Australian Ethical Investment (AEF) H1 2025 earnings summary

Executive summary

• Achieved record half-year underlying profit of $11.5 million (up 35% year-over-year) and NPAT of $9.3 million (up 50%), reflecting strong execution of growth strategy and disciplined cost management.

• Funds under management (FUM) reached $13.26 billion as of December 2024, up 37% year-over-year and 27% since June 2024, driven by organic growth and the Altius Asset Management acquisition.

• Maintained over 40 consecutive quarters of positive net flows, with 1H25 retail and wholesale net flows of $269 million, high customer retention, and strong investment performance across most strategies.

• Continued recognition for ethical investment leadership, with active engagement on human rights and climate issues, multiple industry awards, and strong gender diversity (50% female representation on executive team and board).

• Completed key operational transitions, including super administration and custody moves, and advanced technology platform upgrades to support scalability.

Financial highlights

• Revenue rose 21% year-over-year to $58.8 million, driven by FUM growth and the Altius acquisition; average FUM increased 29%.

• Underlying profit after tax (UPAT) was $11.5 million, up 35% year-over-year; NPAT was $9.3 million, up 50%.

• Operating expenses increased 14% to $41.5 million, mainly due to employee costs, capability build, and platform investments.

• Interim dividend of 5 cents per share, up 67% year-over-year, with a payout ratio of 61%.

• Diluted UPAT EPS rose 34% to 10.11c; diluted NPAT EPS up 49% to 8.22c; basic EPS on NPAT attributable to shareholders was 8.36c.

Outlook and guidance

• Expect marketing expenses to normalize and net flows to revert to higher levels in H2 FY2025 as platform transitions are completed.

• Revenue margin anticipated at ~0.90% in H2 FY2025, reflecting lower margin Altius funds.

• Full run-rate of ~$4 million in annualized operating cost savings from administration and custody transitions expected in the second half, with some reinvestment into platform enhancements.

• Medium-term growth underpinned by compulsory Superannuation Guarantee increase, expansion into private markets and international equities, and values-aligned channels.

• Employee expense growth expected to moderate in the second half.