Computershare Limited · ASX:CPU
Computershare — H1 2011 Earnings Presentation
65 slides from Computershare's earnings presentation, Feb 9, 2011
Slide 1: Computershare Limited Half Year Results 2011 Presentation
Computershare Limited Half Year Results 2011 Presentation Stuart Crosby Peter Barker 9 February 2011
Slide 2: Introduction, CEO's Report, Financial Results
Introduction Financial CEO’s Report Results 2
Slide 3: Introduction: Stuart Crosby
Introduction S Stuart C Crosby b President & Chief Executive Officer 3
Slide 4: Results Highlights
Results Highlights Introduction Management Adjusted Results 1H 2011 @ 1H 2010 1H 2011 v 2H 2010 v 1H 2010 exchange rates Management Earnings per share (post NCI) US 26.96 cents Up 2.0% Down 14.1% US 26.63 cents Total Revenue $781.0 Down 3.8% Down 3.3% $771.3 Operating Expenses $535.0 Down 7.1% Down
Slide 5: Computershare Strengths
Computershare Strengths Introduction › Strong g balance sheet,, low gearing g g and long-term g robust cash ggeneration. › Diversification into counter and non cyclical businesses gives stability to revenue and profit base. › More than 70% of revenue recurring in nature. nature › Demonstrated abilit
Slide 6: Trading environment
Trading environment Introduction › Transactional revenues continue to be subdued and we have limited visibilityy of when the cycle will turn. Revenue lines affected include corporate actions, mutual fund proxy solicitation, bankruptcy administration and trading. › We are seeing g aggressive gg compe
Slide 7: Investment and guidance
Investment and guidance › Despite p the revenue softness,, we plan p to maintain our investment in technology, operational capabilities and new product. We see this as vital to our capacity to execute on growth opportunities. › The range of acquisition opportunities that we are exploring continues t
Slide 8: Financial Results
Introduction Financial CEO’s Report p Results 8
Slide 9: Peter Barker, Chief Financial Officer
Financial Results Peter Barker k Chief Financial Officer 9
Slide 10: Drivers Behind 1H 2011 Financial Performance
Drivers Behind 1H 2011 Financial Performance Financial Results › Revenues down 3% when compared p against g a stellar 1H10. This reflects the importance and generally solid performance of our annuity equity market businesses, and the current low levels of corporate action activity (except in Hong Ko
Slide 11: Group Financial Performance
Group Financial Performance Financial Results % variance % variance 1H 2011 2H 2010 1H 2010 to 2H 2010 to 1H 2010 Sales Revenue $772.7 $801.3 (4%) $798.3 (3%) Interest & Other Income $8 3 $8.3 $10 8 $10.8 (22%) $9 2 $9.2 (9%) Total Revenue $781.0 $812.1 (4%) $807.5 (3%) Operating Costs $535.0 $575.7
Slide 12: Analysis of Management EPS
Analysis of Management EPS Financial Results 12
Slide 13: 1H 2011 Management NPAT Analysis
1H 2011 Management NPAT Analysis Financial Results 13
Slide 14: Free Cash Flows
Free Cash Flows Financial Results ** * US 49.7m includes acquisition of Land and Buildings in the UK (US$ 34.7m) ** Lower 1H11 cash flow reflects movements in the balance sheet over the period 30‐Jun‐10 through 31‐Dec‐10 plus payment of variable compensation for the Y/E Jun‐10 14
Slide 15: Revenue & EBITDA
Revenue & EBITDA Financial Half Year Comparisons Results 15
Slide 16: Revenue Breakdown
Revenue Breakdown Financial Results % variance % variance Revenue Stream 1H 2011 2H 2010 1H 2010 to 2H 2010 to 1H 2010 Register Maintenance $ $325.8 $ $329.2 ( ) (1%) $ $312.6 4% Corporate Actions $99.1 $98.1 1% $116.9 (15%) Business Services $133.8 $123.1 9% $139.8 (4%) Stakeholder Relationship Mgt
Slide 17: Margin Income Analysis
Margin Income Analysis Financial Results Average Market Interest rates UK 5.71% 5.19% 4.16% 0.82% 0.50% 0.50% 0.50% US 4 85% 4.85% 2 67% 2.67% 1 53% 1.53% 0 27% 0.27% 0 25% 0.25% 0 25% 0.25% 0 25% 0.25% Canada 4.45% 3.51% 2.58% 0.64% 0.25% 0.29% 0.88% Australia 6.52% 7.12% 6.23% 3.35% 3.24% 4.10% 4.
Slide 18: 1H 2011 Revenue & EBITDA Regional Analysis
1H 2011 Revenue & EBITDA Financial Regional Analysis Results Total Revenue breakdown EBITDA breakdown 12% 20% 17% 24% Australia & NZ Asia UCIA 13% 9% Continental Europe 33% USA 27% Canada 18% 23% 4% 1% Regional g Reporting p g Previous Structure Current Structure Australia & NZ Australia & NZ Asia A
Slide 19: Operating Costs
Operating Costs Financial Half Year Comparisons Results 19
Slide 20: Technology Costs
Technology Costs Financial Continued Investment to Maintain Strategic Advantage Results * *The basis for calculating and classifying technology costs has been revised from 1 July 2011. Partly this reflects changes in reporting structures, where technologygy workers ppreviously y embedded within busi
Slide 21: Balance Sheet as at 31 December 2010
Balance Sheet as at 31 December 2010 Financial Results Dec‐10 Jun‐10 Variance Dec‐10 to US$'000 US$'000 Jun‐10 Current Assets $644,200 $653,512 (1%) Non Current Assets $2,071,776 $2,036,943 2% Total Assets $2,715,976 $2,690,455 1% Current Liabilities $405,839 $ , $497,347 $ , ((18%)) Non Current Lia
Slide 22: Key Financial Ratios
Key Financial Ratios Financial Results EBITDA Interest Coverage Net Financial Indebtedness to EBITDA Dec‐10 Dec 10 Jun‐10 Jun 10 Variance Dec‐10 to US$ Mn US$ Mn Jun‐10 Interest Bearing Liabilities $1,003.9 $994.0 1% Less Cash ($320.5) $ ($278.7) $ 15% Net Debt $683.4 $715.4 (4%) Management EBITDA (
Slide 23: Debt Facility Maturity Profile
Debt Facility Maturity Profile Financial Results Debt Total Club Private Placement Maturity Dates Drawn Debt Facilities Debt Facility Facility FY11 Mar-11 50.0 50.0 50.0 FY12 Mar-12 123.0 123.0 123.0 FY13 May-13 297.8 300.0 300.0 FY14 May-14 85.0 300.0 300.0 FY15 Mar-15 124.5 124.5 124.5 FY16 FY17 M
Slide 24: Capital Expenditure vs. Depreciation
Capital Expenditure vs. Depreciation Financial Results 24
Slide 25: Working Capital Management
Working Capital Management Financial Results 25
Slide 26: Return On Invested Capital Vs. WACC and Return on Equity
Return On Invested Capital Vs. WACC and Financial Return on Equity Results 26
Slide 27: Equity Management – Interim Dividend
Equity Management – Interim Dividend Financial of 14 cents (AU) Results EPS ‐ Basic US 21.03 cents EPS ‐ Management US 26.96 cents Interim Dividend AU 14 cents (60% franked) Current yield* 2.8% * Based on 12 month dividend and share price of AU$ 10.16 (close 3 February 2011) 27
Slide 28: Financial Summary – Final Remarks
Financial Summary – Final Remarks Financial Results › A solid p performance for the half,, with results reflecting g both the strength g of the underlying business and the current absence of Computershare’s traditional growth drivers › Diverse pportfolio of revenues,, ongoing g g disciplined p expen
Slide 29: Market Overview
Market Financial CEO’s CEO s Report Overview Results 29
Slide 30: CEO Presentation
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. revenue › Continue to seek acquisition and oth
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: i it › Operational productivity and quality continues to improve across the globe, evidenced by continued leadership in independent client and shareholder service i su
Slide 33: Priority - Lifting our Market Position
Priority - Lifting our Market Position CEO’s Report › Third party shareholder and issuer satisfaction surveys surveys, as well as our own market research, continue to show that the market recognises the edge that our quality and product innovation give us. This becomes all the more important as comp
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 US SEC’s review of the proxy voting system in that country and a range of European initiatives, including but by no means limited to the ECB’s Target 2 Se
Slide 35: USA Update
USA Update CEO’s Report › Excellent service levels and q qualityy across all businesses. › Winning some clients – eg, GM IPO – but also lost a couple of others to bundled credit offerings and “balance of trade” pitches. › Volumes remain low on transactional work – corporate actions, actions solicita
Slide 36: Canada Update
Canada Update CEO’s Report › Loss of largest g TA client (Bell ( Canada)) to a revitalised competitor p (formerly ( y CIBC Mellon, now Canadian Stock Transfer) has galvanised the Canadian management team. › State of Israel’s Israel s global bond record keeping and paying agent work (in the US and UK
Slide 37: UCIA Update
UCIA Update CEO’s Report › Won major j clients Aviva (from ( Equiniti) q ) and Sports p Direct (from ( Capita) p ) for both registry and plans – plans take-on puts additional pressure on the HBOS migration / integration. › Migration and integration of the former HBOS Employee Equity Solutions busine
Slide 38: Continental Europe Update
Continental Europe Update CEO’s Report › German AGM business doingg well,, but the reduction in numbers of EGMs post p GFC makes revenues soft. › New consolidated Moscow office provides the platform for the new Russian management team to integrate NRC and Nikoil. Nikoil › VEM continues to ‘wash its
Slide 39: Asia Update
Asia Update CEO’s Report › Hongg Kong g business as usual running g well,, and we are investing g alongside g HKEx in the HK dematerialisation project sponsored by the HK Government and regulator. › HK fund raising (primary and secondary) has been strong and is likely to continue. Also good levels o
Slide 40: Australia & New Zealand Update
Australia & New Zealand Update CEO’s Report › Market share and business as usual revenues in investor services holding g up p well. › Transaction levels remain down, affecting corporate actions and solicitation revenues. › Winning a good share of large IPO appointments. › Communication Services busi
Slide 41: Computershare Limited Half Year Results 2011 Presentation
Computershare Limited Half Year Results 2011 Presentation Stuart Crosby Peter Barker 9 February 2011
Slide 42: Appendix
Appendix: Half Year Results 2011 Presentation 9 February 2011 42
Slide 43: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Group Comparisons 43
Slide 44: CPU Revenues
CPU Revenues Financial Results 3% 11% Register Maintenance Corporate Actions 9% 42% Business Services 5% Stakeholder Relationship M'ment Employee Share Plans 17% Communication Services Tech & Other Revenue 13% 44
Slide 45: 1H 2011 Revenue Regional Analysis
1H 2011 Revenue Financial Regional Analysis Results 45
Slide 46: Revenue Half Year Comparisons
Revenue Financial Half Year Comparisons Results 46
Slide 47: Operating Costs
Operating Costs Financial Half Year Comparisons Results * Corporate operating costs will be allocated and reported under the five main cost categories – cost of sales, personnel, occupancy, other direct and technology from the next reporting period. period 47
Slide 48: Underlying Effective Tax Rate
Underlying Effective Tax Rate Financial Results 48
Slide 49: Client Balances - Hedging of Sustainable Client Balances
Client Balances - Financial Hedging of Sustainable Client Balances Results Sustainable Client Balance Hedges – snapshot as at 31-Dec-10 100% 80% 60% 40% 20% 0% Jan 11 Jan-11 Jan 12 Jan-12 Jan 13 Jan-13 Jan 14 Jan-14 Total Hedging (derivatives, term deposits and floating rate debt) Long term sustaina
Slide 50: Impact of Interest Rates on Profit Before Tax
Impact of Interest Rates on Profit Before Tax Financial Results US$m PBT 110 Impact 90 This point is the estimated contribution (+$28m) that derivatives and fixed deposits will make to PBT over the next twelve months assuming cash 70 rates remain at current levels 1% up contributes circa $19m 50 The
Slide 51: Client Balances – Interest Rate Hedging
Client Balances – Financial Interest Rate Hedging Results Interest Rate Hedging Based on average g total funds* held during 1H11 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
Slide 52: Appendix 2: Country Summaries
Appendix 2: Country Summaries Financial Results Country Summaries 52
Slide 53: Australia
Australia Financial Half Year Comparison Results 53
Slide 54: New Zealand
New Zealand Financial Half Year Comparison Results 54
Slide 55: Hong Kong
Hong Kong Financial Half Year Comparison Results 55
Slide 56: India
India Financial Half Year Comparison Results 56
Slide 57: United States
United States Financial Half Year Comparison Results 57
Slide 58: Canada
Canada Financial Half Year Comparison Results 58
Slide 59: United Kingdom & Channel Islands
United Kingdom & Channel Islands Financial Half Year Comparison Results 59
Slide 60: Ireland
Ireland Financial Half Year Comparison Results 60
Slide 61: Germany
Germany Financial Half Year Comparison Results 61
Slide 62: South Africa
South Africa Financial Half Year Comparison Results 62
Slide 63: Russia
Russia Financial Half Year Comparison Results 63
Slide 64: Appendix 3: Assumptions
Appendix 3: Assumptions Financial Results Assumptions 64
Slide 65: Assumptions: Exchange Rates
Assumptions: Exchange Rates Financial Results Average exchange rates used to translate profit and loss to US dollars USD 1.00000 AUD 1.08022 HKD 7 76847 7.76847 NZD 1.37543 INR 45.77128 CAD 1.03601 GBP 0.64200 EUR 0.76332 ZAR 7.23072 RUB 30.75594 AED 3.67303 DKK 5.68780 SEK 7.12775 65