ANNUAL REPORT 2018
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WE MOVE
IVE Group Limited Annual Report 2018VALUE PERCEPTIONSIDEASWE MOVEWE MOVE IVE Group Limited’s 2018 AGM
will be held on Tuesday,
20 November 2018 commencing
at 10:00am (Sydney time)
in Establishment Room II at Establishment,
252 George Street, Sydney NSW 2000
Registered office
IVE Group Limited
Level 3, 35 Clarence Street
Sydney NSW 2000
Telephone: +61 2 8020 4400
ACN 606 252 644
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IVE Group Limited Annual Report 2018
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IVE is a vertically integrated marketing services and print communications
provider. IVE enables its customers to communicate more effectively
with their customers by creating, managing, producing and distributing
content across multiple channels.
The marketing services and print communications industry is dynamic
and constantly evolving. IVE’s response to this evolution has been to
maintain relevance with our customers through ongoing investment and
continual expansion of our product and service offering.
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
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018PERCEPTIONSWE MOVEWE MOVEIDEASWE MOVEWE MOVEWE MOVEWE MOVEWE MOVEVALUES IVE Group Limited Annual Report 2018
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HIGHLIGHTS
OF THE YEAR
FINANCIAL
RESULTS
SUCCESSFULLY
RAISED $55.6
MILLION
IN AUGUST 2017
TO DRIVE FURTHER
GROWTH BEYOND
FY18
MILESTONES MET
Relocated and merged Victorian
Blue Star DISPLAY with Franklin WEB
retail display business
Completed the merger of Franklin
WEB Victoria and AIW
$53 million investment in a new
highly automated production site
for Franklin WEB NSW
Completed acquisition of SEMA
in September 2017
EARNINGS
PER SHARE
Earnings Per Share of $0.252(1) was
down 2.6% on PCP impacted by
August 2017 share issue, with full
benefits of the capital raise residing
in FY19 following completion of
acquisition integrations and major
capital expenditure programs
REVENUE
Strong organic growth of 6.2%
Excellent success on
revenue retention
Continued good momentum
on ‘cross sell’
No material revenue losses
(1) Pro forma NPATA/weighted average shares on issue
REVENUE $M
FY2016
FY2017
FY2018
382.0
496.9
695.4
EBITDA $M
FY2016
FY2017
FY2018
NPATA $M
FY2016
FY2017
FY2018
44.9
55.2
73.2
23.9
27.3
35.9
EBITDA PERFORMANCE
AND PRO FORMA FREE
CASH CONVERSION OF
85.4% SUPPORTED A FINAL
DIVIDEND OF 7.5 CENTS PER
SHARE, FULLY FRANKED.
PAYOUT RATIO OF 74% OF
PRO FORMA NPAT
Revenue $695.4M
↑ 39.9% PCP
$73.2M EBITDA
↑32.4% PCP
$35.9M NPATA(1)
↑32.4% PCP
18.3% ROFE (2)
OPERATING CASH FLOW WAS
STRONG REFLECTING EBITDA
ACHIEVEMENT
(1) NPAT excluding amortisation of customer contracts
(2) EBIT/average funds employed where funds employed
equals net assets plus net debt
IVE Group Limited Annual Report 2018 4
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EXECUTIVE
CHAIRMAN’S
REPORT
Dear shareholders,
I am pleased to present my report as Executive
Chairman of IVE Group, being proud of the
progress we made over the year ending 30 June
2018. We are very satisfied that once again we
have delivered on all strategic objectives and key
operational milestones as we drive to position the
company for continued growth.
Since listing on the ASX in December 2015 we
have met market guidance(s) and delivered a
strong uplift across revenue, EBITDA and NPATA.
Our strategy, our narrative and operational
imperatives have been effectively communicated
and consistent throughout.
Continued Growth – Revenue and Earnings
FY18 revenue growth of 39.9% to $695.4
million including strong organic growth of 6.2%
was underpinned by acquisitions, excellent
revenue retention of key client accounts, no
material revenue losses, and importantly,
continued momentum on cross selling
– a testament to IVE being Australia’s
most diversified marketing and print
communications provider.
EBITDA was up 32.4% to $73.2 million, with
NPATA up 32.4% to $35.9 million. While our
business experienced robust growth in FY18 we
were still able to lift our dividend by 22% to 15.5
cents per share, underpinned by the highly cash
generative nature of our business.
EPS was down 2.6% on PCP impacted by the
delayed deployment of the funds raised in the
August 2017 capital raise. We would expect
the full benefits and resulting EPS uplift of this
capital raise and subsequent investment program
to flow through in FY19.
Our diversified customer base
Having led sector consolidation over the last
20 years, we have accumulated an enviable
and very stable customer base from both new
customers and through businesses we have
acquired. Our company operates as a highly
integrated collection of businesses, with 70%+
of our customers being serviced by more than
one of our businesses. This reaffirms the success
we have had in cross-selling additional services
across the broader IVE Group.
SINCE LISTING ON THE
ASX IN DECEMBER
2015, OUR STRATEGY,
OUR NARRATIVE, AND
OUR OPERATIONAL
IMPERATIVES HAVE
BEEN EFFECTIVELY
COMMUNICATED
AND CONSISTENT
We genuinely value the deep partnerships we
have established over many years with our
customers. In many cases we have been servicing
customers for decades, a testament to our
focus on client service as we have evolved our
value proposition and maintained our relevance
to meet their ever changing communications
requirements.
Well positioned for FY19
Having now fully deployed the funds raised in
August 2017, and following the successful
execution of key operational initiatives over
the last year, we expect in FY19 to fully realise
operational efficiencies following our significant
investment in Franklin WEB and the SEMA
acquisition and integration.
We anticipate that the strong momentum across
the Group will continue over FY19 and therefore
expect to see a return to EPS growth.
Thank you
The success we have had at IVE has been a
direct result of the hard work of our talented
and committed team. Our senior management
team have worked closely together for ten
years and we have welcomed additional talent
into IVE Group following the acquisitions of
key businesses. We now employ around 1,700
people across the Group who have a wonderful
customer service ethic. I would like to thank all
staff for their tremendous effort during the year
and our customers and supply partners for their
continued support.
We are most fortunate to have a highly skilled and
cohesive board. Thank you to my fellow directors
for their commitment and valuable input over the
last year.
Geoff Selig
Executive Chairman
THE DIVERSE AND
COMPELLING VALUE
PROPOSITION
CONTINUES TO LEAD THE
MARKET, UNDERPINNING
CONSISTENT REVENUE
GROWTH AND RETENTION
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 6
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MANAGING
DIRECTOR’S
REPORT
We were certainly
on the move over
the last year to
complete our plans
in the Franklin WEB
business.
Pareto is the leading data expert in understanding
and forecasting trends across the not-for-
profit sector. During the year we developed
and implemented a new ‘big data platform’
that will enable all client fundraising data to be
automatically uploaded and integrated to provide
sophisticated reporting and an enhanced level of
insights, both in relation to specific charities and
across the wider market. We released a number
of new analytics products which are enabling our
customers to better target their fundraising efforts
to benefit recipients.
We were certainly on the move over the last
year to complete our plans in the Franklin WEB
business. In Victoria, the merger of Franklin and
AIW was completed in December 2017, when
the AIW site ceased production and excess press
capacity was retired. The AIW site remained open
during the integration period to ensure there were
no disruptions to our clients, and pleasingly we
achieved that objective.
An important strategic objective was to ensure we
had the appropriate balance of capacity between
Franklin WEB NSW and Victoria to best service
national retailers. The Group committed $53
million to establish a highly automated, low cost
Franklin NSW operation in Huntingwood NSW.
The facility was fully operational in November
2017 following the installation of the first new
80 page press and highly automated binding
line, with stitching capacity expanded in March
2018. The second new 80 page press was
commissioned on schedule in September 2018.
We now look forward to driving growth and
returns from both the Franklin Victoria and
NSW businesses in FY19 as this investment
is now complete.
Acquisitions integrated
Having completed the SEMA acquisition in
September 2017 we integrated this business
into Blue Star’s existing data driven, personalised
communications division, Blue Star DIRECT.
The integration was largely completed across
three states in the second half of FY18, with
the final phase completed in September 2018.
Pleasingly, we had a smooth change in ownership,
which is a testament to the strong emphasis we
2018 was a year of further consolidation
for our business, as we completed an
equity raise in August 2017 to fund growth
initiatives, including the further expansion of
our personalised communications business
Blue Star DIRECT through the acquisition
and subsequent integration of SEMA, and
the establishment of the highly automated
world class Franklin WEB NSW operation.
In 2014 we launched a company wide employee
benefits program, ‘IVE Plus’. This program is
designed to support our staff realise their full
potential through access to benefits across health
and wellbeing, lifestyle, wealth and security, and
personal family and community. In December
2017 this program was expanded further to
include a diversity and inclusion component to
ensure we continue to reinforce the extent to
which we embrace and value our diverse
workforce and inclusive culture. Our workplace
health and safety platform ‘IVE 360’ was also
successfully launched through the year.
Operational initiatives
Our first operational initiative was to relocate the
Group’s existing Victorian Blue Star DISPLAY
operation, which was merged with Franklin
WEB’s retail display business into a dedicated
facility in Victoria. This coincided with a significant
investment program across both Victoria and NSW
to provide more capacity to better service national
retailers for their retail display requirements.
Kalido, our data analytics, marketing automation
and digital services division continued its strong
growth in both Australia and Asia, where we
secured a number of new tier one customers.
We were proud to have been awarded the
2017 Salesforce Global Innovation Award for a
major project undertaken with Craveable Brands
(Oporto, Red Rooster and Chicken Treat). Kalido
partnered with Craveable Brands to transform
their customer journey experience, leveraging
leading marketing cloud platforms to enable
a truly customer-centric, omni-channel
automated solution.
KALIDO WINS 2017
GLOBAL INNOVATION
AWARD FOR OMNI-
CHANNEL SOLUTION
FOR ENHANCING THE
CRAVEABLE BRANDS
CUSTOMER EXPERIENCE
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 8
IVE Group Limited Annual Report 2018
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MANAGING DIRECTOR’S REPORT
BOARD OF
DIRECTORS
place on acquiring businesses that have the right
culture and management teams. Customers were
very supportive of the ownership change, and
we have subsequently experienced strong new
business growth with all key staff retained.
Dominion Print Group was a bolt on acquisition
which we acquired in November 2017 and was
fully integrated into the Group by March 2018.
Continued strong outlook
IVE Group is set to continue with another strong
year in FY19, with year on year revenue and
earnings growth expected. We have a diverse and
compelling value proposition which continues to
underpin strong revenue retention and growth,
both cross selling opportunities across our
divisions and new customer acquisition. Having
completed two significant acquisition and
integration projects over the last two years, with
associated major capital investment programs,
we are well positioned to fully realise the resulting
operational efficiencies in FY19 to unlock further
growth in earnings per share.
As a result of strong revenue growth we undertook
most of the ‘heavy lifting’ of our capital expenditure
program in FY17/18, and accordingly our FY19
targeted investment and maintenance capital
expenditure is significantly lower at $9 million. This
excludes previously committed and communicated
capital expenditure of $10.7 million for final phase
of establishing Franklin Web NSW, and $5.5
million into additional high speed continuous inkjet
in Blue Star DIRECT. We expect restructure costs
for FY19 to be minimal.
Reflecting on the success we have had over FY18,
I would like to thank all staff across the Group.
I am privileged to work with a terrific team and the
continued growth and strength of the Company is
testament to their talent and dedication.
Warwick Hay
Managing Director
(L to R) Gavin Bell,
Andrew Harrison, Sandra
Hook, Geoff Selig, Paul
Selig, Warwick Hay and
James Todd.
Geoff Selig
Executive Chairman
Geoff has over 30 years’ experience in the
marketing communications sector. Geoff was
Managing Director of the IVE Group prior to
moving into the role of Executive Chairman
following the Company’s listing on the ASX
in December 2015.
Geoff is a director of Caxton Group and Caxton
Print Holdings, and also sits on the board of
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 and is a member of the
Australian Institute of Company Directors.
Warwick Hay
Managing Director
After joining IVE Group in 2009 as CEO of Blue
Star WEB, Warwick was appointed Managing
Director in 2014.
Warwick has over 20 years of management
experience across all business functions in
complex B2B environments.
Between 2004 and 2009 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 his tertiary education in New Zealand,
a Graduate Diploma in Packaging Technology from
Massey University and a Post Graduate Diploma in
Business from Auckland University.
Paul Selig
Executive Director
Paul’s career commenced in banking and treasury
management before moving into the print and
marketing communications sector over 25 years
ago. He has been an executive director of the
Company since 2012.
Paul is an experienced director and investor
having run the Caxton Group family office for
over15 years.
Paul is also a director of Caxton Group,
Caxton Print Holdings and Caxton Property
Developments. He holds a Bachelor of Economics
(Hons) from Macquarie University.
IVE Group Limited Annual Report 2018
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IVE Group Limited Annual Report 2018
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WE MOVE
The future never
stands still.
And neither do we.
At IVE, we move
value, we move
ideas and we move
perceptions.
BOARD OF
DIRECTORS
Sandra Hook
Independent Non-Executive Director
Sandra Hook has a track record in driving
customer-centred business transformation and
transitioning traditional organisations in rapidly
evolving environments. She has extensive
operational, digital, financial management and
strategic experience built over 25 years as a CEO
and in senior executive roles for some of Australia’s
largest media companies including News Limited,
Foxtel, Federal Publishing Company, Murdoch
Magazines and Fairfax.
Since 2000 Sandra has also served as a non-
executive director on listed, public and private
companies and government bodies. Sandra
is a director of digital/technology companies
RXP Services, MedAdvisor and .au Domain
Administration as well as the Sydney Fish Market.
Sandra is a trustee of the Sydney Harbour
Federation Trust and the Royal Botanic Gardens
and Domain Trust.
Gavin Bell
Independent Non-Executive Director
Gavin is an experienced director, executive
and lawyer.
Gavin is a director of Smartgroup Corporation and
icare NSW. He is also a member of the Advisory
Council of the UNSW School of Business. Prior to
becoming a director, Gavin was the CEO of global
law firm Herbert Smith Freehills. He was a partner
in the firm for 25 years.
Gavin holds a Bachelor of Laws from the University
of Sydney and a Master of Business Administration
from the AGSM, University of New South Wales.
Andrew Harrison
Independent Non-Executive Director
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 Finance
Director of Landis and Gyr and Chief Financial
Officer and a director of Alesco.
Andrew is a director of Burson Group, Estia Health,
and WiseTech Global.
Andrew was previously a Senior Manager at Ernst
& Young (Sydney and London) and Gresham
Partners, 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
School of the University of Pennsylvania, and is a
chartered accountant.
James Todd
Independent Non-Executive Director
James is an experienced company director,
corporate adviser and investor. He commenced his
career in investment banking and has taken active
roles in a range of private and public companies.
He was until recently Managing Director of
Wolseley Private Equity, an independent private
equity firm he co-founded in 1999.
James is a director of Coventry Group and
HRL Holdings.
James holds a Bachelor of Commerce and a
Bachelor of Laws from the University of New
South Wales, and a Graduate Diploma of Applied
Finance from the Financial Services Institute
of Australasia (FINSIA), where he is a Fellow.
He is also a member of the Australian Institute
of Company Directors.
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WE MOVE
3,000+ CUSTOMERS
ACROSS 26 INDUSTRY
SECTORS
OUR CUSTOMERS
Recognising that our customers operate in a
fast-changing world, our diverse and integrated
capabilities support their evolving needs and
strategic business opportunities. Our approach
to customer communications that build brand
value is measured by performance, creativity and
innovation. Through continued diversification and
internal development, our in-house capabilities –
from data analytics and marketing automation to
advanced print technology – drive demand for our
customers’ products and services.
OUR SHAREHOLDERS
Our market-leading positions across the many
sectors in which we operate, continue to deliver
value for shareholders. The leadership team’s
vision and investment strategy ensure we are
strongly positioned to leverage Group capabilities,
anticipate changing market conditions and meet
our customers’ evolving needs.
70%+ OF REVENUE
GENERATED BY
CUSTOMERS USING
MULTIPLE IVE
BUSINESSES
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VALUE
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WE EMPLOY 1,700+ PEOPLE
ACROSS AUSTRALIA,
NEW ZEALAND, CHINA
AND SINGAPORE
OUR PEOPLE
Our continued growth and evolution as an
omnichannel marketing communications business
is powered by our people. We value diversity and
actively work to cultivate an open, dynamic and
inclusive workplace. Supporting the individual and
collective wellbeing of our people helps us attract
and retain smart, energetic and determined talent
who are focused to deliver.
IVE PLUS EMPLOYEE
BENEFITS PROGRAM
EXPANDED TO INCLUDE
A DIVERSITY AND
INCLUSION COMPONENT
OUR ETHICAL SUPPLY CHAIN
INCLUDES 300 DOMESTIC
AND GLOBAL SUPPLY
PARTNERS
OUR STABLE MANAGEMENT
TEAM HAS AN AVERAGE OF
20 YEARS’ SECTOR
EXPERIENCE
OUR PARTNERS
To ensure we can reliably meet our customers’
marketing and communications campaign
requirements, we work closely with select
technology partners and third-party suppliers,
both domestically and globally.
From digital workflow and managed solutions
software to the world’s most advanced print
operations, our partnerships connect customers
with the most relevant and innovative solutions,
driving efficiency and value.
We collaborate with leading
global tech partners to deliver
the world’s best practice
cross-channel campaign
management (maybe put this
under ideas seeing as we don’t
have anything else)
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IDEAS
THE VALUES THAT DEFINE
OUR BUSINESS ARE AT THE
CORE OF OUR LONG-TERM
RELATIONSHIPS WITH ALL
STAKEHOLDERS
DIVERSIFICATION
IVE’s product and service offering is
unparalleled in Australia. In many of the sectors
in which we operate, we are leaders in both
innovation and market share. This breadth
of services empowers our people to deliver
inspired ideas that drive successful results.
By creating, managing, producing and
distributing highly personalised and engaging
content across multiple marketing channels we
give our customers a competitive edge.
RELATIONSHIPS
In the constantly evolving world of marketing
communications, relationships can be fleeting.
We take pride in the fact that 75% of our
revenue is generated from contracted or long-
term customer relationships. Supporting deep
customer engagement and the opportunity to
introduce capabilities from across the IVE Group,
these trusted business partnerships drive our
organic growth. Our solutions-based approach
brings ideas to life with innovative technology and
contemporary creative solutions.
THE DIVERSIFICATION
OF OUR OFFER TODAY
IS THE RESULT OF 20
YEARS+ OF CLEARLY
DEFINED STRATEGY,
MEASURED GROWTH
AND EVOLUTION
IVE Group Limited Annual Report 2018IDEASWE MOVEWE MOVE 18
1919
EXPERTISE AND SKILLS
When customers bring the opportunity, our
people bring the smarts. Backed by leading-
edge technology and unrivalled knowledge of the
sectors in which we operate, our team’s expertise
and experience is highly valued by our customers.
Staying on top of global trends and new
technologies, our people work together to provide
powerful and relevant creative solutions.
TECHNOLOGY
Just as technology is reshaping our lives,
it continues to reshape our business. Our long
history and expertise in traditional print is
combined with dynamic capabilities in technology,
data and digital communications. Valuable insights
are driven by deep data analysis and inspire the
ideas and innovations that our customers need
to thrive. One-to-one or one-to-many, we are
strongly positioned to lead the way in delivering
highly personalised communications models
and strategies.
WE HELP CUSTOMERS
HARNESS DATA
TO STRENGTHEN
RELATIONSHIPS WITH
INTERACTIVE TOOLS
FOR MARKETING
AUTOMATION,
SHOPPER INSIGHTS,
E-COMMUNICATIONS
AND MORE
THE UNIQUE BLEND OF
CREATIVITY, SKILLS AND
TECHNOLOGY DELIVER
GREAT IDEAS AND
OUTCOMES
INSIGHTS
Data helps unlock opportunities for innovation and
creativity. From choosing the right communication
channel to re-engineering delivery systems, we
help deliver optimum value, efficiency and results
throughout our customers’ businesses.
By integrating data insight with CRM and
marketing automation, we cohesively connect
strategy, planning, delivery and optimisation
services within the one solution.
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DATA
IVE has been creating personalised
communications for more than 30 years. From
our heritage as an innovator in personalised direct
mail, today we are a market leader in data-driven
communications that extend to every media
channel and every area of the business. Whether
managing customer relationships, fundraising for
charity or building paths to purchase, our industry-
leading data analytics, benchmarking, predictive
modelling and insights help customers deliver the
right message at the right time.
CONTENT
Whether it’s a personalised online experience or
printed brand collateral, IVE is strongly positioned
to deliver compelling content that brings
customers’ brand stories to life. Our integrated
teams work to develop ‘media-neutral’ creative
ideas that can be seamlessly rolled-out across
any media channel. Complementing our deep
expertise in print communications, our in-house
design capabilities include branding, video
content, animation and digital design.
HARNESSING THE
POWER OF DATA
TO DRIVE BETTER
CUSTOMER RESULTS
IS CORE TO OUR
PERSONALISED
COMMUNICATIONS
OFFERING
OUR ISO 27001
ACCREDITATION
PROVIDES CUSTOMERS
WITH THE ULTIMATE
LEVEL OF COMFORT
THAT IVE CAN MANAGE
THEIR HIGHLY SENSITIVE
DATA IN A SECURE
ENVIRONMENT
WE MOVE
PERCEPTIONS
OUR MANAGED
SERVICES HELP
BUSINESSES TO PLAN,
EXECUTE AND OPTIMISE
DATA-DRIVEN CUSTOMER
JOURNEYS
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PRINT COMMUNICATIONS
IVE is recognised as one of the most versatile
and powerful print communications businesses
in Australia, with capacity to handle projects of
virtually any scope or size. We have continued to
invest in technology that meets the ongoing needs
of our customers. Investment and workflows are
geared towards maximising flexibility, efficiency
and competitiveness as well as greater speed to
market for our customers.
PRODUCED 180 MILLION+
PERSONALISED DIRECT
MARKETING MAIL PACKS
AND 3.5 BILLION+
CATALOGUES
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252525
WE HAVE 110+ MARKETING
EXECUTION EXPERTS
EMBEDDED ON-SITE WITH
CUSTOMERS OR NEAR SITE
AT OUR CBD HUBS
DIGITAL MARKETING
Connected by smartphones, mobile devices
and computers, we’re living in a digital world.
IVE provides solutions that let businesses
interact with their customers in ways that are
more personalised, more interactive and more
informed by personal data than ever before.
Every consumer has different preferences and
behaviours so we help customers harness data to
create highly personalised engagement journeys.
We partner with leading technology platforms to
deliver shopper insights, loyalty programs and
marketing automation. We create chat-bots driven
by Artificial Intelligence and enable marketing
communications through SMS, email, social media
and messaging platforms.
1 MILLION+ OUTBOUND
PHONE CONVERSATIONS ON
BEHALF OF CHARITIES
95 MILLION+ ELECTRONIC
DIRECT MAILS AND
14 MILLION+ TEXT
MESSAGES SENT
OUR FULLY INTEGRATED
SOLUTIONS HELP
BRANDS TO CONFIDENTLY
NAVIGATE THE PATH FROM
TRADITIONAL PRODUCT-
LED MARKETING, TO THE
REWARDS OF BEING
CUSTOMER-CENTRIC
CHAMPIONS
INTEGRATED MARKETING
SOLUTIONS
IVE combines our expertise in traditional print
with leading capabilities in digital technology
and data to provide integrated multi-channel
solutions for many of Australia’s leading
organisations. We help unlock opportunities for
innovation and advantage, by drawing on our
extensive consulting experience from marketing
communications to digital technologies, supply
chain logistics to retail display. Understanding
each customer’s unique issues, we then
collaborate to develop, implement and
manage the optimum solution to drive better
business results.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018PERCEPTIONSWE MOVEWE MOVEWE MOVE IVE Group Limited Annual Report 2018
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IVE Group Limited Annual Report 2018
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IVE GROUP LIMITED
ANNUAL FINANCIAL
REPORT
YEAR ENDED 30 JUNE 2018
ABN 62 606 252 644
WE MOVE
The future never stands still.
And neither do we.
At IVE we’re on the move to create
value for our people, shareholders,
customers, and partners.
On the move to deliver inspired
creative ideas that deliver the full
potential of the continually
evolving marketing and
communications landscape.
And thinking beyond the ‘right now’
to help our customers confidently
navigate the road ahead.
Our strategy of diversification and
innovation continues to reinforce
our position as a respected market
leader in the many sectors in
which we operate.
A stable and experienced
leadership team guide our strategy
and our culture, ensuring that we
continue to attract customers,
people and shareholders who
share the IVE vision for our
dynamic future.
WE MOVE 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 auditor’s report
ASX additional information
Corporate Governance Statement
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OPERATING AND FINANCIAL REVIEW
1.
INTRODUCTION
The Directors are pleased to present the Operating and Financial Review (OFR) for IVE Group Limited (IVE) for the
financial year ended 30th June 2018.
The OFR is provided to assist shareholder’s understanding of IVE’s business performance and factors underlying
its results and financial position.
2. SUMMARY
IVE achieved revenue growth for FY2018 of 39.9% compared to the prior corresponding period (PCP).
The revenue increase reflects the impacts of the asset acquisition of Franklin Web Pty Ltd (Franklin) and share
capital acquisitions of AIW Printing Pty Ltd (AIW) completed mid December 2016 and SEMA entities acquisition
in September 2017. Growth also continued through a combination of new business wins and expanded spend
from the existing customer base through IVE’s diversified service offering (share of wallet).
IVE achieved pro forma EBITDA growth of 32.4% over the PCP (before restructure and acquisition costs), due
to a combination of organic growth and the acquisitions of Franklin WEB, AIW and SEMA, 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 77.2% higher than PCP, reflecting
restructuring and acquisition costs in FY2017 mainly relating to Franklin and AIW acquisitions and costs.
During FY2018 IVE acquired 100% of the share capital of SEMA entities in September 2017, and John W Cage &
Co Pty Ltd (trading as Dominion) in mid-November 2017.
FY2018 the Group successfully completed the integration of Franklin WEB and AIW, opened a new greenfield
production site in Huntingwood Sydney (Franklin WEB NSW), which became fully operational in November 2017.
The new site allowed for the final closure of production at the AIW site in mid-December 2017. The company also
successfully undertook a capital raise in August 2017 to fund the SEMA acquisition (integrated H2 FY2018 and
will complete Q1 FY2019), funding of a new printing press and ancillary equipment for recently secured revenue
for our Franklin WEB operations (VIC and NSW), and provide capacity for future bolt on acquisitions and balance
sheet flexibility.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 30
31
OPERATING AND FINANCIAL REVIEW (CONT.)
3. STRATEGY AND OPERATING OVERVIEW
IVE’s journey of evolution and growth over the last 20 years has resulted in the most diversified marketing
communications business in Australia. It is the extent of our diversification that has underpinned our capacity to
retain customers over a very long period as we continue through our evolving value proposition to remain relevant
to our customers’ changing communications requirements.
IVE’s four divisions (Kalido, Blue Star Group, Pareto Group, IVEO) bridge multiple sectors, and in each sector we
continue to maintain our market leading positions.
IVE’s evolution and growth strategy has been focused on the following key initiatives:
• A cohesive, talented and stable leadership team
• A very stable, diverse and inclusive workforce
• New customer origination driven by a highly customer centric culture
• Effective cross selling to drive growth in share of wallet with existing customers
• Historically, the execution of a disciplined acquisition program
• Expansion of the value proposition through the addition of new products and services
• Continuing to strengthen and leverage our existing operational platforms through targeted productivity
investment programs.
Further information on IVE’s strategy, operations and markets will be set out in our 30 June 2018 Annual Report.
4.
OVERVIEW OF RESULTS FOR Y/E FY2018
IVE’s Financial Report for FY2018 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 FY2018 results presented before
impacts of all restructuring and acquisition costs which primarily relate to the acquisitions of AIW, Franklin, SEMA
and the August 2017 capital raise. Comparisons to FY2017 performance are on a Pro Forma basis also excluding
all restructure and acquisition costs.
The Directors believe that the results before restructuring and acquisitions costs, and Pro Forma comparisons,
better reflect the underlying operating performance and is consistent with the basis of full year guidance, this
differs from the Statutory presentation.
The non-IFRS Pro Forma financial information has not been audited or reviewed.
Financial information in this OFR is expressed in millions and has been rounded to one decimal place. This differs
from the interim Financial Report where numbers are expressed in thousands. As a result, some minor rounding
discrepancies occur.
4.1 STATUTORY RESULTS PER THE FINANCIAL REPORT
Table 1 outlines the Statutory results for FY2018 and FY2017 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
FY2018
$’M
Actual
FY2017
$’M
Variance
$’M
Variance
%
695.4
338.6
496.9
248.1
198.5
39.9%
90.5
36.5%
48.7%
49.9%
0
-2.5%
63.7
9.2%
44.8
6.4%
36.9
25.7
29.3
35.9
7.2%
22.2
4.5%
16.4
12.1
14.8
27.7
77.2%
0
26.6%
22.6
102.2%
0
44.5%
20.4
13.6
14.5
124.5%
112.4%
98.5%
The key variances on a Statutory basis between FY2018 and FY2017 are as follows:
• Revenue
Revenue increase of $198.5M or 39.9% over PCP, reflects the impact of Franklin/AIW and SEMA 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.
• Gross profit
The gross profit increase of $90.5M over PCP largely driven by increased revenue. The Group achieved gross
profit margin of 48.7% to revenue compared with 49.9% in PCP. Normalising for Franklin and AIW work mix and
outsourcing due to capacity constraints during integration in H1 FY2018, 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. Paper cost increases in Q4 had minimal impact and were passed on wherever
possible.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 32
33
OPERATING AND FINANCIAL REVIEW (CONT.)
4.1 STATUTORY RESULTS PER THE FINANCIAL REPORT (CONT.)
• EBITDA (Earnings before interest, tax, depreciation and amortisation)
EBITDA of $63.7M represents an increase of $27.7M or 77.2% over PCP, achieved via a combination of
acquisitions, organic revenue growth, and efficiency gains.
Production expenses (excluding depreciation) of $160.3M are 23.1% to revenue compared to $107.9M and
21.7% to revenue in PCP. The main driver of the increase in production expense is to service additional revenue;
however % increase to revenue was partly driven by the integration of the SEMA acquisition in H2, as well as a result
of keeping AIW operational throughout the integration period in H1 of FY2018. Production expenses also reflect
increases in power expense.
Administration expenses (excluding depreciation and amortisation) of $106.0M are 15.2% to revenue compared
to $88.7M and 17.8% to revenue in PCP.
Other expenses of $9.5M compared to PCP of $19.1M. FY2018 includes restructure costs associated with final
AIW close down as well as SEMA integration costs, and acquisition costs also related to SEMA and August 2017
capital raise (see table 3). FY2017 is comprised of restructuring costs and acquisition costs predominantly relating
to the Franklin and AIW acquisitions.
Other income of $0.8M mainly relates to contingent deferred goodwill (net) written back to the profit and loss.
EBITDA also impacted by bad debts associated with Kalido Asia.
4.2 YEAR ENDED FY2018 NON IFRS PRO FORMA FINANCIAL INFORMATION
The FY2018 results below are presented before all restructuring and acquisition costs. Compared to FY2017 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: FY2018 non IFRS Pro Forma financial information, FY2017 results on a Pro Forma basis, and FY2018
Statutory results
Statutory
Pro Forma (ex restructure & acquisition)
Actual
FY2018
$’M
Actual
FY2018
$’M
Actual
FY2017
$’M
Variance
$’M
Variance
%
695.4
338.6
695.4
338.6
496.9
248.1
48.7%
48.7%
49.9%
63.7
9.2%
44.8
6.4%
36.9
25.7
29.3
73.2
55.3
10.5%
11.1%
54.3
7.8%
46.4
32.4
35.9
41.5
8.4%
35.8
24.5
27.1
198.5
39.9%
90.5
0.0
17.9
0.0
12.8
0.0
10.6
7.9
8.8
36.5%
–2.5%
32.4%
–5.4%
30.9%
–6.5%
29.7%
32.1%
32.4%
Revenue
Gross Profit
% of Revenue
EBITDA
% of Revenue
EBIT
% of Revenue
Profit before tax
NPAT
NPATA
Table 3: FY2018 Statutory NPAT reconciliation to Pro Forma NPAT:
Statutory to pro forma NPAT reconciliation
Statutory NPAT
Restructure – IVE base (inc FW/AIW)
Restructure – SEMA/Dominion
Acquisition costs - SEMA/Dominion/ August 2017 capital raise
Tax effect of adjustments
Pro forma NPAT
FY18
Actual
$’M
25.7
4.1
4.4
1.0
–2.9
32.4
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 34
35
OPERATING AND FINANCIAL REVIEW (CONT.)
4.3 BALANCE SHEET
Table 4 sets out the indebtedness of IVE on a Statutory basis as at 30th June 2018 as a comparison to
30th June 2017.
Table 4: FY2018 Statutory indebtedness
Borrowings – short term
Borrowings – long term
Borrowings* – Sub Total
Cash
Net Debt
Actual June
FY2018
$’M
Actual June
FY2017
$’M
15.7
137.5
153.2
–22.3
130.9
12.8
137.2
150.0
–23.9
126.2
DIRECTORS’ REPORT
For the year ended 30 June 2018
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 2018 and the
auditor’s report thereon.
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;
• Printing of catalogues, 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.
* Borrowings are gross of loan establishment costs
There were no significant changes in the nature of the activities of the Group during the year.
Equipment finance borrowings increased due to the new printing presses in LFWO division, offset by reduction in
senior facilities due to facility amortisation payment of $5.0M in December 2017 and a further $5.0M in June 2018.
The second press and ancillary equipment has been funded from the proceeds of the August 2017 capital raise
with the majority of the spend occuring in FY2018 and final payments due on commissioning in H1 of FY2019.
Net debt to FY18 pro forma EBITDA of $73.2M is 1.79X and operating cash flow conversion of 85.4% to EBITDA
(on a pro forma basis).
Operating cash flow was strong reflecting EBITDA achievement, although partially offset by an increase in working
capital from June 2017 impacted by the SEMA acquisition.
5. FY2018 FINANCIAL OUTLOOK
• Continued good momentum across the Group positons us well for year on year revenue and earnings growth
•
The diverse and compelling value proposition we take to market continues to underpin strong revenue retention
and growth – both ‘cross sell’ and new business
• With the completion of the two significant acquisition/integration projects (Franklin/AIW & SEMA/Blue Star
DIRECT) and associated major capital investment program, the Company is ideally positioned to fully realise
the resulting operational efficiencies in FY19
• Following a period of significant capital expenditure, the Company’s FY19 new capital expenditure (excluding
already committed FY19 capital expenditure as previously communicated) budget is significantly lower at
$9 million
• Restructure costs for FY19 are expected to be minimal.
6. ADDITIONAL INFORMATION
For further information contact:
Geoff Selig
Executive Chairman
Darren Dunkley
Chief Financial Officer
+ 61 2 9089 8550
+ 61 2 8020 4400
Operating and financial review
The profit after tax of the Group for the year ended 30 June 2018 was $25,715 thousand (2017: $12,109 thousand).
A review of operations and results of the Group for the year ended 30 June 2018 are set out in the Operating and Financial
Review, which forms part of the Annual Financial Report.
Dividends
The directors have declared a final dividend of 7.5 Australian cents per share, fully franked, to be paid on 25 October 2018
to shareholders on the register at 19 September 2018.
Total dividends of $21,325 thousand were declared and paid by the Company to members during the 2018 financial year.
Further details on dividends is included in note 19 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 21 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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
36
37
Director
James Scott
Charles Todd
Independent
Non-executive Director
Appointed:
10 June 2015
Sandra Margaret Hook
Independent
Non-executive Director
Appointed:
1 June 2016
Experience, special responsibilities and other directorships
James is an experienced company director, corporate adviser and investor. He commenced
his career in investment banking and has taken active roles in a range of private and
public companies. He was until recently Managing Director of Wolseley Private Equity, an
independent private equity firm he co-founded in 1999.
James is a director of Coventry Group and HRL Holdings.
James holds a Bachelor of Commerce and a Bachelor of Laws from the University of New
South Wales, and a Graduate Diploma of Applied Finance from the Financial Services Institute
of Australasia (FINSIA), where he is a Fellow. He is also a member of the Australian Institute
of Company Directors.
Sandra Hook has a track record in driving customer-centred business transformation and
transitioning traditional organisations in rapidly evolving environments. She has extensive
operational, digital, financial management and strategic experience built over 25 years as a
CEO and in senior executive roles for some of Australia’s largest media companies including
News Limited, Foxtel, Federal Publishing Company, Murdoch Magazines and Fairfax.
Since 2000 Sandra has also served as a non-executive director on listed, public and private
companies and government bodies. Sandra is a director of digital/technology companies
RXP Services, MedAdvisor and .au Domain Administration as well as the Sydney Fish Market.
Sandra is a trustee of the Sydney Harbour Federation Trust and the Royal Botanic Gardens and
Domain Trust.
DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2018
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
Warwick Leslie Hay
Managing Director
Appointed:
25 November 2015
Geoff has over 30 years’ experience in the marketing communications sector. Geoff was
Managing Director of the IVE Group prior to moving into the role of Executive Chairman
following the Company’s listing on the ASX in December 2015.
Geoff is a director of Caxton Group and Caxton Print Holdings, and also sits on the board of
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 and is a member of the
Australian Institute of Company Directors.
After joining IVE Group in 2009 as CEO of Blue Star WEB, Warwick was appointed Managing
Director in 2014.
Warwick has over 20 years of management experience across all business functions in
complex B2B environments.
Between 2004 and 2009 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 his tertiary education in New
Zealand, a Graduate Diploma in Packaging Technology from Massey University and a Post
Graduate Diploma in Business from Auckland University.
Gavin Terence Bell
Gavin is an experienced director, executive and lawyer.
Independent
Non-executive Director
Appointed:
25 November 2015
Andrew Charles
Harrison
Independent
Non-executive Director
Appointed:
25 November 2015
Gavin is a director of Smartgroup Corporation and icare NSW. He is also a member of the
Advisory Council of the UNSW School of Business. Prior to becoming a director, Gavin was the
CEO of global law firm Herbert Smith Freehills. He was a partner in the firm for 25 years.
Gavin holds a Bachelor of Laws from the University of Sydney and a Master of Business
Administration from the AGSM, University of New South Wales.
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 Finance Director of Landis and Gyr and Chief Financial Officer and a director of Alesco.
Andrew is a director of Burson Group, Estia Health, and WiseTech Global.
Andrew was previously a Senior Manager at Ernst & Young (Sydney and London) and Gresham
Partners, 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 School of the University of Pennsylvania, and is a chartered accountant.
Paul Stephen Selig
Non-executive Director
Paul’s career commenced in banking and treasury management before moving into the print
and marketing communications sector over 25 years ago. He has been an executive director of
the Company since 2012.
Appointed:
10 June 2015
Paul is an experienced director and investor having run the Caxton Group family office for
over15 years.
Paul is also a director of Caxton Group, Caxton Print Holdings and Caxton Property
Developments. He holds a Bachelor of Economics (Hons) from Macquarie University.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 38
39
DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2018
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
Eligible Attended Eligible Attended Eligible Attended Eligible Attended
11
11
11
11
11
11
11
11
11
10
11
11
10
11
–
–
4
4
–
–
4
–
–
4
4
–
–
4
–
–
3
–
3
–
3
–
–
3
–
3
–
3
2
1
–
–
–
1
–
2
1
–
–
–
1
–
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 40).
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.
Events subsequent to reporting date
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
During the financial year, the Group paid a premium insuring the directors of the Group, the company secretaries, and
executive officers to the extent permitted by the Corporations Act 2001.
The Group indemnified its directors and company secretaries to the extent permitted by law against a liability incurred.
Indemnification and insurance of auditor
During or since the end of the financial year the Group has not indemnified or made a relevant agreement to indemnify
the auditor of the Group against a liability incurred as the auditor. In addition, the Group has not paid, or agreed to pay, a
premium in respect of a contract insuring against a liability incurred by the auditor.
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 2018. 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 2019. 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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 40
41
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 2018
(FY18).
The Report is designed to provide shareholders with an understanding of
IVE’s remuneration philosophy and the link between this philosophy and IVE’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 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.
Remuneration Philosophy
• 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
• Be acceptable to
shareholders.
The remuneration framework was reviewed in 2018 and a staged process was commenced to appropriately reward
Key Management Personnel through base pay and short term incentive levels that are in line with IVE’s peers and
reward performance and ensure an appropriate level of long term incentives aligned with shareholder objectives of
long-term sustainable performance. 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 2018 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 Directors
Geoff Selig
Warwick Hay
Paul Selig
Role
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Executive Chairman
Managing Director
Executive Director
Executive Key Management Personnel
Matt Aitken
Darren Dunkley
Chief Operating Officer
Chief Financial Officer & Company Secretary
KMP detailed above were in their roles for the full year, except for Paul Selig who became an Executive Director effective
1 October 2017, from his previous role as a Non-Executive Director.
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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
42
43
DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2018
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.
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.
Governance
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
2018 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 FY18 which has been implemented from 1 July 2018.
Fixed remuneration for executive KMP was increased for FY18 based on a review of competitor remuneration, the
substantial increase in the size and complexity of the business and also noting the length of time since the last fixed
remuneration increase. Most of the executive KMP had 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 given the significant acquisitions made over the past two years and the consolidation
occurring in some of the Company’s key markets. This is reflected in some of the base pay increases effected in FY18.
The context of these increases includes the significant increase in the size, complexity and profitability of the Company
since it listed in December 2015. As shown in the table on page 46, both revenue and EBITDA have more than doubled
since FY15.
Short term incentive (STI)
In FY18, executive KMP (excluding Paul Selig) were eligible to receive an STI payment of between 19 and 24% 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, pro-forma Earnings before Interest, Tax, Depreciation
and Amortisation (EBITDA) for the year in review and
•
Individual financial and non-financial performance targets relevant to the individual executive KMP.
This STI target was an increased percentage over FY17, which was a deliberate decision by the NRC to have a greater
proportion of remuneration at-risk.
In FY18, the NRC reviewed performance against actual EBITDA and achievement of other performance indicators to
determine the proportion of target STI to award. The award for each Executive KMP against target is shown in the table on
the following page.
Paul Selig was awarded a discretionary bonus payment of $250,000 (paid 30/10/2017), as announced to the ASX in
September 2017 on his appointment, for his work on strategic acquisitions, financing, integration and property related
matters. The NRC’s view is that Mr Selig’s industry, financial and property experience, knowledge of the Company,
commitment and remuneration arrangements delivered considerably more value to the Company than if an external
consultant/s or additional employee/s were retained to perform this role. Paul Selig is not part of the usual executive
remuneration framework due to his specific role.
Long term incentive (LTI)
The Board has established a LTI Plan as outlined in prior years Remuneration Reports and outlined in the section in this
Report entitled “Share based remuneration”. The LTI Plan has not been amended during FY18 and will be the subject of a
resolution at this year’s AGM to refresh shareholders’ approval of the LTI Plan. The LTI Plan 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, including the combination of TSR and EPS hurdles, 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 Managing Director was approved by shareholders at the 2017 Annual General Meeting (AGM)
and the Rights to be granted to the Executive Chairman and Managing Director for 2018 will be submitted for approval by
shareholders at the 2018 AGM.
The Board has the discretion to amend the future 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 re-testing of performance hurdles.
The Board makes changes to the level of LTI to grant each year based on reviews of total remuneration packages for
executives. In FY18 the Board, following review by the NRC, did not grant an equity-based LTI to Geoff Selig, Executive
Chairman, due to Geoff Selig being a substantial shareholder in IVE Group by being a beneficiary of the Selig Family Trust
No.5 (trustee Caxton Print Holdings Pty Ltd). The NRC has again reviewed this position and will grant an equity-based
LTI to Geoff Selig as Executive Chairman in FY19 after a review of comparable peers and to align his total remuneration
package with other executives. Due to Paul Selig’s executive role being specific in nature, he does not participate in the
LTI Plan.
The NRC agreed to increase the level of long term incentives in both FY18 and FY19 to further align management’s
remuneration with shareholders’ longer term interests. This has been a staged program over FY18 and FY19 and all
rewards are subject to achieving the performance conditions outlined above.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 44
45
DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2018
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.
Executive KMP remuneration – paid, vested and targets
The table below presents the STI and LTI paid and vested to executive KMP during FY17 and FY18. Further detail on
remuneration is included in the tables at the end of this Report.
All in $
Geoff Selig
STI
LTI – Number of Rights
Maximum
Actual
Granted
Vested
FY18
200,000
181,250
FY17
70,000
50,000
Warwick Hay
FY18
100,000
84,250
FY17
70,000
50,000
Matt Aitken
FY18
90,000
76,960
FY17
70,000
50,000
Darren Dunkley
FY18
75,000
64,700
FY17
35,000
25,000
0 Not applicable
(3 year vesting)
32,817 Not applicable
(3 year vesting)
67,567 Not applicable
(3 year vesting)
32,817 Not applicable
(3 year vesting)
60,810 Not applicable
(3 year vesting)
32,817 Not applicable
(3 year vesting)
50,675 Not applicable
(3 year vesting)
19,690 Not applicable
(3 year vesting)
Paul Selig*
FY18
FY17
0
0
0
0
0
0
0
0
*As disclosed earlier, Paul Selig was paid a discretionary bonus payment of $250,000, which is not part of the STI framework.
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, the annual review of fixed remuneration and STI and LTI targets and
benchmarking against peers, the changes to executive KMP for FY19 is outlined below. As detailed above, the increases
for FY18 and FY19 have been an agreed staged program to adequately reward executive KMP and align remuneration
with shareholders’ longer term interests.
All in $
Fixed Remuneration*
STI
LTI
FY17
Actual
FY18
Actual
FY19
Agreed
FY17
Actual
FY18
Actual
FY19
Maximum
FY17
Grant**
FY18
Grant**
FY19
Grant**
Geoff
Selig
Warwick
Hay
Matt
Aitken
Darren
Dunkley
700,000
850,000
952,000
50,000
181,250
200,000
50,000
0 200,000***
440,000
500,000
525,000
50,000
84,250
100,000
50,000
100,000 200,000***
400,000
480,000
504,000
50,000
79,960
100,000
50,000
90,000
200,000
305,000
400,000
420,000
25,000
64,700
80,000
30,000
75,000
150,000
Paul Selig N/A****
303,501
330,000
N/A****
250,000
0
N/A****
N/A****
N/A****
*Fixed remuneration includes superannuation
**LTI grant is the $ value of the grant approved by the Board.
***FY19 LTI grant is subject to shareholder approval.
**** Paul Selig was a non-executive Director during FY17 and appointed as an Executive effective 1 October 2017. FY18 is Fixed Remuneration
for the part of the year Paul Selig was appointed as an Executive. Due to the specific nature of his role, Paul Selig does not participate in
the LTI Plan.
Proportions of fixed and variable remuneration
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 past two financial periods and proposed for the next financial
period are shown below. This chart shows the staged process the NRC has undertaken to increase the proportion of at
risk remuneration.
100
80
60
40
20
0
2017
2018
Geoff Selig
2019
2017
2018
Warwick Hay
2019
2017
2018
Matt Aitken
2019
2017
2018
Darren Dunkley
2019
Fixed
At Risk
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
46
47
DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2018
For FY19, below shows the remuneration mix for each Executive KMP (noting Paul Selig is not subject to the general
executive remuneration framework):
Fixed Remuneration
At risk – STI (maximum)
At risk LTI
2019
2018
2017
2019
2018
2017
2019
2018
2017
70.4%
80.9%
85.4%
14.8%
19.1%
8.5%
14.8%
0%
6.1%
63.6%
71.4%
78.6%
12.1%
14.3%
12.5%
24.3%
14.3%
8.9%
62.7%
72.7%
76.9%
12.4%
13.7%
13.5%
24.9%
13.6%
9.6%
64.6%
72.7%
82.4%
12.3%
13.7%
9.5%
23.1%
13.6%
8.1%
100%
56.9%
N/A
N/A
43.1%
N/A
N/A
N/A
N/A
Geoff
Selig
Warwick
Hay
Matt
Aitken
Darren
Dunkley
Paul
Selig*
*Paul Selig was a Non-Executive Director during FY17 and appointed as an executive effective 1 October 2017. FY18 is Fixed Remuneration for
the part of the year Paul Selig was appointed as an Executive.
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 and non-financial targets for the year in
review; and
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:
• On 17 November 2017, offers were made granting 253,374 performance rights under the Senior Leadership Team
Plan. These Rights vest following the release of the FY20 financial results if certain performance conditions are met
during the Performance period which is 1 July 2017 to 30 June 2020. During the year 27,026 of these Rights lapsed
due to employee resignations.
In total there were 357,615 unvested Rights at 30 June 2018 form the FY17 and FY18 offers.
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 and
FY18 are as follows:
Feature
Type of security
Valuation
Terms of the IVE Group Equity Incentive Plan
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.
The fair value is calculated using a Monte Carlo simulation approach for the Awards subject
to the Relative TSR condition and a risk neutral assumption is used the value the Awards
subject to the EPS condition.
For the Executive Chairman Managing Director, the LTI grant, 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.
• LTI grants only vest if IVE Group achieves the targets set for TSR and EPS over a three year period.
Performance Period
The Performance Period is the three year period 1 July to 30 June inclusive.
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 FY18, each executive KMP was awarded the proportion of the target STI indicated above, based on achievement of the
Group EBITDA component to forecast as well as individual performance targets.
Key financial metrics over the last four years that can be measured are shown below:
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:
Revenue ($m)
EBITDA ($m)
Net profit after tax ($m)
Dividend payment (cents per share)*
Dividend payout ratio*
Share price change ($)**
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
N/A
N/A
FY15
337.4
30.9
9.7
N/A
N/A
N/A
FY16
382.0
42.8
20.9
N/A
N/A
N/A
FY17
496.6
55.2
24.6
12.7
69%
FY18
695.4
73.2
32.4
15.5
71%
(0.043)
+0.162
*** Pro forma results exclude all restructure and acquisition costs. This better reflects the underlying operating performance and is consistent
with guidance.
(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 peer group for the FY18
offer is shown on the following page. 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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
48
49
DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2018
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 if 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.
TSR Peer Group for FY18 Offer
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
OPG
PMP
WLL
CWY
MIL
SLM
SPO
SGN
SWM
ORA
PPG
GWA
DCG
APN
SIQ
Opus Group Limited
PMP Limited
Wellcom Group Limited
Cleanaway Waste Management Limited
Millennium Services Group Limited
Salmat Limited
Spotless Group Holdings Limited
STW Communications Group Limited
Seven West Media Limited
Orora Limited
Pro-Pac Packaging Limited
GWA Group Limited
Decmil Group Limited
APN Outdoor Group Limited
Smartgroup Corporation Ltd
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
MMS
QMS
KSC
LAU
CKF
OML
PRT
SXL
TRS
RCG
TGA
KMD
AMA
FWD
GUD
PGH
McMillan Shakespeare Limited
QMS Media Limited
K & S Corporation Limited
Lindsay Australia Limited
Collins Foods Limited
Ooh!Media Limited
Prime Media Group Limited
Southern Cross Media Group Limited
The Reject Shop Limited
RCG Corporation Limited
Thorn Group Limited
Kathmandu Holdings Limited
AMA Group Limited
Fleetwood Corporation Limited
GUD Holdings Limited
Pact Group Holding Limited
The peer group was chosen by the Board. When compiling the peer group, the Board sought to include similar companies
and, in addition to their size, considered characteristics such as being a direct competitor, operating in a similar industry
or sector, generating revenue in Australia only, being exposed to domestic economic conditions including consumer
spending and marketing spend.
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, the need to attract high quality Directors and the size and complexity of the Company.
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. There were no additional services provided in FY18 by Non-Executive Directors.
During FY18, the Board agreed to increase the fee paid to Non-Executive Directors from $90,000 per annum to
$105,000 per annum, commencing from 1 July 2018. This is the first increase in director fees since IPO and the fees
were set approximately three years ago. Since that time the size and complexity of IVE has increased considerably.
In determining the increase, the Board considered the level of Non-Executive Director fees paid to comparable peers
and this level was deemed to be appropriate.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 50
51
DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2018
The current annual fees provided to Non-Executive Directors are shown below (inclusive of superannuation):
Chair fee
N/A as Executive Chairman
Non-Executive Director fee (from 1 July 2018)
$105,000
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 FY18 was $360K , being 36% of the approved fee pool. There is no intent to seek approval to
increase the Non-executive Director fee pool at the 2018 AGM.
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.
Executive Directors are not remunerated separately for acting as Directors.
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 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
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 – 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.
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
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.
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
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.
Redundancy:
6 months’ pay in circumstance where employment is terminated due to redundancy.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
52
53
DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2018
Details of Remuneration
The table below provides remuneration prepared for on a statutory basis for directors and executive KMPs year ended
30 June 2018 (except as noted below).
Name
Executive Directors
Geoff Selig
Paul Selig1,2
Warwick Hay
Non-executive Directors
Gavin Bell
Andrew Harrison
Sandra Hook
James Todd
Other Executive KMP
Darren Dunkley
Matt Aitken
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Fixed Remuneration
Cash
salary and
fees
Super-
annuation
Non-
monetary
benefits
798,030
622,813
280,030
51,142
437,494
389,664
82,192
82,192
82,192
82,192
82,192
82,192
82,192
82,192
20,049
19,616
19,895
4,859
20,049
19,616
7,808
7,808
7,808
7,808
7,808
7,808
7,808
7,808
Variable Remuneration
Long
service
leave
Short
term
incentive
Fair value
of LTI
award
Total
0
0
0
0
0
181,250
50,000
250,000
1,031,250
5,284
755,284
553,501
56,001
84,250
50,000
10,450
594,700
5,284
495,284
Annual
leave
31,921
57,571
3,576
42,457
30,720
90,000
90,000
90,000
90,000
90,000
90,000
90,000
90,000
348,340
262,334
422,801
375,995
20,049
19,616
20,049
19,616
39,493
27,084
43,651
5,157
0
0
0
0
64,700
25,000
76,960
50,000
7,838
3,171
9,405
5,284
480,420
337,205
572,866
456,052
1 Paul Selig provided additional services to IVE Group in 2017 well beyond those usually provided by a Non-Executive Director including advice
on financing and property arrangements and assisting with strategic opportunities and acquisitions. Payment relating to these additional
services in 2017 was $134,004. In 2017, payments were made out of the director fee pool 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). Paul Selig became an Executive Director on 1 October 2017.
2 Paul Selig is not part of the STI framework but was awarded a discretionary bonus of $250,000 in FY18.
Rights granted to executive KMP
FY18
KMP
Warwick Hay
Matt Aitken
Warwick Hay
Number of rights
granted in FY18
Vesting conditions
Grant Date
Fair value at
grant date
Expiry date
27,027
40,540
67,567
24,324
36,486
60,810
20,270
30,405
Relative TSR
17 Nov 2017
31,270
Compound annual EPS
growth over 3 years
17 Nov 2017
68,730
Total
Relative TSR
Compound annual EPS
growth over 3 years
Total
Relative TSR
Compound annual EPS
growth over 3 years
100,000
17 Nov 2017
28,143
17 Nov 2017
61,857
90,000
17 Nov 2017
23,452
17 Nov 2017
51,547
After vesting following release
of FY20 results. Any unvested
Rights expire.
After vesting following release
of FY20 results. Any unvested
Rights expire.
After vesting following release
of FY20 results. Any unvested
Rights expire.
50,675
Total
75,000
FY17
KMP
Geoff Selig
Warwick Hay
Matt Aitken
Warwick Hay
Number of rights
granted in FY18
Vesting conditions
Grant Date
Fair value at
grant date
Expiry date
13,127
19,690
32,817
13,127
19,690
32,817
13,127
19,690
32,817
7,876
11,814
Relative TSR
16 Sep 2016
15,853
Compound annual EPS
growth over 3 years
16 Sep 2016
34,147
Total
Relative TSR
Compound annual EPS
growth over 3 years
Total
Relative TSR
Compound annual EPS
growth over 3 years
Total
Relative TSR
Compound annual EPS
growth over 3 years
50,000
16 Sep 2016
15,853
16 Sep 2016
34,147
50,000
16 Sep 2016
15,853
16 Sep 2016
34,147
50,000
16 Sep 2016
9,512
16 Sep 2016
20,488
After vesting following release
of FY19 results. Any unvested
Rights expire.
After vesting following release
of FY19 results. Any unvested
Rights expire.
After vesting following release
of FY19 results. Any unvested
Rights expire.
After vesting following release
of FY19 results. Any unvested
Rights expire.
19,690
Total
30,000
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
on exercise of
Performance
Share Rights
Balance
at
1 July 2017
Shares
acquired
Shares
disposed
Balance at
30 June
2018
Executive Directors
Geoff Selig, Executive Chairman1
10,066,329
Paul Selig1
10,066,329
Warwick Hay, Managing Director
520,681
Non-executive Directors
Gavin Bell
Andrew Harrison
Sandra Hook
James Todd
Executive KMP
Darren Dunkley, CFO
and Company Secretary
Matt Aitken,
Chief Operating Officer
93,429
53,371
10,526
86,236
200,273
500,681
–
–
–
–
–
–
–
–
–
1,143,902
1,193,902
15,000
29,268
37,585
2,393
19,600
–
–
–
–
–
–
11,210,231
11,260,231
535,681
122,697
90,956
12,919
105,836
–
–
152,222
48,051
500,681
0
1 Geoff Selig and Paul Selig are each beneficiaries of the Selig Family Trust No. 5, the trustee of which holds 11,210,231 shares.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
54
55
DIRECTORS’ REPORT (CONT.)
For the year ended 30 June 2018
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 357,615 unvested Rights at 30 June 2018.
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 2018
and up to the date of this report.
This concludes the remuneration report, which has been audited.
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 30 of the Financial Report.
Lead auditor’s independence declaration
The Lead auditor’s independence declaration is set out on page 55 and forms part of the directors’ report for the financial
year ended 30 June 2018.
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 27th day of August 2018
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 56
57
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the year ended 30 June 2018
In thousands of AUD
Revenue
Cost of sales
Gross profit
Other income
Production expenses
Administrative expenses
Other expenses
Note
2018
2017
4
695,361
(356,742)
338,619
807
(172,653)
(112,521)
(9,487)
Results from operating activities
5, 6
44,765
Finance income
Finance costs
Net finance costs
Profit before tax
Income tax 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 (net of tax)
Cash flow hedges – reclassified to profit or loss (net of tax)
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)
248
(8,152)
(7,904)
36,861
(11,146)
25,715
(1,007)
759
25,467
25,715
25,715
25,467
25,467
0.18
0.18
7
8
20
20
The notes on pages 61 to 91 are an integral part of these consolidated financial statements.
496,873
(248,769)
248,104
3,496
(116,380)
(93,906)
(19,124)
22,190
237
(6,009)
(5,772)
16,418
(4,309)
12,109
100
–
12,209
12,109
12,109
12,209
12,209
0.11
0.11
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. Financial 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. Loans and borrowings
16. Employee benefits
17. Provisions
18. Share-based payments
19. Capital
20. Earnings per share
21. Acquisitions
22. Operating segments
23. Financial risk management and financial instruments
24. Operating leases
25. Capital commitments
26. Related parties
27. Group entities
28. Parent entity disclosures
29. Subsequent events
30. Auditor’s remuneration
31. Deed of cross guarantee
Directors’ declaration
Independent auditor’s report to the shareholders of IVE Group Limited
57
58
59
60
61
61
62
71
71
71
71
72
73
74
75
75
76
77
77
78
78
79
80
81
82
83
83
88
89
89
89
90
91
91
91
92
93
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
58
59
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 30 June 2018
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
Total non-current assets
Total assets
Liabilities
Trade and other payables
Loans and borrowings
Employee benefits
Current tax payable
Provisions
Total current liabilities
Trade and other payables
Loans and borrowings
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
Note
2018
2017
9
10
11
8
12
13
14
15
16
17
14
15
16
17
20
22,325
118,282
47,115
2,559
–
5,226
195,507
16,006
123,681
170,271
309,958
505,465
111,522
16,442
18,493
1,285
1,815
149,557
681
134,890
6,079
14,917
156,567
306,124
199,341
156,318
25
42,998
199,341
23,851
94,785
46,563
1,978
3,049
4,490
174,716
19,192
80,540
153,857
253,589
428,305
98,373
12,815
15,158
–
5,861
132,207
12
135,513
5,706
17,251
158,482
290,689
137,616
98,820
188
38,608
137,616
For the year ended 30 June 2018
In thousands of AUD
Note
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
18
19
19
Total transactions with owners
of the Company
Balance at 30 June 2017
Balance at 1 July 2017
Total comprehensive income for the year
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Share
capital
39,843
–
–
–
–
58,977
–
58,977
98,820
98,820
–
–
–
Transactions with owners of the Company
Performance share rights
Issue of share capital
Dividends to owners of the Company
18
19
19
–
57,498
–
Share-
based
payment
reserve
–
–
–
–
88
–
–
88
88
88
–
–
–
85
–
–
Total transactions with owners
of the Company
Balance at 30 June 2018
57,498
156,318
85
173
Hedging
reserve
Retained
earnings
Total
equity
–
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
100
38,608
137,616
–
(248)
(248)
25,715
–
25,715
(248)
25,715
25,467
–
–
–
–
–
–
(21,325)
85
57,498
(21,325)
(21,325)
36,258
(148)
42,998
199,341
The notes on pages 61 to 91 are an integral part of these consolidated financial statements.
The notes on pages 61 to 91 are an integral part of these consolidated financial statements.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
60
61
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
In thousands of AUD
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
Proceeds from bank loans
Repayment of bank loans
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
Note
2018
2017
9
21
750,486
(687,997)
62,489
211
(7,257)
(3,957)
(1,267)
(13,552)
36,667
1,095
(36,310)
(11,606)
(3,821)
(50,642)
55,582
–
(16,000)
(2,297)
(21,325)
(3,511)
12,449
23,851
(1,526)
22,325
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
The notes on pages 61 to 91 are an integral part of these consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2018
1. Reporting entity
IVE Group Limited (the ultimate parent entity or the Company) is a company domiciled in Australia. Its registered address is
Level 3, 35 Clarence Street, Sydney NSW 2000.
This consolidated financial report as at and for the year ended 30 June 2018 comprises the Company and its subsidiaries
(IVE or Group).
The Group is a for-profit entity. The Group is primary involved in:
• Conceptual and creative design across print, mobile and interactive media;
• Printing of catalogues, 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.
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 2018. 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.
(c) Use of estimates and judgements
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 2017.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
62
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
2. Basis of preparation (cont.)
(d) Use of estimates and judgements (cont.)
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 23 – 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 2018 is included in the following notes:
• Note 3(h)(ii) & 13 – impairment testing for cash generating units containing goodwill; and
• Note 21 – 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 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.
(c) Financial instruments
(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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 64
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 66
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
3. Significant accounting policies (cont.)
(h) Impairment
(i) Non-derivative financial assets
Financial assets not classified as at 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.
(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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 68
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
3. Significant accounting policies (cont.)
(k) Revenue
(i) Sales
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.
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.
(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.
(ii) Deferred tax
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.
3. Significant accounting policies (cont.)
(n) Income tax (cont.)
(ii) Deferred tax (cont.)
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.
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 its 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.
(o) Goods 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.
(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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018 70
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
3. Significant accounting policies (cont.)
(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 2018, and have not been applied in preparing these financial statements. Those which may be relevant to the Group
and its financial impact are set out below.
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.
The Group has assessed the requirements of the new standard. The only financial impact affecting the Group will be the
implementation of the new expected credit loss (ECL) model for calculating the allowance for impairment in respect of
receivables. In calculating the ECL the Group has reviewed its historical bad debts experience. Based on this the Group will
increase as at 1 July 2018 its allowance for impairment in respect of receivables and adjust retained earnings. The Group
expects the adjustment amount to be immaterial.
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.
The Group has applied the requirements of the standard to customer contracts with similar characteristics. The following
are key characteristics within its customer contracts that the Group believes affects AASB 15: identification of goods and
services to be delivered, price, variable consideration (e.g. discounts, rebates, sign-on fees, incentives, etc.), any materials
supplied by the customer, payment terms, extended warranty, and right of payment for work completed to date. The Group
has applied the following steps in assessing the requirements of the new standard:
•
•
Identification of the customer contract
Identification of the performance obligation(s)
• Determining the transaction price
• Allocating the transaction price to the performance obligation(s)
• Recognising the revenue as (or when) the performance obligation is completed.
The Group has determined that there is no financial impact. The current recognition of revenue already takes into
consideration variable consideration such as discounts, rebates, incentives, etc. Under new standard, the Group’s revenue
from goods sold does not satisfy the criteria for recognition of revenue over time; hence, the Group will continue to
recognise revenue at a point in time when the goods are delivered to the customer.
Separately, the Group’s lesser revenue from services provided also continues to meet the criteria for recognition over time.
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.
The Group is currently assessing the financial impact of AASB 16.
3. Significant accounting policies (cont.)
(r) New standards and interpretations not yet adopted (cont.)
Other standards
The following amended standards and interpretations are not expected to have a significant impact on the Group’s
consolidated financial statements:
• Disclosure Initiative (Amendments to IAS 7)
• Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)
• Annual Improvements to IFRSs 2014–2016 Cycle – various standards (Amendments to IFRS 12).
4. Other income
In thousands of AUD
Other income*
* Includes reversal of contingent consideration (net) – refer to Note 23.
5. Personnel expenses
In thousands of AUD
Wages and salaries
Contributions to defined contribution plans
Share-based payment expense
2018
807
807
2017
3,496
3,496
2018
20176
183,391
12,560
212
196,163
138,432
10,353
88
148,873
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
7. Finance income and finance costs
In thousands of AUD
Interest income
Net foreign exchange gain
Finance income
Interest expense
Net foreign exchange losses
Finance costs
Net finance costs
2018
18,874
1,039
8,475
2018
211
37
248
(8,152)
–
(8,152)
(7,904)
2017
13,777
5,911
13,350
2017
237
–
237
(5,978)
(31)
(6,009)
(5,772)
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
72
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
2018
2017
8. Taxes (cont.)
Movement in temporary differences during the year
8. Taxes
In thousands of AUD
Current tax expense
Current year
Changes in estimates related to prior years
Deferred tax expense
Origination and reversal of temporary differences
Total tax expense
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
Previously unrecognised deductible temporary differences
Changes in estimates related to prior years
Other items (net)
7,796
(43)
7,753
3,393
11,146
2018
36,861
11,058
73
43
(43)
15
11,146
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
In thousands of AUD
Property, plant and equipment
Inventories
Intangible assets
Employee benefits
Provisions
Other items
2018
4,011
–
–
9,108
5,289
4,167
2017
6,630
–
–
6,906
7,775
4,204
Tax assets/(liabilities)
Set off of tax
22,575
(6,569)
25,515
(6,323)
2018
2017
2018
–
(532)
(6,037)
–
–
–
(6,569)
–
–
(19)
(6,275)
–
–
(29)
(6,323)
6,323
4,011
(532)
(6,037)
9,108
5,289
4,167
16,006
–
19,192
–
3,023
434
3,457
852
4,309
2017
16,418
4,925
(545)
(495)
434
(10)
4,309
2017
6,630
(19)
(6,275)
6,906
7,775
4,175
2018
In thousands of AUD
Property, plant and equipment
Inventories
Intangible assets
Employee benefits
Provisions
Other items
2017
In thousands of AUD
Property, plant and equipment
Inventories
Intangible assets
Employee benefits
Provisions
Other items
Balance
1 July
2017
6,630
(19)
(6,275)
6,906
7,775
4,175
19,192
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
(989)
–
(840)
1,007
236
–
(586)
–
–
–
–
–
793
793
(1,630)
(513)
1,078
1,195
(2,722)
(801)
(3,393)
Acquisition
through
business
Combination*
Recognised
in equity
(1,071)
792
(4,332)
1,715
5,063
126
2,293
–
–
–
–
–
542
542
Recognised
in profit
or loss
(1,703)
(305)
796
(328)
196
492
(852)
Balance
30 June
2018
4,011
(532)
(6,037)
9,108
5,289
4,167
16,006
Balance
30 June
2017
6,630
(19)
(6,275)
6,906
7,775
4,175
19,192
* 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.
9. Cash and cash equivalents
In thousands of AUD
Bank balances
Petty cash
2018
22,314
11
22,325
2017
23,843
8
23,851
Net deferred tax assets
16,006
19,192
–
–
–
19,192
Cash and cash equivalents in the statement of cash flows
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
74
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
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
Interest expense
Acquisition costs
Restructuring costs
Income tax expense
Cash items
Net gain on disposal of property, plant and equipment
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
10. Trade and other receivables
In thousands of AUD
Current
Trade receivables
Allowance for impairment
Forward exchange contracts used for hedging
Other receivables
2018
25,715
18,874
212
(704)
–
895
(228)
–
11,146
(6)
55,904
(14,514)
47
486
(111)
5,575
(6,763)
40,624
(3,957)
36,667
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
2018
2017
115,367
(677)
114,690
655
2,937
118,282
92,712
(704)
92,008
397
2,380
94,785
11. Inventories
In thousands of AUD
Finished goods
Work in progress
Raw materials
Allowance for inventory obsolescence
2018
3,135
8,598
36,989
48,722
(1,607)
47,115
2017
2,421
7,502
39,677
49,600
(3,037)
46,563
During the year, raw materials, consumables and changes in finished goods and work in progress recognised as cost of
sales amounted to $356,742 thousand (2017: $248,769 thousand).
The reduction in allowance for inventory obsolescence of $1,188 thousand in stock write offs, sale of stock at loss, and
costs associated in moving excess/older stock relates to the Franklin WEB and AIW acquisitions.
12. Property, plant and equipment
In thousands of AUD
Leasehold
improvements
Plant and
equipment
Fixtures
and fittings
Cost
Balance at 1 July 2016
Acquisitions through business combinations
Additions
Disposals
Balance at 30 June 2017
Balance at 1 July 2017
Acquisitions through business combinations
Additions
Disposals
Balance at 30 June 2018
Depreciation and impairment losses
Balance at 1 July 2016
Depreciation for the year
Disposals
Balance at 30 June 2017
Balance at 1 July 2017
Depreciation for the year
Disposals
Balance at 30 June 2018
Carrying amounts
At 1 July 2017
At 30 June 2018
6,292
372
1,910
(1,084)
7,490
7,490
–
7,106
–
14,596
2,474
858
(1,084)
2,248
2,248
1,235
–
3,483
5,242
11,113
61,863
26,812
19,087
(1,875)
105,887
105,887
3,502
47,206
(1,381)
155,214
24,508
8,804
(1,801)
31,511
31,511
12,443
(305)
43,649
1,044
–
547
(236)
1,355
1,335
–
277
(24)
1,608
510
150
(227)
433
433
194
(22)
605
Total
69,199
27,184
21,544
(3,195)
114,732
114,732
3,502
54,589
(1,405)
171,418
27,492
9,812
(3,112)
34,192
34,192
13,872
(327)
47,737
74,376
111,565
922
1,003
80,540
123,681
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
76
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
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 2018 the net carrying amount of leased assets
was $17,621 thousand (2017: $18,338 thousand).
Security
At 30 June 2018 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 2016
Acquisition through business combinations
Other additions
Acquisition accounting measurement
period adjustment*
Balance at 30 June 2017
Balance at 1 July 2017
Acquisition through business combinations
Other additions
21
Balance at 30 June 2018
Amortisation and impairment losses
Balance at 1 July 2016
Amortisation for the year
Balance at 30 June 2017
Balance at 1 July 2017
Amortisation for the year
Balance at 30 June 2018
Carrying amounts
At 1 July 2017
At 30 June 2018
58,777
72,893
–
(2,000)
129,670
129,670
15,477
–
145,147
–
–
–
–
–
–
129,670
145,147
5,764
–
2,210
–
7,974
7,974
–
3,139
11,113
3,477
1,309
4,786
4,786
1,409
6,195
3,188
4,918
11,376
14,440
–
–
(2,000)
25,816
163,460
25,816
2,800
–
28,616
2,161
2,656
4,817
4,817
3,593
8,410
163,460
18,277
3,139
184,876
5,638
3,965
9,603
9,603
5,002
14,605
20,999
20,206
153,857
170,271
*The adjustment relates to finalisation of preliminary accounting entries for the acquisition of JBA.
No impairment losses in relation to goodwill have been recognised in the year ended 30 June 2018 (2017 nil).
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 (and AIW combined)
Print communication and marketing services (group of CGUs)
Creative services (group of CGUs)
Pareto
2018
65,033
52,618
11,614
15,882
2017
69,233
32,941
11,614
15,882
145,147
129,670
Total
75,917
87,333
2,210
Goodwill impairment test is performed applying by value in use calculations. The calculations use cash flow projections
based on budgeted EBITDA approved by the Board. A post-tax WACC rate of 9.32% or 9.82% (depending on the size of the
CGU) has been used with 2% growth allowance (in line with consumer price index) 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.
During the year, a part of Franklin’s business was transferred into the Print communications CGU. Hence, a reallocation of
goodwill has been made between these CGUs.
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
15. Loans and borrowings
In thousands of AUD
Current
Bank loan
Finance lease liabilities
Equipment finance
Non-current
Bank loan
Finance lease liabilities
Equipment finance
2018
2017
70,730
34,015
1,850
4,850
77
111,552
650
31
681
63,301
28,804
1,200
4,825
243
98,373
–
12
12
2018
2017
10,000
3,668
2,774
16,442
108,961
9,481
16,448
134,890
10,000
2,815
–
12,815
124,325
11,188
–
135,513
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
78
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
15. Loans and borrowings (cont.)
Bank loan
As at 30 June 2018, the Syndicated Facilities Agreement has a carrying amount of $118,961 thousand and face value of
$120,000 thousand (2017: carrying amount of $134,325 and face value of $136,000 thousand). These facilities have an
interest rate of BBSY plus a margin. Facility B 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 2018.
Finance lease liabilities
Finance lease liabilities of the Group are payable as follows:
Future minimum
lease payment
Interest
Present value of
minimum lease
payments
In thousands of AUD
2018
2017
2018
2017
2018
2017
Less than one year
Between one and five years
More than five years
4,264
9,225
1,389
3,462
10,027
2,530
596
694
439
14,878
16,019
1,729
647
1,260
109
2,016
3,668
8,531
950
2,815
8,767
2,421
13,149
14,003
At 30 June 2018, the finance lease liabilities include $930 thousand lease liability for leased properties (2017: $1,196
thousand) and $12,219 thousand lease liability for leased plant and equipment (2017: $12,807 thousand).
16. Employee benefits
In thousands of AUD
Current
Liability for long service leave
Liability for annual leave
Non-current
Liability for long service leave
2018
2017
7,833
10,660
18,493
6,079
6,079
6,116
9,042
15,158
5,706
5,706
Total
23,112
859
(7,239)
16,732
1,815
14,917
16,732
17. Provisions
In thousands of AUD
Restructuring
Balance at 1 July 2017
Provisions made during the year
Provisions reversed during the year
Balance at 30 June 2018
Current
Non-current
6,054
157
(5,234)
977
344
633
977
Make
good
2,642
702
(354)
2,990
–
2,990
2,990
Acquired
lease liability
14,416
–
(1,651)
12,765
1,471
11,294
12,765
18 . Share-based payments
During the year ended 30 June 2018, 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
17 November 2017
17 November 2017*
Number granted
Contractual life
Vesting conditions
Weighted average
fair value
Valuation methodology
92,921
2 years
The Rights are subject to Performance
Conditions: depending on the individual,
including Earnings Before Interest Tax,
Depreciation and Amortisation (EBITDA) or
Revenue targets. The performance period
is 1 July 2017 to 30 June 2018 inclusive.
The vesting date is expected to be on or
soon after the approval of IVE’s 2018
Annual Financial Report. Vested shares
will be subject to an escrow period until
30 June 2019.
253,374
3 years and 2 months
The Rights are subject to the following
Performance Conditions: sixty percent of
the Rights are referenced against achieving
Earnings Per Share Target (EPS), and forty
percent are referenced against achieving
Relative Shareholder Return (TSR) target.
The performance period is 1 July 2017 to
30 June 2020 inclusive. The vesting date is
expected to be on or soon after the approval
of IVE’s 2020 Annual Financial Report.
$1.98
$1.48
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
Risk free interest rate
Dividend yield
$2.17
21.4%
1.64%
8.04%
$2.17
21.4%
1.96%
8.04%
*Share rights issued to Directors required shareholder approval. This occurred at the Group’s 2017 Annual General Meeting.
Total expense relating to Share-based payments has been disclosed in note 5 of this consolidated financial statements.
On 27 September 2017, the Group issued shares under the 2017 General Management award (refer note 19 – Capital).
The exercise price per share at the time of issue was $2.07. The fair value per share at grant date was $2.02. The total
value of shares issued was $127 thousand.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
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81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
19. Capital
Issued and paid up capital
148,103,655 (June 2017: 119,280,624) ordinary shares fully paid
Movement in ordinary share capital
Date
Details
1-Jul16
Opening balance
13-Dec-16
Issue of new shares under the Institutional
Entitlement Offer and Placement
2018
156,318
Number
of shares
89,180,901
Issue
Price
17,659,564
$2.00
13-Dec-16
Issue of shares as consideration for acquisitions
9,814,729
19-Dec-16
30-Dec-16
Additional issue of shares as consideration
for acquisition
264,253
Issue of new shares under the
Retail Entitlement Offer
Transaction costs arising from issue of shares
(net of tax)
30-Jun-17
Closing balance
1-Jul-17
5-Sep-17
5-Sep-17
Opening balance
Issue of new shares under the
Institutional Entitlement Offer (refer below)
Issue of shares as consideration for acquisition
(refer below)
20-Sep-17
Issue of new shares under the
Retail Entitlement Offer (refer below)
Transaction costs arising from issue of shares
(net of tax)
27-Sep-17
Issue of shares under the Equity Incentive Plan
62,872
$2.02
30-Jun-18
Closing balance
148,103,655
Dividends
On 27th August 2018, the directors have declared a fully franked dividend of 7.5 cents per share to be paid on
25th October 2018 to shareholders on the register at 19 September 2018. The final dividend payout is $11.1m
(2017: $9.5m). A liability has not been recognised as the dividend was declared after the reporting date.
2017
99,820
Total
$’000
39,843
35,319
19,771
529
19. Capital (cont.)
Dividends (cont.)
The following dividends were declared and paid during the year ended 30 June 2018:
In thousands of AUD
2018
Final 2017 ordinary
Interim 2018 ordinary
Total amount
Cents
per share
6.4
8.0
Total
amount
9,477
11,848
21,325
Date of
payment
25 October 2017
19 April 2018
On 25 October 2017 a dividend of 6.4 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 19 April 2018 a further dividend of 8.0 cents per share (100% franked) was declared and paid by the directors.
The dividend was paid out of profits earned up to that date.
The following dividends were declared and paid during the year ended 30 June 2017:
2,361,177
$2.00
4,722
119,280,624
119,280,624
(1,364)
98,820
98,820
18,860,264
$2.05
38,664
1,650,165
3,399
8,249,730
$2.05
16,912
In thousands of AUD
2017
Final 2016 ordinary
Interim 2017 ordinary
Total amount
Dividend franking account
In thousands of AUD
Cents
per share
8.6
6.3
Total
amount
7,671
7,514
15,185
Date of
payment
20 October 2016
20 April 2017
(1,604)
127
156,318
Amount of franking credits available to shareholders of IVE Group Limited
for subsequent financial years
The ability to utilise the franking credits is dependent upon the ability to declare dividends.
20. 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
2018
2017
5,857
12,080
2018
0.18
0.18
2018
2017
0.11
0.11
2017
25,715
12,109
142,549
105,560
142,796
105,656
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
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83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
21. Acquisitions
During the year, the Group acquired the following businesses, the details of which are as follows:
• On 6 September 2017, IVE Group acquired the shares of SEMA Holdings Pty Limited (“SEMA”) and its operating entities.
SEMA is a leading provider in personalised communication services and will be integrated into IVE’s Direct business.
• On 16 November 2017, IVE Group acquired the shares of John W Gage & Co Pty Limited (trading as “Dominion”).
Dominion is a provider of creative services, digital print, offset print and warehousing and logistics services. It will be
integrated into IVE’s Print business.
21. Acquisitions (cont.)
The businesses of SEMA and Dominion are being integrated into IVE. 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 $39,447 thousand. Individually these businesses are considered immaterial.
If these acquisitions had occurred from beginning of the reporting period the combined Group revenue would have been
estimated at $51,125 thousand. The Group has not estimated the profit before tax for the reasons provided above.
The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired
and liabilities assumed at the acquisition date:
Acquisition-related costs totalling $1,039 thousand for all acquisitions has been included in Other expenses in the Group’s
consolidated statement of profit or loss and other comprehensive income.
In thousands of AUD
Consideration transferred
Cash
Completion cash adjustment*
Deferred consideration
Contingent consideration
Issue of shares
Identifiable assets acquired
and liabilities assumed
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Customer relationship (intangible asset)
Other current assets
Deferred tax assets/(liabilities)
Trade and other payables
Current tax payable
Employee benefits
Goodwill on acquisition
SEMA Dominion
Total
7,750
(356)
–
3,350
3,399
14,143
657
7,275
277
448
2,874
800
1,221
45
(6,416)
(350)
(2,723)
4,108
10,035
4,572
1,018
1,850
650
–
8,090
721
1,450
322
22
628
2,000
–
(631)
(877)
(188)
(799)
2,648
5,442
12,322
662
1,850
4,000
3,399
22,233
1,378
8,725
599
470
3,502
2,800
1,221
(586)
(7,293)
(538)
(3,522)
6,756
15,477
* The completion cash adjustment 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.
Management have measured the assets and liabilities acquired at fair value with the remainder of the purchase
consideration being allocated to goodwill. The acquisition accounting is still on a provisional basis pending the completion
of a final valuation. If new information obtained within one year from the acquisition date about facts and circumstances
that existed at the acquisition date identifies adjustments to the above amounts, or any additional provisions that existed
at the acquisition date, 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.
22. 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 interim financial report.
In thousands of AUD
EBITDA
Depreciation, amortisation and impairment
Net finance costs
Profit before income tax
2018
2017
63,639
(18,874)
(7,904)
36,861
35,967
(13,777)
(5,772)
16,418
23. Financial risk management and financial instruments
Overview
The Group has exposure to the following risks from its use of financial instruments:
a. credit risk
b.
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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
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85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
23. 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
2018
2017
9
10
22,325
118,282
140,607
23,851
94,785
118,636
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
2018
68,282
33,197
10,017
6,808
118,304
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
2018
704
562
263
(852)
677
2017
58,578
21,327
9,172
6,015
95,092
2017
1,315
424
217
(1,252)
704
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.
23. 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
104,745
1,850
5,500
13,149
19,222
118,961
104,745
1,850
5,500
14,878
19,610
125,866
104,745
1,850
5,500
4,264
3,093
13,738
–
–
–
9,225
12,096
112,128
263,427
272,449
133,190
133,449
108
108
108
108
77
77
31
31
–
–
–
1,389
4,421
–
5,801
–
–
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
–
–
–
2,530
–
2,530
In thousands of AUD
30 June 2018
Non-derivative financial liabilities
Trade and other payable
Deferred consideration
Contingent consideration
Finance lease liabilities
Equipment finance
Bank loans
Derivative financial liabilities
Interest rate swaps used for hedging
In thousands of AUD
30 June 2017
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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
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87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
23. Financial risk management and financial instruments (cont.)
Currency risk (cont.)
During the year, 5% 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 $655 thousand at the reporting
date (2017: $397 thousand). The Group has performed effectiveness testing and recognised the full fair value amount net
of deferred tax of $459 thousand in other comprehensive income (2017: $278 thousand). Based on the results of the test
no in-effectiveness has been recognised in the profit or loss.
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:
In thousands of AUD
Euro
USD
GBP
Euro
USD
NZD
As at 30 June 2018
As at 30 June 2017
Equipment finance loan
Next three months forecast purchases
Forward exchange contracts
Net exposure
Sensitivity analysis
12,739
5,860
(18,599)
–
–
350
(350)
–
–
1,430
(1,430)
–
5,258
(5,258)
–
–
–
567
(567)
–
–
26
(26)
–
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 its variable interest exposure on bank loans. As at
30 June 2018, 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 (2017: 50% of the carrying value of Facility A and B). The interest rate swap
has been designated as a cash flow hedge. Its fair value at reporting date is $108 thousand (2017: $255 thousand). The
Group has performed effectiveness testing and recognised the full fair value amount net of deferred tax of $76 thousand
(2017: $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 and equipment finance
Effect of interest rate swaps – notional amount
Variable rate instruments
Financial assets – bank balances
Financial liabilities – bank loans
Effect of interest rate swaps – notional amount
Carrying amount
2018
2017
(32,371)
(55,000)
(87,371)
22,314
(120,000)
55,000
(42,686)
(14,003)
(60,000)
(74,003)
23,843
(136,000)
60,000
(52,157)
23. Financial risk management and financial instruments (cont.)
Interest rate risk (cont.)
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.
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 $43 thousand (2017: $52 thousand). This analysis assumes that all other variables, in particular foreign currency
rates, remain constant. The analysis is performed on the same basis as 2017.
Measurement of fair values
The table below gives information on the valuation technique and unobservable inputs of financial assets or liabilities
categorised as a Level 2 or Level 3 in the fair value hierarchy.
Type
Valuation technique
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 (over the 2018
and 2019 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
$650 thousand.
Not applicable
Not applicable
Not applicable
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.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
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89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
23. Financial risk management and financial instruments (cont.)
Measurement of fair values (cont.)
Reconciliation of Level 3 Contingent consideration fair value
The following table shows reconciliation of Contingent consideration from the opening balance to the closing balance:
25. Capital commitments
As at 30 June 2018, the Group has committed to purchase plant and equipment of $16,200 thousand
(2017: $23,188 thousand).
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
Fair values versus carrying amounts
2018
4,825
4,000
(2,622)
(703)
–
5,500
2017
10,374
1,700
(2,300)
(2,949)
(2,000)
4,825
26. 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
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.
Related party transactions and outstanding balances
2018
2017
3,433,721
131,323
27,693
3,592,737
2,494,251
114,555
19,023
2,627,829
Transaction
value year
ended
30 June 2018
Transaction
value year
ended
30 June 2017
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 subject to externally imposed
capital requirements (being financial loan covenants – refer to note 15).
24. 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
2018
25,334
78,144
40,325
2017
22,067
81,304
56,274
143,803
159,645
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 $26,265 thousand (2017: $19,680 thousand) was recognised as an expense in profit or loss
in respect of operating leases.
In AUD
Caxton Property Investments Pty Ltd – purchases
–
224,004
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 “purchases” referred to were payments of directors fees paid to that entity in lieu of director fees to the
individual directors.
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.
27. Group entities
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
Ownership interest
2018
%
2017
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
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91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
For the year ended 30 June 2018
27. Group entities (cont.)
IVE Employment (Australia) Pty Limited
IVE Employment (Victoria) Pty Limited
Taverners No. 13 Pty Limited
AIW Printing (Aust) Pty Limited
AIW Printing Unit Trust
IVE Group Asia Limited
Guangzhou IVE Trading Company Limited
IVE Singapore Pte Limited
SEMA Holdings Pty Ltd
SEMA Infrastructure Pty Ltd
SEMA Operations Pty Ltd
John W Gage & Co Pty Ltd
Ownership interest
29. Subsequent events
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 2018.
2018
%
100
100
100
100
100
100
100
100
100
100
100
100
2017
%
100
100
100
100
100
100
100
100
–
–
–
–
30. Auditors’ remuneration
In AUD
Audit services
Auditors of the Company – KPMG
Audit and review of financial reports
Audit of other assurance
Other services
Auditors of the Company – KPMG
Taxation services
Transaction services
2018
2017
384,088
10,125
394,213
189,625
399,750
589,375
413,470
5,000
418,470
86,818
653,000
739,818
28. Parent entity disclosures
As at, and throughout, the financial year ending 30 June 2018 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
2018
2017
–
–
–
18
100,593
80
80
287,631
(146,662)
(40,455)
100,514
1,004
–
1,004
80
64,491
18
18
230,267
(146,662)
(19,132)
64,473
IVE Group Limited was incorporated on 10 June 2015, but did not undertake any trading activities until its listing (IPO)
on the Australian Stock Exchange (ASX) on 16 December 2015 where it also contemporaneously acquired Caxton Print
Group Holdings Pty Ltd (CPGH).
An internal restructure took place resulting in IVE Group Limited becoming the holding company of CPGH. 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. As such, the consolidated financial statements of the new IVE Group have been presented as a
continuation of the pre existing accounting values of assets and liabilities in CPGH’s financial statements.
Accordingly, the other equity reserve represents the difference between the fair value of the share capital at the date of the
IPO and historical book values of the assets and liabilities of the Group.
31. 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 amended its Deed of Cross Guarantee on 23 February 2018. The subsidiaries subject to
the Deed are:
a. Caxton Print Group Holdings Pty Limited
b.
IVE Group Australia Pty Limited
c.
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
i.
j.
IVE Employment (Australia) Pty Limited
IVE Employment (Victoria) Pty Limited
k. Taverners No. 13 Pty Limited
l. AIW Printing (Aust) Pty Limited
m. SEMA Holdings Pty Limited
n. SEMA Infrastructure Pty Limited
o. SEMA Operations Pty Limited
p. John W. Gage & Co 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 2018 is set out on pages 57 and 58 of this
financial report.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
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93
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 57 to 91, 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 2018 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.
2.
There are reasonable grounds to believe that the Company and the group entities identified in Note 27 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.
3.
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 27th day of August 2018
Independent Auditor’s Report
Independent Auditor’s Report
To the shareholders of IVE Group Limited
To the shareholders of IVE Group Limited
Report on the audit of the Financial Report
Report on the audit of the Financial Report
Opinion
Opinion
We have audited the Financial Report of
IVE Group Limited (the Company).
We have audited the Financial Report of
IVE Group Limited (the Company).
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
giving a true and fair view of the
Group's financial position as at 30
giving a true and fair view of the
June 2018 and of its financial
Group's financial position as at 30
performance for the year ended on
June 2018 and of its financial
that date; and
performance for the year ended on
that date; and
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
•
•
•
•
The Financial Report comprises:
The Financial Report comprises:
• Consolidated statement of financial position as at 30
• Consolidated statement of financial position as at 30
• Consolidated statement of profit or loss and other
June 2018
June 2018
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended
• Notes including a summary of significant accounting
policies
• Notes including a summary of significant accounting
• Directors' Declaration.
policies
• Directors' Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
Basis for opinion
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Liability limited by a scheme approved under
Professional Standards Legislation.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
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95
Key Audit Matters
•
conditions and environment the specific CGU is
subject to from time to time;
conditions and environment the specific CGU is
level of disclosure of the key assumptions used
subject to from time to time;
in the Group’s valuation models.
level of disclosure of the key assumptions used
in the Group’s valuation models.
•
Given the nature of these judgments, we involved
our valuation specialists and senior staff with
Given the nature of these judgments, we involved
experience in the industry and the Group’s business.
our valuation specialists and senior staff with
experience in the industry and the Group’s business.
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
audit of the Financial Report of the current period.
This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on this matter.
Assessment of carrying value of goodwill
Refer to Note 13 ‘Intangible assets and goodwill’ to the Financial Report (Goodwill: $145.1 m)
The key audit matter
How the matter was addressed in our audit
The Group’s annual testing of goodwill for
impairment is a key audit matter due to the:
•
•
•
•
•
•
•
size of the goodwill balance (being 28.7% of the
total assets);
significant forward looking judgments the Group
applied in their value in use models.
The judgments we focused on included:
assessment of the Cash Generating Units
(CGUs). The Group has several operating
businesses and product lines and has made
acquisitions during the year, necessitating our
consideration of the Group’s determination of
CGUs, based on the smallest group of assets to
generate largely independent cash inflows;
assessment of allocation of goodwill to CGUs.
The Group made significant acquisitions during
the year, necessitating our consideration of the
Group’s allocation of goodwill to the CGUs to
which they belong based on the management
and monitoring of the business;
forecasting operating cash flows, capital
expenditure and forecast growth rates, including
terminal growth rate. These judgments are
impacted by the highly competitive market
conditions and the pace of technological change
and digital disruption in the printing industry, and
increase the complexity of the audit;
assessment of the discount rates. These are
complicated in nature and vary according to the
Our procedures included:
• we considered the Group’s determination
of their CGUs based on our understanding
of the Group’s business, the impact of the
SEMA Holdings Pty Limited (“SEMA”) and
John W Gage & Co Pty Limited
(“Dominion”) acquisitions, and, how
independent cash inflows were generated,
against the requirements of the accounting
standards;
• we analysed the impact of the SEMA and
Dominion acquisitions and the Group’s
internal reporting to assess their
monitoring and management of activities,
and the consistency of the allocation of
goodwill to CGUs;
• we considered the appropriateness and
application of the value in use method
applied by the Group to perform the annual
test of goodwill for impairment against the
requirements of the accounting standards;
• we assessed the integrity of the value in
use models used, including the accuracy of
the underlying calculations and formulas;
• we evaluated the Group’s cash flow
forecasts, including capital expenditure, by
comparing the forecasted data to the Board
approved budget.
• we assessed the accuracy of previous
Group forecasts to inform our evaluation of
forecasted data incorporated in the models.
•
•
• we challenged the Group’s significant
• we challenged the Group’s significant
forecasted data incorporated in the models.
forecast cash flow and forecast growth
rates in light of the expected continuation
forecast cash flow and forecast growth
of highly competitive market conditions and
rates in light of the expected continuation
digital disruption in the printing industry.
of highly competitive market conditions and
We compared key events to the Board
digital disruption in the printing industry.
approved plan and strategy. We compared
We compared key events to the Board
forecast growth rates and terminal growth
approved plan and strategy. We compared
rates to published information on industry
forecast growth rates and terminal growth
trends and expectations, and considered
rates to published information on industry
differences for the Group’s operations. We
trends and expectations, and considered
used our knowledge of the Group, their
differences for the Group’s operations. We
past performance, business and
used our knowledge of the Group, their
customers, and our industry experience;
past performance, business and
customers, and our industry experience;
we considered the sensitivity of the
models by varying key assumptions, such
we considered the sensitivity of the
as forecast growth rates, terminal growth
models by varying key assumptions, such
rates and discount rates, within a
as forecast growth rates, terminal growth
reasonably possible range, to identify those
rates and discount rates, within a
CGUs with a higher risk of impairment and
reasonably possible range, to identify those
to focus our further procedures;
CGUs with a higher risk of impairment and
• working with our valuation specialists, we
to focus our further procedures;
analysed the discount rates and terminal
• working with our valuation specialists, we
growth rates, based on our knowledge of
analysed the discount rates and terminal
the Group, its industry, current market
growth rates, based on our knowledge of
forces, and publicly available market data
the Group, its industry, current market
for comparable entities;
forces, and publicly available market data
• we assessed the impact of technological
for comparable entities;
change and digital disruption in the printing
• we assessed the impact of technological
industry on the Group’s key judgements,
change and digital disruption in the printing
for indicators of bias and inconsistent
industry on the Group’s key judgements,
application, using our industry knowledge;
for indicators of bias and inconsistent
• we assessed the related disclosures
application, using our industry knowledge;
against the requirements of the accounting
standards.
against the requirements of the accounting
standards.
• we assessed the related disclosures
Other Information
Other Information
Other Information is financial and non-financial information in IVE Group Limited’s annual reporting which
is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for
Other Information is financial and non-financial information in IVE Group Limited’s annual reporting which
the Other Information.
is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for
The Other Information we obtained prior to the date of this Auditor’s Report was the Appendix 4E,
the Other Information.
Operating and Financial Review, Director’s Report, Remuneration Report and the IVE Group Ltd FY18
The Other Information we obtained prior to the date of this Auditor’s Report was the Appendix 4E,
Results Presentation. The Chairman’s Report and Managing Director’s Report are expected to be made
Operating and Financial Review, Director’s Report, Remuneration Report and the IVE Group Ltd FY18
available to us after the date of the Auditor’s Report.
Results Presentation. The Chairman’s Report and Managing Director’s Report are expected to be made
available to us after the date of the Auditor’s Report.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
96
97
forecasted data incorporated in the models.
conditions and environment the specific CGU is
subject to from time to time;
•
level of disclosure of the key assumptions used
in the Group’s valuation models.
Given the nature of these judgments, we involved
our valuation specialists and senior staff with
experience in the industry and the Group’s business.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
• we challenged the Group’s significant
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
forecast cash flow and forecast growth
rates in light of the expected continuation
of highly competitive market conditions and
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
digital disruption in the printing industry.
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
We compared key events to the Board
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
approved plan and strategy. We compared
We are required to report if we conclude that there is a material misstatement of this Other Information,
forecast growth rates and terminal growth
and based on the work we have performed on the Other Information that we obtained prior to the date of
rates to published information on industry
this Auditor’s Report we have nothing to report.
trends and expectations, and considered
differences for the Group’s operations. We
used our knowledge of the Group, their
past performance, business and
customers, and our industry experience;
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
we considered the sensitivity of the
models by varying key assumptions, such
as forecast growth rates, terminal growth
rates and discount rates, within a
reasonably possible range, to identify those
CGUs with a higher risk of impairment and
to focus our further procedures;
• implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company’s ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to
• working with our valuation specialists, we
going concern and using the going concern basis of accounting unless they either intend to liquidate the
analysed the discount rates and terminal
Group or to cease operations, or have no realistic alternative but to do so.
growth rates, based on our knowledge of
the Group, its industry, current market
forces, and publicly available market data
for comparable entities;
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
change and digital disruption in the printing
industry on the Group’s key judgements,
• to obtain reasonable assurance about whether the Financial Report as a whole is free from material
for indicators of bias and inconsistent
misstatement, whether due to fraud or error; and
application, using our industry knowledge;
• we assessed the impact of technological
• to issue an Auditor’s Report that includes our opinion.
• we assessed the related disclosures
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
against the requirements of the accounting
standards.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this Financial Report.
Other Information
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our Auditor’s Report.
Other Information is financial and non-financial information in IVE Group Limited’s annual reporting which
is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for
the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Appendix 4E,
Operating and Financial Review, Director’s Report, Remuneration Report and the IVE Group Ltd FY18
Results Presentation. The Chairman’s Report and Managing Director’s Report are expected to be made
available to us after the date of the Auditor’s Report.
•
conditions and environment the specific CGU is
subject to from time to time;
Report on the Remuneration Report
level of disclosure of the key assumptions used
in the Group’s valuation models.
Opinion
Given the nature of these judgments, we involved
In our opinion, the Remuneration
our valuation specialists and senior staff with
Report of IVE Group Limited for the
experience in the industry and the Group’s business.
year ended 30 June 2018, complies
with Section 300A of the Corporations
Act 2001.
forecasted data incorporated in the models.
• we challenged the Group’s significant
Our responsibilities
Directors’ responsibilities
forecast cash flow and forecast growth
rates in light of the expected continuation
of highly competitive market conditions and
digital disruption in the printing industry.
The Directors of the Company are responsible for the
We compared key events to the Board
preparation and presentation of the Remuneration Report in
approved plan and strategy. We compared
accordance with Section 300A of the Corporations Act 2001.
forecast growth rates and terminal growth
rates to published information on industry
We have audited the Remuneration Report included in pages
trends and expectations, and considered
40 to 54 of the Directors’ report for the year ended 30 June
differences for the Group’s operations. We
used our knowledge of the Group, their
2018.
past performance, business and
customers, and our industry experience;
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
•
we considered the sensitivity of the
models by varying key assumptions, such
as forecast growth rates, terminal growth
rates and discount rates, within a
reasonably possible range, to identify those
CGUs with a higher risk of impairment and
to focus our further procedures;
KPMG
• working with our valuation specialists, we
John Wigglesworth
Partner
analysed the discount rates and terminal
growth rates, based on our knowledge of
the Group, its industry, current market
forces, and publicly available market data
for comparable entities;
Sydney
• we assessed the impact of technological
27 August 2018
change and digital disruption in the printing
industry on the Group’s key judgements,
for indicators of bias and inconsistent
application, using our industry knowledge;
• we assessed the related disclosures
against the requirements of the accounting
standards.
Other Information
Other Information is financial and non-financial information in IVE Group Limited’s annual reporting which
is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for
the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Appendix 4E,
Operating and Financial Review, Director’s Report, Remuneration Report and the IVE Group Ltd FY18
Results Presentation. The Chairman’s Report and Managing Director’s Report are expected to be made
available to us after the date of the Auditor’s Report.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
98
99
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 30 July 2018.
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
Level 3, 35 Clarence Street
Sydney NSW 2000
Phone: +61 2 8020 4400
Principal Place of Business
Building B, 350 Parramatta Road
Homebush NSW 2140
Phone: +61 2 8020 4400
Substantial shareholders of ordinary shares (as reported to the ASX)
Name
Caxton Print Holdings Pty Ltd as trustee for the Selig Family Trust
Hume Partners Pty Ltd
Regal Funds Management Pty Ltd
COPIA Investment Partners
FIL Limited and associated entities
Number of
shares held
11,210,231
8,421,747
10,259,475
6,565,000
7,607,453
Distribution of shareholders and shareholdings – ordinary shares
There are 148,103,655 ordinary shares on issue held by 1,779 shareholders.
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
Total
Ordinary
Shares
87,166
1,480,489
2,732,277
20,506,781
123,296,942
%
0.06
1.00
1.84
13.85
83.25
Number
of holders
172
487
333
705
82
148,103,655
100.00
1,779
100.00
Distribution of shareholders and shareholdings – performance share rights (unlisted)
There are 447,506 unlisted performance share rights on issue that have been issued under an employee share plan. These
are held by 25 employees.
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
Total
Unmarketable parcels
Performance
Share Rights
–
26,765
50,500
269,857
100,384
447,506
%
5.98
11.28
60.30
22.44
100.00
Number
of holders
–
9
10
6
1
26
%
34.61
38.46
23.08
3.85
100.00
The number of shareholders holding less than a marketable parcel of ordinary shares is 40 for 998 shares.
%
8.02%
7.20%
6.93%
5.50%
5.14%
%
9.67
27.37
18.72
39.63
4.61
Twenty largest shareholders
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
14
15
16
17
18
19
20
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Caxton Print Holdings Pty Ltd
J P Morgan Nominees Australia Limited
National Nominees Limited
Taverners N Pty Ltd
BNP Paribas Nominees Pty Ltd
CS Fourth Nominees Pty Limited
BNP Paribas Noms Pty Ltd
Brispot Nominees Pty Ltd
Strategic Value Pty Ltd
Strategic Value Pty Limited
CS Third Nominees Pty Limited
Mr Stephen Craig Jermyn
SCJ Pty Ltd
UBS Nominees Pty Ltd
Pershing Australia Nominees Pty Ltd
BNP Paribas Noms (NZ) Ltd
Shansley Pty Ltd
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd DRP
Neweconomy Com Au Nominees Pty Limited
Total
Balance of register
Grand total
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:
Number of
Shares
20,324,314
18,402,345
11,210,231
10,828,047
10,453,586
7,740,136
4,594,542
3,911,248
3,213,815
2,574,368
2,515,948
2,024,414
2,007,247
2,000,000
2,000,000
1,881,991
1,220,000
1,191,252
988,462
940,133
885,888
110,907,967
37,195,688
148,103,655
%
13.72
12.43
7.57
7.31
7.06
5.23
3.10
2.64
2.17
1.74
1.70
1.37
1.36
1.35
1.35
1.27
0.82
0.80
0.67
0.63
0.60
74.89
25.11
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.
Voluntary escrow
There were no ordinary shares held in a voluntary escrow arrangement as at 31 July 2018.
Stock Exchange Listing
IVE Group securities are only listed on the ASX.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018
100
101
CORPORATE GOVERNANCE STATEMENT
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 http://investors.ivegroup.com.au/home/.
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 2018. It has been approved by the Board and is available on the IVE website under Investors at
http://investors.ivegroup.com.au/home/.
IVE Group Limited Annual Report 2018IVE Group Limited Annual Report 2018PERCEPTIONSWE MOVEWE MOVEWE MOVEWE MOVE 102
ivegroup.com.au
IVE Group Limited Annual Report 2018WE MOVEWE MOVE