Transitioning Iress tightens belt as $115m becomes $52m

Mike Taylor

Managing Editor/Publisher, Financial Newswire

22 August 2023

ANALYSIS

It has been less than three years since Iress acquired OneVue for $115 million. Yesterday the Managed Fund Administration component of that business was sold to SS&C for $52 million.

Iress says the sale of its Platforms business is also underway with the goal of achieving divestment by the end of the year. In both cases, the funds will be used to retire debt.

It will not be lost on Iress shareholders that at the same time as announcing the SS&C transaction, Iress also used its half-year results announcement to declare that it had “made the prudent decision to suspend its interim dividend to reduce debt at a time when it is incurring high one-off costs from the company’s transformation plan”.

At the same time, the company’s announcement to the Australian Securities Exchange (ASX) said that during the next half, Iress’ new chief financial officer, Cameron Williamson, would be leading “a full review of our capital management plan, including Iress’ approach to debt, dividend and R&D.

So a lot has changed since the OneVue transaction and belt-tightening has become the order of the day, with the company announcing that after taking independent advice, it would be “restructuring its its remuneration program to drive business unit and improved performance”.

That restructuring will see Equity Right being discontinued and replaced by performance-driven STIs with performance rights being replaced by Share Appreciation Rights which will be based on post-resulted Volume Weighted Average pricing.

The bottom line is that Iress’ half-year result announcement was an ugly one with net profit after tax down 557% with EBITDA down 55%.

Speaking to the result, Iress chief executive, Marcus Price sought to emphasise the cost of a strategic transition stating that in April the company had “laid out six big jobs to reset Iress’ cost and asset base”.

He said the key result had been a $47 million saving in annual gross costs and the realisation of the $52 million from the sale of the Managed Funds Administration (OneVue) business.

The bottom line, however, is that the Iress OneVue acquisition is now in tatters along with the expressed ambition that it might deliver “end-to-end investment infrastructure” enabling “industry and investors to transact and report seamlessly” via ‘infrastructure as a service”.