The Australian Ethical Investment Limited (ASX: AEF) share price has responded well to the company’s release of full-year earnings for the 2020 financial year today. At the time of writing, Australian Ethical shares are up 4.65% at market close to $4.50 after closing at $4.30 yesterday.
What is Australian Ethical Investment?
Australian Ethical is a superannuation provider that specialises in providing ethical investment options for super funds (as its name implies). It also offers non-super investment options like managed funds and retirement plans. The company started life back in 1986 and today manages roughly $4.05 billion in funds for more than 57,000 clients.
What did the company report today?
Australian Ethical reported total revenues of $46.26 million for FY20, up 22% from FY19’s $40.98 million. This was helped by funds under management growth of 19% over the prior year to $4.05 billion. The company also experienced record net inflows of $660 million, which was a 100% increase on the prior year.
Meanwhile, earnings per share (diluted) came in at 8.42 cents, up 46% from FY19’s 5.77 cents per share. The company noted that the compounded annual growth rate (CAGR) for earnings had been a pleasing 47.6% per annum over the past 3 years.
That enabled statutory net profits after tax to rise 43% from FY19’s $6.6 million to $9.46 million in FY20.
Dividend investors will be pleased with the company’s results as well. Australian Ethical will pay 6 cents per share in dividends for FY20, up 20% from FY19’s 5 cents per share. This includes a fully franked dividend of 1.5 cents per share that will be paid on 16 September. A special dividend of 1 cent per share that reflects performance fees is also included.
FY21 outlook
Australian Ethical didn’t provide any material guidance for FY21, but CEO John McMurdo had this to say on the company’s outlook:
Like all fund managers we are highly leveraged to the markets at a time when economic uncertainty remains high, interest rates low and COVID-19 still unbeaten. FY21 will be a difficult year as market volatility continues…
Despite this, we are in a strong position heading into FY21 with no debt, strong cash flows and positive net inflow momentum. We are focused on investing in the long-term growth of our business.
All in all, it was good news for the Australian Ethical share price today, which, although up more than 14% for the year to date, is still down more than 50% from the highs we saw in June.
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More reading
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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