HY20 result: Australian Ethical share price down on big profit growth

The share price of ethical fund manager Australian Ethical Investment Limited (ASX:AEF) is up after reporting its HY20 result.

The share price of Australian Ethical Investment Limited (ASX: AEF) is down 0.2% after the ethically-focused fund manager reported large profit growth in its half-year result to 31 December 2019.

a woman

Australian Ethical's HY20 result

The ethical fund manager reported that its revenue increased by 18% to $23.3 million. This was helped by a 36% increase of funds under management (FUM) to $3.87 billion at 31 December 2019. First half net inflows were up 100% to $295.8 million. Funded superannuation members increased by 13% to 43,264.

Australian Ethical implemented super fee reductions in December 2019 which is aimed to attract more superannuation funds.

Operating expenses only increased by 13% to $17 million for the half year. The company launched a new website and content management system in October 2019 and will continue to invest.

Excluding the Australian Ethical Foundation, net profit rose by 40% to $4.4 million and diluted earnings per share (EPS) increased by 39% to 3.95 cents.

Australian Ethical's funds are performing strongly. In its managed funds, Emerging Companies fund and Australian Shares fund outperformed the benchmark, while in superannuation its Balanced option and Australian Shares option are ranked among the top performers.

Australian Ethical dividend and balance sheet

The Board of Australian Ethical decided to increase the interim dividend by 25% to 2.5 cents.

Excluding the Foundation again, Australian Ethical reported that the cash and cash equivalents on the balance sheet increased by 19.5% to $17.7 million with no debt and net assets increased by 16% to $17.4 million.

Outlook

In a trading update for January 2020, it reported net inflows of $112 million and FUM of $4.14 billion.

The fund manager expects continuing strong growth as ethical investment moves into the mainstream and people realise Australian Ethical is performing well whilst delivering social good.

Tristan Harrison owns shares of Australian Ethical Investment Ltd. 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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