Australian Ethical Investment Ltd · ASX:AEF
Australian Ethical Investment — H1 FY2024 Earnings Presentation
39 slides from Australian Ethical Investment's earnings presentation, Feb 23, 2024
Slide 1: FY24 Half Year Results
Australian Ethical Investment Ltd FY24 Half Year Results John McMurdo (Managing Director & CEO) and Mark Simons (CFO) I 23 February 2024
Slide 2: Contents
Contents 01 Overview & highlights 3 02 Financial Results 16 03 Business update 27 04 Appendices 30 2
Slide 3: Overview & highlights
Overview & highlights )] Australian | AS
Slide 4: Overview
Overview Our authenticity Low carbon future We are an authentic purpose-driven investment The structural drivers for a more sustainable, low carbon manager, focused on investor returns and future remain compelling with a mega trend towards positive influence. responsible investing and a significant
Slide 5: Our strategic pillars
Our strategic pillars Purpose: Investing for a better world 1. Principled 2. Advocates for 3. Compelling 4. Impactful investment leadership a better world client experience business Deliver superior risk adjusted Foster a coalition of co-investors Deliver a seamless, modern and Showcase the duality
Slide 6: 1H24 financial results
1H24 financial results $8.5m $6.2m UPAT, up 71% NPAT* Scale, increased profitability and improved (up 24% vs 2H23) (up 11% vs 2H23) operating leverage emerging as we continue to execute against our strategic plan $48.5m $36.3m Revenue, up 33% Expenses**, up 23% (up 9% vs 2H23) (up 4% vs 2H23) 3c int
Slide 7: Operational highlights
Operational highlights Investment in the business is delivering growth, scale and a quality, well regarded business platform $0.26bn 72% employee positive 15 /0 increase in FUM net flows engagement scoreA $9.67bn 13% 3rd $0.9m provisioned for increase in Record FUM most trusted Australian Ethical cu
Slide 8: Investment highlights
Investment highlights Top quartile Product launches Top 10 Enhanced investment performance* Launched 3 new products: • Australian Ethical Balanced & ethics capability super option recognised • for Diversified Shares • Moderate and by Chant West in the Top • 16 investment team Fund & High Growth Fund
Slide 9: We received recognition across multiple parts of our business
We received recognition across multiple parts of our business AUSTRALIAN cx MORNINGSTAR GROWTH COMPANY AWARDS AWARDS ESG Commitment Leader, achieved by Financial Services Growth Company of the Year Award 2023, Best Inclusive Customer Experience only eight asset managers covered globally* in Australi
Slide 10: Our ethical pedigree is embedded in our business
Our ethical pedigree is embedded in our business Certified oil F,/S,4ÿ o V Australian ° <° T#1 I I *«- ke/ / M CO o O O Foundation Corporation / °* / G H A 1 Australia's first publicly listed B Corp. Highest 10% of AEI profits are allocated to scoring Certified B Corporation in Australia & Tobacco F
Slide 11: We are increasingly using our voice to advocate for systemic change
We are increasingly using our voice to advocate for systemic change as part of our ethical stewardship engagement In-depth multi-year engagements Boral active engagement Strong platform for bank engagement To have influence beyond our invested capital, During the first half we escalated our Received
Slide 12: Our Foundation supports charities combatting climate change
Our Foundation supports charities combatting climate change I i e<TM Our Foundation's vision is to direct as much philanthropy as possible to " % -Jli effective solutions and charities addressing the climate emergency. $0.9m provisioned $9m+ allocated to 10% of AEI profits allocated in 1HFY24 not-fo
Slide 13: And our success is underpinned by our people
And our success is underpinned by our people Purpose-driven, Gender diversity Investment in capability high performance culture 50% female representation on with FTE increasing to 126* Attracts top talent and is led executive leadership team, during the year from the top 67% on the board Investment
Slide 14: Financial Results
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Slide 15: FUM continues to grow - up 15% to a record $9.67bn
FUM continues to grow - up 15% to a record $9.67bn FUM ($bn) at 31 December of each year # |Managed funds | Institutional Superannuation A Percentage changes reflect movement in non-rounded, precise figures * Includes SMA, excludes institutional # Average FUM calculated as average of average monthly
Slide 16: With customer numbers continuing to increase - 13% up
With customer numbers Key themes continuing to increase - 13% up • Customer numbers grew 13% driven by growth in super channels Customers at 31 December • Total customers now >130,000 • Super members grew 16% to >117,000 • Volatile market conditions have impacted short term managed fund customer num
Slide 17: And positive net flows continue despite challenging markets
And positive net flows continue despite Key themes challenging markets • Positive net flows of $0.26bn in a challenging market • Super net flows of $0.27bn Flows by product ($bn) • Managed funds saw a modest net outflow of $-0.01bn reflecting cautious investor sentiment during j volatile market cond
Slide 18: Whilst we continue to balance profitable growth with a more competitive fee offering
Whilst we continue to balance profitable Key themes growth with a more competitive fee offering • Average revenue margin of 1.01% for calendar year 2023* down from 1.06% in calendar year 2022 Revenue margin Ave FUM ($bn) Ave revenue • Fee reductions occurred in margin September 2022, and on completi
Slide 19: Operating revenue increased 33% to $48.5m
Operating revenue increased 33% to $48.5m Key themes • Solid operating revenue growth despite challenging markets • 1H24 revenue up 33% driven by the full impact of the SFT, positive investment performance and net flows, partially offset by fee reductions following SFT • Revenue up 9% compared t
Slide 20: And expense growth reflects post-SFT cost base and disciplined strategic investment
And expense growth reflects post-SFT cost Key themes base and disciplined strategic investment Expenses* increased 23%, driven by: • Investment in capability (both new hires and full year run rate of FY23 hires) and remuneration increases drove higher employee costs. This increase includes Christian
Slide 21: 1H24 Financial Results
1H24 FinancialResults Key themes Strong profit growth following SFT and continued organic growth • Step-change in profitability following SFT and focussed strategic investment in the business • First half UPAT up 71% compared to 1H23, and up 24% compared to 2H23. • UPAT adjustments reflect: o Christ
Slide 22: We retain a strong capital position with no debt
We retain a strong capital position with no debt Key themes With $12.8m surplus above regulatory capital • Strong balance sheet with no debt • Strong cash position • Minimum regulatory capital requirement of $7.2m at 31 December 2023 • Parent holds a surplus above regulatory capital of $12.8m (pre-d
Slide 23: Key financials
Funds under management ($bn) Operating Revenue ($m) Key financials As at 31 December of each year For the 6 months ending 31 December Statutory Profit after tax* ($m) Underlying profit after tax* ($m) 1 Attributable to shareholders For the 6 months ending 31 December For the 6 months ending 31 Decem
Slide 24: Key metrics
Interim Dividends (cps) Key metrics Diluted earnings per share* (UPAT) (cps) Diluted earnings per share* (NPAT) (cps) *Based on NPAT /UPAT attributable to shareholders 24
Slide 25: Business update
Business update 03
Slide 26: Continued momentum on execution against our strategy
Continued momentum on execution against our strategy 1. Principled 2. Advocates for 3. Compelling 4. Impactful Leadership investment a better world client experience business & innovation leadership Strengthened Investment and Strong platform for ongoing Awarded and recognised for customer FUM up 15
Slide 27: Outlook
Outlook Positive momentum to continue in the second half as we target $100m annualised revenue run rate by end FY24 (subject to market conditions) Medium term market Disciplined strategic execution Remain opportunity remains to continue well-positioned compelling • continued integration activities w
Slide 28: Appendices
Appendices Australian | Ag B
Slide 29: Appendix 1: UPAT reconciliation
Appendix 1: UPAT reconciliation 29
Slide 30: Appendix 2: Investment Performance
Appendix 2: Investment Performance 30
Slide 31: Investment leadership
Investment leadership Strong long-term returns I Australian Shares Fund Value of $1000 invested since inception Risk/return over ten years to December 2023 6 O Australian Shares Fund O S&P/ASX Small Industrials O S&P/ASX 300 (Wholesaled Source: Mercer. Comparison with the Wholesale-Equity - Australi
Slide 32: Australian Shares Fund
Australian Shares Fund • Australian Shares Fund has Rolling 1 Year Net Return delivered positive rolling 3 year returns (annualised) for all periods since June 2015* • Australian Shares Fund (ASF) has outperformed its benchmark- for all periods of five years and greater Rolling 3 Year Net ReturnA *
Slide 33: Emerging Companies Fund
Emerging Companies Fund • The Emerging Companies Fund (ECF) Rolling 1 Year Net Return attracts a performance fee for outperformance over benchmark* • The ECF has outperformed benchmark for all periods of five years and above • The Fund has a small-cap strategy with investments spread across small an
Slide 34: Balanced Accumulation Option (MySuper)
Balanced Accumulation Option (MySuper) Top 10 best performing growth fund over 10 years - the only retail product to appear in the 10-year top 10A A To December 2023. Source Chant West. AFR article 18 January 2024 ~ After all fees, assuming average $50k member balance. Performance calculated in acco
Slide 35: Australian Shares Fund
Australian Shares Fund Investments in the Technology sector added value during the period due to stock selection. The Consumer Staples sector was also a contributor, benefiting from corporate takeover activity. The Materials and Healthcare sectors detracted from performance during the period. The Fu
Slide 36: Emerging Companies Fund
Emerging Companies Fund Has outperformed the benchmark for all periods of 5 years and above. The Fund has a small-cap strategy with investments spread across small and microcap companies in Australia and New Zealand. Short term underperformance largely attributable to poor performing Healthcare sect
Slide 37: Contacts
Contacts John McMurdo Mark Simons Chief Executive Officer Chief Financial Officer jmcmurdo@australianethical.com.au msimons@australianethical.com.au 0449 903 207 0434 369 746 Melanie Hill Elise Davidson Head of Business Performance & Investor Relations BlueChip Communication mhill@australianethical.
Slide 38: Disclaimer
Disclaimer Australian Ethical Investment Ltd (ABN 47 003 188 930; AFSL No. 229949) (AEI) is the or indirectly, arising from any person relying, either wholly or partially, upon any Responsible Entity and Investment Manager of the Australian Ethical Managed Funds. information shown in, or omitted fro
Slide 39: Thank you
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