Australia’s leading ethical wealth manager Australian Ethical Investment Limited (ASX: AEF) delivered an Underlying profit after tax of $5.0 million in FY 2018 which is 18 percent higher than the last year. The profit was mainly driven by the strong member growth, strong inflows and positive investment performance of the company. The revenues in the financial year 2018 increased by 27 percent to $36.0 million. The Funds under management (FUM) for FY 2018 increased by 31 percent to $2.82 billion as compared to the previous corresponding period. The increase in FUM was driven by strong member growth, strong inflows, low outflows, and positive investment performance.
During the financial year 2018, the company’s Super Fund experienced lower net flows than last year by 26% which was mainly due to the lower proportion of rollovers per new member arising from changes to new member signup processes part way through the year. At the end of FY 2018, the company was having strong a balance sheet with no debt. Further, the net assets of the company increased by 9.6 percent to $14.8 million and the operating expenses of the company increased by 28 percent in FY 2018.
In the Annual General Meeting of the company which was held on 25 October 2018, the Managing director of the company informed that the company is currently facing various challenges which include the increasing competition in the responsible investment space. Further, the company is also experiencing a challenging regulatory environment with increased scrutiny on the superannuation sector, in particular, to demonstrate that it is efficient and effective in delivering member outcomes. The Managing Directors of the company also informed that the Investment performance of company’s flagship funds - the Australian Shares Fund and the Balanced Accumulation Option of its superannuation fund, has provided superior risk-adjusted returns over the medium to long-term.
At the Annual general meeting, the company informed that its default MySuper Option, the Balanced Accumulation option, has outperformed its 5-year objective and benchmark over the medium, long & very long term. In FY 2019, the company is planning for fee reductions in some of its retail managed funds, along with reductions for select options in its super fund. In the September quarter, funds under management (FUM) of the company increased by 5.0% to $2.96 Bn as compared to the June quarter.
In the last six months, the share price of the company increased by 28.88 percent as on 3 December 2018 and traded at a PE level of 37.280x. AEF’s shares traded at $172.900 (-0.626% intraday) with a market capitalization of circa $195.03 million as on 4 December 2018 (AEST 4:00 PM).
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