Impax Asset Management Group Plc · LSE:IPX

Impax Asset Management — FY2020 Earnings Presentation

53 slides from Impax Asset Management's earnings presentation, December 2020

  1. Slide 1: Results for year ended 30 September 2020

    Results for year ended 30 September 2020 The specialist asset manager focused on a more sustainable economy

  2. Slide 2: Agenda

    Agenda Ian Simm Charlie Ridge • Highlights and Business update Founder & Chief Executive Chief Financial Officer • Financial update • Background to the Company 2

  3. Slide 3: 2020 highlights

    2020 highlights AUM increased Strong investment Resilience and performance and exceptional Solid platform for 34% year on year further expansion to £20.2bn1 record net inflows growth through of £3.5bn COVID-19 2020 UNPRI assessment: A+ Strategy and Governance 1As at 30 September 2020. Assets under a

  4. Slide 4: Financial performance

    Financial performance1 FINANCIAL HIGHLIGHTS ASSETS UNDER MANAGEMENT (£bn)² 2020 20.2 87.5 Revenue (£m) £23.4bn AUM 73.7 as at 2019 15.1 30 November 2020 Adjusted Adjusted 23.3 operating operating SHAREHOLDERS’ EQUITY (£m) profit (£m)³ 18.0 2020 71.5 Adjusted Adjusted 22.2 2019 63.2 profit/(loss) pro

  5. Slide 5: Impax Asset Management - overview £20.2bn AUM

    Impax Asset Management - overview Real Assets • Specialist manager, over 20 years’ experience Strategies Systematic Beta £0.4bn Strategies £0.8bn Sustainability Lens US • 57 investment team members (UK, US, HK) Strategies Equities £4.3bn £1.0bn • Global distribution and client relations Fixed Income

  6. Slide 6: Highly-attractive market context

    Highly-attractive market context • Strengthening drivers ― Increased focus on climate change (ahead of COP26 conference in Nov 2021) ― Biden Presidency should restore/enhance policy momentum ― Evidence of broader societal support for sustainable development • Rapidly-expanding investment opportuniti

  7. Slide 7: Impax & COVID-19: robust performance & attractive prospects

    Impax & COVID-19: robust performance & attractive prospects Impax and the pandemic Implications for our investment approach • Seamless transition to remote working • Heightened awareness of systemic risks • No health & safety or operational issues • Capital markets rewarding resilience • Sustained s

  8. Slide 8: Investment performance

    Investment performance¹ Major thematic strategies outperformed 'comparator' indices over 1, 3 and 5 years Environmental Markets Strategies • Asia-Pacific 19.3%, Leaders 14.8%; Specialists 13.9%; Water 9.6% Sustainable Food 3.3% • Benchmark: MSCI ACWI 5.3% Sustainable Lens Strategies • Global Opportu

  9. Slide 9: AUM breakdown (30 September 2020)

    AUM breakdown (30 September 2020) AUM BY STRATEGY AUM BY REGION Asia-Pacific Pax World Funds Specialists 0.6% 15.9% UK 19.4% Private Equity 15.8% 1.8% North America 29.2% Global Opportunities 11.6% Leaders 22.8% Sustainable Food Continental Europe 3.8% Water Asia 54.4% 21.7% 3.0% AUM BY CLIENT TYPE

  10. Slide 10: Movement in AUM – breakdown by channel (£m)

    Movement in AUM – breakdown by channel (£m) Funds sub-managed for Other European UK/Ireland BNP Paribas Asset Distributors / Funds Management Formuepleje 98 269 Aqua 303 DK / /SESEB / / NL Irish UCITS platform Water ASN 38 116 279 184 64 North America IEM plc Global Environment Leaders 36 132 Pax Wo

  11. Slide 11: Breakdown of AUM increase

    Breakdown of AUM increase IMPAX LN: LISTED EQUITY FUNDS (£m)1 IMPAX NH: PAX WORLD FUNDS (£m)1 30 September 2020 16,611 30 September 2020 4,186 Market movement 3,711 Market movement 682 Inflows 2,808 Inflows 615 Outflows (1,343) Outflows (417) 31 March 2020 11,435 31 March 2020 3,306 Market movement

  12. Slide 12: Successful integration of Impax NH (formerly Pax World Management)

    Successful integration of Impax NH (formerly Pax World Management) Finalisation of acquisition Pax World Fund AUM evolution from acquisition (US$bn) • Will acquire remaining 16.7% of Pax World Management 6.0 from management in Jan 2021 4.9 • Total consideration US$7.8 million (settled in cash or sha

  13. Slide 13: Investment strategies and products: scope for further growth

    Investment strategies and products: scope for further growth Expanding our existing strategies • Current distribution structure well positioned for further expansion • Significant capacity headroom in all products except Specialists Developing new products • Successful track record of seeding new st

  14. Slide 14: Investing in our people

    Investing in our people Developing our approach • High levels of staff engagement (biennial reviews, additional "pulse" surveys) • In FY20, headcount grew 12% to 175 permanent staff • "People" strategy focused on: ― further strengthening our culture globally based on publicly-declared "Values" ― rol

  15. Slide 15: Enhancing our client model: beyond investment returns

    Enhancing our client model: beyond investment returns Advocacy, partners and global networks Thought leadership and insights Engagement and stewardship Impact reporting and analytics 15

  16. Slide 16: Financial update

    Financial update

  17. Slide 17: Financial highlights

    Financial highlights REVENUE (£m) REVENUE BY CLIENT DOMICILE Other Ireland 3% Netherlands 4% UK 87.5 3% 2020 65.1 22.5 17% Luxembourg Performance 22% 4.8 0.4 France North America Flows 9.4 0.8 11% 40% Sale Saleof of assets in assets WEIGHTED AVERAGE FEE MARGIN (bps) Private Equity in Private (1.5) 1

  18. Slide 18: Financial highlights – trends

    Financial highlights – trends TOTAL STAFF (AVERAGE) NUMBER OF INVESTMENT STAFF (AVERAGE) 2020 174 2020 57 2019 155 2019 55 REVENUE PER EMPLOYEE (£’000) AUM PER INVESTMENT STAFF (£m) 2020 502 2020 354 2019 477 2019 274 18

  19. Slide 19: Financial highlights – operating expenses

    Financial highlights – operating expenses IMPAX LN (adjusted¹) (£m) IMPAX NH (adjusted1) (£m) OPERATING MARGIN 2020 10.2 14.8 17.9 42.9 2020 9.5 8.7 3.1 21.4 2020 26.6% 2019 10.0 12.6 13.2 35.8 2019 9.5 8.1 2.3 19.9 2019 24.4% Non-staff costs Fixed staff costs Variable staff costs • Operating profit

  20. Slide 20: Financial highlights - earnings and dividends

    Financial highlights - earnings and dividends ADJUSTED DILUTED EPS (p) DIVIDEND (p) 2020 1.8 6.8 8.6 2020 14.5 2019 1.5 4.0 5.5 2018 1.1 3.0 4.1 2.6 Other effects 0.1 2017 0.7 2.2 2.9 2016 0.5 1.6 2.1 Tax (0.5) 2015 0.4 1.2 1.6 0.5 2014 0.1 1.1 1.2 2013 0.9 Operating profit 3.4 2012 0.75 Interim 201

  21. Slide 21: Financial highlights - balance sheet

    Financial highlights - balance sheet CASH MOVEMENTS¹ (£m) CASH RESERVE ANALYSIS1 (£m) 30 September 2020 37.4 30 September 2020 37.4 Other cash movements 0.3 Risk buffer (11.7) Net redemption from 1.0 "Available" cash 25.7 unconsolidated funds Acquisition of own shares (4.2) Net working capital (8.9)

  22. Slide 22: IPX shareholder register - cash and long-term trends

    IPX shareholder register - cash and long-term trends IPX SHARES SEPTEMBER 2020 (m) POTENTIAL DILUTION (IN 2021) IPX issued shares 130.4 • The 16.7% of Impax NH owned by management can be purchased with either cash or equity. A purchase with equity would equate to 0.5m1 shares. Net Net share buy back

  23. Slide 23: Outlook

    Outlook Acknowledged Attractive Established Build Back Better leading global investment distribution and the Biden brand skills/strategies network administration Potential for Scope to Building further develop/add shareholder scaling new capabilities value 23

  24. Slide 24: Appendix

    Appendix

  25. Slide 25: 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

  26. Slide 26: Environmental Markets Strategies performance versus benchmark

    Environmental Markets Strategies performance versus benchmark1,2 Leaders – AUM £3,956m Specialists – AUM £2,517m Water – AUM £4,372m 123.1 123.5 120.4 35.6 33.8 34.5 14.8 13.9 9.6 1 year 3 year 5 year 1 year 3 year 5 year 1 year 3 year 5 year Asia-Pacific – AUM £607m Sustainable Food – AUM £762m MSC

  27. Slide 27: Sustainable Lens Strategies performance versus benchmark

    Sustainable Lens Strategies performance versus benchmark Global Opportunities – AUM £2,348m1,3 US Large Cap – AUM US$894m2,4 US Small Cap – AUM US$363m2,5 53.2 US Large Cap 47.0 133.3 Global Opportunites US Small Cap 41.6 S&P 500 Index MSCI ACWI 91.3 Russell 2000 Index 24.6 55.6 21.0 15.2 27.6 12.9

  28. Slide 28: Gender Lens, Systematic Beta, and Multi Asset Strategies performance v benchmark

    Gender Lens, Systematic Beta, and Multi Asset Strategies performance v benchmark Global Women’s Select – AUM US$3m1,3 Global Women’s Leadership – AUM US$607m1,3 17.3 70.1 64.6 Global Women's Leadership 10.4 Global Women's Select MSCI World MSCI World 27.7 25.1 8.2 10.4 N/A N/A 1 year 3 year 5 year 1

  29. Slide 29: 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 22.2 • Amortisation (over 11

  30. Slide 30: Income analysis

    Income analysis IFRS Adjustments for Adjusted for Year ended Year ended Year ended September September September 2020 2020 2020 Income statement £'000 £'000 £'000 Comments on adjustments 87,511 - 87,511 Revenue Operating costs (69,928) 5,667 (64,261) Amortisation of intangibles and mark to market Na

  31. Slide 31: Additional information

    Additional information SHARE AWARDS OUTSTANDING² INVESTMENTS END OF 1 % OF NUMBER VESTING DATE EXERCISE PRINCIPAL INVESTMENTS AWARDS THEME FUND COMMENTS OUTSTANDING PERIOD FUNDS/INVESTEE (£M) AUM 2014 ESOP 100,000 Vested 31/12/2020 Global Global Women’s 2.0 100% 2017 ESOP 1,300,000 31/12/2020 31/12/

  32. Slide 32: Background to the Company

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  33. 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

  34. Slide 34: Strong track record of growth – assets under management at year end (£m)

    Strong track record of growth – assets under management at year end (£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 20,18

  35. Slide 35: 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

  36. Slide 36: Global distribution

    Global distribution North America Delaware Fund1 NEI Investments Pax World Funds1 Desjardins Global AM Mackenzie Investments Europe IEM plc1 NEF Funds1 ASN Bank Formuepleje St. James’s Place Impax (Ireland) Funds UCITS1 BNP Paribas Asset Management Asia - Pacific BNP Paribas Asset Management 1Distri

  37. Slide 37: Real Assets: NEF III

    Real Assets: NEF III Highlights 30MW + 36MW • €1711 million invested and committed in projects • Eight investments2 in five countries across three technologies and ownership of three development teams • Nearly 500MW are in operation or advanced development 110MW stages 18MW 102MW + + 382MW 398MW Map

  38. Slide 38: Global Opportunities: annual disclosure presentation – GBP

    Global Opportunities: annual disclosure presentation – 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** 2020 YTD 19,2

  39. Slide 39: Leaders: annual disclosure presentation – GBP

    Leaders: annual disclosure presentation – 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

  40. Slide 40: Specialists: annual disclosure presentation – GBP

    Specialists: annual disclosure presentation – 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 Retur

  41. Slide 41: Specialists: annual disclosure presentation cont. – 2020

    Specialists: annual disclosure presentation cont. – 2020 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 monthl

  42. Slide 42: Asia-Pacific: annual disclosure presentation – GBP

    Asia-Pacific: annual disclosure presentation – GBP MSCI AC AP 3yr FTSE EO AP 3yr Total Firm Assets Composite Assets Number of Annual Gross Asset Weighted 3yr Annualized Std Annualized Std Annualized Std Year (Millions) (Millions) Portfolios Return Annual Net Return MSCI AC AP Return FTSE EO AP Retur

  43. Slide 43: Water: annual disclosure presentation – GBP

    Water: annual disclosure presentation – GBP FTSE EO Water 3yr MSCI AC World FTSE EO Water Total Firm Assets Composite Assets Number of Annual Gross MSCI AC World Technology Annual Asset Weighted Annualized 3yr Annualized Technology 3yr Year (Millions) (Millions) Portfolios¹ Return Annual Net Return

  44. Slide 44: Sustainable Food: annual disclosure presentation – GBP

    Sustainable Food: annual disclosure presentation – 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** 2020 YTD 19,257.1

  45. Slide 45: Large-Cap Strategy: annual disclosure presentation – USD

    Large-Cap Strategy: annual disclosure presentation – USD Annual Annual Asset S&P 500 - Net Return Total Firm Assets Composite Assets Number of Gross Annual S&P 500 Weighted 3yr Annualized 3yr Annualized Std Year (Millions) (Millions) Portfolios Return Net Return Return StdDev* Std Dev** Dev** 2020 Y

  46. Slide 46: Impax Core Bond Strategy disclosures - USD

    Impax Core Bond Strategy disclosures - USD Total Firm Assets Composite Assets Number of Annual Gross Annual Net Annual Bloomberg Barclays US Asset Weighted 3yr Annualized Bloomberg Barclays US Aggregate Year (Millions) (Millions) Portfolios Return Return Aggregate Return StdDev* Std Dev** 3yr Annual

  47. Slide 47: Impax High Yield Bond Strategy disclosures - USD

    Impax High Yield Bond Strategy disclosures - USD ICE BofA US Cash Pay High Yield Annual ICE BofA US Cash Pay Constrained (BB-B) (USD Total Firm Assets Composite Assets Number of Annual Gross Annual Net High Yield Constrained (BB-B) Asset Weighted 3yr Annualized Unhedged) 3yr Annualized Std Year (Mil

  48. Slide 48: Impax Ellevate Global Women’s Leadership Strategy - USD

    Impax Ellevate Global Women’s Leadership Strategy - USD TOTAL FIRM IMPAX Global Composite Assets Gross of Fees Net of Fees MSCI World Composite 3 GWLI 3 YEAR MSCI WORLD 3 Number of Year ASSETS (USD) Women’s Leadership (USD) (millions) (%) (%) (NET) Index Year Std. Dev. STD. DEV. Year Std. Dev. Accou

  49. Slide 49: Impax Global Women’s Select Strategy - USD

    Impax Global Women’s Select Strategy - USD Composite 3 Year Benchmark 3 Year Total Firm Assets (USD) Composite Assets Number of Total Return Gross Total Return Net of Fee's MSCI World (Net) Asset Weighted Std Year Standard Standard (Millions) (USD) (Millions) Portfolios of Fee's (%) (%) Index ("Worl

  50. Slide 50: Impax Sustainable Allocation Strategy disclosures - USD

    Impax Sustainable Allocation Strategy disclosures - USD Year Total Firm Assets Composite Assets Number of Annual Gross Annual Net Annual 60% S&P 500 Index / Asset Weighted 3yr Annualized 60% S&P 500 Index / 40% (Millions) (Millions) Portfolios Return Return 40% Barclays US Aggregate StdDev* Std Dev*

  51. Slide 51: Impax Sustainable Allocation Strategy disclosures cont. - USD

    Impax Sustainable Allocation Strategy disclosures cont. - USD Custom Benchmark Description Custom Blended Index for the Balanced Fund is composed of 60% S&P 500 Index and 40% Bloomberg Barclays U.S. Aggregate Bond Index, rebalanced monthly using the weighted average returns of S&P 500 Index and Bloo

  52. Slide 52: Impax US Small Cap Strategy disclosures - USD

    Impax US Small Cap Strategy disclosures - USD Total Firm Assets Composite Assets Number of Annual Gross Annual Net Annual Russell 2000 - Net Asset Weighted 3yr Annualized Russell 2000 - Net Return 3yr Year (Millions) (Millions) Portfolios Return Return Return Return StdDev* Std Dev** Annualized Std

  53. Slide 53: Important information

    Important information Disclaimer 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 Mana

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