COMPUTERSHARE LIMITED. — Annual Report 2018

Aug 14, 2018

ASX PRELIMINARY FINAL REPORT

Computershare Limited

ABN 71 005 485 825

30 JUNE 2018

Lodged with the ASX under Listing Rule 4.3A

Contents

Contents
Results for announcement to the market	2
Appendix 4E item 2
Preliminary consolidated statement of comprehensive income	4
Appendix 4E item 3
Preliminary consolidated statement of financial position	5
Appendix 4E item 4
Preliminary consolidated statement of changes in equity	6
Preliminary consolidated statement of cash flows	7
Appendix 4E item 5
Supplementary Appendix 4E information	8
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 2018 (Previous corresponding period year ended 30 June 2017)

RESULTS FOR ANNOUNCEMENT TO THE MARKET

				$000
Revenuefrom continuing operations	up	8.7%	to	2,289,889
(Appendix 4E item 2.1)
Profit/(loss)after tax attributable to members	up	12.6%	to	300,064
(Appendix 4E item 2.2)
Net profit/(loss)for the period attributable to members	up	12.6%	to	300,064
(Appendix 4E item 2.3)
Dividends	Amount per security			Franked amount
(Appendix 4E item 2.4)				per security
Final dividend		AU 21 cents		AU 21 cents
Interim dividend		AU 19 cents		AU 0 cents

Record date for determining entitlements to the final dividend (Appendix 4E item 2.5) 22 August 2018

Explanation of revenue (Appendix 4E item 2.6)

Total revenue from continuing operations for the year ended 30 June 2018 was $2,289.9 million, an increase of 8.7% over the corresponding period. The US region was the main driver of growth with large events and margin income benefiting stakeholder relationship management, class actions and corporate actions. There was also a 15% uplift in US mortgage servicing driven by our focus on the key priorities and growth opportunities that have continued to build scale within the business.

Register maintenance revenues were slightly down for the year with positive contributions from Switzerland, the UK and Hong Kong being more than offset by declines in the US, Australia and Germany. In addition to the strong performance of the US region, corporate activity in Hong Kong and Ireland showed modest improvement in the year. India’s mutual fund administration support services (business services) was up, driven by higher levels of assets under management. Plan managers was flat for the year as improved transactional activity in Hong Kong and Continental Europe was offset by lower activity in Canada and the US.

Margin income increased during the period primarily driven by interest rate increases in the US and higher average client balances. The stronger British pound, Australian dollar and Canadian dollar relative to the prior period improved the translated contribution in those regions.

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

Net statutory profit after tax attributable to members was $300.1 million, an increase of 12.6% over the

corresponding period. This was supported by higher margin income and an improved operating performance in the US with growth in US mortgage services and solid event activity in class actions, corporate actions and stakeholder relationship management.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES YEAR ENDED 30 JUNE 2018 (Previous corresponding period year ended 30 June 2017)

RESULTS FOR ANNOUNCEMENT TO THE MARKET

The Group’s income tax expense for the year ended 30 June 2018 was significantly lower than the previous corresponding period as it included a one-off $44.7 million income tax credit due to the US Tax Cuts and Jobs Act 2017 which became effective on 1 January 2018. The key change was the reduction of the federal corporate tax rate from 35% to 28% for Computershare’s financial year ended 30 June 2018 and to 21% for years beginning after 30 June 2018, which required a restatement of the US deferred tax balances. The current period’s tax expense also included the effect of changes in tax rates other than due to US tax reform and a oneoff Australian foreign income accruals regime tax payable due to the acquisition of Equatex.

Overall, the current period’s net profit after tax showed an improvement over the 30 June 2017 result, despite the non-recurrence of significant items such as the $48.8 million gain on the sale of the Group’s headquarters in Melbourne, Australia and the disposal of the Company’s investment in INVeSHARE recorded in the prior period.

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

Please refer above.

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 2017 was declared on 16 August 2017 and paid on 18 September 2017. This was an ordinary unfranked dividend of AU 19 cents per share, amounting to AUD 103,727,282 ($80,470,502).

An interim dividend was declared on 14 February 2018 and paid on 16 March 2018. This was an ordinary unfranked dividend of AU 19 cents per share, amounting to AUD 103,137,695 ($80,013,107).

A final dividend in respect of the year ended 30 June 2018 was declared by the directors of the Company on 15 August 2018, to be paid on 17 September 2018. This is an ordinary dividend of AU 21 cents per share, franked to 100%. As the dividend was not declared until 15 August 2018, a provision was not recognised as at 30 June 2018.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018

FOR THE YEAR ENDED 30 JUNE 2018
Note Revenue from continuing operations Sales revenue Other revenue Total revenue from continuing operations Other income Expenses Direct services Technology costs Corporate services Finance costs Total expenses Share of net profit/(loss) of associates and joint ventures accounted for using the equity method 11 Profit before related income tax expense Income tax expense/(credit) 5 Profit for the year Other comprehensive income that may be reclassified to profit or loss Available-for-sale financial assets Cash flow hedges Exchange differences on translation of foreign operations Income tax relating to components of other comprehensive income Total other comprehensive income for the year, net of tax Total comprehensive income for the year Profit for the year attributable to: Members of Computershare Limited Non-controlling interests Total comprehensive income for the year attributable to: Members of Computershare Limited Non-controlling interests Basic earnings per share (cents per share) 3 Diluted earnings per share (cents per share) 3	2018 2017 $000 $000 2,282,728 2,100,811 7,161 4,951
	2,289,889 2,105,762 11,218 62,365 1,537,138 1,438,887 284,302 286,432 27,951 23,145 62,117 54,394
	1,911,508 1,802,858 297 655 389,896 365,924 81,567 94,223
	308,329 271,701
	(15) 11 44 - (13,657) 5,680 2,711 (4,078)
	(10,917) 1,613
	297,412 273,314
	300,064 266,395 8,265 5,306
	308,329 271,701
	291,009 266,919 6,403 6,395
	297,412 273,314
	55.17 cents 48.76 cents 55.05 cents 48.68 cents

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

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018

AS AT 30 JUNE 2018
Note CURRENT ASSETS Cash and cash equivalents Bank deposits Receivables Loan servicing advances Available-for-sale financial assets Other financial assets Inventories Current tax assets Derivative financial instruments Other current assets Assets classified as held for sale 10 Total current assets NON-CURRENT ASSETS Receivables Investments accounted for using the equity method 11 Available-for-sale financial assets Property, plant and equipment Deferred tax assets Derivative financial instruments Intangibles Total non-current assets Total assets CURRENT LIABILITIES Payables Interest bearing liabilities Current tax liabilities Provisions Derivative financial instruments Deferred consideration Mortgage servicing related liabilities Liabilities directly associated with assets classified as held for sale 10 Other liabilities Total current liabilities NON-CURRENT LIABILITIES Payables Interest bearing liabilities Deferred tax liabilities Provisions Derivative financial instruments Deferred consideration Mortgage servicing related liabilities Other liabilities Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity 8 Reserves Retained earnings 15 Total parent entity interest Non-controlling interests Total equity	2018 2017 $000 $000 500,888 489,917 6,539 6,505 428,973 422,805 156,689 217,752 4,361 1,583 16,517 19,396 3,844 3,748 2,236 4,026 1,791 470 40,079 28,417 79,999 57,082
	1,241,916 1,251,701 152 49 26,770 11,021 26,566 34,391 115,249 109,897 145,654 178,675 4,263 19,440 2,327,626 2,341,856
	2,646,280 2,695,329
	3,888,196 3,947,030
	442,270 433,973 427,292 117,228 42,319 44,816 50,746 46,616 88 3,653 29,432 21,914 27,740 25,323 69,639 57,413 2,083 2,205
	1,091,609 753,141 2,842 4,300 1,053,844 1,455,837 193,026 258,251 24,762 26,635 5,333 3,374 26,110 48,953 154,404 157,347 2,869 2,164
	1,463,190 1,956,861
	2,554,799 2,710,002
	1,333,397 1,237,028
	- - (148,098) (98,487) 1,455,187 1,315,607
	1,307,089 1,217,120 26,308 19,908
	1,333,397 1,237,028

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

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018

Attributable to members of Computershare Limited

Note Total equity at 1 July 2017 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 Cash purchase of shares on market Share based remuneration Balance at 30 June 2018	Contributed Equity Reserves Retained Earnings Total Non- controlling Interests Total Equity $000 $000 $000 $000 $000 $000 - (98,487) 1,315,607 1,217,120 19,908 1,237,028 - - 300,064 300,064 8,265 308,329 - (15) - (15) - (15) - 44 - 44 - 44 - (11,795) - (11,795) (1,862) (13,657) - 2,711 - 2,711 - 2,711
	- (9,055) 300,064 291,009 6,403 297,412
	- - (160,484) (160,484) (3) (160,487) - (38,533) - (38,533) - (38,533) - (20,158) - (20,158) - (20,158) - 18,135 - 18,135 - 18,135
	- (148,098) 1,455,187 1,307,089 26,308 1,333,397

Attributable to members of Computershare Limited

Total equity at 1 July 2016 Profit for the year Available-for-sale financial assets 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 Cash purchase of shares on market Share based remuneration Balance at 30 June 2017	Contributed Equity Reserves Retained Earnings Total Non- controlling Interests Total Equity $000 $000 $000 $000 $000 $000 - (95,872) 1,188,890 1,093,018 13,515 1,106,533 - - 266,395 266,395 5,306 271,701 - 11 - 11 - 11 - 4,591 - 4,591 1,089 5,680 - (4,078) - (4,078) - (4,078)
	- 524 266,395 266,919 6,395 273,314
	- - (139,678) (139,678) (2) (139,680) - (3,458) - (3,458) - (3,458) - (15,105) - (15,105) - (15,105) - 15,424 - 15,424 - 15,424
	- (98,487) 1,315,607 1,217,120 19,908 1,237,028

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

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES PRELIMINARY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018

Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Loan servicing advances (net) Dividends received from associates, joint ventures and equity securities Interest paid and other finance costs Interest received Income taxes paid Net operating cash flows 6(a) CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchase of controlled entities and businesses (net of cash acquired) and intangible assets including MSRs Proceeds from sale of property, plant and equipment (Payments for)/proceeds from disposal of associates and joint ventures Proceeds from/(payments for) investments Payments for property, plant and equipment Net investing cash flows CASH FLOWS FROM FINANCING ACTIVITIES Payment for purchase of ordinary shares - share based awards Proceeds from borrowings 6(b) Repayment of borrowings 6(b) Loan servicing borrowings (net) 6(b) Dividends paid - ordinary shares (net of dividend reinvestment plan) Purchase of ordinary shares - dividend reinvestment plan Dividends paid to non-controlling interests in controlled entities Payments for on-market share buy-back Repayment of finance leases 6(b) Net financing cash flows Net increase/(decrease) in cash and cash equivalents held Cash and cash equivalents at the beginning of the financial year Exchange rate variations on foreign cash balances Cash and cash equivalents at the end of the year*

2018 2017 $000 $000 2,390,107 2,201,306 (1,794,529) (1,670,948) 61,063 37,387 4,337 2,469 (63,014) (56,136) 2,968 2,912 (86,881) (59,308) 514,051 457,682 (121,164) (110,700) - 66,240 (11,866) 23,786 3,776 1,489 (39,361) (34,215) (168,615) (53,400) (20,158) (15,105) 1,337,297 466,047 (1,353,618) (680,565) (75,697) (13,586) (150,116) (129,672) (10,368) (10,006) (3) (2) (38,533) (3,458) (5,390) (30,071) (316,586) (416,418) 28,850 (12,136) 510,683 526,575 (4,864) (3,756) 534,669 510,683

*Cash and cash equivalents at 30 June 2018 includes $33.8 million (2017: $20.8 million) cash presented in the assets classified as held for sale line item in the consolidated statement of financial position.

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

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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 15 August 2018 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 2018 Earnings per share (cents per share) Reconciliation of earnings Profit for the year Non-controlling interest (profit)/loss Add back management adjustment items (see below) Net profit attributable to the members of Computershare Limited Weighted average number of ordinary shares used as denominator in calculating earnings per share	Basic EPS Diluted EPS Management Basic EPS Management Diluted EPS 55.17 cents 55.05 cents 63.38 cents 63.24 cents $000 $000 $000 $000 308,329 308,329 308,329 308,329 (8,265) (8,265) (8,265) (8,265) - - 44,631 44,631
	300,064 300,064 344,695 344,695
	543,874,751 545,090,537 543,874,751 545,090,537

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

Year ended 30 June 2017	Basic EPS	Diluted EPS	Diluted EPS	Management	Management
				Basic EPS	Diluted EPS
Earnings per share (cents per share)	48.76 cents	48.68	cents	54.41 cents	54.32 cents
Reconciliation of earnings	$000		$000	$000	$000
Profit for the year	271,701	271,701		271,701	271,701
Non-controlling interest (profit)/loss	(5,306)	(5,306)		(5,306)	(5,306)
Add back management adjustment items (see
below)	-		-	30,877	30,877
Net profit attributable to the members of
Computershare Limited	266,395	266,395		297,272	297,272
Weighted average number of ordinary shares
used as denominator in calculating earnings per	546,330,942	547,259,360		546,330,942	547,259,360
share
Reconciliation of weighted average number of shares used as the denominator:
				2018	2017
				Number	Number
Weighted average number of ordinary shares used	as the denominator	in calculating
basic earnings per share				543,874,751	546,330,942
Adjustments for calculation of diluted earnings per	share:
Performance rights				1,215,786	928,418
Weighted average number of ordinary shares and potential ordinary shares used			as
the denominator in calculating diluted earnings per share				545,090,537	547,259,360

The weighted average number of potential dilutive ordinary shares excludes 533,458 performance rights (2017: 1,880,713) as they are not dilutive for the year ended 30 June 2018. These performance rights could potentially dilute basic earnings per share in the future.

No employee performance rights have been issued since year end.

For the year ended 30 June 2018 management adjustment items were as follows:

Amortisation Amortisation of intangible assets Acquisitions and disposals Acquisition accounting adjustments Acquisition and disposal related expenses One-off accruals regime tax payable due to acquisition of Equatex Tax on expected disposal of Karvy Other Restatement of deferred tax balances due to US tax reform Put option liability re-measurement Major restructuring costs Voucher Services impairment Marked to market adjustments – derivatives Total management adjustment items

Gross Tax effect Net of tax $000 $000 $000 (52,432) 15,427 (37,005) (7,606) - (7,606) (5,694) 281 (5,413) - (5,244) (5,244) - (3,777) (3,777) - 44,692 44,692 (13,577) - (13,577) (19,904) 6,528 (13,376) (3,621) - (3,621) 217 79 296

(102,617) 57,986 (44,631)

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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 2018 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 in the year ended 30 June 2018 was $37.0 million. Amortisation of intangibles purchased outside of business combinations (e.g. mortgage servicing rights) is included as a charge against management earnings.

Acquisitions and disposals

• An expense of $7.6 million was recognised for re-measurement of contingent consideration payable to the sellers of RicePoint Administration Inc., Capital Markets Cooperative, LLC and Homeloan Management Limited.

• Acquisition related expenses of $5.1 million were incurred, mainly associated with the acquisition of Equatex Group Holding AG (Equatex). Disposal related expenses of $0.4 million were incurred in relation to Karvy Computershare Private Limited (Karvy).

• Pursuant to the Australian foreign income accruals taxation rules, tax expense of $5.2 million was booked as a result of signing the agreement to acquire Equatex in May 2018.

• A deferred tax expense of $3.8 million was booked with regard to the carrying value of the Indian venture Karvy as it is expected that the value of this investment will be recovered through sale. The associated accounting gain on disposal will only be recognised once the disposal is completed.

Other

• A restatement of deferred tax balances due to the US tax reform resulted in a tax benefit of $44.7 million (refer to note 5).

• The put option liability re-measurement resulted in a loss of $13.6 million related to the Karvy joint venture arrangement in India.

• Costs of $13.4 million were incurred in relation to the major operations rationalisation underway in Louisville, USA, and the progress of the shared services and technology components of the structural cost-out programmes.

• As the remaining forecast cash flows of Computershare’s Voucher Services continue being realised, an impairment charge of $3.6 million was booked against goodwill related to this business. It is expected that the remaining goodwill of $11.8 million associated with Voucher Services will be written off in the coming years.

• 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 $0.3 million.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

For the year ended 30 June 2017 management adjustment items were as follows:

Amortisation Amortisation of intangible assets Acquisitions and disposals Gain on disposals Acquisition related restructuring costs Acquisition accounting adjustments Acquisition related expenses Other Major restructuring costs Voucher Services impairment Put option liability re-measurement Marked to market adjustments – derivatives Total management adjustment items	Gross Tax effect Net of tax $000 $000 $000 (59,928) 20,626 (39,302) 52,764 (3,926) 48,838 (1,836) 393 (1,443) 1,316 (260) 1,056 (891) 225 (666) (33,638) 13,161 (20,477) (11,315) - (11,315) (7,080) - (7,080) (693) 205 (488)
	(61,301) 30,424 (30,877)

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.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

OPERATING SEGMENTS

June 2018 Total segment revenue and other income External revenue and other income Intersegment revenue Management adjusted EBITDA June 2017 Total segment revenue and other income External revenue and other income Intersegment revenue Management adjusted EBITDA

Asia Australia & New Zealand Canada Continental Europe Technology & Other UCIA United States Total $000 $000 $000 $000 $000 $000 $000 $000

161,481 242,869 183,184 106,755 263,708 484,606 1,108,564 2,551,167 156,762 242,122 180,687 105,861 18,715 482,407 1,105,129 2,291,683 4,719 747 2,497 894 244,993 2,199 3,435 259,484 55,868 34,479 81,029 18,807 16,979 103,519 312,645 623,326 142,637 252,086 170,949 93,465 224,532 448,924 998,084 2,330,677 138,274 251,091 168,960 92,741 15,601 445,641 994,362 2,106,670 4,363 995 1,989 724 208,931 3,283 3,722 224,007 48,857 38,094 75,958 20,301 20,708 85,579 247,493 536,990

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:

Total operating segment revenue and other income Intersegment eliminations Corporate revenue and other income Total revenue from continuing operations	2018 2017 $000 $000 2,551,167 2,330,677 (259,484) (224,007) (1,794) (908)
	2,289,889 2,105,762

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

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:

Management adjusted EBITDA – operating segments Management adjusted EBITDA – corporate Management adjusted EBITDA Management adjustment items (before related income tax effect): Amortisation of intangible assets Acquisition accounting adjustments Acquisition and disposal related expenses Put option liability re-measurement Major restructuring costs Voucher Services impairment Marked to market adjustments - derivatives Gain on disposals Acquisition related restructuring costs Total management adjustment items (note 3) Finance costs Other amortisation and depreciation Profit before income tax from continuing operations	2018 2017 $000 $000 623,326 536,990 (680) 3,801
	622,646 540,791 (52,432) (59,928) (7,606) 1,316 (5,694) (891) (13,577) (7,080) (19,904) (33,638) (3,621) (11,315) 217 (693) - 52,764 - (1,836)
	(102,617) (61,301) (62,117) (54,394) (68,016) (59,172)
	389,896 365,924

5. RECONCILIATION OF INCOME TAX EXPENSE

Numerical reconciliation of income tax expense to prima facie tax payable

Profit before income tax expense 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% Tax effect of permanent differences: Restatement of deferred tax balances due to US tax reform Withholding tax not creditable Effect of changes in tax rates (excluding US tax reform) One-off accruals regime tax payable due to acquisition of Equatex Tax on expected disposal of Karvy Variation in tax rates of foreign controlled entities Prior year tax (over)/under provided Disposal of Australian head office premises and redemption of investment in INVeSHARE Net other Income tax expense

2018 2017 $000 $000 389,896 365,924 116,969 109,777 (44,692) - 9,142 3,718 (6,538) 4,950 5,244 - 3,777 - (2,201) (874) (1,739) 1,444 - (13,854) 1,605 (10,938)

81,567 94,223

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

US tax reform

Pursuant to the Tax Cuts and Jobs Act of 2017, the US federal corporate income tax rate was reduced from 35% to 28% for the year ended 30 June 2018 and to 21% for the subsequent years. Consequently, deferred tax asset and liability balances as at 30 June 2018 were restated using the new rates, giving rise to a tax benefit of $44.7 million.

In the financial year ending 30 June 2019, the net impact of the further reduction in the US federal corporate income tax rate together with the introduction of new taxes and the reduction or cessation of certain US tax deductions is not expected to be material.

Australian thin capitalisation

The Group has renewed an existing bilateral advance pricing arrangement with the Australian Taxation Office (ATO) and Her Majesty’s Revenue and Customs in relation to remuneration to be paid to the Australian Group from its ownership and licensing of certain intangible assets. As part of that process, the ATO undertook collateral review activities and issued a draft position paper challenging the inclusion of these intangible assets in the thin capitalisation calculation used by the Australian Group to determine the amount of tax deductible interest on Australian borrowings between 1 July 2010 and 30 June 2014. Computershare disagrees with the ATO’s views and responded to the draft position paper in September 2017. If the ATO maintains its views, Computershare intends to vigorously defend its position. This process may take some years to resolve. As the Group does not expect to pay additional tax related to this matter, no provision was recognised at 30 June 2018. If Computershare is unsuccessful in defending its position, the maximum potential primary tax liability in respect of the period from 1 July 2010 to 30 June 2018 excluding interest is estimated at $46.6 million.

6. CASH FLOW INFORMATION

(a) Reconciliation of net profit after tax to cash flows from operating activities

Net profit after income tax Adjustments for non-cash income and expense items: Depreciation and amortisation Net (gain)/loss on asset disposals and asset write-downs Contingent consideration re-measurement Gain on acquisition Share of net (profit)/loss of associates and joint ventures accounted for using equity method Employee benefits – share based expense Impairment charge – Voucher Services Fair value adjustments Changes in assets and liabilities: (Increase)/decrease in receivables (Increase)/decrease in inventories (Increase)/decrease in loan servicing advances (Increase)/decrease in other current assets Increase/(decrease) in payables and provisions Increase/(decrease) in tax balances Net cash and cash equivalents from operating activities

2018 2017 $000 $000 308,329 271,701 120,450 119,100 (26) (52,237) 7,606- - (1,316) (297) (655) 17,564 15,028 3,621 11,315 13,360 7,773 (26,577) (47,634) (144) 797 61,063 37,387 (11,681) 1,340 26,105 60,168 (5,322) 34,915

514,051 457,682

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4E INFORMATION

(b) Reconciliation of liabilities arising from financing activities

Opening balance at 1 July 2017 Cash flows Non-cash changes: Fair value adjustments Transfers and other Currency translation difference Balance at 30 June 2018	Current borrowings Non- current borrowings Current lease liabilities Non- current lease liabilities Cross currency swap Total $000 $000 $000 $000 $000 $000 111,865 1,451,176 5,363 4,661 2,723 1,575,788 (103,756) 23,020 (5,141) (249) (11,282) (97,408) (147) (14,687) - - 9,174 (5,660) 414,527 (417,821) 3,458 (2,360) - (2,196) 1,187 10,154 (64) (50) (615) 10,612
	423,676 1,051,842 3,616 2,002 - 1,481,136

7. BUSINESS COMBINATIONS

There have been no business combinations completed during the year ended 30 June 2018.

In accordance with the accounting policy, the acquisition accounting for Six Securities Services AG has been finalised. Intangible assets of $4.2 million have been reclassified out of goodwill.

On 15 May 2018, the Group entered into an agreement to acquire 100% of Equatex Group Holding AG, a leading European employee share plan administration business headquartered in Zurich, Switzerland. The agreed cash consideration is EUR 354.5 million to be paid on completion from Computershare’s existing cash and debt facilities. The acquisition is subject to regulatory approvals, which are expected to be obtained within six months.

8. CONTRIBUTED EQUITY (Appendix 4E item 14.2)

On 16 August 2017, Computershare announced an on-market buy-back of shares with an aggregate value of up to AUD 200.0 million for capital management purposes. The buy-back commenced on 30 August 2017.

From 30 August 2017 until 30 June 2018, the Company purchased and cancelled 3,370,142 ordinary shares at a total cost of AU$49.7 million (US$38.5 million) with an average price of AU$14.74 and a price range from AU$13.77 to AU$16.61.

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 2018.

Movement in contributed equity

Movement in contributed equity
Balance at 1 July 2017 Share buy-back Transfer to share buy-back reserve Balance at 30 June 2018	Number of shares $000 546,326,010 - (3,370,142) (38,533) - 38,533
	542,955,868 -

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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)

There have been no legal entities acquired or sold in the current reporting period.

10. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE

Assets classified as held for sale Cash and cash equivalents Intangibles Receivables Property, plant and equipment Other current assets Deferred tax assets Total assets held for sale Liabilities directly associated with assets classified as held for sale Put option liability Payables Current tax liabilities Provisions Deferred tax liabilities Total liabilities held for sale	2018 2017 $000 $000 33,781 20,766 19,383 7,847 18,569 19,104 8,115 8,684 151 157 - 524
	79,999 57,082
	56,568 45,684 10,290 9,915 1,782 1,107 637 707 362 -
	69,639 57,413

Assets and liabilities 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 and current liabilities in the consolidated statement of financial position.

On 3 August 2017, Computershare agreed to sell its 50% interest in the Indian venture Karvy. Completion is subject to regulatory approval as well as finalisation of terms with the prospective buyer and is expected to occur by 31 December 2018. Consequently, Karvy continues to be classified as a disposal group held for sale as at 30 June 2018.

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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 VENT	URE ENTITIES(Appendix 4E item 11)	URE ENTITIES(Appendix 4E item 11)
Name	Place of incorporation Principal activity		Ownership		Consolidated
			interest		carrying	amount
			June	June	June	June
			2018	2017	2018	2017
			%	%	$000	$000
Joint Ventures
Computershare Pan Africa Holdings Ltd	Mauritius	Investor Services	60	60	-	-
Asset Checker Ltd	United Kingdom	Investor Services	50	50	-	-
VisEq GmbH	Germany	Investor Services	66	66	45	54
Associates
SETL Development Limited1	United Kingdom	Business Services	10.8	4	13,490	-
Expandi Ltd	United Kingdom	Investor Services	25	25	6,354	6,136
Milestone Group Pty Ltd	Australia	Technology Services	20	20	3,918	3,759
CVEX Group. Inc2	United States of America Investor Services		20	-	1,940	-
The Reach Agency Holdings Pty Ltd	Australia	Investor Services	46.5	46.5	1,023	1,072
Mergit s.r.l.	Italy	Technology Services	**30 **	30	-	-
					26,770	11,021

1 On 17 January 2018, Computershare’s investment in SETL Development Limited was transferred from available-for-sale financial assets to associates as the Group gained significant influence over this company by means of board representation.

2 On 27 February 2018, Computershare acquired a 20% interest in CVEX Group, Inc (CVEX). CVEX is an Alternative Trading System (ATS) leveraging blockchain technology.

The share of net profit/loss of associates and joint ventures accounted for using the equity method for the year ended 30 June 2018 is a $0.3 million profit (2017: $0.7 million profit).

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 2018 are as follows:

Record date	Payment date	Type	Amount per security	Total dividend	Franked amount per security	Conduit Foreign Income amount per security
23 August 2017	18 September 2017	Final	AU 19 cents	AUD 103,727,282	AU 0.0 cents	AU 19.0 cents
21 February 2018	16 March 2018	Interim	AU 19 cents	AUD 103,137,695	AU 0.0 cents	AU 19.0 cents
22 August 2018	17 September 2018	Final	AU 21 cents	AUD 114,020,732*	AU 21.0 cents	AU 0.0 cents

• Based on 542,955,868 shares on issue as at 15 August 2018

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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 on 15 August 2018 in respect of the FY18 financial year. Applications or notices received after 5.00pm (Melbourne time) on 23 August 2018 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 27 August 2018 to 7 September 2018 (inclusive). No discount will apply to the DRP price.

15. RETAINED EARNINGS (Appendix 4E item 6)

15. RETAINED EARNINGS(Appendix 4E item 6)
Retained earnings Retained earnings at the beginning of the financial year Ordinary dividends provided for or paid Net profit/(loss) attributable to members of Computershare Limited Retained earnings at the end of the financial year	2018 2017 $000 $000 1,315,607 1,188,890 (160,484) (139,678) 300,064 266,395
	1,455,187 1,315,607

16. NTA BACKING (Appendix 4E item 9)

16. NTA BACKING(Appendix 4E item 9)
	2018	2017
Net tangible asset backing per ordinary share	(2.15)	(2.39)

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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