Investor presentation · Formerly International Greetings plc Investor presentation for the year ended 31 March 2016 Presented by Paul Fineman CEO and Anthony Lawrinson

Formerly International Greetings plc

Investor presentation for the year ended 31 March 2016

Presented by

Paul Fineman CEO and

Anthony Lawrinson CFO

June 2016

2

Introduction

designs, innovates, manufactures and sources the following core product categories

Celebrations Stationery & creative play Gifting

3

Welcome to our vision of the future

Benefits to the businessLeverages our global scale

Drive the benefits of scale and breadth

Becomes more cohesive

Communicating the extent of our offering

Broadens growth potential

Enabling available opportunities to be seized

Helps to simplifyCreating an

efficient structure

Benefits to internal and external audiencesTranslates globally

Communicating to our global audience

Captures our ‘Soul’

Illustrating our creativity

Becomes more representative

Demonstrating the breadth of what we do

Becomes more coherent

One Group, one common focus

A business with a unique blend of creativity and reliability, focused on profit growth and designed to succeed.

A design‑focused multi‑category business servicing the world’s best retailers.

IG Design Group UK Limited

IG Design Group plc

IG Design Group Asia LimitedIG Design Group Europe BV

Holland

IG Design Group Americas IncIG Design Group Australia Pty

Poland

Next phase – trading structure

4

Present in over 150,000 retail outlets in more than 80 countries

Over 80 million crackers,

750 million stickers, nearly 850 million metres of giftwrap,

sold in 2016

In excess of 5,400 customers

Balanced business with

£79m of product sold under IG’s generic brands and licensed

brands

No. 3 in the global gift packaging

market worth £10bn at

retail value

Some key facts

5

Group revenue by customer destination

Where we operate

33%USA

34%UK

19%Europe

12%Australia

2%Rest of world

£79.6m £80.0m £43.8m £27.9m £5.6m

6

• Strong offering created for specific customer channels – we provide a good, better, best approach and are proud to serve the best retailers around the globe with a complete end‑to‑end service from design to distribution

• Geographic diversity – with sales to over 80 countries, we combine global scale with local expertise and combat competitive market conditions

• Customer relationships – we have over 5,400 customers, and are proud to have traded with many of them for over 20 years

• Design and innovation – we design with creative flair and imagination, striving to exceed our customers’ expectations

• A broad portfolio of generic, licensed and customer bespoke brands, across design‑led product categories

• Low cost manufacturing and sourcing

• Award winning service – we do whatever it takes to ensure total customer satisfaction

• Compliant with the demanding standards of the world’s leading retailers and licensors, we source and manufacture our products responsibly

A unique blend of creativity and reliability

7

The elephant in the room – Brexit

•Diversified•Global portfolio•New global funding arrangements•Largely low ticket “recession proof” items

•Weaker sterling results in stronger overseas earnings when translated

•One third of product manufactured in local markets•Product sourced from Asia in US dollars potentially

higher cost•Well hedged based on good visibility of customer orders•Mitigation possible through re‑engineering of product

and revised commercial terms

NO MATERIAL CHANGE IN OUTLOOK

8

Results

Design is at the heart of all we do

9

+18%on 2015

Profit before tax, exceptional items and LTIP

(£million)

201520142013 2016

Profit before tax, exceptional items and LTIP charges up 18% to £10.8m

10.8

9.2

7.67.3

+15%on 2015

Underlying diluted earnings per share

(pence)

201520142013 2016

Fully diluted earnings per share before exceptional items and LTIP increased by 15% to 13.2p with 3‑year average growth in EPS

at 19%

13.2

11.5

8.47.8

+16%on 2015

Cash generated from operations

(£million)

201520142013 2016

Cash generated from operations of £20.7m. Cash conversion over 100% of EBITDA

reflecting inventory reduction

20.7

17.9

15.2

7.5

40%reduction on 2015

Net debt improvement

(£million)

201520142013 2016

Debt down £11.9m (40%) to £17.5m. Year end leverage at 1.0 x EBITDA (before

pre‑exceptional items and LTIP charges)

17.5

29.4

36.9

42.1

Financial highlights

10

Operational and commercial highlights

•Record Group sales of £237m includes highest volumes ever of gift packaging and greetings related products sold, including over 60 million gift bags

•Underlying gross margin up 0.8 percentage points (from 17.5% to 18.3%) underpinned by the full year effect of manufacturing efficiencies and product innovation

•Strengthened management team in USA delivers 34% growth in operating profit(a) and completes a major capital investment project in paper converting facilities on time and on budget

•Sales and operational initiatives drive 66% growth in operating profit(a) in Australia

•Non‑UK revenues by customer destination are now 66% of Group sales

• In a year of excellent overall performance, we generated over £20m in operating cash flow allowing acceleration of dividend from 1p to 2.5p

(a) Operating profit growth in local currency before exceptional items, LTIP charges and management charges.

11

Year ended Year ended 31 March 31 March 2016 2015 Growth £m £m %

Sales 237.0 229.0 3Gross profit 43.4 40.0 9 18.3% 17.5% Overheads (30.7) (28.8) 6 12.9% 12.6% Other income 0.8 0.7 Operating profit 13.5 11.9 14EBITDA (pre exceptional items and LTIP) 17.4 16.3 7Finance costs (2.7) (2.7) —Profit before tax, exceptional items and LTIP 10.8 9.2 18LTIP (0.9) (0.7)Exceptional items — (1.2) Profit before tax 9.9 7.3 35

£m

Overheads 2014/15 28.8Increased indirect sales costs 1.2Increased admin & management team costs, notably in USA with growth of team 0.7Overheads 2015/16 30.7

Overhead costs

2016 2015 £m £m

Celebrations 184.4 176.4Stationery & Creative Play 38.3 37.2Gifting 14.3 15.4 237.0 229.0

Sales

2016 2015 £m £m

Interest & other borrowing costs 2.1 2.7Derivative mark to market provisions 0.6 — 2.7 2.7

Finance costs

Summary of full year results

12

Where we operate

Group revenue by geographic business unit

2015 2016

£35.9m

Europe

£34.1mRevenue

14%

% of Group revenue


IG Design Group plc


Holland


Poland


£108.2m

2015 2016

UK & Asia

£109.7mRevenue

46%

% of Group revenue


IG Design Group plc


Holland


Poland


2015 2016

£57.9m+12.7% +1.4% +3.3% -4.9% +3.5%

USA

£65.3mRevenue

28%

% of Group revenue


IG Design Group plc


Holland


Poland


2015 2016

£27.0m

Australia

£27.9mRevenue

12%

% of Group revenue


IG Design Group plc


Holland


Poland


2015 2016

£229.0m

Group

£237.0mRevenue

100%

Group revenue


IG Design Group plc


Holland


Poland


13

Diluted EPS (Pre‑exceptionals and LTIP) Tax rates

•Average growth of 19% over this 3‑year period

• Diluted EPS post LTIP and exceptional items up 29% to 12.0p with 3 year average growth at 27%

•Unrecognised tax assets (tax value) circa £2m• ‘Expected’ rate will increase as US profits grow,

with ‘underlying’ rate trending towards this in the coming years

•Tax assets in the UK & USA will mitigate cash tax in near term

Earnings

“Expected” rate 27%

“Underlying” rate 22.5%

36.9%

14.8%

2012/13 UK2014/15 USA USA2013/14 Asia*2015/16Continental

Europe* Australia

13.2

7.7%

8.4

12

10

8

6

4

2

0

40

35

30

25

20

15

10

5

0

7.8

20.0

%

Earnings per share and tax

23.9

35.1

24.2

30.0

* Blended average rate.

EPS

(pen

ce)

11.5

14

Strong cash flow conversion

2016 2015 £m £m

EBITDA before LTIP costs 17.2 16.3(Increase)/decrease in debtors 1.0 (1.3)Decrease in stock 1.2 3.2Increase in creditors, provisions and accruals 1.5 0.7Exceptional items (0.2) (1.1)Cash generated from operations 20.7 17.8Net capital expenditure (3.2) (2.1)Business acquired (Enper Giftwrap) — (1.6)Tax paid (1.8) (1.3)Interest paid (2.0) (2.8)Dividends paid to non‑controlling interest — (0.8)Equity dividend paid (1.0) —Other movements (including FX) (0.8) (1.7)Movement in net debt 11.9 7.5Opening net debt (29.4) (36.9)Closing net debt (17.5) (29.4)

15

Balance sheet

Freehold property

Fixed assets of £30.2m include freehold land and buildings with a net book value of £9.9m. This includes the following site that may become available for sale in the future:

IG UK NBV Est. market value £m

Hirwaun 1.5 3.7 – 3.9

IG UK has granted a 5‑year call option to a power company to purchase part of the Hirwaun site for £2.4m in consideration for premiums totalling £0.5m. The Aberbargoed site was sold at the very end of the financial year releasing £1.4m in cash net of costs, just over book value.

Gross stock

2016 2015 Difference Reduction/(increase) £m £m £m

UK & Asia 23.5 26.1 2.6

USA 11.8 9.5 (2.3)

Europe 9.0 9.2 0.2

Australia 6.3 6.3 —

50.6 51.1 0.5

Translation effect (1.1)

50.6 50.0

Provision (4.6) (3.8)

46.0 46.2

Provision as a percentage of total gross stock 9.1% 7.6%

As at As at 31 March 31 March 2016 2015 £m £m

Intangibles 32.2 31.7Fixed assets 30.2 29.9Stock 46.0 46.2Trade and other receivables 21.4 22.3Net debt (17.5) (29.4)Trade and other payables (40.6) (37.1)Deferred income and provisions (2.3) (2.9)Taxation 2.0 1.9Net assets 71.4 62.6Attributable to shareholders 68.0 59.7

16

New global funding arrangements

Average leverage Year end leverage

Target 2.5x EBITDA by 18/19

Target 2.0x achieved 31/3/15

Lender Due Facility Margin Covenant

HSBC Corporate revolving credit facility & overdraft 2019 £18m 0.95% Leverage covenant Working capital revolving credit facility Annual £39m 1.40% Stock and unfunded debtors HP agreement 2021 £2m 4.75% Fixed rate UK/Europe Receivables financing 2019 £50m 1.10% Receivables USA Receivables financing 2019 £50m 1.10% Receivables Asia Receivables financing 2019 £12m 1.30% ReceivablesWestpac Annual $10m 2.52%

2012 20122014 20142013 20132015 20152016 2016

4.0

3.2

4.44.54.7

1.8

1.0

2.4

2.82.8

17

Outperformance remains our goalO

ur le

vers

Considered investment opportunities

Underlying 20% of sales or higher

Gross margin

Focus USA and Australia

7% of sales or higher

PBIT

Targets set in all businesses

Improving the ROCE in each of our businesses

Return on capital employed

Our

obj

ectiv

es

Through organic growth and acquisitions

Double digit CAGR for underlying EPS

Currently 3.2x

Average leverage < 2.5x by 18/19

15/16 2.5p (5.3x covered)

Trend upwards no less than 3x covered

Underlying EPS growth Average leverage Dividend policy

18

Looking forward

19

Strategy

To be the world’s largest and most efficient designer and manufacturer in our core category of gift packaging

To become an increasingly important and successful supplier of design‑led stationery, creative play, giftware and related products in the markets in which we operate

To nurture deep and mutually valuable relationships with our customers and suppliers across our core and associated product categories, growing our worldwide presence together

To take every opportunity to share knowledge and exploit synergies across our business units, to leverage this efficient cost base and store of excellence through local entrepreneurial management teams focused on customer service, innovation and relevant product

To improve our margins and the cash profile of our profitability by:•providing differentiated product offerings across the value, mass and upscale markets•balancing our business across geographies, seasons, brands and higher‑margin product categories

To give our people the knowledge they need, the tools and inspiration to create value for the Group and help pursue their careers and goals

Strategic themes

1 Achieve market leading position in gift packaging

2 Focus on stationery and creative play

3 Nurturing valuable relationships

4 Leveraging Group expertise

5 Balancing our business

6 Giving our people the knowledge they need

20

Growth

Organic growth Inorganic growth

ProductsNew products to existing customers ie partyware, stickers

ChannelsIncrease number of channels for existing products through retail and online opportunities ie regional drugstores and

grocery stores in the US

Product and categoriesNew categories suited to broad design capability meeting changing trends and tastes ie design themed Gifting, retail

collateral – eg bags for retail consumption – ie not for re‑sale

M&A• Entering new closely related categories• Adding recognised brands to our group

• Leveraging scale• Consolidating the market place

Partnership and joint venture channelsAn alternative and flexible way to fast tracking progress to

niche channels and categories

Underpinned by innovationNew and patented formats ie bags with integrated tissue

Underpinned by synergies and an entrepreneurial approach

Taking the right steps to growth

21

LEvERAGING sCALE ANd IP

Underpinning growth

• Operational synergies resulting from inter‑changeable Group‑wide wrap manufacturing facility.

• Overall purchasing requirements, working with preferred supply partners.

• Purchasing of raw materials – worldwide benchmarking and sourcing with increased standardisation driven through common manufacturing platform.

• Solutions to optimise cost and service provided to global retailers such as Ikea, Costco, Carrefour, Walmart, Tesco etc.

• Bespoke, licensed and generic approach to provide customers with a ‘one stop shop’ solution.

• Payback from high speed, highly efficient paper conversion facilities.

• Further automation – cost reducing and volume enhancing.

• Benefits, learnings and subsequent development of operational experience of new state‑of‑the‑art printing facilities.

Global capability Technology advancements

Operational scale Automation

22

5 More than ever we are “designed to succeed”

4 Focused on profit growth underpinned by a unique blend of creativity and reliability

1 Foundations in place to support growth

2 Plentiful growth opportunities, organic or M&A/JV/partnerships

3 Flexible and competitive global funding in place gives us options to support the future vision

Outlook for Design Group

Documents

Investor presentation · Formerly International Greetings plc Investor presentation for the year ended 31 March 2016 Presented by Paul Fineman CEO and Anthony Lawrinson