Impax has received notice from St. James's Place Unit Trust Group Limited that its mandate to manage the Sustainable & Responsible Equity Fund (SRE) is to be terminated from February 2025, subject to EGM. This is a blow to top-line AUM, with SRE making up c. £5.2bn (30 Nov 24) or c. 14% of total AUM of £37.2bn (30 Sep 24); although the SRE fund was clearly a low-fee-margin account at around 24bps compared to the overall Impax average fee margin of 44.3bps. Therefore, the impact on revenue is far more muted (c.7.5% on an annualised basis). Indeed, Impax has clarified that the reduction will be c. £12.7m on an annualised basis, or an approx. £8m reduction to FY25 revenue (Oct 24 – Sep 25). In addition, some costs are stripped out of the system too (c. 5% of adjusted operating costs on an annualised basis) and we remind readers that Impax’s remuneration model is heavily incentive based i.e. variable staff pay falls with events such as this. We would therefore expect a cost reduction of around £5.5m-£6.5m on an annualised basis (£3.5m-£4m for FY25). This leads to a reduction in our FY25 adjusted operating profit forecast from £44.6m to £40.4m, and our FY26 forecast from £53.9m to £42.7m (a margin cut from 29.6% to 26.1%). Our fundamental value / share also falls, by 14% from 700p to 600p, i.e. still well over double the share price following the 23% fall on 13 Dec 2024.