Iress Limited · ASX:IRE
Iress — Investor Day (April 2023)
40 slides from Iress's investor day presentation, Apr 20, 2023
Slide 1: Taking Iress to its next growth horizon
Investor Day Presentation Taking Iress to its next growth horizon 20 April 2023
Slide 2: Disclaimer
Disclaimer The material in this presentation is intended to be general background information These risks include domestic and international economic conditions, exchange To the maximum extent permitted by law, Iress and its Related Parties disclaim any on Iress Limited and its activities, current a
Slide 3: Agenda
Agenda Topic Speaker Page Welcome Kelly Fisk 4 Chair’s address Roger Sharp 5 Strategy overview Marcus Price 7 Transformation roadmap Ana Smith 24 Meet the leaders Kelly Fisk 26 Financial metrics and guidance Marcus Price, John Harris 29 Q&A Michael Brown 39 3
Slide 4: Welcome
Welcome 4
Slide 5: Chair's Address
Chair’s Address 5
Slide 6: Chair's Address: Iress vision and financial goal
Chair’s Address Iress vision Innovative technology company which connects and empowers millions to generate and manage wealth Iress group financial goal Consistently achieve ‘Rule of 40’ returns for shareholders and build new businesses that achieve ‘Rule of 40’ returns 6
Slide 7: Strategy Overview
Strategy Overview 7
Slide 8: What you will hear today
What you will hear today Structure for accountability and performance 1 ● New P&L, BU-driven structure ● New performance remuneration framework ● New transparent reporting framework ● New path to enterprise improvement - 2025 targets no longer appropriate Reset 2 Cost and assets ● $32m in cost reduc
Slide 9: Iress overview
Iress overview Iress provides essential technology to the Australian financial services industry Established in 1993 Listed on ASX since 2000 Financial advice Trading & market data Super 37,584 Australian Xplan users 3.2b trade orders annually 3m+ member accounts Up 10% Avg 21,000 digital advice jour
Slide 10: Iress' performance has declined despite acquisitions and top line growth
Iress’ performance has declined despite acquisitions and top line growth Revenue & balance sheet CAGR over era (1993-2006) Era 2 (2007-2017) Era 3 (2018-2022) 1,000 6% 20% Invested Capital 1 65% 19% Total revenue 500 7% 12% 0 Profitability Excludes FY22 non-op items 100 20% 8% -6% NOPLAT 50 0 Econom
Slide 11: 'Rule of 40': benchmark for leading software companies
‘Rule of 40’1: benchmark for leading software companies EBITDA Margin (%) 40% Above ‘Rule of 40’ Below ‘Rule of 40’ Revenue Growth YoY (%) 40% 1 ‘Rule of 40’ proxy being the sum of Revenue Growth + EBITDA Margin % 11 Source: Public data
Slide 12: Iress' core businesses are above or on a path to the 'Rule of 40'
Iress’ core businesses are above or on a path to the ‘Rule of 40’⁽¹⁾ ANZ Wealth Management 40% APAC Trading & Global Market Data Pursue organic growth EBITDA Margin (%) Organic growth and operating leverage Manage Super Revenue Growth YoY (%) 40% ⁽¹⁾ ‘Rule of 40’ being the sum of Revenue Growth + EB
Slide 13: Strategy Overview: Six big jobs
Strategy Overview Six big jobs to deliver on potential Structure for accountability and 1 improved performance Reset 2 Reset the cost and asset base 3 Refocus on the core Refocus 4 Manage portfolio for value 5 Finish technology uplift Build 6 Build new businesses 13
Slide 14: Reset | Structure for accountability and improved performance
1 Reset | Structure for accountability and improved performance New structure based on business units with P&L accountability ● Clear product-led P&L Group CEO ownership driving end-to-end accountability CEO Wealth CEO Trading & CEO Managed and improved CEO Super Corporate Functions Management Marke
Slide 15: Reset | New performance-based remuneration framework
1 Reset | Structure for accountability and improved performance Introduction of new performance-based remuneration framework ● Existing remuneration framework (including Equity Rights and Performance Rights) to be replaced ● Remuneration framework to be refreshed in line with market norms and expect
Slide 16: Reset | Reset cost and asset base
2 Reset | Reset cost and asset base Resetting of costs and asset base to improve efficiency Program of cost savings through headcount reduction: ● $32m annualised savings (~10% of group headcount costs)⁽¹⁾ by 30 June ● Current elevated levels of technology project work in non-operating items will come
Slide 17: Refocus on core: Wealth Management
3 Refocus | Refocus on core: Wealth Management Positive outlook for Australian Wealth Management industry with large unmet need Industry trends Strengthen the core Innovate to grow ● 12m1 Australians want advice but ● Strong market position in ● Advice firms seeking greater scale can’t access it. Aus
Slide 18: Refocus on core: Trading & Market Data
3 Refocus | Refocus on core: Trading & Market Data Maintain and enhance leading position in core AU trading; emerging opportunities in data Industry trends Strengthen the core Innovate to grow ● Global trading infrastructures ● Leading position in core Australian ● Clients seeking differentiation re
Slide 19: Refocus on core: Superannuation
3 Refocus | Refocus on core: Superannuation Scaling up to win the wave of automation in super administration Industry trends Strengthen the core Innovate to grow ● Super assets under management ● Super funds shifting from manual ● Iress expanding digital member forecast to reach $8.6trn over next to
Slide 20: Manage portfolio businesses for value
4 Refocus | Manage portfolio businesses for value Focus on empowering management with the tools of private equity Strengthen the core Drive organic growth Manage for value Mindset Market Leader Market Builder Private Equity Strategy Maintain existing high market Capture market opportunities Empower
Slide 21: Build | Finish technology uplift program
5 Build | Finish technology uplift program Transition to platform architecture and cloud optimisation program to be completed by Q1 2024 Work completed Final items to finish Program extension to ● Technology platform design ● Migrate and optimise improve client experience complete and single addition
Slide 22: Build | Innovate to drive future growth
6 Build | Innovate to drive future growth Iress will innovate and build new organic business development opportunities in Wealth, Data/AI and Trading Innovation discipline Grow next generation of capabilities ● Additional growth opportunities beyond organic ● Immediate opportunities focused on growt
Slide 23: Strategy overview: Six big jobs
Strategy overview Six big jobs to deliver on potential Structure for accountability and improved 1 performance Iress vision Reset Innovative technology company, connecting 2 Reset the cost and asset base and empowering millions to generate and manage wealth 3 Focus on the core Refocus 4 Manage portf
Slide 24: Transformation Roadmap
Transformation Roadmap 24
Slide 25: Transformation Roadmap - disciplined execution to deliver benefits
Transformation Roadmap - disciplined execution to deliver benefits Iress has a disciplined and rigorous transformation plan to execute the strategy Transformation Governance Iress Board Governance Executive Transformation Steering Committee Transformation Execution Transformation Execution Office Team
Slide 26: Transformation Roadmap - disciplined execution to deliver benefits
Transformation Roadmap - disciplined execution to deliver benefits Iress has a disciplined and rigorous transformation plan to execute the strategy Transformation Governance Transformation Roadmap 2023 2024 Iress Board Governance H1 H2 H1 H2 Corporate Business Iress Strategy Strategy Unit 5 Year Plan
Slide 27: Video: Innovation showcase
Video: Innovation showcase 27
Slide 28: Meet the leaders
Meet the leaders 28
Slide 29: Meet the leaders
Meet the leaders Harry Mitchell Jason Hoang Paul Giles John Harris CEO CEO CEO CEO Wealth Management Trading & Market Data Superannuation Managed Portfolio 29
Slide 30: Financial metrics & guidance
Financial metrics & guidance 30
Slide 31: Core and Manage Portfolio Businesses - Financial Profile
Core and Manage Portfolio Businesses - Financial Profile 2022 actuals Core Manage Group Revenue $357m $261m $618m Revenue Growth⁽¹⁾ 6% 0% 4% Underlying EBITDA Margin 30% - 35% 8% - 15% 24% Underlying EBITDA⁽²⁾ $106m - $124m $21m - $39m $146m ⁽¹⁾ 2022 vs 2021 growth rates ⁽2⁾ 2022 figures. EBITDA figure
Slide 32: Core and Manage Portfolio Businesses - Financial Profile
Core and Manage Portfolio Businesses - Financial Profile 2022 actuals Core Manage Group Non-Current Assets ⁽¹⁾ $306m $447m $754m Non-Current Assets $300m $330m $630m (adjusted for impairment)⁽¹⁾⁽2⁾ Indicative Underlying 2022 $64m - $78m ($7m) - $7m $71m NPAT⁽3⁾ Indicative Underlying 2022 ROIC 23% - 2
Slide 33: Changes to External Reporting Segments
Changes to External Reporting Segments Effective from 2023 annual results, the business will be making changes to segment reporting to support the new organisation structure. Restated financials for new structure will be provided later in the year. Existing APAC UK & Europe Mortgages South Africa Ame
Slide 34: Capital Allocation Framework
Capital Allocation Framework Investment grade capital structure Summary debt profile ● Leverage expected to increase in the short term due to technology investments, restructuring and transformation costs ($m) 2021 2022 ● Targeting net debt of 1.5-2.0x in the medium term. Deleveraging driven by dives
Slide 35: 2023 Guidance Update
2023 Guidance Update Pro Forma Segment Segment Profit +10-13% growth v 2022 driven by cost reduction programme ($m) 2023 CC ● Pro Forma Segment Profit +10-13% v 2022 2022 Segment Profit 165 ● Reported Segment Profit +0-3% v 2022 2023 BAU Segment Profit 150-155 ● Going forward, moving away from Segment Co
Slide 36: 2023 Guidance Update - Non Operating Items and NPAT
2023 Guidance Update - Non Operating Items and NPAT Non Operating Items ($m) 2023 CC ● ~$123m1 write down of intangibles, largely Total Non Operating Items ~(184) relating to UK goodwill based on Q1 EBITDA (35)-(40) performance and revised FY23 revenue outlook for that business (non cash) D&A (40) ●
Slide 37: Summary
Summary 37
Slide 38: Core long-term objectives
Core long-term objectives How we’ll be measuring our success Rule of 40 Free cash flow ROIC EPS growth returns generation expansion Employee Client retention NPS engagement 38
Slide 39: Strategy overview: Six big jobs
Strategy overview Six big jobs to deliver on potential Structure for accountability and improved 1 performance Iress vision Reset Innovative technology company, connecting 2 Reset the cost and asset base and empowering millions to generate and manage wealth 3 Focus on the core Refocus 4 Manage portf
Slide 40: Q&A
Q&A 40