Slide 1: Information for Release to the Market
ASX Market Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 21 February 2019 IRESS LIMITED - INFORMATION FOR RELEASE TO THE MARKET As required by the Listing Rules, IRESS encloses for release to the market a presentation to be provided to investors today at 09.30 relating to the com
Slide 2: 2018 Full Year Results
2018 Results Full Year 21 February 2019 For the year ended 31 December 2018 iress.com 1
Slide 3: Agenda
Agenda Who we are 3 2018 results 8 Segment overview 13 Financial information 22 2019 Outlook 27 Appendices 30 Andrew Walsh John Harris Managing Director & CEO Chief Financial Officer iress.com 2
Slide 4: Who we are
= = 1) 77) 17) Who-we-are
Slide 5: World-leading solutions for trading & market data, advice, super and lending
World-leading solutions for trading & market data, advice, super and lending ● IRESS (IRE.ASX) is an independent financial technology provider of trading and market data, advice, superannuation and lending solutions ● Recurring subscription revenue accounts for approximately 90% of total revenue ● 9
Slide 6: Robust business model underpins market-leading positions
Robust business model underpins market-leading positions Open and modular software solutions that are central to our clients’ business Subscription-based model with ~90% revenue recurring Market-leading product functionality and focus on user experience Targeted investment to constantly enrich solut
Slide 7: Growth drivers & strategic priorities
Growth drivers & strategic priorities Key drivers of growth Increasing regulatory Market consolidation Demand for broader Demand for software Increasing requirements increasing business integrated solutions to that increases demand for complexity enable client business efficiency and reduces advice
Slide 8: Strong track record of delivering sustainable returns for shareholders
Strong track record of delivering sustainable returns for shareholders Operating revenue Segment profit NPAT Operating cash flow Earnings per share Dividend per share Notes: 2011 results impacted by acquisition of Peresys 2013 results impacted by acquisition of Avelo (one-off costs and issue of shar
Slide 9: 2018 Results
iress.com 8 2018 Results
Slide 10: 2018 financial highlights
2018 financial highlights Revenue growth: +8% (constant currency: +6%) Growth driven by Australia and the UK Group Segment Profit growth: +10% (constant currency: +8%) Ahead of 2018 guidance (3-7% constant currency Segment Profit growth). Margin +1% ANZ Wealth Management revenue growth: +9% Good rev
Slide 11: +8% reported revenue growth and positive operating leverage
+8% reported revenue growth and positive operating leverage $AUDm - Reported 2017 2018 Change ● Revenue growth of +8% (+6% constant Operating Revenue 430.0 464.6 +8% currency) reflects strong overall Segment Profit 125.4 137.7 +10% performance, with stronger second half performance in the United Kin
Slide 12: Segment summary - double digit reported segment profit growth
Segment summary - double digit reported segment profit growth Reported Currency Constant Currency Segment ($AUDm) 2017 2018 Change Change Revenue ● Key contributors to constant currency revenue growth of +6% were ANZ WM, UK and Lending. APAC FM 115.1 115.6 - - ANZ WM 125.1 136.4 +9% +9% ● ANZ WM, UK
Slide 13: Key 2018 strategic achievements
Key 2018 strategic achievements To be essential to Identify and deliver Service clients exceptionally our clients’ success through scale benefits continued product investment ● Strong ongoing progress with client projects ● Continuous delivery improving upgrade ● New digital personal advice product
Slide 14: Segment overview
iress.com Segment 13 overview
Slide 15: APAC Financial Markets
APAC Financial Markets Despite ongoing challenging macro environment, strong execution ensures resilient earnings. AUD (m) 1H17 2H17 2017 1H18 2H18 2018 2018/2017 ● 2018 revenue was marginally up on 2017, with buy-side demand and client delivery Operating Revenue 57.5 57.5 115.1 56.9 58.7 115.6 0% s
Slide 16: ANZ Wealth Management
ANZ Wealth Management Strong growth across wealth, superannuation and data analytics solutions reflects underlying demand in changing industry. AUD (m) 1H17 2H17 2017 1H18 2H18 2018 2018/2017 ● Strong revenue growth of +9%, underpinned by ongoing demand for technology efficiency Operating Revenue 61
Slide 17: Diversity and strength in IRESS' Australian retail client base
Diversity and strength in IRESS’ Australian retail client base Distribution of Australian retail revenue - 2018 ● IRESS well placed to assist clients navigate regulatory and industry change. Compliance is a clear priority over productivity at this time. ● Super fund strategies increasingly focused o
Slide 18: United Kingdom
United Kingdom Significant client activity in the second half driving revenue growth. GBP (m) 1H17 2H17 2017 1H18 2H18 2018 2018/2017 ● Good progress on a number of key client projects delivered +7% revenue growth, with Operating Revenue 30.7 31.7 62.3 32.4 34.3 66.7 +7% increased momentum in the se
Slide 19: Lending
Lending Building subscription model as scale business from UK to Australia. GBP (m) 1H17 2H17 2017 1H18 2H18 2018 2018/2017 ● Operating revenue growth of +15% was weighted to the first half due to timing of Operating Revenue 6.4 7.6 14.0 8.4 7.6 16.1 +15% client project activities. Direct Contributi
Slide 20: South Africa
South Africa Investment in expanding product capability and a significant new client win to drive revenue growth in 2019. ZAR (m) 1H17 2H17 2017 1H18 2H18 2018 2018/2017 ● Operating Revenue growth of +4% despite flat second half, reflects demand for Operating Revenue 219.3 218.5 437.8 228.4 228.3 45
Slide 21: Canada
Canada Recurring revenue growth driven by continuing momentum in wealth. CAD (m) 1H17 2H17 2017 1H18 2H18 2018 2018/2017 ● Marginal revenue growth reflects wealth deployments and net client retention. Market Operating Revenue 8.5 9.1 17.6 8.8 9.1 17.9 +1% continues to face pressure, sell-side client
Slide 22: Functional segments
Functional segments Focused investment driving positive operational leverage. Product and Technology AUD (m) (1) 1H17 2H17 2017 1H18 2H18 2018 2018/2017 ● Visible increase in operating leverage. Costs flat on 2017 excluding previously disclosed remuneration adjustments. Direct Contribution 53.8 54.5
Slide 23: Financial information
iress.com Financial 22 information
Slide 24: Financial results reflect targeted investment
Financial results reflect targeted investment AUD (m) 2017 2018 Change Targeted non-operating costs in line with guidance: Operating Revenue 430.0 464.6 +8% ● Team restructuring delivering efficiency, quality and operational leverage Operating Costs (304.6) (326.9) +7% ● Changes to non-executive rem
Slide 25: Dividends and new accounting standards
Dividends and new accounting standards Dividend & Franking Outlook Impact of adopting AASB 16 ● Final dividend franked at 40%. FY17 dividends franked 60% ● AASB 16 changes accounting treatment of leases - P&L charge moves out of opex; now expensed through ● Effective tax rate (ETR) lower than expect
Slide 26: Strong cash conversion, conservative balance sheet
Strong cash conversion, conservative balance sheet Balance Sheet ● Cash conversion 94% in line with long term trend. Unbilled income that drove lower 2017 cash AUD (m) Dec 2017 Dec 2018 conversation was billed and paid early in 2018 Total current assets 84.8 91.8 ● IRESS generates significant operat
Slide 27: AWS
AWS AWS Product & technology progress Financial impact IRESS’ cloud strategy ● Total cash savings over 5 years in the order of $5m-10m excluding one off migration costs. ● Focuses on speed and scale benefits. Client deployment tasks that previously took weeks now at click of a button. ● Once-off mig
Slide 28: 2019 Outlook
iress.com 27 2019 Outlook
Slide 29: Strategic priorities in 2019
Strategic priorities in 2019 Service clients To be essential to Identify and deliver Attract and retain the exceptionally our clients’ success scale benefits best people through through continued culture, environment product investment and reward ● Consistent systems and ● Continue to build products
Slide 30: 2019 financial outlook
2019 financial outlook ● IRESS expects reported Segment Profit growth in ● Following targeted and elevated investment in recent 2019 of between 6% and 11% ($146m - $153m), on a years, non-operating costs are expected to be constant 2018 currency basis(1, 2), including the substantially lower in 2019
Slide 31: Appendices
Appendices iress.com 30
Slide 32: Change in reporting in 2019
Change in reporting in 2019 AUD (m) 1H17 2H17 2017 1H18 2H18 2018 2018/2017 ● IRESS will combine the reporting of APAC FM Operating Revenue and ANZ WM from 1H19, to reflect software engineering and operational practices, and Trading and Market Data 57.5 57.5 115.1 56.9 58.7 115.6 - increasingly inte
Slide 33: Depreciation and amortisation
Depreciation and amortisation D&A - Operational 2017 2018 Depreciation Plant & Equipment 8.0 9.2 Amortisation Software (3rd Party Purchased) 4.8 5.2 Total 12.8 14.4 D&A - Acquisition Related 1H18 2H18 1H19 2H19 1H20 2H20 Computer Software Avelo 0.6 0.6 0.3 0.2 0.2 0.2 Proquote & Pulse 0.4 0.4 0.3 0.
Slide 34: Disclaimer
Disclaimer The material in this presentation is intended to be general background information on IRESS Limited and its activities, current at the date of the presentation. The information is provided in summary form and does not purport to be complete. It is not intended to be relied upon as advice
Slide 35: Delivering outcomes today developing for tomorrow
Delivering outcomes today Contact developing Andrew Walsh, CEO John Harris CFO for tomorrow designing +61 3 9018 5800 iress.com for the future iress.com 34