Full Year 2026 Australian Ethical Investment Ltd Earnings Call

August 25, 2026

Speaker #2: Good morning, everyone, and thank you for joining us. I'm Melanie Hill, Head of Investor Relations at Australian Ethical. I would like to begin by acknowledging the traditional owners of the country on which we work, the Gadigal people, one of the 29 tribes of the Eora Nation, and recognize their continuing connection to the land, waters, and culture.

Melanie Hill: Good morning, everyone, and thank you for joining us. I am Melanie Hill, Head of Investor Relations at Australian Ethical. I would like to begin by acknowledging the traditional owners of the country on which we work, the Gadigal people, one of the 29 tribes of the Eora Nation, and recognize their continuing connection to the land, waters, and culture. We pay our respects to their elders, past and present. Please note that today's presentation is being recorded, and a recording will be made available on the Australian Ethical website. The slides used in the presentation are also available on our website. There will be an opportunity for questions and answers at the end. Questions can be submitted at any time by selecting the raised hand icon in the top right-hand corner of the webpage and entering your question in the designated text box.

Speaker #2: We pay our respects to their Elders past and present. Please note that today's presentation is being recorded, and a recording will be made available on the Australian Ethical website.

Melanie Hill: Please note that today's presentation is being recorded, and a recording will be made available on the Australian Ethical website. The slides used in the presentation are also available on our website.

Speaker #2: The slides used in the presentation are also available on our website. There will be an opportunity for questions and answers at the end. Questions can be submitted at any time by selecting the raised hand icon in the top right-hand corner of the web page, and entering your question in the designated text box.

Melanie Hill: There will be an opportunity for questions and answers at the end. Questions can be submitted at any time by selecting the raised hand icon in the top right-hand corner of the webpage and entering your question in the designated text box.

Speaker #2: To view the slides in full screen, select the button at the top of the slide container. Press the button again to return to the normal layout, showing both the slides and the presenter.

Melanie Hill: To view the slides in full screen, select the button at the top of the slide container. Press the button again to return to the normal layout showing the slides and presenter. We may also have media in attendance this morning. I am joined this morning by John McMurdo, our Group CEO and Managing Director, and Mark Simons, our CFO. Also up front, we have our Group Executive, Superannuation, Maria Loyez, and Group Executive, Asset Management, Ludo Theau. Members of our executive leadership team are also present to assist with answering questions. John will take us through the highlights, Mark will cover the financials, then John will provide a short business update. Over to you, John.

Speaker #2: We may also have media in attendance this morning. I'm joined this morning by John McMurdo, our Group CEO and Managing Director, and Mark Simons, our CFO.

Speaker #2: Also up front, we have our Group Executive, Superannuation, Maria Lawyers, and Group Executive, Asset Management, Ludo Teo. Members of our executive leadership team are also present to assist with answering questions.

Melanie Hill: Also up front, we have our Group Executive, Superannuation, Maria Loyez, and Group Executive, Asset Management, Ludo Theau. Members of our executive leadership team are also present to assist with answering questions. John will take us through the highlights, Mark will cover the financials, then John will provide a short business update. Over to you, John.

Speaker #2: John will take us through the highlights, Mark will cover the financials, then John will provide a short business update. Over to you, John.

Speaker #3: Thanks, Mel, and good morning, everyone. It's great to be back together. This year marks 40 years of Australian Ethical—evidence not just of time, but of consistency.

John McMurdo: Thanks, Mel, and good morning, everyone. It is great to be back together. This year marks 40 years of Australian Ethical, evidence not just of time, but of consistency. Founded in 1986, Australian Ethical was built on the belief that money can be a force for good. We generate strong returns while directing capital to future-focused companies and away from unnecessary harm to people, planet, and animals. The Ethical Charter guiding our investments today is the same charter written 40 years ago. That gives us a distinctive market position. We are not a conventional financial services company with an ethical option attached. We are a pure play ethical investment manager. Today, we are also a fast-growing S&P/ASX 300 business delivering long-term value for investors and shareholders. We have demonstrated that purpose and profit can work together and be mutually reinforcing. Our strategy remains clear and deliberately consistent.

Speaker #3: Founded in 1986, Australian Ethical was built on the belief that money can be a force for good. We generate strong returns while directing capital to future-focused companies and away from unnecessary harm to people, planet, and animals.

Speaker #3: The Ethical Charter guiding our investments today is the same charter written 40 years ago. That gives us a distinctive market position. We're not a conventional financial services company with an ethical option attached.

John McMurdo: The Ethical Charter guiding our investments today is the same charter written 40 years ago. That gives us a distinctive market position. We are not a conventional financial services company with an ethical option attached. We are a pure play ethical investment manager.

Speaker #3: We are a pure-play ethical investment manager. Today, we're also a fast-growing ASX 300 business, delivering long-term value for investors and shareholders. We've demonstrated that purpose and profit can work together and be mutually reinforcing.

John McMurdo: Today, we are also a fast-growing S&P/ASX 300 business delivering long-term value for investors and shareholders. We have demonstrated that purpose and profit can work together and be mutually reinforcing. Our strategy remains clear and deliberately consistent.

Speaker #3: Our strategy remains clear and deliberately consistent. We're focused on strengthening both growth engines: superannuation and investments beyond super, while rolling out the operating capabilities that enable better service at a scalable unit cost.

John McMurdo: We're focused on strengthening both growth engines, superannuation and investments beyond super, while rolling out the operating capabilities that enable better service at a scalable unit cost. Organic growth remains our priority. We've also executed and remain open to values aligned inorganic opportunities, where they strengthen capability, broaden reach, or accelerate scale in a disciplined way. The point I want to emphasize is consistency. This is not a new strategy. It's a strategy we've been executing over multiple years, and the benefits are increasingly visible in the quality and the resilience of the business that we've built. Our FY26 financial result and strategic milestones build on the momentum of recent years. In superannuation, we completed the transition of all members onto the Grow administration platform. This reduces complexity, delivers cost savings, and gives us a firm platform from which to enhance the member experience, and grow member numbers.

Speaker #3: Organic growth remains our priority. We've also executed, and remain open to, values-aligned inorganic opportunities where they strengthen capability, broaden reach, or accelerate scale in a disciplined way.

Speaker #3: The point I want to emphasize is consistency. This is not a new strategy; it's a strategy we've been executing over multiple years. The benefits are increasingly visible in the quality and the resilience of the business that we've built.

Speaker #3: Our FY26 financial results and strategic milestones build on the momentum of recent years. In superannuation, we completed the transition of all members onto the Grow administration platform.

Speaker #3: This reduces complexity, delivers cost savings, and gives us a firm platform from which to enhance the member experience and grow member numbers. In the second half of the year, our enhanced digital marketing, website, and onboarding experience were key contributors to lifting new member joins by 20% compared with the first half of the year.

John McMurdo: In the H2 of the year, our enhanced digital marketing, website, and onboarding experience were key contributors to lifting new member joins by 20% compared with the H1 of the year. In investments, we deliberately expanded our capability by adding fixed income and private markets. This broadened diversification across our superannuation investment options and supported product innovation for middle-market investors. When launched in March of this year, our Growth Opportunities Fund received Australian government backing through a AUD 125 million cornerstone investment from the Clean Energy Finance Corporation. During the year, we also continued our focus on business resilience, governance, cyber risk, and the work required to address APRA license conditions remain priorities. These are not distractions from growth. They're part of building a stronger, more scalable, and trusted institution. Our long-term success also depends on a capable, purpose-led culture that attracts, develops, and retains talented people.

Speaker #3: In investments, we deliberately expanded our capability by adding fixed income and private markets. This broadened diversification across our superannuation investment options and supported product innovation for middle market investors.

Speaker #3: When launched in March of this year, our Growth Opportunities Fund received Australian government backing through a $125 million cornerstone investment from the Clean Energy Finance Corporation.

Speaker #3: During the year, we also continued our focus on business resilience, governance, and cyber risk, and the work required to address APRA license conditions remains a priority.

Speaker #3: These are not distractions from growth; they're part of building a stronger, more scalable, and trusted institution. Our long-term success also depends on a capable, purpose-led culture that attracts, develops, and retains talented people.

Speaker #3: And I'm so proud of our people, and pleased to see their engagement and commitment to our strategy continue to strengthen year on year. For that engagement to sit ahead of industry benchmarks is a real testament to them.

John McMurdo: I'm so proud of our people, and pleased to see their engagement and commitment to our strategy continue to strengthen year on year. For that engagement to sit ahead of industry benchmarks is a real testament to them. Mark will cover the financials in detail, but I do just want to briefly frame the result. FY26 was a record result, reflecting focused execution, continued organic net flows, record funds under management and earnings, stronger operating leverage, and a more diversified platform. Underlying profit after tax increased 15%. Net profit after tax increased 29%, and the underlying cost to income ratio improved by 1.6 percentage points to 69.8%. The strength of this result enabled the board to declare a final dividend of AUD 0.10 per share, taking the full year dividend to AUD 0.18 per share, a 29% uplift year on year.

Speaker #3: Mark will cover the financials in detail, but I do just want to briefly frame the result. FY26 was a record result, reflecting focused execution, continued organic net flows, record funds under management and earnings, stronger operating leverage, and a more diversified platform.

Speaker #3: Underlying profit after tax increased 15%. Net profit after tax increased 29%. The underlying cost-to-income ratio improved by 1.6 percentage points to 69.8%.

Speaker #3: The strength of this result enabled the Board to declare a final dividend of 10 cents per share, taking the full-year dividend to 18 cents per share—a 29% uplift year on year.

Speaker #3: Over the past few years, we’ve consistently demonstrated that we are a growth company, but also a company with strong predictability of earnings. These results were delivered while we continued to invest in the capabilities required for future growth.

John McMurdo: Over the past few years, we've consistently demonstrated that we are a growth company, but also a company with strong predictability of earnings. These results were delivered while we continued to invest in the capabilities required for future growth. We're investing where it strengthens the business while maintaining clear cost discipline and a focus on shareholder returns. Our strong results reflect the quality of the offer we now have for our customers. With strong systems growth tailwinds, our superannuation growth engine provides revenue predictability and underpins further growth. Beyond super, we develop new propositions for values aligned investors seeking financial returns alongside measurable positive outcomes. Our Growth Opportunities Fund launched in March, and we plan to launch a new impact fund in the H1 of FY27, targeted at the very strong philanthropic sector.

Speaker #3: We're investing where it strengthens the business, while maintaining clear cost discipline and a focus on shareholder returns. Our strong results reflect the quality of the offer we now have for our customers.

Speaker #3: With strong system growth tailwinds, our superannuation growth engine provides revenue predictability and underpins further growth. Beyond super, we develop new propositions for values-aligned investors, seeking financial returns alongside measurable positive outcomes.

Speaker #3: Our Growth Opportunities Fund launched in March, and we plan to launch a new Impact Fund in the first half of FY27, targeted at the very strong philanthropic sector.

Speaker #3: We continue to focus on customer engagement to support retention and acquisition, underpinning net flows, funds under management growth, and operating leverage as we scale.

John McMurdo: We continue to focus on customer engagement to support retention and acquisition, underpinning net flows, fund under management growth, and operating leverage as we scale. Investors come to Australian Ethical for our expertise in assessing ethical investment opportunities, investing with discipline, and delivering real-world impact through effective stewardship. Over the past year, we continued to scale elements of our ethical review process through the effective use of artificial intelligence, increasing the breadth of our ethical investable universe. We also held policymakers and companies to account on issues that matter for long-term investors. Our investment team navigated a challenging year well. Fixed income and private markets delivered above benchmark returns, while Australian equities were more exposed to the dynamics shaped by the war in the Middle East. Our ethical approach means performance can vary when the strongest market returns are concentrated outside our ethical investable universe.

Speaker #3: Investors come to Australian Ethical for our expertise in assessing ethical investment opportunities, investing with discipline, and delivering real-world impact through effective stewardship. Over the past year, we have continued to scale elements of our ethical review process through the effective use of artificial intelligence, increasing the breadth of our ethical investable universe.

Speaker #3: We also held policymakers and companies to account on issues that matter for long-term investors. Our investment team navigated a challenging year well. Fixed income and private markets delivered above-benchmark returns, while Australian equities were more exposed to the dynamics shaped by the war in the Middle East.

Speaker #3: Our ethical approach means performance can vary when the strongest market returns are concentrated outside our ethical investable universe. But it can also create opportunities when future-focused sectors are undervalued.

John McMurdo: It can also create opportunities when future focused sectors are undervalued. We remain focused on what has always defined us, staying true to the Ethical Charter, investing with valuation discipline, broadening capability, and delivering values-aligned returns over the long term. The Australian Ethical Foundation remains one of the clearest expressions of what makes our model different. Each year, we allocate 10% of profits to charitable organizations, primarily through the foundation, to help protect and restore, address climate change, restore nature, empower First Nations peoples and communities. In FY26, we allocated a record AUD 3.4 million to the foundation. Since 2010, more than AUD 16 million has been allocated to support that grant-making work. Through these grants, the foundation supports collaborative, evidence-based, and community-led solutions addressing biodiversity loss, climate change, and social inequity.

Speaker #3: We remain focused on what has always defined us: staying true to the Ethical Charter, investing with valuation discipline, broadening capability, and delivering values-aligned returns over the long term.

Speaker #3: The Australian Ethical Foundation remains one of the clearest expressions of what makes our model different. Each year, we allocate 10% of profits to charitable organizations, primarily through the Foundation, to help address climate change, restore nature, and empower First Nations peoples and communities.

Speaker #3: In FY26, we allocated a record $3.4 million to the Foundation. Since 2010, more than $16 million has been allocated to support that grant-making work.

Speaker #3: Through these grants, the foundation supports collaborative, evidence-based, and community-led solutions addressing biodiversity loss, climate change, and social inequity. My team knows that rather than blowing our own trumpet, I'm much more interested in what customers and the market are saying.

John McMurdo: My team knows that rather than blowing our own trumpet, I am much more interested in what customers and the market are saying. I am deeply proud of what the team has achieved, as underscored by recognition across all facets of our business. Our super and pension products have won Money magazine's Best of the Best awards. The care and attention of our customer service team has been acknowledged by Roy Morgan and Finder. The integrity of our ethical investment approach is widely recognized. We don't exist to win awards, but this recognition gives us confidence that our proposition is resonating. This is not just about the past year. It is about sustained focus over the past five or six years. During this time, we have increased funds under management more than 3.5 times.

Speaker #3: And so, I'm achieved as underscored by recognition across all facets of our business. Our super and pension products have won Money magazine's Best of the Best awards.

Speaker #3: The care and attention of our customer service team has been acknowledged by Roy Morgan and Finder, and the integrity of our ethical investment approach is widely recognized.

Speaker #3: We don't exist to win awards, but this recognition gives us confidence that our proposition is resonating. And this is not just about the past year.

Speaker #3: It's about sustained focus over the past five or six years. During this time, we've increased funds under management more than three-and-a-half times.

Speaker #3: We also strengthened the operating platform, broadened investment capability, increased brand recognition, and delivered stronger returns to shareholders. The quality of that growth matters. It's been built through organic net flows, targeted investments in capability, strategic inorganic opportunities, and a continued focus on operating leverage.

John McMurdo: We also strengthened the operating platform, broadened investment capability, increased brand recognition, and delivered stronger returns to shareholders. The quality of that growth matters. It has been built through organic net flows, targeted investments in capability, strategic and organic opportunities, and a continued focus on operating leverage. After Mark takes you through the financial results, I look forward to returning and sharing with you a business outlook as I see the organization. Mark, could you come and share the financials with us? Thank you.

Speaker #3: After Mark takes you through the returning and shares with you a business outlook as I see the organization. But Mark, could you come and share the financials with us?

Speaker #3: Thank you.

Speaker #1: Thank you, John. And good morning, everyone. FY26 was another year of strong execution, delivering growth in funds under management, revenue, earnings, and dividends, alongside our continued improvement in operating leverage.

Mark Simons: Thank you, John, and good morning, everyone. FY26 was another year of strong execution, delivering growth in funds under management, revenue, earnings, and dividends, alongside our continued improvement in operating leverage. Revenue increased 9%, supported by higher average funds under management. Underlying profit after tax increased 15%, and net profit after tax attributable to our shareholders increased 29%. Our underlying cost-income ratio improved by 1.6 percentage points to 69.8%. As underlying profit adjustments more than halved in FY26, total expenses increased by only 2%. A key differentiator of Australian Ethical is the predictability of our earnings. The majority of our funds under management is in super, with growth supported by the recurring member contributions and long duration member retention through market cycles. We closed FY26 with record funds under management of AUD 14.5 billion. This growth continues to be driven by positive net flows and investment performance.

Speaker #1: Revenue increased 9%, supported by a higher average funds under management. Underlying profit after tax increased 15%, and net profit after tax attributable to our shareholders increased 29%.

Speaker #1: Our underlying cost-to-income ratio improved by 1.6 percentage points to 69.8%, as underlying profit adjustments more than halved in FY26. Total expenses increased by only 2%.

Speaker #1: A key differentiator of Australian Ethical is the predictability of our earnings. The majority of our funds under management is in super, with growth supported by recurring member contributions and long-duration member retention through market cycles.

Speaker #1: We closed FY26 with record funds under management of $14.5 billion. This growth continues to be driven by positive net flows and investment performance.

Speaker #1: Approximately three-quarters of our funds under management are in our superannuation. Alongside our core superannuation business, we continue to broaden our investment capability and product range to attract new middle-market and institutional clients.

Mark Simons: Approximately three-quarters of our funds under management is in our superannuation. Alongside our core superannuation business, we continue to broaden our investment capability and product range to attract new middle market and institutional clients. Organic flows increased 13% to AUD 664 million. Superannuation remained the primary contributor, generating AUD 527 million of net flows despite disruption from the final migration of members to Grow Inc. Only 7.4% of members are in pension phase, which is below the broader industry and reduces the impact of benefit payments. Our annualized superannuation outflow rate remains low at 7% of funds under management. Outside of super, newer channels are contributing meaningfully to our growth. These include NGOs, charities, foundations, and businesses seeking a values-aligned investment manager. We are also seeing traction from our institutional investors, including the AUD 125 million we received from the Clean Energy Finance Corporation into our Growth Opportunities Fund.

Speaker #1: Organic flows increased 13% to $664 million. Superannuation remained the primary contributor, generating $527 million of net flows despite disruption from the final migration of members to Grow.

Speaker #1: Only 7.4% of members are in pension phase, which is below the broader industry and reduces the impact of benefit payments. Our annualised superannuation outflow rate remains low at 7% of funds under management.

Speaker #1: Outside of super, newer channels are contributing meaningfully to our growth. These include NGOs, charities, foundations, and businesses seeking a values-aligned investment manager. We are also seeing traction from our institutional investors, including the $125 million we received from the Clean Energy Finance Corporation into our Growth Opportunities Fund.

Speaker #1: Our fee strategy is central to keeping our premium products competitive for current and future customers. We carefully assess price elasticity while maintaining a focus on profitable growth for shareholders, and a compelling offer for customers.

Mark Simons: Our fee strategy is central to keeping our premium products competitive for current and future customers. We carefully assess price elasticity while maintaining a focus on profitable growth for shareholders and a compelling offer for customers. Average revenue margins were stable in FY26. The spot revenue margin at 30 June 2026 was 89 basis points, following fee reductions in the fourth quarter, and this margin is expected to remain consistent during FY27. Operating revenue increased 9%, driven by 11% growth in average funds under management, marginally offset by a lower revenue margin and fee adjustments. Revenue was supported by a full year of Altius Asset Management business, the insurance administration fee introduced during the year, and continued expansion across our newer channels. Our revenue base is broader and more diversified than it was several years ago, spanning multiple customer segments and growing range of products.

Speaker #1: Average revenue margins were stable in FY26. The spot revenue margin at 30 June 26 was 89 basis points, following fee reductions in the fourth quarter, and this margin is expected to remain consistent during FY27.

Speaker #1: Operating revenue increased 9%, driven by 11% growth in average funds under management, marginally offset by a lower revenue margin and fee adjustments. Revenue was supported by a full year of LTS business.

Speaker #1: The insurance administration fee was introduced during the year, along with continued expansion across our newer channels. Our revenue base is broader and more diversified than it was several years ago.

Speaker #1: Spanning multiple customer segments and a growing range of products, this diversification supports both future growth and revenue stability. To capture the growth opportunities ahead, it has been critical that we continue to invest in a scalable business platform.

Mark Simons: This diversification supports both future growth and revenue stability. To capture the growth opportunities ahead, it has been critical that we continue to invest in a scalable business platform. In FY26, we balanced continued investment with improved operating leverage, reflecting scalability, efficiency from our platform transformations, and disciplined cost management. Operating expenses increased 7%, compared with the operating revenue growth of 9%. Employee expenses increased 11%, reflecting enhanced capability in ethics, product, investments, and governance and the full year impact of the Altius Asset Management team and wage inflation. Fund related expenses decreased 1%, compared with the average funds under management growth of 11%, which reflects the more competitive administration and custody rate cards. Technology expenses growth reflects continued investment in digital and data capability, artificial intelligence initiatives, and stronger cybersecurity.

Speaker #1: In FY26, we balanced continued investment with improved operating leverage, reflecting scalability, efficiency from our platform transformations, and disciplined cost management. Operating expenses increased 7%, compared with operating revenue growth of 9%.

Speaker #1: Employee expenses increased 11%, reflecting enhanced capability in ethics, product, investments, and governance, as well as the full-year impact of the LTS team and wage inflation.

Speaker #1: Fund-related expenses decreased 1%, compared with the average funds under management growth of 11%, which reflects the more competitive administration and custody rate cuts. Technology expenses growth reflects continued investment in digital and data capability, artificial intelligence initiatives, and stronger cybersecurity.

Speaker #1: We are already seeing artificial intelligence free up capacity and accelerate ethical research and assessments, allowing our people to focus on that higher-value work.

Mark Simons: We are already seeing artificial intelligence free up capacity and accelerate ethical research and assessments, allowing our people to focus on that higher value work. The business is entering its next phase with a stronger, more scalable, and operating platform, and enhanced cost flexibility. We have significantly improved our operating leverage over the past five years. We achieved this while continuing to invest in the business platform needed to support future growth and delivering fee reductions for members and investors. We retain a strong balance sheet with no debt, strong cash reserves, and capital well above reg requirements. This provides resilience and the flexibility to continue investing in strategic priorities. It also provides optionality to pursue attractive growth opportunities while maintaining a disciplined capital management approach and dividend profile. The successful execution of our strategy has delivered another year of strong shareholder outcomes.

Speaker #1: The business is entering its next phase with a stronger, more scalable operating platform and enhanced cost flexibility. We have significantly improved our operating leverage over the past five years.

Speaker #1: We achieved this while continuing to invest in the business platform needed to support future growth and delivering fee reductions for members and investors. We retain a strong balance sheet, with no debt, strong cash reserves, and capital well above regulatory requirements.

Speaker #1: This provides resilience and the flexibility to continue investing in strategic priorities. It also provides optionality to pursue attractive growth opportunities while maintaining a disciplined capital management approach and dividend profile.

Speaker #1: The successful execution of our strategy has delivered another year of strong shareholder outcomes. Four-year compound annual earnings growth of 27% enabled us to deliver compound dividend growth of 32% over the same period.

Mark Simons: Four year compound annual earnings growth of 27% enabled us to deliver compound dividend growth of 32% over the same period. We are proud to deliver strong financial results underpinned by our high performing team and culture, our resilient business model, trusted brand, and successful strategy execution. I will now hand you back to John for the business update.

Speaker #1: We are proud to deliver strong financial results, underpinned by our high-performing team and culture, our resilient business model, trusted brand, and successful strategy execution.

Speaker #1: I'll now hand you back to John for the business update.

Speaker #2: Thanks very much, Mark. The financial results that Mark has just shared outline and show the benefit of a clear strategy executed with discipline. This is the strategy that will continue to guide us over the coming years.

John McMurdo: Thanks very much, Mark. The financial results that Mark has just shared outlined and show the benefit of a clear strategy executed with discipline. This is the strategy that will continue to guide us over the coming years. Importantly, work is already underway in FY27 to position the business for its next phase of growth. In superannuation, we are developing a member app, evaluating advice options, and expanding employer channel capability. Together, these initiatives are expected to improve engagement, support acquisition and retention, and increase member lifetime value. In investments beyond super, the Charles River rollout is being completed across asset classes, strengthening our institutional grade operating platform. We also look forward to bringing further product innovation to market in the coming months. There is a significant opportunity to enhance how we use data, artificial intelligence, and smart technology to serve members, investors, and advisors more efficiently and effectively.

Speaker #2: Importantly, work is already underway in FY27 to position the business for its next phase of growth. In superannuation, we're developing a member app, evaluating advice options, and expanding employer channel capability.

Speaker #2: Together, these initiatives are expected to improve engagement, support acquisition and retention, and increase member lifetime value. In investments beyond super, the Charles River rollout is being completed across asset classes, strengthening our institutional-grade operating platform.

Speaker #2: We also look forward to bringing further product innovation to market in the coming months. There's a significant opportunity to enhance how we use data, artificial intelligence, and smart technology to serve members, investors, and advisors more efficiently and effectively.

Speaker #2: We intend to assess these opportunities in the first half of FY27, and we continue the work required to strengthen business resilience, governance practices, and risk management.

John McMurdo: We intend to assess these opportunities in the first half of FY27. We continue the work required to strengthen business resilience, governance practices, and risk management. We continue to feel very positively about our opportunity set in both the short and the longer term, subject to market conditions, of course. Australian Ethical does occupy a unique position among fund managers and listed fund managers in particular. Unlike many traditional fund managers that depend on discretionary investment flows, we have intentionally built a business underpinned by structural superannuation inflows that continue through market cycles. Regardless of short-term investment market conditions, I expect the underlying momentum generated in the second half of FY26 and new customers inflows to continue. This will be supported by further enhancements to our superannuation value proposition and continued product innovation and investments beyond super.

Speaker #2: So, think about our outlook. We continue to feel very positively about our opportunity set, in both the short and longer term, subject to market conditions, of course.

Speaker #2: But Australian Ethical does occupy a unique position among fund managers, and listed fund managers in particular. Unlike many traditional fund managers that depend on discretionary investment flows, we have intentionally built a business underpinned by structural superannuation inflows that continue through market cycles.

Speaker #2: Regardless of short-term investment market conditions, I expect the underlying momentum generated in the second half of FY26, as well as new customers and flows, to continue.

Speaker #2: This will be supported by further enhancements to our superannuation value proposition and continued product innovation, as well as investments beyond super. I'm confident in the strength of our brand and the product and channel growth engines we've built to meet strong, long-term demand for values-aligned investing.

John McMurdo: I'm confident in the strength of our brand and the product and channel growth engines we've built to meet strong long-term demands for values aligned investing. We'll continue to invest sensibly in the business while maintaining strong cost discipline, targeting expense growth below revenue growth, subject, as I've said, to market conditions. We'll also maintain line of sight to operating leverage with an expectation that underlying cost to income ratio falls to the mid-60s over the medium term. Again, thanks very much for joining us this morning. I really deeply value the support of our shareholders and our broader stakeholders. The team and I look forward to answering any questions that you might have. Thank you.

Speaker #2: We'll continue to invest sensibly in the business while maintaining strong cost discipline, targeting expense growth below revenue growth, subject, as I've said, to market conditions.

Speaker #2: We'll also maintain line of sight to operating leverage, with an expectation that the underlying cost-to-income ratio falls to the mid-60s over the medium term.

Speaker #2: Again, thanks very much for joining us this morning. I really deeply value the support of our shareholders and our broader stakeholders, and the team and I look forward to answering any questions that you might have.

Speaker #2: Thank you.

Speaker #3: Thank you, John. We will now open up for Q&A. As a reminder, questions can be submitted by selecting the raised hand icon located in the top right-hand corner of the web page, and typing the question into the designated text box.

Melanie Hill: Thank you, John. We will now open up for Q&A. As a reminder, questions can be submitted by selecting the raise hand icon located in the top right-hand corner of the webpage and typing the question into the designated text box. A question's come in. I will hand this to you, Mark, as the CFO. You've had significant profit growth during the period. Did the board consider paying a higher dividend?

Speaker #3: A question's come in. I will hand this to you, Mark. As the CFO, you've had significant profit growth during the period. Did the Board consider paying a higher dividend?

Speaker #1: Thank you for the question. The Board was particularly pleased with the profit growth over FY26. That profit growth is obviously underpinned by the underlying profit of 15%, and statutory profit growth of 29%.

Mark Simons: Thank you for the question. The board was particularly pleased with the profit growth over the FY26. That profit growth is obviously underpinned by the underlying profit of 15% and statutory profit growth of 29%. With that confidence in the company and the growth in profit, the board was comfortable increasing the final dividend to AUD 0.10 per share, which has taken our total dividends for the year up to 29% from the prior corresponding year. This is a show of strength. What this is a payout ratio continues to be 80%, about statutory NPAT attributable to shareholders. That gives us that capital flexibility to ensure that we can invest wisely into the business, reinvest, and also look for inorganic smaller opportunities as they exist.

Speaker #1: With that confidence in the company and the growth in profit, the board was comfortable increasing the final dividend to 10 cents per share, which has taken our total dividends for the year up by 29% from the prior corresponding year.

Speaker #1: This is a show of strength. What this is, is a payout ratio that continues to be 80% of our statutory NPAT attributable to shareholders. And that gives us capital flexibility to ensure that we can invest wisely into the business, reinvest, and also look for inorganic, smaller opportunities as they exist.

Speaker #3: Great. Thank you, Mark. A question for you, John: how has your organization been thinking about AI?

Melanie Hill: Great. Thank you, Mark. A question for you, John. How is your organization thinking about AI?

Speaker #2: Look, we're excited about the opportunity of AI as a tool to enable our business. We, as a team, are looking up and down our whole value chain, and probably in two sort of unique ways.

John McMurdo: Look, we're excited about the opportunity of AI as a tool to enable our business. We, as a team, are looking up and down our whole value chain, and probably in two unique ways. The first is, what's the opportunity to leverage and accelerate our unique IP, and value proposition and differentiation in the market. The second, of course, what are the efficiencies and speed dividends that might apply in the business. We're excited about that. One example is in the use of our ethical universe with our investment team, an ethical team looking to accelerate and expand our investable universe. But I might, if we can get the tech working, Alison George, who's our Chief Ethics and Investment Officer out of our Melbourne office. Alison, briefly, if you were able to share the example you've been working on, would be helpful.

Speaker #2: The first is: what's the opportunity to leverage and accelerate our unique IP, value proposition, and differentiation in the market? And the second, of course, is: what are the efficiencies and speed dividends that might apply in the business?

Speaker #2: So we're excited about that. One example is in the use of our ethical universe, with our investment team and ethical team looking to accelerate and expand our investable universe.

Speaker #2: But I might, if we can get the tech working, Alice and George—who’s our Chief Ethics and Investment Officer out of our Melbourne office.

Speaker #2: Alice, and briefly, if you're able to share the example you've been working on, that would be helpful.

Speaker #3: I'd be glad to, John. During the year, we've been working to better leverage data and technology in our ethical workflows, including piloting AI approaches.

Alison George: I'd be glad to, John. During the year, we've been working to better leverage data and technology in our ethical workflows, including piloting AI approaches. This has really helped us to prove up where and how AI can add value in augmenting our in-house ethical experts and help us to scale our research activities while maintaining our ethical standards. It supported us to increase our research output in FY26. We added more than 190 new names to our investable universe, giving the investment team a broader set of ethically assessed opportunities to consider. Back to you, John.

Speaker #3: And this has really helped us to prove where and how AI can add value in augmenting our in-house ethical experts, and help us to scale our research activities while maintaining our ethical standards.

Speaker #3: It's supported us to increase our research output in FY26. We added more than 190 new names to our investable universe, giving the investment team a broader set of ethically assessed opportunities to consider.

Speaker #3: Back to you, John.

Speaker #2: Thank you, Alice. Yep. I think—look, it's a great example of one of the domains I referred to, where we look to accelerate and further leverage our unique IP.

John McMurdo: Thanks, Alison. Yep. I think, look, it's a great example of one of the domains I referred to where we look to accelerate, and leverage further our unique IP. We're also, of course, right across the organization, embedding AI in our ways of working to create efficiency and speed for the team. As I said, I'm excited about that. I think what I'll also say as CEO of this organization, I see some other companies talking about what they're doing and investing, and sometimes there's even, I think, fanciful ideas or projections of what may or may not happen. We will be very disciplined about what we do with a clear eye to benefit for the organization, and for our shareholders, and very aware of the changing cost curves that will naturally play out on AI. But we're very positive about it.

Speaker #2: We're also, of course, right across the organization, embedding AI in our ways of working to create efficiency and speed for the team. And so, as I said, I'm excited about that.

Speaker #2: I think what I'll also say, as CEO of this organization, is that I see some other companies talking about what they're doing and investing, and sometimes there's even, I think, fanciful.

Speaker #2: Ideas or projections of what may or may not happen. We will be very disciplined about what we do, with a clear eye to benefit for the organization and for our shareholders, and very aware of the changing cost curves that will naturally play out on AI.

Speaker #2: But we're very positive about it. We're starting to use it widely, and we will embrace that in our organization over the next period.

John McMurdo: Starting to use it widely, and we will embrace that in our organization over the next period.

Speaker #3: Great. Thank you, John and Alice, for that. Questions have come in about superannuation flows, and I'm going to hand this to you, Maria, Group Executive, Superannuation.

Melanie Hill: Great. Thank you, John and Alison George, for that. Question has come in about superannuation flows, and I am going to hand this to you, Maria Loyez, as Group Executive, Superannuation. Question is, can you provide more detail on your super flows for the FY26 year, and what is your outlook?

Speaker #3: The question is, can you provide more detail on your super flows for the FY26 year? And what's your outlook?

Speaker #4: Yeah, thank you. Look, we're really pleased with our FY26 results. We're seeing strong SG involuntary contributions year on year, despite the disruption of the transition to a single administration platform, which completed in the first half of the year.

Maria Loyez: Yeah, thank you. Look, we are really pleased with our FY26 results. We are seeing strong SG and voluntary contributions year on year, despite the disruption of the transition to a single administration platform, which completed in the H1 of the year. With clear air in the H2, we made changes to our digital marketing and web experience, which saw our joins lift, as you saw in the presentation. We continue to focus on making sure that we get our new customers to roll over as soon as we can after they join. In terms of outlook, we are really focused on building on those foundations of that new platform. We are looking at building out our member experience, particularly our help content, and looking at options for advice. As John McMurdo said, we are also looking at how we might improve our employer engagement as well.

Speaker #4: With clear air in the second half, we made changes to our digital marketing and web experience, which saw our joins lift, as you saw in the presentation.

Speaker #4: And we continue to focus on making sure that we get our new customers to roll over as soon as we can after they join.

Speaker #4: In terms of outlook, we're really focused on building on those foundations of that new platform. So we're looking at building out our member experience particularly our health and content our help content and looking at options for advice.

Speaker #4: And as John said, we're also looking at how we might improve our employer engagement as well.

Speaker #3: Fantastic. Thanks, Maria. John, I have a question for you to answer. Can you comment further on how the license condition work is progressing?

Melanie Hill: Fantastic. Thanks, Maria Loyez. John McMurdo, question for you to answer. Can you comment further on how the license condition work is progressing?

Speaker #2: Sure. Look, I'm really pleased with the progress on that. We have a very, and continue to have a very, collaborative relationship with APRA. We have agreed with APRA on the uplift plan that we're already actually well advanced in delivering.

John McMurdo: Sure. Look, I am really pleased with progress on that. We have a very, and continue to have a very collaborative relationship with Australian Prudential Regulation Authority. We have agreed with Australian Prudential Regulation Authority the uplift plan that we are already actually well advanced on in delivering. I am very confident that we will be able to satisfy Australian Prudential Regulation Authority’s requirements.

Speaker #2: And I'm very confident that we'll be able to satisfy APRA's requirements.

Speaker #3: Great. Excellent. Thank you, John. A question's come in on revenue margin. The question is, it has looked relatively stable in FY26, but the listener is keen to know what the outlook is for revenue margins and fees.

Melanie Hill: Great. Excellent. Thank you, John. A question has come in on revenue margin. The question is, it has looked relatively stable in FY26, but the listener is keen to know what the outlook is for revenue margins and fees. I will hand this to you, Mark, as CFO.

Speaker #3: And I'll hand this to you, Mark, as CFO.

Speaker #2: Thank you. Thank you.

Mark Simons: Thank you. With regards to revenue margin, I would just like to highlight, as I have mentioned, we have a premium product, and it is a premium ethical leading product, which is delivered at a premium price. That premium price is relevant to the proposition that we provide to all our members and investors. Our focus is on providing that proposition, that product, at the right price that provides the leading investment objectives, and we meet those objectives. In FY26, I had mentioned that the revenue margin was relatively stable. It only reduced by one basis point. Going to FY27, we finished the year with some changes in fine-tuning of our superannuation menu, which is optimized. With that fine-tuning, we have resulted in our basis point margins reducing to 89 points. We see that will be stable throughout FY27.

Speaker #1: With regards to revenue margin, I'd just like to highlight, as I've mentioned, we have a premium product and it's a premium, ethical, leading product.

Speaker #1: Which is delivered at a premium price. That premium price is relevant to the proposition that we provide to all our members and investors.

Speaker #1: Our focus is on providing that proposition, that product at the right price that delivers the leading investment objectives. And we meet those objectives. In FY26, I mentioned that the revenue margin was relatively stable.

Speaker #1: It only reduced by one basis point. Going to FY27, we finished the year with some changes and fine-tuning of our superannuation menu, which is optimized.

Speaker #1: And with that fine-tuning, we've resulted in our basis point margins reducing to 89 points. We see that'll be stable throughout FY27. And then beyond FY27, we're always looking to make sure we've got a compelling, competitive proposition, and as we scale, there will be some modest fee reductions.

Mark Simons: Beyond FY27, we are always looking to make sure we have got a compelling competitive proposition that as we scale, there will be some modest fee reductions. We call that modest, and we are always doing that in context of our cost-to-income ratio, which, as John mentioned, is expected to come down to the mid-60s over the medium term.

Speaker #1: But we call that modest. And we've always done that in the context of our cost-to-income ratio, which, as John mentioned, is expected to come down to the mid-60s over the medium term.

Speaker #3: Great, thank you, Mark. I'm going to pass the next question over to Ludo, our Chief Investment Officer. Ludo, you've mentioned the middle market—and during the speeches, the middle market and product innovation were quite a feature.

Melanie Hill: Great. Thank you, Mark. I am going to pass the next question over to Ludo Theau, our Chief Investment Officer. Ludo, you have mentioned the middle market, and during the speeches, the middle market and product innovation was quite a feature. What is the size of this market, and what are your plans to capture the market?

Speaker #3: What is the size of this market, and what are your plans to capture the market?

Speaker #5: May I thank you for the question. Yes, we are very excited about the middle market segment. By "middle market," we mean foundations, charities, family offices, and, broadly speaking, values-aligned investors.

Ludo Theau: Mel, thank you for the question. Yes, we are very excited about the middle market segment. By middle market, we mean foundations, charities, family offices, and broadly speaking, values-aligned investors. We estimate that the size of the foundation market is about AUD 50 billion. We are very keen on the concept of financial and investment innovation. John mentioned before that we launched recently our second private markets fund, the Growth Opportunities Fund, and we are also about to launch a Multi-Asset impact fund. Both funds are targeted at the middle market. We are very comfortable, very confident that this concept of strategic partnering with ethical values-aligned investors will deliver growth and strength to our business.

Speaker #5: We estimate that the size of the foundation market is about $50 billion. We are very keen on the concept of financial and investment innovation.

Speaker #5: John mentioned before that we recently launched our second private markets fund, the Growth Opportunities Fund, and we're also about to launch a multi-asset impact fund.

Speaker #5: Both funds are targeted at the middle market, so we are very comfortable, very confident that this concept of strategic partnering with ethical, values-aligned investors will deliver growth and strength to our business.

Speaker #3: Thank you, Ludo. So another question has come in about Super member joins, where you noted there was 20% growth in member joins.

Melanie Hill: Thank you, Ludo. So another question has come in about super member joins, which you noted that there was 20% growth on member joins versus the H1. I will hand this to you, Maria. Could you give us a bit more flavor on this and what the outlook is for member joins?

Speaker #3: Versus the first half, I'll hand this to you, Maria. Could you give us a bit more flavor on this, and what the outlook is for member joins?

Speaker #4: Yes, sure. We saw good growth in member joins. We saw 15,000 new member joins in the year, and we'll continue to focus on that.

Maria Loyez: Yes, sure. We saw good growth in member joins. We saw 15,000 new member joins in the year, and we will continue to focus on that. We are a choice superannuation provider, so our members are joining us through a digital marketing focus, and we will continue to hone that, but also hone the website experience so that we continue to get customers rolling over, which is obviously very important for our revenue.

Speaker #4: So, we are a choice superannuation provider. Our members are joining us through a digital marketing focus, and we'll continue to hone that, but also improve the website experience so that we continue to get customers rolling over.

Speaker #4: Which is obviously very important for our revenue.

Speaker #3: Great, thanks for that extra detail, Maria. Another question has come in regarding governance. So, regarding the governance transformation that you have underway, are you able to give us a sense of how much additional cost that might bring?

Melanie Hill: Great. Thanks for that extra detail, Maria. Another question has come in regarding governance related. Regarding the governance transformation that you have underway, are you able to give us a sense of how much additional cost that might bring? Also, whether that will be one-off or recurring in nature.

Speaker #3: And also, whether that will be one-off, four, or recurring in nature?

Speaker #2: Let me start that, Mark. You might add to that. Largely, one orphan nature. Just to elevate what we do—of course, we'll continue to invest in the business.

John McMurdo: Let me start that. Mark, you might add to that. Largely one-off in nature. Just to elevate what we do, of course, we will continue to invest in the business. As I said in my remarks, it is important as we continue to scale this business, that we have a strong operating platform, that it is resilient, that we are well managed and governed. So I see investment as the space, not detracting from growth, but completely underpinning the growth profile we have going forward. So we will have some one-off costs in the next year. They are not, to my mind, material in the context of our overall earnings. But of course, we will do that diligently and well. But they are embedded in what I think is a sensible cost envelope, and I still have strong expectations about our revenue uplift and our cost containment in full during FY27. Mark, your further comment on that?

Speaker #2: As I said in my remarks, it's important, as we've continued to scale this business, that we have a strong operating platform—that it's resilient, and that we're well managed and governed.

Speaker #2: So I see investment as the space not detracting from growth, but completely underpinning the growth profile we have going forward. So we'll have some one-off costs in the next year.

Speaker #2: They're not, to my mind, material in the context of our overall earnings. But, of course, we'll do that diligently and well. But they're embedded in what I think is a sensible cost envelope, and I still have strong expectations about our revenue uplift and our cost containment in full during FY27.

Speaker #1: Mark, do you have further comment on that? Well, the only further comment is that, yes, the one-off nature and the transformational uplift in governance, which may—in the one-off uplift—we would, you've had to adjust those amounts.

Mark Simons: Well, the only further comment is that, yes, the one-off nature and the transformational uplift in governance, which may, in the one-off uplift, we would UPAT adjust those amounts. But any further BAU costs will be continuing as just part of our operating expense envelope, as John mentioned, under the cost income ratio. We do not see it as a material impact on the business, and we are making sure we make sensible and disciplined investment decisions in context of the governance uplift.

Speaker #1: But any further BAU costs will continue as just part of our operating expense envelope, as John mentioned under the cost-to-income ratio. We don't see it as a material impact on the business.

Speaker #1: And we're making sure we make sensible and disciplined investment decisions in the context of the governance uplift.

Speaker #3: Excellent. Thank you, John and Mark. That looks like all the questions that we've had in for the day, so I'd like to thank you all again for joining.

Melanie Hill: Excellent. Thank you, John and Mark. That looks like all the questions that we have had in for the day. So I would like to thank you all again for joining, and have a great day.

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