Thank you for standing by, and welcome to the Iress Limited 2022 full year results financial conference call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the one on your telephone keypad. I'd now like to hand the conference over to Mr. Marcus Price, CEO. Please go ahead.
Thank you, operator. It's a great pleasure to address investors on my first Iress results call and to present our results for the 2022 financial year. Before going into details of our performance, I'd like to talk about two things. First, my initial observations of Iress, and secondly, what you can expect to see over the coming months. First, my observations. Since commencing as CEO in October, we have been conducting a thorough analysis of the company, assessing Iress's performance across geographic segments and the commercial and operating models that we have in place. We've brought in some external expertise to fast-track this analysis. It's about developing the right models, right structures for the business going forward, and choosing where and how we compete, improving efficiency, resource allocation, and increasing return on invested capital and earnings per share. This review is set to be completed in March.
We'll evaluate the data and make informed decisions before sharing the outcomes at an Investor Day on April 20. Some things are already very clear. The first of these is the core of the Iress business is incredibly strong, and the core is the Australian franchise, which comprises three businesses in financial advice, Trading & Market Data, and superannuation. Each of them in their own right, excellent businesses. There is certainly scope for continued organic growth in advice, trading, and superannuation in Australia, and for our software to continue helping our clients to grow their businesses and deliver operating leverage for Iress. It's easy to forget actually that Iress is critical to capital markets and wealth infrastructure. Just a few facts. In Australia alone, Iress processes AUD 2.8 trillion in trades each month. While we see 20,000 new client accounts added to Xplan each month.
Superannuation represents an industry predicted to grow to AUD 10 trillion in assets over the next 15 years, with a large number of funds seeking to reassess their platforms over the coming years to drive greater efficiencies. Iress is at the heart of that. While the Australian franchise is powerful, there is still room for improvement and further performance improvement, specifically. We need to treat incumbency with respect by improving the experience of our clients. Over the last few years, a significant proportion of our investment dollars have been focused offshore, and a number of Australian clients have felt underserved. We're already beginning to address this by reallocating resources back to our core franchises. We do need to reinvest in our powerful core franchises, strengthen the core of our business to sustain growth and returns.
We're kicking off a period of reinvention to drive the next generation of platforms in our core markets. The second point I'd like to make is we do need to improve return on capital in offshore markets. The Australian franchise has historically funded expansion into offshore and adjacent markets with mixed results. Localization hasn't been as simple as you might have initially thought. Our offshore investments have become capital-intensive, materially impacting the group's EPS and return on invested capital performance. We are assessing the best path for unlocking returns for shareholders from those investments. We certainly do see significant opportunities offshore, including in the U.K., but we do need to determine the best structures, ways of going about that, operating models and product strategies to do so. In our review, nothing is off the table. We've identified some quick wins to support FY 2023 as long as well as longer-term opportunities.
The third point I'd like to make is that Iress has great people and great clients. I think this is really important to remember actually. Since becoming CEO in October, I've been impressed by the breadth of industry knowledge and technical capability at Iress. You might often hear that from a CEO, but when I reflected on it, what I could see is these skills in Trading & Market Data and in advice at a technical level are relatively rare. There are relatively few teams globally that have the competence of the Iress team, and I think that's a great strategic capability for the company and something we can build on. I've been also impressed, of course, by the strength of the Iress's client base. Who wouldn't be? We've got exceptional clients.
They are at the heart of financial services in this country and overseas. One of our core focuses will be on improving our clients' experience so that they in turn can unlock growth in their businesses. This is how we'll unlock significant opportunities for our clients and for us and for the broader industry. I think one of the things that comes from this is we need to be participating in the evolution of the industries around us. We are incumbents in many cases, and it's on us and on Iress to step into those opportunities. The fourth point I'd like to make is that we do need to drive high performance in doing just that. My goal is to drive a high-performance culture at Iress that keeps us focused on our customers. I've got three things I'd like to achieve in doing that.
Three ways of doing it. The first is we need to introduce a clearer structure with clear accountability. The second point is, it follows, is introducing greater clarity in reporting so that we can see transparently, both internally and externally. We can evaluate performance and set priorities. The third point is our remuneration structure needs to follow the metrics of performance. We are looking to review our remuneration structure accordingly. My final point is that Iress has tremendous potential. That was the reason why I joined this business. My view hasn't changed. Iress has systemically significant infrastructure in strong and growing industries. In some cases, these are global industries. We've got deep and enduring relationships with many clients across our business. Our client retention is very, very high. We need to do more to partner with our clients and help them solve industry-wide pain points.
The most recent example of this, the Quality of Advice Review report, has highlighted just how underserved the advice needs of Australians are. It's absolutely critical to me and to Iress that we step into this and respond for the benefits of advisors and indeed for all Australians, because we need to make advice more accessible, and we need to provide the next generation of advice technology. In order to do that, we need contemporary technology. Moving to our cloud-based architecture has been an incredibly important building block for the business, and we're at very well advanced in doing just that. We also need to evolve to a more product-led approach in the way we innovate and compete and win in our chosen markets. Pulling it all together, we'll be getting back to our core software strengths. We'll be looking to drive greater operating leverage from this business.
Operating leverage, which is consistent with and what you would expect from a leading software and SaaS company. On to the next point. What you can expect from us from here. Previously outlined, we have kicked off a very significant piece of analysis. Part of this analysis, we are reviewing our longer-term targets. I will present my view of Iress' long-term financial potential at the Investor Day in April after this analysis has been completed. To be very clear, though, this includes the 2025 targets, which we'll be reviewing and updating as part of this exercise. A further point in regard to that, though, I do believe there are significant tailwinds and opportunities for this business, which can generate significant upside on both return on invested capital and earnings per share.
I want to complete the review and make informed decisions based on good data before we talk to investors on April 20th. We've moved forward on a number of immediate priorities already. We're progressing plans to reinforce the strong Australian core. We're certainly looking to be improving our clients' experience by reallocating resources away from low return initiatives and investing back into our core trading and advice software. We've also launched investment infrastructure, connectivity and advice. We will also have new mobile apps coming for advice and trading. We're well advanced on moving to cloud-based architecture, which increases our speed, scale, and agility, provides an absolutely crucial launching pad for the next range of Iress' innovation. We've launched a new sales incentive to fuel growth in Australia and around the world. We are actively looking at evaluating opportunities to improve returns in the U.K.
At the Investor Day on 20th of April, we'll be specifically addressing all of this in more detail. Let's now turn to the FY 2022 results. In 2022, we delivered results in line with revised expectations. Revenue in constant currency was up 5%, underlying NPAT was up 6%, while underlying earnings per share increased by 10%. In constant currency, segment profit was AUD 166.8 million, which is flat on last year. NPAT in constant currency was AUD 54 million. Both are within the revised guidance range. Iress, along with many other companies, have been navigating a changing and challenging economic climate. Historically, Iress has performed very well in tough markets, and you can see that here once again. As previously outlined, I can see significant opportunities for us to be more efficient.
The APAC business continued to perform well with strong revenue growth and high levels of recurring revenue. Superannuation was a clear highlight where we're seeing significant industry growth. Funds want greater efficiency. They certainly wanna deliver more value to members and to reduce costs for those members. The execution of our strategy here has delivered 15% revenue growth, driven by making progress in onboarding clients and winning new ones. Our U.K. business had a more disappointing result, with revenue growth below expectations. There were, however, wide variations between segments there, with recurring revenue growth in Trading and Private Wealth, both offsetting churn in Retail Wealth with a loss of a major client and user rationalization drove revenue down. Overall, though, it's clear we need to find a better pathway to success in the U.K.
We've invested heavily in modernizing our technology to a cloud-based architecture, spending AUD 11 million this year. This work is well advanced. We've now successfully migrated 99% of client sites in Wealth Management to the cloud. 85% of clients are now on a weekly update schedule. We've also decommissioned 11 pieces of legacy software last year, reducing complexity and costs. We launched aspects of investment infrastructure in November. Affinity connects Xplan and third-party investment platforms and insurers to deliver on one of the biggest pain points for advisors. This is the execution of advice. Colonial First State, MetLife, MLC Life, and Praemium have all signed MoUs to collaborate with Iress on this design. We'll continue to innovate and build on the functionality of Affinity in 2023. As one of the platforms we are most proud of at Iress as we provide essential industry infrastructure.
I'll now hand over to John to take you through the financials in more detail and then finish with the outlook.
Thanks, Marcus. I'll start on page 16, which summarizes the key drivers of the 2022 financial performance. As Marcus has said, revenue and constant currency grew by 5%, underpinned by strong performances in APAC and mortgages. Revenue growth was offset by inflationary pressure in the cost base, in particular technology vendor costs, which grew 20% year on year. As a result, and in line with our revised September guidance, segment profit was flat for the year. Iress's financial performance continues to be characterized by very high levels of recurring revenue and very low levels of customer churn, reflecting the critical importance of our software to our clients' businesses. Although we are not immune from inflationary pressure on our cost base, we were able to offset this with recurring revenue growth, including pricing.
Our segment profit margin in 2022 declined from 27.9% to 26.8%. In setting our own price rises, we took the deliberate decision to absorb some of the increase in input costs. We have a loyal and long-term customer base, and we felt this was the right thing to do. We will address this margin decline through a focus on the efficiency of our own business, which will be a key priority for 2023. I'll now drill into these themes in more detail. Turning to slide 18. This slide shows each segment's contribution to revenue growth in 2022. APAC delivered another strong performance, contributing 80% of the group's revenue growth in 2022, driven by new client wins, organic growth with existing clients, and pricing.
APAC Financial Advice revenue grew by 4%, with pricing and organic growth partially offset by some institutional contract resizing as a result of structural changes in the industry. We are pleased with the stability and strength that the financial advice business has shown in a rapidly changing industry over the last couple of years, and we remain positive on the outlook for advice in Australia. Indeed, we continue to see opportunities for the industry to grow and deliver this important service to a greater number of Australians through a combination of technology-led efficiency gains and regulatory support. APAC Trading & Market Data also had a good year with revenue growing by 7%. We saw strong growth in recurring revenue driven by price increases, new client wins in the year, and the full year benefit of clients won in the previous year.
As Marcus said earlier, superannuation revenues increased by 15%, with 84% of revenue now recurring. This growth was driven by making solid progress with the onboarding of new clients, as well as work commencing on the client win announced in 2022. We are seeing a lot of pipeline activity in the superannuation sector, including material and near-term opportunities. The U.K. and Europe's revenue performance was disappointing, with constant currency growth of 1%. Recurring revenue grew by 3%, non-recurring revenue, driven by the timing of client project work, fell by 22%. Performance was mixed across the U.K. product lines, with Trading & Market Data and Private Wealth recurring revenue growing by 7% and 21%, respectively. Retail Wealth declined by 7%. The Retail Wealth decline was a result of the loss of one client and the rationalization of users at another.
Both of these events were covered in the first half results. Mortgages delivered a second year of high growth, with 9% of revenue growth in 2022. We had the full year benefit of a new client going live late in 2021, as well as price gains. Two more client implementations are underway, and we're really pleased with the way this business is performing. Turning briefly to slide 19. I'll call out two points on this slide. Firstly, operations costs increased by AUD 7.1 million as a result of ongoing investment in the cybersecurity team, as well as additional operational resources added in support of the MFA and platform businesses. The increase in corporate costs was largely driven by insurance premiums. Pleasingly, this market looks to have stabilized in 2023.
As noted above, we were able to offset these cost increases with revenue growth, resulting in a flat segment profit outcome on a constant currency basis. I'll turn now to slide 20. This slide shows a bridge of our cost growth from 2021 to 2022. Technology costs were the main driver of increases in the cost of sales and OpEx. Transitioning to the cloud increased the cost of sales by $11.7 million or 13%. Prior to cloud, much of the cost of providing compute power to our teams and our clients was reflected in depreciation of physical servers. These costs are now above the line. OpEx increased by $8.1 million or 15%, driven largely by vendor price rises and the FX impact of US dollar pricing.
Employee costs increased by a modest 2% or AUD 6.3 million, with headcount increases focused on super and mortgages, as well as cybersecurity and compliance teams. Turning now to slide 21. The big movers on this bridge are the AUD 6.3 million reduction in depreciation and amortization, which was the result of the rationalization of our office footprint in 2021, and the full amortization of acquisition-related intangibles. Net interest and financing costs were AUD 3.7 million higher than 2021 as a result of the buyback increase in drawn debt and changes in the interest rate environment. Finally, a couple of comments on slide 22 and 23. Iress continues to be a highly cash generative business, as can be seen on slide 22.
On slide 23, you'll see that net debt now sits at AUD 326 million, with leverage at 2.2x segment profit. This is above our neutral setting of 2x as a result of the 2022 profit downgrade announced in September last year. We also fixed approximately 28% of our lending in May with the issuance of a AUD 60.5 million 7-year fixed rate note. I'll now hand back to Marcus to take you through the outlook and his concluding remarks.
Thank you very much, John. I'll briefly cover the 2023 guidance and some conclusions. We can open the line for questions. I'm very positive about the strength of the Iress core business and the opportunities to deliver greater returns for shareholders. In 2023, we expect our segment profit to be at least the levels of 2022. I'll also hope that we can do better than that as an outcome of the analysis currently underway. Given the extensive scope of this work and the impact this is likely to have on both near and longer term performance, we will be updating guidance on April 20 at our Investor Day. What really matters to me and the team at Iress is ensuring that we finalize the review at pace.
We will evaluate the findings in a considered way, and we'll be executing the changes needed to deliver against the enormous potential that I see for Iress, our shareholders, our clients, and our people. Thank you for attending today. We'd now like to hand back to the operator so that we can get into some questions.
Thank you. If you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are on a speakerphone, please pick up your handset before asking your question. Your first question comes from Nicholas McGarrigle at Barrenjoey. Please go ahead.
Hi, team. Thanks for taking questions. Maybe, Marcus, if you could give us some commentary around having some of the attributes in the domestic business.
Nick, we're having trouble hearing you. Nick. Sorry.
You got that?
That's better.
Yep, sorry. maybe just some commentary around the attributes in the domestic business that you're looking to double down on. and then in the same breath, a commentary around the offshore businesses strategy in terms of either pivoting or improving or divesting, just so a round up of just the way you see Iress maybe moving forward on a three to five year view.
Right. Nick, first of all, I think the Australian business is really well-placed. I mean, particularly, given the incredibly strong structural position we have in trading. I think also in advice, with the Levy Review that's coming through, we can see changes happening in the marketplace. I think they represent great opportunities for Iress. I think we are the incumbent. In fact, I think the industry's looking to us for leadership, and I expect that we can take that on and deliver results that are gonna genuinely change the availability and access of advice for Australians. I'm really excited by that. I think the superannuation business, the other third pillar, if you like, has got an extraordinary roadway ahead of it. The Acurity platform is first among equals in the industry.
I expect it to be one of the leading platforms for the next decade. As we're seeing funds consolidate, that's going to benefit Iress. We are already in some of those large funds that are likely to be the consolidators. There's a lot of tailwinds in that superannuation industry that's going to drive us for a number of years. In the offshore markets, I think it's really about a horses for courses type analysis. We've got some really good businesses in offshore markets, and we've got some subscale ones that are underperforming as well. It's really is, you know, working through a sort of a rationalization and evaluation process of those businesses. One thing I am concerned about though, we've been at some of these quite a long time.
I wanna make sure that, you know, if we've paid the price of entry, that we're not leaving value on the table. If there's a pathway to success, we still wanna make sure we drive towards that success. If there's not, and if we've done everything we think we can, then it's gonna be a different conversation. We're only halfway through that analysis at this point in time, and I'm really, I don't wanna be drawn on sort of the outcome of that result ahead of it, and certainly I'd be speculating in some cases. We'll leave that for April 20, but we'll certainly be quite articulate about that on that day.
Great. Yeah. Maybe just an update on, I think in the last few updates you've been hearing about a couple of superannuation clients. One of them obviously was signed last year with CSC, but maybe just an update on the status of the negotiations with that second client that's been alluded to.
Yeah, sure, Nick. We continue to, well, it's gone beyond negotiation. We're working with that client, and we're very happy with the way that's progressing. Clearly in this industry, there's lots of sensitivity about announcements and so forth, but we're pleased with the way that engagement is working.
Great. I guess markets somewhat focused on the FY 2025 targets, but they weren't mentioned today. Just what the status is in terms of when we'll hear how the business is tracking towards that and maybe compositionally, how the targets might be achieved if they're still in the mix?
Well certainly, Nick, we are, as I said, we are in the middle of a fairly wide-ranging analysis of the business, including its long-term financial capability and performance. I'll be expecting to update all shareholders on that, including 2025 on April 20. I'm a bit underdone on data at this point, so I'm not in a position to comment today, but I certainly will be on April 20.
All right. I might leave it there and jump back in the queue. Thanks.
Thank you. Your next question comes from Olivier Coulon from E&P Financial Group. Please go ahead.
Oh, hi, guys. Can you hear me okay?
We can, yeah.
Sure.
Okay, perfect. The MFA business from OneVue , obviously has been a source of underperformance and additional costs this year. Do you mind just updating us on the status of the platform rebuild there and when those extra costs that you put in should hopefully drop out?
Yeah. The costs we're putting into the MFA business have been focused on our broader DII strategy. As Marcus said, we're, you know, we're very focused on how we can solve the core challenge that our advice customers are facing, which is the inefficiency with the execution of advice. We launched Affinity last year, Olivier, and that's where our focus has been to date. The MFA business has had some costs go into that business. You know, that's making sure that it's in good shape for whatever might come in the DII strategy.
Okay. Just on the platform re-architecture, you know, it sounds like I think you're saying 11 this year or so. Do you mind updating us? Is the original target and timeframe still intact?
I-
In terms of the total cost?
Sure. Look, I think it's gone very well, first of all. I mean, there's three components to it. The transition to cloud, which I think as I've mentioned earlier, has gone extremely well. Cloud doesn't mean every application goes into the cloud, but the ones where we wanna look for that SaaS-type operating model. We've definitely achieved everything, almost everything we wanted to achieve there. In terms of retirement of applications, we've had an acceleration of that, and we've had a number of sunsets, 11 sunsets in the last 12 months. We've been delighted with that. There's a few more to go. In terms of the final phase of that, which is the SaaS, sort of, you know, which applications go on to be fully re-architected as SaaS applications. Horses for courses there.
We're just sort of ring-fencing the ones we think are absolutely, you know, the must-haves and working towards those. To be honest, I think this program is probably a little ahead of schedule actually, and is likely to conclude even a little early. We're actually going very well with that. And I think the tech team has done a tremendous job in that area.
Okay, perfect. Then, sorry, one more if I may. Just on the international portfolio, I mean, have you managed when you're doing the analysis to have a, you know, genuine, full lifecycle view, you know, of the contribution of these businesses? Are there any that and if you have, are there any that, you know, are actually not contributing, you know, once you factor in costs, you know, central support costs that you might be able to get rid of if you were to exit?
One of the challenges has been exactly getting that data to do exactly that. It's not been readily to hand. We've been getting a bit of external work to assist us with that. That's really, in many respects, you've hit, sort of hit the nail on the head in terms of what I'm, what I'm interested in as well. Where these applications are up to or, sort of, businesses are up to in their life cycle, what they're genuinely contributing when you actually, you know, decompose all of the contributions that have been made to them. The early analysis would show there are definitely some parts of the portfolio that are significantly underperforming and are dragging the performance of the group. There's equally some ones that are actually quite good.
What I would say is a lot of, well, quite a few of them are actually a little bit subscale in my mind. That's all part of the thinking and part of the factoring in that we wanna present a full portfolio view on our Investor Day. We're sort of only partway through that analysis at this stage. Yeah, those sort of topics are exactly the ones that are exercising us at the moment.
I'd also point you to slide 11 in the deck, which I think has got some really good proxies for that sort of stuff, and it lays out the non-current assets aligned to each of these segments and compares that to the direct contribution and the return on invested capital profile. There's some good data in there for you.
Okay. No, that's great. Thanks for that. Appreciate it.
Thank you. Your next question comes from Bob Chen at JP Morgan. Please go ahead.
Morning, guys. Just a couple of questions for me. look, there's obviously been a lot of talk on optimizing and improving the efficiency of the business, including maybe some reprioritization. like how easy do you think that is? like how long could this process take ?
Well, it's a couple of things. First of all, I guess our review of efficiency, that's the sort of the third rung. We're looking, you know, at strategies, particularly in the offshore markets. We're looking at structures and accountability through the group, then efficiency third. One thing I would say, though, our efficiency program will be something which will be undertaken this half of the calendar year, and it will be completed pretty quickly. That will go along with the restructuring exercise. We are really moving at pace on this, and my view of those things is you get them done very quickly and very accurately, and with no ambiguity for anyone.
That will all be again, something we can announce on April 20, but this is not something that's gonna take a long period of time. Obviously, if we are dealing with other assets, other parts of the group, then that might be, and depending on what strategies are outlined for those, they will take longer. The efficiency and structural parts of that will happen quickly.
Okay, great. Some of the comments earlier around cost pressures, especially on the tech side. Are you seeing that sort of subsiding this year, or could we expect a little bit more?
I'd expect there to remain some, continuous, some pressure on the cost base, particularly in that, global technology vendor space. As we've said, Bob, we, you know, we believe we'll be able to offset that with, pricing on organic revenue growth. That goes to the guidance we've given for 2023.
Okay, great. Just a final one. Just in terms of some of those comments around the implications of the Quality of Advice Review. I mean, one of the recommendations was the proposed removal of SOAs. Like, could that have any sort of impact or negative impact on the Xplan product itself?
Not really. SOA is a relatively minor component of advice from our perspective. Although it's, as Levy identified, it's one of the sort of largest impediments and costs that advisors incur. From our perspective, we're incredibly supportive of Levy Review. We want to see advice made more, more widely and cheaply available to Australians, and we want to support our advisors in the network. We're absolutely, I think that's, you know, that particular review recommendation we would support.
Great. Thanks, guys.
Thank you. Once again, if you do wish to ask a question, please press star then one on your telephone and wait for your name to be announced. Our next question comes from Brendan Carrig at Macquarie. Please go ahead.
Hi. Good morning, gentlemen. Just two questions from me. The first is obviously the guidance. We can kind of see a bottom end of the range, sort of in the maybe the mid-40s kind of a ballpark. If I was to then add back the one-off costs to get to your underlying number, then and then sort of apply a little range to that, maybe we're talking sort of AUD 55 million-AUD 60 million for FY 2023.
I'm just interested as to, Marcus, your observations as to, you know, if that's the ballpark, what was the biggest, I guess, miss or the drivers, for that number being, you know, so far below the medium-term target of AUD 94 million-AUD 100 million, that was implied for what would've been, you know, in FY 2023 in order to get to those medium-term targets? Not holding you accountable for those targets, but just interested in your observations as to, you know, as to what the big divide is, on current numbers versus where those medium-term targets were.
Look, I think the big, It's John here. The big driver of that is actually the segment profit guidance. Between segment profit and NPAT, you've got an increase in interest costs, which reflects the environment that we're all in at the moment. The main aspect of the guidance statement that I'd point you to is flat on segment profit, and it was flat on segment profit in 2022 as well. Clearly, we're trying to indicate there that we think there's opportunity to do better than that, and that's where we're focused. As Marcus said, that's where this review is looking across the spectrum of structure, strategy, and efficiency.
Okay. Thanks, John. My other question, so just on the repricing that was put through in APAC, which you sort of flagged at the last result, and then also that Insto contract resizing. Were they at all related in terms of the resizing? Was that, you know, off the back of the repricing? Can you maybe provide some commentary or any background information from feedback that you have had from the network following that repricing?
They're not related. The Insto contract resizing relates to structural change in our clients' business, and it's not linked to pricing. The pricing that was put through last year, I think, was respectful to our clients. People understood that there was a change in our input costs, and it was fair and reasonable that our prices would also increase. As I said in my opening remarks, we didn't pass on all of those input cost price rises to clients. I think we've found the right balance between protecting margin as well as doing the right thing by our clients.
Okay. Thanks, John. I'll leave it there.
Thank you. Our next question is a follow-up question from Nicholas McGarrigle at Barrenjoey. Please go ahead.
Thank you. There were some efficiency measures alluded to in the outlook commentary. I'm not sure if you can give us some context around what that could entail.
We can't really talk about that in more detail at this point, Nick. That's the purpose of the review process that we're going through. I think it's clear, though, if you look at our margins across different businesses, we've got some parts of our business that operate at very high margins and deliver all the scale benefits you'd expect from a software company, but other parts of our business don't. The focus is on making sure that our operating margins and our return to shareholders are increased across the group.
I think if I might also add, Nick, the structure of the group, I mean, structure is first for me, but I can see some certainly opportunity for efficiencies within the structure, within the current operating structure. I do think there's an opportunity for the group to be more efficient, and I think we'll be able to deliver some sort of efficiency outcome for the group in the next 12 months.
Okay. Maybe just another follow-up on some of the contracts that were in the mix last year. I guess there were a couple in the MSO segment, maybe just an update on those. A final question around for me on CSC, has that relationship evolved from just the DB registry into a broader relationship on their admin and other registry?
I think your first question, Nick, was around the mortgages business in the U.K. As we said in our opening remarks, there's a couple more client implementations that commenced towards the end of last year. We see good momentum both in terms of the pipeline and conversion of that pipeline in that business. That's two years in a row where it's had really strong revenue growth, and as I said, I'm really pleased with the way that business is going. Your second question was around CSC. I mean, we're focused on commencing the work that we announced last year. I think how that relationship evolves over time, it's something that we'll need to continue to work with that client on.
Thanks for that.
Thank you. Once again, if you do wish to ask a question, please press star then one on your telephone and wait for your name to be announced. We will just pause briefly to allow anyone else to register. Thank you. Your next question comes from Cameron Halkett at Wilsons Advisory. Please go ahead.
Hey, Marcus, John. Thanks for taking the questions. Just quickly on the guidance for segment profit being flat to above. Sounds like you're pretty confident on the outlook for super, and you'll invest a bit more into APAC to drive returns there as well. Just in terms of relativity, it kinda sounds like a gap to growth and segment profit, given you've discussed the operating cost outlook in detail. It sounds a bit more conservatism in the U.K. Can see there's a bit of a slide in the deck there around the U.K. and wanting to improve returns, but just keen to hear a bit more commentary around what you're seeing, in terms of, you know, outlook, particularly in the short term, for the U.K. business.
Sure. Look, I think we've had two years in a trot where revenue growth in the U.K. as a combined segment has been pretty flat, like 0%-1%. Obviously, there's parts of that business which are growing more strongly than others, and we continue to see some good momentum in the Private Wealth space and in the Trading space. We're yet to see that growth coming out of Retail Wealth. You know, that's essentially the position that we enter this year in, Cameron. I think your broader question was around the overall segment profit guidance. I mean, clearly we're guiding to flat because there's a number of moving parts in there.
As you say, we are confident about our momentum in super, but we also had a very good year in 2022 with super as well. Much of the themes that drove the result in 2022 on a business as usual basis, we'd expect to be driving 2023 as well.
Yeah, that makes sense. Just following up from what Nick mentioned before around the mortgages business. Now when revised guidance last year was put out, it was mentioned that there was some, you know, slower procurement in APAC and the mortgages business. I'm just wondering if some of those key, you know, contributors that didn't drop in the second half of 2022, have they come back, or are they perhaps taking a little while longer? Just trying to get a feel for procurement in the current market that we're all in.
Yeah, that goes to timing. We've started a couple of more implementations, as I said earlier. They may have come later in the year than we expected, but momentum in that business is strong.
Excellent. Thanks, guys.
Thank you. once again, if you do wish to ask a question, please press star then one on your phone. Thank you. As we are showing no further questions, I would like to hand back to Marcus Price for closing remarks.
Well, thank you all for dialing in. It's been a great pleasure to hear from you. I'm looking forward to meeting many of you on the roadshow. Just like to recap very quickly on three key points from today's presentation, that is, I do think we're having a wonderful opportunity with our Australian franchises. A lot more growth left in Australia, and given our incumbency in those core markets, I think there's a lot we can do. We are underway in a very significant data-driven analysis process. We are looking to improve returns to shareholders through that process, in particular return on capital and earnings per share. I am really genuinely excited about the potential of this business.
Iress is a great Australian company, and has the potential to be a great international company. We've got a bit of work to do, and we're going through that process now. I'm looking forward to giving you a far more detailed update on that and where we're going when we meet on the April 20 Investor Day. Thank you all for dialing in.