Slide 1: Computershare Limited 2019 Half Year Results Presentation
COMPUTERSHARE LIMITED Solid results – performing to plan 2019 Half Year Results Presentation Stuart Irving Chief Executive Officer and President Mark Davis Chief Financial Officer 13 February 2019
Slide 2: 1H19 Executive summary
1H19 Executive summary Solid results – continuing to deliver sustained earnings growth Management results1 Revenue EBITDA EPS $1,146.5m 1.7% $335.4m 14.3% 35.37 cents 15.5% Statutory EPS Return on Equity (ROE) Dividend per share Actual Actual Interim 47.77 cents2 52.0% 27.1% 40bps AU 21 cents 10.5%
Slide 3: Executing strategic priorities continues to deliver strong returns
Executing strategic priorities continues to deliver strong returns Growth Profitability Capital Management › Equatex acquisition completed. › Group EBITDA margin › Strong Balance sheet continues Pleased with early continues to rise to 29.3% (up post funding acquisitions and performance, capabilities
Slide 4: FY19 outlook – guidance upgraded
FY19 outlook – guidance upgraded Guidance › At November’s AGM, we said that we confidently expected FY19 Management EPS in constant currency to increase by around +10% on FY18 › Given the 1H19 result, we now expect Management EPS for FY19 in constant currency to increase by around +12.5% on FY18 Ass
Slide 5: Growth: Mortgage Services
Growth: Mortgage Services Revenue and EBITDA growth - continuing to build scale 1H19 @ CC 1H18 Actual CC Variance US Mortgage Services revenue $159.5 $143.4 +11.2% UK Mortgage Services revenue $128.8 $121.7 +5.8% Total Mortgage Services revenue $288.3 $265.1 +8.8% Total Mortgage Services EBITDA $59.
Slide 6: Growth: Employee Share Plans
Growth: Employee Share Plans Equatex acquisition completed: enhances scale, capabilities and earnings 1H19 @ CC 1H18 Actual CC Variance Fee revenue $58.0 $51.2 +13.3% Transactional revenue $42.7 $39.3 +8.7% Margin income $7.1 $7.0 +1.4% Other revenue $10.5 $8.9 +18.0% Total Employee Share Plans reve
Slide 7: Profitability: Margin income
Profitability: Margin income Record balances and rising interest rates boost margin income Boosted by 21.0 140.0 20.0 Corporate Actions balances 120.0 17.3 125.2 105.8 16.8 16.3 16.6 16.6 15.0 15.1 15.2 15.0 100.0 14.4 99.9 Average Client Balances for period USD million 14.0 for period USD billion M
Slide 8: Profitability: Register Maintenance and Corporate Actions
Profitability: Register Maintenance and Corporate Actions Register maintenance revitalised, good organic growth and margin expansion 1H19 @ CC 1H18 Actual CC Variance Register Maintenance revenue $345.4 $330.8 +4.4% Corporate Actions revenue $93.2 $85.2 +9.4% Total Register Maintenance & $438.6 $416
Slide 9: Profitability: Structural cost out programs progressing well
Profitability: Structural cost out programs progressing well Stages 1, 2 and 3 total gross savings of $125m - $155m affirmed Total cost Benefit realisation (cumulative) Activity savings estimates $m FY17A FY18A FY19E FY20E FY21E FY22E FY23E Stage 1 Total 25 - 30 7.8 14.0 23.2 28.0 28.0 28.0 28.0 Sta
Slide 10: Capital management
Capital management Strong balance sheet with leverage below mid point of target range Acquisitions and investments add to growth engines › Share Plans; Equatex $419.7m › US Mortgage Services: LenderLive $31.8m and MSRs $45.7m and group CAPEX $33.6m (includes new US data centre) Recycling capital › K
Slide 11: 1H19 Management Results summary
1H19 Management Results summary Strong operating performance with margin income and lower tax rate enhancing earnings 1H19 @ CC 1H18 Actual CC Variance 1H19 Actual Total Revenue $1,146.5 $1,127.8 +1.7% $1,127.8 Margin income $126.6 $79.6 +59.0% $125.2 Operating Costs $810.0 $835.2 -3.0% $795.4 EBITD
Slide 12: 1H19 Management NPAT analysis
1H19 Management NPAT analysis Margin income drives NPAT growth 250 1H18 included $60.8m of large one off event 200 based revenues 1.1 7.9 4.4 47.0 5.6 192.0 2.2 189.9 166.8 4.9 150 USD million 100 50 0 Margin Income Interest Mgt EBITDA Dep'n & Amort Tax FX 1H19 @ CC 1H18 NPAT Non-controlling 1H19 NP
Slide 13: Management revenue by business stream
Management revenue by business stream Strategic growth and additional margin income offset declines in event revenues Business stream 1H19 @ CC 1H18 Actual CC Variance 1H19 Actual Business Services $449.8 $441.4 +1.9% $443.9 Register Maintenance $345.4 $330.8 +4.4% $339.6 Corporate Actions $93.2 $85
Slide 14: Management revenue bridge
Management revenue bridge Growth achieved despite decline in event based revenues - Class Actions (pcp includes VW Action) ($27.4m) 1,160 - Mortgage Services +$15.7m 1,150 - Other Business Services +$0.2m Gains across 1,146.5 1,140 US, UK and 18.7 HK 1,130 Large event 1,127.8 for US Fund 1,127.8 11.
Slide 15: EBITDA and margins by business stream
EBITDA and margins by business stream Ongoing margin expansion to 29.3%, up 330 bps 1H19 @ CC 1H18 Actual CC Variance 1H19 EBITDA 1H18 Actual Margin in CC EBITDA Business Stream % Margin % Business Services $120.6 $113.5 +6.3% 26.8% 25.7% Register Maintenance & Corporate Actions $162.0 $139.6 +16.0%
Slide 16: EBITDA and margin income by business stream
EBITDA and margin income by business stream EBITDA growth of 14.3%, with margin income increasing by 59.0% 1H19 1H19 1H19 1H18 1H18 1H18 CC EBITDA MI EBITDA EBITDA MI EBITDA Variance Business Stream @ CC @ CC ex MI @ ex MI CC Business Services $120.6 $56.2 $64.5 $113.5 $36.3 $77.3 -16.6% Register Ma
Slide 17: Operating costs analysis
Operating costs analysis Total costs down by $25.2m, down 3.0% Operating costs 1H19 @ CC 1H18 Actual CC Variance 1H19 Actual Cost of sales $179.2 $197.7 -9.4% $175.5 Personnel $486.5 $484.5 +0.4% $477.9 Fixed/Perm $458.3 $448.6 +2.2% $450.1 Variable/Temp $28.2 $35.9 -21.4% $27.7 Occupancy $39.7 $46.
Slide 18: Cash flow summary
Cash flow summary Timing factors impact 1H cash flows 1H19 Actual 1H18 Actual Net operating receipts and payments $268.1 $273.1 Net interest and dividends ($35.1) ($23.3) Income taxes paid ($56.4) ($50.5) Net operating cash flows excluding SLS advances $176.6 $199.3 Cash outlay on business capital e
Slide 19: Balance sheet
Balance sheet Post acquisitions and growth investments, leverage ratio below mid point of target range (1.75 - 2.25x) Dec 18 Jun 18 Variance Current Assets $1,407.8 $1,241.9 +13.4% Non-Current Assets $3,111.2 $2,646.3 +17.6% Total Assets $4,518.9 $3,888.2 +16.2% Current Liabilities $740.7 $1,091.6 -
Slide 20: Conclusions
Conclusions › CPU continues to deliver solid results. Outperformance driven mainly by ongoing profitable growth in Register Maintenance, margin income gains and a reduced tax rate - 1H19 Management EPS +15.5% › Purposefully designed Growth, Profitability and Capital Management strategies continue to
Slide 21: Appendices
APPENDICES Statutory results Company Overview 1H19 Computershare at a glance Management EBITDA (ex MI) Financial performance by half year at actual FX rates Revenue and EBITDA by business stream at actual FX rates Global Registry Maintenance and Employee Share Plans Business Services revenue excludi
Slide 22: Statutory results
Statutory results 1H19 1H18 Vs 1H18 (pcp) Total Revenues $1,242.1m $1,130.1m +9.9% › Management results are used, along with Total Expenses $912.0m $941.3m -3.1% other measures, to assess operating business Statutory Net Profit (post NCI) $259.4m $171.2m +51.5% performance. The Company believes that
Slide 23: Management adjustment items
Management adjustment items Appendix 4D Note 2 Management adjustment items net of tax for the half-year ended 31 December 2018 were as follows: Amortisation › Customer contracts and other intangible assets that are recognised on business combinations or major asset acquisitions are amortised over th
Slide 24: Company overview
Company overview A leading global provider of administration services in our selected markets Who we are › Global market leader in transfer agency and share registration, employee equity plan administration, proxy solicitation and stakeholder communications › Also specialise in mortgage servicing, c
Slide 25: 1H19 Computershare at a glance
1H19 Computershare at a glance Management revenue @ CC Management EBITDA @ CC Canada ANZ ANZ Canada 9% 12% 6% Asia 15% 8% By geography Asia 6% UCIA $1,146.5m $335.4m 18% UCIA USA 23% CEU 46% 1% CEU USA 4% 52% Comms Services Corporate & Technology Comms Services Corporate & Technology 8% 2% 4% 3% Emp
Slide 26: Management EBITDA excluding margin income and FX movements decreased by 2.3%
Management EBITDA excluding the impact of margin income and FX movements decreased by 2.3% in 1H19 versus pcp 443.1 412.9 379.6 362.9 1H18 included $60.8m of large 326.4 one off event based revenues 260.3 213.8 208.8 FY13 FY14 FY15 FY16 FY17 FY18 1H19 Note: Management EBITDA translated at FY18 avera
Slide 27: Financial performance by half year at actual FX rates
Financial performance by half year at actual FX rates 1H19 2H18 1H18 2H17 1H17 2H16 1H16 2H15 1H15 2H14 1H14 Total Management $1,127.8 $1,173.1 $1,127.8 $1,110.8 $1,003.2 $1,035.5 $938.7 $1,016.5 $959.5 $1,045.7 $976.9 Revenue Operating Costs $795.4 $843.4 $835.2 $811.6 $762.3 $744.5 $695.7 $720.7 $
Slide 28: Revenue and EBITDA by business stream at actual FX rates
Revenue and EBITDA by business stream at actual FX rates 1H19 1H19 1H19 Actual 1H18 1H18 1H18 Actual Revenue EBITDA EBITDA Margin Revenue EBITDA EBITDA Margin % % Business Services $443.9 $118.5 26.7% $441.4 $113.5 25.7% Register Maintenance $339.6 $330.8 Corporate Actions $91.7 $85.2 Register Maint
Slide 29: Global Registry Maintenance and Employee Share Plans revenue
Global Registry Maintenance and Employee Share Plans revenue Registry Maintenance @ CC Employee Share Plans @ CC Oth Rev 9% Margin Holder/Broker Income paid Issuer paid 6% 30% 64% 1H19 @ CC Fee $345.4m $118.4m 49% Margin Transaction Income 36% 6% Oth Rev 8% Margin Holder/Broker Income paid 7% 28% Is
Slide 30: Business Services revenue excluding Mortgage Services
Business Services revenue excluding Mortgage Services 1H19 @ CC 1H18 Other 3% Other India Funds 3% 11% India Funds 13% Voucher Services Class Actions 36% Voucher 6% Services 6% Deposit Class Actions Deposit 45% Protection Scheme $161.5m Protection Scheme $176.3m 10% 6% Corporate Corporate Bankruptcy
Slide 31: Management revenue and EBITDA at actual FX rates
Management revenue and EBITDA at actual FX rates Regional Analysis Revenue by region EBITDA by region 1,400 350 329.3 331.4 1,173.1 293.4 46.2 47.6 1,200 1,127.8 1,127.8 300 111.0 103.5 100.9 45.1 1,000 250 800 543.0 200 171.2 175.6 544.9 531.7 152.2 600 150 66.8 41.5 40.0 17.0 3.9 400 100 1.4 230.0
Slide 32: 1H19 Management revenue at actual FX rates
1H19 Management revenue at actual FX rates Regional Analysis 450 400 350 300 215.3 250 USD millions 178.8 200 159.4 150 100 55.1 48.4 48.4 44.6 43.8 41.4 31.5 28.9 28.1 26.0 50 19.4 16.5 14.2 13.5 13.4 12.4 11.9 10.7 10.6 8.1 6.8 6.1 4.9 4.3 4.3 4.0 3.6 3.4 2.9 1.8 1.8 1.5 0.9 0.6 0.5 0.0 0.0 0.0 0.
Slide 33: Australia
Australia Management revenue: AUD million 1H18 2H18 1H19 165.0m 140.3m 162.7 68.9 61.9 61.0 61.6 60.1 48.4 18.0 13.5 11.8 11.1 10.5 8.8 6.2 6.1 6.0 5.8 3.6 3.3 0.4 0.3 0.7 Register Corporate Business Stakeholder Employee Share Communication Corporate & Maintenance Actions Services Relationship Mgt P
Slide 34: Hong Kong
Hong Kong Management revenue: HKD million 1H18 2H18 1H19 344.7m 371.6m 358.0m 210.4 204.7 196.1 102.3 93.5 78.6 57.4 47.5 45.8 12.5 11.4 14.0 Register Maintenance Corporate Actions Stakeholder Relationship Mgt Employee Share Plans 1H18 2H18 1H19 34
Slide 35: India
India* Management revenue: INR million 1H18 2H18 1H19 1,937.0m 1,987.3m 1,608.6m 1,540.2 1,421.5 1,137.7 439.0 397.8 401.1 76.6 69.8 49.4 Register Maintenance Corporate Actions Business Services 1H18 2H18 1H19 35 * Karvy disposal completed in November 18
Slide 36: United States
United States Management revenue: USD million 1H18 2H18 1H19 544.9m 543.0m 531.7m Mortgage Services 1H18: 143.4 2H18: 162.7 1H19: 159.5 218.2 216.2 215.3 194.3 178.8 168.9 52.8 55.1 50.6 45.1 35.5 26.1 28.1 29.6 28.9 18.4 20.0 19.4 6.4 5.8 6.1 Register Corporate Business Stakeholder Employee Share C
Slide 37: Canada
Canada Management revenue: CAD million 1H18 2H18 1H19 131.6m 141.2m 132.3m 67.7 65.5 63.6 45.9 33.5 34.1 14.0 13.4 13.3 13.9 9.9 10.1 5.2 4.0 4.7 1.9 2.5 2.0 Register Maintenance Corporate Business Employee Share Plans Communication Corporate & Technology Actions Services Services 1H18 2H18 1H19 37
Slide 38: United Kingdom and Channel Islands
United Kingdom and Channel Islands Management revenue: GBP million 1H18 2H18 1H19 160.8m 174.2m 187.8m Mortgage Services 1H18: 92.4 2H18: 96.3 1H19: 97.7 122.9 114.0 108.3 32.8 30.0 24.9 20.5 20.7 22.0 1.5 1.8 3.1 2.0 2.9 2.1 2.0 2.7 2.3 1.5 2.1 2.7 Register Corporate Business Stakeholder Employee S
Slide 39: South Africa
South Africa Management revenue: RAND million 1H18 2H18 1H19 134.3m 138.6m 137.9m 120.5 115.3 113.5 17.2 8.9 9.6 9.0 7.7 7.4 1.2 0.2 0.3 Register Maintenance Corporate Actions Stakeholder Relationship Mgt Employee Share Plans 1H18 2H18 1H19 39
Slide 40: Germany
Germany Management revenue: EUR million 1H18 2H18 1H19 15.4m 27.4m 16.9m 13.1 12.2 11.6 10.8 2.6 2.5 2.1 2.2 1.8 0.3 0.3 0.3 Register Maintenance Employee Share Plans Communication Services Corporate & Technology 1H18 2H18 1H19 40
Slide 41: Management EPS – AUD equivalent
Management EPS – AUD equivalent 140 1 0.9139 0.9 0.8389 120 0.7758 0.8 0.7521 0.7273 0.7281 100 0.7 0.6 Cents per share 80 81.69 75.74 0.5 71.31 72.35 60 65.92 0.4 48.03 0.3 40 ~ 39.39 0.2 ~ 20 0.1 0 0 FY14 FY15 FY16 FY17 FY18 1H19 AUD/USD average exchange rate 41
Slide 42: Technology costs at actual FX rates
Technology costs at actual FX rates 11.6% 12% 11.3% 11.3% 160 140 10% 130.8 132.2 128.0 4.8 5.2 4.1 120 Tech costs as a % of revenue 8% 38.2 37.6 100 43.0 USD million 6% 80 60 50.6 53.0 45.1 4% 40 2% 20 37.3 36.4 35.7 0 0% 1H18 2H18 1H19 Development Infrastructure Maintenance Admin Technology costs
Slide 43: Capital expenditure versus depreciation at actual FX rates
Capital expenditure versus depreciation at actual FX rates 45 18.9 20 40 18 16.4 16.5 33.3 16 35 0.8 14 30 4.7 12 3.9 25 22.8 Depreciation USD million USD million 10 Capex 20 4.0 8 14.6 5.1 15 0.5 0.5 6 3.6 24.0 10 0.5 4 13.1 5 10.0 2 0 0 1H18 2H18 1H19 Information Technology Communication Services
Slide 44: Breakdown of client balances
Breakdown of client balances Significant leverage to rising interest rate cycle – $12.9bn of average exposed balances in 1H19 Assuming an USD 21.0bn increase of 100bps Total balances in achieved yield on our 1H19 exposed non-hedged balances ($10.0bn) CPU would generate USD 8.1bn USD 12.9bn an additi
Slide 45: Exposed and non-exposed balances by business
Exposed and non-exposed balances by business Business Activity 1H19 Balances (USD billions) Margin income (USD millions) Exposed Non-exposed Register Maintenance 2.4 0.5 20.3 Corporate Actions 3.7 3.7 42.5 Employee Share Plans 1.6 0.2 7.0 Business Services 5.2 3.7 55.4 Totals 12.9bn 8.1bn 125.2m 21.
Slide 46: Breakdown of exposed balances by currency
Breakdown of exposed balances by currency Currently most exposed to USD rates though GBP and CAD remain important Average exposed balances hedged CAD Average exposed balances prior to hedging 2% Other AUD 4% 3% CAD GBP USD 2.9bn 69% 13% USD (USD 12.9bn x 22%) 57% USD 12.9bn (USD 21.0bn x 61%) USD GB
Slide 47: Profile of our swap and deposit book
Profile of our swap and deposit book Fixed rate hedging 3,000 Fixed rate deposits Swaps 2,500 USD million 2,000 1,500 1,000 500 0 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Floating rate deposits - comprise both exposed and non-exposed balances 6,000 Floating Rate Deposits 5,000 USD million 4,000 3,000 2,00
Slide 48: Debt maturity profile – 31 December 2018
Debt maturity profile – 31 December 2018 Maturity Dates Debt Committed Bank Private SLS USD million Drawn Debt Debt Placement Advance Facilities Facility Facility Facility FY19 Feb-19 70.0 70.0 70.0 Mar-19 30.6 70.0 70.0 FY21 Dec-20 189.6 225.0 225.0 Apr-21 188.0 450.0 450.0 FY22 Jul-21 26.4 50.0 50
Slide 49: Key financial ratios
Key financial ratios Dec 18 Jun 18 Variance USD m USD m Dec 18 to Jun 18 Interest Bearing Liabilities including SLS advance debt $1,988.0 $1,481.1 +34.2% Less Cash* ($510.0) ($534.7) -4.6% Net Debt (including SLS advance debt) $1,478.0 $946.5 +56.2% Management EBITDA $660.7 $622.6 +6.1% Net Financia
Slide 50: Effective tax rate
Effective tax rate Statutory and management (at actual FX rates) Tax rate % 30% 28.3% 26.3% › The Group’s statutory effective tax rate has 25.4% increased from 7.4% in 1H18 to 20.2% in 25% 1H19. This is primarily driven by the restatement of deferred tax balances due 20.9% 20.2% to US tax reform giv
Slide 51: Dividend history and franking
Dividend history and franking 20.0 21 21 19 19 17 17 15.0 16 16 15 15 AU cents 14 10.0 5.0 0.0 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 Dividend (AU cents) Franking (%) 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 20% 20% 20% 25% 100% 20% 30% 0% 0% 100% 30% 51 Policy 40% - 60
Slide 52: Mortgage Servicing
US and UK mortgage services - UPB and number of loans US mortgage services UPB up 14.3% ($92.6bn v $81.0bn) Performing Non-performing At 31 Dec 18 At 30 Jun 18 At 31 Dec 18 At 30 Jun 18 Fully-Owned $16.7bn $14.7bn $10.3bn $11.3bn MSRs 1 77K Loans 70K Loans 89K Loans 106K Loans Excess strip deals Exc
Slide 53: Mortgage Services Revenue and EBITDA at actual FX rates
Mortgage Services Revenue and EBITDA at actual FX rates 1H19 2H18 1H18 2H17 1H17 2H16 1H16 US Mortgage Services revenue $159.5 $162.7 $143.4 $133.5 $123.7 $115.6 $106.4 UK Mortgage Services revenue $126.8 $132.4 $121.7 $122.4 $117.3 $52.2 $41.1 Total Mortgage Services $286.3 $295.1 $265.1 $255.9 $24
Slide 54: Financial Snapshot – US Mortgage Servicing
Financial Snapshot – US Mortgage Servicing 1H19 revenue composition Other Base service fees servicing 27% fees • Base servicing fees, $94.7m, +19.4% 59% • Servicing related fees $22.2m, -4.1%* $159.5m • Other services fees $42.5m, +4.0%* Servicing related fees 14% Dec-18 Jun-18 Annual Report referen
Slide 55: Mortgage services key terms
Mortgage services key terms Performing servicing: Servicing of a mortgage which is less than 30 days delinquent. Typically loans that meet the criteria of the Government Sponsored Entities e.g. “Fannie Mae”, “Freddie Mac”. Non-performing servicing: Servicing of a mortgage that is over 30 days delinq
Slide 56: LenderLive
LenderLive › LenderLive Network, LLC (LLN), is a leading end to end mortgage fulfilment company and services the private label fulfilment market and also provides services into the secondary market. LLN is based in the Denver area (with additional offices in Jacksonville and Florida) › It operates i
Slide 57: Exchange rates
Exchange rates › Average FX rates used to translate profit and loss to US dollars for key reporting currencies › The USD has strengthened in 1H19 against all currencies Currency 1H19 FY18 1H18 Var 1H Movement against USD: USD 1.0000 1.0000 1.0000 AUD 1.3734 1.2890 1.2863 6.8% Weakened HKD 7.8371 7.8
Slide 58: 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