Computershare Limited · ASX:CPU
Computershare — FY2004 Earnings Presentation
69 slides from Computershare's earnings presentation, Aug 19, 2004
Slide 1: Financial Year 2004 Final Results Presentation
Financial Year 2004 Final Results Presentation 19 August 2004 1
Slide 2: Market Overview and Financial Results
Market Overview and Financial Results Tom Honan Chief Financial Officer 2
Slide 3: Summary of Results
Summary of Results ¾ Normalised EPS (pre goodwill) of 19.0 cents, up 61%. ¾ Operating Cash Flows of $136.1m, up 79%. ¾ Total revenue of $894.7m, up 24% or up 5% excluding FY04 acquisitions. ¾ Operating Costs (excluding FY04 acquisitions, & cost of sales) of $457.8m, down 1%. ¾ Days Sales Outstanding
Slide 4: Context of Results
Context of Results ¾ Significant gains in Revenue, Net Profit, Earnings per Share and Cash Flows. ¾ Increased revenues reflect improved market conditions (especially in the Asia Pacific region) and the contribution from FY04 acquisitions. ¾ Significantly improved profit contribution from North Ameri
Slide 5: This presentation is structured around the following framework
This presentation is structured around the following framework Market Financial CEO’s Report Overview Results 5
Slide 6: CPU Revenues are driven by multiple factors
CPU Revenues are driven by multiple factors Market Overview Revenue Type Revenue Driver Risk mitigation Register Maintenance Growth in clients & Retain existing clients, win holders market share 1% 6% Corporate Actions Market conditions & M&A Win new business; link to 6% activities key stakeholders,
Slide 7: Global Equities Market
Global Equities Market Market Overview Historical Equity Issuance Data Annual M & A Book to Bill Ratio Source: SDC Thomson Financial and UBS Securities Australia Ltd ¾ CPU impact mainly felt in Australia and Hong Kong. 7
Slide 8: Global Interest Rate Market
Global Interest Rate Market Market Overview % % UK US 8 8 6 6 4 4 2 2 0 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 1996 1997 1998 1999 2000 2001 2002 2003 2004 % Canada 8 6 4 2 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 8
Slide 9: Computershare Strengths
Computershare Strengths Market Overview ¾ Recurring Revenue - >70% of revenue is of a recurring nature. ¾ Global Diversification – across more than 15 countries. ¾ High Margins – EBITDA margins > 20% and increasing. ¾ Low Capital Requirements – Capex < depreciation expense. ¾ Profit increases delive
Slide 10: Financial Results
Market Financial CEO’s Report Overview Results 10
Slide 11: Group Financial Performance – A$m's
Group Financial Performance – A$m’s Financial Results FY04 FY03 Variance Sales Revenue 871.3 705.7 23% Interest & Other Income* 23.4 14.1 66% Total Revenue 894.7 719.8 24% Operating Costs* 711.1 583.9 (22%) Share of net (profit)/loss of Associates 0.1 2.0 n/a Normalised EBITDA 183.4 133.9 37% Non-Re
Slide 12: Revenue Breakdown
Revenue Breakdown Financial Results FY04 FY03 Var Register Maintenance 459.2 459.2 0% Corporate Actions 143.8 93.3 54% Investor Relations Services 76.0 14.4 428% Employee Share Plans 100.9 80.2 26% Document Services 51.0 39.1 30% Mutual Funds 9.8 0.0 n/a Technology & Other Revenues 53.9 33.6 61% Tot
Slide 13: Half Year Comparisons – Revenue & EBITDA
Half Year Comparisons – Revenue & EBITDA Financial Results Revenue & EBITDA $Am $Am 550 120 ¾ Increased 103.3 revenues have 500 100 delivered significant 79.5 improvements in 450 80.1 R 80 E EBITDA. e B 400 v I 54.4 60 e T n 350 D u A e 40 300 355.7 364.1 399.5 495.2 20 250 200 0 1H03 2H03 1H04 2H04
Slide 14: Regional Analysis – Revenue & EBITDA
Regional Analysis – Revenue & EBITDA Financial Results Total Revenue Breakdown EBITDA Breakdown 32% 35% 40% 39% 28% 26% Asia Pacific Europe North America Asia Pacific Europe North America 14
Slide 15: Half Year Comparisons - Costs
Half Year Comparisons - Costs Financial Results $Am Operating Costs 400 Acquisitions 98.6 19.2 300 200 300.8 298.7 294.6 283.1 100 0 1H03 2H03 1H04 2H04 15 Note: FY03 & 1 H FY04 restated for cost of sales adjustment.
Slide 16: Progress on Cost Savings
Progress on Cost Savings Financial Results Savings Expected FY04 Realised FY04 Excess Savings Savings (Shortfall) Personnel 20.7 18.4 (2.3) Property 0.4 0.6 0.2 Other 1.2 1.6 0.4 Total 22.3 20.6 (1.7) ¾ Expected personnel savings impacted by market & business growth Note: cost savings translated at
Slide 17: Analysis of NPAT
Analysis of NPAT Financial Results A$m Normalised Net Profit After Tax 80 70 60 50 40 77.8 30 57.9 20 45.8 10 0 FY02 FY03 FY04 17
Slide 18: Normalised Basic EPS Performance (pre goodwill)
Normalised Basic EPS Performance (pre goodwill) Financial Results cents Normalised Basic EPS (pre goodwill) 20 (rolling 12 months) 18 16 14 12 10 8 6 4 2 0 Dec'01 Jun'02 Dec'02 Jun'03 Dec'03 Jun'04 Normalised Basic EPS (pre goodwill) 18
Slide 19: Returns improving, Cost of Capital declining
Returns improving, Cost of Capital declining Financial Results 18% ROIC vs. WACC 16% 14% 12% 10% 8% 6% FY02 FY03 FY04 WACC ROIC 19
Slide 20: Effective Tax Rate
Effective Tax Rate Financial Results ¾ Headline effective tax rate for FY04 is 24.4% (FY03: 41.8%) ¾ Normalised headline effective tax rate for FY04 is 29.9% (FY03: 20.7%) ¾ The underlying effective tax rate being the tax rate adjusted for one off, non- recurring items and non-deductible goodwill ch
Slide 21: Technology Costs – Establishing Global Platform
Technology Costs – Establishing Global Platform Financial Results A$m % 120 14% 14% 115 13% 12% 110 106.7 11% 10% 105 ¾ All R & D technology costs are expensed 8% 100 ¾ FY04 includes $7.7m in Technology costs from businesses acquired 6% 95 92.0 92.1 90 4% 85 2% 80 0% FY02 FY03 FY04 Technology costs
Slide 22: Analysis of Technology Costs
Analysis of Technology Costs Financial Results $Am 110 100 26.8 2.0 90 9.5 80 21.1 14.4 16.6 70 External Bureau 60 Infrastructure Maintenance 25.6 27.2 24.8 50 Application Maintenance 40 2.5 2.3 Administration 2.8 Research & Development 30 20 38.6 41.1 35.5 10 0 FY02 FY03 FY04 22
Slide 23: Net Operating Cash Flows
Net Operating Cash Flows Financial Results $Am Net Operating Cash Flows (after Capex) 140 114.7 ¾ Increase in Operating Cash 120 Flows 100 ¾ Gearing on a net debt to equity basis – 36.6% 80 ¾ Committed debt facility - A$360m 58.3 60 ¾ Debtors days outstanding have fallen from 61 to 57 days 40 25.0 2
Slide 24: Key Financial Ratios
Key Financial Ratios Financial Results times EBITDA interest coverage times Total Financial Indebtedness to EBITDA 25 3 21.2 20 14.5 2 1.7 15 11.9 1.4 10 1 0.7 5 0 0 FY02 FY03 FY04 FY02 FY03 FY04 % Gearing (Net Debt / Net Debt + Equity) % Funds Flow to Total Debt 60% 100% 82% 50% 80% 40% 60% 50% 50%
Slide 25: Capital Expenditure
Capital Expenditure Financial Results CPU Group Capex $Am 60 56.9 2.2 50 40 29.1 Other Occupancy 30 21.4 Document Services Facilities 7.7 17.9 0.5 Information Technology 20 2.4 4.2 1.7 2.7 1.0 10 17.9 12.8 14.0 0 FY02 FY03 FY04 25
Slide 26: Working Capital Management
Working Capital Management Financial Results Days DSO & DPO 70 66 61 57 Receivable 60 Days 54 51 50 Payable Days 41 40 30 20 10 0 FY02 FY03 FY04 26
Slide 27: Interest Rate Sensitivity
Interest Rate Sensitivity Financial Results A$m PBT 100 Impact 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 Exposure Hedged exposure 100% Hedged -60 • A 25 bps movement in global interest rates impacts PBT by A$2.5m p.a. • No si
Slide 28: Equity Management – Fully Franked Final Dividend of 5 cps
Equity Management – Fully Franked Final Dividend of 5 cps Financial Results ¾ EPS – Normalised Basic (post goodwill) 12.89 cents ¾ EPS – Normalised Basic (pre goodwill) 19.02 cents ¾ Final Dividend 5 cents (fully franked) ¾ Full Year Dividend 8 cents (fully franked) ¾ Current yield * 2.5% ¾ Franking
Slide 29: Equity Management – Preference Share Conversion
Equity Management – Preference Share Conversion Financial Results ¾ Recent changes in Accounting Standards treat Reset Preference Shares (RPS) as debt (at 5.5% post tax). ¾ Announced conversion of RPS to Equity on 19th August, 2004. ¾ Converting on 30 September 2004 at trailing 20 day VWAP (with 2.5
Slide 30: Equity Management – Share Buy Back: Reset Preference Shares
Equity Management – Share Buy Back: Reset Preference Shares Financial Results ¾ Announced 19th December 2003 - Buy back a maximum of 17% (250,000 preference shares). ¾ Commenced 5th January 2004. ¾ Changes announced on 19th March 2004 – Buy back a further 500,000 shares. ¾ Acquired 315,193 preferenc
Slide 31: Equity Management – Ordinary Share Buyback
Equity Management – Ordinary Share Buyback Financial Results ¾ Announced 26th May 2004 - Buy back a maximum of 27,500,000 shares. ¾ Commenced 10th June 2004. ¾ Acquired 15,970,000 shares by 16th August 2004. ¾ Completion expected 17th December 2004. ¾ Average price AUD $3.18. 31
Slide 32: Financial Summary
Financial Summary Financial Results ¾ Normalised Earnings per Share (pre goodwill) rose from 11.79 to 19.02 cents per share. ¾ Net operating Cash Flows were $136.1m (an increase of 79% on FY 2003). ¾ Revenues increased 24% to $894.7m. ¾ Normalised EBITDA up 37% to $183.4m ¾ Operating expenses were $
Slide 33: CEO's Report
Market Financial CEO’s Report Overview Performance 33
Slide 34: Highlights - Financial
Highlights - Financial CEO’s Report ¾ Increased Revenue & Profit ¾ Major focus on capital management ¾ Capital Expenditure ¾ Cash Flow ¾ Focus on EPS for future reporting 34
Slide 35: Regional Highlights – Asia/Pacific
Australia New Zealand Regional Highlights – Asia/Pacific India Philippines Hong Kong 35
Slide 36: Regional Highlights – Asia/Pacific
Regional Highlights – Asia/Pacific CEO’s Report ¾ Relocated to Global Headquarters 36
Slide 37: Regional Highlights – Asia/Pacific
Regional Highlights – Asia/Pacific CEO’s Report ¾ Call Centre (from worst to first) 37
Slide 38: Regional Highlights – Asia/Pacific
Regional Highlights – Asia/Pacific CEO’s Report ¾ Australia: Significant improvement in productivity, accuracy and efficiency ¾ Introduction of Workflow / EDC resulted in 65% productivity improvement over 18 months ¾ IAG significant win ¾ More than 75% of clients have taken our integrated offering ¾
Slide 39: Regional Highlights - EMEA
Ireland United Kingdom Regional Highlights - EMEA Germany Russia South Africa 39
Slide 40: Regional Highlights - EMEA
Regional Highlights - EMEA CEO’s Report ¾ South Africa significant turnaround in EBITDA ¾ Germany ¾ Design and implementation of new registry system ¾ All companies migrated from Deutsche Bourse system ¾ Creation of Plans division ¾ Now operating profitably ¾ Gilts & NHS in UK ¾ Appointed Geoff Pric
Slide 41: Regional Highlights – North America
CEO’s Report United States of America Canada Regional Highlights – North America 41
Slide 42: Regional Highlights – North America: Georgeson
Regional Highlights – North America CEO’s Report ¾ Georgeson ¾ Integration benefits better than expected ¾ Major synergies starting to be realised ¾ Rationalization of offices underway ¾ Significant savings in operational areas ¾ Now have 35 people in sales force in US ¾ Inherited great staff who ha
Slide 43: Regional Highlights – North America: Transcentive
Regional Highlights – North America CEO’s Report ¾ Transcentive ¾ Les Trachtman, Global head of business development for Plans ¾ Expanding their products globally ¾Europe ¾Hong Kong, China ¾India ¾ Selling web-based solutions hosted in USA ¾ 22 New clients have been signed since acquisition ¾ Exceed
Slide 44: Regional Highlights – North America: Cross-Sell
Regional Highlights – North America CEO’s Report ¾ Growing our Cross-Sell opportunities in North America ¾ New Business from cross sales $15.1 million ¾ Benefits spread across all business solutions ¾ Analytics $0.4 million ¾ Corporate Actions $1.0 million ¾ Plans $0.1 million ¾ Post Merger Clean-up
Slide 45: Regional Highlights – North America
Regional Highlights – North America CEO’s Report ¾ Canada efficiency gains (overtime 5% of a year ago) ¾ Restructured Canadian Trust business - now showing solid growth ¾ Centralization of sales and marketing in North America ¾ Significant business wins in the US include: ¾ News Corporation ¾ Alltel
Slide 46: Highlights - Global: Document Services
Highlights - Global CEO’s Report ¾ Document Services ¾ Brilliant results ¾ The only global print/mail operation ¾ Seeking opportunities to expand in ¾Perth ¾South Africa ¾Ireland ¾ Alamo gives us an East coast facility 46
Slide 47: Highlights - Global: Analytics
Highlights - Global CEO’s Report ¾ Analytics ¾ Integration into Georgesons’ Stock ID completed ¾ Appointed Paul Conn as Global Managing Director ¾ IR Track released ¾ Deal with NASDAQ and in discussions with other major exchanges ¾ Some work outsourced to our Philippine business ¾ Global development
Slide 48: Highlights - Global: Pepper
Highlights - Global CEO’s Report ¾ Pepper ¾ ERM forecast revenues this year > $15m plus + $$ to Plan Managers ¾ CRM expanded to Asia Pacific and North America: revenues now over $25m per year ¾ SRM strong in the UK and Australia, first clients signed up in the US, adds significant value to our other
Slide 49: Where to from here?
CEO’s Report WHERE TO FROM HERE? 49
Slide 50: Market Conditions and Progress Report
Market Conditions and Progress Report CEO’s Report ¾ Margin Income and Corporate Action Revenue Trends 900 180 Revenue from Margin Income & Corporate 850 160 800 Total Revenue Total Revenue (A$m) 140 750 Actions (A$m) 700 120 Revenue from Margin 650 Income & Corporate 100 Actions 600 80 550 500 60 2
Slide 51: Growth Strategy
Growth Strategy CEO’s Report Integrated Shareholder Integrated Employee Relationship Management Relationship Management SRM Analytics Proxy Global ERM Solicitation Share Plans Processing Value Investor Plan Call Fulfilment Data EDC Services Administration Centre (CDS) Processing Workflow Technology
Slide 52: Outlook
Outlook CEO’s Report ¾ Revenue growth > 10% ¾ Growth in EPS > 20% ¾ Guidance for FY 2005 will be established within the context of these metrics 52
Slide 53: Questions?
93 Report QUESTIONS? €omputershare
Slide 54: Financial Year 2004 Final Results Presentation
Financial Results Financial Year 2004 Final Results Presentation 19 August 2004 54
Slide 55: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Financial Results Group Comparisons 55
Slide 56: Half Year Comparisons - Revenue
Half Year Comparisons - Revenue Financial Results $Am 244.2 235.0 224.2 215.0 74.7 69.1 60.2 55.2 50.3 43.1 45.7 40.5 39.7 29.8 19.0 20.1 21.2 15.8 7.2 7.1 8.9 0.0 0.0 0.8 Register Maintenance Corporate Actions Inv estor Relations Employ ee Share Plans Document Serv ices Mutual Funds 1H03 2H03 1H04
Slide 57: Regional Analysis
Regional Analysis Financial Results $Am 164.8 160.6 133.8 69.4 65.3 59.3 39.5 33.4 30.1 26.7 15.1 12.5 8.8 7.5 6.4 5.1 2.2 0.0 Register Maintenance Corporate Actions Investor Relations Employee Share Plans Document Services Mutual Funds Asia Pacific Europe North America Excludes proceeds on the sale
Slide 58: Half Year Comparisons - Costs
Half Year Comparisons - Costs Financial Results $Am Operating Cost Breakdown 174.8 139.3 136.5 133.5 92.5 67.4 56.7 58.8 48.5 40.6 40.4 42.1 41.6 36.7 34.5 26.6 25.9 18.0 18.8 19.3 13.9 16.1 8.6 4.0 Cost of Sales Personnel Occupancy Other Direct Technology Corporate 1H03 2H03 1H04 2H04 58
Slide 59: Risk Management - Interest Rate Sensitivity
Risk Management - Interest Rate Sensitivity Financial Results Interest Rate Hedging Exposure to Strategy: interest rates No exposure – Minimise downside risk in current low 26% 37% interest rate environment Policy: – Minimum hedge of 25% / Maximum hedge of 75% Effective – Minimum term 1 year / Maxim
Slide 60: Risk Management – Average Funds Balances
Risk Management – Average Funds Balances Financial for 12 months ending 30 June 2004 Results By Category By Country Dividend US Australia 14% Sharesave 2% 10% 22% Dissenter 8% Canada Corporate UK 49% Actions 39% Broker Trust 16% 23% Regular Trust 17% Balance range A$2.7b to A$4.1b Average fund balan
Slide 61: Appendix 2: Country Summaries
Appendix 2: Country Summaries Financial Results Country Summaries 61
Slide 62: Australia Half Year Comparison
Australia Half Year Comparison Financial Results $Am Revenue Breakdown $Am Total Revenue 47.4 114.9 43.5 109.3 39.7 38.9 86.8 86.6 31.1 25.2 19.7 18.8 17.1 15.8 16.3 14.2 4.2 4.4 4.4 2.1 2.6 2.7 1.2 1.3 1H03 2H03 1H04 2H04 Register Maintenance Corporate Actions Investor Relations Employee Share Plan
Slide 63: New Zealand Half Year Comparison
New Zealand Half Year Comparison Financial Results $NZm Total Revenue $NZm 8.7 Revenue Breakdown 8.3 7.1 6.9 7.4 6.3 6.3 7.1 1.6 1.4 1.0 0.8 1H03 2H03 1H04 2H04 Register Maintenance Corporate Actions 1H03 2H03 1H04 2H04 63
Slide 64: Hong Kong Half Year Comparison
Hong Kong Half Year Comparison Financial Results $HKm Total Revenue Revenue Breakdown $HKm 99.1 97.4 73.4 89.6 66.9 59.7 58.1 71.1 32.2 31.5 24.0 11.1 1H03 2H03 1H04 2H04 Register Maintenance Corporate Actions 1H03 2H03 1H04 2H04 64
Slide 65: United Kingdom Half Year Comparison
United Kingdom Half Year Comparison Financial Results GBPm Revenue Breakdown Total Revenue GBPm 25.3 41.6 23.0 22.6 21.0 36.3 33.8 33.7 6.0 4.8 5.0 4.5 3.9 3.6 3.0 2.9 3.2 2.7 2.0 1.5 1.4 1.6 1.3 1.2 1H03 2H03 1H04 2H04 Register Maintenance Corporate Actions Investor Relations Employee Share Plans D
Slide 66: Ireland Half Year Comparison
Ireland Half Year Comparison Financial Results EUROm Total Revenue EUROm Revenue Breakdown 4.3 2.8 3.8 3.6 2.3 2.3 2.2 2.7 0.9 0.7 0.7 0.4 1H03 2H03 1H04 2H04 Register Maintenance Corporate Actions 1H03 2H03 1H04 2H04 66
Slide 67: South Africa Half Year Comparison
South Africa Half Year Comparison Financial Results ZARm Total Revenue ZARm Revenue Breakdown 93.4 90.5 86.8 90.1 92.2 86.5 83.4 83.7 3.4 3.4 4.5 1.2 0.2 0.5 1H03 2H03 1H04 2H04 Register Maintenance Corporate Actions Investor Relations Services 1H03 2H03 1H04 2H04 67
Slide 68: United States Half Year Comparison
United States Half Year Comparison Financial Results USDm Total Revenue USDm Revenue Breakdown 98.8 22.6 21.4 20.9 19.9 18.5 17.9 15.7 14.5 12.4 11.6 50.9 11.3 30.8 35.4 4.8 3.5 3.3 2.7 1.5 1.2 1.4 0.6 0.0 0.2 0.6 1H03 2H03 1H04 2H04 Register Main Corp Actions Investor Employee Share Document Mutual
Slide 69: Canada Half Year Comparison
Canada Half Year Comparison Financial Results CADm Revenue Breakdown CADm Total Revenue 56.1 54.7 70.0 68.8 46.6 46.6 62.9 56.8 9.5 8.0 5.7 5.5 5.4 4.7 4.3 4.6 4.3 0.2 0.0 0.1 0.3 0.2 Register Maintenance Corporate Actions Investor Relations Employee Share Document Services 1H03 2H03 1H04 2H04 Servi