Computershare Limited · ASX:CPU
Computershare — FY2002 Earnings Presentation
42 slides from Computershare's earnings presentation, Aug 28, 2002
Slide 1: Financial Year 2002 Results Presentation
Financial Year 2002 Results Presentation 28 August 2002 1
Slide 2: Introduction
Introduction Chris Morris Chief Executive Officer 2
Slide 3: 2002 – The Redefining Year
2002 – The Redefining Year • Results in line with forecast made in February after first and only downgrade • Delivered steady profit levels in line with prior year despite massive deterioration in equity capital markets • Good quality result – maintained strong operating cash flows from all business
Slide 4: Board Breadth and Expertise - New Appointments
Board Breadth and Expertise - New Appointments Sandy Murdoch Non- Executive Chairman Chris Morris Penny Maclagan Tony Wales Peter Griffin CEO Head of IT Non-Executive Non-Executive New Appointments Phil DeFeo Iain Saville CBE Non-Executive European Time Zone Head • US capital markets expertise and •
Slide 5: 2002 – The Redefining Year (continued)
2002 – The Redefining Year (continued) • Reduced sensitivity on interest rates • Marketing Alliances with key industry players • Focus on marketing CPU’s core strengths being technology, global and total product offering • Critical evaluation of all areas of business with renewed focus on margins an
Slide 6: Today's Announcements
Today's Announcements • Results in line with forecasts • Revenue $781.0 up by 3.5% • EBITDA $147.6 down by 2.8% (before non recurring items) • NPAT before Pref. Div. $57.9m up by 5.5% (before non recurring items) • Share buyback of up to 10% of the stock • Increased annual dividend from 1 cent to 5
Slide 7: Financial Results
Financial Results Tom Honan Chief Financial Officer 7
Slide 8: Key Messages
Key Messages 1. Hit revised forecast in all financial indicators, with good quality result. 2. Delivered steady profit levels to last year, despite market conditions. 3. Guaranteed steady cash flows from all businesses with significant balance sheet capacity 4. Progressed organisation to a more soph
Slide 9: Achieved forecast with good quality result
Achieved forecast with good quality result • Normalised EPS – 9.6 cents • EBITDA steady at $ 147.6 m • Annual dividend increased from 1 cents to 5 cent – fully franked • Share Buy-Back of up to 10% of issued capital announced • Operating cash flow up 16% to $79.4 m • Net debt - $34.5 m • Funding cap
Slide 10: Achieved forecast on all key measures
Achieved forecast on all key measures A$ M Forecast range Actual Revenue 753 – 775 781.0 EBITDA 145 – 152 147.6 NPAT before OEI 56 – 60 57.8 10
Slide 11: Financial Performance A$m's
Financial Performance A$m’s 2002 2001 Revenue Registry maintenance 348.1 344.3 Corporate actions 53.7 74.8 Margin income (including sharesave admin) 72.5 96.8 Non Registry fees/sales 163.7 105.6 Interest income 4.2 3.7 Recoveries 125.6 114.5 Other 13.2 14.6 781.0 754.3 Expenses Operating costs 631.9
Slide 12: Consolidated Results Half Year Comparison
Consolidated Results Half Year Comparison A$m 414.7 A$m Revenue Breakdown 396.5 384.5 181.5 185.5 339.6 162.8 164.6 94.8 68.0 68.9 79.7 74.6 46.9 49.8 71.9 73.0 38.7 36.2 41.9 37.7 32.6 28.6 21.1 HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-02 Register Main Corp Actions Margin Income Non Registry Sales/Fees
Slide 13: Revenue by Region
Revenue by Region Total Revenue A$m Revenue Breakdown 140.5 109.2 30% 98.4 39% 68.7 65.2 52.5 41.7 37.1 36.0 29.8 28.7 21.2 19.6 12.9 2.1 31% Register Corp Actions Margin Recoveries Non Registry Main Income Sales/Fees Asia Pacific Europe North America Asia Pacific Europe North America Revenue by cou
Slide 14: EBITDA generated from diversified portfolio
EBTIDA generated from diversified portfolio A$m Total EBITDA EBITDA Breakdown 151.7 FY 2002 147.6 28% 38% 91.7 34% FY'00 FY'01 FY'02 Asia Pacific Europe North America 14
Slide 15: Cost increases held to 5.5% for the FY02 year
Cost increases held to 5.5% for the FY02 year A$m Operating Costs A$m Operating Cost Breakdown 631.9 290.6 598.9 269.8 126.0 108.5 107.7 81.6 79.9 60.9 40.3 38.7 11.7 15.1 Recov Exp Personnel Occupancy Other Direct Technology Corporate FY'01 FY'02 FY'01 FY'02 15
Slide 16: Business Unit Headcount
Business Unit Headcount * Geographic Breakdown 1,233 1,200 1,027 1,033 1,000 800 673 600 514 400 200 152 78 75 0 a ia S a nd nd K g ic ad U on U al la la fr tr an K A Ire ea us C g S. .Z A on N H * Headcount excludes Technology and Corporate Services 16
Slide 17: Analysis of NPAT
Analysis of NPAT A$m Normalised Explanation Actual 70 4.9 Prefs • Normalised NPAT for FY01 60 16.2 ETrade Div was $54.9m 50 • Pre preference dividend NPAT for FY02 was $57.9m 40 • Significant improvement to 30 53.0 effective tax rate (31%) drove NPAT higher in 2002 20 38.2 38.7 10 0 FY'00 FY'01 FY'0
Slide 18: Corporate Equity Issuance 30 June – US $ M
Corporate Equity Issuance 30 June – US $ M 2001/02 year lowest levels since 1994/95 International Equity Issuance - Year to June30 350,000 311,816 300,000 250,000 200,000 180,970 169,660 179,225 150,000 107,383 118,861 98,251 100,000 50,000 0 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 S
Slide 19: Global Interest Rates
Global Interest Rates % % UK US 8 8 6 6 4 4 2 2 0 0 1995 1996 1997 1998 1999 2000 2001 1995 1996 1997 1998 1999 2000 2001 % Canada 8 6 4 2 0 1995 1996 1997 1998 1999 2000 2001 19
Slide 20: Funds Balances at 30 June 2002
Funds Balances at 30 June 2002 By Category By Country Dividend Sharesave US Australia 17% 18% 8% 1% Dissenter 9% Canada UK 51% 40% Corporate Actions Broker Trust 15% 37% Regular Trust 4% FY02 average balance range A$3.7b – A$4.5b 20
Slide 21: Funds Balances Interest Rate Sensitivity
Funds Balances Interest Rate Sensitivity Interest Rate Hedging Exposure to No Strategy: - Minimise downside risk in current low interest rate interest rates environment exposure 20% 41% Policy: - Minimum hedge of 25% / Maximum hedge of 75% - Minimum term 1 year / Maximum term 5 years - Current hedgi
Slide 22: Margin Income – Interest Rate Sensitivity
Margin Income – Interest Rate Sensitivity Margin Income Exposure A$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% 3.50% 4.50% -20 -40 Exposure Hedged exposure 100% Hedged -60 22
Slide 23: Technology Costs – Establishing Global Platform
Technology Costs – Establishing Global Platform 100 79.9 All A$m – internal costs only 80 All technology costs are expensed 60.9 60 Increase attributed to: • SCRIP implementation: US, Canada and 40 30.8 Hong Kong • North America infrastructure development 20 • ESSP Conversion (US – Merrills) 0 • Glo
Slide 24: Analysis of Technology Costs - 2002
Analysis of Technology Costs - 2002 Category Cost Type Admin External 3% bureau External bureau 25% 25% Development 25% Personnel & Computer on-costs Costs 56% 9% Comms 4% Infrastructure Occupancy Maintenance 13% 6% 25% 24
Slide 25: Analysis of Technology Costs
Analysis of Technology Costs A$m 120.0 106.7 110.0 100.0 89.9 External Bureau 90.0 26.8 80.0 29.0 External Bureau 14.4 Infrastructure 70.0 Maintenance 60.0 50.0 19.3 Reclassification Application 27.2 Maintenance 40.0 2.8 - Administration 30.0 20.0 41.6 Internal Costs 35.5 Development 10.0 0.0 FY'01
Slide 26: Cashflow
Cashflow A$m • Gearing on a net debt to 100 equity basis - 5% 79.4 80 68.3 • Available resources 55.1 56.1 56.9 A$250m 60 43.3 40 • Debtors days outstanding have fallen from 75 to 70 20 days 0 FY 2000 FY 2001 FY 2002 Cashflow from Ops Cap Ex - PPE 26
Slide 27: Analysis of Capital Expenditure
Analysis of Capital Expenditure CPU Group Capex A$ M Occupancy 29.1 Document Services Facilities 7.7 Information Technology 17.9 Other 2.2 TOTAL 56.9 27
Slide 28: Improved Working Capital Management
Improved Working Capital Management 100 87 90 80 75 70 70 60 50 46 Receivable days Payable days 40 33 33 30 20 10 0 FY 2000 FY 2001 FY 2002 days 28
Slide 29: Balance Sheet Strength
Balance Sheet Strength Net Debt / Equity = 5.2 % Net debt = A$ 34.5m Debt facility available = A$ 250m 29
Slide 30: We have delivered on structural changes
We have delivered on structural changes Initiative Action • Increased focus on staffing costs • Review continuing into restructuring alternatives • Critical evaluation of costs • Implemented strategic review of all non personnel costs within the business, commencing in Australia • Increased fiscal d
Slide 31: Outlook
Outlook At this stage we are confident that FY02 has been our redefining year, and provides the base for future growth. Any revenue and earnings growth will depend on the recovery of global equity markets, and in particular a higher level of corporate actions. Increases in interest rates will also b
Slide 32: Equity Management – Fully Franked Annual Dividend of 5.0 cps
Equity Management – Fully Franked Annual Dividend of 5.0 cps - EPS – Normalised 9.6 cents - Dividend 5.0 cents - Current yield * 2.5 % - EPS Payout ratio 52.1 % - Franking Benefit – Total return 3.6 % * Based on share price of A$ 2.00 32
Slide 33: Equity Management – Share Buy Back
Equity Management – Share Buy Back • On-market Share Buy Back up to 10% of issued capital (approx 55 million shares) • Anticipated commencement: 11 September ’02 (14 days notice) • Period: Over next 6 months • Funding: Current cash and debt facilities 33
Slide 34: Appendix A Registry Revenue Breakdown by Country
Appendix A Registry Revenue Breakdown by Country 34
Slide 35: Global Investor Services Australia - Half Year Comparison
Global Investor Services Australia - Half Year Comparison A$m A$m Revenue Breakdown 61.4 59.0 36.3 34.8 50.6 50.8 29.9 29.4 17.7 15.6 13.3 12.6 8.1 7.9 6.4 6.0 1.0 1.0 1.1 0.7 HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-02 Register Main Corp Actions Margin Income Recoveries HY Dec-00 HY Jun-01 HY Dec-01 HY
Slide 36: Global Investor Services Ireland - Half Year Comparison
Global Investor Services Ireland - Half Year Comparison A$m A$m Revenue Breakdown 4.9 8.3 6.9 3.1 5.5 3.1 3.0 2.8 4.1 2.2 2.4 1.6 0.8 0.4 0.2 0.2 0.0 0.0 0.1 0.0 HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-02 Register Main Corp Actions Margin Income Recoveries HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-02 Revenu
Slide 37: Global Investor Services New Zealand - Half Year Comparison
Global Investor Services New Zealand - Half Year Comparison A$m A$m Revenue Breakdown 4.2 4.3 7.5 6.7 5.6 5.9 3.2 3.3 2.5 2.1 1.7 1.2 1.2 0.7 0.8 0.5 0.0 0.0 0.0 0.0 HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-02 Register Main Corp Actions Margin Income Recoveries HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-02 Re
Slide 38: Global Investor Services South Africa - Half Year Comparison
Global Investor Services South Africa - Half Year Comparison A$m A$m Revenue Breakdown 11.8 13.2 12.4 13.1 11.0 10.8 7.8 8.3 1.0 0.8 1.2 1.2 0.8 0.4 0.0 0.0 0.0 0.0 0.1 0.1 Register Main Corp Actions Margin Income Recoveries HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-01 HY Dec-00 HY Jun-01 HY Dec-01 HY Ju
Slide 39: 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 44.4 44.6 95.5 38.5 37.1 75.8 26.3 23.5 24.0 22.8 21.2 17.6 16.4 17.1 15.9 14.3 11.0 5.2 HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-02 Register Main Corp Actions Margin Income Recoveries HY Dec-00 HY Jun-0
Slide 40: Global Investor Services Hong Kong - Half Year Comparison
Global Investor Services Hong Kong - Half Year Comparison A$m A$m Revenue Breakdown 12.6 12.0 12.1 9.8 8.5 9.0 2.7 3.0 2.3 1.4 0.0 0.0 0.0 0.0 0.0 HY Jun-01 HY Dec-01 HY Jun-02 Register Main Corp Actions Margin Income Recoveries Revenue HY Jun-01 HY Dec-01 HY Jun-01 40
Slide 41: Global Investor Services United States - Half Year Comparison
Global Investor Services United States - Half Year Comparison A$m A$m Revenue Breakdown 33.5 55.2 31.2 53.2 27.7 24.1 49.2 47.5 17.7 16.3 12.0 11.1 7.3 6.3 4.6 4.2 2.7 3.5 2.9 0.0 HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-02 Register Main Corp Actions Margin Income Recoveries HY Dec-00 HY Jun-01 HY Dec-0
Slide 42: 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 58.2 34.3 18.8 17.5 13.4 14.1 12.3 11.0 6.7 6.5 3.6 4.7 3.3 4.2 HY Dec-00 HY Jun-01 HY Dec-01 HY Jun-02 Register Main Corp Actions Margin Income Recoveries HY Dec-00 HY Jun-01 HY Dec-01 HY