Computershare Limited Half Year Results 2008 Presentation

Transcription

1 Computershare Limited Half Year 2008 Presentation Stuart Crosby Tom Honan 13 February 2008

2 Introduction CEO s Report 2

3 Introduction Stuart Crosby President & CEO 3

4 Highlights Introduction Management EPS of cents, up 53% Management Net Profit After OEI of $155.8m, up 46% Free cash flows of $187.4m, up 44% Total Operating Revenues of $788.2m, up 14% Operating Costs of $532.4m, up 5% Interim Dividend of 10 cents* (AUD) per share, up 25% Return to dividend franking 20% franked 4 Note: all results are in USD except for dividend; all comparisons with 1H07 *20% franked

5 Global Interest Rate Market Introduction % UK % US % 8 Canada

6 Computershare Strengths Introduction More than 70% of Revenue recurring in nature Global Diversification across 17 countries including growth engines China, India and Russia Proven technology capabilities and innovation Demonstrated ability to acquire and integrate businesses Strong and sustained earnings and cashflow growth Unique cross-border transaction capacities 6

7 Outlook Introduction In light of the excellent half year result and despite recent equity and interest rate market conditions, we expect Management EPS to be approximately 40% higher than last year. 7

8 Introduction CEO s Report 8

9 Tom Honan CFO 9

10 Group Performance US$m 1H08 1H07 Variance Sales Revenue % Interest & Other Income % Total Revenue % Operating Costs (5%) Share of Net (Profit)/Loss of Associates (1.6) (1.0) Management EBITDA % Management Adjustments - Revenue/(Expense) Reported EBITDA % Management EPS % 10

11 Drivers behind financial performance Corporate action environment Higher balances Revenue enhancements New clients Acquisitions Cost control Operating efficiency Balance sheet improvements Acquisition synergies Foreign exchange 11

12 Management EPS Performance Rolling 12 months US cents H05 1H06 1H07 1H08 12

13 EPS Growth FY05 to FY10 US cents 60 Rolling 12 months Management EPS FY05 1H06 FY06 1H07 FY07 1H08 FY08 1H09 FY09 1H10 FY10 EPS projected from FY05 at 20% p.a. Rolling 12 months Actual EPS 13

14 Analysis of Management EPS Half Year Comparison US cents H05 2H05 1H06 2H06 1H07 2H07 1H

15 1H08 NPAT Analysis $USm EBITDA - AP EBITDA - EMEA EBITDA - NA Depn & Amort Interest Tax OEI 60 1H07 NPAT H08 NPAT 15

16 Net Operating Cash Flows $USm Operating Cash Flow Vs. Capital Expenditure H06 2H06 1H07 2H07 1H08 Operating Cash Flows Capital Expenditure 16

17 Free Cash Flow up 44% on 1H07 $USm Operating Cash Flows less Capital Expenditure Free Cash Flow: - 3 year 1H CAGR 96% - 4 year CAGR 71% H06 2H06 1H07 2H07 1H08 17

18 Half Year Comparisons Revenue & EBITDA $USm 900 $USm R e v e n u e E B I T D A H06 2H06 1H07 2H07 1H Tot al Revenue M anagement EB ITDA 18

19 Half Year Comparisons Revenue & EBITDA $USm 1st Half $USm $USm 2nd Half $USm H06 1H07 1H H05 2H06 2H07 0 Revenue Management EBITDA Revenue Management EBITDA 19

20 Management EBITDA Margin 35.0% 32.7% 30.0% 27.2% 25.0% 22.4% 25.1% 20.0% 18.5% 20.4% 15.0% 17.0% 10.0% 1H05 2H05 1H06 2H06 1H07 2H07 1H08 20

21 Revenue Breakdown US$m 1H08 1H07 Variance Register Maintenance % Corporate Actions % Fund Services (44%) Stakeholder Relationship Mgt % Employee Share Plans % Communication Services % Technology & Other Revenues % Total Revenue % Note: Included in the revenue results are $123.4m of Margin Income (1H07: $84.0m) and $116.3m of Recoverable Income (1H07: $132.9m). 21

22 Margin Income analysis US$m Average Interest rates: UK US Canada 0 1H06 2H06 1H07 2H07 1H % 4.50% 4.78% 5.31% 5.71% 3.70% 4.66% 5.25% 5.25% 4.85% 2.79% 3.77% 4.25% 4.25% 4.45% Average balances (US$bn) * *Note: some balances attract no interest or a set margin for Computershare

23 Regional Analysis 1H08 Revenue & EBITDA Total Revenue Breakdown EBITDA Breakdown 30% 28% 48% 50% 22% 22% Asia Pacific EMEA North America Asia Pacific EMEA North America 23

24 Half Year Comparisons Operating Costs $USm H06 2H06 1H07 2H07 1H08 Operating Costs excl. COS Cost of Sales (COS) 24

25 Technology Costs Establishing Global Platform US$m % % % 9% 9% 10% 10% % % H06 2H06 1H07 2H07 1H08 0.0% Total Technology costs Technology costs as a % of sales revenue 25

26 Analysis of 1H08 Technology Costs 4% 28% 40% Total Costs US$77.1m Development Costs US$30.3m 28% Development Infrastructure Maintenance Administration 26

27 Balance Sheet as at 31 December 2007 Dec-07 Jun-07 Variance US$'000s US$'000s Current Assets 369, ,891 0% Non Current Assets 1,520,793 1,366,224 11% Total Assets 1,890,556 1,735,115 9% Current Liabilities 332, ,550 2% Non Current Liabilities 874, ,990 (55%) Total Liabilities 1,207, ,540 (34%) Total Equity* 682, ,575 (18%) * After buy-back of US$297.5m. 27

28 Key Ratios times EBITDA interest coverage times Net Indebtedness to EBITDA FY05 FY06 FY07 1H FY05 FY06 FY07 1H08 Gearing (Net Debt / Net Debt + Equity) % 80% Funds Flow to Total Debt 76% % 50% 40% 30% 41% 37% 29% 48% 60% 40% 27% 43% 53% 20% 10% 20% 0% FY05 FY06 FY07 1H08 0% FY05 FY06 FY07 1H08 28

29 Computershare Borrowings Dec-07 Jun-07 Variance US$m US$m Cash % Interest Bearing Liabilities * (72%) Net Debt (84%) Management EBITDA** % Net debt to Management EBITDA (55%) *Average Tenor of drawn debt is 4 years ** Rolling 12 months 29

30 Debt Facility Maturity Profile US$m FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Total Nil $160.0m Nil $490.0m $123.0m Nil Nil $124.5m Nil $21.0m $918.5m 30

31 Capital Expenditure $USm 20.0 Capital Expenditure Vs. Depreciation Depreciation H06 2H06 1H07 2H07 1H08 Information Technology Communication Services Facilities Occupancy Other 31

32 Working Capital Management Days Days Sales Outstanding H06 FY06 1H07 FY07 1H08 32

33 Return On Invested Capital Vs. WACC Increased returns, Cost of Capital flat 20% AGAAP AIFRS 18% 16% 14% 12% 10% 8% 6% FY03 FY04 FY05 FY06 FY07 1H08 WACC ROIC 33

34 Return on Equity Vs. Return on Assets 40% AGAAP AIFRS 30% 20% 10% 0% FY03 FY04 FY05 FY06 FY07 1H08 ROA ROE 34

35 Equity Management Interim Dividend of 10 cps (AU) EPS Basic US cents EPS Management US cents Interim Dividend (20 % franked) AU 10 cents Current Yield* 2.5% * Based on 12 month dividend and share price of A$7.56 (close 12 February 2008) 35

36 Equity Management Ordinary Share Buy-back Acquired 45,000,000 ordinary shares Average price AUD $

37 Summary Final Remarks Continued strong EPS growth - 53% Free cash flow up 44% Record revenues Maintained strong balance sheet Return on equity > 35% Dividend increased to 10 cents (AUD) per share, 20% franked 37

38 Market Overview CEO s Report 38

39 CEO Presentation CEO s Report Stuart Crosby President & CEO 39

40 Group Strategy CEO s Report Focus unchanged: 1. Continue to drive operations quality and efficiency through measurement, benchmarking and technology 2. Improve our front office skills to protect and drive revenue 3. Continue to seek acquisition and other growth opportunities where we can add value and enhance returns for our shareholders 40

41 Taking advantage of M&A opportunities in a changed environment CEO s Report Year to date transactions include: Datacare UMB Administar RSS VEM QMT In total, over US$300m in 8 transactions YTD after nearly US$100m in 7 transactions last year Strong cash-flows and balance sheet, position us to take full advantage of opportunities that emerge from current business environment 41

42 Specific initiatives quality differentiation and shareholder communications CEO s Report Over the past few years, we have made many significant improvements to client and stakeholder servicing We re now investing in taking service excellence to a new level The timing is ideal for this exercise, as increasing numbers of issuers and employers see untapped value in the relationships with their investors/employees that Computershare manages for them 42

43 Specific initiatives quality differentiation and shareholder communications CEO s Report In parallel, the introduction of e-communication initiatives in a range of markets offers much more efficient channels of communication with these stakeholders Computershare is a thought leader in e-communication developments, which are generating meaningful new revenues and assisting in strengthening client relationships The Georgeson consulting and solicitation offering rounds out our investor communications offering we are reshaping the market face of Georgeson to fit evolving requirements 43

44 Electronic shareholder communications around the grounds CEO s Report USA notice and access reforms in first year; better than expected uptake of the products we d prepared Australia only 10% of shareholders electing to receive hard copy annual reports, with good uptake of integrated Computershare on-line report and hosting services UK - into second year of the deemed consent regime, with good uptake of new products Canada, HK, Ireland, SA, NZ, Japan watch developments in other markets with great interest but no change implemented as yet. Generally we are ideally placed to lever our data and experience of the wide range of regulatory approaches across different markets 44

45 North America update - USA CEO s Report Investor Services Client retention remains strong off the back of robust service delivery Corporate action pipeline changing shape, but holding up better than many predicted Good returns from investment in business as usual capacities over past 12 to 18 months Other Fund Services - continues to win vast majority of work, but lower volumes than recently Plans rolling out new options technology IML (wireless voting), GSC (subsidiary management and governance services), RSS (insider dealing program management) cross sell strong Encouraging pipeline for Administar (class action and bankruptcy admin) 45

46 North America update - Canada CEO s Report Investor Services Strong local and cross-border corporate actions deal flow continues, but deals generally smaller in size Operations efficiency being enhanced by deployment of CPU best practice Quality client relationships Corporate Trust Steady business with excellent margin No adverse effect as yet from Sub-prime Proxy Georgeson dominates the Canadian proxy market 46

47 EMEA update UK, Russia, Germany, Ireland and South Africa CEO s Report UK Market more rational on price post ownership change at main competitor Deposit Protection Scheme continues to exceed expectations Investment in adviser relationships in the IPO/DI sector continues to bear fruit Change in corporate actions mix, but good pipeline still Good new business prospects in Plans space Russia CPU continues to drive consolidation now 65% NRC and 40% NIKoil Germany VEM acquisition nearly complete, materially extending the range of our service offering to German corporates Other: Ireland - Improving margins and good revenue growth, esp. in ETF space IML rolling up distribution network globally acquisitions complete in Australia, Belgium; other jurisdictions in progress 47

48 Asia Pacific update - Asia CEO s Report Hong Kong and China IPO pipeline continues to hold up much better than expected continue to monitor market conditions PRC opportunities continue to take shape. Plans still the most developed; other areas remain interesting but rate of progress hard to predict Beijing office now established Japan Joint venture with MUTB continues to perform well Working on expanding range of cooperation India Reliance Power (we processed 6M IPO applications in 8 days) is the largest (in applications) IPO ever! UTI MF book also won and migrated 48

49 Asia Pacific update Australia and New Zealand CEO s Report Investor Services Good news continues: better margins, a range of positive pricing outcomes Communication Services QM takeover offers opportunity to take CCS Australia to a new level in a rationalised industry Plans Organic growth continues. Strong support for China and other regional business development Fund Services Now has a solid platform and well positioned to grow into Asia as well as Australia Proxy Georgeson remains market leader in proxy services 49

50 Looking forward to 2008 CEO s Report Computershare has a strong operational and financial platform for continued growth: Healthy revenues Strong understanding of cost structures and margins Strong balance sheet to support acquisitions and capital management Well positioned to take on new business lines (eg, Administar in US) The strategic focus remains unchanged: Continue to drive operations quality and efficiency through measurement, benchmarking and technology Improve our front office skills to protect and drive revenue Continue to seek acquisition and other growth opportunities where we can add value and enhance returns for our shareholders 50

51 Specific current priorities and expectations CEO s Report Continue to take advantage of M&A opportunities Strong focus on taking service quality to next level Lever shareholder communications opportunities from regulatory change EPS growth expectations for FY 08 upgraded to approximately 40% 51

52 Computershare Limited Half Year 2008 Presentation Stuart Crosby Tom Honan 13 February 2008

53 Appendix: Half Year 2008 Presentation 13 February

54 Appendix 1: Group Comparisons Group Comparisons 54

55 Behind the Headline NPAT IMPACT US$000 s Net profit after tax at 31 December ,934 Acquisition provisions no longer required (272) Intangible assets amortisation 1,546 US property rationalisation 710 Marked to market adjustments - derivatives (1,113) Management adjusted profit after tax at 31 December ,805 55

56 CPU Revenues 6% 3% Revenue Type 7% 5% 5% 53% Register Maintenance Corporate Actions Fund Services Stakeholder Relationship Management Employee Share Plans Communication Services Technology & Other Revenue 21% 56

57 Regional Analysis 1H08 Revenue $USm ` Register Maintenance Corporate Actions Fund Services Stakeholder Relationship Management Employee Share Plans Communication Services Technology & Other Revenue Asia Pacific EMEA North America 57

58 Half Year Comparisons - Revenue $USm Register Maintenance Corporate Actions Funds Serv ices Stakeholder Relationship Management Employ ee Share Plans Communication Serv ices Technology & Other Rev enue 1H06 2H06 1H07 2H07 1H08 58

59 Half Year Comparisons Operating Costs $USm Cost of Sales Personnel Occupancy Other Direct Technology Corporate 1H06 2H06 1H07 2H07 1H08 59

60 Underlying Effective Tax Rate % FY05 FY06 FY07 1H08 60

61 Interest Rate Sensitivity US$m PBT Impact % -2.50% -2.00% -1.50% -1.00% -0.50% Current 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% Exposure Hedged exposure 61

62 Risk Management - Interest Rate Sensitivity Exposure to interest rates 41% No exposure 22% Interest Rate Hedging Strategy: - Protect downside risk in current interest rate environment Policy: - Minimum hedge of 25% / Maximum hedge of 100% - Minimum term 1 year / Maximum term 5 years - Current hedging: 37% Effective hedging in place - both natural & synthetic 37% 62

63 Risk Management Average Funds Balances for year ending 31 December 2007 Dissenter 3% Dividend 16% By Category Sharesave/ Employee Plans 11% Broker Trust 14% US 29% By Country Australia 2% Corporate Actions 39% Regular Trust 17% UK 21% Canada 48% Average funds balance US$8.7b 63

64 Appendix 2: Country Summaries Country Summaries 64

65 Appendix 2: Country Summaries Asia Pacific 65

66 Australia Half Year Comparison $Am Total Revenue $Am Revenue Breakdown H06 2H06 1H07 2H07 1H Register Maintenance Corporate Actions Fund Services Stakeholder Relationship Management Employee Share Plans Communication Services Technology & Other Revenue 1H07 2H07 1H08 66

67 New Zealand Half Year Comparison $NZm Total Revenue $NZm 8.0 Revenue Breakdown H06 2H06 1H07 2H07 1H Register Maintenance Corporate Actions 1H07 2H07 1H08 67

68 Hong Kong Half Year Comparison $HKm 500 Total Revenue $HKm Revenue Breakdown H06 2H06 1H07 2H07 1H Register Maintenance Corporate Actions 1H07 2H07 1H08 68

69 India Half Year Comparison 900 INRm Total Revenue INRm Revenue Breakdown H06 2H06 1H07 2H07 1H Register Maintenance Corporate Actions Fund Services 1H07 2H07 1H08 69

70 Appendix 2: Country Summaries North America 70

71 United States Half Year Comparison $USm Total Revenue $USm Revenue Breakdown H06 2H06 1H07 2H07 1H Register Main Corp Actions Fund Services Stakeholder Relationship Management Employee Share Plans 1H07 2H07 1H Communication Services Technology & Other Revenue 71

72 Canada Half Year Comparison $CAm Total Revenue $CAm Revenue Breakdown H06 2H06 1H07 2H07 1H Register Maintenance Corporate Actions Stakeholder Relationship Management Employee Share Plans 1H07 2H07 1H Communication Services Technology & Other Revenue 72

73 Appendix 2: Country Summaries EMEA 73

74 United Kingdom Half Year Comparison GBPm Revenue Breakdown GBPm Total Revenue H06 2H06 1H07 2H07 1H Register Maintenance Corporate Actions Stakeholder Relationship Management Employee Share Plans Communication Services 1.8 Technology & Other Revenue 1H07 2H07 1H08 74

75 Ireland Half Year Comparison EURm Total Revenue EURm Revenue Breakdown H06 2H06 1H07 2H07 1H08 Register Maintenance Corporate Actions Funds Services Technology & Other Revenue 1H07 2H07 1H08 75

76 Germany Half Year Comparison EURm 25 Total Revenue EURm Revenue Breakdown H06 2H06 1H07 2H07 1H08 Register Maintenance Corporate Actions Stakeholder Relationship Management Employee Share Plans 1H07 2H07 1H08 Communication Services Technology & Other Revenue 76

77 South Africa Half Year Comparison ZARm 140 Total Revenue ZARm Revenue Breakdown H06 2H06 1H07 2H07 1H08 0 Register Maintenance 1H07 2H07 1H08 Corporate Actions 77

78 Appendix 3: Assumptions Assumptions 78

79 Assumptions: Exchange Rates Average exchange rates used to translate profit and loss to US dollars. USD AUD HKD NZD INR CAD GBP EUR ZAR