TIDMIAEM TIDMIAES
RNS Number : 9849X
Impax Asian Environmental Mkts Plc
15 February 2013
IMPAX ASIAN ENVIRONMENTAL MARKETS PLC
HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2012
INVESTMENT OBJECTIVE
The Company's investment objective is to generate long-term
capital growth through investment in a diverse portfolio of quoted
companies in the markets for cleaner or more efficient delivery of
basic services of energy, water and waste in the Asia Pacific
Region.
FINANCIAL INFORMATION
At 31 December At 30 June % change
2012 2012
------------------------------------------- --------------- -------------- ---------
Net assets GBP190.4m GBP183.1m +4.0%
------------------------------------------- --------------- -------------- ---------
Number of Ordinary Shares in issue(1) 200,914,475 207,674,475 -3.3%
------------------------------------------- --------------- -------------- ---------
Net asset value ("NAV") per Ordinary
Share 94.8p 88.2p +7.5%
------------------------------------------- --------------- -------------- ---------
NAV per Ordinary Share (excluding current
period net revenue) 94.1p 86.6p +8.7%
------------------------------------------- --------------- -------------- ---------
Total return(2) +9.1%
------------------------------------------- --------------- -------------- ---------
FTSE Environmental Opportunities Asia
Pacific (ex-Japan) Index (sterling)(3) +7.5%
------------------------------------------- --------------- -------------- ---------
FTSE Environmental Opportunities Japan
Index (sterling)(3) +0.5%
------------------------------------------- --------------- -------------- ---------
MSCI AC Asia Pacific (ex-Japan) Index
(sterling)(3) +12.1%
------------------------------------------- --------------- -------------- ---------
Composite Index (sterling)(3,4) +6.1%
------------------------------------------- --------------- -------------- ---------
Ordinary Share price (mid-market) 82.3p 75.8p +8.6%
------------------------------------------- --------------- -------------- ---------
Subscription Share price (mid-market) 1.8p 2.4p -25.9%
------------------------------------------- --------------- -------------- ---------
Ordinary Share price discount to diluted
NAV 13.2% 14.1% -
------------------------------------------- --------------- -------------- ---------
(1) Excluding shares held in treasury
(2) NAV plus dividend paid
(3) Total return in pounds sterling
(4) Calculated by Impax Asset Management Limited and consisting
of 80% FTSE Environmental Opportunities Asia Pacific (ex-Japan) and
20% FTSE Environmental Opportunities Japan Indices
CHAIRMAN'S REVIEW
Since my full year communication with investors in October 2012,
the headwinds of the previous 18 months have eased, and investors'
risk appetite for equities and Asian markets has revived. The
Company's performance started to turn around in the third quarter
of calendar 2012 and maintained that positive momentum through to
the end of the six months ended 31 December 2012 (the "Period") as
we started to see the stabilisation of earnings and re-rating of
many sectors.
While we have seen a broad based contribution to performance,
China and Hong Kong, which had been a drag on performance for the
last 18 months, became the growth engine for the Company's
portfolio in the final months of 2012 following the smooth
leadership transition in China. We believe China will continue with
its existing commitments within the current five year plan, which
commenced in 2011 and was labelled "the plan for green growth".
After a pause in expenditure, levels of activity are now expected
to recover and so we anticipate targeted spending in our markets to
gather momentum.
Price and Performance
Over the Period, the Company posted a net asset value total
return of 9.1%; outperforming the FTSE Environmental Opportunities
Asia Pacific Ex-Japan Index ("EOAX") and the FTSE Environmental
Opportunities Japan Index ("EOJP") which returned 7.5% and 0.5%
respectively, but lagging the MSCI AC Asia Pacific Ex Japan Index
("MXAPJ") which returned 12.1%.
During the Period the Company's Ordinary Share Price rose from
75.8p to 82.3p and the net asset value ("NAV") per share increased
from 88.2p to 94.8p.
Sector Developments
Policy developments continue to favour the growth of
Environmental Markets in the region. Air pollution in China,
particularly the current crisis in Beijing, is moving policy
towards stricter regulation and we expect to see higher long-term
commitments to gas and renewables. China's recently announced solar
target of 10 GigaWatts ("GW") was considerably higher than
anticipated, and we are seeing indications of higher wind
commitments. There has also been a marked increase in applications
for solar projects in Japan. Elsewhere in the region, Australia
announced that it will link its carbon market with the European
Union from 2015 and extended its Kyoto Climate Pledge. Indian
electricity black-outs spurred a commitment to an US$18 billion
power grid upgrade over five years. South Korea has raised its
target for greenhouse gas emission reductions in 2013 and aims to
enhance its competitiveness prior to a new carbon scheme in
2015.
Gearing
Throughout the Period the Company had US$40 million drawn down
from its revolving credit facility, and at the Period end the
Company's gearing level was 10% (net of cash and cash equivalents).
The credit facility expires on 28 April 2013 and the Board and its
advisers are currently considering the possible options following
that date.
Regulatory Changes
There are a number of regulatory changes which will become
effective over the next two years, with the Alternative Investment
Fund Managers Directive ("AIFMD") having the most significant
impact on the Company. The Board and its advisers continue to
monitor regulatory developments closely and are currently making
plans for the implementation of the AIFMD.
Discount and Buybacks
During the Period, the IAEM share price traded at an average
discount to NAV of 14% and in a range of 11% to 16%. The Company
bought back 6,760,000 Ordinary Shares in the Period and at 31
December 2012 the discount stood at 13%.
The directors are mindful of the Company's share price discount
relative to its peer group of investment trusts focused on the Asia
Pacific region and the Board will continue to utilise its powers to
buy in shares on an ad hoc basis when circumstances are considered
to be appropriate.
Update and Outlook
The increase in investor confidence and recovery in equity
markets has continued into 2013. As at 13 February the IAEM
undiluted NAV has risen 10.5% to 104.8p while the Ordinary Share
price has risen 9.1% to 89.8p. The corresponding increases in the
EOAX and the EOJP have been 8.9% and 4.2% respectively, while the
MXAPJ has risen by 7.7%.
The Board of Directors and the Manager believe that the
long-term investment thesis, based on changing demographics,
urbanisation, rising consumption and depletion of natural resources
remains compelling.
There are signs of strengthening sector drivers as Asian
economies start to improve and robust policy support continues
across the region. The increase in investor interest in
environmental and Asian markets since the Autumn of 2012 is
encouraging and our longer term confidence is based on a cautiously
optimistic global outlook.
The Board and the Manager believe that the Company is well
placed for 2013 as the global economy continues its slow recovery
and the medium to longer-term environmental themes in the
Asia-Pacific region gain traction.
Allan McKenzie
Chairman
15 February 2013
MANAGER'S REPORT
Investment Performance
The Company produced a net asset value per Ordinary Share total
return of 9.1% for the Period, with the majority of gains achieved
in the last three months of 2012. China and Hong Kong were the
largest regional contributors. Waste, water and pollution control
were the best performing sectors and renewable energy was the
weakest, but showed signs of stabilisation.
Investment Universe & Portfolio Structure
Our investment process remains unchanged and the market cap bias
still tends towards companies with smaller capitalisations. The
Company ended the period with investments in 48 companies. Our
biggest geographical exposure continues to be China and Hong Kong
(37%), followed by Japan (16%) and Taiwan (11%). At the end of the
period the portfolio has its largest allocation to Energy
Efficiency, followed by Water Infrastructure and Technologies which
together make up over 50% of the portfolio. The lowest weighting
was in Renewables & Alternative Energy at approximately 7%. An
analysis of the structure of the portfolio, as well as the
sub-sector contribution to performance, is shown on page 7.
Environmental Sub-sectors
Renewables and Alternative Energy ("RAE") - 7% weighting (11% as
at 30 June 2012)
While policy developments in the region continue to be positive,
the industry has been dominated by over supply and pricing
pressures. The sector remained widely out of favour during the
Period and performance was weak. Solar was particularly challenging
with over-capacity and declining prices, despite high levels of
construction activity. Wind companies rallied late in the period
despite weak pricing of turbines. In China the continued grid
constraints led to disappointing installations and Longyuan (wind
IPP, China) underperformed ahead of a capital raising. In this
sector our emphasis is on the Independent Power Producers (IPPs)
rather than the equipment manufacturers. Our holdings include
Energy Developments (geothermal, Philippines) and Greenko (wind and
hydro, India).
The Company's RAE underweight exposure was reduced further
during the period as we downsized our holdings in China High Speed
(wind turbine gearboxes, China) and Taewoong (wind turbine
components, Korea).
Energy Efficiency ("EE") - 39% weighting (38% as at end June
2012)
Energy efficiency markets recovered well over the Period, with
the exception of Light Emitting Diodes (LEDs) where margins came
under pressure and growth in lighting was slower than expected. Two
companies in particular performed well: Hollysys (industrial and
transport energy efficiency, China) rose strongly as the company
continued to gain market share and investors anticipated a recovery
in rail investment and Delta Electronics (power electronics,
Thailand) performed strongly on the back of better than expected
results.
Our overall sector weighting is unchanged at the end of the
period although we undertook some rebalancing at the stock level to
target key growth markets such as efficient vehicles and
automation. Our trades in this regard included selling China High
Precision (industrial efficiency, China) and NVC Lighting
(efficient lighting, China) and adding to Denso (transport energy
efficiency, Japan) and Hiwin (industrial automation, Taiwan).
Waste Management & Technologies ("WMT") - 12% weighting (13%
as at end June 2012)
The recycling sector performed strongly over the Period and IAEM
stocks outperformed, led by robust recoveries in the Chinese
recycling companies as relevant commodity prices rose and investors
anticipated higher activity levels following the political
leadership transition. However, in Japan, Daiseki (hazardous waste)
performed poorly as recycling volumes failed to meet
expectations.
During the period we sold out of Sims Metal Management
(Australia) and took profits in China Metal Recycling (China), both
metals recycling companies.
Water Infrastructure & Technologies ("WIT") - 17% weighting
(18% as at end June 2012)
Increased urbanisation is one of the top priorities for the
incoming Chinese government and water infrastructure stocks are
well placed to benefit from a total stated investment in
conservation and irrigation systems reaching in excess of USD 600
billion by 2020.
Over the Period IAEM holdings in the sector delivered strong
performance led by ASEAN water utilities and Coway (formerly
Woongjin Coway, water treatment, Korea) and Liansu (water pipes,
China) which rose over 50% on anticipation of the recovery of
infrastructure spending.
Our exposure to the water sector declined slightly during the
Period. We added to Beijing Enterprise Water (waste water treatment
and water supply, China), while taking profits in Manila Water
(water utility, Philippines) and selling out of Jain Irrigation
(micro-irrigation, India) and Torishima Pump (desalination pumps,
Japan) following disappointing results.
Pollution Control ("PC") - 14% weighting (13% as at end June
2012)
Reducing high air pollution levels in cities is a high priority
across the region and China has pledged US$56 billion to cut air
pollution. Investment in city gas networks is a key component of
this strategy and we continue to maintain exposure to this
theme.
The sector and IAEM's holdings exposed to this theme performed
strongly over the Period. Our Chinese gas infrastructure and
utility companies all rose on the back of sound growth and we took
profits in both ENN Energy and Towngas. Horiba (environmental and
engine testing, Japan) declined following a weaker outlook for the
semiconductor division which we saw as an opportunity to increase
our position.
Diversified Environmental ("DE") - 11% weighting (7% end June
2012)
This sub-sector was relatively weak as strength in LG Chem
(speciality chemicals and batteries, Korea) was offset by weakness
in Sekisui Chemical (solar homes, Japan). We increased our exposure
to Sekisui Chemical and Yingde Gases (industrial gases, China).
Macro & Regional Factors
In China, we expect further government commitments to
urbanisation and rising living standards, against a backdrop of
increasing resource constraints and pollution issues. Given the
policy priority, the building of targeted environmental
infrastructure projects is likely to benefit, in contrast to the
very broad economic stimulus seen in 2009 which the Chinese
government will be reluctant to repeat.
The dispute over the Senkaku/Diaoyu Islands in the East China
Sea has the potential to impact Japanese equity markets and we
continue to monitor the situation closely. The outlook for India is
more promising with the government initiating policy reforms which
should kick start a new investment cycle and lead to a recovery in
earnings.
Outlook
Impax remains optimistic on the prospects for Asian markets,
particularly China and Hong Kong where we expect further re-rating
across our sectors. We continue to see strong policy support for
our markets in the region and energy efficiency, water
infrastructure and city gas distribution look set to deliver
particularly strong growth while continuing to trade at attractive
valuations.
We will continue to post monthly updates on the Company's
performance and sector news on www.impaxam.com
Impax Asset Management Limited
15 February 2013
FIVE LARGEST INVESTMENTS
As at 31 December 2012
ENN Energy (Natural gas distribution, China - 3.6%)
ENN is the largest privately-run city gas distributor in China.
The company is set to benefit from policy objectives to improve air
quality, reduce coal utilisation and increase the natural gas share
of primary energy from 4% to 8% by 2015. The company has long term
exclusive concessions in 100 cities covering an urban population of
50 million people.
Hollysys (Industrial and transport energy efficiency, China -
3.3%)
Hollysys is a leading provider of industrial automation and
control technologies. Against the background of labour cost
inflation and industrial equipment upgrades in China, the company
is well positioned with potential for market share gains from
foreign players due to its competitive products. Hollysys is also a
key beneficiary of the huge Chinese railway and city metro
investment plan.
LG Chem (Speciality chemicals and efficient batteries, South
Korea - 3.2%)
LG Chem is a speciality chemical manufacturer which has
diversified into batteries. The company has applied its chemical
industry experience to produce rechargeable batteries using cheaper
raw materials than the competition. The company has a lithium ion
battery that has met auto manufacturers' safety standards for
Hybrid Vehicle and Electric Vehicle ("EV") batteries, and is
currently one of the leading EV battery makers in the world.
Xinyi Glass (Energy efficient glass, China - 3.2%)
Xinyi Glass is an integrated glass manufacturer specialising in
the production of energy efficient glass for applications in the
automotive, high end construction and solar markets. The company
also has plans to expand into electronic grade glass and is gaining
market share through geographic expansion and industry
consolidation.
Rinnai (Efficient water heaters, Japan - 3.1%)
Rinnai is Japan's largest manufacturer of domestic gas
appliances, with a global presence in highly efficient gas-fired
tankless water heaters. The domestic gas market is an oligopoly and
growth is driven by the need to increase energy efficiency and
policy initiatives to drive the replacement of electric heaters
following the earthquake in Japan in 2011.
STRUCTURE OF PORTFOLIO
As at 31 December 2012
BREAKDOWN BY COUNTRY OF DOMICILE AND QUOTATION (in market value
terms)
Domicile Quotation(2)
China and Hong Kong(1) 37% 33%
Japan 16% 16%
Taiwan 11% 11%
South Korea 11% 11%
India 8% 7%
Philippines 4% 4%
Thailand 4% 4%
Australia 4% 4%
Singapore 3% 4%
Indonesia 2% 2%
United States - 3%
United Kingdom - 1%
Total 100% 100%
(1) Where a participatory note is held, the exposure is reported
for the underlying security. American depositary receipts are
included under United States.
(2) Companies quoted in Hong Kong represented 31% (by market
value) of the Company's portfolio.
BREAKDOWN BY SECTOR
Renewable & Alternative
Energy 7%
Energy Efficiency 39%
Waste Management & Technologies 12%
Water Infrastructure &
Technologies 17%
Pollution Control 14%
Diversified Environmental 11%
Total 100%
BREAKDOWN BY MARKET CAPITALISATION
>US$5bn 24%
US$1bn - US$5bn 53%
< US$1bn 23%
Total 100%
INTERIM MANAGEMENT REPORT
The Chairman's review on pages 1 and 2 and the Manager's report
on pages 3 to 5 provide details on the performance of the Company.
Those reports also include an indication of the important events
that have occurred during the first six months of the financial
year ending 30 June 2013 and the impact of those events on the
condensed set of financial statements included in this Half-yearly
financial report.
Details of the largest five investments held at the period end
are provided on page 6 and the structure of the portfolio at the
period end is analysed on page 7.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board considers that the main risks and uncertainties faced
by the Company fall into the categories of (i) Asia Pacific region
risks (ii) Market risks and (iii) Corporate governance and internal
control risks. A detailed explanation of these risks and
uncertainties can be found in the Company's most recent Annual
Report for the year ended 30 June 2012. The risks and uncertainties
facing the Company remain unchanged from those disclosed in the
Annual Report.
RELATED PARTY TRANSACTIONS
Details of the investment management arrangements were provided
in the Annual Report. There have been no changes to the related
party transactions described in the Annual Report that could have a
material effect on the financial position or performance of the
Company. Amounts payable to the investment manager in the period
are detailed in the Income Statement on page 10.
Board of Directors
15 February 2013
DIRECTORS' STATEMENT OF RESPONSIBILITY
FOR THE HALF-YEARLY REPORT
The Directors confirm to the best of their knowledge that:
-- The condensed set of financial statements contained within
the half yearly financial report has been prepared in accordance
with the guidance issued by the Accounting Standards Board on
"Half-yearly financial reports".
-- The interim management report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the FSA's Disclosure
and Transparency Rules.
Allan McKenzie
Chairman of the Board of Directors
15 February 2013
INCOME STATEMENT
For the six months ended 31 December 2012
Six months ended Six months ended Year ended 30 June
31 December 2012 31 December 2011 2012
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains /
(losses)
on
investments - 15,107 15,107 - (66,103) (66,103) - (67,004) (67,004)
Income 3 2,116 - 2,116 2,566 - 2,566 5,024 - 5,024
Investment
management
fees (194) (777) (971) (224) (897) (1,121) (449) (1,797) (2,246)
Other
expenses (371) - (371) (307) - (307) (664) - (664)
------------ ------------ ------------ ------------ ------------ ------------ ---------- ----------- -----------
Return on
ordinary
activities
before
finance
costs
and
taxation 1,551 14,330 15,881 2,035 (67,000) (64,965) 3,911 (68,801) (64,890)
Finance
Costs 4 (75) (300) (375) (66) (265) (331) (160) (636) (796)
------------ ------------ ------------ ------------ ------------ ------------ ---------- ----------- -----------
Return on
ordinary
activities
before
taxation 1,476 14,030 15,506 1,969 (67,265) (65,296) 3,751 (69,437) (65,686)
------------ ------------ ------------ ------------ ------------ ------------ ---------- ----------- -----------
Taxation 5 (170) - (170) (267) - (267) (408) - (408)
------------ ------------ ------------ ------------ ------------ ------------ ---------- ----------- -----------
Return on
ordinary
activities
after
taxation 1,306 14,030 15,336 1,702 (67,265) (65,563) 3,343 (69,437) (66,094)
------------ ------------ ------------ ------------ ------------ ------------ ---------- ----------- -----------
Return per
Ordinary
Share 6 0.64p 6.88p 7.52p 0.79p (31.34p) (30.55p) 1.57p (32.63p) (31.06p)
The total column of the Income Statement is the profit and loss
account of the Company.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
during the period.
A Statement of Total Recognised Gains and Losses has not been
presented as all gains and losses are recognised in the Income
Statement.
BALANCE SHEET
As at 31 December 2012
At 31 December At 31 December At 30
2012 2011 June
2012
(unaudited) (unaudited) (audited)
Note
GBP'000 GBP'000 GBP'000
Fixed assets
Investments at fair value through
profit and loss 2 212,629 210,843 205,550
--------------- --------------- ----------
Current assets
Income receivable 117 125 803
Sales - future settlements 602 1,639 374
Other debtors 8 165 12
Cash at bank and in hand 2,146 4,309 2,951
--------------- --------------- ----------
2,873 6,238 4,140
--------------- --------------- ----------
Creditors: amounts falling due within
one year
Bank Loan 24,654 - 25,510
Fair Value of interest rate swap 110 - 179
Purchases - future settlements - 2,655 619
Accrued liabilities 338 263 271
--------------- --------------- ----------
25,102 2,918 26,579
--------------- --------------- ----------
Net current assets (22,229) 3,320 (22,439)
Total assets less current liabilities 190,400 214,163 183,111
Creditors; amounts falling due after
more than one year
Bank loan 7 - 25,879 -
Fair value of interest rate swap 8 - 192 -
Total net assets 190,400 188,092 183,111
--------------- --------------- ----------
Capital and reserves: equity
Share capital 2,189 2,189 2,189
Share premium account 10,060 10,060 10,060
Capital redemption reserve 129,982 129,982 129,982
Share purchase reserve 91,352 100,903 96,453
Capital reserve (45,383) (57,241) (59,413)
Revenue reserve 2,200 2,199 3,840
--------------- --------------- ----------
Shareholders' funds 190,400 188,092 183,111
--------------- --------------- ----------
Net asset value per share
Net asset value per Ordinary Share 9 94.77p 88.26p 88.17p
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
For the six months ended 31 December 2012 (unaudited)
Share Capital Share
Share premium redemption purchase Capital Revenue
capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- ----------- --------- --------- -------- --------
Opening shareholders'
funds 2,189 10,060 129,982 96,453 (59,413) 3,840 183,111
Ordinary Share buy
backs - - - (5,101) - - (5,101)
Dividends paid - - - - - (2,946) (2,946)
Profit for the period - - - - 14,030 1,306 15,336
-------- -------- ----------- --------- --------- -------- --------
Closing shareholders'
funds
as at 31 December
2012 2,189 10,060 129,982 91,352 (45,383) 2,200 190,400
-------- -------- ----------- --------- --------- -------- --------
For the six months ended 31 December 2011 (unaudited)
Share Capital Share
Share premium redemption purchase Capital Revenue
capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- ----------- --------- --------- -------- ---------
Opening shareholders'
funds 2,189 10,056 129,982 102,350 10,024 2,539 257,140
Exercise of Subscription
Shares - 4 - - - - 4
Ordinary Share buy
backs - - - (1,447) - - (1,447)
Dividends paid - - - - - (2,042) (2,042)
Profit/(loss) for
the period - - - - (67,265) 1,702 (65,563)
-------- -------- ----------- --------- --------- -------- ---------
Closing shareholders'
funds
as at 31 December
2011 2,189 10,060 129,982 100,903 (57,241) 2,199 188,092
-------- -------- ----------- --------- --------- -------- ---------
For the year ended 30 June 2012 (audited)
Share Capital Share
Share premium redemption purchase Capital Revenue
capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- ----------- --------- --------- -------- ---------
Opening shareholders'
funds 2,189 10,056 129,982 102,350 10,024 2,539 257,140
Exercise of Subscription
Shares - 4 - - - - 4
Ordinary Share buy
backs - - - (5,897) - - (5,897)
Dividends paid - - - - - (2,042) (2,042)
Profit/(loss) for
the year - - - - (69,437) 3,343 (66,094)
-------- -------- ----------- --------- --------- -------- ---------
Closing shareholders'
funds
as at 30 June 2012 2,189 10,060 129,982 96,453 (59,413) 3,840 183,111
-------- -------- ----------- --------- --------- -------- ---------
CASH FLOW STATEMENT
For the six months ended 31 December 2012
Six months Six months Year ended
ended 31 ended 31 30 June 2012
December December
2012 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Operating activities
Cash inflow from investment income
and bank interest 2,796 2,884 4,662
Cash outflow from management expenses (1,342) (1,592) (3,009)
Cash inflow from disposal of investments 77,482 84,861 141,956
Cash outflow from purchase of
investments (71,091) (92,481) (146,222)
Cash outflow from net foreign
exchange costs (19) (1,149) (307)
Cash outflow from taxation (170) (266) (408)
------------ ------------ --------------
Net cash flow from operating activities 7,656 (7,743) (3,328)
------------ ------------ --------------
Returns on investments and servicing
of finance
Interest paid (414) (245) (733)
------------ ------------ --------------
Net cash flow from returns on
investments and servicing of finance (414) (245) (733)
------------ ------------ --------------
Equity dividends paid (2,946) (2,042) (2,042)
Financing
Proceeds of share issues - 4 4
Share buy backs (5,101) (1,447) (5,897)
Bank loan - 10,231 9,396
------------ ------------ --------------
Net cash flow from financing (5,101) 8,788 3,503
------------ ------------ --------------
Decrease in cash (805) (1,242) (2,600)
Opening balance 2,951 5,551 5,551
------------ ------------ --------------
Closing balance 2,146 4,309 2,951
------------ ------------ --------------
NOTES TO THE ACCOUNTS
1 Accounting policies
The Half-yearly financial report has been prepared in accordance
with applicable UK accounting standards and UK GAAP. The accounting
policies used by the Company are the same as those stated in its
most recent Annual Report. The accounting policy in relation to
investments is stated in note 2 below.
The Company manages its affairs to enable it to qualify as an
investment trust for taxation purposes under section 1158 of the
Corporation Tax Act 2010. The Company therefore presents its
accounts in accordance with the Statement of Recommended Practice
for Investment Companies.
2 Investments
Investments have been classified as "fair value through profit
or loss" and are initially recognised on the trade date and
measured at fair value. Investments are measured at subsequent
reporting dates at fair value by reference to the following
criteria:-
-- Any securities of companies quoted on an investment exchange
are valued at fair value by reference to market bid price.
-- Any investments in derivatives are valued at fair value. In
the case of Participatory Notes this is by reference to latest
broker quotations or, if unavailable or lower, by reference to the
equivalent market bid price valuation of the relevant underlying
security.
-- Any other investments (including suspended securities) are
valued at best estimate of fair value as determined by the
Directors.
Changes in fair value are included in the Income Statement as a
capital item.
Transaction costs incurred on the acquisition and disposal of
investments are charged to the Income Statement as a capital
item.
3 Income
Six months Six months Year ended
ended ended
31 Dec 2012 31 Dec 2011 30 Jun 2012
GBP'000 GBP'000 GBP'000
------------ ------------ ------------
Income from investments:
Dividends from overseas listed
investments 2,109 2,562 5,017
UK treasury bill income 6 4 6
Total 2,115 2,566 5,023
------------ ------------ ------------
Other income:
Interest receivable 1 - 1
Total income 2,116 2,566 5,024
------------ ------------ ------------
4 Finance Costs
Six months ended Six months ended Year ended
31 Dec 2012 31 Dec 2011 30 Jun 2012
Revenue Capital Total Revenue Capital Total Revenue Capital Capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- -------- -------- -------- -------- -------- --------
Interest payable 78 313 391 51 205 256 149 596 745
Direct costs 10 42 52 10 41 51 21 82 103
Fair value
of swap (13) (55) (68) 5 19 24 (10) (42) (52)
75 300 375 66 265 331 160 636 796
-------- -------- -------- -------- -------- -------- -------- -------- --------
5 Taxation
The tax charge in the Income Statement is in respect of overseas
tax suffered on dividend income.
6 Return per share
Return per Ordinary Share is based on the net return
attributable on ordinary activities after taxation attributable to
the weighted average of 204,066,699 Ordinary Shares in issue
(excluding shares held in treasury) during the period (Six months
ended 31 December 2011: 214,605,268; Year ended 30 June 2012:
212,795,589).
Dilution may be caused by the Subscription Shares in issue. Each
Subscription Share carries the right to subscribe for one Ordinary
Share at a price of 100p. The average bid price per Ordinary Share
during the period was lower than 100p and consequently the
Subscription Shares had an anti-dilutive impact on return per share
during the period and no dilution to return per Ordinary Share is
presented.
7 Bank Loan
The Company has a US dollar revolving credit facility with the
Royal Bank of Scotland plc. Under the terms of the facility the
Company may draw down loans of up to, in aggregate, US$50 million.
The facility expires on 28 April 2013. As at 31 December 2012 US$40
million (31 December 2011: US$40m; Year ended 30 June 2012: US$40
million) was outstanding.
Interest is payable on amounts drawn down under facility
computed at the rate of US$ LIBOR plus a margin of 1.85% per annum.
A commitment fee computed at the rate of 0.925% per annum is
payable on any amounts not drawn under the facility.
8 Interest Rate Swap
The Company has also entered into a US$50 million swap
arrangement under which the finance cost on amounts drawn down from
the US50m loan facility has been fixed for the term of the loan per
annum. The fixed rate payable under the swap arrangement is 1.0575%
per annum with the Company receiving interest at US$ LIBOR.
Breakage costs may apply in the event of early termination of the
swap agreement. The fair value of the interest rate swap liability
at 31 December 2012 was GBP110,000 (31 December 2011: GBP192,000;
30 June 2012: GBP179,000).
9 Net assets per share
The undiluted net assets per Ordinary Share figure is based on
the net assets of GBP190,400,000 at 31 December 2012 (31 December
2011: GBP188,092,000; 30 June 2012: GBP183,111,000) divided by
200,914,475 Ordinary Shares in issue (excluding shares held in
treasury) at 31 December 2012 (31 December 2011: 213,105,198; 30
June 2012: 207,674,475).
There was no dilution of net assets per Ordinary Share at 31
December 2012 due to the net asset value per share being lower than
the Subscription Share exercise price of 100p at that date.
10 Shares in issue
The number of Ordinary Shares in issue (excluding shares held in
treasury) at 31 December 2012 was 200,914,475. The Company also
held 14,076,000 Ordinary Shares in treasury. Each Ordinary Share
held (excluding treasury shares) entitles the holder to one vote at
any general meetings of the Company.
The number of Subscription Shares in issue at 31 December 2012
was 39,000,116.
Each Subscription Share carries the right to subscribe for one
Ordinary Share at 100p per share on any business day between 1
November 2009 and 31 October 2014 inclusive. The subscription price
and number of Ordinary Shares are subject to adjustment on the
occurrence of certain events including subdivision or consolidation
of Ordinary Shares. Subscription Shares carry limited voting
rights.
11 Purchase of own shares
During the six months ended 31 December 2012, 6,760,000 Ordinary
Shares were bought back to be held in treasury at an aggregate cost
of GBP5,101,000.
12 Investment management fees
Fees payable to Impax Asset Management Limited (the "Manager")
are shown in the Income Statement. At 31 December 2012 the fee
accrual outstanding to the Manager was GBP159,000 (31 December
2011: GBP178,000; 30 June 2012: GBP173,000). These fees were
subsequently paid following the period end.
The basis on which management fees are calculated changed from
total assets to net assets with effect from 1 October 2012.
13 Status of this report
These financial statements are not the Company's statutory
accounts for the purposes of section 434 of the Companies Act 2006.
They are unaudited and have not been subject to an audit review.
The Half-yearly financial report will be sent to shareholders and
copies will be made available to the public at the registered
office of the Company. The report will be available in electronic
format on the Manager's website (www.impaxam.com).
The Half-yearly financial report was approved by the Board on 15
February 2013.
The Company's statutory accounts for the year ended 30 June 2012
received an unqualified audit report and have been filed with the
registrar of companies at Companies House.
DIRECTORS, MANAGER AND ADVISERS
DIRECTORS INVESTMENT MANAGER
Allan McKenzie (Chairman) Impax Asset Management Limited
Simon Atiyah Norfolk House
Alan Barber 31 St James's Square
Richard Franklin London
Terence Mahony SW1Y 4JR
BROKER SECRETARY AND ADMINISTRATOR
Canaccord Genuity Limited Cavendish Administration Limited
88 Wood Street 145-157 St. John Street
London EC2V 7QR London EC1V 4RU
REGISTRAR
SOLICITOR Capita Registrars
CMS Cameron McKenna LLP The Registry
Mitre House 34 Beckenham Road
160 Aldersgate Street Beckenham
London EC1A 4DD Kent BR3 4TU
CUSTODIAN AUDITOR
BNP Paribas Securities Services Ernst & Young LLP
BNP Paribas London Branch 1 More London Place
10 Harewood Avenue London SE1 2AF
London NW1 6AA
REGISTERED OFFICE*
145-157 St. John Street
London EC1V 4RU
* Registered in England and Wales
No. 7016550
15 February 2013
Enquiries:
Anthony Lee
Tel: 020 7490 4355
Company Secretary
Cavendish Administration Limited
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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