2020 RESULTS FOR THE FULL YEAR ENDED 30 JUNE 2020 MAINSTREAM GROUP HOLDINGS LIMITED (ASX: MAI) RELEASED 17 AUGUST 2020
Foundations of our success About › ASX: MAI, founded 2006, IPO 2015 Local presence, › Global fund services for 350 clients and 1,078 funds with $196 billion in funds under administration global reach › 272 employees in eight countries › Product, client and geographic diversity relative to peers Services › Long term contracts to deliver fund services, custody, middle office and corporate services FY20 revenue by region › 64% of clients use 2+ services › Focus on fund managers with listed, unlisted and alternative funds 19% Strategy 72% 9% › Specialise in fund services › Organic growth in core markets › Asia-Pacific Americas Europe Deliver back and middle office solutions to clients › Serve clients across multiple jurisdictions › Build partnerships and alliances with providers across the value chain 3
FY20 highlights › Resilient revenue and funds under Revenue EBITDA* administration continued to grow $9.2m $55.4m in challenging conditions 24% on FY19 11% on FY19 › Signing of Pendal secures 3rd ‘crown jewel’ client, backed by significant new client wins in US Funds under Funds administered and Hong Kong administration 1,078 › Continued new business $196.6bn opportunities created by structural 7% on FY19 14% on FY19 shifts, industry consolidation and regulatory changes › Good progress in building our higher margin businesses (custody, private equity) US business now profitable › *See Defined Terms in the Appendix for definitions of non- IFRS measures and information on the impact of Mainstream’s adoption of AASB 16 Leases on the Group’s financial information. Prior periods have not been restated for comparative purposes. 4
Transformational growth over five years @ IPO @ FY18 @ FY20 Key Points › Mainstream has delivered $14.7m $41.8m $55.4m Revenue on its strategy › Global platform built in first Countries 4 8 8 3 years post IPO › Employees 100 245 272 100% organic growth in last two years › Funds under Administration $52bn $138bn $196bn $10m capital raise in early FY19 seeded growth in custody, private equity and Funds administered 265 815 1,078 digital services › Growth from these Clients 76 343 350 investments expected to deliver improved margins 3 9 9 Acquisitions Initial Public Offering: 1 October 2015. Revenue @IPO refers to year ended 30 June 2015. 5
Supported by a strong financial track record EBITDA 1 ($m) Revenue ($m) 30% CAGR 2 59% CAGR 2 10 60 9 50 8 7 28.7 40 2H 1H 25.1 6.0 6 2H 1H 3.8 26.7 22.3 5 30 3.4 IPO 4 16.2 20 IPO 3 2.5 10.0 26.7 24.9 2 7.6 3.6 1.2 10 19.0 3.2 3.0 13.1 1 1.8 8.8 7.1 1.1 0.6 0.3 0 0 FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 1 See Defined Terms in the Appendix for definitions of non- IFRS measures and information on the impact of Mainstream’s adoption of AASB 16 Leases on the Group’s financial information. 2 Compound annual growth rate (CAGR): FY15 v FY20 8 8
Financial highlights Change YEAR ENDED 30 JUNE 2020 2019 (%) Strong organic growth profile › $5.4m revenue increase driven by Revenue $55.4m $50.0m 11% organic growth from both existing clients and new client wins Operating EBITDA* $16.1m $11.7m 38% › Contracted revenue at 1 July 2019 Operating EBITDA margin (%) 29.0% 23.0% was $47m › Higher cash balances and increased EBITDA* $9.2m $7.4m 24% transaction fees largely offset lower basis point fees (linked to FuA) and EBITDA margin (%) 16.6% 14.9% custody income (linked to official cash rates) NPAT $0.5m ($1.1m) nm › Investment in a number of initiatives 1.00cps 1.25cps 20% increased our operating costs, including: Dividend per share (DPS) › $0.8m building out US operations to support private equity offering › $0.5m investment in succession planning and client relationship development in Asia-Pacific › Year of consolidation and driving organic *See Defined Terms in the Appendix for definitions of non- IFRS measures and information on the impact of Mainstream’s adoption of AASB 16 Leases on the Group’s financial information. Prior periods have not been restated for comparative purposes. growth pipeline 9
Dividend Dividend payment history Organic growth company that aims to pay dividends to shareholders › Strong cash generation in 2H FY20 will be used to reduce debt by $1 million $0.0050 plus pay a dividend to shareholders $0.0100 50% $0.0075 › FY20 total dividend of $0.01 per share franked 100% 100% › Final dividend: $0.01 per share, franked franked $0.0100 $0.0100 50% franked at corporate tax rate of $0.0075 30% for imputation purposes, $0.005 $0.005 payable 14 October 2020 100% 100% 100% 50% 100% franked franked franked franked franked › No interim dividend due to focus on FY16 FY17 FY18 FY19 FY20 growth investments in 1H FY20 › Move to partial franking reflects growing contribution from international operations › FY20: 47% of revenue and 40% of EBITDA sourced internationally ^ Net inflows refers to applications and new clients less redemptions, cash distributions and lost clients. 12
Organic growth FuA quarterly net change Funds under Administration (FuA) Financial results backed by strong Net inflows 20 200 organic growth Market movements 180 As at 30 June 2020: 15 160 › FuA grew to $196.6 billion (+14% YoY) 140 10.6 10 in volatile market conditions from 120 6.0 4.4 6.1 COVID-19 4.2 ($bn) $bn 5 100 7.9 5.1 5.0 4.9 4.2 4.3 3.9 3.9 › $23.8 billion FuA growth included net 80 0 inflows^ of $16.8 billion 60 -4.0 -0.6 -8.3 40 -5 › 1,078 funds administered (+7% YoY), driven by private equity and custody 20 -10 fund wins 0 Sep Dec Mar Jun Sep Dec Mar Jun 2013 2014 2015 2016 2017 2018 2019 2020 18 18 19 19 19 19 20 20 › 350 clients (-2% YoY), with small fund closures offset by new clients › Servicing diverse geographies and asset classes provides resilience through market cycles ^ Net inflows refers to applications and new clients less redemptions, cash distributions and lost clients. 14
Diversified and high quality client base Key Points Clients by funds under administration 1 Clients by type 1 › Mainstream has outsourcing $0.6bn arrangements with leading global 8 fund managers 94 $30bn $147bn › Clients are diversified across $18bn 188 traditional and alternative asset 60 classes › Alternative fund managers Private equity fund managers Traditional fund managers Superannuation funds Majority of revenue is sourced from long term contracts for essential services Top 20 clients by relationship length 1 Selection of our high quality clients 2 › 13 of top 20 clients have > 10 years 2 contracted Mainstream as their administrator for 5+ years 5-10 years 11 › Notable new clients in FY21: 2-4 years 4 Pendal and Redpoint <2 years 3 › We grow as our clients grow 1. As at 30 June 2020. 15 2. Pendal is currently in the process of transitioning unit registry services to Mainstream.
Business outlook Favourable industry trends despite uncertain market conditions: Key messages 1. Solid growth track record Convergence of Investor demand Need for efficient 2. Securing strategic client listed and unlisted for digital services and secure data funds exchange and contracts processing 3. High recurring revenue 4. Margin improvement Increasingly Continued trend Market complex operating towards consolidation and regulatory outsourcing 5. Pay dividends / reduce debt environment 18
Financial outlook Capital Group earnings Dividend outlook Balance sheet expenditure › Full year guidance › Client projects to be › Continue to reward › Ongoing strong of approximately self funded shareholders with cash generation $65m revenue and dividends in periods › Workflow integration › Debt level reduced $11.5m EBITDA^ of strong financial (AWD to HiTrust) from $11m (FY18) results › Outlook sensitive to to $6m (FY20), with › Permanent remote client closures, › Anticipate partial additional early $1m market movements, work infrastructure franking as repayment in 1H exchange rates, › Renewal of IT international profit FY21 interest rates and duration/severity of continues to grow hardware COVID-19 › Increased › Approx 50% of investment in fraud EBITDA earned in USD and cyber controls ^ After application of AASB 16 Leases. Assumes AUD/USD 0.72. See Defined Terms in the Appendix for definitions of non-IFRS measures. 19 19
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