REPORTING SEASON: Computershare Limited (CPU)
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Figure 1: Computershare Limited 12 month chart
Computershare Limited (CPU) write-downs and lower earnings forecasts weigh on CPU
– Computershare (CPU) has reported a full year statutory net profit after tax of $153.6 million, which represented a fall of 38.9% over the previous corresponding period. The fall was mainly a result of the non-cash impairment charge of $109.5 million which was booked against the value of the UK Voucher Services business.
– Earnings were also negatively impacted by the strengthening of the US dollar during FY2015 and the Group’s effective tax rate has increased from 21.8% for the year ended 30 June 2014 to 35.3% in the current financial year. At the same time maturing deposits which were reinvested at lower yields and a fall in the Canadian and Australian cash rates also impacted earnings. Other factors that weighed on the result included the loss of Serviceworks’ largest client and a major sub-servicing contract in the loan servicing business, the sale of Highlands Insurance LLC and increased regulatory costs, particularly in the US and the UK.
– In contrast corporate actions in Canada and Australia, improved results in Hong Kong and the Indian mutual funds business helped mitigate the weaker earnings outcomes. Cost management, synergies from previous acquisitions and lower financing costs were factors that favourably impacted full year earnings.
– Looking to the year ahead, CPU expects underlying business performance to be broadly similar to FY15, however, the impact of the stronger USD and the anticipated lower yields on client balances are again expected to create significant earnings headwinds. The business is also anticipating increased costs including those associated with investments in product stgelopment and efficiency initiatives. Taking these factors into account the Company expects Management EPS for FY16 to be around 7.5% lower than the previous year.
– A final dividend of 16 cents per share, franked to 25% was declared with a record date of 20 August 2015 and a payment date of 15 September 2015.