Impax Asset Management Group Plc · LSE:IPX
Impax Asset Management — FY2022 Earnings Presentation
54 slides from Impax Asset Management's earnings presentation, Nov 30, 2022
Slide 1: Results for the year ending 30th September 2022
THIS IS NOT A FINANCIAL PROMOTION Results for the year ending 30th September 2022 30 November 2022
Slide 2: Agenda
Agenda • Highlights and business update Ian Simm Charlie Ridge Founder & Chief Executive Chief Financial Officer • Financial update • Outlook • Appendices 2
Slide 3: Karen Cockburn: Chief Financial Officer Designate
Karen Cockburn: Chief Financial Officer Designate • To become CFO, January 2023 • Expected to join the Impax Group Board as Executive Director following the AGM in March 2023, subject to regulatory approval • Charlie Ridge to be part-time adviser during calendar 2023 3
Slide 4: Investing in the transition to a more sustainable economy
Investing in the transition to a more sustainable economy Investment manager – 24+ years’ experience Expertise in highly attractive areas recognised worldwide Large investment team (c.80 members) – Listed equities, fixed income, private markets Global client base of institutional & intermediary inve
Slide 5: Impax’s investment philosophy
Impax’s investment philosophy The transition to a more sustainable economy Secular Sectoral Attractive for “active” drivers transformation investment managers • Resource/environmental • Large-scale, affecting constraints most sectors • Regulation • High growth rates • Technology change • Uncertain i
Slide 6: 2022 highlights
2022 highlights Net inflows of Continued Strengthening £2.9bn, Challenging longer-term direct AUM decreased market investment distribution by 4.1% from environment outperformance2 capabilities £37.2bn1 Pensions Age “Active Manager of the Year” Environmental Finance £37.4bn AUM as at 31 Oct 2022 “Lis
Slide 7: Financial performance
Financial performance1 Financial highlights Assets under management (£bn)² FY 2022 35.7 175.4 Revenues (£m) 143.1 FY 2021 37.2 Adjusted 67.4 operating profit (£m) 3 55.8 Shareholders’ equity (£m) Adjusted 68.4 FY 2022 138.2 profit before 4 tax (£m) 54.9 FY 2021 110.5 Adjusted 42.1 diluted earnings F
Slide 8: FY 2022: Breakdown of AUM increase (£bn)
FY 2022: Breakdown of AUM increase (£bn) 30-Sep-22 35.7 Outflows (4.0) Inflows 4.4 Market movement (2.8) £37.4bn AUM as at 31-Mar-22 38.0 31 Oct 2022 Outflows (3.9) Inflows 6.3 Market movement (1.7) 30-Sep-21 37.2 8
Slide 9: Significant opportunities available in a more challenging market environment
Significant opportunities available in a more challenging market environment • Macro-economic challenges and Ukraine conflict… ― Inflationary and interest rate pressures; monetary tightening and supply chain disruptions • …led to a market rotation towards value ― Commodities (incl. fossil fuels) ben
Slide 10: Well-diversified AUM by strategy
Well-diversified AUM by strategy AUM by range1 AUM by strategy1 International Sustainable Other, 10% 64% Economy, 2% Environmental Markets 70% Global Women's Leadership, 2% Leaders, 20% 30% US Large Cap, 4% Sustainability Lens 25% Global Water, 15% 6% Opportunities, 21% Other FY 2022 5% FY2022 FY 20
Slide 11: AUM by geography and asset class
AUM by geography and asset class AUM by region AUM by asset class Asia-Pacific, 2% Listed North America, 27% equities, 95% EMEA1, 50% Fixed income, 4% Private markets, 1% UK, 21% All data as at 30 September 2022. 1Includes Ireland. 11
Slide 12: Movement in net inflows – breakdown by channel (£m)
Movement in net inflows – breakdown by channel (£m) Funds sub-managed for UK/Ireland BNP Paribas Asset Management North America Own label funds 683 1,123 Own label funds1 St James's Place -517 1,245 2,089 BNPP funds 4,516 Other mutual & Other mutual advisory & funds 319 advisory funds 659 50 IEM plc
Slide 13: Sustainability Lens Strategies: FY 2022 performance versus benchmark
Sustainability Lens Strategies: FY 2022 performance versus benchmark (cumulative, %)1 Global Opportunities – AUM £7.5bn US Large Cap – AUM £1.3bn US Small Cap – AUM £0.5bn Global Opportunities US Large Cap 108.3 US Small Cap 46.9 80.3 43.1 MSCI ACWI2 S&P 500 Index3 86.9 Russell 2000 Index4 28.2 49.4
Slide 14: Environmental Markets Strategies: FY 2022 performance versus benchmark
Environmental Markets Strategies: FY 2022 performance versus benchmark (cumulative, %)1 Leaders3 – AUM £7.2bn Specialists – AUM £3.5bn Water – AUM £5.5bn Leaders Specialists Water 49.5 49.4 62.6 64.1 MSCI ACWI2 MSCI ACWI2 MSCI ACWI2 49.4 49.4 26.5 38.4 33.7 23.3 23.3 23.3 -4.2 -4.2 -8.6 -4.2 -11.3 -
Slide 15: Investment strategies and products: scope for further growth
Investment strategies and products: scope for further growth 1 Expanding our current strategies • Commingled funds: (e.g Lombard Odier) • Significant capacity headroom • US Large Cap sold into Europe & APAC 2 Developing new products • Sustainable Infrastructure (Active) strategy 3 Private markets, f
Slide 16: Beyond the pursuit of financial returns
Beyond the pursuit of financial returns Policy & advocacy Thought leadership and insights Financing Greening the net-zero emissions financial system Nature and Human biodiversity loss capital Partnerships and networks • Established Global Policy Group • Delivering COP26 commitments and supporting in
Slide 17: Beyond the pursuit of financial returns (continued)
Beyond the pursuit of financial returns (continued) Engagement and stewardship Reporting and analytics • 47% positive outcome out of 204 engagements1 • Expanded Impact reporting (fixed income; social • Areas of focus: climate; corporate governance; impact; environmental metrics) human capital; Susta
Slide 18: Investing in our people
Investing in our people Employee headcount • Continued strong employee engagement score 30 Sep 21 155 30 Sep 22 • Team grew 26% , but reduced rate of hiring during second half • New senior distribution hires for North America 120 and Europe & APAC Total • Opened new Manhattan office 102 headcount: 2
Slide 19: Systems and infrastructure
Systems and infrastructure Compliance Risk • Expanding and globalising Compliance team • Strengthened our Risk function and hired ― Investment additional senior managers ― Distribution ― Oversight ― Financial Crime IT • Developed our IT platform ― Salesforce implementation ― Continued focus on data
Slide 20: Financial update
Financial update
Slide 21: 23% revenue growth since 2021
23% revenue growth since 2021 Revenue (£m) Average fee margin (bps) Sep-22 Sep-21 Sep-22 run rate: run rate: run rate: £166.2m 47 bps 47 bps 47 46 FY 2022 175.4 Performance 6.8 Net flows 25.6 FY 2021 143.1 FY 2021 FY 2022 21
Slide 22: Revenue diversification
Revenue diversification Revenue by strategy Revenue by region Asia Pacific, 2% North America, Others, 14% 35% Leaders, 22% EMEA1, International Sustainable 46% Economy, 2% Global Women's Leadership, 2% US Large Cap, UK, 17% 4% Global Water, 12% Opportunities, Revenue by client type2 12% Sustainable
Slide 23: Operating expenses: investment to support growth
Operating expenses: investment to support growth Adjusted operating expenses (£m) Total staff (average)1 FY 2022 108.0 FY 2022 71 169 240 Variable Staff costs 7.2 Fixed staff costs 8.3 FY 2021 62 133 195 Non-staff costs 5.2 Investment Staff Other Staff FY 2021 87.3 AUM per investment staff member (£
Slide 24: 21% operating profit increase in 12 months
21% operating profit increase in 12 months Operating profit1 (£m) Operating margin FY 2022 67.4 FY 2022 38.4% FY 2021 39.0% FY 2021 55.8 • 30 Sept 2022 run rate operating profit: £54.1m • 30 Sept 2022 run-rate operating margin: 32.6% Operational gearing trend Operating profit per average staff membe
Slide 25: Strong cash position and robust capital buffer
Strong cash position and robust capital buffer Dividend (p) Cash movements¹ (£m) Capital resources (£m) 70.9 70.9 FY 2022 106.9 Other 2022 4.7 22.94 27.6 assets 0.2 Other cash 4.3 movements 2021 3.6 17.0 20.6 Net redemption 0.4 Capital of investments 48.1 buffer 2020 1.8 6.8 8.6 Acquisition of 63.4
Slide 26: IPX shareholder register
IPX shareholder register IPX shares September 2022 (m) Share management • EBT purchased 1,078,000 shares in the period • Continuation of EBT purchasing policy IPX shares in issue 132.6 Current ownership 30 September 2022 Shares held in EBT (3.3) BNP Paribas Asset Management 14% Net IPX shares 129.3
Slide 27: Outlook
Outlook
Slide 28: Outlook
Outlook Supportive Rising Asset owner policy and environmental trends aligned regulatory and societal with “TSE” drivers challenges Established, Attractive Institutionally- investment Authenticity & diversified focused client skills/ heritage distribution base strategies network 28
Slide 29: Appendix
Appendix
Slide 30: 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 effects of primarily: Adjusted PBT 68.4 • Foreign exchange gains
Slide 31: Additional information
Additional information Share awards outstanding1 Awards Number outstanding Vesting date End of exercise period RSS 2,494,007 2022-2027 RSU 2,436 2023 ESOP 700,000 Vested 2023 LTOP 1,993,575 2024-2027 2029-2032 Total 5,190,018 Investments Theme Principal funds/investee Investments (£m) % of fund aum
Slide 32: Background to the Company
Background to the Company
Slide 33: 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 • Increasingly complex regulatory environment Differentiated strategies • Growing fee pressure on generic products Diversified inco
Slide 34: Strong track record of growth – assets under management (£m)
Strong track record of growth – assets under management (£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 12,515 2019 15,051 2020 20,183 2021 37,21
Slide 35: Global distribution
Global distribution North America Desjardins AM (Canada) FÉRIQUE (Canada) Mackenzie Investments (Canada) NEI Investments (Canada) Impax commingled vehicles Pax World vehicles1 Europe ASN Bank BNP Paribas Asset Management Formuepleje St. James’s Place Lombard Odier Impax investment trust Impax UCITS
Slide 36: Our strategic priorities (products & clients)
Our strategic priorities (products & clients) Deliver superior, risk adjusted Optimise existing & selectively investment returns launch new strategies Widen & deepen Enhance client experience distribution channels beyond investment returns 36
Slide 37: Our strategic priorities (resources & results)
Our strategic priorities (resources & results) Attract & develop Increase operational outstanding team scalability & efficiency Build insights & advocacy Deliver excellent financials & around transition to a more sustainable stakeholder value sustainable economy 37
Slide 38: Our investment solutions: underpinned by proprietary tools
Our investment solutions: underpinned by proprietary tools Environmental Sustainability Gender Sustainable Multi-Asset Markets Lens Lens Infrastructure Sustainable Allocation Active Equities Active Equities Systematic Equities Systematic Equities Private Markets 1971 Specialists Global Opportunities
Slide 39: NEF III status
NEF III status • €2611 million invested and committed in a diversified portfolio ― 12 investments in eight countries across four technologies ― Four development platforms ― First investment in an adjacent sector: battery storage • Over 100% invested, committed and reserved for the execution of the i
Slide 40: NEF IV status
NEF IV status • Second rolling close held in Sep. and Oct. 2022 with additional commitments of €55.3m bringing total commitments to €293.3m ― c. 60% of €500m target fund size raised • Eight investments within nine months of the first close (Oct. 2021) ― Investments in six countries across four techn
Slide 41: NEF Performance notes
NEF Performance notes IRR, multiples and other return calculations All Internal Rates of Return ("IRR"), multiples and other return or performance information calculations include realised values and unrealised values, as applicable and include all returns generated by reinvested capital and proceed
Slide 42: Leaders: GIPS report – GBP
Leaders: GIPS report– GBP Total Firm Assets Composite Assets Number of Annual Gross Annual Net MSCI AC World Asset Weighted 3yr Annualized MSCI AC World 3yr FTSE EOAS 3yr Year (Millions) (Millions) Portfolios Return Return Return FTSE EOAS Return StdDev* Std Dev** Annualized Std Dev** Annualized Std
Slide 43: Climate: GIPS report – GBP
Climate: GIPS report – GBP Benchmark 3yr Total Firm Assets Composite Assets Number of Annual Gross Annual Benchmark Asset Weighted 3yr Annualized Std Annualized Std Year (Millions) (Millions) Portfolios Return Annual Net Return Return StdDev* Dev** Dev** 2021 39,788.29 3,584.90 4 17.77 17.13 19.63 -
Slide 44: Water: GIPS report – GBP
Water: GIPS report – GBP FTSE EO Water 3yr MSCI AC World FTSE EO Water Total Firm Assets Composite Number of Annual Gross Annual Net MSCI AC World Technology Asset Weighted Annualized 3yr Annualized Technology 3yr Year (Millions) Assets (Millions) Portfolios¹ Return Return Annual Return Annual Retur
Slide 45: Asian Environmental: GIPS report – GBP
Asian Environmental: GIPS report – GBP MSCI AC AP 3yr FTSE EO AP 3yr Total Firm Composite Number of Annual Gross Annual Net MSCI AC AP FTSE EO AP Asset Weighted 3yr Annualized Annualized Std Annualized Std Year Assets (Millions) Assets (Millions) Portfolios Return Return Return Return StdDev* Std De
Slide 46: Global Opportunities: GIPS report – GBP
Global Opportunities: GIPS report – GBP Benchmark 3yr Total Firm Assets Composite Assets Number of Annual Gross Annual Benchmark Asset Weighted 3yr Annualized Std Annualized Std Year (Millions) (Millions) Portfolios Return Annual Net Return Return StdDev* Dev** Dev** 2021 39,788.29 7,157.93 14 21.80
Slide 47: Sustainable Food: GIPS report – GBP
Sustainable Food: GIPS report – GBP Total Firm Assets Composite Assets Annual Benchmark Asset Weighted 3yr Annualized Std Benchmark 3yr Year (Millions) (Millions) Number of Portfolios Annual Gross Return Annual Net Return Return StdDev* Dev** Annualized Std Dev** 2021 39,788.29 1,447.61 1 13.95 13.5
Slide 48: Specialists: GIPS report – GBP
Specialists: GIPS report – GBP MSCI AC World 3yr FTSE ET 3yr Total Firm Assets Composite Assets Number of Annual Gross MSCI AC World Asset Weighted 3yr Annualized Std Annualized Std Annualized Std Year (Millions) (Millions) Portfolios¹ Return Annual Net Return Return FTSE ET Return StdDev* Dev** Dev
Slide 49: Specialists: GIPS report cont.
Specialists: GIPS report cont. Calculation Methodology performance returns was only applicable to Impax Asset Management, whilst since November 2018 the highest fee Returns are calculated using the asset-weighted method and individual portfolios are revalued daily or monthly, used for the computatio
Slide 50: US Large cap: GIPS report – GBP
US Large cap: GIPS report – GBP S&P 500 3yr Total Firm Assets Composite Assets Number of Annual Gross Annual Net S&P 500 Annual Asset Weighted 3yr Annualized Annualized Std Year (Millions)* (Millions) Portfolios Return Return Return StdDev** Std Dev*** Dev*** 2021 39,788.29 1,158.66 1 33.02 32.29 29
Slide 51: US Small Cap: GIPS report– GBP
US Small Cap: GIPS report– GBP Russell 2000 3yr Total Firm Assets Composite Assets Number of Annual Gross Russell 2000 Asset Weighted 3yr Annualized Std Annualized Std Year (Millions)* (Millions) Portfolios Return Annual Net Return Annual Return StdDev** Dev*** Dev*** 2021 39,788.29 546.63 1 32.96 3
Slide 52: Core Bond strategy: GIPS report – GBP
Core Bond strategy: GIPS report – GBP Bloomberg Bloomberg Barclays US Barclays US Aggregate 3yr Total Firm Assets Composite Assets Number of Annual Gross Aggregate Annual Asset Weighted 3yr Annualized Std Annualized Std Year (Millions)* (Millions) Portfolios Return Annual Net Return Return StdDev**
Slide 53: High Yield strategy: GIPS report– GBP
High Yield strategy: GIPS report– GBP ICE BofA US Cash ICE BofA US Cash Pay High Yield Pay High Yield Constrained (BB- Total Firm Assets Composite Assets Number of Annual Gross Constrained (BB- Asset Weighted 3yr Annualized Std B) 3yr Annualized Year (Millions)* (Millions) Portfolios Return Annual N
Slide 54: Important information
Important information NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION The information contained in this confidential document (the “Presentation”) a
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