At 8.30am this morning, Australia’s unique Millionaires Factory unveiled the following annual paper deluge on the market:
- 6 page press release
- 224 page annual report
- 75 page analyst presentation
- 72 page management discussion
- 50 page shareholder review
- 5 page statutory accounts
As usual, there wasn’t a single picture of Macquarie’s 13,000 bankers but the information was a tribute to outgoing CEO Allan Moss, who retires on Saturday with a final pay packet that dropped from a record $33.5 million to $24.75 million.
Net profit was up 23% to $1.8 billion, total assets under management leap 18% to $232 billion, liquidity tripled to $18 billion, trading income soared from $1.04 billion to $1.835, there is $3 billion of surplus capital and credit losses were negligible. So much for the global credit crunch.
Alas, the market was unimpressed as Macquarie shares tumbled as much as 5% in morning trade because the bank failed to pull any rabbits out of the hat and investors fretted about the sustainability of the third party fund model.
Whilst Australian income rose by 7% to $3.3 billion, it was the emerging Asia-Pacific division that starred as income soared by 71% to $ 2 billion. This almost surpassed the $2.3 billion in income from the rest of the world as European and US income both fell.
The combination of record performance fees from its myriad of listed and unlisted funds, plus good old fashioned investment banking fees saw total fees and commissions rocket 31% to $4.6 billion.
Two individual deals sum this up. As the main Wesfarmers adviser on the Coles takeover, Macquarie pocketed a decent whack of the $600 million in total fees on that deal.
And when Macquarie Airports flogged control of Birmingham Airport to the Victorian Government and the Ontario Teachers Pensions Plan last year for an exorbitant price that valued the whole airport at $1.9 billion, the bank appears to have pocketed a performance fee of $147.4 million, equivalent to 29% of the sale price. This sort of outrageous gouging will get a big airing at next week’s Macquarie Airports AGM.
Macquarie’s Australian listed funds are now are trading at steep discounts to net assets, but this hasn’t stopped the bank raising a staggering $22.4 billion over the year to March, 75% of which was unlisted and 85% offshore.
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The only major blemish was the property division which tumbled from a $507 million profit to a loss of $81 million thanks to $293 million in write-down on its investments in the likes of Macquarie Office ($99 million), Macquarie Countrywide ($113 million) and a Japanese fund which dropped $72 million.
These conservative write downs have left the total book value of the bank’s investments in its funds at $3 billion, $281 million below the current market value.
All up, the numbers look great and we should salute Macquarie for out-smarting governments, investors, clients and counter-parties all over the world, rather than just in Australia. Whether they can keep it up with Nicholas Moore at the helm is another question altogether.
*Listen to last night’s interview on 4BC about Reserve Bank raids and dodgy government accounting.