The IPH Ltd (ASX: IPH) share price has edged higher in morning trading after the intellectual property (IP) services provider advised its earnings have grown in the first four months of FY21, predominantly due to synergies arising from the acquisition of Xenith Group. At the time of writing, the IPH share price has risen by 0.86% to $7.03.
What’s moving the IPH share price?
The IPH share price is inching higher following the company’s annual general meeting (AGM) this morning. In his address to shareholders, IPH Chief Executive, Dr Andrew Blattman, advised that the company delivered a solid result in FY20, despite the COVID-19 pandemic.
He reported that IPH delivered these impressive metrics in FY20:
- Earnings before interest, tax, depreciation and amortisation (EBITDA) was $126 million compared to $89.7 million for the prior year.
- Underlying revenue for the year increased by 44% to $370 million.
- Underlying net profit after tax (NPAT) lifted by 24% to $78 million.
Blattman also praised his team for the successful integration of Xenith into the IPH group. Xenith was acquired in 2019, in what was the largest acquisition in IPH’s history since its listing in 2014. The company now says that it has successfully delivered net cost synergies of $3.5 million, which is in line with the guidance the company provided at the time of the acquisition.
Update on FY21 trading
In what has been a challenging economic climate for many businesses due to the global pandemic, IPH’s first four months of trading has resulted in ‘like-for-like’ EBITDA growth against the prior corresponding period. IPH says that this growth has been predominately driven by the synergies generated from the acquisition of Xenith.
Having said that, IPH advised it continues to operate in difficult market conditions, as Australian patent filings decreased by 1% in the four months to October. In total, IPH filings (excluding Innovation Patents) declined 8.1% during this period.
Blatmann said:
While we have not had any significant client losses over this period, we are seeing some large clients who are filing less at this time. Additionally, we have the local market’s largest exposure to US clients, which as you would expect, has experienced some short-term disruption due to COVID.
How is the IPH share price performing in 2020?
IPH is a major IP company that provides services including the protection, commercialisation, enforcement, and management of intellectual property. The IPH share price has more than tripled since its initial public offering (IPO) to become the leading IP services firm in the Asia Pacific region.
However, the IPH share price has been volatile this year. It started the year at $8.20, before surging to $10.22 in February. It then dropped to $6.26 at the height of the pandemic in March, before arriving at today’s price of $7.03. All in all, the IPH share price has dropped by around 14% on a year-to-date basis. IPH commands a market capitalisation of $1.5 billion at this price.
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Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends IPH Ltd. The Motley Fool Australia has recommended IPH Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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