Marcus Price

Iress has entered into a binding agreement to divest its Managed Funds Administration business to global software provider SS&C Technologies, while reporting a $140 million loss in its half-year results.

In an update to the ASX on Monday morning, Iress said the deal with SS&C will be for a total cash consideration of $52 million subject to customary working capital adjustments with the process to be used to pay off other debt.

The MFA business has over $900 billion in funds under administration and delivers administration services connecting custodians, responsible entities and fund managers with investors and financial advisers.

The completion of the transaction is subject on granting access to the systems and transferring the necessary employees, which it anticipates will be done by Q3 FY23. As part of the transition, Iress will provide transitional services for 24 months.

The announcement accompanied half-year financial results for the financial software provider, which reported revenue of $315.3 million for the half-year, a 2 per cent increase over the previous corresponding period.

Underlying Net Profit After Tax (which excludes one-off expenditures) is $24.4 million, a 31 per cent decrease compared to previous half year result, while full NPAT was a loss of $139.8 million.

The results come amid Iress’ re-shuffling of the business under CEO Marcus Price who replaced Andrew Walsh last year.

The business restructure was announced earlier this year, which has already led to the announcements that the OneVue platform will be sold off, along with a 10 per cent staff reduction.

After acquiring OneVue during the second half of 2020, the company updated the sale was still in progress with divestment intended to be completed by year end.

Iress also stated it saw $47 million in annualised gross costs removed from the business which it said would be reflected in FY24 results.

Further softening of revenue growth is anticipated by the firm for the second half of the year which will be mitigated by some of the transformation projects.

The longer-term objective is for all business sectors to operating at “Rule of 40” – when growth rate and profit margins exceed 40 per cent – by FY25.

It had suspended the interim dividend to reduce debt due to high one-off costs because of the company’s transformation plan.

Chief financial officer Cameron Williamson will spend the second half of the year reviewing the company’s finances, with a focus on the approach to debt, dividends, and research and development.