Australian Ethical’s funds under management (FUM) expanded 27 per cent in the six months to 31 December to $13.26 billion, marking a new record high.
This, it said, was boosted by its acquisition of Altius Asset Management, which added $1.93 billion in FUM at the time of completion in September, as well as continuing positive organic net flows and investment performance of $680 million.
Net profit after tax attributable to shareholders for the half year was $9.3 million, an increase of 50 per cent.
Moreover, retail and wholesale net flows were $269 million in the six months to December, which included superannuation net flows of $194 million.
Regarding flows in its super channel, Australian Ethical said this was “predictably below” the comparative half, given its regular marketing program was scaled back during the seven-week limited service period covering the transition of the Mercer superannuation administration services to Grow Inc.
Flows over the period were also partially offset by Australian Unity institutional outflows of $58 million in lower margin fixed income funds. As part of the acquisition of Altius, Australian Ethical now serves a number of institutional clients, including Australian Unity.
Moreover, Australian Ethical reported a 1H25 revenue increase of 21 per cent driven by increased average FUM, the Altius Asset Management acquisition and positive investment performance. UPAT increased 14 per cent over the period.
“This is a strong first half result for Australian Ethical and evidence that our growth strategy is delivering,” chief executive John McMurdo said on Thursday.
“Compared to the first half of FY24, we’ve seen FUM grow by 37 per cent, revenue grow by 21 per cent and underlying profit growth of 35 per cent. These are strong financial metrics that we can feel very proud of. Our growth has been underpinned by organic activity with strong results across our direct and values-aligned channels as well as inorganic activity with the acquisition of Altius.”
From an operational perspective, McMurdo confirmed that the first half of FY2024–25 has also seen the transitions from Mercer to Grow Inc for its super administration, and from NAB to State Street for its custodian services.
And as it continues to scale, Australian Ethical revealed that operating leverage has seen further advancement, with underlying cost to income ratio improving from 74 per cent in FY23–24 to 72 per cent in 1H25.
Meanwhile, expenses – excluding $2.8 million integration and transformation costs and $860,000 due diligence and transaction costs – increased by 14 per cent, driven predominantly by increased variable costs.
This was partially offset by a 15 per cent reduction in marketing expenses, although this is expected to come in higher in its full-year 2025 results compared to FY23–24.
Looking ahead, McMurdo said the firm sees strong momentum, which he expects to continue into the second half of the year.
“l anticipate continued growth in brand awareness and superannuation net flows post-transition to Grow as we recommence our marketing activity,” the CEO said.
“During the second half, revenue margins are expected to stabilise and employment expenses are moderating following the completion of the acquisition of the Altius business in late September 2024. We will also benefit from the full run rate of the improved commercial rate cards following our superannuation administration and custody transitions.
“We continue to focus on our growth strategy and will continue to enhance the maturity of our investment management platform, to support our growing business.”
According to McMurdo, the transition of its remaining super members from MUFG to Grow Inc is expected by the end of calendar 2025.
“I’m excited about the period ahead of us. We are well positioned with a strong balance sheet, highly capable team, enhanced business platform, unique brand and deep ethical pedigree,” McMurdo added.
The board declared a fully franked interim dividend of 5 cents per share.
