Iress Limited · ASX:IRE
Iress — H1 2020 Earnings Presentation
31 slides from Iress's earnings presentation, Aug 20, 2020
Slide 1: Half-year results presentation
Half-year results presentation For the six months ended 30 June 2020
Slide 2: Agenda
Agenda Who we are 3 Half-year results 7 Segment overview 15 Financial information 22 Trading update 25 Appendices 26 Andrew Walsh John Harris Managing Director & CEO Chief Financial Officer 2
Slide 3: Who we are
Who we are We are a technology company providing software to the financial services industry. Award-winning 500,000+ users globally 9,000+ clients financial software 2,000+ people 18 offices 9 countries 3
Slide 4: Our mission, our purpose
Our mission Our purpose To be essential We believe technology and desirable to our should help people clients and users. perform better every day. 4
Slide 5: We help our clients find better ways to
We help our clients find better ways to Manage Navigate financial Deliver high quality investments markets financial advice Simplify mortgage Find and compare Administer super funds applications insurance and service members 5
Slide 6: Key drivers of growth
Key drivers of growth Increasing Increasing Demand Demand Demand for regulatory business for inter-connected for data solutions efficiency through requirements. complexity and software and for compliance, automation. industry change. services. intelligence and growth. Strategic priorities Attract A co
Slide 7: Half-year results
Half-year results 7
Slide 8: Successfully responding to COVID-19
Successfully responding to COVID-19 Iress rapidly adapted to remote working with no impact on business operations, client servicing and delivery. Our people 90% favourability rating from our people on support provided in 1H20 including 10 days’ emergency childcare leave and an extension of the emplo
Slide 9: 2020 half-year financial highlights
2020 half-year financial highlights Group Revenue growth: +12% v pcp (constant currency: +11%) Strong growth in Australia, positive contribution from recent acquisition of QuantHouse and O&M Systems. Segment Profit growth: -3% v pcp (constant currency: -3%) Reflects impact of acquisitions and a short-t
Slide 10: Revenue +12% v pcp, Underlying Segment Profit +2%, NPAT +4% v pcp
Revenue +12% v pcp, Underlying(5) Segment Profit +2%, NPAT +4% v pcp $AUDm - Reported 1H 19 2H 19 1H 20 1H 20/1H 19 1H 20/2H 19 Strong underlying Operating revenue 241.8 267.2 270.7 +12% +1% performance Operating costs (167.7) (189.2) (198.7) 19% 5% in Australia. Segment Profit (1) 74.1 78.0 71.9 (3%)
Slide 11: Australia driving underlying growth, positive contribution from acquisitions
Australia driving underlying growth, positive contribution from acquisitions Segment ($AUDm) 1H 19 2H 19 1H 20 1H 20/1H 19 1H 20/ 1H 19 Revenue Reported currency change Constant currency change Recurring revenue APAC 128.2 136.2 142.3 +11% +11% growth underpinned by strong performance in UK & Europe
Slide 12: Focused on building on Iress' strengths
Focused on building on Iress’ strengths Automation Data Connectivity Financial services organisations are Businesses have little issue in Financial services is increasingly increasingly automating for collecting data but significant interconnected. efficiency, compliance and scale. challenges in managi
Slide 13: Business highlights
Business highlights Superannuation Data Xplan Connectivity automation demand growth X Strong tender activity and two Successful integration and synergies More than 1,000 advice practices Strong demand for SuperConnector, a deliveries underway for Australian from QuantHouse, moving to have migrated t
Slide 14: Proposed acquisition of OneVue via Scheme of Arrangement
Proposed acquisition of OneVue via Scheme of Arrangement Structure & consideration Strategic acquisition Leverage Iress’ strengths Scheme of arrangement. Iress to acquire 100% Technology and innovation core to Iress’ OneVue’s position in administration in of the outstanding shares of OneVue via grow
Slide 15: Segment overview
4 Segment overview 15
Slide 16: APAC
APAC Ongoing demand for financial advice software & high client retention. Super admin client delivery momentum building. Financial Advice & Superannuation revenue AUD (m) 1H 19 2H 19 1H 20 1H 20/1H 19 1H 20/2H 19 +15% v pcp. Operating revenue Industry change remains elevated. Trading & Market Data 5
Slide 17: UK & Europe
UK & Europe Stable underlying revenue. QuantHouse performing well. Client delivery and ongoing demand to drive growth. GBP (m) 1H 19 2H 19 1H 20 1H 20/1H 19 1H 20/2H 19 Total revenue +16% v pcp, reflects stable underlying business combined with positive contribution from QuantHouse. Operating revenue
Slide 18: Mortgages
Mortgages COVID-19 delayed projects and revenue in first half. Projects now resumed, size of opportunity remains. GBP (m) 1H 19 2H 19 1H 20 1H 20/1H 19 1H 20/2H 19 Revenue decline reflects project timing and some project delays due to COVID-19. Operating revenue 8.0 7.8 6.2 (22%) (20%) All key project
Slide 19: South Africa
South Africa Successful client deliveries amidst challenging market conditions. ZAR (m) 1H 19 2H 19 1H 20 1H 20/1H 19 1H 20/2H 19 Revenue up amidst challenging local trading conditions, and cost pressure amongst Operating revenue 242.4 242.2 246.7 +2% +2% sell-side brokers. Retail trading momentum i
Slide 20: North America
North America Stable underlying client base. Deployment of retail trading solution to tier one bank live. CAD (m) 1H 19 2H 19 1H 20 1H 20/1H 19 1H 20/2H 19 Revenue +45% v pcp reflecting contribution from QuantHouse. Operating revenue 9.0 13.4 13.1 +45% (3%) Stable underlying recurring revenue. Direct
Slide 21: Ongoing cost discipline across functional segments
Ongoing cost discipline across functional segments Product and Technology (P&T) AUD (m) 1H 19 2H 19 1H 20 1H 20/1H 19 1H 20/2H 19 Excluding the impact of acquisitions, currency, a short term increase in leave costs and internal staff transfers, costs Direct contribution 57.1 61.7 67.4 +18% +9% incre
Slide 22: Financial information
Financial information 22
Slide 23: Underlying NPAT reconciliation
Underlying NPAT(1) +4% v pcp AUD (m) 1H 19 2H 19 1H 20 1H20/1H19 1H20/2H19 Segment Profit impacted in 1H20 by losses from acquired business BC Operating Revenue 241.8 267.2 270.7 +12% +1% Gateways, a short-term increase in annual leave costs and targeted investment ahead of revenue. Operating Costs (
Slide 24: Strong cash conversion, conservative balance sheet
Strong cash conversion, conservative balance sheet AUD (m) 1H 19 2H 19 1H 20 Cash conversion (%) Total current assets 100.0 115.3 174.8 Total non-current assets 724.9 721.7 732.1 Total Assets 824.9 837.0 906.9 Total current liabilities 91.7 85.6 105.3 Total non-current liabilities 326.0 316.4 250.3
Slide 25: Trading update
Trading update The Board has reaffirmed Iress’ medium to long-term growth strategy Iress’ business model, which is predominantly recurring subscription and we continue to make decisions for the medium to long-term. In that revenue, has demonstrated its strength and resilience in the first half. context
Slide 26: Appendices
Appendices 26
Slide 27: Underlying financial performance reconciliation
Underlying financial performance - reconciliation Acquisition Acquisition Annual Reported Acquisition of QH Currency Underlying of BCG of O&M Leave* $AUDm 1H19 2H19 1H20 1H19 2H19 1H 20 1H 20 1H 20 1H19 2H19 1H 20 1H 20 1H19 2H19 1H 20 Operating Revenue 241.8 267.2 270.7 3.1 18.8 20.2 - 1.1 (0.7) - 1
Slide 28: Depreciation and amortisation
Depreciation and amortisation D&A - Operational 1H19 2H19 1H20 Depreciation Plant & Equipment 5.6 5.8 5.4 Amortisation Software (3rd Party Purchased) 0.9 0.8 0.7 Leases 5.4 5.6 5.7 Total 11.9 12.2 11.8 D&A - Acquisition Related 1H19 2H19 1H20 2H20 1H21 2H21 1H22 2H22 Computer Software Avelo 0.3 0.2
Slide 29: Lease information
Lease information Leases 1H 19 2H 19 2019 1H 20 Profit and Loss account 6.1 6.4 12.5 6.4 Depreciation 5.4 5.6 11.0 5.7 Sublease income -0.3 -0.3 -0.6 -0.3 Interest on leases 1.0 1.1 2.1 1.0 Cashflow 4.7 7.5 12.2 5.9 Interest on lease liabilities 1.0 1.0 2.0 1.0 Payment on lease liabilities 3.7 6.5 10.
Slide 30: 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 31: Contact
Contact Andrew Walsh, CEO John Harris, CFO +61 3 9018 5800 iress.com