Macquarie Group, Ltd. · ASX:MQG
Macquarie — Shareholder Meeting (July 2008)
61 slides from Macquarie's shareholder meeting presentation, Jul 23, 2008
Slide 1: Macquarie Group Limited 2008 Annual General Meeting
For personal use only Macquarie Group Limited 2008 Annual General Meeting 23 July 2008
Slide 2: David Clarke, Chairman
For personal use only Macquarie Group Limited 2008 Annual General Meeting 23 July 2008 David Clarke, Chairman
Slide 3: Disclaimer
For personal use only Disclaimer This presentation has been prepared by Macquarie Group Limited (Macquarie) ABN 94 122 169 279. This presentation is general advice only and does not take account of your objectives, financial situation or needs. Before acting on general advice you should consider the
Slide 4: Profit of $A1.8 billion
Profit of $A1.8 billion Consistent with guidance: 23% increase on prior year For personal use only $Am 2,000 $A1.80b 1,800 1,600 $A1.46b 1,400 1,200 1,000 $A916m $A812m 800 600 $A494m 400 200 0 2004 2005 2006 2007 2008 Throughout this report, periods prior to the 2005 financial year are reported und
Slide 5: Operating Income of $A8.2 billion
Operating Income of $A8.2 billion 15% increase on prior year For personal use only $Am 9,000 $A8.2b 8,000 $A7.2b 7,000 6,000 5,000 $A4.8b $A4.2b 4,000 3,000 $A2.8b 2,000 1,000 0 2004 2005 2006 2007 2008 5
Slide 6: Earnings per share of $A6.71
Earnings per share of $A6.71 13% increase on prior year For personal use only Acps 700 671cps 600 592cps 500 400cps 400 370cps 300 233cps 200 100 0 2004 2005 2006 2007 2008 Basic EPS. 6
Slide 7: Dividend per share of $A3.45
Dividend per share of $A3.45 10% increase on prior year For personal use only 52% payout ratio on total dividends for year ended 31 March 2008, 100% franked Acps 400 Special dividend 345cps 350 315cps 300 250 215cps 201cps 200 150 122cps 100 50 0 2004 2005 2006 2007 2008 7
Slide 8: Assets under management of $A232 billion
Assets under management of $A232 billion 18% increase on prior year For personal use only $Ab 250 Securities Wholesale $A232b Securities Retail Other Specialist 200 $A197b Real estate Infrastructure 150 $A140b 100 $A97b $A63b 50 0 2004 2005 2006 2007 2008 Note: Sale of Macquarie-IMM Investment Manag
Slide 9: International income of $A4.3 billion
International income of $A4.3 billion 14% increase on prior year, Asia-Pacific up 71% For personal use only 57% of operating income1 $US/$A exchange rate strengthened from $0.60 at 1 April 2003 to $0.91 at 31 March 2008 $Am 5,000 4,500 $A4.3b 4,000 $A3.8b 3,500 3,000 2,500 $A2.0b 2,000 1,500 $A1
Slide 10: Capital growth
Capital growth Return on equity: 23.7% For personal use only Consistently grown capital ahead of business requirements to allow for future growth $Ab $12 New Capital* Macquarie Income Preferred Securities $A10.0b $10 Macquarie Income Securities Ordinary shareholders equity $8 $A7.5b $6 $A5.3b $A4.
Slide 11: Some notable events of the past year
For personal use only Index 50 60 70 80 90 100 110 120 130 30-Mar-07 30-Mar-07 14-Apr-07 29-Apr-07 14-May-07 14-Apr-07 29-May-07 13-Jun-07 29-Apr-07 28-Jun-07 13-Jul-07 28-Jul-07 14-May-07 12-Aug-07 27-Aug-07 11-Sep-07 26-Sep-07 11-Oct-07 26-Oct-07 10-Nov-07 25-Nov-07 10-Dec-07 25-Dec-07 MSCI World
Slide 12: Some notable events of the past year
For personal use only Index 50 60 70 80 90 100 110 120 130 30-Mar-07 14-Apr-07 29-Apr-07 14-May-07 29-May-07 13-Jun-07 28-Jun-07 28-Jul-07 13-Jul-07 28-Jul-07 12-Aug-07 12-Aug-07 27-Aug-07 11-Sep-07 26-Sep-07 27-Aug-07 11-Oct-07 26-Oct-07 11-Sep-07 10-Nov-07 25-Nov-07 10-Dec-07 25-Dec-07 MSCI World
Slide 13: Some notable events of the past year
For personal use only N s o c h r Index u a t 50 60 70 80 90 100 110 120 130 s r h 30-Mar-07 t e e o 14-Apr-07 s r 29-Apr-07 m n p l e 14-May-07 r u R 29-May-07 s n o 13-Jun-07 f g 28-Jun-07 l e ck e (Sep , 13-Jul-07 e 200 28-Jul-07 ers 12-Aug-07 Reut 7) 27-Aug-07 12-Aug-07 11-Sep-07 26-Sep-07 11-Oc
Slide 14: Some notable events of the past year
For personal use only Index 50 60 70 80 90 100 110 120 130 30-Mar-07 14-Apr-07 r 29-Apr-07 g 14-May-07 S t a e 29-May-07 n a pres 13-Jun-07 r 28-Jun-07 n Bear to JP 13-Jul-07 s US T sure 28-Jul-07 Mo reasury sold under 12-Aug-07 (Mar 27-Aug-07 2 11-Sep-07 Time s The 008) 26-Sep-07 11-Oct-07 26-Oct-0
Slide 15: Some notable events of the past year
For personal use only U Index s S 50 60 70 80 90 100 110 120 130 e 30-Mar-07 s wo n t 14-Apr-07 r d o s i D 29-Apr-07 c t e n 14-May-07 k J g p s 29-May-07 r u t 13-Jun-07 e D n u s o 28-Jun-07 e s i m s 13-Jul-07 w i o b 28-Jul-07 n n to le 12-Aug-07 c o (Jun e 27-Aug-07 m 11-Sep-07 berg Blo 2008)
Slide 16: Share price reflected global financials over last 12 months
For personal use only Index 50 60 70 80 90 100 110 120 130 30-Mar-07 14-Apr-07 29-Apr-07 14-May-07 29-May-07 13-Jun-07 28-Jun-07 13-Jul-07 28-Jul-07 12-Aug-07 27-Aug-07 11-Sep-07 26-Sep-07 11-Oct-07 26-Oct-07 10-Nov-07 25-Nov-07 10-Dec-07 25-Dec-07 09-Jan-08 24-Jan-08 08-Feb-08 23-Feb-08 09-Mar-08 2
Slide 17: The ASX has returned to July 2006 levels
The ASX 200 has returned to July 2006 levels For personal use only Index Index ASX 200 6800 6800 6300 6300 5800 5800 5300 5300 4800 4800 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Source: Macquarie Research, Datastream, July 2008 17
Slide 18: Resources stocks have outperformed
For personal use only Resources stocks have outperformed ASX200 Index Index 140 140 130 130 120 120 110 110 100 100 90 90 80 80 Industrials ex financials 70 70 Financials ex A-REITs 60 A-REITs 60 Resources 50 50 40 40 Jun 2007 Aug 2007 Oct 2007 Dec 2007 Feb 2008 Mar 2008 May 2008 Jul 2008 Source: IB
Slide 19: The financial services industry globally has been affected
The financial services industry globally has been affected For personal use only No financial institution immune from effect of adverse market conditions, however we have performed well relative to our peers, even in very tough market conditions, because: — Derive most operating income from provis
Slide 20: Long-standing key philosophies
For personal use only Long-standing key philosophies Strong risk management Strong goals and values Encouraging an entrepreneurial environment Philosophy of freedom within boundaries Remuneration systems — Recognise success — Encourage long-term commitment — Aligned with shareholder intere
Slide 21: Very well positioned
For personal use only Very well positioned Macquarie remains — Very profitable — Well capitalised — Well funded No unusual trading exposures No unusual concerns with credit quality Reflects Macquarie’s strong commitment to risk management Despite market conditions, global business platform
Slide 22: Nicholas Moore, Chief Executive Officer
For personal use only Macquarie Group Limited 2008 Annual General Meeting 23 July 2008 Nicholas Moore, Chief Executive Officer
Slide 23: Key drivers of year to March 2008
For personal use only Key drivers of year to 31 March 2008 Strong performance from equities related businesses in Asia, Australia and Europe, especially in 1H08 Substantial investment banking deal flow – value of transactions $A200b Record volumes in foreign exchange and commodity related busi
Slide 24: Strong broad-based growth
For personal use only Strong broad-based growth Group growth driven by: — Previous business investment — Diversification by product and geography — Continued strong demand for Macquarie products Good contribution from most operating groups. Exceptions: — Real Estate Group contribution impacted b
Slide 25: Diverse sources of income
For personal use only Diverse sources of income Dividends & distributions, 1.0% Base funds management fees, specialist funds, 7.2% Share of net profits of associates, 1.9% Base funds management fees, other funds, 3.8% Net interest income, 8.1% Interest rate products, 1.2% Foreign exchange products,
Slide 26: Diverse sources of income
For personal use only Diverse sources of income Commodities, resources^ and Lending, leasing and margin foreign exchange, 13% related income, 11% Cash equities – institutional & retail, 13% Equity derivatives, 15% Asset & equity investments (excl. specialist funds)^ and other income, 11% Specialist
Slide 27: Geographically diverse sources of income
For personal use only Geographically diverse sources of income Note: Income in each region excludes earnings on capital and other corporate items Australia $Am Asia-Pacific $Am 2500 3,500 3,000 2000 2,500 1500 2,000 1,500 1000 1,000 500 500 0 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Austr
Slide 28: No unusual trading exposures
No unusual trading exposures Our robust risk management has proven effective in this environment For personal use only Main business focus is making returns by providing services to clients rather than by principal trading No problem trading exposures No material problem credit exposures No
Slide 29: Very well funded – supporting ongoing business and growth
Very well funded – supporting ongoing business and growth For personal use only Liquid Assets Deposits 25 20 20 $A20.3b $A15.5b 15 15 10 10 $A8.5b $A6.0b 5 5 0 0 Mar-07 Jun-08 Mar-07 Jun-08 29
Slide 30: Very well funded – supporting ongoing business and growth
Very well funded – supporting ongoing business and growth For personal use only Term assets more than covered by Excess Capital term funding 12 $A32.0b 32 10 Convertible Preference Security Offer Excess Capital 8 $600m $A3.6b $A28.1b 6 27 4 Regulatory Capital 2 0 22 Proforma July 08 Term ASSETS - Ju
Slide 31: Growth through the cycle
For personal use only Growth through the cycle 120 100 0.8 Hill Samuel First listed 80 0.6 UK opens property trust Profit ($Am) branch Global real Enter office in estate crash stockbroking 0.4 Sydney London 60 office 0.2 opens Stock market 0 crash 40 1969 1970 1971 1972 1973 1974 1975 1976 MBL estab
Slide 32: Growth through the cycle
For personal use only Growth through the cycle Orion Securities Credit market 2000 CIT Systems Leasing disruption Group restructure 1800 1600 Giuliani Capital Russian debt SARS 1400 crisis 9/11 Profit ($Am) US recession Thames Asian financial 1200 Water crisis ING Dot com acquired crash Sydney 1000
Slide 33: Some new growth initiatives
For personal use only Some new growth initiatives Commodities, resources^ and foreign exchange, 13% Lending, leasing and margin related income, 11% Freight derivative services to Acquisition of US based shipping and freight industry CIT Systems Leasing Carbon trading initiatives New deposit
Slide 34: Specialist funds – serving the community everyday
Specialist funds Ó serving the community everyday For personal use only Macquarie is a global leader in managing businesses that provide essential services Broadcast Communications Airports +90 million people through television, +78 million passengers per telephone and radio infrastructure & annum n
Slide 35: Specialist funds – businesses performing well
Specialist funds Ó businesses performing well For personal use only Macquarie Capital Funds’ largest businesses1 have experienced continued EBITDA growth 30% 27% 25% % Change in 1 year EBITDA growth2 20% 19%4 17%3 16% 15% 14% 14% 13% 11% 10% 9% 4% 5% 0% Thames APRR Arqiva Sydney M6 Toll 407ETR Airwa
Slide 36: Specialist funds – strong investor support
For personal use only Specialist funds Ó strong investor support Record $A22.4b raised over the 12 months to 31 March 2008 75% from international investors and 85% into unlisted funds or syndicates Fund raisings continue despite market conditions $Ab 25 20 Raising Fund ($Ab) Unlisted Infrastru
Slide 37: Despite poor A-REIT market performance, solid underlying asset performance
Despite poor A-REIT market performance, solid underlying asset performance For personal use only Occupancy remains high (above 96%) with long remaining lease terms Positive rental growth being achieved on lease expiries General US property operating conditions becoming more difficult, especial
Slide 38: The global economy is running at two speeds
The global economy is running at two speeds For personal use only % Chg on Prev Yr % Chg on Prev Yr 8 Total World Global Real GDP Growth 8 Advanced economies 7 7 Emerging and developing economies 6 6 5 5 4 4 3 3 2 2 1 1 0 0 1972 1977 1982 1987 1992 1997 2002 2007 IMF forecasts Source: IMF, Macquarie
Slide 39: China is the engine of global growth
For personal use only China is the engine of global growth Contribution to global growth (%) % chg on prev yr 3.0 China US Europe 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 -0.5 -0.5 1980 1984 1988 1992 1996 2000 2004 2008 IMF forecasts Source: IMF, Macquarie Research, July 2008 39
Slide 40: Ongoing growth in demand for commodities
We expect to see ongoing growth in demand for commodities For personal use only % of total China’s demand as a % of world total % of total 80% Macquarie 80% Copper projection Aluminium 70% Zinc 70% Nickel 60% Iron Ore (Trade) 60% Oil 50% Steel 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 1950 1960 1970
Slide 41: Significant boost to Australia's terms of trade
This provides a significant boost to Australia’s terms of trade For personal use only Index Mar 86=100 Terms of Trade Index Mar 86=100 Treasury estimates the 200 200 AUS US CAN UK gains to the terms of trade Impact of soaring this year will add: 180 bulk commodity 180 9% to nominal GDP prices 20
Slide 42: Expect Australian growth to moderate but remain reasonable
Expect Australian growth to moderate but should remain reasonable For personal use only Contribution to GDP (%) Composition of Growth % Chg on Prev Yr 10 10 Household Consumption Business Investment 8 Housing Net Exports 8 Other GDP (RHS) 6 6 4 4 2 2 0 0 -2 -2 *GDP growth is the annual average % chg
Slide 43: The Australian economy is running at two speeds
However, the Australian economy is running at two speeds For personal use only Gross State Product % Chg on Prev Yr % Chg on Prev Yr 10 10 NSW, VIC, SA, Tas, ACT WA, Qld, NT 8 8 6 6 4 4 2 2 0 0 -2 -2 Mar 01 May 02 Jul 03 Sep 04 Nov 05 Jan 07 Mar 08 Quarterly 43
Slide 44: Global market conditions
For personal use only Global market conditions Credit markets — Since August 2007, credit markets have been extremely difficult and funding has been more expensive — Funding costs at significantly higher levels than pre-August 2007 Equity markets — Volumes have dropped off from very high levels
Slide 45: Solid first quarter but down on record prior corresponding period
Solid first quarter but down on record prior corresponding period For personal use only Conditions in many markets have deteriorated since this time last year. All groups operating profitably, but reported lower first quarter results than prior corresponding year’s record first quarter Businesse
Slide 46: Some highlights during the first quarter
For personal use only Some highlights during the first quarter Large advisory transactions — BrisConnections consortium awarded 45 year concession to construct, operate & finance Brisbane Airport Link tollroad — Adviser to BUPA on its $A2.4b merger with MBF — Takeover defence adviser to Dyno Nobel
Slide 47: Some highlights during the first quarter
For personal use only Some highlights during the first quarter $A600m Convertible Preference Securities issue as part of Group funding strategy Continued growth of US/European broking businesses Macquarie Cook Power – growing involvement in US power markets Cash Management Trust over $A17b;
Slide 48: Outlook – current year
For personal use only Outlook – current year Market conditions continue to make short-term forecasting more difficult than usual Solid start to the year, but current state of financial markets means that to repeat last year’s record performance is becoming increasingly challenging However, ove
Slide 49: Macquarie Group Limited 2008 Annual General Meeting
For personal use only Macquarie Group Limited 2008 Annual General Meeting 23 July 2008
Slide 50: Item 2: Remuneration Report
For personal use only ITEM 2: REMUNERATION REPORT Macquarie Group Limited 2008 Annual General Meeting
Slide 51: Remuneration Policy: Focussing on Appropriate Objectives
Remuneration Policy: Focussing on Appropriate Objectives For personal use only Emphasising performance-based remuneration Aligning the interests of staff Linking remuneration to shareholder and shareholders return drivers Emphasising direct alignment with Driving long-term long-term shareholde
Slide 52: Executive Director Remuneration: Emphasis on Performance-Based Remuneration
Executive Director Remuneration: Emphasis on Performance-Based Remuneration For personal use only Executive Director remuneration comprises three elements No special contractual termination payments A function of profit and excess return on Profit Share equity; key drivers of shareholder returns
Slide 53: Executive Director Remuneration: Ensuring Direct Long-Term Alignment of Interests
Executive Director Remuneration: Ensuring Direct Long-Term Alignment of Interests For personal use only Significant equity and retention arrangements ensure direct long-term alignment: — 20% profit share retained for 10 years, linked to fund performance — additional profit share invested in MQG sh
Slide 54: Board Oversight of Remuneration Approach
Board Oversight of Remuneration Approach For personal use only Board oversees the remuneration approach, assisted by the Remuneration Committee: — Remuneration Committee: majority of independent directors — key remuneration policies fully considered by Non-Executive Directors at least annually — c
Slide 55: Success in Aligning the Interests of Staff and Shareholders
Success in Aligning the Interests of Staff and Shareholders For personal use only Consistent profit growth and high return on equity reflect the outstanding efforts of staff Net profit after tax attributable to ordinary equityholdersReturn on ordinary equity A$ million % 50 2,000 40 1,800 : 1,600
Slide 56: Success in Attracting and Retaining High Quality People
Success in Attracting and Retaining High Quality People For personal use only Shareholders have benefited from a stable management team Approximately 7% voluntary turnover rate for Director level (senior 20% of staff) — 28% of Directors have been with the Group 5-10 years — 28% of Directors have
Slide 57: Success in Delivering Long-Term Shareholder Returns
Success in Delivering Long-Term Shareholder Returns For personal use only Total Shareholder Return 1,170% since July 1996 at MBL’s listing Macquarie and the nine best performing companies in the ASX 50 at July 1996 and international investment banking competitors % 1,550 1,350 1,150 950 750 550
Slide 58: Macquarie Group Limited 2008 Annual General Meeting
For personal use only Macquarie Group Limited 2008 Annual General Meeting 23 July 2008
Slide 59: Glossary
For personal use only GLOSSARY Macquarie Group Limited 2008 Annual General Meeting
Slide 60: Glossary
For personal use only Glossary $US/USD US Dollar 1H First half 1H08 Half year ended 30 September 2007 ABS Australian Bureau of Statistics AGAAP Australian Generally Accepted Accounting Principles APRA Australian Prudential Regulatory Authority ASX Australian Stock Exchange AUD/$A Australian dollar A
Slide 61: Glossary
For personal use only Glossary JV Joint Venture M&A Mergers and Acquisitions MAP/MAp Macquarie Airports MBL Macquarie Bank Limited MBL Macquarie Bank Limited MCG Macquarie Communications Infrastructure Group MIC Macquarie Infrastructure Company Trust MIG Macquarie Infrastructure Group MIIF Macquarie