Full Year Results Presentation Year ended 30 June 2016 David - PowerPoint PPT Presentation

Full Year Results Presentation Year ended 30 June 2016 David Griffith - Managing Director, IPH Limited Dr. Andrew Blattman - CEO, Spruson & Ferguson Malcolm Mitchell - Group Chief Financial Officer, IPH Limited John Wadley - Deputy Chief Financial Officer, IPH Limited 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 made materials/slides for a presentation concerning IPH. by IPH that the forward looking statements contained in this presentation are accurate, complete, reliable or adequate or that they will be achieved or prove This presentation is for information purposes only and does not constitute or to be correct. Except for any statutory liability which cannot be excluded, IPH form part of any offer or invitation to acquire, sell or otherwise dispose of, or and its respective officers, employees and advisers expressly disclaim any issue, or any solicitation of any offer to sell or otherwise dispose of, purchase or responsibility for the accuracy or completeness of the forward looking subscribe for, any securities, nor does it constitute investment advice, nor shall statements and exclude all liability whatsoever (including negligence) for any it or any part of it nor the fact of its distribution form the basis of, or be relied on direct or indirect loss or damage which may be suffered by any person as a in connection with, any or contract or investment decision. 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”, rules of the ASX, IPH disclaims any obligation or undertaking to disseminate “assume” and words of similar import . any updates or revisions to any forward looking statements in these materials to reflect any change in expectations in relation to any forward looking These forward looking statements speak only as at the date of this statements or any change in events, conditions or circumstances on which any presentation. These statements are based on current expectations and beliefs statement is based. Nothing in these materials shall under any circumstances and, by their nature, are subject to a number of known and unknown risks and create an implication that there has been no change in the affairs of IPH since uncertainties that could cause the actual results, performances and the date of the presentation. achievements to differ materially from any expected future results, performance or achievements expressed or implied by such forward looking statements. 2

Contents FY16 Highlights 1. FY16 Business Performance & Market Update 2. Acquisitions 3. FY16 Financial Results 4. Outlook & Growth Strategy 5. Appendices 6. 3

1 | FY16 HIGHLIGHTS 4

Financial Highlights FY16 NPAT has increased by 50%  Underlying NPAT of $46.9m (EPS 26.2c), 50% ahead of FY15. Underlying Results ($'m) FY16 FY15 Chg % Revenue $143.1 $94.5 51%  Like vs like (ie constant currency, excl. acquisitions) earnings growth in EBITDA $65.0 $42.5 53% line with market trends over recent years. NPAT $46.9 $31.2 50% EPS (Diluted) 26.2c 19.9c 32% Total Dividends 21.0c 13.5c 56%  Revenue / earnings were biased towards the 1 st HY (particularly in Asia) due to a pull forward of filings caused by the America Invents Act. Statutory Results ($'m) FY16 FY15 Chg %  Year on year net benefits derived from foreign exchange movements Revenue $143.1 $93.8 53% EBITDA $59.5 $38.5 55%  Incremental $12.4m EBITDA from new acquisitions NPAT $38.8 $30.6 27% EPS (Diluted) 21.7c 19.5c 11%  Increased development expenditure on Practice Insight business.  Free cash flow 1 of $39.1m, compared to $30.4m in FY15  Cash of $58.5m, no debt and $95m undrawn bank facilities  Final Dividend of 10.0c/share (50% franked) declared; No DRP Notes 1. Operating cash flow before acquisitions and financing activities 5

Operational Highlights A year of acquisitions, expansion and organic growth Key milestones: 3. Australia 2. Asia 1. Acquisitions   Strengthening market position IPH and Spruson & Ferguson (Asia) maintain the No.1  Pizzeys (Sep 2015). with acquisition of Pizzeys, patent market position in Singapore with 25% market  Callinans (Nov 2015). Callinans and Cullens. share.  Cullens (Jul 2016).   As a group IPH holds No.1 In FY16 Spruson & Ferguson (Asia) increased its total  patent (22% market share) and Strong pipeline of acquisitions and patent filings by 6.5% on previous year. trademark (13 % “qualified” expansion opportunities.  Spruson & Ferguson (Asia) recommenced its trade market share) market position in mark business in Nov 2015. Australia. 4. Operations  Pizzeys opened a Singapore office in Feb 2016.  Spruson & Ferguson, as an  Spruson & Ferguson opened offices in Indonesia individual firm, maintained No.1  Continue to improve operational (March) and Thailand (June) in 2016. patent market position in efficiencies across the group. Australia.  IPH’s companies received approval for WOFEs in  Strengthening the company’s Shanghai and Beijing.  Strategic merger of Fisher management team with key Adams Kelly and Callinans  In 1HY16 America Invents Act (AIA) stimulated growth appointments. practices (Nov 2015). in patent filings in Australia and Asia.  A number of senior professional promotions across the group to ensure 5. Practice Insight the continuity and regeneration of the business.  Market-focused product development.  New sales and support office in Munich to provide better reach in key markets (Europe and USA).  Launch of new products. 6

2 | FY16 BUSINESS PERFORMANCE & MARKET UPDATE

Business Snapshot EMPLOYEES OFFICES BRANDS 420+ PATENT MARKET SHARE FILINGS CLIENTS 6,000 22% 25% 16,000 4,000 + + + No.1 in Australia No.1 in Singapore Patent applications Trademark applications 8

Market Overview – Patents Primary (Incoming) Markets Fig. 1: PCT international applications filed in United States of America, Japan and European Patent Office 1) by applicants from the respective countries 2)  Re-normalisation of US PCT filings post America 140,000 CAGR = 3.89% Invents Act (AIA) in the second half of CY15. 120,000  4% increase in EPO PCT applications and 5% 100,000 increase in Japanese PCT applications by resident 80,000 applicants in CY15 compared to CY14. 60,000  A steady number of PCT applications filed in key 40,000 jurisdictions gives confidence in the number of PCT national phase patent applications expected 20,000 to be filed in the countries serviced by IPH. 0 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 United States of America European Patent Office Japan Notes: EPO resident applicants – applicants from countries, members of EPO. 1) 9 2) Source: IPH management analysis based on information available in the WIPO statistics database as at 1 Aug 2016.

Market Overview – Patents Secondary Markets Fig. 2: Asia Market - Patent applications filed in key jurisdictions in Asia 1) Fig. 3: China Market - Patent applications filed in China 1) 50,000 1,000,000 CAGR = 8.1% CAGR = 24.1% High-volume, Strong, consistent 40,000 800,000 high-growth growth in Asia. market. Over 900,000 patent 30,000 600,000 applications filed in China 7,930 400,000 20,000 with approx. 1,937 120,000 patent 8,023 5,630 200,000 applications 10,000 filed by non- residents in 0 0 CY14. CY10 CY11 CY12 CY13 CY14 CY15 CY10 CY11 CY12 CY13 CY14 3) Non-Resident Resident 2) Philippines Viet Nam Malaysia Thailand Indonesia Singapore Fig.4: Australian Market - Patent applications filed in Australia 4) Fig. 5: Singapore Market - Patent applications filed in Singapore 5) 40,000 12,000 CAGR = 2.04% CAGR = 1.01% Moderate market 10,000 Flat, mature market 35,000 growth in in Australia. 8,000 Singapore. 30,000 6,000 4,000 25,000 2,000 20,000 0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 CY10 CY11 CY12 CY13 CY14 CY15 Notes: 1) Source: IPH management analysis based on information available in the WIPO statistics database as at 1 Aug 16. 2) CY12 Indonesia patent filings information is not available through the WIPO statistics database. CY12 filings are calculated as an average of CY11 and CY13 filing numbers. 10 3) Source: IPH management analysis based on information provided on IPOS website (“Singapore Patent Statistics 2014” and “Singapore Pate nt Statistics 2015”). 4) Source: IPH management analysis based on information available through IP Australia’s AusPat search facility. All types of patent applications. Accessed on 15 Aug 16.