Iress Limited · ASX:IRE
Iress — H1 2009 Earnings Presentation
40 slides from Iress's earnings presentation, Aug 21, 2009
Slide 1: Half Year Results
Half Year Results | June 2009 For personal use only Half Year Re esults Half Year Ended 30 June 200 09 August 2009
Slide 2: IRESS H1'09 Results
Half Year Results | June 2009 IRESS H1’09 Results For personal use only • Adjusted Group profit $26.4 million (H2’0 08: $25.3m, up 4.6%) • Resilient performance through financial crisis, c with Revenue up 0.8% and EBITDA up 3 8% on H2’08 3.8% • Common strategy in all businesses of lon ng term client
Slide 3: Segment Performance Against Prior Half
Half Year Results | June 2009 Segment g Performance Again g nst Prior Half For personal use only Financial Markets Wealth Management Aust & NZ Aust & NZ • Op Rev down 2.0% (up 1.0% on PCPP) • Op Rev up 0.4% (up 11.1% on PCP) • EBITDA up 0.4% 0 4% (up ( 3.9% 3 9% on PCP) • EBITDA up 5.6% 5 6% ((up 15
Slide 4: Group Performance Against Prior Year
Half Year Results | June 2009 Group p Performance Against g Prior Year For personal use only • Adjusted Group Profit $26.434 m Up p $1.163 million,, 4.6% on Prior Half • Segment Contribution against prior year $A % • Financial markets Aust/NZ (.078) (7) • Financial markets Canada 0.477 41 • Wealth M
Slide 5: EBITDA Margins
Half Year Results | June 2009 EBITDA Margins For personal use only EBITDA Margin: % Revenue • Wealth Management (Media Release) H1 '07 H2'0 7 H1'08 H2'08 H1 2009 2006 2007 2008 Aust Fin Mkts 5 5 .7 % 54 .1 % 5 5.2 % 5 5 .5% 56 .8 % 5 4 .8% 5 4 .8 % 5 5 .3% Can Fin Mkts (CAD)* (15 .8%) 0 .6 % 2 1.3 %
Slide 6: Strategic Charges and Non-Recurring Expenses/Contribution
Half Year Results | June 2009 For personal use only St t gi Charges Strategic Ch g N R Non-Recurring i g Expenses/Contribution E /C t ib ti • $7.622 m for half year (H2’08:$7.553m) • Net non-recurring contribution before tax of Continued with amortisation of purchased $0.092m intangibles such as Com
Slide 7: Review of Group Recurring Subscription Revenue
Half Year Results | June 2009 Review of Group Recurring Subscription S Revenue For personal use only 70 60 ons 50 $A Millio 40 30 20 10 0 H1'04 H1'0 H1'05 H1'06 H1'0 H1'07 H1'08 H1'09 Wealth Mgt RSA Wealth Mgt Aust Canada Fin Mkts Aust Fin Mkts 7
Slide 8: Review of Group EBITDA
Half Year Results | June 2009 Review of Group EBITDA* For personal use only 45 40 35 30 $ A Millions s 25 20 15 10 5 0 -5 H1'04 H1'05 H1'06 H1'07 H1'08 H1'09 Wealth Mgt RSA Wealth Mgt Aust Canada Fin Mkts Aust Fin Mkts *Defintion of EBITDA as per IRESS Media Release 8
Slide 9: Relative Impact H1'09
Half Year Results | June 2009 Relative Impact H1’09 For personal use only 100% 80% 60% 40% 20% 0% Revenue e e ue EBITDA Total o a Direct ec SStaff a Total oaS Strategic a eg c (Recurring Subs) Costs Charges Wealth Mgt RSA Wealth Mgt Aust Canada Fin Mkts Aust Fin Mkts *Def Def intion of EBITDA as per
Slide 10: Operating Cashflow per share
Half Year Results | June 2009 Operating p g Cashflow p per sharre* For personal use only Cash generation from the business continues to be very strong $0.60 $0 50 $0.50 $0.40 $0.30 H2 H1 $0.20 $ $0.10 $0.00 2002 2003 2004 2005 20 006 2007 2008 2009 * Calculated as Net Cash from Operations ÷ No N sha
Slide 11: IRESS 2009 Group Outlook
Half Year Results | June 2009 IRESS 2009 Group p Outlook For personal use only • Results reflect resilience in all our businesss areas in face of exceptionally difficult circumstances for our customers • Growth weakened in late 2008 and carried d into Q1 2009 with signs of stabilisation in Q2 • Redu
Slide 12: Daily Trades on the ASX
Half Year Results | June 2009 Daily Trades on the ASX For personal use only 800 700 600 500 400 300 200 100 0 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Value of Trades Number of Trades 12
Slide 13: Australia Financial Markets
Half Year Results | June 2009 Australia Financial Markets For personal use only • Revenue peaked in November last year and trended down since, initial monthly movements volatile stabilising g later in the epperiod & reached a low in May: y • IRESS desktop – majority of downsizin ng as licensed per u
Slide 14: Australia Financial Markets – 2009
Half Year Results | June 2009 Australia Financial Markets – 2009 For personal use only • IOS+ implementation progresses: • major institutional OMS enhancementss • high volume market making in production • Range of trading terminals available • FIX+ further roll-out • IOS+ now generating 30%+ of ASX
Slide 15: Australia Financial Markets - Outlook
Half Year Results | June 2009 Australia Financial Markets - Outlook For personal use only • Revenue conditions in early 2nd half 2009 9 show: • Level of cancellations has markedly deeclined nearly back to pre crisis levels eclined, • Modest new revenue • Signs the negative factors are moderating, ca
Slide 16: Australia Financial Markets – Monthly Subscription Revenue
Half Year Results | June 2009 Australia Financial Markets – Monthly Subscription For personal use only Revenue 65 6.5 6.0 5.5 5.0 4.5 40 4.0 3.5 3.0 2.5 2004 2005 2006 2007 2008 2009 16
Slide 17: IRESS Desktop Monthly $ Gross Cancellations
Half Year Results | June 2009 IRESS Desktop Mthly $ Grosss Cancellations For personal use only Oct‐07 Jan‐08 Apr‐08 Jul‐08 Oct‐08 Jan‐09 Apr‐09 Jul‐09 0 (10) (20) (30) 000 ((40)) $'0 (50) (60) (70) (80) (90) (100) 17
Slide 18: Change in Australia Financial Markets Revenue
Half Year Results | June 2009 Change in Australia Financia al Markets Revenue For personal use only 40 4.0 3.0 Millions 2.0 $A M 1.0 - H1'04 H1'05 H1'06 H1'07 H1'08 H1'09 (1.0) (2.0) News, Royalty & Comms Other Hardware// DR Trading Services IRESS + Services 18
Slide 19: Canada - Overview
Half Year Results | June 2009 Canada - Overview For personal use only • Result significantly better than anticipa ated in February. • Revenue increased 7.2% on H2’08 to t 7.811 (CAD) • EBITDA increased 19.4% on H2’08 to t 2.810 (CAD) • Impact of crisis on Canadian financial markets no less severe th
Slide 20: Canada – 2009
Half Year Results | June 2009 Canada – 2009 For personal use only • Institutional order management projects underway with key clients. • Soon to be released Buy-Side enhancem ments will allow for further penetration of the EMS segment. t • Product enhancements, content acquisition for Canadian Marke
Slide 21: Canada – Product Strategy
Half Year Results | June 2009 Canada – Product Strategy gy For personal use only • Current product set: • Tradingg terminals for Canadian equitie q s and options p • Retail order flow management (includin ng US FX tools) • Institutional order management and co ompliance • FIX connectivity • Best mar
Slide 22: Canada - Outlook
Half Year Results | June 2009 Canada - Outlook For personal use only • Early Q3 trading has seen modest net re evenue increases and a continued cautious improvement in prospects. • On O balance b l expectt a flflatt to t slightly li htl positi itive revenue outlook tl k for f the th balance b l off
Slide 23: Canada – Monthly Subscription Revenue
Half Year Results | June 2009 Canada – Monthly Subscripttion Revenue* For personal use only 1.4 1.2 ns D$ Million 1.0 CAD 0.8 Pre-IRESS full production level offering 0.6 04 0.4 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 *Assumes 100% ownership 23
Slide 24: Financial Markets – Asian Initiative
Half Year Results | June 2009 Financial Markets – Asian In nitiative For personal use only • Decision to organically invest in creatin ng South East Asian capability • Following successful CFD roll-out in Singapore our increased understanding has exposed strong opportunities for ourr solution set in
Slide 25: Wealth Management
Half Year Results | June 2009 Wealth Management g For personal use only • Australia & NZ • Revenue up p 0.4% and EBITDA up p 5.6% on H2’08 respectively p y • Margin improvement primarily throu ugh staff cost management • Revenue reduction from cost cutting offset by y demand elsewhere • Demand for s
Slide 26: Wealth Management - 2009
Half Year Results | June 2009 Wealth Management g - 2009 9 For personal use only • eApplications – mortgage: g • Agreement with four major j lenders for LIXI-based loan lodgement g and backchannel connectivity. First lender in production,, others to follow this half • Key client for integrated wealt
Slide 27: Wealth Management - South Africa
Half Year Results | June 2009 Wealth Management g - South h Africa For personal use only • Liberty Life is first XPLAN client in South h Africa and both teams have finalised integration requirements and will comme ence rollout. • Philippe Moretonas renewed tenure into the future following completion
Slide 28: Wealth Management Outlook
Half Year Results | June 2009 Wealth Management g Outlook For personal use only • Australia & NZ • Clients continue to deal with lower assset set-based based revenue and reduced activity • Efficiency and cost are a renewed focu us which is upholding demand for our comprehensive and integrated soluti
Slide 29: Wealth Management – Aust & NZ Monthly Subscription Revenue
Half Year Results | June 2009 Wealth Management – Aust & NZ Mthly Subscription Rev For personal use only 3.5 3.0 2.5 $A Milllions 2.0 1.5 1.0 0.5 0.0 2004 2005 2006 2007 2008 2009 29
Slide 30: Managing Director & Board Succession
Half Year Results | June 2009 Managing g g Director & Board Succession S For personal use only • Managing Director • Since announcement last year that Peter Dunai will not continue as Managing Director after May 2010, orderly succeession planning has been underway. • Andrew Walsh (currently head of
Slide 31: Iress Market Technology
iress MARKET TECHNOLOGY In, ] the, £" | - ween www.iress.com.au 31
Slide 32: Supplementary Information
Half Year Results | June 2009 Supplementary Information: For personal use only • Opex O O Overview i • Headcount • Strategic charges • Non-Recurring Non Recurring items //Capex • Share Plans / SBP ex xpense 32
Slide 33: Review of Group Opex
Half Year Results | June 2009 Review of Group Opex For personal use only 14 Aust Fin Mkts Canada Fin Mkts (Assumes 100% Ownership) 5 12 10 4 CAD m $Am 8 3 6 2 4 2 1 0 0 H1'04 H1'05 H1'06 H1'07 H1'08 1'09 H1 H1'04 H1'05 H1'06 H1'07 H1'08 H1'09 C Comms &O Other h G General lAAd i i Administration i O
Slide 34: Breakdown of Opex H1'09
Half Year Results | June 2009 Breakdown of Opex H1’09 For personal use only Aust Fin Mkts Canada Fin Mkts 9% 1% 4% 1% 4% 5% 2% 4% 2% 3% 80% 85% Total Direct Staff Costs (inc AL) Other Employe ee Related Expenses Hardware & Software Expenses Occupancy Expenses General Admin nistration Expenses Comms
Slide 35: Headcount & Direct Staff Costs
Half Year Results | June 2009 Headcount & Direct Staff Co osts* For personal use only Accquisition of 500 Spotlight business in me equivalent staff Jul’07 400 Acquisition of VisiPlan business in Acquisition of 300 Apl’07 Plantech business in Sep’06 200 Full tim 100 - H1'05 H1'06 H H1'07 H1'08 H1'09
Slide 36: Strategic Charges - Amortising Intangibles
Half Year Results | June 2009 Strategic g Charges g - Amortisin ngg For personal use only Amortising intangibles arising through acquisitions Tax Description Cost (AUD) $m Amortisation period Deductible Canada Fin Mkts Reuters Commission Charge 3 482 3.482 3 years (ending Jun 10) Yes Plantech Softwa
Slide 37: Non-Amortising Intangibles
Half Year Results | June 2009 Non-Amortising Intangibles For personal use only Cost (AUD) Descrip ption $m Amortisation period Canada Fin Mkts LP Goo odwill 9.782 Plantech Goodwill G 3.449 Visiplan Goodwill G 10.695 Goodwill Wealth Mgt Aust Transactive e Goodwill 0.285 Will be subject to regular imp
Slide 38: Anticipated Future Strategic Charges
Half Year Results | June 2009 Anticipated p Future Strategic g Charges g For personal use only Assumes no goodwill impairment is identified in future periods Description H H2'09 H1'10 H2'10 H1'11 H2'11 H1'12 H2'12 Canada Fin Mkts Reuters Commission Charge 0.442 0.076 - - - - - Plantech Software 0.95
Slide 39: Non-Recurring items / Capex / Depreciation
Half Year Results | June 2009 Non-Recurring g items / Capex p x / Depreciation p For personal use only • Non-Recurring Expenses / Contribution • Non Non-Recurring Recurring Contribution of $0$0.092m 092m m for the period (H2 (H2’08: 08: $0 $0.041m) 041m) • Primarily relates to realised exchangge gai
Slide 40: 2009 Share Grants
Half Year Results | June 2009 2009 Share Grants For personal use only • Excluding grants to MD, the fair value of totall grant at date of issue (pre tax effect) historically tracking at around 4% of operating revenue. • In 2009 this % reduced to around 3.2%. Accounting expense in 2009 is impacted by