Impax Asset Management Group Plc · LSE:IPX
Impax Asset Management — FY2019 Earnings Presentation
44 slides from Impax Asset Management's earnings presentation, December 2019
Slide 1: Results for year ended 30 September 2019
Results for year ended 30 September 2019 The specialist asset manager focused on a more sustainable economy
Slide 2: Agenda
Agenda • Highlights Ian Simm Charlie Ridge Founder & Chief Executive Chief Financial Officer • Business update • Financial update • Background to the Company 2
Slide 3: 2019 highlights
2019 highlights Net inflows of Strong long-term Broad product AUM increased £1.4bn and investment range and 21% year on year robust mandate performance diversified to £15.1bn1 pipeline distribution 1As at 30 September 2019. Assets under advice represent ~3% of total AUM. 3
Slide 4: Financial performance
Financial performance1 2019 2018 CHANGE Assets under management2 £15.1bn £12.5bn 20.8% Revenue £73.7m £65.7m 12.2% Adjusted operating profit3 £18.0m £20.0m (10.0%) Adjusted profit/(loss) before tax £18.1m £19.2m (5.7%) Adjusted diluted earnings per share 11.5p 12.4p (8.1%) Shareholders’ equity £63.2
Slide 5: Business update
Business update
Slide 6: Impax Asset Management - overview
Impax Asset Management - overview Thematic Equities £11.1bn Global Opportunities £611m • Investing in the transition to a sustainable economy US Equities £932m • Founded in 1998 £15.1bn Beta Strategies £1.1bn • 55 investment team members (UK, US, HK) AUM1 Fixed Income £887m • Global distribution Rea
Slide 7: Market context and Impax’s potential
Market context and Impax’s potential • Rapidly expanding investment opportunities — New sectors e.g. renewable energy — Disruption in established sectors — Widespread mispricing of assets/securities • Growing demand from asset owners and allocators — Search for growth/out-performance — Stakeholder p
Slide 8: Listed equities (Impax LN): investment performance (USD)
Listed equities (Impax LN): investment performance (USD) STRATEGIES 1 YEAR 3 YEARS 5 YEARS Specialists Active 3.3 8.7 8.6 FTSE ET100 INDEX BENCHMARK -0.1 7.4 5.1 Leaders Active 2.7 8.9 8.1 FTSE EOAS INDEX BENCHMARK 5.2 11.1 8.7 Asia-Pacific Active 1.4 6.0 5.2 FTSE EOAP COMPOSITE INDEX BENCHMARK 0.3
Slide 9: Global Opportunities strategy
Global Opportunities strategy 180 • Investing across the transition to a more Global Opportunities strategy MSCI ACWI sustainable global economy 160 140 • 30 - 50 stocks; expected turnover 20% p.a. • Seeded in December 2014; AUM of 120 US$760m by 30 September 2019 100 • Distribution channels include
Slide 10: AUM growth in Europe and North America – by client domicile
AUM growth in Europe and North America – breakdown by client domicile (£m) PRINCIPAL FUNDS/PARTNERS Impax Environmental Markets plc 930 Irish UCITS Platform UK/Ireland 1,601 St James’s Place Formuepleje 6,581 ASN Bank EMEA 8,031 Impax LN managed BNP Paribas Asset Management 76 Asia-Pacific BNP Parib
Slide 11: AUM growth – breakdown by investment strategy
AUM growth – breakdown by investment strategy (£m) Specialists 2,193 2,691 Leaders 2,694 3,512 Impax LN managed Asia-Pacific 99 273 Water 3,305 3,829 Sustainable Food 709 740 Global Opportunities 24 611 450 Real Assets 445 Impax NH managed US Equities 1,210 932 Smart Beta 996 1,126 Fixed Income 835
Slide 12: Breakdown of AUM increase
Breakdown of AUM increase IMPAX LN: LISTED EQUITY FUNDS (£m)1 IMPAX NH: PAX WORLD FUNDS (£m)1 30 September 2019 11,656 30 September 2019 3,659 Market movement 1,008 Market movement 340 Inflows 1,628 Inflows 360 Outflows (1,040) Outflows (395) 31 March 2019 10,060 31 March 2019 3,354 Market movement
Slide 13: Private Equity Infrastructure
Private Equity Infrastructure NEF II INVESTMENTS NEF ll • Over 95% of total value of portfolio now € € realised € • Excellent performance track record 105MW • Impax has received £3.2m net payments from carried interest € NEF III € € • Final close on 31 May 2018 € € € € 48MW € • Capital commitments o
Slide 14: Investing to support continued organic growth
Investing to support continued organic growth People • 13 new hires in 2019 • New Global Head of HR • Excellent results from April 2019 staff survey Systems • Brexit ready: Dublin entity authorised • Scalable systems in place • Support team integration across Impax LN and Impax NH Products • Active
Slide 15: Financial update
Financial update
Slide 16: Adjusted ‘IFRS’ performance measures
Adjusted ‘IFRS’ performance measures IFRS PBT TO ADJUSTED PBT (£m) As a result of the acquisition, certain financial performance measures have been prepared on an adjusted basis. ‘Adjusted’ financial metrics are shown after removing the Adjusted PBT 18.1 effects of primarily: Fair value gains/(losse
Slide 17: Financial highlights - revenue
Financial highlights - revenue IMPAX LN (£m) IMPAX NH (£m) 2019 52.4 2019 21.3 Listed Equity Listed equity flows flows and and Impact of additional 3.5 performance 8.9 Annualisation months revenue 5.7 performance Prioroffyear One Private prior Equity year private equity items items not not repeated
Slide 18: Financial highlights – operating expenses
Financial highlights – operating expenses IMPAX LN (adjusted¹) (£m) IMPAX NH (adjusted1) (£m) 2019 10.0 12.6 13.2 35.8 2019 9.5 8.1 2.3 19.9 Partial 2018 7.7 11.0 13.3 32.0 2018 6.5 5.1 2.2 13.8 year2 Non-staff costs Non-staff costs Fixed staff costs Fixed staff costs Variable staff costs Variable s
Slide 19: Financial highlights - trends
Financial highlights - trends LN AVERAGE NUMBER OF EMPLOYEES NH AVERAGE NUMBER OF EMPLOYEES 30 September 2019 93 2019 30 September 2019 56 2019 30 September 2018 2018 87 30 September 2018 2018 53 LN ADJUSTED OPERATING COSTS PER EMPLOYEE (£’000) NH ADJUSTED OPERATING COSTS PER EMPLOYEE (£’000) 2019 3
Slide 20: Financial highlights - earnings and dividends
Financial highlights - earnings and dividends ADJUSTED DILUTED EPS (p) DIVIDEND (p) 2019 1.5 4.0 5.5 2019 11.5 2018 1.1 3.0 4.1 2.6 Other effects 0.5 2017 0.7 2.2 2.9 2016 0.5 1.6 2.1 LN operating earnings 2.7 2015 0.4 1.2 1.6 0.5 2014 0.1 1.1 1.2 NH operating earnings (1.3) 2013 0.9 NH annualisatio
Slide 21: Financial highlights - balance sheet
Financial highlights - balance sheet CASH MOVEMENTS¹ (£m) CASH RESERVE ANALYSIS1 (£m) 30 September 2019 26.2 30 September 2019 26.2 Other cash movements 0.6 Risk buffer (7.5) Repayment of bank borrowing (10.4) "Available" cash 19.7 Acquisition of own shares (2.5) Net working capital (3.7) Dividends
Slide 22: Finalisation of Impax NH acquisition
Finalisation of Impax NH acquisition • Complete acquisition of Impax NH by acquiring 16.7% currently owned by management in Q1 2021 • Acquisition to be settled via cash or equity • Potential payment of contingent consideration, currently forecasted to be nil • Review remuneration and retention arran
Slide 23: IPX shareholder register - cash and long-term trends
IPX shareholder register - cash and long-term trends IPX SHARES SEPTEMBER 2019 (m) POTENTIAL DILUTION (IN 2021) • The 16.7% of Impax NH owned by management can be purchased IPX issued shares 130.4 with either cash or equity. A purchase with equity would equate to 1.2m2 shares. Net Netshare buy backs
Slide 24: Impax’s strong position
Impax’s strong position Acknowledged Attractive Established leading global investment distribution brand skills/strategies network Potential for Scope to Building further develop/add shareholder scaling new capabilities value 24
Slide 25: Background to the Company
Background to the Company
Slide 26: The rapidly changing landscape for investment managers
The rapidly changing landscape for investment managers IMPAX WELL MAINSTREAM TRENDS A FORMULA FOR WINNERS POSITIONED • Pressure on generalists “Specialist” approach P • Increasingly complex regulatory environment Differentiated strategies P • Growing fee pressure on generic products Diversified inco
Slide 27: Solid track record of growth – AUM FYE £m
Solid track record of growth – AUM FYE £m 1998 15 1999 20 2000 39 2001 38 2002 55 2003 66 2004 69 2005 214 2006 429 2007 982 2008 1,099 2009 1,265 2010 1,823 2011 1,896 2012 1,828 2013 2,197 2014 2,755 2015 2,823 2016 4,502 2017 7,261 2018 12,5151 2019 15,051 AUM shown is at end of financial years t
Slide 28: Investment solutions across asset classes
Investment solutions across asset classes Impax Asset Management Group plc London managed (Impax LN) US managed (Impax NH) Asset class Strategy Inception date Asset class Strategy Inception date Specialists 2002 Small Cap 2008 US Equities Large Cap 2016 Leaders 2008 ESG Beta Quality 1997 Thematic Eq
Slide 29: Our offices and distribution partners
Our offices and distribution partners North America UK/Ireland Pax World Funds IEM plc Delaware funds platform UCITS platform NEI Investments NEF Funds1 Desjardins Global Asset Management St James’s Place Mackenzie Investments London Portland Asia - Pacific Portsmouth BNP Paribas in Hong Kong and Au
Slide 30: Appendix
Appendix
Slide 31: Impax believes the economy is in transition
Impax believes the economy is in transition From a depletive Disruptors To a sustainable economic model economic model Technology Growth ignoring Growth with negative social improved social and environmental and environmental Customer costs preferences outcomes Social factors Sustainability Durable
Slide 32: Transitions create losers and winners
Transitions create losers and winners COMBUSTION CLEAN ENERGY ELECTRIC ENGINE TRANSITION VEHICLES PROCESSED HEALTH & WELLNESS NATURAL FOOD TRANSITION INGREDIENTS TRANSITION TO NON-SPECIFIC DIAGNOSTIC PERSONALISED TREATMENTS TOOLS MEDICAL CARE Source: Shutterstock/Unsplash. 32
Slide 33: Pax World Funds: investment performance
Pax World Funds: investment performance STRATEGY 1 YEAR 3 YEARS 5 YEARS Impax Large Cap 4.6 - - S&P 500 INDEX BENCHMARK 4.3 - - Impax Small Cap -1.3 5.9 6.2 RUSSELL 2000 INDEX BENCHMARK -8.9 8.2 8.2 Impax ESG Beta Quality 5.3 - - RUSSELL 1000 INDEX BENCHMARK 3.9 - - Impax ESG Beta Dividend 4.0 - - R
Slide 34: Pax World Funds: investment performance
Pax World Funds: investment performance STRATEGY 1 YEAR 3 YEARS 5 YEARS Impax Global Women’s Leadership 4.3 12.1 8.8 MSCI WORLD (NET) INDEX BENCHMARK 1.8 10.2 7.2 Impax MSCI EAFE ESG Leaders Index 0.2 6.4 3.8 MSCI EAFE (NET) INDEX BENCHMARK -1.3 6.5 3.3 Impax Core Bond 10.4 2.9 - BLOOMBERG BARCLAYS
Slide 35: Acquisition transaction summary
Acquisition transaction summary On 18 January 2018 Impax completed the purchase of Pax World Management LLC (renamed Impax Asset Management LLC, here referred to as ‘Impax NH’) — 83.3 per cent from majority shareholder and others — 16.7 per cent from Pax Management in 2021 under put/call arrangement
Slide 36: Income analysis
Income analysis IFRS Adjustments for Adjusted for Year ended Year ended Year ended September September September 2019 2019 2019 Income statement £'000 £'000 £'000 Comments on adjustments Revenue 73,695 - 73,695 Operating costs (54,883) (834) (55,717) Contingent consideration adjustment amortisation
Slide 37: Additional information
Additional information SHARE AWARDS OUTSTANDING1 INVESTMENTS END OF 2 % OF NUMBER VESTING DATE EXERCISE PRINCIPAL INVESTMENTS AWARDS THEME FUND COMMENTS OUTSTANDING PERIOD FUNDS/INVESTEE (£M) AUM 2013 ESOP 200,000 Vested 31/12/2019 Global Global Women’s 1.7 100% 2014 ESOP 600,000 Vested 31/12/2020 E
Slide 38: Global Opportunities: annual disclosure presentation – September 2019 USD
Global Opportunities: annual disclosure presentation – September 2019 USD Benchmark 3yr Total Firm Assets Ending Market Number of Annual Gross Annual Benchmark Asset Weighted 3yr Annualized Std Annualized Std Year (Millions) Value (Millions) Portfolios Return Annual Net Return Return StdDev* Dev** D
Slide 39: Leaders: annual disclosure presentation – September 2019 USD
Leaders: annual disclosure presentation – September 2019 USD Annual Annual Benchmark 1 Benchmark 2 Total Firm Ending Market Number of Annual Gross Annual Net Benchmark 1 Benchmark 2 Asset Weighted 3yr Annualized 3yr Annualized 3yr Annualized Year Assets (Millions) Value (Millions) Portfolios Return
Slide 40: Specialists: annual disclosure presentation – September 2019 USD
Specialists: annual disclosure presentation – September 2019 USD MSCI AC World FTSE ET 3yr Total Firm Ending Market Number of Annual Gross Annual Net MSCI AC World Asset Weighted 3yr Annualized 3yr Annualized Annualized Std Year Assets (Millions) Value (Millions) Portfolios¹ Return Return Return FTS
Slide 41: Asia-Pacific: annual disclosure presentation – September 2019 USD
Asia-Pacific: annual disclosure presentation – September 2019 USD Total Firm MSCI AC AP FTSE EO AP Assets Ending Market Number of Annual Gross Annual Net MSCI AC AP FTSE EO AP Asset Weighted 3yr Annualized 3yr Annualized 3yr Annualized Year (Millions) Value (Millions) Portfolios Return Return Return
Slide 42: Water: annual disclosure presentation – September 2019 USD
Water: annual disclosure presentation – September 2019 USD FTSE EO FTSE EO Water Total Firm Water MSCI AC World Technology 3yr Assets Ending Market Number of Annual Gross Annual Net MSCI AC World Technology Asset Weighted 3yr Annualized 3yr Annualized Annualized Std Year (Millions) Value (Millions)
Slide 43: Sustainable Food: annual disclosure presentation – September 2019 USD
Sustainable Food: annual disclosure presentation – September 2019 USD Benchmark 1 3yr Total Firm Assets Ending Market Number of Annual Gross Annual Benchmark Asset Weighted 3yr Annualized Std Annualized Std Year (Millions) Value (Millions) Portfolios Return Annual Net Return 1 Return StdDev* Dev** D
Slide 44: Important information
Important information This document has been Issued in the UK by Impax Asset Management Group plc, whose shares are quoted on AIM. Impax Asset Management Group plc is registered in England & Wales, number 03262305. Impax Asset Management Group plc is the parent company of Impax Asset Management Limi
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