Computershare Limited · ASX:CPU
Computershare — H1 2007 Earnings Presentation
71 slides from Computershare's earnings presentation, Feb 14, 2007
Slide 1: Half Year Results 2007 Presentation
Computershare Limited Half Year Results 2007 Presentation Stuart Crosby Tom Honan 14 February 2007
Slide 2: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 2
Slide 3: Introduction - Stuart Crosby, President & CEO
Introduction Stuart Crosby President & CEO 3
Slide 4: Summary of Results
Introduction Summary of Results › Management EPS of 17.86 cents, up 102% › Management Net Profit After OEI of US$107.0m, up 104% › Total Revenue of US$694.0m, up 18% › Free cash flows of US$129.7m, up 153% › Operating Costs of US$506.3m, a 3% increase › Days Sales Outstanding at 45 days, down 8 days
Slide 5: A strong result from a broad base
Introduction A strong result from a broad base › Performing well across all major business lines and regions › Standouts: US, UK, Canada, Aus, HK › Revenue growth a factor but margin growth more important › Cost growth 3% vs. sales revenue growth 18% takes Management EBITDA margin from 17% to 27% ›
Slide 6: Global Equities Market
Global Equities Market Introduction Completed M & A Volume Annual M & A Book to Bill Ratio 1.5 4000 35000 3500 30000 3000 25000 2500 1.3 $ Billions 20000 2000 15000 1500 1000 10000 5000 1.0 500 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 0.8 1991 1992 1993 199
Slide 7: Global Interest Rate Market
Global Interest Rate Market Introduction % % UK US 8 8 6 6 4 4 2 2 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2000 2001 2002 2003 2004 2005 2006 2007 % Canada 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 7
Slide 8: Computershare Strengths
Introduction Computershare Strengths › Recurring Revenue – >70% of revenue is of a recurring nature › Global Diversification – across 17 countries including growth engines China, India and Russia. › Exposure to northern hemisphere interest rates › Technological innovation and capabilities – enhanced
Slide 9: Guidance Upgrade
Introduction Guidance Upgrade In light of the excellent first half result and the continuation of favourable equity and interest rate market conditions, the company is expecting to report annual earnings numbers (reflected in Management EPS) approximately 50% higher than last year. Any guidance beyo
Slide 10: Financial Results
Introduction Financial CEO’s Report Results 10
Slide 11: USD Reporting
USD Reporting Financial Results › Announced 13th December 2006 – adoption of US dollars as presentation currency › Introduced as a result of the increasing contribution of the US businesses to the consolidated results of the Group › Effective for the financial year beginning 1st July 2006 and beyond
Slide 12: Group Financial Performance – US$m
Group Financial Performance – US$m Financial Results IH07 IH06 Variance Sales Revenue 687.9 583.6 18% Interest & Other Income 6.1 4.4 38% Total Revenue 694.0 588.1 18% Operating Costs 506.3 489.5 (3%) Share of Net (Profit)/Loss of Associates (1.0) (1.1) Management EBITDA 188.7 99.7 89% Management Ad
Slide 13: CPU Revenues
CPU Revenues Financial Results Revenue Type 3% 11% 5% Register Maintenance Corporate Actions Stakeholder Relationship Management 8% Employee Share Plans 48% Communication Services Fund Services T echnology & Other Revenue 5% 20% 13
Slide 14: Revenue Breakdown – US$m
Revenue Breakdown – US$m Financial Results 1H07 1H06 Variance Register Maintenance 331.1 284.6 16% Corporate Actions 141.6 92.1 54% Fund Services 73.0 67.2 9% Stakeholder Relationship Mgt 34.2 35.4 (3%) Employee Share Plans 58.2 44.2 32% Communication Services 37.2 31.7 17% Technology & Other Revenu
Slide 15: Behind the Headline – NPAT Impact
Behind the Headline – NPAT IMPACT Financial Results US$000’s Net profit after tax at 31 December 2006 119,345 Marked to market adjustments - derivatives (205) Client list amortisation 1,193 Profit on sale of Analytics (7,951) US property rationalisation 1,483 Acquisition provisions no longer require
Slide 16: EPS Growth FY05 to FY10
EPS Growth FY05 to FY10 Financial Results Management EPS US cents 50 40 30 20 10 0 FY05 FY06 FY07 FY08 FY09 FY10 EPS projected from FY05 at 20% p.a. Actual / Forecast EPS growth 16
Slide 17: Management EPS Performance
Management EPS Performance Financial Results US cents Rolling 12 months 40 AGAAP AIFRS 35 30 25 20 15 10 5 0 1H04 1H05 1H06 1H07 17
Slide 18: Analysis of Management EPS – Half Year Comparison
Analysis of Management EPS – Financial Results Half Year Comparison 20.00 18.00 16.00 14.00 12.00 US cents 17.86 10.00 8.00 13.92 6.00 9.51 8.82 4.00 6.60 2.00 0.00 1H05 2H05 1H06 2H06 1H07 18
Slide 19: Half Year Comparisons – Revenue & EBITDA
Half Year Comparisons – Revenue & EBITDA Financial Results $USm $USm 800 188. 7 200 180 700 160 600 140. 4 R 140 E e 500 B v 120 I e 99. 7 T 93. 1 n 400 100 D u A e 65. 4 80 300 60 200 40 100 20 354. 5 455. 9 588. 1 626. 7 694. 0 0 0 1H05 2H05 1H06 2H06 1H07 Tot al Revenue M anagement EB ITDA 19
Slide 20: Half Year Comparisons – Revenue & EBITDA
Half Year Comparisons – Revenue & EBITDA Financial Results $USm 1st Half $USm $USm 2nd Half $USm AGAAP AIFRS 800 188.7 200 800 200 180 180 700 700 160 160 600 600 140.4 140 140 500 500 120 120 99.7 93.1 400 100 400 100 694.0 76.1 80 626.7 80 300 65.4 588.1 300 60 455.9 60 200 200 365.4 354.5 40 40 1
Slide 21: Regional Analysis – 1H07 Revenue & EBITDA
Regional Analysis – 1H07 Revenue & EBITDA Financial Results Total Revenue Breakdown EBITDA Breakdown 23% 21% 56% 58% 21% 21% Asia Pacific EMEA North America Asia Pacific EMEA North America 21
Slide 22: 1H07 NPAT Analysis
1H07 NPAT Analysis Financial Results $USm 160 140 0.4 3.6 29.6 120 41.6 1 EBITDA - AP 100 1.8 2 EBITDA - EMEA 31.1 80 3 EBITDA - NA 60 16.3 4 Depn & Amort 107.0 5 Interest 40 52.5 6 Tax 20 7 OEI 0 1H06 NPAT 1 2 3 4 5 6 7 1H07 NPAT AIFRS AIFRS 22
Slide 23: Half Year Comparisons – Operating Costs
Half Year Comparisons – Operating Costs Financial Results $USm 600 500 400 300 489.5 200 363.9 488.3 506.3 289.5 100 0 1H05 2H05 1H06 2H06 1H07 23
Slide 24: Technology Costs – Establishing Global Platform
Technology Costs – Establishing Global Platform Financial Results US$m % 90.0 15.0% 80.0 11% 11% 10% 10% 70.0 9% 10.0% 64.7 61.7 60.0 50.8 50.0 5.0% 42.3 40.0 37.5 30.0 0.0% 1H05 2H05 1H06 2H06 1H07 Total Technology costs Technology costs as a % of sales revenue 24
Slide 25: Analysis of 1H07 Technology Costs
Analysis of 1H07 Technology Costs Financial Results 2% 34% 33% Total Costs US$61.7m Development Costs US$21.1m 31% Development Infrastructure Maintenance Admin incl. External Bureau 25
Slide 26: Net Operating Cash Flows
Net Operating Cash Flows Financial Results $USm Operating Cash Flows Vs. Capital Expenditure 160 137.5 117.8 120 80 73.1 65.8 36.7 40 11.8 14.6 11.8 10.4 7.8 0 1H05 2H05 1H06 2H06 1H07 Operating C ash Flow s C apital Ex penditure 26
Slide 27: Free Cash Flow – up 153% on 1H06
Free Cash Flow – up 153% on 1H06 Financial Results $USm Operating Cash Flows less Capital Expenditure 140 129.7 120 107.3 100 80 61.3 60 51.3 40 24.9 20 0 1H05 2H05 1H06 2H06 1H07 27
Slide 28: Balance Sheet as at 31 December 2006
Balance Sheet as at 31 December 2006 Financial Results Dec-06 Jun-06 Variance US$'000s US$'000s Current A ssets 371,239 338,475 10% Non Current A ssets 1,292,487 1,264,318 2% T otal A ssets 1,663,726 1,602,793 4% Current Liabilities 276,663 265,620 (4%) Non Current Liabilities 571,969 637,305 10% T
Slide 29: Computershare Borrowings
Computershare Borrowings Financial Results Dec-06 Jun-06 Variance US$m US$m Cash 110.0 72.8 51% Interest Bearing Liabilities * 430.7 476.5 10% Net Debt 320.7 403.7 21% Management EBITDA ** 329.1 240.0 37% Coverage 0.97 1.68 42% * Average Tenor of drawn debt is 5.2 years ** Rolling 12 months 29
Slide 30: Capital Expenditure
Capital Expenditure Financial Results $USm 20.0 Capital Expenditure Vs. Depreciation 0.8 15.0 2.2 0.6 1.4 Depreciation 0.5 10.0 1.4 4.1 3.0 1.1 2.7 3.8 2.1 1.4 0.9 5.0 2.3 6.4 7.6 6.2 5.0 2.9 0.0 1H05 2H05 1H06 2H06 1H07 Information Technology Communication Services Facilities Occupancy Other 30
Slide 31: Working Capital Management
Working Capital Management Financial Results Days Sales Outstanding Days 70 63 60 53 50 45 45 40 30 20 10 0 FY05 1H06 FY06 1H07 Note: historical DSO restated to exclude deferred revenue 31
Slide 32: Return On Invested Capital Vs. WACC
Return On Invested Capital Vs. WACC Financial Results Increased returns, Cost of Capital flat 18% AGAAP AIFRS 16% 14% 12% 10% 8% 6% FY03 FY04 FY05 FY06 1H07 WACC ROIC 32
Slide 33: Return on Equity Vs. Return on Assets
Return on Equity Vs. Return on Assets Financial Results AGAAP AIFRS 25% 20% 15% 10% 5% 0% FY03 FY04 FY05 FY06 1H07 ROA ROE 33
Slide 34: Interest Rate Sensitivity
Interest Rate Sensitivity Financial Results US$m PBT 80 Impact 60 40 20 0 -3.00% -2.50% -2.00% -1.50% -1.00% -0.50% Current 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% -20 -40 Exposure -60 Hedged exposure 100% Hedged -80 34
Slide 35: Equity Management – Final Dividend of 8 cps (AU)
Equity Management – Final Dividend of 8 cps (AU) Financial Results › EPS – Basic US 19.91 cents › EPS – Management US 17.86 cents › Full Dividend (unfranked) AU 8.0 cents › Current Yield* 1.5% * Based on 12 month dividend and share price of A$9.80 (close 13th Feb 07) 35
Slide 36: Equity Management – Ordinary Share buy-back
Equity Management – Ordinary Share buy-back Financial Results › Announced 15th November 2006 – on market share buy-back of up to 25 million ordinary shares › Acquired 1,325,000 ordinary shares as at 13th February 2007 › Average price AUD $8.68 36
Slide 37: Financial Summary – Final Remarks
Financial Summary – Final Remarks Financial Results › Continued strong EPS growth - 102% after 5 years of growth > 20% CAGR › Free cash flow up 153% › Record revenues › Maintained strong balance sheet lowering earnings to debt coverage by 42% › Dividend increased to 8 cents (AUD) per share 37
Slide 38: CEO's Report
Market Financial Overview Results CEO’s Report 38
Slide 39: CEO Presentation - Stuart Crosby
CEO Presentation Stuart Crosby President & CEO 39
Slide 40: Computershare's changed global shape
Computershare’s changed global shape CEO’s Report › Previously largely symmetrical › Now US ~50% - dedicated Management › Key areas: › US › Canada › Asia › Aust/NZ › UK/Russia/Ireland/SA › Germany › Global executive team: › Chris Morris (Exec Chairman) › Stuart Crosby (President & CEO) › Steven Roth
Slide 41: Group Strategy
Group Strategy CEO’s Report Three focuses: 1. Continue to drive operations quality and efficiency through measurement, benchmarking and technology 2. Improve our front office skills to protect and drive revenue 3. Seek acquisition and other growth opportunities where we can add value and enhance ret
Slide 42: Geographic update - USA
Geographic update - USA CEO’s Report Investor Services › Migrations all but complete (3 clients left) › Client retention remains strong › Operational fine-tuning will continue › Corporate action pipeline remains strong (CPU did the largest M&A transactions in TA, proxy and Mutual Funds for calendar
Slide 43: Geographic update - Canada
Geographic update - Canada CEO’s Report Strong corporate actions flows; market share in the strong western Canada market especially pleasing at 65%; great proxy deal flow Integration of National Bank acquisition bedding down Continuing to look to consolidation opportunities – but mostly small Operat
Slide 44: Geographic update – UK, Russia, Ireland and South Africa
Geographic update – UK, Russia, Ireland CEO’s and South Africa Report UK › Restructure delivered major savings in shared services costs › Big wins in Standard life, BAA takeover, Aviva SSP, Rental Bonds › Rationalised business lines, contracts – some sold or cancelled › DI listing increasing signifi
Slide 45: Geographic update – Rest of Europe
Geographic update – Rest of Europe CEO’s Report Germany › Computershare now largest and only integrated provider of AGM and registry services › Short term opportunities to penetrate existing client base with integrated offerings › Longer term opportunities to provide bearer share and corporate actio
Slide 46: Geographic update - Asia
Geographic update - Asia CEO’s Report Hong Kong › Continued flow of China IPOs into Hong Kong (ICBC etc) › Extending product range – Plans, eIPO, more to come Japan › Joint venture with MUTB continues to perform well › Working on referral to other CPU businesses India › Mutual Fund Services continue
Slide 47: Geographic update – Australia and New Zealand
Geographic update – Australia and New Zealand CEO’s Report Investor Services › Good news: better margins, a range of positive pricing outcomes, retaining and winning clients › Strong pipeline of corporate activity Communication Services › Good corporate actions revenues, but commercial book also rob
Slide 48: Global technology update
Global technology update CEO’s Report Development › eIPO process scaled to process 30,000 applications per hour › Dealing systems now handle 300,000 transactions per hour › All client information synchronised globally on web based data services › Completed Equiserve conversion Infrastructure › Creat
Slide 49: Half Year Results 2007 Presentation
Computershare Limited Half Year Results 2007 Presentation Stuart Crosby Tom Honan 14 February 2007
Slide 50: Appendix
Appendix: Half Year Results 2007 Presentation 14 February 2007 50
Slide 51: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Group Comparisons 51
Slide 52: Regional Analysis – 1H07 Revenue
Regional Analysis – 1H07 Revenue Financial Results $USm 200.0 180.0 166.2 160.0 140.0 120.0 100.0 76.4 80.0 62.7 64.6 66.2 60.0 48.2 40.0 33.9 28.9 21.4 24.0 17.8 20.0 13.9 15.3 11.0 9.9 5.0 6.5 4.8 6.8 5.9 0.0 1.8 0 0.5 0.0 Register Corporate Stakeholder Employee Share Communication Fund services F
Slide 53: Half Year Comparisons - Revenue
Half Year Comparisons - Revenue Financial Results $USm 400.0 350.0 332.4 331.1 300.0 284.6 250.0 220.0 200.0 171.9 141.6 150.0 103.8 92.1 100.0 68.2 73.0 67.2 56.4 51.7 58.2 41.1 54.9 48.7 41.4 44.2 31.5 37.2 35.4 50.0 34.2 31.6 34.2 20.5 24.4 31.7 26.2 13.6 0.0 Register Maintenance Corporate Action
Slide 54: Half Year Comparisons – Operating Costs
Half Year Comparisons – Operating Costs Financial Results $USm 300.0 250.0 220.7 218.8 210.4 200.0 167.4 150.0 144.5 138.9 136.9 133.2 95.5 100.0 75.7 63.2 64.3 61.3 50.0 41.9 41.7 37.1 30.2 28.9 27.5 30.2 25.5 26.0 18.8 19.4 14.7 16.5 13.1 15.3 14.4 5.7 0.0 Cost of Sales Personnel Occupancy Other D
Slide 55: Underlying Effective Tax Rate
Underlying Effective Tax Rate Financial Results AGAAP AIFRS % 35 30.6 30 23.7 23.9 25 19.4 20 15 10 5 0 FY04 FY05 FY06 1H07 55
Slide 56: Key Financial Ratios
Key Financial Ratios Financial Results AGAAP AIFRS AGAAP AIFRS EBITDA interest coverage Net Financial Indebtedness to EBITDA times times 25 3.0 21.1 2.48 2.5 20 2.0 1.68 15 12.1 10.5 1.5 1.21 10 8.7 0.97 1.0 5 0.5 0 0.0 FY04 FY05 FY06 1H07 FY04 FY05 FY06 1H07 AGAAP AIFRS AGAAP AIFRS % Funds Flow to
Slide 57: Risk Management - Interest Rate Sensitivity
Risk Management - Interest Rate Sensitivity Financial Results No exposure 37% Interest Rate Hedging Exposure to interest rates Strategy: - Protect downside risk in current interest rate 33% environment Policy: - Minimum hedge of 25% / Maximum hedge of 100%* * Board approved - Minimum term 1 year / M
Slide 58: Risk Management – Average Funds Balances
Risk Management – Average Funds Balances Financial Results for the half year ended 31 December 2006 By Category By Country Sharesave / Employee Dividend Plans Australia 16% 14% US 1% 25% Dissenter 5% Broker Trust 14% Canada 46% Corporate Regular Trust Actions 18% UK 33% 28% Average fund balance US$6
Slide 59: Appendix 2: Country Summaries
Appendix 2: Country Summaries Country Summaries 59
Slide 60: Appendix 2: Country Summaries – Asia Pacific
Appendix 2: Country Summaries Asia Pacific 60
Slide 61: Australia Half Year Comparison
Australia Half Year Comparison Financial Results $Am Total Revenue $Am Revenue Breakdown 150 143.6 60 125.9 127.5 51.4 120.0 50 115.9 46.7 46.2 40.1 100 40 31.1 30 28.1 25.5 24.6 22.9 50 20 10 8.6 6.7 7.4 5.5 4.9 4.0 0 0 Register Maintenance Corporate Actions Stakeholder Employee Share Plans Communi
Slide 62: New Zealand Half Year Comparison
New Zealand Half Year Comparison Financial Results Total Revenue $NZm $NZm Revenue Breakdown 10 9.7 9.0 8 8.6 7.0 6.9 7.9 7.7 8 6 5.6 6 4 4 2.8 2.1 2 1.6 2 0 0 1H05 2H05 1H06 2H06 1H07 Register Maintenance Corporate Actions 1H06 2H06 1H07 62
Slide 63: Hong Kong Half Year Comparison
Hong Kong Half Year Comparison Financial Results Total Revenue Revenue Breakdown $HKm $HKm 250 130 123.4 227.1 120 110 103.5 200 100 95.7 90 80 76.9 146.1 150 70 120.6 60 108.3 111.1 49.3 100 50 43.6 40 30 50 20 10 0 0 Register Maintenance Corporate Actions 1H05 2H05 1H06 2H06 1H07 1H06 2H06 1H07 63
Slide 64: Appendix 2: Country Summaries – North America
Appendix 2: Country Summaries North America 64
Slide 65: United States Half Year Comparison
United States Half Year Comparison Financial Results Total Revenue $USm Revenue Breakdown $USm 299.4 160 300 282.0 150.4 282.5 150 280 140 133.7 260 130 125.2 240 120 220 110 200 100 90 180 80 160 70 64.2 66.2 140 138.2 60 120 50 45.5 94.8 42.5 36.0 100 40 29.3 25.4 27.9 28.0 80 30 23.4 20 15.6 12.7
Slide 66: Canada Half Year Comparison
Canada Half Year Comparison Financial Results Total Revenue CA$m CA$m Revenue Breakdown 110 80 99.9 100 96.2 68.8 70 63.6 90 86.4 60 54.9 80 73.4 50 70 63.1 60 40 50 30 40 21.4 19.5 20 30 9.8 10 6.1 6.7 20 3.8 4.8 2.1 2.9 1.8 1.7 1.5 0 10 Register Corporate Actions Stakeholder Employee Share Communi
Slide 67: Appendix 2: Country Summaries – EMEA
Appendix 2: Country Summaries EMEA 67
Slide 68: United Kingdom Half Year Comparison
United Kingdom Half Year Comparison Financial Results GBPm Revenue Breakdown Total Revenue GBPm 40 60.0 56.2 32.3 48.4 50.0 30 26.4 40.2 40.0 37.0 35.9 22.3 20 30.0 20.0 11.6 10 8.8 9.4 7.5 6.6 10.0 4.6 3.2 2.7 1.8 1.1 0.5 0.5 0.0 0 1H05 2H05 1H06 2H06 1H07 Register Maintenance Corporate Actions Sta
Slide 69: Ireland Half Year Comparison
Ireland Half Year Comparison Financial Results EURm Total Revenue EURm Revenue Breakdown 4 3 3.4 2.7 2.6 3.1 3.0 2.4 3.0 3 2.7 2 2 1 0.7 1 0.6 0.4 0 0 Register Maintenance Corporate Actions 1H05 2H05 1H06 2H06 1H07 1H06 2H06 1H07 69
Slide 70: Germany Half Year Comparison
Germany Half Year Comparison Financial Results EURm Total Revenue Revenue Breakdown 24.1 EURm 25 10 9.8 9 20 19.3 8 7.3 7.2 7.0 7 6.5 15.5 6.2 6.2 6 15 13.5 5 4.1 4 10 3 7.1 2 5 1.0 1 0.7 0.5 0.4 0 Register Maintenance Corporate Actions Stakeholder Relationship Communication Services 0 Management 1H
Slide 71: South Africa Half Year Comparison
South Africa Half Year Comparison Financial Results Total Revenue ZARm ZARm Revenue Breakdown 120 100.0 95.2 99.3 94.7 99.3 99.4 100 90.0 81.5 87.7 79.0 80.0 80 70.0 60.0 60 50.0 40.0 40 30.0 20.0 20 10.0 10.0 6.4 6.3 0.0 0 Register Maintenance Corporate Actions 1H05 2H05 1H06 2H06 1H07 1H06 2H06 1H