Australian Ethical Investment Ltd · ASX:AEF
Australian Ethical Investment — FY2024 Earnings Presentation
49 slides from Australian Ethical Investment's earnings presentation, Aug 29, 2024
Slide 1: Australian Ethical Investment Ltd FY24 Full Year Results
Australian Ethical As Australian Ethical Investment Ltd FY24 Full Year Results John McMurdo (Managing Direct ns (CFO) | 2
Slide 2: Contents
Contents 01 Overview & FY24 highlights 02 Financial Results 03 Business update 04 Appendices Australian Ethical AS
Slide 3: Overview & FY24 highlights
Overview & FY24 highlights ()] Australian Ethical Ag 3
Slide 4: Our authenticity
Our authenticity We are an authentic purpose-driven investment manager, focused on investor returns and positive influence. Low carbon future The structural drivers for a more sustainable, low carbon future remain compelling with a mega trend towards responsible investing and a significant potential
Slide 5: Strong execution of our strategy across strategic pillars
Strong execution of our strategy across 4 strategic pillars... Ss 1. Principled investment leadership Deliver superior risk adjusted returns over the long term, and be a powerful influence in ethical investing aN 2. Advocates for a better world Foster a coalition of co-investors in the cause for a b
Slide 6: FY24 financial results: A milestone year
FY24 financial results A milestone year * This momentum against our strategy has further strengthened operational foundations, increased scale and profitability with a record FY24 result * Record UPAT following strong 2H24 uplift of 18% on 1H24 $18.5m FY24 UPAT* up 57% on FY23 $11.8m NPAT** up 80% o
Slide 7: Investment in our capability & business platform
Investment in our capability & business platform as part of our strategy is benefiting all stakeholders... FUM $bn Revenue $m 04 1005 * Over the last 5 years we have been focused on investing for the next stage of our growth * This investment has meant while net profit had been impacted in the short
Slide 8: Inorganic growth contributing to FUM and capability
..with inorganic growth contributing to FUM and c christian ALTIUS Christian Super SFT Altius ASSET MANAGEMENT $1.9bn ~$2bn: Uplift in FUM with ~90% of customers retained” FUM Uplift + Highly successful acquisition, increasing ongoing + Completion expected late September 2024 taking proforma Superan
Slide 9: A stronger, more capable business positions us for further growth
...-and a stronger, more capable business positions us for further growth Major milestones Boosted by the first full year benefit of the successful SFT’ with Christian Super $10bn FUM $100m revenue Record UPAT and NPAT* i Bag | ROY Strong brand & reputation Bl Foocan 34 most trusted Super brand in A
Slide 10: We are receiving recognition across all areas of our business
We are receiving recognition across all areas of our business... Investments and superannuation Responsible investment leadership Customer experience @ ROY MORGAN Roy Morgan Top 3 Most trusted Super Brand** Cy) Financial Standard Investment Leadership Awards 2024 Australian Ethical Diversified Share
Slide 11: Ethical pedigree deeply embedded in the business
...with our ethical pedigree deeply embedded in the business Certified tt Nay Australian Py 2 Ethical | s 8 Foundation ——:: , > ry Corporation <7 e P Snare Australia’s first publicly listed B Corp. 10% of AEI profits are allocated to Highest scoring Certified B Corporation in Australia Tobacco Free
Slide 12: Sustainability highlights - Investment portfolio
Sustainability highlights - Investment portfolio 75% 2.3X 47x 5.2x lower CO, intensity" revenue from revenue from sustainable investment in in listed companies in our share sustainable impact water & agriculture and renewables and portfolio, compared to benchmark solutions* pollution prevention” ene
Slide 13: Sustainability highlights - Ethical stewardship
Sustainability highlights - Ethical stewardship In-depth multi-year engagements To have influence beyond our invested capital, we continue to use our voice and position to advocate for the changes needed for the sustainable and equitable future we are striving for. 330+ engagements for people, plane
Slide 14: Our Foundation supports charities combatting climate change
Our Foundation supports charities combatting climate change Our Foundation’s vision is to direct as much philanthropy as possible to effective solutions and charities addressing the climate emergency. $1.8m $llm+ 10% Record donation to the Cumulatively allocated of AEI profits™ allocated Foundation
Slide 15: Our success is underpinned by our people
And our success is underpinned by our people Purpose-driven, high performance culture Attracts top talent and is led from the top [-< Workplace Gender Equality (WEGA) Report 2024 Report submitted. Our practices reflected in our current results o (A Gender diversity 50% female representation on execu
Slide 16: Financial Results
Financial Results Australian Ethical Ag 16
Slide 17: FY24 Financial Results
FY24 Financial Results Strong profit growth following Christian Super SFT and continued organic growth Key financials ($'000) FY24 FY23 Movement % Operating Revenue 100,304 81,096 24% Performance fee 187 - Total Revenue 100,491 81,096 24% Total Operating expenses (excluding integration & transformat
Slide 18: $10bn FUM milestone reached, FUM grew 13% to $10.44bn
$10bn FUM milestone reached, as FUM grew 13% to a record $10.44bn FUM (Sbn) 12.00 10.00 8.00 6.00 4.05 4.00 3.42 2.00 0.00 6.07 6.20 30 Jun 19 30 Jun 20 © Superannuation * Includes SMA, excludes Institutional 30 Jun 21 30 Jun 22 ™ Managed Funds* 30 Jun 23 Institutional 10.44 30 Jun 24 Funds under ma
Slide 19: Positive net flows continue through challenging market cycles
Positive net flows continue through Key themes chal lenging market cycles * Over 40 quarters of positive net flows through various market cycles + FY24 net flows of $0.61bn driven by Net Flows (Sbn) Super net flows 120 + Record Superannuation Guarantee and year-end voluntary contributions 1.03 + Man
Slide 20: Balance of profitable growth with a more competitive fee offering
Balance of profitable growth with a more competitive fee offering Revenue margin Average Average revenue FUM (Sbn) margin* 120 1.80% 1.60% 10.0 1.40% 8&0 1.20% 1.00% 6.0 0.80% 40 0.60% 0.40% 20 | a sone 00 0.00% FYI6 FYI8 FY19 FY20 FY21 FY22 FY23 FY24 Average FUM (LHS) ——Total average revenue margin
Slide 21: Revenue milestone of $100m achieved
Revenue milestone of $100m achieved, up 24% to $100.5m $m 110 179 0.2 0.9 100 — 90 80 70 60 50 0.4 40 FY23 FUM Based fees Performance fees Member fees Other income Fy24 Key themes + Revenue has grown at 20% CAGR over the last 5 years supported by positive FUM growth + FY24 operating revenue increase
Slide 22: Expense growth reflects business growth
Expense growth reflects business growth and strengthening of business platform $m 80.0 75.0 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.0 30.0 FY23 36 1.0 07 04 05 Employee Fund Marketing ITExpenses External Other FY24 (excl Foundaton FY24 Related services expenses Foundation Grants Grants) * Operating ex
Slide 23: We retain a strong capital position with no debt
We retain a strong capital position with no debt With $13.8m surplus above regulatory capital 25.0 20.0 15.0 10.0 5.0 Net Tangible Assets** (Sm) $m FY24 FY23 Cash & term deposits* 36.3 321 Surplus above regulatory capital** 13.8 13.5 Net cash from operating activities 22.3 16.2 Cashflow conversion %
Slide 24: Shareholder Dividends (cps)
Shareholder Dividends (cps) 8.0 metrics + Delivering value to shareholders + — Strong growth in underlying profit ‘caer reflecting resilient and growing business * Confidence in momentum resulting FY19 FY20-FY21 = FY22FY23—FY24 in record FY24 Dividend of 9.0 SsInerim dividend mFinol dividend" Specia
Slide 25: Business update
iness update Bus ()3 25 sion | AS Australiar Ethical
Slide 26: We are supported by two structural macro themes
We are supported by two structural macro themes... Ethical Investing Australian Superannuation Sector Sus40tr Stttr SUS30tr a - 2022 2030 2023 2043 Global ESG assets Australia’s total Superannuation assets * Global ESG assets surpassed $30 trillion in 2022 and are on track to + Australia’s total sup
Slide 27: Strong execution against strategy is delivering results
Strong execution against strategy is delivering results... 1. Principled investment leadership Strengthened Investment & Ethics team with new Systematic Portfolio Manager, new Head of Private Markets, 3 new analysts, Investment Operations Manager, and Senior Ethics Analyst. Team size increased from
Slide 28: Platform well positioned for the next phase of growth
..-with the platform well positioned for the next phase of growth Business quality and growth trajectory continues to accelerate from strong foundations 2023 Morningstar Highest Honours ESG Commitment Level 2014 First Australian public 1995 Gamieanr/ Cuan Divestment from Lendlease Company 2000 B Cor
Slide 29: Strong momentum to continue into FY25
Strong momentum to continue into FY25 with completion of the Altius acquisition, further organic growth and the de Further profit uplift expected Disciplined strategic Medium term market opportunity in FY25, driven by: execution to continue: remains compelling * ongoing revenue increase expected fro
Slide 30: Thank you
Slide 31: Appendices
Appendices Australian Ethical | Ay 31
Slide 32: Appendix 1: UPAT and Cost to Income (CTI) reconciliation
Appendix 1: UPAT and Cost to Income (CTI) reconciliation
Slide 33: Appendix 1: UPAT and CTI reconciliation
Appendix 1: UPAT and CTI reconciliation Key financials ($1000) FY24 FY23_Movement % Statutory Net profit after tax 11,531 6,576 75% Add: Net Loss attributable to The Foundation 316 0 Net profit after tax attributable to shareholders 11,847 6,576 80% Adjustments: Change in fair value of investment 2,
Slide 34: Appendix 2: Investment Performance
Appendix 2: Investment Performance
Slide 35: Investment leadership
Investment leadership Strong long-term returns | Australian Shares Fund Value of $1,000 invested since inception 18,000 16.000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 o Australian Share Fund (Retail) ‘= Australian Share Fund - Blended Benchmark* Retum (pa) Risk/return over ten years to June 202
Slide 36: Australian Shares Fund
Australian Shares Fund Rolling 1 Year Net Return + Australian Shares Fund has delivered positive rolling 3-year 60% 50% returns (annualised) for all oe periods since June 2015* 20% . ‘on + Australian Shares Fund (ASF) has % outperformed its benchmark for ae periods of 5 years and longer Jun-13 Jun-1
Slide 37: Emerging Companies Fund
Emerging Companies Fund Rolling 1 Year Net Return 100% 80% 60% 40% Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 Jun-24 Emerging Companies Fund (Wholesale) ==S&P/ASX Small Industrials Rolling 3 Year Net Return* 35% 30% 25% 20% 15% 10% 5% M% 5% vw 10% Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-
Slide 38: Balanced Option (MySuper) performance
( ~~ Since Bal anced vy 3Y (%pa) SY (%pa) TY (Mpa) 10Y (%pa) — 20Y (%pa) —_—inception* . opa) Accumulation Absolute Performance ~ 6.8% 3.0% 5.6% 6.5% 68% 5.7% 8.3% Benchmark# 7.A% 8.4% 7.0% 8.5% 6.2% 6.3% 6.3% . (0.6%) (5.4%) (1.4%) (0.1%) 0.6% (0.6%) (0.1%) Option (MySuper) Relative Performance ‘at
Slide 39: Australian Shares Fund performance
Since Austr ali an WV 3Y (%pa) SY (%pa) TY (%pa) 10Y (%pa) 20Y (%pa) inception (Mopa) Shares Fund Retail* 10.9% 0.9% 8.3% 8.2% 9.9% 9.8% 9.6% Benchmark 116% 6.0% 7.1% 8.6% 8.8% 7.1% 7.3% Relative Performance (0.7%) (5.0%) 1.2% (0.3%) 1.1% 2.7% 2.3% ee CoDTNERENY S&P/ASX Small Industrial: nccun | _ n
Slide 40: Emerging Companies Fund FY24 Commentary
an Emerging Companies Fund FY24 Commentary The Fund has a small-cap strategy with investments spread across small and microcap companies in Australia and New Zealand. Stock selection in the technology sector was the stand-out contributor to performance. The Fund also benefited from no exposure to th
Slide 41: Appendix 3: Additional FUM & Financial details
Appendix 3: Additional FUM & Financial details
Slide 42: Channel, product and asset class overview
Channel, product and asset class overview FUM by channel "Direct © Advised Employer FUM by product = Managed Funds wholesale" Managed Funds retail ™ Superannuation = Domestic Equities (incl NZ) = Cash Fixed Income (glotal) Alternatives FUM by asset class Intemational Equity 1 Fixed Income (domestic)
Slide 43: FUM summary - Asset Class & Strategy
FUM summary - Asset Class & Strategy FUM at 30 Jun 24 = FUM at 30 Jun 23 Asset Class (bn) (bn) Domestic Equities (incl NZ) 4.45 3.78 International Equity 2.50 210 Cash 0.20 0.27 Fixed Income (domestic) 1.57 147 Fixed Income (global) 0.62 0.46 Unlisted Property 0.52 0.64 Alternatives 0.59 0.47 Total
Slide 44: FUM summary - Superannuation
FUM summary —- Superannuation FY24 Market , Current FUM at 30 Jun 23 FY24 Net flows FUM at 30 Jun 24 Fund/option movement / Other Management Fee (Sbn) (Sbn) (Sbn) ($bn) Superannuation Defensive 0.20% 0.18 -0.01 0.01 0.18 Conservative 0.55% 0.33 0.00 0.00 0.33 Balanced (Accumulation/Pension) 0.64%, 0
Slide 45: FUM summary - Managed Funds
FUM summary — Managed Funds Applications and Fund/opti Current Management FUM at 30 June 23 Red 9 N Market movement / FUM at 30 Jun 24 ‘und/option —_ (Sbn) edemptions Net Other (Sbn) (Sbn) flows (Sbn) Managed Funds - Wholesale Income 0.20% 0.01 2 (0.00) 0.01 Fixed Interest 0.30% 0.03 2 (0.00) 0.03 I
Slide 46: Growth metrics
Growth metrics ‘AE growth metrics FY24 FY23 Fv22 2H24 4H24 2H23 4H23 4H22 FUM ~ managed funds - retail/wsale (Sbn) 2.19 2.00 178 2.19 204 2.00 187 2.10 FUM ~ managed funds ~ inste ($bn) 0.00 0.00 0.19 a.0G 0.00 0.00 0.00 0.38 FUM ~ super ($bn) 8.25 721 4.23 8.25 7.63 721 6.50 4.46 FUM - total (Sbn)
Slide 47: Financial metrics
Financial metrics Financial metrics FY24 FY23 FY22 2H24 1H24 2H23 1H23 2H22 1H22 FUM based revenue (ex performance fee) ($m) 92.9 75 656 4841 448 ad 33.9 32.8 32.9 Pertormance tee ($m) 0.2 2 o4 0.2 = 2 = O4 = Member based revenue ($m)* 6.0 54 47 3.0 3.0 27 24 24 23 Other (Sm) 13 1.0 01 07 07 07 03 a
Slide 48: Disclaimer
Disclaimer Australian Ethical Investment Ltd (ABN 47 003 188 930; AFSL No. 229949) (AEl) is the Responsible Entity and Investment Manager of the Australian Ethical Managed Funds. Interests in the Australian Ethical Retail Superannuation Fund (ABN 49 633 667 743) are offered by Australian Ethical Inv
Slide 49: Australian Ethical Investment Ltd FY24 Full Year Results
Australian Ethical As Australian Ethical Investment Ltd FY24 Full Year Results John McMurdo (Managing Direct ns (CFO) | 2
Australian Ethical Investment — FY2024 Earnings Presentation on 6ix