Australian Ethical Investment (AEF) H1 2025 earnings summary

Executive summary

• Funds under management (FUM) reached $13.26 billion at 31 December 2024, up 27% since June 2024 and 37% year-over-year, driven by organic growth and the Altius Asset Management acquisition.

• Achieved record half-year underlying profit after tax (UPAT) of $11.5 million, up 35% year-over-year, and net profit after tax (NPAT) of $9.3 million, up 50% year-over-year.

• 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.

• Continued recognition for ethical investment leadership, with active engagement on human rights and climate issues, strong gender diversity, and multiple industry awards.

• Completed key operational transitions, including moving super administration to GROW Inc and custody to State Street, 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%.

• 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, fully franked, up 67% year-over-year, with a payout ratio of 61%.

• Cost-to-income ratio improved to 72% from 75% year-over-year.

• Diluted UPAT EPS rose 34% to 10.11 cents; diluted NPAT EPS up 49% to 8.22 cents.

Outlook and guidance

• Expect continued growth momentum in H2 FY2025, with net flows and marketing spend to increase as platform transitions are completed.

• Revenue margins anticipated to remain around 0.90% following the Altius acquisition; full-year marketing spend to be slightly higher than FY24.

• 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.

• Remaining super members to transition to GROW Inc by end of calendar 2025.