REG - Impax Asset Mgmnt - Interim results to 31 March 2022
01/06/2022 07:00
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RNS Number : 4774N Impax Asset Management Group plc 01 June 2022
Impax Asset Management Group plc
Interim results to 31 March 2022
London, 1 June 2022 - Impax Asset Management Group plc ('Impax' or the
'Company'), the specialist investor focused on a more sustainable global
economy, today announces interim results for the six months to 31 March 2022
(the 'Period').
H1 Business highlights
· Positive net inflows of £2.5 billion during the Period, well
diversified by channel and geography
· Continued long-term out-performance of Impax's strategies versus
benchmarks, despite market rotation towards value during the Period
· Strengthened investment capabilities, distribution and resilience
· Recent geopolitical events underscore the importance of energy
security and tackling climate change, both key areas for Impax's investments
· AUM £37.0 billion as at 30 April 2022
H1 Financial highlights
· AUM £38.0 billion as at 31 March 2022 (31 March 2021: £30.0
billion)
· Revenue increased to £88.6 million (H1 2021: £60.6 million)
· Adjusted operating profit of £34.0 million (H1 2021: £20.7
million)
· Shareholders' equity increased to £112.3 million (H1 2021 £81.0
million)
· Adjusted diluted earnings per share increased to 21.5 pence (H1
2021: 11.8 pence)
· Profit before tax of £32.7 million (H1 2021: £14.4 million)
· Interim dividend per share of 4.7 pence (H1 2021: 3.6 pence)
Ian Simm, Chief Executive commented:
"Impax has delivered a solid first half to its financial year, with revenue up
46% and adjusted operating profit up 64% on the comparable period in 2021. We
have benefitted from net inflows of £2.5 billion that were well diversified
both geographically and across a wide range of sales channels.
"Our investment approach, with its careful attention to risk and resilience,
continues to attract asset owners that are seeking to build robust portfolios
with attractive returns, focused on the transition to a more sustainable
economy.
"Amid considerable market volatility surrounding recent geopolitical events,
we continue to be pleased with the long-term performance of our investment
strategies."
The presentation for shareholders and analysts will be available to view on
the Company's website later this morning:
https://www.impaxam.com/investor-relations/reports-and-presentations
(https://www.impaxam.com/investor-relations/reports-and-presentations)
Enquiries:
Impax Asset Management Group plc
Ian Simm, Chief Executive +44 (0)20 3912 3000
Paul French, Head of Corporate Communications
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
James Britton or Rishi Shah +44 (0)20 7418 8900
Berenberg, Joint Broker
Alex Reynolds +44 (0)20 3207 7800
LEI number: 213800AJDNW4S2B7E680
About Impax
Founded in 1998, Impax is a specialist asset manager, with approximately
£37.0bn / US$46.5bn as of 30 April 2022 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 ca. 230 staff across six offices in the United Kingdom, the United
States, Ireland and Hong Kong, making it one of the investment management
sector's largest investment teams dedicated to sustainable development.
www.impaxam.com (http://www.impaxam.com)
CHIEF EXECUTIVE'S REPORT
BUSINESS UPDATE
Impax delivered a solid first half to its financial year, which includes the
six months to 31 March 2022 ("the Period"). Amid considerable market
volatility surrounding the Russian invasion of Ukraine, the business once
again demonstrated its resilience. Meanwhile, our investment approach, with
its careful attention to risk and a focus on quality companies, continues to
attract asset owners that are seeking to build robust portfolios focused on
the transition to a more sustainable economy.
During the Period, Impax's assets under management and advice ("AUM") rose by
2.2% to reach £38.0 billion. This was driven by positive net flows of
£2.5 billion, which were offset by a decline of £1.7 billion due to market
movements, investment performance and the impact of foreign exchange.
By 30 April 2022, our AUM had fallen slightly to £37.0 billion.
MARKETS
During the six months of the Period, underlying market concern switched from
focusing on the impact of COVID-19 to gauging the impact of rising inflation
and the deteriorating geopolitical situation.
Initially, global equity markets posted gains, backed by robust economic data
and strong corporate earnings. However, the strength of the post COVID-19
recovery coupled with localised lockdowns led to supply chain constraints
across numerous industries, which in turn fuelled inflation globally.
The Bank of England and the US Federal Reserve Bank ("the Fed") responded by
raising rates, with the Fed signalling further hikes this year, noting
improving labour conditions. The Fed also brought its quantitative easing
programme to a close in March 2022.
In early 2022, the unexpected instigation, followed by the horrifying reality,
of a war in Ukraine contributed to market volatility. Global equity markets
fell as investor concerns about the wider implications of Russia's invasion
combined with inflationary, interest rate, and monetary tightening pressures,
were amplified.
The war intensified an already-looming global energy crisis with a rise in
oil, gas and soft commodities prices, while the invasion caused policymakers
urgently to turn their attention to reducing Europe's dependency on Russian
gas, bolstering the secular case for renewables.
As investors shifted towards value-orientated stocks such as commodities and
financials, the share prices of companies at the vanguard of the sustainable
economy suffered more than average: for example, the FTSE Environmental
Opportunities All-Share Index dropped 4.5% between 1 January and 31 March
2022, compared to the MSCI ACWI Index, which fell by 2.6%.
Movements in the Company's AUM for the Period(1)
Listed equities £m Fixed income Private markets Total firm
£m £m £m
Total AUM at 30 September 2021 35,637 1,257 318 37,211
Net flows 2,256 48 168 2,472
Market movement, FX and performance -1,624 -36 -7 -1,667
Total AUM at 31 March 2022 36,269 1,268 479 38,016
1 Figures may not add up due to rounding
Percentage returns for Environmental Markets strategies (GBP)1
AUM The Period 1 year 3 years 5 years
Leaders £8.0bn -4.5 5.0 48.0 70.2
Water £6.2bn -2.1 12.0 61.4 84.9
Specialists £3.9bn -5.8 6.5 64.8 88.0
Climate £3.1bn -6.0 5.2 63.2 N/A
Sustainable Food £1.4bn -2.3 2.3 30.0 45.1
MSCI ACWI Index2 3.4 12.4 45.7 64.7
Asian Environmental £1.8bn -8.6 -1.6 35.3 54.6
MSCI Asia-Pacific Composite Index3 -5.1 -5.8 18.2 30.7
Percentage returns for Sustainability Lens strategies (GBP)1
AUM The Period 1 year 3 years 5 years
Global Opportunities £7.3bn -1.4 12.5 56.7 104.6
MSCI ACWI Index2 3.4 12.4 45.7 64.7
US Large Cap £1.2bn 6.0 18.8 84.3 122.8
S&P 500 Index 8.5 21.2 66.5 99.4
US Small Cap £550m -3.1 7.4 44.6 45.8
Russell 2000 Index -3.3 -1.3 38.1 51.2
Percentage returns for Sustainability Lens Fixed Income strategies (GBP)(1)
AUM The Period 1 year 3 years 5 years
High Yield Bond £590m -1.9 3.6 15.0 20.1
ICE BofA US Cash Pay High Yield Constrained (BB-B) -1.6 4.3 12.6 18.8
Core Bond £560m -3.2 1.1 5.2 6.8
Bloomberg Barclays US Aggregate -3.7 0.4 4.1 5.6
Past performance is not necessarily a guide to future performance. The value
of investments can fall as well as rise and you may get back less than you
invested. All data as at 31 March 2022
1. AUM (GBP as at 31 March 2022). The strategy returns are calculated
including the dividends re-invested, net of withholding taxes, gross of
management fee, and are represented in sterling.
2. MCSI indices are total net return (net dividend re-invested). S&P,
Russell, ICE BofA, and Bloomberg Barclays indices are all total gross return.
3. MSCI AC AP Composite is a custom-made benchmark made up of 80% MSCI AC
Asia Pacific ex-Japan and 20% MSCI Japan rebalanced daily. MSCI indices are
total net return (net dividend re-invested).
INVESTMENT PERFORMANCE
Impax offers actively managed Listed Equities strategies in Environmental
Markets and Sustainability Lens segments as well as strategies in Fixed
Income, Systematic Equities, and Private Markets.
On an absolute and relative basis, Impax strategies largely performed
positively during the first three months of the Period. However, during the
second half of the Period our Environmental Markets strategies in particular -
which use a quality growth at a reasonable price investment style - were
negatively impacted, as market sentiment switched in favour of value-oriented
stocks. This has led to strong performance, for example, in the fossil fuel
energy sector, to which Impax strategies typically have no exposure.
Consequently, for the six-month Period, our thematic Environmental Markets
strategies underperformed their benchmarks, with Water lagging the MSCI All
Country World Index ("ACWI") by 5.5%; Sustainable Food by 5.7%; Leaders by
7.9%; Specialists by 9.2%; and the Climate strategy by 9.4%. The Asian
Environmental strategy also trailed its benchmark, the MSCI AC AP Composite,
by 3.5%.
Amongst our Sustainability Lens strategies, the US Large Cap strategy trailed
the S&P 500 by 2.5%; the US Small Cap strategy lagged the Russell 2000
Index by 0.2%; and Global Opportunities trailed the ACWI by 4.8%.
Meanwhile, in Fixed Income, the Core Bond strategy and the High Yield
strategy both performed broadly in line with their benchmarks.
We continue to be pleased with the long-term performance of our investment
strategies. Eight out of our ten largest strategies have continued to
outperform their benchmarks over three years and seven out of nine strategies
with five-year track records also outperformed.
CLIENT SERVICE AND BUSINESS DEVELOPMENT
The positive net flows of £2.5 billion during the Period reflected both new
mandates and increased investments into existing accounts across North
America, Europe, and Asia-Pacific.
The growth was well diversified via our distribution partner network and
direct sales channels. Of the latter, by the end of the Period, the US-based
Pax World funds' AUM grew by 4.9% to US$8.7 billion and our UCITS fund range
(based in Ireland) grew by 9.8% to £2.3 billion. We saw increased net inflows
via intermediaries, consultants and our distribution partners including
Desjardins, NEI Investments and Principal Global Investors in North America
and BNP Paribas Asset Management, Fidante and St James's Place in Europe and
Asia-Pacific.
In the wake of the UN COP26 climate conference in Glasgow in November 2021, we
continued to see strong investor interest in our Climate strategy. Part of our
Environmental Markets range, this strategy focuses on investing in companies
providing solutions to the challenges linked to climate change. The Climate
strategy accounted for 12.9% of net inflows during the Period and we secured
two new mandates for this strategy in the US and China.
Also part of our thematic Environmental Markets range, and with AUM of £8.0
billion, Leaders maintained its position as our largest strategy. Highlights
included a global consulting firm choosing the strategy for distribution into
the New Zealand market, while in the US, the Pax Global Environmental Markets
fund enjoyed significant net inflows over the Period.
Utilising our Specialists strategy, Impax Environmental Markets plc, which
celebrates its 20th anniversary this year, was named "Environmental Company of
the Year" in Investment Week's Investment Company awards in November.
In the Sustainability Lens segment, Global Opportunities registered 36.6% of
Impax's total net inflows for the Period and reached an AUM of £7.3 billion.
This included strong inflows via St James's Place, and into our Ireland-based
Impax Global Equity Opportunities fund.
In October 2021 our Private Markets team investing in renewable power
generation held the first close of Impax New Energy Investors IV, with €238
million raised. By the Period end, the team had invested, reserved or
committed nearly all the first close capital with projects signed in Poland,
Greece, Italy and Germany during the Period. Meanwhile the team continues to
make good progress with Impax New Energy Investors III having progressed the
sale process for both its French and Spanish operating solar portfolios and
completed add-on acquisitions in France.
Finally, we recently announced that we would be strengthening our
distribution, product and marketing capabilities with a number of senior
appointments announced during the Period. We are focusing on deepening our
distribution capabilities across our target markets, accelerating our product
development and ensuring that our clients enjoy a consistent experience
globally.
OPERATIONS AND CORPORATE SERVICES
Within corporate services, we are continuing to invest in our systems,
infrastructure, risk and compliance capabilities to increase our operational
resilience as the business expands.
Impax continues to have no direct holdings in either Russian or Ukrainian
equities or fixed income securities and very limited direct revenue exposure
to those countries in companies held within our portfolios. We have reviewed
our clients, suppliers and vendors to confirm compliance with sanctions and
have found no areas of concern.
In light of the recent market volatility, we have moderated the rate of our
hiring, but continue to build our team to support our previously stated growth
ambitions.
FINANCIAL RESULTS FOR THE PERIOD
Revenue for the six months to 31 March 2022 grew to £88.6 million (H1 2021:
£60.6 million, H2 2021: £82.5 million) driven by the positive net flows
across the business offset in part by the market falls in the second half of
the Period. At the end of the Period the weighted average run rate revenue
margin was 47 basis points (30 September 2021: 47 basis points) on the £38.0
billion of AUM.
Adjusted operating costs for the Period increased to £54.7 million (H1 2021:
£39.8 million, H2 2021: £47.5 million), reflecting a full six months of
costs from hires made throughout 2021 as well as the cost of further hires in
the Period to support continued growth. IFRS operating costs includes £2.0
million, (H1 2021: £4.3 million, H2 £4.0 million) of charges that do not
reflect the operating performance of the Group which have been removed for
adjusted measures. A reconciliation of adjusted to IFRS measures is provided
in Note 3.
Adjusted operating profit for the period was £34.0 million (H1 2021: £20.7
million, H2 2021: £35.1 million). The decrease from H2 2021 is a result of
the increase in adjusted operating costs discussed above offset in part by the
growth in revenue. Run rate annualised adjusted operating profit was £65.2
million at the end of the Period (H1 2021: £51.7m, H2 2021: £67.5m).
Adjusted operating profit margin was 38% (H1 2021: 34%, H2 2021: 43%).
Adjusted profit before tax of £34.6 million (H1 2021: £18.7 million, H2
2021: £35.3 million) includes net finance income of £0.7 million (H1 2021:
(£2.0 million), H2 2021: £0.2 million). IFRS profit before tax for the
Period was £32.7 million (H1 2021: £14.4 million, H2 2021: £31.4 million).
Adjusted diluted earnings per share for the Period were 21.5 pence (H1 2021:
11.8 pence, H2 2021: 22.1 pence). IFRS earnings per share were 20.1 pence (H1
2021: 10.9 pence, H2 2021: 19.4 pence).
FINANCIAL RESOURCES
The Company continues to be a strongly cash generative business with high
levels of cash and no debt. Our cash reserves were £67.4 million at the
Period end (H1 2021: £34.4 million). We retain access to a US$13 million
revolving credit facility which remains unutilised. We continue to hold seed
investments in our own Listed Equities funds and to invest in our Private
Equity funds, and these investments were in total valued at £6.2 million at
the Period end.
DIVIDENDS
A final dividend for 2021 of 17.0 pence per share was paid in March 2022,
following approval at the Annual General Meeting. This took the total dividend
paid for 2021 to 20.6 pence per share. As described above the business has
continued to perform strongly in the Period and to reflect this we are pleased
to announce a 31% increase in the interim dividend to 4.7 pence (2021: 3.6
pence per share). This dividend per share will be paid on 22 July 2022 to
Ordinary Shareholders on the shareholder register at the close of business on
17 June 2022.
The Company operates a dividend reinvestment plan ("DRIP"). The final date for
receipt of elections under the DRIP will be 1 July 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.
SHARE MANAGEMENT
During the Period the Group's Employee Benefit Trust ("EBT") purchased 367,000
ordinary shares. The EBT holds shares for Restricted Share awards until they
vest or will use them to settle option exercises.
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 EBTs (subject to the trustees'
discretion), using funding provided by the Company.
At the Period end the EBTs held a total of 2.8 million shares, 2.2 million of
which were held for Restricted Share awards leaving up to 0.6 million
available for option exercises and future share awards. There were 2.9 million
options outstanding at the Period end, of which 0.9 million
were exercisable.
KEITH FALCONER
Earlier this month we were very sad to hear the news that Keith Falconer had
died unexpectedly at the age of 67. Keith played an integral role in Impax's
growth during his time as Chairman from 2004 until 2020 and the Impax
leadership team benefitted greatly from his sage advice based on decades of
asset management experience. Sadly, we must continue Impax's journey without
him.
OUTLOOK
The invasion of Ukraine by Russia, higher inflation data and supply chain
disruptions have complicated the global macroeconomic outlook. Nevertheless,
companies whose business plans are aligned with a more sustainable economy
should continue to offer compelling opportunities for investors. The recent
heightened focus on energy security and the sobering reports from the
Intergovernmental Panel on Climate Change have reinforced the drivers behind
many of the markets in which Impax invests, including renewable power
generation, zero-emissions transportation, climate resilience, resource
efficiency and ecosystem protection.
Meanwhile, the emergence of mandatory "sustainable finance" disclosure
requirements on fund managers and the adoption by governments of green
taxonomies is likely to raise the attractiveness of investments that are
consistent with the transition to a more sustainable economy. Given this
backdrop, we believe that Impax continues to be well positioned to provide
continued value to all of our stakeholders.
Ian Simm
31 May 2022
Condensed Consolidated Income Statement
For the six months ended 31 March 2022
Note Unaudited Unaudited Audited
Six months
Year ended
ended 31 March Six months ended 31 March
30 September 2021
2022
2021
£000
£000
£000
Revenue 88,640 60,591 143,056
Operating costs (56,680) (44,150) (95,622)
Finance income 5 1,130 110 286
Finance expense 6 (403) (2,103) (1,971)
Profit before taxation 32,687 14,448 45,749
Taxation 7 (6,046) (91) (5,504)
Profit after taxation 26,641 14,357 40,245
Earnings per share
Basic 8 20.6p 11.1p 31.5
Diluted 8 20.1p 10.9p 30.3
Adjusted results are provided in Note 3.
Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2022
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 March
31 March
30 September 2021
2022
2021
£000
£000 £000
Profit for the Period 26,641 14,357 40,245
Change in value of cash flow hedges - 288 137
Tax on change in value of cash flow hedges - (54) (26)
Exchange differences on translation of foreign operations 64 (1,277) (1,075)
Total other comprehensive income 64 (1,043) (964)
Total comprehensive income for the Period attributable to equity holders of 26,705 13,314 39,281
the parent
All amounts in other comprehensive income may be reclassified to income in the
future.
All profit for the Period is derived from continuing operations.
Condensed Consolidated Statement of Financial Position
As at 31 March 2022
Note Unaudited Unaudited Audited
As at As at As at
31 March 31 March 30 September 2021
2022 2021 £000
£000 £000
Assets
Non-current assets
Goodwill 10 12,063 11,622 11,816
Intangible assets 10 16,714 18,338 17,473
Property, plant and equipment 11 9,020 9,805 9,435
Deferred tax assets 7,265 6,099 11,895
Total non-current assets 45,062 45,864 50,619
Current assets
Trade and other receivables 39,496 26,750 39,800
Investments 12 6,246 6,537 7,564
Current tax asset 558 1,601 134
Cash invested in money market funds and long term deposit accounts 13 40,451 11,357 38,066
Cash and cash equivalents 13 31,574 26,896 36,172
Total current assets 118,325 73,141 121,736
Total assets 163,387 119,005 172,355
Equity and liabilities
Equity
Ordinary shares 15 1,326 1,326 1,326
Share premium 9,291 9,291 9,291
Merger reserve 1,533 1,533 1,533
Exchange translation reserve 438 172 374
Hedging reserve - 123 -
Retained earnings 99,758 68,652 97,998
Total equity 112,346 81,097 110,522
Current liabilities
Trade and other payables 41,365 27,570 50,107
Lease liabilities 11 1,311 1,403 1,330
Current tax liability 409 127 1,923
Total current liabilities 43,085 29,100 53,360
Non-current liabilities
Lease liabilities 11 7,585 8,378 8,102
Deferred tax liability 371 430 371
Total non-current liabilities 7,956 8,808 8,473
Total liabilities 51,041 37,908 61,833
Total equity and liabilities 163,387 119,005 172,355
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 March 2022
Share capital Share premium Merger reserve Exchange translation reserve Hedging reserve Retained earnings Total equity
£000 £000 £000 £000 £000 £000 £000
As at 1 October 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 - - - - - (8,871) (8,871)
Cash received on option exercises - - - - - 597 597
Purchase of Impax NH shares - - - - - (2,239) (2,239)
Tax credit on long-term incentive schemes - - - - - 3,570 3,570
Share based payment charge - - - - - 1,743 1,743
Total transactions with owners 22 - 1,533 - - (5,220) (3,665)
Profit for the Period - - - - - 14,357 14,357
Other comprehensive income
Change in value of cash flow hedge - - - - 288 - 288
Tax on change in value of cashflow hedges - - - - (54) - (54)
Exchange differences on translation of foreign operations - - - (1,277) - - (1,277)
Total other comprehensive income - - - (1,277) 234 - (1,043)
As at 31 March 2021 1,326 9,291 1,533 172 123 68,652 81,097
Transactions with owners of the Company
New shares issued - - - - - - -
Dividends paid - - - - - (4,745) (4,745)
Cash received on option exercises - - - - - - -
Purchase of Impax NH shares - - - - - - -
Tax credit on long-term incentive schemes - - - - - 5,064 5,064
Share based payment charge - - - - - 3,139 3,139
Total transactions with owners - - - - - 3,458 3,458
Profit for the Period - - - - - 25,888 25,888
Other comprehensive income
Change in value of cash flow hedge - - - - (151) - (151)
Tax on change in value of cashflow hedges - - - - 28 - 28
Exchange differences on translation of foreign operations - - - 202 - - 202
Total other comprehensive income - - - 202 (123) - 79
As at 30 September 2021 1,326 9,291 1,533 374 - 97,998 110,522
Transactions with owners of the Company
Dividends paid - - - - - (22,475) (22,475)
Cash received on option exercises - - - - - 180 180
Tax charge on long-term incentive schemes - - - - - (1,269) (1,269)
Share based payment charge - - - - - 2,558 2,558
Acquisition of own shares - - - - - (3,875) (3,875)
Total transactions with owners - - - - - (24,881) (24,881)
Profit for the Period - - - - - 26,641 26,641
Other comprehensive income
Change in value of cash flow hedge - - - - - - -
Tax on change in value of cashflow hedges - - - - - - -
Exchange differences on translation of foreign operations - - - 64 - - 64
Total other comprehensive income - - - 64 - - 64
As at 31 March 2022 1,326 9,291 1,533 438 - 99,758 112,346
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 March 2022
Note Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
£000 £000 £000
Operating activities:
Cash generated from operations 17 28,149 13,275 59,812
Corporation tax paid (4,624) (1,532) (4,445)
Net cash generated from operating activities 23,525 11,743 55,367
Investing activities:
Net acquisition of property plant and equipment and intangible assets (407) (33) (257)
Net redemptions/(investments) from unconsolidated Impax funds 1,229 (1,973) (2,529)
Purchase of Impax NH shares - (704) (704)
Settlement of investment related hedges (97) (120) (455)
Investment income received 145 54 93
(Increase)/decrease in cash held by money market funds and long-term deposit (2,385) 7,159 (19,550)
accounts
Net cash generated (used by)/from investment activities (1,515) 4,383 (23,402)
Financing activities:
Acquisition of non-controlling interest - - (191)
Interest paid on bank borrowings (59) (64) (129)
Payment of lease liabilities (846) (832) (1,691)
Acquisition of own shares (3,875) - -
Cash received on exercise of Impax share options 180 597 597
Dividends paid (22,475) (8,871) (13,616)
Net cash used by financing activities (27,075) (9,170) (15,030)
Net (decrease)/increase in cash and cash equivalents (5,065) 6,956 16,935
Cash and cash equivalents at the beginning of the Period 36,172 20,245 20,245
Effect of foreign exchange rate changes 467 (305) (1,008)
Cash and cash equivalents at the end of the Period 13 31,574 26,896 36,172
Notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 31 March 2022
1 Basis of preparation
This condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the UK and the
AIM Rules.
The annual financial statements of the Group for the year ended 30 September
2022 will be prepared in accordance with UK-adopted international accounting
standards. The condensed set of financial statements has been prepared
applying the accounting policies and presentation that were applied in the
preparation of the Company's published consolidated financial statements for
the year ended 30 September 2021 which were prepared in accordance with the
requirements of the Companies Act 2006 ("Adopted IFRS") and applicable law.
The comparative figures for the financial year ended 30 September 2021 are not
the Company's statutory accounts for that financial year. Those accounts,
prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, have been reported on by the
Company's auditors and delivered to Companies House. The report of the
auditors was (i) unqualified, (ii) did not include a reference to matters to
which the auditors drew attention by way of emphasis without qualifying their
report, and (iii) did not contain a statement under Section 498 (2) or (3) of
the Companies Act 2006. Copies of these accounts are available upon request
from the Company's registered office at 7th floor, 30 Panton St, London, SW1Y
4AJ or at the Company's website: www.impaxam.com.
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. 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.
Accounting policies
The accounting policies applied by the Group in these condensed consolidated
interim financial statements are the same as those applied by the Group in its
consolidated financial statements for the year ended 30 September 2021.
New and forthcoming accounting standards applicable to the Group
No new accounting standards or interpretations issued or not yet effective are
expected to have an impact on the Group's condensed consolidated financial
statements.
2 Estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
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 note 10.
3 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 in the following tables.
Six months ended 31 March 2022
Adjustments
Reported IFRS Business combination effects Other Adjusted
£000 £000 £000 £000
Income statement
Revenue 88,640 88,640
Operating costs (56,680) (54,688)
Amortisation of intangibles arising on acquisition 1,200
Acquisition equity incentive scheme charges 669
Mark to market charge on equity awards 123
Operating Profit 31,960 1,869 123 33,952
Finance income 1,130 (32) 1,098
Finance expense (403) (403)
Profit before taxation 32,687 1,869 91 34,647
Taxation (6,046)
Tax credit on adjustments (17) (6,063)
Profit after taxation 26,641 1,869 74 28,584
Diluted earnings per share 20.1p 1.4p 0.1p 21.5p
Six months ended 31 March 2021
Adjustments
Reported IFRS Business combination effects Other Adjusted
£000 £000 £000 £000
Income statement
Revenue 60,591 60,591
Operating costs (44,150) (39,849)
Amortisation of intangibles arising on acquisition 1,196
Acquisition equity incentive scheme charges 986
Contingent consideration adjustment 167
Mark to market charge on equity awards 1,952
Operating Profit 16,441 2,349 1,952 20,742
Finance income 110 (42) 68
Finance expense (2,103) (2,103)
Profit before taxation 14,448 2,349 1,910 18,707
Taxation (91)
Adjustment re historical tax charges (2,803)
Tax credit on adjustments (363) (3,257)
Profit after taxation 14,357 2,349 (1,256) 15,450
Diluted earnings per share 10.9p 1.8p (1.0)p 11.8p
The adjusted diluted earnings per share is calculated using the adjusted
profit after taxation shown
above. The diluted number of shares is the same as used for the IFRS
calculation of earnings per share (see Note 8).
Similar adjustments have been made, where relevant, for the year ended 30
September 2021 to give adjusted operating profit of £55,784,000, adjusted
profit before tax of £54,010,000 and adjusted diluted earnings per share of
33.9 pence.
Amortisation of intangibles
Management contracts, which are classified as intangible assets, were acquired
as part of the acquisition of Impax NH 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.
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 two 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 included a credit in respect of historical tax
charges related to private equity income. This does not reflect the
performance of the Group and is therefore excluded from adjusted profit.
Contingent consideration adjustment
Until the time it was settled, the Group was required to review and adjust its
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.
4 Segment Information
The Group is managed on an integrated basis and there are no reportable
segments.
5 Finance income
31 March 31 March 30 September 2021
2022 2021 £000
£000 £000
Fair value gains - 57 161
Interest income 53 12 36
Other investment income 32 41 89
Foreign exchange gains 1,045 - -
1,130 110 286
Foreign exchange gains mainly arise on the retranslation of intercompany loans
and cash balances held in USD.
6 Finance expense
31 March 31 March 30 September 2021
2022 2021 £000
£000 £000
Interest on lease liabilities 217 242 468
Finance costs on bank loans 59 64 85
Foreign exchange losses - 1,797 1,418
Fair value losses 127 - -
403 2,103 1,971
Fair value losses represent those arising on the revaluation of investments
held by the Group (see note 12) and any gains or losses arising on related
hedge instruments held by the Group.
Commitment fees are payable on the revolving credit facility which the Group
retains.
7 Taxation
The UK tax rate for the Period is 19%. The tax assessment for the Period is
lower than this rate. The differences are explained below:
Six months ended Six months Year ended
31 March ended 30 September 2021
2022 31 March £000
£000 2021
£000
Profit before tax 32,687 14,448 45,749
Tax charge at 19% 6,211 2,745 8,692
Effects of:
Non-taxable income (13) - (18)
Non-deductible expenses and charges 1 1 316
Adjustment in respect of historical tax charges (65) (2,803) (2,795)
Effect of higher tax rates in foreign jurisdictions 123 83 22
Tax losses not recognised 2 65 -
Recognition of prior year tax losses (213) - (713)
Total income tax expense 6,046 91 5,504
8 Earnings per share
Six months ended 31 March 2022 Earnings for the Period Shares Earnings per share
£'000 '000
Basic 26,641 129,259 20.6p
Diluted 26,641 132,743 20.1p
Six months ended 31 March 2021
Basic 14,029 126,804 11.1p
Diluted 14,029 128,429 10.9p
Year ended 30 September 2021
Basic 40,245 127,644 31.5p
Diluted 40,245 132,669 30.3p
The weighted average number of shares is calculated as shown in the table
below.
Six months ended Six months Year ended
31 March ended 30 September 2021
2022 31 March '000
'000 2021
'000
Weighted average issued share capital 132,597 130,942 131,772
Less own shares (3,338) (4,138) (4,128)
Weighted average number of ordinary shares used in the calculation of basic 129,259 126,804 127,644
earnings per share
Additional dilutive shares regarding share awards 5,120 2,660 5,983
Adjustment to reflect option exercise proceeds and future service from (1,636) (1,035) (958)
employees receiving awards/shares
Weighted average number of ordinary shares used in the calculation of diluted 132,743 128,429 132,669
eps
9 Dividends
On 29 March 2022, at the Company's Annual General Meeting, payment of a 17.0
pence per share final dividend for the year ended 30 September 2021 (2020: 6.8
pence per share) was approved. Combined with an interim payment of 3.6 pence
this gave total dividends for the year ended 30 September 2021 of 20.6 pence.
The Trustee of the Impax Employee Benefit Trusts waived the Trusts' rights to
part of the final dividend, leading to a total dividend payment of
£27,220,113 which was paid on 24 March 2022.
The Board has declared an interim dividend for the Period of 4.7 pence per
ordinary share (2021: 3.6 pence). This dividend will be paid on 22 July 2022
to Ordinary Shareholders on the register at close of business on 17 June 2022.
10 Goodwill and Intangible assets
The goodwill and intangible assets held by the Group primarily relate to the
acquisition of Impax NH in January 2018.
Goodwill £000
Cost
At 1 October 2020 12,306
Foreign exchange movement (684)
At 31 March 2021 11,622
Foreign exchange movement 194
At 30 September 2021 11,816
Foreign exchange movement 247
At 31 March 2022 12,063
There were no brought forward impairment losses at 1 October 2021 or
impairment charges during the Period.
Intangible assets Management contracts Software Total
£000 £000 £000
Cost
At 1 October 2020 27,707 529 28,236
Foreign exchange movement (1,767) 1 (1,766)
At 31 March 2021 25,940 530 26,470
Foreign exchange movement 501 (1) 500
At 30 September 2021 26,441 529 26,970
Additions - 57 57
Foreign exchange movement 640 - 640
At 31 March 2022 27,081 586 27,667
Accumulated amortisation and impairment
At 1 October 2020 6,907 458 7,365
Amortisation 1,196 29 1,225
Foreign exchange movement (458) - (458)
At 31 March 2021 7,645 487 8,132
Amortisation 1,162 22 1,184
Foreign exchange movement 181 - 181
At 30 September 2021 8,988 509 9,497
Amortisation 1,200 14 1,214
Foreign exchange movement 242 - 242
At 31 March 2022 10,430 523 10,953
Net book value
At 31 March 2022 16,651 63 16,714
At 30 September 2021 17,453 20 17,473
At 31 March 2021 18,295 43 18,338
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 2021 and showed no
impairment was required. The test used the following key assumptions - inflows
of new assets of $US0.34bn 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 that we would use in an impairment test
performed at 31 March 2022 remain the same as at 30 September 2021. Long term
fund performance, asset inflows and operating margin are in excess of those
assumed in the valuation, accordingly there are no indicators of impairment.
11 Property, plant & equipment
Property plant and equipment 31 March 31 March 30 September 2021
2022 2021 £000
£000 £000
Right-of-use assets 7,531 8,432 8,065
Property, plant and equipment owned by the Group 1,489 1,373 1,370
9,020 9,805 9,435
The carrying value of the Group's right of use assets, associated lease
liabilities and the movements during the Period are set out below.
Lease arrangements Right of use asset Lease
£000 liabilities
£000
At 1 October 2021 8,065 9,432
Lease payments - (846)
Interest expense - 217
Depreciation charge (619) -
Foreign exchange movement 85 93
At 31 March 2022 7,531 8,896
12 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.
£000
At 1 October 2020 4,387
Additions 2,662
Fair value movements 177
Repayments/disposals (689)
At 31 March 2021 6,537
Additions 170
Fair value movements 471
Repayments/disposals 386
At 30 September 2021 7,564
Additions 125
Fair value movements (89)
Repayments/disposals (1,354)
At 31 March 2022 6,246
An analysis of the investment by valuation technique hierarchy is disclosed
below.
31 March 31 March 30 September 2021
2022 2021 £000
£000 £000
Level 1 3,880 3,895 4,090
Level 2 - - -
Level 3 2,366 2,642 3,474
6,246 6,537 7,564
Level 1 means that valuation is made by reference to quoted prices in active
markets for the relevant securities.
Level 2 assets do not have regular market pricing but can be given a fair
value based on quoted prices in active markets.
Level 3 assets are those where there is no readily available market
information to value them and the asset value are based on models. They
represent investments in our private equity funds.
13 Cash reserves
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 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:
31 March 31 March 30 September 2021
2022 2021 £000
£000 £000
Cash and cash equivalents 31,574 26,896 36,172
Cash held in money market funds and long-term deposit accounts 40,451 11,357 38,066
Less: cash held in RPAs (4,673) (3,777) (4,089)
Total cash reserves 67,352 34,476 70,149
14 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.
15 Share capital and own shares
31 March 31 March 30 September 2021
2022 2021
Issued and fully paid ordinary shares of 1 pence each
Number 132,596,554 132,596,554 132,596,554
£000s 1,326 1,326 1,326
31 March 31 March 30 September 2021
2022 2021
Own shares
Number 2,792,373 4,165,214 4,103,395
£000s 2,802 3,030 4,117
Own shares represents those held by the Impax Asset Management Group plc
Employee Benefit Trust 2012 (the "EBT") which are typically used to fund
exercise of options or awards of restricted shares. 0.4 million shares were
purchased by the EBT in the six months ended 31 March 2022. The number of own
shares held by the EBT fell in the Period as it transferred 1.7 million shares
to option/restricted share holders on exercise of options or to holders of
restricted shares when the restrictions lapsed.
As at 31 March 2022 there were a total of 2.9 million options outstanding over
the Group's shares of which 0.9 million were exercisable. As at 31 March 2022
employees also held 2.2 million Restricted Shares over which the restrictions
lapse from December 2022 through to January 2027. These Restricted Shares are
held in the EBT and included in the own shares numbers shown above.
16 Related party transactions
Private Equity Funds managed by the Group, entities controlled by these funds
and certain other funds are related parties of the Group by virtue of
subsidiaries being the General Partners to these funds. The Group earns
management fees from these entities.
BNP Paribas Asset Management Holdings is a related party of the Group by
virtue of owning a significant stake in the Group. The Group also sub-manages
certain funds for BNP for which it earns fees.
Other funds managed by subsidiaries of the Group are also related parties by
virtue of its management contracts.
A loan facility has been provided to an executive for the sole purpose of
investment in a fund managed by the Group. The loan is provided at an
interest rate of LIBOR plus 2% per annum on amounts drawn, calculated on a
daily basis. Interest of €1,952 was accrued on the loan during the Period.
The balance on the loan is €91,789 at the reporting date.
Revenue earned from and operating costs for related parties of the Group are
as shown in the table below:
Six months ended Six months ended Year ended
31 March 2022 31 March 2021 30 September 2021
£000 £000 £000
Revenue 88,595 59,634 73,120
Operating costs 509 497 898
Investments in related parties of the Group and trade and other receivables
due from related parties are as shown in the table below:
31 March 31 March 30 September 2021
2022 2021 £000
£000 £000
Current asset investments 2,366 2,642 3,474
Trade and other receivables 33,460 23,577 34,685
17 RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS
This note should be read in conjunction with the condensed consolidated cash
flow statement. It provides a reconciliation of how profit before tax, which
is based on accounting rules, translates to cashflows.
31 March 31 March 30 September 2021
2022 2021 £000
£000 £000
Profit before taxation 32,687 14,448 45,749
Adjustments for:
Depreciation and amortisation 2,069 2,032 4,057
Finance income (1,130) (110) (286)
Finance expense 403 2,103 1,971
Share-based payment charges 2,558 1,743 4,882
Adjustment for statement of financial position movements:
Decrease/(increase) in trade and other receivables 304 (6,664) (19,021)
(Decrease)/increase in trade and other payables (8,742) (277) 22,460
Cash generated from operations 28,149 13,275 59,812
18 Group risks
The Group's principal risks remain as detailed within the Directors' Report of
the Group's 2021 Strategic Report.
Alternative Performance Measures
The Group uses the following Alternative Performance Measures ("APMs").
ADJUSTED OPERATING PROFIT, ADJUSTED PROFIT BEFORE TAX AND ADJUSTED PROFIT
AFTER TAX
These APMs exclude the impact of the following items:
· amortisation of intangible assets which arose on the acquisition
of Impax NH;
· charges in respect of equity incentive scheme related to the
acquisition of Impax NH;
· fair value movements in contingent consideration payable on the
acquisition of Impax NH;
· significant tax credits related to the prior year; and
· mark-to-market charges in respect of National Insurance payable
on share awards.
These performance measures are reported as they facilitate comparison with
prior periods and provide an appropriate comparison with our peers. Excluding
amortisation of intangible assets arising from acquisitions is consistent with
peers and therefore aids comparability. It also aids comparison to businesses
which have grown organically, and do not have such charges. Fair value
movements on contingent consideration are excluded as they are one-off items
and not representative of the operating performance of the Group. Mark to
market charges in respect of National Insurance are excluded as they arise due
only to changes in the share price and therefore do not reflect the operating
performance of the Group.
A reconciliation to the relevant IFRS terms is provided in Note 3 of the
financial statements.
ADJUSTED OPERATING MARGIN
This is calculated as the ratio of adjusted operating profit to revenue. This
number is reported as it gives a good indication of the underlying
profitability of the company and how this has changed year on year.
ADJUSTED EARNINGS PER SHARE AND ADJUSTED EARNINGS PER SHARE
This is calculated as the adjusted profit after tax divided by the diluted
number of shares used in the calculation of IFRS diluted earnings per share.
This is used to present a measure of profitability per share in line with
adjusted profits.
A reconciliation to IFRS diluted earnings per share is shown in note 3 of the
financial statements.
RUN RATE REVENUE AND RUN RATE ADJUSTED OPERATING PROFIT
Run rate revenue is the revenue that the Group would report if the AUM for the
year remained static at that shown at 31 March and fee rates were those at 31
March. Run rate revenue margin is the ratio of run rate revenue to AUM.
Run rate adjusted operating profit is the run rate revenue less adjusted
operating costs for the month of March extrapolated for 12 months. Adjustments
are made to exclude any one off items. Run rate numbers are reported as they
give a good indication of the current profitability of the Group.
CASH RESERVES
Cash reserves is the sum of cash and cash equivalents and cash held in money
market accounts or fixed term deposit accounts less cash held in research
payment accounts and cash held by consolidated funds. The calculation of cash
reserves is shown in note 13 to the financial statements. Cash reserves are
reported as they give a good indication of the total cash resources available
to the Group.
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