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This financial report covers the
consolidated entity consisting of
Computershare Limited and its
controlled entities.
The financial report is presented in
United States dollars (USD), unless
otherwise stated.
Computershare Limited is a
company limited by shares,
incorporated and domiciled in
Australia. Its registered office and
principal place of business is:
The financial report was authorised
for issue by the directors on
21 September 2020. The company
has the power to amend and reissue
the financial report.
A separate notice of meeting
including a proxy form is enclosed
with this financial report.
Computershare Limited
Yarra Falls
452 Johnston Street, Abbotsford
Victoria 3067 Australia
CONTENTS
OVERVIEW
FINANCIALS
Financial Highlights ................................................................ 3
Consolidated Statement of Comprehensive Income ...60
Financial Calendar .................................................................. 3
Consolidated Statement of Financial Position .............61
Chairman’s Report .................................................................. 4
Consolidated Statement of Changes in Equity ............62
CEO’s Report ............................................................................ 6
Consolidated Cash Flow Statement .................................63
Computershare at a Glance .................................................. 9
Notes to the Consolidated Financial Statements .........64
Key Financial Metrics ...........................................................11
Issuer Services .......................................................................13
Employee Share Plans .........................................................14
Mortgage Services .................................................................15
Business Services ..................................................................16
Sustainability ..........................................................................17
Community .............................................................................19
People ......................................................................................21
Group operating overview ...................................................23
Business strategies and prospects ....................................25
GOVERNANCE
Corporate Governance Statement ....................................27
Directors’ Report ....................................................................40
Auditor’s Independence Declaration ................................59
REPORTS
Directors’ Declaration ....................................................... 121
Declaration to the Board of Directors .......................... 122
Independent Auditor’s Report ........................................ 123
FURTHER INFORMATION
Shareholder information .................................................. 130
Corporate directory ........................................................... 131
The Chairman’s Report, CEO’s Report, Group Operating Overview and Business Strategies and Prospects comprise our Operating and
Financial Review (OFR) and form part of the Directors’ Report. The information included in the Overview section of the report contains
various measures which are non-IFRS in nature and not aligned to the Financial section of the Annual Report (Page 60 – 120).
Overview
FINANCIAL HIGHLIGHTS
June 2020
June 2019
% Change
Statutory results
Total revenue
2,277.3 million
2,346.0 million
Net profit after non-controlling interests (NCI)
232.7 million
415.7 million
Statutory earnings per share
42.97 cents
76.57 cents
Management adjusted results
Management EBITDA
Management net profit after NCI
Management earnings per share
646.4 million
674.9 million
303.8 million
381.4 million
56.12 cents
70.24 cents
Management earnings per share (in constant currency)
56.34 cents
70.24 cents
Balance sheet
Total assets
Total shareholders’ equity
Performance indicators
4,989.8 million
4,685.0 million
1,590.3 million
1,574.1 million
-2.9%
-44.0%
-43.9%
-4.2%
-20.3%
-20.1%
-19.8%
6.5%
1.0%
Free cash flow (excluding SLS advances)
505.9 million
312.9 million
61.7%
Net debt to management EBITDA (excluding non-recourse debt)*
1.93 times
1.84 times
Up 0.09 times
Return on equity*
Staff numbers
19.50%
12,646
26.40%
Down 690bps
12,701
For a reconciliation between statutory and management adjusted results, refer to note 4 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 the 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 adjusted results are quoted in constant currency (CC) unless otherwise stated. Constant currency equals FY20
results translated to USD at FY19 average exchange rates.
FINANCIAL CALENDAR
2020
2021
19 August
Record date for final dividend
10 February
14 September
Final dividend paid
11 November
The Annual General Meeting of
Computershare Limited
ABN 71 005 485 825
Location:
Online – refer to Notice of Meeting
for details
Time:
9.00am
Announcement of
financial results for
the half-year ending
31 December 2020
3 | COMPUTERSHARE | ANNUAL REPORT | 2020
CHAIRMAN’S
REPORT
Simon Jones
Chairman
YEAR IN REVIEW
It goes without saying that 2020 has been an extraordinary year.
I feel a great sense of pride in what Computershare has achieved this year,
particularly in the second half of FY20. Like every other global company,
we’ve faced substantial challenges as business operations and supply
chains were disrupted and normal work routines and social structures were
interrupted. Every one of our people has felt some strain and stress. But we’ve
demonstrated, conclusively, that Computershare remains strong and stable and
capable of delivering for our stakeholders – our employees, our shareholders,
our clients and our communities.
We’ve respected our shareholders, by being fully transparent as the impact of
Covid-19 on our businesses became clearer. We updated our guidance in March
and again in April, as deeper than expected rate cuts bit hard into our margin
income, and market volatility reduced transactional volumes. We could have
simply withdrawn our guidance, but instead, we increased disclosure and told
the market exactly what we were seeing – and then we came in right on the
number. We also made it a priority to maintain our dividend.
Despite the disruption to our normal office operations, we’ve continued to
deliver high levels of service to our customers, with most of our staff working
remotely. We have never dropped our sharp focus on execution and getting the
job done.
Of course, none of this would be possible without the expert and dedicated
contributions of our 12,600 global employees. Since the potential impact of the
Covid-19 pandemic became clear, our priority has been to look after our people,
to protect their health and wellbeing, while enabling them to work productively
and to continue to pursue their professional goals and development.
Last year we rolled out our global ways of working, ‘Being Purple’ – this year
those values were exemplified by the way our people pitched in to support each
other in the most challenging of circumstances and found innovative solutions
to support our clients’ changing needs.
Despite the impact of Covid-19 on our earnings, and our Management earnings
per share (EPS) being down 19.8%, across the year our headline revenue was
down by only 1.9%, and Management EBITDA was down by 3.7%. Although
activity levels across the group were subdued in the fourth quarter, the
business performed in line with the revised expectations and we saw continuing
improvement after the macro volatility months of March and April. There are
many other positives and reasons for an optimistic outlook, which Stuart will
expand upon in his CEO Report.
Despite the impact of
Covid-19 on our earnings, and
our Management earnings
per share (EPS) being down
19.8%, across the year:
HEADLINE REVENUE WAS
DOWN BY ONLY 1.9%
MANAGEMENT EBITDA WAS
DOWN BY ONLY 3.7%
*
All references to Management Results in the Chairman’s Report are in constant currency
unless otherwise stated.
4
CHAIRMAN’S REPORT
OUTLOOK
With interest rates projected to remain depressed over the year ahead, we expect our FY21 results will continue to be affected by
reduced margin income. Fundamentally, that’s a reflection of where we are in the global economic cycle. However, our core businesses
remain robust and well-positioned. Excluding margin income, our EBIT is expected to be up in the year ahead, and we expect to see
transactional revenue pick up as confidence returns to markets. We also have good counter-cyclical prospects in Business Services.
Overall, we remain focused on the things we can control – building stronger businesses with diversified revenue pools and greater
exposure to structural growth trends over the longer term.
ACKNOWLEDGMENTS
On behalf of my fellow directors, I’d like to thank you for your ongoing support as a shareholder. The past 12 months have seen
large swings in market sentiment, but our company remains stable, strong and well-positioned to continue our growth trajectory.
Our efforts to diversify, invest in scale and grow complementary and counter-cyclical businesses will continue to bear fruit in the
years ahead.
I’d also like to thank our incoming Chief Financial Officer, Nick Oldfield, and his global Finance team, for the work they have done in
preparing these results, and more broadly, in safeguarding the financial health and stability of the Group. Their responsibilities are
demanding at the best of times, and no doubt have been even more so recently given the way working routines have been upended.
Of course, those same thanks are due to every one of our global employees – the way they have kept delivering amid widespread
uncertainty and upheaval is truly remarkable.
Finally, I would like to especially thank Stuart Irving, our CEO and President, for the exemplary leadership he’s provided throughout
the year. I know that his commitment to protecting our company – our people, our businesses and our shareholders – has meant
many long hours for him. His dedication is appreciated, as is the great contribution he continues to make to Computershare’s
performance and our distinctive culture.
I would also like to acknowledge my fellow board members for their invaluable support – they bring a real diversity of experience,
insight and expertise to the Group.
Simon Jones
Chairman
5 | COMPUTERSHARE | ANNUAL REPORT | 2020
CEO’S REPORT
Stuart Irving
CEO
DEMONSTRATING OUR RESILIENCE IN THE FACE OF
MARKET DISRUPTION
RESILIENT OPERATING
PERFORMANCE
Not surprisingly, this year needs to be understood in two parts – pre- and
post-Covid-19. Prior to March, we were tracking comfortably to the guidance we
gave in August and reaffirmed in February. At this point, we were tracking 8%
ahead of our budgeted 2H earnings targets, enough of a buffer to offset the
earlier than expected cuts to interest rates we had seen.
In March, all of this changed – the world economy, and our markets in particular,
abruptly entered a period of heightened uncertainty and volatility. Central banks
injected emergency liquidity into financial markets and cut interest rates. This
upheaval had an immediate effect on our business operations. Those rate cuts
saw our margin income decline sharply, ending the year down 18.3%.
Another major impact was reduced transaction activity in our markets: fewer
corporate actions (outside of HK and AU), deferred meetings and events, lower
levels of trades by shareholders and employees, and regulatory relief measures
in mortgage markets (such as foreclosure freezes) which also reduced our fee
income. Understandably, many of our clients’ priorities changed overnight,
and some major revenue opportunities we had in the pipeline ended up being
cancelled or postponed. We will recapture some of the deferred revenue in the
year ahead. In combination, the impact of Covid-19 disruption on our business
operations took 10.2% off our management earnings per share for FY20.
In addition to this, in the light of Covid-19, we made some one-off management
decisions in the last quarter, which cut our earnings result by a further 4.6%.
These decisions were taken to look after our shareholders and our staff. We
repatriated cash out of Canada to enhance our liquidity, incurring withholding
taxes, so we could maintain our year-end dividend. And we looked to protect our
most vulnerable employees, setting aside provisions for a hardship fund for their
benefit. We’ve also allowed our employees to accrue leave, rather than mandating
furloughs, so they have personal financial buffers if there are further waves of
Covid-19 that come in the months ahead.
In combination, this has resulted in our full-year Management EPS being down
19.8% on FY19, instead of the 5% decline we had previously forecast. We have
been open and transparent throughout – this is the result we provided in our April
guidance, issued as soon as we took stock of unfolding events in our markets.
We have maintained our final dividend at 23 cents, without impairing our liquidity
or capacity to make investments. The Group generated $506 million of free
cash flow – about 55% of which has gone to fund strategic acquisitions and
build further scale in our US mortgage books. One third has been returned to
our shareholders as dividends – something we believe is the right thing to do,
especially in a historically low interest rate environment.
1
Includes impact of IFRS16
2 Excluding non-recourse SLS Advance debt.
*
All References to Management Results in the CEO’s Report are in constant currency unless
otherwise stated.
Revenue
$2.3b
DOWN 1.9%
Management EBITDA1
$650m
DOWN 3.7%
MARGIN INCOME
HEADWINDS
Margin Income
$201m
DOWN 18.3%
Management EPS
56.3CPS
DOWN 19.8%
BALANCE SHEET
STRENGTH
Net Debt/EBITDA2
1.93X
UP 0.09X
Final Dividend Per Share
23.0CPS
MAINTAINED
6
CEO’S REPORT
Our balance sheet remains conservative, with a leverage rate of 1.93x, below the midpoint of our target range. Net debt was
essentially unchanged, with a $500 million facility refinanced and pushed out from 2021 to 2024.
We could have chosen to impose widespread staff furloughs or layoffs. Instead, we provided support and flexibility. We’ve encouraged
our employees to choose how to best combine their professional lives with other responsibilities, like providing care or home
schooling. We see this as part of our social obligation to our employees and the wider communities around us. I believe we will see
tangible returns on this investment in our people in the years ahead.
As a silver lining, our goals of reducing our carbon footprint by travelling less and videoconferencing more took a great leap
forward in the second half of the year, albeit by necessity. We’ve learnt a lot about what is possible with remote working, while also
acknowledging that it doesn’t suit all people and all roles.
We did see some encouraging signs of recovery in our markets during May and June, and since, which gives us some cause for
optimism about the year ahead, assuming economies continue to stabilise on the same trajectory.
OUR COVID-19 RESPONSE – PROTECTING OUR PEOPLE, STANDING BY OUR CLIENTS
When the rapid spread of Covid-19 became apparent, we took immediate action and, by mid-February, we had assembled a
dedicated global pandemic task force. I thank that team for their single-minded concentration in handling a blizzard of facts and
figures from every country.
Our immediate and highest priority was to protect the health and wellbeing of our 12,600 employees. I’d like to acknowledge the
roles played by the divisions that support our core businesses, including our People, Communications and Technology teams.
These teams were instrumental in planning and executing changes to our operations, and then providing important guidance and
reassurance to our employees during a frightening time. Their efforts enabled thousands of our employees to move to full-time
work from home, in some cases virtually overnight, maintaining our capacity to serve our clients and customers.
Having already invested in secure virtual networks and supporting technologies, we were able to ramp up capacity rapidly, allowing
over 90% of our workforce to work off-site without interrupting our service to our clients or compromising their data. For those
with essential on-site roles, we put in place strict hygiene and distancing protocols, along with stringent cleaning processes, to
reduce risk as much as possible.
Our support for our employees is ongoing, as already noted above. We have placed a priority on our communications, providing
regular updates, advice and reassurance to help people adjust to new circumstances, and encouraged them to reach out for extra
help. We’ve given our managers guidance and tools to support their teams, and we’ve extended and promoted the provision of
mental health support. Our people are our advantage, so it makes perfect sense to put them first.
At the same time, we also took stock of the pressing needs of our clients and customers, many of whom were facing new challenges
of their own.
We’ve supported our corporate clients by rolling out a range of rapidly developed and innovative products to help them meet
their governance obligations. We’ve long been an advocate for opening company meetings to a more diverse audience through
technology – it turned out that our leadership in this area couldn’t have been more timely. This year we conducted numerous online
seminars, and promoted, planned and coordinated over 1,000 virtual Annual General Meetings around the world.
We also facilitated critical market activities, assisting our clients with capital raisings, delivering these complex and often high-risk
transactions via expert teams working remotely.
In the US and UK, we scaled up our Mortgage Services operations, to help homeowners by quickly and efficiently processing their
mortgage payment holiday requests. This was enabled by our rapid development and deployment of changes to our customer
service systems, a technology proficiency we have placed increasing emphasis on in recent years.
EXECUTING ON OUR GLOBAL BUSINESS STRATEGIES
As much as 2020 has been about change and adapting to ‘the new normal’, we remain focused on executing our own long-term
growth strategies. At Computershare, we seek to build stronger businesses with scale and more exposure to positive structural
growth trends. As we move through and out of Covid-19, some of our businesses will see more opportunities, others fewer. Some
adjustments will need to be made accordingly. But we continue to look beyond the short term, to remain focused on our strengths:
long-term planning, disciplined execution, making strategic investments to achieve organic growth while driving efficiencies and
cost-out programs. It’s an approach that serves us well.
All of this comes down to people. We are well organised, and our people are highly skilled, competent, loyal and reliable. That’s coming
through strongly in client feedback as well as in these results. We have been rock-solid when our clients needed us the most, and they
won’t quickly forget this.
7 | COMPUTERSHARE | ANNUAL REPORT | 2020
This year you’ll see a change in our full-year reporting (which we flagged last year)
to provide segment reporting over our five business lines, plus our technology
function. As we’ve explained before, our move from a regional model to a global
business structure was needed to fire the next phase of growth for the Group.
That structure is now well established, with complementary products and services
grouped together, bringing with it an increased focus on new opportunities,
innovative product development and a better, more coherent customer experience.
It also allows us to align and resource our supporting functions more effectively –
People, Technology, Operations, Finance, Sales and Marketing, and so on.
You can read an overview of our four largest business lines on pages 13 to 16,
while the complete financials are available in the Directors’ Report and
accompanying financial statements.
This year you’ll see a change
in our full-year reporting to
provide segment reporting
over our five business lines,
plus our technology function.
OUTLOOK FOR FY2021
ISSUER SERVICES
MORTGAGE SERVICES
EMPLOYEE SHARE PLANS
BUSINESS SERVICES
COMMUNICATION SERVICES
CORPORATE AND TECHNOLOGY
As I’ve already suggested, there are good reasons to be optimistic about the year
ahead, although that always has to be qualified by uncertainty about the timing and
rate of recovery in our markets. We will continue to update guidance throughout
the year, if and when there are material changes that affect our outlook.
We expect margin income to remain depressed, which will adversely impact
our full-year earnings. Otherwise, all of our core businesses remain resilient
and well-positioned. We expect to retain our clients and continue to win new
ones. We will, increasingly, be able to leverage these relationships to cross-sell
complementary products and services. In short, we will continue to focus on what
we can control. When the cycle turns back up, we will be able to take full advantage.
We are already seeing positive indicators for a rebound in our cyclical businesses,
with a good pipeline of opportunities awaiting the right conditions. In FY21, we will
see immediate returns on our investment in corporate governance services.
In Employee Share Plans, we’ve established an enviable track record in migrating
clients, with a leading platform to drive sales in a growing market and we are
planning to commence this roll out in Asia Pacific during FY21.
In Mortgage Services, our UK team completed the migration of all borrower
accounts on to our proprietary servicing platform. This was a sterling performance
given the final stages of that project coincided with the first wave of Covid-19
outbreaks in that region.
In Business Services, we expect further work to come across our desk in
bankruptcy claims administration, and we will continue to look for ways to expand
our Corporate Trust division, one of the highest quality businesses we have in
Computershare.
In Communication Services, we’re refreshing our digital toolkit to drive margin
growth and further sales. There is plenty of work to be getting on with.
My heartfelt thanks go out to every one of my fellow employees whose efforts have
made these results possible under extraordinary circumstances. Time and time
again, I’ve been struck by the selfless ethos of our people, going above and beyond
to look after our company, our customers and their fellow workers. I also note,
with sadness, the passing in May of one of our employees in US Communication
Services, Hoa Van Luong, due to Covid-19 related illness. With 39 years of service to
our company, and a valued colleague and friend to many, he will be greatly missed
– our thoughts and sympathy go out to his family.
To Simon Jones and the rest of the Board, I have very much appreciated your
support and counsel during a highly unusual year in our company’s history.
I’d also like to acknowledge our shareholders for their ongoing interest and
engagement as we continue to build a strong platform for Computershare’s
long-term growth and profitability.
Stuart Irving
CEO
8
COMPUTERSHARE AT A GLANCE
Edinburgh
Skipton
Dublin
Monaghan
Bristol
Jersey
Jersey
London
Madrid
Barcelonaa
Stockho
ockholmlm
Doxford
Doxford
CroCrossflatts
flatts
OsloOslo
Copenhagen
Rotterdam
Rotter
Warsaw
Zurich
Zurich
Rome
Rome
Rome
MMununich
PaParis
Turin
Beijing
Beijing
Hong Kong
Manila
ohannesburg
Johann
Perth
Adelaide
Melbourne
STAFF NUMBERS IN EACH BUSINESS LINE
Issuer
Services
4,234
Employee
Share Plans
1,086
Mortgage
Services
3,306
9 | COMPUTERSHARE | ANNUAL REPORT | 2020
COMPUTERSHARE AT A GLANCE
Calgary
VanVanV couver
Chicagoo
Denver
San Francisco
Los Angeles
Louisville
Phoenix
College Station
College Station
Toronto
Montreal
Boston
New York
New Jersey
Maroochydore
Brisbane
Sydney
Auckland
Business
Services
514
Communication
Services
869
Corporate and
Technology
2,637
10
KEY FINANCIAL METRICS
Management
revenue
2300.9 2356.5
2281.2
2114.0
1974.2
Management
EBITDA
674.9
646.4
622.6
532.6
540.8
16
17
18
19
20
Management
EPS
70.24
63.38
55.09
54.41
56.12
16
17
18
19
20
Cash flow
from
operations
608.8
514.1
457.7
305.1
286.8
16
17
18
19
20
Net Operating
Cash Flow
excluding
SLS advances
594.4
453.0
420.3
411.5
373.2
n
o
i
l
l
i
m
D
S
U
s
t
n
e
c
D
S
U
n
o
i
l
l
i
m
D
S
U
n
o
i
l
l
i
m
D
S
U
16
17
18
19
20
Statutory
EPS
76.57
55.17
48.76
42.97
28.55
16
17
18
19
20
Dividend
per share
46
44
40
36
33
16
17
18
19
20
2.12
Net Debt to
EBITDA ratio
excluding
non-recourse
SLS Advance
debt
1.93
1.84
1.60
1.33
n
o
i
l
l
i
m
D
S
U
s
t
n
e
c
D
S
U
s
t
n
e
c
D
U
A
s
e
m
T
i
16
17
18
19
20
16
17
18
19
20
11 | COMPUTERSHARE | ANNUAL REPORT | 2020
REVENUE
BY PRODUCT
EBITDA BY
PRODUCT
REVENUE
BY REGION
EBITDA BY
REGION
Issuer Services
Mortgage Services
& Property Rental Services
Corporate & Technology
Communication Services
& Utilities
Business Services
Employee Share Plans
& Voucher Services
Issuer Services
Mortgage Services
& Property Rental Services
Corporate & Technology
Communication Services
& Utilities
Business Services
Employee Share Plans
& Voucher Services
United States
Canada
Australia and
New Zealand
Asia
United Kingdom,
Channel Islands and Africa
Continental Europe
United States
Canada
Australia and
New Zealand
Asia
United Kingdom,
Channel Islands and Africa
Continental Europe
39%
29%
1%
7%
11%
13%
40%
22%
9%
5%
14%
10%
51%
8%
9%
5%
23%
4%
60%
13%
4%
7%
14%
2%
12
ISSUER SERVICES
RESILIENT REGISTER MAINTENANCE WITH
LOWER EVENT-BASED REVENUES
Naz Sarkar,
Global Head
Issuer Services
Issuer Services is our largest business, with a leading presence in every region. At its core are our Register Maintenance and
Corporate Actions businesses, which offer clients deep expertise in international markets to guide them through regulatory
requirements and highly complex transactions. We are leveraging our core skills into new, complementary and large adjacencies –
registered agent, entity management and private markets. The technologies and services we provide ease the burden of
governance, reporting and compliance for company officers. We acquired Corporate Creations in February 2020 and Verbatim in
July 2020 to extend our scale and capability in these new markets. While this year results were impacted by lower margin income
and reduced transaction fees, Issuer Services has the potential for significantly increased revenue earnings, and we look forward to
some catch-up in events-based revenues over time.
FY20 CC
$673.3
$136.1
$59.2
$38.5
$907.2
$263.0
29.0%
$181.7
21.8%
FY19 Actual
CC Variance
$700.8
$157.9
$67.3
$25.9
$951.9
$313.6
32.9%
$198.2
23.6%
-3.9%
-13.8%
-12.0%
+48.6%
-4.7%
-16.1%
-3.9%
-8.3%
-1.7%
FINANCIAL RESULTS
Revenue breakdown
Register Maintenance
Corporate Actions
Stakeholder Relationship Management
Issuer Services - Other
Total revenue
Mgmt EBITDA
Mgmt EBITDA margin
Mgmt EBIT ex Margin Income
Mgmt EBIT ex Margin Income margin
KEY
ACHIEVEMENTS
ACQUISITIONS
KEY PRIORITIES FOR FY21
Continue momentum
with client wins
Expand and cross-sell
registered agent services
Build out entity
management capability
Constant currency (CC) equals FY20 results translated to USD at FY19 average exchange rates.
13 | COMPUTERSHARE | ANNUAL REPORT | 2020
EMPLOYEE
SHARE PLANS
EQUATEX CONTINUES TO DELIVER, UPGRADE TO
THE ENHANCED SOLUTION PROGRESSING WELL
Francis Catterall,
Global Head
Employee Share Plans
Employee Share Plans leverages both local and global expertise and full-service capabilities to support the complex share plan
requirements of our clients and their employees. In FY20, our clients realised many benefits from the phased upgrade to our
EquatePlus platform which supported the anticipated positive impact of the Equatex acquisition. We have continued to upgrade
more clients to EquatePlus, and the market response to our enhanced offering in Europe has been encouraging, yielding positive
competitive outcomes. Asia Pacific will be the next focus for the roll-out of our enhanced solution.
FINANCIAL RESULTS
Revenue breakdown
Fee revenue
Transactional revenue
Margin income
Other revenue
Total revenue
Mgmt EBITDA1
Mgmt EBITDA margin
Mgmt EBIT ex Margin Income
Mgmt EBIT ex Margin Income margin
FY20 CC
FY19 Actual
CC Variance
$138.8
$130.1
$11.5
$12.6
$293.1
$56.1
19.1%
$41.1
14.6%
$130.4
$128.2
$15.7
$14.7
$289.0
$67.5
23.3%
$49.1
18.0%
+6.4%
+1.5%
-26.8%
-14.3%
+1.4%
-16.9%1
-4.2%
-16.3%
-3.4%
KEY
ACHIEVEMENTS
7%
FY20 growth pcp in net
competitive wins
96%
Satisfaction level for
EquatePlus clients
post-upgrade
Enhanced tax mobility
and financial reporting
solutions
KEY PRIORITIES FOR FY21
Continue to win
new clients
EquatePlus
roll out
Innovation
1 FY19 only includes eight months of Equatex, integration costs impacting EBITDA
14
MORTGAGE SERVICES
US ASSET SERVICING STRATEGY ON TRACK,
UK LOAN MIGRATION COMPLETE
Nick Oldfield,
Chief Financial Officer and
Global Head of Mortgage Services
Computershare offers a comprehensive range of services across the mortgage services value chain in the UK and US. Our UK
Mortgage business has completed the migration of all UKAR assets onto our core platform, despite the schedule for the final set
of clients coinciding with the peak of Covid-19 disruption. The migration team did a sterling job of executing the project without a
full presence in the office. To coincide with the reduced fixed fee revenue in the UK business, we have also continued to progress
our cost-out program to resize the operations appropriately, given the headwinds in the UK mortgage origination market that are
expected to persist for some time.
In the US, we have continued to build scale, with our mortgage book (Unpaid Principal Balances) up 16.4%. We’ve increased our
investments in mortgage servicing rights (MSRs) while acknowledging that current market value is less than book value, due to
prevailing economic settings.
FINANCIAL RESULTS
Revenue breakdown
US Mortgage Services
UK Mortgage Services
Total revenue
Mgmt EBITDA1
Mgmt EBITDA margin
Mgmt EBIT ex Margin Income
Mgmt EBIT ex Margin Income margin
FY20 CC
$438.7
$202.1
$640.9
$127.1
19.8%
$33.4
5.4%
FY19 Actual
CC Variance
$360.7
$255.2
$615.9
$134.5
21.8%
$58.6
10.0%
+21.6%
-20.8%
+4.1%
-5.5%
-2.0%
-43.0%
-4.6%
Note: FY20 UK Mortgages EBIT loss of ($7.8m), US Mortgages EBIT ex Margin Income margin 9.9%, increased by 320 bps
KEY
ACHIEVEMENTS
+11.2%
Increase in capital light
sub servicing UPB
320bps
Growth in underlying
US EBIT margin
ex Margin Income
$16.6m cost savings
delivered on UK cost
base of $122.5m
KEY PRIORITIES FOR FY21
Growth in US capital
light revenues
Improvement in US
operating margins
Delivery of UK
cost-out program
1
UK Mortgage Services EBITDA loss making ($6.6m)
15 | COMPUTERSHARE | ANNUAL REPORT | 2020
BUSINESS SERVICES
ACTIVITY GROWING IN
COUNTER-CYCLICAL REVENUE
Stuart Swartz,
Global Head
Business Services
Business Services is focused primarily on corporate services where the client requires trustee, custodial, fiduciary or agency
services. It’s also a great example of the benefits of incorporating counter-cyclical revenue drivers. By May 2020, we had already
been appointed to more bankruptcy cases than for the entire 2019 calendar year. In Class Actions, we’re seeing somewhat
reduced activity, and we expect a lag in earnings due to protracted schedules for court proceedings. Corporate Trust has
benefited from increased rates of issuance of covered bonds by Canadian banks, offsetting lower rates.
FINANCIAL RESULTS
Revenue breakdown
Corporate Trust
Bankruptcy
Class Actions
Karvy
Total revenue
Mgmt EBITDA
Mgmt EBITDA margin
Mgmt EBIT ex Margin Income
Mgmt EBIT ex Margin Income margin
FY20 CC
FY19 Actual
CC Variance
$92.1
$51.6
$101.2
-
$244.9
$89.1
36.4%
$31.6
16.8%
$85.7
$42.9
$121.1
$17.0
$266.7
$92.6
34.7%
$31.8
15.4%
+7.5%
+20.3%
-16.4%
-100.0%
-8.2%
-3.8%
+1.7%
-0.6%
+1.4%
KEY
ACHIEVEMENTS
18%
FY20 growth in
US Corporate
Trust mandates
2X
#2
Trustee & Fiduciary
Services balances doubled
Market Share position
retained in FY20
KEY PRIORITIES FOR FY21
Geographic expansion in
Corporate Trust services
Innovation in products
and services
Bankruptcy Market
Share growth
16
CORPORATE RESPONSIBILITY
SUSTAINABILITY
We have sustainability and environmental programs in place around the globe to further reduce our already low impact on the
natural world, underpinned by our corporate responsibility policy and annual sustainability objectives. For more information, visit
www.computershare.com/cr
FY20 has provided unique opportunities to accelerate our drive to reduce the environmental footprint of our business activities on
behalf of clients.
MOVING MEETINGS
ONLINE IN ISSUER
SERVICES
During the 2019 meeting season, Computershare supported 20 clients with hybrid or virtual meetings, and
we anticipated a steady increase in clients deploying digital meetings alongside those held in person.
At the start of the pandemic, this expectation changed dramatically, and we took our pre-existing virtual
AGM service offering and rapidly scaled it to meet the needs of hundreds of corporate clients across
multiple jurisdictions.
In the first six months of 2020, we facilitated around 1,000 online meetings, each having a significantly
lower carbon footprint than a physical meeting. We expect the adoption of online meetings to continue to
grow in the coming months.
DIGITAL ‘PAYMENT
HOLIDAYS’ IN OUR
LOAN SERVICES
BUSINESS
In response to the US and UK authorities introducing ‘mortgage payment holidays’ or ‘forbearance’, we
launched an online tool to allow our customers to apply for and extend payment holidays, avoiding the need
for paper-based processes. Around 44% of the payment holidays we granted in the UK are being managed
digitally, and 80% in the US. Also, in the US, we have delivered interactive, personalised videos educating
borrowers on their forbearance options and enhanced online self-service options including SMS, IVR and
web, reducing the use of traditional paper application forms.
In the UK, we have continued to expand our digital capability and refocus our efforts on future growth
through the successful migration of all mortgages to our iConnect online solution, which improves our
operational efficiency and reduces complexity.
PROMOTING FULLY
ELECTRONIC
PARTICIPATION IN
EMPLOYEE SHARE
PLANS
Over the past financial year, we’ve made significant progress in the transition of our EMEA employee
plans clients to the EquatePlus platform. By design, this upgrade brings with it significant improvements
from a sustainability perspective. Prior to the transition, our EMEA business generated approximately
300,000 participant communications per year which flowed through to a paper-based postal mailing.
Post upgrade to EquatePlus, which is scheduled for completion during FY21, this volume of paper-based
communication will be reduced by 90%. This includes the elimination of inbound paper-based requests
for enrolments and dealing activity, except for those situations in which the participant or client has
specific personal needs.
As our upgrade program progresses to other regions over the coming years, we anticipate making similar
reductions in printed material, making our Employee Share Plans business increasingly environmentally
friendly.
REPLACING
PRINT AND MAIL
WITH DIGITAL
COMMUNICATIONS
Our Communication Services business continues to evolve and deliver engaging multi-channel digital
communications, including email, SMS and secure electronic document retrieval to our clients, resulting in a
6.8% reduction in physical mail packs printed when compared to last year.
Although digital communication was already high on everyone’s agenda, Covid-19 has challenged clients,
Computershare and regulators to push digital channels even more. We anticipate the true environmental
impact of this to be seen in the coming financial year – for instance, we expect to see production of
supporting printed matter (like heavy Annual Reports, Prospectuses, etc.) to reduce between 20% - 40% as
content moves increasingly online.
ENABLING
SELF-SERVICE
THROUGH OUR
VIDEO CHANNEL
The Computershare YouTube channel, started in 2011, provides hundreds of ‘how-to’ videos aimed at making
it easy for people to manage their accounts electronically, whether updating a home address, obtaining
information for a tax return or understanding the vesting process. In the past year, it has had 110,000 views.
Our state-of-the-art video conferencing facilities give clients the option to collaborate without the need
to travel. We have installed 30 video conferencing units in meeting rooms across most of our large global
sites, including Melbourne, Zurich, Canton, Denver, Louisville, Bristol and Edinburgh. We have also rolled
out Microsoft Teams to our employees, allowing them to collaborate and meet face-to-face while enduring
lockdown in their part of the world.
17 | COMPUTERSHARE | ANNUAL REPORT | 2020
REDUCTION TARGETS
We have sustainability targets in place for our key locations around the world to ensure we maintain a focus on managing and
reducing our environmental impact wherever possible.
FY20 targets – complete
New Zealand Electricity: target achieved
We met and maintained our reduction target for this location.
FY15 figure: 324 kWh per FTE
FY20 target: 258 kWh per FTE
FY20 actual: 106 kWh per FTE
Canton
This office relocated during the target period.
Hong Kong
This office relocated during the target period.
New sustainability targets for Canton and Hong Kong will be set after stable baselines are in place at these new locations.
FY22 targets – two years to go – 63% on target
Crossflatts
What we’ve
done
Skipton
What we’ve
done
Halifax
What we’ve
done
Munich
What we’ve
done
Doxford
What we’ve
done
Electricity: On target
Undertaken LED lighting replacement and replacement of
over-door heaters to efficient alternatives.
Gas: Working to target
Made improvements to heating circulation to increase
efficiency.
Electricity: On target
Reduced IT server equipment which has been co-located offsite. Better utilised the capacity of our electric chillers for air
Gas: On target
conditioning, with support from the gas-powered chiller units.
Electricity: On target
We have met and maintained our target at this location since 2017. This office underwent a significant refurbishment in 2017
including new LED lighting and efficient controls, as well as a new heating and cooling system.
Electricity: Working to target
At the start of the target period, we undertook an extensive replacement program of our on-site IT infrastructure to reduce
energy consumption.
Electricity: Working to target
Consumption increased due to increased operating hours
at this location (up 28%) but has been consistently reduced
through management.
Gas: On target
Installed new, energy efficient boilers.
FY2023 targets – three years to go – 36% on target
Yarra Falls
What we’ve
done
Electricity: On target
Reduced our lighting and air
conditioning footprint to better
reflect this location’s headcount.
Lighting has been upgraded to LED
where this wasn’t already done.
Gas: Working to target
Reduced heating in underused
areas and reviewed heating
controls to minimise use
during out-of-hours periods.
Water: Working to target
Continued to upgrade to
efficient plumbing and sensors
and undertaken employee
awareness campaigns.
Waste: New target
This target is being reset to
reflect improved reporting data
now available at this location.
Bristol
What we’ve
done
Electricity: On target
Upgraded most of our lighting to
LED and are continuing to do this
where it hasn’t been done already.
Gas: Working to target
Undertaken a review of our
heating and air conditioning
controls to improve efficiency.
Water: Working to target
Installed water sensors in the
bathrooms to reduce water
usage.
East Beaver
Creek
What we’ve
done
Electricity: Working to target
Upgraded lighting to LED,
consolidated our printers and
decommissioned obsolete on-site
server equipment.
Gas: On target
Water: On target
Please note that a period of working remotely will have an impact on our figures in the coming financial year.
Waste: Working to target
Continued to raise awareness of
recycling and waste reduction
among employees through
communications campaigns.
Waste: Working to target
Continued to raise awareness of
recycling and waste reduction
among employees through
communications campaigns.
PROGRESS ON OBJECTIVES
TREE PLANTING PROGRAM
During FY20 we maintained our global tree planting program and committed
to planting 2,557 trees around the world, with the aim of covering 10% of
the carbon emitted as a result of our business air travel during the previous
financial year. Since 2016 we’ve planted 7,860 trees as part of the initiative.
In February 2020 we suspended all non-essential business travel due to the
pandemic. However, we’ll continue to work with our partners to plant further
trees in FY21 to cover business air travel during the first half of FY20.
GREEN OFFICE CHALLENGE
Last year, as part of our two-year commitment to cut single-use plastic from
across our business, we focused our annual Green Office Challenge on ideas to
reduce the use of plastic in our offices. Six proposals submitted by employees
received funding to help make a difference, including providing reusable cups
for hot drinks, replacing single-use cutlery with silverware and removing
single-use condiment sachets in cafeterias. This year’s Green Office Challenge
was postponed due to disruption caused by the global pandemic. Planning for
Green Office Challenge FY21 is underway, focusing on ways we can improve our
environmental footprint while working remotely.
GREEN IT
We continue to promote recycling of all devices that are retired from
service, with a significant number of laptops and desktops recycled
as part of our migration to Windows 10.
Computershare’s data centres are under continued investment, with
end of life equipment replaced with more efficient technology and
computer processes, ultimately reducing infrastructure footprint
and power consumption. A total of 20,717 kg of equipment was
recycled across the North American region in the past year, saving a
combined 65,751 kWh of electricity and 80,795 kg of CO2 per annum
over the life of the device.
Advancements in technology have helped to improve our employee
experience while our people work from home. In FY20, we
accelerated a large program of work to improve virtual collaboration
using Microsoft Teams. Over 7,900 active users now participate in
1,300 virtual team meetings, 1,300 calls and 135,000 chat messages
each workday. These investments will continue to reduce our travel
footprint when normal business operations resume.
18
COMMUNITY
Globally, Computershare is dedicated to supporting initiatives that
help alleviate poverty through our community giving program, Change
A Life. With a focus on sustainability, it provides an opportunity for
our employees to help build physical, long-term solutions for the
communities they voted to support. We invest 80% of donations in
global projects, and the remaining 20% is provided to local projects
via established charities, chosen by employees in each locality.
Computershare matches all employee payroll donations to Change A Life
and provides every staff member a day of paid volunteer leave each year
to support the charity of their choice.
AUD 655,000
Total donated to our
projects in FY20
AUD 10.2 MILLION
Total donated since launch
WORLD YOUTH INTERNATIONAL
Our employees chose World Youth International (WYI) to be our global Change A Life partner in 2017, and we made a five-year
commitment to the WYI School in Gokarna, Nepal. Change A Life is funding a range of improvements to the school, including
upgrades to classrooms and other facilities, extending the school program into Year 11 and 12, and supporting improvements
to the quality of education provided. WYI is an Australian-based charity committed to enhancing quality of life, strengthening
communities and reducing poverty through sustainable development projects.
In FY20 the WYI School:
Educated 507
students
Ran regular
competitions for
students, including
debating, dancing,
quizzes, chess,
handwriting and
poems
Achieved exam results
that were some of the
best in the school’s
history and well above
the national standard
average
Organised sports weeks,
arranging various inter-
house sports activities
such as football,
basketball, cricket,
Kabaddi and athletics
Received the ‘Best
Contribution to
Education’ and
‘The Best Principal’
awards for the region
Provided advanced
level and multimedia
training for teachers
Celebrated 20 years of
operation
Launched extra
activities for all
students, including
life skills training,
women’s empowerment
programs, police
partnerships and English
and science clubs
Due to Covid-19, the school went into lockdown in April and is due to reopen in September. Students who could access internet
were able to access government-assisted online education.
TREK NEPAL
In 2018 and again in 2019, Computershare funded an
employee trek with participants chosen from regular
contributors to Change A Life. Trek teams were drawn from
our UK and Europe region in 2018, and in 2019 from our Asia
Pacific region. Unfortunately, due to Covid-19, our 2020 trek
for North American staff has been cancelled.
The treks followed the Ghorepani Poon Hill trail in the
Annapurna region and concluded with a visit to the WYI
school. In 2019 our employees raised over AUD 195,000 which
went towards the completion and fit-out of a student boarding
home on campus.
19 | COMPUTERSHARE | ANNUAL REPORT | 2020
Construction began
in 2019
85% complete at
July 2020
Foundations built to
earthquake standards
Will be home to
25 female and
25 male students
The construction of the boarding home began in 2019
is now 85% complete. The foundations are built to
earthquake standards, making it one of the sturdiest
buildings in the region and a safe house for students in
the event of an earthquake. The dorms will be home to
25 female and 25 male students, allowing them to live on
campus and avoid traveling long distances to school each
day over roads which can become dangerous or impassable
during the monsoon storm season. Boarding fees will
ensure the self-sufficiency of the boarding home for years
to come, providing benefits to future students of the World
Youth International school. Completion of construction
is due for the end of 2020 and fit-out is scheduled to be
completed by April 2021.
Come-Share Education
SRI LANKA
Come-Share assists Sri Lankan students
from low-income families to complete their
high school education and undertake other
post-secondary education and training to
further their employment prospects.
Through the donations of our
staff, we have supported:
25 students in university, professional
and vocational training
39 students undertaking
12 students in ordinary
English and IT training 57 students in advanced level
level (O-level) courses 60 computers provided to students
(A-level) courses
LOCAL
CHARITIES
WE ALLOCATE
20% OF CHANGE
A LIFE FUNDS TO
LOCAL PROJECTS
VOTED FOR BY
EMPLOYEES
83 staff from Hong Kong and China donated HK$40,700 to a lucky-draw fundraising event to
support their local charity the Hans Andersen Club. Volunteers also prepared handmade gifts
and visited elderly residents who live alone on Lamma Island, an outlying island in Hong Kong.
In Autumn, our office in Boston
prepared 1,500 hat and glove packs
for children in association with their
local charity Cradles to Crayons. They
also wrote 1,500 cards with positive
messages, one to go into each pack.
During the holiday season, the Boston
team organised a giving tree with
ornaments – each ornament had an
outfit specification (size, item type,
favourite colour). In total, 88 outfits
were purchased and donated.
Our New Zealand office organised their
annual collection of non-perishable goods
and unwrapped Christmas presents,
which were donated to the Auckland City
Mission Christmas Appeal. A group of
seven staff volunteered at Eden Park to
assist the Mission in handing out food
parcels and gifts for children.
Construction began
in 2019
85% complete at
July 2020
Foundations built to
earthquake standards
Will be home to
25 female and
25 male students
The construction of the boarding home began in 2019
is now 85% complete. The foundations are built to
earthquake standards, making it one of the sturdiest
buildings in the region and a safe house for students in
the event of an earthquake. The dorms will be home to
25 female and 25 male students, allowing them to live on
campus and avoid traveling long distances to school each
day over roads which can become dangerous or impassable
during the monsoon storm season. Boarding fees will
ensure the self-sufficiency of the boarding home for years
to come, providing benefits to future students of the World
Youth International school. Completion of construction
is due for the end of 2020 and fit-out is scheduled to be
completed by April 2021.
20
TREK NEPAL
In 2018 and again in 2019, Computershare funded an
employee trek with participants chosen from regular
contributors to Change A Life. Trek teams were drawn from
our UK and Europe region in 2018, and in 2019 from our Asia
Pacific region. Unfortunately, due to Covid-19, our 2020 trek
for North American staff has been cancelled.
The treks followed the Ghorepani Poon Hill trail in the
Annapurna region and concluded with a visit to the WYI
school. In 2019 our employees raised over AUD 195,000 which
went towards the completion and fit-out of a student boarding
home on campus.
PEOPLE
VALUES
Our long-standing brand values of Certainty,
Ingenuity and Advantage represent what
we as a company bring to our clients every
day. In FY20, we extended our core values
by introducing our ‘Being Purple’ ways
of working; a set of positive behavioural
signposts for our people. ‘Being Purple’ also
helps us to define the people we want to
bring into Computershare, and the conduct,
behaviours and professional attributes we
want to promote and reward.
Detailed guidelines are provided to each
member of staff, including our board of
directors, so that our people know what is
expected of them. They reflect what actions
can be taken to deliver on these ways of
working at every level - from employee to
senior leader. We also provide guidance on
‘what it’s not’ so that our people understand
the behaviours we won’t accept.
Our Being Purple ways of working also reflect
the requirements of our well-established
policies on diversity and inclusion, human
rights, anti-bribery, corruption and
whistleblowing.
Move the
business
forward
E
G
A
T
N
A
V
D
A
Keep
customers
at our
heart
Work well
together
CERTAI
N
T
Y
Do the
right thing
World leaders
in financial
administration
U ITY
N
I N G E
Strive for
excellence
Be a
pioneer
CERTAINTY
INGENUITY
ADVANTAGE
Working well together means
working collaboratively, valuing
differences and building
partnerships to support business
outcomes. We expect our people to
show respect to people regardless
of their background, show support
through tough times and good, and
communicate openly, honestly,
clearly and regularly.
We also expect our people to ‘do
the right thing’. Each employee is
personally responsible and needs
to act with integrity. Our staff need
to follow through on commitments
and promises, take responsibility
and ownership of their actions and
ensure risks are managed while
complying with our policies.
21 | COMPUTERSHARE | ANNUAL REPORT | 2020
Taking pride in delivering
high-quality outcomes and
outstanding results is how we
strive for excellence. We expect our
employees to meet deadlines and
targets, use resources effectively
and maintain a high standard in
their work, even when workloads
come under pressure.
We also ask our staff to challenge
the status quo in order to do things
differently and better. This enables
us to be pioneers – curious and keen
to learn new things. Our staff are
encouraged to think creatively, seek
feedback and ask questions.
Our employees build long-lasting
relationships and deliver products
and services that meet customers’
needs as part of keeping customers
at our heart. Following this way
of working seeks to build on
relationships through proactive
communication.
We also ask our staff to continually
move the business forward by
maintaining high performance in the
face of change, to keep us ahead in
our industry. This means staying up
to date with our global priorities,
adapting and responding quickly
to changing circumstances and
staying calm under pressure.
COMPUTERSHARE DAY
On 29 May we celebrated our fourth annual Computershare Day, marking 26 years since Computershare was listed on the
Australian Securities Exchange. This year employees around the world took part in the festivities from home, as part of our
Computershare Talent Challenge. People sent in videos and pictures, and we awarded prizes for the best entry in each category
which included magic tricks, singing or playing music, dancing, arts and crafts, baking and costumes.
We presented our Purple Person awards digitally this year, recognising 25 employees for making outstanding contributions to
Computershare, and for exemplifying our values.
OUR
PURPLE
PEOPLE
FOR 2020
Jen Usher
Shared Services
UK
Leigh Thomson
Employee Share Plans
Australia
May Kong
Issuer Services
Hong Kong
Petra Gollong
Issuer Services
Philippines
Antonio Domingo
Issuer Services
Australia
Claire Vowles
Shared Services
UK
Inna Baranbaeva
Employee Share Plans
UK
Jenny Lannoy
Technology Services
Australia
Lynne Hartley
Loan Services
UK
Michelle Cantwell
Issuer Services
Ireland
Raylynn Friend
Technology Services
US
Audrey Selemela
Issuer Services
South Africa
Dolyana Ng
Shared Services
Australia
James Farmer
Loan Services
US
Jonathan Hach
Employee Share Plans
Switzerland
Michelle Tait
Communication Services
Canada
Chris Johal
Loan Services
UK
Doris Grave
Issuer Services
Australia
Jeff Quilter
Loan Services
UK
Lara McDermott
Business Services
US
Mary Hammer
Business Services
Canada
Marcetta Rhodes-Gaines
Loan Services
US
Nicole LeMay
Shared Services
US
Robert Spadaro
Communication Services
US
Trish Lamont
Technology Services
UK
22
GROUP OPERATING OVERVIEW
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the financial year were the operation of the following areas:
>
Issuer Services comprise register maintenance, corporate actions, stakeholder relationship management, corporate governance
and related services.
> Mortgage Services and Property Rental Services comprise mortgage servicing and related activities, together with tenancy
bond protection services in the UK.
> Employee Share Plans and Voucher Services comprise the provision of administration and related services for employee share
and option plans, together with Childcare Voucher administration in the UK.
> Business Services comprise the provision of bankruptcy, class actions and corporate trust administration services.
> Communication Services and Utilities operations comprise document composition and printing, intelligent mailing, inbound
process automation, scanning and electronic delivery.
> Technology Services comprise the provision of software specialising in share registry and financial services.
REVIEW OF OPERATIONS
Overview
Revenue for the Group fell 1.9% to $2,311.8m in constant currency terms. Underlying organic revenue growth, after adjusting for
margin income (-$45.1m), acquisitions and disposals (+$25.1m) and the UKAR fixed fee (-$40.9m), was 0.8%.
Margin Income declined $45.1m as a result of the global interest rate cuts throughout FY20 driven by the Covid-19 pandemic.
Issuer Services revenue excluding margin income was down 1.4% in constant currency terms. The decline was largely due to lower
shareholder activity in the US and lower transactional activity for stakeholder relationship management. This has been partly
offset by an increase in corporate actions activity and, encouragingly, growth in our new revenue streams which include four
months of Corporate Creations. Issuer Services EBITDA excluding margin income was down 8.7% to $183.7m.
Mortgage Services and Property Rental Services revenue excluding margin income grew 5.1% in constant currency terms. This
was due to continued growth in the US, with growth in the servicing portfolio, higher co-issue volumes and ancillary fees all
contributing, in addition to the annualised impact of the LenderLive acquisition. The expansion in the US is partly offset by the
reduction in the UKAR fixed fee (-$40.9m) and book run-off in the UK. However, on a positive note, we successfully migrated the
last of the remaining UKAR loans onto our UK servicing platform. This project was completed in May 2020. Overall, Mortgage
Services and Property Rental Services EBITDA excluding margin income was down 5.0% to $87.5m.
Employee Share Plans and Voucher Services revenue excluding margin income was up 1.6%. Employee Share Plans includes an
annualised contribution from Equatex (an additional four months in FY20 vs. FY19), partly offset by lower transactional activity
given the volatility in equity market conditions over the final quarter of FY20. Voucher Services revenues also declined due to
reduced parent numbers, reflecting the ongoing run-off of this business area. EBITDA excluding margin income was down 15.1%
to $54.7m.
Business Services revenue excluding margin income was down 8.9%. Excluding the Karvy revenue contribution of $17.0m in FY19,
revenue was modestly down 0.7%. This reflects lower Class Actions volumes partly offset by increased activity in the Bankruptcy
business and underlying growth in Corporate Trust. EBITDA excluding margin income was down 0.3%. Karvy EBITDA contribution
in FY19 was $7.1m.
Revenue for the Communication Services and Utilities business was down 1.1% and EBITDA was down 16.4% at $31.7m in
constant currency.
23 | COMPUTERSHARE | ANNUAL REPORT | 2020
Revenue
Business stream
Issuer services
Mortgage Services & Property Rental Services
Employee Share Plans & Voucher Services
Business Services
Communication Services & Utilities
Corporate & Technology
Total management revenue
Comparison in constant currency
FY2020 @ CC
$ million
FY2019 Actual
$ million
CC
Variance
FY2020 Actual
$ million
907.2
671.5
308.0
244.9
175.8
4.5
951.9
646.1
307.7
266.7
177.8
6.3
2,311.8
2,356.5
-4.7%
+3.9%
+0.1%
-8.2%
-1.1%
-28.6%
-1.9%
894.7
665.1
304.6
243.6
168.8
4.2
2,281.2
Total management revenue excludes management adjustment items further described in note 4 of the financial statements
Regions
ANZ
Asia
UCIA
CEU
US
Canada
Total management revenue
FY2020 @CC
$ million
FY2019 Actual
$ million
CC
Variance
FY2020 Actual
$ million
209.8
112.0
547.3
83.0
220.4
119.1
580.3
104.4
1,172.0
1,137.2
187.8
195.2
2,311.8
2,356.5
-4.8%
-6.0%
-5.7%
-20.5%
+3.1%
-3.8%
-1.9%
196.4
112.5
527.0
87.5
1,172.0
185.8
2,281.2
Operating costs
Operating expenses were down 1.1% on FY19 to $1,662.1m in constant currency terms. This includes a reclassification of costs under
AASB16 of $48.4m as depreciation and interest expense, and the net impact of acquisitions and disposals of $23.0m. Normalising
for these two items, operating expenses were up 0.4%. The increase is predominantly driven by investment in US Mortgage
Services, Bankruptcy and Employee Share Plans to drive growth, along with some wage inflation, whilst we also incurred increased
and largely one-off professional fees and accounting adjustments. The Group’s cost out program continues to deliver benefits with
$50.2m achieved in FY20 and $130.3m cumulative gross benefits achieved to date.
Earnings per share
Statutory basic earnings per share
Statutory diluted earnings per share
Management basic earnings per share
Management diluted earnings per share
2020
Cents
42.97
42.97
56.12
56.12
2019
cents
76.57
76.42
70.24
70.10
The management basic and diluted earnings per share amounts have been calculated excluding the impact of management
adjustment items (refer to note 4 in this financial report). All EPS numbers above have been translated at actual FX rates
(not constant currency).
24
BUSINESS STRATEGIES AND PROSPECTS
OUTLOOK
In August 2020, we provided earnings guidance for FY21. Overall, we expect Management EPS to be down by around 11% on a
constant currency basis. We anticipate EBIT excluding margin income across our operating businesses to improve around 10%
(again on a constant currency basis), reflecting the ongoing delivery of our various growth and cost-out initiatives. However this
underlying growth is expected to be more than offset by a reduction in margin income. The steep fall-off in margin income we saw
in 2H20 will continue across FY21, due to a combination of lower balances and very low interest rates, as existing term deposits run
off. Overall, we are assuming margin income to come in at around $100m – about half of the FY20 figure.
Turning to the individual business lines, in Issuer Services, we will have full-year contributions from our Governance Services
acquisitions, Corporate Creations and Verbatim Global Compliance. Organic growth in this business will be spurred by our Front
Office programs, new client wins and expansion in Registered Agent.
In US Mortgages, we expect to see lower average lifespans of assets under management. Whilst we will continue to amortise
non-performing portfolios over nine years, we will now be amortising performing portfolios over eight years (down from nine).
Against that, we do expect to see further expansion of capital-light subservicing and fee income from non-performing mortgages,
as forbearance periods and foreclosure moratoriums expire and special servicing opportunities start to open up.
In UK Mortgages, the loss of UKAR fixed fee income will be offset by reduced costs, as well as continued progress in our wider
cost-out programs. UK mortgage origination activity is expected to remain subdued.
In Employee Share Plans, we will continue to benefit from increased scale and synergies, and anticipate more competitive client
wins as we continue to roll out our industry-leading EquatePlus platform into new regions.
In Business Services, we expect continued growth in Corporate Trust and counter-cyclical opportunities (bankruptcy and Chapter
11) that will be offset by lower levels of class actions as cases are deferred or extended.
This outlook assessment, and other references to our FY21 outlook in this document, are subject to the forward-looking statements
disclaimer and a number of other assumptions provided in our FY20 results announcement disclosed to the Australian Securities
Exchange (Slide 95).
RISKS
The Board is ultimately responsible for setting the risk appetite for the Group and otherwise reviewing and approving
Computershare’s risk management framework and policies and assessing their effectiveness in mitigating the risks present in our
business. The Board delegates some of this responsibility to the Risk and Audit Committee. The Risk and Audit Committee is well
qualified with deep expertise in strategic, operating and financial risk management. It receives quarterly reports on the key and
emerging risks in the Group and meets with management to discuss and challenge its view on Group or relevant business line risk
positions as appropriate.
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 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 oversight of risk management activities and 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 effectively
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.
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 that could impact our business.
Many of our key businesses are also subject to direct regulatory oversight. We are required to maintain the appropriate
regulatory approvals and licenses to operate and, in some cases, adhere to certain financial covenants (such as capital adequacy).
Computershare has robust compliance management and monitoring programs in place to support these regulatory obligations.
25 | COMPUTERSHARE | ANNUAL REPORT | 2020
Our business is also at risk of disruption from new technologies and alternative service providers. This means we must constantly
be looking for ways to improve our services by investing in new technologies and processes. We have 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.
Our future prospects also depend on finding and executing on opportunities to grow and diversify our business. There is 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 registry and employee share plan administration businesses. We have a deliberately focused acquisition
strategy with rigorous approval processes, and we also undertake subsequent reviews of our acquisitions and their performance.
Computershare also operates across a diverse set of countries and tax jurisdictions. The tax environments in these jurisdictions
can be complex and subject to change, and these changes cannot be accurately predicted. Computershare operates a global
finance function to manage tax risk within the Group’s risk appetite and engages external tax advice as appropriate.
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, foreign exchange and interest rates have the ability to impact adversely on our
financial performance. Computershare generates significant revenues from the transaction processing fees we earn from our
services (including the interest income earned by investing client funds). These revenue sources are substantially dependent on
customer trading volumes, market prices and liquidity of securities markets. Sudden sharp or gradual but sustained declines in
market values of securities can result in reduced investor communication activity, including reduced mutual funds communication
volumes, reduced mergers and acquisitions activity, and reduced proxy activity; reduced trading activity; and illiquid markets.
Margin income is a key contributor to earnings. Changes in investment restrictions, interest rates and the level of balances that we
hold on behalf of clients can have a material impact on the Group’s earnings. For example, the swift and forceful response of central
banks in early March 2020 to the then-emerging Covid-19 pandemic, with interest rates being reduced to historic lows, resulted in
an immediate and significant impact on the margin income that Computershare generates from holding client balances.
We have strong relationships with the global financial institutions that hold our client balances. We have robust policies and other
protections to manage interest rate risk and other risks associated with placing those funds (including counterparty risk), and we
also make significant investments in processes and technology to identify, allocate, reconcile and oversee client monies.
In addition, in the course of its business, Computershare’s mortgage servicing business purchases Mortgage Servicing Rights
(MSR) in order to service a group or portfolio of mortgages. Interest rate volatility creates risk related to the ability to generate
revenue over the expected useful life of the MSR assets.
The market for Computershare’s products and services is rapidly evolving and highly competitive. We compete with a number
of firms that provide similar products and services to our own. In addition, we compete with our clients’ in-house capabilities to
perform functions that they might otherwise outsource to us. 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 maintains the capability to provide critical services to our clients during times of business disruption, through
strict business continuity planning, crisis management and disaster recovery processes. This capability covers the various risks
Computershare may face that may disrupt our critical services from cyber threat to natural disasters.
When the rapid spread of Covid-19 became apparent, we invoked our business continuity plans, which resulted in around 90%
of our staff remotely. Computershare’s response was managed through a dedicated crisis-management taskforce with board
oversight and reporting.
Computershare deals with a high volume of daily transactions that can be exposed to data loss and security breaches. The nature
of cyber-crime is constantly evolving, and information systems are vulnerable to cyber-attacks. Security breaches may involve
unauthorised access to Computershare systems and databases, damage to Computershare’s systems and the exposure and/or theft
of confidential 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 resiliency
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 endpoint, 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 appropriate insurance.
26
Governance
CORPORATE GOVERNANCE STATEMENT
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.
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 21 September 2020.
1. 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 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 and risk management – 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,
setting the Group’s risk appetite and approving enterprise risk management plans and monitoring the progress of major capital
expenditure, acquisitions and divestitures within the scope of Board approved delegations.
> Corporate governance – incorporates overseeing Computershare’s corporate governance framework, including approving
Computershare’s statement of values and code of conduct as well as 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.
2. 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; 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 the 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.
27 | COMPUTERSHARE | ANNUAL REPORT | 2020
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 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
7
5
5
7
8
8
7
7
6
6
5
4
7
5
6
5
7
4
7
There were no changes 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 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 the major markets in which the Group operates, new directors are, along with the rest of the Board, given the opportunity to
meet with 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, which 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.
28
CORPORATE GOVERNANCE STATEMENT
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: 64
Independent: Yes
Years of service: 15
STUART IRVING
CHRISTOPHER MORRIS
Position: Chief Executive Officer
Age: 49
Independent: No
Years of service: 6
Position: Non-Executive Director
Age: 72
Independent: No
Years of service: 42
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.
Board Committee membership
Member of the Nomination Committee
Term of office
Chris Morris and an associate
established Computershare in 1978.
Chris was appointed Chief Executive
Officer in 1990 and oversaw the listing of
Computershare on the ASX in 1994.
He 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 2018.
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 2009)
Non-Executive Chairman of DTI Limited
(resigned 2018)
Board Committee memberships
Member of the Nomination Committee
Term of office
Simon Jones was appointed to the Board
in November 2005 as a non-executive
director. Simon was appointed as
Computershare’s Chairman in November
2015 and was last re-elected by
shareholders in 2019.
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 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 Human Resources and
Remuneration Committee
29 | COMPUTERSHARE | ANNUAL REPORT | 2020
TIFFANY FULLER
B.Com, GAICD, ACA
JOSEPH VELLI
BA, MBA
ABI CLELAND
B.Com, BA, MBA.
Position: Non-Executive Director
Age: 50
Independent: Yes
Years of service: 6
Position: Non-Executive Director
Age: 61
Independent: Yes
Years of service: 6
Position: Non-Executive Director
Age: 47
Independent: Yes
Years of service: 2
Term of office
Tiffany Fuller was appointed to
the Board on 1 October 2014 as a
non-executive director. Tiffany was last
re-elected in 2019.
Term of office
Joseph Velli was appointed to the Board
on 1 October 2014 as a non-executive
director. Joseph was last re-elected in
November 2017.
Term of office
Abi Cleland was appointed to the
Board as a non-executive director on
14 February 2018 and was re-elected by
shareholders in November 2018.
Skills and experience
Tiffany is an experienced public company
non-executive director with broad
experience in chartered accounting,
corporate finance, investment banking,
funds management and management
consulting in Australia and globally.
Tiffany’s skills include finance and
accounting, strategy, M&A, risk and
governance. Her career includes roles at
Arthur Andersen and Rothschild and
spans multiple industry sectors,
including financial services,
technology, retail, resources and
telecommunications.
Other directorships and offices
Non-Executive Director of Washington
H. Soul Pattinson & Company Limited
(appointed in 2017)
Non-Executive Director of Smart Parking
Limited (appointed in 2011)
Non-Executive Director of Costa Group
Holdings Limited (resigned 2018)
Board Committee membership
Chair of the Risk and Audit Committee
Member of the Nomination Committee
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.
Other directorships and offices
Non-Executive Director of Paychex, Inc.
Non-Executive Director of Cognizant
Technology Solutions Corporation
Board Committee membership
Chairman of the Human Resources and
Remuneration Committee
Member of the Nomination Committee
Skills and experience
Abi Cleland has extensive global
experience in strategy, M&A, digital
and business growth. She has held
senior executive roles in the industrial,
retail, agriculture and financial services
sectors at companies including ANZ,
Amcor, Incitec Pivot, Caltex after
starting her career at BHP. Between
2012 and 2017, Abi set up and ran an
advisory andmanagement business,
Absolute Partners which focused on
strategy, M&A and building businesses
leveraging disruptive changes.
Other directorships and offices
Non-Executive Director of Orora Limited
(appointed in 2014)
Non-Executive Director of Sydney Airport
Limited (appointed in 2018)
Non-Executive Director of Coles Group
Limited (appointed in 2018)
Non-Executive Director of BWX Limited
(resigned in 2017)
Non-Executive Director of Swimming
Australia
Board committee membership
Member of the Human Resources and
Remuneration Committee
Member of the Nomination Committee
30
CORPORATE GOVERNANCE STATEMENT
LISA GAY
BA, LLB
PAUL REYNOLDS
BA, PhD
Position: Non-Executive Director
Age: 58
Independent: Yes
Years of service: 2
Position: Non-Executive Director
Age: 63
Independent: Yes
Years of service: 2
Term of office
Lisa Gay was appointed to the Board
as a non-executive director on
14 February 2018 and was re-elected by
shareholders in November 2018.
Term of office
Paul Reynolds was appointed to the
Board as a non-executive director on
5 October 2018 and was re-elected by
shareholders in November 2018.
Skills and experience
Lisa Gay is a highly regarded business
leader with extensive financial services
experience in funds management,
investment banking, and stockbroking.
She was formerly Chair of the Australian
Securities and Investment Commission’s
Markets Disciplinary Panel and
Deputy Chair of the Indigenous Land
Corporation. From 1990-2010 Lisa was
general counsel and managing director
of Goldman Sachs Group Australia.
Other directorships and offices
Non-executive Director of Victoria Funds
Management Corporation
Non-executive Director of Koda Capital
Member of the Council of Trustees of the
National Gallery of Victoria
Board committee membership
Member of the Risk and Audit Committee
Member of the Nomination Committee
Member of the Human Resources and
Remuneration Committee
Skills and experience
Paul Reynolds has gained extensive
leadership skills from his previous
experience in CEO and Chairman
positions with complex, large-scale
infrastructure enterprises. He was a
member of the board at British Telecom
from 2001-2007 and CEO of one of its
largest businesses, BT Wholesale, where
he led the global technology divisions
and many of its biggest transformation
programs. From 2007-2012, Paul was
CEO of Telecom New Zealand, during
the world’s first structural separation
into independent retail and network
companies. Paul is based in the UK.
Other directorships and offices
Non-Executive Chairman of 9 Spokes
Limited (appointed in 2014)
Non-Executive Director of Talk Talk
Telecom Group Plc
Board committee membership
Member of the Risk and Audit Committee
Member of the Nomination Committee
31 | COMPUTERSHARE | ANNUAL REPORT | 2020
3. 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 (six out of eight) are independent, and were so throughout the reporting period. The two directors who are not considered
to be independent are Chris Morris, due to his substantial shareholding in the Company, and Stuart Irving, as the current Group
Chief Executive Officer.
To determine the independence of a director, the Board must consider several 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
In relation to the Chairman, Simon Jones, the Board notes that he was first appointed as a non-executive director in November
2005 and subsequently as Chairman in November 2015. The Board has considered and is satisfied that Mr Jones’s tenure as a
director does not have any impact on his capacity to bring an independent judgement to bear on issues before the Board or to
act in the best interests of the Company and its shareholders generally. The Board also notes that Joseph Velli is a director of
Cognizant Technology Solutions Corporation, a company which supplies IT and business outsource services to the Group. The
Board has considered and is satisfied that Mr Velli’s position as a director of Cognizant Technology Solutions Corporation does not
have any impact on his capacity to bring an independent judgement to bear on issues before the Board. The Board has appropriate
procedures in place to manage circumstances where a matter relating to Cognizant Technology Solutions Corporation might be
under consideration by the Board.
4. BOARD MEETINGS AND REPORTS
The Board’s standard annual meeting schedule includes four in-person meetings each year, as well as a series of scheduled update
meetings. The Board will also meet as required to discuss, and if appropriate, approve specific strategic initiatives contemplated
by the group. When the Board meets in person, those meeting will generally take place over three days and provide the Board
with the opportunity to meet senior management relevant to the agenda for the meeting. At its meetings, the Board 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 Committees of the Board also meet regularly to fulfil their duties, as discussed further below.
Due to the Covid-19 pandemic, the Board met more frequently in FY2020 than is typical and, in particular, was meeting initially
weekly and subsequently fortnightly during the initial phase of the pandemic as the Group initiated its business continuity plans.
Also, given restrictions on travel, the Board replaced the in-person meeting that was scheduled in June 2020 with a virtual Board
meeting and associated Committee meetings held by video conference. This form of Board meeting has continued into FY21 and is
anticipated to be required for the foreseeable future.
Group management provides monthly reports to the Board detailing current financial information concerning the Group.
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 Board received additional reporting during the initial stages of the Covid-19
pandemic, which provided the Board with strong oversight of business continuity and remote working arrangements, trading updates
across business lines, enhanced cash and liquidity reporting as well as how key risks within the group were being managed.
5. BOARD COMMITTEES
To assist in discharging its responsibilities, the Board has established four committees.
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 Committee also reviews material legal matters and receives updates
on reports made under the Group’s Whistleblower program.
The Risk and Audit Committee is chaired by Non-Executive Director Tiffany Fuller. The Committee currently has three other
members, Simon Jones, Lisa Gay and Paul Reynolds. 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.
32
CORPORATE GOVERNANCE STATEMENT
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.
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.
Human Resources and Remuneration Committee
The Human Resources and Remuneration Committee’s principal functions are to advise the Board on matters relating to human
resources, talent management and diversity, as well as the remuneration of the Group’s key management personnel.
In relation to remuneration related matters, the Committee considers, reviews and makes 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 executives
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 executives
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
In relation to human resources and related matters, the Committee considers, reviews and makes recommendations to the Board
about the following matters:
> succession planning for senior management and development frameworks for key talent
>
the effectiveness of the Group’s diversity policies and initiatives
> monitoring surveys conducted by the company in relation to the culture of the organisation; assessing performance against
measurable objectives for achieving diversity on an annual basis, including the relative proportion of women at all levels; and
Computershare’s compliance with external reporting requirements
The Committee is chaired by Joseph Velli. The Committee has three other members, Simon Jones, Lisa Gay and Abi Cleland.
Pursuant to its Charter, the Committee must always be comprised of a majority of independent directors.
The Committee has access to Group management and, where necessary, may consult independent experts to discharge its
responsibilities effectively.
The Human Resources and Remuneration Committee is governed by a Board-approved charter. A copy of this Remuneration
Committee Charter is available from http://www.computershare.com/governance.
For details of directors’ attendance at Committee meetings, see the Directors’ Report, which starts on page 40 of this
Annual Report.
6. 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 the date of this report, all non-executive directors hold a relevant interest in shares in the Company.
7. 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 2020, see the Remuneration Report, which starts on page 43
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.
33 | COMPUTERSHARE | ANNUAL REPORT | 2020
8. ANNUAL REVIEW OF BOARD AND GROUP MANAGEMENT PERFORMANCE
The Board’s performance is regularly reviewed by the directors of the Company as a whole. 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 questionnaires relating to Board and Committee performance during the reporting period and the Board
and relevant Committee then reviewed and discussed 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 can 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 Human Resources and
Remuneration Committee.
9. 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 122) 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 reviewed and assessed the Group’s risk management practices throughout the year and also
undertook a formal review of the Group’s risk management framework during the reporting period and was satisfied that it
remained sound.
10. DIVERSITY AND INCLUSION
This summary outlines our progress during FY20 and covers our focus areas for FY21.
Progress during FY20
We continue to make progress on our Diversity and Inclusion (D&I) initiatives, taking these steps forward during the year:
> Appointed a Global D&I Manager to drive the execution of our D&I strategy
> Revised, published and promoted our D&I policy to all global staff
> Worked to embed our Being Purple ways of working, with a focus on promoting ‘Working well together’ in training programs and
communications
> Organised and promoted activities linked to D&I calendar events such as Black History Month and International Women’s Day
> Held a range of diversity, inclusion and wellness events and initiatives, and published regular communications covering a variety
of topics, such as hearing loss, flexible working and mental health
> Held our second Women4Women conference, this time virtually, for North American employees
> Rolled out new technology and flexible work practices to support our employees’ ability to work from home and to balance their
professional and personal responsibilities
> Fostered awareness, understanding and support for mental wellbeing by developing a mental health toolkit, hosting mental
health webinars and posting a wide variety of articles and resources
During FY20, significant global events brought workplace changes that impacted our D&I activities, notably the large-scale move
to working remotely. This has further widened our potential recruitment pools, increasing the opportunity to recruit from more
diverse backgrounds.
At the same time, our commitment to the development of a diverse and inclusive culture where all staff are given an equal
opportunity to succeed remains. Our D&I strategy already provides a clear pathway for ongoing improvements to our processes,
practices and systems relative to inclusivity and equality – we will drive this forward with a renewed focus in the coming year.
Computershare’s Change A Life charity donated to the Equal Justice Initiative, which works to improve fair treatment under the law
for communities marginalised by poverty and discouraged by inequality.
34
CORPORATE GOVERNANCE STATEMENT
Despite interruptions to some of our projects due to impacts from Covid-19, we have continued to make progress on our local D&I
initiatives, some of which are noted below.
In the US
Over the past year we have:
> Undertaken more work in support of our Affirmative Action Program compliance
>
Incorporated the testimonials of armed service veteran employees in our recruitment activities
> Leveraged our Women4Women network (see below) to promote roles and facilitate the development of cooperative and mentor
networks
> Partnered with state and national associates who work to help people with disabilities gain employment and integrate into our
workforce
> Represented our company at career events
> Developed advertising focused on attracting talent from minority groups
Our 2020 Women4Women Summit shifted to a virtual event due to Covid-19. We have continued to run the agenda by hosting a
monthly webinar for designated attendees and W4W network members.
In the UK
We became a Disability Confident employer, a certification showing we fulfil criteria for supporting those with disabilities and other
health conditions through our employee lifecycle. Disability Confident is a government scheme in the UK designed to encourage
employers to recruit and retain disabled people and those with chronic health conditions. This scheme is designed to create a
movement for change, encouraging employers to think differently about disability, halve the disability employment gap and provide
employers with the skills and tools they need to retain disabled staff.
Internship programs
We’ve run paid internship (or local equivalent) programs in South Africa, US, Germany, HK and UK.
These programs invite students and those with disabilities to the organisation to help them gain work experience and knowledge of
our business environment, as well as exposure to career opportunities in their field.
Feedback on Measurable Objectives
Objective
Measurement
1. Champion realignment: Realign our previously regional
champion system to a global structure. We aim to do this
by the end of December 2019. This will go hand in hand
with appointing a D&I Manager early in 2020.
2. Strategy: Drive the execution of our three-year D&I
strategy through our global business lines, with the
realigned champions group and dedicated D&I Manager.
D&I Manager appointed, albeit later than intended due to the
onset of Covid-19. Champion structure yet to be fully realigned.
We continue to make progress with communication and
awareness of D&I in the workplace and are at the early stages
of embedding D&I principles into our operations and processes.
We are 30% along our three-year D&I strategy.
3. Training: Further extend the D&I training available via
our Learning Management System and Performance
Management toolkit, with the aim of continuing to raise
awareness and improvements in key outcomes in line with
our D&I strategy.
In FY20:
Total of 15,855 ‘hits’ on D&I related learning assets:
E-learning = 13,460
Videos = 1,473
Webinars = 471
Online resources and toolkits = 451
4. Communication: Continue to deliver regular, quality D&I
related communications across all staff.
5. Reporting: Continue to develop the D&I reporting available
across all data categories in line with the global People
data strategy.
35 | COMPUTERSHARE | ANNUAL REPORT | 2020
We have recently implemented a new digital learning platform
globally, meaning 100% of our global workforce have access to
digital learning content in FY20. This provides access to another
414 learning assets related to D&I.
We launched a new global series of regular diversity, inclusion
and wellness events, including regular communications on a
variety of topics. We ran communications campaigns for hearing
loss, Black History Month and International Women’s Day.
Communications published: 25
Readership stats: 1,003 unique readers
Appointed a Global Management Information (MI) Manager in the
People team. Created automated global People-related reporting.
Made headway into D&I data capture strategy. Required reporting
on gender and other demographics delivered accurately and
on time.
Gender diversity statistics for FY20
The table below includes data on global gender statistics at a global level as at 30 June 2020. Observations include:
> Representation on the Computershare Board is currently 37.5% female, 62.5% male
> The number of women as a percentage of overall staff has not changed year on year, and remains at 54%
> The percentage of females in executive ranks has not changed year on year, and remains at 28%
> Across our countries and business lines, the general trend has been towards an increase in females in managerial positions
Board (inc. CEO)
Direct reports of CEO
Company Executive
Senior Manager
Manager
Other
Total
Data valid as at 30 June 2020.
F
3
3
34
193
912
5,410
6,555
M
5
13
85
306
1,016
4,249
5,674
F%
38%
19%
29%
39%
47%
56%
54%
M%
63%
81%
71%
61%
53%
44%
46%
Total
8
16
119
499
1,928
9,659
12,229
Change to
Female %
-
+
-
+
+
=
=
Company Executive means a person reporting to a direct report of the CEO. Senior Manager means a person reporting to a
Company Executive.
FY21 focus areas and objectives
Objective
Measurement
1. Strategy: D&I Manager will drive the execution of the
existing D&I strategy through our global business lines,
with D&I champions who will be aligned to regions and
business lines.
2. Training: Further extend the D&I training available via
our Learning Management System and Performance
Management toolkit, with the aim of continuing to raise
awareness and improvements in key outcomes in line with
our D&I strategy.
3. Communication: Continue to deliver regular, quality D&I
related communications across all staff.
4. Engagement: Generate more employee involvement in D&I
related activities such as awareness weeks, focus groups
and global virtual events.
To be measured using completion statistics from our roadmap of
action plans.
To measure the effectiveness of the strategy, we will use
statistics from diversity-related programs and our People
Management system as well as through surveys, performance
reviews, exit interviews, employee referrals and open discussion
forums.
To be measured using statistics from our Learning Management
System records.
To be measured using reporting from our internal
communications reporting system, along with feedback from our
employee survey.
To be measured by the number of participants involved in
planning D&I events and attendees at D&I related events;
statistics that track the increase or decrease in the number of
participants; ratings from responses in the Employee Opinion
Survey that relate to D&I.
5. Reporting: Continue to develop the D&I reporting available
across all data categories in line with the global People
data strategy.
Delivery of global, accurate D&I data points to support
strategy work.
6. Board: The composition of the Computershare board
should not have less than 30% of its directors of each
gender.
To be measured using gender diversity statistics compiled for the
Annual Report.
Our D&I Policy is available from http://www.computershare.com/governance.
11. WORKPLACE GENDER EQUALITY REPORT
In each country in which Computershare operates, the company complies with legislated diversity reporting requirements. In
Australia, Computershare met its reporting requirements under the Federal Government’s Workplace Gender Equality Act 2012,
including submitting an annual public report on 17 July 2020.
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.
36
CORPORATE GOVERNANCE STATEMENT
12. 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 the Schedule to 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
13. 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 2020, as detailed on page 122 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
2019.
14. 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.
15. 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
16. 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. Since 2017,
the Company has conducted its AGM as a hybrid meeting which provides an opportunity for shareholders to attend the meeting
via an online platform. Attending the meeting online enabled shareholders to view the AGM live and to also ask questions and
cast direct votes at the appropriate times whilst the meeting was in progress.
37 | COMPUTERSHARE | ANNUAL REPORT | 2020
> 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. Due to the Covid-19 pandemic, Computershare
intends that its 2020 AGM will be held as a virtual online-only meeting. This will enable shareholders, no matter where they are
located, to participate in the AGM. Shareholders who are unable to attend and vote during the meeting are encouraged to vote
electronically in advance 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.
17. 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 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 Group General Counsel and 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.
Announcements that do not require the approval of the Board can be approved for release by the Chief Executive Officer having
regard to the advice of the Disclosure Committee (as appropriate).
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, the Chair of the Risk and Audit Committee 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
18. 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. Audit services have been put out to tender since
their initial appointment.
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 59 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 58 of this Annual Report).
38
CORPORATE GOVERNANCE STATEMENT
19. 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 Chair 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
and 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 within specific timeframes which are
actively monitored. All internal audits are conducted in accordance with the Institute of Internal Auditors (IIA) Standards for the
Professional Practice of Internal Auditing.
20. 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 an externally managed hotline and web portal, or by directly contacting
designated regional Whistleblower officers. Any reported concerns are assessed and handled by these 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 and more serious matters may be escalated to the Committee within a reporting period where
appropriate.
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
21. CORPORATE RESPONSIBILITY
For details relating to the Company’s corporate responsibility initiatives, see pages 17 to 20 of this Annual Report.
A copy of the Board-approved Corporate Responsibility Policy is also available from the corporate governance section of
http://www.computershare.com/governance
22. 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.
The maintenance of a safe and healthy working environment for staff globally was identified as the key priority for the group at
the outset of the Covid-19 pandemic. Remote working measures were deployed for more than 90% of our staff and, where roles
could not be performed remotely, strict Covid-19 safety protocols were implemented across all work-sites in accordance with local
requirements.
23. 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 Group General Counsel of Computershare and is a Fellow of the Governance Institute of Australia.
All directors have access to the advice and services of the Company Secretary.
39 | COMPUTERSHARE | ANNUAL REPORT | 2020
DIRECTORS’ REPORT
The Board of Directors of Computershare Limited has pleasure in submitting its report for the financial year ended 30 June 2020.
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)
Abigail Pip Cleland
Tiffany Lee Fuller
Lisa Mary Gay
Christopher John Morris
Paul Joseph Reynolds
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 Operating Review set out on pages 23 to 24 and form part of
this report.
CONSOLIDATED PROFIT
The profit of the consolidated entity for the financial year was $232.7 million after income tax. Net profit attributable to members
of the parent entity was $232.7 million, which represents a decrease of 44.0% on the previous year’s result of $415.7 million.
Profit of the consolidated entity for the financial year after management adjustment items was $303.8 million after income tax and
non‑controlling interests. This represents a decrease of 20.3% on the 2019 result of $381.4 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
Amortisation of intangible assets
Acquisitions and disposals
Acquisition related expenses
Benefits of tax losses not previously recognised on Equatex acquisition
One‑off tax expense on Equatex IP restructure
Acquisition accounting adjustments
Gain on disposal of Karvy
Other
Major restructuring costs
Marked to market adjustments ‑ derivatives
Impairment charge – investments in associates
Restatement of deferred tax balances due to US tax law changes
Put option liability re‑measurement
True‑up of US tax reform impact on foreign subsidiary profits
Net profit after management adjustment items
2020
$000
2019
$000
232,657
415,732
42,597
40,074
15,656
13,575
(7,666)
(1,054)
(1,039)
-
5,801
713
-
(106,442)
19,939
2,752
-
-
-
-
14,791
(3,053)
13,511
(12,819)
(1,672)
1,153
303,842
381,364
40
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 4 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 2019 was declared on 14 August 2019 and paid on 16 September 2019. This
was an ordinary dividend of AU 23 cents per share, franked to 30%, amounting to AUD 124,864,490 ($83,864,241).
An interim dividend was declared on 12 February 2020 and paid on 19 March 2020. This was an ordinary dividend of AU 23 cents
per share, franked to 30%, amounting to AUD 124,380,452 ($83,539,141).
A final dividend in respect of the year ended 30 June 2020 was declared by the directors of the Company on 11 August 2020 and
paid on 14 September 2020. This was an ordinary dividend of AU 23 cents per share, franked to 30%. As the dividend was not
declared until 11 August 2020, a provision was not recognised as at 30 June 2020.
REVIEW OF OPERATIONS
The review of operations is outlined in the Group Operating Review set out on pages 23 to 24 and forms part of this report.
SIGNIFICANT EVENTS AND SIGNIFICANT CHANGES IN ACTIVITIES
A discussion of significant events and significant changes in activities, if applicable, is included in the Group Operating Review set
out on pages 23 to 24 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 matters or circumstances have 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 25 to 26 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 2020 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.
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
AP Cleland
TL Fuller
LM Gay
SD Jones
CJ Morris
PJ Reynolds
JM Velli
41 | COMPUTERSHARE | ANNUAL REPORT | 2020
Number of
ordinary shares
Number of
performance rights
250,193
12,334
14,500
19,700
46,619
31,045,300
8,000
17,000
320,150
-
-
-
-
-
-
-
Meetings of directors
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
Human Resources and
Remuneration Committee
Meetings
A
22
21
21
21
22
20
22
20
B
22
22
22
22
22
22
22
22
A
-
-
8
8
8
-
7
-
B
‑
‑
8
8
8
‑
8
‑
A
4
4
4
4
4
4
4
4
B
4
4
4
4
4
4
4
4
A
-
6
-
-
6
-
-
6
B
‑
6
‑
‑
6
‑
‑
6
SJ Irving
AP Cleland
TL Fuller
LM Gay
SD Jones
CJ Morris
PJ Reynolds
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 forms sub‑committees to consider specific transaction opportunities as appropriate.
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.
42
REMUNERATION REPORT
CHAIRMEN’S LETTER
Dear Shareholders
On behalf of the Board, we present Computershare’s remuneration report for the financial year ended 30 June 2020. Our aim
in preparing this report is to enable you to understand the links between remuneration, company strategy and Computershare’s
performance; and the framework we have in place to provide effective governance over remuneration at Computershare.
RESPONSE TO PANDEMIC
As we’ve already observed, the last four months of FY2020 made it an extraordinary year. Coming into March, our earnings were
slightly ahead of internal assumptions for the second half, and we had confidence in meeting guidance. Our published initiatives were
on track and execution was running to plan, including the Equatex integration, the Loan Services asset migration program in the UK
and growth in the US Loan and Issuer Services businesses.
The global Covid‑19 outbreak had a sudden and profound impact on global trading conditions; central banks cut interest rates which
impacted our margin income earnings, and local restrictions affected our business operations. This had a material effect on our
earnings, which could not have been foreseen or mitigated after the fact.
The Board commends our management team for their decisive response to these events. Firstly, they took immediate action to
safeguard the health and safety of our employees. A global pandemic taskforce was assembled, working around the clock to put
measures in place to implement Covid‑19 protocols in our offices and move over 90% of our workforce to remote working. That they
were able to achieve this without impacting our service delivery is remarkable.
Secondly, our businesses stepped up to provide our clients and customers with critical support, introducing innovative solutions
quickly and effectively. We facilitated over 1,000 virtual AGMs across the globe, swiftly processed mortgage payment holiday requests
and facilitated significantly increased numbers of capital raisings in Australia and Hong Kong.
Thirdly, we took steps to shore up the financial health of our business, including extending the duration of some debt and repatriating
funds to help with liquidity. We took steps to protect staff, so our response did not involve material numbers of redundancies, the
receipt of JobKeeper payments or similar government subsidies. While a small employee group was furloughed in the UK, this was
largely driven by employee choice (for instance, due to childcare responsibilities). Any government assistance was passed in full to the
affected employees directly.
In short, the entire organisation rose to an extraordinary challenge, working exceptionally hard to mitigate the impact of the pandemic
on our customers and clients, and on their fellow employees. Our management team delivered in the midst of unprecedented
circumstances. The Company provided updated guidance several times, then management focused on meeting that guidance. Their
resilient performance has enabled us to maintain our full year dividend, has kept our balance sheet sound without the need to raise
additional capital, and did not shift any of the burden onto our workforce. Instead, they continued to invest in our people, providing
greater flexibility and support and making provisions for hardship relief and mental health care. Our culture stood out again.
Despite ongoing uncertainty, our management team has renewed their priorities for the year ahead, continuing our long‑term work
of building scale and greater exposure to structural growth trends. While there are short‑term opportunities to be realised, their
main focus continues to be on leveraging our core strengths: making strategic investments, disciplined execution, and achieving ever
greater efficiencies.
OUTCOMES FOR FY2020
The challenging economic environment in the latter stages of FY2020 and its impact on
Computershare’s financial performance translated into materially reduced outcomes on
executive pay.
In relation to the Group’s STI plan, the management EPS result for the year was below threshold
and EBITDA against budget was above threshold but below target across most business lines,
which speaks to the resilience in the underlying business and the solid achievements delivered in
the first eight months of the year. Overall, STI payments in FY2020 were paid out on average at
43% of maximum and at around 57% of the level of payments in FY2019.
The business also decided to make a special support payment to the bottom two quartiles of
employees who would be especially vulnerable to the economic challenges this year.
The FY2018 LTI grant was tested, and the outcome was that the management EPS did not meet
hurdle. The relative Total Shareholder Return (rTSR) across the performance period was just
below the median, and as a result, the FY2018 LTI grant did not vest for executives. Despite the
FY2018 LTI grant tracking well above the relevant performance hurdles throughout the first 32 of
the 36 months of the performance period, the Board did not exercise its discretion to allow any of
the FY2018 LTI awards to vest.
On reflection, and noting the approximate 20% reduction in the Computershare share price from
$16.79 at the start of FY2020 to $13.25 at the end of FY2020, the Board is satisfied that executive
remuneration outcomes in FY2020 are aligned with the overall shareholder experience.
The CEO’s expat arrangement ended 31 March 2020 as per his employment agreement.
FY20 CEO STI
DOWN 46%
on FY19
DECREASE
-$737,907
CEO LTI (FY18)
NO AWARD
DECREASE
100%
43 | COMPUTERSHARE | ANNUAL REPORT | 2020
DIRECTORS’ REPORT ARRANGEMENTS FOR FY2021
The swift and forceful response of central banks to the emerging pandemic in early March 2020, with interest rates being reduced
to historic lows, resulted in an immediate and significant impact on the margin income that Computershare generates from holding
client balances. This impact will flow through into FY2021 and beyond with a full year of interest rate reductions and hedges rolling
off. Yield curves across major currencies indicate the longer‑term outlook for interest rates will remain subdued.
While the market has had the opportunity to factor this interest outlook into its assessment of Computershare’s prospects, its
impact on Computershare’s variable incentive plans is significant and ongoing. The FY2018 LTI grant has not vested, and the
retention and incentive value in the current FY2019 and FY2020 LTI grants has been materially eroded as the component subject
to the EPS hurdle has been rendered ineffective. An FY2021 LTI grant under the same terms would be similarly challenged.
The implication is, no matter how much the underlying business is improved by executives across the next few years to the benefit
of shareholders, that negative EPS growth of FY2020 and the anticipated drop in margin income in FY2021 and potentially into
FY2022 means executives would not be appropriately rewarded for delivery of future shareholder value.
The main aim of our executive remuneration strategy and structure is to ensure that executives are rewarded when they deliver
positive outcomes to our shareholders. In considering remuneration changes, the Committee ensures all executive pay decisions
are based on the following four principles:
> Fairness – ongoing plan design must motivate and stretch the executives to focus on the right outcomes for the business and
to reward what the executives can influence. In particular, because the impact of interest rates on Computershare’s financial
performance is largely outside management’s control, the Board’s view is that this presents a challenge to the current structure
and design of the Group’s incentive plans.
> Alignment – incentive plan design and outcome should align to shareholder experience and company recovery in a meaningful
way while also being mindful of the general employee experience. Plan measures should drive sustained, long‑term,
organisational growth and success.
> Simplicity – where possible, plan design should be simple to explain and to execute. It should strike the right balance between
fixed and at‑risk pay.
> Risk management – Board discretion or plan amendments must be applied on a robust basis, ensuring no windfall occurs to
participants. Due consideration is given to business and operational risk, and the Group’s values and culture, through plan design
such as clawback and malus.
The changes proposed for FY2021 are summarised in section 2.4 of the remuneration report and based on the principles noted
above. We look forward to continuing conversations with our stakeholders and welcome your feedback to ensure this report meets
the standards and expectations you have of our unique organisation.
HUMAN RESOURCES AND REMUNERATION COMMITTEE (HRRC)
The role of the HRRC continues to evolve, with a broad remit reflecting the breadth of our focus across the entire employee life
cycle at Computershare. The Committee takes an active view of the following:
> Remuneration – Board and executive remuneration strategy and structure, with a focus on strengthening the link between
Company and individual performance.
> Performance – establishing, monitoring and assessing executive KPIs that encourage strong, ethical performance and drive
business outcomes while adding shareholder value.
> Talent and Succession – ensuring succession plans are in place for executives and a ready pool of talent is considered internally
and externally.
>
Inclusion & Diversity – ensuring all executive and board appointments are underpinned and guided by our diversity and inclusion
framework and ensuring all employee processes such as recruitment, remuneration, retention, promotion, recognition and
termination are within that.
> Alignment with Strategy and Operating Model – ensuring the people strategy supports our business objectives, drives
sustainable value creation and fosters ethical stewardship to deliver long‑term shareholder value.
> Culture – our Being Purple framework is demonstrated throughout the company and underpins all decisions made. It guides
us to ‘do the right thing’ – both in the way we deliver for our clients and customers and in the way we conduct ourselves in the
workplace.
The Board is committed to an executive remuneration framework that is focused on driving a performance culture and
linking pay to the achievement of Computershare’s long‑term strategy and business objectives, which in turn drive long‑term
shareholder value.
With regards
SD Jones
Chairman
JM Velli
Chairman – HRRC
44
CONTENTS
1. Remuneration snapshot
3. KMP remuneration outcomes
1.1 Key Management Personnel
1.2 CPU performance and KMP outcomes in FY2020
1.3 KMP realised pay in FY2020
1.4 Changes in FY2020
2. Remuneration strategy
2.1 Remuneration framework
2.2 KMP target remuneration mix
2.3 Remuneration structure
2.4 Key features of the long‑term incentive plan
2.5 Other remuneration
3.1 Relationship between remuneration and Group’s performance
3.2 FY2020 short‑term incentive outcomes
3.3 FY2020 long‑term incentive outcomes
4. Non‑executive director
5. KMP contractual arrangements
6. Statutory remuneration disclosures
6.1 Remuneration of directors and other key management personnel
6.2 Short‑term salary and fees, cash profit share and bonuses,
long‑term other, post‑employment benefits
6.3 Other
This report is prepared in accordance with section 300A of the Corporations Act 2001 (Cth) (Corporations Act) for Computershare
for the year ended 30 June 2020. The information provided in this Remuneration Report has been audited as required by
section 308(3C) of the Corporations Act, apart from where it is indicated that the information is unaudited.
1. REMUNERATION SNAPSHOT
1.1 KEY MANAGEMENT PERSONNEL (KMP)
Computershare’s KMP are assessed each year and comprise the Directors of the company and select senior executives who have
the authority and responsibility for planning, directing and controlling the activities of the company directly or indirectly. Each KMP
held their position for all of FY2020 unless otherwise stated.
On 1 July 2019, Computershare moved to a global operating model which led to changes in the organisation structure to align to our
long‑term strategy. This had a consequential impact on the composition of our executive KMP who are listed below.
Non-executive director
Executive KMP
Stuart J Irving
President and Chief Executive Officer
Nick Oldfield1
Chief Financial Officer
Mark B Davis2
Chief Financial Officer
Mark L McDougall
Global Chief Information Officer
Naz Sarkar
Global Head of Issuer Services
Abigail P Cleland
Tiffany L Fuller
Lisa M Gay
Simon D Jones
Chris J Morris
Paul J Reynolds
Joeseph M Velli
1 N Oldfield was appointed as CFO on 3 December 2019.
2 MB Davis resigned effective 31 December 2019.
1.2 CPU PERFORMANCE AND KMP OUTCOMES IN FY2020
FY20 PERFORMANCE AND REMUNERATION OUTCOMES
Computershare vs S&P ASX100 index TSR
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
TOTAL SHAREHOLDER
RETURN (TSR) FY18-FY20
43RD
PERCENTILE
FY20 EPS GROWTH*
-19.8%
AVERAGE EPS GROWTH
FY18-FY20*
2.4%
30/06/2017
30/06/2018
30/06/2019
30/06/2020
CPU
ASX100
* EPS growth on constant currency basis
45 | COMPUTERSHARE | ANNUAL REPORT | 2020
DIRECTORS’ REPORT Performance conditions
Remuneration strategy and link to performance
Fixed
Designed to be competitive
in the market where the
executive is located
STI
LTI
Reflects performance across
the year and is designed
to reward management for
achieving financial targets,
delivering on strategic
objectives and managing the
business in a prudent and
sustainable manner
Aligns executive rewards with
long‑term sustainable value
creation for shareholders
The CEO’s expat arrangement and tax equalisation benefit ended as intended
on 31 March 2020. To administer the CEO’s pay from UK effective 1 April 2020, a
36‑month average was used in converting his pay from Australian to UK currency to
smooth the volatility in foreign exchange rates resulting from Brexit and Covid‑19.
Since the CEO did not receive any increase to his pay in FY2020, any changes to his
remuneration in this report appear solely as a function of the currency exchange
that occurred in April.
Despite Covid‑19 impact to earnings, the underlying business remained robust with
positive recurring revenues.
Management mitigated the Covid‑19 impact where possible, with positive performance
against the majority of strategic and other non‑financial objectives over the year.
For executive KMP, STI outcomes varied between 36% and 55% of maximum
entitlement.
See pages 50 to 51 for detailed STI outcomes for the CEO.
Computershare TSR across the three‑year performance period ending 30 June 2020
was below the threshold of median ASX 100.
Despite strong growth in the two years preceding, the impact of Covid‑19 in FY2020
resulted in the three‑year average growth in earnings per share (constant currency)
being less than the threshold of 5%.
Therefore, the FY2018 LTI did not meet threshold performance with nil vesting
in FY2020.
See page 51 for detailed LTI outcomes.
1.3 KMP REALISED PAY IN FY2020
The table below details actual pay and benefits for KMPs who were employed as at 30 June 2020. This table aims to assist
shareholders in understanding the cash and other benefits actually received by KMPs from the various components of their
remuneration during FY2020.
As a general principle, Australian Accounting Standards require the value of share‑based payments to be calculated at the time of
grant and accrued over the performance period and restriction period. The Corporations Act and Australian Accounting Standards
also require that pay and benefits be disclosed for the period that a person is a KMP. This may not reflect what executive KMPs
actually received or became entitled to during FY2020 (especially if they became KMP part way through the year). The figures in
this table have not been prepared in accordance with Australian Accounting Standards. They provide additional voluntary disclosures.
The treatment of the remuneration elements in this disclosure are as follows:
> Fixed remuneration earned between 1 July 2019 and 30 June 2020. This includes superannuation.
> STI payable as cash and equity under the FY2020 STI plan (which is paid in FY2021 after audited results), and the FY2018 LTI
that has been earned as a result of performance in previous financial years but was subject to a restriction period that ended
30 June 2020.
> Benefits received between 1 July 2019 and 30 June 2020.
The below table also does not include expatriate costs and associated tax equalisation payments. Whilst these are clearly disclosed
in the statutory remuneration table, the Board does not believe that they represent actual remuneration to the relevant executive
and have therefore been excluded.
FY2020 actual package details
FY2020 actual vs target
FY2020 vs FY2019 actual
FY2020 fixed
(base + benefits)
FY2020
actual total STI
FY2018 LTI
vesting in FY20
KMP
SJ Irving1
N Oldfield2
N Sarkar
1,277,501
863,573
828,661
240,618
635,464
171,856
ML McDougall
449,085
132,847
FY2020
actual total
remuneration
(base + STI+ LTI)
2,141,074
1,069,279
807,320
581,932
FY2020
actual
vs max STI
55%
39%
36%
39%
-
-
-
-
FY2020 actual
vs max total
remuneration
(base + max
STI + LTI)
FY2020 vs
FY2019
actual STI
received
FY2019 vs FY2020
actual total
remuneration
(base + STI +
FY17LTI)
45%
50%
49%
50%
54%
64%
52%
69%
1 For SJ Irving, the maximum STI award is set at 150% of target where as the maximum award for other KMPs is 175% of target.
2 N Oldfield was appointed as CFO on 3 December 2019. Realised pay in FY2020 is referable to the full year.
48%
67%
55%
66%
46
1.4 CHANGES IN FY2020
Mark Davis resigned effective 31 December 2019 and Nick Oldfield was appointed as CFO on 3 December 2019. No changes to
Nick Oldfield’s remuneration package were made at the time of appointment. In FY2021, it is anticipated that his package will be
adjusted to reflect his appointment to the CFO role and the design of his STI to mirror that of the CEO’s.
Following the implementation of a new global structure effective 1 July 2019, the composition of executive KMP roles was
reviewed. The executive roles identified as KMP comprise the Group CEO, CFO and CIO, each of whom is an individual responsible
for managing and directing the global Computershare Group, as well as the Global Head of Issuer Services, who is the person
responsible for directing the activities of the most dominant operating segment in terms of contribution to Group revenue
and results.
2. REMUNERATION STRATEGY
2.1 REMUNERATION FRAMEWORK
Given Computershare is a global company with a global workforce, our remuneration practices need to be globally competitive and
flexible to attract, motivate and retain a talented workforce, and to drive success in our growth markets.
The Board and the Human Resources and Remuneration Committee review the framework on an ongoing basis to ensure it remains
aligned to business objectives. No significant changes were made to the key elements of the framework in FY2020.
2.2 KMP TARGET REMUNERATION MIX
The graph below shows the target remuneration mix for KMPs.
KMP
AVERAGE
41.5%
10.8%
10.8%
36.9%
CEO
30%
12.5%
12.5%
45%
Base pay
STI cash
STI shares
LTI (FY20 LTI grant value)
2.3 REMUNERATION STRUCTURE
Attract, motivate
and retain highly
skilled employees
Reward achievement
of financial and personal
strategic objectives
FR
Fixed
remuneration
STI
Short term incentive
(at risk)
Align to long
term shareholder
value creation
LTI
Long term incentive
(at risk)
Cash
Equity
> Base Salary plus
superannuation.
> Set based on market
and internal relativities,
performance
and experience.
> 50% of STI outcome
paid in cash after the
financial year end.
> STI outcome based on
financial and individual
performance.
> Subject to malus,
clawback and forfeiture
in circumstances outlined.
> 50% of the STI outcome
is deferred as Restricted
Shares for a period of
two years.
> Subject to malus,
clawback and forfeiture
in circumstances outlined.
> Indeterminate Rights
subject to three‑year
performance period with
50% subject to EPS and
50% subject to RTSR.
> Subject to malus,
clawback and forfeiture
in circumstances outlined.
47 | COMPUTERSHARE | ANNUAL REPORT | 2020
DIRECTORS’ REPORT 2.4 KEY FEATURES OF THE LONG-TERM INCENTIVE PLAN
The FY2020 LTI plan was offered in the form of performance rights granted well before the Covid‑19 pandemic gripped the world.
The design of the FY2020 LTI plan was carried over from the previous year. While the key features of the plan are shown below, as
noted before, the plan design and structure does not support the altered circumstances in which Computershare will operate over
the next few years.
Who participates?
The CEO and CFO and other senior executives who are identified as being particularly important to the
longer‑term future of Computershare.
What type of awards
are granted?
The FY2020 LTI award comprises a grant of performance rights over Computershare shares that vest
subject to testing against applicable performance hurdles.
How is the size of any
award calculated?
In FY2020, the CEO received an LTI award equal to 45% of his total remuneration package. For other
KMPs, the value of their LTI award was in a range of 35% to 40% of their total remuneration package.
How is the number of
rights to be awarded
calculated?
The actual number of performance rights that an eligible executive receives is calculated on a ‘face‑value’
basis by dividing that executive’s LTI award entitlement by Computershare’s share price. The share price
used is the volume‑weighted average share price over the five trading days after the full‑year results
announcement for FY2019.
What is the
performance period?
What are the
performance hurdles?
The FY2020 LTI plan will be tested over the period 1 July 2019 to 30 June 2022.
Earnings per share
Average growth in management adjusted EPS
in constant currency over the performance period
Performance rights subject to EPS hurdle
that vest (%)
12% or greater
Between 5% and 12%
5%
Less than 5%
Total Shareholder Return
100%
Progressive pro rata vesting between 50% to 100%
(ie on a straight‑line basis)
50%
0%
Relative TSR ranking against peer group
(comprising the ASX 100)
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%
(ie on a straight‑line basis)
Equal to the 50th percentile
Below the 50th percentile
50%
0%
Other key features
The Board has the 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 certain circumstances, which
include fraud, dishonesty or material misstatement of financial statements.
As at the date of this report, there are 1.3 million performance rights outstanding under the LTI plan. These include 0.7 million
performance rights that were granted to eligible executives in the financial year 2020 and which remain on issue. These rights are
due to vest in September 2022 (subject to performance against hurdles).
The Board has considered the appropriateness of the FY2020 and FY2019 LTI plans currently in operation in terms of the incentive
and retentive value to executives. Since management’s focus over the next few years should be on recovery and growth, the Board
believes that Share Appreciation Rights (SARs) are the most shareholder aligned instrument on a transitional basis. This decision is
in specific response to the uncertain climate, and it is currently envisaged that SARs will only be in effect for the FY2021 LTI grant
and for a proposed one‑off SARs grant for the FY2019/FY2020 LTI plans.
A share‑settled SAR entitles the holder to a payment, in shares, of the amount by which the underlying share price has increased
since the right was granted (ie strike price) at the end of the performance (vesting) period. If SARs vest, shares are allocated to the
participant with nothing payable by the participant.
48
> FY2021 LTI plan – In order to remain flexible to changing conditions a transitional LTI plan will be put in place for FY2021 only,
giving the Board time to conduct an in‑depth review of the LTI plan design based on the prevailing conditions from FY2022
onwards. This transitional FY2021 LTI grant will be consistent with prior years by granting half in the form of rights that are
tested against relative TSR ranking against the ASX100 over a three‑year period. However, the other half will take the form of a
grant of SARs (which will only have value if Computershare’s share price appreciates). There will be appropriate safeguards put
in place to ensure windfall outcomes to executives are avoided.
> SARs grant for FY2019/FY2020 LTI plans – The FY2019 and FY2020 LTI grants will remain in operation and while the relative
TSR components of those grants still have an opportunity to vest, the components subject to the EPS hurdle are highly unlikely
to do so. Therefore, to provide executives with the appropriate incentive to enhance shareholder value over the next two years, a
one‑off grant is proposed to be made in the form of SARs, that will vest in two tranches at the end of FY2021 and FY2022. There
will be appropriate safeguards put in place to ensure windfall outcomes to executives are avoided, including by the imposition
of hard caps on vesting outcomes. Full details of these will be set out in the notice of annual general meeting circulated to
shareholders.
2.5 OTHER REMUNERATION
Like all our employees, KMP can participate in the Group’s general employee share plans. An overview of these plans is disclosed in
note 40 of the financial statements.
3. KMP REMUNERATION OUTCOMES
3.1 RELATIONSHIP BETWEEN REMUNERATION AND GROUP’S PERFORMANCE
One of the key principles of Computershare’s remuneration strategy is to ensure that there is a clear and transparent link between
the remuneration outcomes for executives and Group performance and its consequent impact on shareholder interests. The
following table highlights some of the key financial results for Computershare over the period from the financial year 2016 to the
financial year 2020 with the corresponding average STI outcomes for executive key management personnel over the same period.
2016
2017
2018
2019
2020
Management EBITDA (USD million)
532.6
540.8
622.6
674.9
646.4
Statutory EPS (US cents)
Management EPS (US cents)
28.55
48.76
55.17
76.57
42.97
55.09
54.41
63.38
70.24
56.12
Management EPS (US cents) – constant currency1
52.78
54.52
61.95
69.98
56.12
Total Dividend (AU cents per share)
Share price as at 30 June (AUD)
Average STI received as % of maximum opportunity for executive KMP (%)
1 Translated at FY2020 average exchange rates.
33
9.17
48.0
36
40
44
46
14.14
18.43
16.21
13.25
56.8
77.4
71.1
47.3
Computershare’s incentive plans measure performance against a range of financial and non‑financial performance. Therefore,
the pay for performance relationship is based against those measures as a whole and may not fully align with some of the metrics
shown below. However, it is evident, as demonstrated below, that there is strong overall alignment between Computershare’s
incentive plan outcomes to financial performance.
CEO STI PAYOUT CORRELATION TO COMPUTERSHARE PERFORMANCE
Earnings per Share
Share price
Management Adjusted EBITDA
80
70
60
50
40
30
20
10
0
FY16
FY17
FY18
FY19
FY20
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
20
18
16
14
12
10
8
6
4
2
0
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
800
700
600
500
400
300
200
100
0
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FY16
FY17
FY18
FY19
FY20
FY16
FY17
FY18
FY19
FY20
Management EPS (cps)
% maximum CEO STI paid
Closing Share Price ($)
% maximum CEO STI paid
EBITDA achievement ($m)
% maximum CEO STI paid
49 | COMPUTERSHARE | ANNUAL REPORT | 2020
DIRECTORS’ REPORT 3.2 FY2020 STI OUTCOMES
In FY2020, the Board’s assessment of the CEO’s performance against his STI objectives was as follows:
Financial objectives
Group management EBITDA performance against budget in constant currency
Below target
> Budget EBITDA – $698m vs Actual ($646m)
>
Impacted heavily by Covid‑19 in the last quarter
Growth in management EPS
No entitlement
> FY20 management EPS was down 20% in constant currency
> Was tracking to only down 5% until Covid‑19 impacted margin income in the last quarter
Strategic objectives
Performance of US CLS against plan at PBT and ROIC levels
Above target
> Profit before tax – actual exceeded budget by 6%
> ROIC – affected by Covid‑19 in the last quarter but at February 2020, tracking to 19%
Achievement of CLS UK Budget with focus on cost out or revenue growth
On target
> EBITDA loss in line with budget
> Budgeted cost out materially on track
> Asset migration achieved during Covid‑19
> Softening market environment impacted revenue number negatively
Registry maintenance growth
Above target
> Absent Covid‑19 impact, small underlying growth in this business
> Excluding margin income, improvement in margins in registry maintenance
Development of a holistic 5‑year plan across the business
Above target
> All five‑year divisional plans approved but require re‑work post Covid‑19
> Clear improvement in strategic focus and innovation
Achievement of targeted cost out programs
> Cost out programs progressing in line with projections
> Stage 3 savings projections increased this year
Non‑financial objectives
Customer satisfaction
> Continued market‑leading survey results in all jurisdictions for Issuer Services
> Positive customer reaction to EquatePlus platform
> Achievement of SLA’s and levels of customer satisfaction despite disruption of Covid‑19
> Very strong NPS scores in major markets
Above target
Above target
People and culture
On target
> Staff survey results lower than prior years but still high response rate and overall positive position
> Diversity – progress in line with objectives made but notably 18 out of 25 ‘Purple People’ were
women (an increase of three over the previous year)
> Significant progress in embedding ‘Being Purple’ ways of working throughout process and practice
50
Non‑financial objectives
Capital and risk management
> Balance sheet remains strong post funding acquisitions and MSR growth
> Net debt to EBITDA ratios are at the mid‑point of the target range
> Accelerated re‑financing of $450m of debt due in April 2021 during Covid‑19
> Maintained dividend levels during Covid‑19
> Crystallisation of in‑money hedges
>
Improved effectiveness of both risk and internal audit
> Positive response to market communications during Covid‑19
Above target
Innovation
Above target
> Development of governance services business including enhancement of GEMS
> Development of registered agent business
> Continued enhancement to Equatex platform
Percentage of maximum achieved
55.3% of maximum
The table below shows the STI paid or payable to each Computershare executive who is identified as key management personnel for
entitlements referable to performance in the financial year ended 30 June 2020. The table sets out the actual amounts awarded as
STI and how they relate to the maximum entitlement for each executive.
Executive
SJ Irving
MB Davis1
ML McDougall
N Oldfield2
N Sarkar
STI awarded (USD)
STI as percentage
of maximum
863,573
220,513
132,847
240,618
171,856
55%
66%
39%
39%
36%
1
2
For MB Davis his awarded STI represents an amount paid as a bonus in respect of the period up to 31 December 2019, being the date when his
employment at Computershare ended.
N Oldfield was appointed as CFO on 3 December 2019. His awarded STI is referable to the full year. As no changes were made to his remuneration
package at the time of appointment, his maximum STI award was set at 175% of target for FY2020.
For the CEO and CFO, the maximum STI award is set at 150% of target whereas the maximum award for other executives is 175%
of target.
3.3 FY2020 LTI OUTCOMES
LTI awards that were granted in FY2018 were tested against the performance hurdles over the period 1 July 2017 to 30 June 2020.
At the time of mid‑year guidance in March 2020, LTI was set to vest at 64% reflecting 32 months of strong performance. The
outcomes noted here reflect the impact the last four months had on a 36‑month performance period.
For performance rights subject to the TSR performance hurdle, Computershare achieved negative TSR of ‑8.89% across the period
and a relative TSR ranking against the peer group of 43rd percentile, which is below the threshold of 50th percentile of ASX100.
Accordingly, the LTI awards subject to the TSR performance test did not vest.
For performance rights subject to the EPS performance hurdle, average annual growth in management EPS on a constant currency
basis over the performance period was 2.4% and accordingly, the LTI awards subject to the EPS performance test did not vest.
51 | COMPUTERSHARE | ANNUAL REPORT | 2020
DIRECTORS’ REPORT 4. NON-EXECUTIVE DIRECTORS
Computershare’s total non‑executive directors’ fee pool has a limit of AU $2.0 million. This limit was approved by shareholders in
November 2014.
Fees payable to non‑executive directors in FY2020 are set out in the table below (in AUD).
Chairman’s Fee
FY2020
335,000
NED
160,000
Chair Risk and
Audit Committee
Chair HR and
Remuneration
Committee
Member Risk and
Audit Committee
Member HR and
Remuneration
Committee
75,000
25,000
25,000
10,000
These fees are inclusive of statutory superannuation where applicable. JM Velli and PJ Reynolds receive their director fees in
their local currency. The exchange rate is set by reference to when they were first appointed as a director of Computershare.
No bonuses, either short or long term, are paid to non‑executive directors. They are not provided with retirement benefits.
5. KMP CONTRACTUAL ARRANGEMENTS
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 2 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 (eg 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 Deferred Short‑Term Incentive (DSTI) plan provides for full vesting on redundancy or termination by the Group
other than for cause. 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,
subject in some instances to local requirements in the jurisdictions where the Group operates, none of these executives would
receive special termination payments should they cease employment for any reason.
6. STATUTORY REMUNERATION DISCLOSURES
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 2020 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 FY2020 USD/AUD average rate was
0.67164, the FY2019 USD/AUD average rate was 0.71774).
52
6.1 REMUNERATION OF DIRECTORS AND OTHER KEY MANAGEMENT PERSONNEL
Short-term
Long-term
Post
employ-
ment
benefits
Share-based
payments expense
Financial
Year
Salaries
and fees
Cash profit
share and
bonuses
$
$
Super‑
annuation/
pension
$
Other1
$
Shares
$
Directors
Perfor‑
mance
rights/
options2
Expatriate
costs3
Other
Tax equal‑
isation on
expatriate
benefits4
$
$
$
Total
Other5
$
$
SJ Irving3,4,6 2020 1,266,921
431,787
20,911
10,580
595,058
346,275
614,090
684,427
- 3,970,049
2019 1,213,136
855,695
97,048
14,736
307,109
979,867
909,662 1,085,425
10,939 5,473,617
AP Cleland6 2020
110,409
2019
108,152
TL Fuller6
2020
145,251
2019
152,396
LM Gay6
2020
114,346
2019
119,623
SD Jones6
2020
236,204
2019
247,238
CJ Morris6
2020
107,463
2019
113,043
P Reynolds6 2020
128,291
2019
90,309
JM Velli
2020
169,143
2019
166,857
Other key management personnel
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,648
10,274
13,639
14,478
10,863
11,364
14,106
14,736
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
MB Davis6,7
2020
269,497
220,513
4,379
10,580
541,192 (153,937)
2019
596,940
308,772
13,716
14,736
212,442
515,074
ML McDougall6 2020
434,979
84,752
19,409
14,106
119,389
55,509
2019
402,211
86,843
9,555
14,736
88,591
221,709
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
115,057
118,426
158,890
166,874
125,209
130,987
250,310
261,974
107,463
113,043
128,291
90,309
169,143
166,857
1,976
894,200
2,150 1,663,830
1,965
730,109
2,150
825,795
1,596
796,556
N Oldfield8
2020
452,694
153,506
N Sarkar3,4,6 2020
635,464
103,771
2019
628,256
149,922
-
-
-
30,900
155,618
2,242
-
-
187,519
74,405
353,035
64,322
2,270 1,420,786
133,570
339,781
169,144
192,081
2,333 1,615,087
1
2
3
4
5
6
Other long‑term remuneration comprises long service leave accruals and other long‑term entitlements.
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 2021 financial year budget process, it was no longer considered probable that the performance condition applicable to the performance rights
granted on 4 December 2018 would be fully met. On this basis, the accounting expense (excluding the TSR component) related to prior years has
been reversed.
Expatriate costs include payments made to key management personnel engaged on overseas assignments in accordance with Computershare’s
expatriate policy. For SJ Irving, the amount reflects expatriate benefits related to his and his family’s relocation to the United Kingdom on an assignment
ending March 2020. For N Sarkar, the amount reflects benefits related to his and his family’s relocation to the United States on an assignment ending
October 2021.
Tax equalisation arrangements operate so Computershare employees on an expatriate assignment pay the equivalent tax to what would have been paid
had they not been on an assignment. This includes tax that the Company is required to pay in order to provide expatriate benefits.
Other includes other benefits provided to key management personnel and benefits related to Computershare’s general employee share plan as detailed
in note 40 of the financial statements.
Key management personnel are paid in their local currency. Foreign exchange rate movements can impact on the comparison between years in
US dollar terms.
7 MB Davis resigned effective 31 December 2019.
8 N Oldfield was appointed as CFO on 3 December 2019.
53 | COMPUTERSHARE | ANNUAL REPORT | 2020
DIRECTORS’ REPORT 6.2 SHORT-TERM SALARY AND FEES, CASH PROFIT SHARE AND BONUSES, LONG-TERM OTHER, POST-EMPLOYMENT BENEFITS
Directors
AP Cleland, TL Fuller, LM Gay, SD Jones and CJ Morris are paid in Australian dollars. Director fees for JM Velli and PJ Reynolds are
paid in local currency. SJ Irving’s remuneration was converted from Australian dollars to GBP effective from 1 April 2020.
Group CEO and other executive key management personnel
All executive key management personnel receive their salary and other cash payments in their local currency.
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)
SJ Irving
MB Davis1
ML McDougall
N Oldfield2
N Sarkar
6/12/2017
4/12/2018
2/12/2019
1/10/2017
1/10/2018
1/10/2019
1/10/2017
1/10/2018
1/10/2019
1/10/2018
1/10/2019
1/10/2017
1/10/2018
1/10/2019
21,630
39,382
78,797
12,163
24,714
28,433
5,919
9,171
11,052
19,930
21,606
8,123
14,533
17,384
(21,630)
-
-
(12,163)
(24,714)
(28,433)
(5,919)
-
-
-
-
(8,123)
-
-
-
39,382
78,797
-
-
-
-
9,171
11,052
19,930
21,606
-
14,533
17,384
FY2020
FY2021
FY2022
FY2020
FY2021
FY2022
FY2020
FY2021
FY2022
FY2021
FY2022
FY2020
FY2021
FY2022
1 Shares granted to MB Davis vested on 31 December 2019.
2 Shares granted to N Oldfield were awarded prior to his appointment as CFO on 3 December 2019.
Fair values of shares at grant date are determined using the closing share price on grant date.
Maximum
total value
of grant
yet to be
expensed
$
-
45,473
$
-
-
927,746
620,430
-
-
325,982
-
-
126,710
-
-
-
-
-
11,151
77,254
24,234
247,711
151,026
-
-
-
17,671
199,306
121,514
54
Performance rights
Performance rights granted under 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 LTI plans.
Date
granted
Number
granted
Number
vested
during
the year
Number
lapsed
during
the year
Number
outstanding
end of
the year
Financial
year in
which grant
may vest
Value at
grant date
(if granted
this year)
SJ Irving
16/12/2016
170,170
(149,579)
(20,591)
-
5/12/2017
90,627
4/12/2018
129,707
2/12/2019
190,443
-
-
-
-
-
-
MB Davis1
16/12/2016
115,115
(101,186)
(13,929)
5/12/2017
4/12/2018
ML McDougall
16/12/2016
N Oldfield2
5/12/2017
4/12/2018
2/12/2019
5/12/2017
4/12/2018
2/12/2019
N Sarkar
16/12/2016
5/12/2017
4/12/2018
2/12/2019
61,269
44,848
33,783
33,916
25,395
39,103
31,250
49,612
69,420
55,223
44,853
40,423
53,504
-
-
(10,211)
(22,424)
(29,695)
(4,088)
-
-
-
-
-
-
-
-
-
-
-
-
(48,541)
(6,682)
-
-
-
-
-
-
Maximum
total value
of grant
yet to be
expensed
$
-
-
417,971
FY2020
FY2021
FY2022
$
-
-
-
90,627
129,707
190,443
FY2023
1,551,605
1,034,403
-
51,058
22,424
-
33,916
25,395
39,103
31,250
49,612
69,420
-
44,853
40,423
53,504
FY2020
FY2021
FY2022
FY2020
FY2021
FY2022
FY2023
FY2021
FY2022
FY2023
FY2020
FY2021
FY2022
FY2023
-
-
-
-
-
-
-
-
72,260
-
-
81,833
318,586
212,390
-
-
-
159,871
565,589
377,059
-
-
-
-
-
130,260
435,916
290,610
1
In accordance with the terms and conditions of the LTI plan, 10,211 of the performance rights granted to MB Davis in FY2018 lapsed following his ending
of employment with Computershare. The remaining 51,058 of the performance rights have not lapsed and will be subject to testing against the relevant
performance hurdles at the conclusion of the performance period on 30 June 2020. 22,424 of the performance rights granted in FY2019 lapsed
following his ending of employment with Computershare. The remaining 22,424 of the performance rights have not lapsed and will be subject to testing
against the relevant performance hurdles at the conclusion of the performance period on 30 June 2021.
2
Performance rights granted to N Oldfield were awarded prior to his appointment as CFO on 3 December 2019, and will be subject to testing against the
relevant performance hurdles at the conclusion of the performance periods.
55 | COMPUTERSHARE | ANNUAL REPORT | 2020
DIRECTORS’ REPORT 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)
Vested
Other
share
plans3
Balance at
end of the
year
Other
Value of
options/
performance
rights
exercised
Directors
SJ Irving
AP Cleland
TL Fuller
LM Gay
SD Jones
CJ Morris
PJ Reynolds
JM Velli
56,455
11,767
2,000
13,703
20,921
32,231,000
-
10,000
21,630
149,579
(95,650)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
358
8,500
5,997
5,698
(1,135,700)
8,000
7,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other key management personnel
MB Davis1
ML McDougall
N Oldfield2
N Sarkar
34,093
-
-
65,310
5,919
-
101,186
(144,249)
29,695
(29,695)
-
1,976
53,661
8,123
48,541
(56,664)
3,895
1,321
234
1,144
(60,235)
-
43,393
-
132,014
12,125
10,500
19,700
26,619
31,095,300
8,000
17,000
-
7,240
45,603
54,805
1
2
3
MB Davis resigned effective 31 December 2019. His shareholding balance is from the beginning of the year to the date he ceased being KMP. His final
shareholding is disclosed in the Other column.
N Oldfield was appointed as CFO effective 3 December 2019. His shareholding balance is from the date of appointment to the end of the year.
Vested Other share plans include shares vested related to Computershare’s general employee share plan as detailed in note 40.
$
-
-
-
-
-
-
-
-
-
-
-
-
56
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:
SJ Irving1
AP Cleland
TL Fuller
LM Gay
SD Jones
CJ Morris
PJ Reynolds
JM Velli
MB Davis
ML McDougall
N Oldfield
N Sarkar2
% 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*
58.82%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
25.74%
55.15%
50.48%
66.10%
9.78%
13.48%
17.92%
-
-
-
-
-
-
-
19.82%
9.93%
15.97%
6.50%
-
-
-
-
-
-
-
48.63%
13.99%
16.19%
11.75%
-
-
-
-
-
-
-
5.81%
20.93%
17.36%
15.65%
* Excludes the performance rights reversal in the year ended 30 June 2020.
1
2
The percentage of fixed/non‑performance related remuneration disclosed is inclusive of expatriate benefits and associated tax equalisation.
Excluding these amounts, the proportions of total remuneration are: Fixed/non‑performance related – 41.66%; CSTI – 13.86%; DSTI – 19.09%;
performance rights – 25.39%.
The percentage of fixed/non‑performance related remuneration disclosed is inclusive of expatriate benefits and associated tax equalisation.
Excluding these amounts, the proportions of total remuneration are: Fixed/non‑performance related – 54.09%; CSTI – 8.80%; DSTI – 15.91%;
performance rights – 21.20%.
6.3 OTHER
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 an interest in Colonial Leisure Group Jersey Limited. Computershare provided secretarial services to the entity on
ordinary commercial terms and conditions. Total value of services provided in the period to June 2020 was $13,125.
As a matter of Board approved policy, the Group maintains a register of all transactions between directors 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
As per Corporations Act 2001, Section 206J, Computershare’s policy forbids key management personnel to deal in derivatives
designed as a hedge against exposure to unvested shares and vested shares that are still subject to a disposal restriction 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
04/12/2018
02/12/2019
Financial year of expiry
Number under performance rights
2022
2023
520,104
735,321
57 | COMPUTERSHARE | ANNUAL REPORT | 2020
DIRECTORS’ REPORT AUDITOR
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.
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
Taxation services provided by network firms of PricewaterhouseCoopers Australia
Total Auditor’s Remuneration
ROUNDING OF AMOUNTS
2020
$000
1,021
2,757
2019
$000
973
2,573
3,778
3,546
321
2,013
329
2,663
6,441
372
1,835
375
2,582
6,128
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
21 September 2020
SJ Irving
Chief Executive Officer
58
AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
As lead auditor for the audit of Computershare Limited for the year ended 30 June 2020, 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
21 September 2020
PricewaterhouseCoopers, ABN 52 780 433 757
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
59 | COMPUTERSHARE | ANNUAL REPORT | 2020
FINANCIALS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2020
Revenue from continuing operations
Sales revenue
Dividends received
Interest received
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 related income tax expense
Income tax expense/(credit)
Profit for the year
Other comprehensive income that may be reclassified to profit or loss
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 attributable to:
Members of Computershare Limited
Non‑controlling interests
Total comprehensive income for the year attributable to:
Members of Computershare Limited
Non‑controlling interests
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Note
2020
$000
2019
$000
2,271,512
2,341,247
2,142
3,627
1,333
3,423
2,277,281
2,346,003
3,905
123,025
1,540,471
1,544,961
313,731
294,445
36,535
66,325
33,575
66,689
1,957,062
1,939,670
239
(1,006)
324,363
91,632
232,731
528,352
109,397
418,955
2
2
3
31
6
12,023
(21,185)
6
116
7,967
6,793
711
(9,046)
15,471
223,685
434,426
232,657
415,732
74
3,223
232,731
418,955
224,246
431,716
(561)
2,710
223,685
434,426
4 42.97 cents
76.57 cents
4 42.97 cents
76.42 cents
The above consolidated statement of comprehensive income is presented in United States dollars and should be read in conjunction with the
accompanying notes.
60
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2020
CURRENT ASSETS
Cash and cash equivalents
Bank deposits
Other financial assets
Receivables
Loan servicing advances
Financial assets at fair value through profit or loss
Inventories
Current tax assets
Prepayments
Other current assets
Total current assets
NON-CURRENT ASSETS
Receivables
Investments accounted for using the equity method
Financial assets at fair value through profit or loss
Property, plant and equipment
Right‑of‑use assets
Deferred tax assets
Intangibles
Other non‑current assets
Total non-current assets
Total assets
CURRENT LIABILITIES
Payables
Borrowings
Lease liabilities
Current tax liabilities
Financial liabilities at fair value through profit or loss
Provisions
Deferred consideration
Mortgage servicing related liabilities
Other liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Payables
Borrowings
Lease liabilities
Financial liabilities at fair value through profit or loss
Deferred tax liabilities
Provisions
Deferred consideration
Mortgage servicing related liabilities
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
2020
$000
2019
$000
7
597,313
561,346
17
15
16
13
18
19
15
31
13
20
21
6
9
19
22
14
21
13
23
24
25
22
14
21
13
6
23
24
25
27
28
29
26
26
-
59,943
426,465
267,016
17,979
5,113
17,979
36,757
3,426
6,335
67,096
483,301
281,458
24,247
4,654
26,950
42,171
3,510
1,431,991
1,501,068
2,184
10,670
39,713
110,094
180,032
161,153
2,639
11,126
102,400
136,612
-
139,179
3,052,826
2,782,680
1,088
9,251
3,557,760
3,183,887
4,989,751
4,684,955
494,737
287,410
43,159
73,170
3,456
70,863
8,045
43,766
-
489,915
72,594
1,931
35,330
3,265
45,170
15,487
35,024
2,345
1,024,606
701,061
1,052
6,632
1,742,410
1,955,980
158,910
-
5,804
744
227,342
217,589
25,188
9,536
22,902
16,310
210,388
178,596
-
5,266
2,374,826
2,409,823
3,399,432
3,110,884
1,590,319
1,574,071
-
-
(172,496)
(134,551)
1,761,188
1,706,427
1,588,692
1,571,876
1,627
2,195
1,590,319
1,574,071
The above consolidated statement of financial position is presented in United States dollars and should be read in conjunction with the
accompanying notes.
61 | COMPUTERSHARE | ANNUAL REPORT | 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2020
Note
1a
27
28
28
Total equity at 1 July 2019
Change in accounting policy
Restated total equity at the beginning of
the financial year
Profit for the year
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
Cash purchase of shares on market
Share‑based remuneration
Balance at 30 June 2020
Total equity at 1 July 2018
Change in accounting policy
Restated total equity at the beginning of
the financial year
Profit for the year
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
Disposal of non‑controlling interest
Cash purchase of shares on market
Share‑based remuneration
Balance at 30 June 2019
Attributable to members of Computershare Limited
Contributed
Equity
$000
Reserves
$000
Retained
Earnings
$000
Non-
controlling
Interests
$000
Total
$000
Total
Equity
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(134,551)
1,706,427
1,571,876
2,195
1,574,071
-
(10,493)
(10,493)
-
(10,493)
(134,551)
1,695,934
1,561,383
2,195
1,563,578
-
232,657
232,657
12,023
74
-
232,731
12,023
12,023
(20,550)
116
-
-
-
(20,550)
(635)
(21,185)
116
-
116
(8,411)
232,657
224,246
(561)
223,685
-
(167,403)
(167,403)
(7)
(167,410)
(22,098)
(25,797)
18,361
-
-
-
(22,098)
(25,797)
18,361
-
-
-
(22,098)
(25,797)
18,361
(172,496)
1,761,188
1,588,692
1,627
1,590,319
(148,098)
1,455,187
1,307,089
26,308
1,333,397
(263)
(876)
(1,139)
-
(1,139)
(148,361)
1,454,311
1,305,950
26,308
1,332,258
-
415,732
415,732
3,223
418,955
7,967
7,306
711
-
-
-
7,967
7,306
-
(513)
7,967
6,793
711
-
711
15,984
415,732
431,716
2,710
434,426
-
-
(21,671)
19,497
(163,616)
(163,616)
(8,110)
(171,726)
-
-
-
-
(18,713)
(18,713)
(21,671)
19,497
-
-
(21,671)
19,497
(134,551)
1,706,427
1,571,876
2,195
1,574,071
The above consolidated statement of changes in equity is presented in United States dollars and should be read in conjunction with the
accompanying notes.
62
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Loan servicing advances (net)
Dividends received from associates, joint ventures and equity securities
Interest paid and other finance costs
Interest received
Income taxes paid
Net operating cash flows
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchase of controlled entities and businesses (net of cash acquired)
Payments for intangible assets including MSRs
Proceeds from sale of property, plant and equipment
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
Lease principal payments
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
Note
2020
$000
2019
$000
2,449,925
2,373,626
(1,761,805) (1,788,401)
14,442
(124,769)
2,496
1,470
(56,577)
(73,089)
3,627
3,423
(43,303)
(105,502)
7(b)
608,805
286,758
(159,075)
(445,201)
(187,540)
(101,822)
-
2,837
6,795
(18,779)
(24,043)
(55,626)
-
75,727
(363,863)
(542,864)
(25,797)
(21,671)
786,985
2,175,760
(680,747) (1,792,144)
(43,736)
103,047
(159,210)
(155,468)
(8,193)
(7)
(22,098)
(8,148)
(8,110)
-
(44,094)
(4,021)
(196,897)
289,245
48,045
33,139
561,346
534,669
(12,078)
(6,462)
597,313
561,346
The above consolidated cash flow statement is presented in United States dollars and should be read in conjunction with the accompanying notes.
63 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
Results and key balances
2. Revenue and other income
3. Expenses
4. Earnings per share
5. Segment information
6.
7. Notes to the consolidated cash flow statement
8. Business combinations
9.
Intangible assets
10. Impairment
Income tax expense and balances
Financial risk management
11. Hedge accounting
12. Financial risk management
13. Financial assets and liabilities at fair value through profit or loss
14. Borrowings
Other balance sheet items
15. Receivables
16. Loan servicing advances
17. Other financial assets
18. Inventories
19. Other assets
20. Property, plant and equipment
21. Leases
22. Payables
23. Provisions
24. Deferred consideration
25. Mortgage servicing related liabilities
Equity
26. Interests in equity
27. Contributed equity
28. Reserves
29. Retained earnings and dividends
Group structure
30. Details of controlled entities
31. Investments in associates and joint ventures
32. Deed of cross guarantee
33. Parent entity financial information
Unrecognised items
34. Contingent liabilities
35. Commitments
36. Capital expenditure commitments
37. Significant events after year end
Other disclosures
38. Related party disclosures
39. Key management personnel disclosures
40. Employee and executive benefits
41. Remuneration of auditors
64
1. BASIS OF PREPARATION
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 2020 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).
Changes to conceptual framework
Changes to the Conceptual Framework for Financial Reporting have been issued by the International Accounting Standards
Board. Amendments were made to apply new definition and recognition criteria for assets, liabilities, income and expenses in
the framework, which will apply for years commencing on or after 1 January 2020. The changes could affect entities that use the
Conceptual Framework to develop accounting policies for transactions, events or conditions that are not otherwise dealt with
under existing IFRS Standards. The Group has not yet determined the impact of adopting the criteria in the new framework.
Historical cost convention
The financial statements have been prepared under the historical cost convention except for certain financial assets and
liabilities (including derivative instruments) measured 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.
Investments in associated entities
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 associates are accounted for using
the equity method.
Investments in 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.
65 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Foreign currency
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 presented statement of financial position 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.
Key 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 are set out in the
relevant notes:
Note
Key accounting estimates and judgements
2
6
6
8
10
Revenue and other income
Provision for income tax
Deferred tax assets relating to carry forward tax losses
Accounting for business combinations
Impairment
Financial reporting impact of Covid-19
On 11 March 2020, the World Health Organisation declared the spread of novel coronavirus (Covid‑19) a global pandemic. The
impact of the pandemic globally on both public health and the economy has been unprecedented and its consequences continue to
evolve. The Group has considered the impact in preparing its financial report for the year ended 30 June 2020.
The key accounting estimates and judgements areas of the Group have required additional consideration and analysis due to the
ongoing impact of Covid‑19. Given the uncertainty of the extent of the pandemic, changes to the estimates and assumptions that
have been applied in the measurement of the Group’s assets and liabilities may arise in the future. Other than adjusting events
that provide evidence of conditions that existed at the end of the financial year, the impact of events that arise after the reporting
period will be accounted for in future reporting periods.
Details about the key assumptions and considerations are outlined in the following notes:
> Note 10 Impairment
> Note 12 Financial risk management
> Note 15 Receivables
> Note 16 Loan servicing advances
66
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 instrument, amounts in the financial report have been rounded off to the nearest thousand dollars,
or in certain cases, the nearest dollar.
New and amended accounting standards and interpretations adopted from 1 July 2019
The Group has adopted all standards and amendments to accounting standards which became applicable to the Group from
1 July 2019, including:
> AASB 16 Leases;
> AASB 2017‑7 Amendments to Australian Accounting Standards – Long-term Interests in Associates and Joint Ventures;
> AASB 2018‑1 Amendments to Australian Accounting Standards – Annual Improvements 2015-2017 Cycle;
> AASB 2018‑2 Amendments to Australian Accounting Standards – Plan Amendment, Curtailment or Settlement;
>
Interpretation 23 Uncertainty over Income Tax Treatments and AASB 2017-4 Amendments to Australian Accounting Standards –
Uncertainty over Income Tax Treatments.
As a result of adopting AASB 16 the Group amended its accounting policies, disclosed in note 1a. The other amendments and
interpretations listed above did not have any impact on the amounts recognised in current or prior periods and are not expected to
significantly affect future periods.
1a) CHANGES IN ACCOUNTING POLICIES
AASB 16 Leases
This note explains the impact of the adoption of AASB 16 Leases on the Group’s financial statements and discloses the new
accounting policies that have been applied from 1 July 2019.
The Group’s leasing activities
The Group leases various properties, computer equipment, motor vehicles and other items of plant and equipment. Leases vary in
contract term, with renewal at the option of the Group. The Group’s leases mainly relate to property.
How leases are accounted for under AASB 16
Until 30 June 2019, leases of property, plant and equipment were classified as either finance or operating leases. Payments made
under operating leases (net of any incentives) were charged to profit or loss on a straight‑line basis over the period of the lease.
From 1 July 2019, leases are recognised as a right‑of‑use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group. Each lease payment is allocated between the liability and interest expense. Interest expense is
recognised on the lease liability using the effective interest method. The right‑of‑use asset is depreciated over the shorter of the
asset’s useful life and the lease term on a straight‑line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
>
fixed payments, less any lease incentives receivable
> variable lease payments that depend on an index or rate
> any amounts expected to be payable under residual value guarantees
>
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
> payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with similar terms and conditions.
Right‑of‑use assets are measured at cost comprising the following:
>
the amount of the initial measurement of lease liability
> any lease payments made at or before the commencement date less any lease incentives received
> any initial direct costs, and
>
restoration costs.
Payments associated with short‑term leases and leases of low‑value assets are recognised on a straight‑line basis as an expense in
profit or loss. Short‑term leases are leases with a lease term of 12 months or less. Low‑value assets largely comprise IT equipment
and small items of office furniture.
Extension and termination options are included in a number of leases across the Group. In determining the lease term,
management considers all the facts and circumstances that create an economic incentive to exercise an extension option, or not
to exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated).
67 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified as
operating leases under the principles of AASB 117 Leases. These liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee’s incremental borrowing rate as of 1 July 2019.
Computershare has calculated incremental borrowing rates based on the risk‑free rate relevant to the country and currency of the
lease, considering the nature of the assets to which leases apply and matched to the lease term, plus an applicable margin based on
country‑specific credit rating assumptions.
The associated right‑of‑use assets were determined as follows:
> Some of the Group’s largest property leases were measured on a retrospective basis as if the new standard had always
been applied.
> All other right‑of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or
accrued lease payments and lease inducements relating to that lease recognised as at 30 June 2019.
Where the Group calculated right‑of‑use assets on a retrospective basis, lease inducements were included in the calculation as if
AASB 16 had always applied. As a result, the carrying value of associated lease inducements was reclassified to retained earnings
on transition.
Identifying a lease within an arrangement requires exercise of judgement. An arrangement contains a lease where there is an
identified asset and the customer has the right to obtain substantially all of the economic benefits from use of the asset and the
right to direct the use of the asset.
When analysing global technology contracts, the Group considered office equipment, servers and other hardware, co‑hosting sites,
cables and routers included in network contracts and software. No leases have been identified for recognition other than server
co‑hosting sites, which have been included in the lease assets and liabilities recognised at 1 July 2019.
For leases previously classified as finance leases, the Group recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of the right‑of‑use asset and the lease liability at the date of initial
application.
In applying AASB 16 for the first time, the Group has applied the following practical expedients permitted by the standard:
> use of a single discount rate to a portfolio of leases with reasonably similar characteristics
> use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease
> accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short‑term leases
> exclusion of initial direct costs for the measurement of the right‑of‑use asset at the date of initial application.
Deferred tax on right-of-use assets and lease liabilities
Deferred tax is recognised in respect of temporary differences between the tax bases of right‑of‑use assets and lease liabilities
and their carrying amounts in the consolidated financial statements. The Group considers the right‑of‑use asset and lease liability
separately when calculating temporary differences and as a result deferred tax assets and liabilities are recognised at their gross
amounts.
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.
For temporary differences on leases with retrospective asset calculations, the difference between the lower lease asset and the
higher lease liability recognised on 1 July 2019 was booked to retained earnings.
Impact on the financial statements
The Group has adopted AASB 16 using the modified retrospective approach on transition and accordingly has not restated
comparative information. The reclassification and adjustments arising from the new leasing standard are therefore recognised in
the opening balance sheet on 1 July 2019.
68
The following table shows the adjustments recognised in the opening balance sheet on 1 July 2019 for each individual line item:
Balance sheet (extract)
Current assets
Prepayments
Non-current assets
Property, plant and equipment
Right‑of‑use assets
Deferred tax assets
Impact of changes on total assets
Current liabilities
Payables
Lease liabilities
Other liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Other liabilities
Impact of changes on total liabilities
Impact of changes on net assets
Retained earnings
Impact of changes on total equity
30 June 2019
$000
AASB 16
impact
$000
1 July 2019
Restated
$000
42,171
(1,067)
41,104
136,612
(6,413)
130,199
-
207,717
139,179
40,640
240,877
207,717
179,819
489,915
(1,437)
488,478
1,931
2,345
41,249
(2,345)
43,180
-
5,804
182,252
217,589
5,266
36,917
(5,266)
251,370
(10,493)
188,056
254,506
-
1,706,427
(10,493)
1,695,934
(10,493)
A reconciliation of the total operating lease commitments as at 30 June 2019 (as disclosed in the 2019 financial report) to the
opening lease liability, is as follows:
Operating lease commitments as at 30 June 2019
Finance lease liabilities recognised at 30 June 2019
Impact of discounting
Different term applied to lease liability
Exemptions applied
Other
Lease liability as at 1 July 2019
$000
227,912
7,735
(35,339)
32,233
(1,009)
(296)
231,236
The weighted average incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 3.32%.
Under the previous accounting standard, operating lease expenses were included within management adjusted EBITDA. Under
AASB 16, lease expenses are recognised in the income statement as depreciation of right‑of‑use assets and interest expense arising
from lease liabilities.
Compared to the previous accounting standard, the Group’s income statement and management adjusted EBITDA for the year
ended 30 June 2020 were impacted by AASB 16 as follows:
Management adjusted EBITDA
Depreciation and amortisation
Finance costs
Profit before tax
Income tax
Profit for the year
$000
47,931
(41,927)
(6,945)
(941)
228
(713)
Net operating cash flows increased under AASB 16 as the element of cash paid under lease arrangements attributable to the
repayment of principal (previously included in the operating cash flows) is included in financing cash flows.
69 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS New and amended standards and interpretations issued but not yet effective
AASB 2019-3 Interest Rate Benchmark Reform
Inter‑bank offered rates (IBOR) refers to interest rate benchmarks that are used in a wide variety of financial instruments.
Examples of IBOR include ‘LIBOR’ (the London Inter‑bank Offered Rate), ‘EURIBOR’ (the Euro Inter‑bank Offered Rate) and ‘BBSW’
(the Australian Bank Bill Swap Rate). The UK Financial Conduct Authority (the regulator of LIBOR, the most widely used interest
rate benchmark) has confirmed that it will no longer compel or persuade panel banks to submit rates for the calculation of LIBOR
beyond December 2021. Therefore, there can be no guarantee that LIBOR will be determined after 2021 on the same basis as at
present, if at all. LIBOR and other benchmark interest rates are being replaced with alternative reference rates (ARRs), collectively
known as IBOR reform.
AASB 2019‑3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform amends some specific hedge
accounting requirements to provide relief from potential effects of the uncertainty caused by the interest rate benchmark reform.
The Group is currently assessing the potential impact of IBOR reform by reviewing contracts which reference IBOR and has
commenced its transition plan in order to manage changes required to contracts impacted by IBOR reform within the specified time
frame. The Group has a number of arrangements which reference IBOR benchmarks and extend beyond 2021, including borrowing
facilities and deposit contracts. Based on our initial assessment, the impact of IBOR reform is not expected to be material to
the Group.
At 30 June 2020, the Group does not have any derivative arrangements designated as hedges maturing beyond December 2021
which are expected to be impacted by IBOR reform.
2. REVENUE AND OTHER INCOME
Sales revenue
Revenue from contracts with customers
Dividends received
Interest received
Total revenue from continuing operations
Other income
Other
Rent received
Gain on disposal of Karvy
Marked to market adjustments – derivatives
Put option liability re‑measurement
Total other income
2020
$000
2019
$000
2,271,512
2,341,247
2,142
3,627
1,333
3,423
2,277,281
2,346,003
3,126
779
-
-
-
8,830
1,704
106,456
4,363
1,672
3,905
123,025
Sales revenue
Revenue is recognised in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the provider of the goods or services expects to be entitled. This involves following a five‑step model of
revenue recognition:
>
>
Identifying the contract with a customer
Identifying performance obligations under the contract
> Determining the transaction price
> Allocating the transaction price to performance obligations under the contract
> Recognising revenue when Computershare satisfies its performance obligations
70
Integrated services
Integrated services customer contracts for registry maintenance, employee plans management, trust management, loan services
and some recurring contracts in communication services include an obligation to perform an unspecified number of tasks to
provide an integrated service over the contract period, where Computershare is compensated over the contract term whether or
not any specific activities are required to be performed. In these situations, the Group has a stand‑ready obligation to perform any
of the tasks constituting the integrated service whenever needed, which is considered one performance obligation.
Typically, the consideration that Computershare is entitled to for satisfying performance obligations can vary in line with
underlying measures, such as the number of shareholders or participants in an employee share plan. For the purposes of recording
revenue, the Group estimates the amount of variable consideration it is entitled to, only to the extent that it is highly probable that
a significant reversal in the cumulative amount of revenue recognised will not occur.
In some instances, particularly for smaller clients, consideration may be fixed. This fixed consideration is recognised as revenue
over the contract term by measuring progress towards complete satisfaction of the underlying performance obligation, which is
generally on a straight‑line basis. Revenue for provision of shareholder meetings (considered a separate performance obligation) is
recognised at a point in time when the meeting service has been provided.
The Group sometimes provides services on an ad‑hoc basis over the contract period, where those services do not form a part of a
stand‑ready obligation (eg, property valuations). Each of these individual tasks is classified as a separate performance obligation
and the allocated fee is recognised once that performance obligation has been completed.
Corporate actions, stakeholder relationship management, class actions
For corporate actions, stakeholder relationship management, class actions, bankruptcy administration and some communication
services contracts, each customer contract is a separate performance obligation and revenue related to these contracts is typically
variable. For contracts that qualify for over time revenue recognition, revenue is recognised in line with contractual charging
arrangements for variable fees as they reflect the transfer of benefit to the customer.
Margin income
Margin income is part of variable consideration related to customer contracts and is recognised when it becomes receivable.
Upfront fees
Where work reflected by the upfront fees charged to clients is classified as a fulfilment activity, the associated revenue is
recognised straight line over the relevant contract term. In those instances where the upfront fees represent a separate
performance obligation, the associated revenue is recognised at a point in time when that performance obligation is satisfied.
Discounts and rebates
Where a contract includes a variable amount, the consolidated entity determines the transaction price with regard to any variable
consideration it is entitled to. The estimated consideration can sometimes vary due to discounts and rebates. Accumulated
experience is used to estimate the highly probable amount of variable consideration to be recognised.
Interest and dividend income
Interest income on deposits is recognised using the effective interest method. Dividends are recognised as revenue when the right
to receive payment is established.
Key estimates and judgements
As part of Computershare’s appointment by UK Asset Resolution to undertake its mortgage servicing activities, it was agreed
that a fixed fee would be payable to Computershare over four years for the provision of infrastructure to support core services
under the contract. A single performance obligation has been identified in the contract between the Group and UK Asset
Resolution which, under AASB 15 Revenue from Contracts with Customers, will be satisfied over a period of time. A portion
of the fixed fee is recognised as revenue during the period with reference to the percentage of related costs that have been
incurred to date.
The Group is required to reassess the related costs which may arise in the future and the resulting amount of revenue to
be recognised on an annual basis. This reassessment may lead to fluctuations in the amount of the fixed fee recognised as
revenue each year. Judgement is required in estimating the total amount of related costs which are expected to be incurred,
the percentage of these costs incurred to date and the period over which these costs will be incurred. The remaining fixed fee
yet to be recognised as revenue as of 30 June 2020 amounts to $3.9 million.
71 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3. EXPENSES
Profit before tax includes the following specific expenses:
Depreciation and amortisation
Depreciation of property, plant and equipment
Depreciation of right‑of‑use assets
Total depreciation
Amortisation of intangible assets
Amortisation of mortgage servicing related liabilities
Total amortisation (net)
Total depreciation and amortisation
Finance costs
Interest expense
Borrowings and derivatives
Lease liabilities
Other
Loan facility fees and other borrowing expenses
Total finance costs
Other operating expense items
Technology spending ‑ research and development
Employee entitlements (excluding superannuation and other pension) expense
Superannuation and other pension expenses
2020
$000
2019
$000
34,251
43,221
77,472
37,539
-
37,539
166,706
134,283
(38,010)
(31,210)
128,696
206,168
103,073
140,612
52,232
58,949
7,366
3,200
3,527
607
3,501
3,632
66,325
66,689
99,181
72,344
920,403
921,225
45,125
44,325
Profit before tax includes the following individually significant expenses. Further information is included in note 4.
Individually significant items
Acquisition and disposal related expenses
Impairment charge ‑ investments in associates
Acquisition accounting adjustments
Depreciation and amortisation
Refer to notes 9, 20, 21 and 25 for further details on depreciation and amortisation.
Finance costs
Finance costs are recognised as an expense when they are incurred.
Technology spending – research and development
These are operating expenses incurred on research and development activities.
21,011
-
-
17,170
13,953
702
Employee entitlements
Employee entitlements include salaries and wages, leave entitlements, incentives and share‑based payment awards. The Group’s
accounting policy for liabilities associated with employee benefits is set out in notes 22 and 23. The policy relating to share‑based
payments is set out in note 40.
Superannuation and other pension expenses
The Group makes contributions to various defined contribution superannuation and pension plans. The Group has no further
payment obligations once the contributions have been paid. The contributions are recognised as expenses when they
become payable.
72
4. EARNINGS PER SHARE
Year ended 30 June 2020
Earnings per share (cents per share)
Reconciliation of earnings
Profit for the year
Non‑controlling interest (profit)/loss
Add back management adjustment items (see below)
Basic EPS
Diluted EPS
Management
Basic EPS
Management
Diluted EPS
42.97 cents
42.97 cents
56.12 cents
56.12 cents
$000
$000
$000
$000
232,731
232,731
232,731
232,731
(74)
-
(74)
-
(74)
(74)
71,185
303,842
71,185
303,842
Net profit attributable to the members of Computershare Limited
232,657
232,657
Weighted average number of ordinary shares used as denominator in
calculating earnings per share
541,420,844
541,420,844
541,420,844
541,420,844
Year ended 30 June 2019
Earnings per share (cents per share)
Reconciliation of earnings
Profit for the year
Non‑controlling interest (profit)/loss
Less management adjustment items (see below)
Basic EPS
Diluted EPS
Management
Basic EPS
Management
Diluted EPS
76.57 cents
76.42 cents
70.24 cents
70.10 cents
$000
$000
$000
$000
418,955
418,955
418,955
418,955
(3,223)
(3,223)
(3,223)
(3,223)
-
-
(34,368)
(34,368)
Net profit attributable to the members of Computershare Limited
415,732
415,732
381,364
381,364
Weighted average number of ordinary shares used as denominator in
calculating earnings per share
542,955,868
543,996,500
542,955,868
543,996,500
Reconciliation of weighted average number of shares used as the denominator:
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
541,420,844
542,955,868
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
-
1,040,632
541,420,844
543,996,500
The weighted average number of potential dilutive ordinary shares excludes 1,730,608 performance rights (2019: 744,431) as they
are not dilutive for the year ended 30 June 2020. These performance rights could potentially dilute basic earnings per share in
the future.
2020
Number
2019
Number
No employee performance rights have been issued since year end.
Calculation of earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing profit attributable to members of Computershare Limited by the weighted
average number of ordinary shares outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share is determined by adjusting the weighted average number of shares used in the calculation of basic
earnings per share to take into account the weighted average number of additional ordinary shares that would have been
outstanding assuming the conversion of all dilutive potential ordinary shares, such as performance rights.
73 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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 management adjustment items net of tax.
For the year ended 30 June 2020 management adjustment items include the following:
Amortisation
Amortisation of intangible assets
Acquisitions and disposals
Acquisition related expenses
Benefit of tax losses not previously recognised on Equatex acquisition
One‑off tax expense on Equatex IP restructure
Acquisition accounting adjustments
Other
Major restructuring costs
Marked to market adjustments – derivatives
Total management adjustment items
Gross
$000
Tax effect
$000
Net of tax
$000
(57,856)
15,259
(42,597)
(21,011)
-
-
5,355
7,666
1,054
1,410
(371)
(15,656)
7,666
1,054
1,039
(25,972)
(3,932)
6,033
1,180
(19,939)
(2,752)
(107,361)
36,176
(71,185)
Management adjustment Items
Management adjustment items net of tax for the year ended 30 June 2020 were as follows:
Amortisation
> Customer relationships and most of 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 in the year ended 30 June 2020 was $42.6 million. Amortisation of mortgage servicing rights,
certain acquired software as well as intangibles purchased outside of business combinations is included as a charge against
management earnings.
Acquisitions and disposals
> Acquisition related expenses of $14.6 million were incurred related to the integration of Equatex and $1.1 million related to the
acquisition of Corporate Creations.
> A deferred tax asset of $7.7 million was recognised for tax losses not previously recognised on the Equatex acquisition.
> A true‑up of the one‑off tax expense recognised as a result of the Equatex IP restructure in the prior financial year resulted in a
tax benefit of $1.1 million.
> A gain of $1.0 million resulted from an adjustment to prior period acquisition accounting.
Other
> Costs of $19.9 million were incurred in respect of major restructuring programmes spanning several years and comprising
specified significant cost‑out initiatives and related workforce reductions. In the current reporting period, these costs related
mainly to UK Mortgage Services, Global Issuer Services and Shared Services.
> 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 loss of $2.8 million.
74
For the year ended 30 June 2019 management adjustment items were as follows:
Amortisation
Amortisation of intangible assets
Acquisitions and disposals
Gain on disposal of Karvy
Acquisition related expenses
One‑off tax expense on Equatex IP restructure
Acquisition accounting adjustments
Other
Major restructuring costs
Impairment charge – investments in associates
Restatement of deferred tax balances due to significant US tax law changes
Marked to market adjustments – derivatives
Put option liability re‑measurement
True‑up of US tax reform impact on foreign subsidiary profits
Total management adjustment items
5. SEGMENT INFORMATION
Gross
$000
Tax effect
$000
Net of tax
$000
(55,808)
15,734
(40,074)
106,456
(14)
106,442
(17,170)
3,595
(13,575)
-
(5,801)
(5,801)
(702)
(11)
(713)
(19,891)
(13,953)
5,100
(14,791)
442
(13,511)
-
4,363
1,672
12,819
(1,310)
-
12,819
3,053
1,672
-
(1,153)
(1,153)
4,967
29,401
34,368
As previously announced, effective 1 July 2019, Computershare has changed its management structure and reporting from
a regional to a global business model aligned to its product offering. This is intended to intensify customer focus, identify
opportunities for new business and operating efficiencies and enhance the development of new products. Consequently, the
change to the organisational structure has resulted in a change to the composition of operating segments.
In accordance with AASB 8 Operating Segments, the Group has identified its operating segments to be the following six global
business lines:
a. Issuer Services
b. Mortgage Services & Property Rental Services
c. Employee Share Plans & Voucher Services
d. Business Services
e. Communication Services & Utilities
f. Technology Services
Issuer Services comprise register maintenance, corporate actions, stakeholder relationship management, corporate governance
and related services. Mortgage Services & Property Rental Services comprise mortgage servicing and related activities,
together with tenancy bond protection services in the UK. Employee Share Plans & Voucher Services comprise the provision of
administration and related services for employee share and option plans, together with Childcare Voucher administration in the UK.
Business Services comprise the provision of bankruptcy, class actions and corporate trust administration services. Communication
Services and Utilities operations comprise document composition and printing, intelligent mailing, inbound process automation,
scanning and electronic delivery. Technology Services comprise the provision of software specialising in share registry and
financial services.
There is a corporate function which 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.
The operating segments presented reflect the manner in which the Group is internally managed and the financial information
reported to the chief operating decision maker (CEO). 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. The key segment performance measure
is based on earnings before interest, tax, depreciation and amortisation (management adjusted EBITDA). An additional measure
of segment performance is management adjusted EBIT, which reflects management adjusted earnings before interest and tax.
Management adjusted EBIT is of particular relevance to Mortgage Services & Property Rental Services as there are significant
levels of amortisation included in management earnings for this business line.
Comparative segment information has been restated to reflect the Group’s new operating segments, including revenue by
geography. Consequently, the segment information disclosed by geography is not entirely comparable to the information disclosed
by geographic segment for the prior year.
75 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OPERATING SEGMENTS
June 2020
Total segment revenue and
other income
Intersegment revenue
External revenue and
other income
Revenue by geography:
Asia
Australia & New Zealand
Canada
Continental Europe
UCIA
United States
Management adjusted EBITDA
Management adjusted depreciation
and amortisation
Employee
Share
Plans &
Voucher
Services
$000
Communi-
cation
Services &
Utilities
$000
Mortgage
Services &
Property
Rental
Services
$000
Issuer
Services
$000
Business
Services
$000
Technology
Services
$000
Total
$000
918,562
306,346
331,286
665,149
244,863
236,890
2,703,096
(23,813)
(1,742)
(162,465)
-
(1,246)
(236,054)
(425,320)
894,749
304,604
168,821
665,149
243,617
836
2,277,776
79,928
99,657
74,557
44,745
102,625
493,237
894,749
260,481
32,612
12,321
18,752
8,830
175,619
56,470
-
81,838
7,776
33,843
6,669
38,695
304,604
168,821
65,707
30,798
-
-
-
-
226,413
438,736
665,149
141,202
-
-
84,623
-
14,209
144,785
243,617
88,181
-
858
33
-
112,540
194,674
185,741
87,418
(55)
525,480
-
1,171,923
836
2,277,776
19,367
605,736
(1,975)
(3,612)
(3,387)
(70,777)
(885)
(17,646)
(98,282)
Management adjusted EBIT
258,506
62,095
27,411
70,425
87,296
1,721
507,454
June 2019
Total segment revenue
and other income
Intersegment revenue
979,705
310,318
352,273
646,101
269,315
238,040
2,795,752
(27,855)
(2,570)
(174,488)
-
(2,625)
(237,122)
(444,660)
External revenue and other income
951,850
307,748
177,785
646,101
266,690
918
2,351,092
Revenue by geography:
Asia
Australia & New Zealand
Canada
Continental Europe
UCIA
United States
Management adjusted EBITDA
Management adjusted depreciation
and amortisation
72,977
107,222
80,118
52,913
107,271
531,349
951,850
313,581
29,051
14,450
20,522
21,025
162,377
60,323
-
94,554
6,879
29,739
6,516
40,097
307,748
177,785
80,280
37,915
-
-
-
-
285,354
360,747
646,101
150,234
17,003
-
87,529
-
18,430
143,728
266,690
92,633
-
871
36
4
7
-
119,031
217,097
195,084
103,681
579,955
1,136,244
918
2,351,092
16,425
691,068
(3,008)
(2,503)
(3,282)
(47,717)
(869)
(18,435)
(75,814)
Management adjusted EBIT
310,573
77,777
34,633
102,517
91,764
(2,010)
615,254
Segment revenue
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
2020
$000
2019
$000
2,703,096
2,795,752
(425,320)
(444,660)
(495)
(5,089)
2,277,281
2,346,003
76
Management adjusted EBITDA and management adjusted EBIT
Management adjusted results are used, along with other measures, to assess operating business performance. The Group believes
that exclusion of certain items permits a better analysis of the Group’s performance on a comparative basis and provides a better
measure of underlying operating performance.
A reconciliation of management adjusted EBITDA and EBIT to operating profit before income tax is provided as follows:
2020
Management adjusted EBITDA2
Management adjusted depreciation and amortisation3
Management adjusted EBIT
Management adjustment items (before related income tax effect):
Amortisation of intangible assets
Major restructuring costs
Acquisition related expenses
Marked to market adjustments ‑ derivatives
Acquisition accounting adjustments
Total management adjustment items (note 4)
Finance costs3
Profit before income tax from continuing operations
Operating
segments
$000
Corporate1
$000
Total
$000
605,736
40,625
646,361
(98,282)
(50,030)
(148,312)
507,454
(9,405)
498,049
(57,856)
(25,972)
(21,011)
(3,932)
1,410
(107,361)
(66,325)
324,363
1
In the 2019 reporting period, the corporate function incurred external operating lease expenses, which were booked and then recharged to the
operating segments above EBITDA. In the current reporting period, these operating lease expenses in the corporate function have been replaced
by lease‑related depreciation and interest expenses under AASB 16. The corporate function continues to recharge these below EBITDA costs to the
operating segments as an above EBITDA charge to ensure business performance measures include property costs. Hence, corporate EBITDA is inclusive
of the intercompany recharge revenue without the offsetting external lease costs.
2 Management adjusted EBITDA in the current reporting period was impacted by adoption of AASB 16, which resulted in an increase of $47.9 million
(refer to note 1).
3 Excluding the impact of AASB 16, finance costs were $59.4 million and management adjusted depreciation and amortisation was $106.4 million
(refer to note 1).
2019
Management adjusted EBITDA
Management adjusted depreciation and amortisation
Management adjusted EBIT
Management adjustment items (before related income tax effect):
Amortisation of intangible assets
Major restructuring costs
Acquisition related expenses
Marked to market adjustments ‑ derivatives
Acquisition accounting adjustments
Gain on disposal of Karvy
Impairment charge ‑ investments in associates
Put option liability re‑measurement
Total management adjustment items (note 4)
Finance costs
Profit before income tax from continuing operations
77 | COMPUTERSHARE | ANNUAL REPORT | 2020
Operating
segments
$000
Corporate
$000
Total
$000
691,068
(16,190)
674,878
(75,814)
(8,990)
(84,804)
615,254
(25,180)
590,074
(55,808)
(19,891)
(17,170)
4,363
(702)
106,456
(13,953)
1,672
4,967
(66,689)
528,352
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Geographical Information
Australia
United Kingdom
United States
Canada
Switzerland
Other countries
Total
Geographical allocation of
external revenue
Geographical allocation
of non-current assets
2020
$000
185,889
388,408
2019
$000
208,209
457,824
2020
$000
174,998
225,199
2019
$000
152,708
206,974
1,201,873
1,158,265
2,238,014
1,896,276
185,577
195,005
60,158
45,418
255,376
281,282
164,381
400,269
154,033
168,993
383,860
133,497
2,277,281
2,346,003
3,356,894
2,942,308
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 $2,091.4 million (2019: $2,137.8 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 $3,181.9 million (2019: $2,789.6 million).
6. INCOME TAX EXPENSE AND BALANCES
Income tax expense
The income tax expense 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.
Income tax expense is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, tax is also recognised in other comprehensive income or directly in equity, respectively.
(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
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
Prima facie income tax expense thereon at 30%
Variation in tax rates of foreign controlled entities
Tax effect of permanent differences:
Benefit of tax losses not previously recognised on Equatex acquisition
Withholding tax not creditable
Prior year tax (over)/under provided
One‑off tax expense on Equatex IP restructure
Effect of changes in tax rates and laws
Gain on disposal of Karvy
Impairment of investment in SETL
True‑up of US tax reform impact on foreign subsidiary profits
Net other
Income tax expense
2020
$000
2019
$000
98,026
94,328
(2,131)
(4,120)
95,895
90,208
(7,031)
(11,387)
2,768
(4,263)
30,576
19,189
91,632
109,397
324,363
528,352
97,309
158,506
25
(7,554)
(7,666)
6,266
(2,131)
(1,054)
-
-
(4,120)
5,801
(1,213)
(14,284)
-
-
-
96
(32,493)
2,339
1,153
49
91,632
109,397
78
(c) Amounts recognised directly in equity
Deferred tax – share‑based remuneration
(d) Tax benefit/(expense) relating to items of other comprehensive income
Cash flow hedges
Net investment hedges
2020
$000
253
2019
$000
887
(3,564)
(2,390)
3,680
116
3,101
711
(e) Unrecognised tax losses
As at 30 June 2020, companies within the consolidated entity had estimated unrecognised tax losses of $6.6 million
(2019: $15.4 million) available to offset against future years’ taxable income. Tax losses of $5.8 million will expire between 2022
and 2027.
Deferred tax balances
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 to the extent it
is probable that future taxable amounts will be available to utilise them. 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.
Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Financial instruments and foreign exchange
Mortgage servicing related liabilities
Lease liabilities
Intangible assets
Provisions
Other creditors and accruals
Employee benefits
Property, plant and equipment
Share‑based remuneration
Loss allowance
Deferred revenue
Other
Total deferred tax assets
Set‑off of deferred tax liabilities pursuant to set‑off provisions
Net deferred tax assets
Movements during the year
Opening balance at 1 July
Change in accounting policy (note 1a)
Opening balance at 1 July (restated)
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
2020
$000
30,004
77,239
67,554
35,843
27,276
19,427
8,436
6,163
3,927
3,610
3,330
2,509
2,098
2019
$000
30,810
59,071
59,642
3,950
29,642
19,843
6,166
7,228
3,853
4,772
2,456
3,734
5,947
287,416
237,114
(126,263)
(97,935)
161,153
139,179
139,179
145,654
40,640
4,100
179,819
149,754
(1,999)
(2,542)
7,031
253
3,680
11,387
887
3,101
(28,328)
(37,534)
697
14,126
161,153
139,179
The total deferred tax assets expected to be recovered after more than 12 months amounts to $188.5 million (2019: $144.3 million).
79 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Deferred tax liabilities
The balance comprises temporary differences attributable to:
Goodwill
Intangible assets
Right‑of‑use 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
Movements during the year:
Opening balance at 1 July
Change in accounting policy (note 1a)
Opening balance at 1 July (restated)
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
2020
$000
2019
$000
198,449
118,155
29,976
3,065
3,960
187,256
100,911
-
20,640
6,717
353,605
315,524
(126,263)
(97,935)
227,342
217,589
217,589
193,026
36,917
2,569
254,506
195,595
(107)
2,768
(2,194)
(424)
30,576
2,390
(28,328)
(37,534)
697
26,986
227,342
217,589
The total deferred tax liabilities expected to be settled after more than 12 months amount to $352.6 million (2019: $311.7 million).
Key estimates and judgements
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.
Contingent liability - Australian thin capitalisation
The ATO has previously challenged the inclusion of the Australian Group’s intangible assets in the thin capitalisation calculation
used to determine the amount of tax‑deductible interest expense. Computershare disagrees with the ATO’s views and intends
to vigorously defend its position. This process may take some years to resolve. As the Group does not expect to pay additional
tax related to this matter, no provision was recognised as at 30 June 2020. If Computershare is unsuccessful in defending its
position, the maximum potential primary tax liability excluding interest is estimated at $20.4 million (2019: $52.1 million).
80
7. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
(a) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, and short‑term deposits with original maturities of three months
or less that are readily convertible to known amounts of cash 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.
Cash and cash equivalents in the consolidated cash flow statement are reconciled to the consolidated statement of financial
position as follows:
Shown as cash and cash equivalents in the consolidated statement of financial position
Cash and cash equivalents in the consolidated cash flow statement
(b) Reconciliation of net profit after income tax to net cash from operating activities
Net profit after income tax
Adjustments for:
Depreciation and amortisation
Gain on disposal of Karvy
Net (gain)/loss on asset disposals and asset write‑downs
Contingent consideration re‑measurement
Share of net (profit)/loss of associates and joint ventures accounted for using equity method
Employee benefits – share‑based expense
Hedge cost of business combination
Impairment charge
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
Net cash and cash equivalents from operating activities
(c) Reconciliation of liabilities arising from financing activities
2020
$000
597,313
597,313
2019
$000
561,346
561,346
232,731
418,955
206,168
140,612
-
-
-
(239)
18,833
-
-
(106,456)
817
702
1,006
18,049
7,138
13,953
3,932
(6,035)
45,403
(52,636)
(519)
(832)
14,442
33,452
6,273
48,329
(124,769)
1,899
(29,540)
3,895
608,805
286,758
Opening balance at 1 July 2019
Change in accounting policy (note 1a)
Restated balance at the beginning
of the financial year
Cash flows
Non‑cash changes:
Acquisitions of entities and businesses
Additions
Fair value adjustments
Transfers and other
Currency translation difference
Balance at 30 June 2020
Current
borrowings
$000
Non-current
borrowings
$000
Current
lease
liabilities
$000
Non-current
lease
liabilities
$000
Cross
currency
swap
$000
Total
$000
72,594
1,955,980
1,931
5,804
2,451
2,038,760
-
-
41,249
182,252
-
223,501
72,594
1,955,980
43,180
188,056
2,451
2,262,261
88,208
(13,797)
(44,094)
-
(11,909)
18,408
-
-
-
-
-
50,763
458
3,484
-
2,072
13,648
-
-
-
12,112
2,530
17,132
62,875
137,715
(241,738)
41,064
(41,064)
(11,107)
(8,798)
(933)
(3,802)
-
494
(104,023)
(24,146)
287,410
1,742,410
43,159
158,910
3,148
2,235,037
(d) Acquisitions and disposals of businesses
For details of businesses acquired during the year and related cash flows refer to note 8.
81 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. 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 is 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 28 February 2020, the Group acquired the assets and liabilities of Corporate Creations International along with 100%
of Corporate Creations Intellectual Property LLC, Corporate Creations Management LLC, Corporate Creations Network Inc.
[Florida] and its subsidiaries, Management Group Limited and Worldwide Nominee LLC (collectively Corporate Creations),
a registered agent business headquartered in Florida, US. Total consideration was $144.8 million. Corporate Creations
provides registered agent and related filing services to over fourteen thousand small, medium and large US corporations.
The acquisition enhances Computershare’s registered agent product suite and capabilities and accelerates Computershare’s
growth in the US registered agent market.
This business combination did not materially contribute to the total revenue of the Group. If the acquisition had occurred on
1 July 2019, the total revenue contribution by the acquired entities would have been $33.1 million.
Details of the acquisition are as follows:
Cash consideration
Total consideration paid
Less fair value of identifiable assets acquired
Provisional goodwill on consolidation
The recognised goodwill is expected to be deductible for tax purposes.
Assets and liabilities arising from this acquisition are as follows:
Intangible assets
Receivables
Right‑of‑use assets
Cash and cash equivalents
Deferred tax assets
Property, plant and equipment
Prepayments
Payables
Lease liabilities
Deferred tax liabilities
Net assets
Purchase consideration:
Inflow/(outflow) of cash to acquire the entities, net of cash acquired:
Cash balance acquired
Less cash paid
Net inflow/(outflow) of cash
$000
144,817
144,817
(59,407)
85,410
Fair value
$000
62,880
3,545
2,530
1,422
697
129
13
(8,582)
(2,530)
(697)
59,407
$000
1,422
(144,817)
(143,395)
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 value 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.
82
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 gain on bargain purchase.
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.
Finalisation of acquisition accounting
In accordance with the accounting policy, the acquisition accounting for the Equatex business combination was finalised in the
current period, which resulted in an additional provision recognised of $9.6 million. As the provision was determined during
the 12‑month measurement period, this adjustment has been made against goodwill. Accordingly, the goodwill recognised on
acquisition has increased from $244.4 million, as previously reported at 30 June 2019, to $254.0 million.
Key estimates and judgements
Acquisition accounting requires that management make estimates with regard to valuation of certain non‑monetary assets and
liabilities of the acquired entities. These estimates have particular impact in terms of valuation of intangible assets, contingent
consideration liabilities 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.
9. INTANGIBLE ASSETS
At 1 July 2019
Opening cost
Opening accumulated amortisation
Opening net book amount
Additions (net of adjustments and reclassifications)1
Amortisation charge2
Currency translation difference
Transfers and other
Closing net book amount
At 30 June 2020
Cost
Accumulated amortisation
Closing net book amount
At 1 July 2018
Opening cost
Opening accumulated amortisation
Opening net book amount
Additions (net of adjustments and reclassifications)1
Amortisation charge2
Currency translation difference
Closing net book amount
At 30 June 2019
Cost
Accumulated amortisation
Closing net book amount
Customer
contracts
and
relationships
$000
Mortgage
Servicing
Rights
$000
Goodwill
$000
Other3
$000
Total
$000
1,768,025
688,864
763,296
98,266
3,318,451
-
(275,231)
(219,374)
(41,166)
(535,771)
1,768,025
413,633
94,996
60,884
543,922
270,959
57,100
2,782,680
6,703
433,542
-
(52,846)
(102,494)
(11,366)
(166,706)
(5,894)
-
709
-
-
-
579
7,916
(4,606)
7,916
1,857,127
422,380
712,387
60,932
3,052,826
1,857,127
747,195
1,034,131
100,374
3,738,827
-
(324,815)
(321,744)
(39,442)
(686,001)
1,857,127
422,380
712,387
60,932
3,052,826
1,521,575
572,619
599,581
52,561
2,746,336
-
(241,786)
(144,832)
(32,092)
(418,710)
1,521,575
250,473
330,833
129,674
454,749
163,715
20,469
2,327,626
45,318
589,180
-
(50,058)
(74,542)
(9,683)
(134,283)
(4,023)
3,184
-
996
157
1,768,025
413,633
543,922
57,100
2,782,680
1,768,025
688,864
763,296
98,266
3,318,451
-
(275,231)
(219,374)
(41,166)
(535,771)
1,768,025
413,633
543,922
57,100
2,782,680
1 Additions comprise 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.
3 Other intangible assets include intellectual property, licences, software and brands.
4 The gross amount of mortgage servicing rights amortisation is partially offset in the statement of comprehensive income by the amortisation of the
related mortgage servicing liabilities.
83 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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 and is tested for impairment annually or more frequently,
if events or changes in circumstances indicate that it might be impaired. On disposal or termination of a previously acquired
business, any associated goodwill is included in the determination of profit or loss on disposal.
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 full integration into the
Computershare Group. Where acquisitions have been made during the period, the Group has 12 months from the acquisition date
in which to finalise the accounting, including calculation of goodwill. Until finalisation of acquisition accounting within the 12‑month
period, provisional amounts are included in the consolidated results.
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 value over their
estimated useful lives, typically ranging from one to twenty years.
Mortgage servicing rights
Mortgage servicing rights acquired as part of business combinations 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 of nine years.
Given interest rate decreases that occurred in the US during the reporting period, the Group has reviewed the useful life estimate
of all servicing rights and concluded that the useful life of the interest‑sensitive part of the total portfolio should be reduced to
eight years. This change will be applied prospectively from 1 July 2020. Accordingly, from this date amortisation of servicing rights
will be calculated based on estimated useful lives of between eight and nine years.
Software and research and development costs
All research‑related costs are expensed as incurred. Software development costs are capitalised where they meet the recognition
criteria for capitalisation, and are subsequently amortised using the straight line method to allocate their value over their
estimated useful lives, typically ranging from eight to fifteen years.
Impairment of intangible assets with a finite useful life
Intangible assets with a finite useful life are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. As intangible assets do not generate independent cashflows, they are tested for impairment at the
CGU level to which they belong.
10. IMPAIRMENT
Impairment test for goodwill
Goodwill is tested for impairment at least once a year, or more frequently if events or changes in circumstances indicate that the
carrying amount may not be recoverable. Where required, impairment losses are recognised in profit or loss in the reporting period
when the carrying amount exceeds recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use.
For the purpose 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 (CGUs), or groups of CGUs, expected to benefit from
synergies of the business combination. Effective from 1 July 2019, the Group’s management structure and reporting has changed
from a regional model to a global business model aligned to its product offering. The reorganisation of the Group’s reporting
structure has given rise to a change in the composition of the CGUs to which goodwill is allocated. Accordingly, goodwill has been
reallocated to the following groups of CGUs at this date.
Class Actions and Bankruptcy
Communication Services and Utilities
Corporate Trust
Employee Share Plans
Issuer Services
Mortgage Services and Property Rental Services
Voucher Services
30 June 2020
$000
1 July 2019
$000
89,901
115,230
72,529
383,057
1,021,978
163,341
11,091
89,952
116,674
75,257
368,741
941,586
164,377
11,438
1,857,127
1,768,025
84
As reported at 30 June 2019
Asia
Australia and New Zealand
Canada
Continental Europe
United Kingdom, Channel Islands, Ireland and Africa (UCIA)
United States
2019
$000
62,722
149,583
116,610
26,940
334,195
1,077,975
1,768,025
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.
No impairment charge has been recognised for the financial year ended 30 June 2020.
Key estimates and judgements
Key assumptions used in the value‑in‑use calculations are described below for each group of CGUs with allocated goodwill.
The impact of the Covid‑19 pandemic was included in estimates of the five‑year cash flow projections. Given the evolving nature
of Covid‑19 and uncertainty around the extent of its duration and economic impact, changes to estimates and assumptions may
arise in the future.
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 on
approved budgets covering a one‑year period, with
subsequent periods based on the Group’s expectations of
growth excluding the impact of possible future acquisitions,
business improvement and restructuring. Cash flows also
include margin income projections, which reflect expectations
regarding future client balances and interest rates.
The earnings growth rates applied beyond the initial five‑year
period are as follows:
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:
Class Actions and Bankruptcy
Communication Services and Utilities
Corporate Trust
Employee Share Plans
Issuer Services
Mortgage Services and Property Rental Services
2020
2.0%
2.0%
2.0%
1.9%
2.0%
2.0%
Class Actions and Bankruptcy
Communication Services and Utilities
Corporate Trust
Employee Share Plans
Issuer Services
Mortgage Services and Property Rental Services
Voucher Services
n/a
Voucher Services
As previously disclosed
Asia
Australia and New Zealand
Canada
Continental Europe
United Kingdom, Channel Islands, Ireland and
Africa (UCIA)
United States
2019
3.0%
2.5%
2.0%
1.7%
2.6%
2.5%
Asia
Australia and New Zealand
Canada
Continental Europe
United Kingdom, Channel Islands, Ireland and
Africa (UCIA)
United States
2020
9.4%
9.6%
9.4%
8.1%
9.2%
9.0%
20.4%
2019
9.0%
12.1%
10.1%
9.3%
8.7%
9.7%
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. Due to the uncertainty of Covid‑19, the Group has further undertaken to stress test the
assessments of value‑in‑use for year‑end reporting requirements. For all operating segments, the recoverable amount exceeds the
carrying amount when testing for reasonably possible changes in key assumptions.
85 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 11. HEDGE ACCOUNTING
The Group applies hedge accounting as follows:
Fair value hedge
Cash flow hedge
Cash flow hedge
Nature of hedge
The hedge of fair value risk
of a financial liability.
The hedge of a highly
probable forecast
transaction.
The hedge of a highly
probable forecast
transaction.
Hedge of net investment in
foreign operations
The hedge of changes in the
consolidated entity’s foreign
denominated net assets
due to changes in foreign
currency rates.
Hedged risk
Interest rate risk
Interest rate risk
Foreign exchange risk
Foreign exchange risk
Hedged item
Fixed interest rate US Private
Placement issues.
Highly probable interest cash
flows from which margin
income is derived.
Highly probable cash flows
associated with foreign
currency denominated debt.
Foreign operations.
Hedging
instruments
Interest rate swaps
Interest rate swaps
Cross currency swaps
Cross currency swaps,
foreign currency
denominated issued debt
Designation and
documentation
At the inception of the transaction, the Group documents its risk management objective and strategy for the hedge, hedging
instrument, hedged item, hedged risk and how the hedge relationship will meet the hedge effectiveness requirements.
Hedge
effectiveness
method
Accounting
treatment for
the hedging
instrument
Accounting
treatment
for the
hedged item
Accounting
treatment
for hedge
ineffectiveness
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
The assessment is based on:
> existence of an economic relationship between the hedged item and the hedging instrument
>
>
the effect of credit risk not dominating the changes in value of either the hedged item or the hedging instrument
the hedge ratio being reflective of the Group’s risk management approach.
Fair value through the
income statement.
Carrying value adjusted
for changes in fair value
attributable to the hedged
risk; fair value through the
income statement.
Fair value through the cash
flow hedge reserve and then
recognised in the income
statement at the time at
which the hedged item
affects the income statement
for the hedged risk.
Fair value through the cash
flow hedge reserve and then
recognised in the income
statement at the time at
which the hedged item
affects the income statement
for the hedged risk.
Fair value through the foreign
currency translation reserve
and recognised in the income
statement at the time at
which there is a disposal of
the hedged foreign operation.
Accounted for under other
accounting standards
(revenue).
Accounted for under other
accounting standards
(foreign exchange).
Foreign exchange gains and
losses are recognised in the
Group’s foreign currency
translation reserve.
Recognised in the income
statement to the extent that
changes in fair value of the
hedged item attributable to
the hedged risk are not offset
by changes in fair value of
the hedging instrument.
Recognised in the income
statement to the extent to
which changes in fair value
of the hedging instrument
exceed, in absolute terms, the
change in the fair value of the
hedged item.
Recognised in the income
statement to the extent to
which changes in fair value
of the hedging instrument
exceed, in absolute terms, the
change in the fair value of the
hedged item.
Recognised in the income
statement to the extent to
which changes in fair value
of the hedging instrument
exceed, in absolute terms, the
change in the fair value of the
hedged item.
Accounting
treatment if
the hedge
relationship is
discontinued
Where the hedged item still
exists, adjustments to the
hedged item are amortised to
the income statement on an
effective interest rate basis.
The gain or loss remains
recognised in the foreign
currency translation reserve
until such time as the
foreign operation is partially
disposed of or sold.
The gain or loss remains in
the cash flow hedge reserve
to the extent that the
hedged cash flows are still
expected to take place and
subsequently recognised in
the income statement at the
time at which the hedged item
affects the income statement
for the hedged risk.
The gain or loss remains in
the cash flow hedge reserve
to the extent that the
hedged cash flows are still
expected to take place and
subsequently recognised in
the income statement at the
time at which the hedged item
affects the income statement
for the hedged risk.
Where the hedged cash flows
are no longer expected to
take place, the gain or loss in
the cash flow hedge reserve
is recognised immediately in
the income statement.
Where the hedged cash flows
are no longer expected to
take place, the gain or loss in
the cash flow hedge reserve
is recognised immediately in
the income statement.
Hedge ratio
The hedge ratio is reflective of the Group’s risk management objectives.
The notional of the interest
rate swap is allocated to the
hedged item on a one‑for‑one
basis.
The notional of the interest
rate swap is allocated to
hedged item on a one‑for‑one
basis.
The notional amount of the
cross currency swap equals
the notional amount of the
hedged item.
Foreign currency borrowings
and swaps are allocated
to the net investments in
foreign operations on a
one‑for‑one basis.
86
Hedging instruments
The following table details the hedging instruments, nature of hedged risks, as well as the notional and the carrying amount of
derivative financial instruments and, in the case of net investment hedges, the notional of foreign denominated debt issued,
for each type of hedge relationship. The maturity profile for the hedging instruments’ notional amounts is reported based on
their contractual maturity. Designated cross‑currency swaps for foreign exchange risk are included as a single notional amount
per derivative.
Hedging
Instrument
Risk
Notional
Carrying
amount
2020
Assets
Less than
3 months
$000
3 to 12
months
$000
1 to 5
years
$000
Over 5
years
$000
Total
$000
Total
$000
Cash flow hedges
Interest rate swaps
Interest
50,000
40,000
20,588
Cash flow hedges
Cross currency swaps Foreign exchange
Net investment hedges Cross currency swaps Foreign exchange
Liabilities
Net investment hedges Cross currency swaps Foreign exchange
Net investment hedges Borrowings
Foreign exchange
-
-
-
-
100,000
183,812
268,026
-
-
-
100,789
-
-
-
-
110,588
100,000
183,812
1,114
130
308
268,026
3,456
100,789
100,789
2019
Assets
Cash flow hedges
Interest rate swaps
Interest
163,690
Fair value hedges
Interest rate swaps
Interest
Net investment hedges Cross currency swaps Foreign exchange
-
-
-
-
193,323
Liabilities
Cash flow hedges
Interest rate swaps
Interest
250,000
-
Net investment hedges Cross currency swaps Foreign exchange
Net investment hedges Borrowings
Foreign exchange
-
-
255,938
-
45,964
390,000
-
553,690
7,849
385,000
450,000
835,000
54,786
-
-
-
-
-
-
-
193,323
814
250,000
255,938
-
3,265
45,964
45,964
Hedging instrument executed rates
The following table shows the executed rates for the hedging instruments that have been designated in cash flow hedges and net
investment hedges that are in place at balance date.
Cash flow hedges
Hedging instruments
Currency/
Currency pair
Interest rate swaps
Interest rate swaps
AUD
USD
Cross currency swaps
AUD/USD
Net investment hedges
Cross currency swaps
EUR/AUD
CHF/AUD
CHF/USD
Hedged rate
0.95%
2.45% - 2.52%
0.6876
0.6180
0.6615
0.9500
Hedge ineffectiveness
Hedge ineffectiveness, in the case of a fair value hedge, is the extent to which the changes in the fair value of the hedging
instrument differ to that of the hedged item, and in the case of cash flow and net investment hedge relationships, the extent to
which the change in the hedging instrument exceeds that of the hedged item. Sources of hedge ineffectiveness primarily arise from
changes in credit risk of the counterparties, breakdown in correlation or impact of the basis spread between short‑term interest
rates in the same currency changes in market premiums and differences in reset dates, risk and discount rates between the hedged
item (possibly represented by a hypothetical derivative) and hedging instrument.
87 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table reflects the hedge ineffectiveness during the period, as reported in direct services in the statement of
comprehensive income:
Hedging
instruments
Risk
2020
Cash flow hedges
Interest rate swaps
Interest
Cash flow hedges
Cross currency swaps
Foreign exchange
Fair value hedges
Interest rate swaps
Interest
Net investment hedges Cross currency swaps
Foreign exchange
2019
Cash flow hedges
Interest rate swaps
Interest
Fair value hedges
Interest rate swaps
Interest
Net investment hedges Cross currency swaps
Foreign exchange
Gains/(losses)
on hedging
instruments
$000’s
Gains/(losses)
on hedged items
attributable to the
hedged risk
$000’s
Hedge
ineffectiveness
recognised in the
income statement
$000’s
13,810
(1,145)
47,083
(12,112)
8,304
50,838
(10,595)
(13,837)
1,145
(51,718)
12,118
(8,304)
(50,546)
10,593
(27)
-
(4,635)
6
-
292
(2)
Discontinuation of hedge accounting
On 11 June 2020 the Group disposed of $835.0 million notional value of interest rate swaps designated as fair value hedges of
USD Senior debt. As a result, hedge accounting was discontinued. The fair value adjustment of $101.9 million at the date of disposal,
is amortised to the income statement on an effective interest rate basis over the remaining term of the USD Senior notes.
On 11 June 2020 the Group disposed of $300.0 million notional value of interest rate swaps designated as cash flow hedges of
margin income. The cumulative fair value gain of $18.8 million at the date of disposal was recognised in the cash flow hedge
reserve and is reclassified to the income statement where margin income is recognised, over the period of the original swaps.
12. 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 guidance 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. It also 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 as permitted under policy 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 adjusted earnings before interest, tax, depreciation
and amortisation (Management adjusted EBITDA). Net debt is calculated as borrowings less cash and cash equivalents.
Borrowings1
Cash and cash equivalents
Net debt
Management adjusted EBITDA (note 5)
Net debt to Management adjusted EBITDA
Net debt to Management adjusted EBITDA (excluding mortgage servicing debt)2,3
2020
$000
2019
$000
2,029,820
2,036,309
(597,313)
(561,346)
1,432,507
1,474,963
646,361
674,878
2.22
1.93
2.19
1.84
1 June 2019 includes lease liabilities of $7.7 million. Effective 1 July 2019, net debt excludes lease liabilities recognised under AASB 16. Lease liabilities are
presented separately in the statement of financial position.
2 Excludes mortgage servicing debt of $187.5 million (2019: $233.5 million).
3 As a result of the adoption of AASB 16, lease expenses are recognised in the statement of comprehensive income as depreciation of right‑of‑use assets
and interest expense. Excluding the impact of AASB 16 to the FY2020 calculation, net debt to management adjusted EBITDA (excluding mortgage
servicing debt) was 2.08.
88
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.
No changes were made to the capital structure objectives or processes during the current financial year.
Computershare has a target neutral gearing level such that net debt to EBITDA is between 1.75x ‑ 2.25x excluding the non‑recourse
SLS advance facility debt, with flexibility to temporarily go above this range to take advantage of compelling investment
opportunities. Computershare will consider capital management initiatives to maintain leverage within this target band.
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 $17.2 billion (2019: $18.5 billion) and in relation to these balances, the consolidated entity has in place interest rate
derivatives totalling $0.1 billion notionally (2019: $1.0 billion).
Hedging strategy
i) Fixed rate debt
Where fixed rate debt is issued, the Group may enter interest rate derivatives to manage the change in fair value of fixed rate
debt obligations, arising from changes in variable interest rates. On 11 June 2020 the Group disposed of $835.0 million notional
value of interest rate swaps designated as fair value hedges of USD Senior notes. As a result, hedge accounting was discontinued.
At 30 June 2020, no derivative financial instruments hedging the fair value of fixed rated debt obligations were outstanding.
ii) Margin income
Interest rate risk is managed in accordance with Board approved policy, which sets out minimum/maximum thresholds with respect
to currency and maturities of margin income balances. Floating rate debt is considered a natural hedge against margin income
balances and forms part of the hedge allocation required to meet policy guidelines. The Group also uses interest rate swaps
designated as cash flow hedges to manage the variability of cash flows attributable to changes in interest rates associated with
highly probable interest earned on client balances (margin income).
On 11 June 2020 the Group disposed of $300.0 million notional value of interest rate swaps designated as cash flow hedges of
margin income. At 30 June 2020, $110.6 million notional value interest rate swaps were outstanding.
Interest rate sensitivity
The table below provides an indication of sensitivity of the Group’s profit before tax and other components of equity to movements
in interest rates with all other variables held constant.
Movement in basis points
Sensitivity of profit before tax
AUD
USD
CAD
GBP
EUR
CHF
Other
Total
Sensitivity of other components of equity
USD
AUD
2020
$000
2019
$000
+50
-50
+50
-50
955
(399)
468
(1,136)
(306)
(1,588)
(955)
399
(468)
1,136
306
1,588
1,006
(1,006)
(792)
535
(1,464)
(309)
(1,655)
796
(535)
1,464
309
1,655
261
(261)
227
(227)
(1,745)
1,745
(2,452)
2,456
(51)
(453)
51
464
(6,379)
6,519
-
-
The sensitivity of profit before tax 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 2020. Other components of equity change as a result of
an increase/decrease in the fair value of cash flow hedges. The total sensitivity analysis is based on the assumption that there are
parallel shifts in the yield curve.
89 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The above 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 certain client balances. Client balances have been excluded from the
sensitivity analysis where 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.
Total margin income generated on client balances for the year was $199.4 million (2019: $246.5 million), reflecting a yield of 1.16%
(2019: 1.33%) on average client balances. The significant fall in interest rates across the globe during March and April 2020 in
response to the economic impacts of Covid‑19, negatively impacted margin income in the fourth quarter. If the Group was able to
achieve an additional yield of 0.25% on the total average balances of $17.2 billion held during the reporting period, the Group’s
profit before tax would have increased by $43.0 million (‑0.25%: $43.0 million decrease).
(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 relevant 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 currency translation 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.
Hedging strategy
The risk of changes in the net investments in foreign operations as a result of movements in foreign exchange rates is hedged
through a combination of foreign denominated borrowings and cross‑currency swaps, in currencies that match the currencies of
the Group’s foreign operations.
Exchange rate sensitivity
The following table illustrates the sensitivity of the Group’s net assets (after hedging), with all other variables held constant, to
movements in the United States dollar against foreign currencies as at 30 June 2020. The currencies with largest impact on the
sensitivity analysis are Canadian dollar, Australian dollar and Great British pound.
Movement in exchange rates %
Sensitivity of other components of equity
Canadian dollar
Australian dollar
Great British pound
2020
$000
2019
$000
+5%
-5%
+5%
-5%
(13,510)
(17,752)
13,510
17,752
(15,100)
(20,999)
15,100
20,999
10,031
(10,031)
9,901
(9,901)
(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, loan servicing advances, 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 consequently, 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. The Group’s
maximum exposure to credit risk for cash and cash equivalents at 30 June 2020 was $667.6 million; $597.3 million as outlined in
the statement of financial position and an additional $70.2 million escrow cash held in a Group bank account at balance date, which
has not been recognised in the statement of financial position at year‑end. Payment instructions were entered on 30 June 2020 to
return these funds to the relevant escrow account which settled on 1 July 2020.
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. Issuer services
and plans services 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 (ISDA) 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 and derivative instrument exposure.
90
(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 2021
June 2022
June 2023
June 2024
June 2025
June 2026
June 2027
June 2028
June 2029
Total
Debt facilities
utilised
$million
Committed
debt facilities
$million
287.5
220.0
424.8
451.5
-
200.0
-
-
350.0
1,933.8
540.0
220.0
450.0
770.0
-
200.0
-
-
350.0
2,530.0
The Group responded to the increased liquidity and refinancing risks as a consequence of the Covid‑19 pandemic by extending
borrowings that were due to mature in April 2021 and July 2021. Additionally, cash proceeds from the unwind of interest rate swaps
in June were used to enhance liquidity and reduce debt.
For information on debt refinancing activities during the period refer to note 14.
Maturities of financial liabilities
The table below breaks down 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 2020
Non-derivatives
Trade payables
Other payables
Borrowings
Lease liabilities (undiscounted)
Total non-derivatives
Derivatives
Gross settled (cross currency swaps)
– (Inflow)
– Outflow
Total derivatives
As at 30 June 2019
Non-derivatives
Trade payables
Other payables
Borrowings
Lease liabilities (undiscounted)
Total non-derivatives
Derivatives
Gross settled (cross currency swaps)
– (Inflow)
– Outflow
Total derivatives
91 | COMPUTERSHARE | ANNUAL REPORT | 2020
Less than
1 year
$000
Between
1-5 years
$000
More than
5 years
$000
Total
contractual
cash flows
$000
14,682
480,055
-
1,052
-
-
14,682
481,107
341,329
1,248,351
607,630
2,197,310
49,512
151,907
94,562
295,981
885,578
1,401,310
702,192
2,989,080
(556,465)
554,064
(2,401)
17,068
472,847
-
-
-
-
6,632
-
-
-
-
-
(556,465)
554,064
(2,401)
17,068
479,479
141,990
1,548,173
631,330
2,321,493
2,114
6,109
-
8,223
634,019
1,560,914
631,330
2,826,263
(458,590)
449,434
(9,156)
-
-
-
-
-
-
(458,590)
449,434
(9,156)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (e) Fair value measurements
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.
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 13), which are included in the financial
assets at fair value and deferred consideration (note 24) arising from business combinations.
The amount of contingent consideration recognised on business combinations is typically referenced to revenue or EBITDA
targets. The Group estimates the fair value of the expected future payments based on the terms of each earn‑out agreement and
management’s knowledge of the business taking into account the likely impact of the current economic environment. Contingent
consideration amounts are re‑measured every reporting period based on most recent projections. Gains or losses arising from
changes in fair value are recognised in profit or loss in the period in which they arise.
The fair value of the investment in structured entities is determined by reference to the interest in net assets of these entities,
which approximate their fair values. As profits are realised and dividends are paid to 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 2020.
The comparative figures are also presented below.
As at 30 June 2020
Assets
Financial assets at fair value through profit or loss
Total assets
Liabilities
Financial liabilities at fair value through profit or loss
Deferred consideration
Total liabilities
As at 30 June 2019
Assets
Financial assets at fair value through profit or loss
Total assets
Liabilities
Borrowings
Financial liabilities at fair value through profit or loss
Deferred consideration
Total liabilities
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
16,976
16,976
-
-
-
2,651
2,651
3,456
-
3,456
38,065
38,065
-
17,581
17,581
57,692
57,692
3,456
17,581
21,037
23,352
23,352
64,649
64,649
38,646
38,646
126,647
126,647
-
-
-
-
885,010
4,009
-
889,019
-
-
31,797
31,797
885,010
4,009
31,797
920,816
92
The following table presents the changes in level 3 items for the periods ended 30 June 2020 and 30 June 2019:
Financial assets at fair
value through profit or loss
Deferred
consideration liability
Opening balance at 1 July
Change in accounting policy
Restated balance at the beginning of the financial year
Payments
Additions
Return of capital
Gains/(losses) recognised in profit or loss
Currency translation difference
Closing balance at 30 June
2020
$000
38,646
-
38,646
-
25,409
25,409
-
8,519
16,227
(9,100)
(2,583)
-
-
(407)
-
2019
$000
2020
$000
2019
$000
-
(31,797)
(55,542)
-
-
(31,797)
(55,542)
15,180
(1,750)
-
-
786
24,453
(994)
-
(702)
988
38,065
38,646
(17,581)
(31,797)
Fair value of financial assets and liabilities
The carrying amounts of cash and cash equivalents, receivables, loan servicing advances, payables, non‑interest bearing
liabilities, lease liabilities and loans approximate their fair values for the Group except for the unhedged portion of USD Senior
Notes of $1,088.3 million (2019: $155.0 million), where the fair value based on level 2 valuation techniques described above was
$1,113.7 million as at 30 June 2020 (2019: $164.4 million).
13. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
The Group classifies the following financial assets at fair value through profit or loss:
> debt securities that do not qualify for measurement at either amortised cost or fair value through other comprehensive income;
> derivatives, which are mandatorily measured at fair value through profit or loss;
> equity investments for which the entity has not elected to recognise fair value gains and losses through other comprehensive
income; and
>
investments in structured entities.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Gains or losses
from subsequent re‑measurement to fair value at each balance date are recognised in profit or loss.
Financial assets
Current
Debt securities
Derivative assets (b)
Equity securities
Non-current
Investment in structured entities (a)
Derivative assets (b)
Equity securities
Financial liabilities
Current
Derivative liabilities (b)
Non-current
Derivative liabilities (b)
93 | COMPUTERSHARE | ANNUAL REPORT | 2020
2020
$000
2019
$000
15,853
2,072
54
22,078
2,030
139
17,979
24,247
35,565
579
3,569
39,713
38,646
62,619
1,135
102,400
3,456
3,456
-
-
3,265
3,265
744
744
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (a) Investment in structured entities
Non‑current financial assets include $35.6 million of investments in unconsolidated structured entities (2019: $38.6 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% 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 compensation for providing such services.
The structured entities are designed to hold assets that will generate cash flows for their 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.
(b) Derivative financial 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 at each balance date. 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 hedges of net investments in a foreign operation; hedges of firm commitments or
highly probable forecast transactions (cash flow hedges); or fair value hedges. Refer to note 11 for further information on the
Group’s hedging instruments.
Derivative assets
Current
Non‑current
2020
$000
2,072
579
2,651
2019
$000
2,030
62,619
64,649
Derivative assets - current and non-current
Fair values of interest rate derivatives designated as cash flow hedges
1,114
7,849
Fair values of cross currency derivatives designated as hedge of net investment
Fair values of cross currency derivatives designated as cash flow hedges
Fair values of interest rate derivatives designated as fair value hedges
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 cross currency derivatives designated as hedge of net investment
Fair value of derivatives for which hedge accounting has not been applied
Total derivative liabilities
308
130
-
1,099
2,651
3,456
-
3,456
3,456
-
3,456
814
-
54,786
1,200
64,649
3,265
744
4,009
3,265
744
4,009
94
14. BORROWINGS
Borrowings are initially recognised at fair value and are subsequently measured at amortised cost unless designated in a fair value
hedge relationship. 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.
Current
Bank loans (SLS non‑recourse advance facility) (a)
ANZ syndicated facility (b)
Other bank loans (c)
Non-current
Bank loans (SLS non‑recourse advance facility) (a)
USD Senior Notes (d)
Revolving syndicated bank facilities (e)
2020
$000
2019
$000
178,154
61,068
99,919
9,337
287,410
-
11,526
72,594
-
160,880
1,088,346
1,037,160
654,064
757,940
1,742,410
1,955,980
(a) The borrowings of the overseas subsidiary engaged in mortgage servicing activities are secured against the loan servicing
advances without recourse to the Group.
(b) On 12 March 2020, Computershare Limited executed a bilateral facility of $100.0 million with Australia and New Zealand Banking
Group Limited, maturing in March 2021. The facility was fully drawn at 30 June 2020.
(c) Other bank loans include warehouse facility held by LenderLive Network, LLC.
(d) 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. The six and seven‑year notes with a
total value of $110.0 million were repaid during prior years. On 20 November 2018, Computershare US Inc. issued 24 notes in the
United States with a total value of $550.0 million. These notes were for a tenor of seven and ten years. Fixed interest is paid on
all the issued notes on a semi‑annual basis.
During the year, the Group used 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 ‑ fair value hedge
Total
990,000
990,000
98,346
47,160
1,088,346
1,037,160
-
(54,786)
1,088,346
982,374
On 11 June 2020, the Group disposed $835.0 million notional value interest rate derivatives hedging the USD Senior Notes
(note 12). On disposal, the hedge relationship was discontinued. The gain from re‑measuring the interest rate derivatives at fair
value was recognised immediately in the statement of comprehensive income along with the change in fair value of the USD
Senior Notes, to the date of disposal. From this date, the USD Senior notes cease to be adjusted for changes in fair value. The fair
value adjustment is amortised to interest expense in the income statement, on an effective interest basis, over the remaining
term of the USD Senior Notes.
The fair value adjustments at 30 June 2020 represent loan origination fees and the revaluation of the hedged portion of the
USD Senior Notes to the date hedge accounting was discontinued, less the interest expense amortised to the income statement.
All of the USD Senior Notes were unhedged as at 30 June 2020 (2019: $155.0 million unhedged).
(e) The consolidated entity maintains revolving syndicated facilities that were executed on 11 April 2018. The first facility is a
multi‑currency facility of $450.0 million maturing on 17 April 2023. The second facility was a USD only facility of $450.0 million
initially maturing on 17 April 2021 that was subsequently refinanced effective 30 June 2020.
A bilateral debt facility was executed on 28 June 2018. This was a multi‑currency facility of $100.0 million with $50.0 million
initially maturing on 5 July 2021 and $50.0 million maturing on 5 July 2023.
The consolidated entity undertook the refinancing of the $450.0 million revolving syndicated facility maturing 17 April 2021
and the $50.0 million bilateral facility maturing 5 July 2021. These facilities were combined to form a $500.0 million revolving
syndicated facility maturing on 30 June 2024. The new facility became effective 30 June 2020.
The revolving syndicated facilities were drawn to an equivalent of $606.1 million at 30 June 2020. The bilateral facility was
drawn to an equivalent of $50.0 million at 30 June 2020. 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 2020.
95 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15. RECEIVABLES
Current
Trade receivables
Unbilled receivables
Less: allowance for expected credit losses
Other non‑trade amounts
Non-current
Other
2020
$000
2019
$000
206,952
191,908
205,245
238,324
(16,316)
(10,877)
382,544
432,692
43,921
50,609
426,465
483,301
2,184
2,184
2,639
2,639
Trade and unbilled receivables
Trade receivables and unbilled receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method, net of allowances for expected credit losses. Trade receivables generally have settlement terms of
30 days and are therefore classified as current. The right to receive consideration is unconditional.
Impairment
The Group applies the simplified approach to measure Expected Credit losses (ECLs), which uses a lifetime expected loss allowance
for all trade and unbilled receivables. To measure the expected credit losses, trade and unbilled receivables have been grouped
based on shared credit risk characteristics and days past due. The Group has established a provision matrix that is based on the
payment profile of customers and the corresponding historical credit loss experience, adjusted for current and forward‑looking
factors specific to the debtors and the economic environment. Trade and unbilled receivables are written off when there is no
reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst other things,
a finalisation of formal liquidation or other proceedings.
The Group has assessed the impact of Covid‑19 and its potential to affect customers’ repayment ability. The Group undertook an
extensive review of aged receivables across all regions in which the Group operates. This review included identifying any customers
that were in financial difficulty due to the pandemic, reviewing large customers in industries significantly impacted, reviewing
ageing and emerging collection issues in the second half of the financial year and considering the macroeconomic factors specific
to each region. Based on this assessment, the Group recorded a modest increase in the Group’s ageing of receivables and loss
allowance at 30 June 2020. A loss allowance has not been recognised in respect of other non‑trade amounts, due to the nature of
the receivables and no historical losses.
An analysis of trade and unbilled receivables and the associated allowance for expected credit losses is as follows:
Current
Less than 30 days overdue
Between 30 and 60 days overdue
Between 60 and 90 days overdue
Between 90 and 120 days overdue
More than 120 days overdue
Total
Trade and unbilled
receivables
Loss
allowance
Net
receivables
2020
$000
2019
$000
2020
$000
2019
$000
2020
$000
2019
$000
301,755
358,921
(4,078)
(3,228)
297,677
355,693
45,402
12,874
10,675
6,670
21,484
45,877
13,355
5,891
5,001
14,524
(616)
(499)
(612)
(1,045)
(9,466)
(451)
(365)
(544)
(692)
(5,597)
44,786
12,375
10,063
5,625
12,018
45,426
12,990
5,347
4,309
8,927
398,860
443,569
(16,316)
(10,877)
382,544
432,692
Movement in the allowance for expected credit losses is as follows:
Loss allowance
Opening balance at 1 July
Change in accounting policy
Restated balance at the beginning of the financial year
(Increase)/decrease in loss allowance recognised in profit or loss during the year
Receivables written off during the year as uncollectible
Acquisition of entities and businesses
Other
Currency translation differences
Closing balance at 30 June
2020
$000
(10,877)
-
2019
$000
(9,997)
(6,050)
(10,877)
(16,047)
(6,496)
(1,513)
2,174
(1,177)
-
60
6,049
-
588
46
(16,316)
(10,877)
96
16. LOAN SERVICING ADVANCES
Current
Loan servicing advances
2020
$000
2019
$000
267,016
281,458
Loan servicing advances are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
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. Although it takes longer than 12 months for a portion of the loan servicing
receivables to be collected, all servicing advances are classified as current. This reflects the fact that collections occur within the
normal operating cycle of the overseas subsidiary.
Impairment
The Group applies the AASB 9 general approach to measuring expected credit losses on loan servicing advances. The loss
allowance is based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these
assumptions and selecting the inputs to the impairment calculation, based on the historical losses, existing market conditions,
expectations of future advances and recoverability of outstanding advances from liquidation of the underlying property.
In response to Covid‑19 pandemic, the Group reviewed expected credit losses related to advances. Computershare has considered
current and forward‑looking information in its assessment, including housing market information and current property valuations,
and the protection mechanisms in place to ensure recoverability of advances. Although there has been an increase in certain
activities such as forbearance programs, loan modification programs and servicing advances in recent months, collectability of
advances continues to be well protected. Therefore, there has not been an increase in the total value of expected credit losses at
30 June 2020.
Movement in the allowance for expected credit losses for is as follows:
Loss allowance
Opening balance at 1 July
Increase in loss allowance recognised in profit or loss during the year
Amounts written off as uncollectible
Closing balance at 30 June
17. OTHER FINANCIAL ASSETS
Current
Client deposits1
Broker deposits2
2020
$000
2,588
1,238
2019
$000
976
3,222
(1,574)
(1,610)
2,252
2,588
51,642
8,301
59,943
59,126
7,970
67,096
1 A subsidiary located in Switzerland is a registered broker‑dealer and custodian of clients’ assets. Client monies it manages as part of providing plan
managers services meet criteria for on‑balance sheet recognition as other financial assets, together with a corresponding liability (note 22).
2 A subsidiary located in Canada is a licensed deposit taker. This subsidiary accepts deposits in its own name, and records these funds as other financial
assets together with a corresponding liability (note 22). The deposits are insured through a local regulatory authority.
Client and broker deposits are recognised initially at fair value and subsequently measured at amortised cost.
18. INVENTORIES
Raw materials and stores, at cost
5,113
4,654
Inventories are valued at the lower of cost and net realisable value. Cost is assigned on a first‑in first‑out basis. Net realisable
value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated
costs to sell.
97 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 19. OTHER ASSETS
Current
Set‑up fees
Other
Non-current
Set‑up fees
2020
$000
825
2,601
3,426
1,088
1,088
2019
$000
2,789
721
3,510
9,251
9,251
Set-up fees
Where upfront client fees have been deferred and the related implementation costs can be measured reliably, they are
capitalised and amortised straight‑line over the same period. In the year ended 30 June 2020, amortisation of $10.4 million
(2019: $2.2 million) was recognised in the statement of comprehensive income relating to capitalised set‑up fees.
20. PROPERTY, PLANT AND EQUIPMENT
At 1 July 2019
Opening net book amount
Change in accounting policy (note 1a)
Restated balance at the beginning
of the financial year
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 2020
At 1 July 2018
Opening net book amount
Acquisition of entities and businesses
Additions
Disposals
Depreciation charge
Land
$000
Buildings
$000
Plant and
Equipment
$000
Fixtures
and
Fittings
$000
Leasehold
improve-
ments
$000
Total
$000
8,415
27,882
77,710
4,980
17,625
136,612
-
(350)
(6,063)
-
-
(6,413)
8,415
27,532
71,647
4,980
17,625
130,199
-
-
-
-
-
143
-
-
18,983
(95)
16
385
(7)
113
4,532
129
24,043
(32)
(134)
(1,398)
(25,659)
(1,825)
(5,369)
(34,251)
(253)
-
8,162
8,162
(771)
(729)
24,777
35,651
(935)
(7,916)
56,025
258,494
7
-
3,556
29,311
(24)
729
17,574
46,974
(1,976)
(7,916)
110,094
378,592
-
(10,874)
(202,469)
(25,755)
(29,400)
(268,498)
8,162
24,777
56,025
3,556
17,574
110,094
10,580
32,324
-
-
-
398
53,582
2,553
49,173
4,590
147
2,706
14,173
115,249
346
9,572
3,046
61,849
(1,879)
(1,702)
(48)
(10)
(13)
(3,652)
-
(1,510)
(26,611)
(2,382)
(7,036)
(37,539)
Currency translation differences
(286)
(1,037)
(939)
Transfers and other
Closing net book amount
Cost
Accumulated depreciation
At 30 June 2019
-
8,415
8,415
(591)
27,882
38,687
-
77,710
276,665
(71)
-
4,980
29,286
(8)
591
17,625
36,264
(2,341)
-
136,612
389,317
-
(10,805)
(198,955)
(24,306)
(18,639)
(252,705)
8,415
27,882
77,710
4,980
17,625
136,612
Property, plant and equipment are stated at historical costs less accumulated depreciation and impairment. Cost includes the
purchase price and expenditure that is directly attributable to bringing the asset to the location and condition necessary for its
intended use.
98
Depreciation
Items of property, plant and equipment excluding freehold land are depreciated on a straight line basis 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.
Depreciation expense has been determined based on the following typical rates of depreciation:
> Buildings (2.5% per annum)
> Plant and equipment (10% to 50% per annum)
> Fixtures and fittings (13% to 50% per annum)
Leasehold improvements are depreciated over the shorter of the useful life of the improvements or the term of the lease.
21. LEASES
The Group leases various properties, computer equipment, motor vehicles and other items of plant and equipment. Leases vary in
contract term, with renewal at the option of the Group. The Group’s leases mainly relate to property.
Leases are recognised as a right‑of‑use asset and a corresponding liability at the date at which the leased asset is available for use
by the Group. For information on the adoption of AASB 16 Leases, refer to note 1a.
Lease Liabilities
Current
Non‑current
2020
$000
43,159
158,910
202,069
2019
$000
1,931
5,804
7,735
Lease liabilities include the net present value of the following lease payments:
>
fixed payments, less any lease incentives receivable;
> variable lease payments that depend on an index or rate;
> any amounts expected to be payable under residual value guarantees;
>
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
> payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s
incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with similar terms and conditions.
Lease liabilities are subsequently measured at amortised cost using the effective interest rate method. When there is a change in
lease term or a change in future lease payments, lease liabilities are remeasured, with a corresponding adjustment to lease assets.
Right-of-use assets
Buildings
Plant and Equipment
Motor Vehicles
Total
2020
$000
166,482
12,739
811
180,032
Additions to the right‑of‑use assets during the year were $19.7 million.
Right‑of‑use assets are measured at cost comprising the following:
>
the amount of the initial measurement of lease liability
> any lease payments made at or before the commencement date less any lease incentives received
> any initial direct costs, and
>
restoration costs.
The right‑of‑use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight‑line basis.
Short-term and low-value leases
Payments associated with short‑term leases and leases of low‑value assets are recognised on a straight‑line basis as an expense in
profit or loss. Short‑term leases are leases with a lease term of 12 months or less. Low‑value assets largely comprise IT equipment
and small items of office furniture.
99 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Amounts recognised in the Profit or Loss related to lease activities
Profit before tax includes the following amounts related to leases:
Depreciation of leased buildings
Depreciation of leased plant and equipment
Depreciation of leased motor vehicles
Total depreciation of right-of-use assets
Interest expense on lease liabilities
Expenses related to short‑term and low‑value leases
2020
$000
40,628
2,331
262
43,221
7,366
2,852
Commitments for leases not yet commenced
At 30 June 2020, the Group had committed to leases which had not yet commenced. Accordingly, these lease contracts are
not included in the calculation of the Group’s lease liability. At 30 June 2020, potential future cash flows of $64.5 million
(undiscounted) have not been included in the lease liability because the leased asset is not yet available for use.
Extension and termination options
Extension and termination options are included in a number of leases across the Group. In determining the lease term,
management considers all the facts and circumstances that create an economic incentive to exercise an extension option, or not
to exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated).
The total potential future lease payments (undiscounted) that have not been included in the lease liability, because it is not
reasonably certain that the leases will be extended (or not terminated), is summarised as follows:
Undiscounted potential future lease payments
As at 30 June 2020
22. PAYABLES
Current
Trade payables – unsecured
Expense accruals
Contract liabilities1
Interest payable
GST/VAT payable
Broker client deposits (note 17)
Employee entitlements
Unredeemed childcare vouchers
Other payables
Non-current
Other payables
5 years
or less
$000
Greater than
5 years
$000
Total
$000
17,635
57,255
74,890
2020
$000
2019
$000
14,682
17,068
151,609
164,524
38,182
19,329
30,229
59,943
28,969
85,159
66,635
30,465
14,779
22,844
67,096
23,384
77,651
72,104
494,737
489,915
1,052
1,052
6,632
6,632
Trade and other payables
Trade and other payables represent liabilities for those goods and services provided to the Group prior to the end of the financial
year that are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities1
A contract liability arises when Computershare has received consideration for performance obligations that have not yet been
satisfied, including deferred revenue and upfront fees. Revenue is recognised over the life of the relevant contract term as
performance obligations are satisfied.
100
23. PROVISIONS
Provisions 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. 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.
Provisions are measured at the Group’s best estimate of the expenditure required to settle the present obligation at the reporting
date and discounted to present value where the impact of discounting is material. 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.
Current
Restructuring
Unredeemed voucher provision
Acquisitions related
Tax related
Legal
Prepayment protection
Lease related
Other
Non-current
Employee entitlements
Acquisitions related
Prepayment protection
Other
2020
$000
2019
$000
19,408
11,442
7,951
6,635
11,501
4,890
1,266
7,770
12,395
9,377
2,563
6,700
5,861
-
1,640
6,634
70,863
45,170
12,778
9,800
2,610
-
13,097
9,800
-
5
25,188
22,902
Restructuring
Restructuring provisions are recognised when a detailed plan for restructuring has been developed and a valid expectation has
been raised with the affected employees that the terminations will be carried out.
Unredeemed vouchers
The unredeemed voucher provision is recognised for the expected usage of unredeemed childcare vouchers over two years old.
Tax related
Tax related provisions relate to potential tax liabilities associated with prior years’ business activities.
Legal
Legal provisions represent cash outflows expected to cover legal claims made against the Group. The status of all claims is
monitored on a regular basis.
Prepayment protection
As part of a transaction for the sale of excess servicing rights during the year, the Group provided prepayment protection to the
counterparty over a two‑year period. As a result, the Group has recognised a provision for the amount estimated to compensate
the counterparty for shortfalls in cash flows, where prepayments of the unpaid principal balance exceed a certain percentage.
Lease related
Lease related provisions represent costs to restore leased premises to their original condition at the end of the respective lease
terms.
Acquisitions related
Acquisition related provisions relate to significant provisions acquired as part of business combinations and are first recognised at
the date of acquisition.
101 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Employee entitlements
Employee entitlements provision represents long service leave and other employee entitlements. Where payments to the employee
are not expected to be settled wholly within 12 months, they are measured as the present value of expected future payments for
the services provided by employees up to the reporting date.
Liability for benefits accruing to employees in relation to employee bonuses and annual leave is recognised in payables.
Movements in each class of current provision during the financial year are set out below.
Carrying amount at start of year
Additions
Payments
Reversals
Other
Unre-
deemed
voucher
provision
$000
9,377
6,711
Acquisit
-ions
related
$000
2,563
9,623
Restruc-
turing
$000
12,395
15,445
Tax
related
$000
6,700
-
Pre-
payment
protection
$000
Lease
related
$000
-
1,640
4,890
177
Legal
$000
5,861
6,050
Other
$000
6,634
3,771
Total
$000
45,170
46,667
(7,195)
(4,362)
(1,460)
(65)
(1,475)
(1,100)
-
-
-
(3,025)
-
250
-
-
-
-
1,065
-
-
-
-
-
(271)
(2,100) (16,928)
(253)
(419)
(4,797)
-
-
1,065
(27)
(116)
(314)
Foreign exchange movements
(137)
(284)
Carrying amount at end of year
19,408
11,442
7,951
6,635
11,501
4,890
1,266
7,770
70,863
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
Additions
Payments
Carrying amount at end of year
24. DEFERRED CONSIDERATION
Current
Deferred settlements on acquisition of entities
Non-current
Deferred settlements on acquisition of entities
Acquisitions
related
$000
Prepayment
protection
$000
9,800
-
-
-
2,610
-
9,800
2,610
Other
$000
5
-
(5)
-
Total
$000
9,805
2,610
(5)
12,410
2020
$000
2019
$000
8,045
15,487
9,536
16,310
Non‑current deferred settlements on acquisition of entities are payable in between one and three years.
102
25. MORTGAGE SERVICING RELATED LIABILITIES
Current
Mortgage servicing related liabilities
Non-current
Mortgage servicing related liabilities
2020
$000
2019
$000
43,766
35,024
210,388
178,596
Mortgage servicing related liabilities represent the portion of the economic benefits of mortgage servicing rights that has been
transferred to third parties. The liabilities are amortised over the same useful life as the related mortgage servicing rights (note 9).
26. INTERESTS IN EQUITY
Interest in the equity of the consolidated entity:
Contributed equity – ordinary shares
Reserves
Retained earnings
Total interests in equity
27. CONTRIBUTED EQUITY
Members of the
parent entity
Non-controlling
interests
2020
$000
2019
$000
2020
$000
2019
$000
-
-
989
989
(172,496)
(134,551)
(2,622)
(1,987)
1,761,188
1,706,427
1,588,692
1,571,876
3,260
1,627
3,193
2,195
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 recognised directly 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.
Share buy-back
On 14 August 2019, Computershare announced an on‑market buy‑back of shares with an aggregate value of AUD 200.0 million for
capital management purposes, which commenced on 3 September 2019.
From 3 September 2019 until 31 October 2019, the Company purchased and cancelled 2,076,275 ordinary shares at a total cost of
AU$32.9 million (US$22.1 million) with an average price of AU$15.85 and a price range from AU$15.42 to AU$16.16.
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 2020.
Movement in contributed equity
Balance at 1 July 2019
Share buy‑back
Transfer to share buy‑back reserve
Balance as at 30 June 2020
Number of
shares
542,955,868
$000
-
(2,076,275)
(22,098)
-
22,098
540,879,593
-
103 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 28. RESERVES
Capital redemption reserve
Foreign currency translation reserve
Share buy‑back reserve
Cash flow hedge reserve
Share‑based payments reserve
Equity related contingent consideration 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
Opening balance
Excess value of shares bought over the original amount of subscribed capital
Closing balance
Cash flow hedge reserve
Opening balance
Revaluation
Reclassified to profit or loss
Tax benefit/ (expense)
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
Transactions with non-controlling interests
Opening balance
Closing balance
2020
$000
2
2019
$000
2
(88,060)
(71,190)
(101,558)
(79,460)
9,212
32,611
753
40,047
(8,199)
(8,199)
(16,504)
(16,504)
(172,496)
(134,551)
(71,190)
(81,597)
(20,550)
(6)
-
3,680
7,312
3,101
(88,060)
(71,190)
(79,460)
(79,460)
(22,098)
-
(101,558)
(79,460)
753
(4,824)
12,665
(642)
8,304
(337)
(3,564)
(2,390)
9,212
753
40,047
42,221
(25,797)
(21,671)
18,361
32,611
19,497
40,047
(8,199)
(8,199)
(8,199)
(8,199)
(16,504)
(16,504)
(16,504)
(16,504)
104
Nature and purpose of reserves
(a) Foreign currency translation reserve
On consolidation, exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency
translation reserve. This amount is the net of gains and losses on hedge transactions and intercompany loans after adjusting for
related income tax effects. When a foreign operation is disposed, the associated exchange differences are reclassified to profit or
loss as part of the gain or loss on sale.
(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
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be in an
effective hedge relationship. Refer to note 11 for information on cash flow hedges which were disposed in the period.
(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) 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.
29. RETAINED EARNINGS AND DIVIDENDS
Retained earnings
Retained earnings at the beginning of the financial year
Change in accounting policy (note 1a)
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
2020
$000
2019
$000
1,706,427
1,455,187
(10,493)
(876)
(167,403)
(163,616)
232,657
415,732
1,761,188
1,706,427
Final dividend paid during the financial year in respect of the previous year, AUD 23 cents per share franked to 30%
(2019 – AUD 21 cents per share fully franked)
83,864
81,821
Interim dividend paid in respect of the current financial year, AUD 23 cents per share franked to 30%
(2019 – AUD 21 cents per share franked to 30%)
83,539
81,795
A final dividend in respect of the year ended 30 June 2020 was declared by the directors of the Company on 11 August 2020, to
be paid on 14 September 2020. This is an ordinary dividend of AUD 23 cents per share, franked to 30%. As the dividend was not
declared until 11 August 2020, a provision was not recognised as at 30 June 2020.
Dividend franking account
Franking credits available for subsequent financial years based on a tax rate of 30%
58,495
20,030
The above amounts are calculated from the balance of the franking account as at the end of the reporting period, adjusted for
franking credits and debits that will arise from the settlement of liabilities or receivables for income tax after the end of the year.
105 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30. 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 and Computershare International
Information Consultancy Services (Beijing) Company Ltd 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 2020 include the following controlled entities:
Place of incorporation
Percentage of shares held
2020
%
2019
%
Name of controlled entity
Computershare Limited
A.C.N. 080 903 957 Pty Ltd
A.C.N. 081 035 752 Pty Ltd
A.C.N. 617 889 424 Pty Limited
A.C.N. 618 089 688 Pty Limited
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
Computershare Utility 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
Source One Communications Australia Pty Ltd
Switchwise Pty Ltd
Computershare Investor Services (Bermuda) Limited
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
Australia
Australia
Bermuda
Computershare Investor Services (BVI) Limited
British Virgin Islands
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.
RicePoint Administration Inc.
SyncBASE Inc.
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Computershare Investor Services (Cayman) Limited
Computershare International Information Consultancy Services
(Beijing) Company Limited
Computershare A/S
Cayman Islands
China
Denmark
(2)
(1)(2)
(1)(2)
(1)
(1)
(1)(2)
(1)(2)
(1)
(1)(2)
(1)
(1)
(1)(2)
(1)(2)
(1)
(1)
(1)(2)
(1)(2)
(1)
(1)
(1)
(1)
(1)
(1)(2)
(1)
(1)(2)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(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
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
100
100
100
100
100
100
100
100
100
100
106
Name of controlled entity
Georgeson Shareholder SAS
Computershare Communication Services GmbH
Computershare Deutschland GmbH & Co. KG
Computershare Governance Services GmbH
Computershare Verwaltungs GmbH
Equatex Deutschland GmbH
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
Computershare Investor Services Limited
Hong Kong Registrars Limited
Computershare Finance Ireland Limited
Computershare Governance Services Limited
Computershare Investor Services (Ireland) Limited
Computershare Nominees (Ireland) Limited
Computershare Services Nominees (Ireland) Limited
Computershare Trustees (Ireland) Limited
HML Mortgage Services Ireland Limited
Specialist Mortgage Services Ireland Limited
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 Treasury Services Limited
Computershare Trustees (C.I.) Limited
Computershare Trustees (Jersey) Limited
EES Nominees International Limited
Computershare Netherlands B.V.
Computershare Investor Services Limited
Computershare Nominees NZ Limited
ConnectNow New Zealand Limited
CRS Nominees Limited
Equatex Employee Services AS
Equatex Norway AS
Equatex Poland Sp.Z.o.o.
CIS Company Secretaries (Pty) Ltd
Computershare (Pty) Ltd
Computershare Investor Services (Pty) Ltd
Computershare Nominees (Pty) Ltd
Computershare Outsourcing (Pty) Ltd
Computershare South Africa (Pty) Ltd
Computershare TR Services (Pty) Ltd
Minu (Pty) Ltd
Georgeson S.L
Computershare AB
Computershare Schweiz AG
Computershare Technology Services AG
Equatex AG
Equatex Group Holding AG
107 | COMPUTERSHARE | ANNUAL REPORT | 2020
Place of incorporation
Percentage of shares held
2020
%
2019
%
France
Germany
Germany
Germany
Germany
Germany
Guernsey
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Italy
Italy
Italy
Italy
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Netherlands
New Zealand
New Zealand
New Zealand
New Zealand
Norway
Norway
Poland
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
Spain
Sweden
Switzerland
Switzerland
Switzerland
Switzerland
(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)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
74
74
74
74
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
100
74
74
74
74
74
74
74
74
100
100
100
100
100
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Name of controlled entity
Equatex Holding AG
Equatex IP AG in Liquidation
Baseline Capital Limited
Computershare Company Nominees Limited
Computershare Global Technology Services Limited
Computershare Governance Services (UK) Limited
Computershare Investments (UK) (No.2) Limited
Computershare Investments (UK) (No.3) 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 Plc
Computershare IP (UK) Limited
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
DPS Trustees Limited
EES Capital Trustees Limited
EES Corporate Trustees Limited
EES Trustees Limited
Equatex UK Ltd
Equatex UK Nominee Ltd
Homeloan Management Limited
KB Analytics Limited
Mortgage Systems Limited
Rosolite Mortgages Limited
Siberite Mortgages Limited
Topaz Finance Limited
Administar Services Group LLC
Capital Markets Cooperative, LLC
Capital Markets Holdings, Inc.
CMC Funding, Inc.
Computershare Asset Management LLC
Computershare Communication Services Inc.
Computershare Governance Services Inc.
Computershare Holdings Inc.
Computershare Holdings LLC
Computershare Inc.
Computershare Mortgage Services Inc.
Computershare Property Solutions LLC
Computershare Technology Services, Inc.
Computershare Title Services LLC
Computershare Trust Company, N.A.
Computershare US Inc.
Computershare US Investments LLC
Computershare US Services Inc.
Computershare Valuation Services LLC
Credit Risk Holdings, LLC
Credit Risk Solutions LLC
Place of incorporation
Percentage of shares held
2020
%
2019
%
Switzerland
Switzerland
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
(4)
(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)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(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
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(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
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
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
108
Name of controlled entity
Data Point Analysis Group, LLC
Equatex US Inc.
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
LenderLive Financial Services, LLC
LenderLive Network, 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 SAF Depositor LLC
SLS SAF Issuing Trust
SLS Servicer Advance Revolving Trust 1
Specialized Loan Servicing Holdings LLC
Specialized Loan Servicing LLC
Corporate Creations Alabama LLC
Corporate Creations Alaska Inc.
Corporate Creations Arizona LLC
Corporate Creations Arkansas LLC
Corporate Creations California Inc.
Corporate Creations Colorado LLC
Corporate Creations Connecticut LLC
Corporate Creations Delaware LLC
Corporate Creations District of Columbia LLC
Corporate Creations Florida LLC
Corporate Creations Georgia LLC
Corporate Creations Hawaii LLC
Corporate Creations Idaho LLC
Corporate Creations Illinois LLC
Corporate Creations Indiana LLC
Corporate Creations Intellectual Property LLC
Corporate Creations Iowa LLC
Corporate Creations Kansas LLC
Corporate Creations Kentucky LLC
Corporate Creations Louisiana LLC
Corporate Creations Maine LLC
Corporate Creations Management LLC
Corporate Creations Maryland LLC
Corporate Creations Massachusetts Inc.
Corporate Creations Michigan LLC
Corporate Creations Minnesota LLC
Corporate Creations Mississippi LLC
Corporate Creations Missouri Inc.
Corporate Creations Montana Inc.
Corporate Creations Nebraska LLC
Corporate Creations Network Inc. [Arkansas]
Corporate Creations Network Inc. [California]
109 | COMPUTERSHARE | ANNUAL REPORT | 2020
Place of incorporation
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
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
United States of America
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)(3)
(1)(3)
(1)
(1)
(1)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
Percentage of shares held
2020
%
2019
%
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
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 STATEMENTS Name of controlled entity
Corporate Creations Network Inc. [Florida]
Corporate Creations Network Inc. [Hawaii]
Corporate Creations Network Inc. [Kansas]
Corporate Creations Network Inc. [Maryland]
Corporate Creations Network Inc. [Oklahoma]
Corporate Creations Nevada LLC
Corporate Creations New Hampshire LLC
Corporate Creations New Jersey LLC
Corporate Creations New Mexico Inc.
Corporate Creations New York LLC
Corporate Creations North Carolina LLC
Corporate Creations North Dakota LLC
Corporate Creations Ohio LLC
Corporate Creations Oklahoma LLC
Corporate Creations Oregon LLC
Corporate Creations Pennsylvania LLC
Corporate Creations Puerto Rico Inc.
Corporate Creations Rhode Island LLC
Corporate Creations South Carolina LLC
Corporate Creations South Dakota LLC
Corporate Creations Tennessee LLC
Corporate Creations Texas LLC
Corporate Creations Utah LLC
Corporate Creations Vermont LLC
Corporate Creations Virginia LLC
Corporate Creations Washington LLC
Corporate Creations West Virginia LLC
Corporate Creations Wisconsin LLC
Corporate Creations Wyoming LLC
Management Group Limited
United Agent Group Inc.
United Agent Group Inc.
United Agent Group Inc. [Alabama]
United Agent Group Inc. [Alaska]
United Agent Group Inc. [Arizona]
United Agent Group Inc. [Arkansas]
United Agent Group Inc. [California]
United Agent Group Inc. [Colorado]
United Agent Group Inc. [Connecticut]
United Agent Group Inc. [Delaware]
United Agent Group Inc. [Florida]
United Agent Group Inc. [Georgia]
United Agent Group Inc. [Hawaii]
United Agent Group Inc. [Idaho]
United Agent Group Inc. [Illinois]
United Agent Group Inc. [Indiana]
United Agent Group Inc. [Iowa]
United Agent Group Inc. [Kansas]
United Agent Group Inc. [Kentucky]
United Agent Group Inc. [Louisiana]
United Agent Group Inc. [Maine]
United Agent Group Inc. [Maryland]
United Agent Group Inc. [Massachusetts]
United Agent Group Inc. [Michigan]
United Agent Group Inc. [Minnesota]
United Agent Group Inc. [Mississippi]
United Agent Group Inc. [Missouri]
Place of incorporation
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
Puerto Rico
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
British Virgin Islands
Puerto Rico
US Virgin Islands
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)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
Percentage of shares held
2020
%
2019
%
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
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
110
Name of controlled entity
United Agent Group Inc. [Montana]
United Agent Group Inc. [Nebraska]
United Agent Group Inc. [Nevada]
United Agent Group Inc. [New Hampshire]
United Agent Group Inc. [New Jersey]
United Agent Group Inc. [New Mexico]
United Agent Group Inc. [New York]
United Agent Group Inc. [North Carolina]
United Agent Group Inc. [North Dakota]
United Agent Group Inc. [Ohio]
United Agent Group Inc. [Oklahoma]
United Agent Group Inc. [Oregon]
United Agent Group Inc. [Pennsylvania]
United Agent Group Inc. [Rhode Island]
United Agent Group Inc. [South Carolina]
United Agent Group Inc. [South Dakota]
United Agent Group Inc. [Tennessee]
United Agent Group Inc. [Texas]
United Agent Group Inc. [Utah]
United Agent Group Inc. [Vermont]
United Agent Group Inc. [Virginia]
United Agent Group Inc. [Washington D.C.]
United Agent Group Inc. [Washington]
United Agent Group Inc. [West Virginia]
United Agent Group Inc. [Wisconsin]
United Agent Group Inc. [Wyoming]
United Agent Group Management LLC
United Agent Group Services Inc. [Arkansas]
United Agent Group Services Inc. [California]
United Agent Group Services Inc. [Delaware]
United Agent Group Services Inc. [Hawaii]
United Agent Group Services Inc. [Kansas]
United Agent Group Services Inc. [Maryland]
United Agent Group Services Inc. [Oklahoma]
Worldwide Nominee LLC
Place of incorporation
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
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)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
(1)(3)(5)
Percentage of shares held
2020
%
2019
%
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 ASIC Corporations (Wholly‑owned Companies) Instrument 2016/785 these companies are relieved from the requirement to
prepare a financial report and directors’ report.
3 These companies became controlled entities during the year ended 30 June 2020.
4 These companies ceased to be controlled entities during the year ended 30 June 2020.
5 These companies were acquired as part of the Corporate Creations acquisition (note 8).
111 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Investments in associates and joint ventures are accounted for using the equity method of accounting. Under this method,
the investments are initially recognised at cost and the carrying value is subsequently adjusted for increases or decreases
in the Group’s share of post‑acquisition profit or loss and movements in other comprehensive income. The Group’s share of
post‑acquisition profits or losses from investments in associates and joint ventures is recognised in the profit or loss. Dividends
received or receivable are recognised as a reduction of the carrying amount of the investment.
Set out below are the associates and joint ventures of the Group at 30 June 2020:
Place of
incorporation
Principal activity
Ownership interest
Consolidated
carrying amount
Name
Associates
Expandi Ltd
United Kingdom Investor Services
Milestone Group Pty Ltd
Australia
Technology Services
CVEX Group, Inc
United States
Investor Services
The Reach Agency Holdings Pty Ltd
Australia
Investor Services
Mergit s.r.l.
Italy
Technology Services
Total investments in associates
Joint ventures
Computershare Pan Africa Holdings Ltd
Mauritius
Investor Services
Asset Checker Ltd
VisEq GmbH1
United Kingdom Investor Services
Germany
Investor Services
Total investment in joint ventures
Total investment in associates and joint ventures
June
2020
%
25
20
22.2
46.5
30
60
50
-
June
2019
%
25
20
20
46.5
30
60
50
66
June
2020
$000
6,145
3,148
-
June
2019
$000
6,304
3,611
-
1,377
1,172
-
-
10,670
11,087
-
-
-
-
-
-
39
39
10,670
11,126
1 On 7 November 2019, Computershare acquired the remaining 34% interest in VisEq GmbH. From this date, VisEq GmbH became a wholly owned
subsidiary of the Group.
The movements in the carrying amount of equity accounted investments in associates and joint ventures are as follows:
Associates
Joint Ventures
2020
$000
2019
$000
2020
$000
2019
$000
Carrying amount at the beginning of the financial year
11,087
26,725
Impairment charge
Share of net result (after income tax)
Dividends received
Transfer to consolidated entity
Share of movement in reserves
Carrying amount at the end of the financial year
-
241
(13,953)
(1,001)
(354)
(140)
-
-
(304)
(544)
10,670
11,087
39
-
(2)
-
(36)
(1)
-
45
-
(5)
-
-
(1)
39
112
32. DEED OF CROSS GUARANTEE
Computershare Limited and each wholly‑owned subsidiary party to a deed of cross guarantee dated 26 June 2008 (together
the “Closed Group”) are listed in note 30. 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 Closed Group for the year
ended 30 June 2020.
Computershare Limited Closed Group - Statement of financial position
Current assets
Cash and cash equivalents
Receivables
Inventories
Other current assets
Derivative financial instruments
Total current assets
Non-current assets
Receivables
Other financial assets
Property, plant and equipment
Right‑of‑use assets
Deferred tax assets
Intangibles
Derivative financial instruments
Other non‑current assets
Total non-current assets
Total assets
Current liabilities
Payables
Borrowings
Lease liabilities
Current tax liabilities
Provisions
Derivative financial instruments
Other liabilities
Total current liabilities
Non-current liabilities
Payables
Borrowings
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
113 | COMPUTERSHARE | ANNUAL REPORT | 2020
2020
$000
2019
$000
44,147
117,809
725
3,352
973
31,202
63,518
749
4,632
829
167,006
100,930
-
30,417
1,642,377
1,673,025
7,156
25,210
65,172
6,367
-
59,259
117,394
120,233
579
665
62,619
957
1,858,553
1,952,877
2,025,559
2,053,807
63,814
99,919
7,138
51,192
25
3,456
-
136,665
-
140
13,178
587
3,265
38
225,544
153,873
110,705
199,486
19,679
8,660
10,204
-
-
113,061
317,659
188
20,681
10,641
744
145
348,734
574,278
463,119
616,992
1,451,281
1,436,815
-
-
(305,025)
(251,209)
1,756,306
1,688,024
1,451,281
1,436,815
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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
Exchange differences on translation of foreign operations
Cash flow hedges
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
Change in accounting standards
Profit for the year
Dividends provided for or paid
Retained earnings at the end of the financial year
33. 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
Retained earnings
Total equity
Profit/(loss) attributable to members of the parent entity
Total comprehensive income attributable to members of the parent entity
2020
$000
2019
$000
174,860
297,378
472,238
41,980
196,066
239,728
435,794
195,656
140,445
165,587
43,389
30,292
17,044
51,222
33,566
21,051
231,170
271,426
(9)
64
283,039
360,088
46,458
44,748
236,581
315,340
(29,043)
(68,186)
12,023
7,967
(3,564)
(2,390)
(20,584)
(62,609)
215,997
252,731
1,688,024
1,536,871
(896)
(571)
236,581
315,340
(167,403)
(163,616)
1,756,306
1,688,024
2020
$000
2019
$000
26,860
36,002
1,160,235
1,107,539
1,187,095
1,143,541
217,057
522,228
739,285
83,451
533,594
617,045
-
-
(101,558)
(79,460)
2
35,689
20,608
2
48,120
28,555
(2,327)
(2,327)
495,396
447,810
131,193
118,761
531,606
526,496
452,250
433,230
114
(b) Guarantees
The parent entity’s financial guarantees have been outlined in note 34.
(c) Contingent liabilities
The parent entity did not have any contingent liabilities as at 30 June 2020 or 30 June 2019 other than the Australian thin
capitalisation contingent liability outlined in note 6 and the matters outlined in note 34.
d) Parent entity financial information
The financial information for the parent entity, Computershare Limited 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
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.
Tax consolidation legislation
Computershare Limited and its wholly‑owned Australian controlled entities formed a tax consolidation group with effect from
1 July 2002.
Members of the tax consolidated group also entered into a tax sharing deed, which includes a tax funding arrangement. As a
consequence, Computershare Limited, as the head entity in the tax consolidation group, has recognised the current tax liability
(or receivable) relating to the wholly owned Australian controlled entities in this group in the financial statements as if that liability
(or receivable) was its own. Amounts receivable or payable under the tax sharing deed are recognised separately as intercompany
payables or receivables.
34. CONTINGENT LIABILITIES
(a) Guarantees and Indemnities
Computershare Limited, ACN 081 035 752 Pty Ltd, Computershare Investments (UK) (No. 3) Ltd, Computershare Finance Company
Pty Ltd, Computershare US Inc. and Computershare Investor Services Inc are parties to a Guarantor Deed Poll dated 11 April 2018 in
respect to the following Facility Agreements:
> $500.0 million four‑year USD Syndicated Facility Agreement executed on 30 June 2020;
> $450.0 million five‑year multi‑currency Syndicated Facility Agreement executed on 11 April 2018;
> $100.0 million one‑year multi‑currency Bilateral Facility Agreement executed on 12 March 2020; and a
> $50.0 million five‑year multi‑currency Bilateral Facility Agreement executed on 28 June 2018 (refer to note 14 for further detail).
Guarantees and indemnities of $990.0 million (2019: $990.0 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 Inc.,
Computershare Investments (UK) (No. 3) Ltd and Computershare Investor Services Inc under a Note and Guarantee Agreement
dated 9 February 2012 and 20 November 2018.
A guarantee of USD 15 million (2019: USD 15 million) has been given to bankers of LenderLive Network, LLC by Computershare
Mortgage Services LLC under a Mortgage Warehouse Agreement dated 11 June 2019.
Bank guarantees of AUD 2.6 million (2019: AUD 2.6 million) have been given in respect of facilities provided to Australian
subsidiaries.
Bank guarantees of ZAR 6.8 million (2019: ZAR 6.8 million) have been given in respect of facilities provided to South African
subsidiaries.
A performance guarantee of ZAR 32.0 million (2019: ZAR 16.0 million) has been given by Computershare (Pty) Ltd to provide
security for the performance of obligations as a Central Securities Depository Participant.
(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. For the Australian thin capitalisation contingent liability refer to note 6.
(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 (2019: ZAR 455.0 million).
115 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Potential withholding and other tax liabilities arising from distribution of all retained distributable earnings of all foreign
incorporated controlled entities are $31.7 million (2019: $34.4 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.
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.
35. 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)
> Category 2 ‑ Staff (statutory employer contributions of 9.5%, voluntary employee contributions)
> Category 3 ‑ SG (Superannuation Guarantee) Staff and casual and fixed term employees (statutory employer contributions,
voluntary employee contributions)
Foreign controlled entities contribute to the defined contribution funds as follows:
a. United Kingdom entities – between 1% and 10% of employees’ gross salaries depending upon years of service
b. United States entities – voluntary employee contributions with matching employer contribution up to 4% of employees’
base salaries
c. Canadian entities – between 2% and 7% of employees’ base salaries dependent upon years of service
d. South African entities – 12% of employees’ gross salaries
e. New Zealand entities – voluntary employee contributions with matching employer contribution up to 6% of employees’
base salaries
f. Hong Kong entities – between 5% and 20% of employees’ base salary dependent upon years of service
Defined Benefit Funds
Computershare Deutschland GmbH & Co. KG and Computershare Communication Services GmbH maintained a defined
benefit scheme which provides benefits to 4 employees (2019: 7) An actuarial assessment of the scheme was completed as at
30 June 2020 and defined benefit plan liability recognised in accordance with the actuarial valuation. The net liability is not
material to the Group.
(b) Lease Liabilities
The Group leases various properties, computer equipment, motor vehicles and other items of plant and equipment. From
1 July 2019, the Group has recognised right‑of‑use assets and lease liabilities for these leases except for short‑term and low‑value
assets (see note 1a for transitional details and note 21 for details on the Group’s lease commitments).
(c) Other
An overseas subsidiary performing loan servicing activities is obliged, in certain circumstances, to make payments on behalf of
mortgagors related to taxes, insurance, principal and interest. The amount of these advance payments fluctuates over time as it
depends on the type of loans being serviced and their performance.
As of 30 June 2020, the Group was servicing approximately $24.5 billion of mortgages owned by the US government sponsored
mortgage agencies. While the Group, as the owner of the related MSRs, may have the obligation to acquire any mortgages from
the serviced pool that do not meet the agencies’ lending criteria, the consolidated entity is in possession of indemnities and
warranties that require originating banks to purchase such mortgages from the Group and cover any transfer costs. Only in the
event of bankruptcy or dissolution of the originating bank, would Computershare retain the defective mortgage together with the
underlying collateral. In these limited circumstances, the Group would have the option to either hold the mortgage or seek another
buyer in the open market. The impact at 30 June 2020 of any retained mortgages is immaterial to the consolidated entity.
116
36. CAPITAL EXPENDITURE COMMITMENTS
Capital expenditure commitments contracted for at balance date but not recorded in the financial statements are as follows:
Fit‑out of premises
Plant and equipment
2020
$000
1,100
2,424
3,524
2019
$000
250
3,251
3,501
37. SIGNIFICANT EVENTS AFTER YEAR END
On 1 July 2020, Computershare acquired 100% of Verbatim LLC, a global corporate secretarial managed services provider located
in the United States, for total consideration of $9.5 million.
No other 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.
38. RELATED PARTY DISCLOSURES
Key management personnel disclosures are included in note 39. 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
Shares in the parent entity
2020
2019
31,321,258
32,345,846
(1,195,797) (2,603,008)
2020
$
2019
$
9,978,110
11,787,800
(a) Wholly owned Group – intercompany transactions and outstanding balances
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 33)
> Dividends were paid between entities
> Bank guarantees were provided by the parent entity to its controlled entities (note 34)
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 30. Interests held in associates and joint ventures are disclosed in note 31.
117 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(c) Transactions with associates and joint ventures
The following transactions were entered into 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
These transactions were undertaken on commercial terms and conditions.
39. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation
Short‑term employee benefits
Other long‑term benefits
Post‑employment benefits
Share‑based payments
Other
Total
2020
$
2019
$
250,991
198,541
2,495,705
2,285,066
40,797
-
22,889
36,650
2020
$
2019
$
5,064,991
9,600,408
44,699
109,422
126,417
213,661
1,923,270
4,880,075
1,723,681
2,397,374
8,866,063
17,217,935
Following implementation of the new global structure effective 1 July 2019, the composition of executive KMP roles has changed.
Consequently, the comparative information disclosed is not comparable to the remuneration disclosed in table 6.1 of the
remuneration report.
For detailed remuneration disclosures please refer to sections 1 to 6 of the remuneration report within the Directors’ Report.
40. EMPLOYEE AND EXECUTIVE BENEFITS
Certain employees are entitled to participate in share and performance rights schemes. A transaction is classified as share‑based
compensation where the Group receives services from an employee and pays for these in shares or similar equity instruments.
For each of the Group’s share plans, the fair value is measured at grant date and the expense is recognised over the relevant
vesting period in the income statement with a corresponding increase in the share‑based payments reserve. The expense is
adjusted to reflect actual and expected levels of vesting.
(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 six 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 one year. Matching shares funded by the Group must be kept in
the plan for a minimum of two 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 US.
Subject to the discretion of the Board, shares in the parent entity may also be allocated to selected employees 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.
118
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 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
2020
2019
9,781,063
10,495,235
3,941,588
2,650,025
183,334
26,159
(94,101)
(158,325)
(2,623,305) (3,232,031)
11,188,579
9,781,063
39,532
34,694
* 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 $14.27.
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 the Long‑Term Incentive Plan, known as the LTI 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
16 Dec 2016
05 Dec 2017
04 Dec 2018
02 Dec 2019
Total
Approximate
exercise date
Exercise
price
Balance at
beginning of
the year
Granted
during
the year
Exercised
during
the year
Lapsed
during
the year
Balance at
end of
the year
Exercisable
at end of
the year
Sep 2019
Sep 2020
Sep 2021
Sep 2022
$0.00
$0.00
$0.00
$0.00
738,356
494,774
551,925
-
-
-
-
735,321
(649,010)
(89,346)
-
-
-
-
(18,435)
476,339
(31,821)
520,104
-
735,321
1,785,055
735,321
(649,010)
(139,602)
1,731,764
-
-
-
-
The fair value of performance rights granted under the 2020 LTI plan were assessed using the following parameters:
2020 Plan – EPS
2020 Plan - TSR
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)
2 Dec 2019
1 Jul 2019
30 Jun 2022
AUD 17.53
AUD 16.36
AUD 0.00
21.15%
3 years
2.51%
0.69%
2 Dec 2019
1 Jul 2019
30 Jun 2022
AUD 17.53
AUD 7.90
AUD 0.00
21.15%
3 years
2.51%
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.
119 | COMPUTERSHARE | ANNUAL REPORT | 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(c) Employee benefits recognised
Performance rights expense
Share plan and options expense
Aggregate employee entitlement liability (note 22 and 23)
41. REMUNERATION OF AUDITORS
2020
$000
1,039
19,604
41,747
2019
$000
4,348
15,385
36,481
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
2020
$000
2019
$000
1,021
2,757
3,778
321
2,013
2,334
329
329
973
2,573
3,546
372
1,835
2,207
375
375
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
543
416
120
REPORTS
DIRECTORS’ DECLARATION
In the directors’ opinion:
(a) the financial statements and notes set out on pages 60 to 120 are in accordance with the Corporations Act 2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 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
30 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 32.
Note 1 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
21 September 2020
SJ Irving
Director
121 | COMPUTERSHARE | ANNUAL REPORT | 2020
DECLARATION TO THE BOARD OF DIRECTORS
The Chief Executive Officer and Chief Financial Officer state that:
(a) the financial records of the consolidated entity for the financial year ended 30 June 2020 have been properly maintained in
accordance with section 286 of the Corporations Act 2001; and
(b) the financial statements, and the notes to the financial statements, of the consolidated entity, for the financial year ended
30 June 2020:
(i) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(ii) give a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of their performance for the
financial year ended on that date.
SJ Irving
Chief Executive Officer
21 September 2020
NSR Oldfield
Chief Financial Officer
122
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report
To the members of Computershare Limited
Report on the audit of the financial report
Our opinion
In our opinion:
(a) The accompanying financial report of Computershare Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the Group's financial position as at 30 June 2020 and of its
financial performance for the year then ended
ii. 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 1.
What we have audited
The Group financial report comprises:
●
●
●
●
●
●
the consolidated statement of financial position as at 30 June 2020
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated cash flow statement for the year then ended
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial report
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, 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.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, 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.
123 | COMPUTERSHARE | ANNUAL REPORT | 2020
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and management structure of the
Group, its accounting processes and controls and the industry in which it operates.
Materiality
● For the purpose of our audit we used overall Group materiality of $16 million, which represents
approximately 5% of the Group’s profit before tax.
● We applied this threshold, together with qualitative considerations, to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on
the financial report as a whole.
● We chose Group profit before tax because, in our view, it is the benchmark against which the performance
of the Group is most commonly measured.
● We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
● Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
● The Group operates in more than 20 countries, with the majority of its business based in five geographical
locations – Australia, United States of America, United Kingdom, Canada and Switzerland. The Group
engagement team determined the nature, timing and extent of work that needed to be performed by it and
by auditors operating under its instruction (component auditors). We structured our audit approach as
follows:
− We audited certain entities in Australia, United States of America, United Kingdom and Canada due to
their financial significance to the Group.
[to insert page no’s to match accounts]
124
− We performed specified risk focused procedures on certain account balances for other entities in
Australia, United States of America, United Kingdom, Canada, Hong Kong and Switzerland.
− We carried out further procedures at the Group level, including procedures over consolidation and
preparation of the financial statements.
● For work performed by component auditors, we determined the level of involvement required
from us in order to be able to conclude whether sufficient appropriate audit evidence had been
obtained. Our involvement included discussions, written instructions and holding meetings
with component audit teams in Australia, United States of America, United Kingdom, Canada,
Hong Kong and Switzerland.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. The key audit matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. Further, any commentary on the outcomes of a particular audit
procedure is made in that context. We communicated the key audit matters to the Risk and Audit
Committee.
Key audit matter
Impairment assessment of goodwill
(Refer to note 10 of the financial statements)
The Group had a goodwill balance of $1.9 billion at 30
June 2020, representing approximately 37% of the
total assets of the Group.
The Group is required to perform an impairment
assessment of its goodwill balance at least annually
under Australian Accounting Standards.
Effective from 1 July 2019, the Group’s management
structure and reporting changed from a regional
model to a global business model, aligned to the
Group’s products. This resulted in a change in the
composition of the Group’s cash generating units
(CGUs). Goodwill was then reallocated to groups of
CGUs based on relative fair value as at 30 June 2019.
For the year ended 30 June 2020, the Group
developed a new model for the purpose of assessing
goodwill impairment, reflective of the newly identified
CGUs. The Group performed an impairment
assessment over the goodwill balance by calculating
the value in use for each operating segment (which is
comprised of groups of CGUs), or CGUs separately
How our audit addressed the key audit
matter
We evaluated whether the Group’s identification of
CGUs, which are the smallest identifiable groups of
assets that can generate largely independent cash
inflows, was consistent with our knowledge of the
Group’s operations and new internal organisational
structure.
We evaluated whether the methods applied in
calculating and allocating carrying value and value in
use to the identified CGUs were in line with the
requirements of Australian Accounting Standards.
In relation to the models, we performed the following
procedures, amongst others:
● Tested the mathematical accuracy of the
models’ calculations.
● Compared cash flow forecasts for the year
ended 30 June 2021 to the Board approved
budget.
● Compared previous cash flow forecasts to
actual results to assess the Group’s historical
accuracy of forecasting.
● Together with PwC valuation experts, we
assessed the reasonableness of discount
rates contained in the models, for a sample
[to insert page no’s to match accounts]
125 | COMPUTERSHARE | ANNUAL REPORT | 2020
INDEPENDENT AUDITOR’S REPORT
identified for impairment testing, using discounted
cash flow models (the models).
of CGUs, by comparing these to similar
companies and other relevant external data.
The assumptions and cash flow forecasts used to
assess for impairment were updated to reflect the
potential impact of COVID-19. This involved specific
assumptions applied to short-term cash flow forecasts
(including margin income forecasts) for all CGUs, for
at least the next five years. These valuations were then
compared to respective carrying values to determine
the need for any impairment. In each operating
segment, the Group’s valuations exceeded carrying
values.
The models accounted for sensitivity by assessing
reasonably possible changes in key assumptions,
which did not identify any impairment.
We considered the impairment assessment of
goodwill to be a key audit matter as the goodwill
balance is significant to the consolidated statement of
financial position and significant judgement is
required by the Group in estimating future cash flows,
particularly with respect to determining appropriate:
● Discount rates
● Short-term cash flow forecasts
● Earnings growth rates applied beyond the
short-term cash flow forecasts (terminal
growth rates).
Revenue recognition – Computershare
Mortgage Services’ (CMS) fixed fee revenue
(Refer to note 2 of the financial statements)
In 2016, Computershare was appointed by UK Asset
Resolution (“UKAR”) to undertake its mortgage
servicing activities. The arrangement involved a fixed
fee payable to Computershare over a total of four
years for the provision of infrastructure to support the
contract (CMS fixed fee revenue). A single
performance obligation has been identified in the
contract between the Group and UKAR which, under
Australian Accounting Standards, is satisfied over a
period of time. A portion of the fixed fee is recognised
as revenue during the period with reference to the
percentage of related costs that have been incurred to
date.
We note that the majority of the revenue has been
recognised by 30 June 2020, with $3.9m expected to
be recognised in FY21 in line with the wind down of
UKAR.
● Tested whether short-term cash flow
forecasts and terminal growth rates used in
the models were consistent with our
knowledge of current business conditions,
externally derived data (where possible) and
our understanding of the business.
For each operating segment, we assessed
Management’s sensitivity analysis which included
changes to key assumptions.
We also considered the adequacy of the Group’s
financial report disclosures in relation to this matter
in light of the requirements of Australian Accounting
Standards.
We performed the following procedures, amongst
others, over the recognition of CMS fixed fee revenue:
● Compared the Group’s revenue recognition
policies to the requirements under
Australian Accounting Standards.
● Confirmed that the Group had reassessed
the related costs and inspected a copy of the
latest projections of the total amount of
related costs which are expected to be
incurred.
● Agreed the total amount of related costs to
the Group’s approved business plan.
● Compared a sample of current year related
costs included in the Group’s cash flow
forecasts against actual related costs
incurred to assess whether the related costs
were recognised in the correct period.
[to insert page no’s to match accounts]
126
We consider the recognition of CMS fixed fee revenue
a key audit matter given the judgement required by
the Group in determining the total amount of related
costs which are expected to be incurred, the
percentage of these costs incurred to date and the
period over which these costs will be incurred.
Uncertain tax positions - Australian thin
capitalisation
(Refer to note 6 of the financial statements)
The Australian Taxation Office (ATO) has previously
undertaken review activities in relation to the Group’s
compliance with thin capitalisation rules. Under
Australian thin capitalisation rules, the amount of
debt used to fund Australian operations or
investments is limited. Once certain limits are
exceeded, debt deductions claimable against
Australian assessable income are disallowed.
In April 2017, the ATO issued a draft position paper to
the Group to indicate that it disagreed with the basis
applied by the Group in calculating its thin
capitalisation position in the 2011–2014 income tax
years. In particular, the ATO questioned the
recognition of certain intangible assets within the
calculation. The Group responded to the ATO’s
position paper, outlining the rationale for its thin
capitalisation treatment. This process may take some
years to resolve. As the Group does not expect to pay
additional tax related to this matter, no provision was
recognised as at 30 June 2020, however a contingent
liability continues to be disclosed for this issue.
We consider this a key audit matter, given the
financial significance of the contingent liability in
addition to the significant judgement required by the
Group in assessing whether the accounting treatment
remained appropriate as at balance sheet date and the
adequacy of disclosures in the financial report, as
required under Australian Accounting Standards.
● Reviewed Management’s calculation of the
fixed fee recognised as revenue during the
period, with reference to the percentage of
related costs that were incurred to date and
validated key inputs.
We performed the following procedures, amongst
others:
● Confirmed that no correspondence has
taken place between the Group and the ATO
during the year with respect to Australian
thin capitalisation.
●
Interviewed the Group Tax Director, the
Chief Financial Officer, and considered the
views of the Group’s expert to determine if
there had been a change to the Group’s
strategy, position and approach in relation to
the ATO draft position paper.
● Considered whether the current accounting
treatment applied by the Group remains
appropriate based on the information
obtained from the procedures listed above.
● Considered the adequacy of the Group’s
contingent liability by obtaining a copy of the
Group’s calculations and determining if the
methodology applied in the calculations was
consistent with existing facts and
circumstances.
● Assessed the relevant disclosures in light of
the requirements of Australian Accounting
Standards.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2020, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
[to insert page no’s to match accounts]
127 | COMPUTERSHARE | ANNUAL REPORT | 2020
INDEPENDENT AUDITOR’S REPORT
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 gives a true and fair view and is free from material misstatement, whether due to fraud or
error. In Note 1, 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.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 43 to 57 of the directors’ report for the year
ended 30 June 2020.
In our opinion, the remuneration report of Computershare Limited for the year ended 30 June 2020
complies with section 300A of the Corporations Act 2001.
[to insert page no’s to match accounts]
128
Responsibilities
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.
PricewaterhouseCoopers
Anton Linschoten
Partner
Melbourne
21 September 2020
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129 | COMPUTERSHARE | ANNUAL REPORT | 2020
INDEPENDENT AUDITOR’S REPORT
FURTHER INFORMATION
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
Australian Super Pty Ltd
Christopher John Morris
BlackRock Group
Vanguard Group
Number of
ordinary shares
Fully paid
percentage
52,629,084
31,045,300
27,174,749
27,054,099
9.73%
5.74%
5.02%
5.00%
Class of shares and voting rights
At 11 September 2020 there were 36,751 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 11 September 2020
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
20,100
13,377
1,934
1,230
110
36,751
There were 957 shareholders holding less than a marketable parcel of 41 ordinary shares as at 11 September 2020.
Twenty Largest Shareholders of ordinary shares as at 11 September 2020
Ordinary shares
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Mr Chris Morris
National Nominees Limited
Welas Pty Ltd
Penelope Maclagan
BNP Paribas Nominees Pty Ltd
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