Interim Results

RNS Number : 1545H

Impax Asset Management Group plc

15 May 2014

 



Impax Asset Management Group plc 

Results for half year ended 31 March 2014

Impax delivers robust performance for all strategies

and reports strong net inflows for first half year

London, 15 May 2014 - Impax Asset Management Group plc, ("Impax" or the "Company"), the AIM listed investment manager dedicated to investing in the opportunities created by the scarcity of natural resources and growing demands for cleaner more efficient products and services, announces its unaudited results for the six months to 31 March 2014.

Highlights

·    Assets under management ("AUM") increased 16% to £2.548 billion (31 March 2014) from £2.197 billion (30 September 2013)

·    Strong net inflows of £189m (H1, 2013: £100m)

·    Revenue in the first half of 2014 was £9.9m (H1, 2013: £8.7m)

·    Operating earnings¹ were £2.7m (H1, 2013: £1.8m)

·    Unaudited profit before tax was £1.4m (H1, 2013: £1.5m²)

·    Diluted earnings per share were 1.20 pence (adjusted³) (H1, 2013: 1.45 pence (adjusted³))

·    Shareholders' equity increased to £23.5m (H1, 2013: £22.8m)

·    Initiation of interim dividend of 0.3 pence per share

·    Continuing robust investment performance by all strategies

·    Granted a Queen's Award for Enterprise: Sustainable Development

Ian Simm, Chief Executive commented:

"I'm pleased that Impax has continued to deliver profitable growth during the first half.  Our target markets made good progress in the Period, with the renewable energy, water and pollution control sub-sectors all making a significant contribution.  More than half the increase in our AUM is attributable to net inflows.  These were particularly strong from clients in Europe and the US, where we also have a promising mandate pipeline."

"We are announcing the initiation of an interim dividend of 0.3 pence per share for the Period. The Board also intends to maintain the final dividend in line with last year."

¹ Revenue less operating costs.

² Profit before tax in the Period was impacted inter alia by £0.71 million of charges (2013: £0.36 million) associated with the Company's share-based incentive schemes.

³ Adjusted to exclude IFRS2 charges for shares schemes intended to be satisfied by primary shares, and include the related tax benefit reported in Other Comprehensive Income and the dilution effect of unvested share awards.  The increase in after tax operating earnings is more than offset by tax benefits in H1, 2013 not being repeated during the Period, an increased employer's National Insurance provision due to the rise in the Company's share price and a reduction to the fair value of the Company's interest in Impax New Energy Investors.

Enquiries:

Impax Asset Management Ltd

Anne Gilding                                                              Tel: [phone] (switchboard)

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

Impax Asset Management                                        Tel: [phone] (mobile)

Norfolk House, 31 St James's Square,                                    Fax [phone]

London, SW1Y 4JR                                                       Email: [e-mail]

www.impaxam.com

About Impax Asset Management

Founded in 1998, Impax Asset Management Ltd ("Impax") is dedicated to investing in resource efficiency and environmental markets created by resource scarcity and the demand for cleaner, more efficient products and services.  Impax, which employs 28 investment professionals and a similar number of support staff, has offices in London, Hong Kong, New York and Portland (Oregon).  The firm manages ca. £2.5 billion* for investors globally across listed and private equity strategies.

Impax's listed equity funds seek out mispriced companies that are set to benefit from the long-term trends of changing demographics, rising consumption, limited natural resources and urbanisation.  Investment is focused on the alternative energy, water, waste, food, agriculture and related markets.  Impax's private equity infrastructure funds invest in power generation and related assets in the renewable energy sector.   

*as at 31 March 2014

Chief Executive's Statement

During the first half year for Impax Asset Management Group plc ("Impax" or the "Company"), i.e. the Period from 1 October to 31 March 2014, rising investor confidence gave way to ambivalence as economic data softened and the number of actual or perceived risks increased.  Nevertheless, Impax's target markets linked to environmental and resource efficiency drivers ("Target Markets") generally made good progress, particularly in renewable energy, water and pollution control, and investor interest remained high.  Against this backdrop, Impax's assets under management and advisory ("AUM") increased by 16 per cent to £2,548 million, with more than half the increase (£189 million) attributable to net inflows.  On 30 April 2014, AUM were £2,538 million.

Developments in Resource Efficiency and Environmental Markets

During the Period, the Target Markets sustained their out-performance of broader global equity indices.  For example, the FTSE Environmental Opportunities All Share Index^I ("EOAS") returned 6.8 per cent (total return, GBP) while the MSCI World ("ACWI")^II index rose by 5.4 per cent.  Over the five years to 31 March 2014, the EOAS grew by 111.2 per cent while the ACWI rose by 95.1 per cent.

With an improving economy in much of the developed world, capital expenditure remained strong.  For example, higher housing starts and the benefits of cheap energy in the United States are underpinning investment in a wide range of infrastructure and industrial sectors, many of which are impacted by environmental legislation.  Meanwhile, the turnaround in renewable energy markets is gaining momentum as sustained rising demand removes much of the over-capacity that has held back prices in recent years.

The publication of a number of important scientific reports has also raised the profile of many resource scarcity issues.  The UN followed last September's Fifth Assessment Report with a more focused analysis on the impacts of climate change, warning of the potential damage to ecosystems, rising food prices and threats to national security, and arguing that substantial investments were urgently required to improve resilience to extreme weather and mitigate further damage.  Preparation for the next major international summit on climate change in Paris in December 2015 is now underway: this work is likely to attract significant publicity and sustain investor interest in several Target Markets.

Government reaction to resource scarcity issues has continued to shape markets.  In January 2014, the UK water regulator OFWAT announced its preliminary decisions on capital guidance for the industry.  These new initiatives consider pricing for customers and the introduction of water trading incentives to reduce damaging abstraction which could contribute to future water shortages.  In the US, the Environmental Protection Agency announced measures to clean up vehicle emissions, including a particularly sharp reduction in the allowable sulphur content in gasoline.  In China we see further evidence of the Government's growing commitment to environmental protection, including plans announced last November to spend ca. US$330 billion to tackle water pollution. 

Financial Results for the Period

Revenue for the six months to 31 March 2014 was £9.9 million (2013: £8.7 million).  Operating earnings¹ for the Period were £2.7 million (2013: £1.8 million) and the associated operating margin was 27 per cent (2013:  21 per cent). 

The unaudited result for the Period was a profit before tax² ("PBT") of £1.4 million (2013: £1.5 million) and the diluted adjusted³ earnings per share for the Period were 1.20 pence (2013: 1.45 pence). 

The increase in operating earnings is offset by tax benefits in 2013 not being repeated during the Period, an increased employer's National Insurance provision due to the rise in the Company's share price and a reduction to the fair value of the Company's interest in Impax New Energy Investors.

Interim dividend

At the Annual General Meeting on 10 February 2014, Impax shareholders approved payment of a dividend of 0.90 pence per share for the year ended 30 September 2013 (2012: 0.75 pence).  The Board believes the Company is able to support the payment of both an interim dividend and maintain the final dividend in line with the prior year and has therefore declared an interim dividend for the Period of 0.3 pence per share. This will be paid on 20 June 2014 to ordinary shareholders on the shareholder register at close of business on 23 May 2014.

Listed Equities

During the Period Impax's Listed Equity strategies^III performed well compared to global indices.  Our Specialists strategy, which invests in stocks of small and mid-cap environmental services and technology companies, rose by 11.0 per cent, while the ACWI grew by 5.4 per cent.  Impax's Leaders strategy, a portfolio that includes larger cap stocks, returned 6.6 per cent.  The Water strategy returned 9.7 per cent, retaining its position as one of the best performing funds in its peer group, while the Food & Agriculture fund delivered 5.6 per cent, level with rise of the MSCI ACWI Food & Agriculture Chain Index.  The Asia-Pacific strategy returned 12.0 per cent while the MSCI AC Asia Pacific Ex-Japan Index grew by 0.3 per cent.

Longer term performance remains strong too.  Over the ten years to 31 March 2014, the Specialists strategy returned an average of 11.2 per cent per annum, materially ahead of the ACWI, which rose by 8.0 per cent per annum.

Private Equity

Our private equity business continues to make good progress.  During the Period we expanded the portfolio of our second fund, Impax New Energy Investors II, with new investments in Italy and Germany, and also made our first investments in Finland and Ireland to increase the geographic diversification across northern EU countries.   The fund is now approximately 62 per cent invested and currently owns or is in the process of funding the construction of some 400 MW of onshore wind farms and solar projects.

The assets held in Impax New Energy Investors I LP continue to perform well operationally.  However, the Spanish government has now finalised its solar tariff reforms; these are more severe than originally anticipated and have led us to write down the Company's holding in the fund by a further £0.5 million.

Fund flows and distribution

The net inflows of £189 million over the Period comprised inflows into our listed equity funds and accounts of £322 million and outflows of £133 million (see the table below).  We have continued to benefit from strong inflows from continental Europe, particularly into the funds and accounts we run for BNP Paribas.  The BNP Paribas Aqua fund, which marked its fifth anniversary in December 2013, remains one of the best performing water funds globally, having returned 15.5 per cent net per annum (institutional share class) since inception, versus 11.2 per cent (net) for the ACWI over the same period.

Total Assets under Management and Fund Flows

AUM movement 6 months to 31 March 2014	Impax label listed equity funds	Third party listed equity funds and accounts	Private equity funds	Total
	£m	£m	£m	£m
Total AUM at 30 September 2013	503	1,314	380	2,197
Net inflows	(13)	202	-	189
Market movement and performance	49	117	(4)	162
Total AUM at 31 March 2014	539	1,633	376	2,548

Commitments and interest from North American clients continues to build.  During the Period, the assets we manage or sub-advise for US clients in domestic funds and accounts increased 117 per cent to £167 million, maintaining the high rate of growth achieved in recent years.  Inflows into the Global Environmental Markets Fund, which we sub-advise for Pax World, were more than matched by the rapid expansion of our mandate with a large private bank which hired us in November 2013 to manage part of a multi-manager product.  We are currently aiming to progress a significant pipeline of potential new business in the United States. 

Infrastructure and support

In April, i.e. after the Period end, in light of our optimistic prospects in North America, we announced the appointment of a second senior business development and client service professional, who will cover the US West Coast from our new office in Portland, Oregon. 

Headcount was unchanged over the period, with 57 full time equivalent staff. 

Queen's Award for Enterprise: Sustainable Development

On 21 April 2014, Impax was honoured to receive a Queen's Award for Enterprise in the Sustainable Development category.   These prestigious awards are made annually by HM The Queen, and recognise the highest levels of excellence in business.  Impax is the only asset manager to hold an award in this category.  We believe that this award will further raise our profile in the investment community, particularly in overseas markets.

Remuneration and share management

Following a review of remuneration policy in 2011, the Company adopted a three year Employee Share Option Plan ("ESOP"), under which final awards may be made following the end of the Company's current financial year.  In order to consider the most appropriate means of incentivising management and staff, the Remuneration Committee has initiated a further review of remuneration policy and expects to report to shareholders later this calendar year. 

During the Period, the Board confirmed the grant of 2.9 million options under the current ESOP to management and staff in respect of their performance for the financial year ended 30 September 2013.  The strike price was set at 47.9 pence, and the options will vest on 31 December 2016. 

Update on Regulation

We continue to monitor the evolving requirements of global financial services regulation closely. Further to the requirements of the Alternative Investment Fund Managers Directive ("AIFMD"), during the Period we submitted our application for authorisation as an Alternative Investment Fund Manager to the Financial Conduct Authority ("FCA").  We are in the process of implementing the policies, procedures and other requirements arising from the AIFMD.

Prospects

Notwithstanding higher levels of volatility, we expect that markets will tend to rise over the next few years, underpinned by further news of economic recovery around the world.  The outlook for environmental and resource efficiency markets remains very positive, and valuations are attractive compared to those for equities in general.  Meanwhile, Impax's strong track record, stable investment team and international reputation continue to reinforce our position as a preferred provider of services to investors seeking to tap into the large number of diverse opportunities.  With a scalable business model and strong balance sheet, we remain well placed for further business expansion.

Ian Simm

14 May 2014

¹revenue less operating costs

²profit before tax for 2013 was impacted inter alia by £0.71 million of charges (2013: £0.36 million) of charges associated with the Company's share-based incentive schemes

³adjusted to exclude IFRS2 charges for shares schemes intended to be satisfied by primary shares, and to include the related tax benefit reported in Other Comprehensive Income, the full effect of share buybacks and the dilution effect of unvested share awards. 

^I FTSE indices are total return calculated including the dividends reinvested gross of withholding taxes. 

^II The returns for the MSCI indices are net calculated including the dividends reinvested, net of withholding taxes. 

^III In line with market standards the Impax strategy returns (source: Factset) are calculated including the dividends reinvested, net of withholding taxes, gross of management fee and are represented in GBP except for BNP Paribas Aqua which is represented in Euros.

Impax Asset Management Group plc Condensed Consolidated Statement of Comprehensive Income For the Six Months Ended 31 March 2014 Six months ended Six months ended Year        ended 31 March 2014 31 March 2013 30 September 2013 Note £'000 £'000 £'000 Revenue 9,911 8,671 18,463 Operating costs (7,239) (6,833) (14,124) Share-based payment charge for EIA extension scheme 5 - (280) (280) Other (charges)/credits related to EIA schemes 5 (707) (83) 111 Fair value (losses)/gains 6 (624) 42 (947) Change in third party interest in consolidated funds 7 (28) (83) (32) Investment income 64 43 163 Profit before taxation 1,377 1,477 3,354 Taxation 8 36 (7) (397) Profit after taxation 1,413 1,470 2,957 Other comprehensive income Tax benefit on long-term incentive schemes - 14 20 Change in value of cash flow hedges (8) 3 158 Tax on change in value of cash flow hedges 2 (1) (34) Exchange differences on translation of foreign operations 40 159 55 Third party interests' share of exchange differences on translation of foreign operations - (124) (124) Total other comprehensive income 34 51 75 Total comprehensive income for the period attributable to equity holders of the parent 1,447 1,521 3,032 Basic earnings per share 9 1.20 p 1.20 p 2.44 p Diluted earnings per share 9 1.20 p 1.20 p 2.44 p All profit for the period is derived from continuing operations.

Impax Asset Management Group plc Condensed Consolidated Statement of Financial Position As at 31 March 2014 Note As at As at As at 31 March 2014 31 March 2013 30 September 2013 £'000 £'000 £'000 ASSETS Non-current assets Goodwill 11 1,629 1,629 1,629 Intangible assets 67 115 95 Property, plant and equipment 339 587 456 Investments NC 17 17 17 2,052 2,348 2,197 Current assets Trade and other receivables 5,168 3,772 3,145 Derivative asset 152 5 159 Investments 12 11,647 9,224 9,336 Current tax asset - 25 19 Margin account 233 236 186 Cash invested in money market funds and long term deposit accounts 13 8,609 11,867 12,873 Cash and cash equivalents 13 4,174 3,377 3,680 29,983 28,506 29,398 TOTAL ASSETS 32,035 30,854 31,595 EQUITY AND LIABILITIES Equity Ordinary shares 1,277 1,277 1,277 Share premium 4,093 4,093 4,093 Exchange translation reserve (312) (248) (352) Hedging reserve 120 4 126 Retained earnings 18,347 17,637 17,800 TOTAL EQUITY 23,525 22,763 22,944 Current liabilities Trade and other payables 6,073 5,816 5,948 Third party interests in consolidated funds 539 400 549 Current tax liability 99 19 103 6,711 6,235 6,600 Non-current liabilities Accruals 252 522 399 Deferred tax liability 1,547 1,334 1,652 Total non-current liabilities 1,799 1,856 2,051 TOTAL LIABILITIES 8,510 8,091 8,651 TOTAL EQUITY AND LIABILITIES 32,035 30,854 31,595

Impax Asset Management Group plc Condensed Consolidated Statement of Changes in Equity For the Six Months Ended 31 March 2014 Share capital Share premium Exchange  translation reserve Hedging reserve Retained earnings Total £'000 £'000 £'000 £'000 £'000 £'000 As at 1 October 2012                1,156                      78 (283)                        2             21,616             22,569 Dividends paid (816) ( 816) Issue of shares to EBT 2012         121      4,015 (4,136)               - Shares acquired by Treasury and EBT 2012 (890) ( 890) Award of shares on option exercises 12            12 Long-term incentive scheme charge 367          367 Tax benefit on long-term incentive schemes 14            14 Cash flow hedge             3             3 Tax on cashflow hedge ( 1) ( 1) Exchange differences on translation of foreign operations 159         159 Third party interests' share of exchange differences on translation of foreign operations ( 124) ( 124) Profit for the period       1,470     1,470 As at 31 March 2013  1,277 4,093 ( 248)  4   17,637  22,763 Shares acquired by EBT 2012 (1,507) ( 1,507) Award of shares on option exercises 29            29 Long-term incentive scheme charge 148          148 Tax benefit on long-term incentive schemes 6             6 Cash flow hedge         155          155 Tax on cashflow hedge (33) ( 33) Exchange differences on translation of foreign operations (104) ( 104) Profit for the period       1,487     1,487 As at 30 September 2013     1,277       4,093 ( 352)          126   17,800   22,944 Dividends paid (1,004) ( 1,004) Award of shares on option exercises 38            38 Long-term incentive scheme charge 100          100 Cash flow hedge (8) ( 8) Tax on cashflow hedge 2             2 Exchange differences on translation of foreign operations 40            40 Profit for the period       1,413      1,413 As at 31 March 2014                1,277                4,093 ( 312)                   120             18,347             23,525 EBT 2012 = Impax Asset Management Group plc Employee Benefit Trust 2012 All equity is attributable to owners of the parent.

Impax Asset Management Group plc Condensed Consolidated Statement of Cash Flows For the Six Months Ended 31 March 2014 Six months ended Six months ended Year ended 31 March 2014 31 March 2013 30 September 2013 Note £'000 £'000 £'000 Cashflows from operating activities Profit before taxation 1,377 1,477 3,354 Adjustments for: Investment income (64) (43) (163) Depreciation of property, plant and equipment 126 143 275 Amortisation of intangible assets 32 32 65 Fair value losses/(gains) 624 (42) 947 Share-based payment charges 100 367 472 Other charges related to EIA schemes 707 83 (111) Change in third party interest in consolidated funds 28 83 32 Operating cash flows before movement in working capital 2,930 2,100 4,871 (Increase) in receivables (2,023) (958) (338) (Increase) in margin account (49) (80) (31) (Decrease) in payables (747) (669) (567) Cash generated from operations 111 393 3,935 Corporation tax paid (10) (54) (54) Net cash generated from operating activities 101 339 3,881 Investing activities: Investment income received 64 43 163 Settlement of investment related hedges (771) (573) (1,115) Proceeds on sale/redemption of investments 1,223 - 47 Purchase of investments held by consolidated funds (2,916) (2,196) (3,099) Sale of investments held by consolidated funds 17 - 612 Purchase of investments (473) (222) (496) Purchase of intangible assets (5) - (14) Purchase of property, plant and equipment (9) (28) (28) Net cash used by investment activities (2,870) (2,976) (3,930) Financing activities: Dividends paid 10 (1,004) (816) (816) Impax shares acquired by EBT 2012/Treasury - (1,347) (2,853) Cash received on exercise of Impax share options           38 12 41 (Redemptions)/Investments by third parties from/into consolidated funds (38) 361 1,222 Decrease in cash held in money market funds and long-term deposit accounts 4,264 2,227 559 Net cash generated from/(used by) financing activities 3,260 437 (1,847) Net increase/(decrease) in cash and cash equivalents 491 (2,200) (1,896) Cash and cash equivalents at the beginning of the period 3,680 5,577 5,577 Effect of foreign exchange rate changes 3 - (1) Cash and cash equivalents at the end of the period 13 4,174 3,377 3,680

Impax Asset Management Group plc Notes to the Condensed Consolidated Interim Financial Statements For the Six Months Ended 31 March 2014 1 Reporting entity Impax Asset Management Group plc is a public limited company that is incorporated and domiciled in the United Kingdom, and is listed on the Alternative Investment Market (AIM). The condensed consolidated interim financial statements of the Company for the six months ended 31 March 2014 comprise the Company and its subsidiaries (together referred to as the "Group"). 2 Statement of compliance This interim report is unaudited and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting"  as adopted by the EU and the AIM rules. They do not include all the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2013. The comparative figures for the financial year ended 30 September 2013 are not the Company's statutory accounts for that financial year. Those accounts, prepared in accordance with IFRSs as adopted by the EU, have been reported on by the Company's auditors and delivered to Companies House. The report of the auditors was (i) unqualified, (ii) did  not include a reference to matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. Copies of these accounts are available upon request from the Company's registered office at Norfolk House, 31 St James's Square, London, SW1Y 4JR or at the Company's website: www.impaxam.com. These condensed consolidated interim financial statements were approved by the Board of Directors on 14 May 2014. 3 Significant accounting policies The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 30 September 2013. The Group has adopted no new accounting standards that have had an impact on the Statement of Comprehensive Income or the Statement of Financial Position.  Certain balances for 2013 have been reclassified to conform with the current period classification. 4 Estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were: i) judgements and estimates made in the valuation of unlisted current asset investments (see note 12); ii) determining whether managed funds should be consolidated; iii) determining the size of the charge for National Insurance Contributions payable on long-term incentive schemes and iv) determining the value of deferred tax assets. 5 Long-term incentive scheme charges Share-based payment charges Under the Group's Employee Incentive Arrangement ("EIA") Extension Scheme 14.05 million Long Term Incentive Plan ("LTIP") options were awarded to certain employees in April 2011.  The LTIP options have a 1p or nil exercise price and vested to individuals who remained employed on 30 September 2012 or in respect of one individual only, 15 January 2013.  They are exercisable over a period from 1 October 2012 to 31 December 2020.  The Group accrued for the International Financial Reporting Standard ("IFRS") 2 Share-Based Payment charge for shares allocated under the EBT and LTIP options from the date of grant, to the date of vesting.  This charge is excluded from the Group's definition of adjusted earnings as explained in note 9. The Group has a further share-based payment scheme called the Employee Share Option Plan under which it has granted a total of 10,741,455 options to date.  The Board intends that these awards will be satisfied by share buy-backs.  The share-based payment charge in respect of these schemes, which is offset by an equal reduction in the total cash bonus pool payable to employees, is included in operating costs and in the Group's definition of adjusted earnings. Other long-term incentive scheme related charges Six months ended 31 March 2014 Six months ended 31 March 2013 Year ended 30 September 2013 £'000 £'000 £'000 EIA NIC charge/(credit) 303 37 (7) EIA Extension NIC charge 274 40 (19) EIA Additional payments 130 6 (85) Other long-term incentive scheme related charges 707 83 (111) (NIC = Employers National Insurance Charge) EIA Charge The Impax Employee Benefit Trust 2004 ("EBT 2004") holds Impax shares and other assets in sub-funds for the benefit of certain of the Group's past and current employees.  The Impax shares were awarded under the Group's Employee Incentive Arrangement ("EIA").  The Group is required to pay Employers National Insurance Charge ("NIC") on the value of any assets that are transferred out of the Trust and has accrued for the estimated amount payable using the relevant share prices at the balance sheet date.  The amount payable will fluctuate in line with the Company's share price, such fluctuations being recorded in the current period income statement. If and when the EBT 2004 Trustee agrees to transfer assets held in the EBT 2004 to beneficiaries and if the assets transferred are in the form of the Group's Ordinary Shares, the Group also expects to be eligible for a corporation tax deduction equal to the value of those Ordinary Shares.  The Group expects this tax benefit will be up to £1,280,000 but has not recognised this to date. EIA Extension NIC charge  The Group accrues for the Employer's NIC payable in respect the options of the options and share awards made under the EIA Extension over the same period as the related share-based payment charge.  The amount payable will fluctuate in line with the Impax share price, such fluctuations being recorded in the current period income statement.  The Group also receives a corporation tax deduction on the exercise of the options equal to the gain made on these options. This deduction has been recognised as a deferred tax asset and its value will also fluctuate in line with the Company's share price with the fluctuation being recorded in the current Period tax charge. EIA Additional payments Individuals receiving LTIP Options are eligible for a retention payment payable after the end of the financial year in which each employee exercises his or her LTIP Options.  The payment will be equal to the corporation tax benefit realised by the Group on the exercise of the LTIP options minus the amount of the Employer's NIC suffered by the Group on the exercise of the LTIP options.  6 Fair value gains Fair value gains include those arising on revaluation of listed and unlisted investments held by the Group including those held by the Group's consolidated funds (see Note 12) and any gains or losses arising on related hedge instruments held by the Group. 7 Change in third party interest in consolidated funds This charge removes the fair value gains or losses, other operating costs and investment income recorded in the Group's consolidated funds (see Note 12) which are attributable to third party investors in the funds. 8 Taxation The tax assessment for the period is lower than the standard rate of corporation tax in the UK for the period (22%).  The differences are explained below: Six months ended 31 March 2014 Six months ended 31 March 2013 Year ended 30 September 2013 £'000 £'000 £'000 Profit before tax 1,377 1,477 3,354 Tax charge at 22.0%,23.5%,23.5% 303 347 788 Effects of: Non-deductible expenses and charges 9 30 235 Increases in value of deductions re share based payments (322) - - Non-taxable income - (37) (16) Foreign exchange 27 (155) (147) Tax effect of previously unrecognised tax losses (52) (181) (267) Adjustment in respect of prior years - 9 111 Change in UK tax rates (6) (8) (317) Effect of higher tax rates in foreign jurisdictions 5 2 10 Total income tax credit/(expense) (36) 7 397 9 Earnings and earnings per share Earnings and Adjusted earnings In order to better reflect the underlying economic performance of the Group, an adjusted earnings has been calculated.  The adjustment i) excludes the IFRS 2 'Share based payment' charge in respect of schemes where shares awarded are expected to be satisfied by the issue of new shares (the EIA Extension), and ii) includes the tax benefit recognised in Other Comprehensive Income in respect of transfers out of the EBT and the exercising of LTIP options. Six months ended 31 March 2014 Six months ended 31 March 2013 Year ended 30 September 2013 £'000 £'000 £'000 Earnings 1,413 1,470 2,957 IFRS 2 Share-based payment charge (see Note 5) -                                280 280 Tax benefit on long-term incentive scheme included in Other Comprehensive Income (see Note 5) - 14 20 Adjusted earnings 1,413 1,764                                           3,257 The earnings per share on an adjusted and IFRS basis are as shown below. Adjusted earnings per share Adjusted earnings for the period Shares Adjusted earnings per share £'000 '000 Six months ended 31 March 2014 Basic adjusted 1,413 117,463 1.20p Diluted adjusted 1,413 117,856 1.20p Six months ended 31 March 2013 Basic adjusted 1,764 121,637 1.45p Diluted adjusted 1,764 121,637 1.45p Year ended 30 September 2013 Basic adjusted 3,257 117,463 2.77p Diluted adjusted 3,257 117,463 2.77p The number of Ordinary shares used in the calculation of diluted adjusted earnings per share excludes the number of shares held in Treasury or the EBTs at the end of the period and includes an adjustment for the dilutive impact of the ESOP share schemes.  The dilutive impact is calculated in the same way as for the IFRS earnings per share. Six months ended 31 March 2014 Six months ended 31 March 2013 Year ended 30 September 2013 '000 '000 '000 Shares in issue 127,749 127,749 127,749 Shares held in Treasury or EBT 2012 (excluding those held to satisfy awards under the EIA Extension share scheme) (10,286) (6,112) (10,286) Number of shares used in the calculation of basic adjusted earnings per share 117,463 121,637 117,463 Dilutive effect of ESOP share scheme 393 - - Number of shares used in the calculation of diluted adjusted earnings per share 117,856 121,637 117,463 IFRS earnings per share Earnings for the period Shares Earnings per share £'000 '000 Six months ended 31 March 2014 Basic 1,413 117,598 1.20p Diluted 1,413 117,991 1.20p Six months ended 31 March 2013 Basic 1,470 122,453 1.20p Diluted 1,470 122,453 1.20p Year ended 30 September 2013 Basic 2,957 121,318 2.44p Diluted 2,957 121,318 2.44p The number of Ordinary shares used in the calculation of diluted earnings per share reconciles to the number of Ordinary shares used in the calculation of basic earnings per share as follows: Six months ended 31 March 2014 Six months ended 31 March 2013 Year ended 30 September 2013 '000 '000 '000 Number of ordinary shares used in the calculation of basic earnings per share 117,598 122,453 121,318 Additional dilutive shares re 2011, 2012 and 2013 ESOP 3,250 -                                                -   Adjustment to reflect future contributions from employees receiving awards and option exercise proceeds (2,857) - - Number of ordinary shares used in the calculation of diluted earnings per share 117,991 122,453 121,318 The Basic earnings per shares for all periods shown includes vested LTIP options on the basis that these have an inconsequential exercise price (1p or 0p).  ESOP options are not dilutive for the periods ended 31 March 2013 and 30 September 2013 based on the relevant share prices. 10 Dividends On 10 February 2014, at the Company's Annual General Meeting, payment of a 0.9p per share dividend in respect of the year ended 30 September 2013 (2012: 0.75p per share) was approved.  The Trustee of the Impax Employee Benefit Trusts waived the Trusts' rights to part of this dividend, leading to a total dividend payment of £1,004,000.  This was paid on 17 February 2014. The Board has declared an interim dividend for the period of 0.3p per ordinary share(2013: nil). This dividend will be paid on 20 June 2014 to ordinary shareholders on the register at close of business on 23 May 2014. 11 Goodwill Cost £'000 At 31 March 2013, 30 September 2013 and 31 March 2014  1,629 Goodwill arose on the acquisition of Impax Capital Limited on 18 June 2001. The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill may be impaired. 12 Current asset investments Unlisted investments Listed investments Total £'000 £'000 £'000 At 1 October 2012 3,027 5,683 8,710 Additions 222 2,201 2,423 Fair value movements 327 467 794 Deconsolidation of IGRO 3,164 (5,867) (2,703) At 31 March 2013 6,740 2,484 9,224 Additions 272 898 1,170 Fair value movements (341) (58) (399) Repayments/disposals (47) (612) (659) At 30 September 2013 6,624 2,712 9,336 Additions 475 2,916 3,391 Fair value movements (177) 322 145 Repayments/disposals (1,223) (17) (1,240) Foreign exchange - 15 15 At 31 March 2014 5,699 5,948 11,647 Impax Food and Agriculture Fund On 1 December 2012 the Group launched the Impax Food and Agricuture Fund ("IFAF") and invested, from its own resources £2,000,000 into the fund. The IFAF invests in listed equities using the Group's Food and Agriculture Strategy.  The Group's investment represented more than 50% of the IFAF's NAV from the date of launch to 31 March 2014 and accordingly has been consolidated throughout this period with its underlying investments included in listed equities in the table above. Impax Fundamental Long Term Opportunities in Water Fund On 31 January 2014 the Group launched the Impax Fundamental Long Term Opportunities in Water Fund LP ("IFLOW") and invested, from its own resources $5,000,000 into the fund. IFLOW invests in listed equities using the Group's Water Strategy.  The Group's investment represented more than 50% of IFLOW's NAV from the date of launch to 31 March 2014 and accordingly has been consolidated throughout this period with its underlying investments included in listed equities in the table above. Impax Global Resource Optimization Fund ("IGRO") In December 2011 the Group launched the Impax Green Markets Fund LP.  The Group invested $5,000,000 at launch and during the current period redeemed $2,000,000 (prior periods: £nil).  Subsequent to launch we changed the fund's name to Impax Global Resource Optimization Fund.  IGRO invests in listed equities using the Group's Environmental Specialists Strategy.  The Group's investment represented more than 50% of IGRO's NAV from the date of launch to 1 December 2012 and accordingly the IGRO was consolidated until this date with its underlying investments included in listed investments in the table above.  Thereafter the Group's investment in the fund is included in Unlisted investments although its underlying investment are listed and the fund is valued based on the market value of those investments. The investments held by the funds described above are revalued to market value using quoted market prices that are available at the date of these financial statements. The quoted market price is the current bid price. Unlisted investments The Group has a 3.76% partnership share of Impax New Energy Investors LP, a private equity partnership managed by the Group.  At the period end the carrying value of the investment was £762,000. The carrying value represents the Board's assessment of the investment's fair value which was determined using a discounted cashflow approach.  75% of the partnership's valuation is represented by investments in Spanish solar parks.  These investments have been adversely impacted by the significant retroactive reforms of the Spanish energy markets and covenants for loans held by the investment have been breached.  The partnership has begun negotiations with the relevant banks to restructure the loans and is also in the process of pursuing a claim for compensation from the Spanish government.  In the event that the banks take possession of the assets and the claims for compensation are unsuccessful the investment would be impaired by £574,000. The Group has a further commitment of €3.3m to Impax New Energy Investors II LP, a private equity partnership managed by the Group which was established on 22 March 2010.  At the period end the Group had invested a total of €1,667,000.  The Group's commitment of €3.3m is equal to 1% of the total commitments made to the fund.  The investment is included at the Board's assessment of its fair value. 13 Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents includes the following: 31 March 2014 31  March 2013 30 September 2013 £'000 £'000 £'000 Cash at bank and in hand Held by operating entities of the Group 4,157 3,377 3,620 Held by the consolidated funds   17 - 60 4,174 3,377 3,680 In order to mitigate bank default risk and to access favourable interest rates the Group invests part of its surplus cash in money market funds and long-term deposit accounts.  Amounts held in money market funds and long-term deposit accounts are as shown below.  The Group considers the total of its cash and cash equivalents held by operating entities of the Group and cash invested in money market funds and in long-term deposit accounts to be its cash reserves. 31 March 2014 31 March 2013 30 September 2013 £'000 £'000 £'000 Cash and cash equivalents 4,157 3,377 3,620 Cash held in money market funds and long-term deposit accounts 8,609 11,867 12,873 Total cash reserves 12,766 15,244 16,493 14 Group risks The Group's principal risks remain as detailed within the Directors' report of the Group's 2013 Annual Report and Financial Statements and are categorised as financial, investment, and operational. 15 Share capital and Own shares 31 March 2014 31  March 2013 30 September 2013 Issued and fully paid ordinary shares of 1p each Number 127,749,098 127,749,098 127,749,098 £000s 1,277 1,277 1,277 31 March 2014 31  March 2013 30 September 2013 Own shares Number 16,243,769 18,685,316 20,239,769 £000s 5,093 5,715 6,331 Own shares represents shares held in the EBT 2012 and EBT 2004.  No new shares were acquired in the period ended 31 March 2014, 3,996,000 shares were awarded to option holders on exercise of options.  As at 31 March 2014 the Company had a total of 16,698,895 options outstanding of which 5,957,440 were exercisable. 16 Related party transactions Impax New Energy Investors LP, Impax New Energy Investors II LP, Impax New Energy Investors II-B LP, Impax New Energy Investors SCA, Impax Global Resource Optimization Fund LP, Impax Fundamental Long Term Opportunities in Water LP, Impax Carried Interest Partners LP and Impax Carried Interest Partners II LP and entities controlled by them are related parties of the Group by virtue of subsidiaries being the General Partners to these funds.  BNP Paribas Investment Partners is a related party of the Group by virtue of owning a 25.2% equity holding.  Other funds managed by subsidiaries of the Company are also related parties by virtue of their management contracts. The aggregate related party transactions during the period, and holdings or balances as at the period end, are as shown below.  All balances were unsecured. Unless stated otherwise balances outstanding were £nil. Six months ended 31 March 2014 Six months ended 31 March 2013 Year ended 30 September 2013 £'000 £'000 £'000 Statement of comprehensive income  Revenue  9,819 8,547 18,463 31 March 2014 31  March 2013 30 September 2013 £'000 £'000 £'000 Statement of financial position Non-current asset investments                               17                                 17                                               17 Current asset investments       5,346    6,353 6,261 Trade and other receivables         3,970 2,088              2,564

 

END

 

 

IR SFEFALFLSEFI