The Iress Ltd (ASX: IRE) share price is on the move on Tuesday morning.
In early trade, the financial technology company's shares are up 1.5% to $11.78.
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Why is the Iress share price pushing higher?
Investors have been bidding the Iress share price higher today following an update on a planned divestment.
According to the release, the company has decided against divesting its UK Mortgages business.
Last year, as part of a Board-led strategy review, Iress decided that it would explore potential opportunities to divest its Mortgages business. This decision reflected the potential to achieve higher returns under new ownership, as well as providing the company with an opportunity to redeploy the anticipated sale proceeds to enhance returns to shareholders.
However, after a thorough and well considered process, the company has had a change of heart and now believes the best outcome for shareholders and clients is to retain the business. Particularly given declining technology valuations.
Iress' Chief Executive, Andrew Walsh, commented: "The Mortgages business continues to perform strongly, contributing £16.1m of revenue and £6.4m of NPAT in 2021. In recent months, Mortgages has increased its pipeline of opportunities as lenders demand greater scale, efficiency and automation in mortgage processing."
"During the sale process, global market volatility increased and technology company valuations declined. It became evident that purchasers' valuations were likely to be below levels that represent a reasonable return to Iress' shareholders. As a result, the Board has decided to cease the divestment process and retain the business," Walsh added.
Guidance update
Iress also took this opportunity to advise that its guidance for FY 2022 remains unchanged.
It continues to expect:
- Segment profit growth of 7% to 10%
- Underlying net profit after tax growth of 25% to 37%
- Underlying earnings per share of 40 cents per share to 44 cents per share in constant currency
Management also revealed that it has upgraded its FY 2025 growth target (including Mortgages) to net profit after tax of $120 million to $135 million. This will be a big increase on the net profit of $73.8 million recorded in FY 2021.
