TIDMIPX
RNS Number : 9758U
Impax Asset Management Group plc
29 November 2023
Impax Asset Management Group plc
Results for the year ended 30 September 2023
London, 29 November 2023 - Impax Asset Management Group plc
("Impax" or the "Company"), the specialist investor focused on the
transition to a more sustainable global economy, today announces
final audited results for the year ending 30 September 2023 (the
"Period").
Business highlights
-- Further development of the transition to a more sustainable
economy, with significant growth in renewable power generation,
electric vehicle fleets and investment to adapt to more extreme
weather
-- High client retention despite challenging markets
-- Targeted investment to support growth
-- Strengthened distribution capabilities, including in North
America, Latin America, and Japan, with a new office in Tokyo
-- Increased product pipeline, including launching an equities
strategy targeting Sustainable Infrastructure
-- Additional investment to expand the Company's fixed income offering
-- Increased operational resilience and improved efficiency
through investment in systems and infrastructure
-- Launched Impax Sustainability Centre to facilitate the scaling of resources in this key area
-- Awards during and after the Period included: 'Investment
Manager of the Year' (European Pensions Awards 2023); 'Responsible
Investor of the Year' (Reuters Responsible Business Awards) and
'Listed Equites Manager of the Year' (Environmental Finance
Sustainable Investment Awards).
Financial highlights
-- Assets under management ("AUM") increased by 4.8% to GBP37.4 billion (2022: GBP35.7 billion)
-- Revenue increased 1.7% to GBP178.4 million (2022: GBP175.4 million)
-- Adjusted operating profit decreased by 13.8% to GBP58.1 million (2022: GBP67.4 million)
-- Profit before tax decreased by 28.2% to GBP52.1 million (2022: GBP72.6 million)
-- Cash reserves of GBP87.7 million (2022: GBP107.0 million)
-- Adjusted diluted earnings per share decreased by 16.4% to 35.2 pence (2022: 42.1 pence)
-- Proposed final dividend of 22.9 pence per share bringing
total dividend per share to 27.6 pence (2022: 27.6 pence)
Sally Bridgeland, Chair, commented:
"Despite the challenging macro environment that has faced the
asset management community, Impax has continued to deliver for its
clients over the financial year. The Company has been recognised
for its sector leadership and its commitment to investing in the
transition to a more sustainable economy, winning several industry
awards.
"In 2019, the Company adopted a policy of paying an annual
dividend of between 55% and 80% of adjusted profit after tax. In
line with this, the Board now recommends paying a final dividend
for 2023 of 22.9p for a total for the year of 27.6p, representing a
flat total dividend relative to the 2022 payout.
"Lindsey Brace Martinez and I will step down from the Board on
the ninth anniversary of joining at the end of July 2024. I am
delighted that Simon O'Regan has agreed, subject to his re-election
as a Director at the Company's AGM in March 2024, to succeed me as
independent Non-Executive Chair with effect from 31 July 2024. I'm
also very pleased to welcome Julia Bond as a Non-Executive Director
of the Company, effective 29 November 2023."
Ian Simm, Chief Executive, added:
"Impax has delivered creditable results during a year that has
presented challenging investment conditions. Over the Period,
assets under management increased by 4.8% to GBP37.4 billion,
driven by investment returns and strong client retention.
"The Company was able to expand revenue by GBP3.0 million to
GBP178.4 million. Nevertheless, operating costs also rose as we
invested in our distribution and investment capabilities,
technology and operations to ensure that the business is resilient
and scalable, and hence adjusted operating profit decreased to
GBP58.1 million.
"We made good progress in developing and launching new products,
including a new sustainable infrastructure strategy and will soon
launch a new social thematic strategy. We have also identified a
particular opportunity within fixed income and have made strategic
hires into that team. We are reviewing opportunities to source
additional fixed income capabilities and will provide an update in
due course.
"In a year where we have celebrated Impax's 25(th) anniversary,
our conviction in our investment thesis focused on the transition
to a more sustainable economy is stronger than ever. With
valuations increasingly attractive, our investment teams have
identified several compelling themes that we believe will play out
over the medium to long term, for example the adoption of renewable
energy, the provision of climate resilient water supply and
infrastructure and the deployment of new technology to improve
access to healthy food and financial services worldwide."
Board Changes
Effective 29 November 2023, Julia Bond joins as a Non-Executive
Director of the Company. Julia will serve as a member of the
Remuneration and Audit & Risk Committees.
At the end of July 2024, in line with UK corporate governance
best practice, Lindsey Brace Martinez and Sally Bridgeland will
step down from the Board on the ninth anniversary of joining.
Simon O'Regan, subject to his re-election as a Director at the
Company's AGM in March 2024, will succeed Sally as independent
Non-Executive Chair with effect from 31 July 2024, upon which Simon
will also cease to be a member of the Audit & Risk Committee.
Simon's appointment as Chair is subject to regulatory approval.
Annette Wilson, who joined the Board in June 2022, will succeed
Simon as Senior Independent Director and Whistleblowing Champion,
with effect from 31 July 2024.
It is contemplated that Julia Bond will become Chair of the
Remuneration Committee with effect from 31 July 2024 when Lindsey
Brace Martinez departs.
The Company is currently interviewing US-based candidates with a
view to appointing a new US-based Non-Executive Director in due
course.
Ends
Media Enquiries:
Impax Asset Management Group plc
Ian Simm, Chief Executive +44 (0)20 3912 3000
Paul French, Head of Corporate Communications +44 (0)20 3912 3032
p.french@impaxam.com
Montfort Communications
Gay Collins +44(0)77 9862 6282
Jack Roddan +44(0)78 2567 0695
impax@montfort.london
Peel Hunt LLP, Nominated Adviser and Joint Broker
John Welch +44 (0)20 7418 8900
Dan Webster
Berenberg, Joint Broker
James Felix +44 (0)20 3753 3153
Dan Gee-Summons
LEI number: 213800AJDNW4S2B7E680
Notes to Editors - About Impax Asset Management
Founded in 1998, Impax is a specialist asset manager, with
approximately GBP37.4 billion of 30 September 2023 in both listed
and private markets strategies, investing in the opportunities
arising from the transition to a more sustainable global
economy.
Impax believes that capital markets will be shaped profoundly by
global sustainability challenges, including climate change,
pollution and essential investments in human capital,
infrastructure and resource efficiency. These trends will drive
growth for well-positioned companies and create risks for those
unable or unwilling to adapt.
The company seeks to invest in higher quality companies with
strong business models that demonstrate sound management of risk.
Impax offers a well-rounded suite of investment solutions spanning
multiple asset classes seeking superior risk-adjusted returns over
the medium to long term.
Impax has approximately 300 employees(1) across its offices in
the United Kingdom, the United States, Ireland, Hong Kong and Japan
making it one of the investment management sector's largest
investment teams dedicated to sustainable development.
www.impaxam.com
(1) Full-time equivalent
Issued in the UK by Impax Asset Management Group plc, whose
shares are quoted on the Alternative Investment Market of the
London Stock Exchange. Impax Asset Management Group plc is
registered in England & Wales, number 03262305. AUM relates to
Impax Asset Management Limited, Impax Asset Management (AIFM)
Limited, Impax Asset Management Ireland Limited and Impax Asset
Management LLC. Impax Asset Management Limited and Impax Asset
Management (AIFM) Limited are authorised and regulated by the
Financial Conduct Authority and are wholly owned subsidiaries of
Impax Asset Management Group plc. Please note that the information
provided on www.impaxam.com and links from it should not be relied
upon for investment purposes.
Chief Executive's Report
BUSINESS UPDATE
Impax has delivered creditable results during a year that
presented challenging investment conditions. Over the 12 months
ending 30 September 2023 ("the Period"), the Company's assets under
discretionary and advisory management ("AUM") increased by 4.8% to
GBP37.4 billion, driven by investment returns and strong client
retention.
Despite a challenging external environment for the asset
management industry, the Company was able to expand revenue by
GBP3.0 million to GBP178.4 million. Nevertheless, operating costs
also rose as we invested in our distribution and investment
capabilities, technology and operations to ensure that the business
is resilient and scalable, and hence adjusted operating profit
decreased to GBP58.1 million (2022: GBP67.4 million).
As set out below, we continue to build strong, long-term
relationships with clients and to expand our new capabilities, such
as in fixed income. Our long-term investment approach, which
focuses on companies with robust business models that are well
placed to benefit from the transition to a more sustainable
economy, continues to appeal to a growing segment of the investment
community, and, when market sentiment improves, we believe that the
Company will be well positioned for further growth.
CHALLENGING EXTERNAL ENVIRONMENT
Global equities markets returned to positive territory over the
Period, following a torrid prior Period for investors. While the
headline performance of wider equities markets has been
encouraging, continued challenges and upheavals in the
macroeconomic environment have created a volatile investment
backdrop, with higher inflation and interest rates impacting the
real economy.
The public release of OpenAI's ChatGPT in November 2022 sparked
huge public excitement about the potential for artificial
intelligence. This was exemplified by the meteoric rise in the
share price of chipmaker Nvidia, one of a narrow range of
technology stocks that has contributed significantly to the rise in
global equities indices over the Period.
In other areas of the economy sentiment has been more fragile,
contributing to a cyclical derating of Impax's major investment
portfolios. Smaller and mid-cap companies in particular have faced
challenges in the form of the higher costs of borrowing and supply
chain issues.
Additionally, post-pandemic inventory destocking has temporarily
disrupted the demand for goods across several sectors that our
investment strategies have long-term exposure to, including
nutritional ingredients, life sciences tools and solar energy.
This uncertain backdrop and the impact of higher rates has led
many investors to delay investment decisions, preferring to benefit
from the positive returns currently available in cash.
Meanwhile, policy support has benefitted many of the companies
held in our portfolios. In the US the Inflation Reduction Act and
the CHIPS and Science Act have made available a combined US$420
billion via the provision of subsidies and tax breaks into clean
energy deployment and manufacturing. The Infrastructure Investment
and Jobs Act is set to provide a further US$550 billion over the
next five years.
The US government's heavy skew towards encouraging domestic job
creation and its success in attracting multinationals to direct
their investment into the US, has led to equivalent climate-related
initiatives, including the EU's Green Deal Industrial Plan and
similar measures in China and India.
In the UK the government's decision after the Period to wind
back key net-zero policies was disappointing. While it brings the
UK in line with other countries (for example, the shift to 2035
from 2030 for the ban of the sale of new petrol and diesel cars),
the announcement inevitably sends a negative signal about the UK
government's commitment to investing in the transition to a
low-carbon economy. The direct impact of this announcement on Impax
is limited. 78% of the Company's AUM is from outside the UK and
approximately 93% of our investment assets are outside the UK.
INVESTMENT PERFORMANCE
During the Period, the performance of MSCI ACWI, the benchmark
index for many of our listed equities strategies, was driven
particularly by strong returns from certain US-listed large-cap
stocks, particularly the 'mega-cap' technology stocks referred to
above.
Many of our strategies, particularly in our thematic listed
equities Environmental Markets range, have a lower exposure to this
sector, so while our strategies on the whole saw positive absolute
returns, the market cap and sector bias meant that the majority
underperformed their respective benchmarks during the 12-month
Period.
Longer term, nine out of twelve of our active strategies,
accounting for a combined 86% of AUM have outperformed their
benchmarks over the five years to 30 September 2023, with three out
of thirteen outperforming over three years.
Movements in the Company's AUM for the full year ended 30
September 2023
Listed equities Fixed Private Total
GBPm income markets firm
GBPm GBPm GBPm
--------------------------- ---------------- -------- --------- -------
Total AUM at 30 September
2022 33,801 1,354 521 35,676
--------------------------- ---------------- -------- --------- -------
Net flows (144) 2 49 (92)
--------------------------- ---------------- -------- --------- -------
Market movement, FX and
performance 1,896 (73) (6) 1,816
--------------------------- ---------------- -------- --------- -------
Total AUM at 30 September
2023 35,552 1,283 564 37,399
--------------------------- ---------------- -------- --------- -------
NET FLOWS
The Company experienced modest net outflows of GBP92 million
over the Period, demonstrating the benefits of our increasingly
diversified distribution strategy and product range and the
strength of our existing client relationships. Redemptions from our
Environmental Markets strategies were largely offset by inflows
into our Sustainability Lens strategies.
Amid challenging market conditions, our Environmental Markets
strategies saw total net outflows of GBP1.7 billion. A high portion
of the outflows came via redemptions from our distribution
partners, including from BNP Paribas Asset Management ("BNPP AM"),
our most significant channel for this range of thematic strategies.
Overall, the proportion of Impax's annual revenues from the BNPP AM
range of SICAV mutual funds fell to 28%, compared to 30% in the
previous financial year.
Overall, our Sustainability Lens strategies saw net inflows of
GBP1.6bn over the Period. Global Opportunities consolidated its
position as our largest strategy at GBP9.2bn, with net inflows of
GBP1.0bn, including a large contribution from UK-based St James's
Place, and via Formuepleje in Denmark and Desjardins in Canada. The
US Large Cap strategy registered net inflows of GBP700 million,
supported by subscriptions via Lombard Odier and a significant
segregated mandate from a Japanese pension fund, awarded in October
2022.
CLIENT SERVICE AND BUSINESS DEVELOPMENT
We continued to expand our international footprint,
strengthening our own direct distribution capabilities and
consolidating our partner relationships. Highlights included
expanding our distribution resources in Japan, Australia, the
Nordics, Latin America, the US and Canada.
Meanwhile we are focused on providing an outstanding service to
our clients. During the Period we engaged a third-party
organisation to carry out our first client survey, with 90% of
clients reporting a positive view of Impax.
In March we opened a new office in Japan, following our
selection by the Tokyo Metropolitan Government to receive a Green
Finance Subsidy. We have hired a senior Country Head to lead our
growth in Japan, which has a sophisticated asset owner community
with a considerable interest in the investable opportunities
relating to the transition to a more sustainable economy, and where
Impax has managed client money since 2008.
In Australia, after the Period end, we launched a second fund
targeting the wholesale market in collaboration with our local
distributor, Fidante Partners.
In June 2023 we signed a distribution agreement to bring our
services to clients in Latin America. São Paolo-based BTG Pactual,
Latin America's largest investment bank, will distribute our range
of Irish-domiciled UCITS funds, marking the first time that we have
actively targeted clients in this region.
In the US, we increased the availability of the Impax mutual
fund range on several of the largest wealth management platforms
and are now able to offer the investment strategies underlying
these funds both as collective investment trusts ("CITs") and
separately managed accounts ("SMAs"). After the end of the Period,
we engaged a client-introducing representative in Canada, a market
where we have enjoyed considerable success for over a decade with
support from our US offices.
Our team investing in privately held companies operating in the
renewable power sector has continued to raise capital for our
fourth fund, which at final close in January 2024 will be Impax's
largest private markets fund to date. During the Period the team
made nine new investments from this fund across five technologies,
including solar PV, energy efficiency and decentralised generation,
and completed two exits from the portfolio of our third fund.
PRODUCT DEVELOPMENT
Over the Period we made good progress in developing and
launching new products, continuing to both diversify our range and
provide additional solutions in line with the needs of our
clients.
We have identified a particular opportunity within fixed income.
Since these markets are earlier in their adoption of sustainability
considerations than listed equities, we believe that Impax is well
placed to develop additional strategies beyond our current
offerings in US Investment Grade and US High Yield. We have
recently hired four professionals into our Fixed Income team, and,
last month, completed the recruitment of an experienced executive
to head up our investment work and business development in this
asset class. In addition, we are reviewing opportunities to source
additional fixed income capabilities, and will provide an update in
due course.
Within Listed Equities, we launched a new Sustainable
Infrastructure product in October 2022, and we plan shortly to add
our US Environmental Leaders strategy to our Ireland-based UCITS
range and will soon launch a strategy targeting Social themes.
We plan to launch a Global Emerging Markets listed equities
strategy using our Sustainability Lens during 2024.
IMPAX SUSTAINABILITY CENTRE
Since the late 1990s, Impax has built up expertise across a
range of topics and activities linked to investing in the
transition to a more sustainable economy, for example long-term
market assessment, engagement with investee companies, impact
reporting and policy advocacy.
In order to ensure that our resources in these areas add even
greater value to our clients, are efficiently managed, accessible
to others and scalable, we recently launched the Impax
Sustainability Centre, which brings together our Sustainability
& Stewardship and Policy & Advocacy teams.
As an example of the synergies from this initiative, we have
recently started combining company engagement and our policy
advocacy activities, seeking to shape company practices through
regulatory or policy change and focusing our activities on four
pillars: climate, nature, people and governance.
We have continued to advance our proprietary impact reporting.
This includes introducing a new metric this year for quantifying
the positive impacts associated with investee companies that supply
consumers with healthy and nutritious food. We are also developing
metrics related to social impact and biodiversity.
We continue to provide research and insights to our clients and
partners. This year we supported a report by researchers from
Imperial College London to identify corporate activity that has
delivered positive outcomes for companies and nature, and we
produced a three-part series of articles examining the US energy
transition.
CLIMATE AND THE COMMUNITY
We are pleased again this year to include a report that
describes how we manage climate risks and opportunities. In the
next few months we plan to publish a separate Taskforce for
Climate-related Financial Disclosures ("TCFD") Report for the
calendar year 2023, including information about our strategic
approach and risk management in this area.
We also significantly expanded our community activity during
2023, focusing on charities in education and skills development for
the green economy. During the Period we developed new community
partnerships with Country Trust and Groundwork UK, and launched the
Pax Scholarship programme supporting students in New Hampshire. Our
colleagues once again voted that food scarcity should be our
'Community Cause of the Year' and engaged in a wide range of
volunteering and fundraising activities in their local
communities.
ATTRACTING AND DEVELOPING OUR TALENT
In our employee engagement survey this year, 97% of our
colleagues told us that they feel closely aligned to Impax's
mission, culture and values, with its clear focus on sustainable
development.
Our overall engagement score, which reflects employee's
satisfaction and commitment, rose 1 point to 90%, with Impax once
again being rated as a '5-star employer' by WorkBuzz, the survey
organiser. At 10%, our staff turnover remains low relative to
peers.
Over the Period we sharply reduced our headcount expansion, up
10% (compared to 26% in 2022),(1) and, mindful of market
conditions, have already slowed this further in the new financial
year.
We rolled out a new remuneration framework across the Company
and now provide clearer guidance and consistency around how we
assess performance through scorecards and performance evaluation in
appraisals.
Having made good progress against our equity, diversity and
inclusion ("E,D&I") strategy in recent years, we have refined
our E,D&I goals and will be monitoring our progress around this
area as part of our performance appraisal system.
SYSTEMS, INFRASTRUCTURE And Cost efficiency
To increase our operational resilience as the business expands,
we have continued to invest selectively in systems, infrastructure,
risk management and compliance capabilities.
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.
Finally, we implemented a new HR system to support recruitment,
talent development and performance evaluation and to assist in the
management of personal data.
Given the sustained bearish sentiment in equities, we have been
particularly focused on the effectiveness of our operations,
examining each area of our work and launching a wide range of
initiatives to improve efficiency. As well as supporting Impax's
current profitability, we believe that this work will help
significantly in positioning the Company for scalable growth over
the medium term.
AWARDS AND INDUSTRY RECOGNITION
Impax continues to be recognised for our leadership within the
investment management industry. During the Period we were named
'Investment Manager of the Year', by European Pensions Awards;
'Listed Equites Manager of the Year', in the Environmental Finance
Sustainable Investment Awards; and 'ESG Manager of the Year', by
Financial News. We also received a Morningstar ESG Commitment Level
of 'Leader', the highest ranking for the 108 asset managers
evaluated this year. Impax was one of four to maintain this Level
on each of the three occasions this survey has been run.
After the end of the Period, we were named as 'Responsible
Investor of the Year', in the Reuters Responsible Business Awards
and 'Boutique Manager of the Year' by Financial News.
JOE Keefe
In January 2024, Joe Keefe will retire as President of Impax
North America, to be succeeded by Ed Farrington, who will also
retain his position as our Head of Distribution for North America.
Joe has headed our US-based team since the acquisition of Pax World
Management in 2018 and previously led that business since 2005. We
have all benefited from Joe's expertise and his passion, kindness
and good nature will be much missed.
OUTLOOK: 25 YEARS ON
This year we have been celebrating 25 years since I founded
Impax Asset Management. The Company and the markets in which we
invest have certainly come a long way in that time. For example, in
1998, the largest wind turbines generated 1MW (vs 16MW today), the
price of solar panels was the equivalent of around US$7 per watt
(versus around US$0.16 per watt today), and the most common
electric vehicles were golf buggies!
Ever since we received our first mandate from the World Bank,
Impax has argued consistently that, on a finite planet with an
expanding population seeking ever higher standards of living, the
transition to a more sustainable economy is practically inevitable.
It is our conviction that this transition will continue to provide
excellent investment opportunities for red-blooded capitalists and
ethically motivated investors alike.
Our belief in this investment thesis is stronger than ever and,
with valuations increasingly attractive, our investment teams have
identified several compelling themes that we believe will play out
over the medium to long term. For example, our recent launch of the
new Social thematic strategy underlines the opportunities that we
have identified in addressing challenges facing global society,
including access to basic needs, financial inclusion and healthcare
innovation.
Meanwhile the increasing de-coupling of the global economy
presents opportunities for certain companies as those sectors that
are identified by national governments as strategic are reshored,
but also the potential for heightened risk, for example through
business inefficiency.
As highlighted earlier, artificial intelligence ("AI") has
attracted excitement and valid concerns in equal measure. Many of
our strategies' holdings are already deploying AI to help deliver
efficiencies in the context of a more sustainable global economy,
an area in which we see considerable potential for the
technology.
September 2023 saw the publication of the recommendations from
the Taskforce on Nature-related Financial Disclosures ("TNFD").
Impax has long considered nature within our Environmental Markets
strategies and we expect to assess the risks and opportunities
related to biodiversity loss over the coming months, including
through the work of the Impax Sustainability Centre.
Finally, in its first 'Synthesis Report' in nine years, in March
2023 the Intergovernmental Panel on Climate Change ("IPCC") said
that there is a more than a 50% chance that global temperature rise
will reach or surpass 1.5˚C between 2021 and 2040. The need for
accelerated investment in climate solutions and addressing physical
climate risks has never been more acute, presenting considerable
opportunities for investors. With a 25-year heritage of
specialising in investing in climate solutions, Impax is ideally
placed to support asset owners as they decide on how best to
allocate to this meta-trend reshaping society.
Notwithstanding the headwinds that we have experienced during
2023, I am highly encouraged that our client retention has been
excellent. Meanwhile, we continue to develop new investment
capabilities while enhancing our operating model to ensure that the
business is efficient and scalable, and, as a result, we believe
we're well positioned to continue to deliver value for all
stakeholders.
Ian Simm
Chief Executive
28 November 2023
Financial Review
I am pleased to present our results for the year which, in a
time of challenging market conditions, demonstrate the resilient
nature of the Company which has allowed for continued investment in
our growth strategy.
Financial highlights for financial year 2023 versus financial
year 2022
2023 2022
------------------------------- --------------- ---------------
AUM(1) GBP37.4bn GBP35.7bn
------------------------------- --------------- ---------------
Revenue GBP178.4m GBP175.4m
------------------------------- --------------- ---------------
Adjusted operating costs GBP120.3m GBP108.0m
------------------------------- --------------- ---------------
Adjusted operating profit(2) GBP58.1m GBP67.4m
------------------------------- --------------- ---------------
Adjusted profit before tax(2) GBP60.0m GBP68.4m
------------------------------- --------------- ---------------
Adjusted diluted earnings
per share(2) 35.2p 42.1p
------------------------------- --------------- ---------------
Cash reserves(2) GBP87.7m GBP107.0m
------------------------------- --------------- ---------------
Seed investments GBP13.3m GBP7.3m
------------------------------- --------------- ---------------
Dividend per share(3) 4.7p interim + 4.7p interim +
22.9 p final 22.9p final
------------------------------- --------------- ---------------
2023 2022
--------------------------- --------- ---------
IFRS operating profit GBP54.2m GBP65.2m
--------------------------- --------- ---------
IFRS profit before tax GBP52.1m GBP72.6m
--------------------------- --------- ---------
IFRS diluted earnings per
share 29.8p 44.7p
--------------------------- --------- ---------
As in previous periods, in order to facilitate comparison of
performance with previous time periods and to provide an
appropriate comparison with our peers, the Board encourages
shareholders to focus on financial measures after adjustment for
accounting charges or credits arising from the acquisition of Impax
NH, adjustments arising from the accounting treatment of national
insurance costs on share-based payment awards and significant tax
credits related to prior periods.
Revenue
Revenue for the Period increased by GBP3.0 million to GBP178.4
million (2022: GBP175.4 million) as a result of the growth in AUM
driven by GBP1.8 billion of market movements and investment
performance during the Period.
At the end of the Period, the weighted average run rate revenue
margin was 45 basis points (2022: 46 basis points) on the GBP37.4
billion of AUM. Our run-rate revenue(1) , also based on the Period
end AUM, rose to GBP168.8 million (2022: GBP166.2 million).
Operating costs
Adjusted operating costs increased to GBP120.3 million
(2022: GBP108.0 million) as we continued to invest strategically
in the business to support our long-term growth ambitions. Being
mindful of the challenging market conditions and economic
uncertainty that remains, we have focused our investment in the
areas of people, technology and operations that will ensure we
build a scalable and resilient business that is well prepared for
future growth.
These costs also reflect a full year of costs from hires made in
FY2022.
IFRS operating costs include additional charges and credits,
principally the amortisation of intangible assets and equity
incentive scheme charges arising on the acquisition of Impax NH as
well as national insurance charges and credits on share options and
restricted shares which is payable based on the share price when an
option is exercised or restricted shares vest.
Profits and operating margins
Adjusted operating profit decreased to GBP58.1 million (2022:
GBP67.4 million) owing to the increased operating costs discussed
above offset in part by the increase in revenue. As a result,
adjusted operating profit margin reduced to 32.6% (2022: 38.4%).
Run-rate adjusted operating profit at the end of the Period was
GBP51.9 million (2022: GBP54.3 million) and run-rate adjusted
operating margin at the end of the Period was 30.8% (2022:
32.6%).
Adjusted profit before tax of GBP60.0 million (2022: GBP68.4
million) and adjusted diluted earnings per share of 35.2 pence
(2022: 42.1 pence) include net finance income of GBP1.9 million
(GBP0.9 million).
IFRS operating profit for the Period decreased to GBP54.2
million (2022: GBP65.2 million) reflecting the increased operating
costs. IFRS profit before tax of GBP52.1 million (2022: GBP72.6m)
includes foreign exchange losses of GBP4.0 million (2022: foreign
exchange gains of GBP6.4 million) on the retranslation of monetary
assets held in foreign currencies that are not linked to the
operating performance of the Group. GBP1.2 million of this loss
relates to the retranslation of a US Dollar denominated loan
between the Parent Company and a US subsidiary. A corresponding
gain is recognised in equity in the exchange translation reserve.
IFRS diluted earnings per share decreased to 29.8 pence (2022: 44.7
pence).
Tax
The effective tax rate has increased due to an increase in the
main corporation tax rate in the UK from 19% to 25% from 1 April
2023. As such, a blended rate of 22% has been applied for the
Period (2022: 19%).
Financial management
The Company continues to be a strongly cash generative business
with high levels of cash and no debt. At the Period end the Company
held GBP87.7 million of cash resources (2022: GBP107.0 million).
The decrease of GBP19.3 million from 2022 is mainly attributable to
further seed investments and share purchases made during the
Period.
During the Period, we made seed investments, net of redemptions,
of GBP5.3 million in our listed equity and private equity funds
(2022: net redemptions of GBP0.3 million) and at the Period end
these investments were valued at GBP13.3 million (2022: GBP7.3
million).
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 Trusts ("EBTs") (subject to the trustees'
discretion), using funding provided by the Company.
During the Period, the EBT purchased 2.1 million ordinary
shares. The EBT holds shares for Restricted Share awards until they
vest or to satisfy share option exercises.
At the Period end the EBTs held a total of 4.3 million shares,
2.7 million of which were held for Restricted Share awards leaving
up to 1.6 million available for option exercises and future share
awards. There were 2.0 million options outstanding at the Period
end, of which none were exercisable.
Dividends
The Company paid an interim dividend of 4.7 pence per share in
July 2023. Our dividend policy is to pay, in normal circumstances,
an annual dividend between 55% and 80% of adjusted profit after
tax. As described above, despite uncertain markets, business
performance was stable during the Period and the Company remains in
good financial health. The Board has therefore decided to recommend
a final dividend of 22.9 pence (2022: 22.9 pence) taking the total
dividend for 2023 to 27.6 pence (2022: 27.6 pence). The total
dividend for the year represents 78% of our adjusted profit.
This dividend proposal will be submitted for formal approval by
shareholders at the Annual General Meeting on 12 March 2024. If
approved, the dividend will be paid on or around 22 March 2024. The
record date for the payment of the proposed dividend will be 9
February 2024 and the ex-dividend date will be 8 February 2024.
The Company operates a dividend reinvestment plan ("DRIP"). The
final date for receipt of elections under the DRIP will be 23
February 2024. For further information and to register and elect
for this facility, please visit www.signalshares.com and search for
information related to the Company.
Going concern
The Financial Reporting Council requires all companies to
perform a rigorous assessment of all the factors affecting the
business when deciding to adopt a 'going concern' basis for the
preparation of the accounts.
The Board has made an assessment covering a period of at least
12 months from the date of approval of this report which indicates
that, taking account of a reasonably possible downside in relation
to asset inflows, market performance and costs, the Group will have
sufficient funds to meet its liabilities as they fall due for that
period. The Group has high cash balances and no debt and, at the
Period end market levels, is profitable. A significant part of the
Group's cost basis is variable as bonuses are linked to
profitability. The Group can also preserve cash through dividend
reduction and through issuance of shares to cover share option
exercises/restricted share awards (rather than purchasing shares).
The Directors therefore have a reasonable expectation that the
Group has adequate resources to remain in operational existence for
the foreseeable future and have continued to adopt the going
concern basis in preparing the financial statements.
Karen Cockburn
Chief Financial Officer
28 November 2023
Consolidated Income Statement
For the year ended 30 September 2023
Notes 2023 2022
GBP000 GBP000
------------------------------------------ ------ ---------- ----------
Revenue 6 178,367 175,396
------------------------------------------ ------ ---------- ----------
Operating costs 7 (124,120) (110,213)
------------------------------------------ ------ ---------- ----------
Finance income 10 3,130 7,950
------------------------------------------ ------ ---------- ----------
Finance expense 11 (5,271) (574)
------------------------------------------ ------ ---------- ----------
Profit before taxation 52,106 72,559
------------------------------------------ ------ ---------- ----------
Taxation 12 (12,884) (13,077)
------------------------------------------ ------ ---------- ----------
Profit after taxation 39,222 59,482
------------------------------------------ ------ ---------- ----------
Earnings per share
------------------------------------------ ------ ---------- ----------
Basic 13 30.5p 46.0p
------------------------------------------ ------ ---------- ----------
Diluted 13 29.8p 44.7p
------------------------------------------ ------ ---------- ----------
Dividends per share
------------------------------------------ ------ ---------- ----------
Interim dividend paid and final dividend
declared for the year 14 27.6p 27.6p
------------------------------------------ ------ ---------- ----------
Adjusted results are provided in note 4.
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2023
2023 2022
GBP000 GBP000
----------------------------------------------------------- -------- --------
Profit for the year 39,222 59,482
----------------------------------------------------------- -------- --------
Exchange differences on translation of foreign operations (119) 2,685
----------------------------------------------------------- -------- --------
Total other comprehensive income (119) 2,685
----------------------------------------------------------- -------- --------
Total comprehensive income for the year attributable
to equity holders of the Company 39,103 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.
Consolidated Statement of Financial Position
As at 30 September 2023
2023 2022
------------------ ------------------
Notes GBP000 GBP000 GBP000 GBP000
------------------------------- ------ -------- -------- -------- --------
Assets
------------------------------- ------ -------- -------- -------- --------
Goodwill 15 12,883 13,932
------------------------------- ------ -------- -------- -------- --------
Intangible assets 16 14,185 18,340
------------------------------- ------ -------- -------- -------- --------
Property, plant and equipment 17 8,820 9,279
------------------------------- ------ -------- -------- -------- --------
Deferred tax assets 12 3,665 4,781
------------------------------- ------ -------- -------- -------- --------
Total non-current assets 39,553 46,332
------------------------------- ------ -------- -------- -------- --------
Trade and other receivables 18 42,543 38,769
------------------------------- ------ -------- -------- -------- --------
Investments 19 13,270 7,255
------------------------------- ------ -------- -------- -------- --------
Current tax asset 1,645 176
------------------------------- ------ -------- -------- -------- --------
Cash invested in money market
funds 21 53,542 58,687
------------------------------- ------ -------- -------- -------- --------
Cash and cash equivalents 21 37,963 52,232
------------------------------- ------ -------- -------- -------- --------
Total current assets 148,963 157,119
------------------------------- ------ -------- -------- -------- --------
Total assets 188,516 203,451
------------------------------- ------ -------- -------- -------- --------
Equity and liabilities
------------------------------- ------ -------- -------- -------- --------
Ordinary shares 24 1,326 1,326
------------------------------- ------ -------- -------- -------- --------
Share premium 9,291 9,291
------------------------------- ------ -------- -------- -------- --------
Merger reserve 1,533 1,533
------------------------------- ------ -------- -------- -------- --------
Exchange translation reserve 2,940 3,059
------------------------------- ------ -------- -------- -------- --------
Retained earnings 118,868 122,969
------------------------------- ------ -------- -------- -------- --------
Total equity 133,958 138,178
------------------------------- ------ -------- -------- -------- --------
Trade and other payables 22 44,809 53,624
------------------------------- ------ -------- -------- -------- --------
Lease liabilities 17 1,524 1,488
------------------------------- ------ -------- -------- -------- --------
Current tax liability 1,007 2,202
------------------------------- ------ -------- -------- -------- --------
Total current liabilities 47,340 57,314
------------------------------- ------ -------- -------- -------- --------
Lease liabilities 17 7,218 7,590
------------------------------- ------ -------- -------- -------- --------
Deferred tax liability 12 - 369
------------------------------- ------ -------- -------- -------- --------
Total non-current liabilities 7,218 7,959
------------------------------- ------ -------- -------- -------- --------
Total equity and liabilities 188,516 203,451
------------------------------- ------ -------- -------- -------- --------
Consolidated Statement of Changes in Equity
For the year ended 30 September 2023
Exchange
Share Share Merger translation Retained Total
capital premium reserve reserve earnings equity
Notes GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
1 October 2021 1,326 9,291 1,533 374 97,998 110,522
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Transactions with owners
of the Company:
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Dividends paid 14 - - - - (28,665) (28,665)
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Cash received on option
exercises - - - - 540 540
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Tax charge on long-term
incentive schemes - - - - (3,756) (3,756)
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Share-based payment charges 9 - - - - 6,151 6,151
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Acquisition of own shares - - - - (8,781) (8,781)
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Total transactions with
owners
of the Company - - - - (34,511) (34,511)
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Profit for the year - - - 59,482 59,482
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Other comprehensive income:
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Exchange differences on
translation of foreign
operations - - - 2,685 - 2,685
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Total other comprehensive
Income - - - 2,685 - 2,685
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
30 September 2022 1,326 9,291 1,533 3,059 122,969 138,178
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Notes Share Share Merger Exchange Retained Total
capital premium reserve translation earnings equity
GBP000 GBP000 GBP000 reserve GBP000 GBP000
GBP000
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
30 September 2022 1,326 9,291 1,533 3,059 122,969 138,178
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Transactions with owners
of the Company:
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Dividends paid 14 - - - - (36,376) (36,376)
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Cash received on option
exercises - - - - 1,261 1,261
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Tax credit on long-term
incentive schemes - - - - 371 371
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Share-based payment charges 9 - - - - 6,535 6,535
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Acquisition of own shares - - - - (15,114) (15,114)
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Total transactions with
owners
of the Company - - - - (43,323) (43,323)
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Profit for the year - - - 39,222 39,222
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Other comprehensive income:
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Exchange differences on
translation of foreign
operations - - - (119) - (119)
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Total other comprehensive
Income - - - (119) - (119)
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
30 September 2023 1,326 9,291 1,533 2,940 118,868 133,958
----------------------------- ------ --------- --------- --------- ------------- ---------- ---------
Consolidated Cash Flow Statement
For the year ended 30 September 2023
2023 2022
Notes GBP000 GBP000
---------------------------------------------------- ------ --------- ---------
Operating activities
---------------------------------------------------- ------ --------- ---------
Cash generated from operations 27 53,218 80,321
---------------------------------------------------- ------ --------- ---------
Corporation tax paid (14,562) (9,046)
---------------------------------------------------- ------ --------- ---------
Net cash generated from operating activities 38,656 71,275
---------------------------------------------------- ------ --------- ---------
Investing activities
---------------------------------------------------- ------ --------- ---------
Net acquisition of property, plant & equipment
and intangible assets (824) (796)
---------------------------------------------------- ------ --------- ---------
Net (investments)/redemptions from unconsolidated
Impax funds (5,281) 355
---------------------------------------------------- ------ --------- ---------
(Expenditure)/income from settlement of investment
related hedges (390) 69
---------------------------------------------------- ------ --------- ---------
Investment income received 2,865 586
---------------------------------------------------- ------ --------- ---------
Decrease/(increase) in cash held in money
market funds 5,145 (19,091)
---------------------------------------------------- ------ --------- ---------
Net cash generated from/(used by) investing
activities 1,515 (18,877)
---------------------------------------------------- ------ --------- ---------
Financing activities
---------------------------------------------------- ------ --------- ---------
Acquisition of non-controlling interest - (182)
---------------------------------------------------- ------ --------- ---------
Finance costs paid on a loan facility (86) (141)
---------------------------------------------------- ------ --------- ---------
Payment of lease liabilities (1,979) (1,729)
---------------------------------------------------- ------ --------- ---------
Acquisition of own shares (15,114) (8,781)
---------------------------------------------------- ------ --------- ---------
Cash received on exercise of Impax staff
share options 1,261 540
---------------------------------------------------- ------ --------- ---------
Dividends paid (36,376) (28,665)
---------------------------------------------------- ------ --------- ---------
Net cash used by financing activities (52,294) (38,958)
---------------------------------------------------- ------ --------- ---------
Net (decrease)/increase in cash and cash
equivalents (12,123) 13,440
---------------------------------------------------- ------ --------- ---------
Cash and cash equivalents at beginning of
year 52,232 36,172
---------------------------------------------------- ------ --------- ---------
Effect of foreign exchange rate changes (2,146) 2,620
---------------------------------------------------- ------ --------- ---------
Cash and cash equivalents at end of year 21 37,963 52,232
---------------------------------------------------- ------ --------- ---------
Cash and cash equivalents under IFRS does not include cash held
in money market funds. The Group however considers its total cash
reserves to include these amounts. Cash held in Research Payment
Accounts ("RPAs") are not included in cash reserves (see note 21).
There are no significant changes to liabilities arising from
financing activities.
Movements on cash reserves are shown in the table below:
At the At the
beginning end
of the Cash Foreign of the
Period flow exchange Period
GBP000 GBP000 GBP000 GBP000
------------------------------------- ----------- --------- ---------- --------
Cash and cash equivalents 52,232 (12,123) (2,146) 37,963
------------------------------------- ----------- --------- ---------- --------
Cash invested in money market funds 58,687 (5,145) - 53,542
------------------------------------- ----------- --------- ---------- --------
Cash in RPAs (3,951) 138 - (3,813)
------------------------------------- ----------- --------- ---------- --------
Total Group cash reserves 106,968 (17,130) (2,146) 87,692
------------------------------------- ----------- --------- ---------- --------
Notes to the Financial Statements
For the year ended 30 September 2023
1 REPORTING ENTITY
Impax Asset Management Group plc (the "Company") is incorporated
and domiciled in the UK and is listed on the Alternative Investment
Market ("AIM"). These consolidated financial statements comprise
the Company and its subsidiaries (together referred to as the
"Group").
2 BASIS OF PREPARATION
These financial statements have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 ("IFRS") and applicable
law.
The financial statements have been prepared under the historical
cost convention, with the exception of the revaluation of certain
investments and derivatives being measured at fair value.
Details of the significant accounting policies adopted by the
Group are shown in note 31.
The financial statements are presented in sterling. All amounts
have been rounded to the nearest thousand unless otherwise
indicated.
Going concern
The financial statements have been prepared on a going concern
basis which the Directors consider to be appropriate for the
following reasons. Cash flow forecasts covering a period of 12
months from the date of approval of these financial statements
indicate 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.
3 USE OF JUDGEMENTS AND ESTIMATES
In preparing these financial statements management has made
estimates that affect the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from estimates.
Revisions to estimates are recognised prospectively.
The Group has not identified any significant judgements and
estimates at the end of the reporting period. However the key areas
that include judgement and/or estimates are set out in notes 9, 15
and 16.
4 ADJUSTED PROFITS AND EARNINGS
The reported operating earnings, profit before tax and earnings
per share are substantially affected by business combination
affects and other items. The Directors have therefore decided to
report an adjusted operating profit, adjusted profit before tax and
adjusted earnings per share which exclude these items in order to
enable comparison with peers and provide consistent measures of
performance over time. A reconciliation of the adjusted amounts to
the IFRS reported amounts is shown below.
Year ended 30 September 2023
-----------------------------------------------
Adjustments
---------- ----------------------- ----------
Business
Reported combination
- IFRS effects Other Adjusted
GBP000 GBP000 GBP000 GBP000
------------------------------------- ---------- ------------- -------- ----------
Revenue 178,367 178,367
------------------------------------- ---------- ------------- -------- ----------
Operating costs (124,120) (120,264)
------------------------------------- ---------- ------------- -------- ----------
Amortisation of intangibles arising
on acquisition 2,813
------------------------------------- ---------- ------------- -------- ----------
Acquisition equity incentive scheme
charges 1,318
------------------------------------- ---------- ------------- -------- ----------
Mark to market credit on equity
awards (275)
------------------------------------- ---------- ------------- -------- ----------
Operating Profit 54,247 4,131 (275) 58,103
------------------------------------- ---------- ------------- -------- ----------
Finance income 3,130 3,130
------------------------------------- ---------- ------------- -------- ----------
Finance costs (5,271) 3,994 (1,277)
------------------------------------- ---------- ------------- -------- ----------
Profit before taxation 52,106 4,131 3,719 59,956
------------------------------------- ---------- ------------- -------- ----------
Taxation (12,884) (13,591)
------------------------------------- ---------- ------------- -------- ----------
Tax on adjustments (707)
------------------------------------- ---------- ------------- -------- ----------
Profit after taxation 39,222 4,131 3,012 46,365
------------------------------------- ---------- ------------- -------- ----------
Diluted earnings per share 29.8 3.1 2.3 35.2
------------------------------------- ---------- ------------- -------- ----------
Year ended 30 September 2022
------------------------------------------------
Adjustments
----------- ----------------------- ----------
Business
Reported combination
- IFRS effects Other Adjusted
GBP000 GBP000 GBP000 GBP000
-------------------------------------- ----------- ------------- -------- ----------
Revenue 175,396 175,396
-------------------------------------- ----------- ------------- -------- ----------
Operating Costs (110,213) (107,980)
-------------------------------------- ----------- ------------- -------- ----------
Amortisation of intangibles arising
on acquisition 2,420
-------------------------------------- ----------- ------------- -------- ----------
Acquisition equity incentive scheme
charges 1,340
-------------------------------------- ----------- ------------- -------- ----------
Mark to market credit on equity
awards (1,527)
-------------------------------------- ----------- ------------- -------- ----------
Operating Profit 65,183 3,760 (1,527) 67,416
-------------------------------------- ----------- ------------- -------- ----------
Finance income 7,950 (6,440) 1,510
-------------------------------------- ----------- ------------- -------- ----------
Finance costs (574) (574)
-------------------------------------- ----------- ------------- -------- ----------
Profit before taxation 72,559 3,760 (7,967) 68,352
-------------------------------------- ----------- ------------- -------- ----------
Taxation (13,077) (12,293)
-------------------------------------- ----------- ------------- -------- ----------
Adjustment re historical tax charges (730)
-------------------------------------- ----------- ------------- -------- ----------
Tax on adjustments 1,514
-------------------------------------- ----------- ------------- -------- ----------
Profit after taxation 59,482 3,760 (7,183) 56,059
-------------------------------------- ----------- ------------- -------- ----------
Diluted earnings per share 44.7 2.8 (5.4) 42.1
-------------------------------------- ----------- ------------- -------- ----------
The diluted number of shares is the same as used for the IFRS
calculation of earnings per share (see note 13).
Amortisation of intangibles
Management contracts, which are classified as intangible assets,
were acquired as part of the acquisition of Impax NH (the
"Acquisition") and are amortised over their 11-year life. This
charge is not linked to the operating performance of the Impax NH
business and 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. 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 options when they are
exercised and on the RSS awards when they vest, based on the
valuation of the underlying shares at that point. A charge is
accrued for the NIC within IFRS operating profit based on the share
price at the balance sheet date. The Group also receive a
corporation tax credit equal to the value of the awards at the date
they are exercised (options) or vest (RSS awards). The tax credit
in excess of the cumulative share-based payment expense is
recognised directly in equity.
These two charges/credits vary based on the Group's share price
(together referred to as mark to market charge on equity incentive
schemes) and are not linked to the operating performance of the
Group. They are therefore eliminated when reporting adjusted
profit.
Finance income and expense
Finance expense for the Period has been adjusted for foreign
exchange gains and losses on monetary assets that are not linked to
the operating performance of the Group. GBP1,200,000 of the current
Period foreign exchange loss relates to the retranslation of a US
Dollar denominated loan between the Parent Company and a US
subsidiary. A corresponding gain is recognised in equity in the
exchange translation reserve
5 SEGMENTAL REPORTING
(a) Operating segments
The Group is managed on an integrated basis and there is one
reportable segment.
Segment information is presented on the same basis as that
provided for internal reporting purposes to the Group's chief
operating decision maker, the Chief Executive.
(b) Geographical analysis
An analysis of revenue by the location of client is presented
below:
Revenue
------------------
2023 2022
GBP000 GBP000
--------------- -------- --------
North America 54,183 61,890
--------------- -------- --------
Luxembourg 49,383 43,362
--------------- -------- --------
UK 30,712 34,069
--------------- -------- --------
Ireland 13,323 13,175
--------------- -------- --------
France 11,085 12,261
--------------- -------- --------
Canada 6,363 954
--------------- -------- --------
Australia 3,821 2,796
--------------- -------- --------
Netherlands 3,641 3,012
--------------- -------- --------
Denmark 3,378 2,129
--------------- -------- --------
Other 2,478 1,748
--------------- -------- --------
178,367 175,396
--------------- -------- --------
The following non-current assets: property, plant and equipment,
goodwill and intangible assets are located in the countries listed
below:
Non-current assets
---------------------
2023 2022
GBP000 GBP000
--------------- ---------- ---------
UK 5,753 6,427
--------------- ---------- ---------
United States 29,738 34,907
--------------- ---------- ---------
Hong Kong 6 140
--------------- ---------- ---------
Ireland 391 77
--------------- ---------- ---------
35,888 41,551
--------------- ---------- ---------
6 REVENUE
See accounting policy at note 31 (D).
The Group's main source of revenue is investment management and
advisory fees. The Group may also earn carried interest from its
private equity funds. Management and advisory fees are generally
based on an agreed percentage of the valuation of assets under
management ("AUM") for listed equity and fixed income funds. For
private equity funds they are generally based on an agreed
percentage of commitments made to the fund by investors during the
fund's investment period and thereafter on the cost price of
investments made and not exited. Carried interest is earned from
private equity funds if the cash returned to investors exceeds an
agreed return. Carried interest of GBP35,600 was received in the
Period (2022: none).
The Group determines the investment management and advisory fees
to be a single revenue stream as they are all determined through a
consistent performance obligation. Should AUM reduce as a result of
equity market downturns, foreign exchange or allocation of capital
away from equity markets then the revenue would reduce.
None of the Group's funds individually represented more than 10%
of Group revenue in the current or prior year.
Revenue includes GBP172,373,446 (2022: GBP170,840,243) from
related parties.
7 OPERATING COSTS
The Group's largest operating cost is staff costs. Other
significant costs include IT and communication costs, direct fund
expenses, professional fees, premises costs (depreciation on office
building leases, rates and service charge) and placement fees.
2023 2022
GBP000 GBP000
--------------------------------------- -------- --------
Staff costs (note 8) 86,078 81,766
--------------------------------------- -------- --------
IT and communications 7,850 5,805
--------------------------------------- -------- --------
Direct fund expenses 7,441 6,388
--------------------------------------- -------- --------
Professional fees 5,094 4,006
--------------------------------------- -------- --------
Depreciation and amortisation 5,073 4,257
--------------------------------------- -------- --------
Placement fees 2,815 1,783
--------------------------------------- -------- --------
Premises costs 1,639 1,333
--------------------------------------- -------- --------
Research costs 1,167 980
--------------------------------------- -------- --------
Mark to market credit on share awards (275) (1,527)
--------------------------------------- -------- --------
Other costs 7,238 5,422
--------------------------------------- -------- --------
Total 124,120 110,213
--------------------------------------- -------- --------
Operating costs include GBP1,237,000 (2022: GBP1,183,000) in
respect of placement fees paid to related parties.
Other costs include GBP297,000 (2022: GBP295,000) paid to the
Group's auditors which is analysed below. Audit-related assurance
services in the Period relate to the auditor's review of the
Group's half-yearly report.
2023 2022
GBP000 GBP000
------------------------------------------------------ -------- --------
Audit of the Group's Parent Company and consolidated
financial statements 122 91
------------------------------------------------------ -------- --------
Audit of subsidiary undertakings 143 124
------------------------------------------------------ -------- --------
Audit-related assurance services 32 80
------------------------------------------------------ -------- --------
297 295
------------------------------------------------------ -------- --------
8 STAFF COSTS AND EMPLOYEES
Staff costs include salaries, variable bonuses, social security
costs (principally employers' NIC on salary, bonus and share
awards), the cost of contributions made to employees' pension
schemes and share-based payment charges. Further details of the
Group's remuneration policies are provided in the Remuneration
Committee Report. Share-based payment charges are offset against
the total cash bonus pool paid to employees. NIC charges on
share-based payments are accrued based on the share price at the
balance sheet date and the proportion vested.
2023 2022
GBP000 GBP000
----------------------------------------- -------- --------
Salaries and variable bonuses 63,936 62,393
----------------------------------------- -------- --------
Social security costs 6,188 6,356
----------------------------------------- -------- --------
Pensions 1,955 1,635
----------------------------------------- -------- --------
Share-based payment charge (see note 9) 6,535 6,152
----------------------------------------- -------- --------
Other staff costs 7,464 5,230
----------------------------------------- -------- --------
86,078 81,766
----------------------------------------- -------- --------
The Group contributes to private pension schemes. The assets of
the schemes are held separately from those of the Group in
independently administered funds. The pension cost represents
contributions payable by the Group to these funds. Contributions
totalling GBP140,000 (2022: GBP105,000) were payable to the funds
at the year end and are included in trade and other payables.
Other staff costs include the cost of providing health and other
insurances for staff, Non-Executive Directors' fees, contractor
fees, recruitment fees and termination costs.
Directors and key management personnel
Key management personnel are related parties and are defined as
members of the Board and/or the Executive Committee. The
remuneration of key management personnel, including pension
contributions, during the year was GBP12,049,310 with GBP2,457,318
of share-based payments (2022: GBP14,525,298 plus GBP2,239,493 of
share-based payments). No Board members received pension
contributions during the year (2022: nil).
Employees
The average number of persons (excluding Non-Executive Directors
and including temporary staff) employed during the year was 290
(2022: 240).
2023 2022
No. No .
----------------------------------------- ----- ------
Portfolio Management 105 86
----------------------------------------- ----- ------
Private Equity 15 13
----------------------------------------- ----- ------
Client Service and Business Development 101 82
----------------------------------------- ----- ------
Group 69 59
----------------------------------------- ----- ------
290 240
----------------------------------------- ----- ------
9 SHARE-BASED PAYMENT CHARGES
The total expense recognised for the year arising from
share-based payment transactions was GBP6,535,000 (2022:
GBP6,151,000). The charges arose in respect of the Group's
Restricted Share Scheme ("RSS") and the Group's Long Term Option
Plan ("LTOP") which are described below. Details of all outstanding
options are provided at the end of this note. The charges for each
scheme are:
2023 2022
GBP000 GBP000
------ -------- --------
RSS 5,861 5,231
------ -------- --------
LTOP 674 920
------ -------- --------
6,535 6,151
------ -------- --------
Restricted Share Scheme
Restricted shares are awarded to some employees as part of their
year end remuneration. These awards are made post year end but part
of the charge is recorded in the Period based on an estimated value
at the year end date. 729,750 restricted shares were granted during
the Period under the 2022 plan. Awards can also be issued to new
employees and during the Period, 42,630 RSS awards were granted to
employees joining ("RSS 2023 A"). Post year end, the Board approved
the grant of a further 1,519,750 restricted shares under the 2023
plan ("RSS 2023 Final"). Following grant, the shares are held by a
nominee for employees, who are then immediately entitled to receive
dividends. After a period of three years' continuous employment,
the employees will receive unfettered access to one third of the
shares, after four years a further third and after five years the
final third. The employees are not required to make any payment for
the shares on grant or when the restrictions lapse other than
personal taxes.
Full details of the awards granted during the year along with
their valuation and the inputs used in the valuation are described
in the tables below. The valuation was determined using the
Black-Scholes-Merton model with an adjustment to reflect that
dividends are received during the vesting period.
2023 2022
---------------------- ----------------------
RSS 2023 RSS 2023 RSS 2022 RSS 2022 RSS 2021
(estimate) A Final A Final
---------------------------- ------------ ---------- ---------- ---------- ----------
Awards originally granted 1,519,750 42,630 729,750 397,889 413,750
---------------------------- ------------ ---------- ---------- ---------- ----------
Weighted average award GBP4.30 GBP7.51 GBP8.42 GBP7.32 GBP13.82
value
---------------------------- ------------ ---------- ---------- ---------- ----------
Weighted average share GBP4.40 GBP7.61 GBP8.52 GBP7.32 GBP13.94
price on grant
---------------------------- ------------ ---------- ---------- ---------- ----------
Weighted average expected
volatility 36.3% 35.8% 35.5% 34.6% 34.0%
---------------------------- ------------ ---------- ---------- ---------- ----------
Weighted average award 5.3 years 4.0 years 5.3 years 2.6 years 5.2 years
life on grant
---------------------------- ------------ ---------- ---------- ---------- ----------
Weighted average expected
dividend yield 6.3% 3.6% 3.2% 3.0% 1.5%
---------------------------- ------------ ---------- ---------- ---------- ----------
Weighted average risk free
interest rate 4.2% 3.6% 4.6% 1.6% 1.0%
---------------------------- ------------ ---------- ---------- ---------- ----------
The expected volatility was determined by reviewing the
historical volatility of the Company and that of comparator
companies. The expected dividend rate is determined using the
Company share price and most recent full year dividend to grant
date.
The fair value of the RSS 2023 Final awards has initially been
estimated using the average share price over the period of five
days preceding the final Remuneration Committee and other inputs as
at this date. This will be adjusted for using the share price and
other inputs at the grant date.
Restricted shares outstanding
---------------------------------- ----------
Outstanding at 1 October 2022 2,494,006
---------------------------------- ----------
Granted during the year 772,380
---------------------------------- ----------
Vested during the year (383,618)
---------------------------------- ----------
Forfeited during the year (187,086)
---------------------------------- ----------
Outstanding at 30 September 2023 2,695,682
---------------------------------- ----------
Employee share option plans
Employee Share Option Plan
Awards were granted to employees in 2017 under the Group's
Employee Share Option Plan ("ESOP"). The strike price of these
options was set at a 10% premium to the average market price of the
Company's shares for the five business days following the
announcement of the results for the preceding financial year. The
2017 options did not have performance conditions but did have a
time vesting condition such that they vested subject to continued
employment on 31 December 2020. All remaining options outstanding
under the ESOP were exercised during the Period.
Long Term Option Plan
Awards have been granted to employees under the Group's LTOP
between 2018 and 2022. The strike prices of these options were GBP1
(2018 and 2019), GBP3 (2020), GBP9 (2021) and GBP7.50 (2022). These
options do not have performance conditions but do have a time
vesting condition such that the options vest subject to continued
employment on five years following grant. Vested shares are
restricted from being sold until after a further five-year period
(other than to settle any resulting tax liability).
Post year end the Board approved the grant of 1,012,000 options
under the 2023 LTOP plan with a GBP4.40 strike price and with the
other conditions the same as the 2018-2022 plans.
The valuation was determined using the binomial model. Full
details of the awards granted during the year along with their
valuation and the inputs used in the valuation are described in the
table below.
Share options are equity settled.
2023 2023 2022
LTOP (estimated)
2022 2021
LTOP LTOP
------------------------------------------ ------------------ -------- ---------
Awards originally granted 1,012,000 300,000 339,575
------------------------------------------ ------------------ -------- ---------
Exercise price GBP4.40 GBP7.50 GBP9.00
------------------------------------------ ------------------ -------- ---------
Weighted average award value GBP0.80 GBP2.14 GBP4.87
------------------------------------------ ------------------ -------- ---------
Weighted average share price on grant GBP4.40 GBP8.12 GBP13.90
------------------------------------------ ------------------ -------- ---------
Weighted average expected volatility 36.3% 35.6% 34.2%
------------------------------------------ ------------------ -------- ---------
Weighted average award life on grant 6 years 6 years 6 years
------------------------------------------ ------------------ -------- ---------
Weighted average expected dividend yield 6.3% 3.4% 1.5%
------------------------------------------ ------------------ -------- ---------
Weighted average risk free interest rate 4.2% 4.6% 0.8%
------------------------------------------ ------------------ -------- ---------
The expected volatility was determined by reviewing the
historical volatility of the Company and that of comparator
companies. The expected dividend rate is determined using the
Company share price and most recent full year dividend to grant
date.
The fair value of the 2023 LTOP awards has initially been
estimated using the average share price over the period of five
days preceding the final Remuneration Committee and other inputs as
at this date. This will be adjusted for using the share price and
other inputs at the grant date.
Options outstanding
An analysis of the outstanding options arising from the Group's
LTOP is provided below:
Number Weighted
average
exercise
price
p
------------------------------------------ ---------- ----------
Options outstanding at 1 October 2022 2,693,575 265.2
------------------------------------------ ---------- ----------
Options granted 300,000 750.0
------------------------------------------ ---------- ----------
Options forfeited (311,000) 246.6
------------------------------------------ ---------- ----------
Options exercised (725,000) 184.3
------------------------------------------ ---------- ----------
Options outstanding at 30 September 2023 1,957,575 372.4
------------------------------------------ ---------- ----------
Options exercisable at 30 September 2023 - -
------------------------------------------ ---------- ----------
The weighted average remaining contractual life was 7.1
years.
During the Period, 15,750 options, with a GBP0.01 exercise
price, were also granted to employees (2022: 6,000). These options
vest in three equal tranches between 2026 and 2028. Post year-end,
the Board approved the grant of a further 22,000 of these options
with the same conditions which vest between 2027 and 2029.
10 FINANCE INCOME
2023 2022
GBP000 GBP000
------------------------- -------- --------
Fair value gains 265 148
------------------------- -------- --------
Interest income 2,865 520
------------------------- -------- --------
Other investment income - 33
------------------------- -------- --------
Foreign exchange gains - 7,249
------------------------- -------- --------
3,130 7,950
------------------------- -------- --------
Fair value gains represent those arising on the revaluation of
listed and unlisted investments held by the Group (see note 19) and
any gains or losses arising on related hedge instruments held by
the Group.
Fair value gains comprise unrealised gains of GBP756,000 offset
by realised losses of GBP491,000 (2022: GBP46,000 of unrealised
gains and GBP102,000 of realised gains).
Foreign exchange gains in the prior Period mainly arose on the
retranslation of monetary assets held in US Dollars.
11 FINANCE EXPENSE
2023 2022
GBP000 GBP000
---------------------------------- -------- --------
Interest on lease liabilities 411 433
---------------------------------- -------- --------
Finance costs on a loan facility 86 141
---------------------------------- -------- --------
Foreign exchange losses 4,774 -
---------------------------------- -------- --------
5,271 574
---------------------------------- -------- --------
Foreign exchange losses in the current Period mainly arose on
the retranslation of monetary assets held in US Dollars. GBP1.2
million of this loss relates to the retranslation of a US Dollar
denominated loan between the Parent Company and a US subsidiary. A
corresponding gain is recognised in equity in the exchange
translation reserve.
12 TAXATION
The Group is subject to taxation in the countries in which it
operates (the UK, the US, Hong Kong, Ireland and Japan) at the
rates applicable in those countries. The total tax charge includes
taxes payable for the reporting period (current tax) and also
charges relating to taxes that will be payable in future years due
to income or expenses being recognised in different periods for tax
and accounting periods (deferred tax).
(a) Analysis of charge for the year
2023 2022
GBP000 GBP000
-------------------------------------- -------- --------
Current tax expense:
-------------------------------------- -------- --------
UK corporation tax 9,542 13,400
-------------------------------------- -------- --------
Foreign taxes 3,639 472
-------------------------------------- -------- --------
Adjustment in respect of prior years (53) (1,606)
-------------------------------------- -------- --------
Total current tax expense 13,128 12,266
-------------------------------------- -------- --------
Deferred tax (credit)/expense:
-------------------------------------- -------- --------
Credit for the year (821) 133
-------------------------------------- -------- --------
Adjustment in respect of prior years 577 678
-------------------------------------- -------- --------
Total deferred tax (credit)/expense (244) 811
-------------------------------------- -------- --------
Total income tax expense 12,884 13,077
-------------------------------------- -------- --------
A tax credit of GBP371,000 (deferred tax charges of GBP859,000
net of current tax credits of GBP1,230,000) is also recorded in
equity in respect of changes in estimates of the tax deductions on
share awards arising from changes in the share price (2022: charges
of GBP3,756,000 (deferred tax charges of GBP6,739,000 net of
current tax credits of GBP2,983,000)).
The deferred tax adjustment in respect of prior years in the
Period arises from the utilisation of tax losses following the
finalisation of intra-group profits.
An increase in the main rate of UK corporation tax from 19% to
25% with effect from 1 April 2023 was enacted in the Finance Act
2021. This rate increase has been taken into account in the
calculation of the Group's UK deferred tax assets and liabilities
as at 30 September 2023, to the extent that they are expected to
reverse after the rate increase comes into effect.
(b) Factors affecting the tax charge for the year
The blended UK tax rate for the year is 22% due to the increase
in the corporation tax rate from 19% to 25% from 1 April 2023. The
tax assessment for the Period is higher than this rate (2022:
lower). The differences are explained below:
2023 2022
GBP000 GBP000
----------------------------------------------------- -------- --------
Profit before tax 52,106 72,559
----------------------------------------------------- -------- --------
Tax charge at 22% (2022: 19%) 11,463 13,786
----------------------------------------------------- -------- --------
Effects of:
----------------------------------------------------- -------- --------
Non-taxable income (231) (506)
----------------------------------------------------- -------- --------
Non-deductible expenses and charges 1,256 617
----------------------------------------------------- -------- --------
Adjustment in respect of historical tax charges 559 (928)
----------------------------------------------------- -------- --------
Effect of higher tax rates in foreign jurisdictions (29) 31
----------------------------------------------------- -------- --------
Tax losses not recognised 9 77
----------------------------------------------------- -------- --------
Recognition of prior year tax losses (143) -
----------------------------------------------------- -------- --------
Total income tax expense 12,884 13,077
----------------------------------------------------- -------- --------
(c) Deferred tax
The deferred tax asset included in the consolidated statement of
financial position is as follows:
Share-based Tax losses Other Income Other Total
payment carried assets not yet liabilities GBP000
scheme forward GBP000 taxable GBP000
GBP000 GBP000 GBP000
---------------------- ------------ ----------- -------- --------- ------------- --------
As at 1 October
2021 10,593 681 621 (161) (210) 11,524
---------------------- ------------ ----------- -------- --------- ------------- --------
(Charge)/credit
to equity (7,848) 1,109 - - - (6,739)
---------------------- ------------ ----------- -------- --------- ------------- --------
Exchange differences
on consolidation 311 127 - - - 438
---------------------- ------------ ----------- -------- --------- ------------- --------
Credit/(charge)
to the income
statement 267 (1,304) 224 161 (159) (811)
---------------------- ------------ ----------- -------- --------- ------------- --------
As at 30 September
2022 3,323 611 847 - (369) 4,412
---------------------- ------------ ----------- -------- --------- ------------- --------
(Charge)/credit
to equity (859) - - - - (859)
---------------------- ------------ ----------- -------- --------- ------------- --------
Exchange differences
on consolidation (70) - (62) - - (132)
---------------------- ------------ ----------- -------- --------- ------------- --------
Credit/(charge)
to the income
statement 729 - (979) - 494 244
---------------------- ------------ ----------- -------- --------- ------------- --------
As at 30 September
2023 3,123 611 (194) - 125 3,665
---------------------- ------------ ----------- -------- --------- ------------- --------
A deferred tax asset of GBP952,000 (2022: GBP1,600,000) relating
to GBP4.4 million of losses in one of the Group's subsidiaries has
not been recognised as there is insufficient evidence that there
will be sufficient taxable profits in the future against which
these deferred tax assets could be utilised.
13 EARNINGS PER SHARE
Basic earnings per share ("EPS") is calculated by dividing the
profit for the year attributable to ordinary equity holders of the
Parent Company (the "Earnings") by the weighted average number of
ordinary shares outstanding during the year, less the weighted
average number of own shares held. Own shares are held in Employee
Benefit Trusts ("EBTs").
Diluted EPS includes an adjustment to reflect the dilutive
impact of share awards.
Earnings Shares Earnings
for the 000's per share
year
GBP000
--------- --------- -------- -----------
2023
--------- --------- -------- -----------
Basic 39,222 128,769 30.5p
--------- --------- -------- -----------
Diluted 39,222 131,572 29.8p
--------- --------- -------- -----------
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:
2023 2022
000's 000's
---------------------------------------------------- -------- --------
Weighted average number of ordinary shares held 132,597 132,597
---------------------------------------------------- -------- --------
Less weighted average number of own shares held (3,828) (3,188)
---------------------------------------------------- -------- --------
Weighted average number of ordinary shares used
in the calculation of basic EPS 128,769 129,409
---------------------------------------------------- -------- --------
Additional dilutive shares regarding share schemes 2,803 3,759
---------------------------------------------------- -------- --------
Weighted average number of ordinary shares used
in the calculation of diluted EPS 131,572 133,168
---------------------------------------------------- -------- --------
14 DIVIDS
Dividends are recognised as a reduction in equity in the period
in which they are paid or in the case of final dividends when they
are approved by shareholders. The reduction in equity in the Period
therefore comprises the prior Period final dividend and the current
Period interim.
Dividends declared/proposed in respect of the year
2023 2022
pence pence
------------------------------------- ------- -------
Interim dividend declared per share 4.7 4.7
------------------------------------- ------- -------
Final dividend proposed per share 22.9 22.9
------------------------------------- ------- -------
Total 27.6 27.6
------------------------------------- ------- -------
The proposed final dividend of 22.9p will be submitted for
formal approval at the Annual General Meeting to be held on 12
March 2024. Based on the number of shares in issue at the date of
this report and excluding own shares held the total amount payable
for the final dividend would be GBP30,003,000.
Dividends paid in the year
2023 2022
GBP000 GBP000
------------------------------------------ -------- --------
Prior year final dividend - 22.9p, 17.0p 30,216 22,475
------------------------------------------ -------- --------
Interim dividend - 4.7p, 4.7p 6,160 6,190
------------------------------------------ -------- --------
36,376 28,665
------------------------------------------ -------- --------
15 GOODWILL
The goodwill balance within the Group at 30 September 2023 arose
from the acquisition of Impax Capital Limited on 18 June 2001 and
the acquisition of Impax NH in January 2018.
Goodwill
GBP000
---------------------- ----------
Cost
---------------------- ----------
At 1 October 2021 11,816
---------------------- ----------
Foreign exchange 2,116
---------------------- ----------
At 1 October 2022 13,932
---------------------- ----------
Foreign exchange (1,049)
---------------------- ----------
At 30 September 2023 12,883
---------------------- ----------
Impax NH consists of only one cash-generating unit ("CGU").
Goodwill is allocated between CGUs at 30 September 2023 as follows
- GBP11,254,000 to Impax NH and GBP1,629,000 to the listed equity
and private equity CGUs.
The Group has determined the recoverable amount of its CGUs by
calculating their value in use using a discounted cash flow model
over a period of 10 years. The cash flow forecasts were derived
taking into account the budget for the year ended 30 September
2024, which was approved by the Board of Directors in September
2023. The discount rate was derived from the Group's weighted
average cost of capital, adjusted for market specific risks
associated with the estimated cash flows, and takes into account
the weighted average cost of capital of other market
participants.
The goodwill on the listed equity and private equity CGUs arose
over 20 years ago and the business has grown significantly in size
and profitability since that date. There is accordingly significant
headroom before an impairment is required. The main assumptions
used to calculate the cash flows in the impairment test for these
CGUs were that assets under management and margins would continue
at current levels, that fund performance for the listed equity
business would be 5% per year (2022: 5%) and a discount rate of
12.5% (2022: 12.5%). There has been no impairment of goodwill
related to this segment to date and there would have to be
significant asset outflows over a sustained period before any
impairment was required. If the discount rate increased by 1% there
would no impairment and if fund performance reduced to zero there
would be no impairment (2022: 1% increase in discount rate, no
impairment).
The impairment test for the Impax NH CGU showed no impairment
(2022: no impairment) was required and used the following key
assumptions - average fund inflows of US$0.56 billion (2022:
US$0.38 billion), fund
performance of 5% (2022: 5%), an average operating margin of 29%
(2022: 17%) and a discount rate of 12.5% (2022: 12.5%). The
following plausible changes in assumptions would individually not
give rise to an impairment: a consistent 10% decrease in inflows
(2022: 10% decrease); a 100 basis point annual reduction in
performance each year (2022: 100 basis point reduction); a 1%
annual reduction in operating margin (2022: 1% reduction) and a 1%
increase in discount rate (2022: 1% increase).
16 INTANGIBLE ASSETS
Intangible assets mainly represents the value of the management
contracts acquired as part of the acquisition of Impax NH.
Management
contracts Software Total
GBP000 GBP000 GBP000
-------------------------- ----------- --------- --------
Cost
-------------------------- ----------- --------- --------
As at 1 October 2021 26,441 529 26,970
-------------------------- ----------- --------- --------
Additions - 81 81
-------------------------- ----------- --------- --------
Disposals - (309) (309)
-------------------------- ----------- --------- --------
Foreign exchange 5,469 - 5,469
-------------------------- ----------- --------- --------
As at 30 September 2022 31,910 301 32,211
-------------------------- ----------- --------- --------
Additions - 299 299
-------------------------- ----------- --------- --------
Foreign exchange (2,710) - (2,710)
-------------------------- ----------- --------- --------
As at 30 September 2023 29,200 600 29,800
-------------------------- ----------- --------- --------
Accumulated amortisation
-------------------------- ----------- --------- --------
As at 1 October 2021 8,988 509 9,497
-------------------------- ----------- --------- --------
Charge for the year 2,459 26 2,485
-------------------------- ----------- --------- --------
Disposals - (310) (310)
-------------------------- ----------- --------- --------
Foreign exchange 2,199 - 2,199
-------------------------- ----------- --------- --------
As at 30 September 2022 13,646 225 13,871
-------------------------- ----------- --------- --------
Charge for the year 2,813 62 2,875
-------------------------- ----------- --------- --------
Foreign exchange (1,131) - (1,131)
-------------------------- ----------- --------- --------
As at 30 September 2023 15,328 287 15,615
-------------------------- ----------- --------- --------
Net book value
-------------------------- ----------- --------- --------
As at 30 September 2023 13,872 313 14,185
-------------------------- ----------- --------- --------
As at 30 September 2022 18,264 76 18,340
-------------------------- ----------- --------- --------
As at 30 September 2021 17,453 20 17,473
-------------------------- ----------- --------- --------
The management contracts were acquired with the acquisition of
Impax NH in January 2018 and are amortised over an 11-year
life.
Assets under management, forecast asset inflows and operation
margin are all the same or in excess of the assumptions when the
management contracts were first valued. The discounted cost of
capital is the same as when the management contracts were first
valued. As such, there are no indicators of impairment.
17 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment mainly represents the costs of
fitting out the Group's leased London office (leasehold
improvements), office furniture and computers (fixtures, fitting
and equipment) and the capitalised value of the Group's leases on
its office buildings (right-of-use assets).
Fixtures,
Right-of-use Leasehold fittings
assets improvements and equipment Total
GBP000 GBP000 GBP000 GBP000
-------------------------- -------------- --------------- ---------------- ---------
Cost
-------------------------- -------------- --------------- ---------------- ---------
As at 1 October 2021 10,527 2,074 2,090 14,691
-------------------------- -------------- --------------- ---------------- ---------
Additions 139 274 441 854
-------------------------- -------------- --------------- ---------------- ---------
Disposals - (6) (22) (28)
-------------------------- -------------- --------------- ---------------- ---------
Foreign exchange 951 1 105 1,057
-------------------------- -------------- --------------- ---------------- ---------
As at 30 September 2022 11,617 2,343 2,614 16,574
-------------------------- -------------- --------------- ---------------- ---------
Additions 1,607 82 443 2,132
-------------------------- -------------- --------------- ---------------- ---------
Disposals - - (37) (37)
-------------------------- -------------- --------------- ---------------- ---------
Foreign exchange (468) (1) (53) (522)
-------------------------- -------------- --------------- ---------------- ---------
As at 30 September 2023 12,756 2,424 2,967 18,147
-------------------------- -------------- --------------- ---------------- ---------
Accumulated depreciation
-------------------------- -------------- --------------- ---------------- ---------
As at 1 October 2021 2,462 1,253 1,541 5,256
-------------------------- -------------- --------------- ---------------- ---------
Charge for the year 1,273 181 318 1,772
-------------------------- -------------- --------------- ---------------- ---------
Disposals - (6) (22) (28)
-------------------------- -------------- --------------- ---------------- ---------
Foreign exchange 235 1 59 295
-------------------------- -------------- --------------- ---------------- ---------
As at 30 September 2022 3,970 1,429 1,896 7,295
-------------------------- -------------- --------------- ---------------- ---------
Charge for the year 1,659 214 325 2,198
-------------------------- -------------- --------------- ---------------- ---------
Disposals - - (6) (6)
-------------------------- -------------- --------------- ---------------- ---------
Foreign exchange (127) (1) (32) (160)
-------------------------- -------------- --------------- ---------------- ---------
As at 30 September 2023 5,502 1,642 2,183 9,327
-------------------------- -------------- --------------- ---------------- ---------
Net book value
-------------------------- -------------- --------------- ---------------- ---------
As at 30 September 2023 7,254 782 784 8,820
-------------------------- -------------- --------------- ---------------- ---------
At 30 September 2022 7,647 914 718 9,279
-------------------------- -------------- --------------- ---------------- ---------
As at 30 September 2021 8,065 821 549 9,435
-------------------------- -------------- --------------- ---------------- ---------
Lease arrangements
Property, plant and equipment includes right-of-use assets in
relation to leases for the Group's office buildings.
The carrying value of the Group's right-of-use assets,
associated lease liabilities and the movements during the period
are set out below:
Right-of-use Lease
assets liabilities
GBPm GBPm
--------------------------- ------------- -------------
At 1 October 2022 7,647 9,078
--------------------------- ------------- -------------
New leases 1,607 1,607
--------------------------- ------------- -------------
Lease payments - (1,979)
--------------------------- ------------- -------------
Interest expense - 410
--------------------------- ------------- -------------
Depreciation charge (1,659) -
--------------------------- ------------- -------------
Foreign exchange movement (341) (374)
--------------------------- ------------- -------------
At 30 September 2023 7,254 8,742
--------------------------- ------------- -------------
Current 1,524
------------- -------------
Non-current 7,218
------------- -------------
8,742
------------- -------------
The contractual maturities on the undiscounted minimum lease
payments under lease liabilities are provided below:
2023 2022
GBP000 GBP000
-------------------------------------- -------- --------
Within 1 year 1,942 2,937
-------------------------------------- -------- --------
Between 1 and 5 years 6,489 6,339
-------------------------------------- -------- --------
Later than 5 years 1,702 2,447
-------------------------------------- -------- --------
Total undiscounted lease liabilities 10,133 11,723
-------------------------------------- -------- --------
The Company's London office lease has an extension option of a
further five years from June 2027, subject to a rent review, which
is not included in the above numbers on the basis that it is not
yet reasonably certain that it will be exercised.
18 TRADE AND OTHER RECEIVABLES
2023 2022
GBP000 GBP000
-------------------------------- -------- --------
Trade receivables 8,803 10,196
-------------------------------- -------- --------
Other receivables 2,282 1,205
-------------------------------- -------- --------
Prepayments and accrued income 31,458 27,368
-------------------------------- -------- --------
42,543 38,769
-------------------------------- -------- --------
Accrued income relates to accrued management fees and arises
where invoices are raised in arrears.
An analysis of the ageing of trade receivables is provided
below:
2023 2022
GBP000 GBP000
---------------------------- -------- --------
0-30 days 7,488 9,069
---------------------------- -------- --------
Past due but not impaired:
---------------------------- -------- --------
31-60 days 1,098 382
---------------------------- -------- --------
61-90 days 6 557
---------------------------- -------- --------
Over 90 days 211 188
---------------------------- -------- --------
8,803 10,196
---------------------------- -------- --------
At the date of this report, substantially all of the trade
receivables above have been received. As at 30 September 2023, the
assessed provision under the IFRS 9 expected credit loss model for
trade receivables and prepayments and accrued income was immaterial
(2022: immaterial).
GBP33,660,000 of trade and other receivables were due from
related parties (2022: GBP32,954,000).
19 CURRENT ASSET INVESTMENTS
The Group makes seed investments into its own listed equity
funds and also invests in its private equity funds. Where the funds
are consolidated the underlying current asset investments are shown
in the table below. Investments made in unconsolidated funds are
also included.
Total
GBP000
---------------------- --------
At 1 October 2021 7,564
---------------------- --------
Additions 256
---------------------- --------
Fair value movements 46
---------------------- --------
Repayments/disposals (611)
---------------------- --------
At 30 September 2022 7,255
---------------------- --------
Additions 8,073
---------------------- --------
Fair value movements 734
---------------------- --------
Repayments/disposals (2,792)
---------------------- --------
At 30 September 2023 13,270
---------------------- --------
The investments include GBP4,647,000 in related parties of the
Group (2022: GBP3,534,000).
Hierarchical classification of investments
The hierarchical classification of the investments as considered
by IFRS 13 Financial Instruments: Disclosures is shown below:
Level Level Level Total
1 2 3 GBP000
GBP000 GBP000 GBP000
---------------------- -------- -------- -------- --------
At 1 October 2022 3,721 - 3,534 7,255
---------------------- -------- -------- -------- --------
Additions 7,175 - 898 8,073
---------------------- -------- -------- -------- --------
Repayments/disposals (2,315) - (477) (2,792)
---------------------- -------- -------- -------- --------
Fair value movements 42 - 692 734
---------------------- -------- -------- -------- --------
At 30 September 2023 8,623 - 4,647 13,270
---------------------- -------- -------- -------- --------
There were no movements between any of the levels in the
Period.
The Level 3 investments are in the Group's private equity funds.
The net asset value of these funds is reported in the NAV
statements represents the fair value at the end of the reporting
period and as such a range of unobservable inputs is not reported.
If the NAV of those funds changed by +/- 10% then the valuation of
those investments would change by +/- GBP465,000.
Market risk and investment hedges
Investments made are subject to market risk. Where appropriate
the Group has attempted to hedge against the risk of market falls
by the use of derivative contracts. The derivative contracts
consist of short positions against a global equity index and are
arranged through BNP Paribas, a related party. Any outstanding
amounts on the short positions are settled daily.
20 INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES
The Group's interest in structured entities is reflected in the
Group's AUM. The Group is exposed to movements in AUM of structured
entities through potential loss of fee income as a result of client
withdrawals or market falls. Outflows from funds are dependent on
market sentiment, asset performance and investor considerations.
Further information on these risks can be found in the Strategic
Review. Considering the potential for changes in AUM of structured
entities, management has determined that the Group's unconsolidated
structured entities include segregated mandates and pooled funds
vehicles. Disclosure of the Group's exposure to unconsolidated
structured entities has been made on this basis.
At 30 September 2023, AUM managed within unconsolidated
structured entities was GBP37.40 billion (2022: GBP35.68 billion)
and within consolidated structured entities was nil (2022:
GBPnil).
GBP178,367,000 (2022: GBP175,396,000) in revenue was earned from
unconsolidated structured entities.
The total exposure to unconsolidated structured entities in the
statement of financial position is shown in the table below:
2023 2022
GBP000 GBP000
------------------------------------------------------- -------- --------
Management fees receivable (including accrued income) 37,159 35,069
------------------------------------------------------- -------- --------
Investments 13,270 3,534
------------------------------------------------------- -------- --------
50,429 38,603
------------------------------------------------------- -------- --------
The main risk the Group faces from its interest in
unconsolidated structured entities are decreases in the value of
seed capital investments.
21 CASH AND CASH EQUIVALENTS, CASH INVESTED IN MONEY MARKET
FUNDS
Cash and cash equivalents under IFRS does not include cash
invested in money market funds which is exposed to market
variability. However the Group considers its total cash reserves to
include these amounts. Cash held by consolidated funds is not
considered to be available to the Group so it is not included in
cash reserves. Cash held in 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 excluded from cash reserves. A
reconciliation is shown below:
2023 2022
GBP000 GBP000
------------------------------------- -------- --------
Cash and cash equivalents 37,963 52,232
------------------------------------- -------- --------
Cash invested in money market funds 53,542 58,687
------------------------------------- -------- --------
Less: cash held in RPAs (3,813) (3,951)
------------------------------------- -------- --------
Cash reserves 87,692 106,968
------------------------------------- -------- --------
The Group is exposed to interest rate risk on the above balances
as interest income fluctuates according to the prevailing interest
rates. The average interest rate on the cash balances during the
year was 3.0% (2022: 0.6%). Given current interest rate levels a
sensitivity rate of 1% is considered appropriate. A 1% increase in
interest rates would have increased Group profit after tax by
GBP713,000. An equal change in the opposite direction would have
decreased profit after tax by GBP627,000.
The credit risk relating to cash reserves held by the Group is
spread over several counterparties. The Group holds cash balances
with RBS International and Bank of Ireland (both with Standard
& Poor's credit rating A-2) and the Bank of New Hampshire, SMBC
and Hang Seng (unrated). The remainder of the Group's cash reserves
is invested in money market funds managed by BlackRock and Goldman
Sachs, with a Standard & Poor's credit rating of A, and
Santander, with a Standard & Poor's credit rating of A-1.
22 TRADE AND OTHER PAYABLES
See accounting policy at note 31 (S).
2023 2022
GBP000 GBP000
------------------------------------ -------- --------
Trade payables 730 1,078
------------------------------------ -------- --------
Taxation and other social security 1,166 1,981
------------------------------------ -------- --------
Other payables 4,833 4,738
------------------------------------ -------- --------
Accruals and deferred income 38,080 45,827
------------------------------------ -------- --------
44,809 53,624
------------------------------------ -------- --------
The most significant accrual at the year end relates to variable
staff remuneration.
23 LOANS
The Group had retained a US$13 million revolving credit facility
("RCF") with RBS International which expired in January 2023. No
amounts were drawn down or repaid in the current or prior
periods.
24 ORDINARY SHARES
2023 2022
Issued and fully paid No. of No. of 2023 2022
shares shares GBP000 GBP000
000s 000s
------------------------------- -------- -------- -------- --------
At 1 October and 30 September 132,597 132,597 1,326 1,326
------------------------------- -------- -------- -------- --------
Ordinary shares have a par value of GBP0.01 per share. Each
ordinary share carries the right to attend and vote at general
meetings of the Company. Holders of these shares are entitled to
dividends as declared from time to time.
25 OWN SHARES
No. of
shares GBP000
-------------------------------------------------- ------------ --------
At 1 October 2021 4,103,395 4,117
-------------------------------------------------- ------------ --------
Issuance of shares to EBT 2012 1,078,000 8,781
-------------------------------------------------- ------------ --------
Satisfaction of option exercises and RSS vesting (1,916,286) (4,770)
-------------------------------------------------- ------------ --------
At 30 September 2022 3,265,109 8,128
-------------------------------------------------- ------------ --------
Purchase of shares by EBT 2012 2,074,454 15,114
-------------------------------------------------- ------------ --------
Satisfaction of option exercises and RSS vesting (1,065,287) (4,637)
-------------------------------------------------- ------------ --------
At 30 September 2023 4,274,276 18,605
-------------------------------------------------- ------------ --------
The EBT hold shares for RSS awards until they vest or to satisfy
share option exercises. Included within Own Shares are 2,695,682
shares held in a nominee account in respect of the Restricted Share
Scheme as described in note 9.
26 FINANCIAL COMMITMENTS
At 30 September 2023 the Group has outstanding commitments to
invest up to the following amounts into private equity funds that
it manages:
-- EUR1,105,516 into Impax New Energy Investors III LP (2022:
EUR1,276,000); this amount could be called on in the period to 31
December 2026; and
-- EUR952,658 into Impax New Energy Investors IV SCSp Luxembourg
(2022: EUR1,446,977); this amount is called on in the period to 31
October 2031.
The fund life for Impax New Energy Investors II LP ended during
the Period and all remaining uncalled capital commitments were
cancelled (2022: outstanding commitments of EUR57,499).
27 RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM
OPERATIONS
This note should be read in conjunction with the consolidated
cash flow statement. It provides a reconciliation to show how
profit before tax, which is based on accounting rules, translates
to cash flows.
2023 2022
GBP000 GBP000
----------------------------------------------------------- -------- --------
Profit before taxation 52,106 72,559
----------------------------------------------------------- -------- --------
Adjustments for income statement non-cash charges/income:
----------------------------------------------------------- -------- --------
Depreciation of property, plant & equipment and
amortisation of intangible assets 5,073 4,257
----------------------------------------------------------- -------- --------
Finance income (3,130) (7,950)
----------------------------------------------------------- -------- --------
Finance expense 5,271 574
----------------------------------------------------------- -------- --------
Share-based payment charges 6,535 6,151
----------------------------------------------------------- -------- --------
Loss on disposals of property, plant and equipment 31 -
----------------------------------------------------------- -------- --------
Adjustment for statement of financial position movements:
----------------------------------------------------------- -------- --------
(Increase)/decrease in trade and other receivables (3,774) 1,031
----------------------------------------------------------- -------- --------
(Decrease)/increase in trade and other payables (8,894) 3,699
----------------------------------------------------------- -------- --------
Cash generated from operations 53,218 80,321
----------------------------------------------------------- -------- --------
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END
TSTFFFLILRLTFIV
(END) Dow Jones Newswires
November 29, 2023 02:00 ET (07:00 GMT)
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