Impax Asset Management Group plc · LSE:IPX

Impax Asset Management — H1 2015 Earnings Presentation

33 slides from Impax Asset Management's earnings presentation, May 2015

  1. Slide 1: Impax Asset Management Group plc Interim results

    Impax Asset Management Group plc Interim results for the six months to 31 March 2015 CLEAR INVESTMENT

  2. Slide 2: Agenda

    Agenda  Business update Ian Simm Chief Executive  Interim results  Q&A Charlie Ridge Chief Financial Officer CLEAR INVESTMENT 2

  3. Slide 3: Financial performance (six months to 31 March 2015)

    Financial performance (six months to 31 March 2015) FINANCIAL PERFORMANCE H1 2015 H1 2014 2014 Assets under management £3.1bn £2.6bn £2.8bn Revenue £10.4m £9.9m £20.4m Operating earnings¹ £2.3m £2.7m £5.3m Profit/(loss) before tax2 £1.9m £1.4m £3.5m Earnings per share3 1.62p 1.20p 2.79p Shareholders

  4. Slide 4: Key developments

    Key developments  AUM up 13% since year end to new peak of £3.1bn  Net inflows of £96m, predominantly from US and Continental Europe  Strong balance sheet maintained  Interim dividend increased by 33% to 0.4 pence per share  Robust performance and new product development  In discussions with i

  5. Slide 5: Investors waking up to climate risk

    Investors waking up to climate risk  Climate change: now risk not uncertainty  Growing concern around stranded assets  Divestment intentions reached US$50 billion  Over 800 global investors now committed to divest CLEAR INVESTMENT 5

  6. Slide 6: Impax strategies

    Impax strategies LISTED EQUITIES AUM1 REAL ASSETS AUM1 Specialists Impax New Energy £877m Investors I LP £90m Leaders £658m Impax New Energy Investors II LP £239m Impax Climate Property Water £1,193m Fund £22m Total £351m Asia-Pacific £24m Food and Agriculture £3m Total £2,755m ¹ As at 31 March 2015

  7. Slide 7: Listed Equities

    Listed Equities  Impact of oil price on Resource Efficiency markets was limited  Proved positive for sectors exposed to consumer spending  Perception initially negative for renewables, strong Q1 recovery for solar  Prospects for target markets in Asia continue to strengthen  Extended stock rese

  8. Slide 8: Private Equity infrastructure

    Private Equity infrastructure  Fund II investment period ended 31 March 2015  ~400MW European wind projects + 78MW under construction  Material construction pipeline in Finland, Ireland and France  Strong interest from potential asset purchasers  Discussions with investors on appetite for new a

  9. Slide 9: Property (with a sustainability focus)

    Property (with a sustainability focus)  Strong track record  Sale of final asset in Impax Climate Property Fund pending  Attractive market for investment  Discussions with investors on raising new monies CLEAR INVESTMENT 9

  10. Slide 10: Strong inflows into third party funds/accounts

    Strong inflows into third party funds/accounts “IMPAX LABEL” FUNDS (£M) THIRD PARTY FUNDS/ACCOUNTS (£M) 31-Mar-15 559 31-Mar-15 2,198 Market 230 Market movement 53 movement Inflows 15 Inflows 398 Outflows (20) Outflows (296) 30-Sep-14 511 31-Sep-14 1,868 Market Market movement ( 25) (47) movement In

  11. Slide 11: Strong AUM growth in Europe and North America

    Strong AUM growth in Europe and North America AUM breakdown by client domicile (£m) Principal funds/partners Impax Environmental Markets plc 644 Impax Environmental Markets (Ireland) Fund UK/Ireland Impax Asian Environmental Markets (Ireland) Fund 692 Impax Food and Agriculture Fund 1,425 BNP Pariba

  12. Slide 12: Significant growth in Water and Leaders strategies

    Significant growth in Water and Leaders strategies AUM breakdown by strategy AUM (£) AUM (£) Investment strategy 31 Mar’15 30 Sep’14 Specialists 876m 790m - Impax Environmental Markets plc 390m 358m - Impax Environmental Markets (Ireland) 115m 114m - Third Party funds/accounts 371m 317m Leaders 657m

  13. Slide 13: Financial highlights (1)

    Financial highlights (1) REVENUE (£m) OPERATING COSTS (£m) OPERATING EARNINGS (£m) H1 H1 2015 10.4 H1 2015 54.4% 23.5% 8.1 2015 2.3 H1 H1 2014 9.9 H1 2014 51.2% 21.5% 7.2 2014 2.7 2014 20.4 2014 52.5% 21.1% 15.0 2014 5.3 Staff costs Other costs (% of revenue) (% of revenue)  Revenue increase 5% vs

  14. Slide 14: Financial highlights (2)

    Financial highlights (2) “IMPAX LABEL” FUNDS1 (£m) CASH RESERVES (£m) CASH RESERVE ANALYSIS (£m) 12.2 Cash as at 31 Mar 2015 12.2 31Mar 31 Mar2015 2015 9.5 12.3 31 Mar 2015 Investment hedges Working capital (0.5) Risk buffer (4.9) and treasury… Mark toMark to market Working Share capital buybacks (0

  15. Slide 15: Financial highlights (3)

    Financial highlights (3) DILUTED ADJUSTED¹ EPS (P) DIVIDEND (p) H1 2015 1.62 2015 0.40 H1 2015 Effect of shares effect back bought of shares and 0.03 2014 0.30 1.40 dilution back and… bought Tax benefits 0.21 Tax benefits 2013 0.90 EIA charges 0.26 EIA charges 2012 0.75 Decreaseininfair decrease fai

  16. Slide 16: Outlook

    Outlook Investor interest in our target markets Impax well placed for expansion strengthening  High growth global equities  An acknowledged leader globally  Natural resources  Strong investment consultant endorsement  ESG/SRI investments  Stable team with critical mass  Alternatives  Scalabl

  17. Slide 17: Important information

    Important information This document has been prepared by Impax Asset Management Group plc and approved by Impax Asset Management Limited and Impax Asset Management (AIFM) Limited (“Impax”, authorised and regulated by the Financial Conduct Authority). Both companies are wholly owned subsidiaries of I

  18. Slide 18: Appendix

    Appendix CLEAR INVESTMENT 18

  19. Slide 19: Resource Efficiency and Environmental Markets

    Resource Efficiency and Environmental Markets: Diverse listed equity opportunities (FTSE classification) Energy Water Energy Efficiency Alternative Energy Water Pollution Control Infrastructure & ■ Power Network ■ Developers & IPPs Technologies ■ Pollution Control ■ Industrials ■ Solar Solutions ■ I

  20. Slide 20: Impax investment universe is growing rapidly

    Impax investment universe is growing rapidly 2015 YTD Large universe of growing companies 400  $4 T in Market Cap companies Diverse range of opportunities  Cyclical 1,200  Defensive companies  Special Situations Higher expected earnings growth 1999  9% forward EPS growth vs 5% for MSCI ACWI1 25

  21. Slide 21: Extensive expertise

    Extensive expertise Keith Ian Guy Falconer Simm de Froment Ian Simm Chairman Chief Executive Non-Executive Director Chief Executive Jon Forster Solar, Waste & Water 0 years Vincent Mark Kaye Zack Forrest O’Brien White Non-Executive Adviser Wilson Non-Executive Director Non-Executive 28 Director year

  22. Slide 22: Investing since 1998

    Investing since 1998 (financial year) FY AUM (£m) 1998 15 1999 20 Phase 1: 2000 39 Establishing the business 2001 38 2002 55 2003 66 2004 69 2005 214 Phase 2: 2006 429 Scale up to critical mass 2007 982 2008 1,099 2009 1,265 2010 1,823 Phase 3: Consolidation & investment 2011 1,896 2012 1,828 2013 2

  23. Slide 23: Valuation indicators

    Valuation indicators OPERATING EARNINGS AFTER TAX¹ PER SHARE (p) LIQUID ASSETS (£m) SHARES RECONCILIATION² (m) H1 2015 1.57 H1 7.3 19.6 Diluted shares 115.5 2015 ESOP/RSS Dilution 0.8 (IFRS) H1 2014 1.77 Basic shares 114.7 Share buy backs 13.1 2014 3.56 2014 9.4 17.1 Shares in issue 127.7 Available

  24. Slide 24: Illustrative valuation approach

    Illustrative valuation approach  Important to apply consistent assumptions for share quantity and “free balance sheet” in valuation models  In the event of all ESOP options being exercised, the Group will receive £6.5m exercise premium SUM OF PARTS VALUATION APPROACH Price per share = “Free Balanc

  25. Slide 25: Illustrative valuation approach

    Illustrative valuation approach Examples 1.1. Nil dilution assumed (nil ESOP exercised) (19.6 + 0) + (earnings x multiple) 114.7 (i.e. “basic shares”) 2. 2. Full dilution assumed (all ESOP exercised) (19.6 + 6.5) + (earnings x multiple) 129.25 (i.e. “fully diluted shares”) 3. Partial dilution (IFRS

  26. Slide 26: Income statement

    Income statement 6 months 6 months Year ended ended ended 2015 2014 2014 £'000 £'000 £'000 Revenue 10,422 9,911 20,359 Bonuses (1,880) (2,064) (4,377) Other operating costs (6,262) (5,175) (10,662) Operating costs (8,142) (7,239) (15,039) Operating earnings 2,280 2,672 5,320 Operating margins 21.9%

  27. Slide 27: Balance sheet

    Balance sheet 31 Mar 2015 31 Mar 2014 30 Sep 2014 £'000 £'000 £'000 Goodwill and intangibles 1,720 1,696 1,772 Other non-current assets 195 356 262 1,915 2,052 2,034 Cash and cash equivalents 12,449 12,783 17,249 Current asset investments 11,774 11,647 11,640 Other current assets 7,041 5,553 3,568 T

  28. Slide 28: Impax equity interests

    Impax equity interests IPX ordinary shares (total 127.7m) % Employee incentive schemes BNP Paribas Investment Partners Impax Share Strike Exercise Period Options Others Option Scheme price outstanding Granted 24.99% FY11 ESOP 49.6p 1 Jan 2015 - 31 Dec 2017 4,540,000 29.6% FY12 ESOP 37.6p 1 Jan 2016

  29. Slide 29: Impax seed investments

    Impax seed investments Principal Investments¹ Initial Theme % of Fund AUM Comments funds/investee (£m) investment Impax Food and Food and agriculture 2.5 95% Dec-12 2 year anniversary - Dec 2014 Agriculture Fund Impax Fundamental Seed investment of $5m Water Long-Term Opportunities 3.6 84% Jan-14 (r

  30. Slide 30: Long term investment performance

    Long term investment performance Performance to 31.03.2015. in 1 Year 2 Years 3 Years 4 Years 5 Years 10 Years EPS Growth1 PE Ratio GBP (cumulative %) % Specialists 5.6 25.3 43.4 28.1 40.6 170.6 14.8 17.7 x -- FTSE ET Index 10.6 43.8 59.5 13.9 16.0 21.5 17.0 x Leaders 12.2 26.7 52.0 46.8 61.4 -- 17.

  31. Slide 31: Where does Resource Efficiency belong in a portfolio?

    Where does Resource Efficiency belong in a portfolio? Global equities Natural resources  Unconstrained  Resource demand  Highly differentiated  Resource scarcity  Thematic  Resource efficiency  Opportunistic IMPAX STRATEGIES INTEGRATE WELL WITHIN MANY ASSET ESG/SRI investments CATEGORIES Alte

  32. Slide 32: Our offices and distribution partners

    Our offices and distribution partners UK / Ireland IEM plc UCITS Platform Europe North America Old Mutual Ethical Fund BNP Paribas PaxWorld ASN Bank Mandate from US Private Bank London Delaware funds platform Asia Pacific Portland BNP Paribas in Hong Kong New York and Australia Hong Kong CLEAR INVES

  33. Slide 33: Remuneration policy

    Remuneration policy  Salaries: aiming to pay market median  Performance related pay (“PRP”): target remains 45% of operating earnings before PRP ¹  PRP continues to comprise cash bonuses and Fair Value charge of equity incentive schemes  Employee Share Option Plan:  3.7m ESOP awards made in the

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