Slide 1: Half year results presentation
2022 For the six months ended 30 June 2022 Half year results presentation
Slide 2: Agenda
Agenda 2 Andrew Walsh John Harris Managing Director & CEO Chief Financial Officer Overview of Iress 3 1H 22 results summary 4 Outlook 16 Financial Performance 19 Appendix 26
Slide 3: Overview of Iress
Overview of Iress 3 Executing our vision: Simpler, faster with higher returns 1H highlights Key statistics 1H 22 Constant Currency Segment Profit up 6%, Underlying NPAT up 29%. Core business leverages common technology in trading, wealth and data to build scale in Strong performance in APAC trading &
Slide 4: 1H 22 underlying financial performance - constant currency
1H 22 underlying financial performance - constant currency (1) 4 Underlying EPS growth of 32%. Full year results expected to be at the lower end of guidance range Segment profit guidance expected to be at the lower end of the range Revenue Segment Profit & margin 177 to 183 Up 6% Segment Profit up 6% 75
Slide 5: 1H 22 reported financial performance
1H 22 reported financial performance 5 Reported EPS impacted by prior period provision releases(1) and investment spend on single technology platform Reported revenue Reported Up 6% Segment Profit & margin Segment Profit up 7% 26.0% 26.2% 1H 21 1H 22 1H 21 1H 22 NPAT guidance expected to be at the lowe
Slide 6: 1H results summary
1H 22 results summary 6 Delivered Growth Progress Constant Currency Segment Profit up 6% v PCP Strong revenue growth in APAC trading & market Industry consolidation creating super admin data, superannuation and financial advice opportunities Successfully implemented price increases reflecting the inflat
Slide 7: Iress technology solutions meet industry imperatives of improving efficiency, reducing complexity and lowering cost
Iress technology solutions meet industry imperatives of improving 7 efficiency, reducing complexity and lowering cost to serve Cost of investing across the value chain remains Complexity drives cost across Australian investing value chain high due to a complex, disconnected and inefficient financial serv
Slide 8: Strength in APAC trading & market data and financial advice
Strength in APAC trading & market data and financial advice 8 Financial updates Medium-term targets Progress report Trading & market data revenue 1H 22 Growth vs 1H 21 APAC trading & market data total revenue growth of Price increases reflecting inflationary environment ($AUDm)⁽¹⁾ 9% and financial advic
Slide 9: Superannuation growth strategy
Superannuation growth strategy 9 Successful implementations, pipeline growing Financial updates Medium-term targets Progress report Revenue ($AUDm) 1H 22 Growth vs 1H 21 Recurring revenue is on track to medium term Recurring revenue increase, driven largely by targets, growing 17%. ESSSuper and Guil
Slide 10: UK growth strategy
UK growth strategy 10 Strong progress in private wealth and trading, rejuvenating growth in retail wealth. Mortgages performing well. Financial updates Medium-term targets Progress report UK Recurring Revenue ($AUDm) Private wealth management has outperformed the medium Strong growth in private weal
Slide 11: Investment infrastructure growth strategy
Investment infrastructure growth strategy 11 Phase 1 launch in November 2022 Growth opportunity Progress report - commercial launch plans well underway Combines largest provider of adviser and trading ✓ Commercial leadership and dedicated digital investment infrastructure team in place software in A
Slide 12: Transition to a single technology platform
Transition to a single technology platform 12 Platform transition on track with design confirmed and technology foundations in place Platform transition underway Cloud transition Progress update ✓ 94% (5,700+) services across Xplan, CommPay, IPS, ✓ Platform design complete and single technology platf
Slide 13: SaaS metrics summary
SaaS metrics summary (1) 13 Total LTV $25.7bn, 10+ times Iress’ market capitalisation(2) Group Lifetime Value (LTV) 1H 20 1H 21 1H 22 1H 22 vs 1H 21 Highlights Avg. Revenue per Client (A$k) 25.7k 26.7k 29.1k 2.4k Total LTV of A$25.7b: 10+ times the current market Annual Churn rate (%) 2.2% 1.5% 1.6%
Slide 14: Capital management
Capital management 14 Consistent returns with conservative gearing Net debt ROIC Leverage Dividends Increase in net debt reflects the Underlying 1H 22 ROIC is 9.6%. Iress maintains conservative gearing Iress’ continues to pay consistently impact of on-market share buyback levels. high dividends reflec
Slide 15: Capital management
Capital management 15 Self-funding growth initiatives and significant returns to shareholder Cumulative share buyback ($AUDm) Cumulative dividends ($AUDm) Free cash flow(2) ($AUDm) c.70% of the $100m buyback purchased as at 1H 22 Iress has consistently paid dividends at >100% Free cash flow generated f
Slide 16: 2022 Outlook
2022 Outlook (1) 16 Full year guidance intact, results expected at lower end of the range. Segment profit expected to grow by around 7%. Highlights Guidance (constant currency using average 2021 rates) ($AUDm)(1) Segment profit for the year is expected to grow by around 7%. 2H 22 guidance 2022 guidanc
Slide 17: 2H 22 Outlook - NPAT breakdown
2H 22 Outlook - NPAT breakdown (1) 17 Around 28% underlying NPAT growth v 1H 22. 2H will benefit from a lower annual leave expense and growth in APAC and the UK. Significant benefit from annual leave timing in 2H. Consistent with previous years. APAC will benefit from the full period impact of Growth of
Slide 18: Iress' vision
Iress’ vision 18 Simpler, faster with higher returns Technology Benefits 2025 targets intact 2022 A single technology platform that Faster product development Transition to platform and new Positive outlook: deploys Iress’ capability into and delivery. operating model underway and Solid start to 2022
Slide 19: Financial Performance
Financial Performance
Slide 20: Segment performance
Segment performance 20 Constant currency using 1H 21 average FX rates Segment ($AUDm) 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Historic segment profit Revenue performance(1) APAC 164.6 170.4 175.2 6% 3% UK & Europe 75.7 77.9 77.5 2% - Mortgages 13.6 15.3 16.1 18% 6% South Africa 21.3 21.6 21.7
Slide 21: Underlying Segment Profit breakdown - 1H 22 vs 1H 21
Underlying Segment Profit breakdown - 1H 22 vs 1H 21 (1) 21 +6% Underlying Segment Profit (using 1H 21 average FX rates) driven by APAC, UK & Europe, and Mortgages Reflecting successful project deliveries and Reflecting growth in recurring Full period impact of project work Largely driven by increased c
Slide 22: Underlying costs breakdown
Underlying costs breakdown (1) 22 Strong cost discipline with focus to scale: jaws positive (using 1H 21 average FX rates) Reported P&T costs were up 2% v 1H 21. Increase largely driven by investment Underlying P&T costs (adjusting for to support MFA business growth as internal staff transfers) were
Slide 23: Underlying net profit after tax analysis
Underlying net profit after tax analysis (1) 23 29% Underlying NPAT growth vs 1H 21 (using 1H 21 average FX rates) Provision release associated with Lower share based payment expense Lower intangible amortisation Underlying effective tax rate was 24% in finalisation of QuantHouse due to forfeitures fr
Slide 24: Net debt analysis
Net debt analysis 24 Strong cash generation and distributions to shareholders 1H 22 free cash flow of $40.6m(¹) (1H 21: $31.2m(2)) reflects strong cash conversion of 93% after payment of non-operating and significant committed one-off expenses. A strong ongoing focus on working capital management resul
Slide 25: Q&A
Q&A
Slide 26: Appendix
Appendix
Slide 27: Environment, Social & Governance
Environment, Social & Governance 27 Environment Social Foundation Signed Science Based Target Internal Diversity and Inclusion survey commitment letter to set a verified completed during May. Results to inform emission reduction target. On track to updates to existing policy and set 3 year Over $95,0
Slide 28: Income statement - constant currency
Income statement - constant currency (1) 28 Constant currency using 1H 21 average FX rates Constant Currency $AUDm 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Operating Revenue 290.2 301.1 306.4 6% 2% Operating Costs (214.7) (211.8) (226.1) 5% 7% Segment Profit 75.5 89.2 80.3 6% (10%) Share Based
Slide 29: Income statement - Reported results
Income statement - Reported results 29 Reported Currency $AUDm 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Operating Revenue 290.2 305.7 308.2 6% 1% Operating Costs (214.7) (215.1) (227.5) 6% 6% Segment Profit 75.5 90.7 80.7 7% (11%) Share Based Payments (10.3) (7.1) (8.8) (15%) 24% Segment Profit
Slide 30: Underlying NPAT reconciliation - 1H 22 vs 1H 21
Underlying NPAT reconciliation - 1H 22 vs 1H 21 30 Constant currency using 1H 21 average FX rates 1H 21 1H 22 1H 22 vs 1H 21 Staff One-Off Remove One-Off $AUDm Reported Underlying Reported Underlying % Change Transfers ⁽¹⁾ Adjustments⁽³⁾ Currency ⁽²⁾ Adjustments⁽³⁾ APAC 116.0 2.2 118.2 124.2 0.1 124
Slide 31: Underlying NPAT reconciliation - 1H 22 vs 2H 21
Underlying NPAT reconciliation - 1H 22 vs 2H 21 31 Constant currency using 1H 21 average FX rates 2H 21 1H 22 1H 22 vs 2H 21 Remove Staff One-Off Remove One-Off $AUDm Reported Underlying Reported Underlying % Change Currency ⁽²⁾ Transfers ⁽¹⁾ Adjustments⁽³⁾ Currency ⁽²⁾ Adjustments⁽³⁾ APAC 123.0 (0.
Slide 32: Segment performance
Segment performance 32 Reported currency Segment ($AUDm) 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Revenue APAC 164.6 170.7 175.2 6% 3% UK & Europe 75.7 80.5 78.0 3% (3%) Mortgages 13.6 15.9 16.3 20% 3% South Africa 21.3 22.1 22.2 4% - North America 15.0 16.5 16.5 10% - Total Revenue 290.2 305
Slide 33: Segment performance
Segment performance 33 Constant currency using 2021 average FX rates Segment ($AUDm) 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Revenue APAC 164.7 170.6 175.3 6% 3% UK & Europe 76.9 79.2 78.8 2% - Mortgages 13.9 15.6 16.4 18% 6% South Africa 21.6 21.8 22.0 2% 1% North America 15.2 16.2 16.2 6%
Slide 34: Segment performance
Segment performance 34 1H 22 results (Reported & constant currency) Segment ($AUDm) 1H 22 1H 22 1H 22 Revenue Reported FX Constant ccy (using avg. 1H 21 FX rates) Constant ccy (using avg. 2021 FX rates) APAC 175.2 175.2 175.3 UK & Europe 77.9 77.5 78.8 Mortgages 16.3 16.1 16.4 South Africa 22.2 21.7
Slide 35: APAC
APAC (1) 35 Ongoing demand for financial advice software & high client retention. Super admin client delivery momentum building. AUD (m) 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Operating revenue Trading & Market Data 65.0 68.1 71.0 9% 4% Financial Advice 60.3 63.4 64.6 7% 2% Superannuation 21
Slide 36: UK & Europe
UK & Europe 36 Strong progress in private wealth and trading, rejuvenating growth in retail wealth. GBP (m) 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Operating revenue Wealth ⁽¹⁾ 17.4 18.0 17.5 - (3%) Trading 6.0 6.4 6.7 10% 4% Sourcing 11.7 11.8 11.7 - (1%) QuantHouse Europe 7.0 7.0 7.2 2% 2%
Slide 37: Mortgages
Mortgages 37 Strong growth in recurring licence fees. Size of opportunity remains strong. GBP (m) 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Operating revenue Recurring revenue 4.4 5.0 5.4 22% 8% Non-Recurring revenue 3.2 3.5 3.6 13% 2% Total operating revenue 7.6 8.5 9.0 18% 6% Direct contribu
Slide 38: South Africa
South Africa 38 Stable recurring revenues and modest growth in non-recurring revenues vs 1H 21. ZAR (m) 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Operating revenue Recurring revenue 226.5 226.1 228.6 1% 1% Non-Recurring revenue 12.8 16.1 15.0 18% (7%) Total operating revenue 239.3 242.3 243.6
Slide 39: North America
North America 39 Strong recurring revenues with a stable client base. 1H 22 non-recurring revenues impact by elevated project work in 1H 21. CAD (m) 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 Operating revenue Recurring revenue 13.0 14.1 14.4 11% 2% Non-Recurring revenue 1.4 1.1 0.6 (60%) (50%)
Slide 40: 5 Year Targets
5 Year Targets (1) 40 (1) Figures are presented on a constant currency basis, assuming the results are converted at the average foreign exchange rates used for 2020. (2) Underlying NPAT (excluding Mortgages), excludes post tax of investment in Iress’ single technology platform. (3) 2022 Underlying N
Slide 41: Ongoing cost discipline across functional segments
Ongoing cost discipline across functional segments (1) 41 Product & Technology (P&T) Reported Underlying ⁽¹⁾ AUD (m) 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 1H 21 2H 21 1H 22 1H 22 vs 1H 21 1H 22 vs 2H 21 P&T Costs ($m) 68.5 66.6 69.7 2% 5% 69.3 65.7 69.4 0% 6% As a % of revenue 24% 22% 23%
Slide 42: Strong balance sheet and cash conversion averaging >90% over time
Strong balance sheet and cash conversion averaging >90% over time 42 $AUDm 1H 21 2H 21 1H 22 Cash conversion (%)(3) Total current assets 131.7 148.6 167.4 Total non-current assets 893.8 884.0 844.0 Total assets 1,025.5 1,032.6 1,011.3 Total current liabilities 102.2 108.8 115.4 Total non-current lia
Slide 43: Depreciation and Amortisation (D&A)
Depreciation and Amortisation (D&A) 43 D&A – Operational $AUDm 1H 21 2H 21 2021 1H 22 2H 22 2022 Depreciation Plant & Equipment 5.7 6.0 11.7 5.4 5.3 10.7 Amortisation Software 0.8 0.8 1.6 1.0 1.3 2.2 Leases 7.5 8.3 15.9 7.1 7.1 14.2 Total D&A - Operational 14.1 15.1 29.2 13.4 13.7 27.1 D&A – Acquisi
Slide 44: Foreign exchange rates
Foreign exchange rates 44 1H 21 foreign exchange rates 2021 foreign exchange rates 1H 21 Rate 2021 Rate GBP 0.5577 GBP 0.5477 CAD 0.9640 CAD 0.9435 ZAR 11.2285 ZAR 11.0981 EUR 0.6421 EUR 0.6367 1H 22 foreign exchange rates 1H 22 Rate GBP 0.5521 CAD 0.9092 ZAR 10.9769 EUR 0.6547
Slide 45: Glossary
Glossary 45 Underlying NPAT 1H 21 underlying results excludes the earnout provision releases of $15.2m and $1.1m in relation to the acquisitions of QuantHouse in 2019, and BC Gateways in 2020, respectively. The earnout benefit has no income tax effect. 2H 21 underlying results excludes (-$5.5m) costs
Slide 46: Glossary
Glossary 46 Annual Churn rate Revenue from lost clients / prior period total group revenue. Value of revenue from lost clients is equal to the last twelve months of revenue recognised prior to the month of leaving. Average Lifetime Value (LTV) per Client The inverse of annual churn rate multiplied b
Slide 47: Disclaimer
Disclaimer 47 The material in this presentation is intended to be general background information on Iress Limited and its activities, current at the date These risks and uncertainties could cause actual results, performance or events to differ materially from those expressed or implied. of the prese
Slide 48: Contact
Contact Andrew Walsh Managing Director & CEO John Harris Chief Financial Officer +61 3 9018 5800 iress.com © Iress 2022