The IPH Ltd (ASX: IPH) share price was up more than 8% in morning trade after the company announced a 31% increase in net profit.
IPH Ltd is a services group comprising law firms that specialise in intellectual property and how best to navigate the challenging world of patents and trademarks. The company listed on the ASX in 2014 and the IPH share price has enjoyed significant growth in the intervening period, up more than 400% from its initial listing price.
What You Need To Know
For the year to June 30th 2019, IPH reported profit after tax (NPAT) of $53.1 million, a 31% increase on the previous year. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was up 21% to $89.7 million. The Rask Finance video below explains EBITDA.
IPH shareholders would have been especially thrilled to see a strong increase in earnings on a like-for-like basis showing that the business continues to go from strength-to-strength.
Earnings within IPH’s Asian operations continue to grow strongly with underlying EBITDA coming in at $31.1 million. The Australian and New Zealand operations recorded underlying EBITDA of $54.1 million and continues to be the biggest contributor to company profits.
IPH’s board of directors have declared a final dividend of $0.13 per share which brings the full-year dividend to $0.24, placing IPH shares on a dividend yield of 2.6% at the time of publishing.
Completion of Xenith IP Group Acquisition
Last week, IPH completed the acquisition of Xenith IP Group. This is a significant achievement and will be a driver of future growth as the largest acquisition undertaken by the company since its listing in November 2014.
For the year ended 30 June 2019, Xenith reported revenue of $125.5 million and underlying earnings before interest, tax, depreciation and amortisation of $19.7 million. Net profit after tax (NPAT) was $11.2 million which constitutes a little over 20% of IPH’s FY19 profit.
The ability of management to integrate the new business successfully with current operations will be crucial to the overall performance of the company over the next 24 months.
Management Comments
Commenting on the result IPH’s CEO Andrew Blattman said: “This result demonstrates IPH’s continued ability to leverage our extensive network across Asia to deliver double-digit growth in that region while successfully integrating our domestic acquisitions to further strengthen our operations.”
Mt Blattman added, “We are continuing to deliver margin improvement to post a 9% increase in Group like-for-like earnings for the year. Importantly, this improved like-for-like measure of performance excludes any benefit from the lower Australian dollar compared to the prior year.”
Will The IPH Share Price Keep Going Higher
Investors have given the IPH result a big tick of approval with the share price having climbed to an all-time high of $9.25 at the time of publishing. Whilst it’s hard to fault the progress the company is making I think today’s share price leaves very little room for error.
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Disclosure: At the time of publishing, Luke has no financial interest in any companies mentioned.
