Computershare Limited · ASX:CPU
Computershare — FY2007 Earnings Presentation
77 slides from Computershare's earnings presentation, Aug 15, 2007
Slide 1: Computershare Limited Full Year Results 2007 Presentation
Computershare Limited Full Year Results 2007 Presentation Stuart Crosby Tom Honan 15 August 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: Results Highlights
Introduction Results Highlights › Management EPS of 36.68 cents, up 61% › Management Net Profit After OEI of $219.4m, up 62% › Free cash flows of $295.3m, up 86% › Total Operating Revenues of $1,418.4m, up 17% › Operating Costs of $1,050.9m, a 7% increase › Management EBITDA margin up from 20% to 26
Slide 5: A Strong Result From a Broad Base
Introduction A Strong Result From a Broad Base › Continued strong performance across all major business lines and regions › Standouts: HK, UK, Canada, Aus, US (ie, just about everywhere!) › Revenue growth a factor but margin growth just as important › Cost growth 7% vs. revenue growth 17% takes Mana
Slide 6: Global Equities Market
Global Equities Market Introduction Completed M & A Volume Annual M & A Book to Bill Ratio Source: SDC Thomson Financial and UBS Securities Australia Ltd 6
Slide 7: Global Interest Rate Market
Introduction Global Interest Rate Market % % UK US 8 8 6 6 4 4 2 2 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2000 2001 2002 2003 2004 2005 2006 2007 % Canada 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 7
Slide 8: Computershare Strengths
Introduction Computershare Strengths › More than 70% of Revenue recurring in nature › Global Diversification – across 17 countries including growth engines China, India and Russia › Exposure to global interest rates › Proven technology capabilities and innovation › Demonstrated ability to acquire an
Slide 9: Outlook
Outlook Introduction Long-term growth in Management EPS of 20% per year remains the target, to be achieved by a combination of organic growth and acquisitions, as well as continued balance-sheet management. Looking to FY08 and having regard to current equity and interest rate market conditions, we e
Slide 10: Ordinary Share buy-back
Introduction Ordinary Share buy-back › Increase total buy-back program to 45 million ordinary shares, leaving 31,582,023 ordinary shares still to be purchased. › Buy-back period extended to 31st January 2008. 10
Slide 11: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 11
Slide 12: Financial Results – Tom Honan, CFO
Financial Results Tom Honan CFO 12
Slide 13: Group Financial Performance – US$m
Group Financial Performance – US$m Financial Results FY07 FY06 Variance Sales Revenue 1,404.2 1,198.3 17% Interest & Other Income 14.2 16.4 (13%) T otal Revenue 1,418.4 1,214.7 17% Operating Costs 1,050.9 977.8 (7%) Share of Net (Profit)/Loss of A ssociates (3.0) (3.2) Management EBIT DA 370.5 240.1
Slide 14: Drivers behind financial performance
Drivers behind financial performance Financial Results • Corporate action environment • Interest rate levels • Higher balances • New clients • Acquisitions • Divestment of underperforming business • Cost control • Operating efficiency • Balance sheet improvements • Acquisition synergies • Foreign ex
Slide 15: Management EPS Performance
Management EPS Performance Financial Results US cents 40 AGAAP AIFRS 35 30 25 20 15 10 5 0 FY03 FY04 FY05 FY06 FY07 15
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: Analysis of Management EPS – Half Year Comparison
Analysis of Management EPS – Financial Half Year Comparison Results 20.00 18.00 16.00 14.00 12.00 US cents 10.00 8.00 6.00 4.00 2.00 0.00 1H05 2H05 1H06 2H06 1H07 2H07 6.60 9.52 8.82 13.92 17.86 18.83 17
Slide 18: FY07 NPAT Analysis
FY07 NPAT Analysis Financial Results $USm 300 250 1.6 42.3 65.5 3.5 1 EBITDA - AP 2.3 200 2 EBITDA - EMEA 39.8 3 EBITDA - NA 150 25.1 4 Depn & Amort 5 Interest 100 219.4 6 Tax 135.5 7 OEI 50 0 FY06 NPAT 1 2 3 4 5 6 7 FY07 NPAT 18
Slide 19: Net Operating Cash Flows
Net Operating Cash Flows Financial Results $USm Operating Cash Flow Vs. Capital Expenditure 321.0 330 300 270 240 210 183.6 180 150 120 109.8 90 60 23.7 25.0 25.7 30 0 FY05 FY06 FY07 Operating C ash Flow s C apital Ex penditure 19
Slide 20: Free Cash Flow – up 86% on FY06
Free Cash Flow – up 86% on FY06 Financial Results $USm Operating Cash Flows less Capital Expenditure 295.3 300 250 200 158.6 150 100 86.2 50 0 FY05 FY06 FY07 20
Slide 21: Cash Flows
Cash Flows Financial Results $USm 330 321.0 Free Cash Flow 4 year CAGR 71% 300 295.3 270 240 210 183.6 180 158.6 150 109.8 120 96.3 90 86.2 46.2 81.5 60 30 34.3 0 FY03 FY04 FY05 FY06 FY07 Operating C ash Flow s Free C ash Flow s 21
Slide 22: Full Year Comparisons – Revenue & EBITDA
Full Year Comparisons – Revenue & EBITDA Financial Results $USm $USm 1600 370. 5 400.0 1400 350.0 1200 300.0 R E e 1000 240. 1 250.0 B v I e T n 800 200.0 D 158. 5 u A e 600 150.0 400 100.0 200 50.0 810. 4 1214. 7 1418. 4 0 0.0 FY 05 FY 06 FY07 Tot al Revenue M anagement EB ITDA 22
Slide 23: Half Year Comparisons – Revenue & EBITDA
Half Year Comparisons – Revenue & EBITDA Financial Results $USm 1st Half $USm $U Sm 2nd Half $U Sm 800 188.7 200 800 200 181.7 180 180 700 700 160 160 600 600 140.4 140 140 500 500 120 120 99.7 400 93.1 100 400 100 724.4 694.0 65.4 80 626.7 80 300 588.1 300 60 455.9 60 200 200 354.5 40 40 100 100 20
Slide 24: Management EBITDA Margin
Management EBITDA Margin Financial Results 28.0% 26.1% 26.0% 24.0% 22.0% 20.5% 19.6% 19.8% 20.0% 18.6% 18.0% 16.0% 14.0% 12.0% 10.0% FY03 FY04 FY05 FY06 FY07 24
Slide 25: Revenue Breakdown – US$m
Revenue Breakdown – US$m Financial Results FY07 FY06 Variance Regist er Maint enance 725.9 639.6 13% Corporat e A ct ions 252.5 171.8 47% Fund Services 116.1 110.5 5% St akeholder Relat ionship Mgt 86.9 90.3 (4%) Employee Share Plans 117.1 95.8 22% Communicat ion Services 75.7 63.2 20% T echnology &
Slide 26: Regional Analysis – FY07 Revenue & EBITDA
Regional Analysis – FY07 Revenue & EBITDA Financial Results Total Revenue Breakdown EBITDA Breakdown 23% 20% 55% 57% 23% 22% Asia Pacific EMEA North America Asia Pacific EMEA North America 26
Slide 27: Full Year Comparisons – Operating Costs
Full Year Comparisons – Operating Costs Financial Results $USm 1200 1100 1000 900 800 700 600 977.8 1,050.9 500 400 653.4 300 200 100 0 FY05 FY06 FY07 27
Slide 28: Technology Costs – Establishing Global Platform
Technology Costs – Establishing Global Platform Financial Results US$m % 140.0 15.0% 132.0 130.0 120.0 115.5 110.0 10% 10% 9% 10.0% 100.0 90.0 79.8 80.0 70.0 5.0% 60.0 50.0 40.0 30.0 0.0% FY05 FY06 FY07 Total Technology costs Technology costs as a % of sales revenue 28
Slide 29: Analysis of FY07 Technology Costs
Analysis of FY07 Technology Costs Financial Results 5% 33% 31% Total Costs US$132.0m Development Costs US$43.3m 31% Development Infrastructure Maintenance Administration 29
Slide 30: Balance Sheet as at 30 June 2007
Balance Sheet as at 30 June 2007 Financial Results Jun-07 Jun-06 Variance US$'000s US$'000s Current A ssets 368,891 338,475 9% Non Current A ssets 1,366,224 1,264,318 8% T otal A ssets 1,735,115 1,602,793 8% Current Liabilities 338,551 265,620 (27%) Non Current Liabilities 563,989 637,305 12% T otal
Slide 31: Key Financial Ratios
Key Financial Ratios Financial Results AGAAP AIFRS AGAAP AIFRS EBITDA interest coverage Net Financial Indebtedness to EBITDA times times 25 3.0 21.1 2.48 2.5 20 2.0 1.68 15 12.1 11.9 1.5 1.21 10 8.7 0.94 1.0 5 0.5 0 0.0 FY04 FY05 FY06 FY07 FY04 FY05 FY06 FY07 AGAAP AIFRS AGAAP AIFRS % Funds Flow to
Slide 32: Computershare Borrowings
Computershare Borrowings Financial Results Jun-07 Jun-06 Variance US$m US$m Cash 86.8 72.8 19% Interest Bearing Liabilities * 435.1 476.5 9% Net Debt 348.3 403.7 14% Management EBITDA 370.5 240.1 54% Net debt to Management EBITDA 0.94 1.68 44% * Average Tenor of drawn debt is 4.6 years 32
Slide 33: Capital Expenditure
Capital Expenditure Financial Results $USm 30.0 Capital Expenditure Vs. Depreciation 1.3 1.7 25.0 2.0 6.0 4.4 20.0 4.3 4.5 Depreciation 15.0 4.8 5.1 10.0 12.6 15.1 5.0 12.6 0.0 FY05 FY06 FY07 Information Technology Communication Services Facilities Occupancy Other 33
Slide 34: Working Capital Management
Working Capital Management Financial Results Days Sales Outstanding Days 70 63 60 50 45 43 40 30 20 10 0 FY05 FY06 FY07 Note: historical DSO restated to exclude deferred revenue 34
Slide 35: Return On Invested Capital Vs. WACC
Return On Invested Capital Vs. WACC Financial Results Increased returns, Cost of Capital flat 20% AGAAP AIFRS 18% 16% 14% 12% 10% 8% 6% FY03 FY04 FY05 FY06 FY07 WACC ROIC 35
Slide 36: Return on Equity Vs. Return on Assets
Return on Equity Vs. Return on Assets Financial Results AGAAP AIFRS 30% 25% 20% 15% 10% 5% 0% FY03 FY04 FY05 FY06 FY07 ROA ROE 36
Slide 37: Equity Management – Final Dividend of 9 cps (AU)
Equity Management – Final Dividend of 9 cps (AU) Financial Results › EPS – Basic US 39.08 cents › EPS – Management US 36.68 cents › Final Dividend (unfranked) AU 9 cents › Current Yield* 1.9% * Based on 12 month dividend and share price of A$9.14 (close 14th August 2007) 37
Slide 38: Equity Management – Ordinary Share buy-back
Equity Management – Ordinary Share buy-back Financial Results › 15th November 2006 – announced on market share buy-back of up to 25 million ordinary shares › 24th May 2007 - buy-back extended to earlier of 29th November 2007 or until maximum number of shares are purchased › Acquired 13,417,977 ordin
Slide 39: Financial Summary – Final Remarks
Financial Summary – Final Remarks Financial Results › Continued strong EPS growth - 61% .. Year Reported EPS growth FY04 61% FY05 28% FY06 41% FY07 61% › Free cash flow up 86% after increasing 84% last year › Record revenues › Maintained strong balance sheet lowering earnings to debt coverage by 44%
Slide 40: Market Overview, Financial Results, CEO's Report
Market Financial Overview Results CEO’s Report 40
Slide 41: CEO Presentation – Stuart Crosby
CEO Presentation CEO’s Report Stuart Crosby President & CEO 41
Slide 42: Group Strategy
Group Strategy CEO’s Report Focus unchanged: 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. Continue to seek acquisition and other growth opportunities where we can add value a
Slide 43: Global Services
Global Services CEO’s Report Advice and solutions for major multi-jurisdiction M&A deals › NYSE and Euronext, RBS and ABN Amro, Rio Tinto and Alcan, many more Cross-border listings and services › LSE and AIM DI listings, DIFX listings › Dedicated units for rapid inter-market stock movement for broke
Slide 44: North America update - USA
North America update - USA CEO’s Report Investor Services › Client retention remains strong › Corporate action pipeline remains robust despite recent market volatility › Some post-migration operational fine-tuning continues › Further consolidated US TA market by acquiring smaller players (USST, UMB)
Slide 45: North America update - Canada
North America update - Canada CEO’s Report Investor Services › Strong local and cross-border corporate actions deal flow › Operations efficiency being enhanced by deployment of CPU best practice › Quality client relationships Corporate Trust › Steady business with excellent margin › Business acquire
Slide 46: EMEA update – UK, Russia, Germany, Ireland and South Africa
EMEA update – UK, Russia, Germany, Ireland CEO’s and South Africa Report UK › Lloyds TSB Registrars sold to Advent, offering new business opportunities › Deposit Protection Scheme live and exceeding expectations; exploring other government business opportunities › Launched dedicated broker / adviser
Slide 47: Asia Pacific update - Asia
Asia Pacific update - Asia CEO’s Report Hong Kong and China › Have seen strong flow of China IPOs into Hong Kong (China Merchant Bank, ICBC, Citic Bank, etc) – but expect less going forward as PRC issuers go more to Shanghai and Shenzhen › Extending product range – Plans (good sales in China), eIPO,
Slide 48: Asia Pacific update – Australia and New Zealand
Asia Pacific update – Australia and CEO’s New Zealand Report Investor Services › Good news: better margins, a range of positive pricing outcomes Communication Services › Strong focus on new product development / differentiation and on production efficiency Plans › Continued organic growth and suppor
Slide 49: Looking forward to 2008
Looking forward to 2008 CEO’s Report Computershare has a strong operational and financial platform for continued growth: › Healthy margins › Strong balance sheet to support acquisitions and capital management › Well positioned to take on new business lines (eg, DPS in UK) The strategic focus remains
Slide 50: Computershare Limited Full Year Results 2007 Presentation
Computershare Limited Full Year Results 2007 Presentation Stuart Crosby Tom Honan 15 August 2007
Slide 51: Appendix
Appendix: Full Year Results 2007 Presentation 15 August 2007 51
Slide 52: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Group Comparisons 52
Slide 53: Behind the Headline – NPAT Impact
Behind the Headline – NPAT IMPACT Financial Results US$000’s Net profit after tax at 30 June 2007 233,785 Profit on sale of subsidiaries (7,886) Tax losses recognised (6,819) Acquisition provisions no longer required (6,607) Intangible assets amortisation 4,246 US property rationalisation 1,275 Cana
Slide 54: CPU Revenues
CPU Revenues Financial Results Revenue Type 3% 8% 5% Register Maintenance Corporate Actions 8% Stakeholder Relationship Management Employee Share Plans Communication Services 52% Fund Services 6% T echnology & Other Revenue 18% 54
Slide 55: Regional Analysis – FY07 Revenue
Regional Analysis – FY07 Revenue Financial Results $USm 450.0 414.3 400.0 350.0 300.0 250.0 200.0 ` 160.4 151.2 150.0 131.2 99.4 100.0 69.2 66.7 52.2 44.3 50.0 34.8 41.4 37.2 21.6 16.7 14.2 19.7 10.8 13.1 9.8 0.0 5.1 0.0 Register Maintenance Corporate Actions Stakeholder Employee Share Communication
Slide 56: Full Year Comparisons - Revenue
Full Year Comparisons - Revenue Financial Results $USm 725.9 700.0 6 39 .7 600.0 500.0 4 16 .7 400.0 300.0 252 .5 200.0 171.8 117.1 110.5 116 .1 9 9.9 9 5.8 80 .3 9 0.3 8 6 .9 100.0 75.6 4 4 .9 6 3.2 75.7 53 .4 4 3.5 4 4.2 3 9.7 0.0 Register Corporate Employ ee Share Communication Fund Serv ices Sta
Slide 57: Full Year Comparisons – Operating Costs
Full Year Comparisons – Operating Costs Financial Results $USm 600 500 459.4 431.1 400 304.2 300 277.7 278.6 200 171.2 131.3 113.7 100 78.8 69.5 77.2 64.5 56.2 33.5 46.9 39.9 29.7 18.7 0 Cost of Sales Personnel Oc c upanc y Other Direc t T ec hnology Corporate FY05 FY06 FY07 57
Slide 58: Underlying Effective Tax Rate
Underlying Effective Tax Rate Financial Results % 35.0 30.0 28.5 23.9 25.0 19.4 20.0 15.0 10.0 5.0 0.0 FY05 FY06 FY07 Increase largely due to greater earnings in jurisdictions in which corporate tax rates are higher 58
Slide 59: Interest Rate Sensitivity
Interest Rate Sensitivity Financial Results US$m PBT100 Im pact 80 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 -60 -80 Exposure -100 Hedged exposure 59
Slide 60: Risk Management - Interest Rate Sensitivity
Risk Management - Interest Rate Sensitivity Financial Results No Interest Rate Hedging exposure Strategy: - Protect downside risk in current interest rate 30% environment Exposure to Policy: - Minimum hedge of 25% / Maximum hedge of 100% interest rates - Minimum term 1 year / Maximum term 5 years 38
Slide 61: Risk Management – Average Funds Balances
Risk Management – Average Funds Balances Financial for year ending 30 June 2007 Results By Category By Country Sharesave/ Dividend Employee Australia 17% Plans 2% 13% US 26% Dissenter Broker Trust 4% 15% Canada 45% Regular Corporate Trust UK Actions 16% 27% 35% Average funds balance US$6.7b 61
Slide 62: Appendix 2: Country Summaries
Appendix 2: Country Summaries Financial Results Country Summaries 62
Slide 63: Appendix 2: Country Summaries – Asia Pacific
Appendix 2: Country Summaries Financial Results Asia Pacific 63
Slide 64: Australia Half Year Comparison
Australia Half Year Comparison Financial Results $Am Total Revenue $Am Revenue Breakdown 150.0 143.6 139.9 70 66.8 63.2 120.0 60 57.5 115.9 53.5 50 100.0 40 30 28.1 28.7 24.7 25.5 24.6 50.0 20.3 21.0 20 15.6 10.3 10 8.6 8.2 6.7 7.4 6.8 7.6 5.5 4.9 5.6 5.1 4.0 2.5 3.0 3.0 0.9 0 0.0 Register Corporate
Slide 65: New Zealand Half Year Comparison
New Zealand Half Year Comparison Financial Results Total Revenue $NZm $NZm Revenue Breakdown 9.7 10 8.0 8.6 6.9 7.0 8 7.7 6.9 5.9 6.0 5.6 6 4.0 4 2.8 2.1 2.0 1.6 2 1.0 0 0.0 1H06 2H06 1H07 2H07 Register Maintenance Corporate Actions 1H06 2H06 1H07 2H07 65
Slide 66: Hong Kong Half Year Comparison
Hong Kong Half Year Comparison Financial Results Total Revenue Revenue Breakdown $HKm $HKm 250 140.0 235.4 227.1 130.0 126.0 123.4 120.0 109.4 200 110.0 103.5 100.0 95.1 90.0 150 145.2 80.0 76.9 120.6 70.0 60.0 49.0 100 50.0 43.6 40.0 30.0 50 20.0 10.0 0.0 0 Register Maintenance Corporate Actions 1H
Slide 67: India Half Year Comparison
India Half Year Comparison Financial Results Total Revenue Revenue Breakdown INRm INRm 400.0 900 377.3 796.6 350.0 800 700 300.0 287.0 270.6 261.8 600 540.8 582.2 533.2 250.0 224.5 216.3 212.0 207.3 500 200.0 178.4 400 150.0 137.9 300 100.0 200 46.3 50.0 33.4 100 0.0 0 Register Maintenance Corporate
Slide 68: Appendix 2: Country Summaries – North America
Appendix 2: Country Summaries Financial Results North America 68
Slide 69: United States Half Year Comparison
United States Half Year Comparison Financial Results Total Revenue $USm Revenue Breakdown $USm 299.4 296.7 170.0 300.0 282.5 157.2 282.0 160.0 150.4 280.0 150.0 260.0 140.0 133.7 240.0 130.0 125.2 220.0 120.0 110.0 200.0 100.0 180.0 90.0 160.0 80.0 140.0 70.0 64.2 66.2 60.0 120.0 50.0 42.5 45.5 45.4
Slide 70: Canada Half Year Comparison
Canada Half Year Comparison Financial Results Total Revenue CA$m $CAm Revenue Breakdown 130 80.0 76.0 120 114.6 70.0 67.1 110 63.6 100 97.7 96.2 60.0 54.9 90 50.0 80 73.4 70 40.0 60 30.0 24.1 50 21.4 19.2 20.0 40 9.8 30 10.0 7.9 5.1 5.9 6.7 3.7 2.9 4.8 2.1 1.8 1.6 1.5 1.5 20 0 0.1 0.1 0.1 0.0 10 Reg
Slide 71: Appendix 2: Country Summaries – EMEA
Appendix 2: Country Summaries Financial Results EMEA 71
Slide 72: United Kingdom Half Year Comparison
United Kingdom Half Year Comparison Financial Results GBPm Revenue Breakdown Total Revenue 40.0 GBPm 60.0 56.2 54.0 33.9 32.3 50.0 48.3 30.0 26.4 40.0 35.9 22.3 20.0 30.0 20.0 11.6 9.4 9.8 10.0 8.7 7.5 6.6 10.0 4.5 3.8 3.2 2.7 2.7 2.4 1.8 1.1 1.5 0.6 0.6 0.5 0.5 0.1 0.0 0.0 1H06 2H06 1H07 2H07 Regis
Slide 73: Ireland Half Year Comparison
Ireland Half Year Comparison Financial Results EURm Total Revenue EURm Revenue Breakdown 4.5 4.1 4 3.4 3.4 3.0 3 3.0 2.7 3.0 2.6 2.4 2 1.5 1 0.7 0.7 0.6 0.4 0 0.0 Register Maintenance Corporate Actions 1H06 2H06 1H07 2H07 1H06 2H06 1H07 2H07 73
Slide 74: Germany Half Year Comparison
Germany Half Year Comparison Financial Results EURm Total Revenue 24.8 Revenue Breakdown EURm 25 23.9 10 9.8 9.8 9 8.6 20 19.3 8 7.3 7.2 7.0 7 6.4 15.5 6.2 6.1 6 5.7 15 5 4.1 4 10 3 2 1.0 1.1 1 0.7 5 0.5 0.4 0.5 0.5 0.3 0.1 0.1 0.1 0.1 0.1 0 Register Corporate Stakeholder Communication Emplyee Share
Slide 75: South Africa Half Year Comparison
South Africa Half Year Comparison Financial Results Total Revenue ZARm ZARm Revenue Breakdown 120 100.0 99.4 99.7 89.4 100 90.0 86.7 87.6 92.8 81.5 87.7 80.0 80 70.0 60.0 60 50.0 40.0 40 30.0 20.0 20 12.1 10.0 10.0 6.2 6.3 0.0 0 Register Maintenance Corporate Actions 1H06 2H06 1H07 2H07 1H06 2H06 1H
Slide 76: Appendix 3: Assumptions
Appendix 3: Assumptions Financial Results Assumptions 76
Slide 77: Assumptions: Exchange Rates
Assumptions: Exchange Rates Financial Results Average exchange rates used to translate profit and loss to US dollars. USD 1.0000 AUD 1.2798 HKD 7.7909 NZD 1.4755 INR 44.2131 CAD 1.1315 GBP 0.5186 EUR 0.7662 ZAR 7.2059 77