Despite a period of “unprecedented volatility and uncertainty,” ASX-listed print & marketing business IVE Group reported a healthy net profit of $36.7 million for the financial year ending 30 June 2020, down just 6.3% on FY 2019. “I don’t believe we could have responded any better to the impacts of COVID-19,” said executive chairman Geoff Selig.
“The Federal Governments ‘JobKeeper Program’ has fortunately enabled us to retain staff through this period of revenue volatility,” IVE told the ASX. “The Group received a gross amount from JobKeeper of $16.8M, with a final net amount of $15.1M net of payments to employees on stand down.”
Excluding the government assistance, IVE’s profit was $26.2 million, down 33.2% on the previous year. IVE said the company does not expect to qualify for JobKeeper after the end of September 2020.
Total 2020 revenue fell by $32 million (4.4%) to $691.5 million. Net debt was reduced to $137.1 million, “due to tight liquidity control and working capital management from the start of COVID period and ongoing.”
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| 'Pleased with the performance': IVE chairman Geoff Selig |
IVE Group executive chairman Geoff Selig said: “Notwithstanding the extent and speed with which the COVID-19 crisis impacted their personal and professional lives, our entire workforce of 1700 staff responded together as one. They committed to do whatever was required to maintain a safe workplace, and ensure we continued delivering high levels of service to our clients.
“Under the circumstances, I don’t believe we could have responded any better to the impacts of COVID-19, and I thank our leadership team and all of our staff for their efforts and commitment during the year, particularly the last 6 months. I am pleased with the performance of the business over the last year and the underlying strength of our financial position.”
IVE Group chief executive officer Matt Aitken added: “IVE entered the COVID-19 crisis in a position of strength, with the company responding very well on all fronts to the unprecedented and volatile operating environment. The company remains well capitalised, highly liquid, and confident that we are ideally placed to maintain our strong market position as we emerge from this period of uncertainty and disruption.”
2020 Revenue
Total revenue for the Group for FY20 was $691.5. This includes acquisition revenue for H2 for Salmat Marketing Solutions (now IVE Distribution) and Reach Media of $50.0M. Normalised for the acquisitions, revenue declined by $82.1M from pcp of $723.6M to $641.5M. The main drivers in the decreased revenue relate to
COVID19 negatively impacting revenues from March and the balance of Q4
- Catalogue production and distribution revenue impacted due to major supermarket clients not needing to advertise as a result of significantly increased sales through the crisis. Some retail clients also reduced/cancelled catalogue production and distribution due to a combination of ongoing supply issues and store closures.
- Travel sector clients reduced spend over the period, however it should be noted that we are still doing work for travel clients albeit at reduced levels.
Despite the negative impacts of COVID on parts of the business other sectors continued to perform strongly:
— Retail Display had a strong growth year on year
— COVID resulted in many clients increasing 1 to 1 communications with their with customers
— Many clients/sectors not impacted by COVID and activity levels remain strong (eg: healthcare and not for profit)
— No material client losses of note during FY20 including post COVID
— Secured contract extensions for a large number of existing clients
— Continued strong momentum on organic revenue growth
— Revenue from our PPE product lines in our premiums and merchandise business was much higher than anticipated
The Year Ahead
The Company believes that its investment and diversification strategy over the last decade to be sound, and has confidence that the value proposition IVE takes to market places us in a flexible position to adapt to potential movements in client expectations in the post COVID-19 world.
FY21 Guidance
Full year FY21 underlying EBITDA expected to be consistent with FY20
Margins expected to remain stable over FY21
Forecast net debt at 30 June 2021 of approximately $110M
Capital expenditure for FY21 of $10M
The Company does not expect to qualify for JobKeeper after 30 September 2020
The Board intends to resume dividend payments consistent with the existing dividend policy commencing with the H1 FY21 interim dividend.
Earlier this month, IVE Group was informed by major client Coles Group of its plan to cease distribution of printed catalogues from September 9, 2020. IVE expects this to reduce revenue by approximately $35-$40m a year. The Coles catalogue is currently printed and distributed to about seven million Australian households weekly.
