Iress (ASX: IRE) (OTCPK: IRSMF) shares are down 34% today. IRE shares dropped on the announcement of the first half results. Which, for all the company’s attempts to get us to focus on the underlying show an actual loss of $140 million. Which is, you know, sort of “ouch” territory. At which point and almost as an aside, one of those top tips for reading a corporate profits announcement. If there’s constant repetition of “underlying” (as here) instead of actual and we’ve got to keep reading to find out what those actual results were: then the actual results were a stinker. That’s why they want us to keep considering the underlying, not the actual, results. For of course underlying is one of those numbers that can be massaged whereas actual is a real number.
We do - because it’s a statutory necessity - get told that real number, of course we do: “ Net (loss)/profit attributable to members of parent company (139,794)” as opposed to the $30 million profit of the corresponding period a year earlier.
At which point we rather like the tagline they’ve given that results announcement: “Reset
Refocus Build” and, well, yes, we’d rather hope so.
Iress share price from Google Finance
The background here is that the company really has just rather lost its way. There’s a perfectly decent financial services platform and advisory business in there. Which got a bit tangled in too many things, some of which were not good uses of capital. So, a revision of what is done and how is necessary.
Among other things they ditched the CEO and CFO, are conducting a full review of what the company should be doing, have sold off a division and so on - they’re doing the “Reset” part. What matters though is whether the refocus actually works. For that is what is going to determine whether the build part is possible. We’d suggest that the jury is still out on that. Which is the real reason for the share price drop today. For we already knew that the CEO had gone, that there was to be a clearing of the decks and so on. Now we’re seeing that the new team is doing and proposing and that 34% decline in the IRE share price is not, to put this mildly, a great vote of confidence in their decisions.
We’d suggest that it’ll be time that tells here - whether they will be able to regrow the business or not.
