IPH Limited

Thank you for standing by and welcome to the IPH limited half-year 2026 results presentation. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Dr. Andrew Blattman, Managing Director and Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning and welcome to the IPH results presentation for the half year ended 31 December 2025. My name is Andrew Gladman and I am CEO and Managing Director of IPH. With me today is Brendan York, our CFO. Thank you for joining us for today's presentation and your interest in IPH. Before we get started, I'd like to thank the broader IPH team across all our regions for their efforts and contribution to our results for first half FY26. In terms of how we'll play it today, I'll provide an overview of the operational strategic highlights. Brendan will discuss the financial results in detail. I'll then provide an update on the performance of our three segments, Canada, Asia, Australia and New Zealand, before concluding with a summary of our priorities for the full year. As always, we're very happy to answer your questions at the end. So moving to slide three about IPH, a quick reminder of the continued growth in the diversity and scale of IPH. We have seven brands and over 1,700 employees servicing some 26 IP jurisdictions. We are the number one patent group in Australia, in Canada, Singapore and New Zealand. More recently, we were informed by the Indonesian Patent Office that we are the number one filer in our country, a testament to the strength of our network across the Asian region. And I'm told we're also giving the leaderboard a good scare in the Philippines as well, which is great. I'll talk more about the benefits of our global network and scale shortly. Moving on to slide four and number five in terms of the highlights, IPH delivered a solid result for the first half. Despite the ongoing challenges of lower US patent filings in Australia and New Zealand, group underlying EBITDA increased by 6.6%, with reported net profit up 10.5%. We had a very strong turnaround in our Canadian business with organic revenue growth Acquisition Synergies and Cost Discipline driving an 18.9% increase in like-for-like earnings. For the SEPO issues, SEPO is, for your benefit, is the Canadian Intellectual Property Office, so I will refer you to the SEPO going forward. SEPO issues is somewhat in its half. There has been no meaningful clearance of the workflow backlog caused by the systems upgrade they did in July 2024. Hopefully, we'll see some of that backlog unwind with associated revenue this calendar year. We also had a very pleasing return to growth in our Asian business. Filings ex-Singapore were up 7.3%, continuing the improvement from last year, and that's resulted in a lift in like-for-like revenue and in earnings. IPH remains a highly cash-generative business, and that continued in the first half, with cash conversions remaining above 100%. Combined with our strong balance sheet, this strong cash flow has enabled 11.8% lift in the interim dividends to $0.19 per share. The next slide talks about our scale and diversity. And as I mentioned earlier, IPH is truly a global leader with an extensive network and reach across IP secondary markets. This global scale provides resilience and diversity to our earnings base. as we benefit from our exposure to an increasing number of IP jurisdictions around the world. This diversity also mitigates any periodic fluctuations in filings in certain markets. While the ANZ market has been impacted by the recent decline in US filings, it's important to note that nearly 60% of IPH group earnings now come from outside ANZ. Our strategy has been consistent for a number of years to create the leading IP services group in Secretary IP markets. Our decision to enter the Canadian market in 2022 was absolutely consistent with that strategy. In just over three years, we've built the market-leading IP business in Canada, which now accounts for over a third of our earnings. Just to put that into context, based on our half-year results, Canada's annualised run rate is 323 million revenue, EBITDA of over $83 million with annualized patent filings of over 10,000 patent applications. We have achieved acquisition synergies in line of targets. We're delivering organic growth despite the continued CIPO backlog and we are generating client referrals across the group which delivers revenue across IPH and particularly into our Asian business. That additional scale has enabled the group to manage the current challenges facing our domestic business and ANZ and still deliver improved earnings and dividends to shareholders. But it also provided an enhanced opportunity to deliver further earnings growth as the CPO backlog ultimately unwinds and as we continue to leverage our market-leading position to drive organic growth. Moving on to slide seven. While we have continued to face some market headwinds, including the CPO backlog in Canada and the decline in US economies and ANZ, we are responding directly to these challenges. In Canada, we are focused on leveraging our integrated platform for organic revenue growth and cost discipline is laser-focused and it's delivering earnings improvement. In Asia, we will capitalise on our market-leading network and unique client proposition to build on the recent increase in filings to deliver revenue and earnings growth. That includes business development activities targeting international corporate clients and also seek to continue our success in gathering case transfers which provide future revenue events. In ANZ, given the weakness in US PCTs, our member firms are responding with new business efforts deliberately targeting primary IP markets outside of the US, including Western Europe, Japan, South Korea, and in particular, Chinese incoming filings. At a group level, our focus remains on dropping operational efficiencies by leverage scales. the scaling capability across IPH. We have realigned our cost base in FY25 and operational efficiencies have reduced our corporate costs by $2.5 million in the first half, which contribute to an increased underlying EBITDA margin. We continue to focus on leveraging our global presence to boost client referrals across our network. We have delivered almost 1,200 cumulative client referrals between IPH Canada and our Asian Pacific offices since we first entered the Canadian market in 2022. In fact, in the last 12 months, we've almost doubled the referral volume. In fact, just in the last week, we secured a further 100 patent case transfer in the southeast states of China and Australia from an IPH Canadian firm. Finally, we are further embedding AI into our core operations, whether it be patent drafting and prosecution to the administrative functions, thereby streamlining workflows and reducing costs, We're building on the automation we already have by the AI, which now lets us to automate decisions. And we bring in more advanced agent-based AI who are able to triage instructions, analyze documents, streamline documenting, support lodgements and renewals, giving us more end-to-end automation to address specular effort. So that's an introduction. I'll now hand over to Brendan who will discuss the financial results in more detail.

Thanks, Andrew, and good morning, everyone. Looking first at an overview of the financial results and key metrics, Revenue of $363.9 million was up 6.5%, including an increased three-month incremental revenue from the Breskin Empire acquisition and organic growth in Canada and Asia, partially offset by decline instead. Underlying EBITDA increased 6.6% to $107.1 million, primarily reflecting improved earnings in Canada, including the acquisition impact, growth in Asia, as well as cost discipline across all segments and corporate. As always, there is a foreign exchange element to our underlying results. The group recognised a net foreign exchange loss of $0.2 million compared to a $1.3 million gain in the prior corresponding half. This was primarily driven by the appreciation of the AUD against the USD and other key currencies at 31 December 2025 relative to 30 June 2025. A slide detailing FX impacts is included in the appendix to the investor presentation. Underlying MPAT-A which is underlying NPAT adjusted to exclude the income tax affected non-cash amortisation of acquired intangible assets, increased by 2.6% to $62.6 million. Underlying basic EPSA increased by 3.9% from the prior corresponding half. That reflects the improved financial performance and also the 1.5% decrease in the weighted average number of shares on issue following the share buyback conducted in FY25. Statutory net profit after tax was up 10.5%. driven by increased underlying earnings, a reduction in the non-underlying costs compared to the prior corresponding period, partially offset by the increased effective tax rate. Tax-free basic EPS was up 12.1%. The company continues to generate strong cash flow with a gross operating cash flow to EBITDA conversion ratio of 101%. This has supported an increase in the interim dividend, which was up 11.8% on the prior corresponding half. The interim dividend of 19 cents per share will be paid on the 24th of March. Looking at the financials in a little bit more detail, the 6.5% increase in revenue included the incremental three months contribution in half-way 26 from the Breskina PAR acquisition, which we acquired in September 2024. Improved organic revenue growth in Canada and Asia was partially offset by decline in ANZ. While agency expenses increased, these are offset by increases in the recoverable disbursements, which are included in revenue. The 6.8% increase in employee benefits Expense primarily reflects the impact of the acquisition, while the benefit of the FY25 cost reduction program has offset any inflationary cost increases. Underlying EBITDA was up 6.6% to $107.1 million, reflecting the improved earnings in Canada, including acquisition impact, a return to growth in Asia, a reduction in corporate costs and ongoing cost discipline. The underlying EBITDA margin lifted by 0.1 percentage points, reflecting improved performance in Canada and Asia. the reduction in those corporate costs, however, tempered by the margin reduction in ANZ. The slight increase in depreciation and amortisation relates to the increased expense from the Bereskin & Parr acquisition, offset by property synergies achieved in late 2025. Half-year 26 non-underlying expenses net of income tax impacts were $2.8 million compared to $4.8 million in the prior corresponding period and primarily related to transformation project costs and IT implementation costs. These are also detailed in the appendix. The effective tax rate excluding the income tax impact of non-underlying expenses increased from 20.4 to 26.2. This reflects a normalisation of the underlying effective tax rate post the Canadian acquisition activity. We expect this effective tax rate going forward based on our geographic earnings mix. Onto our balance sheet. IPH maintains a strong balance sheet. Trade and other receivables decreased by 12.1 million from 30 June 2025, representing improved collections and an overall improvement in the receivables ageing profile. The decrease was offset slightly by an increase in contract assets, which is our work in progress, of 6.3 million. The decrease in intangible assets reflects the foreign exchange translation impacts of approximately 19.1 million and amortisation of the acquired intangible relationships and other intangible assets of 26.9 million. The key movement in equity was the foreign currency translation reserve which reduced by $14.1 million from the translation of overseas subsidiaries into AUD which strengthened this period. Onto our cash flow and working capital, the group continues to generate strong cash flows with the cash conversion of 101% and free cash flow up 32% for the half. We maintain a strong focus on working capital management with a $5.9 million reduction in working capital balances. Working capital management will continue to be a focus for the group to unlock further cash. IPH continues to be a capital-like business with capex of just $1.5 million for the first half of the year, which was significantly below the price corresponding period of $6.1 million. Capex for the first half of this year related to leasehold improvements in Asia and including a new Philippines office. Turning now to capital management, net debt at 31 December 2025 was down 6.5% or $27 from 30 June 2025. The leverage ratio at 31 December was 1.8 times, slightly down from the 1.9 times at 30 June 2025 and remains within the company's maximum target ratio of up to two times. In December 2025 the group refinanced $210 million of its syndicated debt facility agreement on improved pricing terms. Maturity dates for all facilities are in FY28 and FY29. The group had a total undrawn financing facilities of $111 million as at 31 December 25. The interim dividend of $0.19 per share, franked 20% at the corporate tax rate, represents a payout ratio of 81% of cash adjusted NPAT. Separately, we have also announced today an on-market buyback program with a maximum capacity of 12.2 million shares. The buyback will commence on 9 March 2026 and remain in place for 12 months. The buyback provides flexibility as part of the group's capital management program and will not impact the company's existing dividend policy. Turning to the segment like-for-like performance, the like-for-like basis eliminates the impact of acquisitions and foreign exchange movements which would create a lot of variability in the IPH reported results. I will not spend too much time on this slide as Andrew will provide further analysis on each of the segments in the next section. Looking at Canada First, this represents a strong turnaround in performance with organic revenue growth assisted by acquisition synergies and cost discipline driving an 18.9% increase in like-for-like underlying EBITDA. Like-for-like revenue and earnings also increased in Asia as this segment returned to growth. As we called out at the AGM in November, the ANZ business continues to be impacted by the decline of the USBCTs being filed with IPH member firms, disproportionately affected by a larger exposure to US applicants relative to the market. Despite the challenges of the lower US filings into the US and at a group level, like-for-like revenue was up 0.7% and with a 3.2% increase in like-for-like underlying EBITDA on an improved like-for-like EBITDA margin of 0.7 percentage points. I'll now hand over to Andrew to discuss the segments in more detail.