Intellectual Property services company, IPH Limited (ASX: IPH) announced a 23% increase in Statutory Net Profit After Tax to $24.2 million for the half year ended 31 December 2018.
The Group’s top line grew by 23% to $124.9 million compared to the previous corresponding period. EBITDA has increased to $40.6 million, representing an improvement of 28% on 1H FY18. As a result, Diluted Earnings Per Share increased by 21 per cent to 12.2 cents for the period.
IPH reported its like-for-like revenue of $104.3 million, up 3%, with like-for-like EBITDA increased by 8% to $35.9 million. Growth in earnings on a like-for-like basis broadly reflects the company’s strong performance from Asia like-for-like with revenue up 14% and EBITDA up 17%. Further, its Australian/New Zealand IP business like-for-like EBITDA increased by 4% from cost efficiencies reportedly driven by the merger of Fisher Adams Kelly Callinans (FAKC) and Cullens into Spruson & Ferguson, and also from an improvement in AJ Park’s EBITDA margin.
Chief Executive Officer, Dr Andrew Blattman “The Group has continued to deliver margin improvement from the second half of last year to increase like-for-like earnings for the first half. And the company’s Asian IP business continues to be a core focus of its growth strategy, and this has been reflected in a strong result for the first half.”
Coming to the underlying performance of the company, it can be seen that underlying Earnings Before Interest, Tax, Depreciation and Amortisation (Underlying EBITDA) increased by 22% to $40.4 million for H1 FY19. And Underlying revenue for the period increased by 21 per cent to $122.8 million while Underlying NPAT increased by 15 per cent to $27.9 million.
Dr Blattman told that total Australian market patent filings increased by 4.0% for the period with IPH Group’s filings increased by 1.8% including AJ Park, reflecting strong client base and mix.
The Board declared an interim dividend of 12 cents per share, 50 per cent franked, an increase of 4 per cent on the prior corresponding period. The record date for determining entitlements to the interim dividend is 20 February 2019 with scheduled payment on 13 March 2019.
In line with its strategy to pursue an acquisition in the domestic market, IPH acquired an equity interest in Xenith IP Group Limited of approximately 19.9% on 13 February 2019. However, the company intends to undertake discussions in relation to an alternative transaction to the current scheme.
The company’s wholly-owned subsidiary Practice Insight Pty Limited sold two of its products, Filing Analytics and Citation Eagle, to CPA Global for $10 million and the net proceeds from the sale were reportedly used to repay debt.
In today’s trading session, IPH stock price declined by 4.605% to last trade at $5.80 on 14 February 2019. The stock last traded at a Price to Earnings multiple of 29.240 x with a market capitalisation of $1.2 billion. Over the past 12 months, the stock has gone up by 18.75% including a surge of 12.59% over the past three months.
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