COMPUTERSHARE LIMITED. - Annual Report 2016

ASX PRELIMINARY FINAL REPORT

Computershare Limited

ABN 71 005 485 825

30 JUNE 2016

Lodged with the ASX under Listing Rule 4.3A

Contents
Results for announcement to the market	1
Appendix 4E item 2
Preliminary consolidated statement of comprehensive income	3
Appendix 4E item 3
Preliminary consolidated statement of financial position	4
Appendix 4E item 4
Preliminary consolidated statement of changes in equity	5
Preliminary consolidated statement of cash flows	6
Appendix 4E item 5
Supplementary Appendix 4E information	7
Appendix 4E item 6 to 13

This report covers the consolidated entity consisting of Computershare Limited and its controlled entities. The financial statements are presented in United States dollars (unless otherwise stated).

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES YEAR ENDED 30 JUNE 2016 (Previous corresponding period year ended 30 June 2015) RESULTS FOR ANNOUNCEMENT TO THE MARKET

				$000
Revenuefrom continuing operations	down	0.5%	to	1,961,125
(Appendix 4E item 2.1)
Profit/(loss)after tax attributable to members	up	2.4%	to	157,334
(Appendix 4E item 2.2)
Net profit/(loss)for the period attributable to members	up	2.4%	to	157,334
(Appendix 4E item 2.3)
Dividends	Amount per security		Franked amount per security
(Appendix 4E item 2.4)
Final dividend	AU	17 cents		20%
Interim dividend	AU	16 cents		100%

Record date for determining entitlements to the final dividend (Appendix 4E item 2.5) 17 August 2016

Explanation of revenue (Appendix 4E item 2.6)

Total revenue from continuing operations for the year ended 30 June 2016 is $1,961.1 million, down 0.5% against the last corresponding period. Revenue was significantly impacted by the stronger US dollar relative to the prior corresponding period, substantially reducing the translated contribution from non-US businesses. In constant currency terms, total revenue from continuing operations would have been up by 4.6%. Revenue grew materially in US loan servicing. Revenue growth was also recorded in communication services in Australia and the US, Indian mutual funds administration, US corporate actions, bankruptcy administration and class actions. A weaker revenue outcome was recorded across employee plans in both the US and the UK, corporate actions in Canada and Australia, US registry, voucher services and Deposit Protection Scheme businesses in the UK. Overall, revenue benefited modestly from the net impact of prior and current period acquisitions and disposals.

Explanation of profit/(loss) from ordinary activities after tax (Appendix 4E item 2.6)

Net statutory profit after tax attributable to members is $157.3 million, an increase of 2.4% over the last corresponding period. This outcome was the net result of a number of factors, including significant non-recurring items, impacting the current and prior reporting period. There was earnings growth in the Australian, Hong Kong, UK and Irish registry businesses, Indian mutual fund administration, Australian and US communication services as well as bankruptcy administration, mortgage servicing and corporate actions in the US. In contrast, the translation effect of the strengthening US dollar along with weaker earnings in the UK, US and European employee plan businesses, Australian and Canadian corporate actions, the Australian Serviceworks and UK Deposit Protection Scheme businesses negatively impacted net profit after tax. A range of businesses also had earnings impacted by lower yields on client balances. Interest expense was higher primarily due to increased mortgage servicing advance facilities and debt funding mix. Amortisation expense increased mainly due to the acquisition of mortgage servicing rights during the past two years in the US mortgage servicing business.

The Group’s effective tax rate has decreased from 35.3% for the year ended 30 June 2015 to 34.0% in the current financial year.

Explanation of net profit/(loss) (Appendix 4E item 2.6)

Please refer above.

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES YEAR ENDED 30 JUNE 2016 (Previous corresponding period year ended 30 June 2015) RESULTS FOR ANNOUNCEMENT TO THE MARKET

Explanation of dividends (Appendix 4E item 2.6)

The following dividends have been paid, declared or recommended since the end of the preceding financial year:

Ordinary shares

A final dividend in respect of the year ended 30 June 2015 was declared on 12 August 2015 and paid on 15 September 2015. This was an ordinary dividend of AU 16 cents per share franked to 25% amounting to AUD 88,991,746 ($64,725,977).

An interim dividend in respect of the year ended 30 June 2016 was declared on 10 February 2016 and paid on 16 March 2016. This was an ordinary dividend of AU 16 cents per share franked to 100% amounting to AUD 87,751,688 ($63,824,051).

A final dividend in respect of the year ended 30 June 2016 was declared by the directors of the Company on 10 August 2016, to be paid on 13 September 2016. This is an ordinary dividend of AU 17 cents per share, franked to 20%. As the dividend was not declared until 10 August 2016, a provision has not been recognised as at 30 June 2016.

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016

FOR THE YEAR ENDED 30 JUNE 2016
	Note	2016	2015
		$000	$000
Revenue from continuing operations
Sales revenue		1,957,860	1,966,193
Other revenue		3,265	5,059
Total revenue from continuing operations		1,961,125	1,971,252
Other income		27,740	12,777
Expenses
Direct services		1,405,410	1,410,524
Technology costs		260,570	260,915
Corporate services		22,047	15,146
Finance costs		54,480	51,957
Total expenses		1,742,507	1,738,542
Share of net profit/(loss) of associates and joint ventures accounted for using the	11
equity method		(1,349)	(2,316)
Profit before related income tax expense		245,009	243,171
Income tax expense/(credit)	5	83,211	85,893
Profit for theyear		161,798	157,278
Other comprehensive income that may be reclassified to profit or loss
Available-for-sale financial assets		(62)	9
Cash flow hedges		(497)	(53)
Exchange differences on translation of foreign operations		(17,005)	(106,480)
Income tax relatingto components of other comprehensive income		(6,841)	14,963
Total other comprehensive income for the year, net of tax		(24,405)	(91,561)
Total comprehensive income for theyear		137,393	65,717
Profit for the year attributable to:
Members of Computershare Limited		157,334	153,576
Non-controllinginterests		4,464	3,702
		161,798	157,278
Total comprehensive income for the year attributable to:
Members of Computershare Limited		133,912	63,239
Non-controllinginterests		3,481	2,478
		137,393	65,717
Basic earnings per share (cents per share)	3	28.55 cents	27.61 cents
Diluted earnings per share (cents per share)	3	28.51 cents	27.56 cents

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

AT 30 JUNE 2016
Note	2016 2015
	$000 $000
CURRENT ASSETS
Cash and cash equivalents	526,575 555,278
Bank deposits	20,174 -
Receivables	425,343 361,185
Loan servicing advances	255,139 187,002
Available-for-sale financial assets	591 620
Other financial assets	18,655 22,655
Inventories	4,512 4,853
Current tax assets	6,423 10,574
Derivative financial instruments	1,952 750
Other current assets	29,694 33,362
Assets classified as held for sale 10	26,128 51,558
Total current assets	1,315,186 1,227,837

NON-CURRENT ASSETS
Bank deposits	- 19,664
Receivables	876 972
Investments accounted for using the equity method 11	27,357 31,596
Available-for-sale financial assets	17,487 7,394
Property, plant and equipment	116,535 161,107
Deferred tax assets	178,644 189,348
Derivative financial instruments	48,035 31,239
Intangibles	2,273,628 2,132,298
Total non-current assets	2,662,562 2,573,618
Total assets	3,977,748 3,801,455

CURRENT LIABILITIES
Payables	382,921 392,448
Interest bearing liabilities	260,088 172,805
Current tax liabilities	29,131 29,435
Provisions	40,688 44,231
Derivative financial instruments	1,238 20,838
Deferred consideration	12,402 6,585
Liabilities directly associated with assets classified as held for sale	- 12,816
Other liabilities	69,869 44,537
Total current liabilities	796,337 723,695

NON-CURRENT LIABILITIES
Payables	9,740 1,374
Interest bearing liabilities	1,603,217 1,596,299
Deferred tax liabilities	232,100 214,512
Provisions	29,129 31,548
Deferred consideration	65,969 4,869
Derivative financial instruments	5,500 9,732
Other liabilities	127,023 41,785
Total non-current liabilities	2,072,678 1,900,119
Total liabilities	2,869,015 2,623,814
Net assets	1,108,733 1,177,641

EQUITY
Contributed equity 8	- 35,703
Reserves	(81,472) (19,362)
Retained earnings 15	1,176,690 1,147,906
Total parent entity interest	1,095,218 1,164,247
Non-controllinginterests	13,515 13,394
Total equity	1,108,733 1,177,641

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016

	Attributable to members of Computershare Limited
Note	Contributed Equity Reserves Retained Earnings Total Non- controlling Interests Total Equity $000 $000 $000 $000 $000 $000 35,703 (19,362) 1,147,906 1,164,247 13,394 1,177,641 - - 157,334 157,334 4,464 161,798 - (62) - (62) - (62) - (497) - (497) - (497) - (16,022) - (16,022) (983) (17,005) - (6,841) - (6,841) - (6,841) - (23,422) 157,334 133,912 3,481 137,393 - - (128,550) (128,550) (2,799) (131,349) (35,703) (37,469) - (73,172) - (73,172) - - - - (561) (561) - (12,177) - (12,177) - (12,177) - 10,958 - 10,958 - 10,958 - (81,472) 1,176,690 1,095,218 13,515 1,108,733


Total equity at 1 July 2015

Profit for the year
Available-for-sale financial assets
Cash flow hedges
Exchange differences on translation of foreign operations
Income tax(expense)/credits
Total comprehensive income for the year

Transactions with owners in their capacity as owners:
Dividends provided for or paid
Share buy-back 8
Transactions with non-controlling interests
Cash purchase of shares on market
Share based remuneration
Balance at 30June 2016


	Attributable to members of Computershare Limited
	Contributed Equity Reserves Retained Earnings Total Non- controlling Interests Total Equity $000 $000 $000 $000 $000 $000 35,703 84,240 1,134,305 1,254,248 12,964 1,267,212 - - 153,576 153,576 3,702 157,278 - 9 - 9 - 9 - (53) - (53) - (53) - (105,256) - (105,256) (1,224) (106,480) - 14,963 - 14,963 - 14,963 - (90,337) 153,576 63,239 2,478 65,717 - - (139,975) (139,975) (2,048) (142,023) - (293) - (293) - (293) - (27,971) - (27,971) - (27,971) - 14,999 - 14,999 - 14,999 35,703 (19,362) 1,147,906 1,164,247 13,394 1,177,641


Total equity at 1 July 2014

Profit for the year
Available-for-sale financial assets
Cash flow hedges
Exchange differences on translation of foreign operations
Income tax(expense)/credits
Total comprehensive income for theyear

Transactions with owners in their capacity as owners:
Dividends provided for or paid
Transactions with non-controlling interests
Cash purchase of shares on market
Share based remuneration
Balance at 30 June 2015

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016

FOR THE YEAR ENDED 30 JUNE 2016
Note	2016 2015
	$000 $000
CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers	2,001,817 2,064,771
Payments to suppliers and employees	(1,521,470) (1,540,924)
Loan servicing advances (net)	(68,137) (44,522)
Dividends received from equity securities	701 917
Interest paid and other finance costs	(53,786) (52,723)
Interest received	2,564 4,142
Income taxespaid	(57,042) (59,529)
Net operating cash flows 6	304,647 372,132

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for purchase of controlled entities and businesses (net of cash acquired) and intangible assets	(167,848) (186,021)
Proceeds from sale of a joint venture	1,532 -
Dividends received from associates and joint ventures	445 339
Proceeds from/(payments for) investments	(19,984) (15,495)
Payments for property, plant and equipment	(25,317) (28,384)
Proceeds from sale of subsidiaries and businesses,net of cash disposed	(6,511) 23,849
Net investing cash flows	(217,683) (205,712)

CASH FLOWS FROM FINANCING ACTIVITIES

Payment for purchase of ordinary shares - share based awards	(12,177) (27,971)
Proceeds from borrowings	494,918 1,242,784
Repayment of borrowings	(439,840) (1,161,005)
Loan servicing borrowings (net)	41,381 76,283
Dividends paid - ordinary shares (net of dividend reinvestment plan)	(123,057) (133,601)
Purchase of ordinary shares - dividend reinvestment plan	(5,493) (6,374)
Dividends paid to non-controlling interests in controlled entities	(2,799) (2,048)
Payments for on-market share buy-back	(71,830) -
Repayment of finance leases	(6,684) (7,759)
Net financing cash flows	(125,581) (19,691)

Net increase/(decrease) in cash and cash equivalents held	(38,617) 146,729
Cash and cash equivalents at the beginning of the financial year	604,092 509,151
Exchange rate variations on foreign cash balances	(38,900) (51,788)
Cash and cash equivalents at the end of the year*	526,575 604,092

Cash and cash equivalents at 30 June 2016 include nil cash presented in the assets classified as held for sale line item (2015: $48.8 million) in the consolidated statement of financial position.

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

This preliminary final report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E.

This report is to be read in conjunction with any public announcements made by Computershare Limited during the reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and Australian Securities Exchange Listing Rules.

The financial report, comprising the financial statements and notes of Computershare Limited and its controlled entities, complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Where necessary, comparative figures have been adjusted to comply with the changes in presentation in the current period.

The principal accounting policies adopted in the preparation of the financial statements are consistent with those of the previous financial year.

2. MATERIAL FACTORS AFFECTING THE ECONOMIC ENTITY FOR THE CURRENT PERIOD

Refer to the Market Announcement and Management Presentation dated 10 August 2016 for discussion of the nature and amount of material items affecting revenue, expenses, assets, liabilities, equity or cash flows, where their disclosure is relevant in explaining the financial performance or position of the entity for the period.

3. EARNINGS PER SHARE (Appendix 4E item 14.1)

Year ended 30 June 2016	Basic EPS	Diluted EPS	Management	Management
			Basic EPS	Diluted EPS
Earnings per share (cents per share)	28.55 cents	28.51 cents	55.09 cents	55.00 cents
Reconciliation of earnings	$000	$000	$000	$000
Profit for the year	161,798	161,798	161,798	161,798
Non-controlling interest (profit)/loss	(4,464)	(4,464)	(4,464)	(4,464)
Add back management adjustment items(see below)	-	-	146,206	146,206
Net profit attributable to the members of
Computershare Limited	157,334	157,334	303,540	303,540
Weighted average number of ordinary shares
used as denominator in calculating earnings per	550,992,891	551,917,891	550,992,891	551,917,891
share

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

	Year ended 30 June 2015	Basic EPS	Diluted EPS	Management Basic EPS	Management Diluted EPS

	Earnings per share (cents per share)	27.61 cents	27.56 cents	59.82 cents	59.72 cents



	Reconciliation of earnings	$000	$000	$000	$000

	Profit for the year	157,278	157,278	157,278	157,278

	Non-controlling interest (profit)/loss	(3,702)	(3,702)	(3,702)	(3,702)

	Add back management adjustment items(see below)	-	-	179,158	179,158

	Net profit attributable to the members of Computershare Limited	153,576	153,576	332,734	332,734



	Weighted average number of ordinary shares used as denominator in calculating earnings per share	556,203,079	557,178,079	556,203,079	557,178,079



	Reconciliation of weighted average number of shares used as the denominator:
				2016	2015
				Number	Number
	Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share				556,203,079
				550,992,891
	Adjustments for calculation of diluted earnings per share:
	Performance rights				975,000
				925,000
	Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share				557,178,079
	denominator in calculating diluted earnings per share			551,917,891
	No employee performance rights have been issued since year end.
	For the year ended 30 June 2016 management adjustment items were as follows:
Gross Tax effect Net of tax
$000 $000 $000
Amortisation
Intangible assets amortisation (96,134) 32,091 (64,043)
Acquisitions and disposals
Acquisition related accounting adjustments (45,642) (699) (46,341)
Foreign currency translation reserve write-off on disposals (25,904) - (25,904)
Gain on acquisition 11,113 (2,222) 8,891
Acquisition and disposal related expenses (3,480) 1,072 (2,408)
Acquisition related restructuring costs (2,002) 698 (1,304)
Asset write-down (1,687) - (1,687)
Gain on disposal 325 - 325
Other
Major restructuring costs (14,545) 6,080 (8,465)
Put option liability re-measurement (7,526) - (7,526)
Marked to market adjustments - derivatives 3,244 (988) 2,256
Total management adjustment items (182,238) 36,032 (146,206)

		Tax
	Gross	effect	Net of tax
	$000	$000	$000
Amortisation
Intangible assets amortisation	(96,134)	32,091	(64,043)
Acquisitions and disposals
Acquisition related accounting adjustments	(45,642)	(699)	(46,341)
Foreign currency translation reserve write-off on disposals	(25,904)	-	(25,904)
Gain on acquisition	11,113	(2,222)	8,891
Acquisition and disposal related expenses	(3,480)	1,072	(2,408)
Acquisition related restructuring costs	(2,002)	698	(1,304)
Asset write-down	(1,687)	-	(1,687)
Gain on disposal	325	-	325
Other
Major restructuring costs	(14,545)	6,080	(8,465)
Put option liability re-measurement	(7,526)	-	(7,526)
Marked to market adjustments - derivatives	3,244	(988)	2,256
Total management adjustment items	(182,238)	36,032	(146,206)

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

Management Adjustment Items

Management adjustment items net of tax for the year ended 30 June 2016 were as follows:

Amortisation

Customer contracts and other intangible assets that are recognised on business combinations or major asset acquisitions are amortised over their useful life in the statutory results but excluded from management earnings. The amortisation of these intangibles for the year ended 30 June 2016 was $64.0 million. Amortisation of intangibles purchased outside of business combinations (eg, mortgage servicing rights) is included as a charge against management earnings.

Acquisitions and disposals

A liability of $47.3 million was recognised for contingent consideration payable to the sellers of Homeloan Management Limited. An acquisition accounting adjustment related to the Registrar and Transfer Company resulted in a benefit of $1.0 million.
The finalisation of disposal accounting for the Russian registry business, VEM (a corporate actions bank located in Germany) and the Australian ConnectNow business resulted in a loss of $25.9 million due to a write-off of the associated cumulative translation differences from the foreign currency translation reserve. The cumulative translation differences are only reclassified to profit or loss when the disposal process has been completed and control over a foreign subsidiary is lost. The Russian registry business and VEM were classified as held for sale as at 30 June 2015.
A gain of $8.9 million was recorded on acquisition of assets under the mortgage servicing contract with UK Asset Resolution Limited.
Acquisition and disposal related expenses of $2.4 million were incurred associated with recent acquisitions and disposals including Gilardi & Co, Capital Markets Cooperative, Homeloan Management Limited, Altavera, SyncBASE and ConnectNow.
Restructuring costs of $1.3 million were incurred for the Gilardi & Co, Valiant Trust Company and SyncBASE acquisitions.
A property in the UK was written down to fair value less cost of disposal on classification as ‘held for sale’ resulting in a loss of $1.7 million.
A gain of $0.3 million was recorded on sale of the Japanese joint venture interest.

Other

Costs of $8.5 million were incurred in relation to the major operations rationalisation underway in Louisville, USA.
The put option liability re-measurement resulted in an expense of $7.5 million related to the Karvy joint venture arrangement in India.
Derivatives that have not received hedge designation are marked to market at the reporting date and taken to profit and loss in the statutory results. The marked to market valuation resulted in a gain of $2.3 million.

For the year ended 30 June 2015 management adjustment items were as follows:

	For the year ended 30 June 2015 management adjustment items were as follows:
		Gross Tax effect Net of tax
		$000 $000 $000
	Amortisation
	Intangible assets amortisation	(90,065) 31,545 (58,520)
	Acquisitions and disposals
	Gain on disposal	7,288 343 7,631
	Acquisition and disposal accounting adjustments	11,383 (4,800) 6,583
	Acquisition and disposal related restructuring costs	(9,094) 3,080 (6,014)
	Asset write-down	(5,241) - (5,241)
	Acquisition and disposal related expenses	(4,540) 988 (3,552)
	Gain on acquisition	670 - 670
	Other
	Voucher Services impairment	(109,536) - (109,536)
	Put option liability re-measurement	(7,749) - (7,749)
	Marked to market adjustments - derivatives	(3,179) 975 (2,204)
	Major restructuringcosts	(2,050) 824 (1,226)
	Total management adjustment items	(212,113) 32,955 (179,158)

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

4. SEGMENT INFORMATION (Appendix 4E item 14.4)

The operating segments presented reflect the manner in which the Group has been internally managed and the financial information reported to the chief operating decision maker (CEO) in the current financial year. The Group has determined the operating segments based on the reports reviewed by the CEO that are used to make strategic decisions and assess performance.

There are seven operating segments. Six of them are geographic: Asia, Australia and New Zealand, Canada, Continental Europe, UCIA (United Kingdom, Channel Islands, Ireland & Africa) and the United States of America. In addition, Technology and Other segment comprises the provision of software specialising in share registry and financial services. It is also a research and development function, for which discrete financial information is reviewed by the CEO.

In each of the six geographic segments the consolidated entity offers a combination of its core products and services: investor services, business services, plan services, communication services and stakeholder relationship management services. Investor services comprise the provision of registry maintenance and related services. Business services comprise the provision of bankruptcy class action and utilities administration services, voucher services, corporate trust services and mortgage servicing activities. Plan services comprise the provision of administration and related services for employee share and option plans. Communication services comprise laser imaging, intelligent mailing, inbound process automation, scanning and electronic delivery. Stakeholder relationship management services comprise the provision of investor analysis, investor communication and management information services to companies, including their employees, shareholders and other securities industry participants.

Corporate function includes entities whose main purpose is to hold intercompany investments and conduct financing activities. It is not considered an operating segment and includes activities that are not allocated to other operating segments.

OPERATING SEGMENTS

	Asia Australia & New Zealand Canada Continental Europe Technology & Other UCIA United States Total

	$000 $000 $000 $000 $000 $000 $000 $000
June 2016
Total segment revenue and other income	128,029 266,897 166,080 80,986 223,491 359,390 957,850 2,182,723
External revenue and other income	124,413 265,932 164,274 80,772 15,679 356,615 953,816 1,961,501
Intersegment revenue	3,616 965 1,806 214 207,812 2,775 4,034 221,222
Management adjusted EBITDA	45,231 45,741 67,440 13,732 25,233 100,036 226,392 523,805

June 2015
Total segment revenue and other income	124,596 309,635 186,660 113,299 226,705 358,562 870,521 2,189,978
External revenue and other income	122,350 308,928 184,567 112,979 17,407 354,368 867,473 1,968,072
Intersegment revenue	2,246 707 2,093 320 209,298 4,194 3,048 221,906
Management adjusted EBITDA	42,217 51,652 76,595 22,161 30,646 118,966 213,549 555,786

10 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

Segment revenue

The revenue reported to the CEO is measured in a manner consistent with that of the statement of comprehensive income. Sales between segments are included in the total segment revenue, whereas sales within a segment have been eliminated from segment revenue. Sales between segments are at normal commercial rates and are eliminated on consolidation.

Segment revenue reconciles to total revenue from continuing operations as follows:

Segment revenue reconciles to total revenue from continuing operations as follows:
	2016 2015
	$000 $000
Total operating segment revenue and other income	2,182,723 2,189,978
Intersegment eliminations	(221,222) (221,906)
Corporate revenue and other income	(376) 3,180
Total revenue from continuing operations	1,961,125 1,971,252

Management adjusted EBITDA

Management adjusted results are used, along with other measures to assess operating business performance. The Group believes that exclusion of certain items permits better analysis of the Group’s performance on a comparative basis and provides a better measure of underlying operating performance.

A reconciliation of management adjusted EBITDA to operating profit before income tax is provided as follows:

					2016 2015
					$000 $000
	Management adjusted EBITDA - operating segments				523,805 555,786
	Management adjusted EBITDA - corporate				8,804 (1,694)
	Management adjusted EBITDA				532,609 554,092
	Management adjustment items (before related income tax effect):
	Amortisation of intangible assets				(96,134) (90,065)
	Acquisition and disposal accounting adjustments				(45,642) 11,383
	Foreign currency translation reserve write-off on disposals				(25,904) -
	Gain on acquisition				11,113 670
	Acquisition and disposal related expenses				(3,480) (4,540)
	Acquisition related restructuring costs				(2,002) (9,094)
	Asset write-down				(1,687) (5,241)
	Gain on disposal				325 7,288
	Voucher Services impairment				- (109,536)
	Major restructuring costs				(14,545) (2,050)
	Put option liability re-measurement				(7,526) (7,749)
	Marked to market adjustments - derivatives				3,244 (3,179)
	Total management adjustment items (note 3)				(182,238) (212,113)
	Finance costs				(54,480) (51,957)
	Other amortisation and depreciation				(50,882) (46,851)
	Profit before income tax from continuing operations				245,009 243,171

11 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

5. RECONCILIATION OF INCOME TAX EXPENSE

5. RECONCILIATION OF INCOME TAX EXPENSE
Numerical reconciliation of income tax expense to prima facie tax payable
	2016 2015
	$000 $000

Profit before income tax expense	245,009 243,171

The tax expense for the financial year differs from the amount calculated on the profit.
The differences are reconciled as follows:

Prima facie income tax expense thereon at 30%	73,503 72,951

Tax effect of permanent differences:
Contingent consideration re-measurement	9,463 -
Prior year tax (over)/under provided	5,142 3,927
Research and development allowance	(1,733) (2,327)
Variation in tax rates of foreign controlled entities	(472) (4,277)
Voucher Services goodwill impairment	- 32,861
Net other deductible	(2,692) (17,242)
Income tax expense	83,211 85,893

6. RECONCILIATION OF NET PROFIT AFTER TAX TO CASH FLOWS FROM OPERATING ACTIVITIES

	2016 2015
	$000 $000

Net profit after income tax	161,798 157,278
Adjustments for non-cash income and expense items:
Depreciation and amortisation	147,016 136,916
Contingent consideration re-measurement	45,642 (9,434)
Net (gain)/loss on asset disposals and asset write-downs	27,266 (2,291)
Gain on acquisition	(11,113) (670)
Share of net (profit)/loss of associates and joint ventures accounted for using equity method	1,349 2,316
Employee benefits – share based expense	10,366 16,535
Impairment charge – Voucher Services	- 109,536
Fair value adjustments	3,889 10,911
Changes in assets and liabilities:
(Increase)/decrease in receivables	(64,164) (19,162)
(Increase)/decrease in inventories	(1,710) 2,482
(Increase)/decrease in loan servicing advances	(68,137) (44,522)
(Increase)/decrease in other current assets	5,116 10,207
Increase/(decrease) in payables and provisions	21,160 (24,334)
Increase/(decrease)in tax balances	26,169 26,364
Net cash and cash equivalents from operating activities	304,647 372,132

7. BUSINESS COMBINATIONS

The Group continues to seek acquisition and other growth opportunities where value can be added and returns enhanced for the shareholders. The following significant controlled entities and businesses were acquired by the consolidated entity at the date stated and their operating results have been included in the Group’s results from the acquisition date.

(a) On 29 April 2016, Computershare acquired Capital Markets Cooperative, LLC (CMC), based in Florida, USA. CMC is a service provider to mortgage originator clients with a substantial mortgage servicing rights co-issue programme. Total consideration was $98.1 million, which included deferred consideration of $10.2 million and contingent consideration of $5.6 million, which is subject to certain performance hurdles being satisfied. Contingent consideration is based on the best estimate at acquisition date and does not contain a cap.
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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

This business combination contributed $5.5 million to the total revenue of the group. Had the acquisition occurred on 1 July 2015, the total revenue contribution to the Group by the acquired entity would have been $25.9 million.

Details of the acquisition are as follows:

Details of the acquisition are as follows:
	$000
Cash consideration	82,303
Deferred consideration	10,192
Contingent consideration	5,587
Total consideration paid	98,082
Less fair value of identifiable assets acquired	(53,048)
Provisional goodwillon consolidation*	45,034

*Identification and valuation of net assets acquired will be completed within the 12 month measurement period in accordance with the Group's accounting policy.

Assets and liabilities arising from this acquisition are as follows:

	Assets and liabilities arising from this acquisition are as follows:
			Fair value
			$000
	Cash		8,238
	Receivables		3,200
	Loan servicing advances		503
	Current tax assets		1,704
	Derivative financial instruments		857
	Other current assets		177
	Property, plant and equipment		848
	Mortgage servicing rights		43,085
	Payables		(1,807)
	Other current liabilities		(579)
	Deferred tax liability		(3,178)
	Net assets		53,048

	Purchase consideration:
	Inflow/(outflow) of cash to acquire the entity, net of cash acquired:
			$000
	Cash balance acquired		8,238
	Less cashpaid		(82,303)
	Net inflow/(outflow) of cash		(74,065)

(b) On 4 May 2016, Computershare was appointed by UK Asset Resolution Limited (UKAR) to undertake its mortgage servicing activities under a seven year contract covering GBP 30 billion of UKAR mortgages. In addition, Computershare entered into separate contracts for the servicing of the GBP 11 billion of assets purchased by other parties from UKAR in November 2015. As part of the contract, Computershare acquired around 1,700 staff as well as certain assets and liabilities of UKAR effective 6 June 2016. Consideration paid for the assets acquired was GBP 1. Computershare also paid a working capital adjustment to the sellers of $0.5 million.

Due to the structure determined by the UK Government for award of the UKAR contract, business combination accounting rules are applicable, which resulted in a gain on acquisition of $11.1 million as the total value of net assets acquired exceeded the purchase consideration. The gain is included in other income in the statement of comprehensive income and is excluded from management earnings.

This business combination did not materially contribute to the total revenue of the Group in the year ended 30 June 2016.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

Details of the acquisition are as follows:

Details of the acquisition are as follows:
	$000
Total cash paid	507
Less fair value of identifiable assets acquired	(11,620)
Provisional gainon acquisition*	(11,113)
*Identification and valuation of net assets acquired will be completed within the 12 month measurement period in accordance with
the Group's accounting policy.

Details of the acquisition are as follows:	Details of the acquisition are as follows:	Details of the acquisition are as follows:
$000
Total cash paid 507
Less fair value of identifiable assets acquired (11,620)
Provisional gainon acquisition (11,113)*
*Identification and valuation of net assets acquired will be completed within the 12 month measurement period in accordance with the Group's accounting policy.

	Assets and liabilities arising from this acquisition are as follows:
		Fair value
		$000
	Other current assets	2,702
	Property, plant and equipment	1,548
	Customer contracts and related relationships	12,700
	Payables	(2,195)
	Provisions	(595)
	Deferred tax liability	(2,540)
	Net assets	11,620

	Purchase consideration:
	Inflow/(outflow) of cash, net of cash acquired:
		$000
	Cash considerationpaid	(507)
	Net inflow/(outflow) of cash	(507)

(c) On 27 August 2015 Computershare acquired 100% of Gilardi & Co., LLC (Gilardi), based in San Rafael, California, USA. Gilardi is a securities and anti-trust class actions claims administration business and complements Computershare’s KCC business and its integrated suite of corporate restructuring, class action and legal document support solutions. Total consideration was $41.9 million, which included contingent consideration of $11.1 million. Contingent consideration is dependent on achieving net billable revenue targets over a three year period and is capped at $11.1 million.

This business combination contributed $29.2 million to the total revenue of the group. Had the acquisition occurred on 1 July 2015, the total revenue contribution to the Group by the acquired entity would have been $34.2 million.

Details of the acquisition are as follows:

	$000
Cash consideration	30,814
Contingent consideration	11,070
Total consideration paid	41,884
Less fair value of identifiable assets acquired	(37,620)
Goodwill on consolidation	4,264

Assets and liabilities arising from this acquisition are as follows:
	Fair value
	$000
Cash	62
Current receivables	6,847
Other current assets	484
Plant, property and equipment	182
Customer contracts and related relationships	32,410
Intellectual property	1,300
Brand name	1,050
Deferred tax assets	627
Current payables	(5,216)
Other current liabilities	(126)
Net assets	37,620

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

SUPPLEMENTARY APPENDIX 4E INFORMATION
Purchase consideration:		$000 62 (30,814) (30,752)
Inflow/(outflow) of cash to acquire the entity, net of cash acquired:

Cash balance acquired
Less cashpaid
Net inflow/(outflow) of cash
8. CONTRIBUTED EQUITY(Appendix 4E item 14.2)
		2016 2015
		$000 $000
Ordinaryshares		- 35,703
Total contributed equity		- 35,703

On 18 August 2015, Computershare announced an on-market buy-back of shares with an aggregate value of up to AUD 140.0 million for capital management purposes.

From 1 September 2015 until 30 June 2016, the Company purchased 9,377,069 ordinary shares at a total cost of AU$100.6 million (US$73.2 million). The shares were acquired at an average price of AU$10.73 and a price range from AU$9.00 to AU$11.86. As at 30 June 2016, 9,056,656 of the purchased ordinary shares have been cancelled.

Since the effect of share buy-backs over the years has reduced contributed equity to nil, a reserve has been created to reflect the excess value of shares bought over the original amount of subscribed capital.

There has been no issue of ordinary shares during the year ended 30 June 2016.

Movement in contributed equity
	Number of shares $000
Balance at 1 July 2015	556,203,079 35,703
Share buy-back	(9,377,069) (73,172)
Transfer to share buy-back reserve	- 37,469
Balance at 30 June 2016	546,826,010 -

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

9. CONTROLLED ENTITIES ACQUIRED OR DISPOSED OF (Appendix 4E item 10)

Acquired	Date control gained
Gilardi & Co., LLC	27 August 2015
Gilco LLC	27 August 2015
Data Point Analysis Group, LLC	27 August 2015
SyncBASE Inc.	31 January 2016
PR im Turm HV-Service AG	1 February 2016
Capital Markets Holdings, Inc.	29 April 2016
Capital Markets Cooperative, LLC	29 April 2016
CMC Funding, Inc.	29 April 2016
Altavera LLC	13 May 2016
Altavera Mortgage Services LLC	13 May 2016
Disposed	Date control lost
Closed Joint Stock Company "Computershare Registrar"	17 July 2015
Computershare LLC (Russia)	17 July 2015
VEM Aktienbank AG	31 July 2015

10. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE

	2016 2015
	$000 $000
Assets classified as held for sale:
Cash and cash equivalents	- 48,814
Financial assets held for trading	- 1,904
Property, plant and equipment	26,128 -
Other	- 840
Total assets held for sale	26,128 51,558

Liabilities directly associated with assets classified as held for sale:
Payables	- 12,816
Total liabilities held for sale	- 12,816

On 26 April 2016, Computershare announced the sale of the land and building housing its Australian head office. The sale will be completed on 9 September 2016 and is expected to result in a gain of $40.3 million, which will be recorded in next year’s results. Separately, the sale process of a building located in the United Kingdom is underway and is expected to be completed within the next twelve months. The building was acquired as part of the original IML acquisition. Both the Australian head office building and land as well as the building in the UK are classified as held for sale as at 30 June 2016.

Land and buildings classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell at the time of the reclassification, and are presented separately within current assets in the consolidated statement of financial position. A loss of $1.7 million before tax resulting from the write-down of the United Kingdom property to fair value less cost of disposal has been recognised in the direct services expense line of the consolidated statement of comprehensive income.

The sale process of VEM Aktienbank AG (VEM), a corporate action bank located in Germany, was completed on 31 July 2015 and sale of the Russian registry business was completed on 17 July 2015. VEM and Russia were classified as disposal groups held for sale as at 30 June 2015. The finalisation of disposal accounting for VEM and Russia resulted in a loss of $25.9 million due to a write-off of the associated cumulative translation differences from the foreign currency translation reserve. The cumulative translation differences are only reclassified to profit or loss when the disposal process has been completed and control over a foreign subsidiary is lost.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

11. ASSOCIATES AND JOINT VENTURE ENTITIES (Appendix 4E item 11)

11. ASSOCIATES AND JOINT VENTURE ENTITIES(Appendix 4E item 11)
Name Place of incorporation Principal activity Ownership interest	Consolidated carrying amount
June June	June June
2016 2015	2016 2015
% %	$000 $000

Joint Ventures
Japan Shareholder Services Ltd Japan Technology Services -* 50	- 1,415
Computershare Pan Africa Holdings Ltd Mauritius Investor Services 60 60	- -
Computershare Pan Africa Ghana Ltd Ghana Investor Services 60 60	- -
Computershare Pan Africa Nominees Ghana Ltd Ghana Investor Services 60 60	- -
Asset Checker Ltd United Kingdom Investor Services 50 50	- -
VisEq GmbH Germany Investor Services 66 66	104 143

Associates
Expandi Ltd United Kingdom Investor Services 25 25	6,045 6,226
Milestone Group Pty Ltd Australia Technology Services 20 20	5,623 6,004
The Reach Agency Pty Ltd Australia Investor Services 49 49	1,244 1,068
INVeShare United States Investor Services 40 40	14,326 16,713
Mergit s.r.l Italy TechnologyServices 30 30	15 27
	27,357 31,596

*Japan Shareholder Services Ltd was disposed on 30 September 2015.

The share of net profit/loss of associates and joint ventures accounted for using the equity method for the year ended 30 June 2016 is a $1.3 million loss (2015: $2.3 million loss).

12. OTHER SIGNIFICANT INFORMATION (Appendix 4E item 12)

Refer to the Market Announcement and Management Presentation.

13. ADDITIONAL DIVIDEND INFORMATION (Appendix 4E item 7)

Details of dividends declared or paid during or subsequent to the year ended 30 June 2016 are as follows:

Record date	Payment date	Type	Amount per security	Total dividend	Franked amount per security	Conduit Foreign Income amount per security
20 August 2015	15 September 2015	Final	AU 16 cents	AUD 88,991,746	AU 4.0 cents	AU 12.0 cents
22 February 2016	16 March 2016	Interim	AU 16 cents	AUD 87,751,688	AU 16.0 cents	AU 0.0 cents
17 August 2016	13 September 2016	Final	AU 17 cents	AUD 92,875,422*	AU 3.4 cents**	AU 13.6 cents

Based on 546,326,010 shares on issue as at 10 August 2016

** Dividend franked to 20%

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

14. DIVIDEND REINVESTMENT PLANS (Appendix 4E item 8)

Computershare operates a Dividend Reinvestment Plan (DRP) which provides eligible shareholders with the opportunity to elect to take all or part of dividends in the form of shares in accordance with the DRP plan rules. Shares are provided under the plan free of brokerage and other transaction costs and will rank equally with all other ordinary shares on issue.

The DRP will apply to the final dividend declared in respect of the current financial year on 10 August 2016. Applications or notices received after 5.00pm (Melbourne time) on 18 August 2016 will not be effective for payment of this final dividend but will be effective for future dividend payments.

The DRP price for the final dividend will be equal to the arithmetic average of the daily volume weighted average market price (rounded to the nearest cent) of all shares sold through a normal trade on the ASX automated trading system during the DRP pricing period for this dividend, being 23 August 2016 to 5 September 2016 (inclusive). No discount will apply to the DRP price.

15. RETAINED EARNINGS (Appendix 4E item 6)

15. RETAINED EARNINGS(Appendix 4E item 6)
	2016 2015
	$000 $000
Retained earnings
Retained earnings at the beginning of the financial year	1,147,906 1,134,305
Ordinary dividends provided for or paid	(128,550) (139,975)
Netprofit/(loss)attributable to members of Computershare Limited	157,334 153,576
Retained earnings at the end of the financial year	1,176,690 1,147,906
16. NTA BACKING(Appendix 4E item 9)
	2016 2015
Net tangible asset backing per ordinary share	(2.48) (2.08)

17. COMMENTARY ON RESULTS (Appendix 4E item 14)

Refer to the Market Announcement and Management Presentation.

18. SIGNIFICANT FEATURES OF OPERATING PERFORMANCE (Appendix 4E item 14.3)

Refer to the Market Announcement and Management Presentation.

19. TRENDS IN PERFORMANCE (Appendix 4E item 14.5)

Refer to the Market Announcement and Management Presentation.

20. OTHER FACTORS THAT AFFECTED RESULTS IN THE PERIOD OR WHICH ARE LIKELY TO AFFECT RESULTS IN THE FUTURE (Appendix 4E item 14.6)

Refer to the Market Announcement and Management Presentation.

21. AUDIT STATUS (Appendix 4E item 15)

This report is based on accounts which are in the process of being audited.

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AI assistant

COMPUTERSHARE LIMITED. — Annual Report 2016

64696_rns_2016-08-09_435563c3-972f-4f39-906e-9d34bfb89694.pdf

ASX PRELIMINARY FINAL REPORT