IPH Limited (IPH) Earnings Call Transcript

Thank you for standing by, and welcome to the IPH Limited Fiscal Year '21 Results Webcast. [Operator Instructions] I would now like to hand the conference over to Dr. Andrew Blattman, CEO. Please go ahead.

Many thanks. Good morning, and welcome to the IPH Results Presentation for the Year Ended 30 June 2021. My name is Andrew Blattman, I'm the CEO of IPH. Joining the call this morning is John Wadley, our CFO. Thank you all for joining us for today's presentation on our FY '21 result and for your continuing interest in IPH. Before commencing the formal presentation, I would like to acknowledge and thank the IPH executive team and Board for their support throughout the year and, of course, all of our people across the group for their terrific contribution during the '21 year. Despite the significant currency headwind in financial year '21 and the ongoing disruption of COVID-19, IPH has delivered a very strong result. And once again, it's a testament to the efforts of all our people across the group. So moving on to Slide 3, table of contents. For today's presentation, I will provide an overview of the operational highlights for the year. John will discuss the financial results in detail before handing back to me to provide some commentary on our key markets in terms of filing activity and a review of our operations. I'll conclude with some comments about our strategic focus and how we are building a stronger platform for growth. As always, happy to answer your questions at the end. Slide 4 is a recap -- is a recap about IPH. As many of you know, IPH is a leading IP services group in the Asia Pacific region with #1 patent market position in Australia, New Zealand and Singapore, and #1 trademark position in Australia and New Zealand. We now operate 7 brands, we've got 900 employees working throughout 8 IP jurisdictions in Asia Pacific, servicing more than 25 countries across the region. The new brand, you can see on this slide is Applied Marks, which we acquired on 1 July this year. This is an exciting opportunity for us to build our online trademark and digital capability, which I'll talk about later in the presentation. Firstly, let me step through some of the highlights of the year. I'll speak to these at an operational level, and then John will pick up on matters financial. So moving on to Slide 6. We have delivered a solid result for the year. Performance demonstrates our success in acquiring and integrating IP companies into the group and the power of our network across the region. Despite the currency headwinds, including the 11% increase in the average Australian dollar against the U.S. dollar in FY '21 and ongoing market disruption caused by COVID-19, underlying EBITDA was consistent with the prior year. On a like-for-like basis, underlying EBITDA was up 10%, with double-digit growth in EBITDA margin, a very strong result. We continue to see an increase in client referrals from acquired businesses to IPH entities, good client referrals into IPH Asia, up by 25% for the year. Our strong financial position and excellent cash flow generation has enabled the final dividend of $0.155 per share, 40% franked, bringing the full year dividend to $0.295 per share, up 3.5% on the prior year. As you know, China represents a key growth market for the group. And I'm pleased to report continued significant patent filing growth in China for the year, with patent filings into our Beijing office increasing by 12%. A core part of our strategy has always been successfully acquiring and integrating companies to deliver margin accretion. The acquisition of Xenith IP is a good example of that and how we are adding value to the group. As you may recall, the acquisition, Xenith comprised the businesses of Griffith Hack, Shelston IP, Watermark and Glasshouse Advisory. Post the divestment of Glasshouse Advisory and the integration of Watermark into Griffith Hack, the former Xenith business delivered an EBITDA margin of 28% for the year, which is up 39% from when we acquired the business. In my view, that's a strong endorsement of our acquisition strategy. So in summary, IPH has delivered another strong result. We have also made significant progress in our strategy to strengthen the group for future growth. Before handing over to John, I'll want to again acknowledge our people across the group for their dedication and hard work in assisting IPH to deliver this result. We've had the continuing impacts of COVID-19, particularly in our Asian business throughout most of the year and, again, more recently in Australia, but we have consistently ensured an uninterrupted level of service to our clients, and that's a testament to our people across IPH. I will now hand over to John to step us through the financial results in detail.

Thank you, Andrew, and good morning, everyone. Our financial highlights on Slide 8 reflect the group's performance in the COVID trading environment. The key factor to understand when reviewing these results is the foreign exchange impacts when compared to the comparative period. The average Australian-U.S. dollar for the year averaged $0.747 versus $0.671 in the comparative period, an increase of 11%. We previously advised that a $0.01 weakening in the U.S. dollar equates to a $1.9 million reduction in service charge revenue. Further, the strengthening of the Australian dollar versus the Singapore dollar of 8% year-on-year has had the impact of reducing the profits of our Singapore business when reported in Australian dollars. Finally, the ForEx losses recorded in our P&L, those derived by banking receipts at a weaker rate than booked, are $0.4 million greater than the prior corresponding period. Both sides of this slide reflect these FX headwinds. In addition, the left-hand, or statutory side, reflects the increase in noncash amortization of intangibles, which results from our acquisitions. Unpacking the result, the main contributors outside of the foreign exchange movements have been an additional 1.5 months of acquisitive growth from the Xenith IP business, 2.5 months of acquisitive growth from the Baldwins acquisition and margin expansion from both the Australian and New Zealand and Asian businesses. A particular feature of this has been the contribution from former Xenith IP Group, now comprising Griffith Hack and Shelston IP, of $29.4 million. This has been achieved by the previously announced initiatives of corporate cost reduction, sale of the Glasshouse Advisory business and the integration of the Griffith Hack and Watermark. Those factors have assisted to deliver a group underlying EBITDA of $124.3 million, down 1% on prior year comparative as a result of the FX headwinds. A highlight, as Andrew did, the final dividend of $0.155 per share, which is 40% franked, a 3% increase on the prior final year dividend. As the group has now utilized the franking credits obtained from the Xenith acquisition and received the tax refund in the current year, the franking level will likely revert to between 40% and 60% on an ongoing basis. The DRP will operate for the final dividend. Moving on to Slide 9, being the like-for-like revenue and EBITDA. And clearly, the elimination of FX impacts produces a significantly more positive picture. A reminder that the like-for-like basis eliminates the impact of acquisitions and, more importantly in this period, the adverse foreign exchange I discussed earlier. This new format slide draws out the highlights. However, for those who find this analysis useful, the full calculation is contained within the Appendix to this pack. You may observe in that table approximately $17 million in FX headwinds incurred this year when compared to the prior year. Looking at the highlights. Group-wide revenue declined by 2%. However, EBITDA grew by 10% on a like-for-like basis. In ANZ, like-for-like revenue reduced by 3%, including as a result of the challenges of COVID-19 as well as the integration of Griffith Hack and Watermark in Australia. However, the same integration was the largest contributor to the EBITDA growth and the margin expansion. While the ANZ calculation doesn't include the acquisitive impact of 8.5 months of Baldwins IP, it does include incremental contribution generated under IP ownership over and above the results generated in that business under prior ownership. Asia has seen like-for-like revenue growth a result of increased filings in China, Hong Kong and Singapore, some of these through the expansion of the network effect, the filings preferred from other IPH offices. These preferred filings were also particularly beneficial to the EBITDA line. Excluding the impact of foreign exchange on the revaluation of the U.S. dollar debt, the group's corporate costs were flat on a like-for-like basis. The elimination of annualized Xenith IP Group corporate costs of $1.1 million, being offset by investment in the IT function, increased D&O insurance costs and compensation for new executive positions added during FY '20. Looking at Slide 10, the underlying NPAT and earnings per share. This slide shows the calculation of the underlying result, which is on a consistent basis with prior periods, and reconcile these to the reported statutory FY '21 results. The main adjustments to the statutory results in the current period include acquisition costs related to completed and potential acquisitions, restructuring costs related to post-acquisition activities at the Xenith IP Group and Baldwins, the cost of equity-based remuneration and a new item this year being expensing of one-off costs associated with the implementation of a SaaS-based general ledger and HRIS. This follows an interpretation issued by the accounting standard setting body during the financial year. The previous treatment would have been to capitalize these costs and then amortize. Amortization of acquired intangibles has increased the result of the Xenith IP Group and Baldwins acquisitions. On an annualized basis, this noncash expense will be $21.8 million. The underlying effective tax rate is marginally lower at 25.6%, reflecting the utilization of the tax losses. Moving on to Slide 11 and reviewing the cash flow statement. Cash flow conversion continued to be strong. The improved metric is reflective of the collection of a large receivable related to a legal matter as well as consistent underlying collections. Strong cash flows allowed to the repayment of $32.7 million of debt and borrowings in the first half, reducing leverage to 0.4x net debt to EBITDA at 30 June 2021. It also continues to support a high dividend payout, which is reflected in the payout ratio of the year's total dividend, which is 90% of cash NPAT. Looking at the balance sheet on Slide 12. The main movements relate to movements in the valuations as a result of FX fluctuations and the acquisition of Baldwins. As mentioned, strong cash flows allowed for the repayment of $32.7 million in debt. In June, we extended our borrowing facilities to July 2024. Slide 13 and the impact of foreign currency. Based upon the U.S. dollar profile in FY '21, a $0.01 movement in the AUD-USD exchange rate equates to approximately $1.9 million of revenue on an annualized basis. As U.S. costs are minimal, majority of this reduction falls to the EBITDA line. As mentioned previously, our FY '21 results came through at an average of approximately $0.747 versus the comparative period of $0.671. The AUD also strengthened against the Singapore dollar, reducing the profits of the Asian business in Australian dollars. I will now hand back to Andrew to take a closer look at the business.

Thanks, John. Slide 14 onwards, I'll provide an update on filing activity for the year as a first pass. So Slide 15, patent market in Australia, an update on the applications as we see them in Australia in the last 12 months. As we always remind you, filing activities should not be assessed on a 6-month cycle. This is especially true, I mean, the continuing impact of COVID-19. It's also relevant during a period which included the integration of the Watermark and Griffith Hack businesses which, as we outlined in February, experienced some disruption from this process. Overall, total Australian patent filings increased by 15.5% compared to the prior year. However, this includes innovation patent filings, which are being phased out this month, I think it might be next week. The overwhelming proportion of these innovation filings were from China and Canada. They are up a combined 453% for the period. As I've said in the past, innovation patents do not constitute a large part of IPH Group filings. Once the innovation filings are removed, total Australian patent filings increased by 2.6%. IPH has maintained the #1 position with a combined group market share, ex innovation filings, of 36.2%. IPH's group filings declined by 4.8% for the year. This was an improvement from our update at the AGM, with filings decline by approximately 8% for the 4-month period to 31 October, and the half year result, which showed a decline of 5.7%. However, when you exclude the impact of the decline in filings arising from the reset of the merged Griffith Hack business into a higher margin and more profitable business, IPH's filings increased by 0.7%. The decline in Griffith Hack filings can be attributed to some anticipated client losses as a result of the integration due to client conflict, some smaller filers by volume, and the periodic filing patents of some existing clients. This outcome is to be expected. Indeed, it was an anticipated result of the merger, and our focus remains on ensuring Griffith Hack can build on the more efficient and profitable platform we have created to grow the business and enhance margins. Moving to Singapore. The Singapore patent market decreased by 6.5% in the calendar year 2020 compared to the prior year. Calendar 2020 compares against a very strong fourth quarter of calendar 2019, which reflected changes to Singapore patent examination process, closure of the foreign route from 1 January 2020. This resulted in a strong spike of applications in December 2019. However, preliminary data for the first half of calendar '21 indicates that the market has increased by 7.7% compared to the first half calendar '20. There is always a delay in obtaining final data in Singapore, which is why the first half calendar year is preliminary in nature. For the same period, preliminary data shows IPH filings have increased by 16.8% on the prior corresponding period. That reflects excellent organic growth and has seen IPH materially strengthen our market-leading position, a terrific result. IPH market share has significantly increased from 23% for calendar year '20 to 25.9% for the first half calendar '21, despite the closure of the foreign route I mentioned earlier and, of course, the impact of COVID-19. Moving to Slide 17, the Asia patent market. As I mentioned earlier, one of the key highlights for the year is how we continue to successfully leverage our network effect with an increase in client referrals from acquired companies to our Asian hubs. Moreover, this not only includes domestic Australian and New Zealand client filings going into Asia. In FY '21, I was very pleased to see that we're able to successfully leverage an international corporate client from one of the acquired business units into Spruson & Ferguson Asia. We had continued momentum from half year for filings into China and Hong Kong. For the full year, filing growth in China was up 12% and Hong Kong was up 10%. We are consistently growing our presence in China with a compound annual growth rate of over 10% of filings over the past 3 years. Filing activity across Asia for FY '21 compares to a very strong prior year. As you may recall, we had 1 client who filed a significant number of patent applications in '19 and '20. And removing the effect of this significant increase, we experienced patent filing growth of 8.4% across our Asian jurisdiction in FY '21, excluding Singapore, which, of course, which I just mentioned grew on almost 17%, would keep that growth across all key jurisdictions with the exception of Vietnam. Filings declined by 5% when you include that client's filings, as mentioned previously. IPH continues to be attractive to large clients. In FY '21, we have seen multiple large clients increasing filings across a number of jurisdictions across our network. Moving to Slide 18, trademark market in Australia. We have maintained our #1 position in this market with an increase in group trademark volumes for the year. The overall trademark market in Australia increased by about 18% for the year. Excluding self-filers, trademark filings increased by 24.2% in FY '21. Much of this growth mainly arose from Australian applicants. We are well placed to leverage this trend with the acquisition of Applied Marks, the fourth largest of the top 50 trademark filing agents with a client base which is predominantly in this growing Australian retail segment. While the market has experienced growth mainly from Australian applicant filings, the IPH portfolio is traditionally more internationally weighted. And pre the acquisition of Applied Marks, Australian filings made up only around 30% of IPH total filings compared to the market where around 70% of applications are from Australia. Pleasingly, and even with this background in mind, IPH trademark filings in Australia, excluding Applied Marks, increased by 7.7% in FY '21, and we continue to be the leading Australian trademark group by market share of the top 50 agents. The increase in trademark filings generally reflects an economic recovery story in terms of the improving economy and business creation expansion. For example, IPH experienced strong growth from U.S. applicants. They are up 17.4% for the year. Moving to Slide 19 and 20, our strategy. I'll spend the next few slides just stepping through our strategic progress. As we've outlined before, our strategy has 3 main components: organic growth, consolidation of acquisitions and growth step-outs. I'll address each of these in turn. Firstly, organic growth on Slide 21. We have mentioned for a number of years now that IPH maintains a core competitive advantage of an unrivaled network across the Asia Pacific region. However, this network effect is more than simply recurring clients, it's about leveraging the combined power of our member firms and finding smart and more efficient ways to operate and to build greater capability and enhance our performance. During FY '21, we have demonstrated the success of this approach. As I mentioned earlier, we have significantly strengthened our #1 patent filing position in Singapore and grew market share to 25%, while filings in Hong Kong, up 10%; China, up 12%. We continue to see an increase in client referrals from acquired businesses to IPH entities, with client referrals into our Asian hubs up by 25%. Most pleasingly was a cross-brand referral of an international corporate into Spruson & Ferguson Asia. As I mentioned earlier, on a like-for-like basis, removing the impact of those significant filings from 1 client in FY '20, IPH filings in Asia in '21 were up 8% across key jurisdictions with the exception of Vietnam. Now 22, consolidating acquisitions. IPH has a consistent track record of acquiring and integrating businesses to deliver growth and margin accretion. It has been the hallmark of our success and remains a fundamental part of our strategy. On this slide, we review an example of this process, Griffith Hack. Having acquired Griffith Hack and Watermark as part of the Xenith IP acquisition in August 2019, we made a decision in November 2019 to integrate the 2 businesses to create 1 firm operating the Griffith Hack brand from July 2020. Now notwithstanding the difficulties arising from merging these businesses during the COVID-19 pandemic, including a prolonged Melbourne lockdown, we have successfully completed the integration and delivered $2 million in synergies from the combined in FY '21, which was in line with our previous guidance. That has assisted in bolstering the overall EBITDA margin of the former Xenith IP business at acquisition. Xenith was operating an EBITDA margin of around 20% compared to 28% for FY '21, an increase of 39% once you adjust for the AASB 16 lease accounting provisions and post the divestment of Glasshouse Advisory, integration of Waterman. Clearly, we are strengthening the Griffith Hack business. We have appointed a new leadership team, including a new Managing Director, Head of Growth and Head of Operations. We've also made a number of new hires towards the end of FY '21 at all levels of the organization to support growth in FY '22 and beyond. Obviously, when you undertake an integration of 2 firms, there are some expected disruptions in the combined business. I have already mentioned the impact on filings from the loss of some smaller Watermark clients and also a small number of client losses due to, I think, group conflicts. In total, we are very pleased with the improved financial performance of the business and has increased referrals to our Asian network in FY '21, which, of course, assist the earnings of our Asian business. Within the new brand, new team and refocused business, we are very excited about the growth prospects ahead for Griffith Hack. 23, another step-out slide. Our AJ Park business completed the acquisition of Baldwins IP in New Zealand in October '20. The successful integration of Baldwins into AJ Park provides AJ Park greater depth of expertise, enhanced career opportunities for our people and provides clients of access to a complementary team of experienced IP professionals in other jurisdictions. We have completed the full physical and systems integration, which has led the synergies being captured in the areas of rental savings and rightsizing of the business. The earnings contribution from Baldwins in the 8.5-month period since acquisition is consistent with the previous guidance of around AUD 2 million. The merged business is the leading patent and trademark business in New Zealand. We have a rejuvenated brand identity for AJ Park, which represents the opportunity to capitalize on the key attributes of this wonderful business. It's really a top referrer of work into IPH Asia, and I think there's more opportunity to come there. The next one, Slide 24, Applied Marks. We like this story. It's another example of how we're implementing our growth step-out strategy. We acquired Applied Marks on 1 July. It's a leading Australian online automated trademark application platform and provides automated registration and intelligence services to companies and domain names. They have grown to be the fourth largest filer of Australian trademarks with a focus on what I call the retail market. And they've been able to do this with a very light people model, leveraging their strong digital capability and expertise. This is a very good acquisition for us. It accelerates our digital capability while allowing us to address the growing retail trademark market. It also bolsters our ability to participate in the online automotive IP services space. It will support us in evolving our traditional trademark offering in line with the changing market. The resources and technology that we acquired through Applied Marks will contribute to a new digital services function within the IPH Group, and we are pleased that the principles of Applied Marks will be part of that function to drive our digital capability. Over time, we expect to harness this digital expertise beyond trademarks and into patents and related areas of IP. We can see a changing landscape in IP, and we are investing ahead of the curve to ensure IPH is at the forefront of this change. Slide 25, our people. We continue to focus on attracting, motivating, developing and retaining our people across the group. We are investing in our people to ensure we have the right talent to continue to deliver great outcomes for our clients. Our key focus during the year was building a group-wide people function, which is now operational across Asia Pacific. That includes building a platform, embedding new centralized tools and processes across the group, including a new HR information system. We have introduced new policies to support our people, particularly during the pandemic, including hybrid working. We also enhanced paid parental leave. Another core focus of our strategy is providing opportunities for continued career advancement. FY '21 was a record year for promotions within the IPH Group with 35 promotions across member firms, including 11 principal appointments. Breadth and depth of promotions highlights the opportunity and collective strength of talent across our group. Indeed, we have made more than 50 principal appointments since 2014. While we have 180 senior practitioners at IPH, we continue to invest in the future of the IP profession with more than 95 early career attorneys across the group. We have also appointed a new commercial -- a Chief Commercial Officer for IPH in July 21. And during the year, new Managing Directors were appointed in Spruson & Ferguson Australia, Griffith Hack and AJ Park and a General Manager in Pizzeys. Our ongoing commitment to operating as a sustainable company is reflected in Slide 26. It's an important aspect of our strategy. We recognize that our people are fundamental to our success, and I have outlined the progress we have made in this year in the previous slide. We have already exceeded our gender diversity target for female participation at the senior executive principal level. We maintain a robust governance and risk management system, which now includes a new supplier code of conduct as part of our ethical and socially responsible procurement, following on from the release of our first modern slavery statement earlier this year. We are very pleased this morning also to have released our third annual sustainability report as part of our suite of reports for the FY '21 period, which addresses our commitment to act in a sustainable manner in key areas affecting our business. Now the nature of our business is such that we have not identified a material exposure to climate change risks. However, we are mindful of potential risks that may develop for our business, and we'll continue to assess our exposure to climate change and environmental-related risks. As the leading IP group in the region, we are conscious of being at the forefront in delivering into the client solutions and promoting industry. And IPH and our individual member firms and attorneys herein continue to be recognized as leaders in this profession. Final slide. Let me conclude with some final comments about our progress in that outlook. In FY '21, we have once again demonstrated that our ability to achieve business improvement from acquisitions, and the rightsizing of our acquired businesses has created a more efficient operating model to deliver margin accretion. We remain very focused on organic growth while leveraging our network for increased client referrals and targeting new business opportunities. In FY '22, we will harness the acquisition of Applied Marks to further develop our technology-enabled IP services and continued disciplined investment in a WiseTime and its associated billing platform, [indiscernible]. We maintain a solid financial position with low gearing and consistent cash generation, which enables us to continue to assess further growth options, including potential international acquisition opportunities in core secondary IP markets and IP adjacencies. I'm very pleased with our results and our progress this year. Finally, and whilst I'm not in the business of predicting foreign exchange movements, I do note that today's U.S. dollar spot rate is lower than last year's average. And with reference to John's currency slide, we may enjoy an FX tailwind as we move into FY '22. In closing, I'd like to acknowledge the hard work and contribution of all our people, and many thanks to all of you for your continued interest and support. And over to our moderator for -- where John and I are happy to take some questions.

[Operator Instructions] And the first question will come from Michael Peet with Goldman Sachs.

Congratulations on the result in a tough environment.

Michael, thanks very much.

First question for me. Just on those '22 priorities, it seems the order is pretty clear, organic growth ahead of acquisitions. I guess that's -- in the current environment, that sounds logical. Could you just step us through maybe on the organic growth what you're targeting in terms of maybe any chance for margin expansion, whether it's through cost-out, automation efficiencies? Or is it new client wins and just getting that scale in the business that might drive margin? Just looking for a margin direction sort of guide if we can.

Sure. Thanks, Michael. I'm not sure I'd say we're necessarily focused on organic growth above and beyond acquisitory growth. But look, we certainly -- acquisitions remain firmly on the agenda. They are not as easy to execute in this environment, as you'd appreciate. But certainly, given what we have in our balance sheet and what I've said in the past, that is something we continue to focus on. In the context of organic growth, look, what's underpinned our organic growth opportunity has always been, over the last 20 years or less, this network effect. And it continues to drive opportunity in the firm -- the group, rather. That's one of the reasons why Singapore went to 25% market share was that ability to refer across business unit. Domestically, the domestic clients of AJ Park, Griffith Hack and Spruson & Ferguson in Australia going into Asia. What I did mention in the result was, for the first time, we were able to leverage a corporate client from a non-Spruson business into Spruson & Ferguson Asia. And that's a major development. So if we can continue to take that opportunity across brand, that's one of the reasons why we rebranded IPH, and we're starting to reflect IPH more to the market than we've done in the past, I guess, as a bridge to assist that kind of leverage. But that's a huge opportunity for us to take the corporate client relationships, the international corporate client relationships of Griffith Hack and AJ Park, Shelston and put them into the Spruson Asia group. And that will drive growth in the short term. And it's what -- it's just a further development of what we've seen in the last few years and what we've experienced in Asia for the last 20 years for Spruson.

And the next question comes from Sam Haddad with Bell Potter Securities.

Well done on that, on the strong result. Just on the -- just more on the recent half year and as we go into FY '22 in terms of filing trends, what are you seeing month-on-month? I know we don't like to focus on short term. Just look at the directional trend that you're seeing from both a market and from your company's specific perspective. Because from what I've seen in industry data is that it seems to be strengthening in April and May, I'm just not sure how it's been since then.

I think you're right there, Sam, in terms of the Australian picture. And really, the whole -- or the surprise of the Australian picture has been the strength in trademarks and we've seen that. And we've -- both the market, and we've benefited from that ourselves. I think you're right in terms of patterns that April, May did look pretty good. June and July, it's probably a little bit early to make the call on those. Probably for us, our focus, and you can see it in the presentation, has been on the strength of our Asian filings, particularly in Singapore in the 6 months, and that's continued on recently and also there's China and Hong Kong filings.

Just a quick -- is there a correlation with the reopening of the Northern Hemisphere markets with that trend? Or was it delayed effect?

Well, I think certainly in trade -- this is Andrew speaking, Sam. Certainly, in trademarks, it goes on and off very quickly. And as I say, the recovery piece in the traditional IPH market share, which is the international base, and we saw that 17%, I think it was, growth in U.S. applicant trademark filing. So that is an economy recovery story very much so. There's more of a lag position in terms of R&D converting into patents, which is a longer-term view. What will happen, of course, with more certainty around economic conditions is the existing pipeline of patent applications, which they may -- clients may have restricted the scope of filings internationally to the more defined markets. In a recovery piece, they'll extend those filings into more countries. And that's where we get the sweet spot. So yes, more definitive in trademarks and probably a little bit less so in patents.

[Operator Instructions] The next question comes from Conor O'Prey with Canaccord Genuity.

Just maybe following off on the first question around organic growth. It looks as if -- said, revenue sort of stabilized, bottomed out a little bit in the second half. Is it reasonable to expect sort of a return to some organic growth this year, FY '22, given you're sort of lapping a couple of sort of soft-ish comps from sort of second half '20, first half '21?

I think that's our expectations, Sam, particularly -- sorry, Conor. That's our expectation, Conor, looking forward, well, particularly with our international client base. The world seems to be moving on probably quicker than Australia, so we're well equipped to service those international clients. So we're probably looking to revert back to our traditional growth rates in Australia and in Asia.

Just if I can add to that, Conor, look, we had to rightsize these businesses in the acquired space. And we've got the margins more where we like them to be where we're comfortable with them being in these acquired businesses. They're good businesses. They're excellent businesses. And they're now rightsized, they're ready to go, and it's time to drive some top line growth for those businesses.

The next question is a follow-up from Michael Peet with Goldman Sachs.