2020 Annual Report
What do we do?
We provide
technology to power
financial services.
What’s our purpose?
We believe technology should help
people perform better every day.
What are we trying to do?
Make it easy for people to love
financial services.
If we get there, what will
we become?
The essential partner for forward-thinking
financial services businesses.
Our strategic focus for investors,
clients, users and employees
The quality, competitiveness and relevance of
our technology have successfully driven Iress’
long-term growth. The current drivers of industry
growth, including regulatory requirements,
automation and data, mean Iress is well placed
for continued success.
Key drivers of growth
Increasing regulatory
requirements.
Increasing business
complexity and
industry change.
Demand for
inter-connected
software and services.
Demand for data
solutions for
compliance, intelligence
and growth.
Demand for
efficiency through
automation.
Strategic priorities
Attract and retain the
best people.
A continued focus on
operational efficiency
and quality.
Targeted investment
in data services,
cloud technology
and connectivity.
Service clients
exceptionally.
Deliver a compelling
user experience.
Cover image credit: Ketut Subiyanto
01
In this report
2020 highlights
Business overview
Chair & CEO’s letter
Iress leadership
Wellbeing & technology assume centre stage
Iress Foundation
Board of directors
Material business risks
Impact of COVID-19 on Iress
Operating & Financial Review
Directors’ Report
Auditor’s Independence Declaration
Financial Statements
Directors’ declaration
Independent Auditor’s Report
Shareholder information
Corporate directory
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AGM details
Subject to COVID-19
requirements, the AGM
will be a hybrid event,
with the option to attend
online or in person on:
Thursday 6 May 2021
11.30am AEST
RACV Club
501 Bourke Street
Melbourne, Australia
Image credit: Yan, from Pexels
02
Iress Limited Annual Report 2020
2020 highlights
Financial
Shareholder
Operating revenue AUD (m)
Sustainable return for shareholders
$542.6
7%
7%
On a constant
currency basis v 2019
On a reported
currency basis v 2019
Segment Profit
AUD (m)
Earnings per share
AUD (cents)
Net Profit After Tax
AUD (m)
$152.9
32.3c
$59.1
$542.6
Dividend per share
AUD (cents)
46.0c
2019
2020
$508.9
$542.6
2018
2019
2020
Operating cash flow AUD (m)
Sustainable return
Strong track record of
producing sustainable
returns for shareholders
$124.9
2019
2020
$102.6
$124.9
03
Moving to the cloud
Employee rating score
1,000
90%
Client sites migrated to AWS
Favourable rating of support given
by Iress during the pandemic
(June 2020)
Integrations
New team members by acquisition
228
People welcomed to Iress, following
the acquisitions of BC Gateways,
O&M Systems and OneVue in 2020
550
Iress Community
12,500+
Active users
Increased digital connection for clients
Iress Foundation
7x
Increase in Client Portal users
$373,873
Contributed by Iress Foundation and
Iress people to charitable initiatives
04
Business overview
Iress is a leading technology company,
designing and developing software and
services for the financial services industry.
Iress operates across Asia Pacific, the United
Kingdom & Europe, Africa and North America.
Software & clients
Our clients range from small retail to large
institutional businesses across the financial
services industry.
Our technology sits at the centre of our
clients’ businesses, supporting their core
operations with essential infrastructure and
functionality, helping them deliver to their
clients, members and customers.
Financial advice
Trading and
market data
Investment
management
Software
Integrated financial advice
software offering:
• client management
• business automation
• portfolio data
• research
Global market data and trading
software including:
• market data
• trading interfaces
• order and execution management
• smart order routing
• FIX services
• portfolio management
Global investment management and
trading software including:
• portfolio management
• order and execution
management services
• FIX services
• analytical tools
• connectivity
Superannuation
Mortgages
Superannuation administration
software including:
• fund registry
• digital member portal
Multi-channel mortgage sales and
origination software including:
• automated workflow
• application processing
• connectivity
Life and
pensions
Insurance and pension sourcing
software including:
Clients
• institutional and
independent advisory
• institutional sell-side brokers
• retail brokers
• online brokers
• financial planning tools
• scaled advice journeys
• digital client solutions
• data-driven compliance and analytics
• consent infrastructure-as-a-service
• securities lending
• analytical tools
• algorithmic trading
• market making
• CFD clearing
• post trade solutions
• trading and market data APIs
Integrated software offerings, including:
• market data
• order management
• portfolio management
• client relationship management
• wealth management
• investment managers
• investment platforms
• fund managers
• private client advisers and managers
• wealth managers
• retail platforms
• Funds administration services
including:
• funds registry
• retail platform licensing and technology
• digital advice solutions
• superannuation funds
• fund administration services
Mortgage intermediary
software, including:
• mortgage comparison
• mortgage advice
• lender connectivity
• quoting
• comparison
• application processing
• mortgage lenders
• mortgage intermediaries
• institutional and
independent advisory
• mortgage intermediaries
Iress Limited Annual Report 2020 05
52%
30%
9%
9%
Our locations
Where our people focus
Asia Pacific
UK & Europe
Africa
North America
Product & technology
Client service & support
Corporate
Operations
People across the globe
Revenue
$542.6m
2,333
Clients
9,000
Users
500,000
1,215
Asia Pacific
772
290
56
UK & Europe
Africa
North America
06
Chair & CEO’s letter
2020 was a year like no other—for individuals and for the
world. Never before has our purpose—we believe technology
should help people perform better every day—been as
relevant. As the world’s financial services professionals
started working from their homes, Iress’ technology
demonstrated again how essential it is.
Faced with a global pandemic, Iress
management and the Board set two core
priorities to guide our response: uninterrupted
service delivery to clients and the health and
wellbeing of our people.
We have delivered on these two priorities
throughout the past year. While some of the
countries we operate in are experiencing
periods of relief from government restrictions,
others remain under heavy lockdowns and as
a business we remain vigilant.
Our technology investments in prior periods—
including workplace technology, and cloud
services and digital tools for clients—have
ensured we have been able to meet rapidly
changing client demand. This includes record
trading volumes, heightened demand for
tools such as digital signatures and urgent
software changes such as those needed to
facilitate early release of superannuation.
While the pandemic is not over, Iress has
demonstrated the value of its resilient
business model, the essential nature of what
it offers to clients and users, and its strong
collaborative culture.
The Board and Management are proud of
how our people have responded and adapted
through this period—to help each other and
our clients and users.
Strategic priorities
The pandemic accelerated some trends
but slowed other areas of demand as
clients re-prioritised. Our strategic priorities
continued to be critical to achieving
our goal of being the essential partner
for forward-thinking financial services
businesses. We continue to make strong
progress against each of our strategic
priorities:
• To attract and retain the best people.
• A continued focus on operational efficiency
and quality.
• Targeted investment in data services, cloud
technology and connectivity.
• Service clients exceptionally.
• Deliver a compelling user experience.
Attracting and retaining the best people
sits at the core of successful technology
companies. Iress’ employee engagement
rates have continued to improve in recent
years, and our current and former employees
rate us highly versus technology competitors
on sites such as Glassdoor. Operational
efficiency and leverage is critical to all
aspects of our business, including financial
outcomes, but also increasingly for client
and user experience. We are seeing this
in our financial performance, and in client
and user feedback, where investment in our
technology platforms are driving consistent,
high quality deployment at scale. Our
progress in migrating clients to cloud is
strong with approximately 1,000 client sites
migrated during the year.
Servicing clients exceptionally and delivering
a compelling user experience is at the heart
of Iress. The addition of two executives during
2020, Joydip Das as Chief Product Officer
and Michael Blomfield as Chief Commercial
Officer, will continue to drive a client and
user-centred culture.
Financial results
We are pleased to report 2020 results
ahead of reinstated guidance, aided by
good momentum in the fourth quarter. 2020
pro forma Segment Profit was $155.6m, 5%
ahead of 2019. A year into the pandemic,
these results highlight the strength of Iress’
businesses and the improving returns on our
growth investments.
Recurring revenue, which underpins our
group, increased by 8%, making up over
90% of total revenue. Cash conversion
moved up to 108% (87% in pcp) and pro forma
return on invested capital remains strong
at 10%. The group generated $114m of free
cash flow allowing us to continue to invest
in technology and product development
to sustain long-term growth. Including the
successful capital raise in May, net debt fell
by 36%.
APAC was a stand-out performer with revenue
up 10%. Our strong Australian businesses
continue to deliver growth with consistently
high returns. We made good progress in
executing our growth strategies including
turning QuantHouse to monthly profitability
and in providing Australian super funds with
a highly efficient, outsourced administration
solution. In the UK though, we have been
affected by restrictions relating to the
pandemic. While our significant growth
opportunity remains intact, project timing
and new business development have been
delayed with revenue growth deferred.
2021 has started well for Iress and we have a
positive outlook. For 2021 we expect to deliver
Segment Profit in constant currency between
the range of $164m and $168m including
OneVue and ROIC of between 9% and 10%.
Guidance assumes organic growth and
improving returns on growth investments,
underpinned again by 90%+ levels of
recurring revenue.
Your dividend
The final dividend is 30 cents per share,
franked to 40% bringing the full year 2020
dividend to 46.0 cents per share, franked to
38% (average weighted). Iress continues to
maintain a conservative balance sheet at a
leverage ratio of 0.8x Segment Profit.
Iress Limited Annual Report 2020 Tony D’Aloisio (left)
and Andrew Walsh (right)
07
2020 acquisitions
During 2020, alongside organic growth,
Iress completed three acquisitions:
• BC Gateways (Australia, January 2020).
BC Gateways has provided Iress with
an end-to-end blockchain platform that
enables financial services to exchange
information in a secure, trusted, and
streamlined way. This is being deployed
in Australia to help the industry meet new
advice fee consent requirements.
• O&M Systems (United Kingdom,
March 2020). O&M Systems provides
pension and investment data and
comparison tools to financial advisers.
The acquisition has further strengthened
Iress’ already comprehensive advice
offering in the United Kingdom.
• OneVue (Australia, November 2020). With
OneVue, Iress will be able to offer clients
an open, seamless and highly efficient
investment infrastructure that does not
currently exist in Australia.
In 2020, Iress completed a successful
$175 million equity raising to further
strengthen its balance sheet and increase
the flexibility for opportunities in the
current environment, including the OneVue
acquisition. We thank those investors
who participated.
Annual General Meeting
Subject to any government restrictions
relating to the pandemic, it is the Board’s
intention to have a hybrid annual general
meeting via video conferencing and in
person. The meeting is scheduled for
11.30 am, 6 May 2021 at the RACV City Club
in Melbourne.
Thank you
On behalf of the Board and Management,
thank you to our shareholders, our clients
and users and to Iress’ 2,333 people. While
2021 is unlikely to see the end of this
pandemic, we hope it is a more predictable
and manageable year for everyone.
Tony D’Aloisio
Andrew Walsh
Chair
Managing Director & CEO
Chair and Board succession
At the May 2019 Annual General Meeting,
I outlined the Board’s succession and
renewal plan.
In line with this we welcomed two new
non-executive directors: Michael Dwyer and
Trudy Vonhoff at the beginning of 2020.
At the AGM in May 2020, Jenny Seabrook
stepped down from the Board following
twelve years of service. At the 2021 AGM, two
long-serving directors John Hayes and Geoff
Tomlinson will not be seeking re-election. On
behalf of my fellow directors, I thank John
and Geoff for their commitment as directors.
With these changes Iress will have a
Board of seven made up of Roger Sharp,
John Cameron, Julie Fahey, Trudy Vonhoff,
Michael Dwyer, Niki Beattie and Andrew
Walsh. Niki and Julie along with Roger are
subject to election and re-election at this
year’s AGM.
At Iress’ Annual General Meeting in May, I
will step down as chair and director. 2021
will mark more than eight years as an Iress
director and more than six years as Chair.
During this time, Iress has continued to
adapt and grow. Iress is a strong company,
whose strength comes from its ability to
predict trends and lead clients ahead of
those trends. Its strength also comes in its
diversity including by geography, segment
and product.
I am pleased to welcome Roger Sharp as
non-executive director and chair-elect. Roger
brings 35 years’ experience in markets,
technology and governance. He has broad
international experience in Australia,
New Zealand, Hong Kong, Singapore, the
United Kingdom and the United States.
He is currently chair of ASX-listed Webjet,
the deputy chair of Tourism New Zealand,
the chair of the Lotteries Commission of
New Zealand and the founder of boutique
technology investment bank, North Ridge
Partners. His past executive roles have
included Global Head of Technology at
ABN AMRO Bank and CEO of ABN AMRO
Asia Pacific Securities.
Tony D’Aloisio, Chair
08
Iress leadership
At Iress, our greatest asset is our
people. Supporting them through an
unprecedented time is a leadership team
committed to achieving Iress’ goals.
Iress Limited Annual Report 2020 09
Left to right
Andrew Todd
Chief Technology Officer
Andrew Walsh
Chief Executive Officer
Coran Lill
Chief Communications & Marketing Officer
John Harris
Chief Financial Officer
Joydip Das
Chief Product Officer
Julia McNeill
Chief People Officer
Michael Blomfield
Chief Commercial Officer
Peter Ferguson
Chief Legal Officer & Company Secretary
Simon New
Chief Client Solutions Officer
10
Wellbeing & technology
assume centre stage
During the unexpected events of 2020,
Iress focused on two things: the health and
wellbeing of its people and uninterrupted
delivery to its clients and users.
Image credit: Zen Chung
Iress Limited Annual Report 2020 11
It was the year no-one was expecting. While
governments grappled with economies
and millions dealt with the fallout of
lockdowns, employers transitioned swiftly to
a new, digital way of working. At Iress, prior
investments and current strategies meant the
transition to working from home was smooth,
and clients benefitted from our digital focus,
cloud technology and expert service.
Supporting our people
With cloud-based technology well embedded
into the workplace, our transition to remote
work was seamless. Collaboration tools such
as Slack and Zoom kept us agile and working
effectively together.
Supporting our people has been at the
forefront of how we’ve navigated this year.
With a pragmatic yet supportive approach,
we prioritised our people’s health and
wellbeing through:
• Flexible leave arrangements:
Including the temporary addition of
Emergency Childcare Leave to support
parents during lockdown.
• Employee Assistance Program:
Our free, confidential 24/7 counselling
service for all people was expanded to
include immediate family members.
• Increased regularity of leadership sessions
and all people webinars:
To keep our people informed and help those
in leadership to support their people.
• Resilience webinars:
Internal webinars featuring professionals
with tangible tips to help people build
their resilience.
• Regular surveys:
We continue to survey people on how
effectively they are working and their
wellbeing.
The feedback from our people has been
overwhelmingly positive at the support
they have received during 2020 with a
90% favourability rating of how Iress has
supported them during the pandemic.
Supporting our clients
Financial services businesses rely on Iress
to stay connected and be productive. With
financial services needing to adapt quickly
in response to the pandemic, our technology
was even more critical. How clients needed
to respond to their clients, members and
customers shifted overnight and the need for
digital interaction was a must. Many of our
clients have adopted financial technologies like
digital signatures and client portals, and others
have brought forward strategies to digitise and
automate further. Client and user survey results
show that remote access capabilities from
Iress were a huge benefit during COVID-19,
helping them to deliver better outcomes for
their clients, and make their job easier.
We have not experienced any serious negative
impact on operations or productivity as a
result of the pandemic.
Looking to the future
Employees have been returning to offices
in Asia Pacific in select locations in line with
local guidelines, however, returning to the
office remains a personal decision for each
employee for the foreseeable future. We
believe that during and beyond the pandemic
there will continue to be a permanent shift
in how people work. Rather than prescribe
whether someone can or can’t work from
home, or how many days they must work in
the office, we will move to a flexible system
driven by the needs of each team. Each
employee will ask themselves: “What do I
need to achieve today”, “Who do I need to
achieve it with” and therefore “Where am I
best to be”.
Zoom meetings held
357,233
Slack messages sent
19m
Slack activity
Average 99 minutes
per person every day
Zoom webinars
1,069
Living alone during lockdown in 2020 my anxiety and loneliness
steadily increased. Through the employee assistance program
(EAP) offered by Iress, I was able to reach out for some much
needed support. I was introduced to cognitive behavioural
therapy, a short-term treatment which focuses on how
thoughts, beliefs, and attitudes affect feelings and behaviours.
In these sessions I learned techniques for coping with this
undeniably stressful situation that we were all thrust into. In
addition to EAP, Iress hosted a number of sessions to build
resilience throughout the year. Mental wellbeing is often a
hidden struggle, and can be uncomfortable to talk about. It was
such a relief to be in a safe environment where it was ok not to
be ok and to reach out for help.
Klee Barris
Iress – South Africa
12
Iress Foundation
Making a difference in tough times.
For most around the world, 2020 has been a
year of challenges—making the work of the
Iress Foundation more important than ever.
Social distancing has meant that our normal
giving methods weren’t always possible,
however, that wasn’t going to stop us. Our
people still volunteered their time where they
were able to, or found alternative ways to
fundraise and support the causes close to
their hearts.
• A garden triathlon: After the sad passing of
a UK colleague to an incurable brain tumour,
one of our data engineers Steve Mitchell
took up the challenge of a lockdown-style
triathlon to raise funds for the family.
Steve’s triathlon comprised of a 1500m
swim in a child-sized 4m paddle pool, a
40km cycle using a 12-year-old’s bike (on
rollers) and a 10km run in a 6m garden.
Supported by the Iress Foundation and
generous colleagues, Steve raised £14,000.
Iress fundraising highlights
• The Australian bushfire relief effort:
January saw devastating bushfires rage
through parts of Australia. The Iress
Foundation raised over $28,500 to help
support those affected.
• Tackling food poverty: With the number of
people facing food insecurity on the rise,
this is a cause we continue to support. Due
to the scaled-back hands-on help this year,
we opted to donate to these charities in
Australia and the UK.
• Getting behind Talent Beyond Boundaries:
With their Middle East base in Beirut, Talent
Beyond Boundaries was in the centre of a
powerful explosion this year where over 200
people perished and around 5,000 were
injured. A financial contribution of $15,000
was made to support Talent Beyond
Boundaries and the important work they do,
especially during times like these.
• Helping at-risk youth reach their potential:
Before lockdown hit in March, a group of
intrepid hikers from our Melbourne and
Sydney offices took on the Whitelion Three
Peaks Challenge climbing three Australian
mountains, in three states, over 33 hours and
raised $48,394. These funds will go towards
helping at-risk youth to reach their potential.
• Giving children a better start: We’ve
donated and fundraised for our education
partner charities in South Africa who provide
food and resources to help make learning
more accessible for disadvantaged children.
“I just wanted to do something that would
make things easier for Liam’s family. I saw
that someone had done a marathon in their
garden during the lockdown, and it gave
me the idea. Colleagues came together to
help raise a staggering amount.”
Steve Mitchell,
Iress – UK
“Projects that help childhood development
are loved by the team here in South Africa.
Helping make an impact that sets kids up
for a better future makes me really proud.”
Kelisha Panday,
Iress – South Africa
“We are driven by the continued resilience
of our refugee candidates and the support
of companies like Iress, which keep us
inspired to push for a better tomorrow. We
will always consider Iress part of the Talent
Beyond Boundaries family, and we hope to
continue changing lives together for many
years to come.”
Noura Ismail,
Middle East Director,
Talent Beyond Boundaries
1,646
donations contributed via
Iress Giving Platform
$241,713
contributed by Iress Foundation
$132,160
contributed by Iress people
Iress Limited Annual Report 2020 13
$241,713
33
charities supported
Organisations the Iress Foundation was
proud to support during 2020 are available
on iress.com/iressfoundation2020.
14
Board of directors
Tony D’Aloisio AM, Chair of the Board
Andrew Walsh
Independent Non-Executive Director since
June 2012 and Chair since August 2014
Managing Director and Chief Executive Officer
since October 2009
Tony has 45 years’ experience as a senior
executive in government, corporate and
legal roles, including Chair and independent
Non-Executive Director of Perpetual, Chair
and Commissioner for the Australian
Securities and Investment Commission
(ASIC), Chair of the International Joint
Forum of the Basel Committee on Banking
Supervision, managing director and Chief
Executive Officer at the Australian Securities
Exchange (ASX) and Chief Executive partner
at Mallesons Stephen Jaques between 1992
and 2004, having first joined the firm in 1977.
After a career as an actuarial consultant,
Andrew co-founded and spearheaded the
development of market-leading financial
planning software Xplan and joined Iress when
it acquired Xplan Technology in 2003. Andrew
became Iress’ CEO in 2009 and has since
led the growth of the group. Since Andrew
became CEO, Iress has expanded organically
and made several local and international
acquisitions, with a focus on designing,
developing and delivering software for the
financial services industry in Asia Pacific,
UK & Europe, Africa and North America.
Julie Fahey
Niki Beattie
Independent Non-Executive Director since
October 2017 and Chair of the People &
Performance Committee since February 2020
Julie has over 30 years of experience in
technology, including in major organisations
such as Western Mining, Exxon, Roy Morgan,
General Motors and SAP, covering consulting,
software vendor and chief information officer
roles. In addition to her industry experience,
Julie spent 10 years at KPMG as a partner
with the firm, during which time she held roles
as national lead partner telecommunications,
media and technology, and national
managing partner – markets. Julie was also
a member of the KPMG National Executive
Committee. Julie is a Non-Executive Director
of SEEK, Datacom Group, CenITex, Vocus
Group, The Australian Red Cross Blood
Service and non-profit disability services
organisation Yooralla, and a member of the
La Trobe University board.
Independent Non-Executive Director since
February 2015
Niki has more than 30 years’ experience in
financial technology and capital markets.
She currently runs Market Structure
Partners, a strategic consulting firm.
Niki spent more than a decade in senior
positions at Merrill Lynch International.
She is currently Non-Executive Chair of
listed entity Aquis Exchange Limited, which
operates a pan-European stock exchange
and technology business, and of privately
owned XTX Markets, a quantitative-driven,
electronic global market-maker. She is also a
Non Executive Director of Kepler Cheuvreux
UK Ltd, a French brokerage firm and of FMSB,
Fixed Income, Currencies and Commodities
Standards Board, a standard setting body
for wholesale markets. She was previously
on the board of MOEX, the Moscow Exchange
and of Borsa Istanbul, the Turkish Exchange.
She also spent 12 years on the Secondary
Markets Advisory Committee to the European
Securities Markets Authority and 6 years on
the Regulatory Decisions Committee of the
UK Financial Conduct Authority.
Iress Limited Annual Report 2020 15
Geoff Tomlinson
John Cameron
John Hayes
Independent Non-Executive Director since
February 2015
Independent Non-Executive Director since
March 2010
Geoff has more than 40 years’ experience
in financial services. His executive career
encompassed 29 years with the National
Mutual Group, including six years as group
managing director and chief executive
officer. He was a Non-Executive Director of
National Australia Bank from March 2000
to December 2014, including Chair of its
wealth management division MLC. Other
companies he has been a director of include
Amcor, Suncorp, Dyno Nobel, Programmed
Management Services and Neverfail
Springwater. Geoff is Chair of Growthpoint
Properties Australia and a director of Wingate
Group Holdings.
John is one of the pioneers of electronic
trading. He was a key member of the team
that first automated the trading floor of the
Australian Securities Exchange (ASX), one of
the first in the world. He has designed and
developed information systems for major
financial institutions in the United Kingdom,
France, the United States and Australia. In
1997 John created what was to become the
world’s leading FIX solution, CameronFIX. It
was acquired by Orc Software in 2006 where
John served as CTO until 2009. In 2007
John created the Cameron Foundation.
John co-founded the global refugee initiative
Talent Beyond Boundaries and now works for
them pro bono and serves as Vice Chair of
its board.
Independent Non-Executive Director since
June 2011 and Chair of the Audit & Risk
Committee since June 2011
John is a Fellow of CPA Australia with over
45 years’ experience in financial services.
His senior roles have included CFO of
both ASX and Advance Bank Australia
and Vice President Financial Services with
BT Australia. John’s previous directorships
include ASX Perpetual Registry (now Link
Market Services) and Orient Capital as well
as executive director roles with the Australian
Clearing House, ASTC (CHESS) and ASX
Operations. He was also previously a member
of the Advisory Council of Comcover, a federal
government entity, for six years.
Trudy Vonhoff
Michael Dwyer AM
Independent Non-Executive Director since
February 2020
Independent Non-Executive Director since
February 2020
Trudy has over 20 years’ experience in retail
banking, financial markets and investment.
She is currently a director of Credit Corp
Group and Cuscal Limited. Previous
directorships include AMP Bank, A2B
(Cabcharge), Ruralco Holdings Limited, Tennis
NSW and the Westpac Staff Superannuation
Fund. For 13 years Trudy held senior
executive roles at Westpac and AMP across
retail banking, finance, risk, technology &
operations, and agribusiness.
Michael has over 35 years’ experience in
superannuation and investment, including
14 years as CEO of First State Super. He is
a director of the Global Advisory Council
of Tobacco Free Portfolios and the Sydney
Financial Forum. Since 1998 Michael has
also been a director and subsequently
Chair of Australia for UNHCR, the private
sector partner of the UN Refugee Agency.
He is a life member of ASFA (Australia’s
superannuation industry association) and
the Fund Executives Association. After
serving as a director, on 31 August 2020
Michael was appointed as the Chair of TCorp
(New South Wales Treasury Corporation). On
22 October 2020 Michael was appointed as a
director of Bennelong Funds Management.
Company Secretary
Peter Ferguson
Peter joined Iress in 2011 and has many
years’ experience in international legal and
commercial appointments in the financial
technology sector, with prior international
and domestic appointments including
seven years with Nasdaq OMX, located in
Stockholm and later in Sydney. In addition
to his role as Group General Counsel &
Company Secretary, Peter is responsible for
management of Iress’ compliance and risk
functions. He also carries oversight of the
Iress Foundation. Peter has been a Board
member of the Schizophrenia Fellowship of
NSW (trading as One Door) since 2012.
16
Material business risks
The material business risks that have the potential to
impact Iress are outlined below, together with mitigating
actions undertaken to minimise these risks:
Risk
Nature of risk
Mitigation
Information security
breach and failure of
critical systems
Due to the nature of Iress’ business,
Iress could be impacted significantly by
the failure of critical systems, whether
caused by error or malicious attack.
Iress has increased its investment in information security in recent years in
response to several factors including the increased sophistication of cyber
terrorists, the increased reliance on our solutions by our customers and
increased regulatory pressure from government agencies. We have a dedicated
information security function across jurisdictions, Board oversight through the
Audit & Risk Committee and executive oversight via the Executive Risk Committee
and Chief Information Security Officer.
Iress’ controls, audit and governance provide a framework for actively
identifying gaps, new exposures and the development of appropriate treatment
plans and include:
• Network and malware scanning and data loss prevention systems.
• Mandatory information security awareness training across the business.
• Comprehensive disaster recovery procedures.
• Focus on redundancy for internal and critical systems.
Iress’ Global Information Security Management System (ISMS) is certified by
independent audit to meet the global ISO 27001 standard.
Economic climate
Economic conditions, domestically
and internationally, can impact client
expenditure and accordingly, client
demand for Iress’ systems.
This risk is mitigated by Iress’ diverse geographic presence and diverse
product portfolio.
The impact of COVID-19 is mitigated by the recurring revenue base and cash
generative nature of the Group.
Foreign exchange
Iress is exposed to foreign exchange
movements, which may affect the value
of profits repatriated to Australia.
Iress mitigates the foreign exchange risk associated with investments in international
operations by funding these investments in the local currency. Foreign currency
transaction risks are hedged where appropriate. Iress does not hedge translation risk
on foreign currency earnings. However, Iress reports the financial performance of its
offshore operations in local currency and AUD in order to enable investors to better
understand the performance of the underlying business and the exposure to different
currencies inherent in Iress’ international operations.
Regulation
Regulation can impact Iress and its
clients because regulation increases the
cost of doing business. Regulation may
have the effect of structural changes,
including consolidation or fragmentation,
both of which can negatively impact Iress’
client engagements.
Iress’ risk management strategy includes the close monitoring of regulatory
developments globally. Iress is pro-actively engaged in the development of
new and existing relationships with relevant regulatory stakeholders, policy
makers, and media groups to monitor the regulatory landscape. This strategy
is focused on limiting potential impacts of regulatory development so that
Iress may continue to service its global markets and efficiently respond to
compliance requests.
Industry or
technology risk
The risk that a pronounced shift in
technology or a pronounced change in the
way market segments organise themselves
and make use of Iress’ technology.
Reputation risk
Iress provides solutions to the financial
services industry. The financial services
industry is subject to significant public
focus, media attention and government
review. The use of technology within
financial services businesses, and
especially its role in processing and storing
sensitive personal information, can expose
both the financial services provider and
providers of technology such as Iress, to
reputational risk where there is a failure in
a critical system or process or the release
by error or mischief of personal data.
Iress endeavours to manage this risk by maintaining a highly skilled and
educated technology organisation and by exploring the potential utilisation
or impact of emerging technologies. In the same way, Iress endeavours to
manage market change by maintaining a high degree of engagement with
its customers. In that regard Iress is fortunate that its customer base, being
distributed geographically and being comprised of highly sophisticated industry
representatives, is likely to be at the forefront of industry change and evolution.
Mitigation of technology risk lies at the heart of Iress’ information security
function (refer to comments above under Information Security) and software
development practices. The latter includes rigour in architecture, code
development and testing. Iress does not outsource development of core
technology, maintaining direct oversight and control.
Iress Limited Annual Report 2020 17
Impact of COVID-19 on Iress
Subsequent to 31 December 2019, there was a
global outbreak of a novel strain of coronavirus
(COVID-19), and on 11 March 2020, the World
Health Organisation declared the coronavirus
outbreak a pandemic. The global and
domestic responses, including mandates
from federal, state, and/or local authorities,
to mitigate the spread of the virus continues
to evolve rapidly and has impacted global
commercial activity and contributed to
significant volatility in financial markets.
Iress’ key focus during this time has been
the health and wellbeing of its people, and
ensuring that they have been able to work
safely and effectively on a remote basis, as
well as providing service continuity for clients
and users. While some people and teams in
certain locations have started returning to
the office as government restrictions have
lifted, the majority of Iress’ people continue to
work from home. For those offices that have
reopened, Iress’ focus has been on ensuring
that workplaces are safe.
Operations have not been interrupted by
COVID-19 and Iress continues to deliver all
services and support to clients and users.
Iress’ teams, including business-critical teams,
have been working well remotely and the
business can continue to operate effectively in
this manner for an extended period of time if
required. Regular updates regarding business
continuity are published on Iress’ website.
Iress operates a subscription model and
most of Iress’ revenue is recurring in nature.
Iress has a history of strong cash conversion
and low debtor defaults. These features of
Iress’ commercial model have continued
throughout the COVID-19 pandemic.
The majority of client implementation
projects have continued since the onset of
the COVID-19 pandemic, notwithstanding
a short period of adjustment to the new
environment. However, some projects,
particularly in the UK Mortgages business
were temporarily delayed.
In addition, Iress is exposed to the broader
economic uncertainty evident in all of Iress’
markets as a result of COVID-19. This makes
it difficult to forecast short-term financial
performance.
At the date of this report, due to the resilience
of Iress’ business, Iress has not been eligible
for, nor applied for, significant government
COVID-19 related support other than the
deferral of certain VAT and payroll tax
payments that were offered to all companies
in the UK and NSW respectively. Iress settled
the deferred payroll tax payments during the
second half of 2020 and expects to settle the
UK VAT liabilities within the next twelve months
and as such they remain presented in the
financial statements as current liabilities.
Key risk areas identified by Management
and the Board where COVID-19 may impact
financial reporting for the Group are:
• The impact of COVID-19 on Iress’ clients
and, as a result, on Iress’ revenue,
• The carrying value of non-financial assets
(primarily goodwill) and the forward looking
assumptions made about future performance
in the models used to test for impairment,
• The assumptions utilised in determining the
level of the Group’s credit loss provisioning
including expectations of future credit
losses from client default, and
• The assumptions around future
performance used to determine the
fair value of contingent consideration
relating to the QuantHouse and BC
Gateways acquisitions that are recorded
as provisions on Iress’ balance sheet as at
31 December 2020.
18
Operating & Financial Review
Operating & Financial Review
For the year ended 31 December 2020
Operating & Financial Review
Operating revenue
Segment Profit
Reported
Constant Currency Basis
Reported
Constant Currency Basis
Segment Profit after share-based payments
EBITDA
Reported NPAT
Earnings & dividends per share
Basic earnings per share
Dividends per share
2019
$m
508.9
508.9
152.1
152.1
134.4
133.9
65.1
2020
$m
542.6
546.0
152.9
155.4
131.9
125.5
59.1
2020 vs 2019
7%
7%
1%
2%
(2%)
(6%)
(9%)
2019
Cents per share
2020
Cents per share
2020 vs 2019
37.9
46.0
32.3
46.0
(15%)
0%
Constant currency basis assumes the 2020 financial results are converted at the same average foreign exchange rates used to convert the
2019 financial results.
Operating Revenue
Direct Contribution
APAC
UK & Europe
Mortgages
South Africa
North America
Client Contribution
Product and Technology
Operations
Corporate
Segment Profit
Acquisition of OneVue
2019
$m
264.5
142.7
29.0
48.3
24.5
508.9
2020
$m
289.8
154.6
26.9
42.9
28.4
542.6
2020 vs 2019
10%
8%
(7%)
(11%)
16%
7%
2019
$m
191.1
91.9
19.2
37.5
10.4
350.1
(118.6)
(42.7)
(36.7)
152.1
2020
$m
204.0
94.4
18.1
33.9
11.0
361.4
(128.4)
(42.6)
(37.4)
152.9
2020 vs 2019
7%
3%
(5%)
(10%)
6%
3%
8%
0%
2%
1%
On 6 November 2020, Iress acquired OneVue for $115m. OneVue is Australia’s largest third-party fund registry as well as providing online
investment solutions and third-party superannuation administration services. The combination of Iress’ technology footprint and OneVue’s
market leading managed fund administration business provides a unique opportunity to deliver seamless, automated and efficient end-to-end
investment infrastructure in Australia.
Due to the timing of transaction completion, OneVue did not make a material contribution to the 2020 financial result.
Operating Revenue
On a reported basis, revenue from ordinary activities grew 7% from $508.9m in 2019 to $542.6m in 2020. The increase in revenue was primarily
driven by strong growth in Australia, the full year impact from acquiring QuantHouse in 2019 and contributions from the recent acquisitions of
OneVue and O&M. On a constant currency basis, revenue grew 7% for the same period.
Iress Limited Annual Report 2020 19
Segment Profit(1)
On a reported basis, Segment Profit increased 1% from $152.1m in
2019 to $152.9m in 2020. On a constant currency basis Segment
Profit grew 2% for the same period. The result was driven by growth
in operating revenue partly offset by recent acquisitions which
currently operate at a lower margin than the rest of the group or
are loss making; and cost investments to capitalise on emerging
revenue opportunities or to improve the way Iress designs, engineers
and deploys software. In constant currency, excluding the impact
of acquisitions and staff transfers, Operations and Corporate costs
decreased 1% from 2019 to 2020 with all organic cost growth focussed
on the Product and Technology teams.
APAC
On a reported basis, APAC revenue grew 10% from $264.5m in 2019 to
$289.8m in 2020 which reflects strong growth in Financial Advice and
Superannuation, continued growth in Asia, and ongoing resilience in
Trading and Market Data. The result also benefited from the full year
impact from QuantHouse (acquired in May 2019) and contribution
from the recently acquired OneVue business.
Across the APAC region, Trading & Market Data revenue grew 5%
reflecting the full year contribution from QuantHouse, project fees
from the implementation of a Private Wealth solution for a leading
Australian institution and organic growth of 15% in Asia, reflecting
the full year revenue impact of successful client implementations
in 2019 and new sales momentum in 2020.
Financial Advice revenue grew 7% from 2019 to 2020 reflecting
ongoing demand for Iress’ financial advice software (Xplan) as advisers
continued to focus on risk, data and compliance following the Royal
Commission into financial services in Australia. As expected, financial
advice revenue declined in the second half of 2020 versus the first
half of 2020 due to the timing impact of advisers migrating from large
institutions to independent advice firms.
Superannuation revenue grew 12% from 2019 to 2020, reflecting
heightened client project activity and fees, particularly from the
deployment of automated super administration solutions to two
large clients.
Excluding acquisitions and staff transfers, direct contribution was up
5% in 2020 reflecting revenue growth and a 9% increase in costs as
the business invests in super administration.
UK & Europe
On a reported basis, revenue grew 8% from $142.7m in 2019 to
$154.6m in 2020 (local currency revenue also increased 8%) which
reflects the contribution from the recently acquired businesses of
QuantHouse and O&M. Excluding these acquisitions, revenue was
down 2% in 2020 reflecting the impact of COVID-19 on the timing
of key client projects and new business tendering activity. Revenue
growth in local currency, returned in the second half with revenue up
2% versus the first half of 2020.
On a reported basis, direct contribution grew 3% from $91.9m in 2019
to $94.4m in 2020. In local currency, direct contribution increased
by 2%. The 2020 contribution margin was lower than 2019 in part
due to recent acquisitions operating at lower margins. Excluding
acquisitions, the contribution margin improved in the second half from
65% to 69% as a result of organic revenue growth returning.
During 2020, the UK business achieved a number of important client
project milestones including:
• Private Wealth deployment to a large financial adviser completed
• Successful proof of concept delivered and a subsequent large
enterprise wealth deployment under way.
• Successful Xplan implementation project milestones at three
large enterprise wealth management clients.
• First market making client commenced billing and two further
clients signed for implementation in 2021.
Mortgages
On a reported basis, revenue decreased 7% from $29.0m in 2019 to
$26.9m in 2020. In local currency, revenue was also down 7% over
the same period. At the end of 2019, the Mortgages business ceased
support of the original version of the Mortgage Sales and Originations
(“MSO”) software product. 2020 revenue in local currency from
MSO Version 2 increased 3% from 2019.
A number of key client projects were delayed or paused in the first
half of 2020 due to the onset of COVID-19. However, these projects
recommenced in the second half resulting in revenue increasing 35%
in local currency compared to the first half of 2020.
The Mortgages business continues to grow recurring subscription
licence revenue which contributed approximately 46% of total revenue
in 2020, up from 31% in 2019 as a result of two clients going live in
the second half of the year. All non recurring revenue relates to the
implementation of MSO and will drive recurring revenue growth at
the conclusion of the implementation project.
In May 2020, Iress announced the withdrawal from the Australian
mortgage market following a strategic review. The impact of this
closure on the 2020 financial results was minimal.
In local currency, direct contribution decreased 5% from 2019 to
2020 reflecting revenue decline, partially offset by cost control.
The contribution margin increased by 2% in 2020 compared to 2019.
South Africa
Political and economic uncertainty was heightened in 2020,
exacerbated by the onset of COVID-19. In local currency, revenue
in 2020 remained in line with 2019. However, as a result of the
depreciation of the South African Rand relative to the Australian Dollar
revenue decreased 11% on a reported currency basis from $48.3m in
2019 to $42.9m in 2020.
A broad private wealth solution was successfully delivered in 2020
to a Tier 1 financial services institution. Interest in Iress’ retail trading
product continues following the roll out of Viewpoint to South Africa’s
largest online share trading broker.
In local currency, direct contribution increased 2% from 2019 to 2020,
resulting in a 1% improvement in contribution margin.
(1) Iress uses Segment Profit as a measure of underlying earnings to aid inter-period comparability of results.
20
Operating & Financial Review
Operating & Financial Review cont.
For the year ended 31 December 2020
North America
On a reported basis, revenue increased 16% (17% in local currency) from $24.5m in 2019 to $28.4m in 2020 reflecting the full year contribution
from QuantHouse and strong client retention.
In local currency, direct contribution increased 7% from 2019 to 2020 which reflects the full year impact of the QuantHouse acquisition and
ongoing cost discipline, offset by the transfer of people from other segments.
Product and Technology
Investment in product and technology is at the heart of Iress’ success and market position, supporting client retention and future recurring
revenue growth. Product and Technology cost is primarily made up of people costs and reflects Iress’ ongoing investment in existing
and new technology.
On a reported basis, costs increased 8% from $118.6m in 2019 to $128.4m in 2020. Cost increases in 2020 reflect recent acquisition as well as
investments in people and capability to pursue emerging revenue opportunities and continue to improve the way Iress designs, engineers and
deploys software. In constant currency, excluding acquisitions and staff transfers, Product and Technology costs increased by 4% compared
to 2019.
Operations
On a reported basis, Operations costs of $42.6m were in line with 2019. Operations costs include core business infrastructure and people,
such as internal and external communications technology, information security, operating hardware and software, and client help desk. In
constant currency, excluding acquisitions and staff transfers, Operations costs decreased by 3% in 2020 reflecting increasing scale and
operating leverage.
Corporate
On a reported basis, costs increased 2% from $36.7m in 2019 to $37.4m in 2020. Corporate costs include Iress’ central business functions
including human resources, finance, communications & marketing, legal and other general corporate costs. In constant currency, excluding the
impact of acquisitions and staff transfers, Corporate costs increased 1%.
Net Profit after Tax (NPAT)
Segment Profit
Share-based payment expense
Segment Profit after share-based payments
Other non-operating expenses
Profit before depreciation and amortisation, interest and income tax expense
Depreciation and amortisation expense
Profit before interest and income tax expense
Net interest and financing costs
Income tax expense
Net profit after income tax expense
2019
$m
152.1
(17.7)
134.4
(0.5)
133.9
(37.2)
96.6
(8.2)
(23.3)
65.1
2020
$m
152.9
(21.0)
131.9
(6.4)
125.5
(39.4)
86.2
(8.0)
(19.1)
59.1
2020 vs 2019
1%
(19%)
(2%)
large
(6%)
(6%)
(11%)
2%
18%
(9%)
Iress Limited Annual Report 2020 21
Net Profit After Tax (NPAT)
Iress’ reported NPAT decreased 9% from $65.1m in 2019 to $59.1m in 2020 which reflects increases in share-based payments, other
non-operating expenses and depreciation and amortisation.
Share-based payments increased 19% from $17.7m in 2019 to $21.0m in 2020 as a result of the previously announced changes in both
executive and non-executive remuneration structures. These changes brought forward accounting expense recognition for non-executive equity
remuneration and, for executives, resulted in cash bonuses being replaced by equity remuneration. These changes in remuneration structures
are described in the Remuneration Reports included in the 2017, 2018 and 2019 Annual Reports.
Other non-operating expenses are one-off costs primarily in relation to:
• Costs associated with the acquisitions of BC Gateways, O&M and OneVue (largely external adviser costs),
• Integration costs in relation to the acquisition of QuantHouse,
• The migration of some server infrastructure to Amazon Web Services,
• Uplift of certain corporate core infrastructure including information security and restructuring activities, and
• Revaluation of deferred contingent consideration (“earn-outs”) associated with the acquisition of QuantHouse in 2019 and BC Gateways
in 2020. This is discussed in more detail in Note 2.6 in the 2020 Financial Statements.
Depreciation and Amortisation increased from $37.2m in 2019 to $39.4m in 2020 as a result of assets added to the balance sheet by recent
acquisitions and office refurbishments in the UK, Singapore and South Africa.
The Group’s effective tax rate of approximately 24% (2019: 26%) is a function of the tax rates in the jurisdictions in which the business operates
and the taxable earnings within those jurisdictions.
Dividends
Iress’ dividend policy is to maintain a payout ratio of not less than 80% of underlying earnings(2) on an annualised basis, subject to accounting
limitations. Dividends continue to be franked to the greatest extent possible, while reflecting the geographical context of the business and timing
of tax payments.
In respect of 2020 earnings, the Directors determined to pay a final dividend of 30.0 cents per share franked to 40% at a 30% corporate tax rate
bringing the full year 2020 dividend to 46.0 cents per share, franked to 38% at a 30% corporate tax rate.
Statement of Financial Position
Net debt (measured as borrowings excluding capitalised borrowing costs, net of derivatives, and less cash and cash equivalents) decreased
by $69.8m mainly due to the successful $175m equity raise in June 2020 offset by the $115.2m cash consideration paid to acquire OneVue
in November 2020. As a result, the leverage ratio (defined in these financial statements as the ratio of net debt over the last twelve months
Segment Profit) decreased to 0.82x at the end of the period. Iress continues to maintain a conservative level of gearing and to actively manage
cash holdings to reduce interest costs.
Current liabilities increased by $16.6m during the period to 31 December 2020. This was primarily due to the impact of the OneVue acquisition
with $14.2m of payables and other liabilities being consolidated from the OneVue Group at 31 December 2020.
Lease liabilities (both current and non-current) increased in total by $27.0m primarily due to the commencement of new office leases in
the UK and the impact of the acquisitions of OneVue and O&M Systems during the year. As a result of these changes right-of-use assets
increased by $23.4m.
Intangible assets increased by $114.4m primarily due to the acquisitions of BC Gateways, O&M Systems and OneVue during 2020. Refer to notes
2.1 and 4.2 to the Financial Statements for more details.
Issued capital increased by $175.3m was primarily due to the equity issued as part of the Share Placement and Share Purchase Plans launched
in June 2020. See note 3.2 to the Financial Statements for more details.
(2) Segment Profit less operating depreciation and tax at 30%.
22
Directors’ Report
Directors’ Report
For the year ended 31 December 2020
The Directors of Iress Limited and its subsidiaries (“the Group”) submit the annual financial report for the year ended 31 December 2020.
Directors’ meetings
The following table sets out the number of meetings of the Group’s Board of Directors and of each Board Committee held during the year ended
31 December 2020, and the number of meetings attended by each Director.
Director
A D’Aloisio
N Beattie
J Cameron
M Dwyer
J Fahey
J Hayes
J Seabrook(1)
G Tomlinson
T Vonhoff
A Walsh
Board Meetings
Audit & Risk
People & Performance
Eligible
Attended
Eligible
Attended
Eligible
Attended
17
17
17
17
17
17
6
17
17
17
17
17
16
17
17
17
6
15
17
17
1
*
*
3
4
4
2
4
3
*
1
*
*
3
4
4
2
4
3
*
*
8
8
6
8
*
4
*
6
*
*
8
8
6
8
*
4
*
6
*
* Not a member of this committee.
(1) Independent Non-Executive Director since August 2008, fourth and final term as a Director ended at the AGM in May 2020.
Events subsequent to the Statement of Financial Position date
On 17 February 2021, the Directors declared a final dividend of 30.0 cents per share franked to 40% totalling $58.0 million.
Other than the events above, there has been no other matter or circumstance which has arisen since the end of the financial year which has
significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group
in subsequent years.
Changes in operations during the year
During the year, the operations of the Group were not modified in any material way.
Changes in state of affairs
On 7 January 2020, Iress acquired 100% of the share capital of BC Gateways and on 17 March 2020 Iress acquired 100% of the share capital of
O&M Systems (O&M).
On 29 April 2020, Iress refinanced its unsecured bank facilities totalling $300m that were due to expire in November 2021. The amount of the
unsecured bank facilities was increased to $405m and the expiry date extended to April 2024. The covenant requirements remained unchanged.
On 1 June 2020, Iress announced the proposed issue of 14,395,394 ordinary fully paid shares through an equity placement and 1,919,386
ordinary fully paid shares under a Share Purchase Plan for total gross proceeds of $170m. The issuance of the shares under the equity
placement was completed on 4 June 2020 and total proceeds, before fees, of $150m were received. The Share Purchase Plan closed on
29 June 2020 and was oversubscribed. The issue was increased by 479,844 shares and 2,399,230 shares were issued on 8 July 2020 for
total proceeds of $25m.
On 6 November 2020 Iress acquired 100% of the outstanding shares of OneVue (OneVue) via a Scheme Implementation Agreement with OneVue
Holdings (OVH.ASX).
For details on the BC Gateways, O&M and OneVue acquisitions refer to Note 4.2 to the Consolidated Financial Statements.
Other than the above, there was no significant change in the state of affairs of the Group during the financial year.
Iress Limited Annual Report 2020 23
Indemnification of Officers & Auditors
During the year, the Company paid a premium in respect of a contract insuring each of the Directors of the Company (as named above), the
Company Secretary and each of the Executive Officers of the Company and any related body corporate against a liability or expense incurred
in their capacity as a Director, Secretary or Executive Officer to the extent permitted by the Corporations Act 2001. Further details have not been
disclosed due to confidentiality provisions in the insurance contract.
In addition, the Company has entered into a Deed of Indemnity which ensures that a Director or an officer of the Company will generally incur
no monetary loss as a result of defending actions taken against them as a Director or an officer. Certain actions are specifically excluded, for
example, penalties and fines which may be imposed in respect of breaches of the law.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by the law, indemnified or
agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred in their capacity as an
officer or auditor.
Non-audit services
Details of the amounts paid or payable to the auditor for audit services provided during the year are outlined in Note 1.6(b) to the financial
statements. During the year, the Company’s auditor performed certain other services in addition to its audit responsibilities. The Board is satisfied
that the provision of non-audit services during the year by the auditor is compatible with, and did not compromise the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Company to ensure that they do not impact the
integrity and objectivity of the auditor; and
• the non-audit services provided did not undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision
making capacity of the Company, acting as an advocate of the Company or jointly sharing risks or rewards.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001, is set out on page 45.
Rounding of amounts
The amounts shown in this report and in the financial statements have been rounded off, except where otherwise stated, to the nearest thousand
dollars, the Company being in a class specified in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued
by the Australian Securities and Investments Commission.
Corporate governance
The corporate governance statement is located on the Iress website.
https://www.iress.com/trust/corporate-governance/corporate-governance-statement/
24
Directors’ Report
Remuneration Report
Directors’ Report cont.
For the year ended 31 December 2020
REMUNERATION REPORT
This remuneration report provides details of Iress’ remuneration policy and practice for Key Management Personnel (KMP) for the 2020 financial
year. The information presented in this report has been audited as required under section 308(3C) of the Corporations Act 2001 and forms part
of the Director’s report.
There were two key Leadership team changes in 2020: a change in the Chief Product Officer and the introduction of a new Chief Commercial
Officer role. Effective 1 September 2020, a review of the Leadership team structure was conducted and the Chief Commercial Officer role
was introduced to consolidate responsibility for clients and revenue across Iress. As a result of the strategic and operational decision making
undertaken by the Leadership team, the list of KMP has been updated.
For the year ended 31 December 2020, the KMP were:
KMP
Position
Term as KMP
Non-executive Directors (NED)
A D’Aloisio
N Beattie
J Cameron
M Dwyer(a)
J Fahey
J Hayes
J Seabrook(b)
G Tomlinson
T Vonhoff(a)
Executive Director
A Walsh
Executive
M Blomfield(c)
J Das(d)
P Ferguson
J Harris
A Knowles(d)
C Lill(e)
J McNeill
S New
A Todd
Non-executive Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Full year
Full year
Full year
Partial year
Full year
Full year
Partial year
Full year
Partial year
Managing Director and Chief Executive Officer (CEO)
Full year
Chief Commercial Officer
Chief Product Officer
Chief Legal Officer
Chief Financial Officer
Chief Product Officer
Chief Communications & Marketing Officer
Chief People Officer
Chief Client Solutions Officer
Chief Technology Officer
Partial year
Partial year
Full year
Full year
Partial year
Partial year
Full year
Full year
Full year
(a) M Dwyer and T Vonhoff were appointed to the Board as NED on 1 February 2020.
(b) J Seabrook ceased to be a NED on 7 May 2020.
(c) M Blomfield was appointed to the newly created role of Chief Commercial Officer on 19 October 2020.
(d) J Das was appointed to the role of Chief Product Officer on 15 September 2020. The previous incumbent in this role (A Knowles) changed his role effective 31 August 2020 and
ceased to be KMP.
(e) C Lill became KMP upon changes to the Leadership Team structure on 1 September 2020.
Contents
Section 1 Overview of remuneration
Section 2 Remuneration framework
Section 3 Relationship between performance and remuneration outcomes
Section 4 Non-executive Director fees
Section 5 Additional required disclosures
25
28
31
37
38
Iress Limited Annual Report 2020 25
SECTION 1 OVERVIEW OF REMUNERATION
1.1 Executive summary
Iress’ executive remuneration framework applies to executive members of the KMP (Executive KMP) and selected other executives. Under the
framework, equity is awarded up-front as a set percentage of remuneration (subject to Board discretion), with service and performance measured
over three to five years from grant as per the below diagram:
Remuneration
principles
Annual performance
measurement
Remuneration
components
Long-term
performance
measurement
Our goal
To be the essential partner for forward-thinking financial services businesses
Our goal is supported by our remuneration principles and performance framework
Attract, motivate and
retain talent
Reward for
value creation
Simple and transparent
Aligned with shareholder
interests
Robust performance management incorporating the what and the how
Base salary
Equity rights
Performance rights
Minimum shareholding
requirement
Market-based reward
for role
Equity to reward
shareholder returns and
retain talent
Equity to reward
substantial shareholder
returns
A material minimum
shareholding requirement
to be met within 5 years
Individual performance
Share price movement
Any increases in base
salary will consider
the market and
individual contribution
and experience
Over the 4-year aggregate
ER holding period,
executives will be directly
exposed to the same
share price movements as
shareholders
Absolute total shareholder
return (ATSR)
Shareholder wealth
ATSR over a 3-year period,
relative to a pre-determined
benchmark, will determine
vesting for PR awards
granted from 2019
Over time, executives will
see a direct increase or
decrease in their wealth
in the same way that
shareholders do
This framework was introduced in 2019 when the Board made a number of changes to Iress’ executive remuneration framework which included
removal of cash short-term incentives, increasing the proportion of remuneration delivered through equity and replacing the Relative Total
Shareholder Return (RTSR) performance hurdle with an Absolute Total Shareholder Return (ATSR) hurdle. These changes were made to enhance
the alignment of executives and shareholders. The framework is accompanied by additional safeguards enabling the Board to reduce the
grant value of equity and clawback unvested/restricted equity in the event of significant underperformance or misconduct. In the Board’s view,
notwithstanding the impact of COVID-19, these changes are working as intended with a greater focus on medium to long-term performance from
executives, both at an individual and group level.
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Directors’ Report
Remuneration Report
Directors’ Report cont.
For the year ended 31 December 2020
Impact of COVID-19
In light of the COVID-19 pandemic, Iress’ clients across the world,
who rely on Iress to stay connected and productive, have had to
rapidly adapt to a digital interaction model. Iress responded quickly
and effectively to this by prioritising service continuity and providing
practical technology related support to help clients stay connected
with their people and business. Iress continues to deliver all services
and support to clients and users.
Iress’ financial performance in 2020 was impacted by the pandemic.
While most of Iress’ revenue is recurring in nature, some client
projects, particularly in the UK mortgages business, were temporarily
delayed in the context of economic uncertainty.
Iress’ 2020 revenue of $543m was 7% higher than in 2019, but
fell short of the internal target set for 2020 as a result of the
more challenging macro environment. Management responded
to lower than expected revenue through rigorous cost control
which delivered a Segment Profit outcome, excluding the impact of
currency fluctuations, of $155m, 2% higher than in 2019. Pro forma
Segment Profit(1), a measure of performance that removes the impact
of currency fluctuations and the timing of acquisitions, grew 5%
compared to 2019.
The Board and Management made a considered decision to focus on
sustainable business outcomes. Iress takes a medium to long term view
when assessing strategic investment decisions and, in this context, the
Board and Management maintained a number of important investment
initiatives that formed part of the 2020 cost base. No employees were
stood down or asked to reduce their hours or pay and no roles were
made redundant as a direct impact of COVID-19. Iress’ key focus during
this time has been the health and wellbeing of its people, and ensuring
that they have been able to work safely and effectively on a remote
basis, as well as providing service continuity for clients and users.
In addition, Iress completed the acquisition of OneVue in
November 2020. This strategic acquisition opened a material
new growth opportunity for Iress, allowing Iress to participate in
a revenue pool of more than $3 billion. With OneVue, Iress is able
to offer clients an open, seamless and highly efficient investment
infrastructure that does not currently exist in Australia.
As a result of these decisions, the 2020 Segment Profit result is
less than it would have been if only short term financial outcomes
had been the focus. The Board and Management believe that this
approach was, and is, in the best medium to long term interests
of shareholders. The Board views the Segment Profit result to be
a steady outcome in the context of the volatile macroeconomic
environment and the impact it has had on top-line growth.
Iress did not access direct government support in any jurisdiction in
relation to COVID-19. As mentioned above, measures were taken to
support the health and wellbeing of our people. Iress’ entire workforce
worked remotely from home for many months of the year, even ahead
of government advice in each jurisdiction. Additional leave, at full pay
was also provided to all employees with dependents at school age
and below and additional annual leave could be purchased or sold to
support individual circumstances.
While some people and teams in certain locations have started
returning to the office as government restrictions have lifted, the
majority of Iress’ people continue to work from home. For those offices
that have reopened, Iress’ focus has been on ensuring that workplaces
are safe.
The Board and Management are extremely proud of the resilience
shown by our people and the successful adaptation to significant
change in their daily working lives. While the pandemic brought
significant uncertainty and disruption, Iress was in a strong position
to respond given its adoption of collaborative tools and ways of
working in line with Iress’ strategic objectives over previous years.
Remuneration outcomes
As further detailed in Section 1.2 and 3.2, the Board assessed
individual and group performance in 2020 and Iress’ progress towards
the Company’s longer-term strategic goals. The Board’s view is that
the executive remuneration framework continues to provide strong
alignment between performance and remuneration, which is clearly
demonstrated in this year’s difficult market circumstances. Under
Iress’ executive remuneration framework, performance is measured
over the equity holding period and impacts the amount and value of
equity that vests. Iress does not have a short-term incentive under
which annual performance determines the value of cash/equity
incentive awarded.
In line with delivering shareholder value, the key performance metric
impacting the value of equity vested is Total Shareholder Return. In
2020, executives saw a reduction in the value of their equity, which
forms a significant portion of their total remuneration, due to the
reduced likelihood of Performance Rights (PR) vesting, and declined
value of current equity holdings (see Section 3.5). This decline in the
value of exposure to Iress equity, and thus the personal wealth of
individual executives, is directly aligned with shareholder experience.
The Board reviewed the impact of the share price movements on
executives and determined that the framework was working as intended.
(1) For a reconciliation of pro forma to reported results refer to the table in Section 3.2 of this report.
Iress Limited Annual Report 2020 27
Under Iress’ executive remuneration framework, the Board also has
discretion to consider other measures of performance. The Board
reviewed Iress’ 2020 performance against the agreed non-financial
performance measures (see Section 3.2), which for 2020 were at
target in most areas, above target for Company/People-Quality
and below target for Client-Growth. Progress towards medium term
strategic goals was on target in all areas, including Growth, due to
acquisitions such as OneVue. After due consideration, the Board
concluded that the below target performance in Client-Growth
in the short term did not materially impact overall performance,
which remains on track over the medium-term. With additional
consideration to the sustainable approach with which Management
responded to COVID-19 and the degree to which executives had
already been impacted by share price movements, the Board viewed
that applying discretion to further alter outcomes was not warranted
or appropriate.
Accordingly in 2020, no equity granted in prior years lapsed or was
clawed back, a portion of the 2016 CEO PR and 2017 Executive PR
awards vested (see Section 1.2) and the Board intends to grant equity
for 2021 in line with the target remuneration mix (see Section 2.2).
1.2 Performance and remuneration outcomes
The Board assessed the Group’s performance in 2020 against the
financial and non-financial objectives it established at the beginning of
the year and viewed that collectively Iress’ performance was tracking
to achieve its strategic outcomes (see Section 3.2) in the medium
to long term.
Although financial and growth performance in 2020 was below target,
the Board is of the opinion that the executives performed exceptionally
well in limiting the impact of COVID-19 on financial performance,
whilst supporting both Iress’ clients and people, and continuing to
invest in future growth opportunities. In addition, the executives
made substantial progress towards the Group’s medium term growth
objectives in 2020 with the acquisitions of BC Gateways, O&M
Systems, and OneVue.
The remuneration framework, together with the Board’s assessment of
company and individual performance has translated into the following
remuneration outcomes for Executive KMP (see Section 3.3 and 3.4 for
more details):
Base salary
No increases in base salary were given to Executive KMP in 2020. Base
salary paid to Executive KMP in 2020 was $4,446,090 (2019: $4,187,740).
This represents an increase of 6.2% which is due to the part-year
inclusion of the Chief Commercial Officer and Chief Communications
& Marketing Officer in KMP and the full-year impact of the base salary
increases awarded to Executive KMP during 2019. The 2019 increases
aligned salaries with the market and recognised the change in scope
and complexity of the roles since previous adjustments.
Equity granted
Following its 2019 assessment of performance at a Group level and
performance and conduct at an individual level, the Board determined
it was fair and appropriate that the 2020 equity grants proceed in line
with the target remuneration mix disclosed in Section 2.2 (i.e. discretion
was not applied to adjust grant values). Executive KMP were awarded
Equity Rights (ER) of $2,675,066 and PR of $2,735,065 in total in
February 2020. Total Remuneration awarded in 2020 was $9,856,221,
which was comparable to the prior year (2019: $9,860,835).
As above, following its assessment of 2020 performance, the
Board intends to grant the equity for 2021 in line with the target
remuneration mix shown in Section 2.2.
Equity vested
The previous remuneration framework included deferred equity and
PR (see Section 5.4 for more detail). Some equity granted under
the previous remuneration framework vested in May 2020. The
performance metric for PR granted before 2019 was on a RTSR basis.
The Board was satisfied that there were no other performance or
conduct factors which would justify a clawback of equity scheduled to
vest in May 2020. Hence, vesting was approved to proceed as follows:
• Based on RTSR performance, the CEO 4-year and 3-year PR granted
in 2016 vested at 82.0% and 64.0% respectively and the Executive
3-year PR granted in 2017 vested at 63.4%. The performance period
for these awards was prior to the impact of COVID-19.
• The value of equity vested in 2020 (deferred equity and PR totalled
$2,536,412) was lower than the value that vested in 2019 ($3,473,720).
This is primarily due to lower RTSR results (and thus a lower proportion
of PR vesting) and a lower share price at vesting compared to 2019.
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Remuneration Report
Directors’ Report cont.
For the year ended 31 December 2020
SECTION 2 REMUNERATION FRAMEWORK
2.1 Our remuneration structure, effective 1 January 2019
Component
Base salary
Equity rights (ER)
Description
• A market-related reward for performing a leadership role at Iress.
• An up-front grant of Rights(1) to facilitate immediate, collective alignment of executives with shareholders.
• Vesting after two years is subject to continued service. A further two-year restriction period applies(2), supporting
retention and sustainable value creation over a total of four years.
• Performance is reflected in share price movements and dividends earned which collectively impact the value of
ER. Executives will share in the same price movements and dividends(3) as shareholders over the entire vesting and
holding period.
• If employment ceases due to resignation, termination for cause or gross misconduct, unvested equity lapses. If employment
ceases for other reasons, ER will continue to be held subject to original terms (subject to Board discretion)(4).
Performance rights (PR) • A grant of PR(1), with vesting subject to Iress’ ATSR performance over three financial years and ongoing service.
• ATSR is aligned to Iress’ business objectives as ATSR focuses on growth of Iress and value to shareholders, regardless
of the broader market and other companies’ movements. Awards to executives will not vest unless substantial
shareholder value has been created over the measurement period.
• ATSR is preferred over other measures as it is simple and transparent to both executives and shareholders. It also
enables consideration of a range of benchmarks for performance.
• In setting the three-year ATSR target for each PR grant, the Board will reference a vesting range which reflects business
strategy but is informed by benchmarks such as recent performance of the All Ordinaries Accumulation index, Iress’ cost
of equity, market practice for companies with ATSR targets and historical performance of Iress and its peers.
• After considering internal and external benchmarks for performance, the Board determined that a three-year ATSR of
6.5% per annum over FY20 - FY22 would be required for 50% of the 2020 PR to vest, with maximum vesting requiring
an ATSR of 10.0% per annum.
• If employment ceases due to resignation, termination for cause or gross misconduct, unvested PR lapse. If
employment ceases for other reasons, PR continue to be held subject to original terms on a pro rata basis (subject
to Board discretion)(4).
• The CEO will be required to accrue and hold Iress equity equivalent to 400% of base salary within five years
(by 31 December 2023).
• Executives, other than the CEO, will be required to accrue and hold Iress equity equivalent to 225% of their base salary
within five years.
• Unvested ER will count towards meeting the requirement; unvested PR, which are subject to an additional ATSR hurdle,
will not.
• The value of each holding will be calculated as the maximum of
> Share price at the time of the measurement, or
Minimum shareholding
requirement (MSR)
> Share price at the time when equity is acquired (i.e., when ER is granted, when PR vests and/or when fully-paid shares
are purchased).
• Progress towards the MSR is shown in Section 5.6.
Clawback
• For both ER and PR, significant underperformance or misconduct can lead to reduced vesting at Board’s discretion.
In addition, the Board may decline to make future grants in such cases.
(1) A Right is the right to receive one Iress share (or cash of equivalent value) upon vesting and exercise of that Right at no cost, subject to adjustment for certain capital actions.
Performance Rights do not carry any dividend entitlements or voting rights. Shares allocated upon exercise carry the same rights as any other Iress share.
(2) Depending on the tax rules of the relevant jurisdiction, the restriction will either be in the form of a holding lock (preventing the share received on exercise from being sold) or an
exercise restriction (preventing the Right being converted to a share). Australian tax residents have the option of choosing an additional 6-month voluntary holding lock period.
(3) Participants are eligible for dividend equivalents during the service period (in the form of additional ER on vesting), and dividends (or cash dividend equivalents for some
jurisdictions) during the restriction period.
(4) Board discretion also applies on a change in control. The Board will consider time elapsed and performance achieved when exercising this discretion.
Iress Limited Annual Report 2020 29
Under the framework, remuneration is delivered over a five year timeframe as shown below:
2020
2021
2022
2023
2024
2025
Base salary
Cash
ER(1)
PR(2)
MSR
Vesting period (Rights)
Holding lock period
Measurement period(1)
Vesting period(2)
Minimum shareholding requirement to be met within five years (ongoing requirement)
Performance Rights
(Absolute TSR)
(1) The Executive grants were awarded on 28 February 2020 with the measurement period for PR starting from 1 January 2020. The CEO grants were awarded post shareholder
approval at the AGM on 8 May 2020.
(2) Subject to performance, vesting occurs after the vesting period has ended (28 February 2023).
2.2 Our approach to setting remuneration
Iress offers executives a Total Remuneration package and each remuneration component (base salary, ER and PR) is calculated as a proportion
of Total Remuneration, using the target remuneration mix shown in the diagram below. In determining Total Remuneration, Iress considers the
skills, experience, performance and value to Iress of the individual and market pay levels of comparable roles. Total Remuneration is reviewed
annually and approved by the Board for the CEO and by the People and Performance Committee (PPC) for other executives. Any decision to
increase total remuneration is considered in the context of the resulting change to Base Salary, ER and PR.
Iress serves multiple sophisticated client segments internationally, faces a range of competitors, and is exposed to global technology and
regulatory influences. As a result, Iress competes for the best people on a global basis. The challenges and opportunities faced by Iress reflect
the international nature of its business, its size and the industries in which it operates. Recognising this, Iress considers two main comparator
groups when assessing executive KMP remuneration: ASX-listed technology companies with complex multinational operations of a similar size
(assessed by market capitalisation); and, overseas-listed technology companies operating in a closely comparable industry segment with
comparable scale.
The executive remuneration framework delivers a large proportion of remuneration in equity which is held for three to five years. Equity
represents 68% of Total Remuneration for the CEO and 50% of Total Remuneration for other executives in 2020, as shown in the diagram below.
The proportions of equity represent both a target and a maximum grant value with performance impacting value at vesting rather than value at
grant. Allocations do not vary from target unless the Board exercises discretion. The Board can decline to make an equity grant in the case of
significant underperformance or misconduct and as such, the minimum equity allocation is nil.
Target remuneration mix
CEO
Base salary (32%)
ER (33%)
PR (35%)
Cash (32%)
Equity (68%)
Executive
Base salary (50%)
Cash (50%)
ER (25%)
PR (25%)
Equity (50%)
The number of ER and PR granted to each executive is calculated using face value. Total Remuneration is multiplied by the percentages shown above.
This amount is divided by the twenty-trading-day volume-weighted average share price to 31 December of the year prior to when grant is made.
The 2020 remuneration outcomes for each member of the Executive KMP are shown in Section 3.3.
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Remuneration Report
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For the year ended 31 December 2020
2.3 Our remuneration principles
Iress’ executive remuneration framework aligns with the following remuneration principles:
Our remuneration
principles
Alignment with Iress’
overall strategy for
medium to long-term
value creation
Alignment with our principles
✓ To support Iress’ focus on sustainable long-term growth, deferred equity that rewards multi-year performance is
used in lieu of traditional cash incentives that reward current year performance.
✓ A focus on medium to long-term outcomes is reinforced by delivering a large proportion of remuneration in equity,
requiring that equity be held for up to five years. This further enhances the alignment between executive and
shareholder long-term interests.
✓ By linking PR vesting to ATSR, the Board seeks to ensure that rewards are available for collective progress against
the business strategy, which focuses the executives on generating substantial returns for shareholders.
Alignment of
executives with
shareholders.
✓ A significant portion of remuneration is granted in equity, providing considerable ‘skin in the game’. Equity represents
68% of total remuneration for the CEO and 50% of total remuneration for executives in 2020. With the addition of the
minimum shareholding requirement, executives will see a direct increase or decrease in their wealth over the equity
holding period in the same way that shareholders do.
Ensure that Iress can
attract, motivate and
retain the leadership
talent needed to
succeed on an
international basis.
✓ Executives are prohibited from hedging unvested equity and ER that are subject to restrictions.
✓ PR which make up half of the equity awarded are subject to an additional ATSR hurdle, which vests only if
substantial returns are delivered to shareholders.
✓ In setting the ATSR target for each PR grant, the Board will reference a vesting range which reflects business
strategy but is informed by benchmarks such as recent performance of the All Ordinaries Accumulation index, Iress’
cost of equity, market practice for companies with ATSR targets and historical performance of Iress and its peers.
✓ The simplicity and transparency of the framework increases its perceived value for executives.
✓ The design of the executive remuneration framework incorporated a review of market practices for global technology
peers and consultation with the executives.
✓ Total remuneration quantum is reviewed against the remuneration offered to executives performing comparable
roles in other similarly-sized listed technology companies with dynamic international operations.
✓ Equity is held for three to five years encouraging increased executive tenure.
✓ ATSR performance is a quantified target which is within the executive’s control, thereby maximising the perceived
value of the PR grant by an individual.
✓ Substantial equity exposure allows executives to share appropriately in the value they generate for shareholders.
This will enhance Iress’ ability to attract and retain the executives needed to execute Iress’ strategy.
Simple to understand
and transparent for
all stakeholders.
✓ There are only two incentive instruments used, and equity exposure is real and in the hands of executives.
✓ By establishing a Total Remuneration (TR) approach, with the quantum of each component of remuneration at a set
percentage of Total Remuneration, the remuneration and value available is clearly communicated to the executives
and shareholders.
✓ The value of unvested equity is easily assessed by stakeholders, based on current share price and ATSR
performance.
✓ The absence of traditional STI removes the complexity and lack of transparency about performance measurement,
target setting, pool funding and adjustments.
Support robust
performance
management.
✓ The Board sets financial and non-financial objectives and reviews Iress’ performance and the performance of each
executive on an ongoing basis and intervenes where required.
✓ By having a significant proportion of remuneration delivered in equity held for long periods, the impact of individual
and collective performance is measured over multiple years.
✓ Remuneration outcomes are capped, with grant values a set percentage of Total Remuneration and PR only vesting
if shareholders have made substantial returns over three years.
✓ The framework has safeguards that give the Board discretion over remuneration outcomes if company or individual
performance is significantly below expectations. In particular, the Board may reduce or decline to make an equity
grant (either as both ER and PR) and can clawback unvested equity and restricted ER if the participant has engaged
in fraud, misrepresentation, dishonesty, gross misconduct; poor risk practices or reputational issues or any other
matters the Board determines is relevant. See Section 3.2 for the outcome of the Board discretion in 2020.
Iress Limited Annual Report 2020 31
SECTION 3 RELATIONSHIP BETWEEN PERFORMANCE AND REMUNERATION OUTCOMES
3.1 Mechanisms that link remuneration to performance
The Board sets the strategy for the Group with a three to five-year outlook. The Strategy is reviewed and adjusted each year in the context of
business progress, achievement, and the external environment. Executive remuneration is aligned to the Board’s medium to long-term strategic
outlook through equity instruments that have a holding period of up to five years. In this way, the Board incentivises executives to deliver
sustainable long-term shareholder value.
The Board sets annual and multi-year financial and non-financial objectives in areas that progressively and collectively support the Group’s
medium to long-term strategy and align with the Group’s risk appetite. Performance against these objectives is reviewed by the Board at the
Group and individual level every six months.
Review of performance against short and medium-term objectives is a key consideration for direct adjustments to individual remuneration. Group
and individual performance impacts executives’ remuneration in four ways:
• Impact 1: Individual and Group performance against the annual objectives set by the Board is a key consideration when the Board determines
the Base Salary and Total Remuneration package of an executive.
• Impact 2: Share price movements and dividends impact the value of equity over the three to five-year holding period and aligns reward with
shareholder outcomes.
• Impact 3: PR vesting is subject to a three-year ATSR measure that aligns reward with shareholder outcomes. PR vesting for awards made prior
to 2019 is subject to a RTSR measure.
• Impact 4: The Board has discretion to reduce, cancel or clawback equity remuneration if group or individual performance is significantly
below expectations, or in the event of individual misconduct. The discretion can be applied at grant, vesting, or during the equity holding period.
The Board has a rigorous process to assess performance and where necessary, adjust remuneration, as described below.
Before the start of the year
During the year
End of the year
Group performance objectives set
Performance assessed against objectives
Performance assessed against objectives
✓ The Board approves the financial and
non-financial objectives consistent with
the Group’s risk appetite and specific
targets for the Group to achieve its
medium-term strategy.
✓ The Board considers a range of financial
and non-financial metrics as summarised
in Section 3.2.
✓ In addition to monitoring throughout the
year, at mid-year, the Board formally
assesses the Group’s progress against
the objectives and company strategy.
✓ At mid-year, the PPC reviews the CEO’s
assessment of individual executive’s
progress against objectives and
company strategy.
✓ The Board assesses the performance
of the Group and the CEO against the
objectives and company strategy. The
CEO’s assessment of the performance of
other executives against their individual
objectives is reviewed by the PPC.
Individual performance objectives set
Determination of remuneration outcomes
Determination of remuneration outcomes
✓ The Group’s financial and non-financial
objectives are cascaded to individual
objectives for each executive. The targets
and weighting of the objectives are specific
to each executive’s role, but include financial
and non-financial objectives in all cases.
The Board approves the CEO’s objectives
and the PPC reviews the objectives for
other executives.
✓ At each scheduled vesting date, the
PPC reviews Iress’ TSR performance and
confirms the maximum PR eligible to vest
(Impact 3). With consideration also to
any group and individual performance
or conduct and risk factors at any time
during the equity holding period, the PPC
determines the final number of ER and PR
to vest (Impact 4).
✓ At half-year, the CEO reviews the
remuneration packages of his direct
reports taking their individual performance
into consideration (Impact 1). Any
recommended changes are reviewed
by PPC.
The sections below outline Iress’ performance and the resulting remuneration outcomes in 2020.
✓ The Board reviews the CEO’s remuneration
package (Impact 1) for the subsequent year.
✓ The Board (for the CEO) and the PPC (for
other executives) determines if there were
any group or individual performance or
conduct and risk factors which would justify
a reduction in value of ER and PR to be
granted in the subsequent cycle (Impact 4).
✓ During the equity holding period, each
executive’s equity is subject to the same
share price movements as other Iress
shareholders (Impact 2).
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Directors’ Report cont.
For the year ended 31 December 2020
3.2 Group performance against objectives
The table below provides summary information on the Group’s earnings for the five years to 31 December 2020.
Measure
Net Profit After Tax ($’000s)
Segment Profit ($’000s)(a)
Operating revenue ($’000s)
Segment Profit on a constant
currency basis ($’000s)(a)
Operating revenue on a constant
currency basis ($’000s)
Basic Earnings per share (cents)
Annual ATSR(b)
Annualised 3-year ATSR(b)
3-year RTSR target for PR grant
3-year ATSR target for PR grant
2020
59,066
152,918
542,630
2019
65,128
152,062
508,943
2018
64,096
137,702
464,624
2017
59,755
125,383
429,952
2016
59,452
123,531
389,737
155,339
152,062
138,743
127,875
124,425
546,022
32.3
–18.0%(c)
1.3%
n/a
6.5–10% p.a.
508,943
37.9
23.5%
9.3%
n/a
469,617
37.6
2.7%
8.7%
443,967
35.4
2.8%
7.8%
393,329
37.0
21.7%
10.6%
50th – 75th percentile
n/a
(a) Segment Profit (calculation as set out in Note 1.1 to the Consolidated Financial Statements) is a measure of core underlying business performance.
(b) All share prices and the TSR calculation are based on the twenty trading day volume weighted average share price on the relevant dates.
(c) Iress’ share price (twenty-trading-day volume weighted average share price) was $13.21 at 31 December 2019 and $10.39 at 31 December 2020.
As noted earlier in this report, Iress’ 2020 operating revenue of $543m was 7% higher than in 2019, but fell short of the target set for 2020 as a
result of the more challenging macro environment. Pro forma (see table below for a reconciliation of reported results to pro forma results) revenue
growth was 2%. Management responded to lower than expected revenue through rigorous cost control which delivered a Segment Profit outcome,
excluding the impact of currency fluctuations, of $155m, 2% higher than in 2019. Pro forma Segment Profit grew 5% and pro forma NPAT grew 7%
compared to 2019. The Board views this to be a steady outcome in the context of the volatile macroeconomic environment and the impact it has
had on top-line growth.
Also noted earlier in this report, Iress takes a medium to long term view when assessing strategic investment decisions. In this context, the Board
and Management maintained a number of important investment initiatives that form part of the 2020 cost base and impacted Segment Profit
outcome for the year. As a result, the 2020 Segment Profit result is less than it would have been if only short term financial outcomes had been
the focus. The Board and Management believe that this approach was, and is, in the best medium to long term interests of shareholders.
Iress’ 2020 non-financial objectives and performance are summarised below. When determining whether to make (and the extent of)
adjustments to remuneration, the Board considers the following areas of performance collectively and in context of achieving the Company’s
medium term strategy.
Reconciliation: Reported
to pro forma results
Operating Revenue
Segment Profit
NPAT
Reported result
Add: QuantHouse results for 1st five months
of 2019 (1)
Remove: BC Gateways post acquisition results
in 2020(2)
Remove: O&M Systems post acquisition results
in 2020(2)
Remove: OneVue Holdings post acquisition
results in 2020 (2)
Remove: Impact of currency movements
in 2020(3)
Pro forma result
2019
$AUDm
508.9
15.2
524.1
2020
$AUDm
542.6
0.0
(2.7)
(7.9)
3.4
535.5
2019
$AUDm
152.1
(3.5)
148.5
2020
$AUDm
152.9
1.5
(0.2)
(1.0)
2.4
155.6
2019
$AUDm
65.1
(4.9)
60.2
2020
$AUDm
59.1
(1.4)
0.4
4.3
1.8
64.3
(1) Adjustment to include five months pre-acquisition QuantHouse trading in 2019 (business was purchased end of May 2019) which provides a full twelve month comparative.
(2) Adjustments to remove the impact of 2020 acquisitions.
(3) Adjustment to remove the impact of currency movements in 2020 so that 2020 results are translated at the same currency rates as 2019.
Iress Limited Annual Report 2020 33
Focus area
Performance goal
FY20 achievement
Strategic progress
FY20–21
Clients & Users
Quality
Ease
Growth
Product & Technology
Quality
Ease
Growth
Company & People
Quality
Ease
Growth
To grow strategic relationships
Clients experience ease with interactions with Iress
Iress achieves budgeted growth goals, through existing and new clients
At target
At target
Below target
Iress continues to improve in quality delivery and speed
Software useability is improved for end users
Data and innovation is delivered in new products for growth
Iress is an employer of choice and known for the best people
A consistent approach to describe and achieve work across teams
is a driver of efficiency
Automation is a primary driver of scale across Iress
At target
At target
At target
Above target
At target
At target
At target
At target
At target
At target
At target
At target
At target
At target
At target
As shown above, 2020 non-financial performance was at target in most areas, above target for Company/People-Quality and below target for
Client-Growth. Progress towards medium term strategic goals was on target in all areas, including Growth, due to acquisitions such as OneVue.
After due consideration, the Board concluded that the below target performance in Client-Growth in the short-term did not materially impact
overall performance, which remains on track in the medium term.
While financial and Client-Growth performance was below the targets set by the Board at the beginning of the year, the Board is of the opinion
that the Executive Team have performed exceptionally well under the current circumstances by:
• Limiting the impact on financial performance by managing cost growth effectively;
• Continuing to invest in medium to long term growth opportunities;
• Delivering seamless service delivery to clients through a period of lockdown and remote working while also helping clients to transition their
own businesses to remote working;
• Continuing to increase the client base and maintaining service continuity for clients despite economic uncertainty;
• Prioritising the health and wellbeing of our people and long term relationships of clients over short term financial performance; and
• Creating opportunities for future growth through strategic acquisitions.
With consideration to the sustainable approach with which Management responded to COVID-19 and the degree to which executives had
already been impacted by share price movements (see Section 3.5), the Board viewed that applying discretion to further alter outcomes was
not warranted or appropriate.
Iress’ key achievements in 2020 are further described in pages 2 to 7 of the Annual Report.
34
Directors’ Report
Remuneration Report
Directors’ Report cont.
For the year ended 31 December 2020
3.3 Remuneration awarded in the current year
Following its 2019 year-end assessment of performance at a Group level and performance and conduct at an individual level, the Board
determined it was fair and appropriate that the 2020 equity grants proceed in line with the remuneration mix disclosed in Section 2.2.
The remuneration awarded to Executive KMP in 2020 (and 2019) is shown below. Total Remuneration awarded in 2020 was $9,856,221, which
was comparable to the prior year (2019: $9,860,835).
Base salary awarded to Executive KMP in 2020 was higher than in 2019 due to the part-year inclusion of new roles in KMP and the full-year
impact of the base salary increases disclosed in 2019. The increases aligned salaries with the market and recognised the change in scope and
complexity of the roles since previous adjustments.
Equity was awarded in line with the target remuneration mix disclosed in Section 2.2, which resulted in higher values than 2019 for ER and PR
due to the changes to base salary and the higher equity grant values approved by shareholders in May 2019. The value of equity awarded is not
realised unless and until the equity vests (subject to the satisfaction of vesting conditions) and is released from restrictions.
No Transition ER was awarded in 2020, as this was a one-off award in 2019 to compensate executives for the negative impact of the one-off
transition to the new remuneration framework.
Executive KMP
A Walsh
M Blomfield(c)
J Das(c)
P Ferguson
J Harris
A Knowles(c,d)
C Lill(c)
J McNeill(d)
S New(d)
A Todd
Total Executive KMP
Year
2020
2019
2020
2020
2020
2019
2020
2019
2020
2019
2020
2020
2019
2020
2019
2020
2019
2020
2019
Base
salary
$
1,000,000
1,000,000
123,077
162,885
390,000
375,417
620,000
573,333
386,795
611,636
133,333
410,714
422,956
589,286
589,623
630,000
614,775
4,446,090
4,187,740
ER(a)
$
Transition
ER(a,b)
$
PR(a)
$
Total
remuneration
$
1,008,901
888,894
n/a
n/a
195,006
182,511
310,012
270,001
313,738
283,320
n/a
218,665
194,786
313,738
265,613
315,006
301,960
2,675,066
2,387,085
0
0
0
0
0
109,507
0
162,005
0
169,992
0
0
116,871
0
159,372
0
181,178
0
898,925
1,068,900
888,894
n/a
n/a
195,006
182,511
310,012
270,001
313,738
283,320
n/a
218,665
194,786
313,738
265,613
315,006
301,960
2,735,065
2,387,085
3,077,801
2,777,788
123,077
162,885
780,012
849,946
1,240,024
1,275,340
1,014,271
1,348,268
133,333
848,044
929,399
1,216,762
1,280,221
1,260,012
1,399,873
9,856,221
9,860,835
(a) ER, Transition ER and PR are shown at face value which includes the value of dividends. This differs from fair value expensed in 2020, which has been used to calculate
remuneration in Section 5.2. The number of rights granted to each executive KMP in 2020 and 2019 was based on the twenty-trading-day volume weighted average share price
up to and including 31 December 2019 and 31 December 2018 respectively. Where not applicable (n/a) is stated, the individual became KMP after the eligibility date for this
award.
(b) Transition ER were a one-off equity grant in 2019 to offset the reduction in cash flow as a result of changes to the executive remuneration framework.
(c) Amounts shown reflect the part of the year the individual was KMP as per the introduction to this Remuneration Report.
(d) Salary of A Knowles, J McNeill and S New is denominated fully or partly in British Pounds and is subject to Fx movements. The Australian dollar amounts shown in the table were
converted at an average foreign exchange rate of 0.56 (2019:0.53).
Iress Limited Annual Report 2020 35
3.4 Remuneration realised from equity granted in previous years
Equity vested
In May 2020, based on Iress’ RTSR performance in the preceding three and four year periods, there was partial vesting of PR granted to the CEO
in 2016 and PR granted to other executives in 2017.
Award
CEO 2016 4-yr
CEO 2016 3-yr deferred start
Executive 2017 3-yr
Initial measurement period(a)
RTSR percentile
Final vesting
At end of measurement period (a,b)
1 Jan 2016 to 31 Dec 2019
1 Jan 2017 to 31 Dec 2019
1 Jan 2017 to 31 Dec 2019
66.0th
57.0th
56.7th
82.0%
64.0%
63.4%
(a) PR granted prior to 2019 had one re-test 6 months after the initial measurement period. The final outcomes above are thus based on maximum performance as measured on
31 Dec 2019 and 30 June 2020.
(b) TSR amounts are calculated as per the terms of each PR offer, which provide for a 20-day volume weighted average share price at the start and end. Due to a slight
methodology change, percentiles were rounded to zero decimal places for the 2016 awards and one decimal place for the 2017 award.
In addition to the RTSR vesting criteria, equity granted prior to 2019 also required satisfactory individual performance. Following its assessment
of performance and conduct at an individual level at the end of the year, the Board determined not to clawback any of the above awards and that
the full value of PR as determined by RTSR performance would vest.
The value of equity vested to Executive KMP in 2020 (and 2019) is shown below. In addition to the 2016 and 2017 PR, it includes deferred equity
granted in 2017 under the previous remuneration framework (see Section 5.4 for more details). Executive KMP had a decrease in their realised
remuneration in 2020 as compared to 2019, which was primarily driven by lower RTSR results and thus a lower proportion of PR vesting, lower
share price at vesting and a lower number of deferred shares due to vest in 2020 for the CEO compared to 2019.
Executive KMP
A Walsh
M Blomfield(b)
J Das(b)
P Ferguson
J Harris
A Knowles(b,c)
C Lill(b)
J McNeill(c)
S New(c)
A Todd
Total Executive KMP
Financial
Year
2020
2019
2020
2020
2020
2019
2020
2019
2020
2019
2020
2020
2019
2020
2019
2020
2019
2020
2019
Base
salary
$
1,000,000
1,000,000
123,077
162,885
390,000
375,417
620,000
573,333
386,795
611,636
133,333
410,714
422,956
589,286
589,623
630,000
614,775
4,446,090
4,187,740
Deferred
equity
vested(a)
$
498,262
831,836
n/a
n/a
112,356
135,256
170,975
135,256
170,975
236,699
n/a
74,506
140,993
74,506
81,159
161,203
n/a
1,262,783
1,561,199
PR vested(a)
$
917,722
1,244,426
n/a
n/a
64,084
136,837
98,001
193,187
98,001
193,187
n/a
44,720
80,488
51,101
64,396
n/a
n/a
1,273,629
1,912,521
Total
remuneration
$
2,415,984
3,076,262
123,077
162,885
566,440
647,510
888,976
901,776
655,771
1,041,522
133,333
529,940
644,437
714,893
735,178
791,203
614,775
6,982,502
7,661,460
(a) The value of equity that vested is based on the twenty-trading-day volume weighted average share price up to and including the vesting date. Where not applicable (n/a) is
stated , the executive started with the Group after the eligibility date for this award. This differs from fair value expensed in 2020, which has been used to calculate remuneration
in Section 5.2.
(b) Amounts shown reflect the part of the year the individual was KMP as per the introduction to this Remuneration Report.
(c) Salary of A Knowles, J McNeill and S New is denominated fully or partly in British Pounds and is subject to Fx movements. The Australian dollar amounts shown in the table were
converted at an average foreign exchange rate of 0.5600(2019:0.5300).
Total salary awarded to executives in 2020 was higher than in 2019 due to the full-year impact of the base salary increases disclosed in 2019,
which was offset by the value of equity vested in 2020 being lower than in 2019, resulting in a decrease to total realised remuneration.
36
Directors’ Report
Remuneration Report
Directors’ Report cont.
For the year ended 31 December 2020
3.5
Change in value of equity held
Iress’ remuneration framework directly links shareholder and executive outcomes. Executive KMP saw a reduction in the value of their equity in
2020 due to the reduced likelihood of future PR vesting, and declined value of their equity holdings due to the share price. This is aligned with
shareholder experience in 2020. As shown in Section 5.6, Executive KMP have accumulated shares from previous vestings voluntarily. These
shareholdings were also exposed to share price changes during the year.
Shareholder outcome
Executive outcome(1)
Estimated $ impact(2)
Equity type
Shares
Deferred equity (previous
remuneration framework)
ATSR –18.0%
ATSR –21.3% (due to no dividends)
Unvested equity rights
ATSR –18.0%
ATSR –18.0%
Unvested performance rights
2019 and 2020 awards not
tracking to vest due to ATSR of
0.6% and –18.0% respectively
(1) Where equity was held all of 2020.
(2) This estimate is based on the equity held at 31 December 2020 (which approximates the average balance throughout the year), and the value of equity holdings at the
beginning and end of the year using a twenty-trading-day volume weighted average share price ($13.21 at 31 December 2019 and $10.39 at 31 December 2020).
In its 2020 half-year and year-end assessments, the Board did not identify any individual or company performance or conduct factors that
would warrant clawback of currently unvested equity at future vesting dates. The Board will continue to monitor such factors until the relevant
vesting date for each grant of equity.
The 1.5m shares/rights held
by executive KMP decreased
in value by $4.2m in 2020, of
which $2.2m is for the CEO.
After offsetting the value of
dividends (and potential dividend
equivalents), the difference in
value for Executive KMP was
–$3.6m (–$1.9m for the CEO).
As of 31 December 2019, 100%
of the 2019 Performance Rights
were on track to vest.
The loss in the potential value in
2020 is $3.0m, of which $1.1m is
for the CEO.
Iress Limited Annual Report 2020 37
SECTION 4 NON-EXECUTIVE DIRECTOR FEES
4.1 Fee policy
NED receive fees for their services plus the reimbursement of reasonable expenses. To ensure objective and independent oversight of the Group,
NED do not participate in performance-based incentives or receive post-employment benefits. The fee levels that applied during 2020 were:
Role
Chair
Member
Fee ($)
Audit & Risk
Committee
24,000
Nil
People &
Performance
Committee
24,000
Nil
Iress Ltd Board
240,000(a)
130,000
(a) The Chairman of the Iress Ltd Board is entitled to the Board Chair fee only (no additional Committee fees).
NED fees are reviewed at appropriate intervals and are determined by the Board in consideration of fees paid to NED of comparable companies.
4.2 Maximum aggregate NED fee pool
The maximum aggregate pool available for NED fees is approved by the shareholders at the Annual General Meeting in accordance with the
Group’s Constitution. The maximum pool is set around the median level for comparable companies, to provide the ability for Iress to attract and
retain appropriately qualified and experienced directors.
The maximum aggregate fee pool of $1,500,000 per annum was approved at the Annual General Meeting held on 2 May 2019. The pool was
increased in 2019 to ensure that there was flexibility to provide an orderly succession process, with an overlap between new directors and
directors who are in their final term. Accordingly, two NED were appointed to the Board in 2020. The total amount of remuneration paid to NED
in 2020 was $1,234,691 (2019: $1,080,350) with the increase being driven by the new appointments.
For the NED statutory remuneration details, please see Section 5.3.
38
Directors’ Report
Remuneration Report
Directors’ Report cont.
For the year ended 31 December 2020
SECTION 5 ADDITIONAL REQUIRED DISCLOSURES
5.1 Remuneration governance
The Board and the People & Performance Committee work closely to apply the Group’s remuneration philosophy and ensure the Company’s
remuneration strategy supports the creation of sustainable shareholder value.
The Board oversees remuneration for Iress and approves remuneration for NED and the CEO. The PPC reviews remuneration taking into account
a wide variety of information including business strategy and culture, stakeholder interests, market practice and corporate governance principles
and also approves remuneration arrangements of executives (excluding the CEO). More information about the Board’s role in remuneration
governance can be found at https://www.iress.com/trust/corporate-governance/governance-documents/board-charter/.
No remuneration recommendations (as defined by the Corporations Act 2001) were provided to the Board during the reporting period.
5.2 Executive KMP remuneration
The table below presents details of Executive KMP remuneration prepared in accordance with statutory requirements and accounting standards.
Under this standard, equity is expensed based on the grant date fair value over the vesting period.
Total
remun-
eration
$
Performance
related
remun-
eration
Short-term benefits
$
Post-
employment
benefits
$
Salary
& fees(a)
Non-
monetary
benefits(b)
Super-
annuation
1,000,000
1,000,000
123,077
162,885
390,000
375,417
620,000
573,333
386,795
611,636
133,333
425,179
438,239
589,286
589,623
630,000
614,775
4,460,555
4,203,023
17,104
21,971
0
0
2,369
2,535
2,369
2,535
2,235
3,611
0
8,683
12,077
4,798
5,062
0
0
37,558
47,791
25,000
25,000
11,692
15,474
25,198
25,990
25,000
25,000
6,519
26,250
12,667
36,830
38,066
29,464
29,481
25,000
25,000
212,844
Long-term benefits
$
Share-
based
payments
DSR/ER
1,366,056
931,879
0
0
329,161
250,695
495,435
366,637
281,009
387,711
88,474
349,631
246,671
470,477
317,106
545,716
512,339
3,925,959
Share-
based
payments
PR
687,411
744,050
0
0
79,124
82,644
119,715
123,256
69,573
123,352
19,450
82,342
75,195
107,050
90,594
114,538
80,739
1,279,203
Long-
service
leave
32,101
16,112
0
0
9,273
9,728
16,300
24,379
0
14,786
2,274
3,127,672
2,739,012
134,769
178,359
835,125
747,009
1,278,819
1,115,140
746,131
1,167,346
256,198
n/a
902,665
n/a
n/a
n/a
9,010
5,445
68,958
70,450
810,248
1,201,075
1,031,866
1,324,264
1,238,298
9,985,077
8,848,919
66%
61%
0%
0%
49%
45%
48%
44%
47%
44%
42%
48%
40%
48%
40%
50%
48%
52%
49%
Executive KMP
A Walsh
M Blomfield(c)
J Das(c)
P Ferguson
J Harris
A Knowles(d)
C Lill(e)
J McNeill(d)
S New(d,f)
A Todd
Total
Year
2020
2019
2020
2020
2020
2019
2020
2019
2020
2019
2020
2020
2019
2020
2019
2020
2019
2020
2019
194,787
3,013,038
1,319,830
(a) Salary and fees includes allowances and short-term compensated absences paid during the 2019 and 2020 years.
(b) Non-monetary benefits include health and life insurance subsidies. For A Walsh, this also includes the market value of his/Iress’ ongoing arrangement for settling UK tax and
insurance obligations on equity awards that were on foot during his 2013–2015 secondment to the UK. Excluded from non-monetary benefits for A Walsh is the cost of filing tax
returns in the UK ($2,648).
(c) M Blomfield and J Das joined Iress in September and October 2020 respectively and have not received any Iress equity to date.
(d) Remuneration of A Knowles, J McNeill and S New is denominated fully or partly in British Pounds and is subject to Fx movements. The Australian dollar amounts shown in the
table were converted at an average foreign exchange rate of 0.5600 (2019:0.5300). The amounts included under Superannuation refer to Pension for these individuals.
(e) C Lill became KMP in September 2020 and his remuneration from that date has been included including the share-based payment expense for September to December 2020
in relation to awards he was granted prior to becoming KMP.
(f) Simon New’s 2019 superannuation has been restated to correct an error in the 2019 report.
Iress Limited Annual Report 2020 5.3 Non-executive Director remuneration
The total remuneration for NED during 2020 and 2019 is set out in the table below.
Non-executive Director
A D’Aloisio
N Beattie
J Cameron
M Dwyer(d)
J Fahey(b)
J Hayes
J Seabrook(c)
G Tomlinson(a)
T Vonhoff(d)
Total Non-executive Director fees
Short-term
benefits
Fees
($)
219,178
219,178
130,000
130,000
118,721
118,721
108,828
140,639
118,721
140,639
140,639
44,894
140,639
127,180
118,721
108,828
1,138,907
986,619
Post-
employment
entitlements
Super-
annuation
($)
20,822
20,822
12,350
12,350
11,279
11,279
10,339
13,361
11,279
13,361
13,361
1,113
13,361
2,820
11,279
10,339
95,784
93,731
Year
2020
2019
2020
2019
2020
2019
2020
2020
2019
2020
2019
2020
2019
2020
2019
2020
2020
2019
39
Total(a)
($)
240,000
240,000
142,350
142,350
130,000
130,000
119,167
154,000
130,000
154,000
154,000
46,007
154,000
130,000
130,000
119,167
1,234,691
1,080,350
(a) NED fees are paid inclusive of superannuation for all NEDs except for N Beattie, who is paid superannuation on-top of fees based on the percentage of total fees relating to work
performed in Australia.
(b) J Fahey was appointed as the Chair of the PPC in February 2020.
(c) J Seabrook ceased to be a Non-executive Director of the Board on 7 May 2020.
(d) M Dwyer and T Vonhoff were appointed to the Board as NED on 1 February 2020.
5.4 Terms of equity grants
2019 & 2020 Performance Rights
The 2019 and 2020 PR were granted consistent with the terms described in Section 2.1. The number of PR that will vest will depend on Iress’
ATSR performance over the measurement period, measured using a twenty-trading-day volume weighted average share price at the start and
end of the measurement period. The vesting schedule for the 2019 and 2020 PR award is given below.
Iress’ annualised ATSR over the 3-year measurement period
% of PR that will vest
Below 6.5%
6.5%
Between 6.5% and 10%
10% or higher
0%
50%
Pro-rata portion will vest on a straight-line basis between 50% (at 6.5%) and
100% (at 10%)
100%
This vesting schedule was set with consideration to the benchmarks outlined in Section 2.3. The above are stretch targets against those benchmarks.
Performance Rights granted prior to 2019
PR granted prior to 2019 had similar terms to the 2019 PR grant. The main difference was that vesting was based on RTSR performance over
the measurement period. Iress’ TSR performance was measured against a comparator group consisting of companies listed in the S&P/ASX 200
index, excluding mining and resource companies, and listed property trusts. The comparator group companies were determined as at 1 January
of the year of grant. For all PR granted prior to 2019, 0% of the rights vested for RTSR performance below the 50th percentile and 100% of the
rights vested for RTSR performance of 75th percentile with pro-rata vesting on a straight-line basis in between. Iress allowed for one re-test, six
months after the initial test date, for any portions of awards that do not vest on the initial test date.
40
Directors’ Report
Remuneration Report
Directors’ Report cont.
For the year ended 31 December 2020
2019 Transition Equity Rights (Transition ER)
In 2019, the annual cash short-term incentive was removed upon the introduction of the new executive remuneration framework. Until the ER
begin to be released from restrictions in 2023, executives have a negative cash flow impact. To offset this, a one-off additional grant of Transition
ER valued at 30% of an executive’s 31 December 2018 base salary was provided to executives (excluding the CEO) in 2019.
Transition ER have the same vesting conditions and holding restrictions as the annual ER allocations. However, for circumstances such as
redundancy, Transition ER will be retained on a pro rata basis (subject to Board discretion).
Deferred equity delivered as Deferred Share Rights (DSR)
Under the previous remuneration framework, executives were eligible for a cash short-term incentive and deferred equity, as well as PR. Deferred
Equity was delivered in the form of Deferred Share Rights. A grant under this plan was made in May 2019 in relation to performance in the 2018
financial year. A grant was also made under this plan to A Todd in December 2019. This was granted in lieu of a grant he should have received
in May 2017 after joining Iress, which in error, had been missed. A DSR is a right to acquire one fully paid ordinary share in Iress (subject to
adjustment for certain capital actions) at no cost. Vesting is conditional on three-years’ continued service and achievement of a satisfactory level
of individual performance during these three years.
Employee share plans
The previous employee share plans offered to Australian and UK employees were expanded globally in 2020. Under the 2020 OneIress Equity
award, permanent employees were invited to acquire Iress shares either by:
• salary sacrificing up to specified limits with Iress supplementing this with shares up to a value of $300, or
• receiving free Iress shares or share rights worth $300 with the tax obligations being borne by the participant.
Equity is granted in the form of shares or share rights. In 2020, 836 employees (44% of eligible employees) participated in the plan, subscribing
to 92,100 shares and 29 share rights.
5.5 Unvested equity
The table below presents the ER, DSR (Deferred equity and Avelo awards) and PR held during the financial year by each Executive KMP. No rights
are granted to NED or related parties. Any rights that vest will be automatically exercised on or around the time Iress notifies the participant that
their rights have vested. ER, DSR and PR are granted for no consideration, and upon vesting, can be exercised at no cost.
Executive
KMP(a)
Type of
equity
Grant
date
Number
granted
Fair value
at grant
date
Vesting
date
Expiry
date
Number
vested(e)
%
vested
Number
lapsed
%
lapsed
Number
unvested(b)
A Walsh
ER
PR
ER
PR
DSR
PR
PR
DSR
PR
PR
DSR
PR
PR
8-May-20
8-May-20
9-May-19
9-May-19
9-May-19
10-May-18
10-May-18
10-May-18
11-May-17
11-May-17
11-May-17
5-May-16
5-May-16
76,374
80,916
80,020
80,020
42,736
45,605
45,605
51,707
54,739
54,739
47,575
60,000
60,000
11.86
2.61
14.22
8.6
12.73
5.75
5.78
9.58
6.64
7.05
10.86
6.24
8.00
28-Feb-22
28-Feb-23
26-Feb-21
28-Feb-22
10-May-22
10-May-22
10-May-22
10-May-21
11-May-21
11-May-21
11-May-20
5-May-20
5-May-20
28-Feb-22
28-Feb-23
28-Feb-21
28-Feb-22
10-May-22
10-May-22
10-May-22
10-May-21
11-May-23
11-May-23
11-May-21
5-May-23
5-May-23
–
–
–
–
–
–
–
–
–
–
47,575
38,400
49,200
–
–
–
–
–
–
–
–
–
–
100.00%
64.00%
82.00%
–
–
–
–
–
–
–
–
–
–
0
21,600
10,800
–
–
–
–
–
–
–
–
–
–
0.00%
36.00%
18.00%
Total of ER and DSR
Total of PR
76,374
80,916
80,020
80,020
42,736
45,605
45,605
51,707
54,739
54,739
0
0
0
250,837
361,624
Iress Limited Annual Report 2020 41
Expiry
date
Number
vested(e)
%
vested
Number
lapsed
%
lapsed
Number
unvested(b)
Executive
KMP(a)
Type of
equity
Grant
date
Number
granted
Fair value
at grant
date
P Ferguson ER
PR
ER
PR
TER
DSR
PR
DSR
PR
DSR
28-Feb-20
28-Feb-20
28-Feb-19
28-Feb-19
28-Feb-19
10-May-19
10-May-18
10-May-18
11-May-17
11-May-17
J Harris
Total of ER and DSR
Total of PR
ER
PR
ER
PR
TER
DSR
PR
DSR
PR
DSR
28-Feb-20
28-Feb-20
28-Feb-19
28-Feb-19
28-Feb-19
10-May-19
10-May-18
10-May-18
11-May-17
11-May-17
Total of ER and DSR
Total of PR
A Knowles ER
PR
ER
PR
TER
DSR
PR
DSR
PR
DSR
28-Feb-20
28-Feb-20
28-Feb-19
28-Feb-19
28-Feb-19
10-May-19
10-May-18
10-May-18
11-May-17
11-May-17
C Lill
Total of ER and DSR
Total of PR
ER
PR
ER
PR
TER
DSR
PR
DSR
28-Feb-20
28-Feb-20
28-Feb-19
28-Feb-19
28-Feb-19
10-May-19
10-May-18
10-May-18
Total of ER and DSR
Total of PR
14,762
14,762
16,430
16,430
9,858
9,966
12,770
12,772
9,646
10,728
23,468
23,468
24,306
24,306
14,584
14,861
19,154
18,666
14,752
16,325
23,750
23,750
25,505
25,505
15,303
16,473
18,242
18,175
14,752
16,325
13,059
13,059
12,379
12,379
7,427
8,392
9,577
9,825
11.86
3.81
12
5.54
12
12.73
5.79
9.58
7.13
10.86
11.86
3.81
12
5.54
12
12.73
5.79
9.58
7.13
10.86
11.86
3.81
12
5.54
12
12.73
5.79
9.58
7.13
10.86
11.86
3.81
12
5.54
12
12.73
5.79
9.58
Vesting
date
28-Feb-22
28-Feb-23
26-Feb-21
28-Feb-22
26-Feb-21
10-May-22
10-May-21
10-May-21
11-May-20
11-May-20
28-Feb-22
28-Feb-23
26-Feb-21
28-Feb-22
26-Feb-21
10-May-22
10-May-21
10-May-21
11-May-20
11-May-20
28-Feb-22
28-Feb-23
26-Feb-21
28-Feb-22
26-Feb-21
10-May-22
10-May-21
10-May-21
11-May-20
11-May-20
28-Feb-22
28-Feb-23
28-Feb-21
28-Feb-22
28-Feb-21
10-May-22
10-May-21
10-May-21
11-May-24
11-May-21
28-Feb-22
28-Feb-23
28-Feb-21
28-Feb-22
28-Feb-21
10-May-22
10-May-21
10-May-21
11-May-24
11-May-21
28-Feb-22
28-Feb-23
28-Feb-23
28-Feb-22
28-Feb-21
10-May-22
10-May-21
10-May-21
11-May-24
11-May-21
28-Feb-22
28-Feb-23
26-Feb-21
28-Feb-22
26-Feb-21
10-May-22
10-May-21
10-May-21
28-Feb-22
28-Feb-23
28-Feb-21
28-Feb-22
28-Feb-23
10-May-22
10-May-21
10-May-21
–
–
–
–
–
–
–
–
6,116
10,728
–
–
–
–
–
–
–
–
9,353
16,325
–
–
–
–
–
–
–
–
9,353
16,325
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
63.40%
100.00%
–
–
–
–
–
–
–
–
63.40%
100.00%
–
–
–
–
–
–
–
–
63.40%
100.00%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,530
0
–
–
–
–
–
–
–
–
5,399
0
–
–
–
–
–
–
–
–
5,399
0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
36.60%
0.00%
–
–
–
–
–
–
–
–
36.60%
0.00%
–
–
–
–
–
–
–
–
36.60%
0.00%
–
–
–
–
–
–
–
–
14,762
14,762
16,430
16,430
9,858
9,966
12,770
12,772
0
0
63,788
43,962
23,468
23,468
24,306
24,306
14,584
14,861
19,154
18,666
0
0
95,885
66,928
23,750
23,750
25,505
25,505
15,303
16,473
18,242
18,175
0
0
99,206
67,497
13,059
13,059
12,379
12,379
7,427
8,392
9,577
9,825
51,082
35,015
42
Directors’ Report
Remuneration Report
Directors’ Report cont.
For the year ended 31 December 2020
Executive
KMP(a)
Type of
equity
Grant
date
Number
granted
Fair value
at grant
date
J McNeill
S New
A Todd
ER
PR
ER
PR
TER
DSR
PR
DSR
PR
DSR
28-Feb-20
28-Feb-20
28-Feb-19
28-Feb-19
28-Feb-19
10-May-19
10-May-18
10-May-18
11-May-17
11-May-17
Total of ER and DSR
Total of PR
ER
PR
ER
PR
TER
DSR
PR
DSR
PR
DSR
28-Feb-20
28-Feb-20
28-Feb-19
28-Feb-19
28-Feb-19
10-May-19
10-May-18
10-May-18
11-May-17
11-May-17
Total of ER and DSR
Total of PR
ER
PR
DSR(c)
ER
PR
TER
DSR
PR
DSR
28-Feb-20
28-Feb-20
13-Dec-19
28-Feb-19
28-Feb-19
28-Feb-19
10-May-19
10-May-18
10-May-18
Total of ER and DSR
Total of PR
16,553
16,553
17,535
17,535
10,521
10,567
13,682
13,731
6,731
7,114
23,750
23,750
23,911
23,911
14,347
13,520
15,962
17,164
7,692
7,114
23,846
23,846
15,392
27,183
27,183
16,310
16,784
20,067
21,614
11.86
3.81
12
5.54
12
12.73
5.79
9.58
7.13
10.86
11.86
3.81
12
5.54
12
12.73
5.79
9.58
7.13
10.86
11.86
3.81
13.17
12
5.54
12
12.73
5.79
9.58
Vesting
date
28-Feb-22
28-Feb-23
26-Feb-21
28-Feb-22
26-Feb-21
10-May-22
10-May-21
10-May-21
11-May-20
11-May-20
28-Feb-22
28-Feb-23
26-Feb-21
28-Feb-22
26-Feb-21
10-May-22
10-May-21
10-May-21
11-May-20
11-May-20
28-Feb-22
28-Feb-23
11-May-20
26-Feb-21
28-Feb-22
26-Feb-21
10-May-22
10-May-21
10-May-21
Expiry
date
Number
vested(e)
%
vested
Number
lapsed
%
lapsed
Number
unvested(b)
28-Feb-24
28-Feb-23
28-Feb-23
28-Feb-22
28-Feb-23
10-May-22
10-May-21
10-May-21
11-May-24
11-May-21
28-Feb-22
28-Feb-23
28-Feb-23
28-Feb-22
28-Feb-21
10-May-22
10-May-21
10-May-21
11-May-24
11-May-21
28-Feb-22
28-Feb-23
11-May-24
28-Feb-21
28-Feb-22
28-Feb-21
10-May-22
10-May-21
10-May-21
–
–
–
–
–
–
–
–
4,268
7,114
–
–
–
–
–
–
–
–
4,877
7,114
–
–
15,392
–
–
–
–
–
–
–
–
–
–
–
–
–
–
63.41%
100.00%
–
–
–
–
–
–
–
–
63.40%
100.00%
–
–
100.00%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,463
0
–
–
–
–
–
–
–
–
2,815
0
–
–
0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
36.59%
0.00%
–
–
–
–
–
–
–
–
36.6%
0.00%
–
–
0.00%
–
–
–
–
–
–
16,553
16,553
17,535
17,535
10,521
10,567
13,682
13,731
0
0
68,907
47,770
23,750
23,750
23,911
23,911
14,347
13,520
15,962
17,164
0
0
92,692
63,623
23,846
23,846
0
27,183
27,183
16,310
16,784
20,067
21,614
105,737
71,096
(a) M Blomfield and J Das have not received any Iress equity to date.
(b) This includes equity instruments held by the individual and in a nominated trust.
(c) A Todd was awarded an additional grant of DSRs in 2019 in lieu of a grant that should have been awarded in 2017. This award had a service period of 11 May 2017 to 11 May 2020
as per other DSR awarded in 2017.
(d) All DSR and PR that vested during the year were exercisable. A Knowles has 49,484 vested DSR and PR which have not been exercised.
The maximum value of the grants yet to vest has been determined as the fair value of awards at the grant date. The minimum value is zero as no
rights vest if the conditions are not satisfied.
Iress Limited Annual Report 2020 43
5.6 Shareholdings
The number of ordinary shares held in Iress Limited during the financial year by each KMP is set out below for NED and Executive KMP respectively.
Included for each individual are shares held on their behalf by the trustee of the Iress Limited Equity Plans Trust and their personally related parties.
NED have a Minimum Shareholding Requirement to be met by 31 December 2022, or within three years of their appointment. They are required to
accrue and hold Iress equity equivalent to 100% of the base fee for being a Member of the Board, unless otherwise determined by the Board.
NED
A D’Aloisio
N Beattie
J Cameron
M Dwyer
J Fahey
J Hayes
J Seabrook(a)
G Tomlinson
T Vonhoff
Total
Balance
as at
1 Jan 2020
49,402
6,000
36,668
0
2,584
13,788
41,549
8,000
0
157,991
Shares
acquired
during
the year
2,879
5,185
5,758
–
–
1,438
1,059
–
13,879
30,198
Other
changes
Balance
as at
31 Dec 2020
Value of
Total Holdings
as % of
base fees
0
0
0
0
0
0
0
0
0
0
52,281
11,185
42,426
0
2,584
15,226
42,608
8,000
13,879
188,189
226%
89%
339%
0%
17%
103%
n/a
64%
121%
(a) J Seabrook’s closing balance is at 7 May 2020, when she ceased to be KMP.
Iress executives have a Minimum Shareholding Requirement to be met by December 2023, or within five years of commencing. The CEO is
required to accrue and hold Iress equity equivalent to 400% of base salary. Other executives are required to hold 225% of their base salary.
This requirement only applies to equity granted under the new remuneration framework implemented in 2019. Unvested ER and TER count
towards the requirement but unvested PR do not.
Prior remuneration framework awards
(pre 2019) and directly acquired shares
New remuneration framework awards
(2019 and after)
Executive
KMP(a)
A Walsh(f)
P Ferguson
J Harris
A Knowles(g)
C Lill
J McNeill
S New(f)
A Todd
Total
Balance
as at
1 Jan 2020
Shares
acquired
during the
year(b)
Other
changes
Balance
as at
31 Dec 2020(c)
Balance
as at
1 Jan 2020
ER granted
during
the year
Balance
as at
Value of
Holding
as % of base
Value of
Total Holdings
as % of base
31 Dec 2020(c)
salary(d)
salary(e)
406,714
21,597
23,874
13,164
–
3,682
5,402
–
139,807
16,844
28,557
25,678
–
11,382
11,991
15,561
474,433
249,820
–
(3,700)
(28,013)
(11,414)
–
(6,215)
(6,547)
(15,392)
(71,281)
546,521
34,741
24,418
27,428
–
8,849
10,846
169
80,020
26,288
38,890
40,808
19,806
28,056
38,258
43,493
76,374
14,762
23,468
23,750
13,059
16,553
23,750
23,846
652,972
315,619
215,562
156,394
41,050
62,358
64,558
32,865
44,609
62,008
67,339
531,181
190%
125%
120%
n/a
98%
129%
125%
127%
758%
217%
161%
n/a
98%
152%
143%
127%
(a) M Blomfield and J Das do not hold any Iress Limited shares. They are eligible to receive equity in 2021.
(b) Shares acquired by Executive KMP during the year were acquired on the exercise of DSR and PR or directly acquired.
(c) This includes equity instruments held individually and in trusts.
(d) The value of ER for the purpose of the MSR calculation is the higher of the grant price and share price at 31 December 2020, in both cases using the twenty trading day volume
weighted average share price.
(e) For equity awarded under pre 2019 remuneration frameworks and directly acquired shares, the share price at 31 December 2020 (twenty-trading-day volume weighted average
share price up to and including 31 December 2020) was used to calculate the value.
(f) Opening balances have been restated for A Walsh (to correct error in indirect holding disclosed in the 2 September 2020 Change of Director’s Interest Notice) and S New (to
include disposals of 5,766 shares in the prior year).
(g) A Knowles ceased to be subject to the MSR on 31 August 2020 due to the change in his role.
44
Directors’ Report
Remuneration Report
Directors’ Report cont.
For the year ended 31 December 2020
5.7 Executive KMP service agreements
All Iress Executive KMP have a formal contract, known as a service agreement. These agreements are of an ongoing nature and have no set term
of service.
The key terms of the service agreements for the CEO and other Executive KMP are summarised below. Executive KMP termination entitlements
are limited to 12 months’ base salary unless shareholder approval is received.
Criterion
Term of contract
Notice period
Resignation
Arrangements
Ongoing.
Six months (from the employee and Group).
The executive may resign by giving six months’ written notice.
Termination on notice by Iress
Iress may terminate the employment agreement by providing six months’ written notice, or payment in lieu
of the notice period.
Redundancy
If Iress terminates employment for reasons of bona fide redundancy, a severance payment will be made.
The quantum of the payment will be determined subject to the Board’s discretion, considering matters such
as statutory requirements, the executive’s contribution, position and length of service.
Termination for serious misconduct
Iress may terminate the employment agreement at any time without notice.
Non-compete
A non-compete arrangement exists for a period of six months following employment with the Group(1).
(1) The non-compete period is up to 12 months for other members of the Executive KMP.
5.8 Transactions with KMP
No transactions (excluding share-based payment compensation) occurred between KMP and the Group during 2020.
5.9 Loans to KMP or related parties
No loans to KMP or related parties were provided during 2020.
This Directors’ Report has been verified by Management and reviewed by the Company’s Board of Directors and its Audit and Risk Committee.
Signed in accordance with a resolution of the Directors made pursuant to s.298(2) of the Corporations Act 2001 (Cth).
On behalf of the Directors.
Tony D’Aloisio
Andrew Walsh
Chair
Melbourne
17 February 2021
Managing Director and Chief Executive Officer
Iress Limited Annual Report 2020
45
Auditor’s Independence Declaration
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne, VIC, 3000
Australia
Phone: +61 3 9671 7000
www.deloitte.com.au
17 February 2021
The Board of Directors
Iress Limited
Level 16, 385 Bourke Street
MELBOURNE VIC 3000
Dear Board Members
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo IIrreessss LLiimmiitteedd
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of IRESS Limited.
As lead audit partner for the audit of the financial statements of Iress Limited for the financial year ended 31
December 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Tom Imbesi
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
46
Financial Statements
Contents
Financial Statements
For the year ended 31 December 2020
This is the financial report for Iress Limited (the ‘Company’) and its controlled entities (collectively referred to as the ‘Group’ or ‘Iress’)
for the year ended 31 December 2020.
CONTENTS
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Section 1. Financial results
1.1 Segment information
1.2 Earnings per share and dividends per share
1.3 Revenue from contracts with customers
1.4 Employee benefit expenses
1.5 Share-based payments
1.6 Other expenses
1.7 Depreciation and amortisation
1.8 Notes to the Consolidated Statement of Cash Flows
Section 2. Core assets and working capital
2.1 Intangible assets
2.2 Plant and equipment
2.3 Leases
2.4 Receivables and other assets
2.5 Payables and other liabilities
2.6 Provisions
2.7 Commitments and contingencies
Section 3. Debt and equity
3.1 Debt facilities and derivatives
3.2 Issued capital
3.3 Managing financial risks
Section 4. Other disclosures
4.1 Taxation
4.2 Businesses and investments acquired and divested
4.3 Iress Limited – Parent entity financial information
4.4 Subsidiaries
4.5 Deed of cross guarantee
4.6 Basis of preparation
4.7 The impact of the COVID-19 pandemic on these financial statements
4.8 Transactions with related parties
4.9 Events subsequent to the Statement of Financial Position date
Directors’ declaration
Independent Auditor’s Report
Shareholder information
Corporate directory
47
48
49
50
51
51
51
53
54
57
58
61
62
62
63
63
65
66
70
74
75
76
77
77
79
80
81
81
84
87
88
89
91
93
93
93
94
95
100
101
Iress Limited Annual Report 2020 Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 31 December 2020
Revenue from contracts with customers
Customer data fees
Communication and other technology expenses
Employee benefit expenses
Net other expenses
Profit before depreciation, amortisation, interest and income tax expense
Depreciation and amortisation expense
Profit before interest and income tax expense
Interest income
Interest expense
Net interest and financing costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Tax related to exchange differences recognised directly in foreign
currency translation reserve(1)
Total other comprehensive (loss)/income for the period
Total comprehensive income for the period
47
2019
$’000
508,943
(42,952)
(43,339)
(269,075)
(19,713)
133,864
(37,244)
96,620
547
(8,716)
(8,169)
88,451
(23,323)
65,128
10,775
39
10,814
75,942
Notes
1.3(a)
1.4
1.6
1.7
3.1(e)
4.1
2020
$’000
542,630
(48,024)
(54,654)
(285,250)
(29,213)
125,489
(39,356)
86,133
438
(8,422)
(7,984)
78,149
(19,083)
59,066
(19,150)
(76)
(19,226)
39,840
Earnings per share
Basic earnings per share
Diluted earnings per share
Cents per share
Cents per share
1.2(a)
1.2(a)
32.3
32.0
37.9
37.6
The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
(1) Relates to the tax effect on the exchange differences arising from intercompany monetary items that are treated as part of a net investment in a foreign operation. Under
AASB121 – The Effects of Changes in Foreign Exchange Rates, the foreign exchange gains or losses on these monetary items are recognised directly in other comprehensive
income rather than the profit or loss.
48
Financial Statements
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
As at 31 December 2020
ASSETS
Current assets
Cash and cash equivalents
Receivables and other assets
Current taxation receivables
Derivative assets
Total current assets
Non-current assets
Intangible assets
Plant and equipment
Right-of-use assets
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables and other liabilities
Lease liabilities
Provisions
Current taxation payables
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Borrowings
Deferred tax liabilities
Derivative liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Share-based payments reserve
Foreign currency translation reserve
(Accumulated losses)/retained earnings
Total equity
Notes
1.8(a)
2.4(a)
3.1(c)
2.1(a)
2.2(a)
2.3(c)
4.1(c)
2.5
2.3(d)
2.6(a)
2.3(d)
2.6(a)
3.1(a)
4.1(c)
3.1(c)
3.2
2020
$’000
2019
$’000
63,141
66,113
2,845
1,739
133,838
734,098
32,740
75,307
29,289
871,434
1,005,272
82,457
13,383
5,914
486
102,240
71,125
43,517
188,433
12,095
–
315,170
417,410
587,862
558,416
35,020
(5,093)
(481)
587,862
33,386
81,710
200
–
115,296
619,748
27,547
51,901
22,479
721,675
836,971
64,525
9,179
6,669
5,253
85,626
48,356
30,560
225,914
9,789
1,820
316,439
402,065
434,906
383,083
30,990
14,133
6,700
434,906
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Iress Limited Annual Report 2020 Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Balance at 1 January 2019
Impact of change in accounting policy(2)
Adjusted balance at 1 January 2019
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity
as owners:
Shares issued during the year(3)
Dividends declared(4)
Share-based payment expense, net of tax(5)
Transfer of share-based payments reserve(6)
Balance at 31 December 2019
Balance at 1 January 2020
Profit for the year
Other comprehensive loss
Total comprehensive (loss)/income
Transactions with owners in their capacity
as owners:
Shares issued during the year(3)(7)
Share issue costs, net of tax(8)
Dividends declared(4)
Share-based payment expense, net of tax(5)
Transfer of share-based payments reserve(6)
Balance at 31 December 2020
Share-based
Payments
Reserve
$’000
Foreign
Currency
Translation
Reserve
$’000
24,683
–
24,683
–
–
–
–
–
16,976
(10,669)
6,307
30,990
Share-based
Payments
Reserve
$’000
30,990
–
–
–
–
–
–
21,177
(17,147)
4,030
35,020
3,319
–
3,319
–
10,814
10,814
–
–
–
–
–
14,133
Foreign
Currency
Translation
Reserve
$’000
14,133
–
(19,226)
(19,226)
–
–
–
–
–
–
(5,093)
Retained
Earnings
$’000
12,852
(2,110)
10,742
65,128
–
65,128
–
(79,839)
–
10,669
(69,170)
6,700
Retained
Earnings/
(Accumulated
Losses)
$’000
6,700
59,066
–
59,066
–
–
(83,394)
–
17,147
(66,247)
(481)
Issued
Capital(1)
$’000
378,577
–
378,577
–
–
–
448
4,058
–
–
4,506
383,083
Issued
Capital(1)
$’000
383,083
–
–
–
175,604
(2,933)
2,662
–
–
175,333
558,416
49
Total
Equity
$’000
419,431
(2,110)
417,321
65,128
10,814
75,942
448
(75,781)
16,976
–
(58,357)
434,906
Total
Equity
$’000
434,906
59,066
(19,226)
39,840
175,604
(2,933)
(80,732)
21,177
–
113,116
587,862
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
(1) For details of shares issued during the period please refer to Note 3.2.
(2) Impact of adopting AASB 16’s modified retrospective approach under which the cumulative effect of initial application is recognised in retained earnings at 1 January 2019.
(3) Shares issued to satisfy Employee Share Plan obligations. Refer to Note 3.2.
(4) Shares issued under the Dividend Reinvestment Plan. Refer to Note 3.2. For dividends declared refer to Note 1.2(c).
(5) The share-based payment expense includes the tax impact of $0.157 million (2019: $0.68 million) on vesting of employee share-based payments.
(6) The movement from share-based payment reserves to retained earnings represents the grant date fair value of share-based payments that have vested or lapsed during
the year. The amount has been recognised as a share-based payment expense over the vesting period. Details of share-based payment arrangements are provided in Note 1.5.
(7) Shares issued during the year from a share placement and share purchase plan. Refer to Note 3.2.
(8) Capitalised share issue costs incurred during the year.
50
Financial Statements
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
Cash flows from operating activities
Cash generated from operating activities
Interest received
Interest and borrowing costs paid
Interest on lease liabilities(1)
Income tax paid(2)
Net cash inflow generated from operating activities
Cash flows from investing activities
Payments for purchase of intangible assets
Payments for purchase of plant and equipment
Proceeds from sale of plant and equipment
Payment for deferred consideration
Payments for acquisition of subsidiaries & businesses, net of cash acquired
Net cash outflow utilised by investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Share issue costs paid
Proceeds from employee share plan repayments
Payment of lease liabilities(1)
Repayment of borrowings within acquired entities
Dividends paid
Proceeds from borrowings
Repayment of borrowings
Net cash inflow generated from/(outflow utilised by) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of the year
Notes
1.8(b)
2.3(e)
2.1(a)
2.2(a)
2.2(a)
2.6(b)
4.2
3.2
3.2
3.2
2.3(d)
4.2(c)
3.1(b)
3.1(b)
2020
$’000
165,565
438
(7,314)
(2,227)
(31,588)
124,874
(6,465)
(17,046)
43
(1,620)
(114,208)
(139,296)
175,000
(4,108)
604
(10,334)
(6,482)
(80,722)
142,039
(172,239)
43,758
29,336
33,386
419
63,141
2019
$’000
131,762
538
(5,911)
(2,086)
(21,696)
102,607
(2,487)
(10,480)
1,313
(1,436)
(20,411)
(33,501)
–
–
448
(10,189)
–
(75,882)
123,645
(107,022)
(69,000)
106
30,190
3,090
33,386
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
(1) In the prior period interest on lease liabilities was previously disclosed within cash flows from financing activities. To be consistent with other types of interest, the interest on
lease liabilities is now disclosed within cash flows from operating activities.
(2) The increase in income tax paid during the current period compared to the corresponding prior period is as a result of changes in the timing of income tax instalment payments
primarily in the UK and Australia.
Iress Limited Annual Report 2020 51
Notes to the Consolidated Financial Statements
For the year ended 31 December 2020
SECTION 1. FINANCIAL RESULTS
1.1. Segment information
Iress has a global presence, with the Managing Director and Chief Executive Officer, who is Iress’ Chief Operating Decision Maker, receiving
internal reporting split by the segments listed below. Any transactions directly between segments are charged on an arm’s length basis.
Iress segments comprise:
(a) Client segments
Client segments which include the revenue less the direct costs of customer facing teams that oversee this revenue generation, are:
APAC
Consists of:
• The trading & market data business which provides market data, trading, compliance, order management, portfolio systems and related tools
to financial markets participants in Australia, New Zealand and Asia,
• The financial advice & superannuation business which provides financial planning systems and related tools to wealth management professionals
located in Australia and New Zealand, and fund administration software to the superannuation and wealth management industries, and
• The operations of the recently acquired OneVue which provides administration platforms for managed funds, superannuation and investments.
UK & Europe
Incorporates the financial markets business which provides information, trading, compliance, order management, portfolio systems and
related tools to cash equity participants; and the wealth management business which provides financial planning systems and related tools
to wealth management professionals located in the United Kingdom. In addition, market data services are provided to customers throughout
the UK & Europe.
Mortgages
The mortgages segment operates in the United Kingdom to provide mortgage origination software and associated consulting services to banks.
South Africa
Provides information, trading, compliance, order management, portfolio systems and related tools to financial markets participants and provides
financial planning systems and related tools to wealth management professionals located in South Africa.
North America
Provides information, trading, compliance, order management, portfolio systems and related tools to financial markets and wealth management
participants in Canada. In addition, market data services are provided to customers in the United States of America.
(b) Cost segments
Product & Technology
All costs associated with product and technology will be reported under this segment giving a clear view of the quantum of investment made by
Iress in maintaining and enhancing its products.
Operations
Includes costs to run client facing and corporate operations activity, including hosting and networks, information security, client help desks and
property infrastructure.
52
Notes to the Consolidated Financial Statements
Section 1. Financial results
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
1.1. Segment information (continued)
(b) Cost segments (continued)
Corporate
All other corporate functions including legal, strategy, finance and administration, human resources, communications and marketing, board
of directors and Chief Executive Officer.
Any transactions directly between segments are charged on an arm’s length basis.
The revenue, Segment Profit and reconciliation to the Group results are shown below:
Operating Revenue(1)
Direct Contribution
Client segments
Cost segments
APAC
UK & Europe
Mortgages
South Africa
North America
Total group
Product and Technology
Operations
Corporate
Total indirect costs
Group results
Segment Profit
Share-based payment expense
Segment Profit after share-based
payment expense
Other non-operating expenses(2)
Profit before depreciation,
amortisation, interest and income
tax expense
Depreciation and amortisation
Profit before interest and income
tax expense
Net interest and financing costs
Income tax expense
Net profit after income tax expense
2020
$’000
289,843
154,590
26,925
42,931
28,341
542,630
2019
$’000
264,475
142,686
29,026
48,304
24,452
508,943
2020
$’000
203,977
94,363
18,102
33,928
11,009
361,379
(128,407)
(42,619)
(37,435)
(208,461)
152,918
(21,020)
131,898
(6,409)
125,489
(39,356)
86,133
(7,984)
(19,083)
59,066
2019
$’000
191,113
91,949
19,151
37,503
10,364
350,080
(118,635)
(42,707)
(36,676)
(198,018)
152,062
(17,701)
134,361
(497)
133,864
(37,244)
96,620
(8,169)
(23,323)
65,128
(1) Operating revenue is recognised ‘over time’ in accordance with AASB 15 Revenue from Contracts with Customers.
(2) Predominately relates to office move costs, non-operating income, business acquisition and integration expenses, revaluation of financial liabilities relating to deferred
contingent consideration and realised and unrealised foreign exchange gains and losses. Refer to Note 1.6.
Iress Limited Annual Report 2020 53
The below table outlines operating revenue and non-current assets by geographical area, being Australia and New Zealand, Asia, UK & Europe,
South Africa and North America:
Australia & New Zealand
Asia
Total APAC
UK & Europe
South Africa
North America
Grand total
Operating Revenue
Non-Current Assets(1)
2020
$’000
279,976
9,867
289,843
181,515
42,931
28,341
542,630
2019
$’000
257,397
7,078
264,475
171,712
48,304
24,452
508,943
2020
$’000
266,125
777
266,902
475,559
15,022
9,355
766,838
2019
$’000
128,247
343
128,590
491,685
17,631
9,389
647,295
(1) Excludes right-of-use assets, financial instruments and deferred taxes, and predominantly relates to intangible assets. Refer to Note 2.1.
1.2 Earnings per share and dividends per share
(a) Basic and diluted earnings per share, and dividends per share for the year are:
Cents per share
2020
Cents per share
2019
Earnings per share
Diluted earnings per share
Dividends per share:
Interim dividend franked to 35% (2019: 10%)
Final dividend declared after the Statement of Financial Position date franked to 40% (2019: 40%)
(b) The weighted average number of shares used to calculate earnings per share is as follows:
Weighted average number of ordinary shares used in basic earnings per share
Effect of potentially dilutive shares
Weighted average number of ordinary shares used in diluted earnings per share
(c) Dividends recognised during the year and after the Statement of Financial Position date were as follows:
Dividends paid during the year
Final dividend for 2019 30.0 cents per share franked to 40% (2018: 30.0 cents per share franked to 40%)
Interim dividend for 2020 16.0 cents per share franked to 35% (2019: 16.0 cents per share franked to 10%)
32.3
32.0
16.0
30.0
Number
of shares
2020
‘000
182,995
1,411
184,406
2020
$’000
52,477
30,917
83,394
37.9
37.6
16.0
30.0
Number
of shares
2019
‘000
171,980
1,457
173,437
2019
$’000
51,915
27,924
79,839
Dividends declared after balance date
Since the end of the year, the Directors declared a final dividend of 30.0 cents per share franked
to 40% (2019: 30.0 cents per share franked to 40%)
Franking credit balance
57,998
52,477
Franking credits available for subsequent reporting periods based on a tax rate of 30% (2019: 30%)
7,921
2,055
54
Notes to the Consolidated Financial Statements
Section 1. Financial results
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
1.3 Revenue from contracts with customers
Iress designs, develops and delivers technology solutions for the financial services industry in Australia, Asia, New Zealand, UK & Europe, South
Africa and North America.
From these activities, Iress generates the following streams of revenue:
• Software licence revenue
• Implementation and consulting revenue
• Royalties revenue from provision of financial market information
• Other ancillary fees such as hosting and support service fees
Each of the above services delivered to customers are considered separate performance obligations, even though for practical expedience they
may be governed by a single legal contract with the customer.
Revenue recognition for each of the above revenue streams is as follows:
Revenue stream
Performance obligation
Timing of recognition
Software licence
revenue
Access to software.
Software licence revenue is recognised over time as the customer simultaneously
receives and consumes the benefit of accessing the software.
Revenue is calculated based on the number of licences used and rate per licence, or as a
negotiated package for large customers. Changes in these factors over time may impact
the revenue recognised over the life of the contract.
Software licence revenue is recognised as the amount to which the Group has a right
to invoice.
Customers are typically invoiced monthly and consideration is payable when invoiced,
which corresponds directly with the performance completed to date in respect of
this stream.
Implementation and
consulting revenue
As defined in the contract.
Revenue is recognised over time as services are delivered.
For implementation revenue
– typically completion of data
conversions, completion of user
acceptance testing, provision of
functional environments.
Revenue from providing services is recognised in the accounting period in which the
services are rendered.
Revenue is calculated based on time and materials usage.
For fixed-price contracts, revenue is recognised based on the actual service provided
to the end of the reporting period.
Recognition is determined based on the actual labour hours spent as a proportion
of total expected hours. This requires judgment of the forecast expected hours and
changes in implementation timing.
If contracts include the installation of hardware, revenue for the hardware is recognised
at a point in time when the hardware is delivered, the legal title has passed, and the
customer has accepted the hardware.
Royalties revenue
Provision of financial market
information.
Royalties revenue is recognised over time as the customer simultaneously receives and
consumes the benefit of accessing the information.
Other ancillary fees
Provision of hosting services,
cloud services, support and
maintenance services.
Royalties revenue is recognised as the amount to which the Group has the right
to invoice.
Customers are typically invoiced monthly and consideration is payable when invoiced, which
corresponds directly with the performance completed to date in respect of this stream.
Over time, depending on circumstances.
Iress Limited Annual Report 2020 55
Some contracts include multiple deliverables, such as implementation services and software licences.
Because the implementation services do not include material software customisation that are specific to the client and could be performed by
another party, the implementation service and software licences are accounted for as separate performance obligations. In these cases, the
transaction prices are allocated to each performance obligation based on the stand-alone selling prices. Where these are not directly observable,
they are estimated based on expected cost plus a margin.
In fixed-price contracts, the customer pays the fixed amount based on an agreed payment schedule. If the services rendered by the Group
exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.
If the contract includes an hourly fee, revenue is recognised at the amount to which the Group has the right to invoice (i.e. based on hours
actually incurred in providing the service to the client). Customers are invoiced monthly and consideration is payable when invoiced.
(a) Revenue by client segment is summarised below:
Revenue stream
For the year ended
31 December 2019
Software licence revenue
Implementation and
consulting revenue
Royalties revenue
Other ancillary fees
Total revenue
Revenue stream
For the year ended
31 December 2020
Software licence revenue
Implementation and
consulting revenue
Royalties revenue
Other ancillary fees
Total revenue
Revenue
recognition
APAC
$’000
UK & Europe
$’000
Mortgages
$’000
South Africa
$’000
North America
$’000
Total
$’000
Over time
218,490
118,042
7,562
45,305
19,890
409,289
Over time
Over time
Over time
11,268
23,930
10,787
2,407
5,893
16,344
264,475
142,686
19,630
–
1,834
29,026
9
1,896
1,094
–
2,849
1,713
33,314
34,568
31,772
48,304
24,452
508,943
Revenue
recognition
APAC
$’000
UK & Europe
$’000
Mortgages
$’000
South Africa
$’000
North America
$’000
Total
$’000
Over time
238,552
129,499
11,773
39,817
23,074
442,715
Over time
Over time
Over time
14,651
25,178
11,462
2,317
8,439
14,335
289,843
154,590
14,568
–
584
26,925
54
1,696
1,364
42,931
–
3,254
2,013
31,590
38,567
29,758
28,341
542,630
(b) Receivables, contract assets and contract liabilities from contracts with customers by client segment are summarised below:
APAC
$’000
UK & Europe
$’000
Mortgages
$’000
South Africa
$’000
North America
$’000
Total
$’000
For the year ended 31 December 2019
Trade receivables
Contract assets
Contract liabilities
14,309
3,398
(653)
17,325
8,256
(11,282)
557
5,189
(145)
3,075
380
(3)
1,522
–
–
APAC
$’000
UK & Europe
$’000
Mortgages
$’000
South Africa
$’000
North America
$’000
For the year ended 31 December 2020
Trade receivables
Contract assets
Contract liabilities
18,445
6,789
(787)
9,364
5,827
(11,584)
557
3,432
(797)
1,597
349
–
758
–
(245)
36,788
17,223
(12,083)
Total
$’000
30,721
16,397
(13,413)
56
Notes to the Consolidated Financial Statements
Section 1. Financial results
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
1.3 Revenue from contracts with customers (continued)
(c) Revenue recognised in relation to contract assets and liabilities
The following table shows the revenue recognised in the current reporting period in relation to the contact assets and contract liabilities:
Contract Assets
Contract Liabilities
Balance at the beginning of the year
Transfer from contract assets to receivables
Revenue raised for work performed but not yet billed
Decrease due to revenue recognised from performance obligations
satisfied
Increase due to cash received, excluding amount recognised during
the year
Acquired from business combinations
Foreign currency translation
2020
$’000
17,223
(17,154)
15,891
–
–
–
437
2019
$’000
8,302
(8,302)
16,997
–
–
–
226
Balance at the end of the year
16,397
17,223
2020
$’000
(12,083)
–
–
12,340
(13,902)
–
232
(13,413)
2019
$’000
(4,915)
–
–
4,915
(3,601)
(8,201)
(281)
(12,083)
(d) Transaction price allocated to the remaining performance obligations
The following table includes the revenue on existing contracts expected to be recognised in the future which relates to performance obligations
that are unsatisfied (or partially satisfied) at the reporting date:
UK &
Europe
$’000
Mortgages
$’000
South
Africa
$’000
North
America
$’000
Year in which
transaction price
is expected to
be realised
2021
2022
2023
2024
Total
Revenue stream
Software licence revenue
Implementation and
consulting revenue
Other ancillary fees
Total revenue
Revenue
recognition
Over time
Over time
Over time
Software licence revenue
Over time
Over time
Over time
Total revenue
Software licence revenue
Total revenue
Software licence revenue
Total revenue
Software licence revenue
Implementation and
consulting revenue
Other ancillary fees
Total revenue
APAC
$’000
1,279
1,604
–
2,883
–
–
–
–
–
–
2,755
1,012
–
3,767
610
610
622
622
635
635
207
1,977
–
2,184
–
–
–
–
–
–
Over time
1,279
4,622
207
Over time
Over time
1,604
–
2,883
1,012
–
5,634
1,977
–
2,184
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
489
489
–
–
–
–
–
–
–
–
489
489
Total
$’000
4,241
4,593
489
9,323
610
610
622
622
635
635
6,108
4,593
489
11,190
The Group applies the practical expedient in the revenue standard and does not disclose information about the remaining performance obligation
on contracts that have an original expected duration of one year or less or where the Group has the right to consideration from a customer in an
amount that corresponds directly with the value to the customer of the Group’s performance to date.
The table above, therefore, does not include revenue expected to be recognised in future years on software licence, royalties and other ongoing
contracts where the Group will recognise revenue in the amount to which the entity has a right to invoice.
Iress Limited Annual Report 2020 57
1.4 Employee benefit expenses
Short-term employee benefits, mainly comprising base salary and annual leave costs are expensed as the employee renders services.
Post-employment benefits which comprise Iress’ contribution to a defined contribution retirement plans are expensed as the service is received
from the employee.
Termination benefits are amounts paid to employees when their employment is terminated. These are expensed when Iress can no longer
withdraw the offer of the termination benefit.
Short-term and other employee benefits
Post-employment benefits
Termination benefits
Share-based payment expense
Employee administration expense
Notes
1.5(c)
2020
$’000
(237,930)
(19,189)
(484)
(21,020)
(6,627)
(285,250)
2019
$’000
(222,906)
(17,081)
(833)
(17,701)
(10,554)
(269,075)
Key Management Personnel
Executive and Non-Executive Director Key Management Personnel compensation included in total employee benefits for the year is set out below:
Short-term and other employee benefits
Long-term employee benefits
Post-employment benefits
Share-based payment expense
Notes
2020
$’000
(5,637)
(69)
(309)
(5,205)
(11,220)
2019
$’000
(5,237)
(70)
(289)
(4,333)
(9,929)
Detailed remuneration disclosures are provided in the Audited Remuneration Report including a description of the executive remuneration framework.
58
Notes to the Consolidated Financial Statements
Section 1. Financial results
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
1.5 Share-based payments
The grant date fair value of equity settled share-based payment awards granted to employees is recognised as an expense, with a corresponding
increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for
which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based
on the number of awards that meet the related service and non-market performance conditions at the vesting date.
(a) Details of share plans
To assist in the attraction, retention and motivation of employees, the Group operates the following share-based payment plans:
Plan
Key terms
Executive Equity Rights
– From 2019
Executive Transition
Equity Rights – In 2019
Eligible participants
receive equity rights
at no cost.
Eligible participants
receive equity rights
at no cost.
Performance
condition
Performance/
Restriction period
Dividends received
before vesting
Individual
performance criteria
2 year vesting followed
by 2 year holding lock
Individual
performance criteria
2 year vesting followed
by 2 year holding lock
No but dividend
equivalent “top-up”
on vesting
No but dividend
equivalent “top-up”
on vesting
Executive PR Plan –
CEO – From 2019
Executive PR Plan –
From 2019
Executive PR Plan –
CEO – Prior to 2019
Executive PR Plan –
Prior to 2019
Employee Deferred
Share Plan – From 2019
Employee Deferred
Share Plan – Prior
to 2019
Employee Deferred
Share Rights Plan –
From 2019
Employee Deferred
Share Rights Plan –
Prior to 2019
OneIress Equity award/
UK Share Incentive
Plan
CEO receives
performance rights
at no cost.
Eligible participants
receive performance
rights at no cost
CEO receives
performance rights
at no cost.
Eligible participants
receive performance
rights at no cost.
Eligible participants
receive deferred
shares at no cost.
Eligible participants
receive deferred
shares at no cost.
Eligible participants
receive deferred
rights at no cost.
Eligible participants
receive deferred rights
at no cost.
Eligible participants are
invited to acquire Iress
shares, Iress matches
this participation to a
set value.
Absolute total
shareholder return
(ATSR) against hurdles
3 years
No
No
3 years and 4 years
No
Total shareholder
return (TSR) against
peer group
3 years
Individual
performance criteria
3 years (Vesting
in equal portions
annually)
3 years
3 years (Vesting
in equal portions
annually)
3 years
Nil
3 years
No
Yes
Yes
Yes
No
Yes
If participant leaves
before end of
performance period
Generally forfeited
(Board discretion
may apply)
Pro-rata portion of
equity generally held
subject to original
terms (Board discretion
may apply)
Generally forfeited
(Board discretion
may apply)
Generally forfeited
(Board discretion
may apply)
Generally forfeited
(Board discretion
may apply)
Generally forfeited
(Board discretion
may apply)
Matched shares are
forfeited under the UK
Share Incentive Plan
and granted under
the General Employee
Share Plan.
As at 31 December 2020, the total unvested shares in the OneIress Equity award were 106,225 (2019: 28,958). In addition there were 29 unvested
share rights (2019:0).
Iress Limited Annual Report 2020 59
(b) Grant date fair value
The grant date fair value of the Executive LTI Plans and the Employee Deferred Share Rights Plan are independently determined using a Monte
Carlo simulation option pricing model using standard option pricing inputs such as the underlying share price, exercise price, expected dividends,
expected risk free rates and expected share price volatility. Key inputs are summarised below:
Grant date fair value
Key inputs in determining grant date fair value
Model used
Risk free rate
Share price volatility
Dividend yield
Executive LTI Plan
Employee Deferred
Share Rights Plan
Monte Carlo
0.22% – 3%
22.5% – 27.5%
Monte Carlo
0.22% – 3%
22.5% – 27.5%
3.25% – 4.25%
3.25% – 4.25%
As the vesting conditions of the Employee Deferred Share Plan grants are not linked to company performance and participants receive dividends
during the vesting period, the grant date fair value approximates the share price at the date of grant.
(c) Details of shares or rights on issue during the year and the amount expensed during the year is shown below:
Type
Grant date
Vesting date
Executive Plans – CEO
05 May 2020
2016 Grant – 3 year
05 May 2016
05 May 2020
2016 Grant – 4 year
05 May 2016
11 May 2021
2017 Grant – 3 year
11 May 2017
11 May 2021
2017 Grant – 4 year
11 May 2017
11 May 2020
2017 Grant
11 May 2017
10 May 2022
2018 Grant – 3 year
10 May 2018
10 May 2022
2018 Grant – 4 year
10 May 2018
11 May 2021
10 May 2018
2018 Grant
09 May 2022
2019 Grant – PR pre 19 09 May 2019
26 Feb 2021
09 May 2019
2019 Grant – ER
09 May 2019
2019 Grant – PR
28 Feb 2022
08 May 2020 28 Feb 2022
2020 Grant – ER
08 May 2020 28 Feb 2023
2020 Grant – PR
Number of shares
At grant date
Expenses
At
1 Jan
2020
60,000
60,000
54,739
54,739
47,575
45,605
45,605
51,707
42,736
80,020
80,020
–
–
Granted
Forfeited
Vested
–
–
–
–
–
–
–
–
–
–
–
76,374
80,916
(10,800)
(21,600)
–
–
–
–
–
–
–
–
–
–
–
(49,200)
(38,400)
–
–
(47,575)
–
–
–
–
–
–
–
–
At
31 Dec
2020
–
–
54,739
54,739
–
45,605
45,605
51,707
42,736
80,020
80,020
76,374
80,916
Share
price
$
11.87
11.87
12.39
12.39
12.39
10.86
10.86
10.86
14.22
14.22
14.22
11.86
7.17
Fair
value
$
8.00
6.24
6.64
7.05
10.86
5.75
5.78
9.58
12.73
14.22
8.60
11.86
2.61
2020
$’000
(41)
(32)
(91)
(97)
(62)
(66)
(66)
(165)
(182)
(632)
(245)
(325)
(49)
622,746
157,290
(32,400)
(135,175)
612,461
(2,053)
60
Notes to the Consolidated Financial Statements
Section 1. Financial results
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
1.5 Share-based payments (continued)
(c) Details of shares or rights on issue during the year and the amount expensed during the year is shown below (continued):
Number of shares
At grant date
Expenses
Type
Grant date
Vesting date
At
1 Jan
2020
Granted
Forfeited
Vested
At
31 Dec
2020
Share
price
$
Executive Plans –
Non-CEO
11 May 2017
2017 Grant
2018 Grant
10 May 2018
2019 Grant – PR pre 19 09 May 2019
2019 Grant – ER & TER 28 Feb 2019
28 Feb 2019
2019 Grant – PR
28 Feb 2020
2020 Grant – PR
28 Feb 2020
2020 Grant – ER
Employee Deferred
Share Plan
2017 Grant(1)
11 May 2017
10 May 2018
2018 Grant
28 Feb 2019
2019 Grant – EAG – A
28 Feb 2019
2019 Grant – EAG – B
28 Feb 2019
2019 Grant – EAG – C
28 Feb 2020
2020 Grant – EAG – A
2020 Grant – EAG – B 28 Feb 2020
2020 Grant – EAG – C 28 Feb 2020
11 May 2020
10 May 2021
09 May 2022
26 Feb 2021
28 Feb 2022
28 Feb 2023
28 Feb 2022
105,461
170,470
133,502
372,509
240,289
–
–
–
–
–
–
–
220,643
220,643
(38,706)
–
–
–
–
–
–
(66,755)
–
–
–
–
–
–
–
170,470
133,502
372,509
240,289
220,643
220,643
1,022,231
441,286
(38,706)
(66,755) 1,358,056
11 May 2020
10 May 2021
28 Feb 2020
26 Feb 2021
28 Feb 2022
26 Feb 2021
28 Feb 2022
28 Feb 2023
546,901
817,527
294,018
294,018
295,441
–
–
–
–
–
–
–
–
366,938
366,938
367,803
(9,626)
(59,588)
(2,519)
(21,966)
(22,842)
(16,313)
(16,313)
(16,348)
(537,275)
(5,218)
(291,499)
(2,295)
(1,537)
–
–
–
–
752,721
–
269,757
271,062
350,625
350,625
351,455
2,247,905 1,101,679
(165,515)
(837,824) 2,346,245
Employee Deferred
Share Rights Plan
11 May 2017
2017 Grant
10 May 2018
2018 Grant
28 Feb 2019
2019 Grant – EAG – A
28 Feb 2019
2019 Grant – EAG – B
28 Feb 2019
2019 Grant – EAG – C
2020 Grant – EAG – A
28 Feb 2020
2020 Grant – EAG – B 28 Feb 2020
2020 Grant – EAG – C 28 Feb 2020
11 May 2020
10 May 2021
28 Feb 2020
26 Feb 2021
28 Feb 2022
26 Feb 2021
28 Feb 2022
28 Feb 2023
173,523
204,352
11,631
11,631
11,691
–
–
–
–
412,828
–
–
–
–
–
12,619
12,619
12,653
–
37,891
(1,400)
(2,337)
–
(817)
(822)
–
–
–
–
(172,123)
–
(11,631)
–
–
–
–
–
–
–
202,015
–
10,814
10,869
12,619
12,619
12,653
–
(5,376)
(183,754)
261,589
Total
4,305,710 1,738,146
(241,997) (1,223,508) 4,578,351
The weighted average remaining contractual life of the above grants is 0.9 years (2019: 1.4 years).
(1) The opening balance has been restated to correct an error in the 2019 closing balance..
12.39
10.86
14.22
12.00
12.00
7.17
11.86
12.39
10.86
12.00
12.00
12.00
11.86
11.86
11.86
12.39
10.86
12.00
12.00
12.00
11.86
11.86
11.86
–
Fair
value
$
7.13
5.79
12.73
12.00
5.54
3.81
11.86
12.39
10.86
12.00
12.00
12.00
11.86
11.86
11.86
10.86
9.58
12.00
12.00
12.00
11.86
11.86
11.86
–
2020
$’000
(91)
(330)
(568)
(2,282)
(469)
(235)
(1,099)
(5,074)
(734)
(2,414)
(545)
(1,539)
(1,029)
(3,507)
(1,746)
(1,168)
(12,682)
(216)
(640)
(23)
(61)
(41)
(126)
(63)
(41)
–
(1,211)
(21,020)
Iress Limited Annual Report 2020 1.6 Other expenses
(a) Included in other operating and other non-operating expenses are the following items:
Other operating income/(expenses)
Fees to auditors
Irrecoverable trade debtors written off
Credit loss allowances released to the profit and loss
Rental expense relating to operating leases
Other operating expenses(¹)
Other non-operating income/(expenses)
Realised/unrealised (losses)/gains on foreign balances
Non-operating income
Business acquisition, integration and restructuring expenses(²)
Remeasurement of deferred acquisition consideration
Release of deferred consideration provision
Release of onerous loss provision
Release of severance pay provision
Other non-operating expenses(3)
Notes
1.6(b)
2.6(b)
2.6(b)
2.6(b)
2020
$’000
(895)
(637)
50
(170)
(21,152)
(22,804)
(1,041)
1,281
(10,012)
5,128
–
128
23
(1,916)
(6,409)
61
2019
$’000
(845)
(807)
392
(184)
(17,772)
(19,216)
533
1,634
(5,088)
3,203
576
300
315
(1,970)
(497)
Net other expenses
(29,213)
(19,713)
(1) Includes office related expenses, insurance premiums, professional and legal fees and marketing expenses.
(2) Includes $0.3 million of BC Gateway acquisition costs and $5.5 million of OneVue acquisition costs. Refer to Note 4.2(a) and Note 4.2(c).
(3) Comprises all other non-operating project related expenses.
(b) Fees to auditors, Deloitte Touche Tohmatsu and other audit firms, for services rendered are as follows:
Auditors of the parent entity
Audit or review of the financial report
Other non-audit services(1)
Network firms of the parent entity auditor
Audit or review of the financial report
Other audit firms
Audit or review of subsidiary financial statements
Total fees to auditors
(1) Other services comprise assurance and other compliance reviews.
2020
$
2019
$
(432,115)
(8,000)
(440,115)
(363,116)
(363,116)
(91,691)
(91,691)
(895,056)
(356,927)
(74,449)
(431,376)
(357,277)
(357,277)
(56,511)
(56,511)
(845,164)
62
Notes to the Consolidated Financial Statements
Section 1. Financial results
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
1.7 Depreciation and amortisation
Depreciation and amortisation is calculated on a straight line basis over the expected useful life of the respective assets.
Depreciation and amortisation expense
Amortisation – intangible assets
Depreciation – plant and equipment
Depreciation – right-of-use assets
1.8 Notes to the Consolidated Statement of Cash Flows
(a) Cash and cash equivalents comprise cash at bank held in the following currencies:
Australian dollar
Euro
British pound
United States dollar
South African rand
Other currencies
Total cash and cash equivalents
Notes
2.1(a)
2.2(a)
2.3(c)
2020
$’000
(16,072)
(10,807)
(12,477)
(39,356)
2020
$’000
32,634
1,735
11,699
3,634
8,565
4,874
63,141
(b) Reconciliation of profit attributable to members of the parent entity to cash generated from operating activities:
Profit for the financial year
Adjustment for non-cash and non-operating cash flow items
Depreciation and amortisation
Net credit loss allowances recognised on trade receivables
Net provision reversed on employee benefits
Net provision recognised on deferred payments
Net provision recognised on the onerous losses
Net provision recognised on other provisions
Share-based payment expense
Foreign exchanges losses/(gains)
Losses on sale of plant and equipment
Gains on derecognition of right-of-use-assets and lease liabilities
Losses on the fair value recognition of the right-of-use-assets and lease liabilities
Interest income
Interest expense
Income tax expense
Change in working capital, net of effects from acquisition of controlled entities
Decrease/(increase) in receivables and other assets
Decrease in payables and other liabilities
Decrease in provisions
Net cash inflow generated from operating activities
Notes
1.7
2.4(c)
2.6(b)
2.6(b)
2.6(b)
2.6(b)
1.5(c)
2.3(e)
2.3(e)
2020
$’000
59,066
39,356
(50)
1,294
(5,128)
(128)
(23)
21,020
1,041
33
(751)
788
(438)
8,422
19,083
24,301
(2,321)
–
165,565
2019
$’000
(14,825)
(11,118)
(11,301)
(37,244)
2019
$’000
14,325
1,666
5,781
1,731
5,746
4,137
33,386
2019
$’000
65,128
37,244
(392)
1,071
(3,779)
(300)
(315)
17,701
(533)
74
(386)
–
(538)
8,707
23,323
(9,486)
(4,840)
(917)
131,762
Iress Limited Annual Report 2020 63
SECTION 2. CORE ASSETS AND WORKING CAPITAL
2.1 Intangible assets
Intangible assets for the Group comprise goodwill arising from business combinations, customer relationships, computer software and other
intangibles (mainly acquired databases and brands). Intangible assets with finite lives are carried at cost less accumulated amortisation and
accumulated impairment losses.
Goodwill recognised arose from business combinations where the fair value of the consideration paid exceeded the fair value of the assets
acquired. Goodwill is considered to have an indefinite life and is not amortised as it represents the synergistic benefits of bringing the
businesses together.
Customer relationships, a proportion of computer software and other intangibles were acquired as part of business combinations. These
intangible assets are initially recognised at their fair value at the acquisition date. The remainder of the computer software was separately
acquired, and initially recognised at cost. Subsequent to initial recognition, intangible assets other than goodwill are amortised over the
expected useful lives noted below.
Internally generated assets will be recognised where the cost of actual development can be reliably measured and clearly distinguished from
research and ongoing operating and maintenance activities. Given software development occurs contemporaneously with the research phase and
operating and maintenance activities, the separation of the cost of development can be imprecise and difficult to reliably measure. Accordingly,
where the expenditure related to the development activity cannot be reliably measured, the Group expenses the amounts in the period they are
incurred. During the year, $3.6 million (2019: $0.4 million) of internally generated computer software assets have been recognised.
(a) The carrying value of intangible assets is shown below:
As at 31 December 2019
Cost
Accumulated amortisation
Net carrying value
Balance at 1 January 2019
Acquired through business combinations(1)
Reclassified between asset categories(3)
Separately acquired
Disposal
Amortisation
Foreign currency translation
Closing carrying value
Expected useful life (years)
As at 31 December 2020
Cost
Accumulated amortisation
Net carrying value
Balance at 1 January 2020
Acquired through business combinations(2)
Separately acquired
Internally generated development costs
Amortisation
Foreign currency translation
Closing carrying value
Expected useful life (years)
Goodwill
$’000
528,676
–
528,676
458,144
54,822
–
–
–
–
15,710
528,676
605,440
–
605,440
528,676
102,102
–
–
–
(25,338)
605,440
Customer
Relationships
$’000
Computer
Software
$’000
Other
Intangibles
$’000
57,419
(31,274)
26,145
29,486
1,618
–
–
–
(5,446)
487
26,145
1 to 10
68,067
(34,639)
33,428
26,145
12,977
–
–
(5,081)
(613)
33,428
1 to 10
207,664
(146,527)
61,137
63,490
10,455
(6,218)
2,510
(23)
(9,086)
9
61,137
3 to 20
243,210
(151,743)
91,467
61,137
34,866
2,832
3,633
(10,681)
(320)
91,467
3 to 20
8,399
(4,609)
3,790
4,070
–
–
–
–
(293)
13
3,790
1 to 10
8,187
(4,424)
3,763
3,790
300
–
–
(310)
(17)
3,763
1 to 10
Total
$’000
802,158
(182,410)
619,748
555,190
66,895
(6,218)
2,510
(23)
(14,825)
16,219
619,748
924,904
(190,806)
734,098
619,748
150,245
2,832
3,633
(16,072)
(26,288)
734,098
(1) Acquisition of QuantHouse Group on 31 May 2019.
(2) Acquisitions of BC Gateways, O&M Systems and OneVue during 2020. Refer to Note 4.2.
(3) Third party computer software held under finance lease arrangements was previously presented within intangible assets. As a result of the adoption of AASB 16 Leases
the software asset was derecognised within intangible assets and re-recognised as a prepayment within trade and other receivables. There has been no change in the
expense recognised.
64
Notes to the Consolidated Financial Statements
Section 2. Core assets and working capital
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
2.1 Intangible assets (continued)
(b) Impairment testing for goodwill
In accordance with the accounting standard AASB 136 Impairment of Assets, the Group has conducted a review of indicators of impairment
during the year for each of the cash generating units (CGUs) to which goodwill has been allocated.
Goodwill is tested for impairment annually or more frequently whenever indicators of impairment are identified. In testing for impairment, the
carrying amount of each Cash Generating Unit (CGU) is compared against the recoverable amount.
For each CGU tested, the recoverable amount has been calculated based on the value in use, using a discounted cash flow (DCF) approach.
The DCF uses post-tax cash flow projections that are based on the most recent five-year financial plan updated for current performance and
is discounted at an appropriate after-tax discount rate taking into account the Group’s weighted average cost of capital adjusted for any risks
specific to the CGU.
Terminal growth rates applied in the DCF are based on estimates of long term inflation and GDP growth in the country in which the CGU
primarily operates.
The allocation of goodwill to each cash generating unit and assumptions applied in calculating the recoverable amounts of the goodwill in testing
for impairment are as follows:
Allocated Goodwill
Post-Tax Discount Rates
Long Term Growth Rates
Cash generating unit
APAC Financial Market
ANZ Wealth Management
International Market Data
UK
UK Mortgages
South Africa
Canada
Goodwill tested for
impairment during 2020
Provisional goodwill
arising from the OneVue
acquisition
Total goodwill
2020
$’000
43,246
48,060
5,384
317,792
78,052
13,939
15,153
2019
$’000
30,855
45,841
5,448
333,154
82,608
15,542
15,228
521,626
528,676
83,814
605,440
–
528,676
2020
%
7.2
7.2
10.5
8.2
8.2
17.6
8.6
2019
%
8.6
8.6
11.8
9.3
9.3
18.3
9.2
2020
%
2.7
2.7
2.0
2.7
2.7
4.7
2.0
2019
%
2.7
2.7
2.0
2.7
2.7
4.7
2.0
Based on the impairment testing performed, it was concluded that no impairment was required to be booked in the year to 31 December 2020.
As reported in Note 4.2(c) the provisional goodwill arising from the acquisition of OneVue on 6 November 2020 is $83.8 million. Due to the timing
of the acquisition and the fact that the acquisition accounting is only provisional, the OneVue goodwill has not been included in the annual
goodwill impairment test during 2020. Iress will allocate the goodwill to one or more CGUs for the purposes of testing for impairment once the
acquisition accounting is completed during the 2021 financial year.
Significant estimates made
The cash flow projections included in the value in use models for each CGU assume that any delays in revenue as a result of COVID-19 are
recovered in future periods. This assumption is based on the impact of COVID-19 observed during the 2020 financial year which has been
limited to project delays. If COVID-19 does have a longer term material impact on revenue within a CGU, then it will result in reduced headroom
or impairment of the goodwill allocated to that CGU.
The continued profitability and growth of the Canada business is dependent on retained client revenue and future growth from Iress’ products
deployed to Canadian clients and prospects in the financial markets business. If either of these initiatives are unsuccessful or delayed, it will
result in reduced headroom or impairment of the goodwill allocated to the Canada CGU.
The UK Mortgages cash flow projections included in the value in use model have been adjusted for client projects that have been delayed as a
result of COVID-19 and assumes that this revenue is recovered in future periods. The cash flow projections also assume an increased number of
clients using the software provided by the business over the forecast period. If the business is not able to achieve the increased revenue from
new client sales then it will result in reduced headroom or impairment of the goodwill allocated to the UK Mortgages CGU.
Iress Limited Annual Report 2020 65
Total
$’000
93,070
(65,523)
27,547
30,851
1,792
(3,271)
10,480
(1,387)
(11,118)
200
27,547
2.2 Plant and equipment
Plant and equipment are carried at cost less accumulated depreciation and any impairment losses.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period.
The depreciation charge for each period is recognised in profit or loss.
(a) The carrying value of plant and equipment is shown below:
Leasehold
Improvement
$’000
Furniture
& Fittings
$’000
Office
Equipment
$’000
Computer
Equipment
$’000
Work In
Progress
$’000
As at 31 December 2019
Cost
Accumulated depreciation
Carrying value
Movement for the year
Balance at 1 January 2019
Acquired through business
combinations(1)
Reclassified between
asset classes(3)(4)
Separately acquired
Disposal
Depreciation
Foreign currency translation
Balance at 31 December 2019
Expected useful life (years)
As at 31 December 2020
Cost
Accumulated depreciation
Carrying value
Movement for the year
Balance at 1 January 2020
Acquired through business
combinations(2)
Reclassified between asset classes(3)
Separately acquired
Disposal
Depreciation
Foreign currency translation
Balance at 31 December 2020
Expected useful life (years)
13,184
(5,265)
7,919
9,799
163
(1,523)
1,241
(494)
(1,291)
24
7,919
3 to 10
17,445
(6,207)
11,238
7,919
–
535
4,844
–
(1,634)
(426)
11,238
3 to 10
15,771
(8,022)
7,749
9,464
34
–
532
(6)
(2,307)
32
7,749
3 to 10
16,492
(8,042)
8,450
7,749
39
52
2,831
(68)
(1,924)
(229)
8,450
3 to 10
548
–
548
–
–
(1,748)
2,296
–
–
–
548
1,943
(853)
1,090
1,403
19
–
24
–
(357)
1
1,090
3
2,361
(1,470)
891
61,624
(51,383)
10,241
10,185
1,576
–
6,387
(887)
(7,163)
143
10,241
3
64,551
(52,397)
12,154
7
–
7
100,856
(68,116)
32,740
1,090
10,241
548
27,547
60
95
23
–
(362)
(15)
891
3
214
1,821
7,172
(8)
(6,887)
(399)
12,154
3
–
(2,503)
2,176
–
–
(214)
7
313
–
17,046
(76)
(10,807)
(1,283)
32,740
(1) Acquisition of QuantHouse Group on 31 May 2019.
(2) Acquisitions of O&M Systems and OneVue during 2020. Refer to Note 4.2.
(3) Work-in-progress are transferred to plant and equipment asset classes as brought into use.
(4) Leasehold improvements previously disclosed within plant and equipment are now disclosed as a component of the right-of-use assets.
(b) Plant and equipment pledged as security
The Group does not have any plant and equipment that have been pledged to secure borrowings of the Group. In addition, the Group does not
have any obligations under finance leases, or any restrictions on title or items pledged as security for liabilities.
66
Notes to the Consolidated Financial Statements
Section 2. Core assets and working capital
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
2.3 Leases
(a) Summary of leasing amounts recognised in the Statement of Profit or Loss and Statement of Cash Flows
(i) The table below discloses the principle amounts recognised in the Statement of Profit or Loss as well as contractual lease payments:
Contractual rental payments
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
(ii) The table below discloses the total cash flow relating to leases recognised in the Statement of Cash Flows:
Settlement of lease liabilities
Interest expense on lease liabilities
Total cash outflows for leases
2020
$’000
(12,561)
(12,477)
(2,227)
2020
$’000
(10,334)
(2,227)
(12,561)
2019
$’000
(12,275)
(11,301)
(2,086)
2019
$’000
(10,189)
(2,086)
(12,275)
(b) Iress Group lease portfolio
The Group leases real estate and data servers in the ordinary course of its business. The Group’s real estate leases comprise office building
leases in the countries in which the Group operates. Data servers are leased in South Africa.
The Group’s regional lease portfolio is presented below:
Region
Australia
Lease characteristic features
The Group leases office buildings in numerous Australian cities, with its head office in Melbourne and an office in Sydney being the
most significant. The non-cancellable period of the leases range from two to twelve years with variable options to extend the lease
terms. The lease payments are adjusted every year, based on contractual fixed percentage increases and in certain instances
additionally increased by the prevailing consumer price index (“CPI”) at the lease review date.
Provision for make-good
The Group is required to make-good (rehabilitate) the installed interconnecting stairs as part of its fit-out to connect floors at its head
office in Melbourne.
Real estate sub-leases
The Group leased an office building in Sydney through a lease (the head lease) that commenced on 1 January 2013. The head lease
terminated in February 2020. The Group has entered into a sub-lease that covers the period to the end of the head lease term. The
sub-lease was accounted for as an operating lease.
South Africa
Real estate leases
The Group leases office buildings in South Africa. The non-cancellable period of these leases range from two to seven years with
options to extend the lease terms up to five years. The lease payments are adjusted every year by a fixed percentage increase at the
lease review date.
Data servers
The Group leases data servers which are principally used to host Iress software on client premises. Lease terms are five years.
United Kingdom
Real estate leases
The Group leases office buildings in the UK. The non-cancellable period of these leases range from five to eight years. The lease
payments are fixed with no increases over the lease terms.
Sub-leases
The Group leases an office building on a ten year lease (the head lease) that commenced on 1 January 2016. The Group had entered
into a sub-lease that leased part of the office building. The sublease arrangement was terminated during the year along with the
head lease. The sub-lease was accounted for as an operating lease.
Other
The Group leases other office buildings in other countries. The non-cancellable period of these leases range from three to eight.
The lease payments are fixed with no increases over the lease terms.
Iress Limited Annual Report 2020 67
(i) Group as a lessee
Right-of-use asset
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the
site on which it is located, less any lease incentives received.
The right-of-use asset is separately disclosed in the Consolidated Statement of Financial Position.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the
useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same
basis as those of plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for
certain remeasurements of the lease liability.
Lease liability
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the
Group uses its incremental borrowing rate as the discount rate. The Group’s average incremental borrowing rate used is 2.83% (2019: 3.45%).
Lease payments included in the measurement of the lease liability comprise the following:
• Fixed payments, including in-substance fixed payments less any lease incentives receivable,
• Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date,
• Amounts expected to be payable under a residual value guarantee,
• The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the
Group is reasonably certain to exercise an extension option, and
• Payment of penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is separately disclosed in the Consolidated Statement of Financial Position.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease
payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under
a residual value guarantee or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is
recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of office and information technology
equipment that have a lease term of 12 months or less or for leases of low-value assets. The Group recognises the lease payments associated
with these leases as an expense on a straight-line basis over the lease term.
68
Notes to the Consolidated Financial Statements
Section 2. Core assets and working capital
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
2.3. Leases (continued)
(b) Iress Group lease portfolio (continued)
(ii) Group as a lessor
When the Group acts as a lessor, which is generally when it sub-leases property on which it has entered a head lease as a lessee, it determines
at the sub-lease inception whether each sub-lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall
assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is
the case then the lease is a finance lease. If not, then it is accounted for as an operating lease. As part of this assessment, the Group considers
certain indicators such as whether the lease is for the major part of the economic life of the asset.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. The Group assesses the lease
classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head
lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.
If an arrangement contains a lease and non-lease component, the Group applies AASB 15 Revenue from Contracts with Customers to allocate
the consideration in the contract.
The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of
‘non-operating income’.
(c) Carrying value of right-of-use assets
The Group’s right-of-use assets comprise real estate and data server leases. Right-of-use assets have finite lives and are carried at cost less
accumulated depreciation.
The carrying value of right-of-use assets is presented below:
Office Buildings
Data Servers
Total
Cost
Accumulated depreciation
Carrying value
Opening carrying value
Change in accounting policy(1)
Acquired through business combinations
New leases entered into contract
Expenses capitalised to right-of-use
assets
Disposal of leases from early termination
Fair value adjustments from modified
leases
Depreciation
Foreign currency translation
Closing carrying value
Expected useful life (years)
2020
$’000
107,195
(31,898)
75,297
51,850
–
5,681
33,881
797
(1,720)
(1,201)
(12,442)
(1,549)
75,297
2 to 12
2019
$’000
90,538
(38,688)
51,850
–
52,192
4,881
6,744
–
(792)
–
(11,247)
72
51,850
2020
$’000
124
(114)
10
51
–
–
–
–
–
–
(35)
(6)
10
5
2019
$’000
274
(223)
51
–
107
–
1
–
–
–
(54)
(3)
51
2020
$’000
107,319
(32,012)
75,307
51,901
–
5,681
33,881
797
(1,720)
(1,201)
(12,477)
(1,555)
75,307
2019
$’000
90,812
(38,911)
51,901
–
52,299
4,881
6,745
–
(792)
–
(11,301)
69
51,901
(1) Impact of adopting AASB 16’s modified retrospective approach under which the cumulative effect of initial application is recognised in retained earnings at 1 January 2019.
Iress Limited Annual Report 2020 69
2020
$’000
(13,383)
(71,125)
(84,508)
2019
$’000
(9,179)
(48,356)
(57,535)
(d) Lease liabilities
(i) Lease liabilities included in the Statement of Financial Position at the end of the period:
Current
Non-current
Total
The Group’s liquidity risk with regard to its lease liabilities is managed by the inclusion of lease liability cashflows in the cashflow forecasts
regularly monitored by the Group in line with the Group’s treasury policy.
(ii) Reconciliation of the movement of the lease liabilities:
Opening carrying value
Change in accounting policy(1)
Lease liabilities assumed in business combinations
Lease liabilities raised from the negotiation of new lease contracts
Lease liabilities reversed from early termination of lease contracts
Lease liabilities raised from changes to existing lease contracts
Lease liabilities raised from changes in subsequent lease payments
Lease liabilities incurred from rent free periods
Settlement of lease liabilities
Foreign currency translation
Closing carrying value
2020
$’000
(57,535)
–
(8,100)
(33,881)
2,471
–
413
–
10,334
1,790
(84,508)
2019
$’000
–
(56,880)
(5,060)
(6,532)
1,178
(119)
–
(132)
10,189
(179)
(57,535)
(1) Impact of adopting AASB 16’s modified retrospective approach under which the cumulative effect of initial application is recognised in retained earnings at 1 January 2019.
(iii) Maturity analysis – contractual undiscounted cash flows:
Less than one year
More than one year and not more than five years
More than five years
Total undiscounted lease liabilities at the end of the period
2020
$’000
15,051
53,803
21,551
90,405
2019
$’000
11,026
38,996
14,114
64,136
70
Notes to the Consolidated Financial Statements
Section 2. Core assets and working capital
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
2.3. Leases (continued)
(e) Amounts recognised in the Statement of Profit or Loss and Other Comprehensive Income
The table below shows the amounts recognised in the Statement of Profit or Loss:
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Expenses relating to short term or low value assets leases
Loss on the fair value recognition of the right-of-use-assets and lease liabilities as a result
of incremental lease payments
Gain on the de-recognition of right-of-use assets and lease liabilities
Income from the sub-leasing of right-of-use assets
Notes
1.7
3.1(e)
2020
$’000
(12,477)
(2,227)
(170)
(788)
751
566
2019
$’000
(11,301)
(2,086)
(184)
–
386
1,501
(f) Operating lease arrangements
As at 31 December 2020 the Group had no outstanding sublease arrangements for which the Group was the lessee under a head lease
arrangement. The one outstanding sublease arrangement was terminated during the year along with the head lease.
2.4 Receivables and other assets
Trade receivables arise from revenue that has been billed, but not yet settled by the customer.
Revenue arises from providing access to Iress software, rendering of services or recharging for access to capital markets data. Revenue is measured
at the fair value of the consideration received or receivable.
Revenue is recognised over time as the relevant performance obligations identified in a customer contract are satisfied.
Refer to Note 1.3 for further details of revenue recognition.
Where revenue recognised exceeds billings it results in a contract asset as disclosed in the table below, and where cash amounts are received
in advance of revenue recognition it results in a contract liability as disclosed in Note 1.3(b).
Iress’ credit terms are generally 30 days from the date of invoice. As such, the carrying amount of receivables approximates their fair value.
(a) Receivables and other assets as at the end of the year comprises of:
Trade receivables
Credit loss allowance
Contract assets
Prepayments
Deposits
Financial assets at fair value through profit or loss
VAT receivables
Other assets
Notes
2.4(d)
2.4(b)
1.3(b)
2020
$’000
30,721
(1,720)
29,001
16,397
15,642
901
396
447
3,329
66,113
2019
$’000
36,788
(1,718)
35,070
17,223
22,861
1,043
26
687
4,800
81,710
Iress Limited Annual Report 2020 71
Included within receivables and other assets are financial assets categorised as financial assets at fair value through profit or loss. Iress has
assessed its investments held at fair value through profit and loss and these investments are held for trading, where they are acquired for
the purpose of selling in the short term with an intention of making a profit.
These investments primarily comprise holdings in ASX listed equities that are held for operational purposes. Regular purchase and sales of
investments are recognised on trade date, the date on which Iress commits to purchase or sell the asset. Investments are initially recognised
at fair value with any transactions costs expensed through the statement of profit and loss and other comprehensive income. Subsequent
movements in fair value of financial assets are recognised in the statement of profit and loss and other comprehensive income. These
instruments, which are categorised as Level 1 in the ‘Fair Value Hierarchy’, are valued using the quoted price in active markets.
(b) Credit Loss Allowance
The Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.
Expected credit losses are measured by grouping trade receivables and contract assets based on shared credit risk characteristics and the days
past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for
the same types of contracts.
A provision matrix is then determined based on the historic credit loss rate for each group of customers, adjusted for any material expected
changes to the future credit risk for that customer group.
The credit loss allowance as at 31 December 2019 is determined as follows:
Provision matrix
As at 31 December 2019
1 to 30 days
31 to 60 days
61 to 90 days
Over 90 days
Contract assets
Ageing of receivables
As at 31 December 2019
1 to 30 days
31 to 60 days
61 to 90 days
Over 90 days
Total trade receivables
Contract assets
Allowance based on historic credit losses
Adjustment for expected changes in credit risk(1)
Credit loss allowance
APAC
UK & Europe
South Africa
North America
0.2%
0.5%
1.1%
1.1%
0.1%
APAC
$’000
13,498
659
86
66
14,309
3,398
36
80
116
0.5%
0.6%
2.1%
2.1%
0.2%
0.3%
0.6%
1.3%
1.3%
0.1%
1.0%
1.5%
2.2%
2.2%
0.3%
UK & Europe
$’000
South Africa
$’000
North America
$’000
14,394
1,893
595
1,000
17,882
13,445
135
940
1,075
2,118
152
125
680
3,075
380
18
374
392
1,275
119
25
103
1,522
–
18
117
135
Group
$’000
31,285
2,823
831
1,849
36,788
17,223
207
1,511
1,718
(1) Adjustment to reflect the higher credit risk and probability of default relating to customers that are over 90 days past due.
72
Notes to the Consolidated Financial Statements
Section 2. Core assets and working capital
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
2.4 Receivables and other assets (continued)
(b) Credit Loss Allowance (continued)
The credit loss allowance as at 31 December 2020 is determined as follows:
Provision matrix
As at 31 December 2020
1 to 30 days
31 to 60 days
61 to 90 days
Over 90 days
Contract assets
Ageing of receivables
As at 31 December 2020
1 to 30 days
31 to 60 days
61 to 90 days
Over 90 days
Total trade receivables
Contract assets
Allowance based on historic credit losses
Adjustment for expected changes in credit risk(1)
Credit loss allowance
APAC
0.2%
0.4%
0.9%
0.9%
0.1%
APAC
$’000
17,525
511
22
387
18,445
6,789
46
814
860
UK &
Europe
0.4%
0.6%
1.8%
1.9%
0.2%
UK &
Europe
$’000
8,483
630
54
754
9,921
9,259
71
603
674
South
Africa
0.3%
0.6%
1.2%
1.3%
0.1%
South
Africa
$’000
1,362
34
54
147
1,597
349
7
116
123
North
America
1.1%
1.9%
2.4%
2.4%
0.2%
North
America
$’000
710
16
12
20
758
–
9
54
63
Group
$’000
28,080
1,191
142
1,308
30,721
16,397
133
1,587
1,720
(1) Adjustment to reflect the higher credit risk and probability of default relating to customers that are over 90 days past due.
Significant estimate made
The adjustment for material expected changes to credit risk for each client group requires judgment about future events and as such a
significant increase in actual credit losses from that expected would lead to a significant impact on financial performance. To date, COVID-19 has
not had a material impact on the credit risk profile of Iress’ clients. However, the broader economic uncertainty as a result of COVID-19 could
lead to a deterioration in the credit profile within the client base. Iress continues to monitor credit exposures closely and carefully.
Iress Limited Annual Report 2020 73
(c) Movement in credit loss allowance
The movement in the credit loss allowance during the year is as follows:
Balance at the beginning of the year
Credit loss allowances recognised during the year
Credit loss allowance utilised during the year against irrecoverable trade debtors
Acquired through business combinations
Foreign currency translation
Balance at the end of the year
Notes
2.4(a)
2020
$’000
(1,718)
(587)
637
(242)
190
(1,720)
2019
$’000
(1,553)
(415)
807
(520)
(37)
(1,718)
(d) Quality of trade receivables
The quality of trade receivables is monitored by the ageing of invoiced amounts yet to be received. The ageing at the end of the year is as follows:
Neither past due nor impaired – less than 30 days
Past due but not impaired:
+31 to 90 days
+91 days
Impaired
Notes
2.4(a)
2020
$’000
27,164
1,043
794
1,720
30,721
2019
$’000
21,681
11,741
1,648
1,718
36,788
Receivables that are neither past due nor impaired comprise customers with a long term record of timely payments and/or no recent history of
default arising from financial difficulty.
Receivables that are past due but not impaired comprise customers which do not have any objective evidence that the receivable may
be impaired. Iress has actively engaged these customers and reasons for the invoices remaining outstanding are being actively resolved.
A credit loss allowance is recognised where Iress has identified:
• Objective evidence that an amount owing may not be recoverable, mainly arising from observed financial difficulty of a customer, or
• A risk of expected credit loss based on the historical trend of credit losses.
74
Notes to the Consolidated Financial Statements
Section 2. Core assets and working capital
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
2.5 Payables and other liabilities
Payables and other liabilities are initially measured at fair value. Subsequent to initial measurement, these are recognised at amortised cost.
Liabilities are classified as current where Iress does not have an unconditional right to defer settlement beyond 12 months.
Employee related liabilities primarily comprise of the annual leave liability and other employee related entitlements. The annual leave liability
is measured as current leave accrued multiplied by current salary plus statutory charges.
Contract liabilities represent amounts received from customers for which revenue has not been earned or recognised.
Finance arrangements relate to the acquisition of software licences.
Due to the short term nature of current liabilities, the carrying amount approximates their fair value.
Current
Trade payables
General accruals
Audit fee accruals
Taxation fee accruals
Contract liabilities
GST/VAT payable
Finance arrangements
Employee related liabilities
Dividend payable
Accrued interest
Other liabilities
Notes
1.3(b)
2020
$’000
9,120
23,191
559
290
13,413
13,606
–
19,174
86
437
2,581
82,457
2019
$’000
4,958
17,700
518
604
12,083
6,729
1,600
17,605
75
325
2,328
64,525
The Group’s exposure to foreign currency risk arising from translating payables and other liabilities to the Group’s functional currency is
considered insignificant. The exposure is monitored on a net working capital basis as disclosed in Note 3.3.
Liquidity risk arises from current payables and other liabilities that are payable in less than one year. The Group manages this liquidity risk
by maintaining sufficient cash and current assets to meet the contractual obligations as they arise.
Iress Limited Annual Report 2020 75
2.6 Provisions
Provisions are measured at the present value of Management’s best estimate of the expenditure required to settle the present obligation at the
end of the reporting period.
Employee benefits mainly comprise long service leave entitlements of employees.
Deferred consideration represents purchase consideration payable for acquisitions once certain conditions are met as stipulated in the contracts.
These are measured at the discounted value of the best estimate of the cash payable based on conditions existing at the balance date.
Significant estimates made
Non-current provisions contain $33.6 million (2019: $27.1 million) of deferred contingent consideration in relation to the acquisitions of
QuantHouse in 2019 and BC Gateways in 2020.
The measurement of deferred consideration at fair value at each reporting date requires estimates to be made about expected revenue and
expenses over the measurement period to which the deferred consideration relates.
In respect of the deferred consideration arising from the QuantHouse acquisition, estimates have been established for expected revenue in
the 2021 and 2022 financial years. If actual revenue differs from these estimates, including as a result of future disruption from the COVID-19
pandemic on current and prospective clients, the amounts of deferred consideration paid will change. The fair value of acquisition deferred
consideration recorded as non-current at 31 December 2020 was $21.1 million based on a probability weighted assessment of likely revenue
outcomes for the periods in question. The minimum and maximum amounts payable under these arrangements are $0 and $27.5 million
respectively.
In respect of the deferred consideration arising from the BC Gateways acquisition, estimates have been established for expected client
acquisitions and revenue in the 2021, 2022 and 2023 financial years. If actual client acquisitions and revenue differ from these estimates,
including as a result of future disruption from the COVID-19 pandemic on prospective clients, the amounts of deferred consideration payable will
change. The fair value of acquisition deferred consideration recorded at 31 December 2020 was $12.5 million based on a probability weighted
assessment of likely revenue outcomes for the periods in question. The estimated potential range of likely outcomes of amounts payable under
these arrangements is between $0 and $20 million.
Onerous losses represent the expected losses on non-cancellable property lease commitments which the Group no longer utilises. The amount
provided for represents the present value of the future payments on the leases, net of expected income from sub-leasing the properties. These
leases have expired in late 2020 and the provision is expected to be utilised in 2021.
The make good provision relates to restoration expenses which will be incurred upon termination of property leases in order to reinstate the
leased properties to their original condition.
(a) Provisions as at the end of the year comprises of:
Current provisions
Employee benefits
Deferred consideration(1)
Onerous losses provision
Other provisions
Non-current provisions
Employee benefits
Deferred consideration(1)
2020
$’000
1,610
4,230
64
10
5,914
2020
$’000
9,926
33,591
43,517
2019
$’000
5,210
1,235
192
32
6,669
2019
$’000
3,484
27,076
30,560
(1) The deferred consideration relates to the QuantHouse and BC Gateways acquisitions. The current provision balance of $4.2m has been settled since 31 December 2020.
76
Notes to the Consolidated Financial Statements
Section 2. Core assets and working capital
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
2.6 Provisions (continued)
Significant estimate made (continued)
(b) The carrying value of provisions are reconciled as follows:
As at 31 December 2019
Opening carrying value
Change in accounting
policy(1)(2)
Assumed in business
combination
Provision raised during
the year
Provision reversed during
the year
Provision utilised during
the year
Foreign currency
translation
Closing carrying value
As at 31 December 2020
Opening carrying value
Assumed in business
combination
Provision raised during
the year
Provision reversed during
the year
Provision utilised during
the year
Foreign currency
translation
Closing carrying value
Employee
Benefits
$’000
Deferred
Considerations
$’000
Onerous Loss
Provision
$’000
Make Good
Provision
$’000
7,461
–
288
1,367
(296)
(130)
4
8,694
1,360
–
32,527
–
(3,779)
(1,436)
(361)
28,311
611
(119)
–
–
(300)
–
–
192
1,756
(1,756)
–
–
–
–
–
–
Other
Provisions
$’000
1,189
(1,199)
348
–
(315)
–
9
32
Employee
Benefits
$’000
Deferred
Considerations
$’000
Onerous Loss
Provision
$’000
Make Good
Provision
$’000
Other
Provisions
$’000
8,694
1,552
1,294
–
–
(4)
11,536
28,311
16,158
–
(5,128)
(1,620)
100
37,821
192
–
–
(128)
–
–
64
–
–
–
–
–
–
–
32
–
–
(23)
–
1
10
Total
$’000
12,377
(3,074)
33,163
1,367
(4,690)
(1,566)
(348)
37,229
Total
$’000
37,229
17,710
1,294
(5,279)
(1,620)
97
49,431
(1) Impact of adopting AASB 16 Leases’ modified retrospective approach whereby amounts as at 1 January 2019 were either derecognised or transferred to lease liabilities.
(2) The provision for make good was previously disclosed as a provision. Upon the application of AASB 16 Leases, the amount was transferred to lease liabilities. There was no
change in the amount recognised.
2.7 Commitments and contingencies
(a) Capital commitments
No capital expenditure has been contracted or provided for at balance date (2019: Nil).
(b) Contingencies
There are no material contingent liabilities that have been contracted or provided for at the reporting date (2019: Nil).
Iress Limited Annual Report 2020 77
SECTION 3. DEBT AND EQUITY
3.1 Debt facilities and derivatives
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any gains or losses are recognised in the Statement of Profit or Loss in the event the borrowings are derecognised.
On 29 April 2020, Iress refinanced its unsecured bank facilities totalling $300 million that were due to expire in November 2021. The amount of the
unsecured bank facilities was increased to $405 million and the expiry date extended to April 2024. The covenant requirements remain unchanged.
(a) Details of borrowings held by the Group are as follows:
NON-CURRENT
4 year $300 million bank facility to November 2021
AUD
GBP
EUR
4 year $405 million bank facility to April 2024
AUD
GBP
EUR
Total amount drawn
Borrowing costs capitalised
Total borrowings
2020
$’000
–
–
–
48,500
107,123
34,403
190,026
(1,593)
188,433
2019
$’000
87,500
113,377
25,623
–
–
–
226,500
(586)
225,914
The bank facilities allow multi-currency drawdowns and are at variable interest rates based on BBSY, LIBOR and EURIBOR benchmark rates plus
a market margin. Amounts can be repaid at the discretion of the Group. As such, the amounts drawn approximates their fair value.
Not included in the table above is a $10 million multi-currency guarantee facility that is used for any bank guarantees required by the Group. As
at 31 December 2020, $6.5 million (2019: $5.8 million) was utilised. The borrowings are unsecured, and the Group has complied with the financial
covenants of its borrowing facilities during the year.
(b) Reconciliation of the movement in borrowings to the financing cash flows is shown as follows:
Opening balance
Proceeds from borrowings
Repayments of borrowings
Net borrowing costs (capitalised)/amortised
Foreign exchange rate movements
Closing balance
2020
$’000
225,914
142,039
(172,239)
(1,008)
(6,273)
188,433
2019
$’000
204,389
123,645
(107,022)
651
4,251
225,914
78
Notes to the Consolidated Financial Statements
Section 3. Debt and equity
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
3.1 Debt facilities and derivatives (continued)
(c) Derivatives
Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently revalued to fair value at
the end of each reporting period.
The fair value of the derivatives is determined by first calculating the future cash flows that are estimated based on forward interest rates (from
observable yield curves at the end of the reporting period) and contract interest rates, and then discounting the future cash flows at a rate that
reflects the credit risk of various counterparties.
Iress has the following cross currency swaps:
CURRENT
Assets at fair value
3 year receive AUD/pay GBP to September 2021
NON-CURRENT
Liabilities at fair value
3 year receive AUD/pay GBP to September 2021
2020
$’000
2019
$’000
1,739
–
–
1,820
The cross currency swaps minimise unfavourable foreign exchange rate movements and also reduce the Group’s cost of funding.
The fair value of the swaps is classified as Level 2 as the calculation is based on observable inputs. The change in the fair value during the year
is due to the impact of the appreciation of the Australian dollar against the British pound. No credit risk adjustments have been recognised on the
fair value of the derivatives as these are not material.
(d) Contractual maturity analysis
Contractual cash outflow maturity analysis is shown based on undiscounted cash flows. An estimate, based on forward interest rates and foreign
currency rates, has been applied in determining interest and foreign cash outflows and inflows. The actual contractual outflow may vary to the
amounts disclosed.
31 December 2019
Outflows/(inflows)
4 year facilities – principal
Interest on borrowings
3 year cross currency swaps – principal exchange(1)
3 year cross currency swaps – interest(1)
31 December 2020
Outflows/(inflows)
4 year facilities – principal
Interest on borrowings
3 year cross currency swaps – principal exchange(1)
3 year cross currency swaps – interest(1)
Within 1 year
$’000
–
4,938
–
(164)
1–3 years
$’000
226,500
4,526
1,856
(123)
Within 1 year
$’000
1–3 years
$’000
–
3,420
(1,554)
(108)
–
6,841
–
–
Greater than
3 years
$’000
–
–
–
–
Greater than
3 years
$’000
190,026
1,140
–
–
(1) Represents expected net cash exchange in AUD that occurs at settlement. Under the terms of the cross currency swaps, the settlements are on a gross basis where Iress
receives AUD and pays GBP.
Iress Limited Annual Report 2020 79
(e) Interest expense and financing costs
Interest expense are recognised using the effective interest rate method. Interest expense includes exchange differences arising from foreign
currency borrowings to the extent they are regarded as adjustments to interest costs.
Net interest expense and financing costs for the year comprise the following:
Interest income
Interest expense
Other financing costs comprising:
Interest expense of lease liabilities
Amortisation of borrowing costs
Translation (losses)/gains on intra-group financing arrangements
Fair value changes on cross currency swaps
Fair value changes on managed investment
Net interest expense and financing costs
3.2 Issued capital
Notes
2.3(e)
2020
$’000
438
(5,294)
(2,227)
(1,042)
(3,397)
3,508
30
(7,984)
2019
$’000
547
(5,968)
(2,086)
(651)
2,592
(2,603)
–
(8,169)
On 1 June 2020, Iress announced the proposed issue of 14,395,394 ordinary fully paid shares through an Equity Placement and 1,919,386
ordinary fully paid shares under a Share Purchase Plan for total gross proceeds of $170 million.
The issuance of the shares under the equity placement was completed on 4 June 2020 and total proceeds, before fees, of $150 million
were received.
The Share Purchase Plan closed on 29 June 2020 and was oversubscribed. The issue was increased by 479,844 shares and 2,399,230 shares
were issued on 8 July 2020 for total proceeds, before fees, of $25 million.
The number of ordinary shares outstanding at the end of the year is as follows:
Balance at 1 January
New shares issued to employees in relation to employee
share schemes
Shares issued to meet obligations under the Dividends
Reinvestment Plan
Shares issued under the Equity Placement(1)
Shares issued under the Share Purchase Plan
Shares issued under employee Share Purchase Plan
Less Treasury Shares(2)
Number of shares on issue
Amount
Number of shares
2020
$’000
383,083
–
2,662
147,227
24,840
604
558,416
–
2019
$’000
378,577
–
4,058
–
–
448
383,083
–
558,416
383,083
2020
‘000
2019
‘000
174,924
173,251
1,370
238
14,395
2,399
–
193,326
(2,514)
190,812
1,308
327
–
–
38
174,924
(2,442)
172,482
(1) Shares issued during the year net of issue cost and tax.
(2) The change is due to the net movement in shares issued and shares vested under the Employee Share Plans.
80
Notes to the Consolidated Financial Statements
Section 3. Debt and equity
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
3.3 Managing financial risks
(a) Market risks
Interest rate risk
The Group’s exposure to interest rate risk mainly arises from its variable rate borrowings and cross currency swaps. An increase in the
benchmark interest rates of 50 basis points (0.5%), with all other factors held constant, would result in an increase in the annual interest cost
of the Group of $0.9 million (2019: $1.1 million increase).
Foreign currency risk
GBP and EUR borrowings do not give rise to foreign currency risk to the Group as they are ultimately held in entities that have a GBP or EUR
functional currency respectively.
The Group is exposed to foreign currency transaction risk mainly from intercompany balances denominated in foreign currency, the majority of
which is mitigated by internal GBP/AUD cross currency derivatives. Additional foreign currency risk arises from cash balances, receivables and
payables held within each subsidiary but denominated in a currency different to the functional currency of that subsidiary.
The material exposure to foreign currency movements arising from foreign currency working capital balances held within the Group is
summarised below:
Working capital denominated in foreign currency
GBP
ZAR
AUD impact on profit or loss of a 1% increase in foreign currency rates
GBP
ZAR
2020
‘000
(1,222)
44,374
(22)
40
2019
‘000
(12,041)
31,280
(226)
32
The above excludes the exposure of the Group from translating its foreign operations to the Group presentation currency.
(b) Capital risk management
The Group manages its capital to ensure it will be able to continue as a going concern while maximising the return to shareholders.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt. The Group is not subject to any significant regulatory capital requirements.
Management reviews the capital structure of the Group on a regular basis. As part of this review, the cost of capital and the risks associated
with each class of capital is considered as well as the impact on the Group’s leverage ratio.
The Group’s year end leverage ratio is outlined below:
Net debt(1)
Segment Profit for the last twelve months
Leverage ratio
(1) Measured as borrowings and net derivatives liabilities/assets less cash and cash equivalents.
Notes
1.1(a)
2020
$’000
125,146
152,918
0.82
2019
$’000
194,934
152,062
1.28
Iress Limited Annual Report 2020 81
SECTION 4. OTHER DISCLOSURES
4.1 Taxation
Total income tax expense comprises current and deferred tax recognised in the Statement of Profit or Loss in the year. Current and deferred tax
is also recognised directly in equity, and not in the Statement of Profit or Loss, to the extent it is attributable to amounts and movements which
have also been recognised directly in equity.
Current tax
Current tax comprises expected tax payable/receivable on business taxable income/loss which is recognised in the Statement of Profit or Loss
in the current year, as well as any adjustments to tax payable/receivable recognised in the current year which relate to taxable income/loss
recognised in the Statement of Profit or Loss in prior years.
Current tax is measured using the applicable income tax rates which are enacted, or substantively enacted, at the reporting date in the countries
where the company’s subsidiaries and associates operate.
Deferred tax
Deferred tax represents the movements in deferred tax assets and liabilities which have been recognised during the year and which are
attributable to amounts recognised in the Statement of Profit or Loss in the current year, as well as amounts recognised in the Statement of
Profit or Loss in prior years. Deferred tax assets and liabilities are attributable to temporary timing differences between the carrying amount
of assets and liabilities recognised for financial reporting purposes and the tax base of assets and liabilities recognised for tax purposes.
Deferred tax assets are recognised for deductible temporary differences, unused tax losses and unused tax credits to the extent it is probable
that future taxable profits will be available against which they can be realised.
Deferred tax liabilities are recognised for all the assessable temporary differences as required by accounting standards.
Deferred tax is determined using tax rates which are expected to apply when the deferred tax asset/liability is expected to be realised/settled
based on laws which have been enacted or substantively enacted at the reporting date. The measurement of deferred tax also reflects the tax
consequences flowing from the manner in which the Group expects, at the reporting date, to realise or settle the carrying amount of its assets
and liabilities.
Tax consolidation
The Company and its wholly-owned Australian resident entities are part of a tax consolidated group under Australian Taxation Law. Iress Limited
is the head entity of the Australian tax consolidated group. Tax expense, deferred tax assets and deferred tax liabilities arising from temporary
differences of the members of the tax consolidated group are recognised in the separate financial accounts of the members of the Australian
tax consolidated group using the ‘stand-alone taxpayer’ approach. Current and deferred tax assets and liabilities arising from unused tax losses
and tax credits of the members of the Australian tax consolidated group are recognised by the Company (as head entity of the tax consolidated
group).
Due to the existence of a tax funding arrangement between the entities in the Australian tax consolidated group, amounts are recognised as
payable to or receivable by the Company and each member of the Australian tax consolidated group in relation to the tax contribution amounts
paid or payable between the parent entity and the other members of the Australian tax consolidated group in accordance with the arrangement.
82
Notes to the Consolidated Financial Statements
Section 4. Other disclosures
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
4.1 Taxation (continued)
(a) Income tax expense for the year including current and deferred tax is as follows:
INCOME TAX EXPENSE RECOGNISED IN STATEMENT OF PROFIT OR LOSS
Current income tax expense
Current income tax charge
Adjustments in respect of current income tax of the previous year
Deferred income tax expense
Origination and reversal of temporary differences
Adjustments in respect of deferred income tax of the previous year
Total income tax expense recognised in Statement of Profit or Loss
Income tax expense recognised in other comprehensive income
Arising from gains or losses on long term monetary intercompany balances
Income tax expense recognised directly in equity
Current tax credited directly to other reserves
Deferred tax credited directly to other reserves
Total income tax expense recognised in Other Comprehensive Income and Equity
(b) The reconciliation of income tax expense at the Australian tax rate to total income tax expense is as follows:
Profit from continuing operations before income tax expense
Tax at the Australian tax rate of 30% (2019: 30%)
Income tax expense adjustments:
Effect of different tax rates in foreign jurisdictions
Effect of non-assessable income and non-deductible expenses
Adjustments for current and deferred tax of prior periods
Employee share plan
Unrecognised tax losses
Income tax expense
2020
$’000
2019
$’000
25,529
(521)
25,008
(5,759)
(166)
(5,925)
19,083
(76)
(158)
(819)
(1,053)
2020
$’000
78,149
23,445
(2,761)
(1,402)
(687)
312
176
19,083
24,819
3,416
28,235
(685)
(4,227)
(4,912)
23,323
39
809
(775)
73
2019
$’000
88,451
26,535
(3,441)
(617)
(811)
127
1,530
23,323
Iress Limited Annual Report 2020 83
(c) Deferred income tax assets and liabilities recognised in the Statement of Financial Position are as follows:
For the year ended
31 December 2019
Deferred tax assets
Receivables and other assets
Plant and equipment
Computer software
Payables and other liabilities
Provisions and accruals
Derivative liabilities
Carry forward tax losses
Capital transaction costs
Share-based payments
Leases
Other
Total deferred tax assets
Deferred tax liabilities
Trade and other payables
Computer software
Intangible assets
Other financial assets
Employee share plan
Total deferred tax liabilities
For the year ended
31 December 2020
Deferred tax assets
Receivables and other assets
Plant and equipment
Computer software
Payables and other liabilities
Provisions and accruals
Derivative liabilities
Carry forward tax losses
Capital transaction costs
Share-based payments
Leases
Other
Total deferred tax assets
Deferred tax liabilities
Trade and other payables
Computer software
Intangible assets
Other financial assets
Employee share plan
Total deferred tax liabilities
Opening
balance
$’000
Charged
to income
$’000
Charged to
OCI/Equity
$’000
From business
combinations
$’000
Exchange
differences
$’000
Closing
balance
$’000
176
4,853
1,307
2,045
4,931
170
2,362
1,133
366
–
457
17,800
–
(380)
(7,069)
(248)
–
(7,697)
(30)
(612)
1,240
(877)
4,057
(700)
(124)
(434)
771
345
(26)
3,610
(990)
217
1,361
761
(47)
1,302
–
–
–
–
–
–
–
(121)
77
819
–
775
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3,174)
–
–
(3,174)
–
195
1
(94)
11
–
120
–
58
–
3
294
–
(28)
(192)
–
–
(220)
146
4,436
2,548
1,074
8,999
(530)
2,358
578
1,272
1,164
434
22,479
(990)
(191)
(9,074)
513
(47)
(9,789)
Opening
balance
$’000
Charged
to income
$’000
Charged to
OCI/Equity
$’000
From business
combinations
$’000
Exchange
differences
$’000
Closing
balance
$’000
146
4,436
2,548
1,074
8,999
(530)
2,358
578
1,272
1,164
434
22,479
(990)
(191)
(9,074)
513
(47)
(9,789)
153
228
28
2,191
(1,101)
1,052
91
(462)
2,250
327
(433)
4,324
990
(202)
1,827
(1,061)
47
1,601
–
–
–
–
–
–
–
819
–
–
–
819
–
–
–
–
–
–
–
(8)
(572)
128
2,064
–
–
201
–
546
–
2,359
–
–
(4,226)
(9)
–
(4,235)
(12)
(259)
–
(16)
(31)
–
(243)
–
(110)
(21)
–
(692)
–
16
312
–
–
328
287
4,397
2,004
3,377
9,931
522
2,206
1,136
3,412
2,016
1
29,289
–
(377)
(11,161)
(557)
–
(12,095)
84
Notes to the Consolidated Financial Statements
Section 4. Other disclosures
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
4.1 Taxation (continued)
(d) Unused tax losses to carry forward for which no deferred tax asset has been recognised are outlined below:
Singapore (Tax rate 17.0%, 2019: 17.0%)
Hong Kong (Tax rate 16.5%, 2019: 16.5%)
France (Tax rate 28.0%, 2019: 28.0%)
Potential tax benefit
2020
$’000
–
121
73,214
20,520
2019
$’000
1,539
135
66,707
18,962
4.2 Businesses and investments acquired and divested
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration
transferred in the acquisition is measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for
impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if
related to the issue of debt or equity securities.
Any contingent consideration is measured at fair value at the date of acquisition. If any obligation to pay contingent consideration that meets
the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise,
subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.
Acquisition of subsidiaries
(a) BC Gateways
On 7 January 2020, Iress acquired a 100% interest in BC Gateways Limited, a blockchain communication platform provider based in Hong Kong
and Australia.
Iress acquired the holding company, BC Gateways Limited via Iress International Holding Pty Ltd which is a company incorporated in Australia
and ultimately 100% owned by Iress Limited.
The acquisition of BC Gateways will assist Iress in meeting the demand from financial institutions for cost-effective, automated and compliant technology.
Initial cash consideration of $1.5 million was paid with further milestone and earnout payments to be made to the sellers on the achievement of
specific customer and revenue targets in the 2020, 2021 and 2022 financial years. The range of estimated possible outcomes for the milestone
and earnout payments in total are $0 to $20 million.
The milestone payments and earnouts have been individually measured at the acquisition date based on the discounted present value of the
expected payment achieved under the respective milestone and earnout formulae. In order to assess the expected outcome, Management made
assumptions as to the probability of achieving the specific targets and the range of possible outcomes. These probability assumptions were
made on the basis of financial forecasts available at the date of the acquisition.
The following table summarises consideration paid and payable and the fair value of net assets acquired at the date of acquisition:
Consideration
Cash consideration
Fair value of contingent consideration (‘the milestone payments and earnouts’)
Total fair value of consideration
Assets acquired
Cash and cash equivalents
Trade and other receivables
Intangible assets
Deferred tax liabilities
Fair value of assets acquired
Goodwill recorded on acquisition
7 January
2020
$’000
1,525
16,158
17,683
1
1
2,929
(572)
2,359
15,324
Acquisition costs of $0.2 million are included in ‘Business acquisition, integration and restructuring expenses’. Refer to Note 1.6.
The financial results of BC Gateways for the period since the acquisition date and included in the Group’s Consolidated Statement of Profit or
Loss for the year ended 31 December 2020 are not material to the Group’s revenue and profit after tax.
Iress Limited Annual Report 2020 85
(b) O&M Systems
On 17 March 2020, Iress completed the acquisition of 100% of the share capital of O&M Systems Limited (O&M). O&M provides pension and
investment data and comparison tools to financial advisers in the UK. Established in 1992, O&M has over 2,000 clients comprising pension and
platform providers and advice businesses.
O&M software will further strengthen Iress’ already comprehensive advice offering in the UK. It will integrate directly into Iress’ Xplan software and
is immediately available to Iress’ clients, as well as continuing as a stand alone research service.
The following table summarises consideration paid and payable and the fair value of net assets acquired at the date of acquisition:
Consideration
Cash consideration
Total fair value of consideration
Assets acquired
Cash and cash equivalents
Trade and other receivables
Intangible assets
Plant and equipment
Right-of-use assets
Payables and other liabilities
Lease liabilities
Deferred tax liabilities
Fair value of assets acquired
Goodwill recorded on acquisition
17 March
2020
$’000
6,757
6,757
2,161
229
3,770
21
512
(1,623)
(552)
(725)
3,793
2,964
The financial results of O&M for the period since the acquisition date and included in the Group’s Consolidated Statement of Profit or Loss for the
year ended 31 December 2020 are not material to the Group’s revenue and profit after tax for the year ended 31 December 2020.
In addition, the financial results of O&M for the period from 1 January 2020 to the acquisition date would not be material to the Group’s revenue
and profit after tax for the year ended 31 December 2020 if they had been consolidated into the results of the Group.
86
Notes to the Consolidated Financial Statements
Section 4. Other disclosures
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
4.2 Businesses and investment acquired and divested (continued)
Acquisition of subsidiaries (continued)
(c) OneVue
On 6 November 2020 Iress acquired 100% of the outstanding shares of OneVue (OneVue) via a Scheme Implementation Agreement with OneVue
Holdings (OVH.ASX). OneVue is an ASX listed administration platform for managed funds, superannuation and investments. The business operates
through two core divisions: Fund Services and Platform Services. OneVue has scale in Fund Services managed funds administration as the
largest single third-party fund registry in Australia and third in Superannuation Member Administration.
Iress’ strategy is to continue to generate long-term growth opportunities, leveraging technology and automation while helping clients achieve
efficiency, compliance and growth. The combination of OneVue’s position in administration in funds, super and investment, and Iress’ strength
in software and data will drive innovation through technology. This includes the development of software and services that connects advice and
investments closer together, resulting in greater efficiency and productivity for professional advisers and businesses in Australia.
The following table summarises consideration paid and payable and the fair value of net assets acquired at the date of acquisition:
Consideration
Cash consideration
Total fair value of consideration
Assets acquired
Cash and cash equivalents
Trade and other receivables
Intangible assets
Plant and equipment
Right-of-use assets
Deferred tax assets
Interest-bearing loan
Payables and other liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Fair value of assets acquired
Goodwill recorded on acquisition
6 November
2020
$’000
115,210
115,210
7,122
6,043
41,444
292
5,169
2,939
(6,482)
(14,229)
(6,988)
(395)
(3,518)
31,397
83,813
The allocation of the purchase consideration outlined above remains provisional in relation to the fair valuation of certain intangible assets and
tax accounting.
Acquisition costs of $5.5 million were incurred during 2020 and are included in ‘Business acquisition, integration and restructuring expenses’.
Refer to Note 1.6.
The revenue resulting from the operations of OneVue since acquisition and included in the Group’s Consolidated Statement of Profit or Loss for
the year ended 31 December 2020 was $7.9 million. OneVue’s loss after tax since acquisition included in the Group’s Consolidated Statement of
Profit or Loss for the year ended 31 December 2020 was $0.3 million.
Had the acquisition of OneVue been effected at 1 January 2020, the revenue of the Group for the year ended 31 December 2020 would have
increased by $40.3 million and the profit after tax of the Group for the year ended 31 December 2020 would have been reduced by $12.5 million.
Iress Limited Annual Report 2020 87
4.3 Iress Limited – Parent entity financial information
The ultimate controlling entity of the Group is Iress Limited, which is a for profit entity listed on the Australian Securities Exchange.
(a) Summary financial information
The individual financial statements for the parent entity, Iress Limited, show the following aggregate amounts:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Profit for the year(1)
Total comprehensive income
(1) Included within profit for the year is dividend income from subsidiaries of $85.0 million (2019: $87.0 million).
2020
$’000
168,790
867,073
1,035,863
111,111
188,555
299,666
736,197
558,416
35,051
142,730
736,197
54,275
54,275
2019
$’000
214,482
759,879
974,361
166,566
238,989
405,555
568,806
383,083
31,021
154,702
568,806
46,421
46,421
(b) Capital commitments and contingent liabilities
There are no material contingent liabilities or capital expenditure that have been contracted or provided for at the reporting date (2019: Nil).
88
Notes to the Consolidated Financial Statements
Section 4. Other disclosures
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
4.4 Subsidiaries
Details of the Group’s wholly-owned subsidiaries at the end of the year are as follows:
Australia
BC Gateways Pty Ltd(2)
Diversa Funds Management Pty Ltd(4)
Diversa Pty Ltd (formerly Diversa Ltd)(4)
Canada
Iress Canada Holdings Ltd
Iress (LP) Holdings Corp.
Iress Market Technology Canada LP
FUND.eXchange Pty Ltd (formerly OneVue Private Clients Pty Ltd)(4)
Iress (Ontario) Ltd
Financial Synergy Pty Ltd(1)
Financial Synergy Actuarial Pty Ltd(1)
Financial Synergy Holdings Pty Ltd(1)
Glykoz Pty Ltd(4)
KTG Technologies Corp.
South Africa
Advicenet Advisory Services (Pty) Ltd
Iress Hosting (Pty) Ltd
Group Insurance & Superannuation Concepts Pty Ltd(4)
Iress Financial Markets (Pty) Ltd
Innergi Pty Ltd
Iress MD RSA (Pty) Ltd
Investment Gateway Pty Ltd (formerly MAP Financial Planning Pty Ltd)(4)
Iress Wealth MNGT (Pty) Ltd
Iress Data Pty Ltd(1)
Iress Euro Holdings Pty Ltd(1)
Iress Information Pty Ltd
Iress International Holding Pty Ltd(1)
Iress South Africa (Australia) Pty Ltd(1)
United Kingdom
Iress FS Group Ltd
Iress FS Ltd
Iress Mortgage Services Ltd
O&M Systems Ltd(3)
Iress Spotlight Wealth Management Solutions (RSA) Pty Ltd(1)
O&M Life & Pensions Ltd(3)
Iress Wealth Management Pty Ltd(1)
Lucsan Capital Pty Ltd
Map Funds Management Pty Ltd(4)
No More Practice Education Pty Ltd(4)
No More Practice Holdings Pty Ltd(4)
OneVue Financial Pty Ltd(4)
OneVue Fund Services Pty Ltd(4)
OneVue Holdings Ltd(4)
OneVue Pty Ltd(4)
OneVue Services Pty Ltd(4)
OneVue Super Member Administration Pty Ltd(4)
OneVue Super Services Holdings Pty Ltd(4)
OneVue Super Services Pty Ltd(4)
OneVue UMA Pty Ltd(4)
OneVue Unit Registry Pty Ltd(4)
OneVue Wealth Services Ltd(4)
Iress Portal Ltd
Iress Solutions Ltd
Iress Technology Ltd
Iress (UK) Ltd
Iress UK Holdings Ltd
Iress Web Ltd
Proquote Ltd
Pulse Software Systems Ltd
Pulse Software Management Ltd
TrigoldCrystal Ltd
Other countries
BC Gateways Ltd (Hong Kong)(2)
Iress Asia Holdings Ltd (Hong Kong)
Iress Malaysia Holdings Sdn Bhd (Malaysia)
Iress Market Technology (Singapore) Pte Ltd (Singapore)
Iress (NZ) Ltd (New Zealand)
OneVue Wealth Solutions Pty Ltd (formerly OneVue Wealth Services Pty Ltd)(4)
Peresys Software Ltd (Ireland)
Planning Resources Group Pty Ltd(1)
Top Quartile Management Pty Ltd(1)
Tranzact Consulting Pty Ltd(4)
Tranzact Financial Services Pty Ltd(4)
Tranzact Superannuation Services Pty Ltd(4)
Waysun Technology Development Ltd (Hong Kong)(²)
QH Hold Co (Luxembourg)
QuantHouse SAS (France)
QuantHouse Sàrl (Tunisia)
QuantHouse Singapore Pte Ltd (Singapore)
QuantHouse UK Ltd (United Kingdom)
QuantHouse Inc. (United States of America)
(1) Iress Limited and its Australian subsidiaries entered into an ASIC Class Order and Deed of Cross Guarantee with Iress Limited in December 2014.
(2) Group acquired these entities on 7 January 2020.
(3) Group acquired these entities on 17 March 2020.
(4) Group acquired these entities on 6 November 2020.
Iress Limited Annual Report 2020 89
4.5 Deed of cross guarantee
Iress Limited and a number of Australian wholly-owned subsidiaries as specified in Note 4.4 are party to a Deed of Cross Guarantee under which
each company guarantees the debts of the others. By entering into the deed, the relevant wholly-owned subsidiaries have been relieved from
the requirement to prepare the financial report and Directors’ Report under ASIC Corporations (Wholly-Owned Companies) Instrument 2016/785
issued by the Australian Securities and Investments Commission.
(a) Consolidated Statement of Profit or Loss and retained earnings:
Profit before tax
Income tax expense
Net profit after tax
Retained earnings at the beginning of the year
Impact of change in accounting policy(1)
Dividends declared
Transfers from SBP reserve
Retained earnings at the end of the year
2020
$’000
103,507
(16,477)
87,030
(12,565)
–
(83,394)
17,163
8,234
2019
$’000
66,878
(16,399)
50,479
7,081
(955)
(79,839)
10,669
(12,565)
(1) Impact of adopting AASB 16’s modified retrospective approach under which the cumulative effect of initial application is recognised in retained earnings at 1 January 2019.
90
Notes to the Consolidated Financial Statements
Section 4. Other disclosures
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
4.5 Deed of cross guarantee (continued)
(b) Consolidated Statement of Financial Position
ASSETS
Current assets
Cash and cash equivalents
Receivables and other assets
Receivables from Iress Group companies outside the Deed
Current taxation receivables
Total current assets
Non-current assets
Intangible assets
Plant and equipment
Right-of-use assets
Deferred tax assets
Investment in subsidiaries
Other financial assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables and other liabilities
Lease liabilities
Provisions
Current taxation payables
Total current liabilities
Non-current liabilities
Payables and other liabilities
Lease liabilities
Provisions
Payables to Iress Group companies outside the Deed
Borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Share-based payments reserve
Foreign currency translation reserve
Retained earnings/(accumulated losses)
Total equity
2020
$’000
2019
$’000
27,593
28,856
7,975
935
65,359
113,879
15,311
26,913
17,761
548,579
165,465
887,908
953,267
28,285
5,512
4,777
–
38,574
50,846
25,443
42,833
5,321
188,433
577
313,453
352,027
601,240
558,416
35,020
(430)
8,234
601,240
15,645
27,546
–
208
43,399
106,250
18,760
33,204
12,984
414,149
175,109
760,456
803,855
28,655
5,330
6,634
1,684
42,303
50,851
31,374
30,244
20,053
225,914
692
359,128
401,431
402,424
383,083
30,990
916
(12,565)
402,424
Iress Limited Annual Report 2020 91
4.6 Basis of preparation
Iress Limited (the ‘Company’) is a for profit company domiciled in Australia. The full year financial report is a general purpose financial report
comprising the Company and its subsidiaries (collectively referred to as the ‘Group’ or ‘Iress’) for the year ended 31 December 2020. The full year
financial statements:
• have been prepared in accordance with the Corporations Act 2001 (Cth), Australian Accounting Standards and Interpretations, and
International Financial Reporting Standards (IFRS);
• were authorised for issue by the Directors on 17 February 2021;
• have been prepared on a historical cost basis, except for derivative financial instruments and investments in financial assets which have been
measured at fair value;
• have all amounts presented in Australian dollars, unless otherwise stated; and
• have amounts rounded off to the nearest thousand dollars, unless otherwise stated, as allowed under ASIC Corporations (Rounding in Financial/
Directors Reports) Instrument 2016/191 dated 24 March 2016 (ASIC guidance).
(a) Adoption of new standards
In the current period, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (AASB) that are relevant to its operations and effective for annual reporting periods commencing on or after 1 January 2020
including the following:
AASB 3 Business combinations (amendments)
AASB 101 and AASB 108 (amendments)
– Definition of a business
– Definition of material
Conceptual Framework for Financial Reporting (updated 2018)
– Amendments to and reference to the Conceptual Framework in IFRS Standards
AASB 2019–3 Amendments to Australian Accounting Standards
– Interest rate benchmark reform
AASB 2019–5 Amendments to Australian Accounting Standards
– Disclosure of the Effect of New IFRS Standards not yet issued in Australia
AASB 2020–4 Amendments to Australian Accounting Standards
– COVID-19 related rent concessions
None of these standards have had a material impact on the Group in the current period and are not expected to have a material impact in future
reporting periods or on foreseeable future transactions.
(b) Standards on issue but not yet effective
At the date of authorisation of the financial statements, the following new accounting standards and interpretations have been published that are
not mandatory for 31 December 2020 reporting periods and have not yet been applied by the Company within this financial report:
AASB 10 Consolidated Financial Statements and AASB 128 Investments
in Associates (amendments)
– Sale or contribution of assets between an investor and its associate
or joint venture(1)
AASB 17 Insurance contracts
– Measurement of insurance liabilities(2)
AASB 2020–1 Amendments to Australian Accounting Standards
– Classification of liabilities as current or non-current(3)
AASB 2020–3 Amendments to Australian Accounting Standards
– Annual improvements 2018–2020 and other amendments(3)
(1) Effective for annual periods beginning on or after 1 January 2021, with earlier application permitted.
(2) Effective for annual periods beginning on or after 1 January 2021.
(3) Effective for annual periods beginning on or after 1 January 2022.
Iress does not believe these new accounting standards, amendments and interpretations will have a material impact on the financial statements
of the Group in future periods.
(c) Summary of general accounting policies
The following significant accounting policies have been adopted in the preparation and presentation of the financial report.
(i) Consolidation
The consolidated financial statements include the financial statements of the Company, and the information and results of each subsidiary from
the date on which the Company obtains control and until such time as the Company ceases to control such entity.
An entity is controlled when Iress is exposed to, or has rights to, variable returns from involvement with the entity and has the ability to affect those
returns through power over the entity.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s
accounting policies.
In reporting the consolidated financial statements, all intercompany balances and transactions, and unrealised profits or losses within the Group
are eliminated in full.
92
Notes to the Consolidated Financial Statements
Section 4. Other disclosures
Notes to the Consolidated Financial Statement cont.
For the year ended 31 December 2020
4.6 Basis of preparation (continued)
(ii) Foreign currency translation
Foreign currency transactions
All foreign currency transactions during the financial year are brought
to account using the exchange rate in effect at the date of the
transaction. Foreign currency monetary items at reporting date are
translated at the exchange rate existing at the reporting date.
Exchange differences are recognised in profit or loss in the period
in which they arise except that exchange differences on monetary
items receivable from or payable to a foreign operation for which
settlement is neither planned or likely to occur, which form part of the
net investment in a foreign operation are recognised in the foreign
currency translation reserve in the consolidated financial statements
and are recognised in profit or loss on disposal of the net investment.
Foreign operations
Assets and liabilities of foreign operations are translated using
exchange rates prevailing at the end of each reporting period. Income
and expense items are translated at the average exchange rates
for the period, unless exchange rates fluctuate significantly during
that period, in which case the exchange rates at the dates of the
transactions are used. Any exchange differences are recognised in
equity. On the disposal of a foreign operation, all of the exchange
differences accumulated in equity in respect of that operation are
reclassified to profit or loss.
(iii) Financial instruments
Financial assets and financial liabilities are recognised in the
Company’s Statement of Financial Position when the Group becomes
a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets or
financial liabilities at fair value through profit or loss are recognised
immediately in profit or loss.
If the transaction price differs from fair value at initial recognition,
the Group will account for such difference as follows:
• if fair value is evidenced by a quoted price in an active market for
an identical asset or liability or based on a valuation technique
that uses only data from observable markets, then the difference
is recognised as a gain or loss on initial recognition (i.e. day 1 profit
or loss);
• in all other cases, the fair value will be adjusted to bring it in line
with the transaction price (i.e. day 1 profit or loss will be deferred
by including it in the initial carrying amount of the asset or liability).
After initial recognition, the deferred gain or loss will be released to
profit or loss such that it reaches a value of zero at the time when the
entire contract can be valued using active market quotes or verifiable
objective market information. Depending on the type of financial
instrument, the Group can adopt one of the following policies for
the amortisation of day 1 gain or loss:
• calibrate unobservable inputs to the transaction price and
recognise the deferred gain or loss as the best estimates of those
unobservable inputs change based on observable information; or
• release the day 1 gain or loss in a reasonable fashion based on
the facts and circumstances (i.e. using either straight-line or
non-linear amortisation).
Financial assets
The Company’s financial assets include cash and cash equivalents,
derivatives, listed shares and trade and other receivables.
Classification and subsequent measurement of financial assets
Financial assets that meet the following conditions are subsequently
measured at amortised cost:
• the financial asset is held within a business model whose objective is
to collect contractual cash flows; and
• the contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal
amount outstanding.
All other financial assets are subsequently measured at fair value.
Amortised cost and interest income
Interest income is recognised using the effective interest method for
financial assets measured subsequently at amortised cost. Interest
income is calculated by applying the effective interest rate to the
gross carrying amount of a financial asset, except for financial assets
that have subsequently become credit-impaired.
Impairment of financial assets
The Group performs impairment assessment under the expected
credit losses model on financial assets (including trade and other
receivables, receivables from related parties and bank balances)
which are subject to impairment under AASB 9 Financial Instruments.
The amount of expected credit losses is updated at the end of
each reporting period to reflect changes in credit risk since initial
recognition. Refer to notes 2.4(b) on the Group’s approach to the credit
loss allowance.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual
rights to the cash flows from the asset expire, or when it transfers the
financial asset and substantially all the risks and rewards of ownership
of the asset to another entity.
On derecognition of a financial asset measured at amortised cost, the
difference between the asset’s carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and on-demand
deposits, and other short-term highly liquid investments that are
readily convertible into a known amount of cash and are subject to
an insignificant risk of changes in value.
Iress Limited Annual Report 2020 93
Financial liabilities and equity
Financial liabilities and equity instruments are classified according
to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest in
the assets of the Company after deducting all of its liabilities. Equity
instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs.
Share capital represents the nominal value of equity shares issued.
Share premium represents the excess over nominal value of the fair
value of the consideration received for equity shares, net of direct
issue costs.
Retained earnings include all current and prior year results as disclosed
in the statement of comprehensive income. Retained earnings include
realised and unrealised profits. Profits are considered unrealised where
they arise from movements in the fair value of investment properties
that are considered to be temporary rather than permanent.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the fair
value of proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and direct
issue costs, are accounted for on an accruals basis in the statement
of comprehensive income using the effective interest rate method and
are added to the carrying amount of the instrument to the extent that
they are not settled in the period in which they arise.
Trade payables
Trade payables are initially measured at fair value and are
subsequently measured at amortised cost, using the effective
interest rate method.
(d) Significant sources of estimation uncertainty
The following assets and liabilities recognised in the Consolidated
Statement of Financial Position as at 31 December 2020 are subject
to estimates made about future performance and as such require
significant judgment:
(i) Goodwill
Significant judgment is required in the assumptions used in the
value-in-use models used in impairment testing. Refer to Note 2.1 for
more detailed information.
(ii) Credit Loss Allowance
Significant judgment is required in the assumptions made in
calculating the Group’s credit loss allowance included within trade
and other receivables. Refer to Note 2.4 for more detailed information.
(iii) Provision for deferred consideration
The Group’s provision for deferred contingent consideration is
recognised within ‘Provisions’ in the Consolidated Statement of
Financial Position.
Deferred contingent consideration represents purchase consideration
payable for acquisitions once certain conditions are met as stipulated
in the contracts. These are measured at the discounted value of the
best estimate of the cash payable based on conditions existing at
the balance date. Refer to Note 2.6 for more detailed information.
4.7 The impact of the COVID-19 pandemic on these
financial statements
Subsequent to 31 December 2019, there was a global outbreak
of a novel strain of coronavirus (COVID-19), and on 11 March 2020,
the World Health Organisation declared the coronavirus outbreak a
pandemic. The global and domestic responses, including mandates
from federal, state, and/or local authorities, to mitigate the spread
of the virus continues to evolve rapidly and has impacted global
commercial activity and contributed to significant volatility in
financial markets.
Iress’ key focus during this time has been the health and wellbeing
of its people, and ensuring that they have been able to work safely
and effectively on a remote basis, as well as providing service
continuity for clients and users. While some people and teams in
certain locations have started returning to the office as Government
restrictions have lifted, the majority of Iress’ people continue to work
from home. For those offices that have reopened, Iress’ focus has
been on ensuring that workplaces are safe.
Operations have not been interrupted by COVID-19 and Iress continues
to deliver all services and support to clients and users. Iress’ teams,
including business-critical teams, have been working well remotely
and the business can continue to operate effectively in this manner
for an extended period of time if required. Regular updates regarding
business continuity are published on Iress’ website.
Iress operates a subscription model and most of Iress’ revenue is
recurring in nature. Iress has a history of strong cash conversion and
low debtor defaults. These features of Iress’ commercial model have
continued throughout the COVID-19 pandemic.
The majority of client implementation projects have continued since
the onset of the COVID-19 pandemic, notwithstanding a short period
of adjustment to the new environment. However, some projects,
particularly in the UK Mortgages business, were temporarily delayed.
In addition, the Group is exposed to the broader economic uncertainty
evident in all of Iress’ markets as a result of COVID-19. This makes it
difficult to forecast short-term financial performance.
At the date of this report, due to the resilience of Iress’ business,
Iress has not been eligible for, nor applied for, significant Government
COVID-19 related support other than the deferral of certain VAT and
payroll tax payments that were offered to all companies in the UK
and NSW respectively. Iress settled the deferred payroll tax payments
during the second half of 2020 and expects to settle the UK VAT
liabilities within the next twelve months and as such they remain
presented in the financial statements as current liabilities.
4.8 Transactions with related parties
There are no shareholders with substantial holdings that materially
transacted with the Group during the year.
4.9 Events subsequent to the Statement of Financial
Position date
On 17 February 2021, the Directors declared a final dividend of
30.0 cents per share franked to 40% totalling $58.0 million.
Other than the events above, there has been no other matter or
circumstance which has arisen since the end of the financial year
which has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations, or the state
of affairs of the Group in subsequent years.
94
Directors’ declaration
31 December 2020
In the Directors’ opinion:
(a) the financial statements and notes set out on pages 46 to 93 are in accordance with the Corporations Act 2001, including:
(i) complying with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and of its performance for the financial
year ended on that date; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in Note 4.4
will be able to meet any obligations or liabilities to which they are, or may become subject by virtue of the deed of cross guarantees described
in Note 4.5.
Note 4.6 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
A D’Aloisio
Chair
Melbourne
17 February 2021
A Walsh
Managing Director and Chief Executive Officer
Iress Limited Annual Report 2020
Independent Auditor’s Report
Independent Auditor’s Report
95
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne, VIC, 3000
Australia
Phone: +61 3 9671 7000
www.deloitte.com.au
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt
ttoo tthhee mmeemmbbeerrss ooff IIrreessss LLiimmiitteedd
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
OOppiinniioonn
We have audited the financial report of Iress Limited (the “Company”) and its subsidiaries (the “Group”), which
comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes to the consolidated financial statements, including a summary
of significant accounting policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its financial
performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
BBaassiiss ffoorr OOppiinniioonn
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We
are independent of the Group in accordance with the auditor independence requirements of the Corporations Act
2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the financial report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KKeeyy AAuuddiitt MMaatttteerrss
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report for the current period. These matters were addressed in the context of our audit of the financial report
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
96
Independent Auditor’s Report
Independent Auditor’s Report cont.
KKeeyy AAuuddiitt MMaatttteerr
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee
KKeeyy AAuuddiitt MMaatttteerr
CCaarrrryyiinngg vvaalluuee ooff ggooooddwwiillll iinn tthhee UUKK MMoorrttggaaggeess
bbuussiinneessss
Our procedures included, but were not limited
to:
Refer to Note 2.1 - Impairment assessment.
As at 31 December 2020, the Group’s goodwill
totalled $605.4 million which is allocated across
the seven to the relevant Cash Generating Units
(CGUs). Goodwill is required to be assessed for
impairment on an annual basis or when any
indicators of impairment exist.
The UK Mortgages CGU was identified as having a
heightened risk of impairment due to their
dependency on securing key contracts and the
achievement of forecast growth rates which
require
Included within the UK
Mortgages CGU at 31 December 2020 is goodwill
of $78.1 million.
judgement.
The Group has prepared value in use models to
determine the recoverable amount of the UK
Mortgages CGU.
•
Obtaining an understanding of the key
controls associated with the
preparation of the value in use models
and assessing management’s
methodologies.
With the assistance of our valuation specialists,
we:
•
•
•
•
•
•
Assessed key assumptions, including
forecast growth rates by comparing to
economic and industry growth rates
Challenged the forecasted revenue for
the UK Mortgages CGU with reference
to:
-
-
review of the historical
accuracy of forecasting of the
Group
evaluation of current pipeline
and historical pipeline
conversion rate
Evaluated discount rates used to assess
the cost of capital for the UK Mortgages
CGU against comparable organisations
Agreed the cash flow forecast with the
latest Board approved four year
financial plan for the UK Mortgages
CGU
Recalculated the cash flow models for
mathematical accuracy
Assessed the net present value of the
UK Mortgages CGU in local currency to
the carrying values in local currency.
We also performed a sensitivity analysis to stress
test the key assumptions used in the value in use
models, including revenue growth, terminal
growth rates and discount rates used.
We have assessed the appropriateness of the
disclosures included in Note 2.1 to the financial
statements.
Iress Limited Annual Report 2020
97
AAccqquuiissiittiioonn aaccccoouunnttiinngg ooff OOnneeVVuuee HHoollddiinnggss
LLiimmiitteedd
Refer to Note 4.2 – Businesses and investment
acquired and divested.
With respect to the accounting for the OneVue
acquisition, we performed the following
procedures in conjunction with our valuation
specialists:
On the 6th November 2020, the Group acquired
100% interest in OneVue Holdings Limited for a
total consideration of circa $115 million by way of
a Scheme Implementation Agreement. OneVue
Holdings Limited is an administration platform for
and
managed
investments.
superannuation
funds,
Accounting for this transaction is a complex and
judgemental exercise, requiring management to
determine the fair value of acquired assets and
liabilities, in particular determining the allocation
of purchase consideration to goodwill.
Due to the timing of the acquisition, the purchase
price accounting for OneVue Holdings Limited will
be provisional within the
Iress Limited 31
December 2020 financial statements.
Determination of purchase price:
•
•
Reviewed the Board approved purchase
contract to understand the contractual
terms concerning assets acquired,
liabilities assumed and the purchase
price
Reviewed the actual year-to-date
performance of the OneVue business
since the date of acquisition
Determination of fair value of assets and
liabilities acquired:
•
•
•
Reviewed a copy of the external
valuation report and assessed the
underlying assumptions used to
determine the fair values of the assets
acquired and liabilities assumed as part
of the acquisition
Assessed the objectivity and
competence of the external valuation
specialist used by management
Evaluated and challenged
management’s methodology for the
identification of, and the determination
of fair values of the assets acquired and
liabilities assumed, including any fair
value adjustments. As part of this we
considered the valuation method used,
underlying forecast cashflow,
comparable transactions, discount rates
and tax rates.
We have also assessed the appropriateness of
the disclosures included in Note 4.2 of the
financial statements.
OOtthheerr IInnffoorrmmaattiioonn
The directors are responsible for the other information. The other information comprises the information in the
Company’s annual report for the year ended 31 December 2020, but does not include the financial report and our
auditor’s report thereon.
98
Independent Auditor’s Report
Independent Auditor’s Report cont.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss ffoorr tthhee FFiinnaanncciiaall RReeppoorrtt
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as
the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
AAuuddiittoorr’’ss RReessppoonnssiibbiilliittiieess ffoorr tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
Iress Limited Annual Report 2020
99
•
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that achieves
fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 24 to 44 of the Directors’ Report for the year ended 31
December 2020.
In our opinion, the Remuneration Report of Iress Limited, for the year ended 31 December 2020, complies with section
300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Tom Imbesi
Partner
Chartered Accountants
Melbourne 17 February 2021
100
Shareholder information
Shareholder information
The shareholder information set out below was applicable as at 31 December 2020.
Distribution of members and their holdings:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Substantial shareholders:
GREENCAPE CAPITAL PTY LIMITED
FIRST SENTIER INVESTORS
Total substantial shareholders
Balance of register
Total
20 largest shareholders of quoted equity securities
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD [AGENCY LENDING DRP]
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
BNP PARIBAS NOMS PTY LTD [DRP]
PACIFIC CUSTODIANS PTY LIMITED [EQUITY PLANS TST]
PACIFIC CUSTODIANS PTY LIMITED [IRE PLANS]
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED [NT-COMNWLTH SUPER CORP]
ARGO INVESTMENTS LIMITED
MIRRABOOKA INVESTMENTS LIMITED
CITICORP NOMINEES PTY LIMITED [COLONIAL FIRST STATE INV]
DJERRIWARRH INVESTMENTS LIMITED
NAVIGATOR AUSTRALIA LTD
AVANTEOS INVESTMENTS LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
AMCIL LIMITED
POWERWRAP LIMITED
NETWEALTH INVESTMENTS LIMITED [WRAP SERVICES]
Total top twenty shareholders
Balance of register
Total
Number of
shareholders
4,829
4,019
770
454
48
Number of
shares
2,137,244
9,369,780
5,469,556
9,488,229
166,861,654
% of issued
capital
1.11
4.85
2.83
4.91
86.30
10,120
193,326,463
100.00
Number held
16,012,570
10,282,718
26,295,288
167,031,175
193,326,463
Number
held
65,589,104
28,271,651
21,945,654
12,534,618
6,664,582
5,471,523
3,645,127
2,937,000
2,115,892
1,827,621
1,417,413
1,220,000
1,160,223
1,069,000
869,542
806,957
662,023
645,000
604,363
584,608
160,041,901
33,284,562
193,326,463
%
8.28
5.32
13.60
86.40
100.00
% of issued
shares
33.93
14.62
11.35
6.48
3.45
2.83
1.89
1.52
1.09
0.95
0.73
0.63
0.60
0.55
0.45
0.42
0.34
0.33
0.31
0.30
82.78
17.22
100.00
Iress Limited Annual Report 2020 101
Chair since August 2014 and Independent
Non-Executive Director since June 2012
Managing Director and Chief Executive Officer
since October 2009
Independent Non-Executive Director since
February 2015
Independent Non-Executive Director since
March 2010
Independent Non-Executive Director since
February 2020
Independent Non-Executive Director since
October 2017 and Chair of the People &
Performance Committee since February 2020
Independent Non-Executive Director since
June 2011 and Chair of the Audit & Risk Committee
since June 2011
Independent Non-Executive Director since
August 2008, fourth and final term as a Director
ended at the AGM in May 2020
Independent Non-Executive Director since
February 2015
Independent Non-Executive Director since
February 2020
Corporate directory
Directors
Company Secretary
Registered Office
Share Registry
Stock Exchange Listing
A D’Aloisio
A Walsh
N Beattie
J Cameron
M Dwyer(1)
J Fahey
J Hayes
J Seabrook(2)
G Tomlinson
T Vonhoff(1)
P Ferguson
Level 16, 385 Bourke Street
Melbourne VIC 3000
Phone: +61 3 9018 5800
Fax: +61 3 9018 5844
Computershare Investors Services Pty Limited
452 Johnston Street
Abbotsford VIC 3067
www.computershare.com
Iress Limited shares are quoted on the Australian
Securities Exchange under the code: IRE
Auditor
Deloitte Touche Tohmatsu
(1) Appointed on 1 February 2020.
(2) Final term ended on 7 May 2020.
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