Iress Limited · ASX:IRE
Iress — IRESS Market Technology — FY2007 Earnings Presentation
43 slides from Iress's earnings presentation, Feb 25, 2008
Slide 1: ASX lodgement letter: 2007 Full Year Results Investor Presentation
25 February 2008 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 2007 Full Year Results – Investor Presentation Please find attached a copy of an investor presentation on the Co
Slide 2: Results Presentation Full Year to 31 December 2007
For personal use only Results Presentation Full Year to 31 December 2007 February 2008
Slide 3: IRESS 2007 Results
IRESS 2007 Results For personal use only Adjusted Group profit $39.0 million (2006: $29.6m), up 32% Wealth Management transformed by growth & acquisition Canadian revenue growth of 60% & EBITDA positive for H2’07 Reported Group profit $25.5 million (2006: $24.3m) Fully franked final dividend of 16.0
Slide 4: Group Performance
Group Performance For personal use only Adjusted Group Profit $39.019 m Up $9.374 million, 31.6% on PY Segment Contribution against prior year Information Services Contribution $4.172 45% Wealth Management Contribution $5.894 62% Canada $(0.692) (7)% $9.374 100% Final dividend 16.0 cents, fully fran
Slide 5: Segment Performance Against Prior Half
Segment Performance Against Prior Half For personal use only Aus & NZ Equities Operating Revenue up 8.7% (up 18.2% on PY) EBITDA up 5.7% (up 18.2% on PY) PAT up 4.5% (up 14.7% on PY) Wealth Management * Operating Revenue up 72.2% (up 229% on PY) EBITDA up 57.8% (up 297% on PY) PAT up 41.1% (up 292%
Slide 6: Strategic Items
Strategic Items For personal use only Strategic Charges $12.0m for full year As with prior periods we have continued with amortisation of purchased intangibles such as Computer Software The main changes in H2’07 charges were: Full period amortisation charge for Computer Software recognised on acquis
Slide 7: 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 6
Slide 8: Review of Group Recurring Subscription Revenue
Review of Group Recurring Subscription Revenue For personal use only Client & Central RoyaltyComm Rev Rev News Rev 60.0 Sub Rev (non-rec) 50.0 40.0 Sub Rev (Rec) $m 30.0 20.0 10.0 - H1'02 H1'03 H1'04 H1'05 H1'06 H1'07 Aust Equities Canada Equities Wealth Mngt (Aust) Wealth Mngt RSA 7
Slide 9: PCP change in Group Recurring Subscription Revenue
PCP change in Group Recurring Subscription Revenue For personal use only Acquisition of Acquisition of Visiplan business Spotlight business in April’07 14.0 in July’07 12.0 Acquisition of Plantech business 10.0 in Sept’06 8.0 $m Acquisition of Acquisition of 100% existing business as of Canada busin
Slide 10: 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 9
Slide 11: PCP change in Group EBITDA
PCP change in Group EBITDA* For personal use only Acquisition of Visiplan business Acquisition of in April 07 Spotlight business 6.0 in July 07 Acquisition of 5.0 Plantech business in Sept’06 4.0 Acquisition of Acquisition of 100% existing business as of Canada business 3.0 part of Cad JV in in Apri
Slide 12: Relative Impact H2'07
Relative Impact H2’07 For personal use only 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Revenue EBITDA Total Direct Staff Total Strategic Costs Charges Aust Equities Canadian Equities Wealth Mngt Aust Wealth Mngt RSA *Def intion of EBITDA as per IRESS Media Release 11
Slide 13: 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 00 01 02 03 04 05 06 07 08 12
Slide 14: Australian Equities - Revenue
Australian Equities - Revenue For personal use only Half on half growth again replicates prior half Revenue growth across all products: IRESS desktop – as usual major $ contributor IOS - growth mainly client redundancy & FIX interfaces FTS – surprising number of implementations WebIRESS – key contra
Slide 15: Aust Equities – Monthly Subscription Revenue
Aust Equities – Monthly Subscription Revenue For personal use only 6.0 5.5 5.0 $m 4.5 4.0 3.5 3.0 2.5 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 14
Slide 16: PCP change in Aust Equities Revenue
PCP change in Aust Equities Revenue For personal use only 4.0 3.5 3.0 2.5 2.0 $m 1.5 1.0 0.5 - H1'02 H2'02 H1'03 H2'03 H1'04 H2'04 H1'05 H2'05 H1'06 H2'06 H1'07 H2'07 (0.5) IRESS + Services Trading Services Hardware/DR Other News, Royalty & Comms 15
Slide 17: 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 18: Australian Equities – Products / Operations
Australian Equities – Products / Operations For personal use only Upgraded network fully rolled out and addressing record volumes Launched FIX+ (high speed & low latency) AXE ECN & Liquidnet compatible versions of IRESS, IOS ready pending entrants. Chi-X development commencing soon AMI (IOS+ as cent
Slide 19: Wealth Management - Overview
Wealth Management - Overview For personal use only 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 EBITA m
Slide 20: Wealth Management - Revenue
Wealth Management - Revenue For personal use only Aust/NZ revenue run rate : $35m Spotlight (RSA) + PlanTech (RSA) : A$5.7m run rate 2008 – full year impact of acquisitions, EBITDA based on current run rate >$14m Marketing points of difference: Independence a key and unique strength Credible provide
Slide 21: Wealth Management - Aust / NZ
Wealth Management - Aust / NZ For personal use only Risk Researcher integrated with XPLAN & Visi Continued enhancement of Visi suite for key clients Asteron joins Zurich on AppCentral more to come Integrated CommPay commission system released Asgard licenses XPLAN modelling for platform Supersolver
Slide 22: Wealth Management - South Africa
Wealth Management - South Africa For personal use only Spotlight is the leading provider in South Africa with a large installed user base (16,000) and strong established client relationships Spotlight will continue to provide client support and development locally Growth opportunities exist Extendin
Slide 23: Wealth Management – Monthly Subscription Revenue
Wealth Management – Mthly Subscription Rev For personal use only 4.0 Acquisition of Spotlight in Jul’07 3.5 3.0 Acquisition of Visiplan business in Apl’07 m 2.5 $ 2.0 Acquisition of PlanTech business in Sept’06 1.5 1.0 0.5 0.0 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 22
Slide 24: PCP change in Financial Planning Subscription Revenue
PCP change in Financial Planning Subscription Revenue For personal use only 8.0 Acquisition of Spotlight Jul’07 7.0 6.0 Acquisition of 5.0 Visiplan Apl’07 $m 4.0 3.0 Acquisition of Plantech Sept ‘06 2.0 1.0 - H1'03 H1'04 H1'05 H1'06 H1'07 Xplan Plantech Visiplan South Africa 23
Slide 25: 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 26: Canada - Overview
Canada - Overview For personal use only Meeting the challenges: internal challenges around cut-over of the REUTERS CX user base and the external challenges posed by significant changes in the Canadian market environment. Revenue growth on an annualised run rate basis moved from C$8.3m in January to
Slide 27: Canada Business - Highlights
Canada Business - Highlights For personal use only 90% plus conversion of CX Order Entry user base. Release of smart order router to manage new trading venues. New primary data centre co-located with TSX brought on line. FIX+ high speed DMA solution in production. KTA+ enhanced IRESS technology repl
Slide 28: Canada - Outlook
Canada - Outlook For personal use only CX OMS roll-out has been completed (by end of Feb) with significant extra revenue as these customers move to billing Business now materially EBITDA positive at around $C3m annualised Poised to make a significant contribution to IRESS results in 2008. Following
Slide 29: Canada Longer Term Outlook
Canada Longer Term Outlook For personal use only 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 Existing strate
Slide 30: Canada – Monthly Subscription Revenue
Canada – Monthly Subscription Revenue* For personal use only 1.0 0.9 CAD $m 0.8 0.7 Pre-IRESS full production level offering 0.6 0.5 0.4 Apr-04 Apr-05 Apr-06 Apr-07 * Assumes 100% ownership 29
Slide 31: 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 30
Slide 32: Review of Group Opex
Review of Group Opex For personal use only 12 Aust Equities 5 Canada Equities (Assumes 100% Ownership) 10 4 8 $m 3 $m 6 2 4 2 1 0 0 H1'03 H1'04 H1'05 H1'06 H1'07 H1'03 H1'04 H1'05 H1'06 H1'07 Total Direct Staff Costs (Inc AL) Other Employee Related Expenses Hardware & Software Expenses Occupancy Exp
Slide 33: 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 34: 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 35: Dividends
Dividends For personal use only Final Dividend 16.0 cents (26.0 cents full year) Fully franked Payable 28th March 2008 24% growth in dividend Franking credit balance $19.887m (Dec 2006: 14.553m) 34
Slide 36: Non-Recurring Items
Non-Recurring Items For personal use only Non Recurring $(1.080)m for full year Comprises: VisiPlan Rationalisation Expenses $(0.145)m Other transaction related costs $(0.322)m Premises relocation expenses Duplicate location rental expense* $(0.380)m Consultant related expenses $(0.171)m Net Forex L
Slide 37: EBITDA growth v PBT growth in H2'07
EBITDA growth v PBT growth in H2’07 For personal use only Flow through from EBITDA to PBT was impacted by: Increased Depreciation from: Client directed equipment & 3rd party software Data Centre Canada Microsoft re-rated SQL licensing Internal Lease fit-outs in Melbourne, Sydney & Brisbane (previous
Slide 38: Share Based Payments
Share Based Payments For personal use only The total $ value of the pool made available for LTIs in any period is a function of the prevailing wages expense. In calculating the quantum of grants made the total $ of the pool is divided by the accounting value ascribed to each series. As a consequence
Slide 39: Share Based Payments (Cont)
Share Based Payments (Cont) For personal use only SBP Expense ($m) Dec 2007 Jun 2008 Dec 2008 Jun 2009 Dec 2009 Jun 2010 2004 Series - - - - - - 2005 Staff Series 0.540 0.382 - - - - 2005 MD Series 1 0.130 0.118 0.093 0.084 0.066 0.046 2005 MD Series 2 0.304 0.280 0.232 0.196 0.120 0.083 2006 Staff
Slide 40: CAPEX
CAPEX For personal use only CAPEX was unusually large during the year Key items were: Client network related equipment Markham & Downtown data centres in Canada C$1.630m Leasehold improvements, Computer, Comm’s equipment etc: Relocation Sydney, Melbourne and Brisbane (due to growth of operations) A$
Slide 41: Strategic Charges
Strategic Charges For personal use only Intangibles arising through the acquisition of a business or company Cost (AUD) Tax Description Amortisation period $m Deductible Xplan Software 11.034 5 years (ending Mar 08) Yes Plantech Software 11.440 3 years (ending Oct 09) Yes Wealth Management Plantech
Slide 42: Estimated future strategic charges
Estimated future strategic charges For personal use only Description H1'07 H2'07 H1'08 H2'08 H1'09 H2'09 H1'10 H2'10 Xplan Software 1.070 1.070 0.478 - - - - - Plantech Software 1.907 1.907 1.907 1.907 1.907 0.953 - - Wealth Management Plantech Goodwill - - - - - - - - Aust Visiplan Software 1.385 3
Slide 43: Market Technology
MARKET TECHNOLOGY A.B.N. 47 060 313 359
IRESS Market Technology — FY2007 Earnings Presentation on 6ix