Thank you for standing by, and welcome to the IVE Group Annual General Meeting. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. Geoff Selig, Chairman of the Board of IVE Group Limited, please go ahead.
Thank you, everyone in attendance today at our annual general meeting of the shareholders of IVE Group. It's now 10:00 A.M. in Sydney. We have a quorum of members present, so I declare the AGM open. Sandra Hook, James Todd, Paul Selig, and Cathy Aston. We also have Darren Dunkley, our CFO and Joint Company Secretary and secretary as well. We also welcome representatives and our host, our auditors from KPMG, who will be available to answer any questions you may have. We're also very pleased to welcome those of you participating online through our virtual meeting platform provided by our share registry Link Market Services. Shareholders and proxy holders have the ability to ask questions and submit votes during the meeting, as would be the case for a physical meeting to limit the spread of the COVID-19 virus and encourage greater participation and engagement among our shareholders.
If we do experience any technical difficulties before the formal business of the meeting, I'll give a brief address and then ask our CEO, Matt, to also address you. Voting on the resolutions will be conducted by way of poll in order to provide you with ample time from the opening of voting, which will occur shortly, and the closing of voting as announced at the end of the meeting. Once you've registered, your voting card will appear. The resolutions to be voted on by shareholders at the meeting, as set out in the Notice of Meeting. To cast your vote, simply select one of the options. I now declare the meeting open. I'll also give you notice before I move to close voting at the conclusion of all items of business. After Matt's presentation, we will formally step through any general business. Questions will be taken.
If you have a question you'd like to ask today, there are two ways to do so. Shareholders participating online through the virtual meeting line, please click on Answer Question button, type your question, and click Submit. Questions can also be asked via the moderator for those using the telephone option. To do so, you must first enter your unique PIN, which is available from Link Market Services on request prior to the meeting. After you've dialed in, you'll be asked to mute your computer and listen to the meeting by phone. If you wish to ask a question, please press star one. The moderator will ask your name and will introduce you to the meeting at the relevant time. Please then unmute your phone and ask your question.
Please note that while you can submit questions from now on, we will not address them until the relevant time in the meeting. Please also note that your questions may be moderated, or if we receive multiple questions on the same topic, amalgamated together. Finally, due to time constraints, we may run out of time to answer all of the questions that may be asked today. We will first take questions from shareholders using the online platform and then move to take questions received over the phone. That is it in terms of the meeting protocol. Just moving to a few remarks from my perspective, and then I'll hand over to Matt.
Well, it's fair to say that our centenary as a business, which commenced in March of this year, has thus far not unfolded quite as we'd expected as a result of the disruption of COVID. We certainly look forward to appropriately marking this occasion and milestone for our business with our staff and clients at some point over the coming months. If we look at our financial performance, and notwithstanding the impacts of the pandemic across multiple parts of our business over the entire year, we had solid financial results. We exceeded our earnings guidance at AUD 100.2 million EBITDA, improved our margins despite reduced revenue and any of the impact of the federal government's JobKeeper support. Importantly, our balance sheet strengthened on the back of strong underlying cash generation.
In dollars at 30 June, the board made a decision to pay down AUD 50 million of our senior facility, which we subsequently did on 6 August this year. Following the share, fully franked. Notwithstanding, the company did not pay a dividend for the entire year as a result of the pandemic. The solid financial performance of the company in November 2020 has resulted to date in the company acquiring 5.4 million shares at a total cost of AUD 7.4 million. This represents three point. In recognition of the extraordinary efforts of our employees, approximately 1,600 of them, over the last 18 months, the company issued 500 IGL shares to every. The company remains well capitalized and highly liquid.
The strength of our balance sheet places us in a strong position to actively pursue growth opportunities consistent with our previously articulated strategy to evolve and expand our value proposition we take to market. While observing our stated leverage ratio of 1.5 times pre-earnings accretive opportunities. Matt will touch further on this shortly. The recent acquisitions of Active Display Group and AFI, announced recently, the capacity to drive growth initiatives. In addition to a range of organic growth initiatives, we would anticipate over the next 12-24 months. Over the last year, we've experienced a meaningful increase in interest from our clients, investors and our board regarding environmental, social and governance ESG issues. We recognize these developments and are taking proactive steps to mature and to find our approach further, meet expectations, and adapting to changes in the landscape.
Over the coming months, we are embarking on the next stages of our ESG journey, and we'll welcome feedback and participation from all stakeholders. This work will result in the development of a robust and transparent ESG framework underpinned by commitments and actions, and we look forward to sharing our progress at future reporting and communications. Thank you to our CEO, Matt Aitken, for his continued outstanding leadership of our business. To our CFO, Darren Dunkley, likewise, and the entire leadership team and management team for their never-ending commitment. To all of our dedicated staff for what was a huge effort throughout the most demanding year the business has ever experienced. We welcomed Cathy Aston to the board in December of last year, Cathy also taking on the role as Chair of our Audit, Risk and Compliance Committee.
We're most fortunate to have a very cohesive and diverse board, all of whom have stewarded the business very well through this COVID-19 pandemic. Thank you to my fellow directors, Paul Selig, James Todd, Sandra Hook, Gavin Bell, and Cathy Aston for your ongoing contribution, expertise and support, particularly over the last 18 months. As I reflect on the extraordinary year we've just been through, and in the context of it also coinciding with our centenary as a business, it's reaffirmed my and our optimism that as we emerge from the COVID-19 pandemic, the solid fundamentals of our business place IVE in a position of strength from which to continue growing.
Thanks, Geoff. Good morning, it's my pleasure to present the results for the year and talk about the year ahead. If we can flip to the next slide, please. The content slide. The following slide. That's it. Thank you. Some of the content will already be covered, so we'll quickly focus more on FY 2022. Next slide, please. Geoff has already covered a number of the key metrics in this slide. As you can see, notwithstanding the impact, it was very solid. Earnings of AUD 100.2 million at the upper end of our guidance, which was AUD 98 million-AUD 100 million, and strong cash flows delivered increased balance sheet strength, which illustrates the underlying resilience of the business. Next slide, please. Margin growth continued to improve despite reduced revenue, with much of this achieved through flexing our cost base and management of our supply chain.
I'm also very proud of the contributions made by all of our 1,600 staff in the year as they responded to an unprecedented and volatile operating environment. We really do have an awesome team. During the year, we executed on two key strategic initiatives. The first being the divestment of IVE Telefundraising in October, the details of which Geoff has already referenced this morning. The second being the commitment to a long-term contract with ACM, Australian Community Media, which included the acquisition of their production operation in Western Australia. Since buying the Western Australian operation, it has performed very well, and we are very fortunate to have a great team over there. We have also been able to transition some of our volume from our East Coast operations to WA to better service our national clients. Next slide, please.
The strengthening of the balance sheet is one of the real highlights for FY 2021, with strong cash flow generation and operating cash flow of 131%. Net debt was reduced by almost AUD 60 million, and cash on hand at 30 June was AUD 107 million. Since the end of the financial year, we have repaid AUD 50 million of our senior debt facility. Focus on improving shareholder returns with EPS growth over PCP of 8.4% and the resumption of dividends in FY 2021 with a final dividend of AUD 0.07 per share, fully franked, taking the full year dividend to AUD 0.14 per share, fully franked.
As you would also be aware, the company announced a share buyback in November 2020, as Jeff has mentioned this morning, and we have used AUD 7.4 million of our funds to acquire 5.4 million shares through that period of time to the end of the 25th of August. Next slide, please. Throughout the year, IVE continued to benefit from its differentiated value proposition and a loyal, strong and diversified customer base. From a retention perspective, 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 continue to grow our share of wallet across our customer base as we sell more of our products and services to our 2,800 clients.
Our long-term track record of retaining clients ensured more than AUD 100 million in contract renewals was achieved across a multitude of clients. More importantly, there were no material customer loss at all in FY 2021. From a growth perspective, there was continued focus on growing market share through harnessing the power and uniqueness of IVE's go-to-market proposition. New business across all parts of the business was strong, and despite the challenges of COVID, AUD 58 million of new clients were onboarded into IVE.
Pleasingly, the strong new business momentum has continued into FY 2022, with a number of key wins already, and these include, among many others, ALDI for the distribution of their catalog nationwide, and a significant expansion of our relationship with API, Australian Pharmaceutical Industries, which are better known through one of their key retail brands, Priceline, and we are very grateful for their ongoing support. Next slide, please. From a revenue diversification perspective, executing our strategy has resulted in increased diversification of revenue, 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 capabilities of our business in a post-COVID-19 environment, and we are ideally positioned to capitalize on opportunities and to grow market share across multiple sectors.
As we consider organic and inorganic strategic initiatives has resulted in a resilient business with diversified revenue streams well-positioned to pursue growth initiatives. The diversification of our offering has been the cornerstone of our strategy through actively pursuing growth opportunities. IVE's balance sheet strength will support investment of AUD 30 million-AUD 40 million in growth initiatives, and these growth initiatives will target a minimum ROFE of 15%. These will be areas such as fiber-based packaging, third-party logistics, and the opportunity to bolster our existing businesses with your range of strategic initiatives. One of those is the expansion of our existing digital offerings, which are already broad and significant. In FY 2022, we will be investing in Lasoo that we acquired in early 2020. Lasoo is one of the largest digital catalog consumer platforms in Australia.
It has a loyal and active consumer following, as illustrated by some of the statistics on the slide here, along with a diverse and growing base of Australia's leading retailers. This provides a solid foundation as we invest further to improve the consumer experience, enhance the consumer engagement with catalogs, and work with our retail clients to unlock opportunities to drive further revenue and commercial benefit for their business. It also provides further opportunity to expand our digital offering across our 2,800 strong client base, and even more so, the 400+ retail clients that IVE Group has. The enhanced platform will be launched in the first half of 2022, and we will provide a further update at the release of our half-year results in February. Next slide, please.
These results for the first four months are particularly impressive from my perspective when you consider that two of our major operating markets, being New South Wales and Victoria, have been in lockdown for the majority of this period. Unlike the same time last year, when extended lockdowns were more specific just to Victoria. In the first four months of FY 2022, we have seen strong recovery and momentum across the business with revenue up 9% over PCP. EBITDA and NPAT up 32% and 75% respectively on PCP, demonstrating heightened operating leverage across the business as highlighted in FY 2021 full-year results. Cash on hand at 31 October 2021 is AUD 42 million, post repaying of the AUD 50 million in senior debt facility I spoke to earlier, and net debt at 31 October 2021 of AUD 89.7 million.
I would note that the revenue, EBITDA and NPAT have been normalized through our Telefundraising business, which we divested last year, as we've spoken to. EBITDA is on a pre-AASB 16 basis, and EBITDA and NPAT exclude FY 2021 JobKeeper receipts. With the majority of our workforce in these two markets impacted by the lockdowns, I'm particularly proud of how they have responded to the disruption and challenges at both a personal and professional level throughout this period to deliver this result in the first four months of FY 2022. Next slide, please. The current global supply chain disruptions are having a dual effect on the business. Companies onshoring works are bringing work from offshore back onshore into Australia, where it had been previously. Opportunities, particularly with global brands that have historically relied on global offshore supply chain solutions.
At the same time, however, paper prices have moved to the top end of their long-term historical rate. Expectation is that the price pressure will continue throughout 2022. These price movements do not affect the whole business. They predominantly impact our web offset printing division. In response, we have moved quickly to shore as we foreshadowed at the time of the release of our full-year results in August. IVE has long-term strong relationships with all major international paper suppliers. We're working closely with our clients to manage and mitigate the flow-through cost of adjustments as required, and we're confident that the majority of these recent paper cost increases will be passed through to clients in the course of time. Next slide, please. In terms of major initiatives for H2, Geoff has already touched on the acquisition of Active Display Group and AFI Branding.
The acquisition was completed on the first of November for consideration of AUD 6.5 million. Five point two million of the consideration was paid on completion, with one point three million dollars of the total payable as deferred consideration based on the achievement of agreed revenue targets over a 24-month period. The acquisitions are expected to contribute annual revenue of approximately AUD 45 million, additional EBITDA of AUD 6.5 million, and NPAT of AUD 4 million or AUD 0.028 per share post the full integration of both ADG and AFI into IVE's existing operations. The integration of both businesses has already commenced, and we will complete this by the thirtieth of June 2022.
These acquisitions significantly expand our third-party logistics capability and our retail display businesses, as well as further diversify our offering into fabric point of sale printing, for retail and events and exhibitions through the AFI Branding Solutions acquisition. This is our first acquisition since the Salmat transaction in January 2020 and represents the company's initial investment in growth initiatives as foreshadowed earlier in my presentation. In terms of an update, post-acquisition on the first of November, they have been very well received by staff and clients. The Active Display Group and AFI Branding Solutions were both extremely well regarded by clients in the market. Staff are integrating into the business extremely well. We're near completion of the plan for the integration, and we would consider the business to be an excellent cultural fit with IVE.
The sales teams across the group are already working together to identify cross-sell opportunities across the board across the group and sales momentum across the businesses is strong, particularly in AFI, who are a leading supplier to the events sector, which is expected to rebound in 2022. Next slide, please. We for the last two years and the year ahead have been undertaking a major consolidation program of our footprint in Victoria. This consolidation program will result in having two main operating precincts across Greater Melbourne, driving further efficiencies and enhanced client service. In the west of Melbourne, which is the Altona precinct, and it is the home for our web offset printing operations and letterbox distribution hub. If we move to the next slide, please.
This slide talks about across four buildings and also total 52,000 sq m in space. You'll see from the top right picture on the presentation, we've indicated where certain businesses are based in this precinct. 2022, that is about 18,000 sq m. Building two, which is about 13,000 sq m, will be used for the expansion of our logistics and fulfillment business, and that will include Group and AFI Branding Solutions point of sale side of their businesses will integrate into building three as we go into early calendar 2022. Our integrated logistics in 3 months to 4 months of next year, we will have completed what has been a significant consolidation process of our footprint in Melbourne. Next slide, please.
The financial performance of the business on revenue, EBITDA and NPAT for the four months to 31 October 2021 is significantly up on the same period last year. As illustrated, strong revenue momentum continues, and we remain optimistic this will continue over the remainder of FY 2022, driven by post-lockdown economic growth expected to continue through the balance of FY 2022. IVE is well positioned to pass through the paper increases to clients. Due to contractual timing differences, we expect a one-off NPAT impact of circa AUD 2 million in FY 2022 in relation to this. The recent acquisitions of Active Display Group and AFI Branding Solutions at a very low multiple represent the initial deployment of the AUD 30 million-AUD 40 million we have available to drive earnings, accretive growth initiatives.
In addition to organic growth initiatives, we would anticipate attractive acquisitions opportunities present over the coming 12-24 months. From a capital management perspective, the group will continue to maintain our strong balance sheet position. Our dividend policy remains unchanged, which is that we pay strong dividends at sustainable levels, targeting a full-year payout ratio of 65%-75% of NPAT. That capital expenditure is still expected to be AUD 10 million, excluding the phase 1 investment into Lasoo of AUD 3.5 million. Capital expenditure will continue at approximately 60% of annual depreciation. Next slide, please.
This year, we celebrate our centenary and as part of that, I would like to recognize and congratulate Geoff and Paul Selig for their vision and commitment to creating a business that their father, Gordon, and even more so their father, Oscar, would be very proud of. Their guidance and leadership over many years continues to position the company very well for the future. I'd also like to say thank you to the senior leadership team and our staff for their ongoing commitment and dedication to our customers and the business and to our board for their continued support. Thank you and good morning. I'll now hand back to Geoff.
Thanks, Matt. We now come to the formal part of the meeting, matters requiring resolution which were outlined in the notice of meeting dated the 22nd of October, which was circulated to all members. I will take the notice of meeting as being read. The resolution voted on by shareholders, proxy holders, and shareholder company representatives. Moving to the resolutions, I would intend to vote all undirected proxies in favor of all resolutions except for resolution number four. As each resolution is tabled, a slide will show general questions that we've received via the online platform in relation to meeting procedure.
Chairman, there are no questions at this point.
No questions?
Questions at this.
Moving on, the first item is the consideration of the reports. The 2021 annual independent auditor's report. A copy of the annual report was made available on the company's website and was also sent to those shareholders who requested it at the EGM. At this time, I'd like to take any general questions or comments about the reports or for the auditor. I note that the auditor did not respond on the online platform.
There are no questions on the online platform.
Okay. Anyone via the phone?
There are no questions relating to this item.
Okay. Thank you. To the chair of our remuneration and nomination committee, Gavin Bell, to chair this part of the meeting. Thanks, Gavin.
Thanks, Geoff, and good morning, everybody. The first resolution relates to the re-election of Geoff Selig as a director. A detailed biography of Geoff is included within the notice of meeting. The resolution is set out on the screen. The directors, with Geoff abstaining, recommend shareholders vote in favor of Geoff's re-election. I'll now take questions on this item of business platform. There are currently no questions online. Through the telephone?
There are no questions relating to this.
If there are no further questions, I now put the proxies. Thank you. Please now select either for, against, or abstain for resolution one on the voting card. I'll now hand back to Geoff to chair the meeting.
Thanks, Gavin. Now moving on to resolution number two, election of director Cathy Aston. Her detailed biography is included within the note. The resolution is set out on the screen. The directors, with Cathy abstaining, recommend shareholders vote in favor of Cathy's re-election. Are there any questions via the online platform?
There are no questions.
None on the phone? That being the case, I now put to the meeting resolution number two. The proxies are on the screen. Resolution number two on the voting card. Moving to resolution number three, which relates to the adoption of the remuneration report, which is contained within the 2021 annual report. We'll take the remuneration report as read. In response to the first strike received at the 2020 AGM, the company has consulted with investors and proxy advisors to understand their views on the remuneration report. Representatives of the majority of shares which were voted against adoption have informed us that the reasons they voted against adoption were not primarily related to the remuneration report. We did, however, receive some constructive feedback from a limited number of shareholders and proxy advisors in relation to the remuneration report.
Key aspects of this feedback and the actions we propose to take in response were outlined in the remuneration report and in the notice of meeting. Further details about the resolution are also contained in the explanatory memorandum that accompanied the notice of meeting. I'd also like to advise shareholders that I will disregard any votes as stated in the voting exclusion statement related to resolution three, as set out in the notice of meeting. The directors recommend shareholders vote in favor of this resolution, and the resolution is set out on the screen. Do we have any questions through the online platform?
There are no questions on this item.
The phone?
There are no questions relating to this item.
Okay, thank you. With that being the case, I now put to the meeting resolution number three. Here are the proxies on the screen. Please now enter your votes for resolution three on the voting card. Moving to resolution number four, which is a conditional item being the spill motion. The adoption of the remuneration report contained in the company's 2020 annual report was not approved by more than 75% of votes validly cast on that resolution at the time. If more than 25% of the votes validly cast on resolution number three are against the adoption of the remuneration report, then the company is required to put the spill motion to a vote.
Need for an adjournment to consider the results of resolution number three, the company will proceed to put the spill motion to a vote, as I said, on a conditional basis. A contingent poll will be held on that. Only cast on resolution three to adopt the remuneration report are cast against the resolution. If less than 25% of the votes validly cast on resolution three are, any votes cast on the spill resolution prior to the withdrawal of the spill resolution will be treated as invalid. More than 50% of the votes validly cast are in favor of the spill resolution. If the spill resolution is valid and carried. Regarding the spill resolution and potential spill meeting were included in the notice of meeting. The directors unanimously recommend that shareholders vote against resolution company.
The changes to the board composition would be destabilizing, particularly for management. A spill meeting would likely cause significant disruption to fully focus on meeting the challenges of the current business and post-pandemic environment. Resolution number four.
There are no questions relating to this item.
Thank you. The proxies are on the screen as we speak on the voting card. Resolution number five. Hand over to Gavin to chair this part of the meeting. Thank you.
Thanks, Geoff. The next item of business is the approval of the issue of performance rights under the IVE Group Equity Incentive Plan to Geoff. Further details about the resolution are also contained in the explanatory memorandum that accompanied the notice of meeting. The directors recommend shareholders vote in favor of the resolution, and the resolution is now set out on the screen. I'll now take questions from the online platform.
There are no questions on this item.
From the phone.
There are no questions relating to this item.
The proxies are now displayed on the screen. I now put to the meeting resolution number five. Thank you. If you'd please now enter your votes for resolution five on the voting card. I'll now hand back to Geoff.
Thank you. Moving to resolution number six, which is the approval to issue securities under the IVE Group Equity Incentive Plan. The next item of business is the approval to issue securities under the IVE Group Equity Incentive Plan. If this resolution is approved by shareholders, issues of securities under the plan over the next three years will fall under the ASX Listing Rule 7.2, exemption 13, and will not affect the company's ability to separately issue up to 15% of the total ordinary securities in any 12-month period without having to obtain shareholder approval. Further details about the resolution are contained in the explanatory memorandum that accompanied the notice of meeting. The directors recommend shareholders vote in favor of this resolution, and the resolution is now set out on the screen. Are there any questions via the online platform?
There are no questions on this item.
Via the phone?
There are no questions relating to this item.
Thank you. I now put to the meeting resolution number six. If you could please enter your votes for resolution six on the voting card.
That ends the formal resolutions of the meeting at today. As we outlined at the beginning, we're now happy to respond to any-
We have one question from investor Mariano Castillo, who says, "Acquisitive strategies are risky and few businesses make them. Your record since listing has been exemplary. Congratulations.
1990s and certainly there's been a number of strategic and bolt-on acquisitions through that period. To the specifics of the question, the ADG and AFI acquisitions are a good example of an integration of the kind that we've done many times before and are very good at. I think earmarked for accretive growth opportunities will be a combination, as Matt said, of organic initiatives like our in-store or other adjacencies and so on. Equally, we do see some opportunities to present for acquisitions. From our perspective, we will maintain our discipline and ensure if we do pursue a particular acquisition, that it fits within the strategic framework that we've articulated in the past and that the commercial metrics stack up, and through all of this, we maintain a strong balance sheet.
Yes, we would see some opportunities come on the radar to answer the question, but we'll deal with them as they come up.
There are no further questions at this time.
No questions via the phone?
There are no questions at this time.
Okay, thank you. Well, look, that concludes the business as set out in the notice of meeting. Thank you again for your participation and attendance today. We will publish the results of the poll to the ASX later today. On behalf of the board of IVE, I'd like to thank you again for your support and now declare the meeting closed. Thank you and good morning.