Australian Ethical Investment Ltd · ASX:AEF
Australian Ethical Investment — H1 FY2022 Earnings Presentation
32 slides from Australian Ethical Investment's earnings presentation, Feb 23, 2022
Slide 1: FY22 Half Year Results
Australian Ethical Australian Ethical Investment Ltd FY22 Half Year Results John McMurdo, Managing Director & CEO Mark Simons, CFO 23 February 2022
Slide 2: Agenda
Agenda 01 Highlights 02 ~~Financials 03 Investment update 04 Business update Australian Ethical AS
Slide 3: Highlights
Highlights
Slide 4: 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 5: FY22 Strong headline growth continues
FY22 Strong headline growth continues H1 results $35.2m $5.4m $5.4m . Operating revenue —_—- NPAT attributable UPAT Diluted EPS — to shareholders! 3 year CAGR (1) 38% (A) 5% (A) 12% +24% $0,60bn $6.94bn Net flows a anadomont @) 42% @) 38% Australian Ethical Ag * Based on NPAT attributable to shareho
Slide 6: FY22 H1 investment highlights
FY22 Hl w\ Top quartile performance2 1 + for Balanced Fund over 6 months, * for Australian Shares Fund over the investment 2,3, 4, 5 and 10 years 2,3, 4, 5 and 10 years highlights + for Diversified Shares Fund over 6 * for Emerging Companies Fund over months, 1 year, 2, 3, 4, 5 and 10 years the 2, 3
Slide 7: Awards & recognition
Awards & recognition Responsible Investment Leader 2021 | iSkoan \GD/ Recognised as Responsible Investment Leader Top 100 most trusted brands in Australia by Roy New brand awarded Distinction in the AGDA by RIAA — 1 of just 13 super funds* Morgan, and No.5 among non-bank financial Design Awards 2021
Slide 8: Our Foundation
Our Foundation Impact The Australian Ethical Foundation aims to unearth & fund the most effective charities and solutions addressing climate change. highlights Y) $0.7m VY) >s6m (AX 10% of AEI profits Accrued for impact allocated to not-for- allocated to not-for- initiatives in 1H22 profits since in
Slide 9: Impact Investment Portfolio
Impact Investment Portfolio highlights Nil investment Bek Net zero ®&) innuclear | emissions by & in fossil fuel companies’ i | 2040 target for our private sector & in tobacco” investments C> 77% less CO, DX! 13x more investment produced by the companies we in renewable power generation than invest
Slide 10: Financials
ials inanc I: 25 $8 Bt aii
Slide 11: Key financials
Key financials Key financials ($'000) 1H2022 1H2021 Change (YoY) Operating Revenue Other Revenue Total Revenue 35,225 Operating expenses (18,899) Profit before income tax expense 7,109 10% Income tax expense (1,768) 31% Net profit after tax — statutory 5,341 3% Less Net profit attributable to The Fo
Slide 12: 38% growth in FUM
38% growth in FUM FUM (Sbn) As at 31 December of each year 694 CAGR 28% 5.05 285 2.60 1.32 2017 2018 2019 2020 2021 HI Managed unds [superannuation Funds under management 1H2022 (Sbn) Opening FUM 6.07 4.05 50% Super net flows 0.37 0.25 45% Managed Funds net flows* 0.23 0.17 37% Net flows 0.60 0.42 4
Slide 13: FUM by channel, product and fund
FUM by channel, prod uct and fund Adviser channel continues to grow following targeted investment FUM by channel FUM predominantly super, but managed funds FUM growing more rapidly as we execute on our strategy FUM by product Domestic equities comprise 51% of portfolio FUM by asset class 1B institut
Slide 14: Strong customer growth in 1H22
Strong customer growth in 1H22 Customers at 31 December 42,521 CAGR 16% 76,723 2017 2018 {HF Funded super members * Each platform is regarded as one investor (we have 24 platform accounts) Note: Super members may also be Managed Fund investors. 2019 I Managed fund investors* 2020 2021 Key Themes * S
Slide 15: Net flows up 42% in 1H22
Net flows up 42% in 1H22 Net flows by product (Sbn) Inflows Outflows 1HI8. 1H 1H20 BE superennuation Bi Menaged funds Note: Managed funds includes SMA 4H21 — Net Flows 4H22 Vly Or, Key Themes + Net flows of $0.60bn, up 42% from 1H21 + Managed Funds net flows up 37% to $0.23bn * Super net flows up 45
Slide 16: Revenue margin
Revenue margin FUM (Sbn) 8,000 7,000 6,000 5,000 4,000 3,000 ° 2,000 ~ : L] 2015 2016 2017 Hl Total FuM (LHS) * Average revenue margin calculated on FUM based revenue (excluding member based fees, & excluding performance fee) as a percentage of average annual FUM 2018 2019 = Total average revenue ma
Slide 17: Operating revenue increased 38%
Operating revenue increased 38% Operating Revenue ($'m) —ts— 1H21 Managed Funds Superannuation Superannuation (FUM based) (FUM based) (member based) 4H22 or Key Themes + Revenue growth driven by strong average FUM growth of 47% * This growth is partially offset by the impact of fee reductions of $1.
Slide 18: Expense drivers
Expense drivers Operating expenses ($’m) 30.0 25.0 20.0 15.0 10.0 5.0 04 0.2 0.2 4H21 Employee Fund Related Marketing External services. Iexpenses Community grants Other 4H22 v v v v v Kor Key Themes Operating expenses increased 45% following targeted strategic investment in the business Employee co
Slide 19: Balance sheet strength
Balance sheet strength Net assets (Sm)* CAGR 14% 2017 2018 2019 2020 2021 1 Netassets — Cash and cash equivalents * Represents total assetsless total liabilities attributable to shareholders (excluding The Foundation) as at 31 December of each year Vly Or; Key Themes * Strong balance sheet with no d
Slide 20: Key financials
Key financials Funds under management (Sbn) Operating Revenue ($m) CAGR 19% 35.2 CAGR 28% 25.6 23.3 19.8 17.4 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 A 31 € yf 1 aI For tl nont if 131 each year Profit after tax * (Sm) Underlying profit after tax * (Sm) * Attributable to shareholders CAGR 2
Slide 21: Diluted earnings per share
Australian Ethical AS Diluted earnings per share * (cps) *Based on NPAT attributable to shareholders CAGR 26% 4.83 1.93 Interim Dividend (cps) 1.65 2.00 CAGR 16% 3.00 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 ort months ended 31 each year 2
Slide 22: Investment update
Investment update
Slide 23: Balanced
( YY Balanced Accumulation esis (opa)* Option Absolute Performance ~ 5.2% 12.7% 12.4% 9.3% 8.3% 9.0% 6.2% 6.8% (MySuper) — member fee 5.3% 12.9% 12.5% 9.4% 8.4% 9.1% 6.3% 6.8% Benchmark# 43% 13.3% 105% 7.7% 6.6% 7.6% +«=—» 5.4% 5.4% Ranked 2"4 Relative Performance** 1.0% (0.4%) 2.0% 1.7% 1.8% 15% 0.
Slide 24: Australian Shares Fund
Australian Shares Fund Long track record of outperformance Top quartile performance for periods 2 years and greater” 20Y Since (%pa) inception (pa) Retail* 5.0% 14.2% 20.3% 12.7% 12.9% 14.6% 10.0% 10.6% Benchmark™ 4.0% 17.5% 13.6% 97% 9.9% 11.2% 7.3% 75% Relative Performance 0.9% (3.3%) 67% 3.0% 3.0
Slide 25: Emerging Companies Fund
EN Emerging 6 mths Vv 3Y 5Y Since (%pa) (%pa) inception Companies Fund a Retail* 7.5% 14.3% 30.7% 19.4% 19.1% PS SE TIES 25% 13.7% 14.4% 10.2% 10.7% Relative Performance 5.0% 0.7% 16.3% 9.3% 8.4% Wholesale* 7.7% 14.9% 31.5% 20.2% 19.9% on Feu fe oe IMEI 25% 13.7% 14.4% 10.2% 10.7% Significant outper
Slide 26: Business update
Business update Australi 5 euegien | AL 26
Slide 27: Strong delivery of strategy in the first half of FY22
Strong delivery of strategy in the first half of FY22 Principled investment leadership Market leading retumns* Momentum in product development: High Growth & High Conviction incl first ETF to reach new segments New capability: Investment Director & minority stake in Sentient Impact Group 0 y) Advoca
Slide 28: Outlook
Outlook Despite challenging conditions, we remain committed to implementation of our strategy as we head into the second half vA Flows growth To continue into second half, although market sentiment expected to have some impact. Half on half revenue growth expected Remain focused on our strategic age
Slide 29: Footnotes
Footnotes This excludes the results for the Australian Ethical Foundation Limited (‘The Foundation’). December 2021 quarter Mercer Performance Survey - retail Australian Ethical Super’s Australian Shares option ranks no.1 out of 50 over 3 years, 5 years, 7 years and 10 years according to the SR5O Au
Slide 30: Contacts
John McMurdo Melanie Hill Chief Executive Officer Head of Business Performance & Investor Relations M4 @ q i ill@ " Contacts gq 0449 903 207 & 0428 879 348 Mark Simons Camilla Herring Chief Financial Officer Head of Communications 0434369746 & 0432 988 980 Australian Ethical AS
Slide 31: 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 32: Thank you
Thank you Australian | AS
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