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

Ladies and gentlemen, thank you for standing by, and welcome to the MA Financial Group FY '22 Results Briefing. I would now like to turn the call over to Julian Biggins, Joint Chief Executive Officer. Please go ahead.

Thank you, and good morning, and welcome to the FY '22 Full Year Results for MA Financial Group. My name is Julian Biggins, joint CEO of MA Financial. I'm joined here today by my fellow joint CEO, Chris Wyke. Also in the room for today's conference call is Graham Lello, Chief Financial Officer; and Michael Leonard, Head of Investor Relations. Before we commence this morning, I'd like to acknowledge the traditional owners of the land and pay our respects to elders past and present. I'm pleased to report another record result today, building on last year's momentum and performance. I'll now turn to Slide 7 and some of the key highlights. Our key financial statistics have all grown significantly over the period. At a group level, underlying revenue exceeded $300 million for the first time, up 41% on the prior period. Underlying earnings per share is up 29% to $0.383, and this underpins an 18% increase in fully-franked dividend to $0.20 per share. Over the last 2 years, the group has increased underlying earnings by 60%, and our dividend has doubled from $0.10 to $0.20 per share. Our divisional metrics were also strong with AUM up 13% to $7.8 billion, underpinned by record gross inflows at $1.5 billion. The strength of these flows is obviously very pleasing when considered against the variable market conditions and demonstrates the strength of our diversified alternative asset offering and our unique distribution channel. Residential and specialty lines doubled as we continue to benefit from the relationship between our credit investing and lending and technology businesses. We expect this number to grow quickly as we accelerate our growth in the $2 trillion residential lending market. The underlying performance of Finsure has been very pleasing with the quantum of managed loans increasing to $91.1 billion over the period, up 37%. Corporate Advisory and Equity has delivered a resilient result given market conditions with some timing differences in floating transactions impacting the overall results. The numbers demonstrate that MA Financial is delivering on a well-executed strategy and the diverse nature of the business provides us with the ability to navigate cycles. Turning forward to Slide 8 and some of the detail around our results. The FY '22 result was strong across all group metrics. 1% underlying revenue growth was underpinned by a nearly 50% increase in asset management revenue, which was driven by continued growth in base management fees, a strong performance fee contribution and the settlement of Finsure in February '22. Underlying earnings per share was up 29% after allowing for ongoing investment in future growth opportunities and building out the platform. Expenses increased 36% over the year. We see the level of expense growth moderating as we gain the benefits of scale, especially in the asset management business. MA Financial remains well capitalized with nearly $100 million of cash at the bank at the end of the year and the addition of the $40 million working capital facility and extra flexibility. I'll now turn to Slide 9, which illustrates our track record of growth. The financial metrics on this slide all validate our strategy to issue growth. We're very focused on scaling the business whilst also maintaining a level of investment to support future growth, and this has been reflected in our growth to date, with some periods of very strong growth and periods of consolidation. Now turning forward to high-level divisional performance on Slide 10. One of the main highlights on this slide is Asset Management's EBITDA growth of 78% on the prior period and also the division contributing nearly 80% of the group's EBITDA. We'll save the detail on each division for later in the presentation and turn forward to Slide 11. We continue to focus on executing on a consistent strategy. At the end of December, our recurring revenue run rate from asset management was $138 billion per annum, up 22% on the prior December. This, coupled with Finsure's run rate of $24 million provides over $160 million of recurring revenue to start FY '23, which provides us with a great foundation to start from. Growing our recurring revenue has been a core strategy for the group from the beginning, and the results demonstrate that we are executing well on this strategy. The uniqueness of our distribution platform delivered against -- again with record gross flows of $1.5 billion and non-migration-related flows up 70% to $1.3 billion. In FY '22, less than 18% of our gross flows were from migration-related investor channels, which demonstrates the diversity in the distribution channels and our ability to adapt to changing conditions. We've always chosen to build out deep operational expertise to manage the assets we invest in, having in-house operational expertise delivers better results to investors. We've done this in both hospitality and real estate and also credit investing, where we have originated over 75% of our credit investments in-house or over $2 billion of loans for our investors. Our lending and technology platform supports the credit investing team with deep insights and operational expertise that both provide access to new products and enhances decision-making. Over the last decade, we've invested a lot of time and money into building out a scalable asset management business. We are starting to see operating expense growth to moderate in asset management as we now have the investment strategy team largely in place, our distribution platform scaled and have commenced on the path of digitizing our systems. The balance sheet remains well placed to take advantage of opportunities, and we continue to actively manage our assets. Over the period, we sold $30 million of Redcape securities, which provide seed capital to support the growth of new initiatives in the business. We continue to hold an $85 million investment in the fund, and this is a great example of recycling capital to support growth. Talent is key to what we do and whether it's providing the best amenity the right development program through MA Academy, or the best performance-based incentive structure, we are always thinking about how to ensure we retain the absolute best team and culture. We spend a lot of time on people and have deep talent across the business to drive shareholder outcomes for long term. Turning forward to Slide 13. The momentum from FY '22 has rolled into the first 6 weeks of FY '23. Asset Management has had a good start with flows into our funds continuing at a record pace. In the first 6 weeks, we have received $252 million of gross inflows, which compared to $111 million in the prior period and our AUM hit $8 billion in February. The credit funds continue to receive strong interest from a variety of investors, both domestic and international and covering investment platforms, wholesale and institutional investors. We continue to open up new markets to distribution and are well progressed in opening a Singapore office to focus on marketing our products in the region. Within the Asian region, Singapore represents a significant opportunity for us with the target market very familiar with Australian alternative assets. MA Money has commenced offering suite of products to the broker market, and we have seen significant interest from brokers and end customers. In the third 3 weeks of February, we have settled $20 million of residential loans and currently have over $80 million of loan applications. This is a very good start to MA Money and hopefully bodes well for reaching scale quickly. Our middle technology offering has been well received in a pilot program, and we expect to move to a broader rollout shortly. In corporate advisory and equity at the start of FY '23 has benefited from a couple of deals that were largely completed in FY '22, although will be booked in FY '23. The transactional pipeline remains strong. We've got notable engagement being our advisory role on the sales of Sun cables. Equities have started the year better with volumes up and general market sentiment, all positive than last year. We should support equity capital market activity, which was materially down in 2022. Finally, earlier this month, we were pleased to announce the appointment of Giles Boddy as a new Chief Financial Officer for the group. Giles is a highly credentialed financial executive. We look forward to implementing with the business in March. It replaces our current CFO, Graham Lello, who has been a tremendous asset to the business, and we thank him greatly for his effect over the nearly 6 years, and we'll hear from Graham a little later on the financials. Turning to Slide 14 and the outlook for the group. In terms of FY '23, the momentum in the business is strong, and we have invested materially in future growth options. In regards to the various divisions, we make the following comments on outlook and we'll provide additional clarity as the year progresses. In Asset Management, we anticipate recurring revenue to continue to grow, underpinned by embedded revenue growth from last year's inflows and an expectation for inflows that grow in FY '22 base. Performance fees are expected to normalize in FY '23 and return to levels more akin to prior years. Our pace of investment in asset management is slowing, and we expect to see some scaling benefits in FY '23 and more in FY '24 and beyond. In lending and technology, the pieces of the lending ecosystem are largely in place, and we are now accelerating the launch of our product and tech offering to the market. Finsure continues to attract brokers and gross loan book and coupled with our technology offering is well placed to grow. From a market perspective, we expect the Finsure platform to benefit from the $350 billion of fixed rate mortgages maturing in FY '23. In the second half of FY '22, we invested significantly in rebuilding MA Money and see this investment peaking in FY '23 at a $7 billion to $8 billion EBITDA loss. We anticipate MA Money should be breakeven on a run rate basis in early FY '24. And the target for MA Money for us to deliver $15 million to $20 million NPAT to the group by FY '26. We're targeting $1.1 million to $1.3 million per head in corporate advisory. Our business has been incredibly resilient over the last 14 years, and our track record of achieving its target or thereabouts is strong. With the equity volumes bouncing a bit in FY '23, which should support a strong contribution from our cash equities business. Overall, the business is trading well, and we look forward to updating the market as the year progresses. So turning forward to Slide 16 and a deeper look into asset management. Before we dive into the financial performance, I just wanted to spend a moment on some of the core philosophies in our Asset Management division. We are active managers of alternative assets. We have always focused on building deep operational expertise in the assets we manage, whether it's MA hotel management and hospitality, RetPro and real estate or lending and technology and credit, with deep operational expertise in the underlying investments. We manage alternative assets that generally have longer investment horizon that benefit from this operational capability. We are generally not traders of assets. We originate assets, underwrite risk and then monitor and actively manage the assets to maximize and realize the potential for our investors. We have access to a diversified pool of funding, whether it's banks, balance sheet or third-party investors. We've been focused on diversifying these sources over time to ensure that we can navigate through the cycle. We value diversity from a risk perspective and appreciate that market cycles occur, and the appeal of certain investment strategies will also fluctuate through the cycle. Asset management has been built on these fundamentals, and we believe that it ultimately delivers investors better outcomes in terms of performance, which builds our track record and enhances our reputation. Please now [ talk ] to the financials on Slide 17. Asset management has had a great year delivering 78% EBITDA growth year-on-year. Recurring revenue is up 36%, underpinned by significant inflows into our credit funds. The credit thematic is expected to continue to benefit from macro tailwinds and a higher interest rate environment and demand for fixed income products as the population ages. Performance fees are also highlighted for the year with a significant performance fee earned in hospitality as the assets benefited from strong operating performance and transaction evidence supporting valuation. As a note of detail, there have been a few adjustments in the way we classify our credit fund income this year with the priority income fund revenue and expenses moved from lending to asset management and the real estate credit origination fees moved from transaction fees to recurring credit fund income. In relation to the priority income fund, the change reflects the fact that the income all relates to the third-party managed funds, therefore, it belongs in asset management. In regards to the real estate credit origination fees, the nature of this revenue stream and the tenure of these lines makes these origination fees more recurring in nature as the fees will be earned if the funds remain in place, and therefore, we've incorporated a recurring credit fund income. Now turning forward to Slide 18. Our assets under management continue to grow in a diversified way. Our full year AUM CAGR is in excess of 20% [ per annum ] , all organic growth, and we have been able to do so while maintaining or growing our base margin of 1.1% to 1.2% of AUM. Turning forward to Slide 19. Funding flows were very pleasing over the period and especially when you consider the uncertain market conditions and how our peers performed. As we mentioned, credit funds attracted nearly $1.1 billion of gross flows over the period, nearly double that of last year. Hospitality flows recommenced after delisting Redcape in October 2021 and relaunching the private fund structure. Real estate fund flows were impacted by a number of divestments and our cautious position on the real estate market, especially in the first half of FY '22. In the second half of the year, we acquired Allendale Square opportunistically and raised $70 million in a closed-end fund. From an investor channel perspective, the diverse thing in our distribution channels delivered again. Gross domestic flows were up 26% on the prior year, with broader platform access, delivering strong flows into our credit strategies and hospitality being reactivated post-delisting. International non-migration flows doubled over the year to be in excess of $500 million. The momentum continues in this channel, and it's very exciting to see the success of the strategy to diversify our distribution capability internationally. It really is a very unique and valuable channel. Migration flows were lower on the back of COVID disruptions in China and Hong Kong, which impacted processing [indiscernible]. Migration flows accounted for approximately 18% of gross flows and 15% of net flows. Institutional flows were $141 million over the year, which was pleasing given we were still in the early phase of addressing this market. Despite this, we are pleased that our track record and investment strategies are appealing to a number of institutional clients. This slide highlights the [ diversity unites of ] our asset management business. Our funds are being established to attract long-term capital looking to invest in alternative asset classes where we have deep operational expertise. Now turning forward to an overview of our AUM by investor channels. Diversity is the key game with the Wagon wheel demonstrating that AUM continues to both grow and diversify. So now turning forward to Slide 21. We close out the asset management section, we just wanted to spend a moment on how credit investing and lending and technology work closely together to provide a unique offering to our investor base. As we've talked about, the credit investing business has grown very strongly in recent years as we have honed our strategy and built scalable funds with track records. Since 2017, the AUM has increased 6-fold, and we have witnessed its growth accelerating in recent years. We believe this trend will continue. The ability to originate assets in-house is an important one. Of the $2.5 billion of credit investments, we've originated over 75% in-house. By originating assets, we ensure the risks are intimately understood and our underwriting standards are adhered to. In regards to how this works with lending and technology, we've built out platforms that provide access to products, insights into credit quality and market conditions for real-time data to provide in-depth analysis. We have deep operational expertise in the assets we manage with the goal being to deliver superior outcomes to our investors. I will now pass over to Chris to talk through the next couple of sections of the presentation.

Thanks, Julian. So turning to the Lending and Technology division on Slide 23. During FY '22, we continue to make significant investment into our lending and technology platform. The strategy behind this investment is to create a tech-enabled highly scalable lending ecosystem that generates fee-based income, spread income and delivers primary origination investment product to manage funds. Now this strategy is [ consistent ] with our overall strategic framework that we talk to every year, which is being a builder of valuable businesses in large addressable markets. And the Australian mortgage market is large, it's in excess of $2 trillion. And our lending and technology platform touches over 350,000 borrowers -- by 2,640 brokers and 80 lenders. And [indiscernible] loan settlements were around about $3.5 billion per month. As Julian mentioned, we have a strong history and expertise in credit and lending through the asset management and advisory platforms. And again, I reiterate that these platforms generated over 75% of our $2.5 billion in credit fund investments. This ability to source capital from our managed funds is a considerable advantage to scale our lending activities in a capital-light manner and manufactured credit product for investors with powerful data and market insights from our lending ecosystem. On Slide 24, you can see a graphical representation of how we view the components of the ecosystem that we have built all working together on the outerwear of all the various business initiatives we have, these all contribute to delivering the key components of the ecosystem, which are the data insights, technology and service, capital management and efficiency and asset creation from direct lending. This integrated ecosystem is difficult to replicate and powerful. The components work together to better drive revenue generation across our various businesses, fund management and transaction fees in asset management. These and white label commissions within Finsure, fees from the middle software and spread income within our main money. Now turning to the financial performance of lending and technology on Slide 25. Now it's important to remember that the build-out of this platform continued during FY '22, including the $160 million acquisition of Finsure and MA Money in the first quarter. As such, there are a few moving parts behind the underlying EBITDA movement from '21 to '22, which are easier explained by looking at the components of technology and lending separately. So on Slide 26, this sets out the underlying financials for the technology platform, which comprises Finsure and middle. As Finsure was purchased in FY '22, a middle was in product development and CapEx spend in FY '21, there was no underlying P&L impact from this business in the financial year for '21. FY '22 reflects 11 months of Finsure performance and some minor expenses from middle as it moved from development stage to operational. We've been very pleased with the performance of the Financial business since acquisition. The underlying EBITDA has performed better than expected, driven by strong growth in managed loans, which were up 37% year-on-year for open numbers, which were up 24% and the revenue per broker on the expanded broker base marginally up. Slide 27 shows a longer-term graphic of these measures in addition to the broker market share that Finsure has, which has more than doubled since December 2016 to sit at just over 14% as of December 22. This success underpins our belief that Finsure as a differentiated customer proposition for the brokers with value-adding service innovation and technology. Now moving to our lending platform on Slide 28. This includes our specialty finance activities as well as our residential lending operation MA Money. There's been a fair bit of evolution and investment in this business during '22. So I'll spend a bit of time explaining the 2 key changes in the year. The first key change was in specialty finance where we successfully executed our strategy of using our balance sheet and platform to originate assets for our credit funds. The impact of recycling these assets into a credit fund is that less spread income has been made for the year as the asset returns now go to managed fund investors, hence, the decline in spread income from specialty finance from $13.8 million down to $7.3 million. You can also follow the associated reduction in our balance sheet below in the performance drivers. The average invested capital that we had across our lending platform declined from $54 million down to $13 million. Although this capital made less return in absolute dollars, it work more efficiently for us in FY '22. As you can see, the return on average invested capital in specialty finance increased from 19% to nearly 63%. The second key change has been in MA Money. The increase in spread income from FY '21 to FY '22 stems from the acquisition and full consolidation of MA Money from March. I'll also call out the expenses increase in FY '22, which drove the associated EBITDA loss for the year. The increase in expenses largely relate to the cost of platform transformation with M&A money that we incurred. It was around $4 million for the year and has led to the complete brand refresh and digitization of the platform with a revitalized and enlarged team. So a fair few moving parts on this slide, leading to the overall EBITDA decline given the loss of income from the asset recycling to managed funds and increased expenses given the investment into the platform. The understanding of these moves hopefully gives insight into the uniqueness and power of our business model. And you can see this more graphically represented on Slide 29. A combination of the asset management business and our lending business allowed our loan book to increase 98% to $393 million and our invested capital to decrease by 81% to close the year at $8 million. The ability to tailor make product for our asset management clients and considerably grow our lending activity in a capital-light model or flexible model is highly synergistic and efficient. I'll also step through the corporate advisory and equities performance for the year. On Slide 31, you can see the underlying divisional financials. Our loan EBITDA was down 37% on FY '21 to $13.9 million. This was largely due to challenging equity capital market conditions and equities revenue being impacted by softer market volumes. Corporate advisory fees were, however, resilient despite this weaker ECM activity but ended up down 7%. This represents revenue per executive of $1 million, which is slightly below our target productivity range of $1.1 million to $1.3 million. The business advised on $13.9 billion of transactions during the year, up from $5.8 billion from FY '21. As you can see on Slide 32, activity was broadly spread across industry segments, highlighting the increased breadth of capability in the business following recent key hires. Expenses were in line with the prior year despite average advisory head count growing from 51 to 58 employees. We'll continue to develop and grow the Corporate Advisory and Equities business, but we'll remain selective in our approach to hiring, always pay in regard to the maintenance of the revenue per executive target range, cost discipline and a consistency of productivity in the business over the long term, which you can see on Slide 33, expressed in terms of revenue per executive going back 13 years to 2010. At this point, I'll now hand over to our CFO, Graham Lello, for a more detailed summary of the financials.

Thanks, Chris, and good morning, everyone. Starting on Slide 35, I thought I'd briefly touch on our OpEx drivers for the year. In this regard, there are 2 key impacts running through our results: One, being acquisitions and the second, our continued platform investment. The acquisitions alone added over $20 million of CapEx of OpEx in the year with this figure set to be slightly higher in 2023 as we cycle the full 12 months of ownership. On the platform investment side, 2022 saw material investment in head count, with compensation expense increasing accordingly. While the annualized effect of these new hires will be felt into 2023, expense growth will moderate significantly following a reduction in hiring activity from Q4 and some more recent consolidation activities. While fixed comp increased variable comp was restrained, reflecting a disciplined approach in light of current market conditions. Other key expense items relate to our investment in new [indiscernible], with associated costs up over $9 million in the full year. Feedback on the offices have been fantastic, and we expect them to be an ongoing advantage as the work environment continues to evolve post-COVID. Pleasingly, despite these expense increases, we've managed to improve our margins. And the combination of increased earnings and strong cash conversion means we have increased our full year dividend to $0.20. While this is slightly above the top end of our payout range of 50%, we are confident in how we have balanced shareholder returns with the retention of good levels of cash for future investing. And on the topic of investing over the page on Slide 36 is our operating balance sheet. For those of you that read our standard accounts, you'll notice a much changed statutory balance sheet against the prior year, with gross assets and liabilities increasing to incorporate our lending securitization structures and Finsure's commission [ trailable ]. On the other hand, our operating balance sheet, which you can see on this slide aims to present a simpler view of both our invested capital and true economic exposures. The key highlight in the year was the successful acquisition of both Finsure and MA Money, with approximately $120 million of capital raised at the tale of the year utilized for this purpose. It's worth pointing out that both cash levels and the [ NPA were obviously ] higher than the prior year because of this capital raising. And now following settlements, both metrics have returned to a more normalized position at year-end. Another highlight was the implementation of a new $40 million revolving corporate debt facility. This facility, which is currently undrawn, not only enhances our balance sheet flexibility to give us another lever to optimize our use of capital. Overall, borrowing levels were unchanged in the period. However, we did successfully refinanced $25 million of maturing notes, extending their tender by 5 years and fixing their coupon at 5.75%. With over 2/3 of our debt carrying fixed coupons, we are comfortable with the balanced nature of our borrowing costs. And looking forward, we'll continue to maintain a dynamic but prudently capitalized balance sheet, which can facilitate both investments in existing platform growth and the ability to explore new opportunities. Over the page on Slide 37, I'll touch on some of these investment highlights. Our focus in the year was the ongoing support of key lending and asset management strategies, coupled with the drive on capital efficiency. This efficiency is best highlighted in our lending division, where we significantly reduced our invested capital while continuing to grow our loan book. Our ability to create investment product for our managed funds, especially in the credit space, materially reduces our requirement for growth capital. It's a powerful feature of our business model and a real competitive advantage. Furthermore, we continue to recycle our seed and co-investment capital, utilizing the proceeds to reinvest over $110 million into new and existing strategies over the year. This dynamic nature of the balance sheet and our focus on capital efficiency will continue to underwrite our future growth. Online, the recycling of capital is a real strength, whilst the efficiency focus will be an important factor driving returns, not only in our lending business but across the group as a whole. And with this in mind, I'll now hand back to Julian to talk you through our strategic outlook.

Thank you, Graham, and we'll start on Slide 39. At MA Financial, we have a strong focus on building businesses. And this slide illustrates how our method translates into results. We look to leverage our capabilities and platform into large addressable markets where we have competitive edge establishing a well-considered strategy and executing on it. We tend to start small by investing in new ideas and then once comfortable, we push hard to scale the business. The growth rates on this slide show how effective the strategy has been. This is always a strong focus for us, and we are aligned as fellow shareholders. Turning forward to Slide 40, where we talk to our medium- and longer-term investment strategy. 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, MA Financial has had another great year, and we are optimistic about the future. We believe that the business has great momentum, and we look forward to executing on our consistent strategy. On behalf of the management team, we're very proud and pleased with the performance of the group and look forward to sharing strong results with you in the future. With that, I'll hand back to the moderator for Q&A.

[Operator Instructions] Our first question comes from the line of Tim Piper from UBS.

One question and one follow-up. I'll have to try and choose that. First one, just to understand just quickly the movements in the priority income fund movement. I think you called out on the Slide 17, [ PIF ] strategy is EBITDA was $7.8 million for the year. So effectively, do we just think about on Slide 28, the underlying EBITDA of the lending platforms is [indiscernible] under 7.8% back to that like-for-like a $7 million EBITDA figure for that. Is that correct?

I think that's true. Tim. I won't count that as a question because of a statement of fact. So you've got another question.

Okay. Second one, what sort of drove the decision to sell down some of the direct investment in Redcape?

I think we made the investment into Redcape as a co-investment back in 2017. We invested $60 million into the fund as part of seeding that initiative in hospitality. Over the journey, in delisting Redcape, there was no longer [indiscernible] have that coinvestment. And the actual unit price has gone from $1 to, I think, $1.765 today. So it's been a very good investment for us. And so in terms of recycling capital, we're still materially aligned with our investors, and we just look at sort of actively managing our balance sheet, and we took the opportunity to sell some down. So I think you will see this as an ongoing feature, I talked about it when we actually went through the delisting process with Redcape, that would be saying that we would consider. It doesn't reflect our conviction in the underlying assets. It actually more reflects an active management of our balance sheet.

Okay. Got it. And just with regards to Allendale, have you fully raised the $70-odd million debt that you're looking to raise already, is that completed? And then secondly, how are you approaching sort of real estate asset acquisitions this year in the context of how you think it will be in terms of capital raising environment?

No, I think that's a good question. I think about our peers in terms of how we go about raising capital. And I know that the domestic market has been quite difficult over the last 12 months. Allendale was done and done well within the time frames of marketing that asset. So it was completely sold to third parties on the closing of the fund. I think about the real estate market, Allendale was really an opportunistic buy for us. We thought we're buying it below replacement cost. The yield was good and we actually like the Perth office market. I think you're going to see a fair bit of a fair few real estate owners seeking liquidity through the year. Now you won't want to buy every asset, but it's going to present opportunities. And then I think through our lens, we've got quite unique distribution channels to marry the capital up with these assets that few others have, to be honest. So we're -- I'm quite buoyant about the real estate market. I think pricing is sort of coming our way, and we'll all take advantage of opportunities as they come.

Our final question comes from the line of Vic Lee from Blue Ocean Equities.

Just in terms... Just in terms of the fund flow chart on Slide 19. Can you just talk to the domestic high net wealth net flow piece. It's sort of -- I can see the gross numbers up and there's obviously the net sort of flattish. How are you doing on the sort of expanding sort of the footprint and getting ratings and whatnot, clearly, that's going to be an important growth driver for your net flows going in the next 3 to 5 years to , I suppose.

I think you think about the gross numbers in -- sorry, gross numbers in flows in domestic market being up sort of 26% year-on-year was a great outcome, and a lot of that flow went into credit investments. And we're broadening our platform exposure for those funds, and we're also getting into more [ model ] portfolio. So the momentum is really with that business. I guess those funds are a little bit more liquid in terms of having monthly redemption application of redemptions. So we do see a bit more rotation in those funds, but they're positive in terms of their growth, their net inflows. The other call out would be, obviously, Redcape's gone through a period post the listing, where we've had some, I guess, historic redemptions being made because it's been a fun for 6 or 7 years. It's had a sort of season right. So we expect that domestic flow to increase on a gross basis and probably the net flow, it should be positive as well. But you're going to see a natural churn in the underlying investor base.

Great.

The only other thing I got to mention there, Vic was that during the period, we also sold 2 real estate assets in being Hollywood, Plaza and Dandenong. So we actually return capital to investors, which can get caught up in that net number. When you disclose those numbers, the capital being realized and it's pulled out on that point where there's $66 million of capital returns, obviously, the net numbers improve again. So that captures both redemptions and realization.

Great. And then my second question would be on probably more Graham question. Just on the cash flow statement. So is the way going forward with the statutory cash flow statement to remove that. So net cash from operating activities is minus $283 million. But obviously, you've got that amount advanced the party there. Is that -- you might remove that line? Is that the best way to look at it to operating cash flow?

Vic, it gets close, but the statutory cash flow is actually incorporates a number of different entities, but certainly removing that line or netting off the funds that are coming in from or new funding that's coming in, which is a similar number of about 380 gets you close.

Okay. Perfect. And so if I do that, I suppose, is that mean -- so year-on-year, is it actually -- am I looking at this right? Is it has that gone down [ $44 million, minus $ 119 million ] I might take that offline. I'll take that offline.

We can take that it offline, Vic. I'm happy to talk you through... because the statutory result does have complications when you bring in in the PIF strategy that we have to consolidate and the securitization [ trust ]. So we can talk you through it offline.

We are not thinking about it [indiscernible] simple lens, not consolidated statutory lens. We're a very cash-generative business, and we have high cash conversion on our underlying earnings, and that's how we think about it. We -- that supports the increase in the dividend, et cetera. So we do focus on a lot. Unfortunately, the consolidated cash flow for consolidated statutory accounts to create [indiscernible] reporting. [indiscernible]

There is one final question, sir, from the line of Tim Piper from UBS.

Sorry, I thought I might try and jump in with one more if that's okay. I'm just curious about MA Money. [indiscernible] strategy? You talked about the investment there. And obviously, you've invested quite a lot in platform growth over the past 12 months, and you're targeting sort of profitability or breakeven by the first quarter of '24, I think you mentioned. Maybe can you just talk us through what investment is sort of left in that platform there across this calendar year? And then secondly, in terms of reaching that sort of breakeven level, I mean, is there sort of a growth in loan book that we can think about to reach that breakeven level that's required.

Yes, it's Chris. So I'll break that question for 2 parts. Firstly, what investment is left for the year -- the major commitment investment in team building is complete. It incurred really from May through to the end of December. And the rebrand and the new products were put on the various networks and platforms to be available to consumers. And it really in earnest launched and started picking up loan volume shortly after Australia Day this year. So really coming into January, beginning and of February. So there will be the annualization of those costs. And when you go to market with product, you have to make sure that you give your customers and the broker network with good experience. And that means you need to build a platform capable of processing volume, which you anticipate to have. Now that volume takes time to ramp up, but it means you need the people, systems and infrastructure to cope with that volume day 1. And so therefore, the costs are incurred and continue to drag on the performance of the business until the loan book grows and the revenue, therefore, overtakes them. So we've put in place everything that needs to be in place. If the growth goes really strong, we might need to put on additional BDMs as a marginal expansion, but the core components of the platform are all there. In terms of what it is we need to believe and for the book to be to be of a size and ability for breaking even. It will depend on margins and portfolio mix, but a book size of $1 billion to $1.25 billion is probably around the breakeven level. You are subject to where capital markets and [ term ] markets are pricing, they widened coming into the end of the last year, and there's been good demand and a bit of tightening at the beginning of this year. But by and large, that's the metric that we would see for the run rate breakeven.

That does conclude today's questions. I would now like to turn the call over to Julian Biggins for closing remarks.

Okay. Thank you, Mandeep, and thank you for attending the conference call. We look forward to catching up with you in the future. So thank you, and have a good day.

Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation. You may now disconnect.