Mainstream Group Holdings continues to grow revenue, reaching $55.4 million for FY20

Mainstream Group Holdings Ltd (ASX:MAI) enjoyed an 11% increase in revenue for the 2020 financial year to $55.4 million along with a 24% increase in EBITDA to $9.2 million.

The fund administrator also declared a dividend of 1.0 cents per share, 50% franked at a corporate tax rate for imputation purposes of 30%, payable on October 14, 2020.

Mainstream chief executive officer Martin Smith told a Proactive webinar today: “We continue to see significant growth in our business. The strategy for the last two years has been to leverage our platform to organically grow in our core markets.

"The markets we operate in represent circa $40 trillion and we are only administrating today about $196 billion.”

The company administers around $196 billion for 178 funds, with around 72% of revenue earned in the Asia Pacific, 19% in the US and 9% in Europe.

Largest client, Magellan Financial Group Ltd (ASX:MFG), represents around 12% of the companys business.

FY21 guidance

In the March quarter, the company had inflows (new money coming into the business either through new funds or from new investors into the existing funds) that offset the significant market fall.

Martin said: “Considering global markets fell 21% during that quarter, for us to stand still was a great achievement and was testament to the profile of our clients and the growth initiatives that we have in the business.

“The second half of FY20 was significantly higher than the first half and we expect that trend to flow onto our FY21 numbers.

“Our contracted revenue for the beginning of the financial year was $47 million, so were really pleased that we were able to reach $55.4 million with a particularly difficult and tricky macro situation with COVID in the second half.”

FY21 guidance sits at around $65 million and EBITDA of 11.5%, increases of 18% and 25% respectively.

The company's FY20 revenue

Dividend payment

As a result of Mainstreams strong cash generation in the second half of the year, the board will pay down the companys debt by $1 million in September 2020 as well as paying a dividend to shareholders.

Martin said: “We have a debt balance at the moment of $6 million and we play to repay that to $5 million in the September quarter.

“That debt is at a very economical rate, and so very cheap costs for funds but were trying to balance our working capital requirements, our dividends and our debt repayment.”

The debt was extended during the period to mature in January 2022.

Private equity growth potential

Martin said: “The private equity space, the area weve been investing in over the last couple of years, is an emerging growth opportunity for us.

“To put that in context, in the US where we have established that business, there is $34 trillion in private equity funds.

“Last year there was morRead More – Source