YEAR ENDED
30TH JUNE
IPH LImited | ABN 49 169 015 838
Our Story
IPH is the leading intellectual property (IP) professional
services group in the Asia-Pacific region.
As the first IP services group to list on the Australian
Securities Exchange in 2014, IPH has always had an eye
towards the future. From our foundation and listing, IPH
has expanded its business to provide broader access to IP
professional services across the Asia-Pacific.
IPH companies now operate from 15 offices across eight
IP jurisdictions, employing a multidisciplinary team of
more than 630 people, including 247 IP professionals. Our
group businesses comprise leading IP firms Spruson &
Ferguson, AJ Park and Pizzeys, which provide services
for the protection, commercialisation, enforcement and
management of all forms of intellectual property including
patents, trademarks and designs.
We also operate in adjacent IP areas through our
Practice Insight business.
IPH’s success is underpinned by our core values of excellence
in service delivery to our clients, innovation in value creation,
integrity in business practices, efficiency and effectiveness in our
operations and the empowerment and engagement of our people.
We are constantly investing in our business to ensure we have the
capability, resources and systems to create value for our clients,
employees and shareholders both now and into the future.
www.iphltd.com.au
Contents
1
10
12
FY18 Year
In Review
Corporate
Directory
Directors’
Report
36
Financial
Statements
91
Independent
Auditor’s
Report
96
Shareholder
Information
www.iphltd.com.au
30th June 2018
FY18 Year
in Review
2018 Annual Report
2018 Annual Report
1
1
Chairman’s Letter
Dear Shareholder,
IPH made significant progress in strengthening our
business in FY18.
While the first half result was impacted by the slight decline
in Australian patent filings and the significant appreciation
of the Australian dollar, we delivered a strong second half
performance from increased earnings in our Asian business,
out-performance in the Australian patent market and earnings
ahead of expectations in the AJ Park business.
This stronger performance in the second half enabled Directors
to declare a final dividend of 11 cents per share, 50 per cent
franked, bringing the full year dividend to 22.5 cents per share,
an increase of 2.3 per cent on the prior year.
The Group remains in a very strong financial position and
continues to generate strong cashflow to underpin investment
in our business and returns to shareholders.
In May 2018 the Group commenced an on-market share
buy-back program of its ordinary shares of up to $40
million. The program will remain in place for 12 months from
commencement (unless concluded earlier or extended) and
represents a flexible and efficient capital management initiative
that benefits our shareholders.
In China, the Spruson & Ferguson business successfully
established an exclusive arrangement with an independent
Chinese patent agency, Beijing Pat SF intellectual Property
Agency, to provide all regulated patent services in China
exclusively for Spruson & Ferguson clients.
Together, these initiatives continue to strengthen the Group’s
operations and support our vision of becoming the leading IP
group in secondary IP markets and adjacent areas of IP.
We remain committed to delivering sustainable value to our
shareholders through a combination of organic growth, margin
improvement initiatives and business efficiencies and potential
strategic acquisitions.
IPH also recognises the importance of ensuring our business
is sustainable and we are committed to further defining and
communicating the sustainability performance of our business.
We believe that a sustainable business is one that provides a
safe, rewarding and diverse environment for our people whilst
operating in an environmentally and socially responsible manner.
I would like to thank David Griffith for his contribution as
Managing Director and CEO of IPH until November 2017 and
acknowledge David’s contribution to the FY18 results. I would
also like to acknowledge IPH’s new CEO, Dr Andrew Blattman,
his leadership team and all our people across IPH for their hard
work in FY18, and their continued efforts to provide outstanding
During the year, we continued to progress strategic initiatives across
service to our clients.
a number of areas to create a stronger competitive platform.
On behalf of the Board of Directors, I would like to thank our
A major initiative was the acquisition of AJ Park in New Zealand
shareholders for your ongoing support of the Company.
in October 2017. AJ Park is the premier IP firm in New Zealand
and the acquisition also supports our Asian growth objectives
by extending our Asian service offering to AJ Park’s local and
international clients.
In Australia, we successfully completed the merger of Fisher
Adams Kelly Callinans (FAKC), Cullens and Spruson &
Ferguson, with all three firms now fully integrated and operating
as Spruson & Ferguson. This merger deepens Spruson &
Ferguson’s expertise and geographic reach in the Australian
market and provides an enhanced platform to support our
continued growth in the Asia-Pacific region.
Richard Grellman, AM
Chairman
2 www.iphltd.com.au
Financial Highlights1
Revenue 2
A$226m
(cid:50)perating (cid:38)ash(cid:190)ow
A$46.5m
226
186
157.5
107.8
250
200
)
m
$
(
150
100
50
0
31.5
)
m
$
(
50
40
30
20
10
0
49.9
46.5
42.1
FY15
FY16
FY17
FY18
FY15
FY16
FY17
FY18
EBITDA 3
A$70.1m
Earnings Per Share 4
20.7c
68.7
70.1
59.5
38.5
)
m
$
(
70
60
50
40
30
20
10
0
)
s
t
n
e
c
(
25
20
15
10
5
0
19.5
21.7
22.3
20.8
FY15
FY16
FY17
FY18
FY15
FY16
FY17
FY18
NPAT
A$40.7m
Full Year Dividend
22.5c
42.9
40.7
38.8
30.6
)
m
$
(
50
40
30
20
10
0
13.5
)
s
t
n
e
c
(
25
20
15
10
5
0
21
22
22.5
FY15
FY16
FY17
FY18
FY15
FY16
FY17
FY18
1. The Company listed on 17 November 2014.
2. FY15 and FY16 revenue has been restated to include recognition
of filing fee revenue per change in the FY17 accounting policy.
3. Earnings before interest, tax, depreciation and amortisation.
4. Diluted earnings per share.
2018 Annual Report
3
CEO’s Report
This is my first Annual Report as CEO and Managing Director of
The Asian patent market continues to be a significant area of
IPH Limited. I am honoured to serve as the CEO of the leading
growth, representing a strong opportunity for IPH. Patent filings
IP professional services group in the Asia-Pacific region. I would
by IPH Asian entities increased by 5.6 per cent in FY18.
like to acknowledge David Griffith, IPH’s inaugural Managing
Director & CEO who stepped down in November 2017, for his
enormous contribution and vision in creating IPH.
During FY18, we were able to strengthen our leading position
and this was reflected in an improved second half performance
and implementation of strategic initiatives to create a strong
platform for future growth.
The IPH Group’s overall patent and trade mark filings
continue to underpin future revenue and earnings growth
across our business.
Total patent filings by IPH companies increased by approximately
17 per cent in FY18 from a combination of organic and
acquisition growth, while trade mark filings increased significantly
due to the full year contribution from the substantial trade mark
practices of Ella Cheong Hong Kong and China businesses,
Financial results Ð strong second half performance
acquired in FY17, and AJ Park, acquired in FY18.
Revenue increased by 21.5 per cent to $226.0 million, driven by
organic growth and the acquisition of AJ Park in October 2017.
Creating a stronger platform for growth
This was offset by the impact of a stronger Australian dollar in FY18
compared to the prior year.
Statutory EBITDA increased by 2.1 per cent to $70.1 million while
Underlying EBITDA of $74.0 million increased by 3.3 per cent on
the prior year.
In FY18 the Group made significant progress in implementing a
number of strategic initiatives, which will support future growth.
In our Australian and New Zealand IP businesses, the earnings
contribution of NZ$6.5 million in FY18 from AJ Park in New
Zealand was ahead of expectations, due to a focus on margin
Statutory net profit after tax (“NPAT”) declined by 5.2 per cent
expansion initiatives. We are now focused on capturing referral
to $40.7 million. Statutory NPAT was impacted by increased
synergies into Asia, another key area of opportunity for the Group.
amortisation charges of acquired assets, restructuring charges
and the one-off write-down of intangibles related to the Cullens
and Fisher Adams Kelly Callinans (FAKC) brands. Underlying
NPAT of $51.9 million increased by 1.4 per cent on the prior year.
Fisher Adams Kelly Callinans (FAKC) and Cullens are now
fully integrated into the Spruson & Ferguson business. Clients
of FAKC and Cullens can now benefit from direct access to
Spruson & Ferguson’s service offering across Asia Pacific and
Spruson & Ferguson clients now have access to an expanded
Market conditions Ð IPH outperforms the market
team in Australia. We expect to generate cost synergies from
In Australia, while the overall market for patent filings was
the integration of approximately $1 million in FY19.
broadly steady in FY18, the second half grew by 1.6 per
Our Asian IP business continues to be a strong focus of our
cent which is in line with the medium-term growth rate
growth strategy, leveraging the opening of regional offices and the
of approximately 1.5 per cent. IPH group businesses
acquisition of Ella Cheong Hong Kong and Beijing (re-branded
outperformed the market for both the year (1.7 per cent) and the
Spruson & Ferguson) in prior years.
second half (5.2 per cent) in terms of patent filing growth.
China remains an important growth market for IPH. In FY18
Combined, the IPH group maintained our number one patent
Spruson & Ferguson successfully established an exclusive
market position in Australia with 23.8 per cent market share.
arrangement with an independent Chinese patent agency
One of the key leading indicators of future patent filings is the
level of US Patent Cooperation Treaty (PCT) filings, which
continues to be steady. Similarly, the proportion of PCT filings
into Australia also remains stable.
In Singapore for the calendar year to 30 June 2018, the overall
patent filing market was flat, however, IPH Singapore filings
increased by 1.5 per cent. Combined, the IPH Group continues
to hold the number one patent market position in Singapore
with 24.4 per cent of patents filed for the same period.
(Beijing Pat SF Intellectual Property Agency Co Ltd) to
undertake all regulated patent work in China exclusively for
Spruson & Ferguson clients. This arrangement enables a more
streamlined offering for clients, backed by Spruson & Ferguson’s
quality, service, reliability and communication standards. It
also strengthens our footprint in an addressable market of
approximately 130,000 Chinese patent filings annually.
4 www.iphltd.com.au
IPH Limited
In our Data and Analytics business, the Group’s wholly-owned
In Asia, we expect to maintain our leading market share position
subsidiary, Practice Insight Pty Limited, completed the sale of
in Singapore while seeking to expand market share in other SE
two of its products, Filing Analytics and Citation Eagle, to CPA
Asian higher growth markets. A core component of our strategy
Global for $10 million in August 2018.
remains on increasing our share in the Chinese addressable
While these products had established a high quality, diverse
and loyal customer base, the Board felt the best opportunity
market and continuing to leverage our existing network to grow
internal filings and case transfers.
to maximise their potential was under the ownership of a
Practice Insight will concentrate its efforts on the final
global organisation with established marketing and software
development of its autonomous activity monitoring tool,
distribution channels in the IP sector.
WiseTime. In FY19, the reshaped Practice Insight sales team
The sale will enable our remaining Data and Analytics Software
business to focus on the development and sales of its
autonomous activity monitoring tool, WiseTime.
Continued focus on our people
Our people remain critical to delivering our strategy and during
FY18 we made significant progress in attracting, motivating
and retaining key talent across IPH. Our corporate structure
continues to provide us the ability to invest and develop our
people which is a key part of our competitive advantage.
We appointed 13 new Principals across the Group during the year,
bringing the number of new Principal appointments to 28 since
listing in November 2014. Excluding retirement, over 80 per cent
of Pizzeys and FAKC ex-vendor Principals recommitted to the IPH
group (post initial employment agreement minimum terms).
will focus on promoting WiseTime into the IP law firm market
and progressing partnerships into the broader legal services
software providers.
At a Group level, IPH will continue to focus on attracting,
motivating and retaining talented employees within our
organisation. We will maintain our strategic and disciplined
approach to the assessment of any potential acquisition
opportunities in Asia-Pacific and other secondary IP markets.
The IPH group made significant progress during FY18 and I
want to acknowledge and thank all of our people across the
businesses for their hard work in delivering these results.
I also want to thank our shareholders for their continuing
support of the Company and assure you of the Board and
management’s continued focus and commitment to generating
sustainable value for shareholders.
Priorities for FY19
For FY19, we remain focused on maintaining and leveraging
our leading position in Australia/New Zealand with a continued
focus on market share initiatives and achieving margin
expansion in AJ Park, and also through the integration of FAKC
and Cullens into Spruson & Ferguson.
Dr. Andrew Blattman
CEO and Managing Director
2018 Annual Report
5
Company Snapshot
OUR
ASIA PACIFIC
REACH
8
IP jurisdictions
15
(cid:50)ffices
No1
Patent group
in Australia,
New Zealand
and Singapore1
OUR PEOPLE
630Employees
80 Principals
167 Professional Staff
383 Support Staff
Senior
Executives and
Principals
24% Female
76% Male
6 www.iphltd.com.au
Clients10K+
4 BRANDS
PIZZEYS
Patent and Trade Mark Attorneys
AU S T R A L I A | N E W Z E A L A N D
A S I A PAC I F I C
IPH Limited
19K+
(cid:51)atent filings4
(FY18)
24 %
Patent market share
in Australia2
(FY18)
24.5 %
Patent market share
in Singapore3
(CYTD18)
8.5K+
Trademark
filings4
(FY18)
1 Australia (cid:331) FY18 as at 30 June 2018. New Zealand (cid:331) FY18 as at 30 June 2018. Singapore (cid:331) CYTD18 as at approx. 30 June 2018.
2
3
4
IPH management estimate based on share of agents recorded with IP Australia as at 3 August 2018 for FY18. IPH Group market share includes filings by the following
entities: Spruson & Ferguson (Australia), FAKC, Pizzeys, Cullens and AJ Park. Acquired companies filings are included from the first day of the relevant period.
IPH management estimate based on share of agents recorded with IPOS as at approx. 2 August 2018 and may not reflect any change of agent recorded since filing.
CYTD18 IPH’s percentage of market share represents patent filing by Spruson & Ferguson (Asia) and Pizzeys over total number of applications filed in Singapore.
IPH management estimate based on internal filing information. FY18 includes filings by AJ Park (acquired in FY18). All incoming/outgoing patent/trademark
applications filed either directly or indirectly (through an agent) by IPH companies, including where incoming/outgoing agent is an IPH entity.
Applications filed by Spruson & Ferguson (China/HK) and AJ Park are those filed by the firm across the entire financial year.
2018 Annual Report
7
Board of Directors
Richard Grellman, AM
Dr. Andrew Blattman
Independent Non-Executive Chairman
CEO and Managing Director
FCA
Richard was appointed independent Non-
Executive Chairman in September 2014.
Richard worked for KPMG for 32 years, mostly
within the Corporate Recovery Division and was
a Partner from 1982 to 2000. Richard is currently
the Tribunal of The Statutory and other Officers
Remuneration Tribunal (SOORT), appointed by the
Governor of NSW.
Richard is also Chairman of Fastbrick Robotics Ltd.
Richard is a Director of Bisalloy Steel Group Limited
and the National Health and Medical Research
Council Institute for Dementia Research.
8 www.iphltd.com.au
BScAgr (Hons 1), PhD, GraDipIP
Dr Andrew Blattman was appointed as Managing
Director & Chief Executive Officer of IPH Limited
in November 2017.
Andrew has more than 20 years’ experience in the
intellectual property profession. Previously he was
CEO of Spruson & Ferguson, a leading intellectual
property (IP) firm in the Asia-Pacific region and the
largest entity in the IPH Limited group.
Andrew joined Spruson & Ferguson in 1995 and in
1999 he was appointed as a Principal of the firm.
In 2015 Andrew was appointed CEO of Spruson
& Ferguson. Under his leadership Spruson &
Ferguson significantly expanded its footprint in the
Australian and Asian IP markets (cid:331) opening new
offices in Melbourne, Beijing, Hong Kong SAR,
Jakarta and Bangkok.
Since Spruson & Ferguson’s incorporation and
the listing of IPH on the Australian Stock Exchange
in 2014, Andrew has played a key role in the
development and growth of the IPH group. He
has a deep knowledge and understanding of the
IPH business and the environment in which the
company operates.
IPH Limited
John Atkin
Robin Low
Independent Non-Executive Director
Independent Non-Executive Director
LLB (1st Class Hons)
BA (Pure Mathematics) (1st Class Hons)
BCom, FCA
Robin was appointed as a Non-Executive Director
John was appointed as a Non-Executive Director
in September 2014.
in September 2014.
John is a Non-Executive Director of Integral
Diagnostics Limited, Commonwealth Bank
SuperFund, Australian Outward Bound
Foundation and Outward Bound International
Inc. He is a member of the Board of the State
Library of NSW Foundation.
John is a former CEO & Managing Director of The
Trust Company Limited (2009-2013) prior to its
successful merger with Perpetual Limited. John
was also Managing Partner and Chief Executive
of Blake Dawson (2002-2008). John also worked
at Mallesons Stephen Jaques as a Mergers &
Acquisitions Partner for 15 years (1987-2002).
Robin is a Director of AUB Group Limited,
CSG Limited, Appen Limited, Primary Ethics,
the Public Education Foundation, Australian
Reinsurance Pool Corporation and Gordian
Runoff Limited/Enstar Australia Holdings Pty Ltd
(part of the NASDAQ listed Enstar Group). She
is also President of the Sydney Medical School
Foundation and Deputy Chairman of the Auditing
and Assurance Standards Board.
Robin was with PricewaterhouseCoopers for
28 years and was a Partner from 1996 to 2013,
specialising in audit and risk.
2018 Annual Report
9
Heading Here
Corporate
Directory
10 www.iphltd.com.au
10 www.iphltd.com.au
Corporate Directory
Directors
Company secretary
Notice of annual general meeting
Registered office
Principal place of business
Share register
Auditor
Solicitors
Stock exchange listing
Mr Richard Grellman AM - Chairman
Dr Andrew Blattman
Mr John Atkin
Ms Robin Low
Mr Philip Heuzenroeder
The details of the annual general meeting
of IPH Limited are:
Friday 23 November 2018 at 10:30am at the offices of EY
200 George Street, Sydney NSW 2000
Level 24, Darling Park Tower 2
201 Sussex Street, Sydney NSW 2000
Tel: 02 9393 0301
Fax: 02 9261 5486
Level 24, Darling Park Tower 2
201 Sussex Street, Sydney NSW 2000
Link Market Services Limited
Level 12, 680 George Street, Sydney NSW 2000
Tel: 1300 554 474
Deloitte Touche Tohmatsu
Level 9, Grosvenor Place
225 George Street, Sydney NSW 2000
Watson Mangioni Lawyers Pty Limited
Level 23, 85 Castlereagh Street, Sydney NSW 2000
IPH Limited shares are listed on the
Australian Securities Exchange (ASX code: IPH)
Website
www.iphltd.com.au
Corporate Governance Statement
The Corporate Governance Statement was approved by the Board of
Directors on 18 September 2018 and can be found at www.iphltd.com.au
2018 Annual Report
11
Directors’
Report
12 www.iphltd.com.au
12 www.iphltd.com.au
30th June 2018
The Directors present their report, together with the financial
statements, of the consolidated entity (referred to hereafter as
the ‘Group’) consisting of IPH Limited (referred to hereafter as the
‘Company’ or ‘Parent Entity’) and the entities it controlled at the end of,
or during, the year ended 30 June 2018.
IPH Limited (“IPH”, ASX:IPH), is the holding company of intellectual
property services firms Spruson & Ferguson, Fisher Adams Kelly
Callinans, Pizzeys, Cullens and AJ Park and data analytics software
development company, Practice Insight. The group employs a
multidisciplinary team of approximately 630 people in Australia, New
Zealand, Singapore, Malaysia, Thailand, Indonesia, China, Hong
Kong and Germany.
IPH is the leading intellectual property (“IP”) services group in
the Asia-Pacific region offering a wide range of IP services and
products to a diverse client base of Fortune Global 500 companies,
multinationals, public sector research organisations, SMEs and
professional services firms worldwide.
1. Directors
The following persons were Directors of IPH Limited during the
whole of the financial year and up to the date of this report, unless
otherwise stated:
Name
Office
Mr Richard Grellman, AM
Non-executive Chairman
Dr Andrew Blattman
Executive Officer
Managing Director and Chief
(appointed 20th November 2017)
Mr John Atkin
Non-executive Director
Ms Robin Low
Non-executive Director
Managing Director and Chief
IPH was the first IP services group to list on the Australian
Mr David Griffith
Executive Officer
Securities Exchange.
Dr Sally Pitkin
(resigned 20th November 2017)
Non-executive Director
(resigned 20th November 2017)
1.1 Information on Directors
The skills, experience, and expertise of each person who is a director of
the Company at the end of the financial year is provided below, together
with details of the company secretary as at year end.
Name: Richard Grellman, AM
Title:
Non-executive Chairman (appointed 23 September 2014)
Qualifications:
FCA
Experience
and expertise:
Other current
directorships:
Richard worked for KPMG for 32 years, mostly within the Corporate Recovery Division and was a Partner
from 1982 to 2000. Richard is currently the Tribunal of The Statutory and other Officers Remuneration Tribunal
(SOORT), appointed by the Governor of NSW.
Richard is Chairman of Fastbrick Robotics Ltd (2018) and is also a Director of Bisalloy Steel Group Limited (2003)
and the National Health and Medical Research Council Institute for Dementia Research (2015).
Former directorships
Chairman of Crowe Horwath Australasia Limited (2011 - 2015),
(last 3 years)
Chairman of Genworth Mortgage Insurance Limited (2012-2016),
Chairman of the AMP Foundation (2012 (cid:331) 2018)
Interests in shares:
71,449
Special responsibilities:
Chairman. Member (cid:331) Audit Committee, Risk Committee, Nomination and Remuneration Committee
2018 Annual Report
13
Directors’ Report
Name: Dr. Andrew Blattman
Title:
Managing Director and Chief Executive Officer
Qualifications:
BScAgr (Hons 1), PhD, GraDipIP
Experience and
expertise:
Dr Andrew Blattman was appointed as Managing Director & Chief Executive Officer of IPH Limited in November 2017.
Andrew has more than 20 years’ experience in the intellectual property profession. Previously he was CEO of
Spruson & Ferguson, a leading intellectual property (IP) firm in the Asia-Pacific region and the largest entity in
the IPH Limited group.
Andrew joined Spruson & Ferguson in 1995 and in 1999 he was appointed as a Principal of the firm. In 2015
Andrew was appointed CEO of Spruson & Ferguson. Under his leadership Spruson & Ferguson significantly
expanded its footprint in the Australian and Asian IP markets (cid:331) opening new offices in Melbourne, Beijing,
Hong Kong SAR, Jakarta and Bangkok.
Since Spruson & Ferguson’s incorporation and the listing of IPH on the Australian Securities Exchange
in 2014, Andrew has played a key role in the development and growth of the IPH group. He has a deep
knowledge and understanding of the IPH business and the environment in which the company operates.
Memberships of
FIPTA, APAA, AIPPI, FICPI and IPSANZ
Professional Associations:
Other current
directorships:
No other current directorships
Interests in shares:
4,506,166
Special responsibilities:
CEO
14 www.iphltd.com.au
30th June 2018
Name: John Atkin
Title:
Non-executive Director (appointed 23 September 2014)
Qualifications:
LLB (1st Class Hons), BA (Pure Mathematics) (1st Class Hons)
Experience and
expertise
John is a former Chief Executive Officer and Managing Director of The Trust Company Limited
2009 - 2013). John was also Managing Partner and Chief Executive of Blake Dawson (2002 - 2008). He also
worked at Mallesons Stephen Jaques as a Mergers & Acquisitions Partner for 15 years (1987 - 2002).
Other current
directorships
Integral Diagnostics Limited (2015), The Australian Outward Bound Foundation (2007) and the State Library of
NSW Foundation (2013), Commonwealth Bank SuperFund (2017) and Outward Bound International Inc (2017).
Former directorships
Managing Director of The Trust Company Limited (2009 - 2013), Non-executive director Aurizon Holdings Limited
(last 3 years)
(2010 - 2016), Chairman GPT Metro Office Fund (2014-2016).
Interests in shares:
115,829
Special responsibilities:
Chairman - Nomination and Remuneration Committee. Member - Audit Committee, Risk Committee
Name: Robin Low
Title:
Non-executive Director (appointed 23 September 2014)
Qualifications:
BCom, FCA, GAICD
Experience and
expertise
Other current
directorships:
Robin was with PricewaterhouseCoopers for 28 years and was a Partner from 1996 to 2013,
specialising in audit and risk.
AUB Group Limited (2014), CSG Limited (2014), Appen Limited (2014), Sydney Medical School Foundation
(2012), Auditing and Assurance Standards Board (2013), Primary Ethics (2011), Public Education Foundation
(2010), Australian Reinsurance Pool Corporation (2017) and Gordian Runoff Limited/Enstar Australia
Holdings Pty Limited (part of the NASDAQ listed Enstar Group) (2017).
Interests in shares:
74,214
Special responsibilities:
Chairman - Audit Committee, Risk Committee. Member - Nomination and Remuneration Committee
The directors hold no interest in options, performance rights or
contractual rights to the securities of IPH Limited as at the date
of this report.
2018 Annual Report
15
Directors’ Report
1.2 Meetings of Directors
The number of meetings of the Company’s Board of Directors (‘the
Board’) held during the year ended 30 June 2018, and the number of
meetings attended by each Director were:
Full Board
Nomination
and Remuneration
Committee
Audit
Committee
Risk
Committee
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Richard Grellman, AM
Andrew Blattman
John Atkin
Robin Low
David Griffith
Sally Pitkin
9
4
9
9
5
5
9
4
9
9
5
5
2
-
3
3
-
1
2
-
3
3
-
1
3
-
5
5
-
2
3
-
5
5
-
2
2
-
4
4
-
2
2
-
4
4
-
2
Held: represents the number of meetings held during the time the Director held office.
2. Company secretary
4. Operational and Financial Review
Philip Heuzenroeder, BEc, LLB, LLM, GAICD (Order of Merit). Mr
Heuzenroeder was appointed Group General Counsel and Company
(cid:23)(cid:17)(cid:20) (cid:50)perations and financial performance
Secretary on 29 April 2016. He is a solicitor with over 20 years
professional experience working in private practice and in-house, with
experience in a broad range of areas of law including commercial law,
competition law, ICT and intellectual property, and litigation. Philip was
formerly a Principal of Spruson & Ferguson Lawyers and was a director
of the Cure Brain Cancer Foundation from 2013 to 2017.
3. Principal activities
During the year principal activities of the Group consisted of:
The summary financial analysis below shows the results on a statutory
and underlying basis.
The FY18 underlying earnings of the Group have been determined
by adjusting statutory earnings amounts to eliminate the effect
of business acquisition adjustments, business acquisition costs,
restructuring costs, new business establishment costs and non-cash
share based payments expenses.
Revenue has grown by $40.0M to $226.0M, up by 21.5%, driven by
organic growth and the impact of the acquisition of AJ Park and offset
»
IP services related to provision of filing, prosecution, enforcement
by the impact of a stronger Australian dollar than in the comparative
and management of patents, designs, trade marks and other IP in
period.
Australia, New Zealand, Asia and other countries; and
Statutory EBITDA increased by $1.4M to $70.1M, up from $68.7M in
»
the development and provision of IP data and analytics software
FY17. Underlying EBITDA of $74.0M has increased by 3.3% from the
under the subscription licence model whereby the software is
prior corresponding period.
licensed and paid for on a recurring basis.
The Group achieved a statutory net profit after tax of $40.7M down
There were no significant changes in the nature of activities of the Group
5.2% from $42.9M in FY17. Underlying net profit after tax of $51.9M is
during that period.
a 1.4% improvement over the prior period.
16 www.iphltd.com.au
30th June 2018
Revenue
FY18
Revenue
FY17
Chg%
EBITDA
FY18
EBITDA
FY17
Chg%
Australia & New Zealand IP
155,367
123,162
26.1%
54,147
50,575
7.1%
Asian IP
77,968
68,622
13.6%
31,146
29,579
5.3%
233,335
191,784
21.7%
85,293
80,154
6.4%
Data and Analytics Software
1,212
743
(2,709)
(2,503)
Corporate Office
Eliminations
(1,209)
(218)
(8,367)
(5,616)
(7,312)
(6,277)
(213)
(409)
Underlying Revenue / EBITDA
226,026
186,032
21.5%
74,004
71,626
3.3%
Business acquisition costs
Business combination adjustments
New business establishment costs
Restructuring expenses
Share based payments
(982)
(2,617)
642
1,181
(786)
(207)
(2,134)
-
(676)
(1,325)
Statutory Revenue / EBITDA
226,026
186,032
21.5%
70,068
68,658
2.1%
Interest Income
Interest Expense
Depreciation and amortisation
Impairment of intangible assets
Net Profit Before Tax
Tax
Net Profit After Tax
29
113
(1,537)
(1,241)
(13,092)
(10,329)
(2,148)
-
53,320
57,201
(6.8%)
(12,647)
(14,308)
40,673
42,893
(5.2%)
2018 Annual Report
17
Directors’ Report
4.1 Operations and Financial Performance Continued >
On the latest available data the Group has maintained its number one
patent market share position in Singapore (all patent applications
Australian and New Zealand IP
filed in Singapore).
The ANZ IP segment achieved sales revenue growth of 26.1% to
Data and Analytics Software
$155.4M of which $33.7M was attributable to the AJ Park acquisition.
It was announced on 15 August 2018 that IPH’s wholly-owned
The Group has maintained its number one patent market share position
subsidiary, Practice Insight Pty Limited, has agreed the sale of two of its
(all patent applications filed in Australia) for the year. While the overall
market is flat (in terms of number of patent filings) year on year, the
second half displayed growth (1.6%) in line with the medium-term trend
of 1.5%. The IPH Group outperformed the market for both the year
(1.7%) and the second half (5.2%) in terms of its filing growth.
products: Filing Analytics and Citation Eagle to CPA Global Management
Services Limited for $10 million. The sale will generate an accounting
profit in the consolidated accounts of IPH Limited of approximately $2
million in the 2019 financial year after taking into account the assets’
carrying values and transaction costs. Proceeds from the sale will be
Underlying EBITDA was up by 7% to $54.1M at a margin of 35% (2017:
used to pay down existing debt.
41%). On 30 June 2018 FAKC and Cullens were merged with Spruson &
The remaining Data and Analytics Software business will focus on
Ferguson Australia. The intangible asset relating to the former FAKC and
the final development and sales of its autonomous time keeping
Cullens trademarks has been assessed as having no ongoing economic
platform “WiseTime”.
benefit and hence has been written off.
Asian IP
It is expected that the transaction will reduce EBITDA losses in the Data
and Analytics Software segment by approximately $1 million in FY19.
The Asian IP segment achieved sales revenue growth of 15% to $77.8M
Movements in FX Rates
which includes a full year contribution of the Ella Cheong acquisition.
Underlying EBITDA was up by $1.5M, or 5%.
Foreign exchange rates used to translate earnings throughout
the period were:
FY16
FY17
Movement
FY18
Movement
AUD/USD
AUD/EUR
AUD/ SGD
Year End
Average
Year End
Average
Year End
Average
0.7426
0.7286
0.6699
0.6564
1.0027
1.0122
0.7692
0.7545
0.6730
0.6919
1.0598
1.0505
(3.5%)
(5.4%)
(3.8)%
0.7407
0.7754
0.6420
0.6498
1.0095
1.0404
(2.8%)
6.1%
1.0%
4.1.1 Adjustments to Statutory Results
The internal reporting that is regularly provided to the chief operating
decision makers includes financial information prepared on both a
statutory and underlying basis. It is considered important to include
the financial information on an underlying basis as this reflects the
ongoing or underlying activities of the Group and excludes items that
are not expected to occur frequently and do not form part of the core
activities of the Group.
Adjustments to the statutory EBITDA have been made for:
» Business acquisition costs (cid:331) costs incurred in the pursuit of
acquisitions which have been completed, not ultimately pursued or
» Business combination adjustments (cid:331) the P&L impact of the
revaluation of shares issued on acquisition and arises primarily on
movements in the share price between the completion date of the
transaction and the final settlement. This is a non-cash item.
» New business establishment costs (cid:331) in the current year relates
predominately to the establishment of an exclusive arrangement with
an independent Chinese patent agency late in FY18 for the conduct
of regulated patent services.
» Restructuring expenses (cid:331) costs of restructuring across the Group.
In the current year these predominately relate to two projects: the
merger of Cullens and Fisher Adams Kelly Callinans into Spruson
& Ferguson; and the restructuring of certain aspects of the AJ Park
are currently in progress. In the current year these predominately
business post acquisition.
relate to the acquisition of AJ Park.
18 www.iphltd.com.au
» Share based payments (cid:331) accounting charges for the share-based
incentive plans.
30th June 2018
4.2 Statement of Financial Position
Balance Sheet as at
30 June 2018
Balance Sheet as at
30 June 2017
$’m
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
PP&E
Acquisition intangibles & goodwill
Other
Deferred tax asset
Total assets
Trade and other payables
Tax provisions
Borrowings
Deferred tax liability
Other liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
26.2
57.1
5.3
88.6
6.2
266.3
0.2
6.6
367.9
16.7
6.3
40.1
22.9
14.3
100.3
267.6
262.8
(11.5)
16.3
267.6
24.4
38.0
3.4
65.8
3.0
212.9
0.2
5.1
287.0
11.2
6.9
-
18.7
10.5
47.3
239.7
233.6
(12.3)
18.4
239.7
2018 Annual Report
19
Directors’ Report
4.2 Statement of Financial Position Continued >
A summary of specific key movements are as follows:
» On 23 May 2018 the Company commenced an on-market share buy-
back program of its ordinary shares of up to $40m. As at 30 June 2018,
621,816 shares had been acquired at a combined value of $2.7m.
Cash & cash equivalents
Acquisitions
»
The cash flow statement within the financial report provides details
of the cash movements during the year. The Group generated
positive cash flows from operating activities of $46.5m.
»
The Group derives the majority of its revenue in USD and as such carries
a significant amount of cash in USD. As at 30 June 2018 the cash
balance was denominated in AUD (26%), USD (42%) and other (32%).
Trade and other receivables
On 11 October 2017 IPH announced it had reached agreement to acquire
the New Zealand intellectual property firm AJ Park by an acquisition of its
patent attorney business, the benefit of its trade mark and legal businesses,
and its associated Australian operations. AJ Park is the premier New
Zealand IP firm operating from offices in Auckland and Wellington. AJ Park
become the first New Zealand IP firm to join a publicly listed IP group.
The purchase consideration for the acquisition was NZD$66.1m
(approximately A$60.5m) of which $38.9m was paid in cash and $21.3m
»
The increase in the trade receivables balance is a combination of the
in IPH shares. At the time of settlement the fair value of the equity
acquisition of AJ Park ($10m) as well as the impact of revaluing foreign
component of settlement had risen to $27.0m.
denominated balances. As at 30 June 2018 the trade receivables
balance was denominated in AUD (22%), USD (54%) and other (24%).
The acquisition represented a further step in IPH’s strategy to expand
its presence in secondary IP markets and, most importantly, supports
»
The instance of bad debts remains low with $0.4m written off during
IPH’s growth in Asia through extension of our Asian service offering to
the course of the year.
AJ Park’s local and international clients.
Acquisition intangibles & goodwill
»
The increase in intangible assets arises from the acquisition of
AJ Park ($63.8m), comprising customer relationships ($20.3m),
trademarks ($2.9m) and goodwill ($40.6m).
»
Identifiable intangible assets (at cost) consist of customer
relationships $90.9m, trademarks $4.3m and software of $3.8m.
4.3 Business model, strategy and outlook
4.3.1 Business model
IPH Limited is an intellectual property group operating a number of
independent professional businesses providing intellectual property
services (“IP Services”). It also operates a Data and Analytics Software
» As a result of the merger of Cullens and Fisher Adams Kelly
Business (“Data Services”) with a range of products focussing on: IP
Callinans into Spruson & Ferguson during the year, the value ($1.5m
data; time recording; and a document management system.
net of the reversal of the related deferred tax liability) of the Cullens
and FAKC trademarks was written off.
In IPH’s IP services businesses in Australia, New Zealand and Asia,
revenue is derived from fees charged for the provision of professional IP
» Goodwill recognised on acquisitions is $185.2m.
services by each firm as related to securing, enforcing and managing IP
Liabilities
»
Trade and other payables increased by $5.5m including $3.4m resulting
from the acquisition of AJ Park.
»
The deferred tax liabilities related to the identifiable intangible assets
on acquisitions and have increased with the acquisition of AJ Park
($6.5m) offset by the writeoff of the balance related to the FAKC and
Cullens trademarks ($0.6m).
Borrowings
rights in the country (directly or through an agent) in which registration
is sought by the client. The business model allows IPH to generate
recurring revenue streams throughout all stages of the IP lifecycle from
its long-standing and diverse client base.
IPH’s Data Services business generates revenue from the sale of its
products directly or through a third party under a subscription licence
model. It was announced on 15 August 2018 that the company would
divest the two IP data products within its suite: Filing Analytics and
Citation Eagle. The Data Services business will now primarily focus on
the development of its autonomous time-keeping platform WiseTime.
»
The acquisition of AJ Park was partly funded by the drawdown of
Factors that affect the performance of both business segments
USD26m (AUD35.1m as at 30 June 2018) in debt. In addition, the
company has at its disposal a $40m facility to fund a share buy-
back, of which $5m is drawn at 30 June 2018.
include, amongst others, the performance of the global and Australian
economies, client activity levels, competitor activity, and the regulatory
environment in which the services are provided.
Equity
»
The increase in issued capital predominately arises on the equity
component of the AJ Park acquisition mentioned below.
20 www.iphltd.com.au
30th June 2018
4.3.2 Strategy
IPH vision, mission and values
Asian IP businesses
Asia has been a key part of the Group’s strategy since the opening of the
Singapore office in 1997. In recent years IPH has supported its Asian growth
From the Company’s foundation and listing on the ASX in November
strategy with the opening of offices in Thailand and Indonesia and expanding
2014, IPH has been pursuing its vision of becoming the leading IP group
into China and Hong Kong through the acquisition of Ella Cheong Hong Kong
in IP secondary1 markets and adjacent areas of IP.
IPH’s mission is to provide the highest quality of service to our clients,
meeting their needs and exceeding their expectations, whilst delivering
sustainable growth and value to all of our stakeholders.
and Beijing (re-branded Spruson & Ferguson). The expansion provides a
strong platform to extend the provision of IP services to new geographical
areas for existing clients and an improved multi-country service offering for
potential new clients. The key focus for IPH’s Asian business is to leverage
existing infrastructure for further organic growth. IPH will continue to assess
From our origins in 1887 as Spruson & Ferguson, IPH’s success
potential organic and M&A opportunities in Asia as they arise.
continues to be underpinned by the key drivers and values at the core
our businesses, which remain unchanged:
Other secondary IP markets
Excellence in service delivery to our clients
IPH has adopted a strategic and disciplined approach to the assessment of any
»
»
»
»
»
Innovation in value creation
Integrity in business practices
Efficiency and effectiveness in operations
Empowerment and engagement of our people
Value creating growth strategies
IPH’s plan is to achieve its goals through implementation of strategic
initiatives in five key areas:
» Australian and New Zealand IP businesses
» Asia IP business
» Other secondary IP markets
» Adjacent to IP markets
» Business improvements and operations
1 The primary IP markets of USA, Japan and Western Europe generate the majority
of IP rights and clients by value. The secondary markets are all countries outside of
USA, Japan and Western Europe.
Australian and New Zealand IP businesses
A key objective of all IPH’s ANZ businesses is to continue to organically
grow the volume of filings, market share and revenue across all
disciplines, and to invest in providing superior service to global
customers consistent with the longstanding strength and reputation of
its brands, Spruson & Ferguson, Pizzeys and AJ Park.
IPH’s ANZ businesses are also an important part of the Asian growth
strategy in that they are a valuable source of filings and revenue into IPH’s
Asian business. The initiative to integrate the Cullens and FAKC brands
into Spruson & Ferguson during FY18 will better enable professionals in
these businesses to offer a pan-Asian filing solution to their clients.
potential M&A opportunities in Asia-Pacific and other secondary IP markets.
First and foremost, the growth opportunities are evaluated on the extent to
which they help to achieve IPH’s strategic objectives. IPH continues to evaluate
potential acquisition opportunities in international secondary markets.
Adjacent to IP markets
Over the past 40 years the IP industry observed the rise of non-
traditional IP service providers offering alternative ways of servicing
and delivering value to clients through technology and data-driven
business models. With the acquisition and further investment in Practice
Insight, IPH is well positioned to capitalise on disruptive innovation.
IPH continuously considers new developments in this area to ensure it
maintains its market leadership position.
Business improvements and operations
The Spruson & Ferguson business has operated at industry-leading
efficiency levels for many years. The Group will continue to focus on the
optimisation of all of IPH’s businesses with a view to extract operational
efficiencies and improve the quality of service for our clients.
4.3.3 FY19 priorities
IPH group remains focused on maintaining and leveraging its leading
position in Australia/New Zealand with continued focus on market share
initiatives and achieving margin expansion in AJ Park and through the
merger of FAKC and Cullens into Spruson & Ferguson.
In Asia, IPH expects to maintain its leading market share position in
Singapore while seeking to expand its share in other SE Asian higher
growth markets. The Group remains focused on increasing its share in
the Chinese addressable market and continuing to leverage its existing
network to grow internal filings and case transfers.
The sale of the Filing Analytics and Citation Eagle products will
reduce EBITDA losses in the Data and Analytics Software business
to approximately $1.7 million in FY19 and will enable the business to
refocus on its autonomous time keeping platform WiseTime.
At a Group level, IPH will continue to focus on strategy to attract, motivate
and retain key talent. We will also continue to evaluate acquisition and
expansion opportunities in a strategic and measured manner.
2018 Annual Report
21
Directors’ Report
4.4 Risks
Risk
Description
Management of Risk
Strategic planning and
The Company conducts its operations in
The Board is closely involved in identifying, reviewing and confirming
implementation
a market that has undergone significant
strategic objectives and reviewing implementation, including assessing
changes with the development of corporatised
opportunities and risks, and in providing direction to management.
service providers, which the market continues
to adjust to. This provides the Group with both
opportunities and risks requiring development
and communication of a clear strategic vision
and objectives.
Competition and
changing market
conditions
The sectors in which the Company operates
Effective client service, comprising a high level of expertise at
are subject to vigorous competition, based
competitive prices delivered in a timely manner.
on factors including price, service, innovation
and the ability to provide the customer with
an appropriate range of IP services in a timely
manner. Scope exists for market conditions
to change over time reflecting economic,
political or other circumstances.
All operations of the IPH Group are now or will be supported by industry
leading IT systems.
Regular marketing visits to maintain and develop client relationships
and understand potential changes in client needs, and internal and
external pressures.
IPH also provides a broad range of intellectual property services and its
operations are geographically widespread, reducing exposure to any one
form of intellectual property country or jurisdiction in which it operates.
Regulatory environment
The Company is subject to significant
Senior executives ensure that all regulatory and legal issues affecting
regulatory and legal oversight.
IPH’s business are monitored and that any changes to the business
operations necessary to comply with regulatory and legal changes are
undertaken in a timely manner.
Careful management and oversight of the Group’s internal case
management system.
Principal review of all professional work and compliance with a
professional work approval process for outgoing work. The approval
process is correlated to the complexity and level of potential risk
associated with the work.
22 www.iphltd.com.au
30th June 2018
Risk
Description
Management of Risk
Regulatory reforms
The Group’s service offerings are subject to
The Company is proactive in any review or evaluation of regulations likely
changes to government legislation, regulation
to affect its operations materially, and works with regulators or review
and practices including particularly, if
authorities to ensure a clear understanding of facts and circumstances,
implemented, proposals to streamline multi-
and consideration of all stakeholder perspectives.
jurisdictional patent filing and examination
processes.
The Company seeks to offer its services in a range of secondary markets.
Many of these markets have less developed IP regulations and systems,
and require translations into languages other than English, and are
therefore less likely to be affected by such proposals if they were to be
implemented than developed or primary markets.
Other factors which help safeguard the Company’s role are effective
technology, excellent client service and efficient operations and the
likely need for IP applicants to continue to be required to record a
local address for service of documents with the local IP office for
examination and prosecution purposes.
The Company also continues to consider the development of revenue
streams from adjacent markets.
Personnel
The Company depends on the talent and
Retention practices including appropriate remuneration, incentive
experience of its personnel. The loss of any
programmes (both short and long term), retention awards, working
key personnel, or a significant number of
environment and rewarding work.
personnel generally may have an adverse
effect on the Company. Employee costs
represent a significant component of the
Group’s total cost base.
Careful management of staff numbers and salary levels and
consideration of resourcing requirements as the Company grows.
Disintermediation
The Group acts as an intermediary agent
IPH’s intermediary role is safeguarded by clients’ reliance on the Group’s
between its clients and IP offices. The
expertise (both general IP expertise and local expertise) and regulatory
removal of intermediaries in the IP application
barriers such as exclusive rights of patent attorneys to provide various
and registration process would have an
IP related services and requirements for IP applicants to record a local
adverse impact on the Group.
address for service of documents with the local IP office.
Other factors which help safeguard the Company’s intermediary role are
effective technology, excellent client service and efficient operations.
The Company also seeks to offer its services in a range of secondary
markets. Many of these markets have less developed IP regulations and
systems and require translations into languages other than English, and
are therefore less likely to be affected by disintermediation.
2018 Annual Report
23
Directors’ Report
Risk
Description
Management of Risk
Case management and
The Group’s internally customised systems
The Company has established business continuity plans and
technology systems
represent an important part of its operations
procedures and maintains system back up and maintenance processes.
upon which the Group is reliant.
The Company conducts appropriate reviews of its information
technology systems, operations and human resourcing, and its
management of cyber risk. The Company continually invests in system
enhancements and engages quality 3rd party suppliers to assist with its
systems development and maintenance.
The Company’s transition of its IT systems to offsite ‘cloud-based’
systems enables centralised oversight and standardisation of processes.
Technology disruption
The increasing use of electronic systems
The need for the Company’s services is safeguarded by the reliance of
and processes by regulatory authorities in
target clients on the Group’s expertise (both general IP expertise and
some markets may provide opportunities for
local expertise) and regulatory barriers such as exclusive rights of patent
technology disruption in the industry.
attorneys to provide various IP related services, and requirements for IP
applicants to record a local address for service of documents with the
local IP office.
Other factors which help safeguard the Company against technology
disruption include its own investment in awareness of and effective
technology development, and in efficiency in operations. The Company
also seeks to offer its services in a range of secondary markets. Many
of these markets have less developed IP regulations and systems, are
less advanced technologically and require technical translations into
languages other than English.
Foreign exchange risk
The Group’s financial reports are prepared
The Company monitors the foreign currency exposures that arise from
in Australian dollars. However, a substantial
its foreign currency revenue, expenditure and cash flows and from the
proportion of the Group’s sales revenue,
foreign currency assets and liabilities held on its balance sheet. The
expenditure and cash flows are generated in,
Company undertakes regular sensitivity analyses of these exposures.
and assets and liabilities are denominated in
The Company has foreign currency hedging facilities available as part of
US dollars, Euros and Singapore dollars.
its bank facilities and has engaged in appropriate use of foreign currency
denominated finance facilities to reduce exposure. The Chief Financial
Officer regularly reports to the Board in respect of the Company’s
foreign currency exposures. The Board reviews its hedging policy in
respect of the foreign currency exposures from time to time. Currently
the Group does not directly hedge against its foreign currency exchange
risk to a material extent.
24 www.iphltd.com.au
30th June 2018
Risk
Description
Management of Risk
Conflict of duties
Patent and trademark attorney are required
The Company has been proactive in any review or evaluation of
to abide by a code of conduct that requires
regulations likely to affect its operations materially, and works with
them to act in accordance with the law,
regulators or review authorities to ensure a clear understanding of facts
in the best interests of their client, in the
and circumstances, and consideration of all stakeholder perspectives.
public interest, and in the interests of the
registered attorney’s profession as a whole.
There may be circumstances in with the
Company is required to act in accordance
with these duties contrary to other
corporate responsibilities and against the
interests of shareholders and the short term
profitability of IPH. An amendment to the
Code of Conduct may affect the manner in
which the Group conducts its activities.
The Company has sought detailed advice on issues of conflict of interest
and compliance with related professional obligations. The Company
actively assists its business units to implement appropriate processes
and procedures for compliance, including relevant professional
standards bodies’ Codes of Conduct and Professional Rules.
Professional liability and
The provision of patent and trademark
The Company maintains file management processes which are highly
uninsured risks
services and legal services by the Company
automated, safeguarded, controlled and regularly reviewed.
gives rise to the risk of potential liability for
negligence or other similar client or third
party claims.
The Company has comprehensive quality assurance processes to
ensure appropriate standards of professional work are maintained.
The Group has in place a comprehensive insurance programme which
includes professional indemnity insurance. To support its professional
indemnity insurance arrangements, the Group has internal processes
to ensure timely notification to the underwriters of any potential claim
arising from its business activities.
Acquisitions
The Company’s growth strategy may include
The Company assesses potential acquisition opportunities against the
the acquisition of other intellectual property
Company’s strategic objectives, values and culture. Where an appropriate
businesses. Risks arise in ensuring that
potential acquisition is identified the Company undertakes extensive
potential acquisitions are appropriately
due diligence process and where appropriate engages competent
selected and issues affecting the value of
professional experts to assist with the due diligence process and
individual acquisitions are identified and
appropriate documentation of the transaction. The Company’s Board is
reflected in the purchase considerations.
involved in the review of, and approves, all corporate acquisitions.
Integration of acquired
Following the acquisition of new businesses,
The Company seeks to identify potential post-acquisition risks when
businesses
risks arise in ensuring the business is properly
assessing potential acquisitions including for cultural fit and matching of
integrated into the IPH Group, that people and
expectations, and to mitigate such risks by appropriate transaction and post-
culture issues that may arise are addressed,
acquisition management structures. Steps are taken following acquisition
key staff retained and value maintained.
to review and ensure appropriate on-boarding of new acquisitions with IPH
governance, policies, processes and practices and levels of financial control
and reporting, and to integrate Company and Group approaches to retention
of key staff and utilisation of appropriate information technology platforms.
The integration of new acquisitions is regularly reviewed by the Company’s
Board and relevant Board Committees.
2018 Annual Report
25
Directors’ Report
5. Remuneration report (audited)
Introduction from the Nomination and
Remuneration Committee Chair
Dear Shareholders,
Corporate executive remuneration
Short and long term incentive measures which were formalised
last year, remain in place for the IPH executives.
In broad terms, fixed remuneration is set at median market levels
compared to peers with similar revenues and market capitalisation.
On behalf of the Board, I am pleased to present the Remuneration
Fixed remuneration is supplemented with an annual bonus for
Report for the 2018 financial year.
superior performance awarded at the Board’s discretion having
The Company’s remuneration framework has evolved as
foreshadowed in last year’s report. Managing the change remains
a focus as each acquired business transitions from a private firm to
a member of a publicly listed company. Supporting the leaders of
regard to the Group’s overall performance and the individual
executive’s performance against agreed KPIs. Informed by market
data, the Directors have strengthened the bonus opportunity for the
CEO and CFO. These changes have taken effect from 1 July 2018.
each business as their understanding of corporate remuneration
The long term incentive is structured to align the long term interests
frameworks matures is a key imperative. Further evolution of
of shareholders and executives and is pitched at the upper quartiles
the framework is anticipated to ensure ongoing alignment and
compared to the same peer group. Long term incentives will vest
engagement of our people with the Company.
over a three year period with reference to EPS performance hurdles.
Professional staff incentive plan
CEO transition
The Equity Incentive Plan introduced last year has proven to be
As foreshadowed last year, Andrew Blattman succeeded David
a reward which is valued by eligible staff. The intent of providing
Griffith as Managing Director and CEO in November 2017. After
a more direct link between individual performance and incentive
this initial transition period, Dr Blattman’s remuneration has been
achievement is being realised. As anticipated last year, the plan
reviewed as of 1 July 2018.
is being implemented across other business units for fiscal
year 2019. To ensure affordability of the incentive plan with an
expanded participation pool, key performance indicators (KPIs)
have been strengthened to provide a direct link between individual
performance and business performance. In broad terms, half of an
incentive achieved (by reference to business unit, practice group
and individual targets) in a particular year will be paid in cash and
half in IPH Limited shares (issued to the employee and held in trust
for a period of three years). It is anticipated that business units
operating a cash-based plan this year will transition to the corporate
model in the next fiscal year.
As the Company continues to evolve as a corporate entity, we will
continue to review the remuneration framework for all executives
and professional staff, including KMP, to ensure its continued
ability to attract, motivate and retain the talent necessary to run the
business, and simultaneously drive behaviour that aligns with the
creation of sustainable shareholder value.
We look forward to your continued support and welcome your
feedback on our remuneration report.
Yours sincerely,
John Atkin
Nomination and Remuneration
Committee Chair
26 www.iphltd.com.au
30th June 2018
5. Remuneration report (audited) Continued >
EY was engaged by the NRC to provide remuneration advice in relation
to Key Management Personnel (KMP), but did not provide the NRC with
The remuneration report details the key management personnel (‘KMP’)
remuneration recommendations as defined under Division 1, Part 1.2, 9B(1)
remuneration arrangements for the Group, in accordance with the
requirements of the Corporations Act 2001 and its Regulations.
KMP are those persons having authority and responsibility for planning,
directing and controlling the activities of the Group, directly or indirectly,
including all Directors.
of the Corporations Act 2001 (Cth). The Board was satisfied that advice
received was free from any undue influence by key management personnel
to whom the advice may relate because strict protocols were observed and
complied with regarding any interaction between EY and management, and
because all remuneration advice was provided to the NRC Chair.
The remuneration report is set out under the following main topics:
» Principles used to determine the nature and amount of remuneration
The table below lists consultants who were retained during the year. All
consultants are independent and were engaged solely on the basis of
their competency in the relevant field.
» Details of remuneration
» Service agreements
» Share-based compensation
» Additional disclosures relating to key management personnel
5.1 Principles used to determine the nature and
amount of remuneration
The objective of the Group’s executive reward framework is to ensure
reward for performance is competitive and appropriate for the results
delivered. The framework aligns executive reward with the achievement
of strategic objectives and the creation of value for shareholders. The
Board of Directors (‘the Board’) ensures that executive reward satisfies
the following key criteria for good reward governance practices:
»
»
»
»
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation; and
transparency.
Advisor
Services Provided
EY
Calculation of the fair value of retention rights
and performance rights granted under the
Long Term Incentive Plan and Retention
Rights Plan published on the ASX on 17
November 2014 and subsequently replaced
by the IPH Limited Employee Incentive Plan,
approved by shareholders at the Annual
General Meeting held on 16 November 2016,
for the purpose of calculating the value of
share based remuneration.
Orient Capital
Calculation of the total shareholder return
achieved by IPH Limited compared to the
S&P/ASX 300 Index, for the purpose of
determining whether long term incentive
criteria have been met.
The Nomination and Remuneration Committee (‘NRC’) is responsible for
5.2 Executive remuneration
reviewing and making recommendations to the Board on remuneration
packages and policies related to the Directors and other KMP and to
ensure that the remuneration policies and practices are consistent with
the Group’s strategic goals and people objectives. The performance of
The Group aims to reward executives with a level and mix of remuneration
based on their position and responsibility, which has both fixed and
variable components.
the Group depends on the quality of its Directors and other KMP. The
The executive remuneration and reward framework for KMP for FY18 had
remuneration philosophy is to attract and retain high quality people, and
the following components:
motivate high performance.
»
base salary, short and long term incentives and non-monetary
The NRC has structured an executive remuneration framework that is market
benefits; and
competitive and complementary to the reward strategy of the Group.
»
other remuneration such as superannuation and long service leave.
Alignment to shareholders’ interests:
»
focuses on sustained growth in earnings per share as well as
focusing the executive on key non-financial drivers of value; and
»
attracts and retains high calibre executives.
Alignment to program participants’ interests:
The combination of these comprises the KMP’s total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-
monetary benefits, are reviewed annually by the NRC, based on individual
and business unit performance, the overall performance of the Group and
comparable market remunerations. Executives may receive their fixed
remuneration in the form of cash or other fringe benefits (for example,
motor vehicle benefits) where it does not create any additional costs to the
rewards capability and experience;
»
»
reflects competitive reward for contribution to growth in shareholder
Group and provides additional value to the executive.
wealth; and
»
provides a clear structure for earning rewards.
2018 Annual Report
27
Directors’ Report
5.2 Executive remuneration Continued >
Short and long term incentives were introduced this year to strengthen
The table below outlines how Performance Rights issued in 2018
will vest based on the Company’s EPS performance over the
Performance Period (measured by calculating the CAGR between
alignment with overall performance of the Group and provide a more
EPS for FY17 and EPS for FY20).
complete and market-comparable remuneration package. In this first
year, the short term incentive was modestly set at 20% for the CEO and
10% for other executives, with a stronger focus alignment through the
EPS in FY20
Percentage of Performance
Rights that vest
long term incentives at 100% for the CEO and 50% for other executives.
Incentives are also reviewed annually by the NRC.
Long term incentive
Less than 7% CAGR in EPS over
Nil vesting
the Performance Period
Under the long term incentive plan, the CEO and CFO are issued
Equal to 7% CAGR in EPS over the
20% vesting
Performance Rights which entitle the holder at the Vesting Date to an
Performance Period
equivalent number of Shares subject to satisfying defined vesting conditions.
Performance Rights will vest on the Vesting Date subject to the
Company’s achievement of a minimum compound annual growth
rate (CAGR) in Earnings Per Share over the Performance Period. EPS
performance will be assessed on the basis of the Company’s EPS
performance during the relevant Performance Period compared to the
EPS targets for that period as determined by the Board.
The Board will determine a target for EPS for the Performance Period (EPS
CAGR in EPS greater than 7%, up
Pro-rated vesting (i.e. on a
to and including 10% CAGR in EPS
straight-line basis) between
over the Performance Period
20.01% and 65%
CAGR in EPS greater than 10%, up
Pro-rated vesting (i.e. on a
to and including 15% CAGR in EPS
straight-line basis) between
over the Performance Period
65.01% and 100%
Target) and a minimum target for EPS for the Performance Period (Minimum
At or above 15% CAGR in EPS over
100% vesting
EPS Target) prior to any issue from year to year. For vesting to occur, EPS for
the Performance Period
the Performance Period must be at least equal to the Minimum EPS Target.
EPS targets for the 2018 Plan are:
Dividends will not be paid on Performance Rights.
» Minimum EPS Target (cid:331) 7% CAGR in EPS over the three year
Performance Period ending on 30 June 2020, and
5.3 Company performance
»
EPS Target (cid:331) 15% CAGR in EPS over the three year Performance
Period ending on 30 June 2020,
For the year to 30 June 2018 the Board did not regard the overall
performance of the Group to be at a level that justified the payment of
any performance bonus or STI to KMP. Accordingly, none were paid.
The company’s performance and the consequences on shareholders
financial wealth in the last 4 financial years is summarised below:
2015
30,589
19.51
5,514
3.5
$4.70
-
2016
38,843
21.92
36,837
21.0
$6.42
-
2017
42,893
22.46
40,924
22.0
$4.80
-
2018
40,673
20.79
42,823
22.5
$4.45
2,727
NPAT (‘000)
EPS (cents per share)
Dividends Paid (‘000)
Total Dividends (cents per share)
Share Price (30 June closing price)
Return of Capital (‘000)
28 www.iphltd.com.au
30th June 2018
5.4 Non-executive Directors remuneration
Fees and payments to non-executive Directors reflect the demands
and responsibilities of their role. Non-executive Directors’ fees and
payments are reviewed periodically by the NRC. The NRC may,
from time to time, receive advice from independent remuneration
consultants to ensure Non-executive Directors’ fees and payments are
appropriate and in line with the market.
The Chairman’s fees are determined independently from the fees of
other non-executive Directors based on comparative roles in the external
market. Non-executive Directors do not receive share options or other
incentives and their remuneration must not include a commission on, or
a percentage of, operating revenue.
ASX listing rules require the aggregate non-executive Directors
remuneration be determined periodically by a general meeting. Under
The non-executive Directors are not entitled to participate in any
employee incentive scheme (including the LTIP).
Directors may also be reimbursed for expenses reasonably incurred in
attending to the Company’s affairs. Non-executive Directors may be paid
such additional or special remuneration as the Directors decide is appropriate
where a Director performs extra work or services which are not in the
capacity as a Director of the Group. There is no contractual redundancy
benefit for Directors, other than statutory superannuation contributions.
5.5 Details of remuneration
Amounts of remuneration
The key management personnel of the Group consisted of the following
Directors of IPH Limited:
the Company’s Constitution and as set out in the IPO Prospectus, total
» Richard Grellman, AM (cid:331) Non-executive Chairman
aggregate remuneration available to non-executive Directors is set
currently at $750,000 per annum.
» Andrew Blattman (cid:331) Managing Director and Chief Executive Officer
(from 20 November 2017)
Non-executive Director fees paid (Directors’ fees and committee fees)
(inclusive of superannuation) for the year ended 30 June 2018 are
summarised as follows:
» David Griffith (cid:331) Managing Director and Chief Executive Officer (from
1 July 2017 to 20 November 2017)
»
John Atkin (cid:331) Non-executive Director
Name - Position
FY 2018 Fees
» Robin Low (cid:331) Non-executive Director
Richard Grellman AM - Chairman
John Atkin - Director
Robin Low - Director
Sally Pitkin - Director1
1 Fees paid to the time of resignation on 20 Nov 2017
220,000
115,000
115,000
35,000
585,000
» Sally Pitkin (cid:331) Non-executive Director
(from 1 July 2017 to 20 November 2017)
And the following persons:
»
John Wadley (cid:331) Chief Financial Officer
» Andrew Blattman (cid:331) Chief Executive Officer, Spruson & Ferguson Pty
Limited (from 1 July 2017 to 19 November 2017)
» Kristian Robinson (cid:331) Managing Director, Spruson & Ferguson Asia
Pte Limited (ceased to be a KMP on 20 November 2017)
2018 Annual Report
29
Directors’ Report
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees $
Cash
bonus $
Non-
monetary $
Super-
annuation $
Employee
Leave1 $
Equity-
settled $
Total $
Non-Executive Directors:
Richard Grellman
2018
203,444
2017
177,854
John Atkin
2018
105,023
2017
82,192
Robin Low
2018
105,023
2017
82,192
Sally Pitkin2
2018
31,962
2017
82,192
Executive Directors:
Andrew Blattman3
2018
729,946
2017
480,693
David Griffith4
2018
282,908
2017
730,690
Other Key Management Personnel:
John Wadley5
2018
435,737
-
-
-
-
-
-
-
-
-
-
-
-
-
2017
278,419
50,000
Former Key Management Personnel:
Kristian Robinson6
2018
148,6847
2017
393,3277
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,556
12,146
9,977
7,808
9,977
7,808
3,038
7,808
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
220,000
190,000
115,000
90,000
115,000
90,000
35,000
90,000
25,155
12,281
242,427 1,009,809
19,615
7,763
7,679
4,812
19,615
12,281
-
-
-
507,987
295,483
762,586
20,618
16,861
-
-
72,728
529,083
-
345,280
11,5137
2,386
16,921
179,504
11,6527
6,140
-
411,119
1. Employee Leave balances represent long service leave accrued during the year.
2. Sally Pitkin ceased to be a Non-Executive Director on 20 November 2017. Balances represent remuneration to this date.
3. Andrew Blattman became an Executive Director on 20 November 2017. Balances represent remuneration for the full year.
4. David Griffith ceased to be an Executive Director on 20 November 2017. Balances represent remuneration to this date.
5. John Wadley became a KMP on 1 September 2016. Balances represent remuneration from this date.
6. Kristian Robinson ceased to be a KMP on 20 November 2017 reflecting changes in the management structure of the expanded Group. Balances represent remuneration to this date.
7. Remuneration received in Singapore Dollars. Translated at the average exchange rate for the period to Nov 17 of S$1.0631 (2017 (cid:331) Full Year: S$1.0505)
30 www.iphltd.com.au
30th June 2018
5.6 Service agreements
Remuneration and other terms of employment for KMP are
» Remuneration package (inclusive of superannuation) for the year
ending 30 June 2019 of $540,000. Annual superior performance
bonus of up to 25% of remuneration and a long term incentive
formalised in service or employment agreements. Details of these
opportunity of 50% of remuneration.
agreements are as follows:
David Griffith, Managing Director and Chief Executive Officer during the
period 1 July 2017 to 20 November 2017.
» Agreement concluded 20 November 2017.
» Remuneration package (inclusive of superannuation) for the period
ended 20 November 2017 of $750,000 (annualised).
Andrew Blattman, Managing Director and Chief Executive Officer for the
period 20 November 2017 to 30 June 2018.
As announced last year, David Griffith retired as CEO in November 2017
and Andrew Blattman assumed that position and is employed by IPH
Limited under an employment contract with an indefinite term.
KMP may terminate their employment contract by giving six months’
notice in writing. Contracts may be terminated by the Company with
six months’ notice. In the event of serious misconduct or other specific
circumstances warranting summary dismissal, the Company may
terminate the employment contract immediately and without notice or
payment in lieu of notice. Upon termination of the employment contract,
» New employment agreement commenced 20 November 2017.
the KMP will be subject to a restraint of trade period of 12 months
» Remuneration package (inclusive of superannuation) for the period
ended 30 June 2018 of $750,000. Annual superior performance
throughout Australia, New Zealand and Singapore. The enforceability of
the restraint is subject to all usual legal requirements.
bonus of up to 20% of remuneration and a long term incentive
KMP have no entitlement to termination payments in the event of removal
opportunity of 100% of remuneration.
for misconduct. Andrew Blattman receives five weeks annual leave.
» Remuneration package (inclusive of superannuation) for the year
ending 30 June 2019 of $900,000. Annual superior performance
bonus of up to 33.33% of remuneration and a long term incentive
opportunity of 100% of remuneration.
5.7 Additional disclosures relating to key
management personnel
The following disclosures relate only to equity instruments in the
John Wadley, Chief Financial Officer.
Company or its subsidiaries.
» Remuneration package (inclusive of superannuation) for the year
ended 30 June 2018 of $450,000. Annual superior performance
Shareholding
bonus of up to 10% of remuneration and a long term incentive
The number of shares in the Company held during the financial year by
opportunity of 50% of remuneration.
30-Jun-18
Ordinary shares
Richard Grellman
Andrew Blattman
John Atkin
Robin Low
John Wadley
Sally Pitkin1
David Griffith2
Kristian Robinson3
each Director and other members of key management personnel of the
Group, including their personally related parties, is set out below:
Balance at the
start of the year
Additions
Disposals
Balance at the
end of the year
67,586
4,506,166
97,292
65,804
379
53,841
2,598,765
1,038,991
3,863
-
18,537
8,410
22
-
-
-
-
-
-
-
-
(53,841)
(2,598,765)
(1,038,991)
71,449
4,506,166
115,829
74,214
401
-
-
-
8,428,824
30,832
(3,691,597)
4,768,059
Sally Pitkin ceased to be a Director on 20 November 2017. Disposal represents no longer being designated as a Director, not necessarily a disposal of holding.
1.
2. David Griffith ceased to be a KMP on 19 November 2017. Disposal represents no longer being designated as a KMP, not necessarily a disposal of holding.
3. Kristian Robinson ceased to be a KMP on 20 November 2017. Disposal represents no longer being designated as a KMP, not necessarily a disposal of holding.
2018 Annual Report
31
Directors’ Report
30-Jun-17
Ordinary shares
Richard Grellman
Andrew Blattman
John Atkin
Robin Low
John Wadley
Sally Pitkin
David Griffith
Kristian Robinson
Malcolm Mitchell1
Balance at the
start of the year
Additions
Disposals
Balance at the
end of the year
54,712
12,874
-
6,006,166
97,292
-
-
60,039
5,765
-
379
52,519
1,322
(1,500,000)
-
-
-
-
6,098,766
3,938,991
10,000
-
-
-
(3,500,001)
(2,900,000)
(10,000)
67,586
4,506,166
97,292
65,804
379
53,841
2,598,765
1,038,991
-
1. Malcolm Mitchell ceased to be a KMP on 1 September 2016. Disposal represents no longer being designated as a KMP, not necessarily a disposal of holding.
16,318,485
20,340
(7,910,001)
8,428,824
Option holding
No options over ordinary shares in the Company were held during the
financial year by each Director and other members of key management
personnel of the Group, including their personally related parties.
Performance rights holding
The number of performance rights issued to KMPs in the year
ended 30 June 2018 is set out below:
30 June 2018
Plan1
Grant Date
Vesting
Date
Rights
Granted
Fair Value
per Right
Total Fair
Value at
Grant Date
Expense at
Year End
%
Vested
%
Forfeited
Andrew Blattman
2018
Nov-17
Sep-20
156,780
4.91
769,790
242,427
John Wadley
2018
Nov-17
Sep-20
47,034
4.91
230,937
72,728
-
-
-
-
1. Performance Period for the 2018 Plan is from 1 July 2018 to 30 June 2020.
This concludes the remuneration report, which has been audited.
203,814
1,000,727
315,155
32 www.iphltd.com.au
30th June 2018
6. Shares under performance and retention rights
Details of unissued shares or interests under performance and retention rights at the date of this report are:
Issuing entity
Type
Number of shares
Class
Exercise Price
Expiry Date
IPH Limited
Performance
509,533
Ordinary
IPH Limited
Retention
173,688
Ordinary
0.00
0.00
Up to April 2022
Up to June 2019
7. Shares under option
There were no unissued ordinary shares of IPH Limited under option at the date of this report.
8. Dividends
Dividends paid during the financial year were as follows:
Final dividend of 10.5 cents per share for the year ended 30 June 2017,
paid on 13 September 2017. (100% franked)
Interim dividend of 11.5 cents per share for the year ended 30 June 2018,
paid on 14 March 2018. (40% franked)
20,133
22,687
9. Significant changes in the state of affairs
12. Indemnity and insurance of officers
There were no other significant changes in the state of affairs of the
The Company has indemnified the Directors and executives of the Company
Group during the financial year.
10. Matters subsequent to the end of the
financial year
It was announced on 15 August 2018 that IPH’s wholly-owned
subsidiary, Practice Insight Pty Limited, has agreed the sale of two of its
products: Filing Analytics and Citation Eagle to CPA Global Management
Services Limited for $10 million. The sale will generate an accounting
for costs incurred, in their capacity as a Director or executive, for which they
may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a
contract to insure the Directors and executives of the Company against
a liability to the extent permitted by the Corporations Act 2001. The
contract of insurance prohibits disclosure of the nature of the liability and
the amount of the premium.
profit in the consolidated accounts of IPH Limited of approximately $2
13. Indemnity and insurance of auditor
million in the 2019 financial year after taking into account the assets’
carrying values and transaction costs.
11. Environmental regulation
The Company has not, during or since the end of the financial year,
indemnified or agreed to indemnify the auditor of the Company or any
related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect
The Group is not subject to any significant environmental regulation
of a contract to insure the auditor of the Company or any related entity.
under Australian Commonwealth or State law.
2018 Annual Report
33
Directors’ Report
14. Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the
16. Officers of the Company who are former
partners of Deloitte Touche Tohmatsu
Corporations Act 2001 for leave to bring proceedings on behalf of the
There are no officers of the Company who are former partners of
Company, or to intervene in any proceedings to which the Company is a
Deloitte Touche Tohmatsu.
party for the purpose of taking responsibility on behalf of the Company
for all or part of those proceedings.
15. Non-audit services
17. Rounding of amounts
The Company is of a kind referred to in ASIC Corporations (Rounding
in Financial/Directors Reports) Instrument dated 24 March 2016 and in
Details of the amounts paid or payable to the auditor for non-audit
accordance with that Instrument amounts in the annual financial report are
services provided during the financial year by the auditor are outlined in
rounded off to the nearest thousand dollars, unless otherwise indicated.
note 27 to the financial statements.
The Directors are satisfied that the provision of non-audit services
during the financial year, by the auditor (or by another person or firm
on the auditor’s behalf), is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
18. Auditor
,
s independence declaration
A copy of the auditor’s independence declaration as required under section
307C of the Corporations Act 2001 is set out on the following page.
The Directors are of the opinion that the services as disclosed in
note 27 to the financial statements do not compromise the external
19. Auditor
auditor’s independence requirements of the Corporations Act 2001 for
Deloitte Touche Tohmatsu continues in office in accordance with section
the following reasons:
327 of the Corporations Act 2001.
»
all non-audit services have been reviewed and approved to ensure
This report is made in accordance with a resolution of Directors,
that they do not impact the integrity and objectivity of the auditor; and
pursuant to section 298(2) (a) of the Corporations Act 2001.
»
none of the services undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants issued by the Accounting Professional
and Ethical Standards Board, including reviewing or auditing the
auditor’s own work, acting in a management or decision-making
capacity for the Company, acting as advocate for the Company or
jointly sharing economic risks and rewards.
Dr. Andrew Blattman
Managing Director
16 August 2018, Sydney
34 www.iphltd.com.au
Auditor’s Independence Declaration
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
Tel: +61 2 9322 7000
www.deloitte.com.au
The Board of Directors
IPH Limited
Level 24, Tower 2, Darling Park
201 Sussex Street, Sydney
16 August 2018
Dear Board Members
IPH Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of IPH Limited.
As lead audit partner for the audit of the financial report of IPH Limited for the financial year
ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
H Fortescue
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
2018 Annual Report
35
Financial
Statements
36 www.iphltd.com.au
36 www.iphltd.com.au
Statement of (cid:51)rofit or (cid:47)oss and
Other Comprehensive Income
For the year ended 30th June 2018
Note
30 June 2018
30 June 2017
Consolidated
5
6
7
7
7
7
8
36
36
$’000
221,956
4,100
(65,282)
(13,092)
(8,511)
(1,158)
(65,983)
(1,010)
(1,992)
(14,171)
(1,537)
53,320
(12,647)
40,673
167
167
40,840
40,673
40,673
40,840
40,840
20.79
20.69
$’000
182,041
4,104
(49,055)
(10,329)
(5,420)
(1,574)
(51,033)
(657)
(1,466)
(8,169)
(1,241)
57,201
(14,308)
42,893
(438)
(438)
42,455
42,893
42,893
42,455
42,455
22.46
22.33
2018 Annual Report
37
Revenue
Other income
Expenses
Employee benefits expense
Depreciation and amortisation expenses
Rental expenses
Business acquisition costs
Agent fee expenses
Insurance expenses
Travel expenses
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit for the year is attributable to:
Owners of IPH Limited
Total comprehensive income for the year is attributable to:
Owners of IPH Limited
Earnings per share
From continuing operations
Basic earnings (cents per share)
Diluted earnings (cents per share)
These statements should be read in conjunction with the following notes.
Statement of Financial Position
as at 30TH June 2018
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non-current assets
Available-for-sale financial assets
Property, plant and equipment
Intangibles
Deferred tax
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Income tax payable
Provisions
Other financial liabilities
Deferred revenue
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax
Provisions and other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity attributable to owners of IPH Limited
These statements should be read in conjunction with the following notes.
38 www.iphltd.com.au
Consolidated
Note
30 June 2018
30 June 2017
$’000
$’000
9
10
11
12
13
14
15
16
17
18
19
15
20
21
22
23
26,213
57,112
5,342
88,667
180
6,183
24,398
38,020
3,426
65,844
180
3,004
266,303
212,926
6,557
279,223
367,890
16,722
6,316
8,052
402
1,106
32,598
40,102
22,931
4,671
67,704
100,302
267,588
5,077
221,187
287,031
11,244
6,903
6,271
1,570
1,029
27,017
-
18,715
1,605
20,320
47,337
239,694
262,763
233,598
(11,461)
16,286
(12,340)
18,436
267,588
239,694
Statement of Changes in Equity
For the year ended 30th June 2018
Issued
Capital
Foreign Currency
Translation Reserve
Minority Interest
Reserve
Equity Settled Employee
Benefits Reserve
Retained
Profits
Total
equity
Balance at 1 July 2016
Profit after income tax expense
for the year
Effect of foreign exchange
differences
Total comprehensive
income for the year
$’000
218,583
-
-
-
Transactions with owners in their capacity as owners:
Issue of ordinary shares as
14,498
consideration for a business
combination, net of transaction
costs (note 32)
Dividend Reinvestment plan
517
Share-based payments
Dividends paid (note 24)
-
-
$’000
272
-
(438)
(438)
-
-
-
-
$’000
(14,850)
$’000
$’000
$’000
1,340
16,467
221,812
-
-
-
-
-
-
-
-
-
-
-
-
1,336
42,893
42,893
-
(438)
42,893
42,455
-
14,498
-
-
517
1,336
-
(40,924)
(40,924)
Balance at 30 June 2017
233,598
(166)
(14,850)
2,676
18,436
239,694
Balance at 1 July 2017
233,598
Profit after income tax
expense for the year
Effect of foreign exchange
differences
Total comprehensive
income for the year
-
-
-
Transactions with owners in their capacity as owners:
Issue of ordinary shares as
27,036
consideration for a business
combination, net of transaction
costs (note 32)
Share buy back
Dividend Reinvestment plan
Share-based payments
Dividends paid (note 24)
(2,727)
4,856
-
-
Balance at 30 June 2018
262,763
These statements should be read in conjunction with the following notes.
(166)
-
167
167
-
-
-
-
-
1
(14,850)
2,676
18,436
239,694
-
-
-
36
-
-
-
-
-
-
-
-
-
-
676
40,673
40,673
-
167
40,673
40,840
-
-
-
-
27,072
(2,727)
4,856
676
-
(42,823)
(42,823)
(14,814)
3,352
16,286
267,588
2018 Annual Report
39
Statement of Cash Flows
For the year ended 30th June 2018
(cid:38)ash (cid:190)o(cid:90)s from o(cid:83)erating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities
(cid:38)ash (cid:190)o(cid:90)s from investing activities
Payments for purchase of
subsidiaries, net of cash acquired
Payments for property, plant and equipment
Payments for internally developed software
Net cash used in investing activities
(cid:38)ash (cid:190)o(cid:90)s from financing activities
Share buy back
Dividends paid
Proceeds of borrowings
Repayment of borrowings
Net cash used in financing activities
Net increase/(decrease)
in cash and cash equivalents
Cash and cash equivalents at the
beginning of the financial year
Effects of exchange rate changes
on cash and cash equivalents
Cash and cash equivalents
at the end of the financial year
These statements should be read in conjunction with the following notes.
40 www.iphltd.com.au
Consolidated
Note
30 June 2018
30 June 2017
$’000
$’000
6
7
35
32
13
14
21
24
240,447
(175,495)
29
(1,537)
(16,987)
46,457
205,480
(136,759)
113
(1,241)
(17,671)
49,922
(38,621)
(39,088)
(745)
(3,269)
(619)
(2,670)
(42,635)
(42,377)
(2,727)
(37,967)
46,023
(7,000)
(1,671)
-
(40,407)
-
-
(40,407)
2,151
(32,862)
24,398
58,761
(336)
(1,501)
9
26,213
24,398
Notes to the Financial Statements
Note 1. General information
Basis of preparation
The financial statements cover IPH Limited as a Group consisting of IPH
The financial statements have been prepared under the historical cost
Limited and the entities it controlled at the end of, or during, the year.
convention except for certain financial instruments that are measured
The financial statements are presented in Australian dollars, which is IPH
at revalued amounts or fair values, as explained in the accounting
Limited’s functional and presentation currency.
policies below. Historical cost is generally based on the fair values of the
IPH Limited is a listed public company limited by shares, incorporated
and domiciled in Australia. Its registered office and principal place of
business is:
Level 24, Darling Park, Tower 2
201 Sussex Street, Sydney NSW 2000
consideration given in exchange for assets.
Critical accounting estimates
The preparation of the financial statements requires the use of certain
critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies.
A description of the nature of the Group’s operations and its principal
The areas involving a higher degree of judgement or complexity, or
activities are included in the Directors’ report, which is not part of the
areas where assumptions and estimates are significant to the financial
financial statements.
statements, are disclosed in note 3.
The financial statements were authorised for issue, in accordance
with a resolution of Directors, on 16 August 2018.
Parent entity information
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the
financial statements are set out below. These policies have been
In accordance with the Corporations Act 2001, these financial
statements present the results of the Group only. Supplementary
information about the parent entity is disclosed in note 31.
consistently applied to all the years presented, unless otherwise stated.
Principles of consolidation
New, revised or amending Accounting Standards
and Interpretations adopted
The Group has adopted all of the new, revised or amending
Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for the
current reporting period.
The adoption of these Accounting Standards and Interpretations
did not have any significant impact on the financial performance or
position of the Group.
Any new, revised or amending Accounting Standards or Interpretations
that are not yet mandatory have not been early adopted.
Statement of compliance
These general purpose financial statements have been prepared in
accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board (‘AASB’) and the
Corporations Act 2001, as appropriate for for-profit oriented entities.
These financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting
Standards Board (‘IASB’).
The consolidated financial statements are those of the consolidated
entity (“the Group”), comprising the financial statements of the parent
entity and all of the entities the parent controls. The Company controls
an entity when it has power over the investee and the Group is exposed
to or has rights to variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the
activities of the entity.
Consolidation of a subsidiary begins when the Company obtains control
over the subsidiary and ceases when the Company loses control
of the subsidiary. Specifically, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated
statement of profit or loss and other comprehensive income from the
date the Company gains control until the date when the Company
ceases to control the subsidiary.
External non controlling interests are allocated their share of total
comprehensive income and are presented within equity in the
consolidated Statement of Financial Position, separately from the equity
of shareholders.
When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with the Group’s
accounting policies. All intragroup assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation.
2018 Annual Report
41
Notes to the Financial Statements
Note 2. Significant accounting policies Continued >
Changes in the Group’s ownership interests
in existing subsidiaries
» Assets and liabilities for each Statement of Financial Position
presented are translated at the closing rate at the balance date; and
Changes in the Group’s ownership interests in subsidiaries that do not
result in the Group losing control over the subsidiaries are accounted for
» All resulting exchange differences are recognised in other
comprehensive income, in the foreign currency translation reserve.
as equity transactions. The carrying amounts of the Group’s interests and
Goodwill and fair value accounting adjustments arising on the
the non-controlling interests are adjusted to reflect the changes in their
acquisition of a foreign entity are treated as assets and liabilities of the
relative interests in the subsidiaries. Any difference between the amount
foreign entity and translated at the closing rate.
by which the non-controlling interests are adjusted and the fair value of
the consideration paid or received is recognised directly in equity and
attributed to owners of the Company.
Foreign currency translation
The individual financial statements of each Group entity are presented
in the currency of the primary economic environment in which the entity
operates (its functional currency). For the purpose of the consolidated
financial statements, the results and financial position of each Group
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable.
Revenue recognition relating to the provision of services is determined
with reference to the stage of completion of the transaction at the end
of the reporting period and where outcome of the contract can be
estimated reliably.
entity are expressed in Australian dollars (‘$’), which is the functional
Dividend revenue is recognised when the right to receive a dividend
currency of the Company and the presentation currency for the
has been established (provided that it is probable that the economic
consolidated financial statements.
benefits will flow to the Group and the amount of income can be
In preparing the financial statements of each individual group entity,
measured reliably).
transactions in currencies other than the entity’s functional currency
Interest income from a financial asset is recognised when it is probable that
(foreign currencies) are recognised at the rates of exchange prevailing at
the economic benefits will flow to the Group and the amount of revenue can
the dates of the transactions.
be measured reliably. Interest income is recognised on an accruals basis.
At the end of each reporting period, monetary items denominated in
Other revenue, including commission revenue, is recognised when it is
foreign currencies are retranslated at the rates prevailing at that date.
received or when the right to receive payment is established.
Non-monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing at the date when the
fair value was determined. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in
the period in which they arise except for:
»
exchange differences on transactions entered into in order to hedge
certain foreign currency risks; and
»
exchange differences on monetary items receivable from or payable
to a foreign operation for which settlement is neither planned nor likely
to occur (therefore forming part of the net investment in the foreign
operation), which are recognised initially in other comprehensive
income and reclassified from equity to profit or loss on repayment.
For the purpose of presenting these consolidated financial statements,
the assets and liabilities of the Group’s foreign operations are translated
into Australian dollars as follows:
All revenue is stated net of the amount of goods and services tax (GST).
Work in progress
Work in progress (WIP) represents costs incurred and profit recognised
on client assignments and services that are in progress at balance date.
WIP is valued at net realisable value after providing for any foreseeable
losses. WIP older than 90 days is reviewed and any WIP not thought to
be recoverable is written off.
Disbursements recoverable
Recoverable client disbursements recorded in work in progress are
recognised when services are provided. The amount recognised is net
of any GST payable. Internally generated disbursements are credited
directly to the profit & loss as they are charged to a client matter.
Disbursements older than 60 days are constantly being reviewed and
any not thought to be recoverable are written off.
»
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuated significantly
during that period, in which case the exchange rates at the dates of
Income Tax
the transactions are used.
42 www.iphltd.com.au
The income tax expense or benefit is the tax payable on the current
periods taxable income based on the national income tax rate for each
jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial statements.
30th June 2018
Current tax
Current tax is calculated by reference to the amount of income taxes
payable or recoverable in respect of the taxable profit or tax loss for
the period. It is calculated using tax rates and tax laws that have been
enacted or substantively enacted by reporting date.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amount of assets and liabilities in the financial statements and
the corresponding tax base of those items.
Deferred tax liabilities are recognised for all taxable temporary
differences. Deferred tax assets are recognised to the extent that it is
probable that sufficient taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax assets and liabilities are not recognised if the temporary
differences giving rise to them arise from the initial recognition of assets
and liabilities (other than as a result of a business combination) which
affects neither taxable income nor accounting profit. Furthermore, a
deferred tax liability is not recognised in relation to taxable temporary
differences arising from goodwill.
The Company and its wholly-owned Australian resident entities are
part of a tax-consolidated group which was formed on 3 September
2014. As a consequence, all members of the tax-consolidated group
are taxed as a single entity. The head entity within the tax consolidated
group is IPH Limited.
Tax expense/income, deferred tax liabilities and deferred tax assets
arising from temporary differences of the members of the tax-
consolidated group are recognised in the separate financial statements
of the members of the tax consolidated group using the “separate
taxpayer within group” approach.
Current tax liabilities and assets and deferred tax assets arising from
unused tax losses and tax credits of the members of the tax-consolidated
group are recognised by the Company (as head entity in the tax-
consolidated group).
Due to the existence of a tax funding arrangement between the entities
in the tax-consolidated group, amounts are recognised as payable to or
receivable by the Company and each member of the group in relation to
the tax contribution amounts paid or payable between the parent entity
and the other members of the tax consolidated group in accordance
with the arrangement. Where the tax contribution amount recognised
by each member of the tax consolidated group for a particular period
Deferred tax liabilities are recognised for taxable temporary differences
is different to the aggregate of the current tax liability or asset and any
arising on investments except where the Group is able to control
deferred tax asset arising from unused tax losses and tax credits in
the reversal of the temporary differences and it is probable that the
respect of that period, the difference is recognised as a contribution
temporary differences will not reverse in the foreseeable future. Deferred
from (or distribution to) equity participants.
tax assets arising from deductible temporary differences associated
with these investments and interests are only recognised to the extent
that it is probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the period(s) when the asset and liability giving
rise to them are realised or settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted by reporting date.
The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Company
expects, at the reporting date, to recover or settle the carrying amount
of its assets and liabilities.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and at banks, short
term deposits with an original maturity of three months or less held at
call with financial institutions, and bank overdrafts. Bank overdrafts
are shown within borrowings in current liabilities in the consolidated
Statement of Financial Position.
Trade and other receivables
Trade and other receivables include amounts due from customers for
services performed in the ordinary course of business. Receivables
expected to be collected within 12 months of the end of the reporting
Deferred tax assets and liabilities are offset when they relate to income
period are classified as current assets. All other receivables are
taxes levied by the same taxation authority and the Company intends to
classified as non-current assets.
settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the
Statement of Comprehensive Income, except when it relates to items
credited or debited directly to equity, in which case the deferred tax is
also recognised directly in equity.
Trade and other receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective interest method,
less any provision for impairment.
Trade and other payables
Trade and other payables represent the liabilities for goods and services
received that remain unpaid at the end of the reporting period. The
balance is recognised as a current liability with the amounts normally
paid within 90 days of recognition of the liability.
2018 Annual Report
43
Notes to the Financial Statements
Note 2. Significant accounting policies Continued >
Unearned income is recognised as a liability when received and is recognised
Assets held under finance leases are amortised over their expected
as revenue once a patent service has been provided or completed.
useful lives on the same basis as owned assets. However, when there
Financial instruments
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
are carried at amortised cost using the effective interest rate method.
Gains and losses are recognised in profit or loss when the asset is
derecognised or impaired.
Available-for-sale financial assets
Available for sale financial assets include any financial assets not
included in the above categories and are measured at fair value.
Unrealised gains and losses arising from changes in fair value are taken
directly to equity. The cumulative gain or loss is held in equity until the
financial asset is de-recognised, at which time the cumulative gain or
loss held in equity is recognised in profit and loss.
The carrying amount of financial assets is reviewed annually the
directors’ to assess whether there is any objective evidence that a
financial asset is impaired.
Where such objective evidence exists, the company recognises
impairment losses.
Financial liabilities
is no reasonable certainty that ownership will be obtained by the end of
the lease term, assets are depreciated over the shorter of the lease term
and their useful lives.
Leasehold improvements
Plant and equipment
Furniture, fixtures and fittings
Computer equipment
6-15 years
2-20 years
5-20 years
3-5 years
An item of property, plant and equipment is derecognised upon disposal
or when no future economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising on the disposal or
retirement of an item of property, plant and equipment is determined as
the difference between the sales proceeds and the carrying amount of
the asset and is recognised in profit or loss.
Intangible assets
Intangible assets acquired as part of a business combination, other than
goodwill, are measured at their fair value at the date of the acquisition.
Goodwill
Financial liabilities include trade payables, other creditors and loans from
third parties including inter group balances.
Non derivative financial liabilities are recognised at amortised cost using
the effective interest method.
Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group’s share of the net identifiable assets of the
acquired subsidiary/associate at the date of acquisition. Goodwill is
not amortised. Instead, goodwill is tested annually for impairment, or
more frequently of events or changes in circumstances indicate that it
Trade accounts payable comprise the original debt less principal
might be impaired and it is carried at cost less accumulated impairment
payments plus where applicable any accrued interest.
losses. Impairment losses on goodwill are taken to profit and loss and
Financial liabilities are classified as current liabilities unless the group
has an unconditional right to defer settlement of the liability for at least
twelve months after the reporting period.
not subsequently reversed.
Intangible assets acquired separately
Property, plant and equipment
Intangible assets with finite lives that are acquired separately are
carried at cost less accumulated amortisation and accumulated
impairment losses.
Property, plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses.
Customer Relationships
Depreciation is recognised so as to write off the cost or valuation of
Customer relationships are the assessed value of the supply of goods and
assets less their residual values over their useful lives, using the straight-
services that exist at the date of acquisition. In valuing customer relationships,
line method. The estimated useful lives, residual values and depreciation
consideration is given to historic customer retention and decay statistics,
method are reviewed at the end of each reporting period, with the effect
projected future cash flows and appropriate capital charges.
of any changes in estimate accounted for on a prospective basis.
Customer relationships are amortised over a period of 10 years. The
estimated useful lives, residual values and amortisation method are
reviewed at the end of each reporting period, with the effect of any
changes in estimate accounted for on a prospective basis.
44 www.iphltd.com.au
30th June 2018
Trademarks
Trademarks are intangible assets with indefinite useful lives that are acquired
separately are carried at cost less accumulated impairment losses.
Software acquired
Impairment of assets
Goodwill and other assets that have an indefinite useful life are not
amortised but are tested annually for impairment in accordance with
AASB 136 ‘Impairment of Assets’. Assets subject to annual depreciation
or amortisation are reviewed for impairment whenever events or
Software acquired through a business combination is assessed as the
circumstances arise that indicates that the carrying amount of the asset
identifiable value of that software at the date of acquisition. Acquired
may be impaired.
software is amortised over a period of 4 years.
Internally-generated intangible assets
Internally-generated intangible assets, including software, arising from
development (or from the development phase of an internal project) is
recognised if, and only if, all of the following have been demonstrated:
An impairment loss is recognised where the carrying amount of the asset
exceeds its recoverable amount. The recoverable amount of an asset is
defined as the higher of its fair value less costs to sell and value in use.
For the purposes of impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (cash generating units).
»
the technical feasibility of completing the intangible asset so that it
will be available for use or sale;
Provisions
»
»
»
»
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
Provisions are recognised when the Group has a present obligation
(legal or constructive) as a result of a past event, it is probable that the
Group will be required to settle the obligation, and a reliable estimate
how the intangible asset will generate probable future economic benefits;
can be made of the amount of the obligation.
the availability of adequate technical, financial and other resources to
The amount recognised as a provision is the best estimate of the
complete the development and to use or sell the intangible asset; and
consideration required to settle the present obligation at the end of
»
the ability to measure reliably the expenditure attributable to the intangible
asset during its development.
the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the
cash flows estimated to settle the present obligation, its carrying amount
The amount initially recognised for internally-generated intangible assets
is the present value of those cash flows (where the effect of the time
is the sum of the expenditure incurred from the date when the intangible
value of money is material).
asset first meets the recognition criteria listed above. Where no internally
generated intangible asset can be recognised, development expenditure
is recognised in profit or loss in the period in which it is incurred.
When some or all of the economic benefits required to settle a provision
are expected to be recovered from a third party, a receivable is
recognised as an asset if it is virtually certain that reimbursement will be
Subsequent to initial recognition, internally-generated intangible assets
received and the amount of the receivable can be measured reliably.
are reported at cost less accumulated amortisation and accumulated
impairment losses, on the same basis as intangible assets that are
acquired separately.
Leases
The useful lives of internally generated intangible assets are as follows:
Leases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of ownership to the
Software
3 years
lessee. All other leases are classified as operating leases.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic
benefits are expected from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as the difference between the
net disposal proceeds and the carrying amount of the asset are recognised in
profit or loss when the asset is derecognised.
Assets held under finance leases are initially recognised as assets of
the Group at their fair value at the inception of the lease or, if lower, at
the present value of the minimum lease payments. The corresponding
liability to the lessor is included in the Statement of Financial Position as
a finance lease obligation.
Lease payments are apportioned between finance expenses and
reduction of the lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance expenses
are recognised immediately in profit or loss, unless they are directly
attributable to qualifying assets, in which case they are capitalised
in accordance with the Group’s general policy on borrowing costs.
Contingent rentals are recognised as expenses in the periods in
which they are incurred.
2018 Annual Report
45
Notes to the Financial Statements
Note 2. Significant accounting policies Continued >
Operating lease payments are recognised as an expense on a
straight-line basis over the lease term, except where another
systematic basis is more representative of the time pattern in which
economic benefits from the leased asset are consumed. Contingent
rentals arising under operating leases are recognised as an expense
in the period in which they are incurred.
In the event that lease incentives are received to enter into operating
leases, such incentives are recognised as a liability. The aggregate
benefit of incentives is recognised as a reduction of rental expense on
a straight-line basis, except where another systematic basis is more
representative of the time pattern in which economic benefits from the
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of
GST, except where the amount of GST incurred is not recoverable from
the Tax Office. In these circumstances the GST is recognised as part of
the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the consolidated Statement of Financial
Position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross
basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
leased asset are consumed.
Employee benefits
Short and long-term employee benefit
A liability is recognised for benefits accruing to employees in respect
of wages and salaries, annual leave, and long service leave when it is
Share based payments
Equity settled share based compensation benefits are provided to
employees. Equity settled transactions are awards of shares, options
or rights, which are provided in exchange for the rendering of services.
Equity settled share based payments are measured at the fair value of
the equity instruments at the grant date.
probable that settlement will be required and they are capable of being
The fair value at the grant date of the equity settled share based
measured reliably.
Liabilities recognised in respect of short-term employee benefits, are
measured at their nominal values using the remuneration rate expected
to apply at the time of settlement. Liabilities recognised in respect of
long term employee benefits are measured at the present value of the
estimated future cash outflows to be made by the Group in respect of
services provided by the employees up to reporting date.
Retirement benefit costs
Payments to defined contribution plans are recognised as an expense
when employees have rendered service entitling them to
the contributions.
Borrowing costs
Borrowing costs can include interest, amortisation of discounts or
premiums relating to borrowings, ancillary costs incurred in connection
with arrangement of borrowings, foreign exchange losses net of hedged
amounts on borrowings. Borrowings are initially recognised at fair value,
net of transaction costs and subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the
redemption amount is recognised in profit or loss over the period of the
borrowings using the effective interest method.
payments is expensed on a straight line basis over the vesting period,
based on the Group’s estimate of equity instruments that will eventually
vest, with a corresponding increase in equity. At the end of each
reporting period, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised in profit or loss such that the cumulative
expense reflects the revised estimate, with a corresponding adjustment
to the equity settled employee benefits reserve.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair
value for recognition or disclosure purposes, the fair value is based
on the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the
measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal market, in
the most advantageous market.
Fair value is measured using the assumptions that market participants
would use when pricing the asset or liability, assuming they act in
their economic best interests. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques
that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.
46 www.iphltd.com.au
30th June 2018
Assets and liabilities measured at fair value are classified, into three
Where the business combination is achieved in stages, the Group
levels, using a fair value hierarchy that reflects the significance of the
remeasures its previously held equity interest in the acquiree at the
inputs used in making the measurements (note 25). Classifications
acquisition-date fair value and the difference between the fair value and
are reviewed at each reporting date and transfers between levels are
the previous carrying amount is recognised in profit or loss. Contingent
determined based on a reassessment of the lowest level of input that is
consideration to be transferred by the acquirer is recognised at the
significant to the fair value measurement.
acquisition-date fair value. Subsequent changes in the fair value of the
For recurring and non-recurring fair value measurements, external
valuers may be used when internal expertise is either not available or
when the valuation is deemed to be significant. External valuers are
contingent consideration classified as an asset or liability is recognised
in profit or loss. Contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity.
selected based on market knowledge and reputation. Where there is a
The difference between the acquisition-date fair value of assets
significant change in fair value of an asset or liability from one period to
acquired, liabilities assumed and any non-controlling interest in the
another, an analysis is undertaken, which includes a verification of the
acquiree and the fair value of the consideration transferred and the fair
major inputs applied in the latest valuation and a comparison, where
value of any pre-existing investment in the acquiree is recognised as
applicable, with external sources of data.
goodwill. If the consideration transferred and the pre-existing fair value
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or
is less than the fair value of the identifiable net assets acquired, being
a bargain purchase, the difference is recognised as a gain directly in
profit or loss on the acquisition-date, but only after a reassessment of
the identification and measurement of the net assets acquired, the non-
controlling interest in the acquiree, if any, the consideration transferred
options are shown in equity as a deduction, net of tax, from the proceeds.
and any previously held equity interest.
Dividends
Dividends are recognised when declared during the financial year and no
longer at the discretion of the Company.
Business combinations
Where settlement of any part of cash consideration is deferred, the
amounts payable in the future are discounted to their present value as
at the date of exchange. Contingent consideration is classified either
as equity or a financial liability. Amounts classified as financial liability
are subsequently remeasured to fair value with changes to fair value
recognised in profit or loss.
Business combinations are initially accounted for on a provisional basis. The
The acquisition method of accounting is used to account for business
Group retrospectively adjusts the provisional amounts recognised and also
combinations regardless of whether equity instruments or other assets
recognises additional assets or liabilities during the measurement period,
are acquired.
The consideration transferred is the sum of the acquisition-date fair values
of the assets transferred, equity instruments issued or liabilities incurred.
The consideration transferred also includes the fair value of any contingent
consideration arrangement and the fair value of any pre-existing equity
interest in the subsidiary. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured
based on new information obtained about the facts and circumstances that
existed at the acquisition-date. The measurement period ends on either the
earlier of (i) 12 months from the date of the acquisition or (ii) when the Group
receives all the information possible to determine fair value.
Earnings per share
initially at their fair values at the acquisition date. For each business
Basic earnings per share
combination, the non-controlling interest in the acquiree is measured at
either fair value or at the proportionate share of the acquiree’s identifiable
net assets. All acquisition costs are expensed as incurred to profit or loss.
Basic earnings per share is calculated by dividing the profit attributable to
the owners of IPH Limited, excluding any costs of servicing equity other
than ordinary shares, by the weighted average number of ordinary shares
On the acquisition of a business, the Group assesses the financial
outstanding during the financial year, adjusted for bonus elements in
assets acquired and liabilities assumed for appropriate classification
ordinary shares issued during the financial year.
and designation in accordance with the contractual terms, economic
conditions, the Group’s operating or accounting policies and other
pertinent conditions in existence at the acquisition-date.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination
of basic earnings per share to take into account the after income tax
effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive
potential ordinary shares.
2018 Annual Report
47
Notes to the Financial Statements
Note 2. Significant accounting policies Continued >
Rounding of amounts
The Group has distinct revenue streams over the life of the Intellectual
Property application process. The Group’s assessment of these revenue
The Company is of a kind referred to in ASIC Corporations (Rounding
streams has concluded that at transition the Group will not be materially
in Financial/Directors Reports) Instrument dated 24 March 2016 and
impacted upon adoption and no transition adjustment is required. The
in accordance with that Instrument amounts in the annual financial
application of the requirements of AASB 15 are consistent with the
report are rounded off to the nearest thousand dollars, unless
Group’s existing accounting policies.
otherwise indicated.
New Accounting Standards and Interpretations
not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently
been issued or amended but are not yet mandatory, have not been
early adopted by the Group for the annual reporting period ended 30
June 2018. The Group’s assessment of the impact of these new or
amended Accounting Standards and Interpretations, most relevant to
the Group, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on
or after 1 January 2018. The standard replaces all previous versions
of AASB 9 and completes the project to replace IAS 39 ‘Financial
Instruments: Recognition and Measurement’. AASB 9 introduces new
classification and measurement models for financial assets. New simpler
hedge accounting requirements are intended to more closely align the
accounting treatment with the risk management activities of the entity.
New impairment requirements will use an ‘expected credit loss’ model
to recognise an allowance.
AASB 16 Leases
This standard is currently applicable to annual reporting periods beginning
on or after 1 January 2019. AASB 16 replaces the current AASB 117
Leases standard and sets out a comprehensive model for identifying lease
arrangements and the subsequent measurement. A contract contains a
lease if it conveys the right to control the use of an identified asset for a period
of time. The majority of leases from the lessee perspective within the scope
of AASB 16 will require the recognition of a “right of use” asset and a related
lease liability, being the present value of future lease payments. This will result
in an increase in the recognised assets and liabilities in the Statement of
Financial Position as well as a change in expense recognition, with interest
and depreciation replacing operating lease expense, with the exception of for
leases of low value assets and leases with a term of 12 months or less.
The Group expects to adopt the standard from 1 July 2019 and the
primary impact from adoption will be the treatment of premises and
leased office equipment across the Group. The adoption of the standard
will increase net current assets and lease liabilities due to the recognition
of the lease liability and right of use asset; expense relating to minimum
lease payments will reduce and there will be an increase in interest
expense. The quantum of these changes is currently being determined.
The most significant impact will be the present value of the operating
The Group’s assessment of the requirements of AASB 9 has concluded
that at transition the Group will not be materially impacted upon
lease commitments in note 29.
adoption and no transition adjustment is required.
AASB 15 Revenue from Contracts with Customers
Note 3. Critical accounting judgements,
estimates and assumptions
This standard is currently applicable to annual reporting periods beginning
The preparation of the financial statements requires management to
on or after 1 January 2018. AASB 15 replaces all current guidance
on revenue recognition from contracts with customers. It requires
make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. Management continually evaluates
identification of discrete performance obligations within a transaction and
its judgements and estimates in relation to assets, liabilities, contingent
an associated transaction price allocation to these obligations. Revenue
liabilities, revenue and expenses. Management bases its judgements,
is recognised upon satisfaction of these performance obligations, which
estimates and assumptions on historical experience and on other
occur when control of the goods or services are transferred to the
various factors, including expectations of future events, management
customer. Revenue received for a contract that includes a variable amount
believes to be reasonable under the circumstances. The resulting
is subject to revised conditions for recognition, whereby it must be highly
accounting judgements and estimates will seldom equal the related
probable that no significant reversal of the variable component may occur
actual results. The judgements, estimates and assumptions that have a
when the uncertainties around its measurement are removed.
significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
48 www.iphltd.com.au
30th June 2018
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events of changes
in circumstances indicate impairment, whether goodwill and other
indefinite life intangible assets have suffered any impairment, in
accordance with the accounting policy stated in note 2.
Customer relationships are finite intangible assets and are amortised
over their expected life. Assets subject to amortisation are reviewed for
impairment whenever events or circumstances arise that indicates that
the carrying amount of the asset may be impaired.
Business combinations
The fair value of assets acquired, liabilities and contingent liabilities assumed
are initially estimated by the Group taking into consideration all available
information at the reporting date. Fair value adjustments on the finalisation
of the business combination accounting is retrospective, where applicable,
to the period the combination occurred and may have an impact on the
assets and liabilities, depreciation and amortisation reported. Acquisitions
of $60.5m (2017: $28.9m) were made during the year (note 32).
Intellectual Property Services
Related to the provision of filing,
Australia & New Zealand
prosecution, enforcement and
management of patents, designs,
trade marks and other IP in
Australia and New Zealand.
Intellectual Property Services Asia
Related to the provision of filing,
prosecution, enforcement and
management of patents, designs,
trade marks and other IP in Asia.
Data and Analytics Software
Develops and provides IP data
and analytics software under a
subscription license model.
The CODM reviews earnings before interest, income tax and
adjustments to the statutory reported results. The accounting policies
adopted for internal reporting to the CODM are consistent with those
adopted in the financial statements. The information reported to the
Note 4. Operating segments
CODM is on at least a monthly basis.
Identification of reportable operating segments
Intersegment transactions
The Group is organised into three segments: Intellectual Property Services
Australia & New Zealand; Intellectual Property Services Asia; and Data and
Analytics Software. These operating segments are based on the internal
There are varying levels of integration between the segments.
The integration includes provision of professional services, shared
technology and management services. Intersegment transactions
reports that are reviewed and used by the senior executive team and Board
were made at market rates. Intersegment transactions are
of Directors (who are identified as the Chief Operating Decision Makers
(‘CODM’)) in assessing performance and in determining the allocation of
resources. There is no aggregation of operating segments.
eliminated on consolidation.
Reliance on major customers
Maximum revenue from any customer is less than 2% of overall revenue
of the Group. Country of origin of revenue has not been disclosed as this
is commercially sensitive information.
2018 Annual Report
49
Notes to the Financial Statements
Note 4. Operating segments Continued >
30 June 2018
Consolidated
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Other revenue
Total revenue
Less: Overheads
(cid:44)ntellectual Pro(cid:83)erty Services
(cid:36)ustralia
and NZ1
$’000
146,655
802
147,457
7,910
Asia
$’000
75,301
2,539
77,840
128
155,367
77,968
Data and
(cid:36)nalytics
Soft(cid:90)are
(cid:44)ntersegment
eliminations (cid:18)
unallocated
(cid:38)or(cid:83)orate
$’000
$’000
$’000
Total
$’000
-
-
-
1,212
1,212
-
-
-
(1,209)
(1,209)
(7,158)
-
221,956
(3,341)
(3,341)
(3,971)
(7,312)
-
221,956
4,070
226,026
7,099
(152,022)
(101,220)
(46,822)
(3,921)
Earnings before interest, tax, depreciation and
amortisation (EBITDA), before adjustments
Less: Depreciation
Less: Amortisation
Less: Management Charges
Segment result:
(Profit before interest, tax and adjustments)
54,147
31,146
(2,709)
(8,367)
(213)
74,004
(1,131)
(7,716)
3,937
(204)
(1,005)
(5,491)
(24)
(1,961)
-
(139)
(934)
1,554
-
22
-
(1,498)
(11,594)
-
49,237
24,446
(4,694)
(7,886)
(191)
60,912
1. Australia & New Zealand following the acquisition of AJ Park in Oct 2017
Reconciliation of segment result
Segment result
(cid:36)d(cid:77)ustments to statutory result:
»
»
»
»
»
Business acquisition costs
Business acquisition adjustments
New business establishment costs
Restructuring expenses
Share based payments
Total adjustments
Interest income
Finance Costs
Impairment of intangible assets
Profit for the period before income tax expense
Reconciliation of segment revenue
Segment revenue
Interest income
Total revenue
50 www.iphltd.com.au
60,912
(982)
642
(786)
(2,134)
(676)
(3,936)
29
(1,537)
(2,148)
53,320
226,026
29
226,056
30 June 2017
Consolidated
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Other revenue
Total revenue
Less: Overheads
Earnings before interest, tax, depreciation and
amortisation (EBITDA), before adjustments
Less: Depreciation
Less: Amortisation
Segment result:
(Profit before interest, tax and adjustments)
Reconciliation of segment result
Segment result
(cid:36)d(cid:77)ustments to statutory result:
»
»
»
»
Business acquisition costs
Business acquisition adjustments
New business establishment costs
Share based payments
Total adjustments
Interest income
Finance Costs
Profit for the period before income tax expense
Reconciliation of segment revenue
Segment revenue
Interest income
Total revenue
30th June 2018
(cid:44)ntellectual Pro(cid:83)erty Services
(cid:36)ustralia
$’000
116,002
362
116,364
6,798
Asia
$’000
66,039
1,739
67,778
844
123,162
68,622
Data and
(cid:36)nalytics
Soft(cid:90)are
(cid:44)ntersegment
eliminations (cid:18)
unallocated
(cid:38)or(cid:83)orate
$’000
$’000
$’000
Total
$’000
-
-
-
743
743
-
-
-
(218)
(218)
-
182,041
(2,101)
(2,101)
(4,176)
-
182,041
3,991
(6,277)
186,032
(72,587)
(39,043)
(3,246)
(5,398)
5,868
(114,406)
50,575
29,579
(2,503)
(5,616)
(409)
71,626
(724)
(6,285)
(254)
(608)
(16)
(1,548)
(90)
(823)
-
19
(1,084)
(9,245)
43,566
28,717
(4,067)
(6,529)
(390)
61,297
61,297
(2,617)
1,181
(207)
(1,325)
(2,968)
113
(1,241)
57,201
186,032
113
186,145
2018 Annual Report
51
Notes to the Financial Statements
30 June 2018
$’000
221,956
221,956
30 June 2018
$’000
(270)
826
2,063
1,452
29
4,100
Consolidated
30 June 2017
$’000
182,041
182,041
Consolidated
30 June 2017
$’000
1,050
26
1,367
1,548
113
4,104
Note 5. Sales Revenue
Revenue from the rendering of services
Note 6. Other Income
Net Realised foreign exchange (loss)/gain
Net unrealised foreign exchange gain
Other income
Commission
Interest
52 www.iphltd.com.au
30th June 2018
Consolidated
30 June 2018
30 June 2017
$’000
1,498
9,362
2,232
13,092
676
3,780
(642)
2,020
2,471
1,798
5,734
2,148
14,171
9
754
774
1,537
$’000
1,084
7,738
1,508
10,329
1,325
3,418
(1,181)
1,414
1,728
1,328
3,699
-
8,169
26
-
1,215
1,241
Note 7. Expenses
Profit before income tax includes the following specific expenses:
Depreciation
Amortisation - Acquired Intangibles
Amortisation - Software Development
Share based payments
Superannuation expense
Deferred acquisition and deferred settlement costs remeasurement
Other e(cid:91)(cid:83)enses:
Professional fees
IT & Communication
Office Expenses
Other
Impairment of FAKC & Cullens trademarks (Note 14)
(cid:41)inance costs
Interest on bank facilities - Overdraft
Interest on bank facilities - loan
Other interest expense - Facility fees
Rental e(cid:91)(cid:83)ense relating to o(cid:83)erating leases
Minimum lease payments
8,511
5,420
2018 Annual Report
53
Notes to the Financial Statements
Note 8. Income Tax Expense
(cid:44)ncome ta(cid:91) e(cid:91)(cid:83)ense
Current tax
Deferred tax
Under provided in prior years
Aggregate income tax expense
(cid:39)eferred ta(cid:91) included in income ta(cid:91) e(cid:91)(cid:83)ense com(cid:83)rises:
Increase in deferred tax assets (note 15)
Decrease in deferred tax liabilities (note 15)
Reconciliation of income ta(cid:91) e(cid:91)(cid:83)ense and ta(cid:91) at the statutory rate
Profit before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Permanent adjustments
Equity settled share based payments
Earn-out revaluations
Acquisition costs
Difference in overseas tax rates
Losses not brought to account
Under / (Over) provision with respect
to current tax in prior years
Other
Income tax expense
54 www.iphltd.com.au
Consolidated
30 June 2018
30 June 2017
$’000
$’000
16,080
(3,754)
321
12,647
(1,500)
(2,254)
(3,754)
53,320
15,996
172
(905)
-
277
16,565
(2,984)
727
14,308
2,062
985
3,047
57,201
17,160
(191)
279
(343)
805
(3,146)
(3,590)
195
340
(282)
12,647
35
9
144
14,308
Note 9. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Note 10. Current assets - trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Impairment of receivables
The Group has recognised a loss of $381,000 (2017: Impairment
reversal of $13,000) in profit or loss in respect of impairment of
receivables for the year ended 30 June 2018. The ageing of the
impaired receivables provided for above are as follows:
Movements in the provision for impairment of receivables are as follows:
Past due more
than 91 days
Opening balance
Additions through business combinations (note 32)
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
30th June 2018
Consolidated
30 June 2018
30 June 2017
$’000
89
26,124
26,213
$’000
73
24,325
24,398
Consolidated
30 June 2018
30 June 2017
$’000
57,930
(818)
57,112
$’000
38,759
(739)
38,020
Consolidated
30 June 2018
30 June 2017
$’000
794
$’000
682
Consolidated
30 June 2018
30 June 2017
$’000
739
94
381
(396)
818
$’000
574
334
(13)
(156)
739
2018 Annual Report
55
Notes to the Financial Statements
Note 10. Current assets - trade and other receivables Continued >
Past due but not impaired
Customers with receivable balances past due but without provision
for impairment, amount to $19,262,000 as at 30 June 2018 (2017:
$10,793,000). The Group did not consider there to be a credit risk on
the aggregate balances after reviewing the credit terms of customers
based on recent collection practices. The ageing of the past due but not
impaired receivables are as follows:
31 to 60 days overdue
61 to 90 days overdue
Past due more than 91 days
Ageing has been calculated with reference to the trading terms of local
clients (30 days) and international clients (90 days). The prior period
disclosure has been amended to reflect this methodology.
Note 11. Current assets - other
Prepayments
Work in Progress
Other current assets
56 www.iphltd.com.au
Consolidated
30 June 2018
30 June 2017
$’000
14,913
1,278
3,071
19,262
$’000
8,297
729
1,767
10,793
Consolidated
30 June 2018
30 June 2017
$’000
1,459
2,192
1,691
5,342
$’000
1,122
1,042
1,262
3,426
Note 12. Non-Current assets - Available-For-Sale Financial Assets
Unquoted ordinary shares - at fair value
Note 13. Non-Current assets - Property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Furniture, fixtures and fittings - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
30th June 2018
Consolidated
30 June 2018
30 June 2017
$’000
180
180
$’000
180
180
Consolidated
30 June 2018
30 June 2017
$’000
7,355
(3,545)
3,810
1,258
(984)
274
3,853
(3,024)
829
12,915
(11,645)
1,270
6,183
$’000
3,143
(1,533)
1,610
1,076
(784)
292
1,572
(1,165)
407
6,531
(5,836)
695
3,004
2018 Annual Report
57
Notes to the Financial Statements
Note 13. Non-Current assets - Property, plant and equipment Continued >
Reconciliations
Reconciliations of the written down values at the beginning and end of
the current and previous financial year are set out below:
Consolidated
Leasehold
im(cid:83)rovements
Plant and
e(cid:84)ui(cid:83)ment
(cid:41)urniture(cid:15)
fi(cid:91)tures and
fittings
(cid:38)om(cid:83)uter
e(cid:84)ui(cid:83)ment
Total
$’000
$’000
$’000
$’000
$’000
Balance at 1 July 2016
1,680
459
Additions
Additions through business combinations (note 32)
Disposals / Transfers
Exchange differences
Depreciation expense
Balance at 30 June 2017
Additions
Additions through business combinations (note 32)
Disposals / Transfers
Exchange differences
Depreciation expense
Balance at 30 June 2018
40
2
96
-
(208)
1,610
1,394
1,252
(45)
2
(403)
3,810
10
14
-
-
(191)
292
180
-
-
5
(203)
274
567
114
3
1,644
4,350
455
14
619
33
(157)
(847)
(908)
-
(6)
(6)
(120)
(565)
(1,084)
407
33
726
(205)
20
(152)
829
695
3,004
673
2,280
686
2,664
(51)
7
(301)
34
(740)
(1,498)
1,270
6,183
58 www.iphltd.com.au
Note 14. Non Current assets - intangibles
Goodwill - at cost
Patents and trade marks - at cost
Capitalised software development - at cost
Less: Accumulated amortisation
Software Acquired
Less: Accumulated amortisation
Customer Relationships
Less: Accumulated amortisation
30th June 2018
Consolidated
30 June 2018
30 June 2017
$’000
185,223
4,237
189,460
8,871
(4,648)
4,223
3,805
(3,015)
790
90,950
(19,120)
71,830
266,303
$’000
144,570
3,519
148,089
5,780
(2,612)
3,168
3,805
(2,064)
1,741
70,637
(10,709)
59,928
212,926
2018 Annual Report
59
Notes to the Financial Statements
Note 14. Non Current assets - intangibles Continued >
Reconciliations
Reconciliations of the written down values at the beginning and end of
the current and previous financial year are set out below:
Consolidated
(cid:42)ood(cid:90)ill
Patents and
trade mar(cid:78)s
(cid:38)ustomer
relationshi(cid:83)s
(cid:38)a(cid:83)italised
soft(cid:90)are
develo(cid:83)ment
Soft(cid:90)are
(cid:36)c(cid:84)uired
Total
Balance at 1 July 2016
124,156
3,511
58,685
$’000
$’000
$’000
Additions
Additions through business combinations
Disposals / Transfers
Amortisation expense
1,100
19,314
-
-
8
-
-
-
-
8,028
-
Balance at 30 June 2017
144,570
3,519
59,928
Additions
-
-
-
Additions through business combinations (note 32)
40,639
2,866
20,313
Exchange differences
Impairment1
Amortisation expense
14
-
-
-
(2,148)
-
-
(6,785)
(1,508)
(952)
(9,245)
$’000
1,111
2,662
-
903
$’000
$’000
2,693
190,156
-
-
-
3,770
27,342
903
3,168
3,269
-
18
-
1,741
212,926
-
-
-
-
3,269
63,818
32
(2,148)
-
(8,411)
(2,232)
(951)
(11,594)
Balance at 30 June 2018
185,223
4,237
71,830
4,223
790
266,303
1. On 30 June 2018 FAKC and Cullens were merged with Spruson & Ferguson Australia and will operate under the Spruson & Ferguson name. As a result, the intangible
asset relating to the former FAKC and Cullens trademarks has been assessed as having no ongoing economic benefit and hence has been written off.
Impairment testing
For the purposes of impairment testing, goodwill
is allocated to cash generating units (CGU's) that
are an identifiable group of assets that generate
cash associated with the goodwill.
CGU
On 30 June 2018 FAKC and Cullens were
merged with Spruson & Ferguson Australia.
Spruson & Ferguson Australia
The goodwill relating to the former FAKC and
Practice Insight
Cullens CGU's is now assessed within the
Spruson & Ferguson Australia CGU.
A summary of the goodwill by CGU is
set out below:
Pizzeys
AJ Park1
Consolidated
30 June 2018
30 June 2017
$’000
$’000
52,958
3,834
68,158
40,653
52,958
3,834
68,158
-
Spruson & Ferguson (Hong Kong)
19,314
19,314
Other
Total
1. AJ Park was acquired on 31 Oct 2017 (Note 32).
306
306
185,223
144,570
60 www.iphltd.com.au
30th June 2018
The recoverable amount of a CGU is determined primarily utilising a
rates stated below. After five years a terminal growth rate is assumed
value-in-use calculation and secondly based on estimated net selling
and terminal value-in-use calculated. The terminal growth rates do not
prices. Value-in-use calculations use cash flow projections based on
exceed the average growth rates that the business has experienced and
financial budgets prepared by management and approved by the Board.
are generally lower than the short term growth rates assumed.
Cashflows for future years are extrapolated using the estimated growth
Key assumptions used for value-in-use calculations
(cid:24) yr (cid:40)B(cid:44)(cid:55)(cid:39)(cid:36) (cid:38)(cid:36)(cid:42)R
(cid:55)erminal
gro(cid:90)th rates
(cid:39)iscount rates
CGU
Spruson & Ferguson
Australia1
Pizzeys
AJ Park
S&F Hong Kong
2018
%
4.4
6.2
6.9
18.6
2017
%
4.9
6.1
5.1
17.7
Pre-(cid:55)a(cid:91)
2018 & 2017
Post-(cid:55)a(cid:91)
2018 & 2017
%
15
15
15
15
%
10.5
10.5
10.5
10.5
%
2.5
2.5
2.5
2.5
1. CGU for testing the former FAKC & Cullens goodwill. Prior year CAGR percentage is the average for FAKC & Cullens.
The post-tax discount rate has been applied to discount the future
attributable post-tax cash flows.
Fair value less cost to sell
The fair value less cost to sell method was used to determine the
recoverable amount of the Practice Insight CGU at 30 June 2018 as
an offer for sale was received post year end (Note 34). In the prior this
CGU was valued using value in use calculations with the following
assumptions: 5yr EBITDA CAGR 20.8%, terminal growth rate of 2.5%
and discount rates of 25% and 17.5% pre-and post tax respectively.
At 30 June 2018, the assessed value-in-use for each CGU exceeded the
carrying amounts of the CGU and no impairment loss was recognised.
Impact of possible change in key assumptions
No impairment charge would arise as a result of the following
changes in assumptions:
» Holding all assumptions constant, if the forecast net cashflows in
years 1 to 5 declined by 5%
» Holding all assumptions constant, if the discount rate increased by 0.5%
» Holding all assumptions constant, if the terminal rate declined by 0.5%
In addition to the above sensitivity testing, a decline in expected revenue
growth in Pizzeys of 1.2% would result in the carrying value of the
Pizzeys CGU to equal the recoverable amount.
2018 Annual Report
61
Notes to the Financial Statements
Note 15. Deferred tax assets / liabilities
The net deferred tax liability comprises the following balances:
Impairment of receivables
Property, plant and equipment
Provisions
Accrued expenses
Unbilled revenue
Prepayments
Foreign exchange
Transaction costs
Leased assets
Software
O(cid:83)ening
balance
Recognised in
(cid:83)rofit or loss
(cid:36)c(cid:84)uisitions
Recognised
in equity
(cid:38)losing
balance
$’000
$’000
$’000
$’000
$’000
95
(22)
1,955
178
(134)
(29)
93
(29)
157
28
72
(182)
25
(48)
1,248
(490)
385
610
237
365
66
135
1,983
250
(316)
(4)
45
758
622
975
Intangible assets - Customer Relationships (Note 32)
(16,965)
2,388
(6,490)
(21,067)
Intangible assets - Trademarks
Sundry
(1,049)
(3)
644
587
(405)
584
(13,638)
3,754
(6,490)
-
(16,374)
Consolidated
30 June 2018
30 June 2017
$’000
$’000
6,557
(22,931)
(16,374)
5,077
(18,715)
(13,638)
Disclosed as:
Deferred tax asset
Deferred tax liability
62 www.iphltd.com.au
Note 16. Current liabilities - trade and other payables
Trade payables
Sundry creditors and accruals
Note 17. Current liabilities - provisions
Employee benefits
Provision for onerous lease
Lease make good
Other provisions
Note 18. Current liabilities - other financial liabilities
Lease Incentive liability
Preference shares
Foreign exchange derivative financial instruments
30th June 2018
Consolidated
30 June 2018
30 June 2017
$’000
11,104
5,618
16,722
$’000
6,705
4,539
11,244
Consolidated
30 June 2018
30 June 2017
$’000
6,393
750
-
909
$’000
5,479
-
51
741
8,052
6,271
Consolidated
30 June 2018
30 June 2017
$’000
-
200
202
402
$’000
1,370
200
-
1,570
2018 Annual Report
63
Notes to the Financial Statements
Note 19. Borrowings
Non Current
Bank overdraft
Multi-option facility
Consolidated
30 June 2018
30 June 2017
$’000
$’000
-
40,102
40,102
-
-
-
On 25 August 2014, the Group entered into a facilities agreement
On 20 December 2017, the Group amended the Agreement and while
(‘Agreement’) with Australian and New Zealand Banking Group Limited
maintaining the multi-option acquisition loan facility and multi-option revolving
(‘ANZ’). The facilities under the Agreement comprised:
loan facility including a bank guarantee and overdraft facility for the general
» A multi-option facility with a term of three years for the general
corporate purposes of the Group; and
» A revolving annual credit facility allowing for financial guarantees
and standby letters of credit to be issued for the general corporate
purposes of the Group.
corporate purposes of the Group, the following changes were made:
»
»
The facility limit was reduced from $97m to $54m.
The maturity date was extended by three years to 1 January 2021.
On 5 June 2018, the Group amended the Agreement to include
an additional $40m facility limit, while maintaining the multi-option
On 7 July 2015, the Group amended the agreement to extend the facility
acquisition loan facility and multi-option revolving loan facility including
to $97m over a three year term maturing on 31 July 2018 comprising:
a bank guarantee and overdraft facility for the general corporate
» A multi-option acquisition loan facility
purposes of the Group. The maturity date remains on 1 January 2021.
» A multi-option revolving loan facility including a bank guarantee facility
and overdraft facility for the general corporate purposes of the Group.
Assets pledged as security
The bank facility made available by ANZ is secured by cross guarantee
and all assets from IPH Limited and a number of its wholly owned
subsidiaries. The value of current and non-current assets pledged as
security are as noted on the consolidated statement of financial position.
64 www.iphltd.com.au
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
(cid:55)otal facilities
Bank overdraft1
Multi-option facility1
Standby letter of credit facility
Bank guarantees1
(cid:56)sed at the re(cid:83)orting date
Bank overdraft
Multi-option facility
Standby letter of credit facility
Bank guarantees
(cid:56)nused at the re(cid:83)orting date
Bank overdraft
Multi-option facility
Standby letter of credit facility
Bank guarantees
30th June 2018
Consolidated
30 June 2018
30 June 2017
$’000
$’000
-
94,000
-
-
-
97,000
-
-
94,000
97,000
-
40,102
-
5,985
46,087
-
47,913
-
-
-
-
-
2,473
2,473
-
94,527
-
-
1. The Multi-option facility includes facility sublimits of $7m and $2m which may be used for the issuance of bank guarantees and available overdraft respectively.
47,913
94,527
2018 Annual Report
65
Notes to the Financial Statements
Note 20. Non-current liabilities - provisions and other financial liabilities
Consolidated
30 June 2018
30 June 2017
$’000
200
4,471
4,671
$’000
278
1,327
1,605
Consolidated
Consolidated
30 June 2018
30 June 2017
30 June 2018
30 June 2017
Shares
Shares
$’000
$’000
197,341,566
191,688,526
262,763
233,598
197,341,566
191,688,526
262,763
233,598
Dates
Shares
$’000
188,883,320
218,583
19 August 2016
42,187
Employee benefits
Lease Incentive liability
Note 21. Equity - issued capital
Ordinary Class
shares - fully paid
Movements in ordinary share capital
Balance at 1 July 2016
Retention rights exercised
Acquisition of Pizzeys Patent & Trademark Attorneys
31 August 2016
1,229,545
Acquisition of Cullens & Cullen Services No 1Pty Ltd
31 August 2016
487,890
Acquisition of Ella Cheong (Hong Kong) Ltd
31 October 2016
737,261
Retention rights exercised
6 December 2016
47,619
Acquisition of Callinans Patent & Trademark Attorneys
31 January 2017
143,248
Dividend reinvestment - interim dividend (Note 24)
15 March 2017
113,155
Retention rights exercised
Balance at 30 June 2017
66 www.iphltd.com.au
13 June 2017
4,301
191,688,526
233,598
-
6,787
2,693
4,313
-
705
517
-
30th June 2018
Movements in ordinary share capital Continued >
Dates
Shares
Retention rights exercised
11 July 2017
57,519
Dividend reinvestment - final dividend (Note 24)
13 September 2017
550,929
Performance rights exercised
19 October 2017
310,128
$’000
-
2,479
-
Acquisition of AJ Park Ltd1
Retention rights exercised
Performance rights exercised
31 October 2017
4,621,547
27,036
22 November 2017
23 February 2018
47,619
4,000
-
-
2,377
(2,727)
Dividend reinvestment - interim dividend (Note 24)
14 March 2018
683,114
Shares bought back during the period
(621,816)
Balance at 30 June 2018
197,341,566
262,763
1. Refer note 32 for share issuances arising from business acquisitions.
Ordinary shares
Capital risk management
Ordinary shares entitle the holder to participate in dividends and the
The Group’s objectives when managing capital is to safeguard its
proceeds on the winding up of the Company in proportion to the
ability to continue as a going concern, so that it can provide returns for
number of and amounts paid on the shares held. The fully paid ordinary
shareholders and benefits for other stakeholders and to maintain an
shares have no par value and the Company does not have a limited
optimum capital structure to reduce the cost of capital.
amount of authorised capital.
In order to maintain or adjust the capital structure, the Group may
On a show of hands every member present at a meeting in person or by
adjust the amount of dividends paid to shareholders, return capital to
proxy shall have one vote and upon a poll each share shall have one vote.
shareholders, issue new shares or sell assets to reduce debt.
Employee Share Trust
On 1 July 2017, IPH established the Employee Share Trust for the
The Group would look to raise capital when an opportunity to invest in
a business or company was seen as value adding relative to the current
Company’s share price at the time of the investment.
purpose of acquiring and allocating shares granted through the IPH
The Group is subject to certain financing arrangements covenants and
Employee Incentive Plan. As at 30 June 2018, the number of shares held
meeting these is given priority in all capital risk management decisions.
by the trust was 88,350.
There have been no events of default on the financing arrangements
during the financial year.
Share buy-back
On 8 May 2018 the Group announced a buyback of up to $40m of
Dividend reinvestment plan
ordinary shares. During the period to 30 June 2018 621,816 shares have
The group operates a dividend reinvestment plan. The issue price is
been bought back at an average price of $4.38 per share.
the average of the daily volume weighted average market price of all
shares sold by normal trade during the 10 trading days commencing on
the second trading day following the dividend record date. The plan is
suspended during the share buy-back period.
2018 Annual Report
67
Notes to the Financial Statements
Note 22. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Minority interest reserve
Consolidated
30 June 2018
30 June 2017
$’000
1
3,352
(14,814)
(11,461)
$’000
(166)
2,676
(14,850)
(12,340)
Foreign currency reserve
Minority interest reserve
The reserve is used to recognise exchange differences arising from the
This reserve represents the difference between the amount by
translation of the financial statements of foreign operations to Australian
which non-controlling interests are adjusted and the fair value of the
dollars. It is also used to recognise gains and losses on hedges of the
consideration paid or received, where there is no change in control.
net investments in foreign operations.
Share-based payments reserve
Movements in reserves
Movements in each class of reserve during the current and previous
The reserve is used to recognise the value of equity benefits provided
financial year are presented in the Statement of Changes in Equity.
to employees and Directors as part of their remuneration, and other
parties as part of their compensation for services. Specifically the
reserve relates to performance rights issued by the Company to its
employees under its LTIP.
Note 23. Equity - retained profits
Retained profits at the beginning of the financial year
Profit after income tax expense for the year attributable to owners of IPH Limited
Dividends paid (note 24)
Retained profits at the end of the financial year
68 www.iphltd.com.au
Consolidated
30 June 2018
30 June 2017
$’000
18,436
40,673
(42,823)
16,286
$’000
16,467
42,893
(40,924)
18,436
30th June 2018
Note 24. Equity - dividends
(cid:44)nterim dividend
December 2016 - paid 15 March 2017
December 2017 - paid 14 March 2018
(cid:41)inal dividend
June 2016 - paid 14 September 2016
June 2017 - paid 13 September 2017
Consolidated
(cid:38)ents (cid:83)er share
30 June 2018
30 June 2017
$’000
$’000
11.5
11.5
10.0
10.5
-
22,689
-
20,134
22,031
-
18,893
-
On 16 August 2018, the Company declared an ordinary dividend of
11.00 cents per share (franked at 50%) to be paid on 12 September
2018. The dividend value is $21,708,000. No provision for this dividend
has been recognised in the Statement of Financial Position as at 30
June 2018, as it was declared after the end of the financial year.
Dividend Reinvestment Plan
The Dividend Reinvestment Plan was active during the financial year.
1,234,043 shares were issued to participants totalling $4,856,000.
Franking credits
Consolidated
30 June 2018
30 June 2017
$’000
$’000
1,500
3,092
Franking credits available
for subsequent
financial years based on a
tax rate of 30%
The above amounts represent the balance of the franking account as
at the end of the financial year, adjusted for:
»
franking credits that will arise from the payment of the amount of the
provision for income tax at the reporting date.
2018 Annual Report
69
Notes to the Financial Statements
Note 25. Financial instruments
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk
(including foreign currency risk, price risk and interest rate risk), credit risk
and liquidity risk. The Group’s overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Group. The Group
uses different methods to measure different types of risk to which it is
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign
currency and is exposed to foreign currency risk through foreign exchange
rate fluctuations. Foreign exchange risk arises from future commercial
transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity’s functional currency. The
risk is measured using sensitivity analysis and cash flow forecasting.
exposed. These methods include sensitivity analysis in the case of interest
The Group uses derivative financial instruments such as forward foreign
rate and foreign exchange and ageing analysis for credit risk.
exchange contracts to hedge certain risk exposures which are not significant.
Derivatives are not used as trading or other speculative instruments.
The Group’s net asset exposure at the reporting date was as follows:
A$'000
US$'000
€'000
S$000
NZD$000
Other1
30 June 2018
Net asset exposure
(Local Currency)
30 June 2017
Net asset exposure
(Local Currency)
1. Australian dollar equivalent
248,892
2,039
1,966
7,773
6,006
1,689
195,890
27,942
1,603
5,349
-
336
Sensitivity analysis
The sensitivity of the Group's Australian dollar
denominated Profit or Loss account and
Statement of Financial Position to foreign
currency movements is based on a 10%
fluctuation (2017: 10% fluctuation) on the
average rates during the financial year. This
analysis assumes that all other variables
including interest rates remain constant.
A 10% movement in the average foreign
exchange rates would have impacted the
Group's profit after tax and equity as follows:
USD
Euro
SGD
NZD
Other currencies
Net exposure to
foreign currency risk
(cid:20)(cid:19)(cid:8) (cid:58)ea(cid:78)ening
(cid:20)(cid:19)(cid:8) Strengthening
2018
2017
2018
2017
$’000
$’000
$’000
$’000
204
197
777
601
169
3,635
(185)
(3,305)
238
505
-
34
(178)
(707)
(546)
(154)
(217)
(459)
-
(31)
1,948
4,412
(1,770)
(4,012)
70 www.iphltd.com.au
30th June 2018
Price risk
The Group is not exposed to any significant price risk.
risk. Borrowings issued at fixed rates expose the Group to fair value
interest rate risk. The Group does not enter into any derivative financial
instruments to manage its exposure to interest rate risk
Interest rate risk
As at the reporting date, the Group had the following variable rate
The Group’s main interest rate risk arises from its borrowings.
borrowings outstanding:
Borrowings issued at variable rates expose the Group to interest rate
Consolidated
Multi-option facility
Net exposure to cash flow interest rate risk
30 June 2018
30 June 2017
(cid:58)eighted average
interest rate
Balance
(cid:58)eighted average
interest rate
%
3.85
$’000
40,102
40,102
%
-
-
Balance
$’000
-
-
Credit risk
Liquidity risk
Credit risk refers to the risk that a counterparty will default on its contractual
Liquidity risk management requires the Group to maintain sufficient
obligations resulting in financial loss to the Group. The Group may obtain
liquid assets (mainly cash and cash equivalents) and available
payment in advance or restrict the services offered where appropriate to
borrowing facilities to be able to pay debts as and when they become
mitigate credit risk. The maximum exposure to credit risk at the reporting
due and payable.
date to recognised financial assets is the carrying amount, net of any
provisions for impairment of those assets, as disclosed in the statement of
financial position and notes to the financial statements. The Group does
not have any material credit risk exposure to any single debtor or group of
debtors and does not hold any collateral.
The Group manages liquidity risk by maintaining adequate cash
reserves and available borrowing facilities by continuously monitoring
actual and forecast cash flows and matching the maturity profiles of
financial assets and liabilities.
Financing arrangements (unused)
Unused borrowing facilities at the reporting date:
Bank overdraft
Multi-option facility
Standby letter of credit facility
Bank guarantees
The bank overdraft facilities may be drawn at any time and may be
terminated by the bank without notice. Subject to the continuance of
satisfactory credit ratings, the bank loan facilities may be drawn at any time.
Consolidated
30 June 2018
30 June 2017
$’000
-
47,913
-
-
$’000
-
94,527
-
-
47,913
94,527
2018 Annual Report
71
Notes to the Financial Statements
Note 25. Financial instruments Continued >
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity
for its financial instrument liabilities. The tables have been drawn up
based on the undiscounted cash flows of financial liabilities based on
the earliest date on which the financial liabilities are required to be paid.
The tables include both interest and principal cash flows disclosed as
remaining contractual maturities and therefore these totals may differ
from their carrying amount in the statement of financial position.
The cash flows in the maturity analysis below are not expected to occur
significantly earlier than contractually disclosed below.
(cid:58)eighted average
interest rate
(cid:20) year or less
Bet(cid:90)een (cid:20)
and (cid:21) years
Bet(cid:90)een (cid:21)
and (cid:24) years Over (cid:24) years
Remaining
contractual maturities
%
$’000
$’000
$’000
$’000
$’000
(cid:38)onsolidated -
30 June 2018
(cid:49)on-derivatives
Non-interest bearing
Trade payables
Sundry creditors and
accruals
Interest-bearing - variable
-
-
11,104
5,618
-
-
-
-
-
-
-
-
11,104
5,618
43,961
60,683
Multi-option facility
3.85%
1,544
Total non-derivatives
18,266
1,544
1,544
40,873
40,873
(cid:58)eighted average
interest rate
(cid:20) year or less
Bet(cid:90)een (cid:20)
and (cid:21) years
Bet(cid:90)een (cid:21)
and (cid:24) years Over (cid:24) years
Remaining
contractual maturities
%
$’000
$’000
$’000
$’000
$’000
-
-
6,705
4,539
11,244
-
-
-
-
-
-
-
-
-
6,705
4,539
11,244
(cid:38)onsolidated -
30 June 2017
(cid:49)on-derivatives
Non-interest bearing
Trade payables
Other payables and
accruals
Total non-derivatives
72 www.iphltd.com.au
30th June 2018
Consolidated
30 June 2018
30 June 2017
$
$
Short-term employee benefits
2,042,727
2,471,711
Post-employment benefits
104,597
91,661
Long-term benefits
19,479
26,100
Share-based payments
332,076
-
2,498,879
2,589,472
Consolidated
30 June 2018
30 June 2017
$’000
$’000
290,500
4,000
294,500
50,709
50,709
266,850
3,990
270,840
52,627
52,627
Note 26. Key management
personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of
key management personnel of the Group is set out here:
Note 27. Remuneration of auditors
During the financial year the following fees were paid or payable for
services provided by Deloitte Touche Tohmatsu, the auditor of the
Company, and unrelated firms:
(cid:36)udit services - (cid:39)eloitte (cid:55)ouche (cid:55)ohmatsu (cid:11)(cid:36)ustralia(cid:12)
Audit or review of the financial statements
Other assurance services
(cid:39)eloitte (cid:55)ouche (cid:55)ohmatsu (cid:11)Singa(cid:83)ore(cid:12)
Audit or review of the financial statements
(cid:36)udit services - unrelated firms
Audit or review of the financial statements
41,524
23,175
Other services - unrelated firms
Corporate and taxation services
107,904
149,428
63,082
86,257
2018 Annual Report
73
Consolidated
30 June 2018
30 June 2017
$’000
$’000
7,874
21,567
16,355
45,796
5,055
6,895
2,475
14,425
Notes to the Financial Statements
Note 28. Contingent liabilities
The Group has given bank guarantees in respect of operating lease
commitments for office premises as at 30 June 2018 of $5,985,000
(2017: $1,831,000).
Note 29. Commitments
(cid:47)ease commitments - o(cid:83)erating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Over five years
Operating lease commitments include contracted amounts for offices
and plant and equipment under non-cancellable operating leases
expiring within 1 to 10 years with, in some cases, options to extend.
The leases have various escalation clauses. On renewal, the terms of
the leases are renegotiated.
Note 30. Related party transactions
Parent entity
IPH Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 33.
Key management personnel
Disclosures relating to key management personnel are set out in note 26
and the remuneration report in the Directors’ report.
Transactions with related parties
There were no additional transactions with related parties.
74 www.iphltd.com.au
Note 31. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of (cid:83)rofit or loss and other com(cid:83)rehensive income
Profit after income tax
Total comprehensive income
Statement of financial (cid:83)osition
Total current assets
Total assets
Total current liabilities
Total liabilities
(cid:40)(cid:84)uity
Issued capital
Share-based payments reserve
Retained earnings
30th June 2018
Parent
30 June 2018
30 June 2017
$’000
$’000
61,442
61,442
31,071
326,648
2,208
42,310
262,763
3,353
18,222
284,338
31,893
31,893
14,991
237,773
1,898
1,898
233,598
2,677
(400)
235,875
Guarantees entered into by the parent entity
in relation to the debts of its subsidiaries
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and
Other than the security provided for the ANZ Facility Agreement as
equipment as at 30 June 2018.
disclosed in note 19, the parent entity had no guarantees in relation to
the debts of its subsidiaries as at 30 June 2018 apart from being party
to the deed of cross guarantee as detailed in Note 38.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of
the Group, as disclosed in note 2.
2018 Annual Report
75
Notes to the Financial Statements
Note 32. Business combinations
AJ Park IP Limited
Cash
On 31 October 2017, the Group acquired 100% of the ordinary shares
Equity instruments
of AJ Park IP Limited under the terms of a Share Purchase Agreement
(4,621,547 ordinary shares)
(SPA). The agreed purchase price was NZ$66,100,000 (A$60,500,000).
The consideration was settled by way of issue of 4,621,547 IPH shares
Total consideration transferred
A$’000
38,890
27,036
65,926
at an issue price of $4.61 and cash of NZ$36,214,635.
The acquired business contributed revenues of A$33,700,000 and profit
after tax of A$2,148,000 to the Group for the period from 1 November
2017 to 30 June 2018. The profit after tax includes a loss of A$600k
relating to the AJ Park Australia business which ceased operations
and costs associated with restructuring since acquisition which have
been removed for the purpose of calculating the underlying result of
the business. If the acquisition occurred on 1 July 2017, the full year
contributions would have been revenues of A$47,990,000 and profit
after tax of A$3,532,000.
Consideration transferred
The Group incurred acquisition related costs of $698k. These costs
have been included in business acquisition expenses.
Equity instruments issued
A$21,305,315 of the purchase price was settled by way of the issue of
4,621,547 ordinary shares in IPH to the vendors of AJ Park IP Limited
at an issue price of $4.61 per share. The shares issued have been
recorded in the financial statements at the acquisition date fair value of
$5.85 per share totalling $27,036,052.
Identifiable assets ac(cid:84)uired and liabilities assumed
The following table summarises the acquisition date fair value of each
major class of consideration transferred.
The following table summarises the recognised amounts of assets
acquired and liabilities assumed at the date of acquisition.
76 www.iphltd.com.au
Identifiable assets ac(cid:84)uired and liabilities assumed Continued >
Cash and cash equivalents
Trade and other receivables
Other assets
Property, plant and equipment
Intangible assets - customer relationships
Intangible assets - trademarks
Deferred tax liabilities
Trade and other payables
Provisions
Other creditors
Net assets acquired
Goodwill
Acquisition-date fair value of total consideration transferred
Cash used to acquire business, net of cash acquired:
Acquisition-date fair value of total consideration transferred
Less: shares issued by company as part of consideration
Less: cash and cash equivalents acquired
Net cash used
The goodwill is attributable to the profitability of AJ Park and its standing
as the market leading Intellectual Property firm in New Zealand.
Acquisitions undertaken in the year ended
30 June 2017
Ella Cheong (Hong Kong) Limited
On 31 October 2016, the Group acquired 100% of the ordinary shares
of Ella Cheong (Hong Kong) Limited and its subsidiary Ella Cheong
Intellectual Property Agency (Beijing) Company Limited under the terms
of a Share Purchase Agreement (SPA).
The final accounting for the acquisition was finalised during the previous
financial year. There were no acquisition adjustments recorded during
the year ended 30 June 2018.
30th June 2018
(cid:41)air (cid:57)alue
$’000
269
10,652
1,047
2,664
20,313
2,866
(6,490)
(3,407)
(1,739)
(888)
25,287
40,639
65,926
65,926
(27,036)
(269)
38,621
2018 Annual Report
77
Notes to the Financial Statements
Note 33. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the
following subsidiaries in accordance with the accounting policies described in note 2:
(cid:49)ame
Princi(cid:83)al (cid:83)lace of
business (cid:18) (cid:38)ountry
of incor(cid:83)oration
Princi(cid:83)al
activities
O(cid:90)nershi(cid:83)
interest
O(cid:90)nershi(cid:83)
interest
30 June 2018
30 June 2017
Spruson & Ferguson Pty (NSW) Limited2,3
Australia
Non Trading entity
Spruson & Ferguson Pty Limited2,3
Spruson & Ferguson Lawyers Pty Limited2,3
Australia
Australia
Patent attorneys
Lawyers
Spruson & Ferguson (Asia) Pte Limited
Singapore
Patent attorneys
Spruson & Ferguson SDN BHD
Malaysia
Patent attorneys
IPH Holdings (Asia) Pte Ltd
Singapore
Non Trading entity
PT Spruson Ferguson Indonesia
Indonesia
Patent attorneys
IPH (Thailand) Ltd4
Thailand
Non Trading entity
Spruson & Ferguson Ltd
Thailand
Patent attorneys
IPH Services Limited2,3
Australia
Software development
Practice Insight Pty Limited2,3
Australia
Data analysis and software
Practice Insight GmbH
Germany
Data analysis and software
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
Australia
Australia
Australia
Patent attorneys
Patent attorneys
Patent attorneys
Australia
Patent attorneys
100%
100%
Singapore
Patent attorneys
100%
100%
China
Patent attorneys
100%
100%
Fisher Adams Kelly Pty Limited2,3
Pizzeys Patent & Trademark Attorneys Pty Ltd2,3
Cullens Pty Limited2,3
Cullen Services
No 1 Pty Limited2,3
Pizzeys Pte Ltd
Spruson & Ferguson
(Shanghai) Ltd
78 www.iphltd.com.au
30th June 2018
(cid:49)ame
Princi(cid:83)al (cid:83)lace of
business (cid:18) (cid:38)ountry
of incor(cid:83)oration
Princi(cid:83)al
activities
O(cid:90)nershi(cid:83)
interest
O(cid:90)nershi(cid:83)
interest
30 June 2018
30 June 2017
Spruson & Ferguson Limited
Hong Kong
Non Trading entity
Spruson & Ferguson (Beijing) Ltd
China
Patent attorneys
Spruson & Ferguson (Hong Kong) Ltd
Hong Kong
Patent attorneys
100%
100%
100%
100%
100%
100%
Spruson & Ferguson Intellectual Property Agency
(Beijing) Company Ltd
Beijing Pat SF Intellectual Property Agency Co Ltd6
China
China
Patent attorneys
100%
100%
Patent attorneys
0%
AJ Park IP Ltd5
AJ Park Law Ltd5,6
AJ Park IP Pty Ltd5
New Zealand
Patent attorneys
100%
New Zealand
Lawyers
0%
Australia
Patent attorneys
100%
0%
0%
0%
0%
1. IPH Limited is the head entity within the tax consolidated group.
2. These companies are members of the tax consolidated group.
3. These wholly owned subsidiaries entered into a deed of cross guarantee with IPH limited pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
and are relieved from the requirements to prepare and lodge an audited financial report (note 38).
4. The Group holds 90.6% of the voting rights and thus has control of this entity.
5. These entities were acquired through the acquisition of AJ Park (Note 32).
6. These entities have Alliance Agreements with Group entities which results in consolidation in the IPH Group for Accounting purposes.
Note 34. Events after the reporting period
It was announced on 15 August 2018 that IPH's wholly-owned
subsidiary, Practice Insight Pty Limited, has agreed the sale of two of its
products: Filing Analytics and Citation Eagle to CPA Global Management
Services Limited for $10 million. The sale will generate an accounting
profit in the consolidated accounts of IPH Limited of approximately
$2 million in the 2019 financial year after taking into account the assets'
carrying values and transaction costs.
2018 Annual Report
79
Notes to the Financial Statements
Note 35. Reconciliation of profit after income tax to net cash from operating activities
Consolidated
30 June 2018
30 June 2017
$’000
40,673
13,092
2,148
(826)
676
-
(8,416)
(3,753)
(894)
1,183
(587)
(3,190)
77
6,274
46,457
$’000
42,893
10,329
-
1,067
1,332
(1,408)
2,095
(3,047)
768
(4,582)
(316)
(218)
(166)
1,175
49,922
Profit after income tax expense for the year
(cid:36)d(cid:77)ustments for:
Depreciation and amortisation
Impairment of intangible
Unrealised foreign exchange
Share-based payments
Other
(cid:38)hange in o(cid:83)erating assets and liabilities:
Decrease/(increase) in trade and other receivables
(Increase) in deferred tax assets
(Increase)/Decrease in other assets
Increase/(Decrease) in trade and other payables
Decrease in provision for income tax
Decrease in other liabilities
Increase/(Decrease) in deferred revenue
Increase in provisions
Net cash from operating activities
80 www.iphltd.com.au
Note 36. Earnings per share
Profit after income tax
Profit after income tax attributable to the owners of IPH Limited
30th June 2018
Consolidated
30 June 2018
30 June 2017
$’000
40,673
40,673
$’000
42,893
42,893
(cid:49)umber
(cid:49)umber
Weighted average number of ordinary shares used in calculating basic earnings per share
195,636,068
190,953,365
Rights over ordinary shares
966,124
1,164,271
Weighted average number of ordinary shares used in calculating diluted earnings per share
196,602,192
192,117,636
Basic earnings per share
Diluted earnings per share
Cents
20.79
20.69
Cents
22.46
22.33
Note 37. Share-based payments
Retention rights
On 24 October 2014, the Long Term Incentive Plan (‘LTIP’) was
Each retention right issued under the LTIP converts into one ordinary
adopted by the Board of Directors and was established to attract,
share of IPH Limited on exercise. No amounts are paid or payable by
motivate and retain key staff. Participation in the LTIP is at the
the recipient of the retention right, and the retention rights carry neither
Board’s discretion and no individual has a contracted right to
rights to dividends nor voting rights. The retention rights are treated as in
participate in the LTIP or to receive any guaranteed benefits.
substance options and accounted for as share-based payments.
A portion of the aggregate retention rights granted will vest at each
twelve month anniversary of the grant date; vesting is conditional
on continued employment.
Set out below are summaries of the rights granted under the plan:
(cid:42)rant (cid:39)ate
(cid:57)esting (cid:39)ate
(cid:40)(cid:91)ercise (cid:83)rice
Balance at the
start of year
(cid:42)ranted
(cid:40)(cid:91)ercised
(cid:40)(cid:91)(cid:83)ired (cid:18)
forfeited (cid:18) other
Balance at the
end of the year
19 Nov 2014
19 Nov 20171
$0.00
47,619
16 Sept 2015
1 July 20172
$0.00
57,519
16 Sept 2015
1 July 2018
$0.00
95,864
19 August 2016
30 June 2019
$0.00
127,930
Total Retention Rights
328,932
-
-
-
-
-
(47,619)
(57,519)
-
-
-
-
(10,652)
(39,454)
-
-
85,212
88,476
(105,138)
(50,106)
173,688
1. Share price at date of exercise $5.71.
2. Share price at date of exercise $4.81.
2018 Annual Report
81
Notes to the Financial Statements
Note 37. Share-based payments Continued >
Performance rights
TSR Rights
Each performance right issued under the LTIP converts into one
TSR rights will be assessed against the relative performance over the
ordinary share of IPH Limited on exercise. No amounts are paid or
relevant performance period of a list of companies included in the
payable by the recipient of the performance right, and the performance
ASX300 Accumulation Index. The relative TSR performance targets
rights carry neither rights to dividends nor voting rights. The
and corresponding percentages of the maximum number of TSR
performance rights are treated as in substance options and accounted
Rights that would vest are as follows:
for as share-based payments.
Performance Rights will vest (and become exercisable) to the
extent that the applicable performance, service or other vesting
conditions specified at the time of the grant are satisfied (collectively
the ‘Performance Criteria’). Performance Criteria may include
» Below the 50th percentile: 0%
» At the 50th percentile: 25%
» Better than the 50th percentile but below the 75th percentile: Pro-
rata straight-line between 25% and 100%
conditions relating to continuous employment or service, the individual
»
Equal to or above the 75th percentile: 100%
performance of the participant and/or the Group’s performance.
Typically, the Performance Criteria must be satisfied within a
predetermined performance period. Both the performance Criteria and
the performance period are set by the Board at its absolute discretion.
The Board has set the following Performance Criteria for the
performance period for the Performance Rights granted to employees:
»
50% of the Performance Rights granted will vest subject to a
relative total shareholder return (‘TSR’) performance hurdle over
the relevant vesting period; and
»
The remaining 50% of the Performance Rights granted will vest
subject to an earnings per share (‘EPS’) performance hurdle over the
relevant vesting period.
For the FY15 award, the TSR performance has exceeded the 75th
percentile and the rights vested in full. For the FY16 award, the
performance was below the 50th percentile and no rights will vest on 8
September 2018.
EPS Rights
The absolute EPS performance target (being the compound annual
EPS growth over the relevant performance period, adjusted to take into
account one-off items, if necessary) and corresponding percentages of
the maximum number of EPS Rights that would vest are as follows:
» Compound EPS growth of less than 7% per annum: 0%
» Compound EPS growth of 7% per annum: 20%
» Compound EPS growth of more than 7% per annum but less than
15% per annum: Pro-rata straight line between 20% and 100%
» Compound EPS growth equal to or above 15% per annum: 100%
(cid:41)(cid:60)(cid:20)(cid:24) (cid:36)(cid:90)ard (cid:11)(cid:49)ov (cid:21)(cid:19)(cid:20)(cid:23)(cid:12)
(cid:41)(cid:60)(cid:20)(cid:25) (cid:36)(cid:90)ard (cid:11)Se(cid:83)t(cid:18)(cid:39)ec (cid:20)(cid:24)(cid:12)
EPS in the financial year ending 30 June 2017 of 17.3 cents, being the forecast
Compound annual growth rate
Minimum EPS Target
pro forma EPS of IPH for the financial year ending 30 June 2015 with a compound
(CAGR) in EPS for the period from 1
annual growth rate of 7% applied to it for the following two financial years.
July 2015 to 30 June 2018 of 7%
EPS in the financial year ending 30 June 2017 of 20.0 cents, being the forecast
Compound annual growth rate
EPS Target
pro forma EPS of IPH for the financial year ending 30 June 2015 with a compound
(CAGR) in EPS for the period from 1
annual growth rate of 15% applied to it for the following two financial years.
July 2016 to 30 June 2018 of 15%
For the FY15 award, the EPS performance has exceeded the EPS Target
and the rights vested in full. For the FY16 award, the EPS performance did
not meet the EPS Target and no rights will vest on 8 September 2018.
82 www.iphltd.com.au
30th June 2018
The performance rights are subject to a vesting period from grant date and are detailed below:
(cid:42)rant (cid:39)ate
(cid:57)esting (cid:39)ate
(cid:40)(cid:91)ercise (cid:83)rice
Balance at the
start of year
(cid:42)ranted
(cid:40)(cid:91)ercised
(cid:40)(cid:91)(cid:83)ired (cid:18)
forfeited (cid:18) other
Balance at the
end of the year
TSR - 19 Nov 141
9 Sept 20172
$0.00
110,889
EPS - 19 Nov 141
9 Sept 20172
$0.00
110,889
TSR - 16 Sept 153
8 Sept 2018
$0.00
125,641
EPS - 16 Sept 153
8 Sept 2018
$0.00
125,641
TSR - 2 Dec 153 8 Sept 2018
EPS - 2 Dec 153
8 Sept 2018
$0.00
$0.00
Total Performance Rights
3,528
3,528
480,116
-
-
-
-
-
-
-
(110,889)
(110,889)
-
-
-
-
-
-
(125,641)
(125,641)
(3,528)
(3,528)
(221,778)
(258,338)
1. These awards have achieved the maximum performance hurdles and vested 100% for both TSR and EPS at the vesting date.
2. Share price at date of exercise $4.65.
3. These awards did not achieve the minimum performance hurdles and will not vest for both TSR and EPS at the vesting date.
-
-
-
-
-
-
-
IPH Limited Employee Incentive Plan
A new incentive plan, the IPH Limited Employee Incentive Plan (the
"Incentive Plan"), was approved at the AGM on 16 November 2016.
This plan replaces the existing Long Term Incentive Plan and Retention
Rights Plan. Each performance right issued under the Incentive
Plan converts into one ordinary share of IPH Limited on exercise. No
and the performance rights carry neither rights to dividends nor voting
rights. The performance rights are treated as in substance options and
accounted for as share-based payments.
The conditions attached to rights issued under the Incentive Plan can be
in the form of a retention requirement, TSR, EPS or other Key Performance
Indicator (KPI) metric for the Group, business unit and individual.
amounts are paid or payable by the recipient of the performance right,
TSR and EPS target and measurement criteria remain the same as per
the EPS and TSR Rights under the previous plan.
2018 Annual Report
83
Notes to the Financial Statements
Note 37. Share-based payments Continued >
Movement in Performance Rights issued under the new Incentive Plan during the financial year were:
Final
(cid:57)esting (cid:39)ate
(cid:40)(cid:91)ercise (cid:83)rice
Balance at the
start of year
(cid:42)ranted
(cid:40)(cid:91)ercised2
(cid:40)(cid:91)(cid:83)ired (cid:18)
forfeited (cid:18) other
Balance at the
end of the year
(cid:42)rant (cid:39)ate
Retention -
23 May 17
Retention -
24 May 17
Retention -
24 May 17
Retention -
7 Jun 17
23 May 20191,3
$0.00
4,770
1 Jan 20201,3
$0.00
20,000
1 May 20201,3
$0.00
21,142
1 June 20201,3
$0.00
21,368
TSR - 23 May 17
1 Sept 2019
EPS - 23 May 17
1 Sept 2019
$0.00
$0.00
EPS - 24 May 17 1 Sept 2020 $0.00
2,235
2,235
7,166
KPI - 26 Jun 17
31 Aug 20173
$0.00
179,743
-
-
-
-
-
-
-
-
(1,789)
(4,000)
(4,228)
(4,274)
-
-
-
-
-
-
-
-
-
-
(88,350)
(91,393)
2,981
16,000
16,914
17,094
2,235
2,235
7,166
-
KPI - Dec 17
and Mar 18
31 Aug 2018
$0.00
Retention - Feb 18 5 Feb 20211
Retention - May 18 9 Apr 20222
$0.00
$0.00
-
-
-
283,794
4,606
57,972
-
-
-
(190,275)
93,519
-
-
4,606
57,972
Total Performance Rights
258,659
346,372
(102,641)
(281,668)
220,722
1. Annual vesting at the following rates: 20% first vesting date, 30% second and 50% final vesting date.
2. Annual vesting of 25% of the award.
3. Share price at date of exercise of the each tranche: $4.56 (31 Aug 17); $5.35 (1 Jan 18); $3.84 (1 May 18); $4.39 (23 May 18); $4.41 (1 Jun 18).
84 www.iphltd.com.au
30th June 2018
Long Term Incentive
Vesting of Rights is as follows:
An executive long term incentive was introduced during FY18. Performance
rights vest subject to achievement of a minimum compound annual growth
rate in EPS over the performance period. The Board will determine a
target for EPS for the performance period. For vesting to occur, EPS for the
performance period must be at least equal to the Minimum EPS Target.
EPS Targets for the 2018 plan are:
» Minimum EPS Target: 7% CAGR in EPS over the three year
performance period ending on 30 June 2020;
»
EPS Target: 15% CAGR in EPS over the three year
performance period ending on 30 June 2020.
»
»
Less than 7% CAGR in EPS over the Performance Period - Nil vesting
Equal to 7% CAGR in EPS over the performance Period - 20% vesting
» Greater than 7% CAGR in EPS up to and including 10% CAGR -
straight line vesting between 20% and 65%
» Greater than 10% CAGR in EPS up to and including 15% CAGR -
straight line vesting between 65% and 100%
» At or above 15% CAGR in EPS over the Performance Period -
100% vesting
(cid:42)rant (cid:39)ate
Final
(cid:57)esting (cid:39)ate
(cid:40)(cid:91)ercise (cid:83)rice
Balance at the
start of year
(cid:42)ranted
(cid:40)(cid:91)ercised
(cid:40)(cid:91)(cid:83)ired (cid:18)
forfeited
Balance at the
end of the year
LTI - Nov 17
‘1 Sept 2020
$0.00
Total LTI Performance Rights
-
-
288,811
288,811
-
-
-
-
288,811
288,811
Fair value of retention and performance rights granted
The weighted average share price during the financial year was $4.49 (2017: $5.25).
The weighted average remaining contractual life of rights outstanding at the end of the financial year was 1.4 years (2017: 0.9 years).
The weighted fair value of the rights granted during the year is $4.33 (2017: $4.80).
Valuation model inputs used to determine the fair value of rights at the grant date, are as follows:
(cid:42)rant (cid:39)ate
(cid:57)esting (cid:39)ate
Share (cid:83)rice at
grant date
(cid:40)(cid:91)ercise (cid:83)rice
(cid:40)(cid:91)(cid:83)ected
volatility
(cid:39)ividend
yield
Ris(cid:78)-free
interest rate
(cid:41)air value
at grant date
Performance rights
TSR - 19 Nov 14
9 Sept 2017
EPS - 19 Nov 14
9 Sept 2017
TSR - 16 Sept 15
8 Sept 2018
EPS - 16 Sept 15
8 Sept 2018
TSR - 2 Dec 15
8 Sept 2018
EPS - 2 Dec 15
8 Sept 2018
Retention rights
19 Nov 2014
19 Nov 2017
17 Sept 2015
1 July 2017
17 Sept 2015
1 July 2018
$2.10
$2.10
$6.12
$6.12
$8.20
$8.20
$2.10
$6.12
$6.12
$0.00
35.00%
6.40%
$0.00
35.00%
6.40%
$0.00
35.00%
3.50%
$0.00
35.00%
3.50%
$0.00
35.00%
3.50%
$0.00
35.00%
3.50%
$0.00
35.00%
6.40%
$0.00
35.00%
3.50%
$0.00
35.00%
3.50%
2.56%
2.56%
2.00%
2.00%
2.00%
2.00%
2.58%
1.93%
1.99%
19 August 20161
30 June 2019
$5.80
$0.00
4.00%
1. Expected volatility and risk free rate not included in this valuation
$1.04
$1.75
$4.45
$5.51
$6.66
$7.40
$1.73
$5.75
$5.55
$5.17
2018 Annual Report
85
Notes to the Financial Statements
Note 37. Share-based payments Continued >
(cid:42)rant (cid:39)ate
(cid:57)esting (cid:39)ate
Share (cid:83)rice at
(cid:40)(cid:91)ercise (cid:83)rice
(cid:40)(cid:91)(cid:83)ected
volatility
(cid:39)ividend
yield
Ris(cid:78)-free
interest rate
(cid:41)air value
at grant date
(cid:44)P(cid:43) (cid:47)imited (cid:40)m(cid:83)loyee (cid:44)ncentive Plan
Retention -
23 May 171,2
Retention -
24 May 171,2
Retention -
24 May 171,2
Retention -
7 Jun 171,2
23 May 2019
$4.81
$0.00
35.00%
5.40%
1.58%
$4.49
1 Jan 2020
$4.86
$0.00
35.00%
5.40%
1.63%
$4.39
1 May 2020
$4.86
$0.00
35.00%
5.40%
1.66%
$4.31
1 June 2020
$4.76
$0.00
35.00%
5.40%
1.65%
$4.31
TSR - 23 May 17
1 Sept 2019
EPS - 23 May 17
1 Sept 2019
EPS - 24 May 17
1 Sept 2020
KPI - 26 Jun 17
31 Aug 2017
KPI - Dec 17
31 Aug 2018
KPI - Mar 18
31 Aug 2018
$4.81
$4.81
$4.86
$4.83
$5.48
$3.55
$0.00
35.00%
5.40%
$0.00
35.00%
5.40%
$0.00
35.00%
5.40%
$0.00
35.00%
5.40%
$0.00
32.00%
5.00%
$0.00
37.00%
6.30%
1.65%
1.65%
1.77%
1.57%
1.66%
1.76%
$1.21
$4.25
$4.07
$4.78
$5.28
$3.45
Retention -
Feb 181,2,4
Retention -
May 182,3,4
5 Feb 2021
$3.74
$0.00
6.30%
2.00%
$3.25
9 April 2022
$3.86
$0.00
6.30%
2.08%
$3.32
1. Annual vesting at the following rates: 20% first vesting date, 30% second and 50% final vesting date.
2. Risk free interest rate and fair value at grant date are at the weighted average of the rights issued.
3. Annual vesting of 25% of the award.
4. Expected volatility not included in this valuation.
(cid:40)(cid:91)ecutive - (cid:47)(cid:55)(cid:44)
LTI - 2018
1 Sept 2020
$5.64
$0.00
32.00%
5.00%
1.89%
$5.64
Amounts recognised in the Financial Statements
During the financial year ended 30 June 2018, an expense of $676,000 ww as recognised in the Statement of
Profit or Loss in relation to equity settled share based payment awards (June 2017: $1,325,000).
86 www.iphltd.com.au
30th June 2018
Note 38. Deed of cross guarantee
The members of the Group party to the deed of cross guarantee are detailed in note 33. The consolidated statement of profit or loss and other
comprehensive income and consolidated statement of financial position of the entities party to the deed of cross guarantee are:
30 June 2018
30 June 2017
Revenue
Other income
(cid:40)(cid:91)(cid:83)enses
Employee benefits expense
Depreciation and amortisation expense
Rental expenses
Business acquisition costs
Agent fee expenses
Insurance expenses
Travel expenses
Other expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year
Other com(cid:83)rehensive income
Items that may be reclassified subsequently to profit or loss
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit for the year is attributable to:
Owners of IPH Limited
Profit after income tax expense for the year
(cid:55)otal com(cid:83)rehensive income for the year is attributable to:
Owners of IPH Limited
Profit after income tax expense for the year
$’000
113,659
36,648
(35,816)
(11,386)
(4,536)
(1,078)
(33,923)
(610)
(1,205)
(8,869)
(1,535)
51,349
(7,667)
43,682
-
43,682
43,682
43,682
43,682
43,682
$’000
116,204
24,637
(33,592)
(8,515)
(3,388)
(1,583)
(35,064)
(513)
(986)
(7,911)
(1,224)
48,066
(9,985)
38,081
-
38,081
38,080
38,080
38,080
38,080
2018 Annual Report
87
Notes to the Financial Statements
Note 38. Deed of cross guarantee Continued >
(cid:38)urrent assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
(cid:49)on-current assets
Property, plant and equipment
Intangibles
Investments in subsidiaries
Deferred tax
Total non-current assets
Total assets
(cid:38)urrent liabilities
Trade and other payables
Borrowings
Income tax
Provisions
Other liabilities
Deferred revenue
Total current liabilities
(cid:49)on-current liabilities
Borrowings
Provisions
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
(cid:40)(cid:84)uity
Issued capital
Reserves
Retained profits
Total equity
88 www.iphltd.com.au
30 June 2018
30 June 2017
$’000
$’000
11,088
37,422
3,714
52,224
3,568
184,104
120,754
5,563
313,989
366,213
8,202
5,000
1,492
6,726
-
872
22,292
35,102
4,670
20,958
60,730
83,022
283,191
262,748
5,026
15,417
283,191
14,008
22,861
2,785
39,654
2,693
186,566
48,064
4,581
241,904
281,558
7,611
-
2,788
6,070
1,370
868
18,707
-
1,605
17,463
19,068
37,775
243,783
233,582
2,669
7,532
243,783
Directors’ Declaration
In the Directors
,
opinion:
»
the attached financial statements and notes comply with
At the date of this declaration, the company is within the class
the Corporations Act 2001, the Accounting Standards,
of companies affected by ASIC Corporations (Wholly-owned
the Corporations Regulations 2001 and other mandatory
Companies) Instrument 2016/785. The nature of the deed of
professional reporting requirements;
»
the attached financial statements and notes comply with
International Financial Reporting Standards as issued by the
cross guarantee is such that each company which is party to the
deed guarantees to each creditor payment in full of any debt in
accordance with the deed of cross guarantee.
International Accounting Standards Board as described in note
In the directors’ opinion, there are reasonable grounds to
2 to the financial statements;
»
the attached financial statements and notes give a true and fair
view of the Group’s financial position as at 30 June 2018 and of
its performance for the financial year ended on that date; and
»
there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable.
believe that the company and the companies to which the
ASIC Corporations Instrument applies, as detailed in note 38
to the financial statements, will as a group, be able to meet any
obligations or liabilities to which they are, or may become, subject
by virtue of the deed of cross guarantee.
The Directors have been given the declarations required by section
295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant
to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
Dr. Andrew Blattman
Managing Director
16 August 2018, Sydney
2018 Annual Report
89
90 www.iphltd.com.au
90 www.iphltd.com.au
30th June 2018
Independent
Auditor’s
Report
2018 Annual Report
2018 Annual Report
91
91
Independent Auditor’s Report
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
Tel: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the Members of
IPH Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of IPH Limited (the “Company”) and its subsidiaries (the “Group”)
which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies and other explanatory information, and
the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our
audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
92 www.iphltd.com.au
IPH Limited
Key Audit Matter
Accounting for Acquisitions
As disclosed in Note 32 ‘Business combinations’,
during the financial year the Group acquired AJ
Park, a New Zealand intellectual property firm.
Accounting for the transaction is a complex and
judgemental exercise, requiring management to
determine:
o
o
the fair value of the total purchase
consideration; and
the identifiable intangible assets such as
customer contracts and relationships, to be
recognised separately from goodwill.
Valuation and disclosure of Practice Insight
As disclosed in Note 14 ‘Non Current assets -
intangibles’ and Note 34 ‘Events after the
reporting period’, subsequent to 30 June 2018
the Group have entered into an agreement for
the sale of certain intangible and tangible assets
(and associated liabilities) included in the
Practice Insight cash generating unit (“CGU”).
As a result management have utilised the agreed
sale consideration for the purposes of
determining the recoverable amount of this CGU
(being fair value less cost to dispose) at 30 June
2018.
Management have also considered the
requirements of AASB 5 ‘Non-current Assets
Held for Sale and Discontinued Operations’
(“AASB 5”) in determining whether the assets
and liabilities associated with the Practice Insight
CGU should be disclosed as ‘held for sale’ at 30
June 2018 and have determined that this
classification was met subsequent to the year
end.
How the scope of our audit responded to the Key
Audit Matter
Our procedures performed in conjunction with our
valuation specialists, included, but were not limited to:
o Obtaining a detailed understanding of the terms and
conditions of the purchase contract to enable us to
assess management’s accounting treatment.
o
o
o
Evaluating the competence, capability and
objectivity of management’s external valuation
expert and performing a detailed review of their
report to understand the scope of their engagement
and any limitations in the report.
Evaluating the methodology used by management
to ascertain the fair value of the purchase
consideration at acquisition date.
Evaluating the appropriateness of the values
attributed to the acquired intangible assets
assumed as part of the acquisition:
Assessing the identification and valuation of
customer relationships and the
appropriateness of the amortisation rate;
Performing procedures over the intangible
asset valuations, specifically:
analysing cash flow assumptions
including revenue growth rates, gross
margin and contributory asset charges;
assessing the discount rate used; and
challenging the reasonableness of the
valuation outputs.
o Assessing the appropriateness of the disclosures in
Note 32 to the financial statements.
Our procedures included, but were not limited to:
o Obtaining an understanding of the key controls
associated with management’s assessment of
recoverable amount for the Practice Insight CGU.
o Reviewing the signed agreement and relevant terms
of the sale.
o Reviewing management’s determination of the fair
value less costs to dispose for the Practice Insight
CGU and the appropriateness of this in light of the
terms of the sale.
o Reviewing supporting documentation including
minutes of Board meetings and signed Heads of
Agreement to assess management’s conclusion that
the ‘held for sale’ criteria in AASB 5 were met
subsequent to 30 June 2018.
o
Evaluating the appropriateness of the disclosures in
Note 14 and Note 34 to the financial statements.
2018 Annual Report
93
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF IPH LIMITED
Independent Auditor’s Report
Other Information
The directors are responsible for the other information. The other information comprises the Directors’
Report, which we obtained prior to the date of this auditor’s report, and also includes the following
information which will be included in the annual report (but does not include the financial report and our
auditor’s report thereon): the Chairman’s Letter, Chief Executive Officer’s Report, Board of Directors, and
Shareholders Information, which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not and will not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the
financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
When we read the Chairman’s Letter, Chief Executive Officer’s Report, Board of Directors and Shareholders
Information, if we conclude that there is a material misstatement therein, we are required to communicate
the matter to the directors and use our professional judgement to determine the appropriate action.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
94 www.iphltd.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF IPH LIMITED
IPH Limited
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 32 of the Directors’ Report for the year
ended 30 June 2018.
In our opinion, the Remuneration Report of IPH Limited for the year ended 30 June 2018, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
DELOITTE TOUCHE TOHMATSU
H Fortescue
Partner
Chartered Accountants
Sydney, 16 August 2018
2018 Annual Report
95
Shareholder
Information
96 www.iphltd.com.au
96 www.iphltd.com.au
IPH Limited
The shareholder information set out below was applicable as at 31 August 2018.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Securities
(cid:49)umber of shareholders
%
157,018,427
15,861,230
9,463,326
12,998,293
2,000,290
84
79.57
760
8.04
1,299
4.80
4,886
6.59
3,745
1.01
Unmarketable Parcels
-
0
0.00
197,341,566
10,774
100.00
2018 Annual Report
97
Shareholder Information
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ran(cid:78)
(cid:49)ame
(cid:36)(cid:18)(cid:38) designation
(cid:22)(cid:20) (cid:36)ug (cid:21)(cid:19)(cid:20)(cid:27)
%IC
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
UBS NOMINEES PTY LTD
66,514,669
33.71
28,527,188
14.46
12,577,285
8,017,620
BNP PARIBAS NOMINEES PTY LTD
6,340,826
NATIONAL NOMINEES LIMITED
SETDOR PTY LIMITED
TALABAH PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
WOMBEE PTY LTD
AMP LIFE LIMITED
O'BRIENTRUS PTY LIMITED
BNP PARIBAS NOMS PTY LTD
AFTRUS PTY LIMITED
KIZILE PTY LTD
5,037,276
2,462,963
2,067,175
1,526,204
1,481,654
1,129,850
1,014,814
894,218
818,166
740,741
CURNICK INVESTMENTS PTY LTD
703,704
CS THIRD NOMINEES PTY LIMITED
703,016
CURNTRUS PTY LIMITED
TOH BOON YAN CORAL
ROSSARD PTY LIMITED
641,976
589,809
561,004
6.37
4.06
3.21
2.55
1.25
1.05
0.77
0.75
0.57
0.51
0.45
0.41
0.38
0.36
0.36
0.33
0.30
0.28
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
Balance of register
Grand total
The above table includes shareholders that may hold shares for the benefit of third parties.
142,350,158
72.13
54,991,408
27.87
197,341,566
100.00
98 www.iphltd.com.au
Geography distribution
AUSTRALIA
BAHRAIN
CHINA
CYPRUS
HONG KONG
INDONESIA
KUWAIT
MALAYSIA
MICRONESIA
NEW ZEALAND
PAPUA NEW GUINEA
QATAR
SINGAPORE
SWITZERLAND
THAILAND
UNITED KINGDOM
UNITED STATES
VANUATU
Total
1. May not add up to 100 due to rounding.
IPH Limited
Securities
%
(cid:49)o(cid:17) of holders
191,438,004
97.01
10,614
(cid:22)(cid:20) (cid:36)ug (cid:21)(cid:19)(cid:20)(cid:27)
%
98.51
760
10,652
3,550
749,393
1,193
460
4,050
550
4,857,232
2,380
1,130
183,767
0
7,425
67,238
7,660
6,122
0.00
0.01
0.00
0.38
0.00
0.00
0.00
0.00
2.46
0.00
0.00
0.09
0.00
0.00
0.03
0.00
0.00
1
1
1
6
1
1
3
1
115
1
1
15
0
2
5
4
2
0.01
0.01
0.01
0.06
0.01
0.01
0.03
0.01
1.07
0.01
0.01
0.14
0.00
0.02
0.05
0.04
0.02
197,341,566
100.001
10,774
100.00
2018 Annual Report
99
Shareholder Information
Unquoted equity securities
Performance Rights over ordinary shares granted under the Long Term Incentive Plan
Retention Rights granted under the Long Term Incentive Plan
Number on Issue
Number of holders
509,533
173,688
43
22
Substantial holders
The names of substantial shareholders of the Company’s ordinary shares as at 31 August 2018 (holding no less than 5%)
who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:
Holder
Number of securities
Perpetual Limited and its related bodies corporate
Marathon Asset Management LLP
Commonwealth Bank of Australia and its related bodies corporate
Macquarie Group Limited and its controlled bodies corporate
26,350,054
12,235,241
10,643,180
10,040,061
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by
proxy shall have one vote and upon a poll each share shall have one vote.
There are no other classes of equity securities.
Restricted securities
There are no restricted securities.
Securities Subject to Voluntary Escrow
Class
Ordinary
Ordinary
100 www.iphltd.com.au
Expiry Date
Number of Shares
31/10/2018
31/10/2019
737,261
4,621,547
IPH Limited
Annual General Meeting (AGM)
The 2018 annual general meeting (AGM) of IPH Limited will be held on
Friday 23 November 2018 at 10:30am at the offices of EY, 200 George
Street, Sydney NSW 2000.
Voting at any meeting of shareholder is by a show of hands unless
a poll is demanded in the manner described in the Company’s
Constitution. If there are two or more joint holders of a share and
more than one of them is present at a general meeting, in person or
by proxy, attorney or representative, and tenders a vote in respect of
IPH Limited is listed on the ASX and its ordinary shares are quoted under
the share, the Company will count only the vote cast by, or on behalf
the ASX code ‘IPH’.
Annual Report
Amendments to the Corporations Act 2001 have changed the
obligations of companies regarding the provision of annual reports
to shareholders. The default option for receiving annual reports has
of, the shareholder by the joint holder whose name appears first in the
Company’s register of shareholder.
The quorum required for a meeting of members is two shareholders.
If the votes are equal on a proposed resolution, the matter is decided
in the negative.
changed from a printed copy to an electronic copy via IPH’s website at
Shareholder questions
www.iphltd.com.au.
Online voting
Shareholders can lodge voting instructions electronically either
as a direct vote or by appointing a proxy for the 2018 AGM at
www.iphltd.com.au. The information required to log on and use
online voting is shown on the voting form distributed to shareholders
with the Notice of Annual General meeting.
Voting Rights
At a general meeting, a shareholder present in person or by proxy,
attorney or representative has one vote on a show of hands and on a
poll has one vote for each fully paid share held.
Shareholders can submit a written question to the Company or the
Company’s auditor in regard to the AGM or any of the proposed
resolutions to be considered at the AGM, using the form supplied with
the Notice of AGM distributed to shareholders.
Information about IPH
Information about IPH Limited including company announcements,
presentations and reports can be accessed at www.iphltd.com.au.
2018 Annual Report
101
Level 24
Tower 2, Darling Park
201 Sussex Street,
Sydney, NSW 2000
Australia
Phone: +61 2 9393 0301
Email: info@iphltd.com.au
Cover image:
Bridge of Future Science & Technology Park
Beijing, China
www.iphltd.com.au
30th June 2018
IPH LImited | ABN 49 169 015 838
2018 Annual Report
103
www.iphltd.com.au