Full Year Results 30 June 2016 Phil Vernon | Managing Director 31 August 2016
Results
Highlights • Strong growth in Superannuation clients (24%) Strong Growth • Net flows (78%) • Funds under Management (33%) • Regular top quartile performance for a number of funds over Strong investment many time periods • Australian Shares Fund ranked 1 st in Mercer survey over 10 performance years • Strong growth offsets continued fee reductions Improved fee • Strategy to be at 75 th percentile of MySuper peer group by competitiveness 2020 Strong digital community, • Nearly 100,000 social media followers • Leading industry net promoter scores highly engaged clients • Provision of $900k created for remediation flowing from unit Provision for remediation pricing administration error Increased dividend • Dividend growth of 50% for full year
Financial results Key Financials (A$000s) FY2016 FY2015 Change (YoY) Revenue 23,039 21,171 8.8% Expenses (20,029) (19,201) (4.3%) Net Profit After Tax 3,010 1,970 53% Property impairment 181 484 63% Provision for remediation 900 0 n/a Tax adjustment (270) 0 n/a Underlying Profit After Tax 3,821 2,454 67% Earnings per share 1 282c 190c 48% Dividend 300c 200c 50% Share price $81.11 $58.80 38% Total shareholder return (%) 43% 72% - Return on equity (3 year average) (%) 27% 23% - Earnings per share growth (3 yr average) (%) 36% 89% - 1 Diluted EPS
Balance sheet and capital Balance sheet highlights (A$000s) FY2016 FY2015 Change (YoY) Cash and liquid investments 14,072 12,227 15% Property 1,460 1,725 (15%) Other assets 2,140 3,275 (35%) Total assets 17,672 17,227 3% Financial debt nil nil no change Total liabilities 4,856 6,075 (20%) Net assets 12,816 11,152 15% Regulatory capital (A$000s) FY2016 FY2015 Change (YoY) Net tangible assets 11,690 10,080 16% Regulatory requirement 5,100 5,100 no change Buffer 6,590 4,980 32%
FUM and net inflows (A$m) FY2016 FY2015 Change (YoY) Opening FUM 1,167 887 32% Super flows 237 132 80% Managed funds 82 47 73% Net flows 319 179 78% Market movement 71 101 (29%) Closing FUM 1,557 1,167 33%
Our strategy
Our opportunity Ethically conscious consumers = 10% = 1.5m investors
Seizing our opportunity Grow the ethical investing market We aim to grow the awareness and trust in ethical investing both directly and through our Target market (1.5m) industry associations and intermediaries by: Educating the ethical consumer of the availability of ethical products; and Busting the investment myth by demonstrating that ethical investing can Aware of ethical outperform investing Grow awareness of Australian Ethical We aim to build awareness of Australian Ethical Aware of primarily through: Building a strong digital community Australian Targeted sponsorships Ethical Marketing to ethically aligned employers Build trust and convert We aim to be the provider of choice to the ethically conscious consumer through offering: Our clients high conviction ethics (26k) professional investment management fully featured and competitive products excellence in client service
Growing the ethical investment market AUM $m 60,000 Core Responsible Investment ($) 51,508 50,000 40,000 31,611 30,000 25,590 16,489 20,000 15,202 10,000 0 2011 2012 2013 2014 2015 Core Responsible Investments (% of TAUM) TAUM % 4.5 4 4 3.5 2.7 3 2.6 2.5 1.8 1.8 2 1.5 1 0.5 0 2011 2012 2013 2014 2015 Source: Responsible Investment Benchmark Report
Building our digital community Australian Ethical Facebook Followers 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - Facebook Engagement Rate
Delivering consistent investment performance 1 year 3 years 5 years 7 years 10 years MANAGED FUNDS Quartile Quartile Quartile Quartile Quartile Balanced 1st 1st 1st 4th 2nd 1st 1st 1st 1st 1st Australian Shares (retail) Diversified Shares (retail) 1st 1st 1st 3rd 2nd 1st 1st 1st - - Advocacy (retail) International Shares 1st 2nd 4th 4th - Cash 4th 2nd 2nd 1st 2nd 3rd - - - - Fixed Interest Source: Mercer Peer Comparison as at 30 June 2016 9000 Value of $1000 invested since Fund Inception 19 September 1994 8000 Aus Shares Fund (net of fees) 7000 S&P/ASX 300 Accum index 6000 $’000 Benchmark (S&P/ASX Small Inds Accum index) 5000 4000 3000 2000 1000 0 Period ending 30 June 2016. Performance shown net of fees.
Ensuring our products are competitive Total FUM Total average revenue margin (ARM) 2.50% $2,000 2.00% $1,500 1.50% FUM($m) ARM (%) $1,000 1.00% $500 0.50% $0 0.00% 2012 2013 2014 2015 2016 Average revenue margin is FUM-based revenue as a proportion of average FUM over the year. FUM-based revenue is one component of total revenue. Other revenue includes member and withdrawal fees, interest and rent. Details can be found in Note 2 of the 2016 Financial Statements.
High employee engagement Australian Ethical 2016 (77%) Australian Ethical 2015 (73%) Australian Ethical 2014 (78%) Best Employers Benchmark 2016 (82%) Source: Annual engagement survey conducted by AON Hewitt. Best Employer comparison is for Australia and New Zealand
Has lead to strong client satisfaction Our NPS is one of the highest in the industry (Net promoter score = promoters LESS detractors)
And driven our growth Net Flows FUM($m) ($m) Super Managed Funds Net flows - Super Net flows - Managed Funds $400 $1,800 $1,600 $350 $1,400 $300 $1,200 $250 $1,000 $200 $800 $150 $600 $100 $400 $50 $200 $0 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -$50 -$100 Super members New super members 6,000 30,000 5,000 25,000 20,000 4,000 15,000 3,000 10,000 2,000 5,000 1,000 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -1,000
Which has delivered exceptional shareholder returns Funds Under Management ($m) Revenue ($m) 23.0 21.2 1,557 19.9 16.4 1,167 14.8 892 708 626 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Underlying Profit After Tax ($m) Profit After Tax ($m) 3.0 3.8 2.5 3.1 2.0 2.5 2.0 1.1 0.9 0.4 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
Exceptional shareholder returns 300 Revenue breakdown ($m) Dividends (cps) 23.0 21.2 19.9 200 200 16.4 13.9 85 60 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Significant items NPAT Basic earnings per share (cps) ROE (%) 282.0 33.0% 248.5 27.8% 190.4 21.5% 15.5% 104.8 5.8% 40.1 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
About us
Where we invest We invest in areas such as: We avoid companies involved in:
Our business model Vertically-integrated business, offering a broad range of products, across most asset classes accessed through multiple channels Channels Direct Employers Advisers Super and Pension Managed funds Product A$1,041m (67%) A$516m (33%) packaging 13 options 9 products Investment management Manufacturing Domestic equities, international equities, fixed income, cash – all managed inhouse As at 30 June 2016
Product and channel breakdown Total FUM = $1.6bn $255m 16% $261m 17% $943m 61% Super (Direct) $98m Super (Advised) 6% Managed Funds (Direct) Managed Funds (Advised)
Board of Directors TONY COLE STEVE GIBBS Non-Executive Chair Non-Executive Director Former CEO of ARIA, superfund for federal 17+ years as a Senior Partner in Mercer’s govt. employees Investment Consulting business Former Executive Officer of Australian AO in 1995 for services to government and Institute of Super Trustees industry Served as Chair of Responsible Investment Treasurer Paul Keating’s principal economic Academy Advisory Council and member of adviser, and government Head of Office ASX Corporate Governance Council Former Secretary to the Treasury, Secretary of the Department of Health and Social Security, Deputy Secretary to the Department of the KATE GREENHILL Prime Minister and Cabinet, and Chairman of Non-Executive Director the Industry Commission (now the Productivity Commission) 18+ years financial assurance and advice services Former Partner PricewaterhouseCoopers PHILLIP VERNON Board director and finance committee chair Managing Director for an NFP 30+ years of financial services experience Previously member of the Executive MARA BUN Committee of Perpetual heading up its Non-Executive Director Corporate Trust division Board member of Responsible Investment 20+ years experience in business and community in Association, Investor Group for Climate Australia and overseas including Morgan Stanley, Change and Planet Ark Macquarie, CSIRO, Greenpeace and Choice Founding CEO of Green Cross Australia and current director of Enova Community Energy
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