Australian Ethical has signalled its full-year profit will be sizeably larger than previously expected, reporting fee revenue from its emerging companies fund is set to elevate the group’s profit by around 41 per cent higher year-on year.
The ethical investment specialist told shareholders on Tuesday that its Emerging Companies Fund returned 13.9 per cent (including performance fees) for wholesale investors for the year to 30 June against the S&P ASX Small Industrials benchmark of -7.4 per cent.
As responsible entity, Australian Ethical will take home a performance fee of $3.64 million, calculated as 20 per cent of the fund’s one year outperformance over the benchmark.
Australian Ethical stated the performance fee revenue, after tax and a contribution to its foundation, will see its underlying profit after tax (UPAT) for the full year rise to around $9 million to $9.5 million, an approximate increase of 41 per cent on the year prior from $6.5 million in financial year 2019.
Around two weeks ago, the group had forecast a profit guidance range of $6.8 million to $7.5 million, which would have been an increase of around 10 per cent year-on-year.
The group posted a net profit after tax in FY19 of $6.6 million.
The emerging companies performance fee only crystallised on 30 June.
The group achieved a UPAT of $4.4 million in the first half, with the impact of COVID-19 and lower revenue margins following its super administration fee in April hitting its profits in the second half.
Processing costs related to the early super release scheme were also said to affect the company’s profit.
But, Australian Ethical had seen its funds under management increase by 9.1 per cent to $3.92 billion at the end of May, from $3.59 billion at the end of March.
The superannuation segment saw $30 million in outflows due to the early access scheme during the two months, but overall net flows were positive – with $40 million coming in, as well as $10 million in net inflows to the managed funds business.
Australian Ethical will publish its results in late August.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
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