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MA Financial Group | 2021 Annual Report 01
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About MA Financial Group
Independent Chair’s letter
Joint Chief Executive Officer’s letter
2021 at a glance
Year in review
Sustainability report
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Consolidated statement of profit or loss and
other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor’s report
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Glossary
Corporate directory
Directors’ report
Letter from the Chair of the Nomination and
Remuneration Committee
Remuneration report
Auditor’s independence declaration
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report About MA Financial Group
About MA Financial Group
MA Financial is a diversified financial services group with a strong focus on growth and
innovation. In our twelfth year of operation, our core strategy remains the same and that is to
find great people, empower them and provide the infrastructure to succeed individually and as
a team. This core strategy, coupled with a strong focus on alignment of interest, provides the
foundation to grow a diversified business sustainably across many specialisations.
Our purpose and values
MA Financial is focused on delivering long term value to our
clients and partners, our shareholders and our people. We
do this by:
• partnering with clients who value strong alignment,
complementary expertise and sustainable performance
• empowering our people through a culture of growth,
cohesion, innovation and accountability
• delivering a high standard of technical expertise in both
investment and advisory roles
• being active managers of risk.
Differentiating Values and Behaviours
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We are a diversified financial services firm specialising in Asset Management, Lending,
Corporate Advisory & Equities. Since establishment in 2009 the Group has built on its
capabilities as a corporate advisory business, growing an Asset Management business
with almost $7 billion of assets under management (AUM) and, more recently, a
diversified Lending business.
Our core focus has been to build specialised expertise and capabilities in deep
addressable markets. Where we see strategic benefit, we have invested in operating
capability to complement our investment capability, such as in retail shopping centres
and hospitality.
The Group now employs over 425 people across six locations across Australia, China,
Hong Kong and the United Kingdom. A core MA Financial principle has been to attract
and hire the best people and empower them to reach their full potential. This approach
has been consistent throughout the MA Financial journey and is core to our success.
Growth
Cohesion
• We actively seek sustainable
value creation
• We are committed to continuous
improvement and technical excellence
• We pursue ongoing learning, and we invest in
practical individual and team development
• We recognise the whole is greater
than the sum of its parts
• We encourage each other to pursue
opportunities and empower one another
to succeed
• We actively find solutions, not problems
• Our growth is always paired with acting
• We value diversity
with integrity
Innovation
Accountability
• We uncover opportunities others may
miss and transform them into actionable
and meaningful outcomes for our clients
• We accept our commitments and
are accountable to deliver on them
• We own and discuss our mistakes
• We constantly develop and share new ideas
and learn from them
• We are entrepreneurial and think and act like
• We actively think about and manage risk
business owners
• We speak up and we don’t accept inappropriate
• We are hard-working and resilient
behaviour and actions
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
About MA Financial Group
About MA Financial Group
Asset Management
Lending
We manage funds for institutional, high net worth (HNW)
and retail investors across diversified strategies including
real estate, hospitality, credit, listed equities, private equity
and venture capital. In total, we manage approximately
$6.9 billion across over 50 funds.
Our funds are distributed and managed by experienced
and diverse teams. The business benefits from deep
operating expertise and capability within its investment
teams as we believe that through in-house management of
fund operating assets we can deliver superior returns and
best manage risk.
The Group’s investment team also benefit from sharing
expertise across the wider business, gaining sector
insights and access to different investment opportunities in
our core areas of focus.
Our expertise in credit advisory and investment has
been leveraged to build our Lending division. Lending
activities were originally reported within the Group’s Asset
Management division, however the increasing scale and
ambition of these activities led to the reporting of a new
operating division in May 2021.
Our Lending division is an operator of differentiated lending
platforms and a funder of high-quality loan portfolios. Our
lending platforms focus on residential mortgage lending
and specialty finance which includes legal disbursement
funding. Our loan portfolio funding activities are powered
by the Asset Management credit funds from which we earn
net interest margin. We have also developed institutional
lending partnerships, such as the credit related partnership
we entered with a major Australian bank to fund asset
finance loans.
In real estate, the Group manages a diversified portfolio
of retail, office and industrial assets backed by strong
operating capabilities. RetPro was acquired in April 2021,
adding 123 staff and operational expertise across every
aspect of retail shopping centre management.
In December 2021 the Group announced it would acquire
Finsure, a leading Australian mortgage aggregator business
with loan book on platform of $60.8 billion. Finsure offers
more than 4,800 loan products from a panel of over 65
lenders to a network of over 2,000 mortgage brokers.
The Group’s hospitality platform, MA Hotel Management,
applies strong sector expertise across a high-quality
portfolio of 40 hotel venues. This includes the Redcape
Hotel Group, the Group’s $1.3 billion unlisted hospitality
fund open to retail clients.
MA Financial has expertise in providing credit to borrowers
and structuring transactions in a range of asset classes and
economic conditions. These capabilities are applied across
our credit fund investment strategies spanning real estate
credit, private credit, structured finance, cash and bonds.
The Finsure acquisition was completed in February 2022,
adding technology-enabled infrastructure focused on
Australia’s approximately $2.0 trillion residential mortgage
market to the Lending division.
Corporate Advisory & Equities
Our Corporate Advisory & Equities (CA&E) business
provides strategic and financial advice for mergers and
acquisitions, equity capital markets (ECM), debt capital
markets and restructuring as well as cash equities trading.
Our specialised sector capabilities include real estate,
credit and restructuring, technology and small to mid-cap
industrial companies.
We have a long-standing strategic alliance with NYSE listed
global investment bank Moelis & Company. The strategic
alliance is beneficial to both parties by:
•
Providing access to a global network of advisory
executives sharing intellectual capital and client
relationship
• Facilitating cooperation on cross-border or industry
specific advisory mandates
• Leveraging a strong and recognisable global brand in
corporate advisory activities
• Moelis & Company also owns 13.7% of MA Financial’s
issued capital.
Since 2009, we have advised on over $100 billion worth of
transactions and raised over $12 billion of equity capital for
our clients.
Our Equities business provides securities research, sales
and trading execution services to institutional and HNW
clients. We are primarily focused on small-cap and mid-cap
industrial and real estate companies.
The Equities team complements the Corporate Advisory
division by providing ECM expertise and distribution
capabilities to facilitate transactions on behalf of clients.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
About MA Financial Group
MA Financial in the community
About MA Financial Group
MA Financial in the community
Our core value of Growth is about much more than financial performance. We are part of
a wider, interdependent network of customers, suppliers, shareholders and communities.
We believe that healthy communities and networks lead to better outcomes for everyone.
Sustained growth is also about creating new learning opportunities for our people and
supporting their development so each can reach their full potential.
During 2021 we have had many opportunities to contribute to enriching our communities, below are a few of our
favourite initiatives:
MA Foundation
The MA Foundation was launched
in 2018. Its purpose is to positively
impact the communities in which
we operate. Since inception, the
MA Foundation has donated over
$6.8 million to over 35 charities. The
activities of the Foundation are led
by our people, and more than 80%
of Foundation receipts arise from
pledges from our staff. This is a
testament to our workplace culture
that places great importance on
supporting our communities.
The MA Foundation has three
Community Partners as part of our
giving programme.
•
•
•
GO Foundation – a focus on
education and working to create
a brighter future for Indigenous
Australians
Beyond Blue – supporting millions
of Australians achieve their best
possible mental health
Mirabel Foundation – assisting
children who have been orphaned
or abandoned due to parental illicit
drug use and are now in the care of
extended family.
Leading up to Christmas we gave our
people the opportunity to donate to
the Mirabel Foundation which resulted
in Christmas gifts for the regional NSW
members of the Mirabel community,
who due to distance, were unable to
attend the Mirabel Christmas party.
We were able to bring joy to 300
children for Christmas 2021.
Publinc
Publinc Communities is our Hospitality
venues community programme.
Publinc Communities is a purposeful
social impact programme driven by
customers connecting with their
local community and giving back.
Together with our customers, Publinc
has partnered with more than 80
community groups. Kids with Cancer, a
community organisation that has been
supporting Australian families and their
children battling cancer for over 20
years, is one of the community groups
that is supported by the Publinc
Communities at seven venues. To date,
these communities have raised over
$38,000 to support Kids with Cancer.
Sydney Contemporary
2021 was the year of our first major
sponsorship of the arts – the Sydney
Contemporary art fair. Together with
Sydney Contemporary we share
values of integrity and excellence,
alongside a passion for contemporary
art. Sydney Contemporary is known
for the diversity of artists represented.
Amid COVID lockdowns, we were
able to host the inaugural ‘Celebrating
success’ lunch at the Museum of
Contemporary Art in Sydney. The
theme of this lunch was ‘Celebrating
success: Woman in art’ where we
heard from a diverse panel of women
in the arts community to share their
inspiring stories and collections – Lindy
Lee, Sue Cato, Coby Edgar, Ursula
Sullivan and Mikala Tai.
Regional engagement
We have supported cultural ties
between Australia and our regional
neighbours through active engagement
with and sponsorship of the Australia–
China Business Council, the Migration
Institute of Australia and the Australia–
China Relations Institute.
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Growth is about our people, but also about impact in the communities we
live, work and invest in. It is about creating opportunity for our growing
team of over 425 directly employed people. Whilst not our employees, we
recognise that the employees of the companies and funds we invest in can
be impacted by our decisions. We estimate that there are more than 4,000
people in this cohort; as we grow, our impact on others grows exponentially.
about impact in the communities we
live, work and invest in.
“Growth is about our people, but also
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Independent Chair’s letter
highly motivated, with
staff owning 31% of our
Company and holding
great pride in our history
and service to clients.
“Importantly this team is
12
Our strong earnings growth has been the result of many
years of ongoing investment in our platform. The Group
continued this investment over the past year as we added
capability both organically and through acquisition. We
added to our real estate capabilities with the acquisition
of RetPro, broadened our corporate advisory offering
with selective Managing Director hires and added
strategically important distribution infrastructure to our
Lending business, announcing in December that we
would acquire Finsure.
We also recently moved into new office premises in
Sydney and Melbourne which provide absolute best in
class amenity for our staff and clients, creating a positive
working environment for increased collaboration and
engagement. We often talk about the importance of our
people and this is an important investment in retaining and
encouraging the best people to join MA Financial.
Another core principle of our strategy is our focus on
empowering people.
Our business is a diversified financial services group
which sees us operating and growing multiple business
units in parallel. Our senior leadership team benefits
from significant depth of experience and tenure
working together. Led by Joint CEO’s Julian Biggins and
Christopher Wyke, our senior corporate leadership team
spans 42 Managing Directors with an average of over 6
years employment at MA Financial Group.
Importantly this team is highly motivated, with staff
owning 31% of our Company and holding great pride in
our history and service to clients. They are highly focused,
balancing risk management with excellent shareholder
returns. The output of this focus has seen us achieve total
shareholder returns of approximately 32% per annum
since listing in 2017.
Each of our operating business units is, in turn, run by
experienced executives who focus on their area of
expertise. This focus is complimented by the Board and
senior executive team’s confidence in their decisions.
Our leadership believes that empowering staff to best
serve their clients enables MA Financial Group to remain
focused, relevant and agile.
Many years of empowerment and training coupled with our
history of high retention of key staff means that we enjoy
long term stability and focus.
Delivering on key focuses for our Board
Reflective of the ongoing growth of MA Financial, and
our aim of increasing Board independence, we welcomed
Simon Kelly to the Board of Directors in April. Simon has
over 30 years’ experience in strategic, financial and general
management across a range of Australian listed and
unlisted consumer facing businesses. He joined the Board
as an Independent Non-Executive Director and Chair of the
Audit and Risk Committee.
Following Simon’s appointment, both Board Sub-
committees are chaired by Independent Directors, with
Alexandra Goodfellow appointed as an Independent
Non-Executive Director and Chair of the Nomination and
Remuneration Committee in August 2020.
In 2021, Alexandra has led the Board in the development
and implementation of an enhanced long term incentive
programme that fits within our philosophy of creating long
term alignment between executives and shareholders. We
believe we have struck an appropriate balance and have
outlined our approach in the remuneration report.
The 2021 Annual Report also includes our inaugural
Sustainability Report. As MA Financial’s activities
continue to grow and diversify the Board recognises the
increasing importance of sound Environmental, Social and
Governance practices in generating better outcomes for all
our stakeholders.
I would like to thank our Board, senior executives and staff
for their continued hard work, dedication and skill through
a period of significant business growth and evolution.
Preserving our strong workplace culture based on sound
values, innovation, cohesion and accountability remain key
to our continued success.
Our business is in a strong position and we are looking
forward to continuing our growth journey over the year
ahead. Thank you for your ongoing support of MA
Financial Group.
Yours faithfully
2021 was a year of significant achievement for
MA Financial Group. We delivered record earnings
growth and several important strategic milestones
as our business continues to expand and evolve.
We are pleased to report on this progress in the
2021 Annual Report.
In last year’s Annual Report, I wrote of the significant challenges the
business faced in 2020 from the COVID-19 pandemic, and how the
Group had successfully navigated these to lay the foundations for
strong growth. It is therefore gratifying to see the strength of delivery
in 2021 despite continued disruption from the pandemic. I would
sincerely like to thank all our staff for their hard work in delivering
such a positive result in what was another challenging year for our
entire community.
The Group delivered record Underlying earnings per share of 38.2
cents, up 52% on the 2020 result, as the business capitalised on
improved market sentiment and increased activity levels. As a result
of the strong earnings the Board is pleased to declare a fully franked
final dividend of 12 cents per share to add to our maiden interim
dividend of 5 cents per share. The combined full year distribution of
17 cents per share is up 70% on 2020.
At our AGM in May shareholders approved the change of our
Company’s name from Moelis Australia to MA Financial Group.
This transition is an important milestone, reflecting the growing
diversification of the Group’s business activities and our increasingly
global footprint.
Importantly, the connection with our NYSE-listed strategic partner
Moelis & Company remains strong. It retains a 13.7% ownership
interest in MA Financial Group and two Board seats occupied by Ken
Moelis and Kate Pilcher-Ciafone.
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Jeffrey Browne
Independent Chair
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Joint Chief Executive Officer’s letter
“As business builders,
investing for the future
is important to us as we
carefully look for the next
value creation opportunity
that will significantly
benefit shareholders.
Staff numbers increased by approximately 200 over the
year to over 425 employees. The acquisition of RetPro in
April added 123 staff and provided a full suite of operating
capabilities to our retail shopping centre investment
strategy. Strategic senior hires in our Corporate Advisory
& Equities business at the start of 2021 broadened our
advisory capabilities helping to drive a record year for the
division.
We are pleased to present the 2021 MA
Financial Group Annual Report, highlighting
a record year for our business. The Group
continues to grow and diversify, and this has
been reflected in our change of name from
Moelis Australia to MA Financial.
Underlying net profit of $54.9 million and earnings per
share of 38.2 cents were up 53% and 52% on FY20
respectively. The record level of earnings and growth
reflects a full year of strong momentum across the whole
business. This follows the rebound in business activity
levels experienced during the second half of 2020.
Significant disruption from the COVID-19 pandemic was
again a feature of the year and we are extremely proud of
how our people met this challenge. They have continued to
deliver for our clients, proving highly adaptable, agile, and
persistent in the face of change.
Importantly, we have been able to deliver a strong result
whilst continuing to build our platform for sustainable
long term growth. As business builders, investing for the
future is important to us as we carefully look for the next
value creation opportunity that will significantly benefit
shareholders.
Our recent move to new office premises in Sydney and
Melbourne has been a real positive for the business.
The amenity is first class and provides staff, clients and
investors a great space to enjoy and find new ways to
create opportunities for each other.
In December, we announced the acquisition of Finsure,
a leading mortgage aggregator platform connecting its
network of over 2,000 mortgage brokers with a panel of
approximately 65 lenders. This is strategically significant
for our Lending division and its growth aspirations in
Australia’s $2.0 trillion residential lending market.
The growth and emergence of our Lending business
highlights the strength of the MA Financial business model.
We have materially invested in this strategy over a number
of years whilst leveraging the accumulated expertise within
our CA&E and Asset Management divisions. It has now
reached a scale of earnings contribution and potential
growth that led to its launch as a separate operating
division during the year.
Our Asset Management business remained our key
growth driver in 2021 supported by growing investor
inflows underpinning a 28% increase in Assets under
Management to $6.9 billion. Our investment in distribution
and investment product over several years has led
to accelerating fund inflows that are also becoming
increasingly diversified by source. Inflows from domestic
14
clients of $450 million were nine times higher than the prior
year and our network of Foreign HNW clients continues to
expand and become more geographically diverse. In 2021,
we raised over $1.1 billion of new equity from our clients.
We continue to build and grow our substantial operating
and investment capabilities in real estate, hospitality and
credit. In addition, our listed equities business is becoming
an increasingly important financial contributor supported
by strong inflows and positive investment performance. Our
private equity and venture capital team continues to invest
in Australian small and start-up businesses on behalf of our
Significant Investor Visa clients.
It was a significant year for our hospitality platform
(Hospitality) which navigated numerous COVID-19 related
disruptions to grow its footprint and deliver strong returns
outcomes to investors. This included the successful
delisting of Redcape Hotel Group, the acquisition of our
first hotel in Victoria (the Bendigo All Seasons Resort)
and the announced acquisition of Hotel Brunswick which
is in the Byron Bay region. The Beach Hotel in Byron
Bay, acquired in 2019, and Hotel Brunswick will form two
strategic venues in the burgeoning Byron Bay tourist
region.
Our CA&E division delivered a record year, driven by a 39%
increase in advisory fees. We advised on 25 completed
transactions during the year worth $5.8 billion, up from
$4.2 billion in 2020. Mandates were spread across our
core capabilities of real estate, restructuring, technology
and small to mid-cap industrials.
Our Corporate Advisory revenue per executive of
$1.2 million was in the middle of the Group’s targeted
productivity range. Over our more than 12 years of
operation we have been relatively consistent in delivering
within this range. This highlights the selective approach we
take to growing our advisory business, with productivity
outcomes always front of mind.
The strength and dynamism of our balance sheet is
also critical to our ongoing growth. We took a prudent
approach to balance sheet management during COVID-
related market uncertainty in 2020, allowing the business
to capitalise on the transactional upswing that followed.
In 2021, we realised $80 million of prior investments and
re-invested $60m to support future growth and strategic
initiatives.
The Group’s cash balance was further bolstered by
our successful $100 million institutional placement in
December and subsequent $20 million retail shareholder
purchase plan. This provided significant funds for the
acquisition of Finsure and flexibility for further growth
initiatives. Both raisings were heavily oversubscribed by
investors, reflecting strong endorsement of the business,
its strategy, and its growing presence in the financial
services market.
Looking ahead, we are very pleased with the position of
the Company and optimistic about the strong momentum
across our business. Our focus in 2022 will continue to be
on scaling our chosen areas of expertise whilst considering
what might be the next opportunity in the medium term.
We continue to carefully balance investing in the next
product or opportunity with scaling existing businesses.
We believe we have a proven track record of creating value
for shareholders and have a strong desire to continue to
innovate although we look to balance investing with letting
the scale benefits of prior strategic investments fall to the
bottom line.
In 2022, we expect Underlying earnings per share to
grow between 10% and 20%, supported by continued
momentum across each of our three divisions and
underpinned by the strength of our balance sheet. Of
course, this is subject to the variability of market conditions
and we acknowledge the current increased market
volatility, rising interest rate environment and geopolitical
uncertainty.
In closing, we would like to thank our people for their
significant efforts over the year and our shareholders,
clients and business partners for their ongoing support.
We look forward to delivering on our purpose of building
long term sustainable value for all our key stakeholders.
Yours Sincerely
Christopher Wyke & Julian Biggins
Joint Chief Executive Officers
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
2021 at a glance
Statutory revenue1
Underlying revenue2
Statutory EBITDA3
$228.7m
42% increase from 2020
$232.4m
$72.2m
45% increase from 2020
18% increase from 2020
MA Academy
Established in 2020
Developing and retaining talent
Practical learning with real life edge
Underlying EBITDA2
$88.5m
46% increase from 2020
Statutory NPAT
$32.0m
21% increase from 2020
Underlying NPAT2
Statutory earnings per share
$54.9m
22.3¢
53% increase from 2020
21% increase from 2020
Cash and cash
equivalents
$242.9m
76% increase from 2020
Assets under
management as at
31 December 2021
$6.9bn
28% increase from
December 2020
Year in review
Group performance
Overview
The Group recorded total comprehensive income for the year of $48.1 million (2020: $22.5 million) and profit after income
tax for the year of $32.0 million (2020: $26.5 million). Basic earnings per share was 22.3 cents, an increase of 20.4% on
the prior comparative period.
STATUTORY RESULTS
Total income
Profit before tax
Profit after income tax
Total comprehensive income
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Full year dividend (cents per share)
31 DEC 2021
$’000
31 DEC 2020
$’000
MOVEMENT
%
228,735
48,710
32,041
48,065
22.3
21.2
17.0
161,101
38,690
26,480
22,517
18.5
18.0
10.0
42.0%
25.9%
21.0%
113.5%
20.5%
17.8%
70.0%
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UNDERLYING RESULTS
31 DEC 2021
$’000
31 DEC 2020
$’000
MOVEMENT
%
Underlying earnings
per share2
38.2¢
52% increase from 2020
Revenue
EBITDA
Net profit after income tax
Earnings per share (cents per share)
Non-IFRS Underlying results
232,376
88,492
54,940
38.2
160,134
60,498
35,998
25.1
45.1%
46.3%
52.6%
52.2%
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MA Foundation donations
$6.8m
Since establishment
in late 2017
Full year dividend
per share
17.0¢
Fully franked
70% increase from 2020
Underlying Return
on Equity4
21.2%
5.7% increase from 2020
1. Statutory Revenue refers to total income on the consolidated statement
3. Statutory Earnings Before Interest, Taxation, Depreciation and
of profit or loss and other comprehensive income.
2. Underlying revenue, EBITDA, Net Profit After Tax (NPAT), Return
on Equity and earnings per share and other measures of underlying
performance are not prepared in accordance with IFRS and are not
audited. Detailed reconciliations between the Underlying and IFRS
measures are set out on page 17 and note 3 of MA Financial’s 2021
Financial Report and FY21 Investor Presentation.
Amortisation (EBITDA) is not a recognised International Financial
Reporting Standards (IFRS) measure but has been presented to give a
comparable measure to the Underlying Result.
4. Return on Equity is Underlying net profit after tax divided by average
equity for the year.
The Group also utilises non-IFRS Underlying financial
information in its assessment and presentation of Group
performance. When reading our statutory and Underlying
results, we note that there are some adjustments that a
reader may find useful to understand in more detail. For
further information on adjustments between statutory and
Underlying results, please refer to the detailed reconciliation
provided in note 3 Segment information of the 2021 Financial
Report and to the explanation in the Directors Report as to
why the Directors believe that, when read in conjunction with
the IFRS measures, the Underlying measures are useful to
the reader.
Underlying revenue was up 45% on the FY20 result,
as all business divisions experienced strong activity
levels. Underlying EBITDA was up 46% on FY20 as
strong divisional revenue growth offset a 44% increase
in expenses related to increased business activity and
continued investment in platform capabilities to support
our growth strategy. Importantly Group EBITDA margins
remained in line with the prior year at 38%. As a result of
this strong growth, Group Underlying EPS grew 52% on
FY20 and the Group’s Return on Equity increased from
16% to 21%.
16
17
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Year in review
Our business
The Group operates three divisions being Asset Management, Lending,
Corporate Advisory & Equities, with unallocated costs related to shared
Corporate Services and functions.
Year in review
All divisions performed strongly in the year and the table below shows their respective contributions to Group Underlying
EBITDA and NPAT.
Asset Management
31 Dec 2021
$’000
31 Dec 2020
$’000
73,225
10,306
21,950
48,930
9,126
13,845
(16,989)
(11,403)
88,492
(4,710)
(5,297)
(23,545)
54,940
60,498
(3,741)
(5,332)
(15,427)
35,998
The Asset Management division reported a record result
in the year with strong growth in revenue underpinned
by continued investment in the platform and capability.
Asset Management contributed 69% of Group Underlying
EBITDA before Corporate Services in FY21. Underlying
EBITDA of $73.2 million was up 50% from $48.9 million in
FY20, due to strong growth across all fee-based revenue
activity and positive mark to market revaluations.
Assets under Management (AUM) grew by 28% over the
year to $6.9 billion at 31 December 2021. Net fund inflows
exceeded $1.0 billion for the first time in FY21 ($1.1 billion),
significantly up on the $430 million received in FY20. The
increased inflows were driven by strong growth in inflows
from domestic clients and continued momentum in flows
from international clients. The Group’s investment in
domestic distribution and tailored product for the domestic
market delivered results as net inflows from domestic high
net worth (HNW) and retail clients rose from $52 million in
FY20 to $452 million in FY21.
AUM growth translated into strong fee revenue growth,
with recurring revenue up 32% to $78.2 million, supported
by a 33% increase in base management fees including the
addition of $8.2m of base fee revenue from the acquisition
of RetPro in April 2021.
Transaction and performance based revenue increased
58% to $42.6 million. Transaction fee growth was
underpinned by increased activity in the year and a growing
contribution from our real estate credit funds. Performance
fees reflected the strong performance of our equities,
hospitality, and venture capital funds where we generally
earn performance fees subject to performance hurdles.
Both transaction and performance fees are becoming a
more consistent contributor to earnings as AUM increases
and the Group’s investment strategies mature and diversify.
The mark to market of the Group’s equity investments
delivered a $22.6 million gain relative to a $5.1 million gain
in FY20. This was primarily due to an $18.7 million positive
non-cash revaluation of the Group’s investment in Redcape
Hotel Group and was supported by a further $3.4m of net
realised gains from the disposal of smaller balance sheet
holdings.
Expenses of $70.2 million were up 65% on FY20 due to the
RetPro acquisition and the continued investment in people
and capability to support growth. The hiring of talent is
expected to continue as the Group continues to invest for
the future although with a conscious focus on balancing
investment and earnings.
Asset Management
Lending
Corporate Advisory and Equities
Corporate Services
Underlying EBITDA
Depreciation and amortisation
Interest expense
Income tax expense
Underlying NPAT
18
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Year in review
Year in review
Investment strategy highlights
Hospitality – $1.6 billion AUM – 19%
Credit – $1.6 billion AUM – 42%
Real Estate – $2.6 billion AUM – 17%
FY21 was a year of significant activity as the real estate
strategy continued to expand and diversify its portfolio
of real estate assets, acquiring $360 million of new
assets. The acquisition of RetPro in April 2021 deepened
our operating capability and is complementary to our
investment expertise in the retail real estate sector.
Furthermore, investment in real estate talent continued in
FY21 with key new hires adding to the capability, service
offering and growth potential of the investment team.
The Group added further office assets to its funds,
acquiring a portfolio of three office buildings from
Ascot Capital for $115 million and entering a partnership
with Centuria Capital to acquire a 50% interest in the
$83 million Grenfell Tower in Adelaide.
Investor interest returned to retail real estate assets
and the Group’s acquisition of the Sugarland Plaza in
Bundaberg for $140 million in September was strongly
supported by HNW clients. In December, the Hollywood
Shopping Plaza in South Australia was successfully
divested for $80 million, delivering an IRR of 10% to
investors over a 10 year period.
After establishing the MA Prime Logistics Fund in
September 2020, the Group acquired a further $150 million
of industrial assets in FY21 underpinned by strong investor
demand. This included the $60 million acquisition of Sara
Lee’s food manufacturing facility on the Central Coast of
New South Wales.
The Group’s community-centric hospitality assets are
managed by MA Hotel Management (Hospitality), which
applies leading sector operating expertise across the
real estate backed portfolio of 40 hotel venues. Despite
significant challenges presented by COVID-19 trading
restrictions, Hospitality delivered a strong contribution
in FY21. Hospitality AUM grew 19% over the year, as the
Group added 7 new hotel venues to its portfolio. This
included Hospitality’s first hotel in Victoria, the Bendigo
All Seasons Resort Hotel, acquired for $54.5 million in
November.
Redcape Hotel Group also delivered $18.7 million of
positive mark to market gains and $6 million in performance
fees as hotel valuations benefited from capitalisation rate
compression and strong operational performance outside
of COVID-19 lockdown periods.
In September, Redcape security holders overwhelmingly
voted in favour of its proposed delisting from the ASX.
This has led to Redcape reverting back to an unlisted
fund, providing security holders with a less volatile pricing
structure that more closely reflects the underlying valuation
of Redcape’s assets.
The year finished strongly with the announced acquisition
of the Hotel Brunswick, in Brunswick Heads NSW, for $68
million. Settlement is expected to occur in 1H22, enhancing
the Group’s capability and offering in the popular tourist
destination region of Byron Bay following the acquisition of
the Beach Hotel, Byron Bay in 2019.
The Group continued to expand its Credit investing platform
with AUM increases over the year supported by strong fund
inflows. In particular, the Group’s real estate credit funds
have attracted strong inflows from domestic HNW and
retail clients.
The first two funds targeting retail investors were launched
in April 2021, the Secured Real Estate Income Fund
and Priority Income Fund. Both funds target consistent
yield delivery with monthly cash distributions and have
grown progressively over the year. The wholesale Private
Credit Fund was also realigned into the new MA Credit
Opportunities Fund with a broader investment mandate
to take advantage of opportunities in real estate credit,
structured finance as well as private credit opportunities.
Base management fee growth continued in line with AUM
growth with transaction fees an increasing feature of the
real estate credit funds.
All credit strategies delivered consistent performance for
clients through FY21, with no material impairment issues
across the portfolio reflective of the Group’s conservative
underwriting standards and robust management and
reporting capabilities.
To meet investor demand, the Group developed a number
of new lending funds, including a US Dollar denominated
version of the Priority Income Fund which provide attractive
growth opportunities over the coming years.
Equities (Asset Management) – $0.9 billion AUM – 85%
The equities strategy continued to increase its scale and
earnings contribution in FY21 and is a significant strategic
focus for the Group. The strategy was supported by
ongoing inflows from foreign HNW investors who benefitted
from strong returns in excess of 20% in the flagship
Significant Investor Visa (SIV) small caps fund. This positive
fund performance and the increased fund size delivered a
$14.4 million performance fee in FY21, up from $6.4 million
in FY20.
The Group continues to focus on Equities as a growth
opportunity in Asset Management. In August 2020, we
established the Equity Opportunities Fund, a domestic high
conviction fund, which has grown AUM to approximately
$120 million. Furthermore, the first international equities
fund, the MA Global Equity Opportunities Fund, was seeded
by the Group to build track record ahead of promotion to
investors.
Private Equity / Venture Capital – $0.3 billion AUM – 11%
The PE/VC funds grew AUM by 11% to $315 million
underpinned by inflows from SIV clients and the acquisition
of two accommodation assets, in Bathurst and Cairns, by
the MA Real Asset Opportunities Fund.
PE/VC continues to grow with a maturing pipeline of
realisations providing a steadier flow of performance fees
in 2021 and beyond. The funds successfully realised an
investment in CitrusAd in 2H20 delivering strong returns to
clients, a $1.8 million gain on the Group’s co-investment and
a $4.0 million performance fee to the Group.
Future flows should benefit from an increase to the
mandated allocation for SIV investors into VC funds from
$0.5 million to $1.0 million per visa. This change was
introduced from 1 July 2021 but will mainly impact the
2022 flows.
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21
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Year in review
Year in review
Financial position
Lending
Corporate Advisory & Equities
The Corporate Advisory & Equities (CA&E) division
delivered a record earnings performance in FY21, growing
58% on the prior year largely due to strong M&A activity.
The result reflected the ongoing investment in the team and
capability. Senior hires recruited at the beginning of FY21
were integrated seamlessly with the broader team and
made strong contributions to the full year earnings.
Corporate Advisory fees were up 39%, representing
revenue per executive of $1.2 million, in the middle of the
Group’s target productivity range. Activity was broadly
spread across the division’s core capabilities of real estate,
technology, small and mid-cap industrials and restructuring
and credit.
The business advised on $5.8 billion of transactions during
the year, up on $4.2 billion in FY20. ECM activity increased
in 2H21 after a quiet first half and $1.1 billion was raised
for clients over the year. These transactions included the
highly successful $230 million equity raising for Johns Lyng
Group and sole advisor on its related acquisition of US-
based Reconstruction Experts.
Equities commissions were down 20% on FY20 largely as
significant volatility drove elevated trading volumes in the
prior period.
Expenses increased on the prior year as average Advisory
headcount grew from 45 to 51 staff and the revenue base
increased. At the end of FY21 there were 58 staff employed
in the Advisory division with a new senior hire in Equity
Capital Markets joining the team in early 2022. The Group
will continue to develop and grow the division but will
remain selective in its approach to hiring, always paying
regard to the maintenance of its revenue per head target
range and the consistency of earnings productivity in the
business over the long term.
The Group announced the separation of its Lending
activities from its Asset Management division in May 2021,
reflecting its increasing scale and significance to the
Group’s results.
Lending’s loan portfolio grew by 44% to $455 million at
31 December 2021. The division’s NIM revenue grew by
30% to $19.9 million, while FY21 Underlying EBITDA of
$10.3 million was up 13% on proforma FY20. Lending
EBITDA represented 10% of the Group’s Underlying
EBITDA before corporate costs.
The focus for Lending in FY21 has been on building a
scalable platform to position the Group for long term
growth in the large addressable markets. This included a
significant investment in operational capabilities to support
the delivery of our strategic growth initiatives. The FY21
result includes over $2.1 million of operational expenditure
investment in platforms to facilitate future growth in
both residential mortgages and specialty lending. These
investments are expected to allow the Group to capitalise
on future opportunities at scale, although are a drag on
returns on invested capital (ROIC) in the immediate term.
Lending delivered strong growth in its loan portfolio funding
initiatives in FY21. This was driven by a combination of
growth in funds managed by the Asset Management
division (such as the MA Priority Income Fund), as well as
institutional lending partnerships (such as the credit related
partnership with a major Australian bank announced
in February 2021). Towards the end of FY21, we also
developed a number of new lending funds, including a US
Dollar denominated version of the Priority Income Fund,
which present attractive growth opportunities over the
coming years.
In December 2021 the Group announced it would acquire
Finsure, a leading Australian mortgage aggregator business
for $145 million. The acquisition was completed in February
2022 and enhances the Group’s exposure to recurring
revenue streams in a strategic market with positive
tailwinds. The Finsure acquisition is expected to accelerate
the growth of the Lending division.
22
Statutory total assets amounted to $873 million with net
assets of $370 million at the year ended 31 December 2021.
purposes as they earn a preferential return and have
preferential rights on wind up.
The statutory consolidated statement of financial position
includes the consolidation of two credit funds managed
by the Group under the Priority Income Fund strategies
(together PIF). The Group holds a 10% ‘first loss’ equity
co-investment in the PIF of $30.0 million (2020: $16.8
million) which represents the Group’s maximum contractual
economic exposure.
Third party investors in the PIF are represented in the
consolidated statement of financial position by the Fund
Preferred Units (FPU). Even though the FPU have no rights
beyond the PIF, the FPU are classified as debt for statutory
The Group earns a net interest margin from its co-
investment in the PIF representing the excess profits after
fund expenses and FPU distributions. More information on
the FPU can be found in note 24 Borrowings of the Financial
Report.
Management prefers to make use of an Operating balance
sheet which excludes the PIF gross assets and liabilities
when reviewing the Group financial position. The Operating
balance sheet presents a simplified view of the total
economic exposure of the Group and the capital available to
management to allocate.
31 Dec 2021
Statutory
$’000
31 Dec 2020
Statutory
$’000
31 Dec 2021
PIF
adjustments
$’000
31 Dec 2020
PIF
adjustments
$’000
31 Dec 2021
Operating
$’000
31 Dec 2020
Operating
$’000
Assets
Cash and cash equivalents
242,861
138,004
1,783
25,812
241,078
112,192
Loans receivable
342,449
224,271
285,600
161,056
56,849
63,215
Investments
190,232
119,497
26,422
(17,266)
163,810
136,763
Goodwill and other intangibles
37,769
30,864
42
-
37,727
30,864
Other assets
Total assets
Liabilities
Borrowings
59,561
56,707
1,349
8,021
58,212
48,686
872,872
569,343
315,196
177,623
557,676
391,720
120,030
95,030
25,000
-
95,030
95,030
Fund preferred units
286,290
172,540
286,290
172,540
-
-
Other liabilities
Total liabilities
Net assets
96,519
64,916
3,906
5,083
92,613
59,833
502,839
332,486
315,196
177,623
187,643
154,863
370,033
236,857
-
-
370,033
236,857
1. Please refer to the appendices of the FY21 Investor Presentation that accompanies this Annual Report for more detail on the Operating balance sheet
adjustments.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Year in review
Financial position
Year in review
Financial position
The Group was active in recycling assets whilst maintaining an average cash balance for the year of approximately $100
million as a result of continued prudent treasury management. Notable movements in the Group’s Operating balance sheet
during the year were as follows:
• Cash and net assets increased substantially at reporting date due to the successful completion of a $100 million
institutional placement in December 2021 to fund the 2022 acquisition of Finsure, one of Australia’s leading mortgage
aggregator platforms
• On 1 April 2021 the Group acquired the retail property manager RetPro for a total consideration of up to $16.3 million.
The year saw a high level of rotation of both short term
growth investments and long term strategic investments.
This dynamism underpins the ability of the Group to
support future growth and is reflected in the recycling of
$80 million of prior investments and re-investment of $60
million into new strategic initiatives.
Key movements in investments related to:
RetPro will further enhance the service offering of the Asset Management division’s real estate strategy.
• The realisation of the Japara Health Care (ASX:JHC)
position for $21 million
• Further investment in Redcape Hotel Group of $16
million
• Continued growth investment in the Lending division.
The Group’s investments, including strategic and co-investment positions, are shown in the table below.
31 Dec 2021
Operating
$’000
31 Dec 2020
Operating
$’000
241,078
91,665
43,383
84,339
-
1,272
112,192
68,178
62,074
58,232
9,291
2,203
461,737
312,170
Cash and cash equivalents
Lending
Co-investments
Redcape Hotel Group
Japara Health Care Limited (ASX:JHC)
Other investments
Total investments
24
Capital management
The Group manages its capital with the primary aim of
ensuring it will be able to continue as a going concern
while maximising the return to shareholders through the
optimisation of debt and equity capital balances.
During the year the Group declared its maiden interim
dividend of 5 cents per ordinary share highlighting the
growing recurring cash earnings and stability of the
balance sheet. Subsequent to the year end the Directors
resolved to declare a final dividend of 12 cents per share for
FY21 resulting in a 70% increase in dividends over FY20.
In December 2021 the Group successfully raised $100
million through the issue of 12.9 million ordinary shares
further to an over-subscribed institutional placement. The
associated Share Purchase Plan closed in January 2022
with a further 2.6 million ordinary shares issued, raising an
additional $20 million. The proceeds of the capital raise
were used to acquire Finsure for $145 million in February
2022 with the transaction to be immediately earnings
accretive as well as accelerate the growth of the broader
Lending division.
The Group recognises that debt is an important component
of a balanced capital structure. Whilst the Group utilises
both recourse and non-recourse debt to fund its growth
objectives, we will continue to adopt a prudent approach to
the use of debt capital.
This approach to debt in conjunction with the strong
level of average cash holding is indicative of a consistent
approach in managing the Group for the long term and we
will remain patient and prudent when deploying capital.
Fundamental to this is maintaining a strong balance sheet,
which not only stands us in good stead through economic
uncertainty but can also facilitate attractive investment or
business opportunities.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report Sustainability report
Sustainability report
Stakeholder engagement
Materiality assessment
We believe that placing a strong focus on building a sustainable business generates
better outcomes for all stakeholders including shareholders, employees, our clients, our
fund investors, and the communities we live in. Sustainability is about making decisions
for the long term and as significant owners in the business, management always places
a long term lens on decision making and strategy.
We acknowledge that each stakeholder group is unique
and has a distinctive set of interests and priorities. Our
key stakeholder groups include shareholders, financers,
employees, fund investors, customers and tenants,
governments and regulators, communities, suppliers and
industry groups.
We engage with our key stakeholders through different
channels. As our business evolves, we will strive to ensure
that our channels of stakeholder engagement facilitate
relevant insights and engagement which we can apply to
help us validate the Group’s sustainability approach and
shape new perspectives.
issue to the Group and its
impact on our stakeholders
forms the basis of our
materiality analysis.
“The significance of an
Most material
M AT E R I A L I T Y M AT R I X
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The Group will report on material topics relevant to our
business and our key stakeholders as a reflection of our
socioeconomic and environmental impact. This year we
undertook our first sustainability materiality assessment
through a process which enabled us to identify, understand,
assess, prioritise, and validate our sustainability material
topics.
We analysed the material topics with reference to:
• sector and peer reporting
•
expectations expressed in global ESG frameworks
and standards including GRI, Sustainability Accounting
Standards Board (SASB) and Task Force on Climate-
Related Financial Disclosures (TCFD)
•
standards applied by leading ESG rating agencies.
The analysis considered our business nature as a
diversified financial services group specialising in Asset
Management, Lending, Corporate Advisory & Equities and
the strategies within.
We then considered the sustainability topics identified in
order to determine their overall materiality to us. Topics
were prioritised based on their materiality level as set out in
our Materiality Matrix below:
Systemic risk management
Data privacy
and security
Governance and
compliance
Ethical
behaviour
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Material
Health and safety
Diversity
Employment
Talent development
Product design and lifecycle management
Climate change
Community investment
Human rights
Important
Energy and emissions management
Waste management
Water management
Governance and business model
Social
Environmental
Significance of impact
The topics and their prioritisation were reviewed and validated by the Leadership Team and endorsed by the Board.
29
MA Financial’s environmental, social and governance (ESG) practices continue to
evolve as the Group increases in scale and broadens its business interests. The
senior executives recognise the importance of establishing practices that aim to
embed a sound ESG framework that supports our decision making, measurement
and continual improvement.
In 2021 we have done considerable work to progress our sustainability framework
and reporting, particularly in assessing the most material aspects of sustainability to
our business and our stakeholders.
Accordingly, the Group’s Board and management have resolved to incorporate its
inaugural Sustainability Report within the 2021 Annual Report. The report highlights
sustainability procedures and practices within the business and outlines important
focus points for future development as we continue to grow. We followed the GRI
Standards to create our framework and approach to sustainability.
“We are committed
to understanding
the interests and
expectations of our
stakeholders as a key
tenet of setting our
sustainability objectives.
We strive to develop
collaborative relationships
to deliver positive
sustainability outcomes.
28
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Sustainability report
Sustainability report
We are pleased to provide an update on
our approach to each of these six key
priority areas.
Talent development and wellbeing
Our people
It is our people that makes us unique – both in terms of
delivering excellence in performance and shaping the
Group’s reputation. Our people provide a competitive
advantage for our business, with our unique culture which
focuses on bringing an ‘owner’s mentality’ to business
building and problem solving and combining these with
specialised sector knowledge and expertise which are
critical to our overall performance. In achieving our vision,
the Group’s values of Growth, Cohesion, Innovation and
Accountability guide our behaviours.
Culture and belonging
The Group is committed to providing a work environment
where employees feel recognised, motivated, supported
and have a strong sense of belonging. In 2021 we
progressed from the employee engagement surveys used
in the past to a comprehensive culture and belonging
review which covers all our employees. The review is
designed to provide insights into the culture of the Group,
identifying strengths, challenges, opportunities, risks and
development areas. Insights from the culture and
belonging review were assessed by the Board and
management and have been fed into our people strategy,
which includes a continuous improvement strategy to
address identified gaps and reinforcement mechanisms on
the areas of strength.
The strengths of our culture, as identified by the 2021
review included:
•
Innovation and entrepreneurship
• Collegiality, teamwork and respect
• A flat agile structure
• Commitment to growth
• Our gender and cultural and linguistic diversity.
We are committed to never taking our culture for granted,
and we will continue to actively work on making it even
better. As a result of the review, we identified key areas of
focus for 2022.
Sustainability framework
Based on the results of our materiality assessment, we developed our first sustainability framework which is composed of
six key pillars. These pillars create the foundation to MA Financial’s approach to sustainability and each contain specific
focus areas. The framework was reviewed by our Leadership Team and endorsed by the Board, and our management
approach to material topics are discussed throughout this report.
Talent development and
wellbeing
Strong governance and ethical
behaviour
• Attracting, retaining, motivating,
engaging and developing our
workforce
• Supporting the health, safety
and well-being of our people
• Creating sustainable value
through effective governance,
strong ethical practices and
accountability
• Overseeing internal and external
compliance
• Embedding systemic and active
risk management in our financial
services
Sustainable business model
•
Incorporating sustainability
factors into our businesses,
operations, products and
financial services offerings
Diversity and inclusion
Environmental impact
Supporting the community
• Promoting and maintaining a
• Understanding the impact of
diverse and inclusive workplace
climate change
• Minimising our environmental
footprint focusing on energy
and emissions, waste, and water
management
•
•
Safeguarding the privacy and
security of our customers
Protecting human rights in our
value chain
•
Contributing to our community
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Providing practical and broad
opportunities and direct exposure to
working with our most experienced
leaders is the best way to develop a
high performing team and help all our
people realise their full potential.
“We believe in developing our workforce.
The Group offers a range of benefits to its staff, focused on
providing support for their health and financial wellbeing.
All MA Financial staff are offered two ‘Wellbeing Days’ per
year, which provides an opportunity to take a break, reflect
on their wellbeing and focus on self-care. Comprehensive
health checks are provided semi-annually for senior
employees in the Group, which helps them to keep a
regular check on their overall health and wellbeing.
Employee benefits
Counselling services are offered to all our staff as part of
our ongoing Employee Assistance Programme (EAP). The
Group’s EAP comes with six free counselling sessions to
all employees and their immediate family members and
covers a broad spectrum of circumstances where the
services may be applicable. The service is confidential and
is supported by a team of psychologists, psychotherapists
and counsellors with deep insight and experience in the
areas of psychology, health, and wellbeing.
Additionally, this year we introduced the wellbeing app
‘Sonder’ for all our staff. Sonder provides innovative, 24/7
on call wellbeing and safety support to our people, including
mental health and other EAP services, ‘check on me’ and
basic medical assistance from nurses available on call.
We acknowledge the value of parental leave and the
importance of supporting our people during such an
important life stage. Permanent employees are entitled to
16 weeks of paid parental leave if they are the primary care
giver when a child is born, adopted or fostered. Secondary
carers are entitled to four weeks paid parental leave.
We also have a Childcare Assistance Programme in place
for our people which offers a 12-month allowance for
female employees who return from parental leave as a
means of supporting return to work.
Our new state of the art offices in Melbourne (opened
December 2021) and Sydney (opened January 2022) have
wellbeing, collaboration and sustainability at the heart
of the design brief. We look forward to reporting on the
positive impacts which arise from these work environments
in our 2022 sustainability report.
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people engaged in
performance and career
development reviews.
“In 2021, all of our
In 2021 Andrew Pridham, our Vice Chair and a founder,
published a book and a podcast series titled “What Matters:
Secrets of great leaders, business builders and professional
investors”. Many of the themes of the book have and will be
incorporated into the MA Academy curriculum.
Our investment in MA Academy will continue in 2022 and
we look forward to reporting on our progress.
We are also committed to fostering strong links with the
student community. Our university internship and graduate
placements provide rewarding opportunities for students
from wide ranging backgrounds. In the future, we hope to
extend the MA Academy programme to students not yet in
the workforce.
Supplementary to the MA Academy our people underwent
an average of 10 hours of individual training in 2021 in topics
including technical, financial services, technology/cyber and
our values and key policies. Senior executives underwent an
average of 20 hours of training.
We are committed to providing support to our staff for
their continuous learning, development, and progression.
In 2021, our people received regular performance and
career development reviews. The focus of the process is
on quality conversations and mentoring to ensure all of
our people have the required skills and opportunities to
progress to the next level and pursue their interests within
the Group.
MA Academy
With 98 female and 85 male new team members joining
our business in 2021 (through both organic and inorganic
growth), a significant focus has been to hire skilled people
and further develop their capabilities. We believe in
developing our workforce and in our experience, providing
practical and broad opportunities and direct exposure to
working with our most experienced leaders is the best way
to develop a high performing team and help all our people
realise their full potential. Supporting the development of
our people is the highest priority.
The MA Academy is the umbrella of learning that
encompasses all training and development of our team. It
is a structured way to pass the baton of learning from one
generation to the next. We are pleased that, despite the
challenges imposed by COVID-19 in 2020, we were able to
launch the MA Academy and have made material progress
on programmes for 2021 and beyond.
The MA Academy focuses on current, best-in-class
business and investment practises in the real world,
practical learning with real life edge. The programme
delivers accessible teaching, capitalising on the talents and
experience of our senior company executives, along with
highly credentialed external presenters. The MA Academy is
offering learning opportunities for all our people, regardless
of their experience and background. We believe that these
practical learning opportunities enhance inclusion and
belonging at the Group.
32
Sustainability report
Strong governance and ethical behaviour
MA Financial is focused on delivering long term value to our
clients and partners, our people and our shareholders. Trust
and integrity are essential to the delivery of the financial
services that we provide. Strong corporate governance
practices and policies are intended to instil a culture of
acting honestly, ethically and responsibly in support of
organisational goals and values and are a fundamental
pillar for our sustainable development. Our approach to
governance and ethical behaviour is described below.
The Board and Committees
The Board of MA Financial retains ultimate responsibility
for promoting the long term interests of the Group and
overseeing the activities of management and governance
of the Group.
The Board currently comprises five Non-Executive
Directors and three Executive Directors. Three Directors,
including the Chair, are considered independent with one of
these Directors newly appointed during the 2021 year. Each
director is qualified with the appropriate skills, expertise
and experience to perform their responsibilities.
Two permanent standing committees assist the Board
in key areas of oversight: the Audit and Risk Committee
and the Nomination and Remuneration Committee. Both
Committees are chaired by an Independent Director and
comprise a majority of Independent Directors. Further
information in respect of MA Financial Group’s Board and
Committees including respective roles and responsibilities
is available on the website and outlined in the Corporate
Governance Statement 2021.
Our key governance & compliance policies
Code of conduct
The Group seeks to foster a reputation of integrity and
professionalism with its expectations outlined in the
Code of Conduct. The Code of Conduct applies to all
Directors, officers and employees of the Group and sets
out expectations for how we act in the ordinary course of
our business activities. Employees annually confirm their
compliance with the Code of Conduct and are expected
to abide by the highest standard of ethical conduct in their
relationships with each other, MA Financial, investors,
competitors, suppliers and the public.
A comprehensive framework of additional policies and
procedures that supplement and support the Code of
Conduct have been established including the MA Anti-
Bribery and Corruption Policy, MA Conflicts of Interest
Policy, MA Securities Dealing/Personal Trading Policy,
MA Bullying and Harassment Policy, and the MA
Whistleblower Policy.
Any violation of the Code of Conduct and its associated
policies will be investigated and may have consequences
including disciplinary action such as a formal warning,
suspension, impact to discretionary remuneration or
termination of employment.
Further information in respect of the
aforementioned policies can be found on the
website.
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Sustainability report
Sustainability report
Risk governance
Risks arise at every level of the business, from the
implementation of high-level strategies through to the
physical security and safety of our day to day working
environment. Prudent risk management is fundamental
to the Group and core to its values and is a responsibility
of all employees of the Group. MA Financial’s goal is to
maintain a strong culture in which material risks can be
identified and managed effectively. With factors such as
technological evolution, changing societal/community
expectations, a complex regulatory environment and
increasingly competitive landscape, it is recognised that
the Group’s risk management practices will need to remain
innovative and robust in order to support the execution of
its strategies in a sustainable manner.
The Board recognises the broad range of risks that
the Group faces due to the nature of the industries and
markets in which we operate and has responsibility for the
adequacy of the Group’s risk management systems. The
Board’s Audit & Risk Committee (ARC) assists the Board by
providing oversight over MA Financial’s risk management
framework and advises the Board on the Group’s risk
appetite, adequacy of its risk management practices and
risk culture.
The Group’s approach to effectively managing risk is
reflected in our Risk Management Statement (Statement)
which describes a method for establishing context,
identifying, analysing, evaluating, treating, monitoring and
communicating risks. Risk management involves achieving
an appropriate balance between realising opportunities
within certain risk tolerances as set out in the Group’s Risk
Appetite Statement. The Board is responsible for approving
the risk management Statement and the Group’s Risk
Appetite Statement, following the review by the ARC on an
annual basis.
The Group’s approach to risk management is overseen by
Senior Management through its executive risk roundtable
and the ARC with reporting to the Board. Whilst each
individual has responsibility for the management of
risk, the Heads of Business Divisions of the Group have
responsibility for risk management within their respective
business units and are responsible for ensuring that
risks identified are analysed, evaluated and treated in
accordance with the Statement.
The Chief Operating Officer, Chief Financial Officer and
General Counsel are responsible for coordinating the
Group’s Risk Management Programme and for assisting in
the development of awareness of risk management within
the Group.
Risk culture
Strong focus on risk assessment
and outcomes, set by the Board and
modelled by senior leadership
Robust policies and framework
Focus is on policies that enhance
our risk culture, that work in practice
and can be measured, stress tested
and continually improved
Individual accountability
Our values focus on being active
managers of risk and accountable
for our actions, and aligned through
remuneration structures
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Sustainable business model
Building and maintaining a sustainable business model is
key to the success of MA Financial and to ensuring the
continuity and growth of its businesses now and into
the future.
The Group operates as a diversified financial services
business that spans Asset Management, Lending,
Corporate Advisory & Equities. The Group also operates
Hospitality and Property Management platforms that
provide services to investment funds managed by Asset
Management as well as third parties.
However, we understand that without incorporating ESG
considerations diversification alone has limitations in
terms of increasing our resilience and further reducing
our vulnerability to short, medium and long term risks.
Diversification also means that we have to assess each
of our service streams individually, as well as holistically
in the context of our business, to gain greater visibility of
potential risks and opportunities that could affect the value,
performance and reputation of our business.
Our goal is to deliver balanced and sustainable outcomes
for our stakeholders. During 2021, we commenced a
process of developing a responsible investment policy for
our Asset Management division, which we aim to finalise
during 2022, for implementation thereafter.
We also aim to assess our approach to incorporating ESG
into other parts of our business, including lending, broking
and advisory.
Our Hospitality team manages a number of funds
that operate hospitality venues that offer a range of
entertainment options including gambling services. The
provision of this type of entertainment is a government
regulated offering and we work closely with the appropriate
regulators to ensure that we operate the venues in a
socially responsible manner.
Our Hospitality team takes a progressive and community
focused approach to the responsible service of alcohol
and gaming so as to ensure all of its customers enjoy safe,
sociable and welcoming venues. Redcape’s approach to
problem gaming and harm minimisation is articulated in its
Responsible Service Policy which available on its website.
To ensure sustainability of our business from the supply
chain perspective, we have developed a Supplier Code
of Conduct which describes the requirements and
expectations we have for our supply chain.
Our suppliers, whether directly or through their operations
and supply chain, must comply with all applicable laws
and regulations, and must have in place adequate
procedures to identify, prevent, mitigate and account for
material risks, including health & safety, ethical business
practices, cyber security and privacy, modern slavery, and
other human rights impacts. Suppliers are responsible
for the development, implementation, and testing of
appropriate business continuity and disaster recovery
plans for operations supporting our business to validate
effectiveness.
For our property and hotel operations, we will work towards
developing effective and efficient engagement with our
tenants and collect quantitative information in relation to
our environmental footprint and climate change risk.
The Group seeks to safeguard people and the environment
from harm through its emergency preparedness plans,
while focusing on the continuation of key business
operations.
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Sustainability report
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Diversity and inclusion
We value diversity as a critical enabler of innovation and
growth. Diversity at MA Financial involves creating a work
environment which allows all our people to meet their
potential and is underpinned by respecting and valuing
a wide range of differences including gender, ethnicity,
disability, age, religion, sexual orientation, and educational
and work experience. Our Diversity Policy (available on
our website) outlines our diversity principles, commitment
to diversity objectives and provides a framework for
advancing on our diversity goals.
We have determined key initiatives to assist with the
achievement of our diversity objectives including a focus
on our recruitment processes at all levels of the Group,
an annual gender remuneration gap review process,
accountability for senior staff and leadership to support
our diversity culture through non-financial metrics and
key employee benefits comprising paid parental leave
above minimum legislative requirements and financial
childcare support for female staff returning to work from
parental leave.
In 2021, we set new measurable gender diversity objectives
towards our commitment of a diverse workplace in the
Group. Our diversity objectives, which we will pursue over
the medium term, include the following:
OBJECTIVE / QUANTITATIVE TARGETS BASELINE (2021)
Achieve and retain a 50% female
representation in the business
Achieve and retain a 30% female
representation in senior executive1
Achieve a Culturally and Linguistically
Diverse (CALD) status which is reflective
of the Australian multicultural community.
Achieve a 40% CALD measure
48% female /
52% male
23% female /
77% male
CALD = 35%
1 Senior executives include all employees with a title of Vice-President,
Executive Director, Managing Director or functional equivalent
a critical enabler of
innovation and growth.
“We value diversity as
36
On an annual basis management monitors and reports
to the Board on our objective advancement with the
Board assessing our progress against targets. Below is
a snapshot of our year-on-year movements on gender
diversity at different levels of the organisation.
LEVEL
GENDER
2020
2021
YOY CHANGE
Workforce
Senior
executives
Board
Female
33% 48%
Male
67% 52%
Female
24%
25%
Male
76%
75%
Female
29%
25%
Male
71%
75%
15%
15%
1%
1%
4%
4%
Female representation in our workforce increased
significantly, mainly attributed to the acquisition of retail
property manager RetPro in 2021, as well as a result of our
continued our efforts to increase our diversity across the
business during the year.
The proportion of women on our Board decreased with
respect to last year as a result of the appointment of a
new Non-Executive independent Director which increased
the number of our Board members from seven to eight
together with an increase in the number of independent
Directors. Our female senior executive ratio increased
slightly year on year by 1%.
To further foster a diverse and inclusive work culture in
the Group we are a Silver Pledge Partner of ‘Soldier On’,
which is a support platform for ex-services personnel and
their families to create veteran friendly workplaces and to
recognise their skills.
We are committed to fair and equitable remuneration.
We have an annual process of remuneration review and
discretionary bonus setting which includes a review
and elimination of any identified gender pay gaps for
comparable roles. The process assesses the occurrence
of unusual gaps which are not accounted for by factors
such as experience, skills, performance, and others and
removes them as applicable.
Our diversity principles
• Recruit and retain an appropriately diverse
and skilled workforce and Board to facilitate
achieving or exceeding business objectives
•
Leadership team proactively demonstrating
a commitment to diversity through modelling
inclusive behaviour
• Providing a work environment that values
and fully utilises the perspectives and
experiences of all employees and directors.
Health and safety
The Group aims to create and maintain a safe and
healthy workplace, ensuring that our activities are
carried out in a way that safeguards the safety and
health of our employees, contractors, suppliers,
visitors, and clients according to the relevant
legislation of the jurisdictions in which we operate.
Our Work Health and Safety (WHS) Policy sets the
fundamental principles that govern our approach
to WHS management. We operate in a wide range
of settings and our WHS practices and procedures
are appropriate and tailored for each operating
context, including establishing clear WHS roles and
responsibilities, processes for the identification
and assessment of WHS risks and hazards,
controls for risk mitigation or reduction and incident
management practices.
The Group recognises the importance of health
beyond just physical health with an increasing
focus on mental health and wellbeing particularly
emphasised by the challenges of COVID-19. During
the year mandatory lockdowns were in place for
extended periods of time. We were able to continue operations
with minimal disruption, thanks to our people adapting to
different ways of working. Through the lockdowns, the Group
provided additional support to our staff by putting in place
mechanisms to address potential health impacts and social
disconnection driven by the pandemic. The measures included
regular company-wide check-ins led by our Joint CEOs, virtual
social events to connect staff such as live music, meditation
sessions, fitness sessions and activities involving wider family
such as cooking, pottery and art classes. Additionally, multiple
care packages were sent to staff including on ‘R U OK Day?’
to further emphasise on the importance of mental health and
wellbeing.
Environmental impact
Based on the results of our first materiality assessment,
the rating of environmental issues reflects the nature of our
business and direct investments as being not material emitters
(as is common for our peers in the Financial Services sector).
However, this materiality assessment will continue to change
as our business evolves and the Group recognises the serious
medium to long term potential impacts of environmental
mismanagement.
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New premises
MA Financial has recently moved its head offices
into new premises in Sydney and Melbourne which,
alongside new initiatives focusing on energy and
waste emissions, will substantially reduce the
Group’s environmental footprint. Sustainability and
environmental considerations were core to the design
brief and we are delighted to now be occupying our
leading new premises.
Both the Group’s new offices in Sydney, Brookfield
Place, and Melbourne office at 80 Collins have 6
Green Star ratings and a 5 star NABERs rating. Energy
and waste reduction initiatives have been carefully
considered within the new premises. Some of these
initiatives include:
• the removal of single use bottles in meeting rooms
•
•
•
internal service of coffee for clients and for staff in
keep cups
internal service of after hours meals in house
(improving staff health and nutrition outcomes and
reducing takeaway packaging waste)
increased recycling and other plastic reduction
initiatives.
As a result of these initiatives it is estimated that in
excess of 250,000 single use packaging items will be
avoided every year.
The enhanced facilities will also support staff via
state of the art training and collaboration facilities and
audio-visual capabilities, leading to reduced travel
requirements and significantly improved in-house
service amenities.
Finally, the new premises will facilitate improved support
for the Group’s community partners through access
to MA Financial client and hospitality facilities for
awareness, fundraising and partner events.
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The Group is conscious of the importance of specific issues with the potential to impact multiple ESG areas and
stakeholders such as those related to climate change. The Group will undertake a stepped approach to implementing the
recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) as the leading framework in this area.
Below is our roadmap detailing our future steps to understanding the potential impacts of climate change and embedding
appropriate management practices in line with the TCFD pillars of governance, strategy, risk management and metrics
and targets.
TCFD PILLARS
CURRENT / NEAR TERM
MEDIUM TERM
BEYOND IMPLEMENTATION
Governance
Strategy
Increase climate-related
awareness across key
organisational levels.
Incorporate climate-related
issues into relevant governance
and management bodies.
On-going review and approval
of climate-related issues by
appropriate governance and
management bodies.
Identify exposure, management
strategies and high-level
financial impact of material risks
and opportunities.
Explore qualitative and
quantitative scenarios to update
issues, management strategies
and financial impacts.
Integrate climate-related
scenario analysis into our
strategic and financial planning.
Risk Management
Incorporate climate-related
risk into our Risk Management
Framework.
Embed climate-related risks
into our Risk Management
Framework.
On-going monitoring and risk
management of climate-related
issues.
Metrics and targets
Determine metrics associated
to climate-related risks and
opportunities.
Analyse metrics trends to
develop targets, assess our
strategic position and their
financial impact.
On-going analysis of metrics
and targets performance to
assess our strategic position
and their financial impact.
We are working towards developing processes and
systems to collect quantitative information in relation to
our energy consumption, particularly for our real estate
management strategies, to enable data analysis and
better understanding of our footprint. This will allow for
better decision-making on appropriate management
practices to be implemented. Moreover, this will help us in
understanding the greenhouse gas emissions associated
with our operations which are essential metrics related to
climate change and the TCFD framework.
Supporting the community
MA Financial recognises the impact that ESG risks can
have on communities and other external parties.
COVID-19
The impacts of the COVID-19 pandemic continued
throughout 2021. Support measures continued for our retail
shopping centre tenancies with rental relief assistance
available to those impacted by operating restrictions.
Similarly, governmental requirements in place for COVID-19
impacted our venues managed by our Hospitality platform,
MA Hotel Management. During this challenging period, we
were able to provide financial assistance to a number of
employees who were facing hardship. We also sought to
minimise the number of employees ‘stood down’ during
periods of closure which has led to high levels of staff
engagement, satisfaction and retention.
The Redcape Hotel Group (Redcape) continues to support
local communities and their initiatives through its ‘Publinc
Communities Programme’ (Publinc) which has an objective
of enriching local communities through lasting impact. A
specific COVID-19 Community Fund was also established in
2021 and has provided assistance of $300,000.
Access to justice
Our Legal Funding business, MAF Credit, was established
in 2018 to provide personal loans to individuals pursuing
‘no win no fee’ personal injury claims. The loan assists
with payment of disbursements required to support a
claim, with reimbursement only on successful completion
of an individual’s case out of settlement proceeds. Since
inception, MA’s Legal Funding business has funded
disbursements relating to over 74,900 legal matters and
receivables.
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Data privacy and security
The Group respects data privacy and we recognise how
critical our actions in handling data are in building and
maintaining trust with all of our current and prospective
stakeholders. We are committed to measures which protect
the security of personal data and confidential information
that is collected, stored, processed, or disseminated.
The Group’s ‘Technology Use Policy’ establishes specific
requirements for the use of all computing and network
resources within the business in a responsible, ethical,
and compliant manner. The policy covers the key principles
of data privacy, compliance requirements, privacy and
personal rights and technology use guidelines within
the Group.
The Group’s Head of Technology monitors the
implementation of this Policy and reviews its contents for
relevance and accuracy annually. We know that in order
for us to be effective in managing data privacy, our policies
and processes must be paired with a culture where all
employees understand the importance of privacy and
operate with a high level of vigilance in handling data. The
Board is responsible for ensuring that cyber resilience is an
element of the broader risk framework and that exposures
are recognised and assessed for impacts based on clearly
defined metrics.
Human rights
MA Financial has no tolerance for any form of modern
slavery within its business and supply chain. Modern slavery
covers a broad range of exploitative practices including
slavery and servitude, forced labour, debt bondage, child
exploitation and other slavery like practices including human
trafficking, forced marriage and deceptive recruiting.
The Group’s approach to Modern Slavery is set out in detail
in its Modern Slavery Policy and Modern Slavery Statement,
both available on the website. Tier 1 risk assessments of
MA Financial’s supply chain conducted in 2021 have not
identified any instances of modern slavery or significant
areas of concern.
All objectives set out in MA Financial’s Modern Slavery
Transparency Statement for the 2021 year were met, which
included: the completion of risk-assessments for newly
acquired businesses (RetPro), dissemination of a new
Supplier Code of Conduct to all suppliers and employee
awareness training. In 2022 and beyond, MA Financial will
expand its diligence focus across the supply chains on a
risk assessed basis for suppliers assessed as above the low
risk category.
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Community investment
MA Foundation
The MA Foundation was established to support community
initiatives that align with the culture and broader community
interests of the Group. Our teams believe strongly in
giving back to the community through projects they are
passionate about, and we support this by empowering
them to suggest and drive community initiatives that are
close to their heart.
The Foundation has three Community Partners, the GO
Foundation, Beyond Blue and Mirabel Foundation. This
status provides minimum support of $50,000 per annum
for three years.
Much of the giving of the MA Foundation is staff directed.
In 2020 we introduced matched giving, where the MA
Foundation matched staff giving for up to $2,500. Some
of the charities staff members have nominated include the
Sydney Children’s Hospital, Westmead Children’s Hospital,
UNICEF, Dementia Australia, and the Fred Hollows
Foundation.
Since inception in 2017, the Group has donated at least
$200,00 each year to the Foundation. As a result of Group
and staff contributions, the Foundation has donated over
$6.8 million to over 35 charities.
The focus of our community investment
approach is to positively impact the
communities we operate in. We believe
in enriching the communities we operate
in by engaging in impactful community
partnerships and targeted programmes.
“
2022 and beyond
The vision of the Foundation and our community
investment approach is based on impactful partnerships,
high staff engagement and alignment with the broader ESG
agenda of the Group. In line with this vision, the strategic
pillars of the Foundation strategy include:
Looking forward
We are proud of the initial steps we have made in
developing our Sustainability framework and our renewed
focus on the six key pillars outlined in this report. The
development of our practices and procedures within these
pillars and our disclosure around them will expand and
evolve over time. The table below outlines the key phases
of our development process.
We aim to be proactive in our engagement on ESG issues
as we progress through these development stages. We
look forward to sharing our sustainability progress with our
key stakeholders over future periods.
Further entrenching the
outlined sustainability
principles and applying
the ESG framework, focusing
on a consistent approach to
sustainability as part of how
we do business, including
appropriate metrics and
business targets.
P H ASE 2
Data collection and reporting against
business targets. Formulated key lines
of oversight and accountability for
sustainability focus areas.
Measurement &
Accountability
An ongoing process of review
and improvement based on
metrics and internal and
external feedback.
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Matched giving
Working more closely with our Community Partners
Targeted programmes and specific campaigns led by
our people.
For 2022, we are looking forward to increasing the reach
of the Foundation through renewed staff engagement, a
revitalised matched giving programme and salary sacrifice
initiatives.
This Sustainability Report provides an account of our overall
sustainability performance from 1 January 2020 to 31 December 2021
according to MA Financial Group’s Sustainability Framework.
This report complements our Corporate Governance Statement,
Board Charters and Corporate Policies (publicly available on
our website) while expanding on our Environmental, Social and
Governance (ESG) management and performance disclosures.
The Sustainability Report has been prepared in line with the Global
Reporting Initiative’s (GRI) Sustainability Reporting Standards core
option. Any enquiries about this Sustainability Report should be
directed to Michael Leonard – Director of Investor Relations via
email (michael.leonard@mafinancial.com).
41
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report Directors’ report
For the year ended 31 December 2021
Directors’ report
For the year ended 31 December 2021
The Directors of MA Financial Group Limited (formerly Moelis Australia Limited) (Company) submit their report together
with the consolidated financial report of the Company and its subsidiaries (Group) for the year ended 31 December 2021.
The names of the Directors of the Group during or since the end of the year are:
Jeffrey Browne
Andrew Pridham
Alexandra Goodfellow
Kenneth Moelis
Kate Pilcher Ciafone
Simon Kelly
Julian Biggins
Christopher Wyke
Independent Chair and Non-Executive Director
Group Vice Chair
Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director (appointed 21 April 2021)
Joint Chief Executive Officer
Joint Chief Executive Officer
The Directors have been in office since the start of the year to the date of this report unless otherwise noted.
Jeffrey Browne
Independent Chair and
Non-Executive Director
Andrew Pridham AO
Group Vice Chair
Experience and expertise
Appointed to the Board on 27 February 2017.
Senior executive at Nine Network Australia from
2006 until 2013, including Managing Director from
2010 to 2013.
Previously Chair of Carsales.com (ASX:CAR).
Jeffrey holds a Degree in Arts from La Trobe
University, Melbourne and a Degree in Law from
Monash University, Melbourne.
Other directorships and appointments
Chair of Premoso Pty Ltd (owner of the business of
‘Walkinshaw Automotive Group’)
President of Collingwood Football Club
Special responsibilities
Chair of the Board
Chair of the Audit and Risk Committee (resigned
21 April 2021)
Member of the Audit and Risk Committee
Member of the Nomination and Remuneration
Committee
Interests in the Company
Shares: 781,250
Experience and expertise
Andrew has served as a Director since the formation
of MA Financial Group Limited. He served as Chief
Executive Officer between 2009 and February 2020.
Andrew has 30 years’ experience in
investment banking.
Other directorships and appointments
Chair of Sydney Swans Limited
Adjunct Professor at University of South Australia
Special responsibilities
Member of the Nomination and Remuneration
Committee (resigned 20 May 2021)
MA Academy sponsor
Director of MA Foundation
Interests in the Company
Shares: Andrew holds 522,937 shares as well as a
beneficial equity interest in 18,477,262 shares as a
result of his holdings in the Existing Staff Trusts. As
a result of Andrew’s ownership of the Trustee of one
of the Existing Staff Trusts, Andrew has a deemed
relevant interest in 24,953,607 shares.
Restricted and Loan Funded shares: 139,285
44
Alexandra Goodfellow
Independent
Non-Executive Director
Kenneth Moelis
Non-Executive Director
Experience and expertise
Alexandra is Vice Chair, Head of Board & CEO practice
for Korn Ferry Australasia and has over 30 years’
experience in executive search and human capital
consulting. She joined Korn Ferry in 2014 and works
with clients at Board, CEO and C-suite level assisting
with executive search, leadership succession planning
and human capital advisory. She is a Non-Executive
Director of the Sydney Swans.
Other directorships and appointments
Vice Chair of Korn Ferry Australasia
Non-Executive Director of Sydney Swans Limited
Special responsibilities
Chair of the Nomination and Remuneration Committee
Interests in the Company
Shares: 25,371
Experience and expertise
Ken has served as a Director since the formation of
MA Financial Group Limited.
Ken is Chair of Moelis & Company and has served
as Chief Executive Officer of that company since
2007. Ken has over 30 years’ investment banking and
mergers and acquisitions experience. Prior to founding
Moelis & Company, Ken worked at UBS from 2001 to
2007, where he was most recently President of UBS
Investment Bank. Ken holds a Bachelor of Science and
an MBA from the Wharton School at the University of
Pennsylvania.
Other directorships and appointments
Chair and CEO of Moelis & Company Group LP
(Moelis & Company)
Non-Executive Chair of the Board of Directors, Atlas
Crest Investment Corp.
Non-Executive Chair of the Board of Directors, Moelis
Asset Management
Member, Board of Trustees, University of Pennsylvania
Member, Wharton Board of Overseers
Member, Board of Advisors, Ronald Reagan UCLA
Medical Center
Member, Business Roundtable
Member, The Business Council
Special responsibilities
Member of the Nomination and Remuneration
Committee (resigned 11 August 2021)
Interests in the Company
Ken has 43% of the combined voting power of Moelis
& Company Class A and Class B common stock. As a
result, Ken no longer has a deemed relevant interest
in all shares held by Moelis & Company. Moelis &
Company presently holds 23,500,000 ordinary shares
in the Group.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Directors’ report
For the year ended 31 December 2021
Directors’ report
For the year ended 31 December 2021
Kate Pilcher Ciafone
Non-Executive Director
Experience and expertise
Kate is Chief Operating Officer of Investment Banking
and a founding member of Moelis & Company. Kate
has almost 20 years’ experience in the investment
banking industry as both a banker and operations
executive having begun her career with UBS
Investment Bank prior to joining Moelis & Company
as a founding member in 2007. Kate holds a Bachelor
of Science in Commerce with distinction from the
McIntire School of Commerce at the University of
Virginia.
Other directorships and appointments
None
Special responsibilities
Member of the Nomination and Remuneration
Committee (appointed 11 August 2021)
Interests in the Company
None
Simon Kelly (appointed
21 April 2021)
Independent Non-
Executive Director
Experience and expertise
Simon has over 30 years’ experience in strategic,
financial and general management across a range
of Australian listed and unlisted consumer facing
businesses.
He is currently Chief Executive Officer of technology
start-up, NoahFace. He has previously served in
C-suite level roles at ASX listed Ardent Leisure, Virgin
Australia, Nine Entertainment Co., Artisocrat Leisure
and Goodman Fielder.
Simon is a Fellow of the Institute of Chartered
Accountants in England and Wales, a member of
Chartered Accountants Australia and New Zealand
and a member of the Australian Institute of Company
Directors.
Other directorships and appointments
Chief Executive Officer of NoahFace
Special responsibilities
Chair of the Audit and Risk Committee
(appointed 21 April 2021)
Interests in the Company
Shares: 12,921
Julian Biggins
Executive Director and
Joint Chief Executive
Officer
Christopher Wyke
Executive Director and
Joint Chief Executive
Officer
Experience and expertise
Julian was appointed Joint Chief Executive Officer in
February 2020 and a has been a director of the Board
since February 2017. Julian was one of the founders
of the company in 2009.
Julian has nearly 20 years’ investment banking
experience covering the real estate industry including
a senior role within J.P. Morgan’s Investment Banking
division and UBS’ Equities research division. Julian
holds a Bachelor of Business (Real Estate) and a
Bachelor of Business (Banking and Finance) from the
University of South Australia.
Other directorships and appointments
None
Special responsibilities
Member of the Audit and Risk Committee
Interests in the Company
Shares: Julian holds 295,923 shares as well as a
beneficial equity interest in 5,556,504 shares as a
result of his holding in the Existing Staff Trusts.
Share Rights: 28,866
Restricted and Loan Funded shares: 471,606
Experience and expertise
Christopher was appointed Joint Chief Executive
Officer in February 2020 and a has been a director
of the Board since March 2017. Julian was one of the
founders of the company in 2009.
Christopher has over 20 years’ industry experience,
including extensive private equity, turnaround,
restructuring, M&A, equity and debt capital markets
transactions experience. Christopher previously
worked in investment banking for J.P. Morgan and
UBS in London, Singapore and Sydney. Christopher
holds a Bachelor of Economics with Honours from
University College London.
Other directorships and appointments
None
Special responsibilities
Director of MA Foundation
Interests in the Company
Shares: Christopher holds 195,347 shares as well as
a beneficial equity interest in 5,556,504 shares as a
result of his holding in the Existing Staff Trusts. As
a result of Christopher’s ownership of the Trustee
of one of the Existing Staff Trusts, Christopher has
deemed relevant interest in 14,850,000 shares.
Share Rights: 29,236
Restricted and Loan Funded shares: 489,316
Company secretaries’ qualifications and experience
Janna Robertson
Rebecca Ong
Joint Company Secretary appointed 30 September 2019
Joint Company Secretary appointed 19 February 2020
Janna has over 20 years’ experience in financial services
and prior to joining the Group was a partner at Deloitte.
Janna holds a Bachelor of Business from the University
of Technology Sydney, is a Member of the Institute of
Chartered Accountants in Australia and New Zealand and
graduate of the Australian Institute of Company Directors.
Rebecca has over 15 years’ experience as a lawyer in
the financial services industry, and prior to joining the
Group was Regional Counsel at UBS, advising its Asset
Management business across Asia Pacific. Rebecca holds
a Bachelor of Commerce (Finance) / Bachelor of Laws
from the University of New South Wales and is a Fellow
with the Governance Institute of Australia.
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47
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Directors’ report
For the year ended 31 December 2021
Directors’ report
For the year ended 31 December 2021
Directors’ meetings
The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during
the financial year:
BOARD MEETING
AUDIT AND RISK COMMITTEE
NOMINATION AND
REMUNERATION COMMITTEE
Jeffrey Browne
Andrew Pridham
Alexandra Goodfellow
Kenneth Moelis
Kate Pilcher Ciafone
Simon Kelly
Julian Biggins
Christopher Wyke
A
11
11
10
9
11
8
11
11
B
11
11
11
11
11
8
11
11
A
7
#
#
#
#
5
7
#
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office during the year.
# = Not a member of committee
B
7
#
#
#
#
5
7
#
A
6
3
6
3
3
#
#
#
B
6
3
6
3
3
#
#
#
Principal activities
The Group is a financial services provider with offices in
Sydney, Melbourne, Hong Kong and Shanghai. The Group’s
principal activities are providing asset management, lending,
corporate advisory and equities services. In the opinion
of the Directors, there were no significant changes to the
principal activities of the Group during the financial year
under review that are not otherwise disclosed in this report.
Results
The financial report for the years ended 31 December
2021 and 31 December 2020, and the results have been
prepared in accordance with Australian Accounting
Standards, which comply with International Financial
Reporting Standards (IFRS).
Total comprehensive income attributable to ordinary equity
holders of the Group for the year ended 31 December 2021
was $48.1 million (2020: $22.5 million) and the profit after
tax for the year ended 31 December 2021 was $32.0 million
(2020: $26.5 million).
Dividends
Subsequent to the year ended 31 December 2021, the
Directors have resolved to pay a final dividend of 12.0 cents
per share, fully franked, for the year ended 31 December
2021. The dividend is payable on 11 March 2022.
On 22 September 2021, the Company paid an interim
dividend of $7.8 million (5.0 cents per share), fully franked,
for the year ended 31 December 2021.
On 3 March 2021, the Company paid a dividend of $14.9
million (10.0 cents per share), fully franked, for the financial
year ended 31 December 2020.
State of affairs
There were no other significant changes in the state of
affairs of the Group that occurred during the financial year
under review that are not otherwise disclosed in this report.
COVID-19
COVID-19 has significantly impacted the overall global
economy and continues to affect economic and financial
markets. While the specific areas of judgement remain
unchanged, the ongoing impact of COVID-19 continues
to result in the application of further judgement. Given the
evolving nature of COVID-19 changes to the estimates
and outcomes applied in the measurement of the Group’s
assets and liabilities may arise in the future. Other than
adjusting events that provide evidence of provisions that
existed at the end of the reporting period, the impact
of the events that arise after the reporting period will
be accounted for in the future reporting periods. As a
consequence of the ongoing impacts of COVID-19 and in
preparing the financial statements, management:
• Considered the financial impact on the Group and areas
of the financial statements affected to determine the
disclosures required, and evaluate if any additional areas
of judgement or estimation uncertainty beyond what has
been disclosed existed
• Updated forward-looking information when measuring
expected credit losses to assess any significant
increase in credit risk, and for the impairment analysis of
financial and non-financial assets
• Assessed the measurement of assets and liabilities and
determined the impact thereon as a result of COVID-19
and, where applicable, updated the disclosures in the
financial statements.
During the year the Group received no COVID-19
government wage subsidies (2020: $3.3 million). During the
year no deferral of tax related payments were granted by
the Australian Tax Office (ATO) to the Group (2020: $18.5
million). $4.4 million of ATO deferrals outstanding at 31
December 2020 were fully repaid during the year.
Operating and financial review
Please refer to the Year in Review section of this Annual
Report for the following in respect of the Group:
• a review of operations during the year and the results of
those operations
•
likely developments in the operations in future financial
years and the expected results of those operations
• comments on the financial position
• comments on business strategies and prospects for
future financial years.
Non-IFRS Underlying results
The Group also utilises non-IFRS ‘Underlying’ financial
information in its assessment and presentation of
Group performance. In particular, the Group references
Underlying Revenue, Underlying Earnings Before Interest,
Tax, Depreciation and Amortisation (EBITDA), Underlying
Earnings Per Share (EPS), Underlying Net Profit After Tax
(NPAT), and Underlying Return on Equity (ROE).
Underlying EBITDA and Underlying NPAT achieved for the
year ended 31 December 2021 was $88.5 million (2020:
$60.5 million) and $54.9 million (2020: $36.0 million)
respectively.
The Directors place great importance and value on the
IFRS measures. As such, the Directors believe that, when
read in conjunction with the IFRS measures, the Underlying
measures are useful to the reader as:
• The Underlying measures reveal the underlying run rate
business economics of the Group;
• The Underlying measures are used by management
to allocate resources and make financial, strategic
and operating decisions. Further, all budgeting and
forecasting is based on Underlying measures. This
provides insight into management decision making; and
• The Underlying adjustments have been consistently
applied in all reporting periods, regardless of their
impact on the Underlying result.
The Underlying financial information is not prepared
in accordance with Australian Accounting Standards
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Directors’ report
For the year ended 31 December 2021
Directors’ report
For the year ended 31 December 2021
and IFRS and is not audited. Adjustments to the IFRS
information align with the principles by which the
Group views and manages itself internally and consist
of both differences in classification and differences in
measurement.
Differences in classification arise because the Group
chooses to classify some IFRS measures in a different
manner to that prescribed by IFRS.
Differences in measurement principally arise where the
Group prefers to use non-IFRS measures to better:
• Align with when management has greater certainty of
timing of cash flows
• Regulate the variability in the value of key strategic
assets
• Normalise for the impacts of one-off transaction
costs
• Recognise staff share-based annual bonus expense
when granted as opposed to over the vesting period.
Please refer to note 3 in the Annual Financial Report for a
full reconciliation with explanatory notes of the Statutory to
Underlying measures.
Likely developments
The Group continues to pursue its strategy of focusing on
its core operations. In particular, the Group will look to grow
its lending operations, continue to market its managed
funds and launch new managed funds with the aim of
growing assets under management.
Events subsequent to balance date
On 28 January 2022, the Group completed a Share
Purchase Plan (SPP) offer which raised $20.0 million from
the issue of 2.6 million new ordinary shares.
On 7 February 2022, the Group acquired 100% of Finsure
Holding Pty Ltd and its subsidiaries (Finsure), a leading
Australian mortgage aggregator, from BNK Banking
Corporation Limited (ASX: BBC). Finsure was purchased
for a cash consideration of $145.0 million plus a cash
adjustment under the Share Sale Agreement of $7.2 million,
with estimated acquisition costs of $1.8m. Disclosure
of the acquisition in accordance with AASB 3 has not
been presented as the initial accounting for the business
combination is incomplete at the date of this report.
Environmental regulation
The Group has policies and procedures in place, to identify
obligations and notify material breaches, where operations
are subject to any particular and significant environmental
regulation under a law of the Commonwealth or of a State
or Territory. The Directors have determined that there has
not been any material breach of these obligations during
the financial year.
Non-audit services
The Directors are satisfied that the provision of non-audit
services during the year, by the auditor (or by another
person or firm on the auditor’s behalf), is compatible with
the general standard of independence for auditors imposed
by the Corporations Act 2001 (Cth).
The Directors are of the opinion that the services as
disclosed in note 9 to the financial statements do not
compromise the external auditor’s independence, for the
following reasons:
• all non-audit services have been reviewed and approved
to ensure that they do not impact the integrity and
objectivity of the auditor
• none of the services undermine the general principles
relating to auditor independence as set out in Code
of Conduct APES 110 Code of Ethics for Professional
Accountants issued by the Accounting Professional
and Ethical Standards Board, including reviewing or
auditing the auditor’s own work, acting in a management
or decision making capacity for the Group, acting as
advocate for the Group or jointly sharing economic risks
and rewards.
Indemnification and insurance of
Directors’, officers and auditors
During the year, the Group paid a premium in respect of a
contract insuring the Directors and officers of the Group
against liabilities and legal expenses incurred as a result
of carrying out their duties as a Director or officer. The
Directors have not included details of the nature of the
liabilities covered or the amount of premium paid in respect
of this insurance, as such disclosure is prohibited under the
terms of the contract.
The Group has agreed to indemnify all current and former
Directors and company secretaries and certain officers of
the Group and its controlled entities against all liabilities to
50
persons (other than the Group or a related body corporate)
which arise out of the performance of their normal duties
as a Director, company secretary or officer to the extent
permitted by law and unless the liability relates to conduct
involving wilful misconduct, bad faith or conduct known to
be in breach of law.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in
Financial/ Directors’ Reports) Instrument 2016/191,
amounts in the Directors’ Report and the Financial Report
have been rounded to the nearest thousand dollars, unless
otherwise indicated.
The Group has not otherwise, during or since the end of
the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of
the Group or any related body corporate against a liability
incurred as such an officer or auditor.
Signed in accordance with a resolution of the Directors.
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Julian Biggins
Independent Chair and Non-Executive Director
Sydney
Director and Joint Chief Executive Officer
Sydney
17 February 2022
17 February 2022
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Letter from the Chair of the Nomination and Remuneration Committee
Dear Shareholders,
On behalf of the Board of Directors of MA Financial Group
Limited (the Company) and its subsidiaries (the Group
or MA Financial), I am pleased to present to you our
Remuneration Report for the year ended 31 December
2021 (FY21), for which we will seek your approval at the
next annual general meeting.
May I begin by recognising the considerable efforts of
all MA Financial employees and its leadership team in
navigating the continually changing circumstances arising
from the global pandemic and associated flow on business
and government mandated policy impacts. As a Board, we
have been impressed by the energy, resilience and genuine
care shown by the team for our people, clients and the very
wide range of stakeholders affected by our investment and
business operating decisions.
FY21 has been another year of substantial growth for MA
Financial, in terms of the business and operations and
also in maturing and evolving our remuneration structures,
which we believe will support the ambition of continuing
to scale our business over the coming years and creating
long term sustainable value for shareholders. As Chair of
the Nomination and Remuneration Committee, my role
is to lead our Directors in designing and implementing a
remuneration framework that is fair, market competitive,
ensures MA Financial is an employer of choice and
importantly aligned to shareholders. It must also be an
enabler of our purpose, values and culture and therefore
embedded as one part of our approach to growing and
developing our people to their full potential.
Following significant growth since our listing in 2017 and as
part of the group’s evolution, we comprehensively reviewed
our approach to remuneration during FY20. In doing so, our
focus was to align the structure to ensure that our most
important asset, our people, continue to be aligned to the
long term success of MA Financial and that remuneration
is consistent with market. As part of this review, we also
looked to improve the transparency of our remuneration
report and to better articulate the philosophy underpinning
our remuneration practices.
As a knowledge and innovation-led business, attracting,
developing and retaining the highest calibre talent at every
level of the organisation remains our priority in a dynamic
and competitive labour market.
With the ongoing impacts of the global pandemic, FY21
marked another challenging year for our people, clients and
broader community. Despite the external environmental
challenges, our executives and broader team have done a
remarkable job in executing the Group’s consistent strategy
which has delivered exceptional outcomes for clients and
shareholders, whilst continuing to focus on the health and
well-being of our people and clients.
52
Our people and culture
The Group’s continued growth and outstanding
achievements in FY21 are a testament to our people, who
are at the heart of our business and competitive advantage.
The Group’s core values of Growth, Cohesion, Innovation
and Accountability are fundamental to our culture. They
guide our staff in balancing risk and reward when taking
actions and making decisions, to benefit our people, clients,
shareholders and the communities in which we operate.
To ensure we have the right talent to build sustainable value
for shareholders, in FY21 we increased our workforce to
over 425 total staff (up from approximately 225) including
120 staff joining through the RetPro acquisition. To support
the growth and development of our people, we continued
to see significant progress in the MA Academy programme.
By investing in developing our people and supporting
them in reaching their potential, we improve the quality of
outcomes for our clients and investors and enhance our
risk culture and risk management capabilities. Accordingly,
in 2022 we intend to continue to invest in the MA Academy.
The Group has a strong commitment to workplace diversity
by providing an open, inclusive and accessible work
environment for our people regardless of gender, ethnicity,
disability, age, religion, sexual orientation, and educational
and work experience. In FY21, we made significant
progress against our diversity objectives including gender
diversity of 48% / 52% female to male (compared with
33% / 65% at the end of 2020). We have also commenced
recording our cultural and linguistic diversity (CALD)
statistics, with approximately 35% of our workforce
enjoying cultural and linguistic diversity.
I am especially proud of the ongoing contribution that
staff have made to their own communities and causes
through the MA Foundation. MA Foundation supports a
wide number of charities, and has selected Go Foundation,
Beyond Blue and Mirabel Foundation as its Community
Partners. Meaningful donations have also been made to
the University of South Australia, the Art Gallery of NSW,
the Juvenile Diabetes Foundation of Australia and a range
of other charities which our people are passionate about
supporting. Since its inception in 2017, MA Foundation has
donated over $6.8 million to over 35 charities. The activities
of the Foundation are led by our people, and more than
80% of Foundation receipts come from pledges from our
staff. This is a testament to our workplace culture that
places great importance on enriching our communities and
supporting the less fortunate.
Enhanced remuneration framework
MA Financial relies on a high-performing, innovative
and entrepreneurial management team to execute our
ambitious growth strategy and deliver sustainable long
term value for shareholders. To ensure we continue to
attract, motivate and retain top talent, a key priority for the
Board is to reward and recognise our people fairly and in a
manner that reinforces our core values and culture.
To ensure that the remuneration framework enables our
growth objectives and aligns to market expectations,
the Board undertook a comprehensive review of the
remuneration framework in FY20 and FY21, with assistance
from the Nomination and Remuneration Committee and
external advisors.
A revised executive remuneration structure has been
introduced for FY21, applying our philosophy of providing
lower levels of fixed remuneration relative to the market,
and a bias toward higher performance based variable
remuneration through the introduction of a new long
term incentive (LTI) plan for the Joint CEOs and the
KMP (collectively the Executive) and divisional managing
directors (or equivalent). This structure supports our
strong performance-oriented culture, but seeks to balance
individual and collective contribution, recognising that the
whole is greater than the sum of its parts.
While the Joint CEOs were granted LTIs for FY20, the
Board also recognised the value of introducing a LTI plan
for all the Executive in the place of more ad-hoc equity
awards as a retention mechanism and to ensure they
continue to think and act like owners. The new LTI structure
for the Executive and divisional managing directors
(or equivalent) will support the delivery of long term
profitability and share price growth, through the grant of
Loan Funded Shares with an EPS hurdle.
The Executive will only realise value from the vesting of
shares if EPS targets are met and share price appreciation
is achieved (as the equity value at grant date equals the
limited recourse loan to acquire shares, which are required
to be repaid), following a five-year performance period
(noting a single ‘cliff vest’ at the end of five years). The
instrument, loan funded shares, rewards executives for
share price appreciation over five years, ensuring alignment
with the creation of long term value for shareholders.
As an organisation with significant growth ambitions, we
wish to ensure the remuneration model has the flexibility
to reward outperformance. We consider LTI to be a
responsible and an aligned way to reward outperformance
and accordingly, have not included a maximum award on LTI.
The long term ownership mindset is further reinforced
through the mandatory deferral of a portion of the short
term incentive (STI) into shares, which vest over 1–3 years
following the grant date. The Board will continue to have
a bias towards share-based deferred remuneration as the
Group grows.
Overall, the Board strongly believes that the revised
remuneration framework is appropriate for the Group’s
current phase of development and seeks to:
• Attract, retain and motivate high performing executives
• Align the Executive to deliver both short and long term
results and sustainable value creation
• Align the Executive to shareholder objectives of growth in
the Group’s Enterprise Value
• Reinforce our strong culture and active risk management
and the upholding of the Group’s values
• Enhance alignment with market expectations
• Link pay and performance in a way that is straightforward
for shareholders to understand
•
Introduce a consistent framework that can be adapted as
we scale.
Remuneration outcomes in FY21
The FY21 remuneration outcomes reflect the
outperformance of the Group in the face of a challenging
operating environment. The Board considers that the
leadership team have maximised the available opportunities
presented during FY21 delivering in excess of 50%
Underlying EPS growth, undertaking multiple strategic
acquisitions while maintaining a prudent balance sheet.
The Board recognises that improving our remuneration
practices will be an iterative process. MA Financial Group
has a significant growth trajectory and it operates in
dynamic external environments which will necessitate
continued and active ongoing assessment of the
appropriateness of the remuneration structure.
We conclude by thanking you, our shareholders, for your
support and trust. And by recognising our people who
are integral to our success. We congratulate the entire
MA Financial Group team for a great FY21 result and look
forward to this success continuing in FY22.
On behalf of the Board, I invite you to review the full report
and we look forward to receiving your feedback at the
Annual General Meeting.
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Alexandra Goodfellow
Chair of the Nomination and Remuneration Committee
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Remuneration report
1. Remuneration report overview
Remuneration report
2. How remuneration is governed
The Directors of MA Financial are pleased to present the Remuneration report (the Report) for the Group for the year
ended 31 December 2021. This Report forms part of the Directors’ Report and has been prepared in accordance with
section 300A of the Corporations Act 2001 (Cth) (the Act).
The Report details the remuneration arrangements for the Group’s key management personnel (KMP) including:
•
•
the Non-Executive Directors (NEDs)
the Chief Executive Officers (Joint CEOs) and senior executives (collectively the Executive).
KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling
the activities of the Group.
The table below outlines the KMP of the Group and their movements during FY21.
NAME
POSITION
TERM AS KMP
Non-Executive KMP
Jeffrey Browne
Independent Non-Executive Chair
Full financial year
Alexandra Goodfellow
Independent Non-Executive Director
Full financial year
Simon Kelly
Independent Non-Executive Director
Appointed 21 April 2021
Kenneth Moelis
Non-Executive Director
Full financial year
Kate Pilcher Ciafone
Non-Executive Director
Full financial year
Executive KMP
Julian Biggins
Executive Director and Joint CEO
Full financial year
Christopher Wyke
Executive Director and Joint CEO
Full financial year
Andrew Pridham
Group Vice Chair
Full financial year
Graham Lello
Chief Financial Officer
Full financial year
Janna Robertson
Chief Operating Officer
Full financial year
2.1 Remuneration decision-making
2.2 Remuneration principles and links to business
strategy and performance
The Board recognises the important role people play
in achieving the Group’s long term objectives and as a
key source of competitive advantage. To grow and be
successful, the Group must be able to attract, motivate and
retain quality individuals.
The Group’s purpose is to deliver long term, sustainable
value to our shareholders, clients and people. The key
objectives underpinning our purpose are embedded in the
Group’s remuneration principles, as summarised in the
following diagram.
The Board exercises significant oversight and judgement to
ensure the appropriate alignment of staff, shareholders and
client outcomes. In setting remuneration, the Board seeks
to strike a balance between having a transparent, aligned
and structured remuneration framework, whilst retaining
some discretion and flexibility to alter remuneration
arrangements to meet changing market conditions and
to comply with regulatory and corporate governance
developments. Critical to effective remuneration outcomes
is a consistent and rigorous process for determination of
company-wide and individual remuneration outcomes.
The Board has an established Nomination and
Remuneration Committee (the Committee) which operates
under the delegated authority of the Board. The Committee
has primary carriage of the Group’s remuneration strategy,
framework and principles.
The Board, Committee and the Executive work together to
apply our remuneration governance framework and ensure
our strategy. Our remuneration governance framework is
designed to support our purpose, principles, strategy, and
our long term approach to creating sustainable value for
our shareholders, clients and the community.
The members of the Committee during FY21 were:
• Alexandra Goodfellow – Independent Non-Executive
Committee Chair (full year)
• Jeffrey Browne – Independent Non-Executive
Committee Member (full year)
• Ken Moelis – Non-Independent Non-Executive
Committee Member (until 11 August)
• Kate Pilcher Ciafone – Non-Independent Non-Executive
Committee Member (from 11 August)
• Andrew Pridham – Non-Independent Executive
Committee Member (until 20 May).
The Committee’s Charter allows the Committee to access
specialist external advice about remuneration structure
and levels and is utilised periodically to support the
remuneration decision-making process.
The Committee Charter can be found on the Corporate
Governance page of the Group’s website at
www.mafinancial.com.
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Remuneration report
2. How remuneration is governed
Remuneration report
2. How remuneration is governed
O U R P U R P O S E
• Partnering with clients who value strong alignment, complementary expertise and sustainable
performance
• Empowering our people through a culture of growth, cohesion, innovation and accountability
(Our Differentiating Values and Behaviours)
• Delivering a high standard of technical expertise in both fiduciary and advisor roles
• Being active managers of risk.
R E M U N E R AT I O N P R I N C I P L E S
Enable the Group
to attract, retain
and motivate a
high performing
Executive cohort
Align Executives
to deliver both
short and long
term results and
sustainable value
creation
Alignment to
shareholder
objectives through
an ‘owner’s
mentality’
Reinforce active risk
management and
the upholding of the
Group’s values
Encourage and
drive growth by
linking pay and
performance
and rewarding
outperformance
E X E C U T I V E K M P R E M U N E R AT I O N F R A M E W O R K
At-risk
Fixed Annual Remuneration (FAR)
Short Term Incentive
Long Term Incentive
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Set at a comparatively low
level relative to industry and a
smaller proportion of the total
remuneration mix.
Rewards for achieving annual objectives
that drives execution of our strategy and
creates sustainable shareholder wealth,
in a manner consistent with our values
and risk culture.
Rewards for creating sustainable long
term shareholder value and reinforcing
an ownership mindset.
Base salary, compulsory
superannuation and non-
monetary benefits.
• 65% paid as cash
• 35% deferred into shares, as follows:
– One third for 1 year
– One third for 2 years
– One third for 3 years.
Annual grant of loan funded shares
funded by an interest-free limited
recourse loan, with vesting subject to a
5-year performance period.
Reviewed periodically
considering various factors
including role size and
complexity, talent scarcity and
relevant external remuneration
benchmarks.
Quantum:
Quantum:
• Target opportunity range of 275%-
325% of FAR for Joint CEOs (100%-
222% for other KMP)
• Target opportunity range of 125%-
175% of FAR for Joint CEOs (33%-
50% for other KMP)
• Maximum opportunity of 325% of FAR
for Joint CEOs
• No maximum opportunity for other
KMP who may earn above target range,
based on Board discretion.
• No maximum opportunity for any
KMP (including Joint CEOs) who
may earn above target range for
outperformance, based on Board
discretion.
Performance Assessment:
• 50% Corporate objectives (Underlying
EPS and ROE)
• 50% Personal objectives (role-specific).
Performance Assessment:
• 70% Underlying EPS
• 30% service condition.
56
2.3 Joint CEO structure
2.4 Remuneration advisors
The Committee has access to adequate resources to
perform its duties and responsibilities, including the
authority to seek and consider advice from independent
external advisors, which included Korn Ferry, KPMG,
BDO and Morrow Sodali to ensure that they have all the
relevant information at their disposal to determine KMP
remuneration.
External advisors provide independent information and/or
recommendations relevant to remuneration-related issues,
including benchmarking and market data. External advisors
may be engaged directly by the Committee or through
management.
During FY20 and FY21, the Committee engaged the
services of external advisers to assist with the design
and implementation of a revised remuneration structure
for all senior staff (Managing Director equivalents and
above including the Executive) and conduct a market
benchmarking review of KMP remuneration.
The services provided by external advisors during
FY21 were free from undue influence and did not
include providing the Committee with any remuneration
recommendations as defined by Section 9B of the Act.
The Joint CEO structure was established in March
2020 following the appointments of Julian Biggins and
Christopher Wyke as Joint CEOs.
The Board considers the Joint CEO structure to be
appropriate for MA Financial as a diversified financial
services group due to the following:
• Christopher Wyke and Julian Biggins are founding
members of the Group. The Group operates a breadth of
businesses across three divisions (Asset Management,
Lending, Corporate Advisory & Equities), has operations
in Australia, Asia, United Kingdom, employs more than
425 staff, and has $6.9bn of assets under management.
Our investment expertise span Real Estate, Hospitality,
Credit, Equities and Private Equity investments including
Venture Capital
• Each CEO brings specific skills and capabilities to
allow them to focus on managing and growing different
parts of our diversified financial services businesses,
which we believe will facilitate stronger and more
sustainable growth
• Julian is responsible for the Group’s finance, investor
relations and marketing functions, and leading the
strategy and scaling of all our Real Estate, Hospitality
and operating businesses associated with real estate.
He also leads our Equities and Capital Markets
capabilities
• Christopher has responsibility for our Advisory, Lending
and Credit activities. He also takes responsibility for our
risk, legal and compliance functions
• The Joint CEOs share equal responsibilities for Asset
Management and distribution capability and the Group’s
culture, people and strategy, including acquisitions.
The Committee, as well as the Board, annually review the
appropriateness of the Joint CEO structure to ensure its
effectiveness by assessing the joint performance of the
CEOs in delivering strong shareholder outcomes.
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3. Executive remuneration policy and practices
Remuneration report
3. Executive remuneration policy and practices
To ensure that the remuneration framework remains fit-for-purpose as the Group continues to grow, the Board undertook a
comprehensive review of the remuneration framework in FY20 and FY21, with support from external advisors.
3.1 FY21 Executive remuneration quantum changes
3.2 FY21 Executive remuneration mix
The elements of the revised executive remuneration framework for FY21 are summarised in the diagram below and detailed
in the subsequent sections.
TYPE
STRUCTURE
FY21
FY22
FY23
FY24
FY25
Fixed
Remuneration
Short Term
Incentive (at risk)
(STI)
Long Term
Incentive (at risk)
(LTI)
Base salary,
compulsory
superannuation
and non-monetary
benefits
At risk, with 65%
paid as cash, with
35% deferred into
shares vesting over
3 years
At risk, with annual
grant of loan funded
shares funded by
an interest-free,
limited recourse loan
(subject to a 5-year
vesting period)
Cash paid
throughout
the year
STI cash
component
paid
following the
end of FY21
Opportunity
range is set
as a % of
base salary
Share component deferred with one
third in Year 1, one third in Year 2 and
one third in Year 3
Subject to a 5-year performance period (30% service, 70% avg. EPS
growth per annum of between 7.5% and 12% per annum
Legends:
Award (subject to appropriate approvals)
Share vesting
In FY21 the Executive reviewed the executive remuneration
framework and associated reporting, including a
benchmarking of remuneration packages of the
Joint CEOs.
The figure below shows the remuneration mix for the
Joint CEOs and KMP based on the remuneration outcomes
for FY21 as set out in Table 3 and 5 on page 69.
J O I N T C E O s
In setting compensation for the Joint CEOs, we have
benchmarked remuneration regarding sector, business
size and its growth objectives, its complexity and required
skillset, experience and knowledge.
This has been considered in the context of the Group’s
philosophy to set fixed remuneration at a relatively low level
and provide greater at-risk remuneration to the Executive
(including significant long term equity-based awards),
and a desire to maintain strong links between pay and
performance.
The most material change in the executive remuneration
framework is the introduction of a LTI plan for all senior
staff (Managing Director and equivalent and above
including Executive). Whilst the Group’s STI plan has always
included a deferred equity component, a meaningful LTI
plan was considered essential to ensure ongoing alignment
with the creation of sustainable growth in shareholder
value. The LTI is considered an effective and valuable long
term retention mechanism for the Executive and our senior
managing directors (and equivalent).
K M P
As announced on the ASX on 22 October 2021, the Joint
CEOs signed new employment contracts that provide the
following remuneration:
• Fixed remuneration of $600,000 per annum effective
1 September 2021 (up from $450,000 in FY20)
• Target STI opportunity of $1,800,000 per annum and
maximum STI opportunity $1,950,000 per annum
(previously a discretionary STI in FY20 with no target or
maximum opportunities)
• Target LTI opportunity of $1,000,000 per annum of fixed
remuneration (previously a discretionary LTI with no
target or maximum opportunities). Outperformance may
lead to an award in excess of target, subject to Board
discretion.
17%
28%
83%
At risk
55%
Fixed
STI
LTI
32%
68%
At risk
16%
52%
Fixed
STI
LTI
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3. Executive remuneration policy and practices
Remuneration report
3. Executive remuneration policy and practices
3.3 Fixed Annual Remuneration
Consists of base salary, compulsory superannuation and
non-monetary benefits. Fixed Annual Remuneration (FAR)
levels for the Executive are reviewed periodically by the
Committee on behalf of the Board taking into consideration
several factors including:
• the size and complexity of the role, including role
accountabilities
• the criticality of the role to successful execution of the
business strategy
• skills and experience of the individual
• period of service
• scarcity of talent
• market pay levels for financial services sector and
comparable roles.
The Board determined that there would be no fixed
remuneration increases for any of the Executive other than
the Joint CEOs during FY21. However, fixed remuneration
increases for the Executive (other than the Joint CEOs)
and divisional managing directors are planned for FY22.
MA Financial has and will continue to position FAR at
relatively low levels compared with the financial sector
comparables and intends to review FAR based on the
Group achieving growth milestones, rather than on an
annual basis. We believe that higher at-risk remuneration
supports our philosophy of rewarding for long term
performance.
3.4 Short Term Incentive (STI) plan
What is the
objective of the
STI plan?
The purpose of the STI plan is to recognise the Executive for achieving a combination of Board-approved
Corporate and Personal objectives that support the execution of the Group’s strategy and create
sustainable shareholder wealth, in a manner consistent with organisational values and risk culture.
How is it paid?
STI awards for the Executive are paid part in cash (65%) with a portion deferred in shares (35%) according
to the extent of achievement of the applicable performance measures.
What is the
performance
period?
STI awards are assessed over a 12-month performance period aligned with the Group’s financial year
(1 January 2021 to 31 December 2021).
How much can the
Executive earn?
In FY21, the Joint CEOs had a target STI opportunity of $1,800,000 and a maximum opportunity of
$1,950,000.
Other KMP had a target STI opportunity of 100–222% of FAR, with the ability to earn above the target
range for significant outperformance, based on Board discretion.
STI award outcomes depend on the extent of achievement of the applicable performance measure.
How is
performance
assessed and
what are the
performance
measures?
Performance measures include Corporate and Personal objectives (50% each) that align with the Group’s
strategy and core values.
The Board, with the assistance of the Committee, sets and assesses the measures applicable to the Joint
CEOs. The outcome of the assessment determines the STI amount payable to the Joint CEOs.
The Joint CEOs set and assess the individual measures applicable for the KMP. The Committee reviews
the outcome of the assessment.
The Corporate objectives applicable to the Joint CEOs for FY21, their weightings and link to strategy are
listed below.
Corporate objective
Weighting
(% of STI)
Rationale why chosen and link to strategy
Underlying EPS
ROE
25%
25%
50%
To incentivise profitability growth as a key driver of
sustainable shareholder returns
Delivering long term competitive investment returns for
our investors is core to our offering
The remaining 50% of the STI opportunity relates to performance against personal objectives that are
specific to the role and responsibilities of the Executive in the areas they control and influence. Personal
objectives are ultimately linked to the overall strategy and success measures of the Group.
Refer to section 4.2 for further detail of the Corporate and Personal objectives of the Joint CEOs for FY21,
including commentary on performance assessment and outcomes.
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3. Executive remuneration policy and practices
Is there a deferral
mechanism and
why?
What happens
to STI awards
when an
Executive ceases
employment?
How are dividends
treated during the
deferral period?
Is there a malus/
clawback
provision?
Yes.
35% of any STI award is deferred into ordinary shares in the Company. The shares vest in equal thirds on
the first, second and third anniversaries of the grant date, respectively, subject to the recipient’s continued
employment.
The number of shares to be allocated is equal to 35% of the STI award divided by the face value of
Company shares, calculated as the 5 business-day volume-weighted average price (VWAP) up to and
including 31 December 2021.
The deferral mechanism ensures that the impact of decisions and performance in any one year are
sustained over the medium–long term, acts as a retention mechanism, and provides the Board an
opportunity to reinforce accountability through remuneration reductions if necessary.
Unless the Board determines otherwise or the Executive is a Good Leaver (see below), if the Executive
ceases to be an employee of the Group during the deferral period, their deferred STI will be forfeited.
Subject to the Board’s discretion to determine otherwise and any applicable laws, an Executive who is a
Good Leaver will be entitled to retain a pro rata portion of their deferred STI based on the proportion of
the deferral period that has elapsed as at the date on which employment ceases. Any retained deferred
STI will continue to be held subject to the rules governing the grant of the deferred STI component and will
remain subject to restriction until the end of the relevant deferral period. The balance of the deferred STI
will be forfeited.
Good Leaver means a participant who ceases employment due to retirement (with agreement of the
Board), resignation (with agreement of the Board), ill-health, total and permanent disablement, redundancy,
or death, or the sale by the Company of the business in which the participant is employed such that it is no
longer a member of the Group, as determined by the Board, or such other circumstances as the Board may
at any time determine.
Dividends will be paid to holders of the shares during the deferral period.
Yes.
Where, in the opinion of the Board, a participant has acted fraudulently, dishonestly, made a material
misstatement, has engaged in serious misconduct, gross negligence, is responsible for material financial
losses, has contributed to material reputational damage, is in material breach of duties, has commenced
employment with a direct competitor of the Company, the Board may, deem all or some of any deferred
STI to have been forfeited, adjust conditions applicable to the STI, or adjust the participant’s incentive
entitlements in respect of any future year.
Remuneration report
3. Executive remuneration policy and practices
3.5 Long Term Incentive (LTI) plan
Why does the Board
consider a LTI plan is
appropriate?
The key objectives of the LTI plan are to:
• Align Executive remuneration with the creation of sustainable long term shareholder value
• Reward Executives for share price appreciation and earnings performance over a five-year
performance period
• Attract and retain key Executives
• Encourage an ‘owner’s mentality’
• Provide competitive remuneration aligned with general market practice of ASX-listed entities.
Who is eligible?
The Executive and other senior executives.
How is the award
delivered?
How often are
awards made?
How much can the
Executive earn?
The LTI award for FY21 is in the form of Loan Funded Shares.
A Loan Funded Share is a share whose acquisition has been fully or partly funded by a limited recourse
loan from the Company. The loan is provided for the sole purpose of participants acquiring shares in the
Company. Loan Funded Shares granted, to eligible participants under the LTI plan carry the same rights
and entitlements as other shares on issue, including as to voting and dividends.
The loan is ‘interest free’ in that there is no annual interest charge to the participant on the loan. However,
the notional value of this interest is taken into account in the overall structure of the programme.
The Loan Funded Shares are subject to risk of forfeiture during the vesting/performance periods and while
the loan remains outstanding.
LTI awards are granted on an annual basis to eligible participants.
The Board has absolute discretion to determine the frequency and timing of grants under the LTI plan.
FY21 target LTI opportunities are as follows:
Joint CEOs
Other KMP
125–175% of fixed remuneration at target
50% of fixed remuneration at target
Outperformance may lead to an award in excess of the target range, subject to Board discretion.
What is the quantum
of the award and
what allocation
methodology is
used?
The number of Loan Funded Shares granted to an Executive is determined by dividing the Executive’s LTI
opportunity by the fair value of the Company’s shares, rounded down to the nearest whole number.
The fair value is calculated as the 5-day volume weighted average price (VWAP) of Company shares up to
and including the grant date, multiplied by the binomial pricing model valuation factor.
The model inputs for Loan Funded Shares granted during the year included:
• Share price at grant
• Binomial factor of 30%
• LTI award.
5-year performance period of 1 January 2021 to 31 December 2025.
Of the total number of Loan Funded Shares granted to an Executive:
• 30% will be subject to a Service Condition: the service condition is met if employment/engagement
with the Company is continuous for the period
• 70% will be subject to a Performance Condition: the performance condition for the FY21 LTI award is
average growth in underlying earnings per share (EPS).
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Why does the
Board consider
Board discretion
to be appropriate?
At all times, the Board may exercise discretion on STI awards. The Board acknowledges that selected
performance measures and formulaic calculations may not provide the right remuneration outcome in
every situation, leading to occasions where the incentive does not reflect true performance and overall
contributions of the Executive. It is at this point that discretion becomes necessary, such that the Board
can adjust outcomes up or down as warranted.
Discretion will only be applied in a manner that aligns the experience of both the Company and
shareholders. Any discretion applied will be disclosed and explained in the Remuneration Report.
What is the
performance period?
What are the
performance
conditions?
62
Why were the
performance
conditions selected?
The performance conditions were selected by the Board based on a review of market practice and
consideration of the Group’s strategic objectives. Specifically:
• Service-based conditions are used to encourage retention
• Average growth in underlying EPS was selected as a performance condition to incentivise profitability
growth as a key driver of sustainable shareholder returns
• The award of Loan Funded Shares incorporates an implicit share price appreciation hurdle. As this is
a limited recourse loan, if the value of the shares is less than the outstanding loan balance at the end
of the loan repayment period, the shares will be surrendered and forfeited in full settlement of the loan
balance and no benefit would accrue to the Executive.
The Board will review the performance conditions annually to determine the appropriate hurdles based on
the Group’s strategy and prevailing market practice and conditions.
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3. Executive remuneration policy and practices
Remuneration report
4. Executive remuneration outcomes in FY21
What is underlying
EPS and how is it
measured?
The definition of average growth in Underlying EPS is set out as follows:
Average Return % = ( 25EPS – 20EPS ) ÷ n x 100
20EPS
Where:
20EPS = Earnings per Share as at 31/12/20
25EPS = Earnings per Share as at 31/12/25
N = number of years (being 5 years in the plan)
The level of vesting of this component will be determined according to the following schedule:
Average growth in Underlying EPS (per annum)
Percentage of Loan Funded Shares that vest
Less than 7.5%
7.5% to 12%
Nil
Pro rata between 50% and 100% vest
Greater than or equal to 12%
100% vest
What are the
restrictions applying
to Loan Funded
Shares?
Loan Funded Shares may not be transferred, encumbered, disposed of or otherwise dealt with while they
remain subject to the above performance conditions, unless permitted by the LTI plan rules or determined
by the Board.
Once Loan Funded Shares vest, subject to the Company’s Trading Policy and applicable law, the Executive
will generally be able to sell them subject to repaying the loan applicable to those Shares (or making
arrangements acceptable to the Board regarding repaying of the loan).
How are dividends
treated during the
performance period?
Any dividends paid on the shares while the shares are restricted are applied (on a notional after-tax basis)
towards repaying the loan. The balance of the dividend is paid directly to the executives to fund their tax
liability on the dividends received.
Unless the Board determines otherwise or the Executive is a Good Leaver (see below), if the Executive
ceases to be an employee of the Group during the performance period, their unvested Loan Funded
Shares will be forfeited.
Subject to the Board’s discretion to determine otherwise and any applicable laws, an Executive who is a
Good Leaver will be entitled to retain a pro rata number of their unvested Loan Funded Shares based on
the proportion of the performance period that has elapsed as at the date on which employment ceases.
Any retained unvested LTI will continue to be held subject to LTI plan rules and relevant performance
conditions, and generally the Executive will have 6 months to settle the loan. The balance of unvested
Loan Funded Shares will be forfeited in satisfaction of the portion of the Loan to which the forfeited Loan
Funded Shares relate.
Good Leaver means a participant who ceases employment due to retirement (with agreement of the
Board), resignation (with agreement of the Board), ill-health, total and permanent disablement, redundancy,
or death, or the sale by the Company of the business in which the participant is employed such that it is no
longer a member of the Group, as determined by the Board, or such other circumstances as the Board may
at any time determine.
Yes.
What happens to
Loan Funded Shares
when an Executive
ceases employment?
What happens in the
event of a change of
control?
Is there a malus/
clawback provision?
4.1 Company performance
FY21 financial performance1
The graphs below provides a summary of the Group’s financial performance over the past five financial years (including
FY21) in accordance with the requirements of the Act. As remuneration outcomes are measured with reference to
Underlying and not statutory results, only the Underlying results are presented in this section 4 of the Remuneration
Report. A reconciliation of Underlying results to statutory results is set out in note 3 of the Financial Report:
U N D E R LY I N G R E V E N U E ( $ ’ M )
U N D E R LY I N G E B I T DA ( $ ’ M )
232.4
88.5
137.0
107.4
158.4
160.1
60.5
63.5
60.5
41.9
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
U N D E R LY I N G E P S ( C E N T S )
U N D E R LY I N G R E T U R N O N E Q U I T Y ( % )
23.2
26.1
26.5
25.1
17.2%
17.2%
15.5%
13.8%
38.2
21.2%
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
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The Board has discretion to make a determination to award, partially award or adjust LTI in the event of a
change of control.
S H A R E P R I C E ( $ )
D I V I D E N D ( C E N T S )
Yes.
Where, in the opinion of the Board, a participant has acted fraudulently, dishonestly, made a material
misstatement, has engaged in serious misconduct, gross negligence, is responsible for material financial
losses, has contributed to material reputational damage, has breached any term of the Loan Agreement, is
in material breach of duties, has commenced employment with a direct competitor of the Group, the Board
may, deem all or some of any unvested Loan Funded Shares as forfeited, adjust conditions applicable to
the Loan Funded Shares, or adjust the participant’s incentive entitlements in respect of any future year.
8.95
17.00
6.72
10.00
10.00
4.57
5.10
4.75
7.00
8.00
Why does the Board
consider Board
discretion to be
appropriate?
At all times, the Board may exercise discretion on vesting of LTI awards. The Board acknowledges that
selected performance measures and formulaic calculations may not provide the right remuneration
outcome in every situation, leading to occasions where the incentive does not reflect true performance and
overall contributions of the executive. It is at this point that discretion becomes necessary, such that the
Board can adjust outcomes up or down as warranted.
Discretion will only be applied in a manner that aligns the experience of both the Company and
shareholders. Any discretion applied will be disclosed and explained in the Remuneration Report.
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
1. Underlying numbers are not audited. Please see note 3 within the Annual Financial Report for a reconciliation of Underlying to Statutory
64
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4. Executive remuneration outcomes in FY21
Remuneration report
4. Executive remuneration outcomes in FY21
4.1 Company performance (continued)
4.2 STI performance and outcomes
The Board provides the following commentary regarding
the Group’s Underlying financial performance for FY21.
Further commentary on performance is set out in the Year
in Review section
In accordance with the methodology set out in section 3 of
the Remuneration Report, an assessment was undertaken
of the performance of each eligible Executive against their
FY21 objectives.
Despite challenging conditions arising due to global
pandemic impacts throughout the reporting period, the
Group achieved strong financial performance across all
divisions and exceeded all financial measures applicable to
the Joint CEOs.
The FY21 STI objectives for the Joint CEOs, with
commentary on achievements, are provided in Tables 1 and
2, respectively. The STI award percentages and payments
to Executives are presented in Table 3 and 4.
Recognising that FY20 was adversely impacted by
the global pandemic, the FY21 result is considered an
outstanding outperformance. We call out the following key
highlights:
• Revenue increased by 45%, with Corporate Advisory
delivering record revenues, Asset Management base,
transaction and performance fees also delivered a
record year with 62% Underlying revenue growth and
Lending continues to scale
• Underlying EBITDA increased by 46%. This includes
a favourable mark to market movement of $22.6m, of
which $18.6m relates to a non-cash increase in the
revaluation of the Redcape Hotel Group (RDC) asset
portfolio. The non-cash RDC revaluation movements are
not typically factored into compensation by management
due to the nature of the holding
• Underlying EPS increased by 52% and statutory EPS
grew by 21%
• Underlying Return on Equity was 21.1% compared to
15.5% in the prior year
• As a consequence of the positive momentum in the
business, the share price increased by 88%, with a
closing price of $8.95 on 31 December 2021.
TA B L E 1 – J O I N T C E O J U L I A N B I G G I N S F Y2 1 P E R F O R M A N C E O B J E C T I V E S & O U T C O M E S
CATEGORY
MEASURE
RATIONALE FOR MEASURE
COMMENTARY ON PERFORMANCE
Corporate Objectives (50% – 25% per objective)
Shareholder
Return
• Underlying EPS
attributable to
shareholders.
Investment
Performance
• Underlying Return on
Equity (ROE)
• Metrics focused on
maintenance of a
strong and conservative
balance sheet position.
Personal Objectives (50%)
Provides alignment to
shareholders
Underlying EPS of 38.2cps exceeded EPS target
of 34.7cps
Delivering long term
competitive investment
returns for our investors is
core to our offering
Underlying ROE of 21.2% exceeded ROE target
of 15%
Business
Growth
Strategic
Initiatives
Employee
Engagement
• Revenue target for the
Group’s Real Estate and
Hospitality strategies.
Provides alignment to
the Group’s financial
performance
• Metrics focusing on
strong leadership of
the business, including
promoting leadership
cohesion and cross
business collaboration.
Maintaining collaboration
between the various
business divisions is
considered fundamental to
the performance of
the Group
• Metrics focusing on
strong leadership of
the business, assessed
against staff belonging
and alignment to the
Group’s culture and
values.
Providing a motivating
workplace and maintaining
a ‘owner’s mentality’
environment to drive
continued business
outcomes for investors and
shareholders
It is critical for our senior
management to have a high
degree of ownership for risk
management
Risk
• Metrics focusing
on fostering a risk
management culture
and managing strategic
and operational risk
within Board approved
risk appetite
• Adherence to the
Group’s risk culture
underpins the entire
short term incentive
award.
Revenue and growth targets within specific focus
areas achieved, notwithstanding the COVID
related venue closures impacting the Hospitality
revenues.
Continued strong performance in investment and
advisory activities across the Group. Revenue
targets exceeded.
Strategic initiatives included the acquisition of
RetPro and Finsure, delisting of Redcape Hotel
Group.
Promoted expansion of leadership and capability
with additional senior hires across all business
divisions and Corporate.
Leading by example. The Joint CEOs have
modelled complementary co-leadership
throughout a challenging period. We recognise
shared attribution and complementary
contributions for leading the business through
extended lockdowns in a way which enhanced the
culture and cohesion of our teams.
The implementation of a comprehensive culture
and belonging review across the organisation has
provided new insight into opportunities for further
enhancing our culture.
Areas of particular focus for Julian included:
• Leading the change management associated
with the renaming to MA Financial Group
• Leading the delisting of Redcape Hotel Group
• Our new premises strategies, including vision
for workplace and values integration
• Leading investor engagement
• Leading the strategy for growing our team,
capability, and expertise in Real Estate
(Corporate Advisory, Asset Management) and
Hospitality
• Remuneration and aligning strategy with
creating long term shareholder value
• Reinforcing our risk and governance culture,
including through participation in the Audit and
Risk Committee.
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Overall performance
>100%
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4. Executive remuneration outcomes in FY21
Remuneration report
4. Executive remuneration outcomes in FY21
TA B L E 2 – J O I N T C E O C H R I S T O P H E R W Y K E F Y2 1 P E R F O R M A N C E O B J E C T I V E S & O U T C O M E S
TA B L E 3 – S T I O P P O R T U N I T Y F O R E X E C U T I V E K M P I N F Y2 1
CATEGORY
MEASURE
RATIONALE FOR MEASURE
COMMENTARY ON PERFORMANCE
Corporate Objectives (50% – 25% per objective)
Provides alignment to
shareholders
Underlying EPS of 38.2cps exceeded EPS target
of 34.7cps
Delivering long term
competitive investment
returns for our investors is
core to our offering
Underlying ROE of 21.2% exceeded ROE target
of 15%
Provides alignment to
the Group’s financial
performance
Revenue and growth targets within specific focus
areas exceeded, including revenue diversification,
strong principal lending returns and initiatives.
Shareholder
Return
• Underlying EPS
attributable to
shareholders.
Investment
Performance
• Underlying Return on
Equity (ROE)
• Metrics focused on
maintenance of a
strong and conservative
balance sheet position.
Personal Objectives (50%)
Business
Growth
• Underlying EBITDA
target for the Group’s
Credit and Lending
initiatives
• Growth in origination of
Lending investments
• Metrics focused on
driving continued
innovation, as well
as delivery of agreed
lending milestones.
Strategic initiatives included the acquisition of
RetPro and Finsure, delisting of Redcape Hotel
Group.
Promoted expansion of leadership and capability
with additional senior hires across all business
divisions and Corporate.
Leading by example. The Joint CEOs have
modelled complementary co-leadership
throughout a challenging period. We recognise
shared attribution and complementary
contributions for leading the business through
extended lockdowns in a way which enhanced the
culture and cohesion of our teams.
The implementation of a comprehensive culture
and belonging review across the organisation has
provided new insight into opportunities for further
enhancing our culture.
Areas of particular focus for Christopher included:
• Leading the Finsure acquisition which was
announced in December 2021. The Board
considers this to be a strategic acquisition
which aligns to the scaling of our Lending
business and participation in the Australian
mortgage market
• Product and geographical expansion in lending
offerings, including developing associated
strategic alliances
• Advancing our technology capabilities,
innovation and platform development, with a
focus on our Lending division
• Leading the strategy for growing our team,
capability and expertise in Corporate Advisory,
Credit and Lending
• Sponsoring key transformation initiatives to
deliver enhanced productivity, risk management
and operational improvements
• Reinforcing our risk and governance culture.
>100%
Strategic
Initiatives
Employee
Engagement
• Metrics focusing on
strong leadership of
the business, including
promoting leadership
cohesion and cross
business collaboration.
Maintaining collaboration
between the various
business divisions is
considered fundamental
to the performance of the
Group
• Metrics focusing on
strong leadership of
the business, assessed
against staff belonging
and alignment to the
Group’s culture and
values.
Providing a motivating
workplace and maintaining
an ‘owner’s mentality’
environment to drive
continued business
outcomes for investors and
shareholders
It is critical for our senior
management to have a high
degree of ownership for risk
management
Risk
• Metrics focusing
on fostering a risk
management culture
and managing strategic
and operational risk
within Board approved
risk appetite
• Adherence to the
Group’s risk culture
underpins the entire
short term incentive
award.
Overall performance
68
Target STI
opportunity
Maximum STI
opportunity
STI outcome
% of target
STI awarded
% of maximum
STI awarded
Julian Biggins
$1,800,000
$1,950,000
$1,950,000
Christopher Wyke
$1,800,000
$1,950,000
$1,950,000
Andrew Pridham
$1,000,000
Graham Lello
Janna Robertson
$450,000
$600,000
N/A
N/A
N/A
$1,200,000
$450,000
$585,000
108%
108%
120%
100%
98%
100%
100%
N/A
N/A
N/A
At the request of the KMP, certain amounts of STI Award has been foregone in favour of a donation to the MA Foundation.
The amounts which have been foregone are outlined in the table below.
TA B L E 4 – S T I AWA R D E D T O E X E C U T I V E K M P I N F Y2 1
Achieved STI
amount
Amount foregone
as donation
STI amount
awarded
STI outcome
(65% cash)
STI outcome
(35% deferred)1
Julian Biggins
$1,950,000
$250,000
$1,700,000
$1,105,000
$595,000
Christopher Wyke
$1,950,000
$50,000
$1,900,000
$1,235,000
$665,000
Andrew Pridham
$1,200,000
$0
$1,200,000
$780,000
$420,0002
Graham Lello
Janna Robertson
$450,000
$585,000
$5,000
$25,000
$445,000
$560,000
$289,250
$364,000
$155,750
$196,000
1. With the exception of Mr Pridham, all deferred STI will take the form of deferred shares.
2. In relation to Mr Pridham, the Board has exercised discretion to award the 2021 deferred STI as a deferred cash amount. Given Mr Pridham’s substantial
equity holdings, he would be subject to adverse tax outcomes were he to receive the deferred component in the form of deferred shares. This amount
will be paid in line with the vesting schedule for the deferred shares provided to other KMP. In making this decision, the Board had regard to Mr Pridham’s
substantial shareholdings and considers that he continues to have significant alignment with shareholders.
All of the statutory remuneration tables set out in this remuneration report are shown in accordance with amounts received
or to be received by each KMP and accordingly, exclude the donation amounts foregone as set out in the above tables.
TA B L E 5 – LT I AWA R D S F O R E X E C U T I V E K M P R E L AT I N G T O F Y2 1
Julian Biggins
Christopher Wyke
Andrew Pridham
Graham Lello
Janna Robertson
Target LTI
opportunity
$575,000
$575,000
$225,000
$150,000
$150,000
LTI opportunity
to be granted
% of target
LTI awarded
$1,000,000
$1,000,000
$225,000
$225,000
$225,000
174%
174%
100%
150%
150%
The LTI outcomes are calculated in accordance with the methodology outlined in section 3.5 of this report. Any equity granted to the Executive Directors will
be presented to shareholders for approval in accordance with the requirements of the Corporations Act.
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In recognition of performance during COVID impacted FY20, the Board determined during FY21 to offer a one-off long
term equity opportunity award to certain employees including KMPs. Janna Robertson, Graham Lello and Andrew Pridham
were each awarded LTI opportunity of 100,000 loan funded shares, the terms of which are detailed in note 32.4. Andrew
Pridham’s award was approved by shareholders at the AGM in May 2021. Having now established an ongoing LTI programme
from 2021, such awards are expected to be replaced by the LTI programme described in this Remuneration Report.
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Remuneration report
5. Executive contracts
Remuneration report
6. Executive remuneration tables
Remuneration arrangements for Executives are formalised in employment agreements or service contracts (contracts).
The following table outlines the key terms of the contracts with Executives.
6.1 Executive cash value of remuneration realised in FY21
TA B L E 6 – E X E C U T I V E K E Y C O N T R A C T P R O V I S I O N S
The cash value of remuneration realised by the Executive in FY21 is set out below. This information is considered to be
relevant as it provides shareholders with a view of the ‘take home pay’ received by the Executive in FY21 and may differ
from the disclosure of statutory remuneration in Table 8.
Name
Term of contract
Notice period from
the company1
Notice period from
the executive
Treatment of STI and LTI
on cessation
TA B L E 7 – E X E C U T I V E C A S H VA L U E O F R E M U N E R AT I O N R E A L I S E D I N F Y2 1
Julian Biggins
Ongoing
9 months
9 months
Christopher Wyke
Ongoing
9 months
9 months
Andrew Pridham
Ongoing
3 months
3 months
Graham Lello
Ongoing
6 months
6 months
Janna Robertson
Ongoing
3 months
3 months
Refer to section 3 of the
Remuneration Report for the
treatment of STI and LTI on
cessation of employment.
Refer to section 3 of the
Remuneration Report for the
treatment of STI and LTI on
cessation of employment.
1. The Group may make payment in lieu of notice and must pay statutory entitlements together with superannuation benefits. No notice period or payment
in lieu of notice applies if termination was due to serious misconduct.
Termination payments
EXECUTIVE
FIXED
REMUNERATION
FY21 ANNUAL BONUS1
FIXED
REMUNERATION
VARIABLE
REMUNERATION
Salary including
superannuation
$
Cash
component
$
Deferred
equity2
$
Shares
Salary including
superannuation
%
Cash
bonus
%
Deferred
equity
%
Julian Biggins
500,000
1,105,000
595,000
68,806
23%
50%
27%
Christopher Wyke
500,000
1,235,000
665,000
76,901
21%
51%
28%
Andrew Pridham
450,000
1,200,000
-
-
27%
73%
Graham Lello
450,000
289,250
155,750
18,011
50%
32%
0%
18%
19%
1. FY21 annual bonus amounts are net of voluntary donations, see section 4.
2. Amounts disclosed represent the accounting value of the award that will vest in three annual and equal instalments commencing 2023 and ending in 2026.
The maximum value of the award would be the number of Restricted shares at the Company’s share price at the time of vesting. The minimum total value of
the award would be $0 in the event that the service condition attached to the award is not met prior to 2023.
The Group did not make any termination payments to KMP during FY21. All contractual termination benefits comply with
the provisions of the Act.
Janna Robertson
450,000
364,000
196,000
22,665
45%
36%
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Remuneration report
6. Executive remuneration tables
Remuneration report
7. Non-Executive Director remuneration
6.2 Statutory executive remuneration in FY21
The below sets out the statutory executive remuneration disclosures which have been prepared in accordance with the Act
and Australian Accounting Standards.
TA B L E 8 – S TAT U T O R Y E X E C U T I V E R E M U N E R AT I O N TA B L E
REMUNERATION
Short term employee benefits
Long term benefits
Equity-based
benefits
% total
performance
related
Total
7.1 NED remuneration policy and fee structure
The Group’s NED remuneration policy is designed to attract
and retain suitably skilled Directors who can discharge
the roles and responsibilities required in terms of good
governance, oversight, independence and objectivity.
The Board seeks to attract Directors with different skills,
experience, expertise and diversity.
Under the Group’s Constitution and the ASX listing
rules, the total annual fee pool for NEDs is determined
by shareholders. The current maximum aggregate NED
fee pool of $1,000,000 per annum was approved by
shareholders at the 2020 AGM. Within this aggregate
amount, NED fees are reviewed annually by the Committee
and set by the Board.
The Committee reviews NED fees against comparable
companies within the broader general industry and
taking into account recommendations from independent
remuneration advisors.
The Committee reviewed NED fees during the year for the
first time since listing in 2017 and found that base NED
fees and committee fees were aligned to market. However,
Board Chair fees were considered materially below market
and have been adjusted with effect from 1 December 2021.
The table below summarises the annual Board
and committee fees payable to NEDs (inclusive of
superannuation).
Cash salary
including
superannuation
$
Bonus (cash
component)1
$
Total cash
$
Non-
monetary
$
Long
service
leave
$
Bonus
(deferred
cash
component)
$
Amortisation
equity
granted3
$
$
$
TA B L E 9 – N E D F E E S T R U C T U R E
Executive
Julian
Biggins2
Christopher
Wyke2
Andrew
Pridham2
Graham
Lello
Janna
Robertson
Total
FY21
500,000
1,105,000 1,605,000
- 43,974
FY20
423,188
886,250 1,289,438
- 6,790
FY21
500,000
1,235,000 1,735,000
- 43,703
FY20
423,188
962,500 1,385,688
-
6,810
-
-
-
-
557,928 2,206,902
75%
738,768 2,034,996
79%
587,702 2,366,405
77%
Board fees
ROLE
Chair1
NED
FY21
FY20
280,000
150,000
ROLE
Chair
FY21
FY20
20,000
20,000
120,000
120,000
Member
-
-
Committee
fees
771,527 2,164,025
80%
1. Board Chair fees increased from $150,000 to $280,000 from 1 December 2021.
FY21
450,000
780,000 1,230,000
12,894
8,183
420,000
107,260 1,778,337
74%
The payment of Chair committee fees recognises the additional time commitment required by NEDs who serve in those
positions. The Chair of the Board does not receive additional fees for being a member of any Board committee.
FY20
423,188
330,000
753,188
26,274
7,576
FY21
450,000
289,250
739,250
-
11,646
FY20
450,000
256,750
706,750
-
7,748
FY21
450,000
364,000
814,000
- 3,864
FY20
445,000
319,000
764,000
-
2,238
-
-
-
-
-
97,500
884,538
48%
213,199
964,095
52%
212,371
926,869
51%
195,331
1,013,195
55%
170,777
910,303
52%
FY21
2,350,000
3,773,250 6,123,250
12,894 111,370
420,000
1,661,420 8,328,934
FY20
2,164,564
2,754,500 4,899,064
26,274
31,162
-
1,990,943 6,920,731
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1. The cash component of bonuses received in respect of FY21 is expected to be paid in March 2022.
2. Reflects the amortisation of unvested deferred equity granted to the Executive including share rights, restricted shares and loan funded shares. The
expense is based on grant date fair value, amortised on a straight line basis over the vesting period.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Remuneration report
7. Non-Executive Director remuneration
Remuneration report
8. Equity instrument reporting
NEDs do not receive share options, other performance-based incentives or retirement benefits.
8.1 Loan Funded Shares provided to the Executive
7.2 Total fees paid to NEDs
TA B L E 1 0 – S TAT U T O R Y N E D R E M U N E R AT I O N
The following table details Loan Funded Shares that have been issued to the Executive under the LTI plan (refer section 3).
TA B L E 1 1 – L O A N F U N D E D S H A R E S – LT I P L A N
SHORT TERM EMPLOYEE
BENEFITS
EQUITY-BASED BENEFITS
TOTAL
Balance at
1 Jan 21
Granted as
remuneration
Vested
Lapsed
Julian Biggins
Christopher Wyke
Andrew Pridham
-
-
-
250,000
250,000
100,000
Graham Lello
300,000
100,000
Janna Robertson
400,000
100,000
-
-
-
-
-
-
-
-
-
-
Non-Executive Director
Non-Executive Director
Cash salary and fees
Cash salary and fees
including superannuation $
including superannuation $
Options $11
Options $
$$
Jeffrey Browne
Kenneth Moelis
Alexandra Goodfellow
Kate Pilcher Ciafone
Simon Kelly2
Total
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
160,833
140,625
-
-
140,000
51,653
-
-
97,222
-
398,055
192,278
-
160,833
43,281
183,906
-
-
-
-
-
-
-
-
-
-
-
140,000
51,653
-
-
97,222
-
398,055
43,281
235,559
1. 2020 equity-based benefits reflect the amortisation of the fair value of the unvested portion of options issued to Jeffrey Browne in 2017. The expense is
based on grant date fair value, amortised on a straight line basis over the vesting period. The fair value of the options on grant date was calculated under
AASB2 Share-based payments using a Black-Scholes valuation method. The assumptions underpinning this valuation are set out in note 32 in the Annual
Financial Report.
2. Fees paid to Simon Kelly are reported from commencement of term as Non-Executive Director on 21 April 2021.
74
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Balance at
31 Dec 21
250,000
250,000
100,000
400,000
500,000
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Remuneration report
8. Equity instrument reporting
Remuneration report
8. Equity Instrument reporting
8.2 Movements in Executive equity holdings and deferred shares
8.3 Movements in Non-Executive Director equity holdings
The details of equity holdings and deferred shares in the Company held by executives (including close family members
and/or any entity they, or their close family members, control, jointly control or significantly influence) are set out in
Table 12 below.
The number of equity instruments in the Company held (directly and nominally) by Non-Executive Directors or their
related parties (their close family members and/or any entity they, or their close family members, control, jointly control or
significantly influence) are set out below.
There have been no changes to the terms and conditions of these awards since the awards were granted. There are
no amounts unpaid on any of the shares exercised and all restricted shares and rights are exercised automatically
when vested.
TA B L E 1 2 – E Q U I T Y H O L D I N G S O F E X E C U T I V E K M P
Executive
Equity instrument1, 2
Number at
start of year
Granted
during the
year
Vested
Purchased
Lapsed or
sold
Number at
signing date
Ordinary shares
5,802,378
Julian Biggins
Share rights
111,021
-
-
184,904
(82,155)
Restricted shares
255,549
68,806
(102,749)
Ordinary shares
5,696,240
Christopher Wyke
Share rights
117,778
-
-
195,347
(88,542)
Restricted shares
269,220
76,901
(106,805)
-
-
-
-
-
-
Ordinary shares
18,977,262
Andrew Pridham
Restricted shares
57,198
-
-
(19,066)
19,066
3,871
Salary Sacrifice shares
-
1,153
-
Ordinary shares
187,407
Graham Lello
Share rights
77,260
-
-
(44,579)
63,593
3,871
Restricted shares
47,791
18,011
(19,014)
Ordinary shares
46,693
-
25,122
20,000
Janna Robertson
Restricted shares
68,676
22,665
(25,122)
Salary Sacrifice shares
-
1,153
-
-
-
(134,855)
5,852,427
-
-
28,866
221,606
(139,736)
5,751,851
-
-
-
-
-
-
-
-
-
-
-
29,236
239,316
19,000,199
38,132
1,153
254,871
32,681
46,788
91,815
66,219
1,153
-
-
-
-
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TA B L E 1 3 – E Q U I T Y H O L D I N G S O F N O N - E X E C U T I V E D I R E C T O R S
Executive
Jeffrey Browne1
Equity
instrument
Number at
start of year
Ordinary shares
390,625
Options
390,625
Kenneth Moelis
Ordinary shares
Alexandra
Goodfellow
Ordinary shares
Kate Pilcher Ciafone Ordinary shares
Simon Kelly
Ordinary shares
-
-
-
-
Granted
during the
year
Exercised
Purchased
Lapsed or
sold
Number at
signing date
-
-
-
-
-
-
390,625
(390,625)
-
-
-
-
-
-
-
25,371
-
12,921
-
-
-
-
-
-
781,250
-
-
25,371
-
12,921
1. Jeffrey Browne purchased share options in FY17 exercisable in two tranches. Exercise of the first tranche occurred in FY20. Options under the second
tranche were fully exercised in FY21. No other Non-Executive Director or their related parties have been granted options, share rights or restricted
shares. There are no performance conditions attached to the options granted to Jeffrey Browne. Further details of the option plan are described in note
32 of the Annual Financial Report.
9. Loans to KMP
There were no loans to KMP during the year. Loan balances under the limited recourse Loan Funded Share Plan represent
a transaction with a KMP that is an in-substance option and not a loan to the KMP.
10. Other transactions and balances with KMP and their related parties
Transactions conducted by KMP (and their related parties) during the reporting period with the Group and subsidiaries,
joint ventures and associates of the Group are described below.
During the year ended 31 December 2019 Mr Pridham and Mr Biggins entered into property management service
arrangements with the Group on the same terms offered to third-party investors in a property managed by the Group. Total
management fees payable by Mr Pridham and Mr Biggins for FY21 amounted to $69,352 and $15,506 respectively.
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1. Ordinary share holding includes directly held shares and beneficial interests in ordinary shares as a result of holdings in the Existing Staff Trusts.
2. Includes restricted shares granted as part of the FY21 short term incentive award.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Auditor’s independence declaration
For the year ended 31 December 2021
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
The Board of Directors
MA Financial Group Limited
Level 27, Brookfield Place
10 Carrington Street
SYDNEY NSW 2000
17 February 2022
Dear Board Members
Auditor’s Independence Declaration to MA Financial Group Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of MA Financial Group Limited.
As lead audit partner for the audit of the financial report of MA Financial Group Limited for the year
ended 31 December 2021, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Nicholas Rozario
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
1.
Significant accounting policies
2. Application of new and revised Australian Accounting Standards
3. Segment information
4.
5.
Fee and commission income
Interest and investment income
6. Other income
7.
8.
Employee expenses
Finance costs
9. Other expenses
10.
Income tax expense
11. Cash and cash equivalents
12. Receivables
13. Loans receivable
14. Loss allowance
15. Other assets
16. Restricted cash
17. Other financial assets
18. Property, plant and equipment
19. Right-of-use assets
20.
Investments in associates and joint ventures
84
85
86
87
88
88
104
105
109
109
110
110
110
111
112
114
115
116
117
119
119
120
120
121
121
21.
Intangible assets
22. Goodwill
23. Trade and other payables
24. Borrowings
25. Lease liabilities
26. Provisions
27. Financial instruments
28. Contributed equity
29. Earnings per share
30. Dividends
31. Reserves
32. Share-based payments
33. Key management personnel compensation
34. Related party transactions
35. Parent entity disclosures
36
Investment in subsidiaries
37. Structured entities
38. Commitments
39. Subsequent events
Directors declaration
Independent auditors’ report
Additional information
Glossary
Corporate directory
126
127
128
128
130
131
131
140
141
142
142
143
150
150
153
153
157
158
158
159
160
169
172
174
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report Consolidated statement of profit or loss and other
comprehensive income
For the year ended 31 December 2021
Consolidated statement of financial position
For the year ended 31 December 2021
Fee and commission income
Fee and commission expense
Net fee and commission income
Share of profits/(losses) of associates
Interest income – effective interest rate method
Investment income
Other income
Total income
Employee expenses
Professional services
Information, technology and data
Marketing and business development
Insurance
Fund administration and operational costs
Depreciation and amortisation
18,19,21
Finance costs
Credit loss allowance
Other expenses
Total expenses
Profit before tax
Income tax expense
Profit after income tax
8
14
9
10
Other comprehensive income, net of income tax
Items that will not be classified subsequently to profit or loss:
Fair value gain/(loss) on investments in equity instruments designated at FVTOCI
Share of other comprehensive income/(loss) of associates
Total other comprehensive income/(loss)
Total comprehensive income
Earnings per share
From continuing operations
Basic (cents per share)
Diluted (cents per share)
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
201,969
(20,502)
181,467
3,187
30,008
1,622
12,451
228,735
142,700
(13,016)
129,684
(4,844)
28,398
3,145
4,718
161,101
129,585
83,049
Note
4
20
5
5
6
7
5,746
5,984
5,589
2,487
953
8,952
14,520
1,222
4,987
180,025
48,710
(16,669)
32,041
7,462
8,562
16,024
48,065
2,937
4,954
3,144
1,310
338
5,831
16,847
15
3,986
122,411
38,690
(12,210)
26,480
(3,618)
(345)
(3,963)
22,517
29
29
22.3
21.2
18.5
18.0
Assets
Current assets
Cash and cash equivalents
Receivables
Loans receivable
Other assets
Other financial assets
Total current assets
Non-current assets
Restricted cash
Loans receivable
Other financial assets
Property, plant and equipment
Right-of-use assets
Investments in associates and joint ventures
Intangible assets
Goodwill
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Provisions
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
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Note
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
11
12
13
15
17
16
13
17
18
19
20
21
22
10
23
24
25
10
26
23
24
25
26
10
28
31
242,861
36,505
169,156
14,321
3,805
466,648
6,700
173,293
66,034
2,035
9,874
120,393
13,885
14,010
-
406,224
872,872
33,978
55,030
6,598
7,047
42,461
145,114
229
351,290
3,687
1,239
1,280
357,725
502,839
370,033
254,990
48,491
66,552
370,033
138,004
46,122
132,943
6,635
18,429
342,133
2,500
91,328
25,779
1,450
5,338
75,289
11,794
9,827
3,905
227,210
569,343
23,076
30,030
2,930
6,345
28,779
91,160
-
237,540
2,944
842
-
241,326
332,486
236,857
154,579
25,141
57,137
236,857
The above consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the
accompanying notes.
Total shareholders equity
84
The above consolidated statement of financial position is to be read in conjunction with the accompanying notes.
85
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Consolidated statement of changes in equity
For the year ended 31 December 2021
Consolidated statement of cash flows
For the year ended 31 December 2021
Consolidated
Contributed
equity
$’000
Retained
earnings
$’000
Share-
based
payment
reserve
$’000
Associates
OCI reserve
$’000
FVTOCI
reserve
$’000
Total
equity
$’000
Balance as at 1 January 2020
156,972
45,189
22,888
11,598
(9,521)
227,126
Profit after income tax
Other comprehensive loss, net of tax
Total comprehensive income/(loss)
Payment of dividends
Issue of ordinary shares
Treasury shares
Equity transaction costs
Share-based payments
-
-
-
-
26,480
-
26,480
(14,532)
14,125
(16,590)
(26)
98
-
-
-
-
-
-
-
-
-
-
-
4,139
(2,393)
(14,532)
4,139
-
-
26,480
(345)
(3,618)
(3,963)
(345)
(3,618)
22,517
-
-
-
-
-
-
-
-
-
-
-
-
(14,532)
14,125
(16,590)
(26)
4,237
(12,786)
Cash flows from operating activities
Receipts from customers
Interest received
Payments to suppliers and employees
Cash generated from operations
Interest paid
Income taxes paid
Net cash generated by operating activities
11
Cash flows from investing activities
Amounts advanced to third parties
Net payments for financial investments
Payments to acquire shares in associates
Balance as at 31 December 2020
154,579
57,137
27,027
11,253
(13,139)
236,857
Payments to acquire subsidiary, net of cash acquired
Balance as at 1 January 2021
154,579
57,137
27,027
11,253
(13,139)
236,857
Profit after income tax
Other comprehensive income, net of tax
Total comprehensive income
Payment of dividends
Issue of ordinary shares
Treasury shares
Equity transaction costs
Share-based payments
-
-
-
-
32,041
-
32,041
(22,626)
124,180
(22,147)
(1,622)
-
-
-
-
-
-
-
-
-
-
-
-
7,326
100,411
(22,626)
7,326
-
-
32,041
8,562
7,462
16,024
8,562
7,462
48,065
-
-
-
-
-
-
-
-
-
-
-
-
(22,626)
124,180
(22,147)
(1,622)
7,326
85,111
Payments to acquire property, plant and equipment
Dividends and distributions received from investments
(Payments)/receipts for employee loans
Amounts received from related parties
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of shares
Share issue transaction costs
Net proceeds from borrowings
Purchase of treasury shares
Dividends paid to shareholders
Proceeds from exercise of share options
Balance as at 31 December 2021
254,990
66,552
34,353
19,815
(5,677)
370,033
Payments of lease liabilities
The above consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
Cash transferred to restricted cash accounts
Net cash generated by financing activities
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
Note
236,678
123,729
19,196
(156,132)
99,742
(14,451)
(20,231)
65,060
(110,684)
(5,818)
(39,650)
(6,687)
(2,207)
2,827
(384)
-
14,473
(90,111)
48,091
(10,810)
(8,075)
29,206
(38,267)
(17,737)
(11,792)
-
(401)
2,840
17
6
(162,603)
(65,334)
100,632
(1,622)
138,750
(7,892)
(22,626)
1,757
(2,931)
(4,200)
201,868
-
-
72,057
(8,950)
(14,764)
1,094
(4,036)
(147)
45,254
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Net increase in cash and cash equivalents
104,325
9,126
Cash and cash equivalents at the beginning of the year
138,004
128,800
Effects of exchange rate changes on the balance of cash held in foreign currencies
532
78
Cash and cash equivalents at the end of the year
11
242,861
138,004
The above consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
87
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
1
a
Significant accounting policies
Basis of preparation
The Financial Report is a General Purpose Financial Report
which has been prepared in accordance with Australian
Accounting Standards and the Corporations Act 2001 (Cth).
The Financial Report comprises the consolidated financial
statements of the Group and accompanying notes. MA
Financial Group Limited is a for-profit company for the
purposes of preparing this Financial Report.
The principal accounting policies adopted in the
preparation of this Financial Report and that of the previous
financial year are set out below. These policies have been
consistently applied to all the financial years presented
and are applicable to both MA Financial Group Limited and
its subsidiaries (Group) as well as to MA Financial Group
Limited (Company), unless otherwise stated.
The Financial Report was authorised for issue in
accordance with a resolution of the Directors on 17
February 2022.
Compliance with International Financial Reporting
Standards
Compliance with Australian Accounting Standards ensures
that the Financial Report complies with International
Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board (IASB).
Consequently, this Financial Report has also been
prepared in accordance with and complies with IFRS as
issued by the IASB.
Basis of measurement
Unless otherwise stated, amounts in this Financial Report
are presented in Australian dollars and have been prepared
on a historical cost basis, except for financial instruments
that are measured at fair value at the end of the reporting
period. Historical cost is generally based on the fair values
of the consideration given in exchange for goods and
services.
Going concern
The directors have, at the time of approving the financial
statements, a reasonable expectation that the Group have
adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the
financial statements.
Critical accounting estimates and significant judgements
COVID-19 (continued)
1
a
Significant accounting policies (continued)
Basis of preparation (continued)
The preparation of the Financial Report in conformity with
Australian Accounting Standards requires the use of certain
critical accounting estimates. It also requires management
to exercise judgement in the process of applying the
accounting policies. The notes to the consolidated financial
statements set out areas involving a higher degree of
judgement or complexity, or areas where assumptions are
significant to the Group such as:
• determination of control of subsidiaries (note 1(b) and 36)
• determination of significant influence over associates
and joint control over joint ventures (note 1(p) and 20)
• determination of exposure to structured entities (note 37)
• determination of impairment of finite life intangible assets
(note 1(h), 1(q) and 21)
• the impairment of goodwill (note 1(o) and 22)
• recognition and measurement of employee benefits
including share rights, options, restricted shares, loan
funded share plan and salary sacrifice shares (note 1(k)
and 32)
• timing and amount of impairment of interests in
associates and joint ventures (note 1(h), 1(p) and 20)
• measurement of credit losses including the choice of
inputs, estimates and assumptions relating to information
about past events, current conditions and forecasts of
economic conditions (note 1(l), 13 and 14)
• recognition of fees subject to performance criteria and
other conditions, including conditions outside of the
Group’s control (note 1(c)).
Estimates and judgements are continually evaluated and
are based on historical experience and other factors,
including reasonable expectations of future events.
COVID-19
COVID-19 has significantly impacted the overall global
economy and continues to affect economic and financial
markets. While the specific areas of judgement remain
unchanged, the ongoing impact of COVID-19 continues
to result in the application of further judgement. Given the
evolving nature of COVID-19 changes to the estimates
and outcomes applied in the measurement of the Group’s
assets and liabilities may arise in the future. Other than
adjusting events that provide evidence of provisions
that existed at the end of the reporting period, the
impact of the events that arise after the reporting period
will be accounted for in future reporting periods. As a
consequence of the ongoing impacts of COVID-19 and in
preparing the financial statements, management:
•
•
•
Considered the financial impact on the Group and areas
of the financial statements affected to determine the
disclosures required, and evaluate if any additional areas
of judgement or estimation uncertainty beyond what has
been disclosed existed;
Updated forward-looking information when measuring
expected credit losses to assess any significant
increase in credit risk, and for the impairment analysis of
financial and non-financial assets;
Assessed the measurement of assets and liabilities and
determined the impact thereon as a result of COVID-19
and, where applicable, updated the disclosures in the
financial statements.
During the year the Group received no COVID-19
government wage subsidies (2020: $3.3 million). During the
year no deferral of tax related payments were granted by
the Australian Tax Office (ATO) to the Group (2020: $18.5
million). $4.4 million of ATO deferrals outstanding at 31
December 2020 were fully repaid during the year.
b
Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and its subsidiaries.
Subsidiaries are all those entities controlled by the
Company. Control is achieved when the Company:
• has power over the investee;
•
is exposed, or has rights, to variable returns from its
involvement with the investee; and
• has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control
listed above.
When the Company has less than a majority of the voting
rights of an investee, it has power over the investee when
the voting rights are sufficient to give it the practical
ability to direct the relevant activities of the investee. The
Company considers all relevant facts and circumstances in
assessing whether or not the Company’s voting rights in an
investee are sufficient to give it control, including:
• the size of the Company’s holding of voting rights relative
to the size and dispersion of holdings of the other vote
holders;
• potential voting rights held by the Company, other vote
holders or other parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that
the Company has, or does not have, the current ability
to direct the relevant activities at the time that decisions
need to be made, including voting patterns at previous
shareholders’ meetings.
Consolidation of a subsidiary begins when the Company
obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically,
income and expenses of a subsidiary acquired or disposed
of during the year are included in the consolidated
statement of profit or loss and other comprehensive
income from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
All intragroup assets and liabilities, equity, income,
expenses and cash flows relating to transactions between
the members of the Group are eliminated on consolidation.
c
Revenue recognition
Fee and commission income includes fees from
fund management, brokerage, corporate advisory,
underwriting and property management and is recognised
on completion of performance obligations. Where
commissions and fees are subject to clawback or meeting
certain performance hurdles, they are recognised as
income when it is highly probable those conditions will
not significantly affect the outcome. Fee and commission
income and expenses that are integral to the effective
interest rate on a financial asset or liability are capitalised
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89
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
1
c
Significant accounting policies (continued)
Revenue recognition (continued)
and included in the effective interest rate and recognised
in the income statement over the expected life of the
instrument. Performance fees from managed funds are
recognised when it is highly probable that a significant
reversal of the fee will not occur. Factors that are taken into
consideration for performance fees include:
a financial instrument and allocates the interest income
or interest expense over the relevant period. The effective
interest rate is the rate that discounts estimated future
cash receipts or payments through the expected life of the
financial instrument or, when appropriate, a shorter period,
to the net carrying amount of the financial asset or liability.
• the proportion of assets already realised
• returns on assets realised to-date
• downside valuation on remaining unrealised assets and
reliability of those estimates
• nature of unrealised investments and their returns
Dividends and distributions are recognised as income when
the Group becomes entitled to the dividend or distribution.
Interest income – effective interest rate method is brought
to account using the effective interest method. The
effective interest method calculates the amortised cost of
Interest income on loans receivable held at FVTPL
is included with dividend and distribution income as
‘investment income’ in the statement of profit or loss and
other comprehensive income.
Government grants and assistance are accounted for in
accordance with AASB 120 Accounting for Government
Grants and Disclosure of Government Assistance.
Government grants are recognised when there is
reasonable assurance that the Group will receive the grants.
COVID-19 government wage subsidies are recognised as
other income in the statement of profit or loss.
1
c
Significant accounting policies (continued)
Revenue recognition (continued)
At a point in time revenue recognition:
Type of service
Advisory success
fees
Nature, timing of satisfaction
of performance obligations,
significant payment terms
Fees from corporate advisory
contracts arise from providing
services relating to mergers
and acquisitions, restructurings,
capital fund raising and other
advisory services. Each service
has identifiable performance
obligations – being completion
of the merger and acquisition,
restructuring, or capital fund
raising. Amounts assigned to
each identifiable performance
obligation are based on the
standalone selling price of each
individual performance obligation.
Facilitation and
transaction fees from
asset management
services
Other upfront fees
Commission and
brokerage income
The Group earns fees for
successful transactions relating
to assets and funds managed by
the Group such as the acquisition
and disposal of assets. These
fees can only be invoiced when
the performance obligation (i.e.
the completion of the transaction)
has occurred. The amount of
fee is based on a percentage
of the transaction and payable
immediately as defined within the
underlying trust agreements.
Other upfront fees are typically
establishment fees charged
to new investors on entry
into a fund. The performance
obligation to earn these fees is
the establishment of the client's
investment account. These fees
are defined in the underlying trust
agreements.
The Group is remunerated for
the provision of security trading
services. Customers are invoiced
monthly. The fees are defined
within the underlying customer
contract.
Revenue recognition policy
Judgements used to identify
performance obligations
Revenue is only recognised on
completion of the performance
obligations specified in the
contracts including any
necessary regulatory and
shareholder approvals. No
amounts are recognised if the
performance obligations are not
met in full. For contracts that
have key milestones defined,
each key milestone represents
a separate performance
obligation. Revenue is
recognised once performance
obligations have been met.
Revenue recognised at the time
the transaction is completed.
These type of fees have high
correlation with how fees are
charged. The Group has looked at
its revenue history to assess the
following
(1) the determination of the type of
fees;
(2) the timing of when revenue was
recognised and when invoices were
raised; and
(3) the key milestones that were
met and not met.
The Group considers that control of
the services are only passed to the
customer when the transaction has
completed, and does not create an
asset with alternative use and the
benefits provided are consumed
at completion of the transaction.
As such Advisory success fees are
recognised at a point in time.
The probability of transactions
occurring is dependent on factors
outside of the Group's control. As
the benefits of the transaction will
only be observable on completion,
transaction fees are recognised at
a point in time.
Revenue is recognised when the
customer is set up and invested
into their chosen fund.
The Group has no control on the
timing and amount investors invest
in funds. Revenue is recognised at
the point in time when the account
is set up and established so the
customer is able to invest and thus
obtain the benefits of the account.
Revenue is recognised when the
customer is set up and invested
into their chosen fund.
As the customer can only benefit
at the completion of the trade, the
Group recognises the brokerage
revenue at the point in time
when the brokerage services are
provided.
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91
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
1
c
Significant accounting policies (continued)
Revenue recognition (continued)
Over time revenue recognition:
Type of service
Advisory retainer
fees
Nature, timing of satisfaction
of performance obligations,
significant payment terms
Fees for on-going performance
obligations as specified in each
contract. Retainer fees are
generally pre-defined within the
contract. Invoices are issued on a
monthly basis for ongoing work.
Revenue recognition policy
Judgements used to identify
performance obligations
Revenue is recognised over time
as the Group provides services.
As the customer will benefit as the
Group performs its obligations,
the amount of revenue recognised
over time on a straight-line basis
in accordance within the contract
entered into is the most appropriate
depiction of the transfer of
services. Services are provided in
equal amounts through the course
of the year.
The customer benefits as the
Group provides asset management
services, thus the Group recognises
the performance and distribution
fees over time. Performance fees
are based on returns in excess
of a specified benchmark market
return, over the contract period.
In determining the amount to be
recognised, the Group considers
past performance across its
portfolio of assets and closely
monitors for any potential signs of
adverse impact on the fees.
The Group considers the
performance of these management
and trustee services as a series of
distinct services that have similar
pattern of transfer (i.e. the customer
benefits as the Group performs
its obligations). As such it has
determined that recognising the
revenue over time on a straight-
line basis is the most appropriate
depiction of the transfer of services.
Services are provided in equal
amounts through the year.
The Group considers the
performance of these management
services as a series of distinct
services that have similar pattern
of transfer (i.e. the customer
benefits as the Group performs its
obligations). As such, recognising
the revenue over time on a straight-
line basis is the most appropriate
depiction of the transfer of services
as services are provided in equal
amounts through the year.
Performance and
distribution fees
relating to asset
management
services
Fees are earned for asset
management services when
the fund is managed such
that it exceeds performance
benchmarks. The benchmarks
and associated distribution fee
are defined within each trust
agreement.
The Group recognises
performance fees to the extent
that it is highly probable that a
significant reversal of revenue
will not occur in subsequent
periods.
Management,
administrative and
trustee fees from
asset management
services
The provision of asset
management services per
investment contracts. The
amounts charged for the separate
performance obligations are
determined based on the relevant
clauses of the investment
management contracts.
The performance obligations
represent a series of distinct
services, and are recognised by
progress of completion (i.e. over
time). Revenue is recognised
as performance obligations
are met based on standalone
selling price of the performance
obligation.
Management fees
relating to property
management
services
Fees that are earned for
providing hotel and retail property
management services. The
amounts charged for the separate
performance obligations are
determined based on the relevant
clauses of the individual contracts.
The performance obligations
represent a series of distinct
services that have similar
pattern of transfer (i.e. the
customer benefits as the Group
performs its obligations). As
such, revenue is recognised
over time on a straight-line basis
through the year.
92
1
d
Significant accounting policies (continued)
Foreign currency
Both the presentation currency and the functional currency
of the Company and its controlled Australian entities are
Australian dollars. A number of foreign controlled entities
have a functional currency other than Australian dollars.
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the date of the transactions.
Foreign exchange differences arising on translation are
recognised in profit or loss. At the end of each reporting
period, monetary items denominated in foreign currencies
are re-translated at the rates prevailing at that date. Non-
monetary items carried at fair value that are denominated in
foreign currencies are re-translated at the rates prevailing
at the date when the fair value was determined. Non-
monetary items that are measured in terms of historical
costs in a foreign currency are not re-translated.
e
Employee benefits
Employee benefit liabilities represents accrued wages,
salaries, bonus, annual and long-service leave entitlements
recognised in respect of employee services up to the end
of the reporting date.
Liabilities recognised in respect of short term employee
benefits are measured at the amounts expected to be paid
when the liabilities are settled by the Group in respect of
services provided by employees up to the reporting date.
Liabilities recognised in respect of long term employee
benefits are measured as the present value of the
estimated future cash outflows to be made by the Group
in respect of services provided by employees up to the
reporting date.
f
Taxation
The Company, together with eligible Australian resident
wholly owned subsidiaries, comprise a tax consolidated
group (Tax Group) with the Company as the head entity.
As a result, the Company is subject to income tax as the
head entity of the Tax Group. The consolidated current
and deferred tax amounts for the Tax Group are allocated
to the members of the Tax Group using the ‘separate
taxpayer within group’ approach, with deferred taxes being
allocated by reference to the carrying amounts in financial
statements of each member entity and the tax values
applying under tax consolidation. Current tax liabilities and
assets and deferred tax assets arising from unused tax
losses and relevant tax credits arising from this allocation
process are then accounted for as immediately assumed by
the head entity, as under Australian taxation law the head
entity has the legal obligation (or right) to those amounts.
Entities within the Tax Group have entered into a tax
funding agreement and a tax sharing agreement with the
head entity. Under the terms of the tax funding agreement,
the Company and its subsidiaries have agreed to pay a tax
equivalent payment to or from the head entity equal to the
tax liability or asset assumed by the head entity for the
period as noted above. The amount arising under the tax
funding arrangement for each period is equal to the tax
liability or asset assumed by the head entity for that period
and no contribution (or distribution to) equity participants
arises in relation to income taxes.
The tax sharing agreement entered into between
members of the Tax Group provides for the determination
of the allocation of income tax liabilities between the
entities should the head entity default on its tax payment
obligations or if an entity should leave the Tax Group. The
effect of the tax sharing agreement is that each company
in the Tax Group’s liability for tax payable to the head entity
under the tax funding arrangement.
Current tax
The current tax payable is based on taxable profit for
the year. Taxable profit differs from profit before tax as
reported in the consolidated statement of profit or loss
because of items of income or expense that are taxable
or deductible in other years and items that are never
taxable or deductible. The Group’s liability for current tax
is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the consolidated financial statements and the
corresponding tax bases used in the computation of
taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all
deductible temporary differences to the extent that it is
probable that taxable profits will be available against which
those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised
if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
1
f
Significant accounting policies (continued)
Taxation (continued)
g
Plant and equipment
Deferred tax liabilities are recognised for taxable
temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures,
except where the Group is able to control the reversal
of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible
temporary differences associated with such investments
and interests are only recognised to the extent that it is
probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary differences
and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed
at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be
recovered.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based
on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount
of its assets and liabilities.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to
income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities
on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised as an expense
or income in the profit or loss, except when they relate
to items that are recognised in other comprehensive
income or directly in equity, in which case the current and
deferred tax are also recognised in other comprehensive
income or directly in equity, respectively. Where current
tax or deferred tax arises from the initial accounting for
a business combination, the tax effect is included in the
accounting for business combination.
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment
losses.
Depreciation is calculated on a straight-line basis to realise
the net cost of each class of assets over its expected
useful life. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate
accounted for on a prospective basis. The depreciation
periods are as follows:
• office equipment 3 years
• furniture and fittings 7 years
•
leasehold improvements are amortised over the term of
the lease
The gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
h
Impairment of tangible and intangible assets
other than goodwill
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible and intangible assets to
determine whether there is any indication of impairment. If
any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the
impairment loss (if any). Where it is not possible to estimate
the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating
unit to which the asset belongs. When a reasonable and
consistent basis of allocation can be identified, corporate
assets are allocated to individual cash-generating units, or
otherwise they are allocated to the smallest group of cash-
generating units for which a reasonable and consistent
allocation basis can be identified.
The recoverable amount is the higher of fair value less
costs of disposal and value-in-use. In assessing value-in-
use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset for which the estimates
of future cash flows have not been adjusted.
1
h
Significant accounting policies (continued)
Impairment of tangible and intangible assets
other than goodwill (continued)
If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is
reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss, unless the relevant
asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
When an impairment loss subsequently reverses, the
carrying amount of the asset (or cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been
determined had no impairment loss been recognised for
the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit
or loss, unless the relevant asset is carried at a revalued
amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
i
Provisions
Provisions are recognised when:
• the Group has a present obligation (legal or constructive)
as a result of a past event;
•
it is probable that the Company will be required to settle
the obligation; and
• a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate
of the consideration required to settle the present
obligation at the end of the reporting date, taking into
account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash
flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows.
j
Goods and services tax
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except:
(i) where the amount of GST incurred is not recoverable
from the taxation authority, it is recognised as part of
the cost of acquisition of an asset or as part of an item
of expense; or
(ii) for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables.
Cash flows are included in the cash flow statement on a
gross basis. The GST component of cash flows arising
from investing and financing activities which is recoverable
from, or payable to, the taxation authority is classified
within operating cash flows.
k
Share-based payment transactions
Equity-settled share-based payments to employees and
others providing similar services are measured at the fair
value of the equity instruments at the grant date. Details
regarding the determination of fair value of equity-settled
share-based transactions are set out in note 32.
The fair value determined at the grant date of the equity
settled share-based payments is expensed on a straight-
line basis over the vesting period, based on the Group’s
estimate of equity instruments that will eventually vest,
with a corresponding increase in equity. At the end of each
reporting period, the Group revises its estimate of the
number of equity instruments expected to vest. The impact
of the revision of the original estimates, if any, is recognised
in profit or loss such that the cumulative expense reflects
the revised estimate, with a corresponding adjustment to
the share-based payment reserve.
Equity-settled share-based payment transactions with
parties other than employees are measured at the fair
value of goods or services received, except where that
fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments
granted at the date the entity obtains the goods or the
counterparty renders the service.
l
Financial instruments
Financial assets and financial liabilities are recognised
when the Group becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transactions costs that are directly
attributable to the acquisition or issue of financial assets
and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
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95
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
1
l
Significant accounting policies (continued)
Financial instruments (continued)
1
l
Significant accounting policies (continued)
Financial instruments (continued)
recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately in
profit or loss.
Financial assets
Financial assets are classified into the following categories:
• financial assets ‘at fair value through profit or loss’
(FVTPL);
• equity instruments ‘at fair value through other
comprehensive income’ (FVTOCI), and
• amortised cost.
The classification depends on the nature and purpose
of the financial assets and is determined at the time of
initial recognition. All regular way purchases or sales of
financial assets are recognised and derecognised on
a trade date basis. Regular way purchases or sales are
purchases or sales of financial assets that require delivery
of assets within the time frame established by regulation or
convention in the marketplace.
Classification of financial assets
Debt instruments that meet the following conditions are
subsequently measured at amortised cost:
• The financial asset is held within a business model
whose objective is to hold financial assets in order to
collect contractual cash flows; and
• The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments
of principal and interest on principal amount outstanding.
Debt instruments that meet the following conditions are
subsequently measured at FVTOCI:
• The financial asset is held within a business model
whose objective is achieved by both collecting
contractual cash flows and selling the financial assets;
and
• The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments
of principal and interest on the principal amount
outstanding.
The Group holds no debt instruments measured at
FVTOCI.
By default, all other financial assets are subsequently
measured at FVTPL.
However, the Group may make the following irrevocable
election/designation at initial recognition of a financial
asset:
• The Group may irrevocably elect to present subsequent
changes in fair value of an equity investment in other
comprehensive income if certain criteria are met such
as, if the equity instrument is not held for trading; and
• The Group may irrevocably designate a debt investment
that meets the amortised cost or FVTOCI criteria as
measured at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch.
Financial assets classified as amortised cost
The amortised cost of a financial asset is:
• the amount at which the financial asset is measured at
initial recognition;
• minus the principal repayments;
• plus the cumulative amortisation using the effective
interest method of any difference between that initial
amount and the maturity amount; and
• adjusted for any loss allowance.
The effective interest method is a method of calculating
the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective
interest rate is the rate that exactly discounts estimated
future cash receipts (including all fees and points paid or
received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts)
excluding expected credit losses, through the expected life
of the debt instrument to the gross carrying amount of the
debt instrument on initial recognition.
Interest income is recognised using the effective interest
method for debt instruments measured subsequently at
amortised cost. Interest income is calculated by applying
the effective interest rate to the gross carrying amount of a
financial asset. For financial assets that have subsequently
become credit-impaired, interest income is recognised by
applying the effective interest rate to the amortised cost
of the financial asset. If, in subsequent reporting periods,
the credit risk on the credit-impaired financial instrument
improves so that the financial asset is no longer credit
impaired, interest income is recognised by applying the
effective interest rate to the gross carrying amount of the
financial asset. Interest income is recognised in profit or
loss and is included in the investment income line item.
Equity investments at FVTOCI
On initial recognition, the Group may make an irrevocable
election (on an instrument-by-instrument basis) to
designate investments in equity instruments as at FVTOCI
on the basis that they are held for strategic purposes.
Designation at FVTOCI is not permitted if the equity
investment is held for trading.
measurement or recognition inconsistency that would
arise from measuring assets and liabilities or recognising
the gains and losses on them on different bases. The
Group has not designated any debt instruments as at
FVTPL.
• Financial assets at FVTPL are measured at fair value
at the end of each reporting period, with any fair value
gains or losses recognised in profit or loss. Net gains
and losses, including any interest or dividend income
earned on the financial asset, are recognised in profit or
loss in the ‘other gains and losses’ line item. Fair value is
determined in the manner described in note 27.
A financial asset is held for trading if:
Impairment of financial assets
•
It has been acquired principally for the purpose of selling
it in the near term; or
• On initial recognition it is part of a portfolio of identified
financial instruments that the Group manages together
and has evidence of a recent actual pattern of short
term profit-taking; or
•
It is a derivative.
Investments in equity instruments at FVTOCI are initially
measured at fair value plus transaction costs. Gains and
losses relating to these financial assets will be recognise
in other comprehensive income. Dividends from such
investments are recognised as income in profit or loss
when the Group has the right to receive payments, unless
the dividend clearly represents a recovery of part of the
cost of the investment. The accumulated fair value reserve
related to these investments will never be reclassified to
profit or loss.
Financial assets at FVTPL
Financial assets that do not meet the criteria for being
measured at amortised cost or FVTOCI are measured at
FVTPL. Specifically:
•
Investments in equity instruments are classified
as FVTPL, unless the Group designates an equity
investment that is neither held for trading nor a
contingent consideration arising from a business
combination as at FVTOCI on initial recognition.
• Debt instruments that do not meet the amortised cost
criteria or the FVTOCI criteria are classified as at
FVTPL. In addition, debt instruments that meet either
the amortised cost criteria or the FVTOCI criteria may
be designated as at FVTPL upon initial recognition if
such designation eliminates or significantly reduces a
The Group recognises a loss allowance for expected credit
losses (ECL) on investments in debt instruments that are
measured at amortised cost or at FVTOCI, as well as on
loan commitments and financial guarantee contracts. No
impairment loss is recognised for investments in equity
instruments. The amount of ECL is updated at each
reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
For trade receivables, the Group has elected to use the
simplified approach and has determined the loss allowance
based off the lifetime ECL. The expected credit losses on
these financial assets are estimated based on the Group’s
historical credit loss experience, adjusted for factors that
are specific to debtors, general economic conditions and
an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including the
time value of money where appropriate.
For all other financial instruments, the Group recognises
lifetime ECL when there has been a significant increase in
credit risk since initial recognition. If, on the other hand, the
credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures
the loss allowance for that financial instrument at an
amount equal to 12 months ECL. The assessment whether
lifetime ECL should be recognised is based on significant
increases in the likelihood or risk of a default occurring
since initial recognition instead of on evidence of a financial
asset being credit impaired at the reporting date or an
actual default occurring.
Lifetime ECL represents the expected credit losses
that will result from all possible default events over the
expected life of a financial instrument. In contrast, 12 month
ECL represents the portion of lifetime ECL that is expected
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97
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
1
l
Significant accounting policies (continued)
Financial instruments (continued)
to result from default events on a financial instrument that
are possible within 12 months after the reporting date.
Financial assets, other than those at FVTPL, are assessed
for indicators of impairment at the end of each reporting
period. Financial assets are considered to be impaired
where there is objective evidence that, as a result of one
or more events that occurred after the initial recognition of
the financial asset, the estimated future cash flows of the
investment have been affected.
The Group has provided for commitments that are both
drawn and undrawn. The undrawn commitment is contingent
on the counterparty achieving contractual milestones.
Once they are achieved, the amount can be drawn upon
and expected to be met within 12 months. The Group has
included a loss allowance on the entire commitments based
on the 12 month ECL for these commitments.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets.
Significant increase in credit risk
When determining whether the credit risk of a financial
asset has increased significantly since initial recognition and
when estimating ECL, the Group considers reasonable and
supportable information that is relevant and available without
undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Group’s
historical experience and informed credit assessment
including forward-looking information. As part of the forward
looking assessment, the Group has considered economic
indicators such as economic forecast and outlook, GDP
growth, unemployment rates and interest rates.
The Group determines a significant increase in credit
risk based on the number of days past due. A non-trade
receivable loan is assessed to have increased in credit risk
when the number of days past due is over 90 days. This is
based on historical data.
In particular, the following information is taken in account
when assessing whether credit risk has increased
significantly since initial recognition:
• existing or forecast adverse changes in business, financial
or economic conditions that are expected to cause a
significant decrease in the debtor’s ability to meet its debt
obligations;
• an actual or expected significant deterioration in the
operating results of the debtor; and
98
• an actual or expected significant adverse change in
Write-off policy
1
l
Significant accounting policies (continued)
Financial instruments (continued)
regulatory, economic, or technological environment of the
debtor that results in a significant decrease in the debtor’s
ability to meet its debt obligations.
The Group assumes that the credit risk on a financial
instrument has not increased significantly since initial
recognition if the financial instrument is determined to have
low credit risk at the reporting date. A financial instrument is
determined to have low credit risk if:
(i) the financial instrument has a low risk of default;
(ii) the borrower has a strong capacity to meeting its
contractual cash flow obligations in the near term; and
(iii) adverse changes in economic and business conditions in
the longer term may, but will not necessarily, reduce the
ability of the borrower to fulfil its contractual cash flow
obligations.
For loan commitments and financial guarantee contracts, the
date that the Group has become a party to the irrevocable
commitment is considered to be the date of initial recognition
for the purposes of assessing the financial instrument
for impairment. In assessing whether there has been a
significant increase in the credit risk since initial recognition
of a loan commitment, the Group considers changes in
the risk of a default occurring on the loan to which a loan
commitment relates; for financial guarantee contracts, the
Group considers the changes in the risk that the specified
debtor will default on the contract.
The Group regularly monitors the effectiveness of the
criteria used to identify whether there has been a significant
increase in credit risk and revises them as appropriate to
ensure that the criteria are capable of identifying significant
increase in credit risk before the amount becomes past due.
Definition of default
The Group considers the following as constituting an event
of default for internal credit risk management purposes as
historical experience indicates that receivables that meet
either of the following criteria are generally not recoverable.
• When there is a breach of financial covenants by the
counterparty; or
•
Information developed internally or obtained from external
sources indicates that the debtor is unlikely to pay its
creditors, including the Group, in full (without taking into
account any collaterals held by the Group).
The Group writes-off a financial asset when there is
information indicating that the counterparty is in severe
financial difficulty and there is no realistic prospect of
recovery. Any recoveries made are recognised in profit or
loss. Trade receivables are written-off when there is no
reasonable expectation of recovery. Indicators that there
is no reasonable expectation of recovery include, amongst
others, the failure of a debtor to engage in a repayment
plan with the Group.
Measurement and recognition of credit losses
ECL is a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due
to the entity in accordance with the contract and the cash
flows that the Group expects to receive). The components
used in measuring the ECL include:
(i) probability of default (PD): represents the possibility of a
default over the next 12 months;
(ii) a loss given default (LGD): expected loss if a default
occurs, taking into consideration the mitigating effect of
collateral assets and time value of money;
(iii) exposure at default (EAD): the total exposure at time of
default.
For financial assets, the expected credit loss is estimated
as the difference between all contractual cash flows that
are due to the Group if the holder of the loan commitment
draws down the loan, and the cash flows that the Group
expects to receive, discounted at the original effective
interest rate.
For undrawn loan commitments, the expected credit loss is
the present value of the difference between the contractual
cash flows that are due to the Group if the holder of the
loan commitment draws down the loan, and the cash flows
that the Group expects to receive if the loan is drawn down.
The Group has applied the three stage model based on the
change in credit risk since initial recognition to determine
the loss allowance of its financial assets.
Stage 1: 12 month ECL
At initial recognition, ECL is collectively assessed and
measured by classes of financial assets with the same
level of credit risk as a product of the PD within the next
12 months and LGDs with consideration to forward looking
economic indicators. Loss allowances for financial assets
measured at amortised cost are deducted from the gross
carrying amount of the assets.
Stage 2: Lifetime ECL
When the Group determines that there has been a
significant increase in credit risk since initial recognition but
not considered to be credit impaired, the Group recognises
a lifetime ECL calculated as a product of the PD for the
remaining lifetime of the financial asset and LGD, with
consideration to forward looking economic indicators.
Similar to Stage 1, loss allowances for financial assets
measured at amortised cost are deducted from the gross
carrying amount of the assets.
Stage 3: Lifetime ECL – credit impaired
At each reporting date, the Group assesses whether
financial assets carried at amortised cost and debt
securities at FVTOCI are credit-impaired. A financial
asset is ‘credit impaired’ when one or more events have
a detrimental impact on the estimated future cash flows
of the financial asset have occurred. For financial assets
that have been assessed as credit impaired, a lifetime
ECL is recognised as a collective or individually assessed
(specific) provision, and interest revenue is calculated by
applying the effective interest rate to the amortised cost
instead of the carrying amount.
The Group recognises a loss allowance for expected
credit losses on investments in debt instruments that are
measured at amortised cost or at FVTOCI, as well as on
loan commitments. No impairment loss is recognised for
investments in equity interests. The amount of expected
credit losses is updated at each reporting date to reflect
changes in credit risk since initial recognition of the
respective financial instrument.
The Group applies the AASB 9 simplified approach to
measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables. To
measure the expected credit losses, trade receivables
have been grouped based on the shared credit risk
characteristics and the days past due. The ECL is
calculated based on actual credit loss relating to revenue
from experience over the past 4 years adjusted for the
Group’s forward looking expectations based off economic
indicators. The Group performed the calculations of ECL
rates separately for receivables arising from the advisory
business and other asset management fees as asset
management fees have historically been received in full.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
1
l
Significant accounting policies (continued)
Financial instruments (continued)
n
Leases
1
n
Significant accounting policies (continued)
Leases (continued)
o
Goodwill
Financial liabilities and equity instruments
Classification as debt or equity
Debt or equity instruments issued by a Group entity
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of a financial liability and
an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting all
of its liabilities. Equity instruments issued by a Group entity
is measured as proceeds received less direct issue costs.
Repurchase of the Company’s own equity instruments is
recognised and deducted directly in equity. No gain or loss
is recognised in profit or loss on the purchase, sale, issue
or cancellation of the Company’s own equity instruments.
Financial liabilities
Financial liabilities that are not designated as at FVTPL,
are subsequently measured at amortised cost using the
effective interest method. The effective interest method is
a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly
discounts estimated future cash payments (including all
fees and points paid or received that form an integral part
of the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the
financial liability, or (where appropriate) a shorter period, to
the amortised cost of a financial liability.
Other financial liabilities
Other financial liabilities, including borrowings and trade
and other payables, are initially measured at fair value, net
of transaction costs.
m
Loans receivable
The Group recognises a right-of-use asset and a
lease liability at the lease commencement date in the
consolidated statement of financial position, except for
short term leases and leases of low value assets.
Right-of-use assets
Right-of-use assets are measured at cost and comprise
of the amount that corresponds to the amount recognised
for the lease liability on initial recognition together with any
lease payments made at or before the commencement
date (less any lease incentives received), initial direct costs
and restoration-related costs. The right-of-use asset is
depreciated over the shorter of the asset’s useful life and
the lease term on a straight-line basis. Depreciation of
right-of-use assets starts at the commencement date of the
lease and is recognised in the consolidated statement of
profit or loss.
The Group applies AASB 136 Impairment of Assets
(AASB 136) to determine whether a right-of-use asset is
impaired and accounts for any identified impairment loss in
accordance with note 1(h).
The right-of-use assets recognised under AASB 136 is
an intangible asset, and hence excluded from the Group’s
net tangible assets, despite the related lease liability
being included as a reduction in the net tangible assets
calculation.
Lease liabilities
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate.
Generally, the Group uses its incremental borrowing rate as
the discount rate. Interest on lease liabilities is recognised
in the consolidated statement of profit or loss. Lease
payments included in the measurement of the lease liability
comprise:
Loans receivable are recognised on settlement date, when
cash is advanced to the borrower. A loss allowance for
expected credit losses on loans receivable is recognised
upon inception of a loan. Please refer to note 14 for further
information.
• Fixed lease payments (including in-substance fixed
payments), less any lease incentives receivable;
• Variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date.
Lease liabilities (continued)
The lease liability is subsequently increased by the interest
cost on the lease liability and decreased by lease payment
made. It is remeasured when there is a change in future
lease payments arising from a change in an index or
rate, a change in the estimate of the amount expected
to be payable under a residual value guarantee, or as
appropriate, changes in the assessment of whether a
purchase or extension option is reasonably certain to be
exercised or a termination option is reasonably certain not
to be exercised.
Lease payments are recognised as amortisation expense
of the right of use asset over the term of the lease unless
another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset
are consumed.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
• The lease term has changed or there is a significant
event or change in circumstances resulting in a change
in the assessment of exercise of a purchase option,
in which case the lease liability is remeasured by
discounting the revised lease payments using a revised
discount rate.
• The lease payments change due to changes in an
index or rate or a change in expected payment under
a guaranteed residual value, in which cases the lease
liability is remeasured by discounting the revised lease
payments using an unchanged discount rate (unless
the lease payments change is due to a change in a
floating interest rate, in which case a revised discount
rate is used).
• A lease contract is modified and the lease modification
is not accounted for as a separate lease, in which case
the lease liability is remeasured based on the lease term
of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective
date of the modification.
The Group has applied judgement to determine the lease
term for some lease contracts in which it is a lessee that
include renewal options. The assessment of whether
the Group is reasonably certain to exercise such options
impacts the lease term, which significantly affects
the amount of lease liabilities and right-of-use assets
recognised.
Goodwill arising on acquisition of a business is carried
at cost as established at the date of acquisition of the
business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is
allocated to each of the Company’s cash generating-units
(or groups of cash-generating units) that is expected to
benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been
allocated is tested for impairment annually, or more
frequently where there is indication that the unit may be
impaired. If the recoverable amount of the cash-generating
unit is less than its carrying amount, the impairment loss
is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets
of the unit pro rata based on the carrying amount of each
asset in the unit. Any impairment loss recognised for
goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit,
the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
p
Investments in associates and joint ventures
An associate is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the investee but is not control or joint control over those
policies.
A joint venture is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to
the net assets of the joint arrangement. Joint control is the
contractually agreed sharing of control of an arrangement
which exists only when decisions about the relevant
activities require unanimous consent of the parties
sharing control.
The results and assets and liabilities of associates or joint
ventures are incorporated in these consolidated financial
statements using the equity method of accounting.
Under the equity method, an investment in an associate
or a joint venture is initially recognised in the consolidated
statement of financial position at cost and adjusted
thereafter to recognise the Group’s share of the profit or
loss and other comprehensive income of the associate
or joint venture. When the Group’s share of losses of an
associate or a joint venture exceeds the Group’s interest
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101
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
1
p
Significant accounting policies (continued)
Investments in associates and joint ventures (continued)
in that associate or joint venture, the Group discontinues
recognising its share of further losses. Additional losses are
recognised only to the extent that the Group has incurred
legal or constructive obligations or made payments on
behalf of the associate or joint venture. On acquisition of
the investment in an associate or a joint venture, any excess
of the cost of the investment over the Group’s share of
the net fair value of the identifiable assets and liabilities of
the investee is recognised as goodwill, which is included
within the carrying amount of the investment. Any excess
of the Group’s share of the net fair value of the identifiable
assets and liabilities over the cost of the investment, after
reassessment, is recognised immediately in profit or loss in
the period in which the investment is acquired.
cash inflows from other assets or groups of assets (cash-
generating units). Intangible assets (other than goodwill) that
suffered impairment are reviewed for possible reversal of the
impairment at each reporting date.
Other intangibles include IT development and software
costs. Certain internal and external costs directly incurred
in acquiring and developing certain computer software
programmes are capitalised and amortised over the
estimated useful life, usually a period between three and
five years on a straight-line basis. Costs are capitalised for
activities that are performed on the Group’s infrastructure
and applications as it enhances or customises software
assets that the Group derives future economic benefits from.
When necessary, the entire carrying amount of the
investment (including goodwill) is tested for impairment in
accordance with AASB 136 as a single asset by comparing
its recoverable amount (higher of value-in-use and fair
value less costs of disposal) with its carrying amount. Any
impairment loss recognised forms part of the carrying
amount of the investment. Any reversal of that impairment
loss is recognised in accordance with AASB 136 to the
extent that the recoverable amount of the investment
subsequently increases.
q
Intangible assets
Intangible assets acquired in a business combination and
recognised separately from goodwill are initially recognised
at their fair value at the acquisition date (which is regarded
as their cost).
Subsequent to their initial recognition, intangible assets
acquired in a business combination are reported at cost
less accumulated amortisation and accumulated impairment
losses. Amortisation is recognised on a straight-line basis
over their estimated useful lives. The estimated useful life
and amortisation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate
being accounted for on a prospective basis.
For intangible assets that have a finite useful life, an
assessment is made at each reporting date for indications
of impairment. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher
of the asset’s fair value less costs to sell and value-in-use.
For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the
Software-as-a-service (Saas) arrangements that are not
recognised as intangible assets are recognised as an
operating expense over the term of the service contract
or as the service is received. Costs incurred for the
maintenance of software is expensed as incurred and
recognised in profit or loss.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when
no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an
intangible asset, measured as the difference between the net
disposal proceeds and the carrying amount of the asset, are
recognised in profit or loss when the asset is derecognised.
r
Business combinations
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a
business combination is measured at fair value, which is
calculated as the sum of the acquisition-date fair values of
the assets transferred by the Group, liabilities incurred by the
Group to the former owners of the acquiree and the equity
interests issued by the Group in exchange for control of the
acquiree. Acquisition-related costs are generally recognised
in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value at
the date of acquisition.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s
previously held equity interests in the acquiree (if any) over
1
r
Significant accounting policies (continued)
Business combinations (continued)
the net of the acquisition-date amounts of the identifiable
assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts
of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the
amount of any non-controlling interests in the acquiree
and the fair value of the acquirer’s previously held
interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership
interests and entitle their holders to a proportionate
share of the entity’s net assets in the event of liquidation
may be initially measured either at fair value or at the
non-controlling interests’ proportionate share of the
recognised amounts of the acquiree’s identifiable net
assets. The choice of measurement basis is made on a
transaction-by-transaction basis.
When the consideration transferred by the Group in
a business combination includes assets or liabilities
resulting from a contingent consideration arrangement,
the contingent consideration is measured at its
acquisition-date fair value and included as part of the
consideration transferred in a business combination.
Changes in fair value of the contingent consideration
that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments
against goodwill. Measurement period adjustments
are adjustments that arise from additional information
obtained during the ‘measurement period’ (which cannot
exceed one year from the acquisition date) about facts
and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value
of the contingent consideration that do not qualify as
measurement period adjustments depends on how
the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured
at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent
consideration that is classified as an asset or a liability is
remeasured at subsequent reporting dates in accordance
with AASB 9 Financial Instruments, or AASB 137
Provisions, Contingent Liabilities and Contingent Assets,
as appropriate, with the corresponding gain or loss being
recognised in profit or loss.
When a business combination is achieved in stages, the
Group’s previously held equity interests in the acquiree
is remeasured to its acquisition-date fair value and the
resulting gain or loss, if any, is recognised in profit or loss.
Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in
other comprehensive income are reclassified to profit or
loss where such treatment would be appropriate if that
interest were disposed of.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts
for the items which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement
period (see above), or additional assets or liabilities are
recognised, to reflect new information obtained about facts
or circumstances that existed at the acquisition date that, if
known, would have affected the amounts recognised at
that date.
s
Earnings per share
Basic earnings per share is calculated by dividing the
Group’s profit after income tax by the weighted average
number of ordinary shares outstanding during the
financial year.
Diluted earnings per share is calculated by dividing
the Group’s profit after income tax adjusted by profit
attributable to all the dilutive potential ordinary shares
by the weighted average number of ordinary shares and
potential ordinary shares that would be issued on the
exchange of all the dilutive potential ordinary shares into
ordinary shares.
t
Contributed equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction from the proceeds.
u
Comparatives
Where necessary, comparative information have been
reclassified to conform to any changes in presentation
made in this financial report.
v
Rounding of amounts
In accordance with ASIC Corporations (Rounding in
Financials/Directors’ Reports) Instrument 2016/91, amounts
in the Directors’ Report and the Financial Report are
rounded to the nearest thousand dollars, unless
otherwise indicated.
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103
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
2 Application of new and revised Australian Accounting Standards
3 Segment information
New accounting standards, amendments and interpretations that are effective in the current financial year
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to the Group’s operations and mandatorily effective on or after 1 January
2021, including:
• AASB 2020–8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2
•
IAS 38 Intangible assets – IFRIC agenda decision Configuration or Customisation Costs in a Cloud Computing
Arrangement
The new and revised Standards and Interpretations adopted during the period do not materially affect the Group’s
accounting policies or any of the amounts recognised in the consolidated financial statements.
Accounting standards and interpretations issued but not yet effective
Standard/Interpretation
AASB 2020–1 Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-Current
Effective for annual
reporting periods
beginning on or
after
Expected to be
initially applied in
the financial year
ending
1 January 2022
31 December 2022
• Corporate Advisory and Equities (CA&E)
AASB 8 Operating Segments requires the ‘management
approach’ to disclose information about the Group’s
reportable segments. The financial information is reported
on the same basis as used by senior management and
the Board of Directors for evaluating operating segment
performance and for deciding how to allocate resources to
operating segments. The segment note is prepared on the
same basis as the Group’s non-IFRS (Underlying) financial
measures. Please refer to the Directors’ Report for an
explanation of why the Directors believe these measures
are useful.
The Board of Directors is considered to be the Chief
Operating Decision Maker (CODM).
The Group is organised into the following business
segments:
• Asset Management
• Lending
The Corporate Services segment represents the
unallocated costs associated with the central executives
and corporate support functions. Items of income and
expenses within the Corporate Services segment also
include the net result of managing the Group’s liquidity and
funding requirements.
AASB 2020–3 Amendments to Australian Accounting Standards – Annual
Improvements 2018–2020 and Other Amendments
1 January 2022
31 December 2022
AASB 2014–10 Amendments to Australian Accounting Standards – Sale
or Contribution of Assets between an Investor and its Associate or Joint
Venture, AASB 2015–10 Amendments to Australian Accounting Standards
– Effective Date of Amendments to AASB 10 and AASB 128 and AASB
2017–5 Amendments to Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128 and Editorial Corrections
1 January 2022
31 December 2022
AASB 2021–2 Amendments to Australian Accounting Standards –Disclosure
of Accounting Policies and Definition of Accounting Estimates
1 January 2023
31 December 2023
104
3.1 Services from which reportable segments
derive their revenues
The Asset Management segment incorporates the
provision of asset management services and principal co-
investment and strategic investments.
The Lending segment provides loan funding and invests in
asset-backed credit securities.
The Corporate Advisory and Equities segment provides
corporate advice, underwriting and institutional
stockbroking services.
The main items of profit or loss and other comprehensive
income used by management to assess each business are
Underlying revenue, Underlying net income, Underlying
earnings before interest, tax, depreciation and amortisation
(EBITDA) and Underlying profit after tax.
Information regarding these segments is presented below.
The accounting policies of the reportable segments are the
same as the Group’s reporting policies.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
3 Segment information (continued)
3.2 Segment results
3 Segment information (continued)
3.2
Segment results (continued)
Depreciation, amortisation and net interest expense are not disclosed by segment as they are not provided to the CODM
and are only reported on a Group basis. Assets and liabilities are not disclosed as they are not provided to the CODM. The
following is an analysis of segment performance:
Asset
Management
$’000
Lending3
$’000
CA&E
$’000
Corporate
Services
$’000
Total
Underlying
segment
$’000
Statement of
comprehensive
income
$’000
Adjustments
$’000
A reconciliation of the Underlying segment measures to the statutory measures is as follows:
Note
Revenue1
$’000
EBITDA
$’000
NPAT
$’000
Comprehensive
income
$’000
Statutory result for the period ended 31 December 2021
228,735
72,182
32,041
48,065
31 December 2021
Revenue1
Expenses
EBITDA2
Depreciation and
amortisation
Interest expense4
Profit before tax
Income tax expense
Profit after income tax
Other comprehensive
income
Total comprehensive
income
31 December 2020
Revenue1
Expenses
EBITDA2
Depreciation and
amortisation
Interest expense4
Profit before tax
Income tax expense
Profit after income tax
Other comprehensive loss
Total comprehensive
income
143,440
19,922
68,638
376
232,376
(3,641)
228,735
(70,215)
(9,616)
(46,688)
(17,365)
(143,884)
(12,669)
(156,553)
73,225
10,306
21,950
(16,989)
88,492
(16,310)
72,182
(4,710)
(4,242)
(8,952)
(5,297)
(9,223)
(14,520)
Differences in measurement
Business acquisition adjustments
Equity issued to staff
Net (gains)/losses on investments
Adjustments relating to associates
Credit investments
Differences in classification
Adjustments relating to PIF2
Interest income
78,485
(29,775)
48,710
Net (gains)/losses on investments
(23,545)
6,876
(16,669)
Outgoings recovery
54,940
(22,899)
32,041
Tax on adjustments
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
-
-
-
19,487
(2,651)
(9,346)
(86)
1,554
(5,317)
-
7,943
(1,946)
-
19,487
(1,429)
(9,213)
(86)
1,554
-
-
12,109
(1,946)
-
19,487
(1,429)
-
-
1,554
-
12,109
(1,946)
(11,688)
7,256
(1,429)
-
-
-
-
(6,876)
2,573
-
16,024
16,024
Total adjustments
3,641
16,310
22,899
6,875
Underlying results for the year ended 31 December 2021
232,376
88,492
54,940
54,940
54,940
(6,875)
48,065
Statutory result for the year ended 31 December 2020
161,101
61,368
26,480
22,517
91,430
15,326
53,378
-
160,134
(42,500)
(6,200)
(39,533)
(11,403)
(99,636)
48,930
9,126
13,845
(11,403)
60,498
967
(97)
870
161,101
(99,733)
61,368
(3,741)
(2,090)
(5,831)
(5,332)
(11,515)
(16,847)
51,425
(12,735)
38,690
(15,427)
3,217
(12,210)
35,998
(9,518)
26,480
-
(3,963)
(3,963)
Differences in measurement
Business acquisition adjustments
Equity issued to staff
Net (gains)/losses on investments
Adjustments relating to associates
Credit investments
Differences in classification
Adjustments relating to PIF2
Interest income
Net (gains)/losses on investments
Tax on adjustments
Total adjustments
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
-
-
-
9,506
919
(5,578)
(6,115)
301
640
(591)
-
9,506
782
(5,393)
(6,115)
301
2,738
(591)
-
9,506
782
-
-
301
2,738
(591)
5,469
9,999
782
-
-
-
-
-
(3,218)
(4,916)
(967)
(870)
9,518
13,481
35,998
(13,481)
22,517
Underlying results for the period ended 31 December 2020
160,134
60,498
35,998
35,998
1. Revenue refers to total income on the consolidated statement of profit or loss and other comprehensive income.
2. Statutory EBITDA is not an IFRS measure but has been presented to provide a comparable measure to the Underlying result.
1. Revenue refers to total income on the condensed consolidated statement of profit or loss and other comprehensive income.
2. PIF refers to the two credit funds in the Priority Income Fund strategies that the Group manages and consolidates, the MA Master Credit Trust and MA
3. The comparatives throughout the Financial Report are restated to present the new Lending segment.
USD Master Credit Trust.
4. Interest expense is referred to as Finance costs in the statement of profit or loss.
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107
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
3 Segment information (continued)
3.2 Segment results (continued)
Differences in measurement
Differences in classification
4 Fee and commission income
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
Fee and commission income is accounted for in accordance with AASB 15 Revenue from Contracts with Customers.
(a) The acquisition of Armada Funds Management in 2017 and
RetPro on 1 April 2021 for cash and shares gives rise to
non-cash IFRS expenditure relating to the amortisation of
intangible assets of $4.2 million (2020: $2.1 million) and share-
based payment expenses to vendors, who are now employees
of the Group, of $6.2 million (2020: $0.6 million). Furthermore,
one-off costs of $1.8 million (2020: nil) associated with the
Group’s acquisition of Finsure have been excluded from the
Underlying result.
(b) The Underlying measure expenses the full value of the share-
based payment equity awards issued to staff as part of the
annual bonus awards in the year of grant as opposed to over
the vesting period (up to 5 years) per IFRS.
(f) The Underlying treatment records the distributions received
from the PIF entities in Underlying revenue as opposed to
the IFRS treatment of consolidating the PIF entities into the
Group’s results.
(g) Interest income on cash and bank balances of $0.1 million
(2020: $0.8 million) is reclassified to Underlying net interest
expense. Further, the Group previously consolidated the
assets and liabilities of a fund related credit initiative which
was restructured in December 2020. Interest expense of nil
(2020: $5.4 million) was reclassified to Underlying revenue
to offset against the interest income derived from the credit
initiative to reflect the total net return to the Group of nil.
(h) (Gains)/losses on investments, other than those identified in
(c) Adjustment to remove realised and unrealised (gains)/losses
on the Group’s strategic investment in Japara Healthcare Ltd.
(c) above, are reclassified from Other Comprehensive Income
to Underlying revenue.
(d) The Underlying treatment records dividends and distributions
(i) The RetPro business fully recovers direct site management
receivable from associates in Underlying revenue as
opposed to the IFRS treatment of recording the Group’s
share of accounting profit or loss of an associate. Underlying
revenue further recognises (gains)/losses in management’s
assessment of the movement in the Underlying value
associates.
(e) The Underlying approach only recognises the ECL provision
for all Lending division receivables and specific provisions
individually assessed against non-Lending division receivables.
revenue from clients. The Underlying adjustment reclassifies
these expenses against the outgoings recovery revenue to
reflect the net nil impact to the Group.
3.3 Revenue for major products and services
Revenue type
Operating Segment
Fee and commission income
Management fees
Transaction fees
Performance fees
Corporate advice
Equity services
Asset Management
Asset Management
Asset Management
CA&E
CA&E
31 Dec 2021
Consolidated
$'000
31 Dec 2020
Consolidated
$'000
79,263
28,807
24,951
60,717
8,231
57,378
14,555
16,860
44,186
9,721
Timing of revenue recognition
At a point in time
Advisory success fees
Commission and brokerage income
Facilitation and transaction fees
Total revenue earned at a point in time
Over time
Advisory retainer fees
Performance fees
Distribution fees
Management fees
Total revenue earned over time
Total fee and commission income
Fee and commission income by segment
At a point in time
Asset Management
Corporate Advisory and Equities
Total revenue earned at a point in time
Over time
Asset Management
Corporate Advisory and Equities
Total revenue earned over time
Total fee and commission income
5
Interest and investment income
Interest income on cash and bank balances
Total fee and commission income
201,969
142,700
Interest income on loans receivable held at amortised cost
3.4 Geographical information
The Group primarily operates in Australia.
3.5
Information about major customers
Two funds managed by the Group contributed more than 10% to Group revenue with fees of $27.3 million and $25.7 million
respectively. No other single customer contributed 10% or more to Group revenue in 2021 or 2020.
108
Total interest income – effective interest rate method
Interest income on loans receivable held at FVTPL
Dividends and distributions from investments
Total investment income
Total interest and investment income
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57,891
8,231
28,807
94,929
2,826
24,951
5,693
73,570
107,040
201,969
28,807
66,122
94,929
104,214
2,826
107,040
201,969
86
29,922
30,008
613
1,009
1,622
42,157
8,455
14,555
65,167
3,295
16,860
6,022
51,356
77,533
142,700
14,555
50,612
65,167
74,238
3,295
77,533
142,700
768
27,630
28,398
2,061
1,084
3,145
31,630
31,543
109
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
6 Other income
Other income
Outgoings recovery
Net foreign exchange gains/(losses)
Realised gains from disposal of investments
Net gains/(losses) from financial instruments held at FVTPL
Total other income
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
32
5,317
532
2,500
4,070
12,451
4,026
-
(268)
1,138
(178)
4,718
During the year the Group received no COVID-19 government wage subsidies. (2020: $3.3 million in other income).
9 Other expenses
Charitable donations
Occupancy and office expenses
Other expenses
Total other expenses
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
787
1,821
2,379
4,987
774
1,492
1,720
3,986
The charitable donations paid by the Group in 2021 and 2020 were made to the MA Foundation, a registered charity, and were made
principally in response to staff elections.
7 Employee expenses
Salary, superannuation and bonuses
Termination benefits
Amortisation of share-based payments (refer to note 32)
Other employment expenses¹
Total personnel expenses
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
99,193
716
14,937
14,739
65,438
1,763
9,592
6,256
9.1
Remuneration of auditors
Amounts received or due and receivable by Deloitte Touche Tohmatsu:
Audit or review of the financial statements
Other audit services – audit and review of trusts and funds
Other assurance services
Other advisory services
Other services in relation to the Group
Total auditor remuneration paid to Deloitte Touche Tohmatsu Australia
Amounts received or due and receivable by network firms of Deloitte Touche Tohmatsu Australia:
129,585
83,049
Audit or review of the financial statements
1. Includes recruitment fees, payroll tax, life insurance, workers compensation, fringe benefits tax and leave entitlements.
8 Finance costs
Interest on unsecured notes1
Fund preferred unit distribution1
Interest on lease liabilities
Interest on borrowings
Redeemable preference share interest
Total interest expense
1. Refer to note 24 for more detail on the unsecured note programme and fund preferred units.
5,205
8,946
250
119
-
14,520
5,778
5,402
283
-
5,384
16,847
Total auditor remuneration paid to network firms of Deloitte Touche Tohmatsu
Australia
Total auditor remuneration paid to Deloitte Touche Tohmatsu
541
62
90
425
-
1,118
32
32
1,150
493
-
50
-
33
576
-
576
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111
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
10
Income tax expense (continued)
10.5 Deferred tax balances (continued)
10
Income tax expense
10.1
Income tax expense
Current tax expense
Deferred tax benefit/(expense)
Total income tax expense
(22,380)
5,711
(16,669)
(12,192)
(18)
(12,210)
31 December 2021
Temporary differences
Property, plant and equipment
Financial assets
10.2 Reconciliation of income tax expense to prima facie tax payable
Investments in associates and joint
ventures
(149)
1,145
(3,669)
Profit before tax from continuing operations
48,710
38,690
Deferred revenue
(4,548)
1,296
Opening
balances
$’000
Recognised in
profit or loss
$’000
Recognised
in other
comprehensive
income
$’000
Recognised
in equity
$’000
Acquisitions/
disposals
$’000
Closing
balances
$’000
(352)
5,561
(204)
-
98
(5,842)
1,682
579
1,409
(2,756)
1,673
738
133
578
1,273
1,210
806
(556)
3,905
5,711
(9,511)
Opening
balances
$’000
Recognised in
profit or loss
$’000
Recognised
in other
comprehensive
income
$’000
Prima facie income tax expense at the Australian corporate tax rate of 30%
Effect of losses that are exempt from tax
Non-deductible expenses
Prior year over/(under) adjustment
Foreign Income Tax Offset
Total income tax expense
(14,613)
(2,459)
(719)
1,116
6
(11,607)
8
(331)
(280)
-
Provisions
Loss allowance
Expense accruals
Intangible assets
(16,669)
(12,210)
Share-based payments
10.3 Income tax benefit / (expense) recognised in other comprehensive income
Deferred Tax
Fair value remeasurement of investments
Share of revaluations in associates
Income tax (expense)/benefit in other comprehensive income
10.4 Current tax assets and liabilities
Current tax liabilities
Income tax payable
(5,842)
(3,669)
(9,511)
7,047
7,047
1,552
148
1,700
6,345
6,345
Other
Total
31 December 2020
Temporary differences
Property, plant and equipment
103
(455)
-
Financial assets
4,009
-
1,552
Investments in associates and joint
ventures
(2,366)
2,069
148
During the year no deferrals of tax related payments were granted by the Australian Tax Office (ATO) to the Group (2020: $18.5
million). $4.4 million of ATO deferrals outstanding at 31 December 2020 were fully repaid during the year.
Deferred revenue
(1,276)
(3,272)
10.5 Deferred tax balances
Net deferred tax (liability)/asset
(1,280)
(1,280)
3,905
3,905
Provisions
Loss allowance
Expense accruals
Intangible assets
Share-based payments
Other
Total
1,408
274
1,664
(1,085)
1,087
(3,383)
279
698
2,223
322
627
1,394
108
(18)
-
-
-
-
-
-
-
1,700
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-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
617
617
-
-
-
-
-
-
-
(556)
(183)
(2,673)
(3,252)
2,420
712
1,987
(2,002)
(3,485)
-
-
2,883
867
(2,002)
(1,280)
Recognised
in equity
$’00
Acquisitions/
disposals
$’000
Closing
balances
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(352)
5,561
(149)
(4,548)
1,682
579
1,409
(2,756)
1,673
806
3,905
112
113
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
11 Cash and cash equivalents
Cash and cash equivalents at the end of the financial year are reflected in the related items in the statement of financial position
as follows:
Cash and bank balances
Cash and cash equivalents at the end of the financial year
242,861
242,861
138,004
138,004
11.1
Reconciliation of profit for the year to net cash flows from operating activities
Profit after income tax
32,041
26,480
12 Receivables
Accounts receivable
Fees receivable
Interest receivable
Sundry debtors
Fees receivable from associates
Loss allowance on receivables
Total receivables
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
9,106
19,761
780
2,222
5,590
(954)
36,505
4,798
16,748
528
13,644
11,367
(963)
46,122
Adjustments to profit after income tax:
Income tax expense recognised in profit or loss
Share-based payments
Non-cash interest and investment income
Share of (profits)/losses of associates
Net foreign exchange (gain)/loss
Net gains/(losses) from financial instruments held at FVTPL
Realised gain from disposal of investments
Loss allowance expense
Loss on disposal of fixed assets
Intangible amortisation
Depreciation of right-of-use assets
Depreciation of property, plant and equipment
Total adjustments to profit after income tax
Changes in assets and liabilities:
Change in trade and other receivables
Change in other assets
Change in trade and other payables
Change in provisions
Total changes in assets and liabilities
Cash generated from operations
Income taxes paid
Net cash generated by operating activities
114
16,669
14,863
(5,378)
(3,187)
(532)
(4,070)
(2,500)
1,222
70
5,172
2,805
975
26,109
9,617
(7,686)
11,131
14,079
27,141
85,291
(20,231)
65,060
12,210
9,592
(12,111)
4,844
268
178
(1,138)
15
-
2,090
2,285
1,456
19,689
(13,864)
5,523
125
(672)
(8,888)
37,281
(8,075)
29,206
Fees receivable disclosed above include amounts that are past due at the end of the reporting period for which the Group
has not recognised a loss allowance because the amounts are still considered recoverable. See below table for an aged
analysis of receivables:
12.1 Ageing of receivables
$’000
31 December 2021
Accounts receivable
Fees receivable
Interest receivable
Sundry debtors
Receivables from associates
Past due
Not past
due
60 – 90
days
90+ days
Total past
due
Total
Receivables
Loss
allowance
on
receivables
Total
receivables
net of loss
allowance
8,920
19,484
780
1,998
2,925
40
-
-
-
-
146
277
-
224
186
277
-
9,106
19,761
780
224
2,222
2,665
2,665
5,590
(11)
(87)
-
(81)
(775)
9,095
19,674
780
2,141
4,815
Total receivables
34,107
40
3,312
3,352
37,459
(954)
36,505
31 December 2020
Accounts receivable
Fees receivable
Interest receivable
Sundry debtors
Receivables from associates
4,757
16,242
94
9,510
8,702
41
-
58
-
-
-
506
376
41
506
434
4,798
16,748
528
4,134
4,134
13,644
2,665
2,665
11,367
(13)
(83)
(7)
(200)
(660)
4,785
16,665
523
13,444
10,705
Total receivables
39,305
99
7,681
7,780
47,085
(963)
46,122
Average ageing of receivables that are past due
31 Dec 2021 31 Dec 2020
386
236
Fees receivable and receivables from associates aged 90+ days primarily relate to fees receivable from funds managed
by the Group. During the year, Sundry debtors aged 90 + days of $3.9 million was received that related to 2020 and the
remaining receivable of $0.2 million is expected to be received within 12 months upon the completion of certain future
events (2020: $4.1 million).
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115
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
14 Loss allowance
13 Loans receivable
Current
Loans to third parties
Loans to associates
Loss allowance
Non-current
Loans to third parties
Loans to associates
Loans to employees
Loss allowance
157,277
12,393
(514)
169,156
170,070
4,318
823
(1,918)
173,293
131,317
2,000
(374)
132,943
87,502
4,318
439
(931)
91,328
Loans to third parties comprises commercial loans provided to Australian corporates. The loans have terms of between
three months and five years and are either unsecured, fully or partially secured against the assets of the borrowers.
13.1 Loans receivable by industry
Loans receivable
$’000
Loss allowance
$’000
Total
$’000
6,798
7,876
217,620
107,017
3,138
(2,432)
342,449
(232)
(326)
(939)
(747)
(188)
(472)
(268)
(375)
(167)
(23)
7,030
8,202
218,559
107,764
3,326
344,881
15,044
7,282
109,291
93,520
439
225,576
(1,305)
Consolidated
31 December 2021
Child care
Construction and real estate
Financial services
Professional services
Other
31 December 2020
Child care
Construction and real estate
Financial services
Professional services
Other
116
For receivables and loan receivables, the Group bears
the risk that the future circumstances of customers might
change, including their ability to repay their loans in part
or in full. While the Group’s credit lending policies and
procedures aim to minimise this risk, there will always be
instances where the Group will not receive the full amount
owed and hence a provision for impaired loans will be
necessary. The calculation of both the collectively and
individually assessed expected loss allowance contains
various factors that require judgement and estimates by
management.
The Group periodically assesses exposures to determine
whether the credit risk of a receivable or loan receivable
has increased significantly since initial recognition. The
assessment, which requires judgement, considers both
quantitative and qualitative information that is based on
the Group’s historical experience and informed credit
assessment including forward-looking information,
such as economic forecast and outlook, GDP growth,
unemployment rates and interest rates.
At the reporting date the Group undertook a review of
its receivables, loans receivable portfolio and expected
credit losses, including considering the ongoing impacts
of COVID-19. The review considered the macroeconomic
outlook, counterparty credit quality, the type of collateral
held and exposure at default as at the reporting date. No
significant changes were made to the model inputs and
forward-looking information from the previous reporting
period and the accounting policies of the Group remained
consistent with prior periods. The Group’s loss allowance
provisions are a determination of probabilities of default
and a determination of losses that may be incurred should
a default occur.
The table below presents the gross exposure and
related ECL allowance for assets subject to impairment
requirements of AASB 9 Financial instruments.
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Consolidated
31 December 2021
Receivables
Loans receivable
31 December 2020
Receivables
Loans receivable
Gross exposure
for asset
$’000
Loss allowance
$’000
Total
$’000
37,459
344,881
382,340
47,085
225,576
272,661
(954)
(2,432)
(3,386)
(963)
(1,305)
(2,268)
36,505
342,449
378,954
46,122
224,271
270,393
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f
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a
t
i
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n
14,572
7,014
108,916
93,353
416
224,271
117
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
14 Loss allowance (continued)
14. 1 Credit loss allowance
14 Loss allowance (continued)
14.3 Movement in loss allowance on loans receivable
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
Credit loss allowance recognised in the statement of profit or loss:
Credit loss allowance on receivables
Credit loss allowance on loans receivable
Credit loss allowance on loans to associates and joint ventures
Amounts written-off, not provided for
Individually assessed credit loss allowance on loans receivable
Total credit loss allowance for the year
14.2 Movement in loss allowance on receivables
(9)
944
183
104
-
1,222
Balance as at 1 January 2020
Net credit impairment charges
Amounts written-off
Balance as at 31 December 2020
Net credit impairment charges
Balance as at 31 December 2021
118
555
252
275
108
(1,175)
15
Total ECL
$’000
(408)
(815)
260
(963)
9
(954)
Balance as at 1 January 2020
Net credit impairment charges
Amounts written-off
Balance as at 31 December 2020
Net credit impairment charges
Balance as at 31 December 2021
15 Other assets
Prepayments
Deposits
Leasehold improvements in progress
Other
16 Restricted cash
Equities clearing collateral
Rental bank guarantees
Other collateral
Lifetime ECL
Stage I
$’000
Stage II
$’000
Stage III
$’000
Total ECL
$’000
(778)
(527)
-
(1,305)
(1,127)
(2,432)
-
-
-
-
-
-
(4,550)
-
(778)
(527)
4,550
-
-
-
-
(1,305)
(1,127)
(2,432)
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
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1,510
3,537
7,245
2,029
1,438
4,454
-
743
14,321
6,635
700
5,380
620
6,700
700
1,800
-
2,500
Restricted cash relates primarily to security in respect of the Group’s obligations under its lease agreements.
119
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
18 Property, plant and equipment (continued)
18.1 Movement in carrying value of property, plant and equipment
The movement in the carrying value of the Group’s property, plant and equipment was as follows
17 Other financial assets
Financial assets – current
Financial assets held at FVTPL (equity securities)
Financial assets held at FVTOCI (equity securities)
Financial assets – non-current
Financial assets held at FVTOCI (equity securities)
Financial assets held at FVTPL (non-equity securities)
Refer to note 27.8 for further detail of financial assets
18 Property, plant and equipment
The below table sets out the carrying value of the Group’s property, plant and equipment:
Office equipment – at cost
Less accumulated depreciation
Total office equipment
Furniture and fixtures – at cost
Less accumulated depreciation
Total furniture and fixtures
Leasehold improvements – at cost
Less accumulated depreciation
Total leasehold improvements
Total property, plant and equipment
120
605
3,200
3,805
42,042
23,992
18,429
-
18,429
25,097
682
Consolidated
Assets for own use
Balance as at 1 January 2020
Additions
Depreciation expense
Balance as at 31 December 2020
Additions
66,034
25,779
Depreciation expense
Balance as at 31 December 2021
19 Right-of-use assets
Right-of-use assets – at cost
Less accumulated depreciation
Total right-of-use assets
Balance at the beginning of the year
Additions
Depreciation expense
Balance at the end of the year
3,605
(2,520)
1,085
1,114
(306)
808
1,695
(1,553)
142
2,035
2,553
(2,013)
540
765
(236)
529
1,536
(1,155)
381
1,450
20 Investments in associates and joint ventures
BE ES I LLC
Infinite Care Group
MA Aged Care Fund
MA Kincare Fund
MA Senior Secured Credit Fund II
MKM Capital
Redcape Hotel Group
Office
equipment
$’000
Furniture and
fixtures
$’000
Leasehold
improvements
$’000
645
283
(388)
540
1,052
(507)
1,085
566
32
(69)
529
349
(70)
808
674
50
(343)
381
159
(398)
142
Total
$’000
1,885
365
(800)
1,450
1,560
(975)
2,035
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31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
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n
a
n
c
a
i
17,287
(7,413)
9,874
5,338
7,341
(2,805)
9,874
21,469
-
-
7,594
2,068
4,923
84,339
120,393
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n
9,934
(4,596)
5,338
7,181
442
(2,285)
5,338
-
-
-
9,037
2,353
5,667
58,232
75,289
121
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
20 Investments in associates and joint ventures (continued)
20 Investments in associates and joint ventures (continued)
In line with the Group’s accounting policies, after
application of the equity method of accounting, the
Group’s investments in associates and joint ventures were
assessed for impairment at the reporting date, which
included consideration of the impact of COVID-19. The
Group performs an assessment to determine whether there
is any objective evidence that its investments in associates
and joint ventures are impaired. The main indicators of
impairment are significant financial difficulty of the investee,
significant changes in the technological, market, economic
or legal environment and a significant or prolonged decline
in fair value below cost. Refer to note 20.3 for further
information on the Group’s investments in associates and
joint ventures.
20.1 Details of ownership interest
Associates
BE ES I LLC
Place of
incorporation
United States
of America
Proportion of ownership interest
and voting power held by the
Group
Principal activity
2021
2020
Specialty finance
Infinite Care Group
Australia
Aged care facility operator
MA Aged Care Fund
Australia
Investor in aged care facility operator
MA Kincare Fund
Australia
Credit funds management
MA Senior Secured Credit Fund II
Australia
Credit funds management
MKM Capital
Australia
Residential mortgage lending
Redcape Hotel Group
Australia
Owner and operator of hotels
49.7%
5.2%
10.1%
25.5%
13.0%
47.5%
14.9%
-
5.2%
10.1%
25.5%
13.0%
47.5%
9.4%
20.2 Reconciliation of movements in carrying values of investments in associates and joint ventures
$’000
Opening balance as at 1 January 2020
Acquisition
Share of profit/(loss)
Share of other comprehensive loss
Less dividends/distributions received
Closing balance as at 31 December 2020
Acquisition
Disposal and capital returns
Share of profit/(loss)
Share of other comprehensive income
Less dividends/distributions received
(130)
Closing balance as at 31 December 2021
21,469
BE ES I
LLC
Infinite
Care
Group
MA Aged
Care Fund
MA
Kincare
Fund
MA Senior
Secured
Credit
Fund II
MKM
Capital
Redcape
Hotel
Group
Total
-
-
-
-
-
-
21,211
-
388
-
2,774
3,833
8,721
2,275
-
59,348
76,951
-
-
-
-
5,727
-
5,727
(2,774)
(3,833)
316
78
(60)
1,429
(4,844)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(495)
(495)
(2,050)
(2,050)
9,037
2,353
5,667
58,232
75,289
-
-
(1,434)
(377)
-
-
22,568
43,779
(6,500)
(8,311)
1,275
427
(744)
1,841
3,187
-
-
(1,284)
(335)
-
-
12,232
12,232
(4,034)
(5,783)
7,594
2,068
4,923
84,339
120,393
The unrecognised share of losses for investments in associates and joint ventures that have a nil carrying value for the year
ended 31 December 2021 is $1.8 million (2020: $7.5 million).
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123
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
20 Investments in associates and joint ventures (continued)
20 Investments in associates and joint ventures (continued)
20.3 Summarised financial information for the Group’s material associates and joint ventures
20.3 Summarised financial information for the Group’s material associates and joint ventures (continued)
BE ES I
LLC
Infinite
Care
Group
MA Aged
Care Fund
MA
Kincare
Fund
MA Senior
Secured
Credit
Fund II
MKM
Capital
Redcape
Hotel
Group
$’000
31 December 2021
Assets and liabilities
Current assets
3,329
39,336
39,460
130
56
11,535
31,172
Non-current assets
32,404
323,435
337,279
31,380
16,286
227
1,276,554
Current liabilities
(3,213)
(412,100)
(416,678)
(1,702)
(418)
(1,451)
(80,343)
Non-current liabilities
-
-
-
-
-
(9,099)
(668,624)
Net assets
32,520
(49,329)
(39,939)
29,808
15,924
1,212
558,759
The above net assets include the following:
Cash and cash equivalents
2,630
33,845
33,969
19
32
2,142
18,802
Revenue, expenses and results
Revenue
1,389
52,540
52,540
3,949
-
4,904
145,068
Profit/(loss) for the year
1,315
(13,515)
(11,072)
3,909
335
(1,410)
1,332
Other comprehensive income for the year
-
-
-
-
-
-
82,074
The following information outlines the level of control the
Group has over its associates and the resultant accounting
treatment.
Infinite Care Group (Infinite)
The magnitude and variability of returns the Group receives
from Infinite, including the fees it earns as trustee and asset
manager of the MA Aged Care Fund and the investment
return on its holdings is such that the Group is not
considered to control Infinite. The Group’s equity holdings
in addition to its roles as trustee and asset manager of MA
Aged Care Fund is considered sufficient for the Group to
retain significant influence over Infinite.
MA Aged Care Fund, MA Kincare Fund and MA Senior
Secured Credit Fund II (Funds)
The magnitude and variability of returns the Group receives
from the Funds including the fees it earns as trustee and
asset manager and the investment return on its holdings is
such that the Group is not considered to control the Funds.
The Group’s equity holdings in addition to its roles as
trustee and asset manager is considered sufficient for the
Group to retain significant influence over the Funds.
Total comprehensive income for the year
1,315
(13,515)
(11,072)
3,909
335
(1,410)
83,406
Redcape Hotel Group
31 December 2020
Assets and liabilities
Current assets
Non-current assets
Current liabilities
-
-
-
42,046
42,215
45
5,392
151,351
71,310
417,783
420,480
35,826
13,140
10,604
1,081,287
(239,111)
(242,520)
(398)
(412)
(2,070)
(72,691)
Non-current liabilities
-
(225,595)
(224,493)
-
-
(156,883)
(455,871)
Net assets
-
(4,877)
(4,318)
35,473
18,120
3,002
624,035
The above net assets include the following:
Cash and cash equivalents
-
38,374
38,543
18
29
3,104
55,257
Revenue, expenses and results
Revenue
Profit/(loss) for the year
Other comprehensive loss for the year
Total comprehensive income for the year
-
-
-
-
87,120
87,120
1,311
675
3,335
270,740
(56,077)
(45,732)
1,241
597
(125)
19,200
-
-
-
-
-
(5,280)
(56,077)
(45,732)
1,241
597
(125)
13,920
At 31 December 2021, the Group has a 14.9% direct equity
investment in Redcape Hotel Group (Redcape) and funds
managed by the Group own a further 37.1% of Redcape.
On the 2 November 2021, Redcape was delisted from the
Australian Securities Exchange (ASX). The Group earns
asset management performance and hotel operator fees
from Redcape, as well as investment returns on its direct
investment. The Group is considered to have significant
influence over Redcape as a result of participating in
the financial and operating policy decisions of Redcape
through its roles as responsible entity, asset manager and
hotel operator.
Redcape owns or operates 32 hotels in New South Wales
and Queensland and was forced to temporarily close its
hotels during the year due to Government restrictions
as a result of COVID-19. Redcape’s hotels subsequently
reopened progressively from October 2021 and has traded
at a reduced capacity. Redcape assessed their assets for
impairment at 31 December 2021, including considering
the impact of COVID-19 on current trading performance.
The Directors are satisfied that the impairment testing
performed by Redcape is reasonable, and that no
additional impairment is required for the Group’s
investment in Redcape.
As part of the delisting, Redcape bought back $145.5m of
ordinary stapled securities, partially funding the buy-back
with $115.0m of net debt. As a result, per the Redcape
interim financial statements, Redcape has recognised a
decrease in its net assets during the year.
MKM Capital
At 31 December 2021, the Group has a 47.5% direct equity
investment in MKM Capital. MKM Capital is a residential
mortgage lending business, providing bespoke solutions to
borrowers, secured against residential property. The Group
is considered to have a significant influence over MKM
Capital as a result of participating, through MKM Capital’s
Board, in the financial and operating policy decisions. In
addition to its equity investment, the Group has provided
$4.3 million of shareholder loans to MKM Capital (2020:
$4.3 million) and $9.9 million of mezzanine finance into
MKM Capital’s mortgage warehouse (2020: $2.0 million).
BE ES I LLC
The Group acquired 49.7% of BE ES I LLC at a cost of
$20.2 million via the MA USD Master Credit Trust. BE ES I
LLC is a special purpose vehicle established to house the
co-investment with Blue Elephant Capital Management
(BECM). BE ES I LCC focuses on funding in the specialty
finance sector. The Group is considered to have significant
influence over BE ES I LLC as a result of its participation in
the financial and operating policy decisions.
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125
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
21
Intangible assets (continued)
Impairment assessment of Armada and RetPro intangible assets (continued)
21
Intangible assets
Carrying amounts of:
Identifiable intangible assets
Cost
Balance at the beginning of the year
Additions
Balance at the end of the year
Accumulated amortisation and impairment
Balance at the beginning of the year
Amortisation expense
Balance at the end of the year
13,885
11,794
19,859
7,263
27,122
(8,065)
(5,172)
(13,237)
18,676
1,183
19,859
(5,320)
(2,745)
(8,065)
Identifiable intangible assets comprised:
• $5.9 million (2020: $9.2 million) relating to the net
present value of management rights recognised as part
of the 2017 acquisition of Armada Funds Management
(Armada).
• $5.7 million (2020: nil) relating to the net present value
of customer contracts and property management
agreements recognised as part of the acquisition of
retail property manager RetPro Pty Ltd (RetPro) on 1
April 2021.
• $2.2 million (2020: $2.6 million) related to software and
trademarks.
Included in the deferred tax liability of the Group as at 31
December 2021 is an amount of $1.8 million (2020: $2.8
million) and $1.7 million (2020: nil) relating to the intangible
assets recognised from the Armada and the RetPro
acquisitions respectively.
Identifiable intangible assets recognised as part of the
Armada acquisition were determined as the net present
value of the forecast management fees less operating
expenses, based on the expected lives of each fund which
ranged from 2 years and 7 months to 7 years and 9 months
at the time of acquisition. As at 31 December 2021, the
Armada funds have remaining expected lives of 3 years and
2 months.
Identifiable intangible assets recognised as part of the
RetPro acquisition were determined as the net present
value of forecast property management fees less
expenses, based on the expected remaining lives of
126
each contract. The expected remaining lives of customer
contracts at the acquisition date is between 1 and 5 years.
The expected remaining life of the property management
agreement at the acquisition date is 5 years.
Amortisation of intangible assets
The amortisation of the aggregate value of the intangible
assets over their useful lives is based on the forecast
profile of the profit generated by the management
rights, and is reassessed at the end of each reporting
period. Customer contracts and property management
agreements are amortised over the expected life of the
contracts. Software and trademarks are amortised over the
estimated useful life, usually a period between three and
five years.
Impairment assessment of intangible assets
At 31 December 2021, the Group has assessed the Armada
and RetPro intangible assets for impairment, which included
consideration of the impact of COVID-19. A value-in-use
model was used that incorporated inputs for post-tax cash
flow projections based on financial budgets over five years,
a terminal growth rate of 2.5% and a discount rate of 12.5%.
The values assigned to the inputs represent the Group’s
assessment of future trends and have been based on
historical data from both internal and external sources and
include an assessment of the likely lives of the management
rights, expectations about variations to management fee
rates and amount and timing of transaction fees. In addition,
the assessment includes consideration of expected
changes to operating costs and discount rates that reflect
the relative security of the cashflows and the market pricing
for similar management rights.
No impairment charge was recognised in relation to
Armada and RetPro intangible assets during the year as
the recoverable amount was determined to be in excess
of the carrying amount. A sensitivity analysis was
performed on the value-in-use calculation, stress testing
the model inputs for reasonably possible changes in
assumptions, such as discount rates and post-tax cash
flows, to test for impairment and reasonably possible
changes in assumptions indicated an impairment.
There were no significant impairment indicators for software
and trademarks at 31 December 2021.
Sensitivity to change in assumptions
Management is of the view that reasonable changes in the key
assumptions, such as an increase in the discount rate by 2.5%
or a decrease in growth rate by 2.5%, would not cause the
recoverable amount of the CGU to fall short of the carrying
amount at 31 December 2021.
22 Goodwill
Balance as at 1 January 2020
Acquisitions
Balance as at 31 December 2020
Acquisitions1
Balance as at 31 December 2021
Asset
Management
$’000
Corporate
Advisory &
Equities
$’000
8,501
-
8,501
4,183
12,684
1,326
-
1,326
-
1,326
Total
$’000
9,827
-
9,827
4,183
14,010
1. Goodwill on the acquisition of RetPro on 1 April 2021 which includes a deferred tax liability of $1.7 million.
Goodwill with indefinite lives relates to the Group’s
integrated acquisitions. Goodwill is not amortised but
reviewed for impairment at least annually.
factors that market participants would reflect in pricing
the future cash flows the Group expects to derive from
the asset.
Impairment of goodwill
At 31 December 2021, the Group has assessed goodwill
for impairment, which included consideration of the impact
of COVID-19. A value-in-use model of the cash-generating
unit (CGU), to which goodwill has been allocated, was used
that incorporated inputs for post-tax cash flow projections
based on financial budgets over five years, a terminal
growth rate of 2.5% and a discount rates ranging from 11%
to 12.5%. The values assigned to the inputs represent the
Group’s assessment of future trends and have been based
on historical data from both internal and external sources
and include an assessment of the estimated future cash
flows the Group expects to derive from the asset and the
time value of money, represented by a market risk-free rate
of interest. In addition the assessment considers of other
No impairment charge was recognised in relation to
goodwill during the year as the recoverable amount was
determined to be in excess of the carrying amount. A
sensitivity analysis was performed on the value-in-use
calculation, stress testing the model inputs for reasonably
possible changes in assumptions, such as discount rates
and post-tax cash flows, to test for impairment and no
additional indicators of impairment were identified.
Sensitivity to change in assumptions
Management is of the view that reasonable changes in the
key assumptions, such as an increase in the discount rate
by 2.5% or a decrease in growth rate by 2.5%, would not
cause the recoverable amount of the CGU to fall short of
the carrying amount at 31 December 2021.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
24 Borrowings (continued)
(b) Unsecured notes – limited recourse
23 Trade and other payables
Current
Accounts payable and accrued expenses
Other liabilities
GST payable
Non-current
Other liabilities
24 Borrowings
Current
Unsecured notes
Unsecured notes – limited recourse
Non-current
Unsecured notes
Unsecured notes – limited recourse
Fund preferred units
(a) Unsecured notes
Classification
Issue
Maturity date
Amount ($m)
Interest rate per annum
Issue costs ($'000)
23,877
8,723
1,378
33,978
229
229
25,000
30,030
55,030
40,000
25,000
286,290
351,290
17,801
4,589
686
23,076
-
-
-
30,030
30,030
65,000
-
172,540
237,540
MA Bond II
MA Bond IV
Current
Non-current
2018
2020
Sep 2022
Sep 2024
25.0
5.75%
6.5
40.0
5.85%
9.0
Except for the obligation to pay periodic interest and repay the principal at the end of the term, the terms of the unsecured
notes, including the limited recourse notes, do not include any material undertakings or obligations which, if not complied
with, would result in an acceleration of the amount owing.
128
Classification
Issue
Maturity date
Amount ($m)
Interest rate per annum
MACI Bond
MACPI Bond
Current
Non-current
2019
2021
May 2024
Dec 2027
30.0
Variable
25.0
Variable
The Group raised $25.0 million through the issue of a new
unsecured note (MACPI Bond) on 1 December 2021. The
note has a margin of 4.00% over the RBA cash rate and a
maturity date of 1 December 2027.
The limited recourse notes have been designed and issued
principally for investors under the Significant Investor
Visa (SIV) programme. The notes constitute unsecured,
unsubordinated obligations of issuing special purpose
Group entities (issuing entities). The issuing entities
invest the proceeds of the note issuances in a diversified
portfolio of financial assets. The notes have sole recourse
to the assets of the relevant issuing entities and are not
guaranteed by the Company.
MACI Bond
The MACI Bond notes have a five-year stated maturity,
however can be redeemed at the option of the note holders
subject to a minimum 12 month holding period following
issue. This redemption feature was designed to provide
(c)
Fund preferred units
for the individual requirements of the SIV investors to align
with the timing of when the SIV investors receive their
permanent residency status. The interest rate is calculated
at a margin of 4.35% over the RBA cash rate at the time of
issuance and resets in February and August of each year.
No redemptions of MACI Bonds occurred during the year
ended 31 December 2021 (2020: $5 million).
MACPI Bond
On 1 December 2021, the Group raised $25 million through
the issue of new limited recourse notes under the MACPI
Bond programme. The MACPI Bond notes have a six-year
stated maturity and, unlike the MACI Bond above, cannot
be redeemed at the option of the note holders and must
be held to maturity. The interest rate is calculated at a
margin of 4.00% over the RBA cash rate at the time of
issuance and resets in February and August of each year.
No redemptions of MACPI Bonds occurred during the year
ended 31 December 2021.
MA Priority Income Fund
MA USD Priority Income Fund
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
279,828
172,540
6,462
-
286,290
172,540
MA Priority Income Fund (PIF)
The Group manages the PIF, formerly MA Fixed Income
Fund. The PIF provides investors with exposure to a
diversified portfolio of credit investments via an investment
in Class A Units (Fund Preferred Units) in the MA Master
Credit Trust (Master Credit Trust). As a 10% co-investment,
the Group holds Class B units in the Master Credit Trust. The
Master Credit Trust is a consolidated entity of the Group.
The fund preferred units held by PIF receive a preferential
distribution from the realised profit of the Master Credit
Trust, up to a maximum equal to the RBA cash rate plus
4.00%. The Class B units receive any excess distributable
profits after paying the preferential distribution on the fund
preferred units and any fund expenses. The Class B units
further provide a maximum 10% ‘first loss’ capital buffer
which affords the fund preferred units preferential treatment
on distribution and wind-up of the Master Credit Trust. As
such the Group’s maximum economic exposure is limited to
the value of the Class B units which at 31 December 2021
amounted to $28.0 million (2020: $17.3 million).
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
24 Borrowings (continued)
(c)
Fund preferred units (continued)
Redemptions of the fund preferred units are at the
discretion of the Master Credit Trust Trustee and require
the consent of the Group. Therefore the units are treated
as non-current liabilities as the Group has an unconditional
right to defer settlement for at least 12 months after the
end of the reporting period.
MA USD Priority Income Fund (USD PIF)
During the year the Group established the MA USD Master
Credit Trust (USD Master Credit Trust) and USD PIF. The
USD PIF provides investors with exposure to specialty
finance and structured credit opportunities primarily in
the United States via an investment in Class A Units (Fund
Preferred Units) in the MA USD Master Credit Trust. As a
co-investment, the Group holds Class B units in the MA
USD Master Credit Trust. The MA USD Master Credit Trust
is a consolidated entity of the Group.
The fund preferred units held by USD PIF receive a
preferential distribution from the realised profit of the USD
Master Credit Trust, up to a maximum equal to the Secured
Overnight Financing Rate (SOFR) plus 3.50%. The Class B
units receive any excess distributable profits after paying
the preferential distribution on the fund preferred units and
any fund expenses. The Class B units further provide a
maximum 10% ‘first loss’ capital buffer until a USD Master
Credit Trust fund size of US$50 million, with 5% for each
Class A investor dollar thereafter. This affords the fund
preferred units preferential treatment on distribution and
wind-up of the USD Master Credit Trust. As such the
Group’s maximum economic exposure is limited to the
value of the Class B units which at 31 December 2021
amounted to $2.0 million (2020: nil).
Redemptions of the fund preferred units are at the
discretion of the USD Master Credit Trust Trustee and
require the consent of the Group. Therefore the units
are treated as non-current liabilities as the Group has
an unconditional right to defer settlement for at least 12
months after the end of the reporting period.
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
6,598
2,930
3,687
10,285
5,874
250
(3,184)
7,345
10,285
2,236
7,540
3,452
13,228
2,944
5,874
7,985
283
(2,667)
273
5,874
3,179
2,552
846
6,577
25 Lease liabilities
Current
Lease liabilities
Non-current
Lease liabilities
25.1 Movement in lease liabilities
Opening balance at the beginning of the year
Interest on lease liabilities
Payment of lease liabilities
Additions
Closing balance at the end of the year
25.2 Lease liabilities maturity analysis – contractual undiscounted cashflows
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities at the end of the year
130
26 Provisions
Current
Employee benefits
Non-current
Employee benefits
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
42,461
28,779
1,239
43,700
842
29,621
Employee benefits provisions include annual leave, long service leave and annual bonus entitlements.
27 Financial instruments
27.1 Financial risk management objectives
The Group’s principal financial assets comprise cash and
cash equivalents, trade and other receivables, commercial
loans and investments in listed and unlisted securities. The
Group’s principal financial liabilities comprise of trade and
other creditors and borrowings.
The Group’s activities expose it to a variety of financial
risks. The material risks faced by the Group include market
risk (including interest rate risk and foreign currency
risk), credit risk and liquidity risk. The Group’s overall risk
management programme focuses on the unpredictability of
financial markets and seeks to ensure the potential adverse
effects on the financial performance of the Group are
kept to within acceptable limits. The Group uses different
methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the
case of interest rate risk, and ageing analysis for credit risk.
Risk management is carried out by senior management
and the Board. The Board identifies and monitors the
risk exposure of the Group and determines appropriate
procedures, controls and risk limits. Senior management
identifies, evaluates and monitors financial risks within the
Group’s operations.
In response to COVID-19 the Group reviewed the financial
risks it is exposed to, and the manner in which these risks
are managed and measured. The Group’s review included
stress testing credit and liquidity risks and responding to
short term capital management risks with consideration
to an evolving macroeconomic environment. The growth
in commercial lending introduces an additional level
of liquidity risk and an additional consideration for the
management of the Group’s capital.
Financial assets and liabilities are accounted for in
accordance with AASB 9 and comprises of the following
categories.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
27 Financial instruments (continued)
27 Financial instruments (continued)
27.1 Financial risk management objectives (continued)
27.2 Capital management (continued)
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
Notes
Maturity date
31 Dec 2021
$’000
31 Dec 2020
$’000
Financial assets
Cash and cash equivalents
Restricted cash
Receivables
Loans receivable
Listed and unlisted equity securities
Deposits
Other assets
Total financial assets
Financial liabilities
Trade and other payables
Unsecured notes
Fund preferred units
Total financial liabilities
242,861
138,004
6,700
36,505
342,449
69,839
3,537
-
2,500
46,122
224,271
44,208
4,454
744
701,891
460,303
33,978
120,030
23,076
95,030
286,290
172,540
440,298
290,646
27.2 Capital management
The capital structure of the Group consists of net cash
(cash and bank balances offset by the unsecured notes
detailed in note 24) and equity (comprising contributed
equity, retained earnings and reserves).
The Group manages its capital with the aim of ensuring
that the Group will be able to continue as a going concern
while maximising the return to shareholders through the
optimisation of the debt and equity balance. The Group’s
overall capital management strategy remains unchanged
from 2020.
The Group’s borrowings comprise unsecured notes of
$120.0 million (2020: $95.0 million) and fund preferred
units $286.3 million (2020: $172.5 million).
The maturity dates of the unsecured notes are shown in
the table below. Except for the obligation to pay periodic
interest and repay the principal at the end of the term, the
terms of the unsecured notes do not include any material
undertakings or obligations which, if not complied with,
would result in an acceleration of the amount owing.
The MACI Bond note can be redeemed at the option of
noteholders subject to a minimum 12 month holding period
and are treated as current borrowings.
132
Unsecured notes
Current
MA Bond II
Non-current
MA Bond IV
Unsecured notes – limited recourse
Current
MACI Bond
Non-current
MACPI Bond
14 September 2022
25,000
25,000
30 September 2024
40,000
40,000
16 May 2024
30,030
30,030
1 December 2027
25,000
-
Total unsecured notes
120,030
95,030
A subsidiary of the Company, MA Moelis Australia
Securities Pty Ltd, is an ASX market participant and
therefore has an externally imposed capital requirement.
In addition, certain subsidiaries of the Company hold an
Australian Financial Services Licence and therefore have
externally imposed separate capital requirements. The
Group’s subsidiaries have satisfied all externally imposed
capital requirements throughout the financial year.
27.3 Foreign currency risk
The Group undertakes transactions denominated in foreign
currencies, including fee income on corporate advisory
engagements and expenses. The Group manages its
exposure to corporate advisory fee income denominated in
foreign currency when fees are invoiced, as generally the
receipt revenue is too uncertain prior to invoicing. Foreign
currency debtors and foreign currency bank balances are
periodically reviewed relative to the Group’s balance sheet
and liquidity requirements. Revenue received in foreign
currency may be retained in those currencies, in order to
meet future foreign currency denominated expenses, and
exposes the Group to unrealised foreign currency gains or
losses.
The net carrying amounts of the Group’s foreign currency
denominated monetary assets and liabilities at the end of
the year are set out below:
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Currency
United States Dollar
Chinese Yuan
Great British Pound
Hong Kong Dollar
Total
Assets
Liabilities
31 Dec 2021
$’000
31 Dec 2020
$’000
31 Dec 2021
$’000
31 Dec 2020
$’000
4,450
2,468
(7,405)
242
882
670
88
103
-
(34)
(80)
(66)
6,244
2,659
(7,585)
-
9
(23)
-
(14)
133
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
27 Financial instruments (continued)
27.3 Foreign currency risk (continued)
Foreign currency sensitivity analysis
The Group’s exposure to foreign exchange risk is measured using sensitivity analysis. The following table summarises the
sensitivity on the Group’s net profit from a reasonably possible change in foreign exchange rates against the Australian
dollar at the year end. The sensitivity is assessed against the foreign currencies that have the most impact on the Group.
27 Financial instruments (continued)
27.6 Credit risk management
Credit risk management is the risk that a counterparty
defaults on its contractual obligations resulting in
financial loss to the Group. A default may arise through a
counterparty failing to repay loans and interest thereon, and
through failing to meet its obligation to pay invoiced fees.
the lending is aligned with the Group’s lending strategy.
The detailed due diligence performed on the counterparty
includes an assessment of:
• borrower’s experience in the industry;
Currency
United States Dollar
Chinese Yuan
Great British Pound
Hong Kong Dollar
Total
27.4 Interest rate risk
Sensitivity
+/-10%
+/-10%
+/-10%
+/-10%
31 Dec 2021
$’000
+/-
31 Dec 2020
$’000
+/-
(296)/296
247/(247)
21/(21)
80/(80)
60/(60)
10/(10)
8/(8)
8/(8)
(135)/135
265/(265)
The Group is exposed to interest rate risk from changes in market interest rates on its cash at bank balances and variable
interest rate borrowings. The Group’s borrowings, are at fixed and variable rates of interest (refer to note 24).
Interest rate sensitivity analysis
The table below demonstrates the sensitivity of the Group’s profit for the year to a reasonably possible change in interest
rates:
Impact on profit for the year
+/-1%
(1,357)/1,357
779/(779)
Change in interest
rates
31 Dec 2021
$’000
+/-
31 Dec 2020
$’000
+/-
27.5 Equity investment market price risk
In order to minimise credit risk, the Group assesses the
creditworthiness of counterparties and obtains sufficient
collateral, where appropriate, as a means of mitigating the
risk of financial loss from defaults. For all loans receivable,
the Group only transacts with counterparties that the Group
considers to have an acceptable level of credit risk through
a shadow rating process using publicly available financial
information. The Group’s exposure and the shadow credit
ratings of its counterparties are continuously monitored.
At each reporting period, the Group reviews the
recoverable amount of each receivable on an individual
basis to ensure that adequate loss allowance is made for
irrecoverable amounts.
Invoices for services
The creditworthiness of clients is taken into account when
accepting client assignments, however, the nature of the
Group’s advisory work includes engaging with clients which
are under financial stress where the risk of non-payment of
invoices is elevated.
Receivables consist of a number of customers, spread
across diverse industries and geographical areas. Ongoing
credit evaluation is performed on the financial condition of
accounts receivable.
As at 31 December 2021 and 31 December 2020, the
Group did not have a significant credit risk exposure to
any single customer. Note 12 includes an aged summary of
receivables past due.
The Group is exposed to increases and decreases in the market prices of its equity investments held at FVTPL and
FVTOCI, which would cause an increase or decrease in their carrying value and may result in a lower realised profit on sale.
Commercial loans
The table below illustrates the sensitivity of the Group’s profit for the year and other comprehensive income for the year to
a reasonably possible change in market prices:
Impact on profit for the year
Impact on other comprehensive income for the year
Change in market
prices
+/-5%
+/-5%
31 Dec 2021
$’000
+/-
31 Dec 2020
$’000
+/-
1,230/(1,230)
956/(956)
2,262/(2,262)
1,255/(1255)
The methods and assumptions used in preparing the sensitivity analysis above have not changed significantly from the
prior year.
The Group has provided commercial loans during the year.
The loans are secured by charges over the assets of the
borrowers, with the loans having maturity dates ranging
from one month to four years from the balance sheet date,
with an average maturity of two years.
Credit risk analysis is focused on ensuring that risks have
been fully identified and that the downside risk is properly
understood and acceptable. Prior to providing lending
facilities to counterparties, each loan is subjected to
approval from the relevant Fund or Group, which assess
the credit risks of the borrower and determines whether
• borrower’s credit policy to ascertain their underwriting
practices;
•
internal shadow rating calculations using public market
comparable transactions and financial information of the
borrower;
• historical loan performance, nature of risk and yield;
• alignment to the Group’s risk appetite; and
• securitisation of assets and undertakings.
To mitigate the Group’s exposure to loan defaults,
securitisation and collateral are negotiated and
documented in executed loan agreements to protect the
interests of the Group. Monthly monitoring of all borrowers
financial performance (including arrears balances,
ageing of arrears and losses incurred) is performed and
any exceptions reported to senior management. Senior
management use the information collated to review
individual loan exposures, make decisions on reducing
commitments, and where required refinancing options to
refinance out of certain exposures no longer aligned to the
Group’s risk appetite.
The Group completes an assessment of whether there is a
significant increase in credit risk when an amount becomes
more than 90 days past due on a case by case basis due to
the fact that:
• the majority of the counterparties for commercial loans
made are through MA managed funds, and therefore the
credit risk is lower compared to external counterparties;
and
• historically there have been no defaults from loans
described above despite being over 90 days with
amounts being repaid in full within a reasonable period.
Refer to note 14 for the staging of the Group’s receivables
and loans receivable balance as at 31 December 2021.
Cash at bank balances
The credit risk on the banks holding the Group’s cash at
bank balances is considered limited because the banks
have high credit ratings assigned by international credit-
rating agencies.
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135
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
27 Financial instruments (continued)
27.7 Liquidity management
Liquidity risk is the risk that financial obligations of the
Group cannot be met as and when they fall due without
incurring significant costs. The Group manages liquidity
risk by monitoring forecast cash requirements, both short
and longer term, against its current liquid assets. Regard
is had to cash flows required over the next 12 months,
regulatory obligations such as Australian Financial Services
Licence requirements and financial covenants attached to
any relevant contractual obligations of the Group.
The following table details the Group’s remaining
contractual maturity for its non-derivative financial
liabilities. The table reflects the undiscounted cash flows of
financial liabilities based on the earliest date on which the
Group can be required to pay.
Weighted
average
effective
interest
rate
Liabilities
$’000
31 December 2021
Less than
1 month
1–3
months
3–12
months
1–5
years
5+
years
Total
27 Financial instruments (continued)
27.7 Liquidity management (continued)
The following table details the Group’s expected maturity of its non-derivative financial assets. The table reflects the
contractual maturities of the financial assets. The inclusion of information on non-derivative financial assets is necessary
in order to understand the Group’s liquidity risk management as the liquidity is managed on a net asset and liability basis.
Assets
$’000
31 December 2021
Weighted
average
effective
interest
rate
Less than
1 month
1–3
months
3–12
months
1–5
years
5+
years
Total
Non-interest bearing
-
35,760
1,926
8,653
66,034
786
113,159
Cash held at variable interest rates
0.1%
242,861
-
-
6,700
Variable interest rate instruments1
Fixed interest rate instruments
6.8%
14.6%
-
-
37,201
91,721
83,354
-
48,019
78,876
-
-
-
249,561
212,276
126,895
Non-interest bearing
-
31,831
2,147
-
-
-
33,978
Total
278,621
39,127
148,393
234,964
786
701,891
Variable interest rate instruments1
Fixed interest rate instruments
4.2%
5.8%
-
-
-
-
30,030
286,290
25,000
341,320
25,000
40,000
-
65,000
31 December 2020
Total
31,831
2,147
55,030
326,290
25,000
440,298
31 December 2020
Non-interest bearing
-
15,434
5,371
2,123
148
Variable interest rate instruments
Fixed interest rate instruments
4.2%
5.8%
-
-
-
-
30,030
172,540
-
65,000
Total
15,434
5,371
32,153
237,688
-
-
-
-
23,076
202,570
65,000
290,646
1. The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities are subject to change if changes
in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period.
Non-interest bearing
-
42,127
2,827
21,285
27,984
439
94,662
Variable interest rate instruments cash
0.3%
138,004
-
-
2,500
Variable interest rate instruments
Fixed interest rate instruments
6.0%
15.2%
-
-
25,000
27,500
42,600
38,668
42,149
49,220
-
-
-
140,504
95,100
130,037
Total
180,131
66,495
90,934
122,304
439
460,303
1. The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities are subject to change if changes
in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period.
27.8 Fair value of financial assets and financial
liabilities
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date,
regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating
the fair value of an asset or liability, the Group takes into
account the characteristics of the asset or liability if market
participants would take those characteristics into account
when pricing the asset or liability at the measurement date.
Fair value for measurement and/or disclosure purposes is
determined on such a basis except for measurements that
have some similarities to fair value but are not fair value,
such as value in use in AASB 136 Impairment of Assets.
In addition, for financial reporting purposes, fair value
measurements are categorised into level 1, 2 or 3 based
on the degree to which the inputs to the fair value
measurements are observable and the significance of the
inputs to the fair value measurement in its entirety, which
are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity
can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the asset
or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset
or liability.
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137
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
27 Financial instruments (continued)
27 Financial instruments (continued)
27.8 Fair value of financial assets and financial liabilities (continued)
27.8 Fair value of financial assets and financial liabilities (continued)
Valuation processes
The Group has an established control framework with
respect to the measurement of fair values. This includes
a valuation function that has overall responsibility for
overseeing all significant fair value measurements,
including level 3 fair values, and reports directly to the
Chief Financial Officer. The valuation function regularly
reviews significant unobservable inputs and valuation
adjustments. Significant valuation issues are reported to
the Group’s Audit and Risk Committee.
Some of the Group’s financial assets and financial
liabilities are measured at fair value at the end of each
reporting period. The following table summarises the
levels of the fair value hierarchy and provides information
about how the fair values of these financial assets and
financial liabilities are determined (in particular, the
valuation techniques and inputs used):
Mandatorily
at FVTPL
FVTOCI-
equity
instruments
Total
Level 1
(a)
Level 2
(b)
Level 3
(c)
Total
31 December 2021
Loans receivable
Non-equity securities
5,482
23,992
-
-
5,482
23,992
-
-
-
5,482
5,482
315
23,677
23,992
Equity securities
605
45,242
45,847
1,004
44,843
-
45,847
Financial assets measured at fair value
30,079
45,242
75,321
1,004
45,158
29,159
75,321
31 December 2020
Loans receivable
Non-equity securities
10,752
682
-
-
10,752
682
-
-
-
10,752
10,752
682
-
-
682
43,526
Equity securities
18,429
25,097
43,526
10,859
32,667
Financial assets measured at fair value
29,863
25,097
54,960
10,859
33,349
10,752
54,960
The carrying amount of the Group’s financial assets
(cash and cash equivalents, restricted cash and trade
receivables) and financial liabilities (unsecured notes, fund
preferred units and trade payables) which are not fair
valued approximated their fair value at the current and prior
reporting date and are not presented in the table above.
The Group reviewed its valuation techniques and key
inputs for its level 2 and level 3 assets during the period,
including a consideration of the impact of COVID-19 on
the estimated fair values. The review considered the most
recent independent valuations, quoted unit prices of recent
equity transactions, expected duration the assets are likely
to be held for and the macroeconomic outlook for the
industries each asset operates in. As a result of the review,
no significant change in the fair values of the assets was
identified and the Group considers the fair values adopted
to be appropriate at the end of the year.
Valuation techniques and key inputs
(a) Quoted bid prices in an active market.
(b) Inputs other than quoted prices, that are observable, such as unit prices or based on recent transactions.
(c) Short term held assets or valued using a discounted cash flow valuation technique with inputs that are not based on
observable market data (unobservable inputs) but are based on assumptions by reference to historical company and
industry experience. Discount rate inputs range between 6.65% – 22.0%.
Reconciliation of balances in level 3 of the fair value hierarchy
During the period there were no transfers between level 1, level 2 and level 3 fair value hierarchies. The following table
summarises the movements in level 3 of the fair value hierarchy for the financial instruments measured at fair value by
the Group.
Balance as at the beginning of the year
Purchase, issuances and other additions
Sales, settlements and repayments
Fair value movements recognised in profit or loss
Closing balance as at the end of the year
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
10,752
25,172
9,158
24,388
(6,689)
(22,616)
(76)
29,159
(178)
10,752
Changing inputs to the level 3 valuations to reasonably possible alternative assumptions would not change significantly
amounts recognised in profit or loss, total assets, total liabilities or total equity.
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139
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
28 Contributed equity
Ordinary share capital
Treasury shares
Total contributed equity
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
311,178
188,620
(56,188)
(34,041)
254,990
154,579
Contributed equity
31 Dec 2021
Number of shares
31 Dec 2020
Number of shares
31 Dec 2021
$’000
31 Dec 2020
$’000
Ordinary share capital
Balance as at the beginning of the year
151,141,070
147,641,070
188,620
174,423
Ordinary shares issued
18,450,302
3,500,000
123,756
14,125
Share buy-back and cancellation
Equity transaction costs
Transfer from share-based payment reserve
on vesting of awards
-
-
-
-
-
-
-
(1,622)
424
-
(26)
98
Balance as at the end of the year
169,591,372
151,141,070
311,178
188,620
Treasury shares
Balance as at the beginning of the year
(8,606,109)
(4,429,137)
(34,041)
Ordinary shares issued for staff equity awards
(5,367,928)
(3,500,000)
(25,637)
On market purchases of shares
(577,006)
(1,889,326)
Off market purchases of shares
(512,858)
(378,030)
Shares allocated upon exercise of options
406,458
390,625
Shares allocated under employee share plans
1,590,632
1,199,759
(2,560)
(2,355)
1,219
7,186
(17,451)
(14,125)
(7,012)
(1,989)
1,094
5,442
Balance as at the end of the year
(13,066,811)
(8,606,109)
(56,188)
(34,041)
Contributed equity at the end of the year
156,524,561
142,534,961
254,990
154,579
Shares purchased on-market for the purpose of an
employee incentive scheme
During the year, the Group purchased 577,006 shares on-
market (2020: 1,889,326 shares) and 512,858 shares via
an off-market transfer from its employees during the staff
trading window (2020: 378,030 shares) in order to meet
the Group’s shared based payments award requirements.
The average price of all share purchases during the year
was $4.51 (2020: $3.97).
The Company had authorised share capital amounting
to 169,591,372 ordinary shares at 31 December 2021
(2020: 151,141,070). Ordinary shares entitle the holder to
participate in dividends and the proceeds on the winding
up of the Company in proportion to the number of and
amounts paid on the shares held. The fully paid ordinary
shares have no par value.
On a show of hands every member present at a meeting
in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
140
28 Contributed equity (continued)
Shares issued for the Loan Funded Share Plan
On 11 March 2021 the Company issued 3,635,000 fully
paid ordinary shares in order for eligible employees of the
Group to acquire shares in the Company as part of the
Loan Funded Share Plan (LFSP) employee equity incentive
scheme (2020: 3,500,000). The issue price of the shares
was $4.34 (2020: $4.04), being the volume weighted
average price of the Company’s shares over the 5 business
days to 8 March 2021. A further 650,000 fully paid ordinary
shares were issued on 4 June 2021 as part of the Joint
29 Earnings per share
Basic earnings per share
Diluted earnings per share
CEO Long Term Incentive and 2021 LFSP equity incentive
scheme. The weighted average issue price of the shares
was $4.63. The purchase price of the shares acquired by
eligible employees under the LFSP was fully funded by a
limited recourse loan provided by the Company. The shares
are subject to vesting conditions, including performance
conditions and continuous employment, and carry the
same rights as other fully paid ordinary shares. Refer to
note 32.4 for further details on the LFSP.
31 Dec 2021
Consolidated
Cents per share
31 Dec 2020
Consolidated
Cents per share
22.3
21.2
18.5
18.0
The earnings used in the calculation of basic and diluted earnings per share is the Group’s profit after tax.
Weighted average number of ordinary shares (net of treasury shares) used in calculating basic
earnings per share
143,846,347
143,171,674
31 Dec 2021
31 Dec 2020
Potential equity shares1
Share options
Share rights
Restricted shares
Salary sacrifice shares
Total potential equity shares
4,010,697
243,834
971,164
2,060,394
2,634,796
1,354,739
16,143
22,675
7,632,800
3,681,642
Total weighted average number of ordinary shares (net of treasury shares) and potential
equity shares used in calculating diluted earnings per share
151,479,148
146,853,316
1. Refer to note 32 for detail of the terms and conditions of plans impacting diluted earnings per share
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
30 Dividends
MA Financial Group Limited fully franked dividend payments:
2019 dividend (10 cents per share paid on 4 March 2020)
2020 dividend (10 cents per share paid 3 March 2021)
2021 interim dividend (5 cents per share paid on 22 September 2021)
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
32 Share-based payments
-
14,532
Share-based payment reserve
14,907
7,719
-
-
Balance at the beginning of the year
Amortisation of option fair value
Dividends paid
22,626
14,532
Amortisation of share rights
Dividends not recognised at the end of the financial year
Since the end of the financial year, the Directors have resolved to pay a fully franked dividend of 12 cents per share,
payable on 11 March 2022. The aggregate amount of the proposed dividend expected to be paid from retained profits, but
not recognised as a liability at the end of the year is $20.7 million. This amount has been estimated based on the number
of shares eligible to participate as at 31 December 2021.
Franking credits
Franking credits available for the subsequent financial year1
47,881
32,324
Amortisation of restricted shares
Amortisation of salary sacrifice shares
Amortisation of loan funded shares
Amortisation of share appreciation rights
Amortisation of RetPro deferred remuneration
Amortisation of Armada deferred remuneration
Vesting of share-based payments
Balance at the end of the year
1. Calculated at a corporate tax rate of 30% (2020: 30%)
31 Reserves
Share-based payment reserve (refer to note 32)
Associates OCI reserve
FVTOCI reserve
Total reserves
Associates OCI reserve
Balance at the beginning of the year
Share of other comprehensive income of associates
Income tax relating to the revaluation of associates
34,353
27,027
19,815
11,253
(5,677)
(13,139)
The component of annual bonus expected to be paid in shares has been accounted for as a share-based payment, with
the amounts accruing over the expected vesting period of between 1 to 3 years. The profit or loss impact (after tax) of
the estimated share component for services received for the year ended 31 December 2021 was $2.5 million (2020: $4.8
million). The accounting standards require the value of the share-based component to be determined when there is a
shared understanding of the terms and conditions of the scheme and so the estimate of the accrual to date could change
until this grant date is achieved.
48,491
25,141
32.1 Employee share options
The Group has granted options to employees and its Chairman. For accounting purposes, fair value of the options is
amortised as an expense over the vesting period of the options.
11,253
12,231
(3,669)
11,598
(493)
148
Number of
options
Employees
Number of
options
Chairman
Number of
options
Total
Weighted
average
exercise price
($)
Employees
Weighted
average
exercise price
($)
Chairman
Balance at the end of the year
19,815
11,253
FVTOCI reserve
Balance at the beginning of the year
Net loss/(gain) arising on revaluation of financial assets
Income tax relating to (loss)/gain arising on revaluation of financial assets
(13,139)
13,304
(5,842)
(9,521)
(5,170)
1,552
Balance at the beginning of the year
3,851,450
390,625
4,242,075
Granted during the year
Forfeited during the year
250,000
(98,334)
-
-
250,000
(98,334)
Exercised during the year
(1,127,725)
(390,625)
(1,518,350)
Expired during the year
-
-
-
-
2,875,391
3.22
4.34
3.25
3.00
-
3.41
3.00
-
-
3.00
-
-
Balance at the end of the year
(5,677)
(13,139)
Balance at the end of the year
2,875,391
142
No share options were issued, forfeited or exercised since the end of the reporting period. 72,749 Employee share options
were exercisable as at year end.
143
31 Dec 2021
Consolidated
$’000
31 Dec 2020
Consolidated
$’000
27,027
22,886
107
1,249
7,907
76
2,802
596
2,200
212
3,139
5,133
113
390
-
-
-
694
(7,611)
(5,540)
34,353
27,027
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Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
32 Share-based payments (continued)
32.1 Employee share options (continued)
2017 share options
Prior to the listing of the Company, a number of employees
were provided the opportunity to purchase options (share
option), with each share option carrying the right to acquire
one share in the Company at a future date. As a result of
the offer, the Company issued 5,468,750 share options on
8 April 2017.
At the same time, the Company offered the Chairman and
Non-Executive Director, Mr Jeffrey Browne, the opportunity
to purchase 781,250 share options, with each share option
carrying the right to acquire one share in the Company at a
future date. On 18 February 2021, Jeffrey Browne exercised
390,625 options at an exercise price of $3.00 per option.
During June and August 2021, a total of 1,127,725 employee
options were exercised at an exercise price of $3.00 per
option.
relevant tranche (exercise window) as set out in the table
below. Each share option expires if it is not exercised within
the relevant exercise window. The vesting period of the
share options runs from the grant date to the first exercise
date as shown in the table below. Unless otherwise
determined by the Board, a share option holder must
continue to be employed by the Group in order to exercise
the share option.
Share options do not carry any dividend entitlement.
Shares issued on exercise of share options will rank equally
with other shares of the Company on and from issue.
There are no participating rights or entitlements inherent
in the share options and share option holders will not be
entitled to participate in new issues of capital offered to
shareholders during the life of the share options.
Each share option is exercisable for a period of one year,
commencing on the first exercise date applicable to the
The issue price of the share options was paid by the
recipient on receipt of the share option.
The table below provides the details of options issued on 8 April 2017:
Numbers of
options at
beginning
of year
Acquired by
Grant date
share price
Exercise
price of
option
Earliest
date of
Issue price
exercise Expiry date
Options
forfeited
during the
year
Options
exercised
during the
year
Number of
options at
year end
1,200,474
Employees
$2.35
$3.00
$0.03
8/04/2021
7/04/2022
-
1,127,725
72,749
1,200,474
Employees
$2.35
$3.15
$0.03
8/04/2022
7/04/2023
49,166
-
1,151,308
1,200,502
Employees
$2.35
$3.36
$0.01
8/04/2023
7/04/2024
49,168
-
1,151,334
390,625
Chairman
$2.35
$3.00
$0.02 8/04/2020
7/04/2021
-
390,625
-
3,992,075
98,334
1,518,350
2,375,391
32 Share-based payments (continued)
32.1 Employee share options (continued)
Fair value of share options granted
The weighted average value of the share options at the time of grant was $0.0375.
The fair value of the share options was calculated using a Black-Scholes model, adjusted for expectations of forfeiture
due to employee departures. The assumptions used in calculating the fair value are shown below and are common to all
tranches of share options, unless otherwise stated:
• Dividend yield 4.0%
• Risk-free rate 2.5%
• Expected volatility of 30%, calculated based on the volatility of comparable listed entities
• Expected life of option is the maximum term up to last day of the exercise window
• Forfeiture assumptions for the options granted to employees are that 16%, 20% and 23% of Share options are forfeited
for tranches 1, 2 and 3 respectively. No allowance for forfeiture has been made for the share options granted to the
Chairman.
2020 share options
On 13 March 2020, the Group granted share options to non-Australian domiciled Group employees. The terms of the 2020
share options plan are the same as the 2017 share options plan unless otherwise stated below.
The table below provides the details of options issued on 13 March 2020:
Numbers of
options at
beginning of
year
Grant date
share price
Exercise
price of
option
Issue price
Earliest date
of exercise
Expiry date
83,334
$3.09
$4.04
$0.00
13/03/2024
13/03/2025
83,334
$3.09
$4.04
$0.00
13/03/2025
13/03/2026
83,332
$3.09
$4.04
$0.00
13/03/2026
13/03/2027
250,000
Options
forfeited
during
the year
Options
exercised
during
the year
-
-
-
-
-
-
-
-
Number of
options at
year end
83,334
83,334
83,332
250,000
The weighted average value of the share options at the
time of grant was $0.85.
• Expected life of option is the maximum term up to last
day of the exercise window.
The fair value of the share options was calculated using a
Monte-Carlo model, adjusted for expectations of forfeiture
due to employee departures. The assumptions used in
calculating the fair value are shown below and are common
to all tranches of share options, unless otherwise stated:
• Performance Hurdle of 8% per annum increase in total
shareholder return.
• Risk-free rate 0.67%.
• Expected volatility of 42.78%.
• Forfeiture assumptions for the options granted to
employees are that 20%, 25% and 30% of Share options
are forfeited for tranches 1, 2 and 3 respectively.
2021 share options
On 10 March 2021, the Group granted share options to
non-Australian domiciled Group employees. The terms
of the 2021 share options plan are the same as the 2020
share options plan unless otherwise stated below.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
32 Share-based payments (continued)
32.1 Employee share options (continued)
2021 share options (continued)
32 Share-based payments (continued)
32.2 Share rights (continued)
The table below sets out the movement in share rights during the year:
Numbers of
options at
beginning
of year
Numbers
of options
issued
during the
year
Grant date
share price
Exercise
price of
option
Earliest
date of
Issue price
exercise Expiry date
Options
forfeited
during the
year
Options
exercised
during the
year
Number of
options at
year end
-
-
125,000
$4.40
$4.34
$0.00 10/03/2025 10/03/2026
125,000
$4.40
$4.34
$0.00 10/03/2026 10/03/2027
-
250,000
-
-
-
-
125,000
-
125,000
-
250,000
Balance at the beginning of the year
Granted during the year
Forfeited during the year
Vested during the year
Balance at the end of the year
Number of
share rights
Grant date
fair value
$’000
2,060,394
9,339
-
(4,459)
-
(23)
(1,084,771)
(4,691)
971,164
4,625
The weighted average value of the share options at the
time of grant was $1.48.
The fair value of the share options was calculated using a
Monte-Carlo model, adjusted for expectations of forfeiture
due to employee departures. The assumptions used in
calculating the fair value are shown below and are common
to all tranches of share options, unless otherwise stated:
grants are amortised over the vesting period, on the
basis that employees do not leave prior to vesting. The
value of the grant has been determined by reference
to the trading in the Company’s shares. The amortising
period commences from the date employees first had
an expectation of receiving an equity component to
their bonus incentive scheme. Determination of this date
required a degree of judgement.
• Performance Hurdle of 8% per annum increase in total
Share rights granted as sign-on incentive
shareholder return.
• Risk-free rate 0.67%.
• Expected volatility of 42.78%, based on historical MAF
share price volatility over the expected term of the plan.
• Expected life of option is the maximum term up to last
day of the exercise window.
• Forfeiture assumptions for the options granted to
employees are that 20%, 25% and 30% of Share options
are forfeited for tranches 1, 2 and 3 respectively.
32.2 Share rights
Employee benefits include share rights granted to staff
on commencement of employment and as part of the
bonus incentive scheme, the vesting of which are subject
to continuous employment conditions. The value of these
The Company has periodically granted share rights to
senior executives commencing employment with the
Group. The share rights are priced with reference to the
trading price of the Company’s shares at the time the offer
of employment is made. Vesting is subject to continuous
employment, with terms varying on a case by case basis.
Amortisation of the expense commences on the day the
senior executive starts their employment.
Share rights granted as part of the annual bonus
incentive scheme
Share rights have been granted to employees in connection
with their 2017 and 2018 annual bonus which entitles the
employees to ordinary shares in the Company in the future
for no payment. The share rights vest over a prescribed
vesting period, and are conditional on continuous
employment, unless otherwise determined by the Board.
32.3 Restricted shares
Restricted shares – 2019 and 2020 bonus
incentive scheme
As part of the 2019 and 2020 annual bonus incentive
scheme, the share-based component of remuneration
was delivered in the form of restricted shares, issued to
employees as part of their annual bonus awards. The
restricted shares were priced at the 5-day volume weighted
average price of the shares in the Company at the end
of the 2020 and 2021 financial years respectively. The
restricted shares vest over a prescribed vesting period of
10 months to 34 months, and are conditional on continuous
employment, unless otherwise determined by the Board.
The amortising period has been assessed to commence
from the date employees first had an expectation of
receiving an equity component to their annual bonus (being
1 January of each financial year).
Balance at the beginning of the year
Granted during the year
Forfeited during the year
Vested during the year
Balance at the end of the year
Number of
restricted
shares
1,354,739
1,762,090
-
Grant date
fair value
$’000
6,748
8,416
-
(482,033)
(2,401)
2,634,796
12,763
Restricted shares – 2021 bonus incentive scheme
32.4 Loan funded share plan
As at 31 December 2021, the Group has estimated the
expected 2021 annual bonuses, including an estimate of
the amount of bonuses to be paid in cash and the share-
based component, which is anticipated to be delivered
in the form of restricted shares. The profit or loss impact
(after tax) of the estimated equity component for services
received for the year ended 31 December 2021 was $2.5
million (2020: $4.7 million).
2020 and 2021 plans
The Group has a LFSP for certain employees that enabled
the employees to invest in shares of the Company in
order to more closely align their long term interests
with shareholders of the Group. The Group provides an
interest free and limited recourse loan to the employees
that is used to acquire shares in the Company. The loans
to employees are secured on the shares which are not
transferable until the loan is fully paid. LFSP shares rank
equally in all respects with all shareholder entitlements for
the same class of shares including dividends.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
32 Share-based payments (continued)
32.4 Loan funded share plan (continued)
Retention awards
2021 awards
Shares granted under the prior year retention awards
granted during 2020 and 2021 are subject to a vesting
period of four to six years and are subject to a service
condition and an 8% per annum total shareholder return
performance hurdle.
2021 loan funded shares are awarded under the Long Term
Incentive (LTI) plan for certain senior employees including
KMP. The LTI awards are granted to ensure alignment with
the creation of ongoing shareholder value. Shares granted
are subject to a vesting period of five years. 30% of the LTI
plan is subject to a service condition and 70% is subject to
an EPS performance condition based on average growth in
Underlying EPS over the vesting period.
32 Share-based payments (continued)
32.4 Loan funded share plan (continued)
2020 Retention
Vesting period
Share price at grant date
Expected volatility1
Risk-free rate
Fair value per security
Tranche 1
Tranche 2
Tranche 3
4 years
5 years
6 years
$4.04
$4.04
$4.04
42.78%
42.78%
42.78%
0.67%
$0.75
0.67%
$0.86
0.67%
$0.94
Balance at the beginning of the year
Granted during the year
Forfeited during the year
Vested during the year
Number of loan
funded shares
3,480,000
4,435,184
-
-
Grant date
fair value
$’000
17,333
19,920
-
-
Balance at the end of the year
7,915,184
37,253
All shares issued under the LFSP have been treated as ‘in substance options’. The shares issued under the retention LFSP
awards have been valued using a Monte-Carlo pricing methodology with key inputs shown below. The resulting value is
amortised over the vesting period on a probability adjusted basis. The total expense recorded for the period in respect of
the retention LFSP awards was $2.9 million (2020: $0.4 million).
Performance hurdle (total shareholder return)
8% p.a.
8% p.a.
8% p.a.
Forfeiture assumptions
20%
25%
30%
2021 Retention
Vesting period
Share price at grant date
Expected volatility1
Risk-free rate
Fair value per security
Performance hurdle (total shareholder return)
Forfeiture assumptions
1.
Based on historical MAF share price volatility over the expected term of the plan
Tranche 1
Tranche 2
4 years
5 years
$4.34
$4.34
42.78%
42.78%
0.67%
$1.45
0.67%
$1.51
8% p.a.
8% p.a.
10%
13%
The 2021 awards are expected to be granted on or around
9 March 2022 and valued using a 5-day volume weighted
average price (VWAP) up to and including the grant date.
in the share price between the grant date and vesting date.
Share appreciation rights granted under the LTI plan are
subject to a condition of continuous employment with the
Group and have a five year vesting period.
The accounting standards require the value of the plan to
be determined when there is a shared understanding of
the terms and conditions of the plan. As at 31 December
2021, the Group has estimated the cost of the 2021 awards
using a Black-Scholes model adjusted for the likelihood
of the EPS performance condition and service condition
being met at the conclusion of the vesting period. The profit
or loss impact (after tax) for the year ended 31 December
2021 was $0.9 million (2020: nil). The estimate of the cost
of the 2021 awards could change up until the grant date
is achieved.
32.5 Share appreciation rights plan
Under the LTI plan, 2021 awards for certain senior
executives are in the form of share appreciation rights
(SAR). A SAR is an ‘in substance option’ which gives the
holder a right to shares in the future equivalent to the uplift
The LTI plan is expected to be granted on or around 9
March 2022 and valued using a 5-day volume weighted
average price (VWAP) up to and including the grant date.
The accounting standards require the value of the plan to
be determined when there is a shared understanding of the
terms and conditions of the plan. As at 31 December 2021,
the Group has estimated the cost of the SAR using a Black-
Scholes model adjusted for the likelihood of the service
condition being met at the conclusion of the vesting period.
The profit or loss impact (after tax) for the year ended 31
December 2021 was $0.4 million (2020: nil).
The estimate of the cost of the plan could change up until
the grant date is achieved.
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
32 Share-based payments (continued)
32.6 Salary sacrifice share plan
34 Related party transactions (continued)
34.2 Transactions with Moelis & Company
As part of the 2020 and 2021 bonus incentive schemes,
all permanent full and part-time employees of the Group
were invited to participate in the salary sacrifice share offer
which allowed employees to receive up to $5,000 worth of
shares in the Company by sacrificing an equivalent amount
of their cash bonus award. 17,296 shares were issued
under the 2021 arrangement, priced at $4.3389, being the
5-day volume weighted average price of the Company’s
shares on 8 March 2021. The shares are restricted from
being sold by employees until at least 1 July 2022 or when
the participant is no longer employed by the Group.
Balance at the beginning of the year
Granted during the year
Vested during the year
Balance at the end of the year
Number of salary
sacrifice shares
Grant date
fair value
$’000
22,675
17,296
(23,828)
16,143
91
75
(97)
69
Expenses
Main expenses categories include
Conferences and Seminars
Information services recovery/(expense)
Net recoveries/(expenses) allocated from Moelis & Company
34.3 Transactions with Key Management Personnel
31 Dec 2021
$’000
31 Dec 2020
$’000
-
7
7
(42)
(37)
(79)
Moelis & Company Group LP (Moelis & Company) is a global financial institution with subsidiaries and offices in a number of
countries. During the year there were costs credited by Moelis & Company for market data expenses.
33 Key management personnel compensation
The aggregate compensation made to both Executive and Non-Executive Directors and other members of Key Management
Personnel (KMP) of the Company and the Group is set out below. There were 10 KMPs in 2021 (2020: 9 KMP).
Short-term and post-employment benefits
Share-based payments
Long service leave
Total key management personnel compensation
34 Related party transactions
31 Dec 2021
$’000
31 Dec 2020
$’000
6,954
1,661
111
8,726
5,118
2,034
31
7,183
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have
been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other
related parties are disclosed below.
34.1 Loans to related parties
Loans to employees
823
439
MA Senior Secured Credit Fund II
The Group has provided two employees with interest-free
loans that are used for investment purposes, primarily
for investment in funds managed by the Group. The
investments purchased have been designated as restricted
and are unable to be sold without the approval of the
Group. 51% of distributions received on the investments
are allocated against the loan balance. The loans, which
are measured at amortised cost, are repayable over a
maximum term of five years.
MKM Capital
Redcape Hotel Group
150
In 2019 Mr Pridham and Mr Biggins entered into property management service arrangements with the Group on the same
terms offered to third-party investors in a property managed by the Group. Total management fees payable by Mr Pridham
and Mr Biggins for 2021 amounted to $69,542 and $15,506 respectively (2020: $69,542 and $21,342 respectively).
34.4 Transactions with MA managed funds
The Group is involved in the management of various funds, through it’s role as a trustee, manager, financial advisor and
underwriter, and charges fees for doing so. The Group also invests in some of the funds which it manages.
34.5 Transactions with associates
Transactions between the Group and its associates principally arise from KMP transactions and investments in the
associate.
The amounts below for KMP are recorded at the entry price paid or committed for the relevant investment in accordance
with AASB 124 Related Party Disclosures and have not been adjusted for subsequent valuation changes.
Related party investments
BE ES I LLC
MA Aged Care Fund
MA Kincare Fund
KMP
31 Dec 2021
$’000
Group
31 Dec 2021
$’000
KMP
31 Dec 2020
$’000
Group
31 Dec 2020
$’000
-
21,469
4,150
400
3,658
-
-
7,594
2,068
4,923
-
4,150
400
3,652
-
-
-
9,037
2,353
5,667
7,376
84,339
6,374
58,232
15,584
120,393
14,576
75,289
151
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
35 Parent entity disclosures
As at, and throughout, the reporting year ended 31 December 2021 the parent entity of the Group was MA Financial
Group Limited.
34 Related party transactions (continued)
34.5 Transactions with associates (continued)
Related party fees
Trustee and management fees
Performance fees
Interest on loans receivable
Receivables from related parties
Current
Accounts receivable and fees receivable from related parties
5,590
11,367
31 Dec 2021
$’000
31 Dec 2020
$’000
5,836
6,040
-
16,396
5,836
144
Results of the parent company
Profit for the year
Total comprehensive income for the period
11,876
22,376
Financial position of the parent entity
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent entity comprising of:
Contributed equity
Reserves
Retained earnings
Total equity
31 Dec 2021
Company
$’000
31 Dec 2020
Company
$’000
46,482
46,482
15,794
15,794
331,708
185,409
37,804
37,579
369,512
222,988
1,919
1,919
6,619
6,619
367,593
216,369
311,178
188,621
32,153
24,262
27,016
732
367,593
216,369
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The parent entity had no contingencies at reporting period end other than those already disclosed in the financial
statements.
36
Investment in subsidiaries
36.1 Acquisition and disposal of investments in subsidiaries
Acquisitions
On 1 April 2021 the Group acquired 100% of the issued
share capital of RetPro Pty Ltd and RetPro Management
Pty Ltd (RetPro Group), obtaining control of the RetPro
Group. The RetPro Group is engaged in the provision of
property management, retail leasing and consultancy as
well as strategic advisory services to retail property owners
and qualifies as a business as defined in AASB 3 Business
Combinations.
The initial accounting for the acquisition of the RetPro
Group has only been provisionally determined at the end
of the reporting period. The Group retrospectively adjusts
the provisional amounts recognised and also recognises
additional assets or liabilities during the measurement
period, based on new information obtained about the facts
and circumstances that existed at the acquisition-date.
The measurement period ends on either the earlier of (i)
12 months from the date of the acquisition or (ii) when the
Group receives all the information possible to determine
fair value.
152
153
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
36
Investment in subsidiaries (continued)
36
Investment in subsidiaries (continued)
36.1 Acquisition and disposal of investments in subsidiaries (continued)
36.1 Acquisition and disposal of investments in subsidiaries (continued)
Acquisitions (continued)
Acquisitions (continued)
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table
below.
Fair value
$’000
7,940
3,176
11,116
148
6,676
6,824
17,940
1,335
1,101
1,361
3,797
14,143
2,180
16,323
14,627
1,697
16,324
14,627
7,940
6,687
Current assets
Cash and cash equivalents
Receivables
Total current assets
Non-current assets
Fixed Assets
Identifiable intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Provisions
Total current liabilities
Total identifiable assets acquired and liabilities assumed
Goodwill
Total consideration
Satisfied by:
Cash
Contingent consideration arrangement
Total consideration transferred
Net cash outflow arising on acquisition
Cash consideration
Less: cash and cash equivalent balances acquired
Total net cash outflow arising on acquisition
154
Goodwill
Contingent consideration arrangement
The goodwill of $2.2 million arising from the acquisition
consists of:
The contingent consideration to be transferred by the
Group is recognised at the acquisition-date fair value.
• the experience and employment of key
management;
• expectation of customer property management contract
renewal; and
• future contracts
The contingent consideration arrangement requires the
settlement of outstanding matters and is payable 12 months
after the acquisition date. The potential undiscounted
amount of all future payments that the Group could be
required to make under the contingent consideration
arrangement is between nil and $1.7 million.
None of the goodwill is expected to be deductible for
income tax purposes.
Contribution to the Group’s results
Acquisition related costs
Business acquisition costs of $0.4 million comprising
legal fees and due diligence costs were included in the
Group’s consolidated statement of profit or loss and other
comprehensive income.
The RetPro Group contributed $14.7 million of revenue and
$5.6 million to the Group’s profit before tax for the period
between the date of acquisition and the reporting date.
If the acquisition of the RetPro Group had been completed
on the first day of the period, Group revenues for the year
ended 31 December 2021 would have been $234.2 million
and Group profit before tax would have been $48.4 million.
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155
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
36
Investment in subsidiaries (continued)
37 Structured entities
36.2 Subsidiaries
Details of the Group’s material subsidiaries at the end of the financial year are as follows:
Name of subsidiary
Principal activity
Proportion of ownership
interest and voting power
held by the Group
Place of
incorporation
and operation
31 Dec 2021
31 Dec 2020
Eastern Credit Management Pty Ltd
Asset Management
Australia
MA Asset Management Ltd
Asset Management
Australia
MA Hotel Management Pty Ltd
Asset Management
Australia
MA Investment Management Pty Ltd
Asset Management
Australia
MA Visa Fund Manager Pty Ltd
Asset Management
Australia
MAAM Holdings Pty Ltd
Asset Management
Australia
MAAM RE Limited
Asset Management
Australia
Redcape Hotel Group Management Ltd
Asset Management
Australia
Western Funds Management Pty Ltd
Asset Management
Australia
RetPro Pty Ltd
Asset Management
Australia
MA Asset Management (Hong Kong) Ltd
Asset Management
Hong Kong
MAAM Commercial Consulting (Shanghai) Co Ltd
Asset Management
China
MA UK Operations Limited
Asset Management
United Kingdom
MA UK Topco Limited
Asset Management
United Kingdom
MA Credit Investments Pty Ltd
Asset Management
Australia
MA Master Credit Trust
MA USD Master Credit Trust
MAF Credit Pty Ltd
Lending
Lending
Lending
Australia
USA
Australia
MA Moelis Australia Securities Pty Ltd (formerly
Moelis Australia Securities Pty Ltd)
Corporate Finance
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
-
100%
100%
Corporate Finance
Australia
100%
100%
Financial assets held at FVTOCI
100%
100%
100%
100%
100%
-
Financial assets held at FVTPL
Total carrying value of assets
Maximum exposure to loss
Financial assets held at FVTOCI
Financial assets held at FVTPL
Total maximum exposure to loss
MA Moelis Australia Advisory Pty Ltd (formerly
Moelis Australia Advisory Pty Ltd)
MAFG Operations Pty Ltd (formerly Moelis
Australia Operations Pty Ltd)
Administration Entity
Australia
MAFG Finance Pty Ltd
Administration Entity
Australia
MA Credit Portfolio Investments Pty Ltd
Administration Entity
Australia
156
A structured entity is an entity that has been designed
such that voting or similar rights are not the dominant
factor in determining who controls the entity and the
relevant activities are directed by means of contractual
arrangements.
The Group considers all its fund vehicles to be structured
entities. The Group invests its own capital for the purposes
of seeding fund vehicles. The Group also engages with
structured entities for asset-backed financing. Asset-
backed vehicles are used to provide lending for the
purchase of assets where the assets are pledged as
collateral. The Group also receives management and
performance fees for its role as investment manager.
The Group assesses at inception and at each reporting
date, whether the structured entity should be consolidated
based on the Group’s consolidation accounting policy.
Structured entities are classified as subsidiaries and
consolidated when control exists.
Unconsolidated structured entities
An ‘interest’ in an unconsolidated structured entity is any
form of contractual or non-contractual involvement with
a structured entity that exposes the Group to variability
of returns from the performance of that structured entity.
For the purpose of disclosing interests in unconsolidated
structured entities, no disclosure is made if the Group’s
involvement is not more than a passive interest. On this
basis, exposures to unconsolidated structured entities
that arise from lending, trading and investing activities are
not considered disclosable interests – unless the design
of the structured entity allows the Group to participate in
decisions about the relevant activities (being those that
significantly affect the entity’s returns).
The following table presents the carrying value and maximum exposure to loss (before the benefit of collateral and credit
enhancements) of the Group’s interests in unconsolidated structured entities:
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Carrying value of assets
Financial assets held at FVTOCI
Financial assets held at FVTPL
Total carrying value of assets
Maximum exposure to loss
Financial assets held at FVTOCI
Financial assets held at FVTPL
Total maximum exposure to loss
31 December 2020
Carrying value of assets
Real estate
$’000
Hospitality
$’000
Lending
$’000
Equities
$’000
Total
$’000
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1,273
668
605
1,273
6,636
16,429
23,065
6,636
16,429
23,065
3,117
-
3,117
3,117
-
3,117
-
-
-
-
-
-
31,399
23,677
55,076
31,399
23,677
55,076
-
-
-
-
-
-
7,850
43,034
-
7,850
7,850
-
7,850
2,246
-
2,246
2,246
-
2,246
24,282
67,316
43,034
24,282
67,316
8,882
16,429
25,311
8,882
16,429
25,311
157
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Notes to the consolidated financial statements (continued)
For the year ended 31 December 2021
Directors’ declaration
For the year ended 31 December 2021
37 Structured entities (continued)
39 Subsequent events
Unconsolidated structured entities (continued)
Unless otherwise specified, the Group’s maximum
exposure to loss is the total of its on-balance sheet
positions at reporting date. There are no off-balance sheet
arrangements which would expose the Group to potential
losses in respect of unconsolidated structured entities.
During the year, the Group earned management,
performance, transaction and upfront fee income of
$8.9 million (2020: $2.5 million) and gains or losses from
revaluing financial assets held at FVTPL from interests held
of $1.0 million (2020: ($0.6 million)).
38 Commitments
At 31 December 2021, the Group had undrawn loan
commitments of $104.5 million (2020: $30.9 million).
Subsequent to 31 December 2021, $1.8 million of this
commitment was either cancelled or drawn upon.
At 31 December 2021, the Group has the following capital
commitments:
The Group has committed to a co-investment in Class B
Units in MCT and USD MCT, consolidated entities of the
Group. At 31 December 2021, $28.0 million (2020: $17.3
million) and $2.0 million (2020: nil) has been invested by the
Group in MCT and USD MCT respectively. Refer to further
information in note 24(c).
On 15 December 2021, the Group entered into a contract
to purchase a hospitality property and business for $71.8
million (including estimated acquisition costs of $3.8
million) and a deposit of $3.4 million was paid. Prior to the
completion date in March 2022, the Group is expected
to nominate a fund managed by the Group to fulfil the
purchase obligations.
158
On 28 January 2022, the Group closed its Share Purchase
Plan (SPP) offer which raised $20.0 million. Successful
eligible applicants under the SPP offer were issued new
shares on 4 February 2022 at an issue price of $7.75 per
share. The new shares commenced trading on the ASX on
7 February 2022.
On 7 February 2022, the Group acquired 100% of Finsure
Holding Pty Ltd and its subsidiaries (Finsure), a leading
Australian mortgage aggregator, from BNK Banking
Corporation Limited (ASX: BBC). Finsure was purchased
for a cash consideration of $145.0 million plus a cash
adjustment under the Share Sale Agreement of $7.2 million,
with estimated acquisition costs of $1.8m. Disclosure
of the acquisition in accordance with AASB 3 has not
been presented as the initial accounting for the business
combination is incomplete at the date of this report.
In the Directors’ opinion:
(a) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
(b) the financial statements and notes set out on pages 84 to 158 are in accordance with the Corporations Act 2001 (Cth)
including:
(i) complying with the Australian Accounting Standards, and
(ii) giving a true and fair view of the Company’s and the consolidated Group’s financial positions as at 31 December 2021
and their performance for the financial year ended on that date.
Note 1 (a) includes a statement that the financial report complies with International Financial Reporting Standards.
The Directors have been given declarations by the Joint CEO’s and CFO required by section 295A of the Corporations Act
2001 (Cth).
This declaration is made in accordance with a resolution of the Directors.
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Jeffrey Browne
Julian Biggins
Independent Chair and Non-Executive Director
Sydney
Director and Joint Chief Executive Officer
Sydney
17 February 2022
17 February 2022
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159
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Independent auditor’s report
For the year ended 31 December 2021
Independent auditor’s report (continued)
For the year ended 31 December 2021
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney, NSW, 2000
Australia
Phone: +61 2 9322 7000
www.deloitte.com.au
Independent Auditor’s Report to the Members of MA
Financial Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of MA Financial Group Limited (the “Company”) and its
subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 31
December 2021, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the financial statements, including a summary of significant accounting
policies and other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
Key Audit Matter
How the scope of our audit responded to the Key
Audit Matter
Our procedures included, but were not limited to:
• Analysing management’s
impairment
assessment and conclusions made on
impairment
the
carrying value is supported by the Group’s
share of net assets of Redcape;
to assess
indicators
• Reconciling the Group’s share of net assets
of Redcape to the Group’s investment in
Redcape balance;
• Recalculating the valuation of the Group’s
share of net assets of Redcape using the
Group’s shareholding of Redcape as at year
end and applying that to Redcape’s net
assets as at 31 December 2021;
• Assessing the competence, objectivity and
independence of the component auditors
of Redcape;
• Reviewing
the workpapers of
the
component auditor for Redcape and their
procedures
the
appropriateness of the carrying value of
Redcape’s net assets; and
conclude
on
to
• Utilising our internal accounting specialists
to evaluate management’s key judgements
in concluding that the Group’s investment
in Redcape should not be consolidated by
MAFG in accordance with the requirements
of the accounting standards, and that
equity
classification
correct
accounted associate is appropriate.
an
as
We also assessed the appropriateness of the
disclosures in Note 20 to the financial statements.
Investment in Redcape
MA Asset Management Limited (MAFG) and
MAFG managed funds have held
investments in Redcape Hotel Group
(“Redcape” or “Redcape Group”) since July
2017. Redcape Group underwent an initial
public offering (IPO) in November 2018,
which resulted in a change in investment
percentage holding for both MAFG and the
various MAFG managed funds to 59%.
Redcape has been classified as an
investment in associate following the
requirements of AASB 128 Investment in
Associates and Joint Ventures.
During the period as a listed entity the share
price and market capitalisation for Redcape
was below the carrying value of net assets,
which is an impairment indicator.
Redcape Hotel Group Management Ltd, as
responsible entity for Redcape announced
on 18 August 2021 a delisting proposal
subject to Redcape shareholders approval.
The proposal was a buy-back to be funded
through $115 million of additional debt and
a $132.3 million rights issue at $1.15 per
share (the “transaction”). Management
considered the difference between the buy-
back offer price of $1.15 and the carrying
value as at 31 December 2021 of $1.25 per
share and concluded that there is no
impairment in the carrying value of MAFG’s
investment in Redcape at 31 December
2021.
On completion of the transaction, the Group
held a direct and indirect interest through
MAFG managed funds in Redcape of 53.2%.
Management assessed the key
considerations in AASB 10 Consolidated
Financial Statements for determination of
control vs significant influence over
Redcape. Management have concluded that
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161
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
Independent auditor’s report (continued)
For the year ended 31 December 2021
Independent auditor’s report (continued)
For the year ended 31 December 2021
MAFG does not control Redcape and that
the classification as an equity accounted
associate continues to be appropriate.
Investment Banking Revenue Recognition
The revenue generated by the Corporate
Advisory Segment within the Group is
primarily from investment banking
transactions. For the year ended 31
December 2021, the advisory segment
generated $68.9 million in revenue. This
revenue stream is recognised by reference
to the stage of completion of the
transaction at the end of the reporting
period as disclosed in Note 1(c) and Note 4.
Revenue recognition required management
judgement in respect of when stages of the
transaction were completed and revenue
was appropriately recognised.
Acquisition of Retpro
In April 2021, the Group completed the
acquisition of retail property manager,
RetPro Pty Ltd (Retpro) for $16.3 million as
disclosed in Note 36.
Management performed a Purchase Price
Allocation (PPA) process including the tax
implications of the business combination
resulting from RetPro joining the MAFG tax
consolidated group.
Acquisition accounting gives rise to the
following key areas of management
judgement:
• Determination of the acquisition
date;
• Determination of the fair value of
identifiable net assets acquired; and
Our procedures included, but were not limited to:
• Evaluating management’s relevant controls
over the revenue recognition process and
implementation and
testing of design,
operating
relevant
controls;
effectiveness
of
• Testing on a sample basis, the calculation of
the fees recognised to the key milestones
in the client engagement
as outlined
letters;
• Reviewing
period
documentation to assess whether revenue
has been recorded in the correct period;
and
subsequent
• Reviewing management reporting, board
minutes, market available information and
making enquiries of management
to
support the revenue recognised.
We also assessed the appropriateness of the
disclosures in Note 1(c) and Note 4 to the financial
statements.
Our procedures included but were not limited to:
• Assessing
the
purchase
and
board minutes,
sale
agreements,
and
management paper on the transaction for
appropriateness of managements key
judgements;
• Evaluating
the
PPA performed by
management including the assessment of
the fair values applied to the assets and
liabilities acquired; and
• Assessing the competency, independence
and objectivity of management’s expert
engaged
support management’s
to
assessment;
• Utilising our valuation specialists to assess
the assumptions and methodology applied
by management and the appointed expert
identification and valuation of
in the
assets,
including
intangible
the
determination of appropriate economic
lives
in accordance with the relevant
accounting standards.
We also assessed the appropriateness of the
disclosures in Note 36 to the financial statements.
Our procedures included but were not limited to:
•
Inspecting the transaction agreements and
governing documents of the entities within
the
gain
understanding of the structure and terms of
acquisition;
transaction
structure
to
• Utilising our internal accounting specialists
to evaluate management’s key judgements
in concluding that the asset finance loans
structured
be
consolidated by MAFG; and
should
entity
not
review management’s
• Utilising our internal accounting specialists
to
formalised
assessment for the classification of the
investment at fair value through profit or
loss.
We also assessed the appropriateness of the
disclosures
in the Note 37 to the financial
statements.
• The fair valuation of consideration
transferred.
Asset finance transaction
On 8 February 2021 the Group entered into
a credit related structured arrangement
with a major Australian bank.
The partnership involves the Group
acquiring a $24 million loan note, providing
a residual economic interest in a portfolio of
asset finance loans.
Management were required to make key
judgements and assumptions in determining
the:
• Classification of the Group’s
investment, including consideration
of control under AASB 10
Consolidated Financial Statements.
Management have concluded that
the Group does not control the
underlying structured entity holding
the asset finance loan portfolio; and
• Management have determined the
recognition and measurement of
the loan note investment within the
transaction. The carrying value of
the loan note is $23.7 million as at
31 December 2021 as disclosed in
Note 37.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2021, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
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Independent auditor’s report (continued)
For the year ended 31 December 2021
Independent auditor’s report (continued)
For the year ended 31 December 2021
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
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Independent auditor’s report (continued)
For the year ended 31 December 2021
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 54 to 77 of the Directors’ Report for the
year ended 31 December 2021.
In our opinion, the Remuneration Report of MA Financial Group Limited, for the year ended 31
December 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
Nicholas Rozario
Partner
Chartered Accountants
Sydney, 17 February 2022
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MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report
MA Financial Group | 2021 Annual ReportMA Financial Group | 2021 Annual Report Additional information
For the year ended 31 December 2021
Additional information (continued)
For the year ended 31 December 2021
Dividend details
Unmarketable parcels
MA Financial Group Limited aims to pay an interim and final dividend following its half-year and full-year financial results
announcements respectively.
The payment date for the dividend following the announcement of the 2021 results is 11 March 2022.
There were 80 shareholders (representing 549 shares) who held less than a marketable parcel.
Share registry details
The following information is correct as at 12 February 2022.
Registered holder
MAGIC TT PTY LTD
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