REG - Impax Asset Mgmnt - Final Results
02/12/2021 07:00
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RNS Number : 2933U Impax Asset Management Group plc 02 December 2021
Impax Asset Management Group plc
Results for the year ended 30 September 2021
London, 2 December 2021 - Impax Asset Management Group plc ("Impax" or the
"Company"), the specialist investor focused on the transition to a more
sustainable global economy, today announces final audited results for the year
ending 30 September 2021 (the "Period").
Business highlights
· Assets under management ("AUM") increased 84.4% to £37.2 billion
(2020: £20.2 billion).
· Record net inflows of £10.7 billion (2020: £3.5 billion)
· Largest investment strategies have continued to outperform global and
regional markets
· By 31 October 2021, AUM had risen further to £38.9 billion
Financial highlights
· Revenue increased 63.5% to £143.1 million (2020: £87.5 million)
· Adjusted operating profit grew by 139.5% to £55.8 million (2020:
£23.3 million)
· Profit before tax grew by 173.7% to £45.7 million (2020: £16.7
million)
· Adjusted operating margin grew to 39.0% (2020: 26.6%)
· Shareholders' equity increased 54.5% to £110.5 million (2020: £71.5
million)
· Adjusted diluted earnings per share grew to 33.9 pence (2020: 14.5
pence)
· Proposed final dividend of 17.0 pence per share bringing total for
the year of 20.6 pence per share (2020: 8.6 pence) up 139.5%
· Cash reserves increased 87.4% to £70.1 million (2020: £37.4
million)
Sally Bridgeland, Chair, commented:
"Against any measure this has been an excellent year for the Company, and I
have been inspired by the team's ongoing dedication and delivery to our
clients. We have expanded to ensure that we have the necessary resources to
match ever-increasing client demand. By the end of the Period the team had
grown by 24%, with hires across the investment management, client services and
corporate services teams. We are also delighted with the progress of the
integration of our New Hampshire-based business, which has helped further
establish Impax in the strategically-important North American market."
Ian Simm, Chief Executive, added:
"Impax has enjoyed a year of exceptional growth. During the 12 months ending
30 September 2021, the Company's assets under management increased by 84%
which included a record £10.7 billion of net new inflows, up from £3.5
billion last year. This helped drive an increase in revenue to £143.1
million, up 64%. Overall, we performed very well against all key indicators of
financial performance and our largest investment strategies maintained their
record of outperformance versus global equity indices.
"Impax has a deeply held investment philosophy focused on the opportunities
arising from the transition to a more sustainable economy. During the Period,
this authentic and differentiated approach helped the Company to attract
significant new mandates with asset owners and expand relationships with
intermediaries and distribution partners globally.
"Impax continues to be well positioned to benefit from many regulatory,
policy, market, and investor tailwinds. We believe that the focus on climate
change at COP26 and the post-pandemic fiscal boost will help catalyse further
investment in companies benefitting from the transition to a more sustainable
economy."
Enquiries:
Impax Asset Management Group plc
Ian Simm, Chief Executive +44 (0)20 3912 3000
Paul French, Director of Communications +44 (0)20 3912 3032
p.french@impaxam.com (mailto:p.french@impaxam.com)
Montfort Communications
Gay Collins +44 (0)77 9862 6282
Louis Supple +44 (0)77 3943 0102
impax@montfort.london (mailto:impax@montfort.london)
Peel Hunt LLP, Nominated Adviser and Joint Broker
Rishi Shah +44 (0)20 7418 8900
Berenberg, Joint Broker
Alex Reynolds +44 (0)20 3207 7800
LEI number: 213800AJDNW4S2B7E680
Chair's Introduction
The publication of this report marks a year since I succeeded Keith Falconer
as Chair of the Board. Having served on the Board since 2015, I am honoured to
have taken up the role at such an exciting point in Impax's history. I relish
the opportunity to build on the legacy that Keith forged with Ian, the
management team and the Directors, and would like to thank them all for their
continuing support over the last year.
I would also like to acknowledge the dedication of my Impax colleagues. While
we have benefitted from unprecedented growth in 2021, working mostly virtually
has meant that we have had few opportunities to celebrate this success in
person. I have been inspired by the team's ongoing dedication and delivery to
our clients; this is a tribute to Ian and the management team for their
leadership and the strong culture that they have built together.
Against any measure, this has been an excellent year for the Company. Assets
under discretionary and advisory management ("AUM") grew by 84.4%, revenues by
63.5% and the majority of our investment strategies maintained their record of
outperformance against global equity indices. We have expanded our team to
ensure that we have the necessary resources to match increasing client demand.
By the end of the Period the team had grown by 24%, with hires across the
investment management, client services and corporate services teams. During
the Period we also completed the acquisition of our New Hampshire-based
business, acquiring the remaining 16.7% of the business held by management. We
are delighted with the progress of the integration of the business, which has
helped further establish Impax in the strategically-important North American
market.
Impax's mission is to invest in the transition to a more sustainable economy;
this informs how we create value for all our stakeholders and how we think
about risk.
At a time when all businesses are assessing their response to climate change,
our own approach draws on Impax's long heritage in backing the companies at
the forefront of sustainable development. This encompasses our investment
specialism; our policy and advocacy activity; and how we manage our own
business operations. We are committed to reducing our operational emissions
across Scope 1, 2 and 3, and will measure and report our results in this area
in line with established practices. We have included additional reporting in
this year's Strategic Report and will publish more detail in this area using
the Taskforce for Climate-related Financial Disclosures ("TCFD") framework, in
our 2022 Annual Report. Our approach is coordinated by the Environment
Committee, for which Vince O'Brien acts as Sponsor on behalf of the Board.
As a Board we believe that diversity and inclusion is vital to performance of
the business and a critical governance topic for a fast-growing firm where we
are making new appointments at all levels and face new risks. I have a
personal commitment to this topic, reflecting my own career experiences and my
still rare position as a woman chairing an asset management company. Lindsey
Brace Martinez acts as the Board Sponsor of our focus on equality, diversity
& inclusion ("ED&I") and attends the meetings of the staff ED&I
Group.
The Company has made some important progress in formalising its ED&I
strategy this year. This has included a stated aim that by December 2025 our
overall gender mix should be 48-52% women and that the representation of women
and racial or ethnic minorities in key roles should be meaningfully ahead of
the industry average. We believe that this focus will also reduce the senior
management gender pay gap.
Following the retirement of Keith Falconer, we were pleased to welcome Simon
O'Regan as a Director in December 2020. Simon is a highly knowledgeable
investment industry Non-Executive Director and business leader, with a
background as a CEO of the US business of the investment consultancy firm,
Mercer. He adds considerable international expertise to the existing mix of
skills and experience on the Board across relevant sectors and markets.
Sally Bridgeland
1 December 2021
CHIEF EXECUTIVE'S REPORT
BUSINESS UPDATE
Impax has enjoyed a year of exceptional growth. During the 12 months ending 30
September 2021 (the "Period"), the Company's assets under discretionary and
advisory management ("AUM") increased by 84.4% to reach £37.2 billion, which
included a record £10.7 billion of net new inflows.
We performed very well against all key indicators of financial performance and
in particular our largest investment strategies maintained their record of
outperformance versus global equity indices.
By 31 October 2021, our AUM had risen further to £38.9 billion.
Impax has a deeply held investment philosophy focused on the opportunities
arising from the transition to a more sustainable economy. During the Period,
this authentic and differentiated approach helped the Company to attract
significant new mandates with asset owners and expand our relationships with
intermediaries and distribution partners globally.
SUPPORTIVE EXTERNAL ENVIRONMENT
Two events in early November 2020 helped to frame the Period, during which
global equity markets posted strong returns.
The emergence of COVID-19 vaccines led to earnings upgrades, as businesses
glimpsed a potential exit from months of protracted lockdowns. While rising
rates of the Delta variant meant localised restrictions remained in place,
economic data was largely positive. Meanwhile, efforts to "build back better"
out of the crisis helped to attract capital towards markets that offer
inherent resilience to environmental and social problems.
The victory of Joe Biden in the US presidential elections in November 2020
immediately brought fresh impetus globally towards tackling climate change.
His announcement that the US would be brought back into the Paris climate
agreement helped to accelerate a succession of "net-zero" commitments by
corporates and policymakers in anticipation of the COP26 climate summit in
Glasgow, which concluded last month.
While there were disappointments in the final text, the emergence at Glasgow
of coalitions of key actors around single issues like coal power,
deforestation and methane emissions was a standout success, with business and
finance driving ambitious commitments alongside governments. The transition to
a net-zero economy catalysed by COP26 should create considerable opportunities
for investors. Although there will clearly be rapid market growth in renewable
power generation and energy efficiency, we also expect to back innovative
companies in less visible sectors, for example new materials and agriculture.
INVESTMENT PERFORMANCE
Overall, our range of strategies, managed by our investment teams in the UK,
US and Hong Kong, performed well over the Period. Longer term, eight out of
the largest ten strategies, accounting for a combined 91% of AUM, have
outperformed their benchmarks over three years. Of the eight that have
five-year track records, seven have outperformed their benchmarks1.
Five of our six thematic, Environmental Markets strategies outperformed their
benchmark index over the Period, with the Specialists strategy delivering a
gross total return of 40.5% in comparison to 22.2% from MSCI ACWI2. The
overall outperformance was notwithstanding the headwind from the broad
rotation into value stocks, to which these strategies have limited exposure.
Our Sustainability Lens products also performed well. Four of the five
strategies outperformed their benchmarks over the Period, with the Global
Opportunities strategy delivering a gross total return of 24.9%3.
We continue to focus on managing our capacity and have significant headroom
within our existing strategies.
Private Markets
Our team investing in markets linked to renewable power generation made good
progress with our third fund, Impax New Energy Investors III ("NEF III"),
committing capital in Spain, Italy, Poland and the UK, as well as making two
successful exits. In October 2021 the team held the first close of Impax New
Energy Investors IV ("NEF IV"), with €238 million committed.
CLIENT SERVICE AND BUSINESS DEVELOPMENT
Asset growth was well diversified across our direct sales and distribution
partner channels, reflecting increased client demand across Europe,
Asia-Pacific, and North America.
Inflows over the Period were directed particularly into our Global
Opportunities and Leaders strategies (30.1% and 29.2% of net inflows
respectively) with strong investor interest in our Climate and Asian
Environmental strategies (10.0% and 8.7% of net inflows respectively).
In the UK, we extended our relationship with wealth manager St James's Place
with a second mandate for our Global Opportunities strategy, and we also won
new segregated accounts based on the same strategy.
Our FTSE 250 listed Environmental Markets investment trust continued to
attract considerable inflows and, at the Period end, had approximately £1.4
billion in total net assets.
Our Ireland-domiciled UCITS funds enjoyed significant growth over the Period,
with aggregate AUM reaching £2.1 billion, up from £806 million. Net inflows
from European clients helped push the AUM of the Global Opportunities fund in
this range past £500 million for the first time.
We also continued to build our Dublin-based team, which is now established
post-Brexit as an important strategic centre for the Company to access EU
markets.
In October 2020, we developed further our relationship with BNP Paribas Asset
Management ("BNPP AM") by signing a new distribution agreement on similar
terms to the Memorandum of Understanding that has been in place since 2007.
This continues to be an important strategic relationship across Europe and
Asia. Since the new agreement was signed we have won additional mandates and
received significant flows into the BNPP AM funds that we sub-advise,
including via global financial institutions.
In Japan, we worked with BNPP AM to secure the mandate for a significant new
fund launch by Nomura. This feeds into an existing fund of the Leaders
strategy.
In April we signed a new distribution agreement with Fidante Partners Limited
as our exclusive distribution partner in Australia and New Zealand, markets
that show strong potential. We also won two significant Australian
superannuation funds mandates, including a segregated account using our
Climate strategy. In the run-up to COP26 we have received strong investor
interest globally in this strategy, which focuses on investing in companies
providing solutions to the challenges linked to climate change.
In the US, we secured several new mandates, including with Jordan Park for
the High Yield strategy, and saw notable flows into the Leaders strategy,
particularly via intermediaries, including JP Morgan.
August 2021 marked 50 years since the launch of the Pax Sustainable Allocation
Fund, the first public mutual fund in the US to use social and environmental
criteria. And it was a significant year for the Pax World Funds as a whole.
By the end of the Period, their aggregate AUM reached £6.1 billion, up from
£4.1 billion.
In Canada, we secured a sub-advisory mandate for FÉRIQUE Fund Management,
gained investments from two foundations for our Global Opportunities strategy,
and launched new mandates through our distribution partners.
In January 2021, we completed the integration of our New Hampshire-based team,
who joined us in 2018 following the acquisition of Pax World Management LLC.
Combining the two businesses has already underpinned significant growth for
the Group, and we enjoyed continued momentum throughout the Period, taking our
North American AUM to £9.4 billion.
AUM movement Listed equities Fixed Private Total firm
12 months to 30 September 2021 income markets
£m £m £m £m
Total AUM at 30 September 2020 18,865 947 371 20,183
Net flows 10,387 322 (34) 10,676
Market movement, FX and performance 6,385 (12) (20) 6,353
Total AUM at 30 September 2021 35,636 1,257 318 37,211
BEYOND FINANCIAL RETURNS
Beyond delivering superior, risk-adjusted investment returns, we focus on four
broader areas. First, our corporate engagement and stewardship activity aims
to enhance our understanding of investment risk. In 2020 we took part in over
230 engagements. We were proud to be a successful applicant to be a signatory
to the UK Stewardship Code in 2021.
Second, we disclose through our annual impact report the quantified
environmental benefits linked to our clients' investments in our portfolio
companies. This year we have evolved our reporting to include additional
carbon emissions and water data.
Third, we strive to influence policy outcomes that support solutions to
environmental and social challenges. We focused on three areas during the
Period: financing the transition to net-zero emissions; greening the financial
system, with a particular focus on biodiversity; and human capital, including
the response to COVID-19. Through our policy and advocacy activities we
collaborate closely with a broad network, including the scientific community,
industry bodies, and not-for-profit organisations.
Finally, we publish thought leadership that provides value-added insights to
our clients and partners. This has included a series of articles in the run-up
to COP26, and, together with Swedish pension fund, AP7, producing a report on
how to measure water impact effectively.
DEVELOPING OUR TALENT
We grew our headcount by 24% over the Period. 56% of those new hires were
women. Given this significant growth, we are acutely aware of the need to
nurture the collegial culture that has driven our success over the last two
decades.
Our People strategy seeks to future-proof our business with more resilient HR
systems, whilst offering a stimulating, collaborative, and supportive
workplace for our colleagues.
This year we launched a "behavioural competency" framework, which sets out the
standards we expect from colleagues on a day-to-day basis. This has been woven
into recruitment, development, promotion, and rewards, to help reinforce our
culture, support our core values, and foster accountability.
As we began to emerge from lockdowns, we consulted with our colleagues before
updating our HR policies. Following that consultation, we have decided to
remain an office-based business, but are committed to providing extra
flexibility, for example for those employees that wish to work from home more
regularly.
We were pleased with the results of our employee engagement survey, which
revealed an 88% engagement score, notwithstanding the challenges of working
away from the office; this is 14 percentage points ahead of the industry
benchmark.
We continue to find that our clear mission as a specialist focused on
investing in the transition to a more sustainable economy is a clear
differentiator as we seek to hire, and then retain, the very best talent in an
increasingly competitive market.
SYSTEMS AND INFRASTRUCTURE
As we grow, we are also investing in our corporate services functions,
including risk, compliance and IT. We are focusing in particular on improving
our data capabilities, managing cyber and climate risk, and increasing our
operational resilience.
Following the completion of the integration of our New Hampshire-based team,
we have sought to build global teams and functions. This has included
launching a single trading desk, which serves our investment team across the
US, the UK and Hong Kong.
AWARDS AND INDUSTRY RECOGNITION
The Company's expertise and success has been acknowledged through numerous
prestigious industry awards. After the Period end this included: "AIM Company
of the Year" (Shares); "AIM Growth Business of the Year" (AIM Awards 2021),
and Finncap's "Best Performer, Financials" award. Highlights during the Period
included: Pensions Expert's "Active Equity Manager of the Year"; "Best
Sustainability Reporting (large asset manager)" in Environmental Finance's
Sustainable Investment Awards; and both the "Sustainable Reporting" and "Green
Finance" categories at the Better Society Awards.
OUTLOOK
We believe that the focus on climate change at COP26 and the post-pandemic
fiscal boost will help catalyse further investment in companies benefitting
from the transition to a more sustainable economy.
In particular, we believe that infrastructure investment is set to accelerate.
Rapid expansion in decentralised renewable power generation, zero-emissions
transportation, resilient water supply and climate resilience are positioned
to provide significant investment opportunities.
We also anticipate a number of supportive regulatory drivers. The EU's
wide-ranging Sustainable Finance Disclosure Regulation ("SFDR"), which
attempts to counter "greenwashing", imposes mandatory ESG disclosure
obligations for asset managers and has contributed to a marked increase in
investment towards more sustainable companies and issuers. This, together with
the equivalent UK green taxonomy, will contribute to a further shift in
capital flows across Europe throughout the current decade.
In the US, the Department of Labor announced in October 2021 that it was
proposing to reverse the Trump Administration's ban on considering ESG factors
in retirement plans. This is also likely to be positive for the markets in
which Impax invests.
Our investment teams continue to manage a broad array of risks. 2021 laid bare
the vulnerability of global supply chains and has contributed to concerns
about a potential looming energy crisis in Europe and Asia. Meanwhile, high
valuations in some areas and the threat of persistent inflation continue to
inform our portfolio construction and trading decisions.
We believe that Impax continues to be well positioned to benefit from the many
regulatory, policy, market, and investor tailwinds. There is growing evidence
that asset owners are increasingly attracted to our global reach, our
authenticity, and our investment philosophy focused on the transition to a
more sustainable economy. Against this backdrop, we are confident that Impax
can continue to deliver excellent value for all of our stakeholders.
Ian Simm
1 December 2021
1 Gross of fees.
2 GBP, gross of fees.
3 GBP, gross of fees. Benchmark: MSCI ACWI returned 22.2%.
FINANCIAL REVIEW
I am delighted to report another year of strong financial results including
more than doubling our adjusted operating profit and profit before tax.
As in previous periods, in order to facilitate comparison of performance with
previous time periods and to provide an appropriate comparison with our peers,
the Board encourages shareholders to focus on financial measures after
adjustment for accounting charges or credits arising from the acquisition
accounting from Impax NH, adjustments arising from the accounting treatment of
National Insurance costs on share-based payment awards and significant tax
credits related to prior periods.
Financial highlights for financial year 2021 versus financial year 2020
2021 2020
£000 £000
AUM £37.2bn £20.2bn
Revenue £143.1m £87.5m
Adjusted operating profit £55.8m £23.3m
Adjusted profit before tax £54.0m £22.2m
Adjusted diluted earnings per share 33.9p 14.5p
Cash reserves £70.1m £37.4m
Seed investments £7.5m £4.3m
Dividend per share 3.6p interim + 17.0p final 1.8p interim + 6.8p final
2021 2020
IFRS operating profit £47.4m £17.6m
IFRS profit before tax £45.7m £16.7m
IFRS diluted earnings per share 30.3p 10.5p
Revenue
Revenue for the Period grew by £55.6 million to £143.1 million (2020: £87.5
million). Growth was driven by the exceptionally strong net inflows across the
business and very positive fund performance.
Our run-rate revenue at the end of the Period was £173.8 million (2020:
£96.5 million), giving a weighted average run rate revenue margin1 of 47
basis points (2020: 48 basis points) on the £37.2 billion of AUM.
Operating costs
Adjusted operating costs increased to £87.3 million (2020: £64.3 million),
mainly reflecting increases in headcount required to service our significantly
increased client base and higher profit-related pay due to rising
profitability. We expect higher costs in the next financial year to reflect a
full year of costs from hires made in 2021, further hires in 2022 to support
continued growth opportunities and increased marketing and other costs as we
return to travelling.
IFRS operating costs include additional charges and credits, principally the
amortisation of intangible assets arising from the Impax NH acquisition,
National Insurance charges on share options and restricted shares. Employer's
National Insurance is payable based on the share price when an option is
exercised or restricted shares vest, and accordingly the charge has increased
significantly as our share price has risen over the year. This charge is
offset by a tax credit which is recorded in equity.
Profits
Adjusted operating profit increased to £55.8 million (2020: £23.3 million),
driven by the revenue growth described above. Run-rate adjusted operating
profits at the end of the Period grew further to £67.5 million (2020: £28.3
million), in line with business expansion. IFRS operating profit in 2021
increased to £47.4 million (2020: £17.6 million). Fair value gains and other
non-operating income offset interest expense and non-operating costs to give
adjusted profit before tax of £54.0 million (2020: £22.2 million).
Tax
Tax rates were lower than the prior period as we benefited from a £2.8
million credit in relation to taxation of prior year private equity income
(2020: £1.0 million).
Earnings per Share
Adjusted earnings per share grew to 33.9 pence (2020: 14.5 pence) as a result
of the growth in profits, offset to a small extent by increases in shares in
issue as a result of restricted share awards and option exercises. IFRS
earnings per share increased to 30.3 pence (2020: 10.5 pence).
Financial management
At the Period end the Company held £70.1 million of cash resources, an
increase of £32.8 million on 2020. The Company had no debt (2020: no debt)
but retains access to a US$13 million revolving facility (the "RCF") (LIBOR
plus 3.3%) which was put in place at the time of the Impax NH acquisition.
In January 2021 we completed the integration of our New Hampshire-based team
("Impax NH"), who joined us in 2018 following the acquisition of Pax World
Management LLC. As agreed in the terms of the acquisition announced on 18
September 2017, we acquired the remaining 16.7% of the business held by
management for a total consideration, net of loans, of US$3.0 million, paid in
cash and shares. In addition, contingent consideration payments of US$270,000
were made in cash to the previous shareholders and management as relevant
assets under management of the Pax World funds reached an average of US$5.5
billion over the final six months of the 2020 calendar year, growing to US$6.6
billion at 31 December 2020, up from US$4.9 billion in January 2018.
The Company continues to make seed investments and to invest in our private
equity funds. These investments were valued at £7.5 million at the Period
end. During the Period we invested into a segregated account investing in our
new Asian Opportunities strategy and made further investments into our private
equity funds.
Share management
During the Period the Company issued 2.0 million new ordinary shares to the
Company's Employee Benefit Trust (the "EBT"). The EBT holds shares for
Restricted Share awards until they vest or to satisfy share option exercises.
The Company also issued a further 181,467 shares to part fund the acquisition
of the remaining interest in Impax NH.
Going forward, the Board intends that the Company will satisfy obligations
linked to share incentive awards for employees either through purchase of its
own shares or if there are attractive alternatives for the use of the
Company's cash resources, via issuance of new shares. Share purchases are
usually made by funding the EBT which will then settle option exercises or
hold shares for Restricted Share awards until they vest. No share purchases
were made during the year.
Dividends
The Company paid an interim dividend of 3.6 pence per share in July 2021. Our
dividend policy is to pay, in normal circumstances, an annual dividend within
a range of 55% and 80% of adjusted profit after tax. Impax has reported
exceptionally strong growth in revenue and profits and is in good financial
health. The Board has therefore decided to recommend a final dividend of 17.0
pence. This would be an increase in the total dividend for the year of 12.0
pence or 140%. The annual dividend for the year represents 60% of adjusted
operating profit after tax which is still at the lower end of our stated
range.
This dividend proposal will be submitted for formal approval by shareholders
at the Annual General Meeting on 29 March 2022. If approved, the dividend will
be paid on or around 31 March 2022. The record date for the payment of the
proposed dividend will be 11 February 2022 and the ex-dividend date will be 10
February 2022.
The Company operates a dividend reinvestment plan ("DRIP"). The final date for
receipt of elections under the DRIP will be 28 February 2022. For further
information and to register and elect for this facility, please visit
www.signalshares.com and search for information related to the Company.
Going concern
The Financial Reporting Council requires all companies to perform a rigorous
assessment of all the factors affecting the business when deciding to adopt a
"going concern" basis for the preparation of the accounts.
The Board has made an assessment covering a period of at least 12 months from
the date of approval of this report which indicates that, taking account of a
reasonably possible downside in relation to asset inflows, market performance
and costs, the Group will have sufficient funds to meet its liabilities as
they fall due for that period. In making this assessment the Board has
considered the potential evolving impacts of COVID-19.The Group has high cash
balances and no debt and, at the Period end market levels, is profitable. A
significant part of the Group's cost basis is variable as bonuses are linked
to profitability. The Group can also preserve cash through dividend reduction
and through issuance of shares to cover share option exercises/restricted
share awards (rather than purchasing shares). The Directors therefore have a
reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and have continued to adopt
the going concern basis in preparing the financial statements.
Charles Ridge
1 December 2021
Consolidated Income Statement
For the year ended 30 September 2021
Note 2021 2020
£000 £000
Revenue 143,056 87,511
Operating costs 6 (95,622) (69,928)
Finance income 9 286 1,020
Finance expense 10 (1,971) (1,921)
Profit before taxation 45,749 16,682
Taxation 11 (5,504) (2,944)
Profit after taxation 40,245 13,738
Earnings per share
Basic 12 31.5p 10.6p
Diluted 12 30.3p 10.5p
Dividends per share
Interim dividend paid and final dividend declared for the year 13 20.6p 8.6p
Adjusted results are provided in note 4.
Consolidated Statement Of Comprehensive Income
For the year ended 30 September 2021
Note 2021 2020
£000 £000
Profit for the year 40,245 13,738
Change in value of cash flow hedges 137 (70)
Tax on change in value of cash flow hedges (26) 13
Exchange differences on translation of foreign operations (1,075) (487)
Total other comprehensive income (964) (544)
Total comprehensive income for the year attributable to equity holders of the 39,281 13,194
Parent
All amounts in other comprehensive income may be reclassified to income in the
future.
The statement has been prepared on the basis that all operations are
continuing operations.
Consolidated Statement of Financial Position
As at 30 September 2021 Notes 2021 2020
£000 £000 £000 £000
Assets
Goodwill 14 11,816 12,306
Intangible assets 15 17,473 20,871
Property, plant and equipment 16 9,435 10,857
Deferred tax assets 11 11,895 5,492
Total non-current assets 50,619 49,526
Trade and other receivables 17 39,800 20,735
Investments 18 7,564 4,387
Current tax asset 134 224
Cash invested in money market funds 19 38,066 18,516
and long-term deposit accounts
Cash and cash equivalents 19 36,172 20,245
Total current assets 121,736 64,107
Total assets 172,355 113,633
Equity and liabilities
Ordinary shares 22 1,326 1,304
Share premium and merger reserve 10,824 9,291
Exchange translation reserve 374 1,449
Hedging reserve - (111)
Retained earnings 97,998 59,515
Total equity 110,522 71,448
Trade and other payables 20 50,107 27,984
Lease liabilities 16 1,330 1,410
Current tax liability 1,923 190
Total current liabilities 53,360 29,584
Lease liabilities 16 8,102 9,261
Deferred tax liability 371 3,340
Total non-current liabilities 8,473 12,601
Total equity and liabilities 172,355 113,633
Consolidated Statement of Changes In Equity
For the year ended 30 September 2021
Share capital Share premium and merger reserve* Exchange translation reserve Hedging reserve Retained earnings Total Equity
£000
£000
£000
£000
£000
£000
1 October 2019 1,304 9,291 1,936 (54) 50,504 62,981
Transactions with owners of the Company:
Dividends paid - - - - (7,442) (7,442)
Acquisition of own shares - - - - (4,223) (4,223)
Cash received on option exercises - - - - 489 489
Tax credit on long-term incentive schemes - - - - 4,636 4,636
Share based payment charges - - - - 1,813 1,813
Total transactions with owners of the Company - - - - (4,727) (4,727)
Profit for the year - - - - 13,738 13,738
Other comprehensive income:
Change in value of cashflow hedge - - - (70) - (70)
Tax on change in value of cashflow hedges - - - 13 - 13
Exchange differences on translation of foreign operations - - (487) - - (487)
Total other comprehensive Income - - (487) (57) - (544)
30 September 2020 1,304 9,291 1,449 (111) 59,515 71,448
Transactions with owners of the Company:
New shares issued 22 1,533 - - (20) 1,535
Dividends paid - - - - (13,616) (13,616)
Cash received on option exercises - - - - 597 597
Purchase of Impax NH shares - - - - (2,239) (2,239)
Tax credit on long-term incentive schemes - - - - 8,634 8,634
Share based payment charges - - - - 4,882 4,882
Total transactions with owners of the Company 22 1,533 - - (1,762) (207)
Profit for the year - - - - 40,245 40,245
Other comprehensive income:
Change in value of cash flow hedge - - - 137 - 137
Tax on change in value of cashflow hedges - - - (26) - (26)
Exchange differences on translation of foreign operations - - (1,075) - - (1,075)
Total other comprehensive Income - - (1,075) 111 - (964)
30 September 2021 1,326 10,824 374 - 97,998 110,522
* Includes merger reserve of £1,533,000.
Consolidated Cash Flow Statement
For the year ended 30 September 2021
Notes 2021 2020
£000 £000
Operating activities
Cash generated from operations 25 59,812 24,382
Corporation tax paid (4,445) (607)
Net cash generated from operating activities 55,367 23,775
Investing activities
Net acquisition of property plant & equipment and intangible assets (257) (182)
Net (investments into)/redemptions from unconsolidated Impax funds (2,529) 1,191
Settlement of investment related hedges (455) (156)
Purchase of Impax NH shares (704) -
Investment income received 93 222
Increase in cash held in money market funds and long-term deposit accounts (19,550) (3,281)
Net cash used by investing activities (23,402) (2,206)
Financing activities
Acquisition of non-controlling interest (191) (201)
Interest paid on bank borrowings (129) (136)
Payment of lease liabilities (1,691) (1,699)
Acquisition of own shares - (4,223)
Cash received on exercise of Impax staff share options 597 489
Dividends paid 13 (13,616) (7,442)
Net cash used by financing activities (15,030) (13,212)
Net increase in cash and cash equivalents 16,935 8,357
Cash and cash equivalents at beginning of year 20,245 11,939
Effect of foreign exchange rate changes (1,008) (51)
Cash and cash equivalents at end of year 19 36,172 20,245
Cash and cash equivalents under IFRS does not include deposits in money market
funds and cash held in deposits with more than an original maturity of three
months. The Group however considers its total cash reserves to include these
amounts. Cash held in RPA accounts are not included in cash reserves.
Movements on cash reserves are shown in the table below:
At the beginning of the year Cashflow £000 Foreign exchange At the end of the year
£000 £000 £000
Cash and cash equivalents 20,245 16,935 (1,008) 36,172
Cash invested in money market funds and long-term deposit accounts 18,516 19,550 - 38,066
Cash in RPAs (1,363) (2,726) - (4,089)
Total Group cash reserves 37,398 33,759 (1,008) 70,149
1 REPORTING ENTITY
Impax Asset Management Group plc (the "Company") is incorporated and domiciled
in the UK and is listed on the Alternative Investment Market ("AIM"). These
consolidated financial statements comprise the Company and its subsidiaries
(together referred to as the "Group").
2 BASIS OF PREPARATION
These financial statements have been prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006 ("Adopted IFRS") and applicable law.
The financial statements have been prepared under the historical cost
convention, with the exception of the revaluation of certain investments and
derivatives being measured at fair value.
The financial statements are presented in Sterling. All amounts have been
rounded to the nearest thousand unless otherwise indicated.
Going concern
The Board has made an assessment covering a period of 12 months from the date
of approval of these financial statements which indicates that, taking account
of reasonably possible downside assumptions in relation to asset inflows,
market performance and costs, the Group will have sufficient funds to meet its
liabilities as they fall due and regulatory capital requirements for that
period. In making this assessment the Board has considered the potential
ongoing impact of COVID-19. The Group has sufficient cash balances and no debt
and, at the year-end market levels, is profitable. A significant part of the
Group's cost basis is variable as bonuses are linked to profitability. The
Group can also preserve cash through dividend reduction and through issuance
of shares to cover share option exercises/restricted share awards (rather than
purchasing shares). The Group has operated without disruption during the
lockdown periods to date and expects to continue to do so. Consequently, the
Directors are confident that the Group will have sufficient funds to continue
to meet its liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared the
financial statements on a going concern basis.
3 USE OF JUDGEMENTS AND ESTIMATES
In preparing these financial statements management has made estimates that
affect the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from estimates. Revisions to estimates are
recognised prospectively.
The Group has not identified any significant judgements and estimates at the
end of the reporting period.
4 ADJUSTED PROFITS AND EARNINGS
The reported operating earnings, profit before tax and earnings per share are
substantially affected by business combination effects and other items. The
Directors have therefore decided to report an adjusted operating profit,
adjusted profit before tax and adjusted earnings per share which exclude these
items in order to enable comparison with peers and provide consistent measures
of performance over time. A reconciliation of the adjusted amounts to the IFRS
reported amounts is shown below.
Year ended 30 September 2021
Reported Adjustments Adjusted
- IFRS
£000
£000
Business combination effects Other
£000
£000
Revenue 143,056 143,056
Operating costs (95,622) (87,272)
Amortisation of intangibles arising on acquisition 2,358
Credit from contingent consideration adjustment 1,649
Acquisition equity incentive scheme charges 167
Mark to market charge on equity awards 4,176
Operating profit 47,434 4,174 4,176 55,784
Finance income 286 (89) 197
Finance costs (1,971) (1,971)
Profit before taxation 45,749 4,174 4,087 54,010
Taxation (5,504) (9,084)
Adjustment re historical tax charges (2,803)
Tax credit on adjustments (777)
Profit after taxation 40,245 4,174 507 44,926
Diluted earnings per share 30.3p 3.2p 0.4p 33.9p
* The charge is offset by £8,634,000 of tax credits shown in the statement of
changes in equity.
Year ended 30 September 2020
Reported - IFRS Adjustments Adjusted
£000
£000
Business Other
combination effects
£000 £000
Revenue 87,511 87,511
Operating costs (69,928) (64,261)
Amortisation of intangibles arising on acquisition 2,535
Acquisition equity incentive scheme charges 135
Mark to market charge on equity awards* 2,997
Operating profit 17,583 2,670 2,997 23,250
Finance income 1,020 (124) 896
Finance costs (1,921) (1,921)
Profit before taxation 16,682 2,670 2,873 22,225
Taxation (2,944) (3,490)
Tax credit on adjustments (546)
Profit after taxation 13,738 2,670 2,327 18,735
Diluted earnings per share 10.5p 2.1p 1.8p 14.5p
* The charge is offset by £4,636,000 of tax credits shown in the statement of
changes in equity.
The diluted number of shares is the same as used for the IFRS calculation of
earnings per share.
Amortisation of intangibles
Management contracts, which are classified as intangible assets, were acquired
as part of the acquisition of Impax NH, the New Hampshire based company
acquired in January 2018, and are amortised over their 11 year life. This
charge is not linked to the operating performance of the Impax NH business so
is excluded from adjusted profit.
Acquisition equity incentive scheme charges
Impax NH staff have been awarded share-based payments in respect of the
acquisition of Impax NH. Charges in respect of these relate to the acquisition
rather than the operating performance of the Group and are therefore excluded
from adjusted profit.
Contingent consideration adjustment
Until the time it was settled, the Group was required to review and adjust our
estimate of the contingent consideration payable in respect of the Impax NH
acquisition. Adjustments were recorded through income but excluded from
adjusted profit. These adjustments are not linked to the operating performance
of the Impax NH business and are therefore eliminated from operating costs.
Mark to market charge on equity incentive awards
The Group has in prior years and the current period awarded employees options
over the Group's shares, some of which are either unvested or unexercised at
the balance sheet date. The Group has also made awards of restricted shares
("RSS awards") some of which have not vested at the balance sheet date.
Employers National Insurance Contributions ("NIC") are payable on the option
awards when they are exercised and on the RSS awards when they vest, based on
the valuation of the underlying shares at that point. The Group does however
receive a corporation tax credit equal to the value of the awards at the date
they are exercised (options) or vest (RSS awards). A charge is accrued for the
NIC within IFRS operating profit based on the share price at the balance sheet
date. Similarly a credit for the corporation tax is accrued within equity.
These charges vary based on the Group's share price (together referred to as
"mark to market charge on equity incentive schemes") and are not linked to the
operating performance of the Group. They are therefore eliminated when
reporting adjusted profit.
Taxation
The IFRS tax charge for 2021 includes a credit in respect of historical tax
charges related to private equity income. This does not reflect the current
year performance of the Group and is therefore excluded from adjusted profit.
5 SEGMENTAL REPORTING
(a) Operating segments
For the year ended 30 September 2020 and prior years, the Group had two
reportable segments being Impax LN, the primarily London based manager of
listed equity and real asset funds and accounts, and Impax NH. For the current
year the Group is managed on an integrated basis and there are no reportable
segments. Financial information is therefore reported for Impax LN and Impax
NH for the prior year only in the following table.
The segment information presented is on the same basis as that provided for
internal reporting purposes to the Group's chief operating decision maker, the
Chief Executive.
Year ended 30 September 2020
Impax LN Impax NH Adjustments Total
£000 £000 £000 £000
Revenue
External customers 61,906 25,605 - 87,511
Inter-segment 3,147 - (3,147) -
Total revenue 65,053 25,605 (3,147) 87,511
Segment profit - adjusted operating profit 22,176 1,074 - 23,250
(b) Geographical analysis
An analysis of revenue by the location of client is presented below:
Revenue
2021 2020
£000 £000
UK 26,733 15,104
North America 50,608 34,705
France 12,680 9,478
Luxembourg 35,448 19,066
Netherlands 3,359 2,912
Ireland 9,412 3,553
Other 4,816 2,693
143,056 87,511
The following non-current assets: property plant and equipment, goodwill and
intangible assets, are located in the countries listed below:
Non-current assets
2021 2020
£000 £000
UK 6,952 7,882
United States 31,594 36,131
Hong Kong 7 21
Ireland 171 -
38,724 44,034
(c) Non-cash items
Operating expenses include the following non-cash items:
Year ended 30 September 2020
Impax LN Impax NH Total
£000 £000 £000
Share based payments 1,678 135 1,813
Depreciation and amortisation 1,221 3,039 4,260
2,899 3,174 6,073
6 OPERATING COSTS
The Group's largest operating cost is staff costs. Other significant costs
include direct fund costs, premises costs (depreciation on office building
leases, rates and service charge), amortisation of intangible assets, mark to
market charges on share awards and IT and communication costs.
2021 2020
£000 £000
Staff costs (note 7) 66,215 44,728
Direct fund expenses 5,542 5,570
Premises costs 1,015 1,062
Research costs 780 570
Professional fees 3,321 2,555
IT and communications 4,457 4,017
Depreciation and amortisation 4,057 4,260
Mark to market charges on share awards 4,176 3,243
Other costs 5,892 3,923
Sub-total 95,455 69,928
Contingent Consideration 167 -
Total 95,622 69,928
Operating costs include £898,000 (2020: £774,000) in respect of placing
agent fees paid to related parties.
7 STAFF COSTS AND EMPLOYEES
Staff costs include salaries, a variable bonus, social security cost
(principally UK Employers' National Insurance on salary, bonus and share
awards), the cost of contributions made to employees' pension schemes and
share-based payment charges. Further details of the Group's remuneration
policies are provided in the Remuneration Committee Report. Share-based
payment charges are offset against the total cash bonus pool paid to
employees. NIC charges on share-based payments are accrued based on the share
price at the balance sheet date.
2021 2020
£000 £000
Salaries and variable bonuses 51,510 34,081
Social security costs 5,181 3,702
Pensions 1,069 948
Share-based payment charge (see note 8) 4,882 1,813
Other staff costs 3,573 4,184
66,215 44,728
Employees
The average number of persons (excluding Non-Executive Directors and including
temporary staff), employed during the year was 195 (2020: 171).
2021 2020
No. No.
Portfolio Management 69 57
Private Equity 12 12
Client Service and Business Development 63 53
Group 51 49
195 171
8 SHARE-BASED PAYMENT CHARGES
The total expense recognised for the year arising from share-based payment
transactions was £4,882,000 (2020: £1,813,000). The charges arose in respect
of the Group's Restricted Share Scheme ("RSS") and the Group's Employee Share
Option Plan ("ESOP") which are described below. Share based payment charges
also arose in respect of the Put and Call arrangement made with Impax NH
management to acquire their shares in Impax NH. Details of all outstanding
options are provided at the end of this note. The charges for each scheme are:
2021 2020
£000 £000
RSS 3,636 1,253
ESOP 1,003 426
Put and Call 243 134
4,882 1,813
Restricted Share Scheme
Restricted shares have been granted to employees in prior years which are not
wholly vested.
During the Period 361,500 restricted shares were granted under the 2020 plan
and post year end the Board approved the grant of a further 389,750 restricted
shares under the 2021 plan. Following grant, the shares are held by a
nominee for employees - who are then immediately entitled to receive
dividends. After a period of three years' continuous employment, the employees
will receive unfettered access to one third of the shares, after four years a
further third and after five years the final third. The employees are not
required to make any payment for the shares on grant or when the restrictions
lapse.
A further 912,084 restricted shares were also granted to employees of Impax NH
following the acquisition of the remaining shares held by management in that
business. These have the same conditions as described above except that
unfettered access is gained to all of the shares after a period of 3 years.
Full details of the awards granted along with their valuation and the inputs
used in the valuation are described in the tables below. The valuation was
determined using the Black-Scholes-Merton model with an adjustment to reflect
that dividends are received during the vesting period.
2015 RSS 2017 RSS 2018 RSS 2019 RSS 2020 RSS 2021 RSS
Awards originally granted 3,140,000/ 2,550,000/ 478,250 67,250 361,500 912,084/
1,000,000 500,000/ 389,750
675,000
In respect of services provided 1 Oct 2014/ 14 Dec 2016/ 1 Oct 2017 1 Oct 2018 1 Oct 2019 28 Oct 2020/
for period from
24 Nov 2020/
9 Feb 2016 11 May 2017/
1 Oct 2020
1 Oct 2016
Award value 42.1p/ 52.2p/87.7p/ 201.3p 236.8p 506.2p 497.98p/
564.51p/
41.5p 161.6p
1,144.7p
Weighted average share price on grant 41.4p 77.4p 202.8p 239.0p 510.0p 709.1p
Expected volatility 32%/31% 29%/29%/29% 30% 31% 32% 32%
Weighted average award life on grant 4.9yrs 4.3yrs 5.3yrs 5.3yrs 5.3yrs 3.4yrs
Expected dividend rate 3% 4%/2%/2% 1% 2% 1% 1%
Risk free interest rate 1.2%/0.8% 0.6%/0.6%/0.7% 1.2% 0.3% 0.0% 0.35%/0.67%
The expected volatility was determined by reviewing the historical volatility
of the Company and that of comparator companies. The expected dividend rate is
determined using the Company share price and most recent full year dividend to
grant date.
Restricted shares outstanding
Outstanding at 1 October 2020 4,747,722
Granted during the year 1,273,584
Vested during the year (2,683,473)
Forfeited during the year (15,000)
Outstanding at 30 September 2021 3,322,833
Employee share option plan ("ESOP")
Options granted in 2017
The strike price of these options was set at a 10% premium to the average
market price of the Company's shares for the five business days following the
announcement of the results for the preceding financial year, which was
£1.80. The 2017 options did not have performance conditions but did have a
time vesting condition such that they vested subject to continued employment
on 31 December 2020. Once vested, the options have an exercise period of three
years.
The valuation was determined using the Black-Scholes-Merton model.
Options granted in 2018 and 2020
The strike price of the 2018 and 2019 options was set at £1. The strike price
of the 2020 options was set at £3. These options do not have performance
conditions but do have a time vesting condition such that the options vest
subject to continued employment for five years following grant. Vested shares
are restricted from being sold until after a further five year period (other
than to settle any resulting tax liability and the strike price).
Post year end the Board approved the grant of 378,475 options under the 2021
plan with a £9 strike price and with the other conditions the same as the
2018, 2019 and 2020 plans.
The valuation was determined using the binomial model.
Share options are equity settled.
Options outstanding
An analysis of the outstanding options arising from the Company's ESOP is
provided below:
Number Weighted average
exercise
price
Pence
Options outstanding at 1 October 2020 2,450,000 140.7
Options granted 610,000 300.0
Options exercised (400,000) 148.6
Options outstanding at 30 September 2021 2,660,000 176.0
Options exercisable at 30 September 2021 1,000,000 180.2
The weighted average remaining contractual life of options outstanding at the
end of the period was 6.0 years.
9 FINANCE INCOME
2021 2020
£000 £000
Fair value gains 161 798
Interest income 36 98
Other investment income 89 124
286 1,020
Fair value gains represent those arising on the revaluation of investments
held by the Group and any gains or losses arising on related hedge
instruments held by the Group.
The fair value gain comprises realised losses of £487,000 and unrealised
gains of £648,000 (2020: £53,000 of realised losses and £851,000 of
unrealised gains).
10 FINANCE EXPENSE
2021 2020
£000 £000
Interest on lease liabilities 468 514
Finance costs on bank loans 85 295
Foreign exchange losses 1,418 1,112
1,971 1,921
Commitment fees are payable on the revolving credit facility which the Group
retains. Foreign exchange losses mainly arise on the retranslation of
intercompany loans.
11 TAXATION
The Group is subject to taxation in the countries in which it operates (the
UK, the US, Hong Kong and Ireland) at the rates applicable in those countries.
The total tax charge includes taxes payable for the reporting period (current
tax) and also charges relating to taxes that will be payable in future years
due to income or expenses being recognised in different periods for tax and
accounting periods (deferred tax).
(a) Analysis of charge for the year
2021 2020
£000 £000
Current tax expense:
UK corporation tax 5,960 124
Foreign taxes 235 219
Adjustment in respect of prior years 73 342
Total current tax 6,268 685
Deferred tax (credit)/expense:
Charge for the year 2,104 3,388
Adjustment in respect of prior years (2,868) (1,129)
Total deferred tax (764) 2,259
Total income tax expense 5,504 2,944
Tax credits of £8,634,000 are also recorded in equity in respect of tax
deductions on share awards arising due to the share price increase (2020:
£4,636,000). Tax credits of £26,000 on cash flow hedges have been
reclassified from equity to the income statement during the year on maturity
of the hedges (2020: tax credits recorded in equity of £13,000).
A tax credit of £713,000 has been recorded in respect of prior year tax
losses that previously had not been recognised.
The deferred tax adjustment in respect of prior years in 2020 and 2021 mainly
reflects reductions in the tax expected to be payable on private equity
income, recorded in prior years, as result of transactions which took place in
the year.
Adjustments in 2020 also include a credit of £175,000 to reflect the
cancellation of the planned reduction in the UK tax from 19% to 17% that was
due to come in to effect from 1 April 2020.
An increase in the main rate of UK corporation tax from 19% to 25% with effect
from 1 April 2023 was enacted in the Finance Act 2021. This rate increase has
been taken into account in the calculation of the Group's UK deferred tax
assets and liabilities as at 30 September 2021, to the extent that they are
expected to reverse after the rate increase comes into effect.
(b) Factors affecting the tax charge for the year
The UK tax rate for the year is 19%. The tax assessment for the period is
lower than this rate (2020: lower). The differences are explained below:
2021 2020
£000 £000
Profit before tax 45,749 16,682
Tax charge at 19% (2020: 19%) 8,692 3,170
Effects of:
Non-taxable income (18) -
Non-deductible expenses and charges 316 13
Adjustment in respect of historical tax charges (2,795) (787)
Effect of higher tax rates in foreign jurisdictions 22 85
Tax losses not recognised - 463
Recognition of prior year tax losses (713) -
Total income tax expense 5,504 2,944
(c) Deferred tax
The deferred tax asset/(liability) included in the consolidated statement of
financial position is as follows:
Share-based payment scheme Other assets Total Income Other liabilities £000 Total liabilities £000
£000
assets
not yet taxable
£000
£000
£000
As at 1 October 2019 3,519 238 3,757 (3,833) (167) (4,000)
Credit to equity 4,636 13 4,649 - - -
Exchange differences on consolidation - - - 6 - 6
Credit/(charge) to the income statement (2,953) 40 (2,913) 697 (43) 654
As at 30 September 2020 5,202 291 5,493 (3,130) (210) (3,340)
Credit to equity 8,634 (26) 8,608 - - -
Exchange differences on consolidation - - (1) - - -
Credit/(charge) to the income statement (3,243) 1,038 (2,205) 2,969 - 2,969
As at 30 September 2021 10,593 1,303 11,895 (161) (210) (371)
Other assets include carried forward losses of £681,000 as at 30 September
2021 (2020: nil).
12 EARNINGS PER SHARE
Basic earnings per share ("EPS") is calculated by dividing the profit for the
year attributable to ordinary equity holders of the Parent Company (the
"Earnings") by the weighted average number of ordinary shares outstanding
during the year, less the weighted average number of own shares held. Own
shares are held in Employee Benefit Trusts ("EBTs").
Diluted EPS includes an adjustment to reflect the dilutive impact of share
awards.
Earnings for the year Shares Earnings per share
£000 000s
2021
Basic 40,245 127,644 31.5p
Diluted 40,245 132,669 30.3p
2020
Basic 13,235 124,572 10.6p
Diluted 13,235 125,825 10.5p
The weighted average number of shares is calculated as shown in the table
below:
2021 2020
000's 000's
Weighted average issued share capital 131,772 130,415
Less own shares held (4,128) (5,843)
Weighted average number of ordinary shares used in the calculation of basic 127,644 124,572
EPS
Additional dilutive shares regarding share schemes 5,983 2,451
Adjustment to reflect option exercise proceeds and future service from (958) (1,198)
employees receiving share awards
Weighted average number of ordinary shares used in the calculation of diluted 132,669 125,825
EPS
13 DIVIDENDS
Dividends are recognised as a reduction in equity in the period in which they
are paid or in the case of final dividends when they are approved by
shareholders. The reduction in equity in the year therefore comprises the
prior year final dividend and the current year interim dividend.
Dividends declared/proposed in respect of the year
2021 2020
pence pence
Interim dividend declared per share 3.6 1.8
Final dividend proposed per share 17.0 6.8
Total 20.6 8.6
The proposed final dividend of 17.0p will be submitted for formal approval at
the Annual General Meeting to be held on 29 March 2022. Based on the number of
shares in issue at the date of this report and excluding own shares held the
total amount payable for the final dividend would be £22,409,000.
Dividends paid in the year
2021 2020
£000 £000
Prior year final dividend - 6.8p, 4.0p 8,871 5,140
Interim dividend - 3.6p, 1.8p 4,745 2,302
13,616 7,442
14 GOODWILL
The goodwill balance within the Group at 30 September 2021 arose from the
acquisition of Impax Capital Limited on 18 June 2001 and the acquisition of
Impax NH in January 2018.
Goodwill
£000
Cost
At 1 October 2019 12,804
Foreign exchange (498)
At 30 September 2020 12,306
Foreign exchange (490)
At 30 September 2021 11,816
Impax NH consists of only one cash-generating unit ("CGU"). Goodwill is
allocated between CGUs at 30 September 2021 as follows - £10,187,000 to Impax
NH and £1,629,000 to the Listed Equity and Private Equity CGUs.
The Group has determined the recoverable amount of its CGUs by calculating
their value in use using a discounted cash flow model. The cash flow forecasts
were derived taking into account the budget for the year ended 30 September
2022, which was approved by the Directors in October 2021.
The goodwill on the Listed Equity and Private Equity CGUs arose over 15 years
ago and the business has grown significantly in size and profitability since
that date. There is accordingly significant headroom before an impairment is
required. The main assumptions used to calculate the cash flows in the
impairment test for these CGUs were that assets under management would
continue at current levels and margins would continue at current levels, that
fund performance for the Listed Equity business would be 5% per year (2020:
5%) and a discount rate of 12.5% (2020: 12.5%). The discount rate was derived
from the Group's weighted average cost of capital. There has been no
impairment of goodwill related to these segments to date and there would have
to be significant asset outflows over a sustained period before any impairment
was required. If the discount rate increased by 3% there would no impairment
and if fund performance reduced to zero there would be no impairment (2020: 3%
increase in discount rate, no impairment).
The impairment test for the Impax NH CGU showed no impairment (2020: no
impairment) was required and used the following key assumptions - average fund
inflows of $0.38 billion (2020: $0.57 billion), fund performance of 5% (2020:
5%), an average operating margin of 17% (2020: 20%) and a discount rate of
12.5% (2020: 12.5%). The following plausible changes in assumptions would
individually not give rise to an impairment: a consistent 10% decrease in
inflows (2020: 10% decrease); a 100 basis point annual reduction in
performance each year (2020: 100 basis point reduction); a 1% annual reduction
in operating margin (2020: 1% reduction), a 1% increase in discount rate
(2020: 1% increase).
15 INTANGIBLE ASSETS
Intangible assets mainly represent the value of the management contracts
acquired as part of the acquisition of Impax NH.
Management contracts Software Total
£000 £000 £000
Cost
As at 1 October 2019 29,016 515 29,531
Additions - 14 14
Foreign exchange (1,309) - (1,309)
As at 30 September 2020 27,707 529 28,236
Foreign exchange (1,266) - (1,266)
As at 30 September 2021 26,441 529 26,970
Accumulated amortisation
As at 1 October 2019 4,621 392 5,013
Charge for the year 2,535 66 2,601
Foreign exchange (249) - (249)
As at 30 September 2020 6,907 458 7,365
Charge for the year 2,358 51 2,409
Foreign exchange (277) - (277)
As at 30 September 2021 8,988 509 9,497
Net book value
As at 30 September 2021 17,453 20 17,473
As at 30 September 2020 20,800 71 20,871
As at 30 September 2019 24,395 123 24,518
The management contracts were acquired with the acquisition of Impax NH in
January 2018 and are amortised over an 11 year life. An impairment test was
completed on this asset for the year ended 30 September 2020 and showed no
impairment was required. The test used the following key assumptions - inflows
of new assets of $US0.34 billion per annum on average, future equity fund
performance of 5%, an average operating margin of 20% and a discounted cost of
capital of 13.5%.
The assumptions around fund performance, operating margin and discounted cost
of capital that we would use in an impairment test performed at 30 September
2021 remain the same as at 30 September 2020. Future inflows would be greater.
Actual asset inflows, fund performance and operating margin for the year ended
30 September 2021 have however been significantly in excess of those assumed
and accordingly there are no indicators of impairment.
16 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment mainly represents the costs of fitting out the
Group's leased London office (leasehold improvements), office furniture and
computers (fixtures, fitting and equipment) and the capitalised value of the
Group's leases on its office buildings (right-of-use assets).
Right of use assets Leasehold improvements Fixtures, fittings and equipment Total
£000 £000 £000 £000
Cost
As at 1 October 2019 10,693 2,071 1,701 14,465
Additions 87 22 146 255
Foreign exchange (225) - - (225)
As at 30 September 2020 10,555 2,093 1,847 14,495
Additions 194 - 257 451
Disposals - (19) - (19)
Foreign exchange (222) - (14) (236)
As at 30 September 2021 10,527 2,074 2,090 14,691
Accumulated depreciation
As at 1 October 2019 - 970 1,023 1,993
Charge for the year 1,249 146 264 1,659
Foreign exchange (9) 2 (7) (14)
As at 30 September 2020 1,240 1,118 1,280 3,638
Charge for the year 1,236 145 267 1,648
Disposals - (10) - (10)
Foreign exchange (14) - (6) (20)
As at 30 September 2021 2,462 1,253 1,541 5,256
Net book value
As at 30 September 2021 8,065 821 549 9,435
As at 1 October 2020 9,315 975 567 10,857
As at 30 September 2019 10,693 1,101 678 12,472
Lease arrangements
Property, plant and equipment includes right-of-use assets in relation to
operating leases for the Group's office buildings.
The carrying value of the Group's right-of-use assets, associated lease
liabilities and the movements during the period are set out below.
Right of use asset Lease liabilities
£m £m
At 1 October 2020 9,315 10,671
New leases 194 202
Lease payments - (1,691)
Interest expense - 468
Depreciation charge (1,236) -
Foreign exchange movement (208) (218)
At 30 September 2021 8,065 9,432
Current 1,330
Non-current 8,102
9,432
The contractual maturities on the undiscounted minimum lease payments under
lease liabilities are provided below:
2021 2020
£000 £000
Within 1 year 1,694 1,702
Between 1 and 5 years 6,452 6,461
Later than 5 years 3,110 4,862
Total undiscounted lease liabilities 11,256 13,025
The Company's London office lease has an extension option of a further five
years from June 2027, subject to a rent review, which is not included in the
above numbers on the basis that it is not yet reasonably certain that it will
be exercised
17 TRADE AND OTHER RECEIVABLES
2021 2020
£000 £000
Trade receivables 8,679 3,512
Other receivables 1,717 685
Prepayments and accrued income 29,404 16,538
39,800 20,735
Accrued income relates to accrued management fees and arises where invoices
are raised in arrears.
An analysis of the aging of trade receivables is provided below:
2021 2020
£000 £000
0-30 days 6,865 2,317
Past due but not impaired:
31-60 days 1,052 -
61-90 days 762 1,195
8,679 3,512
At the date of this report, substantially all of the trade receivables above
have been received. As at 30 September 2021, the assessed provision under the
IFRS 9 expected loss model for trade receivables and prepayments and accrued
income was immaterial (2020: immaterial).
£34,685,000 of trade receivables and accrued income were due from related
parties (2020: £16,302,700).
18 CURRENT ASSET INVESTMENTS
The Group makes seed investments into its own Listed Equity funds and also
invests in its Private Equity funds. Where the funds are consolidated the
underlying investments are shown in the table below. Investments made in
unconsolidated funds are also included.
Total
£000
At 1 October 2019 4,626
Additions 758
Fair value movements 952
Repayments/disposals (1,949)
At 30 September 2020 4,387
Additions 2,832
Fair value movements 648
Repayments/disposals (303)
At 30 September 2021 7,564
19 CASH AND CASH EQUIVALENTS, CASH INVESTED IN MONEY MARKET FUNDS AND
LONG-TERM DEPOSITS
Cash and cash equivalents under IFRS does not include deposits in money market
funds or cash held in deposits with an original maturity of more than three
months. However, the Group considers its total cash reserves to include these
amounts. Cash held by consolidated funds is not considered to be available to
the Group so it is not included in cash reserves. Cash held in Research
Payment Accounts ("RPAs") is collected from funds managed by the Group and can
only be used towards the cost of researching stocks. A liability of an equal
amount is included in trade and other payables. This cash is also excluded
from cash reserves. A reconciliation is shown below:
2021 2020
£000 £000
Cash and cash equivalents 36,172 20,245
Cash invested in money market funds and long-term deposit accounts 38,066 18,516
Less: cash held in RPAs (4,089) (1,363)
Cash reserves 70,149 37,398
20 TRADE AND OTHER PAYABLES
2021 2020
£000 £000
Trade payables 852 305
Taxation and other social security 5,160 3,285
Other payables 4,655 4,550
Accruals and deferred income 39,440 19,844
50,107 27,984
The most significant accrual at the year-end relates to variable staff
remuneration.
21 LOANS
The Group retains a US$13 million revolving credit facility ("RCF") with RBS
International which expires in January 2023. No amounts were drawn down or
repaid in the current period or in the prior year.
22 ORDINARY SHARES
Issued and fully paid 2021 2020 2021 2020
No of shares/000s No of shares/000s £000 £000
At 1 October and 30 September 132,597 130,415 1,326 1,304
Ordinary shares have a par value of £0.01 per share. Each ordinary share
carries the right to attend and vote at general meetings of the Company.
Holders of these shares are entitled to dividends as declared from time to
time. On 16 February 2021, 2,000,000 new shares were issued to the Impax Asset
Management Group plc Employee Benefit Trust 2012 (the "EBT") and a further
181,467 shares were issued to management of Impax NH as part of the
consideration for the acquisition of that business that occurred in 2018.
23 OWN SHARES
No of Shares/000s £000
At 1 October 2019 9,025,766 6,878
Satisfaction of option exercises and RSS vesting (5,105,507) (3,891)
EBT 2012 purchases 1,266,608 4,223
At 30 September 2020 5,186,867 7,210
Issuance of shares to EBT 2012 2,000,000 -
Satisfaction of option exercises and RSS vesting (3,083,472) (3,093)
At 30 September 2021 4,103,395 4,117
Included within Own Shares are 3,322,833 shares held in a nominee account in
respect of the Restricted Share Scheme as described in note 8.
24 FINANCIAL COMMITMENTS
At 30 September 2021 the Group has outstanding commitments to invest up to the
following amounts into private equity funds that it manages:
· €203,000 (2020: €203,000) into Impax New Energy Investors LP;
this amount could be called on in the period to 31 December 2021;
· €113,000 (2020: €113,000) into Impax New Energy Investors II
LP; this amount could be called on in the period to 22 March 2022;
· €1,567,000 (2020: €2,137,000) into Impax New Energy Investors
III LP; this amount could be called on in the period to 31 December 2026; and
· €449,616 (2020: £nil) into Impax New Energy Investors IV SCSp;
this amount could be called on in the period to 31 October 2031.
25 RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
This note should be read in conjunction with the consolidated cash flow
statement. It provides a reconciliation to show how profit before tax, which
is based on accounting rules, translates to cash flows.
2021 2020
£000 £000
Profit before taxation 45,749 16,682
Adjustments for income statement non-cash charges/income:
Depreciation of property plant and equipment and amortisation of intangible 4,057 4,260
assets
Finance income (286) (1,020)
Finance expense 1,971 1,921
Share-based payment charges 4,882 1,813
Adjustments for statement of financial position movements:
Increase in trade and other receivables (19,021) (3,995)
Increase in trade and other payables 22,460 4,721
Cash generated from operations 59,812 24,382
26 COMPLETION OF ACQUISITION OF IMPAX NH
On 16 February 2021, the Company exercised its call option, issued as part of
the acquisition of Impax NH in 2018, to acquire the remaining 16.7% of the
shares held by Impax NH's management for total consideration, after repayment
of loans made by Impax NH to the individuals, of $3,006,000, $979,000
(£704,000) was paid in cash and $2,027,000 was paid in the Company's shares
with the number of shares being determined based on the average share price
for the 20 trading days to 27 January 2021. The shares were however issued on
16 February 2021 and have been valued in these financial statements at a total
of £1,535,000 using the share price on that date.
The award and subsequent purchase of the shares was treated as a share-based
payment classified as equity settled as the Company had the option of settling
in cash or shares. The completion of the acquisition is therefore accounted
for as a reduction in equity of £2,239,000 being the sum of the cash paid of
£704,000 and the £1,535,000 value of the shares issued.
The amount of contingent consideration due in respect of the acquisition was
also finalised with $270,000 (£167,000) payable. This amount has been
recorded as a charge to profit.
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