IVE Group (ASX:IGL) 1H21 results & outlook


by Melissa Darmawan

IVE Group Limited (ASX:IGL) Executive Chairman Geoff Selig talks about the company's strong 1H21 results on the back of a rebound in activity as the adverse impact of COVID disruptions diminishes.

Melissa Darmawan: Hello. Melissa Darmawan for the Finance News Network. Joining me from IVE Group (ASX:IGL) is Executive Chairman Geoff Selig. Geoff, welcome back.

Geoff Selig: Thanks for having me. Nice to be here.

Melissa Darmawan: You're welcome. IVE Group covers a full range of marketing functions from design to delivery. Can you tell us a bit more about this?

Geoff Selig: March next month will be the 100th anniversary of the starting of our business back in 1921. We've transitioned over the period, predominantly the last 20 years, from what was just a printing company to a very diversified marketing and communications business. We describe it as taking anything from an idea through to execution in the MarCom space. We have 2,800 customers, about 1,700 staff, and annualised revenues of around $700 million.

Melissa Darmawan: Now, to the results. What were the highlights?

Geoff Selig: Look, the highlights, it was an interesting first half. Our second half of FY20 was seriously impacted by COVID, as was our first half of FY21. Not as affected by COVID, but impacted by COVID too in terms of revenue. So, if I look at the underlying EBITDA performance and our net profit after tax, I think that's a very solid financial performance. We've also, since March of last year, paid off about $87 million of our net debt, or our net debt position has improved by $87 million. We didn't pay a dividend last year, so we're resuming dividend payments by declaring the interim dividend today. So, underling performance, much stronger balance sheet, the paying of the dividend. We've commenced the share buyback that we started in December of last year as well. So, at a whole range of levels, I think the financial metrics are very strong.

Melissa Darmawan: And what drove these results?

Geoff Selig: We still have very good, strong revenue, notwithstanding some impacts. Our gross margins stayed very stable, as it has done over the last five years. We've looked to streamline the business structure. We've shut some parts of our business operations down in Hong Kong and an operation in Queensland and things like that. We've had some relocations. We divested our outbound call centre, IVE Telefundraising, through the course of the year in October for $16.5 million. We acquired a business in January of last year called Salmat, a letterbox distribution business. So we moved pretty quickly to streamline and execute on a restructure plan for that business. We also have a very powerful integrated offer to our customer base where our long-term relationships are typically, on average, about 10 years. Those customers, at the end of the day, they were impacted through COVID themselves, but then look to suppliers like us to continue supporting them and servicing them through what was also a difficult period for their business. So, all of that leads to strong cash flows. We have very good people, a strong offer. It's a combination of all those things that, in the end, drove those underlying results.

Melissa Darmawan: Last question, Geoff, what is the outlook for the second half?

Geoff Selig: Well, we once again, today, reaffirmed our guidance for the full year, which is $100 million EBITDA on a continuing operations basis because we have sold or divested of the telefundraising business, and that $100 million EBITDA number for the full year is consistent with the number that we delivered for the full year in FY20. So, we are hoping as the vaccine is rolled out that some of the sectors that have been badly hit in our business, like the travel sector that we have a large client base in, as they recover, and as the retailers look to market themselves more that we will benefit from that in the second half. So I think, yeah, we're optimistic that trading conditions are better than what they were six months ago, and on the back of a good first half year result that we're charging towards the finishing line for delivering our guidance for the full year.

Melissa Darmawan: Geoff Selig, thanks for the update and well done on the results.

Geoff Selig: Mel, I appreciate the time. Thanks again. All the best.


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