IVE Group (ASX:IGL) FY21 Results Presentation

Company Presentations

IVE Group Limited (ASX:IGL) Executive Chairman Geoff Selig, CEO Matt Aitken and CFO Darren Dunkley present on the group's FY21 results.

Geoff Selig: Thank you and good morning, everybody, and I appreciate you making the time to dial in for the IGL FY21 full year results call. We are nearly halfway through our centenary year. It doesn't quite feel like it. In March 1921, my grandfather issued the first issue of a local newspaper in Balmain. And so hopefully towards the back end of the year, we will appropriately celebrate our centenary year.

Just before dialling in to the investor presentation today, just once again, to introduce the team with me. Our CEO Matt Aiken, CFO Darren Dunkley and Richard Nelson, who heads up our investor relations.

Well, given a year of unprecedented volatility and uncertainty, I would like to acknowledge the capacity of our people and our business to respond to the circumstances we found ourselves in by coming together as one company and committing to go above and beyond to service our clients and to care for each other. It was a huge team effort. And I think our results demonstrate this.

Clearly, the entirety of FY21 year for IVE would best be described as COVID-impacted. We provided quite some detail this time last year in our full year results presentation around our swift response to the impacts of COVID in Q4 FY20, and it's fair to say many of the impacts we touched on at the time prevailed throughout the FY21 year, that being the health and safety of our staff, managing supply chain issues, the tight management of working capital and the need to flex the cost space in response, ultimately, to what was huge volatility in revenues throughout the period. We feel the solid financial performance of the business, our significantly strengthened balance sheet demonstrate the resilience of the IVE business and position the company well, which we'll talk a little later about, to deliver strong growth as we emerge from this period of disruption.

So, with that preamble behind us, I'll move to page three of the presentation that we launched with the ASX this morning titled "The Financial Performance Dashboard". Just make the point that all numbers are underlying on a continuing operations basis. We divested the company throughout the year and are post AASB 16. We've also tried hard to be very clear throughout the presentation with our numbers, both including JobKeeper and excluding JobKeeper. So, if I just look at the eight tiles on the performance dashboard, we'll dive a little deeper shortly as we go through the presentation. Revenue at 656.5 million, a little off last year, which we'll touch on. EBITDA, excluding JobKeeper, 85.3 up on last year. Gross profit margin increased in a meaningful way above last year, sitting at 48.1 per cent. Once again, net profit after tax up at 19.9 million, excluding JobKeeper. That resulted in an earnings per share uplift of 8.4 per cent on PCP. And the result of continuing strong operating cashflow. Our net debt landed at 77.3, which was lower than expected a couple of months ago. With cash on hand at $107 million. The final dividend of 7 cents is the same as the half year dividend of 7 cents, which results in a full year dividend of 14 cents obviously. So, that's the snapshot of the financial performance for the year. I'll now hand over to Matt to walk us through, commencing with page four, the key business highlights.

Matt Aitken: Thank you, Geoff, and good morning, everyone. As Geoff has mentioned, earnings guidance has been met. Strong cashflows have delivered increased balance sheet strength. All of which illustrates the underlying resilience of this business. Earnings of EBITDA 100.2 million was at the upper end of our guidance range, which was 98 to $100 million. And the margin growth continued to improve despite reduced revenue, with much of this achieved through flexing our cost base and the management of our supply chain. I'm also very proud of the contributions made by all 1600 staff during the year, as they responded to an unprecedented and volatile operating environment. We have an awesome team.

During the year we executed on two key strategic initiatives that were also communicated at the half year results. The first being the divestment of IVE tele fundraising in October for consideration of $16.5 million, realising a profit on sale of $4.2 million. And the second being the commitment to a long-term contract with ACM, which included the acquisition of their production operation in Western Australia. This transaction was expected to deliver revenues of $20 million per annum at a full run rate. And I'm pleased to advise we have now reached that point. Since buying, the WA operation has performed really well and we have a great team over there. We've also been able to transition some volume from our east coast operations to WA to better service our national clients.

Turning to page five, the strengthening of the balance sheet is one of our real highlights for FY21 with strong cashflow generation and operating cashflow of 131 per cent. Net debt was reduced by 59.8 million to 77.3 million, with net debt pre AASB 16 EBITDA ex JobKeeper now at 1.3 times. Cash on hand at 30 June was $107 million. And, since year end, we have repaid $50 million of our senior debt facility.

We have also continued to focus on improving shareholder returns, with EPS growth over PCP at 8.4 per cent and the resumption of dividends in FY21, with a final dividend of 7 cents per share fully franked, taking the full-year dividend to 14 cents per share fully franked. As you would also be aware, the company announced a share buyback in November, and as at today has acquired 5.4 million shares or 3.6 per cent of issued capital at a total cost of $7.4 million. As we have illustrated already, the company is in a strong position to fund growth initiatives, with latent balance sheet capacity of $30 to $40 million available to pursue earnings-accretive initiatives or further capital management. We will pick up on this later in our presentation.

Throughout the year, IVE has continued to benefit from its differentiated value proposition and a loyal, strong and diversified customer base. We provided continuity of service and supply to all customers throughout the pandemic, with no COVID-related operating issues at any of our sites. We continued to grow our share of wallet across the customer base as we sell more of our products and services to our 2,800 customers. And our long-term track record of retaining clients ensured more than $100 million in contract renewals was achieved during the year across a multitude of customers, big and small. And some of these include the likes of Woolworths, Westpac, L'Oreal and more. Importantly, there was no material loss of any client in FY21.

From a growth perspective, there was continued focus on growing market share through harnessing the power and uniqueness of our go-to-market proposition. New business momentum across all parts of the business remains strong. And despite the challenges of COVID, $58 million of new clients were onboarded during the year, and again some fantastic brands, big and small, with the likes of Bunnings, Officeworks, Simplot, Colgate, and many more joining the IVE stable.

Pleasingly, the strong new business momentum from Q4 FY21 has continued into FY22, with a number of key customers already secured in this new financial year. We're very fortunate to have strong, reputable customers. And we are very grateful for their ongoing support. I'll now hand over to Darren and ask him to take you through the financial results in more detail.

Darren Dunkley: Thank you, Matt. And good morning, everyone. I'll now take you through the financial section of the presentation, starting on page eight, with the profit and loss, which is presented on an underlying continuing operations basis, excluding JobKeeper.

Improving metrics despite a full year of COVID-19 impacts. Revenue of 656.5 million, a net reduction of 20.9 million or 3.1 per cent on prior period. COVID-19 resulted in reduced a base revenue of 75.6 million over prior period. Main sectors impacted were catalogues, travel, events and exhibitions. This was offset by an increase in revenue of 54.7 million over prior period due to the full year benefit of the Salmat acquisition, acquired in January '20, and the part-year benefit of ACM acquisition, November 20. Our gross profit, which is revenue less material cost of goods sold, that is, it excludes direct labor and direct factory overhead, remains very stable to historical levels and is assisted by the diversity of our revenue streams. Pleasingly, gross margin improved on FY20 due to a combination of reduced outwork and management of our supply chain.

Improvement in EBITDA and NPAT margin driven mainly by increased gross profit as well as continued leveraging of our cost base resulted in EPS growth of 8.4 per cent, notwithstanding the COVID-19 impacts on reduced revenue.

If you just move to page nine, this year we have included an EBITDA bridge. The main points I would just like to emphasise is EBITDA growth in a challenging environment, which was driven by net gross profit improvement despite a net reduction in revenue, with overall gross profit margin increase on prior period. Continued flexing and management of our labour and overhead costs, with base business cost reductions of $11.6 million over prior period, normalising for the cost increases associated with the acquisitions. Our main point here is, as revenue returns, we are well placed to continue to leverage our cost base, supported by a stable gross profit margin.

Our balance sheet strength on page 10. Strong cash generation over the period has substantially reduced our gearing levels. Net debt down $59.8 million from June 20. Take us to a level of $77.3 million net debt, driven by significant operating and free cashflow, as well as the sale of tele fundraising during the period. Net debt of 1.3 times EBITDA, which is on a pre AASB 16 and excluding Job Keeper basis, which is well below our stated target level of 1.5 times. As at 30 June, our working capital facility of 30 million is fully undrawn and remains undrawn as at today. Given our strong cash generation during the period, the board decided to repay 50 million of senior facilities on 6th August, meaning reduced finance costs in FY22. Our senior debt facilities expire in April '23. Our balance sheet strength cornerstones our capacity to execute on growth initiatives in FY22 and beyond, which Matt will touch on shortly.

Page 11, capital expenditure continues to normalise following the completion of major investment and expansion initiatives over recent years. And, as a result, we have an operational footprint that is in excellent shape, full-year capital expenditure of $8.7 million, excluding MIS upgrades of $4 million. FY22 capital expenditure is expected to be circa $10 million, excluding 3.5 million to replatform and transition the Lasoo business. Matt will touch on this shortly, also. We often get asked what is our capex spend relative to our depreciation expense, and it is important to note that the ongoing base business capex is expected to be approximately 60 per cent of depreciation, excluding AASB impacts.

Cashflow generation and dividends. Continued strong free cashflow driven by operational performance and excellent working capital management. Strong operating cashflows of $97 million, with 131 per cent operating cashflow conversion, 110 per cent in prior period. Disciplined management of working capital, including reduced debtor days over the period, debtors aging improvement and reduced inventory levels.

Dividends. Reinstated dividend in H1 FY21. Final dividend of 7 cents per share fully franked, taking full-year dividend to 14 cents per share fully franked. Return on funds employed increase from FY20 of 12.4 per cent to 15 per cent in F'21.

Share buyback update, Matt has already touched on previously, but as of today, 25th August, the company has acquired 5.4 million shares at a total cost of $7.4 million. The average buy price share is $1.37. This represents 3.6 per cent of issued capital, and shares on issue now, 142.8 million. Lastly, but importantly, in recognition of the extraordinary efforts of all of our employees over the last 18 months, the board intends to issue 500 shares to every employee of the company in FY22.

This concludes the financial section of the presentation. I now will hand you back over to Geoff.

Geoff Selig: Thanks, Darren. So I'm now talking to page 14 of the investor presentation, titled "Strategy, Diversification and Growth Opportunities". Prior to talking about the right-hand side of that page, it's important for us to just reflect on the journey the company's been on. This is not a five-minute roll up, it's a company that's been around for a long time. And it's been a very deliberate strategy for a long time, for a long period, certainly over the last 20 years, to diversify the offering of the business. And that has certainly been the cornerstone of our strategy. Certainly since listing in late 2015, strong free cashflow combined with access to capital really has enabled the company to successfully execute on a more transformational investment and growth program that further expanded our integrated communications offer to our customer base.

The result of our long-term strategy, essentially diversification and growth, has delivered today what is, in our view, a highly resilient business, which has been demonstrated by our performance and our metrics over the last 18 months. And some of the slides coming up that Matt will talk to illustrate exactly that point. So, from our perspective, the strategy that we articulated and the course we set 20 years ago has served us very well.

So, if we then turn our mind to where we are today, this really is a continuation of our strategy through actively pursuing the current growth opportunities. And as both Matt and Darren have said before, we have the capacity in our balance sheet to fund $30 to $40 million in growth initiatives in the foreseeable future.

We have a minimum growth target of 15 per cent, and it would be our intention to invest wisely, but to not leave the cash sitting in the bank. We need to be disciplined about it, but there are a range of initiatives and opportunity in front of us today that the company is actively pursuing. Matt will talk shortly about the Lasoo investment, which I'll skip over, but certainly there's a couple of complementary adjacencies, and we have a long track record of moving into complementary adjacencies, like we did in retail display in '14 and premiums and merchandise in '15. This time around and in front of us at the moment is expanding our fibre base, our packaging presence, both organically or potentially through acquisition in that sector.

And we have a very extensive integrated logistics operation across New South Wales and Victoria, 45,000 square meters under roof for our existing logistics customers. And we're looking to expand that into a pure more 3PL operation as well.

And we also, as we come out of COVID, see a number of opportunities in the competitive landscape for us to look to a number of bolt-on acquisitions over the next couple of years, the type of acquisition that we have executed on multiple times over the last 20 years in terms of low risk, low multiples, and a nice earnings kicker for the business.

But really, from our perspective, it is a continuation of the strategy that has served us well up until this point.

I'll now hand back to Matt, and he'll just walk us through some of those initiatives, starting with our investment in Lasoo.

Matt Aitken: Thanks, Geoff. So, look, Geoff has just outlined the company's intention to pursue a range of strategic initiatives. One of those is the expansion of our existing digital offerings, which are already broad and significant. Over the next six to nine months, we'll be investing $3.5 million dollars in enhancing and amplifying the Lasoo platform that we acquired last year. Lasoo is one of the largest digital catalogue consumer platforms in Australia, so both apps and website. It has a loyal and active consumer following, as you can see from the metrics displayed on the slide, along with a diverse and growing base of Australia's leading retailers. And this provides a solid foundation as we invest further to improve the consumer experience and work with our retail clients to unlock opportunities to drive further revenue for their businesses. So, we will have more to say about this in the coming months to investors ahead of our launch, or relaunch, in early 2022.

In relation to the market positioning slide on page 16, we provided this information last year in the FY20 results deck. So, this has been restated for you based on FY21 data. And this slide really reiterates the strong market position IVE holds across a number of its key sectors, and the diversity of the sectors within which we operate.

This is some new data this year. This revenue diversification slide really illustrates the execution of our strategy and how it's resulted in an increased diversification of revenue streams, broader client relationships, and also provides for margin protection. Quarterly ongoing sustainability of our business is the value proposition we take to market, ensuring we remain relevant by closely aligning to our clients' evolving requirements.

A large proportion of our clients engage us across multiple parts of our business, and you can see how the product and service capability on the right-hand side of this slide illustrates the natural connection between our value proposition and the clients' marketing needs. We expect revenue growth across all parts of the business in a post-COVID-19 environment, and are ideally positioned to capitalise on opportunities to grow market share across multiple sectors. As we consider organic and inorganic strategic initiatives, I would expect you would see further diversification of our revenue mix moving forward.

As you can see from this slide, margins have been resilient despite COVID-19 impacting revenue over the last two financial years. Stable margin in the face of these revenue impacts, supply chain challenges, and the broader macroeconomic climate illustrates the strength of our business fundamentals. You can also see how balance sheet flexibility increases as operating cashflows increase and capital expenditure normalises. The business has the capacity to generate high levels of cash, which supports our capacity to invest and pursue the strategic initiatives we have touched on in the previous slides. And it also supports our dividend policy, as well as allowing for our share buyback.

So, from my perspective, the business is clearly match fit, has a strong balance sheet from which to execute growth initiatives, has great operating leverage, and is ready to benefit from the improved trading conditions as the economy re-emerges from these lockdowns.

So I'll now hand you back to Geoff to take you through the outlook statement and provide some closing comments. Thank you.

Geoff Selig: Thanks Matt. And certainly those four slides around market positioning, revenue, diversification, margin stability, and cashflow really, from our perspective, validate the strategy and highlight the resilience of the business, as I said before.

So, just turning to the final slide, 20, being the outlook page. From our perspective, the solid underlying fundamentals of the business, combined with the strength of the balance sheet, place us in an ideal position to deliver strong growth as we emerge from this period of disruption. If we look at FY22 more specifically, we're not able to provide guidance at this time, but we do point to the resilience of the IVE business over the last 18 months, which is important, and we would expect that resilience to continue through this current period.

It is fair to say that August 2021 is very different and very much an improved operating environment to what it was this time last year with even more uncertainty around. Yes, we are seeing some short term impacts to revenue as a result of the current lockdowns. In saying that, we're not a geographic specific business. We have a national client base, and we have dual operations. So, we don't really think about any impact to revenue in terms of specific geographic lockdowns, but we are seeing some short-term impacts to revenue across the existing customer base.

However, as Matt pointed to previously, good new business momentum in FY21 has carried over to H1 this year. And we certainly had solid growth in our retail distribution business, with some very meaningful wins over the last three months. However, post the vaccine rollout, which is in sight, which was in sight at this time last year, and as the country opens up, as they say, we would expect to see a bounce in clients' spending to drive consumer sales. And to pick up on Darren's point before, on a reduced cost base that we now have, as revenue returns, we certainly have the potential to leverage that reduced cost base and improve margins further.

Just looking a little more forward, we would expect revenue growth across the business over the next 24 months, driven by the post-lockdown recovery, as I just touched on, and further improved market positioning in key sectors. We've come out of COVID in a very strong position. We operate with multiple competitors across the landscapes we operate in, the sectors we operate in. So, we would expect that our market position will improve in some of those key sectors. The heightened operating leverage, as I just referred to before, the $30 to $40 million that we have available, while still preserving a strong balance sheet to drive earnings accretive and strategically aligned growth initiatives, which we've talked through, will be a very important part of the next 12 to 24 months.

In terms of capital management, the share buyback remains in place, and the dividend policy remains unchanged. And, finishing on capital expenditure, as Darren said, $10 million for FY22, excluding the Lasoo phase one investment of $3.5 million dollars. That is on top of an excellent operational footprint.

So, I would say in conclusion, before moving to Q&A, my thanks to our board, our CEO Matt Aitken for his outstanding leadership once again over the last year, our CFO Darren Dunkley for his ongoing and valuable contribution to the business, and the entire IVE team of 1600 for their skill and continued commitment over what has been a most challenging year.

Thank you again for making the time to dial in for the call. If there are any questions further to today's call, we will respond within 24 hours. And please feel free to make contact with any additional questions or areas you would like to discuss further. And we look forward to providing a further update to shareholders at our AGM in November. Thank you. On behalf of all of us here this morning, thank you.


Richard Nelson: We've got a couple of questions that have come through on the Q&A panel. So I'll take the first one, is, "Lots of well-known household names have come on as customers in the last 12 months, such as Woolies, Westpac, IAG. What services are you providing for them?"

Matt Aitken: So, it's Matt here, I might take that question. So, just to give you an example, across two of those brands raised, Woolworths, we provide a lot of data and one-to-one communication services for them in relation to their Everyday Rewards loyalty program. We provide a significant amount of product in relation to point-of-sale and retail display throughout their supermarkets nationwide. We provide uniforms for Woolworths, and we also distribute all of their letterbox catalogues nationwide.

For Westpac we provide creative services. We have, in pre-COVID times, a significant number of our staff embedded in Westpac facilities across Sydney, Melbourne and Adelaide. We service all of their five brands. So, when you think about Westpac, it's also St George, Bank of South Australia, Bank of Melbourne, and BT, Rams and so forth. We provide a lot of work for them in and around their data-driven communications requirements, both physical and digital. So, really, the transformation of their customer engagement strategy into a more digital world, digital environment. So, a lot of consulting and work in and around their Salesforce marketing cloud platforms with them. We provide premiums and merchandising. We warehouse all of the product that's required to support their branch networks around the country and their merchant networks. So, a lot of logistics and a lot of product sourcing. And that would be consistent across many of our other customers, like IAG and others. So, hopefully that gives you a flavour for the types of products and services that we're supplying these companies.

Clive Tompkins: Richard, we've got a question from Hamish Murray. Hamish, please go ahead.

Hamish Murray: Maybe just, and I know we touched on this earlier, but could we just touch on, I guess, the current trading conditions that you're seeing as we enter into this first half of '22? And maybe how any of your customers are approaching this differently to the last lockdowns we saw, I guess given the vaccines, and there's less uncertainty about how this plays out that than there was at the peak, I guess this time last year?

Geoff Selig: I think that's probably the answer. There is less uncertainty and less volatility and less fear in the Australian economy and across the country than there was, notwithstanding this Delta outbreak and the current lockdowns, than there was a year ago. And the vaccine targets are now well on track to being met. So, I think, despite where we sit right now in terms of people feeling and looking at daily case numbers, that there is a clear view that the end is in sight in terms of lockdown. And, to that extent, in the low-interest environment and still with reasonable levels of household liquidity, that the economy will bounce back post the pandemic. And I think our customer base is a rock-solid customer base. You know, they will be, and have the capacity to spend to drive consumer sales. And we have every expectation that they do that. We might even see a little more this year than last year because there were a lot of consumers that bought stuff last year that won't be looking necessarily to buy the same thing this year. So, that may actually result in retailers driving hard to maintain or match their revenue, strong revenue or sales numbers from last year. So, we're seeing, as I said, Hamish, you know, pockets of impact in relation to revenue. But, equally, we've secured some good new business wins through the back half of FY21, which certainly put us in good position relative to any short-term revenue impacts as we approach the ending of lockdown and the final rollout of the vaccine.

Hamish Murray: Thanks. Thanks, Geoff. And I've got a couple. So, just the other one was just going to be quickly, on that new business wins, and you guys highlighted that momentum has continued going into this half as well, which is good to hear, but how do we think about those $58 million of new incremental wins? Because I know there are a lot of moving parts in the business, but is it a sense that once we get normalised earnings, this should give you guys a normalised base higher than what we entered COVID in? How do we think about that?

Geoff Selig: Well, look, if revenue were to come back, yes would be the answer. But you'll remember, in all this last year, Coles made a decision to cease the production of their letterbox version of their catalogue, which was not an insignificant revenue spend. So, we can't ignore that was the case. But, equally, you know, if revenues return to pre COVID levels, in addition to the revenue that Matt outlined previously, and you combine that with the lower cost base, or the recalibrated cost base, that the business is operating in and the work that we've done internally in terms of bringing businesses together and so on that we outlined at the full year last year, I think that goes well for both revenue and for EBITDA or net profit. That's before you overlay incremental earnings from strategically investing, or investing wisely, the $30 to $40 million that we referred to before. And we put ourselves in the position to do that, have the capacity to do that, because of the long-term strategy that we've outlined before and the cash that we generate. So, does that give you a little bit more colour on that, Hamish?

Hamish Murray: Yeah. Yeah, it does. It does. And then the other one, just on the other side of this coin, is inventories came off, you know, reduced just slightly, and your net debt is way down under your target. Just understanding, I guess, the paper costs and freight costs. My understanding is that US is up, but Europe paper prices are okay. But just, how you guys are managing that freight that we're hearing about and inflation.

Matt Aitken: Yep. So, Hamish, it's Matt here. And it definitely is something that the team is working hard on every day. We've got really strong relationships with our local partners throughout Europe and America. And, you know, we do source still quite a lot of product out of the Australian market, particularly out of the Tasmanian mills. So, the product, I guess, and the paper coming out of that mill is not as heavily subjected to the shipping delays or the increased shipping costs that we're seeing come from overseas currently. But definitely, it's sort of navigating our way through it reasonably well at the moment.

Hamish Murray: Yeah. Thank you. And just one more for me. I guess the 30 to 40 mil capital you have to deploy. You know, I guess, I have no doubt you're surveying the market for acquisitions. Are multiples looking more compressed given the environment out there? And does it look like good hunting environment? And maybe just talk us through the strategic rationale behind the fibre-based packaging and 3PL and what that could mean?

Geoff Selig: Geoff here, Hamish. I think, as I said, we're coming out of this period of disruption in a strong position. We don't have one headline competitor, and we have multiple competitors. But we do have an active pipeline of opportunities. There are a number of competitors that have come out of this in not a strong position, in part because they don't have the diversified offering that we take to market and some of the things we pointed to before. So, we have a track record on acquisitions of buying well. Some we paid at the full end of the multiple range. But then there's been many that we settled on that are post synergies around the one time.

I think one of the other questions that's popped up on the screen today is managing our acquisition program. And we've undertaken, over a long period of time, a disciplined acquisition program. It's been an important part of broadening our service offering over the years, and it's been an important part of our growth. You know, historically, we've used a combination of internal and external resources. On some acquisitions, completely internal. Put aside the law firm. Completely internal. And other times for larger acquisitions, we have partnered with an external advisory firm on an as-needs basis. And ultimately, there's dual work streams for us. There's the due diligence on the business that we're actually acquiring. And then there's the work stream, which we'd call the synergies work stream, and how that business and that business's revenue would look inside our IVE business or businesses. Once integrated, they go hand in hand. And ultimately at the tail end of the question that's been posted on this call is, how do we know that we don't over-pay? I think it's a function of the two. There's the validation that the material has been provided in through due diligence stacks up, and we're comfortable with it and it's real. And then we overlay that with ultimately a view on revenue retention, and how customers would respond to an acquisition by IVE and validate the synergies number, and those two work streams ultimately inform the purchase price. In saying that, a lot of the acquisitions we've done have had an upfront component, and then a deferred component, which also brings another level of protection to IVE that we're not over-paying. So, I think that adequately answers that question that was posted earlier, or maybe I've answered a couple of questions there at the same time.

Hamish Murray: Yeah. Thanks, Geoff. And just the fibre-based packaging, is that something that would be organic? And this is the last one from me. But would that be organic with the facilities you have or how do we think of that?

Matt Aitken: Yeah. So, it's Matt here again, Hamish. So, we've got an open mind to that one. Both we do provide some capability in that space already through one of our plants in Melbourne, and we would look to organically grow that further. But if the right acquisition came along, we would definitely be interested in considering that route as well.

Hamish Murray: Thanks, team. That's it for me.

Geoff Selig: Thanks, Hamish.

Matt Aitken: Thank you.

Richard Nelson: OK. We have one more on the Q&A chat. "There are some high-profile competitors experiencing some serious challenges at the moment. Would you care to comment on how you view this in terms of the wider industry?"

Geoff Selig: I know we've talked about our structure of our sector previously. I mean, we have a vastly improved structure from an industry sector perspective than we had just 10 years ago. We don't have one headline competitor. We have multiple competitors. And there's less competitors, far less competitors, than what there were 10 years ago through sector rationalisation and consolidation, of which IVE Group has clearly been the leader in that area. I wouldn't consider we have any high-profile competitors, really. I'm not quite sure what the term "high-profile" means. We have, as I said, a proliferation of competitors. And from a business unit, or areas of our business, to business unit, we are focusing quite deliberately on specific competitors. And it may be that a competitor we compete with may bridge a couple of areas of our business. But, ultimately, I wouldn't consider that any of our competitors would be high profile -- albeit, our top 50 customers are all high profile and rock solid. So, I think, yeah, a proliferation of competitors. But, as Matt said before, we're in a strong position from which to compete with those competitors, certainly, based on where we're sitting at the moment in terms of our financial position, the underlying fundamentals of our business and the broad and diversified value proposition we take to market.

Richard Nelson: To what extent is the increase in inbound shipping costs and difficulties at ports due to COVID an opportunity in so far as curtailing offshore printing and bringing it back to Australia?

Matt Aitken: Yeah. It's a good question. And it's certainly something that we are seeing in the market over the last three to six months -- over the last three months in particular. Large Australian organisations or multinational organisations in particular that have been working with some of the global print managers. So, those print management companies don't own any operations here in Australia, are reliant largely on offshore supply chains to service these large multinational clients here in Australia. And we've seen them experience significant supply challenges, both in terms of timeliness of supply in their go-to-market strategy and increasing costs in their ability to execute the campaigns in market. And that definitely is seeing an uplift in engagement from those companies back into exploring local manufacturing options. And we think IVE has a really good fit for them there because we can cater both with offshore requirements, if they require it, but we clearly have substantial onshore requirements that can help those large multinational FMCG companies expedite their campaigns into market.

Richard Nelson: OK. Next one is about cybersecurity. Can you outline your cyber strategy if you've had any risks emerge on this front?

Geoff Selig: Look, I think the company, and certainly it's outlined in the risk section of our OFR, has, both through external advice and internal work that's been undertaken, very conscious of the increase, if I can broaden the answer, the increased exposure to both cyber security and also the management of data for our customers -- because we are, given our DDC operation, very, very large users of personalised data. So, having the right accreditation with tier one customers is incredibly, incredibly important. But certainly in the area of cyber security, generally, I think we've significantly increased our spend, and undertaken a range of initiatives to put ourself in a position that, from our perspective, adequately protects the company from a cyber attack.

Richard Nelson: Great. OK, and back on acquisitions, when making an acquisition, what thought do you give to integrating culture when making acquisitions?

Matt Aitken: Culture, from our perspective in an acquisition, it's right up there in terms of the key considerations for us. It's all very well to pay a fair price and get some revenue, or a new capability, or change the competitive landscape, but culture for me is really, really key. And I want people to come into our business, be part of the IVE culture, add value to what we do and for them to have a long and flourishing career in our business. And I think, as we look back over the 40-odd acquisitions we've done over many, many years, we've had some fantastic people join our business who've gone on to have a fantastic career in our business and actually hold very senior positions in parts of our business today. So, the culture is incredibly key to any acquisition that we decide to make.

Clive Tompkins: Good. Thank you, everyone. That concludes the presentation. Thank you, everyone.

Geoff Selig: No, thanks again, everybody.

Matt Aitken: Thank you.

Geoff Selig: All the best.


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