DETAILED FINANCIAL REPORT 2002 LEVERAGING OUR GLOBAL NETWORK

Transcription

1 DETAILED FINANCIAL REPORT 2002 LEVERAGING OUR GLOBAL NETWORK

2 CORPORATE GOVERNANCE STATEMENT DIRECTORS REPORT STATEMENT OF FINANCIAL PERFORMANCE STATEMENT OF FINANCIAL POSITION STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS DECLARATION INDEPENDENT AUDIT REPORT SHAREHOLDER INFORMATION FINANCIAL CALENDAR AUGUST ANNOUNCEMENT OF RESULTS FOR THE COMPANY S 2002 FINANCIAL YEAR 12 SEPTEMBER BOOKS CLOSE FOR FINAL DIVIDEND 26 SEPTEMBER PAYMENT OF FINAL DIVIDEND 7 NOVEMBER ANNUAL GENERAL MEETING MELBOURNE MARCH ANNOUNCEMENT OF RESULTS FOR THE HALF YEAR ENDING 31 DECEMBER 2002 COMPUTERSHARE LIMITED ABN

3 CORPORATE GOVERNANCE STATEMENT The Board of Directors of Computershare Limited is responsible for the corporate governance of the Computershare group. The Board of Directors is also responsible for setting the strategic direction of the Computershare group and ensuring it is effectively managed. The Board keeps its own processes under review with the aim to achieve global best practice in matters of corporate governance. To assist in the execution of its responsibilities, the Board has established several Board committees and a framework for the management of the Computershare group. THE BOARD The board is currently comprised of four non-executive directors and three executive directors ensuring independence and objectivity. The chairman is a non-executive director. Details of each current member of the Board and their respective shareholdings are set out in the Directors Report. BOARD COMMITTEES The Board has created a number of committees including the nomination committee, the risk and audit committee and the remuneration committee. It is the board s policy that committees dealing with corporate governance matters should be chaired by a non-executive director and have at least a majority of members being non-executive directors. Any director or committee of the Board is entitled to obtain independent professional or other advice at the cost of the Company, unless the Board determines otherwise, and is entitled to obtain such resources and information from the Company, including direct access to employees of and advisers to the Company, as they may require. NOMINATION COMMITTEE The composition of the Board is reviewed at least annually by the nomination committee to ensure that the Board has the appropriate range of expertise and experience. Any selection of suitable candidates for the position of director must stand for election at the general meeting of shareholders. The nomination committee is comprised of Sandy Murdoch, Peter Griffin, and Tony Wales. RISK AND AUDIT COMMITTEE The principal functions of the risk and audit committee include reviewing and making recommendations to the Board and assisting it in the discharge of its responsibilities relating to accounting policy and disclosure. It is responsible for assessing the adequacy of accounting, financial and operating controls, reviewing the performance of external auditors and examining their evaluation of internal controls and management s response. The audit committee is chaired by Tony Wales and has two other members being Sandy Murdoch and Peter Griffin. The managing director, chief financial officer, and the Company s external auditors are invited to risk and audit committee meetings at the discretion of the committee. The committee meets at least twice each year. REMUNERATION COMMITTEE The Board is responsible for determining and reviewing compensation arrangements for the directors themselves and the chief executive officer and the executive team. The senior executive management of the Company comprising the founders and major shareholders, have specifically expressed the view that their remuneration should take some account of the significant equity holding they have in the Company. In this light, the remuneration committee has allowed remuneration for such personnel to be retained at a rate below market level and at a level that does not fully recognise their significant contribution to the Company. As a policy, the Company seeks to remunerate staff in accordance with market conditions and reflective of their contribution. The Board is keen to encourage equity holdings by employees to align staff interest with that of shareholders. Many staff have participated in the Company s various share and option plans and the directors believe this has been a significant contributing factor to the company s success. ANNUAL REVIEW In order to ensure that the Board continues to discharge its duties effectively the performance of all directors is reviewed at least annually by the Chairman. The board also annually reviews the performance of senior management. 1

4 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT (continued) CONFLICTS OF INTEREST AND INDEPENDENT ADVICE If there is a potential conflict of interest, conflicted directors must abstain from deliberations on such matters. Such directors are not permitted to exercise any influence over other board members nor receive relevant board papers. Computershare permits directors to obtain advice about transactions or matters of concern at the Company s cost. Approval of directors seeking independent advice is subject to the approval of the Chairman. ETHICAL STANDARDS The company recognises the need for directors and staff to observe the highest standard of behaviour and business ethics when engaging in corporate activity. The Board has adopted a code of ethics that sets out the principles and standards with which all officers and employees are expected to comply in the performance of their respective functions. A key element of that code is the requirement that officers and staff act in accordance with the law and with the highest standards of propriety. The code and its implementation are to be reviewed each year. A copy of the code is available to shareholders upon request. IDENTIFICATION AND MANAGEMENT OF SIGNIFICANT BUSINESS RISK The Board and senior management work actively to identify significant areas of potential business and legal risk. The identification, monitoring, and management of significant risk to the Company are highlighted in the bi-annual business plan presented to the Board by the managing director. The Board reviews and approves the parameters under which such risks will be managed before adopting the business plan. MARKET DISCLOSURE POLICY The Board has approved a market disclosure policy to ensure the fair and timely disclosure of price sensitive information to the investment community. Computershare s Company Secretary has been appointed the disclosure officer and as such is required to collate and where appropriate disclose share price sensitive information. CODE OF PRACTICE FOR BUYING AND SELLING COMPUTERSHARE SECURITIES The freedom of directors and executives to deal in Computershare s securities is restricted in a number of ways by statute, by common law, and by the requirements of the listing rules of the ASX. In addition to these restrictions, the Company has adopted a code of practice for buying and selling Computershare securities. The Code of Practice contains additional restrictions on dealing. The Code of Practice provides that directors or executives may only deal in Computershare securities, after notifying the Chairman, in the four weeks immediately following the Company s half year and full year financial results announcements and, if relevant, any Annual General Meeting announcement. EQUITY PARTICIPATION BY NON-EXECUTIVE DIRECTORS The Board encourages non-executive directors to own shares in the Company. SHAREHOLDER RELATIONS The Board of Directors aims to ensure that shareholders are informed of all information necessary to assess the performance of the directors. Information is communicated to the shareholders through: The annual report which is distributed to all shareholders The annual general meeting and other meetings so called to obtain approval for board action as appropriate Making available all periodic financial reports and announcements of material developments on the Company s website. All shareholders who are unable to attend general meetings of the Company are encouraged to communicate issues or ask questions by writing to the Company. 2

5 DIRECTORS REPORT The Board of Directors of Computershare Limited has pleasure in submitting its report in respect of the financial year ended 30 June Directors The names of the directors in office at the date of this report are: A.S. Murdoch (Chairman) C.J. Morris (Managing Director) P.D. DeFeo P.J. Griffin P.J. Maclagan I.D. Saville A.N. Wales The qualifications, experience and responsibilities of directors are outlined on pages of the 2002 Concise Annual Report. Directors interests At the date of this report, the direct and indirect interests of the directors in the shares of the Company are: Number Number Number of Ordinary of Reset Name of Options Shares Preference Shares P.D. DeFeo P.J. Griffin P.J. Maclagan C.J. Morris A.S. Murdoch I.D. Saville A.N. Wales 2,000,000 16,367,525 1,330 54,635, , ,000 32,592,384 Directors meetings The number of meetings of the Board of Directors (and of Board committees) and the number of meetings attended by each of the directors during the financial year are: Directors Audit Committee Nomination Remuneration Meetings Meetings Committee Meetings Committee Meetings A B A B A B A B A.S. Murdoch P.D. DeFeo 1 M.E. Elliott* 3 3 P.J. Griffin P.J. Maclagan 5 6 C.J. Morris 5 6 1** I.D. Saville 1 1 A.N. Wales A Number of meetings attended. B Number of meetings held during the time the director held office during the year. * M.E. Elliott is no longer a director and resigned on 8 November ** Attended by invitation. 3

6 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES DIRECTORS REPORT (continued) Principal activities The principal activities of the consolidated entity during the course of the financial year were the operation of computer technology services, operation of share registries, including the administration of employee share and option plans and the provision of software specialising in share registry, financial and stock markets. In addition, the Group also offers corporate trust services and acts as trustee for clients debt offerings in certain markets and provides share ownership and other investor relations services through its Analytics businesses and print and mail distribution services through its Document Services businesses. Computershare is a registered securities transfer agent. In addition, certain subsidiaries are Trust companies whose charters include the power to accept deposits, primarily acting as an escrow and paying agent on behalf of customers. In certain jurisdictions the Group is subject to regulation by certain federal and state agencies and undergoes periodic examinations by those regulatory agencies. There were no other significant changes in the nature of the activities of the consolidated entity during the year. Consolidated profit The consolidated profit of the consolidated entity for the financial year was $71,293,536 after income tax and outside equity interests. This represents an 84% improvement on the 2001 result of $38,734,474. Consolidated profit of the consolidated entity for the financial year excluding non-recurring items was $57,930,984 after income tax and outside equity interests. This represents a 5% improvement on the 2001 results of $54,915,845. Profit before non-recurring items is determined as follows: $000 $000 Net profit 71,293 38,734 Exclusion of write-down investment in E*Trade, net of tax 20,244 Exclusion of sale of SUMMIT, net of tax (4,062) Exclusion of Hong Kong equity transaction (13,362) Net profit excluding non-recurring items (refer note 2(b)) 57,931 54,916 Dividends The following dividends of the consolidated entity have been paid, declared or recommended since the end of the preceding financial year: Ordinary shares A final ordinary dividend of half a cent per share amounting to $2,745,651 fully franked at 30% in respect of the year ended 30 June 2001 was paid on 28 September An interim ordinary dividend of half a cent per share amounting to $2,766,217 fully franked at 30% in respect of the half year ended 31 December 2001 was paid on 19 March A final dividend recommended by the directors of the Company in respect of the year ended 30 June 2002, to be paid on 26 September 2002, is an ordinary dividend of two and a half cents per share amounting to $13,856,959 franked at 30%. Reset preference shares A reset preference dividend of $ per share amounting to $4,204, franked at 30% in respect of the six months ended 30 May 2002 was paid on 31 May A reset preference share dividend of 5.5% per annum amounting to $678,083 has been accrued in respect of the period 1 June 2002 to 30 June Review of operations The Group has recorded an operating profit before tax and non-recurring items of $83.8 million for the year ended 30 June 2002 (2001: $90.9 million). The result was achieved on revenue of $781.0 million (2001: $754.3 million). Before non-recurring items the Group s earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 3% to $147.6 million (2001: $151.6 million). We are pleased to have met the forecast we outlined in February, particularly given the challenging conditions currently existing in the core registry business, which continues to be affected by low interest rates and subdued corporate activity. The quality of our earnings remains high as evidenced by strong cash flows from all businesses, an improved discipline across the Group on cost containment and our continuing prudent approach of expensing continuing software development which this year totalled $36 million. 4

7 The results for the year represent a significant achievement for the group given the volatility of financial markets and world economic conditions. These factors impacted the business through subdued corporate actions and lower margin income, although growth was experienced in non-registry businesses. Regionally, revenues and operating earnings (EBITDA) were relatively evenly spread between North America, Asia Pacific and Europe. The North American business, which continues to be affected by 40 year low interest rates, generated revenues of $305 million and EBITDA of $41.1 million during the year. A substantial reduction in corporate actions (mergers and acquisitions, initial public offerings and stock splits) resulted in reduced registry income, however, this was offset by a solid contribution from the Plan Managers business, particularly in the first half of the year. The Asia Pacific region contributed revenues of $237 million and EBITDA of $56.7 million, representing growth of 20% and 39%, respectively. These improved results were generated by the acquisition of BT Registries in Australia and New Zealand and the joint venture with Hong Kong Exchanges and Clearing Ltd. The Europe region (including South Africa) contributed $237 million and $49.3 million respectively. The results were impacted by a reduction in corporate actions, and lower interest rates affecting margin income, in the registry business. Operating margins remained strong at 19%, with Asia Pacific and Europe achieving 24% and 21%, respectively and North America 13%. Computershare Technology Services has been extremely active as it implements technology and infrastructure to support the expansion of the global registry network. For the year ended 30 June 2002 total technology expenses (including external bureau services) rose by 19% over the spend in the prior 2001 financial year. This increase in costs is a direct result of major projects such as: development and implementation of an ESPP system for US Plan Managers, development of a Global Options System, development and implementation of SCRIP in US, Hong Kong and Canadian markets and set up of communications and data infrastructure for North America. Other operational highlights include: Selected registrar for over 60% of new IPOs in Australia Increased market share in Hong Kong to in excess of 80% through the formation of a joint venture with Hong Kong Exchanges and Clearing Limited Became the sole provider of registry services in South Africa through our acquisition of Mercantile Registrars Our first entry into continental Europe through our joint venture with Deutsche Börse to provide registry related services to the German market Appointed the share registrar for the Bank of China HK listing the largest IPO in Asia this year with nearly 400,000 shareholders Selected to advise the China Securities Depository and Clearing Corporation on the Chinese securities registration service Sale of the SMARTS Market Surveillance system to the Singapore Exchange and Monetary Authority Infrastructure roll out in North America completed US SCRIP conversion 85% completed which now enables us to market registry to major companies Canada conversion to SCRIP remains on track for completion by end March 2003 Merrill Lynch Employee Share Plan conversion complete Contract with BP to manage their Employee Share Plan globally Involvement with an increasing number of major cross border transactions in Canada and the US Substantial growth in commercial (non-registry) document services business worldwide. 5

8 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES DIRECTORS REPORT (continued) Significant changes in the state of affairs Significant changes in the affairs of the consolidated entity during the financial year which are reported in the consolidated financial statements were: In September 2001 Computershare acquired BT Registries in Australia and New Zealand, adding approximately 1.0 million security holder accounts including equity, fixed interest and rental bond accounts. In November 2001 Computershare announced the acquisition of the Mercantile Registrars business in South Africa which was successfully completed in April Computershare is now the sole provider of registry services in the South African market. As part of Computershare s capital management strategy to strengthen its balance sheet and diversify its equity funding base, the Company raised $150.0 million through the issue of $100 Reset Preference Shares. A preferential non-cumulative fully franked dividend of 5.5% per annum is fixed for the first five years and paid semi-annually in arrears in May and November. The preference shares have an ability to convert to ordinary shares at a 2.5% discount to the ordinary share price at the reset dates, with the first reset date being 30 November In December 2001 it was announced that Computershare had taken a 49% interest in a newly formed joint venture with Deutsche Börse to provide share registration and related services to the German equities market and at a later stage to the equities market in continental Europe. In May 2002 Computershare announced that it would re-organise its global management structure into three main operating regions of Europe (including UK, Ireland and South Africa), North America (US and Canada) and Asia Pacific (Australia, New Zealand and Hong Kong). All senior appointments have been made and the new structure was in place prior to the end of this financial year. In June 2002 Computershare merged its Hong Kong registry business with that of Hong Kong Exchanges and Clearing Limited. The joint venture is 76% owned by Computershare and currently has in excess of 80% market share. The aim of the joint venture is to provide share registry and related services to the Hong Kong market and to explore further opportunities in Asia, particularly in China. New appointments to the Board In December 2001, the Board appointed Iain Saville to the Board as an executive director. At the same time Iain was appointed to the newly created position of Managing Director Europe, responsible for the operations and growth of the United Kingdom, continental Europe and South Africa. Iain s appointment took the number of executive directors to three. In May 2002, Philip DeFeo was appointed to the Board as non-executive director. Phil is currently chairman of the California-based Pacific Exchange (PCX), one of the leading stock exchanges in the US. Philip s appointment takes the total number of non-executive directors to four. In the opinion of the directors there were no other significant changes in the affairs of the consolidated entity during the financial year under review that are not otherwise disclosed in this report or the consolidated accounts. Significant events after year end No matter or circumstance has arisen since the end of the financial year which is not otherwise dealt with in this report or in the consolidated financial statements, that has significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial years, other than: On 30 July 2002, Computershare announced that it had obtained approval from the US Securities and Exchange Commission to be an ADR agent in the US and that it intends to now market this service to its non-us based clients. On 28 August 2002, Computershare announced that it had formed a strategic alliance with Citigroup Global Investments to focus on new opportunities and work together in North America and globally. As part of this agreement, Citibank has been provided with an option over 12,081,633 shares in Computershare at an exercise price of $1.83. As at 30 June 2002 no financial impact from this new strategic alliance had been reflected in either the Statement of Financial Performance or the Statement of Financial Position. On 28 August 2002, Computershare also announced that it would acquire up to 10% of its shares through an on-market buyback that would be funded by its existing facilities. The buyback commenced on 11 September 2002 and at the date of this Report, 300,000 shares had been purchased. The buyback is in place for a six month period ending on 11 March

9 Likely developments and future results The directors remain confident of the consolidated entity s immediate future. Operationally, the Company is on track to have its proprietary software, the SCRIP system, live in all three regions by the end of Following this Computershare will have a truly global registry model which will be able to deliver efficiencies and benefits to the Company s clients across the regions in which they operate. The Company also expects the strong growth in its Employee Share Plan business to continue. This business, which currently represents 8% of consolidated revenue, has grown significantly over the last year. Revenues and earnings growth will depend on the recovery of global equity markets, and in particular a higher level of corporate actions. Any increase in interest rates will also be revenue and earnings positive. The Company will nevertheless remain vigilant in managing its cost base efficiently given the uncertain outlook going forward to ensure it continues to deliver acceptable levels of operating earnings and margins. The Company is confident that it will be able to pay a five cent per share fully franked dividend from the 2002/03 financial year onwards. Share options Details of options granted to directors or relevant officers as part of their remuneration are set out in the section of this report headed Directors and Officers Remuneration. Details of shares under option, or issued during or since the end of the financial year due to the exercise of an option, are set out in note 19 to the financial statements and form part of this report. The names of the employees who currently hold options are entered in the Register of Options kept by the Company pursuant to section 170 of the Corporations Act The register may be inspected free of charge. Directors and officers remuneration Remuneration of directors and senior executives of the company is established by the Remuneration Committee. Remuneration is determined as part of an annual performance review, having regard to market factors and a performance evaluation process. For executive directors and officers, remuneration packages generally comprise salary and superannuation. Executives are also provided with longer-term incentives through the employee share ownership and option schemes, which act to align the executives actions with the interests of the shareholders. The Board meets annually to review its own performance. The non-executive directors are responsible for evaluating the performance of the Chief Executive, who in turn evaluates the performance of all other senior executives. Details of remuneration provided to directors and the five most senior executive officers of the consolidated entity for the year ended 30 June 2002 are as follows: Total Value of Total Excluding Options Including Base Salary Directors Fee Superannuation Bonus Other Benefits Options Granted (3) Options $ $ $ $ $ $ $ $ Directors A.S. Murdoch 115,000 11, , ,500 P.D. DeFeo M.E. Elliott (5) 169,565 16, , ,522 P.J. Griffin 100,000 10, , ,000 P.J. Maclagan 348,333 42,000 9, , ,150 C.J. Morris 348,333 38, , ,333 I.D. Saville 138,351 27, ,442 (2) 495, ,463 A.N. Wales (1) 83,750 75,000 15, ,462 (1) 379, ,087 Officers (4) S. Rothbloom 572,410 5, , , ,134 R. Waterhouse 572, , , ,410 E. Stockdale 517,986 18,938 28, , , ,947 S. Crosby 336,381 8, , , , ,732 P. Conn 381,607 79, ,811 64, ,811 (1) A.N. Wales became a non-executive director on 1 October Other benefits paid to A.N. Wales relate primarily to the payment of unused annual and long service leave. (2) Other benefits paid to I.D. Saville relate to a grant of ordinary shares. (3) Options have been valued as at the date of issue using the Black-Scholes option pricing model. (4) The officers included in this disclosure are those executives having, during the year, the greatest authority for managing the Group. Other executives who have not had such authority may have received remuneration at a level in excess of that shown for the executives named above. (5) Resigned as a director on 8 November

10 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES DIRECTORS REPORT (continued) Indemnification of officers During the period, the Company paid an insurance premium to insure directors and officers of the Company and its controlled entities against liability. The directors of the Company are as detailed earlier in the report and the contract also covers all executive officers and directors and executive officers of controlled entities. Disclosure of the amount of insurance premium payable and a summary of the nature of liabilities covered by the insurance contract is prohibited by a confidentiality clause in the contract. Rounding of amounts The parent entity is a company of the kind specified in the Australian Securities and Investments Commission Class Order 98/0100. In accordance with the class order, amounts in the consolidated financial statements and the Directors Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise. Signed in accordance with a resolution of the directors. A.S. MURDOCH Chairman 12 September 2002 C.J. MORRIS Chief Executive Officer 8

11 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2002 Consolidated Parent entity Note $000 $000 $000 $000 Revenues Sales revenue 2 757, ,262 2,135 Other revenues from ordinary activities 2 23,911 23,056 84,735 29,703 Total revenue 2 780, ,318 84,735 31,838 Expenses Direct services 536, ,922 3,159 Technology services 79,850 60,888 Corporate services 15,097 12,128 15,446 20,688 Depreciation and amortisation 2 55,130 46,318 1,151 2,257 Borrowing costs 2 10,169 14,402 6,759 13,302 Write-down investment in E*Trade ( ETR ) 2(b) 21,264 21,264 Total expenses 697, ,922 23,356 60,670 Share of net profit of associates accounted for using the equity method 34 2,383 Profit/(loss) from ordinary activities before income tax expense 83,748 75,779 61,379 (28,832) Income tax (expense)/benefit relating to ordinary activities 3 (25,995) (33,695) (2,823) 2,402 Net profit/(loss) 57,753 42,084 58,556 (26,430) Net (profit)/loss attributable to outside equity interests 2(b) 13,540 (3,350) Net profit/(loss) attributable to members of the parent entity 4 71,293 38,734 58,556 (26,430) Net exchange difference on translation of financial report of self-sustaining foreign operations (24,365) 29,599 Total revenues, expenses and valuation adjustments attributable to members of the parent entity recognised directly in equity (24,365) 29,599 Total changes in equity other than those resulting from transactions with owners as owners 46,928 68,333 58,556 (26,430) Basic earnings per share (cents per share) Normalised basic earnings per share (cents per share) Diluted earnings per share (cents per share) Normalised diluted earnings per share (cents per share) The accompanying notes form an integral part of these financial statements. 9

12 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2002 Consolidated Parent entity Note $000 $000 $000 $000 CURRENT ASSETS Cash assets 74,327 66,276 9,542 9,497 Receivables 6 150, ,927 2,965 1,456 Other financial assets 7 41, Inventories 8 3,355 5,218 Tax assets 11 1,731 Other 9 11,092 11, ,445 Total Current Assets 282, ,080 13,369 12,398 NON-CURRENT ASSETS Receivables , ,366 Other financial assets 7 7,543 8, , ,637 Property, plant and equipment , ,878 4,738 5,389 Deferred tax assets 11 39,804 27,615 5,181 11,277 Intangibles goodwill , ,473 Other 13 3,114 2, Total Non-Current Assets 677, , , ,013 Total Assets 959, , , ,411 CURRENT LIABILITIES Payables ,910 98,316 11,090 33,512 Interest bearing liabilities 15 5,975 2, ,863 Tax liabilities 16 19,825 38, ,592 Other provisions 17 32,182 25,894 15,052 3,542 Other ,156 Total Current Liabilities 176, ,294 27,250 42,509 NON-CURRENT LIABILITIES Interest bearing liabilities , , , ,419 Deferred tax liabilities 16 17,206 6, ,139 Other provisions 17 4,685 6, Other 18 2, Total Non-Current Liabilities 127, , , ,821 Total Liabilities 303, , , ,330 Net Assets 655, , , ,081 10

13 Consolidated Parent entity Note $000 $000 $000 $000 EQUITY Contributed equity ordinary shares , , , ,097 Contributed equity reset preference shares , ,205 Reserves 20 6,414 30, Retained profits 133,781 83,993 37, Parent entity interest (a) 649, , , ,081 Outside equity interest (a) 6,655 3,528 Total Equity 655, , , ,081 Members of the parent entity Outside equity interests $000 $000 $000 $000 (a) Interest in the equity of the consolidated entity: Contributed equity ordinary shares 361, ,603 5,862 Contributed equity reset preference shares 147,205 Reserves 6,414 30,778 (1,028) (106) Retained profits 133,781 83,993 1,821 3,634 Total Interest in Equity 649, ,374 6,655 3,528 The accompanying notes form an integral part of these financial statements. 11

14 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2002 Consolidated Parent entity Note $000 $000 $000 $000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 796, ,325 9,607 19,266 Payments to suppliers and employees (654,645) (603,063) (16,041) (12,419) Dividends received 276 3,603 41,512 Interest paid and other costs of finance (11,222) (13,598) (8,286) (13,056) Interest received 4,181 3,850 12, Australian net GST (paid)/refunded (7,976) (5,541) 758 1,821 Income taxes paid (48,076) (30,297) (2,476) (5,222) Net operating cash flows 30(b) 79,354 68,279 37,143 (8,984) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of controlled entities 30(c) (12,496) (59,294) Purchase of businesses 30(d) (17,945) (40,362) Investment in subsidiaries (99,776) (19,421) Investment in listed entities (1,128) (2,576) (1,137) (2,576) Investment in unlisted entities (1,823) Payments for property, plant and equipment (56,886) (43,301) (492) (223) Security deposit on premises 1,200 (1,200) 1,200 (1,200) Loans granted to other entities (290) (264) Net loan repayments from/(grants to) controlled entities 57,877 (148,980) Loan repayments received 23 1 Proceeds from sale of property, plant and equipment 646 1, ,159 Proceeds from sale of property, plant and equipment to related entity Proceeds from sale of SUMMIT 6,653 Proceeds from sale of investments 8,520 3,685 Net investing cash flows (78,379) (136,465) (42,224) (169,237) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of ordinary shares 7,090 8,581 7,090 8,581 Proceeds from issue of reset preference shares 150, ,000 Costs of issue of reset preference shares (2,795) (2,795) Proceeds from borrowings 57, ,861 19, ,861 Repayment of borrowings (176,000) (72,266) (158,000) (50,500) Loans from controlled entities 1,107 Dividends paid ordinary shares (5,504) (5,406) (5,504) (5,406) Dividends paid reset preference shares (4,204) (4,204) Repayment of finance leases (1,816) (2,630) (756) (1,140) Other settlement of deferred acquisition (12,597) (59,822) Other (518) Net financing cash flows 11,439 83,800 5, ,503 Net increase/(decrease) in cash held 12,414 15, (9,718) Cash at the beginning of the financial year 30(a) 65,453 47,533 9,497 19,215 Exchange rate variations on foreign cash balances (3,540) 2,306 Cash at the end of the financial year 30(a) 74,327 65,453 9,542 9,497 The accompanying notes form an integral part of these financial statements. 12

15 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting The financial statements have been prepared as a general purpose financial report that complies with the requirements of the Corporations Act 2001, Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and Urgent Issues Group Consensus Views. The accounting policies used are consistent with those adopted in the previous year. The financial statements have also been prepared in accordance with the historical cost convention and do not take account of changes in either the general purchasing power of the dollar or in the prices of specific assets except for certain assets that, where noted, are at valuation. Comparative information has been reclassified or represented to maintain comparability with the current reporting period. Principles of consolidation The consolidated financial statements include the financial statements of the parent entity, Computershare Limited, and its controlled entities, referred to collectively throughout these financial statements as the Consolidated entity. All inter-entity balances and transactions have been eliminated. Where an entity either began or ceased to be controlled during the year, the results are included only from the date control commenced or up to the date control ceased. Financial statements of foreign controlled entities presented in accordance with overseas accounting principles are, for consolidation purposes, adjusted to comply with group policy and generally accepted accounting principles in Australia. Foreign currency transactions Foreign currency transactions are converted to Australian dollars at exchange rates approximating those in effect at the date of each transaction. Amounts payable and receivable in foreign currencies at balance date are converted to Australian dollars at the average of the buy and sell rates available on the close of business at balance date. Revaluation gains and losses are brought to account as they occur. The financial statements of all foreign operations are translated using the current rate method as they are considered self-sustaining. Exchange differences relating to monetary items are included in the Statement of Financial Performance, as exchange gains or losses, in the period when the exchange rates change. Where the exchange difference relates to hedging part of the net investment in a self-sustaining foreign operation the exchange difference is transferred to the foreign currency translation reserve on consolidation. Income tax The financial statements apply the principles of tax-effect accounting. The income tax expense in the Statement of Financial Performance represents tax on the pre-tax accounting profit adjusted for income and expenses never to be assessed or allowed for taxation purposes. The provision for deferred income tax liability and the future income tax benefit include the tax effect of differences between income and expense items recognised in different accounting periods for book and tax purposes, calculated at the tax rates expected to apply when the differences reverse. The benefit arising from estimated carry forward tax losses is recorded as a future income tax benefit only where realisation of such benefit is considered to be virtually certain. The benefit arising from timing differences is recorded as a future income tax benefit where realisation of such benefit is beyond reasonable doubt. No provision is made for withholding tax on unremitted earnings of applicable foreign incorporated controlled entities as there is currently no intention to remit these earnings to the parent entity. Inventories Inventories are valued at the lower of cost and net realisable value. Cost is assigned on a first-in first-out basis. Prepaid inventory is recorded at cost and is bought on behalf of the Company s clients. As the inventory is used, the costs are billed. Recoverable amount of non-current assets All non-current assets are reviewed at least annually to determine whether their carrying amounts require write-down to recoverable amount. Recoverable amounts for all non-current assets are determined using net cash flows that have not been discounted to present values. Property, plant and equipment The amounts at which property, plant and equipment are stated in these financial statements are regularly reviewed. Where revaluations are made they are based on reports by independent valuers. The gain or loss on disposal of revalued assets is calculated as the difference between the carrying amount of the asset at the time of disposal and the proceeds on disposal and is included in the profit and loss of the consolidated entity in the year of disposal. Any related revaluation increment in the asset revaluation reserve at the time of disposal is transferred to retained earnings. 13

16 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Depreciation Items of property, plant and equipment, excluding freehold land and leasehold plant and equipment, are depreciated on a straight line basis at rates calculated to allocate their cost or valuation, less estimated residual value, against revenue over their estimated useful life. Additions and disposals are depreciated for the period held in the year of acquisition or disposal. Depreciation expense has been determined based on the following rates of depreciation Buildings (2.5% per annum), Plant and Equipment (10% to 50% per annum), Fixtures and Fittings (13% to 50% per annum) and Motor Vehicles (15% to 40% per annum). Investments Controlled entities The investments in the controlled entities are carried in the Company s financial statements at the lower of cost and recoverable amount. Dividends from controlled entities are brought to account in the Statement of Financial Performance when they are proposed by the controlled entities. Associated entities Interests in material associated entities are brought to account using the equity method. Under this method the investment in associates is initially recognised at its cost of acquisition and its carrying value is subsequently adjusted for increases or decreases in the investor s share of post-acquisition results and reserves of the associate. The investment in associated entities is decreased by the amount of dividends received or receivable. Investments in associates are carried at the lower of cost and recoverable amount in the accounts of the parent entity. Detailed equity accounting information concerning the consolidated entity s interests in material associated entities is provided in note 34. Other financial assets Broker client deposits and all other investments are carried in the accounts at the lower of cost or recoverable amount. Dividend and interest income from these assets is brought to account when received. Leases Assets acquired under finance leases are capitalised and amortised over the life of the relevant lease, or where ownership is likely to be obtained on expiration of the lease, over the life of the asset. Lease payments are allocated between interest expense and reduction in the lease liability. Operating lease assets are not capitalised and rental payments are charged as against operating profit in the period in which they are incurred. Software development costs Internally developed software and related costs are expensed in the year in which they are incurred. Goodwill On acquisition of a controlled entity, the difference between the purchase consideration plus incidental expenses and the fair value of identifiable net assets acquired is initially brought to account as goodwill or discount on acquisition. In establishing the fair value of the identifiable net assets acquired, a liability for restructuring costs is only recognised at the date of acquisition where there is a demonstrable commitment and a detailed plan. The liability is only recognised where there is little or no discretion to avoid payments to other parties in settlement of costs of the restructuring and a reliable estimate of the amount of the liability as at the date of acquisition can be made. Revisions in the estimated amount of restructuring costs which are recognised as a liability as at the date of acquisition are accounted for by adjusting the amount of the liability and the amount of goodwill. These adjustments are made in the reporting period in which the revision in the estimate occurs. Consequential adjustments to reflect the cumulative effect of revisions on the amount of amortisation of goodwill are recognised in the Statement of Financial Performance in the reporting period in which the revision in estimate occurs. Purchased goodwill is amortised on a straight line basis over the period during which the benefits are expected to arise. These periods have been individually assessed on an entity by entity basis and vary between 5 to 20 years from the date of gaining control. The unamortised balance of goodwill is reviewed at each balance date and charged to profit and loss to the extent that applicable future benefits are no longer probable. 14

17 Employee entitlements Provision has been made in the Statement of Financial Position for benefits accruing to employees in relation to annual leave, long service leave, workers compensation and vested sick leave. No provision is made for non-vesting sick leave as the anticipated pattern of future sick leave taken indicates that accumulated non-vesting sick leave will never be paid. All on-costs, including payroll tax, workers compensation premiums and fringe benefits tax are included in the determination of provisions. Vested sick leave, annual leave and the current portion of long service leave are measured at their nominal amounts. The non-current portion of the long service leave provision is measured at the present value of estimated future cash flows, discounted by the interest rate applicable to Commonwealth Government securities maturing in the period the liability is expected to fall due. A 4% per annum rate of increase in employee wage and salary rates was assumed in the present value calculations. Retirement benefits Contributory superannuation and pension plans exist to provide benefits for the consolidated entity s employees and their dependants on retirement, disability or death. The plans are accumulation plans. The employee sponsors contribute to the plans at varying rates of contribution depending on the employee classification. The contributions made to the funds by group entities are charged against profits (refer note 23(a)). Employee share and option ownership schemes Certain employees are entitled to participate in share and option ownership schemes. The details of schemes are described in note 21(a). No remuneration expense is recognised in respect of employee shares and options issued. Operating revenue Sales revenue Sales revenue comprises registry and bureau revenue, sale of software licences and associated development, installation and maintenance fees (net of returns, discounts and allowances) and document processing services. Registry and bureau revenue includes all revenue earned on the provision of regular services to customers, primarily fixed monthly maintenance fees and transaction processing fees. Additionally, sales revenue includes all associated revenue earned from managing various client corporate actions, such as capital raisings, demutualisations and takeovers, which occur periodically. Revenue derived from both sources of sales revenue includes variable margin income earned on administered funds, including Save As You Earn Schemes (refer note 29(a)). In relation to the recognition of any profits and losses on the corporate actions which span reporting periods, where they can be reliably measured, revenue and expenses arising from the project are recognised in the Statement of Financial Performance by reference to the stage of completion of the project as at balance date. Software licence sales and associated development, installation and maintenance fees are recognised in accordance with written customer agreements so as to match revenue with expenses. Document processing revenues include revenue from the provision of paper and electronic document needs for issuers, investors and many corporations. This includes design, document composition and programming, through to various production and distribution methods. Other revenue Other revenue includes interest income on short-term deposits controlled by the consolidated entity, royalties and dividends received from other persons. Insurance recoveries The consolidated entity recognises amounts receivable under its insurance policies, net of any relevant excess amounts, upon indemnity being acknowledged by the insurers. Financial instruments included in equity Ordinary share capital bears no special terms or conditions affecting income or capital entitlements of the shareholders. Reset preference shares earn a preferential non-cumulative dividend fixed for the first five years of 5.5% per annum. Further details of terms and conditions of preference shares are detailed in note 19(a) to the financial statements. Financial instruments included in liabilities Loans are recognised when issued at the amount of the net proceeds received, with any premium or discount on issue amortised over the period to maturity. Interest is recognised as an expense on an effective yield basis. 15

18 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial instruments included in assets Trade debtors Trade debtors are initially recorded at the amount of the contracted sale proceeds. Provision for doubtful debts is recognised to the extent that recovery of the outstanding receivable balance is considered less than likely. Any provision established is based on a review of all outstanding amounts at balance date. Forward exchange contracts Forward currency exchange contracts are initially recognised as either an asset or liability, at an amount equal to the premium or discount on the forward currency exchange contracts. The assets and liabilities recognised are subsequently remeasured by reference to exchange rates at balance date. The gain or loss on remeasurement is brought to account in the Statement of Financial Performance unless the contracts are entered to hedge anticipated specific future transactions, in which case the gain or loss is deferred and included in the initial measurement of the anticipated item being hedged. The premium or discount on the forward currency exchange contracts is amortised over the period of the contracts, unless the contracts are entered to hedge anticipated specific future transactions, in which case the premium or discount is included in the initial measurement of anticipated items being hedged. Bank deposits and loans Bank deposits and loans are carried at cost. Interest revenue is recognised on an effective yield basis. Other investments Other investments, including equity interests in non-subsidiary, non-associated corporations are included in investments at the lower of cost or recoverable amount. Dividend income is brought to account when received. Hedge accounting The consolidated entity applies the principles of hedge accounting as set out in the relevant Australian Accounting Standards and UIG pronouncements, using both interest rate and foreign currency swaps and options. To the extent that hedging instruments are required to be marked to market and become ineffective as a hedge of the intended risk, all gains and losses are recognised immediately in the Statement of Financial Performance. Cash For the purposes of the Statement of Cash Flows, cash includes deposits at call with financial institutions and other highly liquid investments with short periods to maturity which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts. Cash excludes Broker Client Deposits carried on the balance sheet that are recorded as other current financial assets. Earnings per share Diluted earnings per share in previous years adjusted the figures used in the determination of basic earnings per share by taking into account earnings that would have arisen had the dilutive options been exercised during the financial year rather than adjusting the weighed average number of shares to include potential ordinary shares assumed to have been issued for no consideration. The change in the basis for calculating earnings per share was made to comply with AASB 1027 Earnings per Share, issued in June The earnings per share information for the year ended 30 June 2001 has been recalculated to present the comparative amounts on a consistent basis with the current financial year. Where material non-recurring items have impacted net profit the Group also discloses normalised basic earnings per share and normalised diluted earnings per share. These are calculated on the same basis as basic earnings per share and diluted earnings per share except that net profit has been adjusted to reverse the impact of any material non-recurring items (refer note 5 for details). 16

19 Consolidated Parent entity $000 $000 $000 $ OPERATING PROFIT (a) Profit from ordinary activities is after crediting the following revenues: Sales revenue Rendering of services 757, ,262 2,135 Other revenues Net foreign exchange gains (refer also to Borrowing costs) ,169 Decrease in underwriting liability to controlled entity following novation of financial instruments 16,914 Gain on other financial instruments 1,406 1,070 Amortisation of discount on forward exchange contracts 1,485 Dividends received from: Other persons Controlled entity 41,512 Interest received from: Other persons 4,161 3, Controlled entities 13,189 15,473 Rent received 1,947 4,598 Licence fees received from controlled entities 5,486 4,780 Other fees received from controlled entities 4,772 5,993 Gross proceeds from the sale of: Property, plant and equipment 646 1,970 4 Investments 8,520 3,689 SUMMIT (refer note 2(b)) 6,653 Non-current assets to controlled entities 102 3,159 Other revenue items in total 4,666 1, Total other revenues 23,911 23,056 84,735 29,703 Total revenues 780, ,318 84,735 31,838 Profit from ordinary activities is after charging the following expenses: Depreciation and amortisation Depreciation of property, plant and equipment 21,951 18, Amortisation of: Leased assets 1,115 1, Leasehold improvements 2, Establishment costs 67 5 Premium on forward exchange contract 1,006 1,006 Currency options Employee shares Goodwill 29,869 25,007 Total depreciation and amortisation 55,130 46,318 1,151 2,257 17

20 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2002 Consolidated Parent entity $000 $000 $000 $ OPERATING PROFIT (continued) Borrowing costs Interest paid: To other persons 8,798 11,630 6,456 10,931 On finance leases To controlled entities Exchange (gain)/loss on foreign currency loans 1,277 (853) 1,277 Loan facility fees 1,027 1, Total borrowing costs 10,169 14,402 6,759 13,302 Other operating expense items Operating lease rentals (a) 27,973 27,441 2,897 2,633 Provision for employee entitlements 3,212 4, Net charge to/(reduction in) provision for doubtful trade debts (242) 1,667 (604) (Profit)/loss on disposal of investments (1,889) (427) Expense from sale of: Plant and equipment 641 1,630 Plant and equipment to controlled entity 102 3,159 Investments 6,631 3,262 (Profit)/loss on sale of property, plant and equipment (5) (340) 4 Net foreign exchange loss on hedges 8,560 Net foreign exchange loss on other financial instruments (a) Operating lease rentals includes contingent rentals of approximately $786,590. (b) Individually significant items Revenues During the year ended 30 June 2001 Computershare Technology Services Pty Limited sold the SUMMIT broker/client accounting system to Wilco International (a wholly owned subsidiary of Automatic Data Processing Inc.) for a net gain of $6,155,003 (after tax $4,062,324). Since the sale of SUMMIT to Wilco in February 2001, Computershare Limited has ceased to be a significant technology provider to E*Trade Australia Limited ( ETR ). As a consequence, the significance of the Computershare Limited shareholding in ETR has shifted from being strategic to passive. Expenses As at 30 June 2002, Computershare Limited held 11,504,513 shares being 11.84% of the issued capital of ETR. The results for the year ended 30 June 2001 reflect a pre-tax write-down of $21,263,673 (after tax $20,243,673) following the directors evaluation of the investment at that date. No write-down was considered necessary in the year ended 30 June In accordance with Australian Accounting Standards the write-down of the investment in ETR in 2001 was only partially tax effected. In the results for the year ended 30 June 2001, the additional tax expense incurred by not fully tax effecting the write-down was $6,208,000. Outside equity interest On 1 June 2002 Computershare Group sold 7.32% of its interest in Computershare Hong Kong Investor Services Limited ( CHIS ). In addition CHIS issued shares to a subsidiary of the Hong Kong Securities Clearing Company Limited ( MPL ) equivalent to 18% of the expanded CHIS share capital. These shares were issued in consideration for MPL transferring its interest in its Hong Kong registry operations to CHIS. As part of the above transactions, the terms and conditions of shares held by the Computershare Group in CHIS were changed to provide a preferential right to the extent of the retained profits in CHIS as at the transaction date. In accordance with AASB 1024 Consolidated Accounts, the movement in the parent entity s share of net assets of CHIS (arising as a consequence of the issue of new shares in CHIS) has been recorded in the Statement of Financial Performance as a loss to the outside equity interest. 18

21 Consolidated Parent entity $000 $000 $000 $ INCOME TAX The difference between income tax expense provided in the financial statements and the prima facie income tax expense is reconciled as follows: Operating profit/(loss) 83,748 75,779 61,379 (28,832) Prima facie income tax expense/(benefit) thereon at 30% (2001: at 34%) 25,125 25,765 18,414 (9,803) Tax effect of permanent differences: Amortisation of goodwill not deductible 4,666 4,084 Research and development allowance (1,548) (823) Depreciation not deductible Non-deductible provisions 1, Benefit of timing difference on ETR not booked 6,208 6,208 Recoupment of tax losses not previously booked (106) Benefit of tax losses not brought to account Dividend from controlled entity (12,454) Other (781) 881 (212) 184 Prior year tax (over)/under provided (2,086) (752) (2,931) 31 Restatement of deferred tax balances due to income tax rate changes (572) Effect of different tax rates on overseas income: Canada 1,819 1,784 Other (2,195) (4,335) Income tax expense/(benefit) on operating profit/(loss) 25,995 33,695 2,823 (2,402) As at 30 June 2002, companies within the consolidated entity had estimated unconfirmed income tax losses of $4,556,000 (2001: $3,135,000) available to offset against future years taxable income. The benefit of these losses has not been brought to account as realisation is not virtually certain. The benefit for these tax losses will only be obtained if: (a) the companies derive future assessable income of a nature and of an amount sufficient to enable the benefits from the deductions for the losses to be realised; (b) the companies continue to comply with the conditions for deductibility imposed by tax legislation; and (c) no changes in the taxation legislation adversely affect the companies in realising the benefit from the deductions for the losses. 19

22 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2002 Consolidated Parent entity $000 $000 $000 $ RETAINED PROFITS AND DIVIDENDS Retained profits Retained profits at the beginning of the financial year 83,993 50, ,344 Ordinary dividends provided for or paid (16,623) (5,475) (16,623) (5,475) Reset preference dividends provided for or paid (4,882) (4,882) Net profit/(loss) attributable to members of Computershare Limited 71,293 38,734 58,556 (26,430) Retained profits at the end of the financial year 133,781 83,993 37, Equity Total equity at the beginning of the financial year 472, , , ,405 Total changes in equity recognised in the Statement of Financial Performance 46,928 68,333 58,556 (26,430) Transactions with owners as owners: Contributed equity ordinary shares 7,090 26,581 7,090 26,581 Contributed equity reset preference shares, net of costs of issue 147, ,205 Dividends ordinary shares (16,623) (5,475) (16,623) (5,475) Dividends reset preference shares (4,882) (4,882) Total changes in outside equity interests 3,128 (2,538) Total equity at the reporting date 655, , , ,081 Dividends Ordinary Dividends paid during the financial year in respect of the previous year fully franked at 30% (2001: 34%) 2,746 2,688 2,746 2,688 Dividends paid and proposed in respect of the current financial year fully franked at 30% (2001: 34%) 16,623 5,475 16,623 5,475 Reset preference Dividends paid and proposed in respect of the current financial year fully franked at 30% 4,882 4,882 For details of dividend entitlements on reset preference shares refer to note 19(a). Franked dividends The franked dividends proposed as at 30 June 2002 will be franked out of existing franking credits. Dividend franking account Franking credits available for subsequent financial years based on a tax rate of 30% (2001: at 34%) 90,223 84,827 59,966 37,931 The above amounts represent the balance of the franking account as at the end of the financial year adjusted for: (a) franking credits that will arise from the payment of current tax liability (b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date (c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date (d) franking credits that may be prevented from being distributed in subsequent financial years. 20

23 Calculation of Calculation of Calculation of Calculation of Normalised Normalised Basic EPS Diluted EPS Basic EPS Diluted EPS $000 $000 $000 $ EARNINGS PER SHARE Year end 30 June 2002 Earnings per share (cents per share) 12.0 cents 12.2 cents 9.6 cents 9.9 cents Net profit 57,753 57,753 57,753 57,753 Outside equity interest (profit)/loss 13,540 13,540 13,540 13,540 Exclusion of Hong Kong equity transaction (refer note 2(b)) (13,362) (13,362) Dividends on reset preference shares (4,882) (4,882) Net profit 66,411 71,293 53,049 57,931 Weighted average number of ordinary shares used as denominator in calculating basic earnings per share 551,615, ,615,920 Weighted average number of ordinary and potential ordinary shares used as denominator in calculating diluted earnings per share 582,348, ,348,267 Allotment, conversion to or subscription for ordinary shares between reporting date and time of completion of this report Refer note 19 Refer note 19 Issue of potential ordinary shares between reporting date and time of completion of this report Refer note 19 Refer note 19 Employee options on issue that are not dilutive and therefore not included in the calculation of diluted EPS are shown in the table of employee options in note 19 and marked with (b) Year end 30 June 2001 Earnings per share (cents per share) 7.2 cents 7.1 cents 10.2 cents 10.0 cents Net profit 42,084 42,084 42,084 42,084 Outside equity interest (profit)/loss (3,350) (3,350) (3,350) (3,350) Write-down investment in E*Trade, net of tax (refer note 2(b)) 20,244 20,244 Sale of SUMMIT system, net of tax (refer note 2(b)) (4,062) (4,062) Net profit 38,734 38,734 54,916 54,916 Weighted average number of ordinary shares used as denominator in calculating basic earnings per share 540,565, ,565,426 Weighted average number of ordinary and potential ordinary shares used as denominator in calculating diluted earnings per share 548,905, ,905,414 Allotment, conversion to or subscription for ordinary shares 1,516,000 options 1,516,000 options between reporting date and time of completion of this report: exercised as per exercised as per note 19 to 2001 note 19 to 2001 financial report financial report Issue of potential ordinary shares between reporting date and time of completion of this report None None Employee options on issue that are not dilutive and therefore not included in the calculation of diluted EPS are shown in the table of employee options in note 19 and marked with (a) 21

24 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2002 Consolidated Parent entity $000 $000 $000 $ RECEIVABLES Current Trade debtors 104, , ,469 Trade debtors controlled entities 1, Total trade debtors 104, ,500 1,427 1,700 Less: Provision for doubtful debts (4,090) (4,332) (604) Trade debtors, net 100, ,168 1,427 1,096 Accrued revenue 36,112 29,505 Other non-trade amounts 10,907 7,017 1, Interest receivable 2,365 2, , ,927 2,965 1,456 Non-Current Non-trade amounts owing by controlled entities 348, ,838 Non-trade amounts owing by associated entities 1,977 1,168 Less: Provision for doubtful debts (1,977) (1,168) Foreign tax credits , , OTHER FINANCIAL ASSETS Current Broker client deposits (a) (refer note 14) 41,517 Unlisted shares in unrelated entities , (a) During the year ended 30 June 2002 an overseas entity became a licensed deposit taker. As at year end this controlled entity has accepted deposits in its own name, and recorded these funds as other financial assets together with a corresponding liability. The deposits are insured through a local regulatory authority. Non-Current Investments: Shares in listed companies (a) 6,878 7,413 6,785 5,648 Unlisted shares in unrelated entities, at cost Unlisted shares in controlled entities, at cost 304, ,989 7,543 8, , ,637 (a) Market value of shares in unrelated listed companies 5,960 7,413 5,867 5,648 Shares in ETR were written down at 30 June Refer note 2(b). No further adjustment has been made to the carrying value of shares in listed companies during the year ended 30 June 2002 as directors believe there has been no further permanent diminution in value. 22

25 Consolidated Parent entity $000 $000 $000 $ INVENTORIES Raw materials and stores, at cost 3,355 4,962 Work in progress, at cost 256 3,355 5, OTHER Current Prepayments 11,092 10, Deposit on land and buildings 1,200 1,200 Deferred premium on forward exchange contracts ,092 11, , PROPERTY, PLANT AND EQUIPMENT Land at cost (a) Opening balance 13,105 12, Currency translation differences (349) 1,053 Closing balance 12,756 13, Buildings, freehold at cost (a) Opening balance 45,088 39,821 2,200 2,200 Additions 16,338 1,890 Disposals (178) Currency translation differences (1,809) 3,555 Closing balance 59,617 45,088 2,200 2,200 Buildings, leasehold at cost (a) Opening balance Currency translation differences (24) 142 Closing balance Accumulated depreciation Opening balance 4,152 2, Depreciation for the year 1,726 1, Disposals (36) Currency translation differences (43) 182 Closing balance 5,835 4, Net book value of land and buildings 67,375 54,902 2,520 2,608 23

26 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2002 Consolidated Parent entity $000 $000 $000 $ PROPERTY, PLANT AND EQUIPMENT (continued) Plant and equipment at cost Opening balance 78,168 58, ,740 Additions 21,792 13, Acquisitions through subsidiaries and businesses acquired 3,409 5,514 Disposals (1,532) (2,805) (8,559) Currency translation differences (3,216) 3,629 Closing balance 98,621 78, Accumulated depreciation Opening balance 43,314 32, ,507 Depreciation for the year 16,517 13, Acquisitions through subsidiaries and businesses acquired 4,747 Disposals (1,076) (8,825) (5,399) Currency translation differences (954) 1,540 Closing balance 57,801 43, Net book value of plant and equipment 40,820 34, Fixtures and fittings at cost Opening balance 21,283 13,420 1,333 1,120 Additions 6,870 7, Acquisitions through subsidiaries and businesses acquired Disposals (1,591) (325) (1) Currency translation differences (1,553) 1,163 Closing balance 25,534 21,283 1,340 1,333 Accumulated depreciation Opening balance 6,563 3, Depreciation for the year 3,638 3, Acquisitions through subsidiaries and businesses acquired 8 Disposals (1,422) (240) (1) Currency translation differences (516) 229 Closing balance 8,263 6, Net book value of fixtures and fittings 17,271 14,

27 Consolidated Parent entity $000 $000 $000 $000 Motor vehicles at cost Opening balance Additions Acquisitions through subsidiaries and businesses acquired Disposals (45) (166) (21) Currency translation differences (38) 21 Closing balance Accumulated depreciation Opening balance Depreciation for the year Acquisitions through subsidiaries and businesses acquired 211 Disposals (29) (86) Currency translation differences (28) 9 Closing balance Net book value of motor vehicles Leased plant and equipment at cost Opening balance 5,965 7,577 4,046 5,641 Additions 2,380 Disposals (26) (102) Transfer to owned assets on expiry of lease (1,020) (1,595) (919) (1,595) Currency translation differences (80) 9 Closing balance 7,245 5,965 3,025 4,046 Accumulated amortisation Opening balance 3,250 3,392 2,153 2,622 Amortisation for the year 1,115 1, Disposals (4) Transfer to owned assets on expiry of lease (918) (1,436) (918) (1,436) Currency translation differences (2) 3 Closing balance 3,445 3,250 1,852 2,153 Net book value of leased plant and equipment 3,800 2,715 1,173 1,893 25

28 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2002 Consolidated Parent entity $000 $000 $000 $ PROPERTY, PLANT AND EQUIPMENT (continued) Leasehold improvements at cost Opening balance 13, Additions 9,343 10,985 Acquisitions through subsidiaries and businesses acquired 1,150 Currency translation differences (1,771) 716 Closing balance 21,208 13, Accumulated amortisation Opening balance 2, Amortisation for the year 2, Acquisitions through subsidiaries and businesses acquired 1,107 Currency translation differences (342) 52 Closing balance 3,770 2, Net book value of leasehold improvements 17,438 11, Total property, plant and equipment 146, ,878 4,738 5,389 (a) The directors consider that on an existing use basis at 30 June 2002 the current market value of land and buildings is not materially different, in the context of the financial statements, to the cost as presented above. 11. TAX ASSETS Current Refunds receivable 1,731 Non-current Future income tax benefit Attributable to carry forward tax losses 13,208 4,220 Attributable to timing differences 26,596 23,395 5,181 11,277 39,804 27,615 5,181 11, INTANGIBLES GOODWILL Goodwill at cost 558, ,797 Less: Accumulated amortisation (78,735) (47,324) 479, , OTHER Other (including pension asset Hong Kong) 3,114 2,

29 Consolidated Parent entity $000 $000 $000 $ PAYABLES Current Trade creditors unsecured 14,169 17, Trade creditors intercompany 1,410 Deferred discount on forward exchange contracts, net of amortisation 519 Underwriting liability to controlled entity following novation of financial instruments 8,044 Forward exchange hedge contract payables (note 29) 8,044 30,163 30,163 Other loans unsecured, non-interest bearing 1,000 1,000 1,000 1,000 Broker client deposits (refer note 7) 41,517 Other creditors and accruals 52,661 49, , ,910 98,316 11,090 33, INTEREST BEARING LIABILITIES Current Bank loans (d) 2,472 Bank overdraft (a) 823 Loans from controlled entities unsecured 381 1,106 Lease liability secured (note 23(b)) (c) 3,503 1, ,975 2, ,863 Non-current Bank loans (d) 4,338 Revolving multi-currency facility (b) 97, , ,209 Loans from controlled entities unsecured 108,396 Lease liability secured (note 23(b)) (c) 1,279 2, , , , , ,419 (a) Bank overdraft is unsecured and is reviewed annually. (b) The consolidated entity maintains two revolving multi-currency facilities. The first revolving multi-currency facility is $140,000,000 and terminates on 30 June This facility was drawn down to Australian dollar equivalent of $45,014,106 at 30 June The second revolving multi-currency facility is $115,500,000 and terminates on 3 July This facility was drawn down to Australian dollar equivalent of $52,192,901 at 30 June These facilities are subject to negative pledge agreements which impose certain covenants upon the consolidated entity. (c) The lease liability is secured directly against the assets to which the leases relate. (d) Bank loans of $6,808,974 (Rand 40,000,000) were drawn down on 2 April This facility terminates on 31 March 2005 and is secured by guarantee given by Computershare Services (SA) (Pty) Ltd, Computershare Custodial Services Ltd, Computershare Plan Managers (Pty) Ltd (South Africa) and Computershare Outsourcing Ltd. Repayments are Rand 4,236,000 quarterly commencing 1 July

30 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2002 Consolidated Parent entity $000 $000 $000 $ TAX LIABILITIES Current GST/VAT payable 7,386 10, Provision for income tax 12,439 27, ,554 19,825 38, ,592 Non-current Provision for deferred income tax on timing differences 17,206 6, , OTHER PROVISIONS Current Employee entitlements (refer note 21) 9,146 10, Dividend ordinary shares 13,857 2,738 13,857 2,738 Dividend reset preference shares Restructuring of acquired entities (a) 2,107 8,595 Future services 2,696 2,231 Other 3,698 2,217 32,182 25,894 15,052 3,542 Non-current Employee entitlements (refer note 21) 4,685 6, Future services 339 4,685 6, (a) The restructuring provision in 2001 relates primarily to the planned restructuring of the USA, Canadian and Computershare Document Services acquisitions. These actual and forecast costs primarily relate to employee redundancies and office relocations. The balance at 2002 relates entirely to Canada. 18. OTHER LIABILITIES Current Deferred settlement on acquisition of entity , ,156 The balance at 30 June 2001 was primarily in connection with the purchase of the remaining share of Computershare Document Services and the former Merrill Lynch Employee Share Plan business. Non-current Lease inducements (a) 2,795 Deferred settlement on acquisition of entity 624 2, (a) Lease inducements represent cash payments received as an allowance for leasehold improvements made to the premises. This receipt is being accounted for as a reduction in the rental expenses over the term of the lease. 28

31 Consolidated Parent entity $000 $000 $000 $ CONTRIBUTED EQUITY Ordinary shares (b) 361, , , ,097 Reset preference shares (a) 147, ,205 Total contributed equity (b) 508, , , ,097 (a) Reset preference shares represent 1,500,000 fully paid shares of $ ,000 reset preference shares were offered during November pursuant to an institutional placement. A further 750,000 reset preference shares were offered to the public pursuant to a prospectus dated 15 November The shares earn a preferential non-cumulative dividend fixed for the first five years of 5.5% per annum payable semi-annually in arrears on 31 May and 30 November. The first dividend was paid on 31 May The dividend may be increased or decreased on reset dates. Payment of dividends is at the discretion of directors and is subject to there being sufficient profits of Computershare out of which Computershare is lawfully able to pay dividends. The dividend rate assumes full franking. If a dividend is unfranked or partially franked, the dividend will be increased to compensate for the unfranked amount. If there is a change in the corporate tax rate, the dividend will be adjusted to reflect this. Certain terms including the dividend rate, conversion terms and conversion discount may be reset on each reset date. The first reset date will be 30 November On reset dates the outstanding preference shares may be converted into ordinary shares at the option of holders or Computershare. In certain circumstances conversion may occur earlier. For the period to the first reset date, each reset preference share will convert into a number of ordinary shares calculated generally with reference to the conversion discount and the volume weighted average sale price of ordinary shares traded on the ASX during the 20 business days immediately preceding the conversion date. The number of ordinary shares arising from conversion will be subject to a minimum of and a maximum of 100. The conversion discount is 2.5%. Computershare may convert the reset preference shares early in the case of a takeover or tax or regulatory event. A holder may convert at the minimum conversion number prior to a reset date by providing 30 business days notice. In this event no dividend is payable in respect of the converting reset preference shares. Dividends on reset preference shares will be paid in priority to any dividends declared on ordinary shares. In a winding up, reset preference shares will rank for repayment of capital behind all creditors of Computershare but ahead of ordinary shares. Computershare reserves the right in the future to issue additional reset preference shares or other securities ranking equally with the reset preference shares. Prior to conversion of reset preference shares, unless the directors otherwise determine in their discretion, holders do not have a right to participate in issues of securities, or capital reconstructions affecting holders of ordinary shares. However, the minimum and maximum numbers of ordinary shares to be issued on conversion will be adjusted for rights issues, off-market buybacks, capital distributions, bonus issues and capital reconstructions where appropriate. The reset preference shareholders have no right to vote at general meetings except in limited circumstances. (b) During the year ended 30 June 2000 Computershare Limited increased its investment in the CDS Group from 20% to 50.02% by the payment of cash and issue of Computershare Limited equity to ACN Pty Ltd (the parent entity of the CDS Group). The shares were subsequently sold by the CDS Group at a profit. On consolidation this profit was eliminated and transferred to share capital and the outside equity interest leading to the difference in the share capital of the parent entity and that of the consolidated entity. 29

32 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE CONTRIBUTED EQUITY (continued) Consolidated Parent entity $000 $000 $000 $000 Movements in ordinary shares for the year Opening balance: 547,612,396 ordinary shares (1 July 2000: 533,852,607) 354, , , ,516 Issued during the year Number Issue price Date of shares per share As a result of the exercise of employee options: July ,000 NZ$ July ,000 $ September ,558,000 $ ,178 2,178 September ,000 $ September ,000 $ November ,000,000 $ ,750 1,750 December ,000 $ December ,000 $ December ,000 $ March ,400,000 $ ,264 1,264 March ,172,000 $ ,135 2,135 March ,000 $ June ,000 $ June ,000 $ July ,000 $ July ,121,000 $ ,102 1,102 July ,000 $ July ,000 $ September ,000 $ September ,000 $ September ,000 $ September ,000 $ October ,000 $ November ,000 $ November ,000 $ November ,000 $ December ,000 $ December ,000 $ December ,000,000 $ December ,750,000 $ ,075 3,075 December ,000 $ January ,000 $ January ,000 $

33 Consolidated Parent entity Number Issue price Date of shares per share $000 $000 $000 $000 March ,000 $ March ,000 $ March ,000 $ April ,000 $ May ,000 $ June ,000 $ June ,000 $ As a result of purchases under the Employee Share Plan: 31 July $ August ,859 $ September ,441 $ November ,927 $ November ,009 $ December ,204 $ March ,502 $ Other issues: 12 April ,400,000 $ ,000 18,000 In settlement of the acquisition of RPC Plan Managers Pty Ltd 30 June ,365 $ Employee Share Plan 30 June ,502 $ Employee Share Plan Monies not received until shortly after balance date (82) (82) Closing balance: 554,278,613 ordinary shares (30 June 2001: 547,612,396) 361, , , ,097 Options over ordinary shares PCX option PCX was granted options over 15,978,188 unissued ordinary shares at an exercise price of $7.75 per share. The exercise of each of these options was subject to achievement of agreed volume milestones for the new screen based trading business. Computershare announced on 29 May 2002 that it had been agreed with PCX to terminate the agreement for screen based trading upon which the milestones were set and the options were cancelled. Although Computershare delivered the technology on time and to the complete satisfaction of the Pacific Exchange, PCX were unable to gain regulatory and member approval for the change in market structure for which the technology was designed. Citibank options On 28 August 2002, Computershare provided Citigroup Global Investments options over 12,081,633 unissued ordinary shares at an exercise price of $1.83, in connection with the strategic alliance formed on that date. Employee options Computershare Limited has issued the following options over ordinary shares to eligible employees. The options are generally exercisable three years after the date granted or earlier in the case of the employee s death or retirement. The options expire 59 months after the date issued. Each option entitles the holder to one ordinary share upon exercise. 31

34 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE CONTRIBUTED EQUITY (continued) Number Number Number Number Number Number Exercise on issue issued exercised cancelled on issue of Issue date Expiry date price 30/6/01 this year this year this year 30/6/02 recipients 26 June May 2002 $ , , September August 2002 $ , , , September August 2002 $ ,000 50,000 6 March February 2003 $ ,875,000 1,479, , March February 2003 $ ,000,000 1,000, March February 2003 $ , , July June 2003 $ ,000 80, September August 2003 $ , , , September August 2003 $ ,000 92, , November October 2003 $ , ,000 65, , February December 2003 $ ,000 72, April March 2004 $ ,540 12, , , July October 2003 $ ,000,000* 1,750, ,000 1 July May 2004 $ , , July May 2004 $ ,000 32, , b 1 July May 2004 $ , ,000 1 b 10 December November 2004 $ ,000 80,000 1 b 11 February January 2005 $ ,247, ,800 3,870, b 7 April March 2005 $ ,088,250 76,000 1,012, b 9 June May 2005 $ ,250 24, , b 12 June June 2005 $ ,000 30,000 1 b 2 July June 2005 $ ,000 20,000 51, a,b 1 August June 2005 $ ,000 20,000 1 a,b 15 August July 2005 $ , , b 8 September August 2005 $ ,657, ,500 1,554, a,b 25 September August 2005 $ ,000 10, , a,b 15 September November 2005 $ ,000 67,000 5 a,b 29 December November 2005 $ ,200 5,000 71, a,b 21 February January 2006 $ ,653 42, b 26 February January 2006 $ , , b 27 April March 2006 $ ,500 12,500 26,000 5 b 1 July March 2006 $ , ,000 4 b 1 July May 2006 $ ,175,500 97,000 1,078, b 2 July June 2006 $ ,961, ,000 3,788,000 1,017 b 2 July June 2006 $ ,500 96, b 2 July June 2006 $ ,000 25, ,000 9 b 31 July June 2006 $ ,750 4,250 58, b 6 March February 2007 $ ,254,600 2,254, March February 2007 $ , , April March 2007 $ , , May April 2007 $ , ,000 1 Total 17,689,293 8,548,350 5,833,715 1,452,687 18,951,241 4,313 * These options were offered on 16 November 1998 subject to commencement of employment on 1 July Options in the above table that were not dilutive for the purposes of the 30 June 2001 diluted earnings per share are marked with an a in the table above. Options in the above table that were not dilutive for the purposes of the 30 June 2002 diluted earnings per share are marked with a b in the table above. 32

35 The market price of shares under option at 30 June 2002 was $2.20 (2001: $6.05). The following options have been exercised after year end and before the date of this report: Exercise date Exercise price Number of options exercised 1 July 2002 $ ,000 4 July 2002 $ ,000 5 July 2002 $ ,000 8 July 2002 $ ,000 9 July 2002 $ , July 2002 $ , July 2002 $ , August 2002 $ , September 2002 $ ,000 There are no unissued shares under option as at the date of this report, other than those referred to above. Consolidated Parent entity $000 $000 $000 $ RESERVES Capital redemption reserve Asset revaluation reserve Foreign currency translation reserve 5,869 30,234 6,414 30, Movement during the year Asset revaluation reserve Opening balance Closing balance Foreign currency translation reserve Opening balance 30, Translation of overseas subsidiaries (a) (24,365) 29,599 Closing balance 5,869 30,234 (a) This amount is the net gains and losses on hedge transactions and intercompany loans after adjusting for related income tax effects. 33

36 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE EMPLOYEE ENTITLEMENTS (a) Employee share and option scheme Computershare Limited offers options over ordinary shares to eligible employees at the absolute discretion of the Board. Options are generally exercisable three years after the date granted or earlier in the case of the employee s death or retirement. The exercise price of the option is set at an amount equal to the market value of the shares at the date of option grant. Shares in the Company are offered to employees on a fully paid up basis through an Employee Share Plan managed by an unrelated entity, Computershare Plan Pty Limited. Shares in the Company may be allocated to selected employees in accordance with the Employee Share Plan on a discretionary basis having regard to special circumstances as determined by the Remuneration committee. During the year ended 30 June 2001 the Company introduced an Exempt Employee Share Plan. The Plan gives Computershare employees the opportunity to acquire shares in Computershare Limited. All participating employees were issued with $500 worth of Computershare shares at no cost to the employee on 30 June Additionally employees could contribute from their pre-tax salary to acquire a further $500 worth of shares in the Company. All permanent employees in Australia with at least three months service are entitled to participate in the Plan. During the year end 30 June 2002 the plan was amended to enable Computershare to match dollar for dollar any employee pre-tax contributions to a maximum of $3,000 per employee. Shares purchased and funded by employee pre-tax salary must remain in the plan for a minimum of one year. Matching company funded shares must be kept in the plan for a minimum of two years or they will be forfeited. Ordinary shares Options Total number allocated to employees during the year 373, ,789 8,548,350 2,549,353 Total number allocated to employees since commencement of the scheme 1,892,373 1,518,873 41,540,427 32,992,077 Total number of employees eligible to participate in the scheme 5,321 5,148 5,321 5,148 Proceeds received and receivable from share issues or option conversions during the year ($000s) 7,090 8,581 7,090 8,581 Proceeds received and receivable from issues during the year ($000s) 429 Purchase entitlements not taken up by employees are forfeited, accordingly no shares or options remain available at balance date for purchase. Options in Computershare Limited are not listed. The market value of the options issued during the period has been estimated at $19,271,589 (2001: $8,217,000) using a Black-Scholes option pricing model. Consolidated Parent entity $000 $000 $000 $000 (b) Employee entitlements recognised Aggregate employee entitlement liability (refer note 17) 13,831 16, ,067 (c) Number of employees The number of full time equivalent employees as at the end of the financial year was 5,321 (2001: 5,148). 34

37 Consolidated Parent entity $000 $000 $000 $ FOREIGN CURRENCY EXPOSURE Current assets Amounts receivable in foreign currency which are not effectively hedged: Canadian Dollars 30,968 27,985 1,362 Cyprus Pounds Euros 5,791 Hong Kong Dollars 8,585 4,556 Irish Punts 5,092 New Zealand Dollars 2,176 1,944 Philippines Peso Pounds Sterling 42,623 54,109 South African Rand 7,190 6,724 United States Dollars 28,225 26,372 Current liabilities Amounts payable in foreign currency which are not effectively hedged: Canadian Dollars 1,724 Irish Punts 1,903 New Zealand Dollars 605 Philippines Peso 172 Pounds Sterling 7,987 South African Rand 2,466 United States Dollars 1,980 1,404 Non-current assets Amounts receivable in foreign currency which are not effectively hedged: Irish Punts 3, New Zealand Dollars 4,576 4,372 Philippines Peso Pounds Sterling 156, ,510 South African Rand United States Dollars 46,587 Non-current liabilities Amounts payable in foreign currency which are not effectively hedged: Canadian Dollars 19,577 21,697 19,577 21,697 Hong Kong Dollars 18,353 Irish Punts 4 Pounds Sterling 40,486 23,618 22,942 23,618 South African Rand 4,338 United States Dollars 14,144 7,894 7,072 7,894 The Australian dollar equivalents of foreign currency monetary items included in the Statement of Financial Position headings to the extent that they are not effectively hedged are set out above. These amounts include the payables and receivables of foreign subsidiaries that are not effectively hedged by other foreign currency denominated items. 35

38 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE COMMITMENTS (a) Superannuation commitments Defined contribution funds The Company and its controlled entities maintain defined contribution superannuation schemes which provide benefits to all employees upon their disability, retirement or death. Employee contributions to the funds are based upon various percentages of employees gross salaries as set out below: Australian controlled entities contribute to the defined contribution funds as follows: Category 1 Management (employer contributions, voluntary employee contributions of at least 1%) Category 2 Staff (statutory employer contributions, voluntary employee contributions) Category 3 SGC Staff and casual and fixed term employees (statutory employer contributions, voluntary employee contributions) Foreign controlled entities contribute to the defined contribution funds as follows: United Kingdom entities between 3% and 10% of employees gross salaries United States entities voluntary employee contributions with matching employer contribution up to 4% of employees base salaries Canadian entities between 2.5% and 7% of employees base salaries dependent upon years of service South African entities 12.25% of employees gross salaries New Zealand entities voluntary employee contributions with matching employer contribution up to 6% of employees base salaries Hong Kong between 10% and 25% of employees base salary dependent upon years of service Defined benefit funds The Company maintained one defined benefit superannuation scheme in Australia which provides benefits to two employees upon their disability, retirement or death. The Company contributes the statutory employer contributions, with voluntary employee contributions being optional. At the date of this report the fund was fully funded. Computershare Hong Kong Investor Services Limited (previously Central Registration (Hong Kong) Limited) maintained a defined benefit superannuation scheme which provides benefits to 120 (2001: 125) employees. Consolidated $000 $000 Computershare Hong Kong Investor Services Limited Staff Retirement Plan Date at which the following amounts were determined 31 December 31 December Net market value of plan assets 18,614 23,151 Accrued benefits 17,300 23,151 Excess/(deficit) of plan assets over accrued benefits 1,314 Vested benefits 16,075 16,987 36

39 Consolidated Parent entity $000 $000 $000 $000 (b) Finance lease commitments Finance lease commitments are payable as follows: Not later than one year 2,123 1, Later than one year but not later than five years 3,187 3, ,295 Total commitments 5,310 5,089 1,295 2,162 Less: Future finance charges Not later than one year (268) (266) (65) (110) Later than one year but not later than five years (260) (239) (19) (85) Total future finance charges (528) (505) (84) (195) Net finance lease liability 4,782 4,584 1,211 1,967 Reconciled to: Current liability (note 15) 3,503 1, Non-current liability (note 15) 1,279 2, ,210 4,782 4,584 1,211 1,967 Finance leases are entered into as a means of funding the acquisition of minor items of plant and equipment. Rental payments are generally fixed. No leases have escalation clauses other than in the event of payment default. Some leases have purchase options. Where such options exist, they are exercisable at the residual price, which is expected to approximate market prices. No lease arrangements create restrictions on other financing transactions, however, the extent of outstanding finance lease obligations is included in the determination of other loan covenants. (c) Operating lease commitments Operating lease rentals are payable as follows: Not later than one year 31,630 22,801 2,866 2,866 Later than one year but not later than five years 87,864 49,099 4,797 2,866 Later than five years 71,078 68,399 4, , ,299 7,663 10,529 Operating leases are entered into as a means of acquiring access to office facilities. Rental payments are generally fixed, but with inflation and/or market escalation clauses on which contingent rentals are determined. Operating lease commitments in respect of the rental of various premises are subject to market review at various intervals. Certain leases include an option to renew. No operating leases contain restrictions on financing or other leasing activities. 37

40 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE DETAILS OF CONTROLLED ENTITIES The financial years of all controlled entities except for Computershare Trust Company of Canada, Computershare Hong Kong Investor Services Limited (previously Central Registration (Hong Kong) Limited) and its subsidiary is the same as that of the parent entity. These entities have a 31 December year end. The consolidated financial statements as at 30 June 2002 include the following controlled entities. Percentage of shares held Name of controlled entity Place of incorporation 30/6/ /6/2001 % % Computershare Limited Australia (3) ACN Pty Ltd Australia (3) ACN Pty Ltd (previously Michael Gardner Pty Ltd) Australia (5) ACN Pty Ltd (previously David Hynes Pty Ltd) Australia (5) ACN Pty Ltd Australia (5) CDS International Limited Australia (5) Computershare Document Services Limited Australia (5) Computershare Document Services Limited United Kingdom (1) ACN Pty Ltd Australia (3) Computershare Systems (Philippines) Inc Philippines (1) Computershare Hong Kong Investor Services Limited (previously Central Registration (Hong Kong) Limited) Hong Kong (2) Hong Kong Registrars Limited Hong Kong (2) 100 ACN Pty Ltd Australia (3) Financial Markets Software Consultants Pty Ltd (previously ACN Pty Ltd) Australia (4) Computershare Analytics Pty Ltd Australia (5) Obadele Pty Ltd Australia (6) 100 Computershare Clearing Pty Ltd Australia (3) Computershare Depositary Pty Ltd Australia (5) Computershare Finance Company Pty Ltd (previously Computershare Properties Pty Ltd) Australia (5) Computershare Technology Services Pty Ltd Australia (4) Computershare Investments (UK) (No. 2) Limited United Kingdom (1) 100 Computershare Limited United Kingdom (1) Computershare Investments (UK) Limited United Kingdom (1) Computershare Technology Services (UK) Ltd United Kingdom (1) Computershare Trustees Limited United Kingdom (1) Computershare Registry Services Limited United Kingdom (1) Citywatch Limited (previously Computershare Analytics (UK) Limited) United Kingdom (1) 100 Hlulumiti Limited United Kingdom (1) Computershare Analytics (UK) Limited (previously Citywatch Limited) United Kingdom (1) Computershare Investor Services PLC (previously Computershare Services PLC) United Kingdom (1) Exchange Registrars Limited United Kingdom (1) Computershare Company Nominees Limited Scotland (1) Computershare PEP Nominees Limited Scotland (1) Computershare Services Nominees Limited Scotland (1) Computershare Services (Channel Islands) Limited Channel Islands (1)

41 Percentage of shares held Name of controlled entity Place of incorporation 30/6/ /6/2001 % % Computershare Inc United States of America (1) Computershare Technology Services Inc United States of America (1) Computershare Trust Company of New York Inc United States of America (1) Computershare Financial Services Inc United States of America (1) 100 Computershare Investor Services LLC United States of America (1) Computershare Trust Company Inc United States of America (1) Computershare Analytics (North America) Inc United States of America (1) Computershare Document Services Inc United States of America (1) Computershare Securities Corporation Inc United States of America (1) Computershare Trust Company of Canada Canada (1) Computershare Services (South Africa) Pty Ltd South Africa (2) Computershare Custodial Services Ltd South Africa (2) Computershare Nominees (Pty) Ltd South Africa (2) Computershare Outsourcing Limited South Africa (2) Minu Investment Managers Ltd (previously Minu Nominees (Pty) Ltd) South Africa (2) Computershare Investor Services Limited (previously Computershare Services Ltd) South Africa (2) Computershare Management Services (Pty) Ltd South Africa (2) Computershare Plan Managers (Pty) Ltd (previously Optimum Registrars (Proprietary) Ltd) South Africa (2) Mercantile CSDP Nominees (Pty) Ltd South Africa (1) 81.7 Mercantile Custodial Nominees (Pty) Ltd South Africa (1) 81.7 Mercantile Shareholders Nominee (Pty) Ltd South Africa (1) 81.7 Computershare Investor Services (Ireland) Ltd Ireland (1) Computershare Trustees (Ireland) Ltd Ireland (1) 100 Registrars Holdings Pty Ltd Australia (3) Computershare Investor Services Pty Ltd Australia (3) CRS Custodian Pty Ltd Australia (4) Computershare Plan Managers Pty Ltd Australia (5) Computershare Plan Co Pty Ltd Australia (6) 100 CIS Debt Securities Pty Ltd (previously BT Registries Pty Ltd) Australia (6) 100 CIS (WA) Pty Ltd (previously BT Registries (WA) Pty Ltd) Australia (6) 100 Computershare Registry Services (PNG) Pty Ltd Papua New Guinea (1) Global Register (Australia) Pty Ltd Australia (4) Sepon (Australia) Pty Ltd Australia (3) Computershare Systems (N.Z.) Ltd New Zealand (1) Computershare New Zealand Limited New Zealand (1) Computershare Investor Services Limited (previously Computershare Registry Services Limited) New Zealand (1) CIS (NZ) Limited (previously BT Portfolio Services (NZ) Limited) New Zealand (1) 100 Computershare Services Ltd New Zealand (1) CRS Nominees Ltd New Zealand (1) Sharemart NZ Limited New Zealand (1) (1) Controlled entities audited by other PricewaterhouseCoopers member firms at 30 June 2002 (Arthur Andersen member firms at 30 June 2001). The USA and Ireland entities above are only audited for Group purposes. (2) Controlled entities audited by PricewaterhouseCoopers member firms at 30 June Audited by other auditors at 30 June (3) These wholly owned companies have entered into a deed of cross guarantee dated 20 July 1998 with Computershare Limited which provides that all parties to the deed will guarantee to each creditor payment in full of any debt of each company participating in the deed on winding-up of that company. As a result of a Class Order issued by the Australian Securities and Investments Commission, these companies are relieved from the requirement to prepare financial statements. (4) These companies became parties to the deed of cross guarantee noted in (3) above on 29 June (5) These companies became parties to the deed of cross guarantee noted in (3) above on 29 June (6) These companies became parties to the deed of cross guarantee noted in (3) above on 26 June

42 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE DETAILS OF CONTROLLED ENTITIES (continued) Financial information for Class Order Closed Group $000 $000 Computershare Limited Closed Group Statement of Financial Position Current Assets Cash assets 25,971 16,241 Receivables 34,572 36,469 Inventories Tax assets 1,127 Other 3,187 2,557 Total Current Assets 65,420 56,217 Non-Current Assets Receivables 260, ,781 Other financial assets 390, ,363 Property, plant and equipment 21,272 19,700 Deferred tax assets 19,508 13,337 Intangibles goodwill 66,552 63,865 Other Total Non-Current Assets 759, ,391 Total Assets 824, ,608 Current Liabilities Payables 21,784 41,996 Interest bearing liabilities 1,502 1,626 Tax liabilities 4,200 12,456 Other provisions 20,975 10,341 Other deferred settlement of acquisition of entity 11,105 Total Current Liabilities 48,461 77,524 Non-Current Liabilities Interest bearing liabilities 218, ,126 Tax liabilities 8,066 3,922 Other provisions 3,333 2,725 Total Non-Current Liabilities 230, ,773 Total Liabilities 278, ,297 Net Assets 546, ,311 Equity Contributed equity ordinary shares 361, ,603 Contributed equity reset preference shares 147,205 Reserves Retained profits 36,472 30,088 Total equity 546, ,311 40

43 $000 $000 Computershare Limited Closed Group Statement of Financial Performance Revenues Sales revenue 187, ,795 Other revenues from ordinary activities 31,778 35,561 Total revenue 219, ,356 Expenses Direct services 113,064 93,981 Technology services 36,237 36,566 Corporate services 15,097 11,731 Depreciation and amortisation 12,778 11,978 Borrowing costs 6,846 13,559 Net foreign exchange loss on hedges 383 4,919 Net foreign exchange loss on other financial instruments 397 Write-down investment in ETR 21,264 Total expenses 184, ,395 Profit/(loss) from ordinary activities before income tax expense 34,833 6,961 Income tax (expense)/benefit relating to ordinary activities (6,944) (9,807) Net profit/(loss) 27,889 (2,846) Net profit/(loss) attributable to outside equity interests (1,789) Net profit/(loss) attributable to members of the parent entity 27,889 (4,635) Opening net assets of entities first included in the cross guarantee this period (refer to note 24(6)) (2001: note 24(5)) 1,842 Total changes in equity other than those resulting from transactions with owners as owners 27,889 (2,793) Set out below is a summary of movements in consolidated retained profits for the year of the Closed Group: Retained profits at the beginning of the financial year 30,088 38,431 Profit/(loss) from ordinary activities after income tax 27,889 (4,635) Opening net assets of entities first included in the cross guarantee this period (refer to note 24(6)) (2001: note 24(5)) 1,767 Dividends provided or paid (21,505) (5,475) Retained profits at the end of the financial year 36,472 30,088 41

44 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE REMUNERATION OF DIRECTORS AND OFFICERS (a) Income of directors The number of directors of the parent entity who were paid, or were due to be paid, income (including brokerage, commissions, bonuses, retirement payments, superannuation and salaries, but excluding prescribed benefits disclosed later in this note under retirement benefits ) directly or indirectly from the Company or any related party, as shown in the following bands, were: Parent entity $0 $9,999 1 $60,000 $69,999 1 $90,000 $99,999 1 $110,000 $119, $120,000 $129,999 1 $180,000 $189,999 1 $220,000 $229,999 1 $360,000 $369,999 1 $370,000 $379,999 1 $380,000 $389, $400,000 $409,999 1 $420,000 $429,999 1 $490,000 $499,999 1 The aggregate income of the directors referred to above $2,084,056 $1,668,408 The total of all income paid or payable, directly or indirectly, from the respective entities of which they are a director, or from any related party, to all the directors of each entity in the consolidated entity was $19,846,723 (2001: $14,900,965). This amount includes the value of insurance premiums and indemnity payments made for the benefit of directors. 42

45 (b) Income of executives The numbers of executive officers (including executive directors detailed above) whose total income for the year falls within the following bands were: Consolidated Parent entity $100,000 $109, $110,000 $119, $120,000 $129, $130,000 $139, $140,000 $149, $150,000 $159, $160,000 $169, $170,000 $179, $180,000 $189, $190,000 $199, $200,000 $209, $210,000 $219, $220,000 $229, $230,000 $239, $240,000 $249, $250,000 $259, $260,000 $269,999 1 $280,000 $289,999 1 $290,000 $299, $310,000 $319,999 1 $320,000 $329, $330,000 $339,999 1 $340,000 $349,999 1 $350,000 $359, $360,000 $369,999 1 $370,000 $379, $380,000 $389, $400,000 $409,999 1 $420,000 $429, $450,000 $459, $470,000 $479,999 1 $480,000 $489, $540,000 $549,999 1 $720,000 $729,999 1 $1,800,000 $1,809,999 (1) 1 $1,820,000 $1,829,999 (1) 1 The aggregate income of the executives referred to above was $19,695,262 $16,626,860 $3,181,196 $2,238,160 Income of executives comprises amounts paid or payable to executive officers domiciled in Australia, directly or indirectly, by the consolidated entity or any related party (but excluding prescribed benefits disclosed later in this note under retirement benefits ) in connection with the management of the affairs of the entity or consolidated entity, whether as executive officers or otherwise. (1) Each of these includes 500,000 options valued at $3.25 per option using the Black-Scholes option pricing model. Retirement benefits There were no retirement allowances paid to Directors or principal executive officers of the Company and the controlled entities during the period. 43

46 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE 2002 Consolidated Parent entity $ $ $ $ 26. REMUNERATION OF AUDITORS Remuneration received, or due and receivable, by the auditors of the parent entity and its affiliates for: Auditing or review of financial statements Arthur Andersen 377,000 1,094,000 89, ,000 PricewaterhouseCoopers 1,000, ,000 Other services (a) Arthur Andersen 75, ,000 44,000 52,000 PricewaterhouseCoopers 188,000 Remuneration received, or due and receivable, by auditors other than the auditor of the parent entity and its affiliates for: Auditing or review of financial statements 38, ,000 Other services 325, ,000 (a) This relates primarily to regulatory and compliance services. 27. RELATED PARTY DISCLOSURES (a) Directors The following directors held the position of director of Computershare Limited during all of the past two financial years, unless otherwise stated: P.D. DeFeo (Appointed 4 June 2002) M.E. Elliott (Appointed 5 January 2001, Resigned 8 November 2001) P.J. Griffin P.J. Maclagan C.J. Morris A.S. Murdoch I.D. Saville (Appointed 1 May 2002) J.P. Shergold (Resigned 8 May 2001) A.N. Wales Details of directors remuneration and superannuation payments are set out in note 25. (b) Directors shareholdings Shares issued by the parent entity Ordinary shares held at the end of the financial year 105,812, ,473,184 Reset preference shares held at the end of the financial year 330 Options held at the end of the financial year 2,000,000 Ordinary dividends received during the year in respect of those ordinary shares $1,050,415 $1,585,761 Reset preference dividends received during the year in respect of those reset preference shares $925 44

47 $ $ (c) Other transactions with directors or director-related entities C.J. Morris is a director and major shareholder in Modara Grange Pty Ltd which entered into rental agreements with the Company in the ordinary course of business on commercial terms and conditions. Rent received by Modara Grange Pty Ltd 8,550 16,100 C.J. Morris and P.J. Maclagan are directors and major shareholders in Ellon Holdings Pty Limited which entered into rental agreements with the Company in the ordinary course of business on commercial terms and conditions. Rent received by Ellon Holdings Pty Limited 191, ,619 (d) Wholly owned group The parent entity and its controlled entities entered into the following transactions during the year within the wholly owned group: Loans were advanced and repayments received on loans and intercompany accounts (refer notes 6 and 15) Sales were made between entities (refer note 2) Licence fees were charged between entities (refer note 2) Interest was charged between entities (refer note 2) These transactions were undertaken on commercial terms and conditions. (e) Associated entities Computershare Technology Services Pty Ltd has a receivable of $413,993 (2001: $315,654) from Chelmer Limited. Computershare New Zealand Ltd has a receivable of $1,563,742 (2001: $1,302,567) from Chelmer Limited. Computershare Technology Services Pty Ltd has made sales of $98,339 (2001: $30,502) to Chelmer Limited. In the eight months ended 28 February 2001 Central Registration (Hong Kong) Limited paid a dividend of $3,244,021 to ACN Pty Ltd. Central Registration (Hong Kong) Limited became a wholly owned subsidiary on 1 March (f) Ultimate controlling entity The ultimate controlling entity of the consolidated entity is Computershare Limited. 28. SIGNIFICANT EVENTS AFTER BALANCE DATE No matter or circumstance has arisen since the end of the financial year which is not otherwise dealt with in this report or in the consolidated financial statements that has significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial years, other than: On 30 July 2002, Computershare announced that it had obtained approval from the US Securities and Exchange Commission to be an ADR agent in the US and that it intends to now market this service to its non-us based clients. On 28 August 2002, Computershare announced that it had formed a strategic alliance with Citigroup Global Investments to focus on new opportunities and work together in North America and globally. As part of this agreement Citibank has been provided with an option over 12,081,633 shares in Computershare at an exercise price of $1.83. As at 30 June 2002 no financial impact from this new strategic alliance had been reflected in either the Statement of Financial Performance or Statement of Financial Position. On 28 August 2002, Computershare also announced that it would acquire up to 10% of its shares through an on-market buyback that would be funded by its existing facilities. The buyback commenced on 11 September 2002 and at the date of this Report, 300,000 shares had been purchased. The buyback is in place for a six month period ending on 11 March

48 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE FINANCIAL INSTRUMENTS The consolidated entity uses derivative financial instruments to manage specifically identified interest rate and foreign currency risks. The consolidated entity is primarily exposed to the risk of adverse movements in the Australian dollar relative to certain foreign currencies, including the United States dollar, Canadian dollar and Great British pound and to movements in interest rates. The purposes for which specific derivative instruments are used are as follows: Forward exchange contracts are entered into that entitle the consolidated entity to receive an agreed amount of Australian dollars, and oblige it to pay an agreed amount of foreign currency at the date of maturity of the contract. These contracts create a hedge against the net investments in United States dollar and Canadian dollar denominated foreign subsidiaries. The consolidated entity also raises non-australian dollar denominated debt that is designated as a hedge of the net investment in self-sustaining foreign operations, in which case the exchange gain or loss is transferred to the foreign currency translation reserve. Forward exchange contracts and foreign currency options are also used by the consolidated entity in relation to foreign subsidiaries earnings. To the extent that the financial instrument does not satisfy the conditions for hedge accounting as set out in UIG 33, those gains or losses are recognised immediately in the Statement of Financial Performance. The consolidated entity uses interest rate derivatives to manage the floating interest rate exposure that arises as a result of maintaining paying agent and escrow agent accounts on behalf of customers. The United Kingdom operations also use interest rate swaps to manage the interest rate exposure on certain Save As You Earn ( SAYE ) schemes as described below. (a) Administration of Save As You Earn schemes Computershare Investor Services PLC, a controlled entity of Computershare Limited, administers approximately 200 SAYE schemes on behalf of various listed UK entities. Under such schemes, employees make regular monthly contributions which attract government set interest or bonus credits. Interest is generally calculated at 1.8 times one month contributions for three year plans, 5.7 times one month contributions for five year plans and 11 times one month contributions for seven year plans. The total contribution plus interest is then used by the employees to purchase shares in the sponsoring listed entity. Employees leaving a scheme early receive interest at reduced rates. Employees monthly contributions are held by a licensed deposit taker who enters into SAYE contracts with the employees and, as such, is responsible to repay the principal contribution plus the legislated bonus on maturity of the scheme. Computershare Investor Services PLC has been appointed as administrator by the licensed deposit taker and is responsible for scheme management. As agent, Computershare Investor Services PLC indemnifies the licensed deposit taker should the return on funds deposited with them not meet the bonus payment required by law. These arrangements create interest rate risk due to the fixed rates payable on employee monthly contributions and the floating interest rate received on balances held by the licensed deposit taker. The Group employs interest rate risk management techniques, including the use of interest rate swaps to manage the interest rate exposure. In addition extensive modelling is undertaken to determine the net present value of the forecast cash outflows to employees with adjustments to reflect forecast attrition rates. (b) Paying agent funds administration In addition to the above SAYE scheme administration bank accounts, Computershare maintains certain paying agent and escrow agent accounts on behalf of customers. Computershare earns service fee income for administering funds as part of the service. Such funds, which approximate $3.9 billion at 30 June 2002, are deposited in agency bank accounts at call. Given the nature of the accounts, neither the funds nor an offsetting liability are included in the Group s financial statements. During the year ended 30 June 2002 an overseas entity became a licensed deposit taker. As at year end this controlled entity has accepted broker client deposits in its own name which approximate $41 million, and recorded these funds as other financial assets together with a corresponding liability. The deposits are insured through a local regulatory authority. (c) Interest rate risk exposures The consolidated entity is exposed to interest rate risk through primary financial assets and liabilities, modified through derivative financial instruments such as interest rate swaps and options. The following table summarises the interest rate risk for the consolidated entity, together with effective interest rates as at the balance date. 46

49 Fixed interest rate maturing in Floating interest 1 year Over 1 to Non-interest Average interest rate As at 30 June 2002 rate (a) or less 5 years bearing Total Floating Fixed $000 $000 $000 $000 $000 % % Financial assets Cash 74,327 74, Broker client deposits 41,517 41, Trade debtors 100, ,826 Non-trade debtors and loans 10,907 10, , , ,577 Financial liabilities Broker client deposits 41,517 41, Trade creditors 14,169 14,169 Finance lease liabilities 3,503 1,279 4, Other loans 1,000 1,000 Bank loan 2,472 4,338 6, Revolving multicurrency facilities 97,207 97, Hedge payables 8,044 8, ,724 5,975 5,617 23, ,529 Fixed interest rate maturing in Floating interest 1 year Over 1 to Non-interest Average interest rate As at 30 June 2001 rate (a) or less 5 years bearing Total Floating Fixed $000 $000 $000 $000 $000 % % Financial assets Cash 66,276 66, Trade debtors 122, ,168 Non-trade debtors and loans 7,017 7,017 66, , ,461 Financial liabilities Bank overdraft Trade creditors 17,981 17,981 Finance lease liabilities 1,663 2,921 4, Other loans 1,000 1,000 Revolving multicurrency facilities 227, , Hedge payables 30,163 30,163 Interest rate swaps (39,000) 39, ,032 40,663 2,921 49, ,760 (a) Floating interest rates represent the most recently determined rate applicable to the instrument at balance date. The interest rate exposures set out in the above table do not include the exposure relating to SAYE account balances and paying agent balances. Under the SAYE schemes there are approximately GBP255 million of employee account balances earning fixed rates as described in note 29(a). Interest rate swaps of GBP231 million are in place to hedge the floating rate receivables against fixed rate payable amounts forecast. The effect of the interest rate swaps is to convert the income margin on administered funds to a fixed rate and to hedge the cost of fixed rates credited to employee account balances. The margin between the fixed rates paid to SAYE participants and fixed rates received via the interest rate swaps is approximately 1%. The average floating interest rate at balance date is 4%. The maturity profile of these swaps is generally between one to five years. In relation to paying agent balances (refer note 29(b)), Computershare has in place interest rate swaps and options totalling $1.3 billion. 47

50 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE FINANCIAL INSTRUMENTS (continued) (d) Credit risk exposures Credit exposure represents the extent of credit related losses that the consolidated entity may be subject to on amounts to be received from financial assets. The consolidated entity, while exposed to credit related losses in the event of non-performance by counterparties, does not expect any counterparties to fail to meet their obligations given their high credit ratings. The consolidated entity s exposure to on Statement of Financial Position credit risk is as indicated by the carrying amounts of its financial assets. Concentrations of credit risk (whether or not recognised in the Statement of Financial Position) exist for groups of counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The consolidated entity does not have a significant exposure to any individual counterparty. The consolidated entity minimises concentrations of credit risk by undertaking transactions with a large number of debtors in various countries and industries. The software sales and development segment transacts primarily with the broking and financial markets industry. The registry and bureau sector transacts with various listed companies across a number of countries. The major geographic concentrations of credit risk arise from the location of the counterparties to the consolidated entity s financial assets as shown in the following table: Location of credit risk Consolidated $000 $000 Australia 27,064 29,094 Canada 21,654 26,969 Hong Kong 5,594 4,981 Ireland 5,301 3,464 New Zealand 2,111 1,821 Philippines South Africa 7,326 6,724 United Kingdom 27,689 36,738 United States of America 13,923 18,002 Other 1,035 1, , ,185 The following table summarises the consolidated entity s credit exposure on derivative financial instruments with a positive net fair value and has been reduced by unfavourable contracts with the same counterparty pursuant to master netting agreements, which will not be settled before the favourable contracts. These swaps relate to the Group s administration of numerous SAYE schemes and interest rate exposures arising from agency activities on behalf of customers. Derivatives Consolidated $000 $000 Interest rate derivatives SAYE schemes 56,862 55,571 Interest rate derivatives other 1,424 58,286 55,571 48

51 (e) Net fair value of financial assets and liabilities The carrying amounts of trade debtors, trade creditors, finance leases and loans approximate their fair values. Consolidated Carrying amount Net fair value Carrying amount Net fair value $000 $000 $000 $000 Derivatives: Foreign exchange options (223) (223) Foreign exchange contracts (7,965) (7,965) (30,338) (30,338) Interest rate derivatives 1,903 1,903 (264) (264) (f) Foreign exchange The following table summarises by currency the Australian dollar value of forward foreign exchange agreements. Foreign currency amounts are translated at rates current at the reporting date. The buy amounts represent the Australian dollar equivalent of commitments to purchase foreign currencies, and the sell amount represents the Australian dollar equivalent of commitments to sell foreign currencies. Contracts to buy and sell foreign currency are entered into from time to time to hedge the net investment in and earnings from foreign operations Currency Average exchange rate Buy Sell Buy Sell $000 $000 $000 $000 United States dollars: 3 months or less ,285 Over 3 months to 12 months ,199 Canadian dollars: 3 months or less ,052 88, ,166 Over 3 months to 12 months ,381 British pounds: 3 months or less ,501 Over 3 months to 12 months ,616 New Zealand dollars: 3 months or less Over 3 months to 12 months ,522 Total 1, ,862 1, ,863 49

52 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation of cash For the purposes of the Statement of Cash Flows, cash includes cash on hand and at bank and short-term deposits at call, net of outstanding bank overdrafts. Cash as at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows: Consolidated Parent entity $000 $000 $000 $000 Cash at bank and on hand 42,504 44,622 2,542 1,997 Short-term deposits 31,823 21,654 7,000 7,500 Shown as cash on balance sheet 74,327 66,276 9,542 9,497 Bank overdraft (823) Closing cash net of bank overdrafts 74,327 65,453 9,542 9,497 (b) Reconciliation of net profit after income tax to net cash provided by operating activities Net profit after income tax 57,753 42,084 58,556 (26,430) Adjustments for non-cash income and expense items: Depreciation of property, plant and equipment 21,951 18, Amortisation of leased assets 1,115 1, Amortisation of leasehold improvements 2, Amortisation of employee shares Amortisation of establishment costs 67 5 Amortisation of premium/(discount) on forward exchange contracts (1,485) 1,006 1,006 Amortisation of goodwill 29,869 25,007 Foreign exchange (gains)/losses on hedges (23) 8,560 Foreign exchange (gains)/losses unrealised (802) 743 (1,146) 848 Foreign exchange (gains)/losses on financial instruments (1,406) 397 (1,070) 397 (Profit)/loss on sale of plant and equipment (5) (340) (4) (Profit)/loss on sale of SUMMIT (6,155) (Profit)/loss on sale of investments (1,889) (427) Write-down investment in ETR 21,264 21,264 Share of net profit in associates using equity accounting 861 Decrease in underwriting liability to controlled entity following novation of financial instruments (16,914) Other (291) (315) Changes in assets and liabilities: (Increase)/decrease in accounts receivable 10,168 (39,214) (2,050) (7,439) (Increase)/decrease in prepayments (1,441) 1,447 (757) 111 (Increase)/decrease in inventory 1, (Increase)/decrease in current tax assets (1,733) (Increase)/decrease in deferred tax assets (10,857) (17,086) 6,096 (10,029) (Increase)/decrease in other assets (377) (154) Increase/(decrease) in payables (4,091) 9,762 (314) 543 Increase/(decrease) in income tax liabilities (20,592) 7,010 (3,478) (1,620) Increase/(decrease) in other provisions (10,300) (4,938) (329) 265 Increase/(decrease) in deferred tax liability 9,424 4,819 (2,601) 2,762 Increase/(decrease) in reserves 408 1,769 Net cash provided by operating activities 79,354 68,279 37,143 (8,984) 50

53 (c) Controlled entities acquired or formed The following controlled entities were acquired or formed by the consolidated entity at the dates stated and their operating results have been included in the Statement of Financial Performance from the relevant date. Proportion of Entity acquired Date acquired shares acquired Consideration $000 $000 Computershare Custodial Services Ltd 1 July % Computershare Nominees (Pty) Ltd 1 July % Computershare Depositary Pty Ltd 26 October % Computershare Outsourcing Limited 17 October % Computershare Securities Corp Inc 17 November % Minu Nominees (Pty) Ltd 1 December % Computershare Trust Company of New York 12 December % Hlulumiti Limited 15 December % Citywatch Limited 15 December % 11,835 ACN Pty Ltd ( the CDS Group )* 31 December % 17,597 David Hynes Pty Ltd* 31 December % Michael Gardner Pty Ltd* 31 December % CDS International Limited* 31 December % Computershare Document Services Limited (inc in UK) (previously Ci (UK) Limited)* 31 December % Computershare Document Services Limited (previously Ci Limited)* 31 December % Central Registration (Hong Kong) Limited 28 February % 40,000 Computershare Investments (UK) Limited 5 February % Computershare Properties Pty Ltd 27 March % Computershare Plan Managers Pty Ltd (previously RPC Plan Managers Pty Ltd) 12 April % 18,000 Computershare Analytics (North America) Inc 23 April % Computershare Document Services Inc 27 April % Obadele Pty Ltd 27 July % CIS Debt Securities Pty Ltd (previously BT Registries Pty Ltd) 1 September % 10,253 CIS (WA) Pty Ltd (previously BT Registries (WA) Pty Ltd) 1 September % CIS (NZ) Limited (previously BT Portfolio Services (NZ) Limited) 1 September % 2,827 Citywatch Limited (previously Computershare Analytics (UK) Limited) 1 October % Mercantile CSDP Nominees (Pty) Ltd 2 April % Mercantile Custodial Nominees (Pty) Ltd 2 April % Mercantile Shareholders Nominee (Pty) Ltd 2 April % Hong Kong Registrars Limited (refer note 30(f)) 1 June % Total consideration 13,080 87,432 *CDS Group 51

54 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE NOTES TO THE STATEMENT OF CASH FLOWS (continued) Computershare Plan Co Pty Ltd, a subsidiary of Computershare Plan Pty Ltd, was formed on 10 October Computershare Investments (UK) (No. 2) Limited was formed on 14 December Computershare Financial Services Inc was incorporated on 30 November The amounts of assets and liabilities acquired by major class are: BT Portfolio Services (NZ) BT Registries Limited Pty Limited $000 $000 $000 $000 Cash assets ,209 Receivables 48 2,434 2,482 9,993 Prepayments Other financial assets 80 Property, plant and equipment Deferred tax assets 1,209 1,209 Intangible assets including goodwill on acquisition 2,201 7,421 9,622 78,155 Payables (149) (149) (7,652) Tax liabilities (529) (529) (1,870) Other provisions (53) (655) (708) (1,623) 2,827 10,253 13,080 86,331 Outside equity interest 1,101 Consideration paid and payable 2,827 10,253 13,080 87,432 Outflow of cash to acquire the entities, net of cash acquired: Less: Consideration shares issued (18,000) Less: Consideration paid in prior periods/payable in future periods (11,105) Other acquisition costs 560 Less: Cash balance acquired (574) (10) (584) (8,209) Subtotal 2,253 10,243 12,496 50,678 Deferred settlement of Client Connections Inc settled 588 Deferred settlement of Computershare Investor Services LLC settled 3,533 Deferred settlement of Computershare Investor Services Inc settled 2,905 Deferred settlement of Computershare Services (Ireland) Ltd settled 1,590 Outflow of cash 12,496 59,294 (d) Acquisition of businesses Business acquired Date purchased Consideration $000 $000 Internal Communications 1 July Independent Corporate Services 1 January Financial Data Concepts Inc 31 March ,033 Merrill Lynch Employee Share Purchase Plan 15 December ,844 Mercantile registry business 2 April ,945 Total 17,945 49,026 52

55 The amounts of assets and liabilities acquired by major class are: Mercantile registry business $000 $000 $000 Cash assets 57 Receivables 446 Prepayments 28 Property, plant and equipment 3,438 3, Intangible assets including goodwill on acquisition 17,071 17,071 50,478 Payables (1,808) Other provisions (2,564) (2,564) (372) Consideration paid and payable 17,945 17,945 49,026 Less: Consideration paid in prior periods/payable in future periods (9,826) Other acquisition costs 1,219 Less: Cash balance acquired (57) Outflow of cash 17,945 17,945 40,362 (e) Financing facilities The consolidated entity has access to the following financing facilities with a number of financial institutions: Consolidated Parent entity $000 $000 $000 $000 Facilities Bank overdraft facilities 11,097 11,193 5,000 5,000 Bank loans 6,810 Leasing facility 4,782 4, ,967 Revolving multi-currency facility 255, , ,500 Other facilities 1,000 1,000 1,000 1,000 Total facilities 279, ,277 6, ,467 Facilities utilised Bank overdraft facilities 823 Bank loans 6,810 Leasing facilities 4,782 4, ,967 Revolving multi-currency facility 97, , ,209 Other facilities 1,000 1,000 1,000 1,000 Total facilities utilised 109, ,616 1, ,176 Unused facilities 169,390 45,661 5,000 40,291 (f) Non-cash transactions On 31 December 2000 the economic entity acquired the remaining interest in the CDS Group. The total purchase price was based on a deferred settlement calculation payable post 30 June The final settlement of $11.56 million was paid in cash during the period ended 30 June On 1 June 2002 Computershare Hong Kong Investor Services Limited ( CHIS ) issued shares to a subsidiary of the Hong Kong Securities Clearing Company Limited ( MPL ) equivalent to 18% of the expanded CHIS share capital. These shares were issued in consideration for MPL transferring its interest in its Hong Kong registry operations to CHIS, giving rise to goodwill on consolidation of Hong Kong dollars $73 million. 53

56 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE CONTINGENT LIABILITIES Contingent liabilities at balance date, not otherwise provided for in these financial statements are categorised as follows: (a) Guarantees and Indemnities Guarantees and indemnities of $260,500,000 (30 June 2001: 262,500,000) have been given to the consolidated entity s Australian Bankers by Computershare Limited, Computershare Technology Services Pty Limited, CDS International Limited, Computershare Investor Services Limited, Computershare New Zealand Limited, Computershare Investor Services Ltd (incorp in NZ), Computershare Ltd (incorp in UK), Computershare Investor Services PLC, Computershare Inc, Computershare Investor Services LLC, Computershare Services (Ireland) Ltd, Computershare Finance Company Pty Ltd, Computershare Technology Services (UK) Ltd, Computershare Financial Services Inc, and ACN Pty Ltd as security for Computershare Finance Company Pty Ltd s facilities (note 15). Guarantees of $6,226,458 (30 June 2001: $6,109,035) have been given by Computershare Limited as security for bonds in respect of leased premises. Bank guarantees of $270,000 (2001: $270,000) have been given in respect of facilities provided to Computershare Clearing Pty Ltd. A bank guarantee of $250,000 (2001: $250,000) has been given in respect of facilities provided to Sepon Australia Pty Ltd. A bank guarantee of $150,000 (2001: $150,000) has been given in respect of facilities provided to Computershare Investor Services Pty Ltd. Guarantees given by Computershare Limited as security for performance by Computershare Technology Services Ltd in relation to certain customer contracts were discharged during the period (30 June 2001: $518,157). (b) Legal Matters Due to the nature of operations, certain commercial claims in the normal course of business have been made against Computershare in various countries. The directors, based on legal advice, are contesting all of these matters. The majority of these claims are covered by insurance. It is considered unlikely that any material liability to the Group will eventuate. (c) Other As noted in this financial report the Group is subject to regulatory capital requirements administered by certain US and Canadian banking commissions. These requirements pertain to the trust company charter granted by the commission. Failure to meet minimum capital requirements can initiate action by the commission that, if undertaken, could revoke or suspend the Group s ability to provide trust services to customers in these markets. At all relevant times the Computershare subsidiary has met all minimum capital requirements. In addition to the capital requirement, a trust company must deposit eligible securities with a custodian. The Group has deposited a certificate of deposit with the Group s custodian in this jurisdiction in order to satisfy this requirement. Computershare Limited (Australia) has issued a letter of warrant to Computershare Custodial Services Ltd. This obligates Computershare Limited (Australia) to maintain combined tier one capital at Rand 500,000,000. At 30 June 2001 the Group disclosed a contingent liability regarding an issue in respect of UK Value Added Tax. Following consultation with industry, UK Customs and Excise have now agreed that in future standard rated VAT will be applied to corporate actions charges raised by share registrars. Customs and Excise had previously been seeking to apply this ruling retrospectively. At 30 June 2001 the Group disclosed a contingent liability of US$1,000,000 in respect of penalty payments for failure to meet agreed conversion milestones in converting Share Plans to the SCRIP system. Computershare met all timetable requirements and no penalty payments will be required to be made. Potential withholding and other tax liabilities arising from distribution of all retained distributable earnings of all foreign incorporated subsidiaries $7,659,921 (30 June 2001: $4,272,513). No provision is made for withholding tax on unremitted earnings of applicable foreign incorporated controlled entities as there is currently no intention to remit these earnings to the parent entity. 54

57 32. CAPITAL EXPENDITURE COMMITMENTS Consolidated Parent entity $000 $000 $000 $000 Less than one year: Fitout of premises Purchase of equipment 5,562 2,829 5,562 2, SEGMENT INFORMATION The consolidated entity operates predominantly in six business segments: Investor services, Plan services, Document services, Analytics services, Corporate and Technology services. The Investor services operations comprise provision of registry services. The Plan services operations comprise the provision and management of Employee Share Plans. Document services operations comprise laser imaging, intelligent mailing, scanning and electronic delivery. The Asia geographic segment includes Hong Kong and Philippines. Intersegment charges are at normal commercial rates. PRIMARY BASIS Business Segments 2002 Analytics Document Investor Plan Technology Unallocated/ Consolidated services Corporate services services services services eliminations total Major business segments $000 $000 $000 $000 $000 $000 $000 $000 Revenue External revenue 13,160 17,007 43, ,504 66,188 31,564 3, ,966 Intersegment revenue 50 56,407 44,887 2, ,838 (187,319) Total segment revenue 13,210 73,414 88, ,633 66, ,402 (184,285) 780,966 Segment Result Profit from ordinary activities before income tax (1,412) (7,134) 6,421 88,864 (1,415) (7,192) 5,616 83,748 Income tax expense (25,995) Profit from ordinary activities after income tax 57,753 Depreciation 96 1,816 3,056 8, ,209 (6,361) 22,142 Amortisation goodwill ,562 3,007 1,482 29,869 Other non-cash expenses 11 (740) 639 1, ,634 Liabilities Total segment liabilities 1, ,230 8, ,249 1,907 9,807 28, ,968 Assets Total segment assets 21, ,451 41, ,328 66,555 36,497 (800,033) 959,716 Segment assets acquired during the reporting period: Investments 1,122 30,447 31,569 Property, plant and equipment 51 15,103 4,314 20,441 2,977 14,000 56,886 Total 51 16,225 4,314 50,888 2,977 14,000 88,455 55

58 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE SEGMENT INFORMATION (continued) PRIMARY BASIS Business Segments (continued) 2001 Analytics Document Investor Plan Technology Unallocated/ Consolidated services Corporate services services services services eliminations total Major business segments $000 $000 $000 $000 $000 $000 $000 $000 Revenue External revenue 5,183 7,045 38, ,327 27,059 44,927 3, ,318 Intersegment revenue 39,101 28,151 1,268 46,212 (114,732) Total revenue 5,183 46,146 66, ,595 27,059 91,139 (111,133) 754,318 Share of net profit of associates 2,383 2,383 Total segment revenue 5,183 46,146 66, ,978 27,059 91,139 (111,133) 756,701 Segment Result Profit from ordinary activities before income tax (987) (11,506) 5,513 76,272 (5,161) 6,954 4,694 75,779 Income tax expense (33,695) Profit from ordinary activities after income tax 42,084 Depreciation 56 1,359 2,040 10, ,789 (6,199) 18,131 Amortisation goodwill ,071 1,334 1,659 25,007 Other non-cash expenses 1, ,180 Liabilities Total segment liabilities 1, ,556 19,100 80,595 13,921 6,974 41, ,092 Assets Total segment assets 23, ,025 35, ,342 66,330 27,292 (572,004) 903,994 Segment assets acquired during the reporting period: Investments 4, ,452 Property, plant and equipment 129 4,901 1,416 31,650 5,205 43,301 Total 129 9,205 1,416 31,798 5,205 47,753 56

59 SECONDARY BASIS Geographic Segments 2002 Australia and United Kingdom Unallocated/ Consolidated Asia New Zealand Canada South Africa and Ireland USA eliminations total Major geographic segments $000 $000 $000 $000 $000 $000 $000 $000 Revenue External revenue 26, , ,369 21, , ,148 3, ,966 Segment Result Profit from ordinary activities before income tax 8,330 22,936 18,494 1,846 36,289 (9,762) 5,615 83,748 Income tax expense (25,995) Profit from ordinary activities after income tax 57,753 Assets Total segment assets 90, , ,832 29, , ,012 (800,033) 959,716 Segment assets acquired during the reporting period: Investments 4 13,620 17,945 31,569 Property, plant and equipment 163 8,575 12, ,073 15,595 56,886 Total ,195 12,470 17,955 20,073 15,595 88, Australia and United Kingdom Unallocated/ Consolidated Asia New Zealand Canada South Africa and Ireland USA eliminations total Major geographic segments $000 $000 $000 $000 $000 $000 $000 $000 Revenue External revenue 9, , ,366 25, , ,967 3, ,318 Segment Result Profit from ordinary activities before income tax 4,645 (4,273) 21,586 2,884 62,681 (16,438) 4,694 75,779 Income tax expense (33,695) Profit from ordinary activities after income tax 42,084 Assets Total segment assets 85, , ,388 15, , ,389 (572,004) 903,994 Segment assets acquired during the reporting period: Investments 2, ,744 4,452 Property, plant and equipment 63 9,471 8, ,407 14,433 43,301 Total 63 12,047 8, ,151 14,433 47,753 57

60 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 30 JUNE SEGMENT INFORMATION (continued) Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 1 and revised segment reporting accounting standard, AASB 1005 Segment Reporting, which has been applied for the first time in the year ended 30 June The business segments identified in the primary and secondary reporting disclosures are not materially different to the industry and geographical segments identified in the previous year. The comparative information has been restated to present the information on a consistent basis with the current year disclosures. Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, inventories, property, plant and equipment and goodwill and other intangible assets, net of related provisions. Corporate Segment assets also include financial assets. Segment liabilities consist primarily of trade and other creditors, employee entitlements and other provisions. Corporate segment liabilities also include borrowings. Segment assets and liabilities do not include income taxes. 34. ASSOCIATED ENTITIES Share of associates results $000 $000 Profit/(loss) before income tax Income tax Profit/(loss) after tax Amortisation of goodwill 4,556 (673) 3,883 (1,500) Share of net result of associates 2,383 Dividends (3,244) Cessation of equity accounting for CDS Pty Ltd and CDS (UK) Limited 2,133 Retained profits at the beginning of the financial year (1,272) Details of interests in associated entities are as follows: Place of Percentage of Name Principal activities incorporation ownership Balance date Carrying amount 2002 $000 Equity accounted Chelmer Limited Computer Technology Services New Zealand 50% (2001: 50%) 30 June Total investments in associated entities Contingent liabilities There are no material contingent liabilities in respect of associates at balance date. 58

61 DIRECTORS DECLARATION The director s of Computershare Limited declare that the financial statements and notes set out on pages 9 to 58: (a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (b) give a true and fair view of the Company s and consolidated entity s financial position as at 30 June 2002 and of their performance, as presented by the results of their operations and their cash flows, for the financial year ended on that date; and (c) in the director s opinion: (i) the financial statements and notes are in accordance with the Corporations Act 2001; and (ii) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and (iii) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in note 24, will together be able to meet any obligations or liabilities to which they are, or may become, subject to by virtue of the deed of cross guarantee described in note 24. This declaration is made in accordance with a resolution of the directors. A.S. MURDOCH Chairman 12 September 2002 C.J. MORRIS Chief Executive Officer 59

62 COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES INDEPENDENT AUDIT REPORT Independent audit report to the members of Computershare Limited Audit opinion PricewaterhouseCoopers ABN Collins Street MELBOURNE VIC 3000 GPO Box 1331L MELBOURNE VIC 3001 DX 77 Melbourne Australia Telephone Facsimile In our opinion, the financial report, set out on pages 9 to 59: presents a true and fair view, as required by the Corporations Act 2001 in Australia, of the financial position of Computershare Limited and the Computershare Group (defined below) as at 30 June 2002 and of their performance for the year ended on that date is presented in accordance with the Corporations Act 2001, Accounting Standards and other mandatory professional reporting requirements in Australia, and the Corporations Regulations This opinion must be read in conjunction with the following explanation of the scope and summary of our role as auditor. Scope and summary of our role The financial report responsibility and content The preparation of the financial report for the year ended 30 June 2002 is the responsibility of the directors of Computershare Limited. It includes the financial statements for Computershare Limited (the Company) and for the Computershare Group (the Group), which incorporates Computershare Limited and the entities it controlled during the year ended 30 June The auditor s role and work We conducted an independent audit of the financial report in order to express an opinion on it to the members of the Company. Our role was to conduct the audit in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial report is free of material misstatement. Our audit did not involve an analysis of the prudence of business decisions made by the directors or management. In conducting the audit, we carried out a number of procedures to assess whether in all material respects the financial report presents fairly a view in accordance with the Corporations Act 2001, Accounting Standards and other mandatory reporting requirements in Australia, and the Corporations Regulations 2001, which is consistent with our understanding of the Company s and the Group s financial position, and their performance as represented by the results of their operations and cash flows. The procedures included: selecting and examining evidence, on a test basis, to support amounts and disclosures in the financial report. This included testing, as required by auditing standards, certain internal controls, transactions and individual items. We did not examine every item of available evidence evaluating the accounting policies applied and significant accounting estimates made by the directors in their preparation of the financial report obtaining written confirmation regarding material representations made to us in connection with the audit reviewing the overall presentation of information in the financial report. Our audit opinion was formed on the basis of these procedures. Independence As auditor, we are required to be independent of the Group and free of interests which could be incompatible with integrity and objectivity. In respect of this engagement, we followed the independence requirements set out by The Institute of Chartered Accountants in Australia, the Corporations Act 2001 and the Auditing and Assurance Standards Board. In addition to our statutory audit work, we were engaged to undertake other services for the Group. These services are disclosed in note 26 to the financial statements. In our opinion the provision of these services has not impaired our independence. PricewaterhouseCoopers Russell Sutton Melbourne Partner 12 September Liability is limited by the Accountant's Scheme under the Professional Standards Act 1994 (NSW)