Publicly-listed superannuation fund administration and custody business, Mainstream has responded to declining superannuation services revenue by closing its Melbourne superannuation operations, relocating to Sydney.
The company announced the move to the Australian Securities Exchange today at the same time as announcing a 21 per cent increase in revenue on the back of a 24 per cent increase in funds under administration (FUA) but a net loss after tax of $1.1 million.
The company said it had undertaken a strategic review of its three core service offerings in fund administration, custody and superannuation administration with the result that it determined that Mainstream Fund Services, which includes fund administration and custody, contributed 92 per cent of the group’s financial year revenue.
“Mainstream Superannuation Services contributed the balance (eight per cent) of Mainstream’s FY19 revenue,” it said. “It underperformed during the period due to client losses through fund mergers and regulatory changes. It is expected to contribute less than two per cent of revenue in FY20.”
“Given ongoing consolidation and disruption in the superannuation industry, the board has conducted a strategic review of Superannuation Services and has elected to integrate its operations into fund services and changes its strategy from focusing on industry fund member administration to growing Mainstream’s public offer superannuation fund as a complementary service to Mainstream’s SMA [separately managed account] fund,” the announcement said.
“As a result, Mainstream’s Melbourne office is closing and its superannuation operations are in the process of being relocated to Sydney with $0.3 million of associated restructure costs in FY19.”