Computershare Limited · ASX:CPU
Computershare — UK and US Equity Investor Conferences September 2016
31 slides from Computershare's conference presentation, Sep 2, 2016
Slide 1: Market Announcement
Computershare Limited ABN 71 005 485 825 Yarra Falls, 452 Johnston Street Abbotsford Victoria 3067 Australia PO Box 103 Abbotsford Victoria 3067 Australia Telephone 61 3 9415 5000 Facsimile 61 3 9473 2500 MARKET ANNOUNCEMENT www.computershare.com Date: 2 September 2016 To: Australian Securities Exch
Slide 2: Positioning for sustained earnings growth
COMPUTERSHARE LIMITED Positioning for sustained earnings growth UK and US Equity Conferences Presentation September 2016
Slide 3: Robust underlying business performance continues
Robust underlying business performance continues Management EBITDA excluding both margin income and the impact of exchange rate movements has grown 46.1% since FY13 400 35% 379.3 350 364.4 30% 327.2 300 25% 250 259.7 EBITDA Margin USD million 21.4% 20% 20.8% 200 19.6% 16.4% 15% 150 10% 100 5% 50 0 0
Slide 4: Overview: Positioning for sustained earnings growth
Overview: Positioning for sustained earnings growth › FY16: Resilient performance - Total management revenue $2,074.7m, +5.0% 1 - Management EBITDA $557.1m, +0.5% (26.9% margin) and Management EBITDA excluding margin income $394.4m, +4.3% 1 - Management EPS 55.09 cents, -7.9%, in line with guidance
Slide 5: FY17 outlook
FY17 outlook Guidance statement provided on 10 August 2016 › In constant currency, Computershare expects FY17 Management EPS to be slightly up on FY16 with a further update to be provided at the AGM Assumptions › This outlook assumes that equity markets remain at current levels and interest rate mar
Slide 6: Company overview
Company overview A leading global provider of administration services in our selected markets Who we are › Global market leader in transfer agency and share registration, employee equity plan administration, proxy solicitation and stakeholder communications › Also specialise in mortgage servicing, c
Slide 7: FY16 Computershare - at a glance
FY16 Computershare - at a glance Management revenue @ CC Management EBITDA @ CC Canada Canada ANZ ANZ 9% 14% 8% Asia 15% By geography 8% Asia 6% $2,074.7m $557.1m UCIA UCIA 22% USA 19% 47% USA CEU CEU 45% 3% 4% Communicati Technology & Communicati Technology & on Services other on Services other 9%
Slide 8: Results summary
Results summary Comparison in constant currency FY16 @ CC 1 FY15 Actual CC Variance FY16 Actual Total Management Revenue $2,074.7 $1,976.1 Up 5.0% $1,974.2 Operating Costs $1,516.3 $1,419.7 Up 6.8% $1,440.2 Management EBITDA $557.1 $554.1 Up 0.5% $532.6 EBITDA Margin % 26.9% 28.0% Down 110bps 27.0%
Slide 9: FY16 management NPAT analysis
FY16 management NPAT analysis Underlying resilience of operating business Controllable External 360 350 16.1 340 5.6 6.0 0.8 330 332.7 USD million 13.0 320 8.1 315.3 310 11.7 303.5 300 290 280 FY15 Mgt EBITDA Interest Dep'n & NCI MI Tax FY16 NPAT FX FY16 NPAT NPAT (ex MI) Amort @ CC 8 Constant curre
Slide 10: Management revenue breakdown
Management revenue breakdown Comparison in constant currency Revenue stream FY16 @ CC FY15 Actual CC Variance FY16 Actual Register Maintenance $764.1 $798.9 Down 4.4% $727.8 Corporate Actions $147.5 $144.2 Up 2.3% $140.5 Business Services $629.3 $519.1 Up 21.2% $605.7 Employee Share Plans $234.3 $24
Slide 11: Management revenue bridge
USD million 10 1,850 1,900 1,950 2,000 2,050 2,100 FY15 Total Mgt Revenue 1,976.1 Register 32.1 Maintenance Russian disposal business $20.0m Corporate 2.7 Actions Business Services 117.6 Stakeholder 13.0 Relationship Mgt Management revenue bridge Employee 5% revenue growth (pre FX impact) 9.8 Share
Slide 12: Client balances and margin income
Client balances and margin income Continued growth in balances 18 16 15.7 Effective hedging - natural 8% 15.2 15.2 ($1.2bn) 14 14.2 Pre-hedged exposure 12 Effective hedging - derivative / fixed rate 26% Client Balances ($4.1bn) USD billion 10 224.9 8 192.6 Exposure to interest rates 30% ($4.7bn) 175
Slide 13: Client balances: strong leverage to rising rates
Client balances Strong leverage to rising rates Assuming an increase of 100bps on our 3.00% FY16 exposed balances ($4.7bn) CPU would generate an additional $47m 2.50% annualised EBITDA 2.00% 1.50% 1.00% 0.50% 0.00% Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 D
Slide 14: EBITDA by business stream
EBITDA by business stream Comparison in constant currency FY16 @ CC FY15 CC Variance FY16 FY16 Actual Actual Actual EBITDA Margin % Register Maintenance & Corporate Actions $277.5 $270.5 Up 2.6% $266.0 30.6% Business Services $153.6 $134.9 Up 13.9% $145.3 24.0% Employee Share Plans $58.9 $74.4 Down
Slide 15: Operating costs bridge
Operating costs bridge BAU OPEX including non recurring items up 1.8% 1,540 1,520 76.1 1,516.3 1,500 1,480 USD million 1,460 52.3 1,440 18.0 1,440.2 1,420 1,419.7 26.3 1,400 1,380 1,360 FY15 Operating FY16 Operating FY16 Operating (including non Cost associated Acquisitions net FX related activity w
Slide 16: Structural cost review commenced
Structural cost review commenced Group wide cost review a key priority › External consultants appointed to review: - Process automation - Supplier costs - Productivity; and - Business simplification measures Louisville update – net benefits upgraded Prior estimate Current Actual % Future estimate %
Slide 17: Cash flows
Cash flows Strong cash flows fund growth and return strategies FY16 Actual FY15 Actual Net operating receipts and payments $480.2 $523.8 Net interest and dividends ($50.5) ($47.7) Income taxes paid ($57.0) ($59.5) Loan servicing advances (net) ($68.1) ($44.5) Statutory operating cash flows $304.6 $3
Slide 18: Balance sheet
Balance sheet Optimising the balance sheet to enhance future returns Jun 16 Jun 15 Variance Current Assets $1,315.2 $1,227.8 Up 7.1% › Goodwill and intangible assets increased Non-Current Assets $2,662.6 $2,573.6 Up 3.5% due to acquisitions and MSR additions. Total Assets $3,977.7 $3,801.5 Up 4.6% ›
Slide 19: Capital management
Capital management A sign of confidence in our business and future Share buy-back › The Company announced on 18 August 2015 an on-market buy-back having an aggregate value of up to AUD 140 million › As at 30 June 2016, the Company had acquired 9,377,069 ordinary shares for a total consideration of A
Slide 20: Strategies and Execution
Strategies and Execution Aims and Strategy FY16 Scorecard FY17 Priorities US Registries Maintain underlying business › 73% of the Dow, 60% of the S&P 500, › Maintain market share and profitability and free cashflows 55% of Fortune 500 external / internal quality scores 1. Preserve market leading sha
Slide 21: Strategies and Execution
Strategies and Execution Aims and Strategy FY16 Scorecard FY17 Priorities UK Mortgage Build the leading UK mortgage UKAR appointment - servicing GBP 30bn book › Execute UKAR business and servicing business while delivering with an additional GBP 11bn of assets technology integration Servicing synerg
Slide 22: Hot Topics
Hot Topics Blockchain Computershare has a measured and considered approach to Blockchain. In the near to medium term, we will continue to pursue a dual track approach in terms of assessing the commercial value of introducing innovative blockchain services in market adjacencies, while also rigorously
Slide 23: Conclusions
Conclusions › Resilient FY16 performance with Management EPS in line with guidance - Total management revenue up 5.0% 1 - Management EBITDA excluding margin income up 4.3% 1 › Continued track record of robust underlying profitability - Management EBITDA excluding both margin income and the impact of
Slide 24: Appendices
APPENDICES Financial performance by half year at actual rates Management revenue by region Client balances Key financial ratios SLS (US mortgage servicing) cash flows US and UK Mortgage Servicing – UPB and number of loans
Slide 25: Financial performance by half year at actual rates
Financial performance by half year at actual rates 2H16 1H16 2H15 1H15 2H14 1H14 2H13 1H13 Total Management Revenue $1,035.5 $938.7 $1,016.5 $959.5 $1,045.7 $976.9 $1,037.5 $987.6 Operating Costs $744.5 $695.7 $720.7 $699.0 $771.7 $709.2 $767.6 $747.6 Management EBITDA $290.3 $242.3 $294.8 $259.3 $2
Slide 26: FY16 Management revenue: Regional Analysis
FY16 Management revenue Regional Analysis 378.0 400 337.4 350 300 250 USD million 200 150.5 150 104.7 97.5 95.5 89.8 78.0 100 63.6 61.6 61.1 59.6 55.0 38.1 36.0 31.8 24.4 50 23.5 20.0 18.9 18.5 17.9 17.3 15.0 14.0 11.3 9.6 8.0 7.0 6.0 5.7 5.6 4.2 2.4 2.3 1.8 1.6 0.6 0.1 0.0 0.0 0.0 0 Register Corpor
Slide 27: FY16 client balances
FY16 client balances Exposed funds by currency (FY16 average balances) Average exposed funds Average exposed funds balance prior to hedging balance net of hedging Other AUD 5% Other AUD 2% CAD 8% 5% 12% CAD 17% USD USD 9.9bn USD 4.6bn (USD 15.7bn x 64%) USD 45% (USD 15.7bn x 30%) 41% GBP 36% GBP 29%
Slide 28: Key financial ratios
Key financial ratios Jun 16 Jun 15 Variance USD m USD m Jun 16 to Jun 15 Interest Bearing Liabilities $1,863.3 $1,769.1 5.3% Less Cash ($526.6) ($604.1)* (12.8%) Net Debt $1,336.7 $1,165.0 14.7% Management EBITDA $532.6 $554.1 (3.9%) Net Financial Indebtedness to EBITDA 2.51 times 2.10 times Up 0.41
Slide 29: SLS (US mortgage servicing) cash flows
SLS (US mortgage servicing) cash flows Cash flows have different statutory classifications and can fall across different reporting periods FY16 FY15 Notes Actual Actual Loan Servicing Advances (net) ($68.1) ($44.5) Operating cash flow (outflow)/inflow > Loan servicing advances are a working capital
Slide 30: US and UK Mortgage Servicing - UPB and number of loans
US and UK Mortgage Servicing - UPB and number of loans Performing Non-performing US Mortgage Servicing At 30 Jun 16 At 30 Jun 15 At 30 Jun 16 At 30 Jun 15 Fully-Owned $4.9BN $5.0BN $8.8BN $8.1BN MSRs 1 24K Loans 21K Loans 92K Loans 97K Loans Excess strip deals No excess strip SPV deals SPV deals Par
Slide 31: Important notice
Important notice Forward-looking statements › This announcement may include 'forward-looking statements'. Such statements can generally be identified by the use of words such as 'may', 'will', 'expect', 'intend', 'plan', 'estimate', 'anticipate', 'believe', 'continue', 'objectives', 'outlook', 'guid
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