IVE Group Annual Report 2019

FY2019 Annual Report · IVE Group

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Annual Report
2019

Founded in 1921,
we are Australia’s
leading holistic
marketing company.
With an unmatched
breadth and depth
of offering, we guide
our clients from...

idea

execution

IVE Group Limited’s 2019
AGM will be held on Tuesday,
26 November 2019 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
ABN 62 606 252 644

ASX : IGL

Annual Report 2019IVE Group LimitedThe year in review

Year in review

Financial results

Executive Chairman’s review

CEO’s review

Board of Directors

Why IVE

Our offering

Service offering

Creative services

Data-driven communications

Production and distribution

Integrated marketing

Technology solutions

IVE Care

Annual Financial Report

Operating and financial review

Directors’ report

Lead auditor’s independence declaration

Financial report contents

Consolidated financial statements

1 2

1 4

Notes to the Consolidated Financial Statements 79

Directors’ declaration

Independent auditor’s report

117

118

ASX additional information

123

Corporate governence statement

125

Year in review

Financial results

Significant Investment
Program Concluded

Revenue

In FY19 the Group concluded
the most significant investment
program the sector has seen
for many years, demonstrating
continued confidence in the
sector, and in our capacity as
a business to execute major
initiatives effectively.

Revenue growth of 4.1%
(2.4% organic growth)

Solid momentum with a range of
significant new clients secured

A number of key contract
extensions

No material client losses

Cashflow
and Dividend

Key Operational
Milestones

Cash conversion of 81.7% supported
a final dividend of 7.7 cents per
share, fully franked. Full year
dividend of 16.3 cents per share,
fully franked was up 5.2% on prior
year. The dividend payout ratio
was 71% of NPAT

Earnings per share of $0.228(1)
was 0.6% growth on PCP

There is no further deferred
consideration payable from
prior acquisitions

Capital expenditure (excluding ERP/
MIS upgrade) reducing significantly
to $8-10 million in FY20 an FY21

(1) Pro forma NPAT/weighted average shares on issue

The final stage investment and
official opening in November 2018
of the Group’s $53 million world
class Franklin WEB NSW operation

Additional investment in high
speed continuous inkjet technology
to support the Group’s further
expansion in data-driven
communications

In support of revenue growth,
the logistics and fulfilment
operation in Victoria was relocated
to a new 15,000sqm facility

The Group refinanced its senior
debt facilities for a new 4 year term

Revenue $724.2m

4.1 %

PCP

$80.4m EBITDA

9.8%

PCP

Revenue
$m

FY2017

FY2018

FY2019

EBITDA
$m

FY2017

FY2018

FY2019

$37.5m NPATA(1)

4.4 %

PCP

17% ROFE (2)

NPATA
$m

FY2017

FY2018

FY2019

496.9

695.4

724.2

55.2

73.2

80.4

27.3

35.9

37.5

(1) NPAT excluding amortisation

of customer contracts

(2) EBIT/average funds employed
where funds employed equals
net assets plus net debt

Annual Report 2019IVE Group Limited Executive Chairman’s review

Over the last year the Group concluded the most
significant investment program the sector has
seen for a very long time, demonstrating our
confidence in the industry, and our capacity as a
business to execute major initiatives effectively.
Our strategic investment program commenced
shortly after our listing in December 2015, and
would best be described as a period of further
diversification, significant expansion and growth
in the scale of our business. The enhanced value
proposition we take to market remains compelling
to our clients, and clearly demonstrates that
our strategy of ensuring and maintaining our
relevance in the marketing communications space
over a long period continues to serve us very well.

We have not raised capital nor completed an
acquisition for nearly 2 years, with our FY19 financial
results the ‘cleanest’ set of reported numbers since we
listed. Notwithstanding some challenges, particularly
in the second half of the year, we are pleased to have
once again delivered a solid result, with key financial
performance metrics up on the prior year. All key
operational milestones were met, with the highlight
of the year being the final phase and official opening
of our $53 million Franklin WEB NSW operation -
what an amazing world class operation it is.

The Group had a change of leadership in August
2019 with the resignation of our managing director
of 5 years, Warwick Hay. I would like to acknowledge
Warwick’s outstanding contribution to the growth
and evolution of the business during his time as
managing director. It was a pleasure to have worked
closely with Warwick during this period, in particular
our listing on the ASX back in 2015. I thank him on
behalf of the board and our staff for his commitment
and leadership of the business.

Matt Aitken, chief operating officer of the Group,
was appointed chief executive officer in August
following Warwick’s resignation. Matt has been a
core member of the leadership team for a very long
time and we were most fortunate to have someone
of Matt’s calibre and commitment to seamlessly
transition into the leadership role of the business.
I have worked closely with Matt over the last
20 years and the level of respect with which he is
held across IVE and the broader marketing sector
is testament to his personal style and unique skill
set. Matt’s appointment as expected has been
universally well received across the business and
our client base.

I also convey our thanks to Andrew Harrison who
stepped off the board in November 2018. Andrew
joined the board (and chaired our audit risk &
compliance Committee) at the time of our listing
in December 2015 and we benefited greatly from
his insights and experience during the early years
of public company life. We welcomed Carole
Campbell to the board in November 2018, and
Carole has also taken on the role as chair of the
audit risk & compliance Committee.

As our business and offer to the market has
become more integrated over the last 5 to
10 years, operating under multiple brands has led
to some confusion from clients and shareholders
as we attempt to clearly articulate the expertise
of our product/service offering across each of our
businesses and as a broader diversified marketing
group. It’s the right time for us to move to the one
IVE brand and this will be officially launched by
the end of 2019. I firmly believe this simplification
of our brand and narrative will build further on
the existing IVE brand to create an incredibly
impactful, strong and modern identity.

With the significant investment and expansion phase
of the last 5 years now behind us, the continued
solid performance of the business positions us
well to generate strong free cashflow over the
years ahead. Further supporting strong cashflow,
capital expenditure reduces significantly for the
next 24 months and we have no further deferred
consideration payable from prior acquisitions.

I am proud to be the chairman of a company that is
committed to making decisions that we believe to be
are in the best interests of the ongoing sustainability
of our business. We are extremely fortunate to have
a diverse, committed and talented team of 1800
across the region that remain focused every day
of the year on ensuring we continue to exceed our
client expectations in the ever changing and complex
marketing landscape. We are most fortunate to
be led by a cohesive, aligned and complimentary
leadership team whom I respect greatly.

To my fellow directors, thank you for your
continued engagement, guidance and expertise
over the last year.

Geoff Selig
Executive Chairman

IVE Group LimitedIVE Group LimitedAnnual Report 2019 CEO’s review

IVE is a business that has been the cornerstone
of my professional career for over 20 years, so I
was delighted to be appointed CEO in August
of this year.

I genuinely believe the value proposition we take
to market, and the stable, dedicated and talented
people we have to support this, has underpinned
the sustainability and success of our business over
a very long period. I look forward to continuing to
build on the business we have today to ensure our
ongoing success moving forward.

FY19 was a year focused on concluding the final
phase of the significant investment and expansion
program we have executed over the last 4 years.
Our performance for the year was solid, with
key financial metrics up over the prior year.
Revenue growth up 4.1% (2.4% organic growth)
to $724.2 million, with good momentum resulting
in the Group securing a number of significant
new client wins, key contract extensions with no
material client losses. Gross profit margin was
down on the prior year by 1.9% as a result of
the continued absorption of higher energy costs,
unrecovered increases in paper cost, and the
competitive landscape in the web offset part of
the sector. EBITDA was up 9.8% to $80.4 million,
NPATA up 4.4% to $37.5 million, with acquisition
and restructure costs once again minimal at
$3.1 million. High cash conversion supported a
5.2% increase in fully franked dividends for the
year to 16.3 cents per share.

Our balance sheet remains strong with net debt
to proforma EBITDA of $80.4 million remaining the
same as the prior year at 1.79 times. Significantly
higher inventory levels at year end were the result
of increased paper holdings on the back of global
shortages in supply, and a decision to ensure
certainty of print supply for our retail clients.
The global pulp and paper market has stabilised
somewhat over the last 6 months and we would
expect a return to more normal levels of inventory
over the course of the year.

We successfully executed on a number of key
operational initiatives during the year:

The final stage investment and official opening
in November 2018 of the Group’s $53 million
Franklin WEB NSW operation

Additional $6.4 million investment in high speed
continuous inkjet technology to support the
Group’s further expansion in data-driven
communications

In support of revenue growth, our logistics and
fulfilment operation in Victoria was relocated
to a new 15,000sqm facility

With an estimated total cost of circa $3-4 million
over 3 to 4 years, we have taken the opportunity
during the last year to execute phase 1 of the
comprehensive upgrade of our Group wide
ERP/MIS workflows

We refinanced our senior debt facilities for a
new 4 year term resulting in additional facility
and covenant headroom at improved pricing

My thanks to our 1800 staff for their ongoing
commitment, and to our board for their continued
support and encouragement. We will strive as always
to be focused on delivering for our customers, and
ensuring we operate as efficiently as possible to
deliver an acceptable return for our shareholders.

We have an exciting year ahead with our move to one
brand, the continued upgrade of our workflows, and
a number of other important initiatives to support the
ongoing strength and sustainability of the business.

Matt Aitken
Chief Executive Officer

We further expanded our digital retail offer with
the highly anticipated launch of our Nexus
platform in May 2019. Nexus provides our
customers with a solution that transforms printed
materials such as catalogues and brochures
into interactive shoppable experiences. We are
increasing our customers’ revenue with a new sales
channel that is accessed dynamically through
web, mobile, email and social media. The platform
has been embraced by both existing and potential
customers; as it delivers value add functionality,
detailed analytics and insights about shoppers,
and activates an additional sales channel
for customers.

The Group expects the solid performance and
free cashflow of the business to continue in FY20.
Following a period of heavy investment in a
number of strategic growth initiatives, targeted
investment and maintenance capital expenditure
reduces significantly to circa $8-10 million
(excluding ERP/MIS upgrade), and the Group has
no further deferred consideration payable from
prior acquisitions. Significant items are once again
expected to be minimal.

IVE Group LimitedIVE Group LimitedAnnual Report 2019 Board of Directors

Sandra Hook
Independent
Non-Executive Director

James Todd
Independent
Non-Executive Director

Carole Campbell
Independent
Non-Executive Director

Gavin Bell
Independent
Non-Executive Director

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 in to 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 Lysicrates
Foundation. He was the
State President of the NSW
Liberal Party from 2005-08.

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

Sandra 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 she has also
served as a non-executive
director on listed, public
and private companies
and government bodies.
Sandra is currently director
of digital/technology
companies RXP Services Ltd
(ASX : RXP), MedAdvisor Ltd
(ASX : MDR) and .au Domain
Administration Ltd as well
as the Sydney Fish Market.
She is a trustee of the
Sydney Harbour
Federation Trust.

Committees:
Member of the Nominations
& Remuneration Committee.

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
a director of the Company
since 2012 and appointed
to IVE Group Limited on its
incorporation in 2015.
Paul is an experienced
director and investor having
run the Caxton Group family
office for over 15 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.

Gavin is an experienced
director, executive and
lawyer. Gavin is currently
a director of Smartgroup
Corporation Limited (ASX:
SIQ) 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.

Committees:
Chair of the Nominations &
Remuneration Committee
and Member of the Audit, Risk
& Compliance Committee.

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 also a
Non-Executive Director of two
other ASX listed companies,
HRL Holdings Limited and
Coventry Group Limited.

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.

Committees:
Member of the Audit, Risk
& Compliance Committee
and Nominations &
Remuneration Committee.

Carole Campbell is a
professional company
director with more than 30
years’ experience across a
diverse range of industries
including professional
services, financial services,
media, mining and
industrial services.

Carole commenced her
career with KPMG and has
held senior finance roles with
Macquarie Group, Westpac
Institutional Bank, Seven
West Media, Bis Industries
and Merivale.

Carole is a Non-Executive
Director and Chair of Audit
Committee of FlexiGroup
Limited (ASX : FXL) and
Deputy Chair of Council
and Chair of the Finance,
Audit and Risk Management
Committee of the Australian
Film Television and Radio
School. She is also a
Non-Executive Director of
The Sydney Film Festival.

Carole is a Fellow of
Chartered Accountants
Australia and New Zealand
(FCA) and a Graduate
Member of the Australian
Institute of Company
Directors (GAICD).

Committees:
Chair of the Audit, Risk &
Compliance Committee.

Annual Report 2019IVE Group Limited Why IVE

IVE Group Limited

As marketing natives,
we understand that for
businesses who need to connect
with their customers, the
marketing landscape is
becoming more complex.

Annual Report 2019IVE Group

From idea

We help our
clients navigate the
marketing maze...

to execution.

Annual Report 2019IVE Group LimitedWe connect our clients
with customers.
Wherever, whenever.

1919

IVE Group LimitedIVE Group LimitedAnnual Report 2019 Service offering

Annual Report 2019

Our integrated
service model.

W e g o f u r t h e r, so our clients can too.

Creative
Services

Data-Driven
Communications

Integrated
Marketing

Production
and Distribution

Specialising in creative, data-driven communications,
integrated marketing, production and distribution, we bring
together the capabilities, specialists and technology needed
to make customer connection seamless.

Creative
services

Creative is a field for specialists—designers,
writers, artists and alchemists who
have mastered their craft. Applying that
craft to complex, decoupled marketing
campaigns with consistency, speed and
scale is where we excel.

Visual
Motion
Digital
Personalised
Structural

IVE Group LimitedAnnual Report 2019 Creative services

With one of the largest and most diverse
creative capabilities in Australia, we
specialise in visual, motion, digital,
personalisation and structural (3D) design.
We roll out large-scale campaigns with the
accuracy, speed and cost efficiency needed
to deliver superior creative across every
touchpoint, every time.

Our teams in Sydney and Melbourne
expertly manage every step of the creative
production process. This includes Digital
Asset Management (DAM) services for
version control, rights management, and
controlled access to reduce duplication
for our clients.

No matter how large or complex the
campaign, we have the right experts,
capabilities and technology to deliver
memorable creative that connects clients
with customers.

IVE Group LimitedIVE Group LimitedAnnual Report 2019IVE Group Limited

Data-driven
communications

To create meaningful experiences
with customers, we need to
truly understand them. To get
that understanding across vast
and varied audiences takes one
critical element: data. That’s
the competitive advantage
needed to match the reach, pace
and personalisation today’s
clients demand.

CX data and insights
Marketing technology
Omni-channel deployment
Retrieval and enrichment
Tele-fundraising

Annual Report 2019 Data-driven
communications

Driven by data, our powerful offering provides
deep customer insights and expert marketing
technology services. We then implement this
through the content creation, production and
delivery of personalised communications
across all channels-physical and digital.

With this depth of capability residing within
a single company, we ensure speed, impact,
reduced risk of data mismanagement, and a
greater measurable return on investment for
our clients. This leads to better, more holistic
brand experiences for their customers.

Annual Report 2019IVE Group Limited

Production
and
distribution

Truly effective marketing is often
experienced by customers in a single
moment. To make the most of that moment,
every touchpoint needs to be precisely
crafted across a vast array of distinct
capabilities—print, retail display, premiums,
merchandising, and integrated logistics.

Print
Retail display
Premiums and merchandising
Integrated logistics

Annual Report 2019 Production and distribution

IVE Group Limited

We are Australia’s largest
marketing production
and distribution company
with almost 100 years of
experience. We specialise
in every facet of marketing
production – from
catalogues, magazines
and brochures, to point
of sale, apparel, fulfilment
and logistics.

Our expertise, as broad as it is
deep, allows us to guide clients
to the best answer for their
specific needs. And then we act.
We make. We do. We deliver. We
execute in savvy tailored ways,
so our clients can effectively
connect with their customers
wherever, whenever.

With duplicate operations in
Sydney and Melbourne across all
of our production capabilities, we
are set up to meet the tightest
deadlines while ensuring high
quality, cost efficiency, and
minimum risk of redundancy.

Annual Report 2019Integrated
marketing

With marketing becoming increasingly
fragmented there’s never been a greater
need for a simpler way forward—one that
can effectively deliver customer-centric
content across all channels accurately
and efficiently. That’s exactly what our
integrated marketing offer does. It brings
together our full spectrum of marketing
services into a single, seamless, client-
customised solution.

Resource management
Supply chain
Reporting

IVE Group LimitedAnnual Report 2019 Integrated marketing

By vertically integrating our creative,
data-driven, production and distribution
capabilities, we give our clients a distinct
advantage: fewer handovers and greater
control, accuracy, flexibility, accountability,
cost efficiencies and speed to market.

With experts in resource
management, procurement, and
supply chain management, we
support our clients with integrated
marketing teams embedded on-site
or near-site. When suitable, we can
also provide clients with access to
our broader accredited domestic
and Asia Pacific supply chain.

Whether it’s integrating creative,
data-driven communications,
production and distribution or all
of the above, our entire process
seamlessly integrates through our
workflow technology platform.
It’s everything our clients need,
precisely the way they need it.

IVE Group LimitedIVE Group LimitedAnnual Report 2019IVE Group Limited

Technology
solutions

Technology is at the forefront of
everything we do. Our technology makes
complex marketing simpler for our
clients, improving speed to market and
reducing costs. We also provide powerful
and user-friendly automation and
self-service tools.

Content management
Digital asset management
Inventory management
Procurement
Web to Print
Retail
E-Commerce
Workflow

Annual Report 2019 IVE Care
IVE Care

Secure and
certified

Empowering
our people

IVE Care focuses on ensuring
and improving two key areas:

The quality and security
of our products and services
for our clients

The wellbeing and safety
of our employees.

Quality assurance
We apply rigorous quality
assurance processes to everything
we do. This is core to the long-
term relationships we enjoy with
our clients. ISO 9001 certified, and
an accredited Salesforce Platinum
Partner, we are uncompromising
in our commitment to quality from
marketing technology through to
production and distribution.

Environmental
management
Our outstanding credentials
include ISO 14001 Environment
certification, Program for
Endorsement of Forest
Certification™ (PEFC™) chain of
custody certification, and Forest
Stewardship Council® (FCR®)
chain of custody certification.

Ethical sourcing
Everything we source is ethically
managed. Adhering to the
highest standards, we’re certified
by SA 8000 for human rights
and minimum age certification,
as well as Intertek—a global
independent certifier operating
in over 100 countries worldwide.

Data security
We are fully accredited and
certified by ISO 27001 and
Sedex (supplier of ethical data
exchange). We invest over $1.7m
annually in data security, so
our clients and their customers
can take comfort knowing their
sensitive data is secure.

Employee wellbeing
We’re exceptionally proud and
supportive of our people. Our
employee wellbeing program aims
to help them achieve their personal
and professional goals.

Designed to create an environment
that embraces our diverse
workforce, our program provides our
1800+ employees and their families
with access to a wide range of
initiatives and benefits, including:

Health & Wellbeing

Lifestyle Benefits

Wealth & Security

Personal, Family & Community

Diversity & Inclusion

Workplace
health & safety
Key to ensuring our employees’
collective wellbeing is making
workplace health and safety an
absolute business priority.

Our IVE Care program is widely
recognised as the market leader
when it comes to embedding
health and safety practices into
all aspects of our business
operations and culture. We
have a dedicated, full-time
team continually enhancing
our WH&S processes to ensure
all our people, across all our
locations, experience the best
work conditions possible.

Regularly audited and with an
enviable record, we’re proud that
our workplace health and safety
is second to none.

Annual Report 2019IVE Group LimitedIVE Group LimitedIVE Group Limited

IVE GROUP LTD

ABN 62 606 252 644

Annual
Financial Report

Year ended 30 June 2019

Annual Report 2019Operating and financial review

Introduction

The Directors are pleased to present the Operating
and Financial Review (OFR) for IVE Group Limited
(IVE) for the year ended 30th June 2019.

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

Summary

IVE FY2019 results reflect the impacts of previous
period’s capital investment, final acquisition
integration and growth strategy execution resulting
in revenue, EBITDA and NPAT increase as well
as EBITDA margin expansion. Restructure and
acquisition costs were down significantly on prior
corresponding period (‘PCP’).

Revenue growth for the year FY2019 of 4.1%
compared to the PCP. The revenue increased through
a combination of new business wins and expanded
spend from the existing customer base through
diversified service offering (share of wallet) which
resulted in organic growth of 2.4%. The balance of
revenue growth relates to prior period acquisition
revenue for the full period.

IVE achieved pro forma EBITDA growth of 9.8% over
the PCP (before restructure and acquisition costs),
driven by revenue growth as well as the operation
of Franklin WEB NSW facility for the full period of
FY19 thereby increasing production efficiencies and
reducing outwork, driving increased gross profit and
EBITDA. This was offset by the negative impact of

increased paper costs. EBITDA also reflects the write
off of prior period’s bad debts in Kalido, largely offset
by the reversal of deferred goodwill in other income.
Further productivity gains and cost base refinement
through prior period capital expenditure investment,
as well as the benefits arising from acquisition
synergies and continued focus on cost management
drove EBITDA margin expansion. Statutory EBITDA is
21.4% higher than PCP, reflecting restructuring and
acquisition costs in FY2018 mainly relating to Franklin,
AIW and SEMA acquisition and integration costs.

Pro forma NPAT increase on prior period of 4.5%
reflecting increased EBITDA as noted above partly
offset by the impact of increased depreciation, due
to Franklin WEB NSW being fully operational for
the period. Statutory NPAT is 21.7% higher than PCP,
reflecting significantly reduced restructuring and
acquisition costs in FY2019 compared to FY2018.

During the period IVE refinanced its senior debt
facilities for a new four year term, resulting in more
facility and covenant headroom at improved pricing
with benefits to flow in FY2020 and beyond.

Strategy and operating overview

Our strategy of diversification and innovation has
resulted in a marketing communications value
proposition that is unparalleled in this country,
and one that is compelling for our customers and
prospective customers. The power of our vertically
integrated multi-channel product and service
offering and the success we’ve had in cross selling
is evidenced by the increase over the last 4 years in
customers engaging IVE across multiple parts of the
business. We continue to grow revenue on the back of
customers seeking to rationalise their supply chain.

As a result of the diversity of our offer, the Group does
not have one headline competitor. The structure of
our sector has improved significantly over the last
decade, with IVE taking a leading role in driving
rationalisation and consolidation. This consolidation
has resulted in fewer but stronger operators like IVE
across many of the sectors in which we operate.

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

• 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 are set out in our 30 June 2019
Annual Report.

Overview of results or full year FY2019

IVE’s Financial Report for FY2019 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 FY2019 and FY2018
results presented before impacts of all restructuring
and acquisition costs (including write off of previous
facility establishment costs of $0.7M), which allow for
a direct comparison to FY2018, primarily impacted
by acquisition and integration costs associated with
August 2017 equity raise as well as the SEMA acquisition
in September 2017 and final AIW close down costs.

The Directors believe that the results before
restructuring and acquisitions costs, and Pro
Forma comparisons, better reflect the underlying
operating performance and 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.

Annual Report 2019IVE Group Limited4.1 Statutory results per the Financial Report

4.1 Statutory results per the Financial Report (cont.)

NPAT (Net profit after tax)

NPAT of $31.3M represents an increase of $5.6M or
21.7% over PCP, achieved via a combination of revenue
growth, efficiency gains and reduced acquisition and
restructure costs. FY2019 increased depreciation due
to Franklin WEB NSW facility being fully operational
for period as well as targeted communications
business expansion compared to that in FY2018.
Interest expense increased in FY2019 due to FY2018
benefiting from capital raise funds not yet deployed.

Table 1 outlines the statutory results for FY2019 and
FY2018 on a comparable basis.

Table 1: Statutory results

Revenue

Gross Profit

% of Revenue

EBITDA

% of Revenue

EBIT

% of Revenue

Profit before tax

NPAT

NPATA

Actual
FY2019
$’M

724.2

347.1

47.9%

77.3

10.7%

54.6

7.5%

44.8

31.3

35.0

Actual
FY2018
$’M

695.4

338.6

48.7%

63.7

9.2%

44.8

6.4%

36.9

25.7

29.3

Statutory

Variance
$’M

Variance
%

28.8

8.5

13.6

9.8

7.9

5.6

5.7

4.1%

2.5%

-1.6%

21.4%

16.6%

21.8%

17.0%

21.6%

21.7%

19.5%

The key variances on a statutory basis between FY2019 and FY2018 are as follows:

Revenue

Gross profit

Revenue increase of $28.8M or 4.1% over PCP,
reflecting continued growth through existing
client base through expanded service offering as
well as new customer wins resulting in organic
growth of 2.4%, revenue growth also increased
by full year contribution of SEMA acquisition. The
revenue increase continues to be realised through
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.

The gross profit increase of $8.5M over PCP largely
driven by increased revenue. The Group achieved
gross profit margin of 47.9% which was down on
FY2018 of 48.7%. Although the Group benefited
from reduced outwork in FY19 due to Franklin WEB
NSW facility being fully operational, this was offset
by unrecovered paper cost increases negatively
impacting margin (timing difference). Gross profit
margin in all other areas of the business remained
stable to PCP.

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

EBITDA of $77.3M represents an increase of $13.6M or
21.4% over PCP, as well as an expansion of EBITDA
margin from 9.2% in PCP to 10.7%, achieved through
a combination of revenue growth, stable gross profit
offset by paper price impact, productivity gains,
continued focus on cost management as well as
the benefits arising from synergies from prior period
acquisitions. EBITDA also reflects write off of prior
period bad debts relating to Kalido, largely offset by
the reversal of deferred goodwill not paid which is
included in other income.

Production expenses (excluding depreciation) of
$163.0M are 22.5% to revenue compared to $160.3M
and 23.1% to revenue in PCP. The main driver of the
increase in production expense is to service additional
revenue however the % to revenue reduced to PCP due
to efficiencies during the period. Production expenses
also reflect the absorption of continued higher
energy costs.

Administration expenses (excluding depreciation
and amortisation) of $104.9M are 14.5% to revenue
compared to $106.0M and 15.2% to revenue in PCP,
the reduction as a % to revenue in current period
reflecting benefits of further synergies from prior
period acquisitions as well as a focus on controlling
of cost base.

Other expenses of $3.3M compared to PCP of $9.5M.
FY2018 includes restructure costs associated with
final phase of the AIW close down, SEMA acquisition
and integration costs, and acquisition costs related
to August 2017 equity raise. FY2019 is comprised of
restructuring and acquisition costs partly relating to
the final integration of SEMA as well as ongoing cost
base management, Victorian warehouse relocation
due to growth and restructure of Pareto Fundraising.

Annual Report 2019IVE Group Limited4.2 Year Ended FY2019 NON IFRS Pro Forma Financial Information

4.3 Balance sheet and cash flow

The FY2019 results below are presented before all
restructuring and acquisition costs. Compared to
FY2018 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: FY2019 non IFRS Pro Forma
financial information, FY2018 results
on a Pro Forma basis, and FY2019
Statutory results.

Revenue

Gross Profit

% of Revenue

EBITDA

% of Revenue

EBIT

% of Revenue

Profit before tax

NPAT

NPATA

Table 3: FY2019 Statutory NPAT
reconciliation to Pro Forma NPAT.

Statutory to pro forma NPAT reconciliation

Statutory NPAT

Restructure costs

Acquisition costs

Prior facility write off costs

Tax effect of adjustments

Pro forma NPAT

Statutory

Pro Forma (ex restructure and acquisition)

Variance
$’M

Variance
%

28.8

8.5

7.2

3.4

2.3

1.4

1.6

4.1%

2.5%

-1.6

9.8%

5.5%

6.2%

1.9%

4.9%

4.5%

4.4%

Actual
FY2019
$’M

724.2

347.1

47.9%

77.3

10.7%

54.6

7.5%

44.8

31.3

35.0

Actual
FY2019
$’M

724.2

347.1

47.9%

80.4

11.1%

57.7

8.0%

48.7

33.8

37.5

Actual
FY2018
$’M

695.4

338.6

48.7%

73.2

10.5%

54.3

7.8%

46.4

32.4

35.9

FY19
Actual
$’M

31.3

3.1

0.5

0.7

-1.3

33.8

Table 4 sets out the indebtedness of IVE on a
statutory basis as at 30th June 2019.

Table 4: FY2019
Statutory indebtedness.

Borrowings – short term

Borrowings – long term

Borrowings – Sub Total

Cash

Net Debt

FY19 Net debt to pro forma EBITDA

Actual June
FY2019
$’M

6.3

168.9

175.2

-31.5

143.7

1.79

Net debt to pro forma EBITDA of $80.4M 1.79x.

Equipment finance borrowings increased due to the
installation of a new high speed digital ink jet press
relating to the SEMA acquisition, integration, and the
group’s targeted communication’s growth strategy.
Increase in borrowings also related to funding of
higher working capital balance due to temporarily
higher levels of paper inventory in the period.

Statutory free cash conversion to EBITDA of 80.8%
impacted by increased working capital due to higher
paper inventory holdings. The cash flow also reflects
finalisation of our significant growth phase capital
investment, as well as payments for acquisitions
related to SEMA deferred goodwill consideration in H1
of FY2019. There is no further goodwill consideration
payable from prior acquisitions.

During the period the Group refinanced its senior debt
facilities for a new four year term resulting in additional
facility and covenant headroom at improved pricing
with benefits to flow to FY2020 and beyond.

FY20 outlook

Additional information

For further information contact:

Geoff Selig
Executive Chairman
+ 61 2 9089 8550

Darren Dunkley
Chief Financial Officer
+ 61 2 8020 4400

• Expected solid performance positions us well
to generate strong free cashflow over the
year ahead.

• Following a period of heavy investing in a

number of strategic growth initiatives, FY20
capital expenditure will reduce to circa $8-10M
(excluding the MIS upgrade/enhancement).

• No further goodwill consideration payable

from prior acquisitions.

• Restructure costs are once again expected to

be minimal.

Annual Report 2019IVE Group Limited
Directors’ report

For the year ended 30 June 2019

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 2019 and the auditor’s report thereon.

Principal activities

Operating and financial review

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;

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

• Personalised communications including marketing
automation, marketing mail, publication mail,
eCommunications, multi-channel solutions and
call centre services;

• Data analytics, customer experience strategy,

CRM; and

• Outsourced communications solutions for

large organisations including development of
customised multi-channel management models
covering creative and digital services, supply chain
optimisation, inventory management, warehousing
and logistics.

The Group services all major industry sectors in
Australia including financial services, publishing,
retail, communications, property, clubs and
associations, not-for-profit, utilities, manufacturing,
education and government.

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

The profit after tax of the Group for the year ended
30 June 2019 was $31,304 thousand (2018: $25,715
thousand). A review of operations and results of the
Group for the year ended 30 June 2019 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 7.7
Australian cents per share, fully franked, to be paid
on 24 October 2019 to shareholders on the register at
18 September 2019.

Total dividends of $23,851 thousand were declared
and paid by the Company to members during the
2019 financial year. Further details on dividends is
included in note 20 of the Financial Report.

Significant changes in the
state of affairs

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.

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

Ceased:
5 August 2019

Geoff has over 30 years’ experience in the marketing communications sector.
Geoff was managing director of the IVE Group prior to moving in to the role of
executive chairman following the Company’s listing on the ASX in December 2015.

Geoff is a director Caxton Group and Caxton Print Holdings, and also sits on
the board of 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. His expertise lies in his
ability to lead through significant change, from business turnarounds to growth
strategies such as building greenfield facilities. He has a proven track record
and passion for delivering customer centric strategies, including new product
innovation and market launch, implementation of complex importing supply
chains and large capital investment projects.

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

Independent Non-executive
Director

Appointed:
25 November 2015

Gavin is an experienced director, executive and lawyer. Gavin is currently a director
of Smartgroup Corporation Limited (ASX: SIQ) 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.

Committees: Chair of the Nominations & Remuneration Committee and Member
of the Audit, Risk & Compliance Committee.

Annual Report 2019IVE Group LimitedInformation on Directors (cont.)

Information on Directors (cont.)

Director

Experience, special responsibilities and other directorships

Director

Experience, special responsibilities and other directorships

Carole Louise Campbell

Independent Non-executive
Director

Appointed:
21 November 2018

Carole Campbell is a professional company director with more than 30 years’
experience across a diverse range of industries including professional services,
financial services, media, mining and industrial services.

Carole commenced her career with KPMG and has held senior finance roles with
Macquarie Group, Westpac Institutional Bank, Seven West Media, Bis Industries
and Merivale.

Carole is a Non-Executive Director and Chair of Audit Committee of FlexiGroup
Limited (ASX: FXL) and Deputy Chair of Council and Chair of the Finance, Audit
and Risk Management Committee of the Australian Film Television and Radio
School. She is also a Non-Executive Director of The Sydney Film Festival.

Carole is a Fellow of Chartered Accountants Australia and New Zealand (FCA)
and a Graduate Member of the Australian Institute of Company Directors (GAICD).

Committees: Chair of the Audit, Risk & Compliance Committee.

Paul Stephen Selig

Executive Director

Appointed:
10 June 2015

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 a director of the Company since 2012 and appointed to IVE Group Limited on
its incorporation in 2015. Paul is an experienced director and investor having run
the Caxton Group family office for over 15 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.

James Scott
Charles Todd

Independent Non-executive
Director

Appointed:
10 June 2015

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 also a Non-Executive Director of two other ASX listed companies,
HRL Holdings Limited and Coventry Group Limited.

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.

Committees: Member of the Audit, Risk & Compliance Committee and
Nominations & Remuneration Committee.

Sandra Margaret Hook

Independent Non-executive
Director

Appointed:
1 June 2016

Sandra 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.

Andrew Charles
Harrison

Independent Non-executive
Director

Appointed:
25 November 2015

Ceased:
20 November 2018

Since 2000 she has also served as a non-executive director on listed, public and
private companies and government bodies. Sandra is currently director of
digital/technology companies RXP Services Ltd (ASX: RXP), MedAdvisor Ltd
(ASX: MDR) and .au Domain Administration Ltd as well as the Sydney Fish Market.
She is a trustee of the Sydney Harbour Federation Trust.

Committees: Member of the Nominations & Remuneration Committee.

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 currently a non-executive director of Capitol Health Limited, Bapcor Limited
and WiseTech Global Ltd. He was previously a director of Estia Health Limited
and Xenith IP Group Limited. Andrew was previously a Senior Manager at Ernst
& Young (Sydney and London) and Gresham Partners Ltd, and an Associate at
Chase Manhattan Bank (New York). Andrew holds a Bachelor of Economics from
the University of Sydney and a Master of Business Administration from Wharton,
and is a chartered accountant.

Company Secretary

Naomi Dolmatoff

Darren Dunkley

Naomi was appointed as joint Company Secretary
on 26 March 2019. Naomi is an experienced
Company Secretary and has worked with ASX-listed
entities in the financial services, technology,
telecommunications and mining and resources
industries. Naomi holds a Bachelor of Commerce
(Finance) with distinction and a graduate Diploma
in Applied Corporate Governance. Naomi is also
an Associate of both the Governance Institute of
Australia and the Institute of Chartered Secretaries
and Administrators (UK).

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.

Emma Lawler

Emma was also a joint Company Secretary of IVE
during the period. Emma ceased as joint Company
Secretary on 26 March 2019.

Annual Report 2019IVE Group LimitedMeetings 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 and
Compliance
Committee (ARCC)

Nominations &
Remuneration
Committee (NRC)

Other
Committees

Eligible

Attended

Eligible

Attended

Eligible

Attended

Eligible

Attended

Geoff Selig

Warwick Hay

Gavin Bell

Sandra Hook

Paul Selig

James Todd

Carole Campbell*

Andrew Harrison**

–

* Carole was appointed as a director on 21 November 2018.
** Andrew ceased to be a director on 20 November 2018.

Directors’ interest and benefits

Environmental regulation

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 56).

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

Indemnification and insurance
of auditor

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.

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.

Likely developments

Insurance premiums

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.

During the financial year the Company has paid
premiums in respect of directors’ and officers’ liability
insurance contracts for the year ended 30 June 2019.
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
2020. 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.

Annual Report 2019IVE Group LimitedRemuneration Report (Audited)

Introduction

This Remuneration Report (Report), which has been
audited, describes the Key Management Personnel
(KMP) remuneration arrangements for the period
ended 30 June 2019 for IVE, in accordance with the
Corporations Act 2001 (Cth) (Corporations Act) and
its regulations.

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.

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.
The remuneration framework was reviewed again
in 2019. There have been no changes to the overall
framework, quantum or components of any member
of the KMP for the 2020 financial year.

The members of the Nominations and Remuneration
Committee (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.

As discussed on pages 44 to 49, the 2019 financial
year saw a strong financial performance across
the group. This is in the context of a very competitive
market and our key competitors not achieving similar
levels of performance. The remuneration outcomes
for the executive KMP reflect this success but overall
satisfy the goals of the remuneration framework.

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 Harrison1

Sandra Hook

James Todd

Carole Campbell2

Executive Directors

Geoff Selig

Warwick Hay3

Paul Selig

Role

Independent Non-Executive Director

Executive Chairman

Managing Director

Executive Director

Executive Key Management Personnel

Matthew (Matt) Aitken

Chief Executive Officer (appointed 5 August 2019)
Chief Operating Officer (ceased 5 August 2019)

Darren Dunkley

Chief Financial Officer & Company Secretary

1 Andrew Harrison ceased to be a Director on 20 November 2018.
2 Carole Campbell was appointed as a Director on 21 November 2018.
3 Warwick Hay resigned as Managing Director effective 5 August 2019 but will remain employed until 31 January 2020.

Overview of IVE Group’s remuneration framework for executive KMP

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

• Be competitive and reasonable to attract and

retain key talent;

• Align to IVE’s strategies and business objectives;

• Provide a balance between fixed and

variable rewards;

• Be transparent and easily understood; and

• Be acceptable to shareholders.

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

Governance

IVE Group has established the Nominations &
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.

Annual Report 2019IVE Group LimitedExternal remuneration consultants

Short term incentive (STI)

The Terms of Reference for the NRC requires that any
remuneration consultants engaged be appointed by
the NRC. During 2019 IVE did not engage the services
of any external remuneration consultants.

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.

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 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. As indicated in the 2018
remuneration report, fixed remuneration was
reviewed in 2018 and was implemented from 1 July
2018. The NRC has also reviewed fixed remuneration
for executive KMP for the 2020 financial year and
determined not to increase fixed remuneration.
The NRC believes that current fixed remuneration
remains appropriate.

Paying executive KMP the right fixed remuneration is
a key tool in attracting and retaining the best talent.
The Company continues to perform soundly and as
shown in the table on page 49, both revenue and
EBITDA continue to grow.

Fixed remuneration is the major component of
the Executive Chairman’s remuneration. Through
his family arrangements, he has an interest in
a substantial shareholding in the Company.
This provides significant alignment with
shareholders’ experience.

In FY19, executive KMP (excluding Paul Selig) were
eligible to receive an STI payment of between 19%
and 21% of fixed remuneration. The STI is a cash
incentive payment and full payment is conditional on
achievement of the following:

• 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 which includes strategic and discretionary
measurements. Discretionary measurements vary
depending on the nature and specific strategic
areas attributable to the executive KMP to align
with the IVE’s strategic objectives. Discretionary
payments are linked to initiatives such as:

– workplace health and safety;

– risk management;

– new business and organic and inorganic

growth opportunities;

– customer retention; and

– stakeholder relationships.

The Board determines the STI payment for executive
KMP by allocating a percentage weighting across
the above measures. At the end of the financial year,
the Board assesses the individual and collective
performance against the STI measures.

The percentage weightings across financial and
discretionary targets, and the assessed performance
achieved during FY19 for each of the KMP to whom an
STI payment was made was as follows.

STI Target Measures (%)

KMP

Geoff Selig

Warwick Hay

Matt Aitken

Darren Dunkley

Group EBITDA
target (%)

Individual
financial targets
(%)

Discretionary and
non-financial
targets (%)

Total (%)

STI Achieved (%)

25.00

75.00

50.00

–

11.25

10.00

37.50

75.00

13.75

15.00

12.50

100.00

89.00

82.75

88.50

Details of the actual dollar amounts paid to each
executive KMP are set out in the table on page 60.

The STI target for FY19 was increased over FY18
by the NRC to ensure a greater proportion of
remuneration at-risk. No increase has been made to
the STI target for FY20.

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 was last approved by
shareholders at IVE’s 2018 Annual General Meeting
(AGM). 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’s long-term strategic objectives so that executive
KMP will only receive a substantial component
of LTI when there has been strong absolute and
relative performance.

The grant of Rights during FY19 to the Executive
Chairman and Managing Director was approved
by shareholders at the 2018 AGM and the Rights to
be granted to the Executive Chairman for FY20 will
be submitted for approval by shareholders at the
2019 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. The Board also has the discretion
to change the LTI Plan and to determine whether LTI
grants will be made in future years. There is
no-retesting of performance hurdles.

The Board makes changes to the level of LTI to grant
each year based on reviews of total remuneration
packages for executives. In FY19 the Board, following
review by the NRC, agreed to grant an equity-based
LTI to Geoff Selig, Executive Chairman. This was to
better align the Executive Chairman’s remuneration
package with other executives and the results of the
peer review undertaken. The NRC has again reviewed
this position and will grant an equity-based LTI to
Geoff Selig as Executive Chairman in FY20, as well
as other executives. Due to Paul Selig’s executive role
being specific in nature, he does not participate in the
LTI Plan.

The NRC decided to not to increase the level of long
term incentives for FY20. They will remain in-line
with the same quantum agreed in respect of FY19.
The NRC believe that the issue of long term equity
incentivises and aligns management’s remuneration
with shareholders’ longer term interests.

The staged approach to executive remuneration
over recent years has led to the current level of
executive remuneration which the Board feels is
appropriate in the challenging and competitive
sector in which the Group operates. All rewards, other
than fixed remuneration, are subject to achieving the
performance conditions outlined above.

Annual Report 2019IVE Group LimitedAssessment 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 are made by the
Chair of the NRC for Board approval.

The NRC assesses the actual performance of IVE 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 FY18 and FY19. Further detail
on remuneration is included in the tables at the end of this Report.

All in $

Geoff Selig

Warwick Hay

Matt Aitken

Darren Dunkley

Paul Selig1

FY19

FY18

FY19

FY18

FY19

FY18

FY19

FY18

FY19
FY18

STI

LTI – Number of Rights

Maximum

Actual

Granted

Vested

200,000

178,000

130,718

200,000

181,250

100,000

90,000

80,000

75,000

0
0

82,750

84,250

82,750

76,960

70,800

64,700

130,7182

67,5672

130,718

60,810

98,039

50,675

0
250,0001

0
0

N/A

Not applicable
(3 year vesting)
Not applicable
(3 year vesting)

Paul Selig was paid a discretionary bonus payment of $250,000 during FY18 as announced to the ASX on September 2017, which
is not part of the STI framework.

2 Warwick Hay resigned as Managing Director effective 5 August 2019 but will remain employed until 31 January 2020.

In accordance with the IVE Group Equity Incentive Plan Rules, these unvested performance rights have lapsed and were forfeited.

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

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.

As shown below, no changes were made to executive
KMP remuneration for FY20 following the assessment
of performance, the annual review of fixed
remuneration and STI and LTI targets.

All in $

Fixed Remuneration1

STI

LTI

FY18
Actual

FY19
Actual

FY20
Actual

FY18
Actual

FY19
Actual

FY20
Maximum

FY18
Grant2

FY19
Grant2

FY20
Grant2

850,000

952,000

181,250

178,000

200,000

200,0003

500,000

525,000

84,250

82,750

N/A

100,0005

200,0005 N/A

486,501

504,000

79,960

82,750

100,000

90,000

200,000

407,882

420,000

64,700

70,800

80,000

75,000

150,000

303,501

330,000

250,000

N/A4

Geoff
Selig

Warwick
Hay5

Matt
Aitken

Darren
Dunkley

Paul
Selig

Fixed remuneration includes superannuation and excludes annual leave loading.

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

FY20 LTI grant is subject to shareholder approval.

4 Paul Selig was appointed as an Executive effective 1 October 2017 and as such, 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.

5 Warwick Hay resigned as Managing Director effective 5 August 2019. In accordance with the IVE Group Equity Incentive Plan

Rules, the unvested performance rights granted under the FY18 and FY19 LTI have lapsed and were forfeited.

The Board uses a fair value method to determine
the value of performance rights issued under the LTI
Plan, which was last approved by shareholders in
2018. This is consistent with the required accounting
treatment of rights and the basis on which the
KMP remuneration arrangements were agreed. The
Board recognises that some stakeholders advocate
the use of the face value method to determine the
value of performance rights. A face value approach

does not take into account the risk that rights
may not vest and that the rights are not entitled
to dividends. The executive KMPs remuneration
arrangements were agreed assuming a fair value
approach. In a year where there is no change to
remuneration arrangements, a move to a face value
approach would effectively reduce the executive
KMPs remuneration.

Annual Report 2019IVE Group LimitedIf a face value method were used, the FY19 LTI and proposed FY20 LTI grants for each of the executive KMP
would be as indicated below:

Geoff Selig

Warwick Hay3

Matt Aitken

Darren Dunkley

Paul Selig

FY19 Fair Value
(No. of rights)

FY19 Face Value1
(No. of rights)

Proposed
FY20 Fair Value
(No. of rights)

Proposed
FY20 Face Value2
(No. of rights)

130,718

98,039

86,956

65,217

N/A

147,058

N/A

147,058

110,294

97,560

N/A

97,560

73,170

N/A

1 Based on the closing share price on 2 July 2018 of $2.30 per share
2 Based on the closing share price on 1 July 2019 of $2.05 per share
3 Warwick Hay resigned as Managing Director effective 5 August 2019. In accordance with the IVE Group Equity Incentive Plan

Rules, the 130,718 unvested performance rights granted under the FY19 LTI have lapsed and were forfeited.

How reward is linked to performance

Performance indicators and link to performance

IVE’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

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

There has been no LTI vesting for executive KMP since
listing on the ASX. The first possible vesting date for
executive KMP is after the FY19 financial results are
released to the market and targets will be tested at
that time. Vesting performance will be reported in the
FY20 annual report.

In FY19, 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 six years are shown below:

Revenue ($m)

EBITDA ($m)

Net profit after tax ($m)

Dividend payment (cents per share)1

Dividend payout ratio1

Share price change ($)2

FY14

FY15

FY16

FY17

FY18

FY19

303.5

22.9

6.4

N/A

337.4

30.9

9.7

N/A

382.0

496.6

695.4

724.2

44.9

22.3

N/A

55.2

24.6

12.7

69%

73.2

32.4

15.5

71%

80.4

33.8

16.3

71%

(0.043)

+0.162

(0.23)

The above results are prepared on a pro forma basis3.

1 Only applicable post-listing on ASX.
2 Calculated as close price on 30 June for the applicable year.
3 Pro forma results exclude all restructure and acquisition costs. This better reflects the underlying operating performance and is

consistent with guidance.

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 21 November 2018, offers were made granting
594,767 performance rights under the Senior
Leadership Team Plan. These Rights vest following
the release of the FY21 financial results if certain
performance conditions are met during the
Performance period which is 1 July 2018 to 30 June
2021. Of these, 130,718 unvested performance
rights were granted to Warwick Hay who resigned
as Managing Director effective 5 August 2019.
Accordingly, these performance rights have lapsed
and were forfeited.

• On 3 April 2019, additional offers were made

granting 65,358 performance rights under the
Senior Leadership Team Plan as an adjustment
to the non-KMP FY19 LTI. These Rights vest
following the release of the FY21 financial results
if certain performance conditions are met during
the Performance period which is 1 July 2018 to
30 June 2021.

In total there were 1,017,740 unvested Rights at
30 June 2019 from the FY17, FY18 and FY19 offers.
Of these, 198,285 unvested performance rights were
granted to Warwick Hay who resigned as Managing
Director effective 5 August 2019. Accordingly, these
performance rights have lapsed and were forfeited.

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, FY18 and FY19 are as follows:

Feature

Terms of the IVE Group Equity Incentive Plan

Type of security

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.

Valuation

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 and 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.

Performance
Period

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

Annual Report 2019IVE Group Limited

Feature

Terms of the IVE Group Equity Incentive Plan

Performance
Conditions

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

• Earnings Per Share (EPS) compound annual growth over the Performance Period. EPS
growth will be calculated as IVE Group’s Net Profit After Tax (NPAT) divided by the
undiluted weighted average shares on issue throughout the Performance Period, using the
following formula

(Benchmark 1); and

• Relative Total Shareholder Return (TSR) performance of the Company in comparison to
similar companies in a peer group determined by the Board. The peer group for the FY19
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

Forfeiture

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

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.

Clawback

TSR Peer Group for FY19 Offer

OPG

OVT

WLL

CWY

MIL

SLM

SPO

SGN

SWM

ORA

PPG

GWA

DCG

APN

SIQ

MMS

QMS

KSC

LAU

CKF

OML

PRT

SXL

TRS

RCG

TGA

KMD

AMA

FWD

GUD

PGH

Opus Group Limited

Ovato 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

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.

Annual Report 2019IVE Group Limited

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 FY19
was $423,296, being 42% of the approved fee pool.
There is no intent to seek approval to increase the
Non-executive Director fee pool at the 2019 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.

The remuneration paid to Non-Executive Directors is
detailed in the tables later in this Report.

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 FY19 by Non-Executive Directors.

During FY19, the Board did not increase fees paid
to Non-Executive Directors and no increase is
proposed for FY20. The current annual fees provided
to Non-Executive Directors are shown below
(inclusive of superannuation):

Chair fee

Non-Executive Director fee
(effective since 1 July 2018)

N/A as Executive
Chairman

$105,000 (each)

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:

Paul Selig

Executive 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:

Name:

Title:

Incentives – discretionary bonus

Termination – 3 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.

Warwick Hay

Managing Director1
1

Warwick Hay resigned as Managing Director effective 5 August 2019 but will remain employed
until 31 January 2020

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 – 9 months restraint provisions.

Annual Report 2019IVE Group LimitedName:

Title:

Darren Dunkley

Chief Financial Officer

Terms of Agreement:

No fixed term – subject to termination provisions detailed below

Details:

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

Termination:

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

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

Post-employment – 3 months restraint provisions.

Redundancy

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

Name:

Title:

Matt Aitken

Chief Executive Officer (appointed 5 August 2019)

Chief Operating Officer (ceased 5 August 2019)

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 – 9 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.

Details of Remuneration

The table below provides remuneration prepared for on a statutory basis for directors and executive KMPs year
ended 30 June 2019 (except as noted below)

Fixed Remuneration

Variable Remuneration

Cash
salary
and fees4

Super-
annuation

Other
long term
benefits

Short
term
incentive

Fair value
of LTI
award

Total

Total
performance
related

Percentage
performance
related

Name

Year

Executive Directors

Geoff
Selig

Paul
Selig1

Warwick
Hay

2019

931,469

20,531

178,000

20,218

1,150,218

198,218

2018

829,951

20,049

181,250

1,031,250

181,250

2019

309,469 20,531

330,000

17.2%

17.6%

0.0%

2018

283,606 19,895

250,000

553,501

250,000

45.2%

2019

504,469 20,531

82,750

20,218

627,968

102,968

2018

479,951

20,049

84,250

10,450

594,700

94,700

Non-executive Directors

Gavin
Bell

Andrew
Harrison2

Carole
Campbell3

Sandra
Hook

James
Todd

2019

96,657

8,351

2018

82,192

7,808

2019

39,962

3,796

2018

82,192

7,808

2019

58,887

5,594

2018

2019

95,898

9,110

2018

82,192

7,808

2019

95,928

9,113

2018

82,192

7,808

Other Executive KMP

105,008

90,000

43,758

90,000

64,481

105,008

90,000

105,041

90,000

16.4%

15.9%

0.0%

16.9%

15.1%

Darren
Dunkley

Matt
Aitken

2019

350,995 20,531

52,238

70,800

15,163

509,727

85,963

2018

387,833

20,049

64,700

7,838

480,420

72,538

2019

493,231

20,531

82,750

20,218

616,730

102,968

16.7%

2018

466,452 20,049

76,960

9,405

572,866

86,365

15.1%

1 Paul Selig is not part of the STI framework but was awarded a discretionary bonus of $250,000 in FY18.
2 Andrew Harrison ceased to be a Director on 20 November 2018.
3 Carole Campbell was appointed as a Director on 21 November 2018.
4 Cash, salary and fees includes annual leave.

Annual Report 2019IVE Group LimitedRights granted to executive KMP

Director and Executive KMP Shareholding

FY19

KMP

Number of rights
granted in FY19

Vesting conditions

Grant Date

Fair value at
grant date

Expiry date

Geoff Selig

130,718

Warwick Hay1

130,718

Matt Aitken

130,718

Darren Dunkley

98,039

Relative TSR and
Compound annual EPS
growth over 3 years

21 November
2018

$200,000

21 November
2018

$200,000

21 November
2018

$200,000

21 November
2018

$150,000

After vesting following release
of FY21 financial results.
Any unvested Rights expire.

Warwick Hay resigned as Managing Director effective 5 August 2019. In accordance with the IVE Group Equity Incentive Plan
Rules, these unvested performance rights have lapsed and were forfeited.

FY18

KMP

Number of rights
granted in FY18

Vesting conditions

Grant Date

Fair value at
grant date

Expiry date

Warwick Hay1

67,567

Matt Aitken

60,810

Darren Dunkley

50,675

Relative TSR and
Compound annual EPS
growth over 3 years

17 November
2017

$100,000

17 November
2017

$90,000

17 November
2017

$75,000

After vesting following release
of FY20 financial results.
Any unvested Rights expire.

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:

Balance at
1 July 2018

Shares received
during the period on
exercise of Performance
Share Rights

Shares
acquired

Shares
disposed

Balance at
30 June 2019

Executive Directors

Geoff Selig, Executive Chairman1

Paul Selig1

Warwick Hay, Managing Director5

Non-executive Directors

Gavin Bell

Andrew Harrison2

Sandra Hook

James Todd

Carole Campbell3

Executive KMP

Darren Dunkley,
CFO and Company Secretary

Matt Aitken,
Chief Executive Officer4

11,210,231

11,260,231

535,681

122,697

90,956

12,919

105,836

48,051

–

11,210,231

11,260,231

535,681

122,697

90,9562

12,919

105,836

48,051

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.

2 Andrew Harrison ceased to be a Director on 20 November 2018. The closing balance above is reflective of the known balance at

Warwick Hay resigned as Managing Director effective 5 August 2019. In accordance with the IVE Group Equity Incentive Plan
Rules, these unvested performance rights have lapsed and were forfeited.

the date of ceasing to be a Director.

3 Carole Campbell was appointed as a Director on 21 November 2018.

FY17

KMP

Number of rights
granted in FY17

Vesting conditions

Grant Date

Fair value at
grant date

Expiry date

Geoff Selig

32,817

Warwick Hay

32,817

Matt Aitken

32,817

Darren Dunkley

19,690

Relative TSR and
Compound annual EPS
growth over 3 years

22 November
2016

$50,000

22 November
2016

$50,000

16 September
2016

$50,000

16 September
2016

$30,000

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

Note there were no Rights or options granted in FY16.

4 Matt Aitken held the role of Chief Operating Officer until 5 August 2019 and was appointed as Chief Executive Officer on

5 August 2019.

5 Warwick Hay resigned as Managing Director effective 5 August 2019 but will remain employed until 31 January 2020.

Loans to directors and executives

Shares under performance rights

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

Shares under option

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

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

In total there were 1,017,740 unvested Rights at 30
June 2019. Of these, 198,285 unvested performance
rights were granted to Warwick Hay who resigned
as Managing Director effective 5 August 2019.
Accordingly, these performance rights have lapsed
and were forfeited.

Annual Report 2019IVE Group LimitedShares issued on the exercise
of options

Shares issued on the exercise of
Performance Share Rights

There were no ordinary shares of IVE Group Limited
issued on the exercise of options during the year
ended 30 June 2019 and up to the date of this report.

75,502 rights vested during the year and 75,502
shares were issued on exercise of Rights during
the year.

This concludes the remuneration report, which has been audited.

Lead auditor’s independence
declaration

The Lead auditor’s independence declaration is set
out on page 73 and forms part of the directors’ report
for the financial year ended 30 June 2019.

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.

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial
year ended 30 June 2019, there have been:

no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and

ii.

no contraventions of any applicable code of professional conduct in relation to the audit.

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

KPMG

John Wigglesworth
Partner

Sydney

27 August 2019

Geoff Selig
Director

Dated at Sydney this 27th day of August 2019

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:

1. the non-audit services provided during the

financial year by KPMG as the external auditor
were compatible with the general standard of
independence for auditors imposed by the Act; and

2. any non-audit services provided during the

financial year by KPMG as the external auditor
did not compromise the auditor independence
requirements of the Corporations Act 2001 (Cth) for
the following reasons:

a) 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

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

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

28 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 ProfessionalStandards Legislation.Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of IVE Group Limited I declare that, to the best of my knowledge and belief, in relation to the audit of IVE Group Limited for the financial year ended 30 June 2019 there have been: i.no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii.no contraventions of any applicable code of professional conduct in relation to the audit. KPM_INI_01 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG John Wigglesworth Partner Sydney 27 August 2019 28 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 ProfessionalStandards Legislation.Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of IVE Group Limited I declare that, to the best of my knowledge and belief, in relation to the audit of IVE Group Limited for the financial year ended 30 June 2019 there have been: i.no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii.no contraventions of any applicable code of professional conduct in relation to the audit. KPM_INI_01 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG John Wigglesworth Partner Sydney 27 August 2019 28 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 ProfessionalStandards Legislation.Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of IVE Group Limited I declare that, to the best of my knowledge and belief, in relation to the audit of IVE Group Limited for the financial year ended 30 June 2019 there have been: i.no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii.no contraventions of any applicable code of professional conduct in relation to the audit. KPM_INI_01 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 KPMG John Wigglesworth Partner Sydney 27 August 2019 Annual Report 2019IVE Group Limited

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

Reporting entity

Basis of preparation

Significant accounting polices

Revenue

5. Other income

Personnel expenses

Expenses

Financial income and finance costs

Taxes

10. Cash and cash equivalents

11. Trade and other receivables

12.

Inventories

13. Property, plant and equipment

14.

Intangible assets and goodwill

15. Trade and other payables

16. Loans and borrowings

17. Employee benefits

18. Provisions

19. Share-based payments

20. Capital and reserves

21. Earnings per share

22. Acquisitions

23. Operating segments

24. Financial risk management and financial instruments

25. Operating leases

26. Capital commitments

27. Related parties

28. Group entities

29. Parent entity disclosure

30. Subsequent events

31. Auditor’s remuneration

32. Deed of cross guarantee

33.

1 July 2018 Restated

Directors’ declaration

Independent audit report to the members of IVE Group Limited

100

101

102

103

104

105

106

112

113

114

115

116

117

118

Consolidated statement of profit or loss and other
comprehensive income

For the year ended 30 June 2019

In thousands of AUD

Note

2019

2018

Revenue

Cost of sales

Gross profit

Other income

Production expenses

Administrative expenses

Other expenses

724,197
(377,134)

347,063
1,383
(177,838)
(112,691)
(3,254)

695,361
(356,742)

338,619
807
(172,653)
(112,521)
(9,487)

Results from operating activities

6, 7

54,663

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)

191
(10,031)

(9,840)

248
(8,152)

(7,904)

44,823

36,861

(13,519)

31,304

(11,146)

25,715

(579)
115

(1,007)
759

30,840

25,467

31,304

25,715

30,840

25,467

30,840

25,467

21
21

0.21
0.21

0.18
0.18

The notes on pages 79 to 116 are an integral part of these consolidated financial statements.

Annual Report 2019IVE Group LimitedConsolidated statement of financial position

Consolidated statement of changes in equity

As at 30 June 2019

In thousands of AUD

Assets

Cash and cash equivalents

Trade and other receivables

Inventories

Prepayments

Contract asset

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

Contract liabilities

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

2019

2018 restated*

10
11
12

9
13
14

15
16
17
4

15
16
17
18

31,501
113,586
66,016
3,076
47
3,901

22,325
118,282
47,115
2,559
–
5,226

218,127

195,507

13,536
135,278
163,612

17,536
123,681
168,741

312,426

309,958

530,553

505,465

100,957
6,192
18,882
6,734
2,864
2,006

111,522
16,442
18,493
–
1,285
1,815

137,635

149,557

–
167,349
6,182
13,580

681
134,890
6,079
14,917

187,111

156,567

324,746

306,124

205,807

199,341

156,468
(493)
49,832

156,318
25
42,998

205,807

199,341

For the year ended 30 June 2019

In thousands of AUD

Balance at 1 July 2018

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

Total transactions with owners of the Company

Balance at 30 June 2018

Balance at 1 July 2018

Initial application of AASB 9*

Adjusted balance 1 July 2018

Total comprehensive income for the year

Profit for the year

Other comprehensive income

Total comprehensive income for the year

19
20
20

3(s)

Transactions with owners of the Company

Performance share rights

Issue of share capital

Dividends to owners of the Company

19
20
20

Total transactions with owners of the Company

Note

Share
capital

Share-
based
payment
reserve

Hedging
reserve

Retained
earnings

Total
equity

98,820

100

38,608

137,616

–
–

–

–
57,498
–

57,498

–
–

–

85
–
–

156,318

173

156,318
–

156,318

173
–

173

–
–

–

–
150
–

150

–
–

–

(54)
–
–

(54)

–
(248)

(248)

–
–
–

–

(148)

(148)
–

(148)

–
(464)

(464)

–
–
–

–

25,715
–

25,715
(248)

25,715

25,467

–
–
(21,325)

85
57,498
(21,325)

(21,325)

36,258

42,998

199,341

42,998
(619)

199,341
(619)

42,379

198,722

31,304
–

31,304
(464)

31,304

30,840

–
–
(23,851)

(54)
150
(23,851)

(23,851)

(23,755)

Balance at 30 June 2019

156,468

119

(612)

49,832

205,807

* The Group has initially applied AASB 9 as at 1 July 2018. Under the transition method chosen, comparative information has not

been restated. Refer to note 3(s) on ‘Adoption of new accounting standards’.

The notes on pages 79 to 116 are an integral part of these consolidated financial statements.

* Refer to note 33 on restatement.

The notes on pages 79 to 116 are an integral part of these consolidated financial statements.

Annual Report 2019IVE Group Limited

Consolidated statement of cash flows

For the year ended 30 June 2019

Notes to the Consolidated Financial Statements

For the year ended 30 June 2019

In thousands of AUD

Note

2019

2018

1. Reporting entity

2. Basis of preparation

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

799,817
(734,140)

750,486
(687,997)

65,677
191
(7,738)
(7,477)
(500)
(2,716)

62,489
211
(7,257)
(3,957)
(1,267)
(13,552)

Net cash from operating activities

47,437

36,667

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

43
(21,935)
–
(6,000)

1,095
(36,310)
(11,606)
(3,821)

(27,892)

(50,642)

–
27,000
(5,000)
(1,022)
(23,851)
(7,496)

55,582
–
(16,000)
(2,297)
(21,325)
(3,511)

(10,369)

12,449

9,176
22,325

31,501

23,851
(1,526)

22,325

The notes on pages 79 to 116 are an integral part of these consolidated financial statements.

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 2019 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;

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

• Personalised communications including marketing
automation, marketing mail, publication mail,
eCommunications, multi-channel solutions, and
call centre services;

• Data analytics, customer experience strategy,

CRM; 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.

(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
27 August 2019. 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.

Annual Report 2019IVE Group Limited(c) Use of estimates and judgements

(ii) Assumptions and estimation

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 2018.

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(e) & (f) – estimation of useful lives of assets;

• Note 3(k) – provisions; and

• Note 24 – Level 3 fair value of contingent

consideration, interest rate swaps and forward
exchange contracts.

uncertainties

Information about assumptions and estimation
uncertainties that have a significant risk of resulting
in a material adjustment in the year ending 30 June
2019 is included in the following notes:

• Note 3(i)(ii) & 14 – impairment testing for cash
generating units containing goodwill; and

• Note 22 – acquisitions: fair value measured on a

provisional basis.

Measurement of fair values

When measuring the fair value of an asset or a
liability, the group uses market observable data if
possible. Fair values are categorised into different
levels in a fair value hierarchy based on the inputs
used in the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active
markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included

within Level 1 that are observable for the asset or
liability, either directly (i.e., as prices) or indirectly
(i.e., derived from prices).

• Level 3: inputs for the asset or liability that
are not based on observable market data
(unobservable inputs).

3. Significant accounting policies

The accounting policies set out below have been
applied consistently during the period presented in
these consolidated financial statements, and have
been applied consistently by all entities in the Group,
except for the adoption of new accounting standards
(see Note 3(s)).

(a) Basis of consolidation

(i) Business combinations

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

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

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

(ii) Subsidiaries

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

(iii) Transactions eliminated on consolidation

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

(b) Foreign currency

Foreign currency transactions

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

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

(i) Recognition and initial measurement

Trade receivables and debt securities issued are
initially recognised when they are originated. All
other financial assets and financial liabilities are
initially recognised when the Group becomes a party
to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable
without a significant financing component) or
financial liability is initially measured at fair value
plus, for an item not at fair value through profit and
loss (FVTPL), transaction costs that are directly
attributable to its acquisition or issue. A trade
receivable without a significant financing component
is initially measured at the transaction price.

(ii) Classification and subsequent

measurement

Effective 1 July 2018, the Group classifies its financial
instruments in accordance with AASB 9 in the following
measurement categories: at amortised cost, at fair
value through profit and loss (FVTPL) and at fair value
through other comprehensive income (FVOCI).

Financial assets are not reclassified subsequent to
their initial recognition unless the Group changes
its business model for managing financial assets,
in which case all affected financial assets are
reclassified on the first day of the first reporting
period following the change in the business model.

Annual Report 2019IVE Group LimitedA financial asset is measured at amortised cost if
it meets both of the following conditions and is not
designated as at FVTPL:

•

It is held within a business model whose objective
is to hold assets to collect contractual cash flows;
and

Its contractual terms give rise on a specified dates
to cash flow that are solely payments of principal
and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets
both of the following conditions and is not designated
as at FVTPL:

•

It is held within a business model whose objective
is achieved by both collecting contractual cash
flows and selling financial assets; and

Its contractual terms give rise on a specified dates
to cash flow that are solely payments of principal
and interest on the principal amount outstanding.

including any interest expense, are recognised
in profit and loss. Other financial liabilities are
subsequently measured at amortised cost using
the effective interest method. Interest expense and
foreign exchange gains and losses are recognised in
profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.

(iii) Derecognition

Financial assets

The Group derecognises a financial asset when the
contractual rights to the cash flows from the financial
asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which
substantially all of the risks and rewards of ownership
of the financial asset are transferred or in which the
Group neither transfers nor retains substantially all
of the risks and rewards of ownership and it does not
retain control of the financial asset.

On initial recognition of an equity investment that is
not held for trading, the Group may irrevocably elect
to present subsequent changes in the investment’s
fair value in OCI. This election is made on an
investment-by-investment basis.

The Group enters into transactions whereby it transfers
assets recognised in its statement of financial position
but retains either all or substantially all of the risks
and rewards of the transferred assets. In these cases,
the transferred assets are not derecognised.

All financial assets not classified as measured at
amortised cost or FVOCI as described above are
measured at FVTPL. This includes all derivative
financial assets. On initial recognition, the Group
may irrevocably designate a financial asset that
otherwise meets the requirements to be measured
at amortised cost or at FVOCI as at FVTPL if doing
so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.

Financial assets at amortised costs

These assets are subsequently measured at amortised
cost using the effective interest method. The amortised
cost is reduced by impairment losses. Interest income,
foreign exchange gains and losses and impairment
are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.

Financial liabilities – Classification, subsequent
measurement and gains and losses

Financial liabilities are classified as measured at
amortised cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held-for-
trading, it is a derivative or it is designated as such
on initial recognition. Financial liabilities at FVTPL
are measured at fair value and net gains and losses,

Financial liabilities

The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled
or expire. The Group also derecognises a financial
liability when its terms are modified and the cash
flows of the modified liability are substantially
different, in which case a new financial liability based
on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference
between the carrying amount extinguished and the
consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in
profit or loss.

(iv) Offsetting

Financial asset and financial liabilities are offset
and the net amount presented in the statement of
financial position when, and only when the Group
currently has a legally enforceable right to set off
the amounts and it intends either to settle them on
a net basis or to realise the asset and settle the
liability simultaneously.

(v) Derivative financial instruments and

hedge accounting

Derivative financial instruments and hedge
accounting – Policy applicable from 1 July 2018

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
the host contract is not a financial asset and certain
criteria are met.

Derivatives are initially measured at fair value.
Subsequent to initial recognition, derivatives are
measured at fair value, and changes therein are
generally recognised in profit or loss.

The Group designates certain derivatives as
hedging instruments to hedge the variability in cash
flows associated with highly probable forecast
transactions arising from changes in foreign
exchange rates and interest rates.

At inception of designated hedging relationships, the
Group documents the risk management objective and
strategy for undertaking the hedge. The Group also
documents the economic relationship between the
hedged item and the hedging instrument, including
whether the changes in cash flows of the hedged
item and hedging instrument are expected to offset
each other.

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
OCI and accumulated in the hedging reserve. The
effective portion of changes in the fair value of the
derivative that is recognised in OCI is limited to the
cumulative change in fair value of the hedged item,
determined on a present value basis, from inception
of the hedge. Any ineffective portion of changes in the
fair value of the derivative is recognised immediately
in profit or loss.

The Group designates only the change in fair value
of the spot element of forward exchange contracts
as the hedging instrument in cash flow hedging
relationships. The change in fair value of the forward
element of forward exchange contracts (‘forward
points’) is separately accounted for as a cost of
hedging and recognised in a costs of hedging reserve
within equity.

When the hedged forecast transaction subsequently
results in the recognition of a non-financial item such
as inventory, the amount accumulated in the hedging
reserve and the cost of hedging reserve is included
directly in the initial cost of the non-financial item
when it is recognised.

For all other hedged forecast transactions, the
amount accumulated in the hedging reserve and the
cost of hedging reserve is reclassified to profit or loss
in the same period or periods during which the hedged
expected future cash flows affect profit or loss.

If the hedge no longer meets the criteria for hedge
accounting or the hedging instrument is sold, expires,
is terminated or is exercised, then hedge accounting is
discontinued prospectively. When hedge accounting
for cash flow hedges is discontinued, the amount
that has been accumulated in the hedging reserve
remains in equity until, for a hedge of a transaction
resulting in the recognition of a non-financial item,
it is included in the non-financial item’s cost on its
initial recognition or, for other cash flow hedges, it
is reclassified to profit or loss in the same period or
periods as the hedged expected future cash flows
affect profit or loss.

If the hedged future cash flows are no longer
expected to occur, then the amounts that have been
accumulated in the hedging reserve and the cost of
hedging reserve are immediately reclassified to profit
or loss.

Derivative financial instruments and hedge
accounting – Policy applicable before
1 January 2018

The policy applied in the comparative information
presented for 2017 is similar to that applied for
2018. However, for all cash flow hedges, including
hedges of transactions resulting in the recognition of
non-financial items, the amounts accumulated in the
cash flow hedge reserve were reclassified to profit
or loss in the same period or periods during which
the hedged expected future cash flows affected
profit or loss. Furthermore, for cash flow hedges that
were terminated before 2017, forward points were
recognised immediately in profit or loss.

Annual Report 2019IVE Group Limited(d) 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.

(e) 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.

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

3 – 20 years

• Fixtures and fittings

5 – 10 years

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

(f) 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.

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.

(g) 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.

(h) 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.

(i) Impairment

(i) Non-derivative financial assets

The impairment of financial assets is based on the
expected credit loss (ECL) approach, as introduced
by AASB 9. Prior to the introduction of AASB 9,
the incurred loss model of AASB 139 required the
recognition of an allowance once a loss event
occurred. An additional allowance was recorded
based on past bad debts experience and possible
future defaults. AASB 9 replaces the incurred loss
model under AASB 139.

The Group recognizes loss allowances for ECLs on
financial assets measured at amortised costs.

The Group measures loss allowance at an amount
equal to lifetime ECL.

Loss allowances for trade receivables are always
measured at an amount equal to lifetime ECLs.

When determining whether the credit risk of a
financial asset has increased significantly since
initial recognition and when estimating ECLs, the
Group considers reasonable and supportable
information that is relevant and available without

undue cost or effort. This includes both quantitative
and qualitative information and analysis, based on
the Group’s historical experience and informed credit
assessment including forward-looking information.

The Group assumes that the credit risk on a financial
asset has increased significantly if it is more than 90
days past due.

The Group considers a financial asset to be in
default when the debtor is unlikely to pay its credit
obligations to the Group in full, without recourse by
the Group to actions such as realizing security (if any
is held).

Lifetime ECLs are the ECLs that result from all
possible default events over the expected life of a
financial instrument.

The maximum period considered when estimating
ECLs is the maximum contractual period over which
the Group is exposed to credit risk.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit
losses. Credit losses are measured as the present
values of all cash shortfalls (i.e. the difference
between the cash flows due to the entity in
accordance with the contract and the cash flows
that the Group expects to receive).

ECLs are discounted at the effective interest rate of
the financial asset.

Credit-impaired financial assets

At each reporting date, the Group assesses whether
financial assets carried at amortised cost are
credit-impaired. A financial asset is “credit-impaired”
when one or more events that have a detrimental
impact on the estimated future cash flows of the
financial assets have occurred.

Evidence that a financial asset is credit-impaired
includes the following observable data:

• A breach of contract such as a default or being

more than 90 days past due;

•

It is probable that the debtor will enter bankruptcy
or other financial reorganization.

Annual Report 2019IVE Group LimitedPresentation of allowance for ECL in the statement
of financial position

Loss allowances for financial assets measured at
amortised cost are deducted from the gross carrying
amount of the assets.

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.

Write-off

The gross carrying amount of a financial asset
is written off when the Group has no reasonable
expectation of recovering a financial asset in its
entirety or a portion thereof. The Group individually
makes an assessment with respect to the timing
and amount of write-off based on whether there is
a reasonable expectation of recovery. The Group
expects no significant recovery from the amount
written off. However, financial assets that are written
off could still be subject to enforcement activities
in order to comply with the Group’s procedures for
recovery of amounts due.

(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.

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.

(j) 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

(l) Revenue from contracts

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.

(k) 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.

with customers

The Group has initially applied AASB 15 from 1 July
2018. Information about the Group’s accounting policies
relating to contracts with customers is below. The effect
of initially applying AASB 15 is described in Note 3(s).

Revenue is measured based on the consideration
specified in a contract with a customer. The Group
recognises revenue over-time, or at a point in time.

Recognising of revenue over-time

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.

Revenue recognition under AASB 15 (applicable from
1 July 2018) – Revenue and associated costs are
recognised over time. Revenue is recognised on the
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.

Recognising of revenue at a point in time

The Group recognises revenue of when it transfers
control over a good or service to a customer.
Customers obtain control when the goods are
delivered to and have been accepted. Invoices are
generated at that point in time. Invoices are usually
payable within 30 days.

Revenue recognition under AASB 15 (applicable from
1 July 2018) – Revenue is recognised when the goods
are delivered and have been accepted by customers
at their premises.

Revenue recognition under AASB 118 (applicable
before 1 July 2018) – Revenue was recognised when
the goods were delivered to the customers’ premises,
which was taken to be the point in time at which the
customer accepted the goods and the related risks
and rewards of ownership transferred.

Annual Report 2019IVE Group Limited(m) Lease payments

(ii) Deferred tax

(iii) Tax exposures

(q) Earnings per share

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.

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:

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.

(n) 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.

(o) 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.

•

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.

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.

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

(iv) Tax consolidation

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

(p) 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.

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.

(r) 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.

(s) Adoption of new

accounting standards

The Group has adopted all new and amended
Australian Accounting Standards and Australian
Accounting Standards Board (AASB) interpretations
that are mandatory for the current reporting
period and relevant to the Group. Adoption of these
standards and interpretations has not resulted in any
material changes to the Group’s financial report.

Effective 1 July 2018, the Group adopted AASB 15
Revenue from Contracts with Customers and AASB
9 Financial Instruments. The Group has elected to
apply these standards from that date.

Annual Report 2019IVE Group LimitedAASB 9 Financial Instruments

With the adoption of AASB 9, the Group assesses on
a forward looking basis the expected credit losses
associated with trade receivables. The expected
lifetime losses are recognised from initial recognition
of the receivables. It has been calculated by
assessing previous six years of actual bad debts,
and any possible defaults in the future. The change
in policy resulted in a reduction of retained earnings
of $619 thousand and has been disclosed in the
Condensed Consolidated statement of changes
in equity.

The following table below explains the original
measurement categories under AASB 139 and the
new measurement categories under AASB 9 for each
class of the Group’s financial assets and financial
liabilities as at 1 July 2018.

The following table summarises the impacts of adopting AASB 15 on the Group’s consolidated statement of
financial position as at 30 June 2019. There was no material impact on the Group’s consolidated statement of
profit or loss and other comprehensive income, and Condensed consolidated statement of cash flows for the
year ended 30 June 2019.

Consolidated statement of financial position

In thousands of AUD

Note

As reported

Adjustments

Amounts without
adoption of AASB 15

140,607

139,723

Trade and other payables

In thousands

Financial assets

Trade and
other receivables

Cash and
cash equivalents

Total financial assets

In thousands

Financial liabilities

Trade
payables

Interest rate swaps
used for hedging

Loans and borrowings
receivables

Total financial liabilities

Original classification
under AASB 139

New classification
under AASB 9

Original carrying
amount under
AASB 139

Original carrying
amount under
AASB 9

Loans and receivables

Amortised cost

Forward exchange contracts
used for hedging

Cash flow –
hedging instrument

117,627

655

116,743

655

Loans and receivables

Amortised cost

22,325

Original classification
under AASB 139

New classification
under AASB 9

Original carrying
amount under
AASB 139

Original carrying
amount under
AASB 9

Other financial
liabilities

Cash flow –
hedging instrument

Loans and
Amortised cost

Other financial
liabilities

Cash flow –
hedging instrument

70,030

70,730

108

Amortised cost

151,332

222,170

AASB 15 Revenue from Contracts with Customers

The standard establishes a comprehensive
framework for determining whether, how much
and when revenue is recognised. It replaced AASB
118 Revenue, AASB 111 Construction Contracts and
related interpretations.

The Group has adopted AASB 15 using the cumulative
effect method (without practical expedients), with the
effect of initially applying this standard recognised
at the date of initial application (i.e. 1 July 2018).
Accordingly, the information presented for 2017 has
not been restated – i.e. it is presented, as previously
reported, under AASB 118, AASB 111 and related
interpretations, and there has been no material
impact to the Group’s current financial statements.

Assets

Cash and cash equivalents

Trade and other receivables

Inventories

Prepayments

Contract asset

Other current assets

Total current assets

Total non-current assets

Total assets

Liabilities

Loans and borrowings

Employee benefits

Contract liabilities

Current tax payable

Provisions

Total current assets

Total non-current assets

Total liabilities

Net assets

Equity

Total equity

10
11
12

15
16
17
4

31,501
113,586
66,016
3,076
47
3,901

218,127

312,426

530,553

100,957
6,192
18,882
6,734
2,864
2,006

137,635
187,111

324,746

205,807

(47)

–

6,734

(6,734)

–
–

–

31,501
113,633
66,016
3,076
–
3,900

218,126

312,820

530,946

107,691
6,192
18,882
–
3,257
2,006

138,028
187,111

325,139

205,807

Annual Report 2019IVE Group Limited(t) 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 2019, 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 16 Leases

The Group is required to adopt AASB 16 Leases from
1 July 2019. The Group has assessed the estimated
impact that initial application of AASB 16 will
have on its consolidated financial statements, as
described below.

AASB 16 introduces a single, on-balance sheet lease
accounting model for lessees. A lessee recognises
a right-of-use asset representing its right to use the
underlying asset and a lease liability representing
its obligation to make lease payments. There are
recognition exemptions for short-term leases and
leases of low-value items. Lessor accounting remains
similar to the current standard – i.e. lessors continue
to classify leases as finance or operating leases.

AASB 16 replaces existing leases guidance, including
AASB 117 Leases, AASB Interpretation 4 Determining
whether an Arrangement contains a Lease, AASB
Interpretation 115 Operating Leases – Incentives and
AASB Interpretation 127 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease.

Leases in which the Group is a lessee

The Group will recognise new assets and liabilities
for its operating leases of warehouse and factory
facilities. The nature of expenses related to those
leases will now change because the Group will
recognise a depreciation charge for right-of-use
assets and interest expense on lease liabilities.

Previously, the Group recognised operating lease
expenses on a straight-line basis over the term of
the lease, and recognised assets and liabilities
only to the extent that there was a timing
difference between actual lease payments and the
expense recognised.

In addition, the Group will no longer recognise provisions
for operating leases. Instead, the Group will include the
payments due under the lease in its lease liability.

No significant impact is expected for the Group’s
finance leases.

4. Revenue

Based on the information currently available, the
Group estimates that it will recognise additional
lease liabilities of between $102,000 thousand and
$126,000 thousand as at 1 July 2019. The Group does
not expect the adoption of AASB 16 to impact its
ability to comply with its loan covenants.

Transition

The Group plans to apply AASB 16 initially on 1 July
2019, using the modified retrospective approach.
Therefore, the cumulative effect of adopting IFRS 16
will be recognised as an adjustment to the opening
balance of retained earnings at 1 July 2019, with no
restatement of comparative information.

The Group plans to apply the practical expedient to
grandfather the definition of a lease on transition.
This means that it will apply AASB 16 to all contracts
entered into before 1 July 2019 and identified as
leases in accordance with AASB 117 and AASB
Interpretations 4.

Other standards

The following amended standards and
interpretations are not expected to have a
significant impact on the Group’s consolidated
financial statements:

•

IFRIC 23 Uncertainty over Tax Treatments.

• Annual Improvements to IFRSs 2015–2017 Cycle –

various standards

• Amendments to References to Conceptual

Framework in IFRS Standards

The Group’s operations and main revenue streams are those described in Note 1. The tables below provide
information on the Group’s revenue and contract balances derived from contracts with customers.

The nature and effect of initially adopting AASB 15 on the Group’s interim financial statements are disclosed in
Note 3.

The Group has initially adopted AASB 15 as at 1 July 2018. Under this transition method chosen, comparative
information has not been restated.

(a) Disaggregation of revenue

In thousands of AUD

Products transferred at a point in time

Services transferred over time

(b) Contract balances

In thousands of AUD

Receivables, which are included in ‘Trade and other receivables’

Contract assets

Contract liabilities

2019

2018

654,189
70,008

724,197

628,079
67,282

695,361

2019

1 July 2018*

113,306
47
6,734

115,367
8
8,013

* The Group has adopted AASB 15 using the cumulative effect method (without practical expedients), with the effect initially

applying this standard recognised at the date of initial application (i.e. 1 July 2018).

5. Other income

In thousands of AUD

Other income*

* Includes reversal of contingent consideration (net) – refer to Note 24.

6. Personnel expenses

In thousands of AUD

Wages and salaries

Contributions to defined contribution plans

Share-based payment expense

2019

1,383

2018

807

2019

2018

184,810
12,894
96

183,391
12,560
212

197,800

196,163

Annual Report 2019IVE Group Limited7. Expenses

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

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

In thousands of AUD

Depreciation and amortisation

Acquisition costs

Restructuring costs

8. Finance income and finance costs

In thousands of AUD

Interest income

Net foreign exchange gain

Finance income

Interest expense

Derivative net change in fair value

Net foreign exchange losses

Finance costs

Net finance costs

9. 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)

2019

2018

22,726
500
2,598

18,874
1,039
8,475

2019

191
–

191

(9,764)
(174)
(93)

(10,031)

(9,840)

2018

211
37

248

(8,152)
–
–

(8,152)

(7,904)

2019

2018

9,072
(17)

9,055

4,464

13,519

7,796
(43)

7,753

3,393

11,146

2019

2018

44,823
13,447
(147)
17
(17)
219

13,519

36,861
11,058
73
43
(43)
15

11,146

In thousands of AUD

Property, plant and equipment

Inventories

Intangible assets

Employee benefits

Provisions

Other items

Tax assets/(liabilities)

Set off of tax

Assets

Liabilities

Net

2019

3,221
–
–
7,919
5,386
3,459

19,985
(6,449)

2018
restated*

4,011
–
–
9,108
5,289
5,697

24,105
(6,569)

2019

–
(1,527)
(4,922)
–
–
–

(6,449)
–

2018
restated*

–
(532)
(6,037)
–
–
–

(6,569)
–

2019

3,221
(1,527)
(4,922)
7,919
5,386
3,459

13,536
–

2018
restated*

4,011
(532)
(6,037)
9,108
5,289
5,697

17,536
–

Net deferred tax assets

13,536

17,536

–

13,536

17,536

* Refer to note 33 on restatement.

Movement in temporary differences during the year

2019
In thousands of AUD

Property, plant and equipment

Inventories

Intangible assets

Employee benefits

Provisions

Other items

* Refer to note 33 on restatement.

2018
In thousands of AUD

Property, plant and equipment

Inventories

Intangible assets

Employee benefits

Provisions

Other items

Balance
1 July 2018
restated*

Acquisition
through
business
Combination

Recognised
in equity

Recognised
in profit
or loss

Balance
30 June 2019

4,011
(532)
(6,037)
9,108
5,289
5,697

17,536

–
–
–
–
–
–

–

–
–
–
–
–
464

464

(790)
(995)
1,115
(1,189)
97
(2,702)

3,221
(1,527)
(4,922)
7,919
5,386
3,459

(4,464)

13,536

Balance
1 July 2017

Acquisition
through
business
Combination

Recognised
in equity

Recognised
in profit
or loss

Balance
30 June 2019

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

19,192

(989)
–
(840)
1,007
236
–

(586)

–
–
–
–
–
793

793

(1,630)
(513)
1,078
1,195
(2,722)
(801)

4,011
(532)
(6,037)
9,108
5,289
4,167

(3,393)

16,006

Annual Report 2019IVE Group Limited10. Cash and cash equivalents

11. Trade and other receivables

In thousands of AUD

Bank balances

Petty cash

Cash and cash equivalents in the statement of cash flows

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

Derivative net change in fair value

Interest expense

Decrease in allowance for impairment on trade receivables

Acquisition costs

Restructuring costs

Income tax expense

Cash items

2019

2018

31,491
10

31,501

22,314
11

22,325

2019

2018

31,491

22,314

22,726
96
(1,350)
174
2,026
(59)
–
232
13,519

18,874
212
(704)
–
895
–
(228)
–
11,146

Net gain on disposal of property, plant and equipment

(6)

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

68,752
3,167
(18,901)
1,325
(517)
2,540
(1,452)

54,914

(7,477)

47,437

55,904
(14,514)
47
486
(111)
5,575
(6,763)

40,624

(3,957)

36,667

In thousands of AUD

Current

Trade receivables

Allowance for impairment

Forward exchange contracts used for hedging

Other receivables

12. Inventories

In thousands of AUD

Finished goods

Work in progress

Raw materials

Allowance for inventory obsolescence

2019

2018

113,306
(1,814)

111,492

–
2,094

115,367
(677)

114,690

655
2,937

113,586

118,282

2019

2018

3,404
9,677
53,723

66,804

(788)

3,135
8,598
36,989

48,722

(1,607)

66,016

47,115

During the year, raw materials, consumables and changes in finished goods and work in progress recognised as
cost of sales amounted to $377,134 thousand (2018: $356,742 thousand).

During 2019 financial year an analysis of aged inventory and previous write-offs was performed which resulted
in a reduction of excess provision amounting to $819 thousand.

Annual Report 2019IVE Group Limited

13. Property, plant and equipment

14. Intangible assets and goodwill

In thousands of AUD

Cost

Balance at 1 July 2017

Acquisitions through business combinations

Additions

Disposals

Balance at 30 June 2018

Balance at 1 July 2018

Additions

Disposals

Balance at 30 June 2019

Depreciation and impairment losses

Balance at 1 July 2017

Depreciation for the year

Disposals

Balance at 30 June 2018

Balance at 1 July 2018

Depreciation for the year

Disposals

Balance at 30 June 2019

Carrying amounts

At 1 July 2018

At 30 June 2019

Leasehold
improvements

Plant and
equipment

Fixtures and
fittings

Total

In thousands of AUD

Note

Goodwill

Computer
software

Customer
relationships

Total

7,490
–
7,106
–

14,596

14,596
3,977
(97)

18,476

2,248
1,235
–

3,483

3,483
1,839
(97)

5,225

11,113

13,251

105,887
3,502
47,206
(1,381)

155,214

155,214
24,574
(311)

179,477

31,511
12,443
(305)

43,649

43,649
14,803
(159)

58,293

111,565

121,184

1,335
–
277
(24)

1,608

1,608
48
(37)

1,619

433
194
(22)

605

605
206
(35)

776

1,003

843

114,732
3,502
54,589
(1,405)

171,418

171,418
28,599
(445)

199,572

34,192
13,872
(327)

47,737

47,737
16,848
(291)

64,294

123,681

135,278

Cost

Balance at 1 July 2017

Acquisition through business combinations

Other additions

Balance at 30 June 2018

Balance at 1 July 2018 (restated)*

Other additions (or adjustments)

Balance at 30 June 2019

Amortisation and impairment losses

Balance at 1 July 2017

Amortisation for the year

Balance at 30 June 2018

Balance at 1 July 2018

Amortisation for the year

Balance at 30 June 2019

Carrying amounts

At 1 July 2018 (restated)*

At 30 June 2019

* Refer to note 33 on restatement.

129,670
15,477
–
145,147

143,617
–

143,617

–
–

–

–
–

–

143,617

7,974
–
3,139
11,113

11,113
749

11,862

4,786
1,409

6,195

6,195
2,160

8,355

4,918

3,507

25,816
2,800
–
28,616

28,616
–

28,616

4,817
3,593

8,410

8,410
3,718

12,128

20,206

16,488

163,460
18,277
3,139
184,876

183,346
749

184,095

9,603
5,002

14,605

14,605
5,878

20,483

168,741

163,612

No impairment losses in relation to goodwill have been recognised in the year ended 30 June 2019 (2018 nil).

Leased plant and machinery

Security

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 2019 the
net carrying amount of leased assets was $20,901
thousand (2018: $17,621 thousand).

At 30 June 2019 the carrying amount of total assets
less the written down value of finance leased assets
were held as security for bank facilities.

Annual Report 2019IVE Group LimitedImpairment testing for cash-generating units containing goodwill

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

16. Loans and borrowings

In thousands of AUD

Franklin (and AIW combined)

Print communication and marketing services (group of CGUs)

Creative services (group of CGUs)

Pareto

* Refer to note 33 on restatement.

Goodwill impairment test is performed by applying
value in use calculations. The calculations for all
CGU’s use cash flow projections based on budgeted
EBITDA approved by the Board. A post-tax WACC
rate of 9.95% to 11.0% (depending on the size and
nature 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.

The estimated recoverable amount for the “Franklin
Web” CGU exceeded its carrying amount by
approximately $26 million. Franklin WEB operates
in a competitive environment and is subject to cost

15. Trade and other payables

2019

2018 restated*

64,141
51,980
11,614
15,882

143,617

of goods sold fluctuations. Certain positive forecast
EBITDA assumptions have been made relating to
these impacts. Management has identified that a
reasonably possible change in these assumptions
could cause the carrying amount to exceed the
recoverable amount. A decrease of forecast EBITDA
over the 5 year projection period of 13% would
reduce the recoverable amount to be equal to the
carrying amount.

There are no other reasonable possible changes in
assumptions that would give rise to impairment.

In thousands of AUD

Current

Trade payables

Accrued expenses

Deferred consideration

Contingent consideration

Interest rate swaps

Non-current

Contingent consideration

Interest rate swaps

2019

2018

72,010
28,772
–
–
175

70,730
34,015
1,850
4,850
77

100,957

111,552

–
–

–

650
31

681

In thousands of AUD

Current

Bank loan

Finance lease liabilities

Equipment finance

Non-current

Bank loan

Finance lease liabilities

Equipment finance

Bank loan

2019

2018

–
3,147
3,045

6,192

141,042
12,586
13,721

10,000
3,668
2,774

16,442

108,961
9,481
16,448

167,349

134,890

During the financial year, the Group refinanced its bank loan. As at 30 June 2019, the amended Syndicated
Facilities Agreement has a carrying amount of $141,042 thousand and face value of $142,000 thousand (2018:
carrying amount of $118,961 and face value of $120,000 thousand). These facilities have an interest rate of BBSY
plus a margin, and mature on 4th April 2023. The Company was in compliance with all loan covenants as at
30 June 2019.

Finance lease liabilities

Finance lease liabilities of the Group are payable as follows:

Future minimum
lease payment

Interest

In thousands of AUD

2019

2018

2019

Less than one year

Between one and five years

More than five years

3,936
13,539
390

4,264
9,225
1,389

17,865

14,878

789
1,264
79

2,132

Present value of minimum
lease payments

2019

2018

3,147
12,275
311

15,733

3,668
8,531
950

13,149

2018

596
694
439

1,729

At 30 June 2019, the finance lease liabilities include $639 thousand lease liability for leased properties (2018:
$930 thousand) and $15,094 thousand lease liability for leased plant and equipment (2018: $12,219 thousand).

101

Annual Report 2019IVE Group Limited17. Employee benefits

19. Share-based payments

In thousands of AUD

Current

Liability for long service leave

Liability for annual leave

Non-current

Liability for long service leave

18. Provisions

In thousands of AUD

Restructuring

Make good

Balance at 1 July 2018

Provisions made during the year

Provisions reversed during the year

Balance at 30 June 2019

Current

Non-current

977
19
(368)

628

360
268

628

2,990
368
(54)

3,304

–
3,304

3,304

2019

2018

8,463
10,419

18,882

6,182

7,833
10,660

18,493

6,079

Acquired
lease liability

12,765
490
(1,601)

11,654

1,646
10,008

11,654

Total

16,732
877
(2,023)

15,586

2,006
13,580

15,586

During the year ended 30 June 2019, 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

Senior Leadership Team Award

Date of grant

20 November 2018*

Number granted

660,127

Contractual life

3 years and 2 months

Vesting conditions

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 2018 to
30 June 2021 inclusive. The vesting date is expected to be on or soon after
the approval of IVE’s 2021 Annual Financial Report.

Weighted average fair value

$1.53

Valuation methodology

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

$2.27

Expected volatility

Risk free interest rate

Dividend yield

20.4%

2.09%

8.07%

* Share rights issued to Directors required shareholder approval. This occurred at the Group’s 2018 Annual General Meeting.

Total expense relating to Share-based payments
has been disclosed in note 6 of this consolidated
financial statements.

On 4 October 2019, the Group issued shares under
the 2018 General Management award (refer note
20 – Capital). The exercise price per share at the time
of issue was $2.15. The fair value per share at grant
date was $1.98. The total value of shares issued was
$150 thousand.

103

Annual Report 2019IVE Group Limited20. Capital and reserves

Issued and paid up capital (in thousands of AUD)

148,179,157 (June 2018: 148,103,655) ordinary shares fully paid

Movement in ordinary share capital

Date

Details

1 Jul 17

15 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

30 Jun 18

Closing balance

1 Jul 18

4 Oct 18

Opening balance

Issue of shares under the Equity Incentive Plan

30 Jun 19

Closing balance

Dividends

2019

2018

156,468

156,318

Number of
shares

Issue
Price

Total
$’000

119,280,624
18,860,264
1,650,165
8,249,730

$2.05

62,872

$2.02

148,103,655

148,103,655
75,502

$1.98

98,820
38,664
3,399
16,912
(1,604)
127

156,318

156,318
150

148,179,157

156,468

On 27th August 2019, the directors have declared a fully franked dividend of 7.7 cents per share to be paid on
24 October 2019 to shareholders on the register at 18 September 2019. The final dividend payout is $11.4M
(2018: $11.1M). A liability has not been recognised as the dividend was declared after the reporting date.

The following dividends were declared and paid during the year ended 30 June 2019:

In thousands of AUD

2019

Final 2018 ordinary

Interim 2019 ordinary

Total amount

Cents
per share

Total
amount

Date of
payment

7.5
8.6

11,108
12,743

23,851

25 October 2018

18 April 2019

On 25 October 2018 a dividend of 7.5 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 18 April 2019 a further dividend of 8.6 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 2018:

In thousands of AUD

2018

Final 2017 ordinary

Interim 2018 ordinary

Total amount

Dividend franking account

In thousands of AUD

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

Cents
per share

Total
amount

Date of
payment

6.4
8.0

9,477
11,848

21,325

25 October 2017

19 April 2018

2019

2018

4,902

5,857

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

21. Earnings per share

In dollars

Basic earnings per share

Diluted earnings per share

In thousands

Earnings

2019

0.21
0.21

2018

0.18
0.18

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

31,304

25,715

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

148,160

142,549

148,638

142,796

22. Acquisitions

There have been no acquisitions during the year ended 30 June 2019.

105

Annual Report 2019IVE Group Limited23. Operating segments

Exposure to credit risk

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.

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.

The key measure of performance used by the CODM
to assess performance is earnings before interest,
tax, depreciation and amortisation (EBITDA).

In thousands of AUD

EBITDA

Depreciation, amortisation and impairment

Net finance costs

Profit before income tax

2019

2018

77,389
(22,726)
(9,840)

63,639
(18,874)
(7,904)

44,823

36,861

24. Financial risk management and financial instruments

Overview

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

a. credit risk

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.

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.

Credit risk

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

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.

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

Impairment

Carrying amounts

Note

2019

2018

10
11

31,501
113,586

22,325
118,282

145,087

140,607

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

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

Carrying amounts

2019

2018

65,691
34,586
12,437
2,686

68,282
33,197
10,017
6,808

115,400

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

Initial application of AASB 9

Assumed in a business combination in current year

Impairment loss recognised

Amounts written off

Balance at end of year

Liquidity risk

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.

2019

677
884
–
1,034
(781)

1,814

2018

704
–
562
263
(852)

677

107

Annual Report 2019IVE Group LimitedThe following are the remaining contractual maturities of financial liabilities at the reporting date.
The amounts are gross and undiscounted, and include estimated interest payments:

Currency risk

In thousands of AUD

30 June 2019

Non-derivative financial liabilities

Trade and other payable

Finance lease liabilities

Equipment finance

Bank loans

Derivative financial liabilities

Interest rate swaps used for hedging

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

Contractual cash flows

Carrying
amount

Total

12 months
or less

1–5
years

More than
5 years

100,782
15,733
16,766
141,042

100,782
17,865
17,952
160,921

100,782
3,936
3,332
5,055

–
13,539
14,620
155,866

274,323

297,520

113,105

184,025

175

–

–
390
–
–

390

–

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

–
–
–
1,389
4,421
–

263,427

272,449

133,190

133,449

5,801

108

–

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.

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

During the year, 6% (2018: 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 zero fair value at the reporting date
(2018: $655 thousand). The Group has performed
effectiveness testing and recognised the full fair value
amount net of deferred tax of zero thousand in other
comprehensive income (2018: $459 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:

As at 30 June 2019

As at 30 June 2018

In thousands of AUD

Euro

USD

NZD

Euro

USD

NZD

Equipment finance loan

Next three months forecast purchases

Forward exchange contracts

Net exposure

10,758
6,675
(17,433)

–

–
150
(150)

–

–
–
–

–

12,739
5,860
(18,599)

–

–
350
(350)

–

–
1,430
(1,430)

–

Sensitivity analysis

Interest rate risk

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.

During the financial year, the Group refinanced its
bank loan. Hence, the interest rate swap contracts
(used to hedge the previous bank loan) are not
designated as a cash flow hedge. Its fair value
at reporting date is $175 thousand (2018: $108
thousand). The Group now recognises the full fair
value amount net of deferred tax of $123 thousand
in the profit or loss (2018: $76 thousand in other
comprehensive income).

109

Annual Report 2019IVE Group LimitedExposure to interest risk

Measurement of fair values

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

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.

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 amounts

2019

2018

(32,499)
(36,625)

(32,371)
(55,000)

(69,124)

(87,371)

31,491
(142,000)
36,625

22,314
(120,000)
55,000

(73,884)

(42,686)

Fair value sensitivity analysis for
fixed rate instruments

Cash flow sensitivity analysis for
variable rate instruments

During the financial year, the Group refinanced its
bank loan. Hence, the interest rate swap contracts
(used to hedge the previous bank loan) is not
designated as a cash flow hedge.

The Group does account for any fixed rate financial
assets and liabilities at fair value through profit
or loss, and the Group does 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
affect profit or loss.

A change of 10 basis points in interest rates at the
reporting date would have increased (decreased)
equity and profit or loss by $74 thousand (2018: $43
thousand). This analysis assumes that all other
variables, in particular foreign currency rates, remain
constant. The analysis is performed on the same
basis as 2018.

Type

Valuation technique

Significant unobservable
inputs

Relationship between the fair
value and unobservable inputs

Contingent
consideration

Interest rate
swaps

Forward
exchange
contracts

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

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.

Forecast revenue and
earnings growth

Not applicable

Reconciliation of Level 3 Contingent consideration fair value

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

In thousands of AUD

Balance at 1 July

Assumed in a business combination in current year

Contingent consideration settled during the year

Contingent consideration reduced

Balance at 30 June

2019

2018

5,500
–
(4,150)
(1,350)

–

4,825
4,000
(2,622)
(703)

5,500

Fair values versus carrying amounts

Capital management

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.

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 16).

111

Annual Report 2019IVE Group LimitedNon-cancellable operating lease rentals are payable as follows:

In AUD

2019

2018

Caxton Property Developments Pty Ltd – sales

25. Operating leases

Leases as lessee

In thousands of AUD

Less than one year

Between one and five years

More than five years

25,795
73,500
26,053

25,334
78,144
40,325

125,348

143,803

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 $26,850 thousand
(2018: $26,265 thousand) was recognised as an
expense in profit or loss in respect of operating leases.

26. Capital commitments

As at 30 June 2018, the Group has committed to purchase plant and equipment of GBP585 thousand (2018:
$16,200 thousand).

27. Related parties

Key management personnel compensation

Key management personnel compensation comprised the following:

In AUD

Short-term employee benefits

Post-employee benefits

Other long term benefits

Share-based payments

2019

2018

3,391,262
138,621
52,238
75,817

3,433,721
131,323
–
27,693

3,657,938

3,592,737

Related party transactions and outstanding balances

Paul Selig (director of the Company), holds positions
in Caxton Property Developments Pty Ltd that results
in him having control or significant influence over the
financial or operating policies of this entity.

During the year ending 30 June 2019, the Group sold
goods and services to Caxton Property Developments
Pty Ltd.

28. 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

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

Transaction
value year
ended
30 June 2019

Transaction
value year
ended
30 June 2018

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.

Ownership interest

2019 %

2018 %

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

113

Annual Report 2019IVE Group Limited

29. Parent entity disclosures

30. Subsequent events

As at, and throughout, the financial year ending 30 June 2019 the parent entity of the Group was IVE Group Limited.

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 2019.

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 (net of dividend paid)

Total equity

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

2019

2018

-
-

3
76,896

18
100,593

83
83

80
80

287,781
(146,662)
64,306

287,631
(146,662)
(40,455)

76,813

100,514

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. Auditors’ remuneration

In AUD

Audit services

Auditors of the Company – KPMG

Audit and review of financial reports

Other assurance

Other services

Auditors of the Company – KPMG

Taxation services

Transaction services

IT services

32. Deed of cross guarantee

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

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

The Company and its subsidiaries 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

2019

2018

353,720
6,000

384,088
10,125

359,720

394,213

86,500
-
70,000

189,625
399,750
-

156,500

589,375

d. Caxton Print Group Pty Limited
e. Task 2 Pty Limited
f. Pareto Fundraising Pty Limited
g. Pareto Phone Pty Limited
h. James Bennett & Associates Pty Limited
IVE Employment (Australia) Pty Limited
i.
j.
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 2019 is set out on pages 75 and 78 of this
financial report.

115

Annual Report 2019IVE Group Limited
33. Restatement of comparative information

Directors’ declaration

During 2019, the Group finalised its tax cost setting
amount for joining subsidiary’s assets. Previously,
the Group used draft amounts in its opening
acquisition accounting with a view to updating these
amounts once finalised. The amount have been

corrected by restating each of the affected financial
statement line items for prior periods. The following
tables summarise the impacts on the Group’s
consolidated financial statements.

Consolidated statement of financial position

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

(a) the consolidated financial statements and notes, set out on pages 75 to 116, 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 2019 and of its performance

In thousands of AUD

Assets

Total current assets

Deferred tax assets

Property, plant and equipment

Intangible assets and goodwill

Total non-current assets

Total assets

Liabilities

Total current liabilities

Total non-current liabilities

Total liabilities

Net assets

Equity

Total equity

2018

2018 restated

for the financial year ended on that date; and

195,507

–

16,006
123,681
170,271

309,958

505,465

149,557
156,567

306,124

199,341

1,530
–
(1,530)

–

–
–

–

195,507

17,536
123,681
168,741

309,958

505,465

149,557
156,567

306,124

199,341

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when

they become due and payable.

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

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

Signed in accordance with a resolution of directors.

Geoff Selig
Director

Dated at Sydney this 27th day of August 2019

117

Annual Report 2019IVE Group Limited

119

70 Liability limited by a scheme approved under Professional Standards Legislation. 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.Independent Auditor’s Report To the shareholders of IVE Group Limited Report on the audit of the Financial ReportOpinion 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: •giving a true and fair view of theGroup's financial position as at 30June 2019 and of its financialperformance for the year ended onthat date; and•complying with Australian AccountingStandards and the CorporationsRegulations 2001.The Financial Report comprises: •Consolidated statement of financial position as at 30June 2019.•Consolidated statement of profit or loss and othercomprehensive income, Consolidated statement ofchanges in equity, and Consolidated statement of cashflows for the year then ended.•Notes including a summary of significant accountingpolicies.•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. 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. 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. 71 Key Audit Matters 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 14 ‘Intangible assets and goodwill’ to the Financial Report (Goodwill: $143.6 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 27% of thetotal assets);•significant forward looking judgments the Groupapplied in its value in use models.The judgments we focused on included: •assessment of the Cash Generating Units(CGUs). The Group had several operatingbusinesses and product lines during the year,necessitating our consideration of the Group’sdetermination of CGUs, based on the smallestgroup of assets that generate largelyindependent cash inflows;•forecasting operating cash flows, capitalexpenditure and forecast growth rates, includingterminal growth rate. These judgments areimpacted by the highly competitive marketconditions and the pace of technological changeand digital disruption in the printing industry;•assessment of the discount rates. These arecomplicated in nature and vary according to theconditions and environment the specific CGU issubject to from time to time;•level of disclosure of the key assumptions usedin 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 procedures included: •we considered the Group’s determinationof their CGUs based on our understandingof the Group’s business and howindependent cash inflows were generated,against the requirements of the accountingstandards;•we analysed the impact of the Group’sinternal reporting to assess theirmonitoring and management of activities,and the consistency of the allocation ofgoodwill to CGUs;•we considered the appropriateness andapplication of the value in use methodapplied by the Group to perform the annualtest of goodwill for impairment against therequirements of the accounting standards;•we assessed the integrity of the value inuse models used, including the accuracy ofthe underlying calculations and formulas;•working with our valuation specialists, weanalysed the discount rates and terminalgrowth rates, based on our knowledge ofthe Group, its industry, current marketforces, and publicly available market datafor comparable entities;•we agreed the Group’s cash flowforecasts, including capital expenditure tothe Board approved budget and strategy;•we assessed the accuracy of previousGroup forecasts to inform our evaluation offorecasted data incorporated in the models.70 Liability limited by a scheme approved under Professional Standards Legislation. 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.Independent Auditor’s Report To the shareholders of IVE Group Limited Report on the audit of the Financial ReportOpinion 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: •giving a true and fair view of theGroup's financial position as at 30June 2019 and of its financialperformance for the year ended onthat date; and•complying with Australian AccountingStandards and the CorporationsRegulations 2001.The Financial Report comprises: •Consolidated statement of financial position as at 30June 2019.•Consolidated statement of profit or loss and othercomprehensive income, Consolidated statement ofchanges in equity, and Consolidated statement of cashflows for the year then ended.•Notes including a summary of significant accountingpolicies.•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. 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. 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. Annual Report 2019IVE Group Limited121

•we used our knowledge of the Group, theirpast performance, business andcustomers, and our industry experience tochallenge the Group’s significant forecastcash flow and forecast growth rates, inlight of the expected continuation of highlycompetitive market conditions,technological change and digital disruptionin the printing industry. We also comparedforecast growth rates and terminal growthrates to published information on industrytrends and expectations, and considereddifferences for the Group’s operations;•we considered the sensitivity of themodels by varying key assumptions, suchas forecast growth rates, terminal growthrates and discount rates, within areasonably possible range, to identify thoseCGUs with a higher risk of impairment andto focus our further procedures;•we assessed the related disclosuresagainst the requirements of the accountingstandards.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 FY19 Results Presentation. The Chairman’s Report and Chief Executive Officer’s Report are expected to be made available to us after the date of the Auditor’s Report. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. 72 73 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 AccountingStandards and the Corporations Act 2001.•implementing necessary internal control to enable the preparation of a Financial Report that gives a trueand 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 thegoing concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related togoing concern and using the going concern basis of accounting unless they either intend to liquidate theGroup or to cease operations, or have no realistic alternative but to do so.Auditor’s responsibilities for the audit of the Financial Report Our objective is: •to obtain reasonable assurance about whether the Financial Report as a whole is free from materialmisstatement, whether due to fraud or error; and•to issue an Auditor’s Report that includes our opinion.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. 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. 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. Annual Report 2019IVE Group LimitedASX 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 17 July 2019.

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

Share registry

Registered office

Principal Place of Business

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

Level 3, 35 Clarence Street
Sydney NSW 2000
Phone: +61 2 8020 4400

Building B, 350-374 Parramatta Road
Homebush NSW 2140
Phone: +61 2 8020 4400
Phone: +61 1300 554 474

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

Name

Caxton Print Holdings Pty Ltd as trustee for the Selig Family Trust*

Regal Funds Management Pty Ltd

COPIA Investment Partners

FIL Limited

Anthony Young

Commonwealth Bank of Australia

Number of
shares held

11,210,231
10,520,584
6,565,000
8,285,741
7,486,024
5,553,759

8.02
7.10
5.5
5.59
5.1
5.03

Distribution of shareholders and shareholdings – ordinary shares

There are 148,179,157 ordinary shares on issue held by 2,387 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

124,401
2,205,112
3,709,516
25,417,658
116,722,470

0.08
1.49
2.50
17.15
78.77

Number
of holders

240
699
439
909
100

10.05
29.28
18.39
38.08
4.19

148,179,157

100.00

2,387

100.00

123

74 Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of IVE Group Limited for the year ended 30 June 2019, complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 12 to 26 of the Directors’ report for the year ended 30 June 2019. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.KPMG John Wigglesworth Partner Sydney 27 August 2019 Annual Report 2019IVE Group LimitedDistribution of shareholders and shareholdings – performance
share rights (unlisted)

On-Market Buy Back

There is no current on-market buy back.

Corporate governance
statement

There are 1,017,740 unlisted performance share rights on issue that have been issued under an employee share
plan. These are held by 6 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

Performance
Share Rights

–
–
–
–
1,017,740

1,017,740

–
–
–
–
100.00

100.00

Number
of holders

–
–
–
–
6

–

–
–
–
100.00

100.00

Unmarketable parcels

The number of shareholders holding less than a marketable parcel of ordinary shares is 60 for 2,647 shares,
based on IVE’s closing share price of $2.08, on 17 July 2019.

Twenty largest shareholders

Rank Name

J P Morgan Nominees Australia Pty Limited

HSBC Custody Nominees (Australia) Limited

Citicorp Nominees Pty Limited

Caxton Print Holdings Pty Ltd

National Nominees Limited

UBS Nominees Pty Ltd

Strategic Value Pty Ltd

Taverners N Pty Ltd

Warbont Nominees Pty Ltd

SCJ Pty Ltd

Rylelage Pty Ltd

Scanlon Family Pty Ltd

CS Third Nominees Pty Limited

BNP Paribas Noms (NZ) Ltd

Strategic Value Pty Limited

Mr Stephen Craig Jermyn

BNP Paribas Noms Pty Ltd

BNP Paribas Nominees Pty Ltd

Exldata Pty Ltd

BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd DRP

Total

Balance of register

Grand total

Number of
Shares

17,481,266
13,729,409
13,577,334
11,210,231
5,870,229
5,630,398
3,779,316
3,176,470
3,051,457
3,000,000
2,986,118
2,926,829
2,630,953
2,063,399
2,035,086
2,000,000
1,829,719
1,108,089
992,407
879,320

11.80
9.27
9.16
7.57
3.96
3.80
2.55
2.14
2.06
2.02
2.02
1.98
1.78
1.39
1.37
1.35
1.23
0.75
0.67
0.59

99,958,030
48,221,127

67.46
32.54

148,179,157

100.00

Voting Rights

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

• 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.

• Holders of performance rights do not have voting
rights on the performance rights held by them.

Voluntary escrow

There were no ordinary shares held in a voluntary
escrow arrangement as at 17 July 2019.

Stock Exchange Listing

IVE Group securities are only listed on the ASX.

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/
investor-centre/?page=corporate-governance.

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 19 August 2019. It has been approved
by the Board and is available on the IVE website
under Investors at
http://investors.ivegroup.com.au/
investor-centre/?page=corporate-governance.

125

Annual Report 2019IVE Group Limitedwww.ivegroup.com.au