Impax Asset Management Group plc 

Results for half year ended 31 March 2014

Impax delivers robust performance for all strategies

and reports strong net inflows for first half year

London, 15 May 2014 - Impax Asset Management Group plc, ("Impax" or the "Company"), the AIM listed investment manager dedicated to investing in the opportunities created by the scarcity of natural resources and growing demands for cleaner more efficient products and services, announces its unaudited results for the six months to 31 March 2014.

Highlights

·    Assets under management ("AUM") increased 16% to £2.548 billion (31 March 2014) from £2.197 billion (30 September 2013)

·    Strong net inflows of £189m (H1, 2013: £100m)

·    Revenue in the first half of 2014 was £9.9m (H1, 2013: £8.7m)

·    Operating earnings¹ were £2.7m (H1, 2013: £1.8m)

·    Unaudited profit before tax was £1.4m (H1, 2013: £1.5m²)

·    Diluted earnings per share were 1.20 pence (adjusted³) (H1, 2013: 1.45 pence (adjusted³))

·    Shareholders' equity increased to £23.5m (H1, 2013: £22.8m)

·    Initiation of interim dividend of 0.3 pence per share

·    Continuing robust investment performance by all strategies

·    Granted a Queen's Award for Enterprise: Sustainable Development

Ian Simm, Chief Executive commented:

"I'm pleased that Impax has continued to deliver profitable growth during the first half.  Our target markets made good progress in the Period, with the renewable energy, water and pollution control sub-sectors all making a significant contribution.  More than half the increase in our AUM is attributable to net inflows.  These were particularly strong from clients in Europe and the US, where we also have a promising mandate pipeline."

"We are announcing the initiation of an interim dividend of 0.3 pence per share for the Period. The Board also intends to maintain the final dividend in line with last year."

¹ Revenue less operating costs.

² Profit before tax in the Period was impacted inter alia by £0.71 million of charges (2013: £0.36 million) associated with the Company's share-based incentive schemes.

³ Adjusted to exclude IFRS2 charges for shares schemes intended to be satisfied by primary shares, and include the related tax benefit reported in Other Comprehensive Income and the dilution effect of unvested share awards.  The increase in after tax operating earnings is more than offset by tax benefits in H1, 2013 not being repeated during the Period, an increased employer's National Insurance provision due to the rise in the Company's share price and a reduction to the fair value of the Company's interest in Impax New Energy Investors.

Enquiries:

Impax Asset Management Ltd

Anne Gilding                                                              Tel: +44 (0) 20 7434 1122 (switchboard)

Head of Brand Communications                              Tel: +44  (0) 20 7432 2602 (direct)

Impax Asset Management                                        Tel: +44 (0) 7881 249612 (mobile)

Norfolk House, 31 St James's Square,                                    Fax +44 20 7434 1123

London, SW1Y 4JR                                                       Email: a.gilding@impaxam.com

www.impaxam.com

About Impax Asset Management

Founded in 1998, Impax Asset Management Ltd ("Impax") is dedicated to investing in resource efficiency and environmental markets created by resource scarcity and the demand for cleaner, more efficient products and services.  Impax, which employs 28 investment professionals and a similar number of support staff, has offices in London, Hong Kong, New York and Portland (Oregon).  The firm manages ca. £2.5 billion* for investors globally across listed and private equity strategies.

Impax's listed equity funds seek out mispriced companies that are set to benefit from the long-term trends of changing demographics, rising consumption, limited natural resources and urbanisation.  Investment is focused on the alternative energy, water, waste, food, agriculture and related markets.  Impax's private equity infrastructure funds invest in power generation and related assets in the renewable energy sector.   

*as at 31 March 2014

Chief Executive's Statement

During the first half year for Impax Asset Management Group plc ("Impax" or the "Company"), i.e. the Period from 1 October to 31 March 2014, rising investor confidence gave way to ambivalence as economic data softened and the number of actual or perceived risks increased.  Nevertheless, Impax's target markets linked to environmental and resource efficiency drivers ("Target Markets") generally made good progress, particularly in renewable energy, water and pollution control, and investor interest remained high.  Against this backdrop, Impax's assets under management and advisory ("AUM") increased by 16 per cent to £2,548 million, with more than half the increase (£189 million) attributable to net inflows.  On 30 April 2014, AUM were £2,538 million.

Developments in Resource Efficiency and Environmental Markets

During the Period, the Target Markets sustained their out-performance of broader global equity indices.  For example, the FTSE Environmental Opportunities All Share Index^I ("EOAS") returned 6.8 per cent (total return, GBP) while the MSCI World ("ACWI")^II index rose by 5.4 per cent.  Over the five years to 31 March 2014, the EOAS grew by 111.2 per cent while the ACWI rose by 95.1 per cent.

With an improving economy in much of the developed world, capital expenditure remained strong.  For example, higher housing starts and the benefits of cheap energy in the United States are underpinning investment in a wide range of infrastructure and industrial sectors, many of which are impacted by environmental legislation.  Meanwhile, the turnaround in renewable energy markets is gaining momentum as sustained rising demand removes much of the over-capacity that has held back prices in recent years.

The publication of a number of important scientific reports has also raised the profile of many resource scarcity issues.  The UN followed last September's Fifth Assessment Report with a more focused analysis on the impacts of climate change, warning of the potential damage to ecosystems, rising food prices and threats to national security, and arguing that substantial investments were urgently required to improve resilience to extreme weather and mitigate further damage.  Preparation for the next major international summit on climate change in Paris in December 2015 is now underway: this work is likely to attract significant publicity and sustain investor interest in several Target Markets.

Government reaction to resource scarcity issues has continued to shape markets.  In January 2014, the UK water regulator OFWAT announced its preliminary decisions on capital guidance for the industry.  These new initiatives consider pricing for customers and the introduction of water trading incentives to reduce damaging abstraction which could contribute to future water shortages.  In the US, the Environmental Protection Agency announced measures to clean up vehicle emissions, including a particularly sharp reduction in the allowable sulphur content in gasoline.  In China we see further evidence of the Government's growing commitment to environmental protection, including plans announced last November to spend ca. US$330 billion to tackle water pollution. 

Financial Results for the Period

Revenue for the six months to 31 March 2014 was £9.9 million (2013: £8.7 million).  Operating earnings¹ for the Period were £2.7 million (2013: £1.8 million) and the associated operating margin was 27 per cent (2013:  21 per cent). 

The unaudited result for the Period was a profit before tax² ("PBT") of £1.4 million (2013: £1.5 million) and the diluted adjusted³ earnings per share for the Period were 1.20 pence (2013: 1.45 pence). 

The increase in operating earnings is offset by tax benefits in 2013 not being repeated during the Period, an increased employer's National Insurance provision due to the rise in the Company's share price and a reduction to the fair value of the Company's interest in Impax New Energy Investors.

Interim dividend

At the Annual General Meeting on 10 February 2014, Impax shareholders approved payment of a dividend of 0.90 pence per share for the year ended 30 September 2013 (2012: 0.75 pence).  The Board believes the Company is able to support the payment of both an interim dividend and maintain the final dividend in line with the prior year and has therefore declared an interim dividend for the Period of 0.3 pence per share. This will be paid on 20 June 2014 to ordinary shareholders on the shareholder register at close of business on 23 May 2014.

Listed Equities

During the Period Impax's Listed Equity strategies^III performed well compared to global indices.  Our Specialists strategy, which invests in stocks of small and mid-cap environmental services and technology companies, rose by 11.0 per cent, while the ACWI grew by 5.4 per cent.  Impax's Leaders strategy, a portfolio that includes larger cap stocks, returned 6.6 per cent.  The Water strategy returned 9.7 per cent, retaining its position as one of the best performing funds in its peer group, while the Food & Agriculture fund delivered 5.6 per cent, level with rise of the MSCI ACWI Food & Agriculture Chain Index.  The Asia-Pacific strategy returned 12.0 per cent while the MSCI AC Asia Pacific Ex-Japan Index grew by 0.3 per cent.

Longer term performance remains strong too.  Over the ten years to 31 March 2014, the Specialists strategy returned an average of 11.2 per cent per annum, materially ahead of the ACWI, which rose by 8.0 per cent per annum.

Private Equity

Our private equity business continues to make good progress.  During the Period we expanded the portfolio of our second fund, Impax New Energy Investors II, with new investments in Italy and Germany, and also made our first investments in Finland and Ireland to increase the geographic diversification across northern EU countries.   The fund is now approximately 62 per cent invested and currently owns or is in the process of funding the construction of some 400 MW of onshore wind farms and solar projects.

The assets held in Impax New Energy Investors I LP continue to perform well operationally.  However, the Spanish government has now finalised its solar tariff reforms; these are more severe than originally anticipated and have led us to write down the Company's holding in the fund by a further £0.5 million.

Fund flows and distribution

The net inflows of £189 million over the Period comprised inflows into our listed equity funds and accounts of £322 million and outflows of £133 million (see the table below).  We have continued to benefit from strong inflows from continental Europe, particularly into the funds and accounts we run for BNP Paribas.  The BNP Paribas Aqua fund, which marked its fifth anniversary in December 2013, remains one of the best performing water funds globally, having returned 15.5 per cent net per annum (institutional share class) since inception, versus 11.2 per cent (net) for the ACWI over the same period.

Total Assets under Management and Fund Flows

Commitments and interest from North American clients continues to build.  During the Period, the assets we manage or sub-advise for US clients in domestic funds and accounts increased 117 per cent to £167 million, maintaining the high rate of growth achieved in recent years.  Inflows into the Global Environmental Markets Fund, which we sub-advise for Pax World, were more than matched by the rapid expansion of our mandate with a large private bank which hired us in November 2013 to manage part of a multi-manager product.  We are currently aiming to progress a significant pipeline of potential new business in the United States. 

Infrastructure and support

In April, i.e. after the Period end, in light of our optimistic prospects in North America, we announced the appointment of a second senior business development and client service professional, who will cover the US West Coast from our new office in Portland, Oregon. 

Headcount was unchanged over the period, with 57 full time equivalent staff. 

Queen's Award for Enterprise: Sustainable Development

On 21 April 2014, Impax was honoured to receive a Queen's Award for Enterprise in the Sustainable Development category.   These prestigious awards are made annually by HM The Queen, and recognise the highest levels of excellence in business.  Impax is the only asset manager to hold an award in this category.  We believe that this award will further raise our profile in the investment community, particularly in overseas markets.

Remuneration and share management

Following a review of remuneration policy in 2011, the Company adopted a three year Employee Share Option Plan ("ESOP"), under which final awards may be made following the end of the Company's current financial year.  In order to consider the most appropriate means of incentivising management and staff, the Remuneration Committee has initiated a further review of remuneration policy and expects to report to shareholders later this calendar year. 

During the Period, the Board confirmed the grant of 2.9 million options under the current ESOP to management and staff in respect of their performance for the financial year ended 30 September 2013.  The strike price was set at 47.9 pence, and the options will vest on 31 December 2016. 

Update on Regulation

We continue to monitor the evolving requirements of global financial services regulation closely. Further to the requirements of the Alternative Investment Fund Managers Directive ("AIFMD"), during the Period we submitted our application for authorisation as an Alternative Investment Fund Manager to the Financial Conduct Authority ("FCA").  We are in the process of implementing the policies, procedures and other requirements arising from the AIFMD.

Prospects

Notwithstanding higher levels of volatility, we expect that markets will tend to rise over the next few years, underpinned by further news of economic recovery around the world.  The outlook for environmental and resource efficiency markets remains very positive, and valuations are attractive compared to those for equities in general.  Meanwhile, Impax's strong track record, stable investment team and international reputation continue to reinforce our position as a preferred provider of services to investors seeking to tap into the large number of diverse opportunities.  With a scalable business model and strong balance sheet, we remain well placed for further business expansion.

Ian Simm

14 May 2014

¹revenue less operating costs

²profit before tax for 2013 was impacted inter alia by £0.71 million of charges (2013: £0.36 million) of charges associated with the Company's share-based incentive schemes

³adjusted to exclude IFRS2 charges for shares schemes intended to be satisfied by primary shares, and to include the related tax benefit reported in Other Comprehensive Income, the full effect of share buybacks and the dilution effect of unvested share awards. 

^I FTSE indices are total return calculated including the dividends reinvested gross of withholding taxes. 

^II The returns for the MSCI indices are net calculated including the dividends reinvested, net of withholding taxes. 

^III In line with market standards the Impax strategy returns (source: Factset) are calculated including the dividends reinvested, net of withholding taxes, gross of management fee and are represented in GBP except for BNP Paribas Aqua which is represented in Euros.