Impax Asset Management Group plc · LSE:IPX
Impax Asset Management — FY2018 Earnings Presentation
44 slides from Impax Asset Management's earnings presentation, December 2018
Slide 1: Results for year ended 30 September 2018
Results for year ended 30 September 2018 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: 2018 highlights
2018 highlights Robust investment Net inflows of performance in £1.46bn and Closing of Pax AUM up 72% Listed and Private strong mandate acquisition1 to £12.5bn2. Equity pipeline 1On 18 January 2018 Impax Asset Management Group plc acquired Pax World Management LLC (Pax). 2As at 30 September 2018. As
Slide 4: Financial performance
Financial performance1 2018 2017 CHANGE Assets under management2 £12.5bn £7.3bn 72% Revenue £65.7m £32.7m 101% Adjusted operating profit £20.0m £9.3m 114% Adjusted profit/(loss) before tax £19.2m £8.7m 120% Adjusted diluted earnings per share 12.4p 5.9p 110% Shareholders’ equity £52.6m £35.6m 48% In
Slide 5: Business update
Business update
Slide 6: Impax Asset Management - overview
Impax Asset Management - overview Thematic Equities £9bn • Specialist manager, 20 years’ experience Unconstrained & US Equities £1.2bn • 52 investment team members (UK, US, HK) • Global distribution and client relations £12.5bn Smart Beta £995m AUM1 • High quality investment solutions for institutio
Slide 7: Listed equities (Impax LN): investment performance (USD)
Listed equities (Impax LN) : investment performance (USD) STRATEGIES 1 YEAR 3 YEARS 5 YEARS Specialists Active 4.7 15.6 9.1 FTSE ET100 INDEX BENCHMARK 0.4 11.7 6.7 Leaders Active 5.7 15.0 8.7 FTSE EOAS INDEX BENCHMARK 5.5 16.0 9.2 Asia-Pacific Active -1.0 11.7 9.3 FTSE EOAP COMPOSITE INDEX BENCHMARK
Slide 8: Global Opportunities strategy
Global Opportunities strategy 160 Global Opportunities Strategy (gross) 150 • Investing across the transition to a more MSCI ACWI 140 sustainable global economy 130 120 • Broader approach than Thematic Equity 110 strategies (ca.25% overlap with Leaders) 100 90 • Targeting MSCI ACWI + 250 bp annualis
Slide 9: Impax LN managed: AUM by client domicile
AUM growth in Europe and North America – breakdown by client domicile (£m) PRINCIPAL FUNDS/PARTNERS 802 Impax Environmental Markets plc UK/Ireland 930 Irish UCITS Platform Absalon Capital 4,898 ASN Bank EMEA 6,581 Impax LN managed BNP Paribas Asset Management 68 Asia-Pacific BNP Paribas Investment P
Slide 10: AUM growth by investment strategy
AUM growth – breakdown by investment strategy (£m) Specialists 1,828 2,193 Leaders 2,025 2,694 Impax LN managed Asia-Pacific 51 99 Water 2,308 3,305 Food & Agriculture 574 709 Unconstrained Global Equities 3 24 Real Assets 473 450 Impax NH managed US Equities 1,209 Smart Beta 996 Fixed Income 836 Da
Slide 11: Acquisition of Pax World Management LLC
Acquisition of Pax World Management LLC • On 18 January 2018 Impax completed the purchase of Pax World Management LLC (renamed Impax Asset Management LLC, referred to here as “Impax NH”)1 • Initial implied value (100% of shares) of $52.5m with contingent value of up to $37.5m payable in 2021 • Impax
Slide 12: Integration of Impax NH
Integration of Impax NH • Investment teams ― No integration ― Channels established to exchange ideas/best practice • Client service and business development ― Teams have collaborated since 2008 ― New CSBD Committee established to co-ordinate activity • Support teams ― Aiming for integration of all f
Slide 13: Breakdown of AUM increase
Breakdown of AUM increase IMPAX LN: LISTED EQUITY FUNDS (£m)1 IMPAX NH: PAX WORLD FUNDS (£m)1 30 September 2018 9,024 30 September 2018 3,645 Market movement 676 Inflows 1,292 Market movement 288 Outflows (578) 31 March 2018 7,634 Inflows 561 Market movement (160) Outflows (678) Inflows 1,500 Outflo
Slide 14: 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 € € € 48MW • Final close on 31 May 2018 €€ € € € € Key as at 30 Septe
Slide 15: Financial update
Financial update
Slide 16: Adjusted IFRS performance measures
Adjusted “IFRS” performance measures 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: • Acquisition costs incurred as part of the transaction; • Amortisation
Slide 17: Financial highlights - operating performance
Financial highlights - operating performance REVENUE (£m) OPERATING COSTS (adjusted1) (£m) 2018 49.7 16.0 65.7 Impax NH IAM NH 16.0 2018 24.6 7.3 6.0 7.8 45.7 PrivateEquity Private Equitycarried carried 5.0 interest interest Additional one-time Private Equity PE PPS and revenue 2.2 financing fees Li
Slide 18: Financial highlights - Impax NH operating performance
Financial highlights - Impax NH operating performance Impax NH consolidation consideration: • Operating result only includes Impax NH for 8.5 months from acquisition • 16.7% of Impax NH is currently owned by management which will be acquired through put/call options. Distributions to management is i
Slide 19: Financial highlights - earnings and dividends
Financial highlights - earnings and dividends ADJUSTED DILUTED EPS (p) DIVIDEND (p) 2018 1.1 3.0 4.1 2.6 2018 12.4 2017 0.7 2.2 2.9 2016 0.5 1.6 2.1 Share dilution (0.6) 2015 0.4 1.2 1.6 0.5 Interest (0.5) 2014 0.3 1.1 1.4 2013 0.9 NH operating 1.7 2012 0.75 earnings earnings Interim 2011 0.7 LN ope
Slide 20: Financial highlights - balance sheet
Financial highlights - balance sheet SEGMENTAL BALANCE SHEET¹ CASH MOVEMENTS1 (£m) IMPAX LN IMPAX NH CONSOLIDATED 30 September 2018 24.6 £’000 £’000 £’000 Repayment Repayment of bank of bank borrowing (7.6) Goodwill 12,171 - 12,171 borrowing Intangibles 25,426 139 25,565 Net Net cash on cash on acqu
Slide 21: Financial highlights - cash and long-term trends
Financial highlights - cash and long-term trends CASH RESERVE ANALYSIS (£m) AVERAGE NUMBER OF EMPLOYEES 30 September 2018 24.6 Impax Impax LND 30 September LN 2018 87 30 September 2018 Risk buffer (7.5) Impax Impax LND 30 September LN 2017 73 30 September 2017 "Available" cash 17.1 Net working capit
Slide 22: IPX shareholder register
IPX shareholder register - cash and long-term trends IPX SHARES SEPTEMBER 2018 (m) POTENTIAL DILUTION (IN 2021) • Management equity: 1.1m1 shares would be issued to acquire the Pre acquisition 127.7 16.7% of Impax NH owned by management through put/call options. • Potential addition on earnout: our
Slide 23: 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 23
Slide 24: Background to the Company
Background to the Company
Slide 25: 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 26: Solid track record of growth – AUM FYE
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 AUM shown is at end of financial years to 30 Septemb
Slide 27: Investment solutions across asset classes
Investment solutions across asset classes Impax Asset Management Group plc London managed US managed Asset class Strategy Inception date Asset class Strategy Inception date Specialists 2002 Small Cap 2008 Leaders 2008 US Equities Medium Cap 2016 Large Cap 2016 Thematic Equities Water 2009 ESG Beta Q
Slide 28: 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 Mackenzie Investments London Portland Asia - Pacific Portsmouth BNP Paribas in Hong Kong and Australia New York
Slide 29: Appendix
Appendix
Slide 30: The transition to a more sustainable economy
The transition to a more sustainable economy Key drivers: TECHNOLOGY REGULATION CUSTOMER PREFERENCES SOCIAL FACTORS FROM… TO… A depletive economic model A sustainable economic model Financial returns by externalising Growth with improved societal and social and environmental costs environmental outc
Slide 31: Transitions create losers and winners
Transitions create losers and winners COMBUSTION CLEAN ENERGY ELECTRIC ENGINE TRANSITION VEHICLES SINGLE USE WASTE REDUCTION RECYCLING & PLASTICS TARGETS ALTERNATIVES TRADITIONAL NATURAL RESOURCE PRECISION AGRICULTURE EFFICIENCY IRRIGATION Source: Shutterstock/Unsplash. 31
Slide 32: Powerful drivers and strong growth prospects
Powerful drivers and strong growth prospects Global population living with water scarcity1 - number of people (billions)2 Global population suffering from diabetes - number of people (millions)3 2015 3 2017 424 2050 5 2040 642 Global clean vehicle sales - number (millions)4 Global clean power genera
Slide 33: Pax World Funds: investment performance
Pax World Funds: investment performance Fund 1 year 3 years 5 years Pax Large Cap 21.0 - - S & P 500 INDEX BENCHMARK 17.9 - - Pax Mid Cap 5.3 12.2 - RUSSELL MIDCAP INDEX BENCHMARK 14.0 14.5 - Pax Small Cap 9.7 10.4 8.4 RUSSELL 2000 INDEX BENCHMARK 15.2 17.1 11.1 Pax ESG Beta Quality 16.9 - - RUSSELL
Slide 34: Pax World Funds: investment performance
Pax World Funds: investment performance Fund 1 year 3 years 5 years Pax Global Women’s Leadership 13.2 14.7 - MSCI WORLD (NET) INDEX BENCHMARK 11.2 13.5 - Pax MSCI EAFE ESG Leaders Index 2.6 8.6 4.5 MSCI EAFE (NET) INDEX BENCHMARK 2.7 9.2 4.4 Pax Core Bond -0.96 1.1 - BLOOMBERG BARCLAYS US AGGREGATE
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 2018 2018 2018 Income statement £'000 £'000 £'000 Comments on adjustments Revenue 65,683 - 65,683 Operating costs (50,200) 4,504 (45,696) Acquisition costs, amortisation of intangibles an
Slide 37: Additional information
Additional information SHARE AWARDS OUTSTANDING INVESTMENTS END OF 1 % OF NUMBER VESTING DATE EXERCISE PRINCIPAL INVESTMENTS AWARDS THEME FUND COMMENTS OUTSTANDING PERIOD FUNDS/INVESTEE (£M) AUM 2012 ESOP 100,000 Vested 31/12/2018 Impax Global 2013 ESOP 250,000 Vested 31/12/2019 Global Equities 2.1
Slide 38: Global Opportunities: annual disclosure presentation
Global Opportunities: annual disclosure presentation – September 2018 USD Annual Benchmark 3yr Total Firm Assets Ending Market Number of Annual Gross Asset Weighted 3yr Annualized Std Annual Net Return Benchmark Annualized Std (Millions) Value (Millions) Portfolios Return StdDev* Dev** Year Return D
Slide 39: Leaders: annual disclosure presentation
Leaders: annual disclosure presentation – September 2018 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
Specialists: annual disclosure presentation – September 2018 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
Asia-Pacific: annual disclosure presentation – September 2018 USD MSCI AC AP 3yr FTSE EO AP 3yr Total Firm Ending Market Number of Annual Gross Annual Net MSCI AC AP FTSE EO AP Asset Weighted 3yr Annualized Annualized Std Annualized Std Year Assets (Millions) Value (Millions) Portfolios Return Retur
Slide 42: Food & Agriculture: annual disclosure presentation
Food & Agriculture: annual disclosure presentation – September 2018 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**
Slide 43: Water: annual disclosure presentation
Water: annual disclosure presentation – September 2018 USD FTSE EO Water FTSE EO Water MSCI AC World Technology 3yr Total Firm Ending Market Number of Annual Gross Annual Net MSCI AC World Technology Asset Weighted 3yr Annualized 3yr Annualized Annualized Std Year Assets (Millions) Value (Millions)
Slide 44: 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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