable outcomes to increase customer value.
Digital experience platforms
End-to-end delivery of cross platform digital
experiences, including solutions architecture, digital
design, development and ongoing support.
Marketing automation
We are best in class in Salesforce and Adobe
Marketing Cloud implementation and optimisation to
fast track your return on investment.
Content
Leveraging customer data we create personalised
customer journeys and content that is relevant to your
audience across different channels.

Kalido partners with leading technology platforms
to deliver comprehensive, fully integrated best of breed
solutions that help brands to confidently navigate the
path from traditional product-led marketing, to the
rewards of being customer centric champions.

Tigerair
Marketing Automation
In order to build a personalised experience for every passenger,
Kalido created an analytics framework to gather, analyse
and model data from multiple systems and touch points. We
then created automated customer journeys to deliver timely
and relevant communications via email, SMS and social.

NSW Government SafeWork Awards
Awards Submission Site
Kalido helped SafeWork NSW to develop a new platform
that supports the running of their prestigious annual work
safety awards. The platform managed the end-to-end
process including award entries, structured work flow around
the judging process and winner’s announcement.

Annual Report 2017IVE Group Limited16

AUSTRALIA’S MOST DIVERSIFIED
BUSINESS OF ITS KIND

THE LARGEST COMMERCIAL
OFFSET PRINTER IN AUSTRALIA

Blue Star Group is Australia’s leading provider of
integrated print, display, personalised communications,
promotional products, warehouse and logistics services.
Operating across seven specialist businesses, the

Blue Star Division is Australia’s most diversified
business of its kind. Continual focus on technology,
innovation and efficiency, coupled with our highly
experienced and passionate team, creates a nimble
and flexible environment dedicated to delivering
a responsive service to the market.

As the largest commercial offset printer in Australia,
with state-of-the-art facilities in Sydney and Melbourne,
Blue Star PRINT has an extensive offer, which is
used in conjunction with the other divisions of IVE to
communicate to our customers and in turn their
customers, as part of the overall communications mix.
Sophisticated proofing, colour management
systems and comprehensive finishing capabilities
deliver consistently high quality outcomes for any
size project and to the most demanding deadlines.

Annual Report 2017IVE Group Limited18

PASSIONATE
ABOUT PRINT

FRANKLIN’S CATALOGUE
POWERHOUSE

Operating out of a purpose-built, highly automated
and efficient facility in Sydney, Blue Star WEB is a leader
in niche heat-set web offset printing, producing a
broad range of special interest publications, custom
publications, corporate livery including travel and
tourism & financial services collateral, and magalogues.

Founded in 1936, Franklin is a specialist catalogue
producer and one of the leading players in the large
format web offset sector. With over 120,000 square
metres of world class production facilities across
Victoria and NSW, Franklin produce over 3.4 billion
catalogues per annum for Australia’s leading retailers.

Annual Report 2017IVE Group Limited20

DATA-DRIVEN PERSONALISED
COMMUNICATION

RETAIL
DISPLAY SOLUTIONS

With operations in both Sydney and Melbourne,
Blue Star DISPLAY specialises in the production of
retail display point-of-sale and point-of-purchase
collateral. It is a full service, retail display business
providing services from concept and design (structural
& industrial), through to production and distribution.
Services include offshore sourcing where appropriate
through a dedicated team based in our China office.

Blue Star DISPLAY works with customers to design
solutions that attract consumers into store, drive sales
and deliver positive brand experiences.

Blue Star DIRECT is the largest data-driven direct
personalised communication business in Australia.
Blue Star DIRECT works with customers’ data to
produce highly personalised, multi-channel
communications. These include both physical
communications distributed through the mail as well
as digital communications delivered through multiple
channels, including email, SMS and social media.
Blue Star DIRECT has modern, highly efficient

production facilities in Brisbane, Sydney and Melbourne,
and works with many of Australia’s leading brands in
managing their one-to-one customer
communications strategy.

www.greenpeace.org.au
ABN 61 002 643 852

Greenpeace Australia Pacific
If undeliverable please return to:
GPO Box 2622
Sydney NSW 2001

CM 17100170

POSTAGE
PAID
AUSTRALIA

Don’t let her home
go up in flames

Image: © Greenpeace

Image: © BOSF/Paulina Elia

Annual Report 2017IVE Group Limited22

LARGE SCALE
LOGISTICS & FULFILMENT

Blue Star CONNECT is a highly specialist logistics
operation. An integral part of the Group’s broader
solutions, its core capabilities incorporate two
distinct disciplines:
• Inventory management, call centre, warehousing,

pick & pack, distribution

• Campaign driven, time sensitive kitting

and fulfilment

Operating out of facilities in Sydney and Melbourne,
Blue Star CONNECT interfaces directly into customers’
enterprise resource planning systems. Customers can
use CONNECT’s customised online portals for the
purposes of placing orders, tracking activity, inventory
control and detailed reporting.

DELIVERING COMPREHENSIVE
& TAILORED PROMOTIONAL
MERCHANDISING

With offices across Australia, New Zealand and China,
Blue Star PROMOTE is a leading corporate supplier
of promotional merchandise, apparel and award
solutions. We work with our customers to increase
brand awareness, foster good employee morale, build
positive client relationships and drive sales through
fully customisable promotional product solutions
that creatively and effectively communicate the true
essence of a brand.

Annual Report 2017IVE Group Limited24

MAKING A
POSITIVE IMPACT

The Pareto Group works exclusively with non-profit
organisations to help them raise funds to make the
world a better place. The Pareto Group delivers
globally recognised campaigns through fundraising
direct mail, digital programs and telemarketing. Our
expertise spans decades and has contributed to the
Pareto Group being recognised as a market leader.
One unique organisation – two industry-leading fund-
raising experts: Pareto Fundraising and Pareto Phone.
Together, Pareto helps charities raise more money
than any other direct response business in Australia
and New Zealand. Over half of the largest charities in
Australia and New Zealand engage Pareto to provide
sector intelligence, donor behavioural insight, data-led
strategic guidance, world-class creative and highly
targeted and unique direct response communications.
Our ability to share deeply personal and meaningful

stories, vividly demonstrating the vast range of social
and environmental justice needs, continues to result
in record levels of financial support for charities.
Founded on a passion for data analytics, to understand
donors underpins our communication strategy.

Day by day, the Pareto Group is driving what is
arguably the biggest fundraising revolution of the
decade. The Pareto Group continues to be the only
agency in Australia and New Zealand that can deliver
comprehensive, end-to-end fundraising solutions.
We combine analytics, insights, social media, digital,
direct mail and telemarketing services to deliver highly
integrated campaigns. We find new ways to engage
new audiences, to grow and strengthen the supporter
base of many Australian and International charities.

WE HELP
CHARITIES THRIVE

Annual Report 2017IVE Group Limited26

DATA-DRIVEN SOLUTIONS
SERVING THE NFP SECTOR

HELPING YOU
CHANGE THE WORLD

Pareto Fundraising works with non-profit
organisations to develop targeted strategic solutions
that allow them to create sustainable income streams
from a wide base of supporters.

For over 15 years Pareto Fundraising has been
the industry leader, delivering unprecedented and
integrated services to charities, providing insights,
analytics, direct mail and digital programs that raise
funds. We work with local and global clients, and our
experienced team is immersed in the non-profit sector,
working strategically and tactically with clients on
how to best engage potential donors, retain and foster
existing relationships.

Benchmarking
Pareto Fundraising delivers data-rich insights
through our annual globally recognized Fundraising
Benchmark Report. The report enables clients to
compare their organisation’s performance against
the industry as a whole. This valuable analytical tool
provides unique insights to help clients identify what
is working and what needs to change. Clients are
empowered to make informed decisions on future
directions and fundraising investment.

More than just strategic consultants, Pareto
Fundraising embraces the challenge of delivering
targeted annual fundraising campaigns for their
clients that engage and inspire supporters. Pareto
is privileged to have built a deep and diverse team
who can help any charity improve its direct response
fundraising results while continuing to lead the sector
in innovation and evolution.

“Pareto Fundraising is an
indispensable strategic partner
for any organisation who
wants to kick goals in the NFP
market. The value starts in
the data, but it’s their intelligent
strategic insight and advice
that takes it to another level.
Strategic growth pathways
suddenly become apparent and
attainable.”

Tony O’Halloran, Manager, Marketing Strategy,
Mission Australia

“Pareto Phone is a key part in
Cancer Council NSW’s mission
to beat cancer. Over many years,
across a variety of programs,
Pareto has consistently produced
results and raised the desperately-
needed funds required to beat
cancer. Pareto Phone’s analytical
capabilities are very strong and
enable them to advise on the
viability of a campaign, assure us
when we are on the right track
and suggest specific tactics and
strategies to improve our long-
term ROI.”

Joshua McNeil, Direct Marketing Manager
Cancer Council NSW

Pareto Phone is the industry leader in charity
telefundraising, partnering with the most well-loved
and respected not-for-profit organisations in Australia
and New Zealand.

The reason we outperform the rest is because
our clients know that we consistently deliver the
best outcomes for them. And that helps our charity
partners to help more of their beneficiaries. It is why
we have such long-standing relationships across the
fundraising sector.

We draw on our years of charity fundraising

experience to provide strategically-led expert advice
that uses a unique data-led approach to fully maximise
our client’s fundraising budgets. We do this while
ensuring the very best supporter journey for each
donor.

Being at the forefront of the latest thinking and
using the very latest telemarketing technology helps
us to deliver best-in-class results on all our campaigns,
including the growing area of digital fundraising.

Central to our success is our team of passionate

telefundraisers who engage in meaningful
conversations with charity supporters to produce great
outcomes. We see ourselves as an extension to your
fundraising team.

We operate to the highest standards so that you and

your donors have peace of mind. Pareto Phone is PCI
DSS accredited and fully compliant with government
and industry regulations governing telefundraising.
The best interests of our charity partners is at the heart
of everything we do.

Annual Report 2017IVE Group Limited28

MARKETING EXECUTION
SPECIALISTS

As Australia’s most trusted marketing execution
specialist, we take the powerful scale, innovative
technology and capacity of the IVE Group and combine
it with carefully selected and accredited partners to
deliver the benefits of an Asia-Pacific supply chain.
Our targeted solutions integrate technology and
workflow to create a streamlined service model
guaranteed to improve speed to market and reduce
cost without compromising quality.

The IVEO team are marketing execution and supply

chain experts who take a direct role in ensuring
we deliver to get the best possible results for our
customers’ long-term objectives, whether they’re
located onsite or in one of our centralised city hubs.
We combine in-house creative design with supply
chain management and inventory control to execute
a controlled workflow that takes care of collateral
from creation to distribution.

IVEO helps businesses unlock opportunities for
innovation, from choosing the right communication
channel to re-engineering specifications for efficient
production. We deliver an accountable and transparent

service that provides full visibility on spend and activity
while simplifying stakeholder engagement.

We possess an unrivalled understanding of the
market, applying customer insights and objectives to
everyday decisions that drive positive outcomes
for spend optimisation,
channel diversity and
improved sustainability.

2017 Kérastase Paris Brand Book
Winner, Specialty Retailers, 2017 Annual ACA Awards
IVEO worked with L’Oreal Professional Products Division
to refine and elevate the Kérastase brand book, which houses
all of the brand, portfolio and education requirements for the
year ahead.

WE DRIVE
EFFICIENCIES

Annual Report 2017IVE Group Limited30

THE POWER OF
PERSONALISATION
& SEGMENTATION

team before artwork commences, ensure the utmost
accuracy in personalisation and will coordinate the
development of additional materials within the Blue
Star Group to deliver upon the brief.

DELIVERABLES
• 2,000,000+ fully personalised 28-page booklets
• Delivered in full in a 3-week production timeframe
• Matching of 17 unique offers to each customer,
barcoded for in store redemption.

CASE STUDY

WOOLWORTHS IS A LEADING
AUSTRALIAN SUPERMARKET CHAIN
WITH OVER 960 STORES NATIONWIDE.

THE BRIEF
Blue Star approached Woolworths with the concept
of using their loyalty data to drive more meaningful and
personalised one-to-one communications with their
customers via the direct mail channel. The concept
was to utilise a large subset of its Everyday Rewards
customer purchase data to drive the selection of
relevant offers via coupons and discounts through
personalising booklets for over one million of its
customers. This was to be achieved within a 3-week
production timeframe, from receipt of finished artwork
to delivery into customer households.

Woolworths aimed to generate a noticeable

increase in store traffic, ROI and shopper revenue as
well as cross-sell other parts of the Woolworths Group
(i.e. Big W, Ezibuy, BWS) to customers. Each program
ran for a period of 6 weeks with different personalised
offers available to the shopper each week.

booklet via Australia’s largest digital inkjet devices
combined with the power of the finishing in Blue Star’s
print and mail production facilities. These were then
finished, initially into envelopes and more recently via
our promo-pop plastic wrap product that brings the
creative to life, for lodgment with Australia Post.

THE RESULTS
Woolworths segmented its customer data and tested
the direct mail execution against a similar creative
execution via the email channel to a further 500,000
customers. The success of the direct mail concept
and execution is perhaps best realised when the
second production cycle of the personalised booklets
increased from a quantity of 1m in the first cycle to
1.5m for the next cycle (largely at the expense of the
email channel execution which was shown to be far
less effective than the physical direct mail execution).

THE APPROACH
Working with Woolworths and their analytics agency
a data processing platform was created to analyse
customer spend data. Based on agreed business rules,
an interface between the data platform and a digital
asset repository was created that housed hundreds of
different products and images for the coupons.

Production of the personalised booklets for each
customer were barcode matched, folded perforated
and stitched to create a 28pp fully personalised

SINCE THEN...
The success of this coupon campaign and working
relationship with the Blue Star DIRECT team have
been the driving force behind subsequent targeted
campaigns. They have since created many DM pieces
to target segments from high-value to low-value
consumers whilst promoting a variety of offers.
Blue Star DIRECT works closely with Woolworths to
advise on the best method for execution (e.g. stock,
format, etc.), provide technical advice to their design

Annual Report 2017IVE Group Limited“Unique and engaging creative with offers spanning fuel, food and liquor, meant every customer had at least one offer they found relevant. Shared investment from the three business units resulted in strong return on investment, 75% above forecast.” 32

CASE STUDY

DIGITAL & TRADITIONAL
CHANNELS DELIVER
LIFESAVING RESULTS

LIFELINE IS A NATIONAL CHARITY PROVIDING
AUSTRALIANS WITH ACCESS TO 24/7 CRISIS SUPPORT
AND SUICIDE PREVENTION SERVICES. BUT WITH
CALLS TO LIFELINE INCREASING, SUICIDE PREVENTION
NEEDED AN ADDED BOOST.

THE BRIEF
In Australia, suicide is the leading cause of death for
people aged 15 to 44. Eight people die from suicide
in our country every day, and it’s an issue that causes
terrible heartache and pain.
Lifeline wanted to reduce the suicide toll in two ways:
1. By lobbying for an increase in Federal
government funding for suicide prevention; and
2. By raising funds for Lifeline’s telephone crisis

line service.

Lifeline Australia’s Chairman, John Brogden, had called
for suicide to be declared a national emergency. The
facts pointed to a paradox: suicide was killing twice as
many Australians each year as road accidents – but
suicide prevention received about half as much funding
as road safety.

THE APPROACH
Lifeline with the help of Pareto Fundraising launched a
digital two-step campaign designed to deliver on both
those objectives, calling on the Australian government
to increase funding for suicide prevention.
Step 1: Activism

An online petition calling on the Australian govern-

ment to increase funding for suicide prevention.
People were asked to “Join a compassionate
community and sign a petition asking the Australian
Government to increase Australia’s funding of suicide
prevention programs by double to help reduce deaths
by suicide.”
Step 2: Funding

Petition signers who opted in were taken on an
integrated fundraising conversion journey involving
telephone conversion, an automated email stream and
remarketed advertising.

Pareto Phone’s role helped to bring the discussion

of suicide to the forefront, reinforcing that positive
conversation and connecting with people is the best
way to address this issue. A tight working relationship
and data sharing arrangements within Pareto Group
meant that petition signers were called speedily (while
still engaged in the campaign), call scripts aligned well
with the experience, and a 7% plus phone conversion
rate was maintained throughout the campaign.

To maximise results, the two-step campaign also
needed to coordinate with Lifeline’s extensive press
campaign and any public statements from senior
representatives whilst working in partnership with all
the teams across the organisation.

THE RESULTS
Lifeline acquired just under a thousand regular
givers, at the cost of $344 each, plus 724 cash gifts
totalling almost $50,000. The additional annual
income exceeded $215,000. Early attrition rates for
this two-step campaign are lower than those from
other channels such as face-to-face. Plus tens of
thousands of new and engaged supporters could
potentially become new donors.

The results aren’t all financial. The 159,000
new signatures helped achieve Australia’s first
suicide prevention plan, new government-funded
suicide prevention trial sites across New South Wales
and $2.5 million for a crisis SMS support service.
The campaign delivered a spike in volunteer
enquiries, brand awareness, new leads for case
studies and helped Lifeline gain insights about
supporters via online engagement.

Annual Report 2017IVE Group Limited“We have been very happy with the two-step approach. We received an unprecedented number of emails with questions, opinions, stories and much more! We also achieved fantastic results and acquired new regular supporters at a significantly lower cost per acquisition than other channels. The retention rate of these new supporters has also been positive compared to other channels so far. The Pareto team was easy to work with and completely invested in the success of the campaign – they remained agile throughout the campaign – providing sound strategic recommendations as well as analytics and best practice fundraising skills.- Stephanie Chan,Lifeline Australia
34

CASE STUDY

END-TO-END DATA-DRIVEN
TELEMARKETING
CAMPAIGN RAISES CASH

CANTEEN IS THE NATIONAL SUPPORT ORGANISATION
FOR YOUNG PEOPLE AGED 12–25 WHO ARE LIVING
WITH CANCER; INCLUDING CANCER PATIENTS, THEIR
BROTHERS & SISTERS, AND YOUNG PEOPLE WITH
PARENTS OR PRIMARY CARERS WITH CANCER.

THE BRIEF
CanTeen first engaged Pareto Phone in
2007 to assist with their telemarketing
cash program. Since then, CanTeen’s
reliance on its cash program has migrated
towards a Regular Giving model where
they attract monthly supporters primarily
through face-to-face fundraising. They
required a partnership that could support
this multi-channel fundraising strategy.

THE APPROACH
Pareto Phone provided bespoke solutions
that allowed CanTeen to fully outsource
the end-to-end management of their
telemarketing cash program. This
included integrating CanTeen’s database into Pareto
Phone’s predictive modelling. Through this analysis,
we created an intelligent trigger-calling program that
provided the best return for CanTeen while ensuring
loyal supporters were not bombarded with random ‘call
everything’ calling strategies.

As CanTeen grew their Regular Giving supporter
base, Pareto Phone adapted their service model to
fit with CanTeen’s multi-channel fundraising goals.
Pareto Phone accessed CanTeen’s database monthly
and provided recommendations on data selections
for each Upgrade, Reactivation and Decline campaign
within this program area. These selections were built
through understanding historical outcomes and wider

fundraising strategies around supporter performance.
This approach ensured CanTeen maximised its return
on investment across each campaign and, through
actively-managed calling strategies, eliminated a poor
supporter journey.

THE RESULTS
Across CanTeen’s cash program, Pareto Phone
conducts the full end-to-end management of banking,
processing, fulfilment, data selection and trigger-
calling strategies. It’s a fully managed solution that
uses bespoke intelligent data selections coupled with
a unique back-end operational solution to ensure
success. This allows CanTeen to generate income from
an otherwise labour intensive fundraising solution.

Between 2007 and 2016, Pareto Phone and

CanTeen have worked together to refine and improve
a number of programs. CanTeen’s Regular Giving
programs have therefore grown substantially to deliver
more than 45,000 Upgrades, 7,000 Reactivations and
10,000 new Regular Givers.

This has helped CanTeen’s Regular Giving program

become one of the most successful in the country.
Coupled with accessibility to Pareto’s unique
fundraising dashboard, CanTeen has full visibility of
their fundraising performance. This ensures CanTeen
can continue to support and provide services to young
people affected by cancer.

Annual Report 2017IVE Group Limited“We have worked with Pareto Phone for a number of years and have always been extremely happy with not only the quality of their work but the excellent client service they provide. At the moment we run a number of campaigns with the agency and the reason we do so is to not only increase our regular and cash income results, but also to ensure our supporters receive the best experience.Pareto Phone provides detailed campaign reports which are very comprehensive, with results clearly illustrated each week. This transparency means we are always aware how a campaign is performing and it has further increased the trust between our organisation and the agency. All managers we work with from the agency are willing to go above and beyond, responding to any queries in an efficient manner.Overall I am more than satisfied with the service provided by Pareto Phone. They are professional, knowledgeable, and an extension of your team and I feel they genuinely care about what we are trying to achieve which is to support young people facing cancer. I would happily recommend them to any organisation.” - Yani Ferdinandus,Head of Individual Giving, CanTeen36

CASE STUDY

TECHNOLOGY DRIVES
LOCAL AREA MARKETING
BEST PRACTICE

A GLOBAL LEADER IN THE CAPITAL GOODS SECTOR
THAT DESIGNS, PRODUCES AND SELLS AGRICULTURAL
AND CONSTRUCTION EQUIPMENT, TRUCKS,
COMMERCIAL VEHICLES, BUSES AND SPECIALITY
VEHICLES, IN ADDITION TO A BROAD PORTFOLIO OF
POWERTRAIN APPLICATIONS.

THE BRIEF
To promote and increase sales of CNHI product
through local dealers via a more personalised
printed marketing effort. By moving away from
traditional generic printed materials to an on-demand
personalised approach, local stores could be better
supported and have the ability to promote selected
CNHI product in line with their customer needs.

THE APPROACH
A series of ‘discovery’ sessions were held with senior
CNHI stakeholders to draw out insights which led to
the implementation of Blue Star PRINT’s cloud-based
marketing automation technology solution: Web2Print.
Web2Print is an online portal that enables the creation,
personalisation and ordering of CNHI brochure
collateral as and when required.

THE RESULTS
The personalisation of the product catalogues allowed
dealers to take ownership and create relevance to their
customers. They could now personalise the front cover
with their dealer logo and store address, customise
the product range to reflect their local customer needs
and customise pricing to reflect local markets and
competition factors.

The once 4-page generic brochure transformed
to 20+ pages of highly relevant content. Over 80,000
personalised copies are being printed annually,
warehousing and pulping of the unused or slow-
moving product was eliminated, and ROI increased.

The Web2Print portal also opened a new avenue for

dealers to leverage Blue Star’s catalogue mailing and
distribution services, providing additional support to
get collateral quickly into dealerships.

“The progress that Blue Star has made with
our quarterly local area marketing catalogue
initiative has been phenomenal. Everyone here
at CNHI is extremely, extremely impressed.”

- Jared Dawson
Product Manager, CNHI

Annual Report 2017IVE Group Limited38

CASE STUDY

POINT OF SALE
ENHANCES SHOPPERS
EXPERIENCES

DIAGEO IS A GLOBAL LEADER IN BEVERAGE ALCOHOL
WITH AN OUTSTANDING COLLECTION OF BRANDS.
IN AUSTRALIA, DIAGEO OPERATES ACROSS CATEGORIES
IN INTERNATIONAL SPIRITS, LOCAL SPIRITS, AND
READY TO DRINK FORMATS.

THE BRIEF
Diageo approached IVEO to provide a cost-effective
solution to launch a new range of flagship displays for
their premium partner network. The new displays had
to address instore category confusion for consumers,
clearly defining sections and simplifying the selection
process.

Every store is unique and required a custom fit
out while retaining a similar look and feel to the others.
The overall display needed to reflect the premium
nature of the goods to be sold, without overreaching
a strict budget.

THE APPROACH
IVEO selected sturdy substrates with a premium feel,
allowing the best longevity for
investment.

A planogram was developed to

ensure the layout was functional
and served the objective to relay
clear information to the consumer.
The pieces were a combination
of standard and permanent Point
Of Sale (POS), all with special
build fixtures and electrical and
carpentry based installation.
Once in place, the standard POS
elements are easily updated to
permit reuse of the base fixtures
in the event of brand or product
updates. A 4-week project plan
was developed in accord with
timing and budget requirements.

THE RESULTS
The project was delivered on time and under budget,
with a high rate of satisfaction demonstrated by all
stakeholders.

The downturn in shopper confusion has been

clear, reflected in an increased percentage of sales of
products allocated to areas in the new planogram.
Store owners are thrilled with the clean-cut

appearance of the new design, and the easy restock
of product into designated areas.

Annual Report 2017IVE Group Limited40

IVE GROUP LIMITED
ANNUAL FINANCIAL
REPORT

ABN 62 606 252 644

YEAR ENDED 30 JUNE 2017

WE STRIVE
FOR PERFECTION

Annual Report 2017IVE Group Limited42

CONTENTS

Operating and financial review

Directors’ report

Lead auditor’s independence declaration

Financial report contents

Consolidated financial statements

Notes to the consolidated financial statements

Directors’ declaration

Independent audit report

ASX additional information

106

107

112

OPERATING AND FINANCIAL REVIEW

INTRODUCTION

The Directors are pleased to present the Operating and Financial Review (OFR) for IVE Group Limited (IVE) for the
period ended 30th June 2017.

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

2. SUMMARY

IVE achieved revenue growth for FY2017 of 30.1% compared to the prior corresponding period (‘PCP’) on a
Pro Forma basis, and 34.6% revenue growth on a Statutory basis (Pro Forma and Statutory basis are defined
in Section 5 of the OFR). The revenue increase reflects the impacts of the asset acquisition of Franklin Web Pty
Ltd (Franklin) and share capital acquisition of AIW Printing Pty Ltd (AIW), as well as continued growth through a
combination of new business wins and new business from existing customers through expanded service offering.

IVE also achieved EBITDA growth of 23.0% over the PCP (before restructure and acquisition costs and based
on FY2016 pro forma before restructure and acquisition costs), impacted by the acquisition of Franklin and AIW
through a combination of revenue growth (outlined above), as well as continued productivity gains and cost base
refinement through capital expenditure investment, focus on cost management, and the benefits arising from
acquisition synergies. Statutory EBITDA is 35.5% higher than the PCP, reflecting revenue growth outlined above,
however this has been impacted by restructuring and acquisition costs in FY2017 as well as costs associated with
listing on the ASX in H1 FY2016.

During FY2017 IVE completed the successful integration of FY2016 acquisitions, and continued its acquisition
program acquiring the assets of The Mailing House Pty Ltd (September 2016), Retail 25 Consulting Pty Ltd
(December 2016), and Display Bay Pty Ltd (December 2016).

Further to our acquisition program, IVE strategically entered the large format web offset (LFWO) sector through
the acquisition of Franklin and AIW. Both acquisitions completed on 13th December 2016, and are consistent with
IVE’s strategy to be a leading, full service marketing and print communications provider.

Annual Report 2017IVE Group Limited44

OPERATING AND FINANCIAL REVIEW (CONT.)

3. STRATEGY AND OPERATING OVERVIEW

IVE is a vertically integrated marketing 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. IVE has an unparalleled product and service offering in Australia and holds leading
positions across multiple sectors.

IVE’s growth strategy is focused on the following key initiatives:

• New customer origination driven by a highly customer centric culture;

• Growing share of wallet with existing customers;

• Execution of a disciplined acquisition program;

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

• Continuing to strengthen and leverage the existing business through targeted operational efficiency programs.

IVE has significantly grown it’s diversified offer to the retail sector over the last five years, and the acquisition of both
Franklin and AIW are highly complementary to the Group’s existing offer.

These acquisitions will:

• Make IVE a leading player in the Large Format Web Offset sector specialising in retail catalogues;

• Establish IVE as a low cost and highly efficient specialist catalogue producer by:

– Integrating AIW operations into Franklin’s world class facility in Victoria, allowing IVE to unlock meaningful

synergies

– Enhancing the Group’s national coverage through the establishment of a Franklin facility in NSW to support

national retailers and the publishing sector

• Provide a significant opportunity to cross sell the broader Group offer to the combined customer base;

• Further diversify IVE’s revenue base; and

• Strengthen management capabilities to support integration and growth.

Further information on IVE’s strategy, operations and markets is set out in our 30 June 2017 Annual Report. Other
than the impact of the Franklin and AIW acquisitions, there have been no significant changes to IVE’s strategy,
operations and market.

OVERVIEW OF RESULTS FOR FY2017

IVE’s Financial Report for FY2017 is presented on a Statutory basis 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 FY2017 results presented before
impacts of all restructuring and acquisition costs which primarily relate to the acquisition of AIW and Franklin.
Comparisons to FY2016 performance are on a Pro Forma basis (as outlined in Prospectus dated December 2015,
also excluding all restructure and acquisition costs).

The Directors believe that the results before restructuring and acquisitions costs, and Pro Forma comparisons,
better reflects the underlying operating performance and is consistent with the Prospectus, this differs from the
Statutory presentation. The non statutory FY2017 results are impacted by costs associated with the acquisition
and restructure of Franklin and AIW, Blue Star Connect warehouse relocation as well as all other non-recurring
acquisition and restructure costs. Full year FY2016 results are presented on a Pro Forma basis to reflect the effect
of the operating and capital structure that was established at time of the IPO, and excludes the costs of IPO, one off
tax implications arising as a result of the IPO, and restructure and acquisitions costs.

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.

4.1 STATUTORY RESULTS PER THE FINANCIAL REPORT

Table 1 outlines the Statutory results for FY2017 and FY2016 on a comparable basis.

Table 1: Statutory results

Revenue

Gross Profit

% of Revenue

EBITDA

% of Revenue

EBIT

% of Revenue

Profit before tax

NPAT

NPATA

Statutory

Actual
FY2017
$’M

Actual
FY2016
$’M

Variance
$’M

Variance
%

496.9

248.1

369.2

192.0

127.6

34.6%

56.1

29.2%

49.9%

52.0%

35.9

7.2%

22.2

4.5%

16.4

12.1

14.8

26.5

7.2%

16.9

4.6%

14.2

15.0

16.4

0.0

9.4

0.0

5.3

0.0

2.3

–4.0%

35.5%

0.7%

31.3%

–2.4%

15.9%

–2.9

–1.6

–19.5%

–10.0%

Annual Report 2017IVE Group Limited46

OPERATING AND FINANCIAL REVIEW (CONT.)

4.1 STATUTORY RESULTS PER THE FINANCIAL REPORT (CONT.)

The key variances on a Statutory basis between FY2017 and FY2016 are as follows:

• Revenue

Revenue increase of $127.6M or 34.6% over PCP, this reflects the impact of Franklin and AIW acquisitions, as
well as increased revenue through new customer wins and the existing customer base through expanded service
offering. The revenue increase has been achieved through realising 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 extensions. IVE has also secured a number new customers, the benefit of which commenced in H2 of
FY2017.

• Gross profit

The gross profit increase of $56.1M over PCP largely driven by increased revenue. The Group achieved gross profit
margin of 49.9% to revenue compared with 52.0% in PCP. Normalising for Franklin and AIW work mix, gross profit
has remained stable as a result of managing of inputs, continued leveraging of supply chain and reducing outsource
spend wherever possible by producing internally.

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

EBITDA of $35.9M represents an increase of $9.4M or 35.5% over PCP, achieved via a combination of acquisitions,
revenue growth, and efficiency gains.

Production expenses of $107.9M are 21.7% to revenue compared to $84.7M and 22.9% to revenue in PCP.
The main driver of the increase in production expense is to service additional revenue.

Administration expenses of $88.7M are 17.9% to revenue compared to $81.3M and 22.0% to revenue in PCP,
with PCP impacted by the close out of MEP and costs associated with listing.

Other expenses of $19.1M compared to PCP of $1.5M. FY2017 includes restructuring costs of $13.3M and
acquisition costs of $5.9M predominantly relating to the Franklin and AIW acquisitions.

• NPAT (Net profit after tax)

FY2016 statutory NPAT was impacted by a credit to tax expense of $7.1M due to a one off uplift in tax carrying
values. Normalised for this statutory NPAT increased over the period from FY2016 $7.9M to FY2017 $12.1M.

4.2 FULL YEAR FY2017 NON IFRS PRO FORMA FINANCIAL INFORMATION

The full year FY2017 results below are presented before all restructuring and acquisition costs. Compared to
FY2016 on a Pro Forma basis also excluding all restructure and acquisitions costs to allow investors to make a
comparison on a like for like basis.

Table 2: FY2017 non IFRS Pro Forma financial information, FY2016 results on a Pro Forma basis, and FY2017
Statutory results

Statutory

Pro Forma

Actual
FY2017
$’M

Actual
FY2016*
$’M

Variance
$’M

Variance
%

496.9

248.1

496.9

248.1

382.0

199.6

49.9%

52.2%

35.9

7.2%

22.2

4.5%

16.4

12.1

14.8

55.2

44.9

11.1%

11.7%

41.4

8.3%

36.0

24.6

27.3

34.8

9.1%

32.6

22.3

23.9

114.8

30.1%

48.5

0.0

10.3

0.0

6.6

0.0

3.4

2.3

3.3

24.3%

–4.4%

23.0%

–5.4%

18.9%

–8.6%

10.5%

14.0%

Revenue

Gross Profit

% of Revenue

EBITDA

% of Revenue

EBIT

% of Revenue

Profit before tax

NPAT

NPATA

* The FY2016 Pro Forma has been adjusted by $2m to exclude restructure and acquisition costs. This is consistent with FY2017

Pro Forma adjustments below.

Table 3: FY2017 Pro Forma adjustments are as follows:

Pro Forma Adjustments –

Restructure – IVE other

Restructure – Franklin/AIW

Acquisition – Transaction costs

Interest expense – previous facility setup costs

Total

FY17
$’M

–1.5

–11.8

–5.9

–0.3

–19.5

Annual Report 2017IVE Group Limited48

OPERATING AND FINANCIAL REVIEW (CONT.)

4.3 BALANCE SHEET

The directors present their report together with the consolidated financial statements of the Group comprising of
IVE Group Limited (the Company), and its subsidiaries (the Group) for the financial year ended 30 June 2017 and the
auditor’s report thereon.

Table 4 sets out the indebtedness of IVE on a Statutory basis comparing FY2017 to FY2016 as presented in its
30 June 2017 Annual Financial Report.

Table 4: H1 FY2017 Statutory indebtedness

Principal activities
The principal activities of the Group during the course of the financial year were:

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

DIRECTORS’ REPORT

For the year ended 30 June 2017

• Catalogues, printing of magazines, marketing and corporate communications materials and stationery;

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

• Personalised communications including marketing mail, publication mail, eCommunications and multi-channel

solutions; 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.

There were no significant changes in the nature of the activities of the Group during the year.

Operating and financial review
The profit after tax of the Group for the year ended 30 June 2017 was $12,109 thousand (2016: $15,051 thousand).
A review of operations and results of the Group for the year ended 30 June 2017 are set out in the Operating and Financial
Review, which forms part of the Annual Financial Report.

Dividends
For the year ended 30 June 2017, the directors have declared a final dividend of 7.9 Australian cents per share, fully
franked, to be paid on 25 October 2017 to shareholders on the register at 25 September 2017.

Total dividends of $15,185 thousand were declared and paid by the Company to members during the 2017 financial year.
Further details on dividends is included in note 20 of the Financial Report.

Significant changes in the state of affairs
During the year, the Group acquired a number of businesses, the details of which are included in note 22 of the
Financial Report.

In the opinion of the directors there were no other significant changes in the state of affairs of the Group that occurred
during the financial year under review.

Short-Term – Finance Leases

Long-Term Debt – Finance Leases

Senior Facilities (face value)

Sub Total

Cash

Net Debt

Actual June
FY2017
$’M

Actual June
FY2016
$’M

2.8

11.2

136.0

150.0

–23.9

126.1

2.67

11.7

36.8

51.1

–14.5

36.6

The above reflects current debt structure for IVE as at 30th June 2017.

The increase in drawn senior facilities $99.2M relates to the acquisitions of both Franklin and AIW on the
13th December 2016. The acquisitions were funded through a combination of new equity via issue of shares
to vendors ($20.3M), a share placement and entitlement offer ($40.0M), and a new 3 year senior debt facility
increasing from $53.0M to $145.0M, and as at 30 June $140.0M. The increase in facilities was used to fund the
above acquisitions, necessary ensuing restructuring costs to unlock synergies, resulting transaction costs, and
the associated capital investment program.

During FY2017 IVE remained in compliance with all covenants relating to debt facilities. Operating cash flow
was strong reflecting EBITDA achievement and a reduction of working capital from the seasonal high point in
December 2016 to June 2017.

5. FY2018 FINANCIAL OUTLOOK

• FY18 EBITDA expected to be approximately $70–$75 million (before restructure costs)
– FY18 restructure costs expected to be $2.5–$3.5 million.

• Key drivers of FY18 expected to be:
– full year contribution of Franklin WEB
– phased realisation of new contract wins in LFWO
– phased realisation of synergies from Franklin/AIW integration

• Franklin WEB (NSW) fully operational from October 2017
• AIW to be closed by end of December 2017.

6. ADDITIONAL INFORMATION

For further information contact:

Geoff Selig
Executive Chairman

Darren Dunkley
Chief Financial Officer

+ 61 2 9089 8550

+ 61 2 8020 4400

Annual Report 2017IVE Group Limited

Director

Experience, special responsibilities and other directorships

Andrew Charles
Harrison

Independent
Non-executive Director

Appointed:
25 November 2015

Andrew is an experienced company director and corporate advisor.

Andrew has previously held senior executive positions and non-executive directorships with
public, private and private equity owned companies, including as Chief Financial Officer of
Seven Group Holdings, Group Finance Director of Landis and Gyr, and Chief Financial Officer
and a director of Alesco. Andrew is currently a non-executive director of Burson Group, Estia
Health, Xenith and WiseTech Global. Andrew was previously a Senior Manager at Ernst & Young
(Sydney and London) and Gresham Partners Ltd, and an Associate at Chase Manhattan Bank
(New York). Andrew holds a Bachelor of Economics from the University of Sydney and a Master
of Business Administration from Wharton, and is a chartered accountant.

Paul Stephen Selig

Executive Director

Appointed:
10 June 2015

Paul has over 25 years’ experience in the industry
and is currently Managing Director of Caxton Group.
Paul is a former CEO of Blue Star’s Australian operations (1997 – 2001)

In 2010, he was appointed a director of CaxtonWeb following its acquisition by Caxton
Group and was appointed non- executive director of the Group following the purchase of the
Australian operations of Blue Star Group in 2012.Paul is a director of Caxton Group,
Caxton Property Investments and Caxton Print Holdings.
Paul Holds a Bachelor of Economics (Hons) from Macquarie University.

James Scott
Charles Todd

James was appointed non-executive chairman of the Group in November 2012 and moved to
non-executive director in 2015 when Geoff Selig was appointed executive chairman.

Independent
Non-executive Director

Appointed:
10 June 2015

James is an experienced company director, corporate advisor and investor.

James is Managing Director of Wolseley Private Equity, an independent private equity firm
which he co-founded in 1999.

He commenced his career in investment banking working with Hambros Bank, both in Sydney
and London, and has taken active roles with, and invested in, a range of public and private
companies.

James also served as Council Member of the Australian Private Equity and Venture Capital
Association (AVCAL), where he was chair of the AVCAL Growth Funds Committee.

James holds a Bachelor of Commerce and Bachelor of Laws from the University of New South
Wales, and a Graduate Diploma from the Financial Services Institute of Australia (FINSIA),
where he is a Fellow. He is a member of the Australian Institute of Company Directors.

DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2017

Information on Directors
The directors of the Company at any time during or since the end of the financial year are:

Director

Experience, special responsibilities and other directorships

Geoff Bruce Selig

Executive Chairman

Appointed:
10 June 2015

Geoff has been a director of the Group since November 2012 and has over 25 years’
experience in the marketing communications sector. He is a former CEO of Blue Star Group’s
Australian operations (2001-2007) after the Selig family printing business (Link Printing) was
acquired by Blue Star in 1997.

Geoff re-entered the sector in 2010 leading the Selig family acquisition of CaxtonWeb,
followed by partnering with Wolseley Private Equity to acquire the Australian operations of
Blue Star in late 2012.

Geoff is a director of Caxton Group, Caxton Property Investments and Caxton Print Holdings.

Geoff currently sits on the board of the National Heart Foundation of Australia (N.S.W Division),
The Pinnacle Foundation, and The Lysicrates Foundation. He was the State President of the
NSW Liberal Party from 2005-8.

Geoff holds a Bachelor of Economics from Macquarie University. He is a member of the
Australian Institute of Company Directors.

Warwick Leslie Hay

Managing Director

Appointed:
25 November 2015

After joining the Group in 2009 as CEO of Blue Star WEB, Warwick was appointed managing
director of the Group in 2014. Having worked in senior leadership roles within the business
since 2009, Warwick has been a key influence in the growth and the strategic positioning of
the Company.

Warwick has 20 years of management experience across all business operations in complex
business-to-business environments.

Prior to joining IVE, Warwick was General Manager
of Huhtamaki Flexibles Packaging Oceania. His
prior work history includes 15 years within Carter Holt
Harvey’s packaging division across a broad range
of senior roles. Warwick completed a Graduate Diploma in Packaging Technology from Massey
University in
New Zealand and a Post Graduate Diploma in Business from Auckland University.

Gavin Terence Bell

Independent
Non-executive Director

Appointed:
25 November 2015

Gavin was the Chief Executive Officer of law firm Herbert Smith Freehills, a role he held from
2005 until he retired from the role in 2014.

Gavin is an experienced non-executive director. He is currently a non-executive director of
Smartgroup Corporation and Insurance and Care NSW.

Gavin holds a Bachelor of Laws from the University of Sydney and a Master of Business
Administration (Exec) from AGSM, University of New South Wales.

Sandra Margaret Hook

Independent
Non-executive Director

Appointed:
1 June 2016

Sandra has extensive operational, financial management and strategic experience built over
25 years in senior executive roles as a Chief Executive Office, Chief Operating
Officer, Group Publisher, Marketing Director, and General Manager for some of Australia’s
largest media
companies including Foxtel, Federal Publishing Company, Murdoch Magazines, Fairfax,
ACP and News Limited. She has a track record in driving transformation and transitioning
traditional businesses in rapidly evolving environments.

She currently holds a number of directorships including Non-executive director at RXP
Services, MedAdvisor, auDA, and Sydney Fish Markets, and is a Trustee, Royal Botanic Gardens
and Sydney Harbour Federation Trust. She is also a Member of the Australian Institute of
Company Directors (GAICD).

Annual Report 2017IVE Group Limited52

DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2017

Company Secretary
Emma Lawler

Emma was appointed as Company Secretary on 11 December 2015. Emma has two decades of experience as a company
secretary and governance professional. Emma holds a Bachelor of Business and a Graduate Diploma in Applied Corporate
Governance and is a Fellow of the Governance Institute of Australia.

Darren Dunkley

Darren has been the Chief Financial Officer (CFO) of the Group since 2012, and has been with IVE for over 15 years.
He has over 25 years of experience with a range of blue chip companies including Sharp Corporation, ANZ Banking Group
Ltd and Nashua Australia. Darren has a Bachelor of Commerce majoring in Accounting and is a CPA.

Meetings of Directors
The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by
each of the directors of the Company during the financial year are:

Board

Audit, Risk &
Compliance
Committee
(“ARCC”)

Nominations &
Remuneration
Committee (“NRC”)

Other
Committees

Events subsequent to reporting date
On 28 August 2017 the Group will announce a further capital raise of $55.6 million. The funds from the capital raise will
be used towards a new acquisition, additional press and equipment, growth capital and associated costs. The Group has
identified a target acquisition for an estimated consideration of $14.5 million and completion date of 5 September 2017.

Aside from the above, there has not arisen in the interval between the end of the financial year and the date of this report
any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to
affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future
financial years.

Likely developments
Information about likely developments in the operations of the Group and the expected results of those operations in
future financial years has not been included in this report because disclosure of the information would be likely to result
in unreasonable prejudice to the Group.

Indemnification and insurance of officers and auditors
Indemnification

The Company has not indemnified or made a relevant agreement for indemnifying against a liability any person who is or
has been an officer or auditor of the Company.

Eligible Attended Eligible Attended Eligible Attended Eligible Attended

Insurance premiums

During the financial year the Company has paid premiums in respect of directors’ and officers’ liability insurance contracts
for the year ended 30 June 2017. In addition, since the financial year, the Company paid or agreed to pay premiums in
respect of such insurance contracts for the year ending 30 June 2018. Such insurance contracts insure against certain
liability (subject to specific exclusions) for persons who are or have been directors or executive officers of the Company.

The directors have not included details of the nature of the liabilities covered or the amount of the premiums paid in respect
of the directors’ and officers’ liability insurance contracts, as such disclosure is prohibited under the terms of the contract.

Geoff Selig

Warwick Hay

Gavin Bell

Andrew Harrison

Sandra Hook

Paul Selig

James Todd

–

Committee membership for ARCC and NRC changed during the year.

There were two meetings held of the Independent Directors during the year. All of the Independent Directors attended both
of these meetings

Directors’ interest and benefits
The relevant interests of each director in the shares of the Company as at the date of this report are disclosed in the
Remuneration Report (on page 55).

Environmental regulation
The Group’s operation is not subject to any significant environmental regulations under either Commonwealth or State
legislation. However, the Board believes that the Group has adequate systems in place for the management of its
environmental requirements and is not aware of any breach of those environmental requirements as they may apply to
the Group during the period covered by this report.

Annual Report 2017IVE Group Limited54

DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2017

Letter from the Chair of the Nomination and Remuneration Committee

Dear Shareholder,

As Chair of the Nomination and Remuneration Committee (NRC), on behalf of the Board I am pleased to present IVE
Group’s Remuneration Report for the year ended 30 June 2017 (FY17).

The Report is designed to provide shareholders with an understanding of IVE Group’s remuneration philosophy and the
link between this philosophy and IVE Group’s strategy and performance.

The Board is committed to having remuneration policies and practices which are designed to ensure remuneration is
competitive and reasonable to attract and retain key talent who are critical to IVE’s business success. IVE Group will align
remuneration to strategies and business objectives and provide a balance between fixed and variable rewards to ensure
that rewards are given for performance. Remuneration structures are designed to be transparent to employees and other
stakeholders and easily understood. In addition the remuneration framework is designed to be acceptable to shareholders
by being consistent with market practice and creating value for shareholders.

The remuneration framework was reviewed in 2017 and there have been no significant changes to the overall framework.

The members of the NRC have the necessary expertise and independence to fulfil their responsibilities and are able to
access independent experts in remuneration for advice should this be required. The governance processes in relation to
remuneration are working effectively and the Board trusts that shareholders find this Report useful and informative.

Gavin Bell

Chair of the Nomination and Remuneration Committee

Remuneration Report (Audited)
This Remuneration Report (Report), which has been audited, describes the Key Management Personnel (KMP)
remuneration arrangements for the period ended 30 June 2017 for IVE Group, in accordance with the Corporations Act
2001 (Cth) and its regulations.

The remuneration report contains the following sections:

• Persons covered by this Report

• Overview of the remuneration framework for executive KMPs

• Linking reward and performance

• Grant of Performance Share Rights and the Long Term Incentive Plan

• Non-Executive Director remuneration framework

• Contractual arrangements with executive KMPs

• Details of remuneration for KMPs

• Rights Granted to executive KMP

• Directors and executive KMP shareholdings in IVE Group Limited

• Other statutory disclosures

Who this report covers

This report covers Non-Executive Directors and executive KMPs (collectively KMP) and includes:

Non-Executive Directors

Gavin Bell

Andrew Harrison

Sandra Hook

James Todd

Executive Key Management Personnel

Geoff Selig

Paul Selig

Warwick Hay

Matt Aitken

Darren Dunkley

All KMP were in their roles for the full year.

Role

Independent Non-Executive Director

Executive Chairman

Executive Director

Managing Director

Chief Operating Officer

Chief Financial Officer & Company Secretary

Overview of IVE Group’s remuneration framework for executive KMP

The objective of IVE Group’s remuneration philosophy is to ensure KMPs are rewarded for business performance
and retained to continue to grow the business. The objectives underpinning the remuneration philosophy are that
remuneration will:

• Be competitive and reasonable to attract and retain key talent;

• Align to IVE’s strategies and business objectives;

• Provide a balance between fixed and variable rewards;

• Be transparent and easily understood; and

• Be acceptable to shareholders.

A key factor in IVE Group’s business success will be being able to attract and retain key talent and the remuneration
framework has been designed to enable this.

Annual Report 2017IVE Group Limited56

DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2017

Governance

Long term incentive (LTI)

IVE Group has established a Nomination and Remuneration Committee (NRC) whose role is to assist the Board with
its remuneration responsibilities, including reviewing and recommending to the Board for approval arrangements for
executives, Executive Directors and Non-Executive Directors. The NRC has three members, all of whom are independent,
including an independent Chair. The members of the NRC have appropriate qualifications and experience to enable the
NRC to fulfil its role.

In addition, the Board has appointed Gavin Bell as the Lead Independent Director to fulfil the role of Chair whenever the
Executive Chairman is conflicted and to assist in reviewing the Executive Chairman’s performance as part of the Board
performance evaluation process.

External remuneration consultants

The Terms of Reference for the NRC requires that any remuneration consultants engaged be appointed by the NRC. During
2017 IVE did not engage the services of any external remuneration consultants.

Any advice that may be received from remuneration consultants in future will be carefully considered by the NRC to ensure
it is given free of undue influence by IVE Group executives.

Structure of Remuneration

The remuneration framework for executive KMP includes both fixed and performance-based pay.

Fixed remuneration

Fixed remuneration is set using a combination of historical levels and sector comparisons. Fixed remuneration includes
base pay, statutory contributions for superannuation and non-monetary benefits.

The NRC reviews the fixed remuneration of executive KMP on an annual basis and has reviewed the fixed remuneration
during 2017 which has been implemented from 1 July 2017. Fixed remuneration for executive KMP has been increased
for FY18 based on a review of competitor remuneration, the substantial increase in the size of the business and also noting
the length of time since the last fixed remuneration increase. Most of the executive KMP have not had a fixed remuneration
increase since late 2014 or early 2015.

Paying executive KMP the right fixed remuneration is a key tool in attracting and retaining the best talent. The Board
is committed to retaining key personnel this year given the significant acquisitions made during the year and the
consolidation occurring in some of the Company’s key markets. This is reflected in some of the increases applying
from 1 July 2017. The successful completion of a number of large and significant acquisitions during the year has also
significantly increased the scope of the executive KMP’s rolesand contributed to the significant increase in revenue and
EBITDA referred to in the table on page 17.

Short term incentive (STI)

In 2017, executive KMP were eligible to receive an STI payment of between 10 and 17.5% of fixed remuneration. The STI
is a cash incentive payment and full payment is conditional on achievement of the key financial performance target for the
Group, specifically, Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) for the year in review.

The NRC reviews the achievement of STI targets at the end of each year and sets STI targets for the following year. The STI
is the main tool for rewarding the current year’s performance of the business.

In FY17, full payment of the STI was not made with each executive KMP awarded 71% of the STI target based on the
company not achieving the full EBITDA target. The NRC used its discretion to award a portion of the STI despite the full
EBITDA target not being achieved as the actual result still represented a strong result in the current market and due to
the considerable work undertaken during the year on acquisitions and initiatives directed to the long term growth of
the business.

The Board has established a LTI Plan as outlined in the 2016 Remuneration Report and outlined in the section in this
Report entitled “Share based remuneration”. The LTI Plan has not been amended during the year. The LTI is largely used
to reward long-term sustainable performance.

The LTI Plan facilitates the offer of Performance Share Rights (Rights) to key executives and the Rights vest and convert to
ordinary shares on a one-for-one basis, subject to meeting specific performance conditions, specifically achievement of:

•

relative Total Shareholder Return (TSR); and

• compound annual Earnings Per Share growth (EPS) over a three-year performance period.

The LTI Plan has been designed commensurate with IVE Group’s long-term strategic objectives so that executive KMP
will be rewarded when there is a demonstrable increase in shareholder value.

The grant of Rights to the Executive Chairman and Managing Director was approved by shareholders at the 2016 Annual
General Meeting (AGM) and the Rights to be granted to the Managing Director for 2017 will be submitted for approval by
shareholders at the 2017 AGM.

The Board has the discretion to amend the vesting terms and performance hurdles at the grant of each award of Rights
to ensure that they are aligned to market practice and ensure the best outcome for IVE Group. The Board also has the
discretion to change the LTI Plan and to determine whether LTI grants will be made in future years. There is no-retesting
of performance hurdles.

The Board has made changes to the level of LTI to grant in FY18 as shown in the table under Executive KMP Remuneration
in FY17 and FY18. The Board, following review by the NRC, has agreed not to grant equity-based LTI to Geoff Selig,
Executive Chairman in FY18. Geoff Selig is a substantial shareholder in IVE Group, by being a beneficiary of the Selig
Family Trust No.5, (trustee Caxton Print Holdings Pty Ltd) which already aligns his performance drivers to shareholders’
interests. While each one of the executive KMP holds significant shareholding in IVE, the level is not on the scale of
Geoff Selig’s and the NRC’s view is that an equity-based LTI will still provide an incentive to the other executive KMP.
An STI will continue to be part of Geoff Selig’s remuneration arrangements.

Assessment of performance

Performance of executive KMPs is assessed against the agreed non-financial and financial targets on a regular basis.
Based on this assessment, the Executive Chairman will make a recommendation to the NRC for Board approval of the
amount of STI and LTI to award (as applicable) to each KMP, other than the Executive Chairman. Recommendations in
relation to the Executive Chairman will be made by the Chair of the NRC for Board approval.

The NRC assesses the actual performance of IVE Group and the Executive Chairman against the agreed targets and
recommends the amount of the STI and LTI (as applicable) to be paid for approval by the Board.

Annual Report 2017IVE Group Limited58

DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2017

Executive KMP remuneration – paid, vested and targets

Proportions of fixed and variable remuneration

The table below presents the STI and LTI paid and vested to executive KMP during FY16 and FY17. Further detail on
remuneration is included in the tables at the end of this Report.

All in $

Geoff Selig

Warwick Hay

Matt Aitken

Darren Dunkley

STI

LTI – Number of Rights

Maximum

70,000

Actual

50,000

70,000

50,000

70,000

50,000

35,000

25,000

FY17

FY16

FY17

FY16

FY17

FY16

FY17

FY16

Granted

Vested

32,817 Not applicable
(3 year vesting)
–

–

32,817 Not applicable
(3 year vesting)

19,690 Not applicable
(3 year vesting)

Note – IPO one off benefits have been excluded from the table above for FY16 for comparison purposes. These are shown
in the tables at the end of this Report.

Further detail on the value of the Rights granted is included in the tables at the end of this Report.

Following the assessment of performance and the annual review of fixed remuneration and STI targets, the changes to
executive KMP for FY18 is outlined below.

All in $

Fixed Remuneration*

STI

LTI

Geoff Selig

Warwick Hay

Matt Aitken

FY17
Actual

FY18
Agreed

FY17

FY18
Actual Maximum

FY17
Grant**

FY18
Grant**

700,000

850,000

50,000

200,000

50,000

440,000

500,000

50,000

100,000

50,000 100,000***

400,000

480,000

50,000

90,000

50,000

90,000

Darren Dunkley

305,000

400,000

25,000

75,000

30,000

75,000

* Fixed remuneration includes superannuation

** LTI grant is the $ value of the grant approved by the Board.

*** FY18 LTI grant is subject to shareholder approval.

The Board and NRC consider annually the fixed remuneration and proportion of variable remuneration that is dependent
on performance (“at risk”) for each executive KMP. The relative proportions of fixed versus variable pay (as a percentage
of total remuneration) received by executive KMP during the current financial period and proposed for the next financial
period are as follows:

Geoff Selig

Warwick Hay

Matt Aitken

Fixed Remuneration

At risk –
STI (maximum)

At risk LTI

2018

81.0%

2017

85.4%

2018

19.0%

2017

8.5%

2018

71.4%

78.6%

14.3%

12.5%

14.3%

72.7%

76.9%

13.6%

13.5%

13.6%

Darren Dunkley

72.7%

82.4%

13.6%

9.5%

13.6%

2017

6.1%

8.9%

9.6%

8.1%

How reward is linked to performance

Performance indicators and link to performance
IVE Group’s financial performance has been strong since listing on the ASX in December 2015. Performance of the
business is reflected in the outcome of the variable components to the remuneration framework:

•

full STI payments are only made if executive KMP meet agreed financial targets for the year in review. The financial
target for FY17 was an EBITDA target; and

• LTI grants only vest if IVE Group achieves the targets set for TSR and EPS over a three year period.

There has been no LTI vesting for executive KMP since listing on the ASX. The first possible vesting date for executive
KMP is after the FY19 financial results are released to the market and targets will be tested at that time.

In FY17, each executive KMP was awarded 71% of the STI. The NRC used its discretion to award a portion of the STI
despite the full EBITDA target (prior to acquisitions and other one off changes in the business) not being achieved as the
actual result still represented a strong result in the current market and due to considerable work undertaken during the
year on acquisitions and initiatives directed to the long term growth of the business.

Key financial metrics over the last four years that can be measured are shown below:

Revenue ($m)

EBITDA ($m)

Net profit after tax ($m)

Dividend payment (cents per share)*

Share price change ($)**

The above results are prepared on a pro forma basis.

* Only applicable post-listing on ASX.

** Calculated as close price on 30 June for the applicable year.

FY14

303.5

22.9

6.4

N/A

FY15

337.4

30.9

9.7

N/A

FY16

382.0

42.8

20.9

N/A

FY17

496.6

55.2

24.6

14.9

(0.043)

Annual Report 2017IVE Group Limited

DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2017

Grant of Performance Share Rights

During the year, the Company made offers of Rights under the LTI Plan with clear performance measures. The offers
included:

•

In September 2016, offers were made granting 180,491 performance rights under the Senior Leadership Team Plan.
These Rights vest following the release of the FY19 financial results if certain performance conditions are met during
the Performance period which is 1 July 2016 to 30 June 2019. During the year 16,408 of these Rights lapsed due to
employee resignations.

In September 2016, offers were made granting 156,538 performance rights under the General Management Plan.
These Rights vest after release of the FY17 financial results if certain performance conditions are met. During the
year 12,384 of these Rights lapsed due to employee resignations.

In total there were 308,237 unvested Rights at 30 June 2017.

There were no offers of options during the year and there are no unvested options.

The terms of the Equity Incentive Plan which provide the framework under which the LTI grants were made in FY17 are
as follows:

Type of security

Valuation

Performance Share Rights which are an entitlement to receive fully paid ordinary IVE Group
Limited shares (as traded on the ASX) on a one-for-one basis.

The number of Performance Share Rights for each KMP is calculated by dividing the
allocated value of the LTI award for that KMP by the fair value of a Performance Share Right
calculated using a Black Scholes financial model.

For the Managing Director, the value of the potential LTI award, as recommended by the
Board, will be submitted for approval by shareholders at the relevant Annual General
Meeting, as required by the ASX Listing Rules.

Performance Period

The Performance Period is the three year period 1 July to 30 June inclusive.

Performance Conditions

The number of Performance Share Rights that may vest will be determined by reference to:

• Earnings Per Share (EPS) compound annual growth over the Performance Period.

EPS growth will be calculated as IVE Group’s Net Profit After Tax (NPAT) divided by the
undiluted weighted average shares on issue throughout the Performance Period, using
the following formula:

(Benchmark 1); and

• Relative Total Shareholder Return (TSR) performance of the Company in comparison to
similar companies in a peer group determined by the Board. The TSR of each company
will be measured from the start of the Performance Period to the end of the Performance
Period (Benchmark 2),

(collectively the Performance Conditions).

Together Benchmark 1 and Benchmark 2 comprise the total Performance Conditions
but act independently relative to their specific target component of 60% and 40% of
Performance Share Rights, respectively.

Re-testing

There is no re-testing. Any unvested LTI after the test at the end of the Performance Period
will lapse immediately.

Feature

Forfeiture

Clawback

Terms of the IVE Group Equity Incentive Plan

All Rights will lapse if the participant elects to cease employment with IVE Group prior to
the Conversion Date (being the date that Performance Share Rights convert to shares).

Rights will immediately lapse if the participant is dismissed or removed from office as an
employee for any reason which entitles IVE Group to dismiss the participant without notice
or if the participant acts fraudulently, dishonestly or in breach of their obligations to the
Company.

The only exception to the lapse of rights is for a Good Leaver reason detailed below:

• Any unvested Rights will not lapse if the participant’s employment with IVE Group ceases
due to death, ill-health, total permanent disability or sale of the business in which they
are employed.

• Rights for employees who cease employment due to death will vest in full upon

cessation.

• Rights for other good leavers will remain on foot and will be tested against the
Performance Conditions as at the Vesting Date, vesting on a pro-rata basis.

The Board has discretion to allow vesting for other reasons, such as retirement or
redundancy.

The Board has broad “clawback” powers if, amongst other things, the participant has acted
fraudulently or dishonestly, engaged in gross misconduct or has acted in a manner that has
brought the Company into disrepute, or there is a material financial mis-statement, or the
Company is required or entitled under law or company policy to reclaim remuneration from
the participant, or the participant’s entitlements vest as a result of the fraud, dishonesty or
breach of obligations of any other person and the Board is of the opinion that the incentives
would not have otherwise vested.

Non-executive Director Remuneration

Non-executive Directors enter into service agreements through a letter of appointment which are not subject to a fixed
term. Non-executive Directors receive a fee for their contribution as Directors. Fees are determined with reference to
the demands of the role and the responsibilities carried out by Directors. The fee setting process also takes into account
market levels and the need to attract high quality Directors.

Directors receive fees for their role as members of the Board and, where applicable, for additional responsibilities.
Non-executive Directors do not receive additional fees for being a Chair or member of a Board Committee. Non-executive
Directors do not receive any variable or performance-based remuneration. Where Directors are required to provide
additional services, these are paid on a fixed fee basis or determined on an hourly basis depending on the nature of the
service. The current annual fees provided to Non-executive Directors are shown below (inclusive of superannuation but
exclusive of fees for additional services)

Role

Board

Chair
fee

Member
fee

N/A as Executive Chairman

$90,000

The total Non-executive Director fee pool has a maximum value of $1 million per annum. The total amount paid to
non-executive directors in FY17 was $584,004 per annum, being 58% of the approved cap.

Non-executive Directors do not receive fees that are contingent on performance, shares in return for their services,
retirements benefits, other than statutory superannuation or termination benefits.

Annual Report 2017IVE Group Limited

DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2017

The Executive Chairman and Managing Director are not remunerated separately for acting as Directors.

In FY17, the Board, on the recommendation of the NRC, resolved to pay Paul Selig additional remuneration from
the fee pool for additional services provided. During FY17, the Board recognised that Paul Selig spent an extensive
amount of time, well above the usual time spent by a Non-executive Director, providing advice on financing and property
arrangements and assisting with strategic opportunities and acquisitions. The payments for this are included in the
Remuneration tables at the end of this report. The Board’s view is that Paul Selig, due to his in depth knowledge of the
Company and the industry and professional skills, was best placed to provide these services.

There is no intent to seek to increase the Non-executive Director fee pool at the 2017 AGM and there were no increases
to Non-executive Directors’ fees during FY17 (other than the fee for additional services referred to in the preceding
paragraph).

Directors are not required under the Constitution or any other Board policy to hold any shares in IVE Group.

The remuneration paid to Non-executive Directors and the level of directors is detailed in the tables later in this Report.

Contractual arrangements with executive KMPs

Remuneration and other conditions of employment are set out in the executive KMPs employment contracts. The key
elements of these employment contracts are summarised below:

Name:

Title:

Geoff Selig

Executive Chairman

Termination:

Incentives – eligible to participate in short term incentive and equity remuneration plans

Termination – 12 months written notice (except in certain circumstances, such as where
committed any breach or material neglect of the material terms of his contract of employment,
or any act of serious or wilful misconduct) by Company or employee.

All payments on termination will be subject to the termination benefits cap under the
Corporations Act 2001 in the absence of shareholder approval.

Post-employment – 12 months restraint provisions.

Name:

Title:

Warwick Hay

Managing Director

Terms of Agreement:

No fixed term – subject to termination provisions detailed below

Details:

Annual remuneration includes cash salary, superannuation and non-cash benefits

Termination:

Incentives – eligible to participate in short term incentive and equity remuneration plans

Termination – 6 months written notice (except in certain circumstances, such as where
committed any breach or material neglect of the material terms of his contract of employment,
or any act of serious or wilful misconduct) by Company or employee.

All payments on termination will be subject to the termination benefits cap under the
Corporations Act 2001 in the absence of shareholder approval.

Post-employment – 3 months restraint provisions.

Terms of Agreement:

No fixed term – subject to termination provisions detailed below

Termination:

Details:

Annual remuneration includes cash salary, superannuation and non-cash benefits

Name:

Title:

Darren Dunkley

Chief Financial Officer

Terms of Agreement:

No fixed term – subject to termination provisions detailed below

Details:

Annual remuneration includes cash salary, superannuation and non-cash benefits

Termination:

Incentives – eligible to participate in short term incentive and equity remuneration plans

All payments on termination will be subject to the termination benefits cap under the
Corporations Act 2001 in the absence of shareholder approval.

Post-employment – 3 months restraint provisions.

Redundancy:

6 months’ pay in circumstance where employment is terminated due to redundancy.

Name:

Title:

Matt Aitken

Chief Operating Officer

Terms of Agreement:

No fixed term – subject to termination provisions detailed below.

Details:

Annual remuneration includes cash salary, superannuation and non-cash benefits

Incentives – eligible to participate in short term incentive and equity remuneration plans

All payments on termination will be subject to the termination benefits cap under the
Corporations Act 2001 in the absence of shareholder approval.

Post-employment – 3 months restraint provisions.

Redundancy:

6 months’ pay in circumstance where employment is terminated due to redundancy.

Annual Report 2017IVE Group Limited
64

DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2017

Details of Remuneration

Rights granted to executive KMP

The table below provides actual remuneration for directors and executive KMPs year ended 30 June 2017
(except as noted below).

KMP

Number of rights
granted in FY17

Vesting
conditions

Grant Date

Fair value at
grant date

Expiry date

Fixed Remuneration

Variable
Remuneration

IPO one – off benefits

Cash
salary
and fees

Super-
annuation

Non-
monetary
benefits

Long
service
leave and
annual leave

Short
term
incentive

Fair
value
of LTI
award

One-off
IPO bonus
benefits

MEP
cash
settled

MEP
equity
settled

2017

622,813

19,616

57,571

50,000

5,284

2016

243,351

9,653

2017

389,664

19,616

2016

375,387

29,827

39,271

30,720

45,305

50,000

5,284

82,192

49,315

82,192

49,315

82,192

6,849

51,142

93,335

82,192

49,315

7,808

4,684

7,808

4,684

7,808

651

4,859

7,808

4,684

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

262,334

19,616

27,084

25,000

3,171

Total

755,284

292,275

495,284

468,000

820,816

1,001,362

2,740,697

90,000

53,999

90,000

53,999

90,000

7,500

56,001

93,335

90,000

53,999

337,205

Name

Executive Directors

Geoff Selig3
Executive Chairman

Warwick Hay6
Managing Director

Non-executive Directors

Gavin Bell5

Andrew Harrison5

Sandra Hook1

Paul Selig3,4

James Todd5

Angus Stuart
(Alternate Director)2

Other Executive KMP

Darren Dunkley6
CFO and Company Secretary

Matt Aitken6
Chief Operating Officer

2016

245,878

2017

375,995

19,307

19,616

22,791

364,000

656,653

801,090

2,109,719

5,157

50,000

5,284

456,052

2016

345,551

19,307

41,290

468,000

820,816

1,001,362

2,696,326

Amounts paid to Non-executive Directors for 2016 in the table above related to the period commencing on 16 December 2015 and ending on 30
June 2016 except where noted.

1 Sandra Hook was appointed a Director on 1 June 2016.

2 Angus Stuart resigned as an Alternate Director on 1 June 2016.

3 Prior to 31st January 2016 Geoff Selig and Paul Selig were not paid directly by IVE Group. Payments were made to Caxton Property

Investments Pty Ltd (which is not an entity in the IVE Group) as disclosed in Note 27 to Financial Statements Total payments made to Caxton
Property Investments Pty Ltd from 1st July 2015 to 31st January 2016 for Geoff and Paul Selig’s services were $539,000. Geoff Selig and
Paul Selig reported remuneration in the table above represents payments after 31st January 2016.

4 Paul Selig provided additional services to IVE Group well beyond those usually provided by a Non-executive Director including advice on

financing and property arrangements and assisting with strategic opportunities and acquisitions. This is disclosed under the section of this
Report titled “Non-executive Director Remuneration”. Payment relating to these additional services in 2017 was $134,004. In 2017, payments
were made to Paul Selig via Caxton Property Investments Pty Ltd from 1 July 2016 to 31 March 2017 ($168,003) and from 1 April 2017 to
30 June 2017 payments were made directly to Paul Selig ($56,001).

5 Gavin Bell and Andrew Harrison were appointed on 25 November 2015 and the 2016 fees cover from this date to 30 June 2016. James Todd

was only paid as a Non-executive Director from this date also

6 Some members of management including Warwick Hay, Darren Dunkley and Matt Aitken were participants of the MEP established in July 2013.
As part of the IPO, the MEP was closed, and a total of 4,452,576 ordinary shares ($8.9 million) were issued to settle the share based payment
liability from the MEP. Settlement of the MEP also required the beneficiaries to contribute $0.9 million by way of loan repayment. Further details
of the pre-IPO MEP were set out in the Prospectus dated 4 December 2015 and in note 19 of the 30 June 2016 Annual Financial Report.

Geoff Selig

32,817

Warwick Hay

32,817

Matt Aitken

32,817

Darren Dunkley

19,690

22 November 2016

$50,000

22 November 2016

$50,000

16 September 2016 $50,000

16 September 2016 $30,000

Relative TSR and
Compound annual
EPS growth over
3 years

After vesting following
release of FY19 financial
results. Any unvested
Rights expire.

Note there were no Rights or options granted in FY16.

Director and Executive KMP Shareholding

The table below provides the number of shares in IVE Group Limited held by each Director and executive KMP during the
period, including their related parties:

Shares received
during the period
exercise of
Performance
Share Rights

Balance
at
1 July 2016

Shares
acquired

Shares
disposed

Balance at
30 June
2017

Executive Directors

Geoff Selig, Executive Chairman1

13,316,329

Warwick Hay, Managing Director

500,681

Non-executive Directors

Gavin Bell

Andrew Harrison

Sandra Hook

Paul Selig1

James Todd

Executive KMP

Darren Dunkley, CFO
and Company Secretary

Matt Aitken,
Chief Operating Officer

75,002

30,000

13,316,329

50,000

400,545

500,681

–

750,000

4,000,000

10,066,329

20,000

18,427

23,371

10,526

–

520,681

93,429

53,371

10,526

750,000

4,000,000

10,066,329

36,236

–

86,236

–

200,272

200,273

–

500,681

1 Geoff Selig and Paul Selig are each beneficiaries of the Selig Family Trust No. 5, the trustee of which holds 10,066,329 shares.

This concludes the remuneration report, which has been audited.

Annual Report 2017IVE Group Limited

DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2017

Loans to directors and executives

No loans were made to directors and executives of IVE Group including their close family and entities related to them
during the year.

Shares under option

There were no unissued ordinary shares of IVE Group under option outstanding at the date of this report.

Shares under performance rights

There were no unissued ordinary shares of IVE Group under Rights outstanding at the date of this report.

In total there were 308,237 unvested Rights at 30 June 2017.

Shares issued on the exercise of options

There were no ordinary shares of IVE Group Limited issued on the exercise of options during the year ended 30 June 2017
and up to the date of this report.

Shares issued on the exercise of Performance Share Rights

No Rights vested during the year and no shares were issued on exercise of Rights during the year.

Non-audit services

During the year, KPMG, the Group’s auditor has performed certain other services in addition to its statutory duties. The
Board has considered the non-audit services provided during the year by the auditor, and, in accordance with the advice
received from the Audit Committee, is satisfied that the provision of those non-audit services during the year by the auditor
is compatible with, and did not compromise, the auditor independence requirement of the Corporations Act 2001 (Cth) for
the following reasons:

• All non-audit services are subject to corporate governance procedures adopted by the Group and have been reviewed
by those charged with governance throughout the year to ensure they do not impact the integrity and objectivity of the
auditor; and

• The non-audit services provided do not undermine the general principles relating to audit independence as set out in
the APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s
own work, acting in a management or decision making capacity for the Group, acting as an advocate to the Group or
jointly sharing the risks and rewards.

Details of the amounts paid to the auditor of the Group, KPMG, for audit and non-audit services provided during the year
are set out in note 31 of the Financial Report.

Lead auditor’s independence declaration

The Lead auditor’s independence declaration is set out on page 67 and forms part of the directors’ report for the financial
year ended 30 June 2017.

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 Instrument, amounts in the consolidated financial statements and directors’ report have been rounded off to the
nearest thousand dollars, unless otherwise stated.

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

Geoff Selig
Director

Dated at Sydney this 28th day of August 2017

Annual Report 2017IVE Group Limited68

FINANCIAL REPORT

CONTENTS

Consolidated Financial Statements
Consolidated statement of profit or loss and other comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the Consolidated Financial Statements
1. Reporting entity

2. Basis of preparation

3. Significant accounting polices

4. Other income

5. Personnel expenses

6. Expenses

7. Finance income and finance costs

8. Taxes

9. Cash and cash equivalents

10. Trade and other receivables

11.

Inventories

12. Property, plant and equipment

13.

Intangible assets and goodwill

14. Trade and other payables

15. Finance lease liability

16. Loans and borrowings

17. Employee benefits

18. Provisions

19. Share-based payments

20. Capital and reserves

21. Earnings per share

22. Acquisitions

23. Operating segments

24. Financial risk management and financial instruments

25. Operating leases

26. Capital commitments

27. Related parties

28. Group entities

29. Parent entity disclosure

30. Subsequent events

31. Auditor’s remuneration

32. Deed of cross guarantee

Directors’ declaration

Independent audit report to the members of IVE Group Limited

102

103

104

105

106

107

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME

Results from operating activities

5, 6

22,190

For the year ended 30 June 2017

In thousands of AUD

Revenue
Cost of sales

Gross profit

Other income
Production expenses
Administrative expenses
Other expenses

Finance income
Finance costs

Net finance costs

Profit before tax

Income tax benefit/(expense)

Profit for the year

Other comprehensive income

Items that are or may be reclassified to profit or loss

Cash flow hedges – effective portion of changes in fair value
Cash flow hedges – reclassified to profit or loss

Total comprehensive income for the year

Profit attributable to:
Owners of the Company

Profit for the year

Total comprehensive income attributable to:
Owners of the Company

Total comprehensive income for the year

Earnings per share
Basic earnings per share (dollars)
Diluted earnings per share (dollars)

Note

2017

2016

496,873
(248,769)

248,104

3,496
(116,380)
(93,906)
(19,124)

237
(6,009)

(5,772)

16,418

(4,309)

12,109

369,231
(177,239)

191,992

1,980
(91,174)
(77,737)
(8,170)

16,891

135
(2,847)

(2,712)

14,179

872

15,051

100
–

–
–

12,209

15,051

12,109

12,209

0.11
0.11

15,051

0.18
0.18

The notes on pages 73 to 105 are an integral part of these consolidated financial statements.

Annual Report 2017IVE Group Limited

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

As at 30 June 2017

For the year ended 30 June 2017

In thousands of AUD

Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Current tax receivable
Other current assets

Total current assets

Deferred tax assets
Property, plant and equipment
Intangible assets and goodwill
Other non-current assets

Total non-current assets

Total assets

Liabilities
Trade and other payables
Finance lease liabilities
Loan and borrowings
Employee benefits
Current tax payable
Provisions

Total current liabilities

Trade and other payables
Finance lease liabilities
Loan and borrowings
Employee benefits
Provisions

Total non-current liabilities

Total liabilities

Net assets

Equity
Share capital
Reserves
Retained earnings

Total equity

Note

2017

2016

23,851
94,785
46,563
1,978
3,049
4,490

14,480
66,747
12,466
2,413
–
5,074

In thousands of AUD

Note

Balance at 1 July 2015

Total comprehensive income for the year

Profit for the year
Other comprehensive income

174,716

101,180

Total comprehensive income for the year

Share-
based
payment
reserve

Hedging
reserve

Retained
earnings

Total
equity

–

–
–

–

–
–

–

88
–
–

–

–
–

–

26,633

41,883

15,051
–

15,051

–

24,593

41,684

81,527

41,684

81,527

–
100

100

12,109
–

12,109
100

12,109

12,209

–
–
–

–

–
–
(15,185)

88
58,977
(15,185)

(15,185)

43,880

100

38,608

137,616

Share
capital

15,250

–
–

–

24,593

39,843

–
–

–

–
58,977
–

58,977

98,820

Transactions with owners
of the Company

Issue of share capital

Total transactions with owners
of the Company

Balance at 30 June 2016

Balance at 1 July 2016

Total comprehensive income for the year
Profit for the year
Other comprehensive income

Total comprehensive income for the year

Transactions with owners of the Company

Performance share rights
Issue of share capital
Dividends to owners of the Company

19
20
20

Total transactions with owners
of the Company

Balance at 30 June 2017

The notes on pages 73 to 105 are an integral part of these consolidated financial statements.

9
10
11

8
12
13

14
15
16
17

14
15
16
17
18

19,192
80,540
153,857
–

253,589

428,305

98,373
2,815
10,000
15,158
–
5,861

132,207

12
11,188
124,325
5,706
17,251

158,482

290,689

137,616

98,820
188
38,608

137,616

17,209
41,707
70,279
1,021

130,216

231,396

67,673
2,555
–
11,041
3,694
1,308

86,271

5,687
11,747
36,750
4,967
4,447

63,598

149,869

81,527

39,843
–
41,684

81,527

The notes on pages 73 to 105 are an integral part of these consolidated financial statements.

Annual Report 2017IVE Group Limited

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2017

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 30 June 2017

In thousands of AUD

Note

2017

2016

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 acquisition costs
Payment of restructure costs

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
Acquisitions of businesses, net of cash acquired
Deferred and contingent consideration paid on acquired business

Net cash used in investing activities

Cash flows from financing activities
Proceeds from shares issue and sell down of existing
Beneficiaries contribution to share based payment settlement
Proceeds from bank loans
Repayment of bank loans
Payment of listing costs
Payment of transaction costs for loans and issued capital
Dividends paid
Payment of finance lease liabilities

Net cash from financing activities

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

564,767
(499,344)

65,423
237
(5,111)
(9,985)
(5,153)
(11,386)

34,025

81
(20,139)
(115,152)
(7,642)

(142,852)

40,041
–
104,295
(5,000)
–
(3,345)
(15,185)
(2,608)

118,198

9,371
14,480

23,851

399,122
(365,067)

34,055
135
(2,173)
(7,638)
(2,628)
(1,176)

20,575

1,710
(8,642)
(22,309)
(1,948)

(31,189)

15,800
888
14,750
–
(10,362)
(501)
–
(2,148)

18,427

7,813
6,667

14,480

The notes on pages 73 to 105 are an integral part of these consolidated financial statements.

1. Reporting entity
IVE Group Limited (the ultimate parent entity or the Company) is a company domiciled in Australia. It’s registered address is
350 Parramatta Road, Homebush NSW 2140.

This consolidated financial report as at and for the year ended 30 June 2017 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;

• Catalogues, printing of magazines, marketing and corporate communications materials and stationery;

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

• Personalised communications including marketing mail, publication mail, eCommunications and multi-channel

solutions; and

2. Basis of preparation
(a) Statement of compliance

The consolidated financial statements are general purpose financial statements which have been prepared in accordance
with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the
Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards
(IFRSs) adopted by the International Accounting Standards Board (IASB).

The consolidated financial statements were authorised for issue by the Board of Directors on 28 August 2017. Details of
the Group’s accounting policies is included in Note 3.

(b) Functional and presentation currency

These 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 Instrument, all financial information presented in Australian dollars has been rounded to the nearest
thousand unless otherwise stated.

In preparing these 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 for the year ended
30 June 2016.

Annual Report 2017IVE Group Limited

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

2. Basis of preparation (cont.)
(d) Use of estimates and judgements

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised prospectively.

(i)

Judgements

Information about judgements made in applying the Group’s accounting policies that have the most significant effects
on the amounts recognised in the consolidated financial statements is included in the following notes:

• Note 3(d) & (e) – estimation of useful lives of assets;

• Note 3(j) – provisions; and

• Note 24 – Level 3 fair value of contingent consideration, interest rate swaps and forward exchange contracts.

(ii) Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material
adjustment in the year ending 30 June 2017 is included in the following notes:

• Note 3(h)(ii) & 13 – impairment testing for cash generating units containing goodwill; and

• Note 22 – acquisitions: fair value measured on a provisional basis.

Measurement of fair values

When measuring the fair value of an asset or a liability, the group uses market observable data if 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).

3. Significant accounting policies
The accounting policies set out below have been applied consistently during the period presented in these consolidated
financial statements, and have been applied consistently by all entities in the Group.

(a) Basis of consolidation

(i) Business combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in
profit or loss immediately. Transaction costs are expensed as incurred, except those related to the issue of debt or
equity securities.

The consideration transferred does not include amounts related to the settlement of pre-exiting relationships. Such amounts
are generally recognised in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition, with subsequent changes in the fair value
of the contingent consideration recognised in profit or loss.

(ii) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on
which control commences until the date on which control ceases.

3. Significant accounting policies (cont.)
(a) Basis of consolidation (cont.)

(ii) Subsidiaries (cont.)

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.

(b) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency of the Group (Australian dollars) at exchange
rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to
the functional currency at the exchange rate at the reporting date.

Foreign currency differences arising on retranslation are recognised in profit or loss.

(i) Non-derivative financial assets

The Group initially recognises receivables on the date that they are originated. All other financial assets are recognised
initially on the date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers
the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and
rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or
retained by the Group is recognised as a separate asset or liability.

The Group has the following categories of non-derivative financial assets: cash and cash equivalents, and trade and other
receivables.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less from
the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the
management of its short-term commitments.

Trade and other receivables

Trade and other receivables are financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to
initial recognition trade and other receivables are measured at amortised cost using the effective interest method, less
any impairment losses.

(ii) Non-derivative financial liabilities

Financial liabilities are recognised initially on the date at which the Group becomes a party to the contractual provisions
of the instrument.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities
are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these
financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise finance lease liabilities, bank loan, and trade and other payables.

Annual Report 2017IVE Group Limited76

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

3. Significant accounting policies (cont.)
(c) Financial instruments (cont.)

(iii) Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any tax effects.

(iv) Derivative financial instruments and hedge accounting

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded
derivatives are separated from the host contract and accounted for separately if certain criteria are met.

Derivatives are recognised initially at fair value; any directly attributable transaction costs are recognised in profit or loss
as they are incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are
generally recognised in profit or loss.

Cash flow hedges

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the
derivative is recognised in other comprehensive income (“OCI”) and accumulated in the hedging reserve. Any ineffective
portion of changes in the fair value of the derivative is recognised immediately in profit or loss.

The amount accumulated in equity is retained in OCI and reclassified to profit or loss in the same period or periods during
which the hedged item affects profit or loss.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or
the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer
expected to occur, then the amount accumulated in equity is reclassified to profit or loss.

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment
losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that is integral to
the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items of property, plant and equipment.

Any gains and losses on disposal of an item of property, plant and equipment (calculated as the difference between the net
proceeds from disposal and the carrying amount of the item) are recognised in profit or loss.

(ii) Subsequent costs

Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the
expenditure will flow to the Group. Ongoing repairs and maintenance are expensed as incurred.

(iii) Depreciation

Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in
respect of internally constructed assets, from the date that the asset is completed and ready for use.

Depreciation is calculated to write off the cost of property, plant and equipment less their estimated residual values using
the straight-line basis over their estimated useful lives. Depreciation is generally recognised in profit or loss, unless the
amount is included in the carrying amount of another asset. Leased assets are depreciated over the shorter of the lease
term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

3. Significant accounting policies (cont.)
(d) Property, plant and equipment (cont.)

(iii) Depreciation (cont.)

The estimated useful lives for the current year of significant items of property, plant and equipment are as follows:

• Leasehold improvements

shorter of lease term and life of asset

• plant and equipment

•

fixtures and fittings

3–20 years

5–10 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(e) Intangible assets and goodwill

(i) Goodwill

Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.

(ii) Other intangible assets

Intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated
amortisation and accumulated impairment losses.

(iii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset
to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised
in profit or loss as incurred.

(iv) Amortisation

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-
line method over their estimated useful lives, and is generally recognised in profit or loss. Goodwill is not amortised.

The estimated useful lives are as follows:

• computer software

3 years

• customer relationships

5-9 years

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(f) Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance
leases. Upon initial recognition of finance leases the leased asset is measured at an amount equal to the lower of its fair
value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in
accordance with the accounting policy applicable to that asset.

Other leases are classified as operating leases and are not recognised in the Group’s consolidated statement of financial
position.

(g) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in,
first-out principle. In the case of manufactured inventories and work in progress, cost includes an appropriate share of
production overheads based on normal operating capacity.

Annual Report 2017IVE Group Limited78

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

3. Significant accounting policies (cont.)
(h) Impairment

(i) Non-derivative financial assets

Financial assets not classified as fair value through profit or loss are assessed at each reporting date to determine whether
there is objective evidence of impairment.

Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an
amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will
enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group or economic conditions
that correlate with defaults.

Financial assets measured at amortised cost

The Group considers evidence of impairment for financial assets measured at amortised cost at both a specific asset and
collective level. All individually significant assets are assessed for specific impairment. Those found not to be specifically
impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that
are not individually significant are collectively assessed for impairment by grouping together assets with similar risk
characteristics.

In assessing collective impairment the Group uses historical trends of the probability of default, timing of recoveries and
the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions
are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between
its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective
interest rate. Losses are recognised in profit or loss and reflected in an allowance account against receivables. Interest on
the impaired asset continues to be recognised through the unwinding of the discount.

When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through profit or loss.

(ii) Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed
at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or cash-generating unit (CGU). Goodwill
arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the
synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to
reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts
of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.

3. Significant accounting policies (cont.)
(i) Employee benefits

(i) Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to
defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during
which services are rendered by employees.

(ii) Other long-term employee benefits

The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have
earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value.
Remeasurements are recognised in profit or loss in the period in which they arise.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount
expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.

(iv) Share-based payment transactions

The grant-date fair value of equity-settled share-based payment awards granted to employees is generally recognised as
an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an
expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions
are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the
related service and non-market performance conditions at the vesting date. For share-based payment awards with non-
vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there
is no true-up for differences between expected and actual outcomes.

The fair value of the amount payable to employees in respect of share appreciation rights (SARs), which are settled in
cash, is recognised as an expense with a corresponding increase in liabilities, over the period during which the employees
become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date
based on the fair value of the SARs. Any changes in the liability are recognised in profit or loss.

(j) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised
as finance cost.

(i) Restructuring

A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the
restructuring either has commenced or has been announced publicly. Future operating losses are not provided for.

(ii) Make good provision

A make good provision is recognised when the Group enters into a lease contract that requires the property to be returned
to the lessor in its original condition. The provision is based on the expected future cost of the refurbishment discounted to
reflect current market assessments.

Annual Report 2017IVE Group Limited80

3. Significant accounting policies (cont.)
(k) Revenue

(i) Sales

3. Significant accounting policies (cont.)
(n) Income tax (cont.)

(ii) Deferred tax

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns,
trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have
been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return
of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of
revenue can be measured reliably.

(ii) Rendering of services

The Group is involved in a range of services relating to print, communications, creative and digital services, supply chain
optimisation, inventory management, warehousing and logistics. If the services under a single arrangement are rendered in
different reporting periods, then the consideration is allocated on a relative fair value basis between the different services.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

•

temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or loss; or

temporary differences related to investments in associates to the extent that the Company is able to control the timing
of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future, and

•

taxable temporary differences arising on the initial recognition of goodwill.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects,
at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

The Group recognises revenue from rendering of services in proportion to the stage of completion of the transaction at the
reporting date. The stage of completion is assessed based on surveys of work performed.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using
tax rates enacted or substantively enacted at the reporting date.

(l) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of
the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the
lease when the lease adjustment is confirmed.

(m) Finance income and finance costs

Finance income comprises interest income on funds invested and foreign exchange gains. Interest income is recognised
as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings. Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest
method.

Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on
whether foreign currency movements are in a net gain or net loss position.

(n) Income tax

Income Tax expense comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to
the extent that it relates to items recognised directly in equity or in other comprehensive income.

(i) Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent
that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit
will be realised.

(iii) Tax exposures

In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions
and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may
involve a series of judgements about future events. New information may become available that causes the Group to
change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax
expense in the period that such a determination is made.

(iv) Tax consolidation

IVE Group Limited and it’s wholly owned Australian controlled entities formed a tax consolidated group on 16 December
2015. As a consequence, these entities are taxed as a single entity and the deferred tax asset and liabilities of these
entities are offset in the consolidated financial statements.

The entities have also entered into a Tax Sharing and Tax Funding Agreement. The Tax Sharing Agreement provides for
the allocation of income tax liability between the entities should the head entity default on it’s obligation. The Tax Funding
Agreement provides for the allocation of current tax assets and liabilities between the entities.

(o) Good and services tax (GST)

Revenue, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of
the asset or as part of an item of expense. Receivables and payables are shown inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities, which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

Annual Report 2017IVE Group Limited82

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

3. Significant accounting policies (cont.)
(p) Earnings per share

The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted earnings per share is
determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of
ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which
comprise convertible notes and share options granted to employees.

(q) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. It has been determined the Board of Directors is the chief operating decision maker, as they are ultimately
responsible for allocating resources and assessing performance.

(r) New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning
after 1 July 2017, and have not been applied in preparing these financial statements. Those which may be relevant to the
Group are set out below. The Group does not plan to adopt these standards early, and is currently assessing the impact of
these standards on it’s accounting policies and consolidated financial statements. In particular, it has put together a team,
developed a plan, and commenced analysis.

AASB 9 Financial Instruments (2014)

AASB 9, approved in December 2014, replaces the existing guidance in AASB 139 Financial Instruments: Recognition
and Measurement. AASB 9 includes revised guidance on the classification and measurement of financial instruments,
including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge
accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments
from AASB 139. AASB 9 is effective for annual reporting periods beginning on or after 1 January 2018.

AASB 15 Revenue from Contracts with Customers

AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised.
It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts
and IFRIC 13 Customer Loyalty Programmes. AASB 15 is effective for annual reporting periods beginning on or after
1 January 2018.

AASB 16 Leases

Under this Standard, there will no longer be a distinction between operating and finance leases. Instead, there will be
one treatment and a requirement to recognise an asset and a lease liability for all leases. The effective date is for annual
reporting periods beginning on or after 1 January 2019.

4. Other income

In thousands of AUD

Other income*

* Refer to note 24.

5. Personnel expenses

In thousands of AUD

Wages and salaries
Contributions to defined contribution plans
Share-based payment expense

6. Expenses
Included in the consolidated statement of profit or loss and other comprehensive income:

In thousands of AUD

Depreciation and amortisation
Acquisition costs
Restructuring costs
Net gain on disposal of property, plant and equipment
Listing expenses
Make good expenses

7. Finance income and finance costs

In thousands of AUD

Interest income

Finance income

Interest expense
Net foreign exchange losses

Finance costs

Net finance costs

2017

3,496

2016

1,980

2017

2016

138,432
10,353
88

148,873

107,960
8,900
6,871

123,731

2017

13,777
5,911
13,350
–
–
(216)

2017

237

(5,978)
(31)

(6,009)

(5,772)

2016

9,614
2,272
875
(1,060)
6,680
(597)

2016

135

(2,840)
(7)

(2,847)

(2,712)

Annual Report 2017IVE Group Limited

2017

2016

8. Taxes (cont.)
Movement in temporary differences during the year

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

8. Taxes

In thousands of AUD

Current tax expense
Current year
Changes in estimates related to prior years

Deferred tax expense/(recovery)
Origination and reversal of temporary differences

Total tax expense/(benefit)

Numerical reconciliation between tax expense and pre-tax accounting profit

In thousands of AUD

Profit before tax
Tax using the Company’s domestic tax rate of 30%
(Non-assessable income)/non-deductible expenses (net)
Change in recognised deductible temporary differences*
Changes in estimates related to prior years
Other items (net)

3,023
434

3,457

852

4,309

2017

16,418
4,925
(545)
(495)
434
(10)

4,309

7,251
113

7,364

(8,236)

(872)

2016

14,179
4,254
1,834
(7,126)
113
53

(872)

* As part of the IPO in 2016, IVE formed a consolidated group for taxation purposes. Part of this process involved reassessing carrying values for
IVE’s tax asset base and resulted in a one-off uplift in tax carrying values of $7,126 thousand (tax effected). The impact is a non-recurring credit
to tax expense in the 2016 financial year, and an increase to deferred tax assets representing future deductions available.

Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:

2017
In thousands of AUD

Property, plant and equipment

Inventories

Intangible assets

Employee benefits

Provisions

Other items

2016
In thousands of AUD

Property, plant and equipment

Inventories

Intangible assets

Employee benefits

Provisions

Other items

Balance
1 July
2016

9,404

(506)

(2,739)

5,519

2,516

3,015

17,209

Acquisition
through
business
combination

Recognised
in
equity

Recognised
in profit
or loss

(1,071)

792

(4,332)

1,715

5,063

126

2,293

–

542

(1,703)

(305)

796

(328)

196

492

(852)

Balance
1 July
2015

Acquisition
through
business
combination*

Recognised
in
equity

Recognised
in profit
or loss

3,399

(270)

–

4,624

2,743

1,238

–

(3,088)

–

11,734

(3,088)

–

327

6,005

(236)

349

895

(227)

1,450

8,236

Balance
30 June
2017

6,630

(19)

(6,275)

6,906

7,775

4,175

19,192

Balance
30 June
2016

9,404

(506)

(2,739)

5,519

2,516

3,015

17,209

Assets

Liabilities

Net

* The movement includes recognition of deferred tax on acquisitions made in the previous reporting period. These adjustments have been made
within twelve months since the acquisition date.

In thousands of AUD

Property, plant and equipment
Inventories
Intangible assets
Employee benefits
Provisions
Other items

2017

6,630
–
–
6,906
7,775
4,204

2016

9,404
–
–
5,519
2,516
3,015

Tax assets/(liabilities)
Set off of tax

25,515
(6,323)

20,454
(3,245)

2017

2016

2017

–
(19)
(6,275)
–
–
(29)

(6,323)
6,323

–
(506)
(2,739)
–
–
–

(3,245)
3,245

6,630
(19)
(6,275)
6,906
7,775
4,175

2016

9,404
(506)
(2,739)
5,519
2,516
3,015

19,192
–

17,209
–

Net deferred tax assets

19,192

17,209

–

19,192

17,209

9. Cash and cash equivalents

In thousands of AUD

Bank balances
Petty cash

Cash and cash equivalents in the statement of cash flows

2017

23,843
8

23,851

2016

14,472
8

14,480

Annual Report 2017IVE Group Limited

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

9. Cash and cash equivalents (cont.)
Reconciliation of cash flows from operating activities

In thousands of AUD

Profit for the year

Non-cash items
Depreciation, amortisation and impairment
Share based payment expense
Contingent consideration reduced
Other income
(Reversal of)/provision for impairment loss on trade receivables
Interest expense
Acquisition costs
Restructuring costs
Income tax expense

Cash items
Net gain on disposal of property, plant and equipment
Listing expenses

Change in trade and other receivables
Change in inventories
Change in current assets
Change in prepayment
Change in trade and other payables
Change in provisions and employee benefits

Cash generated from operating activities
Income tax paid

Net cash from operating activities

2017

12,109

13,777
88
(2,949)
(501)
–
867
758
3,992
4,309

–
–

32,450
18,161
(10,801)
584
690
7,980
(5,054)

44,010
(9,985)

34,025

2016

15,051

9,614
6,871
(1,910)
–
982
667
324
163
(872)

(1,060)
6,680

36,510
(7,102)
3,265
(4,597)
(254)
343
48

28,213
(7,638)

20,575

Non-cash investing and financing activities
Acquisition of property, plant and equipment through finance lease

(2,309)

(6,674)

10. Trade and other receivables

In thousands of AUD

Current
Trade receivables
Allowance for impairment

Forward exchange contracts used for hedging
Other receivables

Note

2017

2016

92,712
(704)

92,008

397
2,380

94,785

66,760
(1,315)

65,445

–
1,302

66,747

11. Inventories

In thousands of AUD

Finished goods
Work in progress
Raw materials

Allowance for inventory obsolescence*

2016

2,463
3,070
7,323

12,856

(390)

12,466

2017

2,421
7,502
39,677

49,600

(3,037)

46,563

* The increase in allowance for inventory obsolescence during the 2017 financial year mainly relates to fair value adjustments made on inventory

acquired through business combination.

During the year, raw materials, consumables and changes in finished goods and work in progress recognised as cost of
sales amounted to $248,769 thousand (2016: $177,239 thousand).

12. Property, plant and equipment

In thousands of AUD

Leasehold
improvements

Plant and
equipment

Fixtures
and fittings

Cost
Balance at 1 July 2015
Acquisitions through business combinations
Additions
Disposals

Balance at 30 June 2016

Balance at 1 July 2016
Acquisitions through business combinations
Additions
Disposals

Balance at 30 June 2017

Depreciation and impairment losses
Balance at 1 July 2015
Depreciation for the year
Disposals

Balance at 30 June 2016

Balance at 1 July 2016
Depreciation for the year
Disposals

Balance at 30 June 2017

Carrying amounts
At 1 July 2016

At 30 June 2017

4,999
79
1,229
(15)

6,292

6,292
372
1,910
(1,084)

7,490

1,854
630
(10)

2,474

2,474
858
(1,084)

2,248

3,818

5,242

52,402
970
11,962
(3,471)

61,863

61,863
26,812
19,087
(1,875)

105,887

20,697
6,652
(2,841)

24,508

24,508
8,804
(1,801)

31,511

37,355

74,376

944
79
44
(23)

1,044

1,044
–
547
(236)

1,355

361
157
(8)

510

510
150
(227)

433

534

922

Total

58,345
1,128
13,235
(3,509)

69,199

69,199
27,184
21,544
(3,195)

114,732

22,912
7,439
(2,859)

27,492

27,492
9,812
(3,112)

34,192

41,707

80,540

Annual Report 2017IVE Group Limited

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

12. Property, plant and equipment (cont.)
Leased plant and machinery

The Group leases production equipment under a number of finance lease agreements. Some leases provide the Group
with the option to purchase the equipment at a beneficial price. At 30 June 2017 the net carrying amount of leased assets
was $18,338 thousand (2016: $18,465 thousand).

Security

At 30 June 2017 the carrying amount of total assets less the written down value of finance leased assets were held as
security for bank facilities.

13. Intangible assets and goodwill

In thousands of AUD

Note

Goodwill

Computer
software

Customer
relationships

Cost
Balance at 1 July 2015
Acquisition through business combinations
Other additions
Other adjustments

Balance at 30 June 2016

Balance at 1 July 2016
Acquisition through business combinations
Other additions
Acquisition accounting measurement
period adjustment*

Balance at 30 June 2017

Amortisation and impairment losses
Balance at 1 July 2015
Amortisation for the year

Balance at 30 June 2016

Balance at 1 July 2016
Amortisation for the year

Balance at 30 June 2017

Carrying amounts
At 1 July 2016

At 30 June 2017

21,583
36,512
–
682

58,777

58,777
72,893
–

(2,000)

129,670

–
–

–

–
–

–

58,777

129,670

Total

28,740
45,039
1,456
682

75,917

75,917
87,333
2,210

2,946
8,430
–
–

11,376

11,376
14,440
–

4,211
97
1,456
–

5,764

5,764
–
2,210

–

(2,000)

7,974

25,816

163,460

2,621
856

3,477

3,477
1,309

4,786

2,287

3,188

842
1,319

2,161

2,161
2,656

4,817

3,463
2,175

5,638

5,638
3,965

9,603

9,215

70,279

20,999

153,857

13. Intangible assets and goodwill (cont.)
Impairment testing for cash-generating units containing goodwill

The following CGUs or groups of CGUs have carrying amounts of goodwill:

In thousands of AUD

Franklin Web
Print communication and marketing services (group of CGUs)
Creative services (group of CGUs)
Pareto

2017

69,233
32,941
11,614
15,882

129,670

2016

–
29,281
13,614
15,882

58,777

The recoverable value for goodwill relating to the acquisitions have been determined by value in use calculations.
The calculations use cash flow projections based on budgeted EBITDA approved by the Board. A post-tax rate of 8.65%
WACC (and 9.05% for smaller CGU’s) has been used with 2% growth allowance in the 5 year cash flow projections and
terminal growth. In management’s assessment, there are no reasonable possible changes in assumptions that would give
rise to impairment.

14. Trade and other payables

In thousands of AUD

Current
Trade payables
Accrued expenses
Deferred consideration
Contingent consideration
Interest rate swaps used for hedging

Non-current
Contingent consideration
Interest rate swaps used for hedging

2017

2016

63,301
28,804
1,200
4,825
243

98,373

–
12

35,991
19,275
7,720
4,687
–

67,673

5,687
–

5,687

15. Finance lease liabilities
Finance lease liabilities of the Group are payable as follows:

Future minimum
lease payment

Interest

Present value of
minimum lease
payments

*The adjustment relates to finalisation of preliminary accounting entries for the acquisition of JBA.

In thousands of AUD

2017

2016

2017

2016

2017

2016

No impairment losses in relation to goodwill have been recognised in the year ended 30 June 2017 (2016 nil).

Less than one year
Between one and five years
More than five years

3,462
10,027
2,530

3,215
10,595
2,646

16,019

16,456

647
1,260
109

2,016

660
1,352
142

2,154

2,815
8,767
2,421

2,555
9,243
2,504

14,003

14,302

At 30 June 2017, the finance lease liabilities include $1,196 thousand lease liability for leased properties (2016:
$1,441 thousand) and $12,807 thousand lease liability for leased plant and equipment (2016: $12,861 thousand).

Annual Report 2017IVE Group Limited

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

16. Loans and borrowings

In thousands of AUD

Bank loan
Current

Non-current

Bank loans

2017

2016

10,000

124,325

134,325

–

36,750

In funding the acquisition of Franklin Web, the Group entered into a new Syndicated Facilities Agreement with a carrying
amount of $134,325 thousand and face value of $136,000 thousand at 30 June 2017 (2016: carrying amount and face
value of $36,750 thousand). These facilities have an interest rate of BBSY plus a margin, and is repayable partly during the
term with the remaining balance maturing on 30 November 2019. The Company was in compliance with all loan covenants
as at 30 June 2017.

17. Employee benefits

In thousands of AUD

Current
Liability for long service leave
Liability for annual leave

Non-current
Liability for long service leave

2017

2016

6,116
9,042

15,158

5,706

4,134
6,907

11,041

4,967

Total

5,755
21,189
(3,832)

23,112

5,861
17,251

23,112

18. Provisions

In thousands of AUD

Restructuring

Balance at 1 July 2016
Provisions made during the year
Provisions reversed during the year

Balance at 30 June 2017

Current
Non-current

3,418
5,088
(2,452)

6,054

4,122
1,932

6,054

Make
good

2,337
886
(581)

2,642

260
2,382

2,642

Acquired
lease liability

–
15,215
(799)

14,416

1,479
12,937

14,416

Note 3(j) provides a description on the nature of the restructuring and make good provisions.
Note 22 provides further comment on the acquired lease liability provision.

19 . Share-based payments
During the year ended 30 June 2017, 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

General Management Award

Senior Leadership Team Award

Date of grant

26 August 2016

26 August 2016 and 21 November 2016*

Number granted

Contractual life

Vesting conditions

Weighted average
fair value

Valuation methodology

156,538

2 years

180,491

3 years and 2 months

The Rights are subject to Performance
Conditions depending on the individual:
Earnings Before Interest and Tax (EBIT) or
Revenue targets. The performance period
is 1 July 2016 to 30 June 2017 inclusive.
The vesting date is expected to be on or
soon after the approval of IVE’s 2017
Annual Financial Report. Vested shares
will be subject to an escrow period until
30 June 2018.

The Rights are subject to the following
Performance Conditions: sixty percent of 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 2016 to
30 June 2019 inclusive. The vesting date is
expected to be on or soon after the approval
of IVE’s 2019 Annual Financial Report.

$2.02

$1.52

The fair value has been calculated using
a risk-free neutral assumption. This is
the difference between the spot price of
the underlying asset minus the expected
present value of the future dividend over the
expected life if the holders of the underlying
assets are not entitled to receive future
dividends before the vesting date.

The EPS target was calculated using a
risk-neutral assumption, whereas the TSR
target has been valued using a Monte Carlo
simulation approach.

Expected dividend

Holders of performance share rights are not entitled to receive dividends prior to vesting.

Other key valuation assumptions

Share price at
valuation date

Expected volatility

Dividend yield

Risk free interest rate

$2.19

21.4%

7.88%

1.49%

$2.19

21.4%

7.88%

1.42%

Total expense relating to Share-based payments has been disclosed in note 5 of this consolidated financial statements.

*Share rights issued to Directors required shareholder approval. This occurred at the Group’s 2016 Annual General Meeting.

Annual Report 2017IVE Group Limited

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

20. Capital and reserves
IVE Group Limited was incorporated on 10 June 2015. Contemporaneously with the listing of the consolidated group on
the Australian Securities Exchange on 16 December 2015, IVE Group Limited acquired all of the issued share capital of
Caxton Print Group Holdings Pty Ltd (CPGH), such that on that date CPGH has been a subsidiary of IVE Group Limited.

The Directors elected to account for the restructure as a capital re-organisation rather than a business combination. In the
Directors’ judgement, the continuation of the existing accounting values is consistent with the accounting that would have
occurred if the assets and liabilities had already been in a structure suitable to IPO and most appropriately reflects the
substance of the internal restructure.

Issued and paid up capital

119,280,624 (June 2016: 89,180,901) ordinary shares fully paid

Movement in ordinary share capital

Date

Details

1-Jul15

Opening balance

16-Dec-15

Share split (refer below)

16-Dec-15

Cessation of Management Equity Plan

16-Dec-15

Issue of new shares on initial public offering

Transaction costs arising from issue of shares
(net of tax)

2017

99,820

Issue
Price

$2.00

Number
of shares

16,996,403

59,506,922

4,452,576

7,900,000

30-Jun-16

Issue of new shares under Equity Incentive Plan

325,000

$2.00

30-Jun-16

Closing balance

1-Jul-16

Opening balance

89,180,901

2016

39,843

Total
$’000

15,250

8,905

15,800

(762)

650

39,843

13-Dec-16

19-Dec-16

30-Dec-16

Issue of new shares under the Institutional
Entitlement Offer and Placement (refer below)

Issue of shares as consideration for acquisitions
(refer below)

Additional issue of shares as consideration
for acquisition

Issue of new shares under the
Retail Entitlement Offer

Transaction costs arising from issue
of shares (net of tax)

17,659,564

$2.00

35,319

9,814,729

264,253

19,771

529

2,361,177

$2.00

4,722

(1,364)

98,820

30-Jun-17

Closing balance

119,280,624

20. Capital and reserves (cont.)
On 16 December 2015 the Directors approved an increase in shares with no impact on proportional ownership of the
company before IPO. There was no impact to the value of ordinary shares on issue.

On 5 December 2016, the company announced capital raising to fund the acquisitions of Franklin and AIW. The details
of these acquisitions are included in note 22.

The shares issued as consideration for these acquisitions was at the agreed amounts per the Share Purchase and Asset
Sale Agreements.

Dividends

On 28th August 2017, the directors have declared a fully franked dividend of 7.9 cents per share to be paid on
25 October 2017 to shareholders on the register at 25 September 2017. The final dividend payout is $9.5m
(2016: $7.7m). A liability has not been recognised as the dividend was declared after the reporting date.

The following dividends were declared and paid during the year ended 30 June 2017:

In thousands of AUD

2017
Final 2016 ordinary
Interim 2017 ordinary

Total amount

Cents
per share

8.6
6.3

Total
amount

7,671
7,514

15,185

Date of
payment

20 October 2016
20 April 2017

On 20 October 2016 date a dividend of 8.6 cents per share (100% franked) was declared and paid by the directors.
The dividend was paid out of opening retained profits and profits earned up to that date.

On 20 April 2017 date a further dividend of 6.3 cents per share (100% franked) was declared and paid by the directors.
The dividend was paid out of profits earned up to that date.

Dividend franking account

In thousands of AUD

2017

2016

Amount of franking credits available to shareholders of IVE Group Limited
for subsequent financial years

12,080

8,583

The ability to utilise the franking credits is dependent upon the ability to declare dividends.

Annual Report 2017IVE Group Limited

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

21. Earnings per share

In dollars

Basic earnings per share
Diluted earnings per share

In thousands

Earnings
Profit after income tax attributable to owners of the company used in
calculating basic and diluted earnings per share

Weighted average number of ordinary shares
Weighted average number of ordinary shares used in calculating
basic earnings per share

Weighted average number of ordinary shares used in calculating
diluted earnings per share

2017

0.11
0.11

2017

2016

0.18
0.18

2016

12,109

15,051

105,560

83,171

105,656

83,171

22. Acquisitions
During the year, the Group acquired a number of businesses, the details of which are as follows:

• On 30 September 2016, IVE Group acquired the selected assets of The Mailing House Pty Limited (“TMH”).

TMH specialises in direct and digital communications. This business was integrated into IVE’s Direct business.

•

On 13 December 2016, IVE Group acquired of the selected assets of The Franklin Printing Group Pty Limited
(“Franklin”). Franklin is a specialist catalogue producer.

On 13 December 2016, IVE Group also acquired the shares of Taverners No.13 Pty Limited (“Taverners”).
Taverners through a trust arrangement owns the business of AIW Printing (“AIW”). AIW will be integrated with
Franklin, and other existing business of IVE Group.

On 30 December 2016, IVE Group acquired the selected assets of Display Bay Pty Limited (“Display Bay”).
Display Bay is a commercial wide format digital print business, and will be integrated with IVE’s Display business.

On 30 December 2016, IVE Group also acquired the selected assets of Retail 25 Consulting Pty Limited (“R25”).
R25 is design marketing & strategy agency within the retail display sector. It will be integrated with IVE’s Display
business.

22. Acquisitions (cont.)
The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired
and liabilities assumed at the acquisition date:

In thousands of AUD

TMH

Franklin

AIW

Consideration transferred
Cash
Deferred consideration*
Contingent consideration
Issue of shares

1,530

1,100
–

95,700
15,034
–
4,300

–
4,379
–
16,000

Display
Bay

600
196
400
–

2,630

115,034

20,379

1,196

Identifiable assets acquired
and liabilities assumed
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Customer relationship (intangible asset)
Deferred tax assets/(liabilities)
Trade and other payables
Employee benefits
Current tax payable
Acquired lease liability (provision)
Other provisions

–
–
21
–
24
341
(29)
–
(246)
–
–
–

–
30,389
17,389
135
24,013
12,800
2,462
(10,532)
(2,953)
–
(15,215)
(372)

2,388
15,413
5,710
120
3,147
900
(67)
(15,516)
(2,385)
(356)
–
(1,290)

111

58,116

8,065

Goodwill on acquisition

2,519

56,918

12,315

–
–
176
–
–
399
(74)
–
(133)
–
–
(13)

355

841

R25

Total

100
–
200
–

300

97,930
19,609
1,700
20,300

139,539

–
–
–
–
–
–
–
–
–
–
–
–

–

2,388
45,802
23,296
255
27,184
14,440
2,293
(26,048)
(5,717)
(356)
(15,215)
(1,675)

66,646

300

72,893

* The deferred consideration for the Franklin and AIW acquisitions includes working capital and balance sheet date adjustments. These
adjustments are made in the ordinary course of a transaction to reflect the difference between normalised expectations around balance sheet
items at the time of signing and actual balances on transaction completion.

As part of the consideration transferred, contingent consideration is expected to be payable. The Group has made a best
estimate of the amount of consideration payable for the acquisitions where there is a variable purchase price based on
future revenue performance. Based on past and expected performance the Group assumes that the acquirees will meet
the future revenue target. Any variation at time of settlement will be recognised as an expense or income.

Annual Report 2017IVE Group Limited

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

22. Acquisitions (cont.)
Management have measured the assets and liabilities acquired at fair value with the remainder of the purchase
consideration being allocated to goodwill. The valuation techniques used for measuring the fair value of material assets
acquired were as follows:

Assets acquired

Valuation technique

Property, plant and equipment

Intangible assets

Market comparison technique and cost technique: The valuation model considers
quoted market prices for similar items when they are available, and depreciated
replacement cost when appropriate. Depreciated replacement cost reflects
adjustments for physical deterioration as well as functional and economic
obsolescence. The Group engaged an independent valuation expert to provide
market prices.

Multi-period excess earnings method: This method considers the present value
of net cash flows expected to be generated by the customer relationships, by
excluding any cash flows related to contributory assets.

Acquired lease liability

Market comparison technique: The value is based on a market rental assessment
by an independent valuation expert.

The Group is completing an assessment of the assets acquired and liabilities assumed from the R25 acquisition. If the
assessment identifies assets or liabilities at the date of acquisition and within a year from it, then the accounting for the
acquisition will be revised.

The goodwill is attributable to the future profitability of the acquisitions and the synergies expected to arise within the
Group. None of the goodwill recognised is expected to be deductible for tax purposes.

The acquisition of the TMH, Display Bay and R25 have been fully integrated into IVE’s existing business unit. The profit
before tax contribution of these acquisitions are indistinguishable from existing business unit results. On this basis a
disclosure of profit before tax is impracticable. However, the revenues of these businesses have been tracked due to
contingent consideration. The total revenue since acquisition is $7,393 thousand. Individually these businesses are
considered immaterial.

Since acquisition, the AIW business has been integrated into Franklin. The profit before tax contribution of AIW is
separately indistinguishable from the combined Franklin and AIW results. On this basis a disclosure of profit before tax is
impracticable. However, the combined Franklin and AIW businesses have contributed $102,365 thousand in revenue, and
a loss before tax of ($3,104) thousand. The loss is largely due to the restructure and integration of the AIW business.

If these acquisitions had occurred from beginning of the reporting period the combined Group revenue would have been
estimated at $619,586 thousand. The Group has not estimated the profit before tax for the reasons provided above.

Acquisition-related costs totalling $5,911 thousand for all acquisitions has been included in Other expenses in the Group’s
consolidated statement of profit or loss and other comprehensive income.

23. 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 report 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 financial report.

In thousands of AUD

EBITDA
Depreciation, amortisation and impairment
Net finance costs

Profit before income tax

2017

35,967
(13,777)
(5,772)

16,418

2016

26,505
(9,614)
(2,712)

14,179

24. Financial risk management and financial instruments
Overview

The Group has exposure to the following risks from its use of financial instruments:

a. credit risk

liquidity risk

c. market risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and
processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.

Risk management framework

The Company’s board of directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework. The CFO is responsible for developing and monitoring the Group’s risk management policies.
He reports regularly to the Board of Directors on its activities.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group activities. The Group, through its training and
management standards and procedures, aims to maintain a disciplined and constructive control environment in which all
employees understand their roles and obligations.

The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies
and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

Annual Report 2017IVE Group Limited

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

24. Financial risk management and financial instruments (cont.)
Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the Group’s receivables from customers and investments in debt
securities.

The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of services
are made to customers with an appropriate credit history based on enquires through the Group’s Finance department.
Ongoing customer credit performance is monitored on a regular basis.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at
the reporting date was:

In thousands of AUD

Cash and cash equivalents
Trade and other receivables

Carrying amounts

Note

2017

9
10

23,851
94,785

118,636

2016

14,480
66,747

81,227

Impairment
The aging of the trade and other receivables at the end of the reporting period that were not impaired was as follows:

Carrying amounts

In thousands of AUD

Neither past due nor impaired
Past due 1-30 days
Past due 31-90 days
Past due 91 days and over

2017

58,578
21,327
9,172
6,015

95,092

The movement in the allowance for impairment in respect of receivables during the year was as follows:

In thousands of AUD

Balance at beginning of the year
Assumed in a business combination in current year
Impairment loss recognised
Amounts written off

Balance at end of year

Liquidity risk

2017

1,315
424
217
(1,252)

704

2016

40,781
16,338
8,002
2,941

68,062

2016

333
–
1,187
(205)

1,315

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal
and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

24. Financial risk management and financial instruments Overview (cont.)
Liquidity risk (cont.)

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross
and undiscounted, and include estimated interest payments:

Contractual cash flows

Carrying
amount

Total

12 months
or less

1-5
years

More than
5 years

92,105
1,200
4,825
14,003
134,325

92,105
1,200
4,825
16,019
145,700

92,105
1,200
4,825
3,462
13,934

–
–
–
10,027
131,766

246,458

259,849

115,526

141,793

255

243

–
–
–
2,530
–

2,530

–

Contractual cash flows

Carrying
amount

Total

12 months
or less

1-5
years

More than
5 years

55,266
7,720
10,374
14,302
36,750

55,266
7,720
10,374
16,456
36,750

124,412

126,566

55,266
7,720
4,687
3,215
–

70,888

–
–
5,687
10,595
36,750

53,032

–
–

2,646
–

2,646

In thousands of AUD

30 June 2017
Non-derivative financial liabilities
Trade and other payable
Deferred consideration
Contingent consideration
Finance lease liabilities
Bank loans

Derivative financial liabilities
Interest rate swaps used for hedging

In thousands of AUD

30 June 2016
Non-derivative financial liabilities
Trade and other payable
Deferred consideration
Contingent consideration
Finance lease liabilities
Bank loans

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters, while optimising the return.

Currency risk

The Group is exposed to currency risk to the extent that there is a mismatch between the currencies in which purchases
are denominated and the respective functional currencies of Group entities. The functional currency of the Group is the
Australian dollar (AUD). The currencies in which these transactions are primarily denominated are Euro, US dollars and AUD.

During the year, less than 10% of total group purchases were made in foreign currencies. The Group has used forward
exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date. These
forward exchange contracts has been designated as a cash flow hedge, and have a fair value of $397 thousand at the
reporting date. The Group has performed effectiveness testing and recognised the full fair value amount net of deferred
tax of $278 thousand in other comprehensive income. Based on the results of the test no in-effectiveness has been
recognised in the profit or loss.

Annual Report 2017IVE Group Limited

100

101

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

24. Financial risk management and financial instruments (cont.)
Currency risk (cont.)

Exposure to currency risk

The summary quantitative data about the Group’s exposure to currency risk as reported to the management of the Group is
as follows:

24. Financial risk management and financial instruments (cont.)
Interest rate risk (cont.)

Cash flow sensitivity analysis for variable rate instruments

A change of 10 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or
loss by $52 thousand (2016: $22 thousand). This analysis assumes that all other variables, in particular foreign currency
rates, remain constant. The analysis is performed on the same basis as 2016.

As at 30 June 2017

As at 30 June 2016

Level 3 fair values

In thousands of AUD

Euro

USD

NZD

Euro

Next three months forecast purchases
Forward exchange contracts

Net exposure

Sensitivity analysis

5,258
(5,258)

–

567
(567)

–

26
(26)

–

2,612
(2,612)

–

USD

514
(514)

–

The impact of exchange rate movements on profit is subject to other variables including movement in market prices.
The impact of exchange rate movements on profit and loss is not material.

Interest rate risk

The Group has entered into interest rate swap contracts to minimise it’s variable interest exposure on bank loans. As at
30 June 2017, after taking into account the effect of the interest rate swaps, 50% of the carrying amount of Facility A
and B of the bank loan is exposed to variable rates (2016: nil). The interest rate swap has been designated as a cash flow
hedge. It’s fair value at reporting date is $255 thousand. The Group has performed effectiveness testing and recognised
the full fair value amount net of deferred tax of $178 thousand in other comprehensive income. Based on the results of the
test no in-effectiveness has been recognised in the profit or loss. These interest rate swaps closely match the terms of the
bank loan and will mature during December 2019.

Exposure to interest risk

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

In thousands of AUD

Fixed rate instruments
Financial liabilities – finance lease liabilities
Effect of interest rate swaps – notional amount

Variable rate instruments
Financial assets – bank balances
Financial liabilities – bank loans (face value)
Effect of interest rate swaps – notional amount

Carrying amount

2017

2015

(14,003)
(60,000)

(74,003)

23,843
(136,000)
60,000

(52,157)

(14,302)
–

(14,302)

14,472
(36,750)
–

(22,278)

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the
Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting
model. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

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

Type

Valuation technique

Contingent
consideration

The fair value is calculated
based on the acquired
business achieving future
revenue or earning’s target.

Significant
unobservable
inputs

Forecast revenue
and earnings
growth

Relationship between the fair value
and unobservable inputs

The Group continuously reassess the contingent
consideration payable based on revised expectations
of achieving revenue and earnings growth targets
over the defined measurement period (between 2017
and 2018 financial years). As a result, contingent
consideration continues to be recognised. If the
applicable performance targets for all acquisitions
are lower than expected by 10%, then the contingent
consideration value will be decreased by approximately
$503 thousand.

Not applicable

Interest rate
swaps

Forward
exchange
contracts

The fair value is calculated
using the present value of
the estimated future cash
flow based on observable
yield curves.

The fair value is
determined using quoted
forward exchange rates
and present value of
estimated future cash
flow based on observable
yield curves.

Reconciliation of Level 3 Contingent consideration fair value

The following table shows reconciliation of Contingent consideration from the opening balance to the closing balance:

In thousands of AUD

Balance at 1 July
Assumed in a business combination in current year
Contingent consideration settled during the year
Contingent consideration reduced
Acquisition accounting measurement period adjustment

Balance at 30 June

2017

10,374
1,700
(2,300)
(2,949)
(2,000)

4,825

2016

4,750
7,874
(340)
(1,910)
–

10,374

Annual Report 2017IVE Group Limited

102

103

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

24. Financial risk management and financial instruments (cont.)
Fair values versus carrying amounts

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

Capital management

The primary objective of the Group’s capital management is to maintain a strong capital base through cash flow
management in order to sustain future development of the business and maximise shareholder value. There were no
changes in the Group’s approach to capital management during the year. The Group is not subject to externally imposed
capital requirements.

25. Operating leases
Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

In thousands of AUD

Less than one year
Between one and five years
More than five years

2017

22,067
81,304
56,274

159,645

2016

12,299
30,976
19,053

62,328

The Group leases office space and plant and equipment under operating leases. The leases typically run for a period of 2 to
10 years, with an option to renew the lease after that date.

During the year an amount of $19,680 thousand (2016: $17,559 thousand) was recognised as an expense in profit or loss
in respect of operating leases.

26. Capital commitments
As at 30 June 2017, the Group has committed to purchase plant and equipment of $23,188 thousand
(2016: EUR1,850 thousand).

27. Related parties
Key management personnel compensation

Key management personnel compensation comprised the following:

In AUD

Short-term employee benefits
Post-employee benefits
Share-based payments

Related party transactions and outstanding balances

In AUD

Perpetual Corporate Trust Limited (Wolseley) – purchases

CPGH Employee Pty Ltd – issuance of shares

Caxton Property Investments Pty Ltd – purchases

Caxton Print Holdings Pty Limited

2017

2016

2,494,251
114,555
19,023

2,627,829

3,445,953
92,797
3,958,617

7,497,367

Transaction
value year
ended
30 June 2017

Transaction
value year
ended
30 June 2016

–

224,004

51,921

8,905,152

632,336

Geoff Selig and Paul Selig (directors of the Company), hold positions in Caxton Print Holdings Pty Limited that result in
them having control or significant influence over the financial or operating policies of this entity. In addition, Caxton Print
Holdings Pty Limited holds shares of the Company.

Perpetual Corporate Trust Limited (Wolseley)

Perpetual Corporate Trust Limited (Wolseley) was the parent entity of the Company’s subsidiary Caxton Print Group
Holdings Pty Limited. It held shares of the Company.

Caxton Property Investments Pty Limited

Geoff Selig and Paul Selig (directors of the Company), hold positions in Caxton Property Investments Pty Limited that result
in them having control or significant influence over the financial or operating policies of this entity.

The terms and conditions of the transactions above were no more favourable than those available, or which might
reasonably be expected to be available, on similar transactions to other third parties on an arm’s length basis.

Annual Report 2017IVE Group Limited

104

105

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2017

28. Group entities
As part of the IPO, an internal restructure took place resulting in IVE Group Limited becoming the holding company of
Caxton Print Group Holdings Pty Limited.

Ultimate parent entity

IVE Group Limited

Controlled entities

Caxton Print Group Holdings Pty Limited
Caxton Print Group Pty Limited
IVE Group Australia Pty Limited
IVE Group Victoria Pty Limited
Task 2 Pty Limited
Pareto Fundraising Pty Limited
Pareto Phone Pty Limited
James Bennett & Associates Pty Limited
IVE Employment (Australia) Pty Limited
IVE Employment (Victoria) Pty Limited
Taverners No. 13 Pty Limited
AIW Printing (Aust) Pty Limited
IVE Group Asia Limited
Guangzhou IVE Trading Company Limited
IVE Singapore Pte Limited

Ownership interest

2017
%

2016
%

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

100
100
100
100
100
100
100
100
100
100
–
–
–
–
–

29. Parent entity disclosures
As at, and throughout, the financial year ending 30 June 2017 the parent entity of the Group was IVE Group Limited.

In thousands of AUD

Result of parent entity
Profit/(loss) for the year
Other comprehensive income

Total comprehensive income for the year

Financial position of parent entity at year/period end
Current assets
Total assets

Current liabilities
Total liabilities

Total equity of the parent entity comprising of:
Share capital
Other equity reserve
Accumulated losses

Total equity

2017

2016

1,004
–

1,004

80
64,491

18
18

230,267
(146,662)
(19,132)

64,473

(11,949)
–

(11,949)

439
12,644

–
–

171,255
(146,662)
(11,949)

12,644

30. Subsequent events
On 28 August 2017 the Group will announce a further capital raise of $55.6 million. The funds from the capital raise will
be used towards a new acquisition, additional press and equipment, growth capital and associated costs. The Group has
identified a target acquisition for an estimated consideration of $14.5 million and completion date of 5 September 2017.

Aside from the above, there have been no other events subsequent to balance date which would have a material effect on
the Group’s consolidated financial statements at 30 June 2017.

31. Auditors’ remuneration

In AUD

Audit services
Auditors of the Company – KPMG
Audit and review of financial reports
Other assurance services

Other services
Auditors of the Company – KPMG
Tax and statutory account preparation
Transaction services

2017

2016

413,470
5,000

418,470

86,818
653,000

739,818

247,750
–

247,750

49,305
704,771

754,076

32. Deed of cross guarantee
Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785 the wholly-owned subsidiaries listed
below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports,
and directors’ reports.

It is a condition of the Instrument that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee.
The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding
up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other
provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in full.
The subsidiaries have also given similar guarantees in the event that the Company is wound up.

The Company and its subsidiaries entered into a new Deed of Cross Guarantee on 28 April 2017. The subsidiaries subject
to the Deed are:

a. Caxton Print Group Holdings Pty Limited

IVE Group Australia Pty Limited

IVE Group Victoria Pty Limited

d. Caxton Print Group Pty Limited

e. Task 2 Pty Limited

f. Pareto Fundraising Pty Limited

g. Pareto Phone Pty Limited

h. James Bennett & Associates Pty Limited

IVE Employment (Australia) Pty Limited

IVE Employment (Victoria) Pty Limited

k. Taverners No. 13 Pty Limited

l. AIW Printing (Aust) Pty Limited

A consolidated statement of profit or loss and other comprehensive income and consolidated statement of financial
position, comprising the Company and controlled entities which are a party to the Deed, after eliminating all transactions
between parties to the Deed of Cross Guarantee, for the year ended 30 June 2017 is set out on pages 69 and 70 of this
financial report.

Annual Report 2017IVE Group Limited

106

107

DIRECTORS’ DECLARATION

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

(a) the consolidated financial statements and notes, set out on pages 69 to 105, are in accordance with the

Corporations Act 2001, including:

(i)

giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance for the
financial year ended on that date; and

(ii) complying with Australian Accounting Standards 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.

There are reasonable grounds to believe that the Company and the group entities identified in Note 28 will be able to
meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee
between the Company and those group entities pursuant to ASIC Corporations (Wholly owned Companies) Instrument
2016/785.

The directors draw attention to Note 2 to the consolidated financial statements, which includes a statement of
compliance with International Financial Reporting Standards.

Signed in accordance with a resolution of directors.

Geoff Selig

Director

Dated at Sydney this 28th day of August 2017

Annual Report 2017IVE Group Limited

108

109

Annual Report 2017IVE Group Limited110

111

Annual Report 2017IVE Group Limited112

ASX ADDITIONAL INFORMATION

Additional information required by the Australian Securities Exchange (ASX) and not disclosed elsewhere in the Annual
Report is set out below. The shareholder information below is as at 1 August 2017.

Twenty largest shareholders

IVE Group Limited shares are traded on the ASX under the code ‘IGL’.

Share registry

Link Market Services
Level 12, 680 George Street
Sydney NSW 2000
Phone: +61 1300 554 474

Registered office

Building B, 350 Parramatta Road
Homebush NSW 2140
Phone: +61 2 8020 4400

Substantial shareholders of ordinary shares (as reported to the ASX)

Name

Ellerston Capital and its associates
Caxton Print Holdings Pty Ltd as trustee for the Selig Family Trust
IVE Group Limited and its subsidiaries
Hume Partners Pty Ltd
COPIA Investment Partners Ltd
CBA and its related bodies corporate

Number held

12,304,237
10,066,329
8,648,991
8,421,747
6,565,000
5,601,258

Distribution of shareholders and shareholdings – ordinary shares

Range

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

Total

Number of
shareholders

129

381

303

596

8.70

25.69

20.43

40.19

4.99

Number
of shares

74,858

1,169,131

2,463,248

16,342,590

99,230,797

The number of shareholders holding less than a marketable parcel of ordinary shares is 26.

1,483

100.00

119,280,624

100.00

10.32%
8.4%
9.7%
7.2%
5.5%
6.28%

0.06

0.98

2.07

13.70

83.19

Name

JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
Caxton Print Holdings Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/C 2
Taverners N Pty Ltd
BNP Paribas Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
UBS Nominees Pty Ltd
RBC Investor Services Australia Nominees Pty Limited
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd DRP
CS Third Nominees Pty Limited
Shansley Pty Ltd
Brispot Nominees Pty Ltd
Taverners J Pty Ltd
Wlhalh Holdings Pty Ltd
Mvel Aitken Pty Ltd
Citicorp Nominees Pty Limited
R.E.D Investment Holdings Pty Ltd

Other shareholders

On-Market Buy Back
There is no current on-market buy back.

Voting Rights
The voting rights attached to ordinary shares are set out below:

113

11.51
10.82
10.20
8.92
8.44
7.31
6.14
2.97
1.61
1.37
0.89
0.88
0.85
0.78
0.78
0.77
0.44
0.42
0.36
0.36

75.81

24.19

Number of
Ordinary Shares held

13,728,417
12,901,172
12,165,955
10,638,756
10,066,329
8,718,066
7,324,000
3,547,612
1,925,653
1,629,285
1,057,781
1,047,881
1,016,873
931,450
925,768
924,274
520,681
500,681
434,479
425,545

90,430,658

28,849,966

119,280,624

100.00

On a show of hands every member present at a meeting in person or by proxy shall have one vote, and upon a poll, one vote
for each fully paid share held.

There are no other classes of equity securities.

Annual Report 2017IVE Group Limited

114

115

ASX ADDITIONAL INFORMATION (CONT.)

CORPORATE GOVERNANCE STATEMENT

Voluntary escrow
The number of ordinary shares held in a voluntary escrow arrangement as at 1 August 2017 was 12,516,865.

Period escrow ends

The first day after the day on which IVE Group’s audited results for
the period ending 30 June 2017 are released to ASX

13 December 2017

Total of Escrowed Shares

Stock Exchange Listing
IVE Group securities are only listed on the ASX.

Number of securities
subject to escrow

8,648,991

3,867,874

12,516,865

Use of Cash and Assets
IVE Group has used the cash and assets in a form readily convertible to cash at the time of admission to the ASX in a way
consistent with its business objectives as stated in its Prospectus.

The Board is responsible for the overall corporate governance of IVE Group Limited, including adopting appropriate
policies and procedures designed to ensure that the IVE Group is properly managed to protect and enhance Shareholder
interests.

The Board monitors the operational and financial position and performance of IVE and oversees its business strategy,
including approving the strategic goals of IVE. The Board is committed to maximising performance, generating appropriate
levels of Shareholder value and financial return, and sustaining the growth and success of IVE.

In conducting business with these objectives, the Board is committed to ensuring that IVE is properly managed to
protect and enhance Shareholder interests, and that IVE, its Directors, officers and employees operate in an appropriate
environment of corporate governance. Accordingly, the Board has created a framework for managing IVE, including
adopting relevant internal controls, risk management processes and corporate governance policies and practices, which
it believes are appropriate for IVE’s business and that are designed to promote the responsible management and conduct
of IVE.

Details of IVE’s key governance policies and the charters for the Board and each of its committees are available on IVE’s
website at www.ivegroup.com.au

The Corporate Governance Statement reports against the 3rd edition of the ASX Corporate Governance Council’s
Principles and Recommendations (ASX Principles) and the practices detailed in the Corporate Governance Statement
are current as at 31 July 2017. It has been approved by the Board and is available on the IVE website under Investors at
http://investors.ivegroup.com.au/home/.

Annual Report 2017IVE Group Limited
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