Australian Ethical Investment Ltd · ASX:AEF
Australian Ethical Investment — FY2018 Earnings Presentation
26 slides from Australian Ethical Investment's earnings presentation, Aug 24, 2018
Slide 1: Phil Vernon, Managing Director and CEO; Mark Simons, CFO
Phil Vernon | Managing Director and CEO Mark Simons| CFO
Slide 2: Highlights, Financials, Business Update
HIGHLIGHTS FINANCIALS BUSINESS UPDATE
Slide 3: Highlights
Highlights
Slide 4: Our impact, growth and investment performance
Growth Our impact Investment performance Fastest growing super fund over • $620k distributed through the foundation Long term track record of strong performance 5 years and 5th highest over 1 • Investment portfolio is 66% less carbon intensive than on Balanced Accumulation (My Super) Option year * b
Slide 5: Financials
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Slide 6: Continued growth delivering strong returns
Continued growth delivering strong returns Record profit Diluted EPS 35% Strong FUM & revenue growth 3 year CAGR NPAT attributable to • FUM up 31% shareholders* $5m, up 71% Dividend 54% 400c, up • Revenue up 27% to $36m • Institutional investor win in July 17 of $128m Underlying profit $5m, up 18% T
Slide 7: Key themes
Revenue 28,305 35,992 27% Operating expenses (22,310) (28,594) 28% Key themes Non operating expenses (1,937) - - Total expenses (24,247) (28,594) 18% • Continued FUM growth driving Income tax expense (1,134) (2,317) 104% Net profit after tax-statutory 2,924 5,081 74% higher revenues Less Foundation
Slide 8: FUM $2.82bn as at 30 June 2018
Superannuation FUM ($bn) ($m) 0.17 Managed Funds Retail 0.50 $2.82bn as at 30 June 2018 Managed Funds Wholesale 0.01 0.34 0.31 Institutional 0.01 0.30 0.23 Managed Funds 0.28 0.11 (Direct) 0.26 1.84 0.07 22% 0.23 1.49 1.04 0.79 0.59 2014 2015 2016 2017 2018 Year ending 30 June Funds under Change Man
Slide 9: Net flows up 14%, super members up 17%
Super members up 17% Net flows up 14% 41,518 Superannuation 35,352 Managed Funds Retail Managed Funds Wholesale 519 26,342 Institutional 454 21,196 17,663 Net Flows 319 177 88 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 9
Slide 10: FUM and average revenue margin
Key themes • Ongoing targeted fee ARM % reductions since 2014 Total FUM (LHS) Total average revenue margin (RHS) • Change in managed funds $3,000 2.50% product mix from retail to wholesale contributed to $2,500 further reduction in 2.00% average margin in FY18 • Further fee reductions $2,000 planned
Slide 11: Revenue and expense drivers
Key themes • Super FUM growth of 23% 2.8 driving strong revenue 1.3 0.2 (0.1) growth 4.9 0.9 4.0 • Managed funds FUM tilt to wholesale driving lower average fee margins and revenue growth 36.0 • Employee cost increase 28.6 28.3 driven by full year impact 22.3 of FY17 hires and continued investment i
Slide 12: Expenses
35 30 Key themes 25 $ Millions • Full year impact of FY17 20 hires impacting year on year cost growth 15 • Focused strategic investment on customer 10 experience improvements, communication and channel diversification 5 - 2014 2015 2016 2017 2018 Fixed expenses Variable expenses Non-operating & tax
Slide 13: Key themes
14.8 9.2 13.5 8.2 12.8 11.2 6.8 9.5 6.2 3.2 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 * attributable to shareholders * attributable to shareholders Key themes • Strong balance sheet with no debt • Strong cash balances maintained to support continued investment in growth and customer experien
Slide 14: Key themes
Key themes 2.82 36.0 2.15 28.3 • Strong FUM growth 23.0 1.56 19.9 21.2 continues 0.89 1.17 • Ongoing fee reductions to our customers • Sustained growth in 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 underlying profit and ^before distributions revenue • Continued investment in growing the busin
Slide 15: Key themes
135.0 400 300 Key themes 94.6 260 81.1 200 200 58.8 • Continue to deliver value 35.4 to shareholders • Strong share price growth 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 • FY18 dividend 400c, up 54% • Strong operating cash flow 742 446 592 509 272 262 241 422 181 295 2014 2015 2016 2017 201
Slide 16: Business update
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Slide 17: Strategic pillars
PILLAR PILLAR PILLAR PILLAR Ethical leadership Professional Competitive Sustainable Be a bold ethical voice and investment products business drive change for good. management Offer a unique set of fully Be of a scale that meets customer featured ethical wealth needs, shareholder returns and Deliver
Slide 18: Top funds by AUM and member growth
Top 10 funds by AUM growth Top 10 funds by member growth Tasplan AON Australian Ethical Super Netwealth Investments Netwealth Investments Tasplan Sandhurst Trustees Clearview Wealth Qsuper Australian Ethical Super Host Plus Host Plus Commonwealth Gov Super Mercer Industry Sunsuper Aracon Super Retai
Slide 19: Net promoter scores: superannuation and managed funds
Superannuation Managed funds Detractor Passive Promoter Detractor Passive Promoter +53 +16 +10 -3 +48 -1 -2 -3 -28 -4 -26 -10 66 39 28 -17 -22 47 34 35 34 16 60 -17 -33 23 -40 25 23 18 9 -45 16 32 12 48 41 40 44 32 31 29 36 43 42 28 24 28 35 31 21 21 19 0 -13 -12 -29 -40 -40 -33 -31 -35 -31 -49 -49
Slide 20: Net outflow ratio
1000% 900% 800% 700% Net outflow ratio 600% 500% High outflows Low outflows 400% 300% 200% 100% 100% 0% Australian Ethical Corporate Industry Public sector Retail Australian Ethical Represents outflows as percentage of inflows 20 Source: KPMG 2018 Super Insights Report – published May 2018
Slide 21: Social media fans and engagement
300,000 Fans 250,000 Engagement 200,000 150,000 100,000 50,000 - Australian Industry fund Retail fund Retail fund Industry fund Industry fund Retail fund Industry fund Retail fund Average Ethical Note: Fans = total number of people who have liked our page; Engagement = total of all likes, shares and
Slide 22: Annualised return versus risk
S&P/ASX 200 - Total Return 12,000 Australian Ethical Australian Shares Fund S&P/ASX SMALL INDUSTRIALS – Total Return Australian Share Fund -Net S&P/ASX SMALL ORDINARIES – Total Return 10,000 S&P/ASX 200 INDUSTRIAL – Total Return ASX Small Industrials AE Australian Shares Fund 8,000 S&P/ASX 200 6,000
Slide 23: Australian Shares Fund continues to outperform the market
Australian Shares Fund continues to outperform the market over the medium, long and very long term 1Y 3Y 5Y 7Y 10Y 20Y Since Incept’n (%) (%p.a.) (%p.a.) (%p.a.) (%p.a.) (%p.a.) (%p.a.) Retail* 8.0 10.7 13.1 11.7 9.4 10.7 9.9 S&P/ASX 200 Accum Index 13.0 9.0 10.0 9.1 6.4 8.8 9.4 Relative Performance
Slide 24: Balanced Accumulation option outperformance
Our default MySuper Option, the Balanced Accumulation option, has outperformed its 5 year objective and benchmark over the medium, long & very long term shown below. 1Y 3Y 5Y 7Y 10Y Since Incept’n* (%) (%p.a.) (%p.a.) (%p.a.) (%p.a.) (%p.a.) Balanced Accumulation Option ~ 6.7 6.4 7.6 7.4 5.3 6.2 Ben
Slide 25: Important information and disclaimer
Australian Ethical Investment Ltd (ABN 47 003 188 930; Australian Financial Services Certain statements in this presentation relate to the future. Such statements involve Licence No. 229949) is the Responsible Entity and Investment Manager of the known and unknown risks and uncertainties and other i
Slide 26: australianethical
australianethical *. a
Australian Ethical Investment — FY2018 Earnings Presentation on 6ix