MA Financial Group Limited (MAF) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the MA Financial Group Limited FY '21 Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Julian Biggins, Joint CEO. Please go ahead.

Good morning. I'm pleased to welcome you to the MA Financial Group full year results for FY '21. My name is Julian Biggins, and I am Joint CEO of MA Financial Group, alongside Chris Wyke, who is also in the room with me. Also here is Graham Lello, the Group's CFO; and Michael Leonard, our Head of Investor Relations. Before we go to the financial results, we have provided a quick snapshot of the group for those that are relatively new to the company on Slide 4. Key takeaways are, we are a diversified group with a number of parallel businesses where we aim to be market leaders. We've been in business for over 12 years and listed the company in 2017. The group has had a very stable senior management team, and we are focused on building a sustainable and scalable growth company. We aim to build businesses where there is an opportunity to create material value, and we have competitive edge. We take a long-term view. We now manage nearly $7 billion of AUM and have over 425 people in the business. We are very focused on specialization and having deep expertise in our chosen fields. We aim to have a broad diversity in our distribution channels and activities and acknowledge that cycles come and go. Long-term alignment is at the heart of what we do. Collectively, we own approximately 45% of the company with our original partners at Moelis & Company and alongside fellow shareholders. Since listing, we have generated over 25% compound underlying earnings growth, which has underpinned the 32% compound total share price return over the same period. With this backdrop, we'll now turn to the FY '21 result. On Slide 6. In FY '21, we've generated another record result with earnings up 52% on the prior year, with all divisions demonstrating strong growth. Net inflows exceed $1.1 billion, which is up 2.5x compared to the prior period. This underpinned AUM growth of 28% to $6.9 billion. And given the pace of this growth, our year-end annualized base fee run rate of $89 million was up almost 50% on the prior period. Corporate Advisory & Equities also had a record year, supported by conducive equity market and an active M&A environment and selective senior hires. The Lending division grew its loan book by 44% and made some significant strategic steps over the year. And with the acquisition of Finsure, we look forward to accelerating the lending strategy in 2022. We raised $120 million of new equity in conjunction with the announcement of the acquisition of Finsure, which leaves the balance sheet in great shape to support growth and future acquisitions. Today, we have announced a $0.12 per share dividend. And when coupled with our maiden interim dividend of $0.05, it takes our annual dividends to $0.17, up 70% on the period, all fully franked. All of this while we continue to invest in our platform to ensure the foundations are set to deliver future growth. Looking to the financial results on Page 7. I'll call out a couple of key takeaways. Over the year, we have grown revenue by 45% to $232 million. NPAT was up 53% year-on-year to $54.9 million, which equates to $0.382 of underlying earnings per share, up 52%. EBITDA margin was stable over the period, which is positive given the acquisition of RetPro and the significant investment in the business. We increased our return on equity materially over the year to 21%, reflecting a return to a full year of activity versus 2020, where we had a very cautious first half as the pandemic first settled in. At 31 December, we had over $240 million of cash, which reflected the group's $100 million institutional placement in December to fund the $145 million acquisition of Finsure. Even post settlement of Finsure, we still retain approximately $100 million of working capital to support future growth. The financial result today is the result of the team executing a well-considered strategy to scale our business and continually looking for the next opportunity to apply our business-building approach to underpin future growth. In summary, the business is in great shape. On Slide 8 demonstrates the consistent performance of the business and the strength of the 2021 financial result with both the first half and second half being record respective results for the group. And now turning to Slide 9. The slide demonstrates the diversity in the group and the very strong results across both Corporate Advisory & Equities and Asset Management. We continue to hone in on lending and the large addressable market of residential mortgages. As we have discussed at prior results, we're really excited about this opportunity and have continued to invest in the division to accelerate its growth. In terms of key takeaways, 33% growth in base management fees under was underpinned by strong inflows. The hospitality assets were a significant contributor over the period with valuations supporting both performance fees and noncash mark-to-market movements. The lending book grew by 44% over the period, reflecting strong growth in our Priority Income Fund. Corporate Advisory had a record year. What makes this especially pleasing is that both -- although both Chris and I spent more time focused on strategy, the advisory businesses continue to grow stronger with selective senior hires and strong leadership. Turning to Slide 10. We continue to deliver on our priorities. I mentioned earlier the strong growth in our base fee run rate that provides a foundation for our FY '22 earnings guidance. We continue to see benefits of further diversifying our distribution and investment products with the domestic distribution channel raising $450 million over the year. This is up 9x the prior period. The foreign flows continue to remain strong with both flows inside the SIV program and outside the program growing. We have utilized our balance sheet proactively over the year, securing assets in new funds and the strategic acquisition of RetPro and Finsure both represent important acquisitions supporting future growth. Our people are one of our most important assets, and we've put in place a well-considered remuneration structure this year to ensure that we have deep participation in equity plans that align long-term remuneration outcomes through our senior executives with MA Financial shareholders. We've also recently taken occupation new offices in Sydney and Melbourne, which has delivered a massive amount of energy in the business. We want to be a leading company for attracting talent and offering a unique amenity for our people with an investment for the long term. We'll now turn to Slide 12 to talk about the business activity post December 31. In terms of the quick update, we have had a positive start to the year. In Asset Management over the 6 weeks to today, we've had approximately $135 million of net inflows into our funds. We settled a 50% interest in 25 Grenfell Street, Adelaide, which was an $83 million purchase for our diversified property fund and is an iconic office asset in Adelaide. We're currently marketing Hotel Brunswick to investors, which is an established hospitality venue located in the Byron Bay region. We have high conviction about the region and have had positive early engagement with our investors. We've settled on the acquisition of Finsure and welcome John and his team to the business. While it is early days, it is very exciting to discuss what the opportunity is to diversify and accelerate the growth of our Lending division. Corporate Advisory has had a solid start to the year with a number of mandates rolling into FY '22, including our role advising Consolidated Press Holdings on Blackstone's $9 billion bid for Crown Resorts. As I previously mentioned, the performance of CA&E is especially pleasing as we've made select senior hires to bolster the depth and breadth of the team, and all have hit the ground running. On Slide 13, we reiterate our guidance from 17th of January this year for underlying earnings growth of approximately 10% to 20% in FY '22, equating to our previous range of $0.415 to $0.453 per share. As we have demonstrated, the business has great momentum, and we look forward to delivering another year of growth. As for the health warning, we are obviously cognizant of the current volatility in markets and the geopolitical uncertainty, and we'll keep the market abreast of any changes as the year unfolds. Turning to our divisions. First, Asset Management on Slide 15. As mentioned, Asset Management had another strong year with base management fee revenue up 33%. Transaction and performance fees were significant contributors at 71 basis points of average AUM, reflective of transactional activity across many of our funds and strong performance, especially from our equities, hospitality and PE/VC strategies. The scale and maturing of a number of investment strategies leads to more consistent and larger performance fees and in the case of PE/VC, an increased number of realizations. We believe this will be a trend that continues to be prevalent in our results to come. The mark-to-market contribution this year was significant at $22.6 million versus $5.1 million in the prior period. The large majority of this related to Redcape, where the funds NAV increased significantly in the second half which was supported by strong transactional evidence for hospitality assets late in the year. Importantly, the majority of the valuations were directors valuations and did not crystallize the performance fees for MA Financial. Although we would anticipate that if valuations hold, then this should provide a significant positive tailwind in FY '22. On the expense side, we continue to make significant investment in the platform to support additional scale in the future. We want the platform to be ready and market-leading. Turning to Slide 16. We continue to grow AUM across our investment strategies. The growth in credit AUM stands out and furthers the strategy to push harder into the large addressable market of credit investing in FY '18. We expect this investment strategy to continue to be attractive in the current market and see a lot of opportunities for growth. Net inflows of $1.1 billion is 2.5x the prior period of $430 million. As you can see in the numbers, real estate and credit demonstrated very material step-up in inflows. We launched a number of real estate funds in FY '21, including an open-ended logistics fund offering that was very well sought after by investors. In credit, the credit-backed income strategies continue to gain strong interest from domestic and foreign high net worth investors, and we see further upside to these flows. Our real estate credit strategies have experienced strong net inflows over the year, increasing to $370 million from $75 million in the prior period. The performance of the funds have been outstanding. Equities is a beneficiary of the SIV program and with excellent performance last year, investors were very supportive of the strategy. We believe that equities can be a larger business for MA Financial and consistent with our approach to other strategies, we continue to look actively at how to further scale this strategy beyond SIV flows. Our flows were diversified by channel as we continue to see the benefit of investing in our domestic distribution over the years. Domestic high net worth was a standout for the year, delivering $450 million of net inflows, which was nearly 9x the prior year. This was due to broader engagement with investors, tailored product offerings and support from an increased number of research houses and platforms. Foreign high net worth investor inflows were up nearly 29% over the period, which is also very pleasing with strong growth in inflows from both inside and outside the program. Our investor wagon presents well with good diversity in investor base. I do, however, note the flat result in institutional AUM. In this regard, we continue to make considerable investment in people with a focus on making sure we are marketing to institutional investors and understanding what they are looking for. We acknowledge that we need to be patient in this issue. Importantly, as a general principle, we are focused on attracting high-quality investors who are long-term minded and appreciate our specialized strategies. Having the most AUM is not always the most profitable strategy. On Slide 19, we provide a quick snapshot of some of the highlights in our real estate and hospitality strategies. In real estate, we were active across all 3 core real estate asset classes with increased activity across both office and industrial compared to prior years. As mentioned, we established an open-ended industrial fund in late 2020 and State has a pipeline of $240 million of product when completed, and the fund continues to grow. We acquired Sugar Land Plaza in Bundaberg for $140 million, which formed a single asset fund and was well supported by a development opportunity in Taylor Square, Darlinghurst in Sydney and the other being a stand-alone pub in Bendigo in Victoria, our first asset in Victoria. The platform managed to navigate the many COVID disruptions through the year and when open, the venues largely traded very well. We're very pleased with the performance of our real estate and hospitality assets despite the impact of the global pandemic and believe that the operational capabilities we have across these strategies is unique and valuable. Turning to Slide 20, we look at credit, equities and PE/VC. AUM growth in credit was $475 million or up 42% which was underpinned by strong demand for our 2 marquee credit funds, which have received a number of positive research ratings, including Lonsec supporting the Priority Income Fund. Late in the year, we launched the U.S. dollar series of our Priority Income Fund with the aim of offering our foreign investors a credit-backed USD product based on the same construct as the A dollar Priority Income Fund. This is an important entry for the business into the U.S. credit market, arguably the largest credit market in the world. Equities AUM grew by over $400 million or 85% over the year with the strategy now managing nearly $1 billion. The performance fee contribution was underpinned by strong portfolio performance. And as mentioned earlier, we believe equities could be a more meaningful strategy for us in the future. It has both scale and addressable market traits that we look for when thinking about future growth opportunities for the group. Our PE/VC strategy continues to be an important strategy for securing our SIV investors, and the performance of the underlying assets has been positive over the period. Realizations are expected to become more frequent as this strategy matures, and we are currently into our third VC fund having invested in over 22 high-growth private Australian companies. We've only realized 5 of these investments. All of our investment strategies are gaining in scale. And as this occurs, we continue to build on track record and broader awareness of what we do. The strategies all have deep market and broad appeal for investors, which should support long-term growth for the group. Now turning to the Lending division. Lending is our newest division. The focus in 2021 has been on building a scalable platform to position MA Financial to capitalize on positive tailwinds such as the rise of nonbank lending in a large addressable market. Our loan portfolio grew at a healthy trajectory, increasing 44% to $455 million, while our revenue increased 30% in FY '21. The significant investment we made in operational capabilities did somewhat drag on our return on invested capital, which was 12.2% for the year. Lending's NIM, or net interest margin, of 5.3% reflects the strategy we have previously foreshadowed for shifting our lending activities towards residential mortgage lending, which is lower NIM, but highly scalable compared to Specialty Finance. In December, we announced the acquisition of Finsure, which is an important strategic acquisition for the group and one that I'll talk through in a couple of slides. One of the strengths of our Lending division is its ability to work closely with Asset Management to design products that provide unique funding options for the division, which accelerate growth options for both divisions. Turning to Slide 23. Invested capital in Lending increased to $92 million over the period. This largely reflected an increase in our co-investment stake in the Priority Income Fund units in both the AUD and USD funds. We continue to explore opportunities to optimize our invested capital. Pleasingly, the AUD Priority Income Fund has experienced strong demand over the year, increasing from $195 million to $311 million, up 59%. Our strong track record and the nature of the return being a margin over the cash rate means we are seeing deeper interest from a broad base of investors for this product. On the back of this success, we launched a USD Priority Income Fund in late 2021. While it is early days for this fund, we're very excited about its prospects for growth. The structure is nearly identical to the Australian dollar PIF, where we take a B class unit, provide investors with a preferred return and then earn NIM on the spread. As with many of our new strategies, we've put a toe in the water in the U.S. around a U.S. dollar credit product, and we'll continue to assess other opportunities as we go. Turning to Slide 24 and Finsure. In December 21, we announced the acquisition of Finsure for $145 million. Finsure is a leading Australian mortgage aggregation business with a book on platform of almost $60 billion focused on Australia's $2 trillion residential mortgage market. Finsure adds technology-enabled distribution infrastructure to loan products at scale to our Lending business. It has a simple business model, which is a combination of platform fees, activity fees and other revenues such as white label commission. Finsure enhances our exposure to recurring revenue streams in the large residential lending market with positive tailwinds. The platform offers over 4,800 loan products from a panel of 65 lenders to a network of more than 2,000 mortgage brokers. It is highly complementary to our proprietary capabilities in credit, lending and technology. Importantly, Finsure is led by a highly regarded and experienced management team who are committed to the growth journey with the group. We now turn to Corporate Advisory & Equities. Corporate Advisory & Equities had a very strong year, generating a record result of just over $68.6 million of revenue and $21.9 million of EBITDA, up 58% on the prior period. The revenue per executive was in the middle of the band of $1.2 million with a broad contribution from all of the sectors of specialization. M&A was a significant contributor to the year with a number of key transactions for the group, including the Speedcast restructure, acquisition of Halcyon by Stockland and the acquisition of reconstruction experts by Johns Lyng Group. A number of these mandates are global and showcase the strength of MA Financial and Moelis & Company working together. Pleasingly, the broad contribution from the managing director cohort is a real positive. Over many years, we have carefully curated the expansion of Corporate Advisory with a focus on methodically adding expertise that can be successful in our business model. It is also pleasing to see the natural succession of senior members within the business to take it to a new level. Slide 27 shows that seasonality was right on the 60-40 split this year with a skew to the second half, which is typical in this business. Slide 28, a snapshot of some of the deals we've worked on through the year. And Slide 29 shows a table that we show each reporting season to demonstrate the consistency within our Corporate Advisory business. The table talks for itself, although we do tend to hit within the $1.1 million to $1.3 million range in a majority of years. The pleasing thing out of this table is the increased headcount in recent years, and we still retain productivity and, therefore, profitability. We are very selective in how we go about building this business, and we are focused on doing it profitably. I will now pass over to Graham to talk through the financials before wrapping up with strategy and Q&A.

Thanks, Julian, and good morning, everyone. Starting on Slide 31, we've talked a fair bit about our revenue growth and resilience today. So I thought I would touch on the expense side of the equation. And in particular, our continuing investment in platform and talent. As we mentioned at the half year result, we expected a continued increase in compensation expense, and this is how it turned up, with the increase split between both fixed and variable comp. Some factors impact both components of comp, with headcount being the most material driver. Excluding the impact of RetPro, organic headcount grew 34% over the year, and this growth is expected to continue as we invest in the platform. A significant driver of variable comp is also increased revenue. And given our strong result, this has stepped up. Most importantly, though, is we have maintained our comp ratio at our target of 50% and EBITDA margin in line with the prior year. The combination of increased earnings and our strong cash conversion has resulted in us declaring a $0.12 final dividend and when combined with our maiden interim dividend of $0.05, reflects the 70% increase on the prior year. While this is a great result for shareholders, we have stayed within our dividend policy range of 25% to 50%. And this means we have balance of good levels of operating cash for future investing. And on the topic of cash and investing, over the page on Slide 32 is our operating balance sheet, which we present because we think it gives a simple view of both our economic exposures and the capital available to us to allocate. The key highlight in the year was our successful cash levels returned to a more normalized position, in line with the $100 million of average cash we maintained across 2021. Borrowings remain unchanged in the period, and we are comfortable with the current levels of debt. Although we may look at new, more flexible instruments as we reshape our debt capital structure in 2022. Looking forward, I don't see any change in our approach of maintaining a dynamic but prudently capitalized balance sheet. It certainly stood us in good stead and allows us to not only invest in existing platform growth, but also explore new opportunities. And over the page on Slide 33, I'll touch on some of those investment highlights. We were particularly active in the second half, which was a continuation of the first half's momentum. On this slide, you can see we continue to support the ongoing growth of the Lending business in the period, which included seeding some $15 million into our new U.S. dollar PIF strategy, which we are really excited about. We also successfully churned some of the seed capital and bridge funding of our fund co-investments, and this, coupled with the realization of our Japara stake, gave us confidence and firepower to commit to the Finsure acquisition and still retain good levels of capital for ongoing growth. This dynamism talks to how we think about and position our balance sheet for growth. The recycling of capital is a clear focus in this regard, and I believe a real strength of ours. All in all, across 2021, we rotated out of some $80 million of assets and reinvested $60 million into new opportunities. And a real feature of our capital recycling in the year was the maturity profile of our longer-term investments, with the return of this longer-dated capital making up a large part of realizations. And this only comes with time in the game, and it gave us additional confidence and capital to continue to look at new opportunities. And so with some great earnings momentum and a strong balance sheet behind us, I'll now hand back to Julian to talk you through our strategic outlook.

Thank you, Graham. So in terms of the strategic outlook, Slide 35 really demonstrates our strong focus on building businesses, and this slide provides the evidence of how our method translates into results. We look to leverage our platform into large addressable markets where we have competitive edge and in establishing a well-considered strategy and executing on it. We've balanced investing in new ideas with letting the business scale and seeing the benefits flow through to investors. This has always been a strong focus for us, and we are aligned as fellow shareholders. One of the benefits of our increased scale is that it becomes easier to accommodate both strategies as long as we are sensible about how we seed and start new initiatives. Lending is obviously the newest addition to be made public, and we have others that we are working on that we hope will support future growth. Turning to Slide 36, where we talk to our medium and longer-term investment philosophies. We're a builder of valuable businesses in large addressable markets. We focus on scale and diversity in distribution channels. We diversify our source of capital, and we have a strong balance sheet to support growth initiatives. Our advisory capabilities provide technical edge and our stable and experienced management team is strongly aligned with investors. In closing, the business has had another great year, and the tailwinds are significant. We are really pleased with where we sit today and look forward to executing our consistent strategy over the many years to come. With that, I'll hand back to the moderator for Q&A.

[Operator Instructions] Our first question comes from Nick Burgess from Ord Minnett.

Julian, Graham and team. Just a few questions. Just wouldn't mind starting with the Lending business. So just how should we look at the $2 million of additional cost that's gone into the business from an investment perspective? Should we look at this as you've done well elsewhere in the business, so it was an opportunity to sort of tactically invest, if you like? Or are you preparing that business for the arrival of Finsure? Just from your perspective, how should we look at that? And I guess the broader question is how quickly do returns and margins sort of bounce back from that depressed second half levels?

Yes. Sure, Nick. So it's Chris here. I'll take that question. In terms of the increased cost of Lending business, first thing is to identify where it's going because it can put in perspective what we expect to happen. So there were really 2 buckets that, that cost went into. The first was in relation to MKM. As you know, I think it was October, November 2020 that we concluded and settled on that transaction. And thinking through around enhancements of that platform to build it to scale resulted in a fair bit of costs coming in, in the second half of the year as we build up that platform to cater for digesting larger volumes. The second bucket of costs was in relation to the work that we had done over the year and with a heavy back-end emphasis again in the calendar year of establishing the U.S. dollar PIF and that is extremely embryonic, but that's something that we're disclosing to the market. And so we anticipate that the returns will creep back up as that has been a fair bit of heavy lifting on costs that have gone into both those angles. So it will be a staggered approach to come back on the returns. But I think we've had the majority of the costs come through to the platform, which should now enable scale. And this is a broader thing that you get with our business where we're constantly grappling with growth and letting things drop through to the bottom line and investing in the platform to further diversify and enable us to tap these other markets. So I think there'll still be some costs, but it won't necessarily be as much as it has been in the last calendar year.

Yes. Okay. And since we're talking about the Lending business, just with the arrival of Finsure, I mean, I guess, there are long-term plans. The immediate priorities for this Finsure business is, to what degree will that be integrated into the existing platform? Or do you sort of run it in a slightly separate fashion? And at what point do you start thinking about manufacturing product that could potentially be distributed through that platform?

Yes. So with respect to the comments around integration, a key philosophy of ours is to empower the people that are experts in those business areas to run them as they see fit. And that's philosophically how we approach things. Locationally, we're thinking about taking steps to see them closer to our operations in the respective locations that they also have a presence. Clearly, part of the thesis on acquiring Finsure really was around combining the various bits of the jigsaw puzzle that we have in the Lending business to create the most optimal high-performance engine we possibly can, bringing to fruition over the coming year, absolutely.

Yes. Okay. All right. Yes, I appreciate it's early days, but that helps. I might just ask a couple more questions, if I may. Just on the Asset Management business. Broadly, clearly, a very strong year over the last 12 months in the slow run rate. The first 6 weeks looks broadly in line with what's been achieved over the last 12 months, although you could argue perhaps that, that run rate has been maintained through a seasonally lower period. Just broadly and part of guidance, are you thinking that a good outcome for the Asset Management business is that those flows build in momentum over the remainder of the year?

Yes. Nick, I guess, that's -- that would be a fair way of framing it. I think where we see the sort of various businesses is the Significant Investor Visa program, absent the new class of sort of visa. It's a maturing business, for want of a better term, but it's still growing, and it's growing strongly over '22 and '21, but it's not the same growth rate that we experienced in the early days, and that would be totally expected. In terms of the domestic retail funds flow, that have obviously been coming in very strongly through the year with the number up 9x the prior period, and we're really seeing the benefit of it being on platforms and the performance of our investment strategies, especially in credit, attracting those flows. So we anticipate that they should strengthen. And then the other bit that really excites us is the discussions that we have with existing Significant Investor Visa investors that are investing with us outside of the program, and those numbers continue to grow strongly as well. And I think we called out about 40% growth like on like for those foreign investors outside of the program. So we do see growth. Institutional is something that we do chip away at, and we've got considerable resources in the platform, having those conversations with institutions, albeit we are, as I said, patient about that prospect as well and finding the right partners for us.

Yes. Okay. And is there any sense with the lower level visa program, the SIV light, for want of a better expression? Is there any sense of what that looks like in its early days?

We have a lot of inbound interest about it. So through both the agency platforms and direct investors. It's early days in terms of the processing with government. So we're yet to see the sort of time frame that it takes the process, but they could be a bit more extended than the original Significant Investor Visa program. So we're pretty optimistic about it, but it's yet to sort of, I guess, fall through to actually people being approved under the program. And yes, it's not underpinning a lot of our sort of forecast. It's something that would be beneficial, albeit not expected.

Yes. Okay. All right. That makes sense. Again, early days. Appreciate that. I mean, just in terms of the corporate -- sorry, just sort of around the grounds kind of a vibe to my questions. But just looking to the Corporate Advisory sort of area. Headcount of 51. I don't have in front of me whether that was the average headcount or the year ending headcount. But I guess, with your guidance around revenue per senior head, what are the plans around actual headcount over the next 12 months?

Yes. So the 51 number was average for the year. We have made a number of hires at the beginning of this year, senior hires, revenue-generating hires. So we're investing in the business, but we are very cautious of the way in which we do it to ensure it's sustainable. So the starting headcount for the year, Mike, is 58. And we're continuing to look at a few more senior highs, and we retain our 1.1 to 1.3 guidance.

Okay. That's helpful. And just lastly, just in terms of the head office costs, there was a step-up there. Just conceptually, should we think of that as being related to the Corporate Advisory area, i.e., strong Corporate Advisory performance then drives sort of bonus levels and discretionary compensation at the head office level or they're not -- it's not as related? And I guess the implication -- if that's the case, then there's sort of significant investment that's gone into head office?

I'll let Graham answer the detail, but I think you've got to look at the corporate function as more of a holistic function that oversees the whole business. And then in terms of -- yes, the detail of the numbers, Graham, I think.

Yes. Sure. I mean, Julian is right. If the corporate function is picking up our Board, some of our functions like risk and compliance and the marketing operations and HR, things along those lines, I think the key thing to understand there is that also we've got a little bit more of an allocation of Chris and Julian coming into there as they've moved into the role. We have been investing in this space as we're investing in our asset management platform, we're investing in our corporate support platform. And I think the other side of things is there is a linkage to overall group revenue from a variable comp perspective.

Yes. Okay. But presumably that the overall compensation ratio sort of target 50% still is in place.

That's right. So we've -- its captures all of that, and we've maintained that across the group for the year.

Clearly, as time goes on and we build out the functionality within corporate, you'd expect to get leverage across the whole business from that function and as it supports the growth of the individual, I guess, parallel businesses. And this is, as Chris said earlier, yes, it's important for us in terms of empowering those businesses and have corporate help facilitate the growth of the business, and you get leverage as they scale.

[Operator Instructions] Our next question comes from Glen Wellham from MST Financial.

Congratulations on a great result. Just wondering, have you seen any tailwinds from COVID restrictions easing. And what are your expectations going forward?

I think that's a good question. I guess our most impacted businesses around sort of retail and hospitality definitely had some COVID headwinds over the last 2 years. And I think FY '21 playing FY '20 was less headwind, but there's still definitely headwind in sort of venues being shut for a period of time. And also, that translates through to fees. I think besides ignoring that, yes, there's no -- but putting that side, the pubs are actually trading exceptionally well, and we see the start of the trade in terms of January, February in the current period, they're trading well as well. So we think that that's reducing over FY '22, but you can't be 100% sure of that. In terms of the retail shopping centers, again, I think you've seen some commentary in the market recently around the sort of trade at retail shopping centers. They definitely bounced back pretty quickly, and we've seen that as restrictions have certainly eased in the last a couple of variants of the, I guess, the lockdowns. Yes, one thing I'd say is a little bit different this time is sort of it's less regulated -- or sorry, it's less government regulated and it's more personal decision. So that's playing out a bit differently this time, but we are seeing the retail shopping centers start to trade better as the sort of year goes on. So we don't anticipate a lot of disruption this year from COVID. And we think that we've actually got a fair bit of tailwind in our numbers from seeing the disruption be less.

Your next question comes from Mark Skocic from Kinetic Investment Partners.

Good result. Julian, you sounded really excited about the U.S. dollar PIF product you've actually introduced. Can you just expand a little bit on that? And what we sort of should expect to see over the next couple of years as you source funds from that part of the world?

Yes. Thanks, Mark. It's Chris. I'll take this one. We are super excited. So the U.S. dollar PIF, the way in which to think about it, Mark, is a very, very similar structure to the Australian dollar PIF that we have. And we've really sought to continue to apply our philosophy of saying where is our expertise and edge, what are large addressable markets and couple that with what do our clients and investors seek. And after discussions with our partners in the U.S., Moelis & Company, we've been introduced to the ability to put capital to work and marry up the largest global credit market with investor appetite for funds. And so we look at the growth that we've had and the following that we've had for our Australian dollar PIF and that can only get to a [ final analysis ] size in our market. But the structure is really good, and it really resonates with investors. And the investor base has that demand for U.S. dollar products. So if that can be replicated, I think the growth potential coming from the U.S. dollar product is not going to be capped out in the same way that the Australian dollar product will be due to the nature of our market. It is a deep, diverse and liquid market in the States. So it's something that we've been working out for quite a long period of time, and it's the first that we've made mention of it. The Australian dollar PIF experienced very modest growth in its earlier months. You have to get your portfolio diversified and set. The good news is that we've got a number of different investments. It's around about USD 20 million right now, and the investor interest is really starting to trickle in from what we had is a very, very low key start to that fund at the end of last year. So I think the prospects for growth on this are really quite considerable, but it does take time to ramp up. But we've seen the leading indicator from our Aussie dollar PIF that gives us confidence to spend the money, time and effort to initiate this.

There are no further questions at this time. I'll now hand back to Mr. Biggins for closing remarks.

Okay. Well, thank you, and thank you for your time today. It was a big day in reporting. So we look forward to catching up with you where we can and hopefully the reporting season goes well.

Goodbye.

That does conclude our conference for today. Thank you for participating. You may now disconnect.