C'share Sinks After Warning Of 25pc Plunge In First Half
Sydney Morning Herald
Friday November 8, 2002
Computershare scrip toppled 16per cent yesterday after the global share registry company said first-half earnings would be down on the previous year by about 25 per cent.
After the news was unveiled at the annual general meeting the stock finished 36c weaker at $1.94, on turnover of almost five million shares.
Managing director Chris Morris and chief financial officer Tom Honan said after the meeting that cost-cutting and an expected pick-up in market activity would produce a better second half.
They predicted that full-year earnings would come in at roughly the same level as last year.
``The important thing to recognise is we expect to deliver the same [earnings before interest, tax, depreciation and amortisation] number in fiscal 2003 as we did in fiscal 2002 so we see a significant recovery in the second half," Mr Honan said.
In the year to June 30, 2002, Computershare's EBITDA was $147.56 million while net profit climbed 84 per cent to $71.29 million.
Mr Morris said he did not consider the news to be a profit warning because it was the first time the company had given any indication of the strength of full-year earnings.
He blamed flat market conditions, low interest rates and a decline in corporate activity for the expected slug to earnings, but said the results for October had been encouraging.
``The Dow [Jones Industrial Average] had a good month, they've cut [US] interest rates again ... if the market's strong, then we get more dealing income out of employee share plans," Mr Morris said.
Shareholders raised few concerns at what some expected to be a hostile AGM, and all directors up for election or re-election were voted in.
The Australian Shareholders' Association opposed Sandy Murdoch's re-election as chairman due to his ``large workload" as chairman of four other companies.
However, a majority voted that he retain the position.
The board said that as of the end of October, 8.7 million shares, or 1.58 per cent of the company's capital, had been acquired for $19.5 million in a continuing share buyback.
Mr Morris said the board remained committed to the buyback.
The company also said it would deliver share registry services to Foster's Group, amid speculation that it had undercut its main domestic rival, ASX Perpetual Registrars, by up to 50 per cent to win the deal.
``I've seen the speculation but I can assure you we don't take on business at a loss," Mr Morris said.
``Obviously we feel that we probably have a lower operating cost than our competitors in every market because we have a much bigger base to build over."
Computershare also announced it had acquired the US employee stock purchase plan operations of Charles Schwab Corporate Services.
© 2002 Sydney Morning Herald