Computershare Limited · ASX:CPU
Computershare — FY2010 Earnings Presentation
64 slides from Computershare's earnings presentation, Aug 11, 2010
Slide 1: Computershare Limited Full Year Results 2010 Presentation
Computershare Limited Full Year Results 2010 Presentation Stuart Crosby Peter Barker 11 August 2010
Slide 2: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 2
Slide 3: Introduction: Stuart Crosby
Introduction Stuart Crosby President & Chief Executive Officer 3
Slide 4: Results Highlights
Results Highlights Introduction Management Adjusted Results FY 2010 @ FY 2009 FY 2010 FY 2009 v FY 2009 exchange rates Management Earnings per share (post OEI) US 57.80 cents US 52.11 cents Up 11% US 55.74 cents Total Revenue $1,619.6 $1,511.6 Up 7% $1,552.5 Operating Expenses $1,111.3 $1,035.9 Up 7
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: Outlook
Outlook Introduction › As anticipated, transactional revenues have been subdued and there is no clarity when more typical levels will return. Revenue lines affected include corporate actions, mutual fund proxy solicitation, bankruptcy administration and trading. › Net margin income has declined as h
Slide 7: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 7
Slide 8: Financial Results: Peter Barker
Financial Results Peter Barker Chief Financial Officer 8
Slide 9: Drivers Behind FY 2010 Financial Performance
Drivers Behind FY 2010 Financial Performance Financial Results › Strong delivery of recurring revenues across both the year and across business lines and geographies, good client retention (post GFC losses) and solid performance from non-equity market businesses (Corporate Trust, Deposit Protection
Slide 10: Group Financial Performance
Group Financial Performance Financial Results % variance to FY10 FY09 FY 2009 Sales Revenue $1,599.6 $1,494.0 7% Interest & Other Income $20.0 $17.6 13% Total Revenue $1,619.6 $1,511.6 7% Operating Costs $1,111.3 $1,035.9 7% Share of Net (Profit)/Loss of Associates ($2.6) $0.2 Management EBITDA $510
Slide 11: Analysis of Management EPS
Analysis of Management EPS Financial Results 11
Slide 12: FY 2010 Management NPAT Analysis
FY 2010 Management NPAT Analysis Financial Results 12
Slide 13: Free Cash Flows
Free Cash Flows Financial Results ** Notes 1. * US$ 49.7m includes acquisition of Land and Buildings in the UK (US$ 34.7m) 2. Conversion of Melbourne HQ from operating lease to finance lease not reflected here as not a cash outlay 13
Slide 14: Revenue & EBITDA Half Year Comparisons
Revenue & EBITDA Financial Half Year Comparisons Results 14
Slide 15: Revenue Breakdown
Revenue Breakdown Financial Results FY 2010 Revenue Stream FY 2010 1H 2010 2H 2010 FY 2009 1H 2009 2H 2009 variance to FY 2009 (%) Register Maintenance $641.8 $312.6 $329.2 $629.3 $335.0 $294.3 2% Corporate Actions $215.0 $116.9 $98.1 $273.5 $145.6 $127.9 (21%) Business Services $262.9 $139.8 $123.1
Slide 16: FY 2010 Regional Analysis & Revenue Breakdown
FY 2010 Regional Analysis & Revenue Financial Breakdown Results Regional Reporting Previous Structure Current Structure North America USA Asia Pacific Canada Europe, Middle East & Africa Australia & NZ Asia Europe, Middle East & Africa Revenue Segments Previous Structure Current Structure Register M
Slide 17: Margin Income Analysis
Margin Income Analysis Financial Results Average Market Interest Rates UK 5.71% 5.19% 4.16% 0.82% 0.50% 0.50% US 4.85% 2.67% 1.53% 0.27% 0.25% 0.25% Canada 4.45% 3.51% 2.58% 0.64% 0.25% 0.29% Australia 6.52% 7.12% 6.23% 3.35% 3.24% 4.10% •Note: some balances attract no interest or a set margin for C
Slide 18: FY 2010 Revenue & EBITDA Regional Analysis
FY 2010 Revenue & EBITDA Financial Regional Analysis Results Total Revenue EBITDA breakdown breakdown 18
Slide 19: Operating Costs Half Year Comparisons
Operating Costs Financial Half Year Comparisons Results 19
Slide 20: Technology Costs
Technology Costs Financial Continued Investment to Maintain Strategic Advantage Results 20
Slide 21: Balance Sheet as at 30 June 2010
Balance Sheet as at 30 June 2010 Financial Results Jun-10 Jun-09 Variance Jun-10 to US$'000 US$'000 Jun-09 Current Assets $653,512 $537,014 22% Non Current Assets $2,036,943 $1,960,524 4% Total Assets $2,690,455 $2,497,538 8% Current Liabilities $497,347 $414,935 20% Non Current Liabilities $1,120,1
Slide 22: Key Financial Ratios
Key Financial Ratios Financial Results EBITDA Interest Coverage Net Financial Indebtedness to EBITDA Jun-10 Jun-09 Variance Jun-10 to US$ M US$ M Jun-09 Interest Bearing Liabilities $994.0 $974.3 2% less Cash ($278.7) ($180.4) 54% Net Debt $715.4 $793.9 (10%) Management EBITDA $510.9 $475.5 7% Net D
Slide 23: Debt Facility Maturity Profile
Debt Facility Maturity Profile Financial Results Debt Total Synidcated Private Placement Maturity Dates Drawn Debt Facilities Debt Facility Facility FY11 Mar-11 50.0 50.0 50.0 FY12 Mar-12 123.0 123.0 123.0 FY13 May-13 265.9 300.0 300.0 FY14 May-14 105.0 300.0 300.0 FY15 Mar-15 124.5 124.5 124.5 FY16
Slide 24: Capital Expenditure vs. Depreciation
Capital Expenditure vs. Depreciation Financial Results * Notes * US$ 29.8M conversion of Australian HQ building from operating lease to finance lease 24
Slide 25: Working Capital Management
Working Capital Management Financial Results 25
Slide 26: Return On Invested Capital Vs. WACC and Return on Equity
Return On Invested Capital Vs. WACC and Financial Return on Equity Results 26
Slide 27: Equity Management – Final Dividend of 14 cents (AU)
Equity Management – Final Dividend Financial of 14 cents (AU) Results EPS - Basic US 53.05 cents EPS - Management US 57.80 cents Interim Dividend AU 14 cents (50% franked) Final Dividend AU 14 cents (60% franked) Current yield* 2.4% * Based on 12 month dividend and share price of AU$ 10.28 (close 9
Slide 28: Financial Summary – Final Remarks on FY10
Financial Summary – Final Remarks on FY10 Financial Results › Another record management EPS. › Diverse portfolio of revenues, disciplined expense, cost and capital expenditure management have driven solid margins and excellent free cash flow. › Maintained strong and conservative balance sheet. › Ful
Slide 29: Market Overview
Market Financial CEO’s Report Overview Results 29
Slide 30: CEO Presentation: Stuart Crosby
CEO Presentation CEO‟s Report Stuart Crosby President & Chief Executive Officer 30
Slide 31: 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 32: Delivery Against Strategy
Delivery Against Strategy CEO‟s Report Delivering on the first two limbs of the strategy (cost and revenue) has been a key priority: › Operational productivity and quality continues to improve across the globe. › Revenue initiatives offset to some extent revenue losses from client losses, lower inte
Slide 33: Priority - Lifting our Market Position
Priority - Lifting our Market Position CEO‟s Report › We continue to enhance the quality of our operational and client directed processes, and during the year we rolled out platforms to make it easier for intermediaries (especially brokers and custodians) to deal with us. › We continue to develop an
Slide 34: Priority - Market Structure Projects
Priority - Market Structure Projects CEO‟s Report › We continue to work on a range of market structure projects around the world, for example the SEC‟s concept release on the US Proxy System and the ECB‟s Target 2 Securities project. Similar exercises are underway in China, Russia, Hong Kong and the
Slide 35: USA Update
USA Update CEO‟s Report › Excellent service levels and quality across all businesses. › Winning new clients – eg, Frontier (spin from Verizon). › Significantly reduced volumes of project-driven work at Funds Services and KCC (Resourcing reduced in parallel, but profits still hit). › Small class acti
Slide 36: Canada Update
Canada Update CEO‟s Report › The corporate trust business won the State of Israel‟s global bond record keeping and paying agent work (being delivered in the US and UK as well as Canada), otherwise a slow market. › Corporate actions are very slow, impacting both investor services and proxy solicitati
Slide 37: EMEA Update
EMEA Update CEO‟s Report › Migration and integration of the former HBOS Employee Equity Solutions business underway with a strong team assembled from around the world. › Voucher Services system migration complete. › New Russian management team working to integrate NRC and Nikoil now 100% ownership a
Slide 38: Asia Update
Asia Update CEO‟s Report › HK IPO – have good pipeline but retail demand off the boil – Agricultural Bank only generated 100K applications (vs ICBC with 960K). › Major Chinese banks recapitalising – two complete, three to go. › China plans and proxy business continues to grow profitably. › India qui
Slide 39: Australia & New Zealand Update
Australia & New Zealand Update CEO‟s Report › Corporate action levels down significantly. › Winning a good share of what work there is – followed up Myer IPO role with Dulux and QR National IPO appointments. › Communication Services business winning new work, and final rationalisation post QMT acqui
Slide 40: Computershare Limited Full Year Results 2010 Presentation
Computershare Limited Full Year Results 2010 Presentation Stuart Crosby Peter Barker 11 August 2010
Slide 41: Appendix
Appendix: Full Year Results 2010 Presentation 11 August 2010 41
Slide 42: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Group Comparisons 42
Slide 43: CPU Revenues
CPU Revenues Financial Results 43
Slide 44: FY 2010 Revenue Regional Analysis
FY 2010 Revenue Financial Regional Analysis Results 44
Slide 45: Revenue Half Year Comparisons
Revenue Financial Half Year Comparisons Results 45
Slide 46: Operating Costs Half Year Comparisons
Operating Costs Financial Half Year Comparisons Results 46
Slide 47: Underlying Effective Tax Rate
Underlying Effective Tax Rate Financial Results 47
Slide 48: Hedge Lifecycles
Hedge Lifecycles Financial Results Hedging of Long Term Sustainable Balances 100% 80% 60% 40% 20% 0% Jul-10 Jul-11 Jul-12 Jul-13 Total Hedging (derivatives, term deposits and floating rate debt) 48
Slide 49: Impact of Interest Rates on Profit Before Tax
Impact Impact of Interest Rates on Profit Before Tax Financial Results US$m PBT This point is the estimated contribution Impact (+$34m) that derivatives and fixed deposits 90 will make to PBT over the next twelve months assuming cash rates remain at current levels 70 1% up contributes circa $12m 50
Slide 50: Interest Rate Hedging
Interest Rate Hedging Financial Risk Management Results Interest Rate Hedging Current Strategy:- Continue to monitor medium term swap rates with the intention of accumulating cover should rates rise Policy: - Minimum hedge of 25% / Maximum hedge of 100% - Minimum term 1 year / Maximum term 5 years -
Slide 51: Appendix 2: Country Summaries
Appendix 2: Country Summaries Financial Results Country Summaries 51
Slide 52: Australia Half Year Comparison
Australia Financial Half Year Comparison Results 52
Slide 53: New Zealand Half Year Comparison
New Zealand Financial Half Year Comparison Results 53
Slide 54: Hong Kong Half Year Comparison
Hong Kong Financial Half Year Comparison Results 54
Slide 55: India Half Year Comparison
India Financial Half Year Comparison Results 55
Slide 56: United States Half Year Comparison
United States Financial Half Year Comparison Results 56
Slide 57: Canada Half Year Comparison
Canada Financial Half Year Comparison Results 57
Slide 58: United Kingdom Half Year Comparison
United Kingdom Financial Half Year Comparison Results 58
Slide 59: Ireland Half Year Comparison
Ireland Financial Half Year Comparison Results 59
Slide 60: Germany Half Year Comparison
Germany Financial Half Year Comparison Results 60
Slide 61: South Africa Half Year Comparison
South Africa Financial Half Year Comparison Results 61
Slide 62: Russia Half Year Comparison
Russia Financial Half Year Comparison Results 62
Slide 63: Appendix 3: Assumptions
Appendix 3: Assumptions Financial Results Assumptions 63
Slide 64: Assumptions: Exchange Rates
Assumptions: Exchange Rates Financial Results Average exchange rates used to translate FY10 profit & loss to USD USD 1.00000 AUD 1.13825 HKD 7.75900 NZD 1.43208 INR 46.73583 CAD 1.06571 GBP 0.63073 EUR 0.71745 ZAR 7.58359 RUB 30.21408 AED 3.67289 DKK 5.33968 SEK 7.25558 64