Mainstream Group Holdings is moving away from providing superannuation administration services to industry and corporate funds to focus instead on growing its public offer super fund.
The ASX-listed firm announced today the super admin business will be swallowed up into its fund administration division, and consequently close its Melbourne office and relocate superannuation operations to Sydney.
It recorded a $2.8 million loss in its FY19 results to reflect the loss in value of the super administration services arm. It incurred restructuring costs of about $300,000.
A spokesperson confirmed Mainstream will retain its super admin operations to continue to service existing clients.
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The focus however, is to attract funds into Mainstream's existing superannuation fund CUBS as a complementary service to its SMA offering, the spokesperson said.
Superannuation administration, which was one of Mainstream's three core offerings, next to fund administration and custody, contributed 8% to the group's $50 million revenue earned in FY19.
"It underperformed during the period due to client losses through fund mergers and regulatory changes. It is expected to contribute less than 2% of revenue in FY20," the firm said.
Mainstream flagged in May that pressure for super funds to consolidate stifled the superannuation services' growth opportunities.
This decline is a direct result of consolidation within the superannuation industry, with APRA regulation driving a wave of mergers within the traditional client base of smaller funds, as well as the ATO assuming responsibility for the administration of low balance accounts from July 2019, Mainstream said.
"As a consequence we lost a key superannuation client."
The group reported a net loss of $853,723 last financial year (FY18: $2.1m profit).