IPH Limited
ABN 49 169 015 838
Appendix 4E – Preliminary Final Report
Full year ended 30 June 2023 (“FY23”)
Reporting periods
Current reporting period:
Previous corresponding period:
Financial year ended 30 June 2023
Financial year ended 30 June 2022
Results for announcement to the market
Change
FY23
$'000
FY22
$'000
Revenue from ordinary activities
Up
29.0%
to
482,865
374,330
Profit from ordinary activities after tax
attributable to members
Profit for the period attributable to
members
Up
22.8%
Up
22.8%
to
to
64,541
52,564
64,541
52,564
Dividends
Current period
Final dividend
Interim dividend
Previous period
Final dividend
Interim dividend
Amount
per Share
Franked
amount
per Share
17.5c
15.5c
16.0c
14.5c
6.125c
6.2c
8.0c
5.8c
Final Dividend sourced from Conduit Foreign Income is 11.375c
Record date: Wednesday 23 August 2023
Payment date: Friday 15 September 2023
Ex-dividend date: Tuesday 22 August 2023
The Dividend Reinvestment Plan will be in operation for the FY23 full year dividend
Net tangible assets
FY23
FY22
Net tangible asset backing per share
($0.96)
($0.01)
A large proportion of the Company’s assets are intangible in nature, relating to goodwill and
identifiable intangible assets acquired through business combinations. These assets are excluded
from the calculation of net tangible assets per share. Including intangible assets, net assets per share
are $2.62 (FY22: $1.96)
Audit review status
Details of audit/review dispute or qualification (if any):
The accounts have been audited with no qualification.
Attachments
Details of attachments (if any):
The remainder of the information requiring disclosure to comply with listing rule 4.3A is contained in
the accompanying FY23 Financial Report.
Signed
______________________________
John Wadley
Chief Financial Officer
Sydney
Date: 17 August 2023
iphltd.com.au
2023
Annual Report
Year ended
30 June 2023
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IPH Limited
Level 22
Tower 2, Darling Park
201 Sussex Street,
Sydney, NSW 2000
Australia
P +61 2 9393 0301
E info@iphltd.com.au
Contents:
Annual Report
About IPH
FY23 Year in Review
Our Board & Leadership
Corporate Directory
Sustainability Report
Directors’ Report
Financial Statements
Independent Auditor’s Report
Shareholder Information
2
16
25
31
34
71
103
155
162
iphltd.com.au
2023 Annual Report
1
About IPH
About IPH
IPH is a leading international intellectual property
(IP) services group and was the first IP services
group to list on the Australian Securities Exchange
(ASX) in 2014.
Through the IPH group network, we provide
services for the protection, commercialisation,
enforcement and management of all forms of IP
including patents, trade marks and designs. We
operate in ten IP jurisdictions, servicing clients in
more than 25 countries globally.
IPH’s vision is to be the leading IP services group in
secondary IP markets and adjacent areas of IP. We
service a broad range of clients, including some
of the world’s leading companies, multi-nationals,
universities, public sector research organisations,
foreign associates and other corporate and
individual clients.
Central to everything we do is a set of core values.
These values underpin IPH’s success and assist
us to deliver tailored commercial solutions to
our clients, empower our people, and create and
maintain value for our stakeholders:
Core values
Excellence in
service delivery
to our clients
Innovation in
value creation
Integrity in
business practices
Efficiency and
effectiveness in
our operations
Empowerment
and engagement
of our people
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2023 Annual Report
2
No 1
Patent group
in Australia, Canada,
New Zealand and
Singapore2
Trade mark group
in Australia and New Zealand3
6 brands
10
IP jurisdictions
1,300+
Employees1
31k+
Annual patent filings4
12k+
Annual trade mark filings4
1) Approximate employee numbers across the Group.
2) Management estimated market share based on local IP office filing data: Australia (FY23 as at 16/7/23), Singapore (CY23 YTD April as at 20/7/23), New Zealand
(FY23 as at 6/7/23), Canada (CY21 and CY22 YTD May as at 27/6/23).
3) Management estimated market share based on local IP office filing data: Australia (FY23 as at 17/7/23, share of top 50 agents), New Zealand (FY23 as at 21/7/23).
4) Cases filed or instructed to be filed worldwide based on IPH internal data for FY23, including Smart & Biggar.
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2023 Annual Report
3
The IPH group network
As at 30 June 2023, IPH operated six brands with over 1,300
employees. The IPH group network comprises leading IP member
firms AJ Park, Griffith Hack, Pizzeys, Smart & Biggar, Spruson &
Ferguson and online IP services provider Applied Marks. IPH member
firms provide services for the protection, commercialisation,
enforcement and management of all forms of IP.
We work in some 25 offices globally, including in Australia, Canada,
China, Hong Kong SAR, Indonesia, Malaysia, New Zealand, Philippines,
Singapore and Thailand.
AJ Park, established in 1891, is a premier IP firm operating in Australia,
New Zealand and the Pacific Islands. With offices in Auckland
and Wellington, AJ Park acts for a wide variety of clients, from
international agents to government institutions, multinationals
and major listed companies. As a full-service IP firm, AJ Park helps
these clients identify, develop, protect, commercialise, manage, and
enforce their IP rights in Australia, New Zealand and throughout the
world. On 16 October 2020, AJ Park successfully acquired Baldwins
Intellectual Property, giving the business greater depth.
Year formed
1891
Locations
Auckland
Wellington
27
Principals1
1
Principal
promotion
6
Additional fee
earner promotions
Recent recognition and highlights
Firm of the Year (New Zealand) | Managing IP Asia Pacific 2023
Tier 1: Firms (New Zealand) | Chambers and Partners Asia Pacific 2023
Tier 1: Trade Mark Prosecution and Trade Mark Disputes (New Zealand) |
Managing IP 2023
Gold band: Firms (New Zealand) | World Trademark Review 1000 2023
Tier 1: Firms (New Zealand) | The Legal 500 2023
New Zealand Trademarks Firm of the Year | Asia IP Awards 2022
Highly Recommended: Patent Prosecution | IAM Patent 1000 2022
1) as at 1 July 2023
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Applied Marks is a leading Australian online automated trade mark
application platform, also providing automated registration and
intelligence services relating to companies and domain names,
both directly to customers and through channel partners. Founded
in 2008, Applied Marks is a leading filer in the Australian trade mark
market, with a focus on the retail market.
Recent recognition and highlights
Increased market share from 6.1% to 7.0% of trade mark filings
from the top 50 agents in Australia in FY23
Two new adjacent registration channel partners
Griffith Hack, established in 1904, is one of Australia’s leading
providers of intellectual property services with offices in
Melbourne, Sydney, Brisbane and Perth. The firm is one of
Australia’s largest filers of patents and trade marks and provides
a comprehensive range of domestic and international services
relating to the protection, management, commercialisation
and enforcement of IP rights. In July 2020, the business of
Watermark was integrated into Griffith Hack, strengthening the
combined businesses’ service offering.
21
Principals1
2
Principal
promotions
4
Additional fee
earner promotions
Year formed
2008
Location
Australia
Year formed
1904
Location
Brisbane
Melbourne
Perth
Sydney
Recent recognition and highlights
Tier 1: Trade Marks, Patent & Trade Mark Firms (Australia) | Managing IP 2023
Tier 1: Patent Prosecution (Australia) | Managing IP 2023
Gold: Trade Mark Prosecution & Strategy (Australia) |
World Trademark Review 1000 2023
Gold: Patent prosecution (Australia) | IAM Patent 1000 2023
Tier 2: Intellectual Property (Australia) | The Legal 500 2023
1) as at 1 July 2023
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Pizzeys Patent and Trade Mark Attorneys was established in 1981 and
has offices in Brisbane, Canberra and Singapore. Pizzeys’ business
is predominantly focused on in-bound work into Australia and
Singapore from overseas IP associates and direct corporate clients.
8
Principals1
1
Fee earner
promotion
Year formed
1981
Locations
Brisbane
Canberra
Singapore
Recent recognition and highlights
Tier 3: Patent Prosecution (Australia) | Managing IP 2023
Tier 3: Patent Prosecution (Australia) | Asia IP Patent Rankings 2022
Bronze Firm: Prosecution (Australia) | IAM Patent 1000 2023
1) as at 1 July 2023
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Smart & Biggar is widely recognised as Canada’s leading firm for IP,
providing high quality IP advisory services. With over 100 lawyers,
patent and trademark agents, across five offices, the firm provides
expert counsel and guidance to safeguard clients’ competitive
position and help them secure and enforce strategic IP rights that
create more value for their businesses.
44
Principals1
1
Principal
promotion
2
Additional fee
earner promotions
Year formed
1890
Locations
Calgary
Montreal
Ottawa
Toronto
Vancouver
Recent recognition and highlights
Band-One: IP, IP Litigation | Chambers Global 2023
Top-Tier firm for IP (Canada) | The Legal 500 2023
Gold: Trademarks & Patents (Canada) | World Trademark Review 1000
and IAM Patent 1000 2023
Tier One: Trademarks & Patents (Canada) | Managing IP 2023
IP Litigation Firm of the Year | Benchmark Litigation 2023
Patent Prosecution Firm of the Year (Canada) | Managing IP 2023
IP Boutique Firm of the Year | Lexpert Canadian Law Awards 2023
1) as at 1 July 2023
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Spruson & Ferguson Asia is one of the leading IP firms operating
throughout the Asia-Pacific region, offering a variety of services
for the protection, commercialisation, enforcement and
management of IP.
Year formed
1997
Locations
Beijing
Bangkok
Kuala Lumpur
Hong Kong
Manila
Jakarta
Singapore
16
Principals1
2
Principal
promotions
3
Additional
promotions
Recent recognition and highlights
Asia-Pacific - IP Boutique Firm of the Year | Managing IP Asia Pacific 2023
Silver: Prosecution and Strategy (Singapore) | World Trademark Review 1000 2023
Bronze: Prosecution and Strategy (Indonesia) | World Trademark Review 1000 2023
Gold: Patent Prosecution (Singapore) | IAM Patent 1000 2022
Top Tier: Patent Prosecution (Singapore) | Managing IP 2022
1) as at 1 July 2023
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2023 Annual Report
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Spruson & Ferguson Australia established in 1887, is one of
Australia’s leading IP firms, offering a variety of services for the
protection, commercialisation, enforcement and management of IP.
Year formed
1887
Locations
Brisbane
Melbourne
Sydney
38
Principals1
1
Principal
promotion
4
Additional fee
earner promotions
Recent recognition and highlights
Asia-Pacific - IP Boutique Firm of the Year | Managing IP Asia Pacific 2023
Winner: Patent Disputes - Patent & Trademark Attorney Firms (Australia) |
Managing IP Asia Pacific 2023
Gold: Patent prosecution (Australia) | IAM Patent 1000 2023
Top Tier: Trade Mark Prosecution (Australia) | Managing IP 2023
Gold: Prosecution and strategy (Australia) | World Trademark Review 1000 2023
Gold: Patent prosecution (Australia) | IAM Patent 1000 2022
1) as at 1 July 2023
The group’s acquisition history
Since listing on the ASX in November 2014, IPH has
grown through a series of strategic acquisitions
and integrations to become a leading international
IP services group, with a market capitalisation of
approximately $1.8bn.
In FY23 we continued to grow and consolidate the
IPH group network.
In October 2022, we officially welcomed Canada’s
pre-eminent IP agency firm, Smart & Biggar, to our
group of leading IP member firms. This addition to
the IPH group extends our international network
beyond the Asia-Pacific region into the additional
significant secondary market of Canada. It also
provides a platform for IPH to participate in further
growth opportunities.
In May 2023, Spruson & Ferguson Asia announced
the opening of its newest office in Manila,
Philippines. This is Spruson & Ferguson’s 7th
office in Asia and its 10th office across the Asia-
Pacific region. It is now 25 years since the firm
first commenced operations in Singapore, with
the latest office opening in Manila representing
continued growth in the Asia-Pacific region.
The addition of Smart & Biggar to the IPH group and
the newly opened Spruson & Ferguson Manila office
- a total of six new offices (five in Canada and one in
Asia) - represent the expansion of the IPH network to
25 offices internationally.
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2023 Annual Report
9
IPH timeline
2023
2022
2021
May 2023
Announced the establishment of Spruson & Ferguson Philippines
Oct 2022
IPH acquires Canada’s pre-eminent IP agency firm, Smart & Biggar
Jul 2022
Divestment of Practice Insight Pty Ltd, trading as WiseTime to Anaqua Inc.
Dec 2021
Integration of IPH member firms Shelston IP and Spruson & Ferguson Australia completed
Jul 2021
IPH expands its digital and trade mark capability with the acquisition of Applied Marks
2020
Oct 2020
IPH firm AJ Park acquires New Zealand IP firm Baldwins IP
Jul 2020
Integration of IPH member firms Watermark and Griffith Hack completed
May 2020
Divestment of Glasshouse Advisory R&D tax and EMDG practices to Grant Thornton
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2023 Annual Report
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IPH timeline
2019
Aug 2019
IPH acquires Xenith IP Group, including Griffith Hack and Shelston IP
2018
2017
Jul 2018
Merger of Fisher Adams Kelly Callinans and Cullens with Spruson & Ferguson
Oct 2017
IPH acquires AJ Park in New Zealand
Jun 2017
Opening of Spruson & Ferguson Melbourne
Oct 2016
IPH acquires Ella Cheong Hong Kong and Beijing
2016
Jun 2016
IPH acquires Australian IP firm Cullens
May 2016
Opening of Spruson & Ferguson Thailand
Mar 2016
Opening of Spruson & Ferguson Indonesia
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2023 Annual Report
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IPH timeline
2015
Nov 2015
IPH firm Fisher Adams Kelly acquires the business of Australian IP firm Callinans
Sep 2015
IPH acquires Australian IP firm Pizzeys
May 2015
IPH acquires Australian IP firm Fisher Adams Kelly
Apr 2015
IPH acquires IP data analysis & software applications businesses
Practice Insight and WiseTime
2014
Nov 2014
IPH becomes the first IP firm to list on the Australian Securities Exchange,
with Spruson & Ferguson as the founding business
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2023 Annual Report
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The IPH story
IPH was formed in 2014 with the vision of being the
leading IP services group in secondary IP markets.
We are now the number one patent group in
Australia, Canada, New Zealand and Singapore and
the number one trade marks group in Australia and
New Zealand.
Our strategy, which allows us to deliver on our
vision, is focused on organic growth, investing in
new international and domestic businesses, and
consolidating these acquisitions. Core to this
strategy has been our success in acquiring and
integrating firms that share our values, employ
highly skilled professionals and that are leaders in
the markets they serve.
Strategic direction
Organic
growth
Consolidate
acquisitions
Growth
step-outs
Enablers
Robust client
management
programs focused
on delivering the
highest levels of
client service
Targeted service
expansion across
secondary IP
markets
Focus on our
people – attract,
motivate and retain
Expand service
offering to
international
companies
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2023 Annual Report
13
The IPH brand
At IPH, we use the combined power of our group
network to build the capabilities of our people and
our member firms to create benefit and value for all
of our stakeholders. We call it the network effect.
IPH’s commitment to continuous improvement means
that we are continually looking to shape new ways of
working in IP services. The scale of our group allows
IPH to invest in technology, tools and resources to
enhance our service offering and provide our clients
and our people with smarter ways of working.
As the network evolves, we will continue to invest in
building the capabilities of member firms and their
people to enhance performance and open up new
opportunities for growth.
The Network Effect
Smarter working
IPH is at the forefront
of the future of work
and is continuously
finding smarter
ways to operate its
member firms.
Combined power
IPH brings together a
portfolio of member
firms supported by
leading infrastructure
that makes accessing
international markets
more streamlined
for clients.
Enabling growth
IPH enables its people
and its member
firms to build greater
capability and enhance
performance.
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2023 Annual Report
14
Spruson & Ferguson –
25 years in Asia
In FY23, Spruson & Ferguson celebrated the
25-year anniversary since the firm’s Singapore
office opened. To mark this milestone, Spruson
& Ferguson combined its experience, insights,
industry research and data to report on notable
trends and influences on the future of IP in the
region in its 25 years in Asia report.
Back in 1997, Spruson & Ferguson’s successful Australia-
based operation identified an opportunity to establish
a footprint in Asia, recognising the importance of
establishing a physical presence to demonstrate
commitment to the region. The practice has undergone
many evolutions over time, including partnerships and
mergers with local firms, as the firm built up its practice
and expertise to respond to changing market conditions.
Over the next five years, the firm will look to expand its
geographic footprint and grow expertise in the regions
with the most impact. In the immediate term, Spruson
& Ferguson has expanded its network to the Philippines,
with a new office in Manila announced in May 2023. The
Manila office handles Philippines patent applications and
trade marks, and provides support for the wider region as a
strategic growth opportunity.
Regardless of the changes over the past 25 years in Asia
and the past 135 years since Spruson & Ferguson was first
established, the proven formula still works – a commitment
to providing top notch service and expertise to clients,
investing in people and operations, and remaining
responsive and at the forefront of industry best practice.
“As a business, Spruson & Ferguson has
always understood the value of having a local
presence in supporting the development of
strong relationships and partnerships. The
investment we have made in establishing a
local presence and expertise in what is now
a leading growth region has been a critical
part of our success story as a firm.”
Kristian Robinson
Managing Director
Spruson & Ferguson Asia
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2023 Annual Report
15
FY23
Year in Review
Chairman’s report
IPH delivered increased profitability and enhanced
returns to shareholders in FY23, which included the
contribution of our Canadian IP business, Smart &
Biggar, which the Group acquired during the year.
FY23 Results
IPH reported a Statutory Net Profit After Tax (NPAT)
of $64.5 million for FY23 compared to $52.6
million for the prior year. Diluted Earnings Per Share
increased by 19% to 28.4 cents per share.
On an Underlying basis, the Company reported a
significant increase in earnings with Underlying
NPAT increasing by 20% to $99.0 million and
Underlying EBITDA increasing 28% to $170.0 million.
Group Underlying results in FY23 were assisted
by the inclusion of earnings from Smart & Biggar
in Canada which was acquired with effect from
6 October 2022 and from a foreign exchange
currency benefit.
The difference between the Group’s Statutory
and Underlying EBITDA in FY23 of $11.0 million
relates to changes in deferred consideration, costs
associated with acquisitions, costs associated with
managing the cyber security incident, restructuring
expenses and IT SaaS implementation costs.
The Directors declared a final dividend for FY23 of
17.5 cents per share, 35% franked, bringing the full
year dividend to 33.0 cents per share, compared to
30.5 cents per share for the prior year.
The full year dividend is in line with the Board’s
dividend policy to pay 80 to 90% of cash NPAT
as dividends.
Further detail on IPH’s financial results is contained
within the CEO’s Report and Operating and
Financial Review in the Directors’ Report.
Update on Strategy
The IPH Group strategy has been consistent since
our listing in 2014 which supports our vision to
be the leading IP services group in secondary IP
markets and adjacent areas of IP.
The Group has made a number of business
acquisitions in support of that strategy over the
past nine years.
As detailed in my report last year, IPH delivered
a significant step in the implementation of this
strategy with the acquisition of Canada’s leading IP
agency firm, Smart & Biggar in October 2022.
Smart & Biggar’s financial performance to 30 June
2023 has marginally exceeded our expectations
at the time of acquisition and also established a
platform for IPH to participate in further growth
and industry consolidation opportunities in the
Canadian market.
I look forward to keeping shareholders further
updated in respect of this strategy.
Cyber Incident
On 13 March 2023, the Company detected that a
portion of our IT environment had been subject to
unauthorised access.
Upon becoming aware of this incident, we
immediately enacted our cyber response plan
and implemented our business continuity plan to
resolve the cyber incident.
A forensic investigation identified that a limited
set of data was downloaded by an unauthorised
third-party during the incident. The downloaded
dataset originated from the Spruson & Ferguson
Australia business and primarily contained data
relating to a small number of clients of Spruson &
Ferguson Lawyers and certain historical financial
and corporate information.
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2023 Annual Report
17
IPH conducted a comprehensive post incident review
into the incident and has identified further learnings
and opportunities which will be incorporated into
strengthening our cyber security measures and
ensuring the strengthening of controls.
IPH has also completed the forensic investigation and
the review of regulatory requirements associated with
the issue. We have not experienced any known loss of
client relationships as a result of this incident.
While this was an unfortunate incident, the Board was
pleased with the rapid and comprehensive response
from our executive team in managing this issue.
Further details regarding this incident are detailed in
this Annual Report.
Sustainability
IPH remains committed to sustainability and we
continue to work closely with our stakeholders as
part of our commitment to drive positive change
and sustainable outcomes.
In FY23, IPH continued to work on refreshing our
sustainability strategy which also included seeking
the views of internal and external stakeholders to
identify priority material issues for the IPH group.
We also engaged external advisors to assist us in
our Greenhouse Gas Emissions measurement and
reporting which now comprises direct and indirect
emissions sources (Scope 1, 2, 3) of our international
operations, including our member firms. This GHG
accounting methodology aligns to the International
Greenhouse Gas Protocol, which is also the
framework that underpins carbon accounting under
the ISSB, Climate Reporting Standard (IFRS S2).
During the year we established a Reconciliation
Working Group with representatives from our
Australian member firms. The Working Group
researched with our clients and a range of external
providers how we could meaningfully contribute
towards reconciliation.
We are currently engaging with Reconciliation
Australia on our draft Reconciliation Action Plan, to
be released later in FY24.
We have also announced a partnership in FY24
with DeadlyScience, a not for profit organisation
with a vision to create STEM equity for First Nations
learners. Working with primary and high schools in
regional and remote communities, DeadlyScience
provides Science, Technology, Engineering and
Mathematics (STEM) resources and programs to
create effective learning.
Further details on these and other initiatives are
contained within our Sustainability Report.
IPH Board
We were pleased to announce the appointment
of Vicki Carter as a Non-executive Director to the
Board in October 2022.
Vicki has over 35 years’ experience in the financial
and telecommunications sectors with executive
roles in distribution, strategy and operations, human
resources and transformation.
The Board has also determined to establish a new
Projects Committee of the Board with its own
charter, to be chaired by Vicki.
Separately, the Remuneration and Nomination
Committee has been renamed the People,
Remuneration and Nominations Committee (PRN
Committee) to reflect more accurately the evolving
changes in the IPH workplace and to assist the Board
in fulfilling its corporate governance responsibilities
in regard to people and culture matters.
Conclusion
I would like to acknowledge the Company’s
Managing Director and CEO, Dr Andrew Blattman,
his leadership team, and all our people right across
the IPH Group for their contribution during FY23.
The IPH Group continues to expand and we now
employ over 1,300 people across 10 IP jurisdictions.
We are fortunate to have such a highly talented
group of people who consistently deliver results for
our clients which in turn delivers increased returns
for our shareholders.
Let me conclude by thanking shareholders for your
continued support of IPH Group.
Kind regards,
Peter
Peter Warne
Non-executive Chairman
IPH Limited
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2023 Annual Report
18
Financial highlights
Revenue and other income1
AUD$496.2m
Operating Cashflow
AUD$91.8m
496.2
370.1
363.5
385.1
259.5
)
m
$
(
600
500
400
300
200
100
0
61.6
)
s
t
n
e
c
(
100
90
80
70
60
50
40
30
20
10
0
87.6
92.6
94.9
91.8
FY19
FY20
FY21
FY22
FY23
FY19
FY20
FY21
FY22
FY23
EBITDA2
AUD$159.0m
Diluted Earnings Per Share
28.4c
159.0
113.2
113.3
115.9
85.9
)
m
$
(
180
160
140
120
100
80
60
40
20
0
28.4
26.7
25.8
24.7
24.0
29
28
27
26
25
24
23
22
21
)
e
r
a
h
s
r
e
p
s
t
n
e
c
(
FY19
FY20
FY21
FY22
FY23
FY19
FY20
FY21
FY22
FY23
NPAT
AUD$64.5m
Full Year Dividend
33.0c
53.1
54.8
53.6
52.6
64.5
)
m
$
(
70
60
50
40
30
20
10
0
28.5
29.5
30.5
33.0
25
35
30
25
20
15
10
5
0
)
e
r
a
h
s
r
e
p
s
t
n
e
c
(
FY19
FY20
FY21
FY22
FY23
FY19
FY20
FY21
FY22
FY23
1) Revenue and other income excluding interest.
2) Earnings before Interest, Tax, Depreciation and Amortisation.
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2023 Annual Report
19
Our achievements
110+
professional staff
received industry awards
41
Firm of the Year, Top Tier Firm
or Gold Band Firm awards
the group in FY23
76 promotions across
7Principal promotions
announced for FY24
67 %
of fee earner
promotions in FY23
were women
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240+
leaders participated in the IPH
People Leadership Excellence
Program since inception in FY21
AUD$570k+
to support 64 trainees to complete their
Masters of IP, and launched Graduate Program
with initial cohort of IT graduates
3,200+
hours of staff development
training across the group in FY23
1,200+
hours of content delivered through our IPH
Professional Development Workshops in FY23
217
new hires
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2023 Annual Report
21
CEO’s report
IPH continued to execute its growth strategy
successfully during FY23, demonstrated by the
acquisition and subsequent integration of leading
Canadian IP firm, Smart & Biggar which assisted in
delivering a significant increase in underlying Group
profitability for the year.
FY23 Results
On an Underlying basis, IPH delivered a 20%
increase in Underlying NPAT to $99.0 million with
Underlying EBITDA improving by 28% to $170.0
million. The Underlying Group result included
the contribution from Smart & Biggar (which was
acquired on 6 October 2022) and was also assisted
by the lower average A$ / US$ exchange rate
compared to the prior year.
On a Group like-for-like basis (which removes the
impact of acquisitions and the effect of foreign
exchange movements) revenue was steady with
Underlying EBITDA declining by 3% on the prior year.
In our Asian business, our Singaporean hub
continued to deliver improved results with like-
for-like revenue up by 8% and underlying earnings
growth of 7%. However, this was offset by a
significant decline in patent and trade mark revenue
in Hong Kong/China. One of our larger clients exited
operations in China which reflects recent industry
supply chain de-risking as some corporates seek
alternative manufacturing locations to China.
Continued geopolitical impacts in the region
caused a decline in patent and trade mark revenue
in Hong Kong with a decline in translation revenue.
As a result total like-for-like revenue in Asia
increased by 4% while like-for-like EBITDA was
steady on the prior year.
Like-for-like revenue in our Australian and New
Zealand IP businesses declined by 1% with like-for-
like EBITDA declining by 5%. This represented an
improvement from the first half (where revenue had
declined 3% and EBITDA down 6%) notwithstanding
some disruption from managing the response to
the cyber incident during March/April.
Market Conditions
IPH experienced patent filing decline of 2% across
our Asian jurisdictions (outside of Singapore) in
FY23 which compared to a strong prior year. Filing
growth in Indonesia and Malaysia was offset by a
decline in China.
In Singapore, IPH Group maintained our number
one patent market share of 23.1% for the period
CY22 YTD December 2022.
Australian patent market filings (ex innovation
patents, which were phased out in Australia in
Aug 2021) declined by 3.3% in FY23 compared to
FY22 while IPH Group filings (ex innovation patents)
declined by 7.8% for the same period.
The relative decline in IPH Group filings in Australia
reflects a full year of the integration of Spruson
& Ferguson Australia and Shelston IP in FY23,
compared to seven months in FY22. We have
previously noted the disruptive impact of member
firm integrations on filing activity.
IPH Group filings began to stabilise in 2HFY23 while
both Spruson & Ferguson Australia and Griffith
Hack recorded improved filing performance in
2HFY23.
IPH remains the market leader in Australia with combined
group patent market share (excluding innovation patents)
of 32.4% for the year to 30 June 2023.
Cyber Incident
As shared with the market on 13 March 2023, IPH
detected a portion of its IT environment had been
subject to unauthorised access. We immediately
enacted our cyber response and business
continuity plans, including establishing new network
infrastructure, restoring system functionality and
implementing enhanced cyber security measures.
A forensic investigation identified that a limited set of
data was downloaded by an unauthorised third-party
during the incident. The downloaded dataset originated
from the Spruson & Ferguson Australia business and
primarily contained data relating to a small number
of clients of Spruson & Ferguson Lawyers and certain
historical financial and corporate information.
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2023 Annual Report
22
We have conducted a comprehensive post incident
review into the incident and have identified further
learnings and opportunities which will be incorporated
into strengthening our cyber security measures and
ensuring the strengthening of controls.
IPH has not experienced any known loss of client
relationships as a result of this incident and we have
also completed a review of regulatory requirements.
The financial impact of the incident is consistent
with previous announcements. For the month of
March 2023, business disruption contributed to a
service charge budget shortfall of approximately $4.4
million (in aggregate) for the impacted businesses of
Spruson & Ferguson Australia and Griffith Hack. In
the subsequent months, Griffith Hack and Spruson &
Ferguson Australia collectively exceeded budget by
approximately $1.5 million. No further backlog of filings
is expected for either firm. IPH incurred $2.8 million
(pre-tax) in non-underlying costs in FY23 including
costs for specialist third parties as part of management
and remediation of IT systems, legal and other costs.
A more detailed summary of the cyber incident is
included on page 24.
Strategy Update
IPH made solid progress in implementing its growth
strategy during FY23.
A major focus during the year was the continuing
successful integration of Smart & Biggar into the IPH
network. The Smart & Biggar acquisition extended
our reach beyond Asia Pacific and enabled an
initial strong presence in Canada which is a major
secondary market in IP.
Smart & Biggar’s financial performance for the
year was marginally ahead of our expectations and
recorded $31.4 million in Underlying EBITDA from
the date of acquisition (6 October 2022).
Our integration program remains on track both in
terms of local operations in Canada and client referrals
into the IPH network. For the year, a total of c. 220
referrals were made between Smart & Biggar and other
member firms of the IPH network which provides an
initial base from which we expect to increase over time.
In FY23, Spruson & Ferguson celebrated the 25-year
anniversary of the opening of the firm’s Singapore
office. Over that period the firm has established a
significant presence across the Asian region providing
a compelling service offering for our clients.
In May 2023, Spruson & Ferguson further
expanded this network offering, announcing the
establishment of a new office in Manila. The Manila
office handles Philippines patent applications and
trade marks and provides support for the wider
region as a strategic growth opportunity.
We continue to assess complementary acquisition
opportunities in Canada and other core secondary
IP markets.
In Canada, we believe there are a number of further
consolidation opportunities to expand our patent
market share in a material manner, each in the region
of approximately 4-7% of the Canadian patent market.
In line with our previously announced strategy, we
are in discussions with parties regarding potential
acquisition opportunities, with one potential
opportunity expected to be announced immediately
post publication of FY23 results, and another
opportunity being actively pursued.
IPH is also continuing to pursue other acquisition
opportunities and is involved in discussions.
Focus on People
A core focus for the group remains on attracting,
motivating, developing and retaining our people
across IPH.
During FY23 IPH made 76 promotions across all our
member firms, including 7 Principal appointments.
Over two thirds (67%) of fee earner promotions in
FY23 were women.
We continue to invest in the future of the profession
and during the year we launched a Graduate Program
with an initial cohort of IT graduates joining the
business in February 2023. We have also designed
a broader curriculum to support Trainee Attorneys,
which focuses on building the required competencies
to support the progression through our defined
career pathway and empowering our emerging talent.
Summary
IPH continues to make substantial progress on its
growth strategy. As a result, we remain uniquely
positioned as one of the largest IP services groups
in secondary IP markets to consolidate and grow
our business in our key markets.
I want to acknowledge and thank all our people
across IPH for their continued hard work and
dedication over the past year which has included
several disruptions and challenges.
I would also like to thank our shareholders for your
ongoing support and assure you of the Company’s
continued focus on generating further shareholder
value creation.
Kind regards,
Andrew
Dr Andrew Blattman
CEO and Managing Director
IPH Limited
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2023 Annual Report
23
Cyber incident and response
In FY23, IPH experienced a cyber incident which
impacted a portion of its IT environment.
Here is a summary of IPH’s response, including
business continuity implementation, infrastructure
isolation and restoration, enhanced cyber security
measures and the outcomes of the investigation, as
reported to the market during March and April 2023.
What occurred and how we responded:
» On 13 March 2023, IPH detected that a portion
of its IT environment had been subject to
unauthorised access.
»
»
»
This access was primarily limited to the
document management systems of the IPH
head office and two IPH member firms in
Australia, Spruson & Ferguson Australia and
Griffith Hack, and the practice management
systems of these two IPH member firms.
Upon becoming aware of the incident, IPH
immediately isolated these systems, removed them
from its network, and implemented its business
continuity plan to resolve the cyber incident.
IPH subsequently established new network
infrastructure, following a methodical restoration
process. Supported by leading external cyber
security experts, IPH applied enhanced cyber
security measures, including additional preventative
and detective controls to protect the IPH network.
»
All other IPH member firms continued to operate
as normal.
Forensic investigation findings
and post incident review
The forensic investigation identified that a limited set
of data was downloaded by an unauthorised third-
party during the incident. The downloaded dataset
originated from the Spruson & Ferguson Australia
business and primarily contained:
»
data relating to a small number of clients of
Spruson & Ferguson Lawyers; and
»
some historical financial and corporate information.
Following the forensic investigation, IPH has no evidence
to suggest that data located on any other component of
IPH’s IT network (including the document management
system of the IPH head office and the document
management and practice management systems of
Griffith Hack) was downloaded by the unauthorised
third-party during the course of the incident.
IPH reviewed the downloaded dataset and worked
with Spruson & Ferguson Lawyers to directly contact
affected clients. IPH also notified the Office of the
Australian Information Commissioner of the incident.
IPH notified the Office of the Australian Information
Commissioner of the incident and has completed a
review of regulatory requirements.
The Company has conducted a comprehensive post
incident review into the incident and has identified
further learnings and opportunities which will be
incorporated into strengthening our cyber security
measures and ensuring the strengthening of controls.
Financial impact
As previously announced, while IPH enacted its
Business Continuity Plan in response to the cyber
incident, the affected member firms did experience
some business disruption related to the incident.
For the month of March 2023, this disruption
contributed to a service charge budget shortfall
of c$4.4 million (in aggregate) for the impacted
businesses of Spruson & Ferguson Australia and
Griffith Hack. While this service charge budget
shortfall resulted in lost revenue due to the disruption,
IPH expected to recover a material proportion of this
shortfall as delayed processing or invoicing of such
events occurs over time. In the subsequent months,
Griffith Hack and Spruson & Ferguson Australia
collectively exceeded budget by c$1.5 million. No
further backlog of filings is expected for either firm.
IPH has also incurred costs related to responding to,
and investigating, the cyber incident, including costs
associated with specialist external third parties as
part of the management and remediation of IPH’s
network and IT systems and forensic investigation,
and legal and other costs. A total of $2.8 million (pre-
tax) has been incurred as non-underlying costs in
FY23 accounts related to this incident.
There has been no known loss of client relationships
as a result of the incident.
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2023 Annual Report
24
Our Board &
Leadership
The IPH Board of Directors
Peter Warne
Non-executive Director and
Chairman
BA (Actuarial Studies), FAICD
Peter has been a Non-executive
Director of IPH since 2021
and Chairman since February
2022. He brings to the roles an
extensive knowledge of, and
experience in, financial services
and investment banking, gained
through a number of senior
roles at Bankers Trust Australia
Limited, including as head of its
Global Financial Markets Group
from 1988 to 1999.
Peter was a Director of the
Sydney Futures Exchange (SFE)
from 1990 to 1999, and from
2000 to 2006, and served as
its Deputy Chairman from 1995
to 1999. When the SFE merged
with the Australian Securities
Exchange (ASX Limited) in July
2006, he became a Director of
ASX Limited, a position he held
until 2020.
Peter has previously served as a
Non-executive Chairman of ALE
Property Group from 2003 to
2017, and OzForex Group Limited
(now trading as OFX Limited)
from 2013 to 2016. He also served
as a Non-executive Director of
Macquarie Group Limited and
Macquarie Bank Limited from
2007 to 2022, including the
period from 2016 to 2022 as
Chairman. He was a Director
of New South Wales Treasury
Corporation from 2012 until
2020, where he also served as
Chairman from 2019 to 2020.
In addition to his role on the IPH
Board, Peter is Non-executive
Director of UniSuper, Argo
Investments Limited, Allens,
and NSW Net Zero Emissions
and Clean Economy Board,
Non-executive Chairman of
St Andrews Cathedral School
Foundation. He is also a
member of the ASIC Corporate
Governance Consultative Panel,
and an adviser to the board of
Virgin Australia Airlines.
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2023 Annual Report
26
Note: Executives’ profiles as at August 2023.
Dr Andrew Blattman
John Atkin
Vicki Carter
Chief Executive Officer and
Managing Director
BScAgr (Hons 1), PhD, GraDipIP
Andrew was appointed as Chief
Executive Officer and Managing
Director of IPH in November 2017.
Andrew has nearly 30 years’
experience in the IP profession,
having joined IPH Group member
firm Spruson & Ferguson in 1995.
He was appointed as a Principal
in 1999 and served as CEO from
2015 to 2017, during which time
the firm significantly expanded its
footprints in both the Australian
and Asia IP markets, opening
new offices in Melbourne, Beijing,
Hong Kong SAR, Jakarta and
Bangkok.
Since Spruson & Ferguson’s
incorporation and the listing of
IPH on the ASX 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.
Andrew is on the Board of St
Paul’s College Foundation.
Independent Non-executive
Director
LLB (1st Class Hons), BA (Pure
Mathematics) (1st Class Hons)
John was appointed as a
Non-executive Director in
September 2014.
Independent Non-executive
Director
BA (Social Sciences),
GradDipMgmt
Vicki Carter was appointed as
a Non-executive Director in
October 2022.
He is Chairman of the Australian
Institute of Company Directors
and Qantas Superannuation
Limited, as well as a Non-
executive Director of Integral
Diagnostics Limited. He served
as Chairman of Outward Bound
Australia for over 12 years and
has been the Vice Chairman of
Outward Bound International
since 2017. John is also a former
Director of Commonwealth
Bank Officers Superannuation
Corporation Pty Limited.
John was CEO & Managing
Director of The Trust Company
Limited from 2009-2013 prior
to its successful merger with
Perpetual Limited. A former
lawyer, he was Managing Partner
and Chief Executive of Blake
Dawson from 2002-2008 and
also practiced at Mallesons
Stephen Jaques (as it was
then known) as a Mergers &
Acquisitions Partner for 15 years
from 1987-2002.
She is currently a Non-executive
Director of ASX Limited, Bendigo
and Adelaide Bank Limited and
Non-executive Director and
Chair of Sandhurst Trustees
Limited. She has over 35 years’
experience in the financial and
telecommunications sectors with
executive roles in distribution,
strategy and operations, human
resources and transformation.
Her former roles include
Executive Director,
Transformation Delivery at Telstra
and senior executive roles at
National Australia Bank including
Executive General Manager –
Retail Bank, Executive General
Manager – Business Operations
and Executive General Manager
– People and Culture, as well as
roles at MLC, ING and Prudential
Assurance Co. Ltd.
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2023 Annual Report
27
Note: Executives’ profiles as at August 2023.
Robin Low
Jingmin Qian
Independent Non-executive
Director
BCom, FCA
Independent Non-executive
Director
BEc, MBA, CFA, FAICD
Robin was appointed as a
Non-executive Director in
September 2014.
In addition to her role on the IPH
Board, Robin is a Non-executive
Director of ASX listed companies:
AUB Group Limited, Appen
Limited and Marley Spoon SE.
She is also on the boards of
Guide Dogs NSW/ACT and the
Sax Institute. Robin is a member
of the University of New South
Wales audit committee.
She is a former Non-executive
Director of CSG Limited and
Australian Reinsurance Pool
Corporation and former Deputy
Chair of the Auditing and
Assurance Standards Board. Robin
was with PricewaterhouseCoopers
for 28 years, including as a Partner
from 1996 to 2013, specialising in
audit and risk.
Jingmin was appointed as a Non-
executive Director in April 2019.
Jingmin is also a Non-executive
Director of Abacus Property
Group, Trustee Director of HMC
Capital Partners Fund, a member
of Macquarie University Council,
a Non-executive Director and
National Vice President of the
Australia China Business Council.
She is also a senior advisor to
leading global and Australian
organisations and Director of
Jing Meridian Advisory Pty Ltd.
Jingmin is a member of Chief
Executive Women (CEW).
Jingmin is a former Trustee
Director of Club Plus Super,
former Board Director of CFA
Society of Sydney and former
Non-executive Director of
Golden Cross Resources. She
also previously held senior roles
with L.E.K. Consulting, Boral
Limited, and Leighton Holdings.
Jingmin brings a broad range
of commercial experience
covering strategy, mergers and
acquisitions, capital planning,
investment review and Asian
expansion to her role on the
IPH Board.
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2023 Annual Report
28
Note: Executives’ profiles as at August 2023.
The IPH Executive
Leadership Team
Philip Heuzenroeder
John Wadley
John O’Shea
Group General Counsel &
Company Secretary
BEc, LLB, LLM, GAICD
(Order of Merit)
Philip has been Group General
Counsel and Company Secretary
of IPH since 2016.
Prior to joining the IPH Executive
Leadership Team, he was a
Principal of member firm Spruson
& Ferguson for over 12 years.
Philip has nearly 30 years’
experience as a solicitor and
governance professional, both in
private practice and in-house. His
expertise covers a broad range of
areas of law including commercial
law, competition law, ICT,
intellectual property and litigation.
Philip is a former Director of the
Cure Brain Cancer Foundation.
Chief Financial Officer
B.Bus (Accounting & Finance),
ICAA
John has been IPH’s Chief
Financial Officer since 2016.
As CFO John is responsible for
financial management of the
Group, including internal and
external reporting to the ASX and
IPH shareholders. The Finance
team is also responsible for the
treasury, taxation, budgeting and
forecasting functions.
John is a qualified accountant.
Prior to joining IPH he was Group
Financial Controller at IT services
firm SAI Global, having previously
spent seven years in audit at
firms Ernst & Young and Arthur
Andersen.
Chief Operating Officer
BEc, MBA, GAICD
John has been IPH’s COO
since 2018.
In his role, John works with the
Managing Directors of the Group’s
member firms to ensure business
strategy and key business
initiatives are identified, developed
and delivered in a way that
supports commercial outcomes.
In his time with IPH, John has
had responsibility for the
consolidation of acquisitions into
the Group and he relocated to
Toronto in 2023 to ensure the
successful integration of Smart &
Biggar into the IPH Group.
John has an extensive background
in senior executive roles having
international, regional and
Australian experience in his time as
both a partner in KPMG Australia
and as Global Chief Marketing
Officer for KPMG International.
Note: Executives’ profiles as at August 2023.
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2023 Annual Report
29
Cath Harris
Tee Tan
Halina Kochanowicz
Chief Information Officer
BE (Computing) (Hons), MBA
Chief Commercial Officer
Licentiate in Law, MBA
Tee joined IPH in 2018 and is the
company’s Chief Information
Officer.
Halina joined IPH in 2021 as
the company’s Chief Commercial
Officer.
Tee is responsible for ensuring
that information technology
investments and operations in all
IPH Group companies are aligned
with the Group’s strategic
business objectives. His role
includes overseeing IT and digital
strategy, executive leadership
and team development,
technology roadmap, IT
operations, project delivery and
information security.
Tee has more than 20 years’ of
experience, previously working in
various senior IT roles, mainly in
the financial services industry. He
has an extensive IT background,
specialising in systems
architecture with a proven track
record in championing flexible
and scalable solutions and solving
complex organisational problems.
She is responsible for business
development, sales, marketing
and communications.
A former lawyer, Halina has
more than 20 years’ experience
working as a marketing
professional in Europe, Brazil,
New York and Sydney. She has
worked primarily in the legal
industry for both international
and leading Australian firms.
Before joining IPH as the Chief
Commercial Officer, Halina
worked for Elevate and set up
Elevate Flex in Australia. Prior to
that she was the CMO at Corrs
Chambers Westgarth, Australia’s
leading independent law firm.
Halina is fluent in six languages
and is a passionate advocate for
kids with ASD.
Chief People Officer
BA (Hons), Masters of Human
Resources and Organisational
Development
Cath joined IPH as Chief People
Officer in 2020.
In her role as Chief People
Officer, Cath works with the
leadership and people teams
to align HR strategy to set and
execute the Group’s business
strategy. She is responsible
for talent attraction and
management, policy design
and implementation, employee
relations, reward and recognition,
performance management,
building leadership capability
and creating a great working
atmosphere.
She has over 20 years’
experience working in senior HR
roles in professional services
firms including roles leading
HR functions for Dentons and
Slater & Gordon, and media
organisations Foxtel and Sky
Broadcasting in Australia and
the UK respectively. Cath has
particular expertise in partnering
with business leaders to shape
strategy, build performance and
create growth for their people.
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2023 Annual Report
30
Note: Executives’ profiles as at August 2023.
Corporate
Directory
Corporate directory
Directors
Mr Peter Warne - Chairman
Dr Andrew Blattman
Mr John Atkin
Ms Vicki Carter
Ms Robin Low
Ms Jingmin Qian
Company Secretary
Mr Philip Heuzenroeder
Notice of Annual
General Meeting
Registered office
IPH will hold its 2023 Annual General Meeting on
Wednesday 15 November 2023.
Level 22, Tower 2, Darling Park
201 Sussex Street, Sydney NSW 2000
Tel: 02 9393 0301
Fax: 02 9261 5486
Principal place of business
Level 22, Tower 2, Darling Park
201 Sussex Street, Sydney NSW 2000
Share register
Auditor
Solicitors
Link Market Services Limited
Level 12, 680 George Street, Sydney NSW 2000
Tel: 1300 554 474
Deloitte Touche Tohmatsu
Quay Quarter Tower, 50 Bridge Street
Sydney NSW 2000
Bird & Bird
Level 22, 25 Martin Place, Sydney NSW 2000
Stock exchange listing
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 has been
approved by the Board of Directors and can be
found at www.iphltd.com.au
iphltd.com.au
2023 Annual Report
32
Sustainability
Report
Contents:
Sustainability Report
Our Approach to Sustainability
Materiality and Stakeholder Engagement
Governance, Privacy and Data Security
Client Experience
Impact & Innovation
Diversity, Equity & Inclusion
Education & Training
Wellbeing & Flexibility
Looking Ahead to FY24
35
36
40
44
46
50
60
68
70
iphltd.com.au
2023 Annual Report
34
Our approach
to sustainability
At IPH, ensuring our expanding international
business contributes positively to the economy,
society and the environment is fundamental to
how we operate. We understand the importance of
resilient and sustainable business practices to help
achieve a more sustainable future.
Our approach is underpinned by our core values, in
particular our commitment to:
»
»
Integrity in business practices; and
Empowerment and engagement of our people
Our firms provide services to a range of industries
including pharmaceutical, engineering, aerospace,
healthcare, food and beverage, life sciences,
agriculture, biotechnology, ICT and fintech. We
work with clients to secure IP protection and
commercialisation of new technologies, inventions
and designs, and support a range of innovations that
will create a better and more sustainable future.
We also continue to engage with the diverse range
of communities in which we operate, and partner
with organisations to support causes that drive
positive social change, with a particular focus on
education, STEM and school mentoring.
In FY23, we continued to prioritise the five United
Nations Sustainable Development Goals (UNSDGs),
where we believe we can enact the greatest impact.
These are:
» We promote a diverse workforce and inclusive
culture (UNSDG #5).
» We donate and volunteer to support stronger
communities (UNSDG #16).
» We provide productive employment for
our people, value for our shareholders, and
contribute to economic advancement by
protecting innovations (UNSDG #17).
»
IPH actively participates in the IP ecosystem,
by serving clients, supporting IP regulatory
authorities and utilising international
frameworks (UNSDG #8).
We promote a diverse
workforce and inclusive culture.
IPH actively participates in the IP
ecosystem, by serving clients,
supporting IP regulatory authorities
and utilising international networks.
The nature of our business
activities encourages research,
development and innovation.
We donate and volunteer to
support stronger communities.
We provide productive employment
for our people, value for our
shareholders, and contribute
to economic advancement by
protecting innovations.
»
The nature of our business activities
encourages research, development and
innovation (UNSDG #9).
In FY23, we partnered with external advisors,
Republic of Everyone, to support the development
of a refreshed Sustainability Strategy, which is
outlined in more detail in this report. We also
engaged external advisors, South Pole, to assist us
in our Greenhouse Gas Emissions measurement
and reporting. As set out further below, South
Pole has helped us to conduct Greenhouse
Gas emissions measurement for the IPH group,
comprising direct and indirect emissions sources
(Scope 1, 2, 3) of our international operations,
including our member firms.
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2023 Annual Report
35
Materiality and
stakeholder engagement
Our Material Issues
IPH is exposed to multiple risks that may have an
impact on the company’s ability to achieve its
operational, financial and strategic objectives.
Material risks faced by the IPH group are disclosed
in the Directors’ Report and addressed in our 2023
Corporate Governance Statement.
In this Sustainability Report, we report on the
material risks and opportunities for the IPH group
that have economic, environmental and social
impacts, and therefore influence the assessments
and decisions of our stakeholders. The issues
reported on in this Sustainability Report have been
assessed as priority material issues by applying the
“materiality principle” articulated by the GRI in GRI
Standard 101: Foundation 2016.
During FY23, the materiality assessment undertaken
by IPH involved external advisors, Republic of Everyone,
who were engaged to support the development of a
refreshed Sustainability Strategy for the IPH group.
The development of this refreshed strategy included
stakeholder interviews and surveys, which assisted in
identifying priority material issues.
In addition to the existing core elements of our
sustainability approach: Governance, Privacy and
Data Security and Client Experience, the following
priority material issues have been considered by
management and crystallised into the following
four additional sustainability strategic priorities:
»
»
»
Impact & Innovation
Diversity, Equity & Inclusion
Education & Training
» Wellbeing & Flexibility
Each of the six key sustainability strategic priorities are
addressed in more detail in this Sustainability Report.
As noted before, using the GRI “materiality principle”
to assess the IPH group’s material issues has involved
assessing the influence of risks and opportunities
on our stakeholders. The use of this principle means
that the issues set out in this Sustainability Report
differ somewhat from the material risks disclosed
in the Directors’ Report and in our Corporate
Governance Statement. While in our 2023 Corporate
Governance Statement we note that IPH does not
consider that it has material exposure to climate
change risks, we do report on environmental impact
below as part of the material issue titled “Impact
& Innovation”. IPH appreciates the importance and
relevance of this issue to our stakeholders, and as
a key sustainability strategic priority, this issue also
informs the IPH group’s broader strategic objectives
and risk management priorities.
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2023 Annual Report
36
Sustainability strategic priorities
Client Experience
Impact & Innovation
Elevate sustainable
innovators and minimise
our own footprint.
» Deliver scope 1-3 GHG
emissions reporting
» Carbon reduction
roadmap by 2025
» Develop impact program
supporting climate
innovators.
Deliver exceptional client
service through the
expertise of our people and
strength of our network.
» Leverage Client
Relationship Management
to enhance client
interactions
» Continue Global Client
Feedback Program and
Net Promoter Score (NPS)
measurement
» Deliver new initiatives
to foster client centric
culture
Education & Training
Wellbeing & Flexibility
Build a culture of
continuous and holistic
learning and development.
Create healthy, flexible and
engaged teams, built on
autonomy and trust.
» Continue tailored
» Offer flexible work for all
training opportunities at
every career stage for all
employees
» Build on the 1,500 hours
of professional learning
already available.
» Develop a best practice
toolkit for the hybrid
world
» Introduce accredited
mental health training
and wellness education.
Governance, Privacy &
Data Security
Manage risk effectively,
maintain transparency and
drive successful outcomes.
» Comprehensive corporate
governance framework of
policies and practices
» IPH Board and Board
Committees: Audit
Committee; People,
Remuneration and
Nominations Committee;
and Risk Committee
» Robust risk management
framework, including
ongoing staff training
» Data security 24/7
monitoring system
enhanced
Diversity, Equity &
Inclusion
Close opportunity gaps to
ensure equitable access.
» Achieve 40/40/20 gender
representation by 2030
» $500,000 partnership
with Beacon Foundation
to support disadvantaged
students in Australia
» Offer cultural awareness
training across all our
markets by 2024
» Set a diversity baseline
by 2025
» Launch new diversity
and inclusion framework
to identify and address
disadvantage gaps.
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Our Stakeholders
IPH engages with a broad range of stakeholders,
who are an essential part of our operations.
Planning and engagement with stakeholders is a
key element of effective risk management.
Stakeholder engagement is also an important part
of the materiality assessment referred to above and
formed a significant part of the process undertaken
to develop a refreshed sustainability Strategy for
the IPH group.
Our key stakeholders are considered to be those
that are affected by, or have the ability to effect,
the IPH group, together with stakeholders that are
interested in the IPH group.
IPH is committed to engaging openly, honestly
and regularly with our stakeholders to understand
their expectations and concerns. The method and
frequency of engagement varies depending on the
stakeholder, the purpose of engagement and the
stakeholder’s issues of concern.
IPH’s key stakeholders can be identified as follows:
Stakeholder
group
Why is this a key
stakeholder group?
Method of
engagement
Clients and
customers
Our People
Shareholders
and the
investment
community
The group has a diverse client
base including some of the
world’s leading companies, multi-
nationals, universities, public
sector research organisations,
foreign associates and other
corporate and individual clients.
We assist our clients by helping
to protect their IP, including
their research, inventions, trade
marks, brands, designs and other
innovations.
As a network of professional
services businesses, our people
are critical to our success. We have
a strong commitment to creating
a dynamic workplace where our
people are supported to reach
their personal and career goals.
IPH has a range of investors with
different interests and concerns.
We are committed to providing
information to shareholders and
the market in a timely manner,
which assists in promoting
investor confidence in the
integrity of the group.
IPH member firms have ongoing dialogue
with their clients and customers, including
via meetings, phone calls and written
communications, and through client surveys.
We engage with our people through
engagement surveys, presentations, internal
learning and development, training sessions,
reviews, performance development sessions
and succession planning.
IPH engages regularly with its shareholders
and the investment community, guided by our
Continuous Disclosure and Investor Relations
Policy. IPH communicates information on
the group’s activities to shareholders and
the public via a number of forums and
channels including our Annual General
Meeting, announcements to the ASX, investor
presentations, meetings with investors,
analysts and proxy advisers, releases to the
media, the release of financial and other
reports, our website including an enquiry
tool and publication of all announcements,
and the membership and participation of
directors and senior management in a range
of professional governance bodies and
interaction in other forums.
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Stakeholder
group
Why is this a key
stakeholder group?
Method of
engagement
Suppliers
IPH has a diverse supply chain.
IPH and its member firms are
dependent on our suppliers to
assist the group in the provision of
professional services.
Government and
regulators
IPH operates in a highly regulated
environment as an Australian listed
entity, and in the operation of our
professional services businesses.
Our IP professional staff are
governed by codes of conduct
and professional conduct rules for
patent and trade mark attorneys
and legal practitioners. IPH and its
member firms are committed to
maintaining the highest standards
in our activities.
IPH and its member firms have ongoing
engagement with our suppliers in the course
of the supply relationship. The IPH Group
Supplier Code of Conduct sets out the
standards and behaviours expected from
suppliers when conducting business with the
group. We also work with our suppliers to
ensure compliance with legislation, including
the Modern Slavery Act 2018 (Cth).
To ensure we monitor and comply with
regulatory and professional obligations, IPH
and its member firms engage directly with
relevant regulatory and government bodies
as required.
Communities
IPH recognises our responsibility
to act appropriately within the
communities in which we operate.
We do this in our interaction with
all of the stakeholders outlined
above. This commitment extends
to our engagement with our
profession and our community and
charitable initiatives.
IPH and its member firms engage with
our local communities via professional
memberships and contributions, and by
giving and volunteering initiatives. IPH makes
a significant financial contribution to our
communities by the creation of economic
activity with our suppliers and customers,
provision of employment, and creation and
distribution of value for shareholders.
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39
Governance, privacy
and data security
Corporate Governance Framework
Governance Policies
IPH remains committed to high standards of
corporate governance to ensure the long-term
sustainability of its business, including to deliver
value to its stakeholders. Our corporate governance
framework includes policies and practices which
help to ensure that IPH manages risk effectively,
maintains appropriate transparency of its operations
and drives successful outcomes across the group.
This summary should be read in conjunction with our
Corporate Governance Statement, which has been
lodged with the ASX and is available on our website.
The IPH Board
The IPH Board is responsible for establishing a
corporate governance structure aimed at creating
and protecting shareholder value.
The Board is also responsible for setting the
strategic direction of the group and monitoring the
implementation of that strategy by IPH management.
Board Committees
The IPH Board has established the following
committees to assist in managing its various
responsibilities:
»
»
»
»
Audit Committee
People, Remuneration and
Nominations Committee
Projects Committee
Risk Committee
IPH seeks to maintain the highest standards of
governance in the conduct of its activities and
continually seeks out ways to strengthen its
governance of the group.
The success of the group is underpinned by a number
of core values, which are set out in IPH’s Statement of
Values, available on the IPH website. The values set out
in the Statement of Values are inculcated across the
group and supported by the standards and behaviours
set out in IPH’s Code of Ethics and Professional
Conduct, also available on the IPH website.
These policies assist IPH to maintain its reputation
and standing in the community as an ethical business,
which is important to IPH’s ongoing success.
In addition to the Statement of Values and Code
of Ethics and Professional Conduct, IPH has a
number of other corporate policies, which further
strengthen its corporate governance framework.
IPH’s suite of corporate governance policies are
available on the IPH website and listed below:
»
Statement of Values
» Code of Ethics and Professional Conduct
» Continuous Disclosure and Investor Relations Policy
»
»
»
»
Share Trading Policy
Diversity Policy
Hedging and Margin Loan Policy
Risk Management Policy
The members of each of these committees (other
than the Projects Committee) are listed in the
Directors’ Report. As the Projects Committee was
only established in June 2023, its first meeting will be
held in FY24 and details of its members and meetings
will be outlined in the FY24 Directors’ Report. The
charter for each committee (including the Projects
Committee) is available on the IPH website.
» Whistleblower Policy
»
»
»
»
Anti-Bribery Policy
Sanctions Policy
Supplier Code of Conduct
Privacy Policy
During FY23, IPH has been pleased to comply with all
recommendations of the 4th Edition of the Corporate
Governance Principles and Recommendations.
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2023 Annual Report
40
Training
Anti-Corruption
During FY23, all officers and employees across the
IPH group who commenced employment with the
group prior to 1 May 2021 were issued “refresher”
online training on a number of key corporate
governance policies, having previously received
such training in 2021. For all officers and employees
across the IPH group who commenced employment
with the group after 1 May 2021 (other than Smart
& Biggar staff), those employees were required to
undertake such training on commencement of their
employment. For Smart & Biggar (acquired during
FY23), all staff will undertake online training in FY24.
The online training courses referred to above cover
IPH group policies including:
IPH and its member firms are committed to doing
business in an ethical and honest manner and we
take a zero-tolerance approach to bribery and
corruption. IPH is committed to acting professionally,
fairly and with integrity in all its business dealings and
relationships and strives to implement and enforce
effective systems to counter corruption.
IPH has implemented an Anti- Bribery Policy, which
applies across the group. As noted above, one of
the online training courses rolled out to relevant
staff during FY23 covered the IPH Anti-Bribery
Policy. This material references Disclosure 205-2
from GRI 205: Anti-Corruption 2016.
»
Statement of Values
» Code of Ethics and Professional Conduct
» Whistleblower Policy
»
Anti-Bribery Policy
During FY23, online training (including “refresher”
training) was also provided to relevant officers and
employees across the IPH group (other than Smart
& Biggar staff) on the following policies:
Anti-Competitive Behaviour
IPH supports fair and vigorous competition and
operates in a manner consistent with relevant anti-
competition, anti-trust and monopoly legislation.
During FY23, IPH was not identified as a participant
in any pending or completed legal actions
regarding anti-competitive behaviour or violations
of anti-trust and monopoly legislation. This material
references Disclosure 206-1 of GRI 206: Anti-
Competitive Behaviour 2016.
»
»
Share Trading Policy
Sanctions Policy
For Smart & Biggar (acquired during FY23), relevant
officers and employees will undertake online
training on the above policies in FY24.
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41
Modern Slavery and the Supplier Code of Conduct
In FY23, IPH continued to undertake activities to
address and remediate modern slavery risks within
its business and supply chains in compliance with
the Australian Modern Slavery Act 2018 (Cth).
IPH will publish its fourth Modern Slavery Statement
for FY23 later this year.
The IPH Group Supplier Code of Conduct has
been rolled out across the IPH group and forms
an important part of the group’s commitment to
ethical and socially responsible procurement. The
Supplier Code of Conduct outlines the standards
and behaviours IPH and its group businesses
expect from their suppliers when conducting
business with the group.
Risk
Risk Management
We recognise that a robust risk management
framework is critical for the effective management
of our business. IPH’s risk management framework
aims to identify and manage potential risks in
a continuous, proactive and systematic way
through high quality risk management policies
and processes across the group. IPH’s Risk
Management Policy is available on the IPH website
and was updated in June 2023.
As part of the IPH risk management framework,
the Board regularly reviews its Risk Appetite
Statement, which is designed to support and
inform Board and management decision-making.
The Board reviews IPH’s risk management
framework annually. The Board’s annual review
of IPH’s risk management framework in FY23
concluded that the framework is sound and IPH
continues to operate with due regard to the risk
appetite set by the Board.
IPH’s Risk Committee comprises four independent
non-executive directors and is chaired by an
independent non-executive director who is not
the Chairman of IPH. The Committee’s Charter is
available on the IPH website.
During FY23, IPH completed the roll out across the
IPH group of an online enterprise governance risk
and compliance management software solution,
provided by KPMG and known as “Risk Hub”.
Material Risks
The Operating and Financial Review (OFR) section
of the Directors’ Report includes a summary of
material risks faced by IPH which may have an
impact on IPH’s ability to achieve its operational,
financial and strategic targets. This summary also
contains details regarding our approach to the
management of such risks. IPH’s approach to
identifying the material issues reported on in this
Sustainability Report is set out in the section titled
“Materiality and Stakeholder Engagement”.
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Privacy and data protection
Overview
IPH provides services to a substantial number of
clients across multiple jurisdictions, and interacts
with a range of external contractors, suppliers and
private and public sector companies, as well as
having a large number of employees.
For this reason, we take cyber security and the
protection of data and information very seriously.
IT security is a critical part of our business, and we
continue to strengthen our security posture every
year, with a strong focus on cybersecurity.
The strength of our data protection was tested in
FY23 by a cyber incident, as outlined on page 22.
As detailed, we responded immediately to isolate
the impacted systems, and implement our business
continuity plan, before establishing new network
infrastructure. Supported by leading external cyber
security experts, we also applied enhanced cyber
security measures, including additional preventative
and detective controls to protect the IPH network.
Our infrastructure has gone through a series of
hardening processes.
Our 24/7 monitoring system has been further
enhanced, and we have introduced a number of next
generation threat detection technologies.
We have a robust cyber incident response plan, and
our disaster recovery and backup processes have
also been reviewed. We have also further increased
our security resources and other security initiatives
to improve our preventative and detective controls,
as well as bolstered capacity to counter the ever-
changing threats.
IPH has developed a multi-year roadmap with a
program of work focusing on information and
systems security and continues to invest in system
and security enhancements. We have measured
our security posture using industry standard NIST
framework and we have set targets to continuously
improve year-on-year.
Privacy
Our approach to privacy and how we collect, use,
manage, and disclose personal information is
outlined in our Privacy Policy, available on the IPH
website. This policy was last updated on 6 October
2022, to incorporate amendments to reflect Smart &
Biggar’s entry into the IPH group.
We also have an established internal data breach
policy and procedure in place across the group.
During FY23, relevant officers and employees
across the IPH group were issued with online
training covering the IPH Group Notifiable Data
Breaches Policy.
During FY23, in connection with the cyber incident
experienced by IPH, IPH determined to notify a small
number of individuals whose personal information
was included in an affected dataset downloaded
during the incident. IPH also notified the Office
of the Australian Information Commissioner of
the incident. IPH has and will continue to meet all
regulatory obligations in relation to the incident.
This material references Disclosure 418-1 of GRI 418:
Customer Privacy 2016.
24/7system & network
monitoring
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2023 Annual Report
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Client experience
Through our international network, IPH supports a
diverse client base of Fortune Global 500 companies
and other multinationals, public sector research
organisations, SMEs, and professional services firms
in more than 25 countries. We pride ourselves on the
expertise of our people and the high-quality service
and advice we provide our clients.
In FY23, our commitment to delivering exceptional
client service, coupled with strategic initiatives
to drive growth, has resulted in considerable
progress in our client offering.
Client experience
As an expanding network of firms, we are
continually evaluating opportunities to improve the
IPH member firm client experience and foster a
strong client centric culture across the group.
IPH is focused on ensuring our clients experience
the full benefits of our international network.
As a client of an IPH group member firm, our global
and multi-national clients gain connectivity to a
wider, and increasing, range of jurisdictions, with
simpler access to on-the-ground local knowledge,
alongside international expertise.
Domestic clients also benefit from the scale,
improved infrastructure, tools, and resources that
our international network provides, in addition to
the strong local expertise of our practitioners, who
are well recognised as leaders in their own markets.
The initiatives outlined below, focusing on client
listening, client relationship management and
business development (BD) best practice, are
all designed with the client at the centre of
everything we do.
Client service and engagement initiatives
In FY23 we launched a new Customer Relationship
Management (CRM) system to our member firms
AJ Park, Griffith Hack and Spruson & Ferguson, to
enhance client interactions, streamline internal
processes, and improve overall client service.
The new CRM provides our practitioners with the
right tools to better manage client relationships,
capture client feedback and client needs, and
improve client satisfaction.
The completion of the second year of the Global
Client Feedback Program marks a significant
milestone in our commitment to understanding
and meeting client needs. Through this program,
each member firm actively seeks feedback from
their clients to identify areas of improvement
and develop strategies to deliver tailored and
exceptional service. The valuable insights gathered
from our clients enable us to make data-driven
decisions and to enhance the client experience.
Overall, the IPH group achieved a Net Promoter
Score (NPS) of 58, a 3% increase on the 2021/22
NPS score. This positive feedback from our
clients demonstrate their satisfaction with our
services and their willingness to recommend our
member firms to others. This latest NPS score is
a testament to our progress and commitment to
client service excellence.
Business growth initiatives
As part of our business growth initiatives, we
continue to implement robust Client Service
and BD planning across all member firms. These
comprehensive planning frameworks provide our
member firms with a structured approach to client
delivery, identifying new opportunities to partner
with clients and developing effective strategies to
achieve sustainable business growth.
During the year, we assessed Key Performance
Indicators (KPIs) to support business growth and
monitor progress. Consistently tracking these
KPIs enables us to identify areas for improvement,
allocate resources according to client need, and
drive continued growth across the group.
We have also made significant progress in developing
comprehensive ‘Sales Playbooks’ for our member
firms. These playbooks will serve as practical guides,
providing a standardised approach to sales and BD
activities, best practices, and effective strategies to
attract and retain our valued clients.
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2023 Annual Report
44
In FY23, more than 110 staff received industry
recognition for their expertise.
Our member firms continued to receive global
industry accolades, including:
»
»
»
AJ Park was named Tier 1 firm in New Zealand in
Chambers and Partners Asia Pacific 2023 and
The Legal 500 2023
AJ Park was named Gold band firm in New
Zealand in World Trademark Review 1000 2023
AJ Park was named Tier 1 for Trade Mark
Prosecution and Trade Mark Contentious in the
Managing IP 2023
» Griffith Hack was named Tier 1 for Trade Mark
and Patent Prosecution in Managing IP 2023
» Griffith Hack was ranked Gold for Trade Mark
Prosecution & Strategy (Australia) in World
Trademark Review 1000 2023
»
Spruson & Ferguson Australia was ranked Gold
for Patent prosecution (Australia) in IAM Patent
1000 2023 and Gold for Prosecution and strategy
(Australia) in World Trademark Review 1000 2023
»
»
»
»
»
Spruson & Ferguson Australia was ranked Top
Tier for Trade Mark Prosecution (Australia) in
Managing Intellectual Property 2023
Spruson & Ferguson Asia was ranked Silver for
Prosecution and Strategy (Singapore) in World
Trademark Review 1000 2023
Smart & Biggar was ranked Gold: Trademarks
& Patents (Canada) in World Trademark Review
1000 and IAM Patent 1000 2023
Smart & Biggar was named Top-Tier firm for
IP (Canada) in The Legal 500 2023, Tier One:
Trademarks & Patents (Canada) in Managing
IP 2023, and Band-One: IP, IP Litigation in
Chambers Global 2023
Smart & Biggar was named IP Litigation Firm
of the Year by Benchmark Litigation 2023,
Patent Prosecution Firm of the Year (Canada) by
Managing IP Awards 2023 and IP Boutique Firm of
the Year by Lexpert Canadian Law Awards 2023.
110+ professional staff received
industry recognition for
their expertise
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2023 Annual Report
45
Impact & innovation
Elevate sustainable innovators and
minimise our own footprint
In FY23, the IPH group took additional steps to
identify, assess and manage risks in accordance with
its risk management framework.
We partnered with external advisors South Pole, to
support the development of Greenhouse Gas (GHG)
Emissions measurement reporting, covering Scope
1 - 3 and across our international operations.
Although as a professional services business the
IPH group has minimal carbon or energy- intensive
business activities, we recognise the importance of
disclosing information on key sustainability metrics.
Greenhouse Gas (GHG) Emissions
measurement in FY23
South Pole adheres to international standards such as
the International Greenhouse Gas Protocol, which is
also the framework that underpins carbon accounting
under the ISSB, Climate Reporting Standard (IFRS S2)
– along with ISO 14064 – 1 standard for reporting of
GHG emissions and removals.
The GHG emissions data set out in this report is derived
from IPH Group data provided to South Pole, to which
assumptions, emission factors and extrapolations have
been applied based on the GHG Protocol.
Overview of findings
On the basis of the data reported by IPH and the
estimations done by South Pole, the total GHG
emissions for IPH’s operations in FY23 for Scope 1 –
3, have been calculated as 31,342 tonnes of carbon
dioxide equivalent (tCO2e).
GHG FY23 results by Scope 1, 2 and 3
Scope 1 & 2 emissions account for approximately
2.5% of total GHG emissions, with purchased
electricity the largest Scope 1 & 2 emissions source.
Scope 3 emissions account for the largest
component of total GHG emissions, at 97.5%.
The three largest categories within Scope 3 are
purchased goods and services (65.5% of total
emissions), waste generated in operations (14.6%)
and capital goods (13.2% of total emissions).
GHG FY23 results
by Scope 1, 2 and 3
Scope 1
0.3%
Scope 2
2.2%
Scope
Total emissions (tCO2e)
Scope 1
Scope 2
Scope 3
Total
90
702
30,550
31,342
tCO2e
31,342
Scope 3
97.5%
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2023 Annual Report
46
Scope
Activity
Total emissions (tCO2e)
% of total
Scope 1
Fugitive emissions
Scope 2
Purchased electricity
90
702
0.3%
2.2%
Scope 3
Cat 01 - Purchased goods and services
20,535
65.5%
Cat 02 - Capital goods
4,147
13.2%
Cat 03 - Fuel- & energy-related activities
103
0.3%
Cat 05 - Waste generated in operations
4,573
14.6%
Cat 06 - Business travel
Cat 07 - Employee commuting
Total
1,188
3
3.8%
0.1%
31,342
100.00%
Notes:
Numbers may not round up due to rounding.
The term ‘fugitive emissions’ refers to gases or vapour leaks from a pressurised containment, including common industrial gases such as refrigerants.
Scope 1 emissions
IPH’s direct emissions
in FY23 come from
refrigerant (R410A).
Scope 3 emissions
Emissions from purchased
goods and services, waste
and capital goods, make
up 95% of IPH’s Scope 3
emissions.
IPH’s purchased goods
and services emission
profile is dominated by
Scope 2 emissions
Electricity makes up to 2.2% of the total
emissions and the refrigerants contributes a
further 0.3%.
IPH’s Scope 2 emissions are relatively low, in
line with the nature of IPH’s business activities.
South Pole identified some gaps in electricity
and refrigerant data for a small number of IPH
member firm offices, which may impact the
accuracy of Scope 2 emissions.
service-related expenses (100%), due to the nature of its business
as a professional services group. The services category includes
management consulting services, other financial investment activities,
equipment maintenance and other services. The top two emissions in
the services category for the IPH group are:
»
Foreign agent services, related to the filing and prosecution of IP
rights in overseas IP jurisdictions (40%)
» Official government and regulatory services, related to the filing and
prosecution of IP rights (33%)
Waste generated in operations accounted for 15% of Scope 3 emissions.
Capital goods, such as emissions from equipment used for office
renovations, fit-outs and other equipment purchases (refrigerators and
water purification system), accounted for 13.6% of Scope 3 emissions.
Business travel accounted for 3.9% of Scope 3 emissions.
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2023 Annual Report
47
Scope 3
97.5%
Summary of key findings
»
»
»
»
The total GHG emissions for IPH’s operations
in FY23 for Scope 1 – 3, have been calculated
as 31,342 tonnes of carbon dioxide equivalent
(tCO2e).
Scope 1 & 2 emissions account for
approximately 2.5% of total GHG emissions,
with purchased electricity the largest Scope
1 & 2 emissions source.
Scope 3 emissions account for the largest
component of total GHG emissions, at 97.5%.
The three largest categories within Scope 3
are purchased goods and services (65.5% of
total emissions), waste generated in operations
(14.6%) and capital goods (13.2% of total
emissions).
Total emissions
The total Scope 1
emissions for IPH
accounts for 0.3% of
the total footprint.
tCO2e
90
0.3%
of total
R410A fugitive
emissions accounts for 100% of emissions
from scope 1 and 0.35% of the total
footprint. As IPH does not own any vehicles,
there are no Scope 1 emissions resulting
from mobile combustion.
Assumption summary
Fugitive emissions were calculated using
South Pole’s internal auxiliary calculators.
Total emissions
Teleworking
0.0%
Business travel
3.9%
Waste generated
in operations
15.0%
Capital goods
13.6%
Purchased goods
and services
67.2%
Fuel and energy
related activities
0.3%
tCO2e
30,550
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48
Innovating for the marine
industry, sustainably
Fuel and energy
related activities
0.3%
Partnering with clients to address climate change
AJ Park’s client, ZeroJet’s ambitious goal is to
eliminate the need for combustion engines on water.
The team has proudly developed the world’s best-
performing electric powertrain for small boats and
continue to drive innovation in the marine industry.
Business and life partners, Bex Rempel and Neil Mans,
started out by developing their own electric jet-board,
which stemmed from their love of jet-surfing. In 2019,
they pivoted the business to creating electric jet
systems that could be used on small boats, which is
where ZeroJet was born.
Fast-forward to today, ZeroJet has attracted top
engineering talent from well-known businesses such
as Apple, Rocket Lab, and Bosch. With an experienced
and passionate team, they’ve not only been able to
deliver a system that’s good for the environment, but
one that makes it easy for boat owners to transition to a
sustainable equivalent.
Educating the whole team about the importance of IP
and driving an IP-led culture is also key to ZeroJet’s
success. As well as providing patent and trade mark
support, AJ Park has presented educational seminars
to the team, to help them think more deeply about the
potential value of their daily work.
AJ Park is proud to work with a company such as
ZeroJet, who is paving the way for electric boating
to bring consumers a sustainable alternative to
combustion engines.
Working with clients like ecostore is core to IPH’s group-
wide focus on supporting sustainable practices on a
global scale.
“Our technology is showing people that
electric boating is also really powerful. So,
as well as saving the planet, we’ve built
a 48-volt system that’s outperforming
anything equivalent in the market.”
Bex Rempel
CEO
ZeroJet
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Diversity, equity & inclusion
Close opportunity gaps
to ensure equitable access
Our workforce in FY23
As at 30 June 2023, IPH employed more than 1,300
people across our member firms, serving over 25
countries. The following tables show our workforce
by contract type, employment type and region
across the group. We have also included data on
new hires. This material references Disclosure 401-1
from GRI 401: Employment 2016.
Diversity
Diversity and inclusion remain fundamental to
building a strong culture and attracting key talent.
Part of our support of diversity and inclusion initiatives
is to support the communities in which we operate
through activities such as our participation in Wear
It Purple Day. Wear It Purple is a youth-led initiative to
raise awareness and support safe, empowering and
inclusive environments for rainbow young people.
In terms of diversity, in FY23, the Board adopted a
measurable objective of at least 30% representation
of women on the IPH Limited Board of Directors and
in Senior Executive/Principal roles across the group.
As highlighted in the table below, we exceeded
our target for IPH Limited Board Directors, whilst
our representation of 30% for Senior Executive/
Principal roles fell slightly short of our target of
>30%, owing, in part to a skills shortage in the market.
During FY24, a strategy will be developed to focus
on strengthening gender diversity. This material
references Disclosure 405-1 from GRI 405: Diversity
and Equal Opportunity 2016.
Gender diversity
50%
Females
Board of
Directors
50%
Males
Across
the Group
66%
Females
34%
Males
Senior Executive1
& Principal roles
30%
Females
70%
Males
All other
fee earners2
55%
Females
45%
Males
1) A senior executive is a person who is a member of the Company’s group leadership team, comprising the Company’s senior executive team and leaders of the group’s principal business units.
2) All other fee earners include all registered Lawyers, Patent Attorneys, Trade Mark Attorneys, Clerks and Paralegals who are not in a Principal or Practice Group Leader position.
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Our Diversity Policy outlines other strategies in place to cultivate a diverse workforce. We are pleased to
provide a recap on what we introduced and achieved against some of these strategies in FY23.
Diversity strategy (as outlined
in our Diversity Policy)
What we have done in FY23
Taking steps to attract, retain
and motivate well qualified
employees, Senior Executives
and Board members from a
diverse pool of candidates
»
Launching a group international secondment policy that enables our
people to apply for an opportunity to work in one of our offices around
the world to further their careers
» Continuing to reward employees when they refer a new employee to
the group (payable on successful completion of probation)
»
»
»
Launching a Group Leave Policy enabling employees to work remotely
for up to 90 days per annum
Developing and launching a new Senior Associate Excellence Program
to support Senior Associates to build their client skills and coach and
mentor junior team members
Developing and launching a new curriculum of learning programs for
those in support and specialist shared services roles
Develop a broader pool of
skilled and experienced
employees, Senior Executives
and Board candidates,
including workplace
development programs
» Continuing to roll out the IPH People Leadership Excellence Program
»
»
Launch of People Leader Connect sessions for People Leadership
excellence alumni to practise and apply their learning on a quarterly basis
Developing and launching a Coaching program for People Excellence
alumni participants to further build their leadership practice
» Continued development of the Business Development Excellence
Program
»
Development and launch of our succession planning framework to
identify high performers and focus on where we need to build upon our
talent pipeline
» Continued evolution of our development curriculums for all staff
» Continued opportunities for knowledge sharing sessions and in-house
tutorials through our learning academies
» Continued financial support of our Trainee Attorneys across our member
firms through the completion of the Masters in Intellectual Property
course to enable them to become registered attorneys
»
»
»
»
Taking action against
inappropriate workplace
behaviours including
discrimination, harassment,
vilification and victimisation
Recognising that employees
(female and male) may have
domestic responsibilities and
providing workplace flexibility
that will assist them to meet
those responsibilities
* Excludes those not yet returned from leave.
Providing financial support for postgraduate programs or bespoke
conferences for executives or identified talent in shared services pipeline
Deployment of risk and compliance training for all new starters, with
refresher training rolled out every two years for all staff members
Revising the Hybrid Working Policy to provide greater flexibility
to support employees balancing workplace and domestic
responsibilities
Providing the ability for employees to purchase additional annual
leave for up to an additional two weeks per year
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Parental leave
Our Paid Parental Leave Policy provides primary care
givers with 18 weeks paid leave and secondary care
givers with three weeks paid leave after two years’
service in a group business. The policy is available to
birth parents and adoptive parents and covers special
leave for pregnancy related illness, miscarriage and
birth related complications.
In addition, the policy recognises employees who
have been with the group for a minimum of one year
but less than two years, who are entitled to eight
weeks of paid leave.
Our policy also ensures all employees continue
to receive their usual monthly superannuation
payments, for the first 52 weeks of parental leave,
irrespective of whether they are taking paid or
unpaid parental leave over that period.
In recognising that the path to parenthood is not
always straightforward, we have also introduced
additional paid leave entitlements for miscarriage or
loss of a child on top of existing leave entitlements
mandated by the government.
The following table shows the uptake of parental
leave within our group businesses for the period 1
July 2022 to 30 June 2023. This material references
Disclosure 401-3 from GRI 401: Employment 2016.
Parental leave
Commenced parental leave in FY23
Returned from leave in FY23
Still on leave as at 30 June 2023
Male
Female
6
8
2
34
28
15
All
40
36
17
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Gender diversity of full-time vs part-time employees
Full Time
Part Time
423
Males
755
Females
Total
1,178
15
Males
109
Females
Total
124
Gender diversity of employees by contract type
Number of
permanent staff
Number of
contract staff
427
Males
829
Females
Total
1,256
22
Males
37
Females
Total
59
Approximate employee numbers as at 30 June 2023.
7Principal
appointments 3 Female 4Male
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Workforce by region
Australia
Total 469
Thailand
Total 10
Singapore
Total 133
Philippines
Total 6
New
Zealand
Total 210
Canada
Total 345
Total*
1,315
* Includes all permanent,
contract and casual employees.
Malaysia
Total 41
Indonesia
Total 19
Hong Kong SAR
Total 37
China
Total 45
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New hires by region
Australia
Total 79
Thailand
Total 2
Singapore
Total 19
Philippines
Total 6
New
Zealand
Total 36
Malaysia
Total 41
Canada
Total 52
Total*
217
Malaysia
Total 10
Indonesia
Total 1
Hong Kong SAR
Total 7
China
Total 5
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Mentoring students to
inspire career pathways
In FY23 we continued our flagship community
partnership with Australian not-for-profit
organisation Beacon Foundation, following our
commitment in 2022 of $500,000 over a five-year
period to support Beacon Foundation in fulfilling
its mission to support young people to have the
aspiration, motivation, and ability to determine
their working future.
Beacon Foundation has been delivering career readiness
programs across Australia to students in Years 7-12 for
35 years. All programs connect industry volunteers
to students and are delivered either face-to-face in the
classroom or on-site with industry representatives.
Beacon works in schools in lower socio-economic areas,
providing support to young people who need it most.
Employees in our Australian-based businesses participate
in the program as volunteer mentors, working with
disadvantaged students through programs run by Beacon
and hosted within our offices.
This program is supported by our Volunteering Policy
which entitles all maximum term and permanent
employees access up to a maximum of one day per
annum to engage in workplace volunteering with Beacon
Foundation during working hours.
In FY23, we’ve participated in a number of Beacon
Foundation initiatives, including:
• High Impact Programs with students ranging from
year 9 to year 11 both across the IPH group offices,
and within schools. Groups of up to 30 students
were introduced to the offices of IPH Sydney, Griffith
Hack Melbourne and Perth, and Spruson & Ferguson
Sydney and Brisbane for a day of networking and
workshops, helping them break down barriers
between school and the world of work. To date more
than 50 people across the group have volunteered as
mentors in Beacon programs.
• Beacon Foundation programs that are facilitated in
schools in regional areas.
AUD$500k
committed to a 5-year
partnership with
Beacon Foundation
“Beacon’s partnership with IPH has
provided increased capacity to support
more young Australians to feel empowered
to transition to further education, training
or employment after school. IPH’s
Volunteering Policy has provided a great
opportunity for staff to participate as
volunteers at Beacon programs. IPH staff
have been extremely welcoming, engaging
and proactive during our programs and
have shown a real interest in the students
which is what makes Beacon programs
even more impactful.”
Scott Harris
CEO
Beacon Foundation
“I’m passionate about mentoring young
people, so when the Beacon mentoring
program came up, I jumped at the
opportunity. I see it as a great introductory
program to anyone who’s never mentored
but is interested in doing so.”
Anne Ye
Commercial Finance Manager
IPH Limited
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Active in our communities
» Griffith Hack provided pro bono IP legal
In FY23, our IPH and member firm community,
charity and pro bono participation included, but
was not limited to, the following initiatives:
»
»
»
»
»
»
IPH and member firms participated in Wear
It Purple Day, a youth led initiative to raise
awareness and support safe, empowering
and inclusive environments for rainbow
young people, and R U OK? Day, encouraging
meaningful connection and conversations with
colleagues, friends or family members who may
be struggling with life.
IPH and member firms participated in a number
of Beacon Foundation initiatives, including
High Impact Programs with groups of up to 30
students ranging from year 9 to 11 introduced
to the offices of IPH Sydney, Griffith Hack
Melbourne and Perth, and Spruson & Ferguson
Sydney and Brisbane for a day of networking
and workshops, helping them break down
barriers between school and the world of work.
IPH participated in STEPtember 2022,
Australia’s leading virtual health and wellness
fundraising challenge dedicated to raising
funds for people living with cerebral palsy, with
29,871,248 steps taken.
AJ Park entered a three-year partnership with
the Graeme Dingle Foundation, and employees
have volunteered at Kiwi Can class, attended
the National Excellence Awards, and hosted an
internal quiz fundraiser.
AJ Park staff frequently volunteer in the
community and hold internal fundraising events
for causes such as the NZ Flood Relief Fund.
AJ Park hosted networking drinks with Rainbow
Wellington at Wellington office in November 2022.
assistance to Creality, a Western Australian-
based community arts initiative, and continued
its support of the Arts Law Centre of Australia
through the provision of pro bono document
review services.
» Griffith Hack provided pro bono assistance to
Heart Research Australia, Integra Service Dogs
Australia and Activ Foundation on various trade
mark matters.
» Griffith Hack is a member of the Diversity
Council of Australia, held internal events for
National Reconciliation Week, NAIDOC Week,
and held a seminar facilitated by educational
provider Acknowledge This! on how to give an
authentic Acknowledgement of Country.
»
»
»
»
»
»
Smart & Biggar donated to Food Banks Canada
during the winter holidays in addition to local
office community giving initiatives including food
banks, toy drives, and winter clothing drives.
Smart & Biggar teams raised funds in Charity
Runs in Toronto and Ottawa for Campfire Circle
and Amyotrophic Lateral Sclerosis (ALS).
Spruson & Ferguson hosted the 2022
Millennium Women Leader Accelerator by
EL-LEAD Global Centre of Excellence for
Leadership, Engagement and Development.
Spruson & Ferguson sponsored the Global
Women’s Breakfast organised by Women
in Chemistry NSW and the Royal Australian
Chemical Institute.
Spruson & Ferguson sponsored the GEDITT
EDIT Breakfast at the AUTM conference.
Spruson & Ferguson sponsored the Bridge
Program.
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Supporting New Zealand
students to a brighter future
Member firm AJ Park launched its successful
partnership with the Graeme Dingle Foundation
(the Foundation), an organisation working with
New Zealand’s tamariki and rangatahi at different
life stages.
Working directly with schools and communities,
the Foundation programs help build self-esteem,
and promote good values which teach valuable life,
education and health skills.
The partnership was kicked off in October 2022 and
AJ Park employees have since been presented with
a range of ways to get involved and support the good
work of the Foundation. From volunteering with
existing Foundation programs to attending or hosting
fundraising events, the partnership has so far been a
success with the opportunity to build on this in FY24.
In November, AJ Park Managing Director and two AJ
Park representatives attended the National Excellence
Awardees evening. The evening showcased the far-
reaching impact that the Foundation has on so many
young Kiwis and celebrated the talented rangatahi,
mentors, and volunteers.
Papatoetoe West Primary in Auckland welcomed
AJ Park volunteers to experience a Graeme Dingle
Foundation Kiwi Can class. The theme for the program
was ‘respect’, where the Foundation Leaders used games,
conversation, and activities to illustrate the importance
of respecting one another. These important life lessons
create a foundation for these children to thrive in their
communities and contribute to a better world.
The AJ Park social club hosted a quiz evening in the
Auckland and Wellington offices to raise funds for the
Foundation. Teams were encouraged to donate to the
cause through various ways, including purchasing clues
to quiz questions. The event had a successful turn out
and all money raised was donated to the Foundation.
AJ Park looks forward to its continued involvement
with the Foundation into FY24 with additional
initiatives in the pipeline, including facilitating young
tamariki to gain exposure to the various career options
available to them, including intellectual property law.
“For over 27 years, we have positively
impacted the lives of young people across
Aotearoa. Through AJ Park’s financial
support and engagement, the Foundation
has been able to support more tamariki and
rangatahi through its programs, resulting in a
better New Zealand.”
Sir Graeme Dingle
Founder
Graeme Dingle Foundation
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Committed to reconciliation
Another initiative undertaken as part of our
commitment to equity and inclusion is the work we
have commenced in supporting First Nations people.
In FY23, IPH established a Reconciliation Working
Group with representatives from our Australian
member firms. The Working Group researched with
our clients and a range of external providers how we
could meaningfully contribute towards reconciliation.
The Working Group concluded that the first step in our
reconciliation action plan is to develop a partnership
to improve outcomes in science for First Nations
school students. We are currently engaging with
Reconciliation Australia on our draft Reconciliation
Action Plan, to be released later in FY24.
During National Reconciliation Week 2023, we
announced a partnership with DeadlyScience, a
not for profit organisation with a vision to create
STEM equity for Aboriginal and Torres Strait Islander
learners. Working with primary and high schools in
regional and remote communities, DeadlyScience
provides Science, Technology, Engineering and
Mathematics (STEM) resources and programs to
create effective learning.
In 2020, Australia’s STEM Workforce Report
highlighted that the percentage of Aboriginal and
Torres Strait Islander people with a University STEM
qualification is 0.5%. For non-Indigenous Australians,
5.2% have a STEM qualification - over 10 times as
many as Aboriginal and Torres Strait Islander people.
The DeadlyLearners program provides one-hour
STEM related learning opportunities to primary and
high school students. School teachers request
sessions based on topics within the state syllabus.
DeadlyScience then locates the most appropriate
STEM Legends (STEM experts from research,
education, or industry) to conduct the session.
These sessions are designed to give First Nations
students the chance to learn key ideas, meet STEM
professionals, ask questions and share knowledge.
Under the partnership IPH team members will
provide their time to support DeadlyScience’s
learning programs, including DeadlyLearners, and
assist to grow capacity within DeadlyScience.
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Image credit: DeadlyScience
Education & training
Build a culture of continuous and
holistic learning and development
IPH is committed to investment in its people to
help our staff maximise their own potential.
Our focus in FY23 has been on building our
current and future talent and organisational
capability through further investment, enabling
us to continue to progress towards becoming
an employer of choice. This material references
Disclosure 404-2 from GRI 403: Training and
Education 2016.
Group Staff Development - During FY23, IPH has
invested in the design and delivery of new online
and facilitated development sessions to further
develop key capabilities among employees in all
roles. As part of the group's investment in leading
systems, we have also focused on providing
training and broader support to enable our people
to effectively transition to new ways of working.
During FY23, over 3,200 hours of staff development
training have been delivered to IPH group staff.
Group Professional Development Program
– IPH’s Professional Development Working
Group promotes collaboration in education and
professional development to deliver an extensive
program of sessions to ensure that our people are
up to date with legal frameworks, case law and
developments across the IP spectrum. During FY23,
we have delivered over 1,200 hours of continuous
professional education to over 400 colleagues
working in our member firms.
Group Leadership Development - In FY23 we
continued to focus on building our People
Leadership capability across the group. A further
26 leaders completed our bespoke People
Leadership Excellence Program with over 240
leaders having completed this development
program since its launch in FY21. A new program
has been developed and successfully piloted to
build our leaders' coaching capability to further
enhance our employee experience. We plan to roll
this program out more broadly in FY24.
We have also continued to invest in building the
capability of newly promoted Principals and Senior
Associates with both cohorts participating in
bespoke programs which are specifically tailored
for their respective roles. Already, 38 leaders
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across our member firms have completed one of
these programs and we are looking forward to
rolling out new development opportunities to other
cohorts in FY24.
Over 1,100 hours of formal leadership development
training has been delivered across the group
during FY23.
Junior Talent - During FY23, the group launched
its Graduate Program with an initial cohort of IT
graduates joining the business in February 2023.
We have also designed a broader curriculum to
support Trainee Attorneys, which focusses on
building the required competencies to support the
progression through our defined career pathway
and empowering our emerging talent.
Capability Framework - IPH’s capability framework
provides a defined career pathway for those entering
the IP profession as a trainee all the way through to
Practice Group Leader. The framework continues
to be used to shape our approach to support
recruitment, talent and succession planning, and the
design and delivery of development programs for
those at various stages of their career.
Learning & Development Academies – Our
member firms continue to deliver training locally
through their own Learning & Development
academies with areas of activity including systems
training and professional development, ensuring
we maximise opportunities to develop our people
through exposure and experience.
Financial support for study – Across the group,
in FY23, member firms invested a combined total
of over AUS $570K supporting 64 trainees to
complete their Masters in Intellectual Property,
enabling them to become registered attorneys.
The Dome - Launched in July 2021, the Intranet
continues to provide employees across a number
of our member firms access to centralised training
resources, learning and development resources,
career opportunities across the group, and the latest
group news and information.
240+
leaders have participated in the People
Leadership Excellence Program since FY21
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IT Graduates make
their home at IPH
In February, IPH welcomed two IT graduates as
part of the IPH Graduate Program.
The Graduate Program was launched in FY23, alongside
a broader curriculum developed to support Trainee
Attorneys focusing on building required competencies to
support progression through our defined career pathway
and empowering our emerging talent. Over an 18 month
period, our IT graduates will rotate through a variety of
IT functions, starting in Service Desk, and moving to
Process Improvement and Project Management.
They were warmly welcomed with a morning tea to
introduce them to colleagues from across the IPH team,
in addition to induction training and e-learning, and a
number of meet and greets with different departments
to get to know the business.
“I highly recommend this program to
students who are finishing their studies and
have little experience in the field. With its
comprehensive curriculum and hands-on
approach, the Graduate Program provides a
well-structured and immersive experience
that bridges the gap between theoretical
knowledge and practical application,
preparing individuals for the challenges and
opportunities that await in their careers. One
particular aspect that stands out to me is the
mentorship provided in the program. Having
mentors to turn to for advice and direction
has instilled confidence in me and helped
me navigate the program more effectively.
I feel fortunate to be part of a program that
invests in its participants’ development.”
“I’ve really enjoyed working with many
different people across IPH and our member
firms. While I’m currently working in the
Service Desk role, I’m also looking forward to
learning new things in Process Improvement
and Project Management. I hope that by
experiencing the various rotations in the
Graduate Program I’ll be able to identify
what I enjoy the most and pursue that for
my career. The Graduate Program provides
me with the opportunity to experience
various roles in IT, I have been supported
very well throughout the program and would
recommend the program to others.”
Gavin Zhang
Graduate
Saad Raja
Graduate
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Promotions
Employee referral program
IPH announced 25 promotions across member
firms AJ Park, Griffith Hack, Pizzeys, Smart &
Biggar and Spruson & Ferguson, effective 1 July
2023. This included 7 Principal appointments. 43%
of Principals promoted were women, and 44% of
all fee earners promoted were women. In FY23,
a total of 76 promotions were made, including
31 fee earner promotions, of which 68% were
women. Women also accounted for 71% of non-
fee earner promotions.
Our group-wide employee referral program
provides an attractive benefit to staff who refer
potential candidates who are then successfully
recruited into that business.
Employee Incentive Plan (EIP) participation
In FY23, 268 eligible staff participated in our (EIP),
and we were able to achieve 44.3% of awards in cash
incentives and 41.8% in shares incentives, through
the program. In addition to the cash elements of the
incentive plan, our EIP enables eligible employees
receiving awards in the plan to become shareholders
in IPH, thereby sharing in its success.
50 employee referrals via our
Employee Referral Program
AUD$570k+
to support 64 trainees to complete their
Masters of IP, and launched Graduate Program
with initial cohort of IT graduates
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Smart & Biggar’s
student program for
aspiring IP lawyers
Smart & Biggar is the top choice in Canada for law
school graduates wishing to build a career in IP
law. Each year Smart & Biggar hires a wide range of
students that are enrolled in, or have just graduated
from, Canada’s leading universities. They join Smart
& Biggar for a four-month summer term or one-
year articling term. Many of the students also have
undergraduate and graduate degrees in science
and engineering, giving them a rare combination of
broad legal training and scientific knowledge that is
ideal for a career in IP law.
Law students enjoy a unique work experience with
exposure to all aspects of Intellectual Property law
and agency practice. Each student gains invaluable
hands-on experience working alongside Smart & Biggar
lawyers and agents on matters in patents, trademarks,
copyright and IP litigation. Each member of the student
program receives mentorship to help them reach their
full potential, as well as the opportunity to work directly
with Principals and Associates on real cases from our
high-profile roster of clients. The students also participate
in a firm designed learning program that includes an
introduction to client and practice management, business
development and personal branding, thought leadership
as well as practical skills and substantive knowledge
across the many different areas of IP law.
Many students who participate in the student program
enjoy career growth as the program prepares them for
success from the start of their legal careers in IP. The
scope of work students undertake during their time
allows them to obtain unmatched experience and realise
their potential alongside the best of the best in IP law.
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Contribution to the IP profession
Involvement in, and contribution to, the
development of the IP profession through taking
part in industry events not only builds our internal
talent, it also raises our profile as a market leader
within the IP profession. We regularly contribute to
various events, examples during FY23 include:
»
»
»
»
»
IPH CEO, Dr Andrew Blattman, presented to
industry leaders at the Institute of Patent
and Trade Mark Attorneys of Australia (IPTA)
annual conference, on the state of Australia’s
innovation on the world stage.
IPH Strategic Advisor, Dr Francis Gurry, former
head of the World Intellectual Property
Organisation, presented to IPH clients and
employees on international IP trends.
AJ Park regularly engages with academia
and industry bodies including University of
Auckland, Legalwise and LESANZ to deliver IP
training and share knowledge with the wider
Trans-Tasman IP industry.
AJ Park staff volunteered as invigilators for the
IPTA IP Administrator’s Course in Wellington
and Auckland in April 2023.
AJ Park employees sit on various Trans-Tasman
industry boards and committees including
AIPLA, AIPPI, Asian Patent Attorneys Association
(APAA), American Chamber of Commerce in
NZ, Auckland Women Lawyers Association,
Copyright Tribunal of NZ, IPSANZ, IPONZ
Technical Focus Group, INTA, NZ Sustainable
Business Network, and NZIPA.
» Multiple Griffith Hack Principals lecture on
subjects in the University of Melbourne’s
Masters of Intellectual Property program.
»
A Griffith Hack Principal completed a two-year
term as the President of IPTA, and a Griffith
Hack Consultant is President of the APAA.
» Griffith Hack team members sit on committees
for various organisations including APAA, IPTA,
AmCham Australia, International Trade Mark
Association (INTA), and the Intellectual Property
Society of Australia & New Zealand
» Griffith Hack team members spoke at the World
Renewable Energy Congress, IPBC Australasia,
APAA General Assembly, various Knowledge
Commercialisation Australia events, and the
Fragment-Based Drug Design Conference.
» Griffith Hack sponsored Curtin University’s
Innovation Awards, the Western Australian
Innovator of the Year Awards, and the Victorian
Clean Tech Cluster.
»
Smart & Biggar practitioners sit on various
international IP industry boards and committees
including AIPLA, AIPPI, INTA, IPO, and Marques,
and within Canada including Intellectual
Property Institute of Canada (IPIC), Canadian
Bar Association Ontario (CBAO), Le Forum
international de la propriété intellectuelle –
Québec (FORPIQ) and BIOTECanada.
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»
»
»
»
»
»
Smart & Biggar team members gave IP
presentations at Association of Corporate
Counsel (ACC) Ontario, IPIC/McGill Summer
IP Courses, Canadian International Internet
Dispute Resolution Centre (CIIDRC), Bar
Association of Quebec, the Canadian Lawyer
LegalTech Summit and InvestOttawa, and at
various CLE webinars offered by Intellectual
Property Institute of Canada (IPIC), and AIPLA.
LegalTech Summit and InvestOttawa, and at
various CLE webinars offered by Intellectual
Property Institute of Canada (IPIC), and AIPLA.
A Spruson & Ferguson Associate spoke at
the Hong Kong University of Science and
Technology.
A Spruson & Ferguson Principal spoke at
the Ethics, Professional Skills, and Practice
Management for the Modern Lawyer webinar
hosted by Legalwise Seminars.
A Spruson & Ferguson Principal spoke at the RACI
Bioactive Discovery and Development event.
Spruson & Ferguson Australia attended the KCA
NSW End of Year Networking event and were
silver sponsor for IP Week.
Global conference participation further provides a
forum to network with peers and share knowledge
with other IP professionals. In FY23, staff have
attended or presented at local and international
conferences, including, but not limited to:
»
»
IPTA 2023 Annual Conference
INTA 2023 Annual Conference
»
»
BIO International Convention Boston 2023
BIO International Convention Korea 2023
» QLD Biocheers 2023
»
»
»
»
»
»
NSW Biocheers 2023
Intellectual Property Business Conference
(IPBC) Australasia 2023
American Intellectual Property Law Association
(AIPLA) 2023
Asian Patent Attorneys Association (APAA) 2023
International Association of University
Technology Managers (AUTM) Conference 2023
AmCham Australia Boardroom Series - The
Presidio – 2023
»
Fragment-Based Drug Discovery Conference 2022
» World Renewable Energy Conference 2022
»
»
International Association for the Protection of
Intellectual Property (AIPPI) Conference 2022
Intellectual Property Owners Association (IPO)
Conference 2022
»
National Cleantech Conference 2022
IPH group employees also hold positions on
professional associations, including but not limited
to, the New Zealand Institute of Patent Attorneys,
the Institute of Patent and Trade Mark Attorneys
of Australia (IPTA) and the Intellectual Property
Institute of Canada (IPIC).
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Trainee experiences
life on the client-side
Griffith Hack trainee patent attorney Mitchell
Stott is a technically qualified astrophysicist with
a deep interest in advanced technologies, so when
a secondment at Silicon Quantum Computing
(SQC) was offered to him, he knew it was a unique
opportunity to immerse himself in one of Australia’s
leading quantum technology companies.
With an astrophysics and mechanical engineering degree
from Macquarie University, Mitchell’s understanding
of the theoretical principles of physics allows him to
interpret many of the technical concepts and theories
behind quantum computing technology. And through his
experience and training at Griffith Hack, he has been able
to apply this knowledge through the lens of IP – assisting
SQC’s in-house Intellectual Property team with its IP
portfolio and IP roadmap.
For Mitchell, the opportunity to be embedded within
SQC has accelerated his development as a patent
attorney and highlighted the importance of client
relationships. The experience has also helped improve
his working relationship with clients by providing a better
understanding of the position clients are in when they are
providing instructions on IP matters.
Griffith Hack is proud to work with SQC as they develop
life enhancing, human-centred and world changing
technology – and help position Australia as a global leader
in innovation.
“Silicon Quantum Computing is developing
technology at the cutting edge of science, so
to have the opportunity to undertake a six-
month secondment with them has been an
exciting opportunity. I’ve also really enjoyed
being on the other side of the attorney-
client relationship.”
Mitchell Stott
Trainee Patent Attorney
Griffith Hack
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Wellbeing & flexibility
Create healthy flexible and engaged
teams, built on autonomy and trust
Health, safety and security of employees
» Mental health awareness – initiatives included
We are committed to providing a safe work
environment and flexible work options that support
the diverse individual, team and geographic
circumstances of our people across the IPH group.
During FY23, we have maintained a strong focus on
supporting flexible working arrangements for our
staff, promoting mental health and wellbeing, and
providing management with resources to drive staff
engagement.
Health and wellbeing
Our partnership with Assure, our Employee
Assistance Provider (EAP) for Australia, New
Zealand and Asia and HumanaCare our Employee
Assistance Provider for Canada continue to provide
benefits for our staff and enables the provision of
comprehensive employee support and wellbeing
services. Assure offer support to our people via
the Wellbeing Gateway application, which provides
virtual counselling services and materials accessible
on the IPH group Intranet. The application includes
resources and webinars in support of physical,
social, and emotional health including workouts,
mindfulness activities, healthy eating and other
health and wellbeing resources. HumanaCare offer
employee and family support services in the areas
of short term support, counselling, financial, legal
and stress-related health matters as well as support
for eldercare and community support.
During FY23, we delivered several initiatives to
support health and wellbeing across Australia, New
Zealand and Asia, including but not limited to:
participation in RU OK? Day, an initiative
driven by an Australian non-profit suicide
prevention organisation; and a session focused
on managing uncertainty due to the global
pandemic. More than 400 group employees
participated in one or both of these events.
» Counselling services – as noted above,
working with our partner Assure, we provided
a comprehensive range of resources, including
access to free professional and confidential
counselling services for employees and
their immediate family members. The annual
utilisation rate of the Assure service for FY23
was 6.83%.
» Member firm initiatives - our member firms
facilitated numerous wellbeing initiatives
including flu vaccinations programs, health
insurance benefits, seminars and providing
healthy food in offices.
» Community-based initiatives - initiatives
included the group-wide involvement in the
“STEPtember” event in September 2022, with
29,871,248 steps taken.
Hybrid working approach
Our Hybrid Working Policy has been in place since
FY22, to support our people and their diverse
working arrangements. In FY23, the vast majority
of our workforce across the group worked flexibly,
reflecting our commitment to hybrid working.
17%staff turnover
across the group
in FY23
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IPH Engagement Pillars
What IPH will be focussed upon to improve the Employee Experience:
Embedding our Shared
Services Model
Work with our employees
and stakeholders to
embed our shared services
strategies and delivery
model.
Values and Behaviour Program
Review and relaunch our values and
behaviour program to underpin our new EVP.
Succession Planning
Focused approach to supporting
career transitions and embedding
our succession planning
methodology across the group.
Sustainability
Embedding our
refreshed Sustainability
Strategy and related
framework across
the group.
Employee engagement and motivation
»
Engagement surveys
We are committed to providing the best possible
employee experience for our people. In 2020,
we launched a partnership with Culture Amp to
facilitate regular employee engagement surveys
to track engagement within each of our member
firms. Annual surveys are conducted both at a
group level and within each member firm, providing
insights on staff satisfaction and highlighting areas
of focus to enhance our employee experience.
Based on results and feedback from our 2022
surveys, we introduced several initiatives to drive
employee engagement and satisfaction during FY23.
Our FY23 employee engagement survey, conducted
in March 2023 across the group, highlighted the
positive impacts of these actions, with group-wide
improvements across the following key themes:
Leadership – Increased levels of satisfaction
with the quality of people leadership and the
impact of support our people receive from their
local leader.
» Work / life blend – High levels of support for,
and engagement with, the group’s flexible work
arrangements assisting our people to balance
their commitments outside of work.
»
Development opportunities - Positive feedback
about the evolution of development offerings and
ability to grow and develop capability within roles.
In FY23, we also consulted widely among employees
to develop our Employee Value Proposition (EVP).
Our new EVP is due to launch in early FY24,
alongside the introduction of refreshed recognition
programs and some adjustments, where needed,
for our remuneration and benefits offerings.
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Looking ahead to FY24
As noted before, during FY23 we finalised the
group’s new Sustainability Strategy, following
collaboration with sustainability and impact
specialists, Republic of Everyone.
We also worked with external advisor, South
Pole, to help us conduct Greenhouse Gas (GHG)
emissions measurement for the IPH group,
comprising direct and indirect emissions sources
(Scope 1, 2, 3) of our international operations,
including our member firms.
South Pole’s GHG accounting methodology aligns
to the International Greenhouse Gas Protocol,
which is also the framework that underpins carbon
accounting under the ISSB, Climate Reporting
Standard (IFRS S2).
We are pleased to have a new Sustainability
Strategy in place and look forward to continuing
to strengthen our sustainability activities in FY24
and beyond.
In FY24, we will continue to advance the initiatives
under each of our six sustainability strategic
priorities: Governance, Privacy and Data Security;
Client Experience; Impact & Innovation; Diversity,
Equity & Inclusion; Education & Training; and
Wellbeing & Flexibility.
We will also look to progress alignment with the
ISSB standards and to understand the emerging
jurisdictional requirements in markets in which
we operate.
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Directors’
Report
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 2023.
IPH is a leading international intellectual property (“IP”) services group offering a wide range of IP services and products
to a diverse client base including some of the world’s leading companies, multi-nationals, universities, public sector
research organisations, foreign associates and other corporate and individual clients. IPH was the first IP services group
to list on the Australian Securities Exchange.
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 Peter Warne
Non-executive Director and Chairman
Dr Andrew Blattman
Managing Director and Chief Executive Officer
Mr John Atkin
Non-executive Director
Ms Vicki Carter
Non-executive Director (appointed 5 October 2022)
Ms Robin Low
Non-executive Director
Ms Jingmin Qian
Non-executive Director
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:
Title:
Peter Warne
Non-executive Director (appointed 18th November 2021) and Chairman (appointed 28th February
2022)
Qualifications:
BA (Actuarial Studies), FAICD
Experience and
expertise:
Other current
directorships:
Peter has extensive knowledge of, and experience in, financial services and investment banking,
gained through a number of senior roles at Bankers Trust Australia Limited, including as head of its
Global Financial Markets Group from 1988 to 1999. Peter was a director of the Sydney Futures
Exchange (SFE) from 1990 to 1999, and from 2000 to 2006, and served as its Deputy Chairman from
1995 to 1999.
Peter is Non-executive Director of UniSuper, Argo Investments Limited, Allens, and NSW Net Zero
Emissions and Clean Economy Board, Non-executive Chairman of St Andrews Cathedral School
Foundation. He is also a member of the ASIC Corporate Governance Consultative Panel, and an
adviser to the board of Virgin Australia Airlines.
Former directorships
(last 3 years)
Director of Macquarie Group Limited and Macquarie Bank Limited (2007 to 2022), Chairman (2016
to 2022), Director of ASX Limited (2006-2020)
Interests in shares:
40,000
Special responsibilities:
Chairman. Member – People, Remuneration and Nominations Committee.
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72
Name:
Title:
Dr Andrew Blattman
Managing Director and Chief Executive Officer (appointed 20 November 2017)
Qualifications:
BScAgr (Hons 1), PhD, GraDipIP
Experience and
expertise:
Andrew has nearly 30 years’ experience in the intellectual property profession, having joined IPH
Group member firm Spruson & Ferguson in 1995. He was appointed as a Principal in 1999 and
served as CEO from 2015 to 2017, during which time the firm significantly expanded its footprint in
both the Australian and Asian IP markets, opening new offices in Melbourne, Beijing, Hong Kong
SAR, Jakarta and Bangkok.
Since Spruson & Ferguson’s incorporation and the listing of IPH on the ASX 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
Professional Associations:
FIPTA, APAA, AIPPI, FICPI and IPSANZ
Other current
directorships:
St Paul’s College Foundation
Interests in shares:
2,142,844
Interests in rights:
575,217
Special responsibilities:
CEO
Name:
Title:
John Atkin
Non-executive Director (appointed 23 September 2014)
Qualifications:
LLB (1st Class Hons), BA (Pure Mathematics) (1st Class Hons), FAICD
Experience and
expertise:
Other current
directorships:
John was CEO & Managing Director of The Trust Company Limited from 2009–2013 prior to its
successful merger with Perpetual Limited. A former lawyer, he was Managing Partner and Chief
Executive of Blake Dawson from 2002–2008 and also practised at Mallesons Stephen Jaques (as it
was then known) as a Mergers & Acquisitions Partner for 15 years from 1987–2002.
John is Chairman of the Australian Institute of Company Directors, and Qantas Superannuation
Limited, as well as a Non-executive director of Integral Diagnostics Limited. He served as Chairman
of Outward Bound Australia for over 12 years and has been the Vice Chairman of Outward Bound
International since 2017.
Former directorships
(last 3 years)
Commonwealth Bank Officers Superannuation Corporation Pty Limited
Interests in shares:
129,841
Special responsibilities:
Chairman – People, Remuneration and Nominations Committee. Member - Audit Committee, Risk
Committee, Projects Committee.
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73
Name:
Title:
Vicki Carter
Non-executive Director (appointed 5 October 2022)
Qualifications:
BA (Social Sciences), GradDipMgmt
Experience and
expertise:
Vicki was previously Executive Director, Transformation Delivery at Telstra and held
senior executive roles at National Australia Bank including Executive General Manager –
Retail Bank, Executive General Manager – Business Operations and Executive General
Manager – People and Culture, as well as roles at MLC, ING and Prudential Assurance Co.
Ltd.
Other current
directorships:
Vicki is currently a Non-executive Director of ASX Limited, Bendigo and Adelaide Bank
Limited and Non-executive Director and Chair of Sandhurst Trustees Limited.
Interests in shares:
Nil
Special responsibilities:
Chair – Projects Committee. Member – Audit Committee, People, Remuneration and
Nominations Committee and Risk Committee.
Name:
Title:
Robin Low
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.
Robin is a Director of ASX listed companies: AUB Group Limited, Appen Limited and Marley Spoon
SE. She is also on the boards of Guide Dogs NSW/ACT and the Sax Institute. Robin is a member of
the University of New South Wales audit committee.
Interests in shares:
74,214
Special responsibilities:
Chair - Audit Committee. Member – People, Remuneration and Nominations Committee, Risk
Committee, Projects Committee.
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Name:
Title:
Jingmin Qian
Non-executive Director (appointed 1 April 2019)
Qualifications:
BEc, MBA, CFA, FAICD
Experience and
expertise:
Other current
directorships:
Jingmin previously held senior roles with L.E.K. Consulting, Boral Limited, and Leighton Holdings. She
brings a broad range of commercial experience covering strategy, mergers and acquisitions, capital
planning, investment review and Asian expansion.
Jingmin is a Non-executive Director of Abacus Property Group, Trustee Director of HMC Capital
Partners Fund, a member of Macquarie University Council, a Non-executive Director and National
Vice President of the Australia China Business Council. She is also a senior advisor to leading global
and Australian organisations and Director of Jing Meridian Advisory Pty Ltd. Jingmin is a member of
Chief Executive Women (CEW).
Interests in shares:
8,000
Special responsibilities:
Chair - Risk Committee. Member – Audit Committee, People, Remuneration and Nominations
Committee, Projects Committee.
The non-executive directors hold no interest in options, performance rights or contractual rights to the securities of IPH
Limited as at the date of this 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 2023,
and the number of meetings attended by each Director were:
Name
Board of Directors
Board of Directors
(Scheduled)
(Unscheduled)
People,
Remuneration and
Nominations
Committee
Audit Committee
Risk Committee
Attended
Held Attended
Held
Attended Held Attended Held Attended
Held
Peter
Warne
Andrew
Blattman
John Atkin
Vicki Carter
Robin Low
Jingmin
Qian
6
7
7
4
7
7
7
7
7
4
7
7
4
5
6
6
6
6
6
6
6
6
6
6
4
-
4
2
4
4
4
-
4
2
4
4
-
-
4
3
4
4
-
-
4
3
4
4
-
-
3
1
3
3
-
-
3
1
3
3
Held: represents the number of meetings held during the time the Director held office. A number of the unscheduled Board meetings were related to the cyber incident and called on
short notice so not all Board members were able to attend. Whilst not a member of the committees Andrew Blattman was in attendance except in circumstances of a conflict of
interest. Peter Warne was also in attendance at meetings of committees of which he was not a member.
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2. Company secretary
Philip Heuzenroeder, BEc, LLB, LLM, GAICD (Order of Merit). Philip was appointed Group General Counsel and Company
Secretary on 29 April 2016.
Philip has nearly 30 years’ experience as a solicitor and governance professional, both in private practice and in-house.
His expertise covers a broad range of areas of law including commercial law, competition law, ICT, intellectual property
and litigation. Philip is a former Director of the Cure Brain Cancer Foundation.
3. Principal activities
During the year the principal activities of the Group consisted of IP services related to provision of filing, prosecution,
enforcement and management of patents, designs, trademarks and other IP in Australia, New Zealand, Asia, Canada and
other countries.
From 1 July to 19 July 2022, the group was also involved in the development of autonomous timekeeping software
under a subscription licence model whereby the software is licensed and paid for on a recurring basis, until Practice
Insight Pty Ltd was divested to Anaqua, Inc., which completed on 19 July 2022.
Other than as set out above, there were no significant changes in the nature of activities of the Group during that
period.
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4. Operational and Financial Review
4.1 Operations and financial performance
The summary financial analysis below shows the results on a statutory and underlying basis. The Directors believe it is
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.
The FY23 underlying earnings of the Group have been determined by adjusting statutory earnings amounts to eliminate
the effect of changes in deferred consideration, business acquisition costs, costs associated with managing the cyber
incident, restructuring expenses and IT SaaS implementations costs.
As previously announced, share-based payments expense is now included in underlying earnings and the FY22
underlying results have been restated to include share based payments expense for comparative purposes. Share based
payments may be included in non-underlying results where they are directly related to a non-underlying item. For FY23
total share based payment expense was $6.1 million (FY22 $4.8 million) of which $1.6 million (FY22 Nil) was recorded as
non-underlying business acquisition costs.
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Statutory Results
Revenue and other income (excluding interest) of $496.2 million increased by 29% on the prior year. This increase
included the contribution of the Smart & Biggar business (acquired on 6 October 2022), and foreign currency benefits.
EBITDA increased by 37% to $159.0 million. Net Profit After Tax (NPAT) also increased by 23% to $64.5 million (FY22:
$52.6 million).
Underlying Results
Underlying EBITDA increased by 28% to $170.0 million, including the contribution of Smart & Biggar from 6 October
2022.
Australian & New Zealand IP
Revenue in the Australian & New Zealand IP segment increased by 1% to $289.8 million.
Group filings (ex innovation patents, which were phased out in Australia in Aug 2021) declined by 7.8% for FY23
compared to a market decline of 3.3% for the same period. The relative decline in Group filings in Australia reflects a full
year of the integration of Spruson & Ferguson Australia and Shelston IP in FY23, compared to seven months in FY22.
The Company has previously noted the disruptive impact of member firm integrations on filing activity.
Group filings began to stabilise in 2HFY23 while both Spruson & Ferguson Australia and Griffith Hack recorded
improved filing performance in 2HFY23.
Underlying EBITDA increased by 2% to $103.3 million at a margin of 35.6%. On a like-for-like basis, removing the effects
of currency, revenue declined by 1% and EBITDA decreased by 5%. This represented an improvement from the first
half (where revenue had declined 3% and EBITDA down 6%) notwithstanding some disruption from managing the
response to the cyber incident during March/April 2023.
Asian IP
Asian IP segment revenue increased by 8% to $118.9 million. The segment benefitted from a stronger SGD against the
AUD.
Underlying EBITDA increased by 7% to $54.3 million, including the impact of currency gains. On a like-for-like basis,
EBITDA was steady on the prior year.
The Singaporean hub continued to deliver improved results with like-for-like revenue up by 8% and underlying
earnings growth of 7%. However, this was offset by a significant decline in patent and trade mark revenue in Hong
Kong/China. One of the Group’s larger clients exited operations in China which reflects recent industry supply chain
de-risking as some corporates seek alternative manufacturing locations to China. Continued geopolitical impacts in
the region caused a decline in patent and trade mark revenue in Hong Kong with a decline in translation revenue.
Canadian IP
The Group completed the acquisition of Smart & Biggar, a leading IP firm in Canada, on 6 October 2022.
The FY23 financial results include revenue and earnings contribution from 6 October 2022 (FY22: nil). Smart & Biggar
recorded revenue of $93.8 million and Underlying EBITDA of $31.4 million.
The results were marginally ahead of the Group’s expectations at time of acquisition.
Adjacent Businesses
Adjacent businesses includes the autonomous time keeping software tool, WiseTime. The business was divested on 19
July 2022.
Corporate Office
Excluding the impacts of foreign exchange, a $1.2 million gain, reflecting the revaluation of USD cash and debt, and
adjusting for the inclusion of share based payments $0.7m in FY23 against $2.4m in FY22, Corporate costs increased by
$1.1 million in FY23 due to increased IT, legal and consulting fees.
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Impact of Foreign Exchange Movements
The Group is impacted by movements in foreign exchange rates in the following ways:
(i) Net impact recorded in the P&L account
Group companies invoice a significant proportion of their revenue in USD reflecting the preference of the client base.
Accordingly, the Group carries a material amount of USD denominated cash and receivables. As at 30 June 2023, the
balance sheet contained US$32m in cash and US$39m in receivables. These US denominated assets were offset by a
US$19.5m loan.
Realised foreign exchange gains of $3.1m and unrealised foreign exchange gains of $0.2m were recognised in the P&L
account during the year, resulting in a net foreign exchange gain of $3.3m (FY22 $6.0m gain).
Period end foreign exchange rates used to translate balance sheet accounts were:
FY21
FY22
Smart & Biggar Acquisition Date (6 Oct 22)
FY23
(ii) P&L impact of trading in foreign currencies
AUD/USD
AUD/SGD
AUD/CAD
0.7507
0.6892
-
0.6640
1.0095
0.9588
-
0.8994
-
-
0.8868
0.8798
Revenue derived by the Group is recorded at the rate of the day of transaction. The Group invoiced 40% of its revenue in
USD during the current period, with a relatively low proportion of USD denominated expenses.
The average exchange rate at which this USD revenue was derived was 0.67, while in the comparative period it was 0.73.
Based on the USD profile in FY23, a 1c movement in the AUD/USD exchange rate equates to approximately $2m of
revenue on services charges on an annualised basis.
Average foreign exchange rates used to translate earnings throughout the period were:
FY22
Smart & Biggar Acquisition Date (6 Oct 22)
FY23
Movement
AUD/USD
AUD/SGD
AUD/CAD
0.7256
-
0.6733
(7.8%)
0.9865
-
0.9182
(7.4%)
-
0.8868
0.9048
2%
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4.2 Business model, strategy and outlook
4.2.1 Business model
The Company is an intellectual property group operating a number of professional services businesses providing
intellectual property services (“IP Services”). Up until 19 July 2022, it also operated the WiseTime business, an
autonomous time-keeping software application. WiseTime was divested to Anaqua Inc. on 19 July 2022.
In the Group’s IP Services businesses in Australia, Canada, New Zealand and Asia, revenue is derived from fees charged
for the provision of professional IP Services by each firm as related to securing, enforcing and managing IP rights in the
country (directly or through an agent) in which registration is sought by the client. The business model allows the Group
to generate recurring revenue streams throughout all stages of the IP lifecycle from its long-standing and diverse client
Factors that affect the performance of each business include, amongst others, the performance of the global and
relevant local economies, client activity levels, competitor activity, and the regulatory environment in which the services
base.
are provided.
4.2.2 Strategy and outlook
More information on the Company’s strategy and outlook is included in the “About IPH” and “FY23 Year in Review”
section of the 2023 IPH Annual Report.
4.3 Risks
During FY23 the Company took steps to identify, assess and manage risks in accordance with its risk management
framework. This section provides a summary of the material risks identified by the Company which may have an impact
on the Company’s ability to achieve its operational, financial and strategic targets and the Company’s approach to the
management of such risks.
Cyber Incident
The Group announced on 13 March 2023 that it detected a portion of its IT environment had been subject to
unauthorised access. The Company immediately enacted its cyber response and business continuity plans to address
this incident including establishing new network infrastructure, restoring system functionality and implementing
enhanced cyber security measures.
A forensic investigation identified that a limited set of data was downloaded by an unauthorised third-party during
the incident. The downloaded dataset originated from the Spruson & Ferguson Australia business and primarily
contained data relating to a small number of clients of Spruson & Ferguson Lawyers and certain historical financial
and corporate information.
The Company has conducted a comprehensive post incident review into the incident and has identified further
learnings and opportunities which will be incorporated into strengthening our cyber security measures and ensuring
the strengthening of controls.
IPH has not experienced any known loss of client relationships as a result of this incident and the Company has also
completed a review of regulatory requirements.
The financial impact of the incident is consistent with the Company’s previous announcements. For the month of
March 2023, business disruption contributed to a service charge budget shortfall of approximately $4.4 million (in
aggregate) for the impacted businesses of Spruson & Ferguson Australia and Griffith Hack. In the subsequent months,
Griffith Hack and Spruson & Ferguson Australia collectively exceeded budget by approximately $1.5 million. No further
backlog of filings is expected for either firm. IPH incurred $2.8 million (pre-tax) in non-underlying costs in FY23
including costs for specialist third parties as part of management and remediation of IT systems, legal and other costs.
Adjustments to Statutory Results
Adjustments to the statutory EBITDA have been made for:
•
Changes in deferred consideration – A non-cash $6.3m gain on the remeasurement of the fair value of the
Smart & Biggar earnout due to movements in the Company share price, and the balance being the
remeasurement of the Applied Marks earnout to an achievement of 80%.
• Business acquisition costs ($10.8m)– costs incurred in the pursuit of acquisitions, primarily related to the
acquisition of Smart & Biggar which was completed on 6 October 2022.
• Restructuring expenses ($2.8m) – costs of restructuring across the Group. This predominately included the
costs associated with implementation of Group’s new business process re-engineering programme, the IPH
Way and exit of the former Shelston IP lease.
IT SaaS Implementation costs ($0.9m) – costs associated with the implementation SaaS based projects.
Cyber Security Costs ($2.8m) - costs associated with the Group’s response to the cyber incident during 2H23.
•
•
Dividends
Since the end of the year, the Directors have declared the payment of a final ordinary dividend of 17.5 cents per share,
franked at 35%. This represents 85% of cash adjusted NPAT (NPAT adjusted for net acquisition intangibles amortisation,
the movements in deferred consideration and net share-based payment expense).
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4.2 Business model, strategy and outlook
4.2.1 Business model
The Company is an intellectual property group operating a number of professional services businesses providing
intellectual property services (“IP Services”). Up until 19 July 2022, it also operated the WiseTime business, an
autonomous time-keeping software application. WiseTime was divested to Anaqua Inc. on 19 July 2022.
In the Group’s IP Services businesses in Australia, Canada, New Zealand and Asia, revenue is derived from fees charged
for the provision of professional IP Services by each firm as related to securing, enforcing and managing IP rights in the
country (directly or through an agent) in which registration is sought by the client. The business model allows the Group
to generate recurring revenue streams throughout all stages of the IP lifecycle from its long-standing and diverse client
base.
Factors that affect the performance of each business include, amongst others, the performance of the global and
relevant local economies, client activity levels, competitor activity, and the regulatory environment in which the services
are provided.
4.2.2 Strategy and outlook
More information on the Company’s strategy and outlook is included in the “About IPH” and “FY23 Year in Review”
section of the 2023 IPH Annual Report.
4.3 Risks
During FY23 the Company took steps to identify, assess and manage risks in accordance with its risk management
framework. This section provides a summary of the material risks identified by the Company which may have an impact
on the Company’s ability to achieve its operational, financial and strategic targets and the Company’s approach to the
management of such risks.
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Risk
Description
Management of risk
Personnel
The Company depends on the talent and
Retention practices including conducting regular employee
Strategic
planning and
implementation
The Company conducts its operations in a
market that has undergone significant
changes with the development of
corporatised service providers, to which the
market continues to adjust. This provides the
Group with both opportunities and risks
requiring development and communication
of a clear strategic vision and objectives.
The Board is closely involved in identifying, reviewing and
confirming strategic objectives and reviewing
implementation, including assessing opportunities and risks,
and in providing direction to management.
Competition and
changing market
conditions
The sectors in which the Company operates
are subject to vigorous competition, based
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.
Effective client service, comprising a high level of expertise at
competitive prices delivered in a timely manner. The IPH
Group continues to implement leading IT systems to support
client services. Regular marketing visits or, where travel is not
possible, virtual meetings or other forms of communication,
to maintain and develop client relationships and understand
potential changes in client needs, and internal and external
pressures.
Regulatory
environment
The Company is subject to significant
regulatory and legal oversight.
Regulatory reforms The Group’s service offerings are subject to
changes to government legislation,
regulation and practices including
particularly, if implemented, proposals to
streamline multi-jurisdictional patent filing
and examination processes.
IPH also provides a broad range of IP services and its
operations are geographically widespread, reducing exposure
to any one form of IP country or jurisdiction in which it
operates.
Senior executives ensure that all regulatory and legal issues
affecting 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 systems. 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.
Internal audit program for periodic review of compliance in
areas of identified risk.
The Company is proactive in any review or evaluation of
regulations likely to affect its operations materially, and
works with regulators or review authorities to ensure a
clear understanding of facts and circumstances, and
consideration of all stakeholder perspectives.
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.
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experience of its personnel. The loss of any
surveys and implementing initiatives to improve the
key personnel, or a significant number of
personnel generally may have an adverse
effect on the Company including loss of
employee experience, appropriate remuneration,
incentive programs (both short and long term having
regard to appropriate key performance indicators),
knowledge and relationships. Employee costs
retention awards, working environment and rewarding
represent a significant component of the
Group’s total cost base.
work. Learning and development programs are in place to
attract, develop and build the capability of our workforce
to meet our current and future needs of clients.
Remove single point of failure by, where practicable,
maintaining relationships with clients through multiple
contact points. Dilute the dependency on personnel by
providing value-add services through technology.
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
adjacent service
providers and third
party aggregation
between its clients and IP offices. The
removal of intermediaries in the IP
have an adverse impact on the Group.
IPH’s intermediary role is safeguarded by clients’ reliance
on the Group’s expertise (both general IP expertise and
local expertise) and regulatory barriers such as exclusive
services and requirements for IP applicants to record a
local address for service of documents with the local IP
application and registration process would
rights of patent attorneys to provide various IP related
It is possible that third party service
providers that currently only provide services
office.
with respect to limited aspects of IP
protection may seek to extend their
Other factors which help safeguard the Company’s
intermediary role are effective technology, excellent client
relationships with clients into other aspects
service and efficient operations. The Company also seeks
of the provision of IP services that the Group
to offer its services in a range of secondary markets. Many
currently services causing a diminution of
of these markets have less developed IP regulations and
relationships with clients.
Third party aggregators, such as third parties
offering IP provider “brokerage”-like services
systems and require translations into languages other than
English and are therefore less likely to be affected by
disintermediation or expansion by other providers.
may have an adverse impact on the Group’s
The “network effect” provided by the Group in bringing
relationships with clients.
together a portfolio of member firms supported by leading
infrastructure and providing services across multiple
jurisdictions may reduce the risk of disintermediation and
third party aggregation and may provide an opportunity
for the Group to secure its own additional clients.
Case
management
and technology
systems
The Group’s internally customised systems
The Company has in place business continuity procedures
represent an important part of its operations
as well as a cyber response plan. A new standardised
upon which the Group is reliant.
disaster recovery system is currently being set up to
further reduce risk. The Company conducts appropriate
reviews of its information technology systems, operations
and human resourcing (including as part of its internal
audit program). The Company continually invests in
system enhancements and engages third party suppliers
to assist with its systems development and maintenance.
Cloud has been the first choice for new systems
implemented within the Group. This has allowed the
Group to build a future-proof systems architecture that
integrates well with the expanding business in different
parts of the world.
Standardisation, ongoing documentation of IT
architecture, removal of technical debts and the
introduction of IT change control stabilises the systems
and improves reliability. Remediation work continues to
further strengthen general access controls, segregation of
duties and to enforce control awareness across the group.
Personnel
The Company depends on the talent and
experience of its personnel. The loss of any
key personnel, or a significant number of
personnel generally may have an adverse
effect on the Company including loss of
knowledge and relationships. Employee costs
represent a significant component of the
Group’s total cost base.
Disintermediation,
adjacent service
providers and third
party aggregation
The Group acts as an intermediary agent
between its clients and IP offices. The
removal of intermediaries in the IP
application and registration process would
have an adverse impact on the Group.
It is possible that third party service
providers that currently only provide services
with respect to limited aspects of IP
protection may seek to extend their
relationships with clients into other aspects
of the provision of IP services that the Group
currently services causing a diminution of
relationships with clients.
Third party aggregators, such as third parties
offering IP provider “brokerage”-like services
may have an adverse impact on the Group’s
relationships with clients.
Case
management
and technology
systems
The Group’s internally customised systems
represent an important part of its operations
upon which the Group is reliant.
Retention practices including conducting regular employee
surveys and implementing initiatives to improve the
employee experience, appropriate remuneration,
incentive programs (both short and long term having
regard to appropriate key performance indicators),
retention awards, working environment and rewarding
work. Learning and development programs are in place to
attract, develop and build the capability of our workforce
to meet our current and future needs of clients.
Remove single point of failure by, where practicable,
maintaining relationships with clients through multiple
contact points. Dilute the dependency on personnel by
providing value-add services through technology.
Careful management of staff numbers and salary levels
and consideration of resourcing requirements as the
Company grows.
IPH’s intermediary role is safeguarded by clients’ reliance
on the Group’s expertise (both general IP expertise and
local expertise) and regulatory barriers such as exclusive
rights of patent 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’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 or expansion by other providers.
The “network effect” provided by the Group in bringing
together a portfolio of member firms supported by leading
infrastructure and providing services across multiple
jurisdictions may reduce the risk of disintermediation and
third party aggregation and may provide an opportunity
for the Group to secure its own additional clients.
The Company has in place business continuity procedures
as well as a cyber response plan. A new standardised
disaster recovery system is currently being set up to
further reduce risk. The Company conducts appropriate
reviews of its information technology systems, operations
and human resourcing (including as part of its internal
audit program). The Company continually invests in
system enhancements and engages third party suppliers
to assist with its systems development and maintenance.
Cloud has been the first choice for new systems
implemented within the Group. This has allowed the
Group to build a future-proof systems architecture that
integrates well with the expanding business in different
parts of the world.
Standardisation, ongoing documentation of IT
architecture, removal of technical debts and the
introduction of IT change control stabilises the systems
and improves reliability. Remediation work continues to
further strengthen general access controls, segregation of
duties and to enforce control awareness across the group.
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Technology
disruption
The increasing use of electronic systems and
processes and technology by regulatory
authorities in some markets, as well as
general developments in technology, may
provide opportunities for technology
disruption in the industry.
Cyber security
risk
The increasing reliance on technology in
conducting the operations of the Group gives
rise to the risk that the Group may be
exposed to loss resulting from a cyber
incident or data breach.
Foreign
exchange risk
The Group’s financial reports are prepared in
Australian dollars. However, a substantial
proportion of the Group’s sales revenue,
expenditure and cash flows are generated in,
and assets and liabilities are denominated in,
US dollars, Euros, Singapore dollars and
Canadian dollars.
The need for the Company’s services is safeguarded by the
reliance of target clients on the Group’s expertise (both
general IP expertise and local expertise) and regulatory
barriers such as exclusive rights of patent 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.
Targeted acquisitions of new technologies also increase
the services offered by the Group.
Other factors which help safeguard the Company against
technology disruption include its own investment in and
awareness of effective technology development, and
investment in the 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 electronic systems, are less advanced
technologically and require technical translations into
languages other than English.
The Company has in place business continuity procedures
as well as a cyber response plan. A new standardised
disaster recovery system is currently being set up to
further reduce risk.
Following the cyber incident which impacted a portion of
the Group’s IT environment, which was announced on 13
March 2023, the Company subsequently established new
network infrastructure following a methodical restoration
process. Supported by leading external cyber security
experts, the Company also applied enhanced cyber
security measures, including additional preventative and
detective controls to protect the IT network.
The Company has conducted a comprehensive post
incident review into this incident and has identified further
learnings and opportunities which will be incorporated
into strengthening our cyber security and to ensure a
strengthening of controls.
The Company monitors the foreign currency exposures
that arise from its foreign currency revenue, expenditure
and cash flows and from the foreign currency assets and
liabilities held on its balance sheet. The Company
undertakes regular sensitivity analyses of these exposures.
The Company has foreign currency hedging facilities
available as part of 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.
Conflict of duties
Australian and New Zealand patent and
trademark attorneys are required to abide by
the Code of Conduct for Trans- Tasman
Patent and Trade Marks Attorneys 2018
(Code of Conduct) that requires them to act
in accordance with the law, in the best
interests of their client, in the public interest,
and in the interests of the registered
attorney’s profession as a whole. Similar
The Company has been proactive in any review or
evaluation of regulations likely to affect its operations
materially and works with regulators or review authorities
to ensure a clear understanding of facts and
circumstances, and consideration of all stakeholder
perspectives.
The Company has sought detailed advice on issues of
conflict of interest and compliance with related
professional obligations. The Company actively assists its
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2023 Annual Report
84
professional codes of conduct also apply to
member firms to implement appropriate processes and
patent and trademark attorneys located in
other jurisdictions across the Group. There
procedures for compliance, including relevant professional
standards bodies’ Codes of Conduct and Professional
may be circumstances in with the Company is
Rules.
Compliance with the Code of Conduct has been the
subject of an internal audit program review.
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 or similar codes of conduct may
affect the manner in which the Group
conducts its activities, particularly with the
expansion of the Group to include additional
member firms.
Professional
liability and
The provision of patent and trademark
The Company maintains file management processes which
services and legal services by the Company
are automated, safeguarded, controlled and regularly
uninsured risks
gives rise to the risk of potential liability for
reviewed.
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
program which includes professional indemnity insurance,
which is reviewed each year. 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
the acquisition of other IP businesses. Risks
arise in ensuring that potential acquisitions
are appropriately selected and issues
against the Company’s strategic objectives, values and
culture. Where an appropriate potential acquisition is
identified, the Company undertakes an extensive due
affecting the value of individual acquisitions
diligence process and, where appropriate, engages
are identified and reflected in the purchase
competent professional experts to assist with the due
considerations.
diligence process and appropriate documentation of the
transaction. The Company’s Board is involved in the
review of, and approves, all corporate acquisitions.
Integration of
acquired
businesses
Following the acquisition of new businesses,
The Company seeks to identify potential post- acquisition
risks arise in ensuring the acquired business
risks when assessing potential acquisitions, including for
is properly integrated into the IPH Group,
including addressing people and culture
cultural fit and matching of expectations, and to mitigate
such risks by appropriate transaction and post-acquisition
issues that may arise and ensuring key staff
management structures. Steps are taken following
are retained and value maintained.
acquisition 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 and
has been the subject of an internal audit program review.
professional codes of conduct also apply to
patent and trademark attorneys located in
other jurisdictions across the Group. 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 or similar codes of conduct may
affect the manner in which the Group
conducts its activities, particularly with the
expansion of the Group to include additional
member firms.
Professional
liability and
uninsured risks
The provision of patent and trademark
services and legal services by the Company
gives rise to the risk of potential liability for
negligence or other similar client or third
party claims.
member firms to implement appropriate processes and
procedures for compliance, including relevant professional
standards bodies’ Codes of Conduct and Professional
Rules.
Compliance with the Code of Conduct has been the
subject of an internal audit program review.
The Company maintains file management processes which
are automated, safeguarded, controlled and regularly
reviewed.
The Company has comprehensive quality assurance
processes to ensure appropriate standards of professional
work are maintained.
The Group has in place a comprehensive insurance
program which includes professional indemnity insurance,
which is reviewed each year. 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 acquisition of other IP businesses. Risks
arise in ensuring that potential acquisitions
are appropriately selected and issues
affecting the value of individual acquisitions
are identified and reflected in the purchase
considerations.
The Company assesses potential acquisition opportunities
against the Company’s strategic objectives, values and
culture. Where an appropriate potential acquisition is
identified, the Company undertakes an extensive due
diligence process and, where appropriate, engages
competent professional experts to assist with the due
diligence process and appropriate documentation of the
transaction. The Company’s Board is involved in the
review of, and approves, all corporate acquisitions.
Integration of
acquired
businesses
Following the acquisition of new businesses,
risks arise in ensuring the acquired business
is properly integrated into the IPH Group,
including addressing people and culture
issues that may arise and ensuring key staff
are retained and value maintained.
The Company seeks to identify potential post- acquisition
risks when assessing potential acquisitions, including for
cultural fit and matching of expectations, and to mitigate
such risks by appropriate transaction and post-acquisition
management structures. Steps are taken following
acquisition 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 and
has been the subject of an internal audit program review.
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Management of an
expanded group
With the expansion of the Group to include
new businesses with multiple offices and
across multiple jurisdictions risk may arise
with respect to ensuring the appropriate
structuring and resourcing of key
management and shared services functions
and appropriate reporting and oversight of
Group operations.
As the Group expands, with the oversight of the Board, the
Company continues to review and adapt existing
management structures to ensure appropriate oversight,
reporting requirements, support and resourcing is in place,
and that the Company is attracting, retaining and
motivating appropriate skilled personnel across an
expanded Group. To ensure future state capability, in
terms of the management of the expanding group the
Company is reviewing its operating model.
Global or
regional
economic, health
or physical
events
Risk may arise as a result of global or regional
events in the nature of natural disasters or
other physical events, global or regional
health events, including the global Covid-19
Pandemic, or global or regional economic
shocks or downturns which may impact on
the level of demand for IP services by clients
and their ability to provide or confirm
instructions, the capability and timing for IP
regulatory authorities to accept, review and
progress the prosecution of IP rights, and the
ability of the Group to provide its services.
The nature of the Group’s customer base means that it
receives revenue from a large number of customers
located in a range of jurisdictions such that no one
customer accounts for more than a small percentage of
the overall revenue of the Group.
Further, much of the demand for patent related services
arises from research and development programs
conducted over longer periods that are likely to be less
susceptible to economic impacts in the short term. The IP
prosecution process also generally extends over longer
timeframes and is usually subject to certain fixed
milestone steps which are known in advance and required
to be met to preserve rights, providing a degree of
protection against short term decisions to cease or delay
prosecution.
The Company has in place business continuity procedures
and a cyber response plan. The Company’s transition of its
IT systems to offsite ‘cloud-based’ systems enables remote
conduct of its business by employees, where required.
Similarly, the ability of many customers and IP offices to
continue their core operations in a remote environment
facilitates the ongoing provision of instructions and
responses.
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5. Remuneration Report (Audited)
Introduction from the Nominations and Remuneration Committee Chair
Dear Shareholders,
On behalf of the Board, I am pleased to present the Remuneration Report for the 2023 financial year.
In assessing remuneration outcomes, it is important to consider them in the context of the outcomes achieved for the
Company and its shareholders. During this financial year:
•
•
•
•
The largest transaction in the history of the group was completed, with the acquisition of Smart & Biggar,
Canada’s leading IP Agency firm, in October 2022. This acquisition is consistent with the group’s vision to be the
leading IP Services Group in secondary markets and represented the culmination of three years work made more
challenging by COVID-19.
Like-for-like revenue in the Australian and New Zealand businesses declined by 1% with like-for-like EBITDA
declining 5% as our market share declined in a contracting market.
The Asian business based in our Singapore hub performed at an equivalent level with historical growth rates,
however the Hong Kong and China hub suffered from the loss of a key client as they shifted their focus from
China as well as a decrease in trademark revenue most likely as a result of the geo-political factors affecting the
region.
In March 2023 we detected unauthorised access to a portion of our IT environment in ANZ. While management
responded well to limit the impact of this incursion, the incident and recovery highlighted the need to continue
to strengthen the security and maturity of our IT systems and controls.
Taking into account the above factors and foreign exchange tailwinds the reported financial outcome for FY23 was
satisfactory, however it did not reach a level at which the financial component of the Short-Term Incentive Payment
(“STIP”) was achieved. Both the CEO and the CFO received a portion of their potential STIP referable to the achievement
of their Strategic (including People Engagement and Growth) KPIs.
The 3-year EPS CAGR for FY21-23 was 6.8%. The LTIP payout ratio was 42.4% as outlined in the report. The impact of the
cyber incident negatively affected the result in the last three months of a 3-year testing period.
The Board has reviewed the Long-Term Incentive (LTI) Earnings Per Share (EPS) targets, taking into account appropriate
levels of growth for IPH to pursue in the markets in which the Group operates. As a result, the LTI targets for the 2023
plan have been re-calibrated to align with internal objectives and external expectations whilst maintaining an appropriate
level of stretch.
Across all our business units we saw accelerating market pressure on fixed remuneration reflective of the current
inflationary environment leading to higher than normal increases. The IPH Executive fixed remuneration increases were
increased to be consistent with those across the business.
The Board did not undertake a further external review of the remuneration mix provided to the CEO, CFO and IPH
Executive team in the 2023 Financial year instead utilising the Aon Hewitt Executive survey as the benchmark to ensure
our framework remained competitive.
As the Company continues to grow and mature, we will continue to review the remuneration framework and settings for
all executives and professional staff, including KMP, to ensure its 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. The Committee intends to carry out a thorough review of the Executive Remuneration Framework in FY24.
We look forward to your support and welcome your feedback on our Remuneration Report.
Yours sincerely,
John Atkin
People, Remuneration and Nominations Committee Chair
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The Remuneration Report details the key management personnel (‘KMP’) 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.
The Remuneration Report is set out under the following main topics:
• Overview of Executive Remuneration Framework and Guiding Principles
• Overview of Executive Remuneration
• 2023 Remuneration Outcomes
• Overview of Non-Executive Director Remuneration
• Details of Remuneration of Key Management Personnel
• Service Agreements
• Additional Disclosures Relating to Key Management Personnel
5.1 Overview of Executive Remuneration Framework and Guiding Principles
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, fairness and reasonableness;
• acceptability to shareholders and other stakeholders;
• performance linkage and alignment of executive compensation with remuneration provided across the Group; and
• transparency.
The People, Remuneration and Nominations Committee (‘PRNC’) is responsible for 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 depends on the quality of its directors and other KMP. The remuneration
philosophy is to attract and retain high quality people and motivate high performance.
The PRNC has structured an executive remuneration framework that is market competitive and complementary to the
strategy of the Group.
a) 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.
b) Alignment to participants’ interests:
• rewards capability, experience and performance;
• reflects competitive reward for contribution to growth in shareholder wealth; and
• provides a clear structure for earning rewards.
5.2 Overview of Executive Remuneration
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 executive remuneration and reward framework for executive KMP for FY23 had the following components:
• base salary, short and long-term incentives and non-monetary benefits; and
• other remuneration such as superannuation and long service leave.
The combination of these comprises the executive KMP’s total remuneration.
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The Remuneration Report details the key management personnel (‘KMP’) 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.
The Remuneration Report is set out under the following main topics:
• Overview of Executive Remuneration Framework and Guiding Principles
• Overview of Executive Remuneration
• 2023 Remuneration Outcomes
• Overview of Non-Executive Director Remuneration
• Details of Remuneration of Key Management Personnel
• Service Agreements
• Additional Disclosures Relating to Key Management Personnel
5.1 Overview of Executive Remuneration Framework and Guiding Principles
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, fairness and reasonableness;
• acceptability to shareholders and other stakeholders;
• transparency.
• performance linkage and alignment of executive compensation with remuneration provided across the Group; and
The People, Remuneration and Nominations Committee (‘PRNC’) is responsible for 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 depends on the quality of its directors and other KMP. The remuneration
philosophy is to attract and retain high quality people and motivate high performance.
The PRNC has structured an executive remuneration framework that is market competitive and complementary to the
• focuses on sustained growth in earnings per share as well as focusing the executive on key non-financial drivers of
strategy of the Group.
a) Alignment to shareholders’ interests:
value; and
• attracts and retains high calibre executives.
b) Alignment to participants’ interests:
• rewards capability, experience and performance;
• provides a clear structure for earning rewards.
5.2 Overview of Executive Remuneration
• reflects competitive reward for contribution to growth in shareholder wealth; and
In broad terms, fixed remuneration is set at or above median market levels compared to peers with similar revenues
and market capitalisation and having regard to performance in role, while the short-term incentive component is set
significantly below median levels.
Fixed Remuneration
Fixed remuneration, consisting of base salary, superannuation and any non-monetary benefits, are reviewed annually
by the PRNC, based on individual performance, the overall performance of the Group and comparable market
remuneration. Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for
example, motor vehicle benefits) where any additional costs to the Group are included in the calculation of the fixed
remuneration.
Based on performance the Directors increased the executive KMP’s fixed remuneration for FY23 by 5%, inclusive of the
increase in the Superannuation Guarantee Contribution.
Variable Remuneration
i)
Short term incentive
Financial KPI – The KMP (maximum 50% of STIP Opportunity) have the attainment of the Group Underlying EBITDA
budget (on an FX adjusted or constant currency basis) as their financial target. Group Underlying EBITDA was selected as
it is the most common measure used to assess the group’s financial performance.
Strategic KPI’s – The KMP (maximum 50% of STIP Opportunity) have the attainment of a number of individual objectives
in line with the Board approved strategy of:
• Consolidation of acquisitions; organic growth; and growth step-outs. (30%)
• People and engagement (20%)
ii)
Long term incentive
Under the long-term incentive plan, the CEO and CFO are issued Performance Rights which entitle the holder at the
Vesting Date (as determined by the Board post the finalisation of the audited results in FY26) to an 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 (3 Financial Years). 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 Target) and a minimum target for EPS for the
Performance Period (Minimum EPS Target) prior to any issue from year to year. For vesting to occur, EPS for the
Performance Period must be at least equal to the Minimum EPS Target. The relevant targets are outlined below.
As noted in previous reports, the Board also considered the possible inclusion of additional performance conditions
based on alternative measures including those based upon capital returns however assessed they were not appropriate
for inclusion. The Board will ensure that management continues to apply a disciplined approach to investing the Group’s
capital when evaluating acquisitions, other investment opportunities and transformation projects.
From time to time, the Committee evaluates the impact on incentive outcomes of certain material approved projects, to
ensure that any costs incurred are taken into account, as well as the benefits which will ultimately flow through the
incentive outcomes. To that end, any costs incurred on The IPH Way program (announced during the financial year) in
FY23 and FY24 will be capitalised for LTIP purposes and amortized over 4 years commencing in FY25.
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 executive remuneration and reward framework for executive KMP for FY23 had the following components:
• base salary, short and long-term incentives and non-monetary benefits; and
• other remuneration such as superannuation and long service leave.
The combination of these comprises the executive KMP’s total remuneration.
Change to threshold and stretch EPS target
The Board has reviewed the Long-Term Incentive (LTI) Earnings Per Share (EPS) targets, taking into account appropriate
levels of growth for IPH to pursue in the markets in which the Group operates. As a result, the LTI targets for the 2024
plan have been re-calibrated to align with internal objectives and external expectations whilst maintaining an appropriate
level of stretch.
The table below outlines how Performance Rights issued in calendar 2023 (the FY24 Plan) will vest based on the
Company’s EPS performance over the Performance Period (measured by calculating the CAGR between EPS for FY23 and
EPS for FY26. The Committee intends to carry out a thorough review of the Executive Remuneration Framework in FY24.
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EPS in FY26
Percentage of Performance Rights that Vest
Less than 4% CAGR in EPS over the Performance Period
Nil vesting
Equal to 4% CAGR in EPS over the Performance Period
25% vesting
CAGR in EPS greater than 4%, up to and including 10% CAGR in
EPS over the Performance Period
Pro-rated vesting on a straight-line basis
At or above 10% CAGR in EPS over the Performance Period
100% vesting
Dividends are not paid on Performance Rights.
Summary of plan design
The maximum short incentive remained constant at 33% of the fixed remuneration for the CEO and 25% of the fixed
remuneration for the CFO for both FY23 and FY22. The maximum long-term incentive was increased for FY23 with the
FY23 LTIP for the CEO to 133% of the fixed remuneration, and to 85% of the fixed remuneration for the CFO.
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5.3 2023 Remuneration Outcomes
The Group aims to align its Executive remuneration to its strategic objectives and the creation of sustainable
shareholder value. The alignment of the Group’s remuneration policy with the improvement in the business over the
last five financial years can be seen in the table below:
2019
2020
2021
2022
2023
NPAT (‘000)
53,112
54,752
53,600
52,564
64,541
EPS (cents per share)
Underlying EPS (cents per share)
26.9
31.7
25.9
36.6
24.8
35.0
24.0
39.5
28.4
43.6
Dividends Paid (‘000)
51,360
61,015
62,432
65,401
70,006
Total Dividends (cents per share)
Share Price (30 June closing price)
25.0
$7.46
28.5
$7.46
29.5
$7.80
30.5
$8.16
33.0
$7.83
*In 2023 SBP were included within the “underlying” results. ** EPS calculated for the purposes of LTIP vesting is calculated below.
2023 STIP Outcomes – Performance commentary
The Group achieved an Underlying EBITDA of $170.0m which included FX tailwinds. The average AUD/USD rate in FY22
was 67.3c versus a rate of 72.6c in the prior year. A 1c movement in this rate impacts service charges by approximately
$2m on an annualised basis. Whilst the result was acceptable, when adjusted for FX compared to the budget, the
performance did not meet the minimum financial KPI target threshold.
Financial KPI
The financial KPI is calculated on a constant currency basis and has a base, target and a stretch, as outlined in the table
below.
Achievement
97.5%
100%
102.5%
Payout Ratio
50%
75%
100%
The purpose of a constant currency calculation is to remove the impact of the difference between actual exchange rates
incurred and the budgeted rate. The key exposure of the Group is to the USD. The budgeted AUD:USD for FY23 was
70.0c. The actual average rate incurred was 67.3c.
The table below outlines the calculation of the constant currency EBITDA for comparison to budget EBITDA:
• the base is the “underlying” EBITDA;
• the first adjustment removes FX gains and losses recorded in the financial accounts while the second reflects the
difference in exchange rates at which revenue and expense items were recorded versus the budgeted rate; and
• this is then compared to the Group budget.
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Reported Group Underlying EBITDA
Accounting FX adjustment
Budgetary FX adjustment
Constant Currency Underlying EBITDA
IPH Group EBITDA Budget
Financial KPI Budget Achievement
Strategic KPI
170.0
(3.3)
(6.6)
160.1
168.4
95.1%
In making short term incentive decisions for the KMP, the Board set out to balance achievement with reasonable
business risk and shareholder outcomes.
The Board agreed strategic plan objectives remained in the areas of consolidating acquisitions, growth steps outs
(acquisitive growth) as well as people and culture objectives to build a high performance organisation with superior
capability and leadership.
Unfortunately whilst the group displayed resilience in the face of the cyber incident and has actively identified and
rectified issues and improved controls to prevent recurrence, it is important that we hold relevant executives
accountable including the KMP as improved performance in these areas will drive shareholder value.
The KMP were awarded 37% of their maximum short term incentive opportunity.
Performance highlights included:
Consolidating acquisitions – During the year Smart and Biggar integrated into the group, successfully transitioning it
from a partnership structure into a corporate model.
Organic growth – During the year the group consolidated systems in Finance to improve efficiency across our
Australian, New Zealand and Asian operations. A client relationship management (CRM) system was also launched. We
also grew our client portfolio with the addition of a number of significant clients to the Group.
Growth step-outs – The completion of the Smart & Biggar acquisition represented the culmination of a three-year,
complex, foreign transaction in a new jurisdiction, significantly adding to the Group’s global footprint. Further progress
has been made in expanding the Group in secondary IP markets.
People and Culture - In 2023, the KMP were assessed as having met the majority of the people and culture key
performance indicators. This included the emphasis on building capability with the continued roll out of the leadership
excellence programs, more robust approach to improving employee engagement, greater focus on succession planning
and movement towards driving greater organisational performance through the improvements in key performance
indicator setting and monitoring. For the first time all people and culture outcomes were contingent on the completion
of risk and compliance training across the group to ensure we build a sustainable and accountable culture.
2023 STIP Outcomes – Individual KMP outcome
2023
2022
Executive
STI
Forgone %
STI
Paid (%)
STI
Payment ($)
STI
Forgone %
STI
Paid (%)
STI
Payment ($)
Andrew Blattman
John Wadley
63
63
37
37
163,718
59,635
45
50
55
50
231,776
76,750
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2021 LTIP Grant Outcomes – tested at the conclusion of the 2023 financial year
The performance period for the 2021 LTIP commenced on 1 July 2020 and concluded on 30 June 2023. Performance
was assessed at the end of the 2023 financial year and as a result of performance over the period, there was a partial
vesting.
In determining the calculation of the Underlying EPS, adjustments are made to statutory profit after tax. Since the grant
of the 2021 LTIP, the Group has changed the way it reports non-cash share-based payments. Previously, they were
excluded from the calculation of Underlying EPS. Therefore, they are added back to assess target achievement on a
consistent basis. The outcome for FY23 is as follows:
Statutory Net Profit after tax ($M)
Net amount of non-cash amortisation expenses of acquired
intangibles
Net amount of non-cash share based payments as part of the share
incentive plan
Net amount of adjustment to statutory results as disclosed in the
Operational and Financial Review
Underlying Net Profit after tax
Underlying EPS (cents per share)
64,541
26,673
3,273
7,641
102,128
45.0
Grant
Performance Period
Measure
Minimum
Maximum
Performance Achieved
2021
1 July 20 – 30 June 23
Underlying
EPS CAGR
5%
12.5%
6.8%
On the basis of the underlying EPS achieved, the Underlying EPS CAGR equated to 6.8%, which led to a pay-out of 42.4%
of the maximum award. The basis for calculation of the proportion of the award is detailed in note 33 of the financial
statements.
In making this assessment, the Board did note the significant impact of the adjustments for non-underlying items.
However, the quantum of each of the items included was objectively determined and the calculation made consistent
with the principles applied in past years. The Board did not exercise any discretion in determining the level of
achievement.
Executive
Maximum
Award1 ($)
Rights
% Vested
% Forfeited
Vested ($)2
Expensed ($)3
Andrew
Blattman
John
Wadley
1,250,000
163,613
450,000
58,901
42
42
58
58
543,182
408,954
195,547
147,224
1. Maximum remuneration attributable to rights
2. Value of shares vesting at 30 June 2023 share price
3. Expensed in the IPH Group P&L account over the life of the award
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5.4 Overview of Non-Executive Director Remuneration
Fees and payments to non-executive Directors reflect the demands and responsibilities of their role. Non-executive
Directors’ fees and payments are reviewed periodically by the PNRC. The PNRC may, from time to time, receive advice
from independent remuneration consultants to ensure Non-executive Directors’ fees and payments are appropriate and
in line with the market.
The Chairman’s fees are determined independently from the fees of other non-executive Directors based on
comparative roles in the external market. Non-executive Directors do not receive share options or other incentives and
their remuneration must not include a commission on, or a percentage of, operating revenue.
Non-executive Director fees paid (Directors’ fees and committee fees) (inclusive of superannuation) for the year ended
30 June 2023 are summarised as follows:
Name - Position
Peter Warne – Chairman
John Atkin - Director
Robin Low - Director
Jingmin Qian - Director
Vicki Carter – Director (appointed 5th October 2022)
FY23 Fees ($)
330,000
165,000
165,000
165,000
122,440
947,440
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.
5.5 Details of Remuneration of Key Management Personnel
Amounts of remuneration
The key management personnel of the Group consisted of the following directors of IPH Limited:
• Peter Warne – Non-executive Chairman
• Andrew Blattman – Managing Director and Chief Executive Officer
• John Atkin – Non-executive Director
• Robin Low – Non-executive Director
• Jingmin Qian – Non-executive Director
• Vicki Carter – Non-executive Director (appointed 5th October 2022)
and the following person:
• John Wadley – Chief Financial Officer
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Statutory Remuneration Table - KMP
Non-executive
Directors
Peter Warne4
John Atkin
Robin Low
Jingmin Qian
Vicki Carter5
Former Director:
Short-term benefits
Post-
employment
benefits
Long-
term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Employee
Leave1
Super
annuation
Employee
Leave2
Equity-
Settled3
Total
$
$
$
$
$
2023
2022
2023
2022
2023
2022
2023
2022
2023
304,708
144,758
149,321
150,000
149,321
150,000
149,321
150,000
110,806
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,292
12,117
15,679
15,000
15,679
15,000
15,679
15,000
11,635
20,091
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
330,000
156,875
165,000
165,000
165,000
165,000
165,000
165,000
122,440
218,946
Richard Grellman6
2022
198,855
Executive Directors:
Andrew Blattman
2023
2022
1,305,203
163,718
1,249,350
231,776
(4,002)
50,657
25,292
23,568
52,844
228,225
1,771,281
(96,223)
540,429
1,999,557
Other Key Management Personnel:
John Wadley
2023
2022
614,578
588,516
59,635
76,750
(6,295)
(18,674)
25,292
23,568
16,685
(7,073)
60,867
770,763
192,791
855,878
1. Employee Leave balances represent the movement in the accrued annual leave balance during the year.
2. Employee Leave balances represent the movement in accrued long service leave balances during the year. Negative movements reflect a remeasurement of Long Service Leave discount rates during
FY22.
3. Accounting charge based on the fair value of the award at date of grant. Total number of rights are included in the performance rights holding table at the end of this report.
4. Peter Warne commenced as a Non-Executive director on 18th November 2021. FY22 balances represent remuneration from that date.
5. Vicki Carter commenced as a Non-Executive director on 5th October 2022. Balances represent remuneration from that date
6. Richard Grellman ceased to be a Non-executive director on 28th February 2022. Balances represent remuneration to that date
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95
Remuneration Outcomes Table – Executive KMP
5.7 Additional Disclosures Relating to Key Management Personnel
The following disclosures relate only to equity instruments in the Company or its subsidiaries.
The following table summarises the remuneration outcomes for the CEO and CFO for the year ended 30 June 2023. The
remuneration outcomes detailed in this table reflect actual value received by the participants.
Shareholding
Cash salary1
$
Cash
bonus2
$
Other
Benefits3
Vesting LTIP
Award
(Shares)4
$
$
Total
$
1,305,203
163,718
74,134
543,182
2,086,237
1,249,350
231,776
(21,998)
763,205
2,222,333
614,578
588,516
59,635
76,750
35,682
(2,179)
195,547
274,755
905,442
937,842
Andrew Blattman
John Wadley
2023
2022
2023
2022
1. Base pay less superannuation. (Superannuation is shown in Other Benefits
2. STIP payment based on outcome of FY23 performance.
3. Other benefits include superannuation and movement in long and short term leave balances
4. Value of shares of the LTIP vesting in FY23 based on the IPH share price at 30 June 2023 of $7.83. (FY22: IPH Share price at 30 June 2022 of $8.16)
5.6 Service Agreements
Remuneration and other terms of employment for KMP are formalised in service or employment agreements. Details of
these agreements are as follows:
Dr Andrew Blattman, Managing Director and Chief Executive Officer.
• Remuneration package (inclusive of superannuation) applicable from 1 September 2022 of $1,340,850. Annual
superior performance bonus of up to 33% of remuneration and a long-term incentive opportunity of 133% of
remuneration.
• Remuneration package (inclusive of superannuation) applicable from 1 September 2023 of $1,407,893. Annual
superior performance bonus of up to 33% of remuneration and a long-term incentive opportunity of 133% of
remuneration.
John Wadley, Chief Financial Officer.
• Remuneration package (inclusive of superannuation) applicable from 1 September 2022 of $644,700. Annual
superior performance bonus of up to 25% of remuneration and a long-term incentive opportunity of 85% of
remuneration.
• Remuneration package (inclusive of superannuation) applicable from 1 September 2023 of $676,935. Annual
superior performance bonus of up to 25% of remuneration and a long-term incentive opportunity of 85% of
remuneration.
Executive 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, the KMP will be subject to a restraint of trade
period of 12 months throughout Australia, New Zealand and Singapore. The enforceability of the restraint is subject to all
usual legal requirements. KMP have no entitlement to termination payments in the event of removal for misconduct.
Andrew Blattman receives five weeks annual leave.
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96
The number of shares in the Company held during the financial year by each Director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
30 June 2023
Additions
Disposals
Balance at the
start of the year
Balance at the
end of the year
Andrew Blattman
2,449,314
93,530
(400,000)
2,142,844
125,247
4,594
74,214
40,000
8,000
-
-
73,834
33,671
(32,505)
2,722,609
179,795
(432,505)
2,469,899
30 June 2022
Additions
Disposals
Balance at the
start of the year
Balance at the
end of the year
Richard Grellman1
54,108
902
(55,010)
Andrew Blattman
2,323,751
125,563
121,053
4,194
74,214
-
-
-
36,165
37,669
73,834
2,609,291
168,328
(55,010)
2,722,609
1Richard Grellman ceased to be a Director on 28 February 2022. Disposal represents no longer being designated as a Director, not necessarily a disposal of holding
Ordinary shares
Peter Warne
John Atkin
Robin Low
Jingmin Qian
Vicki Carter
John Wadley
Ordinary shares
Peter Warne
John Atkin
Robin Low
Jingmin Qian
John Wadley
40,000
129,841
74,214
8,000
-
75,000
-
-
-
2,449,314
125,247
74,214
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5.7 Additional Disclosures Relating to Key Management Personnel
The following disclosures relate only to equity instruments in the Company or its subsidiaries.
Shareholding
The number of shares in the Company held during the financial year by each Director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
30 June 2023
Ordinary shares
Balance at the
start of the year
Additions
Disposals
Balance at the
end of the year
Peter Warne
-
40,000
-
40,000
Andrew Blattman
2,449,314
93,530
(400,000)
2,142,844
John Atkin
Robin Low
Jingmin Qian
Vicki Carter
John Wadley
125,247
4,594
74,214
-
-
-
8,000
-
-
-
-
-
73,834
33,671
(32,505)
129,841
74,214
8,000
-
75,000
2,722,609
179,795
(432,505)
2,469,899
30 June 2022
Balance at the
start of the year
Additions
Disposals
Balance at the
end of the year
Ordinary shares
Richard Grellman1
Peter Warne
54,108
-
902
-
Andrew Blattman
2,323,751
125,563
John Atkin
Robin Low
Jingmin Qian
John Wadley
121,053
4,194
74,214
-
-
-
36,165
37,669
(55,010)
-
-
-
-
-
-
-
-
2,449,314
125,247
74,214
-
73,834
2,609,291
168,328
(55,010)
2,722,609
1Richard Grellman ceased to be a Director on 28 February 2022. Disposal represents no longer being designated as a Director, not necessarily a disposal of holding
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97
Option holding
6. Shares under performance rights
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.
Details of unissued shares or interests under performance rights across all incentive plans of the Group at the date of
Performance rights holding
The number of performance rights issued to KMPs is set out below:
Executive
Plan1
Balance
at Start
of Year
Granted
During
Year
Vested
Forfeited
FY23
Expense3
Unvested
at end
of year
Future
P&L
Expense
No
%2
No
%
There were no unissued ordinary shares of IPH Limited under option at the date of this report.
Andrew
Blattman
2020
93,530
-
(93,530)
2021
163,613 -
2022
177,264 -
2023
-
234,340
John
Wadley
2020
33,671
2021
58,901
2022
63,893
-
-
-
2023
-
72,010
-
-
-
(33,671)
-
-
-
590,872 306,350
(127,201)
1. Financial year in which the award is granted.
2. % of maximum award
3. Expense for the 2020 award includes an adjustment for the forfeited award expensed in prior years.
-
-
-
-
-
-
-
-
-
-
-
(106,968)
-
-
(94,241)
58
(215,639)
69,372
22,249
-
-
-
-
-
-
148,057
177,264
321,670
402,775
234,340
806,654
(38,509)
-
-
(33,927)
58
(77,631)
24,974
8,010
-
-
(128,168)
-
-
-
53,238
63,893
115,665
123,768
72,010
247,875
289,091
641,853
1,522,123
This concludes the remuneration report, which has been audited.
Type
Number
of Shares
Class
Exercise
Price
Expiry Date
IPH Limited
Performance
2,530,339
Ordinary
0.00
Up to Sept 2025
this report are:
Issuing
Entity
7. Shares under option
8. Dividends
Dividends paid during the financial year were as follows:
Final dividend of 16.0 cents per share for the year ended 30 June 2022, paid on 16
September 2022 (50% Franked) (A$’000s)
Interim dividend of 15.5 cents per share for the year ended 30 June 2023, paid on
17 March 2023 (40% Franked) (A$’000s)
35,099
34,907
9. Significant changes in the state of affairs
There were no other significant changes in the state of affairs of the Group during the financial year.
10. Matters subsequent to the end of the financial year
IPH has continued to assess complementary acquisition opportunities in Canada and in other core secondary IP markets.
In Canada, IPH believes a number of further consolidation opportunities exist to expand patent market share.
In line with its previously announced strategy, IPH is in discussions with parties regarding such potential opportunities,
with one potential opportunity expected to be announced post publication of FY23 results, and another opportunity
IPH is also continuing to pursue other acquisition opportunities, and is involved in discussions in relation to such
being actively pursued.
opportunities.
11. Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
12. Indemnity and insurance of officers
The Company has indemnified the Directors and executives of the Company 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.
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98
6. Shares under performance rights
Details of unissued shares or interests under performance rights across all incentive plans of the Group at the date of
this report are:
Issuing
Entity
Type
Number
of Shares
Class
Exercise
Price
Expiry Date
IPH Limited
Performance
2,530,339
Ordinary
0.00
Up to Sept 2025
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 16.0 cents per share for the year ended 30 June 2022, paid on 16
September 2022 (50% Franked) (A$’000s)
Interim dividend of 15.5 cents per share for the year ended 30 June 2023, paid on
17 March 2023 (40% Franked) (A$’000s)
35,099
34,907
9. Significant changes in the state of affairs
There were no other significant changes in the state of affairs of the Group during the financial year.
10. Matters subsequent to the end of the financial year
IPH has continued to assess complementary acquisition opportunities in Canada and in other core secondary IP markets.
In Canada, IPH believes a number of further consolidation opportunities exist to expand patent market share.
In line with its previously announced strategy, IPH is in discussions with parties regarding such potential opportunities,
with one potential opportunity expected to be announced post publication of FY23 results, and another opportunity
being actively pursued.
IPH is also continuing to pursue other acquisition opportunities, and is involved in discussions in relation to such
opportunities.
11. Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
12. Indemnity and insurance of officers
The Company has indemnified the Directors and executives of the Company 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.
iphltd.com.au
2023 Annual Report
99
13. Indemnity and insurance of auditor
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 of a contract to insure the auditor of the
Company or any related entity.
13. Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
14. Proceedings on behalf of the Company
the Company or any related entity against a liability incurred by the auditor.
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
Company or any related entity.
responsibility on behalf of the Company for all or part of those proceedings.
14. Proceedings on behalf of the Company
15. Non-audit services
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
auditor are outlined in note 24 to the financial statements.
responsibility on behalf of the Company for all or part of those proceedings.
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
15. Non-audit services
imposed by the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
auditor are outlined in note 24 to the financial statements.
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
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
objectivity of the auditor; and
imposed by the Corporations Act 2001.
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
The Directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
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.
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
16. Officers of the Company who are former partners of Deloitte Touche Tohmatsu
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.
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.
17. Rounding of amounts
16. Officers of the Company who are former partners of Deloitte Touche Tohmatsu
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument dated
24 March 2016 and in accordance with that Instrument amounts in the annual financial report are rounded off to the
There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.
nearest thousand dollars, unless otherwise indicated.
17. Rounding of amounts
18. Auditor’s independence declaration
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument dated
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
24 March 2016 and in accordance with that Instrument amounts in the annual financial report are rounded off to the
on the following page.
nearest thousand dollars, unless otherwise indicated.
19. Auditor
18. Auditor’s independence declaration
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001. This report
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
is made in accordance with a resolution of Directors, pursuant to section 298(2) (a) of the Corporations Act 2001.
on the following page.
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001. This report
17 August 2023
is made in accordance with a resolution of Directors, pursuant to section 298(2) (a) of the Corporations Act 2001.
Sydney
Dr Andrew Blattman
19. Auditor
CEO and Managing Director
Dr Andrew Blattman
CEO and Managing Director
17 August 2023
Sydney
13. Indemnity and insurance of auditor
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 of a contract to insure the auditor of the
Company or any related entity.
14. Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
15. Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 24 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.
The Directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise
the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
• 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.
16. Officers of the Company who are former partners of Deloitte Touche Tohmatsu
There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.
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 accordance with that Instrument amounts in the annual financial report are rounded off to the
nearest thousand dollars, unless otherwise indicated.
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.
19. Auditor
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001. This report
is made in accordance with a resolution of Directors, pursuant to section 298(2) (a) of the Corporations Act 2001.
Dr Andrew Blattman
CEO and Managing Director
17 August 2023
Sydney
iphltd.com.au
2023 Annual Report
100
13. Indemnity and insurance of auditor
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 of a contract to insure the auditor of the
Company or any related entity.
13. Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
14. Proceedings on behalf of the Company
the Company or any related entity against a liability incurred by the auditor.
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
Company or any related entity.
responsibility on behalf of the Company for all or part of those proceedings.
14. Proceedings on behalf of the Company
15. Non-audit services
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
auditor are outlined in note 24 to the financial statements.
responsibility on behalf of the Company for all or part of those proceedings.
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
15. Non-audit services
imposed by the Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
auditor are outlined in note 24 to the financial statements.
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
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
objectivity of the auditor; and
imposed by the Corporations Act 2001.
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
The Directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
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.
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
16. Officers of the Company who are former partners of Deloitte Touche Tohmatsu
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.
There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.
17. Rounding of amounts
16. Officers of the Company who are former partners of Deloitte Touche Tohmatsu
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument dated
24 March 2016 and in accordance with that Instrument amounts in the annual financial report are rounded off to the
There are no officers of the Company who are former partners of Deloitte Touche Tohmatsu.
nearest thousand dollars, unless otherwise indicated.
17. Rounding of amounts
18. Auditor’s independence declaration
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument dated
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
24 March 2016 and in accordance with that Instrument amounts in the annual financial report are rounded off to the
on the following page.
nearest thousand dollars, unless otherwise indicated.
19. Auditor
18. Auditor’s independence declaration
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001. This report
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
is made in accordance with a resolution of Directors, pursuant to section 298(2) (a) of the Corporations Act 2001.
on the following page.
Dr Andrew Blattman
19. Auditor
CEO and Managing Director
Deloitte Touche Tohmatsu continues in office in accordance with section 327 of the Corporations Act 2001. This report
17 August 2023
is made in accordance with a resolution of Directors, pursuant to section 298(2) (a) of the Corporations Act 2001.
Sydney
Dr Andrew Blattman
CEO and Managing Director
17 August 2023
Sydney
iphltd.com.au
2023 Annual Report
101
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
Level 46, 50 Bridge Street
Sydney NSW 2000
Tel: +61 2 9322 7000
www.deloitte.com.au
17 August 2023
The Board of Directors
IPH Limited
Level 22, Tower 2, Darling Park
201 Sussex Street
Sydney NSW 2000
Dear Board Members,
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo IIPPHH LLiimmiitteedd
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 year ended 30 June 2023, I declare
that to the best of my knowledge and belief, there have been no contraventions of:
· The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
· Any applicable code of professional conduct in relation to the audit.
Yours faithfully,
DELOITTE TOUCHE TOHMATSU
X Delaney
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
iphltd.com.au
2023 Annual Report
102
Financial
Statements
Statement of Profit or Loss and Other Comprehensive Income
Note
30 Jun 2023
30 Jun 2022
Consolidated
Revenue
Other income
Expenses
Employee benefits expense
Agent fee expenses
Amortisation of acquired intangibles
Depreciation of right-of-use assets
Depreciation and amortisation of fixed assets and intangibles
Insurance expenses
Travel expenses
Occupancy 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
Fair value gain on hedging instruments
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.
5
6
7
7
7
7
7
8
31
31
$’000
482,865
15,277
(167,099)
(120,372)
(36,873)
(9,632)
(6,846)
(5,455)
(3,457)
(2,965)
(37,794)
(20,194)
87,455
(22,914)
64,541
9,297
4,128
13,425
77,966
$’000
374,330
10,803
(123,412)
(103,440)
(22,891)
(8,671)
(8,001)
(2,682)
(1,057)
(1,756)
(36,800)
(4,709)
71,714
(19,150)
52,564
2,492
684
3,176
55,740
64,541
52,564
77,966
55,740
28.62
28.43
24.09
23.99
iphltd.com.au
2023 Annual Report
104
Statement of Financial Position
Consolidated
Note
30 Jun 2023
30 Jun 2022
$’000
$’000
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Income tax receivable
Other financial assets
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangibles
Deferred tax
Other financial assets
Other assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Income tax payable
Provisions
Interest bearing lease liabilities
Other financial liabilities
Contract liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax
Interest bearing lease liabilities
Other financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
(Accumulated losses)
Total equity attributable to owners of IPH Limited
These statements should be read in conjunction with the following notes.
9
10
11(a)
22
11(b)
12(a)
12(b)
12(c)
13
22
14
15
12(b)
16
13
12(b)
17
18
19
20
103,267
141,831
21,778
3,371
215
7,509
277,971
12,767
45,748
842,070
11,550
6,149
370
918,654
1,196,625
38,783
12,456
20,420
9,732
1,880
3,827
87,098
387,744
95,874
43,809
-
4,974
532,401
619,499
577,126
558,120
26,095
(7,089)
577,126
88,399
92,760
6,765
3,211
472
5,436
197,043
8,622
30,920
447,643
2,974
-
1,215
491,374
688,417
29,348
7,653
17,825
11,621
200
3,495
70,142
118,477
33,024
31,122
2,038
3,903
188,564
258,706
429,711
424,809
6,526
(1,624)
429,711
iphltd.com.au
2023 Annual Report
105
Statement of Cashflows
Consolidated
Note
30 Jun 2023
30 Jun 2022
$’000
$’000
Cash flows from operating 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
Cash flows from investing activities
Payments for purchase of subsidiaries, net of cash acquired
Proceeds of sale of subsidiaries, net of cash sold
Payments for property, plant and equipment
Payments for internally developed software
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Proceeds of borrowings
Payment of lease liabilities
Net cash from/ (used) in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial period
These statements should be read in conjunction with the following notes.
6
28
12(a)
12(c)
21
9
518,597
(385,257)
1,960
(21,031)
(22,479)
91,790
(275,515)
843
(4,120)
(2,772)
(281,564)
(55,536)
268,492
(13,500)
199,456
9,682
88,399
5,186
103,267
417,887
(294,306)
46
(4,709)
(24,039)
94,879
(4,992)
-
(4,784)
(2,406)
(12,182)
(57,671)
-
(11,007)
(68,678)
14,019
71,152
3,228
88,399
iphltd.com.au
2023 Annual Report
106
Consolidated
Issued Capital
Foreign Currency
Translation Reserve
Minority Interest
Acquisition Reserve
Equity Settled
Employee Benefits
Reserve
Other Reserve
Retained Profits
Total Equity
Statement of Changes in Equity
Balance as at 1 July 2021
Profit after income tax expense for the year
Effect of foreign exchange differences
Hedge revaluation net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Dividend Reinvestment Plan (note 21)
Share-based payments charge
Dividends paid (note 21)
Balance as at 30 June 2022
Balance as at 1 July 2022
Profit after income tax expense for the year
Effect of foreign exchange differences
Hedge revaluation net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Dividend Reinvestment Plan (note 21)
Share-based payments charge
Issue of ordinary shares as consideration for a business
combination, net of transaction costs
Dividends paid (note 21)
Balance as at 30 June 2023
$’000
417,079
-
-
-
-
7,730
-
-
424,809
424,809
-
-
-
-
14,470
(18)
118,859
-
558,120
$’000
(1,959)
-
2,492
-
2,492
-
-
-
533
533
-
9,297
-
9,297
-
-
-
-
$’000
(14,814)
-
-
-
-
-
-
-
(14,814)
(14,814)
-
-
-
-
-
-
-
-
$’000
10,200
-
-
-
-
-
4,850
-
15,050
15,050
-
-
-
-
-
6,144
-
-
$’000
5,073
-
-
684
684
-
-
-
5,757
5,757
-
-
4,128
4,128
-
-
-
-
9,830
(14,814)
21,194
9,885
$’000
11,213
52,564
-
-
52,564
-
-
(65,401)
(1,624)
(1,624)
64,541
-
-
64,541
-
-
-
(70,006)
(7,089)
$’000
426,792
52,564
2,492
684
55,740
7,730
4,850
(65,401)
429,711
429,711
64,541
9,297
4,128
77,966
14,470
6,126
118,859
(70,006)
577,126
These statements should be read in conjunction with the following notes.
iphltd.com.au
2023 Annual Report
107
Note 1. General information
The financial statements cover IPH Limited as a Group consisting of IPH Limited and the entities it
controlled at the end of, or during, the year. The financial statements are presented in Australian dollars,
which is IPH Limited’s functional and presentation currency.
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 22, Darling Park Tower 2, 201 Sussex Street, Sydney NSW 2000
A description of the nature of the Group’s operations and its principal activities are included in the
Directors’ report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 17
August 2023.
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 consistently applied to all the years presented, unless otherwise stated.
New, revised or amended Accounting Standards and
Interpretations adopted
The Group has adopted all of the new, revised or amended 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 amended 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 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’).
Basis of preparation
The financial statements have been prepared under the historical cost convention except for certain
financial instruments that are measured at revalued amounts or fair values, as explained in the accounting
policies below. Historical cost is generally based on the fair values of the 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.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed in note 3.
Parent entity information
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 27.
iphltd.com.au
2023 Annual Report
108
Note 2. Significant accounting policies (continued)
Principles of consolidation
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.
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.
Changes in the Group’s ownership interests in existing subsidiaries
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control
over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s
interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in
the subsidiaries. Any difference between the amount 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 entity are expressed in
Australian dollars (‘$’), which is the functional currency of the Company and the presentation currency for
the consolidated financial statements.
In preparing the financial statements of each individual group entity, transactions in currencies other than
the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at
the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at
the rates prevailing at that date. 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
which are recognised in reserves; 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.
iphltd.com.au
2023 Annual Report
109
Note 2. Significant accounting policies (continued)
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:
• 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 the
transactions are used;
• Assets and liabilities for each Statement of Financial Position presented are translated at the closing rate
at the balance date; and
• All resulting exchange differences are recognised in other comprehensive income, in the foreign
currency translation reserve.
Goodwill and fair value accounting adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rate.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
IP services
The Group provides professional services in relation to the protection, commercialisation, enforcement and
management of all forms of intellectual property. Delivery of these services represent separate
performance obligations. Upon completion of each performance obligation, which is satisfied at a point in
time, the Group is entitled to payment for the services performed. Fees for completion of each
performance obligation are determined by reference to a scale of charges and revenue is recognised.
Legal services
The Group provides IP-related legal advice including commercialisation, and litigation services which assert
and protect IP assets. Legal services revenue received has performance obligations that are satisfied over
time. The Groups performance of legal services does not create an asset with an alternative use and the
Group has an enforceable right to payment for performance completed. Revenue arising from services that
relate to performance obligations satisfied over time are recognised on a progressive basis using the input
method. The input method is used by assessing the cost of time and materials incurred on an engagement.
All revenue is stated net of the amount of goods and services tax (GST).
Other Income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow
to the Group and the amount of revenue can be measured reliably. Interest income is recognised on an
accruals basis.
Commission income is received via the referral of clients onto complementary services related to IP.
All other income is recognised when it is received or when the right to receive payment is established.
All other income is stated net of the amount of goods and services tax (GST).
Contract assets
Contract assets represent costs incurred net of GST and profit recognised on client assignments and
services that are in progress at balance date. Contract assets are valued at net realisable value after
providing for any foreseeable losses. Contract assets are subsequently assessed for impairment using the
expected credit loss under AASB 9 Financial Instruments.
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Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
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:
Income Tax
• 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 the
• Assets and liabilities for each Statement of Financial Position presented are translated at the closing rate
• All resulting exchange differences are recognised in other comprehensive income, in the foreign
Goodwill and fair value accounting adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rate.
transactions are used;
at the balance date; and
currency translation reserve.
Revenue recognition
IP services
Revenue is measured at the fair value of the consideration received or receivable.
The Group provides professional services in relation to the protection, commercialisation, enforcement and
management of all forms of intellectual property. Delivery of these services represent separate
performance obligations. Upon completion of each performance obligation, which is satisfied at a point in
time, the Group is entitled to payment for the services performed. Fees for completion of each
performance obligation are determined by reference to a scale of charges and revenue is recognised.
Legal services
The Group provides IP-related legal advice including commercialisation, and litigation services which assert
and protect IP assets. Legal services revenue received has performance obligations that are satisfied over
time. The Groups performance of legal services does not create an asset with an alternative use and the
Group has an enforceable right to payment for performance completed. Revenue arising from services that
relate to performance obligations satisfied over time are recognised on a progressive basis using the input
method. The input method is used by assessing the cost of time and materials incurred on an engagement.
All revenue is stated net of the amount of goods and services tax (GST).
Other Income
accruals basis.
Contract assets
Commission income is received via the referral of clients onto complementary services related to IP.
All other income is recognised when it is received or when the right to receive payment is established.
All other income is stated net of the amount of goods and services tax (GST).
Contract assets represent costs incurred net of GST and profit recognised on client assignments and
services that are in progress at balance date. Contract assets are valued at net realisable value after
providing for any foreseeable losses. Contract assets are subsequently assessed for impairment using the
expected credit loss under AASB 9 Financial Instruments.
The income tax expense or benefit is the tax payable on the current period’s 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.
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.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments except
where the Group is able to control the reversal of the temporary differences and it is probable that the
temporary differences will not reverse in the foreseeable future. Deferred 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.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow
to the Group and the amount of revenue can be measured reliably. Interest income is recognised on an
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation
authority and the Company intends to 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 Profit or Loss and
Other 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.
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).
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Note 2. Significant accounting policies (continued)
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 is different to the
aggregate of the current tax liability or asset and any deferred tax asset arising from unused tax losses and
tax credits in respect of that period, the difference is recognised as a contribution from (or distribution to)
equity participants.
Financial instruments
Financial assets
Financial assets are classified as either financial assets at amortised cost, at fair value through other
comprehensive income (FVTOCI) or at fair value through profit or loss (FVTPL). Financial assets are initially
recognised at fair value on the trade date, including, in the case of instruments not recorded at fair value
through profit or loss, directly attributable transaction costs. Subsequently, financial assets are carried at
fair value (equity investments and derivatives) or amortised cost adjusted for any loss allowance (loans,
trade receivables and other receivables).
Derivative financial instruments
A derivative is a type of financial instrument typically used to manage risk. A derivative’s value changes over
time in response to underlying variables including interest rates or exchange rates and is entered into for a
fixed period. A hedge is where a derivative is used to manage an underlying exposure and the Group uses
derivatives to manage its exposure to interest rates and foreign exchange risk accordingly.
All derivatives are measured through the Statement of Profit and Loss and Other Comprehensive Income
unless designated and effective as a hedge where the hedge accounting provisions apply.
Impairment of financial assets
The impairment approach is based on lifetime expected credit losses (ECL model) for financial assets held
at amortised cost. Therefore, it is not necessary for a loss event to have occurred before credit losses are
recognised. Instead, a loss allowance is always recognised for ECL and is re-measured at each reporting
date for changes in those expected credit losses. The expected credit losses are estimated via a provision
matrix based on the Group’s historical credit loss experience. This is then adjusted for factors that are
specific to the debtors, general economic conditions and an assessment of both the current and
forecasted direction of conditions at the reporting date, including time value of money where appropriate.
For financial assets, a credit loss is the present value of the difference between: (i) the contractual cash
flows that are due under the contract; and (ii) the cash flows expected to be received.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables, where the carrying amount is reduced through the use of an
allowance account. When a trade receivable is considered uncollectible, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognised in profit or
loss.
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.
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Note 2. Significant accounting policies (continued)
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
period are classified as current assets. All other receivables are classified as non-current assets.
Trade and other receivables are measured at amortised cost using the effective interest method and is
subject to impairment. Impairment losses are recognised in profit or loss and reflected in an allowance
against trade receivables. The Group recognises an allowance for expected credit losses (ECLs) in trade and
other receivables which are derived from the difference between the contractual cash flows in accordance
with the contracts and the expected cash flows to be received.
Financial liabilities
Financial liabilities include trade payables, other creditors and loans from third parties including intra group
balances.
Non derivative financial liabilities are recognised at amortised cost using the effective interest method.
Trade accounts payable comprise the original debt less principal payments plus where applicable any
accrued interest.
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.
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.
Contract Liabilities
Contract liabilities represent billing made to clients where revenue recognition criteria has not yet been fully
met to merit recording revenue as at the balance date.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over
their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.
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Note 2. Significant accounting policies (continued)
Item
Leasehold improvements
Plant and equipment
Furniture, fixtures and fittings
Computer equipment
Years
6-15 years
2-20 years
5-20 years
2-5 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
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 if events or changes in
circumstances indicate that it might be impaired and it is carried at cost less accumulated impairment
losses. Impairment losses on goodwill are taken to profit and loss and not subsequently reversed.
Intangible assets acquired separately
Intangible assets with finite lives that are acquired separately are carried at cost less accumulated
amortisation and accumulated impairment losses.
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Customer relationships are the assessed value of the supply of goods and services that exist at the date of
acquisition. In valuing customer relationships, consideration is given to historic customer retention and
decay statistics, projected future cash flows and appropriate capital charges.
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.
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Trademarks are intangible assets with indefinite useful lives that are acquired separately and are carried at
cost less accumulated impairment losses.
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Software acquired through a business combination is assessed as the identifiable value of that software at
the date of acquisition. Acquired software is amortised over a period of 5 years.
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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:
• the technical feasibility of completing the intangible asset so that it will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
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Note 2. Significant accounting policies (continued)
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
• the availability of adequate technical, financial and other resources to complete the development and to
use or sell the intangible asset; and
• the ability to measure reliably the expenditure attributable to the intangible asset during its
development.
The amount initially recognised for internally generated intangible assets is the sum of the expenditure
incurred from the date when the intangible 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.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less
accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that
are acquired separately.
The useful lives of internally generated intangible assets are as follows:
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33 yyeeaarrss
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.
Sofware-as-a-Service (SaaS) arrangements
SaaS arrangements are service contracts providing the Group with the right to access the cloud provider’s
application software over the contract period. Costs incurred to configure or customise, and the ongoing
fees to obtain access to the cloud provider’s application software, are recognised as operating expenses
when the services are received.
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 circumstances arise that indicates that the
carrying amount of the asset may be impaired.
An impairment loss is recognised where the carrying amount of the asset exceeds its fair value less costs of
disposal. The recoverable amount of an asset is defined as the higher of its fair value less costs of disposal
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).
For the purpose of impairment testing, goodwill acquired in a business combination shall, from the
acquisition date, be allocated to each of the acquirer’s cash-generating units, or groups of cash-
generating units, that is expected to benefit from the synergies of the combination, irrespective of whether
other assets or liabilities of the acquiree are assigned to those units or groups of units.
Provisions
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 can
be made of the amount of the obligation.
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Note 2. Significant accounting policies (continued)
The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at the end of 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 is the present value of those cash flows (where the effect of the
time value of money is material).
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
received and the amount of the receivable can be measured reliably.
Leases
The Group recognises a right-of use-asset and a lease liability at the lease commencement date. The right-
of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made
at or before the commencement day, less any lease incentives received and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and impairment. Right-of-use assets are
depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers
ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the
underlying asset. The depreciation starts at the commencement date of the lease.
The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for any
identified impairment loss as described in the ‘Impairment of assets’ policy.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site
on which it is located or restore the underlying asset to the condition required by the terms and conditions
of the lease, a provision is recognised and measured under AASB137. To the extent that the costs relate to
a right-of-use asset, the costs are included in the related right-of-use asset.
As a practical expedient, AASB 16 permits a lessee not to separate non-lease components, and instead
account for any lease and associated non-lease components as a single arrangement. The Group has not
used this practical expedient.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the Group's incremental borrowing rate. The lease liability is
subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to reflect the lease payments made.
Lease payments included in the measurement of the lease liability comprise:
• Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable; and
• Lease payments that depend on an index rate, initially measured using the index or rate at the
commencement date.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-
use asset) whenever:
• The lease term has changed or there is a significant event or change in circumstances, in which case the
lease liability is remeasured by discounting the revised lease payments using a revised discount rate; or
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which
case the lease liability is remeasured based on the lease term of the modified lease by discounting the
revised lease payments using a revised discount rate at the effective date of the modification.
To determine the incremental borrowing rate, the Group makes adjustments specific to the lease including
factors such as lease term, country, currency and security. The weighted average incremental borrowing
rate applied to lease liabilities was 3.66% (2022: 3.31%).
Variable rents that do not depend on an index or rate are not included in the measurement of the lease
liability and the right-of-use asset. The related payments are recognised as an expense in the period in
which the event or condition that triggers those payments occurs and are disclosed in note 12(b).
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Note 2. Significant accounting policies (continued)
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 probable that settlement will be required and they are capable of being
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.
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.
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.
The fair value at the grant date of the equity settled share based 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.
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Note 2. Significant accounting policies (continued)
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.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making the measurements (note 22). Classifications are
reviewed at each reporting date and transfers between levels are determined based on a reassessment of
the lowest level of input that is significant to the fair value measurement.
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
selected based on market knowledge and reputation. Where there is a significant change in fair value of an
asset or liability from one period to another, an analysis is undertaken, which includes a verification of the
major inputs applied in the latest valuation and a comparison, where applicable, with external sources of
data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether
equity instruments or other assets 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 initially at their fair values at the acquisition date. For each business
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.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed
for appropriate classification 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.
Where the business combination is achieved in stages, the Group remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the
previous carrying amount is recognised in profit or loss. Contingent consideration to be transferred by the
acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of the
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.
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Note 2. Significant accounting policies (continued)
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of
any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and
the pre-existing fair value 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 and any previously held equity interest.
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 Group retrospectively adjusts
the provisional amounts recognised and also recognises additional assets or liabilities during the
measurement period, 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
Basic earnings per share
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 outstanding during the financial year, adjusted for bonus elements in ordinary shares issued
during the financial year.
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.
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 accordance with that Instrument amounts in the annual financial
report are rounded off to the nearest thousand dollars, unless otherwise indicated.
Prior period reclassification
Certain prior period amounts have been reclassified for consistency with the current period presentation
and to align with the IPH Limited financial report. The below reclassification had no effect on the reported
results of the Group.
From FY23 onwards, consistent with market practice share based payments will no longer be shown as a
non-underlying expense. Share based payments may be included in non-underlying results where they are
directly related to a non-underlying item. Accordingly, the prior period comparatives in Note 4 – Operating
Segments have been adjusted to reflect this, increasing FY22 overheads by $4,850k with a corresponding
reduction in the adjustments to the statutory results. There has been no change to the reported statutory
results.
Adoption of new accounting standards
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to its operations and effective for an accounting
period that begins on or after 1 July 2022.
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Note 2. Significant accounting policies (continued)
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and
expenses.
Going Concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the
Group have adequate resources, and the ability to extend all debt facilities, to continue in operational
existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in
preparing the financial statements.
Note 3. Critical accounting judgements, estimates and assumptions
Management bases its judgements, estimates and assumptions on historical experience and on other
various factors, including expectations of future events, management believes to be reasonable under the
circumstances. The resulting accounting judgements and estimates will seldom equal the related actual
results. The judgements, estimates and assumptions that have a 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.
Contract assets and receivables
Judgement is required when estimating the expected credit losses for contract assets and receivables by
using a matrix based on past default experience of the receivables, general economic conditions, and an
assessment of both the current and the forecast direction of conditions at the reporting date.
In relation to contract assets, judgement is required when estimating the value of the services carried out at
the balance sheet date which is based on the value of time spent to date and management’s assessment of
the recoverability of that value. Refer to the accounting policy in note 2, trade and other receivables note
10, and contract assets note 11(a).
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.
Determination of control of subsidiaries
In the current year, the IPH Group completed the acquisition of the IP agency practice of Smart & Biggar
(‘S&B’), which holds a 49.9% interest in the S&B LLP Law entity as well as a number of other legal entities
(‘S&B Group’). The professional code of conduct and Quebec laws and regulations for lawyers and law firms
in Canada requires ownership to reside with local individuals that are registered as a lawyer. Therefore, the
assessment of control is a significant judgement in the financial statements.
The IPH Group controls an entity where it has:
• Power to direct the relevant activities;
• Exposure, or rights to, variable returns, and
• The ability to utilise power to affect the entity’s returns.
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120
Note 3. Critical accounting judgements, estimates and assumptions (continued)
The determination of control is based on the current facts and circumstances and is continuously
reassessed. IPH has power over an entity when it has existing substantive rights that provide it with the
current ability to direct the entity’s relevant activities. IPH also considers the entity’s purpose and design. If
IPH determines it has power over an entity, IPH then evaluates its exposure, or rights, to variable returns by
considering the magnitude and variability associated with its economic interests.
The substance of the arrangement is that IPH has the power over the relevant activities that influence the
variable returns of the S&B Group. While IPH only holds 49.9% of the S&B LLP Law entity, this power is
established by IPH holding a majority representation of the Governance Board that has the ability to set
budgets, approve acceptance of any clients or client engagements, determine nature and pricing of
services, provision of critical intellectual property and other services which are necessary to conduct such a
business. In addition, IPH is exposed to all residual returns of the S&B Group after remunerating the
managing partners (who are the holders of the remaining interest). As a result, there is no non-controlling
interest that is recognised in relation to the acquisition of S&B Group.
See note 28 for a summary of the acquisition of S&B Group completed during the year ended 30 June 2023.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into four segments: Intellectual Property Services Australia & New Zealand;
Intellectual Property Services Asia; Intellectual Property Services Canada; and Adjacent Businesses.
Adjacent Businesses includes the operations of Wisetime1. These operating segments are based on the
internal reports that are reviewed and used by the senior executive team and Board 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.
Segment
Activity
Intellectual Property
Services Australia & New
Zealand
Related to the provision of filing, prosecution, enforcement and
management of patents, designs, trademarks and other IP in Australia &
New Zealand.
Intellectual Property
Services Asia
Related to the provision of filing, prosecution, enforcement and
management of patents, designs, trademarks and other IP in Asia.
Intellectual Property
Services Canada
Related to the provision of filing, prosecution, enforcement and
management of patents, designs, trademarks and other IP in Canada.
Adjacent Businesses
Adjacent businesses include Wisetime1 the autonomous time-keeping
tool.
1. IPH Ltd’s investment in Practice Insight Pty Limited which included the Wisetime application was divested in the FY23 financial period.
The CODM reviews profit 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 CODM is on at least a monthly basis.
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121
Note 4. Operating segments (continued)
Intersegment transactions
There are varying levels of integration between the segments. The integration includes provision of
professional services, shared technology and management services. Intersegment transactions were made
at market rates. Intersegment transactions are eliminated on consolidation.
Reliance on major customers
Maximum revenue from any customer is less than 10% (2022: 10%) of overall revenue of the Group.
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Note 4. Operating segments (continued)
Intersegment transactions
Note 4. Operating segments (continued)
There are varying levels of integration between the segments. The integration includes provision of
professional services, shared technology and management services. Intersegment transactions were made
at market rates. Intersegment transactions are eliminated on consolidation.
Reliance on major customers
Maximum revenue from any customer is less than 10% (2022: 10%) of overall revenue of the Group.
Consolidated
Revenue
Intellectual Property Services
Australia &
NZ
Asia
Canada
Adjacent
Businesses
Corporate
Inter-
segment
Elimination
/
Unallocated
Total
2023
$’000
2023
$’000
2023
$’000
2023
$’000
2023
$’000
2023
$’000
2023
$’000
Sales to external customers
275,578
113,930
93,738
Intersegment sales
Total sales revenue
Other income
1,000
5,931
223
276,578
119,861
93,961
13,265
(961)
(211)
Total revenue and other income
289,843
118,900
93,750
Less: Overheads
(186,586)
(64,639)
(62,306)
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)
103,257
(7,464)
(22,300)
432
54,261
(2,491)
(1,403)
(10,157)
31,444
(2,891)
(13,944)
-
73,925
40,210
14,609
-
-
-
50
50
(83)
(33)
(1)
(83)
-
(117)
-
-
-
-
483,246
(7,154)
(7,154)
-
483,246
12,455
(17,745)
6,853
12,455
(24,899)
490,099
(30,285)
23,830
(320,069)
(17,830)
(1,069)
170,030
(1,228)
(1,546)
9,725
-
-
-
(14,075)
(39,276)
-
(10,879)
(1,069)
116,679
Reconciliation of segment result
Segment result
Adjustments to statutory result:
Business acquistion costs1,2
Restructuring expenses2
Changes in deferred consideration
Costs associated with cyber incident
IT SaaS implementation costs
Total adjustments
Interest income
Finance costs
Profit for the period before income tax expense
116,679
(10,791)
(2,779)
6,270
(2,822)
(868)
(10,990)
1,960
(20,194)
87,455
1 - Business acquisition costs include $1.6m of share-based payment expense resulting from the acquisition of Smart & Biggar.
2 - Business acquisition and restructuring expenses are apportioned across employee benefit expenses, occupancy expenses and other expenses on the Statement of Profit or Loss and Other Comprehensive Income.
Reconciliation of segment revenue and other income
Segment total revenue and other income
Revenue and other income items excluded from segment result
Interest income
Total revenue and other income
Consolidated
30 Jun 2023
$’000
490,099
6,083
1,960
498,142
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123
Intellectual Property Services
Australia &
NZ
Asia
Canada
Adjacent
Businesses
Corporate
Inter-
segment
Elimination
/
Unallocated
Total
2022
$’000
2022
$’000
2022
$’000
2022
$’000
2022
$’000
2022
$’000
2022
$’000
Note 4. Operating segments (continued)
Consolidated
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Other income
271,789
102,541
1,079
6,256
272,868
108,797
13,148
1,411
Total revenue and other income
286,016
110,208
Less: Overheads1
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)
(184,397)
(59,269)
101,619
(9,702)
50,939
(2,422)
(22,375)
(1,271)
3,365
(11,373)
72,907
35,873
Reconciliation of segment result
Segment result
Adjustments to statutory result:
Business acquistion costs2
Restructuring expenses2
Divestment of Practice Insight
Impairment of intangible assets
Impairment of right-of-use assets and fixed assets
IT SaaS implementation costs
Total adjustments
Interest income
Finance costs
Profit for the period before income tax expense
-
-
-
-
-
-
-
-
-
-
-
-
-
-
638
638
-
-
-
9,744
9,744
-
374,330
(7,335)
(7,335)
-
374,330
(14,184)
10,757
(21,519)
385,087
(1,131)
(29,278)
21,558
(252,517)
(493)
(23)
(1,727)
-
(19,534)
(832)
(1,211)
7,990
(2,243)
(13,587)
39
-
-
18
57
132,570
(12,979)
(26,584)
-
93,007
93,007
(3,747)
(1,814)
(2,170)
(4,654)
(2,387)
(1,858)
(16,630)
46
(4,709)
71,714
1 - FY22 overheads have been adjusted to include share based payments of $4,850k, refer to Note 2 for further detail.
2 - Business acquisition and restructuring expenses are apportioned across employee benefit expenses, occupancy expenses and other expenses on the Statement of Profit or Loss and Other Comprehensive Income.
Reconciliation of segment revenue and other income
Segment total revenue and other income
Revenue and other income items excluded from segment result
Interest income
Total revenue and other income
Consolidated
30 Jun 2022
$’000
385,087
-
46
385,133
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124
Note 4. Operating segments (continued)
Note 5. Sales Revenue
Intellectual Property Services
Australia &
Asia
Canada
Adjacent
Businesses
Corporate
Elimination
Total
Inter-
segment
/
Unallocated
2022
$’000
2022
$’000
2022
$’000
2022
$’000
2022
$’000
2022
$’000
Consolidated
Revenue
Sales to external customers
Intersegment sales
Total sales revenue
Other income
Less: Overheads1
Less: Depreciation
Less: Amortisation
NZ
2022
$’000
271,789
102,541
1,079
6,256
272,868
108,797
13,148
1,411
101,619
(9,702)
50,939
(2,422)
(22,375)
(1,271)
3,365
(11,373)
Total revenue and other income
286,016
110,208
Earnings before interest, tax, depreciation and
amortisation (EBITDA), before adjustments
(184,397)
(59,269)
(1,131)
(29,278)
21,558
(252,517)
Less: Management Charges
Segment result: (Profit before interest, tax and
adjustments)
72,907
35,873
(2,243)
(13,587)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
638
638
(493)
(23)
(1,727)
-
-
-
-
9,744
9,744
(19,534)
(832)
(1,211)
7,990
-
374,330
(7,335)
(7,335)
-
374,330
(14,184)
10,757
(21,519)
385,087
39
-
-
18
57
Reconciliation of segment result
Segment result
Adjustments to statutory result:
Business acquistion costs2
Restructuring expenses2
Divestment of Practice Insight
Impairment of intangible assets
Impairment of right-of-use assets and fixed assets
IT SaaS implementation costs
Total adjustments
Interest income
Finance costs
Profit for the period before income tax expense
Reconciliation of segment revenue and other income
Segment total revenue and other income
Revenue and other income items excluded from segment result
Interest income
Total revenue and other income
1 - FY22 overheads have been adjusted to include share based payments of $4,850k, refer to Note 2 for further detail.
2 - Business acquisition and restructuring expenses are apportioned across employee benefit expenses, occupancy expenses and other expenses on the Statement of Profit or Loss and Other Comprehensive Income.
132,570
(12,979)
(26,584)
-
93,007
93,007
(3,747)
(1,814)
(2,170)
(4,654)
(2,387)
(1,858)
(16,630)
46
(4,709)
71,714
Consolidated
30 Jun 2022
$’000
385,087
-
46
385,133
IP services
Legal services
Note 6. Other income
Net realised foreign exchange gain/(loss)
Net unrealised foreign exchange gain/(loss)
Other income
Deferred consideration fair value adjustment
Commission
Interest
Note 7. Expenses
Profit before income tax includes the following specific expenses:
Depreciation and amortisation:
Depreciation - Property, plant and equipment
Amortisation - Software development
Depreciation - Right-of-use asset
Amortisation - Acquired Intangibles
Total depreciation and amortisation
Consolidated
30 Jun 2023
30 Jun 2022
$’000
435,649
47,216
$’000
358,231
16,099
482,865
374,330
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
3,102
216
1,280
6,270
2,449
1,960
4,413
1,539
1,673
-
3,132
46
15,277
10,803
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
4,443
2,403
6,846
9,632
36,873
53,351
4,308
3,693
8,001
8,671
22,891
39,563
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2023 Annual Report
125
Note 7. Expenses (continued)
Employee expenses:
Share based payments
Superannuation expense
Other expenses:
Advertising and marketing
Business acquisition costs
Restructuring costs
Impairment of right-of-use assets and revaluation of lease liabilities arising from onerous leases
Impairment and loss on disposal of fixed assets
Impairment on trademarks and capitalised software development
IT and communication
Office expenses
Professional fees
Staff welfare and training
Bank fees
Subscriptions and memberships
Business development
Foreign tax
Expected credit loss expense
Other
Finance costs
Interest on bank facilities - Loan
Other finance costs - Facility fees
Interest on lease contracts
Total finance costs
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
6,130
9,387
1,791
6,515
3,953
-
-
-
9,225
2,685
2,985
1,909
1,136
734
862
599
1,724
3,676
4,850
7,064
1,071
3,747
3,106
514
1,964
6,284
8,325
2,142
3,177
1,454
901
483
220
474
807
2,131
37,794
36,800
17,081
1,277
18,358
1,836
20,194
2,243
822
3,065
1,644
4,709
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126
Note 7. Expenses (continued)
Note 8. Income tax expense
Impairment of right-of-use assets and revaluation of lease liabilities arising from onerous leases
Impairment and loss on disposal of fixed assets
Impairment on trademarks and capitalised software development
Employee expenses:
Share based payments
Superannuation expense
Other expenses:
Advertising and marketing
Business acquisition costs
Restructuring costs
IT and communication
Office expenses
Professional fees
Staff welfare and training
Bank fees
Subscriptions and memberships
Business development
Foreign tax
Expected credit loss expense
Other
Finance costs
Interest on bank facilities - Loan
Other finance costs - Facility fees
Interest on lease contracts
Total finance costs
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
6,130
9,387
1,791
6,515
3,953
-
-
-
9,225
2,685
2,985
1,909
1,136
734
862
599
1,724
3,676
17,081
1,277
18,358
1,836
20,194
4,850
7,064
1,071
3,747
3,106
514
1,964
6,284
8,325
2,142
3,177
1,454
901
483
220
474
807
2,131
2,243
822
3,065
1,644
4,709
37,794
36,800
Income tax expense
Current tax
Deferred tax
Under provided in prior years
Aggregate income tax expense
Deferred tax included in income tax expense comprises:
(Decrease)/Increase in deferred tax assets
Decrease/(Increase) in deferred tax liabilities
Reconciliation of invoice tax expense and tax at the statutory rate
Profit before income tax expense
Tax at the statutory rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Permanent differences
Equity settled share based payments
Acquisition costs
Difference in overseas tax rates
Under provision with respect to current tax in prior years
Under/(Over) provision with respect to deferred tax in prior years
Effect of income that is exempt from tax
Practice Insight deferred tax write off
Income tax expense
Note 9. Current assets - Cash and cash equivalents
Cash on hand
Cash at bank
Closing balance
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
28,476
(5,573)
11
25,596
(6,508)
62
22,914
19,150
1,598
(7,171)
(5,573)
839
(7,347)
(6,508)
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
87,455
26,237
419
634
1,134
(5,692)
11
447
(276)
-
71,714
21,514
(84)
294
1,648
(4,720)
62
(146)
-
582
22,914
19,150
Consolidated
30 Jun 2023
30 Jun 2022
$’000
40
103,227
103,267
$’000
43
88,356
88,399
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2023 Annual Report
127
Note 10. Current asset - Trade and other receivables
Trade receivables from contracts with customers
Less: Loss allowance
Closing balance
Impairment of receivables
Consolidated
30 Jun 2023
30 Jun 2022
$’000
150,699
(8,868)
141,831
$’000
95,702
(2,942)
92,760
The Group has recognised a loss of $1,724,000 (2022: $806,000) in profit or loss in respect of the loss allowance for the year ended 30 June 2023.
The Group measures the loss allowance for trade receivables at an amount equal to the lifetime expected credit loss (ECL). The expected credit losses are
estimated via a provision matrix based on the Group’s historical credit loss experience. The provision is then adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current and forecasted direction of conditions at the reporting date, including time value of money
where appropriate.
Expected credit losses for ageing categories1
Loss allowance for trade receivables past due more than 91 days
1 - Ageing brackets not covered are deemed immaterial
Movements in the loss allowance for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Provisions recognised as part of business combinations
Receivables written off during the year as uncollectable
Closing balance
Trade receivable ageing
The ageing of trade receivables are as follows:
Current
0 to 60 days overdue
61 to 90 days overdue
Past due more than 91 days
Consolidated
30 Jun 2023
30 Jun 2022
$’000
7,257
$’000
2,795
Consolidated
30 Jun 2023
30 Jun 2022
$’000
2,942
1,724
4,852
(650)
8,868
$’000
2,870
806
-
(734)
2,942
Consolidated
30 Jun 2023
30 Jun 2022
$’000
98,375
11,940
8,807
22,709
141,831
$’000
71,617
7,114
5,129
8,900
92,760
Ageing has been calculated with reference to the trading terms of local clients (30 days) and international clients (90 days). No interest is charged on outstanding
trade receivables.
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128
Note 10. Current asset - Trade and other receivables
Trade receivables from contracts with customers
Less: Loss allowance
Closing balance
Impairment of receivables
where appropriate.
Expected credit losses for ageing categories1
Loss allowance for trade receivables past due more than 91 days
1 - Ageing brackets not covered are deemed immaterial
Movements in the loss allowance for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Provisions recognised as part of business combinations
Receivables written off during the year as uncollectable
Closing balance
Trade receivable ageing
The ageing of trade receivables are as follows:
Current
0 to 60 days overdue
61 to 90 days overdue
Past due more than 91 days
trade receivables.
Consolidated
30 Jun 2023
30 Jun 2022
$’000
150,699
(8,868)
141,831
$’000
95,702
(2,942)
92,760
Consolidated
30 Jun 2023
30 Jun 2022
$’000
7,257
$’000
2,795
Consolidated
30 Jun 2023
30 Jun 2022
$’000
2,942
1,724
4,852
(650)
8,868
$’000
98,375
11,940
8,807
22,709
141,831
$’000
2,870
806
-
(734)
2,942
$’000
71,617
7,114
5,129
8,900
92,760
Consolidated
30 Jun 2023
30 Jun 2022
Ageing has been calculated with reference to the trading terms of local clients (30 days) and international clients (90 days). No interest is charged on outstanding
The Group has recognised a loss of $1,724,000 (2022: $806,000) in profit or loss in respect of the loss allowance for the year ended 30 June 2023.
The Group measures the loss allowance for trade receivables at an amount equal to the lifetime expected credit loss (ECL). The expected credit losses are
estimated via a provision matrix based on the Group’s historical credit loss experience. The provision is then adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current and forecasted direction of conditions at the reporting date, including time value of money
1 - Movement in contract assets relates to the initial recognition of WIP, progression of WIP to trade receivables on billing, and the loss allowance of WIP based on recoverability.
Net movement in contract assets includes the impact of the addition of Smart and Biggar to the group from 6 October 2022.
Note 11. Current assets - other
(a) Contract assets
Opening balance
Contract assets from business combinations (note 28)
Movement in contract assets1
Closing balance
Consolidated
30 Jun 2023
30 Jun 2022
$’000
6,765
5,511
9,502
21,778
$’000
6,329
-
436
6,765
(b) Other assets
Prepayments
Net investment in sub-lease
Other current assets
Closing balance
Note 12. Non-current assets
(a) 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
Consolidated
30 Jun 2023
30 Jun 2022
$’000
6,549
335
625
7,509
$’000
3,287
482
1,667
5,436
Consolidated
30 Jun 2023
30 Jun 2022
$’000
19,892
(11,511)
8,381
1,287
(1,145)
142
5,593
$’000
18,624
(12,862)
5,762
1,425
(1,240)
185
3,351
(4,654)
(2,984)
939
26,855
(23,550)
3,305
12,767
367
21,466
(19,158)
2,308
8,622
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129
Computer
equipment
Total
Note 12. Non-current assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Leasehold
improv.
Plant and
equipment
$’000
$’000
5,779
3,592
-
(1,422)
(51)
(3)
(2,133)
5,762
2,560
1,958
7
(5)
163
(2,064)
8,381
246
38
-
-
(3)
2
(98)
185
43
-
(7)
(15)
-
(64)
142
Furniture,
fixtures and
fittings
$’000
1,090
-
-
(451)
(8)
(4)
(260)
367
99
834
(7)
-
11
(365)
939
Balance as at 1 July 2021
Additions
Reclasses
Impairment
Disposals
Exchange differences
Depreciation expense
Balance as at 30 June 2022
Additions
Additions through business combinations (note 28)
Transfers
Disposals
Exchange differences
Depreciation expense
Balance as at 30 June 2023
(b) Leases
$’000
3,063
1,154
(51)
-
(29)
(12)
(1,817)
2,308
1,418
1,510
7
(3)
15
(1,950)
3,305
The Group enters leases in relation to office space and office equipment.
The Statement of Financial Position shows the following amounts relating to leases:
Balance as at 1 July 2021
Additions
Depreciation expense
Impairment expense
Remeasurements
Disposals
Exchange differences
Balance as at 30 June 2022
Additions
Additions through business combinations (note 28)
Depreciation expense
Disposals
Exchange differences
Balance as at 30 June 2023
Premises
Equipment
$’000
30,440
14,035
(8,545)
(514)
(212)
(4,713)
210
30,701
16,889
7,153
(9,249)
(582)
145
45,057
$’000
199
141
(126)
-
-
-
5
219
85
797
(383)
(31)
4
691
$’000
10,178
4,784
(51)
(1,873)
(91)
(17)
(4,308)
8,622
4,120
4,302
-
(23)
189
(4,443)
12,767
Total
$’000
30,639
14,176
(8,671)
(514)
(212)
(4,713)
215
30,920
16,974
7,950
(9,632)
(613)
149
45,748
iphltd.com.au
2023 Annual Report
130
Additions through business combinations (note 28)
Balance as at 1 July 2021
Additions
Reclasses
Impairment
Disposals
Additions
Transfers
Disposals
(b) Leases
Exchange differences
Depreciation expense
Balance as at 30 June 2022
Exchange differences
Depreciation expense
Balance as at 30 June 2023
Balance as at 1 July 2021
Additions
Depreciation expense
Impairment expense
Remeasurements
Disposals
Exchange differences
Balance as at 30 June 2022
Additions
Depreciation expense
Disposals
Exchange differences
Balance as at 30 June 2023
Additions through business combinations (note 28)
5,779
3,592
-
(1,422)
(51)
(3)
(2,133)
5,762
2,560
1,958
7
(5)
163
(2,064)
8,381
246
38
-
-
(3)
2
(98)
185
43
-
(7)
(15)
-
(64)
142
$’000
3,063
1,154
(51)
-
(29)
(12)
(1,817)
2,308
1,418
1,510
7
(3)
15
(1,950)
3,305
$’000
199
141
(126)
-
-
-
5
219
85
797
(383)
(31)
4
691
$’000
10,178
4,784
(51)
(1,873)
(91)
(17)
(4,308)
8,622
4,120
4,302
-
(23)
189
(4,443)
12,767
Total
$’000
30,639
14,176
(8,671)
(514)
(212)
(4,713)
215
30,920
16,974
7,950
(9,632)
(613)
149
45,748
-
-
(451)
(8)
(4)
(260)
367
99
834
(7)
-
11
(365)
939
$’000
30,440
14,035
(8,545)
(514)
(212)
(4,713)
210
30,701
16,889
7,153
(9,249)
(582)
145
45,057
The Group enters leases in relation to office space and office equipment.
The Statement of Financial Position shows the following amounts relating to leases:
Premises
Equipment
Note 12. Non-current assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Note 12. Non-current assets (continued)
Leasehold
improv.
Plant and
equipment
Computer
equipment
Total
$’000
$’000
Furniture,
fixtures and
fittings
$’000
1,090
Lease liabilities
Current
Non-current
Closing balance
The Statement of Profit or Loss and Other Comprehensive Income shows the following amounts relating to leases:
Depreciation charge - right-of-use assets
Interest expense (included in finance costs)
Expense relating to variable lease payments not included in lease liabilities (included in occupancy expenses)
Income from subleasing of right-of-use assets (included in other income)
Impairment of lease assets and remeasurement of lease liability
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
9,732
43,809
53,541
11,621
31,122
42,743
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
9,632
1,836
2,965
(22)
39
8,671
1,644
1,756
(71)
514
Total cash outflow for leases in 2023 was $15,336,000 (2022: $12,651,000) including $1,836,000 of interest payments (2022: $1,644,000).
(c) Intangibles
Goodwill - at cost
Patents and trade marks - at cost
Less: Accumulated amortisation
Capitalised software development - at cost
Less: Accumulated amortisation
Software acquired - at cost
Less: Accumulated amortisation
Customer relationships
Less: Accumulated amortisation
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
508,438
299,954
42,734
-
12,608
(9)
551,172
312,553
11,388
(7,519)
3,869
5,241
(2,096)
3,145
409,833
(125,949)
12,814
(8,587)
4,227
5,241
(1,048)
4,193
216,485
(89,815)
283,884
126,670
842,070
447,643
iphltd.com.au
2023 Annual Report
131
Note 12. Non-current assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Goodwill
Patents and
trade marks
Customer
relationships
Capitalised
software
development
Acquired
software
Total
Balance as at 1 July 2021
Additions
Additions through business combinations
Reclasses
Impairment1,2
Exchange differences
Amortisation expense
$’000
296,434
$’000
17,288
$’000
148,669
-
1,797
-
-
1,723
-
-
-
-
(4,600)
(86)
(3)
-
-
-
-
(159)
(21,840)
Balance as at 30 June 2022
299,954
12,599
126,670
Additions
-
-
-
Additions through business combinations (note 28)
204,170
29,883
191,700
Disposals
Exchange differences
Amortisation expense
-
4,314
-
(73)
325
-
-
1,339
(35,825)
Balance as at 30 June 2023
508,438
42,734
283,884
1. Patent and trade mark impairment relates to assets previously under the Shelston IP brand which merged with Spruson & Ferguson during HY22.
2. Capitalised software development impairment relates to assets under Practice Insight which were assessed as part of the divestment of that business.
$’000
5,697
2,406
-
51
(1,684)
1,450
(3,693)
4,227
2,772
-
(768)
41
(2,403)
3,869
$’000
-
-
5,241
-
-
-
(1,048)
4,193
-
-
-
-
(1,048)
3,145
$’000
468,088
2,406
7,038
51
(6,284)
2,928
(26,584)
447,643
2,772
425,753
(841)
6,019
(39,276)
842,070
For the purposes of impairment testing, goodwill is allocated to cash generating units (CGUs) that are an identifiable group of assets that generate cash associated
with the goodwill.
A summary of the goodwill by CGU is set out below:
CGU
Spruson & Ferguson Australia
Pizzeys
AJ Park
Segment
Australia & NZ
Australia & NZ
Australia & NZ
Spruson & Ferguson (Hong Kong)
Asia
Griffith Hack
Spruson & Ferguson Asia
Smart & Biggar1
Other
Closing balance
1. Smart & Biggar acquired during the financial year ended 30 June 2023
Australia & NZ
Asia
Canada
Asia
Consolidated
30 Jun 2023
30 Jun 2022
$’000
90,484
68,263
43,040
35,809
54,362
10,331
205,795
354
$’000
90,484
68,263
42,305
34,460
54,362
9,715
-
365
508,438
299,954
iphltd.com.au
2023 Annual Report
132
Note 12. Non-current assets (continued)
The recoverable amount of a CGU is determined primarily utilising a value-in-use calculation. Value-in-use calculations use cash flow projections based on financial
budgets prepared by management and approved by the Board. Cashflows for future years are extrapolated using the estimated growth rates stated below. After
five years a terminal growth rate is assumed and terminal value-in-use calculated. The terminal growth rates do not exceed the average growth rates that the
business has experienced and are generally lower than the short term growth rates assumed.
CGU
Spruson &
Ferguson
Australia
Pizzeys
AJ Park
Spruson &
Ferguson (Hong
Kong)
Griffith Hack
Spruson &
Ferguson Asia
Smart & Biggar2
5 yr EBITDA CAGR
Terminal growth rates
2023
2022
2023
2022
3.0%
3.5%
4.0%
5.0%
4.0%
5.0%
3.0%
4.4%
5.4%
3.3%
12.8%
5.2%
8.0%
N/A
2.5%
2.5%
2.0%
2.5%
2.5%
2.5%
2.0%
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
N/A
1. The post-tax discount rate has been applied to discount the future attributable post-tax cash flows.
2. Smart & Biggar is a new CGU in FY23 with the acquisition of that business (note 28).
Disount rates1
Pre-Tax
Pre-Tax
Post-Tax
Post-Tax
2023
13.6%
13.6%
13.9%
12.6%
13.6%
12.7%
12.9%
2022
14.3%
14.3%
13.9%
14.4%
14.3%
13.3%
N/A
2023
9.5%
9.5%
10.0%
10.5%
9.5%
10.5%
9.5%
2022
10.0%
10.0%
10.0%
12.0%
10.0%
11.0%
N/A
At 30 June 2023, the assessed value-in-use for each CGU exceeded the carrying amounts of the CGU and no impairment loss was recognised.
Balance as at 30 June 2023
508,438
42,734
283,884
Sensitivity analysis
1. Patent and trade mark impairment relates to assets previously under the Shelston IP brand which merged with Spruson & Ferguson during HY22.
2. Capitalised software development impairment relates to assets under Practice Insight which were assessed as part of the divestment of that business.
For the purposes of impairment testing, goodwill is allocated to cash generating units (CGUs) that are an identifiable group of assets that generate cash associated
with the goodwill.
A summary of the goodwill by CGU is set out below:
Sensitivity analysis has been conducted on the assumptions above to assess the effect on the recoverable amount of changes in the key assumptions. For all
CGU's with the exception of Pizzeys it has been determined that a reasonably possible change in key assumptions would not result in an impairment loss for any
CGU.
For Pizzeys a decrease of the EBITDA CAGR by 1.56% or an increase in the post tax discount rate of 0.40% would result in the carrying value of the Pizzeys CGU to
equal the recoverable amount.
As Smart & Biggar was recently acquired, its carrying value approximates its fair value. Adverse changes in macroeconomic factors or failure to achieve planned
growth objectives including the realisation of Board approved synergies, may therefore lead to future impairment.
Note 12. Non-current assets (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Goodwill
Patents and
Customer
trade marks
relationships
Capitalised
software
development
Acquired
software
Total
Additions through business combinations
1,797
Balance as at 30 June 2022
299,954
12,599
126,670
Additions through business combinations (note 28)
204,170
29,883
191,700
$’000
296,434
$’000
17,288
$’000
148,669
-
-
-
-
-
-
-
1,723
4,314
(4,600)
(86)
(3)
-
-
-
-
(73)
325
-
-
-
-
-
-
-
(159)
(21,840)
1,339
(35,825)
$’000
5,697
2,406
-
51
(1,684)
1,450
(3,693)
4,227
2,772
(768)
-
41
(2,403)
3,869
Balance as at 1 July 2021
Additions
Reclasses
Impairment1,2
Exchange differences
Amortisation expense
Additions
Disposals
Exchange differences
Amortisation expense
Spruson & Ferguson (Hong Kong)
Asia
Spruson & Ferguson Australia
CGU
Pizzeys
AJ Park
Griffith Hack
Spruson & Ferguson Asia
Smart & Biggar1
Other
Closing balance
Segment
Australia & NZ
Australia & NZ
Australia & NZ
Australia & NZ
Asia
Canada
Asia
1. Smart & Biggar acquired during the financial year ended 30 June 2023
508,438
299,954
$’000
5,241
(1,048)
4,193
-
-
-
-
-
-
-
-
-
(1,048)
3,145
$’000
90,484
68,263
43,040
35,809
54,362
10,331
205,795
354
$’000
468,088
2,406
7,038
51
(6,284)
2,928
(26,584)
447,643
2,772
425,753
(841)
6,019
(39,276)
842,070
$’000
90,484
68,263
42,305
34,460
54,362
9,715
-
365
Consolidated
30 Jun 2023
30 Jun 2022
iphltd.com.au
2023 Annual Report
133
Note 13. Deferred tax assets/liabilities
The net deferred tax comprises the following balances:
Loss allowance
Property, plant and equipment
Provisions
Accrued expenses
Unbilled revenue
Prepayments
Foreign exchange
Transaction costs
Leased assets
Software
Intangible assets - Customer Relationships
Intangible assets - Trademarks
Sundry
Financial Instruments
Closing balance
Disclosed as:
Deferred tax asset
Deferred tax liability
Closing balance
Note 14. Current liabilities - Trade and other payables
Trade payables
Sundry creditors and accruals
Closing balance
Opening
balance
Acquired
through
business
combinations
Recognised in
equity
Recognised in
profit or loss
Closing
balance
$’000
$’000
$’000
$’000
$’000
639
51
5,091
529
180
-
-
-
(1,643)
(1,200)
(3)
(379)
2,641
2,934
426
-
-
-
240
-
(37,875)
(49,380)
(2,925)
(7,919)
606
(142)
-
-
(30,050)
(58,079)
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,768)
(1,768)
168
(604)
(253)
(48)
(1,289)
(1)
(466)
(518)
(1,011)
-
9,532
-
63
-
987
(553)
4,838
481
(4,132)
(4)
(845)
2,123
2,163
426
(77,723)
(10,844)
669
(1,910)
5,573
(84,324)
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
11,550
2,974
(95,874)
(33,024)
(84,324)
(30,050)
Consolidated
30 Jun 2023
30 Jun 2022
$’000
15,794
22,989
38,783
$’000
18,102
11,246
29,348
iphltd.com.au
2023 Annual Report
134
Intangible assets - Customer Relationships
Intangible assets - Trademarks
(37,875)
(49,380)
(2,925)
(7,919)
(30,050)
(58,079)
5,573
(84,324)
(1,768)
(1,768)
The net deferred tax comprises the following balances:
Loss allowance
Property, plant and equipment
Provisions
Accrued expenses
Unbilled revenue
Prepayments
Foreign exchange
Transaction costs
Leased assets
Software
Sundry
Financial Instruments
Closing balance
Disclosed as:
Deferred tax asset
Deferred tax liability
Closing balance
Note 14. Current liabilities - Trade and other payables
Trade payables
Sundry creditors and accruals
Closing balance
(1,643)
(1,200)
639
51
5,091
529
(3)
(379)
2,641
2,934
426
606
(142)
180
240
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
168
(604)
(253)
(48)
(1,289)
(1)
(466)
(518)
(1,011)
9,532
-
-
-
63
987
(553)
4,838
481
(4,132)
(4)
(845)
2,123
2,163
426
(77,723)
(10,844)
669
(1,910)
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
11,550
2,974
(95,874)
(33,024)
(84,324)
(30,050)
Consolidated
30 Jun 2023
30 Jun 2022
$’000
15,794
22,989
38,783
$’000
18,102
11,246
29,348
Note 13. Deferred tax assets/liabilities
Note 15. Current liabilities - Provisions
Opening
balance
Acquired
through
business
combinations
Recognised in
Recognised in
equity
profit or loss
Closing
balance
$’000
$’000
$’000
$’000
$’000
Employee benefits
Provision for onerous contracts
Closing balance
Movement in provision for onerous contracts
Opening balance at beginning of financial year
Current / non-current reclasses
Payment of onerous contracts
Closing balance
Note 16. Non-current liabilities - Borrowings
Non Current
Multicurrency loan facility
Closing balance
Consolidated
30 Jun 2023
30 Jun 2022
$’000
20,420
-
20,420
$’000
17,689
136
17,825
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
136
-
(136)
-
370
135
(369)
136
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
387,744
387,744
118,477
118,477
On 28 June 2021, the Group entered into a facilities agreement (‘Agreement’) with HSBC, Westpac, ANZ and CBA which refinanced the facilities previously
outstanding with HSBC and Westpac. The facilities under the Agreement comprise:
- A $115m multicurrency revolving loan facility
- A $70m acquisition term loan facility: and
- A $25m revolving credit facility for the general corporate purposes of the Group.
The Agreement matures on 4 July 2024.
On 19 August 2022 the Group entered into an agreement for an additional CAD$180m term loan facility with a maturity date of 19 August 2025.
Assets pledged as security
The bank facility made available by HSBC, ANZ, CBA and Westpac is secured against assets from IPH Limited and a number of its wholly owned subsidiaries.
iphltd.com.au
2023 Annual Report
135
Note 16. Non-current liabilities - Borrowings (continued)
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Loan facilities
Working capital facility
Used at the reporting date
Loan facilities
Bank guarantees drawn under working capital facility
Unused at reporting date
Loan facilities
Working capital facility
Note 17. Non-current liabilities - Provisions
Employee benefits
Other provisions
Closing balance
Provision for onerous contracts
Opening balance at beginning of financial year
Current / non-current reclasses
Closing balance
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
389,592
25,000
185,000
25,000
414,592
210,000
387,744
387,744
118,477
118,477
11,652
10,008
1,848
13,348
15,196
66,523
14,992
81,515
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
4,019
955
4,974
2,998
905
3,903
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
-
-
-
135
(135)
-
iphltd.com.au
2023 Annual Report
136
Total facilities
Loan facilities
Working capital facility
Used at the reporting date
Loan facilities
Unused at reporting date
Loan facilities
Working capital facility
Note 17. Non-current liabilities - Provisions
Employee benefits
Other provisions
Closing balance
Provision for onerous contracts
Opening balance at beginning of financial year
Current / non-current reclasses
Closing balance
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
389,592
25,000
185,000
25,000
414,592
210,000
387,744
387,744
118,477
118,477
1,848
13,348
15,196
66,523
14,992
81,515
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
4,019
955
4,974
2,998
905
3,903
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
-
-
-
135
(135)
-
Note 16. Non-current liabilities - Borrowings (continued)
Note 18. Equity - Issued capital
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Ordinary class shares - fully paid
Closing balance
Movements in ordinary share capital
Opening balance at beginning of financial year
Performance and retention rights exercised
Performance and retention rights exercised
Dividend reinvestment - final dividend (note 21)
Dividend reinvestment - interim dividend (note 21)
Bank guarantees drawn under working capital facility
11,652
10,008
Closing balance
Performance and retention rights exercised
Dividend reinvestment - final dividend (note 21)
Acquisition of Smart & Biggar (note 28)
Dividend reinvestment - interim dividend (note 21)
Smart & Biggar deferred consideration (note 28)
Closing balance
Ordinary shares
Consolidated
30 Jun 2023
30 Jun 2022
30 Jun 2023
30 Jun 2022
Shares
Shares
234,855,739
218,819,232
$’000
558,120
$’000
424,809
234,855,739
218,819,232
558,120
424,809
Date
23 August 2021
15 September 2021
17 September 2021
18 March 2022
22 August 2022
16 September 2022
6 October 2022
17 March 2023
20 April 2023
Shares
217,203,866
615,061
125,563
546,902
327,840
$’000
417,079
-
-
5,052
2,678
218,819,232
424,809
745,299
535,619
5,317,980
1,178,654
(18)
4,991
52,113
9,479
8,258,955
66,746
234,855,739
558,120
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid
on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
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 shall have one vote.
Employee share trust
On 1 July 2017, IPH established the Employee Share Trust for the purpose of acquiring and allocating shares granted through the IPH Employee Incentive Plan. As at
30 June 2023, the number of shares held by the trust was 1,535,360 (30 June 2022: 1,308,672). 745,299 shares were issued to the trust during the year.
Share buy-back
There were no shares bought back during the year ended 30 June 2023.
Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits
for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
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.
The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no
events of default on the financing arrangements during the financial year.
Shares subject to voluntary escrow
The restrictions on disposal of shares under the voluntary escrow arrangements that the Company has in place with the vendors of the business of Smart & Biggar
give the Company a relevant interest in 13,576,935 shares. However, the company has no right to acquire these shares or to control the voting rights attaching to
these shares.
iphltd.com.au
2023 Annual Report
137
Note 18. Equity - Issued capital (continued)
Dividend reinvestment plan
The group operates a dividend reinvestment plan. The issue price is 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 dividend reinvestment plan for 31 December 2022
was discounted by 1.5%.
Note 19. Equity - Reserves
Foreign currency reserve
Equity settled employee benefits reserve
Minority interest acquisition reserve
Other reserve
Closing balance
Foreign currency reserve
Consolidated
30 Jun 2023
30 Jun 2022
$’000
9,830
21,194
(14,814)
9,885
26,095
$’000
533
15,050
(14,814)
5,757
6,526
This reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also
used to recognise gains and losses on hedges of the net investments in foreign operations.
Equity settled employee benefits reserve
This reserve is used to recognise the value of equity benefits provided 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 and STIP (note 33).
Minority interest acquisition reserve
This reserve represents the difference between the amount by which non-controlling interests are adjusted and the fair value of the consideration paid or
received, where there is no change in control and arose on the initial listing of IPH.
Other reserve
This reserve includes the following items:
- fair value gains or losses in investments in equity instruments designated as FVTOCI ($5,333,000 at 30 June 2023 (2022: $5,333,000)); and
- revaluation of hedging instruments ($4,552,000 at 30 June 2023 (2022: $424,000)).
Movements in reserves
Movements in each class of reserve during the current and previous financial year are presented in the Statement of Changes in Equity.
Note 20. Equity - Accumulated Losses
(Accumulated Losses)/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
Closing balance
Consolidated
30 Jun 2023
30 Jun 2022
$’000
(1,624)
64,541
(70,006)
(7,089)
$’000
11,213
52,564
(65,401)
(1,624)
iphltd.com.au
2023 Annual Report
138
Dividend reinvestment plan
was discounted by 1.5%.
Note 19. Equity - Reserves
Foreign currency reserve
Equity settled employee benefits reserve
Minority interest acquisition reserve
Other reserve
Closing balance
Foreign currency reserve
Equity settled employee benefits reserve
Consolidated
30 Jun 2023
30 Jun 2022
$’000
9,830
21,194
(14,814)
9,885
26,095
$’000
533
15,050
(14,814)
5,757
6,526
This reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also
used to recognise gains and losses on hedges of the net investments in foreign operations.
This reserve is used to recognise the value of equity benefits provided 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 and STIP (note 33).
This reserve represents the difference between the amount by which non-controlling interests are adjusted and the fair value of the consideration paid or
received, where there is no change in control and arose on the initial listing of IPH.
Other reserve
This reserve includes the following items:
- fair value gains or losses in investments in equity instruments designated as FVTOCI ($5,333,000 at 30 June 2023 (2022: $5,333,000)); and
- revaluation of hedging instruments ($4,552,000 at 30 June 2023 (2022: $424,000)).
Movements in reserves
Movements in each class of reserve during the current and previous financial year are presented in the Statement of Changes in Equity.
Note 20. Equity - Accumulated Losses
(Accumulated Losses)/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
Closing balance
Consolidated
30 Jun 2023
30 Jun 2022
$’000
(1,624)
64,541
(70,006)
(7,089)
$’000
11,213
52,564
(65,401)
(1,624)
Note 18. Equity - Issued capital (continued)
Note 21. Equity - Dividends
The group operates a dividend reinvestment plan. The issue price is 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 dividend reinvestment plan for 31 December 2022
Interim dividend
December 2021 - paid 18 March 2022
December 2022 - paid 17 March 2023
Final dividend
June 2021 - paid 17 September 2021
June 2022 - paid 16 September 2022
Consolidated
30 Jun 2023
30 Jun 2022
Cents per share
$’000
$’000
14.5
15.5
15.5
16.0
-
34,907
31,681
-
-
33,720
35,099
70,006
-
65,401
On 17 August 2023, the Company declared an ordinary dividend of 17.5 cents per share (franked at 35%) to be paid on 15 September 2023. The dividend value is
$41,099,754. No provision for this dividend has been recognised in the Statement of Financial Position as at 30 June 2023, as it was declared after the end of the
financial year.
Dividend Reinvestment Plan
The Dividend Reinvestment Plan was active during the financial year. 1,714,273 (2022: 874,742) shares were issued to participants totalling $14,470,000 (2022:
$7,730,000).
Franking Credits
Minority interest acquisition reserve
Franking credits available for subsequent financial years based on a tax rate of 30%
Consolidated
30 Jun 2023
30 Jun 2022
$’000
1,072
$’000
3,145
Note 22. Financial instruments
Financial risk management objectives
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’s principal financial instruments, other than derivatives, comprise of cash and bank loan facilities. The main purpose of
financial instruments is to manage liquidity and hedge the Group’s exposure to financial risks, namely:
- foreign currency risk;
- interest rate risk;
- liquidity risk; and
- credit risk.
The Group uses derivatives to reduce the Group’s exposure to fluctuations in interest rates . These derivatives create an obligation or a right that effectively
transfers one or more of the risks associated with an underlying financial instrument, asset or obligation. Derivative financial instruments that the Group uses to
hedge its risks include only interest rate swaps.
The Group does not trade in derivative instruments for speculative purposes. The Group uses different methods to measure the different types of risks to which it
is exposed, including sensitivity analysis in the case of interest rate and foreign exchange and ageing analysis for credit risk.
i) 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. The focus is on minimising exposure to fluctuations in the rate
of the United States Dollar (“USD”), Canadian Dollar ("CAD") and the European Union’s Euro (“EUR”) which represent most of the Group’s foreign currency exposure.
iphltd.com.au
2023 Annual Report
139
Note 22. Financial instruments (continued)
The Group’s net asset exposure at the reporting date was as follows:
30 June 2023
Net asset exposure (Local Currency)
A$'000
US$'000
502,894
46,754
€'000
3,387
S$000
CAD$'000
NZD$000
(89)
(317)
46
Other1
(1,317)
30 June 2022
369,565
39,030
3,740
(153)
(617)
25
(2,630)
Net asset exposure (Local Currency)
1. Australian dollar equivalent.
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 (2022: 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
CAD
NZD
Other currencies
Closing Balance
Interest rate risk
Consolidated - 10% increase
Consolidated - 10% decrease
30 Jun 2023
30 Jun 2022
30 Jun 2023
30 Jun 2022
$’000
6,401
505
(9)
(33)
4
(120)
6,748
$’000
5,148
516
785
(63)
581
345
7,312
$’000
(7,824)
(617)
11
40
(5)
146
$’000
(5,663)
(567)
(864)
69
(640)
(379)
(8,249)
(8,044)
The Group’s main interest rate risk arises from its borrowings. Borrowings issued at variable rates expose the Group to interest rate risk. Borrowings issued at fixed
rates expose the Group to fair value interest rate risk. The Group’s policy is to seek to reduce its interest rate exposure using interest rate swaps. Instruments in
place at year end are summarised in the table below:
as at 30 June 2023
Interest rate swaps
as at 30 June 2022
Interest rate swaps
Carrying
amount
Notional
amount
Hedge ranges
Average
maturity
$’000
$’000
% p.a.
profile years
6,364
354,592
3.74-4.08
472
50,000
0.79-0.92
<5
<5
As at the reporting date, the Group had the following variable rate borrowings outstanding:
Multicurrency loan facility
Weighted average interest rate1
%
6.21
1 - Weighted average interest rate includes the banks margin applied to the borrowings
30 Jun 2023
30 Jun 2022
Balance
$’000
387,744
387,744
Weighted average interest rate
Balance
%
2.83
$’000
118,477
118,477
The sensitivity analysis below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the reporting
date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the reporting date was outstanding for the whole year.
A 1 per cent increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of
the reasonably possible change in interest rates.
iphltd.com.au
2023 Annual Report
140
Note 22. Financial instruments (continued)
The Group’s net asset exposure at the reporting date was as follows:
30 June 2023
Net asset exposure (Local Currency)
Net asset exposure (Local Currency)
1. Australian dollar equivalent.
USD
Euro
SGD
CAD
NZD
Other currencies
Closing Balance
Interest rate risk
as at 30 June 2023
Interest rate swaps
as at 30 June 2022
Interest rate swaps
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 (2022: 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:
Consolidated - 10% increase
Consolidated - 10% decrease
30 Jun 2023
30 Jun 2022
30 Jun 2023
30 Jun 2022
$’000
6,401
505
(9)
(33)
4
(120)
6,748
$’000
5,148
516
785
(63)
581
345
7,312
$’000
(7,824)
(617)
11
40
(5)
146
$’000
(5,663)
(567)
(864)
69
(640)
(379)
(8,249)
(8,044)
The Group’s main interest rate risk arises from its borrowings. Borrowings issued at variable rates expose the Group to interest rate risk. Borrowings issued at fixed
rates expose the Group to fair value interest rate risk. The Group’s policy is to seek to reduce its interest rate exposure using interest rate swaps. Instruments in
place at year end are summarised in the table below:
Carrying
amount
Notional
amount
Hedge ranges
Average
maturity
$’000
$’000
% p.a.
profile years
6,364
354,592
3.74-4.08
472
50,000
0.79-0.92
<5
<5
$’000
118,477
118,477
As at the reporting date, the Group had the following variable rate borrowings outstanding:
Weighted average interest rate1
Weighted average interest rate
Balance
30 Jun 2023
30 Jun 2022
Multicurrency loan facility
%
6.21
%
2.83
Balance
$’000
387,744
387,744
1 - Weighted average interest rate includes the banks margin applied to the borrowings
The sensitivity analysis below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the reporting
date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the reporting date was outstanding for the whole year.
A 1 per cent increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of
the reasonably possible change in interest rates.
A$'000
US$'000
502,894
46,754
€'000
3,387
S$000
CAD$'000
NZD$000
(89)
(317)
46
Other1
(1,317)
Note 22. Financial instruments (continued)
If interest rates has been 1 per cent higher/lower and all other variables were hold constant, the Group's:
- Profit for the year ended 30 June 2023 would decrease/increase by $0.4 million (2022: $0.7 million). This is mainly attributable to the Groups hedging on its
variable rate borrowings
The Group's sensitivity to interest rates has decreased during the current year mainly due to the increased interest rate hedging introduced in response to the
increase in borrowings from FY22.
30 June 2022
369,565
39,030
3,740
(153)
(617)
25
(2,630)
ii) Liquidity risk
Liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to
pay debts as and when they become due and payable.
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.
Refer to the Remaining Contractual Maturities section in this note for a breakdown of future cash commitments of the Group.
iii) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group may obtain payment in
advance or restrict the services offered where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting 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.
iv) Price risk
The Group is not exposed to any significant price risk.
Offsetting financial assets and financial liabilities
The Group presents its derivative assets and liabilities on a gross basis.
Derivative financial instruments
Fair value hedge
A fair value hedge is a hedge of the exposure to changes in fair value of an asset or liability that is attributable to a particular risk and could affect the Statement of
Comprehensive Income. Changes in the fair value of derivatives (hedging instruments) that are designated as fair value hedges are recorded in profit or loss,
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk (hedged item).
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is
used is amortised to profit or loss over the period to maturity using a recalculated effective interest rate.
Cashflow hedge
A cash flow hedge is a hedge of the exposure to variability in cash flows attributable to a particular risk of a highly probable forecast transaction or a recognised
asset or liability. The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges is recognised in other comprehensive
income in equity via the cash flow hedge reserve. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects
profit or loss. Any gain or loss related to ineffectiveness is recognised in profit or loss immediately.
At inception of a hedge relationship the Group formally designates and documents the relationship between the hedging instrument and the hedged item, along
with the risk management objectives and strategy for undertaking the hedge transaction. Both at inception and on an ongoing basis the hedging instrument is
effective in offsetting changes in cash flows and fair values of the hedged item attributable to the hedged risk, which is when the hedging relationship meets all of
the following hedge effectiveness requirements:
- an economic relationship between the hedged item and the hedging instrument;
- effect of credit risk does not dominate the value changes that result from that economic relationship; and
- hedge ratio of the designated hedge is the same; that is the Group hedges the same quantity of the hedging instrument and the hedged item.
Hedge accounting is discontinued when the hedging instrument expires, is terminated, is no longer in an effective hedge relationship, or the forecast transaction is
no longer expected to occur. The fair value gain or loss of derivatives recorded in equity is recognised in profit or loss over the period that the forecast transaction
is recorded in profit or loss. If the forecast transaction is no longer expected to occur, the cumulative gain or loss in equity is recognised in profit or loss
immediately.
iphltd.com.au
2023 Annual Report
141
Note 22. Financial instruments (continued)
Effects of hedge accounting on the financial position and performance
The effects of the interest rate swaps on the Group's financial position and performance are as follows:
Carrying amount
Notional amount
Maturity date
Hedge ratio
Change in fair value of outstanding hedging instruments since inception of hedge
Change in value of hedged item used to determine hedge effectiveness
Weighted average hedged rate for the year
The group has the following derivative financial instruments in the following line items in the Statement of Financial Position:
Current assets
Interest rate swaps - cash flow hedges
Non-current assets
Interest rate swaps - cash flow hedges
Remaining contractual maturities
Consolidated
30 Jun 2023
30 Jun 2022
$’000
6,364
354,592
Up to 2027
1:1
6,364
(6,364)
3.92%
$’000
472
50,000
2023
1:1
472
(472)
-0.94%
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
215
215
6,149
6,149
472
472
-
-
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:
Consolidated - 30 June 2023
Non-derivatives
Non-interest bearing
Trade payables
Sundry creditors and accruals
Deferred consideration
Interest-bearing - variable
Lease liabilities
Multi-option facility
Weighted
average
interest rate
1 year or less
Between 1 and
2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
$’000
$’000
$’000
$’000
$’000
0.00%
0.00%
0.00%
3.66%
6.21%
15,794
22,989
1,680
11,519
24,066
76,048
-
-
-
-
-
-
9,967
197,344
207,311
25,441
205,705
231,146
-
-
-
13,445
-
15,794
22,989
1,680
60,372
427,115
13,445
527,950
iphltd.com.au
2023 Annual Report
142
Note 22. Financial instruments (continued)
Note 22. Financial instruments (continued)
Effects of hedge accounting on the financial position and performance
The effects of the interest rate swaps on the Group's financial position and performance are as follows:
Change in fair value of outstanding hedging instruments since inception of hedge
Change in value of hedged item used to determine hedge effectiveness
Weighted average hedged rate for the year
The group has the following derivative financial instruments in the following line items in the Statement of Financial Position:
Consolidated
30 Jun 2023
30 Jun 2022
$’000
6,364
354,592
Up to 2027
1:1
6,364
(6,364)
3.92%
215
215
6,149
6,149
$’000
472
50,000
2023
1:1
472
(472)
-0.94%
472
472
-
-
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
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:
Consolidated - 30 June 2023
average
1 year or less
Weighted
interest rate
Between 1 and
Between 2
2 years
and 5 years
Over 5 years
contractual
Remaining
maturities
$’000
$’000
$’000
$’000
$’000
0.00%
0.00%
0.00%
3.66%
6.21%
15,794
22,989
1,680
11,519
24,066
76,048
-
-
-
-
-
-
9,967
197,344
207,311
25,441
205,705
231,146
-
-
-
-
13,445
15,794
22,989
1,680
60,372
427,115
13,445
527,950
Carrying amount
Notional amount
Maturity date
Hedge ratio
Current assets
Interest rate swaps - cash flow hedges
Non-current assets
Interest rate swaps - cash flow hedges
Remaining contractual maturities
Non-derivatives
Non-interest bearing
Trade payables
Sundry creditors and accruals
Deferred consideration
Interest-bearing - variable
Lease liabilities
Multi-option facility
Consolidated - 30 June 2022
Non-derivatives
Non-interest bearing
Trade payables
Sundry creditors and accruals
Deferred consideration
Interest-bearing - variable
Lease liabilities
Multi-option facility
Weighted
average
interest rate
1 year or less
Between 1 and
2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
$’000
$’000
$’000
$’000
$’000
0.00%
0.00%
0.00%
3.31%
2.83%
18,102
11,246
-
12,933
3,357
-
-
2,100
7,691
3,357
-
-
-
-
-
-
17,388
121,834
10,103
-
45,638
13,148
139,222
10,103
18,102
11,246
2,100
48,115
128,548
208,111
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that
is significant to the entire fair value measurement, being:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 Unobservable inputs for the asset or liability.
The Board considers that the carrying amount of financial assets and financial liabilities recognised in the financial statements approximate their fair value.
The table below shows the assigned level for each asset and liability held at fair value by the Group:
Consolidated - 30 June 2023
Financial assets measured at fair value
Interest rate swaps - cashflow hedges
Total current assets
Interest rate swaps - cashflow hedges
Total non-current assets
Consolidated - 30 June 2022
Financial assets measured at fair value
Interest rate swaps - cashflow hedges
Total current assets
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
-
-
215
215
6,149
6,149
-
-
-
-
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
472
472
-
-
Total
$’000
215
215
6,149
6,149
Total
$’000
472
472
iphltd.com.au
2023 Annual Report
143
Note 23. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Note 24. Remuneration of auditors
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
2,996,315
2,971,988
134,548
124,344
69,529
(103,296)
289,092
733,220
3,489,484
3,726,256
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:
Audit services - Deloitte Touche Tohmatsu (Australia)
Audit or review of the financial statements
Other assurance services
Overseas Deloitte Touche Tohmatsu firms
Audit or review of the financial statements
Audit services - unrelated firms
Audit or review of the financial statements
Other services - unrelated firms
Corporate and taxation services
Note 25. Contingent liabilities
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
735,000
539,400
25,000
18,000
760,000
557,400
415,400
415,400
66,472
66,472
53,900
39,406
53,902
107,802
78,177
117,583
The Group has given bank guarantees in respect of leased office premises as at 30 June 2023 of $10,267,556 (2022: $10,008,110).
From time to time failures or defects in the lodgement or prosecution of intellectual property rights by Group businesses or their associates may occur. Whilst in
most cases the failure or defect is able to be remedied with the relevant intellectual property offices, the Group maintains professional indemnity insurances to
insure against loss arising from such events. Any material matters which could result in a possible outflow to the Group are disclosed with appropriate provisions
made for probable outflows.
iphltd.com.au
2023 Annual Report
144
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
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Note 24. Remuneration of auditors
firms:
Audit services - Deloitte Touche Tohmatsu (Australia)
Audit or review of the financial statements
Other assurance services
Overseas Deloitte Touche Tohmatsu firms
Audit or review of the financial statements
Audit services - unrelated firms
Audit or review of the financial statements
Other services - unrelated firms
Corporate and taxation services
Note 25. Contingent liabilities
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
2,996,315
2,971,988
134,548
124,344
69,529
(103,296)
289,092
733,220
3,489,484
3,726,256
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
735,000
539,400
25,000
18,000
760,000
557,400
415,400
415,400
66,472
66,472
53,900
39,406
53,902
107,802
78,177
117,583
Note 23. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out below:
Note 26. Related party transactions
Parent entity
IPH Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 30.
Key management personnel
Disclosures relating to key management personnel are set out in note 23 and the remuneration report in the Directors’ report.
Transactions with related parties
There were no additional transactions with related parties.
Note 27. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit after income tax
Other comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Equity settled employee benefits reserve
Other reserves
Retained earnings
Consolidated
30 Jun 2023
30 Jun 2022
$’000
$’000
57,462
1,836
59,298
59,568
684
60,252
311,646
140,705
984,646
585,476
9,342
6,688
401,634
130,553
558,120
424,809
14,550
9,866
476
13,816
5,741
10,557
583,012
454,923
The Group has given bank guarantees in respect of leased office premises as at 30 June 2023 of $10,267,556 (2022: $10,008,110).
From time to time failures or defects in the lodgement or prosecution of intellectual property rights by Group businesses or their associates may occur. Whilst in
most cases the failure or defect is able to be remedied with the relevant intellectual property offices, the Group maintains professional indemnity insurances to
insure against loss arising from such events. Any material matters which could result in a possible outflow to the Group are disclosed with appropriate provisions
made for probable outflows.
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
Other than the security provided for the debt facility agreement as disclosed in note 16, the parent entity had no guarantees in relation to the debts of its
subsidiaries as at 30 June 2023 apart from being party to the deed of cross guarantee as detailed in Note 34.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2023.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2.
iphltd.com.au
2023 Annual Report
145
Note 28. Business combinations
On 6 October 2022 the Group completed the acquisition of the IP agency practice of Smart & Biggar, which holds an interest in the legal practice of Smart &
Biggar as permitted by Canadian regulation (refer to note 3).
The consideration was settled by way of cash payments of C$241m (A$277m) funded by a drawdown of on the existing IPH debt facility, the issuance of 5,317,980
IPH shares and a deferred earn-out capped at C$66m of new IPH shares.
The acquired business contributed revenues of A$94.0m and profit after tax of A$11.1m to the Group for the period from 6 October 2022 to 30 June 2023. For the
period prior to ownership being 1 July 2022 to 5 October 2022, the acquired business generated revenues of A$34.0m and a profit after tax of A$4.0m.
Equity instruments issued
A$52,116,204 of the purchase price was settled by way of the full issue of 5,317,980 ordinary shares in IPH to the Vendors of S&B. The shares issued have been
recorded in the financial statements at the acquisition date fair value of $9.80 per share.
Contingent consideration
Additional shares were issued relating to deferred earn-out consideration, capped at C$66m of new IPH shares. The earn-out consideration was payable
dependent on the extent that Smart & Biggars earnings in CY22 or CY23 outperform agreed thresholds broadly in-line with its pre-Covid earnings levels in 2019.
The earn-out could be achieved in full or part in either of those years.
Contingent consideration of C$66m was paid on 20 April 2023 with Smart & Biggar achieving the full earnout within the FY23 period with payment made in the
form of 8,258,955 shares at a share price of $8.69 per share.
Consideration transferred
The following table summarises the acquisition date fair value of each major class of consideration transferred.
Cash
Equity Instruments
Deferred contingent consideration
Total purchase consideration
The Group incurred acquisition costs of $8.6m. These costs have been included in business acquisition expenses in the Statement of Profit or Loss.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition.
Cash
Trade receivables and other receivables
Other assets
Property, plant and equipment
Lease assets
Intangible assets - customer relationships
Intangible assets - patents and trademarks
Trade and other payables
Other current liabilities
Provisions
Interest bearing lease liabilities
Deferred Tax
Net assets acquired
Goodwill
Acquisition-date fair value of total consideration transferred
$’000
276,626
52,116
74,425
403,167
Fair Value
$’000
1,111
41,690
7,958
4,302
8,079
191,700
29,883
(16,222)
(1,507)
(1,701)
(8,217)
(58,079)
198,997
204,170
403,167
iphltd.com.au
2023 Annual Report
146
Note 28. Business combinations
On 6 October 2022 the Group completed the acquisition of the IP agency practice of Smart & Biggar, which holds an interest in the legal practice of Smart &
Biggar as permitted by Canadian regulation (refer to note 3).
The consideration was settled by way of cash payments of C$241m (A$277m) funded by a drawdown of on the existing IPH debt facility, the issuance of 5,317,980
IPH shares and a deferred earn-out capped at C$66m of new IPH shares.
The acquired business contributed revenues of A$94.0m and profit after tax of A$11.1m to the Group for the period from 6 October 2022 to 30 June 2023. For the
period prior to ownership being 1 July 2022 to 5 October 2022, the acquired business generated revenues of A$34.0m and a profit after tax of A$4.0m.
A$52,116,204 of the purchase price was settled by way of the full issue of 5,317,980 ordinary shares in IPH to the Vendors of S&B. The shares issued have been
recorded in the financial statements at the acquisition date fair value of $9.80 per share.
Additional shares were issued relating to deferred earn-out consideration, capped at C$66m of new IPH shares. The earn-out consideration was payable
dependent on the extent that Smart & Biggars earnings in CY22 or CY23 outperform agreed thresholds broadly in-line with its pre-Covid earnings levels in 2019.
The earn-out could be achieved in full or part in either of those years.
Contingent consideration of C$66m was paid on 20 April 2023 with Smart & Biggar achieving the full earnout within the FY23 period with payment made in the
form of 8,258,955 shares at a share price of $8.69 per share.
Note 28. Business combinations (continued)
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: deferred contingent consideration
Less: cash and cash equivalents acquired
Net cash used
403,167
(52,116)
(74,425)
(1,111)
275,515
The acquisition accounting has been finalised. Since provisionally reported at 31 December 2022, adjustments to the opening values resulted in a decrease of the
net assets of $0.8m and a corresponding increase in goodwill of the same amount.
Note 29. Events after the reporting period
IPH has continued to assess complementary acquisition opportunities in Canada and in other core secondary IP markets. In Canada, IPH believes a number of
further consolidation opportunities exist to expand patent market share.
In line with its previously announced strategy, IPH is in discussions with parties regarding such potential opportunities, with one potential opportunity expected to
be announced post publication of FY23 results, and another opportunity being actively pursued.
IPH is also continuing to pursue other acquisition opportunities, and is involved in discussions in relation to such opportunities.
The following table summarises the acquisition date fair value of each major class of consideration transferred.
Note 30. Interest 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:
Equity instruments issued
Contingent consideration
Consideration transferred
Cash
Equity Instruments
Deferred contingent consideration
Total purchase consideration
Trade receivables and other receivables
Cash
Other assets
Lease assets
Property, plant and equipment
Intangible assets - customer relationships
Intangible assets - patents and trademarks
Trade and other payables
Other current liabilities
Provisions
Interest bearing lease liabilities
Deferred Tax
Net assets acquired
Goodwill
Acquisition-date fair value of total consideration transferred
Fair Value
$’000
276,626
52,116
74,425
403,167
$’000
1,111
41,690
7,958
4,302
8,079
191,700
29,883
(16,222)
(1,507)
(1,701)
(8,217)
(58,079)
198,997
204,170
403,167
The Group incurred acquisition costs of $8.6m. These costs have been included in business acquisition expenses in the Statement of Profit or Loss.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition.
Name
AJ Park IP Ltd
AJ Park IP Pty Ltd2
AJ Park Law Ltd5
Applied Marks Pty Ltd2,3
IPH Canadian Holdings Limited6
Smart & Biggar LP6
Smart & Biggar LLP6,8
Smart & Biggar Alberta LLP6,9
IPH Canadian IP Holdings LP6,10
Smart & Biggar Management Limited6
IPH US Inc.
United States of America
Support services
IPH Holdings (Asia) Pte Ltd
IPH (Thailand) Ltd4
Spruson & Ferguson Ltd
Pizzeys Pte Ltd
PT Spruson Ferguson Indonesia
IPH Services Pty Ltd2,3
Singapore
Thailand
Thailand
Singapore
Indonesia
Australia
Pizzeys Patent & Trade Mark Attorneys Pty Ltd2,3
Australia
Non trading entity
Non trading entity
Patent attorneys
Patent attorneys
Patent attorneys
Support services
Patent attorneys
Practice Insight Pty Limited2,3,7
WiseTime LLC7
Australia
Data analysis and software
United States of America
Data analysis and software
New Zealand
Australia
New Zealand
Australia
Canada
Canada
Canada
Canada
Canada
Canada
Patent attorneys
Patent attorneys
Lawyers
Patent attorneys
Non trading entity
Patent attorneys
Lawyers
Lawyers
Non trading entity
Support services
100.0%
100.0%
0.0%
100.0%
100.0%
99.9%
49.9%
0.0%
75.0%
99.9%
100.0%
100.0%
49.0%
100.0%
100.0%
100.0%
100.0%
100.0%
0.0%
0.0%
100.0%
100.0%
0.0%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
100.0%
49.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Principal place of
business/country of
incorporation
Principal activities
Ownership
interest
Ownership
interest
30 Jun 2023
30 Jun 2022
iphltd.com.au
2023 Annual Report
147
Note 30. Interest in subsidiaries (continued)
Spruson & Ferguson (Hong Kong) Ltd
Hong Kong
Beijing Pat SF Intellectual Property Agency Co Ltd5 China
Spruson & Ferguson Intellectual Property
Agency (Beijing) Company Ltd
Spruson & Ferguson Pty Limited2,3
Spruson & Ferguson (Asia) Pte Limited
Spruson & Ferguson (Philippines) Inc6
Spruson & Ferguson Lawyers Pty Limited2,3
Spruson & Ferguson (M) SDN BHD
Spruson & Ferguson (NSW) Pty Limited2,3
Xenith IP Group Pty Ltd2,3
Griffith Hack Holdings Pty Ltd2,3
GH PTM Pty Ltd2,3
GH Law Pty Ltd2,3
Intellectual Property Management Pty Ltd2
Glasshouse Advisory Pty Ltd2
Shelston IP Lawyers Pty Ltd2
Shelston IP Pty Ltd2
Watermark Holdings Pty Ltd2
Watermark Advisory Services Pty Ltd2
Watermark Australasia Pty Ltd2
Watermark Intellectual Property
Lawyers Pty Ltd2
Watermark Intellectual Property Pty Ltd2
Xenith IP Services Pty Ltd2,3
1. IPH Limited is the head entity within the tax consolidated group.
2. These companies are members of the tax consolidated group.
China
Australia
Singapore
Philippines
Australia
Malaysia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Patent attorneys
Patent attorneys
Patent attorneys
Patent attorneys
Patent attorneys
Patent attorneys
Lawyers
Patent attorneys
Non trading entity
Non trading entity
Non trading entity
Patent attorneys
Lawyers
Non trading entity
Non trading entity
Lawyers
Patent attorneys
Non trading entity
Non trading entity
Non trading entity
Lawyers
Patent attorneys
Support services
100.0%
0.0%
100.0%
100.0%
100.0%
99.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
0.0%
100.0%
100.0%
100.0%
0.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
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 34).
4. The Group holds 90.6% of the voting rights and thus has control of this entity.
5. These entities have Alliance Agreements with Group entities which results in consolidation in the IPH Group for Accounting purposes.
6. These entites were acquired or incorporated by IPH Group in the financial year ended 30 June 2023.
7. These entities were divested by IPH Group in the financial year ended 30 June 2023
8. This entity has exclusive services and licence agreements and terms of the partnership agreement which results in consolidation in the IPH Group for Accounting purposes.
9. This entity has exclusive services and licence agreements which results in consolidation in the IPH Group for Accounting purposes.
10. The remaining 25% is held by Smart & Biggar LLP.
Note 31. Earnings per share
Profit after income tax
Profit after income tax attributable to the owners of IPH Limited
Weighted average number of ordinary shares used in calculating basic earnings per share1
Options over ordinary shares
Weighted average number of ordinary shares used in calculating diluted earnings per share
Consolidated
30 Jun 2023
30 Jun 2022
$’000
64,541
64,541
$’000
52,564
52,564
30 Jun 2023
30 Jun 2022
225,496,338
218,169,060
1,492,275
954,781
226,988,613
219,123,841
iphltd.com.au
2023 Annual Report
148
Note 30. Interest in subsidiaries (continued)
Spruson & Ferguson (Hong Kong) Ltd
Hong Kong
Beijing Pat SF Intellectual Property Agency Co Ltd5 China
Spruson & Ferguson Intellectual Property
Agency (Beijing) Company Ltd
Spruson & Ferguson Pty Limited2,3
Spruson & Ferguson (Asia) Pte Limited
Spruson & Ferguson (Philippines) Inc6
Spruson & Ferguson Lawyers Pty Limited2,3
Spruson & Ferguson (M) SDN BHD
Spruson & Ferguson (NSW) Pty Limited2,3
Xenith IP Group Pty Ltd2,3
Griffith Hack Holdings Pty Ltd2,3
GH PTM Pty Ltd2,3
GH Law Pty Ltd2,3
Glasshouse Advisory Pty Ltd2
Shelston IP Lawyers Pty Ltd2
Shelston IP Pty Ltd2
Watermark Holdings Pty Ltd2
Intellectual Property Management Pty Ltd2
Watermark Advisory Services Pty Ltd2
Watermark Australasia Pty Ltd2
Watermark Intellectual Property
Lawyers Pty Ltd2
Watermark Intellectual Property Pty Ltd2
Xenith IP Services Pty Ltd2,3
1. IPH Limited is the head entity within the tax consolidated group.
2. These companies are members of the tax consolidated group.
China
Australia
Singapore
Philippines
Australia
Malaysia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Patent attorneys
Patent attorneys
Patent attorneys
Patent attorneys
Patent attorneys
Patent attorneys
Lawyers
Patent attorneys
Non trading entity
Non trading entity
Non trading entity
Patent attorneys
Lawyers
Non trading entity
Non trading entity
Lawyers
Patent attorneys
Non trading entity
Non trading entity
Non trading entity
Lawyers
Patent attorneys
Support services
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 34).
4. The Group holds 90.6% of the voting rights and thus has control of this entity.
5. These entities have Alliance Agreements with Group entities which results in consolidation in the IPH Group for Accounting purposes.
6. These entites were acquired or incorporated by IPH Group in the financial year ended 30 June 2023.
7. These entities were divested by IPH Group in the financial year ended 30 June 2023
8. This entity has exclusive services and licence agreements and terms of the partnership agreement which results in consolidation in the IPH Group for Accounting purposes.
9. This entity has exclusive services and licence agreements which results in consolidation in the IPH Group for Accounting purposes.
10. The remaining 25% is held by Smart & Biggar LLP.
Note 31. Earnings per share
Profit after income tax
Profit after income tax attributable to the owners of IPH Limited
Weighted average number of ordinary shares used in calculating basic earnings per share1
Options over ordinary shares
Weighted average number of ordinary shares used in calculating diluted earnings per share
100.0%
0.0%
100.0%
100.0%
100.0%
99.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
0.0%
100.0%
100.0%
100.0%
0.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Consolidated
30 Jun 2023
30 Jun 2022
$’000
64,541
64,541
$’000
52,564
52,564
30 Jun 2023
30 Jun 2022
225,496,338
218,169,060
1,492,275
954,781
226,988,613
219,123,841
Note 31. Earnings per share (continued)
Basic earnings per share
Diluted earnings per share
1. Treasury shares of 216,870 held by the employee share trust have been excluded from the weighted average number of shares in accordance with AASB 133 Earnings Per Share.
Note 32. Reconciliation of profit after income tax to net cash from operating activities
Profit after income tax
Statement of profit or loss and other comprehensive income
Depreciation and amortisation
Impairment of intangible assets
Gain on sale of Practice Insight
Lease liability revaluations and loss on disposal of fixed assets
Prepaid line fees reclassed to borrowings
Unrealised foreign exchange
Tax on revaluation of hedges
Deferred consideration fair value adjustment
Share-based payments
Statement of profit or loss and other comprehensive income
Decrease/(Increase) in trade and other receivables
(Decrease) in deferred tax liabilities (excl. FX mvmt)
(Increase) in other assets
(Decrease)/Increase in trade and other payables
Increase in provision for income tax
(Decrease)/Increase in deferred revenue
Increase/(Decrease) in provisions
Note 33. Share-based payments
IPH Limited Employee Incentive Plan - November 2016
30 Jun 2023
30 Jun 2022
28.62
28.43
24.09
23.99
Consolidated
30 Jun 2023
30 Jun 2022
$’000
64,541
53,351
-
(120)
(431)
(837)
(662)
(1,768)
(6,270)
6,130
(6,746)
(4,602)
(10,121)
(7,084)
4,643
(297)
2,063
$’000
52,564
39,563
6,284
-
2,478
-
(1,539)
-
-
4,850
(8,340)
(6,216)
(1,652)
4,109
1,299
1,516
(37)
91,790
94,879
The IPH limited Employee Incentive Plan (the "Incentive Plan"), was approved at the AGM on 16 November 2016. This plan replaced 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 amounts
are paid or payable by the recipient of the performance right, 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 or other Key Performance Indicator (KPI) metric for
the Group, business unit and individual.
iphltd.com.au
2023 Annual Report
149
Note 33. Share-based payments (continued)
Movement in Performance Rights issued under the new Incentive Plan during the financial year were:
Grant date
Final vesting
date
Exercise price
KPI - FY22 - 15 Sep 21
KPI - FY22 - 15 Sep 21
KPI - FY23 - 15 Sep 22
KPI - FY23 - 6 Dec 22
KPI - FY23 - 6 Dec 22
KPI - FY23 - 10 Mar 23
31 Aug 2022
15 Sep 20231
31 Aug 20231
31 Aug 20231
30 Nov 20241
31 Aug 20231
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Balance at the
start of the
year
540,959
6,943
-
-
-
-
Granted
Exercised
Expired/
forefeited/
other
Balance at the
end of the
year
-
-
941,389
14,395
20,477
279,991
(524,550)
(16,409)
-
-
-
-
-
-
-
(77,238)
(9,247)
-
-
6,943
864,151
5,148
20,477
279,991
Total performance rights
547,902
1,256,252
(524,550)
(102,894)
1,176,710
1. Vesting prior to this date at the Boards discretion
The performance rights that vest are converted into shares and held on behalf of the employee in the IPH Employee Share Trust for a further two years. The
employees receive dividends whilst the shares are in trust but are unable to trade the shares. Shares are forfeited should the employee cease to be an employee
during the two year holding period. A share based payment charge is recognised in the profit and loss account during this period of restriction.
A share based retention reward of C$2.4m was made to a number of employees following the acquisition of Smart & Biggar. This retention period runs from 6
October 2022 to 4 January 2024. At 30 June 2023 A$1.6m has been expensed for the award.
IPH Executives - Long Term Incentive
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 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 FY19 plan are:
- Minimum EPS Target: 7% CAGR in EPS over the three year performance period ending on 30 June; and
- EPS Target: 15% CAGR in EPS over the three year performance period ending on 30 June.
Vesting of Rights is as follows:
- 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% - 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
EPS Targets for the FY20, FY21 , FY22 and FY23 plans are:
- Minimum EPS Target: 5% CAGR in EPS over the three year performance period ending on 30 June; and
- EPS Target: 12.5% CAGR in EPS over the three year performance period ending on 30 June.
Vesting of Rights is as follows:
- Less than 5% CAGR in EPS over the performance period - nil vesting
- Equal to 5% CAGR in EPS over the performance period - 25% vesting
- Greater than 5% CAGR in EPS up to and including 12.5% - pro-rated vesting on a straight line basis
- At or above 12.5% CAGR in EPS over the performance period - 100% vesting
Granted
Exercised
Expired/
forefeited/
other
Balance at the
end of the
year
Grant date
Final vesting
date
Exercise price
LTI - 22 Nov 19
LTI - 7 Dec 20
LTI - 15 Sep 21
LTI - 19 Nov 21
LTI - 6 Dec 22
1 Sep 2022
1 Sep 2023
30 Jun 2024
30 Jun 2024
30 Jun 2025
$0.00
$0.00
$0.00
$0.00
$0.00
Balance at the
start of the
year
200,587
369,768
261,029
177,264
-
-
-
-
(200,587)
-
-
-
-
-
545,568
Total performance rights
1,008,648
545,568
(200,587)
1. Vesting prior to this date at the Boards discretion
-
-
-
-
-
-
-
369,768
261,029
177,264
545,568
1,353,629
iphltd.com.au
2023 Annual Report
150
Note 33. Share-based payments (continued)
Note 33. Share-based payments (continued)
Movement in Performance Rights issued under the new Incentive Plan during the financial year were:
Grant date
Exercise price
start of the
Granted
Exercised
forefeited/
end of the
Balance at the
Expired/
Balance at the
Final vesting
date
31 Aug 2022
15 Sep 20231
31 Aug 20231
31 Aug 20231
30 Nov 20241
31 Aug 20231
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
year
540,959
6,943
-
-
-
-
(524,550)
(16,409)
-
-
941,389
14,395
20,477
279,991
-
-
-
-
-
other
(77,238)
(9,247)
-
-
-
year
-
6,943
864,151
5,148
20,477
279,991
KPI - FY22 - 15 Sep 21
KPI - FY22 - 15 Sep 21
KPI - FY23 - 15 Sep 22
KPI - FY23 - 6 Dec 22
KPI - FY23 - 6 Dec 22
KPI - FY23 - 10 Mar 23
1. Vesting prior to this date at the Boards discretion
Total performance rights
547,902
1,256,252
(524,550)
(102,894)
1,176,710
The performance rights that vest are converted into shares and held on behalf of the employee in the IPH Employee Share Trust for a further two years. The
employees receive dividends whilst the shares are in trust but are unable to trade the shares. Shares are forfeited should the employee cease to be an employee
during the two year holding period. A share based payment charge is recognised in the profit and loss account during this period of restriction.
A share based retention reward of C$2.4m was made to a number of employees following the acquisition of Smart & Biggar. This retention period runs from 6
October 2022 to 4 January 2024. At 30 June 2023 A$1.6m has been expensed for the award.
The weighted average share price during the financial year was $8.57 (2022: $8.33).
The weighted average remaining contractual life of rights outstanding at the end of the financial year was 0.7 years (2022: 0.9 years)
The weighted fair value of the rights granted during the year is $8.69 (2022: $8.82)
Valutation model inputs used to determine the fair value of rights at grant date, are as follows:
IPH Limited Incentive Plan - November 2016
Professional Staff and Senior Management
Grant date
Vesting date
Share price at
grant date
Exercise price
Dividend yield
Risk-free
interest rate
Fair value at
grant date
KPI FY22 - 15 Sep 21
KPI FY22 - 15 Sep 21
KPI - FY23 - 15 Sep 22
KPI - FY23 - 6 Dec 22
KPI - FY23 - 6 Dec 22
KPI - FY23 - 10 Mar 23
IPH Executives - Long Term Incentive
31 Aug 2022
15 Sep 2023
31 Aug 2023
31 Aug 2023
30 Nov 2024
31 Aug 2023
$9.35
$9.35
$9.31
$8.75
$8.75
$8.40
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
3.90%
3.90%
3.60%
3.60%
3.60%
3.90%
-0.02%
0.03%
3.03%
3.09%
3.04%
3.73%
$9.02
$8.65
$9.01
$8.54
$8.15
$7.64
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 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
Grant date
Vesting date
Share price at
grant date
Exercise price
Dividend yield
Risk-free
interest rate
Fair value at
grant date
LTI - 22 Nov 19
LTI - 7 Dec 20
LTI - 15 Sep 21
LTI - 19 Nov 21
LTI - 6 Dec 22
1 Sep 2022
1 Sep 2023
30 Jun 2024
30 Jun 2024
30 Jun 2025
$8.20
$6.62
$9.35
$9.30
$8.75
$0.00
$0.00
$0.00
$0.00
$0.00
3.90%
4.60%
3.90%
3.90%
3.60%
0.74%
0.12%
0.17%
0.88%
3.06%
$7.36
$5.84
$8.34
$8.36
$7.94
Amounts recognised in the Financial Statements
During the financial year ended 30 June 2023, an expense of $6,130,000 was recognised in the Statement of Profit or Loss in relation to equity settled share based
payment awards (2022: $4,850,000).
IPH Executives - Long Term Incentive
to the Minimum EPS target.
EPS Targets for the FY19 plan are:
- Minimum EPS Target: 7% CAGR in EPS over the three year performance period ending on 30 June; and
- EPS Target: 15% CAGR in EPS over the three year performance period ending on 30 June.
Vesting of Rights is as follows:
- 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% - 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
EPS Targets for the FY20, FY21 , FY22 and FY23 plans are:
- Minimum EPS Target: 5% CAGR in EPS over the three year performance period ending on 30 June; and
- EPS Target: 12.5% CAGR in EPS over the three year performance period ending on 30 June.
Vesting of Rights is as follows:
- Less than 5% CAGR in EPS over the performance period - nil vesting
- Equal to 5% CAGR in EPS over the performance period - 25% vesting
- Greater than 5% CAGR in EPS up to and including 12.5% - pro-rated vesting on a straight line basis
- At or above 12.5% CAGR in EPS over the performance period - 100% vesting
Grant date
Exercise price
start of the
Granted
Exercised
forefeited/
end of the
Balance at the
Expired/
Balance at the
Final vesting
date
1 Sep 2022
1 Sep 2023
30 Jun 2024
30 Jun 2024
30 Jun 2025
$0.00
$0.00
$0.00
$0.00
$0.00
LTI - 22 Nov 19
LTI - 7 Dec 20
LTI - 15 Sep 21
LTI - 19 Nov 21
LTI - 6 Dec 22
1. Vesting prior to this date at the Boards discretion
year
200,587
369,768
261,029
177,264
-
-
-
-
(200,587)
-
-
-
-
-
545,568
other
year
-
369,768
261,029
177,264
545,568
-
-
-
-
-
-
Total performance rights
1,008,648
545,568
(200,587)
1,353,629
iphltd.com.au
2023 Annual Report
151
Note 34. Deed of cross guarantee
The members of the Group party to the deed of cross guarantee are details in note 30. 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:
Revenue
Other income
Expenses
Employee benefits expense
Depreciation of right-of-use assets
Depreciation and amortisation of fixed assets and intangibles
Occupancy 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
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit for the year is attibutable to:
Owners of IPH Limited
Profit after income tax expense for the year
Total comprehensive income for the year is attibutable to:
Owners of IPH Limited
Profit after income tax expense for the year
30 Jun 2023
30 Jun 2022
$’000
$’000
205,733
205,664
77,031
65,082
(75,594)
(76,550)
(4,408)
(5,387)
(22,688)
(29,703)
(879)
(3,404)
(59,158)
(2,481)
(1,885)
(3,365)
(24,061)
84,841
(10,086)
74,755
4,128
78,883
74,755
74,755
78,883
78,883
(1,277)
(4,495)
(59,722)
(2,316)
(842)
(21,622)
(3,919)
64,913
(10,200)
54,713
684
55,397
54,713
54,713
55,397
55,397
iphltd.com.au
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152
Note 34. Deed of cross guarantee
Note 34. Deed of cross guarantee (continued)
The members of the Group party to the deed of cross guarantee are details in note 30. 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:
Employee benefits expense
Depreciation of right-of-use assets
Depreciation and amortisation of fixed assets and intangibles
Revenue
Other income
Expenses
Occupancy 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
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit for the year is attibutable to:
Owners of IPH Limited
Profit after income tax expense for the year
Total comprehensive income for the year is attibutable to:
Owners of IPH Limited
Profit after income tax expense for the year
30 Jun 2023
30 Jun 2022
$’000
$’000
205,733
205,664
77,031
65,082
(75,594)
(76,550)
(4,408)
(5,387)
(22,688)
(29,703)
(879)
(3,404)
(59,158)
(2,481)
(1,885)
(3,365)
(24,061)
84,841
(10,086)
74,755
4,128
78,883
74,755
74,755
78,883
78,883
(1,277)
(4,495)
(59,722)
(2,316)
(842)
(21,622)
(3,919)
64,913
(10,200)
54,713
684
55,397
54,713
54,713
55,397
55,397
Current assets
Cash and cash equivalents
Trade and other receivables
Income tax receivable
Other financial assets
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangibles
Investments in subsidiaries
Deferred tax
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Interest bearing lease liabilities
Deferred revenue
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liability
Interest bearing lease liabilities
Other financial liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits
Total equity
30 Jun 2023
30 Jun 2022
$’000
$’000
61,286
233,101
3,024
-
17,470
57,701
61,159
2,889
472
7,899
314,881
130,120
3,721
20,645
4,249
22,202
236,058
260,298
347,406
8,608
128,239
12,355
616,438
427,343
931,319
557,463
15,988
12,248
4,118
2,912
15,825
13,223
6,053
14,206
35,266
49,307
388,581
23,142
22,002
-
3,981
118,477
27,015
25,694
-
3,800
437,706
174,986
472,972
224,293
458,347
333,170
417,182
33,777
7,388
312,232
13,961
6,977
458,347
333,170
iphltd.com.au
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153
Directors Declaration
IPH LIMITED
ABN 49 169 015 838
Directors Declaration
In the Directors’ opinion:
- the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001
and other mandatory professional reporting requirements;
- the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board as described in note 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 2023 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.
At the date of this declaration, the company is within the class of companies affected by ASIC Corporations (Wholly-owned Companies) Instrument
2016/785. The nature of the deed of 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.
In the directors’ opinion, there are reasonable grounds to believe that the company and the companies to which the ASIC Corporations Instrument
applies, as detailed in note 34 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
17 August 2023
Sydney
iphltd.com.au
2023 Annual Report
154
Independent
Auditor’s
Report
IPH LIMITED
ABN 49 169 015 838
Directors Declaration
In the Directors’ opinion:
- the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001
and other mandatory professional reporting requirements;
- the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board as described in note 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 2023 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.
At the date of this declaration, the company is within the class of companies affected by ASIC Corporations (Wholly-owned Companies) Instrument
2016/785. The nature of the deed of 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.
In the directors’ opinion, there are reasonable grounds to believe that the company and the companies to which the ASIC Corporations Instrument
applies, as detailed in note 34 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
17 August 2023
Sydney
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Quay Quarter Tower
50 Bridge Street
Sydney NSW 2000
Tel: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the Members of IPH Limited
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
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 2023, 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:
· Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance
for the year then ended; and
· 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 & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (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 Asia Pacific Limited and the Deloitte organisation.
iphltd.com.au
2023 Annual Report
156
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt
MMaatttteerr
AAccccoouunnttiinngg ffoorr tthhee aaccqquuiissiittiioonn ooff SSmmaarrtt &&
BBiiggggaarr ((““SS&&BB””))
As disclosed in note 28, on 6 October
2022, IPH Limited acquired the IP agency
practice of S&B, which includes a number
of legal entities. In accordance with
Australian Accounting Standards, IPH
have recorded the fair value of the assets
acquired and assumed liabilities on
acquisition date. Total consideration was
$403 million and goodwill of $204 million
was recognised on acquisition.
Accounting for an acquisition is complex
and requires significant judgement,
requiring management to determine:
•
• whether IPH controls all the
entities within the S&B
consolidated group;
the fair value of the
consideration including any
contingent amounts; and
the fair value of the identifiable
intangible assets such as
customer relationships and
trademarks which are
recognised separately from
goodwill.
•
The acquisition of S&B is a key audit
matter due to the complexity and
judgements involved in accounting for
the business combination and the fair
value of the assets acquired and assumed
liabilities at the date of acquisition.
Our procedures performed included, but were not limited to:
•
•
•
•
•
Obtaining a detailed understanding of the terms and
conditions of the related purchase agreements
including the determination of the nature and the
amount of any contingent consideration;
Reviewing the technical accounting position papers
prepared by management's external expert, in
respect of whether IPH has acquired control over all
the entities within the S&B consolidated group in
accordance with Australian Accounting Standards;
Evaluating the competence, capability and objectivity
of management’s external experts used to determine
the accounting treatment, referred to above, and
those used to determine the fair value of the
acquired intangible assets and the associated
purchase price accounting. Performing a detailed
review of management’s external expert’s valuation
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, including the probability of
EBITDA hurdles being achieved by S&B and hence
likelihood of payment of the contingent
consideration;
In conjunction with our valuation specialists,
evaluated the appropriateness of the fair values
attributed to the acquired tangible and intangible
assets, and liabilities (including contingent liabilities)
assumed as part of the business acquisition by:
•
•
assessing the identification and valuation of
customer relationships and trademarks;
performing procedures on the intangible
asset valuations, including;
•
•
•
analysing cash flow assumptions
such as revenue growth rates,
gross margin and contributory
asset charges,
assessing the discount rate used;
and
challenging the reasonableness of
the valuation outputs.
iphltd.com.au
2023 Annual Report
157
• We have obtained and assessed management’s
position paper setting out the accounting treatment
and calculation of the contingent consideration;
•
•
In conjunction with our tax specialists, reviewed the
work performed by management’s expert in respect
of the income tax cost base of assets and liabilities
and any associated deferred tax assets and liabilities
recognised; and
Evaluated the adequacy of disclosures made in the
financial report against relevant accounting
standards.
Our procedures performed included, but were not limited to:
•
•
•
•
•
•
•
Obtaining an understanding of the design and
implementation of management’s process to assess
the recoverable value of each CGU including the
budgeting and forecast process and the preparation
of discounted cash flow models;
Evaluating management’s assessment of whether
there are indicators of impairment;
Agreeing the assumptions used in the discounted
cash flow models to Board approved budgets and
forecasts;
Considering the impact of broader economic
conditions on future forecast cash flows, with
specific focus on revenue and cost forecasts;
Assessing the historical accuracy of management’s
forecasting by comparing actual results to budgeted
results for preceding years;
Reviewing management reporting to understand
performance for the year against budget;
In conjunction with our valuation specialists:
•
•
assessing the appropriateness of the
methodology used in management’s
discounted cash flow models; and
challenging the key assumptions and
estimates used by management in their
discounted cash flow models, including
analysis of long-term growth rates with
reference to industry data and external
economic outlook and determining our
independent expectation of an appropriate
discount rate range;
RReeccoovveerraabbllee vvaalluuee ooff PPiizzzzeeyyss aanndd SS&&BB
ccaasshh ggeenneerraattiinngg uunniittss
Goodwill relating to the Pizzeys cash
generating unit (“CGU”) and S&B CGU as
disclosed in note 12(c) was $68 million and
$206 million, respectively. Management
has applied a ‘value in use’ approach for
impairment testing purposes to both CGUs.
As set out in note 12(c), for the Pizzeys
CGU, a decrease of the EBITDA CAGR by
1.56% or an increase in the post-tax
discount rate of 0.40% would result in the
carrying value of the Pizzeys CGU to equal
the recoverable amount.
As set out in note 12 (c), for the S&B CGU,
as it was acquired in the current financial
year, its carrying value approximates its fair
value. Adverse changes in macroeconomic
factors or failure to achieve planned
growth objectives including the realisation
of Board approved synergies, may
therefore lead to future impairment.
The determination of the recoverable
value requires management to exercise
significant judgement, in particular in
determining the key assumptions used in
the cash flow projections such as:
·
·
·
short-term forecast revenue and
costs;
long-term growth rates; and
discount rates.
Changes to these assumptions can impact
the recoverable value for each CGU.
iphltd.com.au
2023 Annual Report
158
•
•
Challenging and evaluating the appropriateness of
management’s sensitivity analysis; and
Evaluating the adequacy of disclosures made in the
financial report against the relevant accounting
standards.
OOppeerraattiioonn ooff ffiinnaanncciiaall rreeppoorrttiinngg
IInnffoorrmmaattiioonn TTeecchhnnoollooggyy ((IITT)) ccoonnttrroollss
In conjunction with our IT specialists our procedures included,
but were not limited to:
The Group’s IT systems are key to the
daily operations and the integrity of the
financial reporting process. Ensuring
these systems have appropriate access
controls is fundamental to mitigating the
potential for fraud and/or error as a
result of change/s to an application or
underlying data.
We have assessed the general control
environment, taking consideration of the
recent cyber incident. A number of
deficiencies were identified, some of
which were carried forward from
previous years. Following the cyber
incident and in response to the
deficiencies identified, the Group has
designed a remediation plan and are in
the process of implementing this plan.
•
•
•
•
•
Obtaining an understanding of key business
processes and their associated IT systems, general
access, application and IT dependent manual
controls;
Evaluating and testing the design and
implementation of any relevant general, application
and IT dependent manual controls with the
assistance of our IT audit specialists related to key
business processes;
Obtaining an understanding of the remediation of
the general access control deficiencies;
Considering the broader IT environment including
the governance process and controls to monitor and
enforce control awareness across the Group; and
Responding to the identified control findings by
varying the nature, timing and extent of the
substantive procedures we performed.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2023 but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do 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 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,
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.
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.
iphltd.com.au
2023 Annual Report
159
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 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, actions taken to eliminate threats or safeguards
applied.
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160
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.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included in Section 5 of the Directors’ Report for the year ended 30
June 2023.
In our opinion, the Remuneration Report of IPH Limited for the year ended 30 June 2023, 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
X Delaney
Partner
Chartered Accountants
Sydney, 17 August 2023
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2023 Annual Report
161
Shareholder
Information
Shareholder information
The shareholder information set out below was applicable as at 31 July 2023.
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
%
No. of holders
211,554,449
90.08
9,597,386
4,893,942
7,385,572
1,424,390
4.09
2.08
3.14
0.61
Total
234,855,739
100.00
95
407
676
2,948
3,217
7,343
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2023 Annual Report
163
Geographic distribution
Range
AUSTRALIA
Securities
%
No. of holders
%
220,719,293
93.98
7,205
98.12
AUST CAPITAL TERRITORY
457,509
0.19
125
1.70
NEW SOUTH WALES
155,913,824
66.39
2,898
39.47
NORTHERN TERRITORY
QUEENSLAND
SOUTH AUSTRALIA
TASMANIA
VICTORIA
WESTERN AUSTRALIA
CANADA
CHINA
HONG KONG
INDONESIA
JAPAN
MALAYSIA
NEW ZEALAND
PAPUA NEW GUINEA
PHILIPPINES
SINGAPORE
SWEDEN
THAILAND
UNITED KINGDOM
UNITED STATES
69,218
6,429,426
1,299,699
192,886
0.03
2.74
0.55
0.08
54,764,106
23.32
1,592,625
13,576,935
4,105
5,332
2,982
974
15,850
400,533
1,000
1,320
58,520
1,657
8,000
52,566
6,672
0.68
5.78
0.00
0.00
0.00
0.00
0.01
0.17
0.00
0.00
0.02
0.00
0.00
0.02
0.00
32
0.44
1,645
22.40
429
76
1,516
484
41
1
1
1
1
4
67
1
1
7
1
1
7
4
5.84
1.03
20.65
6.59
0.56
0.01
0.01
0.01
0.01
0.05
0.91
0.01
0.01
0.10
0.01
0.01
0.10
0.05
Total
234,855,739
100.00
7,343
100.00
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2023 Annual Report
164
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest registered holders of quoted equity securities as at 31 July 2023 are listed below:
Rank
Name
A/C designation
31 Jul 2023
%IC
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
J P MORGAN NOMINEES
AUSTRALIA PTY LIMITED
CITICORP NOMINEES
PTY LIMITED
NATIONAL NOMINEES
LIMITED
BNP PARIBAS NOMS
PTY LTD
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED -
A/C 2
SETDOR PTY LIMITED
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
UBS NOMINEES PTY LTD
BNP PARIBAS NOMINEES
PTY LTD
PACIFIC CUSTODIANS
PTY LIMITED
TALABAH PTY LIMITED
CITICORP NOMINEES
PTY LIMITED
BNP PARIBAS NOMINEES
PTY LTD HUB24
CUSTODIAL SERV LTD
78,053,168
33.23
36,356,185
15.48
28,067,308
11.95
19,002,450
8.09
7,329,751
3.12
2,891,392
1.23
2,130,797
0.91
2,100,000
2,085,504
1,927,898
1,612,506
0.89
0.89
0.82
0.69
IPH EMP SHARE TST
1,504,004
0.64
1,367,175
0.58
1,101,510
0.47
1,059,801
0.45
WOMBEE PTY LTD
BKI INVESTMENT
COMPANY LIMITED
WILLIAM STACE LLOYD
FRANCOIS GUAY
O'BRIENTRUS PTY LIMITED
1,000,654
665,000
567,200
549,201
514,814
0.43
0.28
0.24
0.23
0.22
Total
189,886,318
80.85
Balance of register
44,969,421
19.15
Grand total
234,855,739
100.00
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2023 Annual Report
165
Unquoted equity securities
Performance Rights
Substantial holders
No. on Issue
2,530,339
No. of holders
159
The names of substantial shareholders of the Company’s ordinary shares as at 31 July 2023 (holding no less
than 5%) who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:
Holder
Date of last
notice received
No. of
securities
Percentage of
issued capital
IPH Ltd and its related bodies corporate1
20 Apr 2023
15,112,295
6.43%
1) The restrictions on disposal of shares under the voluntary escrow arrangements that the Company has in place with the vendors of the business of Smart & Biggar give the Company a relevant interest in 13,576,935
shares. However, the Company has no right to acquire these shares or to control the voting rights attaching to these shares. The remaining 1,535,360 shares are held by the IPH Limited employee share trust.
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
Expiry date
No. of securities
6 Oct 2024
1 Jan 2025
5,317,980
8,255,153
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2023 Annual Report
166
Annual General Meeting (AGM)
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.
In accordance with the requirements of the
Corporations Act, the Chairman will demand a poll in
relation to all substantive resolutions at a meeting of
shareholders. 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 the
share, the Company will count only the vote cast by,
or on behalf 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
the lesser (by number) of: five shareholders present
in person; or shareholders present in person
representing at least 10 per cent of the voting shares.
Shareholder questions
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
which will accompany the Notice of Annual General
Meeting to be distributed to shareholders.
Information about IPH
Information about IPH Group Limited including
company announcements, presentations and
reports can be accessed at www.iphltd.com.au.
IPH will hold its 2023 Annual General Meeting on
Wednesday 15 November 2023. Details of the
meeting will be included with the Notice of Annual
General meeting which will be distributed to
shareholders.
IPH Limited is listed on the Australian Securities
Exchange (ASX) and its ordinary shares are quoted
under 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
changed from a printed copy to an electronic copy
via IPH’s website at www.iphltd.com.au.
Verification process
IPH has in place processes to verify the periodic
corporate reports it has prepared and released
during FY23, where those reports were not subject
to audit or review by an external auditor, to satisfy
itself that each report was materially accurate and
balanced and provided investors with appropriate
information to make investment decisions. This
verification process was applied to the sections of
this Annual Report not audited or reviewed by an
external auditor. The verification processes used
included documenting the sources of information
and undertaking consultation within IPH or with
external parties. The Board or, where appropriate,
Board Committees, have reviewed and approved
each periodic corporate report prepared and
released by IPH during FY23.
Online voting
Shareholders can lodge voting instructions
electronically either as a direct vote or by appointing
a proxy for the 2023 Annual General Meeting. The
information required to log on and use online voting
will be shown on the voting form which will be
distributed to shareholders with the Notice of Annual
General meeting.
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2023 Annual Report
167
iphltd.com.au
2023
Annual Report
Year ended
30 June 2023
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IPH Limited
Level 22
Tower 2, Darling Park
201 Sussex Street,
Sydney, NSW 2000
Australia
P +61 2 9393 0301
E info@iphltd.com.au