Overall, both IPH Limited and AF Legal Group reported largely positive results, with the former acknowledging some challenges encountered spurred by the COVID-19 pandemic.

A wrap-up of each firm’s results is below.

IPH Limited 

The intellectual property giant declared a statutory net profit after tax (NPAT) of $26.8 million for the half-year ending 31 December 2020, compared to $27.2 million for the prior corresponding period. Further, diluted earnings per share (EPS) were listed as 12.4 cents, compared to 12.9 cents. 

Underlying NPAT increased by 3 per cent to $37.6 million, equating to underlying diluted EPS of 17.4 cents per share compared to 17.3 cents in prior corresponding period. 

IPH chief executive Dr Andrew Blattman pointed to “strong organic growth in Asia and successful synergy capture from acquisitions” as the keys in driving earnings and margin growth.

“We are pleased to deliver a solid first half result despite the challenging market conditions,” he said. 

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“As anticipated, these challenges had an impact at the top line, with revenue down 5 per cent on a like-for-like basis. However, IPH’s ability to successfully integrate acquisitions and capture synergies resulted in further margin accretion with an 8 per cent increase in Underlying like-for-like earnings. Group Underlying like-for-like EBITDA margin increased to 38.3 per cent from 33.7 per cent for the prior corresponding period.”

Dr Blattman said the firm’s Asian IP business continues to strengthen revenue-wise, however its Australia and New Zealand IP business took a hit, declining by 6 per cent over the half-year. 

“Total Australian market patent filings (excluding innovation patents which will no longer be available from August 2021) decreased by 0.5 per cent for the period,” Dr Blattman noted.

“IPH Group’s filings (including Baldwins IP on a pro-forma basis and excluding innovation patents) declined by 5.7 per cent. This is an improvement from the figure provided at the IPH Annual General Meeting in November.

“IPH remains the market leader in Australia with combined group patent market share (including Baldwins on a pro-forma basis and excluding innovation patents) of 36.8 per cent in the six months to 31 December 2020.”

In conclusion, Dr Blattman said it was unsurprising for the group to see some level of distribution from the pandemic, which he acknowledged impacted filings for the period, “however the successful delivery of cost synergies from this integration and from corporate Xenith IP synergies, resulted in a 2 per cent lift in like-for-like EBITDA”. 

“Underlying EBITDA margin also increased to 37.9 per cent from 34.8 per cent in the prior corresponding period. The main contribution to this increase was the 35 per cent improvement in Underlying EBITDA margin of the former Xenith IP business to 27 per cent compared to 20 per cent when we acquired the business in 2019,” Dr Blattman said 

“Once again this demonstrates IPH’s ability to successfully integrate businesses to deliver margin accretion for the Group.”

AF Legal Group

The business’, also known as Australian Family Lawyers (AFL), underlying revenue of $4.4 for the half-year to December 2020, was up from $3.3 million for the prior corresponding period, representing a 32.2 per cent climb. Gross profits were finalised at $2.3 million.

Profit before interest, tax, depreciation and amortisation (adjusted for impairment) came in at $805,391, up from $553,695, representing a 45.5 per cent increase.

Meanwhile, NPAT from ordinary activities attributable to owners resulted in $248,494 for the half-year, from $127,122 the corresponding period, up 95.5 per cent overall.

“AFL has continued its growth in revenues and underlying profitability during the six months ending 31 December 2020,” commented Grant Dearlove, executive chairman at AF Legal Group.

“We have also continued our strategy to expand into additional targeted geographies through organic growth, lateral hires and strategic acquisitions. We are now in every major state and territory in Australia. During the period, we expanded our national footprint with four new offices via lateral hires in Adelaide (August 2020), Perth (October 2020), Gold Coast (November 2020) and North Melbourne (November 2020). In addition, we completed the strategic acquisition of Strong Law in Canberra in December 2020.

“These expansion activities have been underpinned by the execution of our proprietary disruptive digital marketing strategy. We continue to have a strong pipeline of organic, lateral hire and acquisition opportunities.”

Mr Dearlove said while the group has observed no impact on performance due to the COVID-19 pandemic, “it is not practicable to estimate the potential impact, positive or negative, after the reporting date”.

“On 1 February 2021, the Group announced the issue of 2,625,000 performance rights under the Company’s Long-Term Incentive Plan. Each performance right entitles the holder to one ordinary share subject to vesting conditions. 600,000 performance rights vest on 30 June 2021 and 2,025,000 performance rights vest on 30 June 2022, both with nil exercise price,” he added.

“On 18 February 2021, the Group announced a non-renounceable, pro rata entitlement offer on the basis of 1 new fully paid ordinary share in the Group at an issue price of $0.50 per share for every 6.15 existing shares held to raise up to $5.0m. The proceeds of the entitlement offer are anticipated to help to fund future acquisitions however the entitlement offer is not inter conditional with any acquisition.”

In conclusion, Mr Dearlove noted the firm will continue its strong growth trajectory and position in the Australian market.

“The AFL story is a great one – it has a well-established competitive advantage, is operating in a market worth over $1 billion revenue per annum with no market leader and has the platform and access to resources to execute its growth strategy,” he said.

“I would finally like to thank our shareholders for their continued support and share my gratitude to the entire staff at AFL for their efforts now and looking into the future.”

Later this week, Lawyers Weekly will report on the half-year findings of Shine Corporate, Slater & Gordon and QANTM Intellectual Property Limited upon the results being made available to the public.