Ma Financial Group Limited · ASX:MAF
Ma Financial — FY2021 Earnings Presentation
54 slides from Ma Financial's earnings presentation, Feb 17, 2022
Slide 1: FY21 Results Presentation
FY21 Results Presentation February 2022
Slide 2: Contents
CONTENTS SEC TIO N HEA DING PAGE N O . 01 FY21 Results & Highlights 4 02 Post Balance Date Activity & FY22 Outlook 11 03 Asset Management 14 04 Lending 21 05 Corporate Advisory & Equities 25 06 FY21 Financials 30 07 Strategic Outlook 34 08 Appendices 37 2
Slide 3: 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 Differences in classification arise because the Company chooses to classify 428) and its subsidiaries (Group) utilise non-IFRS Underlying financial some IFRS measures in a di
Slide 4: MA Financial Group at a glance
MA Financial Group at a glance Twelve years of progress with a focus on delivering results and investing in growth An Australian headquartered financial services firm with activities in 1 Asset Management, Lending, Corporate Advisory and Equities $6.9b $1.5b 2 Established in 2009 and listed on the A
Slide 5: FY21 Results & Highlights
01 FY21 Results & Highlights
Slide 6: FY21 Result Highlights
FY21 Result Highlights Strong growth and performance across all business units despite COVID-19 related disruptions Record Underlying EPS Net fund inflows Base fee run rate1 Full year dividend 38.2c $1.1bn $89m 17cps ⬆ 52% on FY20 ⬆ 155% on FY20 ⬆ 49% on end FY20 ⬆ 70% on FY20 Record Corporate Loan
Slide 7: FY21 Results
FY21 Results UNDERLYING RESULTS1 FY21 FY20 GROWTH STATUTORY RESULTS1 FY21 FY20 GROWTH Revenue $232.4m $160.1m 45% Revenue2 $228.7m $161.1m 42% EBITDA $88.5m $60.5m 46% EBITDA3 $72.2m $61.4m 18% Net profit after tax $54.9m $36.0m 53% Net profit after tax $32.0m $26.5m 21% Earnings per share 38.2¢ 25.
Slide 8: Financial performance
Financial performance Strong business growth delivers record performance UNDERLYING REVENUE ($ M) UNDERLYING EBITDA ($ M) 240 100 1H 2H 1H 2H 200 80 160 129 60 50 120 90 93 40 38 37 39 80 80 71 29 40 103 20 38 56 68 67 22 27 22 36 12 0 0 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 UNDERLYING E
Slide 9: Business unit highlights
Business unit highlights Growing momentum across all business units EBITDA CONTRIBUTION BY BUS INES S DIVIS ION ASSET MANAGEMENT EBITDA contribution1 69% (EX. CORPORATE) 1 • Net inflows of $1.1 billion $m • Base management fees up 33% on FY20 105.5 • Strong performance & transaction fees 100 • Benef
Slide 10: FY21 strategic outcomes
FY21 strategic outcomes Delivering on key priorities Grow recurring Base management fee run rate at the end of FY21 equivalent to $89m pa., up 49% from $60m at end FY20 revenue base Lending net interest income up 30% relative to FY20; recurring fee-based revenue to be lifted by Finsure Received over
Slide 11: Post Balance Date Activity & FY22 Outlook
02 Post Balance Date Activity & FY22 Outlook
Slide 12: Key business activity since December 2021
Key business activity since 31 December 2021 A positive start to FY22 ASSET MANAGEMENT • Positive momentum in AUM and client fund flows continues − $135m of net fund inflows received over the first six weeks of 1H22 • Settled on 50% interest in Grenfell Tower in Adelaide for $83m; acquired in partne
Slide 13: FY22 outlook
FY22 outlook Long term investment in people and platform is delivering accelerating growth underpinned by solid foundations FY22 Underlying EPS expected to increase between 10% and 20% on FY21, as previously announced on 17 January 2022. Several factors provide confidence in the FY22 outlook: • A po
Slide 14: Asset Management
OS MA Financial Group Asset Management 14
Slide 15: Asset Management Performance
Asset Management Performance UNDERLYING FINANCIALS ($M) FY21 FY201 GROWTH Includes $8.2m of RetPro fees from April 21 Base management fees 72.0 54.0 33% Principal investments income 6.2 5.5 13% FY20 impacted by loss of RDC distributions Total recurring revenue 78.2 59.5 32% Transaction fees 17.6 6.2
Slide 16: Assets Under Management
Assets Under Management We manage assets of $6.9 billion with a focus on Real Estate, Hospitality, Credit, Equities and PE/VC 7.0 $6.9b 0.3 0.9 6.0 $5.4b 1.6 0.3 $4.9b 5.0 0.5 1.1 4.0 $3.7b 1.6 1.3 3.0 $2.8b 2.6 2.0 2.2 1.0 - FY17 FY18 FY19 FY20 FY21 Real Estate Hospitality Credit Equities PE/VC 16
Slide 17: FY21 Fund Flows
FY21 Fund Flows Strong net inflows driven by a significant increase in flows from domestic clients NET FLOWS by ASSET CLASS1 ($M) FY21 FY20 GROWTH Significant transactional activity across retail, industrial and office assets Real Estate 269 17 1482% Hospitality 62 25 148% Hospitality flows include
Slide 18: Asset Management client base
Asset Management client base A continued focus on the growth and diversification of existing distribution channels. Focus on building institutional flows in FY22 following investment in distribution FY2 0 AUM BY INVES TOR CHANNEL FY2 1 AUM BY INVES TOR CHANNEL $1.3b $2.1b 19% 30% $1.5b $1.3b $2.6b $
Slide 19: Highlights: Real Estate and Hospitality
Highlights Strong business activity levels despite COVID-19 related disruptions Real Estate Hospitality AUM: A$2.6 billion $380m (+17%) AUM: A$1.6 billion $250m (+19%) • Return of significant asset acquisition activity • Disrupted year due to COVID-19 related lockdowns and restrictions. – approx. $3
Slide 20: Highlights: Credit, Equities and PE/VC
Highlights Strong growth and activity across Credit, Equities and PE/VC portfolios Credit Equities Private Equity / Venture Capital AUM: A$1.6 billion $475m (+42%) AUM: A$0.9 billion $405m (+85%) AUM: A$0.3 billion $30m (+11%) • Strong interest from Domestic clients in • AUM growth driven by strong
Slide 21: Lending
@) A Lending MA Financial Group
Slide 22: Lending Performance
Lending Performance UNDERLYING FINANCIALS FY21 FY20 GROWTH Net interest income 19.9 15.3 30% FY21 includes platform expenditure of $2.1m to Total Underlying revenue 19.9 15.3 30% facilitate future growth in residential mortgage and specialty lending Expenses 9.6 6.2 55% Underlying EBITDA 10.3 9.1 13
Slide 23: Loan portfolio growth and invested capital
Loan portfolio growth and invested capital INVESTED CAPITAL 1 (A$ M ) LOAN PORTFOLIO GROWTH ( A$ M ) 120 500 USD PIF B units USD PIF $455m 110 450 Legal direct & other Legal direct & other 100 AUD PIF B units $92m 400 AUD PIF 90 MKM 350 MKM 80 $317m $68m 300 70 60 250 50 $43m 200 $39m 40 150 30 $112
Slide 24: Finsure adds strategic growth optionality to Lending capabilities
Finsure adds strategic growth optionality to Lending capabilities Completed acquisition enhances exposure to recurring revenue streams in a deep market with positive tailwinds CAPABILITIES REVENUE & EARNINGS MODEL Differentiated platform proposition for mortgage brokers Product focused on technology
Slide 25: Corporate Advisory & Equities
05 Corporate Advisory & Equities
Slide 26: Corporate Advisory & Equities Performance
Corporate Advisory & Equities Performance UNDERLYING FINANCIALS FY21 FY201 GROWTH Corporate Advisory fees [$m] 61.3 44.2 39% Equities commissions [$m] 7.4 9.2 (20%) Total Underlying revenue [$m] 68.6 53.4 29% Expenses [$m] 46.7 39.5 18% Underlying EBITDA [$m] 21.9 13.9 58% Advisory headcount [avg. F
Slide 27: Revenue Seasonality
Revenue Seasonality Typical seasonality exhibited over record annual performance • Corporate Advisory & Equities revenue is typically seasonal with, on average, second half weighting of approximately 60% • M&A activity was strong over the year, large restructuring mandates supported 1H21 and 2H21 wa
Slide 28: A record year with significant transactions
A record year with significant transactions 2021 2021 2021 2021 2021 2021 US$144m A$145m Acquisition of Acquisition of Finsure A$1.2bn A$364m A$135m Reconstruction Experts and A$100m Restructure and Debt restructuring Debt refinancing A$230m Equity Raising Equity raise via Debt restructuring recapit
Slide 29: Corporate Advisory – consistency across the cycle
Corporate Advisory – consistency across the cycle Corporate Advisory has a consistent overall revenue productivity performance • Our target productivity range of $1.1m - $1.3m per executive is supported by over a decade of operations • FY21 revenue per executive of $1.2m in middle of target range •
Slide 30: FY21 Financials
@) 6 FY21 Financials MA Financial Group
Slide 31: Group Underlying Profit and Loss
Group Underlying Profit and Loss SUMMARY UNDERLYING PROFIT OR LOSS STATEMENT ($M)1 FY21 FY202 GROWTH Underlying Revenue Asset Management 143.4 91.4 57% Lending 19.9 15.3 30% Corporate Advisory & Equities 68.6 53.4 29% Corporate 0.5 0.0 N.A. Total Underlying Revenue 232.4 160.1 45% Expenses Includes
Slide 32: Group Operating Balance Sheet
Group Operating Balance Sheet1 OPERATING BALANCE SHEET ($M) 31 DEC 2021 31 DEC 2020 Cash and cash equivalents 241.1 112.2 Refer to detail on page 33 Loans receivable 56.8 63.2 Investments 163.8 136.8 Goodwill and other intangibles 37.7 30.9 Includes fee receivables, restricted cash and plant and equ
Slide 33: Group Investments
Group Investments SUMMARY OF INVESTMENTS ($M) 31 DEC 2021 31 DEC 20201 Cash 241.1 112.2 Lending 91.7 68.2 Co-investments 43.4 62.1 Redcape Hotel Group 84.3 58.2 Japara Healthcare Limited (ASX:JHC) - 9.3 Other equity investments 1.2 2.2 Total 461.7 312.2 Highlights • Ability to recycle capital and ma
Slide 34: Strategic Outlook
O7 MA Financi ial Group Strategic Outlook 34
Slide 35: 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 COMPOUND ANNUAL GROWTH IN KEY
Slide 36: Well positioned for medium term growth
Well positioned for medium term growth Focus on building sustainable earnings growth 01. 02. 03. Builder of valuable Scalable business Diversified capital businesses in large powered by unique sources and client addressable markets distribution investor base 04. 05. 06. Strong balance sheet Speciali
Slide 37: Appendices
O 8 Appendices MA Financial Group
Slide 38: Appendix Financials
Appendix Financials MA Financial Group
Slide 39: FY21 Financials - Statutory to Underlying Profit Reconciliation
FY21 Financials - Statutory to Underlying Profit Reconciliation NOTE REVENUE1 EBITDA NPAT CI1 FY21 Statutory Results ($m) 228.7 72.2 32.0 48.1 Differences in measurement Business acquisition adjustments (a) - 7.9 12.1 12.1 Equity issued to staff (b) - (1.9) (1.9) (1.9) Net (gains)/losses on investme
Slide 40: FY20 Financials – Statutory to Underlying Results Reconciliation
FY20 Financials – Statutory to Underlying Results Reconciliation NOTE REVENUE1 EBITDA NPAT CI1 FY20 Statutory Results ($m) 161.1 61.4 26.5 22.5 Differences in measurement Business acquisition adjustments (a) - 0.6 2.7 2.7 Equity issued to staff (b) - (0.6) (0.6) (0.6) Net (gains)/losses on investmen
Slide 41: Notes to Statutory to Underlying Profit Reconciliation
Notes to Statutory to Underlying Profit Reconciliation Differences in Measurement Differences in Classification a) The acquisition of Armada Funds Management in 2017 and RetPro on 1 April f) The Underlying treatment records the distributions received from the PIF 1 2021 for cash and shares gives ris
Slide 42: FY21 Balance Sheet – Operating to Statutory Reconciliation
FY21 Balance Sheet – Operating to Statutory Reconciliation 31 Dec 2021 31 Dec 2021 31 Dec 2021 Summary consolidated balance sheet ($m) Operating Reclassifications PIF Entities1 Statutory Cash and cash equivalents 241.1 - 1.8 242.9 Loans receivable 56.8 (23.7) 309.3 342.4 Investments 163.8 23.7 2.7 1
Slide 43: FY20 Balance Sheet – Operating to Statutory Reconciliation
FY20 Balance Sheet – Operating to Statutory Reconciliation 31 Dec 2020 31 Dec 2020 31 Dec 2020 Summary consolidated balance sheet ($m) Operating PIF Entities1 Statutory Cash and cash equivalents 112.2 25.8 138.0 Loans receivable 63.2 161.1 224.3 Investments 136.8 (17.3) 119.5 Goodwill and other inta
Slide 44: Notes to Operating Balance Sheet Reconciliation
Notes to Operating Balance Sheet Reconciliation Priority Income Fund (PIF1) Adjustments Reclassification Adjustments • The Statutory balance sheet consolidates the PIF entities, both of which are • The Group reclassifies a $23.7 million (FY20: $Nil) Statutory investment to credit funds managed by th
Slide 45: Group Underlying Profit & Loss – Divisional Summary
Group Underlying Profit & Loss – Divisional Summary UNDERLYING PROFIT & LOSS FY21 FY201 Revenue (A$m) Asset Management 143.4 91.4 Lending 19.9 15.3 Corporate Advisory and Equities 68.6 53.4 Corporate 0.4 - Total Revenue 232.4 160.1 Expenses (A$m) Asset Management 70.2 42.5 Lending 9.6 6.2 Corporate
Slide 46: Borrowings - Operating
Borrowings - Operating BORROWINGS ($M) MATURITY DATE COUPON 31 DEC 2021 31 DEC 2020 MA Bond II Unsecured note 14 Sep 2022 5.85% 25.0 25.0 MA Bond IV Unsecured note 30 Sep 2024 5.75% 40.0 40.0 MACI Bond Unsecured note – limited recourse 16 May 2024 4.35% + RBA 30.0 30.0 Total Borrowings 95.0 95.0 Ave
Slide 47: Appendix Assets under Management
Appendix Assets under Management 47
Slide 48: Real Estate AUM Growth
Real Estate AUM Growth Growth in Diversified Real Estate increases Real Estate AUM to $2.6 billion 38% CAGR (FY16 – FY21) $2.6b $0.7b acquisition of Marion $2.2b $2.2b via MA Financial Group 0.6 managed vehicle, fully capitalised by SPH REIT 0.4 $1.5b $1.4b $0.8b acquisition of Armada Funds Manageme
Slide 49: Hospitality AUM Growth
Hospitality AUM Growth MA Hotel Management is a hotel operating platform that applies strong sector expertise across its high-quality real estate backed portfolios 85% CAGR (FY16 - FY21) $1.6b 0.1 0.1 $1.3b 0.1 $1.2b $1.2b 0.1 Acquisition of Redcape Hotel Group ($677m) in July 2017 $0.9b 1.3 1.2 $0.
Slide 50: Credit AUM Growth
Credit AUM Growth Credit AUM continues to grow strongly driven by growth in Real Estate Credit funds and Priority Income Funds 45% CAGR (FY16 – FY21) $1,600m 100 330 $1,125m 90 $915m 195 690 320 $580m $340m $300m 520 480 FY16 FY17 FY18 FY19 FY20 FY21 Core Funds Bonds & Cash Real Estate Credit Instit
Slide 51: Listed Equities AUM Growth
Listed Equities AUM Growth Equities AUM up 85% on FY20 driven by strong client inflows and positive performance 75% CAGR (FY16 – FY21) $875m 117 120 $470m 17 47 $296m 638 $183m 407 $113m $54m 54 94 157 260 FY16 FY17 FY18 FY19 FY20 FY21 Small Caps Fund Other Equities Funds Equity Opportunities Fund 5
Slide 52: PE/VC AUM Growth
PE/VC AUM Growth Flows into VC Growth Capital Funds to benefit from increased SIV allocation from $0.5m to $1.0m from 1 July 2021 37% CAGR (FY16 – FY21) $315m $285m $250m $235m $180m $65m FY16 FY17 FY18 FY19 FY20 FY21 52
Slide 53: Shares on issue
Shares on issue SUMMARY OF SHARES ON ISSUE 31 DEC 2021 31 DEC 2020 Total shares on issue 169,591,372 151,141,070 Less: Treasury shares 13,066,811 8,606,109 Net shares on issue 156,524,561 142,534,961 Weighted average number of shares on issue 155,279,033 150,450,659 Less: Weighted average number of
Slide 54: Disclaimer
Disclaimer The material in this presentation has been prepared by MA Financial Group Limited This presentation does not constitute an offer to sell, or a solicitation of an offer to ACN 68 142 008 428 (MA Financial) and is general background information about buy, any securities in the United States