Ma Financial Group Limited · ASX:MAF
Ma Financial — 1H23 Earnings Presentation
61 slides from Ma Financial's earnings presentation, Aug 24, 2023
Slide 1: 1H23 Results Presentation
1H23 Results Presentation August 2023 1
Slide 2: Acknowledgement of Traditional Owners
We respectfully acknowledge the Traditional Owners of lands across Australia and pay our respects to their Elders, past, present and emerging. Our head office is located on Gadigal land.
Slide 3: Contents
CONTENTS SECTION HEADING PAGE NO. 01 1H23 Results & Highlights 6 02 Post Balance Date Activity & FY23 Outlook 14 03 Asset Management 17 04 Lending & Technology 27 05 Corporate Advisory & Equities 34 06 1H23 Financials 37 07 Strategic Outlook 41 08 Appendices 43 3
Slide 4: Explanation of Underlying measures in this presentation
Explanation of Underlying measures in this presentation MA Financial Group Limited (MA Financial or the Company) (ACN 142 008 428) Differences in classification arise because the Company chooses to classify some and its subsidiaries (Group) utilise non-IFRS Underlying financial information in IFRS m
Slide 5: MA Financial Group – We invest. We lend. We advise.
MA Financial Group – We invest. We lend. We advise. Founded in 2009, we focus on consistently delivering results to our stakeholders alongside investing in long-term growth We are a global alternative asset manager specialising in private credit, hospitality, real estate 1 and unique real operating
Slide 6: 1H23 Results & Highlights
1H23 Results & @) 1 Highlights MA Financial Group
Slide 7: 1H23 Result – Key Themes
1H23 Result – Key Themes Strong underlying business momentum despite challenging economic conditions Record 1H inflows into Asset Management funds – gross inflows 66% higher on 1H22 1 $308 million of additional inflows post balance date takes year to date gross inflows to $1.26 billion (up 36% on pc
Slide 8: Focused on medium-term growth targets
Focused on medium-term growth targets Confidence in the medium-term derived from strategic investment in platform to build highly scalable businesses Management targets for growth in major business metrics consistent with historic track-record HISTORICAL CAGR / IMPLIED TARGET CAGR AVERAGE ASSET CLAS
Slide 9: 1H23 Result Highlights
1H23 Result Highlights Strong growth in recurring revenue and underlying business drivers 1H Underlying EPS Recurring revenue run rate1 Interim dividend 15.2cps $178m 6cps 13.6% on 1H22 ⬆ 22% on 1H22 Level with 1H22 Assets Under Mgt Gross fund inflows Loan book growth Finsure managed loans Corpora
Slide 10: 1H23 Results
1H23 Results UNDERLYING RESULTS1 1H23 1H22 1H23 v 1H22 STATUTORY RESULTS1 1H23 1H22 1H23 v 1H22 Revenue $128.3m $146.2m (12.2%) Revenue2 $172.9m $154.7m 11.8% Expenses $82.6m $96.6m (14.5%) Expenses3 $97.2m $106.2m (8.5%) EBITDA $45.7m $49.6m (7.9%) EBITDA4 $75.7m $48.5m 56.1% Net profit after tax $
Slide 11: Financial performance
Financial performance Earnings consolidation following 60% EPS growth over the last two years. Improved earnings composition, which positions well for future growth UNDER LYING R EVENUE ($ M ) UNDER L YING EBITDA ($ M ) 350 120 1H 2H 1H 2H 300 100 250 80 57 156 200 60 150 120 41 40 37 33 100 90 87 2
Slide 12: Business unit highlights
Business unit highlights Continued momentum across all business units ASSET MANAGEMENT EBITDA contribution1 79% EBITDA CONTR IBUTION BY BUS INES S DIVIS ION (EX. COR POR ATE) 1 • Gross inflows of $953m, driven by strong flows into Private Credit funds $m 70 • AUM up 20% on 1H22 to $8.6b (grown to $8
Slide 13: 1H23 strategic outcomes
1H23 strategic outcomes Delivering on key priorities despite changing operating conditions Asset Management recurring revenue run rate at end of 1H23 equivalent to $148m p.a., up from $126m at 1H22. Grow recurring revenue base Finsure generated $12m of recurring fee-based revenue at the end of 1H23
Slide 14: Post Balance Date Activity & FY23 Outlook
02 Post Balance Date Activity & FY23 Outlook
Slide 15: Key business activity since June 2023
Key business activity since 30 June 2023 A positive start to 2H23 ASSET MANAGEMENT • Positive momentum in AUM and client fund flows continues − $308 million of gross fund inflows (net inflows: $247 million) received in the first seven weeks of 2H23 taking YTD flows to $1.26 billion − Strong inflows
Slide 16: FY23 outlook commentary
FY23 outlook commentary Positive business momentum continuing with increasing contribution from recurring revenue lines ASSET MANAGEMENT • Strong embedded growth in recurring revenue arising from growth in AUM over the last 12 months (full year contribution) • Continued growth in net flows underpins
Slide 17: Asset Management
O 3 Asset Management MA Financial Group
Slide 18: Focus is to be an active manager of alternative asset classes
MA Financial's focus is to be an active manager of alternative asset classes The active management of longer duration alternative assets presents a strong economic proposition for our clients but involves more operational expertise and infrastructure than the financial management of tradeable securi
Slide 19: Asset Management Performance
Asset Management Performance UNDERLYING FINANCIALS ($M) 1H23 1H22 1H23 v 1H22 Base management fees 50.3 45.7 10% Growth in recurring income driven by strong Credit Funds Income 16.9 12.3 37% contribution from Private Credit funds Principal investments income 3.4 3.8 (11%) Total recurring revenue 70.
Slide 20: Continued growth in recurring revenue
Continued growth in recurring revenue 24% CAGR in recurring revenue since FY20 +24% 197.8 CAGR 162.2 72.1 14.2 132.2 39.7 101.5 23.7 148.0 125.7 92.5 77.8 FY20 FY21 FY22 FY23 1 Recurring Revenue Transaction Revenue & Realised Gains Notes: 1. FY23 Recurring Revenue is the annualised exit run rate for
Slide 21: Assets Under Management
Assets Under Management AUM at $8.6 billion with a focus on alternative assets and private capital markets $8.6b 0.3 $7.8b 0.6 0.3 $6.9b 0.7 3.3 $5.4b 2.5 $4.9b $3.7b 1.8 1.8 2.5 2.6 FY18 FY19 FY20 FY21 FY22 1H23 Real Estate Hospitality Credit Equities PE/VC Notes: Once acquisition of d’Albora marin
Slide 22: 1H23 Fund Flows
1H23 Fund Flows Strong growth in Domestic (up 77%) and International Non-Migration (up 62%) flows FLOWS BY ASSET CLASS1 ($M) 1H23 1H22 Gross Net Gross Net Private Credit 776 571 410 341 Strong flows into Private Credit products from Real Estate 138 98 46 (1) domestic, international and institutional
Slide 23: Investor Flows
Investor Flows Distribution channels continue to grow and diversify – only 4% of flows in 1H23 from Migration related sources INVES TOR CHANNEL GR OS S INFL OWS BY PR OPOR TION (% ) INVES TOR CHANNEL GR OS S INFL OWS ($ ) 1,532 5% FY23 to 9% 13% 141 15th Aug 1,306 4% 1,261 18% 43% 273 308 57% 33% 56
Slide 24: Asset Management client base
Asset Management client base Increasing diversification of distribution channels 1 H2 3 AUM BY INVES TOR CHANNEL 1 H2 2 AUM BY INVES TOR CHANNEL $1.4b $1.2b 16% 17% $3.0b $2.6b 35% 36% $8.6b $7.2b $2.7b 31% $2.6b 36% $1.5b $0.8b 18% 11% Domestic HNW & Retail International HNW (Non-Migration) Domesti
Slide 25: Highlights
Highlights Diversity of fund strategies delivers continued AUM growth Private Credit Hospitality AUM: A$3.3 billion AUM: A$1.8 billion • Increased participation in platforms and model portfolios continues to drive flows and • The Responsible Entity of Redcape Hotel Fund notified investors that the f
Slide 26: Strategic advantage in Private Credit
Strategic advantage in Private Credit Sourcing credit assets directly through our proprietary relationships and in-house platforms is a significant strategic advantage. Over 75% of our $3.3b in credit investment funds have been directly originated in our proprietary channels, including our lending p
Slide 27: Lending & Technology
O YAK Lending & Technology MA Financial Group
Slide 28: Building a tech-enabled highly scalable Lending ecosystem
We are building a tech-enabled highly scalable Lending ecosystem Creation of a tech-enabled highly scalable lending ecosystem that generates fee-based income, spread income and investment product for our managed funds Lending Financial Technology Spread income Fees and commissions Loan book: $421m M
Slide 29: Lending & Technology Divisional Performance
Lending & Technology Divisional Performance Emerging division with growth in MA Money and Finsure complementing existing Specialist Finance platform UNDERLYING FINANCIALS ($M) 1H23 1H22 1H23 v 1H22 Represents growth in Finsure managed loans and Financial Technology 16.5 13.0 27% total brokers Lendin
Slide 30: Financial Technology Performance
Financial Technology Performance Includes acquisition Finsure (acquired February 2022) and the emerging Middle technology platform UNDERLYING FINANCIALS ($M) 1H23 1H221 1H23 v 1H22 Fees & commissions Reflects strong growth in managed loans and brokers on platform Subscription fees and trail commissi
Slide 31: Finsure Platform Growth
Finsure Platform Growth Finsure continues to grow its market position with a differentiated proposition for brokers focused on value-add service innovation and technology BR OKER S ON PL ATFOR M FINS UR E’S BR OKER MARKET S HARE 2 M ANAGED L OANS 2,846 +8% 2,640 14.8% $99bn +9% 14.2% $91bn 2,127 11.
Slide 32: Lending Platforms Performance
Lending Platforms Performance Includes Specialty Finance and MA Money residential lending business. Significant investment in platform during FY23 Reduction of income as balance sheet credit asset recycled UNDERLYING FINANCIALS ($M) 1H23 1H22 1H23 v 1H22 through a MA managed fund – creating Credit i
Slide 33: Loan Book Growth and Invested Capital
Loan Book Growth and Invested Capital Loan book growth achieved with more efficient use of balance sheet capital LOAN BOOK GR OWTH ($ M ) INVES TED CAPITAL 1 ($ M ) 600 100 $564m MA Money MA Money Specialty Finance 90 Specialty Finance Specialty 500 143 Finance platforms 80 % of total Loan book $393
Slide 34: Corporate Advisory & Equities
05 Corporate Advisory & Equities
Slide 35: Corporate Advisory & Equities Performance
Corporate Advisory & Equities Performance Deal activity and ECM impacted by challenging operating conditions UNDERLYING FINANCIALS 1H23 1H22 1H23 v 1H22 Corporate Advisory fees $m 19.6 27.8 (30%) Equities commissions $m 2.6 2.5 4% Total Underlying revenue $m 22.2 30.3 (27%) Expenses $m 17.4 23.6 (26
Slide 36: Revenue Seasonality
Revenue Seasonality Corporate Advisory & Equities revenue typically weighted to second half • Corporate Advisory & Equities revenue is typically seasonal with, on average, second half weighting of approximately 60% • Market conditions make deal execution and timing less predictable. Expectation rema
Slide 37: 1H23 Financials
O 6 1H23 Financials MA Financial Group
Slide 38: Group Underlying Profit and Loss
Group Underlying Profit and Loss SUMMARY UNDERLYING PROFIT OR LOSS STATEMENT ($M)1 1H23 1H22 1H23 v 1H22 Underlying Revenue Strong growth in recurring revenue, offset by cycling of abnormally large performance fees in 1H22 Asset Management 84.8 96.3 (12%) Lending & Technology 20.8 18.6 12% Corporate
Slide 39: Group Operating Balance Sheet
Group Operating Balance Sheet1 OPERATING BALANCE SHEET ($M) 30 JUN 2023 31 DEC 2022 Cash and cash equivalents 56.2 98.8 Refer to detail on page 40 Loans receivable 7.9 9.0 Investments 212.2 210.5 Net trail book asset 38.8 35.9 Blue Elephant acquisition goodwill of $13m Goodwill and other intangibles
Slide 40: Group Investments
Group Investments SUMMARY OF INVESTMENTS ($M) 30 JUN 2023 31 DEC 2022 Cash 56.2 98.8 Lending (MA Money & Specialty Invested Capital) 15.7 8.2 Co-investments 62.0 66.7 Private Credit Funds 87.9 84.1 Redcape Hotel Group (RDC) 51.2 57.1 Other equity investments 3.3 3.4 Total 276.3 318.3 Highlights • Re
Slide 41: Strategic Outlook
O / Strategic Outlook MA Financial Group
Slide 42: Well positioned for medium term growth
Well positioned for medium term growth Focus on building sustainable earnings growth 01. 02. 03. Builder of valuable businesses in Scalable business powered by Diversified capital sources and large addressable markets unique distribution client investor base 04. 05. 06. Strong balance sheet to suppo
Slide 43: Appendices
O 8 Appendices MA Financial Group
Slide 44: Appendix – Financials
Appendix — Financials MA Financial Group
Slide 45: 1H23 Financials – Statutory to Underlying Profit Reconciliation
1H23 Financials – Statutory to Underlying Profit Reconciliation NOTE REVENUE1 EBITDA NPAT CI1 1H23 Statutory Results ($M) 172.9 75.7 17.3 16.5 Differences in measurement Business acquisition adjustments (a) - 3.9 5.6 5.6 Net (gain)/loss on investments (b) - - - (0.3) Adjustments relating to associat
Slide 46: 1H22 Financials – Statutory to Underlying Profit Reconciliation
1H22 Financials - Statutory to Underlying Profit Reconciliation NOTE REVENUE1 EBITDA NPAT CI1 1H22 Statutory Results ($M) 154.7 48.5 20.5 19.3 Differences in measurement Business acquisition adjustments (a) - 3.3 6.2 6.2 Net (gain)loss on investments (b) - - - 2.0 Adjustments relating to associates
Slide 47: Notes to Statutory to Underlying Profit Reconciliation
Notes to Statutory to Underlying Profit Reconciliation Differences in Measurement Differences in Classification a) The Underlying treatment removes one-off transaction costs related to the acquisition e) The Underlying treatment records the net distributions received from the Lending of subsidiaries
Slide 48: 1H23 Balance Sheet – Operating to Statutory Reconciliation
1H23 Balance Sheet – Operating to Statutory Reconciliation 30 JUN 2023 30 JUN 2023 30 JUN 2023 30 JUN 2023 SUMMARY CONSOLIDATED BALANCE SHEET ($M) OPERATING LENDING TRUSTS1 RECLASSIFICATIONS STATUTORY Cash and cash equivalents 56.2 59.9 - 116.1 Loans receivable 7.9 1,280.6 - 1,288.5 Investments 212.
Slide 49: FY22 Balance Sheet – Operating to Statutory Reconciliation
FY22 Balance Sheet – Operating to Statutory Reconciliation 31 DEC 2022 31 DEC 2022 31 DEC 2022 31 DEC 2022 SUMMARY CONSOLIDATED BALANCE SHEET ($M) OPERATING LENDING TRUSTS1 RECLASSIFICATIONS STATUTORY Cash and cash equivalents 98.8 45.8 - 144.6 Loans receivable 9.0 846.5 - 855.5 Investments 210.5 (3
Slide 50: Notes to Operating Balance Sheet Reconciliation
Notes to Operating Balance Sheet Reconciliation Lending Trust Adjustments Reclassifications • The Group utilises non-recourse funding vehicles (Lending Trusts) typically in the form • The reclassification adjustments seek to present the balance sheet on a net basis of securitisation trusts and bank
Slide 51: Group Underlying Profit & Loss – Divisional Summary
Group Underlying Profit & Loss – Divisional Summary UNDERLYING PROFIT & LOSS 1H23 1H22 Revenue ($M) Asset Management 84.8 96.3 Lending 20.8 18.6 Corporate Advisory and Equities 22.2 30.3 Corporate 0.5 1.0 Total Revenue 128.3 146.2 Expenses ($M) Asset Management 41.9 49.6 Lending 14.0 10.6 Corporate
Slide 52: Borrowings - Operating
Borrowings - Operating BORROWINGS ($M) MATURITY DATE COUPON 30 JUN 2023 31 DEC 2022 MA Bond IV Unsecured note Sep 2024 5.85% 40.0 40.0 MA Bond VI Unsecured note Sep 2027 5.75% 25.0 25.0 MACI Bond Unsecured note – limited recourse May 2024 4.35% + RBA cash rate 30.0 30.0 Corporate Facility Fully repa
Slide 53: Appendix – Assets Under Management
Appendix – Assets Under Management 53
Slide 54: Leveraging deep expertise to scale business verticals
Leveraging deep expertise to scale business verticals Our strategy is to develop deep financial and operational expertise in the businesses we choose to scale The value of time and investment in capability delivers strong investment performance and AUM growth over time COM POUND ANNUAL GR OWTH IN KE
Slide 55: Credit AUM
Credit AUM Credit AUM continues to grow strongly driven by growth in Real Estate Credit funds and Diversified Credit (including PIF) $3.3b Acquisition of Blue Elephant and launch of Global Private Credit Fund REC1 strategy $2.5b 1.6 reaches $1b AUM (Oct-22) 0.9 $1.6b Launch of PIF strategy (Dec-18)
Slide 56: Real Estate AUM
Real Estate AUM Real Estate AUM maintained at $2.6b with acquisitions and flows offsetting realisations and capital returns $2.6b $2.6b $2.5b $2.2b $2.2b $0.7b acquisition of Marion shopping 0.8 1.0 centre $0.8b acquisition of $1.5b Armada Funds $1.4b Management 1.7 1.6 $0.5b FY16 FY17 FY18 FY19 FY2
Slide 57: Hospitality AUM
Hospitality AUM Hospitality AUM maintained at $1.8b $1.8b $1.8b $1.6b Acquisition of Redcape Hotel Group ($677m) $1.3b in July 2017 $1.2b $1.2b 1.5 1.5 $0.9b $0.1b 0.3 0.3 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1H23 1 Single Asset Hospitality Funds Redcape Hotel Fund Notes: 1. Single Asset Hospitality F
Slide 58: Listed Equities AUM
Listed Equities AUM Equities AUM steady at $0.6b $0.9b $0.7b $0.6b 0.1 0.1 $0.5b 0.1 0.1 $0.3b $0.2b 0.5 0.4 $0.1b $0.1b FY16 FY17 FY18 FY19 FY20 FY21 FY22 1H23 Small Caps Fund Other Equities Funds Equity Opportunities Fund 58
Slide 59: PE/VC AUM
PE/VC AUM PE/VC successfully divested investments and returned capital to investors in 1H23 $348m $331m $315m $285m $250m $235m 222 214 $180m $65m 117 125 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1H23 Private Equity Venture Capital 59
Slide 60: Shares on issue
Shares on issue SUMMARY OF SHARES ON ISSUE 30 JUNE 2023 30 JUNE 2022 Total shares on issue 178,298,828 175,509,487 Less: Treasury shares 18,115,418 15,332,701 Net shares on issue 160,183,410 160,176,786 Weighted average number of shares on issue 176,985,050 173,169,191 Less: Weighted average number
Slide 61: Disclaimer
Disclaimer Summary Information Disclaimer This presentation has been prepared by MA Financial Group Limited ACN 68 142 008 428 (MA Financial). It is a To the maximum extent permitted by law, MA Financial (including its directors, officers, employees, agents, presentation of general background inform