Computershare Limited · ASX:CPU
Computershare — H1 2002 Earnings Presentation
55 slides from Computershare's earnings presentation, Feb 26, 2002
Slide 1: Interim Results 2002
Interim Results 2002 26 February 2002 1
Slide 2: Interim Results 2002 Overview
Interim Results 2002 Overview Chris Morris Chief Executive Officer 2
Slide 3: Steady Results in Challenging Environment
Steady Results in Challenging Environment – EPS up 27% to 4.3 cents – EBITDA steady at $ 73.0 m – Dividend held at 0.5 cents per share – Return on equity constant at 4% for half year – Technology spend up A$10.5m from June ‘01 – Minimal net debt. Funding capacity $225.0m 3
Slide 4: Context of the Results
Context of the Results – Earnings constant with prior period - EBITDA up 1% (before non-recurring items) – Quality of earnings remains high – Revenues affected by the global slow down of corporate actions activity – Revenues in northern hemisphere operations also affected by interest rates at 40 yea
Slide 5: Key Milestones Achieved this Period
Key Milestones Achieved this Period – Investor Centre launched, giving shareholders 24 hour global coverage – Acquisition of BT Registries in Australia and New Zealand – Global employee share plan deal with BP – Strategic services agreement with Citibank to provide corporate action services – Underw
Slide 6: Expansion Platform - Key Personnel Changes
Expansion Platform - Key Personnel Changes UK/Europe MD - Iain Saville North American Technology - Penny Maclagan North American Operations - Ed Stockdale North American Finance - TBA (funds management expertise) Australian Operations - TBA Global Priorities & Expansion - Chris Morris 6
Slide 7: Background to Profit Forecast Announcement
Background to Profit Forecast Announcement Market Conditions Aug Sep Oct Nov Dec Jan – Corporate Actions Buoyant On hold Deferred Decline Decline – Interest Rates Decline Decline Decline Reached 40 40 yr low yr low Financial Reporting July ‘01 Aug ‘01 Sep ’01 Oct ‘01 Nov ‘01 – Actuals Results Result
Slide 8: Internal Control Review Post January Announcement
Internal Control Review Post 9 January Announcement – Quality of management reporting – Review of profit forecast assumptions for ‘02 – Treasury management - strategy, policy & procedures – Establishment of investor relations function – Greater business accountability to drive organic growth – No ch
Slide 9: Composition Of Operating Profit
Composition Of Operating Profit * Revenue Expenses Recoveries Corporate Other 15% Services 1% 2% Interest Technology Income development 1% 14% Registry Margin Income Maintenance 11% 47% Corporate Actions 8% Non Registry Direct Services Fees 84% 17% * before interest, depreciation & amortisation 9
Slide 10: Revenue Composition Affected by International Market Downturn
Revenue Composition Affected by International Market Downturn Revenue Analysis 3 2 2 14 12 11 Other 9 8 11 Margin Income 11 16 17 Corporate Actions Non Registry Fees 61 61 62 Registry Maintenance & Recoveries 1H'01 2H'01 1H'02 10
Slide 11: Market Share Growth in Registry Operations
Market Share Growth in Registry Operations Actual (%) Aust 63 55 NZ 92 90 Hong Kong 63 60 US 5 5 Canada 62 60 UK 45 35 Ireland 75 60 S/Africa 59 60 1H'02 1H'01 11
Slide 12: Efficiency Initiatives
Efficiency Initiatives – Personnel reduction across all Registry businesses – Consolidation of core functions by country e.g. finance, HR, marketing & sales – ‘Workflow’ introduction for registry documentation – Review of all supplier contracts (e.g. internet travel purchasing - 50% cost saving in N
Slide 13: Global Shareholders
Global Shareholders Total Holders Balance at June 2001 68.0m – Acquisition of BT Registries 2.3m – Transfer of Bureau Clients (7.6)m – Deutsche Börse 6.0m – Net Gain /(Loss) (0.4)m Closing Balance 68.3m In Progress – Mercantile SA 2.0m 13
Slide 14: Technology Achievements this Period
Technology Achievements this Period – Merrill Lynch ESPP – Reduced systems in Canada from 28 to 10 (and continuing) – Global HR system now live in North America; global by end ‘02 – ‘Workflow’ live in Australia all scanned by May ‘02 and to be fully implemented in Canada and US by end ‘02 – Hong Kon
Slide 15: Technology Achievements this Period cont.
Technology Achievements this Period cont. – Completion of the Employee Product to cater for Deferred Plans now supporting AMP – Release of Investor Centre to Australia and UK – Completed phase 3 for i Cap – Deutsche Börse Joint Venture progressing well, staff on site, connectivity to Bristol achieve
Slide 16: Interim Results 2002 Analysis of Results
Interim Results 2002 Analysis of Results Darryl Corney Chief Financial Officer 16
Slide 17: Financial Performance A$m's
Financial Performance A$m’s 1H’02 2H’01 1H’01 Revenue Registry maintenance 185.5 181.5 162.8 Non Registry fees/sales 68.9 68.0 37.7 Corporate actions 32.6 36.2 38.7 Margin income (including sharesave admin) 41.9 49.8 46.9 Interest income 2.5 2.0 1.6 Recoveries 59.5 69.5 45.0 Other 5.6 7.9 6.8 396.5
Slide 18: Consolidated Results Half Year Comparison
Consolidated Results Half Year Comparison A$m 414.7 A$m Revenue Breakdown 396.5 181.5185.5 339.6 162.8 68.0 68.9 71.9 79.7 73.0 38.7 36.2 46.9 49.8 41.9 37.7 32.6 Register Main Corp Actions Margin Income Non Registry HY Dec-00 HY Jun-01 HY Dec-01 Sales/Fees Revenue EBITDA HY Dec-00 HY Jun-01 HY Dec-
Slide 19: Operating Costs Comparison
Operating Costs Comparison A$m Half Years Costs Include 300 DIRECT – Redundancy costs A$3.5m SERVICES 250 TECHNOLOGY – Additional technology spend 200 CORP SERVICES A$10m in North America 150 – Premises set up and moves: 100 CDS US and Plan US 50 – Efficiency initiatives in Global Registry 0 'Dec-00
Slide 20: Global Group Personnel Costs
Global Group Personnel Costs Last Six Months Half Years Dec-00 – Registry head count Jun-01 Dec-01 reduced by 250 A$m – Non Registry increase 140 120 reflects growth in ESP, 100 Analytics and Document 80 Services 60 40 20 0 CTS REGISTRY NON REGISTRY 20
Slide 21: Global Technology Spend
Global Technology Spend – Total Technology Services costs for the last six months were A$46.3m, an increase of A$10.5m from June 01 – Increase driven by • Global Options System Development • SCRIP Implementation: US, Canada and HK • North America Infrastructure Development • ESPP Conversion 21
Slide 22: Funds Balances at 31 December 2001
Funds Balances at 31 December 2001 By Category By Country Sharesave US Australia Dividend 18% 11% 2% 19% Dissenter 11% Canada UK 50% 37% Broker Trust Corporate 35% Actions Regular 14% Trust 3% Refer note 29(b) - June 2001 Financial Report 22
Slide 23: Funds Balances Interest Rate Sensitivity
Funds Balances Interest Rate Sensitivity Interest Rate Hedging Exposure to No Strategy: - Minimise downside risk in current low interest rate exposure environment interest rates 23% 38% Policy: - Minimum hedge of 25% / Maximum hedge of 75% - Minimum term 1 year / Maximum term 3 year - Current hedgin
Slide 24: Global Investor Services Australia - Half Year Comparison
Global Investor Services Australia - Half Year Comparison A$m A$m Revenue Breakdown 61.4 34.8 50.6 50.8 29.9 29.4 17.7 13.3 12.6 8.1 7.9 6.4 1.0 0.7 1.0 HY Dec-00 HY Jun-01 HY Dec-01 Register Main Corp Actions Margin Income Other Revenue HY Dec-00 HY Jun-01 HY Dec-01 24
Slide 25: Global Investor Services Ireland - Half Year Comparison
Global Investor Services Ireland - Half Year Comparison A$m A$m Revenue Breakdown 8.3 6.9 3.1 3.1 3.0 2.8 4.1 2.2 2.4 1.6 0.8 0.1 0.2 HY Dec-00 HY Jun-01 HY Dec-01 Register Main Corp Actions Margin Income Other Revenue HY Dec-00 HY Jun-01 HY Dec-01 25
Slide 26: Global Investor Services New Zealand - Half Year Comparison
Global Investor Services New Zealand - Half Year Comparison A$m A$m Revenue Breakdown 7.5 4.2 5.6 5.9 3.2 3.3 2.5 2.1 1.7 0.7 0.8 0.5 HY Dec-00 HY Jun-01 HY Dec-01 Register Main Corp Actions Margin Income Other Revenue HY Dec-00 HY Jun-01 HY Dec-01 26
Slide 27: Global Investor Services South Africa - Half Year Comparison
Global Investor Services South Africa - Half Year Comparison A$m A$m Revenue Breakdown 13.2 12.4 11.0 10.8 11.1 7.8 2.9 1.0 1.2 0.8 0.4 0.8 HY Dec-00 HY Jun-01 HY Dec-01 Register Main Corp Actions Margin Income Other Revenue HY Dec-00 HY Jun-01 HY Dec-01 27
Slide 28: Global Investor Services United Kingdom - Half Year Comparison
Global Investor Services United Kingdom - Half Year Comparison A$m A$m Revenue Breakdown 104.7 103.9 95.5 44.4 44.6 38.5 26.3 23.5 24.0 22.8 21.2 16.4 17.1 14.3 11.0 HY Dec-00 HY Jun-01 HY Dec-01 Register Main Corp Actions Margin Income Other Revenue HY Dec-00 HY Jun-01 HY Dec-01 28
Slide 29: Global Investor Services Hong Kong - Half Year Comparison
Global Investor Services Hong Kong - Half Year Comparison A$m A$m Revenue Breakdown 9.0 8.5 12.6 13.2 3.0 2.7 1.4 1.2 HY Jun-01 HY Dec-01 Register Main Corp Actions Margin Income Other Revenue HY Jun-01 HY Dec-01 29
Slide 30: Global Investor Services United States - Half Year Comparison
Global Investor Services United States - Half Year Comparison A$m A$m Revenue Breakdown 55.2 31.2 33.5 53.2 27.7 49.2 17.7 12.0 11.1 7.3 6.3 4.6 2.7 3.5 HY Dec-00 HY Jun-01 HY Dec-01 Register Main Corp Actions Margin Income Other Revenue HY Dec-00 HY Jun-01 HY Dec-01 30
Slide 31: Global Investor Services Canada - Half Year Comparison
Global Investor Services Canada - Half Year Comparison A$m A$m Revenue Breakdown 95.3 54.3 79.7 45.9 48.6 66.0 18.8 17.5 12.3 13.4 11.0 6.7 3.6 4.7 4.2 HY Dec-00 HY Jun-01 HY Dec-01 Register Main Corp Actions Margin Income Other Revenue HY Dec-00 HY Jun-01 HY Dec-01 31
Slide 32: Computershare Technology Services CTS Group
Computershare Technology Services CTS Group Revenue CTS is the inhouse A$m technology provider to 58.7 Registry, Plan, Analytics & 44.0 Document Services 40.3 businesses. 20.0 Full commercial charges levied by CTS to fund development. HY Jun-00 HY Dec-00 HY Jun-01 HY Dec-01 Internal revenue accounts
Slide 33: Computershare Document Services
Computershare Document Services Half Year Results A$m 42.1 33.2 32.3 Revenue HY Dec-00 HY Jun-01 HY Dec-01 Internal revenue accounts for 49% in 1H’02 33
Slide 34: Cashflow / Balance Sheet
Cashflow / Balance Sheet A$m 60 – Gearing on a net debt to 50 equity basis - 3% 40 – Available resources A$225m 30 – Debtors days 20 outstanding have fallen 10 from 75 to 62 days 0 HY Dec-00 HY Jun-01 HY Dec-01 Cashflow from Ops Cap Ex - PPE 34
Slide 35: Working Capital Management
Working Capital Management 100 90 80 70 60 Receivable days 50 Payable days 40 30 20 10 0 1999 2000 2001 HY - Dec01 days 35
Slide 36: Interim Results 2002 Strategy and Outlook
Interim Results 2002 Strategy and Outlook Chris Morris Chief Executive Officer 36
Slide 37: Strategy - Maximise Opportunities to Deepen & Expand our Global and Regional Customer Relationships
Strategy - Maximise Opportunities to Deepen & Expand our Global and Regional Customer Relationships Core Skills Strategy Growth Leverage our Innovative e-transform: strengths globally technology Use technology to drive change, boost development productivity, accelerate innovation & dramatically impr
Slide 38: BP Deal Confirms our Global Strategy
BP Deal Confirms our Global Strategy – Global solution in 70 countries – Solution based upon Internet delivery and our straight through processing model – Won against major competitors Lloyd’s, Fidelity, Equiserve – Why did we get the deal? – The only company in the world that could do the job due t
Slide 39: Significance of Deutsche Börse (DB) Joint Venture
Significance of Deutsche Börse (DB) Joint Venture – Acquired 49% in joint venture at minimal capital outlay – Will leverage CPU expertise in registry and related services with strength of DB’s German market position – Creates the essential European platform for CPU’s expansion (e.g. Switzerland & Au
Slide 40: Global Strategy In Action - Some Recent Examples
Global Strategy In Action - Some Recent Examples – Citibank - New York & UK (global re-orgs) – Inter Oil Corp. (Aust & Canada) – BP Global ESP – Invervia West Inc. (Canada & Ireland) – Anglo Gold take-over of Normandy – NRX Global Corp. (Canada & UK) – Newmont take over of Normandy and Franco – Thom
Slide 41: Strategic Direction
Strategic Direction Registry /TA – Develop German business – Expand into other European countries – Acquisitions in North America – Marketing to major US companies when SCRIP is operational leveraging off our ESPP clients Plan Managers – Position as the only global provider specialised plans to take
Slide 42: Strategic Direction
Strategic Direction Analytics – Complete European database – Include Japanese research – Acquisition opportunities especially in the US for investor relations, beneficial ownership services Global services – Develop ADR and global share offering – Currently developing a web based solution to enable
Slide 43: Regional Operations - Australia and New Zealand
Regional Operations - Australia and New Zealand Key Points – Trading activity reasonably strong however new IPO’s well down – Won 60% of new Australian IPO’s in the period – Re-aligned business activities from a state based operation to a national functional base – Centralised Call Centre (200 seats
Slide 44: Regional Overview - UK and Ireland
Regional Overview - UK and Ireland Key Points – Result affected by reduction in corporate action activity and lower interest rates – Major new business: Registry: Allied Domecq, Iceland, Somerfield, Rio Tinto, First Active ESP: BP, mmO2, National Grid – Cost reduction program continuing with redunda
Slide 45: Regional Overview - South Africa
Regional Overview - South Africa Key Points – Results affected by STRATE – Competition decision due 11/4 re Mercantile – Planning for integration of Mercantile business well progressed - when completed will deliver major cost savings – Workflow planned for Q3 02 Outlook – Telkom float scheduled for
Slide 46: Regional Overview - US
Regional Overview - US Key Points – Registry results affected by substantial reduction in corporate actions activity (M&A, stock splits & IPOs) – Significant positive EBITDA contribution from ESP business – ESP: Converted 850,000 participant accounts to SCRIP & maintained re-appointments – Sharehold
Slide 47: Regional Operations - Canada
Regional Operations - Canada Key Points – Results impacted by deferral of Prudential demutualisation (now end Q1 ‘02) – Corporate Trust business affected by reduction in volume of new debt insuance activity - had anticipated an increase given lower interest rates – Major corporate actions: Gulf / Co
Slide 48: Regional Operations - Hong Kong
Regional Operations - Hong Kong Key Points – Conversion to SCRIP will be completed by May 02 – Processed in the UK major IT savings – Training and support from Australia Outlook – Gateway to China – New settlement system proposed similar to Australia will create opportunities for new business and ac
Slide 49: Analytics
Analytics Key Points Over the last six months, Computershare Analytics, the investor relations and market intelligence arm of Computershare, finalised the integration of Citywatch Ltd and Financial Data Concepts LLC, into Analytics – The rollout of a unique multi-register shareholder analysis servic
Slide 50: Analytics cont.
Analytics cont. Outlook – Possible sale of shareownership and market intelligence data to major stock exchanges and information vendors – Expand global offering of Analytics with possible acquisitions – The proxy solicitation and takeover acceptance services in the UK – Rollout of IRtrack product in
Slide 51: Outlook for FY 2002
Outlook for FY 2002 – At present market conditions do not show any signs of sustained or significant recovery in activity levels – On this basis it is likely that the full year results for the group on an existing business basis will be within the following ranges: • Revenue between $753.0m and $775
Slide 52: Priorities
Priorities – Increase focus on customer service levels – Maximise cross-selling (ESP, Analytics, Document Services) opportunities locally & globally – Maintain competitive advantage in established markets (benchmark performance) – Increase quality of management reporting function – Continue to imple
Slide 53: Acquisition Strategy
Acquisition Strategy – Established criteria for technology synergistic acquisitions – Look to achieve economies of scale through merging businesses into existing operations (ie. BT Registries in Australia) – Disciplined approach - historically able to ‘walk away’ – Primary targets - North American a
Slide 54: Introduction to a New Market - UK Experience
Introduction to a New Market - UK Experience 0 - 18 months 18 - 30 months 30 - 36 months 36 - 42 months • Existing system review • SCRIP migration and • Staffing re-org. • Consolidate and drive conversion of accounts business efficiencies and • SCRIP design specs • Training growth • SCRIP developmen
Slide 55: Interim Results 2002
Interim Results 2002 26 February 2002 55