IVE delivers strong full year results

IVE Group is reporting strong revenue and earnings growth for the full year, with its sales rising 39.9 per cent to $695.4m, up from $496.9m in the prior corresponding period (pcp).

EBITDA came to $73.2m, up 32.4 per cent from $55.3m in the pcp, while its EBITDA margin was 10.5 per cent, a 5.4 per cent drop from 11.1 per cent. IVE says its lower earnings margin was driven by a number of factors, citing delayed closure of the AIW site due to contract wins, the integration of direct marketing business SEMA, electricity, gas and paper price increases along with bad debts associated with subsidiary Kalido Asia.

EBIT was $54.3m, increasing by 30.9 per cent from $41.5m in the pcp.

Net profit after tax (NPAT) came to $32.4m, growing by 32.1 per cent from $24.5m in FY17.

The final phase of the Group’s new $53m greenfield site for Franklin Web NSW in Huntingwood, western Sydney, is expected to be completed by next month, with the installation of its second 80 page press.

The facility was made fully operational in November with the installation of an 80 page manroland Lithoman press and an automated binding line. The company expanded its stitching capacity in March.

Warwick Hay, managing director, IVE, says “The final stage of the NSW Franklin Web project is occuring right now, with the commissioning of the second 80 page offset press on track. It is much the same as the first press. It is something that was always in the plans, back to when we raised the capital last year.

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“We intend to have an opening of the Franklin Web facility sometime in November. It is a world class, low cost production environment and it is pleasing to see how it has come together.

“The group has achieved a number of key initiatives over the past twelve months. FY18 has been a standout year for organic growth, well above what we usually have, at 6.2 per cent.

“We now have the broadest point of sales offering in Australia.”

Total capital expenditure for the year came to $54.6m, the bulk of it ($32m) going to Franklin Web NSW to establish its new site, and another $10.7m to be given in the coming year. IVE invested $10.4m in Blue Star Web, with the instalment of a new 16 page web offset press in FY18, while $3.1m went to the integration of SEMA in Blue Star Direct and $9.1m was given to group wide targeted investment and maintenance.

In the next year, IVE is planning to invest $5.5m in additional high speed continuous inkjet in Blue Star Direct. It was successful in $55.6m capital raise in August last year, with aims to drive further growth beyond FY18.

The company relocated and merged Victorian Blue Star Display with Franklin Web’s retail display business in Sunshine, with the merger being completed in December.

IVE also acquired and integrated direct communications business SEMA into Blue Star Direct last year, along with Sydney based Dominion Print Group in November.

[Related: IVE Group delivers half year result]

Hay says, “Over the past 20 months we have successfully undertaken two significant acquisition and integration projects. Both projects involved major capital investment programs to ensure effective integration and to expand our capacity on the back of revenue growth. These projects are now close to complete and we are pleased with the outcomes.

“Additionally, we have retained all key customers and grown market share over the period. As a result the business is ideally positioned to continue our growth trajectory and to build further value for our shareholders in FY19.”

Geoff Selig, executive chairman, IVE, says, “We are pleased to have delivered another strong result, as we acquired and successfully completed the integration of a number of strategically important businesses into the Group, while ensuring throughout there was no disruption to our customers.

“During the year we achieved revenue growth from the combination of solid organic growth and the acquisitions of Franklin Web, AIW and SEMA.

“The strong EBITDA growth we generated translated to uplift in free cash flow, which underpinned the continuation of a healthy dividend yield. We continue to maintain a conservative balance sheet, with net debt of 1.79 times pro forma EBITDA.

“It has been a busy and challenging year in terms of integration and acquisition. It has been a strong uplift in financial performance across the board.

“At a broader group level, we continue to have good momentum. Our value proposition is diverse – it is a world class offering that we bring to market. We have invested a lot of money, that is behind us now as we move forward. Our resting point for capex comes back down to $9m, for this year and moving on.”

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