Impax Asset Management Group plc · LSE:IPX

Impax Asset Management — FY2014 Earnings Presentation

38 slides from Impax Asset Management's earnings presentation, December 2014

  1. Slide 1: Impax Asset Management Group plc

    Impax Asset Management Group plc Final results for the year ended 30 September 2014 CLEAR INVESTMENT

  2. Slide 2: Agenda

    Agenda  Business update Ian Simm Chief Executive  Final results  Q&A Charlie Ridge CFO CLEAR INVESTMENT 2

  3. Slide 3: The leading investment boutique in resource efficiency

    The leading investment boutique in resource efficiency Scalable Experienced team Attractive investment themes 61 staff, 30 investment team members¹ Scalable investment strategies Specialist expertise Proven, rigorous investment process Significant staff share ownership Well-established distribution

  4. Slide 4: Performance (for year ended 30 September 2014)

    Performance (for year ended 30 September 2014) Commentary Financial performance 2014 2013 Assets under management £2.8bn £2.2bn  AUM up 25% – Encouraging business development Revenue £20.4m £18.5m in the United States Operating earnings1 £5.3m £4.3m – High level of inflows into the Water Profit/(Lo

  5. Slide 5: The investment opportunity: high growth markets

    The investment opportunity: high growth markets Illustrative New developments Catalysts for Impax themes • Fracking water treatment investments Water Scarcity • Worst US drought since 1950s1 • Disaster relief/flood defence funding • China: $450bn investment in water/waste • China 12th 5-year plan im

  6. Slide 6: Discernible change in investor sentiment

    Discernible change in investor sentiment  Search for growth  Analysis of investment beliefs  Review of fiduciary duty  Concerns re climate risk and stranded assets CLEAR INVESTMENT 6

  7. Slide 7: Investment strategies

    Investment strategies Global All cap AUM Inception date Specialists Universe: 1100 companies  Small-Mid £790m Mar 2002 Universe Size: $1.6 T market cap Leaders Universe: 1500 companies   £514m Mar 2008 Universe Size: $4.2 T market cap Water Universe: 250 companies   £1.0bn Jan 2009 Universe Siz

  8. Slide 8: Water strategy – strong inflows and performance

    Water strategy – strong inflows and performance Water strategy AUM (£m)  Continuing strong signals for long-term Nov-2008 112 investment Sep-2012 226  Wider European distribution Mar-2013 388 Sep-2013 562  BNPP structured product in France & Italy Mar-2014 911 based on Aqua portfolio Sep-2014 1,0

  9. Slide 9: Significant growth in Water and Leaders strategies

    Significant growth in Water and Leaders strategies AUM BREAKDOWN (1): BY STRATEGY AUM breakdown (£m) AUM (£) AUM (£) Property Investment strategy 30 Sep’13 1% 30 Sep’14 Own label 18% Specialists 790m 819m - Impax Environmental Markets plc 358m 363m Private - Impax Environmental Markets (Ireland) 114

  10. Slide 10: Strong AUM growth in Europe and North America

    Strong AUM growth in Europe and North America AUM BREAKDOWN (2): BY CLIENT DOMICILE (£M) Principal funds/partners 634 Impax Environmental Markets plc UK/Ireland Impax Environmental Markets (Ireland) Fund 644 Impax Asian Environmental Markets (Ireland) Fund Impax Food and Agriculture Fund Other 1,040

  11. Slide 11: Our offices and distribution partners

    Our offices and distribution partners UK / Ireland IEM plc UCITS Platform Europe Nor th 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 INVE

  12. Slide 12: Strong inflows into third party funds/accounts

    Strong inflows into third party funds/accounts FLOWS FOR “IMPAX LABEL” AND THIRD PARTY FUNDS/ACCOUNTS “Impax label” funds (£m) Third party funds/accounts (£m) September 2014 30 Sept 2014 511 30 Sept 2014 September 2014 1,868 Market movement (25) Market movement (47) Inflows 8 Inflows 394 Outflows (1

  13. Slide 13: US: rapid expansion and good prospects

    US: rapid expansion and good prospects  Business development since 2006 AUM from US investors (£m)  Strong latent demand with limited competition Sep-2009 9 – New interest in “resource optimization” Impax private managed funds – Major consultants recommending Impax Pax World Sep-2010 16 US private

  14. Slide 14: Private Equity update

    Private Equity update NEF I NEF II  Strong portfolio operating performance  370MW European wind projects in operation / construction  Focus on cost cutting and debt restructuring  Investment commitments now 73% of Fund capital  Continue complex arbitration against Spanish government  Further a

  15. Slide 15: Property (with a sustainability focus)

    Property (with a sustainability focus) FUND I: STRONG TRACK RECORD £138.8m Purchase 4 assets 1 £111.2m Exits (x3) 1 1.26x ROE 1 5 St Philip’s Place, Birmingham B3 2PW 3-5 Morrison St, Edinburgh EH3 8BH 18.1% IRR Purchase 2009 : £ 3 1.5m Purchase 2009 : £ 2 3.9m Sale 2014 : £ 3 8.0m Sale 2013 : £ 2 9

  16. Slide 16: Financial highlights (1)

    Financial highlights (1) Revenue (£m) Operating costs (£m) Operating earnings (£m) 2014 20.4 PrivateAdditional Equity FX and Financingrevenue Fees 1.1 PE-related 2014 52.6% 21.1% 15.0 2014 5.3 Listed Equity Flows and 2.5 Performance 2013 4.3 2013 53.0% 23.5% 14.1 IAEM Plc exit (1.7) Staff costs Othe

  17. Slide 17: Financial highlights (2)

    Financial highlights (2) Investments¹ (£m) Cash reserves (£m) Cash reserve analysis (£m) Cash C ash as at 330 0 Sept 10.6 330 Sept2014 0 Sept 2014 17.2 17.2 Sept2014 2014 7.7 2.9 30Sept 30 Sept2014 2014 Working capital (0.5) Risk buffer (4.4) Fair value (0.1) changes Investment hedges and Short term

  18. Slide 18: Financial highlights (3)

    Financial highlights (3) Diluted adjusted¹ EPS (p) Dividend (p) 2014 2014 0.30 1.10² 1.40 2.79 2013 0.90 Effect of share buy 0.03 backs and dilution 2012 0.75 EIA charges (0.15) 2011 0.70 Increase in FV losses (0.27) 2010 0.60 Increase in operating 2009 0.40 0.78 earnings 2008 0.35 Tax benefits not

  19. Slide 19: Remuneration policy

    Remuneration policy  Reviewed by the Board in Summer 2014  Salaries: aiming to pay market median  Performance related pay (“PRP”): target remains 45% of operating earnings before PRP¹  PRP will continue to comprises cash bonuses and Fair Value charge of equity incentive schemes  Employee Share

  20. Slide 20: Outlook

    Outlook Attractive prospects for target markets to Active investment management ideal for sustain “superior growth” exploiting inefficient prices  Major overhaul in energy policies worldwide  Rapidly changing market drivers  Demographics, weak asset base and weather risk driving  Expert team can

  21. Slide 21: Appendix

    Appendix CLEAR INVESTMENT 21

  22. Slide 22: Goals and strategy for growth

    Goals and strategy for growth We are in business to . . . Our strategy is based on . . .  Be the leading specialist boutique investing  Recruiting and retaining specialist in the rapidly expanding resource efficiency investment expertise and environmental markets  Managing a small number of scala

  23. Slide 23: Powerful drivers behind resource efficiency and environmental markets

    Powerful drivers behind resource efficiency and environmental markets Economic growth is unsustainable... …while market dislocations provide investment opportunities Technology Consumers • New solutions • Population pressure Weak infrastructure • Corporate R&D • Higher living standards • Power grids

  24. Slide 24: The investment opportunity

    The investment opportunity  Strong fundamental drivers An expanding global population and rising living standards are driving demand for resource supply and resource efficiency.  New risks of holding resource supply assets Core resource assets such as fossil fuels, timber, etc are exposed to syste

  25. Slide 25: Resource efficiency and environmental markets: diverse listed equity opportunities

    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

  26. Slide 26: Impax investment universe is growing rapidly

    Impax investment universe is growing rapidly Large universe of growing companies NUMBER OF COMPANIES  ca $4 T in Market Cap 1,500 Resource efficiency 400 business exposure: Diverse range of opportunities 20-50% >50%  Cyclical  Defensive 1,100  Special Situations Higher Expected Earnings Growth 1

  27. Slide 27: Competitors

    Competitors Listed Equities  Products from large, branded asset managers not typically “consultant quality”  Limited number of boutiques  Sub-sector products, e.g. alternative energy, tend to underperform broader strategies  Little direct competition in North America and Asia Private Equity  Es

  28. Slide 28: Where does a resource efficiency allocation belong in a portfolio?

    Where does a resource efficiency allocation belong in a portfolio? High Growth Global Equities Natural Resources  Unconstrained  Resource Demand  Highly Differentiated  Resource Scarcity  Thematic  Resource Efficiency  Opportunistic Impax strategies integrate well within many asset categories

  29. Slide 29: Extensive expertise

    Extensive expertise Keith Ian Charlie Falconer Simm Ridge Ians ince Chairman Simm2004 Chief Executive CFO Chief Executive 34 years 25 years 28 years Jon Forster Solar, Waste & Water 0 years Bruce Peter Ominder Jenkyn-Jones Rossbach Dhillon Head of Listed E quities MD, Private Equity Head of Distribu

  30. Slide 30: Strong investor relationships

    Strong investor relationships 100+ Institutions US Private Bank European Institution CLEAR INVESTMENT 30

  31. Slide 31: 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 Phase 3: 2010 1,823 Consolidation & Investment 2011 1,896 2012 1,828 2,197

  32. Slide 32: Valuation indicators

    Valuation indicators Operating earnings Liquid assets (£m) Shares reconciliation² (m) after tax¹ per share (p) Diluted shares 116.7 330 0 Sept Sept 2014 9.4 7.7 17.1 2014 3.56 2014 ESOP dilution 0.5 Basic shares 116.2 2.83 330 0 Sept Sept 2013 9.8 6.2 16.0 2013 2013 Share buy backs (11.6) Available

  33. Slide 33: Income statement

    Income statement Year Year Ended Ended 2014 2013 £'000 £'000 Revenue 20,359 18,463 Bonuses Pool (4,377) (3,558) Other operating costs (10,661) (10,566) Operating costs (15,039) (14,124) Operating earnings 5,320 4,339 Share-based payment charge for EIA extension scheme¹ - (280) Other charges related

  34. Slide 34: Balance sheet

    Balance sheet 30 Sept 2014 30 Sept 2013 £'000 £'000 Goodwill and intangibles 1,772 1,724 Other non-current assets 262 473 2,034 2,197 Cash and cash equivalents 17,249 16,553 Current asset investments 11,640 9,336 Other current assets 3,568 3,509 Total assets 34,491 31,595 Current liabilities 7,728 6

  35. Slide 35: Impax equity interests

    Impax equity interests IPX ordinary shares (Total 127.7m) % Employee Incentive Schemes Impax share/ Strike Awards Exercise period 30% option scheme price outstanding 25% BNP Paribas Investment Granted Partners FY11 ESOP 49.6p 1 Jan 2015 - 31 Dec 2017 4,540,000 Directors & staff*¹ FY12 ESOP 37.6p 1 J

  36. Slide 36: Impax seed investments

    Impax seed investments % of Initial Investments¹ Theme Principal funds / Investee Fund investment Comments (£m) AUM date Impax Global Resource Withdrawals to 30 Sept 2014 $3m; further $2m Specialists 2.4 24% Nov-11 Optimization Fund withdrawn Oct 2014 Food & Agriculture Impax Food and Agriculture Fu

  37. Slide 37: Sources

    Sources 1 http://www.cbc.ca/news/world/story/2012/07/25/f-drought-usa-faq.html, 26 July 2012, referencing report by National Climatic Data Centre Source: CBC News 2 http://tilt.ft.com/posts/2011-04/17831/china-water-2 Source: FT Tilt Pro, 11 April 2011 3 Foreign & Commonwealth Office report http://w

  38. Slide 38: 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

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