QANTM Intellectual Property : Half Year Results to 31 December 2021

ASX Announcement

24 February 2022

∙ Patent applications increased 11.9%, based on strength of DCC, FPA, Advanz Fidelis businesses

- Australian applications up 6.0%

∙ Trade mark applications increased 48%, with the inclusion of Sortify.tm acquired 30 September

1. The appendix provides a reconciliation from statutory to underlying results.
2. EBITDA is after foreign exchange $0.1m gain (1H21 1.0m loss). Includes correction of prior period immaterial misstatements $0.3m reduction in Underlying EBITDA
3. Margin is on Service Charges
4. Includes correction of prior period immaterial misstatements, a $0.6m reduction in Underlying Net Profit after Tax

QANTM INTELLECTUAL PROPERTY LIMITED ASX ANNOUNCEMENT

Key Financials

∙ Operating cash flow was lower at $7.3m (1H21: $9.0m) with increased transformation program expenditure in the half.

∙ Net debt as at 31 December 2021 was $23.1m, compared to $17.2m as at 31 December 2020 and $16.2m as at 30 June 2021. Net Debt to Underlying EBITDA was 0.90 at 31 December 2021 (30 June 2021 0.62).

CEO Commentary

Craig Dower, QANTM's Chief Executive Officer, stated:

"QANTM displayed continued, strong underlying business performance relative to the prior corresponding period, demonstrated by solid revenue growth across its patents and, in particular, trade mark businesses. Legal and litigation services revenue were up compared to the immediately preceding half, although lower compared to a strong first-half in FY2021, reflecting timing of case load work.

Our people have continued to display resilience and flexibility, despite the challenges in business and client working arrangements brought about by COVID. There is evidence of both a resurgence in IP-related client Fordemand and the requirement for broader intellectual property advisory services, particularly in areas where the business environment has facilitated innovation in services and new product offerings, as well as strength in QANTM's local clients seeking to file in overseas jurisdictions. This is evident in Trade Marks in particular, where we are seeing large corporates investing further in brands and innovation, as well as increasing new

business and product initiatives amongst start-ups and micro-businesses.

The strong core business and client bases of DCC, FPA, Cotters and Advanz Fidelis, has continued to hold QANTM in good stead, while the addition of Sortify during the half has given momentum to our trade mark business. Sortify's automated technology platform also provides a basis for the further expansion of our trade mark services into other geographies, notably the Asia-Pacific Region. This was a major rationale for the acquisition. We are also working to deploy Sortify's capabilities into our core businesses to help drive innovation, productivity and improved client service.

Pleasingly, the COVID enforced restrictions for Advanz Fidelis in Malaysia have largely lifted, with a return to near pre-COVID business activity levels. This, and the continued growth of DCC and FPA in Singapore, including strong foreign filings into South East Asia, have contributed to a 11.5 per cent increase in Asian revenues. Asia constitutes 6 per cent of total Group revenues.

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QANTM INTELLECTUAL PROPERTY LIMITED ASX ANNOUNCEMENT

Business Performance

Patents has continued strong growth period-on-period:

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Trade Marks recorded a very strong 20.7% increase in Service Charges (20% of the Group total):

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DCC retains the largest market share for trade mark applications in Australia and, with the acquisition of Sortify provides a basis for the expansion of advisory and prosecution services.

Legal and litigation services revenue contribution (11% of the Group total) was 15.6% lower relative to a strong prior period, reflecting the timing of advisory and case load work. DCC Law experienced an increase in revenue generation in 1H21 compared to the immediately preceding half, up 4.7%.

Strategic Initiatives

Material progress has continued to be made in relation to key strategic work streams, which include:

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ForIn Conclusion

As investors will appreciate, QANTM has been engaged in the formulation and now implementation of major business improvement processes since I commenced as CEO in January 2020.

This has encompassed the areas of technology modernisation; people; processes; client interface and growth and scale. Initiatives in each of these areas represent essential areas of investment for competitive business and financial outcomes. As I have conveyed, these activities encompass empowering our people; revenue growth through both organic and acquisition routes and comprehensive improvements to business systems, analytics and processes.

Much of the investment supporting these essential business priorities has been represented through operating expenditure, as opposed to capital expenditure. There was a large element of these business transformation costs in the operating expenditure for this half. Investors can take confidence from the underlying trends in our business that these initiatives are starting to have an impact. We are about a third of the way through that modernisation program, with the planning work on our Case Management upgrades now complete, we will start that next phase of implementation during 2022 and expect to start seeing synergies and productivity gains in 2023.

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QANTM INTELLECTUAL PROPERTY LIMITED ASX ANNOUNCEMENT

In the meantime, the investments in in our capability to service clients effectively and efficiently - more effective account planning, use of improved client tools (CRM, data and analytics), DCC's USA-based sales desk, and the acquisition of Sortify - are driving top-line growth which will flow through to earnings as our transformation program starts to deliver results."

Dividends

Directors have approved an interim dividend of 3.0 cents, fully franked, with a payment date of 6 April 2022 for shareholders registered as at 3 March 2022.

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QANTM INTELLECTUAL PROPERTY LIMITED ASX ANNOUNCEMENT

WEBCAST AND INVESTOR TELECONFERENCE DETAILS

Any other country or mobile phone: +61 2 8373 2830

WEBCAST

The presentation will be webcast live. You can pre-register for the webcast via this link https://webcast.openbriefing.com/8400/

About QANTM Intellectual Property

QANTM Intellectual Property Limited (QANTM, ASX: QIP) is the owner of a group of leading intellectual property (IP) services businesses operating in Australia, New Zealand, Singapore and Malaysia under five key brands - Davies Collison Cave, FPA Patent Attorneys, Cotters Patent and Trade Mark Attorneys and Advanz Fidelis IP and Sortify.tm Ltd (including Sortify's brands - DIY Trademarks, Trademarks Online and Trademark Planet). With more than 150 highly qualified professionals, the businesses within the QANTM Group have a strong track record in providing a comprehensive suite of services across the IP value chain to a broad range of Australian and international clients, ranging from start-up technology businesses to Fortune 500 multinationals, public research institutions and universities.

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