COMPUTERSHARE | ANNUAL REPORT | 2016
This financial report covers the consolidated entity
consisting of Computershare Limited and its controlled
entities.
The financial report was authorised for issue by the
directors on 19 September 2016. The company has the
power to amend and reissue the financial report.
The financial report is presented in United States dollars
(USD), unless otherwise stated.
A separate notice of meeting including a proxy form is
enclosed with this financial report.
Computershare Limited is a company limited by shares,
incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Computershare Limited
Yarra Falls
452 Johnston Street, Abbotsford
Victoria 3067 Australia
CONTENTS*
OVERVIEW
2
3
5
Financial highlights
Chairman and Chief Executive Officer Report
Group and Regional Operating Overview
16
Business Strategies and Prospects
GOVERNANCE
18
29
45
Corporate Governance Statement
Directors’ Report
Auditor’s Independence Declaration
FINANCIALS
46
47
48
49
50
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Consolidated Financial Statements
REPORTS
104
105
106
Directors’ Declaration
Declaration to the Board of Directors
Independent Auditor’s Report
FURTHER INFORMATION
108
109
IBC
Shareholder information
Corporate directory
Office locations
* The Chairman and Chief Executive Officer Report, Group and Regional Operating Review and Business Strategies and Prospects comprise our Operating and Financial
Review (OFR) and form part of the Directors’ Report.
PAGE 1
FINANCIAL HIGHLIGHTS
STATUTORY RESULTS
Total revenue
Net profit after non-controlling interests (NCI)
Statutory earnings per share
MANAGEMENT ADJUSTED RESULTS
Management EBITDA*
Management net profit after NCI*
Management earnings per share*
BALANCE SHEET
Total assets
Total shareholders’ equity
PERFORMANCE INDICATORS
Free cash flow (excluding SLS advances)
JUNE 2016
JUNE 2015
% CHANGE
1,961.1 million
1,971.3 million
157.3 million
153.6 million
28.55 cents
27.61 cents
532.6 million
554.1 million
303.5 million
332.7 million
55.09 cents
59.82 cents
3,977.7 million
3,801.5 million
1,108.7 million
1,177.6 million
347.4 million
388.3 million
-0.5%
2.4%
3.4%
-3.9%
-8.8%
-7.9%
4.6%
-5.9%
-10.5%
14.0%
-6.0%
Net debt to management EBITDA (excluding non-recourse debt)*
2.12 times
1.86 times
Return on equity*
Staff numbers
26.91%
17,839
28.62%
15,836
For a reconciliation between statutory and management adjusted results, refer to note 3 in the notes to the financial statements.
* These financial indicators are based on management adjusted results. Management adjusted results are used, along with other
measures, to assess operating business performance. The Group believes that exclusion of certain items permits better analysis of
the Group’s performance on a comparative basis and provides a better measure of underlying operating performance. Management
adjustment items that were income to the Group are included in statutory results as other income and therefore management total
revenue is consistent with statutory total revenue. Return on equity is calculated as management NPAT after NCI over average
monthly shareholders’ equity.
FINANCIAL CALENDAR
2016
17 AUGUST
Record date for final dividend
13 SEPTEMBER Final dividend paid
9 NOVEMBER
The Annual General Meeting of Computershare Limited ABN 71 005 485 825
LOCATION: Computershare Conference Centre
Yarra Falls, 452 Johnston Street
Abbotsford, Victoria 3067
TIME:
10.00am
2017
15 FEBRUARY Announcement of financial results for the half year ending 31 December 2016
PAGE 2
Computershare Annual Report 2016
CHAIRMAN AND CHIEF EXECUTIVE OFFICER REPORT
On behalf of the Board of Directors, we are pleased to present our financial results for FY2016.
The Company expected a challenging FY2016 and we met that challenge head on, able to deliver on the guidance
handed down at the beginning of the year despite the continued deterioration in macroeconomic conditions for the
Company. We are looking forward enthusiastically, positioning the Company for sustained earnings growth after
implementing a number of initiatives to meet this goal.
YEAR IN REVIEW
In constant currency terms (measuring performance based on exchange rates from the prior period), the Group delivered 5.0% growth
in management revenues. There was a marginal improvement in management EBITDA, up 0.5%, however when excluding the negative
impact of falling yields on client balances, the year-on-year growth was 4.3%. Management earnings per share (EPS) was down 4.3%
on a constant currency basis, impacted by higher tax, interest and amortisation expenses.
Our statutory basic earnings per share grew 3.4% year-on-year to 28.55 cents and net statutory profit after tax attributable to members
grew 2.4% to $157.3 million. For the reconciliation between our statutory and management results, refer to note 3 on pages 52 to 53
in the notes to the consolidated financial statements.
In actual currency terms, Computershare’s key performance indicator, management EPS, was down 7.9% to 55.09 cents. Total
revenues were flat at $1,974.2 million while operating costs were up 1.5% to $1,440.2 million. This year, the strengthening of the
USD again materially impacted our actual financial results.
Register maintenance revenues fell, due largely to the sale of the Russian business in July 2015, while corporate actions activity was
subdued in most markets, other than the US which registered a stronger performance following improved M&A activity.
Business services experienced strong revenue uplift year-on-year, due mainly to growth in US loan servicing, bankruptcy and class
actions administration and a contribution from the UK Asset Resolution (UKAR) contract win. The Company’s UK business was
appointed by UKAR to undertake its mortgage servicing activities under a seven year outsourcing contract, covering GBP 30 billion
of UKAR mortgages. Separate contracts for the servicing of GBP 11 billion of assets, purchased by Cerberus from UKAR, were also
agreed, with both contracts commencing in June 2016. This is the largest single contract appointment in the Company’s history. There
were also contributions to the business services segment from acquisitions, particularly HML reporting for the entire period in FY2016
and the purchase of Gilardi. The voucher services and deposit protection scheme businesses in the UK delivered lower revenue than
in FY2015.
Employee share plans revenue fell on the prior corresponding period, particularly in the larger UK and US markets. The major catalyst
for the fall was reduced equity trading activity by participants, especially energy and mining sector employees, while margin income
was also a drag on this segment.
Free cash flows (excluding SLS advances) were 10.5% lower this year at $347.4 million and capital expenditure was $29.9 million,
down from $38.6 million last year.
STRATEGY FOR SUSTAINED EARNINGS GROWTH
The Company continues to look at all facets of the organisation and is deploying strategies that it believes position us well for the future:
GROWTH
EFFICIENCY
COSTS
Significant progress has been
made in executing our mortgage
services growth strategy with
the UKAR appointment and our
acquisition of Capital Markets
Cooperative LLC (CMC).
Innovation and productivity gains are
a key focus to sustain performance
in registry. Our strategy is to ensure
the employee share plans offering
remains at the forefront of the market
to leverage ongoing growth in demand
for equity based remuneration
administration services.
A group wide cost reduction project is
underway with external specialist input. This
is expected to have a material impact on
the Group in future periods. Our focus will
be on process automation and business
simplification. The property rationalisation
project in the US remains on track, with
savings commencing in FY2017.
PAGE 3
CHAIRMAN AND CHIEF EXECUTIVE OFFICER REPORT
MAJOR ACQUISITIONS AND DISPOSALS
Gilardi, a leading class actions administrator in the US, was acquired in August 2015. This acquisition provides a strong strategic fit
alongside our existing KCC business in a growing market. In May 2016 the Company completed the purchase of CMC, a business that
provides processing, sale and servicing solutions for a wide network of mortgage originators across the US which, combined with our
SLS loan servicing business, positions us well for significant growth in the sector.
The Company disposed of its Russian business in response to increased regulatory risk in that jurisdiction surrounding foreign ownership
of registry assets as well as VEM, the German Corporate Actions Bank, following regulatory approval obtained during 1H2016. The
Company’s global headquarters in Melbourne were also sold in June 2016 in a sale and leaseback arrangement, with the transaction
completing in September 2016. The gain on sale of the property, net of costs, of $40.3 million will be excluded from management
earnings in FY2017.
CAPITAL MANAGEMENT
The Company’s issued capital reduced from 556,203,079 ordinary shares, as at 30 June 2015, to 546,826,010, as at 30 June 2016, as a
result of the share buy-back announced on 18 August 2015. Under the buy-back program, the Company purchased 9,377,069 ordinary
shares during FY2016 for a consideration of AUD 100.6 million at an average price of AUD 10.73 per share. A further 500,000 shares
were purchased post 30 June 2016 for an additional AUD 4.6 million consideration, prior to the buy-back program lapsing.
During FY2016 we stated publicly that we intend to maintain our gearing level such that net debt to EBITDA is between 1.75 to 2.25 times
(excluding the non-recourse SLS advance facility debt). We also stated that we would look to maintain the flexibility to temporarily go above
this range to take advantage of compelling investment opportunities should they arise, while also considering capital management initiatives
to preserve leverage within the target band. This key leverage metric increased from 1.86 to 2.12 times at 30 June 2016. Acquisitions, the
purchase of mortgage servicing rights and the buy-back contributed to the higher leverage outcome during the year.
DIVIDENDS
The Company announced a final dividend of AU 17 cents per share, 20% franked, paid on 13 September 2016 (dividend record date of
17 August 2016). This follows the interim dividend of AU 16 cents per share, 100% franked, paid in March 2016. Overall, our dividend
increased 6.5% year-on-year. The Company continues to operate a dividend reinvestment plan. A new dividend franking policy was
deployed during the year, providing shareholders access to maximum allowable franking credits.
OUTLOOK
We announced in August 2016 that we expected management EPS for FY2017 to be slightly up on FY2016.
This outlook assessment is subject to the forward-looking statements disclaimer in our annual results announcement and assumes
that equity markets and interest rate markets remain at the levels that existed at the time of providing that guidance and that FY2017
corporate action revenue is similar to FY2016. The FY2017 guidance is now given in constant currency terms to better illustrate Group
underlying performance.
ACKNOWLEDGEMENTS
We would again like to thank our clients who continue to use our market-leading products and services around the world. We greatly
appreciate the contribution from our employees across the globe, and thank our fellow directors for their ongoing support and guidance.
We appreciate our shareholders’ loyalty and welcome feedback via investor.relations@computershare.com.au.
Simon Jones
Chairman
Stuart Irving
Chief Executive Officer
PAGE 4
Computershare Annual Report 2016 GROUP AND REGIONAL OPERATING OVERVIEW
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the course of the financial year were the operation of investor services, plan
services, communication services, business services, stakeholder relationship management services and technology services.
> The investor services operations comprise the provision of registry maintenance and related services.
> The plan services operations comprise the provision of administration and related services for employee share and option plans.
> The communication services operations comprise document composition and printing, intelligent mailing, inbound process
automation, scanning and electronic delivery.
> The business services operations comprise the provision of bankruptcy, class action and utilities administration services, voucher
services, corporate trust services and mortgage servicing activities.
> The stakeholder relationship management services group provides investor analysis, investor communication and management
information services to companies, including their employees, shareholders and other security industry participants.
> Technology services includes the provision of software, specialising in share registry and financial services.
Computershare has a range of regulated businesses around the world, including transfer agencies, licensed dealers, corporate trusts
and mortgage servicers.
REVIEW OF OPERATIONS
Overview
The investor services business saw revenues lower as a result of the sale of the Russian business and the impact of the stronger USD.
Register maintenance in the US was impacted by loss of clients due to M&A and lower shareholder activity, offset in part by new client
wins. Register maintenance revenue grew in HK and UCIA but was lower in Canada and India. Corporate actions revenue was stronger
in the US, underpinned by the strong M&A cycle. Corporate actions revenues in HK, Australia and UCIA were lower year-on-year. At
the EBITDA level, the consolidated investor services business improved 2.6% over FY2015 on a constant currency basis.
The plan services business had lower revenues this year, due primarily to significantly weaker transaction activity, particularly from
employees in the energy and resources sectors. UCIA was impacted the most, with the US and Australia also weaker. In contrast, the
HK and Canadian employee share plan businesses improved year-on-year. Overall, at the consolidated level, EBITDA was down 20.8%
in constant currency terms, partly affected by increased regulatory costs and investment in service, product and systems.
Business services’ revenue grew 21.2% on FY2015 in constant currency terms. The substantial improvement was due to a full period
contribution from HML, growth in mortgage services, bankruptcy and Indian mutual funds, the start of the UKAR contract appointment as
well as the Gilardi and CMC acquisitions. Weaker outcomes were seen in the deposit protection scheme and voucher services businesses
in the UK. Business services’ EBITDA grew 13.9% year-on-year on a constant currency basis. The Communication Services business had
a strong year, with revenue increasing 7.6% and EBITDA up 27.4% in constant currency as volumes increased, particularly in Australia and
also in the US and Canada.
Disposals of the Russian business and VEM Aktienbank AG occurred early in FY2016, after both these assets were classified as ‘held
for sale’ at 30 June 2015.
Revenue
Region
Asia
Australia and New Zealand
Canada
Continental Europe
United Kingdom, Channel Islands, Ireland and Africa (UCIA)
United States
* Total external revenue and other income (total segment revenue) apportioned by region.
Operating costs
% of total
revenue*
FY2016
$ million
FY2015
$ million
6.5%
13.6%
8.5%
4.1%
18.4%
48.9%
128.0
266.9
166.1
81.0
359.4
957.9
124.6
309.6
186.7
113.3
358.6
870.5
Operating expenses were up 6.8% on FY2015 to USD 1,516.3 million in constant currency terms. The increase was driven by a
number of factors, including the impact of acquisitions net of disposals, costs associated with revenue related activity (business mix)
and ‘business as usual’ operating expenses that included investment in product development and innovation, increases in regulatory
compliance costs, salary increases and some rightsizing costs. Technology costs as a percentage of revenue remained flat at 12.0%,
largely unchanged from the prior two years.
Earnings per share
Statutory basic earnings per share
Statutory diluted earnings per share
Management basic earnings per share
Management diluted earnings per share
2016
cents
28.55
28.51
55.09
55.00
2015
cents
27.61
27.56
59.82
59.72
The management basic and diluted earnings per share amounts have been calculated to exclude the impact of management adjusted
items (refer to note 3 in this financial report).
PAGE 5
REGIONAL OVERVIEW
RESULTS
Our Indian joint venture
delivered record results on
the back of growth in the
funds administration
business. Ongoing growth
in our Hong Kong registry
and employee plans
administration business
also enhanced regional
performance.
ACHIEVEMENTS
ASIA
5,200 EMPLOYEES
(INCLUDES INDIAN JV)
REVENUE
+2.8%
MANAGEMENT
EBITDA
+7.1%
106.8
113.0
111.9
124.6
128.0
42.2
45.2
34.3
33.4
36.7
12
13
14
15
16
12
13
14
15
16
)
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$
(
)
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$
(
BIG CLIENT WINS
Hong Kong and China
> China Reinsurance IPO
> Listings worth 90% of total IPO
value in Hong Kong, or 54%
in terms of the number of new
listings on the main board
> Alihealth for employee share
plan services
India
> Larsen & Toubro Ltd and
Aditya Birla Group for
registry services
WE MANAGE
> 78% of Hang Seng Index
> 97.5% of China Enterprise Index
> 53% of BSE Sensex
EXPANDED
Our Indian JV into Malaysian
and Philippines markets for
Mutual Fund RTAs
EXECUTED
> Proxy services for the restructure of
China’s two shipping conglomerates,
China Cosco and China Shipping,
involving 74 asset transactions
worth 60 billion RMB
> 823 meetings across Hong Kong
and China, including a record 7,200
shareholders at the ICBC AGM
INNOVATIVE
SOLUTIONS
KPRISM mobile application for
IPO investor queries and service
requirements in India
FOCUS FOR FY2017
Focus on improving
and automating processes
to drive operational
efficiencies
Explore opportunities to
further leverage our Plan
Managers Asia team into
new areas of the plan
administration market
Continue to
bring enhancements
to our offering in the
advisory space for corporate
governance and shareholder
engagement to help our
clients meet increasing
market regulations
Continue to work
closely with the
Hong Kong Securities &
Futures Commission to drive
reforms that enhance
efficiency across
the market
PAGE 6
REGIONAL OVERVIEW
RESULTS
Resilient performance by our
registry and communication
business lines in Australia
and New Zealand drove solid
results across the region,
however, the stronger USD
impacted translated profits.
ACHIEVEMENTS
RATED
> 98% positive in the JP Morgan
Australian Registry Service
Provider Survey
> Top 20 Most Attractive
Employers by Randstad
WE MANAGE
> 70% of the ASX20
> 60% of listed companies on the
NZX Main Board
1,200 EMPLOYEES
REVENUE
-13.8%
MANAGEMENT
EBITDA
-11.4%
407.2
426.5
376.4
309.6
266.9
)
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m
$
(
76.9
77.4
69.8
51.7
45.7
)
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$
(
12
13
14
15
16
12
13
14
15
16
EXECUTED
> Large Corporate Actions for Asciano,
Santos, NAB and Transurban in excess
of AUD 18 billion
> The listing of Reliance, Australia’s
largest IPO in FY2016
> All of NZX Main Board listings,
including the IPO of Tegel Group
Holdings Limited
HELPED OUR
CLIENTS WIN
Employee Ownership Australia and
New Zealand Awards for South 32,
Singtel and Goodman Group
INNOVATIVE
SOLUTIONS
Global wire payments
Allows shareholders to receive their
payments in over 100 currencies
Investor Trade
Since its launch in May 2015, we’ve
processed over 17,000 trades
totalling 45 million shares
ACHIEVED
ISO9001 quality management
accreditation for Utility Services
FOCUS FOR FY2017
Retain key accounts
through proactive
account management,
market-leading products
and superior service
Continue to be
first to market with
innovative solutions on
our industry-leading
technology platforms
Focus on lowering
costs and automating
processes to drive
further operational
efficiencies
Grow the inbound
services revenue of our
Communication Services
business by focusing
on the mortgage and
superannuation
verticals
PAGE 7
REGIONAL OVERVIEW
RESULTS
Our registry business delivered
another year of consistent
results but the region was
impacted by the combined
effects of lower transactional
levels and investments in the
employee share plan business,
lower yields on client balances
across a number of products
and the stronger USD impacting
translated profits.
ACHIEVEMENTS
4,900 EMPLOYEES
REVENUE
+0.2%
MANAGEMENT
EBITDA
-15.9%
358.6
359.4
104.1
100.0
115.8
120.4
119.0
293.4
299.6
324.0
12
13
14
15
16
12
13
14
15
16
)
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RATED
Number 1 in the 2016 Capital
Analytics Survey of Registrars,
for the 7th time in 10 years
> 1st place in all eight headline
categories
> 96% overall satisfaction
> 99% in account management
and service to company
categories
APPOINTED
by the UK government to
service £41 billion of mortgage
assets
WELCOMED
1,700 new employees from UK
Asset Resolution
BIG CLIENT WINS
> Henry Boot and Blackrock
Strategic Investment Fund for
registry services
> Valero, Curtis and HomeServe
for employee share plan services
> Rolls Royce, Tesco, Easyjet for
proxy services
WE MANAGE
> Registry or share plan services for
60% of the FTSE100
> £73 billion mortgage assets under
administration, 62% of 3rd party
market
> Over 65% of the Irish Stock
Exchange Equity Index
> 60% of the Channel Islands listed
funds market
> 86% of South African market by
market capitalisation
EXECUTED
> £3.3 billion Rights Issue for
Standard Chartered plc across UK
and Hong Kong registers
> Significant dealing programmes for
Verizon and Vodafone across UK and
Ireland, with £112 million worth of
shares sold
> Complex acquisition of Cable &
Wireless by Liberty Global, by our
Channel Islands business
> Proxy services for Shell’s acquisition of
BG and Nokia’s bid for Alcatel Lucent
> 70% of IPOs in Ireland
WON
Global Equity Organisation’s award
for Best Plan Effectiveness, for
Computershare’s One Plan
HELPED OUR
CLIENTS WIN
> Global Equity Organisation awards
for Nokia, SAP and Unilever
> ESOP awards for Amadeus,
Telefonica and Shell
> ProShare awards for Aviva and ASDA
RETAINED
license for the Deposit Protection
Service (DPS) to operate the custodial
deposit scheme for a further five years
INCREASED
> value of deposits protected by DPS
by 11%
> funds under management by DPS to
£1.18 billion
> parent numbers for Voucher Services
by 4.8%, to 147,000
INNOVATIVE
SOLUTIONS
> Redesigned the UK Electronic Initial
Public Offering website
> IFRS9 solution: Our data-driven
solution removes the administrative
headache associated with new
accounting standards for mortgage
lenders, SPVs and other portfolio
owners
FOCUS FOR FY2017
Deliver on the loan
services transition and
integration following
the FY2016 UKAR
appointment
Complete the plans
technology and
operations investment to
drive revenue growth and
improve operational
performance
Capitalise on our
position in market as
No.1 registrar to drive
new business wins and
opportunities
Support our clients
through the Brexit
process as the impacts
and new requirements
become clearer
PAGE 8
REGIONAL OVERVIEW
RESULTS
The registry business delivered
another satisfactory year, but
overall regional results were
impacted by the disposal
of the Russian business,
weakness in employee share
plan transactional levels and
the stronger USD impacting
translated profits.
ACHIEVEMENTS
COMPLETED
> Integration of PR IM TURM,
German AGM business
> ISO9001 certification for our
German Communication Services
business in Munich
BIG CLIENT WINS
> Telefonica, Spain’s first registry
services contract
> SAP SE and Maire Tecnimont
S.p.A, for employee share plan
services
350 EMPLOYEES
REVENUE
-28.5%
MANAGEMENT
EBITDA
-38.0%
113.4
110.2
115.1
113.3
81.0
15.0
16.1
14.2
13.7
22.2
)
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$
(
)
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(
12
13
14
15
16
12
13
14
15
16
MOVED
The Munich team into a new
sustainable building, our biggest
site in Continental Europe
INNOVATIVE
SOLUTIONS
Smart voting mobile application
for German AGMs
WE MANAGE
> 90% of AGMs for DAX30 issuers
in Germany
> 75% of issuers in Italy
> 80% of issuers in Denmark
> 76% of issuers in Netherlands
EXECUTED
> IPO of Ferrari, dual-listed in Milan and
New York
> IPO of DONG Energy, one of the biggest
ever IPOs in Denmark
> IPO of ENAV, listed in Italy
> Two of the top three IPOs in Germany
this year
> AGM for Siemens AG, with circa 9,000
shareholders
FOCUS FOR FY2017
Retain our
market-leading position
across the region by
enhancing our front office
skills and cross-selling
capabilities
Target new
revenue opportunities
that leverage our meeting
expertise for large clubs
and associations
Continue to monitor
the central Securities
Depositary regulations
and Shareholder Rights
Directive as Target 2
Securities is rolled out
across Europe
Support our
US-based class action
administration business to
deliver projects and win
clients across Europe
PAGE 9
REGIONAL OVERVIEW
RESULTS
Stronger corporate action
activity and growth across
the mortgage services,
bankruptcy and the class
action administration
business led to another year
of improved regional results.
3,900 EMPLOYEES
REVENUE
+10.0%
MANAGEMENT
EBITDA
+6.0%
843.2
889.7
870.5
957.9
208.8
213.5
226.4
654.4
171.8
125.0
)
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(
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12
13
14
15
16
12
13
14
15
16
ACHIEVEMENTS
RATED
> 94% satisfaction from our
registry clients
> 91% satisfaction from our
employee share plan clients
COMPLETED
ACQUISITIONS
> Gilardi, class-actions business
> Capital Markets Cooperative and
Altavera, which together with
SLS now form Computershare
Loan Services
BIG CLIENT WINS
> Coca-Cola European Partners,
STERIS and 30 closed-end
funds for Legg Mason for
registry services
> CH2M Hill Companies and Cabela’s
Inc. for plans services
> 15 mortgage servicing deals
including new sub-servicing
contracts with Freddie Mac and
BlackRock
> 413 class action settlement
administrations
FOCUS FOR FY2017
WE MANAGE
> 77% of DOW 30
EXECUTED
767 corporate actions, including merger
deals for:
> Charter Communications and Time
Warner Cable: Deal value $78.7 billion
> AT&T and DirecTV: Deal value
$67 billion
> Avago Technologies and Broadcom:
Deal value $77 billion
INNOVATIVE
SOLUTIONS
Iconsent website: Helps clients to
determine employee interest in joining
share purchase plans
Continued focus on
efficiency initiatives,
including progressing our
property rationalisation
project away from high-cost
locations to improve
operating margins
Execute a range of
front office initiatives,
including generating new
sources of revenue in our
traditional markets
Complete integrations
of the CMC and Altavera
acquisitions to support the
ongoing growth in our loan
servicing business line
Deliver on the growth
plans for our class actions
and employee share plans
businesses
PAGE 10
REGIONAL OVERVIEW
RESULTS
Despite the full year impact
of lower interest rates and
soft market conditions, the
region delivered another year
of solid results. Like most
other regions, translated
profits were impacted by the
stronger USD.
ACHIEVEMENTS
CANADA
900 EMPLOYEES
REVENUE
-11.0%
MANAGEMENT
EBITDA
-12.0%
208.5
198.0
189.8
186.7
95.6
166.1
81.6
75.7
76.6
67.4
12
13
14
15
16
12
13
14
15
16
)
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(
)
n
o
i
l
l
i
m
$
(
RATED
> 94% satisfaction from our
registry clients
> 9.5/10 for performance by our
Communication Services clients
COMPLETED
> The integration of SyncBASE and
Valiant Trust Company clients
and staff
BIG CLIENT WINS
> Hydro One IPO
> Sleep Country Canada IPO
EXECUTED
> Key corporate actions for over
300 companies in excess of
CAD 39 billion, including Royal Bank
of Canada’s CAD 5.4billion purchase
of City National Bank and Suncor’s
CAD 3.8 billion acquisition of
Canadian Oil Sands
> Subscription Receipt Offering for
TransCanada Corporation, with
aggregate proceeds of CAD 4.4 billion
WE MANAGE
56% of TSX
INNOVATIVE
SOLUTIONS
Dividend FX
Allows issuers to fund multi-currency
dividends with one single-currency
payment
Facilitating Online and Call Centre
Dividend Reinvestment Plan (DRIP)
transactions
This service is an industry first in
Canada, which simplifies the sale and
transfer process for DRIP participants.
Online tendering solution
For shareholders that participated in
the Restaurant Brands International
Asset Reunification program
FOCUS FOR FY2017
Retain key accounts
through proactive
account management,
demonstrating industry
involvement and
leadership and providing
superior service
Pursue growth
through our recently
expanded private
capital solutions, online
capabilities and class
action service offering
Continue to develop
new/enhanced product
offerings and services
that generate new
sources of revenue
Continued focus on cost
reduction through
automation and process
improvement initiatives
PAGE 11
GLOBAL OVERVIEW
RESULTS
TOTAL
TECHNOLOGY
SPEND
$236.4M
TOTAL SPEND AS
A PERCENTAGE
OF REVENUE
12.0%
DRIVING
SYNERGIES
> Moved HML into our centralised
UK data centre, harnessing global
platforms and Shared Service
systems for the loan management
business
> Deployed our operational suite
to our Hong Kong business,
improving transaction
management and streamlining
processes
> Implemented a hyper converged
infrastructure for our Munich and
Hong Kong offices, improving
system performance speed and
reducing the support required
ACHIEVEMENTS
LAUNCHED
> Investor Centre, designed for mobile
devices, deployed to our Australian
and American clients
> On-demand reporting for employee
share plan clients across the globe
> New computershare.com corporate
website
> Loss mitigation capability for our
US loan servicing businesses
SECURITY INITIATIVES
> Enhanced our disaster recovery
position in North America by deploying
a new metro zone disaster recovery site
> Refined our data loss prevention
processes, scanning seven million files
per week to keep data secure
> Enhanced Security Programme has
delivered complex and privileged
access controls to reduce the risk of
unauthorised access to our clients’ data
FOCUS FOR FY2017
1,300 EMPLOYEES
RESEARCH AND
DEVELOPMENT
SPEND
$76.9M
PRODUCT
INNOVATIONS
> Improving the digital experience
for employee share plans through
refreshing the user interface of
Employee Online and providing
advanced capabilities and features
for our clients
> Developing our first data
insight/business intelligence
dashboards for clients, delivering
descriptive, comparative and
prescriptive analytics
Integrate and consolidate
Computershare Mortgage
Services technology
across our infrastructure
landscape
Deliver products and
services to our employee
share plans business,
capitalising on existing
capabilities and driving
enhanced client
engagement solutions
Drive data services
solutions to provide clients
with a secure environment
to generate data insights
and encourage data
driven innovation
across our portfolio
Continue with product
innovation, focusing on
process automation and
cloud technologies to drive
consistency and improved
cost agility
PAGE 12
GLOBAL OVERVIEW
ACHIEVEMENTS
BIG CLIENT
PROJECTS
> $28 billion tri-company merger of
Coca-Cola Enterprises, spanning
UK, US, Germany, France,
Netherlands and Spain
> $5.3 billion acquisition of Cable &
Wireless by Liberty Global
> $2.3 billion demerger of CYBG plc
from National Australia Bank
> $10 billion demerger of Ferrari
from FiatChrysler; following
$900 million Ferrari IPO
> $6.3 billion merger between
Rexam and Ball Corp., including
provision of a Depositary Interest,
a Corporate Sponsored Nominee
and Dealing service
MANAGED
> 14 redomiciliation transactions in
FY2016. More broadly, the trend
for non-US companies looking to
list in the US in the form of shares
continues
> 47 other cross-border deals
completed in FY2016 around
the world
FOCUS FOR FY2017
INNOVATIVE
SOLUTIONS
> Partnered with SETL and
demonstrated Australia’s first
working blockchain capital
markets solution
> Developed solution to support
prospective offering for digital
securities on blockchain for
Overstock.com
> Developed various use cases for
potential application of blockchain
in capital markets
> Cross-border application xSettle™
released into New Zealand
SETTLEMENT
PROCESSING
Over 35,000 transactions
processed across eight markets
(including transactions for UK
and Irish share plans), with a
total value of over $34 billion
REGULATORY
AND MARKET
INITIATIVES
Engaged with industry
stakeholders on:
> Regulatory approach to capital
markets for blockchain
> CSD regulations across EU
> SEC’s regulation of Transfer
Agencies in the US
> Vote confirmation pilots in UK,
US and Netherlands
Continue to
explore and develop
innovative applications for
blockchain, in particular for
capital markets, across
Computershare’s core
markets
Continue to service and
develop innovative
structures for a wide range
of cross-border
transactions, including
redomiciliations, M&A and
IPO transactions
Monitor and engage with
key industry stakeholders
on global regulatory and
market initiatives
Assess process automation
technology to implement
further efficiencies for
xSettle™, our cross-border
settlement processing
platform
PAGE 13
We know that corporate responsibility is part of doing business successfully. Computershare
is committed to acting in an environmentally friendly and socially responsible manner and we
seek to do so throughout our global business operations and activities.
SUSTAINABILITY
We have sustainability targets and environmental programs in place around the globe to further minimise our already low impact on the natural world,
underpinned by a set of yearly objectives.
REVIEW OF FY2016 SUSTAINABILITY OBJECTIVES
Successful Green Office Challenge 6
Successful Green Days
More than 80% of offices undertook a sustainability
audit comprising 42 questions covering energy, resources,
transportation and waste. In all, 62 offices took part in
the challenge across 15 countries, most of which improved
their score.
Excellent participation in the Carbon Games, with more than
3,000 people calculating their personal carbon footprint. We
also participated in Earth Hour, World Water Day and other
local initiatives such as litter picks.
Plan to achieve Phase 1 reduction targets
Offices have local plans in place and are continuing to work towards their targets, which you can view at www.computershare.com/cr. Here’s a
summary of our efforts to reduce gas, electricity, water and waste in four key premises by 2018:
General waste
The Pavilions, Bristol
and Burr Ridge,
Chicago have reached
and maintained
their targets.
Electricity
East Beaver Creek,
Toronto and
Burr Ridge have
reached and
maintained their
targets.
Natural gas
Water
The Pavilions has
maintained its target, with
Yarra Falls, Melbourne
and Burr Ridge also
reaching and maintaining
their targets during the
past year.
Burr Ridge has reached
and maintained its
individual site target.
Identify and implement new targets for additional offices
Implement first sustainability principles globally
Targets have been put in place for Hong Kong
and Auckland.
Our sustainability principles have been launched globally
along with new promotional material to raise awareness.
Undertake green IT maturity assessment
The maturity assessment has been completed providing a benchmark across regions. Data centre relocations in the UK, USA and
Continental Europe have also significantly driven down energy consumption.
LOCAL ACHIEVEMENTS
Employees’ participation drives our sustainability efforts. Visit our website to see more of our environmental achievements.
Osborne Park, Australia
pallet garden created
by employees to grow
plants and herbs
Holte, Denmark
100% of electricity is
now provided by
off-shore wind power
Canton, MA, USA
reserved parking introduced
for high occupancy or
high efficiency vehicles
Toronto, Canada
introduced coffee
pod recycling
AWARD WINS
Yarra City Council Sustainability
Awards - Sustainable Business
Bristol Green Capital Awards
2016 - Green organisation
Bristol Go Green Awards 2016 -
Most improved sustainable sourcing
For commitment to sustainable
business operations, staff
engagement initiatives and
development of community
partnership building.
In recognition of Computershare’s
commitment to making Bristol, the
West of England and our planet
become greener, safer and cleaner.
For demonstrating sustainable
purchasing practices by sourcing
Fairtrade goods and ensuring ethical
standards are maintained throughout
the supplychain.
PAGE 14
VISIT OUR WEBSITE FOR MORE INFORMATION
www.computershare.com/cr
COMMUNITY
In addition to the volunteer opportunities that we give our employees each year, many staff members also contribute to ongoing community events
and charity initiatives in their local area.
100,000KM
35,700KM
500+
200+
133 colleagues in Australia collectively
walked and ran 100,000km as part of
the Global Corporate Challenge
35,700km cycled in Africa,
raising R3.9 million
Winter clothes appeal in
Australia – 500+ items
donated to homeless people
200+ outfits donated to Dress
for Success events in Brisbane
and Dublin
70
70 boxes of clothing donated
to Syrian refugees
12HR
1
12 hour charity spinathon
1 sky dive event
CHANGE A LIFE
Food and gift drives in Australia,
Canada, United States and
United Kingdom
DONATIONS OF OVER AUD 970,000 SUPPORTED OUR PROJECTS IN FY2016
Founded in 2005, Change A Life is our global community giving program that invests in projects that provide long-term solutions
to the communities involved. We focus on long-term change that is felt on a global stage and provides an opportunity for people
to build up their skills for a brighter and more sustainable future.
PROJECTS COMPLETED IN FY2016
Kenya – Community Learning Centres
WithOneSeed
From 2012 to 2015, we funded a project run by World
Vision Australia to develop three Community Learning
Centres (CLCs) in rural Kenya. These centres are equipped
with electronic encyclopaedias and other learning aids,
and were designed to help communities access health and
development information through technology.
> 6,165 people accessed information
> 5,220 children completed training in the use
of technology
> 18 communities have been formed for the exchange
of information
> 235 youth and community members have been
trained on how to generate and share local information
In 2012, Change A Life committed AUD 350,000 over
three years to help build a small community forestry
program, high in the mountains of Timor Leste. The
program established Community Tree Cooperatives across
10 villages in Baguia, covering a mountainous region of
22,000 hectares, 35 schools and a population of 14,000.
> 450 farmers, 56,000 trees
> 3 community-based nurseries with the capacity to
propagate over 20,000 saplings annually
> established a Village Learning Centre, connecting the
community to the internet
> injected over $150,000 into the local economy
> certified under the International Gold Standard for
Afforestation/Reforestation
CURRENT PROJECTS
Sri Lanka - Come-Share Education Project
Supported since 2005
> Covers 21 out of 25 districts in Sri Lanka
> Tuition provided to 1,400 students
Talensi, Ghana - Farmer Managed Natural
Regeneration
Change A Life’s sixth World Vision project
Sihanoukville, Cambodia – Sunrise Village
Supported since 2007
> Fourth year of a five-year project, due to complete
in 2017
> Aims to reduce the annual hunger gap for over
8,400 children and their families
> The village includes a medical and dental clinic,
12 houses and 4 kitchens, an administration
building, 4 classrooms, a computer lab and dance
and music hall
> Housed around 100 children
NEW PROJECTS
Change A Life Rape Crisis Centre
The Change A Life Rape Crisis Centre, located in South Africa, provides sanctuary for victims of violent crime. Renovations to
the Khayelitsha Centre, for which Change A Life donated the funds, were completed at the beginning of 2016 and a food garden
has been planted. Survivors, many of whom do not have any means of support, are given the opportunity to join the sewing,
gardening and catering projects run by the Centre. South African staff contributed donations of over R157,000 in FY2016.
PAGE 15
BUSINESS STRATEGIES AND PROSPECTS
OUTLOOK
In August 2016, we reported that we expect management EPS in constant currency to be slightly up on FY2016.
The outlook assessment is subject to the forward-looking statements disclaimer in our annual results announcement and assumes that
corporate actions revenue is similar to FY2016, and that interest rate markets perform broadly in line with expectations that existed at
the time of providing that guidance and equity markets remain at the levels that existed at the time of providing that guidance.
Computershare’s strategy is to be the leading provider of services in our selected markets by leveraging our core skills and
competencies to deliver outstanding client outcomes from engaged staff. We focus on new products and services to reinforce market
leadership in established markets and invest in technology and innovation to deliver productivity gains and improved cost outcomes.
Our key growth drivers are as follows:
ORGANIC
MACRO
STRUCTURAL
We are investing in mortgage
servicing, employee share plans
and an enterprise wide cost out
program which, coupled with
property rationalisation benefits,
is expected to drive growth and
improved returns.
We are leveraged to corporate
actions and equity market activity
and a rising interest rate environment,
which should help drive improved
yields on client balances.
We are considering how we best
position ourselves to benefit from the
emerging trend of new non-share registry
outsourcing that is being driven by rising
compliance, technology complexity and
the requirement for efficient processing,
payments and reconciliations.
We are prioritising actions that will best assure our future:
> protecting profitability in our mature businesses through new revenue and cost initiatives
> investing in growth opportunities for businesses that offer that potential, such as mortgage servicing and employee share
plan administration
> evaluating new business opportunities, but with high investment hurdle thresholds
In delivering on our strategic focus, we remain cost focused and have made significant progress through FY2016 on centralising our US
operations, which is expected to yield project benefits of $25-$30 million on an annualised basis. We have also commenced a group
wide cost review project. Further enhancements to our business services portfolio were achieved with the Gilardi acquisition opening
up new opportunities for our US class actions administration business, and the acquisition of CMC, which we expect to considerably
strengthen our US mortgage servicing operation. Our UK mortgage services business was appointed by the UK Government to
service a GBP 30 billion book of UKAR mortgage loans and was also appointed to service an additional GBP 11 billion of similar assets
purchased by Cerberus, which was a significant milestone.
While the competitive landscape remains challenging, we continue to achieve high levels of customer satisfaction and client retention.
Our investments in integrated products continue to help us win new clients across the Group.
RISKS
The Board is ultimately responsible for ensuring that Computershare’s risk management practices are sufficient to mitigate the risks
present in our business as efficiently and effectively as possible. The Board delegates some of this responsibility to the Risk and
Audit Committee.
Computershare has a clear approach to the oversight and management of risk, based on the three lines of defence model. This model
provides a simple framework for the implementation and oversight of risk management in which management, as the first line of
defence, has primary responsibility for risk management and control activities.
The risk function, as part of the second line of defence, is responsible for setting and implementing the risk framework and supporting
tools and methodologies as well as providing advisory support to management.
The internal audit function, as the third line of defence, provides an independent and objective assurance function with the responsibility
of confirming that the framework, policies, and controls designed to manage key risks are being executed by management. Internal
audit carries out regular systematic monitoring of control activities and reports its findings to the senior managers of each business unit
as well as to the Risk and Audit Committee.
PAGE 16
Computershare Annual Report 2016 BUSINESS STRATEGIES AND PROSPECTS
RISK SUMMARY
The following outlines areas of material risk that could impact our ability to achieve our strategic objectives and future financial
prospects including, where applicable, our exposure to economic, environmental or social sustainability risks and how we seek to
mitigate or manage them.
Strategic and regulatory risk
Our businesses operate in highly-regulated markets around the world and our success can be impacted by changes to the regulatory
environment and the structure of these markets. As an organisation we pay very close attention to regulatory developments globally
and play an active role in consulting with regulators on changes which could impact our business.
Many of our key businesses are also subject to direct regulatory oversight and we are required to maintain the appropriate regulatory
approvals and licenses to operate, and in some cases adhere to certain financial covenants.
Our business is also at risk of disruption from new technologies and alternative service providers. This means we must be constantly
looking for ways to improve our services by investing in new technologies and processes. We have also established a dedicated
innovation team which is responsible for rapidly assessing the viability of new business ideas and initiatives in an agile yet systematic
manner using proven innovation techniques.
FY2016 has seen the emergence of distributed ledger technology or ‘blockchain’ as a technology, which has the potential to be deployed
across financial market systems, including post trade clearing and settlement of securities. Deployment of distributed ledger technology
into financial markets, if it ultimately proves to be a viable option, will require extensive dialogue and consultation with regulators and
industry participants and its ultimate market structure implications are not yet known.
Computershare is adopting a measured and considered approach to blockchain. We are pursuing a dual track approach in terms of
assessing the commercial value of introducing innovative blockchain services in market adjacencies, while also rigorously defending
our existing role and overall market positioning. We also believe that our global presence makes us an attractive partner to blockchain
solution providers and gives us access to a wide range of potential commercial blockchain opportunities.
Our future prospects also depend on finding and executing on opportunities to grow and diversify our business. We are potentially
constrained by market structure and competition law restrictions from significantly growing our registry services footprint by acquisition
(unless subsequent market structure changes present new opportunities) and this has inevitably changed the focus of our investment
decisions. There is also inherent risk in any acquisition, including risk of financial loss or missed earnings potential from inappropriate
acquisition decisions as well as integration risk in its implementation. Computershare has a strong track record of acquiring and
integrating businesses successfully, in particular in the businesses of registry and employee share plan administration. We have
a deliberately focused acquisition strategy with rigorous approval processes and we also undertake subsequent reviews of our
acquisitions and their performance.
Financial risk
Our financial performance each year is underpinned by significant annuity revenue. However, there is also a material proportion of
revenue that is derived from transactional activity that is dependent on factors outside our control, which can be challenging to predict.
Changes to market activity generally and foreign exchange rates have the ability to impact on our financial performance.
Margin income is a key contributor to earnings. Changes in investment restrictions, interest rates and to the level of balances that we
hold on behalf of clients can have a material impact on the Group’s earnings. We also have strong relationships with the global financial
institutions that hold our client balances. We have robust policies and other protections to manage risks associated with placing those
funds and we also make significant investments in processes and technology to identify, allocate, reconcile and oversee client monies.
We also experience vigorous competition in all of the markets in which we operate and the actions of our competitors can impact on
our financial prospects. For example, aggressive price discounting by competitors could adversely affect our ability to retain existing
clients and also win new clients. We continually strive to remain the leading provider of services in all our business lines globally and
invest significantly in new technology and services to maintain our market-leading position.
Operational risk
Computershare is responsible for managing valuable client data. This presents a range of challenges, from ensuring the security and
integrity of that data as well as the continuity of our service in the face of internal and external factors. We manage these risks through
extensive business continuity planning and testing as well as rigorous internal controls around the ability to access and modify client
data. We also make significant investments in technology and services to protect data at rest, in motion and at end point, including
a specialist information security team whose responsibilities include ensuring we have appropriate and effective systems in place
to protect our and our clients’ data from unauthorised access. Our dedicated financial crime team is also responsible for analysing
information and transactions to mitigate the risk of fraud (both internal and external) and these resources are focused on areas of
highest potential exposure.
Computershare also undertakes high volumes of transactional processes, some of which are complex. There is a risk that failure to
process these transactions correctly could result in liabilities being incurred to third parties. We invest significantly in technology to
automate processes where possible. We also have policies, processes and corresponding controls to assist in mitigating this risk,
which are routinely tested. The Group also maintains insurance.
PAGE 17
CORPORATE GOVERNANCE STATEMENT
1. COMPUTERSHARE’S APPROACH TO CORPORATE GOVERNANCE
The Board is committed to maintaining high standards of corporate governance by overseeing a sound and effective governance
framework for the management and conduct of Computershare’s business. This corporate governance statement sets out a description
of Computershare’s main corporate governance practices. Computershare’s governance arrangements complied with each of the
recommendations set by the ASX Corporate Governance Council throughout the reporting period, except as identified in this statement.
In this statement ‘Group’ is used to refer to Computershare Limited and its controlled entities, and references to ‘Group management’
refer to the Group’s Chief Executive Officer and the executives reporting directly to the Chief Executive Officer.
This Corporate Governance Statement has been approved by the Board and is current as at 19 September 2016.
2. BOARD RESPONSIBILITIES
The Board is responsible for the corporate governance of the Group and is governed by the principles set out in the Board Charter.
A copy of the Board-approved Charter is available from http://www.computershare.com/governance.
The principal role of the Board is to ensure the long-term prosperity of the Group and, in doing so, to determine the Group’s
strategic direction. The Board also sets broad corporate governance principles, which govern the Group’s business operations and
accountability, and ensures that those principles are effectively implemented by Group management.
The Board’s other reserved powers and duties can be divided into five distinct areas of responsibility, an overview of which is
provided below:
> Strategic planning for the Group – involves commenting on, and providing final approval of, the Group’s corporate strategy and
related performance objectives, as developed by Group management, as well as monitoring Group management’s implementation
of, and performance with respect to, that agreed corporate strategy.
> Financial matters – includes approving the Group’s budgets and other performance indicators and monitoring progress against them,
as well as approving and monitoring financial and other reporting, internal and external audit plans, enterprise risk management plans
and the progress of major capital expenditure, acquisitions and divestitures.
> Corporate governance – incorporates overseeing Computershare’s corporate governance framework, including approving changes
made to key supporting Group policies and overseeing Computershare’s reporting to shareholders and its compliance with its
continuous disclosure obligations.
> Overseeing Group management – involves the appointment and, if required, removal of the Chief Executive Officer and the monitoring
of his or her ongoing performance, as well as, if applicable, the appointment and if required, removal of Group management personnel,
including the Chief Financial Officer and Company Secretary.
> Remuneration – comprises the approval of Computershare’s overall remuneration framework and determining the remuneration of
non-executive directors within the limits approved by shareholders.
The Board has delegated the responsibility for day-to-day management and administration of Computershare to the Chief Executive
Officer. Ultimately, Group management is responsible for managing the Group in accordance with the corporate strategy, plans and
policies approved by the Board, and is required to provide appropriate information to the Board to ensure it can effectively discharge
its duties.
3. BOARD COMPOSITION AND DIRECTOR APPOINTMENT
Computershare’s Constitution states that the Board must have a minimum of three and a maximum of ten directors. Re-appointment is
not automatic and if retiring directors would like to continue to hold office they must submit themselves for re-election by Computershare’s
shareholders at the Annual General Meeting. No director (other than the Chief Executive Officer) may be in office for longer than three
years without facing re-election.
In addition to ensuring that the Board has the mix of skills, knowledge and experience commonly required across boards of major ASX
listed companies, the Board is also focused on ensuring that its composition aligns with the Group’s strategic objectives and that it has
the necessary skills and expertise to provide oversight of those areas of the Group’s business where there is greatest scope to increase
shareholder value in the future.
As a global organisation, it is also of great importance to the Board that it has an appropriate balance of directors who are based in
Australia, as well as directors who are based in or who have experience of regions where there are significant group operations. The
Board also considers its size should be conducive to effective discussion and efficient decision making. The Board regularly reassesses
its composition to ensure that it continues to meet these requirements.
PAGE 18
Computershare Annual Report 2016 To assist in this process the Board has developed a Board skills matrix which sets out the skills and experiences that the Board has or
is looking to achieve. The current skills and experience of the Board assessed as a whole against the matrix is as follows:
Leadership and governance
Strategy
Innovation and entrepreneurship
CEO level experience
Other non-executive director experience
Corporate governance
Business experience
M&A and capital markets experience
International business experience
Working in regulated industries
Outsourced business services
Business development / access to networks
Financial and risk
Accounting and finance
Banking and treasury
Audit, risk management and compliance
Other
Technology
HR / remuneration
Geographic experience
North America
UK and Europe
Asia
Australia
Total out of eight Directors
8
4
5
7
6
8
6
6
6
5
5
5
5
5
5
6
8
3
6
There was no change to the composition of the Board during the reporting period.
All of Computershare’s non-executive directors have signed formal letters of appointment setting out the key terms and conditions
relating to their appointment as a director. Senior managers at Computershare also sign employment agreements, except in certain
overseas jurisdictions due to local employment practices.
Proposed appointees to the Board are subject to appropriate background checks. The format of these checks is dependent on the
residence of the proposed director but would typically include police and bankruptcy checks and searches of relevant public records
and filings. This is in addition to confirmation of the proposed director’s experience and character as appropriate.
Any director appointed by the Board will be required to stand for election at the next AGM, at which time the Company will provide in
the notice of meeting all material information known to the Company that is relevant for shareholders to decide on whether or not to
appoint the director.
On appointment, all new directors undertake an induction process. They receive copies of all key governance documents as well as
briefings from senior management on material matters relating to the Computershare group including strategic considerations, financial
performance, major markets and business lines and operational and technological capability. As the Board holds meetings in all of the
major markets in which the Group operates, new directors are, along with the rest of the Board, given the opportunity to meet with
regional management and visit operational facilities during those meetings.
Computershare does not have a formal program of professional development for its directors. Directors receive briefings on material
developments, including structural developments and market changes, that relate to the Group’s operations. Directors may also
request that the Company provide them with specific development opportunities which they may consider necessary to improve their
skills and knowledge.
PAGE 19
The Directors
As at the date of this Annual Report, the Board composition (with details of the professional background of each director) is as follows:
Simon Jones
M.A. (Oxon), A.C.A.
Position: Chairman
Age: 60
Independent: Yes
Years of service: 11
Term of office
Simon Jones was appointed to the Board in November 2005 as a non-executive director. Simon
was last re-elected by shareholders in 2014 and was appointed as Computershare’s Chairman in
November 2015.
Skills and experience
Simon is a chartered accountant with extensive experience in investment advisory, valuations,
mergers and acquisitions, public offerings, audit and venture capital. Simon was previously a
Managing Director of N.M. Rothschild and Sons (Australia) and Head of Audit and Business
Advisory (Australia & New Zealand) and Corporate Finance (Melbourne) at Arthur Andersen.
Other directorships and offices
Director of Canterbury Partners
Chairman of Melbourne IT Limited (Director since 2003 and Chairman since 2009)
Chairman of the Advisory Board of MAB Corporation Pty Ltd
Board Committee membership
Chairman of the Nomination Committee
Member of the Risk and Audit Committee
Member of the Remuneration Committee
Member of the Acquisitions Committee
Stuart Irving
Term of office
Stuart Irving was appointed Chief Executive Officer and President of Computershare on 1 July 2014.
He joined Computershare in 1998.
Skills and experience
Stuart held a number of roles at The Royal Bank of Scotland before joining Computershare as
IT Development Manager in the UK. Stuart subsequently worked in South Africa, Canada and
the US before becoming Chief Information Officer for North America in 2005 and then the
Computershare Group’s Chief Information Officer in 2008.
Position: Chief Executive Officer
Age: 45
Independent: No
Years of service: 2
Board Committee membership
Member of the Nomination Committee
Member of the Acquisitions Committee
Christopher John Morris
Term of office
Chris Morris and an associate established Computershare in 1978. He was appointed Chief
Executive Officer in 1990 and oversaw the listing of Computershare on the ASX in 1994.
Chris became the Group’s Executive Chairman in November 2006 and relinquished his
executive responsibilities in September 2010 and subsequently stood down as Chairman in
November 2015. Chris was last re-elected in 2015.
Skills and experience
Chris has worked across the global securities industry for more than 30 years. His knowledge,
long-term strategic vision and passion for the industry have been instrumental in transforming
Computershare from an Australian business into a successful global public company.
Other directorships and offices
Non-Executive Chairman of Smart Parking Limited (appointed in March 2009)
Non-Executive Chairman of DTI Limited (appointed in June 2011)
Non-Executive Director of Adslot Limited (from September 2010 to February 2014)
Board Committee memberships
Chairman of the Nomination Committee
Chairman of the Acquisitions Committee
Member of the Remuneration Committee
Position: Non-Executive Director
Age: 68
Independent: No
Years of service: 38
PAGE 20
Computershare Annual Report 2016CORPORATE GOVERNANCE STATEMENT
Penelope Jane Maclagan
BSc (Hons), DipEd
Term of office
Penny Maclagan joined Computershare in 1983 and was appointed to the Board as an executive
director in May 1995. Penny relinquished her executive responsibilities in September 2010.
Penny was last re-elected in 2015.
Skills and experience
Penny has over 30 years of experience and knowledge in the securities industry. Having led
Computershare’s Technology Services business until 2008, Penny has a very deep understanding of
Computershare’s leading proprietary technology that contributes to its competitive advantage in the
global marketplace.
Other directorships and offices
Non-Executive Director of Smart Parking Limited (appointed in February 2011)
Board Committee membership
Member of the Nomination Committee
Member of the Remuneration Committee
Term of office
Markus Kerber was first appointed to the Board as a non-executive director in August 2004.
In November 2009 he was required to retire due to his appointment as the Head of the Planning
Department in the German Treasury and re-joined the Board in 2011. Markus was last re-elected to
the Board in 2014.
Skills and experience
Markus is Managing Director of the Federation of German Industries. Markus has worked as an
investment banker in London in the equity capital markets divisions of Deutsche Bank AG and
S.G. Warburg & Co Limited. Prior to his appointment to the German Treasury, Markus was the
Director General at the German Ministry of the Interior from 2006 until 2009. Between 1998 and
2005 he was Chief Financial Officer, Chief Operating Officer and Vice Chairman of the Supervisory
Board of GFT Technologies AG.
Other directorships and offices
Member of the Supervisory Board of Commerzbank Aktiengesellschaft
Member of the Board of Supervisory Directors of KfW
Board committee membership
Member of the Acquisitions Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Term of office
Les Owen was appointed to the Board on 1 February 2007 as a non-executive director. Les was last
re-elected in 2013.
Skills and experience
Les is a qualified actuary with over 35 years’ experience in the financial services industry.
He held Chief Executive Officer roles with AXA Asia Pacific Holdings and AXA Sun Life plc and was a
member of the Global AXA Group Executive Board. He was also a member of the Federal Treasurer’s
Financial Sector Advisory Council.
Other directorships and offices
Non-Executive Director of Discovery Holdings Limited (a South African-listed health and life insurer)
Non-Executive Director of the Royal Mail Group Plc
Board Committee membership
Member of the Risk and Audit Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Position: Non-Executive Director
Age: 64
Independent: No
Years of service: 21
Dr Markus Kerber
Dipl.oec, Dr. Rer. Soc.
Position: Non-Executive Director
Age: 53
Independent: Yes
Years of service: 5
Arthur Leslie (Les) Owen
BSc, FIA, FPMI
Position: Non-Executive Director
Age: 67
Independent: Yes
Years of service: 9
PAGE 21
Tiffany Lee Fuller
B.Com, GAICD, ACA
Position: Non-Executive Director
Age: 46
Independent: Yes
Years of service: 2
Joseph Mark Velli
BA, MBA
Term of office
Tiffany Fuller was appointed to the Board on 1 October 2014 as a non-executive director. Tiffany was
elected by shareholders at the Company’s AGM in November 2014.
Skills and experience
Tiffany has held various corporate finance, financial advisory and management consulting positions
with Arthur Andersen in Australia, the US and UK. She held roles in investment banking with
Rothschild Australia and was also Director and Principal of the Rothschild e-Fund focusing on
investments in early stage technology companies in Australia and New Zealand. Tiffany has also
been appointed as a non-executive director for various public and private entities in both the for and
not for profit sectors.
Other directorships and offices
Non-Executive Director of Costa Group Holdings Limited (appointed in 2015)
Non-Executive Director of Smart Parking Technologies (since 2011)
Non-Executive Director of Adslot Limited (2011 to 2014)
Board Committee membership
Chair of the Risk and Audit Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Term of office
Joseph Velli was appointed to the Board on 1 October 2014 as a non-executive director. Joseph
was elected by shareholders at the Company’s AGM in November 2014.
Skills and experience
Joseph is a retired financial services and technology executive with extensive securities servicing,
M&A and public board experience. For most of his career, Joseph served as Senior Executive Vice
President of The Bank of New York and as a member of the Bank’s Senior Policy Committee. During
his 22-year tenure with the Bank, Joseph’s responsibilities included heading Global Issuer Services,
Global Custody and related Investor Services, Global Liquidity Services, Pension and 401k Services,
Consumer and Retail Banking, Correspondent Clearing and Securities Services. Most recently
Joseph served as the Chairman and Chief Executive Officer of Convergex Group.
Position: Non-Executive Director
Age: 57
Independent: Yes
Years of service: 2
Other directorships and offices
Non-Executive Director of Paychex, Inc.
Board Committee membership
Chairman of the Remuneration Committee
Member of the Nomination Committee
4. BOARD INDEPENDENCE
The Board has considered each of the eight directors in office as at the date of this Annual Report and has determined that a majority
(five out of eight) are independent, and were so throughout the reporting period. The three directors who are not considered to be
independent are Chris Morris, Penny Maclagan and Stuart Irving due to their past or present involvement in the senior management of
the Company and, in the case of Chris Morris, his substantial shareholding in the Company.
To determine the independence of a director, the Board has to consider a number of different factors, including those set out below:
> whether the director acts (or has recently acted) in an executive capacity for the Company
> the materiality of the director’s shareholding in the Company (if any)
> the existence of any other material relationship between the director and a member of the Group (for example, where the director is
or has been an officer of a significant adviser, supplier or customer)
> the ability of the director to exercise his or her judgement independently
The Board notes that the ASX Corporate Governance Council recommends that the Chair be an independent director. Chris Morris was
Chairman of the Board until November 2015. Although not an independent director, the Board had been of the view that given Chris Morris,
as founder of the company more than thirty years ago and the driving force behind Computershare’s transformation into a successful global
public company, it was appropriate that he held the position of Chairman when he relinquished his CEO position in 2006.
In November 2015, Computershare announced that Chris Morris was stepping down as Chairman and would remain on the Board
as a non-executive director and Simon Jones was appointed as Chairman. Simon Jones was the Lead Independent Director for
Computershare whilst Chris Morris was Chairman. Given Simon Jones is an independent director, no other director was appointed into
that role when Simon Jones became Chairman.
PAGE 22
Computershare Annual Report 2016CORPORATE GOVERNANCE STATEMENT 5. BOARD MEETINGS AND REPORTS
The Board met in person on four occasions in the reporting period. In-person meetings will generally take place over two full days and
provide the Board with the opportunity to meet the senior management in the region where the meeting is held, so that the Board visits
all of the Group management team in person over the year. At its meetings, the Board will also discuss the Group’s results, prospects
and short and long-term strategy, as well as other matters, including operational performance and legal, governance and compliance
issues. The Board also convened four other meetings by telephone during the reporting period.
Group management provides monthly reports to the Board detailing current financial information concerning the Group and each of the
regions in which it operates. Management also provides additional information on matters of interest to the Board, including operational
performance, major initiatives and the Group’s risk profile, as appropriate.
The Committees of the Board also meet regularly to fulfil their duties, as discussed further below.
6. BOARD COMMITTEES
To assist in discharging its responsibilities, the Board has established four committees.
The Risk and Audit Committee
The principal function of the Risk and Audit Committee is to provide assistance to the Board in fulfilling its corporate governance and
oversight responsibilities in relation to the Company’s financial reporting, internal control structure, risk management systems, internal
audit function and external audit requirements.
The Risk and Audit Committee is chaired by Non-Executive Director Tiffany Fuller. The Committee currently has two other permanent
non-executive members, Simon Jones and Les Owen. Each member of this Committee is considered by the Board to be independent.
The Board regards these members as having the required financial expertise and an appropriate understanding of the markets in which
the Group operates. The Chief Executive Officer, the Chief Financial Officer, the Group Head of Internal Audit, the Group Risk Officer
and the Company’s external auditors are invited to meetings of the Risk and Audit Committee at the Committee’s discretion.
The Risk and Audit Committee is governed by a Board-approved charter. A copy of this Risk and Audit Committee Charter is available
from http://www.computershare.com/governance.
The Nomination Committee
The main functions of the Nomination Committee are to review the competence, expertise, performance, constitution and succession
of the Board, as well as the performance of individual directors.
The Nomination Committee generally meets on each occasion that the Board meets in person. All current directors are members of
the Nomination Committee and it is chaired by Simon Jones in his capacity as Chairman of the Board. Although not an independent
director, Chris Morris was Chairman of the Nomination Committee until he stood down as Chairman of the Board in November 2015.
The Nomination Committee’s policy for the appointment of directors is to select candidates whose skills, expertise, qualifications,
networks and knowledge of the markets in which Computershare operates (and other markets into which it may expand) complement
those of existing Board members so that the Board as a whole has the requisite skills, diversity and experience to fulfil its duties.
The Nomination Committee is governed by a Board-approved charter. A copy of this Nomination Committee Charter is available from
http://www.computershare.com/governance.
The Remuneration Committee
The Remuneration Committee’s primary function is to advise the Board on matters relating to the remuneration of the Group’s key
management personnel and specifically to consider, review and make recommendations to the Board about the following matters:
> the Chief Executive Officer’s remuneration policy recommendations
> remuneration and contract terms for the Chief Executive Officer and the Group’s key management personnel
> terms and conditions of long-term incentive plans, short-term incentive plans, share rights plans, performance targets and bonus
payments for the Chief Executive Officer and the Group’s key management personnel
> terms and conditions of any employee incentive plans
> the recommendations of the Chief Executive Officer on offers to executives under any long-term incentive plan established by the
Company from time to time
> remuneration of non-executive directors within the limits approved by shareholders
> content of the remuneration report to be included in the Company’s Annual Report
The Committee is chaired by Joseph Velli. The Committee comprises all directors, except the CEO Stuart Irving. Pursuant to its
Charter, the Committee must always be comprised of a majority of independent directors.
The Remuneration Committee met on three occasions during the reporting period. The Committee has access to Group management
and, where necessary, may consult independent experts to discharge its responsibilities effectively.
The Remuneration Committee is governed by a Board-approved charter. A copy of this Remuneration Committee Charter is available
from http://www.computershare.com/governance.
PAGE 23
The Acquisitions Committee
To assist in fulfilling its corporate governance and oversight responsibilities with respect to prospective acquisitions and divestitures
being considered by the Group, the Board has established an Acquisitions Committee. The Committee receives reports from Group
management on acquisition and divestiture opportunities and provides advice on matters such as the price, terms, structure and
strategic management of such opportunities. The Committee is also authorised to approve transactions to be entered into by Group
companies, provided that it does so within the scope of authority delegated to the Committee by the Board from time to time.
The Acquisitions Committee is chaired by Chris Morris and also comprises Simon Jones, Markus Kerber, Stuart Irving and Mark Davis
(the Group’s Chief Financial Officer).
For details of directors’ attendance at Committee meetings, see the Directors’ Report, which starts on page 29 of this Annual Report.
7. EQUITY PARTICIPATION BY NON-EXECUTIVE DIRECTORS
The Board encourages non-executive directors to own shares in the Company, however the Company has not awarded shares to
non-executive directors. As at 30 June 2016, all non-executive directors held a relevant interest in shares in the Company.
8. REMUNERATION
For information relating to the Group’s remuneration practices, and details relating to the directors’ remuneration and that of the
Group’s key management personnel during the year ended 30 June 2016, see the Remuneration Report, which starts on page 32 of
this Annual Report and is incorporated into this corporate governance statement by reference.
In addition to the disclosures contained in the Remuneration Report, it should be noted that the Board is keen to encourage equity
holdings in the Company by employees with a view to aligning staff and shareholder interests. Many employees have participated
(and continue to participate) in the various equity plans offered by the Company, and the directors believe that, historically, this has
contributed significantly to the Group’s success.
9. ANNUAL REVIEW OF BOARD AND GROUP MANAGEMENT PERFORMANCE
The Board’s performance is regularly reviewed by the directors of the Company as a whole (acting as the Nomination Committee).
These reviews are undertaken in an open manner each time the Board meets in person. There is a standing agenda item at each
in-person Board meeting for directors to be given an opportunity to discuss any concerns they may have with the Board’s and its
Committees’ performance as well as any steps that can be taken to maintain their effectiveness.
Directors also completed a questionnaire relating to Board and Committee performance during the reporting period and the Board then
reviewed the responses. The directors believe that this process works well for its size and composition.
The process for evaluating the performance of individual directors is an informal one. The Chairman is responsible for engaging directly
with directors on any individual performance concerns. Directors are able to raise concerns they might have with an individual director’s
performance directly with the Chairman.
The Board annually reviews the Chief Executive Officer’s performance while the Chief Executive Officer annually reviews the performance
of the other members of Group management against their KPIs for the year. This review process results in each member of Group
management receiving a proposed numerical rating which determines their short-term incentive outcomes for the year. The proposed
rating given to each member of Group management is then reviewed by the Remuneration Committee.
The Risk and Audit Committee also undertakes a review of its performance from time to time. The review comprises completion of
a questionnaire by the individual members of the Committee and a review by the Committee of the responses. A review did not take
place within the current reporting period.
10. IDENTIFYING AND MANAGING BUSINESS RISKS
The Business Strategies and Prospects section of this Annual Report contains a summary of Computershare’s approach to managing
risk within the organisation.
In respect of the reporting period, the Board received a report from the Chief Executive Officer and the Chief Financial Officer that
confirms, among other things, the following:
> The ‘Declaration to the Board of Directors of Computershare Limited’, a copy of which is included in this Annual Report (see page 105)
as required by section 295A of the Corporations Act 2001, is founded on a sound risk management and internal control system that is
operating effectively in all material respects in relation to financial reporting risks.
> The Group’s material business risks have been managed effectively.
The Risk and Audit Committee also undertook a review of the Group’s risk management framework during the reporting period and
was satisfied that it remained sound.
PAGE 24
Computershare Annual Report 2016CORPORATE GOVERNANCE STATEMENT 11. DIVERSITY
With two newly appointed global diversity champions, we anticipate that there will be positive updates for both our diversity policy and
objectives in FY2018, with FY2017 being a year of transition. This report reflects the situation in FY2016.
Diversity Policy
Computershare expects a lot from our employees and we rely on them to protect and grow our business. These employees trust
Computershare to properly recognise their diverse talents. The Board and senior management are committed to honouring that trust.
Computershare’s philosophy on diversity is a practical one. It simply makes good business sense to leverage the diverse skills and
talents of our entire global workforce regardless of gender, age, race, origin, ethnicity, cultural background, disability, sexual orientation
and religious beliefs.
Computershare’s Board and management believe that we should hire, develop, reward, promote and retain our people strictly on the
basis of their talent and commitment, and the results they achieve. We will never recruit or promote on anything other than the basis of
merit, competence and potential.
Our approach to diversity is underpinned by practical objectives to ensure that all of our employees have an equal opportunity to
demonstrate their talent, commitment and results. These are what we will measure ourselves against and they will be our primary
external reporting metrics. The Board annually assesses the objectives and progress made.
Measurable objectives
Listed below is the summary of the objectives that were established in 2011. There have been no material changes to the objectives or
measurements since 2011.
It is important to note that the objectives outlined below do not exclude male employee participation in any relevant programmes.
Objectives
Measurement
FY2016 Results
1. Recognised opportunity culture
Our employees believe that Computershare
has an equal opportunity culture where men
and women are able to demonstrate equally
their talent, commitment and results.
2. Development of high potential women
Via the annual global staff survey, the
majority of employees agree that men
and women at Computershare have
equal opportunity to demonstrate their
talents, commitment and results.
The annual global staff survey has been
enhanced to delve further into diversity
perspectives. The average rating on diversity
related questions was 6.7 (out of ten).
As part of the company’s succession
planning process, high potential
women are identified and developed
for career progression.
High potential women are identified
and are actively developed for career
progression. Their development is
reviewed annually.
Regional heads reviewed the progress of
identified high potential women as part of
the annual employee review process.
3. Mentoring and networking women
Where identified as valuable, mentoring
and/or networking programmes are
implemented to develop women in
our business.
Programme implementation and results
are reviewed annually.
Mentoring and/or networking programmes
are available on a needs basis to employees.
4. Improve support for pregnancy and maternity leave
Programmes are implemented that provide
better support for pregnant women in the
workplace; and for women commencing,
on and returning from, maternity leave.
Over 80% of women return to the
workforce from maternity leave. An annual
report to the CEO monitors progress.
Currently operating at above target rates in
each region. Globally Computershare has a
return rate in excess of 85%.
5. Flexible working arrangements implemented
Flexible working initiatives are supported
by management and where appropriate
made available to employees to achieve
improved business outcomes and support
work/life balance.
Flexible working arrangements are
defined in the appropriate workplace
policies and/or are actively used as
an engagement tool by management.
Management feedback on usage
and effectiveness is provided to the
CEO annually.
Flexible working arrangements are available
to our employees. Requests for a flexible
arrangement are assessed by Human
Resources and the business unit involved.
PAGE 25
Gender diversity statistics
Role category
Board (inc. CEO)
Direct Reports of CEO
Company Executive
Senior Manager
Manager
Other
Totals
Total
Male
Female
Male %
Female %
8
13
98
471
2,092
9,983
12,665
6
12
74
305
1,100
4,315
5,812
2
1
24
166
992
5,668
6,853
75%
92%
76%
65%
53%
43%
46%
25%
8%
24%
35%
47%
57%
54%
Data valid as at 30 June 2016. Our joint venture in India where Computershare is not the active manager is excluded.
12. WORKPLACE GENDER EQUALITY REPORT
In accordance with the requirements of the Workplace Gender Equality Act 2012, on 19 May 2016 Computershare Australia
lodged its annual compliance report with the Workplace Gender Equality Agency. A copy of this report is available from
http://www.computershare.com/governance.
Any comments regarding this report can be submitted via email to the following address wgea.comments@computershare.com.au.
13. SECURITIES TRADING POLICY
The Company has a Securities Trading Policy in place which sets out the restrictions that apply to the Group’s directors, officers and
employees trading in Computershare securities.
The policy explains the insider trading laws as they relate to trading in Computershare securities and the securities of Computershare’s
clients. It also sets out the penalties that apply to insider trading offences under the Corporations Act 2001 and makes clear that
Computershare adopts a zero tolerance approach to breaches of insider trading laws.
The policy imposes additional restrictions on dealings in Computershare securities by Computershare directors and certain specified
executives (designated persons). These designated persons may deal in Computershare securities during the four week period after
the Company releases its half year and full year financial results, and after the date on which its Annual General Meeting is held, subject
always to the laws on insider trading.
In addition, these designated persons may only deal in Computershare securities outside those specified four week trading windows
with an express prior clearance by a nominated director. During certain prohibited periods, being the period between 15 December
and the Company’s release of its half year results and the period between 15 June and the Company’s release of its full year results,
and such other periods as may be determined by the Board from time to time, clearance to deal can only be given in exceptional
circumstances.
Under the policy, designated persons are also prohibited from entering into an arrangement pursuant to which they seek to hedge the
economic risk associated with an unvested incentive award made to them by Computershare.
The list of designated persons is set out in Schedule 1 of the Securities Trading Policy. It is reviewed and updated as appropriate,
having regard to any changes in the structure of or the creation of new roles within Group management. An up-to-date copy of the
Board-approved Securities Trading Policy is available from http://www.computershare.com/governance.
14. CORPORATE REPORTING
The Chief Executive Officer and the Chief Financial Officer have made a Declaration to the Board of Directors in respect of the year ended
30 June 2016, as detailed on page 105 of this Annual Report. The Chief Executive Officer and the Chief Financial Officer also provided an
equivalent statement to the Directors in respect of the Company’s half year report for the period ended 31 December 2015.
15. CONFLICT OF INTEREST AND INDEPENDENT ADVICE
If a director has an actual or potential conflict of interest in a matter under consideration by the Board or a Committee of the Board,
that director must promptly disclose that conflict of interest and abstain from deliberations on the matter. In that circumstance, the
director is not permitted to exercise any influence over other Board members or Committee members on that issue, nor receive
relevant Board or Committee papers.
The Company permits any director or Committee of the Board to obtain external advice about transactions or matters of concern
at the Company’s cost. Directors seeking independent advice must obtain the approval of the Chairman, who is required to act
reasonably in deciding whether the request is appropriate.
PAGE 26
Computershare Annual Report 2016CORPORATE GOVERNANCE STATEMENT 16. ETHICAL STANDARDS
Computershare recognises the need for directors and employees to perform to the highest standards of behaviour and business
ethics. The Board has adopted a Code of Conduct that sets out the principles and standards with which all officers and employees are
expected to comply as they perform their respective functions. The Code recognises the legal and other obligations that the Company
has to legitimate stakeholders, and requires that directors, officers and employees maintain the highest standards of propriety and act
in accordance with the law.
A copy of the Group’s Board-approved Code of Conduct is available from the corporate governance section of
http://www.computershare.com/governance.
17. SHAREHOLDER COMMUNICATIONS AND INVESTOR RELATIONS
Computershare has an investor relations program in place with the aim of facilitating effective communication between Computershare
and its investors. A key feature of this program is to ensure that shareholders are notified of, or are otherwise able to access information
necessary to assess Computershare’s performance. Information is communicated to shareholders through the following means:
> The Annual Report, which is distributed to all shareholders who elect to receive it. An overview of the previous financial year is also
included in the Notice of AGM that all shareholders receive.
> The AGM and any other shareholder meetings called from time to time to obtain shareholder approval as required.
> The Company’s website, which contains information regarding the Company and the Group and its corporate governance
framework. The Investor Relations section of the website also includes information released to the ASX, a copy of investor and
analyst briefing documentation, press releases and webcasts.
> By email to those shareholders who have supplied their email address for the purpose of receiving communications from the
Company electronically. Computershare actively encourages shareholders to provide an email address to facilitate more timely and
effective communication with them and runs campaigns from time to time to encourage greater email adoption.
Computershare also encourages shareholders to participate in the Company’s AGM. Shareholders who are unable to attend and vote
in person at the meeting are encouraged to vote electronically via Computershare’s service known as InvestorVote, where they can
view an electronic version of the voting form and accompanying materials and submit their votes. Computershare also encourages
shareholders who are unable to attend the AGM to communicate any issues or questions by writing to the Company.
18. COMMITMENT TO AN INFORMED MARKET RELATING TO COMPUTERSHARE SECURITIES
The Board has a Market Disclosure Policy to ensure the fair and timely disclosure of price-sensitive information to the investment
community as required by applicable law.
In order to effectively manage its continuous disclosure obligations, the Chief Executive Officer has established a Disclosure Committee
which is responsible for the following matters:
> considering what information needs to be released to the market by Computershare, although routine administrative announcements
may be made by the Company Secretary without consulting the Disclosure Committee
> ensuring announcements relating to significant matters are referred to the Board for consideration and approval, namely
announcements relating to the Company’s half and full year financial reports, financial projections and future financial performance as
well as changes to the Group’s policy or strategy
> approving the disclosure of information to the market for matters not referred to the Board
> implementing adequate systems for ensuring the timely disclosure of material information to the market, including where such
information needs to be released urgently
The Disclosure Committee consists of the Chief Executive Officer, the Chief Financial Officer, the Head of Investor Relations and the
Company Secretary. Where the urgency of an issue, which under the policy is to be referred to the Board, prevents its consideration
by the full Board, an announcement relating to that issue may be approved for release to the market by all available directors in
conjunction with the Disclosure Committee.
Further, in circumstances where it is considered appropriate to request a trading halt (for example, where Computershare is required to
disclose information to the market, but for whatever reason is unable to do so promptly and without delay) the Chief Executive Officer, or if
the Chief Executive Officer is unavailable, the Chairman or the Chief Financial Officer, is authorised to request a trading halt on behalf of the
Company. The full Board is to be consulted as far as is practicable on any request for a trading halt.
A copy of the Board-approved Market Disclosure Policy is available from the corporate governance section of
http://www.computershare.com/governance.
PAGE 27
19. EXTERNAL AUDITORS
The Company’s policy is to appoint external auditors who demonstrate professional ability and independence. The auditor’s
performance is reviewed annually.
PricewaterhouseCoopers were appointed as the external auditors in May 2002.
PricewaterhouseCoopers normally rotates audit engagement partners on listed companies every five years. It is also
PricewaterhouseCoopers’ policy to provide an annual declaration of independence, a copy of which can be found on page 45 of
this Annual Report. The external auditor is required to attend the Company’s Annual General Meeting and be available to answer
shareholder questions about the conduct of the audit and the preparation of the content of the audit report, the accounting policies
adopted by the Company in relation to the preparation of the financial statements and the independence of the auditor in relation to the
conduct of the audit.
An analysis of fees paid to the external auditors, including a breakdown of fees for non-audit services, is provided in the Directors’
Report (see page 44 of this Annual Report).
20. INTERNAL AUDITORS
Computershare has a dedicated Group Internal Audit function. The function is led by the Group Head of Internal Audit who has
a reporting line to the Chairman of the Risk and Audit Committee. Group Internal Audit is authorised to audit all areas of the
Computershare group without the need for prior approval. In carrying out its responsibilities, it has full and unrestricted access to all
records, property, functions, IT systems and staff in the group.
Each financial year, the function develops an annual audit plan which is approved by the Risk and Audit Committee. The function’s key
responsibilities are to review and appraise the adequacy, design and effectiveness of the group’s system of internal controls, advise on
process improvements, evaluate and improve the effectiveness of risk management, control and governance processes and to identify
control gaps.
On completion of audit assignments, Internal Audit will issue written reports which are distributed to management and communicated
to the Risk and Audit Committee. Where the report identifies specific findings and recommendations, the report will include an action
plan from management to implement appropriate corrective action. All internal audits are conducted in accordance with the Institute of
Internal Auditor’s Standards for the Professional Practice of Internal Auditing.
21. WHISTLEBLOWING
The Board has approved a Whistleblower Policy that specifically outlines procedures for dealing with allegations of improper conduct
made by directors, officers or employees of the Company or parties external to Computershare. Concerns can be raised anonymously
in a number of ways, including through the Company’s online whistleblower reporting system, by telephone or by mail. Any reported
concerns are assessed and handled by regional Whistleblower officers. The Group Whistleblower Officer also provides quarterly reports
to the Group Risk and Audit Committee on any concerns reported over the period.
All Computershare employees have received training about the Company’s Whistleblower Policy, including how to detect and report
improper conduct. A copy of the Whistleblower Policy is available from http://www.computershare.com/whistleblowing.
22. CORPORATE AND SOCIAL RESPONSIBILITY
For details relating to the Company’s corporate and social responsibility initiatives, see pages 14 to 15 of this Annual Report.
23. HEALTH AND SAFETY
Computershare aims to provide and maintain a safe and healthy work environment. Computershare acts to meet this commitment by
implementing work practices and procedures throughout the Group that comply with the relevant regulations governing workplaces
in each country in which the Group operates. Employees are expected to take all practical measures to ensure a safe and healthy
working environment, in keeping with their defined responsibilities and applicable laws.
24. COMPANY SECRETARY
The Company Secretary during the reporting period was Dominic Horsley. Under Computershare’s Constitution, the appointment and
removal of the Company Secretary is a matter for the Board.
Among other matters, the Company Secretary advises the Board on governance procedures and supports their effectiveness by
monitoring Board policy and procedures, coordinating the completion and dispatch of Board meeting agendas and papers and assisting
with the induction of new Directors. The Company Secretary is accountable to the Board, through the Chairman, for these responsibilities.
Dominic Horsley joined the Company in June 2006, having previously practised law at one of Asia Pacific’s leading law firms and
worked as a Corporate Counsel with a major listed Australian software and services supplier. Dominic completed a Bachelor of Arts
(Hons) in Economics at the University of Cambridge and completed his legal studies at the College of Law in London. Dominic is also
the Chief Legal Counsel for the Group’s Asia Pacific operations and is a Fellow of the Governance Institute of Australia.
All directors have access to the advice and services of the Company Secretary.
PAGE 28
Computershare Annual Report 2016CORPORATE GOVERNANCE STATEMENT DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Board of Directors of Computershare Limited has pleasure in submitting its report in respect of the financial year ended 30 June 2016.
DIRECTORS
The names of the directors of the Company in office during the whole year and up to the date of this report, unless otherwise indicated, are:
Non-executive
Simon David Jones (Chairman effective 11 November 2015)
Christopher John Morris (Chairman until 11 November 2015)
Tiffany Lee Fuller
Markus Erhard Kerber
Penelope Jane Maclagan
Arthur Leslie Owen
Joseph Mark Velli
Executive
Stuart James Irving (President and Chief Executive Officer)
PRINCIPAL ACTIVITIES
The principal activities of the Group are outlined in the Group and Regional Operating Review set out on page 5 and forms part of
this report.
CONSOLIDATED PROFIT
The profit of the consolidated entity for the financial year was $161.8 million after income tax. Net profit attributable to members of
the parent entity was $157.3 million, which represents an increase of 2.4% on the previous year’s result of $153.6 million. Profit of the
consolidated entity for the financial year after management adjustment items was $303.5 million after income tax and non-controlling
interests. This represents a decrease of 8.8% on the 2015 result of $332.7 million.
Net profit after management adjustment items is determined as follows:
Net profit attributable to members of the parent entity
Management adjustment items (net of tax):
Amortisation
Intangible assets amortisation
Acquisitions and disposals
Acquisition and disposal accounting adjustments
Foreign currency translation reserve write-off on disposals
Gain on acquisition
Acquisition and disposal related expenses
Acquisition related restructuring costs
Asset write-down
Gain on disposal
Other
Major restructuring costs
Put option liability re-measurement
Marked to market adjustments – derivatives
Voucher Services impairment
Net profit after management adjustment items
2016
$000
2015
$000
157,334
153,576
64,043
58,520
46,341
25,904
(8,891)
2,408
1,304
1,687
(325)
8,465
7,526
(2,256)
-
303,540
(6,583)
-
(670)
3,552
6,014
5,241
(7,631)
1,226
7,749
2,204
109,536
332,734
PAGE 29
Management adjustment items
Management results are used, along with other measures, to assess operating business performance. The Group believes that exclusion
of certain items permits better analysis of the Group’s performance on a comparative basis and provides a better measure of underlying
operating performance. Description of management adjustment items can be found in note 3 of the financial statements.
The non-IFRS financial information contained within this Directors’ report has not been audited in accordance with the Australian
Auditing Standards.
DIVIDENDS
The following dividends of the consolidated entity have been paid or declared since the end of the preceding financial year:
Ordinary shares
A final dividend in respect of the year ended 30 June 2015 was declared on 12 August 2015 and paid on 15 September 2015. This was
an ordinary dividend of AU 16 cents per share franked to 25% amounting to AUD 89.0 million ($64.7 million).
An interim dividend was declared on 10 February 2016 and paid on 16 March 2016. This was an ordinary dividend of AU 16 cents per
share franked to 100% amounting to AUD 87.8 million ($63.8 million).
A final dividend in respect of the year ended 30 June 2016 was declared by the directors of the Company on 10 August 2016 and paid
on 13 September 2016. This was an ordinary dividend of AU 17 cents per share, franked to 20%. As the dividend was not declared
until 10 August 2016, a provision was not recognised as at 30 June 2016.
REVIEW OF OPERATIONS
The review of operations is outlined in the Group and Regional Operating Review set out on page 5 and forms part of this report.
SIGNIFICANT EVENTS AND SIGNIFICANT CHANGES IN ACTIVITIES
A discussion of significant events and significant changes in activities is included in the Group and Regional Operating Review set out
on page 5 and forms part of this report.
In the opinion of the directors, there were no other significant changes in the affairs of the consolidated entity during the financial year
under review that are not otherwise disclosed in this report or the consolidated accounts.
SIGNIFICANT EVENTS AFTER YEAR END
No other matter or circumstance has arisen since the end of the financial year which is not otherwise dealt with in this report or in the
consolidated financial statements that has significantly affected or may significantly affect the operations of the consolidated entity, the
results of those operations, or the state of affairs of the consolidated entity in subsequent financial years.
LIKELY DEVELOPMENTS AND FUTURE RESULTS
A discussion of business strategies and prospects is set out on pages 16 to 17 and forms part of this report.
ENVIRONMENTAL REGULATIONS
The Computershare Group is not subject to significant environmental regulation.
INFORMATION ON DIRECTORS
The qualifications, experience and responsibilities of directors together with details of all directorships of other listed companies held by a
director in the three years to 30 June 2016 and any contracts to which the director is a party to under which they are entitled to a benefit
are outlined in the Corporate Governance Statement and form part of this report.
PAGE 30
DIRECTORS’ REPORT Computershare Annual Report 2016 Directors’ interests
At the date of this report, the direct and indirect interests of the directors in the securities of the Company are:
Name
SJ Irving
TL Fuller
SD Jones
ME Kerber
PJ Maclagan
CJ Morris
AL Owen
JM Velli
Meetings of directors
Number of ordinary shares
Number of performance rights
17,837
2,000
17,000
40,000
11,902,025
37,431,000
12,910
10,000
487,606
-
-
-
-
-
-
-
The number of meetings of the Board of Directors (and of Board Committees) and the number of meetings attended by each of the
directors during the financial year were:
Directors’
Meetings
Risk and Audit
Committee
Meetings
Nomination
Committee
Meetings
Remuneration
Committee
Meetings
A
8
8
8
6
8
7
8
8
B
8
8
8
8
8
8
8
8
A
-
8
8
-
-
-
8
-
B
-
8
8
-
-
-
8
-
A
4
4
4
4
4
3
4
4
B
4
4
4
4
4
4
4
4
A
3
3
3
3
3
2
3
3
B
3
3
3
3
3
3
3
3
SJ Irving
TL Fuller
SD Jones
ME Kerber
PJ Maclagan
CJ Morris
AL Owen
JM Velli
A – Number of meetings attended
B – Number of meetings held during the time the director held office during the financial year.
The Board also has an Acquisitions Committee comprising SD Jones, ME Kerber, CJ Morris, SJ Irving and MB Davis (Chief Financial
Officer). The Committee receives a monthly report and meets on an informal basis as necessary. Accordingly, it is not included in the
above table.
INFORMATION ON COMPANY SECRETARY
The qualifications, experience and responsibilities of the Company Secretary are outlined in the Corporate Governance Statement and
form part of this report.
INDEMNIFICATION OF OFFICERS
During the period, the Group paid an insurance premium to insure directors and executive officers of the Group and its controlled
entities against certain liabilities. Disclosure of the amount of insurance premium payable and a summary of the nature of liabilities
covered by the insurance contract is prohibited by the insurance policy.
PAGE 31
REMUNERATION REPORT
This report covers:
A. Remuneration strategy
B. A summary of key remuneration highlights in the current financial year
C. The structure of remuneration at Computershare
D. Details of remuneration and service contracts
E. Proportions of fixed and performance related remuneration
F. Other information
A. REMUNERATION STRATEGY
Computershare’s remuneration strategy is designed to:
> Be competitive in the local employment market where an executive is based so as to support the attraction and retention of a
talented executive team;
> Motivate executives to deliver excellent performance; and
> Align remuneration outcomes for executives with the interests of shareholders.
Computershare’s remuneration strategy and structure is reviewed by the Board and the Remuneration Committee on an ongoing basis
for its appropriateness and effectiveness.
B. A SUMMARY OF KEY REMUNERATION HIGHLIGHTS IN THE CURRENT FINANCIAL YEAR
In the financial year 2016, there were no material changes to the structure of the Group’s remuneration arrangements. Set out below
are some of the key remuneration outcomes and highlights which occurred during the year.
> There was a modest salary increase for Computershare staff globally. There were no general salary increases for the Group’s
executive key management personnel.
> Short-term incentive (STI) outcomes for senior executives were impacted negatively by the decline in management adjusted earnings
per share in the financial year 2016 as compared to 2015.
> There will be a vesting of awards under Computershare’s legacy long-term incentive plan for awards granted in the financial year
2012. The 50% of the awards that were subject to a performance target of at least 7.5% annual compound growth in management
earnings per share over a five-year period will lapse as the target was not met. However, the 50% of the awards that were subject to
a retention condition will vest for those executives who satisfy the five-year retention period.
> The Chairman’s fee and the fee payable to the Chair of the Risk and Audit Committee were increased in November 2015 following a
market review. All other non-executive directors’ fees remained unchanged in the current financial year.
> Computershare staff globally continued to participate in the various employee share plans made available in their regions. The
Computershare One Plan for staff based in Europe was also launched in the financial year 2016. This plan won an award at the
Global Equity Organisation Awards for Best Plan Effectiveness following a 42% growth in membership.
C. THE STRUCTURE OF REMUNERATION
Non-executive directors
Computershare’s total non-executive directors’ fee pool has a limit of AUD 2.0 million. This limit was approved by shareholders in
November 2014.
SD Jones receives a fixed fee of AUD 325,000 as Chairman. All other non-executive directors receive a base fee of AUD 150,000.
TL Fuller receives an additional AUD 75,000 as the Chair of the Risk and Audit Committee and other non-Chair members of the Risk
and Audit Committee (AL Owen and SD Jones) receive an additional AUD 25,000 per annum as members on that committee. JM Velli,
as Chairman of the Remuneration Committee receives an additional AUD 25,000 for performing those duties. These fees are inclusive of
statutory superannuation where applicable.
The fees payable to the Chairman and the Chair of the Risk and Audit Committee were increased effective November 2015 following a
market review. All other non-executive director fees remained unchanged during the reporting period.
If any director wishes to receive their director fees in a different currency to AUD, then they can elect to do so and an exchange rate will
be struck at the start of each financial year for the fees payable in that year.
No bonuses, either short or long-term, are paid to non-executive directors. They are not provided with retirement benefits other than
statutory superannuation entitlements (where applicable). They do not receive shares or options from Computershare.
PAGE 32
DIRECTORS’ REPORT Computershare Annual Report 2016 CEO and other senior executives
Remuneration for the CEO and other key senior executives comprises three main components, being a fixed base salary (which is not
at risk), a variable short-term incentive (STI) which is calculated by reference to current year’s performance and a variable long-term
incentive (LTI) which comprises awards of performance rights over shares in Computershare.
Short-term incentives
STI incentives for senior executives at Computershare comprise a cash bonus (CSTI) and a grant of Computershare shares made on a
deferred vesting basis (DSTI).
Executives are provided with an ‘on target package guide’ which is an amount equal to the value of the base salary and their
STI assuming ‘on target’ performance. If an executive achieves ‘on target’ performance their total STI award would be equal to
approximately 43% of their base salary. The maximum entitlement that an executive could receive as an STI would be 75% of their
base salary.
The following table explains how each component of the STI (being the CSTI and the DSTI) are determined and the limits that apply to
each component.
Component
% of on target
package guide
Minimum
entitlement
Maximum
entitlement Measurement
CSTI
(short-term
cash bonus)
15%
(equal to 21.4%
of base salary)
Nil
15%
(equal to 21.4%
of base salary)
Nil
DSTI
(short-term
incentive
satisfied by
the grant of
equity on
a deferred
basis
22.5%
of the
on target
package
guide
(equal
to 32%
of base
salary)
30% of
the on
target
package
guide
(equal
to 43%
of base
salary)
70% of CSTI is calculated by reference
to performance against the budgeted
management EBITDA of the business
unit(s) or region(s) for which the relevant
executive is responsible.
On target performance for an executive
is meeting the relevant budgeted
management EBITDA target for that
executive and the maximum entitlement
is reached if the executive achieves 120%
of their budgeted management EBITDA
target. No CSTI is payable based on
financial performance if the executive
achieves less than 80% of their target.
The remaining 30% of CSTI is calculated
based on personal objectives tailored
to the executive’s responsibilities and
role. Matters typically covered include
cost control, business expansion, risk
management and service levels.
50% of DSTI is calculated by reference
to the Group’s management earnings per
share (EPS) growth. On target performance
is management EPS growth over the
financial year of 7.5% and the maximum
entitlement is reached if management EPS
growth over the financial year exceeds
15%. No DSTI is payable based on
management EPS growth if EPS growth
over the year is 0% or less.
The remaining 50% of DSTI is calculated
based on strategic, cultural and
organisational measures. These measures
are regularly reviewed and typically cover
non-financial performance, leadership,
replaceability and character.
Comment
Calculated and paid annually after the
release of the annual results.
The CSTI strongly aligns the executive’s
CSTI with the performance of the business
unit(s) or region(s) they manage.
Calculated annually after the release
of the annual results. Grants are not
generally made until after the release of
the annual report.
The DSTI aligns an executive’s remuneration
with the overall Group’s performance, and
provides an incentive for executives to work
to maximise overall Group performance as
well as the performance of the particular
business unit(s) they manage.
Deferred vesting: DSTI grants are unable
to be sold for two years after the date of
grant and are also subject to forfeiture if an
executive resigns or is terminated for cause
in this period.
DSTI grants are designed as an incentive
to encourage long-term, sustainable
performance.
The management adjustment items applied to determine management EBITDA (for CSTI) and management EPS (for DSTI) are set out
in note 3 of the financial statements. The Board retains the discretion to review management adjustment items before the calculation of
STI awards to executives. No DSTI was awarded to executives for the financial year 2016 for the 50% of the DSTI that is calculated by
reference to growth in management EPS as management EPS was 7.9% lower in the financial year 2016 than in the financial year 2015.
The STI awards payable to the CEO are structured in the same way as other senior executives, except that the CEO receives his DSTI
entitlement in cash rather than shares. This is because, as an executive director, he is ineligible to participate in Computershare’s general
equity based plans. However, the CEO is eligible, with shareholder approval where required, to participate in the Group’s long-term
incentive plans.
PAGE 33
STI outcomes in the 2016 financial year
The table below shows the STI paid or payable to each Computershare executive who is identified as a key management personnel for
entitlements referable to performance in the financial year ended 30 June 2016. The table sets out the actual amounts awarded as STI
and how they relate to the maximum entitlement for each executive.
Executive
SJ Irving
SA Cameron
PA Conn
MB Davis
SHE Herfurth
ML McDougall
SR Rothbloom
N Sarkar
SS Swartz
JLW Wong
Long-term incentives
STI awarded
(USD)
STI as percentage
of maximum
296,109
108,490
188,305
230,576
113,394
138,103
409,029
190,534
94,762
227,275
59.7%
47.4%
46.8%
52.5%
46.2%
48.2%
45.8%
45.5%
40.4%
47.7%
In addition to base salary and STI awards, certain senior executives may also receive long-term incentive awards which comprise grants
of performance rights (also known as zero exercise price options) over Computershare shares. The executives who receive long-term
incentive awards will generally comprise the executives who are identified as key management personnel in this report as well as a small
number of other senior executives who are identified as being particularly important to the longer term future of Computershare.
Details of the long-term incentive plan, which is known as Computershare’s LTI plan, are set out below.
Key features of the LTI plan
Eligibility
Participants in the LTI plan comprise the Group’s CEO and CFO and a limited pool of the most senior executives who are important to
the Company’s future.
Frequency and value of grants
Awards under the LTI plan will typically be made annually. A resolution to approve the proposed grant of performance rights under the
LTI plan to the Group CEO is put to shareholders each year at the Company’s AGM.
The value of an award made to an eligible executive under the LTI plan is calculated as a percentage of the executive’s base salary plus
‘on target’ STI award (being both the cash (CSTI) and deferred shares (DSTI) components). For awards made in November 2015, the
Group CEO and CFO received an LTI award equal to 100% of their base salary plus ‘on target’ STI award. For other eligible executives,
the value of their LTI award was in a range of 30% to 60% of their base salary plus ‘on target’ STI award.
As an illustration, the current mix between fixed, short-term variable and long-term variable remuneration for the Group CEO in FY2016
was (based on ‘on target’ STI performance):
CEO
Fixed remuneration
Base Salary
35%
Variable remuneration
STI
15%
LTI
50%
The Board continues to review the mix to ensure shareholder and management objectives are best aligned.
The actual number of performance rights that an eligible executive receives is calculated by dividing that executive’s LTI award
entitlement by the ‘face value’ of Computershare’s share price. For a grant of performance rights in a given financial year, ‘face value’
is the volume weighted average share price over the five trading days after the full year results announcement for the prior financial
year. For awards made in November 2015 in respect of the financial year 2016, the face value of Computershare’s share price for the
purpose of calculating LTI award entitlements was AUD 9.96.
PAGE 34
DIRECTORS’ REPORT Computershare Annual Report 2016 EPS growth performance hurdle
Under the LTI plan, 50% of each award is subject to a management EPS growth hurdle that is tested once at the end of a three year
performance period and will vest in accordance with the table below:
Compound annual growth in management adjusted EPS over the performance period
Performance rights subject
to EPS hurdle that vest (%)
Maximum % or above
15% or greater
100%
Between threshold % and maximum %
Between 5% and 15%
Progressive pro rata vesting between 50% to
100% (i.e. on a straight line basis)
Threshold %
Less than the threshold %
5%
Less than 5%
50%
0%
The Board believes that the EPS growth hurdle under the LTI plan provides an appropriate incentive to its management team to
achieve sustainable growth outcomes for the Computershare Group over the longer term. The Board reviews the management EPS
performance hurdles from time to time to ensure that this remains the case.
Total Shareholder Return performance hurdle
The remaining 50% of each award under the LTI plan is subject to a performance measure based on Total Shareholder Return or ‘TSR’.
For these purposes, TSR means the change in shareholder value over the performance period by measuring movement in share price
plus dividends (assuming reinvestment).
The performance measure compares the TSR of Computershare’s stock against the TSR of the companies within the ASX 100 index at
the start of the performance period on the following basis:
Relative TSR ranking against peer group
Performance rights subject to TSR hurdle that vest (%)
At or above the 75th percentile
100%
Between the 50th to 75th percentile
Progressive pro rata vesting between 50% to 100% (i.e. on a straight line basis)
Equal to the 50th percentile
Below the 50th percentile
50%
0%
The Board has chosen to compare the TSR of Computershare against the ASX 100 index as there is not a narrow comparator group
of companies that are listed on exchanges globally that Computershare can readily compare itself with. The Board believes that having
a performance measure that compares Computershare’s TSR performance with the TSR of companies in a broad index (the ASX 100)
will further align the remuneration outcomes for its senior executives with the investment performance of its shareholders.
As at the date of this report, there are 1.3 million performance rights outstanding under the LTI plan. These include 716,916 performance
rights that were granted to 12 executives in the financial year 2016 and which are due to vest in September 2018 (subject to performance
against hurdles).
Other plan features
Other features of the LTI plan include Board discretion to determine award outcomes for executives in certain circumstances such
as cessation of employment or a change of control and also to cash settle awards on vesting if local regulations or practices make
it appropriate to do so. The LTI plan also includes a clawback mechanism that may be triggered in the event of fraud, dishonesty or
material misstatement of financial statements.
PAGE 35
Overview of the legacy DLI plan
The Computershare LTI plan was introduced in 2014 following a review of the then current long-term incentive plan which was known
as the Deferred Long-Term Incentive Plan or (DLI plan). The DLI plan is now a legacy plan with final awards under that plan scheduled
to vest or lapse in September 2017. Accordingly, details of the terms of the DLI plan will continue to be provided in the Group’s
remuneration report until those awards have vested or lapsed in accordance with their terms.
The DLI plan comprised awards of performance rights where 50% of awards were subject to a performance hurdle based on
Computershare meeting management EPS growth targets, while the remaining 50% were subject to a retention condition which is
satisfied if the relevant executive remains with Computershare for five years. Awards under the DLI plan were intended to remunerate
key executives in relation to Computershare’s long-term performance and also to act as a retention incentive for Computershare’s
senior executive team and accordingly provide a degree of protection for the competitive advantage that results from the extensive
industry specific knowledge within that team.
As at the date of this report, there are 1.9 million performance rights outstanding (being performance rights granted to executives,
yet to vest or lapse) that have been made under the DLI plan. These include 900,000 performance rights which were granted in the
financial year 2012, of which it is expected that 450,000 will vest on the date of this report. This is on the basis that the 50% of awards
subject to a retention period will vest in full for executives who remain employed on the vesting date and all of the 50% of awards
subject to the management EPS hurdle will lapse.
Other remuneration
Like all our employees, key management personnel (except directors) can participate in the Group’s general employee share plans.
An overview of the Group’s employee option and share plans is disclosed in note 41 of the financial statements.
Computershare pays cash bonuses and makes STI awards (but not LTI grants) to a further group of senior executives in accordance
with the same STI structure as outlined above. Computershare will also generally pay discretionary cash bonuses and make allocations
of shares (subject to deferred vesting periods) to an additional broader pool of high performing employees who are not participants in
the structured STI award program. On occasions, the Group allocates shares (subject to deferred vesting periods) outside the structured
annual cycle, for instance as sign-on incentives, as part of specific project incentives or in recognition of exceptional performance.
Relationship between remuneration and Group’s performance
One of the key principles of Computershare’s remuneration strategy is to ensure that there is a link between the remuneration outcomes
for executives and company performance and its consequent impact on shareholder interests. The Board believes that the use of a
management EPS growth hurdle and a relative TSR hurdle under the group’s executive LTI plan supports that alignment. Similarly the
Board believes that short-term incentive outcomes for executives should reflect a combination of personal objectives as well as targets
that are based on financial performance. The following table highlights some of the key financial results for Computershare over the period
from the financial year 2012 to the financial year 2016 with the corresponding average STI outcomes for executive key management
personnel over the same period.
Management EBITDA (USD million)
Statutory EPS (US cents)
Management EPS (US cents)
Total Dividend (AU cents per share)
Share price as at 30 June (AUD)
Average STI received as % of maximum
opportunity for executive KMP (%)
2012
459.0
31.10
49.09
28
7.41
2013
509.8
28.25
54.85
28
10.27
2014
540.6
45.20
60.24
29
12.48
2015
554.1
27.61
59.82
31
11.71
2016
532.6
28.55
55.09
33
9.17
43.2
66.5
65.3
48.7
48.0
PAGE 36
DIRECTORS’ REPORT Computershare Annual Report 2016
D. DETAILS OF REMUNERATION AND SERVICE CONTRACTS
Directors
The directors of Computershare Limited who held the position during the current financial year are listed below.
Non-executive
CJ Morris
TL Fuller
SD Jones
ME Kerber
PJ Maclagan
AL Owen
JM Velli
Executive
SJ Irving
President and Chief Executive Officer
Key management personnel other than directors
The individuals listed below are key management personnel of the Group other than directors (within the meaning of the Australian
accounting standard AASB 124 Related Party Disclosures) who have the authority and responsibility for planning, directing and controlling
the activities of the Group. All individuals named below held their position for the whole of the financial year ended 30 June 2016.
Name
Position
Employer
SA Cameron
President – Australia and New Zealand
Computershare Investor Services Pty Ltd
PA Conn
MB Davis
President – Global Capital Markets
Chief Financial Officer
SHE Herfurth
President – Continental Europe
ML McDougall
Chief Information Officer
SR Rothbloom
President – North America
Computershare Inc (US)
Computershare Ltd
CPU Deutschland GmbH & Co KG
Computershare Technology Services Pty Ltd
Computershare Inc (US)
N Sarkar
SS Swartz
JLW Wong
Service contracts
President – United Kingdom, Channel Islands, Ireland and South Africa
Computershare Investor Services PLC (UK)
President – Canada
President – Asia
Computershare Trust Company of Canada
Computershare Hong Kong Investor Services Limited
On appointment to the board, all non-executive directors sign a formal appointment letter which includes details of their director fees.
Non-executive directors do not have notice periods and are not entitled to receive termination payments.
Except for the Group CEO, no director may be in office for longer than three years without facing re-election. Please refer to Section 3
of the Corporate Governance Statement for further information on the Company’s re-election process.
Neither the Group CEO nor other executive key management personnel are employed under fixed term arrangements with
Computershare. Their notice periods are based on contractual provisions and local laws (e.g. for the Group CEO and CFO and for
those executives based in Australia this is 30 days’ notice).
On termination of employment key management personnel are entitled to statutory entitlements in their respective jurisdictions of
employment. The DSTI plan provides for full vesting on redundancy or termination by the Group other than for cause. The DLI plan
has a structured pro rata arrangement in the same circumstances and under the LTI plan, subject to Board discretion otherwise,
performance rights for ‘good leavers’ will not vest on cessation of employment but instead a pro rata proportion will be eligible to
be retained by the executive and will be subject to vesting at the end of the original performance period based on satisfaction of the
applicable performance measures. Otherwise, none of these executives would, subject in some instances to local requirements in the
jurisdictions where the Group operates, receive special termination payments should they cease employment for any reason.
Amounts of remuneration
Details of the nature and amount of each element of the total remuneration for each director and member of key management personnel
for the year ended 30 June 2016 are set out in the table below. Where remuneration was paid in anything other than USD, it has been
translated at the average exchange rate for the financial year (for example the 2016 USD/AUD average rate was 0.72732, the 2015
USD/AUD average rate was 0.83887).
PAGE 37
Statutory remuneration details
Post
employment
Short-term
Long-term
benefits Share based payments expense Termination
Other4
Total
Financial
year
Salaries
and fees
$
Cash profit
share and
bonuses
$
Superannuation/
pension
$
Other¹
$
Shares
$
Performance
rights/
options²
$
Phantom
plan³
$
Directors
SJ Irving
2016
661,866
296,109
11,046
14,043
11,496
144,500
2015
763,372
335,708
39,794
15,757 85,834
184,067
TL Fuller5
2016
137,556
2015
99,863
SD Jones
2016
214,394
2015
190,824
ME Kerber
2016
115,159
2015
121,371
PJ Maclagan 2016
109,099
2015
122,485
CJ Morris
2016
141,311
2015
225,141
AL Owen
2016
138,966
2015
157,041
JM Velli5
2016
139,171
2015
100,689
Key management personnel
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,983
9,487
13,948
15,757
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
SA Cameron7 2016
305,481
72,487
2015
352,325
63,010
PA Conn
2016
536,550
119,320
2015
532,292
120,984
(777)
5,872
-
-
14,043 55,325
632
15,757 75,381
(5,826)
- 82,369
(39,118)
- 110,413
210,705
MB Davis7
2016
585,501
149,025
9,773
14,043 107,594
123,549
2015
675,290
170,356
44,693
15,757 124,781
158,759
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
SHE Herfurth7 2016
327,020
71,349
2015
354,641
103,093
-
-
-
-
-
40,657
26,890
3,349
(25,673)
77,255
ML McDougall7 2016
381,854
84,917
6,364
14,043 71,674
2015
440,407
99,305
10,954
15,757
90,506
53,724
37,958
SR Rothbloom 2016 1,190,039
268,779
2015 1,184,167
209,568
N Sarkar7
2016
558,318
106,786
2015
553,456
139,947
SS Swartz6,7
2016
312,450
51,242
2015
264,721
84,084
JLW Wong7
2016
634,709
152,469
2015
630,078
187,135
Retired directors and key management personnel
2015
350,452
75,386
-
-
-
-
-
-
-
-
-
29,950 168,190
(13,530)
29,950 235,428
270,411
45,596 89,251
41,393
55,346 105,920
109,738
13,665 42,855
17,255
47,475
58,969
45,651
113,719
87,958
(10,917)
94,512 120,632
96,608
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
- 1,139,060
62,474 1,487,006
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,539
109,350
228,342
206,581
115,159
121,371
109,099
122,485
141,311
225,141
138,966
157,041
139,171
100,689
1,806
448,997
2,086
508,605
-
-
699,121
974,394
2,166
991,651
2,508 1,192,144
2,847
468,763
3,346
516,011
2,166
614,742
2,508
697,395
- 1,643,428
- 1,929,524
2,680
844,024
2,543
966,950
2,918
482,099
880
460,066
2,350
980,288
4,645 1,133,610
23,507 70,504
90,535
-
428,614
344 1,039,342
1 Other long-term remuneration comprises long service leave accruals and other long-term entitlements.
2 Performance rights expense has been included in the total remuneration on the basis that it is considered probable at the date of this financial report that the performance
condition and service condition will be met. In future reporting periods, if the probability requirement regarding the EPS performance condition or the service condition is not
met, a credit to remuneration will be included consistent with the accounting treatment. As part of the 2017 financial year budget process, it was no longer considered probable
that the performance condition applicable to 50% of the performance rights granted on 25 September 2012 and 100% of the performance rights granted on 1 December 2014
would be met. On this basis, the accounting expense (excluding the TSR component) related to prior years has been reversed. Similarly, for the financial year 2015 the expense
related to the 50% of the performance rights granted on 12 October 2011 and 4 May 2012 was reversed.
3 The Phantom Share Awards Plan (Phantom Plan) functions as an alternative to the DSTI Share Plan to employees who are resident for tax purposes in countries where
the taxation and/or legal requirements mean the DSTI Share Plan does not achieve the most effective outcome for Computershare or those employees. Awards under the
Phantom Plan are cash-settled and vest after specified periods of service have been completed.
PAGE 38
DIRECTORS’ REPORT Computershare Annual Report 2016
4 Other include payments made to key management personnel engaged on long term assignments in accordance with Computershare’s expatriate policy and benefits related
to Computershare’s general employee share plan as detailed in note 41 of the financial statements.
5 TL Fuller and JM Velli were appointed as non-executive directors on 1 October 2014.
6 SS Swartz was remunerated as key management personnel from 1 October 2014.
7 Key management personnel outside of the United States are paid in their local currency. Foreign exchange rate movements can impact on comparison between the years in
US dollar terms.
Actual remuneration received
The table below represents the ‘actual’ remuneration outcomes for executive key management personnel in the financial year 2016.
Amounts paid in currencies other than USD are translated at average exchange rates applicable to each financial year.
Statutory remuneration disclosures prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards differ
from the numbers presented below, as they include (among other benefits) expensing for equity grants that are yet to vest and may never
vest. The statutory remuneration table in respect of the executive key management personnel is presented in a separate disclosure.
SJ Irving6
SA Cameron6
PA Conn
MB Davis6
SHE Herfurth6
ML McDougall6
SR Rothbloom
N Sarkar6
SS Swartz5,6
JLW Wong6
Financial
year
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Fixed pay 1
$
675,909
779,129
319,524
368,082
536,550
532,292
599,544
691,047
327,020
354,641
395,897
456,164
1,219,989
1,214,117
603,914
608,802
326,115
281,976
748,428
724,590
Cash STI for
performance
$
Other benefits
and cash
payments 2
$
Deferred
STI vested 3
$
Performance
rights vested 4
$
Total actual
remuneration
$
291,069
276,080
54,631
76,661
120,984
126,746
147,704
139,578
94,602
79,161
86,100
92,933
209,568
276,953
131,764
130,674
74,207
-
187,015
151,341
-
-
3,877
5,941
-
-
-
-
2,847
3,346
-
-
-
-
3,086
4,350
-
-
25,320
34,242
127,999
147,250
66,242
67,322
101,756
104,547
101,347
107,327
66,368
54,705
77,157
81,077
199,001
228,712
91,882
85,406
-
-
106,521
115,461
-
1,094,977
1,760,159
2,962,618
-
-
-
444,274
518,006
759,290
1,257,256
2,020,841
-
848,595
1,760,159
2,698,111
-
-
-
-
-
490,837
491,853
559,154
630,174
1,628,558
1,511,224
3,231,006
-
830,646
1,005,805
1,835,037
-
-
-
400,322
281,976
1,067,284
1,005,805
2,031,439
1 Represents base salary plus superannuation/pension.
2 Includes shares held in the Deferred Employee Share Plan (note 41) that vested in the relevant financial year and the phantom shares vesting.
3 Deferred STI that vested in the relevant financial year. The five day weighted average share price used to value the deferred STI at vesting date is AUD 9.87 for awards
vested on 1 September 2015 (1 September 2014: AUD 12.23).
4 Performance rights that vested in the relevant financial year. These were rights granted under the legacy DLI plan, which were generally granted on a non-annual basis and
with a five-year performance and retention period. The five-day weighted average share price used to value the performance rights at vesting date is AUD 11.99 for awards
vested on 22 September 2014.
5 SS Swartz was remunerated as key management personnel from 1 October 2014.
6 Key management personnel outside of the United States are paid in their local currency. Foreign exchange rate movements can impact on comparison between the years in
US dollar terms.
PAGE 39
1. Short-term salary and fees, cash profit share and bonuses, long-term other, post-employment benefits
Directors
SJ Irving, TL Fuller, SD Jones, PJ Maclagan, and CJ Morris are paid in Australian dollars. Although the non-executive director fees for
ME Kerber, AL Owen and JM Velli are set in Australian dollars, they can elect to be paid in Euros, British pounds and United States
dollars respectively based on an exchange rate set at the start of each financial year.
Group CEO and other executive key management personnel
There were no general increases to base salary and STI award packages for the executive key management personnel in the financial
year 2016. N Sarkar received an increase of GBP 25,000 to reflect additional responsibilities. All executive key management personnel
receive their salary and other cash payments in their local currency.
2. Shares granted as remuneration under DSTI Plan
Set out below is a summary of shares granted under the DSTI plan and the maximum value of shares that are expected to vest in the
future if the vesting conditions are met:
Date
granted
Number
granted
Number
vested
during
the year
Number
outstanding
end of
the year
Financial
year in
which grant
may vest
Value at
grant date
(if granted
this year)
Maximum
total value
of grant yet to
be expensed
SJ Irving
SA Cameron
PA Conn
MB Davis
SHE Herfurth
ML McDougall
SR Rothbloom
N Sarkar
SS Swartz
JLW Wong
1/10/2013
1/10/2013
1/10/2014
1/10/2015
1/10/2013
1/10/2014
1/10/2015
1/10/2013
1/10/2014
1/10/2015
1/10/2013*
1/10/2014*
1/10/2015*
1/10/2013
1/10/2014
1/10/2015
1/10/2013
1/10/2014
1/10/2015
1/10/2013
1/10/2014
1/10/2015
1/10/2013
1/10/2014
1/10/2015
1/10/2013
1/10/2014
1/10/2015
17,837
9,231
7,981
4,241
14,180
10,879
7,751
14,123
14,538
10,568
9,285
8,468
4,719
10,752
9,940
6,362
28,353
25,161
11,460
12,804
11,539
9,327
5,636
5,196
5,114
14,844
12,574
6,881
(17,837)
(9,231)
-
-
(14,180)
-
-
(14,123)
-
-
(9,285)
-
-
(10,752)
-
-
(28,353)
-
-
(12,804)
-
-
(5,636)
-
-
(14,844)
-
-
-
-
7,981
4,241
-
10,879
7,751
-
14,538
10,568
-
8,468
4,719
-
9,940
6,362
-
25,161
11,460
-
11,539
9,327
-
5,196
5,114
-
12,574
6,881
Vested
Vested
FY 2017
FY 2018
Vested
FY 2017
FY 2018
Vested
FY 2017
FY 2018
Vested
FY 2017
FY 2018
Vested
FY 2017
FY 2018
Vested
FY 2017
FY 2018
Vested
FY 2017
FY 2018
Vested
FY 2017
FY 2018
Vested
FY 2017
FY 2018
$
-
-
-
32,681
-
-
59,729
-
-
81,437
-
-
36,365
-
-
49,026
-
-
88,311
-
-
71,874
-
-
39,409
-
-
53,025
$
-
-
6,303
19,925
-
8,592
36,416
-
11,482
49,651
-
5,003
19,517
-
7,851
29,890
-
19,872
53,842
-
9,114
43,821
-
4,104
24,027
-
9,931
32,329
* Awards made under the Phantom Plan
Fair values of shares at grant date are determined using the closing share price on grant date.
PAGE 40
DIRECTORS’ REPORT Computershare Annual Report 2016
3. Performance rights
Performance rights granted under the DLI plan and the LTI plan are for no consideration and carry no dividend or voting rights. Each
performance right carries an entitlement to one fully paid ordinary share in Computershare Limited.
Set out below is a summary of performance rights granted under the DLI and LTI plans.
Date
granted
Number
granted
Number
vested
during
the year
Number
outstanding
end of
the year
Financial
year in
which grant
may vest
Value at
grant date
(if granted
this year)
Maximum
total value
of grant yet to
be expensed
SJ Irving
SA Cameron
12/10/2011
25/09/2012
1/12/2014
1/12/2015
04/05/2012
25/09/2012
1/12/2014
1/12/2015
150,000
100,000
107,084
130,522
200,000
150,000
29,654
36,144
PA Conn
25/09/2012
100,000
MB Davis
SHE Herfurth
ML McDougall
1/12/2014
1/12/2015
12/10/2011
25/09/2012
1/12/2014
1/12/2015
12/10/2011
25/09/2012
1/12/2014
1/12/2015
1/12/2014
1/12/2015
43,937
49,024
150,000
100,000
94,728
115,461
200,000
100,000
30,069
38,768
18,533
33,885
SR Rothbloom
25/09/2012
100,000
N Sarkar
SS Swartz
JLW Wong
1/12/2014
1/12/2015
12/10/2011
25/09/2012
1/12/2014
1/12/2015
1/12/2014
1/12/2015
12/10/2011
25/09/2012
1/12/2014
1/12/2015
73,086
72,487
100,000
100,000
45,411
67,498
22,288
37,895
100,000
100,000
39,000
38,698
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
100,000
107,084
130,522
200,000
150,000
29,654
36,144
100,000
43,937
49,024
150,000
100,000
94,728
115,461
200,000
100,000
30,069
38,768
18,533
33,885
100,000
73,086
72,487
100,000
100,000
45,411
67,498
22,288
37,895
100,000
100,000
39,000
38,698
FY 2017
FY 2018
FY 2018
FY 2019
FY 2017
FY 2018
FY 2018
FY 2019
FY 2018
FY 2018
FY 2019
FY 2017
FY 2018
FY 2018
FY 2019
FY 2017
FY 2018
FY 2018
FY 2019
FY 2018
FY 2019
FY 2018
FY 2018
FY 2019
FY 2017
FY 2018
FY 2018
FY 2019
FY 2018
FY 2019
FY 2017
FY 2018
FY 2018
FY 2019
$
-
-
-
$
-
52,331
56,986
773,221
515,480
-
-
-
-
78,497
15,781
214,119
142,746
-
-
52,331
23,381
290,421
193,614
-
-
-
-
52,331
50,410
683,999
455,995
-
-
-
-
52,331
16,001
229,664
153,109
-
9,862
200,737
133,821
-
-
52,331
38,894
429,418
286,274
-
-
-
-
52,331
24,165
399,863
266,575
-
11,860
224,493
149,657
-
-
-
-
52,331
20,754
229,250
152,833
PAGE 41
Shareholdings of key management personnel
The number of ordinary shares in Computershare Limited held during the financial year by each director and the other named key
management personnel, including details of shares granted as remuneration during the current financial year and ordinary shares
provided as the result of the exercise of remuneration options during the current financial year, are included in the table below.
Balance at
beginning of
the year
Vested under
DSTI plan
On exercise
of options/
performance
rights
On market
purchases/
(sales)
Balance
at end of
the year
Other
Value of
options/
performance
rights
exercised
Directors
SJ Irving
TL Fuller
SD Jones
M Kerber
PJ Maclagan
CJ Morris
AL Owen
JM Velli
Key management personnel
SA Cameron
PA Conn
MB Davis
SHE Herfurth
ML McDougall
SR Rothbloom
N Sarkar
SS Swartz
JLW Wong
-
17,837
2,000
14,000
40,000
12,777,025
37,564,000
12,910
10,000
78
588,508
7,218
13,134
53,238
66,357
11,942
16,266
158,924
-
-
-
-
-
-
-
9,231
14,180
14,123
-
10,752
28,353
12,804
5,636
14,844
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,000
-
(160,000)
(133,000)
-
-
(9,682)
(98,936)
(6,921)
(11,965)
-
(11,231)
(17,168)
(21,902)
(14,000)
-
-
-
-
-
-
-
-
451
-
-
693
-
-
204
-
17,837
2,000
17,000
40,000
12,617,025
37,431,000
12,910
10,000
78
503,752
14,420
1,862
63,990
83,479
7,782
-
3,269
163,037
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
E. PROPORTIONS OF FIXED AND PERFORMANCE RELATED REMUNERATION
The percentage value of total remuneration relating to the current financial year received by key management personnel that consists of
fixed and performance related remuneration is as follows:
% of fixed/
non-performance
related remuneration
% of total remuneration
received as
cash bonus (CSTI)
% of remuneration
received as
equity bonus (DSTI)
% of total remuneration
received as performance
related rights/options*
SJ Irving
TL Fuller
SD Jones
ME Kerber
PJ Maclagan
CJ Morris
AL Owen
JM Velli
SA Cameron
PA Conn
MB Davis
SHE Herfurth
ML McDougall
SR Rothbloom
N Sarkar
SS Swartz
JLW Wong
48.07%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
44.43%
58.92%
48.28%
50.27%
63.41%
64.51%
57.36%
64.54%
63.31%
20.72%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
10.05%
13.10%
11.77%
10.76%
13.31%
14.21%
10.10%
10.05%
12.86%
0.80%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
7.67%
9.04%
8.50%
3.53%
11.24%
8.89%
8.44%
8.41%
7.42%
30.41%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
37.85%
18.94%
31.45%
35.44%
12.04%
12.39%
24.10%
17.00%
16.41%
* Excludes the DLI performance rights reversal in the year ended 30 June 2016.
PAGE 42
DIRECTORS’ REPORT Computershare Annual Report 2016
F. OTHER INFORMATION
Loans and other transactions with directors and executives
Computershare made no loans to directors and executive directors or other key management personnel during the current financial year.
CJ Morris has a significant interest in Lumi Technologies Limited. This entity provides meeting services to Computershare on ordinary
commercial terms and conditions. Total value of services provided in the year ended 30 June 2016 was $2,136,399. Computershare
also provides services to Lumi Technologies Limited, which comprise rental of premises and voucher services, on ordinary commercial
terms and conditions. Total value of services provided in the year ended 30 June 2016 was $827,036.
The consolidated entity made rental payments related to property used by Computershare and owned by CJ Morris. Payments made
in the year ended 30 June 2016 amounted to $31,898.
The consolidated entity made rental payments related to property used by Computershare and owned by PJ Maclagan. Payments made
in the year ended 30 June 2016 amounted to $66,000.
As a matter of Board approved policy, the Group maintains a register of all transactions between employees and the consolidated
entity. It is established practice for any director to excuse himself or herself from discussion and voting upon any transaction in which
that director has an interest. The consolidated entity has a Board approved ethics policy governing many aspects of workplace
conduct, including management and disclosure of conflicts of interest.
Derivative instruments
Computershare’s policy forbids key management personnel to deal in derivatives designed as a hedge against exposure to unvested
shares in Computershare Limited.
Shares under option
Unissued ordinary shares in Computershare Limited under performance rights at the date of this report are as follows:
Date granted
Performance rights
12/10/2011
4/05/2012
25/09/2012
1/12/2014
1/12/2015
AUDITOR
Financial year of expiry
Number under performance rights
2017
2017
2018
2018
2019
700,000
200,000
950,000
579,238
716,916
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
Auditor’s independence declaration
A copy of the auditor’s signed independence declaration as required under section 307C of the Corporations Act 2001 is provided
immediately after this report.
Non-audit services
The Group may decide to employ its auditor, PricewaterhouseCoopers, on assignments in addition to their statutory audit duties where
the auditor’s expertise and experience with the Group are important.
The Board is satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001 and internal guidelines. Further details regarding the Board’s internal policy for engaging
PricewaterhouseCoopers for non-audit services are set out in the Corporate Governance Statement.
The directors are satisfied that the provision of non-audit services by PricewaterhouseCoopers, as set out below, did not compromise
the auditor independence requirements of the Corporations Act 2001 for the following reasons:
> No services were provided by PricewaterhouseCoopers that are prohibited by policy (the policy lists services that cannot
be undertaken).
> None of the services provided undermine the general principles relating to auditor’s independence, including reviewing or auditing
the auditor’s own work, acting in a management capacity or a decision making capacity for the Group, acting as an advocate for the
Group or jointly sharing economic risks and rewards.
PAGE 43
During the year the following amounts were incurred in relation to services provided by PricewaterhouseCoopers and its network firms.
1. Audit services
Audit and review of the financial statements and other audit work by PricewaterhouseCoopers Australia
Audit and review of the financial statements and other audit work by network firms of PricewaterhouseCoopers Australia
2. Other services
Other assurance services performed by PricewaterhouseCoopers Australia
Other assurance services performed by network firms of PricewaterhouseCoopers Australia
Tax advice on acquisitions provided by network firms of PricewaterhouseCoopers Australia
Total Auditor’s Remuneration
ROUNDING OF AMOUNTS
2016
$000
704
2,691
3,395
317
2,139
10
2,466
5,861
2015
$000
843
3,084
3,927
372
2,203
38
2,613
6,540
The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by the
Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report. Amounts in the
Directors’ Report have been rounded off in accordance with that Class order to the nearest thousand dollars unless specifically stated
to be otherwise.
Signed in accordance with a resolution of the directors.
SD Jones
Chairman
19 September 2016
SJ Irving
Chief Executive Officer
PAGE 44
DIRECTORS’ REPORT Computershare Annual Report 2016
AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
As lead auditor for the audit of Computershare Limited for the year ended 30 June 2016, I declare that
to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Computershare Limited and the entities it controlled during the
period.
Anton Linschoten
Partner
PricewaterhouseCoopers
Melbourne
19 September 2016
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
PAGE 45
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2016
Revenue from continuing operations
Sales revenue
Other revenue
Total revenue from continuing operations
Other income
Expenses
Direct services
Technology costs
Corporate services
Finance costs
Total expenses
Note
2016
$000
2015
$000
1
1
2
1,957,860
1,966,193
3,265
5,059
1,961,125
1,971,252
27,740
12,777
1,405,410
1,410,524
260,570
22,047
54,480
260,915
15,146
51,957
1,742,507
1,738,542
Share of net profit/(loss) of associates and joint ventures accounted for using the equity method
31 & 32
(1,349)
(2,316)
Profit before related income tax expense
Income tax expense/(credit)
Profit for the year
Other comprehensive income that may be reclassified to profit or loss
Available-for-sale financial assets
Cash flow hedges
Exchange differences on translation of foreign operations
Income tax relating to components of other comprehensive income
Total other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit for the year is attributable to:
Members of Computershare Limited
Non-controlling interests
Total comprehensive income for the year is attributable to:
Members of Computershare Limited
Non-controlling interests
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
5
5
245,009
83,211
161,798
243,171
85,893
157,278
(62)
(497)
9
(53)
(17,005)
(106,480)
(6,841)
(24,405)
137,393
14,963
(91,561)
65,717
157,334
153,576
4,464
3,702
161,798
157,278
133,912
3,481
137,393
63,239
2,478
65,717
3
3
28.55 cents
27.61 cents
28.51 cents
27.56 cents
The above consolidated statement of comprehensive income is presented in United States dollars and should be read in conjunction
with the accompanying notes.
PAGE 46
Computershare Annual Report 2016
CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2016
CURRENT ASSETS
Cash and cash equivalents
Bank deposits
Receivables
Loan servicing advances
Available-for-sale financial assets
Other financial assets
Inventories
Current tax assets
Derivative financial instruments
Other current assets
Assets classified as held for sale
Total current assets
NON-CURRENT ASSETS
Bank deposits
Receivables
Investments accounted for using the equity method
Available-for-sale financial assets
Property, plant and equipment
Deferred tax assets
Derivative financial instruments
Intangibles
Total non-current assets
Total assets
CURRENT LIABILITIES
Payables
Interest bearing liabilities
Current tax liabilities
Provisions
Derivative financial instruments
Deferred consideration
Liabilities directly associated with assets classified as held for sale
Other liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Payables
Interest bearing liabilities
Deferred tax liabilities
Provisions
Deferred consideration
Derivative financial instruments
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total parent entity interest
Non-controlling interests
Total equity
Note
2016
$000
2015
$000
6
14
15
19
16
17
5
12
18
8
14
30
19
20
5
12
9
21
13
5
22
12
23
8
24
21
13
5
22
23
12
24
26
27
28
25
25
526,575
20,174
425,343
255,139
591
18,655
4,512
6,423
1,952
29,694
26,128
555,278
-
361,185
187,002
620
22,655
4,853
10,574
750
33,362
51,558
1,315,186
1,227,837
-
876
27,357
17,487
116,535
178,644
48,035
2,273,628
2,662,562
3,977,748
382,921
260,088
29,131
40,688
1,238
12,402
-
69,869
796,337
19,664
972
31,596
7,394
161,107
189,348
31,239
2,132,298
2,573,618
3,801,455
392,448
172,805
29,435
44,231
20,838
6,585
12,816
44,537
723,695
9,740
1,374
1,603,217
1,596,299
232,100
29,129
65,969
5,500
127,023
2,072,678
2,869,015
1,108,733
-
(81,472)
1,176,690
1,095,218
13,515
214,512
31,548
4,869
9,732
41,785
1,900,119
2,623,814
1,177,641
35,703
(19,362)
1,147,906
1,164,247
13,394
1,108,733
1,177,641
The above consolidated statement of financial position is presented in United States dollars and should be read in conjunction with the
accompanying notes.
PAGE 47
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2016
Attributable to members of Computershare Limited
Contributed
Equity
$000
Note
Reserves
$000
Retained
Earnings
$000
Non-
controlling
Interests
$000
Total
$000
Total
Equity
$000
35,703
(19,362)
1,147,906
1,164,247
13,394
1,177,641
-
-
-
-
-
-
-
-
157,334
157,334
4,464
161,798
(62)
(497)
(16,022)
(6,841)
-
-
-
-
(62)
(497)
(16,022)
(6,841)
-
-
(62)
(497)
(983)
(17,005)
-
(6,841)
(23,422)
157,334
133,912
3,481
137,393
-
(128,550)
(128,550)
(2,799)
(131,349)
Total equity at 1 July 2015
Profit for the year
Available-for-sale financial assets
Cash flow hedges
Exchange differences on translation of
foreign operations
Income tax (expense)/credits
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Dividends provided for or paid
Share buy-back
26
(35,703)
(37,469)
Transactions with non-controlling interests
Cash purchase of shares on market
Share based remuneration
Balance at 30 June 2016
Total equity at 1 July 2014
Profit for the year
Available-for-sale financial assets
Cash flow hedges
Exchange differences on translation of
foreign operations
Income tax (expense)/credits
Total comprehensive income for the year
Transactions with owners in their
capacity as owners:
Dividends provided for or paid
Transactions with non-controlling interests
Cash purchase of shares on market
Share based remuneration
Balance at 30 June 2015
-
-
-
-
(73,172)
-
(12,177)
10,958
-
(561)
-
-
(73,172)
(561)
(12,177)
10,958
(81,472)
1,176,690
1,095,218
13,515
1,108,733
-
(12,177)
10,958
-
9
(53)
(105,256)
14,963
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35,703
84,240
1,134,305
1,254,248
12,964
1,267,212
153,576
153,576
3,702
157,278
-
-
-
-
9
(53)
-
-
9
(53)
(105,256)
(1,224)
(106,480)
14,963
63,239
-
2,478
14,963
65,717
(90,337)
153,576
-
(139,975)
(139,975)
(2,048)
(142,023)
(293)
(27,971)
14,999
-
-
-
(293)
(27,971)
14,999
-
-
-
(293)
(27,971)
14,999
35,703
(19,362)
1,147,906
1,164,247
13,394
1,177,641
The above consolidated statement of changes in equity is presented in United States dollars and should be read in conjunction with
the accompanying notes.
PAGE 48
Computershare Annual Report 2016
CONSOLIDATED CASH FLOW STATEMENT for the year ended 30 June 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Loan servicing advances (net)
Dividends received from equity securities
Interest paid and other finance costs
Interest received
Income taxes paid
Net operating cash flows
CASH FLOWS FROM INVESTING ACTIVITIES
Note
2016
$000
2015
$000
2,001,817
2,064,771
(1,521,470)
(1,540,924)
(68,137)
(44,522)
701
(53,786)
2,564
(57,042)
917
(52,723)
4,142
(59,529)
6
304,647
372,132
Payments for purchase of controlled entities and businesses (net of cash acquired) and intangible assets
(167,848)
(186,021)
Proceeds from sale of a joint venture
Dividends received from associates and joint ventures
Proceeds from/(payments for) investments
Payments for property, plant and equipment
Proceeds from sale of subsidiaries and businesses, net of cash disposed
Net investing cash flows
CASH FLOWS FROM FINANCING ACTIVITIES
Payment for purchase of ordinary shares – share based awards
Proceeds from borrowings
Repayment of borrowings
Loan servicing borrowings (net)
Dividends paid – ordinary shares (net of dividend reinvestment plan)
Purchase of ordinary shares – dividend reinvestment plan
Dividends paid to non-controlling interests in controlled entities
Payments for on-market share buy-back
Repayment of finance leases
Net financing cash flows
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the financial year
Exchange rate variations on foreign cash balances
Cash and cash equivalents at the end of the year*
1,532
445
(19,984)
(25,317)
(6,511)
-
339
(15,495)
(28,384)
23,849
(217,683)
(205,712)
(12,177)
(27,971)
494,918
1,242,784
(439,840)
(1,161,005)
41,381
76,283
(123,057)
(133,601)
(5,493)
(2,799)
(71,830)
(6,684)
(125,581)
(38,617)
604,092
(38,900)
526,575
(6,374)
(2,048)
-
(7,759)
(19,691)
146,729
509,151
(51,788)
604,092
* Cash and cash equivalents at 30 June 2016 include nil cash presented in the assets classified as held for sale line item (2015: $48.8 million) in the consolidated statement of
financial position.
The above consolidated cash flow statement is presented in United States dollars and should be read in conjunction with the
accompanying notes.
PAGE 49
Results and key balances
1. Revenue and expenses from continuing operations
2. Other income
3. Earnings per share
4. Segment information
5.
6. Notes to the consolidated cashflow statement
7. Business combinations
8. Assets and liabilities classified as held for sale
9.
10. Critical accounting estimates and judgements
Income tax expense and balances
Intangible assets
Financial risk management
11. Financial risk management
12. Derivative financial instruments
13. Interest bearing liabilities
Other balance sheet items
14. Receivables
15. Loan servicing advances
16. Other financial assets
17. Inventories
18. Other current assets
19. Available-for-sale financial assets
20. Property, plant and equipment
21. Payables
22. Provisions
23. Deferred consideration
24. Other liabilities
Equity
25. Interests in equity
26. Contributed equity
27. Reserves
28. Retained earnings and dividends
Group structure
29. Details of controlled entities
30. Investments accounted for using the equity method
31. Associates
32. Joint ventures
33. Deed of cross guarantee
34. Parent entity financial information
Unrecognised items
35. Contingent liabilities
36. Commitments
37. Capital expenditure commitments
38. Significant events after year end
Other information
39. Related party disclosures
40. Key management personnel disclosures
41. Employee and executive benefits
42. Remuneration of auditors
43. Statement of significant accounting policies
PAGE 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016 1. REVENUE AND EXPENSES FROM CONTINUING OPERATIONS
a) Revenues
Sales revenue
Rendering of services
Other revenue
Dividends received
Interest received
Total other revenue
Total revenue from continuing operations
b) Expenses
Depreciation and amortisation
Depreciation of property, plant and equipment
Amortisation of intangible assets (note 9)
Amortisation of mortgage servicing related liabilities
Total amortisation (net)
Total depreciation and amortisation
Finance costs
Interest expense
Loan facility fees and other borrowing expenses
Total finance costs
Other operating expense items
Operating lease rentals
Technology spending – research and development
Employee entitlements (excluding superannuation and other pension) expense
Superannuation and other pension expense
Other significant expense items
Acquisition related accounting adjustments
Foreign currency translation reserve write-off on disposals
Put option liability re-measurement
Asset write-down
Voucher Services impairment
2. OTHER INCOME
Gain on acquisition
Rent received
Marked to market adjustments - derivatives
Gain on disposal
Other
Total other income
2016
$000
2015
$000
1,957,860
1,966,193
701
2,564
3,265
917
4,142
5,059
1,961,125
1,971,252
38,715
120,683
(12,382)
108,301
147,016
51,886
2,594
54,480
58,463
76,882
770,140
37,437
45,642
25,904
7,526
1,687
41,068
103,731
(7,883)
95,848
136,916
49,217
2,740
51,957
59,705
80,433
778,198
38,726
-
-
7,749
5,241
-
109,536
11,113
3,734
3,244
325
9,324
27,740
670
1,799
-
7,288
3,020
12,777
PAGE 51
3. EARNINGS PER SHARE
Year ended 30 June 2016
Earnings per share (cents per share)
Reconciliation of earnings
Profit for the year
Non-controlling interest (profit)/loss
Basic EPS
Diluted EPS
Management
Basic EPS
Management
Diluted EPS
28.55 cents
28.51 cents
55.09 cents
55.00 cents
$000
$000
$000
$000
161,798
161,798
161,798
161,798
(4,464)
(4,464)
(4,464)
(4,464)
Add back management adjustment items (see below)
-
-
146,206
146,206
Net profit attributable to the members of Computershare Limited
157,334
157,334
303,540
303,540
Weighted average number of ordinary shares used as denominator in
calculating earnings per share
550,992,891
551,917,891
550,992,891
551,917,891
Year ended 30 June 2015
Earnings per share (cents per share)
Reconciliation of earnings
Profit for the year
Non-controlling interest (profit)/loss
27.61 cents
27.56 cents
59.82 cents
59.72 cents
$000
$000
$000
$000
157,278
157,278
157,278
157,278
(3,702)
(3,702)
(3,702)
(3,702)
Add back management adjustment items (see below)
-
-
179,158
179,158
Net profit attributable to the members of Computershare Limited
153,576
153,576
332,734
332,734
Weighted average number of ordinary shares used as denominator in
calculating earnings per share
556,203,079
557,178,079
556,203,079
557,178,079
Reconciliation of weighted average number of shares used as the denominator:
2016
Number
2015
Number
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
550,992,891
556,203,079
Adjustments for calculation of diluted earnings per share:
Performance rights
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in
calculating diluted earnings per share
925,000
975,000
551,917,891
557,178,079
No performance rights have been issued since the end of the reporting period.
For the year ended 30 June 2016 management adjustment items were as follows:
Amortisation
Intangible assets amortisation
Acquisitions and disposals
Acquisition related accounting adjustments
Foreign currency translation reserve write-off on disposals
Gain on acquisition
Acquisition and disposal related expenses
Acquisition related restructuring costs
Asset write-down
Gain on disposal
Other
Major restructuring costs
Put option liability re-measurement
Marked to market adjustments - derivatives
Total management adjustment items
PAGE 52
Gross
$000
Tax effect
$000
Net of tax
$000
(96,134)
32,091
(64,043)
(45,642)
(25,904)
11,113
(3,480)
(2,002)
(1,687)
325
(14,545)
(7,526)
3,244
(699)
-
(2,222)
1,072
698
-
-
6,080
-
(988)
(46,341)
(25,904)
8,891
(2,408)
(1,304)
(1,687)
325
(8,465)
(7,526)
2,256
(182,238)
36,032
(146,206)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
Management Adjustment Items
Management adjustment items net of tax for the year ended 30 June 2016 were as follows:
Amortisation
> Customer contracts and other intangible assets that are recognised on business combinations or major asset acquisitions are amortised
over their useful life in the statutory results but excluded from management earnings. The amortisation of these intangibles for the
year ended 30 June 2016 was $64.0 million. Amortisation of intangibles purchased outside of business combinations (eg, mortgage
servicing rights) is included as a charge against management earnings.
Acquisitions and disposals
> A liability of $47.3 million was recognised for contingent consideration payable to the sellers of Homeloan Management Limited.
An acquisition accounting adjustment related to the Registrar and Transfer Company resulted in a benefit of $1.0 million.
> The finalisation of disposal accounting for the Russian registry business, VEM (a corporate actions bank located in Germany) and
the Australian ConnectNow business resulted in a loss of $25.9 million due to a write-off of the associated cumulative translation
differences from the foreign currency translation reserve. The cumulative translation differences are only reclassified to profit or loss
when the disposal process has been completed and control over a foreign subsidiary is lost. The Russian registry business and
VEM were classified as held for sale as at 30 June 2015.
> A gain of $8.9 million was recorded on acquisition of assets under the mortgage servicing contract with UK Asset Resolution Limited.
> Acquisition and disposal related expenses of $2.4 million were incurred associated with recent acquisitions and disposals including
Gilardi & Co, Capital Markets Cooperative, Homeloan Management Limited, Altavera, SyncBASE and ConnectNow.
> Restructuring costs of $1.3 million were incurred for the Gilardi & Co, Valiant Trust Company and SyncBASE acquisitions.
> A property in the UK was written down to fair value less cost of disposal on classification as ‘held for sale’ resulting in a loss of
$1.7 million.
> A gain of $0.3 million was recorded on sale of the Japanese joint venture interest.
Other
> Costs of $8.5 million were incurred in relation to the major operations rationalisation underway in Louisville, USA.
> The put option liability re-measurement resulted in an expense of $7.5 million related to the Karvy joint venture arrangement in India.
> Derivatives that have not received hedge designation are marked to market at the reporting date and taken to profit and loss in the
statutory results. The marked to market valuation resulted in a gain of $2.3 million.
For the year ended 30 June 2015 management adjustment items were as follows:
Amortisation
Intangible assets amortisation
Acquisitions and disposals
Gain on disposal
Acquisition and disposal accounting adjustments
Acquisition and disposal related restructuring costs
Asset write-down
Acquisition and disposal related expenses
Gain on acquisition
Other
Voucher Services impairment
Put option liability re-measurement
Marked to market adjustments – derivatives
Major restructuring costs
Total management adjustment items
Gross
$000
Tax effect
$000
Net of tax
$000
(90,065)
31,545
(58,520)
7,288
11,383
(9,094)
(5,241)
(4,540)
670
(109,536)
(7,749)
(3,179)
(2,050)
343
(4,800)
3,080
-
988
-
-
-
975
824
7,631
6,583
(6,014)
(5,241)
(3,552)
670
(109,536)
(7,749)
(2,204)
(1,226)
(212,113)
32,955
(179,158)
PAGE 53
4. SEGMENT INFORMATION
The operating segments presented reflect the manner in which the Group has been internally managed and the financial information
reported to the chief operating decision maker (CEO) in the current financial year. The Group has determined the operating segments
based on the reports reviewed by the CEO that are used to make strategic decisions and assess performance.
There are seven operating segments. Six of them are geographic: Asia, Australia and New Zealand, Canada, Continental Europe,
UCIA (United Kingdom, Channel Islands, Ireland & Africa) and the United States of America. In addition, Technology and Other segment
comprises the provision of software specialising in share registry and financial services. It is also a research and development function,
for which discrete financial information is reviewed by the CEO.
In each of the six geographic segments the consolidated entity offers a combination of its core products and services: investor services,
business services, plan services, communication services and stakeholder relationship management services. Investor services comprise
the provision of registry maintenance and related services. Business services comprise the provision of bankruptcy, class action and
utilities administration services, voucher services, corporate trust services and mortgage servicing activities. Plan services comprise the
provision of administration and related services for employee share and option plans. Communication services comprise intelligent mailing,
inbound process automation, scanning and electronic delivery. Stakeholder relationship management services comprise the provision of
investor analysis, investor communication and management information services to companies, including their employees, shareholders
and other security industry participants.
Corporate function includes entities whose main purpose is to hold intercompany investments and conduct financing activities. It is not
considered an operating segment and includes activities that are not allocated to other operating segments.
OPERATING SEGMENTS
June 2016
Total segment revenue
and other income
External revenue and
other income
Australia &
New Zealand
$000
Asia
$000
Canada
$000
Continental
Europe
$000
Technology
& Other
$000
UCIA
$000
United
States
$000
Total
$000
128,029
266,897
166,080
80,986
223,491
359,390
957,850
2,182,723
124,413
265,932
164,274
80,772
15,679
356,615
953,816
1,961,501
Intersegment revenue
3,616
965
1,806
214
207,812
2,775
4,034
221,222
Management adjusted
EBITDA
June 2015
Total segment revenue
and other income
External revenue and
other income
45,231
45,741
67,440
13,732
25,233
100,036
226,392
523,805
124,596
309,635
186,660
113,299
226,705
358,562
870,521
2,189,978
122,350
308,928
184,567
112,979
17,407
354,368
867,473
1,968,072
Intersegment revenue
2,246
707
2,093
320
209,298
4,194
3,048
221,906
Management adjusted
EBITDA
Segment revenue
42,217
51,652
76,595
22,161
30,646
118,966
213,549
555,786
The revenue reported to the CEO is measured in a manner consistent with that of the statement of comprehensive income. Sales between
segments are included in the total segment revenue, whereas sales within a segment have been eliminated from segment revenue. Sales
between segments are at normal commercial rates and are eliminated on consolidation.
Segment revenue reconciles to total revenue from continuing operations as follows:
Total operating segment revenue and other income
Intersegment eliminations
Corporate revenue and other income
Total revenue from continuing operations
Management adjusted EBITDA
2016
$000
2015
$000
2,182,723
2,189,978
(221,222)
(221,906)
(376)
3,180
1,961,125
1,971,252
Management adjusted results are used, along with other measures, to assess operating business performance. The Group believes
that exclusion of certain items permits better analysis of the Group’s performance on a comparative basis and provides a better
measure of underlying operating performance.
PAGE 54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
2016
$000
2015
$000
523,805
555,786
8,804
(1,694)
532,609
554,092
(96,134)
(45,642)
(25,904)
11,113
(3,480)
(2,002)
(1,687)
325
-
(14,545)
(7,526)
3,244
(90,065)
11,383
-
670
(4,540)
(9,094)
(5,241)
7,288
(109,536)
(2,050)
(7,749)
(3,179)
(182,238)
(212,113)
(54,480)
(50,882)
(51,957)
(46,851)
245,009
243,171
727,796
140,510
605,722
70,107
222,186
174,416
20,388
798,859
144,215
519,143
58,208
247,637
179,780
23,410
1,961,125
1,971,252
A reconciliation of management adjusted EBITDA to operating profit before income tax is provided as follows:
Management adjusted EBITDA – operating segments
Management adjusted EBITDA – corporate
Management adjusted EBITDA
Management adjustment items (before related income tax effect):
Amortisation of intangible assets
Acquisition and disposal accounting adjustments
Foreign currency translation reserve write-off on disposals
Gain on acquisition
Acquisition and disposal related expenses
Acquisition related restructuring costs
Asset write-down
Gain on disposal
Voucher Services impairment
Major restructuring costs
Put option liability re-measurement
Marked to market adjustments – derivatives
Total management adjustment items (note 3)
Finance costs
Other amortisation and depreciation
Profit before income tax from continuing operations
External revenue per business line
The table below outlines revenue from external customers for each business line:
Register Maintenance
Corporate Actions
Business Services
Stakeholder Relationship Management
Employee Share Plans
Communication Services
Technology and Other Revenue
Total
Geographical Information
Australia
United Kingdom
United States
Canada
Other non-significant countries
Total
Geographical allocation
of external revenue
Geographical allocation
of non-current assests
2016
$000
257,308
307,165
961,049
165,243
270,360
2015
$000
298,494
298,216
881,623
185,468
307,451
2016
$000
186,542
217,760
2015
$000
215,562
276,010
1,701,048
1,507,817
175,552
169,122
177,592
178,388
1,961,125
1,971,252
2,450,024
2,355,369
Revenues are allocated based on the countries in which the entities are located. The parent entity is domiciled in Australia. Revenue
from external customers in countries other than Australia amounts to $1,703.8 million (2015: $1,672.8 million).
Non-current assets exclude financial instruments and deferred tax assets and are allocated to countries based on where the assets are
located. Non-current assets held in countries other than Australia amount to $2,263.5 million (2015: $2,139.8 million).
PAGE 55
5. INCOME TAX EXPENSE AND BALANCES
Income tax expense
a) Income tax expense
Current tax expense
Current tax expense
Under/(over) provided in prior years
Total current tax expense
Deferred tax expense/(benefit)
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax liabilities
Total deferred tax expense/(credit)
Total income tax expense
2016
$000
64,323
5,142
69,465
(51,961)
65,707
13,746
83,211
2015
$000
82,992
3,927
86,919
(33,300)
32,274
(1,026)
85,893
b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
245,009
243,171
The tax expense for the financial year differs from the amount calculated on the profit.
The differences are reconciled as follows:
Prima facie income tax expense thereon at 30%
Tax effect of permanent differences:
Contingent consideration re-measurement
Prior year tax (over)/under provided
Research and development allowance
Variation in tax rates of foreign controlled entities
Voucher Services goodwill impairment
Net other deductible
Income tax expense
c) Amounts recognised directly in equity
Deferred tax – (debited)/credited directly to equity
d) Tax benefit/(expense) relating to items of other comprehensive income
Cash flow hedges
Net investment hedges
e) Unrecognised tax losses
73,503
72,951
9,463
5,142
(1,733)
(472)
-
(2,692)
83,211
-
3,927
(2,327)
(4,277)
32,861
(17,242)
85,893
(30)
92
106
(6,947)
(6,841)
243
14,720
14,963
As at 30 June 2016, companies within the consolidated entity had estimated unrecognised tax losses of $1.1 million (2015: $35.4 million)
available to offset against future years’ taxable income.
PAGE 56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
Tax assets
Current tax assets
Refunds receivable
Deferred tax assets
Attributable to carry forward tax losses
Attributable to temporary differences
Movements during the year
Opening balance at 1 July
Currency translation difference
Credited/(charged) to profit or loss
Credited/(charged) to equity
Credited/(charged) to other comprehensive income
Set-off of deferred tax liabilities
Arising from acquisitions/(disposals)
Closing balance at 30 June
The deferred tax assets balance comprises temporary differences attributable to:
Tax losses
Employee benefits
Property, plant and equipment
Deferred revenue
Doubtful debts
Provisions
Finance leases
Other creditors and accruals
Financial instruments and foreign exchange
Share based remuneration
Intangible assets
Other liabilities
Other
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
2016
$000
2015
$000
6,423
10,574
35,166
143,478
178,644
37,772
151,576
189,348
189,348
167,625
(3,354)
51,961
(30)
(6,947)
(52,839)
505
(11,754)
33,300
92
14,720
(15,238)
603
178,644
189,348
35,166
37,772
6,576
9,882
3,903
2,452
20,383
3,255
6,959
55,252
3,826
42,917
61,456
6,962
7,169
9,419
4,308
1,990
21,926
2,273
8,490
58,364
8,084
34,704
19,704
2,651
258,989
(80,345)
178,644
216,854
(27,506)
189,348
The total deferred tax assets expected to be recovered after more than 12 months amounts to $155.3 million (2015: $102.4 million).
PAGE 57
Tax liabilities
Current tax liabilities
Provision for income tax
Deferred tax liabilities
2016
$000
2015
$000
29,131
29,435
Provision for deferred income tax on temporary differences
232,100
214,512
Movements during the year:
Opening balance at 1 July
Currency translation difference
Charged/(credited) to profit or loss
Charged/(credited) to other comprehensive income
Set-off of deferred tax assets
Arising from acquisitions/(disposals)
Closing balance at 30 June
The deferred tax liabilities balance comprises temporary differences attributable to:
Goodwill
Intangible assets
Financial instruments and foreign exchange
Other
Total deferred tax liabilities
Set-off of deferred tax assets pursuant to set-off provisions
Net deferred tax liabilities
214,512
192,215
(1,801)
65,707
(106)
(5,396)
32,274
(243)
(52,839)
(15,238)
6,627
232,100
10,900
214,512
224,449
69,828
14,594
3,574
312,445
(80,345)
232,100
198,063
31,464
8,873
3,618
242,018
(27,506)
214,512
The amount of deferred tax liabilities expected to be settled after more than 12 months amounts to $304.8 million (2015: $212.3 million).
PAGE 58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
6. NOTES TO THE CONSOLIDATED CASHFLOW STATEMENT
(a) Reconciliation of cash and cash equivalents
For the purposes of the consolidated cash flow statement, cash and cash equivalents include cash on hand, deposits at call with
financial institutions and other highly liquid investments with short periods to maturity (three months or less), which are readily
convertible to known amounts of cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank
overdrafts. Cash and cash equivalents as at the end of the financial year as shown in the consolidated cash flow statement are
reconciled to the related items in the consolidated statement of financial position as follows:
Shown as cash and cash equivalents in the consolidated statement of financial position
Shown as cash and cash equivalents in the assets held for sale line item of the consolidated statement of
financial position (refer to note 8)
Cash at bank and on hand
(b) Reconciliation of net profit after income tax to net cash from operating activities
Net profit after income tax
Adjustments for non-cash income and expense items:
Depreciation and amortisation
Contingent consideration re-measurement
Net (gain)/loss on asset disposals and asset write downs
Gain on acquisition
Share of net (profit)/loss of associates and joint ventures accounted for using equity method
Employee benefits – share based expense
Impairment charge – Voucher Services
Fair value adjustments
Changes in assets and liabilities:
(Increase)/decrease in receivables
(Increase)/decrease in inventories
(Increase)/decrease in loan servicing advances
(Increase)/decrease in other current assets
Increase/(decrease) in payables and provisions
Increase/(decrease) in tax balances
2016
$000
2015
$000
526,575
555,278
-
48,814
526,575
604,092
161,798
157,278
147,016
136,916
45,642
27,266
(11,113)
1,349
10,366
-
3,889
(64,164)
(1,710)
(68,137)
5,116
21,160
26,169
(9,434)
(2,291)
(670)
2,316
16,535
109,536
10,911
(19,162)
2,482
(44,522)
10,207
(24,334)
26,364
Net cash and cash equivalents from operating activities
304,647
372,132
(c) Non-cash transactions
During the year Computershare recognised the following material non-cash transactions in the statement of comprehensive income:
> An expense of $47.3 million related to contingent consideration payable to the sellers of Homeloan Management Limited
> A loss of $25.9 million on finalisation of disposal accounting for the Russian registry business, VEM (a corporate actions bank located
in Germany) and the Australian ConnectNow business due to a write-off of the associated cumulative translation differences from the
foreign currency translation reserve
> A gain of $11.1 million recorded on acquisition of assets under the mortgage servicing contract with UK Asset Resolution Limited
There were no other material non-cash transactions during the year.
(d) Acquisitions and disposals of businesses
For details of businesses acquired during the year and related cash flows refer to note 7.
PAGE 59
7. BUSINESS COMBINATIONS
The Group continues to seek acquisition and other growth opportunities where value can be added and returns enhanced for the
shareholders. The following controlled entities and businesses were acquired by the consolidated entity at the date stated and their
operating results have been included in the Group’s results from the acquisition date. Where goodwill or gain on acquisition are
marked as provisional, identification and valuation of net assets acquired will be completed within a 12 month measurement period in
accordance with the Group’s accounting policy.
(a)
On 29 April 2016, Computershare acquired Capital Markets Cooperative, LLC (CMC), based in Florida, USA. CMC is a
service provider to mortgage originator clients with a substantial mortgage servicing rights co-issue programme. Total
consideration was $98.1 million, which included deferred consideration of $10.2 million and contingent consideration of
$5.6 million, which is subject to certain performance hurdles being satisfied. Contingent consideration is based on the best
estimate at acquisition date and does not contain a cap.
This business combination contributed $5.5 million to the total revenue of the group. Had the acquisition occurred on 1 July 2015,
the total revenue contribution to the Group by the acquired entity would have been $25.9 million.
Details of the acquisition are as follows:
Cash consideration
Deferred consideration
Contingent consideration
Total purchase consideration
Less fair value of identifiable assets acquired
Provisional goodwill on consolidation
Assets and liabilities arising from this acquisition are as follows:
Cash
Receivables
Loan servicing advances
Current tax assets
Derivative financial instruments
Other current assets
Property, plant and equipment
Mortgage servicing rights
Payables
Other current liabilities
Deferred tax liability
Net assets
Purchase consideration:
Inflow/(outflow) of cash to acquire the entity, net of cash acquired:
Cash balance acquired
Less cash paid
Net inflow/(outflow) of cash
PAGE 60
$000
82,303
10,192
5,587
98,082
(53,048)
45,034
Fair value
$000
8,238
3,200
503
1,704
857
177
848
43,085
(1,807)
(579)
(3,178)
53,048
$000
8,238
(82,303)
(74,065)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
(b)
On 4 May 2016, Computershare was appointed by UK Asset Resolution Limited (UKAR) to undertake its mortgage servicing
activities under a seven year contract covering GBP 30 billion of UKAR mortgages. In addition, Computershare entered into
separate contracts for the servicing of the GBP 11 billion of assets purchased by other parties from UKAR in November 2015.
As part of the contract, Computershare acquired around 1,700 staff as well as certain assets and liabilities of UKAR effective
6 June 2016. Consideration paid for the assets acquired was GBP 1. Computershare also paid a working capital adjustment to
the sellers of $0.5 million.
Due to the structure determined by the UK Government for award of the UKAR contract, business combination accounting rules
are applicable, which resulted in a gain on acquisition of $11.1 million as the total value of net assets acquired exceeded the
purchase consideration. The gain is included in other income in the statement of comprehensive income and is excluded from
management earnings.
Since the UKAR contract was only entered into on 4 May 2016, this business combination did not materially contribute to the total
revenue of the Group in the year ended 30 June 2016.
Details of the acquisition are as follows:
Total cash paid
Less fair value of identifiable assets acquired
Provisional gain on acquisition
Assets and liabilities arising from this acquisition are as follows:
Other current assets
Property, plant and equipment
Customer contracts and related relationships
Payables
Provisions
Deferred tax liability
Net assets
Purchase consideration:
Inflow/(outflow) of cash, net of cash acquired:
Cash consideration paid
Net inflow/(outflow) of cash
$000
507
(11,620)
(11,113)
Fair value
$000
2,702
1,548
12,700
(2,195)
(595)
(2,540)
11,620
$000
(507)
(507)
(c)
On 27 August 2015 Computershare acquired 100% of Gilardi & Co., LLC (Gilardi), based in San Rafael, California, USA. Gilardi is
a securities and anti-trust class actions claims administration business and complements Computershare’s KCC business and its
integrated suite of corporate restructuring, class action and legal document support solutions. Total consideration was $41.9 million,
which included contingent consideration of $11.1 million. Contingent consideration is dependent on achieving net billable revenue
targets over a three year period and is capped at $11.1 million.
This business combination contributed $29.2 million to the total revenue of the group. Had the acquisition occurred on 1 July 2015,
the total revenue contribution to the Group by the acquired entity would have been $34.2 million.
Details of the acquisition are as follows:
Cash consideration
Contingent consideration
Total purchase consideration
Less fair value of identifiable assets acquired
Goodwill on consolidation
$000
30,814
11,070
41,884
(37,620)
4,264
PAGE 61
Assets and liabilities arising from this acquisition are as follows:
Cash
Current receivables
Other current assets
Plant, property and equipment
Customer contracts and related relationships
Intellectual property
Brand name
Deferred tax assets
Current payables
Other current liabilities
Net assets
Purchase consideration:
Inflow/(outflow) of cash to acquire the entity, net of cash acquired:
Cash balance acquired
Less cash paid
Net inflow/(outflow) of cash
Fair value
$000
62
6,847
484
182
32,410
1,300
1,050
627
(5,216)
(126)
37,620
$000
62
(30,814)
(30,752)
(d)
On 31 January 2016, Computershare acquired SyncBASE Inc., an equity plan administration business based in Toronto, Canada.
Total consideration was $9.3 million. This business combination did not materially contribute to the total revenue of the Group.
Details of the acquisition are as follows:
Cash consideration
Contingent consideration
Total purchase consideration
Less fair value of identifiable assets acquired
Provisional goodwill on consolidation
Assets and liabilities arising from this acquisition are as follows:
Cash
Current receivables
Other current assets
Plant, property and equipment
Current payables
Current tax liabilities
Net assets
Purchase consideration:
Inflow/(outflow) of cash to acquire the entity, net of cash acquired:
Cash balance acquired
Less cash paid
Net inflow/(outflow) of cash
PAGE 62
$000
7,188
2,138
9,326
(388)
8,938
Fair value
$000
982
351
16
23
(953)
(31)
388
$000
982
(7,188)
(6,206)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
(e)
On 1 February 2016, Computershare acquired PR im Turm HV-Service AG, a company AGM supervisor based in Mannheim, Germany.
Total consideration was $3.0 million. This business combination did not materially contribute to the total revenue of the Group.
Details of the acquisition are as follows:
Total cash consideration paid
Less fair value of identifiable assets acquired
Provisional goodwill on consolidation
$000
3,049
(133)
2,916
(f)
On 13 May 2016, Computershare acquired Altavera, LLC, a mortgage servicing business based in the USA. Total consideration
was $2.8 million. This business combination did not materially contribute to the total revenue of the Group.
Details of the acquisition are as follows:
Cash consideration
Contingent consideration
Total purchase consideration
Less fair value of identifiable assets acquired
Provisional goodwill on consolidation
$000
1,425
1,350
2,775
(275)
2,500
In accordance with the accounting policy, the acquisition accounting for Valiant Trust Company (Valiant) and Istifid S.p.A (Istifid) has
been finalised. Intangible assets of $15.1 million for Valiant and $4.8 million for Istifid have been reclassified out of goodwill.
8. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
Assets classified as held for sale
Cash and cash equivalents
Financial assets held for trading
Property, plant and equipment
Other
Total assets held for sale
Liabilities directly associated with assets classified as held for sale
Payables
Total liabilities held for sale
2016
$000
-
-
26,128
-
2015
$000
48,814
1,904
-
840
26,128
51,558
-
-
12,816
12,816
On 26 April 2016, Computershare announced the sale of the land and building housing its Australian head office. The sale was
completed on 9 September 2016 and is expected to result in a gain of $40.3 million, which will be recorded in next year’s results.
Separately, the sale process of a building located in the United Kingdom is underway and is expected to be completed within the next
twelve months. The building was acquired as part of the original IML acquisition. Both the Australian head office building and land as
well as the building in the UK are classified as held for sale as at 30 June 2016.
Land and buildings classified as held for sale are measured at the lower of carrying amount and fair value less cost to sell at the time of
the reclassification and are presented separately within current assets in the consolidated statement of financial position. A loss of
$1.7 million before tax resulting from the write-down of the UK property to fair value less cost of disposal has been recognised in the
direct services expense line of the consolidated statement of comprehensive income.
The sale process of VEM Aktienbank AG (VEM), a corporate actions bank located in Germany, was completed on 31 July 2015 and
sale of the Russian registry business was completed on 17 July 2015. VEM and Russia were classified as disposal groups held for sale
as at 30 June 2015. The finalisation of disposal accounting for VEM and Russia resulted in a loss of $25.9 million due to a write-off of
the associated cumulative translation differences from the foreign currency translation reserve. The cumulative translation differences
are only reclassified to profit or loss when the disposal process has been completed and control over a foreign subsidiary is lost.
PAGE 63
9. INTANGIBLE ASSETS
Customer
contracts and
relationships
$000
Mortgage
Servicing
Rights
$000
Goodwill
$000
Other
$000
Total
$000
At 1 July 2015
Opening cost
1,560,658
625,109
Opening accumulated amortisation and impairment
-
(205,900)
Opening net book amount
Additions1
Amortisation charge2
Currency translation difference
Closing net book amount
At 30 June 2016
Cost
Accumulated amortisation and impairment
Closing net book amount
At 1 July 2014
Opening cost
Additions1
Disposals
Amortisation charge2
Impairment charge
Currency translation difference
Closing net book amount
At 30 June 2015
Cost
Accumulated amortisation and impairment
Closing net book amount
1,560,658
419,209
43,208
-
(27,968)
65,464
(81,525)
(12,476)
143,051
(18,720)
124,331
191,741
86,395
2,415,213
(58,295)
(282,915)
28,100
2,132,298
3,481
303,894
(24,472)
(14,686)
(120,683)
-
(1,437)
(41,881)
1,575,898
390,672
291,600
15,458
2,273,628
1,575,898
672,064
-
(281,392)
1,575,898
390,672
334,792
(43,192)
291,600
41,492
2,624,246
(26,034)
(350,618)
15,458
2,273,628
1,739,395
665,364
20,945
(10,601)
-
(93,912)
(95,169)
75,653
(8,204)
(70,719)
-
(20,734)
64,048
(5,148)
58,900
79,003
-
(13,572)
-
-
149,016
2,617,823
(115,884)
(343,183)
33,132
16,913
(1,608)
(19,440)
-
(897)
2,274,640
192,514
(20,413)
(103,731)
(93,912)
(116,800)
1,560,658
419,209
124,331
28,100
2,132,298
1,560,658
625,109
-
(205,900)
1,560,658
419,209
143,051
(18,720)
124,331
86,395
2,415,213
(58,295)
(282,915)
28,100
2,132,298
Opening accumulated amortisation and impairment
-
(222,151)
Opening net book amount
1,739,395
443,213
1 Additions comprise the recognition of intangible assets resulting from business combinations and direct purchases as well as adjustments and reclassifications made on
finalisation of acquisition accounting.
2 Amortisation charge is included within direct services expense in the statement of comprehensive income.
The acquired goodwill can be attributed to the expected future cash flows of the acquired businesses associated with the collective
experience of management and staff and the synergies expected to be achieved as a result of the full integration into the Computershare
Group. Other intangible assets include intellectual property, software and brands.
Where acquisitions have been made during the period, the Group has 12 months from the acquisition date in which to finalise the
accounting, including the calculation of goodwill. Until the expiry of the 12 month period provisional amounts have been included in the
consolidated results.
PAGE 64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
Impairment test for goodwill
For the purpose of impairment testing, goodwill is allocated to cash generating units, or groups of cash generating units, expected
to benefit from synergies of the business combination. As the Group continues to acquire operations and reorganise the way that
operations are managed, reporting structures may change giving rise to a reassessment of cash generating units and/or the allocation
of goodwill to those cash generating units.
The carrying amount of goodwill has been allocated to the following groups of cash generating units (CGUs) constituting some of the
Group’s operating segments:
Asia
Australia and New Zealand
Canada
Continental Europe
United Kingdom, Channel Islands, Ireland and Africa (UCIA)
United States
2016
$000
84,574
160,083
122,474
26,876
99,319
2015
$000
86,099
164,712
134,461
29,093
114,925
1,082,572
1,031,368
1,575,898
1,560,658
When testing for impairment, the carrying amount of each group of CGUs is compared with its recoverable amount. The recoverable
amount is determined based on a value in use calculation for each group of CGUs to which goodwill has been allocated. The value in use
calculation uses the discounted cash flow methodology for each CGU typically based upon five years of cash flow projections plus a
terminal value.
Key assumptions used for value in use calculations
Key assumptions used in the value in use calculations are described below for each group of CGUs with a significant amount of
allocated goodwill. As there are a number of CGUs in most of the operating segments, presented below are weighted averages of the
assumptions applied to individual CGUs.
Five-year post-tax cash flow projections are based upon approved budgets covering a one-year period, with the subsequent periods
based upon the Group’s expectations of growth excluding the impact of possible future acquisitions, business improvement and
restructuring. The earnings growth rates applied beyond the initial five-year period are as follows in 2016: Asia 3.8% (2015: 3.0%),
Australia and New Zealand 3.0% (2015: 3.0%), Canada 2.5% (2015: 3.0%), Continental Europe 1.8% (2015: 3.0%), UCIA 3.0%
(2015: 3.0%) and the United States 3.0% (2015: 3.0%).
In performing the value in use calculations for each CGU, the Group has applied post-tax discount rates to discount the forecast future
attributable post-tax cash flows. The discount rates used reflect the risks specific to each CGU. The equivalent pre-tax discount rates
are as follows: Asia 11.5% (2015: 11.0%), Australia and New Zealand 12.2% (2015: 12.7%), Canada 9.8% (2015: 10.4%), Continental
Europe 9.9% (2015: 9.8%), UCIA 9.4% (2015: 9.8%) and United States 10.0% (2015: 10.6%).
Impact of reasonably possible changes in key assumptions
As impairment testing is based on assumptions and judgements, the Group has considered sensitivity of the impairment test results
to changes in key assumptions. For all operating segments, the recoverable amount exceeds the carrying amount when testing for
reasonably possible changes in key assumptions.
Voucher Services
The reduction in expected future earnings of Computershare’s Voucher Services business was slower than anticipated and the present
value of expected future cash flows continues to support the carrying amount of goodwill related to this business of $27.7 million.
Consequently, there was no impairment of goodwill related to Voucher Services during the year. The carrying value of this goodwill will
continue to be monitored and is expected to be written off in the coming years.
10. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The significant estimates and assumptions made in the current financial year comprise assumptions
made in acquisition accounting, goodwill impairment testing and income taxes, including the recoverability of tax losses.
Acquisition accounting requires that management make estimates around the valuation of certain non-monetary assets and
liabilities within the acquired entities. These estimates have particular impact in terms of the valuation of intangible assets, contingent
consideration and provisions. To the extent that these items are subject to determination during the initial 12 months after acquisition,
the variation to estimated value will be adjusted through goodwill. To the extent that determination occurs after 12 months, any
variation will impact profit or loss in the relevant period (refer to notes 7 and 9).
PAGE 65
Goodwill is tested for impairment annually or more frequently, if events or changes in circumstances indicate that it might be impaired, and
is carried at cost less accumulated impairment losses. For more details on assumptions used in value in use calculations refer to note 9.
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required
in determining the provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of
business for which the ultimate tax determination is uncertain. Where the final outcome is different from the amounts that were initially
recognised, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
The Group has recognised deferred tax assets relating to carried forward tax losses to the extent that it is probable that future taxable
profits will be available against which these assets can be utilised. The assumptions regarding future utilisation, and therefore the
recognition of deferred tax assets, may change due to future operating performance and other factors.
11. FINANCIAL RISK MANAGEMENT
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), liquidity
risk and credit risk. The Group’s overall financial risk management is carried out by a central treasury department (Group Treasury)
under policies approved by the Board. The Board provides written principles for overall risk management, as well as policies covering
specific areas such as currency risk management, interest rate risk management, counterparty risk management and the use of
derivative financial instruments. Derivative financial instruments are used to manage specifically identified interest rate and foreign
currency risks.
The Group Treasury function provides services to the business and monitors and manages the financial risks relating to the operations
of the Group. Group Treasury identifies, evaluates and hedges financial risks in close cooperation with the regional treasury centres and
reports regularly to the Board.
Capital risk management objectives
The primary objective of the Group’s capital management is to ensure that it minimises the working capital funding requirements through
effective controls in order to support its businesses and maximise shareholder value.
A key financial ratio for the Group is net financial indebtedness to management earnings before interest, tax, depreciation and amortisation
(EBITDA). Net debt is calculated as interest bearing liabilities less cash and cash equivalents.
Interest bearing liabilities
Cash and cash equivalents1
Net debt
Management EBITDA (note 4)
Net debt to management EBITDA
Net debt to management EBITDA (excluding non-recourse debt)2
1 2015 includes $48.8 million cash presented in assets classified as held for sale.
2 Excludes non-recourse SLS advance debt of $208.2 million (2015: $132.4 million).
2016
$000
2015
$000
1,863,305
1,769,104
(526,575)
(604,092)
1,336,730
1,165,012
532,609
554,092
2.51
2.12
2.10
1.86
The Group manages its capital structure and makes adjustments to it in line with changes in economic conditions. To achieve its
target capital structure, the Group may adjust the dividend payment to shareholders, conduct share buy-backs or issue new shares.
On 18 August 2015 Computershare announced an on-market buy-back of shares with an aggregate value of up to AUD 140.0 million.
For further details refer to note 26. No other changes were made in the capital structure objectives or processes during the current
financial year.
Fair value of financial assets and liabilities
The carrying amounts of cash and cash equivalents, receivables, payables, non-interest bearing liabilities, finance leases and loans
approximate their fair values for the Group except for the unhedged portion of USD Senior Notes of $395.0 million (2015: $395.0 million),
where the fair value was $419.8 million as at 30 June 2016 (2015: $410.9 million).
Financial risk factors
The key financial risk factors that arise from the Group’s activities are outlined below.
(a) Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or fair values of financial
instruments. The consolidated entity is exposed to interest rate risk through its primary financial assets and liabilities and as a result of
maintaining agent and escrow agent bank accounts on behalf of clients. Given the nature of the client balances, neither the funds nor
an offsetting liability are included in the Group’s financial statements. Average client balances during the year approximated $15.7 billion
(2015: $15.2 billion) and in relation to these balances, the consolidated entity has in place interest rate derivatives totalling $1.7 billion
notionally (2015: $2.1 billion).
PAGE 66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The following table summarises the interest rate risk for the consolidated entity, together with effective interest rates as at the balance date.
Fixed interest rate
maturing in
Weighted average
interest rate
Floating
interest
rate
$000
1 year
or less
$000
1 to 5
years
$000
More than
5 years
$000
Non-
interest
bearing
$000
Total
$000
Floating
%
Fixed
%
As at 30 June 2016
Financial assets
Cash and cash equivalents
526,575
-
Bank deposits
Trade receivables
Non-trade receivables and loans
Loan servicing advances
Financial liabilities
Trade payables
Finance lease liabilities
Bank loans
Revolving syndicated bank facilities
USD Senior Notes1
Derivatives2
13,450
6,724
-
-
-
-
-
-
540,025
6,724
-
-
208,210
771,647
-
30,272
7,892
-
-
-
-
-
21,000
345,000
440,000
-
-
526,575
20,174
0.62
2.08
-
2.50
205,176
205,176
62,723
62,723
255,139
255,139
523,038
1,069,787
23,366
-
-
-
-
23,366
38,164
208,210
771,647
806,000
-
-
-
-
-
2.55
1.77
-
-
-
-
-
5.85
-
-
4.74
1,426,437
(787,622)
(363,815)
(275,000)
495,000
495,000
0.95
1.64
2,406,294
(736,350)
(10,923)
165,000
518,366
2,342,387
As at 30 June 2015
Financial assets
Cash and cash equivalents3
604,092
-
Bank deposits
Trade receivables
Non-trade receivables and loans
Loan servicing advances
15,732
3,932
-
-
-
-
-
-
619,824
3,932
Financial liabilities
Trade payables
Finance lease liabilities
Bank loans
-
-
166,753
Revolving syndicated bank facilities
736,527
USD Senior Notes1
Derivatives2
6,052
34,337
-
-
-
-
-
-
604,092
19,664
0.74
2.07
-
2.50
197,925
197,925
47,989
47,989
187,002
187,002
432,916
1,056,672
21,062
21,062
-
-
-
-
40,389
166,753
736,527
806,000
-
-
-
-
-
2.31
2.24
-
-
-
-
-
5.74
-
-
4.73
1.80
-
366,000
440,000
1,732,446
(1,321,446)
(136,000)
(275,000)
550,000
550,000
0.85
2,635,726
(1,315,394)
264,337
165,000
571,062
2,320,731
1 USD Senior Notes at cost, excluding fair value adjustments (note 13).
2 Notional principal amounts.
3 Includes cash that is classified as an asset held for sale.
The sensitivity of the profit and loss statement to interest rate movements is the effect of assumed reasonably possible changes in
interest rates for one year, based on the on-balance sheet floating rate financial assets and liabilities as at 30 June 2016. The total
sensitivity analysis is based on the assumption that there are parallel shifts in the yield curve. The Group’s judgements of reasonably
possible movements in interest rates have been based on a range of 100 basis point movement as at 30 June 2016 for all regions.
The sensitivity to a reasonably possible increase in interest rates, with all other variables held constant, of the statement of comprehensive
income of the consolidated entity is a decrease to profit of $9.5 million (2015: $0.6 million decrease). The sensitivity to a reasonably
possible decrease in interest rates, with all other variables held constant, of the statement of comprehensive income of the Group is an
increase to profit of $7.9 million (2015: $0.7 million increase).
PAGE 67
This sensitivity calculation includes the impact of changes in interest rates on the fair value of recognised derivatives but excludes the
impact on interest income derived from client balances. Client balances have been excluded from the sensitivity analysis as they are not
reflected in the Group’s consolidated statement of financial position. Interest income is earned on these balances at various fixed and
floating interest rates. In a rising interest rate environment, client balances that earn interest income will result in an increase to profit,
while in a falling interest rate environment, client balances that earn interest income will result in a decrease to profit.
(b) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that
is not the entity’s functional currency.
Entities within the Group typically enter into external transactions and recognise external assets and liabilities that are denominated in
their functional currency. Whilst a number of entities within the Group hold bank account balances in a currency which is not their local
functional currency, these balances do not expose the Group to significant foreign exchange risk.
Foreign exchange risk also arises from net investments in foreign operations held in Europe, Canada, South Africa and Asia Pacific.
Accordingly, the Group’s financial position can be affected significantly by movements in the relevant currency exchange rate when
translating into the consolidated entity’s presentation currency, the United States dollar. The consolidated entity also has debt that is
designated as a hedge of the net investment in foreign operations. On consolidation, any foreign exchange gains or losses on these
balances are transferred to the foreign currency translation reserve.
(c) Credit risk
Credit exposure represents the extent of credit related losses that the consolidated entity may be subject to on amounts to be received
from financial assets, which include receivables, cash and cash equivalents and other financial instruments. The consolidated entity,
while exposed to credit related losses in the event of non-payment by clients, does not expect any significant clients to fail to meet
their obligations. The Group’s trading terms do not generally include the requirement for customers to provide collateral as security for
financial assets and accordingly, the consolidated entity does not hold any collateral as security.
The consolidated entity’s exposure to credit risk is as indicated by the carrying amounts of its financial assets. Concentrations of credit
risk exist when clients have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly
affected by changes in economic or other conditions.
The consolidated entity’s concentration of credit risk is minimised due to transactions with a large number of clients in various countries
and industries. The registry and plans sector transacts with various listed companies across a number of countries. The consolidated
entity does not have a significant exposure to any individual client.
Transactions involving derivative financial instruments are with counterparties with whom the Group has signed International Swaps and
Derivatives Association agreements and who maintain sound credit arrangements. To supplement credit ratings of counterparties the
Group has a Board approved policy on managing client balance exposure.
(d) Liquidity Risk
Liquidity risk management implies maintaining sufficient cash and the availability of funding. The Group has staggered its various debt
maturities to reduce re-financing risk. Whilst impacted by acquisitions from time to time, the Group maintains sufficient cash balances
and committed credit facilities to meet ongoing commitments.
Maturity information for the Group’s debt facility is as follows:
Maturity profile (in the 12 months ending)
June 2017
June 2018
June 2019
June 2020
June 2021
June 2022
June 2023
June 2024
Total
Debt facility utilised
$million
229.3
489.6
305.0
322.0
-
220.0
-
220.0
1,785.9
The Group had access to unutilised committed debt of $0.4 million maturing in July 2017 and $128.0 million maturing in July 2019.
PAGE 68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016 Maturities of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings.
The amounts disclosed in the table are the contractual undiscounted cash flows. For interest rate swaps the cash flows have been
estimated using the forward interest rates applicable at the end of the reporting period.
Contractual maturities of financial liabilities
As at 30 June 2016
Non-derivatives
Trade payables
Other payables
Borrowings (excluding finance leases)
Finance lease liabilities (undiscounted)
Put option liability
Total non-derivatives
Derivatives
Net settled (interest rate swaps)
Gross settled (cross currency and FX swaps)
- (Inflow)
- Outflow
Total derivatives
As at 30 June 2015
Non-derivatives
Trade payables
Other payables
Borrowings (excluding finance leases)
Finance lease liabilities (undiscounted)
Put option liability
Total non-derivatives
Derivatives
Net settled (interest rate swaps)
Gross settled (cross currency and FX swaps)
- (Inflow)
- Outflow
Total derivatives
(e) Fair value measurements
Less than
1 year
$000
Between
1-5 years
$000
More than
5 years
$000
Total
contractual
cash flows
$000
23,366
359,555
-
9,740
-
-
23,366
369,295
285,816
1,238,105
478,566
2,002,487
33,258
37,275
7,957
-
-
-
41,215
37,275
739,270
1,255,802
478,566
2,473,638
1,978
(554,310)
549,274
(3,058)
21,062
371,386
246,949
7,775
30,441
944
-
-
944
-
1,374
-
-
-
-
-
-
2,922
(554,310)
549,274
(2,114)
21,062
372,760
1,251,098
497,684
1,995,731
37,192
-
-
-
44,967
30,441
677,613
1,289,664
497,684
2,464,961
957
1,644
(284,851)
301,920
18,026
-
-
1,644
-
-
-
-
2,601
(284,851)
301,920
19,670
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes.
The measurement hierarchy used is as follows:
Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting
period for identical assets and liabilities. The quoted market price used for financial assets held by the Group is the current bid price.
These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which
maximise the use of observable market data and rely as little as possible on entity-specific estimates. The Group uses a variety of
methods and makes assumptions that are based on market conditions existing at the end of each reporting period. This includes
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices). If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Such instruments include derivative financial instruments and the portion of borrowings included in the fair value hedge.
PAGE 69
Specific valuation techniques used to value financial instruments are as follows:
> Quoted market prices or dealer quotes are used for similar instruments.
> The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable
yield curves.
> The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date.
> The fair value of cross currency swaps is a combination of the fair value of forward foreign exchange contracts determined using
forward exchange rates at the balance sheet date (for the final principal exchange) and the use of quoted market prices or dealer
quotes for similar instruments (for the basis valuation).
> The fair value of interest rate swaptions is calculated using the Black-Scholes formula and quoted market prices.
Level 3: Valuation methodology of the asset or liability uses inputs that are not based on observable market data (unobservable inputs).
This is the case of investments in unconsolidated structured entities (refer to note 19), which are included in the available-for-sale
financial assets.
The fair value of the investment in structured entities is determined by reference to the equity interest in net assets of these entities,
which approximate their fair values. As profits are realised and dividends are paid to equity investors, the net assets of these entities
decrease and so does the fair value of the Group’s investment.
The following tables present the Group’s financial assets and liabilities measured and recognised at fair value at 30 June 2016.
The comparative figures are also presented below.
As at 30 June 2016
Assets
Derivative financial instruments
Available-for-sale financial assets
Total assets
Liabilities
Borrowings
Derivative financial instruments
Total liabilities
As at 30 June 2015
Assets
Derivative financial instruments
Available-for-sale financial assets
Total assets
Liabilities
Borrowings
Derivative financial instruments
Total liabilities
Level 1
$000
Level 2
$000
-
49,987
1,761
1,761
-
49,987
-
-
-
452,451
6,738
459,189
-
1,980
1,980
-
-
-
31,989
-
31,989
433,428
30,570
463,998
Level 3
$000
-
16,317
16,317
-
-
-
-
6,034
6,034
-
-
-
The following table presents the changes in level 3 items for the periods ended 30 June 2016 and 30 June 2015:
2016
$000
6,034
10,683
(400)
16,317
Opening balance at 1 July
Additions
Return of capital
Closing balance at 30 June
PAGE 70
Total
$000
49,987
18,078
68,065
452,451
6,738
459,189
31,989
8,014
40,003
433,428
30,570
463,998
2015
$000
7,068
-
(1,034)
6,034
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
12. DERIVATIVE FINANCIAL INSTRUMENTS
Derivative assets
Current
Non-current
Derivative assets – current and non-current
Fair values of interest rate derivatives designated as cash flow hedges (a)
Fair values of interest rate derivatives designated as fair value hedges (b)
Fair value of derivatives for which hedge accounting has not been applied
Total derivative assets
Derivative liabilities
Current
Non-current
Derivative liabilities – current and non-current
Fair values of interest rate derivatives designated as cash flow hedges (a)
Fair values of cross currency derivatives designated as hedge of net investment (c)
Fair value of derivatives for which hedge accounting has not been applied
Total derivative liabilities
2016
$000
2015
$000
1,952
48,035
49,987
65
47,075
2,847
49,987
1,238
5,500
6,738
2
976
5,760
6,738
750
31,239
31,989
753
29,570
1,666
31,989
20,838
9,732
30,570
1
20,693
9,876
30,570
(a) The gain or loss from remeasuring the designated cash flow hedging instruments at fair value is deferred in equity in the cash
flow hedge reserve (note 27) to the extent that the hedge is effective and reclassified into profit or loss when the hedged income
is recognised. The ineffective portion is recognised in the profit or loss immediately. In the year ended 30 June 2016, a loss of
$0.1 million was transferred to the profit or loss (30 June 2015: $0.2 million gain). A loss before tax of $0.5 million was transferred
to the statement of comprehensive income in the year ended 30 June 2016 (30 June 2015: a loss before tax of $0.1 million).
(b) The gain or loss from remeasuring the designated fair value hedging instruments at fair value is recognised immediately in the
statement of comprehensive income. Refer to note 13 for further disclosure on the interest rate derivatives designated as fair
value hedges.
(c) The gain or loss from remeasuring the designated net investment hedging instruments at fair value is recognised in equity in the
foreign currency translation reserve (note 27) to the extent that the hedge is effective. The ineffective portion is recognised in the profit
or loss immediately. In the year ended 30 June 2016, a gain of $0.9m was recognised in profit or loss (30 June 2015: $0.9m loss).
13. INTEREST BEARING LIABILITIES
Current
Bank loans (SLS non-recourse advance facility)
USD Senior Notes (b)
Lease liability – secured (c)
Non-current
Revolving syndicated bank facilities (a)
USD Senior Notes (b)
Lease liability – secured (c)
2016
$000
2015
$000
208,210
166,753
21,606
30,272
-
6,052
260,088
172,805
771,647
823,678
7,892
736,527
825,435
34,337
1,603,217
1,596,299
(a) The consolidated entity maintains revolving syndicated facilities that were executed on 17 July 2014. The first facility is a
multi-currency facility of $450.0 million maturing on 17 July 2017 and the second facility is a USD only facility of $450.0 million
maturing on 17 July 2019. The facilities were drawn to an equivalent of $771.6 million at 30 June 2016. The facilities are subject
to negative pledge undertakings and impose certain covenants upon the consolidated entity. The Group has complied with
the negative pledge undertakings and covenants imposed on it for the year ended 30 June 2016. The Group expects the facility
maturing on 17 July 2017 to be refinanced on or before maturity date.
PAGE 71
(b) On 22 March 2005, Computershare US, a controlled entity, issued 52 notes in the United States with the total value of $318.5 million.
These notes were six, seven, ten and twelve years in tenor and were issued at fair value, with no premium or discount. The six,
seven and ten year notes with a total value of $297.5 million were repaid in prior years. The twelve year notes with a total value of
$21.0 million are due to be repaid during the 2017 financial year.
On 29 July 2008, Computershare US issued a further 26 notes in the United States with a total value of $235.0 million. These
notes were for a tenor of ten years. On 9 February 2012, Computershare Investor Services Inc, a controlled entity, issued 62 notes
in the United States with a total value of $550.0 million. These notes were for tenors of six, seven, ten and twelve years.
Fixed interest is paid on all the issued notes on a semi-annual basis. The Group uses interest rate derivatives to manage the fixed
interest exposure.
The following table provides a reconciliation of the USD Senior Notes.
USD Senior Notes Reconciliation
USD Senior Notes at cost
Fair value adjustments
Total net debt
Interest rate derivative (asset) - fair value hedge (note 12)
Total
2016
$000
2015
$000
806,000
806,000
39,284
19,435
845,284
825,435
(47,075)
(29,570)
798,209
795,865
Fair value adjustments represent loan origination fees and the revaluation of the hedged portion of the USD Senior Notes. Hedged
USD Senior Notes amounted to $411.0 million as at 30 June 2016 (2015: $411.0 million).
The gain or loss from re-measuring the hedging instruments (interest rate derivatives) at fair value is recognised immediately in the
statement of comprehensive income along with the change in fair value of the underlying hedged item (USD Senior Notes). The
fair value adjustment of the hedged USD Senior Notes reflects the valuation change due to lower market interest rates at balance
sheet date for the term until maturity. The increase is offset by the fair value of interest rate derivatives used to effectively convert
the USD fixed interest rate notes to floating interest rates. The conversion to floating interest rate using derivatives provides a
hedge against the Group’s USD interest rate risk exposure.
(c) The lease liability is secured directly against the assets to which the leases relate (note 36). During the year, Computershare entered
into a contract to sell the land and building housing its Australian head office. The sale was completed on 9 September 2016, and the
related finance lease liability was recognised as current at 30 June 2016.
14. RECEIVABLES
Current
Trade receivables
Less: provision for doubtful debts
Trade receivables (net)
Accrued revenue
Other non-trade amounts
Non-current
Other
2016
$000
2015
$000
215,622
(10,446)
205,176
157,444
62,723
205,126
(7,201)
197,925
115,271
47,989
425,343
361,185
876
876
972
972
Bad and doubtful trade receivables
Trade receivables are considered impaired where there is objective evidence that the Group will not be able to collect all amounts due
according to the original trade and other receivable terms. Terms of trade in relation to credit sales are on a weighted average of 30 days
from the date of invoice. Factors considered when determining if impairment exists include ageing and timing of expected receipts and the
creditworthiness of counterparties.
The Group has recognised a loss of $3.8 million (2015: $3.6 million) in respect of bad trade receivables during the year ended
30 June 2016. The loss has been included in the ‘direct services’ expense and ‘technology costs’ lines in the statement of
comprehensive income.
PAGE 72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
The analysis of trade receivables for the consolidated entity that were past due but not impaired is as follows:
Past due but not impaired
Neither past
due nor impaired
$000
Less than
30 days overdue
$000
More than 30 days
but less than
90 days overdue
$000
30 June 2016
30 June 2015
145,531
135,193
36,263
37,865
15,477
18,471
All other receivables do not contain impaired assets and are not past due.
15. LOAN SERVICING ADVANCES
Current
Loan servicing advances
More than
90 days overdue
$000
7,905
6,396
Total
$000
205,176
197,925
2016
$000
2015
$000
255,139
187,002
An overseas subsidiary performing loan servicing activities regularly makes payments on behalf of mortgagors related to taxes,
insurance, principal and interest. The receivable represents the total value of these payments yet to be recovered. In general, the
overseas subsidiary is reimbursed for advances from collections from the relevant pool of mortgages. In the event that pool level
collections are not adequate for full reimbursement, the outstanding advances receive priority over any other liability from the
proceeds from the liquidation of the property.
16. OTHER FINANCIAL ASSETS
Current
Broker client deposits
18,655
22,655
An overseas entity is a licensed deposit taker. This controlled entity accepts deposits in its own name, and records these funds as
other financial assets together with a corresponding liability (note 21). The deposits are insured through a local regulatory authority.
17. INVENTORIES
Raw materials and stores, at cost
Work in progress, at cost
18. OTHER CURRENT ASSETS
Prepayments
Other
19. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Current
Debt securities
Equity securities
Non-current
Equity securities
4,406
106
4,512
26,887
2,807
29,694
4,742
111
4,853
29,098
4,264
33,362
554
37
591
588
32
620
17,487
7,394
PAGE 73
Investment in structured entities
Non-current equity securities include $16.3 million of investments in unconsolidated structured entities (2015: $6.0 million). An
overseas subsidiary of the Group occasionally sells economic benefits and obligations associated with mortgage servicing rights to
unconsolidated structured entities while retaining a 20% equity interest in these entities. An unaffiliated third party, which owns 80%
of the structured entities as asset manager, provides investment opportunities to investors and is considered a sponsor of these
entities. The overseas subsidiary of the Group continues to service the loans associated with the mortgage servicing rights sold to the
structured entities and receives a portion of the related economic benefit for providing such services.
The structured entities are designed to hold assets that will generate cash flows for their equity investors. The acquisition of these
assets is fully funded at inception and future financial support is not expected to be required. As there is no obligation to provide further
funding, the exposure to loss from the Group’s interest in the structured entities is limited to the carrying amount of the investment.
20. PROPERTY, PLANT AND EQUIPMENT
Building,
freehold and
leasehold
$000
Land
$000
Plant and
Equipment
owned and
leased
$000
Fixtures and
Fittings
$000
Motor
Vehicles
$000
Leasehold
improvements
$000
Total
$000
At 1 July 2015
Opening net book amount
22,000
51,932
Acquisition of entities and businesses
Additions
Disposals
Depreciation charge
Asset write-down
Currency translation differences
Transfers and other*
Closing net book amount
Cost
Accumulated depreciation
At 30 June 2016
-
-
-
(1,190)
(1,977)
(10,613)
8,220
8,220
-
8,220
1,548
4,348
(720)
(1,946)
(497)
(6,021)
(14,975)
33,669
45,012
(11,343)
33,669
53,730
915
22,374
(42)
(26,243)
-
(1,833)
(373)
48,528
284,509
(235,981)
48,528
9,422
132
1,096
-
(3,223)
-
(527)
(4)
6,896
34,467
(27,571)
6,896
84
43
166
(14)
(83)
-
(10)
4
190
927
(737)
190
23,939
161,107
-
2,638
2,895
30,879
-
(776)
(7,220)
(38,715)
-
(1,687)
(415)
(167)
(10,783)
(26,128)
19,032
116,535
50,378
423,513
(31,346)
(306,978)
19,032
116,535
* Includes $26.1 million land, buildings and related property, plant and equipment re-classified as held for sale as at 30 June 2016.
At 1 July 2014
Opening net book amount
25,186
60,979
Acquisition of entities and businesses
Additions
Disposals
Depreciation charge
Currency translation differences
Transfers and other
Closing net book amount
Cost
Accumulated depreciation
At 30 June 2015
-
-
-
-
(3,186)
-
22,000
22,000
-
22,000
-
690
(56)
(2,487)
(7,341)
147
51,932
66,674
(14,742)
51,932
53,333
4,159
29,147
(296)
(28,517)
(4,120)
24
53,730
321,261
(267,531)
53,730
11,226
145
2,289
(176)
(3,403)
(668)
9
9,422
320
29
-
-
(142)
(93)
(30)
84
25,129
176,173
-
4,333
6,780
38,906
(31)
(6,519)
(1,270)
(150)
(559)
(41,068)
(16,678)
-
23,939
161,107
41,702
1,003
53,001
505,641
(32,280)
9,422
(919)
84
(29,062)
(344,534)
23,939
161,107
PAGE 74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
The following classes of assets include carrying amounts where the Group is a lessee under a finance lease:
Leased assets
Land
Building, freehold and leasehold
Plant and equipment owned and leased
21. PAYABLES
Current
Trade payables – unsecured
Expense accruals
Deferred revenue
GST/VAT payable
Employee entitlements
Broker client deposits (note 16)
Interest payable
Other payables
Non-current
Other payables
22. PROVISIONS
Current
Restructuring
Acquisitions related
Tax related
Lease related
Other
Non-current
Employee entitlements
Acquisitions related
Other
2016
$000
-
1,282
6,601
7,883
23,366
114,919
30,052
19,843
19,749
18,655
18,135
138,202
382,921
2015
$000
9,264
16,675
3,724
29,663
21,063
112,245
29,052
14,566
15,169
22,655
18,946
158,752
392,448
9,740
9,740
1,374
1,374
9,910
9,992
7,316
2,484
10,986
40,688
14,424
13,878
827
29,129
8,510
8,488
7,587
4,014
15,632
44,231
14,900
15,530
1,118
31,548
PAGE 75
Movements in each class of current provision during the financial year, other than employee entitlements, are set out below.
Carrying amount at start of year
Additions
Payments
Reversals
Transfers and other
Foreign exchange movements
Carrying amount at end of year
Restructuring
$000
Acquisitions
related
$000
8,510
12,144
(11,169)
-
482
(57)
9,910
8,488
4,100
(3,049)
(641)
1,520
(426)
9,992
Tax
related
$000
7,587
-
(271)
-
-
-
Lease
related
$000
4,014
538
(1,840)
(267)
222
(183)
Other
$000
15,632
4,523
(3,051)
(3,388)
(493)
(2,237)
Total
$000
44,231
21,305
(19,380)
(4,296)
1,731
(2,903)
7,316
2,484
10,986
40,688
Movements in each class of non-current provision during the financial year, other than employee entitlements, are set out below.
Carrying amount at start of year
Additional provisions recognised through profit or loss
Transfers and other
Carrying amount at end of year
23. DEFERRED CONSIDERATION
Current
Deferred settlements on acquisition of entities
Non-current
Deferred settlements on acquisition of entities
Acquisitions
related
$000
15,530
-
(1,652)
13,878
Other
$000
1,118
165
(456)
827
Total
$000
16,648
165
(2,108)
14,705
2016
$000
2015
$000
12,402
6,585
65,969
4,869
Non-current deferred settlements on acquisition of entities are payable between one and five years.
Contingent consideration of $47.3 million was recognised during the financial year related to the acquisition of Homeloan Management
Limited.
24. OTHER LIABILITIES
Current
Put option liability (a)
Mortgage servicing related liabilities (b)
Lease inducements (c)
Non-current
Mortgage servicing related liabilities (b)
Lease inducements (c)
37,275
30,383
2,211
69,869
124,222
2,801
127,023
30,441
12,998
1,098
44,537
38,288
3,497
41,785
(a) Non-controlling interest shareholders of Computershare’s Indian subsidiary (Karvy Computershare Private Limited) have an option
to sell their shareholding to Computershare. The put option liability reflects Computershare’s obligation to pay should this option
be exercised.
(b) Mortgage servicing related liabilities represent the portion of the economic benefits of mortgage servicing rights that has been
transferred to third parties. The liabilities amortise over the same useful life as the related mortgage servicing rights (note 9).
(c) Lease inducements represent cash payments received as allowances for leasehold improvements made to a number of premises.
These receipts are accounted for as reductions in rental expense over the lease term.
PAGE 76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
25. INTERESTS IN EQUITY
Interest in the equity of the consolidated entity:
Contributed equity – ordinary shares
Reserves
Retained earnings
Total interests in equity
26. CONTRIBUTED EQUITY
Ordinary shares
Total contributed equity
Share buy-back
Members of
the parent entity
Non-controlling
interests
2016
$000
2015
$000
2016
$000
2015
$000
-
(81,472)
35,703
(19,362)
1,176,690
1,147,906
1,095,218
1,164,247
990
(6,490)
19,015
13,515
2016
$000
-
-
785
(5,302)
17,911
13,394
2015
$000
35,703
35,703
On 18 August 2015, Computershare announced an on-market buy-back of shares with an aggregate value of up to AUD 140.0 million
for capital management purposes.
From 1 September 2015 until 30 June 2016, the Company purchased 9,377,069 ordinary shares at a total cost of AU$100.6 million
(US$73.2 million). The shares were acquired at an average price of AU$10.73 and a price range from AU$9.00 to AU$11.86. As at
30 June 2016, 9,056,656 of the purchased ordinary shares have been cancelled.
Since the effect of share buy-backs over the years has reduced contributed equity to nil, a reserve has been created to reflect the
excess value of shares bought over the original amount of subscribed capital.
There has been no issue of ordinary shares during the year ended 30 June 2016.
Movement in contributed equity
Balance at 1 July 2015
Share buy-back
Transfer to share buy-back reserve
Balance as at 30 June 2016
Number of
shares
556,203,079
(9,377,069)
-
546,826,010
$000
35,703
(73,172)
37,469
-
PAGE 77
27. RESERVES
Capital redemption reserve
Foreign currency translation reserve
Share buy-back reserve
Cash flow hedge reserve
Share based payments reserve
Equity related consideration
Available-for-sale asset reserve
Transactions with non-controlling interests
Movements during the year:
Foreign currency translation reserve
Opening balance
Translation of controlled entities
Amounts reclassified to profit or loss during the year
Deferred tax
Closing balance
Share buy-back reserve
Excess value of shares bought over the original amount of subscribed capital
Closing balance
Cash flow hedge reserve
Opening balance
Revaluation – gross
Deferred tax
Closing balance
Share based payments reserve
Opening balance
Cash purchase of shares for employee and executive share plans
Share based payments expense
Closing balance
Equity related contingent consideration reserve
Opening balance
Closing balance
Available-for-sale asset reserve
Opening balance
Revaluation – gross
Closing balance
Transactions with non-controlling interests
Opening balance
Transfer from non-controlling interests
Closing balance
PAGE 78
2016
$000
2
(58,639)
(37,469)
(4,855)
43,925
(8,199)
267
(16,504)
(81,472)
(35,670)
(45,527)
29,505
(6,947)
(58,639)
(37,469)
(37,469)
2015
$000
2
(35,670)
-
(4,464)
45,144
(8,199)
329
(16,504)
(19,362)
54,865
(105,255)
-
14,720
(35,670)
-
-
(4,464)
(4,654)
(497)
106
(53)
243
(4,855)
(4,464)
45,144
(12,177)
10,958
43,925
58,116
(27,971)
14,999
45,144
(8,199)
(8,199)
(8,199)
(8,199)
329
(62)
267
320
9
329
(16,504)
(16,210)
-
(294)
(16,504)
(16,504)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
Nature and purpose of reserves
(a) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve, as
described in note 43. This amount is the net of gains and losses on hedge transactions and intercompany loans after adjusting for
related income tax effects. The reserve is recognised in the profit or loss when the net investment is disposed of.
(b) Share buy-back reserve
This reserve is used to record the excess value of shares bought over the original amount of subscribed capital.
(c) Cash flow hedge reserve
The hedging reserve is used to record gains and losses on a hedging instrument in a cash flow hedge that are recognised directly
in other comprehensive income, as described in note 43.
(d) Share based payments reserve
The share based payments reserve is used to recognise the fair value of shares which will vest to employees under employee and
executive share plans. This reserve is also used to record cash purchase of shares for employee share plans.
(e) Equity related contingent consideration reserve
This reserve is used to reflect deferred consideration for acquisitions which is payable through the issue of parent entity equity
instruments.
(f) Available for sale asset reserve
Changes in fair value of investments, such as equities, classified as available for sale financial assets after adjusting for related
income tax effects are taken to this reserve in accordance with note 43.
(g) Transactions with non-controlling interests
This reserve is used to record the differences which may arise as a result of transactions with non-controlling interests that do not
result in a loss of control.
28. RETAINED EARNINGS AND DIVIDENDS
Retained earnings
Retained earnings at the beginning of the financial year
Ordinary dividends provided for or paid
Net profit attributable to members of Computershare Limited
Retained earnings at the end of the financial year
Dividends
Ordinary
2016
$000
2015
$000
1,147,906
1,134,305
(128,550)
(139,975)
157,334
153,576
1,176,690
1,147,906
Dividends paid during the financial year in respect of the previous year, AUD 16 cents per share franked to 25%
(2015 – AUD 15 cents per share franked to 20%)
Dividends paid in respect of the current financial year ended June 2016, AUD 16 cents per share franked to 100%
(2015 – AUD 15 cents per share franked to 20%)
64,726
69,987
63,824
69,987
Dividend franking account
Franking credits available for subsequent financial years based on a tax rate of 30%
10,292
27,153
PAGE 79
29. DETAILS OF CONTROLLED ENTITIES
The financial year-end of all controlled entities is 30 June with the exception of Computershare Canada Inc and its controlled entities,
Computershare Hong Kong Investor Services Limited and its controlled entities, Computershare International Information Consultancy
Services (Beijing) Company Ltd, ZAO <>, Karvy Computershare Private Limited and Karvy Computershare (Malaysia)
Sdn Bhd due to local statutory reporting requirements. These entities prepare results on a 30 June year end basis for consolidation
purposes. Voting power is in accordance with the ownership interest held unless otherwise stated.
The consolidated financial statements as at 30 June 2016 include the following controlled entities:
Name of controlled entity
Computershare Limited
A.C.N. 080 903 957 Pty Ltd
A.C.N. 081 035 752 Pty Ltd
CDS International Pty Limited
Communication Services Australia Pty Limited
Computershare Clearing Pty Limited
Computershare Communication Services Pty Limited
Computershare Dealing Services Pty Ltd
Computershare Depositary Pty Limited
Computershare Finance Company Pty Limited
Computershare Investor Services Pty Limited
Computershare Plan Co Pty Ltd
Computershare Plan Managers Pty Ltd
Computershare Technology Services Pty Ltd
CPU Share Plans Pty Limited
CRS Custodian Pty Ltd
Financial Market Software Consultants Pty Ltd
Georgeson Shareholder Communications Australia Pty. Ltd.
Global eDelivery Group Pty Ltd
Obadele Pty Ltd
Q M Industries (N.S.W.) Pty. Ltd.
Registrars Holding Pty Ltd
Sepon (Australia) Pty. Limited
Serviceworks Management Pty Ltd
Source One Communications Australia Pty Ltd
Switchwise Pty Ltd
Karvy Computershare W.L.L
Computershare Canada Inc.
Computershare Governance Services Ltd
Computershare Investment Inc.
Computershare Investments (Canada) (Holdings) ULC
Computershare Investments (Canada) (No.1) ULC
Computershare Investments (Canada) (No.2) ULC
Computershare Investments (Canada) (No.3) ULC
Computershare Investments (Canada) (No.4) ULC
Computershare Investor Services Inc.
Computershare Services Canada Inc.
Computershare Technology Services Inc.
Computershare Trust Company of Canada
Georgeson Shareholder Communications Canada Inc.
GSC Shareholder Services Inc.
SyncBASE Inc.
Computershare International Information Consultancy Services (Beijing)
Company Ltd
Computershare A/S
PAGE 80
Place of incorporation
Percentage of shares held
2016
%
2015
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Bahrain
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
China
Denmark
(2)
(1)(2)
(1)(2)
(1)(2)
(1)(2)
(1)
(1)(2)
(1)
(1)
(1)(2)
(1)(2)
(1)
(1)
(1)(2)
(1)
(1)
(1)
(1)
(1)
(1)(2)
(1)
(1)(2)
(1)
(1)(2)
(1)
(1)
(3)
(1)
(1)
(1)(4)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)(5)
(1)(4)
(1)
(1)
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
-
100
100
100
100
100
100
100
100
100
100
100
-
100
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
Place of incorporation
Percentage of shares held
2016
%
2015
%
Name of controlled entity
Georgeson Shareholder SAS
Computershare Communication Services GmbH
Computershare Deutschland GmbH & Co. KG
Computershare Governance Services GmbH
Computershare Verwaltungs GmbH
Grundstücksentwicklungs Gesellschaft “Am Schönberg” GmbH
PR im Turm HV-Service AG
VEM Aktienbank AG
Computershare Investor Services (Guernsey) Limited
Computershare Asia Limited
Computershare Hong Kong Development Limited
Computershare Hong Kong Investor Services Limited
Computershare Hong Kong Nominees Limited
Computershare Hong Kong Trustees Limited
Hong Kong Registrars Limited
Karvy Computershare Private Limited
Computershare Finance Ireland Limited
Computershare Governance Services Limited
Computershare Investor Services (Ireland) Limited
Computershare Services Nominees (Ireland) Limited
Computershare Trustees (Ireland) Limited
HML Mortgage Services Ireland Limited
Specialist Mortgage Services Ireland Limited
France
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Guernsey
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
India
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Computershare Investor Services (IOM) Limited
Isle of Man
Computershare Italy S.r.l.
Computershare S.p.A.
Georgeson S.r.l.
Proxitalia S.r.l.
Computershare Company Secretarial Services (Jersey) Limited
Computershare DR Nominees Limited
Computershare Investor Services (Jersey) Limited
Computershare Nominees (Channel Islands) Limited
Computershare Offshore Services Limited
Computershare Trustees (C.I.) Limited
Computershare Trustees (Jersey) Limited
EES Nominees International Limited
Karvy Computershare (Malaysia) Sdn Bhd
Computershare Netherlands B.V.
Computershare Investor Services Limited
Computershare Nominees NZ Limited
Computershare Systems (NZ) Limited
ConnectNow New Zealand Limited
CPU (NZ) Share Plans Limited
CRS Nominees Ltd
Sharemart NZ Ltd
Closed Joint Stock Company <>
Computershare LLC
ZAO <>
CIS Company Secretaries (Pty) Ltd
Computershare (Pty) Ltd
Computershare Investor Services (Pty) Ltd
Computershare Nominees (Pty) Ltd
Italy
Italy
Italy
Italy
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Malaysia
Netherlands
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Russia
Russia
Russia
South Africa
South Africa
South Africa
South Africa
(1)
(1)
(1)
(1)
(1)
(1)
(1)(4)
(1)(5)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(3)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(3)(4)
(1)
(1)
(1)
(1)(5)
(1)
(1)(5)
(1)
(1)(5)
(1)(5)
(1)(5)
(1)
(1)
(1)
(1)
(1)
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
-
100
-
100
-
-
-
98
74
74
74
74
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
98
74
74
74
74
PAGE 81
Name of controlled entity
Computershare Outsourcing (Pty) Ltd
Computershare South Africa (Pty) Ltd
Computershare TR Services (Pty) Ltd
Minu (Pty) Ltd
Georgeson S.l
Computershare AB
Baseline Capital Limited
Computershare (Russia) Limited
Computershare Company Nominees Limited
Computershare Governance Services (UK) Limited
Computershare Investments (UK) (No.2) Limited
Computershare Investments (UK) (No.3) Limited
Computershare Investments (UK) (No.5) Limited
Computershare Investments (UK) (No.6) Limited
Computershare Investments (UK) (No.7) Limited
Computershare Investments (UK) (No.8) Limited
Computershare Investments (UK) (No.9) Limited
Computershare Investments (UK) Limited
Computershare Investor Services (Bermuda) Limited
Computershare Investor Services (British Virgin Islands) Limited
Computershare Investor Services (Cayman) Limited
Computershare Investor Services PLC
Computershare Limited
Computershare Mortgage Services Limited
Computershare PEP Nominees Limited
Computershare Regional Services Limited
Computershare Services Limited
Computershare Services Nominees Limited
Computershare Technology Services (UK) Limited
Computershare Trustees Limited
Computershare Voucher Services Limited
Credit Advisory Services Limited
EES Capital Trustees Limited
EES Corporate Trustees Limited
EES Services (UK) Limited
EES Trustees Limited
Homeloan Management Limited
KB Analytics Limited
Legotla Investments (UK) Limited
Mortgage Systems Limited
NRC Investments (UK) Limited
Pathbold Limited
Topaz Finance Limited
Administar Services Group LLC
Altavera, LLC
Altavera Mortgage Services, LLC
Capital Markets Cooperative, LLC
Capital Markets Holdings, Inc.
CMC Funding, Inc.
Computershare Communication Services Inc.
Computershare Finance LLC
Computershare Governance Services Inc.
PAGE 82
Place of incorporation
Percentage of shares held
2016
%
2015
%
South Africa
South Africa
South Africa
South Africa
Spain
Sweden
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)(4)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)(4)
(1)(4)
(1)(4)
(1)(4)
(1)(4)
(1)
(1)
(1)
74
74
74
74
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
74
74
74
74
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
100
100
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
Name of controlled entity
Computershare Holdings Inc.
Computershare Holdings LLC
Computershare Inc.
Computershare Mortgage Services LLC
Computershare Technology Services, Inc.
Computershare Trust Company, N.A.
Computershare US
Computershare US Investments LLC
Computershare US Services Inc.
Data Point Analysis Group, LLC
Georgeson LLC
Georgeson Securities Corporation
Gilardi & Co., LLC
Gilco LLC
GTU Ops Inc.
HELOC Funding II Trust
KCC Class Action Services LLC
Kurtzman Carson Consultants Inc.
Kurtzman Carson Consultants, LLC
MSR Robin Advances (Depositor) LLC
MSR Robin Advances Issuer Trust
RCNG LLC
Rosenthal & Company, LLC
Settlement Recovery Group LLC
SLS Funding III LLC
SLS Investco LLC
SLS Servicer Advance Revolving Trust 1
Specialized Asset Management LLC
Specialized Default Services LLC
Specialized Loan Servicing Holdings LLC
Specialized Loan Servicing LLC
Specialized Title Services LLC
Place of incorporation
United States of America
United States of America
United States of America
(1)
(1)
(1)
United States of America
(1)(4)
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
United States of America
(1)
(1)
(1)
(1)(4)
(1)
(1)(4)
(1)
(1)
(1)(4)
(1)(4)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
Percentage of shares held
2016
%
2015
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
-
100
-
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(1) Controlled entities audited by PricewaterhouseCoopers member firms.
(2)
These wholly owned companies have entered into a deed of cross guarantee dated 26 June 2008 with Computershare Limited
which provides that all parties to the deed will guarantee to each creditor payment in full of any debt of each company participating
in the deed on the winding-up of that company. As a result of a Class Order 98/1418 (as amended) issued by the Australian
Securities and Investments Commission, these companies are relieved from the requirement to prepare financial statements.
(3)
These companies are controlled entities as Computershare Limited is exposed to, or has rights to, variable returns from its
involvement with these companies and has the ability to affect those returns through its power over these companies.
(4)
These companies became controlled entities during the year ended 30 June 2016.
(5)
These companies ceased to be controlled entities during the year ended 30 June 2016.
PAGE 83
30. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Interests in associates (note 31)
Interests in joint ventures (note 32)
31. ASSOCIATES
Details of interests in associates are as follows:
Name
Expandi Ltd
Milestone Group Pty Ltd
The Reach Agency Pty Ltd
INVeSHARE Inc.
Mergit s.r.l.
Total investments in associates
Place of
incorporation
Principal
activity
United Kingdom
Investor Services
Australia
Australia
Technology Services
Investor Services
United States
Investor Services
Italy
Technology Services
Movements in carrying value of investments in associates
Carrying amount at the beginning of the financial year
Share of net result (after income tax)
Dividends received
Share of movement in reserves
Carrying amount at the end of the financial year
Share of associates capital expenditure commitments
There are no material expenditure commitments in respect of associates at balance date.
Share of associates contingent liabilities
There are no material contingent liabilities in respect of associates at balance date.
2016
$000
27,253
104
2015
$000
30,038
1,558
27,357
31,596
Ownership
interest
Consolidated
carrying amount
June
2016
%
25
20
49
40
30
June
2015
%
25
20
49
40
30
June
2016
$000
6,045
5,623
1,244
June
2015
$000
6,226
6,004
1,068
14,326
16,713
15
27
27,253
30,038
2016
$000
2015
$000
30,038
35,052
(1,339)
(254)
(1,192)
(2,617)
(206)
(2,191)
27,253
30,038
PAGE 84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
32. JOINT VENTURES
Details of interests in joint ventures are as follows:
Name
Japan Shareholder Services Ltd*
Computershare Pan Africa Holdings Ltd
Computershare Pan Africa Ghana Ltd
Place of
incorporation
Japan
Mauritius
Ghana
Computershare Pan Africa Nominees Ghana Ltd
Ghana
Principal activity
Technology Services
Investor Services
Investor Services
Investor Services
Asset Checker Ltd
VisEq GmbH
United Kingdom
Investor Services
Germany
Investor Services
Total investment in joint ventures
* Japan Shareholder Services Ltd was disposed during the year.
Ownership interest
Consolidated
carrying amount
June
2016
%
June
2015
%
June
2016
$000
-
60
60
60
50
66
50
60
60
60
50
66
Movement in carrying amount of investment in joint ventures
Carrying amount at the beginning of the financial year
Disposal of investments*
Share of net result of joint ventures (after income tax)
Dividends received
Share of movement in reserves
Carrying amount at the end of the financial year
* A gain of $0.3m was recorded on the sale of Japan Shareholder Services Ltd.
Share of joint venture capital expenditure commitments
There are no material capital expenditure commitments in respect of joint ventures at balance date.
Share of joint venture contingent liabilities
There are no material contingent liabilities in respect of joint ventures at balance date.
June
2015
$000
1,415
-
-
-
-
-
-
-
-
-
104
104
143
1,558
2016
$000
1,558
(1,200)
(10)
(203)
(41)
104
2015
$000
1,761
-
301
(151)
(353)
1,558
PAGE 85
33. DEED OF CROSS GUARANTEE
Set out below is a consolidated statement of comprehensive income, a consolidated statement of financial position and a summary of
movements in consolidated retained earnings of the Australian Closed Group for the year ended 30 June 2016 for all entities that are
parties to a deed of cross guarantee (refer to note 29).
Computershare Limited Closed Group – Statement of financial position
Current assets
Cash and cash equivalents
Receivables
Inventories
Other current assets
Derivative financial instruments
Assets classified as held for sale
Total current assets
Non-current assets
Receivables
Other financial assets
Property, plant and equipment
Deferred tax assets
Intangibles
Derivative financial instruments
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Lease liabilities
Current tax liabilities
Provisions
Derivative financial instruments
Other liabilities
Total current liabilities
Non-current liabilities
Payables
Interest bearing liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Derivative financial instruments
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity – ordinary shares
Reserves
Retained earnings
Total equity
PAGE 86
2016
$000
30,942
70,560
964
3,088
634
23,842
2015
$000
56,327
118,326
1,048
7,559
-
-
130,030
183,260
142,982
184,883
1,737,267
1,921,150
10,797
48,579
127,061
48,014
686
38,151
60,098
148,888
31,237
448
2,115,386
2,384,855
2,245,416
2,568,115
172,896
25,966
6,715
1,006
1,236
37,385
181,102
1,431
12,708
2,629
20,836
30,554
245,204
249,260
132,163
491,509
1,411
15,917
11,656
5,500
471
130,248
578,310
26,081
17,048
11,778
9,732
884
658,627
774,081
903,831
1,023,341
1,341,585
1,544,774
-
(114,016)
158,818
(35,660)
1,455,601
1,421,616
1,341,585
1,544,774
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
Computershare Limited Closed Group – Statement of comprehensive income
Revenues from continuing operations
Sales revenue
Other revenue
Total revenue from continuing operations
Other income
Expenses
Direct services
Technology costs
Corporate services
Finance costs
Total expenses
Share of net profit/(loss) of associates and joint ventures accounted for using the equity method
Profit before income tax expense
Income tax expense/(credit)
Profit for the year
Other comprehensive income
Cash flow hedges
Exchange differences on translation of foreign operations
Income tax relating to components of other comprehensive income
Total other comprehensive income for the year, net of tax
Total comprehensive income for the year
Set out below is a summary of movements in consolidated retained profits for the year of the Closed Group.
Retained earnings at the beginning of the financial year
Profit for the year
Dividends provided for or paid
Retained earnings at the end of the financial year
2016
$000
2015
$000
246,832
208,075
454,907
60,547
277,044
440,908
717,952
33,466
205,193
320,298
71,897
22,030
24,545
75,185
15,129
27,335
323,665
437,947
142
191,931
29,383
162,548
(184)
313,287
(1,833)
315,120
-
(581)
(42,365)
(304,597)
-
348
(42,365)
(304,830)
120,183
10,290
1,421,616
1,246,519
162,548
315,120
(128,563)
(140,023)
1,455,601
1,421,616
PAGE 87
34. PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Equity
Contributed equity – ordinary shares
Reserves
Share buy-back reserve
Capital redemption reserve
Foreign currency translation reserve
Share based payment reserve
Equity related consideration
Available-for-sale asset reserve
Retained earnings
Total equity
Profit/(loss) attributable to members of the parent entity
Total comprehensive income attributable to members of the parent entity
(b) Guarantees entered into by the parent entity
The parent entity’s financial guarantees have been outlined in note 35.
(c) Contingent liabilities of the parent entity
2016
$000
2015
$000
64,501
826,016
890,517
63,098
727,479
790,577
106,832
845,945
952,777
76,142
611,174
687,316
-
35,703
(37,469)
2
68,136
33,162
(2,327)
(60)
38,496
99,940
45,825
35,040
-
2
78,921
32,001
(2,327)
(60)
121,221
265,461
98,483
34,365
The parent entity did not have any contingent liabilities as at 30 June 2016 or 30 June 2015 other than guarantees given by the parent
entity outlined in note 35.
(d) Contractual commitments for the acquisition of property, plant and equipment
The parent entity did not have any commitments for the acquisition of property, plant and equipment as at 30 June 2016 and
30 June 2015.
35. CONTINGENT LIABILITIES
(a) Guarantees and Indemnities
Guarantees and indemnities of $900.0 million (2015: $900.0 million) have been given to the consolidated entity’s Bankers by
Computershare Limited, ACN 081 035 752 Pty Ltd, Computershare Investments (UK) (No. 3) Ltd, Computershare Finance Company
Pty Ltd, Computershare US and Computershare Investor Services Inc under a $450.0 million 3-year Multi-currency Syndicated
Facility Agreement and a $450.0 million 5-year USD Syndicated Facility Agreement both executed on 17 July 2014 (refer to note 13
for further detail).
Guarantees and indemnities of $806.0 million (2015: $930.5 million) have been given to US Institutional Accredited Investors by
Computershare Limited, ACN 081 035 752 Pty Ltd, Computershare Finance Company Pty Ltd, Computershare US, Computershare
Investments (UK) (No. 3) Ltd and Computershare Investor Services Inc under a Note and Guarantee Agreement dated 22 March 2005,
29 July 2008 and 9 February 2012.
Bank guarantees of AUD 4.8 million (2015: AUD 4.2 million) have been given in respect of facilities provided to Australian subsidiaries.
A performance guarantee of ZAR 16.0 million (2015: ZAR 15.0 million) has been given by Computershare (Pty) Ltd to provide
security for the performance of obligations as a Central Securities Depositor Participant.
PAGE 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
(b) Legal and Regulatory Matters
Due to the nature of operations, certain commercial claims in the normal course of business have been made against the consolidated
entity in various countries. An inherent difficulty in predicting the outcome of such matters exists, but in the opinion of the Group, based on
current knowledge and in consultation with legal counsel, we do not expect any material liability to the Group to eventuate. The status of
all claims is monitored on an ongoing basis, together with the adequacy of any provisions recorded in the Group’s financial statements.
(c) Other
The Group is subject to regulatory capital requirements administered by relevant regulatory bodies in countries where Computershare
operates. Failure to meet minimum capital requirements, or other ongoing regulatory requirements, can initiate action by the regulators
that, if undertaken, could revoke or suspend the Group’s ability to provide trust services to customers in these markets. At all relevant
times Group controlled entities have met all minimum capital requirements.
Computershare Limited (Australia) has issued a letter of warrant to Computershare (Pty) Ltd. This obligates Computershare Limited
(Australia) to maintain combined tier one capital of at least ZAR 455.0 million.
Potential withholding and other tax liabilities arising from distribution of all retained distributable earnings of all foreign incorporated
controlled entities are $47.1 million (2015: $40.9 million). No provision is made for withholding tax on unremitted earnings of applicable
foreign incorporated controlled entities as there is currently no intention to remit these earnings to the parent entity.
In consideration of the Australian Securities and Investments Commission agreeing to allow AUD 5.0 million to form part of the net
tangible assets of Computershare Clearing Pty Ltd so that it can meet certain financial requirements under the conditions of its
Australian Financial Services Licence, Computershare Limited has agreed to make, at the request of Computershare Clearing Pty
Ltd, a AUD 5.0 million loan to it. Computershare Limited has agreed to subordinate its loan to any other unsecured creditors of
Computershare Clearing Pty Ltd. The loan was made pursuant to a deed of subordination dated 7 January 2004.
In consideration of the Australian Securities and Investments Commission agreeing to allow AUD 5.0 million to form part of the net
tangible assets of Computershare Share Plans Pty Ltd so that it can meet certain financial requirements under the conditions of its
Australian Financial Services Licence, Computershare Limited has agreed to make, at the request of Computershare Share Plans
Pty Ltd, a AUD 5.0 million loan to it. Computershare Limited has agreed to subordinate its loan to any other unsecured creditors of
Computershare Share Plans Pty Ltd. The loan was made pursuant to a deed of subordination dated 5 July 2007.
Computershare Limited (Australia), as the parent entity, has undertaken to own, either directly or indirectly, all of the equity interests
and to guarantee performance of the obligations of Computershare Investor Services Pty Ltd, Computershare Trust Company NA,
Georgeson LLC, Georgeson Securities Corporation, Computershare Trust Company of Canada and Computershare Investor Services
Inc with respect to any financial accommodation related to transactional services provided by BMO Harris Bank, Chicago.
PAGE 89
36. COMMITMENTS
(a) Retirement benefits
Defined Contribution Funds
The Group maintains defined contribution superannuation schemes which provide benefits to all employees upon their disability, retirement
or death. Employee contributions to the funds are based upon various percentages of employees’ gross salaries as set out below:
Australian controlled entities contribute to the defined contribution funds as follows:
> Category 1 – Management (employer contributions, voluntary employee contributions of at least 1%)
> Category 2 – Staff (statutory employer contributions of 9.5%, voluntary employee contributions)
> Category 3 – SGC Staff and casual and fixed term employees (statutory employer contributions, voluntary employee contributions)
Foreign controlled entities contribute to the defined contribution funds as follows:
> United Kingdom entities – between 7% and 10% of employees’ gross salaries
> United States entities – voluntary employee contributions with matching employer contribution up to 4% of employees’ base salaries
> Canadian entities – between 2% and 7% of employees’ base salaries dependent upon years of service
> South African entities – 12.25% of employees’ gross salaries
> New Zealand entities – voluntary employee contributions with matching employer contribution up to 6% of employees’ base salaries
> Hong Kong entities – between 5% and 20% of employees’ base salary dependent upon years of service
> Indian entity – 12% of employees’ gross salaries
Defined Benefit Funds
Karvy Computershare Private Limited maintained a defined benefit superannuation scheme which provides benefits to 3,663
employees (2015: 3,031). Actuarial valuation of the scheme is provided by the Life Insurance Corporation, which maintains the fund.
The net liability is not material to the Group.
Computershare Deutschland GmbH & Co. KG and Computershare Communication Services GmbH maintained a defined benefit
scheme which provides benefits to 9 employees (2015: 15) An actuarial assessment of the scheme was completed as at 30 June 2016
and defined benefit plan liability recognised in accordance with the actuarial valuation. The net liability is not material to the Group.
(b) Finance lease commitments
Commitments in relation to finance leases are payable as follows:
Not later than 1 year
Later than 1 year but not later than 5 years
Minimum lease payments
Less: Future finance charges
Not later than 1 year
Later than 1 year but not later than 5 years
Total future finance charges
Net finance lease liability
Reconciled to:
Current liability (note 13)
Non-current liability (note 13)
PAGE 90
2016
$000
33,258
7,957
41,215
(2,986)
(65)
(3,051)
38,164
30,272
7,892
38,164
2015
$000
7,775
37,192
44,967
(1,723)
(2,855)
(4,578)
40,389
6,052
34,337
40,389
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
Significant finance lease
The consolidated entity had a finance lease arrangement for the land and building housing its Australian head office. The lease included
a facility agreement, head lease and sublease agreements. Under the terms, Computershare had the right to offset payments and
receipts related to the facility agreement and the head lease. The financial asset and liabilities related to these agreements were offset
against each other in the Group’s balance sheet in accordance with the applicable accounting standards. Details of the offset are
included in the table below.
On 10 June 2016, Computershare entered into a contract to sell the head office land and building. The associated finance lease
arrangement was terminated on 4 August 2016 and is classified as a current liability at the reporting date.
2016
Finance lease liability – Facility agreement
Finance lease asset – Head Lease
Finance lease liability – Sublease
2015
Finance lease liability – Facility agreement
Finance lease asset – Head Lease
Finance lease liability – Sublease
(c) Operating lease commitments
Gross
amounts
set off in
the balance
sheet
(23,654)
(23,654)
Net
amounts
recognised
-
-
-
23,654
Gross
Amounts
23,654
23,654
23,654
24,763
24,763
24,763
(24,763)
(24,763)
-
-
-
24,763
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Not later than 1 year
Later than 1 year but not later than 5 years
Later than 5 years
37. CAPITAL EXPENDITURE COMMITMENTS
Less than 1 year:
Fit-out of premises
Purchase of equipment
Other
2016
$000
45,263
102,627
45,395
2015
$000
45,790
112,993
25,978
193,285
184,761
-
502
794
2,143
795
343
1,296
3,281
38. SIGNIFICANT EVENTS AFTER YEAR END
No matter or circumstance has arisen since the end of the financial year which is not otherwise dealt with in this financial report that
has significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations or the state
of affairs of the consolidated entity in subsequent financial years.
PAGE 91
39. RELATED PARTY DISCLOSURES
Key management personnel disclosures are included in note 40. Detailed remuneration disclosures are provided in the remuneration report.
Directors’ shareholdings
Ordinary shares held at the end of the financial year
Net ordinary shares purchased/(sold) by directors during the financial year
Ordinary dividends received during the year in respect of those ordinary shares
(a) Wholly owned Group – intercompany transactions and outstanding balances
Shares in the parent entity
2016
2015
50,147,772
50,422,326
(290,000)
(2,677,121)
2016
$
2015
$
11,709,346
13,024,460
The parent entity and its controlled entities entered into the following transactions during the year within the wholly owned Group:
> Loans were advanced and repayments received on loans and intercompany accounts
> Fees were exchanged between entities
> Interest was charged between entities
> The parent entity and its Australian controlled entities have been parties to a tax sharing deed, which includes a tax funding
arrangement (note 43)
> Dividends were paid between entities
> Bank guarantees were provided by the parent entity to its controlled entities (note 35)
These transactions were undertaken on commercial terms and conditions.
Ultimate controlling entity
The ultimate controlling entity of the Group is Computershare Limited.
(b) Ownership interests in related parties
Interests in controlled entities are set out in note 29. Interests held in associates and joint ventures are disclosed in notes 31 and 32.
(c) Transactions with associates and joint ventures
The following transactions occurred with associates and joint ventures:
Sales and purchases of goods and services
Sales to
Purchases from
Outstanding balances arising from sales and purchases of goods and services
Trade receivables
Trade payables
Loans to associates
Loan receivable from INVeSHARE Inc.
These transactions were undertaken on commercial terms and conditions.
2016
$
2015
$
700,964
3,115,929
1,993,643
1,325,998
1,199,020
1,911,494
72,658
-
7,192,730
1,000,000
PAGE 92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016
40. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation
Short-term employee benefits
Other long-term benefits
Post-employment benefits
Share based payments
Termination benefits
Other
Total
2016
$
2015
$
7,861,927
8,707,191
26,406
286,033
101,313
308,842
1,143,461
2,320,411
-
428,614
16,933
81,334
9,334,760
11,947,705
For detailed remuneration disclosures please refer to section A to F of the remuneration report within the Directors’ Report.
41. EMPLOYEE AND EXECUTIVE BENEFITS
(a) Share plans
Exempt Employee Share Plan
During the year ended 30 June 2001 the Group introduced an Exempt Employee Share Plan. The Plan gives Computershare
employees in Australia the opportunity to acquire shares in Computershare Limited. Each year, participating employees can make
contributions from their pre-tax salary to acquire AUD 500 worth of shares. Such employee contributions are matched by the Group
with an additional AUD 500 worth of shares being acquired for each participating employee. All permanent employees in Australia with
at least 6 months service and employed at the allocation date are entitled to participate in this Plan.
Deferred Employee Share Plan
During the year ended 30 June 2002 a Deferred Employee Share Plan was established to enable Computershare to match dollar for dollar
any employee pre-tax contributions to a maximum of AUD 3,000 per employee. Shares purchased and funded by an employee’s pre-tax
salary must remain in the plan for a minimum of 1 year. Matching shares funded by the Group must be kept in the plan for a minimum of
2 years or they will be forfeited. All permanent employees in Australia employed at the allocation date are entitled to participate in this
Plan. A derivative of this Plan and the Exempt Employee Share Plan have been made available to employees in New Zealand, Hong Kong,
China, the United Kingdom, Ireland, Jersey, Germany, Canada, South Africa and the United States of America.
Subject to the discretion of the Board, shares in the parent entity may also be allocated to selected employees in accordance with an
employee share plan on a discretionary basis having regard to special circumstances as determined by the Remuneration Committee.
Such shares may be subject to vesting and performance criteria as determined by the Board or the Remuneration Committee.
Deferred Short-Term Incentive (DSTI) Share Plan
The Group also provides DSTI awards to key management personnel and other senior executives as part of a structured STI plan and
then other high performing employees on a discretionary basis. Recipients of DSTI awards must complete specified periods of service
as a minimum before any share awards under the DSTI plan become unconditional.
Number of employee shares held
Opening balance
Shares purchased on the market
Forfeited shares reissued
Shares forfeited
Shares withdrawn
Closing balance
Fair value of shares granted through the employee share plan ($000)*
Ordinary shares
2016
2015
10,031,383
10,386,943
3,050,756
3,898,899
23,424
(139,873)
240,153
(127,285)
(2,443,161)
(4,367,327)
10,522,529
10,031,383
23,050
41,694
* Weighted average fair value of shares is determined by the closing price at the end of the day’s trading on the Australian Securities Exchange on the allocation date.
The average price per share purchased on market was AUD $10.31.
PAGE 93
Phantom Share Awards Plan
The Phantom Share Awards Plan (Phantom Plan) was introduced in 2013 as an alternative to the DSTI Share Plan to employees who
are resident for tax purposes in countries where the taxation and/or legal requirements mean the DSTI Share Plan does not achieve
the most effective outcome for Computershare or those employees. Awards under the Phantom Plan are cash-settled and vest after
specified periods of service have been completed.
(b) Performance rights
Long-Term Incentive Plan
The Board has offered to eligible key management personnel and senior group executives in the Group performance rights under
long-term incentive plans.
In 2014, the Board approved the terms of a new Long-Term Incentive Plan, known as the LTI Plan, which replaces the DLI plan.
Performance rights are granted for no consideration and carry no dividend or voting rights. Each performance right carries an
entitlement to one fully paid ordinary share in Computershare Limited subject to satisfaction of performance hurdles and continued
employment over a three year performance period. Under the plan, 50% of each award of performance rights is subject to EPS
hurdle criteria and 50% is subject to TSR Performance criteria. Unvested performance rights lapse on employee’s termination,
subject to Board discretion.
Set out below are summaries of performance rights granted under the LTI Plan:
Grant date
Exercise
date on
or after
1 Dec 2015
30 Sep 2018
1 Dec 2014
30 Sep 2017
Exercise
price
Balance at
beginning of
the year
$0.00
$0.00
-
579,238
Granted
during
the year
716,916
-
Exercised
during
the year
Forfeited
during
the year
Balance
at end of
the year
Exercisable
at end of
the year
-
-
-
716,916
(14,709)
564,529
-
-
No performance rights expired during the period covered by the above table.
The fair value of performance rights granted under the 2016 LTI plan were assessed using the following parameters:
Grant Date
Hurdle start date
Hurdle end date
Share price at grant date
Fair value at measurement date(i)
Exercise price
Expected volatility(ii)
Option life
Expected dividend yield p.a(iii)
Risk free rate p.a(iv)
2016 Plan – EPS
2016 Plan – TSR
1 Dec 2015
1 Jul 2015
30 Jun 2018
AUD $11.64
AUD $10.72
AUD $0.00
22.81%
3 years
2.89%
2.11%
1 Dec 2015
1 Jul 2015
30 Jun 2018
AUD $11.64
AUD $5.57
AUD $0.00
22.81%
3 years
2.89%
n/a
i) To allow for the TSR hurdle, a Monte Carlo simulation was used to value the performance rights. To allow for the EPS hurdle, a closed form Black Scholes model was used
to value the performance rights.
ii) Expected volatility is based on historical daily share price for the three-year period preceding the grant date.
iii) Expected dividend yield is based on historic yield for the three-year period immediately preceding the grant date.
iv) Risk free interest rate is based on the three-year Australian Bank Bill Swap Rate at grant date.
PAGE 94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016 Deferred Long-Term Incentive Plan
The previous long-term incentive plan, known as the DLI Plan, was offered to eligible key management personnel and senior managers
in the Group. Performance rights were granted for no consideration and carry no dividend or voting rights. Under the DLI Plan
each performance right carries an entitlement to one fully paid ordinary share in Computershare Limited subject to satisfaction of
performance hurdles and/or continued employment over a five-year performance period.
Set out below are summaries of performance rights granted under the plan:
Grant date
Exercise
date on
or after
12 Aug 2010
30 Sep 2015
12 Oct 2011
30 Sep 2016
4 May 2012
30 Sep 2016
25 Sep 2012
30 Sep 2017
Total
Exercise
price
Balance at
beginning of
the year
Granted
during the
year
Exercised
during
the year
Forfeited
during
the year
Balance
at end of
the year
Exercisable
at end of
the year
$0.00
$0.00
$0.00
$0.00
100,000
700,000
200,000
950,000
1,950,000
-
-
-
-
-
(50,000)
(50,000)
-
-
-
-
-
-
-
700,000
200,000
950,000
(50,000)
(50,000)
1,850,000
-
-
-
-
-
No performance rights expired during the period covered by the above table.
(c) Employee benefits recognised
Performance rights expense
Share plan and options expense
Aggregate employee entitlement liability (note 21 and 22)
42. REMUNERATION OF AUDITORS
2016
$000
416
11,593
34,173
2015
$000
1,775
16,258
30,069
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its network firms and
non-related audit firms:
Assurance services:
Auditing or review of financial statements
> PricewaterhouseCoopers Australia
> Network firms of PricewaterhouseCoopers Australia
Other assurance services
> PricewaterhouseCoopers Australia
> Network firms of PricewaterhouseCoopers Australia
Taxation services
> Related practices of PricewaterhouseCoopers Australia
2016
$000
2015
$000
704
2,691
3,395
317
2,139
2,456
10
10
843
3,084
3,927
372
2,203
2,575
38
38
Remuneration received, or due and receivable, by auditors other than the auditor of the parent entity
and its affiliates for:
Auditing or review of financial statements
233
302
PAGE 95
43. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently applied to all the periods presented, unless otherwise stated. The financial report is for the consolidated entity consisting
of Computershare Limited and its controlled entities, referred to collectively throughout these financial statements as the “consolidated
entity”, “the Group” or “Computershare”.
Basis of preparation of full year financial report
This general purpose financial report for the reporting period ended 30 June 2016 has been prepared in accordance with Australian
Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
Computershare Limited is a for-profit entity for the purpose of preparing financial statements.
This report is to be read in conjunction with any public announcements made by Computershare Limited during the reporting period in
accordance with the continuous disclosure requirements of the Corporations Act 2001 and Australian Securities Exchange Listing Rules.
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current period.
Compliance with IFRS
The financial statements of Computershare Limited and its controlled entities also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Historical cost convention
The financial statements have been prepared under the historical cost convention as modified by the revaluation of available-for-sale
financial assets and financial assets and liabilities (including derivative instruments) at fair value through profit or loss.
Principles of consolidation
The consolidated financial statements include the assets and liabilities of the parent entity, Computershare Limited, and its controlled entities.
All intercompany balances and transactions have been eliminated. Where an entity either began or ceased to be controlled during the
year, the results are consolidated only from the date control commenced or up to the date control ceased.
Financial statements of foreign controlled entities, associates and joint ventures presented in accordance with overseas accounting
principles are, for consolidation purposes, adjusted to comply with group policy and Australian Accounting Standards.
Controlled entities
Controlled entities are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. Controlled entities are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated
from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of controlled entities by the Group.
Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This generally accompanies a
shareholding of between 20% and 50% of the voting rights. Interests in material associated entities are brought to account using the
equity method. Under this method the investment in associates is initially recognised at cost and its carrying value is subsequently
adjusted for increases or decreases in the Group’s share of post-acquisition results and reserves of the associate. The Group’s share of
its associates’ post acquisition profits or losses is recognised in the profit or loss. The investment in associated entities is decreased by
the amount of dividends received or receivable.
Joint ventures
Joint ventures are arrangements where Computershare has joint control with another party over that arrangement and each party has
rights to the net assets of that arrangement. Joint control is the agreed sharing of control, which exists when decisions about relevant
activities require unanimous consent of parties sharing control. Interests in joint ventures are accounted for using the equity method.
Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of
the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling
interests to reflect their relative interests in the controlled entity. Any difference between the amount of the adjustment to non-controlling
interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of the parent entity.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The chief operating decision maker is the Computershare Limited Chief Executive Officer (CEO).
PAGE 96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016 Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the ‘functional currency’). The consolidated financial statements are presented in US dollars
as a significant portion of the Group’s activity is denominated in US dollars.
Transactions and balances
Foreign currency transactions are converted to US dollars at exchange rates approximating those in effect at the date of each transaction.
Amounts payable and receivable in foreign currencies at balance date are converted to US dollars at the average of the buy and sell rates
available on the close of business at balance date. Revaluation gains and losses are brought to account as they occur.
Exchange differences relating to monetary items are included in profit or loss, as exchange gains or losses, in the period when the
exchange rates change, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Group companies
The results and financial position of all the group entities that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
> Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement
> Income and expenses for each statement of comprehensive income are translated at average exchange rates
> All resulting exchange differences are recognised in other comprehensive income
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other
currency instruments designated as hedges of such investments, are recognised in other comprehensive income and reflected in equity.
Goodwill and fair value adjustments arising on acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
are translated at the closing rate.
Income tax
The principles of tax-effect accounting are applied in the financial statements. The income tax expense in the profit or loss represents
tax on the pre-tax accounting profit adjusted for income and expenses never to be assessed or allowed for taxation purposes. This is
also adjusted for changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial statements and unused tax losses. The income tax expense is calculated on
the basis of the tax laws enacted or substantively enacted at the end of the reporting period.
Deferred tax assets and liabilities are recognised for temporary differences calculated at the tax rates expected to apply when the
differences reverse. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are
offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the
same taxation authority.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it
is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised in other comprehensive income or directly in equity are also
recognised in other comprehensive income or directly in equity, respectively.
Tax consolidation legislation
Computershare Limited and its wholly-owned Australian controlled entities implemented the tax consolidation regime with effect from
1 July 2002. The Australian Taxation Office has been formally notified of this decision.
The relevant entities have also entered into a tax sharing deed, which includes tax funding arrangements. As a consequence,
Computershare Limited, as the head entity in the tax consolidation group, has recognised the current tax liability relating to transactions,
events and balances of the wholly owned Australian controlled entities in this group in the financial statements as if that liability was its
own, in addition to recognising the current tax liability arising in relation to its own transactions, events and balances. Amounts receivable
or payable under the tax sharing deed are recognised separately as tax related intercompany payables or receivables.
Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as
finance leases. Assets acquired under finance leases are capitalised and amortised over the shorter of the lease term and the useful life
of the asset, or where ownership is reasonably certain to be obtained on expiration of the lease, over the useful life of the asset. Lease
payments are allocated between interest expense and reduction in the lease liability.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Operating lease assets are not capitalised and rental payments (net of any incentives received from the lessor) are charged against
operating profit on a straight line basis over the period of the lease.
PAGE 97
Leasehold improvements
The cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated useful life
of the improvement to the leasehold properties, whichever is shorter.
Software and research and development costs
Internally developed software and related research and development costs are expensed in the year in which they are incurred as they
do not meet the recognition criteria for capitalisation.
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are reviewed at least annually to determine whether their
carrying amounts require write-down to recoverable amount or more frequently, if events or changes in circumstances indicate that
they might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
Impairment testing requires use of assumptions. An impairment loss is recognised as the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
available-for-sale assets, a significant or prolonged decline in fair value is considered when determining whether the asset is impaired.
For the purposes of impairment testing, assets are grouped at the lowest levels for which there are largely independent cash inflows
(cash generating units). Goodwill is allocated to cash generating units, or groups of cash generating units, that are expected to benefit
from the synergies of the business combination.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is assigned on a first-in first-out basis. Prepaid inventory is
recorded at cost and is bought on behalf of the Group’s clients. As the inventory is used, the costs are billed.
Property, plant and equipment
Property, plant and equipment are stated at historical costs less depreciation. The amounts at which property, plant and equipment are
stated in these financial statements are regularly reviewed.
Depreciation
Items of property, plant and equipment excluding freehold land, are depreciated on a straight line basis at rates calculated to allocate
their cost, less estimated residual value, over their estimated useful life. The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period. Additions and disposals are depreciated for the period held, in the year of
acquisition or disposal. Depreciation expense has been determined based on the following rates of depreciation:
> Buildings (2.5% per annum)
> Plant and equipment (10% to 50% per annum)
> Fixtures and fittings (13% to 50% per annum)
> Motor vehicles (15% to 40% per annum)
Revenue
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
trade discounts and volume rebates.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will
flow to the consolidated entity and specific criteria have been met for each of the Group’s activities. The Group bases its estimates on
historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Services revenue is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is
recognised under the percentage of completion method, based on the actual service provided as proportion of the total services to
be provided.
Software licence sales and associated development, installation and maintenance fees are recognised in accordance with written
customer agreements when the entity has the right to be compensated for services and it is probable that compensation will flow to
the entity in the future.
Other revenue
Other revenue includes interest income on short-term deposits controlled by the consolidated entity, and royalties and dividends
received from other persons. Interest income is recognised using the effective interest method. Royalties and dividends are recognised
as revenue when the right to receive payment is established.
Insurance recoveries
The consolidated entity recognises amounts receivable under its insurance policies, net of any relevant excess amounts, upon
indemnity being acknowledged by the insurers.
PAGE 98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016 Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, less provision for doubtful debts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off. A provision
for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of receivables. The amount of the provision is recognised in the profit or loss.
Trade and other payables
These amounts represent liabilities for those goods and services provided to the Group prior to the end of financial year that are
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Dividends
Provision is made for the amount of any dividend declared by the directors on or before the end of the financial year but not distributed
at balance date.
Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing profit attributable to members of Computershare Limited, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year,
adjusted for bonus elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share is determined by adjusting the weighted average number of shares used in the determination of basic earnings
per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Management basic earnings per share
Management basic earnings per share exclude certain items. Management adjusted results are used, along with other measures, to
assess operating business performance. The Group believes that exclusion of certain items permits better analysis of the Group’s
performance on a comparative basis and provides a better measure of underlying operating performance. The net profit used in the
management earnings per share calculation is adjusted for the management adjustment items net of tax (refer to note 3).
Cash and cash equivalents
For the purposes of the consolidated cash flow statement, cash and cash equivalents include cash on hand, deposits at call with
financial institutions and other highly liquid investments with short periods to maturity (three months or less) which can readily be
converted to known amounts of cash on hand and are subject to an insignificant risk of changes in value, net of outstanding bank
overdrafts. Cash and cash equivalents exclude broker client deposits reflected in the statement of financial position that are recorded
as other current financial assets.
Business combinations
The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the acquisition of a controlled entity comprises the fair values of the assets
transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value
of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the controlled entity.
Acquisition-related costs are expensed as incurred. Identifiable assets acquired as well as liabilities and contingent liabilities assumed
in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. Within 12 months of
completing the acquisition, identifiable intangible assets are valued and separately recognised in the statement of financial position.
On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the
non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair
value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is
recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the controlled entity acquired and the
measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar
borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently
re-measured to fair value with changes in fair value recognised in profit or loss.
PAGE 99
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets
acquired. Goodwill is carried at cost less accumulated impairment losses. On disposal or termination of a previously acquired business,
any remaining balance of associated goodwill is included in the determination of the profit or loss on disposal.
Acquired intangible assets
Acquired intangible assets have a finite useful life and are carried at fair value at the date of acquisition less accumulated amortisation
and impairment losses. Amortisation is calculated using the straight line method to allocate the value over their estimated useful lives,
typically ranging from one to fifteen years.
Mortgage servicing rights
Mortgage servicing rights acquired as part of business combination are carried at their fair value at the date of acquisition less
accumulated amortisation and impairment losses. Mortgage servicing rights acquired as part of ongoing operations are carried at cost
less accumulated amortisation and impairment losses. Amortisation for all servicing rights is calculated using the straight line method
over their estimated useful lives.
Employee benefits
Provision has been made in the statement of financial position for benefits accruing to employees in relation to employee bonuses,
annual leave and long service leave. No provision is made for non-vesting sick leave because past pattern of sick leave taken indicates
that there is no material future obligation for unused absences.
Superannuation is included in the determination of provisions. Annual leave is measured at the additional amounts expected to be paid
when the liabilities are settled.
The long service leave provision is measured at the present value of estimated future cash flows, discounted by the interest rate
applicable to the period the liability is expected to fall due. Consideration is given to expected future wage and salary levels, experience
of employee departures and periods of service.
Retirement benefits
Contributory superannuation and pension plans exist to provide benefits for the consolidated entity’s employees and their dependants
on retirement, disability or death. The plans are accumulation plans. The employee sponsors contribute to the plans at varying rates of
contribution depending on the employee classification. The contributions made to the funds by group entities are charged against profits.
Defined benefit superannuation and pension plans are operated in Germany and India only. Where material to the Group, a liability or
asset in respect of the these plans is recognised in the consolidated statement of financial position, and is measured as the present
value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less
the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost.
Executive share and performance right schemes
Certain employees are entitled to participate in share and performance rights schemes.
The market value of shares issued to employees for no cash consideration under employee and executive share schemes is
recognised as a personnel expense over the vesting period with a corresponding increase in the share based payments reserve.
The fair value of performance rights issued under Computershare’s LTI plan and DLI plan are recognised as a personnel expense
over the vesting period with a corresponding increase in the share based payments reserve. At each balance date, the entity revises
its estimate of the number of performance rights that are expected to become exercisable. The personnel expense recognised each
period takes into account the most recent estimate.
Where shares are procured by the Group with cash to satisfy obligations for vested employee entitlements under these plans, a
reduction in the share based payments equity reserve is shown.
Shares issued under employee and executive share plans are held in trust until vesting date. Unvested shares held by the trust are
included in the Group’s consolidated financial statements.
Termination benefits
Liabilities for termination benefits, not in connection with the acquisition of an entity or operation are recognised when a detailed plan
for the terminations has been developed and a valid expectation has been raised in those employees affected that the terminations will
be carried out. The liabilities for termination benefits are recognised in other payables unless the amount or timing of the payments is
uncertain, in which case they are recognised as provisions.
Liabilities for termination benefits relating to an acquired entity or operation that arise as a consequence of an acquisition are
recognised as at the date of acquisition if, at or before the acquisition date, the acquiree had an existing liability for restructuring.
PAGE 100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016 Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and
the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one
item included in the same class of obligations may be small.
Provisions are measured at the present value of Group’s best estimate of the expenditure required to settle the present obligation at the
reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money
and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Non-current assets (or disposal groups) held-for-sale
Non-current assets (or disposal groups) are classified as held-for-sale if their carrying amount will be recovered principally through a
sale transaction rather than through continuing use and a sale is considered highly probable.
Non-current assets and liabilities (or disposal groups) classified as held-for-sale are presented separately from other assets and
liabilities in the statement of financial position. They are stated at the lower of their carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell.
A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current
asset (or disposal group) is recognised at the date of derecognition.
Contributed equity
Ordinary share capital bears no special terms or conditions affecting income or capital entitlements of the shareholders and is classified
as equity. Costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
If the Group reacquires its own equity instruments, for example as the result of a share buy-back, those instruments are deducted from
equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including
any directly attributable incremental costs (net of income taxes) is recognised directly in equity.
Parent entity financial information
The financial information for the parent entity, Computershare Limited, disclosed in note 34 has been prepared on the same basis as
the consolidated financial statements, except as set out below.
Investments in controlled entities, associates and joint venture entities are accounted for at cost in the financial statements of
Computershare Limited. Dividends received from associates and joint ventures are recognised in the parent entity’s profit or loss, rather
than being deducted from the carrying amount of these investments.
Investments and other financial assets
The Group classifies its investments and other financial instruments in the following categories: financial assets at fair value through
profit or loss, loans and receivables and available-for-sale assets. The classification depends on the purpose for which the investments
were acquired. Management determines the classification of its investments at initial recognition.
i.
Financial assets at fair value through profit or loss
This category has two sub categories: financial assets held-for-trading and those designated at fair value through profit or loss on
initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if
so designated by management. Assets in this category are classified as current in the consolidated statement of financial position.
Derivatives are classified as held for trading unless they are designated as hedge instruments.
ii
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are
classified as non-current assets. Loans and receivables are included within receivables in the consolidated statement of financial
position.
iii Available-for-sale assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other
categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the
balance sheet date.
PAGE 101
Initial recognition and subsequent measurement
Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or
loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed
in profit or loss. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Subsequently,
available-for-sale financial assets and financial assets at fair value through profit or loss are carried at fair value. Details on how the fair
value of financial instruments is determined are disclosed in note 11. Realised and unrealised gains and losses arising from changes
in fair value of financial assets at fair value through profit or loss category are included in profit or loss in the period in which they arise.
Unrealised gains and losses for changes in fair value of available-for-sale assets are recognised in other comprehensive income in the
available-for-sale asset reserve. Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When available for
sale assets are sold, the accumulated fair value adjustments are reclassified to profit or loss.
Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is
impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security
below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial
assets, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognised in profit or loss) is reclassified from equity and recognised in profit or loss as a
reclassification adjustment. Impairment losses recognised in profit or loss on equity instruments classified as available-for-sale are not
reversed through profit or loss.
If there is evidence of impairment for any of the Group’s financial assets carried at amortised cost, the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not
been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in profit or loss.
Borrowings
Borrowings are initially recognised at fair value and are subsequently measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the borrowing period using the
effective interest method. Borrowings are classified as current liabilities unless the Group has a legal right to defer settlement of the
liability for at least 12 months after the balance sheet date.
Derivative instruments
The Group uses derivative financial instruments to manage specifically identified interest rate and foreign currency risks. Derivatives are
initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value.
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if
so, the nature of the item being hedged. The Group designates certain financial instruments, including derivatives, as either: (1) hedges
of net investments of a foreign operation; (2) hedges of firm commitments and highly probable forecast transactions (cash flow hedges);
or (3) fair value hedges.
Hedging
At the inception of the transaction the Group documents the relationship between hedging instruments and hedged items, as well as
its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment,
both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will
continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.
i. Hedge of net investment
Changes in the fair value of foreign currency debt balances that are designated and qualify as hedging instruments are recorded in
other comprehensive income in the foreign currency translation reserve. The change in value of the net investment is recorded in the
foreign currency translation reserve in accordance with requirements of AASB 121 The effects of Changes in Foreign Exchange Rates.
The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
ii. Cash flow hedge
The Group uses interest rate derivatives to manage interest rate exposure. These derivatives are entered into as part of a hedging
relationship.
The effective portion of changes in the fair value of derivatives which are designated and qualify as cash flow hedges is recognised
in other comprehensive income in the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss.
Amounts accumulated in equity are recycled in profit or loss in the periods when the hedged item will affect profit or loss (for instance
when the future cash flows that are hedged take place).
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately
recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported
in equity is immediately reclassified to profit or loss.
PAGE 102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSComputershare Annual Report 2016 iii. Fair value hedge
The Group uses interest rate derivatives to manage the fixed interest exposure that arises as a result of notes issued as part of the
US Senior Notes. Changes in the fair value of these derivatives are recorded in profit or loss, together with any changes in the fair value
of the hedged liabilities that are attributable to the hedged risk.
iv. Derivatives that do not qualify for hedge accounting
Certain forward exchange contracts and foreign currency options do not qualify for hedge accounting. Changes in the fair value of any
derivative instrument that does not qualify for hedge accounting are recognised immediately in profit or loss.
Rounding of amounts
The consolidated entity is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191,
issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the financial report. In
accordance with this Class Order, amounts in the financial report have been rounded off to the nearest thousand dollars, or in certain
cases, the nearest dollar.
New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2016 reporting period.
The Group’s assessment of the impact of these new standards and interpretations is presented below.
AASB 9 Financial Instruments
AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities and introduces new
rules for hedge accounting and a new impairment model for financial assets. The standard is applicable for financial years commencing
on or after 1 January 2018 and is available for early adoption. The Group does not expect to adopt AASB 9 before its operative date.
The new hedging rules align hedge accounting more closely with the Group’s risk management practices. As a general rule, it will be
easier to apply hedge accounting going forward as the standard introduces a more principles-based approach. While the Group is yet
to undertake a detailed assessment, it would appear that the Group’s current hedge relationships would qualify as continuing hedges
upon adoption of AASB 9.
The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than
incurred credit losses as is the case under AASB 139. While the Group has not yet undertaken a detailed assessment of how its
impairment provisions would be affected by the new model, it will likely result in an earlier recognition of credit losses.
The new standard also introduces expanded disclosure requirements and changes in presentation.
AASB 15 Revenue from contracts with customers
AASB 15 is a new standard in relation to recognition of revenue and will replace AASB 118 which covers revenue arising from the sale
of goods and services and AASB 111 which covers construction contracts. This standard is applicable to financial years commencing
on or after 1 January 2018 and is available for early adoption. The Group does not expect to adopt AASB 15 before its operative date.
The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. While
the Group has not yet estimated the effect of the new rules on the Group’s financial statements, the consolidated entity is in the process of
actively investigating the impact of AASB 15 and has a plan in place to ensure timely implementation.
AASB 16 Leases
AASB 16 is a new standard in relation to leases which will primarily affect the accounting by lessees and will result in the recognition of
almost all leases on balance sheet. The standard removes the current distinction between operating and financing leases and requires
recognition of an asset (the right to use the leased item) and a financial liability to pay rental. The only exemption relates to short-term
and low-value leases. This standard is applicable to financial years commencing on or after 1 January 2019 and is available for early
adoption, if AASB 15 has been applied. The Group does not expect to adopt AASB 16 before its operative date.
The changes under AASB 16 will have a significant impact on the Group’s accounting for operating lease arrangements. Almost all
operating leases will result in recognition of a lease asset and liability. Additionally, operating expense will be replaced with interest and
depreciation impacting EBITDA metrics.
PAGE 103
DIRECTORS’ DECLARATION
In the directors’ opinion:
(a)
the financial statements and notes set out on pages 46 to 103 are in accordance with the Corporations Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its performance for the
financial year ended on that date; and
(b)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and
payable; and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in note
29 will be able to meet any obligations or liabilities to which they are, or may become, subject to by virtue of the deed of cross
guarantee described in note 33.
Note 43 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of
the Corporations Act 2001.
Signed in accordance with a resolution of the directors.
SD Jones
Chairman
19 September 2016
SJ Irving
Director
PAGE 104
Computershare Annual Report 2016 DECLARATION TO THE BOARD OF DIRECTORS
The Chief Executive Officer and Chief Financial Officer state that:
(a)
(b)
the financial records of the consolidated entity for the financial year ended 30 June 2016 have been properly maintained in
accordance with section 286 of the Corporations Act 2001; and
the financial statements, and the notes to the financial statements, of the consolidated entity, for the financial year ended
30 June 2016:
(i)
(ii)
comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
give a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of their performance for the
financial year ended on that date.
SJ Irving
Chief Executive Officer
MB Davis
Chief Financial Officer
19 September 2016
PAGE 105
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report to the members of
Computershare Limited
Report on the financial report
We have audited the accompanying financial report of Computershare Limited (the company), which
comprises the consolidated statement of financial position as at 30 June 2016, the consolidated
statement of comprehensive income, consolidated statement of changes in equity and consolidated
cash flow statement for the year ended on that date, a summary of significant accounting policies,
other explanatory notes and the directors’ declaration for Computershare Limited Group (the
consolidated entity). The consolidated entity comprises the company and the entities it controlled at
year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error. In Note 43,
the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the consolidated
entity’s preparation and fair presentation of the financial report in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well
as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
PAGE 106
Computershare Annual Report 2016 Auditor’s opinion
In our opinion:
(a)
the financial report of Computershare Limited is in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
(b)
the financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 43.
Report on the Remuneration Report
We have audited the remuneration report included in pages 32 to 43 of the directors’ report for the
year ended 30 June 2016. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Computershare Limited for the year ended 30 June 2016
complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Anton Linschoten
Partner
Melbourne
19 September 2016
PAGE 107
SHAREHOLDER INFORMATION
This section contains additional information required by the Australian Securities Exchange Limited listing rules not disclosed elsewhere
in this report.
SHAREHOLDINGS
Substantial Shareholders
The following information is extracted from the Company’s Register of Substantial Shareholders.
Name
Christopher John Morris
Class of shares and voting rights
Number of
ordinary
shares
37,431,000
Fully paid
percentage
6.85%
At 9 September 2016 there were 43,022 holders of ordinary shares in the Company. The voting rights attaching to the ordinary shares
set out in clause 4 of the Company’s Constitution are:
(a)
the right to receive notice of and to attend and vote at all general meetings of the Company;
(b)
the right to receive dividends; and
(c)
in a winding up or a reduction of capital, the right to participate equally in the distribution of the assets of the Company (both
capital and surplus), subject to any amounts unpaid on the Share and, in the case of a reduction, to the terms of the reduction
Distribution of shareholders of shares as at 9 September 2016
Size of holding
1 – 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total shareholders
Ordinary shareholders
19,780
18,730
2,711
1,661
140
43,022
There were 676 shareholders holding less than a marketable parcel of 50 ordinary shares as at 9 September 2016.
Twenty largest shareholders of ordinary shares as at 9 September 2016
Ordinary shares
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
Mr Chris Morris
Citicorp Nominees Pty Limited
Welas Pty Ltd
Penelope Maclagan
BNP Paribas Noms Pty Ltd
Computershare Clearing Pty Ltd
Ms Michele Jean O’Halloran
Argo Investments Limited
CPU Share Plans Pty Limited
Australian Foundation Investment Company Limited
BNP Paribas Nominees Pty Ltd
RBC Global Services Australia Nominees Pty Limited
UBS Nominees Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
IOOF Investment Management Limited
AMP Life Limited
Total
PAGE 108
Number
126,073,534
83,960,765
56,611,510
37,431,000
30,238,387
17,250,000
11,902,025
9,783,096
7,031,852
5,763,218
4,901,166
4,783,275
4,660,000
3,415,726
2,982,581
1,757,500
1,619,305
1,443,309
1,220,789
968,240
%
23.08
15.37
10.36
6.85
5.53
3.16
2.18
1.79
1.29
1.05
0.90
0.88
0.85
0.63
0.55
0.32
0.30
0.26
0.22
0.18
413,797,278
75.74
Computershare Annual Report 2016 SHARE REGISTRY
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
PO BOX 103
Abbotsford VIC 3067
Telephone 1300 307 613
(within Australia)
+ 61 3 9415 4222
Facsimile + 61 3 9473 2500
INVESTOR RELATIONS
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Telephone +61 3 9415 5000
Facsimile +61 3 9476 2500
Email
investor.relations@computershare.com.au
Website
www.computershare.com
CORPORATE DIRECTORY
DIRECTORS
Simon David Jones
(Chairman)
Stuart James Irving
(President and Chief Executive Officer)
Tiffany Lee Fuller
Markus Erhard Kerber
Penelope Jane Maclagan
Christopher John Morris
Arthur Leslie Owen
Joseph Mark Velli
COMPANY SECRETARY
Dominic Matthew Horsley
REGISTERED OFFICE
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Telephone +61 3 9415 5000
Facsimile +61 3 9476 2500
STOCK EXCHANGE LISTING
Australian Securities Exchange
SOLICITORS
Minter Ellison
Level 23, Rialto Towers
525 Collins Street
Melbourne VIC 3000
AUDITORS
PricewaterhouseCoopers
Freshwater Place
2 Southbank Boulevard
Southbank VIC 3006
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Computershare Annual Report 2016 OFFICE LOCATIONS
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COMPUTERSHARE
HEAD OFFICE
Computershare Limited
ABN 71 005 485 825
Yarra Falls
452 Johnston Street
Abbotsford Victoria 3067
Australia
Telephone: +61 3 9415 5000
Facsimile: +61 3 9473 2500
The Annual Report
is available online at
www.computershare.com