Extracts from the Macquarie Group Limited 2019 Annual Report PDF 6
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ANNUAL REPORT Macquarie Group Year ended 31 March 2019 MACQUARIE GROUP LIMITED ACN 122 169 279 50 years of financial service Macquarie’s predecessor organisation, Hill Samuel Australia, opened in Sydney in December 1969 with three staff, capital of $A250,000 and an ambition to provide advisory and investment banking services of an international standard to the Australian market. Today Macquarie is a global financial services group operating in 30 markets providing asset management, leasing and asset financing, retail banking and wealth management, market access, commodity trading, investment banking and principal investment. 2019 Annual General Meeting Macquarie Group Limited’s 2019 Annual General Meeting will be held at 10:30 am on Thursday, 25 July 2019 at the Sheraton Grand Sydney Hyde Park, Grand Ballroom, 161 Elizabeth St, Sydney NSW 2000. Details of the business of the meeting will be contained in the Notice of Annual General Meeting, to be sent to shareholders separately. Cover image Macquarie’s global headquarters at 50 Martin Place, Sydney is a connected, flexible and sustainable workplace and the largest heritage redevelopment of its size to be awarded a Six Star Green Star Rating from the Green Building Council of Australia. Crowning the building with a new steel-frame glass dome, daylight harvesting reduces energy consumption by 40%. Table of 50 years of financial service 6 1 Letter from the Chairman 8 0 Letter from the Managing Director and CEO 10 contents ABOUT Operating and Financial Review 14 Corporate Governance Summary 26 Environmental, Social and Governance 32 2 Macquarie Group Foundation 42 0 Risk Management Report 44 GOVERNANCE Directors’ Report 51 Directors’ experience and special responsibilities 56 03 Remuneration Report 62 DIRECTORS’ REPORT Contents 102 Income Statements 103 4 Statements of comprehensive income 104 0 Statements of financial position 105 FINANCIAL Statements of changes in equity 106 REPORT Statements of cash flows 108 Notes to the financial statements 109 Directors’ declaration 239 Independent auditor’s report 240 Additional investor information 246 Glossary 05 253 FURTHER INFORMATION 1 0About Cheonan-Nonsan Expressway, South Korea Macquarie’s MKIF fund is the majority owner of the Cheonan-Nonsan Expressway, an 81.0 km, dual two-lane toll expressway that connects the northwestern and southwestern provinces of South Korea. It has two major tunnels, 44 bridges and seven interchanges. Macquarie is the largest foreign asset manager in South Korea with 36 assets across the infrastructure, renewables and waste management sectors. years of financial service Macquarie’s predecessor organisation, Hill Samuel Australia, opened in Sydney in December 1969 with three staff, capital of $A250,000 and an ambition to provide advisory and investment banking services of an international standard to the Australian market. Today Macquarie is a global financial services group with over 15,700(1) staff in 30 markets providing asset management, leasing and asset financing, retail banking and wealth management, market access, commodity trading, corporate advisory and principal investment. (1) This figure includes staff employed in certain operationally segregated subsidiaries (OSS). Unless otherwise stated, further references to staff data and policies do not include those in OSS. 4 Macquarie Group Limited and its subsidiaries 2019 Annual Report About Governance Directors’ Report Financial Report Further Information 1970s The 1970s saw Hill Samuel Australia extend its initial offer beyond The country has been good to us; and in our own way advisory and lending to Australian and international corporates to we have made a contribution to the rapid development establish a strong foothold in the emerging international markets of Australian industry and business. After ten years of of gold bullion and foreign exchange hedging and eventually growth we cannot afford to relax... Our major resource futures and commodities trading. These businesses laid the is our team of professionals who know how and when foundations for the global growth that was to follow. to act. In creating this team, we look for individuality, intelligence and common sense, imagination and The early management team established some of the operating dedication. It is a young, disciplined team, responsive to principles which continue to underpin Macquarie today. These change and alert to its consequences.” included a commitment to recruiting people of talent and integrity; a remuneration structure that aligns the interests of employees Stan Owens, Chairman, 1979 Annual Report with sound long-term outcomes for clients, shareholders and communities; a flat management structure founded on Our ability to develop new ideas, new products and individual accountability and an environment in which people are services; to come up with fresh approaches; and to encouraged to seek out adjacent opportunities within a robust look outside traditional boundaries and barriers is a and enduring risk framework. Opportunity, Accountability and fundamental aspect of our business.” Integrity remain the touchstones of Macquarie’s culture in 2019. Stan Owens, Chairman, 1983 Annual Report Just as Lachlan Macquarie was one of our leading pioneers, introducing many reforms which spurred 1980s Australia’s social and commercial development, so A commitment to innovation in Australian retail financial services we aspire to be a bank known for our pioneering built in the 1980s as Hill Samuel’s Cash Management Trust spirit, our innovative ideas and our willingness to allowed individuals and small businesses to access attractive explore and capitalise on new opportunities… short-term money market rates for the first time and was a Whilst providing the full range of general banking forerunner to Macquarie’s expansion into funds management. services we intend to concentrate on those niches Deregulation of the Australian financial services sector opened of the financial system where we have a leadership the path to a banking licence in 1985 and the creation of position. Or can reasonably be expected to develop Macquarie Bank Limited. The new bank took the name of one one… Change for the sake of change holds little of the early governors of New South Wales, Lachlan Macquarie, value for the successful organisation. However, and adapted as its logo Australia’s first currency, the Holey Dollar, a carefully planned reaction to the ever-changing which Governor Macquarie used to solve a currency shortage in environment is essential for success.” the colony, an early example of creating intrinsic value through David Clarke, Executive Chairman, financial innovation. 1985 Annual Report The Macquarie Group Foundation was established in 1985 to support not-for-profit organisations in the communities in which As a company is a member of the society in which Macquarie operates. Since 1985, Macquarie staff and the it operates, it follows that one of its important duties Foundation have donated over $A360 million to charities working is to work in a multitude of ways for the betterment to improve the communities in which they operate, while staff have of society. In the long run this is consistent with a volunteered well in excess of one million hours of their time to the company’s duty to its shareholders.” causes that matter to them. David Clarke, Executive Chairman, 1985 Annual Report 1979 Annual Report 1983 Annual Report 1985 Annual Report 1986 Annual Report Macquarie Group Limited and its subsidiaries 2019 Annual Report 5 50 years of financial service Continued 1990s The 1990s saw Macquarie accelerate the international expansion Our ongoing commitment to success demands that began in the previous decade, establishing teams and offices a continuation of our policy of resourcing the best alongside client and market opportunities across the four global personnel; young graduates from both Australia regions that now represent Macquarie. and overseas, as well as appointing experienced senior personnel.” Macquarie’s pioneering approach to financing essential infrastructure had its origins in the 1990s, alongside agriculture Tony Berg, CEO, 1993 Annual Report and power trading and innovation in Australian mortgage securitisation and car leasing. Macquarie listed its shares on The process of evolution is evident in all of the Australian Stock Exchange in 1996, with an initial value of the Bank’s businesses. There is a shared $A1.3 billion. commitment to building on existing strengths and successes, while maintaining uncompromised prudential standards.” 2000s Allan Moss, CEO, 1994 Annual Report Macquarie’s infrastructure business accelerated its growth in the 2000s, diversifying into airports, energy infrastructure Macquarie’s approach to global markets has been and utilities and successfully raising funds of broad and varied developing since the early 1990s. We remain sector and geographic focus. The decade also saw Macquarie committed to competing in markets where we complete a series of acquisitions to build its gas and power believe we can add special value. We achieve this trading capabilities, notably to create the leading position in North through organic growth supplemented by joint America which continues to grow today. ventures with local market partners and, more recently, acquisitions in niche markets.” Macquarie Group Limited was also established as a non-operating holding company in November 2007, to provide greater flexibility Allan Moss, CEO, 2001 Annual Report to adapt to future