Impax Asset Management Group (IPX) H2 2024 earnings summary

Executive summary

• Assets under management (AUM) remained essentially flat at GBP 37.2 billion for the year ending September 2024, down 0.5% year-over-year, despite challenging market conditions and significant net outflows, offset by positive investment performance.

• Revenue declined to GBP 170.1 million from GBP 178.4 million year-over-year, mainly due to lower average AUM and net outflows, but was partially offset by improved investment performance and catch-up fees from a record fund close.

• Operating margin held strong at 31%, above the 30% target, supported by cost control and efficiency measures, particularly in the listed equity business.

• Dividend per share maintained at 27.6p, with a payout ratio of 87%, reflecting robust cash generation, strong cash reserves of GBP 90.8 million, and a healthy balance sheet with no debt.

• Strategic progress included two acquisitions in fixed income, expansion of product range, and successful fundraising for Private Equity Fund IV.

Financial highlights

• Adjusted operating profit was GBP 52.7 million, with adjusted EPS at 32.2 pence, both lower than the previous year.

• Costs were GBP 117.4 million, reflecting a focus on cost control and operational resilience; staff-related costs comprised 70% of the cost base, with headcount increasing by 15, mainly in fixed income.

• Cash generation was strong at GBP 49 million, up from GBP 37 million the prior year, resulting in cash reserves of GBP 90.8 million and no debt.

• Dividend yield was approximately 8.5%, with an 87% payout ratio for FY24.

• Over GBP 50 million capital surplus, including GBP 16 million in seed capital.

Outlook and guidance

• Expectation of a positive environment for equities and fixed income over the next 12+ months, with mean reversion anticipated to benefit quality growth companies.

• Revenue run rate projected at just over GBP 170 million post-Sky Harbor acquisition, assuming neutral markets and flows.

• Cost guidance for next year is mid to low GBP 120 million, reflecting the integration of Sky Harbor.

• Operating margin targeted to move toward mid- to high-30s as operational gearing improves with return of positive flows.

• Management remains confident in delivering strong client returns and sees ongoing opportunities for active management.