What: The best-performing stock amongst the S&P/ASX 200 Index (INDEXASX:XJO) today is financial software provider Iress Ltd (ASX: IRE). While the index is following Wall Street's lead overnight and rallying around 0.5%, Iress has reported a very strong interim profit result which has sent the share price up over 9%.
So what: The growth in revenue and earnings has been driven by the inclusion of the UK division for a full period. On an underlying basis, net profit after tax has jumped 47.9% to $38.2 million for the six months.
The earnings growth has flowed through to dividend growth with the board declaring an interim dividend of 16 cents – an increase of 18.5% on the prior interim dividend.
Once again the driver of growth was the Wealth Management division which recorded a 17% increase in revenues and a 26% increase in profits (excluding the contribution from the new UK business). In contrast revenue within the Financial Markets division was flat and profit actually fell.
Now what: Highlighting the offshore expansion of Iress, revenue contribution from outside Australia increased to a 48% share, compared with just 21% in the previous corresponding period (pcp). Segment profit contribution from overseas soared to 30%, compared with just 6% in the pcp.
Management has commented that the second half has commenced positively with expectations that profit for the full year should exceed FY 2013 by between 20% and 25%. It's an impressive outlook and if it is achieved it's quite possible the stock will continue to rally despite Iress already being priced on a high multiple of earnings.
