European growth contributes to 45% increase in Macquarie Group half year net profit

13 November 2007

Key points

• RECORD HALF YEAR NET PROFIT OF $A1.06 BILLION (£454M, €644M)
• DIVERSITY OF OPERATIONS PROVIDING STRONG BROAD-BASED PERFORMANCE
• STRONG INTERNATIONAL GROWTH ACROSS ALL OPERATING GROUPS
• NO UNUSUAL PROVISIONS OR WRITE-DOWNS
• NO PROBLEM TRADING EXPOSURES
• TRANSITION TO NON-OPERATING HOLDING COMPANY STRUCTURE
• EUROPE, AFRICA AND THE MIDDLE EAST INCOME UP 55%

Macquarie Group Limited (Macquarie, ASX:MQG) today announced a record $A1.06 billion profit after tax attributable to ordinary shareholders for the half year ended 30 September 2007 for Macquarie Bank Limited. This is an increase of 45% over the $A730 million (£313m, €443m) profit for the half year ended 30 September 2006.  

The 45% profit growth was driven by a 38% increase in total income, of which 55% was derived from operations outside Australia.

Macquarie Group Managing Director and Chief Executive Officer, Allan Moss, said: “This record half year result underscores the strength and diversity of our global business.  The story of our strong growth beyond Australia continues and we are particularly pleased with the outstanding contribution from the Asia-Pacific region, which was largely unaffected by the credit market disruption.” 

Mr Moss said there was broad growth across all operating groups during the period, supported by Macquarie’s geographic and product diversification and previous investment in the businesses. This growth was also supported by good conditions in markets other than credit markets, although Australia and Asia were largely unaffected by credit market disruption. 

Mr Moss continued: “We are also seeing strong investor demand for physical assets such as infrastructure and real estate – asset classes in which Macquarie excels.  Although there are more participants in the infrastructure space, there is significant availability of assets and overall we expect more opportunities as the asset class becomes increasingly accepted,” he said. 

He added that the specialist funds continued to be well-supported by investors, with strong demand particularly for unlisted funds.  A total of $A13.8 billion (£5.9bn, €8.4bn) was raised from investors during the period, of which 79% was from international investors and 79% was for unlisted funds or syndicates. 

EUROPE, AFRICA AND THE MIDDLE EAST – Income up 55%
Europe, Africa and the Middle East contributed $A774 million (GBP332, €470) to international income, a 55% increase on the prior corresponding period, while assets under management for the region have increased to $A77bn (£33bn, €47bn) – 34% of Macquarie’s total assets under management of $A224bn (£96bn, €136bn). The business growth is supported by staff increases across the European operations – Macquarie now has more than 1,000 staff in Europe.

 “We continue to achieve strong growth in Europe and to attract quality people to support this growth,” said Jim Craig, Head of Macquarie’s European Business.  

He said that while Macquarie’s European business is currently characterised by its infrastructure investment and advisory activities, Macquarie’s other European activites are developing strongly in line with the Group’s strategy to grow its offering in areas where it can use its particular skills to add special value for clients.

“In addition to the advisory and infrastructure funds businesses, Macquarie has very successful Asian Equities and Treasury and Commodities operations in Europe.  In the past six months we have introduced traditional funds management capabilities and seen rapid growth in the real estate business, “ said Mr Craig. “We’ve also now announced the establishment of a European stockbroking business with a specialist sector focus.”

Highlights in Macquarie Bank’s European activities for the six months to 30 September include:
• Macquarie European Infrastructure Fund (MEIF) II, a European unlisted infrastructure fund reached final close in May this year with total commitments of €4.6 billion
• Establishment of the Macquarie European Infrastructure Fund (MEIF) III, which commenced marketing to institutional investors with first close expected in the first quarter of the 2008 calendar year
• Launch of a specialist commodity derivatives portfolio fund for institutional investors


Other fund-related initiatives included:
• Macquarie Communications Infrastructure Group (MCG) – Arqiva’s £2.5 billion acquisition of National Grid Wireless, a broadcast transmission services and independent wireless site provider
• The MCG/MEIF II £1.9 billion acquisition of Airwave, the UK’s digital radio communications provider for emergency services
• Macquarie Real Estate funds:
  o Macquarie CountryWide Trust’s acquisitions of five hypermarket anchored shopping centres in Poland and two shopping centres in Germany
  o Macquarie Office Trust’s acquisition of an A-grade office building in Sachsenhausen, Frankfurt
• The successful refinancing of specialist fund assets on good terms, including:
  o APRR: €500 million (Macquarie Infrastructure Group (MIG))
  o Thames Water: £900 million (MEIF I/MEIF II)
• Rome Airport – minority interest sold realising 2.6 times the equity invested
• Birmingham Airport – minority interest sold realising 2.4 times the equity invested

Other initiatives in the region included the establishment of Russian infrastructure advisory and funds management JV with Renaissance Capital and the signing of a cooperation agreement with Vnesheconombank. 

Macquarie has also announced it will establish a European stockbroking business with a specialist sector focus consistent with Macquarie’s global core strengths in infrastructure, utilities, energy, resources and property.  

Macquarie Group Limited established
Macquarie Group Limited is now operating under the new non-operating holding company structure.  The Group’s shares commenced trading on the Australian Securities Exchange (ASX) on 5 November 2007 under the code “MQG”. 

For further information, please contact:

Alison Jefferis, Public Affairs
Macquarie Group
 Tel   +44 207 065 2335
Mob  +44 7919 382 958

Karen Smith, Public Affairs
Macquarie Group Tel    +44 207 065 2420
Mob   +44 7917 081 541