Impax Asset Management Group Plc (IPX) Earnings Call Transcript & Summary

Thank you, everybody, for joining. We're going to hear about Impax's full year results, which have been very well received, nice reaction in the share price today. A little bit of admin before I pass over to the executives. This session is being recorded, and the slide deck that Ian and Charlie will be speaking to is available on the Impax website, so you don't need to be taking slide shots as we go along. You will be familiar with the Q&A button at the bottom of the Zoom control and do submit any questions you might have during the course of the formal presentation and the speakers will deal with them later on. So without further ado, it's very nice to welcome back Ian Simm, the Founder and CEO of the business; and Charlie Ridge, who is the CFO. And I shall now hand over to Ian to start the proceedings.

Hello, everybody. Great to be with you again. So as shown on this slide, Charlie and I will take you through the highlights of the business update, financial update and then the outlook. We're also joined on this call by Karen Cockburn, who, on the next slide, summarizes there is joining Impax or has joined Impax as our Chief Financial Officer Designate. So from January, Karen will become our CFO. Charlie is retiring from Impax and will be an adviser during 2023, but after 14 long glorious years, he decided to step down. So we'll be seeing him over the next 12 months, but Karen will be fully in the chair of CFO from January. So just to recap, if you haven't met us before, we are an investment management firm, which I founded in 1998, so nearly quarter of a century of experience of a particular investment idea, which we call the transition to a more sustainable economy. And as you'll see in a moment, that's an area that we think is highly attractive for investors. We're deploying our clients' money into listed equities, listed fixed income and private markets with one of the world's largest investment teams dedicated to this space. And today, our assets under management are sourced predominantly from outside the U.K., which is a key differentiator and a key strength of the firm. We do have a very scalable business model and are planning to continue to scale out without the need for additional acquisitions. So the transition to a more sustainable economy is summarized on this slide. Essentially, it's a series of structural transformations or industrial revolutions we like in the areas of energy, transportation, materials, food, financial services, health care and other areas, which have been driven by, in part, a realization across the economy and across society that we're living on the finite planet, with regulatory conditions being tightened to ensure that we are optimizing the use of resources not and destroying human civilization through pollution. These changes are being accelerated by technology change and encouraged by shifting consumer demand. So these are very classical areas of financial market analysis, which our teams are specialized in and are underpinning the high rates of growth we're seeing in areas like renewable energy, water supply, recycling and areas such as fintech as well. So these transformations are very well founded in, if you like, rational economic and financial market, thinking they don't require a particular frame of reference or mindset such as ESG or social responsibility or Impax investing to be attractive. So we are pitching our services to asset owners who are looking for these areas of growth and mispricing. Well, at the same time, we do appeal and are attracting business from ESG-type investors. So with that clarification out of the way, I'd just like to move to the summary for the results for the year ending 30th of September. So as many of you will have seen, we had a very strong year relative to what was a particularly difficult set of market conditions. So in that time frame producing net inflows of nearly GBP3 billion was creditable and quite strong relative to peers. So at the end of September, our financial year were down 4.1% in assets under management terms compared to 12 months earlier. But within a month, we'd more than recovered the drop, reaching GBP37.4 billion of asset under management by the end of October. The result for November will be published in the more close of business next week on our website. I think it's no surprise that markets were up again in November. So the results do include an update on our investment performance, which remains very solid over 3 and 5 years and an update on our distribution as well. And I note that at the bottom about the awards we've won recently. So on the next slide, you can see a summary of the financial results that Charlie will go through in a bit more detail. So revenue up 22.6%, adjusted profits -- operating profits up 20.1% and adjusted diluted EPS up 22.4%. So strong results on the previous year in spite of market headwinds. And on the bottom right of this chart, you can see a 34% increase in our total dividend for the year, which is inclusive of 22.9p per share final dividend, which will be paid in the spring of next year. On the next slide, you can see the breakdown of the asset under management changes across the year in the 2 halves. So the bottom half of this slide is our first half ending 31st of March. And the top half of the slide is the second half. So in both halves, as you can see in the gray little bars that markets were against us, the market headwinds are worse in the second half compared to the first half. The inflows did exceed the outflows in both the first half and the second half. So pleased to report that we have had a positive net inflows in both halves. We have positive net inflows in October as well, which we introduce from the way that our AUM moved. So a little bit sort of context, no need to dwell on the tragic situation in Ukraine, except to note that the associated impact on inflation with interest rate rises following was, of course, compounding in the already fragile situation with regard to monetary tightening that had been started at the turn of the year. So it is being a particularly inflationary environment in which to be investing, which has been challenging. That's led to a market rotation towards value, certainly at the start of the year, which was a very significant headwind for any investment manager looking at growth companies. The key feature about Impax's approach is that we invest with growth at a reasonable prices are key guiding light or approach and at a reasonable price is crucial in the context of both avoiding bubbles, which we think successfully did in much of 2020 and 2021, but also relatively speaking, outperforming those momentum oriented investors who perhaps have trapped in bubbles as they burst this year. So meanwhile, 2022 has been tragically also a year of quite significant weather-related disasters around the world, some of the names of countries listed there badly affected and also the U.K., of course, with the extraordinary heat wave that we had in the summer. So those weather-related events have, of course, compounded the concerns about climate change and accelerated the switch to or move towards renewable energy and energy efficiency on the one hand as well as more investment in water resources on the other. So the so-called environmental solutions in the private site, there are increasingly in demand. It's not just climate change, which is driving the opportunities for businesses that impact is backing. So we're seeing a strong move to energy independence, but also with inflation, then a strong move towards resource efficiency and trying to sort of dematerialize the economy to reduce inflationary pressures. So all those drivers are strengthening the case for the business models and many of the companies that impacts its backing. And meanwhile, regulatory requirements around the world, starting in the European Union for disclosure by investors around they're mapping on to so called green taxonomies is picking up. Impax is very well positioned in that context because we've been running our own green taxonomy since the late 1990s and, therefore, our entire business is well placed for that new trend. So the position of the firm remains very strong. We have had an authentic brand since 1998. Our team of modern investment -- a team of investment professionals and a total team of over 270 is very stable and well aligned with investors and clients. The team owns about 20% of the management company business and with our very robust set of client relationships around the world, a proven distribution model and scalable approach to growth, we think we're well set for further expansion of the business over the next few years. So just diving into a little bit more of the detail. Then you can see on this slide that we go around clockwise, the breakdown between the different types of funds that we run. So environmental markets is our thematic fund range and sustainability lens, more broadly based equities and fixed income range. So you can see the sustainability lens area was improving AUM, less tracking error and less drawdown compared to the more thematic funds, which had stronger headwinds during 2022. The mapping in terms of today's -- or end of September snapshot of AUM as shown on the top right by different category during the relative size of our major funds accounts. And then the revenue by client type and assets under management by client type is shown in the bottom right and bottom left, respectively. And so you can see there the -- I think interesting that the BNP Paribas percentages have been trending down, whereas the percentages in other areas have been trending up. So that's evidence that our medium-term objective to provide a more diversified client base and revenue base is continuing to kick in. And to add to those 2 charts, the breakdown of assets under management by region is shown on the top or the left-hand side of the slide, you can see the U.K. there at 21%. So it's 79% elsewhere, which North America is ticking up quite nicely as a relative percentage now at 27%. And we're still 95% exposed to listed equities versus fixed income and private markets. A bit more detail on the next slide of the movements in funds. So there's 3 columns to this chart, showing the increase of its right-hand directional bar or a decrease of it's going left in the different distribution categories. So on the left-hand side, you can see the U.K. and Ireland with James' Place being the largest contributor. In the middle, BNP Paribas, which represents 5 funds for which we're the sub-managed net-net was a moderate net outflow, but that was more than compensated by the net inflows that we have in Europe or the EMEA region for other sub-managed and advisory funds and accounts. And then strong success in North America, both in our own funds and other mutual funds and a little bit of segregated account business and significant segregated account business in the Asia Pacific region. So this is a breakdown of the GBP2.9 billion net of net inflows for the year, showing a wide geographic dispersion and quite interesting trends with particularly strong performance in North America and also for our own label funds. The next 2 slides show the regular update of our investment performance. Firstly, starting with the sustainability lens strategies, of which there are 3 equities on the top row and 2 in fixed income. I'm not going to give you all the numbers. But if you just have a sort of eyeball of the graphs, dark blue is our performance versus the benchmarks in mid-blue. So over 3 and 5 years, these strategies typically are outperforming benchmarks, whereas over 1 year in September they were a little bit behind. So September was particularly cool month for growth-oriented equity strategies, for example, and so no surprise that we were behind over 12 months to September, but those relative performance of under performances have been reversed certainly in October and certainly check our NAVs in November, I think that outperformance trend has continued in November. And then on the next slide, you can see the environmental markets range. Can we have the next slide? Thank you. So all these equity strategies in the same format, 1-year, 3-year, 5 years, you can see here the larger underperformance 1 year to end of September, but these are high beta products. So the outperformance in October and subsequently have been stronger than in the previous range of sustainability lens strategies. So those are products we have today and then the question around the future is on the next slide. So there is quite significant headroom in our current fund and account range for growth, and that's the strong focus of our distribution team. So we have demonstrated quite a significant appetite amongst European investors for some of our U.S. strategies, U.S. large cap, in particular, which we launched on the Lombard Odier platform this summer. We've not been shy in coming forward with new products. So we've launched a few weeks ago a sustainable infrastructure product, which we've ceded with our UCITS -- on our UCITS platform in Ireland. So that's now available for external investors. And we'll continue to look at private markets and fixed income as areas for further expansion over time. Our clients on the next slide do value, of course, the great potential for investment returns and our solid investment process and pursuit of attractive information ratios. But they also are intrigued and, in many cases, really value the additional work that we do beyond financial returns, if you like. So there's 5 areas here, 3 of which are on this slide. So the policy area, policy analysis, which our 4-person team is doing to improve investment outcomes is a key part of our investment work. But the information flow works in the other direction. So advocacy to help to support and strengthen regulations is increasingly valuable for our brand, but also in the context of our clients' relationships and interest in what Impax is doing were lauded for our advocacy work by many of our particularly institutional clients. The thought leadership of insights work we do in terms of research on topics like biodiversity and physical climate risk is adding to our knowledge and also our credibility in the eyes of peers and clients around the world. And our partnership and networks work to bring people together and be instrumental in helping the international investment community to get wise to sustainable development issues and contribute, for example, in climate change policy is increasingly recognized. Then the final 2 topics in this area are engagement and stewardship where we continue to be active and engage owners with the companies that we own. So looking for quality companies, but not afraid to engage with them to help them to tighten things out planned or improve. And then our reporting around impact and further analytical work on the portfolio is an area of increasing interest to the clients. Just a couple more slides from me. So the people side is, of course, a key part of our work. And as you can see here, we've increased headcount in the U.K. and also the U.S., significantly over the last 12 months with a 26% increase in the overall headcount, net-net, during the year. We've had a very strong engagement score from our staff, reflecting a high degree of start satisfaction. We've opened a Manhattan office. And you can see there are some stats around our internship program and around our increase in FEBA representation across the team. And then in the area of systems and infrastructure as our business has scaled, there has been a need to invest further in compliance. We're now regulated within or in 4 different jurisdictions. And at the same time, the complex of the business means that our risk management functions had to expand with some -- a couple of senior hires joining us in the last 12 months. And then in the area of IT, we do see this as an enabler and a key part of our scalability. So we are currently implementing Salesforce to strengthen our CRM sales and client service system and using IT to improve our resilience around cyber risk, for example.

Great. I'm going to join the conversation now and turn to the financial pages. So firstly, I'd like to just say -- I'd like to start to be reporting these very strong results, especially in the context of the challenging market backdrop over this period. So in terms of revenue, you can see the 23% growth since last year. This is due to a combination of annualization of 2021 effects. So 2021 was a very, very good year for us with a very significant asset gathering in terms of large inflows, but also policy performance. And we now have a full 12-month benefit for those events from last year. Plus importantly, as Ian has mentioned, we've had strong inflows in this year as well. So that's also contributed to the increase in the revenues. As of the end of September, we quoted here the run rate. The run rate is put simply to September revenue times 12 at GBP166 million, which is slightly below the total for the year just gone. However, as Ian mentioned, September was a particular dip in the markets. And sitting here today with October behind us and November, nearly behind us, the markets look to be at a rather high level. And where we be recalculating that number today, it would be correspondingly higher. On the right, we can see that the average fee margin has remained stable. So we have quite a wide range of fees for our different funds and accounts. But it's been the trend for a few years now, there's really not a great sort of change in the average blended rate. So that's stuffed at 47%. Then moving on to this slide, to talk in detail to it. It talks to the -- depicts the diversification that we have in terms of revenue. Really, whichever way you cut our business by strategy on the left or by region or by client type, you can see that there's a very nice spread of different components to that, which -- and our strength of diversity, I think, is a very core part of our business model. Turning now to costs. So costs have also risen for the fact that we've primarily grown head count. Average head count is up 23% over the period to support the growing business, which, therefore, explains the fixed staff costs. Variable staff costs have also gone up, partly due to the annualization effect of paying people a full year, we joined last year, but also for new hires that have joined this year. In terms of explaining the number, the actual variable staff cost number in total, we've had a long-standing policy of paying up to 45% of pre-bonus operating income as a bonus, be it mostly paid in cash, but also paid in equity and associated national insurance. That policy remains. However, in spite of the growth in head count, the very strong year we've had in fact we spent 40% of the 45% cap. Looking forward, it's hard to predict exactly what the number we would expect for any individual year. I would expect us to be flexing that number based upon individual performance and also corporate performance. But in this type of range, 40% to 45% wouldn't be a bad estimate. Finally, non-staff costs are also up, but by a smaller percentage than the staff costs, noting that we are primarily a people-based business. Some of that component increase relates to contra revenues. So these are costs that automatically come on board if revenues go up. So that corresponds to the increase in revenue. But the remainder relates to the investment we're making in the business in areas such as advertising, and as Ian has mentioned, in IT to support the growth. We've also seen effect of return from COVID. So in particular, travel is now present in these numbers, whereas there was very little of that in FY '21. The final thing I'll note is on the right, we're trying to illustrate here the scalability of our business, in particular around the investments and capabilities that we have. So we have grown the average headcount. This is the dark blue on the top right bar, our investment teams. But other than for a couple of specific senior hires, all of the other hires will be coming at the mid and more junior levels to grow, and that's been organic growth within the existing teams. And then the proof of that is bottom right, when we look at the assets under management for our investment staff, it is down slightly, but that can be entirely explained by the drop in the overall market levels that has brought down the assets under management. The actual ability of the team to manage money continues to be highly scalable. Moving on to operating profit. So revenue less costs, and we also see a 21% increase in the operating profit, which also comes at a similar level of operating margin, which you can see on the right is high 30s. I'm particularly pleased with that because I've already mentioned 2021 was a particular knockout year for us. So we're very similar level in terms of the printed results. On the bottom left, diagram is seeking to show the long-term trend in terms of operational gearing. And you can see back to 2018, a broadly upwards trend. I would expect that to -- the underlying trend to continue or be it any individual year, clearly, it's going to be very much dominated by the market backdrop for that period. So just illustrating that at the moment, as I already mentioned, the September run rates that are set out on this -- in these pages are based on September, which is a particularly low point. Even at that low point, we are still trading in the low- to mid-30s noting that the market levels are back up now for October and indeed November, I would expect us to be back up to sort of the mid-30s. So that's the operating profit. If we now move on, on the back of that strong increase in the operating profit, we've increased our dividend by 34%, which is a very strong message. And as part of that, we've also increased the payout ratio. We have a policy of paying between 50% and 80% of adjusted profit after tax. Last year, we paid 60% and this year paying 65%, and that is a combination of a mark of pride in the results that we just printed, but also a question of the strength of the balance sheet that underpins the business. This we can see on the right 2 columns, the middle one first, which is cash position. The business is very cash generative. Pretty much all of the profit after tax falls to the cash generation. And you can see from working the bottom up, nearly GBP70 million of cash generated from operations. In terms of uses of cash, the mean is for dividends. So this is last year's final and this year's interim has been paid during the period. And we've also repurchased something like 1 million shares in the period as well. Other things we used cash for are for ceding capabilities in our own funds. This is not to take the proprietary investment. This is very specifically to facilitate the new business development, be it either new products or entering new jurisdictions. So in the period, there was actually a small net redemption of GBP0.4 million. Overall, that cash position is high at the end of the year. It's always higher at this time of the year because we have our bonuses that are paid in December. So this is a seasonal cyclical high in terms of our overall calendar year. On the right, we see our capital position and capital requirement of GBP22.8 million, which is what we're required to determine from a regulatory perspective and a very healthy buffer of GBP48 million in addition to that. In rationalizing that number, I would want to add a few things that we do need capital for. Firstly, we intend to continue to be buying shares, and that is an immediate deduction from capital we to do that. Secondly, to support the growth of the business. Firstly, if the business is growth, we need more capital, this requirement we're showing here would go up pretty much automatically. And thirdly, the cede investment program, I've mentioned it's important to continue to have firepower for new capabilities. And then finally, it's good to have a surplus that can be used for other purposes for example if we want to look at any M&A type activity stressing that is not so central to our strategy. So overall, I think this slide shows that we've got a nice balance between very strong dividend progression, but also very strong capital structure for the balance sheet and a strong capital position. Moving on to the final slide of mine. So this shows, in summary, our register cut by a couple of ways. On the left, it shows the shares an issue and really explains why we've been buying shares and indeed continue to do so. So this shows that we currently hold 3.3 million shares in our employee benefit trust. And the intention here is to buy shares into the trust using the free cash flow and thereby mitigating the dilutive effect of staff share schemes. Further down the page on the left, you can see the outstanding option awards, GBP5.2 million as of the end of September, implying that there's very slightly dilutive effect at that point. So we believe it's dependent upon pricing, stock availability and other uses of cash. It's a good use of cash to buying shares into the trust in this way. And the final thing to note is on the right, we have the summary of ownership and highlighting the 20% employee ownership.

So just maybe to the final outlook slide. Then hopefully, you've picked up the strong message that we're very excited about our investment philosophy with a medium to long-term outlook. We do think that this transition to a more sustainable economy is going to underpin very significant rates of growth and also mispricing of securities around the world for a couple of decades to come. And in that context, Impax's expertise and authentic brand and track record does really put us at a strong advantage relative to peers to pick up additional clients and assets under management. Our distribution model is being developed organically over more than 20 years and is now well established all over the world. So from Australia and Japan, all the way through to California where we've got Impax brand recognition and either our own sales team or highly motivated teams from third parties who we are contracted to provide services to. So in that context, then we do think that Impax's scalable business model and significant capacity headroom does give us high probability and being able to deliver further value to shareholders by scaling out of the business. Now in the near term, of course, markets are fragile and the outlook for financial market sentiment for the next 12 months is uncertain. Still, we're trying to be prudent and sensible on the one hand, but not overly cautious because we have seen already in the last 6 to 8 weeks that markets can turn quite rapidly. So we are fully invested and liaising closely with our clients about the fact that we're ready for an upturn when it comes. So whether it comes in the rest of financial year '22, '23 or later remains to be seen, but we are monitoring this business with a medium-term horizon and putting in place the building blocks for further expansion in due course. So on that note, I'll hand back to Andy and let's see if there are any questions.

Right. Thank you. Gentle and very clear, as always, and we do have a number of questions, so let's dive straight in. Inevitably, the first one is nothing to do with Impax or has it is. We've had a couple of questions related to COP27 and viewers are interested on what's your perception of the overall outcome was? Was it positive? And if you could add a little political commentary going around the major industrial nations of the world, that would be helpful. And a related question, a lot of the headlines cover the loss and damage funding or impacted nations. And the question is, might there be implications for Impax were there?

Yes. So COP27 recently held in Sharm el-Sheikh in Egypt was the successor to the high profile COP26 in Glasgow this time last year. Now the Glasgow COP was at the 5-year anniversary of the Paris COP. And really, every 5 years, there is a big review as to how the process is going. And so the COPs, in the meantime, are lower profile, if you like, working level COPs where progress is assessed and reviewed, but no major changes or commitments are anticipated. So in that sense, expectations were lower this year than they were going up to the Glasgow COP conference. The results, I think, were somewhat mixed. So obviously, the global economy is quite fragile at the moment and geopolitical tensions are high. So climate change was struggling to get to the top of the agenda. Having said that, though, as I mentioned in my remarks, the series of weather-related disasters this year has been unprecedented. So there was strong societal interest from around the world to make sure that climate change was properly addressed and profiled in the run-up to and subsequent to the Sharm el-Sheikh meeting. So what actually happened was incremental progress on a number of fronts. I won't go into the details because there wasn't really time, but I think it was probably, on average, a reasonably good outcome in terms of tightening the ratchet of policy response. The loss and damage fund is -- for those of you who are not aware, an initiative that the less developed countries have been pushing for, for quite some time on the standable ground, so it was the developed world that caused the climate change problem in the first place because of its historical emissions of greenhouse gases, and therefore, must be compensating almost compensate the now developing world for that damage and reimburse for the loss. Of course, that's a very contentious political challenge. And so the developed nations to their discredit have actually been pushing back. But as I think the question I noted, loss and damage fund was agreed in concept, although no funding was committed to, and so it remains a sort of shale idea to be developed further and no doubt will be rolled out at the COP in the United Arab Emirates in 12 months' time, COP28 to being summoned and for more pressure to be piled on the developed world to put some money into it. So net-net, I think the COP was marginally positive for the businesses that Impax is investing in. But the biggest story of the year was actually the post the developments, particularly in the U.S. with the so-called Inflation Reduction Act, which was really a set of policies to shore up and strengthen the financial case for investing in renewable energy and energy efficiency and of similar policies in the EU, China and India during the year. Those are much more material in the context of the business models that we're backing.

Great. Thank you, Ian. You actually neatly preempted a question on the Inflation Reduction Act. And the question is, given its name as much as you could be, could you assess within the areas it covers the sustainable areas, particularly relating to energy efficiency, storage and so on? Could you just highlight them in a little more detail?

Yes. So it is fairly common in the U.S., the name of the act doesn't really bear much relation to what's actually in it. The name is quite often chosen for political reasons to improve its portability, should we say. So the substance behind the act, I mean, it's very complex detailed set of initiatives. But what's really relevant for Impax is the extension and strengthening of the support for deployment of renewable energy. So the extension from a couple of years to 10 years of tax credits, which is the main way that wind and solar, in particular, are supported. And with similar measures in other areas, including the high inflation economy, then there was quite a strong increase in the financial attractiveness of the clean energy transition. And the only interesting question, I think, for global businesses was the fact that there's quite a strong domestic content requirement in the act, meaning that the benefits will be constrained to a significant degree to companies that are using U.S.-sourced equipment and services. So there's been quite strong complaints raised by European Union and Asian nations because of that. And I think that topic will remain quite contentious during 2023 as we're rowing back from full globalization across many industries and the EU is in particular keen to ensure that domestic businesses and that would include the U.K. So U.K. and the EU domestic businesses are not unduly or inappropriately impacted by that kind of domestic content requirement.

Right. Thank you very much, right. So if I get my abbreviation is correct. So this question, you've mentioned, Ian, that in the annual report, you've used TCFD framework to report on climate risks and opportunities. Could you provide 1 or 2 examples in terms of both physical and transitional risks that Impax faces?

Yes. So the background here is that the so-called task force on climate-related financial disclosures, or TCFD, came up with recommendations for companies and investors to disclose their climate strategy and risk management, in particular, in a structured fashion and the TCFD recommendations are being picked up and rolled out by regulators right now. So there will be requirements as of next year, I think, for U.K. companies to include both public and TCFD reports. So Impax has gone ahead of the requirement to produce, say, a fairly sort of compact TCFD report. That report does talk about the risks and opportunities for both the manager, Impax Asset Management Group, but also for the investments that we're making. And of course, as the investments that we're making with about $40-something billion that have got the most to lose all the potential gain for employment change, whereas as a management company with 270-something employees, and we're operating at a much smaller scale than the businesses we invest in. So specifically to the question, and I hope I get the sort of inference of what the question is really asking, but physical climate risks affecting our companies would be anything from storms, floods, wildfires, droughts affecting any sort of operating business around the world. In terms of Impax Asset Management, then physical climate risk is pretty limited, pretty low. We're operating in 5 offices around the world. And although I think potentially typhoons in Hong Kong have the ability to shut down areas of the central business district, then the rest of our offices at the moment a pretty low exposure to climate-related physical risk. And then for transition risk, which is an idea that the world economy will be adapting rapidly to switch, in particular, to clean energy, and therefore, anyone who is generating or using fossil fuel-type energy sources will be at risk of being uneconomic or were actually prohibited from operating in time. So that's obviously less of a problem for Impax's investing companies where we're not investing in fossil fuel-related businesses. And therefore, the opportunities from that transition risk usually outweighs significantly the potential risks. And then in terms of Impax Asset Management Group, then we have, if you like, the biggest exposure to fossil fuel consumption through our air travel, which, for an international business, is not 0. And so we are having to balance, on the one hand, wanting to be environmentally responsible and keep emissions down with, on the other hand, need to knit together and build an international culture and get everyone working harmoniously together. So yes, hopefully, answer the question.

I think it does indeed. And then moving on to TNFD, the nature framework, we have question on how Impax is likely to use that framework that's currently being tested by companies?

So again, background, so the TNFD is a taskforce on nature-related financial disclosures, which of course, is similar in astounding or similar name to TCFD and relates this time to the risk around biodiversity and nature exposure. So for example, in the food industry companies that are maybe at risk of having crop failure with the agribusiness because of pests. So the TNFD work is much less well advanced compared to TCFD. There is a conference in Montreal in December, which will discuss, amongst other things, how the TNFD framework could be advanced. So it's very early days yet to reflect on what might come out of that work. Impax typically is providing solutions to environmental problems that include sort of reducing pollution or switching to forms of food supply that are not monoculture based or at risk of depleting biodiversity. So that's already part of our risk assessment and actually there are a number of opportunities that are positively linked to nature preservation. So not quite sure what's coming out of TNFD, but I think whatever does come out of it, we should be pretty well placed.

Okay. Thank you. And one here, perhaps for you, Charlie. You showed the average fee margin being very stable. Are there any conclusions that we might draw about the strength of your competitive proposition when you're tendering for business given your authenticity, given your track record, given the difficult markets and the extremely good performance that's coming long? Or is it a case that competition are still just struggling to match up to those central KPIs?

Well, you're seeing a lot of factors going into that sort of single number at the end, which the question touches upon. We do have a very diversified book of business, as I mentioned earlier, in terms of different geographies and channels and products with different fees, and we're able to charge a sensible market fee in each of those locations. Contrary to sort of perhaps profitability, we've not really seen margin decline even on a like-for-like basis in the different places we operate. But I would note that it's quite different in terms of the level of competition and the resulting fee levels we get in different places, in particular around the world. But our current experience has been that, yes, we are able to continue to charge similar fees. Certainly for existing mandates, we occasionally provide a bulk discount or loyalty discount and it must be like for 5 years. But by and large, the clients have been with us for a long time. We find that there's no change to the arrangement. And then when we're bringing on new clients, they're coming in at similar ranges. So I've seen a lot of factors behind that, but certainly, our authenticity and the strength of the brand and the breadth of our offering, I think, is a key component of that.

Yes. Well, I think that's a sensible note on which to finish. I would very much like to thank both of you on behalf of certainly our shareholders. And of course, all the people listening today. We had one question and that was not really a question, Charlie, but it does say thank you very much for those 14 glorious years and an extremely good job well done, and we wish you all the best in the future.

Thank you so much.

And I'll just repeat for those of you who perhaps joined the presentation late, this will be available on the Impax website as will the slides. It will also be available on the Equity Development website. And I think it's reasonable to assume there will be research notes, how some of these strong results in the very near future, which we will also circulate. So thank you for your attention, and thank you for the presentation.