1 Market Overview and Financial Results Tom Honan Chief Financial - - PowerPoint PPT Presentation

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Interim Results 2004 Presentation 26 February 2004

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Market Overview and Financial Results

Tom Honan Chief Financial Officer

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Summary of Results

• Net operating profit after tax (excluding outside equity interests) of $42.4m,

up 986%.

• Half year total revenues (excluding proceeds on sale of UK premises) of

$394.5m, up 13% or up 7% excluding recent acquisitions.

• Half year operating costs excluding the effect of recent acquisitions and

excluding cost of sales was $233.9, down 5%.

• EBITDA (excluding non recurring items) $80.1m, up 47%
• Basic Earnings per Share 7.05 cents per share
• Interim Dividend payable of 3 cents (fully franked), 20% increase.

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Context of Results

1H’04 EBITDA up significantly from last year. Revenues reflect improved market conditions (especially Asia Pacific) and the contribution from acquisitions. Operating costs reflect cost savings from restructuring and continued focus on cost control. Capital expenditure of $7.2m (down 37%.) DSO 63 days, down 4 days from 30 June 2003. Increased ‘non registry’ revenues due to acquisition of Georgeson Shareholder Communications Inc.

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This presentation is structured around the following framework

Market Overview Financial Results CEO’s Report

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CPU Revenues are driven by multiple factors

Revenue type

54% 9% 7% 26% 4%

Register Maint. & Recoveries Corporate Actions Margin Income Non Registry(incl GSC) Other

Market Overview

Increase proportion

• n non-registry

businesses, win market share & new business Growth in non- registry businesses, clients & proxy solicitation Non- Registry (includes Georgesons) Retain existing clients, win market share Growth in clients and holders Register Maint & Recoveries Win new business; link to key stakeholders, clients Market conditions, M&A activity Corporate Actions Hedging, flow on effort from Maintenance & Corp Actions Interest rates, hedging balances Margin Income Risk mitigation Driver Revenue

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Global Equities Market

Market Overview 2003 YTD 1.17x 2003 YTD vs. 2000 - 2002 Avg 34.5% 2000-2002 Average 0.87x 2003 YTD vs. 1991 - 2002 Avg. 7.1% 1991-2002 Average 1.10x 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Book-to-bill ratio Average

Source: SDC Thomson Financial

Historical Equity Issuance Data

M&A Value of Transactions (US$m) M&A Number of Transactions

500,000 1,000,000 1,500,000 2,000,000 2,500,000 1H92 2H92 1H93 2H93 1H94 2H94 1H95 2H95 1H96 2H96 1H97 2H97 1H98 2H98 1H99 2H99 1H00 2H00 1H01 2H01 1H02 2H02 1H03 2H03 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 M&A Value ofTransactions (US$m) M&A Number ofTransactions

Annual M&A Book to Bill Ratio

Positive for first time in four years. CPU impact mainly felt in Australia and Hong Kong.

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Global Interest Rate Market

Market Overview

US

2 4 6 8 1996 1997 1998 1999 2000 2001 2002 2003 2004 %

UK

2 4 6 8 1996 1997 1998 1999 2000 2001 2002 2003 2004 %

Canada

2 4 6 8 1996 1997 1998 1999 2000 2001 2002 2003 2004 %

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Market Overview Financial Results CEO’s Report

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Group Financial Performance – AUD $m’s

Revenue 1H’04 1H’03 %Difference Registry maintenance 165.7 168.0 (1%) Corporate actions 34.4 21.8 58% Margin income (including sharesave admin) 26.6 31.9 (17%) Non Registry fees/sales 101.5 71.4 42% Recoveries 50.0 49.3 1% Interest income 1.7 1.8 (6%) Other 14.6 4.5 224% Total Revenue 394.5 348.7 13% Operating costs 312.9 293.8 (7%) Share of losses of associates 1.5 0.5 (200%) EBITDA 80.1 54.4 47% Depreciation and amortisation 14.5 15.4 6% Amortisation of goodwill 13.5 16.2 17% Borrowing costs 3.8 3.8 0% Other 0.0 (2.0) NA Non-recurring items (5.7) 7.1 NA Pre tax Profit 54.0 13.9 289% Income tax 11.2 9.0 24% NPAT before OEI 42.8 4.8 792% NPAT after OEI 42.4 3.9 986%

Financial Results

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Half Year Comparisons

396.5 384.5 348.7 359.9 73.0 74.6 54.4 79.5 80.1 394.5 **

1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm

Revenue EBITDA

Financial Results

Revenue Breakdown

71.4 166.0 21.8 31.8 74.2 34.4 26.6 101.5 168.0 21.8 31.9 165.7

Register Main Corp Actions Margin Income Non Registry Sales/Fees

$AUDm

1H'03 2H'03 1H'04

* Non registry sales/fees includes income from Georgesons * ** Excludes proceeds on the sale of Pavilions

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Revenue Analysis

Financial Results

Total Revenue

29% 37%* 34%

Asia Pacific Europe North America

*includes revenues from Georgesons. Revenue Breakdown

52.1 1.6 28.6 12.9 23.3 56.2 49.7 16.6 22.9 6.2 57.4 13.1 13.9 11.6 12.1

Register Main Corp Actions Margin Income Recoveries Non Registry Sales/Fees

$AUDm

Asia Pacific Europe North America

*Non registry sales/fees includes revenues from Georgesons.

*

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Cost Analysis

Operating Costs

323.5 309.9 293.8

278.9 312.9 * $AUDm 1H'02 2H'02 1H'03 2H'03 1H'04

Financial Results

Operating Cost Breakdown

49.7 40.6 8.6 54.6 25.9 4.0 62.2 139.3 19.3 36.7 13.9 40.4 136.5 18.0 42.1 133.5 18.8 41.6 Recov Exp Personnel Occupancy Other Direct Technology Corporate

$AUDm

1H'03 2H'03 1H'04

* Includes Georgeson costs. Excludes book value of Pavilions

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EBITDA generated from diversified portfolio

Financial Results

Total EBITDA

73.0 74.6 54.4 79.5 80.1 *

1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm EBITDA Breakdown FY 2003

39% 22% 39% Asia Pacific Europe North America * Excludes non recurring items

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Progress on cost savings

Financial Results

(2.0) 11.3 9.4 22.7 Total 0.7 1.9 0.0 1.2 Other 0.2 0.4 0.1 0.3 Property (2.9) 9.0 9.3 21.2 Personnel Savings Excess/ (Shortfall) 2H’04 Expected Savings 1H’04 Realised Savings Expected Annualised Savings

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Personnel Cost Control

$169.1 ($9.3) $6.4 $5.6 $4.5 $0.5 $161.4 150 155 160 165 170 175 180 185 1H FY04 Restructuring Acquisitions Salary Increase Oz Mkt Recovery UK Mgt Team 2H FY03

A$m Half Year Comparison Personnel Costs

Financial Results

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Analysis of NPAT

Financial Results

24.5 33.4 3.9 12.4 42.4 10 20 30 40 50 1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm

Actual NPAT

Note: Normalised NPAT for 1H’03 = 13.2, 2H’03 = 32.7

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Returns Improving, Cost of Capital Declining

8% 10% 12% 14% Jun '02 Dec '02 Jun '03 Dec '03 ROIC WACC

Rolling 12 month period ROIC vs WACC

Financial Results

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Effective Tax Rate

Headline effective tax rate 1H’04: 20.8% (1H’03: 65.2%) Normalised headline effective tax rate 1H’04: 31.7% (1H’03: 30.3%) The underlying effective tax rate being the tax rate adjusted for one off, non- recurring items and non-deductible goodwill charges for the 1H’04 is 27.7% (1H’03: 10.6%)

Financial Results

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Headcount (excluding Georgeson)

Financial Results

Total FTE's

2,053 2,591 4,300 4,966 5,321 5,029 5,079 1,000 2,000 3,000 4,000 5,000 June '98 June '99 June '00 June '01 June '02 June '03 Dec '03

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Headcount*

Financial Results

Geographic Breakdown

1,102 150 73 1,113 79 522 524 892 200 400 600 800 1,000 1,200 Australia Hong Kong New Zealand UK Ireland

• S. Africa

US Canada * Headcount excludes Technology, Corporate Services and Georgesons.

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Technology Costs – Establishing Global Platform

Financial Results

40.4 42.1 41.6 5 10 15 20 25 30 35 40 45 50 1H'03 2H'03 1H'04

All AUD $m – internal cash costs only All technology costs are expensed Major events: Acquisition of EFA assets February 2003

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Analysis of Technology Costs

Financial Results

Category

23% 2% 30% 42% 3%

Development Infrastructure Maintenance External bureau Admin

Cost Type

2% 8% 3% 82% 5%

External bureau Computer Costs Comms Occupancy Personnel &

• n-costs

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Analysis of Technology Costs

Financial Results

17.8 20.8 18.0 1.3 1.3 1.3 12.7 12.1 12.7 8.6 8.0 9.6 8.0 1.0 1.5 0.0 10.0 20.0 30.0 40.0 50.0

1H'03 2H'03 1H'04

$AUD

External Bureau Infrastructure Maintenance Application Maintenance Administration Development

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Balance Sheet Strength

Financial Results

Net Debt / Equity = 25.7% Net Debt = AUD $157.9m Committed Debt facility = AUD $360m Net Debt / Equity has increased as a result of business acquisitions.

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Cash Flow

Financial Results

• Gearing on a net

debt to equity basis – 25.7%

• Committed debt

facility - A$360m

• Debtors days
• utstanding have

fallen from 67 to 63 days

51.6 27.8 33.1 42.6 43.1 7.2 6.3 11.5 28.4 28.5

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm

Cashflow from Ops Cap Ex - PPE

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Capital Expenditure down 37% on 1H’03

Financial Results

CPU Group Capex AUD $m 0.4 0.7 5.9 0.2 7.2 Occupancy Document Services Facilities Information Technology Other TOTAL

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Working Capital Management Improving

Financial Results

70 67 63 52 51 41 45 75 10 20 30 40 50 60 70 80 FY'01 FY'02 FY'03 1H'04 days

Receivable days Payable days

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Interest Rate Sensitivity

• 60
• 40
• 20

20 40 60 80 100

• 2.50% -2.00% -1.50% -1.00% -0.50% 0.00%

0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% A$m PBT Impact

Exposure Hedged exposure 100% Hedged

Financial Results

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Risk Management – Average Funds Balances for six months ending 31 December 2003

By Category

Sharesave 20% Broker Trust 23% Corporate Actions 15% Dissenter 9% Dividend 16% Regular Trust 17%

By Country

Canada 48% UK 40% US 10% Australia 2% Balance range A$2.7b to A$5.3b Average fund balance A$2.9b

Financial Results

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Risk Management – Interest Rate Sensitivity

Financial Results

Interest Rate Hedging Strategy:

• Minimise downside risk in current

low interest rate environment Policy:

• Minimum hedge of 25% /

Maximum hedge of 75%

• Minimum term 1 year / Maximum

term 5 years

• Current hedging: 41%

Exposure to interestrates 25% Effective hedging in place - both natural & synthetic 41% No exposure 34%

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Equity Management – Fully Franked Interim Dividend of 3cps

EPS – Basic 7.05 cents EPS – Normalised Basic 6.00 cents Dividend 6 cents per year (fully franked) Current yield * 1.71% Franking Benefit – Total return 2.4% * Based on share price of AUD $3.50

Financial Results

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Equity Management – Share Buy Back: Reset Preference Shares

Announced 19th December 2003. Buy back a maximum of 17% (250,000 preference shares). Commenced 5th January 2004 Acquired 145,528 preference shares (9.7% of total issued) Average price AUD $103.63 Scheduled to complete 5th July 2004

Financial Results

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Financial Summary

Improved EBITDA reflecting: Market conditions especially in Australia and Hong Kong. Benefits of restructuring. Contribution from acquisitions. Corporate activity increased. Market activity level still low in North America and Europe. Cost savings realised. Margin income still declining due to rate pressure. Capex down 37% on last year. Improved working capital. 20% increase to dividend.

Financial Results

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Market Overview Financial Results CEO’s Report

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CEO’s Report For The Six Months to 31 December 2003 Chris Morris Chief Executive Officer

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What has turned the business around?

Improved market conditions. Significant improvement in financial reporting so we know where our costs are. Ongoing focus on cost control. New Time Zone structure and focus on P&L at all levels. Changes to management. Our core technology systems in all locations. The most significant factor is…………

CEO’s Report

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Our People

20 40 60 80 100 120 140 160 180 200

%

+30% +138% +35% +60% +30% +715% +405% +25%

Australia Canada Hong Kong Ireland New Zealand South Africa UK USA

Global comparison of results from Aug to Nov 03 survey

Percentage change in the number of staff who thought that Computershare had improved over a 3 month period

CEO’s Report

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Regional Reports - EMEA

General market conditions remain flat. Significantly growing ancillary businesses in the UK including: Small Shareholder Programs. Tracing unclaimed beneficiaries. Dealing Services. Creating new business opportunities in the UK. NHS Foundation Trust Hospitals (Government preferred supplier status). South Africa significant turnaround from FY’03 loss of $6 million to 1H’03 profit

• f $1 million and expected to be even better in 2H’04.

Moving to increase market share in Russia. Computershare Germany provides a solid base to expand our services into continental Europe.

CEO’s Report

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Regional Reports – Asia Pacific

Significant increase in general market activity.

CEO’s Report

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Computershare APRL Registries Ltd Security Transfers Advanced Share Registry Pitcher Partners

Computershare APRL Registries Ltd Security Transfers Adv anced Share Registry Pitcher Partners

CEO’s Report

100.0% $9,104,000,000 Total 0.00% $0 Other 0.50% $44,500,000 Advanced Share Registry 0.80% $77,300,000 Pitcher Partners 0.80% $69,700,000 Security Transfers 2.50% $227,500,000 Registries Ltd 36.00% $3,277,800,000 APRL 59.40% $5,407,200,000 Computershare % Value Share Registry TOTAL CAPITAL RAISED ($) - BREAKDOWN BY SHARE REGISTRY 2003 100.0% 96 Total 0.00% Other 8.30% 8 Pitcher Partners 8.30% 8 Advanced Share Registry 8.30% 8 Registries Ltd 12.50% 12 APRL 15.60% 15 Security Transfers 46.90% 45 Computershare % Number Share Registry NUMBER OF IPO'S WON – BREAKDOWN BY SHARE REGISTRY 2003

Source: Australian Financial Review

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Regional Reports – Asia Pacific cont.

Significant increase in general market activity. Won the registry tender for IAG adding more than 1 million shareholders. Plans business in Australia grew by 21%. Hong Kong improved results and maintaining share of IPO’s coming to the market. India places us in strategically important growth area in Asia.

CEO’s Report

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Regional Reports - North America

Georgeson acquisition has added strength to CPU brand resulting in increased invitations to tender from S&P Top 100. Winning business in the US (Florida Power, Reliant Resources, Viceroy Resources, Stanley Tool Works). Plans voted No 1 in recent service quality survey. Transcentive acquisition creating additional opportunities for cross-sell. Canada providing improved results particularly in Corporate Trust.

CEO’s Report

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Acquisitions – Georgeson Shareholder Communications

Our most significant acquisition to date. All Georgeson’s businesses are undergoing careful analysis. Great fit into Pepper and Analytics businesses. In other CPU markets, we can expose existing CPU clients to GS services. There will be a natural flow into our existing dealing services.

CEO’s Report

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Acquisitions – Georgeson Shareholder Communications cont.

Integration being carefully managed through a dedicated team of top CPU and Georgeson executives. Already identified areas for significant cost savings. Some outsourced operations will be brought back in-house with significant savings. IT Infrastructure. Administrative functions. Office rationalisation. Our back-end processing expertise will reduce the cost of major transactions. Revenues have been around US$120 million and expect these to grow in line with increases in market activity. Margins will be around 20% excluding cost savings.

CEO’s Report

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Acquisitions - Transcentive

Specialist providers of services for all types of equity plans. Acquisition blends well into CPU’s overall Plans business strategy and cements our position as the leading provider of Plans services globally and in the US in particular. Services range from bureau to full outsource. Strong market presence in the US – 48% of Fortune 1000 companies. CPU will be able to leverage off US base and take their services to another level both nationally and internationally. Further opportunities to cross-sell clients.

CEO’s Report

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Acquisitions – Transcentive cont.

Integration will be carefully managed and synergies between our two companies are expected to be extracted from: Administration Merging of outsourcing with CPU Plan Managers Integration of Sales and Marketing functions Technology expense (for both parties). Creates immediate global opportunities Hong Kong India Europe South Africa.

CEO’s Report

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Acquisitions - India

Places Computershare in strategically important, future growth area in Asia. Mutual Funds back office market (30% market share) – opportunities to expand overseas. Market leader in share registry with 40% market share – 16 million shareholders. Potential to leverage CPU’s value-added services, to grow market share. Ability to partner with Indian companies as they move into international markets (ADR’s, overseas companies with employees in India). Appointed our own Chief Financial Officer.

CEO’s Report

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Acquisitions – Deutsche Borse Computershare GMBH (JV)

Have purchased remaining 51% and now trading as Computershare – Germany. Dramatically reduced cost base. Moved operations to Pepper in Munich. New registry system live in May 2004 removing €1 million in costs.

CEO’s Report

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Acquisitions – Pepper Technologies

Purchased remaining 63%. Stakeholder Relationship Management systems that will bring added value to Computershare’s global client base: Shareholders – SRM Employees – CRM Clients – CRM. Innovative technology and unique approach to electronic stakeholder communications has already increased take-up rate for e-communications tenfold. Data mining and other technology tools helping companies to see their stakeholders as an asset rather than a cost. Taking Pepper to the World with over 7000 existing CPU clients – great cross-sell

• pportunities.

CEO’s Report

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Priorities For The Next 6 Months

Manage the integration of new acquisitions to capitalise on synergies and deliver full value. Clearly define our product offerings. Consolidate sales/marketing and business development teams in all regions. Focus effort in each region to achieve maximum cross-sell opportunities. To bring Europe’s contribution in line with other regions.

CEO’s Report

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Outlook

Assumptions

Current levels of M&A, IPO and other Corporate Action activities are sustained. No change in interest rates. Fluctuations in currency are within +/- 10%. Revised EBITDA guidance for full year estimated to be in a range of

$170m - $190m

CEO’s Report

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Appendix A

Revenue Breakdown by Country

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Competitive Environment

CIBC Mellon 2,189 Canada BoNY, DST, (Equiserve), Mellon 1,246 USA 748 South Africa 181 Ireland Lloyds, Capita 685 UK 433 Hong Kong 263 New Zealand APRL 1,173 Australia Competitors Clients

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Australia Half Year Comparison

Revenue Breakdown

18.3 2.5 5.6 0.8 15.6 1.3 38.9 13.0 1.4 20.7 28.3 1.5 35.2 4.5 0.5 25.8 36.5 26.8

Register Main Corp Actions Margin Income Recoveries Non Registry Other

$AUDm 1H'03 2H'03 1H'04

Total Revenue

103.9 98.3 97.3 86.6 86.8

1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm *Excludes revenues from Georgesons.

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New Zealand Half Year Comparison

Revenue Breakdown

2.4 4.1 0.4 0.1 1.6 0.1 4.2 0.7 0.2 2.2 0.1 0.9 4.2

Register Main Corp Actions Margin Income Recoveries Other

$AUDm 1H'03 2H'03 1H'04 Total Revenue

7.3 7.1 7.2 6.3 7.6

1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm

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Hong Kong Half Year Comparison

Total Revenue

11.8 15.9 11.3 13.3 13.0

1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm

Revenue Breakdown

9.7 1.5 0.1 9.0 2.8 3.6 12.3

Register Main Corp Actions Other

$AUDm

1H'03 2H'03 1H'04

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United Kingdom Half Year Comparison

Revenue Breakdown

13.3 17.9 1.6 34.2 4.6 37.8 4.9 12.0 11.4 17.0 1.4 16.2 6.0 40.6 5.7 18.3 13.3 15.1

Register Main Corp Actions Margin Income Recoveries Non Registry Other $AUDm

1H'03 2H'03 1H'04

Total Revenue

84.5 104.0 97.6 91.2 95.6 1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm

*Excludes revenues from Georgeson.

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Ireland Half Year Comparison

Revenue Breakdown

1.1 3.8 0.5 0.3 1.6 0.5

2.9 0.7 0.3 1.0 1.2

3.2 0.2 0.4

Register Main Corp Actions Margin Income Recoveries Non Registry

$AUDm

1H'03 2H'03 1H'04

Total Revenue

6.1 8.2 6.1 6.7 4.9

1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm

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South Africa Half Year Comparison

Revenue Breakdown

0.9 16.1 0.2 0.8 0.9 16.7 0.7 0.6 0.8 0.7 0.6 13.3

Register Main Corp Actions Margin Income Recoveries

$AUDm

1H'03 2H'03 1H'04

Total Revenue

18.7 9.9 11.5 18.0 15.5

1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm

*Excludes revenues from Georgesons.

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United States Half Year Comparison

Revenue Breakdown

7.0 0.1 2.8 11.7 0.1

18.6 3.8 2.1 7.9 25.6 0.1

20.4 2.0 3.2 22.8 2.6 23.6 19.5

Register Main Corp Actions Margin Income Recoveries Non Registry Other

A$m

1H'03 2H'03 1H'04

Total Revenue

58.0 74.7 72.4 60.3 55.5

1H'02 2H'02 1H'03 2H'03 1H'04

A$m *Excludes revenues from Georgesons.

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Canada Half Year Comparison

Revenue Breakdown

6.2 4.9 0.2 5.2 12.1 13.7 5.1

37.6 7.7 10.0 6.0 6.1 0.9

39.0 4.1 10.8 41.7

Register Main Corp Actions Margin Income Recoveries Non Registry Other

$AUDm

1H'03 2H'03 1H'04

Total Revenue

68.4 79.0 78.3 77.8 65.2

1H'02 2H'02 1H'03 2H'03 1H'04

$AUDm *Excludes revenues from Georgesons.