MA Financial Group Limited (“the Group”; “MA Financial”; ASX: MAF) is pleased to present its financial results for the 6 months to 30 June 2023 (1H23):
- Record first half Asset Management gross fund inflows of A$953 million, up 66% on 1H22
- Assets under management (AUM) up 20% on 1H22 to A$8.6 billion. Grown to $8.9 billion by mid-August
- Annualized recurring revenue run rate up 22% on 1H22 to A$178 million
- Finsure managed loans up 18% on 1H22 to A$99 billion
- Loan book grew 59% on 1H22 to A$564 million driven by accelerating growth of MA Money
- Significant increase in recurring revenue offset lower market-related Corporate Advisory, performance fee revenue, and planned strategic investment in MA Money
- Underlying revenue, down 12% on 1H22 to A$128 million
- Underlying earnings per share (EPS) down 13.6% on 1H22 to 15.2 cents (Statutory EPS down 16.3% to 10.8 cents)
- Fully franked interim dividend of 6 cents per share declared, in line with 1H22
MA Financial today announced its first half result for 2023, highlighted by strong growth in the Group’s recurring revenue streams, record first half fund inflows, ongoing growth in Finsure, and accelerating loan volume growth for MA Money. The challenging macro environment led to lower transactional activity impacting performance fees and corporate advisory revenue.
Although Underlying revenue of A$128 million was down 12% on 1H22, the 22% growth in Group recurring revenue was very significant. The reduction in performance fees relative to an elevated 1H22 contribution and softer corporate advisory activity reflects the difficult current economic climate, in particular the rapid increase in market interest rates. In 1H23, recurring revenue represented 65% of Underlying revenue versus 47% in 1H22, highlighting the significantly improved composition of earnings in the period.
1H23 Underlying Net Profit After Tax of A$24.4 million and Underlying EPS of 15.2 cents were both down 13.2% and 13.6% respectively on 1H22. Importantly, this was delivered whilst making a significant investment for future growth in residential lender MA Money and against the backdrop of a significantly weaker transactional environment.
Asset Management delivered 79% of the Group’s EBITDA (before Corporate costs), with a significantly improved earnings mix as 14% growth in recurring revenue and tighter expense management largely offset a A$21.5 million decline in performance fees relative to an elevated contribution in 1H22.
Asset Management received record first half gross fund inflows of A$953 million in 1H23, up 66% on 1H22, due to investor interest in the Group’s Private Credit funds and a strong initial raising for the MA Marina Fund, a new alternative asset class for MA Financial. The acceleration in inflows and growth in AUM to A$8.6 billion at 30 June 2023 provides strong embedded growth in recurring revenue for future periods.
The Group’s strategic development of a Residential Lending Marketplace within the Lending & Technology division continued to build momentum in the half. Finsure grew its managed loans by 18% on 1H22 to $99 billion, as it added over 200 new brokers to its platform during the half. Pleasingly, Finsure continues to increase its market share.
Following the launch of its new product set early in 1H23, MA Money continues to build momentum in the Australian residential mortgage market. MA Money grew its loan book by 85% on 1H22 to A$421 million and the rate of growth has accelerated in early 2H23.
Corporate Advisory & Equities (CA&E) EBITDA was down 28%, as difficult macroeconomic conditions and market volatility impacted equity capital markets (ECM) activity and increased execution risks and timing on advisory transactions. Post balance date, the transactional environment has shown some signs of improvement and the transaction pipeline has strengthened.
The Board has maintained a fully franked half-year dividend of 6 cents per share, representing a conservative payout ratio of 40%. This reflects the Group’s strong capital position underpinned by the ongoing growth in recurring revenues. Since listing at A$2.35 per share in 2017, MA Financial will have paid to its shareholders an aggregate of 78 cents per share in fully franked dividends.
Joint CEOs Julian Biggins and Chris Wyke said:
“We are very pleased with the underlying momentum in the business which positions MA Financial for strong future growth. The composition of our earnings improved significantly with growth in recurring revenue and expense management largely offsetting the decline in performance fees.
“Despite the challenging economic backdrop, we continue to see the benefits of our diversified business model, and our intentional strategy to build a business that can deliver for investors through the economic cycle.
The expansion and success of our Private Credit business is very pleasing. MA Financial’s credit funds are among the fastest growing in the U.S. Advisors and investors continue to value our expertise in originating and managing credit assets, highlighted by the 74% growth in the Assets Under Management of our Private Credit Funds over the last 12 months.
We believe Private Credit investing will continue to benefit from demographic and structural growth drivers for many years.”