IVE Group Limited (IGL) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the analyst and investor call for the IVE Group full year results to June 30, 2020. [Operator Instructions] I would now like to hand the conference over to Mr. Geoff Selig, Executive Chair. Please go ahead.

Thank you very much, and good morning, everybody. It's Geoff speaking. I also have with me this morning our Chief Executive; Matt Aitken; and our CFO, Darren Dunkley, and we look forward to walking you through our full year results for the year ending June 30, 2020. We will reference the investor presentation clearly, that was uploaded to the ASX this morning. Suffice to say, the year just gone has been impacted by the COVID-19 pandemic, which we'll touch on a number of times through the course of the call. From our perspective, I don't believe as a business, we could have responded any better to the crisis, particularly given the speed with which it came across us and the extent to which it impacted the IVE business, our clients and our staff. And it would be an appropriate point to acknowledge the skill and the enormous effort of our CEO, Matt, our CFO, Darren, the entire leadership team and our 1,700 staff who have absolutely gone above and beyond over the last 6 to months to do whatever has been required to ultimately protect the business. As we said in March 23, a market update, we moved quickly at the outset of this pandemic to implement a range of measures, ultimately to ensure the safety of our staff, ensure we continue servicing our clients and effectively manage the various commercial impacts that the crisis may have or have had on the business. We feel we entered the crisis in a position of strength. And notwithstanding what's transpired the last 6 months and the continued uncertainty around the future that prevails, we feel we will emerge as an even more match fit business than we were coming into the crisis. I'll take the first few pages of the presentation as read. It ultimately reaffirms and communicates again, which Matt will touch on our move to the one brand and how we've now described the business in terms of our integrated offering. And we'll move straight to Page 7, which is the financial performance dashboard for the last year. Should point out that we did as a business qualify for JobKeeper and JobKeeper will be available to the company up until the end of September 2020. So the numbers on Page 7 for the financial performance dashboard are on an underlying continuing operation basis and pre AASB 16 and they are inclusive of the net JobKeeper receipts of $15.1 million, which we'll touch on through the course of the presentation. So $691.5 million of revenue, $76.6 million EBITDA, 11.1% EBITDA margin, $36.7 million net profit after tax and amortization. Gross profit margin, which we'll touch on later are consistent with margin for the FY '19 full year. Strong free cash conversion. Our cash on hand at June 30, $51.6 million and $137.1 million net debt, which is a $36-odd million down from the market update in March 23 earlier this year. So at this point, I will hand over to Matt to walk us -- sorry, just -- I will just touch on Page 8, sorry, before I hand over to Matt. It's a while since we put the sector in spread to the market. We haven't done a chart like this since we acquired Franklin WEB and AIW back in late 2016. So we felt in the context of the last 6 months, that it would be good for us to provide some visibility around the sectors in which we operate and the revenues that we derive from each of the sectors. And we've also taken the opportunity to take the retail sector and divide that into the 4 parts of the retail sector that we service. So they are the -- a dissection of the $692 million worth of revenue for the full year June 2020. Clearly, a supermarket from a retail perspective is different to someone from a wide goods perspective, so we felt that was the most appropriate way to split the revenues. And then on the following page, Page 9. Just gives you a snapshot of the diversity of our customer base and the strength of our customer base in terms of them essentially being Tier 1 customers and customers, many of whom have been with us for years and years and years. So at this point, I will now hand over to Matt to take us off from Page 10, the acquisition of Salmat. Thanks, Matt.

Thanks, Geoff. Good morning, everyone. As you're aware, the acquisition of Australia's largest letterbox distribution business, Salmat Marketing Solutions, which is now known as IVE distribution, Lasoo and Reach Media in New Zealand was completed on the first of nearing. The acquisitions were fully debt funded. And at the time of completion, we expected the acquisitions to be accretive to earnings in H2 FY '20. Whilst the timing of the acquisition relative to COVID has not been ideal, we still firmly believe that strategic to this was the right move for IVE. And as a result of COVID, we expedited the integration plans and moved quickly to a more streamlined, nimble and lower cost base business. I just wanted to also touch on Lasoo, which is Australia's largest aggregated digital catalog site. It transforms printed materials such as catalogs and brochures into interactive shoppable experiences where products can be purchased through the Lasoo site. So this is also part of IVE's value proposition that's stable. Lasoo is the market leader in online digital catalog aggregation. We attract 800,000 shoppers a month to our site. There are more than 2 million digital catalogs opened each month, generating 21 million interactions over that period of time. And on average, we would have 70,000 buy now clicks through that site every single month. So over the coming months, we'll be revamping the site and really amplifying its capability market-wide. And from our perspective, it's a great example of the print and digital channels working in harmony to deliver our customers and their consumers a seamless shopping experience. If we move to Page 11, I'll just touch quickly on business and brand simplification. As you know in late 2019, the group ceased to going to market under 4 divisional brands. The evolution to one IVE brand with 4 core offerings is in recognition of our increasingly integrated value proposition and ensure we create a highly impactful, strong and simplified offer to the market. The brand simplification coincided with a number of initiatives to further streamline and strengthen the business. And that included a refined and enhanced organizational structure. The closure of our CX operations, which you would formally know as Kalido, up in Asia; the closure of our DTC operations in Queensland with all of that revenue transferred to our new South Wales and Victorian facilities; the integration of our Pareto fundraising and Pareto Phone businesses into our DTC division. And as I just touched on earlier, the integration of Salmat into the broader IVE Group as part of that process. If we move to Page 12 of the presentation deck, I'll touch a bit more on what we've done in response to COVID. So as Geoff alluded to, I've entered this crisis in a position of strength. The company responding very well to the unprecedented and volatile operating environment. IVE remains well capitalized, highly liquid and confident that we are well placed to maintain our strong market position as we emerge from this period of uncertainty and disruption. We move quickly at the outset of the pandemic to implement appropriate measures to ensure the safety and well-being of our staff, and I could be proud of how our leadership team and all of our staff have responded through this period. All of our COVID plans and strategies were established through the period of mid- to late March, well before JobKeeper was announced, and I'll cover off the 4 key elements of these plans for over the coming pages. So if we move to Page 13, the first one being health and safety of our staff and business continuity of our operations. So in March, we were busy establishing our pandemic plans and ensuring that business continuity requirements of site failovers were in-place should they be required. We established technology infrastructure to support more than 1,000 staff working from home at any given point in time as office starts to split into tribes again, mitigate any impact COVID might have on our business. Operational changes to shift patterns to segregate staff, segregate shifts and allow for time in between shifts for equipment and facilities to be cleaned were implemented. And I would say that this actually drove a level of inefficiency across our sites, but was an important part of our risk mitigation plans, having that 30 to 60 minutes complete separation from one shift finishing before another shift started and people leaving the sites. Issuance of increased levels of PPE to all staff. So wipes, masks, hand sanitizers and anything they require to be safe in the workplace and at all of our facilities and increased cleaning was implemented immediately. And then regular communications with the Board, the leadership and the staff right throughout that period. And I'm pleased to confirm that from a continuity of operations perspective, no IVE facility was impacted by COVID during FY '20. If you move to Page 14, just touching on customers and revenue impacts. We continue to benefit from a diversified value proposition and a loyal and strong diversified customer base across some 2,800 clients. To the extent that we can fully measure direct impacts of revenue in F '20, we would see that they have been as a result of COVID, we would see that they've been a meaningful reduction in catalog production and letter box distribution for a number of our retail customers, a meaningful reduction in activity across the tourism, entertainment and publishing sectors, particularly the travel sector there. We are a large printer in the travel sector. Data-driven communications, though, has remained strong right through that period off the back of an increased desire from our clients to communicate one-to-one with their customers. So we saw no change in that space through this period. And we had solid revenues across the not-for-profit and health sectors right through that. We've also experienced strong growth in sales in our personal protective equipment range since April as we continue to meet the needs of our existing and new customers. And I think the growth of this new revenue stream is an excellent example of our ability to pivot and leverage existing competencies, ideally like more sort of outsourcing up out of Asia and our logistics facilities here in Australia. And the client relationships to drive organic revenue growth in new markets. As well as selling this range into our existing customers, we attracted a number of new customers through this product offering and in particular, essential services businesses like aged care and where we saw existing supply chains for aged care fall over, we were able to step in and fulfill a gap for a number of those essential services and ensure the aged care facilities were not without protective equipment during this extreme period. This has now resulted in a decision to move more permanently into this sector with a wider product range being launched to the market at the start of Q2, and we will be issuing more information about this over the coming months. If we move to Page 15 and Page 16, just touching on the operational impacts. As communicated in our market update on the 23rd of March, we executed a range of initiatives to mitigate the financial impacts of COVID, while still ensuring high levels of customer service. The flexibility of our cost base has been core to mitigation, and we are very fortunate that the level of flexibility that we have. We executed a range of actions to reduce both short-term and permanent labor costs right throughout the business. And these included staff stand-downs as a component of the JobKeeper program, significant reduction of casual and temporary labor with enhanced resource sharing across all parts of our business; reduced hours, including overtime for a proportion of temporary and permanent staff; utilization of accrued annual leave and long service leave wherever possible; and a voluntary temporary reduction in the fixed remuneration during Q4 for a number of employees within our business. And specifically, that was a 50% reduction in fixed remuneration for the Board, including the Executive Chairman, the 25%...

Pardon me, this is the operator, we have temporarily lost connection with the speaker. Please hold the line. We will reconnect shortly. [Technical Difficulty] Ladies and gentlemen, we have reconnected with our presenters. Please go ahead.

Look, it's Geoff here again. We don't know that -- we didn't know that we were disconnected. So could someone please let us know this on the call where we were up to before we went silent, if that's okay. Okay. Look, I think we'll just pick up again at the beginning of Darren, our CFO section on the financial reports. And that's about 13 minutes. If we do repeat something you've heard before, our apologies for that, and then we'll go into Q&A as we intended to do. So at this point, I'll hand back to Darren to walk through the financial results from Page 16 on.

Okay. Thanks, Geoff, and apologies that everybody as you can hear why originally walk through. I'll just take you through the profit and loss on Page 18. There's a lot of information in the P&L to work through. And this is due to have been a transitional year for the adoption of AASB 16. Based on this, the main presentation is on a pre-AASB 16 basis to allow for comparatives to the prior period. Profit and loss is also presented on an IFRS and underlying basis. Underlying were noted, including and excluding the benefits of JobKeeper. I'll just step everybody through the P&L. So starting with revenue, clearly, FY '20 has been heavily impacted by COVID. As previously discussed, in detail by both Geoff and Matt, a $32 million decrease on last year. However, FY '20 also includes $50 million in revenue from the Salmat and Reach acquisitions included in H2 of FY '20. In saying that, it is important to note, we have had no material customer losses, contract extensions for a large number of existing clients. Some of these clients are logos included in Page 9 of the presentation as well as new business wins. Our gross profit margin of 47.7% compares to 47.9% in the prior period. Salmat and Reach now referred to as distribution revenues have a lower gross profit than the balance of IVE. Taking this into account, gross profit continues to remain very stable as it has been for many years. Production and administration expenses, as Matt alluded to, a lot of moving parts over the last 12 months. And as Matt has already outlined, we have costs coming out due to COVID impacts as well as business simplification and leveraging of our cost base. This has been partly offset by production and administration costs coming in due to the acquisitions, as noted in the presentation. EBITDA, Geoff and Matt have already updated you all on our EBITDA performance. The main point is that during Q4 and excluding JobKeeper, the group remained EBITDA positive. Net profit after tax. As previously pushed out, the group has benefited from the reduced finance costs due to our new facility with a improved pricing. However, this has been further reduced due to our increased liquidity. Nonoperating items excluded from underlying earnings are $8.7 million in restructure costs, mainly relating to redundancies and business relocations. $3.6 million on acquisition costs, again, mainly relating to Salmat and Reach acquisitions. Following annual impairment testing of the group CGUs, a goodwill impairment of $40 million has been recognized in relation to the production and distribution CGU. This relates specifically to large-format web offset, formerly Franklin WEB and distribution for only Salmat Marketing Solutions. For further details, please refer to Note 15 in the financial statements. It is important to note that the impairment is noncash and has no impact on senior facility covenants. If you just turn to Page 20, capital expenditure as everyone is aware, the group has invested heavily in previous years, leaving no CapEx overhang. As a result, capital expenditure is in line with previous updates. Previous updates with FY '20 capital expenditure of $12.3 million, including MIS upgrades. For FY '21, capital expenditure is expected to be $10 million in total. If we can now turn to Page 21, net debt. Net debt to underlying EBITDA of 1.79x. Net debt reduced from market update of -- by $36.9 to $137.1 million as of 30 June, '20. As at 30 June, '20, our working capital facility of $30 million is fully undrawn. As at the 31st of July 2020, cash at bank is $56.7 million, noting that working capital facility remains fully undrawn. To be prudent, the group move quickly at the outset of the pandemic to obtain leverage covenant waivers for 30 June '20 as well as 31st of December '20. Based on our positive trading and close management of working capital, the company was covenant compliant at 30 June, '20, just for everyone, so people are aware that IVE's senior facility matures in April 2023. On Page 22, cash flow and dividend. Underlying and statutory free cash flow was strong as a result of the group's management of working capital with underlying 110% to EBITDA free cash conversion. On March 3, '20, IGL announced the cancellation of the H1 FY '20 interim dividend. The Board decided that it is also appropriate to suspend the final dividend for FY '20 giving prevailing uncertainty around the economic impact of COVID-19 and to ensure a continuing strong balance sheet. The Board intends to resume dividend payments consistent with the existing dividend policy, commencing with the H1 FY '21 interim dividend. I will now hand you back over to Geoff to discuss outlook.

Thanks, Darren. Just a few comments before talking through the guidance on Page 24 of the presentation, picking up on some of the elements of the operating and financial review that was also uploaded this morning as part of the broader documental accounts. 100-year -- our 100-year anniversary next year. So we look forward to celebrating that through the course of next year. But the journey of evolution and diversification of our offer really commenced in the late 1990. So through that period, we have ended up with a more defined and a reduced competitor landscape. Today, our value proposition is compelling. And we lead -- have market-leading positions in the respective subsectors of the market that we operate in. These things combined with the fundamentals of our business placed us in a strong position to grow market share in our view in a post COVID environment. In that context and referring to the FY '21 guidance, on Page 24, we expect that the underlying EBITDA for FY '21 to be consistent with the number we just delivered today for FY '20, as Darren said, our margins have been very stable for a number of years now. So we have no expectation of the change in that for the coming year. Our forecast net debt at 30 June is approximately $110 million, that is after taking into account our intention to resume the dividend payments for the H1 FY '21 interim dividend. And we don't have an expectation that we will qualify for JobKeeper or JobKeeper 2 as it's referred to past 30 September this year. Our apologies, again, we're not sure quite why the line dropped out some sort of technical issue. So we're not quite sure exactly where it stopped, but I believe it was probably on or about Page 15, which is the beginning of the operational section of the presentation around flexibility of the cost base and supply chain. So in the Q&A session, if anyone wanted us to specifically go back to Pages 15 and 16 that we may have missed, please let us do so, there's quite a lot of information there. In terms of comprehensively covering those areas, but if you want to specifically ask the question, please do so. Look, at this point, well, for the second time and the formal presentation there and attempt to go into -- intend to go into a Q&A session. Thanks again for your time this morning.

[Operator Instructions] Your first question comes from Tom Adams at Morgan.

Hello?

Pardon me. Tom Adam, your line is now live. We will move to the next person. The next party is Shane Bannan from Bligh Capital.

It's a very creditable result, yes, in terms of the circumstances of the second half. But could I just ask you to address or give us a narrative around the situation around Salmat and Coles and the way they pulled away from the catalog distribution? I haven't had the chance to read your note 15 yet, but if you could just...

It appears we just lost that question. It looks like their line has just disconnected. I'll just put through the next question. It comes from Anne Moal from Perpetual.

Do you want me to -- should I answer that question anyway for the benefit of the other people on the call?

Absolutely.

Yes, I think I would rather. Yes. Look, we announced the week before last that we -- it had been communicated to us from Coles that they had intended to seek the reduction of their letter box quantities of their catalog from September, August. Clearly, disappointing for us. We continue to have a very strong relationship with Coles, but an unfortunate decision from our perspective. But to answer Shane's question specifically would maybe expand on it a little bit further. Our view more broadly is the printed medium is it remains a core component to an integrated communications mix. The environmental credentials of paper particularly as we know the world is moving to fiber-based packaging away from plastics and the like, which is driven out of pulp and recycled paper. The environmental credentials of paper are particularly strong. Equally, there's less CO2 emissions from the production of catalog and the rating of catalogs, and they are from digital mediums and trees aren't specifically to make paper. Sustainable forestry is ultimately a renewable resource, and these resources also produce oxygen. So our view on the printed medium remains very positive. More specifically in relation to catalogs, and without commenting specifically on any particular customer, catalogs as a channel have been very effective for decades. They've also coexisted as a channel alongside online and digital -- other digital mediums for a very long time. They're cost-effective, and they have huge reach. We go to 7 million Australian households per week, 7 million and 11.2 million Australians read the catalog versus just under 400,000 reading the catalog -- online version of the catalog for specials every week. So any suggestion that the catalog is junk mail is absolutely incorrect because 11.2 million Australians every single week read and value the catalog. There's also a social divide concept to consider in the relation catalogs as well. 2.5 million Australians do not have Internet connectivity in their home. And 4 million Australians do not have mobile Internet access. Therefore, many Australians and also many older Australians, notwithstanding they may have Internet connectivity, they value the letterbox and they value the catalog that's delivered in the letter box. So look, we've invested heavily into the catalog production and distribution space, and we remain optimistic, notwithstanding the recent decision by one of the supermarkets and an important customer of ours that the channel will remain strong because it has and it will continue to produce and drive revenue in a post COVID world if we are in an environment that's more subdued from a macroeconomic perspective. When you look at the client list on Page 9 and the customers we do work for, the clients we do work for, they're very strong businesses that have the capacity to fund driving marketing spend to grow revenue for their businesses. And that's what they will do, and I feel whether it's a catalog or the broader comps mix, the diversified offer we take to market, but more specifically, the catalog channel that Shane asked the question of, we'll certainly have a place front and center in that mix. Okay. Let's move on to the next question.

[Operator Instructions] Your next question comes from Anne Moal from Perpetual Investments.

It's actually Michael Murphy from Perpetual here. Just had a follow-up question on Coles. Your previous guidance was that it'd be approximately $40 million revenue drop as a result. Just wanted to reconfirm that guidance. And also, just check, if you think that there will be any sort of following actions in that industry, particularly whether you think Woolies are likely to follow Coles' lead on that one?

Yes. Look, the number that we put in the release is specific in relation to Coles would be our estimation of the impact on both the production and the distribution of the letter box version of the catalog, so nothing would have changed our banking on that. Over the last 10 days since we announced that and the guidance that we have just walked through previously takes the impact of Coles, clearly takes the impact of Coles into consideration. So that's the first point that we would make. The second point would be that I would just repeat what I went through for the last few minutes in relation to the printed medium, the credentials of the printed medium and the effectiveness of the catalog. So I do believe over the last couple of weeks that a number of the other supermarkets have reaffirmed their intent to stay in the channel. And the effect -- the efficacy of the catalog in driving revenue to their businesses. So at this stage, we don't have any indication that -- to use your term, Michael, that anyone intends to follow and as the macroeconomic conditions tighten up, there's, I think many of us feel that they may well do, most of -- all of the major supermarkets and the vast majority of the retailers we deal with have the financial capacity to invest in what is essentially a pretty low-cost, very effective channel that touches 7 million Australian households or 21 million Australians every single week. Now we could move on to the next question, I think if there is any.

We are currently showing no further questions. Pardon me, we do have a follow-up question from Shane Bannan at Bligh Capital.

Yes, sorry, I dropped out my earlier call, but I picked up the last bit of what your commentary was. So thanks for that.

If you missed anything I can give you a call back this afternoon, Shane. That's no problem.

That would be great. And the other follow-up question I did have though was just the comings and goings of JobKeeper. You indicated in the release that you banked $15 million, you're no longer eligible post September. Could I just understand the ebbs and flows and so far as the impact on your business and how you're going to mitigate the loss of that receipt?

Yes. Look, we don't believe that we will qualify for JobKeeper at the end of September. And I suppose it's a little difficult in an investor presentation to context JobKeeper because they're in at one level, you could look at the JobKeeper and say, well, the company is the beneficiary of x millions of dollars that they wouldn't otherwise have received. But you look at it at a broader level, we, as is outlined in that section in the operational section of the response to COVID, we have called every single lever we have. Had staff on stand-down, we forced leave. We've taken pay cuts, we've made redundancies. We've dealt with annualized year-on-year the impact through the period of about $70 million to $80 million less of revenue that ultimately doesn't deliver an earnings return because it's disappeared. And as a result of continuing to perform for our customers through running a hybrid of operations because we're not -- one of our advantages, having multiple facilities, but we're not business where we can close the doors and say to our customers, we'll see you in 6 months' time when you want to start spending again, we ultimately week in, week out month-over-month, over the last 6 months, it had to respond to huge swings and volatility in revenue and attempt to calibrate our cost base in our business. To respond to customer movements, but at the same time, managing the cost base of the business as well as, obviously, the liquidity elements and all the others -- all the other items that we've touched on today. So I think the JobKeeper component is one component in the context of a whole lot of moving parts in the business over the last 6 months. It certainly enabled us to keep people employed and help support the cost base of the business. But equally, as Matt went through, we have demonstrated that we can flex our cost base and that cost base is probably more flexible than people may have thought or more flexible than we have communicated previously, so our forecast for the year ahead assumes post Q1 of this year that revenues from October onward return back to pre-COVID levels and then the cost base accordingly, equally returns back to a level that's commensurate with that revenue. So if there were to be further continuation of COVID or a further softening of revenue, then I think we've demonstrated if required, a capacity reflects that cost save where needed, whilst at the same time, not compromising capacity as a business to maintain high levels at service standard for our clients.

Your next question comes from Hamish Murray at Bell Potter Securities.

I was just going to ask a question quite similar to what you've just sort of answered regarding how you guys are seeing revenue once JobKeeper steps off. And the levers in that guidance in terms of the margin going forward because it looks like you have some of these costs that need to go back up to normalized levels, but at the same time, some of the benefits that you're seeing on a normalized basis come through, like paper costs seem to have come down, you should get the full impact of that this year. So once JobKeeper rolls off post October, I guess, do we expect margins to remain to go back to pre-COVID levels for that 3 months? And then, I guess, does that mean that the JobKeeper benefit given that maybe the worst of the impact we've seen in Q4 of this year might give you a bit of a margin spike next year if all things return to even? Or how should we look at that?

Yes. There's a lot of elements of what you just asked there, Hamish. I think we -- let's just reaffirm the guidance that we put out there because that has clearly a ground-up build. There's not necessarily a link between the cessation of JobKeeper and the returning of revenue, they're not necessarily linked because I don't think anybody is suggesting that the day JobKeeper ends that revenues and all the macroeconomic settings across the country return to pre-COVID levels at the end of September. I don't think that would be the case for us. I think our view would be that it's reflected in our guidance is that we have recalibrated the cost base, and we have done a ground-up, so to speak, build of our FY '21 budget based on all of the assumptions we normally would. JobKeeper's there till the end of September, we are expecting a recovery through the first half of this financial year dependent on macroeconomic environment at the end of the day and how the world looks post COVID, but not necessarily linked to the stopping of the JobKeeper amount. But we would expect that -- and paper coming off a little bit has certainly helped. As you know, when we walked through our FY '19 full year result, the supply issues and the increase in paper price issues we had through the 18 months prior to that were most unhelpful. So we've certainly seen some improvement in that. If there were to be a deterioration in revenue then post JobKeeper ending, so to speak, or even prior to JobKeeper ending in September, then as a company, we will essentially adopt the same approach as we had the last 6 months, which is a micro approach on pulling every single lever and focus on pulling every single lever that's needed to protect the company from a liquidity perspective, a performance perspective but not compromise the capacity to service our customers. That doesn't quite answer your question. Hamish, I think to take it offline a little bit later as I might have missed something, I'm sorry.

I was a bit late on the call, I had an issue, but just a quick one. Just to be clear, on a follow-up from, I guess, the lost revenue from Coles, which is you've called out as $40 million. All things being equal, and I know the macroeconomic environment affects spending, but you haven't been in any sort of I guess, structural changes to any other clients in the book, both with some of their in-store marketing, and I guess their catalog?

I'll answer to your first point. And just to repeat what we said before, the capacity of our clients, if there was to be a softening of the macro settings is very good to fund the marketing of their business to drive revenue, and that's exactly what they will do. It's what they've done in the past, and that's exactly what they're able to do. I think, given our offer that we take to market and the relationships we have, the fact that they're rock-solid business and they have the capacity that puts us in a good position. Equally though, what COVID is throwing up, and we've all seen it is that some companies that have done incredibly well out of COVID, they've sold more than they've ever sold before. And to that extent, we had the luxury of deciding through this period to pull back. On some spend categories and to bank the dollars. And completely understand that there's been other businesses that clearly have disappeared and everything in between. So our view would be as this normalizes out to normal operating environment or this more suppressed macroeconomic environment a lot of the companies that have had sales astronomical sales over the last 6 months that, that will recalibrate to more normal levels, as will their spend -- their marketing spend on driving revenue or sales for their business.

Hamish, it's Matt here. Just to follow-up on a point there. So a number of our customers have been quite astonished at Coles' decision. So I think to the contrary, we're not seeing any fall in the approach from customers at all, particularly a number of the competitors have been quite astonished by that decision. And secondly, you referenced in-store marketing, it's actually that category of the retail spend what through COVID, it's been extremely strong and it continues to be very positive. So again, the depth and the breadth of the broader IVE offer doesn't mean that all aspects of retail for us have been impacted through the COVID period negatively.

Your next question comes from Ben Rodney at Morgans Financial.

Geoff, first of all, congratulations on a strong result despite all of the problems in the world. I've got 2 questions. The first one is really just a clarification. Your underlying EBITDA was $76 million, including JobKeeper this year. Are you guiding to that number for FY '21? Or the $61 million without JobKeeper? And secondly, you've said that you will resume your dividend in the first half, can you just remind us of your dividend policy?

Yes. Okay. Hi, Ben, it's Darren here. I'll just answer your second question. First, around dividend policy. The dividend policy is 65% to 75% of NPAT, and it would be fully franked. So that's our full year dividend policy. And in relation to our guidance for our EBITDA, we are saying it's in line with FY '21. So we -- sorry, in line with FY '20. And given that we had 3 months of JobKeeper in FY '20 result, we've had 3 months of JobKeeper in FY '21 as well. So the answer is yes to both on the pre and post JobKeeper guidance.

Sorry, so it's just $76 million then?

Including JobKeeper.

Yes.

[Operator Instructions] Your next question comes from Christopher Shields at IVE Group.

Yes, Chris Shields, I'm a small investor. My question is in relation to the nonoperating items excluded from underlying NPAT. There's a goodwill impairment there, and I haven't had a chance to read the rest of the report. I just wondered if you could give some explanation for that.

Sure. In relation to the restructure costs or the acquisition cost or the impairment. So maybe I will be better to answer that. It's Darren here. On our balance sheet, we carry around premium of the impairment. We carry around about $170 million of intangible goodwill on our balance sheet, and that's based on amounts that we've paid for acquisitions on businesses over the years. We have to at each point in every end in the financial year. We need to test the carrying amount of that goodwill compared to future cash flows. And given all the uncertainty that we've had, particularly in the large-format web offset division and distribution division. The business store, it was prudent that they reduce our carrying amount of goodwill on our balance sheet. So that there is a noncash item, and it does go through to the P&L as a one-off, but it doesn't impact ongoing profitability of the business.

Any other questions?

No. That does conclude our question-and-answer session. I will hand back for closing remarks.

Yes. Look, thank you, again, everybody, for your time or your extended time this morning. It's -- apologies for the technical difficulty, not quite sure what happened there. But if anyone thought they missed anything that was material in terms of the content of the deck that they wanted further information on, please let Richard know. And we'll take it off-line and we'll walk you through it again. So on behalf of the Board and Matt and Darren, thanks again for making the time and look forward to seeing some of you either virtually or in person shortly. Good afternoon.

That does conclude our conference for today. Thank you for participating. You may now disconnect your lines.