COMPUTERSHARE LIMITED. — Investor Presentation 2014

Sep 2, 2014

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Computershare Limited

MARKET ANNOUNCEMENT

ABN 71 005 485 825 Yarra Falls, 452 Johnston Street Abbotsford Victoria 3067 Australia PO Box 103 Abbotsford Victoria 3067 Australia Telephone 61 3 9415 5000 Facsimile 61 3 9473 2500 www.computershare.com

Date: 3 September 2014 To: Australian Securities Exchange Subject: Investor Conferences – Asia, UK and US – September 2014

Attached is the presentation to be delivered at various investor conferences in Asia, United Kingdom and the United States during September 2014.

For further information contact:

Mr Darren Murphy Head of Treasury and Investor Relations Ph +61 3 9415 5102 darren.murphy@computershare.com.au

About Computershare Limited (CPU)

Computershare (ASX:CPU) is a global market leader in transfer agency and share registration, employee equity plans, proxy solicitation and stakeholder communications. We also specialise in corporate trust, mortgage, bankruptcy, class action, utility and tax voucher administration, and a range of other diversified financial and governance services.

Founded in 1978, Computershare is renowned for its expertise in high integrity data management, high volume transaction processing and reconciliations, payments and stakeholder engagement. Many of the world’s leading organisations use us to streamline and maximise the value of relationships with their investors, employees, creditors and customers.

Computershare is represented in all major financial markets and has over 14,000 employees worldwide. For more information, visit www.computershare.com

Computershare Limited Equity Conferences Presentation Asia, United Kingdom and United States

September 2014

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Group Financial Performance

FY 2014 FY 2013		2H 2014 1H 2014 2H 2013 1H 2013
	% variance to FY 2013
Sales Revenue $2,011.4 $2,015.7	(0.2%)	$1,040.3 $971.1 $1,041.1 $974.7
Interest & Other Income $11.2 $9.4	19.2%	$5.4 $5.8 ($3.5) $12.9
Total Management Revenue $2,022.6 $2,025.1	(0.1%)	$1,045.7 $976.9 $1,037.5 $987.6
Operating Costs $1,480.9 $1,515.2	2.3%	$771.7 $709.2 $767.6 $747.6
Share of Net (Profit)/Loss of Associates $1.1 $0.1		$0.5 $0.7 $1.6 ($1.4)
Management EBITDA $540.6 $509.8	6.0%	$273.6 $267.0 $268.4 $241.4
Statutory NPAT $251.4 $157.0 Management NPAT $335.0 $304.9	60.1% 9.9%	$112.0 $139.4 $62.4 $94.6 $171.5 $163.6 $155.6 $149.3
Management EPS (US cents) 60.24 54.85	9.8%	30.83 29.41 27.98 26.87
Statutory EPS (US cents) 45.20 28.25	60.1%	20.13 25.07 11.23 17.02

Note: all results are in USD M unless otherwise indicated.

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Management Results Summary

				FY 2014 @ FY
	FY 2014	FY 2013	v FY 2013	2013 exchange
				rates
Management Earnings per share (post NCI)	US 60.24 cents	US 54.85 cents	Up 9.8%	US 59.86 cents
Total Operating Revenue	$2,022.6	$2,025.1	Down 0.1%	$2,079.9
Operating Costs	$1,480.9	$1,515.2	Down 2.3%	$1,532.3
Management Earnings before Interest, Tax, Depreciation and
Amortisation (EBITDA)	$540.6	$509.8	Up 6.0%	$544.1
EBITDA Margin	26.7%	25.2%	Up 150 bps	26.2%
Management Net Profit post NCI	$335.0	$304.9	Up 9.9%	$333.0
Cash Flow from Operations	$409.3	$334.0	Up 22.5%
Free Cash Flow	$392.8	$290.3	Up 35.3%
Days Sales Outstanding	45 days	45 days	Flat
Capital Expenditure	$19.8	$49.5	Down 60.0%
Net Debt to EBITDA ratio	2.13 times	2.47 times	Down 0.34 times
Final Dividend	AU 15 cents	AU 14 cents	Up 1 cent
Final Dividend franking amount	20%	20%	Flat

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Note: all results are in USD M unless otherwise indicated.

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Drivers Behind FY14 Financial Performance

• › Overall Register maintenance revenues were slightly down. The contributions from recent acquisitions and modest improvements in shareholder activity were offset primarily by the strengthening US dollar.

• › Revenue in transactional business lines remained subdued. While there was some improvement in corporate activity this was impacted by reduced yields on client balances.

• › Employee Share Plans continue to perform strongly, particularly in the UK, US and HK, with organic growth aided by contributions from recent acquisitions.

• › Average client balances slightly lower than FY13 with ongoing pressure on deposit returns.

• › In Business Services, growth was achieved from Loan Servicing, Class Actions and Utility Back Office Services, while Voucher Services and Bankruptcy both declined.

• › The strong cost focus in all business lines continues and further Shareowner Services synergies were realised as expected. However, 2H14 saw some additional operating costs as a result of revenue mix, recent acquisitions and wage inflation.

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Computershare Strengths

• › Leading market position in all major markets for equity investor record-keeping and employee stock plan administration based on:

• sustainable advantages in technology, operations, domain knowledge and product development;

• sustained quality excellence and operational efficiency; and

• a joined-up global platform and seamless development and execution of crossborder solutions.

• › Consolidating position and continuing to extract synergies from acquisitions within our chosen business lines.

• › Exciting growth opportunities within newer business lines.

• › More generally:

• over 70% of revenues recurring in nature;

• long track record of excellent cash realisation from operations; and

• strong balance sheet and prudent gearing, with average maturity of debt facilities of 4.6 years.

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Guidance

• › Looking to the year ahead, lower yields on client balances and some short term headwinds are expected to be a drag on earnings, but we are seeing modest improvements in some of our key operating environments. Taking all factors into account we expect Management EPS for FY15 to be around 5% higher than FY14.

• › This assessment of the outlook assumes that equity, foreign exchange and interest rate markets remain at current levels, and is also subject to the important notice on slide 21 regarding forward looking statements.

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Management Revenue & EBITDA Half Year Comparisons

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1,200 60%
1,037.3 1,037.5 1,045.7
987.6
976.9
1,000 50%
781.4
800 40%
600 30%
27.3% 26.2%
27.1%
25.9%
23.9% 24.4%
400 20%
268.4 267.0 273.6
247.5 241.4
211.5
200 10%
0 0%
1H12 2H12 1H13 2H13 1H14 2H14
Revenue Management EBITDA Operating Margin
Revenue & EBITDA USD M
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Management Revenue Breakdown

Revenue Stream FY 2014 FY 2013	% variance to FY 2013	2H 2014 1H 2014 2H 2013 1H 2013
Register Maintenance $821.9 $824.1	(0.3%)	$432.3 $389.5 $429.4 $394.7
Corporate Actions $154.2 $169.4	(8.9%)	$77.0 $77.2 $76.6 $92.8
Business Services $487.9 $489.1	(0.3%)	$241.0 $246.9 $247.3 $241.8
Stakeholder Relationship Mgt $74.7 $76.6	(2.5%)	$46.7 $28.0 $45.4 $31.2
Employee Share Plans $259.5 $237.1	9.5%	$134.6 $124.9 $124.6 $112.5
Communication Services $194.8 $198.1	(1.7%)	$100.0 $94.8 $99.8 $98.3
Technology & Other Revenue $29.7 $30.8	(3.5%)	$14.1 $15.6 $14.5 $16.3
Total Revenue $2,022.6 $2,025.1	(0.1%)	$1,045.7 $976.9 $1,037.5 $987.6

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Note: all results are in USD M unless otherwise indicated.

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Management Revenue & EBITDA – Regional Analysis Half Year Comparisons

Revenue Breakdown

EBITDA Breakdown

214.1 200.7 232.2 199.7 200.7 177.4 57.1 54.0 59.7 58.3 56.9 57.0 147.9 156.9 150.4 160.2 150.8 177.1 45.1 62.9 41.1 61.8 40.6 66.7 217.7 452.5 407.2 455.3 437.9 468.0 99.4 110.5 97.0 102.2 90.0 99.5 781.4 1,037.3 987.6 1,037.5 976.9 1,045.7 0 200 400 600 800 1,000 1,200 1H12 2H12 1H13 2H13 1H14 2H14 USD M Australia & NZ Asia UCIA Continental Europe USA Canada 31.6 27.2 36.0 18.4 30.6 17.6 19.4 15.0 18.1 18.2 20.4 20.9 60.7 56.9 60.7 72.6 63.7 73.0 3.1 7.4 4.0 12.9 0.8 14.2 43.2 90.2 77.6 102.0 108.0 104.2 53.6 50.8 45.1 44.3 43.5 43.6 211.5 247.5 241.4 268.4 267.0 273.6 0 50 100 150 200 250 300 1H12 2H12 1H13 2H13 1H14 2H14 USD M Australia & NZ Asia UCIA Continental Europe USA Canada	214.1 200.7 232.2 199.7 200.7 177.4 57.1 54.0 59.7 58.3 56.9 57.0 147.9 156.9 150.4 160.2 150.8 177.1 45.1 62.9 41.1 61.8 40.6 66.7 217.7 452.5 407.2 455.3 437.9 468.0 99.4 110.5 97.0 102.2 90.0 99.5 781.4 1,037.3 987.6 1,037.5 976.9 1,045.7 1H12 2H12 1H13 2H13 1H14 2H14 0 50 100 150 200 250 300 USD M
		247.5 241.4 268.4	43.6 267.0 273.6
		50.8 45.1 44.3 211.5	43.5
		902 77.6 102.0 53.6	108.0 104.2
		31 4.0 12.9 43.2 .	0.8 14.2
		60.7 56.9 60.7 72.6 . 7.4	63.7 73.0
		31.6 27.2 36.0 18.4 19.4 15.0 18.1 18.2	30.6 17.6 20.4 20.9
		1H12 2H12 1H13 2H13

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Margin Income Analysis

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200 18
16.7
180 15.4
16
14.4
14.0
160 13.6
14
12.1
140
12
120.0
117.4
120
104.9 105.8 10
100
89.0
86.8
8
80
6
60
4
40
2
20
0 0
1H12 2H12 1H13 2H13 1H14 2H14
Margin Income Average balances
USD Billion
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AVERAGE MARKET CASH RATES

	1H12	2H12	1H13	2H13	1H14	2H14
UK	0.50%	0.50%	0.50%	0.50%	0.50%	0.50%
USA	0.25%	0.25%	0.25%	0.25%	0.25%	0.25%
Canada	1.00%	1.00%	1.00%	1.00%	1.00%	1.00%
Australia	4.64%	4.05%	3.34%	2.93%	2.55%	2.50%

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FY14 Client Balances Interest Rate Exposure

Average funds (USD 14.2b) held during FY14

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No exposure
24% ($3.4b)
Exposure to
interest rates
46% ($6.5b)
Effective
hedging:
natural
7% ($1.0b)
Effective
hedging:
derivative /
fixed rate
23% ($3.3b)
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CPU had an average of USD14.2b of client funds under management during FY14.

For 24% ($3.4b) of the FY14 average client funds under management, CPU had no exposure to interest rate movements either as a result of not earning margin income, or receiving a fixed spread on these funds.

The remaining 76% ($10.8b) of funds were exposed to interest rate movements. For these funds:

• 23% had effective hedging in place (being either derivative or fixed rate deposits).  7% was naturally hedged against CPU’s own floating rate debt.

The remaining 46% was exposed to changes in interest rates.

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Client Balances Fixed and Floating Rate Term Deposits

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8,000
Floating Rate Deposits Fixed Rate Deposits
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Jul-14 Jul-15 Jul-16 Jul-17 Jul-18
USD M
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Total Management Operating Costs Half Year Comparisons

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900
790.2
800 768.9 771.6
746.3
709.2
700
196.8
168.3 196.2 193.4
164.9
600 569.9
500 132.0
400
300 593.4 577.9 572.7 578.3
544.3
437.9
200
100
0
1H12 2H12 1H13 2H13 1H14 2H14
Controllable Costs (excl COS) Cost of Sales (COS)
USD M
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Technology Costs Continued Investment to Maintain Strategic Advantage

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14%
13.1%
160 12.7%
12.1% 11.8%
11.8%
11.5% 12%
140
131.9
129.4
122.6 6.2 123.1
5.7 117.8
120 7.2 4.9 10%
8.9
32.4
100 44.2 31.6
89.9 8%
45.8 30.2
2.9
80
30.5 6%
56.6
46.8
60
48.4 44.3
4%
21.8 46.5
40
2%
20 34.7 31.2 36.7 34.4 39.8
23.0
0 0%
1H12 2H12 1H13 2H13 1H14 2H14
Development Infrastructure Maintenance Admin Technology costs as a % of revenue
USD M
Technology costs as a % of revenue
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Free Cash Flow

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250
217.4
200.8
200 191.9
188.2
146.4
150
133.3
100
50
30.1
23.6
20.2
10.0 10.2
6.3
0
1H12 2H12 1H13 2H13 1H14 2H14
Operating Cash Flows Cash outlay on Capital Expenditure
USD M
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Note: Excludes assets purchased through finance leases which are not cash outlays.

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Balance Sheet at 30 June 2014

	Jun-14	Jun-13	Variance
	USD M	USD M	Jun-14 to Jun-13
Current Assets	$1,117.5	$982.4	13.8%
Non Current Assets	$2,690.7	$2,636.5	2.1%
Total Assets	$3,808.2	$3,618.9	5.2%
Current Liabilities	$834.6	$501.3	66.5%
Non Current Liabilities	$1,706.4	$1,986.7	(14.1%)
Total Liabilities	$2,541.0	$2,487.9	2.1%
Total Equity	$1,267.2	$1,130.9	12.0%

See ASX Appendix 4E as at 30 June 2014 for full details.

• › Current assets increased mainly due to SLS and other receivables as well as cash (cash partially included in the assets classified as held for sale).

• › Non current assets: goodwill and other intangibles increased due to acquisitions (R&T, Olympia, SG Vestia) and FX partially offset by disposal of Pepper and VEM write-down.

• › Non-current and current liabilities affected by a portion of non-current debt now classified as current.

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Key Financial Ratios

Net Financial Indebtedness to EBITDA

EBITDA Interest Coverage

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14 3.5
12 3.0
10 2.5
8 2.0
13.2
6 1.5 2.92 2.86 2.72
4 9.5 7.3 7.7 8.4 8.6 1.0 2.47 2.26 2.13
2 0.5
0 0.0
1H12 2H12 1H13 2H13 1H14 2H14 1H12 2H12 1H13 2H13 1H14 2H14
Jun-14 Jun-13 Variance
USD M USD M Jun-14 to Jun-13
Interest Bearing Liabilities $1,659.3 $1,711.7 (3.1%)
Less Cash ($509.0) ($454.4) 12.0%
Net Debt $1,150.2 $1,257.3 (8.5%)
Management EBITDA $540.6 $509.8 6.0%
Net Financial Indebtedness to EBITDA 2.13 times 2.47 times Down 0.34 times
Times
Times
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• Cash includes cash that is classified as an asset held for sale.

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Return On Invested Capital vs. WACC and Return on Equity

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30%
28.01%
25.80%
25%
22.34%
20%
16.38%
15.84%
14.37%
15%
10%
9.51%
8.61% 8.97%
5%
0%
FY12 FY13 FY14
WACC ROIC ROE
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• ROIC = (Mgt EBITDA less Depreciation less Income Tax expense)/(Total Debt add Total Equity less Cash).

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Group Strategy and Priorities

Our group strategy remains as it has been:

• Continue to seek acquisition and other growth opportunities where we can add value and enhance returns for our shareholders.

• Improve our front office skills to protect and drive revenue.

• Continue to drive operations quality and efficiency through measurement, benchmarking and technology.

We recently concluded our prioritised asset “clean up” process enabling a clearer focus on our existing businesses and opportunities.

While continuing to focus on the execution of recent transactions, our priorities are moving to those areas that will best assure our future, primarily:

• protecting profitability in our mature businesses; and

• driving growth in businesses that offer that potential, such as Loan Servicing, Share Plan Administration, and Utility Back Office Services.

Across all our business lines and geographies, we are still committed to investing in and remaining engaged with regulatory developments and market structure change.

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Delivery against strategy and priorities

The Shareowner Services synergies are nearing completion and recent acquisitions are all progressing well and meeting expected milestones. However, the opportunities for further acquisitions in our traditional registry space are becoming more limited.

On Loan Servicing, we are excited by both the ongoing prospects with our existing SLS business as well as the new opportunities presented by our recently announced acquisition of HML in the UK. We continue to see a range of potential opportunities to allow us to commit further capital to build our business in this space.

On revenue protection, while the competitive landscape remains challenging, we continue to achieve high levels of customer satisfaction and client retention and we are also making progress with a range of new client wins and revenue initiatives.

Cost and service progress for the period includes ongoing cost out achievements with our global service initiative accompanied by very satisfactory quality outcomes. We are also giving priority to property rationalisation opportunities.

We continue to look for other acquisition opportunities that strongly align with our core competencies. While the details are uncertain and the process at an early stage, we will monitor the developments on the possible disposal of the ASIC registry asset. As with any opportunity, our disciplined approach to acquisitions and return hurdles remain key.

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Important Notice

Forward looking statements

• › This announcement may include 'forward-looking statements'. Such statements can generally be identified by the use of words such as 'may', 'will', 'expect', 'intend', 'plan', 'estimate', 'anticipate', 'believe', 'continue', 'objectives', 'outlook', 'guidance' and similar expressions. Indications of plans, strategies, management objectives, sales and financial performance are also forward-looking statements.

• › Such statements are not guarantees of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Computershare. Actual results, performance or achievements may vary materially from any forward-looking statements. Readers are cautioned not to place undue reliance on forwardlooking statements, which are current only as at the date of this announcement.

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