2019 Full Year Results Investor Presentation Year ended 30 th June 2019 20 th August 2019 Presented by: Dr. Andrew Blattman Managing Director / CEO, IPH Limited John Wadley Chief Financial Officer, IPH Limited www.iphltd.com.au 1
Disclaimer This document has been prepared by IPH Limited (IPH) and comprises written No representation, warranty or assurance (express or implied) is given or materials/slides for a presentation concerning IPH. made by IPH that the forward looking statements contained in this presentation are accurate, complete, reliable or adequate or that they will This presentation is for information purposes only and does not constitute or form be achieved or prove to be correct. Except for any statutory liability which part of any offer or invitation to acquire, sell or otherwise dispose of, or issue, or any cannot be excluded, IPH and its respective officers, employees and solicitation of any offer to sell or otherwise dispose of, purchase or subscribe for, any advisers expressly disclaim any responsibility for the accuracy or securities, nor does it constitute investment advice, nor shall it or any part of it nor completeness of the forward looking statements and exclude all liability the fact of its distribution form the basis of, or be relied on in connection with, any or whatsoever (including negligence) for any direct or indirect loss or damage contract or investment decision. which may be suffered by any person as a consequence of any information in this presentation or any error or omission therefrom. Certain statements in this presentation are forward looking statements. You can identify these statements by the fact that they use words such as “anticipate”, Subject to any continuing obligation under applicable law or relevant listing “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, “target”, “may”, “assume” rules of the ASX, IPH disclaims any obligation or undertaking to and words of similar import. disseminate any updates or revisions to any forward looking statements in these materials to reflect any change in expectations in relation to any These forward looking statements speak only as at the date of this presentation. forward looking statements or any change in events, conditions or These statements are based on current expectations and beliefs and, by their nature, circumstances on which any statement is based. Nothing in these materials are subject to a number of known and unknown risks and uncertainties that could shall under any circumstances create an implication that there has been no cause the actual results, performances and achievements to differ materially from change in the affairs of IPH since the date of the presentation. any expected future results, performance or achievements expressed or implied by such forward looking statements. 2 2019 Full Year Results Investor Presentation | www.iphltd.com.au Cover image: Supertree Grove and OCBC Skyway, Singapore
Table of contents 01 02 03 FY19 highlights FY19 results Market overview 05 06 04 Looking ahead to FY20 Operations review Xenith IP acquisition update 07 Appendix 3 2019 Full Year Results Investor Presentation | www.iphltd.com.au
FY19 highlights 01 4
Operational highlights Delivering results across all FY19 strategic priorities Strategic priorities for FY19 Results in FY19 01 Double-digit organic growth for the third consecutive half Leverage existing network to grow our Asian business fuelled by take up of Asian offering 02 Continue to evaluate acquisition and expansion opportunities Successfully achieved largest ever acquisition – Xenith IP 03 Margin expansion through AJ Park and merger of FAKC Outperformance by AJ Park enhances group EBIT margin and Cullens into Spruson & Ferguson and synergies realised through Spruson & Ferguson merger 04 Sale of Filing Analytics, Citation Eagle and DMS products – Practice Insight refocused post sale of IP products now fully focused on WiseTime 05 Successful delivery of IPH incentive plan into Focus on attract, motivate and retain key talent AJ Park and the expanded Spruson & Ferguson 06 Increased referrals into IPH Asia network in FY19 Leverage market leading position in Australia / New Zealand 5 2019 Full Year Results Investor Presentation | www.iphltd.com.au
Financial highlights Double-digit growth across all financial metrics Revenue 15% FY Dividend 11% $259.5m 25 cents per share (13c final) EBITDA 23% Underlying EBITDA 1 21% $85.9m $89.7m NPAT 31% Underlying NPAT 2 21% $53.1m $62.9m Diluted EPS 29% Underlying Diluted EPS 20% 26.7 cents per share 31.7 cents per share 1. Underlying EBITDA includes the interim dividend received from investment in XIP and excludes gain on disposable of the Practice Insight businesses, costs incurred in pursuit of acquisitions, 6 revaluations of deferred settlements & earn outs, new business establishment costs and accounting charges for share based payments. 2. Underlying NPAT excludes amortisation expense on intangible assets arising from acquisitions and the profit on sale of the Practice Insight businesses.
FY19 results 02 7
Revenue and EBITDA Organic and acquisitive growth Underlying Revenue $’m Underlying EBITDA $’m Adoption of new accounting standard Australia and New Zealand IP Australia and New Zealand IP (AASB16) to impact Data & analytics services Data & analytics services treatment of leases in Asia IP Asia IP FY20 – increase at New businesses New businesses EBITDA line of ~$12m Corp & interco Corp & interco (including XIP) 1. Revenue from FY16 onwards includes the gross amount of the reimbursement by clients of official filing fees paid to national bodies. Previously these fees were recorded on a net basis. Previous periods have not been amended. 2. Underlying EBITDA excludes costs incurred in pursuit of acquisitions, revaluations of deferred settlements & earn outs, new business establishment costs, accounting charges for share based payments and gain on disposal of Practice Insight businesses. 8 3. New Businesses FY19 represents 4 months of AJ Park.
Like for Like Revenue and EBITDA Double-digit growth in Asia Underlying Adjusted Underlying New Accounting FX Currency Revenue 1 Revenue Revenue Chg% Businesses 2 Movements 3 Adjustment 4 June 19 June 19 June 18 Australia & NZ IP 171.6 (15.2) 0.0 (4.1) 152.4 155.4 (2%) Asian IP 93.4 (0.3) (5.2) 87.9 78.0 13% Data Services 0.5 0.5 1.2 Corporate (0.0) 0.1 0.1 (1.2) Eliminations (8.9) (0.6) (9.5) (7.3) 256.6 (15.2) (0.8) (9.2) 231.4 226.0 2% Underlying Adjusted Underlying New Accounting FX Currency EBITDA 1 EBITDA EBITDA Chg% Businesses Movements Adjustment June 19 June 19 June 18 Australia & NZ IP 61.8 (2.4) 0.0 (3.8) 55.7 54.1 3% Asian IP 38.6 (0.3) (2.3) 36.0 31.1 16% Data Services (1.4) (1.4) (2.7) Corporate (10.0) 0.1 (9.9) (8.4) Eliminations 0.7 (0.6) 0.1 (0.2) 89.7 (2.4) (0.8) (6.1) 80.4 74.0 9% 1. Underlying revenue and EBITDA excludes profit on sale of the Practice Insight businesses and underlying EBITDA excludes costs incurred in pursuit of acquisitions, revaluations of deferred settlements & earn outs, new business establishment costs and accounting charges for share based payments. 2. New business represents 4 months of AJ Park. Excludes additional contribution generated under IPH ownership. 3. Accounting FX movements represents change in realised and unrealised FX as reported in the financial statements. 9 4. Currency adjustment represents the performance had the prior period exchange rates applied.
Underlying NPAT and EPS EPS growth of 20% Year ended FY19 Statutory Underlying FY18 Statutory Underlying Adjustments Adjustments 30 June 2019 Income Statement Earnings FY19 2,3 Income Statement Earnings FY18 Total revenue 259.5 (2.9) 256.6 226.0 226.0 Recoverable expenses (74.6) (74.6) (66.0) (66.0) Compensation (68.6) 2.2 (66.4) (65.3) 0.7 (64.6) Occupancy (8.6) (8.6) (9.0) (9.0) New businesses/ acquistions related net expenses (4.5) 4.5 0.0 (3.3) 3.3 (0.0) Other (17.3) (17.3) (12.4) (12.4) Total expenses (173.6) (166.9) (155.9) (152.0) EBITDA 85.9 89.7 70.1 74.0 EBITDA % 33.1% 34.9% 31.0% 32.8% Depreciation & Amortisation (12.7) 9.2 (3.4) (15.2) 11.5 (3.7) EBIT 73.2 86.4 54.9 70.3 Net Finance Costs (2.6) (2.6) (1.5) (1.5) NPBT 70.6 83.8 53.4 68.8 Tax (expense)/benefit (17.5) (3.3) (20.8) (12.6) (4.3) (16.9) NPAT 53.1 9.2 62.9 40.7 11.2 51.9 Diluted EPS (cents) 1 26.7c 31.7c 20.7c 26.4c Growth 20% 1. Diluted EPS includes performance and retention rights that are yet to vest. 2. Underlying EBITDA excludes costs incurred in pursuit of acquisitions, revaluations of deferred settlements & earn outs, new business establishment costs and accounting charges for share based payments. Underlying NPAT excludes amortisation expense on intangible assets arising from acquisitions. 10 3. The profit on sale of the Practice Insight businesses has been excluded from underlying results.
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