Iress Limited · ASX:IRE
Iress — IRESS Market Technology — Macquarie Bank Emerging Leaders Conference 2006
27 slides from Iress's conference presentation, May 4, 2006
Slide 1: Macquarie Bank Emerging Leaders Conference
MARKET TECHNOLOGY Macquarie Bank Emerging Leaders Conference mess MARKET TECHNOLOGY May 2006
Slide 2: Overview
iress|| Overview MARKET TECHNOLOGY » Core business trading strongly into 2006. ASX volumes remain high with corporate activity further boosting local financial markets. => XPLAN continuing its impressive growth and now a material profit contributor. Genesys underwrites growth for 06 > Recently annou
Slide 3: NPAT % Change - Adjusted
iress MARKET TECHNOLOGY NPAT % Change - Adjusted 70% 5 60% 4 50% 4 40% 5 30% + 20% 4 10% + 0% T T '99 -‘00 *00 -'01 ‘01 -'02 02 -'03 ‘03 -'04 '04 -'05 2004 and 2005 results AIFRS, prior periods calculated on AGAAP
Slide 4: Group Performance
iress MARKET TECHNOLOGY Group Performance Adjusted Group Profit $24.891 m Up $4.117 million, 19.8% on PCP Segment Contribution against PCP >Information Services Contribution >XPLAN Contribution >Canada JV $3.408 83% $1.042 25% ($0.333) (8)% $4.117 100% > Final dividend 11.5 cents, fully franked (200
Slide 5: Segment Performance Against Prior Half
iress MARKET TECHNOLOGY Segment Performance Against Prior Half > Information Services 16.4% increase in profit » Financial Planning maiden FY profit > Canadian JV $.010m contribution as fixed cost base moves to production levels > Strategic Amortisation »>XPLAN $2.140m (of $11.034m total) » Canadian
Slide 6: Review of Group Subscription Rev
iress MARKET TECHNOLOGY Review of Group Subscription Rev 30.0 5 25.0 20.0 4 15.0 $m 10.0 4 H1'01 H2'04 H1'02 H2'02 H1'03 H2'03 H1'04 H2'04 H1'05 H1'05 @ lress Recurring @ Xplan Recurring & Canada Recurring
Slide 7: PCP change in Group Sub Rev
iress MARKET TECHNOLOGY PCP change in Group Sub Rev 3.0 5 (0.5) Acquisition of existing business as part of Cad JV in Apri?04, Xplan acquired Mar 03 as start up operation H2'01 H1'02 H2'02 H1'03 H2'03 H1'04 H2'04 H1'05, H2'05 lress Recurring O Xplan Recurring @ Canada Recurring
Slide 8: Review of Operations and Outlook
iress MARKET TECHNOLOGY Review of Operations and Outlook > Info & Trading Systems > Year on year growth for 2005 replicated 2004 and the first half of 2006 looks likely to continue the trend of the previous six halves. > Monthly billings have increased this half by over 200k, mid way between the ful
Slide 9: Information Services: Recurring Subscription Revenues
iress MARKET TECHNOLOGY Information Services: Recurring Subscription Revenues Month 1 Month 2 Month 3 Month 4 Month 5 oe H? 04 oer 1 05 H2 05 «==<H1 06 Month 6
Slide 10: IRESS Pricing Model and Pricing Power
iress MARKET TECHNOLOGY IRESS Pricing Model and Pricing Power => Common question is: Why does IRESS not aggressively raise prices? => We are unusual in maintaining a single pricing model for all segments; > Intuitional Broking > Research > Retail broking > Corporate > Internationally our pricing is
Slide 11: Core Business Strategic Challenges
iress MARKET TECHNOLOGY Core Business Strategic Challenges in 06 > Implement ASX ITS Upgrade to existing products successfully. Development now complete and in testing with key clients. > Target trading terminals within brokers to leverage compliance, DMA and ITS change pressures. Seek role of full
Slide 12: Contracts for Difference (CFDs)
iress MARKET TECHNOLOGY Contracts for Difference (CFDs) > Our CFD development in IOS webIRESS continues to generate growth. CFD’s now an essential component of on-line services. > SFE CFD initiative seems a challenging concept but we will support. Interesting to see if impacted by ASX / SFE merger.
Slide 13: Daily Trades on SEATS (ASX)
iress MARKET TECHNOLOGY Daily Trades on SEATS (ASX) 250 5 Thousands Nn Q Oo 150 4 100 7 50 5 98 99 00 01 02 03
Slide 14: Financial Planning - XPLAN
iress MARKET TECHNOLOGY Financial Planning - XPLAN > Exceptional performance in ’05 carried into 06 > General revenue growth maintained into 2006. » 2006 growth in recurring revenue 40% of IRESS core business growth, revenue base only 10% > Annualised pre-tax profit over $2m. > Genesys (Challenger)
Slide 15: Xplan — Product Outlook
iress MARKET TECHNOLOGY Xplan — Product Outlook > Complete & continued organic growth =» Ongoing conversion of already signed / committed new clients Continued development and product extension » User-driven Competitive feature advantages > Operational efficiency gains are a focus > Service based su
Slide 16: Xplan Gross Operational Revenue
6 Xplan Gross Operational Revenue 600 4 500 4 oo yo Thousands 400 4 300 4 200 4 100 + on™ Jul-03 Oct-03 Jan-04 Apr-O4 Jul-O4d Oct-04 Jan-05 Apr-05 Jul-OS Oct-08 Jan-06 Apr-06
Slide 17: IRESS / XPLAN SMA's and IMAs
iress MARKET TECHNOLOGY IRESS / XPLAN SMA’s and IMAs => SMA and IMA products now in demand from wide spectrum of customers, Retail brokers, Financial Planners, Platforms? > IPS CGT portfolio management now well entrenched through XPLAN and IRESS platforms. » FTS used for high end IMAs and compliance
Slide 18: Canadian Joint Venture Summary
iress MARKET TECHNOLOGY Canadian Joint Venture Summary > 2005 a transforming year > Completed development of Canadian tailored IRESS and IOS versions > Installed to a wide range of live beta users. Feed back used to tune and polish the product > Most early beta clients now converted to fee paying cu
Slide 19: Canadian Transactions
iress MARKET TECHNOLOGY Canadian Transactions > On 1* April 2005, IRESS Market Technology Limited entered into agreements to: > Acquire the remaining 50% of the Canadian joint venture from our partner ITG Canada for C$9.5m of the 50:50 joint venture arrangement in Canada. > Reuters Canada to facilit
Slide 20: Strategic Rationale for ITG Buyout
iress MARKET TECHNOLOGY Strategic Rationale for ITG Buyout > A local partner was critical at launch of the joint venture given our strategy of being a locally tailored niche provider. =» The Canadian business is now well setup with extensive local knowledge internally: > Staff transferred from Austr
Slide 21: CX Trader Agreement
iress MARKET TECHNOLOGY CX Trader Agreement » Royalty payable only on clients that agree to convert. Commission is 1 X annual revenue payable over 24 months. > REUTERS will end life of the product in the medium term so clients required to move. Few alternatives. => CX Trader has two parts: > Over 40
Slide 22: CX Trader OMS
iress MARKET TECHNOLOGY Advisers {up te 3000) LIT EVIL | CX Trader OMS Proprietary Interface OX Screens with Operators
Slide 23: TSX Trading Terminal in Canada
iress MARKET TECHNOLOGY TSX Trading Terminal in Canada > KTG (and IRESS Replacement). (550+) > Sell side focussed 2 IRESS version upgrades to full OMS > CX Trader (400+) > Sell side focussed > Strong with proprietary traders and retail OMS flow > ETRADE (300+) > Strong on Buy Side > Useful FIX netwo
Slide 24: Canadian Joint Venture - Outlook
iress MARKET TECHNOLOGY Canadian Joint Venture - Outlook > Post recent transactions challenge is execution : > Grow presence within strong seed client group established through 2005. > Convert the blue chip CX trader user base. Development of OMS interfaces critical. » Convert KTG terminal base to I
Slide 25: ASX / SFE Merger and Competition
iress MARKET TECHNOLOGY ASX / SFE Merger and Competition =» ASX/ SFE merger has few implications for the IRESS core business. > Deal probably makes sense on strategic only grounds. Price reflects monopoly position (17x rev, 60+x costs) > Competitor to ASX unlikely despite fee grumblings: > Liquidity
Slide 26: Capital Management
iress MARKET TECHNOLOGY Capital Management =» Continued high dividend payout > 80% of earnings before strategic charges > Encouraging opportunities remain for rationalisation in Canadian marketplace > The company remains open to acquisition and joint venture opportunities where these are consistent
Slide 27: Market Technology
MARKET TECHNOLOGY ress MARKET TECHNOLOGY
IRESS Market Technology — Macquarie Bank Emerging Leaders Conference 2006 on 6ix