Computershare Limited Half Year 2008 Presentation Stuart Crosby Tom Honan 13 February 2008
Introduction CEO s Report 2
Introduction Stuart Crosby President & CEO 3
Highlights Introduction Management EPS of 27.36 cents, up 53% Management Net Profit After OEI of $155.8m, up 46% Free cash flows of $187.4m, up 44% Total Operating Revenues of $788.2m, up 14% Operating Costs of $532.4m, up 5% Interim Dividend of 10 cents* (AUD) per share, up 25% Return to dividend franking 20% franked 4 Note: all results are in USD except for dividend; all comparisons with 1H07 *20% franked
Global Interest Rate Market Introduction % UK % US 8 8 6 6 4 4 2 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 % 8 Canada 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 5
Computershare Strengths Introduction More than 70% of Revenue recurring in nature Global Diversification across 17 countries including growth engines China, India and Russia Proven technology capabilities and innovation Demonstrated ability to acquire and integrate businesses Strong and sustained earnings and cashflow growth Unique cross-border transaction capacities 6
Outlook Introduction In light of the excellent half year result and despite recent equity and interest rate market conditions, we expect Management EPS to be approximately 40% higher than last year. 7
Introduction CEO s Report 8
Tom Honan CFO 9
Group Performance US$m 1H08 1H07 Variance Sales Revenue 779.8 687.9 13% Interest & Other Income 8.5 6.1 39% Total Revenue 788.2 694.0 14% Operating Costs 532.4 506.3 (5%) Share of Net (Profit)/Loss of Associates (1.6) (1.0) Management EBITDA 257.4 188.7 36% Management Adjustments - Revenue/(Expense) 0.9 10.3 Reported EBITDA 258.3 199.0 30% Management EPS 27.36 17.86 53% 10
Drivers behind financial performance Corporate action environment Higher balances Revenue enhancements New clients Acquisitions Cost control Operating efficiency Balance sheet improvements Acquisition synergies Foreign exchange 11
Management EPS Performance Rolling 12 months US cents 50 40 30 20 10 0 1H05 1H06 1H07 1H08 12
EPS Growth FY05 to FY10 US cents 60 Rolling 12 months Management EPS 50 40 30 20 10 0 FY05 1H06 FY06 1H07 FY07 1H08 FY08 1H09 FY09 1H10 FY10 EPS projected from FY05 at 20% p.a. Rolling 12 months Actual EPS 13
Analysis of Management EPS Half Year Comparison US cents 30.00 25.00 20.00 15.00 10.00 5.00 0.00 1H05 2H05 1H06 2H06 1H07 2H07 1H08 6.60 9.52 8.82 13.92 17.86 18.83 27.36 14
1H08 NPAT Analysis $USm 180 160 17.8 2.4 4.8 16.9 13.2 0.4 1 EBITDA - AP 140 2 EBITDA - EMEA 120 34.0 3 4 EBITDA - NA Depn & Amort 100 80 107.0 155.8 5 6 7 Interest Tax OEI 60 1H07 NPAT 1 2 3 4 5 6 7 1H08 NPAT 15
Net Operating Cash Flows $USm Operating Cash Flow Vs. Capital Expenditure 240 210 180 183.5 206.2 150 137.5 120 117.8 90 65.8 60 30 14.6 10.4 7.8 17.9 18.8 0 1H06 2H06 1H07 2H07 1H08 Operating Cash Flows Capital Expenditure 16
Free Cash Flow up 44% on 1H07 $USm Operating Cash Flows less Capital Expenditure 200 187.4 150 Free Cash Flow: - 3 year 1H CAGR 96% - 4 year CAGR 71% 129.7 165.6 107.4 100 50 51.3 0 1H06 2H06 1H07 2H07 1H08 17
Half Year Comparisons Revenue & EBITDA $USm 900 $USm 300.0 257.4 750 250.0 R e v e n u e 600 450 99.7 140.4 188.7 181.7 200.0 150.0 E B I T D A 300 10 0.0 150 50.0 0 694.0 588.1 626.7 724.4 788.2 1H06 2H06 1H07 2H07 1H08 0.0 Tot al Revenue M anagement EB ITDA 18
Half Year Comparisons Revenue & EBITDA $USm 1st Half $USm $USm 2nd Half $USm 800 700 257.4 300 250 800 700 181.7 200 600 600 140.4 150 500 188.7 200 500 400 300 200 99.7 694.0 788.2 150 100 400 300 200 93.1 455.9 626.7 724.4 100 50 100 588.1 50 100 0 1H06 1H07 1H08 0 0 2H05 2H06 2H07 0 Revenue Management EBITDA Revenue Management EBITDA 19
Management EBITDA Margin 35.0% 32.7% 30.0% 27.2% 25.0% 22.4% 25.1% 20.0% 18.5% 20.4% 15.0% 17.0% 10.0% 1H05 2H05 1H06 2H06 1H07 2H07 1H08 20
Revenue Breakdown US$m 1H08 1H07 Variance Register Maintenance 406.5 350.1 16% Corporate Actions 169.4 119.7 42% Fund Services 41.7 74.2 (44%) Stakeholder Relationship Mgt 39.9 34.2 17% Employee Share Plans 59.0 58.2 1% Communication Services 44.4 37.2 19% Technology & Other Revenues 27.3 20.4 34% Total Revenue 788.2 694.0 14% Note: Included in the revenue results are $123.4m of Margin Income (1H07: $84.0m) and $116.3m of Recoverable Income (1H07: $132.9m). 21
Margin Income analysis US$m 140 120 123.4 100 80 65.3 84.0 89.7 60 52.1 40 20 Average Interest rates: UK US Canada 0 1H06 2H06 1H07 2H07 1H08 4.55% 4.50% 4.78% 5.31% 5.71% 3.70% 4.66% 5.25% 5.25% 4.85% 2.79% 3.77% 4.25% 4.25% 4.45% Average balances (US$bn) * 6.4 6.4 6.4 *Note: some balances attract no interest or a set margin for Computershare 22 7.0 8.7
Regional Analysis 1H08 Revenue & EBITDA Total Revenue Breakdown EBITDA Breakdown 30% 28% 48% 50% 22% 22% Asia Pacific EMEA North America Asia Pacific EMEA North America 23
Half Year Comparisons Operating Costs $USm 600 500 139.7 400 144.5 133.2 138.9 137.0 300 200 345.0 355.2 367.4 404.9 395.4 100 0 1H06 2H06 1H07 2H07 1H08 Operating Costs excl. COS Cost of Sales (COS) 24
Technology Costs Establishing Global Platform US$m % 100.0 12.0% 90.0 80.0 10% 9% 9% 10% 10% 70.0 60.0 50.0 59.1 56.4 61.7 70.3 77.1 8.0% 40.0 30.0 4.0% 20.0 10.0 0.0 1H06 2H06 1H07 2H07 1H08 0.0% Total Technology costs Technology costs as a % of sales revenue 25
Analysis of 1H08 Technology Costs 4% 28% 40% Total Costs US$77.1m Development Costs US$30.3m 28% Development Infrastructure Maintenance Administration 26
Balance Sheet as at 31 December 2007 Dec-07 Jun-07 Variance US$'000s US$'000s Current Assets 369,763 368,891 0% Non Current Assets 1,520,793 1,366,224 11% Total Assets 1,890,556 1,735,115 9% Current Liabilities 332,971 338,550 2% Non Current Liabilities 874,854 563,990 (55%) Total Liabilities 1,207,825 902,540 (34%) Total Equity* 682,731 832,575 (18%) * After buy-back of US$297.5m. 27
Key Ratios times 14 12 EBITDA interest coverage 12.1 11.9 12.2 times 3.0 2.5 Net Indebtedness to EBITDA 2.48 10 8 6 4 2 0 8.7 FY05 FY06 FY07 1H08 2.0 1.5 1.0 0.5 0.0 1.68 1.46 0.94 FY05 FY06 FY07 1H08 Gearing (Net Debt / Net Debt + Equity) % 80% Funds Flow to Total Debt 76% % 50% 40% 30% 41% 37% 29% 48% 60% 40% 27% 43% 53% 20% 10% 20% 0% FY05 FY06 FY07 1H08 0% FY05 FY06 FY07 1H08 28
Computershare Borrowings Dec-07 Jun-07 Variance US$m US$m Cash 108.0 86.8 24% Interest Bearing Liabilities * 747.4 435.1 (72%) Net Debt 639.4 348.3 (84%) Management EBITDA** 439.1 370.5 19% Net debt to Management EBITDA 1.46 0.94 (55%) *Average Tenor of drawn debt is 4 years ** Rolling 12 months 29
Debt Facility Maturity Profile US$m 600 490.0 500 400 300 200 160.0 123.0 124.5 100 21.0 0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Total Nil $160.0m Nil $490.0m $123.0m Nil Nil $124.5m Nil $21.0m $918.5m 30
Capital Expenditure $USm 20.0 Capital Expenditure Vs. Depreciation 0.6 0.6 15.0 0.8 3.0 7.9 2.2 2.2 0.5 Depreciation 10.0 4.1 1.6 3.8 1.1 5.0 7.6 0.9 5.0 1.4 2.3 12.1 8.8 0.0 2.9 1H06 2H06 1H07 2H07 1H08 Information Technology Communication Services Facilities Occupancy Other 31
Working Capital Management Days 60 50 40 53 Days Sales Outstanding 45 45 43 37 30 20 10 0 1H06 FY06 1H07 FY07 1H08 32
Return On Invested Capital Vs. WACC Increased returns, Cost of Capital flat 20% AGAAP AIFRS 18% 16% 14% 12% 10% 8% 6% FY03 FY04 FY05 FY06 FY07 1H08 WACC ROIC 33
Return on Equity Vs. Return on Assets 40% AGAAP AIFRS 30% 20% 10% 0% FY03 FY04 FY05 FY06 FY07 1H08 ROA ROE 34
Equity Management Interim Dividend of 10 cps (AU) EPS Basic US 27.20 cents EPS Management US 27.36 cents Interim Dividend (20 % franked) AU 10 cents Current Yield* 2.5% * Based on 12 month dividend and share price of A$7.56 (close 12 February 2008) 35
Equity Management Ordinary Share Buy-back Acquired 45,000,000 ordinary shares Average price AUD $9.91 36
Summary Final Remarks Continued strong EPS growth - 53% Free cash flow up 44% Record revenues Maintained strong balance sheet Return on equity > 35% Dividend increased to 10 cents (AUD) per share, 20% franked 37
Market Overview CEO s Report 38
CEO Presentation CEO s Report Stuart Crosby President & CEO 39
Group Strategy CEO s Report Focus unchanged: 1. Continue to drive operations quality and efficiency through measurement, benchmarking and technology 2. Improve our front office skills to protect and drive revenue 3. Continue to seek acquisition and other growth opportunities where we can add value and enhance returns for our shareholders 40
Taking advantage of M&A opportunities in a changed environment CEO s Report Year to date transactions include: Datacare UMB Administar RSS VEM QMT In total, over US$300m in 8 transactions YTD after nearly US$100m in 7 transactions last year Strong cash-flows and balance sheet, position us to take full advantage of opportunities that emerge from current business environment 41
Specific initiatives quality differentiation and shareholder communications CEO s Report Over the past few years, we have made many significant improvements to client and stakeholder servicing We re now investing in taking service excellence to a new level The timing is ideal for this exercise, as increasing numbers of issuers and employers see untapped value in the relationships with their investors/employees that Computershare manages for them 42
Specific initiatives quality differentiation and shareholder communications CEO s Report In parallel, the introduction of e-communication initiatives in a range of markets offers much more efficient channels of communication with these stakeholders Computershare is a thought leader in e-communication developments, which are generating meaningful new revenues and assisting in strengthening client relationships The Georgeson consulting and solicitation offering rounds out our investor communications offering we are reshaping the market face of Georgeson to fit evolving requirements 43
Electronic shareholder communications around the grounds CEO s Report USA notice and access reforms in first year; better than expected uptake of the products we d prepared Australia only 10% of shareholders electing to receive hard copy annual reports, with good uptake of integrated Computershare on-line report and hosting services UK - into second year of the deemed consent regime, with good uptake of new products Canada, HK, Ireland, SA, NZ, Japan watch developments in other markets with great interest but no change implemented as yet. Generally we are ideally placed to lever our data and experience of the wide range of regulatory approaches across different markets 44
North America update - USA CEO s Report Investor Services Client retention remains strong off the back of robust service delivery Corporate action pipeline changing shape, but holding up better than many predicted Good returns from investment in business as usual capacities over past 12 to 18 months Other Fund Services - continues to win vast majority of work, but lower volumes than recently Plans rolling out new options technology IML (wireless voting), GSC (subsidiary management and governance services), RSS (insider dealing program management) cross sell strong Encouraging pipeline for Administar (class action and bankruptcy admin) 45
North America update - Canada CEO s Report Investor Services Strong local and cross-border corporate actions deal flow continues, but deals generally smaller in size Operations efficiency being enhanced by deployment of CPU best practice Quality client relationships Corporate Trust Steady business with excellent margin No adverse effect as yet from Sub-prime Proxy Georgeson dominates the Canadian proxy market 46
EMEA update UK, Russia, Germany, Ireland and South Africa CEO s Report UK Market more rational on price post ownership change at main competitor Deposit Protection Scheme continues to exceed expectations Investment in adviser relationships in the IPO/DI sector continues to bear fruit Change in corporate actions mix, but good pipeline still Good new business prospects in Plans space Russia CPU continues to drive consolidation now 65% NRC and 40% NIKoil Germany VEM acquisition nearly complete, materially extending the range of our service offering to German corporates Other: Ireland - Improving margins and good revenue growth, esp. in ETF space IML rolling up distribution network globally acquisitions complete in Australia, Belgium; other jurisdictions in progress 47
Asia Pacific update - Asia CEO s Report Hong Kong and China IPO pipeline continues to hold up much better than expected continue to monitor market conditions PRC opportunities continue to take shape. Plans still the most developed; other areas remain interesting but rate of progress hard to predict Beijing office now established Japan Joint venture with MUTB continues to perform well Working on expanding range of cooperation India Reliance Power (we processed 6M IPO applications in 8 days) is the largest (in applications) IPO ever! UTI MF book also won and migrated 48
Asia Pacific update Australia and New Zealand CEO s Report Investor Services Good news continues: better margins, a range of positive pricing outcomes Communication Services QM takeover offers opportunity to take CCS Australia to a new level in a rationalised industry Plans Organic growth continues. Strong support for China and other regional business development Fund Services Now has a solid platform and well positioned to grow into Asia as well as Australia Proxy Georgeson remains market leader in proxy services 49
Looking forward to 2008 CEO s Report Computershare has a strong operational and financial platform for continued growth: Healthy revenues Strong understanding of cost structures and margins Strong balance sheet to support acquisitions and capital management Well positioned to take on new business lines (eg, Administar in US) The strategic focus remains unchanged: Continue to drive operations quality and efficiency through measurement, benchmarking and technology Improve our front office skills to protect and drive revenue Continue to seek acquisition and other growth opportunities where we can add value and enhance returns for our shareholders 50
Specific current priorities and expectations CEO s Report Continue to take advantage of M&A opportunities Strong focus on taking service quality to next level Lever shareholder communications opportunities from regulatory change EPS growth expectations for FY 08 upgraded to approximately 40% 51
Computershare Limited Half Year 2008 Presentation Stuart Crosby Tom Honan 13 February 2008
Appendix: Half Year 2008 Presentation 13 February 2008 53
Appendix 1: Group Comparisons Group Comparisons 54
Behind the Headline NPAT IMPACT US$000 s Net profit after tax at 31 December 2007 154,934 Acquisition provisions no longer required (272) Intangible assets amortisation 1,546 US property rationalisation 710 Marked to market adjustments - derivatives (1,113) Management adjusted profit after tax at 31 December 2007 155,805 55
CPU Revenues 6% 3% Revenue Type 7% 5% 5% 53% Register Maintenance Corporate Actions Fund Services Stakeholder Relationship Management Employee Share Plans Communication Services Technology & Other Revenue 21% 56
Regional Analysis 1H08 Revenue $USm 250.0 211.4 200.0 150.0 100.0 97.0 98.0 ` 73.9 71.3 50.0 0.0 24.2 11.9 1.0 28.8 16.0 17.8 6.1 8.2 Register Maintenance Corporate Actions Fund Services Stakeholder Relationship Management 19.5 31.4 Employee Share Plans 30.3 9.7 4.3 Communication Services 7.9 4.4 12.0 Technology & Other Revenue Asia Pacific EMEA North America 57
Half Year Comparisons - Revenue $USm 450.0 400.0 350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0 Register Maintenance Corporate Actions Funds Serv ices Stakeholder Relationship Management Employ ee Share Plans Communication Serv ices Technology & Other Rev enue 1H06 2H06 1H07 2H07 1H08 58
Half Year Comparisons Operating Costs $USm 26.0 30.2 28.9 35.6 30.5 35.4 34.2 41.9 35.3 27.4 15.3 14.4 16.5 23.4 20.9 58.0 55.7 61.3 70.1 76.7 144.5 133.2 138.9 139.7 137.0 210.4 220.7 218.8 240.5 239.7 250 200 150 100 50 0 Cost of Sales Personnel Occupancy Other Direct Technology Corporate 1H06 2H06 1H07 2H07 1H08 59
Underlying Effective Tax Rate % 35.0 30.0 25.0 20.0 19.4 23.9 28.5 28.0 15.0 10.0 5.0 0.0 FY05 FY06 FY07 1H08 60
Interest Rate Sensitivity US$m PBT Impact 80 60 40 20 0-3.00% -2.50% -2.00% -1.50% -1.00% -0.50% Current 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% -20-40 -60-80 Exposure Hedged exposure 61
Risk Management - Interest Rate Sensitivity Exposure to interest rates 41% No exposure 22% Interest Rate Hedging Strategy: - Protect downside risk in current interest rate environment Policy: - Minimum hedge of 25% / Maximum hedge of 100% - Minimum term 1 year / Maximum term 5 years - Current hedging: 37% Effective hedging in place - both natural & synthetic 37% 62
Risk Management Average Funds Balances for year ending 31 December 2007 Dissenter 3% Dividend 16% By Category Sharesave/ Employee Plans 11% Broker Trust 14% US 29% By Country Australia 2% Corporate Actions 39% Regular Trust 17% UK 21% Canada 48% Average funds balance US$8.7b 63
Appendix 2: Country Summaries Country Summaries 64
Appendix 2: Country Summaries Asia Pacific 65
Australia Half Year Comparison $Am Total Revenue $Am Revenue Breakdown 200.0 80.0 76.7 174.6 70.0 66.8 63.2 150.0 143.6 139.9 60.0 120.0 115.9 50.0 100.0 40.0 35.7 35.0 50.0 30.0 20.0 24.7 21.0 28.1 28.7 10.0 3.0 3.0 2.8 4.9 5.6 6.9 8.6 8.2 8.7 7.6 10.3 8.8 0.0 1H06 2H06 1H07 2H07 1H08 0.0 Register Maintenance Corporate Actions Fund Services Stakeholder Relationship Management Employee Share Plans Communication Services Technology & Other Revenue 1H07 2H07 1H08 66
New Zealand Half Year Comparison $NZm 10 9.7 Total Revenue $NZm 8.0 Revenue Breakdown 8 7.7 8.6 6.9 8.1 6.0 7.0 5.9 6.3 6 4.0 4 2 2.0 1.6 1.0 1.8 0 1H06 2H06 1H07 2H07 1H08 0.0 Register Maintenance Corporate Actions 1H07 2H07 1H08 67
Hong Kong Half Year Comparison $HKm 500 Total Revenue $HKm 350.0 Revenue Breakdown 450 441.1 300.0 300.3 400 350 250.0 300 200.0 250 200 150 120.6 145.2 227.1 235.4 150.0 100.0 103.5 126.0 140.7 123.4 109.4 100 50.0 50 0 1H06 2H06 1H07 2H07 1H08 0.0 Register Maintenance Corporate Actions 1H07 2H07 1H08 68
India Half Year Comparison 900 INRm Total Revenue 400.0 INRm Revenue Breakdown 381.2 800 700 600 500 540.8 796.6 582.2 533.2 812.2 350.0 300.0 250.0 200.0 287.0 216.3 309.8 261.8 270.6 400 300 150.0 100.0 121.2 200 100 50.0 33.4 46.3 0 1H06 2H06 1H07 2H07 1H08 0.0 Register Maintenance Corporate Actions Fund Services 1H07 2H07 1H08 69
Appendix 2: Country Summaries North America 70
United States Half Year Comparison $USm 300.0 282.5 Total Revenue 299.4 296.7 282.0 263.2 $USm 200.0 Revenue Breakdown 250.0 200.0 150.0 133.7 157.2 136.7 150.0 100.0 66.2 100.0 50.0 45.5 45.4 44.4 50.0 0.0 1H06 2H06 1H07 2H07 1H08 0.0 33.1 28.8 12.7 21.6 13.7 Register Main Corp Actions Fund Services Stakeholder Relationship Management 27.9 25.9 24.9 Employee Share Plans 1H07 2H07 1H08 3.5 3.7 3.1 Communication Services 9.9 9.7 11.6 Technology & Other Revenue 71
Canada Half Year Comparison $CAm Total Revenue $CAm Revenue Breakdown 130 90.0 120 110 114.6 116.1 80.0 76.0 76.4 100 97.7 96.2 70.0 63.6 90 60.0 80 73.4 50.0 70 60 40.0 50 40 30.0 20.0 21.4 24.1 27.5 30 20 10 0 1H06 2H06 1H07 2H07 1H08 10.0 0.0 Register Maintenance Corporate Actions 2.9 5.1 4.1 Stakeholder Relationship Management 6.7 7.9 6.6 Employee Share Plans 1H07 2H07 1H08 1.5 1.5 Communication Services 1.2 0.1 0.1 0.4 Technology & Other Revenue 72
Appendix 2: Country Summaries EMEA 73
United Kingdom Half Year Comparison GBPm Revenue Breakdown GBPm Total Revenue 40.0 38.6 70.0 60.0 56.2 54.0 60.8 30.0 32.3 33.9 50.0 48.3 40.0 35.9 20.0 30.0 20.0 10.0 10.6 8.6 9.4 9.8 9.3 10.0 4.7 0.0 1H06 2H06 1H07 2H07 1H08 0.0 Register Maintenance Corporate Actions 1.8 2.7 1.6 Stakeholder Relationship Management Employee Share Plans 1.1 1.5 1.0 1.4 0.8 Communication Services 1.8 Technology & Other Revenue 1H07 2H07 1H08 74
Ireland Half Year Comparison EURm Total Revenue EURm Revenue Breakdown 4.5 4.1 4.4 4 3.4 3.0 3.0 3.0 3.4 3 2.7 3.0 2 1.5 1 0.7 0.7 0.5 0.7 0.2 0 0.0 1H06 2H06 1H07 2H07 1H08 Register Maintenance Corporate Actions Funds Services Technology & Other Revenue 1H07 2H07 1H08 75
Germany Half Year Comparison EURm 25 Total Revenue 24.8 23.9 EURm 10 9.8 Revenue Breakdown 9 8.6 20 15 15.5 19.3 17.4 8 7 6 5 7.2 7.7 7.0 5.7 5.7 4 4.1 10 3 2.9 2 5 1 0 0.7 0.5 0.4 0.1 0.1 0.4 0.3 0.1 0.3 0 1H06 2H06 1H07 2H07 1H08 Register Maintenance Corporate Actions Stakeholder Relationship Management Employee Share Plans 1H07 2H07 1H08 Communication Services Technology & Other Revenue 76
South Africa Half Year Comparison ZARm 140 Total Revenue ZARm Revenue Breakdown 120 115.2 110 100 102.3 100 99.4 92.8 87.7 99.7 90 80 81.5 87.6 80 70 60 60 50 40 40 30 20 20 10 6.3 12.1 12.9 0 1H06 2H06 1H07 2H07 1H08 0 Register Maintenance 1H07 2H07 1H08 Corporate Actions 77
Appendix 3: Assumptions Assumptions 78
Assumptions: Exchange Rates Average exchange rates used to translate profit and loss to US dollars. USD AUD HKD NZD INR CAD GBP EUR ZAR 1.0000 1.15385 7.78792 1.32490 44.07212 1.02133 0.49185 0.71329 6.92475 79