Listed intellectual property practice IPH has released its financial year results, which saw earnings of $124.3 million despite currency and pandemic-inspired disruption.
IPH Limited (ASX: IPH), which operates as an intellectual property services group in Asia Pacific, last week announced a statutory net profit after tax of $53.6 million for the year ending 30 June 2021, slightly down from the $54.8 million in the previous year. Its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $124.3 million, compared to $126 million last year.
The group noted in its statement to the market that it delivered strong earnings growth on a “like-for-like” basis.
IPH chief executive Dr Andrew Blattman (pictured) said: “[L]ike-for-like revenue declined by 2 per cent, including the market disruption caused by COVID-19. However, our success in our ongoing strategy to integrate acquisitions and capture synergies to deliver margin accretion, together with another solid performance from Asia, resulted in Group Underlying like-for-like EBITDA increasing by 10 per cent.”
Although like-for-like revenue in the group’s Australian and New Zealand IP businesses declined by 3 per cent, the delivery of cost synergies from the successful Xenith integration saw a 7 per cent uplift in like-for-like EBITDA, Dr Blattman noted, adding that a “double-digit expansion in margin with Underlying EBITDA margin increasing by 11 per cent”.
The main contribution to this increase, Dr Blattman continued, “was the significantly improved financial performance of the Griffith Hack business following the integration of Watermark to operate under the Griffith Hack brand”.
This has led, he said, to an improved underlying EBITDA margin of the former Xenith IP business in FY21 to 28 per cent, up from 20 per cent when it was acquired back in 2019.
In Australia, total patent filings increased by 2.6 per cent for the period, Dr Blattman went on.
“IPH Group’s filings declined by 4.8 per cent. This was an improvement from our update at the AGM, where filings had declined by ~8 per cent and the half-year result (5.7 per cent decline). While we experienced some expected disruption from the integration of Griffith Hack and Watermark, IPH Group filings continued to improve in the second half of the year,” he outlined.
“IPH remains the market leader in Australia with combined group patent market share of 36.2 per cent for the year to 30 June 2021.”
Looking ahead, IPH noted that it is focused on organic growth, consolidating acquisitions and pursuing growth step-out opportunities.
Dr Blattman said: “During FY21, IPH continued to demonstrate our ability to create enhanced value from acquisitions and the right-sizing of our acquired businesses to create a more efficient operating model.
“We continue to create a stronger platform with increased operational leverage for further growth.
“At the same time, IPH maintains a strong financial position with low gearing and consistent cash generation which enables us to continue to assess further growth options, including potential international acquisition opportunities in core secondary IP markets.”