Interim Results

RNS Number : 5699N
Impax Asset Management Group plc
19 May 2015
 



Impax Asset Management Group plc - Interim Results to 31 March 2015

 

London, 19 May 2015 - 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 results for the six months to 31 March 2015.

Highlights

·      Assets under management ("AUM") increased 13% since year end  to new peak of £3.1bn

·      Net inflows of £96m, predominantly from US and Continental Europe

·      Revenue in first half of 2015 was £10.4m (H1, 2014: £9.9m)

·      Operating earnings1 were £2.3m (H1, 2014: £2.7m)

·      Unaudited profit before tax2 was £1.9m (H1, 2014: £1.4m)

·      Diluted earnings per share were 1.62 pence (adjusted3) (H1, 2014: 1.20 pence (adjusted3))

·      Shareholders' equity was £25.2m (H1, 2014: £23.5m)

·      Interim dividend increased by 33% to 0.4 pence per share

 

Ian Simm, Chief Executive commented:

"I am pleased to report another strong period for the Company.  Our AUM has reached a new peak of £3.1 billion with robust investment performance and inflows.  We continue to develop our business in response to rising investor demand and our mandate pipeline is healthy, with investor interest in both our listed equity products and real asset strategies."

"Last year we initiated an interim dividend and I am pleased to report that, in line with our progressive dividend policy, this year we have increased this by 33% to 0.4 pence per share."

1Revenue less operating costs.

2 Profit before tax in the Period was impacted inter alia by £0.16 million of charges (H1 2014: £0.71 million) 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 includes the related tax benefit reported in Other Comprehensive Income and the dilution effect of unvested share awards.

 

  

Enquiries:

Ian Simm                                                                     Tel: + 44 (0) 20 7434 1122 (switchboard)

Chief Executive

Impax Asset Management Group plc

www.impaxam.com

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

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

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

www.impaxam.com                                                     Email: a.gilding@impaxam.com


Guy Wiehahn                                                               Tel: +44 (0) 20 7418 8893
Nominated Adviser
Peel Hunt LLP

About Impax Asset Management

Founded in 1998, Impax Asset Management 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. £3.1 billion* for investors globally across listed and private markets strategies.

Impax's listed equity funds seek out mis-priced companies that are set to benefit from the long-term trends of changing demographics, urbanisation, rising consumption, and the resultant increases in resource scarcity. Investment is focused on a small number of deeply researched global equity strategies across alternative energy, energy efficiency, water, waste, and food and agriculture related markets.

The private equity infrastructure funds follow an operationally focused, value-add strategy, investing in renewable power generation and related assets throughout Europe.

The Impax Climate Property Fund focuses on developing sustainable and energy efficient commercial property in the UK.

*As of 31 March 2015                               

Issued in the UK by Impax Asset Management Group plc, whose shares are quoted on AIM.  Impax Asset Management Group plc is registered in England & Wales, number 03262305.

AUM relates to Impax Asset Management Limited and Impax Asset Management (AIFM) Limited.  Both companies 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 and links from it should not be relied upon for investment purposes.  For further information please visit www.impaxam.com.

 

 

Chief Executive's Statement

 

During the Period Impax's AUM reached a new peak of £3.1 billion with continuing robust inflows and a promising mandate pipeline.

Over the first half year for Impax Asset Management Group plc ("Impax" or the "Company"), i.e. the Period from 1 October 2014 to 31 March 2015, equity markets continued their recovery but also showed signs of volatility, with further geopolitical risk and softer economic growth in several regions. The environmental and resource efficiency markets in which Impax seeks investments made robust progress, generally in line with or slightly ahead of broader equity markets. 

During the Period, the Company's assets under management and advisory ("AUM") increased by 13 per cent to a new peak of £3,108 million, inclusive of net inflows of ca. £96 million.  On 30 April 2015, AUM were £3,110 million.

Developments in Resource Efficiency and Environmental Markets

Against the backdrop of a buoyant economy, investment in infrastructure and capital goods continued to expand across major economies, underpinning strong demand for the products and services of companies in Impax's target markets.  

The sharp fall in oil prices had only a limited impact on the energy efficiency sector, a core component of our universe.  Furthermore, the lower cost of oil has proved positive for sectors with high exposure to consumer spending and for those where oil is a major input cost.  The exception was the renewables sector which underperformed in the last quarter of 2014 due to a perceived risk from lower oil prices, but which has since recovered. 

The prospects for our target markets in Asia have strengthened further.  In early March, the "Under the Dome" documentary on China's air pollution triggered a high profile debate in the country, and the share prices of many domestic environmental companies shot up. China is approaching the completion of its 12th Five Year Plan at the end of 2015, under which ca. $1 trillion of capital is being deployed to further environmental protection and the provision of "low environmental impact" infrastructure. Government announcements indicate that environmental protection will feature even more prominently in the next Five Year Plan, details of which are due to be announced later this year.

Climate change continues to appear frequently in media headlines as we approach the final negotiations at the United Nations Climate Change Conference in Paris this December.  Although there are still significant differences between the negotiating positions of developed and developing countries, pledges from China and the United States bode well for a limited global agreement.  Last year the global economy expanded by three per cent while global emissions of carbon dioxide ("CO2") stood unchanged from the preceding year, challenging the widely held assumption that CO2 reduction is incompatible with economic growth.  We continue to focus on investment opportunities linked to policies to reduce greenhouse gas emissions.

There were further signs during the Period that major investors are concerned about environmental risk and interested in opportunities to deploy capital into related markets.  As a result of the campaign which began on college campuses in the US three years ago, "fossil fuel divestment" has become a particularly prominent issue.   As of last month, more than 800 investors, including foundations such as the Rockefeller Brothers, religious groups, healthcare organisations, universities and local governments, have pledged to withdraw a total of US$50 billion from fossil fuel investments over the next five years.

Although analysis of climate change investment risk is complex, we believe that long term investors should consider initiating some level of partial divestment of fossil fuel assets to reflect the higher probability that governments will impose a tax or equivalent limit on greenhouse gas emissions, potentially rendering a number of assets "stranded".  We continue to research these issues and discuss with asset owners rational approaches to managing this investment risk.  Investment in companies providing products and services linked to clean energy and energy efficiency can provide mitigation while also offering superior long term growth prospects.

Financial results for the Period

Revenue for the six months to 31 March 2015 was £10.4 million (H1 2014: £9.9 million).  Operating earnings1 for the Period were £2.3 million (H1 2014: £2.7 million) and the associated operating margin was 22 per cent (H1 2014:  27 per cent). 

The unaudited result for the Period was a profit before tax2 ("PBT") of £1.9 million (H1 2014: £1.4 million) and the diluted adjusted3 earnings per share for the Period were 1.62 pence (2014: 1.20 pence).

Notwithstanding the material top-line growth, the drop in operating earnings and margin reflect the investments we have made to pursue new business, particularly in the area of real assets, as described below.

Interim dividend

At the Annual General Meeting on 4 February 2015, Impax shareholders approved payment of a dividend of 1.1 pence per share, taking the total dividend for the year ended 30 September 2014 to 1.4 pence per share (2013: 0.90 pence). Further to the initiation of an interim dividend of 0.3 pence per share during the previous financial year, and in line with the Company's progressive dividend policy, the Board has now declared an interim dividend for the Period of 0.4 pence per share. This will be paid on 26 June 2015 to ordinary shareholders on the shareholder register at close of business on 29 May 2015.

Listed Equities

During the Period, Impax's Listed Equity strategies4 delivered robust performance, with the majority in line with or slightly ahead of the MSCI All Country World Index ("ACWI")5, which returned 12.2 per cent.  Our global all-cap strategy (Leaders) delivered 13.4 per cent, the Water strategy returned 15.1 per cent and the Asia-Pacific and Food & Agriculture strategies posted 12.5 and 17.8 per cent respectively.  The Specialists strategy, which focuses on small and mid-cap stocks, lagged as a result of its small-cap bias and avoidance of two particularly volatile stocks (Hanergy and Tesla), returning 10.7 per cent for the period.  However, over the last ten years, the Specialists strategy has outperformed the ACWI by a significant margin, returning 171 per cent versus 138 per cent.

Over the Period, we accelerated a programme to extend our stock research to cover a broader range of markets within the themes of population dynamics, inadequate infrastructure, environmental constraints and resource scarcity, and seeded a new strategy which is designed to compete with unconstrained global equity funds.

Private Equity

Impax New Energy Investors II, our fund targeting the construction of assets providing renewable power generation, reached the end of its investment period on 31 March and we are preparing to exit a number of this fund's investments.  The opportunity to secure superior, risk-adjusted returns from our investment model in this sector remains compelling, and we are currently in discussions with our investor base about their appetite for making further allocations to this strategy in due course. 

Sustainable Property

Strengthening regulation, tenant demand and a shortage of suitable stock has created an opportunity to generate attractive returns in UK commercial property through a value-add strategy focused on significantly increasing energy efficiency and other "sustainability" factors.  Since joining Impax last July, our investment team in this area has been working on the letting and sale of the remaining asset in their first fund, and we are now in discussions with investors over the management of new monies. 

Fund flows and distribution

At a time of sustained investor interest in the growth opportunities in environmental and resource efficiency markets, our distribution through third parties was particularly successful during the Period:  the table below sets out the AUM movements.

AUM movement for six months to 31 March 2015

 

AUM movement

6 months to 31 March 2015

Impax label listed equity funds (£m)

Third party listed equity funds and accounts (£m)

Private equity funds (£m)

Property funds (£m)

 

 

Total (£m)

 

 

Total AUM at 30 September 2014

511

1,867

354

22

2,755

Net inflows/outflows

(5)

100

-

-

96

Market movement and performance

53

230

(25)

-

258

 

Total AUM at 31 March 2015

559

2,198

329

22

3,108

 

Funds and accounts run by BNP Paribas were major contributors to net inflows; the BNP Paribas Aqua fund, which has been one of the top performing pure-play water funds over the six years since its inception, surpassed €1 billion. 

A significant percentage of net inflows arose in the United States, where the Company's pipeline and prospects are healthy.  Our Leaders strategy was recently approved by two leading brokerage firms that are building their offering of strategies focused on resource efficiency, and we are starting to see flows from these new channels.  The Impax-label fund that wraps our Specialists strategy saw further inflows from the family office sector, allowing us to complete the withdrawal of our seed capital; meanwhile, interest in our Water strategy is gathering momentum, particularly amongst West Coast prospects, for whom drought continues to be a topical issue.  

In 2012 we hired an investment team to expand our resource efficiency expertise into the food and agriculture sectors, and launched a fund in December of that year. Since then, the team has built a robust track record and the strategy has attracted considerable investor interest.  Last month, we were pleased to extend the range of listed equity funds that we manage on behalf of BNP Paribas with the launch of a fund based on a sustainable food strategy. 

Infrastructure and support

Over the Period, our headcount rose by four to 65 staff.  In line with previous statements, our core team is now in place, and additional hires will typically support new business.

Remuneration and share management

During the Period, the Board confirmed the grant of 3.4 million options under the Employee Share Option Plan ("ESOP") and 1.25 million Restricted Shares to management and staff in respect of their performance for the financial year ended 30 September 2014. The ESOP strike price was set at 56.9 pence, and the options will vest on 31 December 2017.  The Restricted Shares will vest in equal instalments after three, four and five years.

The Board intends to continue to buy back the Company's shares from time to time after giving due consideration to alternative uses of the Company's cash resources. Shares purchased may be used to satisfy obligations to employees for share-based awards, thus reducing the requirement to issue new shares.  During the Period 1,655,455 shares were bought back to give a total to date of 13,060,120.  14.7 million options and restricted shares have been issued to date.

Prospects

We retain our positive outlook for global equities and believe markets will continue to edge higher, albeit with periods of volatility.  Interest in resource efficiency is gaining additional momentum as investors allocate further assets to environmental and resource efficiency markets and our products are integrated within a widening range of asset categories including socially responsible and impact investments, high growth global equities and liquid alternatives.

We continue to develop our business in response to rising investor demand and our mandate pipeline is promising, with interest in both our listed equity products and real asset strategies.  Impax remains well placed to build further long-term shareholder value.

 

Ian Simm

18 May 2015

 

1Revenue less operating costs.

2 Profit before tax in the Period was impacted inter alia by £0.16 million of charges (H1 2014: £0.71 million) 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 includes the related tax benefit reported in Other Comprehensive Income and the dilution effect of unvested share awards.

4In 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.

5The returns for the MSCI ACWI are net calculated including the dividends reinvested, net of withholding taxes. 

 

 

 

 

 

 

 

Impax Asset Management Group plc

 

 

 

 

Condensed Consolidated Statement of Comprehensive Income

 

 

 

For the Six Months Ended 31 March 2015

 

 

 

 

 

 

 

 

 

 

 

Six months ended

Six months ended

 

Year        ended

 

 

31 March 2015

31 March 2014

30 September 2014

 

Note

£'000

£'000

£'000

 

 

 

 

 

Revenue

 

10,422

9,911

20,359

 

 

 

 

 

Operating costs

 

(8,142)

(7,239)

(15,039)

 

 

 

 

 

Charges related to legacy long term incentive schemes

3

(162)

(707)

(539)

 

 

 

 

 

Fair value losses

4

(135)

(624)

(1,460)

Change in third party interest in consolidated funds

5

(115)

(28)

7

Investment income

 

73

64

207

Profit before taxation

 

1,941

1,377

3,535

Taxation

6

(66)

36

(279)

 

 

 

 

 

Profit after taxation

 

1,875

1,413

3,256

 

 

 

 

 

Other comprehensive income

 

 

 

 

Change in value of cash flow hedges

 

41

(8)

60

Tax on change in value of cash flow hedges

(4)

2

(14)

Exchange differences on translation of foreign operations

 

365

40

146

Third party interest's share of exchange differences on translation of foreign operations

 

(61)

-

-

Total other comprehensive income

 

341

34

192

 

 

 

 

 

Total comprehensive income for the period attributable to equity holders of the parent

2,216

1,447

3,448

Basic earnings per share

7

1.62 p

1.20 p

2.78 p

Diluted earnings per share

7

1.61 p

1.20 p

2.76 p

 

 

 

 

 

 

 

 

 

 

All profit for the period is derived from continuing operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

Impax Asset Management Group plc

Condensed Consolidated Statement of Financial Position

As at 31 March 2015

 

 



Note

As at

As at

As at

 




31 March 2015

31 March 2014

30 September 2014

 




£'000

£'000

£'000

 

ASSETS





 

Non-current assets





 


Goodwill

9

1,665

1,629

1,665

 


Intangible assets


55

67

107

 


Property, plant and equipment


180

339

246

 


Investments


15

17

16

 




1,915

2,052

2,034

 

Current assets





 


Trade and other receivables


6,582

5,168

3,097

 


Derivative asset


152

152

178

 


Investments

10

11,774

11,647

11,640

 


Margin account


307

233

293

 


Cash invested in money market funds and long term deposit accounts

Cash and cash equivalents

11

 

11

10,623

 

1,826

8,609

 

4,174

10,615

 

6,634

 




31,264

29,983

32,457

 

TOTAL ASSETS


33,179

32,035

34,491

 

EQUITY AND LIABILITIES





 

Equity





 


Ordinary shares


1,277

1,277

1,277

 


Share premium


4,093

4,093

4,093

 


Exchange translation reserve


98

(312)

(206)

 


Hedging reserve


209

120

172

 


Retained earnings


19,494

18,347

19,523

 

TOTAL EQUITY


25,171

23,525

24,859

 

Current liabilities





 


Trade and other payables


5,343

6,073

6,536

 


Third party interests in consolidated funds

849

539

1,119

 


Current tax liability


34

99

73

 




6,226

6,711

7,728

 

Non-current liabilities





 


Accruals


225

252

207

 


Deferred tax liability


1,557

1,547

1,697

 

Total non-current liabilities


1,782

1,799

1,904

 

TOTAL LIABILITIES


8,008

8,510

9,632

 

TOTAL EQUITY AND LIABILITIES


33,179

32,035

34,491

 







 







 


 

 

 

 

 

 

 

 

 

 

Impax Asset Management Group plc

Condensed Consolidated Statement of Changes in Equity

For the Six Months Ended 31 March 2014

 

 

 

 

 

 

 

 

 

 

 

 

 


Share capital

Share premium

Exchange  translation reserve

Hedging reserve

Retained earnings

Total



£'000

£'000

£'000

£'000

£'000

£'000

 

As at 1 October 2013

               1,277

               4,093

 (352)

                  126

            17,800

            22,944

 

Transactions with owners







Dividends paid





(1,004)

(1,004)

Award of shares on option exercises

Long-term incentive scheme charge





38


100

  38  


100                                 


  -                     

 -                        

 -                        

 -                        

(866)

(866)

Profit for the period

 





1,413

 

1,413         

Other comprehensive income







Cash flow hedge




(8)


(8)

Tax on cashflow hedge




 2                       


 2                       

Exchange differences on translation of foreign operations



40



40                  


-

-

40

(6)


-


34

 

As at 31 March 2014

   

1,277

    

4,093

 

(312)

 

120


 

18,347


 

23,525

Transactions with owners







Dividends paid





(334)

(334)

Shares acquired by EBT 2012





(619)

(619)

Award of shares on option exercises





9

9

Long-term incentive scheme charge





277

277              


  -                      

   -                     

  -                      

 -                       

(667)

(667)

Profit for the period





1,843

 1,843            

Other comprehensive income







Cash flow hedge




 68                 


 68                    

Tax on cashflow hedge




(16)


(16)

Exchange differences on translation of foreign operations



106



 106               


-

-

106

52

-

158

As at 30 September 2014

1,277               

4,093               

(206)

172                  

19,523            

24,859            

Transactions with owners







Dividends paid





(1,231)

(1,231)

Shares acquired by EBT 2012





(864)

(864)

Award of shares on option exercises






 -                       

Long-term incentive scheme charge





191

191              


-                        

 -                       

-                        

 -                       

(1,904)

(1,904)

 

Profit for the period





 

1,875

1,875

Other comprehensive income







Cash flow hedge




41


41                   

Tax on cashflow hedge




(4)


(4)

Exchange differences on translation of foreign operations



 

365                  



 

365

Third party interest's share of exchange differences on translation of foreign operations



 

 

(61)



 

 

(61)


-

-

304

37

-

341

As at 31 March 2015

1,277

4,093

98

209

19,494

25,171

 

EBT 2012 = Impax Asset Management Group plc Employee Benefit Trust 2012

 

All equity is attributable to owners of the parent.

Impax Asset Management Group plc

Condensed Consolidated Statement of Cash Flows

For the Six Months Ended 31 March 2015


 


 


 



Six months ended

Six months ended

 

Year ended

 



31 March 2015

31 March 2014

September 2014

 


         Note

£'000

£'000

£'000

 

Cashflows from operating activities





 

Profit before taxation


1,941

1,377

3,535

 

Adjustments for:





 

Investment income


(73)

(64)

(207)

 

Depreciation of property, plant and equipment


104

126

243

 

Amortisation of intangible assets


59

32

83

 

Fair value losses


135

624

1,460

 

Share-based payment charges


191

100

377

 

Other charges related to EIA schemes


162

707

539

 

Change in third party interest in consolidated funds


115

28

(7)

 

Operating cash flows before movement in working capital


2,634

2,930

6,023

 

(Increase)/decrease in receivables


(2,211)

(2,023)

48

 

(Increase) in margin account


(17)

(49)

(107)

 

(Decrease) in payables


(1,512)

(747)

(178)

 

Cash generated from operations


(1,106)

111

5,786

 

Corporation tax paid


(42)

(10)

(96)

 

Net cash (used by)/generated from operating activities


(1,148)

101

5,690

 

Investing activities:





 

Investment income received


73

64

207

 

Settlement of investment related hedges


(931)

(771)

(1,244)

 

Proceeds on sale/redemption of investments


1,259

1,223

1,809

 

Purchase of investments held by consolidated funds


(1,936)

(2,916)

(5,263)

 

Sale of investments held by consolidated funds


524

17

1,553

 

Purchase of investments


(38)

(473)

(638)

 

Purchase of intangible assets


(7)

(5)

(28)

 

Purchase of property, plant and equipment


(38)

(9)

(33)

 

Net cash used by investment activities


(1,094)

(2,870)

(3,637)

 

Financing activities:





 

Dividends paid

         8 

(1,231)

(1,004)

(1,338)

 

Impax shares acquired by EBT 2012


(864)

-

(619)

 

Cash received on exercise of Impax share options


-

38

47

 

(Redemptions)/Investments by third parties from/into consolidated funds

(466)

(38)

2,257

 

(Increase)/decrease in cash held in money market funds and long-term deposit accounts

(8)

4,264

554

 

Net cash (used by)/generated from financing activities


(2,569)

3,260

901

 

Net (decrease)/increase in cash and cash equivalents


(4,811)

491

2,954

 

Cash and cash equivalents at the beginning of the period


6,634

3,680

3,680

 

Effect of foreign exchange rate changes


3

3

-

 

11

1,826

4,174

6,634

 






 

 

 

 

Impax Asset Management Group plc

Notes to the Condensed Consolidated Interim Financial Statements

For the Six Months Ended 31 March 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Basis of preparation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This interim report is unaudited and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and the AIM rules. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2014.

 

 

The comparative figures for the financial year ended 30 September 2014 are not the Company's statutory accounts for that financial year. Those accounts, prepared in accordance with IFRSs as adopted by the EU, 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 Norfolk House, 31 St James's Square, London, SW1Y 4JR or at the Company's website: www.impaxam.com.

 

 

This interim report is prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting and the AIM rules.

 

 

The Group has considerable financial resources and a broad range of products.  As a consequence the Directors believe the Group is well placed to manage it business risks in the context of the current economic outlook.  The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing these interim financial statements.

 

 

With effect from 1 October 2014 the Group has adopted IFRS 10, Consolidated Financial Statements and IFRS 12, Disclosure of Interests in Other Entities.  The adoption of IFRS 10, which determines when entities should be consolidated and in particular changes the definition of control, has not had an impact on these financial statements.  IFRS 12 requires certain disclosure to be made in respect of the Group's investments in the funds it manages.  These disclosures are not required to be presented in interim financial statements and will be presented in the 2015 Annual Report and Accounts.  With the exception of the adoption of IFRS 10 and 12 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 2014.

 

 

 

 

 

 

 

 

 

 

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were: i) judgements and estimates made in the valuation of unlisted current asset investments (see note 9); ii) determining whether managed funds should be consolidated; iii) determining the size of the charge for National Insurance Contributions payable on long-term incentive schemes and iv) determining the value of deferred tax assets.

 

 

3

 

Charges related to legacy long-term incentive schemes

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2015

Six months ended 31 March 2014

Year ended 30 September 2014

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

EIA charge

 

 

93

303

223

 

 

EIA Extension NIC charge

 

 

51

274

207

 

 

EIA Additional payments

 

 

18

130

109

 

 

Other long-term incentive scheme related charges

162

707

539

 

 

(NIC = Employers National Insurance Charge)

 

 

 

 

 

 

 

EIA NIC Charge

 

 

 

 

 

 

 

 

 

The Impax Employee Benefit Trust 2004 ("EBT 2004") holds Impax shares and other assets in sub-funds for the benefit of certain of the Group's past and current employees.  The Impax shares were awarded under the Group's Employee Incentive Arrangement ("EIA").  The Group is required to pay Employer's National Insurance Charge ("NIC") on the value of any assets that are transferred out of the Trust and has accrued for the estimated amount payable using the relevant share prices at the balance sheet date.  The amount payable will fluctuate in line with the Impax share price, such fluctuations being recorded in the current period income statement.
If and when the EBT 2004 Trustee agrees to transfer assets held in the EBT 2004 to beneficiaries and if the assets transferred are in the form of the Group's Ordinary Shares, the Group also expects to be eligible for a corporation tax deduction equal to the value of those Ordinary Shares.  The Group expects this tax benefit will be up to £1,257,000 but has not recognised this to date.

 

 

 

 

 

 

 

 

 

 

 

 

EIA extension NIC charge

 

 

 

 

 

 

 

 

 

The Group accrues for the NIC payable in respect of the options and share awards made under the EIA Extension over the same period as the related share-based payment charge.  The amount payable will fluctuate in line with the Impax share price, such fluctuations being recorded in the current period income statement.  The Group also receives a corporation tax deduction on the exercise of the options equal to the gain made on these options. This deduction has been recognised as a deferred tax asset and its value will also fluctuate in line with the share price with the fluctuation being recorded in the current year tax charge.

 

 

 

 

 

 

 

EIA additional payments

 

 

 

 

 

 

 

 

 

Individuals receiving Impax Long-Term Incentive Plan ("LTIP") options are eligible for a retention payment payable after the end of the financial year in which each employee exercises his or her LTIP Options.  The payment will be equal to the corporation tax benefit realised by the Group on the exercise of the LTIP options minus the amount of the NIC suffered by the Group on the exercise of the LTIP options. 

The Group has accrued for these payments over the same period as the related share-based payment charge.  The amount payable will fluctuate in line with the Impax share price, such fluctuations are recorded in the current period income statement.

 

 

 

 

 

 

 

 

 

 

 

4

Fair value losses

 

 

 

 

 

 

 

 

Fair value losses include those arising on revaluation of listed and unlisted investments held by the Group including those held by the Group's consolidated funds (see Note 9) and any gains or losses arising on related hedge instruments held by the Group.

 

 

 

 

 

 

 

 

 

 

 

5

Change in third party interest in consolidated funds

 

 

 

 

 

This charge removes the fair value gains or losses, other operating costs and investment income recorded in the Group's consolidated funds (see Note 10) which are attributable to third party investors in the funds.

 

 

6

Taxation

 

 

 

 

 

 

 

 

 

 

The tax assessment for the period is lower than the standard rate of corporation tax in the UK for the period (20.5%).  The differences are explained below:

 

 

 

 

 

 

 

Six months ended 31 March 2015

Six months ended 31 March 2014

Year ended 30 September 2014

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

Profit before tax

 

 

1,941

1,377

3,535

 

 

 

 

 

 

 

 

 

 

 

 

Tax charge at 20.5%,22%,22%

398

303

778

 

 

Effects of:

 

 

 

 

 

 

 

 

 

Non-deductible expenses and charges

14

9

40

 

 

Increases in value of deductions re share based payments

(206)

(322)

(241)

 

 

Foreign exchange

 

 

(137)

27

(247)

 

 

Tax effect of previously unrecognised tax losses

-

(52)

(61)

 

 

Adjustment in respect of prior years

-

-

8

 

 

Change in UK tax rates

(9)

(6)

(16)

 

 

Effect of higher tax rates in foreign jurisdictions

6

5

18

 

 

Total income tax expense/(credit)

66

(36)

279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

Earnings and earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings and Adjusted earnings

 

 

 

 

 

 

 

In order to better reflect the underlying economic performance of the Group, an adjusted earnings has been calculated.  The adjustment i) excludes the IFRS 2 'Share based payment' charge in respect of schemes where shares awarded are expected to be satisfied by the issue of new shares, and ii) includes the tax benefit recognised in Other Comprehensive Income in respect of transfers out of the EBT and the exercising of LTIP options.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2015

Six months ended 31 March 2014

Year ended 30 September 2014

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

Earnings

1,875

1,413

3,256

 

 

IFRS 2 Share-based payment charge

-

-                                   

-

 

 

Tax benefit on long-term incentive scheme included in Other Comprehensive Income

-

-

-

 

 

Adjusted earnings

1,875

1,413

3,256                   

 

 

 

 

 

 

 

 

 

 

 

 

 

The earnings per share on an adjusted and IFRS basis are as shown below.

 

 

 

 

Adjusted earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings for the period

Shares

Adjusted earnings per share

 

 

 

 

 

 

 

£'000

'000

 

 

 

Six months ended 31 March 2015

 

 

 

 

 

 

 

 

Basic adjusted

1,875

114,689

1.63p

 

 

 

 

 

 

 

 

 

 

 

 

Diluted adjusted

1,875

115,489

1.62p

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2014

 

 

 

 

 

 

 

Basic adjusted

1,413

117,463

1.20p

 

 

 

 

 

 

 

 

 

 

 

 

Diluted adjusted

 

 

 

1,413

117,856

1.20p

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 30 September 2014

 

 

 

 

 

 

 

 

Basic adjusted

3,256

116,199

2.80p

 

 

 

 

 

 

 

 

 

 

 

 

Diluted adjusted

3,256

116,658

2.79p

 

 

 

 

 

 

 

 

 

 

 

 

The number of ordinary shares used in the calculation of diluted adjusted earnings per share excludes the number of shares held in Treasury or the EBTs at the end of the period and includes an adjustment for the dilutive impact of the ESOP share schemes.  The dilutive impact is calculated in the same way as for the IFRS earnings per share.

 

 

 

 

 

 

 

Six months ended 31 March 2015

Six months ended 31 March 2014

Year ended 30 September 2014

 

 

 

 

 

 

 

'000

'000

'000

 

 

 

 

 

 

 

 

 

 

 

 

Shares in issue

127,749

127,749

127,749

 

 

Shares held in EBT 2012 (excluding those held to satisfy awards under the EIA Extension share scheme)

(13,060)

(10,286)

(11,550)

 

 

Number of shares used in the calculation of basic adjusted earnings per share

114,689

117,463

116,199

 

 

 

 

Dilutive effect of ESOP share scheme

 

 

800

 

 

393

 

 

459

 

 

 

Number of shares used in the calculation of diluted adjusted earnings per share

115,489

117,856

116,658

 

 

 

 

 

 

 

 

 

 

 

 

IFRS earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

Earnings for the period

Shares

Earnings per share

 

 

 

 

 

 

 

£'000

'000

 

 

 

Six months ended 31 March 2015

 

 

 

 

 

 

 

Basic

 

 

 

 

1,875

115,738

1.62p

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

1,875

116,538

1.61p

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2014

 

 

 

 

 

Basic

 

 

 

 

1,413

117,598

1.20p

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

1,413

117,991

1.20p

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 30 September 2014

 

 

 

 

 

 

 

Basic

 

 

 

 

3,256

117,314

2.78p

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

3,256

117,773

2.76p

 

 

 

 

 

 

 

 

 

 

 

 

 

The number of ordinary shares used in the calculation of diluted earnings per share reconciles to the number of ordinary shares used in the calculation of basic earnings per share as follows:

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2015

Six months ended 31 March 2014

Year ended 30 September 2014

 

 

 

 

 

 

 

'000

'000

'000

 

 

 

 

 

 

 

 

 

 

 

 

Number of ordinary shares used in the calculation of basic earnings per share

115,738

117,598

117,314

 

 

Additional dilutive shares re ESOP schemes

10,990

3,250

                    5,350

 

 

Adjustment to reflect future contributions from employees receiving awards and option exercise proceeds

(10,190)

(2,857)

(4,891)

 

 

 

 

 

 

 

 

 

 

 

 

Number of ordinary shares used in the calculation of diluted earnings per share

116,538

117,991

117,773

 

 

 

The Basic earnings per shares for all periods shown includes vested LTIP options on the basis that these have an inconsequential exercise price (1p or 0p).

 

8

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On 4 February 2015, at the Company's Annual General Meeting, payment of a 1.1p per share dividend in respect of the year ended 30 September 2014 (2013: 0.9p per share) was approved.  The Trustee of the Impax Employee Benefit Trusts waived the Trusts' rights to part of this dividend, leading to a total dividend payment of £1,231,000.  This was paid on 20 February 2015.

 

 

 

 

 

The Board has declared an interim dividend for the period of 0.4p per ordinary share (2014: 0.3p). This dividend will be paid on 26 June to ordinary shareholders on the register at close of business on 29 May 2015.

 

 

9

 

Goodwill

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

£'000

 

 

At 31 March 2014

 

 

 

 

 

1,629

 

 

Addition

 

 

 

 

 

 

36

 

 

At 30 September 2014 and 31 March 2015

 

 

 

 

1,665

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill arose on the acquisition of Impax Capital Limited on 18 June 2001 and on the acquisition of a property fund business from Climate Change Capital in July 2014.

 

 

 

 

 

The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill may be impaired.

 

 

 

 

 

10

 

 

 

 

Current asset investments

 

 

 

 

 

 

 

 

 

 

 

 

 

Unlisted investments

Listed investments

Total

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

At 1 October 2013

 

 

 

6,624

2,712

9,336

 

 

Additions

 

 

 

 

475

2,916

3,391

 

 

Fair value movements

 

 

 

(177)

322

145

 

 

Repayments/disposals

 

 

 

(1,223)

(17)

(1,240)

 

 

Foreign exchange

 

 

 

-

15

15

 

 

At 31 March 2014

 

 

 

5,699

5,948

11,647

 

 

Additions

 

 

 

 

163

2,347

2,510

 

 

Fair value movements

 

 

 

(84)

(234)

(318)

 

 

Repayments/disposals

 

 

 

(586)

(1,536)

(2,122)

 

 

Foreign exchange

 

 

 

-

(77)

(77)

 

 

At 30 September 2014

 

 

 

5,192

6,448

11,640

 

 

Additions

 

 

 

 

39

1,935

1,974

 

 

Fair value movements

 

 

 

125

721

846

 

 

Repayments/disposals

 

 

 

(2,534)

(524)

(3,058)

 

 

Foreign exchange

 

 

 

-

372

372

 

 

At 31 March 2015

 

 

 

2,822

8,952

11,774

 

 

 

 

 

 

 

 

 

 

 

 

Impax Food and Agriculture Fund ("IFAF")

 

 

 

 

 

 

On 1 December 2012 the Group launched the IFAF and invested, from its own resources £2,000,000 into the fund. The IFAF invests in listed equities using the Group's Food and Agriculture Strategy.  The Group's investment represented more than 50% of the IFAF's NAV from the date of launch to 31 March 2015 and has been consolidated throughout this period with its underlying investments included in listed equities in the table above.

 

 

 

 

 

 

 

 

 

 

 

 

Impax Fundamental Long Term Opportunities in Water Fund ("IFLOW")

 

 

 

 

On 31 January 2014 the Group launched the IFLOW fund and invested, from its own resources $5,000,000 (£3,016,000) into the fund. IFLOW invests in listed equities using the Group's Water Strategy.  The Group's investment represented more than 50% of IFLOW's NAV from the date of launch to 31 March 2015 and has been consolidated throughout this period with its underlying investments included in listed equities in the table above.

 

 

 

Impax Global Equity Opportunities Fund ("IGEO")

 

 

 

 

 

On 23 January 2015 the Group launched the IGEO Fund and invested, from its own resources £2,000,000 into the fund. IGEO invests in listed equities using the Group's Global Equities Strategy.  The Group's investment represented more than 50% of IGEO's NAV from the date of launch to 31 March 2015 and has been consolidated throughout this period with its underlying investments included in listed equities in the table above.

 

 

 

 

 

 

 

 

Impax Global Resource Optimization Fund ("IGRO")

 

 

 

 

 

In December 2011 the Group launched the Impax Green Markets Fund LP.  The Group invested $5,000,000 (£3,184,000) at launch.  In prior years the Group has redeemed $3,000,000 (£1,809,000) and in the current half year the Group redeemed a further $3,894,000 (£2,534,000) to fully exit the Fund.  Subsequent to launch the fund's name was changed to the Impax Global Resource Optimization Fund.  IGRO invests in listed equities using the Group's Environmental Specialists Strategy.  The Group's share of the assets of the NAV of the fund was such that consolidation has not been required throughout the period covered by this Report and the Group's investment in the fund is included in Unlisted investments.  Its underlying investment are however listed and the fund is valued based on the market value of those investments.

 

 

 

The investments held by the funds described above are revalued to market value using quoted market prices that are available at the date of these financial statements. The quoted market price is the current bid price.

 

 

 

 

 

 

 

 

 

 

 

 

Unlisted investments

 

 

 

 

 

 

 

 

The Group has a 3.76% partnership share of Impax New Energy Investors LP, a private equity partnership managed by the Group.  At the period end the carrying value of the investment was £656,000. The carrying value represents the Board's assessment of the investment's fair value which was determined using a discounted cashflow approach.  74% of the partnership's valuation is represented by investments in Spanish solar parks.  These investments have been adversely impacted by the significant retroactive reforms of the Spanish energy markets and covenants for loans held by the investment have been breached.  The partnership has begun negotiations with the relevant banks to restructure the loans and is also in the process of pursuing a claim for compensation along with a number of other parties from the Spanish government.  In the event that the banks take possession of the assets and the claims for compensation are unsuccessful the investment would be written down by £485,000.

 

 

 

 

 

 

 

 

 

 

 

 

The Group also has a commitment of €3.3m to Impax New Energy Investors II LP, a private equity partnership managed by the Group which was established on 22 March 2010.  At the period end the Group had invested a total of €1,916,000 (£1,615,000) of this commitment.  The Group's commitment of €3.3m is equal to 1% of the total commitments made to the fund.  The investment is included at the Board's assessment of its fair value which is determined by valuing the underlying investments.  The principal valuation techniques used are discounted cashflow, price of recent investment and market bids.

 

 

11

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the purposes of the cash flow statement, cash and cash equivalents includes the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 March 2015

31 March 2014

30 September 2014

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

Cash at bank and in hand

 

 

 

 

 

 

 

 

Held by operating entities of the Group

 

 

1,611

4,157

6,560

 

 

Held by the consolidated funds

 

 

215

17

74

 

 

 

 

 

 

 

1,826

4,174

6,634

 

 

 

 

 

 

 

 

 

 

 

 

In order to mitigate bank default risk and to access favourable interest rates the Group invests part of its surplus cash in money market funds and long-term deposit accounts.  Amounts held in money market funds and long-term deposit accounts are as shown below.  The Group considers the total of its cash and cash equivalents held by operating entities of the Group and cash invested in money market funds and in long-term deposit accounts to be its cash reserves.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 March 2015

31 March 2014

30 September 2014

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

Cash and cash equivalents

1,611

4,157

6,560

 

 

Cash held in money market funds and long-term deposit accounts

10,623

8,609

10,615

 

 

Total cash reserves

 

 

 

12,234

12,766

17,175

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

Share capital and Own shares

 

 

 

 

 

 

 

 

 

 

 

 

31 March 2015

31  March 2014

30 September 2014

 

 

Issued and fully paid ordinary shares of 1p each

 

 

 

 

 

 

Number

 

 

 

 

127,749,098

127,749,098

127,749,098

 

 

£000s

 

 

 

 

1,277

1,277

1,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 March 2015

31  March 2014

30 September 2014

 

 

Own shares

 

 

 

 

 

 

 

 

 

Number

 

 

 

 

17,702,620

16,243,769

16,192,620

 

 

£000s

 

 

 

 

5,958

5,093

5,144

 

 

 

 

Own shares represents certain of the shares held in the EBT 2012 and EBT 2004. 1,655,455 shares were acquired in the six months ended 31 March 2015, (period ended 31 March 2014: nil).   145,455 shares were awarded to option holders on exercise of options (period ended 31 March 2014: 3,966,000).  As at 31 March 2015 the Company had a total of 19,487,955 options outstanding of which 9,182,500 were exercisable.

 

 

 

 

 

 

 

 

 

 

 

13

Related party transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impax New Energy Investors LP, Impax New Energy Investors II LP, Impax New Energy Investors II-B LP, Impax New Energy Investors SCA, Impax Global Resource Optimization Fund LP, Impax Fundamental Long Only Opportunities in Water LP, Impax Carried Interest Partners LP and Impax Carried Interest Partners II LP, Impax Climate Property Fund LP and entities controlled by them are related parties of the Group by virtue of subsidiaries being the General Partners to these funds.  BNP Paribas Investment Partners is a related party of the Group by virtue of owning a 24.99% equity holding in the Group.  Other funds managed by subsidiaries of the Company are also related parties by virtue of their management contracts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2015

Six months ended 31 March 2014

Year ended 30 September 2014

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

Statement of comprehensive income

 

 

 

 

 

 

 

Revenue

 

 

 

 

9,939                      

9,819                         

19,966               

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 March 2015

31 March 2014

30 September 2014

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

Statement of financial position

 

 

 

 

 

 

 

 

Non-current asset investments

 

 

                              15

                                17

                          16

 

 

Current asset investments

 

 

 

 

2,822

                          5,346

                    4,830

 

 

Trade and other receivables

 

 

5,754                        

3,970

2,371                  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

The Group also conducts hedging of its seed investments with a member of BNP Paribas Group.  Payments made under these hedges are disclosed in the cashflow statement.

 

Group risks

 

 

 

 

 

 

 

 

 

 

 

 

The Group's principal risks remain as detailed within the Directors' report of the Group's 2014 Annual Report and Accounts and are categorised as financial, investment, and operational.

 

 

 

 

 

 

 

                                                                                                                                               

                                                               

               

 

 

 

 

 


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