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

Right. That looks like a healthy number on. Just a few words of introduction and admin. This presentation is being recorded. So if you do happen to miss any of it, it will be available later on. The slide deck that the Impax management will be talking to is already available on the Impax website, along with lots and lots of other material. So again, if you want to look into more detail at some of the statistics and information given, you can do it there. And then lastly, we will have a formal presentation from the management, but they will take Q&A afterwards, and you can submit that if you're not familiar with Zoom, by using the Q&A button at the bottom of your screen. So I'm delighted to welcome back Ian Simm as the Founder and the CEO of Impax; and Karen Cockburn as the CFO, and they're going to talk about the full year results to the end of September that have just been released this morning and also give a state of the nation about the business and their plans for the future. So I shall now pass over to Ian to start proceedings.

Okay. Thank you, Andy, and hello, everybody. So I'll take you through the slides for the next 25 minutes or so, starting with this one. So just as a summary for those of you that may not know the company, Impax Assessment Management was a firm that I started in 1998, we're investment managers, and we have a particular investment philosophy, which we call the transition to a more sustainable economy as a shorthand for the industrial revolution, which is underway in areas like clean energy, infrastructure, supply of fresh water, recycling and healthy food, amongst others, which are providing high levels of growth as well as opportunities to find undervalued companies. So today, Impax has a globally recognized brand in this area of asset management, one of the world's largest investment teams, investments in listed equities, fixed income and private markets, and a scalable business model targeting institutional and intermediary investors around the world. The next slide, the idea of this transition really is a capitalist idea. So technology change leading to smarter, cheaper technology solutions, for example, solar power or electric vehicles regulation, which is directing the expansion of markets for this technology-based set of solutions and changing consumer demand, for example, the demand for healthier food, which are underpinning a set of transformations across a number of sectors and providing great opportunities for asset managers that are able to understand valuation, drivers and identify mispriced companies and put them together in suitably risk framed portfolios. So that's essentially what Impax does. So in the 12 months to the end of September, which is our full financial year, we have reported a creditable set of results on the back of rising asset management with a 4.8% increase. There's been quite a significant investment in new products, in particular, a push into fixed income, and we have strengthened our distribution and improved resilience across the firm and the results, which are reflective of the investments that we've made, we think are quite significant in the context of a business which has got great medium-term potential. The 3 awards listed on the right there are the latest in a sequence of awards that we've won as investment managers over the last couple of decades. Next slide, please. So this is the summary of the assets under management development over the 12 months, starting from the bottom, which is the start of our financial year, the mid-blue line at the center of the page is halfway through the year at the end of March. The top dark blue line is where we are at the end of September, the end of the full year. And the bridge blocks in between show market movements and inflows and outflows of client assets under management. So very much a sort of mirrored set of halves with the first half being framed through rising markets and net inflows, the second half being falling markets and slight net outflows with the result that the total flows for the year was slightly negative at negative minus GBP 92 million, which in the context of GBP 37 billion assets under management business is very small. And we were able to grow assets under management because of the strong net market movement over the year, which of course, reflects our investment performance. Next slide. So Karen will go through the numbers in a moment, but what this slide shows in the dark blue bars is the year just completed compared to the previous 2 years in the lighter colors. So revenue up moderately on the back of the rising AUM, but because we've been investing in the business through a number of team expansion steps and also areas like IT, costs have been growing. So that has meant that profit for the year we're reporting on have been lower with operating margin lower, but we have been able to maintain the planned final and full year dividend as shown in the bottom right. Next slide. So the backdrop to the investment environment in the last 12 months, I think, is pretty well rehearsed, well known. Global equity markets really demonstrating on the one hand, a very strong surge of interest in AI and the so-called Magnificent Seven Stocks. But if you strip those out of indices, then everything else was pretty sluggish, value tended to outperform growth and Impax is tilt towards quality growth stocks was out of favor, hence, the derating, which has been a headwind for us in the period we're reporting. Having said that, though, the drivers behind the transition to a more sustainable economy continue to strengthen. And in particular, the falling costs of renewable energy, the rapid adoption of vehicle electrification, not just in Europe and the U.S. but also in China, and the acceleration of problems linked to extreme weather, which is going to most likely continue into 2024 and 2025 given the El Nino effect, which compounds the problems of global warming. So in that context, the firm is very well positioned for further growth. We do have a globally recognized brand with this distinctive investment philosophy, a scalable platform and expanding product suite and a wide range of institutional and intermediary clients around the world. So as we've just celebrated our 25th anniversary, we think that we are pretty well placed to build the business over the medium term from here on out. Next slide. A bit of a busy slide here showing how our assets under management breakdown. But if you start in the top right-hand corner with the donuts, everything in the blue color is our thematic funds, typically the environmental market areas such as water and smart food. The orange is more core-based non-thematic products in global and regional equities and then we have some other products, for example, in the systematic equities space. Top left, you can see the darker shade reflects the fact that, relatively speaking, the sustainable lens or core products in orange gained at the expense of the thematic products as clients were over the last 12-month period, more in favor of less sort of or lower tracking error core products rather than thematics. And on the bottom right, you can see that our own label and direct mandates reflected slightly more than half of our business with the revenue coming from BNP Paribas, our major -- one of our major distribution partners dropping again slightly. Bottom left shows a pretty much flat position geographically, slight increase in the U.K. and Asia at the expense of Europe and North America. Next slide. So with that flat, slightly negative picture of net flows, but a good pipeline and high client retention, we're also pleased to report that our recent client survey produced very strong results. And we have been able to secure some quite significant new business wins, which should lead to further inflows over the next couple of years and pipeline for new mandates is also encouraging. Next slide. So a little bit of busy slide of the flows position for the 12 months in the dark blue compared to 12 months previously. And everything to the right of the vertical lines is positive, all to the left is negative. So starting at the left of the page. St. James's Place has been a very strong client for us for several years now and continue to be strong on absolute terms. This period, well, everything else is fairly flat. BNP Paribas, materially negative as asset allocation within the private bank and also Japanese client decided to take money out of equities. Continental Europe on the bottom of the middle area produced generally positive results as did Asia Pacific with new mandate wins. North America on the top right was negative, but it is likely to turn around first because they tend to be the most nimble asset allocator. Next slide. So during the period, we have added new distribution in Canada with our first direct salesperson similarly in the Nordics. And in Japan, we've opened a business development office. Our partnerships in the U.S. with the wirehouses, the big investment banks has deepened and a new partnership in Latin America and Brazil and a new fund in Australia. So plenty of activity around the world. Next slide. Product development is really working very efficiently now. We've got a new head of this area, it's a new position with a very experienced product development ahead. So a new sustainable infrastructure equity fund now just over 11 months old, a couple of new products and social leaders in emerging markets starting very soon, expansion of existing strategies in Europe and North America are set out there, in particular, setting up new more attractively structured and priced wrappers and feeders for North American wealth management clients. And finally, our private markets fund raising for Fund IV is nearing a conclusion. We'll have a final close early in the New Year and the size of Fund IV is likely to be larger than the -- any of the existing funds or funds to date. Next slide. An area where we're paying particular attention at the moment is fixed income. We've had fixed income activity and team since [ 2000 and/or 2018 ] when we bought the Pax World business in the U.S. So we've got about $1.5 billion under management across 2 strategies. Fixed income now with higher interest rates is much more attractive than it's been in recent years for asset allocation, and we think there's a dearth of product from other fund managers that's consistent with the sustainable economy, for example, taking account of climate change effectively. So we have been adding new talents or additional talent to our core bond and U.S. high-yield strategies. We've created some new posts based in London as head of fixed income with a business development mandate, and we are actively looking at bringing on board additional teams potentially through acquisitions. The equity business meanwhile is doing very well, but has had some headwinds in the thematic area, particularly with derating as money has rotated away from quality growth and the small mid-cap space has been affected, as you can see here on the bottom right, this -- the PE premium, which is typically a marker or indicator of the relative value of portfolios has been coming down, which reflects increased value, and that's also shown in the bars at the top with high earnings growth and only a modest premium for price earnings. So this area has been out of favor. And therefore, we do think it should mean revert with the potential for significant flows over the next 12 months to 18 months or so. Next slide. Another step this year has been the formation of our sustainability center to bring together our teams across the firm active in areas such as engagement and stewardship, impact reporting, policy advocacy and research. So this is creating more structure and management oversight and giving us an ability to communicate effectively with clients and also to build through additional hires in a structured fashion. Next slide, please. As the business got larger, then we've been investing quite actively in IT, for example, salesforce and various back and middle office IT solutions. We've enhanced our risk capabilities and staffing and also been working to strengthen the decision-making and overall governance in the context of a growing more complex firm. Next slide. Headcount's been increasing but at a much lower rate than the previous 12 months. We just hit 300 staff. We've got an excellent staff morale and culture and staff engagement numbers. And now with the new HR system and updated ED&I goals, we think that we're very well placed for further results from our very loyal and dedicated team, which owns about 20% of the business. And then finally for me, just a note on Board succession. So, our Chair, Sally Bridgeland; and Remuneration Committee Chair, Lindsey Brace Martinez, will both retire from the Board at the end of July, at the end of the 9-year statutory period. Current Board Director, Simon O'Regan will take over as Chair, subject to regulatory approval, and Annette Wilson will become the Senior Independent Director. She's also been on the Board for around a year, I think. And then we've just announced this morning a new Board Director, Julia Bond, who joined us just after results have been announced and she will take over from Lindsey as RemCom Chair from next July. And of course, Karen joined us formally on the Board in March this year, but has been at the helm as CFO since the end of last year. At which point, I'm just going to hand over to Karen to take you through the numbers.

Thank you. So hopefully you can hear me okay, and good afternoon. So I would just like to share sort through some of the details that Ian has covered in the headline numbers. I'll start with it's a fairly simple model that we have here, revenue driven by the shape of the assets and just the cost that we have. So starting firstly with the revenue. So this year, for Impax, this is sort of a record level of revenue of GBP 178 million, increasing from 2022 by GBP 3 million. But we're very proud of that increase given the very challenging year that it has been for asset managers. And unpacking that in terms of the -- what we've been able to -- what we've seen in terms of that increase is driven by net flows of GBP 5.7 million worth of additional revenue. The lion's share of that may be upwards of GBP 4 million of that has come from a very successful inflow into the private equity funds that Ian as mentioned that are closing towards January. So we have seen a significant increase in that very profitable part of the business. And on top of that, then we had a very successful year in FY '22 in terms of net flows with about GBP 2.9 billion of positive flows into the business and the annualization of that effect has helped this year's revenue increase, but noting that the year overall had a small negative outflow, and that is already is also included within that net flow position. The performance that we look at and is over a 24-month period for the purposes of this analysis in the way that we look at it. And over that period, that the overall performance was improving this year, did not improve enough to recover from where we have been the year before. And that has sort of pegged back the overall revenue, but a very solid position that we have finished in of [ GBP 178 million ]. We do like to look at the bottom of the page on just the run rates at the end of September, tracking closer to GBP 169 million as the asset actually hit its lowest level for the year at GBP 37.4 billion. And of course, as the markets improve and that figure will correspondingly increase. Another key driver of our revenue then is the fee and that we have from existing clients and new business that we're winning. It has reduced slightly to 41 [indiscernible] basis points to 45 basis points. But what we're looking at here is a mixed variance rather than anything to do with price. In fact, we're not seeing price pressure in either winning new business or retaining existing clients. On the next page, another key picture of the revenue is really looking at, and is -- sort of it's a matter of real differentiation for Impax and that is a little bit the differentiation, the diversification that we have in the sources of revenue. Ian has already talked about the strategies and seeing more come into sort of the newer strategies of the sustainability lens, and that's now contributing to 25% of the revenue base. A particular note for me is this revenue by region. So we have a global distribution team in place. And with that, we have a very well-diversified geography of our client base. And in a difficult year that saw revenue fall back in North America and in the U.K, that was offset by increases in Continental Europe, in Canada and in Australia. And also, Ian mentioned earlier on the last pieces that we have BNP as a distributor for many years, we were a core part, a large part of the revenue base. We are building our own distribution now and the measure of the success of that is the reduction in the contribution that BNP make to our overall revenue, which you can see on the bottom right-hand side that has been moved over the course of 2 years from 32%, no towards 28%, telling us that strategy of building on distribution and is working for us. That's really everything in revenue and moving on to costs. So the cost base, the headline really that we're looking at is that the cost growth has moderated to 11% this year from 24% last year. And costs, I'm pleased to say have been managed well by the business. We added GBP 12.3 million to the cost base this year, taking it up to GBP 120 million. But importantly, that takes us to a position where we say we've built the listed equity business that we sought to build over time. And looking at the chart on the right-hand side, the cost increases this year came from non-staff costs of GBP 8 million and then the staff costs of GBP 4 million. And that is a changeover from what we've seen in the prior year at the bottom of that chart, where actually GBP 15 million of staff costs have been introduced in the prior year. And on the bottom, the chart shows where the GBP 8 million worth of non-staff costs have come from. For the first time, we're just sharing a bit more detail in terms of that cost base. There's nothing sort of particular to draw it on that other than to say potentially the GBP 8 million that we did add this year, GBP 2 million to GBP 3 million of that was one-off in nature as we've invested in the operational resilience of the business and some new technology one-off projects that we have had. Importantly, then this -- sorry, back to Andy, if you could go back to just my top graph on that page. Thank you. I was just going to talk about the fixed, the staff cost in the business did increase by GBP 9.6 million. But to unpack that figure, at least half of that was caused by the hiring that we have done in '22, and that has slowed significantly into 2023 with the headcount finishing the year at 300, which was a 10% growth, and that was really very -- in the second to [ most of that ] in itself in the first half of the year. So we've been able to really pull back on sort of the investment that you've seen over the last number of years as we reach the shape of that listed equity business. And lastly in this page, just to talk about the alignment that we have with shareholders, in that we have the policy for a bonus. That's the variable staff cost in the orange that you see there is we saw a reduction in that. So we have a policy where we seek to retain 45% of the pre-bonus profits as part of the bonus pool. Reflecting the overall reduced profitability of the business this year, we have reduced that to a total payout of just over 40%, which has seen the cost base reduced by GBP 5 million. So in the current conditions, we will continue to manage the cost base very carefully. We finished the year at about GBP 120 million, sort of the run rate of where we are for September. And looking ahead, in the current conditions, we will continue, as Ian has talked about, seek to invest in our fixed income business and taking inflation into account, and I see growth in that number in the mid-single digits for next year in terms of the shape. Moving on to the next page now, Andy. Thank you. Sorry about that. It's really just bringing that together in terms of what we've seen this year is a small increase on the revenue. The additional investment that we did make into the business has resulted in a profit of GBP 58.1 million, which is down GBP 9 million from the prior year, but we have a stable cost base is my key message. I'm very pleased actually with the operating margin, which is a key measure for us finishing the year at 32.6%. Now that is lower than the 38% that we've seen in the prior years, the high 30s that we had in the prior years, but it's more reflective of the trading conditions that we find ourselves in now. We do retain our ambition and to have an operating margin as markets expand into the mid-30, mid- to high 30s. And the graph at the bottom just shows the broad trend of our operational gearing over time. And I do expect that to -- as markets expand to see that move towards the mid- to the high 30s over the medium term. I'm done on profit, then to just move on to the balance sheet, if I can. So really, what we're saying is that the balance sheet remains very strong despite these tougher trading conditions that we have found. We started the period with a very good balance sheet. We generate good levels of cash. We finished the year in a strong position with close to GBP 88 million of cash on the balance sheet, and we're able to maintain the dividend that we had last year. Just looking at the cash generation, we did -- I mean the cash reduced from the year from GBP 107 million to GBP 88 million. And the main uses of cash really on there, the largest use we will have is the dividend. And I should also point out that cash generation was strong at GBP 36.7 million. And the other main use, and so the uses of that being dividend. And we do continue to acquire our own shares and where we see value in the share price. And that is a feature that we will continue to deploy in the business as we do seek to have -- we buy the shares for EBT to honor stock awards. So we seek to avoid dilution, and we will continue to seek that the business, the management of the business and staff own 20%. So that will be a continuing feature. And this year, with the launch of new strategies as well, we significantly increased the level of seed that we had. So we've been investing in the business. We do finish in a strong cash position as a result of that, proposing a dividend 22.9 pence for the final, taking us to 27.6 pence for the full year. This dividend is within our dividend policy of paying out from 55% to 80% in normal circumstances. And you shouldn't be surprised to see us towards the top end of that range at 78% this year. And then moving on just to finish on the capital position is, again, we have that strong balance sheet. I do want to call out there is no debt in the business, which is a very healthy position for a new CFO. We have a healthy capital surplus, which includes including the seed capital, they're increasing from GBP 48 million up to GBP 50.7 million. And we have deployed and that's an important use of our capital. I want to finish really is to really just look at with that healthy buffer, how do we think about that. So what we will do with a healthy surplus, we keep a buffer for just the unexpected, just good balance sheet management. We do want to continue to seed new propositions in the business. And on top of that, we do want to maintain the dividend policy within that progressive dividends and good returns for shareholders. I've mentioned earlier that we will seek to use the cash to capital of the business to continue to do share buybacks. And importantly, particularly with our ambition in fixed income is that seeking, we keep an element for -- not for massive acquisitions, but certainly some very strategic and important M&A activity to help diversify the income from listed equity into fixed income being sort of the main draw on that. And overall, very happy with the position where we are on cash, capital and dividends. But if I could just sort of summarize all of that since for me into 3 key points. acknowledging, of course, there are so many factors that are outside of our control and just now in markets. But what 3 messages I would have is what we've built is a very solid, sticky, well diversified source of our revenue base. We've got costs now. Second is really to say that we've costs where we would like them to be, and we will continue with that discipline. But we have built the listed income -- the listed equity business that we had sought to build. And really we are poised to having completed that build. We are poised for the next period of what I believe will be a healthy profitable growth for this business. But again, it's the markets that are out with our control to a degree to ensure that these flows come our way. And then lastly, just to finish off on that healthy balance sheet that we've maintained, and we continue where that allows us to maintain a healthy dividend and payout. With that, I would like to hand back to Ian to wrap up.

So just looking at the last slide, and let me just summarize the fact that we do believe that Impax's business is now really well established for the next phase of growth with a diverse and expanding product range, really well set global distribution in the institutional and intermediary space, a well-motivated team which owns 20% of the business. So nice alignment with shareholders and plenty of capacity to be able to grow our current operations. So very much organic growth from here, but as we've said, open to selective M&A to give us some more capabilities. So with that, back to you Andy, for a little bit of Q&A.

Great. Well, thank you both very much. Very, very thorough as always. And we already got quite a lot of questions in. [Operator Instructions] Maybe 1 for you first. Ian, we've got a question. You've talked about how the markets in the U.S. have been focused on certain sectors and companies. Can you expand a little more about the analytical situation and the so-called backlash against ESG? And I know ESG is not the same as sustainable investing and how that might have affected demand for your products in the last year and whether that backlash is now perhaps [ run its course ]?

Well, as you say, Andy, we really trying to avoid the ESG label, what we're doing is investing in industrial revolutions and sectoral transformations backed by technology change, regulatory interventions and changing consumer demand. So what's very clear in the U.S. is that there is an industrial revolution underway in the direction of clean energy and efficiency. This reshoring of jobs, particularly back from Asia, but also potentially back from Europe. So resurgence of U.S. manufacturing, that's underpinned to a significant degree by the chips and science and infrastructure bills as well as the Inflation Reduction Act. And that has meant that there's plenty of opportunity to invest in both listed and private companies. So yes, we do need to be a little bit careful in places like Texas or Florida that our investment ideas are correctly understood. But our marketing typically is focused on the coasts, the Midwest, where we are well established with a footprint, but not a huge client base and plenty more to go for.

Thank you very much. One for you, Karen. Working capital. One reader is curious. I think he saw a GBP 12.7 million increase this time, which is in the contrary direction to previous years. Could you delve into a little more detail about that?

So in terms of just the working capital, that's really just looking at movements in very straightforward, our debtors and creditors. Debtors were slightly, which way am I going to say, up in the period. Just because of where the AUM finished quarter or year-on-year. So September last year, AUM was at a very low point of GBP 35.7 billion, and we accrue revenue on that basis. Whereas this year, it increased significantly to GBP 37 million, which led to a bigger debtor at the start of the year. And then the similar sort of feature that we see just on the accruals on our creditors, and that was mostly driven by the level of bonus accrual. So as many factors that were driving it, but no fundamental structural changes whatsoever in the operation of the business.

Thank you. Very clear. A question on BNP, as much as you can comment it -- comment on it. The outflows that they've seen in terms of your managed assets, would you consider that to be cyclical, random or perhaps a sign that they have more commitment to other clients?

Well, there's two things going on there. One is asset allocation decisions, particularly within the private bank. And not a surprise, but a lot of asset allocation sentiment has been moving away from equities towards fixed income and cash in the last 12 months or so. So that's been part of the story. And then there has been a longstanding Japanese wholesale investor in the BNP funds in Luxembourg, where we sub-managed, which saw a very strong inflows a couple of years ago and as has been fairly common in Japan that money has gone out, and into other products. That's quite a regular feature of Japanese wholesale markets. So typically, that is wholesale money in general, which is going out, but can come in again pretty swiftly if sentiment improves.

Okay. Then a couple of questions about competition. You've mentioned that you've been winning mandates in the last year successfully, and indeed and the years before that. Has there been any change in the competitors who you are competing against for those mandates? And could you tell us a little bit more about how important your performance of funds is to winning those mandates?

Well, I think 3 years ago or so, there was definitely a strong increase in the number of funds that had some kind of sustainable economy type label. And much of that was motivated by the Sustainable Finance Disclosure Regs, SFDR, within the European Union, so-called Article 8, Article 9, so many of the branded wholesale fund managers across Europe emerged as competition. Several of them have retreated actually as scrutiny on so-called Article 9 designation ramped up and several of our competitors got cold feet. We didn't get cold feet, and never worried about our -- the high quality status and Article 9 compatibility of what we're doing. So if anything, competition this last period has reduced slightly. The nature of that competition, I think, is increasingly specialized with some high quality houses emerging as like proper competition and several other groups falling by the wayside. So I think we are -- we're encouraging competition up to a point because unless there is competition, then would be clients don't believe that what you're doing is a valid idea. And therefore, it's quite good that there's been a shakeout and a smaller number of groups compete against. Those names are probably the same names that we saw 3 or 4 years ago.

Yes. That makes sense. And in terms of specific individual performance, someone who's been reading your RNS very thoroughly today and has noted longer term 9 out of 12 of your active strategies have outperformed their benchmarks. His interpretation is that 3-year numbers are not quite so good and that therefore 10 out of 13 have not outperformed. Is that a fair conclusion?

It is at the end of September. But if you go back to just 6 months prior the end of March, it was a much better picture. So what we've seen actually is a sharp derating between April and September, which has already materially reversed in November. And so it's important not to read too much into those sort of short-term movements. But as you say, Andy, the longer track record of outperformance is still there.

Okay. Thank you. We have commendably a happy birthday, congratulations on 25 years coming in from one shareholder. But they then cunningly lead on to ask whether you have any plans about retiring, Ian, which I think we shall interpret as what our succession plans over the longer term for management?

Rather than a nudge to maybe get back something else. Well, look, succession planning is important in a company of our size. We've explained in some detail today the succession plan for the Board, which has been put in place well in advance of the deadlines and I think reflects a good process around that topic. In the senior team, there are roughly 15 or so senior managers. Our Head of North America will retire at the end of January, and the Head of Distribution in North America, Ed Farrington, who's been with us for just over 2 years, will take over with the additional title of Head of the North American team. That's been in the works for a couple of years. Charlie Ridge, our CFO, retired this year, handed over to Karen late 2022. So we have a good track record of sort of thoughtful and measured succession planning. I don't have any plans to retire, but if people would like to vote in the other direction, then I'm always happy to be told what to do in that context. But as and when the time comes, then there will be lots of thought given to who takes over from me.

I should watch the next AGM voting with interest in that. Karen, you explained the proportions being paid out in dividends from adjusted operating profit. Do you have any internal guidelines about what level you would not see dividend cover fall below?

So that is a very interesting sort of scenario that we are sort of looking at and a number of scenarios that we do look at. Look, so we're an asset manager, and the expectations that we're paying a significant proportion of our profit side as a dividend will remain. In terms of the policy that we have today that we keep within and so not going to -- will be on cover. I'm being conservative actually at capping about 80%. It's a policy I would seek to maintain because we -- we still have -- we're still in growth mode and we still have the opportunities that we see ahead. However, I do sort of see a scenario where we could step above the 80% is how I would answer that. And really that would be underpinned in maybe this year continues with the revenue without the sentiment returning in our favor at the early part of the year, but we could sort of see underlying some real positive signs in that scenario, then yes, I could see us paying above that 80%. But it is -- I think the answer to that is it depends. And at this stage, I'm not ruling anything out, but I certainly have preferences of where I would like to go.

I think recent years have taught us that the benefit of flexibility in the light of a lot of unforeseeable developments. Right. Someone voting for you at the AGM in a shareholder for 20 years, who says, thank you very much for all your efforts and the hopes you continue for a lot longer.

Thank you.

He's got a specific question on the sustainability center. And also notes that you've previously reported on non-financial impacts, such as waste recovered, renewable energy generation, liters of water coming out of capital invested. Are you considering quantifying these non-financial impacts into financial terms, so that investors can better understand the societal value that has been created by Impax's investment strategy and how that societal value can be compared to the financial value?

Yes. Interesting question. So what we are doing is carrying on with the sequence of impact reports that we produce for many of our funds, particularly the thematic funds annually. So we will be producing the 10th report next year. So, therefore, a decade of experience of doing this. It has taken the best part of a decade to get the data around these non-financial metrics. For example, as you say, material recovery, water treatment, et cetera, standardized to then go the next step and apply some kind of financial number. I think that can be done in the margin, if you'd like, by simply taking a notional price of water or price of materials or value of a CO2 credit and multiplying the volume by that price. We don't tend to do that. We don't do that because we think that's too simplistic. And for example, in the case of CO2 reduction, there is no standard global carbon price. And so you're really kind of picking a number out of thin air or picking several different numbers in different geographies, which is actually beyond the ability of the data to give you the geographic dispersion. So an interesting idea. I don't think we're ready to do that yet. I don't think that it's market standard to do that yet. But it can be done if the analyst wants to do that. If that individual would like to do that, and have a conversation about how to do it, then feel free to contact us directly.

I will pass that on. Thank you. And then perhaps a last question. It's always crystal ball time for the last question. COP28 is just getting underway and the question is, what would you, I don't know whether this is collective to the firm or you perhaps Ian as an attendee, regard as a good outcome from this always important meeting in terms of climate control and planet's temperature objectives?

Well, I think that there are 3 things that I'd like to see from the COP conference, which kicks off this coming weekend. Firstly, the global stock take, which is the post-Paris review of where we've got to in terms of progress. So that is done effectively and without contention and with clear messages. Secondly, that there is a clean record for the hosts. The Emirates has genuinely being committed to climate improvement and demonstrating how they can migrate their economy over the next couple of decades to be successful in a post-fossil fuel world. And thirdly, that as a global community that there is as much granularity and confidence around weaning ourselves off oil, as we did 2 years ago in Glasgow, in the context of weaning ourselves off coal, where there has been some strong commitments and quite good progress. So those are the 3 things Impax will be represented at the conference, including in the blue zone, which is the main negotiating area with our Head of Policy, Chris Dodwell representing us. So yes, we are cautiously optimistic, but definitely looking in those 3 dimensions.

Good. Well, we all obviously share those hopes as well. Great. Well, can I thank our audience for their, again, good attendance and excellent round of diverse questions. A reminder that viewers will receive a feedback form and it is really appreciated by the management of Impax. If you can shed a little light of your thoughts via that route, a reminder that the slide deck is along with a lot of other information on the Impax website. Earlier today, Equity Development published a very detailed review of the results, which I commend to you, which you can find on both the Impax and the Equity Development websites. And the fundamental value ascribed by the analyst remains at GBP 8 a share, which is, of course, a level we have seen before and we will hopefully see again. And then lastly, of course, many thanks to both of you, Karen, Ian, and indeed the whole team for another sterling performance. And we wish you all the best in the next 6 months and years ahead. And plenty of people have said they don't want you to retire, Ian, so your confidence could remain unbowed. So thank you both very much for the presentation.

Thanks, Andy. Thanks, everybody.

Thank you. Thank you.