Morning, everyone. I'm Paul Reynolds, Chair of Computershare, and I welcome you to our 2023 Annual General Meeting. We are delighted to offer our shareholders and proxy holders the choice of participating in today's meeting in person, at our offices here in Yarra Falls, or via our Computershare-built meeting platform. The AGM is an important opportunity for shareholders to hear from us and put questions to the board and to the CEO and to the external auditor. I do encourage shareholders to use the various platforms available to participate. All attendees can watch a live webcast of the meeting, and shareholders and proxies also have the ability to ask questions and submit votes online. There is a quorum present, and I now open the meeting. Let me commence our business with some introductions.
Next to me is our CEO, Stuart Irving, and all of your non-executive directors are present today. Tiffany Fuller, Joseph Velli, Lisa Gay, Abi Cleland, and last but very much not least, John Nendick. Also, attending today's meeting is Group General Counsel and Company Secretary, Dominic Horsley, over here, and Marcus Laithwaite, up the front here from PricewaterhouseCoopers, our external auditor. Marcus is available to answer any questions you have about the conduct of the audit of Computershare's financial statements, the preparation and content of the auditor's report, the accounting policies adopted by Computershare in relation to the preparation of the financial statements, and the independence of the auditor in relation to the conduct of the audit.
Information on how to access the notice of meeting was distributed to all shareholders, and I will take the notice of meeting as read. For today's meeting, I will address questions together after all of the items of business and proxy positions have been presented. Online attendees can submit questions at any time prior to the end of the question and answer session. To ask a question, select the Q&A icon, type your question into the box, and once you've finished typing, hit the Send button, and it will come up here. Online participants also can ask a question via the audio questions line, and instructions on how to do so are set out on the platform. Voting today will be conducted by way of a poll on all items of business, and I will shortly open voting for all resolutions.
If you're eligible to vote, press the Vote icon once. Press the Vote icon once, voting opens, and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There's no need to hit the Submit or Enter button, as the vote is automatically recorded. You'll receive a vote confirmation notification on your screen, but you can change your vote up to and until the time I declare the voting closed. For those attending the meeting here in person who are eligible to vote, you can scan the QR code on your attendance card with your mobile device at any time after I open the voting, and this will take you to an online voting page. To cast your vote, simply select one of the options.
There is no need to hit a Submit or Enter button, as the vote is automatically recorded. You will receive a vote confirmation notification on your screen. If you do not have a mobile device, you may complete the voting items on the reverse side of the attendance card. I now declare the voting open on all items of business, and I also appoint Michael Hutchison of Computershare Investor Services as the Returning Officer. Now, let me now turn to our performance in financial year 2023. The slide highlights some of the key numbers. I'm delighted to report Computershare performed well, delivering record earnings in a volatile market. As you may remember, we report our results in U.S. dollars and in constant currency. And for financial year 2023, management earnings per share, EPS, was up 89%.
That includes an extra 4 months benefit from our corporate trust acquisition, which we call CCT. Management revenue increased by 27% to over $3.3 billion. With higher interest rate yields, we achieved a new all-time high level of margin income for the group at $792 million. However, we know that higher rates can also have an impact on other parts of our business. Our transaction and event-based revenues were impacted by lower volumes and activity levels. Encouragingly, we did see some recovery in those later in the year, which included also some benefits of seasonality. So with these earnings, our balance sheet continues to strengthen. Debt leverage now stands at less than 1x, and we have the financial firepower to pursue the right attractive acquisitions. We're also pleased to share, of course, these strong earnings with shareholders....
We declared a final dividend of AUD 0.40 per share, which is another new record for Computershare. As you may have seen, our AUD 750 million share buyback was announced along with results, and that is now underway. Stuart will talk more about our performance and strategies in a little while. While the results for the year are impressive, at Computershare, we are very much focused on the long run. Our goal is to build high-quality businesses that can perform right through the cycle, and this chart shows our long-term track record. Since financial year 2018, which takes us through spells of both falling and rising interest rates, not to mention a global pandemic, Computershare has delivered over 14% compound annual growth in management EPS.
Over the period, return on invested capital, ROIC, has averaged over 15%, and dividends per share have increased at an average annual compound rate of nearly 12%. This is top-quartile performance, and we're pleased to share these strong earnings with shareholders. Over the last six years, we have distributed over $1.6 billion in dividends. It's the disciplined execution of our long-term strategies for growth, profitability, and capital management that contribute to our earnings performance and enable us to deliver these consistent returns for shareholders. We've also made good progress in building a more balanced, stronger Computershare, with a focus on higher quality earnings from our core businesses of issuer services, employee share plans, and corporate trust, our three verticals.
We are simplifying the group along these lines to increase our focus on our core businesses, help investors understand our performance, and deliver higher returns for shareholders. Our environmental, social, and governance, ESG, measures are becoming more sophisticated, and we are making progress in having a greater positive impact on our staff, on the communities in which we operate, and on the environment. In October, we released our ESG report, which I encourage all shareholders to read. It's comprehensive. It outlines our journey and our goals, and how we align with the global disclosure standards and frameworks to which we are committed. We're committed to using less carbon, to having greater diversity across our organization, and contributing to our communities.
As you will have seen around the world, the risk of a cyberattack is real and growing, and while no company is immune, we at Computershare continue to invest to protect our clients and to protect their data. We will always work on this. We'll have more work to do in this ever-evolving space as new risks come to the fore, but I can assure you it's one of the board's very highest priorities. Now, before I hand over to Stuart, I would like to acknowledge the exceptional contributions across the group for this past year. Computershare really is a, it's a very special culture. It's a very special organization. And while, you know, I've spoken, as you do, a lot this morning about earnings, people do come first, and they always should.
It really is a great privilege to me to work with my fellow directors and all of the dedicated team at Computershare, and I would like to thank all of our customers and our shareholders for your support and for your investment in our success. With that, I'll hand over for a word from Stuart. Stuart?
Thank you, Paul. Congratulations on your first AGM as chair. Not bad for a Glaswegian, as I would say. Like, I'd like to say welcome, you know, our shareholders today. It's always a great pleasure for Computershare to address shareholders directly. I mean, as a business, you know, we've championed the rights of shareholders for many years, and, you know, AGM is still a very important day in our year. Now, I do have an apology from one of our shareholders, though, you know, a Mr. Chris Morris. He sends me a note, "Sorry I can't come. Opening a big hotel next to my casino in Townsville. First AGM in 30 years I have missed, but I know CPU is in good hands. PS, please come visit." So there you go.
That's Mr. Morris is missed, but you know, as he says, the company is in good hands. So anyway, let's get on to business and sort of break down... You know, as you heard from Paul, you know, Computershare had a really, really good FY 2023, and I think as shareholders... you know, you should be sort of really, really happy with the performance of the company. But you know, how did we really achieve these results? So let me try and break that down a little bit more for you. So at Computershare, we really have a unique and sort of integrated business model, where we have a sort of portfolio of recurring core fees.
We have cyclical and sort of transaction revenues, and then, of course, we have this thing called margin income, which is interest we receive on balances. And that really allows us to sort of deliver sort of robust earnings and also, you know, pretty decent returns through the cycle. And, you know, at Computershare, our financial strategy really starts with consistently growing the core fee revenues. You know, they're the ones that are recurring, they're the ones who are winning new clients around the world. Now, these revenues were up 14% in FY 2023, and as Paul mentioned earlier on, that did include a full year's contribution from the corporate trust business. Now, these are really the high-quality, recurring revenues, and they account for over half of the group's total.
And that's why we've been building our scale, and our exposure to what we call underlying growth trends, such as, you know, employee share plans, equity-based remuneration, rising governance requirements out there in the world for our customers, and really, the growth and demand for our corporate trust services. These are really long growth runways for Computershare, and I, I think that's the most important thing. Yeah. Now, in the middle here, you know, in the sort of the darker purple, that's really where we have the more cyclical, sort of, shall we say, trading and event-based revenues in the middle of, of this chart. Yeah. Now, what are they? Well, you know, they're corporate actions. They're, you know, employees, you know, employees of our customers, trading shares. There are proxy campaigns, for example.
So they're more market-facing, so they can be impacted by the sort of wider economic conditions, but they do enhance our margin at Computershare. And obviously, the world was, you know... The macro environment was a little uncertainty in FY 2023, and you can see that these types of market event transactions were down 13% in the year, you know. And that was really the impact of sort of rapidly rising rates, some weaker market conditions, primarily in the first half of FY 2023. You know, positively, a number of these transactions and events sort of recovered reasonably well in the second half of the year. And finally, at the bottom there, you know, is where we purposefully seek to collect and manage client cash balances.
Now, it's really important to remember that without any of the underlying businesses, we would have no what we call margin income. Now, cash balances are an embedded feature of our model, and it's actually quite an important part of our strategy. And obviously, we recorded record margin income in FY 2023 as global interest rates increased. So, you know, putting that all together, it's really the combination of these three income streams that sort of drive the strong earnings, high returns through the cycle, and it's really a unique integrated model here at Computershare. Now, another important part of our strategy has really been to continue to simplify the Computershare group. Now, this is an area where we've had to be patient to realize the best outcome for shareholders.
And over the past year, you know, we've executed well, and we've remade really, really good progress. In May, we sold the bankruptcy and class actions business. Now, as a reminder, that business was cyclical, and it was transaction-driven. It was sort of. You know, but it wasn't meeting our market, you know, our target returns, and it was a little bit lumpy. Really strong years, really poorly years. So, you know, that was one of the reasons we got rid of that. But last month, we also announced the sale of our U.S. mortgage services business for an estimated sort of sales proceeds of around $720 million. Now, our U.S. mortgage business, it's been tough.
You know, rates came all the way down, mortgage rates came all the way down, rates went all the way up. It's been a little bit choppy, but it's underperformed against, you know, group margin and also our return on invested capital targets. And it was a little bit more capital-intensive than some of our core businesses and, you know, it also operated in quite a sort of high, sort of, regulatory risk environment as well. Now closing that deal, we've announced that deal, but closing the deal is subject to regulatory approval, which is progressing well, I'm pleased to report. And we do expect that that transaction should complete in the fourth quarter of this financial year, so hopefully around about March or so. But what these transactions do highlight is really the earnings power of a simpler Computershare.
You know, on this page, you know, we show the results for the group, you know, including, and excluding these divestments, which is really this chart that you can see behind me here. So in simple terms, you know, what is the net effect of these divestments? Well, on a pro forma basis for FY 2023, group revenue would fall by around about $500 million, but Our EBIT is broadly similar, and our margin actually increases from around about 32% to over 37%.... and our EBITX margin income improves from just short of $260 million to close to $320 million. So, you know, that, that is going to improve the quality of the underlying group, and it's firmly in line with our strategy to, you know, improve the consistency of our earnings.
So, you know, the question is, so what are you gonna do with the money? Right. So, you know, the proceeds from these sales, you know, will enhance our flexibility to pursue strategic investments, consider further capital management opportunities. But, you know, I would like to say, you know, a thank you to the management and employees of these businesses for their hard work and successes along the way. And, you know, I do wish them all the very best in their next chapters. But simplifying the group also allows us to intensify our focus on growing and strengthening our core business. You know, our goal is to grow our high quality, cash-generative, capital-like businesses that can then self-fund growth, and also balance this with consistent returns to you, our shareholders. Yeah?
So one of the things that we've been working on to improve the consistency of our earnings is another part of our strategy to build, you know, an evolving and stronger Computershare. You know, we are looking to protect our margin income against potential declines in future interest rates. You know, will interest rates stay where they are just now? I have no idea. I'm not an economist. You know, we'll take it while it is, but, you know, what we can do, is we can protect ourselves a little bit on the downside. So we have a disciplined treasury management policy, where we've already locked in a total of $1.4 billion of margin income for shareholders. And around about 80% of that $1.4 billion will be paid over the next five years. Yeah?
You know, so we aim to hedge around half of our balances, our exposed balances, you know, and that's gonna be around about $9 billion of these balances, you know, post the sale of U.S. mortgage services. And as old hedges mature, we will replace them with new hedges at current rates, et cetera. So we do expect to generate a yield of around about 3% on that hedge book. And that provides, or shall we say, locks in, approximately $270 million per annum, you know, essentially of profit for our shareholders, irrespective of what happens on interest rates over the next few years. Yeah? So we've added protection into shareholder, and you can sort of see some of that on some of these charts behind me. And it basically just reduces the volatility of margin income on earnings.
And as a result, fluctuations in interest rates will only, you know, have a, you know, have an immediate impact on our unhedged balances, and won't have an impact on these balances. So what does that mean? Future Computershare margin income earnings should be therefore more predictable, than perhaps been in the past as a result of that policy. So moving on, you know, now that we've sort of passed FY 2023, and you know, the year that we had, just an update on trading for the first few months of the new financial year. You know, overall, our results today are pretty consistent with what we expected when we gave our initial guidance back in August, and we're, you know, affirming that guidance today.
Now, as usual, at the AGM, we sort of produce a slide that goes through the sort of, you know, the unders and the overs so far. You know, that is which areas are performing slightly better than we initially expected back in August. What is pretty much in line with what we expected, and what is trading a little bit behind. Now this year, all these factors broadly net off. You know, that, that's what we're seeing at this early stage of FY 2024. You know, on, on the positive side of the ledger, you know, so what, what's better than we thought in August? You know, it's really the, the continued recovery of our employee share plans, trading activity. You know, and that's continued, and that's good to see.
And, you know, we talked about this latent earnings power in that business, and, you know, it's really good to see that coming through. You know, as companies around the world continue to try to attract, retain, and reward employees, and using equity as a result, and our business has benefited from that. Yeah. Corporate actions have also been slightly stronger than anticipated. You know, not a bumper year. We've seen a lot bigger years in corporate actions than we have in so far. But, you know, slightly better than we thought, especially on the client balances side. And, you know, we've also made a good start, you know, and winning a decent amount of share in the IPO markets. Well, certainly the IPOs that really matter, the slightly larger ones.
In our corporate trust business, you know, our market share is pretty solid, and issuance is sort of slowly picking up. And, you know, margin income overall is in line with our expectations. You know, rates have been positive, and we're achieving our sort of desired yield from our banking partners, 'cause they have strong demand for cash balances at the moment. And as I said, in the legacy businesses, you know, these, margin income, our balances have certainly slightly improved since, the start of the year. However, we have seen a little bit of a change in the mix of balances in CCT, our corporate trust business. Overall, in our corporate trust, balances are actually up around about $1 billion since the end of the year. Although we do expect-...
Our margin income, which we earn on these balances, to be lower than what we had anticipated back in August. Let me try and explain that one there. So, you know, overall, in CCT, you know, cash in the money market funds is up $2 billion, and cash in bank deposits, which generate slightly higher yields for Computershare, is down $1 billion. And that change is just simply a reflection of the type of new debt issuance we're seeing across the market. We've seen lower issuance in debt products that generate higher margin income for us, such as mortgage-backed securities, for example. Correspondingly, we have seen stronger volumes in other debt products, which cash is held in lower-yielding money market funds and non-exposed funds.
It's really that change in mix, you know, which is cyclical, it's not structural, and the overall yield that we receive should recover, as these sort of mortgage-backed security issuance levels improve. So overall, what does that mean? Group performance to date, as usual, has some ups and some downs, but so far, we are broadly in line with guidance. So moving on to that outlook. You know, in August, we said we expected management earnings per share for FY 2024 to be around about $1.16 per share, which is a growth of 7.5% year-on-year. So, you know, Computershare, you know, is still expected and continued to grow, and that's unchanged today. That's what we think.
For the avoidance of all doubt, you know, our management earnings per share does not account for any impact from the buyback, which, you know, Paul mentioned we announced, and also the disposal of our U.S. mortgage services business. You know, and on that similar basis, you know, we continue to expect margin income to be around $840 million just for the group. You know, that also accounts for the cyclical mix shift that I talked about earlier on. Now, I'd also like to close just by highlighting, you know, the balance sheet at Computershare, and also a little bit about the optionality that it provides us. With management EBITDA rising by almost 70% last year, our debt leverage ratio improved to 0.85x at June 30th, and is continuing to trend lower.
So, you know, it's an important one for shareholders. You know, our balance sheet is strengthening fundamentally. And based on achieving guidance in FY 2024, at the end of the financial year, you know, we'll continue to have, you know, over $2.5 billion of acquisition firepower, so to speak, if that's what we wanted to use the funds for. Now, that includes funding the completion of the share buyback and receiving the expected proceeds from the sale of U.S. mortgage services. So the big question is, so what will we do with the balance sheet capacity? You know, like, I think from a Computershare perspective, we will pursue acquisitions that really strengthen our core businesses, our issuer services businesses, our plans business, and our corporate trust business.
But we will be patient, and we're making sure we buy the right assets at the right prices. And, you know, if something doesn't come along, we're more than happy to maintain a very conservative and robust balance sheet as we wait for these opportunities to unfold. We won't be rushing in or seeking out new or unproven verticals or buying earnings to offset any future downturn in interest rates. But probably more importantly, for those in the room, we'll also continue to reward our shareholders for your support as well, and we will continue to invest in our businesses and continue to drive technology innovation. It's been a founding principle of ours, and it continues to serve Computershare well. So in closing, Computershare's future excites me as much today as it did when I joined as a wee whippersnapper in shorts some 26 years ago.
Sixty years feels like that, surely. But, you know, and why, why is that? Why am I still excited about this amazing organization? You know, it, it's really because we always strive for better. You know, we don't get everything right, but we never let rest on our laurels, yeah? And we've got lots and lots of great people here at this company, and it's just an absolute pleasure to come in every single day and partner with them all around the globe. So I'd also like to say my thanks to every one of my colleagues at Computershare, and also to our board, for all their efforts over the past year and for the continuing of support. Thank you very much.
Thank you, Stuart. And if I can return the compliment, not bad for a wee laddie from Edinburgh. I mean, you might have noticed Stuart's got a bit of an accent, unlike myself, you know? So if there's anything you didn't understand there, ask me later. I'll let you know what he said. All right. As I mentioned at the start of the meeting, we'll answer all questions at the same time, once all of the business and the proxy positions have been presented, and we'll start asking questions shortly. So we'll now run through the formal items of business. The first item of business relates to the tabling of the company's financial reports for the year ended 30th of June, 2023.
If you have any questions concerning the financial statements of the company or have a question for the company's auditor, we will address them during the Q&A session, which will commence shortly. I will now proceed with the resolutions to be considered. Any undirected proxy votes given to the chairman on resolutions four and five will be voted in favor of the relevant resolutions, and voting will remain open during those resolutions. I'll also provide you with notice that the polls are about to close, when they're about to close. We'll move now to consider the first resolution. And the first resolution relates to the re-election of our director, Joseph Velli. Joe is due to retire from office, and being eligible, presents himself for re-election. And the board, in the absence of Joe, unanimously supports his re-election.
Before we move to this resolution, I'll ask Joe to say a few words in support of his re-election. Joe?
Thank you, Paul. I don't know, can you hear me? Good. Well, first, let me start off by saying I am truly honored to be on the Computershare Board of Directors. It's a privilege, and I think over the last nine years that I've been on the board, I feel that we have accomplished a lot and clearly are moving in the right direction. As Irv says, we are constantly finding ways to stick to our core business, but at the same time, through innovation and technology, reinvent ourselves. So I'm also very excited about the future. Unlike most Americans, I don't like to talk about myself. So I'm gonna keep my comments very short. I believe-
That's why we like you, Joe.
I believe I am uniquely qualified to stand for re-election and to serve on Computershare's board for a couple of reasons. First, I have a thorough understanding of our core businesses. I grew up at the Bank of New York in New York. Computershare bought one of our businesses, our stock transfer business. We were the third largest transfer agent at the time in the United States. But more importantly, I was responsible for all of our security servicing businesses, which accounted for about 60% of the Bank of New York's earnings, and we were one of the largest banks in the country. I also had direct oversight for our corporate trust business and our plans business, the core elements of Computershare today.
So I have a very good, thorough understanding of the businesses that we're in, how to grow them, and also from a governance standpoint, what we should be looking out for and from a risk standpoint. Second, I have a vast experience from an M&A standpoint. I've been involved in well over 100 transactions in my career, including the biggest one the Bank of New York ever completed called Pershing, which is a corresponding clearing firm, which again, is somewhat related to Computershare's core businesses. My last point is that I have a pretty wide array of experience of public board service. I was on E*TRADE's board for several years.
E*TRADE, while it sounds like a brokerage firm, they were also one of the biggest plan providers in the United States and one of our key competitors now for Computershare, even though they've been acquired by Morgan Stanley. I'm also on Paychex's board, which is a record keeper for payroll. We are the largest payroll provider for medium and small-sized companies. And lastly, I'm on the board of Cognizant, which is a technology-based outsourcing company. And so I, I've had a lot of experience in governance issues, and I know the importance and the role of a director, and making sure that we adhere to our fiduciary responsibilities. And so I very much appreciate all of your support going forward. Thank you.
Thank you, Joe. So I now move the re-election of Joseph Velli as a director of the company. The resolution and a summary of the votes received before the meeting now appears on the screen. The second resolution relates to the re-election of Abi Cleland. Abi is due to retire from office, and being eligible, presents herself for re-election. And the board, in the absence of Abi, unanimously supports her re-election. So before we move this resolution, as before, I will ask Abi to say a few words in support of her re-election. Abi?
Thanks, Paul. I'll give you a different version to the, the U.S. director one. I'm delighted to have this opportunity to speak to you today as I'm up for re-election. I've spent much of my career working for and with Australian companies here and overseas. Computershare continues to be an Australian success story. Computershare has an unrivaled ability to build and/or buy and integrate technology, processes, and teams, something that many companies really, really struggle to do. So the opportunity to work with this passionate purple team is something I really appreciate. My personal global experience spans strategy, M&A, and in building and leading businesses, leveraging disruptive change. I'm also an experienced director on listed and unlisted boards. These skills are a good fit, given the landscape ahead for Computershare over the next few years.
I commit my personal passion and expertise to supporting, growing, and developing the company as it continues to progress. Thank you.
Thank you, Abi. I now move the re-election of Abigail Cleland as a director of the company. The resolution and a summary of the votes received before the meeting now appears on the screen. We will now move to consider the next resolution, which is the adoption of the company's remuneration report. The Corporations Act requires that a resolution in the remuneration report is put to the vote. The vote is advisory only and will not bind the company or the directors. The resolution and a summary of the votes received before the meeting now appears on the screen. The remuneration report sets out the policy for the remuneration of the directors, the CEO, and other designated senior executives, and details how their remuneration is structured.
It also contains remuneration details for the directors and senior executives for the period ended 30th of June, 2023. Noting that each director has a personal interest in their own remuneration, the directors do recommend that shareholders vote in favor of adopting the remuneration report. So I move the adoption of the remuneration report. Clearly, I have difficulty with the word remuneration, but the next resolution for consideration is to approve a grant of performance rights to the CEO, Stuart Irving, under the terms of the company's long-term incentive plan. Approval is requested from shareholders under the ASX listing rules to authorize the company to grant equity securities to the CEO under an employee incentive scheme. Full details of the terms of issue of the equity securities are set out in the notice of meeting.
The board, in the absence of Stuart Irving, unanimously supports the grant of performance rights to the CEO, and I move the grant of performance rights to the CEO. The resolution and a summary of the votes received before the meeting now appears on the screen. Now that we have tabled all the items of business to be considered at the meeting, I will open up the meeting to questions, and I know that we have received some questions from shareholders in advance of the meeting, which I will address first. So the questions will be read out by our company secretary, Dominic Horsley. Dom?
Thank you, Chair. The first question is from shareholder Natasha Lee, who says: "While you have a number of women as non-executive directors, which meets world's best practice, the board does not seem to be inclusive of other forms of diversity. Could you advise what efforts are being undertaken to have a board that better reflects the diversity of the community, apart from gender diversity?
Well, thanks, Natasha, if you're watching or listening. We take our diversity strategy extremely importantly, and indeed, you can read about it in the ESG report if you get the chance. We're delighted as a business with the gender diversity of the report, the gender diversity of the board. And we work earnestly across the company to improve gender diversity, and we know that this is something, gender and other diversity, and we know that this is something that is very appealing, if you like, to our employees. You know, we run an annual employee survey.
The employee engagement, including signals about how they feel about our inclusivity, improved very significantly over the last year, and during that year, we introduced a diversity inclusion three-year strategy, which has been very explicit about the measures we're taking to include all forms of diversity in our hiring. Now, that applies from the top of the company to the bottom. So we have some approaches that we take, and we think that our employees are responding very well to it. So quite a big part of what we do.
Thank you, Chair.
Thanks, Natasha.
We have another question from Natasha Lee. I note that finance costs have increased to $133.8 million from $60 million last year. During this time, current and non-current borrowings have decreased slightly. While interest rates have increased over the year, this does not account for such a large increase in costs. Could you explain the reason for this, and what are the company's plans to reduce this cost?
I guess a technical question about our financing, perhaps, Stuart, do you want to have a go at that?
I'll take that one. You know how much I love finance questions, Dom. Look, quite, quite simply, you know, a lot, a lot of that's round about timing. FY 2022, you know, we, we drew down a fair amount of debt to acquire the Wells Fargo business. You know, that debt was drawn down for sort of, you know, eight months in 2022. It was a full 12 months in 2023, so net-net is gonna be a bigger number. But, you know, probably the biggest impact to that particular number was really about interest rates. And, you know, as a company, we've really benefited from interest rates, but we also share the pain of many other companies where, you know, higher interest rates means our debt costs more. Now, the-...
You know, the interest rate, the average interest rate on our debt in FY 2022 was around about 1.98%. In FY 2023, it was 4.65%. And that really explains the larger increase. The question is also what's our plan to reduce? As you can see, Computershare's had really strong earnings, and it is the intent that, you know, over the course of FY 2024, we will continue to, you know, strengthen the balance sheet that I talked about. So, that's really the cost factor on the debt, which is really all about rates.
Yeah. So Natasha, it's been a very successful acquisition. That's been part of the growth. The interest rate's a big part of it, and we now have the strength of balance sheet to improve things. So it's all good, I think. Dominic?
Sorry, that is the end of questions that we received from before the meeting.
Okay, so-
Shareholders, that the business does not see better opportunities for the funds or that the board has run out of ideas. Can you please comment on why CPU instigated a share buyback rather than returning the funds to shareholders?
So sure. And many shareholders think it's an essential part of capital distribution as well. There are many views as you know, and I think Stuart did cover some of the balanced activities that were taken on capital distribution in his presentation. But perhaps to reiterate, Stuart, if you don't mind.
Yeah. It's all about balance. You know, and the question is, you know, capital allocation, what are you gonna do with capital? You know, what are we gonna do in terms of dividends back to shareholders? What we've got from an acquisition pipeline, and, you know, a buyback is also, you know, sort of a longer-term method to create value for existing shareholders as well. And, you know, I think, Computershare, with its strong earnings, is in quite a unique position to be able to provide a balance between all three. And, you know, you saw the increase in the dividend, you know, which was, you know, hopefully appreciated by retail shareholders.
You know, a buyback, which was $ 750 million buyback, I think we've done around about 50 million of that so far. It takes a long, long time to do that. Clearly, you can stop that at any time, you know, you know, Computershare's M&A team have a fair amount on their desk. But I think Computershare is in a very, very unique position with a strong amount of rates, et cetera, and, you know, the belief where we're going, that we can find a balance between dividends, modest buybacks, and acquisitions. So it's all about balance.
Do you have another question in the room?
Stuart Burns from the ASA again. I have another question. Can you advise why the LTI for the CEO was increased from 150% of base salary to 172% of base salary? And why was the STI target increased from 83%- 100%? These are significant increases in the remuneration, and from the ASA's viewpoint, they vastly exceed our benchmarking criteria.
Yeah, and good question, Stephen. You know, we're a very proud Australian company, but increasingly, our earnings, our business is overseas. It's overwhelmingly overseas and largely in the U.S. and Europe. And our senior executives, including Stuart, operate in the market where our competition pays to the standards of those markets. So as a board, we've sought to balance the issue of the expectations and norms of the Australian market with the norms of the markets in which we do business. We've conducted what we believe is a thorough and professional benchmarking exercise, which shows that although Stuart's pay levels are high by Australian standards, they're actually rather modest by comparison with his competitors and the people he competes with overseas.
Now, we haven't matched those overseas levels, but we've made increases to make his package competitive because we do believe, as a board, that Stuart and his team delivers the results for Australian and other shareholders that we've been talking about today. So we have to reward fairly for that. Any other questions in the room? No? In which case, I will ask for any audio questions received from online participants, Dom.
Anything from the-
There are no audio questions at this time.
Thank you. Okay, as there are no audio questions, I'll take written questions submitted via the online platform.
We have received a few of these during the meeting, Chair. The first one is from shareholder Mr Harry Dunstan, who has asked: When is Computershare going to do a four for one share split?
... Why does-
Clearly, perhaps our Mr. Dunstan was a shareholder back in the late 1990s when four for one share splits were... Well, yeah, you remember that, Dick? Yeah, there you go. Happy times. Look, it's a great question. I mean, quite simply, you know, you end up with 4x as many shares, and the share price goes, you know, gets divided by four, and then the theory being every $0.01 that it goes up, technically, is $0.04 , right? But look, we think that look, it's come up every now and then, once or twice over the years, whether or not we do a share split.
I think that, you know, at a mid-20 AUD share price, you know, you know, I have a view that we're still undervalued, but we don't have any current plans to do a share split. But nice to be reminded of it, and, you know, we'll lob it into the, you know, maybe the next board meeting for a little chat.
Thank you, Stuart.
We've then got a series of questions from Mr. Stephen Mayne. The first one is: When disclosing the outcome of voting on all resolutions today, including the re-election of Abi Cleland, could you please advise the ASX how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? In an environment of retail voting participation falling below 3%, this will provide a better gauge of retail shareholder sentiment on all resolutions, and was a voluntary, voluntary disclosure initiative adopted by the likes of Metcash, Altium, AUI, Dexus, Webjet, Tabcorp, and Myer over the past three years. The ASX itself and Qantas both did it for the first time this season. You've got the data, so why not let the sunshine in?
So is the issue simply why don't we release the proxy results before the meeting?
That's a later question.
Yeah.
This, this is, the number of shareholders who actually vote on each of the resolutions, not just by number, rather than the shares that they-
I think we intend to carry on as we do and issue the result, show the voting results as we can. Stuart, I don't know if you got anything to add.
Look, look, look, I know that Stephen champions retail shareholder rights, and, you know, he should be applauded for doing so. I mean, the interesting one here is, you know, it's very, very typical that post an AGM and the meetings, you then publish to the ASX what the results are. I think the ask is now publish where you're at pre-meeting, not only about what the percentage of the resolutions is, but try to break down the institutional and retail shareholders and the amount of them that have actually voted, which... Because that might help with, you know, sentiment in the room for people that might attend either, you know, in person or virtually. You know, it's, yeah, it's an interesting theory. It's more transparency.
You know, it's also more disclosures to the ASX, and then doing another one immediately after it.
Yeah.
Look, we'll consider it. I mean, at the moment, we didn't do it this year, but look, we understand the ask and we'll consider it.
Thank you, Stuart. And these are Stephen's words, by the way, rather than me wanting to ask for a pay raise in front of everyone. "But our excellent CEO, Stuart Irving, was appointed in 2014. Could the CEO summarize his past LTI grants as to whether they have vested or lapsed? Also, has he ever sold any ordinary shares in the company or bought any on market without relying on an incentive scheme to build his equity position in the company? Please don't say, 'Look it up in the annual report and through ASX announcements.' It's complicated, and the CEO could factually summarize the situation in 60 seconds.
Well, what we do know for sure is that the CEO's LTI grants do not all vest the way they have this excellent year. There's a lot of variability, as there should be, in normal performance. And perhaps, Stuart, give us some color.
All right.
60 seconds.
60 seconds, Stephen. Here we go. Okay. LTIs, first introduced 2017. They have a three-year period, and they're all tested. Could be EPS growth, you know, relative TSR, sometimes there's ROIC in there, et cetera, et cetera. So they're all at risk. Yeah, three-year period. 2017, vested at 0%. 2018, 45%. 2019, 87%. 2020, 0%, COVID. 2021, 0%, COVID. 2022, 50%, recovery. 2023, 100%. All up, all average over that period, 40% achievement of LTIs. To answer the question about whether you do sell shares, you know, unfortunately, I can't defer taxation like I used to be able to do when I lived in Australia.
As a result, as soon as, you know, any of this vests, I have an immediate 50% of that to pay to the tax authorities. So what often you will see is at vesting, technically a share sale that comes in, which is a sale to cover the taxes. At different times, I've funded that tax, you know, tax stuff myself, which technically is buying some shares, 'cause I, I do fund it. So, you know, I'm committed to Computershare. You know, I, I, you know, I run it like an owner. I, you know, I pretend I'm a founder, even though I'm not. Hopefully, 60 seconds, that answers all the questions.
I think that's a pretty good effort.
It was two minutes, actually.
Okay, next question: Automic is the newest well-capitalized entrant into the Australian share registry and investor relations business, backed by an Australian rich lister and private equity. How is our market-leading position holding up in terms of being the named share registry provider for ASX-listed companies, and are margins contracting due to the increased competition from Automic's arrival?
... Stuart?
Yeah, so it's, it's never great sort of, you know, talking, you know, I'd much rather talk about Computershare rather than, you know, competitors. You know, I think, you know, Automic are very good in terms of the, you know, providing services to, you know, sort of smaller shareholder bases. You know, I think from a Computershare perspective, our margins are holding up. We are, you know, competing, you know, in, in IPOs, and it's a similar story that I've seen in other countries around the world, where some of the smaller, cost-conscious customers really enjoy the services that Automic provide. And some of the deep knowledge of the Computershare team to help them through their corporate journey, whether it's acquisitions, et cetera.
So we're not seeing any particular margin erosion. In fact, you know, our margins right across our issuer services business continue to improve.
Thank you, Stuart. We've got a couple more to go. In April 2021, Computershare set a yet to be matched precedent in the Australian market when it included the following words in its announcement after the retail shortfall book build, following the completion of a capital raising. I will read out the wording: "The book build was covered 3.7x at the floor price of $ 13.55, with the company receiving 44 bids for a total demand of $ 549 million at that price. The clearing price of $ 14.55 was covered 1.2x , with the company receiving 15 bids at that price for a total demand of $ 189 million.
Of the successful bids, six of the 15 investors received their allocations in full, and the highest bid was $ 14.85, with 0.2% coverage." Stephen then goes on to say, "Congratulations for blazing the trail on transparency. Why don't you think any other listed company has ever provided such book build disclosure when raising equity from investors?
The answer, of course, is it's up to them, to a degree, but sure.
So this was all about the rights issue that Computershare undertook to acquire the Wells Fargo corporate trust business. As I said at the opening of our speech, Computershare is an organization that has championed the rights of shareholders, and particularly retail shareholders, all around the globe. And, you know, that is why we did the structure. Now, you know, I can see it. You know, you're a corporation, you want to raise capital. You have bankers in the room, and they say, "The easiest way to do it is for us just to, you know, work with... Yeah, and just do an allocation out and not ask your existing shareholders," right? You know, that's the simplest and quickest way, and the biggest guarantee in terms of being success.
But, you know, that doesn't, in my mind, cut it as far as the preemptive rights of shareholders in terms of being diluted. So Computershare was very, very keen to do the PAITREO structure and allow our retail shareholders to participate in what I thought was gonna be a very exciting part of, you know, for time for Computershare in terms of this acquisition. And the results have shown that, because CCT were a great part of that. So I actually worked with Stephen at the time. You know, we had a dialogue. He made a lot of suggestions. I listened to some and not others, and we tried to be as transparent as possible.
I also, you know, take calls and proactively put calls into other listed CEOs to encourage them to be as transparent as Computershare was. But that's their decision, not our decision. But I can assure you that we'll continue to champion the rights of the individual retail shareholder.
Thanks, Stuart. Thanks for the question, Stephen. Dom?
Two more, two more to go. And the next one is: Now that Computershare founder and former CEO and Chairman Chris Morris is off the board, how do we engage with our fourth biggest shareholder, who still owns 5.32% of the company, or 32.1 million shares worth almost $ 800 million? Does our CEO have regular catch-ups with Chris, and what about his sister, Penny, who was also a director and one of our biggest shareholders only a few years ago? Are any of the Morris family children involved in the Computershare business? And I should just say, Stuart, Chris has now joined the meeting.
Better be careful what I say about Mr. Morris.
Um-
Better warn you about that.
Yeah, thanks. Thanks, Dom. Oh, oh, jeez. Now, well, first of all, taking the question backwards, you know, the Morris children, the three lovely girls are not involved in Computershare on a day-to-day basis whatsoever, other than being, you know, a friend. You know, Penny was my boss. You know, when I joined Computershare, she was my boss. Boss for, you know, over 10 years. You know, she's not actively involved in the company. You know, I love Penny. You know, as someone that has always provided me with great counsel and support. You know, people forget that, you know, Penny and I sort of traveled in each other's pockets all over the world for years and years, growing the Computershare franchise.
You know, Penny and her husband, Kick, you know, are great friends, a great support. I actually had lunch with them on Saturday afternoon. It was very, very nice and catching up with them. So, you know, I do catch up, but much more on a friend term. Chris is a busy man, as I mentioned, not here in person. You know, opening up his expansion to his hotel empire. You know, he's not involved at all in the day-to-day running of Computershare. You know, but he's always at the end of the phone, perfectly willing to provide guidance and counsel. And, you know, I've always kept up with Chris. Now, some people have said that was because he owned a brewery, right? And a couple of nice hotels.
But, you know, he's a very inspirational individual. You know, and someone that, you know, really looked after me and taught me an awful lot in my career. And he's the founder of the culture of the company. And I really enjoy his company. And, you know, he spends a lot of times in up in Queensland with a number of his businesses there, with his, you know, his lovely wife, Sharon. And I do miss hanging out with him. But, you know, that's really the extent of the relationship between the two. But, you know, if either of them wanna chip in some of their stock, you know, towards the management or whatever, we're all ears. We're all ears.
Thanks, Stuart. Dom? Stephen, again, I think.
and apologies to Stephen, 'cause I've just noticed that he asked me to ask this question first. So apologies, Stephen. The likes of Dexus, Brambles, Carsales, NAB, JB Hi-Fi, Origin Energy, Viva Energy, and many other companies have all disclosed the proxy votes to the ASX before their latest AGM started, along with the formal addresses. Will the board agree to do this next year so that interested shareholders and other stakeholders, including institutional investors and proxy advisors, have an early insight into the proxy position before the AGM debate commences? Why withhold only the voting data slides from the presentations lodged with the ASX, when this can easily be disclosed at a time of the company's choosing during the meeting itself, without disrespecting those participating in the debate on the floor?
Also, did any of the proxy advisors recommend a vote against any of today's resolutions?
So, thanks, Stephen. I'll take... I mean, I kind of preemptively got there at the beginning. Yes, it's a thought. Should be disclosed beforehand, and we will, as a board, you know, take a view of that before the next meeting. It's, I can certainly see where you're coming from there. Did anyone vote against the recommendations? We received recommendations from actually from Ownership Matters, Glass Lewis, and ISS, for all resolutions. And the ASA, as you would have heard from questions from the floor, did not support the remuneration report resolution or the LTI grant to the CEO. So I think that kind of came out during the course of the meeting. But other than that, all for.
That concludes all online questions.
Thanks, Dom. Thanks, Stephen. It's good to have all those questions. It's nice to be interactive, makes these meetings more meaningful, I think. But as there are no further questions, that concludes the question section of the meeting, and I would like to advise you that voting and all resolutions will close shortly. So I'll provide you all with a few moments to allow you to finish your voting. So please complete your voting now. If you're in the room and you voted using the attendance card, these are now being collected by Computershare staff. Hold up your card or forever hold your peace. All done?
Yes.
All done? Okay, voting is now closed. The final results will be advised to the ASX and also made available on Computershare's website after the meeting. Thank you all for your attendance. As the business of the meeting is now completed, I declare the meeting closed. Thank you very Much for coming.