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

Right. Let's go. [Operator Instructions] The presentation is being recorded. So if you miss anything, you should be able to see it in a day or two's time and the materials that Ian and Karen will be speaking to are available along with a lot of other materials on the Impax website, which I commend to you. Right. We are delighted to be joined again by CFO, Karen Cockburn and the CEO and Founder of Impax, Ian Simm. And I shall now pass over to Ian to start the presentation.

Thanks, Andy, and hello, everybody. So without further ado, we'll just launch into the first slide. One after that one, how about that. So just to go through an introduction for those who maybe don't know the firm. So Impax is an investment manager serving institutional and wholesale clients around the world. We manage just over GBP 37 billion in equities, fixed income and private markets, been around since I founded the business in 1998 and we are running offices all around the world. So U.K., Ireland, Denmark, the U.S., where we have 2 offices, Hong Kong and Japan. And we have a partnership approach, which meant that we've had very, very long-term relationships with many very sophisticated clients. Next slide, please. So Impax stands out because of its investment philosophy. We believe that there's a quite a material economic transformation underway, if you like an industrial revolution, which is driven by technology change, regulatory change and changing consumer sentiment in the direction of what we call a more sustainable economy, which in simple terms is all about efficiency, low pollution and better products and services. So this industrial revolution is providing a great amount of growth and also turmoil and opportunities in the mispricing or benefiting from mispricing in both public markets and in private markets. So that's a great backdrop our investment management style. Next slide, please. And we started with very modest beginnings. So a GBP 15 million mandate with the World Bank got us going. And today, we are GBP 37 billion. So you can see the assets under management at each one of the financial years. We actually went on to the AIM, the alternative investment markets through a reverse in 2001. So we've been a listed company for 23 years. Next slide. So just a summary of the results ending the 30th of September 2024. We have been operating quite choppy and challenging markets. I'm sure everybody who's an investor will appreciate that. It's been a very unusual couple of years with the rise of the Magnificent 7 and mega-cap tech stocks, quite significant political uncertainty and the uncertainty around inflation and interest rates, which at the moment are both trending downwards. We've been continuing to invest in the medium-term potential of the firm, adding more investment capabilities, launching more products and expanding our distribution, and I'm pleased to say that the results has been a flat assets under management, very, very slightly down but essentially flat over those 12 months despite active management being an area of quite considerable stretch and stress. The financial numbers Karen will go into, but revenue and operating margin worth noting, so operating margin still in the 30s, and that's quite a good -- a very good result, commendable result and a dividend, which is the same as last year, 27.6p for the year, which is flat but very nicely covered and slightly greater cash reserves. Next slide, please. So the backdrop to our investment work is summarized here. We do think that equity market sentiment remains robust, is, of course, being quite a lot of uncertainty in the last 3 weeks since the U.S. election. But with the experience of the first Trump administration and Trump's statements so far, we think that the central scenario for equities for the next 12 months and beyond is positive and actually for the stocks that we're investing in very positive given the strong likelihood that delayed mean reversion, i.e., rerating of quality growth companies will take place. So in that sense, we are expecting that relatively high volatility will persist, but that interest rates will not go higher materially and may well continue to drift downwards. And in that context, the Impax's investment philosophy around the transition to a more sustainable economy is very well positioned, we believe, given very attractive valuations, strong fundamentals, and our approach to what you might call no nonsense, common sense investing rather than getting lost in ideas like ESG or Impax's investing, which is not we do. That Impax's discipline is very much valued by our clients. Next slide, please. So our investment performance over the period has remained very strong on an absolute basis. You can see there in the second bullet point, the absolute returns of our major strategies on a relative basis compared to generic indices like the Morgan Stanley or Country World Index or ACWI Index and we have been behind for second year that really reflects derating rather than weak earnings and is this situation we found ourselves in, in which the portfolios we're running are increasingly compelling on an absolute intrinsic value basis, but we're just waiting for the catalyst for re-rating. Going up to the U.S. election, those catalysts appear to be materializing and I think we're probably on pause at the moment as market digests the policy uncertainty coming out of the U.S. Next slide, please. So what we'll follow now with the updates on a number of slides you'll probably have seen in the past, if you followed impacts for a few years. So you start on the right-hand side of this chart. You can see the assets under management, GBP 37.2 billion at the end of September and the journey of getting there over the 2 preceding 6-month periods are shown, starting from September '23 on the far left. So this is self-explanatory, but you can see outflows greater than inflows. So the net outflows have been material, but offset almost exactly by positive investment performance, and we have acquired some assets in the last 6 months, which I'll mention in a moment. Next slide, a breakdown of our business in standard Impax format. So top left, equities in thematic and core equity categories showing that core equities have continued to increase as a percentage of the total assets fixed income. And geographically, the bottom left, we've had a slight increase on a relative basis by -- or with the U.K. and North America at the expense of the EMEA region. The bottom right shows that, once again, the relative revenue from BNP Paribas, one of our largest distribution partners has continued to fall, which is an objective for us in order to diversify the business. So that's nice progress. And you could see a bit more detail about the breakdown of our funds by different strategy on the top right. Next slide, please. So the flows for the 12-month period as shown in the usual Impax format on this slide. So the one that stands out, of course, is the one right in the middle, the top, which is the outflows over GBP 3 billion from BNP Paribas Asset Management. These are really dominated by central gatekeeping decisions initially to allocate client money away from equities into money market and fixed income funds. We have seen towards the end of our period and into the new financial year that those allocations out of equities that Impax managed funds have slowed. So that situation is improving. This is a similar, but smaller situation with St. James's Place on the left-hand side. That's one of our largest U.K. clients and then also flows from out of funds in the rest of Europe and North America. But broadly speaking, the outflow situation has eased, albeit we did announce a few weeks ago that some of our St. James's Place money, about 13% of the total assets would be leaving in November, which is in addition to those outflows, that's just less than GBP 800 million. So that's part of the new financial year, not shown here, but really very much a one-off and our relationship with St. James's Place remains very strong. Next slide. So I just want to now touch on the progress against Impax's strategic priorities. So starting with our listed equity plan, which is to grow organically. So here, we've been making investments into our team and improving the process and the structure incrementally. We've got quite a large 40-plus investment team in listed equities around the world. So plenty of firepower. And as the team has grown, then we've been making sure that everything is working optimally. We've also been launching some new products, as shown here, so another thematic product, which we're calling social leaders, which is a tilt towards health care and financials, a U.S. version of our very well established and successful leader strategy and 2 additional strategies: one, expanding our Asian coverage to emerging markets and an IFA, i.e. non-U.S. product for U.S. investors. Next slide, please. Secondly, in fixed income. So you've heard our presentations before, you'll have heard over the last 15, 18 months or so that we've been investing further in our fixed income capabilities from a relatively small base of U.S. management. So 3 things that we've been doing there. Firstly, expanding our team, our research team, which has been largely in the U.S. Secondly, appointing a very experienced section or division head, which is the first post or first position to this post -- first person this post rather. And thirdly, making a couple of acquisitions. So the first of those is now closed with assets under management of GBP 0.3 billion included in this data. That's so-called Epsilon Corporate Credit, Global High Yield and Emerging Market Corporate debt based in Denmark. And the second one is shown there, Sky Harbor which is actually European assets of a U.S. company called Sky Harbor, which is breaking into 2 parts. We're buying half of it and that transaction we announced in the summer and that should close around the end of the calendar year bringing in about GBP 1.3 billion of additional assets. So those assets are not shown in our AUM here. So it will be an addition to GBP 37.2 billion. So this investment team, you can see those expanded from 14 and will be 20 by the time the Sky Harbor acquisition closes. Thank you. Next slide. Private equity. We've also made good progress this financial year. So I think this is pretty self explanatory, but our third fund investing in renewable energy developers and construction opportunities has continued to make strong exits and is on course for further exits for the next 12-month period. Our fourth fund had its final close in January this year with the largest fund to date and is now nicely invested, and we are thinking about how to expand this area, for example, a fifth fund, which we're not ready to announce yet, but that would be a logical follow-on we're also open to other team and possibly boutiques joining us in private markets. Next slide, please. In the distribution area, I think we're very proud of the fact that we've now had a 2-plus decades of global distribution with, as I mentioned, offices in Asia and the U.S. We've made quite significant strides forward in the last 12 months, including opening office in Denmark, appointing representatives to cover Germany and with Sky Harbor, Switzerland and then distribution partners in the South of Europe and Middle East and Latin America as well. So the number of awards there, I think, has continued to expand. Examples of ones we've won recently, including a third Queens Award previously for enterprise and we've been winning awards in multiple countries. Next slide, please. And then the focus, of course, is on building an efficient and scalable model. So with more than 300 staff and over 90 individual funds and accounts that we're running, then there is very much need for top quality infrastructure risk and compliance functions, which we've had in place but have been further strengthened and expanded over the last 12 months. And we're also paying very close attention to our culture and employee engagement. So employee engagement score from the annual survey was slightly down on the previous year, but remains a top performer relative to the benchmark that our consultants use. And we're also in the context of a slightly expanding head count, so making very good progress in career development of women, minorities and just ensuring that we've got a fully diverse culture and community, which I think benefits the intellectual process and the investment -- the quality of the investment work as well. Over to Karen.

And thank you, and good afternoon, everybody. I hope you can hear me okay. So today, I'll take you through some of those numbers that Ian had mentioned at the start, but try and get through quickly in that we're announcing today, hopefully, there should be no surprises in here, a set of very solid numbers against a well established -- in line with a well-established consensus. And that was in a year, as Ian has said, challenging in terms of net flows, but one in which we've been able to drive business forward and along its strategic priorities. So looking there at the numbers, just to walk through the headlines that we have here. It was an adjusted operating profit of GBP 52.7 million, the PBT slightly above that and the adjusted earnings per share at 32.2p. Now all 3 of those headline measures are lower than they had been in the previous year. And the reason for that really was despite a flat AUM and revenue has fallen by just under 5% from GBP 178 million down to that GBP 170 million. We'll get into that in more detail. But offsetting that was very strong focus on the efficiency and cost control across the listed equity business, in particular, that has seen costs reduced by GBP 3 million and the net result of that is a solid margin still remaining at 31% above the 30% place that we like to be. And then lastly, announcing a final dividend of 22.9p, taking the full year dividend to 27.6p, the same as last year, well covered and supported by strength in the balance sheet. On the next slide, we just look at revenue in a little more detail. So I could sort of put the headline summary that, that AUM stayed flat, but the average AUM year-on-year or sort of that was less in this year, and that was the reason for the shortfall. But I've just put a bit more color around that because there are many moving parts of the revenue picture across that book of GBP 37 billion. But I'll try and summarize 3 key points, if I can. So the first one actually is looking at the impact of activity in the prior financial year that we carried into this year, and that in total impacted our revenue by GBP 8.7 million. So in some ways, in explaining a walk across actually that the activity of the FY '24 actually was net neutral. But the second key point, when we look at the activity in FY '24 was the much talked about net outflow that we had of GBP 5 billion -- over GBP 5 billion that, that did have a significant impact on revenue year-on-year, reducing that by GBP 12 million. But that was more than offset by the less talked about improvement that we had in the overall absolute performance of the book and markets and on top of that, as Ian mentioned that we had a record close on our NEF IV fund, and that resulted in a further benefit to the tune of GBP 1.5 million in catch-up fees and then the overall movement of the margin has sort of pegged things back a little there. But I would then just to follow through on the margin and looking at the graph on the right-hand side, is that whilst you can see that nearly a basis points drop in the average fee margin, that is not raising any alarm or I don't want to cause any alarm with that. Already the run rate for the book at the end of September was climbing again up to 44.8%. And this is comfortably operating within the corridor of plus or minus 1 basis points around the 45%, and the guidance that I give this year again remains the same that we expect just the margin to drift slowly over down over time, and that will include the fixed income over the short term. Earlier on the call, a key challenge of these calls and these moments in the years to try and give guidance in terms of where we think the revenue picture for the business will go, and that's just incredibly difficult, just now in terms of whilst we're seeing an improving picture in net flow, there's still a lot of uncertainty. So I'm really looking at I guess you could say playing it safe to a degree looking at the annualized run rate that we're coming out of the year-end with at GBP 166.5 million. We're very hopeful to close the Sky Harbor deal over the course of the next number of weeks. So that would -- a run rate revenue that we would expect to be at about just over GBP 170 million. I see that as a neutral position. It assumes that markets don't grow. It assumes that flows are neutral. And I get that's sort of the starting position that the most sensible guidance that I can give and that as the year unfolds and we see how flows and markets move that we will be adjusting that position up or down, and the -- but the one thing I will say is that the revenue base remains very, very well diversified both through the list of 90 clients, over a number of -- with their global distribution in place. And then we have looking to add fixed income, which sort of gives a further diversification and further opportunity for the revenue base. Looking then on the next slide, if I can, at costs. So overall, the costs for the year reduced by GBP 2.9 million. Again, looking at the chart at the top, there was a small cost increase of GBP 1.5 million, largely into our fixed income business. But underlying that, what we had was a significant effort on driving efficiencies into the listed equity business that we have built and they are offsetting inflationary pressure that we have in the business. So we can prove that we can manage the cost of that listed equity business effectively. And then you see the benefit, the small cost increase was offset by a benefit, a cost reduction, variable staff cost, which is the bonus, and that is applying our policy, our long-standing policy of paying up to 45% of pre-bonus profits as the bonus pool. And this year, you can see in the second bullet that we've applied a percentage of 40%, not far off the 40.5% and that overall reduction comes from applying the 40% to a reduced pre-bonus pool. Again, looking to the right-hand side, 70% of the cost base of this business is people related. So looking at head count is a very key feature for us, you can see that 15 heads were added from 300 up to 315, of which 8 were into our fixed income business, the rest were really just filling out vacancies. And the last data set there at the bottom, just drawing your attention to GBP 82 million, that is the lion's share of our cost base. But I also wanted to draw attention to the non-staff cost base increased by a very small percentage, and that is we are keeping a lid on cost growth in the business. In terms of guidance that we see on that, we will continue to focus on our efficiency, but again, I draw attention to run rates of about GBP 118 million and added to that will be the cost base that will come alongside the acquisition of Sky Harbor and guiding that I expect the outcome for costs next year to be mid to low 120s. And then bringing that together on the next slide, really just looking at the operational gearing that's in the business. This overall shows the operating margin at that very pleasing, 31%. But for me, what I think is even more pleasing is this opportunity that we now have to really focus on the efficiency of the model that we've been building and the cost that we've added over the last number of years. And what that's allowing us to do is actually to build in even more operational gearing into the business, adding confidence that with the expected return to attraction for active managers and flows to return that we expect to be moving towards that mid to high 30s as the operating gearing base, and that's certainly the goal that we're working to. Moving on then to look at the balance sheet in just some more detail is the cash generation of the business was strong this year, GBP 49 million. That was up from about GBP 37 million last year, as we focused actually on cash and fee collections. And then the uses of the cash, similar as we've seen in terms of the dividend that was paid last year and that would be at the same levels going into next year. We continue to acquire our own shares, small feeding into some of the new strategies that Ian had mentioned, taking the overall sort of cash on the balance sheet to a very healthy GBP 90.8 million. With that strong cash generation, we have been able to maintain the dividend at 27.6p with a payout of 87%. And I should remind you at the half year, we announced an adjustment to our dividend policy that previously had been to pay out between 55% to 80%. We effect removed that top end cap of 80% to say that the policy will be in normal circumstances to pay out more, at least 55%. And that enabled us to sort of manage through a cycle and be able to grow it and maintain, if not grow the dividend through a challenging earning period given the strength of the balance sheet, and that's what you've seen us being able to do in announcing that dividend today. To move on then to the balance sheet -- further balance sheet is to say very little change here. I'm pleased to say we maintain a strong capital surplus. The balance sheet still remains in a very strong position, and we have no debt in the business. And also to say that there is no change in our -- how we're thinking about capital in our capital allocation priorities, which lead with maintaining a healthy capital buffer for the business. We then look to -- we will continue to buy share buybacks to offset -- to put into our EBT to meet share awards and we will then balance that off with dividends balancing as well, very much how we think about the growth opportunities that this business has and the spare cash that we do have in the business that we'll seek to deploy that to invest further into the business and also to seek out these acquisitions of which this year, we have announced Absalon and hopefully, for Sky to follow in short order. So before I just hand back to Ian, I can look back on a -- actually, when you step back at these points in the year, it's been a challenging 3 years now for active managers. But I can look back over the last 12 months and feel that Impax were emerging in very good shape. We've maintained to strengthen the balance sheet. We have built our listed equity business, and we're now adding fixed income to that and being able to focus on the efficiency. So for me, what that's doing is building -- we've built a model puts us on a strong fitting where we can manage through I think, a number of scenarios that may face -- we may face as we move into sort of the uncertainty over the short term that we still see, but hopefully come through in very short order. And then it sets us up in the long term, I would say, to be even better placed than I could have said this time last year in terms of being able to take advantage of the mean reversion and the return to positive flows for the business. And with that, I will hand back to Ian.

So just a couple of slides to finish. Firstly, the outlook. So yes, I think since November the 6, the world has been an uncertain place. But if you look through the early announcements from the Trump administration and Mr. Trump himself, then I think the expectation with the central scenario is that the economic situation, particularly for U.S. companies will be positive over the next 12-plus months. And it's quite likely that, if you like, the U.S. industrials and innovative businesses, particularly in the mid-cap area will do well in terms of earnings and investment sentiment should remain strong. Fixed income market is also likely to be attractive. So provided asset allocation and security selection is good, which is, I think, 2 of our strengths then there's no reason why our investment portfolios couldn't perform well in absolute terms. And as we've been talking about this mean reversion should lead to some relative outperformance as well. We're not obviously guiding as to when that will happen, but it is long overdue given the de-rating that's been experienced. It's also worth noting and just reemphasizing the fact that Impax's approach is to look at quality companies focused on markets that are in transition as a result of technology change and consumer sentiments evolution. And therefore, we're not an ESG investor or an Impax investor. We're not at risk of any of the sort of anti-woke policies coming out of Trump administration. In fact, to the contrary, I think we are likely to benefit from an emphasizing of both common sense and back to basics and avoiding confusing language. So in the context of Impax's strategy then, as you've heard, we are positioning the business for further development over the medium to long term, and that means adding another suite of strong investment capabilities, adjusting and expanding our distribution and focusing very much on increasing the financial leverage in the business as we scale revenues in the context of strong control of costs. So just finally with the summary slide, and then I'll hand back to Andy. So I think the positioning of the firm continues to be excellent in the context of specialized boutique asset managers, who've got to scale, having a very rosy future provider that they've got the right strategy. We think that our investment philosophy does give us a route to alpha generation over the medium to long term, and we've got many years of experience now in operating efficiency and cost control. So we have had more than 2 years of really challenging markets, and it's time for some mean reversion. So we're looking forward to that. And not, of course, clear exactly when it's going to happen. But I think with -- as political uncertainty drops away, then we are expecting a very positive 2025. So thank you for listening, and back to Andy and hopefully some questions.

Yes. Don't worry, Lots of questions. Thank you both for a very clear presentation. Let's go straight in. Right, maybe continue the Donald Trump theme, Ian. It's a question submitted earlier in the presentation where you were taking a positive stance. And I think you have expanded on that in the outlook that you've just given. And the question was going to be, is your optimism based on a more macro top-down view, good for the American economy, good for American corporates versus the fact that you have a number of investing companies that might be well placed in sectors that would benefit such as infrastructure. I suppose the answer may well be a combination of those 2.

Yes, You're showing form as usual, Andy, and know what the answers are. Yes, look, that's absolutely right. I think we are -- we don't have any special insights as to, of course, as to what the top-down configuration will be of Trump era policy, but common sense would suggest that President Trump in the second term will not act to erode the wealth of this core base. And so it's highly likely in our view that inflation will remain under control. Interest rates will remain moderate and will drop. And therefore, it's not really foreseeable in our central scenario that tariffs for trade will be punitive all over the place. There may be some examples made of what could happen if other parties around the world don't negotiate in President Trump's direction. But -- and also, I think immigration needs to be carefully managed. Otherwise, labor cost could go up, which, of course, will bring in inflation. So that's the top-down view and then the bottom up stock selection view, of course, remains the usual challenges is what we get paid for. And our teams are beavering away working out exactly what the optimal selection of securities and portfolio construction is.

Great. And another bigger theme that's been a headwind for asset -- active asset managers is in, of course, the conditions shifting perhaps away from passives that's had a very strong run. And the question we have is, is this part of the discussions that you have with current and prospective clients in that they might be seeing active management as a neglected opportunity or perhaps even seeing it as a risk reduction measure against the concentration of exposure in the U.S. market to the Magnificent 7?

Yes. So I think the Magnificent 7 mega-cap tech phenomenon has caused major problems for active management over the last 18 to 24 months as those 5 to 7 stocks have really torn away in share price terms and that's been very difficult for active managers to maintain market weightings or above market weightings of those stocks from a risk management perspective. So this is an extreme version of what we saw in 2007 just before the financial crash. I think we're unlikely to have a similar financial crash for reasons that are well rehearsed. But at the same time, it's not really foreseeable that the mega-cap tech stocks will continue to expand their multiples without some kind of mean reversion on a relative basis. So that's what we've been referring to throughout this conversation. Yes, clients are generally allocating to managers like Impax because they believe in our investment edge and our investment thesis on the one hand, plus our skill in generating alpha within that thesis. And so given that we're positioned largely in the institutional market, we do have lots of conversations with clients about how that's going, how our risk parameters are developing, and those clients are also examining what the weighting is of Impax versus other managers. The net result of which is that we've got a very stable client base because the outflows that we've been experiencing are being overwhelmingly from the noninstitutional more sort of wholesale markets, which are either driven by 1 or 2 gatekeepers allocating to money market funds, as I mentioned, or retail investors who are perhaps fearful of derating turning into long-term sort of structural weakness, which is definitely not the case.

I do have some questions for Karen later on, so I hope she's not feeling neglected. But this question does seem to have your name on it, Ian. It's regarding fixed interest. And the question is, how does the growing fixed interest offerings sit with Impax's founding investment thesis, which you must know a great deal about. Is this expansion and diversification driven by a need to meet the needs of your distribution partners perhaps?

Well, look, I think it's a sign of strength and progress in this idea of the transition to a more sustainable economy that the companies that are operating within it. For example, companies selling heat pumps or wind turbines or water purification equipment are now large enough and robust enough to be able to attract debt capital, which would then reduce their overall cost of capital. So the strength of our investment idea is leading naturally to more opportunities in fixed income. So that's one probably the main reason why this is now emerging as an opportunity and we've been building this since our Pax acquisition in 2018. It does mean that to build a more fully diversified and properly sort of risk-managed fixed income portfolio we are investing in debt securities from perhaps a wider range of companies than, say, our thematic equity products. So that does include companies that are in more traditional sectors. But those companies need to manage their risk around certainly climate exposure or technology disruption and the risk of stranded assets from new industries. So that risk analysis is a key part of the fixed income investment process. And our clients are in that area, of course, cognizant of our edge and our views of markets and are backing us to run fixed income money in a successful fashion, which I'm very pleased to say we continue to do.

And interesting question here. You've expressed a preference to grow in fixed interest. Does that mean you would decline an acquisition opportunity in the equity space at the same time you were considering an opportunity to build the fixed income exposure even if the equity deal was particularly attractive in the context of your equities business?

Yes. As you said, that is an interesting question. So the starting point broadly speaking is that we are not actively seeking acquisitions in listed equities for 2 reasons. One is that we would expect that there would be significant overlap between investment products that are run by others on the one hand and our own investment product. So there will be some potential for client confusion. And secondly, that any team that wanted to join Impax would probably have skills that we already had. So if we were to bring in an equity manager or boutique, we would have to navigate some quite significant overlaps. So relatively speaking, fixed income is a much more attractive area because given our relatively small base, the probability of overlap is much lower.

Now, Karen, moving on from acquisitions, we have a question of what financial metrics do you consider when you are assessing a fair price to pay for an outside target?

So I -- so we have been busy, as you can see over the years. So I think we are using the fairly traditional multiples, et cetera, is sort of where we would start. But there's also tests that there's organizations just eye on buybacks, especially when we look at where the share price is. So they may make sure the deals that we're doing are sort of accretive to shareholder value versus, for example, doing a buyback. So we do sort of consider that. But generally, if I can look at the specifics of the 2 data sets that we have done, it really has been an element of driving out for the strategy, but ensuring that we're growing that fixed income business by bringing revenue in at the same time as that we're adding cost into the base. So for us, it's about accretive acquisitions.

Thank you. And whilst we have you here, question here. A viewer says, thank you very much for your revenue bridge, and he apologizes for his no doubt stupidities. But could you give a little more explanation about the trail hangover as he describes it from 2020 through feeding through into '24. Is that just delays in settlements of divestiture or..

No. I think the biggest factor, when you look back over -- we say that the market in active management has been challenged in terms of outflow for the last 3 years. I think for Impax that step down from inflow to net outflow happened in the second half of 2023. So what you're seeing is the annualization of a 6 months impact in FY '23 that then further 6 months happen as we take that into 2024. That's the science, if you like, behind that calculation.

Yes, Very clear. A couple of questions on distribution, I suppose. Given your strong proposition, why isn't Impax running mandates for some of the other multi-manager investment trusts of scale like Alliance, Witan or RIT Capital.

Gosh, I don't know the specific answer to that. I mean, frankly, we are knocking the doors of all sorts of managers around the world. I have to say that we are, I think, best known and have the strongest profile in consultant advised institutional markets. So where there's a consultant rating on our strategies, that appeals to pension funds in particular. So that's probably the biggest and actually, frankly, the most scalable segment of our client base. The U.K. multi-managers are very good, but they tend to be quite an unusual or esoteric channel. And so we are not particularly targeting them. Having said that though, I think this St. James's Place mandate that we run is not dissimilar in the sense that St. James's Place does have a very high bar for manager quality, which we've been able to satisfy for the last 7 years. And so I think that's a good example of where we have won and maintained a very significant relationship. But if those 2 managers, in particular, would like to talk to us then we are always happy to chat.

All right. We shall pass that on. Following on from St. James's Place, let's say, look, we have a question here. Do you think there are any other material mandates in the U.K. that might be at risk of a similar outcome as that's seen with a small part of St. James's Place portfolio because of U.K. consumer duty customer value issues.

Well, just to back up then the St. James's Place business that we have -- we had at the start of this financial -- new financial year, so first of October 2024 was in 2 mandates, small one, about 13% was in a multi-manager mandate. And the much larger one, 87% was in their sustainable and responsible equity branded bucket. So it's a small one that we've lost, and that was not due to consumer duty. In fact, I think we are top of the class in terms of St. James's Place's managers with regard to consumer duty, that was rather a decision by the managers that St. James's Place to move to a slightly different risk profile in their equity managers. So that was reason for that mandate going. We generally don't have much overlap with consumer duty in the sense that our products in the U.K. with the exception of our investment trust and not really directly available or marketed to the general public. So they are generally intermediated by private wealth managers or other platforms or marketed to institutional investors. So in that sense, we don't see the consumer duty as a headwind in any way. And in fact, as I said, the ranking from St. James's Place in the context of consumer duty for Impax was very positive.

And a couple of questions on staffing, maybe for you, Karen. You've clearly made as a group some good hires during the course of this year. Has anybody at the senior management level left the firm? And then a separate but related question is in terms of the businesses that you have been or in the process of acquiring, do you typically retain all of the staff members that you take on?

Ian, do you want me to take that?

Well, let me take that, and then you can add if there's anything else. So no, we haven't had any senior managers leave the firm. In fact, we have a very low staff turnover. And -- so yes, I think that's just a key attribute for the company. In terms of the acquisitions, then when we bought the Pax business in 2018, we picked up -- sorry, we picked up 50 staff and with, I think, one exception of a relatively junior person, everybody stayed, and we've now expanded that team to over 100. And then the Absalon acquisition was just 4 people with 1 joining at the end of this year. They've all stayed. And the Sky Harbor team will join us shortly, but we're very optimistic that they will be staying as well. So it's a particular strength of Impax that we've got a very successful and healthy culture, pay lots of attention to how we treat staff, career development in a strongly collegial culture and sort of fair and equitable way of distributing the financial compensation as well. So very optimistic about that in particular.

Good to see retention. And final question, again, a slightly bigger picture and recognizing very much that Impax's raise on debtor is sustainable investing. We just have a question on COP 29 and whether you would agree consensus after the event seems to be that major plans such as phasing out fossil fuels seems to have been rather kicked down the road again. Would you consider that a fair interpretation?

Yes, probably. Yes, there was an announcement about the $300 billion of climate finance towards the end -- or at the end of the conference, but there was a real shortage of detail there. So I think, yes, we'd agree that the conference itself was underwhelming. And even before the conference started, I think attention was refocusing on the COP 30 conference, which will take place in Brazil around this time next year. Having said that though, we certainly don't believe that our investment opportunities are significantly influenced by the conference of the parties or COP process. And that's because they don't lead to policy changes that directly impact businesses. They're more sort of high level and longer term in context. And meanwhile, the falling cost of technology and regulatory support around clean energy, for example, the U.K.'s Clean Power by 2030 Plan are much more important in the assessment of investment opportunities.

Great. Well, can I thank our audience for their attention and a wide range of questions. One or two of them that we haven't covered are relating to the value of Impax's business or Impax shares. So I would point out that in terms of that analysis and forward-looking materials, there was a detailed note written by equity development today, which is well worth reading. The audience will get feedback forms, which the company is always very keen to see filled out and hear what you think about the business and the presentation. And of course, last but not least, on a very busy day for the company, thank you very much to Ian and Karen for coming back and making the time to investors. It is much appreciated. We look forward to you again, hopefully, in 6 months' time, and wish you good fortune until then.

Yes, thank you for joining, and thank you for hosting, Andy. Much appreciated.