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Link Group profit up 7pc but super concerns remain

Emma Rapaport  |  17 Aug 2018Text size  Decrease  Increase  |  
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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.

Italy flag

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.

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"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

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is the editorial manager for Morningstar Australia. Connect with Emma on Twitter @rap_reports. You can email Morningstar's editorial team editorialAU[at]morningstar[dot]com

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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