Australian Ethical has reported a 62 per cent fall in net profit after tax attributable to shareholders year-on-year, for the first six months of 2016.
The firm said in an announcement to the Australian Securities Exchange (ASX) that the results were affected by “remediation and project costs associated with a unit pricing error” as well as employment restructure expenses.
The company said the error was identified by management in June 2016 and a provision was made during the financial year ended 30 June 2016. Australian Ethical completed the investigation at the end of last year and expected that the remediation of members to be completed by 31 March, 2017.
“Our approach is to put members back into the position that they would have been in had the error not occurred,” the company said.
At the same time, shareholders were warned they could expect an increase in staff expenses over the coming year due to an increase in its resources to minimise the chances of repeating such an error.
Funds under management (FUM) for the half-year grew 31 per cent, year-on-year, to $1.84 billion, due to a combination of significant member growth, net inflows, and positive investment performance.
While net profit was impacted by $2.2 million of cost remediating unit pricing, the underlying profit after tax (UPAT) stood at $2.3 million, up 52 per cent year-on-year.
During the first six months Australian Ethical also saw a 35 per cent jump in its net inflows to $209 million and a 30 per cent rise in superannuation membership, it said.
Australian Ethical’s managing director, Phil Vernon, said: “Increasing awareness of ethical investments and our investment in targeted marketing helped us set new records in our super fund”.
“In the six months to 31 December 2016, Australian Ethical Super averaged 812 new members per month, which is approaching double the rate of new membership in the corresponding period in 2015,” Vernon said.
“We believe the rise of the conscious consumer means people will be galvanised to take more direct action with their consumption and investing choices as they become frustrated and disillusioned with the political situation.”
