Computershare (CPU) | SNAPSHOT
Profile: Computershare Limited (CPU) is a global provider of share registration, transfer agency and associated services, including employee share plans, as well as a range of other administration and governance services. CPU also provides mortgage and loan servicing. Its brands include Computershare, Deposit Protection Service, Georgeson and Specialised Loan Servicing.
History: CPU was initially founded in Melbourne in 1978 to provide computer services for businesses to automate processes, before eventually progressing to providing specialist services to Australian share registrars. CPU was listed on the ASX in 1994. Its operations expanded in to the UK market in 1995, followed by NZ in 1997 and subsequently various markets across the globe. CPU acquired Equatex Group Holding AG for €354.5m in November 2018.
Earnings composition: In FY18, the Register Maintenance & Corporate Actions businesses generated Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of US$290m (46%). Business Services reported US$240m (39%) and Employee Share Plans reported US$54m (9%). The remaining businesses (‘other’), which include Communication Services, Stakeholder Relationship Management and Corporate & Technology, reported combined EBITDA of US$38m (6%).
Most recent result – 1H19: EBITDA increased 13.0% to US$331.4m from US$293.4m in the prior corresponding period (pcp). Earnings per share (EPS) increased 14.2% on the pcp to US$0.35 (on a constant currency basis, EPS increased 15.5%). This was driven by growth in Register Maintenance & Corporate Actions EBITDA of 14.8% to US$160.2m. Business Services EBITDA increased 4.4% to US$118.5m. US Mortgage Services’ unpaid principal balances (a key driver of Business Services revenue) were up 14.3% to US$92.6bn. Margin Income (income earned on client balances) was up 57% to US$125.2m as a result of higher interest rates and client balances (up 21.4% on the pcp to US$21.0bn). A dividend of A$0.21 was declared, up from A$0.19 in the pcp.
Company outlook: CPU expects FY19 adjusted EPS to increase by c.12.5% on FY18 (US$0.63) on a constant currency basis. 2H19 revenue from Corporate Actions and event-based activities is expected to be slightly lower than the pcp.
Important dates: Full year results are scheduled for 14 August 2019.
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