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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
DARREN MURPHY, HEAD, TREASURY & IR, COMPUTERSHARE LIMITED: Good morning, all. Darren Murphy. I would like to welcome you all to the results briefing for the full year ended 30 June, 2008. We will kick the presentation off with Stuart Crosby, our Chief Executive Officer, followed by Tom Honan, our Group CFO, for the final time and running through the financials, and we will end the presentation with Stuart giving us an around the ground view of things.
We expect the presentation to go around 30 minutes followed by Q&A, and I will pass over to Stuart.
STUART CROSBY, CEO, COMPUTERSHARE LIMITED: Thank you, Darren, and good morning, everyone. You will have seen I suspect that as well as announcing our full-year results for financial year 2008, we have announced two other things this morning. One is the GBP90 million acquisition of the Busy Bees voucher administration business in the United Kingdom, which we think is quite exciting and a very good fit, and I will mention that briefly as we run through.
We have also on a much less pleasurable note announced that Tom Honan has decided to leave us and seek greener pastures elsewhere. We will not be talking about that. I think the announcement is self-evident, but I thought I should mention it.
So moving to the financial year 2008 results, they are I think very consistent with the guidance we have given. The market had management earnings per share of just over $0.515 or up 41% on last year. Net profit after outside equity interests is just over $290 million, up 32%. Operating cash flow is up only 8% after a number of years of the cash flows actually beating the profit number and a few timing issues and things pushed that back below the growth rate in reported profits.
The profit growth is driven significantly by continuing leverage at the margin with revenues up 12% to $1.582 billion and costs up just say 5% to a tick over $1.1 billion. We have continued our practice of growing our dividend each year, and the final dividend is AUD0.11. As share we have been able to lift the franking rate on that dividend from 20% at the interim dividend this year to 30% now, and we're comfortable franking at that level.
Before I hand over to Tom, I will run through two other things. One is a quick view of where we see our strengths at the moment. We have had this sort of [slowed] in the pack for quite a while now. If you compare it backwards, you will see that it has changed a little. Honestly the growth strength is up we think it's pretty obvious, strong earnings and cash flow growth is now evidenced over a significant period, and that is clearly a financial strength, as well as the fact that a very high proportion of our revenue is recurring north of 70%. And as well our diversification both globally across a range of different countries and markets around the world but also across a range of business lines that work two different cycles and even within financial market cycles produce revenues at different times in that cycle, providing us with some support when cycles are swinging down.
Something we haven't mentioned before but which I think is important is that we are the number one or two provider in all the registry markets that we operate in, as well as having strong and demonstrated acquisitions and integration capacity, which really levers off our technology platform. One of the things we mention later on is that technology investment has now been moved from acquisition integration, which honestly is where it spent most of its time in the last 15 years or so, to driving competitive advantage both in terms of more sophisticated client offerings and in terms of things that help drive the cost line down.
Our client relationships are another important strength, and they are long-term and very robust. And the last but by no means the least point that I wanted to make about our strengths as an organization is that we're really the only people who provide a joined up global offering in the areas in which we operate and that that brings our clients and their investors really, really special opportunities and services.
So looking into the financial year 2009, we are reaffirming our commitment to the long-term target of 27% year-on-year growth, and we are anticipating at this stage on the budgeting processes that management earnings per share in financial year '09 will be approximately 10% higher than they were in financial year '08.
On that notice I will hand over to my colleague, Mr. Honan, and ask him to talk about computer shares results as Darren noted for the last time at least in this iteration call.
TOM HONAN, CFO, COMPUTERSHARE LIMITED: Thanks, Stuart, and thanks for all the people in the Computershare group who put these results together. A special hello to the Chairman who is in the UK and has just inked a deal with the voucher processing business, so well done, Chris. We're justifiably proud that we have grown earnings by 40% this year. It has been an interesting market for us in many different parts of the world, and we are obviously very pleased to have grown our earnings per share by more than 40%.
I will turn to page nine, which is basically the summary P&L. I will just spend a few moments talking about some key numbers here. Sales revenue, as Stuart said, 1.5, just over $1.5 billion, and that grew by 11% during the year. Later on in this slide, I will talk about the individual components, but the thing that comes out of that is that 12 months ago I talked about us really firing on all cylinders.
In the past four months, that has not been the case. So that some of the business lines have been growing significantly faster than the 11%, and some of them either not been growing or have actually been declining over the past 12 months. The operating costs you will see, as Stuart mentioned, are up 5%, and again it is interesting to note some of the costs are up more than that, particularly technology costs and a couple of the things that come out of that, particularly the development costs as part of the technology spend. And that is a good sign from my perspective.
The leverage that 11% growth in sales revenue and 5% growth in operating costs delivers 29% growth in EBITDA, and let's not overlook the fact that we made $479 million US in EBITDA this year. All of that delivers a management EPS result of just $51.61 per share, which as I said is 41% up on last year.
Turning to page 10 and looking to see what has really driven the impact this year, and it is pleasing from our perspective that it has really been an even contribution from the three regions -- Asia-Pacific $35 million, Europe $39 million and North America $33 million. Obviously in proportion to the relative sizes, it shows a different story with Asia-Pacific and Europe providing a much greater proportion of the growth relative to their absolute size.
Depreciation and amortization had an increase of almost $7 million of interest, mainly due to funding the buyback that we undertook or we closed out during the year, and unfortunately we have to pay more tax as we make more money in those three markets. But the pleasing thing is that the tax rate came down, and primarily that was because of the average rate that we were paying across each of the markets decline.
Turning to page 11, our EPS performance, really seeing the climb that continues in what we regarded as our key performance measure over the past five years. So when we define this as our key performance measure, we are making less than $0.10 a share. We're making well over $0.50 now.
Page 12 looks at the half-year comparison, and a couple points I will make here. The first one is that the $24.26 in the second half was up around 30% on the previous year and was pretty much in line with where we thought it would be from about November of 2007. We were projecting the number to be around $0.24 a share, and it came out to be $0.24 a share.
Some of the items drove to a higher number, and they were compensated by some others. And we will talk about those in some detail later on.
Page 13 we look at our cash flow position, and as Stuart said, growing from 321 to 347 is not as strong as we would have liked. A couple of points that I will make there. DSO has not improved as much as we would have liked, and there's a couple of reasons behind that.
One of those is that in the current economy payments have slowed and particularly in the US, and we need to reinvigorate our efforts to collect those payments. Sometimes it is related to the date at which you close off, so a few major accounts were not billed and/or...
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