Computershare Limited · ASX:CPU
Computershare — H1 2006 Earnings Presentation
64 slides from Computershare's earnings presentation, Feb 15, 2006
Slide 1: Computershare Limited Interim Results 2006 Presentation
Computershare Limited Interim Results 2006 Presentation Chris Morris Tom Honan 15 February 2006 1
Slide 2: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 2
Slide 3: Introduction – Tom Honan, Chief Financial Officer
Introduction Tom Honan Chief Financial Officer 3
Slide 4: Summary of Results
Summary of Results Introduction ¾ Normalised EPS of 11.72 cents, up 28% ¾ Normalised Net Profit After Tax of A$69.8m, up 35% ¾ Total Revenue of A$781.5m, up 59% ¾ Operating Cash Flows of A$87.5m, up 72% ¾ Operating Costs of A$650.5m, a 62% increase ¾ Days Sales Outstanding at 56 days, down 6 days si
Slide 5: CPU Revenues continue to diversify
CPU Revenues continue to diversify Introduction Revenue Type 4% 11% Register Maintenance 5% Corporate Actions Stakeholder Relationship Management 47% Employee Share Plans Document Services Fund Services 10% Technology & Other Revenue 6% 16% 5
Slide 6: Global Equities Market
Global Equities Market Introduction Historical Equity Issuance Data Annual M & A Book to Bill Ratio 2006 YTD Total Volume: $187 bn 2006 Est. Annualized Volume: $2,247 bn 2006 YTD 1.08x 2006 YTD vs. 2000 - 2005 Avg 2.3% 2005 Total Volume: $2,108 bn Est. 2006 vs. 2005: 6.6% 2000-2005 Average 1.06x 200
Slide 7: Global Interest Rates
Global Interest Rates Introduction % % UK US 8 8 6 6 4 4 2 2 0 0 1996 1998 2000 2002 2004 2006 1996 1998 2000 2002 2004 2006 % Canada 8 6 4 2 0 1996 1998 2000 2002 2004 2006 7
Slide 8: Computershare Strengths
Computershare Strengths Introduction ¾ Recurring Revenue – >70% of revenue is of a recurring nature ¾ Global Diversification – Across more than 21 countries ¾ Exposure to northern hemisphere interest rates – continued to rise in 1st half ¾ Technological innovation and capabilities – enhanced by acqu
Slide 9: Financial Results
Introduction Financial CEO’s Report Results 9
Slide 10: Group Financial Performance – A$m
Group Financial Performance – A$m Financial Results AIFRS AIFRS 1H06 1H05 Variance Sales Revenue 775.6 475.0 63% Interest & Other Income* 5.9 16.2 Total Revenue 781.5 491.1 59% Operating Costs* 650.5 401.1 (62%) Share of Net (Profit)/Loss of Associates (1.5) (0.6) Normalised EBITDA 132.4 90.6 46% No
Slide 11: NPAT – FY05 AGAAP to AIFRS – 1st Half
NPAT – FY05 AGAAP to AIFRS – 1st Half Financial Results Net profit after tax under AGAAP 31 Decem ber 2004 45,368 Basic EPS (AGAAP) 7.99 cents Write back of goodw ill amortisation 20,260 Share based remuneration expense (3,587) Business combinations 8,312 Other (1,008) Net profit after tax under AIF
Slide 12: NPAT - FY06 AIFRS – 1st Half
NPAT - FY06 AIFRS – 1st Half Financial Results Net profit after tax under AIFRS 31 December 2005 65,784 Basic EPS AIFRS 11.04 cents Adjustment for unusual items - UK redundancies 4,057 Normalised profit after tax under AIFRS 31 December 2005 69,841 Normalised EPS AIFRS 11.72 cents An increase of 28.
Slide 13: NPAT – FY05 AGAAP to AIFRS – Full Year
NPAT – FY05 AGAAP to AIFRS – Full Year Financial Results Net profit after tax under AGAAP 30 June 2005 101,462 Basic EPS AGAAP 17.91 cents Write back of goodw ill amortisation 41,707 Share based remuneration expense (9,971) Business combinations (5,394) Other (2,413) Net profit after tax under AIFRS
Slide 14: Normalised Basic EPS Performance
Normalised Basic EPS Performance (pre goodwill, post pref. dividend) Financial Results cents Rolling 12 months 27 25 AGAAP AIFRS 23 21 19 17 15 13 11 9 7 1H04 2H04 1H05 2H05 1H06 Normalised Basic EPS (pre goodwill, post pref. dividend) 14
Slide 15: Analysis of Normalised EPS – Half Year Comparison
Analysis of Normalised EPS – Half Year Comparison Financial Results EPS (pre goodwill, post preference dividend) 14.00 AGAAP AIFRS 12.00 10.00 8.00 12.53 cents 11.72 6.00 10.53 9.14 4.00 8.49 2.00 0.00 1H04 2H04 1H05 2H05 1H06 15
Slide 16: Half Year Comparisons – Revenue & EBITDA
Half Year Comparisons – Revenue & EBITDA Financial Results $Am AGAAP AIFRS 900 132.4 140 121.3 103.3 120 90.6 100 600 80.1 R E e B v 80 I e T n D u 60 A e 300 40 20 399.5 495.2 491.1 592.1 781.5 0 0 1H04 2H04 1H05 2H05 1H06 Revenue Normalised EBITDA 16
Slide 17: Half Year Comparisons – Revenue & EBITDA
Half Year Comparisons – Revenue & EBITDA Financial Results $Am 1st Half $Am $Am 2nd Half $Am AGAAP AIFRS AGAAP AIFRS 900 132.4 140 800 140 800 120 121.3 120 700 103.3 90.6 700 100 100 80.1 600 79.5 600 80 74.4 80 54.4 500 500 781.5 60 60 400 592.1 400 40 40 491.1 495.2 300 399.5 20 300 384.5 364.1 2
Slide 18: Return On Invested Capital Vs. WACC
Return On Invested Capital Vs. WACC Financial Results Increased returns, Cost of Capital increases slightly 18% AGAAP AIFRS 16% 14% 12% 10% 8% 6% FY03 FY04 FY05 1H06 WACC ROIC 18
Slide 19: Regional Analysis – 1H06 Revenue & EBITDA
Regional Analysis – 1H06 Revenue & EBITDA Financial Results Total Revenue Breakdown EBITDA Breakdown 21% 23% 9% 59% 20% 68% Asia Pacific EMEA North America Asia Pacific EMEA North America 19
Slide 20: Half Year Comparisons – Operating Costs
Half Year Comparisons – Operating Costs Financial Results $Am 700 AGAAP AIFRS 600 500 400 300 650.5 393.3 200 401.1 472.2 317.9 100 0 1H04 2H04 1H05 2H05 1H06 20
Slide 21: Technology Costs – Establishing Global Platform
Technology Costs – Establishing Global Platform Financial Results A$m AGAAP AIFRS % 120 12% 11% 11% 11% 10% 100 10% 9% 86.0 80 8% 60 54.7 6% 51.9 42.6 49.5 40 4% 20 2% 0 0% 1H04 2H04 1H05 2H05 1H06 Total Technology costs Technology costs as a % of sales revenue 21
Slide 22: Analysis of FY06 Technology Costs
Analysis of FY06 Technology Costs Financial Results Analysis of Technology Spend 2% 1% 29% 54% 14% Development Infrastructure Maintenance External Bureau Administration 22
Slide 23: Net Operating Cash Flows
Net Operating Cash Flows Financial Results $Am Operating Cash Flows & Capital Expenditure 140 120 100 93.5 95.9 87.5 80 60 50.9 42.6 40 19.4 20 14.2 16.4 15.2 7.2 0 1H04 2H04 1H05 2H05 1H06 Operating Cash Flows Capital Expenditure 23
Slide 24: Capital Expenditure
Capital Expenditure Financial Results CPU Group Capex $Am 20.0 0.9 0.8 2.9 0.3 1.9 15.0 4.1 3.7 1.7 5.5 10.0 2.9 3.5 2.0 0.3 0.5 0.7 5.0 10.0 8.7 8.2 8.6 5.3 0.0 1H04 2H04 1H05 2H05 1H06 Information Technology Document Services Facilities Occupancy Other 24
Slide 25: Working Capital Management
Working Capital Management Financial Results Days Sales Outstanding Days 70 62 61 Receivable 60 57 56 Days 50 40 30 20 10 0 FY03 FY04 FY05 1H06 25
Slide 26: Interest Rate Sensitivity
Interest Rate Sensitivity Financial Results A$m PBT 120 Impact 100 80 60 40 20 0 -2.50% -2.00% -1.50% -1.00% -0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% -20 -40 -60 Exposure Hedged exposure 100% Hedged -80 26
Slide 27: Equity Management – Interim Dividend of 6 cps
Equity Management – Interim Dividend of 6 cps Financial Results ¾ EPS – Basic 11.04 cents ¾ EPS – Normalised 11.72 cents ¾ Interim Dividend (unfranked) 6.0 cents ¾ Current Yield* 1.8% • Based on 12 month dividend and share price of $6.83 (close 13th Feb 06) 27
Slide 28: UK Restructuring
UK Restructuring Financial Results ¾ Redundancy costs A$5.7m NPAT impact A$4.1m ¾ Annualised Benefits A$7.0m 28
Slide 29: Financial Summary – Final Remarks
Financial Summary – Final Remarks Financial Results ¾ Continued strong EPS growth - 28% ¾ Record revenues for 1st half ¾ Maintained strong balance sheet ¾ Dividend maintained at 6 cents per share ¾ Cashflow from operations up 72% on 1H05 29
Slide 30: CEO's Report – Market Overview and Performance
Market Financial CEO’s Report Overview Performance 30
Slide 31: Regional Updates – Asia/Pacific
CEO’s Report Australia New Zealand Regional Updates – Asia/Pacific India Japan Hong Kong 31
Slide 32: Key Points – Asia/Pacific
Key Points – Asia/Pacific CEO’s Report ¾ Australia y Computershare Fund Services (formerly FBPO) integrated and winning new clients y Opening new CDS building in Melbourne y Slow Corporate Actions compared to recent years ¾ Hong Kong y Well above budget, witnessing large IPO’s from China y Appointed
Slide 33: Key Points – Asia/Pacific (cont'd)
Key Points – Asia/Pacific (cont’d) CEO’s Report ¾ India & New Zealand y Tracking ahead of budget ¾ China y Signed cooperation agreement with China Securities Depository and Clearing Corporation Limited 33
Slide 34: Regional Updates – North America
CEO’s Report United States of America Canada Regional Updates – North America 34
Slide 35: Key Points – North America
Key Points – North America CEO’s Report ¾ USA y Mutual Funds business booming y Equiserve − Integration ahead of schedule - Fairway conversion to complete Apr 2006 − No TA client losses − High staff morale − Well ahead of budget y CDS growing substantially, uplift largely due to Equiserve acquisitio
Slide 36: Regional Updates - EMEA
CEO’s Report Ireland United Kingdom Regional Updates - EMEA Germany Russia South Africa 36
Slide 37: Key Points – EMEA
Key Points – EMEA CEO’s Report ¾ UK y Total restructure affecting all levels of management y Business currently being run by Chris Morris (Group CEO) and Stuart Crosby (Group COO) y Excellent new leadership team y Cut $3m out of shared services costs y Redundancy program initiated delivering at leas
Slide 38: Key Points – EMEA (cont'd)
Key Points – EMEA (cont’d) CEO’s Report ¾ UK (cont’d) y Acquisition of Interactive Meetings Limited (IML) − Exciting new market for Computershare − Will continue with most distributor arrangements but retain AGM services globally y We remain focused on becoming No 1 in the UK - some major competitor
Slide 39: Key Points – EMEA (cont'd)
Key Points – EMEA (cont’d) CEO’s Report ¾ Continental Europe y Germany − Good solid business now in Registry, Plans and AGM services − High level of electronic voting in AGM market offers significant opportunities for IML technology − Pepper CRM business back on track − Appetite for acquisitions in
Slide 40: Financial Outlook – FY2006
Financial Outlook – FY2006 ¾ Revenue > $1.5 billion ¾ EPS > 29 cents per share (normalised) 40
Slide 41: Questions?
QUESTIONS? 41
Slide 42: Appendix: Interim Results 2006 Presentation
Appendix: Interim Results 2006 Presentation 15 February 2006 42
Slide 43: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Financial Results Group Comparisons 43
Slide 44: Regional Analysis – 1H FY06 Revenue
Regional Analysis – 1H FY06 Revenue Financial Results $Am 250.0 204.9 200.0 150.0 100.0 85.9 85.3 77.7 67.5 59.0 50.0 42.8 25.5 20.6 23.0 12.1 15.6 11.0 4.3 6.7 5.7 4.0 0.0 0.0 Register Maintenance Corporate Actions Stakeholder Employee Share Plans Document Services Fund services Relationship Manage
Slide 45: Half Year Comparisons - Revenue
Half Year Comparisons - Revenue Financial Results $Am 368.5 350.0 300.0 285.7 250.0 238.1 200.0 150.0 122.4 100.0 88.5 81.3 89.3 78.2 63.6 65.1 43.7 48.0 59.6 42.2 50.0 28.4 31.6 34.3 18.8 0.0 Register Maintenance Corporate Actions Stakeholder Employ ee Share Document Serv ices Fund Serv ices Relati
Slide 46: Half Year Comparisons – Operating Costs
Half Year Comparisons – Operating Costs Financial Results $Am 300.0 279.6 250.0 217.0 200.0 192.0 189.6 150.0 123.9 104.9 100.0 84.0 51.4 53.9 50.0 34.5 40.1 35.8 26.9 20.4 24.4 20.3 17.2 7.9 0.0 Cost of Sales Personnel Occupancy Other Direct Technology Corporate 1H05 2H05 1H06 46
Slide 47: Revenue Breakdown
Revenue Breakdown Financial Results 1H06 1H05 Variance Register Maintenance 368.4 238.1 55% Corporate Actions 122.4 78.2 57% Fund Services 89.3 18.8 375% Stakeholder Relationship Mgt 48.0 43.7 10% Employee Share Plans 81.3 59.6 36% Document Services 42.2 28.4 49% Technology & Other Revenues 29.8 24.
Slide 48: Underlying Effective Tax Rate
Underlying Effective Tax Rate Financial Results ¾ The underlying effective tax rate (adjusted for one off, non-recurring items and non deductible goodwill charges*) for 1H06 is 27.1% (1H05 19.6%). % AGAAP AIFRS 30 27.7 27.1 25 19.8 19.6 19.1 20 15 10 5 0 1H04 2H04 1H05 2H05 1H06 48 * Pre AIFRS
Slide 49: Key Financial Ratios
Key Financial Ratios Financial Results EBITDA interest coverage Net Financial Indebtedness to EBITDA times times AGAAP AIFRS 2.3 2.3 25 22.6 20.1 2.0 20 1.5 1.3 1.3 15 13.4 1.2 9.8 10 1.0 7.7 5 0.5 0 0.0 1H04 2H04 1H05 2H05 1H06 1H04 2H04 1H05 2H05 1H06 Gearing (Net Debt / Net Debt + Equity) Funds F
Slide 50: Risk Management - Interest Rate Sensitivity
Risk Management - Interest Rate Sensitivity Financial Results Interest Rate Hedging Strategy: - Minimise downside risk in current low interest rate No environment exposure Policy: - Minimum hedge of 25% / Maximum hedge of 75% Exposure to 34% interest rates - Minimum term 1 year / Maximum term 5 year
Slide 51: Risk Management – Average Funds Balances 1H FY06
Risk Management – Average Funds Balances 1H FY06 Financial Results By Category By Country Sharesave/ Employee Dividend Plans Australia 18% 19% 1% US Dissenter 32% 4% Canada 42% Broker Trust 16% Corporate Actions Regular 27% Trust UK 16% 25% Average fund balance A$6.4b 51
Slide 52: Appendix 2: Country Summaries
Appendix 2: Country Summaries Financial Results Country Summaries 52
Slide 53: Country Summaries – Asia Pacific
Appendix 2: Country Summaries Financial Results Asia Pacific 53
Slide 54: Australia Half Year Comparison
Australia Half Year Comparison Financial Results $Am Total Revenue $Am Revenue Breakdown 150.0 48.9 50 46.7 46.7 127.5 125.9 120.0 114.9 109.3 40 100.0 30.9 31.1 29.7 30 25.5 21.9 21.3 20 50.0 10 8.2 8.2 6.7 4.0 4.5 5.0 0.0 0 1H04 2H04 1H05 2H05 1H06 Register Maintenance Corporate Actions Stakeholde
Slide 55: New Zealand Half Year Comparison
New Zealand Half Year Comparison Financial Results Total Revenue $NZm $NZm Revenue Breakdown 10.0 9.7 9.0 8.3 8.3 7.9 8 8.0 7.4 6.8 6.3 6 6.0 4.0 4 2.2 2.0 2 1.6 1.4 0.0 0 1H04 2H04 1H05 2H05 1H06 Register Maintenance Corporate Actions 1H05 2H05 1H06 55
Slide 56: Hong Kong Half Year Comparison
Hong Kong Half Year Comparison Financial Results Total Revenue Revenue Breakdown $HKm 140.0 $HKm 90 84.8 120.6 120.0 80 76.9 111.1 108.3 70.0 70 100.0 97.4 89.6 60 80.0 50 43.6 40 38.3 60.0 30 25.8 40.0 20 20.0 10 0.0 0 1H04 2H04 1H05 2H05 1H06 Register Maintenance Corporate Actions 1H05 2H05 1H06 5
Slide 57: Country Summaries – North America
Appendix 2: Country Summaries Financial Results North America 57
Slide 58: United States Half Year Comparison
United States Half Year Comparison Financial Results Total Revenue USDm Revenue Breakdown USDm 282.5 120 280.0 110 106.4 260.0 240.0 100 220.0 90 200.0 80 180.0 70 64.2 160.0 138.2 60 140.0 120.0 50 41.6 42.5 40.4 100.0 98.8 94.8 40 80.0 29.5 50.9 30 25.3 23.9 22.4 60.0 19.5 20 16.9 15.6 40.0 13.5 1
Slide 59: Canada Half Year Comparison
Canada Half Year Comparison Financial Results CADm Revenue Breakdown Total Revenue CADm 80 100.0 70 68.4 90.0 86.4 60 80.0 54.9 73.4 70.0 50.6 70.0 62.9 50 63.1 60.0 40 50.0 30 40.0 30.0 20 20.0 9.8 10 6.9 6.4 6.0 4.8 4.8 10.0 1.0 2.5 2.1 0.6 1.9 1.8 0 0.0 Register Corporate Actions Stakeholder Empl
Slide 60: Country Summaries – EMEA
Appendix 2: Country Summaries Financial Results EMEA 60
Slide 61: United Kingdom Half Year Comparison
United Kingdom Half Year Comparison Financial Results GBPm Revenue Breakdown Total Revenue GBPm 30 28.2 41.6 40.2 40.0 36.3 37.8 35.8 23.1 23.4 30.0 20 20.0 10 6.6 10.0 5.8 5.9 6.2 2.8 3.2 3.1 2.7 2.6 2.4 1.6 2.0 0.0 0 1H04 2H04 1H05 2H05 1H06 Register Maintenance Corporate Actions Stakeholder Emplo
Slide 62: Ireland Half Year Comparison
Ireland Half Year Comparison Financial Results Total Revenue EUROm Revenue Breakdown EUROm 5.9 2.7 6.0 2.5 2.4 5.0 5.0 4.3 4.3 2 4.0 3.6 3.0 1 2.0 0.6 0.4 1.0 0.3 0.0 0 1H04 2H04 1H05 2H05 1H06 Register Maintenance Corporate Actions 1H05 2H05 1H06 62
Slide 63: Germany Half Year Comparison
Germany Half Year Comparison Financial Results Eur '000 Total Revenue Revenue Breakdown 15.5 EURm 16.0 9.0 8.4 14.0 13.5 8.0 7.3 12.0 7.0 6.6 6.2 6.0 10.0 5.0 8.0 7.1 4.0 6.0 3.2 4.3 3.0 4.0 1.9 2.0 2.0 1.0 1.0 0.4 0.5 0.1 0 0 0.0 0.0 2H04 1H05 2H05 1H06 Register Maintenance Corporate Actions Stakeh
Slide 64: South Africa Half Year Comparison
South Africa Half Year Comparison Financial Results Total Revenue ZARm Revenue Breakdown ZARm 120.0 100 94.1 90 88.3 99.3 99.4 100.0 90.1 94.7 79.0 90.5 80 70 80.0 60 60.0 50 40 40.0 30 20.0 20 10.0 10 6.4 6.4 0.0 0 1H04 2H04 1H05 2H05 1H06 Register Maintenance Corporate Actions 1H05 2H05 1H06 64