Financial services provider Link Group has reduced its expected profit for the full year, citing a competitive pricing environment, lower levels of capital market activity and the volatility of Brexit.
The provider is now expecting a net profit after tax and amortization of $195-205 million, slipping from its prior full-year result of $206.7 million.
Operating earnings before interest, tax and amortization (EBITDA) is forecast to be in the range of $350-360 million, up from its 2018 result of $335.3 million.
Link’s corporate markets business was reported to be working in a “competitive pricing environment across a number of jurisdictions”, also noting lower than expected levels of capital markets activity across both the ANZ and European regions in the second half.
Uncertainty around the Brexit outcome has also affected Link’s European operations. It said the lingering ambiguity of the divorce has contributed to lower levels of business-related activity, capital markets and share dealing revenues, conversion of new business wins and revenue growth.
The company’s Market Services business in the UK has won a number of IPO mandates that have since been postponed.
Link’s shares on the ASX dropped following the announcement, from $7.78 the day before to $6.18 on Friday morning.
The group expects regulatory change in the superannuation industry to affect its fund administration earnings, with the new Protecting Your Super Package to kick in from July.
The initial impact of the regulation is already being felt, with funds move to transfer identified inactive member accounts to an eligible rollover fund to facilitate early consolidation.
Link has increased levels of activity through member communication programs and adjustments to a range of fund product offerings. The company said that as a result it is investing in additional resources to meet the demand.
It also noted additional costs associated with the remediation of client migration in 2018 has also persisted longer than expected, now anticipating the costs will continue into the first half of FY2020.
Other segments, such as technology and innovation and property settlements exchange PEXA, were reported to be performing in line with expectations.
Link’s full-year results will be released on 29 August.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah spent her career working in business-to-business media, including print and online, as well as cutting her teeth on current affairs programs for community radio.
Sarah has a dual bachelor's degree in science and journalism from the University of Queensland.
You can contact her on [email protected].
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