Print and marketing group IVE reported $23 million in net profit for the first half, up from $17.7m pcp despite a 3% fall in revenue to $340.8m. “We estimate a revenue reduction to pcp of circa $50m as a result of the impacts of COVID-19, particularly in the retail catalogue and travel sectors."
IVE’s net profit (NPATA) for the first half of financial year 2021 was $23 million (which includes Jobkeeper receipts of $14.9m), up from $17.7 million in the prior corresponding period (pcp). With Jobkeeper excluded from the figure, underlying NPATA falls to $12.7m, a fall of $28% pcp. IVE ceased to qualify for future JobKeeper benefits from 30 September 2020.
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| "Sound strategic roadmap": IVE chairman Geoff Selig |
“The impacts of COVID-19 have varied across our business, our clients, supply chain and the sector more broadly,” said IVE executive chairman Geoff Selig. “Under the circumstances, the board is very pleased with the first half performance and the significant reduction of $89m in net debt since the end of March 2020.
“The share buyback announced on 12 November 2020 represents a flexible and efficient capital management initiative that benefits shareholders and reflects the confidence in the company’s ongoing performance. The board’s focus continues to be on maintaining our strong financial position and sound strategic roadmap.”
IVE CEO Matt Aitken added: “Our solid first half performance reflects the depth and breadth of our client relationships, the diversity of the value proposition we take to market and the resilience and commitment of our staff. The company remains well placed to grow our market share across the numerous sectors we operate in as we emerge from the COVID-19 pandemic.”
The company told the ASX: “We estimate a revenue reduction to pcp of circa $50m as a result of the impacts of COVID-19, particularly in the retail catalogue and travel sectors.
“IVE delivered solid financial performance for the Half Year despite the challenging conditions. Previous guidance for the Full Year is reaffirmed.
“There has been continued impact from COVID-19 on the economy and customer activity. We have seen a diverse range of customer outcomes under these conditions with Coles reducing letterbox distributions (Revenue reduction to pcp of circa $12m reflects the impact of Coles ceasing to produce the letterbox version of their weekly catalogue from 9 September, 2020), while Australian Community Media (ACM) signed a significant long-term print contract (Expected revenues of circa $100m over the five-year term, with revenue transitioning mainly during H2 of FY21).
“Evolution of the business structure continued with IVE Telefundraising (formally Pareto Phone) being divested for cash consideration of $16.5m, and a net gain on sale of $4.2m, with the proceeds used to further strengthen the balance sheet.
“Following the successful pivot into PPE during FY20, our ivolve brand and extensive range of PPE was successfully launched in October 2020.
“We continued through the period to flex and streamline our cost base in response to COVID-19 to mitigate short term revenue impacts and to further strengthen the business on an ongoing basis. JobKeeper support ended for the majority of IVE businesses at the end of the September quarter. IVE Distribution received JobKeeper through to the end of December.
“Company net debt continued to reduce, liquidity levels are strong and the dividend has been re-instated. The share buyback, announced on 12 November 2020, for up to 10% of issued shares, has also commenced. We remain confident that we are ideally placed to maintain and grow our strong market position in the second half of this financial year."
New business momentum
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| Photo: from IVE Group Limited FY21 H1 Results Presentation |
IVE also outlined an expansion of its point of sale and display business: "We have moved deeper into the retail and FMCG vertical by obtaining HACCP (Hazard Analysis Critical Control Points) certification. This has enabled IVE to move beyond just point of sale production, and now through utilisation of our large Integrated logistics capability we are managing the product co-packing requirements for major clients and household consumer brands, including a major tinned food producer, batteries, coffee pods, confectionery, toys and dental products to name a few.
"As a retail specialist, IVE continues to support leading retail brands, such as Diageo by creating and producing exceptional point of purchase collateral, that help’s turn shoppers into buyers. Despite food and beverage sectors experiencing significant disruption since the outset of the pandemic, Diageo continues to successfully grow market share and capture the attention of shoppers by promoting its stable of brands though increased investment with IVE. Every campaign activation is unique and consists of a diverse range of integrated point of sale, displays, premiums and merchandise solutions – manufactured locally and offshore, incorporating everything from creative development, right through to distribution."
In August 2020, IVE Group reported net profit of $36.7 million for the financial year ending 30 June 2020, after receiving $16.8m in Jobkeeper payments. “The Federal Governments ‘JobKeeper Program’ has fortunately enabled us to retain staff through this period of revenue volatility,” IVE said at the time.
