Slide 1: Solid results - delivering to plan: 2018 Full Year Results Presentation
COMPUTERSHARE LIMITED Solid results - delivering to plan 2018 Full Year Results Presentation Stuart Irving Chief Executive Officer and President Mark Davis Chief Financial Officer 15 August 2018
Slide 2: Executive summary
Executive summary FY18 solid results, fastest rate of earnings growth since FY09 Management results1 Revenue EBITDA EPS $2,247.7m 6.3% $609.7m 12.7% 62.10 cents 14.1% Statutory EPS Free cash flow Dividend per share Actual Actual Final 55.17 cents2 13.1% $379.2m3 4.7% AU 21 cents 10.5% FY18 Managemen
Slide 3: Good progress on executing strategic priorities
Good progress on executing strategic priorities Growth Profitability Capital Management › Mortgage Services EBITDA › Group EBITDA margin › Free cash flow of $379.2m, up 65.4% to $122.4m, continues to rise to 27.1% funds increased MSR growth 22.4% margin (up 150bps) investments, share buy- back, high
Slide 4: FY19 outlook
FY19 outlook Guidance › In constant currency, Computershare expects FY19 Management EPS to increase by around +10% on FY18 Assumptions › Equity markets remain at current levels and interest rate markets remain in line with current market expectations › The Karvy disposal and Equatex acquisition both
Slide 5: Growth: Mortgage Services
Growth: Mortgage Services Strong profit growth, EBITDA +65.4%, execution tracking to plan FY18 @ CC FY17 Actual CC Variance US Mortgage Services revenue $306.1 $257.2 +19.0% UK Mortgage Services revenue $240.1 $239.8 +0.1% Total Mortgage Services revenue $546.2 $496.9 +9.9% Total Mortgage Services E
Slide 6: Growth: Employee Share Plans
Growth: Employee Share Plans Laying the foundations for future growth FY18 @ CC FY17 Actual CC Variance Transactional revenue $83.0 $79.3 +4.7% Fee revenue $104.4 $106.9 -2.3% Margin income $16.2 $16.5 -1.8% Other revenue $17.8 $17.7 +0.6% Total Employee Share Plans revenue $221.3 $220.5 +0.4% Emplo
Slide 7: Profitability: Margin income
Profitability: Margin income 2H18 margin income highlights leverage to rising interest rates 18.0 17.3 140.0 16.0 16.6 16.8 16.6 16.3 15.1 15.2 15.0 14.0 14.4 120.0 14.0 Sharp improvement 12.0 Average Client Balances for period USD million from cyclical for period USD billion 105.8 lows 100.0 Margin
Slide 8: Profitability: Register Maintenance and Corporate Actions
Profitability: Register Maintenance and Corporate Actions Register Maintenance returns to organic growth in 2H FY18 @ CC FY17 Actual CC Variance Register Maintenance revenue $696.6 $697.9 -0.2% Corporate Actions revenue $158.7 $125.8 +26.2% Total Register Maintenance & $855.4 $823.7 +3.8% Corporate
Slide 9: Profitability: Structural cost out programs progressing well
Profitability: Structural cost out programs progressing well Stages 1, 2 and 3 total gross savings of $125m - $155m affirmed Total cost Benefit realisation (cumulative) Activity savings estimates $m FY17A FY18A FY19E FY20E FY21E FY22E FY23E Stage 1 Total 25 - 30 7.8 14.0 19.6 28.0 28.0 28.0 28.0 Sta
Slide 10: Capital management
Capital management: Free cash flow funds growth, debt reduction and enhanced returns Cash generative business model › Free cash flow of $379.2m, up 4.7%. Recurring revenues, high margins and low maintenance capex, funds growth investments and shareholder returns Growth investments › Self funding gro
Slide 11: FY18 Management Results summary
FY18 Management Results summary Record earnings and fastest rate of earnings growth since FY09 FY18 @ CC FY17 Actual CC Variance FY18 Actual Total Revenue $2,247.7 $2,114.0 +6.3% $2,300.9 Margin income $175.5 $136.2 +28.9% $179.5 Operating Costs $1,638.3 $1,573.9 +4.1% $1,678.5 EBITDA $609.7 $540.8
Slide 12: FY18 Management NPAT analysis
FY18 Management NPAT analysis Management EBITDA +$68.9m, +12.7% driven by growth and profitability strategies 375 8.0 355 6.6 39.3 10.8 3.0 6.9 344.7 335 337.8 315 29.6 USD million 295 297.3 275 255 235 215 FY17 Actual FY18 Actual Tax Mgt EBITDA controlling Interest Margin Income Dep'n & Amort FX FY
Slide 13: Management revenue by business stream
Management revenue by business stream Strategic growth, cyclical recovery and increased event activity Business stream FY18 @ CC FY17 Actual CC Variance FY18 Actual Business Services $872.0 $785.9 +11.0% $894.4 Register Maintenance $696.6 $697.9 -0.2% $710.3 Corporate Actions $158.7 $125.8 +26.2% $1
Slide 14: Management revenue bridge
Management revenue bridge Margin income, US mortgage services and large event fees add to growth Impacted 2,350 by weaker USD 2,300 2,300.9 - Growth in Class Actions 53.2 +$28.2m Large event 2,250 for US Fund - Growth in US Mortgage Services +$39.1m 39.3 2,247.7 USD million 2,200 1.2 2.0 3.3 13.9 9.
Slide 15: EBITDA and margins by business stream
EBITDA and margins by business stream Operating leverage and ongoing margin expansion to 27.1%, up 150 bps FY18 @ CC FY17 CC Variance FY18 EBITDA FY17 Actual Actual Margin in CC EBITDA Business Stream % Margin % Business Services $233.7 $172.6 +35.4% 26.8% 22.0% Register Maintenance & Corporate Acti
Slide 16: EBITDA and margin income by business stream
EBITDA and margin income by business stream Improved margin income contribution, $175.5m, +28.9% FY18 FY18 FY18 FY17 FY17 FY17 CC EBITDA MI EBITDA EBITDA MI EBITDA Variance Business Stream @ CC @ CC ex MI @ ex MI CC Business Services $233.7 $77.8 $155.9 $172.6 $59.3 $113.3 +37.6% Register Maintenanc
Slide 17: Operating costs analysis
Operating costs analysis Cost to income ratio continues to fall, 72.9% Operating costs FY18 @ CC FY17 Actual CC Variance FY18 Actual Cost of sales $373.4 $367.5 +1.6% $380.7 Personnel $968.5 $920.6 +5.2% $992.6 Fixed/Perm $902.9 $882.7 +2.3% $925.8 Variable/Temp $65.6 $37.9 +73.1% $66.8 Occupancy $8
Slide 18: Cash flow summary
Cash flow summary Free cash flow up 4.7% - self funding growth and capital management FY18 Actual FY17 Actual Net operating receipts and payments $595.6 $530.4 Net interest and dividends ($55.7) ($50.8) Income taxes paid ($86.9) ($59.3) Net operating cash flows excluding SLS advances $453.0 $420.3 C
Slide 19: Balance sheet
Balance sheet Leverage ratio down to 1.33x after funding strategic investments, share buy- back, debt reductions and dividend increase Jun 18 Jun 17 Variance Current Assets $1,241.9 $1,251.7 -0.8% Non-Current Assets $2,646.3 $2,695.3 -1.8% Total Assets $3,888.2 $3,947.0 -1.5% Current Liabilities $1,
Slide 20: Conclusions
Conclusions › Purposefully designed Growth, Profitability and Capital Management strategies are delivering solid results, with FY18 recording the fastest rate of earnings growth since FY09 › Optionality, inherent in Computershare, is converting into profitability › Solid financial position: strong f
Slide 21: Appendices
APPENDICES Statutory results Company Overview FY18 Computershare at a glance Management EBITDA (ex MI) Financial performance by half year at actual FX rates Revenue and EBITDA by business stream at actual FX rates Global Registry Maintenance and Employee Share Plans Business Services revenue excludi
Slide 22: Statutory results
Statutory results FY18 FY17 Vs FY17 (pcp) Total Revenues $2,301.1m $2,168.1m +6.1% › Management results are used, along with Total Expenses $1,911.5m $1,802.9m +6.0% other measures, to assess operating business Statutory Net Profit (post NCI) $300.1m $266.4m +12.7% performance. The Company believes
Slide 23: Management adjustment items
Management adjustment items Appendix 4E Note 3 Management adjustment items net of tax for the year ended 30 June 2018 were as follows: Amortisation › Customer contracts and other intangible assets that are recognised on business combinations or major asset acquisitions are amortised over their usefu
Slide 24: 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 25: FY18 Computershare at a glance
FY18 Computershare at a glance Management revenue @ CC Management EBITDA @ CC Canada ANZ ANZ Canada 9% 11% 4% Asia 14% 9% Asia By geography 7% UCIA 17% $2,247.7m UCIA $609.7m 21% CEU USA 3% 48% CEU USA 4% 53% Communication Services Corporate & Technology Communication Services Corporate & Technology
Slide 26: Management EBITDA excluding the impact of margin income
Management EBITDA excluding the impact of margin income and FX movements increased by 7.3% in FY18 versus pcp 443.1 412.9 379.6 362.9 326.4 260.3 FY13 FY14 FY15 FY16 FY17 FY18 Note: Management EBITDA translated at FY18 average exchange rates and excludes margin income. 26
Slide 27: Financial performance by half year at actual FX rates
Financial performance by half year at actual FX rates 2H18 1H18 2H17 1H17 2H16 1H16 2H15 1H15 2H14 1H14 Total Management Revenue $1,173.1 $1,127.8 $1,110.8 $1,003.2 $1,035.5 $938.7 $1,016.5 $959.5 $1,045.7 $976.9 Operating Costs $843.4 $835.2 $811.6 $762.3 $744.5 $695.7 $720.7 $699.0 $771.7 $709.2 M
Slide 28: Revenue and EBITDA by business stream at actual FX rates
Revenue and EBITDA by business stream at actual FX rates FY18 FY18 FY18 Actual FY17 FY17 FY17 Revenue EBITDA EBITDA Revenue EBITDA Actual Margin EBITDA % Margin % Business Services $894.4 $240.1 26.8% $785.9 $172.6 22.0% Register Maintenance $710.3 $697.9 Corporate Actions $160.6 $125.8 Register Mai
Slide 29: Global Registry Maintenance and Employee Share Plans revenue
Global Registry Maintenance and Employee Share Plans revenue Registry Maintenance @ CC Employee Share Plans @ CC Oth Rev 8% Holder/Broker MI paid 7% 28% Issuer paid FY18 @ CC 68% Fee 47% $696.6m $221.3m Margin Income TX 4% 38% Oth Rev 8% MI Holder/Broker 8% paid 27% Issuer paid 70% FY17 Fee 48% $697
Slide 30: Business Services revenue excluding Mortgage Services
Business Services revenue excluding Mortgage Services FY18 @ CC FY17 Other India Funds Other 3% India Funds 13% 5% 13% Voucher Services Voucher 6% Services 7% Deposit Protection Class Actions Deposit Class Actions 35% $325.8m $289.0m 41% Scheme Protection 7% Scheme 6% Corporate Trust Corporate 22% T
Slide 31: Management revenue and EBITDA at actual FX rates
Management revenue and EBITDA at actual FX rates Regional Analysis Revenue by region EBITDA by region 2,500 700 2,300.9 622.6 2,114.0 214.6 600 1,974.2 91.3 2,000 181.0 532.6 540.8 165.6 500 70.2 81.1 1,087.9 1,500 994.4 400 965.3 323.5 251.8 266.0 300 1,000 106.9 93.8 81.2 200 14.0 18.4 453.5 490.4
Slide 32: FY18 Management revenue at actual FX rates
FY18 Management revenue at actual FX rates Regional Analysis 500 434.4 450 363.1 400 350 299.4 300 USD millions 250 200 150 104.7 101.3 98.0 93.3 82.7 78.3 76.8 100 65.1 64.2 62.4 46.5 44.5 38.4 28.4 25.1 23.9 22.5 21.0 50 15.7 15.4 15.0 12.2 9.5 9.0 7.9 7.2 6.5 6.4 6.0 5.4 3.4 3.1 2.3 1.4 0.5 0.0 0
Slide 33: Australia
Australia Management revenue: AUD million FY16 FY17 FY18 362.0m 325.0m 305.2m 144.0 141.2 130.5 123.3 117.3 110.3 33.5 29.0 26.6 25.3 19.3 20.0 19.3 13.1 12.3 10.8 5.5 6.9 2.1 1.3 0.7 Register Corporate Business Stakeholder Employee Share Communication Corporate & Maintenance Actions Services Relati
Slide 34: Hong Kong
Hong Kong Management revenue: HKD million FY16 FY17 FY18 597.0m 631.8m 716.3m 406.5 391.6 384.3 181.0 146.6 118.1 104.9 76.1 73.4 18.6 20.2 23.9 Register Maintenance Corporate Actions Stakeholder Relationship Mgt Employee Share Plans FY16 FY17 FY18 34
Slide 35: India
India Management revenue: INR million FY16 FY17 FY18 2,793.4m 3,451.4m 3,924.4m 2,961.6 2,673.8 2,100.3 836.8 659.1 592.7 100.4 118.4 125.9 Register Maintenance Corporate Actions Business Services FY16 FY17 FY18 35
Slide 36: United States
United States Management revenue: USD million FY16 FY17 FY18 965.3m 994.4m 1,087.9m 306.1m Mortgage Services 257.2m Mortgage Services 434.4 378.0 222.0m 376.0 365.8 Mortgage 363.1 Services 337.4 98.0 78.0 71.5 76.8 55.0 64.3 63.6 67.3 65.1 38.1 36.9 38.4 15.0 12.6 12.2 Register Corporate Business St
Slide 37: Canada
Canada Management revenue: CAD million FY16 FY17 FY18 218.9m 240.3m 272.8m 133.2 103.0 80.6 79.4 81.5 78.8 28.3 26.7 23.7 25.0 20.0 17.2 7.4 8.5 9.2 2.4 2.6 4.4 Register Maintenance Corporate Business Employee Share Plans Communication Services Corporate & Actions Services Technology FY16 FY17 FY18
Slide 38: United Kingdom and Channel Islands
United Kingdom and Channel Islands Management revenue: GBP million FY16 FY17 FY18 221.3m 331.3m 335.0m 188.7m 188.5m Mortgage Mortgage Services Services 221.5 222.3 62.7m Mortgage Services 101.1 57.3 54.2 55.0 46.3 39.4 41.2 5.2 3.9 3.3 4.2 4.2 4.9 4.0 4.8 4.7 3.4 3.3 3.5 Register Corporate Business
Slide 39: South Africa
South Africa Management revenue: RAND million FY16 FY17 FY18 245.4m 256.8m 272.9m 228.8 217.3 217.3 26.1 21.9 15.1 16.9 16.7 12.2 0.7 0.7 1.3 Register Maintenance Corporate Actions Stakeholder Relationship Mgt Employee Share Plans FY16 FY17 FY18 39
Slide 40: Germany
Germany Management revenue: EUR million FY16 FY17 FY18 36.6m 39.6m 42.8m 23.9 20.0 18.1 16.1 15.9 14.3 4.0 3.1 1.4 0.9 0.5 0.6 0.1 0.0 0.0 Register Maintenance Corporate Actions Employee Share Plans Communication Services Corporate & Technology FY16 FY17 FY18 40
Slide 41: Management EPS – AUD equivalent
Management EPS – AUD equivalent 120 1 0.9139 100 0.8389 0.7758 0.7521 0.8 0.7273 80 81.69 Cents per share 75.74 71.31 72.35 0.6 60 65.92 0.4 40 ~ 0.2 20 ~ 0 0 FY14 FY15 FY16 FY17 FY18 AUD/USD average exchange rate 41
Slide 42: Technology costs at actual FX rates
Technology costs at actual FX rates 350 12.4% 12.0% 11.4% 12% 300 261.3 263.0 10% 9.6 10.0 250 236.4 Tech costs as a % of revenue 12.7 75.8 8% 84.2 USD million 200 65.7 6% 150 91.7 103.6 81.1 4% 100 50 2% 76.9 75.8 73.7 0 0% FY16 FY17 FY18 Development Infrastructure Maintenance Admin Technology cost
Slide 43: Capital expenditure versus depreciation at actual FX rates
Capital expenditure versus depreciation at actual FX rates 70 60 50 40 37.3 35.4 4.5 Depreciation 1.9 USD million USD million 29.9 Capex 30 2.5 11.1 8.7 8.1 1.0 1.7 20 2.5 23.1 10 20.8 16.8 0 FY16 FY17 FY18 Information Technology Communication Services Facilities Occupancy Other Depreciation 43
Slide 44: Breakdown of client balances
Breakdown of client balances Significant leverage to rising interest rate cycle – 11.4bn of average exposed balances in FY18 USD 17.0bn Assuming an Total balances increase of 100bps on our FY18 exposed non-hedged balances ($8.5bn) CPU would generate an additional $85m USD 5.6bn USD 11.4bn annualised
Slide 45: Exposed and non-exposed balances by business
Exposed and non-exposed balances by business Business Activity FY18 Balances (USD billions) Margin income (USD millions) Exposed Non-exposed Register Maintenance 2.3 0.4 31.4 Corporate Actions 2.8 0.8 51.1 Employee Share Plans 1.7 0.3 16.7 Business Services 4.6 4.1 80.3 Totals 11.4bn 5.6bn 179.5m 17
Slide 46: Breakdown of exposed balances by currency
Breakdown of exposed balances by currency Currently most exposed to USD rates though GBP and CAD remain important Average exposed balances hedged CAD Average exposed balances prior to hedging 2% USD Other 29% AUD 4% 3% CAD USD 2.9bn 13% (USD 11.4bn x 25%) GBP 69% USD 11.4bn USD (USD 17.0bn x 67%) 47
Slide 47: Profile of our swap and deposit book
Profile of our swap and deposit book 2,000 Fixed rate deposits Swaps 1,800 1,600 USD million 1,400 1,200 1,000 800 600 400 200 0 Jul-18 Jul-19 Jul-20 Jul-21 Jul-22 Floating rate deposits comprise both exposed and non-exposed balances 6,000 5,000 4,000 USD million 3,000 2,000 1,000 0 Jul-18 Jul-19 Ju
Slide 48: Debt facility maturity profile
Debt facility maturity profile Average debt facility maturity extended to 2.8 years. Committed debt facilities increased to $2.45bn to enable funding of Equatex Maturity Dates Debt Committed Bank Private SLS USD million Drawn Debt Debt Placement Advance Facilities Facility Facility Facility FY19 Jul
Slide 49: Key financial ratios
Key financial ratios Jun 18 Jun 17 Variance USD m USD m Dec 17 to Jun 17 Interest Bearing Liabilities including SLS advance debt $1,481.1 $1,573.1 -5.8% Less Cash* ($534.7) ($510.7) +4.7% Net Debt (including SLS advance debt) $946.5 $1,062.4 -10.9% Management EBITDA $622.6 $540.8 +15.1% Net Financia
Slide 50: Effective tax rate
Effective tax rate Statutory and management (at actual FX rates) Tax rate % 40% 35% 34.0% › The Group’s statutory effective tax rate has decreased from 25.7% in FY17 to 20.9% in 29.2% FY18. This is primarily driven by the 30% 28.3% 27.9% restatement of deferred tax balances due 25.7% to US tax refor
Slide 51: Dividend history and franking
Dividend history and franking Policy 40% - 60% payout ratio of USD Management NPAT with maximum franking 20.0 21 19 19 17 17 15.0 16 16 15 15 AU cents 14 10.0 5.0 0.0 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 Dividend (AU cents) Franking (%) 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18
Slide 52: Mortgage Servicing
US and UK mortgage services - UPB and number of loans US mortgage services UPB up 35.7% ($81.0bn v $59.7bn) Performing Non-performing At 30 Jun 18 At 30 Jun 17 At 30 Jun 18 At 30 Jun 17 › US UPB at 31 Dec 17 was $71.1bn Fully-Owned $14.7bn $8.5bn $11.3bn $12.4bn MSRs 1 70K Loans 38K Loans 106K Loans
Slide 53: Mortgage Services Revenue and EBITDA at actual FX rates
Mortgage Services Revenue and EBITDA at actual FX rates EBITDA margin continuing to improve 2H18 1H18 2H17 1H17 2H16 1H16 US Mortgage Services revenue $162.7 $143.4 $133.5 $123.7 $115.6 $106.4 UK Mortgage Services revenue $132.4 $121.7 $122.4 $117.3 $52.2 $41.1 Total Mortgage Services revenue $295.1
Slide 54: Financial Snapshot – US Mortgage Servicing
Financial Snapshot – US Mortgage Servicing FY18 revenue composition Other Base service fees servicing 28% fees 56% • Base servicing fees, $171.0m, +23.4% • Servicing related fees $50.0m, +12.9%* $306.1m • Other services fees $85.1m, +14.5%* Servicing related fees 16% Jun-18 Jun-17 Annual Report refe
Slide 55: Mortgage services key terms
Mortgage services key terms Performing servicing: Servicing of a mortgage which is less than 30 days delinquent. Typically loans that meet the criteria of the Government Sponsored Entities e.g. “Fannie Mae”, “Freddie Mac”. Non-performing servicing: Servicing of a mortgage that is over 30 days delinq
Slide 56: Exchange rates
Exchange rates › Average FX rates used to translate profit and loss to US dollars for key reporting currencies › The USD has weakened in FY18 against all currencies except the Hong Kong dollar Currency FY18 FY17 Var USD has: USD 1.0000 1.0000 AUD 1.2890 1.3296 -3.1% Weakened HKD 7.8219 7.7630 0.8% S
Slide 57: Important notice
Important notice Summary information • This announcement contains summary information about Computershare and its activities current as at the date of this announcement. • This announcement is for information purposes only and is not a prospectus or product disclosure statement, financial product or