Phillip Vernon
Increasing client numbers and funds under management
Financial results were (all comparisons are to half-year ended 31 December 2013):
- Revenues of $9.9 million (up 1%)
- Net profit after tax (NPAT) of $0.553 million (down 55%)
- Underlying profit after tax (UPAT) of $0.965 million (down 32%)
- Total expenses were $9.3m (up 9.1%)
- Interim ordinary dividend of 80 cents per share, fully franked.
Operating highlights for the six months ending 31 December 2014 include:
- Funds under management of $1,039m (up 30% since 31 December 2013)
- Net inflows of $77m (up 119% compared to the six months to 31 December 2013)
- Superannuation membership at 19,284 members (up 22% since 31 December 2013)
- Top quartile investment performance
- International Fund wins International Fund of the Year award
- Interim ordinary dividend of 80c per share, fully franked
Australia’s longest running, leading ethical superannuation fund and investment company, Australian Ethical Investment (ASX code: AEF) has released its half-year results to December 31 2014. Whilst the results show a profit decline over the previous year due to fee reductions, property impairment and remuneration adjustments, the underlying business is strong.
Of particular note is a continued upward trend of Australians making the shift to ethical investing with membership of the retail superannuation fund growing by 22%[1]. This is even more impressive against the backdrop of shrinking membership across the super industry, with the median fund experiencing negative member growth of -1.4%[2].
The mid-year results show that increased inflows (up 119% compared to the six months to 31 December 2013) and strong investment performance have led to more than $1 billion[3] in funds under management (FUM) – up 30% since 31 December 2013.
Last year, Australian Ethical made substantial fee reductions on its superannuation fund.
“As we continue our rapid growth we have deliberately shared the benefits of that growth with our clients through lower fees which, in turn, led to greater inflows. This will produce a far more sustainable business in the long term,” said Phil Vernon, Managing Director, Australian Ethical.
“The impact of the fee reduction on revenue was offset by increases in FUM and net flows, resulting in an overall 1% increase in revenue over the period compared to the previous six months,” Mr Vernon said.
“Our underlying business is strong and our focus continues to be on building a long term sustainable organisation that benefits all of our stakeholders, and has significant social and environmental impact,” Mr Vernon said.
It is not just growth of client numbers and funds under management that are cementing Australian Ethical as one to watch.
“Our investment performance continues to be consistently strong with many of our funds performing in the top quartile of their categories, and our International Equities Fund recently won International Fund of the Year in the annual Australian Fund Manager of the Year awards,” said Mr Vernon.
According to independent superannuation research firm, SuperRatings, Australian Ethical’s Smaller Companies investment option outperformed 85 other funds’ returns to take out the number one spot in the ‘Australian Shares’ category, with a return of 16.1%[4] for the 12 months to December 2014.
“Australian Ethical funds are generating great returns for investors who care about the future of the planet,” said Mr Vernon.
Australian Ethical is a unique super fund and investment manager in that all of its investments must meet the principles of its Ethical Charter.
These investments are backed by over 25 years’ experience in the sector, with expert in-house investment and ethics teams, ensuring strong returns without compromise on where members money is invested.
“Our approach to investment means that we are investing in sectors that are experiencing strong growth,” commented Mr Vernon.
“Sectors such as bio-technology, IT, healthcare and renewables are the cornerstones of our business and in turn attract progressive, mindful investors that see that these investments are some of the biggest growth opportunities we have ever seen.
“More and more investors are seeing that ethical investing is the right thing to do and the smart thing to do,” concluded Mr Vernon.
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[1] Super members of 19,284 at 31 December 2014, up 22% from 31 December 2013
[2] SuperRatings Quarterly Stats Snapshot – December 2014
[3] Funds under management of $1,039m at 31 December 2014, up 30% from 31 December 2013
[4] SuperRatings Crediting Rate Survey, December 2014