|
Article Excerpt
OPERATOR: Good morning everyone and thank you for waiting patiently. This is Jeremy, your operator for today. Welcome to the Computershare Ltd. half year results briefing. I'd now like to hand you over to Mr. Darren Murphy, the Head of Treasury and Investor Relations. And today's call is being recorded. Go ahead, thanks Darren.
DARREN MURPHY, HEAD OF TREASURY AND IR, COMPUTERSHARE LTD.: Good morning. My name is Darren Murphy. And I'd like to welcome you to the results call for the six months ended December 31, 2008. I'm joined today by our CEO, Stuart Crosby, and our new Group CFO, Peter Barker, who's been in the chair for a paltry three weeks.
The format for the call today will be an introduction from Stuart. We'll follow that with a financial overview by Peter and we'll go back to Stuart for an around-the-grounds summary. And then we'll move on to Q&A.
Over to you, Stuart.
STUART CROSBY, PRESIDENT & CEO, COMPUTERSHARE LTD.: Thank you Darren. And good morning, everyone. I'm sure it's futile, but Peter has been here three weeks, so be kind to him.
Okay, I guess launching straight into it, this is a result that we're pretty happy with in the environment and in the circumstances. US$0.26 and a bit management earnings per share is, we think, a pretty creditable effort in the environment we've operated in.
You'll see that -- and I won't run through all the numbers on the fourth slide of the presentation, but you'll see, for instance, that our EBITDA margin has held up quite well. I know that's something that has concerned people as the financial headwinds start to bite that that might drop away. So we're very pleased to see that. Our cash flow numbers are also good. And Peter will be talking more about them later on.
The dividend -- although one factor is probably worth breaking out as we move down to the dividend, which is that there were some chunky tax payments in early financial year 2009 in Australia that relate to the profits in the good year of 2008 and that have put us in a position to increase the franking level on the dividend, while we've left the headline figure the same, at AUD0.11 per share on an interim basis.
Historically, on our way in to these presentations, we've run through what we see as our strengths. And this list has remained, to a degree, constant over the years. But it's funny how the emphasis changes looking back. I think two years ago we wouldn't have had balance sheet strength top of the list. But we do at the moment. And again, Peter will take you through in an amount of detail, not just the shape of the balance sheet but the profile of refinancing and those sorts of things.
More than 70% of our revenue remains recurring in nature. If you look at the revenue breakout you'll see that of the order of 50% is register maintenance revenue and there are a number of other strongly recurring lines. I think we've stuck with the 70% figure for a period of time, but the -- it's a pretty conservative estimate of amount of recurring revenue in our business.
Revenues, cash flows and margins are holding up. And the numbers speak for themselves there.
A key thing that we wanted to emphasize today is that we see ourselves as being in a strong position to continue to invest and that there are real opportunities for us to build our market position in the current environment where a number of our competitors are -- have private equity style balance sheets. And while we don't have transparency of that, we believe that if we can build our product offering and our service offering that there is a real chance to build our -- to strongly reinforce our differentiation from other suppliers in the markets that we operate in.
The last three points on that slide are points that we make each time about our technology strengths, about our M&A track record, and about the fact that we are the only people who can offer a joined up global capital markets offering. And on cross-border transactions, that really gives us a fabulous differentiation.
The last thing I want to talk about before I hand over to Peter is the outlook for the rest of the financial year. At the Annual General Meeting we said that we expect our US dollar management earnings per share for the year to be about the same as last year, perhaps marginally behind. We're very glad to be in a position to reiterate that, the caveat about equity markets interest rates and foreign exchange rates remaining broadly consistent with where they are at the moment. It remains -- it's interesting watching the exchange rates overnight, but that is a pretty strong caveat, I guess, because the volatility levels are so high.
What we did want to do though was just reinforce a point that we've tried to make before but that we're not sure the broad market understands, which is that while our US earnings per share may only be flat, if you look at the earnings that are meaningful to an Australian dollar investor, our Australian dollar earnings per share at the exchange rates yesterday, our profit was actually up on an earnings per share basis 30%. Or the guidance is 30% up on what it was last year.
So while a strong US dollar is a drag on a US dollar reported earnings per share, for Australian earnings per share and for Australian dollar investors, it's only -- it can only be a good thing because it means that the translated earnings into Australian dollars are higher.
But really, that's what I wanted to say by way of introduction. I will now hand over to Peter who will take you through the numbers in more detail. Peter.
PETER BARKER, CFO, COMPUTERSHARE LTD.: Thanks very much Stuart. And before I start, a big welcome to the Computershare people who have dialed in around the world. And a big thank you to, firstly, the business people who've brought in the business and the finance team who've worked incredibly hard to pull the result together.
On to slide nine, the drivers behind the financial performance. The seven major drivers are really pretty much unchanged from prior half, but clearly their order of importance and impact has changed, reflecting the global financial situation we find ourselves in.
In terms of page 10, our Group financial performance, we've taken the liberty of disclosing not only our performance year on year against 1H '08, but also to show the performance versus the last half of 2H '08. This additional disclosure we felt was necessary to make a more meaningful comparative on the current half. We will continue to do this going forward, so it does represent an additional disclosure to make it easier to analyze.
As you can see, sales revenue was ostensibly flat, down 1% year on year and half on half. Management EBITDA at $238.6m, Stuart's spoken to, and management EPS at $0.26 or just over $0.26 a share.
On to slide 11, management EPS performance. This reflects the results. And, as you can see, the rate of growth has dropped off slightly. But it still continues to accumulate, which is tremendous.
On to slide 12, the different [break list] showing the half on half. 1H '09 is our second best performance. Clearly it's off the record of 1H '08, which frankly reflects different economic times.
Slide 13, the management NPAT analysis, the waterfall there. A good result for EMEA, which Stuart's going to talk about a little later. And APAC, Asia Pacific impacted very heavily by drying up of IPO activity in Hong Kong and, to an extent, India. But a good solid result from Australia, New Zealand and Japan. And indeed those breakouts are in the back-up slides. US and Canada, North America reflecting general softness in the industry and both of those are impacted by margin income as well.
Slide 14, net operating cash flows. It continued to be an accumulator of cash. Cash flow off our record high, however, when you look at the 4D, and Stuart referenced this, we did make an increased tax payment in the first half this fiscal year, some $20m higher than the previous year. And that obviously impacts the dividend and the franking credit.
Like all companies, we've deferred non-essential capital expenditure. And that's impacting on the free cash flow which you can see on slide 15.
Moving on to slide 16, our revenue and EBITDA. EBITDA is off the 1H '08 record. And I'd characterize this as reflecting substitution. Whilst our revenue is ostensibly flat, margin income has come off some $38m, and it's been replaced by other sources of income which clearly come with associated cost.
The UK -- as mentioned, the UK and Europe had a stellar result. And this also reflects the revenue contribution from our QM and Busy Bees voucher administration business acquisitions. I'd also point out that some most prudent expense management is also assisting in contributing to the management EBITDA result.
Slide 17 just shows the half -- the year on year for both the first half and second half for comparison.
And slide 18 is pleasing in terms of showing the margin. The EBITDA margin is holding up nicely at just over 30%. So, again, we're quite pleased with that.
In terms of the...
|
