TIDMIPX
RNS Number : 2933U
Impax Asset Management Group plc
02 December 2021
Impax Asset Management Group plc
Results for the year ended 30 September 2021
London, 2 December 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
final audited results for the year ending 30 September 2021 (the
"Period").
Business highlights
-- Assets under management ("AUM") increased 84.4% to GBP37.2 billion (2020: GBP20.2 billion).
-- Record net inflows of GBP10.7 billion (2020: GBP3.5 billion)
-- Largest investment strategies have continued to outperform global and regional markets
-- By 31 October 2021, AUM had risen further to GBP38.9 billion
Financial highlights
-- Revenue increased 63.5% to GBP143.1 million (2020: GBP87.5 million)
-- Adjusted operating profit grew by 139.5% to GBP55.8 million (2020: GBP23.3 million)
-- Profit before tax grew by 173.7% to GBP45.7 million (2020: GBP16.7 million)
-- Adjusted operating margin grew to 39.0% (2020: 26.6%)
-- Shareholders' equity increased 54.5% to GBP110.5 million (2020: GBP71.5 million)
-- Adjusted diluted earnings per share grew to 33.9 pence (2020: 14.5 pence)
-- Proposed final dividend of 17.0 pence per share bringing
total for the year of 20.6 pence per share (2020: 8.6 pence) up
139.5%
-- Cash reserves increased 87.4% to GBP70.1 million (2020: GBP37.4 million)
Sally Bridgeland, Chair, commented:
"Against any measure this has been an excellent year for the
Company, and I have been inspired by the team's ongoing dedication
and delivery to our clients. We have expanded to ensure that we
have the necessary resources to match ever-increasing client
demand. By the end of the Period the team had grown by 24%, with
hires across the investment management, client services and
corporate services teams. We are also delighted with the progress
of the integration of our New Hampshire-based business, which has
helped further establish Impax in the strategically-important North
American market."
Ian Simm, Chief Executive, added:
"Impax has enjoyed a year of exceptional growth. During the 12
months ending 30 September 2021, the Company's assets under
management increased by 84% which included a record GBP10.7 billion
of net new inflows, up from GBP3.5 billion last year. This helped
drive an increase in revenue to GBP143.1 million, up 64%. Overall,
we performed very well against all key indicators of financial
performance and our largest investment strategies maintained their
record of outperformance versus global equity indices.
"Impax has a deeply held investment philosophy focused on the
opportunities arising from the transition to a more sustainable
economy. During the Period, this authentic and differentiated
approach helped the Company to attract significant new mandates
with asset owners and expand relationships with intermediaries and
distribution partners globally.
"Impax continues to be well positioned to benefit from many
regulatory, policy, market, and investor tailwinds. We believe that
the focus on climate change at COP26 and the post-pandemic fiscal
boost will help catalyse further investment in companies
benefitting from the transition to a more sustainable economy."
Enquiries:
Impax Asset Management Group plc
Ian Simm, Chief Executive
Paul French, Director of Communications +44 (0)20 3912 3000
p.french@impaxam.com +44 (0)20 3912 3032
Montfort Communications
Gay Collins
Louis Supple +44 (0)77 9862 6282
impax@montfort.london +44 (0)77 3943 0102
Peel Hunt LLP, Nominated Adviser
and Joint Broker
Rishi Shah +44 (0)20 7418 8900
Berenberg , Joint Broker
Alex Reynolds +44 (0)20 3207 7800
LEI number: 213800AJDNW4S2B7E680
Chair's Introduction
The publication of this report marks a year since I succeeded
Keith Falconer as Chair of the Board. Having served on the Board
since 2015, I am honoured to have taken up the role at such an
exciting point in Impax's history. I relish the opportunity to
build on the legacy that Keith forged with Ian, the management team
and the Directors, and would like to thank them all for their
continuing support over the last year.
I would also like to acknowledge the dedication of my Impax
colleagues. While we have benefitted from unprecedented growth in
2021, working mostly virtually has meant that we have had few
opportunities to celebrate this success in person. I have been
inspired by the team's ongoing dedication and delivery to our
clients; this is a tribute to Ian and the management team for their
leadership and the strong culture that they have built
together.
Against any measure, this has been an excellent year for the
Company. Assets under discretionary and advisory management ("AUM")
grew by 84.4%, revenues by 63.5% and the majority of our investment
strategies maintained their record of outperformance against global
equity indices. We have expanded our team to ensure that we have
the necessary resources to match increasing client demand. By the
end of the Period the team had grown by 24%, with hires across the
investment management, client services and corporate services
teams. During the Period we also completed the acquisition of our
New Hampshire-based business, acquiring the remaining 16.7% of the
business held by management. We are delighted with the progress of
the integration of the business, which has helped further establish
Impax in the strategically-important North American market.
Impax's mission is to invest in the transition to a more
sustainable economy; this informs how we create value for all our
stakeholders and how we think about risk.
At a time when all businesses are assessing their response to
climate change, our own approach draws on Impax's long heritage in
backing the companies at the forefront of sustainable development.
This encompasses our investment specialism; our policy and advocacy
activity; and how we manage our own business operations. We are
committed to reducing our operational emissions across Scope 1, 2
and 3, and will measure and report our results in this area in line
with established practices. We have included additional reporting
in this year's Strategic Report and will publish more detail in
this area using the Taskforce for Climate-related Financial
Disclosures ("TCFD") framework, in our 2022 Annual Report. Our
approach is coordinated by the Environment Committee, for which
Vince O'Brien acts as Sponsor on behalf of the Board.
As a Board we believe that diversity and inclusion is vital to
performance of the business and a critical governance topic for a
fast-growing firm where we are making new appointments at all
levels and face new risks. I have a personal commitment to this
topic, reflecting my own career experiences and my still rare
position as a woman chairing an asset management company. Lindsey
Brace Martinez acts as the Board Sponsor of our focus on equality,
diversity & inclusion ("ED&I") and attends the meetings of
the staff ED&I Group.
The Company has made some important progress in formalising its
ED&I strategy this year. This has included a stated aim that by
December 2025 our overall gender mix should be 48-52% women and
that the representation of women and racial or ethnic minorities in
key roles should be meaningfully ahead of the industry average. We
believe that this focus will also reduce the senior management
gender pay gap.
Following the retirement of Keith Falconer, we were pleased to
welcome Simon O'Regan as a Director in December 2020. Simon is a
highly knowledgeable investment industry Non-Executive Director and
business leader, with a background as a CEO of the US business of
the investment consultancy firm, Mercer. He adds considerable
international expertise to the existing mix of skills and
experience on the Board across relevant sectors and markets.
Sally Bridgeland
1 December 2021
CHIEF EXECUTIVE'S REPORT
BUSINESS UPDATE
Impax has enjoyed a year of exceptional growth. During the 12
months ending 30 September 2021 (the "Period"), the Company's
assets under discretionary and advisory management ("AUM")
increased by 84.4% to reach GBP37.2 billion, which included a
record GBP10.7 billion of net new inflows.
We performed very well against all key indicators of financial
performance and in particular our largest investment strategies
maintained their record of outperformance versus global equity
indices.
By 31 October 2021, our AUM had risen further to GBP38.9
billion.
Impax has a deeply held investment philosophy focused on the
opportunities arising from the transition to a more sustainable
economy. During the Period, this authentic and differentiated
approach helped the Company to attract significant new mandates
with asset owners and expand our relationships with intermediaries
and distribution partners globally.
SUPPORTIVE EXTERNAL ENVIRONMENT
Two events in early November 2020 helped to frame the Period,
during which global equity markets posted strong returns.
The emergence of COVID-19 vaccines led to earnings upgrades, as
businesses glimpsed a potential exit from months of protracted
lockdowns. While rising rates of the Delta variant meant localised
restrictions remained in place, economic data was largely positive.
Meanwhile, efforts to "build back better" out of the crisis helped
to attract capital towards markets that offer inherent resilience
to environmental and social problems.
The victory of Joe Biden in the US presidential elections in
November 2020 immediately brought fresh impetus globally towards
tackling climate change. His announcement that the US would be
brought back into the Paris climate agreement helped to accelerate
a succession of "net-zero" commitments by corporates and
policymakers in anticipation of the COP26 climate summit in
Glasgow, which concluded last month.
While there were disappointments in the final text, the
emergence at Glasgow of coalitions of key actors around single
issues like coal power, deforestation and methane emissions was a
standout success, with business and finance driving ambitious
commitments alongside governments. The transition to a net-zero
economy catalysed by COP26 should create considerable opportunities
for investors. Although there will clearly be rapid market growth
in renewable power generation and energy efficiency, we also expect
to back innovative companies in less visible sectors, for example
new materials and agriculture.
INVESTMENT PERFORMANCE
Overall, our range of strategies, managed by our investment
teams in the UK, US and Hong Kong, performed well over the Period.
Longer term, eight out of the largest ten strategies, accounting
for a combined 91% of AUM, have outperformed their benchmarks over
three years. Of the eight that have five-year track records, seven
have outperformed their benchmarks 1 .
Five of our six thematic, Environmental Markets strategies
outperformed their benchmark index over the Period, with the
Specialists strategy delivering a gross total return of 40.5% in
comparison to 22.2% from MSCI ACWI 2 . The overall outperformance
was notwithstanding the headwind from the broad rotation into value
stocks, to which these strategies have limited exposure.
Our Sustainability Lens products also performed well. Four of
the five strategies outperformed their benchmarks over the Period,
with the Global Opportunities strategy delivering a gross total
return of 24.9% 3 .
We continue to focus on managing our capacity and have
significant headroom within our existing strategies.
Private Markets
Our team investing in markets linked to renewable power
generation made good progress with our third fund, Impax New Energy
Investors III ("NEF III"), committing capital in Spain, Italy,
Poland and the UK, as well as making two successful exits. In
October 2021 the team held the first close of Impax New Energy
Investors IV ("NEF IV"), with EUR238 million committed.
CLIENT SERVICE AND BUSINESS DEVELOPMENT
Asset growth was well diversified across our direct sales and
distribution partner channels, reflecting increased client demand
across Europe, Asia-Pacific, and North America.
Inflows over the Period were directed particularly into our
Global Opportunities and Leaders strategies (30.1% and 29.2% of net
inflows respectively) with strong investor interest in our Climate
and Asian Environmental strategies (10.0% and 8.7% of net inflows
respectively).
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 new segregated accounts based on the same
strategy.
Our FTSE 250 listed Environmental Markets investment trust
continued to attract considerable inflows and, at the Period end,
had approximately GBP1.4 billion in total net assets.
Our Ireland-domiciled UCITS funds enjoyed significant growth
over the Period, with aggregate AUM reaching GBP2.1 billion, up
from GBP806 million. Net inflows from European clients helped push
the AUM of the Global Opportunities fund in this range past GBP500
million for the first time.
We also continued to build our Dublin-based team, which is now
established post-Brexit as an important strategic centre for the
Company to access EU markets.
In October 2020, we developed further our relationship with BNP
Paribas Asset Management ("BNPP AM") by signing a new distribution
agreement on 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. Since the new
agreement was signed we have won additional mandates and received
significant flows into the BNPP AM funds that we sub-advise,
including via global financial institutions.
In Japan, we worked with BNPP AM to secure the mandate for a
significant new fund launch by Nomura. This feeds into an existing
fund of the Leaders strategy.
In April we signed a new distribution agreement with Fidante
Partners Limited as our exclusive distribution partner in Australia
and New Zealand, markets that show strong potential. We also won
two significant Australian superannuation funds mandates, including
a segregated account using our Climate strategy. In the run-up to
COP26 we have received strong investor interest globally in this
strategy, which focuses on investing in companies providing
solutions to the challenges linked to climate change.
In the US, we secured several new mandates, including with
Jordan Park for the High Yield strategy, and saw notable flows into
the Leaders strategy, particularly via intermediaries, including JP
Morgan.
August 2021 marked 50 years since the launch of the Pax
Sustainable Allocation Fund, the first public mutual fund in the US
to use social and environmental criteria. And it was a significant
year for the Pax World Funds as a whole. By the end of the Period,
their aggregate AUM reached GBP6.1 billion, up from GBP4.1
billion.
In Canada, we secured a sub-advisory mandate for FÉRIQUE Fund
Management, gained investments from two foundations for our Global
Opportunities strategy, and launched new mandates through our
distribution partners.
In January 2021, we completed the integration of our New
Hampshire-based team, who joined us in 2018 following the
acquisition of Pax World Management LLC.
Combining the two businesses has already underpinned significant
growth for the Group, and we enjoyed continued momentum throughout
the Period, taking our North American AUM to GBP9.4 billion.
AUM movement Listed equities Fixed Private Total firm
12 months to 30 September income markets
2021
GBPm GBPm GBPm GBPm
---------------------------- -------------------------- -------- --------- -----------
Total AUM at 30 September
2020 18,865 947 371 20,183
Net flows 10,387 322 (34) 10,676
Market movement, FX and
performance 6,385 (12) (20) 6,353
---------------------------- -------------------------- -------- --------- -----------
Total AUM at 30 September
2021 35,636 1,257 318 37,211
BEYOND FINANCIAL RETURNS
Beyond delivering superior, risk-adjusted investment returns, we
focus on four broader areas. First, our corporate engagement and
stewardship activity aims to enhance our understanding of
investment risk. In 2020 we took part in over 230 engagements. We
were proud to be a successful applicant to be a signatory to the UK
Stewardship Code in 2021.
Second, we disclose through our annual impact report the
quantified environmental benefits linked to our clients'
investments in our portfolio companies. This year we have evolved
our reporting to include additional carbon emissions and water
data.
Third, we strive to influence policy outcomes that support
solutions to environmental and social challenges. We focused on
three areas during the Period: financing the transition to net-zero
emissions; greening the financial system, with a particular focus
on biodiversity; and human capital, including the response to
COVID-19. Through our policy and advocacy activities we collaborate
closely with a broad network, including the scientific community,
industry bodies, and not-for-profit organisations.
Finally, we publish thought leadership that provides value-added
insights to our clients and partners. This has included a series of
articles in the run-up to COP26, and, together with Swedish pension
fund, AP7, producing a report on how to measure water impact
effectively.
DEVELOPING OUR TALENT
We grew our headcount by 24% over the Period. 56% of those new
hires were women. Given this significant growth, we are acutely
aware of the need to nurture the collegial culture that has driven
our success over the last two decades.
Our People strategy seeks to future-proof our business with more
resilient HR systems, whilst offering a stimulating, collaborative,
and supportive workplace for our colleagues.
This year we launched a "behavioural competency" framework,
which sets out the standards we expect from colleagues on a
day-to-day basis. This has been woven into recruitment,
development, promotion, and rewards, to help reinforce our culture,
support our core values, and foster accountability.
As we began to emerge from lockdowns, we consulted with our
colleagues before updating our HR policies. Following that
consultation, we have decided to remain an office-based business,
but are committed to providing extra flexibility, for example for
those employees that wish to work from home more regularly.
We were pleased with the results of our employee engagement
survey, which revealed an 88% engagement score, notwithstanding the
challenges of working away from the office; this is 14 percentage
points ahead of the industry benchmark.
We continue to find that our clear mission as a specialist
focused on investing in the transition to a more sustainable
economy is a clear differentiator as we seek to hire, and then
retain, the very best talent in an increasingly competitive
market.
SYSTEMS AND INFRASTRUCTURE
As we grow, we are also investing in our corporate services
functions, including risk, compliance and IT. We are focusing in
particular on improving our data capabilities, managing cyber and
climate risk, and increasing our operational resilience.
Following the completion of the integration of our New
Hampshire-based team, we have sought to build global teams and
functions. This has included launching a single trading desk, which
serves our investment team across the US, the UK and Hong Kong.
AWARDS AND INDUSTRY RECOGNITION
The Company's expertise and success has been acknowledged
through numerous prestigious industry awards. After the Period end
this included: "AIM Company of the Year" (Shares); "AIM Growth
Business of the Year" (AIM Awards 2021), and Finncap's "Best
Performer, Financials" award. Highlights during the Period
included: Pensions Expert's "Active Equity Manager of the Year";
"Best Sustainability Reporting (large asset manager)" in
Environmental Finance's Sustainable Investment Awards; and both the
"Sustainable Reporting" and "Green Finance" categories at the
Better Society Awards.
OUTLOOK
We believe that the focus on climate change at COP26 and the
post-pandemic fiscal boost will help catalyse further investment in
companies benefitting from the transition to a more sustainable
economy.
In particular, we believe that infrastructure investment is set
to accelerate. Rapid expansion in decentralised renewable power
generation, zero-emissions transportation, resilient water supply
and climate resilience are positioned to provide significant
investment opportunities.
We also anticipate a number of supportive regulatory drivers.
The EU's wide-ranging Sustainable Finance Disclosure Regulation
("SFDR"), which attempts to counter "greenwashing", imposes
mandatory ESG disclosure obligations for asset managers and has
contributed to a marked increase in investment towards more
sustainable companies and issuers. This, together with the
equivalent UK green taxonomy, will contribute to a further shift in
capital flows across Europe throughout the current decade.
In the US, the Department of Labor announced in October 2021
that it was proposing to reverse the Trump Administration's ban on
considering ESG factors in retirement plans. This is also likely to
be positive for the markets in which Impax invests.
Our investment teams continue to manage a broad array of risks.
2021 laid bare the vulnerability of global supply chains and has
contributed to concerns about a potential looming energy crisis in
Europe and Asia. Meanwhile, high valuations in some areas and the
threat of persistent inflation continue to inform our portfolio
construction and trading decisions.
We believe that Impax continues to be well positioned to benefit
from the many regulatory, policy, market, and investor tailwinds.
There is growing evidence that asset owners are increasingly
attracted to our global reach, our authenticity, and our investment
philosophy focused on the transition to a more sustainable economy.
Against this backdrop, we are confident that Impax can continue to
deliver excellent value for all of our stakeholders.
Ian Simm
1 December 2021
1 Gross of fees.
2 GBP, gross of fees.
3 GBP, gross of fees. Benchmark: MSCI ACWI returned 22.2%.
FINANCIAL REVIEW
I am delighted to report another year of strong financial
results including more than doubling our adjusted operating profit
and profit before tax.
As in previous periods, in order to facilitate comparison of
performance with previous time periods and to provide an
appropriate comparison with our peers, the Board encourages
shareholders to focus on financial measures after adjustment for
accounting charges or credits arising from the acquisition
accounting from Impax NH, adjustments arising from the accounting
treatment of National Insurance costs on share-based payment awards
and significant tax credits related to prior periods.
Financial highlights for financial year 2021 versus financial
year 2020
2021 2020
GBP000 GBP000
------------------------------------ -------------- --------------
AUM GBP37.2bn GBP20.2bn
Revenue GBP143.1m GBP87.5m
Adjusted operating profit GBP55.8m GBP23.3m
Adjusted profit before tax GBP54.0m GBP22.2m
Adjusted diluted earnings per share 33.9p 14.5p
Cash reserves GBP70.1m GBP37.4m
Seed investments GBP7.5m GBP4.3m
3.6p interim + 1.8p interim +
Dividend per share 17.0p final 6.8p final
------------------------------------ -------------- --------------
2021 2020
------------------------------------ -------------- --------------
IFRS operating profit GBP47.4m GBP17.6m
IFRS profit before tax GBP45.7m GBP16.7m
IFRS diluted earnings per share 30.3p 10.5p
------------------------------------ -------------- --------------
Revenue
Revenue for the Period grew by GBP55.6 million to GBP143.1
million (2020: GBP87.5 million). Growth was driven by the
exceptionally strong net inflows across the business and very
positive fund performance.
Our run-rate revenue at the end of the Period was GBP173.8
million (2020: GBP96.5 million), giving a weighted average run rate
revenue margin1 of 47 basis points (2020: 48 basis points) on the
GBP37.2 billion of AUM.
Operating costs
Adjusted operating costs increased to GBP87.3 million (2020:
GBP64.3 million), mainly reflecting increases in headcount required
to service our significantly increased client base and higher
profit-related pay due to rising profitability. We expect higher
costs in the next financial year to reflect a full year of costs
from hires made in 2021, further hires in 2022 to support continued
growth opportunities and increased marketing and other costs as we
return to travelling.
IFRS operating costs include additional charges and credits,
principally the amortisation of intangible assets arising from the
Impax NH acquisition, National Insurance charges on share options
and restricted shares. Employer's National Insurance is payable
based on the share price when an option is exercised or restricted
shares vest, and accordingly the charge has increased significantly
as our share price has risen over the year. This charge is offset
by a tax credit which is recorded in equity.
Profits
Adjusted operating profit increased to GBP55.8 million (2020:
GBP23.3 million), driven by the revenue growth described above.
Run-rate adjusted operating profits at the end of the Period grew
further to GBP67.5 million (2020: GBP28.3 million), in line with
business expansion. IFRS operating profit in 2021 increased to
GBP47.4 million (2020: GBP17.6 million). Fair value gains and other
non-operating income offset interest expense and non-operating
costs to give adjusted profit before tax of GBP54.0 million (2020:
GBP22.2 million).
Tax
Tax rates were lower than the prior period as we benefited from
a GBP2.8 million credit in relation to taxation of prior year
private equity income (2020: GBP1.0 million).
Earnings per Share
Adjusted earnings per share grew to 33.9 pence (2020: 14.5
pence) as a result of the growth in profits, offset to a small
extent by increases in shares in issue as a result of restricted
share awards and option exercises. IFRS earnings per share
increased to 30.3 pence (2020: 10.5 pence).
Financial management
At the Period end the Company held GBP70.1 million of cash
resources, an increase of GBP32.8 million on 2020. The Company had
no debt (2020: no debt) but retains access to a US$13 million
revolving facility (the "RCF") (LIBOR plus 3.3%) which was put in
place at the time of the Impax NH acquisition.
In January 2021 we completed the integration of our New
Hampshire-based team ("Impax NH"), 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 for a total
consideration, net of loans, of US$3.0 million, paid in cash and
shares. 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.
The Company continues to make seed investments and to invest in
our private equity funds. These investments were valued at GBP7.5
million at the Period end. During the Period we invested into a
segregated account investing in our new Asian Opportunities
strategy and made further investments into our private equity
funds.
Share management
During the Period the Company issued 2.0 million new ordinary
shares to the Company's Employee Benefit Trust (the "EBT"). The EBT
holds shares for Restricted Share awards until they vest or to
satisfy share option exercises. The Company also issued a further
181,467 shares to part fund the acquisition of the remaining
interest in Impax NH.
Going forward, the Board intends that the Company will satisfy
obligations linked to share incentive awards for employees either
through purchase of its own shares or if there are attractive
alternatives for the use of the Company's cash resources, via
issuance of new shares. Share purchases are usually made by funding
the EBT which will then settle option exercises or hold shares for
Restricted Share awards until they vest. No share purchases were
made during the year.
Dividends
The Company paid an interim dividend of 3.6 pence per share in
July 2021. Our dividend policy is to pay, in normal circumstances,
an annual dividend within a range of 55% and 80% of adjusted profit
after tax. Impax has reported exceptionally strong growth in
revenue and profits and is in good financial health. The Board has
therefore decided to recommend a final dividend of 17.0 pence. This
would be an increase in the total dividend for the year of 12.0
pence or 140%. The annual dividend for the year represents 60% of
adjusted operating profit after tax which is still at the lower end
of our stated range.
This dividend proposal will be submitted for formal approval by
shareholders at the Annual General Meeting on 29 March 2022. If
approved, the dividend will be paid on or around 31 March 2022. The
record date for the payment of the proposed dividend will be 11
February 2022 and the ex-dividend date will be 10 February
2022.
The Company operates a dividend reinvestment plan ("DRIP"). The
final date for receipt of elections under the DRIP will be 28
February 2022. For further information and to register and elect
for this facility, please visit www.signalshares.com and search for
information related to the Company.
Going concern
The Financial Reporting Council requires all companies to
perform a rigorous assessment of all the factors affecting the
business when deciding to adopt a "going concern" basis for the
preparation of the accounts.
The Board has made an assessment covering a period of at least
12 months from the date of approval of this report which indicates
that, taking account of a reasonably possible downside in relation
to asset inflows, market performance and costs, 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
potential evolving impacts of COVID-19.The Group has high cash
balances and no debt and, at the Period end market levels, is
profitable. A significant part of the Group's cost basis is
variable as bonuses are linked to profitability. The Group can also
preserve cash through dividend reduction and through issuance of
shares to cover share option exercises/restricted share awards
(rather than purchasing shares). 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 the
financial statements.
Charles Ridge
1 December 2021
Consolidated Income Statement
For the year ended 30 September 2021
2021 2020
Note GBP000 GBP000
-------------------------------------------------- ---- -------- --------
Revenue 143,056 87,511
Operating costs 6 (95,622) (69,928)
Finance income 9 286 1,020
Finance expense 10 (1,971) (1,921)
Profit before taxation 45,749 16,682
Taxation 11 (5,504) (2,944)
-------------------------------------------------- ---- -------- --------
Profit after taxation 40,245 13,738
-------------------------------------------------- ---- -------- --------
Earnings per share
Basic 12 31.5p 10.6p
Diluted 12 30.3p 10.5p
-------------------------------------------------- ---- -------- --------
Dividends per share
-------------------------------------------------- ---- -------- --------
Interim dividend paid and final dividend declared
for the year 13 20.6p 8.6p
-------------------------------------------------- ---- -------- --------
Adjusted results are provided in note 4.
Consolidated Statement Of Comprehensive Income
For the year ended 30 September 2021
2021 2020
Note GBP000 GBP000
---------------------------------------------------- ----- ------- -------
Profit for the year 40,245 13,738
Change in value of cash flow hedges 137 (70)
Tax on change in value of cash flow hedges (26) 13
Exchange differences on translation of foreign
operations (1,075) (487)
----------------------------------------------------------- ------- -------
Total other comprehensive income (964) (544)
----------------------------------------------------------- ------- -------
Total comprehensive income for the year attributable to
equity holders of the Parent 39,281 13,194
----------------------------------------------------------- ------- -------
All amounts in other comprehensive income may be reclassified to
income in the future.
The statement has been prepared on the basis that all operations
are continuing operations.
Consolidated Statement of Financial Position
2021 2020
------------------------------------ ----- --------------- ---------------
As at 30 September 2021 Notes GBP000 GBP000 GBP000 GBP000
------------------------------------ ----- ------ ------- ------ -------
Assets
Goodwill 14 11,816 12,306
Intangible assets 15 17,473 20,871
Property, plant and equipment 16 9,435 10,857
Deferred tax assets 11 11,895 5,492
------------------------------------ ----- ------ ------- ------ -------
Total non-current assets 50,619 49,526
Trade and other receivables 17 39,800 20,735
Investments 18 7,564 4,387
Current tax asset 134 224
Cash invested in money market funds
and long-term deposit accounts 19 38,066 18,516
Cash and cash equivalents 19 36,172 20,245
------------------------------------ ----- ------ ------- ------ -------
Total current assets 121,736 64,107
------------------------------------ ----- ------ ------- ------ -------
Total assets 172,355 113,633
------------------------------------ ----- ------ ------- ------ -------
Equity and liabilities
Ordinary shares 22 1,326 1,304
Share premium and merger reserve 10,824 9,291
Exchange translation reserve 374 1,449
Hedging reserve - (111)
Retained earnings 97,998 59,515
------------------------------------ ----- ------ ------- ------ -------
Total equity 110,522 71,448
Trade and other payables 20 50,107 27,984
Lease liabilities 16 1,330 1,410
Current tax liability 1,923 190
------------------------------------ ----- ------ ------- ------ -------
Total current liabilities 53,360 29,584
Lease liabilities 16 8,102 9,261
Deferred tax liability 371 3,340
------------------------------------ ----- ------ ------- ------ -------
Total non-current liabilities 8,473 12,601
Total equity and liabilities 172,355 113,633
------------------------------------ ----- ------ ------- ------ -------
Consolidated Statement of Changes In Equity
For the year ended 30 September 2021
Share
premium Exchange
Share and merger translation Hedging Retained Total
capital reserve* reserve reserve earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- ----------- ------------ -------- --------- --------
1 October 2019 1,304 9,291 1,936 (54) 50,504 62,981
Transactions with owners of
the Company:
Dividends paid - - - - (7,442) (7,442)
Acquisition of own shares - - - - (4,223) (4,223)
Cash received on option exercises - - - - 489 489
Tax credit on long-term incentive
schemes - - - - 4,636 4,636
Share based payment charges - - - - 1,813 1,813
------------------------------------- -------- ----------- ------------ -------- --------- --------
Total transactions with owners
of the Company - - - - (4,727) (4,727)
Profit for the year - - - - 13,738 13,738
Other comprehensive income:
Change in value of cashflow
hedge - - - (70) - (70)
Tax on change in value of cashflow
hedges - - - 13 - 13
Exchange differences on translation
of foreign operations - - (487) - - (487)
------------------------------------- -------- ----------- ------------ -------- --------- --------
Total other comprehensive Income - - (487) (57) - (544)
------------------------------------- -------- ----------- ------------ -------- --------- --------
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 - - - - (13,616) (13,616)
Cash received on option exercises - - - - 597 597
Purchase of Impax NH shares - - - - (2,239) (2,239)
Tax credit on long-term incentive
schemes - - - - 8,634 8,634
Share based payment charges - - - - 4,882 4,882
------------------------------------- -------- ----------- ------------ -------- --------- --------
Total transactions with owners
of the Company 22 1,533 - - (1,762) (207)
Profit for the year - - - - 40,245 40,245
Other comprehensive income:
Change in value of cash flow
hedge - - - 137 - 137
Tax on change in value of cashflow
hedges - - - (26) - (26)
Exchange differences on translation
of foreign operations - - (1,075) - - (1,075)
------------------------------------- -------- ----------- ------------ -------- --------- --------
Total other comprehensive Income - - (1,075) 111 - (964)
------------------------------------- -------- ----------- ------------ -------- --------- --------
30 September 2021 1,326 10,824 374 - 97,998 110,522
------------------------------------- -------- ----------- ------------ -------- --------- --------
* Includes merger reserve of GBP1,533,000.
Consolidated Cash Flow Statement
For the year ended 30 September 2021
2021 2020
Notes GBP000 GBP000
------------------------------------------------------- ----- -------- --------
Operating activities
Cash generated from operations 25 59,812 24,382
Corporation tax paid (4,445) (607)
------------------------------------------------------- ----- -------- --------
Net cash generated from operating activities 55,367 23,775
------------------------------------------------------- ----- -------- --------
Investing activities
Net acquisition of property plant & equipment and
intangible assets (257) (182)
Net (investments into)/redemptions from unconsolidated
Impax funds (2,529) 1,191
Settlement of investment related hedges (455) (156)
Purchase of Impax NH shares (704) -
Investment income received 93 222
Increase in cash held in money market funds and
long-term deposit accounts (19,550) (3,281)
------------------------------------------------------- ----- -------- --------
Net cash used by investing activities (23,402) (2,206)
------------------------------------------------------- ----- -------- --------
Financing activities
Acquisition of non-controlling interest (191) (201)
Interest paid on bank borrowings (129) (136)
Payment of lease liabilities (1,691) (1,699)
Acquisition of own shares - (4,223)
Cash received on exercise of Impax staff share
options 597 489
Dividends paid 13 (13,616) (7,442)
------------------------------------------------------- ----- -------- --------
Net cash used by financing activities (15,030) (13,212)
------------------------------------------------------- ----- -------- --------
Net increase in cash and cash equivalents 16,935 8,357
Cash and cash equivalents at beginning of year 20,245 11,939
Effect of foreign exchange rate changes (1,008) (51)
------------------------------------------------------- ----- -------- --------
Cash and cash equivalents at end of year 19 36,172 20,245
------------------------------------------------------- ----- -------- --------
Cash and cash equivalents under IFRS does not include deposits
in money market funds and cash held in deposits with more than an
original maturity of three months. The Group however considers its
total cash reserves to include these amounts. Cash held in RPA
accounts are not included in cash reserves.
Movements on cash reserves are shown in the table below:
At the
beginning At the
of the Foreign end of
year Cashflow exchange the year
GBP000 GBP000 GBP000 GBP000
---------------------------------------- ---------- -------- --------- ---------
Cash and cash equivalents 20,245 16,935 (1,008) 36,172
Cash invested in money market funds and
long-term deposit accounts 18,516 19,550 - 38,066
Cash in RPAs (1,363) (2,726) - (4,089)
---------------------------------------- ---------- -------- --------- ---------
Total Group cash reserves 37,398 33,759 (1,008) 70,149
---------------------------------------- ---------- -------- --------- ---------
1 REPORTING ENTITY
Impax Asset Management Group plc (the "Company") is incorporated
and domiciled in the UK and is listed on the Alternative Investment
Market ("AIM"). These consolidated financial statements comprise
the Company and its subsidiaries (together referred to as the
"Group").
2 BASIS OF PREPARATION
These financial statements have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 ("Adopted IFRS") and
applicable law.
The financial statements have been prepared under the historical
cost convention, with the exception of the revaluation of certain
investments and derivatives being measured at fair value.
The financial statements are presented in Sterling. All amounts
have been rounded to the nearest thousand unless otherwise
indicated.
Going concern
The Board has made an assessment covering a period of 12 months
from the date of approval of these financial statements which
indicates that, taking account of reasonably possible downside
assumptions in relation to asset inflows, market performance and
costs, the Group will have sufficient funds to meet its liabilities
as they fall due and regulatory capital requirements for that
period. In making this assessment the Board has considered the
potential ongoing impact of COVID-19. The Group has sufficient cash
balances and no debt and, at the year-end market levels, is
profitable. A significant part of the Group's cost basis is
variable as bonuses are linked to profitability. The Group can also
preserve cash through dividend reduction and through issuance of
shares to cover share option exercises/restricted share awards
(rather than purchasing shares). The Group has operated 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 as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
3 USE OF JUDGEMENTS AND ESTIMATES
In preparing these financial statements management has made
estimates that affect the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from estimates.
Revisions to estimates are recognised prospectively.
The Group has not identified any significant judgements and
estimates at the end of the reporting period.
4 ADJUSTED PROFITS AND EARNINGS
The reported operating earnings, profit before tax and earnings
per share are substantially affected by business combination
effects and other items. The Directors have therefore decided to
report an adjusted operating profit, adjusted profit before tax and
adjusted earnings per share which exclude these items in order to
enable comparison with peers and provide consistent measures of
performance over time. A reconciliation of the adjusted amounts to
the IFRS reported amounts is shown below.
Year ended 30 September 2021
-------------------------------------------- -----------------------------------------
Adjustments
-------- --------------------- --------
Business
Reported combination
- IFRS effects Other Adjusted
GBP000 GBP000 GBP000 GBP000
-------------------------------------------- -------- ------------ ------- --------
Revenue 143,056 143,056
Operating costs (95,622) (87,272)
Amortisation of intangibles arising on
acquisition 2,358
Credit from contingent consideration
adjustment 1,649
Acquisition equity incentive scheme charges 167
Mark to market charge on equity awards 4,176
-------------------------------------------- -------- ------------ ------- --------
Operating profit 47,434 4,174 4,176 55,784
Finance income 286 (89) 197
Finance costs (1,971) (1,971)
Profit before taxation 45,749 4,174 4,087 54,010
Taxation (5,504) (9,084)
Adjustment re historical tax charges (2,803)
Tax credit on adjustments (777)
-------------------------------------------- -------- ------------ ------- --------
Profit after taxation 40,245 4,174 507 44,926
-------------------------------------------- -------- ------------ ------- --------
Diluted earnings per share 30.3p 3.2p 0.4p 33.9p
-------------------------------------------- -------- ------------ ------- --------
* The charge is offset by GBP8,634,000 of tax credits shown in
the statement of changes in equity.
Year ended 30 September 2020
-------------------------------------------- -----------------------------------------
Adjustments
-------- --------------------- --------
Business
Reported combination
- IFRS effects Other Adjusted
GBP000 GBP000 GBP000 GBP000
-------------------------------------------- -------- ------------ ------- --------
Revenue 87,511 87,511
Operating costs (69,928) (64,261)
Amortisation of intangibles arising on
acquisition 2,535
Acquisition equity incentive scheme charges 135
Mark to market charge on equity awards* 2,997
-------------------------------------------- -------- ------------ ------- --------
Operating profit 17,583 2,670 2,997 23,250
Finance income 1,020 (124) 896
Finance costs (1,921) (1,921)
-------------------------------------------- -------- ------------ ------- --------
Profit before taxation 16,682 2,670 2,873 22,225
Taxation (2,944) (3,490)
Tax credit on adjustments (546)
-------------------------------------------- -------- ------------ ------- --------
Profit after taxation 13,738 2,670 2,327 18,735
-------------------------------------------- -------- ------------ ------- --------
Diluted earnings per share 10.5p 2.1p 1.8p 14.5p
-------------------------------------------- -------- ------------ ------- --------
* The charge is offset by GBP4,636,000 of tax credits shown in
the statement of changes in equity.
The diluted number of shares is the same as used for the IFRS
calculation of earnings per share.
Amortisation of intangibles
Management contracts, which are classified as intangible assets,
were acquired as part of the acquisition of Impax NH, the New
Hampshire based company acquired in January 2018, and are amortised
over their 11 year life. This charge is not linked to the operating
performance of the Impax NH business so is excluded from adjusted
profit.
Acquisition equity incentive scheme charges
Impax NH staff have been awarded share-based payments in respect
of the acquisition of Impax NH. Charges in respect of these relate
to the acquisition rather than the operating performance of the
Group and are therefore excluded from adjusted profit.
Contingent consideration adjustment
Until the time it was settled, the Group was required to review
and adjust our estimate of the contingent consideration payable in
respect of the Impax NH acquisition. Adjustments were recorded
through income but excluded from adjusted profit. These adjustments
are not linked to the operating performance of the Impax NH
business and are therefore eliminated from operating costs.
Mark to market charge on equity incentive awards
The Group has in prior years and the current period awarded
employees options over the Group's shares, some of which are either
unvested or unexercised at the balance sheet date. The Group has
also made awards of restricted shares ("RSS awards") some of which
have not vested at the balance sheet date. Employers National
Insurance Contributions ("NIC") are payable on the option awards
when they are exercised and on the RSS awards when they vest, based
on the valuation of the underlying shares at that point. The Group
does however receive a corporation tax credit equal to the value of
the awards at the date they are exercised (options) or vest (RSS
awards). A charge is accrued for the NIC within IFRS operating
profit based on the share price at the balance sheet date.
Similarly a credit for the corporation tax is accrued within
equity.
These charges vary based on the Group's share price (together
referred to as "mark to market charge on equity incentive schemes")
and are not linked to the operating performance of the Group. They
are therefore eliminated when reporting adjusted profit.
Taxation
The IFRS tax charge for 2021 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.
5 SEGMENTAL REPORTING
(a) Operating segments
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. 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 only in the following table.
The segment information presented is on the same basis as that
provided for internal reporting purposes to the Group's chief
operating decision maker, the Chief Executive.
Year ended 30 September 2020
Impax LN Impax NH Adjustments Total
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
------------------------------------------- -------- -------- ----------- -------
(b) Geographical analysis
An analysis of revenue by the location of client is presented
below:
Revenue
----------------
2021 2020
GBP000 GBP000
-------------- ------- -------
UK 26,733 15,104
North America 50,608 34,705
France 12,680 9,478
Luxembourg 35,448 19,066
Netherlands 3,359 2,912
Ireland 9,412 3,553
Other 4,816 2,693
-------------- ------- -------
143,056 87,511
-------------- ------- -------
The following non-current assets: property plant and equipment,
goodwill and intangible assets, are located in the countries listed
below:
Non-current assets
--------------------
2021 2020
GBP000 GBP000
-------------- --------- ---------
UK 6,952 7,882
United States 31,594 36,131
Hong Kong 7 21
Ireland 171 -
-------------- --------- ---------
38,724 44,034
-------------- --------- ---------
(c) Non-cash items
Operating expenses include the following non-cash items:
Year ended 30 September 2020
Impax LN Impax NH Total
GBP000 GBP000 GBP000
------------------------------ -------- -------- -------
Share based payments 1,678 135 1,813
Depreciation and amortisation 1,221 3,039 4,260
------------------------------ -------- -------- -------
2,899 3,174 6,073
------------------------------ -------- -------- -------
6 OPERATING COSTS
The Group's largest operating cost is staff costs. Other
significant costs include direct fund costs, premises costs
(depreciation on office building leases, rates and service charge),
amortisation of intangible assets, mark to market charges on share
awards and IT and communication costs.
2021 2020
GBP000 GBP000
--------------------------------------- ------- -------
Staff costs (note 7) 66,215 44,728
Direct fund expenses 5,542 5,570
Premises costs 1,015 1,062
Research costs 780 570
Professional fees 3,321 2,555
IT and communications 4,457 4,017
Depreciation and amortisation 4,057 4,260
Mark to market charges on share awards 4,176 3,243
Other costs 5,892 3,923
--------------------------------------- ------- -------
Sub-total 95,455 69,928
--------------------------------------- ------- -------
Contingent Consideration 167 -
--------------------------------------- ------- -------
Total 95,622 69,928
--------------------------------------- ------- -------
Operating costs include GBP898,000 (2020: GBP774,000) in respect
of placing agent fees paid to related parties.
7 STAFF COSTS AND EMPLOYEES
Staff costs include salaries, a variable bonus, social security
cost (principally UK Employers' National Insurance on salary, bonus
and share awards), the cost of contributions made to employees'
pension schemes and share-based payment charges. Further details of
the Group's remuneration policies are provided in the Remuneration
Committee Report. Share-based payment charges are offset against
the total cash bonus pool paid to employees. NIC charges on
share-based payments are accrued based on the share price at the
balance sheet date.
2021 2020
GBP000 GBP000
---------------------------------------- ------- -------
Salaries and variable bonuses 51,510 34,081
Social security costs 5,181 3,702
Pensions 1,069 948
Share-based payment charge (see note 8) 4,882 1,813
Other staff costs 3,573 4,184
---------------------------------------- ------- -------
66,215 44,728
---------------------------------------- ------- -------
Employees
The average number of persons (excluding Non-Executive Directors
and including temporary staff), employed during the year was 195
(2020: 171).
2021 2020
No. No.
---------------------------------------- ---- ----
Portfolio Management 69 57
Private Equity 12 12
Client Service and Business Development 63 53
Group 51 49
---------------------------------------- ---- ----
195 171
---------------------------------------- ---- ----
8 SHARE-BASED PAYMENT CHARGES
The total expense recognised for the year arising from
share-based payment transactions was GBP4,882,000 (2020:
GBP1,813,000). The charges arose in respect of the Group's
Restricted Share Scheme ("RSS") and the Group's Employee Share
Option Plan ("ESOP") which are described below. Share based payment
charges also arose in respect of the Put and Call arrangement made
with Impax NH management to acquire their shares in Impax NH.
Details of all outstanding options are provided at the end of this
note. The charges for each scheme are:
2021 2020
GBP000 GBP000
------------- ------- -------
RSS 3,636 1,253
ESOP 1,003 426
Put and Call 243 134
------------- ------- -------
4,882 1,813
------------- ------- -------
Restricted Share Scheme
Restricted shares have been granted to employees in prior years
which are not wholly vested.
During the Period 361,500 restricted shares were granted under
the 2020 plan and post year end the Board approved the grant of a
further 389,750 restricted shares under the 2021 plan. Following
grant, the shares are held by a nominee for employees - who are
then immediately entitled to receive dividends. After a period of
three years' continuous employment, the employees will receive
unfettered access to one third of the shares, after four years a
further third and after five years the final third. The employees
are not required to make any payment for the shares on grant or
when the restrictions lapse.
A further 912,084 restricted shares were also granted to
employees of Impax NH following the acquisition of the remaining
shares held by management in that business. These have the same
conditions as described above except that unfettered access is
gained to all of the shares after a period of 3 years.
Full details of the awards granted along with their valuation
and the inputs used in the valuation are described in the tables
below. The valuation was determined using the Black-Scholes-Merton
model with an adjustment to reflect that dividends are received
during the vesting period.
2015 RSS 2017 RSS 2018 RSS 2019 RSS 2020 RSS 2021 RSS
-------------------------- ----------- -------------- ---------- ---------- ---------- ------------
2,550,000/
3,140,000/ 500,000/ 912,084/
Awards originally granted 1,000,000 675,000 478,250 67,250 361,500 389,750
In respect of services 1 Oct 2014/ 14 Dec 2016/ 1 Oct 2017 1 Oct 2018 1 Oct 2019 28 Oct 2020/
provided 9 Feb 2016 11 May 2017/ 24 Nov
for period from 1 Oct 2016 2020/
1 Oct 2020
497.98p/
42.1p/ 52.2p/87.7p/ 564.51p/
Award value 41.5p 161.6p 201.3p 236.8p 506.2p 1,144.7p
Weighted average share
price on grant 41.4p 77.4p 202.8p 239.0p 510.0p 709.1p
Expected volatility 32%/31% 29%/29%/29% 30% 31% 32% 32%
Weighted average award 4.9yrs 4.3yrs 5.3yrs 5.3yrs 5.3yrs 3.4yrs
life on grant
Expected dividend rate 3% 4%/2%/2% 1% 2% 1% 1%
Risk free interest rate 1.2%/0.8% 0.6%/0.6%/0.7% 1.2% 0.3% 0.0% 0.35%/0.67%
-------------------------- ----------- -------------- ---------- ---------- ---------- ------------
The expected volatility was determined by reviewing the
historical volatility of the Company and that of comparator
companies. The expected dividend rate is determined using the
Company share price and most recent full year dividend to grant
date.
Restricted shares outstanding
--------------------------------- -----------
Outstanding at 1 October 2020 4,747,722
Granted during the year 1,273,584
Vested during the year (2,683,473)
Forfeited during the year (15,000)
--------------------------------- -----------
Outstanding at 30 September 2021 3,322,833
--------------------------------- -----------
Employee share option plan ("ESOP")
Options granted in 2017
The strike price of these options was set at a 10% premium to
the average market price of the Company's shares for the five
business days following the announcement of the results for the
preceding financial year, which was GBP1.80. The 2017 options did
not have performance conditions but did have a time vesting
condition such that they vested subject to continued employment on
31 December 2020. Once vested, the options have an exercise period
of three years.
The valuation was determined using the Black-Scholes-Merton
model.
Options granted in 2018 and 2020
The strike price of the 2018 and 2019 options was set at GBP1.
The strike price of the 2020 options was set at GBP3. These options
do not have performance conditions but do have a time vesting
condition such that the options vest subject to continued
employment for five years following grant. Vested shares are
restricted from being sold until after a further five year period
(other than to settle any resulting tax liability and the strike
price).
Post year end the Board approved the grant of 378,475 options
under the 2021 plan with a GBP9 strike price and with the other
conditions the same as the 2018, 2019 and 2020 plans.
The valuation was determined using the binomial model.
Share options are equity settled.
Options outstanding
An analysis of the outstanding options arising from the
Company's ESOP is provided below:
Weighted
average
exercise
price
Number Pence
----------------------------------------- --------- ---------
Options outstanding at 1 October 2020 2,450,000 140.7
Options granted 610,000 300.0
Options exercised (400,000) 148.6
----------------------------------------- --------- ---------
Options outstanding at 30 September 2021 2,660,000 176.0
Options exercisable at 30 September 2021 1,000,000 180.2
----------------------------------------- --------- ---------
The weighted average remaining contractual life of options
outstanding at the end of the period was 6.0 years.
9 FINANCE INCOME
2021 2020
GBP000 GBP000
------------------------ ------- -------
Fair value gains 161 798
Interest income 36 98
Other investment income 89 124
------------------------ ------- -------
286 1,020
------------------------ ------- -------
Fair value gains represent those arising on the revaluation of
investments held by the Group and any gains or losses arising on
related hedge instruments held by the Group.
The fair value gain comprises realised losses of GBP487,000 and
unrealised gains of GBP648,000 (2020: GBP53,000 of realised losses
and GBP851,000 of unrealised gains).
10 FINANCE EXPENSE
2021 2020
GBP000 GBP000
------------------------------ ------- -------
Interest on lease liabilities 468 514
Finance costs on bank loans 85 295
Foreign exchange losses 1,418 1,112
------------------------------ ------- -------
1,971 1,921
------------------------------ ------- -------
Commitment fees are payable on the revolving credit facility
which the Group retains. Foreign exchange losses mainly arise on
the retranslation of intercompany loans.
11 TAXATION
The Group is subject to taxation in the countries in which it
operates (the UK, the US, Hong Kong and Ireland) at the rates
applicable in those countries. The total tax charge includes taxes
payable for the reporting period (current tax) and also charges
relating to taxes that will be payable in future years due to
income or expenses being recognised in different periods for tax
and accounting periods (deferred tax).
(a) Analysis of charge for the year
2021 2020
GBP000 GBP000
------------------------------------- ------- -------
Current tax expense:
UK corporation tax 5,960 124
Foreign taxes 235 219
Adjustment in respect of prior years 73 342
------------------------------------- ------- -------
Total current tax 6,268 685
------------------------------------- ------- -------
Deferred tax (credit)/expense:
Charge for the year 2,104 3,388
Adjustment in respect of prior years (2,868) (1,129)
------------------------------------- ------- -------
Total deferred tax (764) 2,259
------------------------------------- ------- -------
Total income tax expense 5,504 2,944
------------------------------------- ------- -------
Tax credits of GBP8,634,000 are also recorded in equity in
respect of tax deductions on share awards arising due to the share
price increase (2020: GBP4,636,000). Tax credits of GBP26,000 on
cash flow hedges have been reclassified from equity to the income
statement during the year on maturity of the hedges (2020: tax
credits recorded in equity of GBP13,000).
A tax credit of GBP713,000 has been recorded in respect of prior
year tax losses that previously had not been recognised.
The deferred tax adjustment in respect of prior years in 2020
and 2021 mainly reflects reductions in the tax expected to be
payable on private equity income, recorded in prior years, as
result of transactions which took place in the year.
Adjustments in 2020 also include a credit of GBP175,000 to
reflect the cancellation of the planned reduction in the UK tax
from 19% to 17% that was due to come in to effect from 1 April
2020.
An increase in the main rate of UK corporation tax from 19% to
25% with effect from 1 April 2023 was enacted in the Finance Act
2021. This rate increase has been taken into account in the
calculation of the Group's UK deferred tax assets and liabilities
as at 30 September 2021, to the extent that they are expected to
reverse after the rate increase comes into effect.
(b) Factors affecting the tax charge for the year
The UK tax rate for the year is 19%. The tax assessment for the
period is lower than this rate (2020: lower). The differences are
explained below:
2021 2020
GBP000 GBP000
---------------------------------------------------- ------- -------
Profit before tax 45,749 16,682
---------------------------------------------------- ------- -------
Tax charge at 19% (2020: 19%) 8,692 3,170
Effects of:
Non-taxable income (18) -
Non-deductible expenses and charges 316 13
Adjustment in respect of historical tax charges (2,795) (787)
Effect of higher tax rates in foreign jurisdictions 22 85
Tax losses not recognised - 463
Recognition of prior year tax losses (713) -
---------------------------------------------------- ------- -------
Total income tax expense 5,504 2,944
---------------------------------------------------- ------- -------
(c) Deferred tax
The deferred tax asset/(liability) included in the consolidated
statement of financial position is as follows:
Share-based Income
payment Total not yet
scheme Other assets assets taxable Other liabilities Total liabilities
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ ----------- ------------ ------- -------- ----------------- -----------------
As at 1 October 2019 3,519 238 3,757 (3,833) (167) (4,000)
Credit to equity 4,636 13 4,649 - - -
Exchange differences on
consolidation - - - 6 - 6
Credit/(charge) to the income
statement (2,953) 40 (2,913) 697 (43) 654
------------------------------ ----------- ------------ ------- -------- ----------------- -----------------
As at 30 September 2020 5,202 291 5,493 (3,130) (210) (3,340)
Credit to equity 8,634 (26) 8,608 - - -
Exchange differences on
consolidation - - (1) - - -
Credit/(charge) to the income
statement (3,243) 1,038 (2,205) 2,969 - 2,969
------------------------------ ----------- ------------ ------- -------- ----------------- -----------------
As at 30 September 2021 10,593 1,303 11,895 (161) (210) (371)
------------------------------ ----------- ------------ ------- -------- ----------------- -----------------
Other assets include carried forward losses of GBP681,000 as at
30 September 2021 (2020: nil).
12 EARNINGS PER SHARE
Basic earnings per share ("EPS") is calculated by dividing the
profit for the year attributable to ordinary equity holders of the
Parent Company (the "Earnings") by the weighted average number of
ordinary shares outstanding during the year, less the weighted
average number of own shares held. Own shares are held in Employee
Benefit Trusts ("EBTs").
Diluted EPS includes an adjustment to reflect the dilutive
impact of share awards.
Earnings
for the
year Shares Earnings
GBP000 000s per share
-------- -------- ------- ----------
2021
Basic 40,245 127,644 31.5p
-------- -------- ------- ----------
Diluted 40,245 132,669 30.3p
-------- -------- ------- ----------
2020
-------- -------- ------- ----------
Basic 13,235 124,572 10.6p
-------- -------- ------- ----------
Diluted 13,235 125,825 10.5p
-------- -------- ------- ----------
The weighted average number of shares is calculated as shown in
the table below:
2021 2020
000's 000's
---------------------------------------------------------- ------- -------
Weighted average issued share capital 131,772 130,415
Less own shares held (4,128) (5,843)
---------------------------------------------------------- ------- -------
Weighted average number of ordinary shares used in the
calculation of basic EPS 127,644 124,572
Additional dilutive shares regarding share schemes 5,983 2,451
Adjustment to reflect option exercise proceeds and future
service from employees receiving share awards (958) (1,198)
---------------------------------------------------------- ------- -------
Weighted average number of ordinary shares used in the
calculation of diluted EPS 132,669 125,825
---------------------------------------------------------- ------- -------
13 DIVIDS
Dividends are recognised as a reduction in equity in the period
in which they are paid or in the case of final dividends when they
are approved by shareholders. The reduction in equity in the year
therefore comprises the prior year final dividend and the current
year interim dividend.
Dividends declared/proposed in respect of the year
2021 2020
pence pence
------------------------------------ ------ ------
Interim dividend declared per share 3.6 1.8
Final dividend proposed per share 17.0 6.8
------------------------------------ ------ ------
Total 20.6 8.6
------------------------------------ ------ ------
The proposed final dividend of 17.0p will be submitted for
formal approval at the Annual General Meeting to be held on 29
March 2022. Based on the number of shares in issue at the date of
this report and excluding own shares held the total amount payable
for the final dividend would be GBP22,409,000.
Dividends paid in the year
2021 2020
GBP000 GBP000
--------------------------------------- ------- -------
Prior year final dividend - 6.8p, 4.0p 8,871 5,140
Interim dividend - 3.6p, 1.8p 4,745 2,302
--------------------------------------- ------- -------
13,616 7,442
--------------------------------------- ------- -------
14 GOODWILL
The goodwill balance within the Group at 30 September 2021 arose
from the acquisition of Impax Capital Limited on 18 June 2001 and
the acquisition of Impax NH in January 2018.
Goodwill
GBP000
--------------------- --------
Cost
At 1 October 2019 12,804
Foreign exchange (498)
--------------------- --------
At 30 September 2020 12,306
--------------------- --------
Foreign exchange (490)
--------------------- --------
At 30 September 2021 11,816
--------------------- --------
Impax NH consists of only one cash-generating unit ("CGU").
Goodwill is allocated between CGUs at 30 September 2021 as follows
- GBP10,187,000 to Impax NH and GBP1,629,000 to the Listed Equity
and Private Equity CGUs.
The Group has determined the recoverable amount of its CGUs by
calculating their value in use using a discounted cash flow model.
The cash flow forecasts were derived taking into account the budget
for the year ended 30 September 2022, which was approved by the
Directors in October 2021.
The goodwill on the Listed Equity and Private Equity CGUs arose
over 15 years ago and the business has grown significantly in size
and profitability since that date. There is accordingly significant
headroom before an impairment is required. The main assumptions
used to calculate the cash flows in the impairment test for these
CGUs were that assets under management would continue at current
levels and margins would continue at current levels, that fund
performance for the Listed Equity business would be 5% per year
(2020: 5%) and a discount rate of 12.5% (2020: 12.5%). The discount
rate was derived from the Group's weighted average cost of capital.
There has been no impairment of goodwill related to these segments
to date and there would have to be significant asset outflows over
a sustained period before any impairment was required. If the
discount rate increased by 3% there would no impairment and if fund
performance reduced to zero there would be no impairment (2020: 3%
increase in discount rate, no impairment).
The impairment test for the Impax NH CGU showed no impairment
(2020: no impairment) was required and used the following key
assumptions - average fund inflows of $0.38 billion (2020: $0.57
billion), fund performance of 5% (2020: 5%), an average operating
margin of 17% (2020: 20%) and a discount rate of 12.5% (2020:
12.5%). The following plausible changes in assumptions would
individually not give rise to an impairment: a consistent 10%
decrease in inflows (2020: 10% decrease); a 100 basis point annual
reduction in performance each year (2020: 100 basis point
reduction); a 1% annual reduction in operating margin (2020: 1%
reduction), a 1% increase in discount rate (2020: 1% increase).
15 INTANGIBLE ASSETS
Intangible assets mainly represent the value of the management
contracts acquired as part of the acquisition of Impax NH.
Management
contracts Software Total
GBP000 GBP000 GBP000
------------------------- ---------- -------- -------
Cost
As at 1 October 2019 29,016 515 29,531
Additions - 14 14
Foreign exchange (1,309) - (1,309)
------------------------- ---------- -------- -------
As at 30 September 2020 27,707 529 28,236
Foreign exchange (1,266) - (1,266)
------------------------- ---------- -------- -------
As at 30 September 2021 26,441 529 26,970
------------------------- ---------- -------- -------
Accumulated amortisation
As at 1 October 2019 4,621 392 5,013
Charge for the year 2,535 66 2,601
Foreign exchange (249) - (249)
------------------------- ---------- -------- -------
As at 30 September 2020 6,907 458 7,365
Charge for the year 2,358 51 2,409
Foreign exchange (277) - (277)
------------------------- ---------- -------- -------
As at 30 September 2021 8,988 509 9,497
------------------------- ---------- -------- -------
Net book value
As at 30 September 2021 17,453 20 17,473
------------------------- ---------- -------- -------
As at 30 September 2020 20,800 71 20,871
------------------------- ---------- -------- -------
As at 30 September 2019 24,395 123 24,518
------------------------- ---------- -------- -------
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 $US0.34
billion 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 around fund performance, operating margin and
discounted cost of capital that we would use in an impairment test
performed at 30 September 2021 remain the same as at 30 September
2020. Future inflows would be greater. Actual asset inflows, fund
performance and operating margin for the year ended 30 September
2021 have however been significantly in excess of those assumed and
accordingly there are no indicators of impairment.
16 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment mainly represents the costs of
fitting out the Group's leased London office (leasehold
improvements), office furniture and computers (fixtures, fitting
and equipment) and the capitalised value of the Group's leases on
its office buildings (right-of-use assets).
Fixtures,
Right of Leasehold fittings
use assets improvements and equipment Total
GBP000 GBP000 GBP000 GBP000
------------------------- ----------- ------------- -------------- -------
Cost
As at 1 October 2019 10,693 2,071 1,701 14,465
Additions 87 22 146 255
Foreign exchange (225) - - (225)
------------------------- ----------- ------------- -------------- -------
As at 30 September 2020 10,555 2,093 1,847 14,495
Additions 194 - 257 451
Disposals - (19) - (19)
Foreign exchange (222) - (14) (236)
------------------------- ----------- ------------- -------------- -------
As at 30 September 2021 10,527 2,074 2,090 14,691
------------------------- ----------- ------------- -------------- -------
Accumulated depreciation
As at 1 October 2019 - 970 1,023 1,993
Charge for the year 1,249 146 264 1,659
Foreign exchange (9) 2 (7) (14)
------------------------- ----------- ------------- -------------- -------
As at 30 September 2020 1,240 1,118 1,280 3,638
Charge for the year 1,236 145 267 1,648
Disposals - (10) - (10)
Foreign exchange (14) - (6) (20)
------------------------- ----------- ------------- -------------- -------
As at 30 September 2021 2,462 1,253 1,541 5,256
------------------------- ----------- ------------- -------------- -------
Net book value
As at 30 September 2021 8,065 821 549 9,435
------------------------- ----------- ------------- -------------- -------
As at 1 October 2020 9,315 975 567 10,857
------------------------- ----------- ------------- -------------- -------
As at 30 September 2019 10,693 1,101 678 12,472
------------------------- ----------- ------------- -------------- -------
Lease arrangements
Property, plant and equipment includes right-of-use assets in
relation to operating leases for the Group's office buildings.
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
GBPm GBPm
-------------------------- ----------- -----------------
At 1 October 2020 9,315 10,671
New leases 194 202
Lease payments - (1,691)
Interest expense - 468
Depreciation charge (1,236) -
Foreign exchange movement (208) (218)
-------------------------- ----------- -----------------
At 30 September 2021 8,065 9,432
-------------------------- ----------- -----------------
Current 1,330
Non-current 8,102
----------- -----------------
9,432
-------------------------- ----------- -----------------
The contractual maturities on the undiscounted minimum lease
payments under lease liabilities are provided below:
2021 2020
GBP000 GBP000
------------------------------------- ------- -------
Within 1 year 1,694 1,702
Between 1 and 5 years 6,452 6,461
Later than 5 years 3,110 4,862
------------------------------------- ------- -------
Total undiscounted lease liabilities 11,256 13,025
------------------------------------- ------- -------
The Company's London office lease has an extension option of a
further five years from June 2027, subject to a rent review, which
is not included in the above numbers on the basis that it is not
yet reasonably certain that it will be exercised
17 TRADE AND OTHER RECEIVABLES
2021 2020
GBP000 GBP000
------------------------------- ------- -------
Trade receivables 8,679 3,512
Other receivables 1,717 685
Prepayments and accrued income 29,404 16,538
------------------------------- ------- -------
39,800 20,735
------------------------------- ------- -------
Accrued income relates to accrued management fees and arises
where invoices are raised in arrears.
An analysis of the aging of trade receivables is provided
below:
2021 2020
GBP000 GBP000
--------------------------- ------- -------
0-30 days 6,865 2,317
Past due but not impaired:
31-60 days 1,052 -
61-90 days 762 1,195
--------------------------- ------- -------
8,679 3,512
--------------------------- ------- -------
At the date of this report, substantially all of the trade
receivables above have been received. As at 30 September 2021, the
assessed provision under the IFRS 9 expected loss model for trade
receivables and prepayments and accrued income was immaterial
(2020: immaterial).
GBP34,685,000 of trade receivables and accrued income were due
from related parties (2020: GBP16,302,700).
18 CURRENT ASSET INVESTMENTS
The Group makes seed investments into its own Listed Equity
funds and also invests in its Private Equity funds. Where the funds
are consolidated the underlying investments are shown in the table
below. Investments made in unconsolidated funds are also
included.
Total
GBP000
--------------------- -------
At 1 October 2019 4,626
Additions 758
Fair value movements 952
Repayments/disposals (1,949)
--------------------- -------
At 30 September 2020 4,387
Additions 2,832
Fair value movements 648
Repayments/disposals (303)
--------------------- -------
At 30 September 2021 7,564
--------------------- -------
19 CASH AND CASH EQUIVALENTS, CASH INVESTED IN MONEY MARKET
FUNDS AND LONG-TERM DEPOSITS
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 by
consolidated funds is not considered to be available to the Group
so it is not included in cash reserves. 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:
2021 2020
GBP000 GBP000
---------------------------------------------------------- ------- -------
Cash and cash equivalents 36,172 20,245
Cash invested in money market funds and long-term deposit
accounts 38,066 18,516
Less: cash held in RPAs (4,089) (1,363)
---------------------------------------------------------- ------- -------
Cash reserves 70,149 37,398
---------------------------------------------------------- ------- -------
20 TRADE AND OTHER PAYABLES
2021 2020
GBP000 GBP000
----------------------------------- ------- -------
Trade payables 852 305
Taxation and other social security 5,160 3,285
Other payables 4,655 4,550
Accruals and deferred income 39,440 19,844
----------------------------------- ------- -------
50,107 27,984
----------------------------------- ------- -------
The most significant accrual at the year-end relates to variable
staff remuneration.
21 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.
22 ORDINARY SHARES
2021 2020 2021 2020
Issued and fully paid No of shares/000s No of shares/000s GBP000 GBP000
------------------------------ ------------------ ------------------ ------- -------
At 1 October and 30 September 132,597 130,415 1,326 1,304
------------------------------ ------------------ ------------------ ------- -------
Ordinary shares have a par value of GBP0.01 per share. Each
ordinary share carries the right to attend and vote at general
meetings of the Company. Holders of these shares are entitled to
dividends as declared from time to time. 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
consideration for the acquisition of that business that occurred in
2018.
23 OWN SHARES
No of Shares/000s GBP000
------------------------------------------------- ----------------- -------
At 1 October 2019 9,025,766 6,878
Satisfaction of option exercises and RSS vesting (5,105,507) (3,891)
EBT 2012 purchases 1,266,608 4,223
------------------------------------------------- ----------------- -------
At 30 September 2020 5,186,867 7,210
Issuance of shares to EBT 2012 2,000,000 -
Satisfaction of option exercises and RSS vesting (3,083,472) (3,093)
------------------------------------------------- ----------------- -------
At 30 September 2021 4,103,395 4,117
------------------------------------------------- ----------------- -------
Included within Own Shares are 3,322,833 shares held in a
nominee account in respect of the Restricted Share Scheme as
described in note 8.
24 FINANCIAL COMMITMENTS
At 30 September 2021 the Group has outstanding commitments to
invest up to the following amounts into private equity funds that
it manages:
-- EUR203,000 (2020: EUR203,000) into Impax New Energy Investors
LP; this amount could be called on in the period to 31 December
2021;
-- EUR113,000 (2020: EUR113,000) into Impax New Energy Investors
II LP; this amount could be called on in the period to 22 March
2022;
-- EUR1,567,000 (2020: EUR2,137,000) into Impax New Energy
Investors III LP; this amount could be called on in the period to
31 December 2026; and
-- EUR449,616 (2020: GBPnil) into Impax New Energy Investors IV
SCSp; this amount could be called on in the period to 31 October
2031.
25 RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM
OPERATIONS
This note should be read in conjunction with the consolidated
cash flow statement. It provides a reconciliation to show how
profit before tax, which is based on accounting rules, translates
to cash flows.
2021 2020
GBP000 GBP000
-------------------------------------------------------------- -------- -------
Profit before taxation 45,749 16,682
Adjustments for income statement non-cash charges/income:
Depreciation of property plant and equipment and amortisation
of intangible assets 4,057 4,260
Finance income (286) (1,020)
Finance expense 1,971 1,921
Share-based payment charges 4,882 1,813
Adjustments for statement of financial position movements:
Increase in trade and other receivables (19,021) (3,995)
Increase in trade and other payables 22,460 4,721
-------------------------------------------------------------- -------- -------
Cash generated from operations 59,812 24,382
-------------------------------------------------------------- -------- -------
26 COMPLETION OF ACQUISITION OF IMPAX NH
On 16 February 2021, the Company exercised its call option,
issued as part of the acquisition of Impax NH in 2018, 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 $3,006,000, $979,000 (GBP704,000) was paid in
cash and $2,027,000 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 GBP1,535,000 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
GBP2,239,000 being the sum of the cash paid of GBP704,000 and the
GBP1,535,000 value of the shares issued.
The amount of contingent consideration due in respect of the
acquisition was also finalised with $270,000 (GBP167,000) payable.
This amount has been recorded as a charge to profit.
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END
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