Slide 1: Market Announcement: 2019 Investor Day Presentations
Computershare Limited ABN 71 005 485 825 Yarra Falls, 452 Johnston Street Abbotsford Victoria 3067 Australia PO Box 103 Abbotsford Victoria 3067 Australia Telephone 61 3 9415 5000 Facsimile 61 3 9473 2500 MARKET ANNOUNCEMENT www.computershare.com Date: 21 May 2019 To: Australian Securities Exchange
Slide 2: Investor Day 2019: Building the next growth stage
INVESTOR DAY 2019 Building the next growth stage STUART IRVING Chief Executive Officer 21 May 2019
Slide 3: Key CEO messages
Key CEO messages Designing and investing in long term growth strategies Enhancing growth engines, improving efficiencies, expanding the moats New global product aligned management structure to position for next growth stage Focus on new product development and evolving customer needs Disciplined exe
Slide 4: Schedule
Schedule 12:20 – 13:00 Lunch 10:30 – 10:50 CEO Update Stuart Irving 13:00 – 13:45 Employee Share Plans Francis Catterall 10:50 – 11:35 Issuer Services Naz Sarkar 13:45 – 14:00 Summary and question time Mark Davis and Stuart Irving 11:35 – 12:20 Mortgage Services Nick Oldfield 3
Slide 5: Execution priorities
Execution priorities Leverage our core Registry franchise to create and develop new complementary markets and growth opportunities Continued careful expansion of US Mortgage Services Migration and restructuring of UK Mortgage Services Integrating technologies and upgrading toolkit to drive growth in
Slide 6: Earnings guidance
Earnings guidance FY19 guidance affirmed Consistent with what we said in February, we expect Management EPS for FY19 in constant currency to increase by around +12.5% 5 Please refer to assumptions as per Feb 13th announcement
Slide 7: Issuer Services
ISSUER SERVICES Leveraging strength into complementary new growth opportunities NAZ SARKAR CEO - Issuer Services 21 May 2019
Slide 8: Contents
Contents 1 Introducing the new Issuer Services p. 8 2 Register Maintenance – consistent, high-quality performance p. 10 3 Re-energising the core business p. 15 4 Client and market assessment – structural growth p. 18 5 Positioning Issuer Services for the next stages of growth p. 20 6 Execution roadm
Slide 9: Introducing the new Issuer Services
Introducing the new Issuer Services
Slide 10: Introducing the new Issuer Services
Introducing the new Issuer Services We are bringing together our current set of Registry and related services into a single, cohesive, global Issuer Services business positioned for growth The current business › Leading global provider of a range of services in all key markets › Strong and enduring
Slide 11: Register Maintenance – consistent, high-quality performance
Register Maintenance – consistent, high-quality performance
Slide 12: Bringing together a new, cohesive Issuer Services business
Bringing together a new, cohesive Issuer Services business Strong product sets, enduring client relationships and opportunities for improved co-ordination, cross-sell and bundling Company/ General Investor CFO/ Board of Corporate ‘C Suite’ Counsel Relations Treasurer Directors Secretary Register Mai
Slide 13: Unparalleled global capabilities
Unparalleled global capabilities Uniquely positioned to guide Issuers through their most complex challenges Large Australian company Praxair/Linde Pepsi/SodaStream merging with US company Cross-border expertise and CPU’s coverage across multiple Digital platform to enable global footprint to guide j
Slide 14: Register Maintenance and Corporate Actions – recurring revenues and margin expansion
Register Maintenance and Corporate Actions – recurring revenues and margin expansion Since 1H17 combined revenue is up 9.8%, EBITDA is up by 30% and EBITDA margin is up by 5.7% 600 36.9% 40% 33.6% 33.2% 31.9% 35% 500 31.2% 30% 439.7 454.9 400 438.6 416.0 EBITDA Margin % 399.4 25% USD millions 300 20
Slide 15: The strength of our current Issuer Services business
The strength of our current Issuer Services business Register Maintenance is part of a wider Issuer Services portfolio that is well established in key markets and has room for growth $320m $1.42bn $200m Estimated total available $160m revenue in chosen markets 50% $40m 20% $980m of an estimated $2.1
Slide 16: Re-energising the core business
Re-energising the core business
Slide 17: Front office initiatives delivering results
Front office initiatives delivering results Strong client retention rates and improvement in all major index market share Improving IPO win rates Notable competitive wins around the globe 16
Slide 18: Extending the range of Business to Consumer services
Extending the range of Business to Consumer services Improving existing retail investor services by enhancing communications and channels and introducing new products Range of direct retail investor Simple and affordable online Improving our Investor Trade services DirectStock plan for existing and
Slide 19: Client and market assessment – structural growth
Client and market assessment – structural growth
Slide 20: Emerging market trends – structural growth
Emerging market trends – structural growth Increasing demand for integrated governance and compliance solutions Corporate transparency requirements continue to become more onerous Clients need to respond by building more robust governance and reporting frameworks These demands are drivingReplace eme
Slide 21: Positioning Issuer Services for the next stages of growth
Positioning Issuer Services for the next stages of growth
Slide 22: Developing adjacent market opportunities: US Registered Agent
Developing adjacent market opportunities US Registered Agent Every corporation doing business in the United States uses a Registered Agent (RA). Summary The RA provides State-level representation, document processing, annual filings and other corporate services Customer Corporate Secretary or the Ge
Slide 23: Developing adjacent market opportunities: Private Markets
Developing adjacent market opportunities Private Markets Businesses that either remain private or de-list require compliance and governance Summary services more typically associated with public companies Customer Corporate Secretary, General Counsel or Chief Financial Officer Estimated market size
Slide 24: Developing adjacent market opportunities: Corporate Services
Developing adjacent market opportunities Corporate Services Wide range of corporate transactional and advisory services including global entity Summary compliance obligations, in-country governance framework navigation, new entity formations and cross-border corporate action activity Customer Corpor
Slide 25: Extending Issuer Services into adjacent, growing markets
Extending Issuer Services into adjacent, growing markets Size of adjacent markets estimated at more than 2.5 times existing Issuer Services business $2.17bn Global $980m (current market $1.0bn $1.0bn share) GEOGRAPHY Current Issuer Services $0.6bn Private Markets Corporate Services Regional Register
Slide 26: Execution roadmap
© Execution roadmap CERTAINTY INGENUITY ADVANTAGE Computershare
Slide 27: Execution roadmap
Execution roadmap New talent and focus to drive Issuer Services growth Building a Product Growth Operational new team organisation initiatives transformation Our new team will: Establish a global issuer Execute on chosen Initiate next phase of › Continue to re-energise services product and adjacent
Slide 28: Conclusions
Conclusions Computershare Issuer Services is evolving to meet the growing needs of our global Issuer client base The current Issuer Services business is strong and continues to be re-energised Clear and detailed insight into client and market dynamics helping to shape our future positioning Well pla
Slide 29: Mortgage Services: US expansion, UK restructuring
MORTGAGE SERVICES US expansion, UK restructuring NICK OLDFIELD CEO - MORTGAGE SERVICES 21 May 2019
Slide 30: Contents
Contents 1 Key messages p. 30 2 Mortgage Services strategy p. 32 3 UK integration and restructuring p. 34 4 On-going US expansion p. 43 29
Slide 31: Key messages
3) Key messages CERTAINTY INGENUITY ADVANTAGE €omputershare
Slide 32: Key messages
Key messages Well positioned for further US growth, UK restructuring required US UK Grown portfolio to $100bn target Brexit impacting buy-to-let ($101.7bn at 30 April) originations Servicing and revenue mix remain Fixed-fee drop-off. UKAR integration important to achieving target delayed with cost o
Slide 33: Mortgage Services strategy
3) Mortgage Services strategy CERTAINTY INGENUITY ADVANTAGE €omputershare
Slide 34: Mortgage Services strategy
Mortgage Services strategy Expanding servicing channels to control growth and manage run-off 2 Broker Recapture & Refinancing Loan Co-Issue & Servicing Fulfillment & 1 3 Lender In A Box Platform Origination Services Prime Non-prime Property Diligence Solutions 33 subservicing subservicing
Slide 35: UK integration and restructuring
UK integration and restructuring
Slide 36: UKAR migration delayed 12 months
UKAR migration delayed 12 months Significant cost impact in FY20, restructuring planning underway • Computershare platform development complete System development • $16bn in UPB successfully migrated and further $14bn migrating over the next few months • In last 12 months, there have been large scal
Slide 37: UKAR fixed fee revenue profile
UKAR fixed fee revenue profile Embedded programme cost-out opportunity deferred FY19 ($m) FY20 ($m) FY21 ($m) Fixed fee ~90.0 ~50.0 0.0 Dual platform and ~35.0 ~35.0 0.0 programme cost 36
Slide 38: Restructuring planning underway
Restructuring planning underway Initial estimates identify potential ~$85m of cost benefits over three years Total - Source Details $85m › Standing down the project team Migration project $35m › Consolidation onto Computershare’s core platform Standardised servicing › Remove duplication model › Cons
Slide 39: UK strategic priorities
UK strategic priorities Migrate, restructure, create platform for long-term growth options Complete UKAR integration. Migrate all assets onto Computershare’s platform to remove program cost and drive operational benefits Restructure business to drive out cost and deliver a long-term profitable and s
Slide 40: The UK mortgage market
The UK mortgage market Positioning for long-term growth 25% market 25% market 25% market 25% market share share share share Link, 1 lender 2 lenders 3 lenders 70+ lenders £4.1bn, 3% Peratus, Others Exact, £2.5bn, 2% TSB Bank £5.4bn, 5% Coventry Yorkshire BS CYBG Pepper, HSBC £9.8bn, 8% Barclays RBS
Slide 41: New lending activity
New lending activity Over $2.5bn in new challenger bank loans originated in FY19 New Lending Volumes • Subdued market impacting overall pace 1,600 of development 1,400 • Whilst Client 1 is showing good 1,200 volumes and average loan size relative to the market, Client 2 is behind 1,000 expectations
Slide 42: Portfolio development and organic growth
Portfolio development and organic growth We expect to start growing UPB organically by 2HFY20 900 70.0 Redemptions and New Lending (£m) 800 Assets Under Management (£bn) 60.0 700 50.0 600 Bureau - UPB Zephyr 500 40.0 New Lending 400 (exc. Zephyr) 30.0 300 20.0 200 10.0 100 Closed Book TPA - UPB 0 0.
Slide 43: Outlook
Outlook Restructuring to right size for growth Completing the UKAR integration remains our Restructuring program to create a leaner and number one priority more competitive outsourcing option for market Positioned to service new originations for Financial headwinds in FY20 with restructuring challen
Slide 44: On-going US expansion
3) On-going US expansion CERTAINTY INGENUITY ADVANTAGE €omputershare
Slide 45: Stage one of the build is complete – $100bn UPB achieved
Stage one of the build is complete – $100bn UPB achieved Positioned for continued, disciplined growth $100bn in servicing achieved with Non-servicing revenues building Returns improving and on track to good mix of owned / sub-serviced and offer further growth potential meet expectations Proprietary
Slide 46: State of play
State of play Progress across all our key objectives Scale Mix Operating Model Portfolio Sub-servicing +35% Co-issue business delivered $101.7bn +25% $34bn, 34% since June $8.5bn in new servicing since June 2018 of portfolio at at end April 2018 YTD end April Loans Non-performing +21% serviced +27%
Slide 47: Learnings and themes
Learnings and themes Differentiators provide platform for our next stage of growth Strong Focus on counterparty efficiency A servicer, not Service quality, an originator high ratings Steady, Building Capital use & diversified partnerships disciplined servicing supply growth streams 46
Slide 48: Market assessment: scope for further growth
Market assessment Scope for further growth Top 25 Servicers Top 10 Co-Issue Buyers 1,800 16% 20% 1,600 2018 2017 Market 14% 18% 1,400 Share 16% 12% 1,200 14% 10% 12% 1,000 8% 10% 800 6% 8% 600 6% 400 4% 4% 200 2% 2% 0 0% 0% NRZ BB&T Nationstar BOA Loan Care Citi JP Morgan Computershare Citizens Bank
Slide 49: Interest rate sensitivities
Interest rate sensitivities Gently rising rate environment is macro sweet-spot Business impact of interest rate moves Areas impacted Increase Decrease MSR valuation + - Origination levels - + Investor appetite for new products + - Redemptions + run-off + - Margin income on float balance + - Delinque
Slide 50: Market origination levels recovering from Q2 lows
Market origination levels recovering from Q2 lows New product and market opportunities emerging US New Mortgage Originations 4.0 • Outlook relatively flat for coming years 3.5 • Historic low rates of recent years 3.0 expected to drive re-finance activity towards home equity products, rather 2.5 than
Slide 51: Stage two expansion - on-going disciplined growth
Stage two expansion - on-going disciplined growth Leveraging our special servicing skills Building our own network of to drive new sub-servicing growth servicing opportunities to manage run-off and growth Growing our non-servicing revenues to Continued focus on margin improvement maximize returns 50
Slide 52: Core special servicing skills create growth optionality
Core special servicing skills create growth optionality Ability to service non-conventional loans creates sub-servicing growth opportunities • Servicing UPB $2.5bn at 30 April HELOCs • Strong pipeline of new business opportunity • Provide longer term recovery option based on historic behaviours • Si
Slide 53: Expanding our network of servicing channels
Expanding our network of servicing channels Reduces the capital need, provides additional flow to support a larger business Sell MSR to a capital Converts owned MSR Capital light Acquire MSR via partner on a ‘retained’ into a sub-servicing structure co-issue process basis relationship Patrons sell l
Slide 54: Growing our non-servicing revenue lines
Growing our non-servicing revenue lines Represent nearly 30% of our overall business – enhance returns and aiming to maintain ratio • Valuations, title & asset • Collections of charged management off assets • Predominantly still • Book in run-off and we internal business but are focused on Solutions
Slide 55: Continued focus on margin improvement
Continued focus on margin improvement Target margins to be achieved in FY20 • Approximately 40 FTE expected to have been saved by end FY19 – 24 in pipeline for FY20 Process automation • Roles reduced across a range of servicing-focused processes • Some 150 FTE expected to be within global service mo
Slide 56: US conclusions
US conclusions Setting the platform for our next stage of growth Grow our non-servicing revenue lines Valuations, fulfilment, diligence, title, recovery Improve our margins Process and efficiency improvements, new system savings, call centre enhancements Secure new servicing flows Deliver current pi
Slide 57: Employee Share Plans
EMPLOYEE SHARE PLANS Enhancing our business to leverage global growth FRANCIS CATTERALL CEO – Employee Share Plans 21 May 2019
Slide 58: Contents
Contents 1 Key messages p. 58 2 Our business today p. 59 3 Market assessment p. 69 4 Growth strategies and execution priorities p. 73 57
Slide 59: Key messages
Key messages On-going structural growth in the Employee Share Plans market, and positive governance and remuneration trends driving demand for global plans market services A leading global franchise that has high barriers to entry and brings advantage Equatex successfully enhances our technology and
Slide 60: Our business today
© Our business today CERTAINTY INGENUITY ADVANTAGE Computershare
Slide 61: Business today
Business today We are the world’s largest global employee share plans provider Leading global franchise Managing complex Trusted counterparty Significant Assets under Diversification that has high barriers to regulatory and technology Known for data security Administration that provide = greater equ
Slide 62: A strong global franchise that brings advantage
A strong global franchise that brings advantage Recognised experts in compliance requirements and transactional capability Operating in 17 Serving participants Transacting in Across 24 countries from 170 countries 135 currencies exchanges North America EMEA Asia & ANZ • Global data security 557 87 6
Slide 63: Excellent retention and new client wins
Excellent retention and new client wins Computershare services around 1500 Share Plan clients servicing approximately 4.7m +2.9% Net movement in client base participants 62 Net movement adjusts for competitive wins and non-competitive losses such as takeovers and plan wind-up
Slide 64: Launched one of Asia’s largest Employee Share Plans
Launched one of Asia’s largest Employee Share Plans Leveraging our data and expertise to design and implement market leading plans Large financial services company Certainty Ingenuity Advantage • Using our global employee share • Collaboration on design and • Maximised participation plans database t
Slide 65: Recognised as a leader
Recognised as a leader Over the last three years, we’ve been recognised for our contribution and our clients have won over 78 industry awards, including: 64
Slide 66: Latent earnings potential
Latent earnings potential $159bn of AUA drives future transaction revenues - $88bn actionable Our AUA is heavily skewed to contributory and restricted stock Average duration of 77% vesting periods is ‘long’ or vested 21% 23% options in the money or restricted stock grants Time based restricted stock
Slide 67: High quality and diversified book
High quality and diversified book Geographic diversification Skew to contributory plans Sector diversification Real Estate Property, Resources Construction on 1% 4% AU Other 5% Asia Non 15% 8% Contributory Healthcare Industrials 24% 16% 14% CA DE 7% 6% Financial Technology Services Revenue Core fees
Slide 68: Equatex six month scorecard, on target, synergies reaffirmed
Equatex six month scorecard, on target, synergies reaffirmed Investment rationale validated – ahead of plan 63% Client response 100% Year to date performance ahead of plan (revenue and EBITDA) Interest in buying Business integration progressing well. Programme 6 months in positive about the addition
Slide 69: Equatex technology enhances our capability
Equatex technology enhances our capability Purpose-built employee share plan solution Full Access the platform Enhanced • Portfolio views and mobile anytime, anywhere using offering tools price charts Financial All plan our mobile app • Events overview Reporting types • Communications library Ease o
Slide 70: Market assessment
© Market assessment CERTAINTY INGENUITY ADVANTAGE Computershare
Slide 71: Market assessment – emerging opportunities
Market assessment – emerging opportunities We continue to see structural growth and market opportunities and are well-placed to address the trends Ongoing Emerging • Continued structural growth in the Employee • Cyber security, safe custody of assets, compliance Share Plans market and assurance beco
Slide 72: On-going structural growth
On-going structural growth The Employee Share Plan administration market is expected to continue to grow at rates in excess of GDP Key drivers Relevance Impact Trends / Forecast Strateg NA Asia Europe ANZ y Number of Listed and Private Companies using Impacts number of Growth in new IPO High clients
Slide 73: Trends in participation and issuance
Trends in participation and issuance Increasing levels of participation by employees in Employee Share Plans globally More companies are using equity deeper into the organisation to align incentives with their businesses objectives Generally companies maintain the total compensation amount attribute
Slide 74: Growth strategies and execution priorities
Growth strategies and execution priorities
Slide 75: Growth strategies and execution priorities
Growth strategies and execution priorities Increase revenue per client Grow market share • Increase revenue per client by selling • Win more clients, leveraging our data, Revenue additional products and services growth enhanced toolkit and proven service culture • Leverage our global scale and regio
Slide 76: Adding products to drive revenue growth
Adding products to drive revenue growth Global product initiatives • Mobile offering • Financial reporting • Tax mobility and compliance • Automated grant engine +66% increase • New plans being launched in 20-29 age demographic • Communication support to drive Plan participation leveraging expertise
Slide 77: Scope for growth in market share
Scope for growth in market share Large, addressable market with scope to improve our position Computershare only global provider Competing against wealth managers ~$2.2bn+ and plan providers Computershare Total Addressable market leader Market Computershare ~$1.1bn market leader Total ~$950m $307m A
Slide 78: Aligning ourselves on a global basis
Aligning ourselves on a global basis A global management structure will deliver tangible benefits A consistent go-to market strategy The ability to leverage global best practice and local expertise to support clients Streamlined activities with duplication eliminated (e.g. infrastructure, developmen
Slide 79: Conclusion – driving growth and market expansion
Conclusion – driving growth and market expansion Transitioning to the new model strengthens our growth engine A single strategic focus across previously independent regional businesses Enhanced by moving to a global operating model Deploying a purpose built toolkit Clear growth strategies and execut
Slide 80: Investor Day 2019: Q&A
INVESTOR DAY 2019 Q&A STUART IRVING MARK DAVIS Chief Executive Officer Chief Financial Officer 21 May 2019
Slide 81: Summary
INVESTOR DAY 2019 Summary STUART IRVING Chief Executive Officer 21 May 2019
Slide 82: Computershare investment case
Computershare investment case Multiple growth drivers Quality business • US Mortgage Services • Broad, large base of long-term customer relationships • Employee Share Plans • Recurring revenues • Issuer Services • Consistent margin range through the cycle • High returns on equity ESG commitments Opt
Slide 83: Long term shareholder returns
Long term shareholder returns 35% EBITDA margin Return on Equity 25.2% - 31.5% 40% 22.3% - 36.1% 30% 35% 25% 30% 20% 25% 20% 15% 15% 10% 10% 5% 5% 0% 0% FY09 10 11 12 13 14 15 16 17 FY18 FY09 10 11 12 13 14 15 16 17 FY18 Free cash flow Dividend per share 450 $3.4bn generated 45 $1.6bn distributions
Slide 84: Important notice
Important notice Summary information • This announcement contains summary information about Computershare and its activities current as at the date of this announcement. • This announcement is for information purposes only and is not a prospectus or product disclosure statement, financial product or
Slide 85: Investor Day 2019: Building the next growth stage
INVESTOR DAY 2019 Building the next growth stage