ASX Announcement
24 February 2022
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QANTM FINANCIAL RESULTS
FOR HALF YEAR ENDED 31 DECEMBER 2021
Strong growth in fees driven by increase in Patent applications - up 11.9% -
and Trade Mark applications - up 48%
∙ Continued momentum in revenue generation | |
use | - Service Charges up 4.9%, Total Revenue up 7.0% |
∙ Patent applications increased 11.9%, based on strength of DCC, FPA, Advanz Fidelis businesses
- Australian applications up 6.0%
∙ Trade mark applications increased 48%, with the inclusion of Sortify.tm acquired 30 September
2021 | |||||
- Australian applications increased by 62%; market share of 14.5% (compared to 10.5% pcp) | |||||
personal | - DCC no.1 filer in Australia; Sortify no. 2 in New Zealand | ||||
∙ EBITDA down 5.0% with higher operating expenditure, with a number of one-off costs across the | |||||
technology modernisation program, as well as further investment in people | |||||
∙ Interim dividend of 3.0 cents per share, fully franked (1H21: 4.0 cents). | |||||
∙ IP industry continues to show strong resilience in an increasingly uncertain world. | |||||
Half Year Financial Underlying1 Results - Summary | |||||
$m | 1H22 | 1H21 | Change | ||
Service Charges | 48.9 | 46.6 | 4.9% | ||
Total Revenue | 62.7 | 58.6 | 7.0% | ||
EBITDA2 | 12.8 | 13.5 | -5.0% | ||
EBITDA margin3 | 26.1% | 28.9% | -2.8% | ||
For | Net Profit after Tax4 | 6.5 | 7.1 | -8.5% | |
- The appendix provides a reconciliation from statutory to underlying results.
- EBITDA is after foreign exchange $0.1m gain (1H21 1.0m loss). Includes correction of prior period immaterial misstatements $0.3m reduction in Underlying EBITDA
- Margin is on Service Charges
- Includes correction of prior period immaterial misstatements, a $0.6m reduction in Underlying Net Profit after Tax
QANTM INTELLECTUAL PROPERTY LIMITED ASX ANNOUNCEMENT
Key Financials
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Service Charges of $48.9m (1H21: $46.6m), comprising the following main components:
- Patent Service Charges up 4.8% to $33.5m (1H21: $31.9m)
- Trade Marks Service Charges up 20.7% to $9.5m (1H21: $7.9m)
- Legal Service Charges 15.6% lower at $5.7 million (1H21: $6.8m)
Total revenue (Service Charges and Associate Charges) increased 7% to $62.7 million (1H21: $58.6m).
Total net revenue of $50.6m (1H21 $48.3m), which includes other income of $1m, and is after recoverable expenses from Associate Charges of $13.1m.
Underlying operating expenses of $37.8m, an increase of $3.0m (1H21: $34.8m). Operating expenses include a number of one-off strategic investments in our technology modernisation program, increased marketing expenses, as well as some further investments in people that are being made for the future growth and efficiency of the business.
Underlying EBITDA was $12.8m (1H21: $13.5m). EBITDA includes FX gains of $0.1m (1H21: FX loss 1.0m).
∙ Operating cash flow was lower at $7.3m (1H21: $9.0m) with increased transformation program expenditure in the half.
∙ Net debt as at 31 December 2021 was $23.1m, compared to $17.2m as at 31 December 2020 and $16.2m as at 30 June 2021. Net Debt to Underlying EBITDA was 0.90 at 31 December 2021 (30 June 2021 0.62).
personal | As at 31 December 2021, cash and equivalents of $8.4m were held on the balance sheet (31 December |
2020: $6.9m). | |
CEO Commentary
Craig Dower, QANTM's Chief Executive Officer, stated:
"QANTM displayed continued, strong underlying business performance relative to the prior corresponding period, demonstrated by solid revenue growth across its patents and, in particular, trade mark businesses. Legal and litigation services revenue were up compared to the immediately preceding half, although lower compared to a strong first-half in FY2021, reflecting timing of case load work.
Our people have continued to display resilience and flexibility, despite the challenges in business and client working arrangements brought about by COVID. There is evidence of both a resurgence in IP-related client Fordemand and the requirement for broader intellectual property advisory services, particularly in areas where the business environment has facilitated innovation in services and new product offerings, as well as strength in QANTM's local clients seeking to file in overseas jurisdictions. This is evident in Trade Marks in particular, where we are seeing large corporates investing further in brands and innovation, as well as increasing new
business and product initiatives amongst start-ups and micro-businesses.
The strong core business and client bases of DCC, FPA, Cotters and Advanz Fidelis, has continued to hold QANTM in good stead, while the addition of Sortify during the half has given momentum to our trade mark business. Sortify's automated technology platform also provides a basis for the further expansion of our trade mark services into other geographies, notably the Asia-Pacific Region. This was a major rationale for the acquisition. We are also working to deploy Sortify's capabilities into our core businesses to help drive innovation, productivity and improved client service.
Pleasingly, the COVID enforced restrictions for Advanz Fidelis in Malaysia have largely lifted, with a return to near pre-COVID business activity levels. This, and the continued growth of DCC and FPA in Singapore, including strong foreign filings into South East Asia, have contributed to a 11.5 per cent increase in Asian revenues. Asia constitutes 6 per cent of total Group revenues.
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QANTM INTELLECTUAL PROPERTY LIMITED ASX ANNOUNCEMENT
Business Performance
Patents has continued strong growth period-on-period:
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Trade Marks recorded a very strong 20.7% increase in Service Charges (20% of the Group total):
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DCC retains the largest market share for trade mark applications in Australia and, with the acquisition of Sortify provides a basis for the expansion of advisory and prosecution services.
Legal and litigation services revenue contribution (11% of the Group total) was 15.6% lower relative to a strong prior period, reflecting the timing of advisory and case load work. DCC Law experienced an increase in revenue generation in 1H21 compared to the immediately preceding half, up 4.7%.
Strategic Initiatives
Material progress has continued to be made in relation to key strategic work streams, which include:
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ForIn Conclusion
As investors will appreciate, QANTM has been engaged in the formulation and now implementation of major business improvement processes since I commenced as CEO in January 2020.
This has encompassed the areas of technology modernisation; people; processes; client interface and growth and scale. Initiatives in each of these areas represent essential areas of investment for competitive business and financial outcomes. As I have conveyed, these activities encompass empowering our people; revenue growth through both organic and acquisition routes and comprehensive improvements to business systems, analytics and processes.
Much of the investment supporting these essential business priorities has been represented through operating expenditure, as opposed to capital expenditure. There was a large element of these business transformation costs in the operating expenditure for this half. Investors can take confidence from the underlying trends in our business that these initiatives are starting to have an impact. We are about a third of the way through that modernisation program, with the planning work on our Case Management upgrades now complete, we will start that next phase of implementation during 2022 and expect to start seeing synergies and productivity gains in 2023.
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QANTM INTELLECTUAL PROPERTY LIMITED ASX ANNOUNCEMENT
In the meantime, the investments in in our capability to service clients effectively and efficiently - more effective account planning, use of improved client tools (CRM, data and analytics), DCC's USA-based sales desk, and the acquisition of Sortify - are driving top-line growth which will flow through to earnings as our transformation program starts to deliver results."
onlyQANTM's Appendix 4D, Half Year Financial Report for the year ended 31 December 2021, and the Half Year | |
Investor Presentation, provide more detailed information on the Company's half year results, and are available | |
atwww.qantmip.com. | |
For further information, please contact: | |
Craig Dower | Peter Loosmore |
CEO and Managing Director | Chief Financial Officer |
useTel: +61 3 9254 2666 | |
www.qantmip.com | |
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Dividends
Directors have approved an interim dividend of 3.0 cents, fully franked, with a payment date of 6 April 2022 for shareholders registered as at 3 March 2022.
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QANTM INTELLECTUAL PROPERTY LIMITED ASX ANNOUNCEMENT
WEBCAST AND INVESTOR TELECONFERENCE DETAILS
only | You are invited to join QANTM's CEO, Craig Dower, and CFO, Peter Loosmore, for a presentation and | |
discussion of the results. | ||
DATE AND TIME | ||
Thursday, 24 February 2022 at 11:00am Australian Eastern Daylight Time | ||
PRESENTERS | ||
Craig Dower, CEO and Managing Director | ||
Peter Loosmore, Chief Financial Officer | ||
use | DIAL-IN DETAILS | |
TELECONFERENCE DIAL-IN DETAILS (required to participate in Q&A) | ||
Conference ID: 1757949 | ||
Participant Dial-In Numbers: | ||
Australia (toll free) 1800 123 296 | New Zealand (toll free) 0800 452 782 | |
Singapore (toll free) 800 852 8345 | Hong Kong (toll free) 800 820 8369 | |
personalFor | UK (toll free) 0800 279 7147 | US (toll free) 1833 239 5972 |
Any other country or mobile phone: +61 2 8373 2830
WEBCAST
The presentation will be webcast live. You can pre-register for the webcast via this link https://webcast.openbriefing.com/8400/
About QANTM Intellectual Property
QANTM Intellectual Property Limited (QANTM, ASX: QIP) is the owner of a group of leading intellectual property (IP) services businesses operating in Australia, New Zealand, Singapore and Malaysia under five key brands - Davies Collison Cave, FPA Patent Attorneys, Cotters Patent and Trade Mark Attorneys and Advanz Fidelis IP and Sortify.tm Ltd (including Sortify's brands - DIY Trademarks, Trademarks Online and Trademark Planet). With more than 150 highly qualified professionals, the businesses within the QANTM Group have a strong track record in providing a comprehensive suite of services across the IP value chain to a broad range of Australian and international clients, ranging from start-up technology businesses to Fortune 500 multinationals, public research institutions and universities.
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QANTM Intellectual Property Ltd. published this content on 23 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 February 2022 22:33:55 UTC.