Australian Ethical Investment Ltd · ASX:AEF
Australian Ethical Investment — Shareholder Meeting (October 2018)
32 slides from Australian Ethical Investment's shareholder meeting presentation, Oct 25, 2018
Slide 1: Phil Vernon | Managing Director and CEO
For personal use only Phil Vernon | Managing Director and CEO
Slide 2: Highlights, Business update, Financials
HIGHLIGHTS BUSINESS UPDATE FINANCIALS
Slide 3: Highlights
For personal use only Highlights
Slide 4: Highlights: growth, impact, investment performance
For personal use only Growth Our impact Investment performance Fastest growing super fund over • $620k distributed through the foundation Long term track record of strong performance 5 years and 5th highest over 1 • Investment portfolio is 66% less carbon intensive than on Balanced Accumulation (My
Slide 5: Business update
For personal use only Business update 5
Slide 6: Strategic pillars
For personal use only PILLAR PILLAR PILLAR PILLAR Ethical leadership Professional Competitive Sustainable Be a bold ethical voice and investment products business drive change for good. management Offer a unique set of fully Be of a scale that meets customer featured ethical wealth needs, shareholde
Slide 7: Key insights
Key insights • Our target market is the Highly Ethical and Ethical Action Takers segments • Increased competition in the sector but we’re confident of our distinct points of For personal use only difference Ethical Action Takers Ethics dominant, Ethically Inactive financials a hygiene factor Highly
Slide 8: Superannuation and responsible investment market growth
For personal use only Superannuation ($trillion) Core Responsible Investments ($bn) 186.4 $1.8 Increase due to inclusion of $1.6 AMP Capital following implementation of new ethical strategy $1.3 $1.3 $1.1 $1.0 $0.8 $0.8 $0.8 $0.7 64.9 51.5 31.6 25.6 15.2 16.5 2008 2009 2010 2011 2012 2013 2014 2015
Slide 9: Top funds by AUM and member growth
For personal use only 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 Sunsu
Slide 10: Net Promoter Score comparison
For personal use only 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 -3
Slide 11: Social media fans and engagement
For personal use only 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
Slide 12: Net outflow ratio comparison
For personal use only 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 Source: KPMG 2018 Super Insights Report – published
Slide 13: Australian Shares Fund risk and return
For personal use only 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
Slide 14: Australian Shares Fund outperforms market
For personal use only 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.
Slide 15: Balanced Accumulation option performance
For personal use only 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
Slide 16: Investment portfolio and our Foundation
For personal use only Investment Portfolio Our Foundation Investments produced 66% less CO2 than benchmark1 10% of AEI profits donated to not-for-profit organisations 6 $620k in grant making in 2018 Nil investment in fossil fuels2 Multi-year partnership arrangements: • Empowering women with Human Ri
Slide 17: Employee engagement scores
For personal use only Bottom quartile (0-51%) Moderate Zone (51%-68%) Top quartile (68%-100%) 2017 Engagement score 2018 Engagement score 2018 Best Employers Source: Aon Hewitt Differences may appear one percentage point higher or lower than expected due to rounding
Slide 18: Market challenges
For personal use only Competitive Slowing Other channels Regulatory market growth rate pressure From industry funds in Rapid growth rate of past Non digital channels are Productivity commission. general as well as responsible few years has slowed. opening up diversification Member outcomes regime. i
Slide 19: Strategic priorities: be bold, be accessible
For personal use only Be bold Making it real Breaking Be accessible Accentuate our ethical Make our point of through Ensure customers can point of difference in difference tangible reach us through their Significantly increase both substance and through all customer channel of choice. our brand awar
Slide 20: Financials
For personal use only Financials
Slide 21: Continued growth delivering strong returns
For personal use only 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 $128m Underlyin
Slide 22: Income statement summary
For personal use only Revenue 28,305 35,992 27% Operating expenses (22,310) (28,594) 28% Key themes Non operating expenses (1,937) - - Total expenses (24,247) (28,594) 18% • Continued FUM growth driving Income tax expense (1,134) (2,317) 104% Net profit after tax-statutory 2,924 5,081 74% higher rev
Slide 23: Funds under management and flows
For personal use only Superannuation FUM ($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
Slide 24: Super members and net flows
For personal use only 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
Slide 25: Average revenue margin and FUM
Key themes For personal use only • 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 red
Slide 26: Revenue and expense drivers
For personal use only 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
Slide 27: Expenses
For personal use only 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 expense
Slide 28: Balance sheet and cash
For personal use only 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
Slide 29: FUM, revenue and profit trends
For personal use only 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 investmen
Slide 30: Shareholder value, dividend and cash flow
For personal use only 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 2
Slide 31: For personal use only
For personal use only 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 unc
Slide 32: Australian Ethical
australianethical *. a For personal
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