AUM surges / revenue, profit, cash and dividend jump

AUM growth in 2020 has been far above expectations. In the FY to end-Sep it was up 34% from £15.1bn to £20.2bn. And this wasn’t just because of buoyant stock markets. Average quarterly inflows jumped 149% from 0.35bn to 0.87bn. Post FY-end, Oct and Nov saw another 9.4% added to AUM leaving it at £23.4bn on 30 Nov. Equally impressive financial results for FY20 have now been delivered, with revenue and adjusted operating profits slightly ahead of our previous forecasts.

Revenue grew 19% from £73.7m to £87.5m. Adjusted operating profit grew 29% from £18.0m to £23.3m, adjusted diluted EPS 26% from 11.5p to 14.5p, while IFRS profit after tax fell 13% from £15.9m to £13.7m, primarily because of FY19 being boosted by the release of a £3.5m contingent consideration related to the Impax NH acquisition and a £3.0m FY20 mark-to-market charge on equity awards. Net cash rose 43% to a healthy £38.8m (up from £27.2m) with no debt on the balance sheet. Full-year dividends jumped by 56% over FY19 from 5.5p to 8.6p, a yield of 1.3%.

Our growth outlook for Impax remains bullish, with the shift of capital towards sustainable investing gaining even more momentum around the world. We also believe that investors are becoming more discerning about asset managers’ sustainability credentials, and Impax’s credentials are impressive.

Growth should translate into even more attractive profit levels as operational leverage kicks in, and we increase our fundamental per share valuation to 640p.