GuruFocus -
- Assets Under Management (AUM): GBP37.2 billion at the end of September 2024.
- Net Outflows: GBP5.8 billion for the period, with significant outflows from the BNP Paribas (EPA:BNPP) channel.
- Adjusted Operating Profit: GBP52.7 million.
- Revenue: GBP170.1 million, a reduction of 4.7% from the prior year.
- Operating Margin: 31%.
- Diluted EPS: 32.2p.
- Final Dividend: 22.9p per share, maintaining a flat full-year dividend.
- Cash Balance: Close to GBP91 million at the end of the year.
- Fixed Income AUM Growth: From GBP1.1 billion to a pro forma GBP2.7 billion with the SKY Harbor acquisition.
- Headcount Increase: 5% increase in headcount, with 15 new hires, 8 of which were fixed income related.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Impax Asset Management Group PLC (STU:LW4) maintained a resilient performance in challenging markets, with assets under management remaining flat at GBP37.2 billion.
- The company has successfully maintained its dividend at 27.6p per share, reflecting financial stability.
- Impax's focus on quality growth and mid-cap stocks is expected to benefit from a potential market rotation back in favor of these sectors.
- The firm has expanded its fixed income capabilities through strategic acquisitions, increasing assets under management in this area from GBP1.1 billion to a pro forma GBP2.7 billion.
- Impax has launched new thematic products and expanded its investment team, enhancing its global equity strategies and product offerings.
- Impax experienced net outflows of GBP5.8 billion, primarily due to asset allocation shifts by BNP Paribas and other wholesale channels.
- The company's revenue decreased by 4.7% to GBP170.1 million, despite maintaining flat assets under management.
- Investment performance showed relative underperformance against generic indices due to the dominance of mega-cap tech stocks.
- The fee margin has slightly decreased, operating within a corridor around 45 basis points, with expectations of a gradual downward drift.
- Impax's North American business faced increased outflows, reflecting challenging market sentiment in the retail channel.
A: Ian Simm, CEO: The 43 basis points are relatively high but sustainable due to our focus on specialist areas like high yield and emerging market debt. We are confident in maintaining these margins, although future areas of fixed income might not attract similar margins depending on client interest.
Q: How are discussions with investors regarding investment performance, especially with underperformance relative to the MSCI index?
A: Ian Simm, CEO: Conversations with sophisticated institutional clients are detailed and mathematical. Most understand that not following mega-cap tech stocks is part of good risk management. Outflows are more common among less sophisticated investors who may misinterpret historical performance.
Q: With the current capital and cash position, have you considered share buybacks given the surplus capital?
A: Karen Cockburn, CFO: We prioritize using cash to enhance shareholder value through strategic investments and acquisitions rather than buybacks, which are not a current priority.
Q: Has the situation with BNP Paribas stabilized, and what is the outlook for North America regarding outflows?
A: Ian Simm, CEO: BNP Paribas outflows have slowed, indicating a positive trend. In North America, outflows are mainly due to market sentiment in retail channels. We expect improvement as market sentiment shifts, potentially leading to net inflows.
Q: What can we expect from capital raising in the private equity business unit?
A: Ian Simm, CEO: The logical next step would be fund 5, following the success of fund 4. While it's early for fund 5, we remain open to opportunities, likely in real assets rather than growth capital.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.