Macquarie Group Review

MACQUARIE GROUP LIMITED

Subhas Raman

Corporate Finance

July 25, 2012

Table of Contents

EXECUTIVE SUMMARY

I. Section 1: Macquarie Group Limited – Financial Policies and Strategies

II. Section 2: Review of Financial Report for Financial Year 2011 - 2012

III. Section 3: Weighted Average Cost of Capital (WACC) and Risk Management

IV. Section 4: Comments and Conclusion

Macquarie Group Limited (Macquarie) is a listed business concern in Australia under its Securities Exchange as ‘MQG’. The company was founded in 1969 and was initially listed as ‘MBL’ back in 1996, from its original banking heritage. Macquarie’s primary business today is in providing a wide diversified range of services to its clients. It provides global services ranging from banking and financial advisory, including investment and fund management services, with added expertise in certain specific industries such as commodities and resources, energy, infrastructure and real estate. The company currently employs well over 14,000 people in almost 30 countries and as of March 31, 2012 has assets under management of approximately $A327 billion (Macquarie 2012a).

Macquarie Group Limited - Financial Policies and Strategies

In its 2012 Financial Report, Macquarie (2012b, 2) recognizes as part of its corporate governance that a primary factor in ensuring long term shareholder returns is by offering superior services to its clients. To this effect, Macquarie also recruits and hires high quality staff …“to uphold the company’s Goals and Values”. A further strategy to attract and retain the right talents and to drive shareholder returns over the short and longer term is to ensure that its remuneration structure does not encourage excessive risks, while it is aligned to reward executives and promote shareholder value creation. Profit share awards to executives are also differentiated to take into...