COMPUTERSHARE LIMITED. — Interim / Quarterly Report 2016

Feb 9, 2016

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COMPUTERSHARE LIMITED (ASX:CPU)

FINANCIAL RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2015

10 February 2016

NOTE: All figures (including comparatives) are presented in US Dollars unless otherwise stated.

The non-IFRS financial information contained within this document has not been reviewed or audited in accordance with Australian Auditing Standards.

Copies of the 1H16 Results Presentation is available for download at: http://www.computershare.com/au/about/ir/financials/Pages/results.aspx

MARKET ANNOUNCEMENT

Melbourne, 10 February 2016

1H16 Results overview:

• Resilient performance in line with expectations

• Business performance largely in line with the prior corresponding period in constant currency terms

• Macro-economic factors driving lower Management EPS - the stronger US Dollar and lower yields on client balances impacting results as anticipated

• Operating margin impacted by the HML acquisition and some anticipated cost growth

• Good progress made on growth strategies and capital management

• FY16 earnings guidance reiterated, albeit we are seeing some softening in the operating environment

Computer s hare Limit e d (ASX:C P U) today r eported S t atutory Basic Earnin g s per Sha r e (EPS) o f 15.22 cen t s for the s ix months ended 31 December 2015, an i ncrease of 445.5% on the prio r correspon d ing period (six month s ended 31 December 2014).

Managem e nt Earnings per Shar e were 25. 9 8 cents in 1H16, a decrease of 10.0% ov e r the prio r correspon d ing period (pcp). On a constant currency b asis Mana g ement Ea r nings per S hare wer e 27.17 cen t s, 5.9% lo w er than 1 H 15.

An interi m dividend of AU 16 c ents per s hare, 100 % franked has been declared. T he interi m dividend p a id in Marc h 2015 wa s AU 15 cents per shar e , 20% fra n ked.

Computer s hare’s CE O , Stuart Ir v ing said, “ W e are pleased with t he progre s s made on a range o f fronts dur i ng the pe r iod. Subst a ntial inroa d s have b e en made o n several s trategicall y importan t areas that we expect will support future gr o wth and i m proved sh a reholder r e turns. The underlyin g business performanc e was broa d ly in line with the prior period an d our expe c tations.

“The Com p any has articulated a clearer c a pital management strategy, we have mad e significan t progress on the buyb a ck initiate d in Septe m ber 2015 a nd we hav e increase d the divide n d over th e prior corr e sponding p eriod. We have also adopted a new polic y on divide n d frankin g , providin g sharehold e rs access t o maximu m franking c redits allo w able each period, lea d ing to a f u lly franke d dividend i n March 20 1 6.”

Headline Statutory Results (see Appendix 4D) for 1H16 were as follows:

		1H 16		1H15	1H1 6 versus
					1H15
Earnings pe r Share (post	NCI)	15.22 cents		2.79 cents	Up 44 5.5%
Total Reven ues & other i ncome		$941.5 m		$959.5m	Down 1.9%
Total Expen ses		$826.0 m		$910.9m	Down 9.3%
Statutory N et Profit (post	NCI)	$84.3m		$15.5m	Up 44 3.9%

Statutory e arnings per share gro w th of 445 . 5% largely attributable to the im p airment c h arge of $109.5 million booke d against the carrying v alue of go o dwill relat e d to the V o ucher Ser v ices business i n 1H15.

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MARKET ANNOUNCEMENT

Headline Management Results for 1H16 were as follows:

	1H16		1 H15		1H16 versus		1 H16 at	1H16 at
					1H15		1H15	1H15
							ex change	exchange
							rates	rates
								versus
								1H15
Managemen t Earnings	25.98 cen ts		28.8 8 cents	Do wn 10.0%			27.1 7 cents	D own
per Share (p ost NCI)								5 .9%
Total Opera ting	$938.7m		$959 .5m	Do wn 2.2%			$1,0 07.6m	U p 5.0%
Revenues
OperatingC osts	$695.7m		$699 .0m	Do wn 0.5%			$74 8.8m	U p 7.1%
Managemen t Earnings	$242.3m		$259 .3m	Do wn 6.6%			$25 8.2m	D own
before Inter est, Tax,								0 .4%
Depreciation and
Amortisation (EBITDA)
EBITDA ma rgin	25.8%		27.0 %	Do wn 120bps			25.6 %	D 1 own 40bps
Managemen t Net Profit	$143.8m		$160 .6m	Do wn 10.5%			$15 0.4m	D own
(post NCI)								6 .4 %
Free CashF low	$148.4m		$159 .1m	Do wn 6.7%
(ex SLS Adv ances)
Net Debt to EBITDA ratio	2.06 tim es		2.10 times	Do wn 0.04 tim es
(ex SLS Adv ances)
Interim Divi dend	AU 16 ce nts		AU1 5 cents	Up	AU 1 cent
Interim Divi dend franking	100%		20%	Up	from 20%
amount

Revenue Segments

Revenue S (USD milli tream ons)	1H16 Ac tual	C C 1H16 onstant urrency	1H15 Actu al	% va co curren riance in nstant cy terms
Register Ma intenance	$ 342.0	$367.1	$387 .3	(5.2%)
CorporateA ctions	$76.9	$82.6	$72 .8	13.5%
Business Se rvices	$ 287.9	$302.5	$245 .8	23.1%
EmployeeS hare Plans	$ 104.8	$112.4	$121 .6	(7.6%)
Communica tion Services	$80.7	$94.9	$96 .7	(1.9%)
Stakeholder Relationship Management	$31.2	$31.8	$21 .1	50.7%
Other Reven ue	$15.2	$16.2	$14 .3	13.3%
Total Reve nue	$9 38.7	$1,007.6	$959 .5	5.0%

Business S ervices ex p erienced s t rong reve n ue growth driven by a full perio d contribut i on by HM L and growth in the S L S busines s . Opportu n ities conti n ue to em e rge in m o rtgage ser v icing, wit h focus on b usiness mi x (MSRs/su b -servicing and perfor m ing/non- p erforming) in the US A to balanc e sustainabl e revenue g rowth with appropri a te levels o f capital deployment . The CMC acquisitio n and UKAR preferred supplier st a tus further evidence inorganic a nd organi c opportunities in thi s market se g ment.

Corporate Action rev e nues grew largely on the back o f M&A acti v ity in the U SA, however earning s in this segment rema i n historically low due to the curr e nt interes t rate envir o nment th a t continue s to persist in major m a rkets.

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MARKET ANNOUNCEMENT

Employee Plans rev e nue was lower than 1H15 de s pite continued growt h in Hong Kong an d Canada. A reduction i n equity tr a ding activ i ty by parti c ipants due to volatile markets, e xacerbate d by weak m ining and energy in d ices, sect o rs typicall y accommodating large employe e schemes , combined t o deliver t h e weaker o utcome.

Acquisitions and Disposals

During 1H 1 6 the Co m pany disp o sed of its R ussian bu s inesses in r esponse t o increasin g regulator y risk surro u nding foreign owners h ip of registry assets in this juris d iction. Th e Russian G overnmen t subseque n tly introdu c ed legislation prohibit i ng registrars with for e ign owner s hip or indi r ectly unde r foreign co n trol from m anaging c ompanies o f strategic importanc e . The Co m pany also d isposed o f the Germ a n busines s , VEM foll o wing final regulator y approval. In August 2015 Co m putershar e acquired G ilardi, a le a ding class a ctions ad m inistrator in the USA. The acquisition provides a stron g strategic fit alongside our existing KCC busi n ess in a s e ctor that continues t o grow and is expecte d to deliver h ealthy ret u rns on inv e sted capit a l in the ne x t few year s .

Growth Opportunities and Execution Priorities

The Company contin u es to see significant opportuniti e s in the m ortgage s e rvicing sp a ce and th e business r e mains willing to depl o y capital in the employee plans segment s hould appropriate ris k adjusted r eturns be on offer a nd is pri o ritising in v estment i n service, p roduct and systems . Likewise, a n increas e in the in t erest rate outlook globally will have a m e aningful i m pactful t o earnings.

Innovatio n and effici e ncy have been prior i tised, thro u gh invest m ent in pr o jects such as the U S property r ationalisati o n and ini t iatives la u nched in t he UK as well as t h e introdu c tion of a n Innovatio n Garage with the aim of increasi n g competi t iveness an d producti v ity. While h igher cost s have been experienc e d in 1H16 as anticipa t ed when w e provided our FY16 g uidance, our focus o n costs rem a ins a key p riority and w e have o p ened up n e w cost init i atives duri n g the peri o d.

Outlook for Financial Year 2016

The Com p any previ o usly said it expected the Grou p ’s underly i ng busine s s perform a nce to b e broadly si m ilar to F Y 15 but it a nticipated Managem e nt EPS would be around 7.5% lower tha n FY15 prim a rily due to the dual e f fects of th e stronger U SD and lo w er yields o n client balances. Th e Company r eiterates its guidance . However, the Company is seein g some sof t ening in the operatin g environment.

Changes s i nce initial g uidance p r ovided in A ugust 201 5 :

• Sh a re buy-ba c k commen c ed

• Gil a rdi acquisi t ion compl e ted

• On g oing strengthening o f the USD ( b ut no imp a ct to cons t ant curren c y compari s ons)

• De t erioration in global e quity mar k ets drivin g weaker transaction a l activity, particularl y amongst ener g y and min i ng employ e e share pl a n clients

• W e aker inter e st rate outlook, howe v er any fu r ther changes in cash rates are e xpected t o be immaterial to FY16 re s ults

This assessment of t h e outlook assumes t h at equity, foreign ex c hange an d interest r a te market s remain at c urrent lev e ls and tha t FY16 corp o rate actio n activity is similar to F Y15.

Guidance a ssumes t h at any po t ential con t ribution fr o m the rec e ntly anno u nced Capital Market s Cooperati v e LLC acquisition and the UKAR t r ansaction w ill be immaterial in F Y 16.

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MARKET ANNOUNCEMENT

Dividend

The Comp a ny annou n ces an int e rim divide n d of AU16 cents per s hare, 100 % franked, payable o n 16 March 2016 (divi d end recor d date of 22 Februar y 2016). This dividend is unchan g ed on th e 2015 final dividend o f AU16 ce n ts per sha r e, 25% fr a nked, paid in September 2015. T he interi m dividend paid in Mar c h 2015 wa s AU 15 ce n ts per share, 20% fr a nked. The significant increase i n the franki n g percent a ge repres e nts a cha n ge in Company polic y that now looks to distribute al l available f r anking cre d its to shareholders at the earliest opportunity.

The divid e nd reinve s tment pla n (DRP) pr i cing perio d for the i n terim divi d end will b e from 2 5 February to 9 March 2016 (incl u sive). The Company w ill purcha s e the rele v ant numb e r of share s under the DRP elect i on on ma r ket. No di s count will apply to t he DRP p r ice. DRP p articipatio n elections r e ceived aft e r 5pm (A E ST) on 23 February 2 0 16 (day a f ter dividen d record d a te) will no t be effecti v e in respe c t of this final dividen d payment but will a p ply to fut u re dividen d payment s unless the Company e lects to su s pend or c a ncel its DRP.

Capital Management

The Company’s issued capital r e duced fro m 556,203, 0 79 ordina r y shares o n issue as at 30 Jun e 2015 to 5 4 9,006,373 ordinary s h ares as a t 31 Dece m ber 2015 a s a result o f the sha r e buy-bac k announce d on 18 A ugust 2015. Under t he buyba c k progra m the Co m pany had purchase d 7,196,706 ordinary s h ares as at 31 Decem b er 2015 for a total co n sideration of AUD 78,335,555 a t an averag e price of AUD 10.88 per share.

Please refer to the 2016 Half Year Results Presentation for detailed financial data and the important notice on slide 53 regarding forward looking statements.

About Computershare Limited (CPU)

Computers h are (ASX: CPU) is a glo b al market l e ader in tran s fer agency a nd share r e gistration, employee equity plan s , proxy soli c itation and s takeholder c ommunications. We als o specialise i n corporate trust, mortgage, b ankruptcy, c lass action a nd utility a d ministratio n , and a ran g e of other d i versified fin a ncial and governance services.

Founded in 1978, Com p utershare is renowned f o r its expertise in high integrity data manageme n t, high volume tra n saction pro c essing and r econciliatio n s, payment s and stakeh o lder engag e ment. Man y of the world’s lea d ing organis a tions use u s to streamli n e and maxi m ise the val u e of relatio n ships with t h eir investors, employees, c r editors and customers.

Computers h are is repre s ented in all major finan c ial markets and has over 15,000 e m ployees worldwide.

For more information, v isit www.com p utershare.co m

For further information:

Mr Darren M urphy Head of Tr e asury and I n vestor Rela t ions Tel: +6 1 3 9415 51 0 2 Mobile: +6 1 418 392 6 8 7

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