The Link Administration Holdings Ltd (ASX: LNK) share price was trading higher today as the broader market or S&P/ASX 200 (INDEXASX: XJO) could only tread water. Link reported its 2019 full-year financial report to the ASX this morning.
Link Group is a technology-enabled provider of outsourced administration services for superannuation fund administration, corporate markets and related value-added services including data management analytics, digital communication, and stakeholder education and advice.
Link’s business has three key divisions:
- Fund Administration
- Corporate Markets, and
- Link Asset Services (“LAS”)
Link is the largest provider of services in Australia’s superannuation fund administration industry, which services the fourth largest pension pool in the world based on funds under management. Originally a share registry business within an accounting firm, Link Group listed on the ASX in October 2015 and over the past 10 years has grown its domestic and global operations.
What You Need To Know
Here are the key results from Link’s 2019 financials:
- Revenue rose 17% to $1.4 billion
- Profit jumped 123% to $320 million
- A dividend of 12.5 cents per share, fully franked, was declared
- Cash flow rose 6% to $339 million
“FY 2019 was a challenging year for Link Group, but the company’s operations have demonstrated resilience in the face of significant regulatory and market uncertainty,” Link Chairman Michael Carapiet said.
Link’s Managing Director, John McMurtrie, said the company delivered on its strategic objectives, two of which were the renewed customer contracts of two of Australia’s largest superannuation funds in AustralianSuper and Rest.
“Across the group we are focused on driving improved performance and unlocking future opportunities across five key areas; growing our client and member base, technological innovation, driving integration and efficiency, market and geographic expansion and identifying strategic adjacencies, such as PEXA.”
Looking ahead, Mr McMurtrie said the company will continue to invest in its technology and people to maintain its leadership position. Pleasingly, he added that Link hopes its recent strong operating performance carries into the next financial year:
“2H 2019 has seen operating cash flow improve, as well as some significant client renewals in the Retirement & Superannuation Solutions business and we are looking forward to carrying that momentum into the medium term.”
Link Group appears to be a very reliable business, given its incumbency and technology leadership, and it combines that with the long-term growth tailwinds of more retirees and a larger Superannuation pool here in Australia.
While I’m not a buyer of Link Group shares today due to its large debt pile I’d consider its shares before buying shares of retiree favourite Challenger Ltd (ASX: CGF).
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: At the time of writing, Owen does not have a financial interest in any of the companies mentioned.