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Weakened super earnings drag Link result

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Link Group posted declines across its group revenue and profit, with its retirement and superannuation earnings slashed by almost half.

For the six months leading up to December, the group reported a revenue of $624 million, down 4 per cent on the year before.

Operating EBITDA of $163 million was down 11 per cent, while its statutory net profit after tax (NPAT) was $29 million, down 85 per cent (although the prior period had been subject to a different accounting standard). 

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The group’s operating net profit after tax and amortisation came to $81 million, down 11 per cent.

Link Group managing director John McMurtrie said the results reflected it had been a “transitional year”. 

The group has enacted its simplification and transformation strategy, realigning into five global business units. To date, it reported $11.5 million of in-year savings, anticipating $50 million of further savings over the next two and half years.

“We are making good progress on delivering on our strategic plan and our medium to long-term outlook remains strong,” Mr McMurtrie said. 

“This result demonstrates the benefits of geographic and business diversification, [helping offset] the current headwinds in our corporate markets business in the UK and RSS. 

“We have executed on a number of key strategic [initiatives] including the expansion of our BCM business through the acquisition of Pepper European Servicing and our entry into the US$2.9 trillion UK pension market via our investment in Smart Pension.

“In addition, the future potential of PEXA as a growth pillar for the Link Group is becoming evident, given its strong contribution to our first half results.”

The group has forecast its operating NPATA will be at least $160 million, while operating EBITDA is expected to be 10 per cent lower than the prior year. 

The board declared an interim dividend of 6.5 cents per share.

The retirement and superannuation solutions (RSS) business suffered considerable drawdowns across its revenue and earnings. 

Revenue for the first half of financial year 2020 of $259.6 million was $16.3 million down on the previous year. This had a flow-on impact to the operating EBITDA of $37.1 million and operating EBIT of $30.6 million, down 41.3 per cent and 45.9 per cent respectively.

However, it had underlying member growth of 5.2 per cent.

The fund solutions segment in contrast grew, with its revenue up by 8.1 per cent to $86.1 million. Operating EBITDA was $17.8 million and EBIT was $14.7 million, up 7.3 per cent and 5.0 per cent.

Meanwhile the technology and operations business produced a revenue of $188.7 million up 12.8 per cent. Operating EBITDA was $54.1 million and EBIT was $26.1 million, a 40.5 per cent increase and 55.4 per cent increase respectively on the pcp.

The corporate markets segment had a 4.6 decline in revenue to $183 million. Earnings were weakened by “subdued capital markets-related activity in the UK during the Brexit deadlock”.

The banking and credit management division saw its revenue fall by 5.4 per cent to $83.8 million. 

The property platform PEXA produced a revenue of $79 million during the half, up 54 per cent on the pcp. Operating NPATA was $26 million, also up strongly from a loss of $6 million the year before.

The recent acquisition of Pepper European Services is expected to be completed in FY2021.

 

Weakened super earnings drag Link result
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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