COMPUTERSHARE LIMITED. — Interim / Quarterly Report 2019

Feb 12, 2019

ASX HALF-YEAR REPORT

Computershare Limited

ABN 71 005 485 825

31 December 2018

Lodged with the ASX under Listing Rule 4.2A

This information should be read in conjunction with the 30 June 2018 Annual Report.

Contents
Results for Announcement to the Market(Appendix 4D item 2)	2
Half-year report(ASX Listing rule 4.2A1)	8
Supplementary Appendix 4D information(Appendix 4D items 3 to 8)	34
Corporate Directory	36

This half-year report covers the consolidated entity consisting of Computershare Limited and its controlled entities. The interim financial report is presented in United States dollars (unless otherwise stated).

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES HALF-YEAR ENDED 31 DECEMBER 2018 (Previous corresponding period half-year ended 31 December 2017)

RESULTS FOR ANNOUNCEMENT TO THE MARKET

				$000
Revenuefrom ordinary activities	down	0.2%	to	1,120,996
(Appendix 4D item 2.1)
Profit/(loss)after tax attributable to members	up	51.5%	to	259,373
(Appendix 4D item 2.2)
Net profit/(loss)for the period attributable to members	up	51.5%	to	259,373
(Appendix 4D item 2.3)
Dividends	Amount per security Franked		amount per security
(Appendix 4D item 2.4)
Interim dividend	AU 21 cents		AU 6.3 cents
Final dividend (prior year)	AU 21 cents		AU 21 cents

Record date for determining entitlements to the interim dividend (Appendix 4D item 2.5) 20 February 2019

Explanation of Revenue (Appendix 4D item 2.6)

Total revenue for the half-year was $1,121.0 million, a 0.2% decrease over the corresponding period.

The US region revenues declined due to corporate actions (excluding margin income), class actions and stakeholder relationship businesses, where large event based activity from 1H18 was not repeated in 1H19. The US mortgage services revenues increased as a result of growth in loan portfolio and ancillary services, and US register maintenance recorded another strong result.

Margin income increased during the period primarily driven by interest rate increases in the US, Canada and the UK and higher average client balances.

The main drivers of growth in the UCIA region were the plan managers’ contribution due to Equatex acquisition and the UK mortgage services business due to higher origination revenue from new lending clients and UKAR, partially offset by run-off of existing clients.

The Asia region decline was primarily due to the sale of the 50% interest in the Indian venture Karvy Computershare Private Limited (Karvy) on 17 November 2018. Lower revenues in Australia and New Zealand were driven by a reduction in postage revenue in communication services. This was partially offset by higher corporate actions revenues.

A weaker British pound, Australian dollar and Canadian dollar relative to the prior period reduced the translated revenue contribution from those regions.

Explanation of Profit/(loss) from ordinary activities after tax (Appendix 4D item 2.6)

Net statutory profit after tax attributable to members was $259.4 million, an increase of 51.5% over the corresponding period. This was supported by higher margin income driven by interest rate increases in the US, Canada and the UK and higher average client balances.

A gain from the disposal of Karvy of $108.5 million has been recognised in other income in the consolidated statement of comprehensive income during the reporting period. An estimate of the related capital gains tax was booked in the previous financial year. The Group’s income tax expense for the six months ended 31 December 2017 was significantly lower than the current period as it included a one-off $42.4 million income tax credit due to the US Tax Cuts and Jobs Act 2017, which became effective on 1 January 2018. Excluding the tax impact of one-off items, the Group’s effective tax rate increased in line with higher profits in the US.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES HALF-YEAR ENDED 31 DECEMBER 2018 (Previous corresponding period half-year ended 31 December 2017)

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Explanation of Net Profit/(loss) (Appendix 4D item 2.6)

Please refer above.

Explanation of Dividends (Appendix 4D item 2.6)

The Company has announced an interim dividend for the current financial year of AU 21 cents per share. This dividend is franked to 30%.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES

INTERIM FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 December 2018

Contents
Directors’ report	5
Auditor’s independence declaration	7
Consolidated statement of profit or loss and other comprehensive income	8
Consolidated statement of financial position	9
Consolidated statement of changes in equity	10
Consolidated cash flow statement	11
Notes to the consolidated financial statements	12
Directors’ declaration	30
Statement to the Board of Directors	31
Independent auditor’s review report to the members	32

This interim financial report does not include all the notes of the type normally included in the annual financial statements. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2018 and any public announcements made by Computershare Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the Australian Securities Exchange Listing Rules.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT

The Board of Directors of Computershare Limited (the Company) present their report in respect of the financial half-year ended 31 December 2018.

DIRECTORS

The names of the directors of the Company in office during the whole of the half-year and up to the date of this report, unless otherwise indicated, are:

Non-executive

Simon David Jones (Chairman) Abigail Pip Cleland Tiffany Lee Fuller Lisa Mary Gay Penelope Jane Maclagan (resigned effective 14 November 2018) Christopher John Morris Arthur Leslie Owen (resigned effective 14 November 2018) Paul Joseph Reynolds (appointed effective 5 October 2018) Joseph Mark Velli

Executive

Stuart James Irving (President and Chief Executive Officer)

PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the course of the half-year were the operation of investor services, plan services, communication services, business services, stakeholder relationship management services and technology services.

• The investor services operations comprise the provision of registry maintenance and related services.

• The plan services operations comprise the provision of administration and related services for employee share and option plans.

• The communication services operations comprise document composition and printing, intelligent mailing, inbound process automation, scanning and electronic delivery.

• The business services operations comprise the provision of bankruptcy, class action and utilities administration services, voucher services, corporate trust services and mortgage servicing activities.

• The stakeholder relationship management services group provides investor analysis, investor communication and management information services to companies, including their employees, shareholders and other security industry participants.

• Technology services includes the provision of software, specialising in share registry and financial services.

Computershare has a range of regulated businesses around the world, including transfer agencies, licensed dealers, corporate trusts and mortgage servicers.

REVIEW OF OPERATIONS

The Group recorded a profit before tax of $329.0 million for the half-year ended 31 December 2018 (2017: $189.6 million). Total revenue decreased to $1,121.0 million (2017: $1,122.9 million), expenses were down by $29.3 million and operating cash flows decreased by $136.5 million to $68.9 million (2017: $205.4 million).

As foreshadowed in prior disclosures, operating cash flows were impacted by the acquisition of $125.0 million loan servicing advances relating to an MSR transaction completed in a prior reporting period, whereby the Group undertook to purchase on 14 December 2018 any uncollected amounts that had been advanced relating to this MSR before it was acquired, rather than purchase the advances upon the MSR acquisition as is customary. The advances were acquired at fair value. Excluding loan servicing advances, operating cash flows decreased by $22.7 million (2017: increased $26.0 million).

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES DIRECTORS’ REPORT

The weaker British pound, Australian dollar and Canadian dollar relative to the prior period reduced the translated contribution in those regions. Margin income increased during the period primarily driven by interest rate increases in the US, Canada and the UK and higher average client balances. The Group also continued to make good progress during the period on its operational and process efficiency programs and expenses were also lower due to a reduction in large event based activities in 1H18 that did not recur in the period.

Statutory basic earnings per share increased by 52.0% to 47.77 cents. The half-year result included the $108.5 million gain on disposal of Karvy. The prior period income tax expense included a one-off $42.4 million income tax credit due to a restatement of the deferred tax balances under the US Tax Cuts and Jobs Act 2017, which became effective on 1 January 2018.

CONSOLIDATED PROFIT

The profit of the consolidated entity for the half-year was $259.4 million (2017: $171.2 million) after deducting income tax and non-controlling interests.

DIVIDENDS

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

Ordinary shares

• A final dividend in respect of the year ended 30 June 2018 was declared on 15 August 2018 and paid on 17 September 2018. This was a fully franked ordinary dividend of AU 21 cents per share, amounting to AUD 113,998,579 ($83,004,745).

• An interim dividend declared by the directors of the Company in respect of the current financial year, to be paid on 15 March 2019. This is an ordinary dividend of AU 21 cents per share franked to 30%, amounting to AUD 114,020,732 based on shares on issue as at 13 February 2019. The dividend was not declared until 13 February 2019 and accordingly no provision has been recognised at 31 December 2018.

ROUNDING OF AMOUNTS

The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by the Australian Securities and Investments Commission. In accordance with that legislative instrument, amounts in the interim financial report and the Directors’ Report have been rounded to the nearest thousand dollars unless specifically stated to be otherwise.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s signed independence declaration as required under section 307C of the Corporations Act 2001 is provided immediately after this report.

Signed in accordance with a resolution of the Directors.

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SD Jones Chairman

SJ Irving Chief Executive Officer

13 February 2019

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Auditor’s Independence Declaration

As lead auditor for the review of Computershare Limited for the half-year ended 31 December 2018, I declare that to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Computershare Limited and the entities it controlled during the period.

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Anton Linschoten Partner PricewaterhouseCoopers

Melbourne 13 February 2019

PricewaterhouseCoopers, ABN 52 780 433 757 2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the half-year ended 31 December 2018

Note Revenue from continuing operations Sales revenue Other revenue Total revenue from continuing operations Other income 10 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 Profit before related income tax expense Income tax expense/(credit) 4 Profit for the half-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 half-year, net of tax Total comprehensive income for the half-year Profit for the half-year attributable to: Members of Computershare Limited Non-controlling interests Total comprehensive income for the half-year attributable to: Members of Computershare Limited Non-controlling interests Basic earnings per share (cents per share) 2 Diluted earnings per share (cents per share) 2	Half-year 2018 2017 $000 $000 1,118,365 1,119,295 2,631 3,571
	1,120,996 1,122,866 121,078 7,187 724,366 757,164 140,113 141,947 15,069 13,493 32,456 28,650
	912,004 941,254 (1,037) 775 329,033 189,574 66,530 14,074
	262,503 175,500
	- 618 (693) (16) (1,271) 13,626 353 1,529
	(1,611) 15,757
	260,892 191,257
	259,373 171,237 3,130 4,263
	262,503 175,500
	258,338 186,625 2,554 4,632
	260,892 191,257
	47.77 cents 31.43 cents 47.67 cents 31.38 cents

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2018

Note CURRENT ASSETS Cash and cash equivalents Bank deposits Other financial assets 7 Receivables Loan servicing advances Financial assets at fair value through profit or loss 14 Available-for-sale financial assets 14 Inventories Current tax assets Other current assets Assets classified as held for sale 10 Total current assets NON-CURRENT ASSETS Receivables Investments accounted for using the equity method Financial assets at fair value through profit or loss 14 Available-for-sale financial assets 14 Property, plant and equipment Deferred tax assets Intangibles Other non-current assets 14 Total non-current assets Total assets CURRENT LIABILITIES Payables Interest bearing liabilities Current tax liabilities Financial liabilities at fair value through profit or loss Provisions 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 Financial liabilities at fair value through profit or loss Deferred tax liabilities Provisions Deferred consideration Mortgage servicing related liabilities Other liabilities Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity 8 Reserves Retained earnings Total parent entity interest Non-controlling interests Total equity	31 December 30 June 2018 2018 $000 $000 509,981 500,888 6,642 6,539 69,669 16,517 463,219 428,973 264,402 156,689 23,090 1,791 - 4,361 3,834 3,844 9,110 2,236 57,815 40,079 - 79,999
	1,407,762 1,241,916 705 152 24,968 26,770 57,736 4,263 - 26,566 132,992 115,249 131,475 145,654 2,753,805 2,327,626 9,488 -
	3,111,169 2,646,280
	4,518,931 3,888,196
	488,771 442,270 120,362 427,292 29,412 42,319 1,146 88 49,584 50,746 17,203 29,432 32,013 27,740 - 69,639 2,199 2,083
	740,690 1,091,609
	7,806 2,842 1,867,668 1,053,844 3,106 5,333 200,214 193,026 23,971 24,762 24,337 26,110 173,068 154,404 3,938 2,869
	2,304,108 1,463,190
	3,044,798 2,554,799
	1,474,133 1,333,397
	- - (158,568) (148,098) 1,630,660 1,455,187
	1,472,092 1,307,089 2,041 26,308
	1,474,133 1,333,397

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 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the half-year ended 31 December 2018

Attributable to members of Computershare Limited

Note Total equity at 1 July 2018 Change in accounting policy 14 Restated total equity at the beginning of the financial year Profit for the half-year Cash flow hedges Exchange differences on translation of foreign operations Income tax (expense)/credits Total comprehensive income for the half-year Transactions with owners in their capacity as owners: Dividends provided for or paid Disposal of non-controlling interest 10 Cash purchase of shares on market Share based remuneration Balance at 31 December 2018	Contributed Equity Reserves Retained Earnings Total Non- controlling Interests Total Equity $000 $000 $000 $000 $000 $000 - (148,098) 1,455,187 1,307,089 26,308 1,333,397 - (263) (895) (1,158) - (1,158)
	- (148,361) 1,454,292 1,305,931 26,308 1,332,239
	- - 259,373 259,373 3,130 262,503 - (693) - (693) - (693) - (695) - (695) (576) (1,271) - 353 - 353 - 353
	- (1,035) 259,373 258,338 2,554 260,892
	- - (83,005) (83,005) (8,078) (91,083) - - - - (18,743) (18,743) - (20,987) - (20,987) - (20,987) - 11,815 - 11,815 - 11,815
	- (158,568) 1,630,660 1,472,092 2,041 1,474,133

Total equity at 1 July 2017 Profit for the half-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 half-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 31 December 2017	Attributable to members of Computershare Limited 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 - - 171,237 171,237 4,263 175,500 - 618 - 618 - 618 - (16) - (16) - (16) - 13,257 - 13,257 369 13,626 - 1,529 - 1,529 - 1,529
	- 15,388 171,237 186,625 4,632 191,257
	- - (80,642) (80,642) - (80,642) - (38,615) - (38,615) - (38,615) - (17,678) - (17,678) - (17,678) - 10,144 - 10,144 - 10,144
	- (129,248) 1,406,202 1,276,954 24,540 1,301,494

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 CONSOLIDATED CASH FLOW STATEMENT For the half-year ended 31 December 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) Payments for intangible assets including MSRs Proceeds from sale of property, plant and equipment Proceeds from/(payments for) investments Payments for property, plant and equipment Proceeds from sale of subsidiaries and businesses (net of cash disposed) Net investing cash flows CASH FLOWS FROM FINANCING ACTIVITIES Payments 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 half-year*	Half-year 2018 2017 $000 $000 1,156,125 1,214,371 (888,018) (941,268) (107,713) 6,128 1,163 2,262 (37,773) (26,929) 1,468 1,309 (56,371) (50,458)
	68,881 205,415
	(438,287) (8,035) (46,191) (74,025) 2,240 - (16,708) (5,187) (33,565) (17,010) 77,232 -
	(455,279) (104,257)
	(20,987) (17,678) 1,984,976 130,820 (1,600,502) (27,000) 101,142 (42,104) (78,660) (74,590) (4,345) (6,052) (8,078) - - (38,615) (2,091) (2,786)
	371,455 (78,005)
	(14,943) 23,153 534,669 510,683 (9,745) 11,393
	509,981 545,229

*Cash and cash equivalents at 31 December 2018 includes nil cash (31 December 2017: $26.0 million) presented in the assets classified as held for sale line item in the consolidated statement of financial position.

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

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the half-year ended 31 December 2018

1. BASIS OF PREPARATION

The interim financial report for the half-year reporting period ended 31 December 2018 includes the condensed financial statements for the consolidated entity consisting of Computershare Limited and its controlled entities, referred to collectively as the “consolidated entity”, “the Group” or “Computershare”.

The interim financial report is a general purpose financial report prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. The interim financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), including IAS 34 Interim Financial Reporting.

The interim financial report does not include all the notes of the type normally included in annual financial statements. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2018 and any public announcements made by Computershare Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the Australian Securities Exchange listing rules.

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

The accounting policies adopted are consistent with those of the previous financial year and the corresponding interim reporting period with the exception of those discussed in note 14.

2. EARNINGS PER SHARE

Half-year ended 31 December 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 47.77 cents 47.67 cents 34.97 cents 34.90 cents $000 $000 $000 $000 262,503 262,503 262,503 262,503 (3,130) (3,130) (3,130) (3,130) - - (69,492) (69,492)
	259,373 259,373 189,881 189,881
	542,955,868 544,066,299 542,955,868 544,066,299

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the half-year ended 31 December 2018

Half-year ended 31 December 2017 Earnings per share (cents per share) Reconciliation of earnings Profit for the half-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 31.43 cents 31.38 cents 30.62 cents 30.57 cents $000 $000 $000 $000 175,500 175,500 175,500 175,500 (4,263) (4,263) (4,263) (4,263) - - (4,443) (4,443)
	171,237 171,237 166,794 166,794
	544,778,652 545,684,531 544,778,652 545,684,531

Reconciliation of weighted average number of shares used as the denominator:

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Performance rights Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share	2018 2017 Number Number 542,955,868 544,778,652 1,110,431 905,879
	544,066,299 545,684,531

For the half-year ended 31 December 2018 management adjustment items include the following:

Amortisation Amortisation of intangible assets Acquisitions and disposals Gain on disposal of Karvy Acquisition related expenses Acquisition accounting adjustments One-off tax expense on Equatex IP restructure Other Major restructuring costs Marked to market adjustments - derivatives Put option liability re-measurement True-up of US tax reform impact on foreign subsidiary profits Total management adjustment items

Gross Tax effect Net of tax $000 $000 $000 (25,100) 6,543 (18,557) 108,534 (17) 108,517 (8,549) 1,626 (6,923) (277) - (277) - (9,125) (9,125) (10,131) 2,604 (7,527) 4,027 (1,210) 2,817 1,696 - 1,696 - (1,129) (1,129)

70,200 (708) 69,492

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the half-year ended 31 December 2018

Management Adjustment Items

Management adjustment items net of tax for the half-year ended 31 December 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 half-year ended 31 December 2018 was $18.6 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 accounting gain of $108.5 million was recognised on disposal of the Indian Karvy venture.

• Acquisition related expenses of $6.9 million were incurred mainly related to the acquisition of Equatex Group Holding AG (Equatex). This included a $6.1 million loss on derivatives used to fix the amount of borrowings needed to fund the acquisition.

• An expense of $0.3 million was recognised for re-measurement of contingent consideration payable to the sellers of RicePoint Administration Inc.

• Pursuant to the Australian controlled foreign company rules, a one-off tax expense of $9.1 million has been recognised as a result of the Equatex IP restructure.

Other

• Costs of $7.5 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.

• 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 $2.8 million.

• The Karvy put option liability re-measurement up to the date of disposal resulted in a gain of $1.7 million.

• A true-up of the US tax reform impact on foreign subsidiary profits resulted in a tax expense of $1.1 million.

For the half-year ended 31 December 2017 management adjustment items include the following:

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

Gross Tax effect Net of tax $000 $000 $000 (25,747) 7,660 (18,087) - (5,527) (5,527) (4,721) - (4,721) (2,059) 49 (2,010) - 42,403 42,403 (8,811) 3,069 (5,742) (3,544) - (3,544) 1,974 (596) 1,378 293 - 293

(42,615) 47,058 4,443

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the half-year ended 31 December 2018

3. SEGMENT INFORMATION

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, the 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 security 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

December 2018 Total segment revenue and other income Intersegment revenue External revenue and other income Revenue per business line: Register maintenance Corporate actions Business services Stakeholder relationship management Employee share plans Communication services Technology and other Management adjusted EBITDA	Asia Australia & New Zealand CanadaContinental Europe Technology & Other UCIA United States Total $000 $000 $000 $000 $000 $000 $000 $000 72,122 119,623 91,452 41,782 128,201 257,027 542,975 1,253,182 (1,594) (330) (1,334) (476) (118,151) (7,763) (1,903) (131,551)
	70,528 119,293 90,118 41,306 10,050 249,264 541,072 1,121,631
	31,507 48,290 25,781 13,513 1,060 39,413 176,964 336,528 6,835 14,182 10,693 - - 4,919 55,071 91,700 16,472 4,348 38,913 - - 151,630 232,566 443,929 2,714 508 - 1,735 - 3,409 27,148 35,514 12,418 8,076 10,616 11,942 - 44,587 28,949 116,588 - 43,772 3,606 13,429 - 2,943 19,412 83,162 582 117 509 687 8,990 2,363 962 14,210
	70,528 119,293 90,118 41,306 10,050 249,264 541,072 1,121,631
	25,657 22,427 43,737 4,019 13,190 55,786 166,931 331,747

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the half-year ended 31 December 2018

December 2017 Total segment revenue and other income Intersegment revenue External revenue and other income Revenue per business line: Register maintenance Corporate actions Business services Stakeholder relationship management Employee share plans Communication services Technology and other Management adjusted EBITDA	Asia Australia & New Zealand Canada Continental Europe Technology & Other UCIA United States Total $000 $000 $000 $000 $000 $000 $000 $000 78,742 131,581 85,779 39,975 137,955 227,576 557,428 1,259,036 (2,500) (457) (1,335) (72) (128,695) (980) (1,566) (135,605)
	76,242 131,124 84,444 39,903 9,260 226,596 555,862 1,123,431
	31,756 52,194 26,055 11,856 - 38,214 167,865 327,940 8,538 11,965 7,807 - - 4,067 52,836 85,213 22,434 4,797 35,447 - - 142,795 235,948 441,421 2,430 301 - 1,719 - 3,286 49,786 57,522 10,551 8,192 10,580 12,789 - 34,810 29,556 106,478 - 53,543 4,091 12,661 - 2,665 18,424 91,384 533 132 464 878 9,260 759 1,447 13,473
	76,242 131,124 84,444 39,903 9,260 226,596 555,862 1,123,431
	28,774 21,482 38,528 1,568 9,181 45,719 147,716 292,968

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	Half-year 2018 2017 $000 $000 1,253,182 1,259,036 (131,551) (135,605) (635) (565)
	1,120,996 1,122,866

• 16 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the half-year ended 31 December 2018

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 expense): Amortisation of intangible assets Gain on disposal of Karvy Acquisition and disposal related expenses Acquisition accounting adjustments Major restructuring costs Marked to market adjustments - derivatives Put option liability re-measurement Voucher Services impairment Total management adjustment items (note 2) Finance costs Other amortisation and depreciation Profit before income tax from continuing operations 4. INCOME TAX EXPENSE 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: Gain on disposal of Karvy One-off tax expense on Equatex IP restructure Variation in tax rates of foreign controlled entities Prior year tax (over)/under provided True up of US tax reform impact on foreign subsidiary profits Restatement of deferred tax balances due to US tax reform Net other deductible Income tax expense	Half-year 2018 2017 $000 $000 331,747 292,968 (317) 418
	331,430 293,386 (25,100) (25,747) 108,534 - (8,549) (2,059) (277) (4,721) (10,131) (8,811) 4,027 1,974 1,696 293 - (3,544)
	70,200 (42,615) (32,456) (28,650) (40,141) (32,547)
	329,033 189,574
	Half-year 2018 2017 $000 $000 329,033 189,574 98,710 56,872 (33,171) 6,098 9,125 - (5,247) (1,132) (1,813) (1,176) 1,129 - - (42,403) (2,203) (4,185) 66,530 14,074

• 17 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the half-year ended 31 December 2018

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 31 December 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 31 December 2018 excluding interest is estimated at $49.1 million.

5. DIVIDENDS

	2018	2017
	$000	$000
Ordinary shares
Dividends provided for or paid during the half-year	83,005	80,642

Dividends not recognised at the end of the half-year

In addition to the above dividends, since the end of the half-year the directors have declared the payment of an interim dividend of AU 21 cents per fully paid ordinary share, franked to 30%. As the dividend was not declared until 13 February 2019, a provision has not been recognised as at 31 December 2018.

6. CASH FLOW INFORMATION

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

Net profit after income tax Adjustments for: Depreciation and amortisation Gain on disposal of Karvy Net (gain)/loss on asset disposals 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 Acquisition related expenses Contingent consideration re-measurement 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

Half-year 2018 2017 $000 $000 262,503 175,500 65,240 58,294 (108,534) - (799) - 1,037 (775) 10,521 8,822 - 3,544 (3,810) (1,931) 8,549 - 277 4,721 (25,425) 33,312 (43) (393) (107,713) 6,128 (8,284) (7,962) (34,800) (37,461) 10,162 (36,384)

68,881 205,415

• 18 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the half-year ended 31 December 2018

(b) Reconciliation of liabilities arising from financing activities

Opening balance at 1 July 2018 Cash flows Non-cash changes: Acquisitions of entities and businesses Additions Fair value adjustments Transfers and other Currency translation difference Balance at 31 December 2018	Current borrowings Non- current borrowings Current lease liabilities Non- current lease liabilities Cross currency swap Total $000 $000 $000 $000 $000 $000 423,676 1,051,842 3,617 2,002 - 1,481,137 (133,888) 619,504 (1,995) (96) - 483,525 16,993 - - - - 16,993 - - 1,002 4,800 - 5,802 160 12,597 - - 482 13,239 (189,530) 185,472 315 (315) - (4,058) 76 (8,087) (64) (51) (16) (8,142)
	117,487 1,861,328 2,875 6,340 466 1,988,496

7. BUSINESS COMBINATIONS

a) On 9 November 2018, the Group acquired 100% of Equatex Group Holding AG, a European employee share plan administration business headquartered in Zurich, Switzerland. Total consideration was EUR 370.2 million. The acquisition enhances Computershare’s Employee Share Plans client base, product suite, capabilities and position in key European markets.

This business combination did not materially contribute to the total profit of the Group. If the acquisition had occurred on 1 July 2018, consolidated revenue for the half-year ended 31 December 2018 would have been $36.3 million higher.

Details of the acquisition are as follows:

Cash consideration Total consideration paid Less fair value of identifiable assets acquired Provisional goodwill on consolidation*	$000 419,680
	419,680 (57,048)
	362,632

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

The provisional goodwill is attributable to the expected future cash flows of the businesses associated with collective experience of management and staff and synergies expected to be achieved as a result of the full integration into the Group.

• 19 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the half-year ended 31 December 2018

Assets and liabilities arising from this acquisition are as follows:

Client deposits1 Cash and cash equivalents Software Receivables Other current assets Property, plant and equipment Client deposits liability1 Payables Provisions Deferred tax liabilities Current tax liabilities Financial liabilities at fair value through profit or loss Net assets Purchase consideration: Inflow/(outflow) of cash to acquire the entity, net of cash acquired: Cash balance acquired Less cash paid Net inflow/(outflow) of cash	Fair value $000 49,642 26,131 32,243 19,632 2,350 13 (49,642) (21,965) (845) (267) (188) (56)
	57,048
	$000 26,131 (419,680)
	(393,549)

1 Equatex AG is a registered broker dealer and custodian in Switzerland and it accepts client deposits in its own name as part of providing plan manager services. These deposits are recognised in other financial assets in the statement of financial position, with a corresponding offsetting liability recognised in payables.

b) On 31 December 2018, Computershare acquired 100% of LenderLive Financial Services, LLC. LenderLive is a fulfilment and secondary market service provider in the US mortgage industry, based in Denver, USA. This acquisition will further strengthen Computershare’s growth in the US mortgage services market, adding scale to existing fulfilment and secondary market services.

This business combination did not materially contribute to the total revenue of the group.

Details of the acquisition were as follows:

Details of the acquisition were as follows:
Cash consideration Total consideration paid Less fair value of identifiable assets acquired Provisional goodwill on consolidation*	$000 31,801
	31,801 (21,838)
	9,963

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

• 20 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the half-year ended 31 December 2018

Assets and liabilities arising from this acquisition are as follows:

Cash and cash equivalents Bank deposits Financial assets at fair value through profit or loss Receivables Property, plant and equipment Other current assets Intangibles Interest bearing liabilities Payables Provisions Other liabilities Net assets Purchase consideration: Inflow/(outflow) of cash to acquire the entity, net of cash acquired: Cash balance acquired Less cash paid Net inflow/(outflow) of cash	Fair value $000 15,453 293 14,163 8,296 3,033 501 479 (16,993) (2,780) (317) (290)
	21,838
	$000 15,453 (31,801)
	(16,348)

c) On 10 July 2018, Computershare acquired the business of Title XI Software Solutions. Title XI is a provider of software and technology solutions for chapter 11 and chapter 7 bankruptcy administration based in California, USA.

This business combination did not materially contribute to the total revenue of the group.

Details of the acquisition were as follows:

Cash consideration Deferred consideration Total consideration paid Provisional goodwill on consolidation*	$000 4,046 2,454
	6,500
	6,500

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

• 21 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the half-year ended 31 December 2018

8. CONTRIBUTED EQUITY

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 starting on 30 August 2017. The on-market share buyback ended on 29 August 2018.

There have been no share buy-backs or issue of ordinary shares during the half-year ended 31 December 2018.

Movement in contributed equity Balance at 1 July 2018 Balance at 31 December 2018

Number of shares $000 - 542,955,868 542,955,868

9. FAIR VALUE MEASUREMENTS

The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes. The measurement hierarchy used is as follows:

Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period for identical assets and liabilities. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entityspecific estimates. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. This includes inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices). If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Such instruments include derivative financial instruments and the portion of borrowings included in the fair value hedge.

Specific valuation techniques used to value financial instruments are as follows:

• Quoted market prices or dealer quotes are used for similar instruments.

• The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.

• The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date.

• The fair value of cross currency swaps is a combination of the fair value of forward foreign exchange contracts determined using forward exchange rates at the balance sheet date (for the final principal exchange) and the use of quoted market prices or dealer quotes for similar instruments (for the basis valuation).

• The fair value of interest rate swaptions is calculated using the Black-Scholes formula and quoted market prices.

Level 3: Valuation methodology of the asset or liability uses inputs that are not based on observable market data (unobservable inputs). This is the case of investments in unconsolidated structured entities, which are included in financial assets at fair value through profit or loss and deferred consideration arising from business combinations.

• 22 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the half-year ended 31 December 2018

The amount of contingent consideration recognised on business combinations is typically referenced to revenue or EBITDA targets. The Group estimates the fair value of the expected future payments based on the terms of each earn-out agreement and management’s knowledge of the business taking into account the likely impact of the current economic environment. Contingent consideration amounts are re-measured every reporting period based on most recent projections. Gains or losses arising from changes in fair value are recognised in profit or loss in the period in which they arise.

The fair value of the investment in structured entities is determined by reference to the interest in net assets of these entities, which approximate their fair values. As profits are realised and dividends are paid to investors, the net assets of these entities decrease and so does the fair value of the Group’s investment.

The following tables present the Group’s financial assets and liabilities measured and recognised at fair value at 31 December 2018. The comparative figures are also presented below.

As at 31 December 2018 Assets Financial assets at fair value through profit or loss Total assets Liabilities Borrowings Financial liabilities at fair value through profit or loss Deferred consideration Total liabilities As at 30 June 2018 Assets Financial assets at fair value through profit or loss Available-for-sale financial assets Total assets Liabilities Borrowings Financial liabilities at fair value through profit or loss Deferred consideration Total liabilities	Level 1 Level 2 Level 3 Total $000 $000 $000 $000 23,722 19,743 37,361 80,826
	23,722 19,743 37,361 80,826
	- 802,221 - 802,221 - 4,252 - 4,252 - - 41,540 41,540
	- 806,473 41,540 848,013
	- 6,054 - 6,054 5,518 - 25,409 30,927
	5,518 6,054 25,409 36,981
	- 419,464 - 419,464 - 5,421 - 5,421 - - 55,542 55,542
	- 424,885 55,542 480,427

The following table presents the changes in level 3 items for the period ended 31 December 2018:

Opening balance at 1 July Change in accounting policy 14 Restated balance at the beginning of the financial year Additions Payments Gains/ (losses) recognised in the profit or loss Return of capital Currency translation difference Closing balance at 31 December	Financial assets at fair value through profit or loss Deferred consideration liability $000 $000 - (55,542) 25,409 -
	25,409 (55,542)
	14,138 (994) - 14,161 (216) (277) (1,970) - - 1,112
	37,361 (41,540)

• 23 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the half-year ended 31 December 2018

Net fair value of financial assets and liabilities

The carrying amounts of cash and cash equivalents, bank deposits, receivables, payables, non-interest bearing liabilities, finance leases and loans approximate their fair values for the Group except for the unhedged portion of USD Senior Notes of $270.0 million (30 June 2018: $325.0 million), where the fair value based on level 2 valuation techniques described above was $268.8 million as at 31 December 2018 (30 June 2018: $319.5 million).

Interest bearing liabilities

On 20 November 2018, Computershare US issued 24 notes in the United States with a total value of $550.0 million. These notes were for a tenor of seven and ten years. Fixed interest is paid on all the issued notes on a semi-annual basis. The Group uses interest rate derivatives to manage the fixed interest exposure.

On 10 May 2018, a bridge facility was executed for the Equatex acquisition of GBP 332.0 million (USD: $434.2 million) maturing on 20 April 2020. The bridge facility was drawn on 8 November 2018 to settle the Equatex acquisition, then fully repaid on 22 November 2018 upon which date the facility was terminated.

10. OTHER SIGNIFICANT INFORMATION

On 17 November 2018, Computershare completed the sale of its 50% interest in the Indian venture Karvy. A gain of $108.5 million has been recognised in other income in the consolidated statement of comprehensive income during the reporting period. Karvy’s revenues and EBITDA contribution until the date of disposal are included in the Asia segment in note 3.

Details of the disposal are as follows:

Cash consideration Less: Carrying amount of net assets disposed Disposal of non-controlling interest Reclassification of foreign currency translation reserve Disposal costs Gain on disposal before income tax Income tax expense Gain on disposal after tax Carrying amount of net assets disposed: Assets and liabilities Cash and cash equivalents Receivables Intangibles Property, plant and equipment Other assets Put option liability Payables Current tax liabilities Deferred tax liabilities Provisions Net assets	$000 100,476
	(1,143) 18,743 (7,504) (2,038)
	108,534
	(17)
	108,517
	$000 21,206 20,103 19,256 8,641 250 (54,338) (9,857) (2,284) (1,077) (757)
	1,143

• 24 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the half-year ended 31 December 2018

Disposal consideration:

Inflow/(outflow) of proceeds received from sale of subsidiary, net of cash disposed:

Disposal consideration: Inflow/(outflow) of proceeds received from sale of subsidiary, net of cash disposed:
Cash consideration Less cash disposed Net inflow/(outflow) of cash	$000 100,476 (21,206)
	79,270

11. CONTINGENT LIABILITIES

Guarantees, indemnities and other contingent liabilities

Guarantees and indemnities of $1,060.0 million (30 June 2018: $745.0 million) have been given to US Institutional Accredited Investors by Computershare Limited, ACN 081 035 752 Pty Ltd, Computershare Finance Company Pty Ltd, Computershare US, Computershare Investments (UK) (No. 3) Ltd and Computershare Investor Services Inc under a Note and Guarantee Agreement dated 9 February 2012 and 20 November 2018.

There have been no other material changes to guarantees, indemnities and other contingent liabilities since the last reporting date.

Legal and regulatory matters

Due to the nature of operations, certain commercial claims in the normal course of business have been made against the consolidated entity in various countries. An inherent difficulty in predicting the outcome of such matters exists, but in the opinion of the Group, based on current knowledge and in consultation with legal counsel, we do not expect any liability material to the Group to eventuate. The status of all claims is monitored on an ongoing basis, together with the adequacy of any provisions recorded in the Group’s financial statements. For the Australian thin capitalisation contingent liability refer to note 4.

12. COMMITMENTS

There have been no material changes to commitments since the last reporting date.

13. SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE

No matter or circumstance has arisen since the reporting date which is not otherwise reflected in this report that has significantly affected or may significantly affect the operations of the consolidated entity.

• 25 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the half-year ended 31 December 2018

14. CHANGES IN ACCOUNTING POLICIES

This note explains the impact of the adoption of AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers on the Group’s financial statements.

(a) AASB 9 Financial Instruments

AASB 9 replaced the provisions of AASB 139 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The adoption of AASB 9 Financial Instruments from 1 July 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements. In accordance with the transition provisions of AASB 9, comparative figures have not been restated.

Accounting policy applied from 1 July 2018

Under AASB 9, the Group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

• those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses are recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this depends on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. This category includes cash and bank deposits, receivables, loan servicing advances and other financial assets which include client deposits.

• Fair value through other comprehensive income: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income. Unrealised gains and losses for changes in fair value are recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss. Currently, the Group has no financial instruments classified into this category.

• Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises. This category includes derivative financial instruments and debt securities that are not held in a business model to collect contractual cash flows and sell financial assets.

• 26 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the half-year ended 31 December 2018

Equity instruments

The Group measures all equity instruments at fair value through profit or loss. Dividends from such investments continue to be recognised in profit or loss as other income. Changes in fair value are recognised in profit or loss as applicable.

Investment in structured entities

The Group measures investments in structured entities at fair value through profit or loss. Dividends from such investments continue to be recognised in profit or loss as other income. Changes in fair value are recognised in profit or loss as applicable.

Impairment

From 1 July 2018, the Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach, which requires expected lifetime losses to be recognised from initial recognition of the receivables. For loan servicing advances and other receivables, the Group applies the general approach, which requires recognition of a loss allowance based on either 12-month expected credit loss or lifetime expected credit loss depending on whether there has been a significant increase in credit risk since initial recognition. The changes in the loss allowance balance are recognised in profit or loss as an impairment gain or loss.

Impact of adoption of AASB 9

Classification and measurement

On 1 July 2018, the Group assessed which business models apply to the financial assets held by the Group and classified its financial instruments into the appropriate AASB 9 categories. The available-for-sale equity securities, debt securities and investments in structured entities were reclassified from available-for-sale to financial assets at fair value through profit or loss as the contractual cash flows of these financial assets do not represent solely payments of principal and interest.

The adoption of AASB 9 resulted in a reclassification of the closing 30 June 2018 balance in available-for-sale financial assets of $30.9 million to the opening 1 July 2018 balance of financial assets at fair value through profit or loss. Related fair value gains of $0.3 million were also transferred from the available-for-sale asset reserve to retained earnings. In the six months to 31 December 2018, fair value losses of $0.2 million relating to these investments were recognised in the profit and loss.

Impairment of financial assets

Impairment under AASB 9 requires recognition of a loss allowance for expected credit losses rather than incurred credit losses as is the case under AASB 139. Expected credit losses are probability-weighted amounts determined by evaluating a range of possible outcomes and taking into account the time value of money, past events, current conditions and forecasts of future economic conditions.

Application of the AASB 9 impairment provisioning methodology resulted in an increase of $6.1 million to the provision for doubtful debtors and contract assets booked through opening retained earnings on 1 July 2018.

Derivatives and hedging activities

The Group hedge relationships at 30 June 2018 qualified as hedges under AASB 9. The Group’s risk management strategies and hedge documentation are aligned with the requirements of AASB 9 and these relationships are therefore treated as continuing hedges.

• 27 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the half-year ended 31 December 2018

(b) AASB 15 Revenue from Contracts with Customers

AASB 15 is the new standard for recognition of revenue and replaces AASB 118 which covered revenue arising from the sale of goods and the rendering of services and AASB 111 which covered construction contracts. The Group adopted AASB 15 from 1 July 2018 which resulted in minor changes in accounting policies and adjustments to the amounts recognised in the financial statements. In accordance with the transition provisions in AASB 15, the Group adopted the modified retrospective method of implementation and comparative figures were not restated.

Accounting policy applied from 1 July 2018

The Group’s policy for revenue recognition under AASB 15 is largely consistent with the policy applied previously with two minor changes:

i) Upfront fees

There are a number of customer contracts in the Group’s registry, plan managers and business services business lines which include an upfront fee charged at the beginning of the contract for setup and implementation activities. The upfront fees were previously recognised when billed at the beginning of the contract. Under AASB 15, most of the upfront fees are classified as fulfilment activities and recognised straight line over the relevant contract term. Where the related implementation costs can be measured reliably, they are now deferred and amortised over the same period.

In the six months to 31 December 2018, changes in the recognition of upfront fees resulted in an increase in profit after tax of $0.8 million, comprising increase in revenue of $1.7 million, increase in cost of sales of $0.7 million and an increase in tax expense of $0.2 million.

ii) Shareholder meetings

Some of the Group’s customer contracts in the registry business line include the shareholder meeting service in the general registry maintenance fee, which is recognised as revenue over time as the registry maintenance service is provided. For contracts where the shareholder meeting fee is not billed separately, the portion of the fee attributable to the shareholder meeting service was previously recognised progressively over the year. Under AASB 15, revenue related to shareholder meetings is recognised now at a point in time when the shareholder meeting service has been provided.

This change resulted in deferral of some of the registry revenue from the first half of the financial year to the second half of the year with a decrease in revenue for the six months ended 31 December 2018 of $2.2 million. This change does not affect full year’s results and therefore no opening retained earnings adjustment was recorded.

• 28 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the half-year ended 31 December 2018

(c) Combined impact of AASB 9 and AASB 15 on the opening balance sheet

The following table shows the adjustments recognised in the opening balance sheet on 1 July 2018 for each individual line item:

Balance sheet (extract) Current assets Receivables/contract assets Available-for-sale financial assets Financial assets at fair value through profit or loss Other current assets Non-current assets Available-for-sale financial assets Financial assets at fair value through profit or loss Deferred tax assets Other non-current assets Impact of changes on total assets Current liabilities Payables Non-current liabilities Payables Deferred tax liabilities Impact of changes on total liabilities Impact of changes on net assets Reserves Retained earnings Impact of changes on total equity	30 June 2018 AASB 9 AASB 15 1 July 2018 Restated $000 $000 $000 $000 428,973 (6,063) - 422,910 4,361 (4,361) - - 1,791 4,361 - 6,152 40,079 - 3,781 43,860 26,566 (26,566) - - 4,263 26,566 - 30,829 145,654 1,950 2,169 149,773 - - 9,611 9,611
	(4,113) 15,561
	442,270 - 4,276 446,546 2,842 - 5,749 8,591 193,026 - 2,581 195,607
	- 12,606
	(4,113) 2,955
	(148,098) (263) - (148,361) 1,455,187 (3,850) 2,955 1,454,292
	(4,113) 2,955

• 29 -

COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES DIRECTORS’ DECLARATION

Directors’ Declaration

In the directors’ opinion:

(a) the financial statements and notes set out on pages 8 to 29 are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

(ii) giving a true and fair view of the consolidated entity's financial position as at 31 December 2018 and of its performance for the half-year ended on that date; and

(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

This declaration is made in accordance with a resolution of the directors.

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SD Jones

SJ Irving

Chairman

Director

Melbourne

13 February 2019

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES STATEMENTS OF THE CEO AND CFO

Statement to the Board of Directors of Computershare Limited

The Chief Executive Officer and Chief Financial Officer state that:

• (a) the financial records of the consolidated entity for the half-year ended 31 December 2018 have been properly maintained in accordance with section 286 of the Corporations Act 2001; and

• (b) the financial statements, and the notes to the financial statements, of the consolidated entity, for the halfyear ended 31 December 2018:

• (i) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

• (ii) give a true and fair view of the consolidated entity’s financial position as at 31 December 2018 and of their performance for the half-year ended on that date.

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SJ Irving

MB Davis

Chief Executive Officer

Chief Financial Officer

13 February 2019

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Independent auditor's review report to the members of Computershare Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Computershare Limited (the Company), which comprises the consolidated statement of financial position as at 31 December 2018, the consolidated statement of changes in equity, consolidated cash flow statement and consolidated statement of profit or loss and other comprehensive income for the half-year ended on that date, selected other explanatory notes and the directors' declaration for Computershare Limited Group (the Group). The Group comprises the Company and the entities it controlled during that half-year.

Directors' responsibility for the half-year financial report

The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement whether due to fraud or error. In note 1, the directors also state that the consolidated financial statements comply with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board.

Auditor's responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Australian Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2018 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Computershare Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

PricewaterhouseCoopers, ABN 52 780 433 757

2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Computershare Limited:

1. is not in accordance with the Corporations Act 2001 including:

2. (a) giving a true and fair view of the Group’s financial position as at 31 December 2018 and of its performance for the half-year ended on that date;

3. (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

4. does not comply with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board as disclosed in note 1.

PricewaterhouseCoopers

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Anton Linschoten Partner

Melbourne 13 February 2019

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4D INFORMATION

NTA Backing (Appendix 4D item 3)

Net tangible asset backing per ordinary share

31 December 31 December 2018 2017 (2.60) (2.29)

Controlled entities acquired or disposed of (Appendix 4D item 4)

Acquired	Date control gained
Equatex Group Holding AG	9 November 2018
Equatex Holding AG	9 November 2018
Equatex IP AG	9 November 2018
Equatex AG	9 November 2018
Equatex Norway AS	9 November 2018
Equatex Employee Services AS	9 November 2018
Equatex US Inc.	9 November 2018
Equatex UK Ltd	9 November 2018
Equatex Deutschland GmbH	9 November 2018
Equatex Poland Sp.Z.o.o.	9 November 2018
Equatex UK Nominee Ltd	9 November 2018
LenderLive Financial Services, LLC	31 December 2018
LenderLive Network, LLC	31 December 2018
Disposed	Date control lost
Karvy Computershare Private Limited	17 November 2018
Karvy Computershare W.L.L	17 November 2018
Karvy Computershare (Malaysia) Sdn Bhd	17 November 2018

Additional dividend information (Appendix 4D item 5)

Details of dividends declared or paid during or subsequent to the half-year ended 31 December 2018 are as follows:

follows:
Record date	Payment date	Type	Amount per security	Total dividend (AUD)	Franked amount per security	Conduit foreign income amount per security
22 August 2018	17 September 2018	Final	AU 21 cents	113,998,579	AU 21.0 cents	AU 0.0 cents
20 February 2019	15 March 2019	Interim	AU 21 cents	114,020,732	AU 6.3 cents	AU 14.7 cents

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4D INFORMATION

Dividend reinvestment plans (Appendix 4D item 6)

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 interim dividend declared in respect of the current financial year on 13 February 2019. Applications or notices received after 5.00pm (Melbourne time) on 21 February 2019 will not be effective for payment of this interim dividend but will be effective for future dividend payments.

The DRP price for the interim 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 25 February 2019 to 8 March 2019 (inclusive). No discount will apply to the DRP price.

Associates and joint venture entities (Appendix 4D item 7)

Name	Place of	Principal activity	Ownership	Ownership	Consolidated	Consolidated
	incorporation		interest		carrying	amount
			Dec	June	Dec	June
			2018	2018	2018	2018
			%	%	$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	45
Associates
SETL Development Limited	United Kingdom	Business Services	10.8	10.8	11,946	13,490
Expandi Ltd	United Kingdom	Investor Services	25	25	6,327	6,354
Milestone Group Pty Ltd	Australia	Technology Services	20	20	3,831	3,918
CVEX Group, Inc	United States	Investor Services	20	20	1,763	1,940
The Reach Agency Holdings Pty Ltd	Australia	Investor Services	46.5	46.5	1,056	1,023
Mergit s.r.l.	Italy	Technology Services	30	30	-	-
					24,968	26,770

The share of net profit/(loss) of associates and joint ventures accounted for using the equity method for the halfyear ended 31 December 2018 is a loss of $1.0 million (31 December 2017: $0.8 million profit).

Foreign Entities (Appendix 4D item 8)

For foreign entities, International Financial Reporting Standards are used in compiling the half-year consolidated report.

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COMPUTERSHARE LIMITED AND ITS CONTROLLED ENTITIES SUPPLEMENTARY APPENDIX 4D INFORMATION

CORPORATE DIRECTORY

DIRECTORS

Simon David Jones (Chairman) Stuart James Irving (President and Chief Executive Officer) Abigail Pip Cleland Tiffany Lee Fuller Lisa Mary Gay Christopher John Morris Paul Joseph Reynolds Joseph Mark Velli

COMPANY SECRETARY

Dominic Matthew Horsley

REGISTERED OFFICE

Yarra Falls 452 Johnston Street Abbotsford VIC 3067

Telephone +61 3 9415 5000 Facsimile +61 3 9476 2500

STOCK EXCHANGE LISTING

Australian Securities Exchange

SHARE REGISTRY

Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford VIC 3067

PO BOX 103 Abbotsford VIC 3067

Telephone 1300 307 613 (within Australia) + 61 3 9415 4222 Facsimile + 61 3 9473 2500

INVESTOR RELATIONS

Yarra Falls 452 Johnston Street Abbotsford VIC 3067

Telephone +61 3 9415 5000 Facsimile +61 3 9476 2500

Email investor.relations@computershare.com.au

Website www.computershare.com

SOLICITORS

Minter Ellison Level 23, Rialto Towers 525 Collins Street Melbourne VIC 3000

AUDITORS

PricewaterhouseCoopers 2 Riverside Quay Southbank VIC 3006

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