2019 Half Year Results Investor Presentation Half year ended 31 st December 2018 14 th February 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 Half Year Results Investor Presentation | www.iphltd.com.au Cover image: Supertree Grove and OCBC Skyway, Singapore, 2018.
Table of contents 01 02 03 HY19 highlights HY19 results Market overview 04 05 06 Strategic direction Operations review Acquisitions update 07 Appendix 3 2019 Half Year Results Investor Presentation | www.iphltd.com.au
Half year 2019 highlights 01 4
Operational highlights Continued momentum from prior year delivers strong first half result across the IPH Group Strategic priorities for FY19 Results in HY19 01 Leverage market leading Successful merger of QLD businesses; position in Australia/NZ improved performance in AJ Park Margin expansion through AJ Park and 02 Margin expansion delivers merger of FAKC and Cullens into increased like-for-like EBITDA Spruson & Ferguson 03 Leverage existing network to grow internal Increased internal filings supporting filings and case transfers into Asia strong first half performance in Asia 04 Focus on attract, motivate and Delivered on incentive plan retain key talent implementation commitments Practice Insight refocused post sale of Now building momentum with WiseTime 05 products to CPA Global 06 Continue to evaluate acquisition and Stake acquired in Xenith IP Group Limited, expansion opportunities evaluating strategic options 5
Financial highlights Strong growth across all financial metrics 4.3% Revenue 23.4% HY Dividend $124.9m 12.0 cents per share Underlying EBITDA 1 21.7% EBITDA 27.7% $40.6m $40.4m T 1 14.7% NPA T 22.8% Underlying NPA $24.2m $27.9m 13.8% Diluted EPS 21.4% Underlying Diluted EPS 12.2 cents per share 14.1 cents per share 1. Underlying EBITDA excludes costs incurred in pursuit of acquisitions, revaluations of deferred settlements & earn outs, new business establishment costs and accounting charges for share 6 based payments. Underlying NPAT excludes amortisation expense on intangible assets arising from acquisitions and the profit on sale of the Practice Insight businesses.
HY19 Results 02 7
Revenue and EBITDA Strong revenue and earnings growth – organically and by acquisition Underlying Revenue $’m Underlying EBITDA $’m Australia IP Australia IP Data & analytics services Data & analytics services Asia IP Asia IP New businesses New businesses Corp & interco Corp & interco 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 and accounting charges for share based payments. 8 3. New Businesses HY19 represents 4 months of AJ Park.
Like for Like revenue and EBITDA Momentum building in HY19 Underlying New Accounting FX Currency Adjusted Underlying Commentary Adjustment 4 Chg % Revenue 1 Businesses 2 Movements 3 Revenue Revenue Dec 18 Dec18 Dec 17 • IPH Group revenue up 3% and EBITDA up 8% Australia & NZ IP 84.7 (15.2) (1.3) (1.5) 66.7 67.7 (1%) Asian IP (0.1) (2.2) 35.7 14% 42.9 40.6 • Asia double-digit growth for both Data Services 0.3 0.3 0.6 revenue and EBITDA Corporate (1.1) 2.0 0.9 0.6 • Strong underlying AJ Park Eliminations (4.0) (0.4) (4.4) (3.2) performance with a contribution of 122.8 (15.2) 0.3 (3.7) 104.3 101.2 3% A$4.8m EBITDA for the half year Underlying New Accounting FX Currency Adjusted Underlying Adjustment Chg % EBITDA 1 Businesses Movements EBITDA EBITDA Dec 18 Dec18 Dec 17 Australia & NZ IP (2.4) (1.3) (1.3) 24.2 4% 30.1 25.1 Asian IP 17.1 (0.1) (1.1) 15.8 13.6 17% Data Services (0.6) (0.6) (1.3) Corporate (6.4) 2.0 (4.4) (3.1) Eliminations 0.3 (0.4) (0.1) (0.1) 40.4 (2.4) 0.3 (2.4) 35.9 33.2 8% 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 Half year ended 31 December 2018 HY19 Statutory Adjustments Underlying HY18 Statutory Adjustments Underlying $'m Earnings HY19 2,3 Income Statement Income Statement Earnings HY18 Total revenue 125.0 (2.1) 122.8 101.2 101.2 Recoverable expenses (35.7) (35.7) (28.9) (28.9) 89.3 87.1 72.3 72.3 Compensation (34.9) 1.1 (33.8) (29.7) 0.7 (29.0) Occupancy (4.1) (4.1) (3.5) (3.5) New businesses / acquistions (0.8) 0.8 0.0 (0.7) 0.7 0.0 related net expenses Other (8.9) (8.9) (6.6) (6.6) Total expenses (48.7) (46.8) (40.5) (39.1) EBITDA 40.6 40.3 31.8 33.2 EBITDA % 32.5% 32.8% 31.4% 32.8% Depreciation & Amortisation (6.3) 4.7 (1.6) (6.0) 4.4 (1.6) EBIT 34.4 38.8 25.8 31.6 Net Finance Costs (1.1) (1.1) (0.8) (0.8) NPBT 33.3 37.7 25.1 30.7 Tax (expense) / benefit (9.1) (0.7) (9.8) (5.3) (1.1) (6.4) NPAT 24.2 3.9 27.9 19.7 4.7 24.3 Diluted EPS (cents) 1 12.2c 14.1c 10.1c 12.4c 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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