Computershare Limited · ASX:CPU
Computershare — FY2008 Earnings Presentation
75 slides from Computershare's earnings presentation, Aug 13, 2008
Slide 1: Full Year Results 2008 Presentation
Computershare Limited Full Year Results 2008 Presentation Stuart Crosby Tom Honan 13 August 2008
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 51.61 cents, up 41% › Management Net Profit After OEI of $290.4m, up 32% › Operating cash flows of $347.3m, up 8% › Total Operating Revenues of $1,582.5m, up 12% › Operating Costs of $1,106.0m, up 5% › Final Dividend of 11 cents* (AUD) per share, u
Slide 5: Computershare Strengths
Introduction Computershare Strengths › Strong and sustained earnings and cashflow growth › More than 70% of Revenue recurring in nature › Diversified across business lines and globally – across 17 countries including growth engines China, India and Russia › 1st or 2nd in all registry markets we serv
Slide 6: Outlook
Outlook Introduction Long-term growth in management EPS of 20% per year remains the target, to be achieved by a combination of organic growth and acquisitions, as well as balance sheet management. Looking to FY09 and having regard to current equity, foreign exchange and interest rate market conditio
Slide 7: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 7
Slide 8: Financial Results – Tom Honan, CFO
Financial Results Tom Honan CFO 8
Slide 9: Group Financial Performance – US$m
Group Financial Performance – US$m Financial Results FY08 FY07 Variance Sales Revenue 1,564.0 1,404.2 11% Interest & Other Income 18.6 14.2 31% Total Revenue 1,582.5 1,418.4 12% Operating Costs 1,106.0 1,050.9 (5%) Share of Net (Profit)/Loss of Associates (2.7) (3.0) Management EBITDA 479.2 370.5 29
Slide 10: FY08 NPAT Analysis
FY08 NPAT Analysis Financial Results $USm 350 33.9 6.9 1 EBITDA - AP 300 10.4 19.4 2 EBITDA - EMEA 1.1 39.5 3 EBITDA - NA 250 35.4 4 Depn & Amort 290.4 5 Interest 200 219.4 6 Tax 150 7 OEI FY07 NPAT 1 2 3 4 5 6 7 FY08 NPAT 10
Slide 11: Management EPS Performance
Management EPS Performance Financial Results Rolling 12 months US cents 60 50 40 30 20 10 0 FY03 FY04 FY05 FY06 FY07 FY08 11
Slide 12: Analysis of Management EPS – Half Year Comparison
Analysis of Management EPS – Financial Half Year Comparison Results US cents 30.00 25.00 20.00 15.00 10.00 5.00 0.00 1H05 2H05 1H06 2H06 1H07 2H07 1H08 2H08 6.60 9.52 8.82 13.92 17.86 18.83 27.36 24.26 12
Slide 13: Net Operating Cash Flows
Net Operating Cash Flows Financial Results $USm Operating Cash Flow Vs. Capital Expenditure 347.3 350 321.0 300 250 200 183.6 150 109.8 100 50 42.8 23.7 25.0 25.7 0 FY05 FY06 FY07 FY08 Operating Cash Flows Capital Expenditure 13
Slide 14: Free Cash Flow
Free Cash Flow Financial Results $USm Operating Cash Flows less Capital Expenditure 350 304.5 Free Cash Flow: 295.3 300 - 3 year CAGR 52% - 5 year CAGR 54% 250 200 158.6 150 100 86.1 50 0 FY05 FY06 FY07 FY08 14
Slide 15: Full Year Comparisons – Revenue & EBITDA
Full Year Comparisons – Revenue & EBITDA Financial Results $USm $USm 1800 600.0 479.2 1600 500.0 1400 R 370.5 E e B 1200 400.0 v I e T n 1000 D u 240.1 300.0 A e 800 600 200.0 400 100.0 200 1214.7 1418.4 1582.5 0 0.0 FY06 FY07 FY 08 Tot al Revenue M anagement EBITDA 15
Slide 16: Half Year Comparisons – Revenue & EBITDA
Half Year Comparisons – Revenue & EBITDA Financial Results $USm 1st Half $USm $USm $USm 2nd Half 800 300 800 300 257.4 700 700 250 250 221.8 600 600 188.7 200 181.7 200 500 500 400 150 400 140.4 150 99.7 300 300 100 100 200 200 50 50 100 100 588.1 694.0 788.2 626.7 724.4 794.3 0 0 0 0 1H06 1H07 1H08
Slide 17: Management EBITDA Margin
Management EBITDA Margin Financial Results 35.0% 30.3% 30.0% 26.1% 25.0% 19.6% 20.0% 19.8% 15.0% 10.0% FY05 FY06 FY07 FY08 17
Slide 18: Revenue Breakdown – US$m
Revenue Breakdown – US$m Financial Results FY08 FY07 Variance Register Maintenance 817.6 725.9 13% Corporate Actions 303.6 252.5 20% Fund Services 91.3 116.1 (21%) Stakeholder Relationship Mgt 89.0 86.9 2% Employee Share Plans 119.0 117.1 2% Communication Services 105.3 75.7 39% Technology & Other R
Slide 19: Margin Income analysis
Margin Income analysis Financial Results US$m 250 217.5 200 173.7 150 117.5 100 50 0 FY06 FY07 FY08 Average Interest rates: UK 4.52% 5.04% 5.45% US 4.18% 5.25% 3.76% Canada 3.28% 4.25% 3.98% Australia 5.54% 6.25% 6.82% Average balances (US$bn) * 6.4 6.7 8.7 *Note: some balances attract no interest o
Slide 20: Regional Analysis – FY08 Revenue & EBITDA
Regional Analysis – FY08 Revenue & EBITDA Financial Results Total Revenue Breakdown EBITDA Breakdown 23% 28% 48% 51% 26% 24% Asia Pacific EMEA North America Asia Pacific EMEA North America 20
Slide 21: Full Year Comparisons – Operating Costs
Full Year Comparisons – Operating Costs Financial Results $USm 1200 1100 1000 284.4 278.6 900 277.7 800 700 600 500 400 821.4 772.3 700.2 300 200 100 0 FY06 FY07 FY08 Operating Costs excl. COS Cost of Sales (COS) 21
Slide 22: Technology Costs – Focused on Revenue & Cost Initiatives
Technology Costs – Focused on Revenue & Cost Initiatives Financial Results US$m % 175.0 12.0% 150.0 9.6% 9.4% 10.1% 125.0 8.0% 100.0 75.0 115.5 132.0 157.2 4.0% 50.0 25.0 0.0 0.0% FY06 FY07 FY08 Total Technology costs Technology costs as a % of sales revenue 22
Slide 23: Analysis of FY08 Technology Costs
Analysis of FY08 Technology Costs Financial Results 4% 26% 42% Total Costs US$157.2m Development Costs US$64.8m 28% Development Infrastructure Maintenance Administration 23
Slide 24: Analysis of Technology Costs
Analysis of Technology Costs Financial Results $USm 160 6.5 140 6.5 41.3 120 3.7 41.6 100 50.0 44.6 80 40.6 60 21.4 40 64.8 43.3 20 40.5 0 FY06 FY07 FY08 Development Infrastructure Maintenance Admin 24
Slide 25: Balance Sheet as at 30 June 2008
Balance Sheet as at 30 June 2008 Financial Results Jun-08 Jun-07 Variance US$'000s US$'000s Current Assets 516,129 368,891 40% Non Current Assets 1,721,889 1,366,224 26% Total Assets 2,238,018 1,735,115 29% Current Liabilities 436,911 338,551 (29%) Non Current Liabilities 1,030,911 563,990 (83%) Tot
Slide 26: Key Financial Ratios
Key Financial Ratios Financial Results EBITDA interest coverage Net Financial Indebtedness to EBITDA times times 14 3.0 12.1 11.9 2.48 11.5 12 2.5 10 8.7 2.0 1.68 1.64 8 1.5 6 0.94 1.0 4 2 0.5 0 0.0 FY05 FY06 FY07 FY08 FY05 FY06 FY07 FY08 26
Slide 27: Computershare Borrowings
Computershare Borrowings Financial Results Jun-08 Jun-07 Variance US$m US$m Cash 124.2 86.8 43% Interest Bearing Liabilities * 910.9 435.1 (109%) Net Debt 786.7 348.3 (126%) Management EBITDA 479.2 370.5 29% Net debt to Management EBITDA 1.64 0.94 (75%) *Average Tenor of drawn debt at 30 June 2008 w
Slide 28: Debt Facility Maturity Profile
Debt Facility Maturity Profile Financial Results US$m FY09 $200.0m 700.0 FY10 Nil 600.0 FY11 $600.0m 600.0 FY12 $123.0m 500.0 FY13 Nil 400.0 FY14 Nil FY15 $124.5m 300.0 235.0 FY16 Nil 200.0 200.0 FY17 $21.0m 123.0 124.5 100.0 FY18 Nil 21.0 FY19 235.0m 0.0 Total $1,303.5m FY09 FY10 FY11 FY12 FY13 FY1
Slide 29: Capital Expenditure
Capital Expenditure Financial Results $USm 45.0 Capital Expenditure Vs. Depreciation 3.2 40.0 35.0 12.7 30.0 1.7 1.3 Depreciation 25.0 4.1 6.0 20.0 4.4 4.5 15.0 5.1 10.0 22.7 15.0 5.0 12.6 0.0 FY06 FY07 FY08 Information Technology Communication Services Facilities Occupancy Other 29
Slide 30: Working Capital Management
Working Capital Management Financial Results Days Sales Outstanding Days 50 45 43 44 45 40 35 30 25 20 15 10 5 0 FY06 FY07 FY08 30
Slide 31: Return On Invested Capital Vs. WACC
Return On Invested Capital Vs. WACC Financial Results Increased returns, lower Cost of Capital 20% AGAAP AIFRS 18% 16% 14% 12% 10% 8% 6% FY03 FY04 FY05 FY06 FY07 FY08 WACC ROIC 31
Slide 32: Return on Equity
Return on Equity Financial Results AGAAP AIFRS 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% FY03 FY04 FY05 FY06 FY07 FY08 ROE 32
Slide 33: Equity Management – Final Dividend of 11 cps (AU)
Equity Management – Final Dividend of 11 cps (AU) Financial Results › EPS – Basic US 50.12 cents › EPS – Management US 51.61 cents › Final Dividend (30 % franked) AU 11 cents › Current Yield* 2.1% * Based on 12 month dividend and share price of A$9.99 (close 12 February 2008) 33
Slide 34: Equity Management – Ordinary Share Buy-back
Equity Management – Ordinary Share Buy-back Financial Results › Acquired 45,000,000 ordinary shares › Average price AUD $9.91 › Commenced Dec-06, completed Oct-07 34
Slide 35: Financial Summary – Final Remarks
Financial Summary – Final Remarks Financial Results › Continued strong EPS growth - 41% › Record revenues › Maintained strong balance sheet › Return on equity > 40% › Dividend increased to 11 cents (AUD) per share, 30% franked 35
Slide 36: Introduction, Financial Results, CEO's Report
Market Financial Overview Results CEO’s Report 36
Slide 37: CEO Presentation – Stuart Crosby, President & CEO
CEO Presentation CEO’s Report Stuart Crosby President & CEO 37
Slide 38: Strategy
Strategy CEO’s Report 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 and enhance r
Slide 39: Strategy continues to deliver acquisition and operational leverage
Strategy continues to deliver acquisition and CEO’s operational leverage Report Acquisitions continue to drive value and eps accretion › spent $320m on 12 acquisitions in FY08 › Busy Bees voucher admin announced today – another $175m – and we expect opportunities to continue to emerge Operational le
Slide 40: Geographical and business line diversification provides protection
Geographical and business line diversification CEO’s provides protection in a volatile environment Report › Headwinds evident in some areas in FY08 – most noticeable in US, especially proxy and plans › but our portfolio of assets provides protection – both by business line and by geography › We expe
Slide 41: North America update - USA
North America update - USA CEO’s Report Investor Services › Service quality now market leading, providing a much stronger platform for client engagement › Corporate actions slow Other › Fund Services - continues to win vast majority of work, but volumes unpredictable › Communications Services – regi
Slide 42: North America update - Canada
North America update - Canada CEO’s Report Investor Services › Strong local and cross-border corporate action deal flow continues, but deals generally smaller in size › Operations efficiency being enhanced by deployment of CPU best practice › BCE privatisation now proceeding in FY09 Corporate Trust
Slide 43: EMEA update – UK, Russia, Germany, Ireland and South Africa
EMEA update – UK, Russia, Germany, Ireland CEO’s and South Africa Report UK › Market more rational on price post ownership change at main competitor › Deposit Protection Service continues to exceed expectations › Rights issues by major banks › Good new business prospects in Plans space Russia › CPU
Slide 44: Asia Pacific update - Asia
Asia Pacific update - Asia CEO’s Report Hong Kong and China › IPO pipeline healthy but flow stalled by market sentiment › Good proxy deal-flow from PRC › Beijing office now established – PRC plans services relocating there Japan › Joint venture with MUTB continues to perform well › While TA opportun
Slide 45: Asia Pacific update – Australia and New Zealand
Asia Pacific update – Australia and CEO’s New Zealand Report Investor Services › Rolling out new AGM/EGM management product Communication Services › QM integration going well Plans › Soon to deliver new option admin functionality Fund Services › Now has a solid platform and well positioned to grow i
Slide 46: Looking forward to 2009
Looking forward to 2009 CEO’s Report Computershare has a strong operational and financial platform for continued growth: › Powerful technology and investing more to build on our competitive advantage › Economies of scale › Stable and long term client base › Healthy margins › Strong balance sheet to
Slide 47: Full Year Results 2008 Presentation
Computershare Limited Full Year Results 2008 Presentation Stuart Crosby Tom Honan 13 February 2008
Slide 48: Appendix
Appendix: Full Year Results 2008 Presentation 13 August 2008 48
Slide 49: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Group Comparisons 49
Slide 50: Behind the Headline – NPAT Impact
Behind the Headline – NPAT IMPACT Financial Results US$000’s Net profit after tax at 30 June 2008 281,971 Loss on sale of subsidiaries 480 QMT acquisition costs 6,915 Acquisition provisions no longer required (2,628) Intangible assets amortisation 4,641 US property rationalisation 1,913 Marked to ma
Slide 51: CPU Revenues
CPU Revenues Financial Results Revenue Type 4% 7% 8% Register Maintenance Corporate Actions 6% Fund Services Stakeholder Relationship Management Employee Share Plans 6% 51% Communication Services Technology & Other Revenue 18% 51
Slide 52: Regional Analysis – FY08 Revenue
Regional Analysis – FY08 Revenue Financial Results $USm 443.0 450.0 400.0 350.0 300.0 250.0 200.0 187.9 186.7 ` 150.0 128.6 109.9 100.0 73.7 65.0 59.2 59.5 37.6 42.3 43.6 50.0 29.8 20.9 23.6 9.0 15.9 10.7 10.8 14.9 2.3 0.0 Register Maintenance Corporate Actions Fund Services Stakeholder Employee Sha
Slide 53: Full Year Comparisons - Revenue
Full Year Comparisons - Revenue Financial Results $USm 900 817.6 725.9 800 639.7 700 600 500 400 303.6 252.5 300 171.8 200 117.1 119.0 116.1 110.5 105.3 95.8 91.3 86.9 89.0 90.3 75.7 63.2 56.8 44.2 100 43.5 0 Register Corporate Actions Funds Serv ices Stakeholder Employ ee Share Communication Techno
Slide 54: Full Year Comparisons – Operating Costs
Full Year Comparisons – Operating Costs Financial Results $USm 550 501.6 500 459.4 431.1 450 400 350 284.4 278.6 300 277.7 250 200 156.4 131.3 150 113.7 100 77.2 69.5 66.1 64.5 56.2 63.9 39.9 50 33.5 29.7 0 Cost of Sales Personnel Occupancy Other Direct T echnology Corporate FY06 FY07 FY08 54
Slide 55: Underlying Effective Tax Rate
Underlying Effective Tax Rate Financial Results % 35.0 30.0 28.5 26.4 23.9 25.0 19.4 20.0 15.0 10.0 5.0 0.0 FY05 FY06 FY07 FY08 55
Slide 56: Interest Rate Sensitivity
Interest Rate Sensitivity Financial Results US$m PBT 80 Impact 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 Exposure Hedged exposure -80 This graph outlines the sensitivity of northern hemisphere interest rate changes when measured agai
Slide 57: 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 23% environment Policy: - Minimum hedge of 25% / Maximum hedge of 100%* Exposure to * Board approved interest rates 39% - Minimum term 1 year / M
Slide 58: Risk Management – Average Funds Balances
Risk Management – Average Funds Balances Financial for year ending 30 June 2008 Results By Category By Country Sharesave/ Employee Dividend Australia Plans 16% US 3% 11% Dissenter Broker Trust 26% 3% 15% Canada 46% Regular Trust Corporate 17% UK Actions 25% 38% Average funds balance US$8.7b 58
Slide 59: Appendix 2: Country Summaries
Appendix 2: Country Summaries Financial Results Country Summaries 59
Slide 60: Country Summaries – Asia Pacific
Appendix 2: Country Summaries Financial Results Asia Pacific 60
Slide 61: Australia Half Year Comparison
Australia Half Year Comparison Financial Results $Am Total Revenue $Am Revenue Breakdown 200 80.0 76.7 173.6 70.0 66.8 152.9 63.2 63.4 150 143.2 60.0 136.5 50.0 47.4 100 40.0 35.7 35.0 30.0 28.1 28.7 24.7 25.2 21.0 20.0 50 8.6 8.2 8.7 10.0 6.9 7.5 7.2 6.8 7.8 4.9 5.6 3.8 3.0 3.0 2.8 2.6 2.9 0.0 0 Re
Slide 62: New Zealand Half Year Comparison
New Zealand Half Year Comparison Financial Results Total Revenue $NZm $NZm Revenue Breakdown 10 8.0 8.6 8.4 7.0 8.1 8 6.3 6.4 5.9 6.0 6.9 6 4.0 4 2.0 2.0 1.8 1.6 2 1.0 0 0.0 1H07 2H07 1H08 2H08 Register Maintenance Corporate Actions 1H07 2H07 1H08 2H08 62
Slide 63: Hong Kong Half Year Comparison
Hong Kong Half Year Comparison Financial Results Total Revenue Revenue Breakdown $HKm $HKm 500 350.0 450 441.1 300.3 300.0 400 250.0 350 300 200.0 161.4 250 227.1 235.4 212.2 150.0 140.7 126.0 123.4 200 109.4 103.5 100.0 150 50.8 100 50.0 50 0.0 0 Register Maintenance Corporate Actions 1H07 2H07 1H0
Slide 64: India Half Year Comparison
India Half Year Comparison Financial Results Total Revenue Revenue Breakdown INRm INRm 1200 650.0 622.3 1,060.0 600.0 550.0 1000 500.0 812.2 450.0 800 400.0 381.2 350.0 582.2 309.8 600 300.0 287.0 533.2 257.9 261.8 270.6 250.0 216.3 400 200.0 179.8 150.0 121.2 100.0 200 46.3 50.0 33.4 0.0 0 Register
Slide 65: Country Summaries – North America
Appendix 2: Country Summaries Financial Results North America 65
Slide 66: United States Half Year Comparison
United States Half Year Comparison Financial Results Total Revenue $USm Revenue Breakdown $USm 299.4 296.7 200.0 300.0 280.9 263.2 157.2 250.0 149.4 150.0 136.7 133.7 200.0 100.0 150.0 66.2 100.0 50.0 45.5 45.4 44.4 42.6 33.1 28.8 30.5 27.9 25.9 24.9 21.6 21.3 20.6 12.7 13.7 50.0 9.9 9.7 11.6 11.3 3
Slide 67: Canada Half Year Comparison
Canada Half Year Comparison Financial Results Total Revenue $CAm $CAm Revenue Breakdown 130 90.0 81.8 120 114.6 116.1 108.5 80.0 76.0 76.4 110 96.2 70.0 100 63.6 90 60.0 80 50.0 70 40.0 60 30.0 27.5 50 24.1 21.4 40 20.0 14.4 30 10.0 6.7 7.9 6.6 7.6 5.1 4.1 2.9 3.2 20 1.5 1.5 1.2 1.2 0.1 0.1 0.4 0.3
Slide 68: Country Summaries – EMEA
Appendix 2: Country Summaries Financial Results EMEA 68
Slide 69: United Kingdom Half Year Comparison
United Kingdom Half Year Comparison Financial Results GBPm Revenue Breakdown Total Revenue GBPm 40.0 70.0 33.6 60.0 57.1 30.4 29.7 29.6 53.7 55.5 30.0 50.4 50.0 40.0 20.0 30.0 11.8 10.6 10.4 20.0 9.4 9.8 9.3 10.0 8.2 10.0 4.7 2.7 2.4 1.8 1.6 1.8 1.5 1.1 1.5 0.8 1.4 1.0 1.4 0.0 0.0 1H07 2H07 1H08 2H0
Slide 70: Ireland Half Year Comparison
Ireland Half Year Comparison Financial Results EURm Total Revenue EURm Revenue Breakdown 4.5 4.4 4.2 4 4.1 3.4 3.4 3.0 3 2.9 2.7 3 2 1.5 1 0.8 0.7 0.7 0.7 0.5 0.4 0.2 0.1 0 Register Maintenance Corporate Actions Funds Services Technology & Other 0 Revenue 1H07 2H07 1H08 2H08 1H07 2H07 1H08 2H08 70
Slide 71: Germany Half Year Comparison
Germany Half Year Comparison Financial Results EURm Total Revenue 35 Revenue Breakdown EURm 31.2 12 11.6 30 11 10 9.8 25 24.8 9 8.6 8.2 8 7.7 7.2 19.3 7 7.0 20 17.4 6 5.7 5.7 5.5 5.0 5 15 4.1 4 2.9 3 10 2 1 0.7 0.8 0.5 0.4 0.5 0.4 0.3 0.3 5 0.1 0.1 0.1 0 Register Corporate Stakeholder Employee Share
Slide 72: South Africa Half Year Comparison
South Africa Half Year Comparison Financial Results Total Revenue ZARm ZARm Revenue Breakdown 140 110 102.3 100.5 120 115.2 113.1 100 90 87.6 99.7 81.5 100 87.7 80 70 80 60 60 50 40 40 30 20 12.1 12.9 12.6 20 10 6.3 0 0 Register Maintenance Corporate Actions 1H07 2H07 1H08 2H08 1H07 2H07 1H08 2H08 7
Slide 73: Russia Half Year Comparison
Russia Half Year Comparison Financial Results Total Revenue RUBm 292.9 RUBm Revenue Breakdown 300 272.6 300 277.4 250 255.6 250 200 179.8 200 179.8 150 128.5 150 128.5 100 100 50 50 17.0 15.6 0 0 Register Maintenance Corporate Actions 1H07 2H07 1H08 2H08 1H07 2H07 1H08 2H08 73
Slide 74: Appendix 3: Assumptions
Appendix 3: Assumptions Financial Results Assumptions 74
Slide 75: Assumptions: Exchange Rates
Assumptions: Exchange Rates Financial Results Average exchange rates used to translate profit and loss to US dollars. USD 1.0000 AUD 1.11862 HKD 7.79098 NZD 1.29601 INR 40.15670 CAD 1.00802 GBP 0.49783 EUR 0.68296 ZAR 7.22773 RUB 24.53307 75