Computershare Limited · ASX:CPU
Computershare — FY2011 Earnings Presentation
67 slides from Computershare's earnings presentation, Aug 10, 2011
Slide 1: Full Year Results 2011 Presentation
Computershare Limited Full Year Results 2011 Presentation Stuart Crosby Peter Barker 10 August 2011
Slide 2: CEO's Introduction and Financial Results Report
Financial CEO’s Introduction Results Report 2
Slide 3: Introduction – Stuart Crosby
Introduction Stuart Crosby PRESIDENT & CHIEF EXECUTIVE OFFICER
Slide 4: Results Highlights
Results Highlights Introduction Management Adjusted Results FY 2011 @ FY 2010 FY 2011 FY 2010 v FY 2010 exchange rates Management Earnings per share (post NCI) US 55.67 cents US 57.80 cents Down 3.7% US 54.09 cents Total Revenue $1,618.6 $1,619.6 Down 0.1% $1,566.5 Operating Expenses $1,125.4 $1,111
Slide 5: Computershare Strengths
Computershare Strengths Introduction › Strong balance sheet, low gearing and continued robust cash generation. › Diversification into counter and non cyclical businesses gives stability to revenue and profit base. › More than 70% of revenue recurring in nature. › Demonstrated ability to acquire and
Slide 6: Trading environment
Trading environment Introduction › In a difficult environment, annuity revenue lines such as register maintenance, employee share plans, communications services, corporate trust (Canada), voucher services (UK) and the deposit protection scheme (UK) continue to hold up well. › Net margin income is al
Slide 7: Investment
Investment Introduction › Major acquisitions announced during the year include the Bank of New York Mellon’s shareowner services business (still subject to regulatory clearance), and Servizio Titoli in Italy. › We continue to make good progress on integrating recently acquired businesses, including
Slide 8: Guidance
Guidance Introduction › Looking forward to FY12, the impact and duration of current market volatility are unclear. This makes us even more cautious about guidance than usual. › A week ago, we would have said that we do not expect management eps results from Computershare’s current portfolio of busin
Slide 9: CEO's Introduction and Financial Results Report
Financial CEO’s Introduction Results Report 9
Slide 10: Financial Results – Peter Barker
Financial Results PETER BARKER CHIEF FINANCIAL OFFICER 1
Slide 11: Drivers Behind FY 2011 Financial Performance
Drivers Behind FY 2011 Financial Performance Financial Results › Continued solid delivery in subdued market conditions of recurring revenues across the year, business lines and geographies. Non-equity market businesses (Corporate Trust, Deposit Protection Scheme, Voucher Services) generally performe
Slide 12: Group Financial Performance
Group Financial Performance Financial Results % variance FY11 FY10 to FY 2010 Sales Revenue $1,598.9 $1,599.6 (0.0%) Interest & Other Income $19.7 $20.0 (1.6%) Total Revenue $1,618.6 $1,619.6 (0.1%) Operating Costs $1,125.4 $1,111.3 1.3% Share of Net (Profit)/Loss of Associates ($0.4) ($2.6) Managem
Slide 13: Management EPS
Management EPS Financial Results 60.00 57.80 55.67 52.11 50.00 40.00 US Cents 31.38 28.71 30.00 26.14 25.97 26.42 26.96 20.00 10.00 0.00 2009 2010 2011 1H 2H FY 13
Slide 14: FY 2011 Management NPAT Analysis
FY 2011 Management NPAT Analysis Financial Results 350.0 330.0 2.4 9.8 US$ million 2.5 1.5 18.3 3.3 17.4 310.0 12.0 4.2 1.8 8.1 290.0 321.2 309.3 270.0 250.0 14
Slide 15: Revenue & EBITDA
Revenue & EBITDA Financial Results Half Year Comparisons 900 50% 837.6 807.5 812.1 800 783.0 781.0 45% 728.7 40% 700 Revenue & EBITDA (US$ million) 34.0% 35% 32.5% 600 31.5% Operating Margin % 30.5% 29.6% 29.1% 30% 500 25% 400 20% 300 274.8 238.6 236.9 236.1 246.0 247.6 15% 200 10% 100 5% 0 0% 1H09
Slide 16: Revenue Breakdown
Revenue Breakdown Financial Results FY 2011 Revenue Stream FY 2011 FY 2010 variance to 2H 2011 1H 2011 2H 2010 1H 2010 FY 2010 Register Maintenance $698.5 $660.2 5.8% $367.7 $330.8 $342.9 $317.3 Corporate Actions $179.5 $183.2 (2.0%) $82.7 $96.8 $71.0 $112.2 Business Services $266.1 $276.3 (3.7%) $1
Slide 17: FY 2011 Revenue & EBITDA Regional Analysis
FY 2011 Revenue & EBITDA Financial Results Regional Analysis Total Revenue breakdown EBITDA breakdown 13% 15% 23% 20% Australia & NZ Asia 10% UCIA 8% Continental Europe 32% USA 27% Canada 24% 19% 6% 3% Regional Reporting Previous Structure Current Structure Australia & NZ Australia & NZ Asia Asia US
Slide 18: Margin Income Analysis
Margin Income Analysis Financial Results 200.0 12.0 11.2 180.0 10.0 160.0 8.8 9.2 140.0 8.2 7.2 8.0 US$ Million 120.0 US$ Billion 6.4 100.0 87.0 6.0 86.4 83.9 84.5 74.5 77.5 80.0 4.0 60.0 40.0 2.0 20.0 0.0 0.0 1H09 2H09 1H10 2H10 1H11 2H11 Margin Income Average balances Average Market Interest rates
Slide 19: FY11 Client Balances – Interest Rate Exposure
FY11 Client Balances – Financial Results Interest Rate Exposure Total funds (USD 10.2b) held CPU had an average of USD10.2b of during FY11 client funds under management during FY11. For 28% ($2.8b) of the FY11 average client funds under Exposure to No exposure management, CPU had no exposure interes
Slide 20: Client Balances – Interest Rate Exposure and Currency
FY11 Client Balances – Financial Results Interest Rate Exposure and Currency “Exposed Funds” by Currency (FY11 Average Balances) Total Exposed Funds Non-hedged Exposed (both hedged and non-hedged) Funds AUD Other AUD 3% ($0.2b) Other 7% ($0.6b) 3% ($0.1b) CAD CAD 12% ($0.6b) 16% ($1.2b) 14% ($0.6b)
Slide 21: Client Balances – Forward view of Hedges
Client Balances – Financial Forward view of Hedges Results Derivative and Fixed Rate Deposits in place at 30-Jun-11 US$m Total hedges 3,000 2,500 2,000 1,500 1,000 500 0 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Total Synthetic Hedging (derivatives & term deposits) 21
Slide 22: Client Balances – Interest Rate Hedging Policy and Strategy
Client Balances – Financial Results Interest Rate Hedging Policy and Strategy Policy: Minimum hedge of 25% / Maximum hedge of 100% Minimum term 1 year / Maximum term 5 years (some exceptions permitted under the Board policy) Current Strategy: Continue to monitor medium term swap rates with the inten
Slide 23: Operating Costs
Operating Costs Financial Results Half Year Comparisons 700 600 154.2 500 148.6 137.4 138.8 139.6 141.2 400 US$ million 300 427.1 436.2 200 406.7 396.8 395.4 350.6 100 0 1H09 2H09 1H10 2H10 1H11 2H11 Operating costs excl. COS Cost of Sales (COS) 23
Slide 24: Operating Costs Half Year Comparisons
Operating Costs Financial Half Year Comparisons Results 350.0 293.4 283.7 263.8 263.7 300.0 256.1 226.6 250.0 US$ million 200.0 154.2 148.6 141.2 139.6 138.8 137.4 150.0 82.2 81.8 80.7 80.0 79.3 71.3 100.0 37.7 34.8 34.6 33.9 32.3 30.3 28.9 26.8 24.6 23.0 22.7 20.4 50.0 0.0 Cost of Sales Personnel O
Slide 25: Technology Costs
Technology Costs Financial Results Continued Investment to Maintain Strategic Advantage 120 12.0% 10.7% 10.1% 10.3% 10.0% 9.9% 100 10.0% Technology costs as a % of revenue 9.5% 80 4.4 3.4 4.1 8.0% 3.9 2.7 US$ million 18.5 2.3 19.0 19.9 27.6 26.1 60 19.7 6.0% 23.2 26.3 23.3 40 22.1 20.2 23.9 4.0% 20
Slide 26: Free Cash Flows
Free Cash Flows Financial Results 250 206.7 207.7 200 181.6 171.2 ** 159.9 148.4 150 US$ million 100 49.7 * 50 12.6 15.4 ** 10.3 7.3 8.0 0 1H09 2H09 1H10 2H10 1H11 2H11 Operating Cash Flows Cash outlay on Capital Expenditure Notes: 1. * US$49.7m includes acquisition of Land and Buildings in the UK (
Slide 27: FY 2011 Operating Cash Flows Analysis
FY 2011 Operating Cash Flows Analysis Financial Results 450.0 24.1 400.0 32.5 22.9 109.4 350.0 300.0 US$ million 250.0 200.0 414.5 150.0 319.6 100.0 50.0 0.0 27
Slide 28: Balance Sheet as at June 2011
Balance Sheet as at 30 June 2011 Financial Results Jun-11 Jun-10 Variance Jun-11 to US$'000 US$'000 Jun-10 Current Assets $733,928 $653,512 12.3% Non Current Assets $2,139,310 $2,036,943 5.0% Total Assets $2,873,238 $2,690,455 6.8% Current Liabilities $538,456 $497,347 8.3% Non Current Liabilities $
Slide 29: Key Financial Ratios
Key Financial Ratios Financial Results EBITDA Interest Coverage Net Financial Indebtedness to EBITDA 25.0 2.00 1.80 20.0 1.60 1.40 15.0 1.20 Times Times 1.00 22.1 22.3 1.72 1.67 10.0 0.80 17.0 1.42 1.40 1.42 1.35 15.1 0.60 13.3 5.0 10.4 0.40 0.20 0.0 0.00 1H09 2H09 1H10 2H10 1H11 2H11 1H09 2H09 1H10
Slide 30: Debt Facility Maturity Profile
Debt Facility Maturity Profile Financial Results Debt Committed Bank Private Placement Maturity Dates 600.0 ** Drawn Debt Facilities Debt Facility Facility FY12 Mar-12 123.0 123.0 123.0 550.0 FY13 Jul-12 550.0 550.0 May-13 297.7 300.0 300.0 FY14 May-14 140.0 300.0 300.0 500.0 FY15 Mar-15 124.5 124.5
Slide 31: Capital Expenditure vs. Depreciation
Capital Expenditure vs. Depreciation Financial Results 50.0 49.7 45.0 44.2 40.0 35.0 US$ million 30.0 25.0 23.5 20.0 15.0 12.6 10.3 10.0 8.7 5.0 0.0 1H09 2H09 1H10 2H10 1H11 2H11 Other 0.5 0.2 3.0 3.0 2.0 1.8 Occupancy 3.0 0.7 35.9 30.0 1.0 2.5 Communication Services Facilities 1.9 1.2 1.7 0.8 1.0 4
Slide 32: Working Capital Management
Working Capital Management Financial Results Days sales outstanding 45 41 41 40 40 40 38 38 35 30 No. Of Days 25 20 15 10 5 0 1H09 2H09 1H10 2H10 1H11 2H11 32
Slide 33: Return On Invested Capital Vs. WACC and Return on Equity
Return On Invested Capital Vs. WACC and Financial Results Return on Equity 40.00% 36.10% 35.00% 31.44% 30.00% 26.93% 25.00% 20.00% 17.98% 17.36% 16.94% 15.00% 10.57% 10.41% 9.83% 10.00% 5.00% 0.00% FY09 FY10 FY11 WACC ROIC ROE 33
Slide 34: Equity Management – Final Dividend of 14 cents (AU)
Equity Management – Final Dividend Financial of 14 cents (AU) Results EPS - Basic US 47.53 cents EPS - Management US 55.67 cents Interim Dividend AU 14 cents (60% franked) Final Dividend AU 14 cents (60% franked) Current Yield* 3.8% * Based on 12 month dividend and share price of AU$ 7.34 (close 5 A
Slide 35: Financial Summary – Final Remarks
Financial Summary – Final Remarks Financial Results › Second highest management EPS in group’s history in difficult market conditions. › Diverse portfolio of revenues, disciplined expense, cost and capital expenditure management continue to drive solid margins and strong free cash flow. › Maintained
Slide 36: CEO's Introduction and Financial Results Report
Financial CEO’s Introduction Results Report 36
Slide 37: CEO's Report – Stuart Crosby
CEO’s Report Stuart Crosby PRESIDENT & CHIEF EXECUTIVE OFFICER CEO PRESENTATION 3
Slide 38: Group Strategy and Priorities
Group Strategy and Priorities CEO’s Report Our group strategy remains as it has been: › Continue to drive operations quality and efficiency through measurement, benchmarking and technology. › Improve our front office skills to protect and drive revenue. › Continue to seek acquisition and other growt
Slide 39: Delivery Against Strategy
Delivery Against Strategy CEO’s Report Delivering on the first 2 limbs of the strategy (cost & revenue) has been a key priority: › Operational productivity and quality continues to improve across the globe. › Revenue initiatives continue to offset to some extent revenue drag from GFC client losses,
Slide 40: Other priorities - Market Position and Market Structure
Other priorities - Market Position and Market Structure CEO’s Report › We continue to enhance the quality of our operational and client directed processes, and to develop and launch new and enhanced products across the full range of our businesses. › Third party shareholder and issuer satisfaction s
Slide 41: USA Update
USA Update CEO’s Report › Pending regulatory clearance, a strong integration team led by Stuart Irving and Mark Davis is being assembled for the BNY Mellon shareowner services integration. Planning well advanced to ensure quality migrations and undisrupted service for existing clients. › Service lev
Slide 42: Canada Update
Canada Update CEO’s Report › Increased tender activity amongst large clients (ours and not ours) is putting pressure on pricing. › Winning a good number of new TA mandates more generally. › Plans business continues to do well post disposal of the stock options business to Solium Capital. › Corporate
Slide 43: UCIA Update
UCIA Update CEO’s Report › Migration and integration of the former HBOS Employee Equity Solutions business progressing well with sharesave migrations completed, Jersey well advanced, and the financial benefits of those processes meeting or exceeding expectations. › Aviva register and plans successfu
Slide 44: Continental Europe Update
Continental Europe Update CEO’s Report › The November 2011 restructure to break out Continental Europe as a region on its own is already delivering benefits. A range of business development opportunities identified in the very fluid regulatory and structural environment. › Russian business continues
Slide 45: Asia Update
Asia Update CEO’s Report › The HK IPO pipeline is still strong but retail demand remains very subdued. › Planning for dematerialisation of the HK equities market continues. › China plans and proxy businesses continue to grow profitably, and we have launched an AGM administration business with very e
Slide 46: Australia & New Zealand Update
Australia & New Zealand Update CEO’s Report › Scott Cameron (formerly Asia-Pac regional CFO) has taken over from Mark Davis as regional head. (Mark is jointly heading the BNY Mellon shareowner services business integration project.) › Corporate action levels down significantly. › Winning a good shar
Slide 47: Full Year Results 2011 Presentation
Computershare Limited Full Year Results 2011 Presentation Stuart Crosby Peter Barker 10 August 2011
Slide 48: Appendix
Appendix: Full Year Results 2011 Presentation 10 August 2011 48
Slide 49: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Group Comparisons 49
Slide 50: CPU Revenues
CPU Revenues Financial Results 3% 11% Register Maintenance Corporate Actions 10% Business Services 43% 6% Stakeholder Relationship M'ment Employee Share Plans Communication Services 16% Tech & Other Revenue 11% 50
Slide 51: FY 2011 Revenue Regional Analysis
FY 2011 Revenue Financial Results Regional Analysis 300.0 262.2 250.0 200.0 145.6 US$ million 131.4 150.0 104.7 91.2 85.9 84.8 100.0 71.9 66.8 60.5 51.4 49.8 47.5 45.6 34.7 31.4 30.8 50.0 25.1 22.7 19.3 18.3 17.6 15.6 15.5 12.6 12.0 11.0 8.6 6.1 5.3 4.3 4.3 4.0 3.7 3.5 3.4 3.1 2.3 1.9 1.2 0.8 0.0 0.
Slide 52: Revenue Half Year Comparisons
Revenue Financial Results Half Year Comparisons 367.7 400.0 342.9 339.8 330.8 317.3 350.0 308.2 300.0 250.0 US$ million 200.0 140.8 139.8 136.5 134.9 131.2 114.1 112.2 150.0 100.9 96.8 87.5 84.7 83.6 83.5 82.7 81.9 81.6 80.9 78.1 76.0 74.0 71.0 71.1 100.0 70.1 63.2 57.6 56.6 54.1 49.6 44.3 39.5 32.3
Slide 53: Effective Tax Rate - Statutory & Management
Effective Tax Rate - Statutory & Management Financial Results 30.0% 28.5% 28.4% 28.3% 27.5% 27.8% 28.0% 27.0% 26.4% 26.3% 26.6% 25.6% 26.0% 24.0% 22.0% Tax Rate % 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% FY07 FY08 FY09 FY10 FY11 Statutory Management 53
Slide 54: Appendix 2: Country Summaries
Appendix 2: Country Summaries Country Summaries 54
Slide 55: Australia
Australia Financial Half Year Comparison Results Revenue Breakdown Total Revenue 98.0 84.0 250.0 88.0 80.0 221.5 217.3 74.9 73.5 73.1 72.4 78.0 70.9 68.7 192.6 200.0 68.0 61.6 59.9 168.5 165.2 167.4 57.1 54.4 58.0 AU $ m illion AU$ million 150.0 45.8 48.0 38.0 32.8 100.0 26.0 24.2 28.0 21.5 19.3 50.
Slide 56: New Zealand
New Zealand Financial Half Year Comparison Results Revenue Breakdown 7.0 Total Revenue 6.4 6.1 5.8 5.7 9.0 6.0 5.6 8.3 5.5 8.1 8.0 7.5 7.4 7.5 7.2 5.0 7.0 6.0 4.0 NZ$ million NZ$ million 5.0 3.0 4.0 2.3 2.0 3.0 1.8 1.7 2.0 1.5 1.4 2.0 1.0 1.0 0.1 0.1 0.1 0.0 0.0 1H09 2H09 1H10 2H10 1H11 2H11 Registe
Slide 57: Hong Kong
Hong Kong Financial Half Year Comparison Results Revenue Breakdown Total Revenue 250.0 350.0 327.6 297.0 200.0 300.0 177.6 176.8 172.0 155.1 153.8 151.5 250.0 234.1 147.9 135.3 210.3 150.0 HK$ million 195.9 192.4 HK$ million 200.0 150.0 100.0 62.4 100.0 52.2 50.0 50.0 17.1 14.8 14.5 7.1 5.6 4.2 3.0
Slide 58: India
India Financial Half Year Comparison Results 900.0 Revenue Breakdown 798.4 Total Revenue 771.6 800.0 714.2 1,200.0 687.8 1,134.2 1,101.7 1,074.4 700.0 1,060.1 1,000.0 600.0 538.4 836.1 502.7 834.4 500.0 800.0 INR million INR million 400.0 600.0 317.4 301.6 290.5 278.7 276.9 300.0 235.3 400.0 200.0 1
Slide 59: United States
United States Financial Half Year Comparison Results Revenue Breakdown 160.0 138.8 Total Revenue 135.8 140.0 128.0 126.4 122.8 117.4 350.0 312.2 120.0 297.1 300.0 277.1 258.3 266.4 100.0 250.0 231.7 US$ million U S$million 80.0 200.0 65.8 65.4 58.3 53.8 60.0 51.4 150.0 48.1 39.8 37.8 33.2 32.7 40.0
Slide 60: Canada
Canada Financial Half Year Comparison Results Revenue Breakdown 60.0 Total Revenue 48.3 50.0 115.0 45.9 45.1 41.8 109.5 109.0 110.0 38.3 40.0 37.0 36.3 36.1 36.1 104.1 32.8 32.0 105.0 31.5 102.6 CA$ million CA$ million 30.0 100.0 97.7 94.3 17.4 20.0 95.0 14.5 14.0 13.0 12.6 12.2 90.0 8.5 8.0 10.0 7.
Slide 61: United Kingdom & Channel Islands
United Kingdom & Channel Islands Financial Half Year Comparison Results Revenue Breakdown 40.0 Total Revenue 33.4 35.0 32.0 120.0 30.0 27.0 26.4 26.1 96.4 100.0 24.7 24.3 24.2 86.5 25.0 23.2 82.0 77.7 21.4 20.8 73.5 20.6 GBP million 20.2 80.0 19.9 19.6 67.4 GBP million 20.0 17.2 60.0 15.0 11.9 40.0
Slide 62: Ireland
Ireland Financial Half Year Comparison Results Revenue Breakdown 5.0 Total Revenue 4.5 4.3 6.0 5.5 5.4 4.0 3.7 3.5 4.9 3.4 3.3 5.0 4.5 3.5 3.3 4.5 4.4 3.0 4.0 million EUR million 2.5 3.0 EU R 2.0 2.0 1.5 1.3 1.1 1.0 1.0 1.0 0.8 0.8 0.7 0.5 0.0 0.5 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.0 1H09 2H09 1H10 2
Slide 63: Germany
Germany Financial Half Year Comparison Results Revenue Breakdown 13.0 Total Revenue 10.9 10.5 10.4 11.0 30.0 26.3 24.2 25.0 22.9 9.0 7.4 19.0 7.0 20.0 6.8 16.8 EU R million 7.0 16.3 EUR million 6.0 5.5 15.0 5.2 5.2 5.2 4.8 5.0 4.5 3.8 3.7 10.0 3.6 3.4 3.0 3.0 2.4 2.2 5.0 1.8 1.7 1.7 1.4 1.4 1.3 1.2
Slide 64: South Africa
South Africa Financial Half Year Comparison Results Revenue Breakdown 140.0 Total Revenue 118.4 113.5 112.8 120.0 111.5 109.9 107.0 138.0 136.1 136.0 100.0 134.0 132.6 132.0 80.0 million 130.0 ZAR million 127.7 128.0 125.7 126.0 60.0 123.4 123.5 ZAR 124.0 122.0 40.0 120.0 21.2 118.0 20.0 10.8 116.0
Slide 65: Russia
Russia Financial Half Year Comparison Results Revenue Breakdown 400.0 371.3 Total Revenue 350.0 450.0 402.1 293.2 400.0 300.0 247.7 350.0 312.1 250.0 284.5 300.0 RU B million RUB million 250.0 200.0 175.3 200.0 182.1 129.2 150.0 135.3 150.0 103.0 102.8 100.0 100.0 50.0 36.8 50.0 26.8 0.0 17.7 6.8 6.
Slide 66: Appendix 3: Assumptions
Appendix 3: Assumptions Financial Results Assumptions 66
Slide 67: Assumptions: Exchange Rates
Assumptions: Exchange Rates Financial Results Average exchange rates used to translate profit and loss to US dollars USD 1.00000 AUD 1.0196 HKD 7.7763 NZD 1.3270 INR 45.3567 CAD 1.0061 GBP 0.6311 EUR 0.7379 ZAR 7.0344 RUB 29.7754 AED 3.6742 DKK 5.5007 SEK 6.7278 67