Impax Asset Management Group plc
Interim results to 31 March 2023
H1 Business highlights
· Positive net inflows of
· Continued long-term outperformance of major strategies versus respective benchmarks
· Expanded international footprint and direct distribution capabilities, including opening a new office in
· Expanded product base, including launching an actively managed listed equities fund investing in sustainable infrastructure
H1 Financial highlights
· AUM
· Revenue of
· Adjusted operating profit of
· Shareholders' equity at Period end
· Adjusted diluted earnings per share of
· Interim dividend per share of
Ian Simm, Chief Executive commented:
"Impax has delivered a solid first half to its financial year, despite challenging macroeconomic conditions. During the Period, our AUM rose by 12% to reach
"Thanks to positive net flows and rising equities markets, our revenue grew compared to the second half of 2022, while adjusted operating profit fell, reflecting our investment in people and systems to support our growth strategy and to increase our operational resilience. We continue to carefully manage our costs in line with external market conditions and at the end of the Period, our run-rate adjusted operating margin was 31.8%, only slightly lower than the equivalent figure at the start of the Period (32.6%).
"Impax's specialist approach positions us well to benefit particularly from supportive policy and regulatory drivers, including the Inflation Reduction Act in the US and equivalent measures in
The presentation for shareholders and analysts will be available to view on the Company's website later this morning: https://www.impaxam.com/investor-relations/reports-and-presentations
Enquiries:
Impax Asset Management Group plc Ian Simm, Chief Executive Paul French, Head of Corporate Communications
|
+44 (0)20 3912 3000 |
Montfort Communications Gay Collins Jack Roddan
|
+44 (0)77 9862 6282 +44 (0)78 2567 0695 |
Peel Hunt LLP, Nominated Adviser and Joint Broker Paul Shackleton or John Welch
Berenberg, Joint Broker Gillian Martin |
+44 (0)20 7418 8900
+44 (0)20 3207 7800
|
LEI number: 213800AJDNW4S2B7E680
About Impax
Founded in 1998, Impax is a specialist asset manager, with approximately
Impax believes that capital markets will be shaped profoundly by global sustainability challenges, including climate change, pollution and essential investments in human capital, infrastructure and resource efficiency. These trends will drive growth for well-positioned companies and create risks for those unable or unwilling to adapt.
The company seeks to invest in higher quality companies with strong business models that demonstrate sound management of risk. Impax offers a well-rounded suite of investment solutions spanning multiple asset classes seeking superior risk-adjusted returns over the medium to long term.
Impax has approximately 290 employees across its offices in the
Chief Executive's Report
Business Update
Impax delivered a solid first half to its financial year, which includes the six months to 31 March 2023 ("the Period"). Despite challenging macroeconomic and inflationary conditions, we reported positive net flows, benefiting from rising equities markets and the relative outperformance by our major investment strategies.
During the Period, Impax's assets under management and advice ("AUM") rose by 12.4% to reach
While all asset managers currently face a complex operating environment, our performance demonstrates the robust nature of the Company and how Impax's specialist approach enables us to benefit from supportive secular, policy and regulatory drivers. Some significant mandate wins during the Period also highlight how asset owners and their advisers continue to be attracted to the investable opportunities arising from the transition to a more sustainable economy and, notwithstanding the current backdrop of weak market sentiment, our pipeline of new business remains healthy.
Markets
During the six months of the Period, global equities posted modest gains. Corporate revenues broadly remained strong, but earnings were under pressure as higher costs impacted companies' margins. Economic data meanwhile was mixed with indicators in the US and
Investors' attention continued to be focused on inflation, interest rates and the potential impact on the real economy. Market sentiment swung between optimism that the rate cycle would soon peak and concern that central banks would continue to raise rates too far as they attempt to combat inflation.
Meanwhile, policy support continues to provide tailwinds for investors focused on the transition to a more sustainable economy. The US' Inflation Reduction Act, the EU's Green Deal Industrial Plan, and similar climate-related measures in
Investment Performance
Impax offers actively managed Listed Equities strategies that use our Environmental Markets taxonomies and the Impax Sustainability Lens, as well as strategies in Fixed Income and Private Markets.
For the six-month Period, all of our thematic Environmental Markets strategies outperformed their benchmarks. Two out of three of our Sustainability Lens equities strategies outperformed their benchmarks, including Global Opportunities, our largest strategy, which outperformed the MSCI All Country World Index by 4.5%.
Meanwhile, in Fixed Income, the Core Bond strategy and the High Yield strategy both performed broadly in line with their benchmarks.
Longer term, eight out of our ten largest strategies, accounting for 90.4% of our AUM, have continued to outperform their benchmarks over five years, with seven out of ten outperforming over three years.
AUM movement for the Period
|
Listed equities |
Fixed income |
Private markets |
Total |
Total AUM at 30 September 2022 |
33,801 |
1,354 |
521 |
35,676 |
Net flows |
1,089 |
11 |
23 |
1,123 |
Market movement, FX and performance |
3,376 |
(61) |
1 |
3,316 |
Total AUM at 31 March 2023 |
38,266 |
1,304 |
545 |
40,115 |
Client Service and Business Development
We continued to expand our international footprint, focusing on strengthening our own direct distribution capabilities, especially in
In March we opened a new office in
In the US, we also announced that the Pax World mutual fund range would be renamed under the Impax brand, becoming the Impax Funds, effective 31 December 2022. We have increased the availability of the Impax Funds on several of the largest wealth management platforms. For US institutions, we intend to make these Funds available for larger defined contribution plans, with the launch of two sub-trusts of a collective investment trust ("CIT") later this year.
In the
Inflows during the Period were directed particularly into our Sustainability Lens equities strategies, with the US Large Cap strategy seeing net inflows of
Of our thematic Environmental Markets equities strategies, Climate and Sustainable Food received the greatest investor interest and saw net inflows of
Our
Within Private Markets, our team successfully exited two Spanish solar PV investments through our third fund. The fourth fund has been fundraising while progressing its investment programme, with eight projects closed and
As part of our new product development, we launched an actively managed, listed equities UCITS fund investing in Sustainable Infrastructure in November.
We are currently developing a new listed equities product targeted at Social themes, with a launch planned for the second half of the calendar year and are exploring a number of opportunities in fixed income.
All our funds marketed into
Meanwhile, we continue to invest in our brand and enhance the client experience beyond the pursuit of financial returns. This includes activity relating to stewardship, policy advocacy, environmental & social impact, and insights, including current research with Imperial College,
After the Period end, we were pleased to be one of eight asset managers to categorised as a "Leader" by Morningstar for our incorporation of ESG factors into our investment process. Morningstar evaluated 94 companies globally for its report.
Corporate services
Through our recent growth we have been selectively investing in systems, infrastructure, risk and compliance capabilities to increase our operational resilience and procedures as the business expands.
During the Period we moved our customer relationship management system to Salesforce, in order to establish a scalable platform for client relations. We have also extended our data management capabilities and automated some processes within the middle office.
To support our expanding business, we continued to hire during the Period, albeit at a slower rate than in the recent past. By the end of the Period, our number of employees had risen by 6% to 289.1
1. Full-time equivalent.
While we continue to invest in our people and systems to support our growth strategy and increase our resilience, we are carefully managing our costs in line with external market conditions.
Performance for Environmental Markets strategies1, 2, 3
|
|
Cumulative returns (%), GBP, gross of fees |
|||
|
AUM |
6M |
1YR |
3YR |
5YR |
Leaders |
|
13.9 |
5.9 |
70.2 |
73.4 |
Water |
|
13.1 |
5.6 |
78.9 |
86.8 |
Specialists |
|
7.5 |
(1.3) |
78.3 |
76.6 |
Climate |
|
6.4 |
(2.7) |
67.7 |
75.2 |
Sustainable Food |
|
9.7 |
0.9 |
51.5 |
43.8 |
MSCI ACWI |
|
6.3 |
(1.4) |
54.0 |
58.6 |
Asian Environmental |
|
7.7 |
(1.1) |
50.9 |
45.6 |
MSCI Asia Pac Composite |
|
5.9 |
(2.4) |
27.5 |
18.5 |
Performance for Sustainability Lens Listed Equities strategies1,2
|
|
Cumulative returns (%), GBP, gross of fees |
|||
|
AUM |
6M |
1YR |
3YR |
5YR |
Global Opportunities |
|
10.8 |
4.2 |
60.8 |
88.7 |
MSCI ACWI |
|
6.3 |
(1.4) |
54.0 |
58.6 |
US Large Cap |
|
3.1 |
(3.0) |
72.9 |
107.9 |
S&P 500 |
|
4.4 |
(1.7) |
67.3 |
92.8 |
US Small Cap |
|
1.7 |
(1.4) |
73.0 |
51.4 |
Russell 2000 |
|
(1.5) |
(5.9) |
62.7 |
42.8 |
Performance for Sustainability Lens Fixed Income strategies1,3
|
|
Cumulative returns (%), GBP, gross of fees |
|||
|
AUM |
6M |
1YR |
3YR |
5YR |
High Yield Bond |
|
(2.7) |
1.6 |
13.7 |
32.6 |
ICE BofA US Cash Pay High Yield Constrained (BB-B) |
|
(2.5) |
3.3 |
17.1 |
33.1 |
Core Bond |
|
(5.3) |
1.8 |
(5.7) |
20.6 |
Bloomberg US Aggregate |
|
(5.3) |
1.4 |
(7.8) |
18.7 |
1. AUM (GBP as at 31 March 2023). The strategy returns are calculated including the dividends re-invested, net of withholding taxes, gross of management fee, and are represented in sterling.
2. MSCI AC AP Composite is a custom-made benchmark made up of 80% MSCI AC Asia Pacific ex-
3. MCSI indices are total net return (net dividend re-invested). S&P, Russell, ICE BofA, and Bloomberg indices are all total gross return.
Financial results for the period
Revenue for the six months to 31 March 2023 increased to
Adjusted operating costs for the Period increased to
Adjusted operating profit for the Period was
Adjusted profit before tax of
IFRS profit before tax of
Financial Highlights For H1 2023 Versus H1 2022 and H2 2022
|
H1 2023 |
H1 2022 |
H2 2022 |
Revenue |
|
|
|
Adjusted operating costs |
|
|
|
Adjusted operating profit |
|
|
|
Adjusted diluted earnings per share |
17.2p |
21.1p |
21.0p |
Adjusted profit before tax |
|
|
|
IFRS profit before tax |
|
|
|
IFRS diluted earnings per share |
12.8p |
20.1p |
24.6p |
TAX
The effective tax rate has increased due to an increase in the main corporation tax rate in the
Financial resources
The Company continues to be a strongly cash generative business with high levels of cash and no debt. Our cash reserves were
Dividends
A final dividend for 2022 of
markets, the business performed well over the Period, while we continued to invest to support our growth ambitions. Reflecting this, while being mindful of the uncertain market conditions, we are pleased to announce an interim dividend of
Share management
The Board will consider purchasing the Company's shares from time to time after due consideration of alternative uses of the Company's cash resources. Share purchases are usually made by the Group's Employee Benefit Trust ("EBT") (subject to the trustees' discretion), using funding provided by the Company.
During the Period, the EBT purchased 1.4 million of ordinary shares at a weighted average price of
At the Period end the EBT held a total of 3.6 million shares, 2.8 million of which were held for Restricted Share awards leaving up to 0.8 million available for option exercises and future share awards. At the end of the Period, there were 2.0 million options outstanding, none of which were exercisable.
Outlook
Although the macroeconomic backdrop remains challenging, the easing of inflationary pressures, due to lower energy prices and the lessening of supply chain disruptions is expected to bring some relief for businesses in the near term.
Market volatility is likely to persist so long as inflation remains elevated and until there is greater certainty that the interest rate cycle has peaked.
Against this backdrop, we believe that high-quality companies with structural growth drivers benefiting from the transition to a more sustainable economy continue to present attractive investment opportunities.
Areas of investment interest include the beneficiaries of increased spending on drug discovery and testing, companies providing access to finance and businesses enabling the rise of the sharing and circular economy.
Meanwhile, recent policy moves such as the Inflation Reduction Act in the US and equivalent measures in
Despite these policy tailwinds, the operating environment in the US has been complicated recently by the move by some Republican politicians to campaign against "ESG investing", branding asset managers' focus on environmental, social and governance issues as "woke".
Our experience to date is that this criticism is largely limited to states in which Impax is not active and that our focus on economic transition and mainstream fundamentals rather than "ESG" has wide appeal.
Later this year, we will celebrate 25 years of our founding and a quarter-century of investing in the transition to a more sustainable economy. Our understanding of the opportunities and risks associated with the major sectoral transformations that are underway across the economy continue to attract asset owners and their advisers globally.
Our performance during the Period demonstrates the resilience and strength of our diversified business model. Our authenticity and heritage and our commitment to delivering an outstanding service to our clients, continue to make us well-placed to continue to provide long-term value for all our stakeholders.
Ian Simm
Chief Executive
30 May 2023
Condensed Consolidated Income Statement
For the six months ended 31 March 2023
|
Notes |
Unaudited |
Unaudited |
Audited |
Revenue |
|
87,960 |
88,640 |
175,396 |
Operating costs |
|
(63,142) |
(56,680) |
(110,213) |
Finance income |
5 |
1,457 |
1,130 |
7,950 |
Finance expense |
6 |
(4,879) |
(403) |
(574) |
Profit before taxation |
|
21,396 |
32,687 |
72,559 |
Taxation |
7 |
(4,601) |
(6,046) |
(13,077) |
Profit after taxation |
|
16,795 |
26,641 |
59,482 |
Earnings per share |
|
|
|
|
Basic |
8 |
13.0p |
20.6p |
46.0p |
Diluted |
8 |
12.8p |
20.1p |
44.7p |
Adjusted results are provided in Note 3.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 March 2023
|
Unaudited |
Unaudited |
Audited |
Profit for the Period |
16,795 |
26,641 |
59,482 |
Exchange differences on translation of foreign operations |
(466) |
64 |
2,685 |
Total other comprehensive income |
(466) |
64 |
2,685 |
Total comprehensive income for the Period attributable |
16,329 |
26,705 |
62,167 |
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.
Condensed Consolidated Statement of Financial Position
For the six months ended 31 March 2023
|
Note |
Unaudited |
Unaudited |
Audited |
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Goodwill |
10 |
12,738 |
12,063 |
13,932 |
Intangible assets |
10 |
15,378 |
16,714 |
18,340 |
Property, plant and equipment |
11 |
8,271 |
9,020 |
9,279 |
Deferred tax assets |
|
5,278 |
7,265 |
4,781 |
Total non-current assets |
|
41,665 |
45,062 |
46,332 |
Current assets |
|
|
|
|
Trade and other receivables |
|
44,003 |
39,496 |
38,769 |
Investments |
12 |
10,127 |
6,246 |
7,255 |
Current tax asset |
|
2,416 |
558 |
176 |
Cash invested in money market funds |
13 |
20,153 |
40,451 |
58,687 |
Cash and cash equivalents |
13 |
46,932 |
31,574 |
52,232 |
Total current assets |
|
123,631 |
118,325 |
157,119 |
Total assets |
|
165,296 |
163,387 |
203,451 |
Equity and liabilities |
|
|
|
|
Equity |
|
|
|
|
Ordinary shares |
15 |
1,326 |
1,326 |
1,326 |
Share premium |
|
9,291 |
9,291 |
9,291 |
Merger reserve |
|
1,533 |
1,533 |
1,533 |
Exchange translation reserve |
|
2,593 |
438 |
3,059 |
Retained earnings |
|
104,966 |
99,758 |
122,969 |
Total equity |
|
119,709 |
112,346 |
138,178 |
Current liabilities |
|
|
|
|
Trade and other payables |
|
35,166 |
41,365 |
53,624 |
Lease liabilities |
11 |
1,361 |
1,311 |
1,488 |
Current tax liability |
|
1,985 |
409 |
2,202 |
Total current liabilities |
|
38,512 |
43,085 |
57,314 |
Non-current liabilities |
|
|
|
|
Lease liabilities |
11 |
6,706 |
7,585 |
7,590 |
Deferred tax liability |
|
369 |
371 |
369 |
Total non-current liabilities |
|
7,075 |
7,956 |
7,959 |
Total liabilities |
|
45,587 |
51,041 |
65,273 |
Total equity and liabilities |
|
165,296 |
163,387 |
203,451 |
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 March 2023
|
Share capital |
Share premium |
Merger reserve |
Exchange translation reserve |
Retained earnings |
Total Equity |
1 October 2021 |
1,326 |
9,291 |
1,533 |
374 |
97,998 |
110,522 |
Transactions with owners of the Company: |
|
|
|
|
|
|
Dividends paid |
- |
- |
- |
- |
(22,475) |
(22,475) |
Cash received on option exercises |
- |
- |
- |
- |
180 |
180 |
Tax charge on long-term incentive schemes |
- |
- |
- |
- |
(1,269) |
(1,269) |
Share based payment charge |
- |
- |
- |
- |
2,558 |
2,558 |
Acquisition of own shares |
- |
- |
- |
- |
(3,875) |
(3,875) |
Total transactions with owners |
- |
- |
- |
- |
(24,881) |
(24,881) |
Profit for the Period |
- |
- |
- |
- |
26,641 |
26,641 |
Other comprehensive income |
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
- |
- |
- |
64 |
- |
64 |
Total other comprehensive income |
- |
- |
- |
64 |
- |
64 |
31 March 2022 |
1,326 |
9,291 |
1,533 |
438 |
99,758 |
112,346 |
Transactions with owners of the Company |
|
|
|
|
|
|
Dividends paid |
- |
- |
- |
- |
(6,190) |
(6,190) |
Cash received on option exercises |
- |
- |
- |
- |
360 |
360 |
Tax charge on long-term incentive schemes |
- |
- |
- |
- |
(2,487) |
(2,487) |
Share based payment charge |
- |
- |
- |
- |
3,593 |
3,593 |
Acquisition of own shares |
- |
- |
- |
- |
(4,906) |
(4,906) |
Total transactions with owners |
- |
- |
- |
- |
(9,630) |
(9,630) |
Profit for the Period |
- |
- |
- |
- |
32,841 |
32,841 |
Other comprehensive income |
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
- |
- |
- |
2,621 |
- |
2,621 |
Total other comprehensive income |
- |
- |
- |
2,621 |
- |
2,621 |
30 September 2022 |
1,326 |
9,291 |
1,533 |
3,059 |
122,969 |
138,178 |
|
Share capital |
Share premium |
Merger reserve |
Exchange translation reserve |
Retained earnings |
Total Equity |
30 September 2022 |
1,326 |
9,291 |
1,533 |
3,059 |
122,969 |
138,178 |
Transactions with owners of the Company |
|
|
|
|
|
|
Dividends paid |
- |
- |
- |
- |
(30,216) |
(30,216) |
Cash received on option exercises |
- |
- |
- |
- |
1,261 |
1,261 |
Tax credit on long-term incentive schemes |
- |
- |
- |
- |
1,623 |
1,623 |
Share based payment charge |
- |
- |
- |
- |
2,649 |
2,649 |
Acquisition of own shares |
- |
- |
- |
- |
(10,115) |
(10,115) |
Total transactions with owners |
- |
- |
- |
- |
(34,798) |
(34,798) |
Profit for the Period |
- |
- |
- |
- |
16,795 |
16,795 |
Other comprehensive income |
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
- |
- |
- |
(466) |
- |
(466) |
Total other comprehensive income |
- |
- |
- |
(466) |
- |
(466) |
31 March 2023 |
1,326 |
9,291 |
1,533 |
2,593 |
104,966 |
119,709 |
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 March 2023
|
Note |
Unaudited |
Unaudited |
Audited |
Operating activities: |
|
|
|
|
Cash generated from operations |
17 |
6,203 |
28,149 |
80,321 |
Corporation tax paid |
|
(5,932) |
(4,624) |
(9,046) |
Net cash generated from operating activities |
|
271 |
23,525 |
71,275 |
Investing activities: |
|
|
|
|
Net acquisition of property plant and equipment and intangible assets |
|
(376) |
(407) |
(796) |
Net (investments)/redemptions from unconsolidated |
|
(2,202) |
1,229 |
355 |
Settlement of investment related hedges |
|
(477) |
(97) |
69 |
Investment income received |
|
1,264 |
145 |
586 |
Decrease/(increase) in cash invested in money market funds |
|
38,534 |
(2,385) |
(19,091) |
Net cash generated from/(used by) investment activities |
|
36,743 |
(1,515) |
(18,877) |
Financing activities: |
|
|
|
|
Acquisition of non-controlling interest |
|
- |
- |
(182) |
Interest paid on bank borrowings |
|
(34) |
(59) |
(141) |
Payment of lease liabilities |
|
(1,011) |
(846) |
(1,729) |
Acquisition of own shares |
|
(10,115) |
(3,875) |
(8,781) |
Cash received on exercise of Impax share options |
|
1,261 |
180 |
540 |
Dividends paid |
|
(30,216) |
(22,475) |
(28,665) |
Net cash used by financing activities |
|
(40,115) |
(27,075) |
(38,958) |
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(3,101) |
(5,065) |
13,440 |
|
|
|
|
|
Cash and cash equivalents at the beginning of the Period |
|
52,232 |
36,172 |
36,172 |
Effect of foreign exchange rate changes |
|
(2,199) |
467 |
2,620 |
Cash and cash equivalents at the end of the Period |
13 |
46,932 |
31,574 |
52,232 |
Notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 31 March 2023
1 Basis of preparation
This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the
The annual financial statements of the Group for the year ended 30 September 2023 will be prepared in accordance with
The comparative figures for the financial year ended 30 September 2022 are not the Company's statutory accounts for that financial year. Those accounts, prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, have been reported on by the Company's auditors and delivered to Companies House. The report of the auditors was (i) unqualified, (ii) did not include a reference to matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. Copies of these accounts are available upon request from the Company's registered office at 7th floor, 30 Panton St,
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. The Group has sufficient 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). 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.
Accounting policies
The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 30 September 2022.
New and forthcoming accounting standards applicable to the Group
No new accounting standards or interpretations issued or not yet effective are expected to have an impact on the Group's condensed consolidated financial statements.
2 Estimates
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The Group has not identified any significant judgements and estimates at the end of the reporting Period. However the key areas that include judgement and/or estimates are set out in Note 10.
3 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.
|
Six months ended 31 March 2023 |
|||
Reported IFRS |
Adjustments |
Adjusted |
||
Business combination effects |
Other |
|||
Income statement |
|
|
|
|
Revenue |
87,960 |
|
|
87,960 |
Operating costs |
(63,142) |
|
|
(60,645) |
Amortisation of intangibles arising on acquisition |
|
1,344 |
|
|
Acquisition equity incentive scheme charges |
|
661 |
|
|
Mark to market charge on equity awards1 |
|
|
492 |
|
Operating Profit |
24,818 |
2,005 |
492 |
27,315 |
Finance income |
1,457 |
|
|
1,457 |
Finance expense |
(4,879) |
|
4,328 |
(551) |
Profit before taxation |
21,396 |
2,005 |
4,820 |
28,221 |
Taxation |
(4,601) |
|
|
(5,686) |
Tax charge on adjustments |
|
|
(1,085) |
|
Profit after taxation |
16,795 |
2,005 |
3,735 |
22,535 |
Diluted earnings per share |
12.8p |
1.5p |
2.8p |
17.2p |
1. The charge is offset by
|
Six months ended 31 March 2022 |
|||
Reported IFRS |
Adjustments |
Adjusted (restated)2 |
||
Business combination effects |
Other |
|||
Income statement |
|
|
|
|
Revenue |
88,640 |
|
|
88,640 |
Operating costs |
(56,680) |
|
|
(54,688) |
Amortisation of intangibles arising on acquisition |
|
1,200 |
|
|
Acquisition equity incentive scheme charges |
|
669 |
|
|
Mark to market charge on equity awards1 |
|
|
123 |
|
Operating Profit |
31,960 |
1,869 |
123 |
33,952 |
Finance income2 |
1,130 |
|
(682) |
448 |
Finance expense |
(403) |
|
|
(403) |
Profit before taxation |
32,687 |
1,869 |
(559) |
33,997 |
Taxation |
(6,046) |
|
|
(5,940) |
Tax credit on adjustments |
|
|
106 |
|
Profit after taxation |
26,641 |
1,869 |
(453) |
28,057 |
Diluted earnings per share |
20.1p |
1.4p |
(0.3)p |
21.1p |
1. The credit is offset by
2. Adjusted profit before tax has been restated to add back unrealised foreign exchange gains of
The adjusted diluted earnings per share is calculated using the adjusted profit after taxation shown above. The diluted number of shares is the same as used for the IFRS calculation of earnings per share (see Note 8).
Similar adjustments have been made, where relevant, for the year ended 30 September 2022 to give adjusted operating profit of
Amortisation of intangibles
Management contracts, which are classified as intangible assets, were acquired as part of the acquisition of Impax NH and are amortised over their 11 year life. This charge is not linked to the operating performance of the Impax NH business so is excluded from adjusted profit.
Acquisition equity incentive scheme charges
Impax NH staff have been awarded share-based payments in respect of the 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.
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") 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). An accrual for the NIC is recognised based on the share price at the balance sheet date and changes in the accrual are recognised as a charge or credit within IFRS operating profit. Similarly, the corporation tax credit is accrued within equity based on the share price at the balance sheet date with changes in the credit recognised as a credit or charge to equity.
The charge to profit varies based on the Group's share price and is not linked to the operating performance of the Group. It is therefore eliminated when reporting adjusted profit.
Finance income and expense
Finance expense for the Period has been adjusted for foreign exchange losses on intercompany loans and other unrealised foreign exchange gains and losses that are not linked to the performance of the Group. Prior period adjusted profit before tax has been restated to remove unrealised foreign exchange gains of
Taxation
The IFRS tax charge for 2022 includes a credit in respect of historical tax charges related to private equity income. This does not reflect the performance of the Group and is therefore excluded from adjusted profit.
4 Segment Information
The Group is managed on an integrated basis and there are no reportable segments.
5 Finance income
|
31 March |
31 March |
30 September 2022 |
Fair value gains |
193 |
- |
148 |
Interest income |
1,264 |
53 |
520 |
Other investment income |
- |
32 |
33 |
Foreign exchange gains |
- |
1,045 |
7,249 |
|
1,457 |
1,130 |
7,950 |
Fair value gains represent those arising on the revaluation of investments held by the Group (see Note 12) and any gains or losses arising on related hedged instruments held by the Group.
Foreign exchange gains mainly arise on the retranslation of intercompany loans and cash balances held in USD.
6 Finance expense
|
31 March |
31 March |
30 September 2022 |
Interest on lease liabilities |
209 |
217 |
433 |
Finance costs on bank loans |
34 |
59 |
141 |
Foreign exchange losses |
4,636 |
- |
- |
Fair value losses |
- |
127 |
- |
|
4,879 |
403 |
574 |
Foreign exchange losses mainly arise on the retranslation of intercompany loans and cash balances held in USD. Fair value losses represent those arising on the revaluation of investments held by the Group (see Note 12) and any gains or losses arising on related hedge instruments held by the Group. Commitment fees were payable on the revolving credit facility which the Group retained until January 2023.
7 Taxation
The blended
|
Six months ended 31 March 2023 |
Six months ended 31 March 2022 |
Year ended |
Profit before tax |
21,396 |
32,687 |
72,559 |
Tax charge at 22% (FY22 and HY22: 19%) |
4,707 |
6,211 |
13,786 |
Effects of: |
|
|
|
Non-taxable income |
(47) |
(13) |
(506) |
Non-deductible expenses and charges |
4 |
252 |
1,118 |
Tax relief on share awards |
(449) |
(251) |
(501) |
Adjustment in respect of historical tax charges |
289 |
(65) |
(928) |
Effect of (lower)/higher tax rates in foreign jurisdictions |
(1) |
123 |
31 |
Tax losses not recognised |
98 |
2 |
77 |
Recognition of prior year tax losses |
- |
(213) |
- |
Total income tax expense |
4,601 |
6,046 |
13,077 |
8 Earnings per share
Six months ended 31 March 2023 |
Earnings for the Period |
Shares |
Earnings |
Basic |
16,795 |
129,076 |
13.0p |
Diluted |
16,795 |
131,114 |
12.8p |
Six months ended 31 March 2022 |
|
|
|
Basic |
26,641 |
129,259 |
20.6p |
Diluted |
26,641 |
132,743 |
20.1p |
Year ended 30 September 2022 |
|
|
|
Basic |
59,482 |
129,409 |
46.0p |
Diluted |
59,482 |
133,168 |
44.7p |
The weighted average number of shares is calculated as shown in the table below.
|
Six months ended 31 March 2023 |
Six months ended 31 March 2022 |
Year ended |
Weighted average issued share capital |
132,597 |
132,597 |
132,597 |
Less own shares held |
(3,521) |
(3,338) |
(3,188) |
Weighted average number of ordinary shares used in the calculation of basic EPS |
129,076 |
129,259 |
129,409 |
Additional dilutive shares regarding share awards |
3,767 |
5,120 |
4,860 |
Adjustment to reflect option exercise proceeds and future |
(1,729) |
(1,636) |
(1,101) |
Weighted average number of ordinary shares used in the calculation of diluted EPS |
131,114 |
132,743 |
133,168 |
9 Dividends
On 16 March 2023, at the Company's Annual General Meeting, payment of a
The Board has declared an interim dividend for the Period of
10 Goodwill and Intangible assets
The goodwill and intangible assets held by the Group primarily relate to the acquisition of Impax NH in January 2018.
Goodwill |
|
Cost |
|
At 1 October 2021 |
11,816 |
Foreign exchange movement |
247 |
At 31 March 2022 |
12,063 |
Foreign exchange movement |
1,869 |
At 30 September 2022 |
13,932 |
Foreign exchange movement |
(1,194) |
At 31 March 2023 |
12,738 |
There were no brought forward impairment losses at 1 October 2022 or impairment charges during the Period.
Intangible assets
|
Management contracts |
Software |
Total |
Cost |
|
|
|
At 1 October 2021 |
26,441 |
529 |
26,970 |
Additions |
- |
57 |
57 |
Foreign exchange movement |
640 |
- |
640 |
At 31 March 2022 |
27,081 |
586 |
27,667 |
Additions |
- |
24 |
24 |
Disposals |
- |
(309) |
(309) |
Foreign exchange movement |
4,829 |
- |
4,829 |
At 30 September 2022 |
31,910 |
301 |
32,211 |
Additions |
- |
132 |
132 |
Foreign exchange movement |
(3,490) |
- |
(3,490) |
At 31 March 2023 |
28,420 |
433 |
28,853 |
Accumulated amortisation |
|
|
|
At 1 October 2021 |
8,988 |
509 |
9,497 |
Charge for the period |
1,200 |
14 |
1,214 |
Foreign exchange movement |
242 |
- |
242 |
At 31 March 2022 |
10,430 |
523 |
10,953 |
Charge for the period |
1,259 |
11 |
1,270 |
Disposals |
- |
(309) |
(309) |
Foreign exchange movement |
1,957 |
- |
1,957 |
At 30 September 2022 |
13,646 |
225 |
13,871 |
Charge for the period |
1,344 |
15 |
1,359 |
Foreign exchange movement |
(1,755) |
- |
(1,755) |
At 31 March 2023 |
13,235 |
240 |
13,475 |
Net book value |
|
|
|
At 31 March 2023 |
15,185 |
193 |
15,378 |
At 30 September 2022 |
18,264 |
76 |
18,340 |
At 31 March 2022 |
16,651 |
63 |
16,714 |
The management contracts were acquired with the acquisition of Impax NH in January 2018 and are amortised over an 11 year life. Asset inflows, operation margin, discounted cost of capital are all the same
or in excess of the assumptions when the management contracts were first valued. As such, there are no indicators of impairment.
11 Property, plant and equipment
Property plant and equipment
|
31 March |
31 March |
30 September 2022 |
Right-of-use assets |
6,689 |
7,531 |
7,647 |
Property, plant and equipment owned by the Group |
1,582 |
1,489 |
1,632 |
|
8,271 |
9,020 |
9,279 |
The carrying value of the Group's right of use assets, associated lease liabilities and the movements during the Period are set out below.
Lease arrangements
|
Right of |
Lease |
At 1 October 2022 |
7,647 |
9,078 |
Additions |
231 |
231 |
Lease payments |
- |
(1,011) |
Interest expense |
- |
209 |
Depreciation charge |
(804) |
- |
Foreign exchange movement |
(385) |
(440) |
At 31 March 2023 |
6,689 |
8,067 |
12 Current asset investments
The Group makes seed investments into its own Listed Equities 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.
|
|
At 1 October 2021 |
7,564 |
Additions |
125 |
Fair value movements |
(89) |
Repayments/disposals |
(1,354) |
At 31 March 2022 |
6,246 |
Additions |
874 |
Fair value movements |
135 |
At 30 September 2022 |
7,255 |
Additions |
2,298 |
Fair value movements |
670 |
Repayments/disposals |
(96) |
At 31 March 2023 |
10,127 |
An analysis of the investment by valuation technique hierarchy is disclosed below:
|
31 March |
31 March |
30 September 2022 |
Level 1 |
6,363 |
3,880 |
3,721 |
Level 2 |
- |
- |
- |
Level 3 |
3,764 |
2,366 |
3,534 |
|
10,127 |
6,246 |
7,255 |
Level 1 means that valuation is made by reference to quoted prices in active markets for the relevant securities.
Level 2 assets do not have regular market pricing but can be given a fair value based on quoted prices in active markets.
Level 3 assets are those where there is no readily available market information to value them and the asset values are based on models. They represent investments in our private equity funds.
13 Cash reserves
Cash and cash equivalents under IFRS does not include deposits in money market funds. However the Group considers its total cash reserves to include these amounts. Cash held in Research Payment Accounts ("RPAs") is collected from funds managed by the Group and can only be used towards the cost of researching stocks. A liability of an equal amount is included in trade and other payables. This cash is also excluded from cash reserves. A reconciliation is shown below:
|
31 March |
31 March |
30 September 2022 |
Cash and cash equivalents |
46,932 |
31,574 |
52,232 |
Cash held invested in money market funds |
20,153 |
40,451 |
58,687 |
Less: cash held in RPAs |
(5,276) |
(4,673) |
(3,951) |
Total cash reserves |
61,809 |
67,352 |
106,968 |
14 Loans
Up until January 2023, the Group retained a
15 Share capital and own shares
|
31 March |
31 March |
30 September 2022 |
Issued and fully paid ordinary shares of |
|
|
|
Number |
132,596,554 |
132,596,554 |
132,596,554 |
£000s |
1,326 |
1,326 |
1,326 |
|
31 March |
31 March |
30 September 2022 |
Own shares |
|
|
|
Number |
3,613,276 |
2,792,373 |
3,265,109 |
£000s |
8,995 |
2,802 |
8,128 |
Own shares represents those held by the Impax Asset Management Group plc Employee Benefit Trust 2012 (the "EBT") which are typically used to fund exercise of options or awards of restricted shares. 1.4 million shares were purchased by the EBT in the six months ended 31 March 2023. The EBT transferred 1.1 million shares to option/restricted shareholders on exercise of options or to holders of restricted shares when the restrictions lapsed.
As at 31 March 2023 there were a total of 2.0 million options outstanding over the Group's shares of which none were exercisable. As at 31 March 2023 employees also held 2.8 million restricted shares over which the restrictions lapse from February 2024 through to January 2028. These Restricted Shares are held in the EBT and included in the own shares numbers shown above.
16 Related party transactions
Private equity funds managed by the Group, entities controlled by these funds and certain other funds are related parties of the Group by virtue of subsidiaries being the General Partners to these funds. The Group earns management fees from these entities.
BNP Paribas Asset Management Holdings is a related party of the Group by virtue of owning a significant stake in the Group. The Group also sub-manages certain funds for BNP for which it earns fees.
Other funds managed by subsidiaries of the Group are also related parties by virtue of its management contracts.
During 2020 a loan facility was first provided to an executive for the sole purpose of investment in a fund managed by the Group. The loan is provided at an interest rate of LIBOR plus 2% per annum on amounts drawn, calculated on a daily basis. Interest of
Revenue earned from and operating costs for related parties of the Group are as shown in the table below:
|
Six months ended 31 March 2023 |
Six months ended 31 March 2022 |
Year ended |
Revenue |
84,425 |
88,595 |
170,840 |
Operating costs |
537 |
509 |
1,183 |
Investments in related parties of the Group and trade and other receivables due from related parties are as shown in the table below:
|
31 March |
31 March |
30 September 2022 |
Current asset investments |
3,764 |
2,366 |
3,534 |
Trade and other receivables |
35,593 |
33,460 |
32,954 |
17 Reconciliation of net cashflow from operating activities
This Note should be read in conjunction with the condensed Consolidated cashflow statement. It provides a reconciliation of how profit before tax, which is based on accounting rules, translates to cashflows.
|
31 March |
31 March |
30 September 2022 |
Profit before taxation |
21,396 |
32,687 |
72,559 |
Adjustments for: |
|
|
|
Depreciation of property, plant and equipment and amortisation of intangible assets |
2,428 |
2,069 |
4,257 |
Finance income |
(1,457) |
(1,130) |
(7,950) |
Finance expense |
4,879 |
403 |
574 |
Share-based payment charges |
2,649 |
2,558 |
6,151 |
Adjustment for statement of financial position movements: |
|
|
|
(Increase)/decrease in trade and other receivables |
(5,234) |
304 |
1,031 |
(Decrease)/increase in trade and other payables |
(18,458) |
(8,742) |
3,699 |
Cash generated from operations |
6,203 |
28,149 |
80,321 |
18 Group risks
The Group's principal risks remain as detailed within the Directors' Report of the Group's 2022 Strategic Report.
Alternative Performance Measures
The Group uses the following Alternative Performance Measures ("APMs").
ADJUSTED OPERATING COSTS, ADJUSTED OPERATING PROFIT, ADJUSTED PROFIT BEFORE TAX AND ADJUSTED PROFIT AFTER TAX
These APMs exclude the impact of the following items:
· amortisation of intangible assets which arose on the acquisition of Impax NH;
· charges in respect of equity incentive scheme related to the acquisition of Impax NH;
· mark-to-market charges in respect of National Insurance payable on share awards;
· foreign exchange gains and losses on the retranslation of intercompany loans and other unrealised foreign exchange gains and losses;
· significant tax credits related to the prior year.
These performance measures are reported as they facilitate comparison with prior periods and provide an appropriate comparison with our peers. Excluding amortisation of intangible assets arising from acquisitions is consistent with peers and therefore aids comparability. It also aids comparison to businesses which have grown organically, and do not have such charges. Mark to market charges in respect of National Insurance are excluded as they arise due only to changes in the share price and therefore do not reflect the operating performance of the Group. Foreign exchange gains and losses on the retranslation of intercompany loans and other unrealised foreign exchange gains and losses are excluded as they are not linked to the performance of the Group.
A reconciliation to the relevant IFRS terms is provided in Note 3 of the financial statements.
ADJUSTED OPERATING MARGIN
This is calculated as the ratio of adjusted operating profit to revenue. This number is reported as it gives
a good indication of the underlying profitability of the company and how this has changed year on year.
ADJUSTED Diluted EARNINGS PER SHARE
This is calculated as the adjusted profit after tax divided by the diluted number of shares used in the calculation of IFRS diluted earnings per share.
This is used to present a measure of profitability per share in line with adjusted profits.
A reconciliation to IFRS diluted earnings per share is shown in Note 3 of the financial statements.
RUN RATE REVENUE AND RUN RATE ADJUSTED OPERATING PROFIT
Run rate revenue is the revenue that the Group would report if the AUM for the year remained static at that shown at 31 March and fee rates were those at 31 March. Run rate revenue margin is the ratio of run rate revenue to AUM.
Run rate adjusted operating profit is the run rate revenue less adjusted operating costs for the month of March extrapolated for 12 months. Adjustments are made to exclude any one-off items.
Run rate numbers are reported as they give a good indication of the current profitability of the Group.
CASH RESERVES
Cash reserves is the sum of cash and cash equivalents and cash held in money market accounts less cash held in research payment accounts and cash held by consolidated funds. The calculation of cash reserves is shown in Note 13 to the financial statements.
Cash reserves are reported as they give a good indication of the total cash resources available to the Group.
ENDS
Issued in the
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