REG - Impax Asset Mgmnt - Final Results
28/11/2024 07:00
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RNS Number : 9365N Impax Asset Management Group plc 28 November 2024
Impax Asset Management Group plc
Results for the year ended 30 September 2024
London, 28 November 2024 - 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 2024 (the "Period").
Business highlights
· Assets under management ("AUM") remained broadly flat at £37.2
billion (2023: £37.4 billion)
· Net flows of (£5.8 billion) (2023: (£92 million))
· Expansion of distribution and listed equities product range
· Fixed income: two acquisitions and further development of investment
processes
· Resilient financial and operational performance
Key Performance Indicators
· Revenue decreased by 4.7% to £170.1 million (2023: £178.4 million)
· Adjusted operating profit decreased by 9.3% to £52.7 million (2023:
£58.1. million)
· Adjusted operating margin of 31.0% (2023: 32.6%)
· IFRS Profit before tax decreased by 6.0% to £49.0 million (2023:
£52.1 million)
· Adjusted diluted earnings per share decreased by 8.5% to 32.2p (2023:
35.2p)
· IFRS diluted earnings per share decreased by 5.4% to 28.2p (2023:
29.8p)
· Proposed final dividend of 22.9p per share bringing total dividend
per share to 27.6p (2023: 27.6p)
· Cash reserves of £90.8 million (2023: £87.7 million)
Simon O'Regan, Chair, commented:
"Having served on the Board since 2020 and been Senior Independent Director
since March 2023, it was a huge honour to become Chair of this dynamic
business in July this year.
"Impax has continued to show its resilience over the Period. The Company has
made material strategic progress and delivered improved investment performance
while focusing on operational efficiency and the control of costs.
"Notwithstanding the geopolitical and market uncertainty arising in part from
the recent US elections, investor sentiment remains positive and Impax's
differentiated offering continues to be welcomed by clients around the world."
Ian Simm, Chief Executive, added:
"This was a year of positioning the business for further growth, not least
through the acquisition of further fixed income capability, diversification of
our distribution channels, product development and through increased focus on
client service, including additional reporting and thought leadership.
"The broadly flat trajectory of our AUM reflects a positive absolute
contribution of £5.3 billion from the investment performance of the funds and
accounts that we manage, together with £312 million of acquired fixed income
AUM following our acquisition of Absalon Corporate Credit. In a challenging
environment for active asset managers, this was offset by net outflows of
£5.8 billion, which was primarily from our European wholesale channel and
particularly concentrated over the first three financial quarters. The
transaction with SKY Harbor Capital Management, which should add ca. £1.3
billion to our aggregate AUM, is expected to close around the end of the
calendar year.
"We are encouraged by Impax's prospects and believe that the macroeconomic
backdrop is supportive for our strategies. Expectations of a 'soft landing'
for the US economy should underpin improved investor confidence, while stable
risk sentiment should lead investors to look beyond the narrow range of stocks
(including those in artificial intelligence and obesity drugs) that have
driven the performance of global indices for much of the past 18 months.
"Experience from the first Trump administration suggests that the next four
years are likely to be positive for US-based businesses delivering innovative
products and services and in which materials and energy efficiency are
significant contributors. Against this backdrop, we are confident that our
investment portfolios can deliver excellent returns for clients."
Ends
Media Enquiries:
Impax Asset Management Group plc
Ian Simm, Chief Executive +44 (0)20 3912 3000
Paul French, Head of Corporate Communications +44 (0)20 3912 3032
p.french@impaxam.com (mailto:p.french@impaxam.com)
Montfort Communications
Gay Collins +44(0)77 9862 6282
Jack Roddan +44(0)78 2567 0695
impax@montfort.london (mailto:impax@montfort.london)
Peel Hunt LLP, Nominated Adviser and Joint Broker
Andrew Buchanan +44 (0)20 7418 8900
Berenberg, Joint Broker
James Felix +44 (0)203 207 7800
John Welch
Dan Gee-Summons
LEI number: 213800AJDNW4S2B7E680
About Impax Asset Management
Founded in 1998, Impax is a specialist asset manager, with approximately
£37.2 billion of 30 September 2024 in both listed and private markets
strategies, investing in the opportunities arising from the transition to a
more sustainable global economy.
Impax believes that capital markets will be shaped profoundly by global
sustainability challenges, including climate change, pollution and essential
investments in human capital, infrastructure and resource efficiency. These
trends will drive growth for well-positioned companies and create risks for
those unable or unwilling to adapt.
The company seeks to invest in higher quality companies with strong business
models that demonstrate sound management of risk. Impax offers a well-rounded
suite of investment solutions spanning multiple asset classes seeking superior
risk-adjusted returns over the medium to long term.
Impax has approximately 310 employees(1) across its offices in the United
Kingdom, the United States, Ireland, Denmark, Hong Kong and Japan making it
one of the investment management sector's largest investment teams dedicated
to sustainable development.
www.impaxam.com (http://www.impaxam.com)
(1 )Full-time equivalent
Issued in the UK by Impax Asset Management Group plc, whose shares are quoted
on the Alternative Investment Market of the London Stock Exchange. Impax
Asset Management Group plc is registered in England & Wales, number
03262305. AUM relates to Impax Asset Management Limited, Impax Asset
Management (AIFM) Limited, Impax Asset Management Ireland Limited and Impax
Asset Management LLC. Impax Asset Management Limited and Impax Asset
Management (AIFM) Limited are authorised and regulated by the Financial
Conduct Authority and are wholly owned subsidiaries of Impax Asset Management
Group plc. Please note that the information provided on www.impaxam.com
(http://www.impaxam.com/) and links from it should not be relied upon for
investment purposes.
Impax is trademark of Impax Asset Management Group Plc. Impax is a registered
trademark in the UK, EU, US, Hong Kong, Canada, Japan and Australia. © Impax
Asset Management LLC, Impax Asset Management Limited and/or Impax Asset
Management (Ireland) Limited. All rights reserved.
Chief Executive's Report
Impax showed its resilience during the 12 months ending 30 September 2024
("the Period"), a year in which meaningful strategic developments, improved
investment performance and a strong focus on operational efficiency and cost
control was counterbalanced by net outflows.
At the end of the Period, Impax's assets under management and advice ("AUM")
were £37.2 billion as of 30 September 2024 (30 September 2023: £37.4
billion).
The broadly flat trajectory of our AUM reflects a positive absolute
contribution of £5.3 billion from the investment performance of the funds and
accounts that we manage together with £312 million of acquired fixed income
AUM. This was offset by net outflows of £5.8 billion for the Period, which
was particularly concentrated over the first three financial quarters and from
our European wholesale channel.
With client outflows contributing to a lower average AUM compared to the
previous year, the Company's revenues of £170.1 million were down 4.7% on the
prior year. Adjusted operating profits meanwhile fell by 9.3% to £52.7
million, reflecting in part a 2.4% decline in adjusted operating costs across
the year as we focused on efficiency and cost control.
Notwithstanding the near-term headwinds, we remain convinced that investing in
the transition to a more sustainable economy will continue to offer excellent
medium-to-long term financial returns. Today, with a long track-record and an
investment team of over 90 professionals, we're acknowledged globally as one
of the largest specialist managers in this area.
AUM Movement for Full year to 30 September 2024
Listed equities Fixed income Private markets Total firm
£m £m £m £m
Total AUM at 30 September 2023 35,552 1,283 564 37,399
Net flows (5,796) (144) 151 (5,789)
Acquired assets (Absalon Capital Management) 0 312 0 312
Performance, market movement, and FX 5,264 27 (27) 5,265
Total AUM at 30 September 2024 35,021 1,478 689 37,187
The case for our investment philosophy continues to build. This philosophy is
predicated on our strongly held belief that long-term secular trends are
causing inevitable sectoral transformations across virtually every area of the
economy. Well-rehearsed examples include the transition to renewable power
generation and electric vehicles. It's also clear to most that increasingly
frequent severe weather, as evidenced by Hurricane Helene in September or the
recent flooding in eastern Spain, is raising requirements for additional and
innovative investment in areas such as engineering design, infrastructure
monitoring, weather forecasting and disaster management systems.
Overall, we are encouraged by indications of an improvement in investor
sentiment through 2024. As I expand in the "Outlook" section below, as stock
and credit selectors, we're able to adjust our clients' portfolios to reflect
changing economic prospects and are currently analysing the anticipated
stronger United States economic conditions and domestic business confidence
heralded by the forthcoming (second) Trump Administration.
In the round, we believe the outlook is positive for those companies that are
set to benefit from the transition to a more sustainable economy. This
provides a supportive backdrop for the platform that we have built over many
years and will enable further growth in the future.
Investment strategies and performance
We continue to offer investment strategies covering thematic equities, core
equities, fixed income and private markets.
Our strategies largely performed positively on an absolute basis over the
Period, with our three largest strategies (Global Opportunities, Leaders and
Water) returning 17.8%, 19.4% and 18.9% respectively. Together these
strategies accounted for 62.4% of our AUM at the end of the Period.
Nevertheless, relative to generic indices, top-down factors near the beginning
of the Period impacted performance. During the first half of the financial
year, the market concentration of the mega-cap technology stocks in the MSCI
All Country World Index ("ACWI") acted as a detractor for many of our
strategies. However, by the fourth quarter we saw a re-rating of the "quality
growth" businesses in which our principal investment portfolios invest, with
corresponding relative outperformance. This was driven by stronger market
conditions, supported in part by lower bond yields and interest rate cuts (as
a result of falling inflation) in the US and elsewhere.
Longer term, 72%% of our strategies' AUM have outperformed their benchmarks
over five years.
Strategic priorities
During the Period we continued to pursue a strategy of diversifying our
revenue by asset class and by client type. Our priorities centre on deepening
our leadership in listed equities, while at the same time scaling up our fixed
income and private markets propositions. While we will primarily achieve this
growth organically, we will consider smaller acquisitions on an opportunistic
basis, particularly in the latter two asset classes.
Meanwhile, we will continue to focus on growing our direct channel
distribution capabilities, deepening our partnership with selected third
parties and continuing to build an efficient, scalable and agile operating
model.
Fixed income
As the transition to a more sustainable economy unfolds, larger mature
businesses are increasingly able to finance their growth through borrowings,
and hence the investment opportunity in corporate credit continues to expand.
We made particularly significant progress in the expansion of our fixed income
capabilities during the Period, announcing two acquisitions.
In July we completed the acquisition in Denmark of Absalon Corporate Credit,
representing £312 million of AUM with capabilities in Global High Yield and
Emerging Markets Corporate Bond. That month we also announced a conditional
agreement to acquire the European assets of and hire a team from SKY Harbor
Capital Management LLC, bringing us investment capabilities and approximately
£1.3 billion of funds in Short Duration High Yield. We expect to complete
this second acquisition around the end of the calendar year.
Following the completion of both acquisitions, subject to market performance
and client retention, Impax will have total pro forma fixed income AUM of
approximately £2.7 billion.
We have also established a new Global Credit Research Platform and launched a
new analytical framework for fixed income focused on sustainability issues.
Listed equities
We have good capacity to grow within our existing range of listed equities
strategies, while continuing to develop our suite of products. For example, in
North America we have seen some good interest in our recently launched
Sustainable Infrastructure strategy and Global Social Leaders strategy.
Meanwhile, the US Environmental Leaders strategy is now available on our
European UCITS fund platform.
Before the end of the Period we seeded a Global Emerging Markets Opportunities
strategy and, subsequently, an active EAFE Opportunities strategy.
As our team in this area has expanded, we have continued to adjust the team
structure and individual roles to optimise results. During the Period we
created a Global Equity Research structure, tightening the coverage definition
for each analyst and thereby introducing a clearer distinction between idea
generation for individual stocks and portfolio management responsibilities.
Private markets
We continue to identify attractive opportunities to invest privately in real
assets in the renewable energy sector. In early 2024 we announced the
successful final close of our fourth fund in this area, which at €459
million was the team's largest fundraise to date and approximately 30% larger
than the previous fund. This is a significant achievement by the team given
the challenging conditions, notably the macroeconomic environment which lead
to a very challenging fundraising environment over the past two years.
The fund's portfolio currently consists of 12 investments in seven countries
across seven technologies, including a German wind developer, Italian solar PV
and energy efficiency portfolio and an Irish electric vehicle charging
company.
The team's third fund has also made several notable realisations including
exiting a Norwegian small-scale hydropower platform and a sizeable German wind
portfolio. As at the end of the Period, 42% of this Fund's portfolio has been
exited.
The team is currently working on plans for raising the next fund in Impax's
renewable energy fund series.
Client Group
In line with our strategy of diversifying our distribution capabilities, we
further strengthened our own direct channels and expanded our relationships
with partners.
In Europe, following the Absalon acquisition, we opened an office in
Copenhagen and hired a Head of Nordics to lead business development in the
region. We also added new distribution partners in Spain and Italy. Subject to
the completion of the SKY Harbor deal, we expect to have client-facing team
members based in Germany and Switzerland.
Following the closing of the Absalon transaction, we are now offering fixed
income products on our Ireland-based European fund platform for the first
time. During the Period we also added two new listed equities funds
to this platform.
On our US mutual fund platform we launched a new Global Social Leaders fund
and also made enhancements to two other funds: the Impax Ellevate Global
Women's Leadership fund and the Impax Global Sustainable Infrastructure fund.
Meanwhile we are currently filing with the US regulator to offer ETF share
classes of our mutual funds.
Net flows
With total net outflows of £5.8 billion, client redemptions were primarily
made through our wholesale channel and largely by retail clients served by our
third-party distribution partners, including BNP Paribas Asset Management in
Europe & Asia-Pacific.
However, during the fourth quarter of the year we saw a sharp drop in
redemptions (down 36% compared to the third quarter).
Significant new client wins during the Period included listed equities
mandates for pension funds in the UK, Sweden, Australia and the US, and new
accounts through our wholesale channel in the US, Canada, Italy,
and Australia.
While we experienced client redemptions through our intermediary/wholesale
channel in particular, our client retention levels remain solid, with accounts
closing during the Period representing 0.2% of the opening AUM.
In October, i.e., after the Period end, St. James's Place ("SJP") announced
that it was reallocating its Global Quality fund away from Impax. At ca. 13%
of the total AUM that Impax manages for SJP, this is the smaller of our two
accounts with them. The impact on our annualised revenue is expected to be
very modest and we continue to manage the much larger SJP portfolio, the
Sustainable & Responsible Equity Fund, on a sole basis.
Strengthen brand differentiation
The Company continues to be recognised for its leadership in investing in the
transition to a more sustainable economy. During the Period, Impax received a
third prestigious King's Award for Enterprise, in the Sustainable Development
category.1 Morningstar named Impax as "Best Asset Manager" in its 2024
Sustainable Investing Awards, while the Company was named 'Responsible
Investor of the Year' in the Reuters Responsible Business Awards and 'Boutique
Manager of the Year' by Financial News.
The Impax Sustainability Centre acts as the centre of excellence for the
business and for clients, providing services, tools and expertise.3 This
encompasses our policy, advocacy and sustainability activity,
including reporting.
This year we marked a decade of measuring and reporting some of the
non-financial impacts of the companies in which we invest. We have also
introduced some new metrics in this area and expanded our reporting at the
account and fund level.
We were also pleased to initiate and co-write a report for the Sustainable
Markets Initiative to understand how asset owners integrate climate change
issues into their investment decisions. Working together with State Street, we
interviewed the chief investment officers of 11 large asset owners, presenting
the findings at Climate Week New York in September 2024.
Following our engagement with the US regulator, in March 2024, the Securities
& Exchange Commission cited Impax 24 times in the background notes to its
new climate risk disclosure rule, including the requirement that companies
report on physical risks and asset locations when impacts are material.
In our Climate Report 2024 we describe how we manage climate-related risks and
identify climate-related opportunities in line with the recommendations of
what is now the International Sustainability Standards Board.
Operations: managing costs and efficiency
We have continued to focus on the effectiveness of our operations, undertaking
a wide range of initiatives to improve efficiency.
The 2.4% decline in adjusted operating costs, notwithstanding investment into
our fixed income platform, demonstrates our ability to support our
profitability and continue to position the Company for scalable growth over
the medium term.
Operations: managing costs and efficiency continued
We continued to strengthen our approach to risk and compliance, with second
line functions now having a management reporting line through the Chief Risk
Officer directly to me.
We have also improved our data processing capabilities and strengthened the
security and resilience of our operational data transfer infrastructure.
Meanwhile, our headcount grew very modestly to 315 at the end of the Period,
which included five new colleagues in Denmark, compared to 300 a year earlier.
Attracting and developing our talent
We conduct an employee engagement survey annually. This year, the overall
engagement score, which reflects colleague satisfaction and commitment, was,
at 86 points, four points ahead of our peer group benchmark. Our colleagues
continue to tell us that they feel closely aligned to Impax's mission and
values, in particular our focus on sustainable development. Our staff turnover
remains low relative to peers and we made good progress against our equity,
diversity and inclusion goals.
Board succession
As referred to in the Chair's Introduction, at the end of July, Simon O'Regan
succeeded Sally Bridgeland as Chair of the Board. Simon has been a member of
the Impax board for four years and brings considerable international
experience as a pensions consultant, business leader and qualified actuary. He
is perfectly placed to succeed Sally, and I look forward to working with him
closely as we continue to grow and diversify the business.
I would like to welcome Julia Bond and Lyle Logan, who have joined the Board
this year, and to thank both Sally and Lindsey Brace Martinez, who also
retired from the Board in July, for their important contributions to Impax
over nearly a decade.
Outlook
Following a challenging 12 months for client flows, we are broadly encouraged
by the outlook for the business and believe that the macroeconomic backdrop is
supportive for our strategies.
Expectations of a 'soft landing' for the US economy should underpin improved
investor confidence, while improved risk sentiment should lead investors to
look beyond the narrow range of stocks (including those in artificial
intelligence and obesity drugs) that have driven the performance of global
indices for much of the past 18 months.
In these circumstances, our investment teams will continue to seek out
companies displaying quality characteristics, structural growth and the
ability to consistently compound returns. This will include companies enabling
innovation in areas such as healthcare, re-shoring in the semiconductor and
other industries, reinsurance of climate events, and the building of
infrastructure in emerging markets.
Despite President-elect Donald Trump's negative stance on climate policies,
experience from the first Trump administration suggests that the next four
years are likely to be positive for US-based businesses delivering innovative
products and services in the above areas and in which materials and energy
efficiency are significant contributors. Against this backdrop, we are highly
confident that our investment portfolios can deliver excellent returns for
clients.
I'm pleased by the resilience that the business has shown during the Period
and by our ability to maintain cost discipline. Above all, I'm particularly
encouraged by the progress that we have made in diversifying our business,
with the development of our fixed income capabilities and the build-out of our
direct distribution channels; importantly, this has been achieved while still
providing an excellent service to our existing clients.
I'd like to thank you for your continued support for and interest in Impax.
Ian Simm
27 November 2024
Financial Review
I am pleased to present our results for the Period which continue to
demonstrate our resilience. An emphasis on effective cost control and
operational efficiency has enabled us to produce strong results despite the
net outflows experienced during the Period.
In order to facilitate comparison of performance with previous time periods
and to provide an appropriate comparison with our peers, we have presented
adjusted financial measures alongside the IFRS measures.
2024 2023
AUM £37.2bn £37.4bn
Revenue £170.1m £178.4m
Adjusted operating costs £117.4m £120.3m
Adjusted operating profit £52.7m £58.1m
Adjusted profit before tax £55.7m £60.0m
Adjusted diluted earnings per share 32.2p 35.2p
Cash reserves £90.8m £87.7m
Seed investments £16.0m £13.3m
Dividend per share 4.7p interim 4.7p interim
+ 22.9p proposed final
+ 22.9p final
2024 2023
IFRS operating profit £49.0m £54.2m
IFRS profit before tax £49.0m £52.1m
IFRS diluted earnings per share 28.2p 29.8p
Revenue
Revenue for the Period decreased by £8.3 million to £170.1 million (2023:
£178.4 million) as a result of the decrease in average AUM compared to the
prior Period. The decrease in revenue was driven by total net outflows of
£5.8 billion which were largely offset by positive market movements to arrive
at Period end AUM of £37.2 billion (2023: £37.4 billion).At the end of the
Period, the weighted average run-rate revenue margin remained stable at 45
basis points (2023: 45 basis points) on the £37.2 billion of AUM. Our
run-rate revenue, also based on the Period end AUM reduced to £166.5 million
(2023: £168.8 million).
No adjustments have been made to revenue to arrive at adjusted operating
profit.
Operating costs
Adjusted operating costs decreased to £117.4 million (2023: £120.3 million)
as we focused on tightening our control over costs during the Period. We
continue to invest strategically in the areas of the business that we believe
will support our long-term growth ambitions, particularly in the areas of
fixed income and operational resilience.
IFRS operating costs include additional charges and credits, principally
acquisition-related costs, the amortisation of intangible assets and equity
incentive scheme charges arising on acquisitions and national insurance
charges and credits on share options and restricted shares which is payable
based on the share price when an option is exercised or restricted
shares vest.
Profits and operating margin
Adjusted operating profit decreased to £52.7 million (2023: £58.1 million)
owing to the decreased revenue discussed above offset in part by the decrease
in adjusted operating costs. This saw the adjusted operating margin fall
slightly to 31.0% (2023: 32.6%). Run-rate adjusted operating profit at the end
of the Period was £48.8 million (2023: £51.9 million) and run-rate adjusted
operating margin at the end of the Period was 29.3% (2023: 30.8%).
Adjusted profit before tax of £55.7 million (2023: £60.0 million) and
adjusted diluted earnings per share of 32.2 pence (2023: 35.2 pence) include
net finance income of £3.0 million (2023: £1.9 million).
IFRS operating profit for the Period decreased to £49.0 million (2023: £54.2
million) reflecting the reduction in revenue discussed above. IFRS profit
before tax of £49.0 million (2023: £52.1 million) includes foreign exchange
losses of £3.0 million (2023: £4.0 million) on the retranslation of monetary
assets held in foreign currencies that are not linked to the operating
performance of the Group. £1.4 million of this loss relates to the
retranslation of a US dollar denominated loan between the Parent Company and a
US subsidiary. A corresponding gain is recognised in equity in the exchange
translation reserve. IFRS diluted earnings per share decreased to 28.2 pence
(2023: 29.8 pence).
Tax
The effective tax rate has increased to 25.5% (2023: 24.7%).
Financial management
The Company continues to be a strongly cash generative business with high
levels of cash and no debt. At the Period end the Company's cash resources
increased to £90.8 million (2023: £87.7 million) owing to controlled cash
management.
During the Period, we made seed investments, net of redemptions, of £1.2
million in our listed equity and private equity funds (2023: seed investments,
net of redemptions, of £5.3 million). At the Period end total investments
were valued at £16.0 million (2023: £13.3 million).
Share management
The Board will consider purchasing the Company's shares from time to time
after due consideration of alternative uses of the Company's cash resources.
Share purchases are usually made by the Group's Employee Benefit Trust ("EBT")
(subject to the trustees' discretion), using funding provided by the Company.
During the Period, the EBT purchased 1.9 million ordinary shares. The EBT hold
shares for Restricted Share awards until they vest or to satisfy share
option exercises.
At the Period end the EBT held a total of 4.8 million shares, 3.3 million of
which were held for Restricted Share awards leaving up to 1.5 million
available for option exercises and future share awards. There were
2.6 million options outstanding at the Period end, of which 50,000
were exercisable.
Dividends
The Company paid an interim dividend of 4.7 pence per share in July 2024. Our
dividend policy is to pay, in normal circumstances, an annual dividend of at
least 55% of adjusted profit after tax, while ensuring that we retain
sufficient capital to invest in our future growth. As described above, despite
the net outflows experience during the Period, the Company remains in robust
financial health. The Board has therefore decided to recommend a final
dividend of 22.9 pence (2023: 22.9 pence) taking the total dividend for 2024
to 27.6 pence (2023: 27.6 pence). The total dividend for the year represents
87% of our adjusted profit.
This dividend proposal will be submitted for formal approval by shareholders
at the Annual General Meeting on 5 March 2025. If approved, the dividend will
be paid on or around 21 March 2025. The record date for the payment of the
proposed dividend will be 21 February 2025 and the ex-dividend date will be
20 February 2025.
The Company operates a dividend reinvestment plan ("DRIP"). The final date for
receipt of elections under the DRIP will be 28 February 2025. 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 outflows, market performance
and costs, the Group will have sufficient funds to meet its liabilities as
they fall due for that period. 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 remain in in
operational existence for the foreseeable future and have continued to adopt
the going concern basis in preparing the financial statements.
Karen Cockburn
27 November 2024
Consolidated Income Statement
For the year ended 30 September 2024
Notes 2024 2023
£'000 £'000
Revenue 7 170,113 178,367
Operating costs 8 (121,086) (124,120)
Finance income 11 3,946 3,130
Finance expense 12 (4,008) (5,271)
Profit before taxation 48,965 52,106
Taxation 13 (12,488) (12,884)
Profit after taxation 36,477 39,222
Earnings per share
Basic 14 28.5p 30.5p
Diluted 14 28.2p 29.8p
Dividends per share
Interim dividend paid and final dividend declared for the year 15 27.6p 27.6p
Adjusted results are provided in note 5.
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2024
2024 2023
£'000 £'000
Profit for the year 36,477 39,222
Exchange differences on translation of foreign operations (1,644) (119)
Total other comprehensive income (1,644) (119)
Total comprehensive income for the year attributable to equity holders of the 34,833 39,103
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 2024
2024 2023
Notes £'000 £'000 £'000 £'000
Assets
Goodwill 16 11,869 12,883
Intangible assets 17 11,244 14,185
Property, plant and equipment 18 7,879 8,820
Deferred tax assets 13 4,222 3,665
Total non-current assets 35,214 39,553
Trade and other receivables 19 36,870 42,543
Investments 20 15,993 13,270
Current tax asset 1,208 1,645
Cash invested in money market funds 22 67,797 53,542
Cash and cash equivalents 22 25,300 37,963
Total current assets 147,168 148,963
Total assets 182,382 188,516
Equity and liabilities
Ordinary shares 24 1,326 1,326
Share premium 9,291 9,291
Merger reserve 1,533 1,533
Exchange translation reserve 1,296 2,940
Retained earnings 117,677 118,868
Total equity 131,123 133,958
Trade and other payables 23 42,687 44,809
Lease liabilities 18 2,084 1,524
Current tax liability 787 1,007
Total current liabilities 45,558 47,340
Lease liabilities 18 5,701 7,218
Total non-current liabilities 5,701 7,218
Total equity and liabilities 182,382 188,516
Consolidated Statement of Changes in Equity
As at 30 September 2024
Note Share capital Share premium Merger reserve Exchange translation reserve Retained earnings Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
1 October 2022 1,326 9,291 1,533 3,059 122,969 138,178
Transactions with owners of the Company:
Dividends paid 15 - - - - (36,376) (36,376)
Cash received on option exercises - - - - 1,261 1,261
Tax credit on long-term incentive schemes - - - - 371 371
Share based payment charges 10 - - - - 6,535 6,535
Acquisition of own shares - - - - (15,114) (15,114)
Total transactions with owners of the Company - - - - (43,323) (43,323)
Profit for the year - - - - 39,222 39,222
Other comprehensive income:
Exchange differences on translation of foreign operations - - - (119) - (119)
Total other comprehensive Income - - - (119) - (119)
30 September 2023 1,326 9,291 1,533 2,940 118,868 133,958
Transactions with owners of the Company:
Dividends paid 15 - - - - (36,301) (36,301)
Cash received on option exercises - - - - 359 359
Tax credit on long-term incentive schemes - - - - 19 19
Share based payment charges 10 - - - - 6,696 6,696
Acquisition of own shares - - - - (8,441) (8,441)
Total transactions with owners of the Company - - - - (37,668) (37,668)
Profit for the year - - - - 36,477 36,477
Other comprehensive income:
Exchange differences on translation of foreign operations - - - (1,644) - (1,644)
Total other comprehensive Income - - - (1,644) - (1,644)
30 September 2024 1,326 9,291 1,533 1,296 117,677 131,123
Consolidated Cash Flow Statement
For the year ended 30 September 2024
Note 2024 2023
£'000 £'000
Operating activities
Cash generated from operations 27 63,624 53,218
Corporation tax paid (12,988) (14,562)
Net cash generated from operating activities 50,636 38,656
Investing activities
Acquisition of property plant & equipment and intangible assets (1,074) (824)
Redemptions/distributions received from unconsolidated Impax funds 4,824 2,792
Investments into unconsolidated Impax funds (5,998) (8,073)
Settlement of investment related hedges (1,167) (390)
Investment income received 3,305 2,865
(Increase)/decrease in cash invested in money market funds (14,255) 5,145
Net cash (used by)/generated from investing activities (14,365) 1,515
Financing activities
Finance costs paid on loan facilities - (86)
Payment of lease liabilities (1,605) (1,979)
Acquisition of own shares (8,441) (15,114)
Cash received on exercise of Impax staff share options 359 1,261
Dividends paid (36,301) (36,376)
Net cash used by financing activities (45,988) (52,294)
Net decrease in cash and cash equivalents (9,717) (12,123)
Cash and cash equivalents at beginning of year 37,963 52,232
Effect of foreign exchange rate changes (2,946) (2,146)
Cash and cash equivalents at end of year 22 25,300 37,963
Cash and cash equivalents under IFRS does not include cash invested in money
market funds. The Group however considers its total cash reserves to include
these amounts. Cash held in Research Payment Accounts ("RPAs") are not
included in cash reserves (see note 22). There are no significant changes to
liabilities arising from financing activities.
Movements on cash reserves are shown in the table below:
At the beginning of the year Cashflow Foreign exchange At the end
of the year
£'000 £'000 £'000
£'000
Cash and cash equivalents 37,963 (9,717) (2,946) 25,300
Cash invested in money market funds 53,542 14,255 - 67,797
Cash in RPAs (3,813) 1,516 - (2,297)
Total Group cash reserves 87,692 6,054 (2,946) 90,800
Notes to the Financial Statements
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 ("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.
Details of the significant accounting policies adopted by the Group are shown
in note 31.
The financial statements are presented in sterling. All amounts have been
rounded to the nearest thousand unless otherwise indicated.
Going concern
The financial statements have been prepared on a going concern basis which the
Directors consider to be appropriate for the following reasons. Cash flow
forecasts covering a period of 12 months from the date of approval of these
financial statements indicate 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. The Group has
sufficient 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).
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. However the key areas that include judgement
and/or estimates are set out in notes 10, 16 and 17.
4 Acquisition of Absalon Corporate Credit
On 12 July 2024, one of the Group's subsidiaries Impax Asset Management
Ireland Limited ("Impax Ireland") finalised an agreement to acquire the assets
of Absalon Corporate Credit Fondsmæglerselskab A/Sis ("Absalon"), a
Denmark-based fixed income manager. As part of the acquisition agreement the
Group acquired the rights to Absalon's existing management contracts and
Absalon's existing team of portfolio managers joined Impax as employees of a
Danish branch of Impax Ireland ("Impax Denmark").
The Group has determined that the acquisition meets the definition of a
business in accordance with IFRS 3 Business Combinations and has accounted for
the transaction using the acquisition method.
The acquired business is focused on global high yield and emerging market
corporate debt strategies which are expected to increase the scale and breadth
of the Group's fixed income business and complement its existing fixed income
capabilities.
An analysis of the consideration paid, the recognised amounts of assets
acquired and the resulting gain on purchase is set out below. The acquisition
was funded through the Group's existing cash reserves.
Purchase consideration
Under the terms of the agreement, the purchase consideration consisted of an
upfront cash payment of DKK 5.5 million (£500,000) and variable future
payments to be made over a three-year period determined based on an agreed
percentage of assets under management ("AUM") (the "Earn-out").
The Earn-out has been measured at fair value at the time of the business
combination using a discounted cash flow model.
The Earn-out meets the definition of a financial instrument in accordance with
IFRS 9 and will be recorded at fair value at each reporting date with changes
in fair value recognised in the Income Statement. The Earn-out has been
measured at fair value at the time of the business combination using a
discounted cash flow model.
£'000
Cash consideration 500
Earn-out 337
Total consideration 837
Identified assets and liabilities
The fair values are set out below:
£'000
Management Contracts 854
Total identified assets and liabilities recognised 854
The Management Contracts were valued using a multi-period excess earnings
method which takes into account the future expected revenue and costs
attributable to the contracts acquired.
A gain on purchase was identified upon acquisition of the Danish fixed income
business which has been recognised in the Income Statement in full, this has
been calculated as follows:
£'000
Cash consideration 500
Earn-out 337
Less: Fair value of identified assets (854)
Gain on purchase (17)
Any acquisition-related costs incurred have been expensed in full to the
Income Statement.
5 ADJUSTED PROFITS AND EARNINGS
The reported operating earnings, profit before tax and earnings per share are
substantially affected by business combination affects and other items. The
Directors have therefore decided to report 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 2024
Reported - IFRS Adjustments Adjusted
£'000 £'000
Business combination effects Other
£'000 £'000
Revenue 170,113 170,113
Operating Costs (121,086) (117,376)
Amortisation of intangibles arising on acquisitions 2,571
Acquisition equity incentive scheme charges 428
Acquisition costs 1,041
Mark to market credit on equity awards (330)
Operating Profit 49,027 4,040 (330) 52,737
Finance income 3,946 3,946
Finance costs (4,008) 3,047 (961)
Profit before taxation 48,965 4,040 2,717 55,722
Taxation (12,488) (14,103)
Tax on business combination effects (936)
Tax on adjustments (679)
Profit after taxation 36,477 3,104 2,038 41,619
Diluted earnings per share 28.2 2.4 1.6 32.2
Year ended 30 September 2023
Reported - IFRS Adjustments Adjusted
£'000 £'000
Business combination effects Other
£'000 £'000
Revenue 178,367 178,367
Operating costs (124,120) (120,264)
Amortisation of intangibles arising on acquisition 2,813
Acquisition equity incentive scheme charges 1,318
Mark to market credit on equity awards (275)
Operating Profit 54,247 4,131 (275) 58,103
Finance income 3,130 3,130
Finance costs (5,271) 3,994 (1,277)
Profit before taxation 52,106 4,131 3,719 59,956
Taxation (12,884) (13,591)
Tax on adjustments (707)
Profit after taxation 39,222 4,131 3,012 46,365
Diluted earnings per share 29.8 3.1 2.3 35.2
The diluted number of shares is the same as used for the IFRS calculation of
earnings per share (see note 14).
Amortisation of intangibles arising on acquisitions
Intangible assets include management contracts acquired as part of the
acquisitions of Impax NH and Impax Denmark (together the "Acquisitions") and
are amortised over their 11-year and 10-year respective lives. This charge is
not linked to the operating performance of these businesses and so is excluded
from adjusted profit.
Acquisition equity incentive scheme charges
Certain employees joining Impax as a result of the Acquisitions have been
awarded share-based payments. Charges in respect of these relate to the
Acquisitions rather than the operating performance of the Group and are
therefore excluded from adjusted profit.
Acquisition costs
Acquisition costs relate to costs incurred on completed and planned business
acquisitions. These charges do not relate to the operating performance of the
Group and are therefore excluded from the adjusted profit.
Mark to market credit/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") which have not vested at the balance sheet date. Employers
national insurance contributions ("NIC") are payable on the options when they
are exercised and on the RSS awards when they vest, based on the valuation of
the underlying shares at that point. A charge is accrued for the NIC within
IFRS operating profit based on the share price at the balance sheet date. The
Group also receives a corporation tax deduction equal to the value of the
awards at the date they are exercised (options) or vest (RSS awards). The tax
deduction in excess of the cumulative share-based payment expense is
recognised directly in equity.
These two charges/credits vary based on the Group's share price (together
referred to as mark to market credit/charge on equity incentive schemes) and
are not linked to the operating performance of the Group. They are therefore
eliminated when reporting adjusted profit.
Finance Income and Expense
Finance expense for the Period has been adjusted for foreign exchange gains
and losses on monetary assets that are not linked to the operating performance
of the Group. £1.4 million of the current Period foreign exchange loss
relates to the retranslation of a US Dollar denominated loan between the
Parent Company and a US subsidiary. A corresponding gain is recognised in
equity in the exchange translation reserve. The remaining amount mainly
relates to the translation of cash held in US dollars.
6 SEGMENTAL REPORTING
(a) Operating segments
The Group is managed on an integrated basis and there is one
reportable segment.
Segment information is presented on the same basis as that provided for
internal reporting purposes to the Group's chief operating decision maker, the
Chief Executive.
(b) Geographical analysis
An analysis of revenue by the location of client is presented below:
Revenue
2024 2023
£'000 £'000
North America 53,774 54,183
Luxembourg 42,439 49,383
UK 30,754 30,712
Ireland 13,423 13,323
France 11,420 11,085
Canada 6,596 6,363
Australia 4,129 3,821
Netherlands 3,467 3,641
Other 4,111 5,856
170,113 178,367
The following non-current assets: property plant and equipment, goodwill and
intangible assets are located in the countries listed below:
Non-current assets
2024 2023
£'000 £'000
UK 4,746 5,753
United States 24,447 29,738
Ireland 1,119 391
Hong Kong 457 6
Japan 211 -
Denmark 12 -
30,992 35,888
7 REVENUE
The Group's main source of revenue is investment management and advisory fees.
The Group may also earn carried interest from its private equity funds.
Management and advisory fees are generally based on an agreed percentage of
the valuation of AUM for listed equity and fixed income funds. For private
equity funds they are generally based on an agreed percentage of commitments
made to the fund by investors during the fund's investment period and
thereafter on the cost price of investments made and not exited. Carried
interest is earned from private equity funds if the cash returned to investors
exceeds an agreed return. Carried interest of £221,000 was received in the
Period (2023: £35,600).
The Group determines the investment management and advisory fees to be a
single revenue stream as they are all determined through a consistent
performance obligation. Management fees include variable consideration but
there is no significant estimation or level of judgement involved.
Should AUM reduce as a result of equity market downturns, foreign exchange or
allocation of capital away from equity markets then the AUM linked revenue
would reduce. Management fees and carried interest are only recognised once it
is highly probable that a significant reversal will not occur in future
periods.
None of the funds managed by the Group individually represented more than 10%
of Group revenue in the current or prior period.
Revenue includes £167,962,459 (2023: £172,373,446) from related parties.
8 OPERATING COSTS
The Group's largest operating cost is staff costs. Other significant costs
include IT and communication costs, direct fund expenses, professional fees,
premises costs (depreciation on office building leases, rates and service
charges) and placement fees.
2024 2023
£'000 £'000
Staff costs (note 9) 82,176 86,078
IT and communications 8,650 7,850
Direct fund expenses 7,431 7,441
Professional fees 4,907 5,094
Depreciation and amortisation 3,262 3,439
Placement fees 2,673 2,815
Premises costs 3,075 3,273
Research costs 1,578 1,167
Acquisition costs 1,041 -
Mark to market credit on share awards (330) (275)
Other costs 6,623 7,238
Total 121,086 124,120
Operating costs include £911,000 (2023: £1,237,000) in respect of placement
fees paid to related parties.
Other costs include £309,000 (2023: £297,000) paid to the Group's auditors
which is analysed below. Audit-related assurance services in the Period relate
to the auditor's review of the Group's half-yearly report.
2024 2023
£'000 £'000
Audit of the Group's Parent Company and consolidated financial statements 134 122
Audit of subsidiary undertakings 137 143
Audit-related assurance services 38 32
309 297
9 STAFF COSTS AND EMPLOYEES
Staff costs include salaries, variable bonuses, social security costs
(principally employers' NIC 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 and the proportion vested.
2024 2023
£'000 £'000
Salaries and variable bonuses 62,128 63,936
Social security costs 6,183 6,188
Pensions 2,220 1,955
Share-based payment charge (see note 10) 6,696 6,535
Other staff costs 4,949 7,464
82,176 86,078
The Group contributes to private pension schemes. The assets of the schemes
are held separately from those of the Group in independently administered
funds. The pension cost represents contributions payable by the Group to these
funds. Contributions totalling £525,000 (2023: £457,000) were payable to the
funds at the Period-end and are included in trade and other payables.
Other staff costs include the cost of providing health and other insurances
for staff, Non-Executive Directors' fees, contractor fees, recruitment fees
and termination costs.
Directors and key management personnel
Key management personnel are related parties and are defined as members of the
Board and our executive committees. The remuneration of key management
personnel, including pension contributions, during the year was £10,751,821
plus £2,316,645 of share-based payments (2023: £12,049,310 plus £2,457,318
of share-based payments). No Board members received pension contributions
during the year (2023: nil).
Employees
The average number of persons (excluding Non-Executive Directors and including
temporary staff), employed during the year was 311 (2023: 290).
2024 2023
No. No.
Portfolio Management 117 105
Private Equity 16 15
Client Service and Business Development 103 101
Group 75 69
311 290
10 SHARE-BASED PAYMENT CHARGES
The total expense recognised for the year arising from share-based payment
transactions was £6,696,000 (2023: £6,535,000). The charges arose in respect
of the Group's Restricted Share Scheme ("RSS") and the Group's Long Term
Option Plan ("LTOP") which are described below. Details of all outstanding
options are provided at the end of this note. The charges for each scheme are:
2024 2023
£000 £000
RSS 5,642 5,861
LTOP 1,054 674
6,696 6,535
Restricted Share Scheme
Restricted shares are awarded to some employees as part of their year-end
remuneration. These awards are equity settled. These awards are made post
year-end but part of the charge is recorded in the Period based on an
estimated value at the year-end date. 1,533,584 RSS awards were granted during
the Period under the 2023 plan. Awards can also be issued to new employees and
during the Period, 357,084 RSS awards were granted to employees joining ("RSS
2024 A").
Full details of the awards granted during the year 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.
2024 2023
2024 2023 RSS (Final) 2023 2022 RSS (Final)
RSS A
RSS A
Awards originally granted 357,084 1,533,584 42,630 729,750
Weighted average award value £4.12 £5.13 £7.51 £8.42
Weighted average share price on grant £4.32 £5.20 £7.61 £8.52
Weighted average expected volatility 36.5% 36.4% 35.8% 35.5%
Weighted average award life on grant 3.7 years 5.3 years 4.0 years 5.3 years
Weighted average expected dividend yield 6.6% 5.3% 3.6% 3.2%
Weighted average risk free interest rate 3.7% 4.0% 3.6% 4.6%
The expected volatility was determined by reviewing the historical volatility
of the Company and that of comparator companies. The expected dividend yield
is determined using the Company share price and most recent full year dividend
at the grant date.
Restricted shares outstanding
Outstanding as at 1 October 2022 2,494,006
Granted during the year 772,380
Vested during the year (383,618)
Forfeited during the year (187,086)
Outstanding at 30 September 2023 2,695,682
Granted during the year 1,890,668
Vested during the year (1,181,563)
Forfeited during the year (107,749)
Outstanding at 30 September 2024 3,297,038
The weighted average share price on RSS awards vested during the Period was
£5.10. The weighted average remaining contractual life of Restricted Share
awards is 5.0 years.
Restricted Share Plan
Post year end, the Board approved the grant of 903,481 restricted shares under
the 2024 Restricted Share Plan ("RSP") which are equity settled. 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 other than
personal taxes. The fair value of the RSP awards has initially been estimated
using the average share price over the period of five days preceding the
Remuneration Committee and other inputs as at this date. This will be adjusted
for using the share price and other inputs at the grant date. The weighted
average award value is £2.76, weighted average share price is £3.34,
weighted average expected volatility is 36.7%, weighted average award life on
grant is 5.3 years, weighted average expected dividend yield is 7.3% and
weighted average risk-free interest rate is 3.8%.
Employee share option plan
Long Term Option Plan
Awards have been granted to employees under the Group's LTOP between 2018 and
2023. The strike prices of these options are £1 (2018 and 2019), £3 (2020),
£9 (2021), £7.50 (2022) and £4.40 (2023). These options do not have
performance conditions but do have a time vesting condition such that the
options vest subject to continued employment on 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).
Post year end the Board approved the grant of 511,500 options under the 2024
LTOP plan with a £3.34 strike price and with the other conditions the same as
the 2018-2023 plans.
The valuation was determined using the binomial model. Full details of the
awards granted during the year along with their valuation and the inputs used
in the valuation are described in the following table.
Share options are equity settled.
2024 LTOP (estimated) 2024 2023
2023 LTOP 2022 LTOP
Awards originally granted 511,500 996,273 300,000
Weighted average exercise price £3.34 £4.40 £7.50
Weighted average award value £0.61 £1.22 £2.14
Weighted average share price on grant £3.78 £5.23 £8.12
Weighted average expected volatility 36.7% 36.5% 35.6%
Weighted average award life on grant 6 years 6 years 6 years
Weighted average expected dividend yield 7.3% 5.3% 3.4%
Weighted average risk free interest rate 3.8% 4.0% 4.6%
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 at
the grant date.
The fair value of the 2024 LTOP awards has initially been estimated using the
average share price over the period of five days preceding the Remuneration
Committee and other inputs as at this date. This will be adjusted for using
the share price and other inputs at the grant date.
Options outstanding
An analysis of the outstanding options arising from the Group's LTOP is
provided below:
Number Weighted average exercise price p
Options outstanding at 1 October 2022 2,693,575 265.2
Options granted 300,000 750.0
Options forfeited (311,000) 246.6
Options exercised (725,000) 184.3
Options outstanding at 30 September 2023 1,957,575 372.4
Options granted 996,273 440.9
Options forfeited (26,000) 723.4
Options exercised (353,000) 101.7
Options outstanding at 30 September 2024 2,574,848 432.5
Options exercisable at 30 September 2024 50,000 100.0
The weighted average remaining contractual life was 7.5 years.
During the Period, 39,000 options, with a £0.01 exercise price, were also
granted to employees (2023: 15,750). These options vest in one tranche in
2029. Post year-end, the Board approved the grant of a further 70,000 of these
options with the same conditions which vest in 2030.
11 FINANCE INCOME
2024 2023
£'000 £'000
Fair value gains 624 265
Interest income 3,305 2,865
Gain on acquisition 17 -
3,946 3,130
Fair value gains represent those arising on the revaluation of listed and
unlisted investments held by the Group (see note 19) and any gains or losses
arising on related hedge instruments held by the Group.
Fair value gains comprise unrealised gains of £1,653,000 offset by net
realised losses of £1,029,000 (2023: £756,000 of unrealised gains offset by
£491,000 of realised losses).
12 FINANCE EXPENSE
2024 2023
£'000 £'000
Interest on lease liabilities 416 411
Interest on Earn-out 12 -
Finance costs on loan facilities - 86
Foreign exchange losses 3,580 4,774
4,008 5,271
Foreign exchange losses in the current Period mainly arose on the
retranslation of monetary assets held in US Dollars. £1.4 million of this
loss relates to the retranslation of a US Dollar denominated loan between the
Parent Company and a US subsidiary. A corresponding gain is recognised in
equity in the exchange translation reserve.
13 TAXATION
The Group is subject to taxation in the countries in which it operates (the
UK, the US, Hong Kong, Ireland, Denmark and Japan) 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
2024 2023
£'000 £'000
Current tax expense:
UK corporation tax 11,836 9,542
Foreign taxes 1,516 3,639
Stamp duty 65 -
Adjustment in respect of prior years 163 (53)
Total current tax 13,580 13,128
Deferred tax (credit)/expense:
Credit for the year (1,062) (821)
Adjustment in respect of prior years (30) 577
Total deferred tax (1,092) (244)
Total income tax expense 12,488 12,884
A tax credit of £19,000 (deferred tax charges of £356,000 net of current tax
credits of £375,000) is also recorded in equity in respect of changes in
estimates of the tax deductions on share awards arising from changes in the
share price (2023: credits of £371,000 (deferred tax charges of £859,000 net
of current tax credits of £1,230,000)).
The deferred tax adjustment in respect of prior years in the prior period
arose from the utilisation of tax losses following the finalisation of
intra-group profits.
(b) Factors affecting the tax charge for the year
The UK tax rate for the year is 25%. The tax assessment for the Period is
higher than this rate (2023: higher). The differences are explained below:
2024 2023
£'000 £'000
Profit before tax 48,965 52,106
Tax charge at 25% (2023: 22%) 12,241 11,463
Effects of:
Non-taxable income (30) (231)
Non-deductible expenses and charges 780 1,256
Adjustment in respect of historical tax charges 163 559
Effect of lower tax rates in foreign jurisdictions (270) (29)
Stamp duty paid 65 -
Tax losses not recognised - 9
Recognition of prior year tax losses (461) (143)
Total income tax expense 12,488 12,884
(c) Deferred tax
The deferred tax asset included in the consolidated statement of financial
position is as follows:
Share-based payment scheme Tax losses carried forward Other assets Expenses not yet deductible Other liabilities Total
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 October 2022 3,323 611 847 - (369) 4,412
Charge to equity (859) - - - - (859)
Exchange differences on consolidation (70) - (62) - - (132)
Credit/(charge) to the income statement 729 - (979) - 494 244
As at 30 September 2023 3,123 611 (194) - 125 3,665
Charge to equity (356) - - - - (356)
Exchange differences on consolidation (105) (55) (19) - - (179)
Credit/(charge) to the income statement (456) 1,506 21 - 21 1,092
As at 30 September 2024 2,206 2,062 (192) - 146 4,222
A previously unrecognised deferred tax asset of £952,000 relating to
£4.4 million carried forward losses in one of the Group's subsidiaries has
been recognised in the Period. Following the reorganisation of certain Group
subsidiaries, there is now sufficient evidence that there will be taxable
profits in the future against which these losses could be utilised.
14 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 the Group's Employee Benefit Trust ("EBT").
Diluted EPS includes an adjustment to reflect the dilutive impact of share
awards.
Earnings for the year Shares Earnings per share
£'000 000's
2024
Basic 36,477 127,829 28.5p
Diluted 36,477 129,180 28.2p
2023
Basic 39,222 128,769 30.5p
Diluted 39,222 131,572 29.8p
The weighted average number of shares is calculated as shown in the
table below:
2024 2023
£'000 £'000
Weighted average issued share capital 132,597 132,597
Less weighted average number of own shares held (4,768) (3,828)
Weighted average number of ordinary shares used in the calculation of basic 127,829 128,769
EPS
Additional dilutive shares regarding share schemes 5,354 4,080
Adjustment to reflect option exercise proceeds and future (4,003) (1,277)
service from employees receiving awards/shares
Weighted average number of ordinary shares used in the calculation of diluted 129,180 131,572
EPS
15 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 Period therefore comprises the
prior Period final dividend and the current Period interim dividend.
Dividends paid in the year
2024 2023
pence pence
Prior year final dividend - 22.9p, 22.9p 30,132 30,216
Interim dividend - 4.7p, 4.7p 6,169 6,160
36,301 36,376
Dividends declared/proposed in respect of the year
2024 2023
pence pence
Interim dividend declared per share 4.7 4.7
Final dividend proposed per share 22.9 22.9
Total 27.6 27.6
The proposed final dividend of 22.9p will be submitted for formal approval at
the Annual General Meeting to be held on 5 March 2025. 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 £30,075,000.
16 GOODWILL
The goodwill balance within the Group at 30 September 2024 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 2022 13,932
Foreign exchange (1,049)
At 1 October 2023 12,883
Foreign exchange (1,014)
At 30 September 2024 11,869
Impax NH consists of only one cash-generating unit ("CGU"). Goodwill is
allocated between CGUs at 30 September 2024 as follows - £10,240,000 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 over a period of 10
years. The cash flow forecasts were derived taking into account the budget for
the year ended 30 September 2025, which was approved by the Board of Directors
in September 2024. The discount rate was derived from the Group's weighted
average cost of capital, adjusted for market specific risks associated with
the estimated cash flows.
The goodwill on the listed equity and private equity CGUs arose over 20 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 and margins
would continue at current levels, that fund performance for the listed equity
business would be 5% per year (2023: 5%) and a discount rate of 12.5% (2023:
12.5%).
There has been no impairment of goodwill related to this CGU 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 1% there would no
impairment and if fund performance reduced to zero there would be no
impairment (2023: 1% increase in discount rate, no impairment).
The impairment test for the Impax NH CGU showed no impairment (2023: no
impairment) was required and used the following key assumptions - average fund
inflows of US$1.60 billion (2023: US$0.56 billion), fund performance of 5%
(2023: 5%), an average operating margin of 31% (2023: 29%) and a discount rate
of 12.5% (2023: 12.5%). The following plausible changes in assumptions would
individually not give rise to an impairment: a consistent 10% decrease in
inflows (2023: 10% decrease); a 100 basis point annual reduction in
performance each year (2023: 100 basis point reduction); a 1% annual reduction
in operating margin (2023: 1% reduction) and a 1% increase in discount rate
(2023: 1% increase).
17 INTANGIBLE ASSETS
Intangible assets mainly represents the value of the management contracts
acquired as part of the acquisitions of Impax NH and Impax Denmark.
Acquired management contracts Software Total
£'000 £'000 £'000
Cost
As at 1 October 2022 31,910 301 32,211
Additions - 299 299
Foreign exchange (2,710) - (2,710)
As at 30 September 2023 29,200 600 29,800
Additions 854 16 870
Foreign exchange (3,012) - (3,012)
As at 30 September 2024 27,042 616 27,658
Accumulated amortisation
As at 1 October 2022 13,646 225 13,871
Charge for the year 2,813 62 2,875
Foreign exchange (1,131) - (1,131)
As at 30 September 2023 15,328 287 15,615
Charge for the year 2,571 122 2,693
Foreign exchange (1,894) - (1,894)
As at 30 September 2024 16,005 409 16,414
Net book value
As at 30 September 2024 11,037 207 11,244
As at 30 September 2023 13,872 313 14,185
As at 30 September 2022 18,264 76 18,340
The management contracts acquired with the acquisitions of Impax NH and Impax
Denmark are amortised over an 11 year and 10 year life respectively.
AUM, forecast asset inflows, long-term operating margin, discounted cost of
capital are all the same or in excess of the assumptions when the management
contracts were first valued and as such, there are no indicators of
impairment.
18 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 of 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 2022 11,617 2,343 2,614 16,574
Additions 1,607 82 443 2,132
Disposals - - (37) (37)
Foreign exchange (468) (1) (53) (522)
As at 30 September 2023 12,756 2,424 2,967 18,147
Additions 1,229 137 421 1,787
Disposals (945) - - (945)
Foreign exchange (476) (4) (88) (568)
As at 30 September 2024 12,564 2,557 3,300 18,421
Accumulated depreciation
As at 1 October 2022 3,970 1,429 1,896 7,295
Charge for the year 1,659 214 325 2,198
Disposals - - (6) (6)
Foreign exchange (127) (1) (32) (160)
As at 30 September 2023 5,502 1,642 2,183 9,327
Charge for the year 1,317 212 356 1,885
Disposals (446) - - (446)
Foreign exchange (171) (1) (52) (224)
As at 30 September 2024 6,202 1,853 2,487 10,542
Net book value
As at 30 September 2024 6,362 704 813 7,879
At 30 September 2023 7,254 782 784 8,820
As at 30 September 2022 7,647 914 718 9,279
Lease arrangements
Property, plant and equipment includes right-of-use assets in relation to
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 2023 7,254 8,742
New leases 1,229 1,229
Disposals (499) (623)
Lease payments - (1,605)
Interest expense - 417
Depreciation charge (1,317) -
Foreign exchange movement (305) (375)
At 30 September 2024 6,362 7,785
Current 2,084
Non-current 5,701
7,785
The contractual maturities on the undiscounted minimum lease payments under
lease liabilities are provided below:
2024 2023
£'000 £'000
Within one year 2,418 1,942
Between 1 and 5 years 5,355 6,489
Later than 5 years 940 1,702
Total undiscounted lease liabilities 8,713 10,133
The Group'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.
19 TRADE AND OTHER RECEIVABLES
2024 2023
£'000 £'000
Trade receivables 7,721 8,803
Other receivables 2,500 2,282
Prepayments and accrued income 26,649 31,458
36,870 42,543
Accrued income relates to accrued management fees and arises where invoices
are raised in arrears.
Included within prepayments and accrued income are deferred placement fees
amounting to £986,000 (2023: £679,000). These costs are amortised to the
income statement over the fund's investment period (see Note 8).
An analysis of the aging of trade receivables is provided below:
2024 2023
£'000 £'000
0-30 days 5,729 7,488
Past due but not impaired:
31-60 days 787 1,098
61-90 days - 6
Over 90 days 1,205 211
7,721 8,803
At the date of this report, substantially all of the trade receivables above
have been received including the over 90 days balance. As at 30 September
2024, the assessed provision under the IFRS 9 expected loss model for trade
receivables and prepayments and accrued income was immaterial (2023:
immaterial).
£29,485,000 of trade and other receivables and accrued income were due from
related parties (2023: £33,660,000).
20 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 current asset investments are shown in the table below. Investments
made in unconsolidated funds are also included.
Total
£'000
At 1 October 2022 7,255
Additions 8,073
Fair value movements 734
Repayments/disposals (2,792)
At 30 September 2023 13,270
Additions 5,998
Fair value movements 1,549
Repayments/disposals (4,824)
At 30 September 2024 15,993
The Current asset investments include £15,145,000 invested in related parties
of the Group (2023: £13,270,000).
Hierarchical classification of investments
The hierarchical classification of the investments as considered by IFRS 13
Financial Instruments: Disclosures is shown below:
Level 1 Level 2 Level 3 Total
£'000
£'000
£'000
£'000
At 1 October 2023 8,623 - 4,647 13,270
Additions 5,484 - 514 5,998
Repayments/disposals (3,840) - (984) (4,824)
Fair value movements 1,343 - 206 1,549
At 30 September 2024 11,610 - 4,383 15,993
There were no movements between any of the levels in the Period.
The Level 3 investments are in the Group's private equity funds. The net asset
value of these funds as reported in the NAV statements represents the fair
value at the end of the reporting period and as such a range of unobservable
inputs is not reported. The underlying investment in the fund is based on
valuation methodologies depending on the nature of the investment. If the NAV
of those funds changed by +/- 10% then the valuation of those investments
would change by +/- £438,000.
Market risk and investment hedges
Investments made are subject to market risk. Where appropriate the Group has
attempted to hedge against the risk of market falls by the use of derivative
contracts. The derivative contracts consist of short positions against a
global equity index and are arranged through BNP Paribas, a related party.
Any outstanding amounts on the short positions are settled daily.
21 INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES
The Group's interest in structured entities is reflected in the Group's AUM.
The Group is exposed to movements in AUM of structured entities through
potential loss of fee income as a result of client withdrawals or market
falls. Outflows from funds are dependent on market sentiment, asset
performance and investor considerations. Further information on these risks
can be found in the Strategic Review. Considering the potential for changes in
AUM of structured entities, management has determined that the Group's
unconsolidated structured entities include segregated mandates and pooled
funds vehicles. Disclosure of the Group's exposure to unconsolidated
structured entities has been made on this basis.
At 30 September 2024, AUM managed within unconsolidated structured entities
was £37.19 billion (2023: £37.40 billion) and within consolidated structured
entities was nil (2023: £nil).
£170,113,000 (2023: £178,367,000) in revenue was earned from unconsolidated
structured entities.
The total exposure to unconsolidated structured entities in the statement of
financial position is shown in the table below:
2024 2023
£'000 £'000
Management fees receivable (including accrued income) 30,556 37,159
Investments 15,993 13,270
46,549 50,429
The main risk the Group faces from its interest in unconsolidated structured
entities are decreases in the value of seed capital investments.
22 CASH AND CASH EQUIVALENTS AND CASH INVESTED IN MONEY MARKET FUNDS
Cash and cash equivalents under IFRS does not include cash invested in money
market funds which is exposed to market variability. However the Group
considers its total cash reserves to include these amounts. Cash held in 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 excluded from cash reserves. A
reconciliation is shown below:
2024 2023
£'000 £'000
Cash and cash equivalents 25,300 37,963
Cash invested in money market funds 67,797 53,542
Less: cash held in RPAs (2,297) (3,813)
Cash reserves 90,800 87,692
The Group is exposed to interest rate risk on the above balances as interest
income fluctuates according to the prevailing interest rates. The average
interest rate on the cash balances during the year was 4.2% (2023: 3.0%).
Given current interest rate levels a sensitivity rate of 1% is considered
appropriate. A 1% increase in interest rates would have increased Group profit
after tax by £577,000. An equal change in the opposite direction would have
decreased profit after tax by £549,000.
The credit risk relating to cash reserves held by the Group is spread over
several counterparties. The Group holds cash balances with RBS International
(Standard & Poor's credit rating of A-1), Bank of Ireland (Standard &
Poor's credit rating of A-2) and the Bank of New Hampshire (unrated), Danske
Bank (Standard & Poor's credit rating of A-1), SMBC (unrated) and Hang
Seng (Standard & Poor's credit rating of A-1+). The remainder of the
Group's cash reserves is invested in money market funds managed by BlackRock,
with a Standard & Poor's credit rating of AA-, and Goldman Sachs, with a
Standard & Poor's credit rating of A-2, and Santander, with a Standard
& Poor's credit rating of A-1.
23 TRADE AND OTHER PAYABLES
2024 2023
£'000 £'000
Trade payables 792 730
Taxation and other social security 874 1,166
Other payables 5,290 4,833
Accruals and deferred income 35,731 38,080
42,687 44,809
The most significant accrual at the year end relates to variable staff
remuneration. Other payables includes estimated amounts payable for the
Earn-out (see Note 4). This is measured at fair value and is classified as
Level 3 for the hierarchical classification purposes of IFRS 13.
24 ORDINARY SHARES
Issued and fully paid 2024 2023 2024 2023
No of shares No of shares £'000 £'000
000's 000's
At 1 October and 30 September 132,597 132,597 1,326 1,326
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.
25 OWN SHARES
No of Shares £'000
At 1 October 2022 3,265,109 8,128
Issuance of shares to the EBT 2,074,454 15,114
Satisfaction of option exercises and RSS vesting (1,065,287) (4,637)
At 30 September 2023 4,274,276 18,605
Purchases of shares by the EBT 1,866,128 8,441
Satisfaction of option exercises and RSS vesting (1,318,124) (5,806)
At 30 September 2024 4,822,280 21,240
The EBT holds shares for RSS awards until they vest or to satisfy share option
exercises. Own Shares includes 3,297,038 shares held in a nominee account in
respect of the RSS vesting on future dates as described in note 10, and
202,734 shares held in a nominee account for exercised options which are
subject to a five-year holding period.
26 FINANCIAL COMMITMENTS
At 30 September 2024 the Group has outstanding commitments to invest up to the
following amounts into private equity funds that it manages:
· €865,366 into Impax New Energy Investors III LP (2023: €1,105,516);
this amount could be called on in the period to 31 December 2026;
· and €1,802,075 into Impax New Energy Investors IV SCSp Luxembourg
(2023: €952,658); this amount could be called on in the period to 31 October
2031.
27 RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
This note should be read in conjunction with the consolidated cashflow
statement. It provides a reconciliation to show how profit before tax, which
is based on accounting rules, translates to cashflows.
2024 2023
£'000 £'000
Profit before taxation 48,965 52,106
Adjustments for income statement non-cash charges/income:
Depreciation of property plant and equipment and amortisation of intangible 4,578 5,073
assets
Finance income (3,946) (3,130)
Finance expense 4,008 5,271
Share-based payment charges 6,696 6,535
(Gain)/loss on disposals of property, plant & equipment (22) 31
Adjustment for statement of financial position movements
Decrease/(increase) in trade and other receivables 5,815 (3,774)
Decrease in trade and other payables (2,470) (8,894)
Cash generated from operations 63,624 53,218
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