Slide 1: Market Announcement: 2018 Investor Day Presentations
Computershare Limited ABN 71 005 485 825 Yarra Falls, 452 Johnston Street Abbotsford Victoria 3067 Australia PO Box 103 Abbotsford Victoria 3067 Australia Telephone 61 3 9415 5000 Facsimile 61 3 9473 2500 MARKET ANNOUNCEMENT For personal use only www.computershare.com Date: 19 April 2018 To: Austral
Slide 2: Investor Day 2018: Designing and delivering multi-year earnings growth
INVESTOR DAY 2018 For personal use only Designing and delivering multi-year earnings growth Stuart Irving Chief Executive Officer 19 April 2018
Slide 3: Schedule
Schedule For personal use only 10.00 – 10.30 Welcome and CEO Update Stuart Irving 10.30 – 11.30 US Mortgage Services – Executing the growth strategy Nick Oldfield, Tom Millon, Jeff Johnson and Toby Wells 11.30 – 12.00 UK and Ireland Mortgage Services – Executing to plan Andrew Jones 12.00 – 12.40 Lu
Slide 4: Common themes across our businesses
Common themes across our businesses For personal use only Careful, considered and detailed planning Focus on execution to deliver right outcomes for our customers Learn quickly, fix problems and move forward successfully Build scale to drive operating leverage and margin expansion Invest in technolo
Slide 5: Earnings guidance is affirmed
Earnings guidance is affirmed FY18 Management EPS in constant currency: +12.5% with a positive bias For personal use only The Karvy sale The outlook for our process has been Share buy-back as Earnings guidance corporate actions delayed due to part of disciplined business is in line is affirmed as pe
Slide 6: Profitability: Structural cost out programs progressing well
Profitability: Structural cost out programs progressing well For personal use only Total cost savings estimates Benefit realisation (cumulative) Activity $m FY17A FY18E FY19E FY20E FY21E Current Previous Stage 1 Louisville 25 - 30 25 - 30 28% 50% 70% 100% Stage 2 Spans of control 16 ~15 45% 95% 100%
Slide 7: Profitability: Stage 3 structural cost out program
Profitability: Stage 3 structural cost out program For personal use only Total cost savings Benefit realisation (cumulative) Activity estimates $m FY17A FY18E FY19E FY20E FY21E FY22E FY23E Stages 1 & 2 85 - 100 13.7 49.4 72.1 90.7 92.5 92.5 92.5 Stage 3 Shared services 7 - 10 20% 70% 100% Technology
Slide 8: Summary: Designing and delivering multi-year earnings growth
Summary Designing and delivering multi-year earnings growth For personal use only Executing our strategic priorities, Purposefully designed Growth, Optionality converting into complemented by cyclical recovery Profitability and Capital profitability; margin income, and increased event activity, Mana
Slide 9: Simpler, more transparent, disciplined and profitable
For personal use only Simpler, more transparent, disciplined and profitable
Slide 10: US Mortgage Services: Executing the growth strategy
US MORTGAGE For personal use only SERVICES Executing the growth strategy Nick Oldfield, CEO - US Mortgage Services Tom Millon, CEO - Capital Markets Cooperative Jeff Johnson, President - Specialized Loan Servicing Toby Wells, CEO - Specialized Loan Servicing 19 April 2018
Slide 11: Executive summary
Executive summary Executing to plan, building a sustainable, high return growth business For personal use only SCALE › Servicing portfolio $81bn at Mar 31 2018, +35% since Jun 30 2017 › Loans serviced 488k at 31 Mar 2018, +31% since Jun 30 2017 MIX › Sub-servicing 41% at Mar 31 2018, +219% in UPB si
Slide 12: Progress over last months
Progress over last 12 months Delivering on our key priorities For personal use only Financial returns continue Our sub-servicing to improve and are tracking portfolio has increased by in line with our plan $18bn in UPB (107k loans) We delivered on our pipeline Our mortgage recapture of opportunities
Slide 13: The mortgage lifecycle: Overview
The mortgage lifecycle Overview For personal use only 12 Note: We do not provide the finance
Slide 14: US mortgage market
US mortgage market Total originations and mortgage debt outstanding For personal use only 12,000 $9,770 B $9,840 B $9,930 B 10,000 8,000 6,000 4,000 2,000 $1,710 B $1,616 B $1,645 B 0 2017 2018 (F) 2019 (F) Total originations ($B) Mortgage debt outstanding ($B) 13 Source: Mortgage Bankers Associatio
Slide 15: Demographic tailwinds support $1.6tn origination market
Demographic tailwinds support $1.6tn origination market Rising population entering housing demand years For personal use only Millions 5.0 4.7 4.5 Avg=4.3 4.0 3.5 3.9 3.0 2.5 2.0 Born 1980 or later Born 1966-80 Born 1948-65 Born 1947 or earlier 1.5 1.0 0.5 0.0 0 5 10 15 20 25 30 35 40 45 50 55 60 65
Slide 16: Interest rate sensitivity
Interest rate sensitivity Steadily rising rates is a sweet spot For personal use only 5.0 4.5 Mortgage Rates* (%) Value of owned performing servicing 4.0 rights is increasing 3.5 Margin income is rising 3.0 Refinance % is lowest in 2.5 10 years but with no capacity impact 2.0 2 Year Treasury Yield (
Slide 17: The mortgage lifecycle: Origination support to secondary marketing
The mortgage lifecycle Origination support to secondary marketing For personal use only 16
Slide 18: Originations
Originations Scope of the market and loan origination process For personal use only Online applications Mortgage lenders ~1500 US lenders and 500+ are customers Mortgage $1.6 Loan officers applications initiate the tn loan lifecycle mortgage originations (Projected for 2018) 17
Slide 19: Our rapidly growing CMC network
Our rapidly growing CMC network $320+ bn Co-issue servicing For personal use only Combined annual production produced by patrons Average acquisition price of MSR is at 15% discount to MSR fair market value $12bn 10% market share 506 PATRONS $120bn Total co-issue market 18
Slide 20: The mortgage lifecycle: Servicing to end-of-loan
The mortgage lifecycle Servicing to end-of-loan For personal use only 19
Slide 21: The customer experience
The customer experience Customer engagement drivers 900 data checks For personal use only performed per customer 65 transfers boarded per month totalling 10,000 100% accuracy expected customers 200 data fields mapped to servicing platform DRIVERS OF CUSTOMER ENGAGEMENT Recent 200,000+ 500,000+ loan
Slide 22: The Computershare difference
The Computershare difference Driving exceptional customer experience For personal use only Speech analytics Web design Video capabilities Text analytics Survey tools Information control Mobile access and security PEGA Workflow Event based Modelling Knowledgeable e-communication tools human capital 2
Slide 23: For personal use only
For personal use only 22
Slide 24: SLS loss mitigation
SLS loss mitigation Customer touch points For personal use only 125,580 $22M 26% of 483k loans are delinquent revenue in FY17 1,000 Final modifications / month 1,300 Trial modifications / month BORROWERS IN LOSS MITIGATION ON AVERAGE PER MONTH 142 STAFF IN LOSS MITIGATION 23
Slide 25: The foreclosure process
The foreclosure process Foreclosure facts For personal use only THE FACTS 1 2 3 States with longest foreclosure timeline 1. Washington DC: 1080 days Borrowers are SLS verifies occupancy, SLS remains in contact severely delinquent ensures property is with the homeowner 2. New Jersey: 990 days on thei
Slide 26: Technology and process investment yielding results
Technology and process investment yielding results For personal use only 50% BETTER THAN OUR #1 IN RETENTION EFFICIENCY PEER GROUP Transition to 60+ Source: Fannie Mae Scorecard 25
Slide 27: Sub-servicing market overview
Sub-servicing market overview New segments forming, creating new growth opportunities For personal use only Government Re-performing guaranteed loans loans Home equity Non-qualified Special lending mortgages servicing 26
Slide 28: The mortgage lifecycle: Exit management
The mortgage lifecycle Exit management For personal use only 27
Slide 29: Property Solutions
Property Solutions Property Solutions drives revenue diversification For personal use only Valuations Inspections REO Title management and Settlement Services 28
Slide 30: Third party appraisal management
Third party appraisal management Example appraisal For personal use only 29
Slide 31: REO case study
REO Case study For personal use only Appraised Sold for $213,195.58 between $225,000 $235,000 net to seller & $233,000 66 2.45% Assets more than Total inventory more than 180 days on market 180 days on market 30
Slide 32: Execution priorities for the next months
Execution priorities for the next 12 months Delivering on the next stage of the plan For personal use only ADD SERVICING SCALE – through a range of opportunities, including expanding our co-issue programme and executing on the new business opportunities we see GROW OUR THIRD PARTY FEE FOR SERVICE BU
Slide 33: Conclusions and key takeaways
Conclusions and key takeaways Executing to plan, building a sustainable, high return growth business For personal use only Revenues generated across the mortgage lifecycle and through the economic cycle Revenue diversification model presents a range of growth opportunities Investments driving improv
Slide 34: UK and Ireland Mortgage Services: Executing to plan
UK AND IRELAND For personal use only MORTGAGE SERVICES Executing to plan Andrew Jones Head of UK and Ireland Mortgage Services 19 April 2018
Slide 35: Executive summary
Executive summary Delivery of our strategy is on track For personal use only › UKAR contract remains on track to deliver £600m of revenue and £100m of PBT UKAR Contract › 70% of the UKAR book has now been sold with all servicing retained performing well › UKAR currently has a number of sales process
Slide 36: Key areas of strategic focus
Key areas of strategic focus We continue to focus on four key strategic pillars For personal use only Grow organically by FY20 / 21 Retain servicing as assets are sold › Continue to focus on Challenger Banks, Asset Traders › Continued focus on retaining servicing as UKAR sells and Retail Banks asset
Slide 37: Growth initiatives – Challenger Banks
Growth initiatives – Challenger Banks We now have three challenger bank clients lending For personal use only Market dynamics Key strengths Key wins › Customer dissatisfaction with high › Digital offering › Sainsbury’s Bank street banks driving interest in › Vida Homeloans › Transactional revenue fe
Slide 38: Growth initiatives
Growth initiatives We expect lending volumes to grow rapidly over the next two to three years For personal use only FY20 / 21 book becomes net growth positive Note - Chart not to scale 37
Slide 39: Future revenue and profit expectations
Future revenue and profit expectations Book expected to turn to positive organic growth by FY20 / FY21 For personal use only UK Mortgage Services Revenue & EBITDA FY18 – FY23 UKAR Related Revenues Servicing revenues decline as book amortises - £240m UKAR fixed fee received over first 4 years Non UKA
Slide 40: Growth initiatives – Asset Traders
Growth initiatives – Asset Traders Servicing has been retained on 100% of assets sold to date and through this we have expanded relationships amongst asset traders For personal use only Market dynamics Key strengths Key wins › Strong interest in UK mortgage › Existing relationships with most › Cerbe
Slide 41: Growth initiatives – Retail Banks and Insurers
Growth initiatives – Retail Banks and Insurers We continue to work to expand our footprint with Retail Banks and Insurers For personal use only Market dynamics Key strengths Key wins › Cost / income ratios still under › Lower cost to serve driven by › Prudential pressure scale and single platform ›
Slide 42: Continued growth of Topaz
Continued growth of Topaz Topaz is now overseeing circa £12bn of UPB For personal use only › Topaz offers Legal Title and Master Servicing to non regulated parties who want to acquire or originate Customers mortgages › Loans are serviced under Topaz’s regulatory permissions and under sub brands of T
Slide 43: Integration and cost out
Integration and cost out Integration programme well on track For personal use only 550,000 6 sigma Integration Customer accounts Level of code quality being migrated – only 6 defects per million lines of code › Main focus of Integration Programme is the migration of all mortgages onto CPU iConnect p
Slide 44: Integration and cost out – Process Automation and Digital
Integration and cost out – Process Automation and Digital Plan to significantly reduce operational cost base over next five years For personal use only Process Automation and Digital 11 Automated Processes have been delivered to date. These include: › Significant reduction in operational cost base o
Slide 45: Conclusions
Conclusions Our “fee for service” capital light servicing model is performing well and on track For personal use only Integration programme on Ongoing cost out agenda has UKAR contract performing track in terms of both timing been defined that will deliver well and on track and benefit delivery furt
Slide 46: Global Registry: Leveraging our leading franchise
GLOBAL REGISTRY For personal use only Leveraging our leading franchise Steve Rothbloom President, Computershare USA 19 April 2018
Slide 47: Leveraging our leading franchise
Leveraging our leading franchise Our strategy: To capitalise on our established market leadership by enhancing our suite of integrated issuer compliance services and investor solutions while For personal use only improving operational efficiencies. › High quality recurring revenues with efficiency g
Slide 48: Global Registry - High quality revenues and margin expansion
Global Registry - High quality revenues and margin expansion EBITDA margins have increased by 12.9% to 31.7% over last five years For personal use only 1,000 50.0% 900 45.0% 800 152.1 140.9 135.7 40.0% 140.2 125.8 700 35.0% EBITDA Margin USD millions 600 30.0% 30.5% 31.7% 500 28.8% 25.0% 25.5% 400 2
Slide 49: Revenue analysis
Revenue analysis Multiple revenue streams across sources and countries For personal use only Revenue by source Revenue by region Holder/Broker Paid 28% APAC 25% Margin Income 4% Issuer Paid 68% EMEA North America 15% 60% 48
Slide 50: Most trusted provider with impressive, loyal customer base
Most trusted provider with impressive, loyal customer base Many of the globe’s leading companies select and retain Computershare For personal use only Major Indices Fortune Global 500* 55% S&P500 57% Dow Jones 30 70% FTSE 350 30% ASX 200 50% TSX 70% (*Estimates) › Excellent client retention (>98%) w
Slide 51: Evolving market structures
Evolving market structures Registry has a central, sustainable and enduring market position For personal use only Market Structure Initiatives Industry Leadership › ASX CHESS replacement project › Actively demonstrate industry leadership at a number of levels, including: › Shareholder Rights Directi
Slide 52: US Register maintenance revenues and direct shareholder numbers
US Register maintenance revenues and direct shareholder numbers For personal use only FY13 – FY17 trends 3.9% total 1H FY18 revenue New product revenue decline decline arrested initiatives and rising over last five to 0.7% shareholder paid years revenues 11.8% total decline in FY18 shareholder IPO a
Slide 53: Registry - organic growth initiatives
Registry - organic growth initiatives Expanding markets and solutions For personal use only Private Company solutions Cross-border transactions › Private equity and debt markets in US › Leveraging our cross-border expertise and total more than $2.4 trillion in 2017, global footprint to win new corpo
Slide 54: Registry - organic growth initiatives: investor tools
Registry - organic growth initiatives Enhanced investor tools helping to drive shareholder-paid fees For personal use only Upgrades to customer experience Expanded trading, disbursement and administration New offerings for investors Assets › Premium disbursement options Global › CPU-sponsored Direct
Slide 55: Registry – organic growth initiatives execution update
Registry – organic growth initiatives execution update Enhancements to go to market strategies gaining traction For personal use only Segmenting our markets with tailored value propositions, offerings and service delivery models. › The complex needs of Fortune Global 500 corporate secretaries and th
Slide 56: Registry facilitates higher margin corporate actions
Registry facilitates higher margin corporate actions US Corporate action revenues recur with ‘unpredictable regularity’ through the cycle For personal use only Corp. Actions Revenue CA % of Registry Revenue 100 35% 90 30% 80 › Registry facilitates large complex M&A 25% projects and other corporate t
Slide 57: US Corporate actions activity
US Corporate actions activity US Corporate actions revenues and transaction volumes For personal use only Average $ amount per job No. of Projects 900 100 800 90 80 › The average revenue per transaction has grown 700 steadily, and the volume of projects has shown 70 steady upward progression. 600 60
Slide 58: Delivering efficiency gains
Delivering efficiency gains Registry, as our largest business, has and continues to receive the largest benefit of all enterprise cost initiatives, creating positive margin jaws. For personal use only US CA UK AU HK CE Louisville Process Automation Operations Efficiency Spans of Control Global Servi
Slide 59: Conclusions
Conclusions For personal use only Industry-leading global registry franchise with significant scale and deep expertise across the platform Impressive customer base with recurring revenues, new client wins, long term relationships and excellent retention Stable and recurring revenues successfully uph
Slide 60: Global Employee Share Plans: Building a global growth engine
GLOBAL EMPLOYEE For personal use only SHARE PLANS Building a global growth engine Naz Sarkar Head of United Kingdom, Channel Islands, Ireland and Africa 19 April 2018
Slide 61: Global Employee Share Plans: Building a global growth engine
Global Employee Share Plans Building a global growth engine For personal use only Global plans market remains attractive, with positive growth drivers: › large addressable market which has grown faster than GDP › market is expected to deliver structural growth › increasing penetration and popularity
Slide 62: Global Employee Share Plans Revenue
Global Employee Share Plans Revenue For personal use only 250.0 200.0 122.5 118.3 113.6 102.9 150.0 111.5 Other Revenue Issuer Fee 100.0 50.0 100.5 100.6 104.8 107.0 90.7 - FY13A* FY14A* FY15A* FY16A* FY17A $m *Translated at FY17 avg fx rates 61
Slide 63: Revenue analysis – multiple revenue streams
Global Employee Share Plans Revenue analysis – multiple revenue streams across sources and regions For personal use only Revenue by source Revenue by region Other 8% Margin Income APAC 7% 18% North America 38% Issuer Fees 48% 89% 88% Dealing and FX of companies score of companies score 37% global re
Slide 64: Competitive strengths aligned with customer needs
Global Employee Share Plans Competitive strengths aligned with customer needs For personal use only In rating the importance of different criteria for the selection of an external plan administrator, a significant percentage of global companies score quality of service, global reach and regulatory/i
Slide 65: Underlying structural growth in the market
Global Employee Share Plans Underlying structural growth in the Global Employee Share Plans market For personal use only Employee Share Plan revenue pools available to third party providers estimated to be over $2.2bn by 2020. CAGR in 2013-2016 was over 5%; forecast for 2016-2020 is estimated to be
Slide 66: $130bn of assets under administration
Global Employee Share Plans $130bn of assets under administration – latent earnings power For personal use only Assets under administration has grown by around 4% in six month period from 30 June ‘17 to 30 Dec ‘17 This is reflective of the structural growth of the Global Employee Share Plan market.
Slide 67: Growing levels of participation and issuance
Global Employee Share Plans Growing levels of participation and issuance For personal use only Evidence points to increasing levels of participation by employees in Employee Share Plans globally. The data below illustrates this for SIP Plans in the UK and the ESPP Plans in the USA. +7% +31% +24% Eli
Slide 68: Excellent retention with new client wins
Global Employee Share Plans Excellent retention with new client wins For personal use only Computershare services around 1100 Share Plan clients -3% Clients lost from book due to competitive loss in the year +9% +1% Additional clients Net movement added to client book in client base in the year -5%
Slide 69: A high quality global client base
Global Employee Share Plans A high quality global client base For personal use only The average tenure of our top clients in our key regions is over 12 years, representing over 50% of total global Employee Share Plans revenue demonstrating the strength and quality of our client relationships. EMEA N
Slide 70: Improving client loyalty and customer satisfaction
Global Employee Share Plans Improving client loyalty and customer satisfaction For personal use only Our recent focus has been to improve the quality of service and customer satisfaction of our EMEA clients. This focus has helped us improve both our client satisfaction and employee participant advoc
Slide 71: Leveraging our expertise and data analytics capability
Global Employee Share Plans Leveraging our expertise and data analytics capability For personal use only Our strong local market knowledge, combined with the wealth of executive and contributory plans data, built over many years, is helping us to engage with clients earlier in the plans design cycle
Slide 72: Accelerating our growth in China and Hong Kong plans market
Global Employee Share Plans Accelerating our growth in China and Hong Kong plans market For personal use only We have invested in our China and Hong Kong Employee Share Plans business to help us leverage the growing market potential in this region. In October 2017 we launched the new tailor made pla
Slide 73: Expanding our regional market leadership
Global Employee Share Plans Expanding our regional market leadership For personal use only Computershare is the largest provider of Employee Share Plans in China and Hong Kong. In the year to 31 December 2017 we grew the number of clients by 15% and the number of underlying participants by 13%. Our
Slide 74: Key messages
Global Employee Share Plans Key messages For personal use only Structural growth in use of deferred equity compensation plans, underlying participation levels and outsourcing Computershare has excellent client retention and customer loyalty and is growing share in key markets with new client wins In
Slide 75: Summary and question time
INVESTOR DAY 2018 For personal use only Summary and question time Stuart Irving, Chief Executive Officer Mark Davis, Chief Financial Officer 19 April 2018
Slide 76: Simpler, more transparent, disciplined and profitable
For personal use only Simpler, more transparent, disciplined and profitable
Slide 77: Important notice
Important notice Summary information • This announcement contains summary information about Computershare and its activities current as at the date of this announcement. For personal use only • This announcement is for information purposes only and is not a prospectus or product disclosure statement