Computershare Limited · ASX:CPU
Computershare — FY2005 Earnings Presentation
64 slides from Computershare's earnings presentation, Aug 16, 2005
Slide 1: Computershare Limited Full Year Results 2005 Presentation
Computershare Limited Full Year Results 2005 Presentation Chris Morris Tom Honan 16 August 2005 1
Slide 2: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 2
Slide 3: Introduction - Tom Honan, Chief Financial Officer
Introduction Tom Honan Chief Financial Officer 3
Slide 4: Summary of Results
Summary of Results Introduction ¾ Normalised EPS (pre goodwill, post pref. dividend) of 24.27 cents, up 28% ¾ Net Profit After Tax of A$105.4m, up 26% ¾ Total revenue of A$1,098.9m, up 23% or up 13% excluding FY05 acquisitions ¾ Operating Cash Flows of A$146.8 m, up 7.8%. ¾ Operating Costs (excludin
Slide 5: CPU Revenues continue to diversify
CPU Revenues continue to diversify Introduction Revenue Type 6% 5% 5% Register Maintenance Corporate Actions Stakeholder Relationship Management 11% Employee Share Plans 48% Document Services Mutual Funds T echnology & Other Revenue 10% 15% 5
Slide 6: Global Equities Market
Global Equities Market Introduction Historical Equity Issuance Data Annual M & A Book to Bill Ratio 4000 2.0 3500 3000 1.8 2500 $ Billions 2000 1.5 1500 1000 1.3 500 0 1.0 2005E 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 0.8 1991 1992 1993 1994 1995 1996 1997 1998 1999 200
Slide 7: Global Interest Rate Market
Global Interest Rate Market Introduction % % UK US 8 8 6 6 4 4 2 2 0 0 1997 1999 2001 2003 2005 1997 1999 2001 2003 2005 % Canada 8 6 4 2 0 1997 1999 2001 2003 2005 7
Slide 8: Computershare Strengths
Computershare Strengths Introduction ¾ Recurring Revenue – >70% of revenue is of a recurring nature ¾ Global Diversification – Across more than 21 countries ¾ High Margins – EBITDA margins >20% ¾ Exposure to northern hemisphere interest rates ¾ Technological innovation and capabilities ¾ Integration
Slide 9: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 9
Slide 10: Group Financial Performance – A$m
Group Financial Performance – A$m Financial Results FY05 FY04 Variance Sales Revenue 1,063.5 871.3 22% Interest & Other Income* 35.4 23.4 51% Total Revenue 1,098.9 894.7 23% Operating Costs* 878.7 711.1 (24%) Share of Net (Profit)/Loss of Associates (1.8) 0.1 Normalised EBITDA 222.1 183.4 21% Non-Re
Slide 11: Normalised Basic EPS Performance
Normalised Basic EPS Performance (pre goodwill, post pref. dividend) Financial Results cents Normalised Basic EPS (pre goodwill post pref. dividend) 25 23 21 19 17 15 13 11 9 7 FY02 FY03 FY04 FY05 Normalised Basic EPS (pre goodwill, post pref. dividend) 11
Slide 12: Analysis of EPS – Half Year Comparison
Analysis of EPS – Half Year Comparison Financial Results 0.30 – EquiServe 2H05 impact EPS (pre goodwill, post preference dividend) 16 14 12 10 cents 8 14.06 6 10.53 10.21 4 8.04 8.49 2 3.76 0 1H03 2H03 1H04 2H04 1H05 2H05 EPS (pre goodwill, post preference dividend) 12
Slide 13: Full Year Comparisons – Revenue & EBITDA
Full Year Comparisons – Revenue & EBITDA Financial Results $Am Revenue & EBITDA $Am 1200 250 222.1 183.4 200 900 147.6 R 133.9 E e 150 B v I e 600 T n D u 100 A e 300 50 781.0 719.8 894.7 1098.9 0 0 FY02 FY03 FY04 FY05 Revenue Normalised EBITDA 13
Slide 14: Half Year Comparisons – Revenue & EBITDA
Half Year Comparisons – Revenue & EBITDA Financial Results 1H Revenue & EBITDA $Am $Am 2H Revenue & EBITDA $Am $Am 650 140 650 140 127.8 600 120 600 120 550 103.3 94.3 550 100 500 100 80.1 500 79.5 73.2 80 74.4 450 80 450 400 54.4 60 400 596.9 60 350 502.1 350 495.2 40 40 300 396.5 399.5 300 355.7 3
Slide 15: Return On Invested Capital Vs. WACC
Return On Invested Capital Vs. WACC Financial Results 18% Stable Returns, Cost of Capital Declines 16% 14% 12% 10% 8% 6% FY02 FY03 FY04 FY05 WACC ROIC 15
Slide 16: Regional Analysis – FY05 Revenue & EBITDA
Regional Analysis – FY05 Revenue & EBITDA Financial Results Total Revenue Breakdown EBITDA Breakdown 31% 37% 43% 42% 26% 21% Asia Pacific Europe North America Asia Pacific Europe North America 16
Slide 17: Half Year Comparisons – Operating Costs
Half Year Comparisons – Operating Costs Financial Results Operating Costs Equiserve $Am 30.5 450 300 300.8 283.1 317.9 393.3 408.4 439.8 150 0 1H03 2H03 1H04 2H04 1H05 2H05 17
Slide 18: Technology Costs – Establishing Global Platform
Technology Costs – Establishing Global Platform Financial Results A$m % 120 22% 106.6 20% 100 87.9 92.1 18% 83.5 16% 80 14% 12% 12% 11% 12% 60 10% 10% 8% 40 6% 20 4% 2% 0 0% FY02 FY03 FY04 FY05 Total Technology costs Technology costs % of sales revenue 18
Slide 19: Analysis of FY05 Technology Costs
Analysis of FY05 Technology Costs Financial Results Analysis of Technology Spend 1% 2% 36% 42% 19% Development Infrastructure Maintenance External Bureau Administration 19
Slide 20: Net Operating Cash Flows
Net Operating Cash Flows Financial Results $Am Operating Cash Flows & Capital Expenditure 146.8 140 136.1 120 100 79.4 76.2 80 56.9 60 40 31.6 21.4 20 17.9 0 FY02 FY03 FY04 FY05 Operating Cash Flows Capital Expenditure 20
Slide 21: Capital Expenditure
Capital Expenditure Financial Results CPU Group Capex $Am 60.0 2.2 55.0 50.0 45.0 40.0 29.1 35.0 30.0 2.7 5.8 25.0 0.5 7.7 2.4 20.0 6.4 4.2 15.0 2.7 1.7 1.0 10.0 16.8 17.9 12.8 5.0 14.0 0.0 FY02 FY03 FY04 FY05 Information Technology Document Services Facilities Occupancy Other 21
Slide 22: Working Capital Management
Working Capital Management Financial Results Days DSO 70 66 61 62 60 57 Receivable Days 50 40 30 20 10 0 FY02 FY03 FY04 FY05 22
Slide 23: Debt Re-financing
Debt Re-financing Financial Results ¾ Settled US Private Placement in March 2005 • Raised USD318.5million for 6 to 12 years ¾ Re-negotiated Multi Currency Revolving Facility in March 2005 • Facility of AUD400million for 1 to 3 years ¾ Average tenor on debt almost 6 years ¾ Significant headroom maint
Slide 24: Interest Rate Sensitivity
Interest Rate Sensitivity Financial Results A$m PBT 120 Im pact 100 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 -60 Exposure Hedged exposure 100% Hedged -80 Reflects 12 month impact of Equiserve 24
Slide 25: Equity Management – Final Dividend of 6 cps
Equity Management – Final Dividend of 6 cps Financial Results ¾ EPS – Normalised Basic (post goodwill) 17.91 cents ¾ EPS – Normalised Basic (pre goodwill) 24.27 cents ¾ Final Dividend (unfranked) 6.0 cents ¾ Full Year Dividend (10% franked half year only) 11 cents ¾ Current Yield * 1.8% * Based on s
Slide 26: Impact of IFRS on Computershare
Impact of IFRS on Computershare Financial Results Issue Change Impact on CPU Goodwill Annual impairment • FY05 goodwill amortisation of $44.1m will be reversed in FY06 opening Amortisation testing of goodwill balances. instead of amortisation • Impairment testing has been reviewed at both 30 June 20
Slide 27: Impact of IFRS on Computershare
Impact of IFRS on Computershare Financial Results Issue Change Impact on CPU Deferred Tax Deferred tax will be • Lowering of recognition criteria for deferred tax assets to “probable” increases Assets and calculated using the value of deferred tax assets in the balance sheet. Liabilities “balance sh
Slide 28: Equiserve Acquisition – Expected Synergies
Equiserve Acquisition – Expected Synergies Financial Results Year 1 Year 2 Year 3 US $m FY06 FY07 FY08 Incremental P&L Effect 17.9 22.3 19.8 Annualised 22.2 49.0 60.0 28
Slide 29: Financial Summary – Final Remarks
Financial Summary – Final Remarks Financial Results ¾ Continued strong EPS growth - 28% ¾ Includes only one month results relating to Equiserve ¾ Record revenues - exceeded A$1Billion for the first time ¾ Maintained strong balance sheet ¾ Dividend growth continues 29
Slide 30: Market Overview, Financial Performance, CEO's Report
Market Financial CEO’s Report Overview Performance 30
Slide 31: CEO's Report - Chris Morris
CEO’s Report Chris Morris Chief Executive Officer 31
Slide 32: Highlights - Financial
Highlights - Financial CEO’s Report ¾ Surpassed $1 billion revenue ¾ Well above our target of 20% EPS growth ¾ Very satisfying result considering: • EquiServe closed 6 months later than we planned • Mutual Fund proxy work did not eventuate • TA/Registry market still very competitive globally • US M&
Slide 33: Highlights - Equiserve
Highlights - Equiserve CEO’s Report ¾ Deal finally closed in June 2005 ¾ Unqualified support of clients and staff ¾ Worth the wait to get the National Trust Licence ¾ Conversion starts October 2005, completed by December 2006 • First major conversion is SBC/AT&T ¾ Synergies • IT major savings - over
Slide 34: Highlights – Company Structure
Highlights – Company Structure CEO’s Report ¾ Standardised operational structure globally ¾ Introducing best practice model globally to be completed by end of FY06, major savings when completed ¾ Set up Global Capital Markets Group headed by Paul Conn • Market structures • Cross border transactions
Slide 35: Highlights – Employee Plans & Options
Highlights – Employee Plans & Options CEO’s Report ¾ Set up as a global business ¾ Look at obtaining more of the downstream business • 10% record keeping • 20% dealing • 70% on selling of wealth management products ¾ Won GEO awards for: • BP for Best Use of Technology • SMIC (Equiserve Chinese clien
Slide 36: Highlights - Japan
Highlights - Japan CEO’s Report ¾ Letter of Intent signed in June 2005 ¾ JV 1 • Planned opening October 2005 • Services – Proxy Solicitation – Analytics – Stakeholder Relationship Management ¾ JV 2 • Opportunity for CPU to obtain a significant minority interest • Services – Transfer Agency – Plans 3
Slide 37: Highlights – General
Highlights – General CEO’s Report ¾ Mutual Funds business in the US showing large increase in activity, this month we have signed over ½ of FY06 budget ¾ Healthiest M&A in the US in a number of years ¾ IPO increases in the US also evident ¾ Cross sell of SSP and PMC to Equiserve clients ¾ Expansion
Slide 38: Highlights – Corporate Social Responsibility
Highlights – Corporate Social Responsibility CEO’s Report ¾ eTree • 60 member companies in Australia and over 1.1 million trees planted • Launching in the UK, US, Canada, Europe and South Africa ¾ Change-A-Life program • A program to create a sustainable future for the poorest communities in our wor
Slide 39: Financial Outlook – FY2006
Financial Outlook – FY2006 CEO’s Report ¾ Revenue approaching A$1.5 billion ¾ Growth in EPS > 20% Given equity, interest rate and FX market conditions are relatively stable. 39
Slide 40: Questions?
40 QUESTIONS? €omputershare
Slide 41: Appendix: Full Year Results 2005 Presentation
Appendix: Full Year Results 2005 Presentation 16 August 2005 41
Slide 42: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Financial Results Group Comparisons 42
Slide 43: Regional Analysis – FY05 Revenue
Regional Analysis – FY05 Revenue Financial Results $Am 250.0 208.5 200.0 169.9 145.4 150.0 100.0 85.2 83.7 54.3 50.0 43.2 47.7 50.0 40.7 28.7 30.0 16.6 9.5 9.0 7.8 5.4 0.0 0.0 Register Maintenance Corporate Actions Stakeholder Employee Share Plans Document Services Mutual Funds Relationship Manageme
Slide 44: Half Year Comparisons - Revenue
Half Year Comparisons - Revenue Financial Results $Am 300.0 285.7 244.2 250.0 238.1 215.0 200.0 150.0 100.0 88.5 74.7 71.8 78.2 63.6 65.1 57.5 55.2 59.6 43.7 45.7 50.0 34.3 29.8 28.4 31.6 21.2 18.8 15.7 8.9 0.8 0.0 Register Maintenance Corporate Actions Stakeholder Employ ee Share Document Serv ices
Slide 45: Half Year Comparisons – Operating Costs
Half Year Comparisons – Operating Costs Financial Results $Am 210.6 200.0 185.8 174.8 150.0 139.3 123.9 104.9 100.0 92.5 67.4 51.4 53.9 48.5 50.0 36.7 38.0 40.3 41.6 34.5 26.6 24.4 19.3 20.4 13.9 16.1 17.2 7.9 0.0 Cost of Sales Personnel Occupancy Other Direct Technology Corporate 1H04 2H04 1H05 2H0
Slide 46: Revenue Breakdown
Revenue Breakdown Financial Results FY05 FY04 Variance Register Maintenance 523.8 459.2 14% Corporate Actions 166.7 146.6 14% Stakeholder Relationship Mgt 107.3 73.2 47% Employee Share Plans 124.6 100.9 23% Document Services 60.0 51.0 18% Mutual Funds 53.1 9.8 442% Technology & Other Revenues 63.5 5
Slide 47: Effective Tax Rate
Effective Tax Rate Financial Results ¾ Headline effective tax rate for FY05 was 22.7% (FY04 24.4%). ¾ Normalised headline effective tax rate for FY05 was 24.7% (FY04 29.9%). ¾ The underlying effective tax rate (the tax rate adjusted for one off, non recurring items and non deductible goodwill charge
Slide 48: Key Financial Ratios
Key Financial Ratios Financial Results times EBITDA interest coverage times Net Financial Indebtedness to EBITDA 25 2.5 2.3 21.2 20 2.0 14.5 15 13.2 1.5 1.2 11.9 10 1.0 0.8 0.7 5 0.5 0 0.0 FY02 FY03 FY04 FY05 FY02 FY03 FY04 FY05 % Gearing (Net Debt / Net Debt + Equity) % Funds Flow to Total Debt 41%
Slide 49: Share Capital Movements
Share Capital Movements Financial Results Number of Shares Paid Up Share Capital m A$m Opening balance 546.7 339.0 Acquisitions 29.8 188.0 Preference share conversion 24.0 85.0 Buy Backs (10.2) (30.6) Other 4.6 (0.6) Closing Balance 594.9 580.8 49
Slide 50: Risk Management - Interest Rate Sensitivity
Risk Management - Interest Rate Sensitivity Financial Results Interest Rate Hedging Strategy: - Minimise downside risk in current low interest rate environment No Policy: - Minimum hedge of 25% / Maximum hedge of 75% exposure - Minimum term 1 year / Maximum term 5 years 29% - Current hedging: 27% Ex
Slide 51: Risk Management – Average Funds Balances
Risk Management – Average Funds Balances Financial Results for 12 months ending 30 June 2005 By Category By Country Sharesave/ Employee Australia Dividend Plans 2% 18% 24% US Dissenter 31% Canada 4% 38% Broker Trust Corporate 17% Actions 23% Regular UK Trust 29% 14% Average Fund Balance - A$5.2b 51
Slide 52: Appendix 2: Country Summaries
Appendix 2: Country Summaries Financial Results Country Summaries 52
Slide 53: Appendix 2: Country Summaries – Asia Pacific
Appendix 2: Country Summaries Financial Results Asia Pacific 53
Slide 54: Australia Half Year Comparison
Australia Half Year Comparison Financial Results $Am Total Revenue $Am Revenue Breakdown 150.0 48.9 50.0 47.4 46.7 125.9 127.5 43.5 114.9 109.3 40.0 100.0 31.1 30.9 29.7 30.0 25.2 21.9 21.3 20.0 17.1 50.0 16.3 10.0 8.2 8.2 4.2 4.4 4.4 4.5 5.0 2.1 0.0 0.0 1H04 2H04 1H05 2H05 Register Maintenance Corp
Slide 55: New Zealand Half Year Comparison
New Zealand Half Year Comparison Financial Results Total Revenue $NZm $NZm Revenue Breakdown 10.0 9.0 6.9 8.3 6.8 7.9 6.3 6.3 8.0 7.4 6.0 6.0 4.0 4.0 2.2 2.0 1.6 2.0 1.4 1.0 0.0 0.0 1H04 2H04 1H05 2H05 Register Maintenance Corporate Actions 1H04 2H04 1H05 2H05 55
Slide 56: Hong Kong Half Year Comparison
Hong Kong Half Year Comparison Financial Results Total Revenue Revenue Breakdown $HKm 120.0 $HKm 111.1 90.0 84.8 108.3 80.0 100.0 97.4 73.4 89.6 70.0 70.0 80.0 58.0 60.0 50.0 60.0 40.0 38.3 31.5 40.0 30.0 25.8 24.0 20.0 20.0 10.0 0.0 0.0 1H04 2H04 1H05 2H05 Register Maintenance Corporate Actions 1H0
Slide 57: Appendix 2: Country Summaries – North America
Appendix 2: Country Summaries Financial Results North America 57
Slide 58: United States Half Year Comparison
United States Half Year Comparison Financial Results Total Revenue USDm Revenue Breakdown USDm 138.2 50.0 140.0 41.6 120.0 40.0 100.0 98.8 94.8 29.5 30.0 80.0 25.3 23.9 22.4 22.6 21.4 20.9 60.0 50.9 19.5 20.0 17.9 18.5 16.9 15.7 13.5 40.0 11.6 12.3 11.8 10.0 20.0 4.8 3.3 2.7 2.6 0.6 1.3 0.6 0.0 0.0
Slide 59: Canada Half Year Comparison
Canada Half Year Comparison Financial Results CADm Revenue Breakdown Total Revenue CADm 80.0 100.0 70.0 68.4 90.0 86.4 80.0 60.0 54.7 70.0 50.6 70.0 62.9 50.0 46.6 63.1 60.0 40.0 50.0 30.0 40.0 30.0 20.0 20.0 9.5 8.1 10.0 6.0 6.9 5.4 4.3 4.8 6.4 2.1 1.0 2.5 10.0 0.2 0.3 0.2 0.6 1.9 0.0 0.0 Register
Slide 60: Appendix 2: Country Summaries – EMEA
Appendix 2: Country Summaries Financial Results EMEA 60
Slide 61: United Kingdom Half Year Comparison
United Kingdom Half Year Comparison Financial Results GBPm Revenue Breakdown Total Revenue GBPm 25.3 23.1 23.4 41.6 40.2 22.6 40.0 36.3 37.0 20.0 30.0 20.0 10.0 5.8 6.0 5.9 6.2 10.0 4.8 5.0 3.2 3.6 2.9 2.8 3.1 2.4 1.5 1.6 1.6 2.0 0.0 0.0 1H04 2H04 1H05 2H05 Register Maintenance Corporate Actions Sta
Slide 62: Ireland Half Year Comparison
Ireland Half Year Comparison Financial Results Total Revenue EUROm Revenue Breakdown EUROm 5.0 2.7 5.0 2.5 4.3 4.3 2.3 2.2 4.0 3.6 2.0 3.0 2.0 1.0 0.9 0.7 1.0 0.4 0.3 0.0 0.0 1H04 2H04 1H05 2H05 Register Maintenance Corporate Actions 1H04 2H04 1H05 2H05 62
Slide 63: Germany Half Year Comparison
Germany Half Year Comparison Financial Results Eur '000 Total Revenue Revenue Breakdown EURm 14.0 13.5 9.0 8.4 12.0 8.0 7.0 6.6 10.0 6.0 8.0 7.1 5.0 6.0 4.0 3.8 4.3 3.2 3.0 4.0 1.9 2.0 2.0 1.0 0.5 0.4 0.1 0.0 0.0 2H04 1H05 2H05 Register Maintenance Corporate Actions Stakeholder Relationship 2H04 1H0
Slide 64: South Africa Half Year Comparison
South Africa Half Year Comparison Financial Results Total Revenue ZARm ZARm Revenue Breakdown 120.0 100.0 94.1 99.3 90.0 86.5 88.3 100.0 83.7 90.1 94.7 90.5 80.0 80.0 70.0 60.0 60.0 50.0 40.0 40.0 30.0 20.0 20.0 10.0 4.5 6.4 6.4 3.4 0.2 0.5 0.0 0.0 1H04 2H04 1H05 2H05 Register Maintenance Corporate