The managing director of IRESS has labelled the company’s 2012 half year results as being overall resilient.
On Friday, IRESS announced an underlying group profit of $27.8 million for the half year ending 30 June 2012, a figure that represents a 7.4 per cent drop on the previous period.
The company also reported a decline in revenue and segment profit from the previous half by 0.8 per cent and 2.3 per cent and from the prior corresponding half a decline by 3.0 per cent and 0.1 per cent, respectively.
“Group revenue growth was flat against the previous half – the impact of positive client technology initiatives offset by cost reductions throughout financial markets,” IRESS managing director Andrew Walsh said.
“This is most noticeable in our broking client base where cost reducing activities are priority in response to low transaction levels.”
The company’s Australian and New Zealand businesses recorded a slight revenue decline of 0.7 per cent on the previous half and a 2.5 per cent decline in segment profits.
“Net revenue growth has maintained a flat profile over the course of the first half. While this doesn’t reflect our operational and strategic activity with clients following the introduction of multi-markets in late 2011, it does bear the impact of cost reductions throughout our financial markets client base,” Walsh said.
“Action by our clients to control costs has been steady and ongoing over the last 12 months and provides an up to date indication of the response by our clients to conditions.”
Conversely, regulatory reforms and repositioning within the wealth management segment continues to drive demand for technology based services, such as IRESS-owned financial planning software Xplan, Walsh said.
“We have continued to work with our clients strategically as part of organic technology initiatives and projects, including the transition from our own and competitor desktop-based products to Xplan,” he said.
“The business experienced revenue growth of 2.5 per cent from the previous half, translating to segment profits increase of 9.5 per cent influenced by some project based revenue. Revenue and segment profit growth from the prior corresponding half were 10.5 per cent and 19.2 per cent respectively.”
Offshore, the company recorded mixed results with revenue from IRESS’s Canadian operations declining by 7.6 per cent. However in South Africa the business experienced positive revenue growth of 4.0 per cent.
Walsh said the company maintains confidence and positive outlook for medium and long-term growth opportunities offered by its operations in Asia and the United Kingdom.
“In contrast to many businesses at this time, our balance sheet strength and financial resilience provide investment capacity over the medium-term, which is currently set at levels of less than 5 per cent of group revenue,” he said.
“We consider this approach and these levels to be appropriately balanced, and position the company well for improved conditions and with sound medium-long term growth platforms.
“We continue to actively consider acquisitions where these make sense to bring forward growth, within the parameters of our longstanding risk profile.”
