Link Group profit up 7pc but super concerns remain
Shares in Link Administration Holdings rose more than 7 per cent by midday in response to its reported $143.2 million in profit for fiscal 2018, up 68 per cent on 2017.
Shares in Link Administration Holdings (ASX: LNK) rose more than 7 per cent by midday in response to its reported $143.2 million in profit for fiscal 2018, up 68 per cent on 2017.
Revenue was up 54 per cent at the fund administration and share registry company in the 12 months to 30 June, to just under $1.2 billion.
The board also declared a final, fully-franked dividend of 13.5 cents a share for the half, taking the full-year dividend to 20.5 cents.
Both the existing Link businesses and recently acquired asset services operation, Link Asset Services (LAS), which was previously Capita Asset Services, performed well, according to Morningstar equities analyst Gareth James.
LAS expanded its operations into Italy, Netherlands and Luxembourg in 2017.
The acquisition of LAS, completed in November 2017, saw Link expand its debt servicing business into the Netherlands and Italy, and its funds solution business into Luxembourg. Total revenues for LAS were $404.9 million for the eight-month period.
"We are carrying good earnings momentum into financial year 2019, and the strength of our balance sheet and cash flow places us in a strong position to explore further growth opportunities," according to Link Group managing director, John McMurtrie.
"We will continue to invest in our existing businesses to support and deepen our relationship with your clients," he says.
Morningstar cut Link's fair value estimate by 5 per cent in May 2018, to $8.10, in response to proposed government changes to the treatment of "lost" or "inactive" superannuation funds.
"If the proposals are enacted, Link would be impacted, because the company generates revenue based on the number of accounts it administers," James said at the time.
Following today's result, James says he remains concerned about the challenges the proposal may bring for Link in the short term.
Performance highlights
• Net profit up 68 per cent to $143.2 million
• Revenue up 54 per cent to $1,198.4 million
• Final dividend up to 13.5 cents a share, fully franked.
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Emma Rapaport is a reporter for Morningstar Australia
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