TIDMIPX
RNS Number : 9526Z
Impax Asset Management Group plc
27 May 2021
Impax Asset Management Group plc
Interim results 31 March 2021
London, 27 May 2021 - Impax Asset Management Group plc ("Impax"
or the "Company"), the specialist investor focused on the
transition to a more sustainable global economy, today announces
interim results for the six months to 31 March 2021 (the
"Period").
H1 Business highlights
-- Diversified growth across channels and geographies, with
record net inflows of GBP6.8 billion, lifting AUM to GBP30.0
billion
-- Continued strong investment performance, particularly in
thematic Environmental Markets strategies
-- Acquisition of Pax World Management LLC finalised,
positioning North American business for further expansion
-- Extension of secular trend of rising investment into the
transition to a more sustainable economy
-- After Period end, AUM increased further to GBP32.2 billion by 30 April 2021
H1 Financial highlights
-- AUM increased to GBP30.0 billion (H1 2020: GBP14.4bn)
-- Revenue increased to GBP60.6 million (H1 2020: GBP41.2m)
-- Adjusted operating profit increased to GBP20.7 million (H1 2020: GBP10.5m)
-- Profit before tax of GBP14.4 million (H1 2020: GBP8.0m)
-- Shareholders' equity increased to GBP81.0 million (H1 2020 GBP63.2m)
-- Adjusted earnings per share increased to 11.8 pence (H1 2020: 6.3p)
-- Interim dividend per share increased to 3.6 pence (H1 2020: 1.8p)
Ian Simm, Chief Executive, commented:
"Impax has made further excellent progress during the first half
of its financial year. Notwithstanding the challenges imposed by
the COVID-19 pandemic, the business has continued to grow, with
assets under management and advice ("AUM") increasing by almost
50%, including GBP6.8 billion of net inflows.
"Amid rising interest in the transition to a more sustainable
economy, our long track record and broad-based distribution
capabilities and relationships have helped us to stand out from the
crowd as we secured major new mandates, while also increasing
significantly our business with many existing clients.
"Over the next few years we expect the companies in which we
invest to continue to prosper as markets for clean energy, resource
efficiency and low-carbon technologies expand rapidly. Against this
background, Impax is well positioned for further success."
The presentation for shareholders and analysts will be available
to view on the Company's website from 7:30am this morning:
https://www.impaxam.com/investor-relations/reports-and-presentations
Enquiries:
Impax Asset Management Group plc
Ian Simm, Chief Executive +44 (0)20 3912 3000 (switchboard)
Paul French, Corporate Communications Director
Montfort Communications
Gay Collins +44(0)77 9862 6282
Louis Supple +44(0)77 3943 0102
impax@montfort.london
Peel Hunt LLP, Nominated Adviser
James Britton or Rishi Shah +44 (0)20 7418 8900
About Impax
Founded in 1998, Impax is a specialist asset manager, with
approximately GBP32.2bn / US$44.5bn as of 30 April 2021 in both
listed and private markets strategies, investing in the
opportunities arising from the transition to a more sustainable
global economy.
Impax believes that capital markets will be shaped profoundly by
global sustainability challenges, including climate change,
pollution and essential investments in human capital,
infrastructure and resource efficiency. These trends will drive
growth for well-positioned companies and create risks for those
unable or unwilling to adapt.
The company seeks to invest in higher quality companies with
strong business models that demonstrate sound management of risk.
Impax offers a well-rounded suite of investment solutions spanning
multiple asset classes seeking superior risk-adjusted returns over
the medium to long term.
Impax has c. 190 employees across six offices in the United
Kingdom, the United States, Ireland and Hong Kong, making it one of
the investment management sector's largest investment teams
dedicated to sustainable development.
www.impaxam.com
LEI number: 213800AJDNW4S2B7E680
Chief Executive's Report
Business Update
Impax enjoyed a very strong first half to its financial year,
which spans the six months to 31 March 2021 ("the Period").
Continuing the trend of recent years, there was clear evidence that
asset owners globally are increasingly attracted to Impax's
investment philosophy focused on the transition to a more
sustainable economy. Amid rising interest in "ESG" themes, our
authenticity and broad-based distribution capabilities and
relationships have helped us to stand out from the crowd, and we
secured major new mandates, while also expanding significantly our
business with many existing clients.
Notwithstanding the challenges imposed by the COVID-19 pandemic,
the business enjoyed exceptional growth during the Period, during
which we increased our assets under management and advice ("AUM")
by almost 50%, with our AUM reaching GBP30 billion for the first
time. This was driven by GBP6.8 billion of net flows over the
Period and assisted by rising markets.
Markets
In November 2020, global equity markets surged as clinical
trials showed high levels of efficacy from several COVID-19
vaccines. This trend continued throughout the Period and reflected
earnings upgrades across much of the economy as businesses glimpsed
a potential exit from months of protracted lockdowns.
Over the Period our investee companies were largely able to
demonstrate resilience and were able to ride out the economic
impacts of lockdowns and similar restrictions. Many companies
leading the transition to a sustainable economy benefitted from
policy decisions made in response to the pandemic, as governments
stated their intention to "build back better", including in the
context of the climate emergency. A new US administration helped to
accelerate a succession of announcements by corporates and
policymakers in anticipation of the COP26 climate summit,
culminating in President Biden's green infrastructure-focussed
"American Jobs Plan", announced in March.
With vaccines raising hopes of post-pandemic stability, there
was however a broad rotation into value stocks, with hospitality,
transport and energy performing strongly from early 2021. Having
fallen heavily in early 2020, by the end of the Period Brent crude
was trading back at levels in line with the end of 2019. The
reopening of major economies also saw bond yields rise, which
benefitted financial services stocks. Meanwhile, although COVID-19
"third waves" were hitting many countries around the world,
inflation forecasts began to tick upwards, particularly in those
markets where consumers began returning to shops and restaurants in
person.
Investment performance
Against this backdrop, our thematic Environmental Markets
strategies performed well over the Period, with our Specialists
strategy outperforming the MSCI All Country World Index ("ACWI") by
11.9%. Our Water and Sustainable Food strategies outperformed the
ACWI by 4.2% and 3.5% respectively, and the Asian Environmental
strategy (formerly the "Asia-Pacific strategy") returned 14.6%, in
comparison to the MSCI Asia Composite Index, which returned 13.4%.
The Leaders strategy was broadly in line with the ACWI, beating the
benchmark by 0.6%.
Amongst our Sustainability Lens strategies, the Pax Large Cap
Fund ranked in the top decile of peers for the Period, while our
unconstrained equities strategy, Global Opportunities, lagged the
MSCI ACWI by 2.8%. Global Opportunities has a bias towards
high-quality and low-debt holdings, which have not benefitted as
fully from the cyclical rotation to value in recent months.
Overall, our five largest strategies have been ahead of their
global indices (MSCI) over the last three years, and significantly
ahead over five years.
Meanwhile, in fixed income, the Core Bond strategy performed in
line with its benchmark, while the High Yield strategy
underperformed its benchmark by 0.8%.
Our Private Equity/Infrastructure team continues to invest the
capital of Impax New Energy Investors III ("NEF III"). The Fund
made two successful exits, including the Netherlands' largest
operational PV plant, and has a development pipeline across France,
Germany, Spain and Norway. We expect the Fund to be fully committed
by the end of 2021 and are looking to raise additional capital
within this area.
Client service and business development
Inflows over the Period were directed in particular into the
thematic Environmental Markets listed equity strategies (65% of net
inflows) with strong investor interest in our Asian Environmental
strategy, and into Global Opportunities (30% of net inflows), which
reached total assets of GBP4.6 billion by 31 March 2021.
The asset growth was well diversified across our distribution
partner and direct sales channels and reflected client demand in
Europe, Asia-Pacific, and North America.
In the UK, we extended our relationship with wealth manager St
James's Place with a second mandate for our Global Opportunities
strategy and we also won a new segregated account based on the same
strategy. Meanwhile our Environmental Markets investment trust,
which is now a member of the FTSE 250 index, continued to attract
considerable inflows and currently exceeds GBP1 billion in AUM.
We focused on building out our team in Dublin, which post-Brexit
is now established as a strategic centre, and the aggregate AUM of
our Ireland-domiciled UCITS funds hit GBP1.5 billion.
In Continental Europe, Scandinavia was particularly active, and
we enjoyed material inflows from existing investors both via
intermediaries and our distribution partners.
In October, we developed further our relationship with BNP
Paribas Asset Management by signing a new distribution agreement on
very similar terms to the Memorandum of Understanding that has been
in place since 2007. This continues to be an important strategic
relationship across Europe and Asia, and during the Period led to a
significant new mandate based on our Leaders strategy for Nomura in
Japan.
AUM movement for the Period
Listed equities Fixed income Private markets Total firm
GBPm GBPm GBPm GBPm
------------------------------------- --------------- ------------ --------------- ----------
Total AUM at 30 September 2020 18,865 947 371 20,183
------------------------------------- --------------- ------------ --------------- ----------
Net flows 6,673 137 - 6,811
------------------------------------- --------------- ------------ --------------- ----------
Market movements, FX and performance 3,098 (70) (23) 3,005
------------------------------------- --------------- ------------ --------------- ----------
Total AUM at 31 March 2021 28,636 1,015 348 29,999
------------------------------------- --------------- ------------ --------------- ----------
In Australia, one of the country's largest superannuation funds
awarded Impax a AU$240m segregated mandate - the first
institutional client for our Climate strategy that we launched in
2018. In the lead-up to COP26 we continue to see strong investor
interest in this global equities strategy, which focuses on
investing in companies providing solutions to the challenges linked
to climate change.
After the end of the Period we announced a new distribution
agreement with Fidante Partners Limited for it to be Impax's
exclusive distribution partner in Australia and New Zealand. Part
of Challenger Limited (ASX:CGF), Fidante Partners focuses on
partnering with specialist asset managers and we believe is
well-positioned to support Impax's future growth aspirations among
institutional and wholesale investors in this market.
In North America, we completed the integration of our New
Hampshire-based team, who joined us in 2018 following the
acquisition of Pax World Management LLC. As agreed in the terms of
the acquisition announced on 18 September 2017, we acquired the
remaining 16.7% of the business held by management in cash and
Impax shares for a total consideration, net of loans, of US$3.0
million. In addition, contingent consideration payments of
US$270,000 were made in cash to the previous shareholders and
management as relevant assets under management of the Pax World
funds reached an average of US$5.5 billion over the final six
months of the 2020 calendar year, growing to US$6.6 billion at 31
December 2020, up from US$4.9 billion in January 2018.
Combining the two businesses has already underpinned significant
growth for the Group, with continued momentum during the Period. We
are positioning for further expansion in North America by adding to
our research resources, extending our distribution and client
service capabilities, and further strengthening our support
teams.
By the end of the Period, the Pax World funds' AUM exceeded US$7
billion. Increased flows reflected success through intermediaries,
including with Charles Schwab, Morgan Stanley, and Bank of America
Merrill Lynch. Meanwhile, for institutional investors we created a
US-based vehicle for our Global Opportunities strategy, which went
live with investments from two foundations. In Canada we also
secured a significant sub-advisory mandate for the same strategy
for FÉRIQUE Fund Management, a mutual fund serving engineers and
their families.
FINANCIAL RESULTS FOR THE PERIOD
Revenue for the six months to 31 March 2021 was GBP60.6 million
(H1 2020: GBP41.2 million, H2 2020: GBP46.3 million) driven by the
exceptionally strong inflows across the business and to a lesser
extent by market gains. At the end of the Period the weighted
average run rate revenue margin was 47 basis points (30 September
2020: 48 basis points) on our GBP30.0 billion of AUM.
Adjusted operating costs for the Period were GBP39.8 million (H1
2020: GBP30.7 million, H2 2020: GBP33.5 million), primarily
reflecting increases in personnel costs. IFRS operating costs
includes GBP4.3 million, (H1 2020: GBP2.1 million, H2 2020: GBP3.5
million) of charges that do not reflect the operating performance
of the Group which have been removed for adjusted measures. A
reconciliation of adjusted to IFRS measures is provided in Note
3.
Adjusted operating profit almost doubled versus H1 2020 to GBP
20.7 million (H1 2020: GBP10.5 million, H2 2020: GBP12.7 million)
as a result of the growth in revenue. Run rate annualised and
adjusted operating profit also grew strongly to GBP51.7 million at
the end of the Period. This resulted in the adjusted operating
profit margin increasing to 34% (H1 2020: 25%, H2 2020: 28%).
Adjusted profit before tax of GBP18.7 million (H1 2020: GBP10.0
million, H2 2020: GBP12.2 million) includes interest charges and
other non-operating charges (primarily foreign exchange on
inter-group loans) which totalled GBP2.0 million (H1 2020: GBP0.4
million, H2 2020: GBP0.6 million). IFRS profit before tax for the
Period was GBP14.4 million (H1 2020: GBP8.0 million, H2 2020:
GBP8.6 million). The tax charge benefitted from a release of
deferred tax liabilities related to private equity income.
Adjusted earnings per share for the Period were 11.8 pence (H1
2020: 6.3 pence, H2 2020: 8.2 pence). IFRS earnings per share were
10.9 pence (H1 2020: 4.8 pence, H2 2020: 5.7 pence).
FINANCIAL RESOURCES
The Company continues to be a strongly cash-generative business
with high levels of cash and no debt. Our cash reserves were
GBP34.4 million at the Period end (H1 2020: GBP19.9 million). We
retain access to a US$13 million revolving credit facility which is
currently unutilised. We continue to hold seed investments and to
invest in our private equity funds; these investments were in total
valued at GBP6.5 million at the Period end.
DIVIDS
A final dividend for our financial year 2020 of 6.8 pence per
share was paid in March 2021, following approval at the Annual
General Meeting. This took the total dividend paid for 2020 to 8.6
pence per share. To reflect further Impax's strong performance, we
are pleased to announce a 100% increase in the interim dividend to
3.6 pence per share (2020: 1.8 pence per share). This dividend will
be paid on 16 July 2021 to Ordinary Shareholders on the shareholder
register at the close of business on 11 June 2021. The Company
operates a dividend reinvestment plan ("DRIP"). The final date for
receipt of elections under the DRIP will be 25 June 2021. For
further information and to register and elect for this facility,
please visit www.signalshares.com and search for information
related to the Company.
From this year, shareholders will no longer be sent a paper
proxy form but will instead be encouraged to vote electronically
via www.signalshares.com or via CREST.
SHARE MANAGEMENT
During the Period the Company issued 2.0 million new ordinary
shares to the Group's Employee Benefit Trust ("EBT"). The EBT holds
shares for Restricted Share awards until they vest or will use them
to settle option exercises. The Company also issued a further
181,467 shares to part fund the acquisition of the remaining
interest in Pax World Management LLC.
The Board will consider purchasing the Company's shares from
time to time after due consideration of alternative uses of the
Company's cash resources. Share purchases are usually made by the
EBT (subject to the trustees' discretion), using funding provided
by the Company. The EBT did not purchase any shares during the
Period.
At the Period end the EBT held a total of 4.2 million shares,
3.4 million of which were held for Restricted Share awards leaving
up to 0.8 million available for option exercises and future share
awards. There were 2.6 million options outstanding at the Period
end, of which 1.0 million were exercisable.
Outlook
While the pathway out of the pandemic remains uncertain, we
expect that the continued roll-out of vaccines will lead in the
near-term to a sharp recovery in global GDP growth and corporate
earnings. Accommodative monetary policy and the impact of
post-pandemic fiscal stimulus packages should lead to improved
business confidence, a fall in unemployment numbers, and higher
consumer confidence.
Over the next few years we expect the companies that we invest
in to continue to benefit from the secular trend of expanding
investment into the transition to a more sustainable economy.
Meanwhile, the lead-up to COP26 will raise the volume of the debate
over how best to measure and report climate risk and the most
appropriate way for economies to reach their ambitious "net-zero"
targets.
Ahead of the Glasgow conference, we are actively consulting with
policymakers and are participating in the debate around how asset
owners and managers can contribute to the Paris Agreement, building
on our deep experience as a specialist investor in climate
solutions.
We believe that the economic and social challenges that will
emerge out of the pandemic, combined with the focus on the shift
towards a low-carbon economy, will continue to create enormous
opportunities for the companies that are aligned with our
investment thesis.
Impax's strong brand, expanding global footprint and proven
distribution network positions us well for further success as we
work with our stakeholders to identify financial opportunities from
the transition to a more sustainable economy.
Ian Simm
26 May 2021
Condensed Consolidated Income Statement
For the six months ended 31 March 2021
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
Note GBP000 GBP000 GBP000
----------------------- ---- ----------- ----------- -------------
Revenue 60,591 41,191 87,511
----------------------- ---- ----------- ----------- -------------
Operating costs (44,150) (32,851) (69,928)
----------------------- ---- ----------- ----------- -------------
Finance income 5 110 486 1,020
----------------------- ---- ----------- ----------- -------------
Finance expense 6 (2,103) (781) (1,921)
----------------------- ---- ----------- ----------- -------------
Profit before taxation 14,448 8,045 16,682
----------------------- ---- ----------- ----------- -------------
Taxation 7 (91) (1,718) (2,944)
----------------------- ---- ----------- ----------- -------------
Profit after taxation 14,357 6,327 13,738
----------------------- ---- ----------- ----------- -------------
Earnings per share
----------------------- ---- ----------- ----------- -------------
Basic 8 11.1 p 4.8 p 10.6 p
----------------------- ---- ----------- ----------- -------------
Diluted 8 10.9 p 4.8 p 10.5 p
----------------------- ---- ----------- ----------- -------------
Adjusted results are provided in Note 3.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2021
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
------------------------------------------- ----------- ----------- -------------
Profit for the Period 14,357 6,327 13,738
------------------------------------------- ----------- ----------- -------------
Change in value of cash flow hedges 288 7 (70)
------------------------------------------- ----------- ----------- -------------
Tax on change in value of cash flow hedges (54) (1) 13
------------------------------------------- ----------- ----------- -------------
Exchange differences on translation of
foreign operations (1,277) (67) (487)
------------------------------------------- ----------- ----------- -------------
Total other comprehensive income (1,043) (61) (544)
------------------------------------------- ----------- ----------- -------------
Total comprehensive income for the Period
attributable to
equity holders of the parent 13,314 6,266 13,194
------------------------------------------- ----------- ----------- -------------
All amounts in other comprehensive income may be reclassified to
income in the future.
All profit for the Period is derived from continuing
operations.
Condensed Consolidated Statement of Financial Position
As at 31 March 2021
Unaudited Unaudited Audited
As at As at As at
31 March 31 March 30 September
2021 2020 2020
Note GBP000 GBP000 GBP000
------------------------------------ ---- --------- --------- -------------
Asset
------------------------------------ ---- --------- --------- -------------
Non-current assets
------------------------------------ ---- --------- --------- -------------
Goodwill 10 11,622 12,732 12,306
------------------------------------ ---- --------- --------- -------------
Intangible assets 10 18,338 23,005 20,871
------------------------------------ ---- --------- --------- -------------
Property, plant and equipment 11 9,805 11,777 10,857
------------------------------------ ---- --------- --------- -------------
Deferred tax assets 6,099 3,599 5,492
------------------------------------ ---- --------- --------- -------------
Total non-current assets 45,864 51,113 49,526
------------------------------------ ---- --------- --------- -------------
Current assets
------------------------------------ ---- --------- --------- -------------
Trade and other receivables 26,750 18,096 20,735
------------------------------------ ---- --------- --------- -------------
Investments 12 6,537 4,950 4,387
------------------------------------ ---- --------- --------- -------------
Current tax asset 1,601 311 224
------------------------------------ ---- --------- --------- -------------
Cash invested in money market funds
and long-term deposit accounts 13 11,357 11,268 18,516
------------------------------------ ---- --------- --------- -------------
Cash and cash equivalents 13 26,896 9,363 20,245
------------------------------------ ---- --------- --------- -------------
Total current assets 73,141 43,988 64,107
------------------------------------ ---- --------- --------- -------------
Total assets 119,005 95,101 113,633
------------------------------------ ---- --------- --------- -------------
Equity and liabilities
------------------------------------ ---- --------- --------- -------------
Equity
------------------------------------ ---- --------- --------- -------------
Ordinary shares 15 1,326 1,304 1,304
------------------------------------ ---- --------- --------- -------------
Share premium 10,824 9,291 9,291
------------------------------------ ---- --------- --------- -------------
Exchange translation reserve 172 1,869 1,449
------------------------------------ ---- --------- --------- -------------
Hedging reserve 123 (48) (111)
------------------------------------ ---- --------- --------- -------------
Retained earnings 68,652 50,830 59,515
------------------------------------ ---- --------- --------- -------------
Total equity 81,097 63,246 71,448
------------------------------------ ---- --------- --------- -------------
Current liabilities
------------------------------------ ---- --------- --------- -------------
Trade and other payables 27,570 15,394 27,984
------------------------------------ ---- --------- --------- -------------
Lease liabilities 11 1,403 1,421 1,410
------------------------------------ ---- --------- --------- -------------
Current tax liability 127 89 190
------------------------------------ ---- --------- --------- -------------
Total current liabilities 29,100 16,904 29,584
------------------------------------ ---- --------- --------- -------------
Trade and other payables - 748 -
------------------------------------ ---- --------- --------- -------------
Lease liabilities 11 8,378 9,975 9,261
------------------------------------ ---- --------- --------- -------------
Deferred tax liability 430 4,228 3,340
------------------------------------ ---- --------- --------- -------------
Total non-current liabilities 8,808 14,951 12,601
------------------------------------ ---- --------- --------- -------------
Total liabilities 37,908 31,855 42,185
------------------------------------ ---- --------- --------- -------------
Total equity and liabilities 119,005 95,101 113,633
------------------------------------ ---- --------- --------- -------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 March 2021
Exchange
Share translation Hedging Retained Total
capital Share premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- ------------- ------------ -------- --------- --------
As at 1 October 2019 1,304 9,291 1,936 ( 54) 50,504 62,981
------------------------------------ -------- ------------- ------------ -------- --------- --------
Transactions with owners of the
Company
------------------------------------ -------- ------------- ------------ -------- --------- --------
Dividends paid - - - - (5,140) ( 5,140)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Acquisition of own shares - - - - (3,184) ( 3,184)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Cash received on option exercises - - - - 97 97
------------------------------------ -------- ------------- ------------ -------- --------- --------
Tax credit on long-term incentive
schemes - - - - 1,288 1,288
------------------------------------ -------- ------------- ------------ -------- --------- --------
Share based payment charge - - - - 938 938
------------------------------------ -------- ------------- ------------ -------- --------- --------
Total transactions with owners - - - - ( 6,001) ( 6,001)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Profit for the Period - - - - 6,327 6,327
------------------------------------ -------- ------------- ------------ -------- --------- --------
Other comprehensive income
------------------------------------ -------- ------------- ------------ -------- --------- --------
Cashflow hedge - - - 7 - 7
------------------------------------ -------- ------------- ------------ -------- --------- --------
Tax on cashflow hedge - - - (1) - ( 1)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Exchange differences on translation
of foreign operations - - ( 67) - - ( 67)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Total other comprehensive income - - ( 67) 6 - ( 61)
------------------------------------ -------- ------------- ------------ -------- --------- --------
As at 31 March 2020 1,304 9,291 1,869 ( 48) 50,830 63,246
------------------------------------ -------- ------------- ------------ -------- --------- --------
Transactions with owners of the
Company
------------------------------------ -------- ------------- ------------ -------- --------- --------
Dividends paid - - - - (2,302) ( 2,302)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Acquisition of own shares - - - - (1,039) ( 1,039)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Cash received on option exercises - - - - 392 392
------------------------------------ -------- ------------- ------------ -------- --------- --------
Tax credit on long-term incentive
schemes - - - - 3,348 3,348
------------------------------------ -------- ------------- ------------ -------- --------- --------
Share based payment charge - - - - 875 875
------------------------------------ -------- ------------- ------------ -------- --------- --------
Total transactions with owners - - - - 1,274 1,274
------------------------------------ -------- ------------- ------------ -------- --------- --------
Profit for the Period - - - - 7,411 7,411
------------------------------------ -------- ------------- ------------ -------- --------- --------
Other comprehensive income
------------------------------------ -------- ------------- ------------ -------- --------- --------
Cashflow hedge - - - (77) - ( 77)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Tax on cashflow hedge - - - 14 - 14
------------------------------------ -------- ------------- ------------ -------- --------- --------
Exchange differences on translation
of foreign operations - - ( 420) - - ( 420)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Total other comprehensive income - - ( 420) ( 63) - ( 483)
------------------------------------ -------- ------------- ------------ -------- --------- --------
As at 30 September 2020 1,304 9,291 1,449 ( 111) 59,515 71,448
------------------------------------ -------- ------------- ------------ -------- --------- --------
Transactions with owners of the
Company
------------------------------------ -------- ------------- ------------ -------- --------- --------
New shares issued 22 1,533 - - ( 20) 1,535
------------------------------------ -------- ------------- ------------ -------- --------- --------
Dividends paid - - - - (8,871) ( 8,871)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Cash received on option exercises - - - - 597 597
------------------------------------ -------- ------------- ------------ -------- --------- --------
Purchase of Impax NH shares (note
18) - - - - ( 2,239) ( 2,239)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Tax credit on long-term incentive
schemes - - - - 3,570 3,570
------------------------------------ -------- ------------- ------------ -------- --------- --------
Share based payment charge - - - - 1,743 1,743
------------------------------------ -------- ------------- ------------ -------- --------- --------
Total transactions with owners 22 1,533 - - (5,220) (3,665)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Profit for the Period - - - - 14,357 14,357
------------------------------------ -------- ------------- ------------ -------- --------- --------
Other comprehensive income
------------------------------------ -------- ------------- ------------ -------- --------- --------
Cashflow hedge - - - 288 - 288
------------------------------------ -------- ------------- ------------ -------- --------- --------
Tax on cashflow hedge - - - (54) - ( 54)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Exchange differences on translation
of foreign operations - - ( 1,277) - - (1,277)
------------------------------------ -------- ------------- ------------ -------- --------- --------
Total other comprehensive income - - ( 1,277) 234 - (1,043)
------------------------------------ -------- ------------- ------------ -------- --------- --------
As at 31 March 2021 1,326 10,824 172 123 68,652 81,097
------------------------------------ -------- ------------- ------------ -------- --------- --------
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 March 2021
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
Note GBP000 GBP000 GBP000
--------------------------------------------- ---- ----------- ----------- -------------
Operating activities
--------------------------------------------- ---- ----------- ----------- -------------
Cash generated from operations 17 13,275 3,044 24,382
--------------------------------------------- ---- ----------- ----------- -------------
Corporation tax paid (1,532) (152) (607)
--------------------------------------------- ---- ----------- ----------- -------------
Net cash generated from operating activities 11,743 2,892 23,775
--------------------------------------------- ---- ----------- ----------- -------------
Investing activities:
--------------------------------------------- ---- ----------- ----------- -------------
Impax NH acquisition 18 (704) - -
--------------------------------------------- ---- ----------- ----------- -------------
Net acquisition of property plant and
equipment and intangible assets (33) (147) (182)
--------------------------------------------- ---- ----------- ----------- -------------
Net investments into investment funds (1,973) (702) 1,191
--------------------------------------------- ---- ----------- ----------- -------------
Settlement of investment related hedges (120) 469 (156)
--------------------------------------------- ---- ----------- ----------- -------------
Decrease in cash held by money market
funds and long-term deposit accounts 7,159 3,967 222
--------------------------------------------- ---- ----------- ----------- -------------
Investment income received 54 48 (3,281)
--------------------------------------------- ---- ----------- ----------- -------------
Net cash generated from/(used by) investment
activities 4,383 3,635 (2,206)
--------------------------------------------- ---- ----------- ----------- -------------
Financing activities:
--------------------------------------------- ---- ----------- ----------- -------------
Acquisition of non-controlling interest - - (201)
--------------------------------------------- ---- ----------- ----------- -------------
Interest paid on bank borrowings (64) (38) (136)
--------------------------------------------- ---- ----------- ----------- -------------
Payment of lease liabilities (832) (839) (1,699)
--------------------------------------------- ---- ----------- ----------- -------------
Acquisition of own shares - (3,186) (4,223)
--------------------------------------------- ---- ----------- ----------- -------------
Cash received on exercise of Impax
share options 597 97 489
--------------------------------------------- ---- ----------- ----------- -------------
Dividends paid (8,871) (5,140) (7,442)
--------------------------------------------- ---- ----------- ----------- -------------
Net cash used by financing activities (9,170) (9,106) (13,212)
--------------------------------------------- ---- ----------- ----------- -------------
Net increase/(decrease) in cash and
cash equivalents 6,956 (2,579) 8,357
--------------------------------------------- ---- ----------- ----------- -------------
Cash and cash equivalents at the beginning
of the Period 20,245 11,939 11,939
--------------------------------------------- ---- ----------- ----------- -------------
Effect of foreign exchange rate changes (305) 3 (51)
--------------------------------------------- ---- ----------- ----------- -------------
Cash and cash equivalents at the end
of the Period 13 26,896 9,363 20,245
--------------------------------------------- ---- ----------- ----------- -------------
Notes to the Condensed Consolidated Interim Financial
Statements
For the six months ended 31 March 2021
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" 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 2020.
The comparative figures for the financial year ended 30
September 2020 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 7th floor, 30 Panton St, London,
SW1Y 4AJ or at the Company's website: www.impaxam.com.
Going concern
The Board has made an assessment covering a period of at least
12 months from the date of approval of these interim financial
statements which indicates that, taking account of reasonably
possible downsides, the Group will have sufficient funds, to meet
its liabilities as they fall due for that period. In making this
assessment the Board has considered the ongoing impact of Covid-19.
The Group has high cash balances, no debt and is profitable. A
significant part of the Group's cost base is also variable as
bonuses are linked to profitability. The Group can also preserve
cash through dividend reduction and through issuance of shares to
cover share option exercises/restricted share awards (rather than
purchasing shares). The Group has also managed to operate without
disruption during the lockdown periods to date and expects to
continue to do so. Consequently the Directors are confident that
the Group will have sufficient funds to continue to meet its
liabilities for at least 12 months from the date of approval of
these interim financial statements and therefore have prepared them
on the going concern basis.
Accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those
applied by the Group in its consolidated financial statements for
the year ended 30 September 2020.
New and forthcoming accounting standards applicable to the
Group
No new accounting standards or interpretations issued or not yet
effective are expected to have an impact on the Group's condensed
consolidated financial statements.
2 Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
For the prior periods estimates made in determining if
intangible assets were impaired were considered to be a significant
source of estimation uncertainty (see Note 10).
3 Adjusted profits and earnings
The reported operating profit, profit before tax and earnings
per share in the current and prior periods presented are
substantially affected by business combination effects and other
items. The Directors have therefore decided to report an adjusted
operating profit, adjusted profit before tax and adjusted earnings
per share which exclude these items in order to enable comparison
with peers and provide consistent measures of performance over
time. A reconciliation of the adjusted amounts to the IFRS reported
amounts is shown in the following tables.
Six months ended 31 March 2021
------------------------------------- -----------------------------------------
Adjustments
-------- --------------------- --------
Business
Reported combination
IFRS effects Other Adjusted
GBP000 GBP000 GBP000 GBP000
------------------------------------- -------- ------------ ------- --------
Income statement
------------------------------------- -------- ------------ ------- --------
Revenue 60,591 60,591
------------------------------------- -------- ------------ ------- --------
Operating costs (44,150) (39,849)
------------------------------------- -------- ------------ ------- --------
Amortisation of intangibles arising
on acquisition 1,196
------------------------------------- -------- ------------ ------- --------
Acquisition equity incentive scheme
charges 986
------------------------------------- -------- ------------ ------- --------
Contingent consideration adjustment 167
------------------------------------- -------- ------------ ------- --------
Mark to market charge on equity
awards 1,952
------------------------------------- -------- ------------ ------- --------
Operating Profit 16,441 2,349 1,952 20,742
------------------------------------- -------- ------------ ------- --------
Finance income 110 (42) 68
------------------------------------- -------- ------------ ------- --------
Finance expense (2,103) (2,103)
------------------------------------- -------- ------------ ------- --------
Profit before taxation 14,448 2,349 1,910 18,707
------------------------------------- -------- ------------ ------- --------
Taxation (91)
-------- ------------ ------- --------
Adjustment re historical tax charges (2,803)
-------- ------------ ------- --------
Tax credit on adjustments (363) (3,257)
------------------------------------- -------- ------------ ------- --------
Profit after taxation 14,357 2,349 (1,256) 15,450
------------------------------------- -------- ------------ ------- --------
Diluted earnings per share 10.9p 1.8p (1.0)p 11.8p
------------------------------------- -------- ------------ ------- --------
Six months ended 31 March 2020
------------------------------------ -----------------------------------------
Adjustments
-------- --------------------- --------
Business
Reported combination
IFRS effects Other Adjusted
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- ------------ ------- --------
Income statement
------------------------------------ -------- ------------ ------- --------
Revenue 41,191 41,191
------------------------------------ -------- ------------ ------- --------
Operating costs (32,851) (30,699)
------------------------------------ -------- ------------ ------- --------
Amortisation of intangibles arising
on acquisition 1,257
------------------------------------ -------- ------------ ------- --------
Acquisition equity incentive scheme
charges 67
------------------------------------ -------- ------------ ------- --------
Mark to market charge on equity
awards 828
------------------------------------ -------- ------------ ------- --------
Operating Profit 8,340 1,324 828 10,492
------------------------------------ -------- ------------ ------- --------
Finance income 486 (134) 352
------------------------------------ -------- ------------ ------- --------
Finance expense (781) (781)
------------------------------------ -------- ------------ ------- --------
Profit before taxation 8,045 1,324 694 10,063
------------------------------------ -------- ------------ ------- --------
Taxation (1,718)
------------------------------------ -------- ------------ ------- --------
Tax credit on adjustments (132) (1,850)
------------------------------------ -------- ------------ ------- --------
Profit after taxation 6,327 1,324 562 8,213
------------------------------------ -------- ------------ ------- --------
Diluted earnings per share 4.8p 1.0p 0.4p 6.3p
------------------------------------ -------- ------------ ------- --------
The adjusted diluted earnings per share is calculated using the
adjusted profit after taxation shown above with a further
adjustment for profit attributable to owners of restricted shares
of GBP328,000 (see Note 8). The diluted number of shares is the
same as used for the IFRS calculation of earnings per share (see
Note 8).
The same adjustments have been made, where relevant, for the
year ended 30 September 2020 to give adjusted operating profit of
GBP23,250,000, adjusted profit before tax of GBP22,225,000 and
adjusted diluted earnings per share of 14.5 pence.
Mark to market charge on equity incentive awards
The group has awarded options over the Group's shares to
employees in the prior years and the current Period, some of which
are either unvested or unexercised at the balance sheet date. The
Group has also made awards of restricted shares ("RSS awards") a
significant portion of which have not vested at the balance sheet
date. Employer's National Insurance Contributions ("NIC") are
payable on the option awards when they are exercised and on the RSS
awards when they vest, based on the valuation of the underlying
shares at that point. The Group does however receive a corporation
tax credit equal to the value of the awards at the date they are
exercised (options) or vest (RSS awards). A charge is accrued for
the NIC within IFRS operating profit based on the share price at
the balance sheet date. Similarly a credit for the corporation tax
is accrued within the IFRS tax charge and where the corporation tax
credit is larger than the share based payments within equity.
Additional retention payments are made to holders of vested
legacy LTIP awards ("LTIP") when they are exercised. The payment
will be equal to the corporation tax benefit the Group receives on
the exercise of the options minus the amount of NIC payable on
exercise. The charge is accrued based on the share price at the
balance sheet date.
These two charges vary based on the Group's share price
(together referred to as mark-to-market charge on equity schemes)
and are not linked to the operating performance of the Group. They
are therefore eliminated when reporting adjusted profit.
Contingent consideration adjustment
We estimate the contingent consideration payable in respect of
the Impax NH acquisition until the amount is finalised. Any
adjustments are recorded through income. This adjustment is not
linked to the operating performance of the Impax NH business so is
excluded from adjusted profit.
Amortisation of intangibles
Management contracts, which are classified as intangible assets,
were acquired as part of the acquisition of Impax NH and are
amortised over their 11 year life. This charge is not linked to the
operating performance of the Impax NH business so is excluded from
adjusted profit.
Acquisition equity incentive scheme charges
Impax NH staff have been awarded share based payments in respect
of the transaction. Charges in respect of these relate to the
acquisition rather than the operating performance of the Group and
are therefore excluded from adjusted profit.
Taxation
The IFRS tax charge for 2021 includes a credit in respect of
historical tax charges related to private equity income. This does
not reflect the current year performance of the Group and is
therefore excluded from adjusted profit.
4 Segment Information
For the year ended 30 September 2020 and prior years the Group
had two reportable segments being Impax LN, the primarily London
based manager of listed equity and real asset funds and accounts
and Impax NH, the New Hampshire based company acquired in January
2018. For the current year the Group is managed on an integrated
basis and there are no reportable segments. Financial information
is therefore reported for Impax LN and Impax NH for the prior year
and for the prior half year only in the following tables.
Six months ended 31 March 2020
Impax LN Impax NH Adjustments Consolidated
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- -------- ----------- ------------
Revenue
------------------------------------ -------- -------- ----------- ------------
External customers 28,645 12,546 - 41,191
------------------------------------ -------- -------- ----------- ------------
Inter-segment 1,466 - (1,466) -
------------------------------------ -------- -------- ----------- ------------
Total revenue 30,111 12,546 (1,466) 41,191
------------------------------------ -------- -------- ----------- ------------
Segment profit - adjusted operating
profit 9,572 920 - 10,492
------------------------------------ -------- -------- ----------- ------------
Twelve months ended 30 September 2020
Impax LN Impax NH Adjustments Consolidated
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- -------- ----------- ------------
Revenue
------------------------------------ -------- -------- ----------- ------------
External customers 61,906 25,605 - 87,511
------------------------------------ -------- -------- ----------- ------------
Inter-segment 3,147 - (3,147) -
------------------------------------ -------- -------- ----------- ------------
Total revenue 65,053 25,605 (3,147) 87,511
------------------------------------ -------- -------- ----------- ------------
Segment profit - adjusted operating
profit 22,176 1,074 - 23,250
------------------------------------ -------- -------- ----------- ------------
Segment profit is stated at the adjusted operating profit level
as shown in Note 3.
5 Finance income
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
------------------------ -------- -------- ------------
Fair value gains 57 305 798
------------------------ -------- -------- ------------
Interest income 12 47 98
------------------------ -------- -------- ------------
Other investment income 41 134 124
------------------------ -------- -------- ------------
Foreign exchange gains - - -
------------------------ -------- -------- ------------
110 486 1,020
------------------------ -------- -------- ------------
Fair value gains/(losses) include those arising on revaluation
of listed and unlisted investments and any gains or losses arising
on related hedge instruments held by the Group.
6 Finance expense
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
------------------------------ -------- -------- ------------
Interest on lease liabilities 242 251 514
------------------------------ -------- -------- ------------
Finance cost on bank loans 64 149 295
------------------------------ -------- -------- ------------
Foreign exchange losses 1,797 381 1,112
------------------------------ -------- -------- ------------
2,103 781 1,921
------------------------------ -------- -------- ------------
Finance cost on bank loans mainly represent commitment fees on
the Group's revolving credit facility.
7 Taxation
The tax rate for the Period is lower than the standard rate of
corporation tax in the UK for the Period (19 per cent). The
differences are explained below:
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
---------------------------------------------------- ---------- ---------- -------------
Profit before tax 14,448 8,045 16,682
---------------------------------------------------- ---------- ---------- -------------
Tax charge at 19 per cent 2,745 1,529 3,170
---------------------------------------------------- ---------- ---------- -------------
Effects of:
---------------------------------------------------- ---------- ---------- -------------
Non-deductible expenses and charges 1 1 13
---------------------------------------------------- ---------- ---------- -------------
Adjustment in respect of historical tax
charges (2,803) (27) (787)
---------------------------------------------------- ---------- ---------- -------------
Effect of higher tax rates in foreign jurisdictions 83 36 85
---------------------------------------------------- ---------- ---------- -------------
Tax losses not recognised 65 179 463
---------------------------------------------------- ---------- ---------- -------------
Total income tax expense 91 1,718 2,944
---------------------------------------------------- ---------- ---------- -------------
The adjustment in respect of historical tax charges years
relates to the finalisation of how tax is charged on private equity
revenue earned in prior years where it has been deemed that part of
that income is not taxable. In the 3 March 2021 Budget it was
announced that the UK tax rate will increase to 25% from 1 April
2023. This will have a consequential effect on the Group's future
tax charge. If this rate change had been substantively enacted at
the current balance sheet date the deferred tax asset would have
increased by GBP270,000 with no change to the deferred tax
liability.
8 Earnings per share
Earnings
for the Period Shares Earnings
GBP000 '000 per share
------------------------------- --------------- ------- ----------
Six months ended 31 March 2021
------------------------------- --------------- ------- ----------
Basic 14,029 126,804 11.1p
------------------------------- --------------- ------- ----------
Diluted 14,029 128,429 10.9p
------------------------------- --------------- ------- ----------
Six months ended 31 March 2020
------------------------------- --------------- ------- ----------
Basic 6,014 124,255 4.8p
------------------------------- --------------- ------- ----------
Diluted 6,014 125,965 4.8p
------------------------------- --------------- ------- ----------
Year ended 30 September 2020
------------------------------- --------------- ------- ----------
Basic 13,235 124,572 10.6p
------------------------------- --------------- ------- ----------
Diluted 13,235 125,825 10.5p
------------------------------- --------------- ------- ----------
Earnings are reduced by GBP328,000 for the six months ending 31
March 2021 (31 March 2020: GBP313,000, 30 September 2020:
GBP503,000) for basic and diluted earnings per shares to reflect
the profit attributable to holders of restricted shares, which are
treated as contingently returnable shares.
The weighted average number of shares is calculated as shown in
the table below.
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
'000 '000 '000
------------------------------------------------ ---------- ---------- -------------
Weighted average issued share capital 130,942 130,415 130,415
------------------------------------------------ ---------- ---------- -------------
Less own shares (4,138) (6,160) (5,843)
------------------------------------------------ ---------- ---------- -------------
Weighted average number of ordinary shares
used in the
calculation of basic earnings per share 126,804 124,255 124,572
------------------------------------------------ ---------- ---------- -------------
Additional dilutive shares re share awards 2,660 3,250 2,451
------------------------------------------------ ---------- ---------- -------------
Adjustment to reflect option exercise proceeds
and future
service from employees receiving awards/shares (1,035) (1,540) (1,198)
------------------------------------------------ ---------- ---------- -------------
Weighted average number of ordinary shares
used in the
calculation of diluted eps 128,429 125,965 125,825
------------------------------------------------ ---------- ---------- -------------
9 Dividends
On 18 March 2021, at the Company's Annual General Meeting,
payment of a 6.8 pence per share final dividend for the year ended
30 September 2020 (2019: 4.0 pence per share) was approved.
Combined with an interim payment of 1.8 pence this gave total
dividends for the year ended 30 September 2020 of 8.6 pence. The
Trustee of the Impax Employee Benefit Trusts waived the Trusts'
rights to part of the final dividend, leading to a total final
dividend payment of GBP8,871,104 which was paid on 26 March
2021.
The Board has declared an interim dividend for the Period of 3.6
pence per ordinary share (2020: 1.8 pence). This dividend will be
paid on 16 July 2021 to ordinary shareholders on the register at
close of business on 11 June 2021.
10 Goodwill and Intangible assets
The goodwill and intangible assets held by the Group primarily
relate to the acquisition of Impax NH in January 2018.
Goodwill
GBP000
-------------------------- ------
Cost
-------------------------- ------
At 1 October 2019 12,804
-------------------------- ------
Foreign exchange movement (72)
-------------------------- ------
At 31 March 2020 12,732
-------------------------- ------
Foreign exchange movement (426)
-------------------------- ------
At 30 September 2020 12,306
-------------------------- ------
Foreign exchange movement (684)
-------------------------- ------
At 31 March 2021 11,622
-------------------------- ------
There were no brought forward impairment losses at 1 October
2019 or impairment charges during the Period.
Intangible assets
Intangible
assets - Intangible
management assets -
contracts software Total
GBP000 GBP000 GBP000
---------------------------------------- ----------- ---------- -------
Cost
---------------------------------------- ----------- ---------- -------
At 1 October 2019 29,016 515 29,531
---------------------------------------- ----------- ---------- -------
Additions - 15 15
---------------------------------------- ----------- ---------- -------
Foreign exchange movement (207) - (207)
---------------------------------------- ----------- ---------- -------
At 31 March 2020 28,809 530 29,339
---------------------------------------- ----------- ---------- -------
Additions - - -
---------------------------------------- ----------- ---------- -------
Foreign exchange movement (1,101) (1) (1,103)
---------------------------------------- ----------- ---------- -------
At 30 September 2020 27,707 529 28,236
---------------------------------------- ----------- ---------- -------
Additions - 1 1
---------------------------------------- ----------- ---------- -------
Foreign exchange movement (1,767) - (1,767)
---------------------------------------- ----------- ---------- -------
At 31 March 2021 25,940 530 26,470
---------------------------------------- ----------- ---------- -------
Accumulated amortisation and impairment
---------------------------------------- ----------- ---------- -------
At 1 October 2019 4,621 392 5,013
---------------------------------------- ----------- ---------- -------
Amortisation 1,257 34 1,291
---------------------------------------- ----------- ---------- -------
Foreign exchange movement 30 - 30
---------------------------------------- ----------- ---------- -------
At 31 March 2020 5,908 426 6,334
---------------------------------------- ----------- ---------- -------
Amortisation 1,278 32 1,310
---------------------------------------- ----------- ---------- -------
Foreign exchange movement (279) - (279)
---------------------------------------- ----------- ---------- -------
At 30 September 2020 6,907 458 7,365
---------------------------------------- ----------- ---------- -------
Amortisation 1,196 29 1,225
---------------------------------------- ----------- ---------- -------
Foreign exchange movement (458) - (458)
---------------------------------------- ----------- ---------- -------
At 31 March 2021 7,645 487 8,132
---------------------------------------- ----------- ---------- -------
Net book value
---------------------------------------- ----------- ---------- -------
At 31 March 2021 18,295 43 18,338
---------------------------------------- ----------- ---------- -------
At 30 September 2020 20,800 71 20,871
---------------------------------------- ----------- ---------- -------
At 31 March 2020 22,901 104 23,005
---------------------------------------- ----------- ---------- -------
The management contracts were acquired with the acquisition of
Impax NH in January 2018 and are amortised over an 11 year life. An
impairment test was completed on this asset for the year ended 30
September 2020 and showed no impairment was required. The test used
the following key assumptions - inflows of new assets of $US0.34bn
per annum on average, future equity fund performance of 5%, an
average operating margin of 20% and a discounted cost of capital of
13.5%.
The assumptions that we would use in an impairment test
performed at 31 March 2021 remain the same as at 30 September 2020.
Actual asset inflows, fund performance and operating margin for the
six months since 30 September 2020 have however been significantly
in excess of those assumed and accordingly there are no indicators
of impairment.
11 Leases
Property plant and equipment
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
--------------------------------------- -------- -------- ------------
Right-of-use assets 8,432 10,068 9,315
--------------------------------------- -------- -------- ------------
Property, plant and equipment owned by
the Group 1,373 1,709 1,542
--------------------------------------- -------- -------- ------------
9,805 11,777 10,857
--------------------------------------- -------- -------- ------------
The carrying value of the Group's right of use assets,
associated lease liabilities and the movements during the Period
are set out below.
Right of
use asset Lease liabilities
GBP000 GBP000
-------------------------- ---------- -----------------
At 1 October 2020 9,315 10,671
-------------------------- ---------- -----------------
Lease payments - (831)
-------------------------- ---------- -----------------
Interest expense - 242
-------------------------- ---------- -----------------
Depreciation charge (605) -
-------------------------- ---------- -----------------
Foreign exchange movement (278) (301)
-------------------------- ---------- -----------------
At 31 March 2021 8,432 9,781
-------------------------- ---------- -----------------
12 Current asset investments
The Group will from time to time facilitate the establishment of
funds for which it is the investment manager. The Group may invest
seed capital in these funds in order to provide initial scale and
to facilitate the marketing of the fund to third party investors.
Where the Group has control of the fund it is consolidated and its
underlying investments are included in investments in the table
below. Where the investments are not consolidated the investment
itself is included in the table below. The Group also invests in
private equity funds it manages. These investments are recorded at
fair value.
GBP000
--------------------- -------
At 1 October 2019 4,626
--------------------- -------
Additions 702
--------------------- -------
Fair value movements (378)
--------------------- -------
At 31 March 2020 4,950
--------------------- -------
Additions 56
--------------------- -------
Fair value movements 1,330
--------------------- -------
Repayments/disposals (1,949)
--------------------- -------
At 30 September 2020 4,387
--------------------- -------
Additions 2,662
--------------------- -------
Fair value movements 177
--------------------- -------
Repayments/disposals (689)
--------------------- -------
At 31 March 2021 6,537
--------------------- -------
An analysis of the investment by valuation technique hierarchy
is disclosed below.
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
-------- -------- -------- ------------
Level 1 3,895 1,527 1,953
-------- -------- -------- ------------
Level 2 - 1,641 -
-------- -------- -------- ------------
Level 3 2,642 1,782 2,434
-------- -------- -------- ------------
6,537 4,950 4,387
-------- -------- -------- ------------
Level 1 means that valuation is made by reference to quoted
prices in active markets for the relevant securities.
Level 2 assets do not have regular market pricing but can be
given a fair value based on quoted prices in active markets.
Level 3 assets are those where there is no readily available
market information to value them and the asset value are based on
models. They represent investments in our private equity funds.
13 Cash reserves
Cash and cash equivalents under IFRS does not include deposits
in money market funds or cash held in deposits with an original
maturity of more than three months. However the Group considers its
total cash reserves to include these amounts. Cash held in Research
Payment Accounts ("RPAs") is collected from funds managed by the
Group and can only be used towards the cost of researching stocks.
A liability of an equal amount is included in trade and other
payables. This cash is also excluded from cash reserves. A
reconciliation is shown below:
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
---------------------------------------------- -------- -------- ------------
Cash and cash equivalents 26,896 9,363 20,245
---------------------------------------------- -------- -------- ------------
Cash held in money market funds and long-term
deposit accounts 11,357 11,268 18,516
---------------------------------------------- -------- -------- ------------
Less: cash held in RPAs (3,777) (743) (1,363)
---------------------------------------------- -------- -------- ------------
Total cash reserves 34,476 19,888 37,398
---------------------------------------------- -------- -------- ------------
14 Loans
The Group retains a US$13 million revolving credit facility
("RCF") with RBS International which expires in January 2023. No
amounts were drawn down or repaid in the current Period or in the
prior year.
15 Share capital and own shares
31 March 31 March 30 September
2021 2020 2020
----------------------------------------- ----------- ----------- ------------
Issued and fully paid ordinary shares of
1 pence each
----------------------------------------- ----------- ----------- ------------
Number 132,596,554 130,415,087 130,415,087
----------------------------------------- ----------- ----------- ------------
GBP000s 1,326 1,304 1,304
----------------------------------------- ----------- ----------- ------------
On 16 February 2021 2,000,000 new shares were issued to the
Impax Asset Management Group plc Employee Benefit Trust 2012 (the
"EBT") and a further 181,467 shares were issued to management of
Impax NH as part of the completion of the acquisition of that
business.
31 March 31 March 30 September
2021 2020 2020
----------- --------- --------- ------------
Own shares
----------- --------- --------- ------------
Number 4,165,214 7,332,367 5,186,867
----------- --------- --------- ------------
GBP000s 3,030 8,020 7,210
----------- --------- --------- ------------
Own shares represents those held by the EBT which are typically
used to fund exercise of options or awards of restricted
shares.
The number of own shares held by the EBT fell in the Period as
it transferred 3.0 million shares to option holders on exercise of
options or to holders of restricted shares when the restrictions
lapsed. This fall was offset by the issuance of the two million
shares to the EBT referred to above.
As at 31 March 2021 there were a total of 2.6 million options
outstanding over the Group's shares of which 1.0 million were
exercisable. As at 31 March 2021 employees also held 3.4 million
Restricted Shares over which the restrictions lapse from December
2021 through to February 2026. These Restricted Shares are held in
the EBT and included in the own shares numbers shown above.
16 Related party transactions
Funds over which the Group has discretionary management and
entities controlled by these funds are considered to be related
parties of the Group.
BNP Paribas Asset Management Holdings is also a related party of
the Group by virtue of owning a significant stake in the Group.
Revenue earned from and operating costs for related parties of
the Group are as shown in the table below:
Six months Six months
ended ended Year ended
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
---------------- ---------- ---------- -------------
Revenue 59,634 40,720 84,163
---------------- ---------- ---------- -------------
Operating costs 497 485 774
---------------- ---------- ---------- -------------
Investments in related parties of the Group and trade and other
receivables due from related parties are as shown in the table
below:
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
---------------------------- -------- -------- ------------
Current asset investments 2,642 1,782 2,434
---------------------------- -------- -------- ------------
Trade and other receivables 23,577 14,450 16,303
---------------------------- -------- -------- ------------
17 Reconciliation of net cashflow from operating activities
This note should be read in conjunction with the condensed
Consolidated cashflow statement. It provides a reconciliation of
how profit before tax, which is based on accounting rules,
translates to cashflows.
31 March 31 March 30 September
2021 2020 2020
GBP000 GBP000 GBP000
---------------------------------------- -------- -------- ------------
Profit before taxation 14,448 8,045 16,682
---------------------------------------- -------- -------- ------------
Adjustments for:
---------------------------------------- -------- -------- ------------
Depreciation and amortisation 2,032 2,117 4,260
Finance income (110) (486) (1,020)
Finance expense 2,103 781 1,921
---------------------------------------- -------- -------- ------------
Share-based payment charges 1,743 938 1,813
---------------------------------------- -------- -------- ------------
Operating cash flows before movement in
working capital 20,216 11,395 23,656
---------------------------------------- -------- -------- ------------
(Increase) in receivables (6,664) (1,356) (3,995)
---------------------------------------- -------- -------- ------------
(Decrease)/Increase in payables (277) (6,995) 4,721
---------------------------------------- -------- -------- ------------
Cash generated from operations 13,275 3,044 24,382
---------------------------------------- -------- -------- ------------
18 Completion of acquisition of Impax NH
On 16 February 2021 the Company completed the acquisition of
Impax NH when it exercised its call option to acquire the remaining
16.7% of the shares held by Impax NH's management for total
consideration, after repayment of loans made by Impax NH to the
individuals, of $3,006k. $979k (GBP704k) was paid in cash and
$2,027k was paid in the Company's shares with the number of shares
being determined based on the average share price for the 20
trading days to 27 January 2021. The shares were however issued on
16 February 2021 and have been valued in these financial statements
at a total of GBP1,535k using the share price on that date.
The award and subsequent purchase of the shares was treated as a
share based payment classified as equity settled as the Company had
the option of settling in cash or shares. The completion of the
acquisition is therefore accounted for as a reduction in equity of
GBP2,239k being the sum of the cash paid of GBP704k and the
GBP1,535k value of the shares issued.
The amount of contingent consideration due in respect of the
acquisition was also finalised with $270k payable. This amount has
been recorded as a charge to profit.
19 Group risks
The Group's principal risks remain as detailed within the
Directors' report of the Group's 2020 Strategic Report.
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