Share registry services provider Computershare says it is cautious about its outlook for the current financial year due to market volatility.
Computershare on Wednesday reported a 10.4 per cent fall in net profit to $264.1 million for the 12 months to June 30, compared to $294.8 million a year earlier.
The company said lower earnings were primarily a result of weaker corporate activity globally, a lack of large transactions in the US mutual fund proxy solicitation business and reduced filings in the US bankruptcy administration business.
Lower earnings in the UK registry business also contributed to the fall.
Computershare generates the bulk of its revenue in the northern hemisphere and less than 20 per cent in Australia.
Basic earnings per share (EPS) were 47.53 cents in 2010/11, down from 53.05 cents in the prior year.
Management-adjusted EPS fell 3.7 per cent to 55.67 cents, compared to 57.8 cents in the prior year.
The adjustments include restructuring provisions, intangible assets amortisation, acquisition costs and adjustments on derivatives.
The result was Computershare’s second-best full year result and better than its earlier guidance of a five to 10 per cent fall on the 2010 result.
Computershare said it was even more cautious about guidance than usual, because it was hard to gauge the timespan of current market volatility and its impact.
“A week ago, we would have said that we do not expect management EPS results from Computershare’s current portfolio of businesses in FY12 (2012 financial year) to be significantly different from those achieved in FY11,” the company said.
“That guidance would have assumed that equity, interest rate and FX (foreign exchange) market conditions remain broadly consistent with then current levels for the rest of the financial year, an assumption that is no longer valid.”
The company would update the market on its outlook at its annual general meeting in November.
Computershare chief executive Stuart Crosby said market activity reflected a difficult environment.
Transactional revenue from corporate actions, bankruptcy filings in the US, and mutual fund solicitation projects remained “challenged”.
On the other hand, annuity revenue lines such as register maintenance, employee share plans, communications services, voucher services and deposit protection schemes had held up very well.
Mr Crosby said completing Computershare’s proposed purchase of BNY Mellon’s shareowner services business in the US – the largest ever by the company at $US550 million – was a significant near-term priority.
He said obtaining anti-trust approval was a complex and hard process.
“Working to make sure that takes place in the short term is the single biggest priority for us, without question,” Mr Crosby said.
“In terms of the process … I don’t think our prospects of success have changed materially from when we undertook the transaction.”
Computershare announced the acquisition, which requires US regulatory approval under anti-trust laws, in April.
The company said at the time that if regulatory approval were not forthcoming within 12 months, it would pay BNY Mellon a break fee of $US30 million.
Shares in Computershare were 14 cents lower at $6.95 on Wednesday.
