Link Administration share price slides 6% on "challenging" FY20

The Link Administration share price has fallen by more then 6% this morning, after the company reported challenging trading conditions in FY20.

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Link Administration Holdings Ltd (ASX: LNK) share price is currently trading more than 6% lower after the release of the company's financial results for the period ended 30 June 2020 (FY20). 

FY20 results

Link Group had a challenging FY20 and delivered a statutory net loss after tax of $114 million, driven by a $108 million impairment of its corporate markets business in Europe. 

Revenue of $1.23 billion was down 3% on the prior corresponding period (pcp). Recurring revenue of $1.02 billion represents 83% of total revenue.

Operating earnings before interest, taxation, depreciation and amortisation (EBITDA) was down 26% to $294 million. 

The board has declared a 50% franked final dividend of 3.5 cents per share.

Link's Property Exchange Australia (PEXA) is a national property settlement platform. It delivered 264 enhancements over the course of FY20 from member feedback. Additionally, 75% of all property transactions nationally are processed through the PEXA platform. As a result, revenue in this business increased 43% on the pcp and operating net profit after tax adjusted (NPATA) was $53 million, up from $5 million in the pcp.

Management comments

Link Managing director John McMurtrie said:

Against the backdrop of this challenging year, we have successfully delivered continuity of service for our clients, while also keeping our people safe during COVID-19. We continued our growth agenda and executed on a number of efficiencies and opportunities across the group.

He added:

Our transformation strategy of realigning into five global business units is now complete. Whilst the COVID-19 pandemic has delayed the benefit realisation expected, Link Group delivered $14.7 million of savings this year and plans to deliver $50 million of annualised savings by the end of FY2022.

Outlook

The group has decided because of the uncertain economic environment, financial guidance is not appropriate at this time, but is confident that it's well placed to take advantage of new opportunities as they arise.

Link Administration has advanced on a number of initiatives that will deliver benefits in the near term, including its global transformation program and recapitalisation of PEXA. Its global transformation program is on track to deliver $50 million in annualised savings by the end of FY2022.

At time of writing, the Link Administration share price is trading at $4.10, a 6.82% drop on Wednesday's close. 

Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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