Iress Limited · ASX:IRE
Iress — Investor Presentation (February 2021)
48 slides from Iress's investor presentation, Feb 18, 2021
Slide 1: Full year results presentation
Full year results presentation For the year ended 31 December 2020
Slide 2: Agenda
Agenda Overview of Iress 3 FY20 financial performance 4 FY21 outlook 13 Financial information 16 Growth strategies 22 Appendix 27 Andrew Walsh John Harris Managing Director & CEO Chief Financial Officer 2
Slide 3: Overview of Iress
Overview of Iress Market-leading technology for financial services Highlights Consistent revenue growth with over 90% recurring ● Strong position in Australian financial services ● >90% recurring revenue ncy stan t curre ● Cash conversion 3 108% in 2020; long term 0% in con nue 1 average of 90-100% u
Slide 4: FY20 pro forma financial performance - constant currency
FY20 pro forma financial performance - constant currency Delivered pro forma Segment Profit and NPAT growth. EPS and ROIC impacted by the capital raise 155.6 535.5 148.5 524.1 Pro forma 29.0% Pro forma revenue ¹ Segment Profit & margin 1, 2 28.3% Up 2% Up 5% 2019 2020 2019 2020 64.3 24% 23% 60.2 Produc
Slide 5: FY20 reported financial performance
FY20 reported financial performance Performed above guidance, NPAT and EPS impacted by non recurring items Results delivered ahead of guidance 1 542.6 152.1 154.4 152.0 508.9 Constant currency Reported revenue Segment Profit 1 Up 7% + 1.6% v guidance 2019 2020 2019 2020 2020 ex OneVue guidance 152.9 6
Slide 6: 2020 results summary
2020 results summary Delivered Growth Progress 2020 results delivered ahead of Strong organic performance in Good progress in executing growth guidance. Segment Profit constant Australian Advice & Super (+8% strategies including super admin, currency excluding OneVue revenue growth). data, OneVue & m
Slide 7: 2020 execution
2020 execution Priority Result Priority Result Deliver super admin to two key Projects on track Scaling product investment Successfully delivered clients for delivery in 2021 and intellectual property Private Wealth in across geographies Australia Expanding to adjacent markets Acquisitions Access sy
Slide 8: FY20 pro forma Segment Profit breakdown
FY20 pro forma Segment Profit breakdown¹ 5% pro forma Segment Profit growth - strong performance in Australia with investments in growth, scale & product development Strong organic profit UK impacted by COVID Mortgages business Investments in growth, Disciplined cost control. growth in Australia. restr
Slide 9: FY20 pro forma net profit after tax analysis
FY20 pro forma net profit after tax analysis¹ 7% pro forma NPAT includes share-based payments and other non operating expenses Strong performance in Australia Reflects previously announced QuantHouse acquisition related costs and restructuring activities. with investment in growth, scale changes in Ir
Slide 10: Consistent organic revenue growth with value added to acquisitions
Consistent organic revenue growth with value added to acquisitions 9% revenue CAGR % FY16 to FY20 in constant currency (A$m) (1) Total Revenue CAGR = 9% 7.9 39.5 CAGR = 7%(2) 21.9 CAGR = 5% 30.5 34.2 32.1 26.9 CAGR = 1% 29.0 29.5 29.5 4.4 25.8 25.7 129.0 CAGR = 4% 129.9 122.7 114.7 111.2 Growth in e
Slide 11: Consistent high margins in Australia, improving returns on investments
Consistent high margins in Australia, improving returns on investments Direct Contribution Margins (%)(1) 2016 2017 2018 2019 2020 Comments Existing Businesses Australian Financial Advice (5) 82% 83% 81% 79% 80% APAC Trading & Market Data (3) (5) 74% 72% 70% 71% 72% Consistently high contribution ma
Slide 12: Adjusted net profit after tax and earnings per share
Adjusted net profit after tax and earnings per share Key assumptions Adjusted EPS (Constant Currency) (A$m) 2016 2017 2018 2019 2020 NPAT has been adjusted for share-based Segment Profit(3) (Constant Currency) 128.4 131.9 143.9 152.1 155.4 payments, non operating items, acquisition related depreciatio
Slide 13: FY21 Outlook
FY21 Outlook ¹ Guidance (Constant Currency) (A$m) Key assumptions FY20 FY21 guidance Segment Profit Inc OneVue Excl. OneVue OneVue Total Segment Profit outlook of $164m - $168m in Actual Low High Low High Low High constant currency is subject to the timing of client Segment Profit 153 158 161 6 7 164 1
Slide 14: 2021 key priorities
2021 key priorities OneVue Recurring revenue UK Grow funds registry Maintain high quality Grow UK revenue by value and funds recurring revenue and margin Provide investment infrastructure-as-a-service Technology Data Super administration Continue momentum to Grow revenue from Successful Iress Cloud
Slide 15: Medium-term operating outlook - Iress' organic potential
Medium-term operating outlook - Iress’ organic potential Medium-term Margin trend ROIC Key drivers organic revenue FY20 ROIC group Medium-term trend trend (pa) average (above/below) ● Large global markets Group 5-10% n/a ● Supported by structural tailwinds ● Resilient, high margin business with sign
Slide 16: Financial information
Financial information
Slide 17: Income statement - constant currency
Income statement - constant currency Constant Currency Key notes AUD (m) 2019 2020 2020/2019 ● Pro forma operating costs grew 1% Operating Revenue 508.9 546.0 7% ● Share-based payments increase reflects accounting impact Operating Costs (356.9) (390.7) 9% of 2018 remuneration changes Segment Profit 15
Slide 18: Segment performance: strong revenue growth & investment in technology
Segment performance: strong revenue growth & investment in technology Segment ($AUDm) 2019 2020 2020/ 2019 Revenue Constant Currency Constant Currency Change Key notes APAC 264.5 289.8 10% ● Strong performance from Australian UK & Europe 142.7 153.0 7% financial advice and Super Mortgages 29.0 26.9 (
Slide 19: Pro forma cost analysis: cost discipline, targeted investments & scale
Pro forma cost analysis: cost discipline, targeted investments & scale¹ Additional headcount to Pro forma employee and opex cost growth of 1% reflects strong cost Investments in people pursue super admin discipline across the group partly offset by an increase in investment in and capability to pursu
Slide 20: Cash flow: $114m free cash flow, net debt -36%
Cash flow: $114m free cash flow, net debt -36% (incl capital raise) Strong cash BC Gateways conversion 108% O&M OneVue -36% (1) Free Cash Flow = $113.9m 194.9 152.9 12.7 171.5 80.7 122.3 125.1 12.6 9.9 38.5 22.0 Net Debt Segment Working Tax & Maintenance Lease Dividends Other Non Capital Acquisitions
Slide 21: Capital management: consistent returns with decreasing gearing
Capital management: consistent returns with decreasing gearing Net debt ROIC Leverage Dividends Reduction in net debt reflects strong Pro forma 2020 ROIC is 10% v Iress Iress maintains conservative gearing Iress’ dividend policy is to maintain a operating cash flow and proceeds of WACC of ~6.5%. Pro f
Slide 22: Growth strategies
Growth strategies
Slide 23: OneVue: delivering investment infrastructure-as-a-service
OneVue: delivering investment infrastructure-as-a-service Growth opportunity Execution steps Financial highlights Combines largest provider of adviser and 1. Acquisition completed in November Generates high quality, growing recurring trading software in Australia with largest 2020 revenues unlisted
Slide 24: Automated Super Admin: automated, efficient, outsourced administration
Automated Super Admin: automated, efficient, outsourced administration Growth opportunity Execution steps Financial highlights Super funds spend $1.4bn pa on Automated super administration solution TAM of $1.4bn+ administration. ~50% of administration by successfully implemented. number of members is
Slide 25: UK: opportunity affirmed although delayed given COVID-19
UK: opportunity affirmed although delayed given COVID-19 Growth opportunity Execution steps Financial highlights Private wealth management firms Timing of sales and implementation Iress’ internal estimates are that the represent a material opportunity. activity in 2020 impacted by COVID-19. revenue poo
Slide 26: Summary and conclusions
Summary and conclusions Delivered Strong Australian performance Growth 2020 results delivered ahead of Australian Trading & Market Data and Continuing to execute growth reintroduced guidance (Segment Profit Financial Advice are performing with strategies to drive growth, enlarge constant currency exc
Slide 27: Appendix
Appendix 27
Slide 28: Pro forma reconciliation: pro forma NPAT up 7% and Segment Profit 5%
Pro forma reconciliation: pro forma NPAT up 7% and Segment Profit 5% Includes full year contribution from acquisitions in the pcp 2019 2020 $AUDm Reported Add: QH (1) Pro forma Reported Remove: BCG(2) Remove: O&M (2) Remove: OneVue (2) Remove: Currency(3) Pro forma Operating Revenue 508.9 15.2 524.1
Slide 29: Pro forma reconciliation
Pro forma reconciliation Reported Segment Profit to pro forma disclosures by region 2019 2020 2020/2019 Reallocate Add: QH (2) Pro Reallocate Remove: Remove: Remove: Pro Pro forma $ AUDm Reported Reported Staff Transfers (6) Remove: BCG (3) QH(1) forma QuantHouse (1) O&M (3) OneVue (3) Currency(4) fo
Slide 30: Earnings per share - reconciliation
Earnings per share - reconciliation (A$m) NPAT and adjustments EPS (Cents) Key assumptions 2019 2020 2019 2020 EPS Var % Reported NPAT / Reported EPS (Cents) 65.1 59.1 37.9 32.3 (15%) Reported EPS is per the 2020 Annual Report and Foreign Exchange Adjustments 1.8 is simply Reported NPAT over the wei
Slide 31: R&D - Last three years
R&D - Last three years 2018 2019 2020 ● ebMS messaging service ● Completed implementation of Iress Cloud, a ● ~1000 clients migrated to Iress Cloud Platform ● Comprehensive compliance monitoring for platform enhancing automation, security, ● Designed & developed the Iress data platform and licensees
Slide 32: Segment Performance
Segment Performance Strong revenue growth with investments in growth, scale & new product development Segment ($AUDm) 2019 2020 2020/2019 Revenue Reported Reported Reported currency change APAC 264.5 289.8 10% UK & Europe 142.7 154.6 8% Mortgages 29.0 26.9 (7%) South Africa 48.3 42.9 (11%) North Ame
Slide 33: APAC
APAC Ongoing demand for financial advice software & high client retention. Super admin client delivery momentum building AUD (m) 1H 19 2H 19 2019 1H 20 2H 20 2020 2020/2019 APAC performance is attributable to strong growth in Financial Advice and Superannuation, continued Operating revenue growth in
Slide 34: Trading & Market Data
Trading & Market Data Resilient trading and market data revenue. Implementation of Private Wealth solution to leading wealth manager AUD (m) 1H 19 2H 19 2019 1H 20 2H 20 2020 2020/2019 Steady increase in revenue excluding impact of QuantHouse acquisition. Operating revenue Recurring revenue continue
Slide 35: Financial Advice, Superannuation and OneVue
Financial Advice, Superannuation and OneVue Financial Advice software as advisors continue to focus on risk, data & compliance. Super admin deployment progressing well AUD (m) 1H 19 2H 19 2019 1H 20 2H 20 2020 2020/2019 Financial Advice revenue reflects ongoing demand Operating revenue for Iress’ Fin
Slide 36: UK & Europe
UK & Europe Stable underlying revenue. QuantHouse performing well. Client delivery and ongoing demand to drive growth GBP (m) 1H 19 2H 19 2019 1H 20 2H 20 2020 2020/2019 Revenue growth driven by full year impact of Operating Revenue QuantHouse and the acquisition of O&M, offset by some project delay
Slide 37: Mortgages
Mortgages COVID-19 delayed projects and revenue in first half. Two clients live in second half, size of opportunity remains GBP (m) 1H 19 2H 19 2019 1H 20 2H 20 2020 2020/2019 The decline in revenue is due to discontinuation of the first version of our Mortgage Sales & Operating revenue 8.0 7.8 15.8 6
Slide 38: South Africa
South Africa Successful client deliveries amidst challenging market conditions. ZAR (m) 1H 19 2H 19 2019 1H 20 2H 20 2020 2020/2019 Political and economic uncertainty was heightened in 2020, exacerbated by the onset of COVID-19. In Operating revenue 242.4 242.2 484.7 246.7 237.0 483.7 - local curren
Slide 39: North America
North America Stable underlying client base. QuantHouse broadens market data capability. CAD (m) 1H 19 2H 19 2019 1H 20 2H 20 2020 2020/2019 In local currency, revenue increased 17% while direct contribution increased 7%. Operating revenue 9.0 13.4 22.4 13.1 13.1 26.1 17% The increase reflects a full
Slide 40: Ongoing cost discipline across functional segments
Ongoing cost discipline across functional segments Product & Technology AUD (m) 2019 2020 2020/2019 Product & Technology costs increased 9% and the cost as a % P&T Costs ($m)(1) 118.6 128.9 9% of revenue on a constant currency P&T costs as % of revenue 23% 24% basis increased from 23% in 2019 to 24%
Slide 41: Strengthened balance sheet and strong cash conversion 108%
Strengthened balance sheet and strong cash conversion 108% AUD (m) 2019 2020 Cash conversion (%) Total current assets 115.3 133.8 Total non-current assets 721.7 871.4 108% Total Assets 837.0 1,005.3 93% 94% 88% 87% Total current liabilities 85.6 102.2 Total non-current liabilities 316.4 315.2 Total
Slide 42: Segment performance
Segment performance Segment ($AUDm) Q3 2020 Q4 2020 Q4 / Q3 APAC revenue increase in Q4 is Revenue Constant Currency Constant currency change driven by the contribution from APAC 69.9 77.9 11% recently acquired business UK & Europe 37.4 39.5 5% OneVue. Excluding OneVue, APAC growth is flat in Q4. Mor
Slide 43: Reported revenue up 7%
Reported revenue up 7% Reported AUD (m) 2019 2020 2020/2019 Operating Revenue 508.9 542.6 7% Operating Costs (356.9) (389.7) 9% Segment Profit 152.1 152.9 1% Share Based Payments (17.7) (21.0) 19% Segment Profit after SBP 134.4 131.9 (2%) Non Operating Items (1.0) (5.4) large Unrealised Foreign Exchan
Slide 44: Depreciation and amortisation
Depreciation and amortisation D&A - Operational 1H19 2H19 1H20 2H20 Depreciation Plant & Equipment 5.6 5.8 5.4 5.6 Amortisation Software (3rd Party Purchased) 0.9 0.8 0.7 0.9 Leases 5.4 5.6 5.7 6.6 Total 11.9 12.2 11.8 13.1 D&A - Acquisition Related 1H19 2H19 1H20 2H20 1H21 2H21 1H22 2H22 Computer S
Slide 45: Foreign exchange rates
Foreign exchange rates 2019 foreign exchange rates 2020 foreign exchange rates 2019 Rate 2020 Rate GBP 0.5434 GBP 0.5391 CAD 0.9222 CAD 0.9244 ZAR 10.037 ZAR 11.350 EUR 0.6150 EUR 0.6052 45
Slide 46: Glossary
Glossary 2019 is adjusted to add back five months of QuantHouse pre-acquisition trading results from January to May 2019 Pro forma 2020 is adjusted to exclude the current year acquisitions including BCG, O&M and OneVue and remove currency from reported figures Cash flow conversion Cash generated from o
Slide 47: Disclaimer
Disclaimer The material in this presentation is intended to be general background information on Iress Limited and its activities, current at the date of the presentation. The information is provided in summary form and does not purport to be complete. It is not intended to be relied upon as advice
Slide 48: Contact
Contact Andrew Walsh, CEO John Harris, CFO +61 3 9018 5800 iress.com