Computershare Limited · ASX:CPU
Computershare — FY2006 Earnings Presentation
66 slides from Computershare's earnings presentation, Aug 16, 2006
Slide 1: Computershare Limited Full Year Results 2006 Presentation
Computershare Limited Full Year Results 2006 Presentation Chris Morris Tom Honan 16 August 2006
Slide 2: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 2
Slide 3: Tom Honan, Chief Financial Officer
Introduction Tom Honan Chief Financial Officer 3
Slide 4: Summary of Results
Introduction Summary of Results › Management EPS of 30.44 cents, up 41% › Management Net Profit After OEI of A$181.4m, up 49% › Total Revenue of A$1,626.1m, up 50% › Operating Cash Flows of A$245.8m, up 67% › Operating Costs of A$1,309.0m, a 50% increase › Days Sales Outstanding at 54 days, down 8 d
Slide 5: CPU Revenues continue to diversify
CPU Revenues continue to diversify Introduction Revenue Type 4% 9% 5% Register Maintenance Corporate Actions Stakeholder Relationship Management 8% Employee Share Plans 50% Document Services Fund Services 8% Technology & Other Revenue 16% 5
Slide 6: Global Equities Market
Global Equities Market Introduction Historical Equity Issuance Data Annual M & A Book to Bill Ratio 4000 35000 1.8 3500 30000 3000 25000 1.5 2500 $ Billions 20000 2000 1.3 1500 15000 1000 10000 1.0 500 5000 0 0 0.8 2006E 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Slide 7: Global Interest Rate Market
Global Interest Rate Market Introduction % % UK US 8 8 6 6 4 4 2 2 0 0 2000 2001 2002 2003 2004 2005 2006 2000 2001 2002 2003 2004 2005 2006 % Canada 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 7
Slide 8: Computershare Strengths
Introduction Computershare Strengths › Recurring Revenue – 70% of revenue is of a recurring nature › Global Diversification – Across 17 countries › Exposure to northern hemisphere interest rates › Technological innovation and capabilities – enhanced by acquisitions › Integration of businesses – Equi
Slide 9: Introduction, Financial Results, CEO's Report
Introduction Financial CEO’s Report Results 9
Slide 10: Group Financial Performance – A$m
Financial Group Financial Performance – A$m Results AIFRS AIFRS FY06 FY05 Variance Sales Revenue 1,604.1 1,057.7 52% Interest & Other Income 22.0 25.5 Total Revenue 1,626.1 1,083.2 50% Operating Costs 1,309.0 873.1 (50%) Share of Net (Profit)/Loss of Associates (4.2) (1.8) Management EBITDA 321.3 21
Slide 11: NPAT – FY05 AGAAP to AIFRS – Full Year
Financial NPAT – FY05 AGAAP to AIFRS – Full Year Results A$'000s Net profit after tax under AGAAP 30 June 2005 101,462 Basic EPS AGAAP 17.91 cents Write back of goodwill amortisation 41,707 Share based remuneration expense (9,971) Business combinations (5,394) Other (2,413) Net profit after tax unde
Slide 12: Behind the Headline – NPAT Impact
Behind the Headline – NPAT IMPACT Financial Results Net profit after tax under AIFRS at 30 June 2006 182,558 Derivatives marked to market 1,344 Intangibles amortisation 948 UK Redundancies 5,208 Profit on sale of Markets Technology (9,867) UK Property Sale Adjustment 1,268 Georgeson tax losses recog
Slide 13: Management EPS Performance Rolling 12 months
Management EPS Performance Financial Results cents Rolling 12 months AGAAP AIFRS 32 27 22 17 12 7 FY03 FY04 FY05 FY06 13
Slide 14: Analysis of Management EPS – Half Year Comparison
Analysis of Management EPS – Half Year Comparison Financial Results AGAAP AIFRS 20.00 18.00 16.00 14.00 12.00 cents 10.00 18.72 8.00 6.00 12.16 10.53 12.53 11.72 4.00 8.49 2.00 0.00 1H04 2H04 1H05 2H05 1H06 2H06 14
Slide 15: Full Year Comparisons – Revenue & EBITDA
Full Year Comparisons – Revenue & EBITDA Financial Results $Am AGAAP AIFRS $A m 1800 321.3 350 300 1500 250 R E 1200 211.9 e 183.4 B v I 200 e T n 900 133.9 D u A 150 e 600 100 300 50 719.8 894.7 1083.2 1626.1 0 0 FY03 FY04 FY05 FY06 Tot al Revenue M anagement EB ITDA 15
Slide 16: Half Year Comparisons – Revenue & EBITDA
Half Year Comparisons – Revenue & EBITDA Financial Results $Am 1st Half 2nd Half AGAAP AIFRS $Am $Am $Am AGAAP AIFRS 900 132.4 140 900.0 188.9 200 800 120 180 800.0 90.6 160 700 100 700.0 120.1 140 80.1 600 80 103.3 120 600.0 54.4 100 500 781.5 60 79.5 844.7 500.0 80 400 40 400.0 592.1 60 491.1 495.
Slide 17: Regional Analysis – FY06 Revenue & EBITDA
Regional Analysis – FY06 Revenue & EBITDA Financial Results Total Revenue Breakdown EBITDA Breakdown 21% 20% 59% 19% 20% 61% Asia Pacific EMEA North America Asia Pacific EMEA North America 17
Slide 18: FY06 NPAT Analysis
FY06 NPAT Analysis Financial Results $Am 2.4 225 5.8 107.2 18.8 175 26.0 0.4 1 EBITDA - AP 2 EBITDA - EMEA 15.2 3 EBITDA - NA 125 181.4 4 Depreciation 14.2 5 Amortisation 75 121.8 6 Interest 7 Tax 8 OEI 25 FY05 1 2 3 4 5 6 7 8 FY06 NPAT NPAT AIFRS AIFRS 18
Slide 19: Half Year Comparisons – Operating Costs
Half Year Comparisons – Operating Costs Financial Results AGAAP AIFRS $Am 700 600 500 400 300 650.5 658.5 393.2 200 401.1 472.2 317.9 100 0 1H04 2H04 1H05 2H05 1H06 2H06 19
Slide 20: Technology Costs – Establishing Global Platform
Technology Costs – Establishing Global Platform Financial Results AGAAP AIFRS A$m % 12% 160 154.7 12% 11% 10% 10% 140 10% 120 8% 106.6 100 6% 92.1 83.5 80 4% 60 2% 40 0% FY03 FY04 FY05 FY06 Total Technology costs Technology costs as a % of sales revenue 20
Slide 21: Analysis of FY06 Technology Costs
Analysis of FY06 Technology Costs Financial Results 3% 35% Total Costs $Am 154.7 44% Development Costs $Am 54.2 18% Development Infrastructure Maintenance Admin incl. External Bureau 21
Slide 22: Net Operating Cash Flows
Net Operating Cash Flows Financial Results $Am Operating Cash Flows Vs. Capital Expenditure 245.8 240 220 200 180 160 146.8 136.1 140 120 100 76.2 80 60 40 31.6 33.4 17.9 21.4 20 0 FY03 FY04 FY05 FY06 Operating Cash Flows Capital Expenditure 22
Slide 23: Free Cash Flow – up 84% on FY05
Free Cash Flow – up 84% on FY05 Financial Results $Am Operating Cash Flows less Capital Expenditure 220 212.4 200 180 160 140 120 114.7 115.2 100 80 58.3 60 40 20 0 FY03 FY04 FY05 FY06 23
Slide 24: Balance Sheet as at 30 June 2006
Balance Sheet as at 30 June 2006 Financial Results AIFRS AIFRS FY06 FY05 Variance A$'000s A$'000s Current Assets 457,646 495,224 (8%) Non Current Assets 1,709,463 1,546,037 11% Total Assets 2,167,109 2,041,261 6% Current Liabilities 359,140 485,003 26% Non Current Liabilities 861,690 764,660 (13%) T
Slide 25: Computershare Borrowings
Computershare Borrowings Financial Results AIFRS AIFRS FY06 FY05 Variance A$m A$m Cash 98.4 157.1 (37%) Interest Bearing Liabilities * 644.3 683.4 6% Net Debt 545.9 526.3 (4%) Management EBITDA 321.3 211.9 52% Coverage 1.7 2.5 0.8 * Average Tenor of drawn debt is 5.2 years 25
Slide 26: Capital Expenditure
Capital Expenditure Financial Results $Am Capital Expenditure Vs. Depreciation 35.0 2.7 1.7 30.0 8.1 5.8 25.0 Depreciation 0.5 20.0 6.4 6.8 2.4 4.2 15.0 2.7 1.7 1.0 10.0 16.8 14.0 16.8 5.0 12.8 0.0 FY03 FY04 FY05 FY06 Information Technology Document Services Facilities Occupancy Other 26
Slide 27: Working Capital Management
Working Capital Management Financial Results Days Sales Outstanding Days 70 62 61 60 57 54 50 40 30 20 10 0 FY03 FY04 FY05 FY06 27
Slide 28: Return On Invested Capital Vs. WACC
Return On Invested Capital Vs. WACC Financial Results Increased returns, Cost of Capital increases slightly 18% AGAAP AIFRS 16% 14% 12% 10% 8% 6% FY03 FY04 FY05 FY06 WACC ROIC 28
Slide 29: Return on Equity Vs. Return on Assets
Return on Equity Vs. Return on Assets Financial Results AGAAP AIFRS 20% 15% 10% 5% 0% FY03 FY04 FY05 FY06 ROA ROE 29
Slide 30: Interest Rate Sensitivity
Interest Rate Sensitivity Financial Results A$m PBT 120 Impact 100 80 60 40 20 0 -2.50% -2.00% -1.50% -1.00% -0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% -20 -40 -60 Exposure Hedged exposure 100% Hedged -80 30
Slide 31: Equity Management – Final Dividend of 7 cps
Equity Management – Final Dividend of 7 cps Financial Results › EPS – Basic 30.63 cents › EPS – Management 30.44 cents › Final Dividend (unfranked) 7.0 cents › Current Yield* 1.7% * Based on 12 month dividend and share price of $7.45 (close 15th Aug 06) 31
Slide 32: Financial Summary – Final Remarks
Financial Summary – Final Remarks Financial Results › Continued strong EPS growth - 41% after 5 years of growth > 20% CAGR › Free cash flow up 84% › Record revenues › Maintained strong balance sheet lowering earnings to debt coverage by 32% › Final dividend increased to 7 cents per share 32
Slide 33: Market Overview, Financial Performance, CEO's Report
Market Financial Overview Performance CEO’s Report 33
Slide 34: CEO Presentation – Chris Morris
CEO PRESENTATION Chris Morris CEO 34
Slide 35: Key Challenges over the past year
Key Challenges over the past year • Equiserve Integration › Conversions ahead of schedule › Synergies ahead of forecast • United Kingdom › Restructure of the entire business › The right people › Results turnaround • Global Operations › 24/7 Call Centre › Cross border Workflow capability 35
Slide 36: Key Challenges over the past year (continued)
Key Challenges over the past year (continued) • Constant Review of Business Profitability › All businesses (eg. US and UK Plans) › Customer profitability analysis › Divestment where it makes sense › Markets Technology › Analytics • Shared Services focus › Centralised regionally › All costs allocated
Slide 37: Financial Highlights – FY06
Financial Highlights – FY06 • Exceeded our EPS guidance of at least 29c, 41% up on last year • Grew: › Revenue by 50% to over $1.6 billion › EBITDA by 52% to $321.3 million › Operating cash flows by 67% to $246 million 37
Slide 38: Computershare the only global provider
Computershare the only global provider Extract from a tender for global registry and plans services › In particular, our proposed solution produces tangible and unique benefits for XYZ: › Certainty and reliability across all service components provided by Computershare › Cost and time savings throug
Slide 39: A sample of some Major Deals
A sample of some Major Deals • Asia Pacific › Bank of China IPO › NRMA Meeting Services › Industrial and Commercial Bank of China IPO • EMEA › Standard Life demutualisation › BAA takeover by Ferrovial Consortium › Unilever and British American Tobacco registry wins • North America › AT&T Inc. and SB
Slide 40: Growth Opportunities
Growth Opportunities • Asia Pacific › Japan › China • EMEA › Continental Europe › UK business • North America › Mutual Funds › Further Transfer Agent consolidation • Globally › Plans › Related businesses 40
Slide 41: Executive Management changes
Executive Management changes (effective 16th November 2006) • The Chairman, Sandy Murdoch, is to resign as Chairman but continue as a Non-Executive Director following this year’s AGM (held on 15th Nov 2006) • CEO & President, Chris Morris, is to become Executive Chairman • Chief Operating Officer, S
Slide 42: Financial Outlook
Financial Outlook Management remains comfortable with its target of long term Earnings per Share growth of around 20% per annum* * On the assumption that equity, interest rate and FX market conditions remain relatively stable 42
Slide 43: Questions?
CEO Presentation QUESTIONS ? 43
Slide 44: Appendix: Full Year Results 2006 Presentation
Appendix: Full Year Results 2006 Presentation 16 August 2006 44
Slide 45: Appendix 1: Group Comparisons
Appendix 1: Group Comparisons Financial Results Group Comparisons 45
Slide 46: Regional Analysis – FY06 Revenue
Regional Analysis – FY06 Revenue Financial Results $Am 508.9 500.0 400.0 300.0 200.0 156.0 159.5 129.6 134.1 100.0 84.9 77.7 65.0 47.9 46.2 50.2 36.6 14.0 22.2 12.3 11.3 10.9 0.0 0.0 Register Maintenance Corporate Actions Stakeholder Employee Share Plans Document Services Fund services Relationship
Slide 47: Half Year Comparisons - Revenue
Half Year Comparisons - Revenue Financial Results $Am 500.0 450.0 433.2 391.1 400.0 350.0 300.0 285.7 250.0 238.1 200.0 139.9 150.0 122.4 89.3 100.0 78.2 88.5 58.7 69.6 55.7 74.5 47.3 53.7 42.5 63.6 48.0 42.2 34.3 43.7 50.0 28.4 31.6 18.8 0.0 Register Maintenance Corporate Actions Employ ee Share Do
Slide 48: Half Year Comparisons – Operating Costs
Half Year Comparisons – Operating Costs Financial Results $Am 350.0 309.2 300.0 279.6 250.0 217.0 180.2 200.0 192.0 189.6 150.0 123.9 104.9 100.0 84.0 68.4 51.4 53.9 50.0 42.1 40.1 39.2 34.5 35.8 26.9 20.4 24.4 19.4 17.2 20.3 7.9 0.0 Cost of Sales Personnel Occupancy Other Direct Technology Corporat
Slide 49: Revenue Breakdown – A$m
Revenue Breakdown – A$m Financial Results FY06 FY05 Variance Register Maintenance 824.4 523.8 57% Corporate Actions 262.3 166.7 57% Fund Services 145.0 53.1 173% Stakeholder Relationship Mgt 122.5 107.3 14% Employee Share Plans 128.3 101.0 27% Document Services 84.6 60.0 41% Technology & Other Reven
Slide 50: Underlying Effective Tax Rate
Underlying Effective Tax Rate Financial Results AGAAP AIFRS % 25 23.7 23.9 19.4 20 15 10.6 10 5 0 FY03 FY04 FY05 FY06 50
Slide 51: Key Financial Ratios
Key Financial Ratios Financial Results AGAAP AIFRS AGAAP AIFRS EBITDA interest coverage Net Financial Indebtedness to EBITDA times times 25 2.5 21.1 2.5 20 2.0 1.7 15 12.1 11.9 1.5 1.2 10 8.7 1.0 0.8 5 0.5 0 0.0 FY03 FY04 FY05 FY06 FY03 FY04 FY05 FY06 AGAAP AGAAP AIFRS AIFRS % Funds Flow to Total De
Slide 52: Risk Management - Interest Rate Sensitivity
Risk Management - Interest Rate Sensitivity Financial Results Interest Rate Hedging No Strategy: - Protect downside risk in current rising exposure interest rate environment Exposure to 33% interest rates Policy: - Minimum hedge of 25% / Maximum 36% hedge of 75% - Minimum term 1 year / Maximum term
Slide 53: Risk Management – Average Funds Balances
Risk Management – Average Funds Balances Financial Results for year ending 30 June 2006 By Category By Country Sharesave/ Employee Dividend Australia Plans 18% 1% 19% US Dissenter 32% 4% Canada 42% Broker Trust 17% Corporate Actions 27% Regular UK Trust 25% 15% Average fund balance A$6.4b 53
Slide 54: Appendix 2: Country Summaries
Appendix 2: Country Summaries Financial Results Country Summaries 54
Slide 55: Asia Pacific
Appendix 2: Country Summaries Financial Results Asia Pacific 55
Slide 56: Australia Half Year Comparison
Australia Half Year Comparison Financial Results $Am Revenue Breakdown $Am Total Revenue 48.9 150 50 46.7 46.7 46.3 125.9 127.5 120.0 40 115.9 100 30.9 31.1 29.7 30 25.5 24.6 22.9 21.9 21.3 20 50 10 8.2 8.2 6.7 7.4 5.5 4.5 5.0 4.0 0 0 Register Maintenance Corporate Actions Stakeholder Employee Share
Slide 57: New Zealand Half Year Comparison
New Zealand Half Year Comparison Financial Results Total Revenue $NZm $NZm Revenue Breakdown 10 9.7 9.0 8 7.9 7.7 8 6.8 6.9 6.3 6 5.6 6 4 4 2.8 2.2 2.1 2 1.6 2 0 0 1H05 2H05 1H06 2H06 Register Maintenance Corporate Actions 1H05 2H05 1H06 2H06 57
Slide 58: Hong Kong Half Year Comparison
Hong Kong Half Year Comparison Financial Results Total Revenue Revenue Breakdown $HKm $HKm 160 110 146.1 100 95.7 140 90 84.8 120.6 120 80 76.9 108.3 111.1 70.0 70 100 60 80 49.3 50 43.6 38.3 40 60 30 25.8 40 20 20 10 0 0 Register Maintenance Corporate Actions 1H05 2H05 1H06 2H06 1H05 2H05 1H06 2H06
Slide 59: North America
Appendix 2: Country Summaries Financial Results North America 59
Slide 60: United States Half Year Comparison
United States Half Year Comparison Financial Results Total Revenue USDm Revenue Breakdown USDm 300.8 180 168.2 300 170 282.5 160 280 150 260 140 240 130 125.3 220 120 110 200 100 180 90 160 80 140 138.2 70 64.2 60 120 94.8 50 41.6 42.5 36.5 100 40 29.6 28.1 25.4 80 30 19.5 16.9 22.4 21 23.4 23.9 15.
Slide 61: Canada Half Year Comparison
Canada Half Year Comparison Financial Results Total Revenue CADm CADm Revenue Breakdown 110.0 80 99.9 100.0 68.4 68.8 70 90.0 86.4 60 54.9 80.0 73.4 50.6 50 70.0 63.1 60.0 40 50.0 30 40.0 19.5 20 30.0 9.8 10 6.0 6.9 6.4 4.8 6.1 4.8 20.0 2.5 2.1 3.8 1.8 1.7 1.0 0.6 1.9 0 10.0 Register Corporate Actio
Slide 62: EMEA
Appendix 2: Country Summaries Financial Results EMEA 62
Slide 63: United Kingdom Half Year Comparison
United Kingdom Half Year Comparison Financial Results Total Revenue GBPm Revenue Breakdown GBPm 48.4 30 50.0 26.4 24.6 24.9 40.2 40.0 37.0 22.3 35.9 20 30.0 20.0 10 8.8 7.5 6.6 5.8 5.9 6.2 10.0 4.6 2.8 3.2 3.1 2.7 2.4 0.2 0.5 0.5 0.5 0.0 0 1H05 2H05 1H06 2H06 Register Maintenance Corporate Actions S
Slide 64: Ireland Half Year Comparison
Ireland Half Year Comparison Financial Results EUROm Total Revenue EUROm Revenue Breakdown 4 2.7 2.6 2.5 3.3 2.4 3.1 3.0 3 2.7 2 2 1 1 0.6 0.4 0.4 0.3 0 0 Register Maintenance Corporate Actions 1H05 2H05 1H06 2H06 1H05 2H05 1H06 2H06 64
Slide 65: Germany Half Year Comparison
Germany Half Year Comparison Financial Results Eur '000 Total Revenue Revenue Breakdown 24.1 EURm 10.0 9.8 24.0 22.0 9.0 8.4 20.0 8.0 7.3 18.0 7.0 6.6 6.5 6.2 6.2 16.0 15.5 6.0 14.0 13.5 5.0 12.0 4.0 10.0 3.0 2.8 7.1 8.0 1.9 2.0 6.0 1.0 0.4 0.4 0.5 0.4 1.0 4.0 0.1 0 0.0 2.0 Register Maintenance Corp
Slide 66: South Africa Half Year Comparison
South Africa Half Year Comparison Financial Results Total Revenue ZARm ZARm 120.0 Revenue Breakdown 100 94.1 95.2 99.3 94.7 99.3 99.4 88.3 100.0 90 79.0 80 80.0 70 60 60.0 50 40 40.0 30 20 20.0 10.0 10 6.4 6.4 6.4 0 0.0 Register Maintenance Corporate Actions 1H05 2H05 1H06 2H06 1H05 2H05 1H06 2H06 6