The share price fell over 13%, inclusive of a 5% bounce yesterday, after the release of an update by the company on the impact of the proposed legislative changes in superannuation.
Link's preliminary assessment includes:
- In progress is an industry consultation regarding the proposed changes.
- 1 July 2019 is when members accounts will be affected, with transfers of impacted member accounts from 31 October 2019.
- Link's accounts will not feel the impact until at least FY2020.
Link's analysis reveals that the estimated total full year revenue impact would be approximately $55 million. Link believes that the number of accounts transferred may be reduced by the opt-in process for life insurance and active member engagement by the fund. If the decrease in member numbers is material then "volume protections are expected to be triggered in the majority of Fund Administration contracts".
UBS has lowered its earnings per share forecast for FY20 to -12% and has retained its neutral view due to near-term uncertainties.
