In its recent 2022 AGM, IVE has said the integration of the expected $160 million of Ovato revenue into its existing manufacturing footprint could deliver a $15 million increase in underlying NPAT in FY23.
“On 14 September (following ACCC clearance on 30 August), the group completed the highly accretive and strategically attractive acquisition of substantially all the printing and finishing assets of Ovato, IVE’s largest print competitor,” its executive chairman Geoff Selig said.
“The net purchase consideration (including transaction costs) of $16 million was funded from existing facilities, with integration and associated capital expenditure costs over the coming 12 to 18 months expected to be approximately $22 million excluding redundancies.
“The integration of the expected $160 million of Ovato revenue into IVE’s existing manufacturing footprint is estimated to deliver a $15 million increase in underlying NPAT (circa 35 per cent increase in EPS) relative to FY23 guidance once the integration is complete.
“The company remains well capitalised and highly liquid. To preserve balance sheet strength and to enhance capacity to fund future growth initiatives post the Ovato acquisition, the company successfully completed a $19.3 million capital raising (8.58 million shares issued at $2.25 per share) in October.
“The capital raising strengthened IVE’s institutional shareholder base, further increasing liquidity in the market for IGL shares. The company currently has available capacity to pursue targeted earnings accretive opportunities, particularly our intended expansion into the adjacent packaging sector.”
The company also reported on its earnings for the FY22 financial year, with an EBITDA of $96.6 million and an NPAT of $33.1 million – up 66 per cent from the previous year. Its revenue was $759 million, an increase of 15.6 per cent on the previous corresponding period.
It reported a net debt of $76.8 million at 30 June, $60.3 million below the net debt at 30 June 2020.
“It is worth noting that the net debt position also reflected a meaningful short-to-medium term increase in working capital (circa $30 million of additional inventory) as a result of the company’s informed decision to increase paper holdings in response to supply chain volatility and to ensure continuity of service for clients,” Selig said.
According to Selig, IVE’s acquisitions of Active Display Group (ADG) and AFI Branding Solutions on 1 November will also significantly expand its third-party logistics capability and further diversify its offerings in the events and exhibition sector going into the future.
“The company has emerged from the COVID-19 pandemic with a significant step up in both revenue and earnings, a solid balance sheet, an improved market position and a management team focused on ensuring the continued strong performance of the business as well as a commitment to the execution of our ongoing strategy of diversification and growth over the years ahead,” Selig added.
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