Iress Limited · ASX:IRE
Iress — Macquarie Emerging Leaders Presentation (May 2008)
39 slides from Iress's conference presentation, May 9, 2008
Slide 1: Macquarie Emerging Leaders Presentation May 2008
For personal use only Macquarie Emerging Leaders Presentation May 2008
Slide 2: IRESS Group Overview
IRESS Group Overview For personal use only Î Technology and information provider to financial markets and investment community Î Front and middle office focus Î High proportion of Recurring Subscription Revenue Î Service focus, very low client turnover Î Mostly fixed cost structure : scale producing
Slide 3: IRESS Business Breakdown
IRESS Business Breakdown For personal use only Î Australian and New Zealand Equities and Derivatives Original IRESS operation serving mainly stock brokers and investment managers. Very strong position in market data, institutional order management and associated front and middle office products. Î
Slide 4: IRESS GROUP – Overview
IRESS GROUP – Overview For personal use only Information Services Wealth Management IRESS Visiplan Australia & IOS, Australia & WebIRESS, Xplan Portfolio New Zealand New Zealand FTS PlanTech KTA Spotlight IRESS Canada Mkt Data, South Africa Xplan Trading IOS PlanTech 4
Slide 5: IRESS 2007 Results
IRESS 2007 Results For personal use only Î Adjusted Group profit $39.0 million (2006: $29.6m), up 32% Î Wealth Management transformed by growth & acquisition Î Canadian revenue growth of 60% & EBITDA positive for H2’07 Î Reported Group profit $25.5 million (2006: $24.3m) Î Fully franked final divide
Slide 6: Group Subscription Rev : H1 Forecast
Group Subscription Rev : H1 Forecast For personal use only 70.0 60.0 50.0 40.0 $m 30.0 20.0 10.0 - H1'02 H1'03 H1'04 H1'05 H1'06 H1'07 H1'08 Aust Equities Canada Equities Wealth Mngt (Aust) Wealth Mngt RSA
Slide 7: Review of Group EBITDA
Review of Group EBITDA* For personal use only 39.0 34.0 29.0 24.0 $m 19.0 14.0 9.0 4.0 (1.0) H1'02 H2'02 H1'03 H2'03 H1'04 H2'04 H1'05 H2'05 H1'06 H2'06 H1'07 H2'07 Aust Equities Canadian Equities Wealth Mngt Aust Wealth Mngt RSA *Defintion of EBITDA as per IRESS Media Release 7
Slide 8: Daily Trades on the ASX
Daily Trades on the ASX For personal use only 0.7 Millions 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Jan 00 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 8
Slide 9: IRESS Solutions
IRESS Solutions For personal use only Broker Adviser Platform Planner Adviser Platform IRESS / IOS IPS Portfolio Management VISIPLAN / XPLAN System Premium market data Real-time execution Equities – Local and Comprehensive CRM FSRA Order Management International Financial Modeling Multi-market vetti
Slide 10: Australian Equities Business Overview
Australian Equities Business Overview For personal use only Î IRESS market data desktop the standard for Australian equity professionals Î IOS order routing hub 95%+ broker participation. Virtually all institutions are users for block reporting, heavy penetration for IOI’s, bookings and more recentl
Slide 11: Aust Equities – Monthly Subscription Revenue
Aust Equities – Monthly Subscription Revenue For personal use only 6.0 5.5 5.0 4.5 $m 4.0 3.5 3.0 2.5 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 11
Slide 12: H2H Revenue Growth % Aust Equities
H2H Revenue Growth % Aust Equities For personal use only 16% 14% 12% 10% 8% 6% 4% 2% 0% H2'01 H2'02 H2'03 H2'04 H2'05 H2'06 H2'07 -2%
Slide 13: H2H Revenue Growth Aussie Equities
H2H Revenue Growth Aussie Equities For personal use only
Slide 14: Australian Equities – Margin Analysis
Australian Equities – Margin Analysis For personal use only % Revenue per Media Release H2 2006 H1 2007 H2 2007 2005 2006 2007 Licence Fee Revenue 72.0% 71.9% 71.8% 71.8% 71.9% 71.9% Other Rev (News / Roy. / Comms) 28.0% 28.1% 28.2% 28.2% 28.1% 28.1% Gross Profit 77.5% 77.4% 77.5% 76.7% 77.3% 77.4%
Slide 15: Aust Equities Goals
Aust Equities Goals in 08 For personal use only Î Roll out FIX+ IOS+ high speed DMA combination Î Further penetrate trading terminal market Î IPS IMA / SMA Solution rolled out to more clients and leveraging fund manager community. Î Fully implement webIRESS at the major online broker Î Key insto bro
Slide 16: Multiple Trading Venues
Multiple Trading Venues For personal use only Î Launch of alternative liquidity pools in Australia seems inevitable given overseas experience. Both Europe and North America now have several trading venues executing the major listed stocks as an alternative to the traditional exchange with more to co
Slide 17: IRESS and Multiple Trading Venues
IRESS and Multiple Trading Venues For personal use only Î In general multiple venues are good for market data and trading ISVs. In a single market in-house development is sometimes manageable but as the connections grow so does the complexity making these solutions vendor supplied in all but the b
Slide 18: Best Market Order Router
Best Market Order Router For personal use only Î Highly configurable engine which inspects all market data and iteratively makes execution decisions across all available markets to achieve the optimal and compliant outcome. Î In use in Canada – one client sending 65,000+ orders per day peak 150 per
Slide 19: Wealth Management - Overview
Wealth Management - Overview For personal use only Î Acquisition of VisiPlan and Spotlight transforming: a major part of the group contributing on an annualised basis nearly 30% of revenue and 23% of EBITDA. Strong retention of revenue from both acquisitions and a slightly higher than expected E
Slide 20: Wealth Management - Revenue
Wealth Management - Revenue For personal use only Î Aust/NZ revenue run rate : over $36m Î Spotlight (RSA) + PlanTech (RSA) : A$5.7m run rate Î 2008 – full year impact of acquisitions, EBITDA based on current run rate >A$14m Î Marketing points of difference: Independence a key and unique strength
Slide 21: Wealth Management - Aust / NZ
Wealth Management - Aust / NZ For personal use only Î Risk Researcher integrated with XPLAN & Visi Î Continued enhancement of Visi suite for key clients Î Asteron joins Zurich on AppCentral more to come Î Integrated CommPay commission system released Î Asgard licenses XPLAN modelling for platform Î
Slide 22: Wealth Management - South Africa
Wealth Management - South Africa For personal use only Î Spotlight is the leading provider in South Africa with a large installed user base (16,000) and strong established client relationships Î Spotlight will continue to provide client support and development locally Î Growth opportunities exist
Slide 23: Wealth Management Australia & NZ Monthly Subscription Revenue
Wealth Management Australia & NZ Mthly Subscription Rev For personal use only 3.5 3.0 2.5 Acquisition of VisiPlan business in Apl’07 2.0 $m 1.5 Acquisition of PlanTech business in Sept’06 1.0 0.5 0.0 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 23
Slide 24: H2H change in WM Australia & NZ Subscription Revenue
H2H change in WM Australia & NZ Subscription Revenue For personal use only 8.0 7.0 6.0 5.0 $m 4.0 3.0 2.0 1.0 - H1'03 H1'04 H1'05 H1'06 H1'07 H1'08 Xplan Plantech Visiplan 24
Slide 25: Current Product Revenue Split
Current Product Revenue Split For personal use only Revenue by Product 40.0 35.0 3.8 30.0 25.0 14.8 $m pa 20.0 15.0 10.0 16.4 5.0 0.0 Revenue Xplan VisiPlan PlanTech
Slide 26: Wealth Management – Margin Analysis
Wealth Management – Margin Analysis For personal use only % Revenue per Media Release H2 2006 H1 2007 H2 2007 2005 2006 2007 Licence Fee Revenue 97.1% 97.8% 97.9% 97.4% 97.0% 97.8% Other Rev (News / Roy. / Comms) 2.9% 2.2% 2.1% 2.6% 3.0% 2.2% Gross Profit 96.6% 98.0% 97.9% 98.9% 96.7% 98.0% Total Di
Slide 27: Investment Trends Survey
Investment Trends Survey For personal use only The Investment Trends Survey again rated the IRESS Wealth Management Solutions very highly. "XPLAN retains it highest ranking amongst planners for satisfaction levels within fully featured planning software, with VisiPlan also highly ranked."
Slide 28: Canada - Overview
Canada - Overview For personal use only Î Meeting the challenges: Internal challenges around cut-over of the REUTERS CX user base External challenges posed by significant changes in the Canadian market environment. Î Revenue growth on an annualised run rate basis moved from C$8.3m in January 07
Slide 29: Canada Business - Highlights
Canada Business - Highlights For personal use only Î 90% plus conversion of CX Order Entry user base. Î Release of smart order router to manage new trading venues. Î New primary data centre co-located with TSX brought on line. Î FIX+ high speed DMA solution in production. Î KTA+ enhanced IRESS techn
Slide 30: Canada - Outlook
Canada - Outlook For personal use only Î CX OMS roll-out has been completed (by end of Feb) with significant extra revenue as these customers move to billing. Annualised Revenue now running close to C$17m Î Business now materially EBITDA positive at close to $C4m annualised Î Poised to make a signif
Slide 31: Canada Longer Term Outlook
Canada Longer Term Outlook For personal use only Î Current strategy includes: Trading terminals for Canadian equities and options Retail order flow management (including US FX tools) Institutional order management and compliance FIX connectivity Limited market data around OMS solutions Î E
Slide 32: Canada – Monthly Subscription Revenue
Canada – Monthly Subscription Revenue* For personal use only 1.2 1.1 1.0 CAD $m 0.9 0.8 0.7 Pre-IRESS full production level offering 0.6 0.5 0.4 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 * Assumes 100% ownership 32
Slide 33: H2H Canada Revenue Growth CAD
H2H Canada Revenue Growth CAD For personal use only
Slide 34: Daily Trades on TSX & TSX Venture Exchanges
Daily Trades on TSX & TSX Venture Exchanges For personal use only 1.2 Millions 1.0 0.8 0.6 0.4 0.2 0.0 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 34
Slide 35: Breakdown of Opex H2’07
Breakdown of Opex H2’07 For personal use only Aust Equities Canada Equities 1% 4% 1% 6% 4% 7% 2% 14% 8% 10% 67% 76% Total Direct Staff Costs Other E'ee Exp (Inc AL) Hardware & Software Expenses Occupancy Expenses General Administration Expenses Comms & Other Wealth Management (All) 4% 2% 8% 1% 8% 77
Slide 36: Headcount & Direct Staff costs
Headcount & Direct Staff costs* Acquisition of For personal use only Spotlight business 450 in Jul’07 400 Full time equivalent staff 350 300 Acquisition of Visiplan business 250 in Apl’07 200 150 100 50 - H2'01 H1'02 H2'02 H1'03 H2'03 H1'04 H2'04 H1'05 H2'05 H1'06 H2'06 H1'07 H2'07 22 20 * Direct St
Slide 37: Dividend / Balance Sheet Strategy
Dividend / Balance Sheet Strategy For personal use only Î Maintaining existing practice of paying fully franked dividends at approximately 85% of adjusted earnings. Acquisition write offs can make the payout ratio close to 100% of reported profit. Î Dividends plus occasional modest acquisitions have
Slide 38: Market Turmoil and IRESS H1 Result
Market Turmoil and IRESS H1 Result For personal use only Î Revenue Aust Equities up over 5% H2H (historically 5-7%) Wealth Management up approx 5% (first period in mature state) Canada up approx 35% H2H Î EBITDA No good numbers yet but targeting broadly similar margins Î No doubting a mood c
Slide 39: Market Technology
MARKET TECHNOLOGY A.B.N. 47 060 313 359
IRESS — Macquarie Emerging Leaders Presentation (May 2008) on 6ix