Computershare Limited · ASX:CPU
Computershare — H1 2004 Earnings Presentation
62 slides from Computershare's earnings presentation, Feb 26, 2004
Slide 1: Interim Results 2004 Presentation
€omputershare Interim Results 2004 Presentation 26 February 2004 1 Computershare
Slide 2: Market Overview and Financial Results
€omputershare Market Overview and Financial Results Tom Honan Chief Financial Officer 2 €omputershare
Slide 3: Summary of Results
summary of Results > Net operating profit after tax (excluding outside equity interests) of $42.4m, up 986%. > — Half year total revenues (excluding proceeds on sale of UK premises) of $394.5m, up 13% or up 7% excluding recent acquisitions. > — Half year operating costs excluding the effect of recen
Slide 4: Context of Results
Context of Results > 1H’04 EBITDA up significantly from last year. » Revenues reflect improved market conditions (especially Asia Pacific) and the contribution from acquisitions. >» Operating costs reflect cost savings from restructuring and continued focus on cost control. > Capital expenditure of
Slide 5: This presentation is structured around the following framework
This presentation is structured around the following framework My, 7 UEC Financial \. CEO's Report \ Overview Results / / ri 5 €omputershare
Slide 6: CPU Revenues are driven by multiple factors
CPU Revenues are driven by multiple factors > Market Overview Revenue type 4% 26% / 54% T% 9% ® Register Maint. & Recoveries & Corporate Actions ™ Margin income EI Non Registry{incl GSC) OB Other Register Maint & Growth in clients and | Retain existing Recoveries holders clients, win market share Co
Slide 7: Market Overview: Global Equities Market
> Market age Overview Global Equities Market MBA Value of Historical Equity Issuance Data “4A Number of Annual M&A Book to Bill Ratio Transactions (US$m) ‘Transactions 2.500000 18,000 FB gore sso 144 2,000.00 remo 134 reo 124 onsen 4 1,500:000 19000 44 1.000.000 sam0 wf \ . vA ome 08 NZ 500.000 4000
Slide 8: Market Overview: Global Interest Rate Market
> Market Overview Global Interest Rate Market % UK % US oO NM & HM S 1 t T T T T T T T T is) T T T T T T T T 1996 1997 1998 1999 2000 2001 2002 2003 2004 1996 1997 1998 1999 2000 2001 2002 2003 2004 % Canada oN FE HD DW 1996 1997 1998 1999 2000 2001 2002 2003 2004 Computershare
Slide 9: Financial Results
, Ms, Market gucci! = & CEO’s Report ss Overview Results 4 9 €omputershare
Slide 10: Group Financial Performance - AUD $m
> Financial Results Group Financial Performance —- AUD $m’s Revenue 1H'04 1H’03 ‘Difference Registry maintenance 165.7 168.0 (1%) Corporate actions 34.4 21.8 58% Margin income (including sharesave admin) 26.6 31.9 (17%) Non Registry fees/sales 101.5 71.4 42% Recoveries 50.0 49.3 1% Interest income 1
Slide 11: Half Year Comparisons
> Financial 218 28 Register Main Corp Actions Margin Income. Non Ragistry SalesiFeos W@{H'03 G9 2H'03 @ 1H'04 ry Results Half Year Comparisons $AUDm Revenue Breakdown $auD 1680 tego 4857 m 3965 445 304.5 * a4g7 3889 101.5 m4 742 ; 74.6 | 79.5 80.1 ! a : | (944 = 26.6 L 4HO2 2H'02 1H'03 2H'03 4HO4 Re
Slide 12: Revenue Analysis
> Financial 8 Results Revenue Analysis Revenue Breakdown Total Revenue sAuDm 62.1 49.7 28.6 229 23.3 166 29% D Asia Pacific & Europe ll North America Register Main Corp Actions — Margin Income Recoveries Non Registry * includes revenues from Georgesons. Sales/Fees” Asia Pacific [ Europe @ North Amer
Slide 13: Cost Analysis
ze > Financial a Results Cost Analysis $AUDm Operating Costs sAUDm Operating Cost Breakdown 3235 309" 3099 wens 5 130.3 : . 136: - ° 7789 ey 1335 622 54.6 40.6 367 2a 13.9 ce 86 40 aii Jz 4802 BOHOO @1HO3 @ HOS @tHOd Personnel ‘Occupancy ‘Other Direct Technology Corporate 1H'03 © 2H'03 @ tH'04 * Inc
Slide 14: EBITDA generated from diversified portfolio
ze > Financial Results EBITDA generated from diversified portfolio $AUDm Total EBITDA EBITDA Breakdown 795 80.1* FY 2003 73.0 748 54.4 22% —T —T : El Asia Pacife El Europe ill Norh America TH'02 2H'02 {H'03 2H'03 TH'04 * Excludes non recurring items
Slide 15: Progress on cost savings
ze > Financial Results Progress on cost savings Expected 1H’04 2H'04 Savings Annualised Realised Expected Excess! Savings Savings Savings (Shortfall) Personnel 21.2 9.3 9.0 (2.9) Property 03 0.1 0.4 0.2 Other 12 0.0 1.9 0.7 Total 22.7 9.4 11.3 (2.0) 1 5 €Computershare
Slide 16: Personnel Cost Control
Personnel Cost Control ze > Financial Results Personnel Costs 21 FY) I $164.4 UK Mgt Team Oz Mkt Recovery Salary Increase Acquisitions Restructuring 1H FYO04 A$Sm 16 1 H $05 $169.1 50 155 160 165 1 Half Year Comparison 70 Computershare
Slide 17: Analysis of NPAT results
ze > Financial Analysis of NPAT reals $AUDm 50 5 407 Ea Actual NPAT) 30 5 20 5 10 5 1H'02 2H'02 1H'03 2H'03 1H'04 Note: Normalised NPAT for 1H’03 = 13.2, 2H’03 = 32.7 Computershare
Slide 18: Returns Improving, Cost of Capital Declining
ze > Financial Results Returns Improving, Cost of Capital Declining ROIC vs WACC 14% 12% 7 —ROIC —— WACC 10% 8% T T T Jun 02 Dec ‘02 Jun "03 Dec ‘03 Rolling 12 month period 1 8 Computershare
Slide 19: Effective Tax Rate
ze > Financial Effective Tax Rate reas > Headline effective tax rate 1H’04: 20.8% (1H’03: 65.2%) > Normalised headline effective tax rate 1H’04: 31.7% (1H'03: 30.3%) » The underlying effective tax rate being the tax rate adjusted for one off, non- recurring items and non-deductible goodwill charges
Slide 20: Headcount (excluding Georgeson)
ze > Financial Results Headcount (excluding Georgeson) Total FTE's 5,321 4,966 5,029 2,591 2,053 June '98 June ‘99 June ‘00 June ‘01 June ‘02 June ‘03 Dec ‘03 20 €omputershare
Slide 21: Headcount Geographic Breakdown
ze > Financial Results Headcount* Geographic Breakdown 1,102 1,113 892 522 524 150 73 | 79 | dl 0 : I : : Australia Hong New UK Ireland 5. Africa US Canada Kong Zealand * Headcount excludes Technology, Corporate Services and Georgesons. Computershare
Slide 22: Technology Costs - Establishing Global Platform
ze > Financial Results Technology Costs - Establishing Global Platform 50 > 45 + 41.6 40 + : > AILAUD $m — internal cash a5 4+ costs only > All technology costs are 30 expensed 25 + Major events: 20 + » Acquisition of EFA assets q 45 + February 2003 10 + 5+ 0 T T 1 1H'03 2H'03 1H'04 22 €Computershar
Slide 23: Analysis of Technology Costs
ze > Financial Results Analysis of Technology Costs Category Cost Type 2% % 3% 2% 3% 8% 5% 3% 42% & External bureau B Computer Costs| 82% Development 23% & Comms oO infrastructure wm Occupancy fl Maintenance m@ External bureau @ Personnel & @ Admin on-cosis €Computershare
Slide 24: Analysis of Technology Costs
Financial Results f Technology Costs Is 0 @ Infastucture Maintenance & Applicaton Main‘enance @ External Bureau & Administaton 2 Development Analys SAUD 50.0 5 40.0 + 30.0 + 20.0 | 10.0 + 00 HO4 2H03 IH'03 £ | = i = = a 5 yy
Slide 25: Balance Sheet Strength
ze > Financial Results Balance Sheet Strength >» Net Debt / Equity = 25.7% > Net Debt = AUD $157.9m > Committed Debt facility = AUD $360m > Net Debt / Equity has increased as a result of business acquisitions. 25 €Computershare
Slide 26: Cash Flow
ze > Financiat Results Cash Flow $AUDm > Gearing on a net 70.0 5 debt to equity basis ~ 25.7% 60.0 4 516 > Committed debt 50.0 4 431 6 facility - A$360m : : > Debtors days 40.0 5 | 33.4 outstanding have _ | 28.5 a fallen from 67 to 30.0 4 63 days 20.0 4 . : 10.0 5 = (163 | v2 0.0 1 1 1H'02 2H'02 1H'
Slide 27: Capital Expenditure down 37% on 1H'03
Capital Expenditure down 37% on 1H’03 ze > Financial Results CPU Group Capex AUD $m Occupancy 0.4 Document Services Facilities 0.7 Information Technology 5.9 Other 0.2 TOTAL 7.2 21 Computershare
Slide 28: Working Capital Management Improving
ze > Financial Results Working Capital Management Improving 80 5 ifs) 70 4 60 + 50 + El Receivable days G Payable days 40 + 30 4 days FY'04 FY'02 FY'03 1H'04 28 Computershare
Slide 29: Interest Rate Sensitivity
ze > Financial Results Interest Rate Sensitivity ASm PBT 100 5 Impact 80 4 is ~t-~ Exposure —™— Hedged exposure 100% Hedged -60 J Computershare
Slide 30: Risk Management - Average Funds Balances
ze > Risk Management ~ Average Funds Balances Fania for six months ending 31 December 2003 Results By Category Dividend Sharesave 16% 20% Dissenter 9% Broker Trust 23% Regular Trust 17% 30 By Country US Australia UK \, 40% Balance range A$2.7b to A$5.3b Average fund balance A$2.9b €Computershare
Slide 31: Risk Management - Interest Rate Sensitivity
ze > Financial Results Risk Management - Interest Rate Sensitivity Interest Rate Hedging Strategy: - Minimise downside risk in current Exposure to No low interest rate environment interest rates . _, exposure Policy: - Minimurn hedge of 25% / 25% 34% Maximum hedge of 75% - Minimum term 1 year / Maxi
Slide 32: Equity Management - Fully Franked Interim Dividend of 3cps
ze > Financial Results Equity Management ~ Fully Franked Interim Dividend of 3cps > EPS - Basic 7.05 cents >» EPS — Normalised Basic 6.00 cents » Dividend 6 cents per year (fully franked) > Current yield * 1.71% » Franking Benefit - Totalreturn 2.4% * Based on share price of AUD $3.50 32 €Computersh
Slide 33: Equity Management - Share Buy Back: Reset Preference Shares
ze > Financial Results Equity Management —- Share Buy Back: Reset Preference Shares > Announced 19!" December 2003. >» Buy back a maximum of 17% (250,000 preference shares). » Commenced 5th January 2004 >» Acquired 145,528 preference shares (9.7% of total issued) > Average price AUD $103.63 > Schedu
Slide 34: Financial Summary
ze > Financial Results Financial Summary > Improved EBITDA reflecting: > Market conditions especially in Australia and Hong Kong. > Benefits of restructuring. > Contribution from acquisitions. Corporate activity increased. Market activity level still low in North America and Europe. Cost savings rea
Slide 35: CEO's Report
Market Financial CEO’s Report 35 €Computershare
Slide 36: CEO's Report for the Six Months to December 2003
€omputershare CEO’s Report For The Six Months to 31 December 2003 Chris Morris Chief Executive Officer 36: €omputershare
Slide 37: What has turned the business around?
What has turned the business around? > |mproved market conditions. > Significant improvement in financial reporting so we know where our costs are. > Ongoing focus on cost control. > New Time Zone structure and focus on P&L at all levels. » Changes to management. > Our core technology systems in all
Slide 38: Our People
Our People Global comparison of results from Aug to Nov 03 survey Percentage change in the number of staff who thought that Computershare had improved over a 3 month period 200 +715% +405% +25% Australia Canada Hong Ireland New South UK USA 38 Computershare
Slide 39: Regional Reports - EMEA
Regional Reports - EMEA Rept >» General market conditions remain flat. > Significantly growing ancillary businesses in the UK including: » Small Shareholder Programs. » Tracing unclaimed beneficiaries. > Dealing Services. > Creating new business opportunities in the UK. » NHS Foundation Trust Hospit
Slide 40: Regional Reports - Asia Pacific
Regional Reports — Asia Pacific > Significant increase in general market activity. 40 €omputershare
Slide 41: Number of IPOs won - breakdown by share registry 2003
CEO's Report NUMBER OF IPO'S WON - BREAKDOWN BY SHARE REGISTRY 2003 Computershare 45 48.90% Security Transfers 15 15.60% APRL 42 12.50% Registries Ltd 8 8.30% ‘Advanced Share Registry 8 8.30% Gi Computershare BAPRL Oi Registies Li Pitcher Pariners 8 8.30% G Security transfers WAdvanced Share Registy
Slide 42: Regional Reports - Asia Pacific cont.
Regional Reports - Asia Pacific cont. » Significant increase in general market activity. » Won the registry tender for IAG adding more than 1 million shareholders. > Plans business in Australia grew by 21%. >» Hong Kong improved results and maintaining share of IPO’s coming to the market. » india pl
Slide 43: Regional Reports - North America
Regional Reports - North America » Georgeson acquisition has added strength to CPU brand resulting in increased invitations to tender from S&P Top 100. » Winning business in the US (Florida Power, Reliant Resources, Viceroy Resources, Stanley Tool Works). > Plans voted No 1 in recent service quality
Slide 44: Acquisitions - Georgeson Shareholder Communications
Acquisitions - Georgeson Shareholder Communications > Our most significant acquisition to date. » All Georgeson’s businesses are undergoing careful analysis. > Great fit into Pepper and Analytics businesses. > In other CPU markets, we can expose existing CPU clients to GS services. > There will be a
Slide 45: Acquisitions - Georgeson Shareholder Communications cont.
a CEO's Acquisitions - Georgeson Shareholder Communications cont. » Integration being carefully managed through a dedicated team of top CPU and Georgeson executives. » Already identified areas for significant cost savings. >» Some outsourced operations will be brought back in-house with significant
Slide 46: Acquisitions - Transcentive
Acquisitions - Transcentive > Specialist providers of services for all types of equity plans. > Acquisition blends well into CPU's overall Plans business strategy and cements our position as the leading provider of Plans services globally and in the US in particular. > Services range from bureau to
Slide 47: Acquisitions - Transcentive cont.
Acquisitions — Transcentive cont. > Integration will be carefully managed and synergies between our two companies are expected to be extracted from: > Administration >» Merging of outsourcing with CPU Plan Managers > Integration of Sales and Marketing functions » Technology expense (for both parties
Slide 48: Acquisitions - India
Acquisitions - India » Places Computershare in strategically important, future growth area in Asia. > Mutual Funds back office market (30% market share) — opportunities to expand overseas. > Market leader in share registry with 40% market share — 16 million shareholders. >» Potential to leverage CPU
Slide 49: Acquisitions - Deutsche Borse Computershare GMBH (JV)
Acquisitions - Deutsche Borse Computershare GMBH (JV) > Have purchased remaining 51% and now trading as Computershare — Germany. » Dramatically reduced cost base. > Moved operations to Pepper in Munich. >» New registry system live in May 2004 removing €1 million in costs. 49 €omputershare
Slide 50: Acquisitions - Pepper Technologies
Acquisitions - Pepper Technologies > Purchased remaining 63%. >» Stakeholder Relationship Management systems that will bring added value to Computershare’s global client base: > Shareholders —- SRM > Employees - CRM > Clients - CRM. » Innovative technology and unique approach to electronic stakehold
Slide 51: Priorities For The Next Months
Priorities For The Next 6 Months “et > Manage the integration of new acquisitions to capitalise on synergies and deliver full value. » Clearly define our product offerings. > Consolidate sales/marketing and business development teams in all regions. > Focus effort in each region to achieve maximum c
Slide 52: Outlook
Outlook “ee Assumptions > Current levels of M&A, IPO and other Corporate Action activities are sustained. » No change in interest rates. > Fluctuations in currency are within +/- 10%. Revised EBITDA guidance for full year estimated to be in a range of $170m - $190m 52 €Computershare
Slide 53: Appendix A: Revenue Breakdown by Country
Appendix A Revenue Breakdown by Country 53 €omputershare
Slide 54: Competitive Environment
Competitive Environment Clients Competitors Australia 1,173 APRL New Zealand 263 Hong Kong 433 UK 685 Lloyds, Capita ireland 181 South Africa 748 USA 1,246 BoNY, DST, (Equiserve), Mellon Canada 2,189 CIBC Mellon 54 €omputershare
Slide 55: Australia Half Year Comparison
Australia Half Year Comparison SAUD Total Revenue SAUDm Revenue Breakdown 983 1039 973 868 66 | 38.9 36.5 35.2 28.3 25.8 268 207 18.3 15.6 130 [ os 14 25 4315 : O° oom a 1H02 2Hu AH'03 2H'03 4{H04 Register Main Corp Actions Margin Income Recoveries Non Registry Other M1HO03 © 2H03 B1H04 *Excludes re
Slide 56: New Zealand Half Year Comparison
New Zealand Half Year Comparison $AUDm Total Revenue $AUDm Revenue Breakdown 42 44 42 24 22 16 09 07 | 04 : ea at 014 02 | ot 1H'02 2H'02 1H103 2H'03 1H04 Register Main Corp Actions _ Margin Income Recoveries Other @ 1H'03 i 2H'03 m@ 1H'04 Computershare
Slide 57: Hong Kong Half Year Comparison
Hong Kong Half Year Comparison $AUDm Total Revenue Revenue Breakdown $AUDm 159 13.0 133 123 97 80 38 28 15 4H02 2H'02 1H'03 2H'03 1H'04 Register Main Corp Actions Other 5/ Computershare
Slide 58: United Kingdom Half Year Comparison
United Kingdom Half Year Comparison SAUD Total Revenue $AUDm Revenue Breakdown 1040 TS a8 912 40.8 37.8 845 34.2 179 183 162 am /7° 15.1 vag | 199 13.3 Wa 60 57 49 16 |] 16 12 HN AHS HS AH Register Main Corp Actions MarginIncome Recoveries Non Registry Other Excludes revenues from Georgeson. Ww 1HO3
Slide 59: Ireland Half Year Comparison
Ireland Half Year Comparison $AuDm Total Revenue SAUDm Revenue Breakdown 8.2 38 32) 29 16 12 1A 10 05 1402 2H02 1H03 2H03 1H'04 Register Main Corp Actions Margin Income Recoveries Non Registry M103 G1 2H03 @1H04 Computershare
Slide 60: South Africa Half Year Comparison
South Africa Half Year Comparison sauDm Total Revenue $AUDm Revenue Breakdown 18.0 18. 7 4B 167 155 133 | / / / 06 92 oF 07 08 08 09 #09 08 THO2 2HO2 HOS 2HOS HOA Register Main Corp Actions Margin Income Recoveries “Excludes revenues from Georgesons. WIHO3 BHO w 1HO 60 €omputershare
Slide 61: United States Half Year Comparison
United States Half Year Comparison Asm Total Revenue Asm Revenue Breakdown m7 724 | 25.6 80.3 228 235 58.0 55.5 204 195 18.6 q17 79 70 | 38 : : : / : 28 3.2 ot | 2.0 fm 26 r r 1 : me Ud : tl Bt BH lt Es. 0.1 04 04 : 1H02 2H'02 1H'03 2H'03 1HO4 Register Main Corp Actions Margin income Recoveries Non
Slide 62: Canada Half Year Comparison
Canada Half Year Comparison $AUDm 79.0 Total Revenue 78.3 778 SAUDm ANT 39.0 | Ws Revenue Breakdown 137 1H'02 2H'02 1H'03) 0 2H'03)— 1H'04 *Excludes revenues from Georgesons. Register Main Corp Actions. Margin Income @ 1H'03 @ 2H'03 @ 1H'04 Recoveries Non Registry Other Computershare