Headline results

• Normalised Earnings per Share (pre-goodwill and post preference shares and Outside Equity Interests (OEI)) rose from 19.02 cents (FY04) to 24.27 cents per share (up 28%);
• Total revenues reached $1,098.9 million (an increase of 23% on FY04);
• Net Operating Cash Flows for the half year were $146.8 million (an increase of 8% on FY04);
• Normalised Earnings Before Income Tax, Depreciation and Amortisation (EBITDA normalised) was up 21% to $222.1 million;
• Net profit after OEI and preference dividend was $100.2 million (an increase of 38% on FY04);
• Operating expenses (including the effect of acquisitions and Cost of Sales) were $878.7 million, an increase over the prior corresponding period of 24%. Excluding cost of sales and the cost contribution of businesses acquired over the past 12 months, operating costs increased by 7% reflecting overall growth in the business;
• Days Sales Outstanding for the half year ending 30 June 2005 increased to 62 days compared to 60 days at 30 December 2004; and
• Capital expenditure was $31.6 million, in part due to costs of integration of acquired businesses.

Commentary

Computershare reported another record year of Revenues, Earnings, and Operating Cash Flows today. The company achieved strong growth again this year, increasing normalised EPS by 28% in FY05. This result reflects the continued impact of the long term strategy to build a global, fully-integrated, financial services solutions business. The company has now delivered compound annual growth of more than 20% in EPS terms over the past 5 years.

As predicted in the interim results announcement, Computershare surpassed the A$1 billion revenue mark for the first time during the year. This achievement helped to drive a 21% increase in normalised EBITDA and the increase in operating cash flows. Both results were delivered with a minor contribution from the business previously known as Equiserve, which was acquired from DST Systems during June 2005.

Computershare's CEO, Chris Morris, said, "It has been another great year for the Company. We've broken the A$1 billion revenue barrier and, once again, we've recorded strong earnings growth. The result is particularly satisfying given the competitive markets in which we operate and the scope for further improvement in operating conditions in the northern hemisphere. Our staff are to be congratulated for delivering another record year."

In FY2005, Computershare acquired several businesses in North America, the key acquisition being Equiserve. As a result Computershare now acts as Transfer Agent for over 60% of Dow Jones Industrial Average companies. The North American region achieved some significant client wins in the USA and a record result from the Canadian businesses.

In the Asia Pacific region, the combination of healthy levels of market activity, continued operational improvements, and more sophisticated customer relationship management helped the region achieve its best performance ever. The Company is cautiously optimistic that the positive market environment enjoyed for the past few years across Asia Pacific will be maintained.

The EMEA region's market conditions appear to have stabilised and the business has been supplemented by using core capabilities to diversify into other areas.

Dividend

The company announces a final dividend of 6 cents per share unfranked, payable on 23 September 2005. Total dividends for the year are 11 cents per share (interim dividend was 10% franked), a 38% increase on FY04.

On-market Share Buy-Back and Preference Share Conversion

In the first half of the year, the company:

• bought back 10,220,000 ordinary shares at a total cost of $30.6m; and
• bought back 284,807 reset preference shares at a total cost of $29.4m.

The remaining 900,000 reset preference shares were converted into 24,000,382 fully paid ordinary shares.

There were no share buy backs in the second half of the year.

Balance Sheet Overview

The company’s financial position remains strong with total assets of $1,985.6 million being financed by shareholders' funds totalling $755.1 million.

Computershare's total current funding facility is $818.0 million, with net borrowings increasing to $526.3 million at 30 June 2005 (from $257.8 million at 31 December 2004). Gross borrowings at 30 June 2005 amounted to $683.5 million (See Page 8, for information on the US Private Placement and Multicurrency Funding facilities).

Gearing – Net Debt to Net Debt plus Equity increased from 33% at 31 December 2004 to 41% at 30 June 2005.

Capital expenditure was marginally higher than expected due to the commencement of integration projects as a result of various acquisitions throughout the year.

Operating Costs – Overview

Excluding the impact of acquisitions and costs of sales, operating expenses increased by 7%.

Total technology spending for the twelve months was $106.6 million, an increase of 16% on the same period last year, following acquisitions made during the year. This amount includes $44.9 million in research and development (R&D) expenditure. In line with the company's policy, all technology costs have been expensed during the year, although this R&D spending could be determined to be of a capital nature.

Outlook for Financial Year 2006

While the Company is in the early stages of the integration of the Equiserve business (now marketed under the Computershare name) no issues have arisen that would cause management to alter its initial projections substantially regarding the timing and financial impact of the acquisition.

On this basis, coupled with an expectation that market activity in the northern hemisphere will, at a minimum, be similar to the past year, the Company forecasts that revenue will approach A$1.5 billion (including the impact of recent acquisitions) and Earnings per Share will grow more than 20%.Download the document now 1.2 mb (Adobe Acrobat Document)