Iress Limited · ASX:IRE
Iress — IRESS Market Technology — H1 2010 Earnings Presentation
44 slides from Iress's earnings presentation, Aug 25, 2010
Slide 1: ASX cover letter: 2010 Half Year Results Investor Presentation
25 August 2010 For personal use only The Manager Company Announcements Office Australian Stock Exchange 10th Floor, 20 Bond Street SYDNEY NSW 2000 ELECTRONIC LODGEMENT Dear Sir or Madam 2010 Half Year Results – Investor Presentation Please find attached a copy of an investor presentation on the Comp
Slide 2: Half Year Results, Half Year Ended 30 June 2010
Half Year Results | June 2010 For personal use only Half Year Results Half Year Ended 30 June 2010 August 2010
Slide 3: IRESS H1'10 Results
Half Year Results | June 2010 IRESS H1’10 Results For personal use only • Underlying Group profit $28.1 million (H2’09: $27.2m, up 3.5%) & excluding Asia $28.8 million up 5.0%. • Robust performance through the half. Group (ex Asia) saw Revenue up 4.0% and EBITDA up 2.4% on H2’09. • Commitment to pro
Slide 4: Segment Performance Against Prior Half
Half Year Results | June 2010 Segment Performance Against Prior Half For personal use only Financial Markets Wealth Management Aust & NZ Aust & NZ • Op Rev up 2.7% (up 2.6% on PY) • Op Rev up 3.6% (up 2.8% on PY) • EBITDA up 0.6% (up 1.6% on PY) • EBITDA up 5.8% (up 7.5% on PY) • PAT up 3.4% (up 6.3
Slide 5: Group Performance Against Prior Half
Half Year Results | June 2010 Group Performance Against Prior Half For personal use only • Adjusted Group Profit $28.149 m Up $0.952 m, 3.5% on prior half • Segment Contribution against prior half $A % • Financial markets Aust/NZ 0.662 70 • Financial markets Canada 0.332 35 • Wealth Management Aust/
Slide 6: EBITDA Margins
Half Year Results | June 2010 EBITDA Margins For personal use only EBITDA Margin:% Revenue H1 H2 H1 H2 H1 per Media Release 2008 2008 2009 2009 2010 2007 2008 2009 Aust Fin Mkts 55.2% 55.5% 56.8% 57.5% 56.3% 54.8% 55.3% 57.2% Can Fin Mkts (CAD) 21.3% 26.3% 29.2% 34.1% 33.6% (6.4%) 23.9% 31.7% Wealth
Slide 7: Strategic Charges, Non-Recurring Expenses and Tax Expense
Half Year Results | June 2010 For personal use only Strategic Charges Non-Recurring Expenses • $4.942m for half year (H2’09:$6.294m) • Net non-recurring contribution before tax of Continued with amortisation of purchased $0.174m intangibles such as Computer Software. There were no new amortising ite
Slide 8: Review of Group Recurring Subscription Revenue
Half Year Results | June 2010 Review of Group Recurring Subscription Revenue For personal use only 80 60 $A Millions 40 20 0 H1'05 H1'06 H1'07 H1'08 H1'09 H1'10 Fin Mkts - Aust Fin Mkts - Can Fin Mkts - Asia Wlth Mgt - Aust Wlth Mgt - RSA Wlth Mgt - Asia 7
Slide 9: Review of Group EBITDA
Half Year Results | June 2010 Review of Group EBITDA* For personal use only 50 40 30 $A Millions 20 10 0 H1'05 H1'06 H1'07 H1'08 H1'09 H1'10 -10 Fin Mkts - Aust Fin Mkts - Can Fin Mkts - Asia Wlth Mgt - Aust Wlth Mgt - RSA Wlth Mgt - Asia *Defintion of EBITDA as per IRESS Media Release 8
Slide 10: Relative Impact H1'10
Half Year Results | June 2010 Relative Impact H1’10 For personal use only 100% 80% 60% 40% 20% 0% Revenue EBITDA Total Direct Staff Total Strategic (Recurring Subs) Costs Charges -20% Fin Mkts - Aust Fin Mkts - Can Fin Mkts - Asia Wlth Mgt - Aust Wlth Mgt - RSA Wlth Mgt - Asia *Defintion of EBITDA a
Slide 11: Operating Cashflow per share
Half Year Results | June 2010 Operating Cashflow per share* For personal use only Cash generation from the business continues to be very strong $0.70 $0.60 $0.50 $0.40 H2 $0.30 H1 $0.20 $0.10 $0.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Calculated as Net Cash from Operations ÷ No shares on i
Slide 12: IRESS Group Outlook
Half Year Results | June 2010 IRESS Group Outlook For personal use only • Re-emerging growth in 2010 • Improving conditions, caution remains. • Canada and Wealth Management overweight contributions in H1. • Gradual restoration of cost base over 2010 moderating result. • Trading into H2 2010 • Trend
Slide 13: Daily Trades on the ASX
Half Year Results | June 2010 Daily Trades on the ASX For personal use only 1000 900 800 700 600 500 400 300 200 100 0 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Value of Trades Number of Trades Up to July 2010 12
Slide 14: Financial Markets – Australia & NZ
Half Year Results | June 2010 Financial Markets – Australia & NZ For personal use only • Re-emerging result following flat prior half • Revenue increased 2.7% on H2 2009 • EBITDA increased 0.6% on H2 2009 • Net revenue growth sustained during H1, upper-end of expectations: • New revenue across scree
Slide 15: Change in Australia Financial Markets Revenue
Half Year Results | June 2010 Change in Australia Financial Markets Revenue For personal use only 4.0 3.0 $A Millions 2.0 1.0 - H1'05 H1'06 H1'07 H1'08 H1'09 H1'10 (1.0) (2.0) News, Royalty & Comms Other Hardware/DR Trading Services IRESS + Services 14
Slide 16: Financial Markets – 2010 IOS+ progress
Half Year Results | June 2010 Financial Markets – 2010 For personal use only • IOS+ progress • Major institutional OMS enhancements nearing rollout • ASIC short net position reporting in production • IOS+ retail platform with webIRESS and international execution in production • Support for options i
Slide 17: Financial Markets – Multi-markets
Half Year Results | June 2010 Financial Markets – Multi-markets For personal use only • Regulatory update: • Regulatory transition from ASX to ASIC complete. • Suggested new licence timing is now early 2011. • Await ASIC consultation paper on multi-market operating rules including best execution reg
Slide 18: Australia Financial Markets – Monthly Subscription Revenue
Half Year Results | June 2010 Australia Financial Markets – Monthly Subscription For personal use only Revenue 7.0 6.5 6.0 5.5 $A Millions 5.0 4.5 4.0 3.5 3.0 2.5 2004 2005 2006 2007 2008 2009 2010 Up to August 2010 17
Slide 19: Australia Financial Markets - Outlook
Half Year Results | June 2010 Australia Financial Markets - Outlook For personal use only • 2010 outlook: • Revenue growth has continued into H2, in addition to modest price increase. • Positive momentum into H2 with gradual restoration of cost base expects increased EBITDA growth in H2. • Medium te
Slide 20: Canada - Overview
Half Year Results | June 2010 Canada - Overview For personal use only • Strong result adding to prior half gains • Revenue increased 10.3% on H2 2009 to 11.086m (CAD) • EBITDA increased 8.4% on H2 2009 to 3.721m (CAD) • Many positive client initiatives subdued by difficult conditions emerging late i
Slide 21: Canada – 2010 Institutional order management project
Half Year Results | June 2010 Canada – 2010 For personal use only • Institutional order management project • Initial phase of project finalised and into rollout phase at a large bank-owned dealer. • Now looking to additional opportunities in the space, both functionally and clients. • Growing demand
Slide 22: Canada – 2010 webIRESS
Half Year Results | June 2010 Canada – 2010 For personal use only • webIRESS now available in Canada to source additional opportunities. • Retail IOS+ opportunities • Extending the retail OMS into retail branch locations. • Extended IOS+ for US & Canadian options, and other asset classes. • Actively
Slide 23: Canada – Monthly Subscription Revenue
Half Year Results | June 2010 Canada – Monthly Subscription Revenue* For personal use only 1.6 CAD$ Millions 1.2 Pre-IRESS full production level offering 0.8 0.4 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 *Assumes 100% ownership Up to August 2010 22
Slide 24: Canada - Outlook
Half Year Results | June 2010 Canada - Outlook For personal use only • H2 2010 outlook • Run rate started below prior half average • Cancellations early in half higher than expected from cost cutting, consolidation and increased vendor competition. • Expect H2 to soften with market conditions result
Slide 25: Daily trades in Canada
Half Year Results | June 2010 Daily trades in Canada* For personal use only 1,000 Alpha commenced 900 H2'08 800 Chi-X commenced Common Base from Jan-05 H1'08 700 600 TriAct & Omega commenced H2'07 500 400 Pure Market commenced H1'07 300 200 100 - Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 TSX Value o
Slide 26: Average Daily Trades
Half Year Results | June 2010 Average Daily Trades For personal use only 1.2 0.02 1.0 0.22 0.8 0.17 Millions 0.6 0.4 0.68 0.50 0.2 0.0 CAN AUS TSX CHI-X ALPHA PURE ASX Measured over 8 weeks to 12 August 2010. 25
Slide 27: Comparative Message Rates
Half Year Results | June 2010 Comparative Message Rates (per trade per destination) For personal use only 400 350 300 250 200 346 150 315 100 144 50 75 6 - TSX CHI-X ALPHA PURE ASX CANADA AUS Measured over 8 weeks to 12 August 2010. 26
Slide 28: Financial Markets – Asia
Half Year Results | June 2010 Financial Markets – Asia For personal use only • Our investment in Asian expansion continues to progress well as we engage with many prospective opportunities and continue product development. • Key points: • International market data coverage expanded to now include co
Slide 29: Wealth Management Australia & New Zealand
Half Year Results | June 2010 Wealth Management For personal use only • Australia & New Zealand • Resilient result with revenue up 3.6% and EBITDA up 5.8% on H2 2009 • Positive momentum from prior half sustained in H1 from new and organic opportunities exceeding known client roll-offs. • Demand for
Slide 30: Wealth Management - 2010
Half Year Results | June 2010 Wealth Management - 2010 For personal use only • Redefining business models driving technology demand with themes of transparency, efficiency, growth: • Alignment of business processes with fee for service model seeing demand for technology. • Clients seeking IRESS supp
Slide 31: Wealth Management - 2010
Half Year Results | June 2010 Wealth Management - 2010 For personal use only • More insurers added to Risk Research real-time premium validation. • Referral Portal used to connect referral communities electronically to XPLAN. • Integration to 3rd party service providers: payment systems, electronic
Slide 32: Wealth Management – Asia
Half Year Results | June 2010 Wealth Management – Asia For personal use only • Key module localisation underway to cater for opportunities in the region. • Platform integration for prospective requirements now in testing. • Multilanguage support now in place in XPLAN. • Development of XPLAN-integrat
Slide 33: Wealth Management – Aust & NZ Monthly Subscription Revenue
Half Year Results | June 2010 Wealth Management – Aust & NZ Mthly Subscription Rev For personal use only 3.5 3.0 2.5 $A Millions 2.0 1.5 1.0 0.5 0.0 2004 2005 2006 2007 2008 2009 2010 Up to August 2010 32
Slide 34: Wealth Management Outlook
Half Year Results | June 2010 Wealth Management Outlook For personal use only • Australia & New Zealand • Growth has continued into H2, at higher end of expectation given redefining period. • Efficiency and repositioning for growth are key drivers for activity. Not across the board given diversity o
Slide 35: Supplementary Information: Opex Overview
Half Year Results | June 2010 Supplementary Information: For personal use only • Opex Overview • Headcount • Strategic charges • Non-Recurring items / Capex • Share Grants 34
Slide 36: Review of Group Opex
Half Year Results | June 2010 Review of Group Opex For personal use only Fin Mkts - Canada (Assumes 100% Ownership) 14 Fin Mkts - Aust 5 12 10 4 CAD m $Am 8 3 6 2 4 2 1 0 0 H1'05 H1'06 H1'07 H1'08 H1'09 H1'10 H1'05 H1'06 H1'07 H1'08 H1'09 H1'10 Comms & Other General Administration Occupancy Hardware
Slide 37: Headcount & Direct Staff Costs
Half Year Results | June 2010 Headcount & Direct Staff Costs* For personal use only 600 Full time equivalent staff 500 400 300 200 100 - H1'05 H1'06 H1'07 H1'08 H1'09 H1'10 Fin Mkts Aust Fin Mkts Canada Fin Mkts Asia Wlth Mgt Aust Wlth Mgt RSA Wlth Mgt Asia 30 25 20 $A Millions 15 10 5 0 H1'05 H1'06
Slide 38: Strategic Charges - Amortising
Half Year Results | June 2010 Strategic Charges - Amortising For personal use only Amortising intangibles arising through acquisitions C ost (AUD) Description $m Am ortisation period Canada Fin Mkts Reuters Commission Charge 3.479 3 years (ended Feb 10) Visiplan Software 36.710 5 years (ending Mar 1
Slide 39: Anticipated Future Strategic Charges
Half Year Results | June 2010 Anticipated Future Strategic Charges For personal use only Assumes no goodwill impairment is identified in future periods Description H1 '1 0 H2 '1 0 H1 '1 1 H2 '1 1 H1 '1 2 H2 '1 2 H1 '1 3 H2 '1 3 Reuters Commission Charge 0.073 - - - - - - - Visiplan Software 3.671 3.
Slide 40: Non-Amortising Intangibles
Half Year Results | June 2010 Non-Amortising Intangibles For personal use only C ost (AUD) Description $m Am ortisation period Canada Fin Mkts LP Goodwill 9.666 Plantech Goodwill 3.449 Visiplan Goodwill 10.695 Wealth Mgt Aust Goodwill Transactive Goodwill 0.285 Will be subject to regular DMS Goodwil
Slide 41: Non-Recurring items
Half Year Results | June 2010 Non-Recurring items For personal use only • Non-Recurring Expenses / Contribution • Non-Recurring Contribution of $0.174m for the period (H2’09: $0.121m) • Primarily relates to realised exchange gains/losses on foreign currency items. • CAPEX • $1.439m for the period. N
Slide 42: Non-Recurring items (cont)
Half Year Results | June 2010 Non-Recurring items (cont) For personal use only • Tax Expense • Favourable impact from once off items produced an effective tax rate of 16.2% (2009: 23.2%). • Arises primarily from payments related to employee share grants, and is considered non- recurring (see next sl
Slide 43: Share Grants
Half Year Results | June 2010 Share Grants For personal use only • Value of share grants made in May 2010 closer to historical levels. • Expense (P&L) in 2010 aligns more closely with grant value, as the migration from 3 year performance rights to 2 year deferred shares completed effective May 2010.
Slide 44: IRESS Market Technology
MARKET TECHNOLOGY www.iress.com.au
IRESS Market Technology — H1 2010 Earnings Presentation on 6ix