Macquarie Group, Ltd. · ASX:MQG
Macquarie — Shareholder Meeting (July 2011)
69 slides from Macquarie's shareholder meeting presentation, Jul 28, 2011
Slide 1: Macquarie Group Limited 2011 Annual General Meeting
For personal use only Macquarie Group Limited 2011 Annual General Meeting 28 July 2011
Slide 2: Disclaimer
Disclaimer For personal use only Disclaimer The material in this presentation has been prepared by Macquarie Group Limited ABN 94 122 169 279 (Macquarie) and is general background information about Macquarie’s activities current as at the date of this presentation. This information is given in summa
Slide 3: Chairman's address: Kevin McCann AM
For personal use only Macquarie Group Limited 2011 Annual General Meeting Kevin McCann AM, Chairman 28 July 2011
Slide 4: David Clarke
For personal use only David Clarke 4
Slide 5: Global financial market conditions
Global financial market conditions For personal use only This time last year, we reflected on a general improvement in market conditions and sentiment post the extreme financial shocks of 2008 and 2009 However, uncertainty re-emerged in 1H11 due to concerns over European sovereign debt and the s
Slide 6: FY11 saw some improvement in market conditions
FY11 saw some improvement in market conditions For personal use only PURCHASING MANAGERS INDEX1 GDP2 12-mth pro-rated GDP growth Index Index annual average % change 65 65 7 6 60 expansion 60 5 55 55 4 50 50 3 45 45 2 1 40 40 EU contraction 0 35 UK 35 -1 US 30 China 30 -2 US Asia-Pacific JP 25 25 -3
Slide 7: FY11 saw some improvement in market conditions
FY11 saw some improvement in market conditions For personal use only MUTUAL FUNDS FLOW1 US CREDIT SPREADS $USb Index Bps Bps 40 1,500 2,000 US Credit Spreads (over 10 yr Treasuries) 2,000 Net cash flow into long term stock US mutual funds (3 month average) LHS S&P 500 (RHS) 1,400 30 AAA Spread 1,600
Slide 8: Financial performance reflected improved market conditions in 2H11
Financial performance reflected improved market conditions in 2H11 compared to 1H11 For personal use only FY11 Operating income of $A7,644m FY11 Profit of $A956m 2H11 up 9% on 1H11 2H11 up 37% on 1H11 $Am $Am 800 4,000 400 2,000 0 0 2H09 1H10 2H10 1H11 2H11 2H09 1H10 2H10 1H11 2H11 FY11 Earnings Per
Slide 9: Dividends
Dividends For personal use only FY11 dividend set at $A1.86, in line with FY10 ~ 67% payout ratio – 2H11 dividend $A1.00, up from 1H11 dividend of $A0.86 – Dividends remain unfranked Dividend policy remains 50 – 60% annual payout ratio 9
Slide 10: Average return on equity and total shareholder return outperform industry average
Macquarie’s 10 year average return on equity and total shareholder return continue to outperform industry average For personal use only Macquarie’s 10 year average Return on Equity: 19.5% compared to industry average1: 10.7% Macquarie Group International investment banks3 1. Industry return on equit
Slide 11: Total shareholder return continues to track global financials
Macquarie’s total shareholder return continues to track global financials For personal use only Since the GFC, Macquarie has outperformed the MSCI World Capital Markets Index by 10%1 Index 11 1. Source: Factset. MSCI World Capital Markets and Macquarie Group information, presented on a total return
Slide 12: Supporting communities for over 26 years
Supporting communities for over 26 years For personal use only Staff driven initiatives supported by the Macquarie Group Foundation Volunteering Financial support Skills transfer 1,300+ community $A145 million+ over Leveraging our organisations 26 years expertise 12
Slide 13: Macquarie Group Limited 2011 Annual General Meeting
For personal use only Macquarie Group Limited 2011 Annual General Meeting 28 July 2011
Slide 14: Overview of the Result Announcement for the year ended 31 March 2011
For personal use only Macquarie Group Limited Overview of the Result Announcement for the year ended 31 March 2011 Nicholas Moore, Managing Director and Chief Executive Officer 28 July 2011
Slide 15: Result reflected improved 2H11 market conditions
Result reflected improved 2H11 market conditions For personal use only FY11 vs FY10 2H11 vs 1H11 Operating income $A7.6b 15% $A4.0b 9% Operating expenses $A6.4b 19% $A3.2b Flat Tax expense $A282m 40% $A197m 132% Profit $A956m 9% $A553m 37% Earnings per share $A2.83 12% $A1.63 37% Dividend per share
Slide 16: Diversified income
Diversified income Operating income1 by source For personal use only Increase in income from annuity style businesses2 more than offset impact from subdued market conditions 12 months to 31 March 10 12 months to 31 March 11 $A7.0b $A7.6b Institutional and retail cash equities 16% Equity derivatives
Slide 17: Diversified by region
Diversified by region International income1 60% of total Total staff over 15,5002; international staff 53% of total For personal use only EUROPE, MIDDLE EAST ASIA AMERICAS & AFRICA3 Income: $A1,009m (14% of total) Income: $A1,150m (16% of total) Income: $A2,229m (30% of total) Staff: 1,613 Staff: 2,
Slide 18: Diversified income: operating income by region
Diversified income Operating income by region For personal use only 64% of operating income in 2H11 is generated offshore – FX translation estimated to have a negative impact of approx. 5% due to strengthening of AUD by an average of 10% against major currencies ome $Am1 Operating Inco 18 1. Operati
Slide 19: Macquarie Funds
Macquarie Funds FY11 Operating income1 of $A1,410m, down 2% on FY103 FY11 Net profit contribution2 of $A602m, down 26% on FY103 For personal use only OPERATING INCOME BEFORE GAINS FROM LISTED FUND INITIATIVES UP 51% Fund performance Infrastructure Manager of the Year4, won 20 2011 Lipper Awards for
Slide 20: Assets under management of $A310b
Assets under management of $A310b For personal use only Decrease in AUM due to: – Impact of CMT transfer into CMA ($A9.6b in Jul 10) – Net fund inflows and equity movements of $A21b, more than offset by decrease due to FX of $A27b $Ab Fixed income Direct infrastructure 350 $A326b Equities Cash $A3
Slide 21: Fixed Income, Currencies and Commodities
Fixed Income, Currencies and Commodities FY11 Operating income1 of $A1,416m, down 2% on FY10 FY11 Net profit contribution2 of $A575m, down 30% on FY10 For personal use only WEAK MARKETS IN 1H11 FOLLOWED BY STRONG 2H11 Metals Increased equity realisations on strength in resource equity markets Agricu
Slide 22: Corporate and Asset Finance
Corporate and Asset Finance FY11 Operating income1 of $A786m, up 69% on FY10 FY11 Net profit contribution2 of $A501m, up of 96% on FY10 For personal use only ASSET AND LOAN PORTFOLIO OF $A17.3B, UP 22% ON FY10 240,000+ Total motor vehicle leasing contracts post $A1.0b GMAC acquisition $US1.6b Comple
Slide 23: Macquarie Capital
Macquarie Capital FY11 Operating income1 of $A1,001m, up 46% on FY10 FY11 Net profit contribution2 of $A281m, up significantly on FY10 For personal use only 547 ADVISORY DEALS, UP 22% DEAL VALUE $A159B, UP 31% Activity Australia/NZ: 83 deals at $A93b, Asia: 81 deals at $A21b EMEA: 57 deals at $A17b,
Slide 24: Banking and Financial Services
Banking and Financial Services FY11 Operating income1 of $A1,494m, up 19% on FY10 FY11 Net profit contribution2 of $A275m, up 5% on FY10 For personal use only 1 MILLION+ CLIENTS GLOBALLY #1 Retail full service broking Australia3 National Independent Canadian Advisory Firm4 S&P Fund manager of the Ye
Slide 25: Macquarie Securities
Macquarie Securities FY11 Operating income1 of $A1,299m, down 12% on FY10 FY11 Net profit contribution2 of $A175m, down 70% on FY10 For personal use only FY11 RESULT IMPACTED BY SUBDUED EQUITY MARKET CONDITIONS Leading positions No.1 overall research & sales strength3 (Asian Inst. Investors - Austra
Slide 26: Global Specialist
Global Specialist Examples For personal use only Asia-Pacific Energy 40+ years of knowledge and experience Deep industry expertise Over the last 3 years: No.4 US physical gas marketer in North – M&A, ECM & Advisory: 533 deals, $A200b+ America4 – DCM: 77 deals, $A79b Our Acquisitions – Cons
Slide 27: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only $Ab 31 March 2010 $Ab 30 September 2010 $Ab 31 March 2011 90 90 90 Short term paper Short term paper 80 Debt maturing1 80 Debt maturing1 80 < 1 year Cash and liquid < 1 year assets Short term paper Cash and liquid 70 70 assets 70 Debt maturin
Slide 28: Consistently strong capital base
Consistently strong capital base For personal use only Well capitalised – surplus over Group’s minimum regulatory capital requirement of $A3.0b Core equity represents 88% of the Group’s capital base Capital increased in FY11 due to PMI issue, net of reductions from the MEREP on-market purchase
Slide 29: 1Q12 Update
For personal use only Macquarie Group Limited 1Q12 Update Nicholas Moore, Managing Director and Chief Executive Officer 28 July 2011
Slide 30: Global events sapping confidence
Global events sapping confidence For personal use only China United States Concerns over Debt ceiling slowing economy and impasse increasing inflation Europe Japan Sovereign Earthquake debt crisis and tsunami 30
Slide 31: 1Q12 weak market conditions
1Q12 weak market conditions For personal use only $Ab Monthly Australian retail broking value1 Mutual Funds Flow2 720 $USb 620 40 30 520 20 420 10 320 0 220 -10 120 -20 20 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 FY08 FY09 FY10 FY11 1Q12 Australia IPOs and Secondary Issues3 $US/troy ounce Gold Spot
Slide 32: 1Q12 Macquarie update
1Q12 Macquarie update For personal use only 1Q12 operating groups’ contribution1 ahead of subdued pcp (1Q11) but down on prior quarter (4Q11) due to subdued market conditions Compared to pcp (1Q11), increased contribution from the annuity style businesses2 more than offset the lower contribution
Slide 33: 1Q12 Update - Macquarie Funds
1Q12 Update - Macquarie Funds 1Q12 up on 1Q111 For personal use only INFLOWS CONTINUE AS A RESULT OF STRONG INVESTMENT PERFORMANCE ACROSS ASSET CLASSES AND INVESTMENT STRATEGIES Inflows $A5.1b of net inflows in 1Q12, including $A4.6b in MIM strategies and over $A700m in MIRA funds Highest number of
Slide 34: Assets under management of $A308b
Assets under management of $A308b For personal use only Jun 11 broadly in line with Mar 11 – Net fund inflows and equity movements broadly offset by decrease due to FX movements $Ab 350 Fixed income Direct infrastructure $A326b Equities Cash $A310b $A308b Direct real estate Currency 300 Other 250
Slide 35: 1Q12 Update - Corporate and Asset Finance
1Q12 Update - Corporate and Asset Finance 1Q12 up on 1Q111 For personal use only PORTFOLIOS PERFORMING STRONGLY Asset and loan portfolio: Asset and loan portfolio growth - flat on prior quarter (4Q11)2 - up 11% on pcp2 (1Q11) Extending finance through the customer value chain – from manufacturer to
Slide 36: 1Q12 Update - Banking and Financial Services
1Q12 Update - Banking and Financial Services 1Q12 in line with 1Q111 For personal use only REMAINS NO.1 RANKED RETAIL FULL SERVICE BROKER2 Private Wealth/Direct Named ‘Outstanding Institution’ at Australian Private Banking Awards3 MPW ASX retail turnover up 5% on prior quarter (4Q11), down 4% on pcp
Slide 37: 1Q12 Update - Macquarie Securities
1Q12 Update - Macquarie Securities 1Q12 down on 1Q111 For personal use only SUBDUED EQUITY MARKETS AND CHALLENGING ECM CONDITIONS Cash Australia: Market share marginally down on pcp (1Q11) No.1 equity research/advisory share for European and US institutional investors (Australian equities)2 Continue
Slide 38: 1Q12 Update - Macquarie Capital
1Q12 Update - Macquarie Capital 1Q12 up on 1Q111 For personal use only ACTIVITY LEVELS BROADLY IN LINE WITH PCP (1Q11) 1Q12 114 Deals $A24b (1Q11 118 Deals $A16b) 23 deals at $A12.8b (1Q11: 16 deals at $A2.6b) Australia/NZ Including: Royal Adelaide Hospital (Sponsor, Advisory); Fletcher Building (Ad
Slide 39: 1Q12 Update - Fixed Income, Currencies and Commodities
1Q12 Update - Fixed Income, Currencies and Commodities 1 1Q12 down on 1Q11 For personal use only REDUCED VOLUMES AND SUBDUED VOLATILITY IN MOST MARKETS Metals Modest client activity Low equity realisations Asian Markets Phase 1 build out complete MBL Singapore Branch Agriculture Geopolitical tension
Slide 40: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only $Ab 31 March 2010 31 March 2011 30 June 2011 90 Short term paper Short term paper 80 Debt maturing Debt maturing < 1 year1 Cash and liquid < 1 year1 Cash and liquid assets assets Short term paper 70 Debt maturing < 1 year1 Cash and liquid ass
Slide 41: Group capital surplus of $A2.9b
Group capital surplus of $A2.9b For personal use only Group capital of $A11.6b as at 30 Jun 11, a $A2.9b buffer of capital in excess of the Group’s minimum regulatory capital requirements Capital has been deployed across the Group to support business growth Strong Banking Group capital ratios
Slide 42: Outlook
For personal use only Macquarie Group Limited Outlook Nicholas Moore, Managing Director and Chief Executive Officer 28 July 2011
Slide 43: Short term outlook update
Short term outlook update For personal use only Market uncertainty remains making forecasting difficult Summarised below are the outlook statements for each operating group, the FY12 results for which will vary with market conditions Net profit contribution FY07-FY11 FY07-FY11 FY12 outlook as an
Slide 44: Short term outlook update
Short term outlook update For personal use only Consistent with our statement at the FY11 result announcement on 29 April 2011, we continue to expect an improved result for FY12 on FY11 if market conditions for FY12 are not materially worse than FY11 Given subdued market conditions are likely to
Slide 45: Medium term
Medium term For personal use only Macquarie is increasingly well positioned to deliver superior performance in the medium term Continue to adapt our portfolio mix to changing market conditions Annuity style income is provided by three significant businesses which are delivering superior returns
Slide 46: Macquarie Group Limited 2011 Annual General Meeting
For personal use only Macquarie Group Limited 2011 Annual General Meeting 28 July 2011
Slide 47: Formal Business
For personal use only Macquarie Group Limited 2011 Annual General Meeting Formal Business 28 July 2011
Slide 48: Item 1: Financial Statements
Item 1: Financial Statements For personal use only To consider and receive the Financial Report, the Directors’ Report and the Auditor’s Report of Macquarie for the financial year ended 31 March 2011 48
Slide 49: Item 2: Re-election of Mr PM Kirby as a Voting Director
Item 2: Re-election of Mr PM Kirby as a Voting Director For personal use only To consider and, if thought fit, pass the following as an ordinary resolution: That Mr PM Kirby be re-elected as a Voting Director of Macquarie 49
Slide 50: Item 3: Re-election of Dr JR Niland as a Voting Director
Item 3: Re-election of Dr JR Niland as a Voting Director For personal use only To consider and, if thought fit, pass the following as an ordinary resolution: That Dr JR Niland be re-elected as a Voting Director of Macquarie 50
Slide 51: Item 4: Re-election of Dr HM Nugent as a Voting Director
Item 4: Re-election of Dr HM Nugent as a Voting Director For personal use only To consider and, if thought fit, pass the following as an ordinary resolution: That Dr HM Nugent be re-elected as a Voting Director of Macquarie 51
Slide 52: Item 5: Re-election of Mr HK McCann as a Voting Director
Item 5: Re-election of Mr HK McCann as a Voting Director For personal use only To consider and, if thought fit, pass the following as an ordinary resolution: That Mr HK McCann be re-elected as a Voting Director of Macquarie 52
Slide 53: Item 6: Election of Ms DJ Grady as a Voting Director
Item 6: Election of Ms DJ Grady as a Voting Director For personal use only To consider and, if thought fit, pass the following as an ordinary resolution: That Ms DJ Grady, having been appointed as a Voting Director since the last general meeting, be elected as a Voting Director of Macquarie 53
Slide 54: Item 7: Remuneration Report
Item 7: Remuneration Report For personal use only To consider and, if thought fit, pass the following as an ordinary resolution: To adopt the Remuneration Report of Macquarie for the year ended 31 March 2011 54
Slide 55: Remuneration policy
Remuneration policy For personal use only Key elements of Macquarie’s remuneration framework: Aligning the interests of staff and shareholders Driving long-term shareholder returns Attracting and retaining high quality people 55
Slide 56: Remuneration approach - continuing to deliver results
Macquarie’s remuneration approach – continuing to deliver results For personal use only Macquarie’s NPAT 10 year Macquarie’s 10 year average ROE of 19.5% is higher than compound annual growth rate its international peers (CAGR) has outperformed all but one peer1: 10 year ROE Macquarie versus peers1
Slide 57: Remuneration approach - incremental changes
Macquarie’s remuneration approach – incremental changes For personal use only Macquarie is enhancing its remuneration arrangements while ensuring its overall remuneration approach remains in place. These changes: – Reflect global regulatory and competitive remuneration trends – Further align the i
Slide 58: Remuneration approach - return drivers
Macquarie’s remuneration approach – return drivers For personal use only The key components of Macquarie’s remuneration approach: – NPAT and ROE are known to be drivers of shareholder returns over the long-term – The size of the annual profit share pool is determined by reference to Macquarie’s NP
Slide 59: Remuneration approach - performance based
Macquarie’s remuneration approach – performance based For personal use only Individual employee remuneration is based on performance: – Performance is primarily, but not exclusively, assessed based on relative contributions to profits (not revenue) while taking into account capital usage – Other q
Slide 60: Remuneration approach - equity and retention
Macquarie’s remuneration approach – equity and retention For personal use only Current performance based remuneration arrangements: Key Area Executive Committee Members Other Executive Staff other than and Designated Executive Directors Executive Directors Directors Amount of profit 50-70% for Exe
Slide 61: Remuneration approach - Malus
Macquarie’s remuneration approach – Malus For personal use only Malus is to be introduced for 2012 in line with regulatory requirements and to incentivise staff to maintain a long-term focus – For 2012, the Board will have discretion to reduce or eliminate unvested profit share amounts where an Em
Slide 62: Remuneration approach managed through strong governance processes
Remuneration approach managed through strong governance processes For personal use only The Board, supported by the Board Remuneration Committee, provides oversight of Macquarie’s remuneration approach – 2011 remuneration decisions reflect the Board’s evaluation of performance during the year – Th
Slide 63: Item 8: Approval of Executive Voting Director's participation in MEREP
Item 8: Approval of Executive Voting Director’s participation in the Macquarie Group Employee Retained Equity Plan (MEREP) For personal use only To consider and, if thought fit, pass the following as an ordinary resolution That the following be approved for all purposes: (a) participation in the M
Slide 64: Macquarie Group Limited 2011 Annual General Meeting
For personal use only Macquarie Group Limited 2011 Annual General Meeting 28 July 2011
Slide 65: Glossary
For personal use only Macquarie Group Limited Glossary 28 July 2011
Slide 66: Glossary
Glossary For personal use only $A Australian Dollar 4Q Fourth Quarter $C Canadian Dollar 4Q11 Fourth Quarter ended 31 March 2011 $US United States Dollar Approx. Approximately € Euro ASX Australian Securities Exchange 1H10 Half Year ended 30 September 2009 AUD Australian Dollar 1H11 Half Year ended
Slide 67: Glossary
Glossary For personal use only CPS Convertible Preference Shares GFC Global Financial Crisis DCM Debt Capital Markets GMAC General Motors Acceptance Corporation ECM Equity Capital Markets HK Hong Kong EMEA Europe, the Middle East and Africa ILFC International Lease Finance Corporation EU Europe IPO
Slide 68: Glossary
Glossary For personal use only MBL Macquarie Bank Limited RHS Right Hand Side MIM Macquarie Investment Management ROE Return on Equity MIPS Macquarie Income Preferred Securities S&P Standard and Poor’s MIRA Macquarie Infrastructure and Real Assets TSR Total Shareholder Return MIS Macquarie Income Se
Slide 69: Macquarie Group Limited 2011 Annual General Meeting
For personal use only Macquarie Group Limited 2011 Annual General Meeting 28 July 2011