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Fintech player IRESS Limited (ASX:IRE) today announced its financial results for the Fiscal Year ended 31 December 2018. The stock price climbed up more than 3% after the company reported 7% growth in Groupâs Net Profit After Tax (NPAT) of $64.1 million, compared to 2017.
Groupâs 2018 Operating Revenue grew 6% to $454.3 million on a constant currency basis, reflecting the strong performance of ANZ Wealth Management and the United Kingdom divisions which delivered growth of 9% and 7% respectively.Â
On a reported basis, Segment Profit increased 10% from $125.4 million in 2017 to $137.7 million in 2018, reflecting revenue growth, margin improvement from increasing operating leverage, and favourable foreign exchange movements. For the Fiscal Year 2019, the company expects reported Segment Profit growth to range within 6-11% on a constant currency basis.
In Asia-Pacific Financial Markets, the company witnessed marginal revenue growth in 2018, reflecting a flat result in Australia amidst challenging market conditions building pressures on sell-side revenue. However, the demand for IRESS portfolio has gained accelerating interest from retail broking clients in Australia for an integrated solution across wealth and trading to help deliver across the needs of its clients.
ANZ Wealth Management revenue increased 9% from $125.1 million in 2017 to $136.4 million in 2018, driven by the launch of financial planning and wealth management software XPLAN. Moreover, its lending division has reported as high as 20% growth in revenue from 2017 to 2018. This reflects increased pre-sales and implementation activity and recurring licence fee revenue earned by the company during 2018.
On the cost front, the company managed to maintain Product and Technology costs at 25% of operating revenue in 2018. Its costs increased 5% from $108.3 million in 2017 to $114.2 million in 2018 on a reporting basis. The ongoing investment in product and technology is at the heart of IRESSâ success, supporting client retention and future recurring revenue growth.
In respect of 2018 earnings, IRESSâ Directors declared a final dividend of 30.0 cents per share franked to 40%, bringing the full year 2018 dividend to 46.0 cents per share. The Basic Earnings Per Share (EPS) for the company grew 6% to 35.4 cents per share for the year ended 31st December 2018.
During the year, the company completed the refurbishment of the Melbourne office which resulted into the increase in the value of plant and equipment held on the balance sheet from $19.77 million in 2017 to $30.85 million in 2018. IRESS has also increased its interest in Lucsan Capital Pty Ltd 100% in April 2018, up from the previous 15% interest in 2017. On the overall front, the company posted strong fundamentals with cash conversion of 94%, recurring revenue ~90%, net debt balance $174.7 million representing a conservative leverage ratio of 1.3x Segment Profit.
IRE stock price edged up by 3.548% to last trade at $12.840 on 21 February 2019. Over the past 12 months, the stock has gone up by 8.49% including a positive price change of 11.41% in the past three months.
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