Impax Asset Management Group plc

Right. Let's go. We're very pleased to welcome everybody to the webinar today from Impacts, and the presenters are going to cover their interim results for the six months to the 31st of March. Just a few points of admin from me first. The presentation is being recorded, so if you do miss anything, you will get a chance to watch it again. We are keen to try and address as many questions that will come in after the presentation, so you will see the Zoom Submit Question button on your screen. Put any questions you have in there, and after the formal presentation, Ian and Karen will try and go through that. And also, the presentation deck that they are talking to is in slightly different form, but is also on the impacts.am website. with quite a lot of other very useful material, so we'd commend that to you. We're delighted to be joined again by CFO Karen Coburn and the CEO and founder, Ian Simp, and I shall now pass over to Ian to start proceedings.

Okay. Hello, everybody. Welcome to the interim results for Impact Asset Management Group, BLC, for the six months to March, 31st of March, 2026. So if you've been to or attended one of these events before, you'll remember the agenda, which is basically an overview, highlights and business update. I think Talon will give the financial update before I round off. There won't be any presentation appendices. So I think just in summary, fair to say that the world of asset management is changing and changing quite rapidly. There is definitely a move to very large firms with a trillion dollars or more under management at one end, but also like a splitting or bifurcation of the market in which boutiques are of increasing interest to the major asset owners of the world if those boutiques bring something that's different, that's specialist and that can offer products and services that are not easy to find elsewhere. And so in that context, Impact finds itself in a very strong position with a medium to long-term outlook because we are really the global leader in this area of what we would call the transition to a more sustainable economy. We do use the word sustainability as a shorthand, but essentially this is the idea that the world is moving inexorably towards the need for more resource efficiency, for less pollution, for smart materials and those factors and similar factors are producing opportunities to make money because frankly they're quite complicated they require detailed understanding of technology change and regulatory change and it's those areas that provide us as a specialist investment group with an opportunity to uncover hidden gems if you like both in equities and in fixed income. In addition what we can do with our client relationships is expand beyond just the pursuit of great risk-adjusted returns and offer them information around where policy is heading, where difficult and complex scientific debates like extreme weather projections are going, and also compare and contrast for them what's going on in different parts of the world in these topics. So this is where, in fact, asset management sits in the global market. asset management universe, which I hope you've now understood already, is a very strong residence or has a very strong residence with where the whole of the asset management sector is going. The additional points on this slide is that we've very deliberately set up our business to be scalable. So we focused on areas of the market that have a very high degree of liquidity. We positioned our products to be able to generate outperformance relative to global benchmarks over the medium to long term in those areas. And we've set up our business model to be scalable, should underpin the delivery of growth over that timeframe. So moving to the period that we're just reporting, clearly as a public issue, company, then we have various obligations to report data and give outlooks. So, of course, there is a bit of a constraint around the rest of this presentation. But essentially just summarizing what our key messages are as set out on this page. We do think that the fundamentals around this transition to a more sustainable economy are strengthening. That's illustrated quite nicely with the concerns around energy security, particularly heightened by the Iran situation, which in May 2026 is a major topic. There's also real interest and concern around where where the patterns are going, the opportunity to cope with new types of threats and business growth in the food sector, water supply, et cetera, et cetera. Very pleased to be able to report that our investment performance has turned a corner. So at the end of April this year, for a calendar year to date perspective, 70% of our asset management had beaten their benchmarks. which is quite significant improvement on what's happened in the last two or three years when frankly the AI dominated revolutions really skewed markets and I'm sure you all appreciate active managers like ourselves have struggled to keep up with those generic benchmarks. Notwithstanding the improved investment performance then the flows in and out of our funds and products have yet to turn positive. This is not unusual in the context of a period in which investment performance is moving from relatively poor compared to generic benchmarks to relatively good or stronger. So we can't yet forecast when the flows are going to turn around, but the lag effect, if you like, is quite common. In that context, we are focusing very much on positioning the business for the recovery. So diversifying and launching new products, building out our client partnerships, working very assiduously on cost reduction and efficiency. And of course, making sure that our clients and everyone else realize that our balance sheet remains very strong and that the largest investor group is actually management owning 18% of the business. On the next slide, Karen's going to take you through the numbers, so I think it's probably a good idea for me to move on from this, but if you want to refer to those later, please do so. Karen will cover them in a bit more detail. Next slide. This is a set of slides that have followed us for a while. You'll have seen before, so we're trying to provide continuity. So the green bar in the middle is the asset center management that we reported at the start of our the natural year, which is the 1st of October 2025. Everything to the right of that green bar to the blue bar is what's happened during the reporting period. And to the left of the green bar is the previous six months. So as you can see from comparing the heights of the bars, yellow, green, and blue, we were able to grow very slightly as to the management in the previous six months, but they've dropped in this six months. Flows on a net basis negative in both areas. both periods and then market movement in the period we're reporting was substantially lower than it was pre-September or October the 1st, 2025. Next slide. A couple of slides coming out, which look quite busy, but essentially the first of those two slides here is listed equities. How's our performance been? The next one's going to be fixed income. So this is the listed equity slide. We're looking at showing you four of our largest or the four largest strategies or funds that we run in listed equities. So water, leaders, specialists, global opportunities. So those are certainly in the case of Three of them are impact jargon, but essentially leaders and specialists are thematic funds, whereas global opportunities is best seen as a core equity fund with a moderate thematic tilt. So each of the pairs of bars, blue and orange, are in the case of blue, the performance in the calendar years to date of our funds or strategies, and in the case of orange, the benchmark. So if you take leaders, for example, in the top right, you can see in the highlighted box, which is calendar year to date, the blue bar is bigger than the orange bar, so we've been outperforming the benchmark, whereas in the previous four years we were underperforming the benchmark. That's the same story for water and specialists. So that's illustrating the point that I was making before, that we've now been able to return to investment outperformance in a significant percentage, 70% of our asset management. By contrast, global opportunities hasn't quite kept up with the benchmark. So that is the one which is behind calendar year to date. Next slide. I feel like I'm a bit of a school teacher, but I hope you'll bear with me as I try to explain these complicated slides. So anyway, this is fixed income and same format. So our four largest fixed income strategies, and it's exactly the same arrangement. But if you look at the red boxes, then you can see the calendar year to date chart. Moderate, but still measurable outperformance compared to benchmarks. And actually, in the previous four years, generally speaking, these strategies have more often than not outperformed their benchmarks, which of course means that the track record from a communication perspective when we talk to prospective investors is stronger. And although these funds under management are still relatively modest, there's quite a powerful storage depth. I'll come back to that in a moment. Next slide. The breakdown of our asset center management and revenue by various criteria are shown here. So on the left, again, blue bar is what we were reporting at the end of March this year compared to the period 12 months earlier. So I think the key points without getting lost in the detail are on the left, active thematic equities which will be that leaders specialist water and a couple of other strategies from two slides ago is still nearly three quarters of sorry two-thirds of the assets in the management and noticeably or notably then systematic equities and fixed income are larger percentages and if you add those two together with private markets I think work where We like to note or draw your attention to the fact that nearly a quarter of the asset and management are outside listed equities. The objective is to grow those. By region in the middle, not much change, but notably we have North America is over a third of our client base and the EMEA region, so outside the UK, as the majority. Revenue by product type. Probably the thing to point to there is the BNP Paribas mutual funds, which are around a quarter of our revenue, and they've been our largest external shareholder, if you like, for nearly 20 years, actually, and remain our, if you like, most important client from a revenue perspective. Next slide. So just focusing in on where we are in May 2026, I think it's just important to look at what's going on in energy markets in the AI revolution or the trends for AI in wider environmental factors. And these new snippets essentially point to what I was saying at the start, which is that energy security and clean energy issues are really very prominent at the moment and prospects for many of the companies in the space have improved quite considerably. Meanwhile, the AI stocks are not dominant in markets in the way that they've been in the last couple of years and that means that areas of the market that are not in the AI space have had an opportunity to bounce back on a relative basis. And then there's plenty of evidence that the risk around extreme weather and other environmental factors is starting to really impact on corporate decisions and investment risk about long-term prospects for earnings in some areas. Next slide. So in that context, we do believe that with our thematic tilt or our investment pieces, that we've got quite a strong position. The chart here on the left shows the breakdown of our leader strategy by subsector. So this is the definition that we've created over 20 years ago. But hopefully you can see from a qualitative perspective that, broadly speaking, these areas are – well, let me start again. So the bar charts show that there's a broad spread of exposure that this strategy offers to energy efficiency, digital infrastructure, resource efficiency, and several other groups or sectors. On the right, you can see the mapping of the energy security and AI infrastructure build out to those subsectors, illustrating that this strategy does have broad exposure to these pretty prominent themes. Next slide. So a couple of slides now just showing how the net flows broke down. Remember the number from the bar chart stack from five or six slides ago. This is the breakdown of how that's changed both by distribution channel. So again, the blue bars are the period that we've just reported on and the orange bars are 12 months previously. So anything to the left of the The line is negative, and fortunately on this chart, we don't have anything to the right of the line, which would be positive. So the outflows basically are where the bars are longest. I think the positive point from this slide is that with BNP Paribas, the outflows have been materially less negative. So not out of the woods yet, but there is a... a set of indicators, which we think that over time will lead to better results from a flows perspective from our wholesale channels, including this one. The next slide is just rounding off the channel breakdown. So the left, the distributors from the rest of the EMEA region on the right, the Asia Pacific region. Next slide. So, and then the next one, please. So our strategy is, really breaks down into six components reading across the top we are looking to organically grow our list of equities offerings and then build scale in both fixed income and private equity and then on the bottom we already have a nicely diversified global distribution network but there's still some work to do to expand and deepen those that will include in the middle on the bottom work with client partnerships and brand differentiation, which, as I was saying right at the start, is a big opportunity as many of our competitors drop away from this area given the relative underperformance of the whole space. And then, of course, we are committed to running an efficient Agile and scalable operating model. So a little bit more color on those six factors over three charts, first of which is this one. So going left in listed equities, then we are further enhancing our investment process, team structure, and launching some new products, including our first ETF product in the United States, which will probably be the first of several. In fixed income, we've now integrated the Sky Harbor and Absalon teams and client groups into a cohesive investment team with a strong connection to our sustainability center, which does provide for quite a differentiated offering for the market where that fixed income sustainability link is not very well provided for by my competitors. And then in private markets, ongoing progress with the commitment and exit of our third and all funds, and then a plan to raise additional capital. Next slide, please. Our client work continues to build, so this idea of a specialist manager in the transition to a more sustainable economy is increasingly differentiated and popular, supported by the work of our sustainability center around thought leadership. We are extending our work to build relationships with major institutional asset owners. We hired a senior executive with a very strong background in that area who joined us in January. And we are working with several new potential partners on co-developing investment solutions. And meanwhile, as I just mentioned, many of the larger branded asset managers are pulling out of the space. because they are unable to justify continuing to market the funds that have got weak historical, let's say, two, three-year track records against generic indices, even though in many cases they've also seen a turnaround in performance. And then the third slide in the series is this one. So our operating model really depends, of course, in part on our talent and with a a brand in this area, we are continuing to find that we're a very attractive target for external talent. We've also got a very high staff retention rate and a very good track record in succession planning, which has been implemented in the context of a number of senior individuals retiring in the last couple of years. And then efficiency and technology. So we have, as we've seen a reduction in the asset management. We've had a couple of rounds of reducing the number of people who work at impacts. So if you can see the footnote, we entered the period at 269 individuals, now from a peak of about 315, and there will be another 30 redundancies, most of which are already announced in the second half of our actual year. So that's underway at the moment. We've made those adjustments with a very explicit focus on not reducing our capabilities or growth potential. And as I said at the start, there is a very strong focus on efficiency and with the adoption of technology, including AI, then we do believe that we can contribute to margin preservation through that initiative as well. I'm now handing over to Karen, I think.

So, Thank you and good afternoon all. So I would like to take you through the financials in some more detail. To start with, sort of saying that for those that are following sort of guidance closely, there's no surprises relative to the recent market up that we've had. But as Ian has articulated, that challenging environment for net flows has continued. And with that backdrop, the results... summarized in revenue headwinds countered by our continued cost discipline, but supported by a strong balance sheet. So just running through the numbers very quickly, underlying operating profit for the first six months of 11.3, corresponding to 7.4. The reduced AUM is the revenue decline to 58 from half one in 25. And with costs continuing to reduce to 47.5 million, which is more than 8 million below where we were this time last year. And that's as our efficiency programs continue to deliver. And as Ian has pointed out, without compromising our capability for growth. And finally, reflecting confidence in our cash position, the board has announced an interim dividend of two pence per share. So unpacking that in a little more detail on the next slide, we'll talk about revenue. So really looking at the group revenue in half one, that would be 8.8 compared to 65.4 in the previous six months. Now, given on page six on the bar chart that Ian had walked across, there was 3.8 million of net outflow, and that has resulted in the largest impact, really, negative impact on that profit or the revenue we have there. The improving performance, that was... have articulated, that's helping uplifting the revenue line by that 2.8, and then it's pegged back just slightly by just some timing on our private equity to come in in the second half. To the right-hand side, you can see the average fee margin, a very key measure for the business, has held up well over a 12-month period, slightly below where we were at half 2, and that was really just because there was some paper Hi, Karen, it's Andy here.

Your microphone or your audio has gone a little bit in and out in the last minute or so.

I maybe get – oh, no, hang on. Is that – can you hear me now?

That sounds better. That sounds better.

Okay. Well, maybe – sorry, I just nudged it slightly.

Yeah, that sounds good.

Will I pick up again there just from the fee margin?

Absolutely.

Okay. Yeah, so I was just saying that the fee margin had held up well at that 47 – above 47 basis points, but was pegged back slightly from the September year-end position, which had benefited from just favourable mix. Can I check you can still hear me? Yes? Okay, thank you. Okay, so now what I was saying was that we normally do talk about the run rates at the end of this period, but we have not included them just now for really two reasons in that there was sort of a bit of distortion, perhaps in the run rates for the end of March. Two reasons for that. One was really that the 31st of March, that last week of March, markets just really dipped and then recovered very quickly when we went into April. So it will be some hope and savings. But most importantly for me is that it at some rate would have included the impact, the IEM PLC, which we know that we've had that tender. It has been announced in the market that just – about 740 million has tendered. Now, we are working very hard in the background to redirect as much of that as we possibly can into the existing strategy, the same strategy that we have for that fund. So the run rates in themselves, it would just be a bit misleading. But in terms of where we think the revenue will outturn for the year, taking account of IEM, that is still factored into the range that we quoted to the market back in April. of revenue outturned for the full year of between 109 and 113 million. So we remain committed to that. And across the course of the year, to remain in the region 47 to 48 basis points. And in terms of 2027, we normally try and give some guidance. So whilst we see the performance improving, whilst we do see a bit of stabilization in the level of net outflow, we're in net outflow all the same, and we were being incredibly cautious about calling when we see that net outflow turn into positive flow. So we're going to just update on that as the year progresses when we see the market. Then looking in, if I can move on to the next slide, in terms of looking at an area of cost where we continue to make meaningful progress with the cost continuing to be 47.5 million. And looking back across that bridge that we have there, So we're active across all areas of the cost base. We were able to remove about just over a million pounds from really being very disciplined, looking at fund expenses, fund subsidies, etc. But the largest part of the cost saving, both in fixed and variable, come from staff costs. And that correlates from the numbers Ian mentioned earlier of the headcount reducing 9%, a further 9% from 296 to the end of the period at 269. That helps the run, that sort of drives a very favourable improvement in the run rate on the cost. And we will see further savings in half two, as Ian has mentioned. We had the 30 headcounts that we will reduce, as Ian says, has already been announced, and we'll leave the business across the second half of the year. Combined with the change made last year, it's over 70 that have been reduced. from the business, so that is quite significant and we are very disciplined in our approach to costs. We will see that full program complete over the course of the 12 months and we retain guidance for 2026, we're saying in the region of about 95 million, just below 95 million is where we think that will outturn. In terms of bringing that together in the operating margin of 19.2, just slightly down, But given the impact of the IEM PLC, we will see a squeeze on that operating margin in the second half. And for the future, it will be in the mid-term. But a key message that I do have to give, because we have been so disciplined in cost-based, we're seeing our ability to grow. But that cost-based is so well-positioned for margin recovery when revenue stabilizes. If I could then move on to the, just talk very quickly about the balance sheet. So the cash finished at the low point, at the half year. Because looking back over the last six months, in terms of the cash decrease from operations, that's when we paid the 12-month bonus from the prior year. The dividends, we paid 2% in March. And then, of course, we finished our first-ever share buyback in December of £10 million, with the bulk of that, the majority of that, taking place in the first half of our financial year. Whilst that is our lowest point for the year, we do expect that to grow over the course of the next six months back closer towards that opening position. So with that strong cash position and forecast, and just to remind that this time last year we signalled that we to a more sustainable level. And with that in mind, we have, and taking into account the lower earnings, we are announcing two pence interim dividend for the period. Now, that remains in line with our policy of 55% of adjusted profit after tax. And really what that has done is really put the dividend on a footing that is fully covered that it's a through-cycle position and, of course, with room to increase as earnings recover. And then on the last page, that we continue to manage a very strong debt-free balance sheet with shareholder equity of £106 million, sitting alongside that unchanged capital requirement, maintaining that healthy surplus. In terms of seed, currently sat at 16.8 million. That's sort of a big part of our balance sheet and how we invest for the future. But as part of our cost efficiency program, we have been able to identify just some low potential funds that we had seeded in the past. So we expect to see those merged, closed for the coming months with that seed returning, so just improving the quality of the capital. In terms of our capital allocation priorities, they really haven't changed. And in short, you know, the key message for me is we have a strong debt-free balance sheet to keep managing that to continue to invest in the strategy, the growth and diversification of the business. But I think most importantly, enable us to act from a position of strength in challenging times. With that, I'll hand back to Ian.

So just one slide to close. So I think just recapping on what I said at the start, there's a massive opportunity for impacts in this bifurcated asset management market. There's very little in the way of institutional quality, sustainability-focused asset management service, and therefore we've got a real calling card with current clients and prospects all over the globe. The business is still skewed in terms of assets and the management and revenue to listed equities and we have been trying to diversify that over the last five years with the two fixed income acquisitions and further investment in private markets and still some work to be done to diversify the business. The switch from a very narrow equity market to a much broader market has been very helpful for us, hence the strongly improved performance calendar year to date. That, however, in terms of four months is not enough to persuade clients that the areas that we're investing in have recovered strongly and so a lot of prospective clients still sitting on the sidelines and therefore we still have a net outflows position. The exit tender from IEM PLC, as Karen's mentioned, will have kicked in in the last few days. So that will be an initial exit of about 740 million pounds to be offset over the next few months with hopefully a material switch of that money coming back into our USIT vehicle. In the medium term, we are really doubling down on our marketing and outreach, more client partnership type structures. and new products. And then of course, as we've been saying, we've got a very ruthless focus with the board on both cost management, but also talent retention and are very pleased to continue to report a strong balance sheet in financial health. So I'm going to pause there and Karen and I are very happy to take any questions.

Great. Thank you very much. And just keep an eye on that microphone, Karen. It's going to be a little bit in and out. Lots of questions submitted, so let's go straight in. Ian, you mentioned the launch of your first ETF. How exciting do you see the growth potential for ETFs in the American market?

Well, the first objective with this ETF project is defence actually or defence as Americans would say which is that the mutual fund market in the US has some quite specific tax disadvantages. I won't go into the details and therefore there is an opportunity to ensure that our mutual fund clients stay with us by offering them a more tax efficient ETF. So the first ETF we've launched is actually a conversion of one of the sub-funds within the mutual fund range into an ETF, and there's another nine or ten of those that could potentially be switched. So that's the focus at the moment. Once we've done that, in fact, we're starting to see that to some small degree already, then the package of those funds will be much more appealing to new investors. So that's the project at the moment that will keep us busy for the next two to three years or so in that area.

We had a lot of talk about the success you've had in using technology and automation to cut costs. Can you give the audience some specific examples of how you've been able to save money there?

Got me?

Karen, did you want to?

Yeah, OK. So I think we're not, at this stage, AI has not had the AI revolution in the business yet. That's removing costs, but we're very active in our AI program. Really, it has been a function, really, over small technology packages, new payroll systems, a new boarding system for a client group. So, it really has been that. But the business has a very, from somebody fairly new to the business, a very neat operating model. It has looked after its data incredibly well. And I'm actually quite excited about the opportunity that we will have from AI yet to be explored.

And just to add to that, we do have across the investment teams in listed securities a number of technology platforms that are not only making the research and training processes smoother, but also reducing operational risk. And then in the sales and marketing area, there's a new package around the sales lead monitoring, which is proving to be very, very helpful.

Mm-hmm. And a follow-on question, how can you be so confident that the headcount reductions past and ongoing will not impact the core of your operation?

Well, I think in two senses. The first of those is just around the number of clients that we've got. So we've dropped down to that 22 billion or so.

Sorry.

£22 billion or so, then we've lost a number of clients. So therefore, there's a need for fewer people who are doing client-facing work. And then in the other area, we've actually reduced the number of investment strategies and made some adjustments in our teams to make the whole process more efficient. So that is, it's taken us about 15 months to both plan for that and execute. So we've definitely been very thoughtful about each individual step. And yes, I mean, time will tell how quickly we'll be adding back as the recovery kicks in. But yeah, we've close oversight by the board, then we're very happy with the efficiency and effectiveness of that adjustment.

Okay, and perhaps a later question. What level of AUM capacity do you see impacts currently positioned for?

Well, if you look mathematically at the the liquidity of the underlying equity strategies that we are running, then it's well north of £50 billion compared to just shy of £20 billion today. In the fixed income strategies, at the moment, we have a relatively small investment grade offering. But that, of course, has enormous capacity. In high yield, it's probably more like £10 to £15 billion. And then in private markets, we're in the sort of £1 to £5 billion. So if you add all that together, then comfortably north of, say, £70, £80 billion and potentially over £100 billion in theory.

Yeah, it sounds consistent. Question of drivers on sustainability reporting. Sustainability has been driven by voluntary commitments and actions in the past. In the last few years, there's been a flurry of legislation on sustainability reporting and consequently compliance is now one of the main drivers of progress. And it is levelling up reporting and performance on sustainability. It's quite a long question. Could you please comment on how you see this new trend, a focus on compliance and less interest in voluntary commitments, impacting sustainability?

active asset management and indeed your business model okay well look i think it's really important to stress that we are a organization that's trying to generate active risk adjusted returns financial returns for clients rather than fulfill any sort of ethical or political objectives around saving the planet or anything along those lines so in that context because of our thematic tilt towards the sort of sectors that I was referring to earlier, then our efforts are really looking at growth of new markets, the risk around how companies will behave and thrive or otherwise in those markets. And that's the core of the service. Now, I think the question implies that there's a broader approach pressure on corporates in all sorts of sectors to provide or has been pressure to provide reporting across a range of environmental and social and some degree governance elements. For example, the CSRD directive from the European Union. That reporting requirement remains in place. However, it's quite likely that with the rise of populist governments, there will be a watering down of those requirements over time or continued watering down of those requirements. So, as you can imagine, many of Impact's clients are very keen to see high-quality reporting in those areas, and we have a sustainability center of 17 people, which is really focused in part on making sure that we're fulfilling those expectations. Over time, I think the growth of the firm is going to come from being able to successfully demonstrate that we've got a great investment idea rather than in our strength or competitor advantage in reporting.

Yeah, amen to that. Back to IA, Karen, you said that a lot of the benefits are still to come on the administrative cost side. We have a question. How widespread is your team using AI as part of the investment process and investment selection?

Maybe that's one for me, actually. I think so.

We're on the investment side, yeah.

Okay. So I think the answer is at the moment it's bottom-up and very much dependent on individual initiatives. and enthusiasm, which is strongly encouraged, as opposed to being coordinated centrally top-down. We have had about 12 months of experimentation around bottom-up initiatives, and we're now putting in place for the next phase more of a top-down structure. But I'm sure, as everybody appreciates, this is... It's a fast-changing landscape, and we're trying not to be too prescriptive. So work in progress, I would say, but some quite interesting efficiency progress already achieved, particularly, for example, around researching new sectors or even, to some degree, new stocks more rapidly than we were ever too able to do.

Question on M&A. Your acquisitions in recent years have not been too large in scale but seem to have worked out very well. Do you think the current geopolitical turbulence and market headwinds might enable impacts to accelerate the non-organic elements of its diversification away from listed equities?

Yes. I think we are very pleased with the success of the three acquisitions so far, and that's given us confidence to think about doing more of that in the future. However, there's, I think from our experience and experience, the rest of the market sees M&A, one needs to be measured and incredibly selective about the targets and the pace of M&A growth. So I think the objective remains to look for attractive acquisition targets, probably not too big because we don't want to indigestion or threat to our culture. We're not in a hurry, but the market does have quite a lot of distressed players out there who have been suffering from the same sort of MAG7 dominated investment issues that we've just reported.

And a general question on fixed interest. As a narrow-minded equity investor, that is the question that's come in. It's not me. Can you summarize for me which fixed income segments you focus on and whether they are largely immune to the quite severe headwinds currently faced by sovereign debt products at the moment?

So if we were to go back to the slide with the fixed income products you would see there we have high yield in particular and then small exposure to emerging markets. corporate debt and to investment grade debt. So at the moment, we're just in those three areas. We don't have a plan to expand. And I would have to agree that at the moment with very tight spreads, the opportunity for alpha generation is quite limited. That does appear to be a point in the market. So we're being patient and trying to make sure that we've got outreach to prospective clients so they know what we do, such that when spreads start to improve, that we're well-placed to bring in some more clients, more money.

Good to hear. A couple of questions about IEM. What we've got here, it would be unrealistic at this stage to ask you how much of the IEM AUM you think that you can retain using the equivalent USIX product. But first of all, can you give us a feel for early IEM shareholder appetite to possibly make that switch? Has there been much interest, little interest, or something like that?

Well, I think the best way of looking at this is that the tender has produced £740 million of exits, leaving just over £200 million remaining in the trust for us to carry on managing until further notice. That £740 million is particularly held by UK based private wealth managers with whom we've got relationships. I think the core point is that in that pool of capital we've got a very good connection to decision makers. What we're offering essentially is a attractive financially attractive switch or reinvestment of those monies into our Irish usage vehicle which has got the same underlying portfolio to all intents and purposes. We were not able for a variety of reasons to have a sort of tick the box switch so the money has come out first and therefore needs to be reinvested and therefore it's almost certainly going to take one or two months to know how much money moves across. At the moment, I'm afraid I can't give a steer because I frankly don't know how much is likely to move across. But what I can say is that this trust has been around for nearly 25 years. It does actually have a pretty liquid share base, and therefore anyone who wants to get out has an opportunity to get out. There's been strong buybacks in recent years. And therefore, I think it's reasonable to assume that that a high percentage of that money would like to remain in the underlying strategy, which crucially is not available for anyone else. So this is a unique investment product, and we're offering an attractive route to give the clients of that trust access to that investment idea through the users fund.

Yeah, and the following question, presumably from an IEM shareholder. thinking about the switch is do you happen to know the communication strategy for the manager of the environmental USITs? Are they likely to meet with private investors on an annual basis and indulge in regular communications?

Well, that's very much our intention. I mean, we, in practice, as a management, are the manager of the USITs fund, just to That needs to be clarified. And so we are expecting that fund to grow with the switch and therefore are very much committed to high quality investor relations. So I will double check after this meeting that we've got a detailed plan to do that. And if anybody's dissatisfied with the flight service that they see going forward, please drop me a line and I'd be very happy to address any concerns anyone has.

Thank you very much for that. Other investments. So you have helpfully reminded us of your existing exposure to the genuinely massive spending on AI infrastructure. Have you been actively increasing your fund's exposure to areas like power generation, storage or digital solutions in the course of this year?

Well, I think we... It's fair to say that we have been encouraged by the trend of earnings expectations in both the energy security related areas and in the derivative parts of the AI space, for example, generation or water supply. I think it's fair to say that across the fund management team that we have been increasing in those areas, but it's very much on a stop-by-stop basis because business models, of course, vary considerably and there is a lot of hype and overvaluation in our view in many parts of the AI space in particular.

And a very specific question on energy generation. If you happen to know, has fusion energy been something that your fund managers have been looking at or indeed might have invested in?

Well, I think fusion, sadly, is pre-earnings and almost certainly pre-revenue to any significant degree. So, because we don't invest in really early stage businesses and also if you look at a company like Rolls-Royce, which is pioneering the small modular reactor market with a number of international players, then SMR is a tiny part of their business. So, the SMR, small modular reactor trend, which is likely to produce real assets in the ground in 10 to 20 years from now, is not really a driver of stock prices. So very interested in fusion from a sort of theoretical perspective, but it's not really a feature of our investment work at the moment.

A couple back on ETFs. First one, would you consider launching them in partnerships? with other bodies? And do you have any plans to launch ETFs in Europe?

So we're definitely open to commercially attractive ideas to launch more ETFs. And that would definitely be part of our consideration as we expand the ETF thinking outside that US mutual fund range that I referred to before. Nothing concrete to signal at the moment. In terms of Europe, then we certainly wouldn't rule it out. And I do know that notices, I'm sure you've All appreciated that a number of other managers are launching European ETFs. At the moment, there's no material tax advantage that I'm aware of for European ETFs in the way that there is a tax advantage for U.S. ETFs or investments in U.S. ETFs. So given our relatively modest resources for this particular type of work, then we're at the moment just focused on the U.S. for this part of business development.

Understood. And perhaps a good general question to finish on. As CEO and CFO of a business in transition, which KPIs do you personally look at most closely to think about the underlying health of impacts?

Well, let me start. I'm sure Karen will add her own. But I think the reason for emphasizing this turnaround in investment performance is that what we found over over many, many years, as our peers and fellow travellers in this space also find, is that if investment performance is good, then the flows follow. And so the investment performance and risk that fund managers are taking is, for me, the absolute crucial starting point. And then the second derivative, or the second area, which is a derivative of that, of course, is the pipeline and the health of the client relationships, is the second area to look at.

And look, I would just add then is the flow, you know, the data for the equity business, the day-to-day flows, particularly for BNP. That's where we can see a turnaround. Can you hear me?

I'm just fading a little bit in and out there.

I'm sorry, if I just acknowledge you normally, this is incredibly reliable. Can you hear now? Okay.

That's better, yeah.

Okay, sorry. The microphone's just let me down badly today. So I just want to say that I follow very closely then those for the equity business, particularly for BNP. So when we see a turnaround in flow, that's where we expect it to come from in the first instance. And then, as Ian says, following the pipeline, but specifically for fixed income, now that we've had the global high-yield business for two years, we expect to see that pipeline now begin to monetize.

Great. Well, thank you both very much. We'll just get a final summary from Ian in a minute, just to thank our audience for the questions. And you will receive a questionnaire at the end of this broadcast. I don't switch off. It won't take you more than a minute to complete, which the company would be very interested in. But perhaps, Ian, you can just summarise what you're looking forward to in coming months.

Yes, I think it's – those of you that have known us for a long time, it's important to point out that we were about £7 billion in the management in early 2018, and we're now three times the size of that, having been obviously much, much bigger. So the firm's had a very – um interesting journey over that eight year period we do find ourselves as a global global leader in a particularly appealing area of the of the market and um because of that that area the markets lagged generic indices as we've said then we are definitely or we have been out of favor Asset management in the active equity space has been under a lot of pressure. We're not being immune, but I think there are signs of recovery. And with our strategy focused on a compelling market niche, then I do think we're really well placed for growth over the medium to long term.

Great. And best of luck as well. Always a useful commodity, but thank you very, very much.