Australian Ethical Investment Ltd · ASX:AEF
Australian Ethical Investment — H1 2012 Earnings Presentation
31 slides from Australian Ethical Investment's earnings presentation, Apr 10, 2012
Slide 1: Shareholder Update: Half Yearly Results and Business Review
For personal use only Shareholder Update Half Yearly Results and Business Review April 2012
Slide 2: Important Notice
Important Notice For personal use only This presentation does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. Certain statements in the presentation relate to the future. Such statements involve known and unknown risks and un
Slide 3: 25 years of ethical investing
25 years of ethical investing For personal use only Company formed Smaller Listed Companies Trust on ASX $500 million 1980s 1990s 2000s 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Balanced Superannuation Trust Trust Ethical fund of the Year 3
Slide 4: Agenda
Agenda For personal use only 1 2 3 HALF STRATEGY ABOUT YEARLY AND AUSTRALIAN RESULTS PRIORITIES ETHICAL 4
Slide 5: Financial results
Financial results For personal use only % FYO7 FY08 FY09 FY10 FY11 1H11 1H12 Change FUM Average $M 523.0 600.0 539.6 608.4 641.6 654.0 599.0 (8%) Total Revenue 12.1 14.1 13.1 14.1 15.1 7.1 6.8 (4%) Total Expenses (8.9) (11.0) (10.6) (11.7) (12.3) (6.0) (5.9) 1% Operating Profit 3.2 3.1 2.5 2.4 2.8 1
Slide 6: What drives our profits?
What drives our profits? For personal use only Volumes x Pricing ‒ Expenses = Profit • FUM affected by • Regulatory reform • Business • Investing in key market and market complexity drives strategic assets for performance increasing fee costs. Needs long-term • Flows affected by pressure simplificat
Slide 7: What's going on in the world?
What’s going on in the world? For personal use only Markets remain subdued (impacts on FUM) Regulatory change Investor nervousness (fee compression) (affects flows) 7
Slide 8: AEI FUM v market impact
AEI FUM v market impact For personal use only (to 29 February 2012) 800 8000 700 AEI funds under management (left axis) 7000 600 All Ordinaries Index 6000 AEI FUM ($M) 500 5000 400 Australian All Ordinaries Index 4000 (right axis) 300 3000 200 2000 100 1000 0 0 2007 2008 2009 2010 2011 2012 8
Slide 9: Net industry flows (financial services)
Net industry flows For personal use only (financial services) 25 20 15 10 $B 5 0 -5 Source: Plan for life 9
Slide 10: Net industry flows (SRI sector)
Net industry flows For personal use only (SRI sector*) 600 400 200 0 $M -200 -400 -600 -800 Source: Plan for life * SRI = socially responsible investment 10
Slide 11: Net flows AEI vs. SRI sector
Net flows For personal use only AEI vs. SRI sector (as % of FUM) 20.0% 15.0% Australian Ethical 10.0% 5.0% 0.0% -5.0% SRI Industry Average -10.0% -15.0% S D M J S D M J S D M J S D M J S D M J 2006 2007 2008 2009 2010 2011 Source: Plan for life 11
Slide 12: Underlying performance
Underlying performance For personal use only Underlying Revenue Underlying Expenses 16 14 12 10 Intro of wholesale fees $M 8 Technology investment Performance incentives 6 4 2 0 June 07 June 08 June 09 June 10 June June 11 11 December To December 11 2011 Annualised (half year doubled to illustrate t
Slide 13: Efficiency: Funds under management vs. FTE
Efficiency For personal use only Funds under management vs. FTE FUM (average) FTE 700 60 600 50 500 40 $M 400 30 300 20 200 10 100 0 0 June 06 June 07 June 08 June 09 June 10 June 11 As at Normalised 29 Feb 12 13
Slide 14: Peer comparisons: Total Shareholder Return
Peer comparisons For personal use only Total Shareholder Return (TSR) 60% 40% 20% TSR 0% -20% -40% -60% Jun-2008 Jun-2009 Jun-2010 Jun-2011 Dec-2011 AEI Hunter Hall Perpetual Limited Platinum Asset Management IOOF Treasury Group TSR based on change in share price and dividends paid. 14
Slide 15: Agenda
Agenda For personal use only 1 2 3 HALF STRATEGY ABOUT YEARLY AND AEI RESULTS PRIORITIES 15
Slide 16: Strategic Roadmap 2010-13
Strategic Roadmap 2010-13 For personal use only #1 brand for Ethical Investment Q3 2012 - 2013 Product Price & Features Super and Managed Funds Q2 2012 Brand Clear & Consistent Appeals to wider market Influences every part of the business March 2012 People Boost front office skills (sales, marketing
Slide 17: Priorities
Priorities For personal use only Ethics Client Service Focus on the core Great People Advisor Business Focused growth Grow Superannuation 17
Slide 18: Client service
Client service For personal use only What We’ve Achieved Future Focus • Increased resourcing • Review of external providers • Aligned service with sales • Management of investors by AEI key to outsourcing requirements • Invested in improved telephone system • Internalised first call management • Dis
Slide 19: Advisors
Advisors For personal use only What We’ve Achieved Future Focus • Vastly improved service standards • Improve external service provider around distribution and unit pricing support • Introduction of a wholesale unit • Better sales/service alignment and class for certain products resourcing will lead
Slide 20: Superannuation
Superannuation For personal use only What We’ve Achieved Future Focus • Strengthened sales resources • Review external service providers around superannuation • Review pricing to ensure • Providing employers with better competitive in more competitive support for their employees environment 22% 31%
Slide 21: New Senior Hires
New Senior Hires For personal use only David Macri Chief Investment Officer • 15 years experience • Portfolio manager and investment analyst with Macquarie Securities, Credit Suisse, Mellon (previously NSP Buck) and Mercer. Steve Newnham Executive Director • Over 20 years experience in marketing and
Slide 22: Staff survey results
Staff survey results For personal use only 2008 2009 2011 Satisfaction with current role 77% 79% 97% I have confidence in my manager/ supervisor to lead their team 69% 70% 77% Satisfaction with communication 74% 54% 77% Satisfaction with remuneration 63% 63% 46% I feel personally valued at work - -
Slide 23: Our Board
Our Board For personal use only Andre Morony • 40 years in the finance sector • Experience includes Commonwealth Treasury, chief economist and chief investment officer at BT Australia and various prominent fund investment committees Phillip Vernon • 25 years experience in financial services covering
Slide 24: Challenges and priorities
Challenges and priorities For personal use only Key challenges Key priorities • Market likely to remain volatile and • Less products, more focus subdued for some time • Efficiency critical • Investor nervousness likely to remain • External service provision • Fee pressure to remain • Growth of direc
Slide 25: Agenda
Agenda For personal use only 1 2 3 HALF STRATEGY ABOUT YEARLY AND AEI RESULTS PRIORITIES 25
Slide 26: Business Snapshot
Business Snapshot (as at 29 February 2012) For personal use only Products Channels $235m Managed $387m Funds 41% 59% Super Advised Direct Geography Age NT Not Specified Tas 1% 2% 60-69 1% <18 WA 4% 6% 5% 18% ACT 16% 18-29 6% 32% 50-59 NSW SA 8% 11% 26% 33% Qld 29% 40-49 30-39 International <1% Vic 2
Slide 27: Superannuation
Superannuation For personal use only Employers vs. Retail Accumulation $20m SMSF* $31.0m Defensive Smaller c. 14,000 Companies /High members $144m 4% Growth $105.7m $222m Retail $150.8m Casual 6% Direct 32% Balanced Super $387m Employers NSW $57.7m FUM at 10% Growth Feb 2012 $21m $3.2m International
Slide 28: Managed Funds
Managed Funds For personal use only Managed Funds FUM c. 9,000 400 investors 300 200 J J A O J A O J A O J J $235m 100 2007 2008 2009 2010 2011 FUM at $m 0 O J J J A Feb 2012 By investor type Funds Under Management Smaller Larger Companies Master Companies Trust/Wrap 22% 19% $43.9m Income Trust 3% $
Slide 29: Values and Ethics at the heart of everything we do
Values and Ethics at the heart of everything we do For personal use only Ethical Charter Ethics, • The most rigorous and robustly applied charter of ethics in Australian funds management and Governance superannuation • Recent investment decisions to divest Origin and Energy and Hong Kong and China G
Slide 30: Example ethical investments
Example ethical investments For personal use only Cochlear • Supplies approximately 70% of the world market in cochlear implants for profoundly hearing-impaired people. Herman Miller • High quality furniture and office products using predominantly recycled materials • High commitment to waste and ch
Slide 31: Giving back
Giving back For personal use only Community Grants History 250,000 $1.3m donated over 10 years Yearly Payment ($) 200,000 150,000 100,000 50,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 31
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