Link Group has given a bullish growth outlook and flagged plans to launch new digital products and make more acquisitions. The group’s share registry business Link Market Services is courting regulatory approvals that would allow it to sell a new virtual annual general meeting service to its ASX top 200 company clients, Link Group chief executive John McMurtrie said.
A recent trial of the service at the AGM of dual NZX-listed software company Xero was successful and Link Group is liaising with the Australian Securities and Investments Commission about compliance, he said.
“Booming demand from super fund members for mobile and tablet apps is also a big opportunity the administration business,” he said.
Mr McMurtrie made the comments on Wednesday as Link Group’s parent company Link Administration Holdings unveiled its first full-year results as an ASX-listed company, prior to listing on the bourse in October. The result comfortably beat prospectus profit forecasts and the company declared a higher than promised a maiden dividend while providing an upbeat outlook for the year ahead.
The share registry and superannuation administration services company reported a statutory net profit after tax of $42.5 million, beating the guidance given in its listing prospectus for $27.5 million by 54.5 per cent.
However, the much stronger than forecast statutory profit was mostly a reflection of an accounting adjustment as the company was forced to revalue its 11.4 per cent stake in property transaction platform PEXA.
Pro-forma profit, which the company told investors was a more accurate reflection of its true performance, beat prospectus forecasts by 8 per cent.
Alphinity Investment Management portfolio manager Andrew Martin said shareholders had been primed for a beat on prospectus forecasts by a strong half-year result, but that the full-year result still came in comfortably ahead of market expectations.
The underlying net profit result of $102.7 million was 8 per cent ahead of prospectus guidance and beat UBS forecasts for $98.1 million.
UBS analyst Adam Lee said it was a “solid” result with standout features being “good progress on headcount reduction” and expanded margins in the second half of the year across the key super fund administration business.
Mr Martin said the company had a clear plan to grow over the next three to four years through the integration of Superpartners and making more acquisitions.
Link paid $170 million to buy the troubled industry super fund owned administration platform in December 2014. Mr McMurtrie said plans to transfer the administration of the largest partner, AustralianSuper, is on schedule to be complete by December 31, 2016.
Investors Mutual portfolio manager Michael O’Neill said he held “very high hopes” for the Link’s future growth.
“Link’s super fund administration business currently mails out 22 tonnes of paper and more than 300,000 cheques a year so there is plenty of scope to make that more efficient as the company automates those processes,” Mr O’Neill said.
Digital offerings
He said Link Group’s growing scale would also increase its ability to invest in better digital services that would help it win market share.
“Many super funds are struggling with member retention so better digital offerings for account holders should help Link win more clients.”
Mr O’Neill tipped better technology would also help Link’s share registry business win more market share from rivals such as Computershare.
After gaining as much as 5 per cent in early trade, following the release of the results on Wednesday morning, Link closed the session 1¢ lower at $8.39. The stock has gained more than 30 per cent since listing in October, hitting a record high of $8.85 in July.
The company announced a maiden dividend of 8¢, partially franked at 18.7 per cent. The final dividend was 7 per cent stronger than promised in the prospectus.
Last week Link disclosed that it had asked the Australian Competition and Consumer Commission to review whether it would block any bid made by the company to purchase its smaller rival Pillar Administration, which is up for sale by the NSW government.
