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RNS

Half-year Report

Released 07:00 11-May-2017

RNS Number : 7934E
Impax Asset Management Group plc
11 May 2017
 

Impax Asset Management Group plc - Interim results to 31 March 2017

 

London, 11 May 2017 - Impax Asset Management Group plc ("Impax" or the "Company"), the AIM quoted investment manager focused on environmental markets and related resource efficiency sectors, today announces its interim results for the six months to 31 March 2017 (the "Period").

 

H1 highlights

·      AUM1 increased 27% to £5.7 billion at Period end, and further to £6.0 billion on 30 April 2017

  

·      Total net inflows of £870 million during the Period

 

·      Robust investment performance in Listed Equities and significant growth across all strategies

 

·      Strong progress on Real Assets fundraising

 

·      Revenue in first half of 2017 was £13.9 million (H1, 2016: £9.4 million)

 

·      Operating earnings2 were £3.2 million (H1, 2016: £1.6 million)

 

·      Profit before tax was £2.4 million (H1, 2016: £2.1 million)

 

·      Diluted earnings per share were 2.11 pence (H1, 2016: 1.35 pence)

 

·    Interim dividend increased by 40% to 0.7 pence per share

                                                                                                                

Ian Simm, Chief Executive, commented: 

"Impax has had a strong first half year.  Our AUM has now reached a new peak of £6 billion and we can report record net inflows and significant progress with fundraising for our new private equity renewable infrastructure fund."

"We are seeing sustained interest from investors in many countries who are looking to access superior expected returns.  With the Company's assets under management recently passing the £6 billion milestone, we continue to scale existing products across both Listed Equities and Real Assets, while also considering the development of our product range in response to client interest."

The presentation for shareholders and analysts will be available to view on our website later today: https://www.impaxam.com/investor-relations/reports-and-presentations

Impax will host a webinar for investors to present the Interim Results and provide a business update, followed by a Q&A with Ian Simm, Chief Executive and Charlie Ridge, Chief Financial Officer, on Thursday 11 May at 12.30pm.  Please register for this event here: 

https://www.equitydevelopment.co.uk/2017/05/03/impax-asset-management-group-interim-results-webinar-thursday-11th-may-12-30pm/

 

1 Assets under management and advice

2 Revenue less operating costs

 

Enquiries:

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

Chief Executive

Impax Asset Management Group plc

www.impaxam.com

 

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

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

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

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


Guy Wiehahn or Rishi Shah                                        Tel: +44 (0) 20 7418 8900
Nominated Adviser
Peel Hunt LLP

 

Chief Executive's Statement

 

"We are seeing sustained interest from investors in many countries who are looking to access superior expected returns over the long term.  With assets under management at a new peak of £6.0 billion1, we continue to scale our existing products, while developing our product range in response to client demand." 

 

Over the period from 1 October 2016 to 31 March 2017 (the "Period"), Impax Asset Management Group plc ("Impax" or the "Company"), grew its assets under management and advisory ("AUM") by 27 per cent to a new peak of £5,711 million, comprising positive investment performance and record net inflows of ca. £870 million across Listed Equities and our Private Equity Renewable Infrastructure Funds.  On 30 April 2017, AUM were £6.0 billion.

 

This growth has been achieved despite rising political tension around the world.  Investors are concerned about a lengthening list of issues, including the outcome of a series of elections across Europe, the stability of the Euro, continuing unrest across the Middle East, signs of tension in East Asia and the future of US-Chinese trade relations.  These unknowns make it increasingly difficult to navigate uncertain and often conflicting economic forecasts. 

 

Against this more volatile backdrop, our listed equity funds have proved their resilience and delivered robust returns for investors.   We have continued to receive strong inflows, particularly from asset owners in North America and Continental Europe.  We have also achieved further exits from our existing private equity funds and received further commitments to our third fund.  Our mandate pipeline across both listed equities and real assets is most encouraging.

 

Despite President Trump's negative proclamations on climate change and the environment, the markets in which we invest have remained robust - there is considerable support across Congress for the further development of renewable energy, and more investment is being targeted to increase the resilience of water supplies.  Any efforts to roll back existing pollution regulations are likely to face stiff legal challenges. 

 

Furthermore, the response from the international community to President Trump's pre-election threat to "cancel" the 2015 Paris Climate Agreement has been to strengthen support for the treaty, with China, crucially, reiterating its commitment to leading the development of policy to reduce carbon dioxide emissions.

 

Developments in Environmental and Resource Efficiency Markets

 

Environmental markets continue to evolve and the number of companies active in these sectors has again risen.  For example, companies that are improving resource productivity are increasingly deploying business models based on advanced software and the manipulation of large datasets.  We are encouraged by the growth and high returns on capital that these businesses offer to investors, particularly in the rail, water, electricity, agriculture and real estate sectors.  Similarly, the transition to ultra-low emission vehicles and the potential adoption of autonomous vehicles are yielding many new investment prospects while unsettling incumbents in traditional industries, such as vehicle assembly.

 

The food, agriculture and forestry sector is also giving rise to an increasing number of investable businesses.  Here, the value chain is being disrupted by a range of environmental and resource challenges, including climate change and soil degradation, as well as tightening regulation and changing consumer preferences.   Companies that are swift to identify and exploit the opportunities that these changes bring are set to reap significant benefits and undergo rapid growth.  We are finding value in companies that are investing in innovation in these markets.

 

Financial results for the Period

 

Revenue for the six months to 31 March 2017 was £13.9 million (H1 2016: £9.4 million; H2 2016: £11.7 million) and the annualised run rate at the end of the Period was £30.6 million.  Operating earnings2 for the Period were £3.2 million (H1 2016: £1.6 million; H2 2016: £2.6 million) and the associated operating margin was 23 per cent (H1 2016: 17 per cent; H2 2016: 22 per cent).  Operating costs include a £0.4 million increase in employer's National Insurance Contribution ("NIC") due to the sharp rise in the price of Impax shares over the Period, which is offset by a similar corporation tax credit.  Profit-related remuneration increased in line with operating earnings.

 

The result for the Period was a profit before tax ("PBT") of £2.4 million (H1 2016: £2.1 million; H2 2016: £3.1 million) and the earnings per share for the Period were 2.11 pence (H1 2016: 1.35 pence; H2 2016: 2.27 pence).  PBT was impacted by the increased NIC charge referred to above, and also by net hedging losses on seed investments of £0.5 million (H1 2016: £0.3 million gain; H2 2016: £0.6 million gain).

 

Dividends 

 

At the Annual General Meeting on 8 March 2017, shareholders approved payment of a dividend of 1.6 pence per share, taking the total dividend for the year ended 30 September 2016 to 2.1 pence per share (2015: 1.6 pence (plus special dividend of 0.5 pence).  The Board is declaring an interim dividend for the Period of 0.7 pence per share (2016: 0.5 pence). This will be paid on 23 June 2017 to ordinary shareholders on the shareholder register at the close of business on 26 May 2017.   The Company operates a dividend reinvestment plan ('DRIP').  The final date for receipt of elections under the DRIP will be 29 May 2017. For further information and to register and elect for this facility, simply visit www.signalshares.com

 

Listed Equities

 

During 2016, our listed equity strategies extended their strong track record relative to global markets, in spite of the strong positive performance of financials and energy stocks (where our strategies have little or no exposure) during the final three months of the year.  In the first quarter of 2017 we have seen some consolidation, but overall the strategies have delivered a solid performance during the Period, with our Water and Asia funds significantly ahead of their environmental comparators.  We are currently finding value in Europe and many developing markets.

 

Real Assets

 

In November 2016, we announced the first close of our third private equity fund ("NEF3"), which targets renewable energy investments across Europe.  Subsequently, two existing clients increased their initial investments, and we have also secured two new clients.  Commitments to this fund are now €185 million, which includes a €44 million subscription from the EIB (which has agreed to commit up to a further €31 million dependent on the final fund size).  We continue to engage with existing clients and new prospects on further fundraising and the pipeline is encouraging.  We hope to see additional significant inflows before final close, the deadline for which is the end of February 2018.  Plans for the new fund's first investments are at an advanced stage. 

 

We are also making progress to sell the remaining assets in NEF II, particularly 102MW of generating capacity in Ireland, France and Italy, and expect to achieve a full exit and complete the delivery of attractive net cash returns to investors during 2018.

 

Fund flows and distribution

 

Impax has now reported six consecutive quarters of strong inflows.  During the Period we saw further significant commitments from Continental European investors, particularly across the BNP Paribas fund range.  These white label products are based on our Leaders, Specialists, Water, and Food & Agriculture strategies.  For example, over the past two years, BNP Paribas has raised ca. €450 million for funds based on our Food & Agriculture strategy, while the net assets of the BNP Paribas Aqua fund, which we have sub-managed since inception in 2009, have recently exceeded €2 billion. 

 

We also continue to see strong growth from our North American distribution partners; for example, on 1 May 2017, we commenced the mandate of a new US$100 million segregated account based on our Leaders strategy.

 

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

 

AUM movement for six months to 31 March 2017

 

 

Listed equity funds £m

Private equity funds £m

Property funds £m

Total £m

Total AUM at 30 September 2016

4,195

285

22

4,502

Net flows

778

92

-  

870

Market movement and performance

341

 (2)

-  

339

Total AUM at 31 March 2017

5,314

375

22

5,711

 

 

Infrastructure and staff

 

The building we have occupied in London since 2011 is scheduled for redevelopment.  We are anticipating a move before the end of 2017 and are currently evaluating nearby cost-effective options with increased floor space and improved IT infrastructure.

 

In November, we relocated our New York City office to larger premises in Greenwich, Connecticut, to accommodate the expanding team.

 

Over the Period, our permanent staff was stable at 71 (2016: 70).  Our core team is well established and over the medium-term we expect to continue to scale up our business significantly with only a limited number of additional hires.

 

Remuneration and share management

 

In line with previous announcements, the Board intends to recommend that the Group's Employee Benefit Trust ("EBT") continues to buy back the Company's shares from time to time after giving due consideration to alternative uses of the Company's cash resources. Shares purchased may be used to satisfy obligations to employees for share-based awards, thus reducing the requirement to issue new shares.  During the Period the Group's Employee Benefit Trust ("EBT") bought 1.5 million shares in the market, at an average price of 65 pence, bringing total shares purchased to date to 18.7 million.  In comparison, 20.8 million options and restricted shares have been issued to date.

 

Shareholder communications

 

We are committed to open communication with all our stakeholders; we also recognise the importance of expanding our shareholder register and improving liquidity in the Company's shares.  Last October we appointed a specialist investor outreach company to help us extend our investor relations programme, with particular focus on retail investors who may be looking to invest in smaller, fast-growing companies.  We now have several new shareholders on the register and have seen a greater number of smaller trades over the Period, compared to historical averages.

 

Outlook

In recent years, Impax's strategies have proved to be remarkably resilient and we believe that companies across environmental markets will maintain the trend of delivering

above-average earnings growth. The rapid acceleration of innovation in the markets in which Impax invests presents a multitude of investment opportunities, underpinned by powerful long-term drivers.

 

We continue to analyse the potential impact of Brexit on our ability to market and manage funds in Europe, and the possible need to establish additional presence in the EU.  We believe that our culture, structure, and the diversity of our business model should enable us to make good progress in an increasingly complex regulatory and political environment.

 

In our conversations with asset owners around the asset owners around the world, we see growing interest from investors searching for superior long-term returns, while shorter-term catalysts are also increasingly driving positive investor sentiment.   The Board views Impax's prospects with optimism and is confident in the Company's ability to deliver long-term shareholder value.

 

 

Ian Simm

10 May 2017

 

1 As at 30 April 2017

 

2 Revenue less operating costs

 

 

 

 

Impax Asset Management Group plc

 

 

 

 

Condensed consolidated statement of income

For the six months ended 31 March 2017

 

 

 

 

 

 

Six months ended

Six months

ended

Year

ended

 

 

31 March 
2017

31 March 
2016

30 September 2016

 

Note

£000

£000

£000

Revenue

 

13,948

9,434

21,067

 

 

 

 

 

Operating costs

 

(10,774)

(7,871)

(16,915)

 

 

 

 

 

(Charges)/credits related to legacy long-term incentive schemes

3

(242)

86

27

 

 

 

 

 

Fair value (losses)/gains and other financial income/(expense)

4

(538)

357

989

Investment income

 

213

101

319

Change in third party interests in consolidated funds

5

(163)

(48)

(288)

Profit before taxation

 

2,444

2,059

5,199

Taxation

6

77

(508)

(1,022)

 

 

 

 

 

Profit after taxation

 

2,521

1,551

4,177

 

 

 

 

 

Basic earnings per share

7

2.15 p

1.35 p

3.62 p

Diluted earnings per share

7

2.11 p

1.35 p

3.62 p

 

 

 

 

 

 

 

 

 

 

Condensed consolidated statement of comprehensive income

 

 

For the six months ended 31 March 2017

 

 

 

 

 

 

Six months ended

Six months ended

Year  ended

 

 

31 March 2017

31 March 
2016

30 September 2016

 

 

£000

£000

£000

Profit for the period

 

2,521

1,551

4,177

Change in value of cash flow hedges

 

115

(132)

(193)

Tax on change in value of cash flow hedges

(22)

26

38

Tax credit on long-term incentive schemes

 

348

-

-

Exchange differences on translation of foreign operations

 

58

13

87

Total other comprehensive income

 

499

(93)

(68)

 

 

 

 

 

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

3,020

1,458

4,109

 

 

 

 

 

 

 

 

           

 

 

 

Impax Asset Management Group plc

 

 

Condensed Consolidated Statement of Financial Position

 

As at 31 March 2017

 

 

 

 

 

 

 

 

 

 

 

 

Note

As at

As at

As at

 

 

 

31 March 2017

31 March 2016

30 September 2016

 

 

 

£000

£000

£000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

 

Goodwill

9

1,681

1,681

1,681

 

Intangible assets

 

31

55

61

 

Property, plant and equipment

 

115

145

108

 

Investments

 

13

16

14

 

 

 

1,840

1,897

1,864

 

 

 

 

 

 

Current assets

 

 

 

 

 

Trade and other receivables

 

7,148

5,314

6,931

 

Derivative asset

 

98

-

-

 

Investments

10

15,550

10,837

12,811

 

Margin account

 

395

254

378

 

Cash invested in money market funds and long term deposit accounts

11

10,623

10,424

12,891

 

Cash and cash equivalents

11

2,664

2,820

2,804

 

 

 

36,478

29,649

35,815

TOTAL ASSETS

 

38,318

31,546

37,679

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

Equity

 

 

 

 

 

Ordinary shares

 

1,277

1,277

1,277

 

Share premium

 

4,093

4,093

4,093

 

Exchange translation reserve

 

(96)

(228)

(154)

 

Hedging reserve

 

(23)

(67)

(116)

 

Retained earnings

 

23,114

19,463

21,645

TOTAL EQUITY

 

28,365

24,538

26,745

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

4,202

3,079

5,473

 

Third party interests in consolidated funds

4,321

697

2,125

 

Derivative liability

 

28

105

265

 

Current tax liability

 

977

482

2,135

 

 

 

9,528

4,363

9,998

Non-current liabilities

 

 

 

 

 

Accruals

 

264

155

180

 

Deferred tax liability

 

161

2,490

756

Total non-current liabilities

 

425

2,645

936

TOTAL LIABILITIES

 

9,953

7,008

10,934

TOTAL EQUITY AND LIABILITIES

 

38,318

31,546

37,679

 

 

 

 

 

 

 

 

 

 

Impax Asset Management Group plc

 

 

 

Condensed Consolidated Statement of Changes in Equity

 

 

 

For the six months ended 31 March 2017

 

 

 

 

 

 

Share capital

Share premium

Exchange  translation reserve

Hedging reserve

Retained earnings

Total

 

£000
1,277

£000
4,093

£000

(241)

£000
39

£000

  20,759

£000

25,927

As at 1 October 2015

Transactions with owners

 

 

 

 

 

 

Dividends paid

-

-

-

-

(1,905)

( 1,905)

Acquisition of own shares

-

-

-

-

(1,188)

( 1,188)

Award of shares on option exercises

-

-

-

-

3

3

Long-term incentive scheme charge

-

-

-

-

243

243

 

-

-

-

-

( 2,847)

( 2,847)

Profit for the period

-

-

-

-

1,551

1,551

Other comprehensive income

 

 

 

 

 

 

Cash flow hedge

-

-

-

( 132)

-

( 132)

Tax on cash flow hedge

-

-

-

26

-

26

Exchange differences on translation of foreign operations

-

-

13

-

-

13

 

-

-

13

( 106)

-

( 93)

As at 31 March 2016

1,277

4,093

( 228)

( 67)

19,463

24,538

Transactions with owners

 

 

 

 

 

 

Dividends paid

-

-

-

-

( 557)

( 557)

Acquisition of own shares

-

-

-

-

(359)

( 359)

Award of shares on option exercises

-

-

-

-

163

163

Long-term incentive scheme charge

-

-

-

-

309

309

 

-

-

-

-

( 444)

( 444)

Profit for the period

-

-

-

-

2,626

2,626

Other comprehensive income

 

 

 

 

 

-

-

-

-

( 61)

-

( 61)

Tax on cash flow hedge

-

-

-

12

-

12

Exchange differences on translation of foreign operations

-

-

74

-

-

74

 

-

-

74

( 49)

-

25

As at 30 September 2016

1,277

4,093

( 154)

( 116)

21,645

26,745

Transactions with owners

 

 

 

 

 

 

Dividends paid

-

-

-

-

(1,856)

( 1,856)

Acquisition of own shares

-

-

-

-

(948)

( 948)

Award of shares on option exercises

-

-

-

-

1,041

1,041

Long-term incentive scheme charge

-

-

-

-

363

363

 

-

-

-

-

( 1,400)

( 1,400)

Profit for the period

-

-

-

-

2,521

2,521

Other comprehensive income

 

 

 

 

 

 

Cash flow hedge

-

-

-

115

-

115

Tax on cash flow hedge

-

-

-

(22)

-

( 22)

Tax credit on long-term incentive schemes

-

-

-

-

348

348

Exchange differences on translation of foreign operations

-

-

58

-

-

58

 

-

-

58

93

348

499

As at 31 March 2017

1,277

4,093

( 96)

( 23)

23,114

28,365

 

 

 

 

 

 

 

 

Impax Asset Management Group plc

 

 

 

 

Condensed Consolidated Statement of Cash Flows

 

 

 

 

For the six months ended 31 March 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

Six months ended

Year ended

 

 

31 March 2017

31 March 
2016

30 September 2016

 

Note

£000

£000

£000

 

 

 

 

 

Cashflows from operating activities

 

 

 

 

Profit before taxation

 

2,444

2,059

5,199

Adjustments for:

 

 

 

 

Investment income

 

(213)

(101)

(319)

Depreciation and amortisation

 

80

110

198

Fair value losses/(gains)

 

317

(357)

(1,180)

Share-based payment charges

 

363

243

512

Charges/(credits) related to legacy long-term incentive schemes

242

(86)

(27)

Change in third party interests in consolidated funds

163

48

288

Operating cash flows before movement in working capital

3,396

1,916

4,671

 

 

 

 

 

(Increase) in receivables

 

(217)

(357)

(2,139)

(Increase)/decrease in margin account

 

(17)

(78)

(203)

(Decrease)/Increase in payables

 

(1,372)

(1,863)

802

Cash generated from operations

 

1,790

(382)

3,131

 

 

 

 

 

Corporation tax paid

 

(1,351)

(243)

(815)

Net cash (used by)/generated from operating activities

439

(625)

2,316

 

 

 

 

 

Investing activities:

 

 

 

 

Investment income received

 

213

101

329

Settlement of investment related hedges

 

(1,274)

(714)

(1,990)

Net redemptions made to Impax by unconsolidated investment funds

-

1,089

2,329

Net investments made by consolidated funds

 

(2,002)

(3,487)

(4,549)

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

2,268

6,729

4,262

Acquisition of property plant and equipment and intangible assets

(57)

(52)

(109)

Net cash used by investment activities

 

(852)

3,666

272

 

 

 

 

 

Financing activities:

 

 

 

 

Dividends paid

8

(1,856)

(1,905)

(2,462)

Acquisition of own shares

 

(948)

(1,188)

(1,547)

Cash received on exercise of Impax share options

1,041

3

166

Investments by third parties into consolidated funds

2,034

505

1,693

Net cash (generated from)/(used by) financing activities

271

(2,585)

(2,150)

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(142)

456

438

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

2,804

2,364

2,364

 

 

 

 

 

Effect of foreign exchange rate changes

 

2

-

2

Cash and cash equivalents at the end of the period

11

2,664

2,820

2,804

                 

 

 

Impax Asset Management Group plc

 

 

Notes to the Condensed Consolidated Interim Financial Statements

For the Six Months Ended 31 March 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Basis of preparation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This interim report is unaudited and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and the AIM rules. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2016.

 

The comparative figures for the financial year ended 30 September 2016 are not the Company's statutory accounts for that financial year. Those accounts, prepared in accordance with IFRSs as adopted by the EU, have been reported on by the Company's auditors and delivered to Companies House. The report of the auditors was (i) unqualified, (ii) did not include a reference to matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. Copies of these accounts are available upon request from the Company's registered office at Norfolk House, 31 St James's Square, London, SW1Y 4JR or at the Company's website: www.impaxam.com.

 

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

 

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 30 September 2016.

 

 

 

 

 

 

 

 

 

2

Estimates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

 

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were: i) judgements and estimates made in the valuation of unlisted current asset investments (see note 10); ii) determining whether managed funds should be consolidated; iii) determining the size of the charge for National Insurance Contributions payable on long-term incentive schemes and iv) determining the value of deferred tax assets.

 

 

 

 

 

 

 

 

 

3

Charges/(credits) related to legacy long-term incentive schemes

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2017

Six months ended 31 March 2016

Year ended 30 September 2016

 

 

 

 

 

 

£000

£000

£000

 

LTIP NIC charge/(credit)

 

 

159

(44)

3

 

LTIP Additional payments charge/(credit)

 

 

83

(42)

(55)

 

Advisory fees for EBT settlement

 

-

-

25

 

 

242

(86)

(27)

 

(NIC = Employer's National Insurance Charge)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long term incentive plan ("LTIP") NIC Charge

 

 

 

 

 

The Group made awards of options over the Group's shares under the LTIP plan in 2011.  These awards vested in 2012 but 2,969,500 remain outstanding at 31 March 2017.  The Group pays Employers NIC when individuals exercise their options and accordingly accrues for the estimated amount that would be payable on exercise using the year end share price. The amount accrued therefore varies from period to period in line with the Group's share price with any adjustment recorded through the income statement.

 

LTIP Additional payments

 

 

 

 

 

 

Individuals receiving LTIP options are eligible for a retention payment payable after the end of the financial year in which each employee exercises his or her LTIP Options.  The payment will be equal to the corporation tax benefit realised by the Group on the exercise of the LTIP options minus the amount of the NIC suffered by the Group on the exercise of the LTIP options.  The amount payable will fluctuate in line with the Impax share price, such fluctuations are recorded in the current period income statement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

Fair value gains/(losses)

 

Fair value gains/(losses) include those arising on revaluation of listed and unlisted investments held by the Group including those held by the Group's consolidated funds (see note 10) and any gains or losses arising on related hedge instruments held by the Group.

 

 

 

 

 

 

 

 

 

5

Change in third party interest in consolidated funds

 

 

 

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

 

 

 

 

 

 

 

 

 

6

Taxation

 

 

 

 

 

 

 

 

The tax rate for the period is lower than the standard rate of corporation tax in the UK for the period (19.5 per cent).  The differences are explained below:

 

 

 

 

 

 

Six months ended 31 March 2017

Six months ended 31 March 2016

Year ended 30 September 2016

 

 

 

 

 

 

£000

£000

£000

 

Profit before tax

 

 

2,444

2,059

5,199

 

 

 

 

 

 

 

 

 

 

Tax charge at 19.5 per cent, 20 per cent, 20 per cent

477

412

1,040

 

Effects of:

 

 

 

 

 

 

 

 

2

9

24

 

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

(663)

133

-

 

41

-

(59)

 

-

(66)

(42)

 

66

20

59

 

 

 

 

 

 

 

 

 

 

Total income tax expense

(77)

508

1,022

 

 

 

 

 

 

 

 

 

7

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings for the period

Shares

Earnings per share

 

 

 

 

 

 

£'000

'000

 

 

Six months ended 31 March 2017

 

 

 

 

 

 

Basic

 

 

 

 

2,380

110,904

2.15p

 

Diluted

 

 

 

 

2,380

113,048

2.11p

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2016

 

 

 

 

Basic

 

 

 

 

1,517

112,603

1.35p

 

Diluted

 

 

 

 

1,551

114,266

1.35p

 

 

 

 

 

 

 

 

 

 

Year ended 30 September 2016

 

 

 

 

 

 

Basic

 

 

 

 

4,043

111,794

3.62p

 

Diluted

 

 

 

 

4,177

114,399

3.62p

 

 

 

Earnings are reduced by £141,000 for the six months ending 31 March 2017 (31 March 2016, £34,000) for basic earnings per shares to reflect the profit attributable to holders of restricted shares, which are treated as contingently returnable shares.  This adjustment is not normally made for diluted earnings per shares but instead the dilutive restricted shares are included in the number of shares used for the dilutive calculation.  However, where the resulting calculation for diluted earnings per share is lower than the basic earnings per share the basic number is used.

 

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

 

 

 

 

 

 

Six months ended 31 March 2017

Six months ended 31 March 2016

Year ended 30 September 2016

 

 

 

 

 

 

'000

'000

'000

 

 

 

 

 

 

 

 

 

 

Issued share capital

127,749

127,749

127,749

 

Less own shares held

(16,845)

(15,146)

(15,955)

 

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

110,904

112,603

111,794

 

Additional dilutive shares re share options

 

10,630

7,690

10,690

 

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

(8,486)

(6,027)

(8,085)

 

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

113,048

114,266

114,399

 

The basic earnings per share for all periods shown includes vested LTIP options on the basis that these have an inconsequential exercise price (1 pence or 0 pence).  There were 7,440,000 restricted shares in issue at 31 March 2017 which would have increased dilutive shares by 3,662,000.

8

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On 8 March 2017, at the Company's Annual General Meeting, payment of a 1.6 pence per share final dividend 30 September 2016 (2015: 1.2p per share) was approved.  Combined with an interim payment of 0.5 pence this gave total dividends for the year ended 30 September 2016 of 2.1 pence.  The Trustee of the Impax Employee Benefit Trusts waived the Trusts' rights to part of this dividend, leading to a total dividend payment of £1,855,916.  This was paid on 17 March 2017.

 

 

 

The Board has declared an interim dividend for the period of 0.7 pence per ordinary share (2016: 0.5 pence). This dividend will be paid on 23 June to ordinary shareholders on the register at close of business on 26 May 2017.

 

 

 

 

 

 

 

 

 

9

Goodwill

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

£'000

 

At 1 October 2015, 31 March 2016, 30 September 2016 and 31 March 2017

1,681

 

 

 

 

 

 

 

 

 

 

Goodwill arose on the acquisition of Impax Capital Limited on 18 June 2001 and on the acquisition of a property fund business from Climate Change Capital in July 2014.  Adjustments were made to the goodwill in respect of the acquisition of the property fund business in 2015.

 

 

 

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

 

 

 

 

 

 

 

 

 

10

Current asset investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unlisted investments

Listed investments

Total

 

 

 

 

 

 

£000

£000

£000

 

At 1 October 2015

 

 

 

3,329

4,090

7,419

 

Additions

 

 

 

 

91

5,164

5,255

 

Fair value movements

 

 

 

174

845

1,019

 

Repayments/disposals

 

 

 

(1,180)

(1,676)

(2,856)

 

At 31 March 2016

 

 

 

2,414

8,423

10,837

 

Additions

 

 

 

 

25

2,052

2,077

 

Fair value movements

 

 

 

392

1,759

2,151

 

Repayments/disposals

 

 

 

(1,263)

(991)

(2,254)

 

At 30 September 2016

 

 

 

1,568

11,243

12,811

 

Additions

 

 

 

 

-

3,457

3,457

 

Fair value movements

 

 

 

6

731

737

 

Repayments/disposals

 

 

 

-

(1,455)

(1,455)

 

At 31 March 2017

 

 

 

1,574

13,976

15,550

 

Listed investments

 

 

 

 

 

 

 

Impax Food and Agriculture Fund ("IFAF")

 

 

 

 

On 1 December 2012 the Group launched the IFAF and invested, from its own resources £2 million into the fund. The IFAF invests in listed equities using the Group's Food and Agriculture Strategy.  The Group's investment represented more than 50 per cent of the IFAF's NAV from the date of launch to 31 March 2017 and has been consolidated throughout this period with its underlying investments included in listed investments in the table above.

 

 

 

 

 

 

 

 

 

 

Impax Global Equity Opportunities Fund ("IGEO")

 

 

 

On 23 January 2015 the Group launched the IGEO Fund and invested, from its own resources £2 million into the fund. IGEO invests in listed equities using the Group's Global Equities Strategy.  The Group's investment represented more than 50 per cent of IGEO's NAV from the date of launch to 31 March 2017 and has been consolidated throughout this period with its underlying investments included in listed investments in the table above.

 

 

 

 

 

 

 

 

 

 

Impax Environmental Leaders Fund ("IEL")

 

 

 

 

On 12 January 2016 the Group launched the IEL Fund and invested, from its own resources £3 million into the fund. IEL invests in listed equities using the Group's Leaders Strategy.  The Group's investment represented more than 50 per cent of IEL's NAV from the date of launch to 31 March 2017 and has been consolidated throughout this period with its underlying investments included in listed investments in the table above.

 

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

 

 

 

 

 

 

 

 

 

 

Unlisted investments

 

 

 

 

 

 

 

The Group has a 3.76 per cent partnership share of Impax New Energy Investors LP, a private equity partnership managed by the Group.  At the period end the carrying value of the investment was £562,000. The carrying value represents the Board's assessment of the investment's fair value which was determined using a discounted cashflow approach.  100% of the partnership's valuation is represented by investments in Spanish solar parks.  These investments have been adversely impacted by the significant retroactive reforms of the Spanish energy markets and covenants for loans held by the investment have been breached.  The assets are currently the subject of a sales process. At the same time negotiations with the relevant banks to restructure the loans are ongoing and a claim for compensation from the Spanish government is currently being considered by the European Court of Arbitration.  In the event that the sales process is unsuccessful and the banks take possession of the assets and the claims for compensation are unsuccessful the investment would be written down in full. 

 

The Group has a 1.14 per cent partnership share in Impax New Energy Investors II LP, a private equity partnership managed by the Group.  To date the Group has invested a total of €2,195,000 into the partnership and received distributions of €2,868,000 following sales of investments by the partnership.  The investment is included at the Board's assessment of its fair value, being £541,000 at 31 March 2017, which is determined by valuing the underlying investments.  The principal valuation techniques used are discounted cashflow, price of recent investment and market bids.  The Group has a commitment to invest up to a further €1,103,000 into this partnership.

 

The Group has a 3.03 per cent partnership share in Impax New Energy Investors III LP, a private equity partnership managed by the Group.  The Group has made no investments in this partnership to date.  The Group has a commitment to invest up to €4 million into this partnership.

 

 

 

 

 

 

 

 

 

11

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 March 2017

31 March 2016

30 September 2016

 

 

 

 

 

 

£000

£000

£000

 

Cash and cash equivalents

2,664

2,820

2,804

 

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

10,623

10,424

12,891

 

Less cash and cash equivalents held by consolidated funds

(307)

(204)

(292)

 

Total cash reserves

 

 

 

12,980

13,040

15,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

Share capital and Own shares

 

 

 

 

 

 

 

 

 

 

 

31 March 2017

31 March 2016

30 September 2016

 

Issued and fully paid ordinary shares of 1 pence each

 

 

 

Number

 

 

 

 

127,749,098

127,749,098

127,749,098

 

£000s

 

 

 

 

1,277

1,277

1,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 March 2017

31 March 2016

30 September 2016

 

Own shares

 

 

 

 

 

 

 

 

Number

 

 

 

 

19,144,332

21,023,120

21,387,839

 

£000s

 

 

 

 

6,631

7,387

7,131

 

Own shares represent a portion of those held in the EBT 2012 and EBT 2004. 1,466,493 shares were acquired in the six months ended 31 March 2017, (period ended 31 March 2016: 2,883,500). 3,710,000 shares were awarded to option holders on exercise of options (period ended 31 March 2016: 153,000).  As at 31 March 2017 the Company had a total of 13,599,500 options outstanding of which 9,345,500 were exercisable.  As at 31 March 2017 employees also held 7,440,000 Restricted shares over which the restrictions lapse starting from January 2018 through to December 2021.  These shares are held in trust in the EBT 2012 and are included in own shares above.

 

 

 

 

 

 

 

 

 

13

Related party transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 March 2017

Six months ended 31 March 2016

Year ended 30 September 2016

 

 

 

 

 

 

£000

£000

£000

 

Statement of comprehensive income

 

 

 

 

 

Revenue

 

 

 

 

 13,785

        9,378

  21,034

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31 March 2017

31 March 2016

30 September 2016

 

 

 

 

 

 

£000

£000

£000

 

Statement of financial position

 

 

 

 

 

 

Non-current asset investments

 

 

         13

              16

           14

 

Current asset investments

 

 

   1,574

        2,005

     1,114

 

Trade and other receivables

 

 

   6,545

4,595

     6,893

 

 

 

 

 

 

 

 

 

14

Group risks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group's principal risks remain as detailed within the Directors' report of the Group's 2016 Annual Report and Accounts and are categorised as financial, investment and operational.

 

 


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