Computershare Limited · ASX:CPU
Computershare — Investor Day (April 2017)
16 slides from Computershare's investor day presentation, Apr 27, 2017
Slide 1: Margin Income Unwrapped
Margin Income Unwrapped Headwind becoming tailwind Mark Davis Chief Financial Officer 27 April 2017
Slide 2: Margin Income: Average Client Balances
Margin Income Headwind becoming tailwind, FY18 expected to be higher than pcp 18.0 16.0 105.8 16.6 16.3 15.1 15.2 15.0 14.0 14.4 14.0 Average Client Balances for period USD billion 12.0 86.8 89.4 86.4 10.0 79.0 74.3 8.0 66.6 6.0 4.0 2.0 0.0 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Average balances Margin
Slide 3: Balances across the business model
Balances across the business model Margin income features across a broad spectrum of products in our key markets of US, UK and Canada › More than 90% of margin income is generated across 3 key currencies Business Activity US Canada UK Register Maintenance Corporate Actions Employee Share Plans Busin
Slide 4: Breakdown of balances
Breakdown of balances Exposed and hedged USD 16.6bn Total balances USD 10.3bn USD 6.3bn Exposed balances Non-exposed balances USD 4.8bn USD 5.5bn Hedged balances Non-hedged balances USD 1.2bn USD 4.3bn USD 2.8bn USD 2.0bn Natural hedge Non-hedged Fixed Rate Deposits Fixed Rate Swaps floating rate ba
Slide 5: Balances analysis
Balances analysis Majority of balances are exposed to interest rate changes Balances that are not exposed to interest rate changes because either they earn a Not fixed spread or do not Exposed earn interest at all 38% Exposed USD6.3bn USD 16.6bn pre-hedging (Average for 1H17) 62% … Balances impacted
Slide 6: Exposed and non-exposed balances by business
Exposed and non-exposed balances by business Yield, balances and margin income breakdown Business Activity 1H17 Balances (USD billions) Margin Income (USD millions) Exposed Non-exposed Register Maintenance 2.0 0.4 10.2 Corporate Actions 2.7 1.2 18.4 Employee Share Plans 1.6 0.3 8.7 Business Services
Slide 7: Profile of the non-exposed balances
Profile of the non-exposed balances › In 1H17 non-exposed balances represented USD 6.3bn or 38% of the total book › Non-exposed balances occur across the product spectrum in multiple geographies but are concentrated more heavily in the US and Canada › Our fee spread is fixed, 3rd parties remain expo
Slide 8: Exposed balances (hedged and un-hedged)
Exposed balances (hedged and un-hedged) Key driver of margin income upside Average exposed balance pre-hedging 1HFY17 FY16 FY15 FY14 FY13 FY12 FY11 FY10 FY09 Average balances (USD) 10.3bn 9.9bn 10.5bn 10.8bn 11.6bn 9.2bn 7.4bn 6.29bn 4.9bn % of overall balances 62% 64% 69% 76% 77% 67% 72% 74% 72% As
Slide 9: Breakdown of exposed balances by currency
Breakdown of exposed balances by currency Currently most exposed to USD rates though GBP and CAD remain important Average exposed balances hedged CAD Average exposed balances prior to hedging 13% Other AUD 4% 4% USD CAD USD 4.8bn 13% 46% (USD 10.3bn x 46%) GBP 41% USD 10.3bn USD (USD 16.6bn x 62%) 4
Slide 10: Profile of our swap and deposit book
Profile of our swap and deposit book Management of exposed balances Mark to market commentary Treasury management › Swaps: overall positions can be › Treasury teams are actively managing replaced at similar levels – no cliff exposed balances within policy guidelines › Fixed and floating rate deposit
Slide 11: Profile of our swap and fixed rate deposit book
Profile of our swap and fixed rate deposit book Short duration hedging – enhances yield without preventing the benefit of potential rate rises 5,000 4,500 4,000 Fixed Rate Deposits Swaps Derivatives 3,500 c.80% of hedges USD Million 3,000 expire by Nov 2017 2,500 2,000 1,500 1,000 500 0 Jan-17 Jan-1
Slide 12: Duration – enhancing yield
Duration – enhancing yield Stability of balances facilitates long term depositing › Floating rate deposits are included in both exposed and non-exposed balances 5,000 4,000 3,000 USD Million 2,000 1,000 0 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 12
Slide 13: Governance and sensitivities
Governance and sensitivities Our approach to managing balances Permissible counterparties Liquidity management Counterparty Universe: › All products are managed to ensure all liquidity requirements › Either directed or permitted by are met client (eg. list of approved counterparties or ratings › Pol
Slide 14: Governance and sensitivities
Governance and sensitivities Our approach to managing balances Interest rate movements Opportunities and challenges › Managed in accordance with › Balances have grown board approved policy which substantially over recent amongst other things deals with years driven by organic growth the minimum and
Slide 15: Headwind turning into tailwind
Headwind turning into tailwind After a sustained period of interest rate declines rate curves are now improving % 6.00 5.00 USD 4.00 3.00 2.00 1.00 - % 7.00 6.00 5.00 GBP 4.00 3.00 2.00 1.00 - % 6.00 5.00 CAD 4.00 3.00 2.00 1.00 - 15
Slide 16: Conclusions
Conclusions $16.6bn Tailwind $10.3bn FY18 Margin income Balances exposed to rates; Growing 3rd party balances expected to increase immediate and lagged benefits Yield enhanced No cliff/no lockout 1 % = $55m EBITDA No material impact from expiring $55m annualised EBITDA benefit Disciplined use of swa