Financial report

FY2020 was an unprecedented year of rapid change for Link Group, during which we showed resilience in the face of the COVID-19 pandemic and moved to a global operating model with solid progress made on the Global Transformation program, culminating in the establishment of two strategic hubs in Leeds and Mumbai, augmenting existing hubs in Sydney, Melbourne, and Maynooth. In addition to the pandemic-related impact largely felt in the 4th quarter (Q4), lower financial measures compared to FY2019 also reflect the divestment of Corporate and Private Client Solutions (CPCS) in June 2019, the impact of regulatory change and client losses in Retirement and Superannuation Solutions and the effect of Brexit-related uncertainty on Non-Recurring Revenue activity in Corporate Markets.

The net loss of Link Group for FY2020 was $113.9 million, which was down 136% on FY2019’s net profit of $318.1 million. This reduction in net profit was largely the result of including an impairment charge of $107.8 million in relation to Corporate Markets EMEA and the impact of one-off gains in the prior year (related to the profit on sale of CPCS and the fair value revaluation gain on PEXA) not repeated in FY2020.

In addition, in Q4, lower equity markets had a direct impact on pre-tax earnings as a result of depressed asset values, adverse impact on capital markets related revenue and new business pipelines and delays in realising cost savings from the Global Transformation program.

Notwithstanding this statutory loss after tax, Link Group showed resilience in response to the challenges brought on by the COVID-19 pandemic across all global markets. During this period, we maintained a focus on safeguarding the well-being of employees, as well as ensuring continuity of service for clients. Link Group’s response was aided by the following.

• The majority of contracted revenue is with large financial institutions derived from non-discretionary services.
• A resilient earnings profile supporting operating cash flow, with approximately 80% of revenue recurring in nature, however, some business units saw market volatility impacting Non-Recurring Revenue.
• A liquidity position supported by cash reserves and committed, undrawn credit facilities.
• Debt serviceability and leverage remained comfortably within existing bank covenants.
• Additional initiatives were implemented to reduce costs and support operating cash flow recognising the increased activities in Retirement and Superannuation Solutions.