Slide 1: Execution delivering sustained earnings growth: 2017 Full Year Results Presentation
COMPUTERSHARE LIMITED Execution delivering sustained earnings growth 2017 Full Year Results Presentation Stuart Irving Chief Executive Officer and President Mark Davis Chief Financial Officer 16 August 2017
Slide 2: Executive summary
Executive summary FY17 results - upgraded guidance delivered Management results1 Revenue EBITDA EPS $2,182.5m 10.6% $557.2m 4.6% 57.04 cents 3.5% Statutory EPS Free cash flow Dividend per share Actual Actual Final 48.76 cents2 70.8% $362.2m3 7.9% AU 19 cents 11.8% FY17 upgraded guidance delivered de
Slide 3: Strategies driving performance and earnings power
Strategies driving performance and earnings power Growth Profitability Capital Management › Mortgage Services now › Cost out program ahead › Strong free cash flow making a significant of schedule with further › Net debt fell by contribution – 24.6% of benefits to come $260.8m down 23.1% total revenu
Slide 4: FY18 outlook
FY18 outlook Guidance › In constant currency, Computershare expects FY18 Management EPS to increase by around +7.5% on FY17 Assumptions › This outlook assumes that equity markets remain at current levels, interest rate markets remain in line with current market expectations and that there is a modes
Slide 5: Growth: Mortgage Services performing to plan
Growth: Mortgage Services performing to plan Comparison in constant currency FY17 @ CC FY16 Actual CC Variance US Mortgage Services revenue $257.2 $222.0 +15.9% UK Mortgage Services revenue $280.6 $93.3 +200.8% Total Mortgage Services revenue $537.8 $315.3 +70.6% Total Mortgage Services EBITDA $78.0
Slide 6: Growth: Employee Share Plans performing well
Growth: Employee Share Plans performing well Comparison in constant currency FY17 @ CC FY16 Actual CC Variance Transactional revenues $86.8 $64.5 +34.6% Fee revenues $112.4 $109.9 +2.3% Margin income $18.4 $29.7 -38.0% Other revenues $18.0 $18.1 -0.6% Total Employee Share Plans revenue $235.6 $222.2
Slide 7: Profitability: Register Maintenance – Margin expansion
Profitability: Register Maintenance – Margin expansion Comparison in constant currency FY17 @ CC FY16 Actual CC Variance Register Maintenance revenue $703.4 $727.8 -3.4% Corporate Actions revenue $125.8 $140.5 -10.5% Total Register Maintenance & $829.2 $868.3 -4.5% Corporate Actions revenue Register
Slide 8: Profitability: Structural cost out program progressing
Profitability: Structural cost out program progressing Expected benefit realisation (cumulative) Total cost savings Activity estimates $m FY17 FY18 FY19 FY20 Stage 1 25 - 30 28% 45% 70% 100% Louisville (unchanged) Stage 2 ~15 45% 95% 100% Spans of control Operational efficiencies 10 - 15 - 20% 80% 1
Slide 9: Capital management: enhancing shareholder returns
Capital management: enhancing shareholder returns Recycling capital › Completed the disposal of the Company’s global headquarters in Melbourne and investment in INVeSHARE Inc (excluded from management earnings in FY17) › Subsequent to June 30th 2017, the Company announced the agreement to sell its 5
Slide 10: FY17 Management Results summary
FY17 Management Results summary Upgraded guidance delivered Comparison in constant currency FY17 @ CC FY16 Actual CC Variance FY17 Actual Total Revenue $2,182.5 $1,974.2 +10.6% $2,114.0 Margin income $141.6 $153.3 -7.6% $136.2 Operating Costs $1,626.1 $1,440.2 +12.9% $1,573.9 EBITDA $557.2 $532.6 +4
Slide 11: FY17 management NPAT analysis
FY17 management NPAT analysis 9.6% management EBITDA growth (ex margin income) Controllable External 400 380 360 340 0.1 9.1 0.8 11.7 USD million 320 36.3 6.4 300 311.6 14.3 303.5 297.3 280 260 240 220 200 controlling Mgt EBITDA Interest FY16 Actual FX FY17 Actual Dep'n & Income Tax FY17 NPAT Margin
Slide 12: Management revenue breakdown - Growth engines on track and performing well
Management revenue breakdown - Growth engines on track and performing well Comparison in constant currency Business stream FY17 @ CC FY16 Actual CC Variance FY17 Actual Business Services $834.2 $605.7 +37.7% $785.9 Register Maintenance $703.4 $727.8 -3.4% $697.9 Corporate Actions $125.8 $140.5 -10.5
Slide 13: Management revenue bridge
Management revenue bridge UKAR contract win driving revenue growth - Growth in UK mortgage services +$187.3m - Growth in US mortgage Revenue services +$32.3m growth - Other Business Services +12.8%, Impacted +$10.2m excluding 2,250 predominantly MI by GBP fall 2,200 1.0 6.2 24.7 24.6 11.7 15.2 10.7
Slide 14: Client balances and margin income
Client balances and margin income Lowest yield in CPU history – turned positive in 2H17 18.0 16.0 16.6 16.8 16.3 15.1 15.2 15.0 14.0 14.4 14.0 Average Client Balances for period USD billion 12.0 105.8 10.0 89.4 86.8 86.4 8.0 79.0 74.3 6.0 69.6 66.6 4.0 2.0 0.0 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17
Slide 15: EBITDA by business stream
EBITDA by business stream Growth engines delivering strong EBITDA growth Comparison in constant currency FY17 @ CC FY16 CC Variance FY17 FY17 Actual Business Stream Actual Actual EBITDA Margin % Business Services $180.7 $145.3 +24.4% $172.6 22.0% Register Maintenance & Corporate Actions $262.8 $266.
Slide 16: Margin income by business stream
Margin income by business stream Comparison in constant currency EBITDA MI EBITDA EBITDA MI EBITDA CC Business Stream ex MI ex MI Variance FY17 @ FY17 @ FY17 @ FY16 FY16 FY16 CC CC CC Actual Actual Actual Business Services $180.7 $62.6 $118.1 $145.3 $63.9 $81.4 +45.1% Register Maintenance & Corporat
Slide 17: Operating costs analysis
Operating costs analysis Continued cost controls – BAU opex up 0.3% Comparison in constant currency Operating costs FY17 @ CC FY16 Actual CC Variance FY17 Actual Cost of sales $369.6 $350.9 +5.3% $367.5 Controllable costs Personnel $805.9 $696.3 +15.7% $774.9 Occupancy $88.7 $79.2 +12.0% $85.7 Other
Slide 18: Operating and investing cash flows
Operating and investing cash flows Free cash flows up 7.9% - funds growth and capital management FY17 Actual FY16 Actual Net operating receipts and payments $530.4 $480.3 Net interest and dividends1 ($50.8) ($50.1) Income taxes paid ($59.3) ($57.0) Net operating cash flows excluding SLS advances $42
Slide 19: Balance sheet
Balance sheet Net debt falling and leverage down to 1.60x Jun 17 Jun 16 Variance Current Assets $1,251.7 $1,315.2 -4.8% Non-Current Assets1 $2,695.3 $2,660.4 +1.3% Total Assets1 $3,947.0 $3,975.5 -0.7% Current Liabilities $753.1 $796.3 -5.4% Non-Current Liabilities $1,956.9 $2,072.7 -5.6% Total Liab
Slide 20: Conclusions
Conclusions › Delivered on FY17 upgraded guidance despite cyclically depressed Corporate Actions revenues › Executing our growth, profitability and capital management strategies are driving sustained performance, earnings power and shareholder returns › Growth: Mortgage services progressing to plan,
Slide 21: Appendices
APPENDICES Statutory results Company Overview FY17 Computershare at a glance Management EBITDA (ex MI) Financial performance by half year at actual rates Global Registry Maintenance and Employee Share Plans Business Services revenue excluding mortgage services Management revenue by region Management
Slide 22: Statutory results
Statutory results FY17 FY16 Vs FY16 (pcp) Total Revenues $2,168.1m $1,988.9m +9.0% › Management results are used, along with Total Expenses $1,802.9m $1,742.5m +3.5% other measures, to assess operating business Statutory Net Profit (post NCI) $266.4m $157.3m +69.4% performance. The Company believes
Slide 23: Management adjustment items
Management adjustment items Appendix 4E Note 3 Management adjustment items net of tax for the year ended 30 June 2017 were as follows: Amortisation › Customer contracts and other intangible assets that are recognised on business combinations or major asset acquisitions are amortised over their usefu
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: FY17 Computershare at a glance
FY17 Computershare at a glance Management revenue @ CC Management EBITDA @ CC Canada ANZ ANZ Canada 8% 11% 5% Asia 14% 9% Asia By geography 6% UCIA $2,182.5m $557.2m 20% UCIA USA 24% 46% CEU USA 4% CEU 48% 5% Communication Services Technology & other Communication Services Technology & other 8% 1% 7
Slide 26: Management EBITDA (ex margin income) up 58.3% since FY13
Management EBITDA (ex margin income) up 58.3%* since FY13 450 35% 400 404.6 30% 372.9 350 357.5 25% 300 321.5 EBITDA Margin 20% USD million 250 21.3% 20.9% 255.6 20.5% 19.4% 200 16.2% 15% 150 10% 100 5% 50 0 0% FY13 FY14 FY15 FY16 FY17 Mgt EBITDA (excluding MI) EBITDA margin (excluding MI) 26 * Mana
Slide 27: Financial performance by half year at actual rates
Financial performance by half year at actual rates 2H17 1H17 2H16 1H16 2H15 1H15 2H14 1H14 2H13 1H13 Total Management $1,110.8 $1,003.2 $1,035.5 $938.7 $1,016.5 $959.5 $1,045.7 $976.9 $1,037.5 $987.6 Revenue Operating Costs $811.6 $762.3 $744.5 $695.7 $720.7 $699.0 $771.7 $709.2 $767.6 $747.6 Manage
Slide 28: 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 7% Holder/Broker MI paid 8% 27% Issuer paid FY17 @ CC 70% Fee $703.4m 48% $235.6m Margin Income 3% TX 37% Oth Rev 8% Holder/Broker MI paid 13% 28% Issuer paid 69% FY16 Fee 50% $72
Slide 29: Global Employee Share Plans
Global Employee Share Plans Latent earnings potential – UK post-vest assets under administration Units (Bn) 22% Value GBP (Bn) 12.00 22% 10.00 8.00 6.00 4.00 2.00 0.00 Jun 15 Jun 16 Jun 17 29
Slide 30: Business Services revenue excluding mortgage services
Business Services revenue excluding mortgage services FY17 @ CC FY16 Other India Funds Other India Funds 11% 9% 4% 13% Voucher Services Voucher 9% Services 8% Class Actions Class Actions 34% Deposit 29% Deposit $296.4m Protection Scheme $290.4m Protection Scheme 11% 7% Corporate Corporate Trust Bank
Slide 31: Management revenue & EBITDA at actual rates: Regional Analysis
Management revenue & EBITDA at actual rates Regional Analysis Revenue by region EBITDA by region 2,500 600 554.1 540.8 532.6 2,114.0 88.0 1,976.1 1,974.2 500 70.2 81.1 2,000 181.0 185.9 165.6 400 1,500 994.4 229.8 251.8 USD millions 881.7 266.0 965.3 USD millions 300 1,000 23.5 93.8 113.1 200 14.0 8
Slide 32: FY17 Management revenue at actual rates
FY17 Management revenue at actual rates Regional Analysis 450 376.0 365.8 400 350 281.7 300 USD millions 250 200 150 106.2 96.3 77.6 73.6 73.4 71.5 100 67.3 64.3 60.7 60.5 41.0 40.8 36.9 23.3 22.7 21.8 21.3 20.3 50 15.1 13.0 12.6 11.2 9.8 7.4 6.4 6.3 6.1 5.6 4.9 4.2 2.6 2.1 2.0 1.0 0.8 0.0 0.0 0.0 0
Slide 33: Australia
Australia Management revenue: AUD million FY15 FY16 FY17 357.3m 362.0m 325.0m 144.0 141.2 132.2 121.2123.3 117.3 41.4 34.6 33.5 29.0 26.6 22.3 19.3 20.0 13.1 10.8 3.8 5.5 1.9 2.1 1.3 Register Corporate Business Stakeholder Employee Share Communication Tech & Other Maintenance Actions Services Relati
Slide 34: Hong Kong
Hong Kong Management revenue: HKD million FY15 FY16 FY17 575.4m 597.0m 631.8m 391.6 384.3 367.1 146.6 118.1 99.3 92.6 76.1 73.4 16.5 18.6 20.2 Register Maintenance Corporate Actions Stakeholder Relationship Mgt Employee Share Plans FY15 FY16 FY17 34
Slide 35: India
India Management revenue: INR million FY15 FY16 FY17 2,661.1m 2,793.4m 3,451.4m 2,673.8 2,100.3 1,911.9 662.9 659.1 592.7 86.4 100.4 118.4 Register Maintenance Corporate Actions Business Services FY15 FY16 FY17 35
Slide 36: United States
United States Management revenue: USD million FY15 FY16 FY17 881.7m 965.3m 994.4m 257.2m Mortgage Services 222.0m 402.3 Mortgage 378.0 Services 376.0 365.8 337.4 256.0 78.0 71.5 62.5 64.3 68.8 63.6 67.3 55.0 45.0 35.0 38.1 36.9 12.3 15.0 12.6 Register Corporate Business Stakeholder Employee Share Co
Slide 37: Canada
Canada Management revenue: CAD million FY15 FY16 FY17 216.8m 218.9m 240.3m 103.0 82.2 78.8 80.6 79.9 81.5 28.3 23.9 23.7 25.0 20.8 17.2 7.4 8.5 6.5 2.9 2.4 2.6 0.7 0.0 0.0 Register Corporate Business Stakeholder Employee Share Communication Tech & Other Maintenance Actions Services Relationship Mgt
Slide 38: United Kingdom and Channel Islands
United Kingdom and Channel Islands Management revenue: GBP million FY15 FY16 FY17 203.6m 221.3m 331.3m 188.5m Mortgage Services 221.5 62.7m Mortgage Services 101.1 81.0 64.6 57.3 54.2 46.3 41.8 39.4 6.9 5.2 3.9 4.2 4.2 4.4 4.0 4.8 2.9 3.4 3.3 2.0 Register Corporate Business Stakeholder Employee Shar
Slide 39: South Africa
South Africa Management revenue: RAND million FY15 FY16 FY17 244.3m 245.4m 256.8m 220.6 217.3 217.3 21.9 15.5 15.1 16.9 12.2 7.2 1.1 0.7 0.7 Register Maintenance Corporate Actions Stakeholder Relationship Mgt Employee Share Plans FY15 FY16 FY17 39
Slide 40: Germany
Germany Management revenue: EUR million FY15 FY16 FY17 38.6m 36.6m 39.6m 20.0 17.8 18.1 16.1 15.9 15.3 3.1 3.1 1.2 1.4 1.3 0.9 0.5 0.1 0.0 Register Maintenance Corporate Actions Employee Share Plans Communication Services Tech & Other Revenue FY15 FY16 FY17 40
Slide 41: Management EPS – AUD equivalent
Management EPS – AUD equivalent › For Australian investors, AUD equivalent EPS (actual) was weaker due to the combined impact of the weaker GBP and stronger AUD exchange rates. Management EPS (AUD) 1.0297 120 0.9139 100 0.8389 0.7521 0.7273 80 Cents per share 75.74 71.31 72.35 60 65.92 ~ 53.27 40 ~
Slide 42: Technology costs at actual rates
Technology costs at actual rates 350 14% 12.4% 11.9% 12.0% 300 12% 261.3 Tech costs as a % of revenue 250 236.0 236.4 9.6 10% 14.2 12.7 USD million 84.2 200 8% 62.5 65.7 150 6% 79.0 81.1 91.7 100 4% 50 2% 80.4 76.9 75.8 0 0% FY15 FY16 FY17 Development Infrastructure Maintenance Admin Technology cost
Slide 43: Capital expenditure versus depreciation at actual rates
Capital expenditure versus depreciation at actual rates 70 50 45 60 40 50 35 38.6 30 Depreciation USD million 40 USD million 2.2 35.4 Capex 1.9 25 8.7 29.9 30 2.5 11.1 20 2.1 8.1 1.7 15 20 2.5 10 25.6 10 20.8 16.8 5 0 0 FY15 FY16 FY17 Information Technology Communication Services Facilities Occupanc
Slide 44: Breakdown of client balances
Breakdown of client balances Significant leverage to rising interest rate cycle – 10.2bn of average exposed balances in FY17 USD 16.7bn Total balances USD 10.2bn USD 6.5bn Exposed balances Non-exposed balances USD 5.0bn USD 5.2bn Hedged balances Non-hedged balances USD 3.8bn USD 1.4bn USD 3.3bn USD
Slide 45: Client balances: Strong leverage to rising rates
Client balances Assuming an Strong leverage to rising rates increase of 100bps on our FY17 exposed non-hedged 3.00% balances ($5.2bn) CPU would generate an additional $52m annualised EBITDA* 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun
Slide 46: Exposed and non-exposed balances by business
Exposed and non-exposed balances by business Business Activity FY17 Balances (USD billions) Margin income (USD millions) Exposed Non-exposed Register Maintenance 2.1 0.4 23.8 Corporate Actions 2.6 1.0 37.7 Employee Share Plans 1.5 0.3 16.6 Business Services 4.0 4.8 58.1 Totals 10.2bn 6.5bn 136.2m 16
Slide 47: 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 13% Other AUD 5% 4% CAD USD USD 5.0bn 13% 49% (USD 10.2bn x 49%) GBP 38% USD 10.2bn USD (USD 16.7bn x 61%) 4
Slide 48: Profile of our swap and deposit book
Profile of our swap and deposit book Short duration fixed rate hedging – enhances yield without preventing the benefit of potential rate rises 3,500 Fixed Rate Deposits Swaps 3,000 2,500 USD million 2,000 1,500 1,000 500 0 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Floating rate deposits comprise both expos
Slide 49: Debt facility maturity profile
Debt facility maturity profile Maturity Dates Debt Committed Bank Private SLS USD million Drawn Debt Debt Placement Advance Facilities Facility Facility Facility FY18 Dec-17 72.1 110.0 110.0 Feb-18 40.0 40.0 40.0 FY19 Jul-18 235.0 235.0 235.0 Dec-18 122.6 200.0 200.0 Feb-19 70.0 70.0 70.0 FY20 Jul-1
Slide 50: Key financial ratios
Key financial ratios Jun 17 Jun 16 Variance USD m USD m Jun 17 to Jun 16 Interest Bearing Liabilities including SLS advance debt $1,573.1 $1,863.3 -15.6% Less Cash ($510.7) * ($526.6) -3.0% Net Debt (including SLS advance debt) $1,062.4 $1,336.7 -20.5% Management EBITDA $540.8 $532.6 +1.5% Net Finan
Slide 51: Effective tax rate
Effective tax rate Statutory and management (at actual rates) Tax rate % › The Group’s statutory effective tax rate has decreased from 34.0% in 40% FY16 to 25.7% in FY17 35.3% 35% 34.0% › FY16 included $47.3m of contingent consideration payable to HML and a 29.2% loss on the sale of VEM and Russia,
Slide 52: Dividend history and franking
Dividend history and franking Franking suspended due to share buy-back 20.0 100% 18.0 19 90% 16.0 17 17 80% 16 16 14.0 15 15 70% 14 12.0 60% 10.0 50% AU cents 8.0 40% 6.0 30% 4.0 20% 2.0 10% 0.0 0% 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 Dividend (AU cents) Franking (%) 52
Slide 53: Mortgage Servicing
US and UK mortgage services - UPB and number of loans US mortgage services UPB up 12.9% ($59.7bn v $52.9bn) on pcp Performing Non-performing Comments At 30 Jun 17 At 30 Jun 16 At 30 Jun 17 At 30 Jun 16 Fully-Owned $8.5bn $4.9bn $12.4bn $8.8bn MSRs 1 38K Loans 24K Loans 103K Loans 92K Loans During th
Slide 54: Financial Snapshot – US Mortgage Servicing
Financial Snapshot – US Mortgage Servicing FY17 revenue composition Other Base service fees servicing 25% fees 54% • Base servicing fees, $138.6m, +15.8% • Servicing related fees $53.1m, $257.2m +22.1% • Other services fees $65.5m, Servicing +11.4% related fees 21% Jun-17 Jun-16 FY16 Annual Report r
Slide 55: Mortgage services key terms
Mortgage services key terms Performance servicing: Servicing of a mortgage which is less than 30 days delinquent. Typically loans that meet the criteria of the Government Sponsored Entities. Non-performing servicing: Servicing of a mortgage that is over 30 days delinquent up to management of the for
Slide 56: Exchange rates
Exchange rates › Average exchange rates used to translate profit and loss to US dollars for key reporting currencies Currency FY17 FY16 Var USD has: USD 1.0000 1.0000 AUD 1.3296 1.3749 -3.3% Weakened HKD 7.7630 7.7586 0.1% Strengthened NZD 1.4050 1.5017 -6.4% Weakened INR 66.6241 66.2864 0.5% Streng
Slide 57: Important notice
Important notice Forward-looking statements › This announcement may include 'forward-looking statements'. Such statements can generally be identified by the use of words such as 'may', 'will', 'expect', 'intend', 'plan', 'estimate', 'anticipate', 'believe', 'continue', 'objectives', 'outlook', 'guid