FY25 was disappointing as AUM fell 30% to £26.1bn, heavily impacted by the loss of £6.2bn of St James’s Place mandates. Yet, Impax’s current share price seems to price in further decline. The PER is just 10.9, nearly the lowest in the sector, despite net cash of £68m (31% of market cap), no debt, and the group generating £20m PAT in a rare bad year.
The AUM fall was responsible for a y-o-y decline in key financial metrics. Revenue fell 17% to £142m; adjusted operating profit 36% to £34m (adjusted operating margin fell from 31% to 24%); PBT 43% to £28m; and basic EPS 44% to 15.9p per share.
The balance sheet remains strong. Net cash ended FY25 at £68m (-27%), but that was after outgoings of £35m on dividends, £4.4m on acquisitions and £6.9m on share-buybacks. £24m of cash was generated from operations (post-tax).
AUM has stabilised recently (flat in Q4-25) and Impax has highlighted that outflows have slowed substantially with inflows picking up. We expect that it will return to robust long-term growth. It operates in the sustainable investing space which, despite many headlines to the contrary, is a huge US$3.7trn market that is growing.
We trim our AUM forecasts as a return to net inflows is taking a little longer than expected. This moves our DCF valuation down to 380p /share (from 400p), still more than double the current share price.
