Investor Presentation 2008 - Computershare

Investor & Analyst Briefing 

Computershare Limited 

13 March 2008


Darren Murphy 

Head of Treasury and Investor Relations 

Welcome

Computershare Global Footprint 

3. Analyst Briefing of Computershare Limited.


Stuart Crosby 

Chief Executive Officer 

Introduction 


Market Environment 

› General slowdown in merger and acquisition activity 

› Obviously less merger and acquisition value than before 

the sub-prime 

› Biggest drop - private equity buy outs - long term benefit 

for Computershare 

› Corporate to corporate cash and equity deals still 

happening 

› Fundraising continues - rights issues in many markets 

› Post Merger Clean-up relating to prior M&A deals will 

occur over the next 24 months 


Interest Rates 

› Materially lower than recent peaks, especially in the 

United States, but also in other Northern hemisphere 

markets 

› As disclosed in ½ year results, significant hedging of core 

balances (about ½ of recent average daily balances) 

› Continue to grow capture of balances, even if earning 

margin at lower rates 


Interest Rate Sensitivity on Core Balances 

US$m PBT 

Impact 

80 

60 

40 

20 

0 

-3.00% -2.50% -2.00% -1.50% -1.00% -0.50% Current 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 

-20 

-40 

-60 

-80 

Exposure 

Hedged exposure 

This graph outlines the sensitivity of northern hemisphere interest rate changes when measured 

against core client balances (long term sustainable balances), adjusted by the impact of floating 

rate debt, corporate cash balances and derivative positions.


Steven Rothbloom 

Head of Computershare USA 

Business Overview 

United States of America 


Regional Overview: United States of America 

› State of Play 

› No. 1 or 2 ranking across all our core businesses 

› Phenomenal tax season, great momentum 

› Significant focus on new product and service 

enhancements 

› Cross-sell sell efforts paying big dividends 

› Adding top talent across the board 



› Major wins 

› Home Depot Dutch Auction >one of the largest in history 

› Proxy Solicitation for TXU Corporation Acquisition >the largest ever 

public-to 

to-private transaction 

› Plans Software Services & Software in two prominent, complex 

spin-off transactions: Tyco and Temple-Inland 

› Mutual Fund Proxy Solicitation for top funds; 

› Nuveen 

› AIM Funds 

› UBS Funds 

› Pioneer Funds – included “notice and access” component. 



› Challenges and Opportunities 

› Consolidation/exiting/reshaping of competitors 

› Private equity no longer competing with us for acquisitions and taking 

clients 

› Renewed Acquisitions Focus 

› Computershare Executive Services (formerly RSS) 

› Administar 

› Sub-prime market situation hitting our bank and brokerage competitors 

› Computershare USA an increasingly attractive partner and expert 

resource to other financial institutions 

› Merger and acquisition activity & interest rate environment 



Investor Services 


› Major market share of top-tier clients 

› Dow 30 – 63% 

› S&P 500 – 36% 

› Fortune 500 – 31% 

› Fiscal year to date: 110 new appointments 

› Awarded significant amount of IPO-related business 

› Acquired UMB Bank transfer agent business 





› Implement quality methodology to: 

› Improve productivity 

› Reduce operating risks 

› Differentiate us in the marketplace 

› Market dynamics 

› New products and innovations 

› Cross-sell initiatives and realize synergies 

› Merger and acquisition activity 

› Interest rate environment 



Corporate Actions and Asset Reunification Programs 


› Involved in more than 200 deals this FY to date 

› Several high profile M&A and private equity deals 

› Challenges and opportunities 

› M&A activity 

› Interest rate environment 



Corporate Proxy Solicitation and Funds Services 


› Georgeson ranked No. 1 Merger and Acquisition proxy 

solicitor/information agent by Corporate Control Alert 

› 8th consecutive year at top 

› Over 30% of M&A transactions tracked by the publication 

› Fund Services continues to handle more than 70% of the deals in 

the industry 

› Call center built out for both businesses 


› Market dynamics 

› New talent on board, to build key market areas 

› Regulatory changes > specifically notice and access 



Plan Managers and Plans Software 


Plan Managers 

› 27 new clients 

› Market share top-tier clients 

› Fortune 500 – 15% 

› S&P 500 – 14% 

Plans Software 

› 150 new clients 

› Enhanced version of flagship Express Options product 


› Computershare Executive Services (RSS/10b5-1 compliance) 

› Market dynamics > especially sub-prime situation 

› Competitive environment for Plans Software becoming more 

favorable 



Steven Rothbloom 

Head of Computershare USA 

Question Time 



Wayne Newling 

Head of Computershare Canada 


Canada 


Regional Overview: Canada 


› National presence: Vancouver, Calgary, Toronto, Montreal, 

Halifax 

› Investor Services, Corporate Trust, Plans, Georgeson 

represented across all regions 

› Market leadership across all lines of business 

› Significant EBITDA growth over past five years 

› Costs flat 

› Strong management team – ongoing focus succession 

planning 

› On target to deliver 07/08 goals 


Regional Strategy: Canada 

› Challenges and opportunities 

› Operational effectiveness/client retention 

› Acquisitions 

› New product introduction 

› Continued focus/development on risk management 

› M&A activity and interest rate environment




› Strong year 

› Winning more than 63% of IPOs 

› Robust Corporate Actions 

› IPSCO sale to SSAB Stal > $7.7B 

› Prime West Energy Trust sale to ABU Dhabi NEC > valued $5B 

› CanWest Comms acquisition of Atlantis Alliance > valued $2.2B 

› Gained depositary role for Non-CPU clients 

› Rio Tinto/Alcan > valued $37.6B 

› Norilisk Nickel/Lionore > valued $6.2B 

› Telus Corp./Take over Emergis > valued $763M 




› Challenges 

› Regional T/As 

› Corporate actions >volume strong >value lower 

› Opportunities 

› Really benefiting from global operations initiatives 

› Ongoing centralization 

› Acquisitions 

› Global cross border transaction ability proven 

› Rational pricing 



Corporate Trust 


› Continuing to win mandates 

› Displaying strong predictable earnings 

› Ongoing margin enhancement 

› Seen as “industry experts” 

› Cost base remains flat through successful integration of 

acquisitions onto CPU platform 

› Continued process improvement 

› Strong leadership 

› TD Corporate Trust business integrated 



Corporate Trust 


› Consolidation of issuer companies and trusts could result in 

client loss 

› New debt and structured product issuances have slowed due 

to market uncertainty 


› Continued acquisition in local markets in both core and 

non-traditional areas 

› New product development leveraging trust license and 

core competencies 

› Increase in defaults in short term has led to increased 

trustee “special services” 



Communication Services 


› Successful in winning six commercial clients 

› Quality at all time high for both internal and external clients 

› Tapping into registry client base e.g. BNS, BMO and quarterly 

mailings for small cap market 

› Strong management team 





› Gaining foothold in commercial markets 

› Efficiently managing season spikes 

› Regulatory landscape changing 


› Strong commercial relationships and the opportunity to 

introduce new solutions to upsell and cross sell existing clients 

› Access to TA client base allows for upsell and cross sell 

› Fragmented market allows for consolidation 

› Conversion from print to electronic distribution 



Wayne Newling 

Head of Computershare Canada 

Question Time 



James Wong 

Head of Computershare Asia 


Asia 


Regional Overview: Asia 

Hong Kong 

› Review 

› Main business line > Investor Services 

› Product extension through eIPO and allotment results 

hosting has enhanced business proposition and created 

pricing premium 

› Good growth for Plans business in Hong Kong 

› Also introduced Proxy and IML Services into Hong Kong 



Hong Kong 

› Threats and Opportunities 

› IPO pipeline from China influenced by macro 

economic control 

› Working on e-Comm initiative and applying for direct 

clearing system participation 

› HKEx shareholder communications initiatives offer 

new revenues 

› Appetite for more value added product 



China 

› Review 

› Beijing Office opened in Oct 2007> currently has two 

staff 

› Initially provides onshore customer service and 

regulatory liaison 

› Excellent relationship with regulators and market 

infrastructure 



China 


› Fast changing regulatory environment difficult to 

navigate 

› Plan to relocate Plan Managers China team to Beijing, 

and introducing proxy service to Chinese issuers 

› Helps secure Hong Kong’s lead by building a bridge 

between the Hong Kong and Mainland China markets 



India 

› Review 

› 50:50 JV with Karvy Group 

› Biggest player in India in Investor Services and 

second biggest player in Fund Services 

› Our partner has strong distribution capability that helps 

to attract business 



India 


› Highly competitive but fast growing market > we are 

the only viable volume player 

› More consolidation possible but valuation expectations 

high 



Japan 

› Review 

› 50:50 JV with Mitsubishi UFJ Trust Bank 

› Main business lines – Shareholder ID and Corporate 

Proxy 

› We have invested more resources to strengthen this 

business for more volume throughput 

› More merger and acquisition deals seen as well as up 

tick of shareholder activism, generating more high value 

proxy opportunities 



James Wong 

Head of Computershare Asia 

Question Time 



Paul Conn 

Head of Global Capital Markets 


Notice and Access Proxy Distribution 


SEC Requires Internet Availability & Notification 

“Shareholder Choice Regarding Proxy Materials” 

› What is required by companies? 

› Proxy materials must be posted on a publicly-accessible 

Internet site other than EDGAR 

› Notification of availability must be provided to 

shareholders per specific SEC rules 

› Company mailing options 

› Notice-only > one page notification of Internet availability 

› Full-set > traditional mailing of materials with notification 

of Internet availability 

› Mix of notice and full-sets 


SEC Requires Internet Availability & Notification 

“Shareholder Choice Regarding Proxy Materials” 

› Effective dates 

› January 1, 2008 for large accelerated filers 

($700 mil US market value end of fiscal 2Q) 

› January 1, 2009 for all companies and registered 

investment companies 

› Release available at 

www.sec.gov/rules/final/2007/34-56135.pdf . 


Computershare’s ProxyAccess Services for Notice-Only Mailings 

ProxyAccess Basic 

ProxyAccess Plus 

optional services* 

Supplemental Services* 

Consultation and 

analysis 

› Notice and access rule guidance 

› Cost savings identification 

› Fulfillment projections 

› Mailing strategy guidance 

› Delivery preference campaign 

prior to annual meeting 

› In-depth analysis of voting 

projections, as well as proxy 

solicitation [Georgeson] 

Notice document 

design and 

printing 

› Standard notice document 

› Custom notice 

› Complete financial printing 

and EDGAR filing services 

Notice document 

distribution 

Access to 

materials and 

voting 

› Distribution to proxy list 

› Householding* 

› Interactive document presentation and 

hosting 

› Standard Web screens 

› Voting site link 

› Interactive telephone system for voting 

› Material requests via Web, email and toll free 

number 

› Mailing list segmentation for 

mixed mailing 

› Proxy card follow-up mailing 

› Customized Web site text 

› eTree® 

environmental eTree® 

incentive 

environmental 

programs 

incentive to promote 

enrollment in 

electronic delivery 

Fulfillment 

› Fulfillment of material requests in 3 business 

days 

› Proxy materials warehousing and mailing 

through meeting date 


Computershare Notice Document 

Issuer logo 

List of voting items 

SAMPLE 

Instructions to requests 

copies 


Computershare Document Presentation Solution 

Issuer 

logo and 

color 

Thumbnails of 

materials 

Animated link 

to secure 

voting site 


Computershare Document Presentation Solution 

• One-page and two-page magazine views with animated page turning 


Computershare Client Participation 

› Early results 

› Five clients have mailed notice-only to date 

› All pleased with results: 

› Company A fewer registered holders voted, quorum increased 

› Company B fewer registered holders voted, quorum decreased less 

than 1%, reduced print volume by 92%, 

saved $500,000 

› Company C foreign company not required by SEC and first annual 

meeting 

› Company D fewer registered holders voted, quorum increased less 

than 1% 

› Company E (in process: meeting March 26) 



› Early results 

› Fulfillment requests were less than 3% 

› 3 of the 5 used our online document presentation and 

hosting solution 

› Internet press cites success: 

www.environmentalleader.com/2007/12/10/new-sec-rulesaved-sun-500000-and-100-million-sheets-of-paper/ 



› Client adoption for 2008 

› 108 clients have decided to use our notice and access 

product 

› 37 Notice Only 

› 10 Mixed Mailings 

› 50 Full-Set Solution 

› Approximately 65% are using our hosting solution 

› Others required to comply intend to mail full sets and 

host own documents 


Industry Trends 

› Voluntary “fall season” participation 

› Early adopters mailed only notices 

› Fulfillment requests in the 2-3% range 

› Type of meeting 

› Over 60% routine 

› About 30% included non-routine management 

proposal 

› Balance included non-routine shareholder proposal 

› Decline in number of holders voting (~15% to 5%) 

› Total shares voted – minimal change +/- 1% 



› A recent independent survey of companies shows that for 

2008 spring season: 

› Use of N&A 

› 24% plan to use notice-only or a stratified notice 

and full-set mailing 

› 51% will mail full-sets and post materials 

› 22% are undecided 

› 3% had already used N&A 

› Expected savings with N&A 25-50%. 



› Increased participation in 2009+, as issuers and retail 

investors get comfortable with the Notice and Access 

environment. 

› Other key geographic markets to facilitate notice and 

access style shareholder communications to reduce costs 

for issuers, drive efficiencies, increase engagement with 

investors and reduce environmental waste! 



Paul Conn 

Head of Global Capital Markets 

Question Time 




Coffee Break 



Mr Mark Davis 

Head of Computershare Australasia 


Australasia 


Regional Overview: Australasia 

› 9 Computershare Sites 

5 Business lines 

› Perth (2) 

› Adelaide 

› Melbourne (2) 

› Sydney (2) 

› Brisbane 

› Auckland 

› Investor Services 

› Communication Services 

› Plan Managers 

› Corporate Proxy 

› Fund Services. 



Investor Services Australia 


› Market leader with approximately 60% market share 

› Capitalised well on strong market conditions 

› Range of key clients retained without tender at better rates 


› Strong focus on improving our annuity business 

› Good achievements with self service but real benefits still to come 

› Global footprint benefits being realised now more than ever 

› Market conditions currently uncertain 



Investor Services - New Zealand 


› Mature market with approximately 85% market share 

› Clear market leader 

› Focused on bringing ongoing innovation to market 


› Market is small and getting smaller 

› New products best path to growth 





› Now become a leading provider of specialised one-to-one 

communication solutions that integrate print and mail with electronic 

solutions 

› Settled and strong management team 

› Permail acquisition outcomes very positive 

› Registry outcomes strong but non-registry sales a highlight 

› QMT acquisition transforming and will provide a range of benefits 


› Integration of QMT priority #1 

› Impressed by QMT capabilities that we will be able to market 

› On-line annual report legislation 

› Electronic communications 



Plan Managers 


› Clear market leader in Australia 

› Less opportunity in New Zealand due to absence of regulatory 

incentives 

› Global footprint key to our recent major successes eg. BHP 

› Continues to achieve good organic growth 


› Good organic growth opportunities within CIS book remain 

› Citibank alliance – dealing 

› Ongoing development of China book of business by Sydney team 



Proxy Solicitation 


› Market leader in Australia having advised on over $160 

billion of Merger and Acquisition transactions over the last 

few years 

› Premium offering recognised in the market and we are 

winning all the big jobs eg. Coles, BHP, QMT 


› Increased competition – but not on price 

› Market conditions 

› New product initiatives 



Fund Services 


› Retained anchor client 

› Bought new technology through Portfolio Server acquisition and 

so system strategy settled and now very close to roll out 

› We now have substantially greater industry knowledge and 

expertise 

› Market has shown us that there exists significant opportunity but 

we’ve been cautious going to market while on legacy technology. 


› Automation – move from manual to STP 

› Old legacy systems causing problems in industry. 



Mr Mark Davis 

Head of Computershare Australasia 

Question Time 



Mr Steffen Herfurth 

Head of Computershare Germany 


Germany>Austria>Switzerland 


Regional Overview: Germany> Austria> Switzerland 

› With the acquisition of VEM we now have a lot higher 

market profile, and opportunity to cross sell other CPU 

products like Georgeson and Governance Services 

› Focussed on expanding our services into the bearer market 

› Germany > 90% of issuers are bearer shares, only 10% 

registered shares (with a shareholder base of ~10m.) 

› Switzerland > has a stronger registry and share plan 

market than Germany but smaller 

› Austria > is a rather small market, but an important 

gateway into the growing Eastern European markets (i.e. 

Romania, Bulgaria, etc) 



Registry & AGM 


› Dominant position in AGM market with almost 400 clients and 27 out 

of 30 DAX companies 

› In registry business #1 by number of issuers, but not servicing 

companies with large shareholder base, market still 90% bearer 

shares 


› Keep position in AGM market with 2 new competitors founded in 

2007 

› Governmental initiative will probably lead to an increasing number of 

companies with registered shares in 2009 

› CPU is well positioned for small/midcaps due to cost efficiency and 

market access via VEM 


pictures 


pictures 


pictures 


pictures 



Registry & AGM 


› Dominant position in AGM market with almost 400 clients and 27 out 

of 30 DAX companies 

› In registry business #1 by number of issuers, but not servicing 

companies with large shareholder base, market still 90% bearer 

shares 


› Keep position in AGM market with 2 new competitors founded in 

2007 

› Governmental initiative will probably lead to an increasing number of 

companies with registered shares in 2009 

› CPU is well positioned for small/midcaps due to cost efficiency and 

market access via VEM 





› Integration of 2 acquired print & mail businesses completed 

› CCS well positioned as provider for secure and transactional 

document outsourcing 

› Communication and Document Services market is just at the 

beginning of the outsourcing curve in secure and transactional 

business 

› Challenges & Opportunities 

› Enlarging internal business (until now ~5% of revenue) by 

aggressive cross-selling (i.e. invitation process for AGM) 

› Further cleansing of client and project base towards higher margin 

transactional business 



Plans 


› Up until 2006, only German banks (in co-operation with IT provider) 

visible as providers in Plans market 

› Plans market currently relatively small, but governmental initiatives 

underway 

› CPU launched new Solution (Plan Manager) in 11/07 

› 2 DAX clients won in 2007 (Linde AG and Allianz SE) 


› Using CPU’s client base (esp. AGM) to cross-sell 

› Up-Sell potential through greater acceptance of ESPP (right now 

mainly executive programmes) 

› Dealing/margin income now possible with VEM 



VEM 


› Germany’s leading corporate actions bank for SMEs (over 250 

transactions since 1997) 

› Market leader in Designated Sponsoring 

› CPU’s stake ~92% 


› Integrate CPU’s and VEM’s service portfolio to create a fully 

integrated issuer business in Germany 

(full banking license needed) 

› Leverage on benefits for CPU’s broader global business by 

direct connectivity to Clearstream/Euroclear 



VEM 

› Cross-Sell / Up-Sell opportunities (national) 

› Registry business: influence companies at IPO to use registered 

shares to increase the take up of registered shares in the market 

› Ability to manage cash and stock on behalf of our clients which will 

allow us to provide a full corporate actions service to issuers -> 

effective alternative to Deutsche Bank and Dresdner Bank 

› Offering a complete one-stop service together with AGM, registry, 

plans (“post-IPO service”) 

› Offering dividend payment service and “Anmeldestelle” 

(invitation/ticket issuing office for bearer share AGMs) which needs a 

banking license 

› Integrated solution (i.e. including dealing) for the nascent Employee 

Plans business in Germany 



VEM 

› Cross-Sell / Up-Sell opportunities (international) 

› Due to full Clearstream connectivity we can manage share transfers 

and cash payments on behalf of issuers inside Clearstream 

› Ability to access Euroclear directly or indirectly (through the 

Clearstream/Euroclear bridge) facilitates cross-border business 

allowing us to retain more transactional revenue in-house 

› i.e. Ireland: ability to offer Exchange Traded Funds (ETFs) which 

settle in Clearstream (and potentially Euroclear) to the clients of our 

Irish business (which has developed a substantial ETF business in 

recent years) 



Steffen Herfurth 

Head of Computershare Germany 

Question Time 



Chris Morris 

Head of EMEA 


EMEA 


Regional Overview: UK & Ireland 

› Structure 

› New structure in place, I will manage until end CY 2009 

› Senior managers all in place and all UK residents 

› Some excellent next level management hired 

› Lloyds registry sold to Advent named Equiniti 

› Setup New Business Development Unit 

› Across all business lines 

› Increase our profile in the market 

› Release of InSearch 

› Operations 

› Quality number 1 priority 

› Same day turnaround of transactions and complaints 

› Major improvement in call centre and correspondence. 



Registry 


› More rational pricing in the market 

› Still not number 1 but getting there 


› Opportunity as Equiniti manages new owners and new system 

› Cross sell other CPU products to a blue chip client list 

› Increase in DI listings 

› Maximising opportunities in local and global Corporate Actions 

Rio/Alcan, Rio/BHP, RBS/ABN Amro 



Business Services 


› NHS improved profitability 

› Gilts best client reference in the UK 

› Corgi > business as usual 

› DPS > Brilliant business > 90% on the internet 

› LPS > Letting Protection Services will launch April 


› Expand DPS in UK and globally 

› Look for other BPO opportunities where we can use our skill 

sets 



Plans 


› Number 1 in the UK 

› Global tax calculator live for Shell, other companies lined up 

› BHP voted best international plan 

› Released CPU broker accounts for trading and purchase of 

other products i.e. ISA 

› Introduced full self service model, reduce risk, increase profit 


› Low share prices affect dealing and number of participants 

› Increase number of broker accounts 

› System and operational improvements enabling us to scale up 

without increased headcount 



Georgeson 


› Total restructure of Georgeson in EMEA now profitable 

› Increase in lost assets business (PMC), now using US 

system 

› Now in UK, South Africa, France, Germany, Spain and 

Italy 


› Strong competition but we are still the only global 

provider 

› Expansion into Russia and other European countries 

› Developing new information tools to increase success 

rates 



Corporate Governance Services 


› Integration complete of Datacare and World Records 

› All development now done in Monahan (Ireland) 

› Released GEM best of both systems 

› Strong presence in NA & Europe weak in the UK 


› Increase market share in the UK, strong competitor in ICSA 

› Expand into Asia Pacific 

› Integrate with other CPU products i.e. Issuer Online 



IML 


› Rapid expansion 

› Purchased distributors in Australia, US, and Belgium 

› Still considered the number 1 product in the market globally 

› Large increase in marketing meetings 

› Setting up businesses in Germany and Hong Kong 

› Challenges & Opportunities 

› Manage growth 

› Train enough staff for expansion 

› Increase product development 



Communication Services UK 


› New Manager appointed 

› 90% of work is for registry and plans clients 

› Finally have work for colour printers 


› Expand commercial work 

› Improved service levels 


Regional Overview: EMEA 

› South Africa 

› Maintaining profitability in spite of lower Rand 

› Increasing market share 

› Providing services to other CPU EMEA offices 

› Russia 

› Acquiring another 15% of NRC taking us to 80% 

› Options to buy other registry businesses 

› Huge opportunities to sell other CPU services like proxy and 

Plans 

› If DI’s take off then hold on 



Chris Morris 

Head of EMEA 

Question Time 




Meeting Closed

Investor Presentation 2008 - Computershare

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