Interim Results

RNS Number : 5333Y
Impax Asset Management Group plc
18 May 2016
 



Impax Asset Management Group plc - Interim Results to 31 March 2016

 

London, 18 May 2016 - 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 2016.

Highlights

·      Assets under management and advice ("AUM") increased 26% since year end to new peak of £3.6bn

·      Net inflows of £300 million, predominantly from the US and Continental Europe

·      Strong investment performance: all listed equity strategies outperformed MSCI ACWI

·      Strong balance sheet maintained

·      Interim dividend increased by 25 per cent to 0.50 pence per share

·      Encouraging discussions with investors on raising new monies in real assets strategies

 

Financial results

                            


H1 2016

H2 2015

H1 2015

2015

Revenue

£9.4m

£9.3m

£10.4m

£19.7m

Operating earnings1

£1.6m

£0.8m

£2.3m

£3.1m

Profit before tax

£2.1m

£3.2m

£1.9m

£5.1m

Earnings per share

1.35p

1.52p

1.61p

3.13p

Dividend

0.50p

1.70p2

0.40p

2.10p2

 

A material proportion of the AUM flows were received near the end of the Period, and therefore Revenue during the Period does not fully reflect the Company's AUM growth.  Fees from our largest private equity fund fell from 1 April 2015 which contributed to Revenue being lower than in H1 2015; this should be replaced when the Company raises new capital in this area.  Based on our current cost base and run rate revenues from AUM at the end of the Period, we would expect operating earnings to increase during the second half. 

Ian Simm, Chief Executive commented:

"Impax has had a strong first half year.  Our AUM has reached a new peak with net inflows of £300m and our funds have demonstrated superior investment performance."

 

"Our investment hypothesis is clearly resonating with investors around the world.  Over the last year we have witnessed unprecedented levels of investor interest in our investment strategies and our pipeline is encouraging.  I am optimistic on Impax's prospects and positioning and believe that the Company is well placed to deliver long term shareholder value."

1 Revenue less operating costs

2 Includes special dividend of 0.50p

 

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

 

Chief Executive's Statement

Over the first half year for Impax Asset Management Group plc ("Impax" or the "Company"), i.e. the Period from 1 October 2015 to 31 March, the Company's assets under management and advisory ("AUM") increased by 26 per cent to a new peak of £3,562 million, inclusive of net inflows of ca. £300 million.  On 30 April 2016, AUM were £3,557 million.

During the Period, global equity markets were notably more volatile than during early to mid 2015, with heightened geopolitical risk, softer economic growth in many regions and further uncertainty in developing markets.  However, the environmental and resource efficiency markets in which Impax focuses its investments proved particularly resilient and significantly outperformed the MSCI All Countries World Index. 

Impax has had a strong "first half", with investment outperformance from most strategies and robust net inflows into Listed Equities. Investor interest in our capabilities and investment products remains high and we have a healthy pipeline of potential new inflows.

Developments in Environmental & Resource Efficiency Markets

Over the period we have seen a number of important developments that will underpin further growth of environmental and resource efficiency markets.  We are also witnessing accelerating developments and expansion across many of the sectors in which we invest.

The successful outcome of the Paris Climate Agreement last December was more positive than most commentators had expected and is already proving to be a powerful catalyst for many of our holdings.  Over the longer term we will undoubtedly see governments around the world further strengthen policy to reduce greenhouse gas emissions.

Shortly after the start of 2016 the oil price hit US$26 a barrel1, its lowest level for more than a decade, before rising to US$45 a barrel at the time of writing.  As we have reported previously, the impact of oil prices on environmental markets is complex; for example, low prices stimulate far higher levels of fuel consumption and pollution, but also more demand for goods, including those addressing environmental problems. Recent oil price "lows" have not been a headwind to our performance.

We believe that investments in environmental and resource efficiency markets are currently well positioned for continued strong performance. For example, renewable energy generation, particularly solar, continues to grow rapidly as technology costs fall and reliance on subsidies reduces.

Similarly, the transportation sector is undergoing a significant transformation with the roll-out of new energy efficiency technologies and the increased adoption of hybrid and electric vehicles.  Meanwhile, in food and agriculture we see interesting investment opportunities arising from rapidly changing consumer habits, shifts in trade flows and stricter regulation around food safety.

 

The announcement in March of the details in China's 13th Five Year Plan should provide further momentum for companies providing solutions to environmental protection in the region.  In particular, the Chinese government's plans to the end of 2020 highlight huge additional investments to tackle water and air pollution and a notable new target to address soil pollution.

Investor interest in environmental and resource efficiency markets continues to build. Post the Paris Climate Agreement we are seeing significantly more requests for information from investors who want to add climate change investment solutions to their portfolios.  They are seeking solutions that offer superior growth as well as a hedge against longer term risks.

Financial results for the Period

Revenue for the six months to 31 March 2016 was £9.4 million (H1 2015: £10.4 million; H2 2015: £9.3 million).  Operating earnings2 for the Period were £1.6 million (H1 2015: £2.3 million; H2 2015: £0.8 million) and the associated operating margin was 17 per cent (H1 2015:  22 per cent; H2 2015: 8 per cent). 

The result for the Period was a profit before tax ("PBT") of £2.1 million (H1 2015: £1.9 million) and the earnings per share for the Period were 1.35 pence (H1 2015: 1.61 pence).

Revenue for the Period was impacted as fees from our largest private equity fund fell from 1 April 2015 following the end of the fund's investment period. In addition, revenue does not take into account the recent growth in AUM as a material proportion of the AUM flows were near the end of the period, and therefore made little contribution to these results.   Based on our current cost base and run rate revenues from AUM at the end of the Period, we would expect operating earnings to increase during the second half.

Dividends

At the Annual General Meeting on 3 March 2016, shareholders approved payment of a dividend of 1.2 pence per share, taking the total dividend for the year ended 30 September 2015 to 1.6 pence per share (2014: 1.4 pence).  Shareholders also approved an additional special dividend of 0.5 pence.

In line with the Company's progressive dividend policy and confidence in the Company's prospects, the Board is declaring an interim dividend for the Period of 0.5 pence per share (2015: 0.4 pence). This will be paid on 23 June 2016 to ordinary shareholders on the shareholder register at the close of business on 27 May 2016.

Board update

Sally Bridgeland, who joined the Board in August 2015, has assumed the Chair of the Audit & Risk Committee, taking over from Vince O'Brien, who remains Chair of the Remuneration Committee.  Sally brings nearly 30 years' experience of governance and risk analysis to this role.

Listed Equities

During the Period, all Impax's Listed Equity strategies delivered strong performance and our major strategies significantly outperformed the MSCI All Country World Index ("ACWI"), which returned 11.0 per cent3

Water remains our largest asset pool with AUM of £956million and was again our best performing strategy, returning 18.3 per cent in the six months to 31 March 2016.  Leaders, our all cap global strategy, delivered 14.9 per cent, and Specialists, our small and mid-cap global strategy, rose by 18.0 per cent.  Our smaller strategies, Food & Agriculture, and Asia-Pacific, returned 16 per cent and 11.3 per cent respectively.  The longer term investment performance of all our strategies remains strong.

We have further extended our analysis into climate change investment risk in collaboration with Imperial College Business School and Carbon Tracker.  In April we published a white paper setting out a methodology by which institutional investors can reduce carbon risk in their portfolios by reallocating some fossil fuel exposure to a basket of energy efficiency stocks.  We have received an enthusiastic response to this approach from a number of US and UK pension funds, and are using the dialogue as a platform for extending our client base.

Private Equity

Sales of assets from Impax New Energy Investors II, our fund targeting the construction of assets providing renewable power generation in Europe, are progressing well and we expect to return more than 100 per cent of drawn capital to investors by the end of this financial year.  During the Period we completed the sale of a 206MW portfolio of wind assets in France and Germany to ERG, an Italian utility, sold our stake in a 24MW Irish windfarm portfolio to the Greystone Infrastructure Fund, and agreed the sale of our 108MW Finnish wind farm portfolio to a fund managed by Allianz Capital Partners.

 

As we realise assets in existing funds, our management fees reduce accordingly.  However, discussions with investors about their appetite for raising additional monies are progressing well.  Following the European Investment Bank's announcement last year of its proposed €50 million allocation to a new Impax managed fund, we expect to confirm participation from other clients later this year.

Sustainable Property

We continue to pursue the letting and eventual sale of the remaining asset in the first fund, a prime office and retail building in Manchester.  However, many investors in UK property are currently sitting on the sidelines, delaying allocating new capital until the uncertainties surrounding the UK's "Brexit" referendum in June become clearer.

Fund flows and distribution

We received net inflows of £300 million over the Period, which included two significant new mandates from North America.  In January we secured our first client in Canada, and in April we announced a major new segregated account mandate from an institutional investor in the US into our Specialists strategy.  Our North American pipeline remains encouraging.  We also continue to see robust inflows from Continental European investors via BNP Paribas, our third party distributor in the region, particularly into our Leaders, Water and Food & Agriculture strategies.  The sustainable food fund, which we manage on behalf of BNP Paribas, now has a one year track record and assets currently stand at €98 million.

We now have two more strategies available to UK investors and have extended our UK sales team.  In January we launched the Leaders Strategy within our UCITS umbrella.  Furthermore, in March BNP Paribas, which distributes the Aqua Fund based on our Water strategy, introduced a Sterling share class in response to UK investor interest.

The table below sets out the AUM movements during the Period.

AUM movement for six months to 31 March 2016

AUM movement

Six months to 31 March 2016

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 2015

495

1,992

313

22

2,823

Net inflows/(outflows)

23

278

(2)

-

300

Market movement and performance

82

334

24

-

440

Total AUM at

31 March 2016

600

2,604

335

22

3,562

 

Infrastructure and support

Over the Period, our headcount was stable at 67.  As previously stated, our core team is in place and we believe that over the medium term we should be able to scale up our business significantly with only a small number of additional hires to support new business.

Remuneration and share management

During the Period, the Board confirmed the grant of 1.0 million options under the Employee Share Option Plan ("ESOP") and 4.1 million Restricted Shares to management and staff in respect of their performance for the financial year ended 30 September 2015. The ESOP strike price was set at 45.4 pence, and the options will vest on 31 December 2018.  The Restricted Shares will vest in equal instalments after three, four and five years.

The Board intends to continue to buy 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 3.0 million shares were bought, bringing total buybacks to 16.5 million.  In comparison, 18.8 million options and restricted shares have been issued to date.

Outlook

Volatility looks set to dominate markets over the short term with widespread investor concerns on faltering rates of global growth, uncertainties surrounding the "Brexit" vote and the outcome of the US election later in the year.  However, we retain our positive long term outlook for global equities and believe that the environmental and resource efficiency markets in which Impax invests will continue to outperform the wider markets.

Our investment hypothesis is clearly resonating with investors around the world, and over the last year we have witnessed unprecedented levels of investor interest in our investment strategies. Our pipeline is encouraging, with interest from both existing investors and new prospects in our established strategies and in new products, across listed equities and our real asset strategies.  We are optimistic on Impax's prospects and positioning and believe the Company is well placed to deliver long-term shareholder value.

Ian Simm

17 May 2016

 

1 WTI closing price of US$26.2 per barrel on 11 February 2016

2 Revenue less operating costs

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

 

Impax Asset Management Group plc

Condensed consolidated income statement

For the Six Months Ended 31 March 2016










 


Six months
ended

Six months
ended

Year

ended

 

 

31 March 2016

31 March 2015

30 September
2015

 

Note

£'000

£'000

£'000

Revenue

 

9,434

10,422

19,726

 

 

 

 

 

Operating costs

 

(7,871)

(8,142)

(16,616)

 

 

 

 

 

Credits/(charges) related to legacy long-term incentive schemes

3

86

(162)

1,285

 

 

 


 

Fair value gains/(losses)

4

357

(135)

615

Investment income

 

101

73

228

Change in third party interests in consolidated funds

5

(48)

(115)

(101)

Profit before taxation

 

2,059

1,941

5,137

Taxation

6

(508)

(66)

(1,504)

 

 

 

 

 

Profit after taxation

 

1,551

1,875

3,633

 

 

 

 

 

Basic earnings per share

7

1.35 p

1.62 p

3.16 p

 

 

 

 

 

Diluted earnings per share

7

1.35 p

1.61 p

3.13 p

 

 

 

 

 

 

Condensed consolidated statement of comprehensive income

 

For the Six Months Ended 31 March 2016





 


Six months
ended

Six months
ended

Year

ended

 


31 March 2016

31 March 2015

30 September 2015

 


£'000

£'000

£'000

Profit for the period


1,551

1,875

3,633

Change in value of cash flow hedges

 

(132)

41

(171)

Tax on change in value of cash flow hedges

26

(4)

38

Exchange differences on translation of foreign operations

 

13

365

(35)

Third party interests' share of exchange differences on translation of foreign operations

 

-

(61)

-

Total other comprehensive income

 

(93)

341

(168)

 

 

 

 

 

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

1,458

2,216

3,465

 

 

 

 

 

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 2016





 

 

Note

As at

As at

As at

 

 

 

31 March 2016

31 March 2015

30 September
 2015

 

 

 

£'000

£'000

£'000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

 

Goodwill

9

1,681

1,665

1,681

 

Intangible assets

 

55

55

73

 

Property, plant and equipment

 

145

180

185

 

Investments

 

16

15

16

 

 

 

1,897

1,915

1,955

Current assets

 

 

 

 

 

Trade and other receivables

 

5,314

6,582

4,754

 

Derivative asset

 

-

152

49

 

Investments

10

10,837

11,774

7,419

 

Margin account

 

254

307

177

 

Cash invested in money market funds and long term deposit accounts

 

10,424

10,623

17,153

 

Cash and cash equivalents

11

2,820

1,826

2,364

 

 

 

29,649

31,264

31,916

TOTAL ASSETS

 

31,546

33,179

33,871

EQUITY AND LIABILITIES

 

 

 

 

Equity

 

 

 

 

 

Ordinary shares

 

1,277

1,277

1,277

 

Share premium

 

4,093

4,093

4,093

 

Exchange translation reserve

 

(228)

98

(241)

 

Hedging reserve

 

(67)

209

39

 

Retained earnings

 

19,463

19,494

20,759

TOTAL EQUITY

 

24,538

25,171

25,927

Current liabilities

 

 

 

 

 

Trade and other payables

 

3,079

5,343

4,987

 

Third party interests in consolidated funds

697

849

144

 

Derivative liability

 

105

-

74

 

Current tax liability

 

482

34

305

 

 

 

4,363

6,226

5,510

Non-current liabilities

 

 

 

 

 

Accruals

 

155

225

197

 

Deferred tax liability

 

2,490

1,557

2,237

Total non-current liabilities

 

2,645

1,782

2,434

TOTAL LIABILITIES

 

7,008

8,008

7,944

TOTAL EQUITY AND LIABILITIES

 

31,546

33,179

33,871

 

 

Impax Asset Management Group plc


Condensed Consolidated Statement of Changes in Equity

For the Six Months Ended 31 March 2016




Share capital

Share premium

Exchange
translation reserve

Hedging reserve

Retained earnings

Total


£'000

£'000

£'000

£'000

£'000

£'000

As at 1 October 2014

1,277

4,093

(206)

172

19,523

24,859

Transactions with owners







Dividends paid

-

-

-

-

 (1,231)

( 1,231)

Acquisition of own shares

-

-

-

-

(864)

( 864)

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'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

Transactions with owners







Dividends paid

-

-

-

-

(445)

(445)

Acquisition of own shares

-

-

-

-

(294)

(294)

Long-term incentive scheme charge

-

-

-

-

246

246


-

-

-

-

(493)

(493)

Profit for the period

-

-

-

-

1,758

1,758

Other comprehensive income







Cash flow hedge

-

-

-

(212)

-

(212)

Tax on cashflow hedge

-

-

-

42

-

42

Exchange differences on translation of foreign operations

-

-

(400)

-

-

(400)

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

-

-

61

-

-

61


-

-

(339)

(170)

-

(570)

As at 30 September 2015

1,277

4,093

(241)

39

20,759

25,927

Transactions with owners







Dividends paid

-

-

-

-

(1,905)

( 1,905)

Acquisition of own shares

-

-

-

-

(1,188)

( 1,188)

Award of shares on option exercises

-

-

-

-

3

3

Long-term incentive scheme charge

-

-

-

-

243

243


-

-

-

-

( 2,847)

( 2,847)

Profit for the period

-

-

-

-

1,551

1,551

Other comprehensive income







Cash flow hedge

-

-

-

(132)

-

(132)

Tax on cashflow hedge

-

-

-

26

-

26

Exchange differences on translation of foreign operations

-

-

13

-

-

13


-

-

13

( 106)

-

(93)

As at 31 March 2016

1,277

4,093

( 228)

( 67)

19,463

24,538

 

 

Impax Asset Management Group plc

 

 

 

 

Condensed Consolidated Statement of Cash Flows

 

 

 

 

For the Six Months Ended 31 March 2016

 

 

 

 

 

 

Six months ended

Six months ended

Year
ended

 

 

31 March
 2016

31 March
 2015

30 September 2015

 

Note

£'000

£'000

£'000

Cashflows from operating activities

 


 

 

Profit before taxation

 

2,059

1,941

5,137

Adjustments for:

 

 

 

 

Investment income

 

(101)

(73)

(228)

Depreciation and amortisation

 

110

163

273

Fair value gains/(losses)

 

(357)

135

(615)

Share-based payment charges

 

243

191

437

(Credits)/charges related to legacy long-term incentive schemes

(86)

162

(1,285)

Change in third party interests in consolidated funds 

48

115

101

Operating cash flows before movement in working capital

1,916

2,634

3,820

(Increase) in receivables

 

(357)

(2,211)

(1,850)

(Increase)/decrease in margin account

 

(78)

(17)

117

(Decrease) in payables

 

(1,863)

(1,512)

(280)

Cash generated from operations

 

(382)

(1,106)

1,807

Corporation tax paid

 

(243)

(42)

(570)

Net cash (used by)/generated from operating activities

(625)

(1,148)

1,237

Investing activities:

 

 

 

 

Investment income received

 

101

73

228

Settlement of investment related hedges

 

(714)

(931)

(359)

Net redemptions made to Impax by unconsolidated investment funds

1,089

1,221

2,469

Net investments made by/(investment disposals made by) consolidated funds

(3,487)

(1,412)

2,749

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

6,729

(8)

(6,538)

Acquisition of property plant and equipment and intangible assets

 

(52)

(45)

(156)

Net cash generated from/(used by) investment activities

 

3,666

(1,102)

(1,607)

Financing activities:

 

 

 

 

Dividends paid

8

(1,905)

(1,231)

(1,676)

Acquisition of own shares

 

(1,188)

(864)

(1,158)

Cash received on exercise of Impax share options

 

3

-

-

Investments by/(redemptions made by) third parties into/from consolidated funds

505

(466)

(1,067)

Net cash used by financing activities

(2,585)

(2,561)

(3,901)

Net increase/(decrease) in cash and cash equivalents

456

(4,811)

(4,271)

Cash and cash equivalents at the beginning of the period

2,364

6,634

6,634

Effect of foreign exchange rate changes

 

-

3

1

Cash and cash equivalents at the end of the period

11

2,820

1,826

2,364

 

Notes to the Condensed Consolidated Interim Financial Statements

For the Six Months Ended 31 March 2016















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 2015.


The comparative figures for the financial year ended 30 September 2015 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.


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 its 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.


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 2015.










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 10); 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

Credits/(charges) related to legacy long-term incentive schemes

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2016

Six months ended 31 March 2015

Year ended 30 September 2015

 

 

 

 

 

 

£'000

£'000

£'000

 

EBT 2004 taxation

 

 

-

(93)

1,360

 

Advisory fees for EBT settlement

 

-

-

(90)

 

LTIP NIC credit/(charge)



44

(51)

5

 

LTIP Additional payments credit/(charge)



42

(18)

10

 

 

86

(162)

1,285

 

(NIC = Employers National Insurance Charge)





 

Long term incentive plan ("LTIP") NIC Charge

 

 

 


 

The Group made awards of options over the Group's shares under the LTIP plan in 2011.  These awards vested in 2012 but 4,484,500 remain outstanding at 31 March 2016.  The Group pays Employers NIC when individuals exercise their options and accordingly accrues for the estimated amount that would be payable on exercise using the year end share price. The amount accrued therefore varies from period to period in line with the Group's share price with any adjustment recorded through the income statement.

 

LTIP Additional payments

 

 

 

 

 


 

Individuals receiving 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 amount payable will fluctuate inline with the Impax share price, such fluctuations are recorded in the current period income statement.

 

EBT 2004 taxation







 

The Impax Group 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 Schemes in 2011 and prior years.  Taxation of these schemes had been subject to uncertainty but in July 2015 the Group reached agreement with HMRC whereby it made a payment of £715,000 to HMRC in full settlement of income tax, National Insurance and corporation tax credits considered payable/due in respect of the awards.  The EBT 2004 has agreed to pay the Company £894,000 in respect of this settlement.  The credit of £1,360,000 is made up of the release of the amounts previously accrued for Employers National Insurance, payment of the £715,000 and the re-imbursement of the £894,000.

 

 








4

Fair value gains/losses

 

 

 

 

 

 

 

Fair value gains/(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 10) 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 rate for the period is higher than the standard rate of corporation tax in the UK for the period (20%).  The differences are explained below:

 

 

 

 

 

 

 

Six months ended 31 March 2016

Six months ended 31 March 2015

Year ended 30 September 2015

 

 

 

 

 

 

£'000

£'000

£'000

 

Profit before tax

 

 

2,059

1,941

5,137

 

 

 

 

 

 

 

 

 

 

Tax charge at 20%,20.5%,20.5%

412

398

1,054

 

 

 

 

 

 

 

 

 

Non-deductible expenses and charges

9

14

169

 

Decrease/(increases) in value of deductions re share awards from share price decreases/increases

133

(206)

-

 

Exchange differences

 

 

-

(137)

-

 

Adjustment in respect of prior years

-

-

255

 

Change in UK tax rates

(66)

(9)

(22)

 

Effect of higher tax rates in foreign jurisdictions

20

6

48

 

 

 

 

 

 

 

 

 

Total income tax expense

508

66

1,504

 

 

 

 

 

 

 

 

 

7

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings for the period

Shares

Earnings per share

 

 

 

 

 

£'000

'000

 

 

Six months ended 31 March 2016

 

 

 

 

 

 

Basic

 

 

 

 

1,517

112,603

1.35p

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

1,551

114,266

1.35p

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2015

 

 

 

 

Basic

 

 

 

 

1,875

115,738

1.62p

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

1,875

116,538

1.61p

 

 

 

 

 

 

 

 

 

 

Year ended 30 September 2015

 

 

 

 

 

 

Basic

 

 

 

 

3,633

115,133

3.16p

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

3,633

115,909

3.13p

 

 

 

Earnings are reduced by £34,000 for the six months ending 31st March 2016 for basic earnings per share to reflect the profit attributable to holders of restricted shares, which are treated as contingently returnable shares.  This adjustment is not made for diluted earnings per share but instead the dilutive restricted shares are included in the number of shares used for the dilutive calculation.  Where the resulting calculation for diluted earnings per share is higher than the basic earnings per share the basic number is used.

 

 

The weighted average number of shares is calculated as shown in the table below.

 

 

 

 

 

 

 

Six months ended 31 March 2016

Six months ended 31 March 2015

Year ended 30 September 2015

 

 

 

 

 

'000

'000

'000

 

 

 

 

 

 

 

 

Issued share capital

127,749

127,749

127,749

Less own shares held

(15,146)

(12,011)

(12,616)

Weighted average number of ordinary shares used in the calculation of basic EPS

112,603

115,738

115,133

Additional dilutive shares re share options

7,690

10,990

10,090

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

(6,027)

(10,190)

(9,314)

Weighted average number of ordinary shares used in the calculation of diluted earnings per share

114,266

116,538

115,909

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 3 March 2016, at the Company's Annual General Meeting, payment of a 1.2 pence per share final dividend and payment of a 0.5 pence special dividend was approved in respect of the year ended 30 September 2015 (2014: 1.1p per share).  Combined with an interim payment of 0.4 pence this gave  total dividends for the year ended 30 September 2015 of 2.1 pence.  The Trustee of the Impax Employee Benefit Trusts waived the Trusts' rights to part of this dividend, leading to a total dividend payment of £1,905,000.  This was paid on 11 March 2016.

 

 

 

The Board has declared an interim dividend for the period of 0.5 pence per ordinary share (2015: 0.4 pence). This dividend will be paid on 23 June to ordinary shareholders on the register at close of business on 27 May 2016.

 

 

 

 

 

 

9

Goodwill

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

£'000

 

At 1 October 2014 and 31 March 2015

 

 

 

 

1,665

 

Addition

 

 

 

 

16

 

At 30 September 2015 and 31 March 2016

 

 

 

 

1,681

 

 

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.  Adjustments were made to the goodwill in respect of the acquisition of the property fund business in 2015.

 

 

 

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 2014

 

 

 

5,192

6,448

11,640

 

Additions

 

 

 

 

39

1,935

1,974

 

Fair value movements

 

 

 

125

720

845

 

Repayments/disposals

 

 

 

(2,534)

(524)

(3,058)

 

Foreign exchange

 

 

 

-

372

372

 

At 31 March 2015

 

 

 

2,822

8,952

11,774

 

Additions

 

 

 

 

85

3,157

3,242

 

Fair value movements

 

 

 

481

(511)

(30)

 

Repayments/disposals

 

 

 

(59)

(7,317)

(7,376)

 

Foreign exchange

 

 

 

-

(191)

(191)

 

At 30 September 2015

 

 

 

3,329

4,090

7,419

 

Additions

 

 

 

 

91

5,164

5,255

 

Fair value movements

 

 

 

174

845

1,019

 

Repayments/disposals

 

 

 

(1,180)

(1,676)

(2,856)

 

At 31 March 2016

 

 

 

2,414

8,423

10,837

 

 

 

Listed investments

 

 

 

 

 

 

 

 

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 Net Asset Value ("NAV")  from the date of launch to 31 March 2016 and has been consolidated throughout this period with its underlying investments included in listed investments in the table above.

 

 

 

 

 

 

 

 

 

Impax Global Equity Opportunities Fund ("IGEO")

 

 

 

 

On 23 January 2015 the Group launched the IGEO 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 2016 and has been consolidated throughout this period with its underlying investments included in listed investments in the table above.

 

 

 

 

 

 

 

 

 

Impax Environmental Leaders Fund ("IEL")

 

 

 

 

 

On 12 January 2016 the Group launched the IEL and invested, from its own resources £3,000,000 into the fund. IEL invests in listed equities using the Group's Leaders Strategy.  The Group's investment represented more than 50% of IEL's NAV from the date of launch to 31 March 2016 and has been consolidated throughout this period with its underlying investments included in listed investments in the table above.

 

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 per cent 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 £560,000. The carrying value represents the Board's assessment of the investment's fair value which was determined using a discounted cashflow approach.  100 per cent 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.  Negotiations with the relevant banks to restructure the loans are ongoing and a claim for compensation from the Spanish government is currently being considered by the European Court of Arbitration.  In the event that the banks take possession of the assets and the claims for compensation are unsuccessful the investment would be written down in full.  During the period the Group received a distribution of €118,000 from this investment following the successful sale of some of its investments.

 

 

 

 

 

 

 

 

The Group also has a commitment of €3.3million 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 €2.2m (£1.7m) of this commitment.  The Group's commitment of €3.3million is equal to 1.14 per cent 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.  During the period the Group received a distribution of €1,063,000 from this investment following the successful sale of some of its investments.

 

11

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2016

31 March 2015

30 September 2015

 

 

 

 

 

 

£'000

£'000

£'000

 

Cash and cash equivalents

2,820

1,826

2,364

 

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

10,424

10,623

17,153

 

Less cash and cash equivalents held by consolidated funds

(204)

(215)

(193)

 

Total cash reserves

 

 

 

13,040

12,234

19,324

 

 

 

 

 

 

 

 

 

12

Share capital and Own shares

 

 

 

 

 

 

 

 

 

 

 

31 March 2016

31  March 2015

30 September 2015

 

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 2016

31  March 2015

30 September 2015

 

Own shares

 

 

 

 

 

 

 

 

Number

 

 

 

 

21,023,120

17,702,620

18,292,620

 

£000s

 

 

 

 

7,387

5,958

6,251

 

 

Own shares represents a portion of the shares held in the EBT 2012 and EBT 2004. 2,883,500 shares were acquired in the six months ended 31 March 2016, (period ended 31 March 2015: nil).   153,000 shares were awarded to option holders on exercise of options (period ended 31 March 2015: 145,455).  As at 31 March 2016 the Company had a total of 18,369,500 options outstanding of which 11,809,500 were exercisable.  As at 31 March 2016 employees also held 4,890,000 Restricted shares over which the restrictions lapse starting from January 2018 through to January 2021.  These shares are held in trust in the EBT 2012 and are included in own shares above.

 

 

 

 

 

 

 

 

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 Carried Interest Partners LP, 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.

 

The aggregate related party transactions during the period, and holdings or balances as at the period end, are as shown below.  All balances were unsecured. Unless stated otherwise balances outstanding were £nil.

 

 

 

 

 

 

 

Six months ended 31 March 2016

Six months ended 31 March 2015

Year ended 30 September 2015

 

 

 

 

 

 

£'000

£'000

£'000

 

Statement of comprehensive income

 

 

 

 

 

 

Revenue

 

 

 

 

 9,378

 9,939

19,293

 

 

 

 

 

 

31 March 2016

31  March 2015

30 September 2015

 

 

 

 

 

 

£'000

£'000

£'000

 

Statement of financial position

 

 

 

 

 

 

Non-current asset investments

 

 

16

 15

 17

 

Current asset investments

 

 

 

 2,005

 2,822

2,941

 

Trade and other receivables

 

 

 4,595

5,754

3,258

 

 

 

 

 

 

 

 

 

14

Group risks

 

 

 

 

 

 

 

The Group's principal risks remain as detailed within the Directors' report of the Group's 2015 Annual Report and Accounts and are categorised as financial, investment, and operational.

 


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