Australian Ethical Investment Ltd · ASX:AEF
Australian Ethical Investment — FY2021 Earnings Presentation
39 slides from Australian Ethical Investment's earnings presentation, Aug 26, 2021
Slide 1: Australian Ethical Investment Ltd FY21 Results
Australian Ethical Australian Ethical Investment Ltd FY21 Results John McMurdo, Managing Director & CEO Mark Simons, CFO 26 August 2021
Slide 2: Agenda
Agenda 01 Highlights 02 ~~Financials 03 Investment update 04 Business update Australian Ethical AS
Slide 3: Australian
Australian Ethical AS
Slide 4: FY21 results
FY21 results Another record year with strong growth across the business sin this Australian Ethical AS Earnings toward upper end of the guidance range $58.7m $11.3m $11.05m . Operating revenue —NPAT attributable UPAT Diluted EPS to shareholders! 3 year CAGR (A) 18% (4)19% (a) 19% +31% $1.03bn $6.07b
Slide 5: FY21 investment highlights
FY21 investment highlights © $2.9m © 43.1% in performance fees for Emerging 1 year performance for Australian Companies Fund which Shares Fund which also outperformed benchmark by 18.1%* outperformed its benchmark across all time periods* Excellent investment performance . eonnnties \ Top quartile p
Slide 6: Multi award-winning investment + superannuation
Multi award-winning investment + superannuation 1 of only 6 fund managers globally to be named a “leader” for ESG commitment by Morningstar4 , Best ESG Trailblazer | Money Magazine Best of the Best 2021 NS ns Managed Funds ~ n) MONEYMANAGEMENT. FUND MANAGER OF THE YEAR 2021 WINNER Responsible Invest
Slide 7: Investment Portfolio impact highlights
Investment Portfolio “577% less CO, produced by the companies we invest in, compared to benchmark® ¥ Im act *1 investmen *1 investment in fossil "1 inv nipat © Nil ne’ & Nil meses" & Nil meee highlights <a) 2.5x more impact aS 13x more investment towards the Sustainable in renewable power generation
Slide 8: Our Foundation
Our Foundation The Australian Ethical Foundation aims to unearth & fund the most effective charities and solutions addressing climate change. Impact ~ $1.8m ~ >$6m (X 10% of AEI profits s s allocated for impact allocated to not-for- allocated to not-for- 1g 1g ts initiatives in FY21 profits since in
Slide 9: Financials
Financials
Slide 10: Key financials
Key financials Key financials ($'000) FY2021 FY2020 Operating Revenue pre performance fee Performance fee 3,640 (20%) Operating Revenue 49,902 18% Other Revenue Total Revenue Non operating gain/(loss) Operating expenses, (37,018) 18% Profit before income tax expense 13,065 19% Income tax expense (3,
Slide 11: 50% growth in FUM
50% growth in FUM FUM (Sbn) As at 30 June of each year CAGR 30% 390 os 226 149 | 2017 2018 2019 2020 2021 I Menaged funds Superannuation Funds under management (Sbn) 2021 Opening FUM 4.05 3.42 19% Super net flows 0.61 0.47 31% Managed Funds net flows* 0.42 0.19 122% Net flows 1.03 0.66 56% Market mo
Slide 12: FUM by channel, product and fund
FUM by channel, prod uct and fund Adviser channel growth following targeted investment FUM by channel FUM predominantly super, but managed funds growing at a greater pace as we execute on our strategy FUM by product Domestic equities comprise 51% of portfolio FUM by asset class 1B institutional Ml A
Slide 13: Strong customer growth in FY21
Strong customer growth in FY21 Customers at 30 June CAGR 16% 2017 2018 2019 2020 1 Funded super members J Managed fund investors * Each platform is regarded as one investor (we have 24 platform accounts) Note: Super members may also be Managed Fund investors. 2021 Key Themes * Strong growth with fun
Slide 14: Net flows up 56% in FY21
Net flows up 56% in FY21 Net flows by product (Sbn) Inflows Outflows 2017 2018 2019 1 Superennuation Bi Menaged funds Note: Managed funds includes SMA 2020 2021 —— Net Flows Key Themes + Record net flows of $1.03bn, up 56% from FY20 + Managed Funds net flows up 122% to $0.42bn * Super net flows up 3
Slide 15: Revenue margin
Revenue margin FUM (Sbn) 7.0 6.0 5.0 4.0 3.0 6 ARM% 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 20 0.6% 0.4% an 0.2% 0.0 0.0% 2015 2016 2017 Hl Total FuM (LHS) * Average revenue margin calculated on FUM based revenue (excluding member based fees, & excluding performance fee) as a percentage of average annual
Slide 16: Operating revenue increased 18%
Operating revenue increased 18% Operating Revenue ($'m) 5.0 09 (0.2) 39 (0.7) FY20 Managed Funds (FUM — ManagedFunds Superannuation (FUM Superannuation Other based) (Performance Fee) based) (Member based) Fy21 or Key Themes + Revenue growth driven by strong FUM growth * This growth is partially offs
Slide 17: Expense drivers
Expense drivers Operating expenses ($'m) 0.5 0.4 — — LOG | 08 OG FY20 Employee benefits Fundrelated Marketing T Extemal services Other. Community grants Fy21 or Key Themes Operating expenses include $4.6m of investment in business growth. Investments were made in the following areas: new hires to bo
Slide 18: Balance sheet strength
Balance sheet strength Net assets (S$m)* CAGR 12% 2017 2018 2019 2020 1 Netassets — Cash and cash equivalents * Represents total assetsless total liabilities attributable to shareholders (excluding The Foundation) 2021 Vly © Key Themes * Strong balance sheet with no debt + Strong cash position + Par
Slide 19: Funds under management and revenue
Funds under management (Sbn) Operating Revenue ($m) CAGR 20% 6.07 CAGR 30% 58.7 49.9 4.05 36.0 a) 3.42 ; I I 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Profit after tax * ($m) Underlying profit after tax * ($m) 13 CAGR 27% (CAGR pre 4 CAGR 40% performance fee 22%) inosteatt CF and grants. erf
Slide 20: Dividends
Dividends (cps) CAGR 32% %.00 | 6.00 4.00 2017 2018 2019 2020 2021 Il Interim Dividend Final Dividend Special Dividend Diluted earnings per share * (cps) Net Cash from operating activities per share (cps)# CAGR 49% CAGR 40% 10.02 13.50 8.42 522 7.42 7.50 ues 4.46 2.62 a6 2017 2018 2019 2020 2021 201
Slide 21: Investment update
Investment update Australian Ethical Ag a)
Slide 22: Ranked over years
Ranked 1 over 3 years: a|s Balanced Accumulation Option (MySuper) Our default MySuper product was the only retail fund to make top-10 list for 10 year performance? Achieved top quartile performance over 3, 5 and 7- years? 1Y 3Y 5Y TY 10Y (%pa) (%pa) (%pa) (%pa) Balanced Accumulation Option~ 17.5% 9.
Slide 23: Long track record of outperformance
Long track record of outperformance Y Australian Shares Fund Multi award-winning Australian Shares Fund" has a track record of outperformance for all time periods for more than 20 years. Top quartile performance for periods 1 year and greater”. Since inception (pa) Retail* A1.9% 16.2% 13.6% 14.0% 13
Slide 24: Significant outperformance
Significant outperformance Since inception (pa) yy Retail* 50.3% 25.3% 20.0% 19.4% Emerging Pee Soee eS 33.0% 9.4% 10.8% 11.4% mpanies Fun Companies Fund Relative Performance 17.3% 15.9% 9.2% 8.2% Emerging Companies Fund has outperformed Wholesale* 51.1% 26.0% 20.8% 20.2% the benchmark for all time
Slide 25: Business update
Business update Ag 25 Australian Ethical
Slide 26: Our strategic pillars
Our strategic pillars 01 Principled investment leadership * Deliver leading products with long term competitive returns & + Bea powerful proof-point for ethical investing. portfolio resilience for investors. Advocates for a better world * Fostering a coalition of co- investors in the cause for a bet
Slide 27: Good momentum on delivering on our Strategy in FY21
Good momentum on delivering on our Strategy in FY21 Principled investment leadership Market leading returns” Recognised as a global leader in ESG* New roles: Head of Strategic Asset Allocation, Head of Domestic Equities Advocates for a better world Media voice for Climate Change Bill & improved biod
Slide 28: The addressable market has increased significantly
The addressable market has increased significantly ~§2.97 trn Total Professionally Managed Assets Australia 2017 * ~OX increase in potential addressable market rs 20% RI market size 2017 1 ~$4.11 trn Total Professionally Managed Assets Australia 2021" 78% Potential RI market in 2021” In 2017, the Re
Slide 29: We have a strong platform to capture the market opportunity
We have a strong platform to capture the market opportunity... Profit with purpose Largest pureplay ethical investment manager in Australia Demonstrating “Profit for Purpose” since 1986. Achieving Best for World B Corp Status? Recognised as a global leader in ESG commitment by Morningstar4 Top ESG f
Slide 30: ...and will fast track investment to capture ambitious growth
...and will fast track investment to capture ambitious growth... The time is now With this investment & market positioning, if we execute well, we believe it is * Now is the right time to capture possible to grow our business 3-5 times over the next 4-5 years the seismic expansion of the responsible
Slide 31: ...and extend our current leadership through a high growth strategy
..-and extend our current leadership through a high growth strategy Investing in our refreshed Transforming investor acquisition Developing a stronger proposition for AE Brand to increase familiarity : and digital experience by leveraging: Mezzanine and the Institutional & awareness across our incre
Slide 32: Outlook
Outlook i\ Reinvesting to achieve ambitious growth targets Y) Strong momentum on FUM and flows expected to increase into FY22, as the steep market acceleration in responsible investing continues; strategic fee reductions expected to be more than offset by growing net flows. Reinvesting for growth in
Slide 33: Appendices
Appendices
Slide 34: Historical performance fee impact on results
. Historical Scion be sou kvorwniy queue performance fee impact on results Operating Revenue pre performance fee 55,816 46,262 21% Performance fee 2,895 3,640 (20%) Operating Revenue post performance fee 58,711 49,902 18% Net profit after tax attributable to shareholders (post performance fee) 11,26
Slide 35: Key financials UPAT reconciliation
Key financials ($ FY2021 FY2020 Change (YoY) Net profit after tax — statutory 11,118 9,457 18% Add: Net Loss attributable to The Foundation 143 - UP AT Net profit after tax attributable to shareholders 11,261 9,457 19% reconciliation Gain on disposal of property held for sale . 7a) Government grant
Slide 36: Footnotes
Footnotes This excludes the results for the Australian Ethical Foundation Limited (‘The Foundation’). Australian Ethical Super’s Australian Shares option ranks no.1 out of 50 over 1 year, 3 years, 5 years, 7 years and 10 years according to the SuperRatings Fund Crediting Rate Survey - SR50 Australia
Slide 37: Contacts
John McMurdo Melanie Hill Chief Executive Officer Head of Business Performance & Investor Relations M4 @ q ia ill@ " Contacts gq 0449 903 207 q& 0428 879 348 Mark Simons Camilla Herring Chief Financial Officer Head of Communications & 0434369746 & 0432 988 980 Australian Ethical AS
Slide 38: Disclaimer
Disclaimer Australian Ethical Investment Ltd (ABN 47 003 188 930; AFSL No. 229949) is the Responsible Entity and Investment Manager of the Australian Ethical Managed Investment Funds. Interests in the Australian Ethical Retail Superannuation Fund (ABN 49 633 667 743; Fund Registration No. R1004731)
Slide 39: Thank you
Thank you aaa | Ag E
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