Computershare delivered another solid profit result for 2003 with reduced costs partially offsetting the continued pressure on revenue.

• Normalised net profit after tax declined 29% to $41.1 million.
• Net profit after outside equity interests was $16.3 million.
• Normalised earnings per share were 6.05 cents per share. Earnings per share, after non-recurring items, were 1.47 cents per share.
• A final dividend of 2.5 cents per share, fully franked, takes total dividends for the year to 5 cents per share fully franked, compared with 3 cents per share last year.

FINANCIAL PERFORMANCE

• Total revenues were $708.6 million, a 9% decline on last year. Sales revenue declined 8% to $694.5 million. Registry maintenance income declined 7% to $334.0 million due to price competition and the continued poor market conditions impacting transactional revenues, particularly in Europe and North America.
• Corporate actions income declined 25% to $43.6 million as corporate activity remained low.
• Non-registry income declined marginally by 1% to $145.6 million however the decline is attributable to reduced bureau income from the technology business.
• The Plans business experienced strong growth, particularly in the UK, and the Analytics and Document Services businesses delivered steady revenue growth.
• Margin income declined 11% to $63.7 million reflecting the continued low interest rate environment.
• Recoverable income decreased 11% however this has been more than offset by a 17% decrease in cost of sales.
  
  
  
  
• Total operating expenses have decreased 10% on last year, with sustainable reductions in all cost categories.
  
  
• Excluding cost of sales, total operating expenses declined 8%, equal to the 8% decline in sales revenue.
• Computer costs decreased 20% to $29.1 million with the conversion to SCRIP in North America resulting in external bureau fees no longer being incurred.
• Personnel costs decreased 5% to $326.5 million reflecting the decline in head count as a result of organisation restructuring and consolidation in all regions. The reduction in headcount, together with the continued focus on cost control, has contributed to the declines in discretionary and overhead costs.
• The operating result is unfavourably impacted by $35.1 million of non-recurring items. This includes $23.2 million of redundancy costs, the result of which will provide sustainable reductions in personnel costs in future years. The balance of non-recurring items relate to property write-offs ($7.5 million) and other costs of restructuring the business ($4.4 million).
• Borrowing costs declined 18% to $8.3 million reflecting lower interest rates together with lower average debt levels since the preference share issue in December 2001.
• Depreciation and amortisation increased 10% to $60.7 million. Depreciation increased 13% to $24.9 million reflecting the significant capital expenditure in prior years, particularly on occupancy refurbishments. Amortisation increased 8% to $35.9 million due to the acquisition of businesses and expenditure on leased assets and leasehold improvements.
• The headline effective tax rate is 41.8% as at 30 June 2003 (30 June 2002 31.0%) and the underlying effective tax rate adjusted for the benefit of tax losses not brought to account is 20.7% (30 June 2002 31.0%).

This result is primarily due to:

• a critical examination of the group’s qualifying research and development activities in conjunction with the introduction of the 175% research and development concession regime in Australia, as well as qualifying research and development activities in the UK and Canada, that attracted tax concessions in those jurisdictions;
• an increased benefit arising from the difference in tax rates on overseas income as a result of a reduction in tax rates in Canada and, further to the completion of the joint venture arrangements with the Hong Kong Stock Exchange, the comparatively strong performance of the group’s Hong Kong business in FY 2003 prior to the SARS outbreak, and
• limiting inefficient transactions where possible.

Computershare has conservatively not booked the benefit of $18 million of income tax losses and there are a further $18.3 million of capital losses. The benefit of these losses will be reflected in a lower tax expense in future periods when their recovery is virtually certain.