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Impax Asset Management Group plc
Annual Report and Accounts 2014
Impax Asset Management Group plc is a leading specialist investment
manager dedicated to investing in the opportunities created by the
scarcity of natural resources and the growing demand for cleaner,
more efficient products and services.
We manage £2.8 billion1 for institutional and high net worth investors globally, and are
committed to providing strong long-term, risk-adjusted returns for our clients.
Our listed equity funds seek out mis-priced companies that are set to benefit from the long-term trends of changing
demographics, urbanisation, rising consumption and the resultant increases in resource scarcity. Investment is focused
on a small number of deeply researched equity strategies across markets related to alternative energy, energy
efficiency, water, waste, and food and agriculture.
The private equity infrastructure funds that we manage follow an operationally focused, value-add strategy,
investing in renewable power generation and related assets throughout Europe.
Our sustainable property business, acquired in July 2014, focuses on developing sustainable and energy efficient
commercial property, primarily in the UK.
We have a long track record of innovation in environmental investments and are a thought leader in defining the
markets in which we invest: for example, through our partnership with FTSE to develop and manage the classification
system underpinning the FTSE Environmental Markets Index Series.
Impax employs 61 staff of which 30 work in our investment teams. The Company is headquartered in London and
has established offices in Hong Kong, New York and Portland, Oregon.
In April 2014, Impax received a Queen’s Award for Enterprise: Sustainable Development.
1 As at 30 September 2014.
CONTENTS
Strategic report
1 Performance and key facts
2 Chairman’s statement
4 Chief Executive’s report
9
11
12
14
Investing globally in resource efficiency markets
Our approach and creating shareholder value
Key risks
Our values and commitment to
corporate responsibility
Governance
16 Board of Directors and Company Secretary
Senior personnel
17
18 Directors’ report
19 Corporate governance report
21 Statement of Directors’ responsibilities
22 Remuneration report
Financial statements
24 Independent auditor’s report
25 Consolidated statement of comprehensive income
26 Consolidated statement of financial position
27 Consolidated statement of changes in equity
28 Consolidated cash flow statement
29 Notes to the financial statements
48 Company statement of financial position
49 Company statement of changes in equity
50 Company statement of cash flows
51
57 Notice of Annual General Meeting
59 Officers and advisers
Notes to the Company financial statements
Impax Asset Management Group plc Annual Report and Accounts 2014
Strategic report
Performance and key facts
FINANCIAL PERFORMANCE
Assets under management
Revenue
Operating earnings1
Profit before tax2
Shareholders’ equity
Cash reserves
Seed investments
Dividend per share3
BUSINESS PERFORMANCE
⊲ Strong growth in assets from investors based in the US and Continental Europe
⊲ Water strategy passes £1 billion milestone
⊲ Encouraging mandate pipeline
⊲ Addition of sustainable property capability
⊲ Queen’s Award for Enterprise: Sustainable Development
KEY FACTS 2014
2014
£2.8bn
£20.4m
£5.3m
£3.5m
£24.9m
£17.2m
£10.2m
1.40p
2013
£2.2bn
£18.5m
£4.3m
£3.4m
£22.9m
£16.5m
£8.5m
0.90p
ATTRACTIVE INVESTMENT THEMES
⊲ Rapidly growing markets and investment universe
⊲ Market complexity leads to mispricing
⊲ Benefits to investors seeking to reduce exposure to fossil fuels
EXPERIENCED TEAM
⊲ 61 people, including 30 investment professionals
⊲ Stable senior investment team
⊲ Significant staff ownership
EXTENSIVE DISTRIBUTION NETWORKS
⊲ In-house sales
⊲ Committed third-party distributors
⊲ Access to over 20 markets
SCALABLE BUSINESS MODEL
⊲ High capacity investment strategies
⊲ Proven investment processes
⊲ Established infrastructure
1 Revenue less operating costs excluding £0.5 million (2013: £0.2 million) charges due to EIA share schemes.
2 Adjusted to exclude the IFRS2 charge for share schemes satisfied by primary shares, and to include the full effect of share buybacks and the dilutive effect of option schemes.
3 0.3p paid as interim dividend, 1.1p proposed final dividend.
01
CLEAR INVESTMENT Strategic report
Chairman’s statement
Keith Falconer
Chairman
At a time when investors are seeking to direct
capital to markets with strong growth prospects
and/or anomalous valuations, Impax’s Target
Markets are particularly attractive.
RESULTS FOR THE YEAR
Revenue for the Period was £20.4 million (2013: £18.5 million).
Operating earnings1 for the year were £5.3 million (2013: £4.3
million) and the associated operating margin was 26.1 per cent
(2013: 23.5 per cent).
When I last reported to shareholders in November 2013,
there were tangible signs of a sustained recovery in the global
economy and investor sentiment was strengthening. 12 months
on, signals from central banks and major corporations are
more mixed, and investor caution has increased. Nevertheless,
prospects for resource efficiency and environmental markets,
where Impax focuses its expertise (“Target Markets”),
remain healthy, and the Company has once again delivered
significant growth in assets and operating profit.
During the Company’s financial year from 1 October 2013 to
30 September 2014 (the “Period”), assets under discretionary
and advisory management (“AUM”) rose 25 per cent from
£2.20 billion to £2.75 billion. As at 31 October 2014, AUM
had increased further to £2.89 billion.
The case for investing in our Target Markets has strengthened
considerably in the past year. Water has once again attracted
attention as policymakers announced measures to address
the chronic drought in the western United States; meanwhile,
extreme rainfall has affected many countries, particularly the
UK, prompting the need for improved flood defences and
stormwater management. Although the price of oil has recently
fallen, demand for energy efficiency products and services
continues to build, underpinned by the long-term regulatory
frameworks and related investment programmes, for example
in the automobile sector. Similarly, capital flows to provide new
energy efficient transportation and basic needs infrastructure
in emerging markets have remained buoyant.
At a time when investors are seeking to direct capital to markets
with strong growth prospects and/or anomalous valuations,
Impax’s Target Markets are particularly attractive in this respect,
and we have been able to attract a record level of inflows
into our listed equity products and strategies, notably from
Continental Europe and the US. We have also made good
progress in further extending our capabilities in “real assets”
with the acquisition in July of a team with investment expertise
in improving the sustainability of commercial property.
Profit before tax (“PBT”) for the year was £3.5 million (2013:
£3.4 million). PBT included a £0.5 million employer’s National
Insurance charge related to the Company’s legacy Employee
Incentive Arrangement (“EIA”) arising from an increase in the
Company’s share price and £1.5 million of fair value losses on
the Group’s investments. Fair value losses mainly comprise a
write down, as stated in the Company’s Interim Report, of the
Company’s holding in its first private equity fund reflecting
regulatory changes in Spain, and net losses in the Period
related to index future hedges for the Company’s seed
investments in listed equity funds.
Diluted earnings per share was 2.79 pence (adjusted2)
(2013: 2.77 pence (adjusted2).
As of 30 September 2014, cash reserves held by operating
entities of the Group were £17.2 million (2013: £16.5 million),
seed investments were £10.2 million (2013: £8.5 million)
and shareholders’ equity had increased to £24.9 million
(2013: £22.9 million). The Company remained debt free
during the Period.
Operating cash flow for the Period was £6.0 million
(2013: £4.9 million). During the Period the Company spent
£0.6 million buying back 1.2 million of its own shares.
QUEEN’S AWARD FOR ENTERPRISE:
SUSTAINABLE DEVELOPMENT
In the Interim Report, we announced that Impax had been
honoured to receive the prestigious Queen’s Award for
Enterprise: Sustainable Development. This award recognises
Impax’s long, successful track record, our thought leadership
in categorising resource efficiency markets, our contribution
to facilitating the flow of capital to sustainable development
projects and the achievements of our corporate responsibility
and sustainability programmes. I would like to thank everyone
who works at Impax on this tremendous achievement.
PROPOSED DIVIDEND FOR THE PERIOD
The Company is committed to a progressive dividend policy
as a demonstration of commitment to increasing shareholder
value. This year, the Company initiated the payment of an interim
dividend of 0.3 pence per share, which was paid in June.
1 Revenue less operating costs excluding £0.5 million (2013: £0.2 million) charges due to EIA share schemes.
2 Adjusted to exclude the IFRS2 charge for share schemes satisfied by primary shares, and to include the full effect of share buybacks and the dilutive effect of option schemes.
02
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014 Given the encouraging progress this year, the Board recommends
a final dividend of 1.1 pence per share. If approved by shareholders,
the aggregated dividend payment for the full year would be 1.4
pence per share, which would represent a 56 per cent increase
over the dividend for the previous year (2013: 0.9 pence).
REVENUE
£20.4m
OPERATING EARNINGS
£5.3m
The dividend proposal will be submitted for formal approval
by shareholders at the Annual General Meeting on 4 February
2015. If approved, the dividend will be paid on or around
20 February 2015. The record date for the payment of the
proposed dividend will be 23 January 2015 and the ex-dividend
date will be 22 January 2015.
15.34
20.93
20.4
6.24
18.62
18.46
3.83
5.3
4.55
4.34
2010 2011
2012 2013 2014
2010 2011
2012 2013 2014
EARNINGS PER SHARE
DIVIDEND
2.79p
1.40p
3.74
3.49
2.64
2.77
2.79
1.40
0.70
0.75
0.60
0.90
2010 2011
2012 2013 2014
2010 2011
2012 2013 2014
AUM
£2.75bn
2.75
2.20
1.82
1.90
1.83
2010 2011
2012 2013 2014
REMUNERATION AND SHARE MANAGEMENT
In accordance with the Company’s remuneration policy,
during the Period the Board granted 2.7 million ESOP options
to management and staff in respect of their performance for
the year ended 30 September 2013. The strike price was set
at 47.9 pence and the options will vest on 31 December 2016.
Following a review of remuneration policy, the Remuneration
Committee has decided to continue the practice of capping
aggregate variable remuneration (“Variable Remuneration”)
across the Company at 45 per cent of operating earnings and
variable remuneration. Cash bonuses payable in any year
(grossed up by applicable employer’s National Insurance) are
equal to the Variable Remuneration less the fair value charge
arising from employee share-based incentive schemes. The
Company will continue to aim to pay market-median salaries.
Awards under the Company’s Employee Share Option Plan
(“ESOP”) will cease in January 2015 with the grant of 3.7
million options. The Board continues to believe that equity
incentives are an effective means to align interests between
staff and shareholders, and following the success of the ESOP
has decided to put in place a new Restricted Share Scheme
(“RSS”) under which modest amounts of shares are to be
awarded to high performing staff. The RSS will initially run in
parallel with the ESOP, with the award of 1.25 million Restricted
Shares made in respect of individuals’ performance for the
Period. The RSS will then become the principal scheme for
the award of share-based incentives.
The Board intends to continue to buy back the Company’s
shares from time to time after due consideration of attractive
alternatives uses of the Company’s cash resources. Shares
purchased may be used to satisfy employee share-based award
obligations, thus reducing the requirement to issue new shares.
PROSPECTS
Since the end of the Period, economic indicators have
continued to reflect an uncertain business climate, and investor
sentiment is fragile. Nevertheless, interest in Impax’s Target
Markets has remained high, and our pipeline of new business
indicates that we can continue to build our client base and value
for shareholders.
J Keith R Falconer
26 November 2014
03
CLEAR INVESTMENT Strategic report
Chief Executive’s report
Ian Simm
Chief Executive
The drivers behind resource efficiency and
environmental markets maintained momentum
during the Period, with further news on climate
change policy, the development of new
technologies and stricter regulations.
Full divestment is a major decision, and not one that most
investors can or should make in haste. However, for those
investors inclined to reduce their exposure to fossil fuels,
several of Impax’s strategies offer exposure to (retail) energy
prices through companies active in renewable energy and
energy efficiency markets while reducing the risk of adverse
policy changes.
Since Impax’s interim statement, volatility has returned to
financial markets as investors have compared the impact of
increased geopolitical tension and weak economic growth
prospects on the one hand against the potential benefits of
low energy prices and the likelihood of effective intervention
by central banks on the other. Nevertheless, Impax’s prospects
have continued to strengthen, providing reassurance that the
Company is well positioned to deliver attractive returns to
current and potential future clients.
MARKET DEVELOPMENTS AND PERFORMANCE
The drivers behind resource efficiency and environmental
markets maintained momentum during the Period, with further
news on climate change policy, the development of new
technologies and stricter regulations.
Over the past year we have witnessed severe heatwaves
and drought in Australia and California, snow in Vietnam and
the return of the polar vortex to North America. While the UK
endured its wettest winter in 250 years, temperatures in parts
of Russia and the Arctic have been 10 degrees centigrade
above normal. This has coincided with a discernible shift in
investors’ expectations that policymakers around the world
would take material action to address climate change. In
particular, the United States and China have recently joined
the European Union in announcing further commitments to
limiting greenhouse gas (“GHG”) emissions, and optimism is
building that the next major climate change conference, which
is set for December 2015 in Paris, could lead to agreement
on binding targets.
Although the extreme weather and policy interventions
associated with climate change are likely to impact many
sectors, portfolios with significant allocations to fossil fuels
carry the highest risk. Mark Carney, the Governor of the Bank of
England, recently reiterated his warning that the owners of some
fossil fuel assets may not be able to burn all of their reserves
if the world is to avoid catastrophic climate change, and called
for investors to consider the implications of this analysis. Over
the past 12 months, many endowments, public sector investors
and religious institutions have committed to reduce or sell out of
their fossil fuel holdings, with Stanford University, the Rockefeller
Brothers Fund and the World Council of Churches being among
the highest profile investors to take this step.
04
Our investment universe continues to expand as advances
in technologies that improve the efficiency of resource use
become commercially successful. Particularly interesting
developments include improved motors and systems for
hybrid vehicles. We believe vehicle hybridisation offers more
compelling investment prospects than electric vehicles, which
are likely to remain a niche market in the near term. We are also
witnessing increasing technological sophistication in energy
efficiency markets, for example in power network efficiency,
including batteries, standby generators, smart metering and
demand response systems, and related software.
Around the world, regulators have continued to implement
stringent environmental regulations. For example, in June the
US Environmental Protection Agency announced a series of
state-by-state GHG emission reduction targets for existing
power plants, targeting a 30 per cent reduction in national
CO2 emissions from the power sector by 2030 compared to
2005 levels. In China, the government announced a US$330
billion investment programme to tackle pollution of its scarce
water resources, with the aim of improving the water quality
by up to 50 per cent through investments in waste water
treatment systems.
The demand for clean water will inevitably outstrip supply
unless substantial long-term commitments are made to
improving water infrastructure and maximising the effective
use of water, for example in agricultural irrigation. Calendar
year 2013 was the driest year on record in California, the most
hydrologically altered region of the planet, while this summer
many farmers have destroyed vast areas of perennial crops
such as almonds simply because there is no water available
for irrigation. Currently, the water value chain offers many
compelling investment opportunities, for example companies
that are set to benefit from the steady, long-term growth of the
US construction industry and in the clean-up of water used
for fracking. Developments in desalination technologies and
water re-use in the drought affected states of the US are also
presenting interesting investment prospects.
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014 Notwithstanding the strong fundamentals, stocks active
in Impax’s Target Markets sold off in the second half of the
Period as investors switched into sectors with more defensive
characteristics. In the six months to 31 March 2014, the FTSE
Environmental Opportunities All Share Index (“EOAS”) rose by
6.8 per cent, compared to 5.4 per cent for the MSCI AC World
Index (“ACWI”); however, by 30 September 2014 the one year
numbers for the EOAS and ACWI indices were 7.3 and 11.2
per cent respectively. Over the five years to 30 September
2014, the two indices had increased by 59.7 and 59.4 per
cent respectively.
ASSETS UNDER MANAGEMENT AND FUND FLOWS
During the Period, as set out in Figure 1, we received record
net inflows of £466 million into the Listed Equity funds that we
manage or advise. The majority of inflows were from Continental
European and US investors into our third-party listed equity
funds, and our mandate pipeline from these regions remains
promising. The value in sterling of our private equity funds
fell slightly due to foreign exchange effects, while we added
ca. £22 million by acquiring a mandate to run a fund in the
Property sector as set out below.
INVESTMENT PERFORMANCE
Listed Equity
Impax has some 15 years of investing in global resource
efficiency equity markets, following a high conviction, bottom-
up, stock-picking approach to portfolio construction. As set
out in Figure 2, we currently manage five distinct long-only
investment strategies, covering global small and mid cap, global
all cap and more specialised strategies focusing on resource
efficiency and environmental markets in Water, Asia-Pacific
and Food & Agriculture.
Although our listed equity strategies were considerably ahead
of global markets during 2013 and beat the MSCI ACWI during
the first half of the Period, the second half sell off in resource
efficiency and environmental markets stocks impacted annual
performance. Reassuringly, over the same time period our target
companies generally delivered on earnings expectations.
Our “small and mid-cap” Specialists strategy returned 5.0 per
cent1 over the Period, compared to 11.2 per cent2 for the MSCI
ACWI. Nevertheless, over the ten years to 30 September 2014,
Specialists returned 166.6 per cent1 while the MSCI ACWI rose
102.8 per cent2.
FIGURE 1.
AUM MOVEMENT YEAR TO 30 SEPTEMBER 2014
Total AUM at 30 September 2013
Net inflows
Market movement and performance
Total AUM at 30 September 2014
Impax label
listed equity
funds
£m
Third-
party listed
equity funds
and accounts
£m
503
(17)
24
511
1,314
483
70
1,867
Private
equity funds
£m
Property
funds
£m
380
–
(26)
354
–
22
–
22
Total
£m
2,197
489
69
2,755
FIGURE 2.
IMPAX’S LISTED EQUITY INVESTMENT STRATEGIES
Global
All cap
Market cap
relative to
MSCI ACWI
(Median)
AUM
Inception
date
Specialists
Universe: 1,100 companies
Universe size: $1.6 T market cap
Leaders
Universe: 1,500 companies
Universe size: $4.2 T market cap
Water
Universe: 250 companies
Universe size: $0.8 T market cap
Asia-Pacific
Universe: 630 companies
Universe size: $1.4 T market cap
Food & Agriculture
Universe: 1,200 companies
Universe size: $4.9 T market cap
✓
✓
✓
Asia-Pacific
✓
Small-Mid
£790m
Mar 2002
✓
✓
✓
✓
£514m
Mar 2008
£1.0bn
Jan 2009
£22m
Nov 2009
£3m
Dec 2012
In line with market standards the strategy returns1 are calculated including the dividends reinvested, net of withholding taxes, gross of management fee and are represented in GBP;
the returns for the MSCI ACWI2 are net calculated including the dividends reinvested, net of withholding taxes (Source: FactSet).
05
CLEAR INVESTMENT Strategic report
Chief Executive’s report
continued
Our “all cap” Leaders strategy had similar performance, returning
5.4% per cent1 over the Period. Between inception in March
2008 and the end of the Period, Leaders has returned 66.4%1,
outperforming ACWI which has returned 60.2 per cent.
The Water strategy returned 9.3 per cent1 over the Period.
Over the period between inception in January 2009 and
30 September 2014, this strategy returned 112.6 per cent1
compared to 84.4 per cent2 for the MSCI ACWI.
During the Period our Asia-Pacific strategy returned 22.5 per
cent1, a strong performance versus the MSCI AC Asia Pacific
Ex Japan Index which rose 5.8 per cent2.
Food & Agriculture stocks generally had a challenging year
and our strategy, which is approaching its second anniversary,
returned 0.4% over the Period.
In November 2014, lmpax was named Best Environmental Fund
Management Group, and also won Best Environmental Fund for
lmpax Environmental Markets (Ireland), at the Investment Week
Sustainable Investment Awards. These prestigious industry
awards are further recognition of our track record and the
rigour of our investment process.
Private Equity
Our private equity business has made further progress. Impax
New Energy Investors II (“NEF II”) now has over 370 Megawatts
(“MW”) of wind projects in operation or construction across
Europe and some 20MW of solar assets operating in Italy.
During the Period, NEF II invested in further projects in Ireland,
Finland, Germany and Italy, with a sizeable commitment to
onshore wind projects; the fund retains a material pipeline,
both in these countries and in France, for construction in 2015
and beyond. At the end of the Period, the fund was 73 per cent
invested or committed.
The assets held by Impax New Energy Investors I (“NEF I”)
continue to operate in line with or ahead of expectations.
However, in June 2014, as part of a sequence of adverse
regulatory changes, the Spanish government announced some
further amendments, which are expected to represent the final
changes to the legislation governing the revenue received
by this fund’s assets. We remain focused on cost cutting and
debt restructuring for these assets, while continuing to pursue
our complex arbitration case against the Spanish government
alongside other major investors in the Spanish solar sector.
DISTRIBUTION
As previously reported, Impax pursues different routes to market
in each region in order to balance cost effective and scalable
distribution with demanding growth targets (Figure 3). In
Continental Europe, our key distribution partners are ASN Bank,
which is based in the Netherlands, and BNP Paribas Investment
Partners (“BNPP”), which promotes our Specialists, Leaders and
Water strategies. A notable success during the Period was the
BNP Paribas Aqua fund whose net assets increased by 62 per
cent to £591 million. The BNPP team has also developed and
sold a structured product, based on the Aqua portfolio in the
French and Italian markets, which generates solid revenues at
minimal cost. Our Leaders strategy also benefited from robust
long-term performance and had net inflows of £85.5 million
over the Period.
In the UK, Impax Environmental Markets plc, our flagship client,
boasts a strong ten-year track record and is well positioned
as one of the leading closed end resource efficiency funds.
In addition to our UCITS platform of funds, which is domiciled
in Ireland, we continue to sub-manage the Old Mutual Global
Investors Ethical Fund.
Our client base in the US has developed rapidly over the
last 12 months, and AUM have increased by some 220 per
cent, reaching £248 million by the end of the Period. The
principal contributors to this growth were the Pax World Global
FIGURE 3.
OUR OFFICES AND PARTNERS
North America
PaxWorld
Mandate from US Private Bank
Impax managed private funds
UK/Ireland
IEM plc
UCITS Platform
Old Mutual Global Investors
Ethical Fund
London
Europe
BNP Paribas
ASN Bank
Portland
New York
Asia-Pacific
BNP Paribas in Hong Kong
and Australia
Hong Kong
06
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014 Inflows to our
water strategy
Our water strategy seeks to achieve
sustainable, above market returns over the
longer term by investing globally in companies
active in the rapidly growing water value chain.
Water is our fastest growing listed equity
strategy and recently passed the £1 billion AUM
milestone. We see particularly strong interest
from investors in Continental Europe and
the US.
■ Pax World
■ Impax managed
private funds
■ US private bank
FIGURE 4.
AUM FROM US INVESTORS
Sep 2009
9.4
Sep 2010
16.5
Sep 2011
19.2
Sep 2012
36.4
Sep 2013
76.9
Sep 20141
248.4
1 Not to scale.
Environmental Markets fund, which follows our Leaders strategy,
and a new advisory mandate from a large American private
bank, which reached £116 million by 30 September. We have
also had further flows into our US private funds, including a
commitment from a leading US endowment which was made
after the end of the Period. We have an encouraging mandate
pipeline from investors in the region.
BUSINESS DEVELOPMENT – NEW PROPERTY
INVESTMENT BUSINESS
In order to respond to current and anticipated future client
demand, we continue to search for new additions to our product
range. Of particular interest in the current investment climate are
“real assets”, which can offer investors low correlation to equities
and bonds, protection against inflation and the potential for
predictable income.
In July 2014 we announced the addition of a new asset class
with the acquisition of a business investing in the commercial
property sector. This comprised the management responsibility
for the Climate Property Fund LP, which is in the latter stages
of exiting its successful portfolio, and a two person team of
experienced investment professionals.
Increasingly strict building regulations are driving demand
for commercial property to be built or refurbished to exacting
environmental standards, and sustainable buildings typically
attract premium rents. Sustainable property appeals to many
investors looking to generate higher returns or “green alpha”,
and to invest in an effectively future-proofed property portfolio.
At a time of sustained investor interest in the property sector
and increasing evidence that strong environmental performance
can be a material driver of valuation, we believe that this
business is highly complementary to our current product
range, and we are exploring opportunities to raise additional
assets for the team to manage.
07
CLEAR INVESTMENT Strategic report
Chief Executive’s report
continued
Sustainable
property
We see interesting investment opportunities
in the sustainable commercial property market
where supply is low and demand is increasing,
driven by tightening regulation and
occupier preferences.
We define “green alpha” as the premium that
can be generated by successful investment
in sustainable property over and above the
“normal” market return. Sustainable buildings
are increasingly commanding a rental premium,
have shorter vacant periods, slower
depreciation, reduced obsolescence, and
typically command higher capital values.
INFRASTRUCTURE AND SUPPORT
At the end of the Period our headcount was 61 full time
equivalent staff compared to 57 at the same time last year.
Staff numbers in our existing business areas continue to
be stable; in addition to the two members of the property
investment team, we expanded our client service capability
in the US, including a marketing professional in the Portland,
Oregon office which we opened in May, to service our growing
client base and development prospects on the US West Coast.
We do not anticipate significant headcount expansion in the near
term, but may need a small number of additional staff to service
new business in due course.
REGULATORY ENVIRONMENT
We continue to monitor the evolving requirements of global
financial services regulation closely. Further to the requirements
of the Alternative Investment Fund Managers Directive, during
the Period we submitted our application for authorisation as an
Alternative Investment Fund Manager (“AIFM”) to the Financial
Conduct Authority (“FCA”). In July we received full scope
authorisation from the FCA to act as an AIFM for our clients.
OUTLOOK
Last November I suggested that “investors may look back on
2013 as the high point of cheap money” and that, at a time
of inflated asset prices, investment managers needed to pay
particular attention to the quality of company earnings. One
year on, with the possible exception of the US, most national
or regional economies have yet to demonstrate that signs
of recovery are robust, while corporate earnings are fragile
in many areas.
Against this backdrop, it is encouraging that the companies
targeted for investment by Impax are generally reporting solid
results and an improving outlook, and investor interest in
resource efficiency and environmental markets is growing.
We plan to build further on the Company’s strong foundations,
ensuring that our staff remain excited by the opportunities
we can offer, our clients remain pleased with the service we
provide, and conversations with prospective clients continue
to develop.
Ian R Simm
26 November 2014
08
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014 Strategic report
Investing globally in resource efficiency markets
A WELL-POPULATED AND RAPIDLY
EXPANDING UNIVERSE
Our investment universe comprises some 1,500 companies
operating across resource efficiency markets. These markets
are expanding rapidly as companies respond to rising consumer
demand, and the ratchet of environmental regulation continues
to tighten across all regions.
The aggregate market capitalisation of our universe now totals
some $4 trillion across the sectors of Energy, Water, Waste
and Resource Recovery and Sustainable Food, Agriculture and
Forestry. Impax’s proven strategies provide investors with broad
access to these diverse markets.
COMPANIES BY SECTOR
AUM (%)
Water 22%
Energy 58%
Waste and Resource
Recovery 13%
Sustainable Food,
Agriculture and
Forestry 7%
AGGREGATE MARKET CAP
ca.$4 trillion
Water 20%
Energy 55%
Waste and Resource
Recovery 15%
Sustainable Food,
Agriculture and
Forestry 10%
ALLOCATING TO RESOURCE EFFICIENCY
Resource efficiency remains an under allocated growth opportunity
for many institutional investors. Historically, many investors have
assigned resource efficiency and environmental markets holdings
to their environmental, social and governance (“ESG”) or socially
responsible investment (“SRI”) holdings. Some will continue to do
so, but the appeal of these markets is becoming much broader. We
are now seeing investors considering Impax strategies for different
asset buckets in their portfolios: for example, some investors see
resource efficiency holdings as a diversifier to global equities,
typically providing higher growth opportunities from a universe
of stocks that is not typically found elsewhere in a global equity
portfolio. Resource efficiency investments may also be considered
to be a hedge for natural resources or fossil energy exposure,
or as a complement to liquid real assets (as they typically have
a high exposure to infrastructure and related markets).
DRIVERS AND CATALYSTS
We continue to see momentum building and new catalysts
emerging which underpin existing investments, and trigger
additional opportunities across our markets.
RAPIDLY GROWING
DEMAND FOR
RESOURCES
Driven by an expanding
global population and
rising standards of
living and urbanisation,
particularly in
developing markets.
LIMITATIONS TO
COST-EFFECTIVE
RESOURCE SUPPLY
Higher marginal costs of
production for many key
resources including oil and
rare earth minerals.
INADEQUATE
INFRASTRUCTURE
Greater demand for new
infrastructure in developing
economies alongside
repair and replacement
in developed economies.
ENVIRONMENTAL
CONSTRAINTS
Limits on clean water
availability, rising exposure
to flooding, contaminated
air, soil pollution, and
growing impacts from
climate change against a
backdrop of ever stricter
environmental policy
around the world.
09
CLEAR INVESTMENT Strategic report
Investing globally in resource efficiency markets
continued
RESOURCE EFFICIENCY ALLOCATION WITHIN
AN INVESTMENT PORTFOLIO
HIGH GROWTH GLOBAL EQUITIES
⊲ Unconstrained
⊲ Highly differentiated
⊲ Thematic
⊲ Opportunistic
ESG/SRI INVESTMENTS
⊲ Impact/mission related
⊲ Low carbon/fossil fuel free
⊲ Environmental solutions
⊲ Climate change solutions
IMPAX
STRATEGIES
INTEGRATE
WELL WITHIN
MANY ASSET
CATEGORIES
NATURAL RESOURCES
⊲ Resource demand
⊲ Resource scarcity
⊲ Resource efficiency
ALTERNATIVES
⊲ Liquid real assets
⊲ Infrastructure
⊲ Alternative growth
DIVERSE SECTORS
Impax designed and continues to utilise and develop the FTSE Environmental Markets Classification System1.
ENERGY
WATER
ENERGY
EFFICIENCY
⊲ Power
network
⊲ Industrials
⊲ Buildings
⊲ Transport
⊲ Consumer
ALTERNATIVE
ENERGY
⊲ Developers
and IPPs
⊲ Solar
⊲ Wind
⊲ Biofuels
⊲ Other
WATER
INFRASTRUCTURE
AND
TECHNOLOGIES
⊲ Infrastructure
⊲ Treatment
⊲ Utilities
POLLUTION
CONTROL
⊲ Pollution
control
solutions
⊲ Testing and
gas sensing
WASTE/
RESOURCE RECOVERY
WASTE
MANAGEMENT
AND
TECHNOLOGIES
⊲ Tech
equipment
⊲ Recycling and
processing
⊲ Hazardous
⊲ General
ENVIRONMENTAL
SUPPORT
SERVICES
⊲ Consultancies
⊲ Carbon and
asset trading
⊲ Diversified
environmental
FOOD, AGRICULTURE
AND FORESTRY
⊲ Sustainable and
efficient agriculture
⊲ Logistics, food safety
and packaging
⊲ Sustainable forestry
and plantations
1 Some sub-sectors have an additional “diversified” category.
10
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014
Strategic report
Our approach and creating shareholder value
MISSION
We are in business to deliver the highest quality investment management services and solutions in resource efficiency and
environmental markets globally.
INVESTMENT PHILOSOPHY
We believe that a highly motivated team with a broad range of expertise can generate superior investment returns by managing
portfolios of assets in our target markets.
Strategy component
Invest in high growth markets
seeking price inefficiencies.
Our progress to date
We have over 16 years’ experience of exploiting
investment opportunities in rapidly expanding
resource efficiency and environmental markets.
Our plans for the future
Look selectively for new, related markets
impacted by long-term trends.
Focus on scalable investment
strategies where we can
add value.
We have partnered with FTSE and others to
define the markets in which we invest.
We have built a robust suite of five long only
and two real assets strategies.
Build and extend a flexible
distribution architecture.
Our marketing and client services teams in the
UK and US are well established.
We provide investment “white label”
management services to several third parties
with strong brands in particular channels.
Concentrate our investment expertise on our
current range of investment strategies, but are
open to launching or providing a platform for
additional strategies.
Expand our direct marketing and client service
teams selectively, in line with the growth of
our business.
Establish new partnerships provided these don’t
conflict with successful, existing relationships.
Attract and retain highly
qualified individuals.
Balance tight cost control
with the needs of an
expanding business.
We have assembled an experienced team,
which in aggregate owns 25.6 per cent of the
Company.
We have recently reviewed our remuneration
policy and are implementing a new long-term
share incentive programme for our staff.
We have already invested to create a
scalable platform for growth, including a
core team, business systems and processes,
and infrastructure.
Consider incremental investments to support
business expansion, particularly in the areas of
investment analysis, distribution, client service
and regulatory compliance.
The Strategic report on pages 1 to 15 of this document has been approved by the Board and signed on its behalf by:
Zack Wilson
Company Secretary
26 November 2014
11
CLEAR INVESTMENT Strategic report
Key risks
Impax has adopted an ongoing risk management framework taking into account the key principles of risk identification, risk
measurement, risk mitigation, risk monitoring and reporting. Impax strives to achieve a balance between appropriate levels of risk
and return and to ensure that the risks taken by the firm are appropriately managed.
Although the Board sets the overall business risk strategy and appetite, all staff are responsible for identifying, monitoring and
reviewing risks across their team and the Group. The Chief Financial Officer is responsible for maintaining a risk register and for an
ongoing programme to monitor internal controls and processes put in place to control or mitigate the risks identified. This includes
reporting to the Group’s Audit and Risk Committee on a quarterly basis.
The principal risks that the Group faces are described below. Further information on financial risk is given in note 19 to the
financial statements.
Description
Reputational risk can arise from any of the
key risks described below and relates to
the Impax brand and relationships with
our stakeholders.
The Group’s Listed Equity business
charges management fees based on AUM
and accordingly its revenue is exposed to
market risk.
How we manage the risk
Integrity and appropriate conduct are
an integral part of the Impax culture and
values. Our values are reviewed regularly
and we are committed to maintaining an
ethical culture across all our activities.
The Group operates a number of
different strategies which themselves are
diversified by geography and industry.
The Group has a defined investment
process that has to be followed.
All investments are overseen by the
Listed Equity Investment Committee.
The Group seeds investments in its own
Listed Equity funds in order to build a
track record to market those funds more
effectively. It is therefore directly exposed
to the market performance of the funds.
The Group attempts to mitigate this risk
through the use of hedging instruments
where appropriate and intends to divest
from these investments when commercial
and market conditions allow.
The Group also invests in its own private
equity funds and is therefore exposed to
the performance of these funds.
A significant percentage of the Group’s
income is based on assets denominated
in foreign currencies and an element
of the Group’s costs is incurred in
foreign currencies.
A proportion of the Group’s assets and
liabilities is denominated in foreign
currency. The Group also owns a small
number of minor subsidiaries denominated
in foreign currency.
Liquidity risk in relation to client portfolios
is the risk that funds cannot be generated
to meet redemptions or other obligations
as they arise. Liquidity issues can arise as
a result of market conditions or through
holdings of illiquid investments.
Liquidity risk also applies to the Group’s
own financial obligations.
The Group has a defined investment
process that has to be followed. All
investments are overseen by the Private
Equity Investment Committee.
For the year ended 30 September 2014,
and on an ongoing basis, the Group’s
strategy has been to put in place hedges,
in the form of forward rate contracts,
where there is sufficient predictability
over the income to allow for an effective
and cost efficient hedge. Otherwise the
Group converts foreign currency income
to sterling as soon as practically possible
after receipt.
We actively monitor the liquidity of
individual stocks and will adjust fund
holdings where necessary to ensure that
we are able to meet fund redemptions.
The Group’s approach to managing its
own liquidity risk is to ensure that it has
sufficient cash on hand to meet liabilities
when due under both normal and stressed
conditions, and to satisfy regulatory
requirements. The Group produces
cash flow forecasts covering a 12-month
period which are reviewed by the Group’s
management and Board. As shown in note
13 to the financial statements the Group
has significant cash reserves.
Key risk
Reputational risk
Market risk
Currency risk
Liquidity risk
12
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014 Strategic report
Key risks
continued
Key risk
Credit risk
Legal, regulatory and compliance risk
People risk
Description
The Group is exposed to the risk of
counterparty default. Our counterparties
include banks and other institutions
holding the Group’s cash reserves.
The Group’s operations are subject to
financial regulations, including minimum
capital requirements and compliance
procedures in each of the jurisdictions in
which it operates.
The success of the Group depends on the
support and experience of its employees.
The loss of key employees could have
a material adverse effect on its result
or operations.
Operational risk
Operational risk arises in our investment
management activities, distribution
activities, and in the operation of our
IT and operations infrastructure.
How we manage the risk
The Group seeks to manage this risk by
only depositing cash in institutions with
high credit ratings and by allocating its
cash holdings to at least four institutions
at any time.
The Group seeks to manage the risks
associated with these regulations
by ensuring close monitoring of
compliance with the regulations, and
by tracking proposed changes and
reacting immediately when changes are
required. The Group has a dedicated
Compliance team.
The Group seeks to manage this risk
by offering competitive remuneration
packages, including share schemes and
carried interest in private equity funds,
and by creating a supportive, collegial
and enjoyable working environment.
We also seek to put in place sustainable
succession and development plans. The
senior investment team has been stable
since the Company’s inception.
The Group has established a control
framework so that the risk of financial loss
to the Group through operational failure
is minimised. As part of this the Group has
obtained full “ISAE 3402” (formerly known
as SAS 70) certification, for the 12 months
ended 30 September 2014, for its Listed
Equity business.
Furthermore, the Group has put in place
measures to minimise and manage
possible risks of disruption to its business
and to ensure the safety of its staff. This
plan has been put in place to manage its
strategic and operational business risks
in the case of an emergency and is aimed
at bringing together particular responses
such as IT disaster recovery, contingency
plans, off-site storage of records, data
back-up and recovery procedures,
evacuation procedures and
customer/staff communications.
The Group has insurance cover
which is reviewed each year prior to
policy renewal.
13
CLEAR INVESTMENT Strategic report
Our values and commitment to corporate responsibility
In 2015, we are embarking on a Company volunteering
programme and will encourage staff to participate in an
environmental volunteering activity organised by the Company.
In the UK Impax promotes tax efficient payroll giving to
staff through the Charities Aid Foundation Give as You Earn
scheme. In 2014 we maintained our Gold status, with more than
20 per cent of staff involved in the scheme. Impax matches
staff donations.
ENVIRONMENT
While our direct environmental impact is relatively limited, we
strive to minimise this across our working practices through a
culture of energy and resource efficiency and to demonstrate
our leadership in this field. We have a comprehensive
Environmental Policy which is rigorously enforced and
communicated to all staff. We acknowledge and measure
our impacts, recognise our responsibilities and take action
to improve wherever possible.
As an office-based business, the main impacts of our operations
are in energy consumption, water use, travel and materials use.
We have made substantial investments in the energy efficiency
of our London office. Our Environment Committee, which reports
to the Board, has responsibility for coordinating environmental
activities and ensuring that our activities are carried out in
line with our Environment Policy. We implemented an Energy
Management System for our UK operations in 2014 and are
working towards ISO 14001 standards. Impax has reported its
CO2 emissions to the Carbon Disclosure Project since 2009,
and has chosen to report its GHG in this Annual Report.
For the Period, the Company’s Scope 2 emissions1 (energy
consumption) were 1,059 kg CO2 per capita (2013: 1,089 kg per
capita) and Scope 3 emissions (air travel) were 2,121 kg CO2 per
capita (2013: 2,399 kg per capita). Our Scope 3 emissions show
considerable fluctuation year on year, depending on the level of
travel required to support our overseas activities. We plan to set
future reduction targets for our energy and water consumption
and for waste reduction.
We are committed to operating in accordance
with our values and to integrating the highest
standards of responsible practice throughout
our business.
PEOPLE AND WORKPLACE
Our people are key to our success and we recognise that
their skills, experience and commitment are both our greatest
assets and the cornerstone of our business. We seek to attract
and retain the best people for each specific role and to foster
a supportive and empowering working environment in which
staff can prosper. We are committed to the provision of training
and opportunities for staff to develop. We believe that the
diversity of our team and the promotion of equal opportunity are
fundamental to enhancing our success. Impax is committed to
best governance, HR practices and employee communications
and to a process of continual review and improvement.
COMMUNITY
Impax aims to support charities that are aligned with our culture
and values and are dedicated to the environment and the most
efficient use of our finite natural resources. We encourage staff
to play an active role in the community for the benefit of both
our business and society.
We are now in our third year of partnership with Ashden and
our support of the Impax Ashden Award for Energy Innovation.
Ashden is a charity that champions practical, local energy
solutions that cut GHG emissions, protect the environment,
reduce poverty and improve people’s lives. Several of our staff
are involved in volunteering opportunities and the evaluation
of the award submissions, as well as ongoing mentoring and
support work with previous award winners.
14
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014 MARKETPLACE
Impax aspires to best practice across all aspects of the
management of its listed and private equity investments.
We take a long-term approach to investment management
and employ a robust, repeatable investment process.
Our investment decisions are based on strong teamwork.
Our focus on resource efficiency and environmental markets
is based on our confidence that these high growth areas of the
economy are the key to future sustainable economic growth,
and are likely to deliver superior long-term performance.
We work in partnership with our clients and endeavour to
deliver on their specific investment objectives through hard
work, understanding, integrity, discretion, transparency and
clear communication. We believe that a thorough approach to
the management of risk, including environmental and social
risks, will enhance investment returns for our clients.
We seek to focus our investment in companies with strong
governance. Environmental Social and Governance (“ESG”)
considerations are embedded within our rigorous investment
processes for all our investments. For listed equity investments,
failure of a company to reach a minimum ESG score will prevent
our investment.
Impax engages with investee companies to improve practice
and disclosure in governance and across their sustainability
activities. During the Period Impax undertook 23 proactive
ESG engagement initiatives (2013: 28). A particular focus of
our engagement activity this year has been to encourage some
of the US and Asian companies in which we invest, to measure
and disclose their CO2 emissions. Encouragingly, several of
these companies have agreed to initiate this process.
We view proxy voting as a key activity in the ongoing dialogue
with companies in which we invest and it is often the catalyst for
our governance engagements. We are committed to ensuring
the consistent exercise of voting rights associated with shares
held in investment mandates where proxy voting has been
delegated to us. Impax supports the UK Stewardship Code
and complies with its guidelines regarding proxy voting and
engagement. We publicly disclose a summary of our proxy
voting activity on a quarterly basis.
We aim to be an active member of trade and industry
organisations that are dedicated to promoting investment in
the environment and the more efficient use of natural resources.
Impax is member of, or signatory to: the UN Principles for
Responsible Investment (“UNPRI”), Institutional Investors Group
on Climate Change (“IIGCC”), Investor Network on Climate Risk
(“INCR”), Carbon Disclosure Project (“CDP”), UK Sustainable
Investment and Finance Association (“UKSIF”), US Sustainable
Investment and Finance Association (“USSIF”), Low Carbon
Finance Group, UK Stewardship Code and the Association
for Sustainable & Responsible Investment in Asia (“ASrIA”).
THE QUEEN’S AWARD FOR ENTERPRISE:
SUSTAINABLE DEVELOPMENT
In April 2014, Impax was honoured to receive a Queen’s Award
for Enterprise in recognition of our philosophy, corporate
behaviour and commitment to the highest operating standards
across our business operations. We believe we are the first
financial services company to be granted this award in the
Sustainable Development category.
Ian Simm, Chief Executive, receives the Queen’s
Award from Dr Paul Knapman, Deputy Lieutenant
of Greater London.
1 Calculated using DEFRA UK Electricity Scope 2 carbon conversion factor for 2014.
15
CLEAR INVESTMENT Governance
Board of Directors
and Company Secretary
Keith Falconer
Chairman
Ian Simm
Chief Executive
Keith Falconer is Chairman of Impax Asset Management Group
plc. He joined the Group in January 2004. After qualifying as
a Chartered Accountant in 1979, he joined Martin Currie, the
independent Edinburgh based investment firm. The first part of
his career was spent managing portfolios on behalf of institutional
clients. Subsequently, he became the managing director of sales and
marketing. Keith retired from Martin Currie at the end of 2003 and is
now a director of the China A Share Fund, Baillie Gifford Japan Trust,
Asian Opportunities Absolute Return Fund, Asian Equity Special
Opportunities Fund and a number of other companies.
Ian Simm is the Founder and Chief Executive of Impax Asset
Management Group plc. Ian has been responsible for building
Impax since launch in 1998, and he continues to head the firm’s
investment committees. Prior to Impax, Ian was an engagement
manager at McKinsey & Company advising clients on resource
efficiency issues. In 2013 he was appointed by the Secretary of
State for Business, Innovation and Skills as a member of the UK’s
Natural Environment Research Council (“NERC”). He has a first
class honours degree in Physics from Cambridge University and
a Master’s in Public Administration from Harvard University.
Guy de Froment
Non-Executive Director
Vince O’Brien
Non-Executive Director
Guy de Froment is a Non-Executive Director of Impax Asset
Management Group plc. He was previously vice chairman of
BNP Paribas Asset Management and joint CEO responsible for
sales and marketing. From 1997 to 2000, he held the position of
chairman and CEO of Paribas Asset Management. Prior to that
he worked for Barclays as head of Continental European asset
management, having previously spent 24 years in the Indosuez
Group during which time he was chief executive of W. I. Carr
and CEO of Indosuez Asset Management.
Vincent O’Brien is a Non-Executive Director of Impax Asset
Management Group plc. He is currently a director of Montagu
Private Equity and has worked in the private equity industry for
over 20 years. Originally qualifying as a chartered accountant
with Coopers and Lybrand, he joined Montagu Private Equity
in 1993. Vince is a former chairman of the BVCA and served
on its council for seven years.
Mark White
Non-Executive Director
Zack Wilson
Group General
Counsel & Company
Secretary
Mark White is a Non-Executive Director of Impax Asset
Management Group plc. He is the CEO of LGT Capital Partners
(UK) Ltd. From 2001 to 2005, he was chief executive officer of
JP Morgan Fleming Asset Management (UK) Ltd. Prior to that,
Mark was CEO of Jardine Fleming Asset Management in Hong
Kong and CEO of Chase Fleming Asset Management (UK) Ltd in
London. He is also a non-executive director of EB Asia Absolute
Return Fund, F&C Global Smaller Companies plc and Standard
Life Equity Income Trust plc.
Zack Wilson serves as Group General Counsel for Impax and
is also Company Secretary. He is a Non-Executive Director of
Impax Funds (Ireland) plc. Prior to joining Impax in 2011, he was
director & general counsel for the investment management group
Development Capital Management. Previously he was corporate
counsel for Telewest Global Inc, where he played a leading role
in managing the successful execution of transactions including
the Group’s $10 billion financial restructuring. Zack qualified as
a solicitor at the global law firm Norton Rose. He holds a Master
of Arts in Jurisprudence from Oxford University.
16
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014 Governance
Senior personnel
Ominder Dhillon
Head of Distribution
Charlie Ridge
Chief Financial Officer
Ominder Dhillon is Head of Distribution for Impax. He joined
Impax in October 2011 from Fidelity International where he
was head of UK institutional distribution. Ominder previously
spent nine years as director of institutional sales at Scottish
Widows Investment Partnership and, prior to that, nine years at
John Morrell & Associates and Johnson Fry plc (later acquired
by Legg Mason). He holds a degree in Physics from the
University of Kent.
Charlie Ridge is a Director of IAM and Chief Financial Officer
of Impax Asset Management Group plc. Charlie has more than
25 years’ experience working in financial services. He joined
Impax from Deutsche Bank, where he was a managing director
within the finance division serving as the UK asset and wealth
management chief financial officer, and previously in a variety
of financial and market risk related roles for the global markets
division. Charlie has a degree in Engineering Science from
Durham University and qualified as a chartered accountant
at Ernst & Young.
Bruce Jenkyn-Jones
Managing Director
for the Listed
Equity business
Peter Rossbach
Managing Director
for the Private
Equity team
Bruce Jenkyn-Jones is a Director of IAM and Managing Director
for the Listed Equity business. He has 20 years’ experience
working in environmental markets. Prior to joining Impax in 1999
he was a utilities analyst with BT Alex Brown and before that a
senior consultant at Environmental Resources Management Ltd.
Bruce is a graduate of Oxford University and has a Master’s in
Environmental Technology from Imperial College and an MBA
from IESE (Barcelona).
Peter Rossbach is a Director of IAM and Managing Director
for the Private Equity team that manages Impax New Energy
Investors and Impax New Energy Investors II. From 1997 to 2000,
he was senior investment officer at AMI Asset Management.
Before AMI, he held positions as senior investment adviser to
EBRD, vice president of project finance at Mitsui Bank in New
York, within the energy project finance teams at Catalyst Energy,
Lowrey Lazard and at Standard and Poor’s utility debt ratings
services. Peter holds a Bachelor’s degree and a Master’s in
Public Policy from Harvard University.
David Richardson
Head of Business
Development and
Client Service for
North America
Kaye Forrest
Non-Executive Adviser
David Richardson is the Head of Business Development and
Client Service for North America. David joined Impax in 2012
from Global Energy Investors where he was a managing
partner. He was previously managing director of Business
Development at Dwight Asset Management Company (acquired
by Goldman Sachs Asset Management). Prior to this he headed
project development at Mark Technologies Corporation and
successfully developed a number of large scale wind energy
projects. David holds a BS in Mechanical Engineering from the
University of California and is a chartered financial analyst.
Kaye Forrest joined Impax in May 2011, on a part time basis,
as Director of Human Resources. She has over 20 years’ HR
experience and expertise in coaching, talent management,
organisational development and business transformation. Kaye
previously held the role of HR director at Legal and General and
Sensormatic Ltd before setting up her own consultancy business
in 2007. She has an MA in International HRM and is a Fellow of
the Chartered Institute of Personnel and Development. Kaye
stepped down in October 2014 but remains a Non-Executive
Adviser to the Group.
17
CLEAR INVESTMENT Governance
Directors’ report
For the year ended 30 September 2014
DIVIDENDS
The Directors propose a final dividend of 1.1 pence per share
(2013: 0.9 pence) which together with the interim dividend of 0.3
pence per share (2013: nil) already declared and paid, makes
a total for the year ended 30 September 2014 of 1.4 pence per
share (2013: 0.9 pence). The dividend will be submitted for
formal approval at the Annual General Meeting. These financial
statements do not reflect this dividend payable, which will be
accounted for in shareholders’ equity as an appropriation of
retained earnings in the year ended 30 September 2015.
The dividend for the year ended 30 September 2013 was paid
on 17 February 2014, being 0.9 pence per share. The trustees of
the Impax Employee Benefit Trusts’ waived their rights to part of
this dividend, leading to a total dividend payment of £1,004,000.
The interim dividend of 0.3 pence for the year ended
30 September 2014 was paid on 20 June 2014 and totalled
£335,000. These payments are reflected in the statements
of changes in equity.
SHARES
The Impax Employee Benefit Trusts (“EBTs”) made market
purchases of 1,263,791 of the Company’s shares during the year
and satisfied option exercises in respect of 5,310,940 shares.
The Directors expect that future options exercises will primarily
be satisfied by the EBTs.
DIRECTORS AND THEIR INTERESTS IN SHARES
The Directors of the Company during the year and at the date
of this report are set out below. The Directors’ interests and
those of their connected persons in the Ordinary Shares of the
Company, all of which are beneficial, at 30 September 2014
and 30 September 2013 were:
J Keith R Falconer1
Ian R Simm1
Mark B E White
Vince O’Brien
Guy de Froment
30 September
2014
30 September
2013
10,489,290
9,486,261
400,000
110,000
–
10,489,290
9,486,261
400,000
110,000
–
1 Includes vested shares within sub-funds of the Impax Group Employee Benefit Trust
2004 (‘EBT 2004’) from which the individual and their families may benefit.
There have been no changes to the above holdings since
30 September 2014.
Ian Simm has a 5.88% interest in the capital of Impax Carried
Interest Partner LP, and a 5% interest in the capital of Impax
Carried Interest Partner II LP, entities in which the Company
holds an investment.
Ian Simm also has been granted options to acquire a further
450,000 Ordinary Shares at a strike price of 49.6 pence,
100,000 Ordinary Shares at a strike price of 37.6 pence and
100,000 options at a strike price of 47.9 pence. These will
vest subject to his continued employment by the Group on
31 December 2014, 31 December 2015 and 31 December
2016 respectively.
SUBSTANTIAL SHARE INTERESTS
The following interests in 3 per cent or more of the issued
ordinary share capital have been notified to the Company
as at 26 November 2014:
18
BNP Paribas Investment Partners
Impax Asset Management Group
plc Employee Benefit Trust 2012
J Keith R Falconer1
Ian R Simm1
Rathbone Investment Managers
Bruce Jenkyn-Jones2
DIAM Company
Number
Percentage
32,220,000
25.2
14,754,347
10,489,290
9,486,261
7,092,080
6,220,000
5,474,955
11.5
8.2
7.4
5.6
4.9
4.3
1 Includes vested shares within sub-funds of the Impax Group Employee Benefit Trust
2004 (“2004 EBT”), from which the individual and his family may benefit.
2 Includes vested shares within sub-funds of the EBT 2004 from which the individual
and his family may benefit and vested but unexercised options.
In addition the EBT 2004 has a legal interest in a further
15,858,781 shares which have transferred to sub funds from
which individuals and their families may benefit and holds
1,438,273 shares directly.
RISK
A description of the key risks facing the Group and policies and
procedures in place to monitor or mitigate the risk including the
use of hedging instruments is provided on pages 12 to 13.
PEOPLE
Through our robust people management policies we aim
to attract and develop the best people. Our performance
management processes comprise a twice yearly performance
appraisal against agreed objectives and our core values. Output
from this performance process is used to inform decisions on
remuneration, career development and progression.
As part of creating a high-performance organisation, we
encourage all of our employees to fulfil their potential. We
provide our employees with access to a range of training and
development opportunities that are relevant to our business.
AUDITORS
Each person who is a Director at the date of approval of this
report confirms that so far as the Director is aware, there is no
relevant audit information of which the Company’s auditor is
unaware and the Director has taken all the steps that he or she
ought to have taken as Director in order to make himself aware
of any relevant information and to establish that the Company’s
auditors are aware of that information. This confirmation is given
pursuant to section 418 of the Companies Act 2006 and should
be interpreted in accordance therewith.
CREDITOR PAYMENT POLICY
The Group seeks to maintain good terms with all of its trading
partners. In particular, it is the Group’s policy to agree appropriate
terms and conditions for its transactions with suppliers and,
provided the supplier has complied with its obligations, to abide
by the terms of payment agreed. Trade creditor days of the Group
for the year ended 30 September 2014 were 27 (2013: 30).
By order of the Board
Zack Wilson
Company Secretary
26 November 2014
Registered office:
Norfolk House
31 St James’s Square
London SW1Y 4JR
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014 Governance
Corporate governance report
For the year ended 30 September 2014
The Group is committed to maintaining good standards of
Corporate Governance. As an AIM quoted company, compliance
with the Finance Reporting Council’s UK Corporate Governance
Code (the “Code”) is not mandatory. However the Board of
Directors (the “Board”) seeks to comply with the principles of the
Code in so far as appropriate to the Group’s size and complexity.
This report describes how the Group has applied the principles
throughout the year.
THE BOARD OF DIRECTORS
The Board deals with all aspects of the Company’s affairs
including setting and monitoring strategy, reviewing
performance, ensuring adequate financial resources are in place
and reporting to shareholders. The Board reserves these and
other specific matters for its own decision. Operational decisions
are delegated to the Chief Executive and senior management.
The Board consists of a Non-Executive Chairman, three Non-
Executive Directors and the Chief Executive. Details of the
current Board members are given on page 16 of this report.
Throughout the year the position of Chairman and Chief
Executive were held by separate individuals. There is a clear
division of responsibilities between the Chairman and Chief
Executive. The Board has appointed one of the Non-Executive
Directors (Mark White) to act as the Senior Independent
Director. The Board considers that two of the Non-Executive
Directors (Mark White and Vince O’Brien) are independent as
envisaged by the Code. Guy de Froment is not considered to
be independent as he represents a significant shareholder. The
Chairman is also not considered to be independent by nature of
his significant shareholding and past service to the Group. The
Non-Executive Directors and Chairman all have or have had
senior executive experience and offer insightful judgement on
Board matters. The Non-Executive Directors do not participate
in any bonus schemes or share ownership schemes and
their appointments are non-pensionable. There is a rigorous
procedure to appoint new Directors to the Board which is led
by the Chairman. At appropriate times the Board considers the
balance of skills, experience, independence and knowledge of
the Group on the Board and its diversity, how the Board works
as a unit and other factors relevant to its effectiveness.
The Board meets regularly throughout the year. It met five times
in the year ended 30 September 2014 to consider strategic
development and to review trading results and operational and
business issues.
The Board has a formal agenda of items for consideration
at each meeting but also convenes at additional times
when required.
All Directors receive detailed Board papers and reports one
week prior to the regular Board meetings and have unlimited
access to the advice and services of senior management should
further information be required. There is provision for Board
members to solicit professional advice on Board matters at the
Company’s expense.
The Board has carried out a formal evaluation of its own
performance and individual Directors which was led by
the Chairman. The Board also completed an evaluation of
the Chairman’s performance which was led by the Senior
Independent Director. The evaluations confirmed a high rating
for performance.
All Directors are subject to reappointment by shareholders
at the first opportunity after their appointment and thereafter
at intervals of no more than three years.
As permitted by the Company’s Articles of Association, the
Company has maintained Qualifying Third-Party Indemnity
Provisions (as defined under relevant legislation) for the
benefit of the Company’s Directors throughout the period.
BOARD COMMITTEES
The Board is assisted by two standing Committees of the Board
which report to it on a regular basis. These Committees have
clearly defined terms of reference.
AUDIT AND RISK COMMITTEE
The Audit and Risk Committee is comprised of the following
Non-Executive Directors: Mark White (Chairman), Guy de
Froment and Vince O’Brien. The Committee has met four
times this year.
The Committee’s responsibilities include:
• monitoring the integrity of the financial statements and formal
announcements relating to the Company’s and Group’s
financial performance;
reviewing the Group’s risk management processes and
risk reports;
•
• monitoring of the internal financial control procedures;
• making recommendations to the Board in relation to the
appointment, reappointment and removal of the external
auditors and to approve the remuneration and terms of
engagement of the external auditors;
the implementation of new accounting standards and policies;
reviewing arrangements by which staff of the Company may,
in confidence, raise concerns about possible improprieties
in financial reporting or other matters;
reviewing and monitoring the external auditors’
independence and objectivity and the effectiveness of the
audit process;
•
•
•
• ensuring the objectivity and independence of the external
auditor by acting as primary contact with the external
auditors, meeting the external auditors without the presence
of management where considered necessary and receiving
all reports directly from the external auditors; and
reporting to the Board on how it has discharged
its responsibilities.
•
Details of fees paid to the Company’s auditor are shown in
note 2 to the financial statements. In the opinion of the Board,
none of the non-audit services provided caused any concern as
to the auditor’s independence or objectivity. To ensure that the
independence and objectivity of the auditor is maintained, the
Committee monitors the scope of all work performed.
19
CLEAR INVESTMENT Governance
Corporate governance report continued
For the year ended 30 September 2014
REMUNERATION COMMITTEE
The Remuneration Committee is comprised of the three Non-
Executive Directors: Vince O’Brien (Chairman), Mark White and
Guy de Froment. The Committee has met five times this year.
The purpose of the Remuneration Committee is to ensure
that the Chief Executive and other senior employees are
fairly rewarded for their individual contribution to the overall
performance of the Group and that remuneration packages
provided do not promote undue risk taking. The Remuneration
Committee responds to this requirement in the way that meets
the best interest of shareholders. Further details regarding the
remuneration policy and payments made can be found in the
remuneration report on pages 22 to 23.
INTERNAL CONTROL
The Board has overall responsibility for the Group’s system of
internal controls including financial, operational, compliance and
risk management controls.
The Group’s fund management activities are regulated by the
Financial Conduct Authority, the US Securities and Exchange
Commission and in respect of its Hong Kong activities, the
Securities and Futures Commission. The Board has adopted
procedures and controls designed to ensure its obligations
are met.
Details of the key risks facing the Group and internal controls
acting to control or mitigate the risks are set out on pages 12
to 13.
The Audit Committee and Risk Committee and the Board has
concluded that, given the growth in the size and complexity of
the Group, it is appropriate to set up an Internal Audit Function.
The Group is currently planning for this and expects that the
function will commence operation in 2015.
DIALOGUE WITH SHAREHOLDERS
The Company reports formally to shareholders at the half-year
and year end. At the Annual General Meeting of the Company,
a presentation is given and Directors are available to take
questions, both formally during the meeting, and informally
after the meeting. The Chief Executive and Senior Independent
Director are available for dialogue with major shareholders on
the Company’s plans and objectives and meet with them at
appropriate times.
20
CLEAR INVESTMENTImpax Asset Management Group plc Annual Report and Accounts 2014 Governance
Statement of Directors’ responsibilities
In respect of the Directors’ report, the Strategic report and the financial statements
The Directors are responsible for preparing the Strategic report,
the Directors’ report and the financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and
Parent Company financial statements for each financial year.
As required by the AIM Rules of the London Stock Exchange
they are required to prepare the Group financial statements
in accordance with IFRS as adopted by the EU and applicable
law and have elected to prepare the Parent Company financial
statements on the same basis.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and Parent Company
and of their profit or loss for that period. In preparing each of the
Group and Parent Company financial statements, the Directors
are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance with
IFRS as adopted by the EU; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Parent Company and
enable them to ensure that its financial statements comply with
the Companies Act 2006. They have general responsibility for
taking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and
other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included on
the Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
21
CLEAR INVESTMENT Governance
Remuneration report
For the year ended 30 September 2014
POLICY ON CHIEF EXECUTIVE AND SENIOR EMPLOYEES’ REMUNERATION
The remuneration and terms and conditions of service of the Directors and senior employees are determined by the Board,
based on recommendations made by the Remuneration Committee.
For the year ended 30 September 2014 there are potentially four main elements of the remuneration packages for the
Chief Executive and senior employees.
(i) Basic salary and benefits
Basic salaries are recommended to the Board by the Remuneration Committee taking into account the performance of the
individual and the rate for similar positions in comparable companies. Benefits include income protection, critical illness insurance,
life assurance and private medical insurance.
(ii) Variable remuneration
Variable remuneration consists of a cash bonus and share-based payments. Aggregate variable remuneration across the Group will
typically be capped at 45 per cent of earnings before variable remuneration, interest and taxes; as the Group’s profitability increases,
this percentage is likely to fall in line with market norms.
(a) Cash bonus
The cash bonus is determined based on the profitability of the relevant area where the employee works and on the individual’s
personal performance.
(b) Share-based awards
The Board has approved an Employee Share Option Plan (“ESOP”) under which the Chief Executive and senior employees are
eligible to receive up to 14 million share options over a four-year period ending 30 September 2014. The options will have an
exercise price set at a 10 per cent premium to the average share price of the 30 business days following the announcement of
results for the respective year. A total of 10,296,000 option awards have been made in respect of the years ended 30 September
2011, 2012 and 2013. Option awards in respect of the year ended 30 September 2014 have been approved by the Board and will
be communicated to employees shortly after the announcement of results for the year ended 30 September 2014.
The Board has also approved the award of 1,250,000 million awards under a new Restricted Share Scheme (“RSS”). This scheme
will run in parallel with the ESOP plan for awards made in respect of individuals’ performance in the current year, and then
will become the principal scheme for the award of new equity. The RSS has been designed to align the interests of staff and
shareholders more effectively. The awards will initially be held by a nominee for the employees and they will gain unfettered access
to the shares after a three, four and five-year period (one third at each stage) subject to continued employment. During the period
that the shares are held by the nominee, the employee will receive dividends and be able to vote on the shares.
The Chief Executive and other employees also continue to benefit from share-based payment awards made under the previous
share-based incentive plan (the EIA Extension) as more fully described in note 3 to the financial statements. These awards vested
on 30 September 2012.
(iii) Pensions
The Group pays a defined contribution to the pension schemes of certain employees. The individual pension schemes are private
and their assets are held separately from those of the Group.
In addition the Chief Executive and certain senior employees have been awarded interests in the Impax Carried Interest Partner LP
and Impax Carried Interest Partner II LP. These partnerships will receive payments from the Group’s private equity funds depending
on the fund’s performance. No such payments were made during the year. The amounts will be accounted for at the point they
become payable.
DIRECTORS REMUNERATION DURING THE YEAR
Details of each Director’s remuneration are shown below.
Fees/salary
£
65,000
220,610
–
30,000
30,000
30,000
375,610
Benefits
in kind
£
–
6,559
–
–
–
–
6,559
Pension
£
–
–
–
–
–
–
–
Bonus
£
–
225,000
–
–
–
–
225,000
2014
Total
£
65,000
452,160
–
30,000
30,000
30,000
607,169
2013
Total
£
65,000
403,924
18,769
30,000
30,000
30,000
577,693
J Keith R Falconer
Ian R Simm
Peter J Gibbs1
Mark B E White
Guy de Froment
Vince O’Brien
1 Retired on 15 May 2013.
22
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT During the year Ian Simm was granted 100,000 options over the Company’s shares under the 2013 Employee Share Option Plan.
These options vest subject to him remaining employed on 31 December 2016 and have an exercise price of 47.9 pence. Ian Simm
did not exercise any share options during the year.
The above disclosure does not include options that may be awarded to Ian Simm pursuant to the 2014 Employee Share Option Plan
in respect of his service for the year ended 30 September 2014.
SERVICE CONTRACTS
The Chief Executive is employed under a contract requiring one year’s notice from either party. The Chairman and Non-Executive
Directors each receive payments under appointment letters which can be terminated by up to six months’ notice from either party.
POLICY ON NON-EXECUTIVE DIRECTORS’ REMUNERATION
The Chairman and Non-Executive Directors each receive a fee for their services. The fee is approved by the Board, mindful of
the individual’s time commitment and responsibilities and of current market rates for comparable organisations and appointments.
The Non-Executive Directors and the Chairman are reimbursed for their travelling and other minor expenses incurred.
By Order of the Board
Vince O’Brien
Chairman, Remuneration Committee
26 November 2014
23
CLEAR INVESTMENT Financial statements
Independent auditor’s report
To the members of Impax Asset Management Group plc
We have audited the financial statements of Impax Asset Management Group Plc for the year ended 30 September 2014 set out
on pages 25 to 56. The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the EU and, as regards the parent company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members, as a body, for our audit work, for this report,
or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR
As explained more fully in the Directors’ Responsibilities Statement set out on page 21, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit,
and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at
www.frc.org.uk/auditscopeukprivate.
OPINION ON FINANCIAL STATEMENTS
In our opinion:
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at
30 September 2014 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and
as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
•
•
•
OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,
in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Jonathan Mills (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square, London
26 November 2014
24
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT Financial statements
Consolidated statement of comprehensive income
For the year ended 30 September 2014
Revenue
Operating costs
Share-based payment charge for EIA extension scheme
Other charges related to EIA schemes
Fair value loss on investments
Change in third-party interest in consolidated funds
Investment income
Profit before taxation
Taxation
Profit for the year
Other comprehensive income
Tax benefit on long-term incentive schemes
Increase in value of cash flow hedges
Tax on change in value of cash flow hedges
Exchange differences on translation of foreign operations
Third-party interest share of exchange differences on translation of foreign operations
Total other comprehensive income
Total comprehensive income for the Period attributable to equity holders of the Parent
Company
Basic earnings per share
Diluted earnings per share
Notes
1
2
3
3
5
6
7
7
2014
£000
20,359
(15,039)
–
(539)
(1,460)
7
207
3,535
(279)
3,256
–
60
(14)
146
–
192
3,448
2.78p
2.76p
2013
£000
18,463
(14,124)
(280)
111
(947)
(32)
163
3,354
(397)
2,957
201
158
(34)
55
(124)
75
3,032
2.44p
2.44p
1 This amount will never be reclassified to the profit or loss in the future. All other 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.
The notes on pages 29 to 47 form part of these financial statements.
25
CLEAR INVESTMENT Financial statements
Consolidated statement of financial position
As at 30 September 2014
Company No: 03262305
Assets
Goodwill
Intangible assets
Property, plant and equipment
Investments
Total non-current assets
Trade and other receivables
Derivative asset
Investments
Current tax asset
Margin account
Cash invested in money market funds and long-term deposit
accounts
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Ordinary Shares
Share premium
Exchange translation reserve
Hedging reserve
Retained earnings
Total equity
Trade and other payables
Third-party interest in consolidated funds
Current tax liability
Total current liabilities
Accruals
Deferred tax liability
Total non-current liabilities
Total equity and liabilities
Notes
£000
£000
£000
£000
2014
2013
9
10
11
12
13
13
16
14
15
6
1,665
107
246
16
3,097
178
11,640
–
293
10,615
6,634
1,277
4,093
(206)
172
19,523
6,536
1,119
73
207
1,697
2,034
32,457
34,491
2,197
29,398
31,595
1,629
95
456
17
3,145
159
9,336
19
186
12,873
3,680
1,277
4,093
(352)
126
17,800
24,859
22,944
5,948
549
103
399
1,652
6,600
2,051
31,595
7,728
1,904
34,491
Authorised for issue and approved by the Board on 26 November 2014. The notes on pages 29 to 47 form part of these
financial statements.
Ian R Simm
Chief Executive
26
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT Financial statements
Consolidated statement of changes in equity
For the year ended 30 September 2014
Balance at 1 October 2012
Transactions with owners:
Dividends paid
Issue of shares to EBT 2012
Shares acquired by Treasury
and EBT 2012
Award of shares on option
exercise
Long-term incentive scheme
charge
Tax benefit on long-term
incentive schemes
Profit for the year
Other comprehensive income
Cash flow hedge
Tax on cash flow hedge
Exchange differences on
translation of foreign
operations
Third-party interest’s share
of exchange differences
on translation of foreign
operations
Balance at 30 September 2013
Transactions with owners:
Dividends paid
Shares acquired by Treasury
and EBT 2012
Award of shares on option
exercise
Long-term incentive scheme
charge
Profit for the year
Other comprehensive income
Cash flow hedge
Tax on cash flow hedge
Exchange differences on
translation of foreign
operations
Note
8
8
Share
capital
£000
1,156
–
121
–
–
–
121
–
–
–
–
–
–
Share
premium
£000
78
–
4,015
–
–
–
4,015
–
–
–
–
–
–
1,277
4,093
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 30 September 2014
1,277
4,093
EBT 2012 = Impax Asset Management Group plc Employee Benefit Trust 2012.
The notes on pages 29 to 47 form part of these financial statements.
Exchange
translation
reserve
£000
(283)
–
–
–
–
–
–
–
–
–
55
(124)
(69)
(352)
–
–
–
–
–
–
–
–
146
146
(206)
Hedging
reserve
£000
Retained
earnings
£000
Total
equity
£000
2
–
–
–
–
–
–
–
158
(34)
–
–
124
126
–
–
–
–
–
–
60
(14)
–
46
172
21,616
22,569
(816)
(4,136)
(816)
–
(2,397)
(2,397)
41
515
20
41
515
20
(6,773)
2,957
(2,637)
2,957
–
–
–
–
2,957
17,800
158
(34)
55
(124)
3,012
22,944
(1,338)
(1,338)
(619)
47
377
(1,533)
3,256
–
–
–
3,256
19,523
(619)
47
377
(1,533)
3,256
60
(14)
146
3,448
24,859
27
CLEAR INVESTMENT Financial statements
Consolidated cash flow statement
For the year ended 30 September 2014
Operating activities:
Profit before taxation
Adjustments for:
Investment income
Depreciation of property, plant and equipment
Amortisation of intangible assets
Fair value losses
Share-based payment
Other charges related to EIA schemes
Change in third-party interest in consolidated funds
Operating cash flows before movement in working capital
Decrease/(increase) in receivables
(Increase) in margin account
(Decrease) in payables
Cash generated from operations
Corporation tax (paid)/refunded
Net cash generated from operating activities
Investing activities:
Investment income received
Settlement of investment related hedges
Proceeds on sale/redemption of investments
Purchase of investments held by the consolidated funds1
Sale of investments held by the consolidated funds1
Purchase of investments
Purchase of intangible assets
Purchase of property, plant and equipment
Net cash used in investing activities
Financing activities:
Dividends paid
Impax shares acquired by Treasury/EBT 2012
Cash received on exercise of Impax share options
Decrease in cash held in money market funds and long-term deposit accounts
Investment by third-party into consolidated funds
Net cash generated from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
Note
13
2014
£000
3,535
(207)
243
83
1,460
377
539
(7)
6,023
48
(107)
(178)
5,786
(96)
5,690
207
(1,244)
1,809
(5,263)
1,553
(638)
(28)
(33)
(3,637)
(1,338)
(619)
47
2,257
554
901
2,954
3,680
–
6,634
2013
£000
3,354
(163)
275
65
947
472
(111)
32
4,871
(338)
(31)
(567)
3,935
(54)
3,881
163
(1,115)
47
(3,099)
612
(496)
(14)
(28)
(3,930)
(816)
(2,853)
41
1,222
559
(1,847)
(1,896)
5,577
(1)
3,680
1 The consolidated funds are the Impax Food & Agriculture Fund and the Impax Fundamental Long-term Opportunities in Water Fund (see Note 12 for further information).
28
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT Financial statements
Notes to the financial statements
For the year ended 30 September 2014
1 ANALYSIS OF REVENUE AND ASSETS
The Group has three reportable segments: “Listed Equity”, “Private Equity” and “Property”. The results of these segments have
been aggregated into a single reportable segment for the purposes of these financial statements because they have characteristics
so similar that they can be expected to have essentially the same future prospects. These segments have common investors,
operate under the same regulatory regimes and their distribution channels are substantially the same. Additionally management
allocates the resources of the Group as though there is one operating unit.
Analysis of revenue by type of service:
Investment management
Transaction fees
Advisory fees
Analysis of revenue by the location of customers:
UK
Rest of the world
Analysis of “Rest of the world” customer location:
Ireland
France
Luxembourg
Netherlands
US
Other
2014
£000
18,514
1,452
393
20,359
2014
£000
11,602
8,757
20,359
2014
£000
1,261
2,726
1,212
1,063
713
1,782
8,757
Revenue from two of the Group’s customers individually represented more than 10 per cent of Group revenue (2013: three),
equating to £3,529,000 and £5,474,000 (2013: £2,062,000, £3,380,000 and £5,289,000).
Revenue includes £19,966,000 (2013: £18,218,000) from related parties.
All material non-current assets, excluding deferred tax assets and financial instruments, are located in the UK.
2 OPERATING COSTS
Wages and salaries, social security and pension costs and variable bonuses (see note 4)
Share-based payment charge (see note 3)
Other staff costs including contractors and Non-Executive Directors’ fees
Depreciation of property, fixtures and equipment (see note 10)
Amortisation of intangible assets
Auditor’s remuneration – subsidiary undertakings audit fees
Auditor’s remuneration – Parent Company audit fees
Auditor’s remuneration – tax compliance
Auditor’s remuneration – other
Premises related
Travel
Information technology and communications
Other costs
2014
£000
9,659
377
864
243
83
48
42
22
21
1,097
267
686
1,630
15,039
2013
£000
17,769
449
245
18,463
2013
£000
12,741
5,722
18,463
2013
£000
969
1,636
1,189
850
242
836
5,722
2013
£000
9,103
192
693
275
65
38
40
14
31
1,020
238
654
1,761
14,124
29
CLEAR INVESTMENT Financial statements
Notes to the financial statements continued
For the year ended 30 September 2014
3 SHARE-BASED PAYMENT CHARGES AND OTHER LONG-TERM INCENTIVE SCHEME CHARGES
Share-based payment charges
Employee Incentive Arrangement (Extension Scheme) (“EIA Extension”)
Under this scheme, share-based payment awards were granted in April 2011 to employees when the Trustee of the Impax Group
Employee Benefit Trust 2004 (the “EBT”) agreed to allocate 4 million Ordinary Shares to a sub-fund of the EBT of which Ian Simm,
the Company’s Chief Executive and his family are beneficiaries and when 14.05 million Long Term Incentive Plan (“LTIP”) options
were awarded to other employees.
The awards allocated to the EBT sub-fund for Ian Simm and his family ceased to be subject to revocation due to Ian Simm’s
continued employment by the Company on 30 September 2012.
LTIP options have a 1 pence or nil exercise price and have 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 dates of vesting. This charge is excluded from the Group’s definition
of adjusted earnings as explained in note 7.
The awards made to Ian Simm and his family were valued at 68 pence using the same model and assumptions as described under
LTIP in the table below except that the option life was 1.5 years.
2011, 2012, 2013 and 2014 Employee Share Option Plan
The number of options over the Company’s shares granted under the 2011 Employee Share Option Plan (“2011 ESOP”), 2012
Employee Share Option Plan (“2012 ESOP”) and 2013 Employee Share Option Plan (“2013 ESOP”) are shown in the table below.
The strike price of these options was set at a 10 per cent premium to the average market price of the Company’s shares for the
30 business days following the announcement of the results for each of the respective preceding financial year. The options do
not have performance conditions but do have a time vesting condition such that the options vest subject to continued employment
on 31 December 2014 (2011 ESOP), 31 December 2015 (2012 ESOP) and 31 December 2016 (2013 ESOP).
In November 2014, the Board approved the grant of 3,704,000 options under the 2014 Employee Share Option Plan (“2014 ESOP”)
to certain employees in respect of services provided from 1 October 2013. The strike price of the options will be set at a 10 per cent
premium to the average market price of the Company’s shares for the 30 business days following the announcement of the results
for the year ended 30 September 2014. The options will not have performance conditions but do have a time vesting condition such
that the options vest subject to continued employment on 31 December 2017. The employees will be notified of the key terms and
conditions of these awards shortly after the announcement of results for the year ended 30 September 2014.
2014 Restricted Share Scheme
In November 2014 the Board also approved the award of 1,250,000 shares under the 2014 Restricted Share Scheme (“2014 RSS”)
to certain employees in respect of services provided from 1 October 2013. The Shares will be held by a nominee for employees
– they will receive dividends on the shares but will not be allowed to sell the shares. After a period of three years the employees
will be gain unfettered access to one third of the shares, after four years a further third and after five years the final third.
The charges for the year in relation to these schemes are offset by an equal reduction in the total cash bonus pool paid to employees.
The fair value of the share options mentioned above is estimated using the Black-Scholes Merton model. The following table lists
the inputs to the model.
Options originally granted
In respect of services provided for period from
Option/award value
Weighted average share price on grant
Exercise price
Expected volatility
Weighted average option life
Expected dividend rate
Risk free interest rate
LTIP
14,054,940
64p
68p
1p/0p
35%
5.2yrs
1.00%
1.68%
2011
ESOP
2012
ESOP
2013
ESOP
2014
ESOP1
5,000,000
1 Oct 2010
9.1p
45p
49.6p
35%
6.1yrs
1.00%
1.68%
3,056,000
3,000,000
1 Oct 2012
1 Oct 2011
8.3p
7.0p
34.2p
43.5p
37.6p 47.9p/54.0p
35%
6.1yrs
2.00%
1.54%
35%
6.1yrs
1.00%
1.68%
3,704,000
1 Oct 2013
8.8p
48.8p
53.6p
34%
6.1yrs
2.00%
1.50%
1 2014 ESOP figures for weighted average share price is estimated using the year end share price.
The fair value of the RSS awards is deemed to equal the market price of the shares awarded on the date of grant.
The expected volatility was determined by reviewing the historical volatility of the Company and that of comparator companies.
30
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 3 SHARE-BASED PAYMENT CHARGES AND OTHER LONG-TERM INCENTIVE SCHEME CHARGES continued
An analysis of the options over the Company’s shares is provided below:
Weighted
average
exercise
price
(pence)
20.3
48.7
45.8
1.0
NA
31.5
0.6
Options outstanding at the start of the year
Options granted during the year1
Options forfeited during the year
Options exercised during the year
Options expired during the year
Options outstanding at the end of the year
Options exercisable at the end of the year
2014
18,128,895
3,056,000
(790,000)
(5,310,940)
–
15,083,955
4,642,500
1 As noted above a further 3,704,000 options were approved for grant in November 2014.
For the options outstanding at the end of the period the exercise prices were nil or 1 pence for the LTIP, 49.6 pence for the ESOP
2011, 37.6 pence for the ESOP 2012 and 47.9 pence/54.0 pence for the ESOP 2013 and the weighted average remaining contractual
life was 4.7 years.
The total expense recognised for the year arising from share-based payment transactions was 377,000 (2013: £472,000).
Other charges related to EIA schemes
EIA NIC charge/(credit)
EIA Extension NIC charge/(credit)
Additional payments charge/(credit)
2014
£000
223
207
109
539
2013
£000
(7)
(19)
(85)
(111)
EIA NIC charge
The Impax Group 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. The Group is required to pay employer’s 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 Impax share price, such fluctuations are recorded in the current
period income statement.
EIA Extension NIC charge
The Group pays employer’s NIC when individuals exercise their share options and accordingly accrues for the estimated amount
that would be payable on exercise of these options using the year end share price. The amount accrued therefore varies from
period to period in line with the Group’s share price with any adjustment recorded through the income statement.
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.
4 EMPLOYMENT COSTS
Wages, salaries and variable bonuses
Social security costs
Pensions
2014
£000
8,185
1,015
459
9,659
2013
£000
7,766
931
406
9,103
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 the funds. Contributions
totalling £226,000 (2013: £224,00) were payable to the funds at the year end and are included in trade and other payables.
31
CLEAR INVESTMENT Financial statements
Notes to the financial statements continued
For the year ended 30 September 2014
4 EMPLOYMENT COSTS continued
The average number of persons (excluding Non-Executive Directors and including temporary staff), employed during the year was
56 (2013: 56).
2014
Number
2013
Number
Listed Equity
Private Equity
Marketing
Group
20
11
12
13
56
22
12
9
13
56
Details related to emoluments paid to Directors and Directors’ rights to share awards are included in the remuneration report.
Key management personnel are defined as members of the Board and/or the Executive Committee. The remuneration of key
management personnel during the year was £2,055,123 with £77,709 of share-based payments (2013: £1,711,314 with £325,197
of share-based payments).
5 INVESTMENT INCOME
Bank interest
Other investment income
6 TAXATION
(a) Analysis of charge for the year
Current tax expense:
UK corporation tax
Foreign taxes
Adjustment in respect of prior years
Total current tax
Deferred tax expense:
Charge/(credit) for the year
Adjustment in respect of prior years
Total deferred tax
Total income tax expense
2014
£000
60
147
207
2014
£000
–
68
17
85
203
(9)
194
279
(b) Factors affecting the tax charge for the year
The tax assessment for the period is lower than the average rate of corporation tax in the UK of 22 per cent (2013: lower).
The differences are explained below:
2014
£000
Profit/(loss) before tax
Effective tax charge at 22% (2013: 23.5%)
Effects of:
Non-deductible expenses and charges
Non-taxable income
Increase in tax deduction re share awards from share price increase
Tax effect of previously unrecognised tax losses
Adjustment in respect of previous years
Effect of higher tax rates in foreign jurisdictions
Exchange differences on consolidation
Change in UK tax rates
Total income tax expense
32
3,535
778
40
–
(241)
(61)
8
18
(247)
(16)
279
2013
£000
96
67
163
2013
£000
20
124
(5)
139
142
116
258
397
2013
£000
3,354
788
235
(16)
–
(267)
111
10
(147)
(317)
397
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 6 TAXATION continued
(c) Deferred tax
The deferred tax (liability) included in the consolidated statement of financial position is as follows:
As at 1 October 2012
Charge to equity
Exchange differences on consolidation
Credit/(charge) to the income statement
As at 30 September 2013
Charge to equity
Exchange differences on consolidation
Credit/(charge) to the income statement
As at 30 September 2014
Accelerated
capital
allowances
£000
Other
temporary
differences
£000
Income
not yet
taxable
£000
Share-based
payment
scheme
£000
(9)
–
–
46
37
–
–
12
49
206
(34)
–
(327)
(155)
(13)
–
415
247
(2,645)
–
(147)
495
(2,297)
–
163
(369)
(2,503)
1,235
–
–
(472)
763
–
–
(253)
510
Total
£000
(1,213)
(34)
(147)
(258)
(1,652)
(13)
163
(195)
(1,697)
If and when the EBT Trustee agrees to transfer assets held in the EBT to beneficiaries and if the assets transferred are in the
form of the Company’s Ordinary Shares, the Group expects to be eligible for a corporation tax deduction equal to the value of
those Ordinary Shares. The Group has not recognised a deferred tax asset in respect of these amounts which would amount to
£1,623,000. The Group has nil capital losses carried forward (2013: £235,000).
7 EARNINGS AND EARNINGS PER SHARE
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 intended to be
satisfied by the issue of new shares (EIA Original and EIA Extension Schemes), and ii) includes the tax benefit recognised in other
comprehensive income in respect of transfers out of the EBT and the exercising of options over the Company’s shares.
Earnings
Share-based payment charge (see note 3)
Tax benefit on long-term incentive scheme included in other comprehensive income
Adjusted earnings
The earnings per share on an IFRS and adjusted basis are as shown below.
Adjusted earnings per share
2014
Basic adjusted
Diluted adjusted
2013
Basic adjusted
Diluted adjusted
2014
£000
3,256
–
–
3,256
2013
£000
2,957
280
20
3,257
Adjusted
earnings for
the year
£000
Shares
000
Earnings
per share
3,256
116,199
2.80p
3,256
116,658
2.79p
3,257
117,463
2.77p
3,257
117,463
2.77p
33
CLEAR INVESTMENT Financial statements
Notes to the financial statements continued
For the year ended 30 September 2014
7 EARNINGS AND EARNINGS PER SHARE continued
The number of Ordinary Shares used in the calculation of dilutive adjusted earning per shares excludes the number of shares held
in Treasury or the EBTs at the end of the year and includes an adjustment for the dilutive impact of the share schemes. The dilutive
impact of the ESOP and RSS share schemes is calculated in the same way as for IFRS earnings per share.
Shares in issue
Shares held in Treasury or EBT (excluding those held to satisfy awards under the EIA Extension)
Number of shares used in the calculation of basic adjusted earnings per share
Dilutive effect of ESOP and RSS share schemes
Number of shares used in the calculation of diluted adjusted earnings per share
2014
000
127,749
(11,550)
116,199
459
116,658
2013
000
127,749
(10,286)
117,463
–
117,463
IFRS earnings per share
2014
Basic
Diluted
2013
Basic
Diluted
Earnings for
the year
£000
Shares
000
Earnings
per share
3,256
117,314
2.78p
3,256
117,773
2.76p
2,957
121,318
2.44p
2,957
121,318
2.44p
The weighted average number of Ordinary Shares for the purposes of diluted earnings per share reconciles to the weighted
average number of Ordinary Shares used in the calculation of basic earnings per share as follows:
Weighted average number of Ordinary Shares used in the calculation of basic earnings per share
Additional dilutive shares re share schemes
Adjustment to reflect option exercise proceeds and future service from employees receiving awards
Weighted average number of Ordinary Shares used in the calculation of diluted earnings per share
2014
000
117,314
5,350
(4,891)
117,773
2013
000
121,318
–
–
121,318
The Basic earnings per shares includes vested LTIP option shares on the basis that these have an inconsequential exercise price
(1 pence or 0 pence).
8 DIVIDEND
The Directors propose a dividend of 1.1 pence per share for the year ended 30 September 2014 (2013: 0.9 pence per share).
This, combined with the interim dividend of 0.3 pence (2013: nil) which was paid on 20 June 2014 gives a total dividend for the
year of 1.4 pence (2013: 0.9 pence). The dividend will be submitted for formal approval at the Annual General Meeting to be held
on 4 February 2015. These financial statements do not reflect this dividend payable, which will be accounted for in shareholders’
equity as an appropriation of retained earnings in the year ended 30 September 2015.
The dividend for the year ended 30 September 2013 was paid on 17 February 2014, being 0.9 pence per share. The Trustees of the
EBT waived their rights to part of this dividend, leading to a total dividend payment of £1,004,000. This payment is reflected in the
statement of changes in equity.
34
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 9 GOODWILL
Cost
At 1 October 2013
Additions
At 30 September 2014
Goodwill
£000
1,629
36
1,665
The goodwill balance within the Group at the beginning of the year arose from the acquisition of Impax Capital Limited on
18 June 2001.
The addition to goodwill during the year resulted from the acquisition of a property fund from Climate Change Capital Limited.
On 10 July 2014 Impax Asset Management Limited replaced Climate Change Capital Limited as the Manager of the fund, and the
fund was subsequently renamed Impax Climate Property Fund LP. The two key executives of the property fund were immediately
employed by Impax Asset Management Limited to ensure continuity of management.
As consideration for the contract to manage the Impax Climate Property Fund LP and associated goodwill, Impax Asset
Management Limited will pay 30 per cent of the aggregate pre-tax management fees it receives under the agreement to Climate
Change Property Limited. This is considered contingent consideration as it represents the potential fees payable each quarter which
are dependent on Impax Asset Management Limited’s management fee revenues for the year. The potential undiscounted value of
all future payments to Climate Change Property Limited is estimated to be £103,000.
The goodwill of £36,000 arising from the acquisition represents the value expected from the acquisition of the property fund
such as additional business from new clients and value of knowledge from new staff members. The intangible asset of £68,000
represents the valuation of the expected profits to be earned from the management contract and is determined by discounting
the expected future cash flows.
The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill may be impaired.
The Group has determined the recoverable amount of its cash-generating units (“CGUs”) by calculating their value in use using a
discounted cash flow model. The cash flow forecasts were derived from the Group budget for the year ended 30 September 2015,
which was approved by the Directors in September 2014 and thereafter using a conservative growth rate of 2 per cent (2013: 2 per
cent). The key assumptions used to calculate the cash flows in the budget were expected fund flows (based on an aggregation of
flows by product) and a post tax discount rate of 10.5 per cent (2013: 10.5 per cent). The discount rate was derived from the Group’s
weighted average cost of capital which we consider is reflective of a market participants discount rate.
The property fund acquisition made in July 2014 was also included in the value in use calculation. There has been no impairment of
goodwill to date and there is significant headroom before an impairment would be required. As an indication, if the discount rate was
increased by 3 per cent there would be no impairment charge.
35
CLEAR INVESTMENT Financial statements
Notes to the financial statements continued
For the year ended 30 September 2014
10 PROPERTY, PLANT AND EQUIPMENT
Leasehold
improvements
£000
Fixtures,
fittings and
equipment
£000
Cost
As at 1 October 2012
Additions
As at 30 September 2013
Additions
Disposals
As at 30 September 2014
Accumulated depreciation
As at 1 October 2012
Charge for the year
As at 30 September 2013
Charge for the year
Disposals
As at 30 September 2014
Net book value
As at 30 September 2014
As at 30 September 2013
As at 30 September 2012
11 TRADE AND OTHER RECEIVABLES
Trade receivables
Taxation and other social security
Other receivables
Prepayments and accrued income
An analysis of the aging of Group trade receivables is provided below:
Not past due
Past due but not impaired:
1–30 days
31–60 days
61–90 days
More than 90 days
662
7
669
–
–
669
159
158
317
156
–
473
196
352
503
507
21
528
33
(38)
523
307
117
424
87
(38)
473
50
104
200
2014
£000
432
15
197
2,453
3,097
2014
£000
302
119
11
–
–
432
Total
£000
1,169
28
1,197
33
(38)
1,192
466
275
741
243
(38)
946
246
456
703
2013
£000
523
5
199
2,418
3,145
2013
£000
195
–
195
–
133
523
All outstanding amounts listed above have been received at the date of this report. 43 per cent of the receivables were owed by
Impax Environmental Markets (Ireland) and 27 per cent by Windpark Achmer Vinte GmbH & Co. There were no amounts that were
impaired at the reporting date.
A total of £2,371,000 trade and other receivables were due from related parties (2013: £2,564,000).
36
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 12 CURRENT ASSET INVESTMENTS
At 1 October 2012
Additions
Fair value movements
Deconsolidation of IGRO
Repayments/disposals
At 30 September 2013
Additions
Fair value movements
Repayments/disposals
Foreign exchange
At 30 September 2014
Unlisted
investments
£000
Listed
investments
£000
3,027
496
(14)
3,162
(47)
6,624
638
(261)
(1,809)
–
5,192
5,683
3,099
409
(5,867)
(612)
2,712
5,263
88
(1,553)
(62)
6,448
Total
£000
8,710
3,595
395
(2,705)
(659)
9,336
5,901
(173)
(3,362)
(62)
11,640
Listed investments
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 per cent of IFLOW’s NAV from the date of launch to 30 September 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 and invested, from its cash reserves, $5,000,000 into
the fund. The Fund’s name was subsequently changed to the 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 per cent of
IGRO’s NAV from the date of launch to 1 December 2012 and accordingly the IGRO has been 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.
Impax Food & Agriculture Fund
On 1 December 2012 the Group launched the Impax Food & Agriculture 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 & Agriculture Strategy. The Group’s investment
represented more than 50 per cent of the IFAF’s NAV from the date of launch to 30 September 2014 and accordingly has been
consolidated throughout this period with its underlying investments included in listed equities in the table above.
The investments held by the IFAF 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.
The investment in the IFAF, IGRO and IFLOW funds are subject to market risk. 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.
The significant holdings at 30 September 2013 exposed to equity market price risk were the Group’s holdings in the IGRO and
IFAF funds.
Unlisted investments
The unlisted investments principally represent the Group’s investment in its private equity funds, Impax New Energy Investors LP
and Impax New Energy Investors II LP (“INEI” and “INEI II”). Further details of the Group’s commitments to these partnerships are
disclosed in note 18.
The fair value of the investments in INEI II is calculated using the discounted cash flow method. The key assumptions for this
valuation, which consists mainly of investments in wind farms, is the discount rate. The discount rate was determined by reference
to market transactions for equivalent assets. A rise of 1 per cent in the discount rate applied to cash flows would result in a decrease
in profit from operations and net assets of £127,000. A 1 per cent reduction in the discount rate would result in a corresponding
increase of £136,000 in profit from operations and net assets.
37
CLEAR INVESTMENT Financial statements
Notes to the financial statements continued
For the year ended 30 September 2014
12 CURRENT ASSET INVESTMENTS continued
The INEI I investment, which is recorded at a fair value of £708,000, consists mainly of investments in Spanish solar farms
(accounting for 78 per cent of the partnership’s valuation) which are reliant on tariff subsidies. The fair value of this investment was
determined using a discounted cash flow approach. 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 is
still in 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 £504,000.
The unlisted investments include £4,830,000 in related parties of the Group (2013: £6,261,000).
Hierarchical classification of investments
The hierarchical classification of the investments as considered by IFRS 13 Fair Value Measurement: is shown below.
At 30 September 2013
Additions
Fair value movements
Repayments/disposals
Foreign exchange
At 30 September 2014
Level 1
£000
6,650
5,263
267
(3,362)
(62)
8,756
Level 2
£000
–
–
–
–
–
–
Level 3
£000
2,686
638
(440)
–
–
2,884
Total
£000
9,336
5,901
(173)
(3,362)
(62)
11,640
There were no movements between any of the levels in the year.
13 CASH AND CASH EQUIVALENTS AND CASH INVESTED IN MONEY MARKET FUNDS AND
LONG-TERM DEPOSITS
The Group invests part of its surplus cash in money market funds and long-term deposits. The Group can redeem investments in the
former within 24 hours; long-term deposits range between six to 12 months. The Group considers its total cash reserves to be the
total of its cash at bank and in hand held by operating entities of the Group, and cash invested in money market funds and long-term
deposit accounts. Amounts held are shown below.
Cash reserves:
Cash and cash equivalents
Cash invested in money market funds and long-term deposit accounts
Cash and cash equivalents includes the following:
Cash at bank and in hand
– Held by operating entities of the Group
– Held by the consolidated funds
2014
£000
6,560
10,615
17,175
2014
£000
6,560
74
6,634
2013
£000
3,620
12,873
16,493
2013
£000
3,620
60
3,680
The Group is exposed to interest rate risk on the above cash balances as interest income fluctuates according to the prevailing
interest rates. The average interest rate on the cash balances during the year was 0.4 per cent (2013: 0.5 per cent). A 0.5 per cent
increase in interest rates would have increased Group profit after tax by £75,000 (2013: £96,000). An equal change in the opposite
direction would have decreased profit after tax by £75,000 (2013: £92,000).
The credit risk regarding cash balances of the operating entities of the Group is spread by holding parts of the balance with RBS,
Lloyds and Barclays (all with Standard & Poor’s credit rating A–1) and the remainder in money market funds managed by BlackRock
and Goldman Sachs (Standard & Poor’s credit rating of AAA).
38
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 14 TRADE AND OTHER PAYABLES
Trade payables
Taxation and other social security
Other payables
Accruals and deferred income
15 THIRD-PARTY INTEREST IN CONSOLIDATED FUNDS
At fair value
2014
£000
75
1,554
197
4,710
6,536
2014
£000
1,119
2013
£000
33
1,419
79
4,417
5,948
2013
£000
549
Third-party interest at 30 September 2014 is representative of the net assets of IFAF and IFLOW which are not attributable to
the Group. As described in note 12, IFAF and IFLOW are subsidiaries of the Group and their net assets and operating results are
consolidated into the Group’s results at year end. At 30 September 2014 the Group’s interest in IFAF is 81.1 per cent (2013: 80.2
per cent) and the Group’s interest in IFLOW is 83.8 per cent (2013: nil). This balance is classified as Level 1 for the hierarchical
classification purposes of IFRS 13.
16 ORDINARY SHARES
Issued and fully paid
Ordinary Shares of 1 pence each
At 1 October
Issue of shares to EBT 2012
At 30 September
17 OWN SHARES AND TREASURY SHARES
At 1 October 2012
Treasury purchases
Issue of shares to EBT 2012
EBT 2012 purchase of Treasury Shares
Satisfaction of option exercises
EBT 2012 purchases
At 30 September 2013
Satisfaction of option exercises
EBT 2012 purchases
At 30 September 2014
2014
Number
2014
£000
2013
Number
127,749,098
–
127,749,098
1,277
–
115,582,431
12,166,667
1,277
127,749,098
Treasury
Shares
Number
4,699,000
275,000
–
(4,974,000)
–
–
–
–
–
–
Treasury
Shares
£000
1,932
92
–
(2,024)
–
–
–
–
–
–
Own
Shares
Number
1,888,273
–
12,166,667
4,974,000
(5,341,500)
6,552,329
20,239,769
(5,310,940)
1,263,791
16,192,620
2013
£000
1,156
121
1,277
Own
Shares
£000
19
–
4,136
1,692
(1,814)
2,298
6,331
(1,806)
619
5,144
Own Shares are Company shares held by the Impax Employee Benefit Trusts which have not vested unconditionally to employees
and their beneficiaries.
18 FINANCIAL COMMITMENTS
The Group has committed to invest up to €3,756,000 into Impax New Energy Investors LP. At 30 September 2014 the outstanding
commitment was €1,014,000 (2013: €1,014,000) which could be called on in the period to 19 August 2015.
The Group has committed to invest up to €3,298,000 into Impax New Energy Investors II LP. At 30 September 2014 the outstanding
commitment was €1,433,000 (2013: €2,194,000) which could be called on in the period to 22 March 2020.
At 30 September 2014 the Group had commitments under non-cancellable operating leases as follows:
Within one year
Between one and two years
Between two and five years
Offices
2014
£000
440
101
–
541
2013
£000
440
440
101
981
Other
2014
£000
15
1
–
16
2013
£000
15
1
–
16
39
CLEAR INVESTMENT Financial statements
Notes to the financial statements continued
For the year ended 30 September 2014
19 FINANCIAL RISK MANAGEMENT
Risk management is integral to the business of the Group. There are systems of controls in place to create an acceptable balance
between the potential cost should such a risk occur and the cost of managing those risks. Management continually monitors the
Group’s risk management process to ensure that an appropriate balance between risk and control is achieved. This section provides
details of the Group’s exposure to financial risks and describes the methods used by management to control such risk.
Credit risk
Credit risk is the potential financial loss resulting from the failure of a counterparty to settle their financial and contractual obligations
to the Group, as and when they fall due. The Group’s maximum exposure to credit risk is represented by the carrying value of its
financial assets. Further consideration of credit risk in respect of cash holdings is provided in note 13.
The Group’s primary exposure to credit risk relates to its cash and cash equivalents and cash in money market funds and long-
term deposits that are placed with regulated financial institutions. The Group is also exposed to credit risk on trade receivables,
representing investment management fees due. An analysis of the aging of these is provided in note 11.
Foreign exchange risk
Foreign exchange risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes
in foreign exchange rates. A significant amount of the Group’s income is denominated in GBP, EUR and USD. The Group’s foreign
exchange risk arises from income received in these currencies, together with a limited amount of exposure to expenses in
foreign currencies.
The strategy of the Group for the year ended 30 September 2014 has been to convert earned income back to sterling and to use
hedges where there is sufficient predictability over inflows to allow for an effective and efficient hedge. At the year end the Group
had outstanding forward rate foreign currency contracts to sell euro and buy sterling. These have been designated as cash flow
hedges against euro income and will be recognised in profit in October 2014, January, April and July 2015. The fair value of these
instruments at 30 September 2014 was £221,000 which is recognised in equity. £63,000 was reclassified from equity to the income
statement during the year on maturity of the hedges.
The Group’s exposure to foreign exchange rate risk at 30 September 2014 was:
EUR/GBP
£000
USD/GBP
£000
Other/GBP
£000
EUR/USD
£000
Other/USD
£000
Assets
Non-current asset investments
Current asset investments
Trade and other receivables
Cash and cash equivalents
Liabilities
Trade and other payables
Third-party interest in consolidated funds
16
3,202
1,337
6
4,561
46
130
176
5,947
301
216
6,464
86
555
641
Net exposure
4,385
5,823
The Group’s exposure to foreign exchange rate risk at 30 September 2013 was:
1,525
89
2
1,616
20
277
297
1,319
355
–
–
355
–
58
58
297
611
–
–
611
–
100
100
511
EUR/GBP
£000
USD/GBP
£000
Other/GBP
£000
EUR/USD
£000
Other/USD
£000
Assets
Non-current asset investments
Current asset investments
Trade and other receivables
Cash and cash equivalents
Liabilities
Trade and other payables
Third-party interest in consolidated funds
17
3,092
1,389
127
4,625
38
159
197
–
5,342
59
87
5,488
58
208
266
Net exposure
4,428
5,222
–
902
95
–
997
13
181
194
803
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 These amounts related only to the consolidated fund and do not take account of any offsetting benefit or charge from the market value hedges held (see opposite).
40
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 19 FINANCIAL RISK MANAGEMENT continued
The following table demonstrates the estimated impact on Group post-tax profit and net assets caused by a 5 per cent variance in
the exchange rate used to revalue significant foreign assets and liabilities, assuming all other variables are held constant. Post-tax
profit will either increase or (decrease) as shown.
Post-tax profit
2014
£000
2013
£000
(200)
200
(169)
169
Translation of significant foreign assets and liabilities
GBP strengthens against the USD, up 5 per cent
GBP weakens against the USD, down 5 per cent
GBP strengthens against the EUR, up 5 per cent
GBP weakens against the EUR, down 5 per cent
(223)
223
(168)
168
Liquidity risk and regulatory capital requirements
Liquidity risk is the risk that the Group does not have sufficient financial resources to meets it obligations when they fall due or
will have to do so at a cost. The Group monitors its liquidity risk using cash flow forecasts taking into account the commitments
made to its private equity funds (see note 18) and the cash required to meet the Group’s investment plans and its regulatory
capital requirements.
The Group considers its share capital, share premium and retained earnings to constitute its total capital. These are shown in the
statement of changes in equity. Certain companies of the Group are regulated and must maintain liquid capital resources to comply
with the capital requirements of the Financial Conduct Authority (the “FCA”). Throughout the Period the companies have significantly
exceeded these requirements. The policy of the Group is to retain sufficient capital to enable it to meet its growth objectives and
to satisfy regulatory requirements. The Group has no borrowings but may seek to borrow cash if sufficiently attractive business
opportunities arise which cannot be met from internal resources. The Company has no plans to raise additional equity and is
currently buying back shares to enable it to meet commitments under its Employee Share Ownership Plan.
At 30 September 2014, the Group had cash and cash equivalents and cash in money market funds and long-term deposit accounts of
£17,249,000. This is £10,713,000 in excess of trade and other payables. The Group in addition had other current assets of £15,208,000.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market
interest rates. The Group is exposed to interest rate risk on its interest-bearing assets, specifically cash balances that earn interest
at a floating rate.
Market risk
The significant holdings that are exposed to equity market price risk is the Group’s investment in the IFAF, IFLOW and IGRO funds.
See note 12 for further information.
Fair values of financial assets and liabilities
The Directors consider there to be no difference between the carrying value of the Group’s financial assets and liabilities and their
fair value.
Financial assets and liabilities by category
30 September 2014
Financial assets
Cash and cash equivalents
Cash held in money market funds and long-term deposits
Trade and other receivables
Investments
Total financial assets
Financial liabilities
Trade and other payables
Third-party interest in consolidated funds
Total financial liabilities
1 FVTPL = Fair value through profit and loss.
FVTPL1 –
designated
on initial
recognition
£000
Available
for sale
£000
FVTPL1 – held
for trading
£000
Loans and
receivables
£000
Financial
liabilities
measured at
amortised
cost
£000
–
–
–
16
16
–
–
–
–
–
–
5,251
5,251
–
1,119
1,119
–
–
–
6,389
6,389
–
–
–
6,634
10,615
629
–
17,878
–
–
–
–
–
–
–
272
–
272
41
CLEAR INVESTMENT Financial statements
Notes to the financial statements continued
For the year ended 30 September 2014
19 FINANCIAL RISK MANAGEMENT continued
30 September 2013
Financial assets
Cash and cash equivalents
Cash held in money market funds and long-term deposits
Trade and other receivables
Investments
Total financial assets
Financial liabilities
Trade and other payables
Third-party interest in consolidated funds
Total financial liabilities
20 ULTIMATE CONTROLLING PARTY
The Group has no ultimate controlling party.
FVTPL –
designated
on initial
recognition
£000
Available
for sale
£000
FVTPL – held
for trading
£000
Loans and
receivables
£000
Financial
liabilities
measured at
amortised
cost
£000
–
–
–
17
17
–
–
–
–
–
–
6,625
6,625
–
549
549
–
–
–
2,711
2,711
–
–
–
3,680
12,873
722
–
17,275
–
–
–
–
–
–
–
–
112
–
112
21 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 Carried Interest Partners LP, Impax Carried Interest Partners II LP, Impax Global Resource Optimization Fund LP, Impax
Climate Property Fund LP and Impax Fundamental Long-term Opportunities in Water Fund LP 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 per cent equity holding.
Other funds managed by subsidiaries of the Group are also related parties by virtue of its management contracts.
Transactions with related parties have been included in the relevant notes where appropriate.
22 ACCOUNTING POLICIES
Presentation of Financial Statements
Impax Asset Management Group plc is a public limited company that is incorporated and domiciled in the UK, and is listed on
the Alternative Investment Market (“AIM”). The address of the registered office is given on page 59 of these financial statements.
The nature of the Group’s operations and its principal activities are set out in the Strategic and Directors’ reports on pages 1 to 15.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards adopted for use by the
European Union.
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future and have concluded that it is appropriate to adopt the
going concern basis in preparing the financial statements of the Group.
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.
The Group and Company adopted the following amended standards in the year. These standards and amendments did not have
a material impact on the Group’s consolidated financial statements:
• Amendment to IAS 32 Financial instruments: Presentation provides additional guidance for offsetting financial assets and
•
liabilities while amendments to IFRS 7 Financial instruments: Disclosures set out the corresponding new disclosure requirements.
IFRS 13 Fair Value Measurement does not give rise to any new requirements as to when fair value measurements are required,
but aims to improve consistency and reduce complexity by providing guidance on how to measure fair value where fair value
is required or permitted across IFRSs and enhances disclosures requirements. IFRS 13 has not had a material impact on the
fair value measurements carried out by the Group.
42
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 22 ACCOUNTING POLICIES continued
The following new standards and amendments issued have not been early adopted:
Effective for the year ended 30 September 2015
•
•
•
IFRS 10 Consolidated Financial Statements revises the concept of control to relate it to whether an investor has exercisable power
over an investee and consequently has exposure or rights to variable returns. Consolidation procedures remain unchanged;
IFRS 12 Disclosure of Interests in Other Entities consolidates and enhances disclosure requirements relating to interests of
an entity in other entities.
IAS 27 Consolidated and separate financial statements and IAS 28 Investments in associates and joint ventures the amendments
allow an entity to apply the equity method in accounting for its investments in subsidiaries, joint ventures and associates in its
separate financial statements.
• Amendment to IAS 36 Recoverable amount disclosures for non-financial assets to reverse the unintended requirement in IFRS
13 Fair Value Measurement to disclose the recoverable amount of every cash-generating unit to which significant goodwill
or indefinite-lived intangible assets have been allocated. Under the amendments, the recoverable amount is required to be
disclosed only when an impairment loss has been recognised or reversed.
Effective for the year ended 30 September 2016
•
IFRS 9 Financial Instruments: Classification and Measurement replaces the current models for classification and measurement
of financial instruments. Financial assets are to be classified into two measurement categories: those measured as at fair value
and those measured at amortised cost. Classification depends on an entity’s business model and the contractual cash flow
characteristics of the instrument. Financial liabilities are not affected by the changes.
Effective for the year ended 30 September 2017
•
IFRS 15 Revenue from Contracts with Customers is a new standard that replaces revenue recognition guidance that currently
exists under IFRS. The standard provides new qualitative and quantitative disclosure requirements and sets out a model to
determine how much and when revenue is to be recognised.
Adoption of IFRSs 9, 10, 12 and 15 could have a significant effect on the Group’s financial statements; the impact of which is still being
considered by management.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the
Company (its subsidiaries) made up to 30 September each year. Control is achieved where the Company has the power to govern
the financial and operating policies of a subsidiary so as to obtain benefits from its activities.
Subsidiaries are accounted for using the acquisition method of accounting whereby the Group’s results include the results of the
acquired business from the date of acquisition until the date of disposal.
All intra-Group transactions and balances are eliminated in full on consolidation
Investments in funds in which the Group has more than 50 per cent of the share of the net assets are consolidated from the date
that control is gained until the date that control is lost due to dilution or sale of the fund holding. The Group’s investment holding
instrument in its consolidated fund is classified as a liability in the fund’s own financial statements. This is on the basis that the
instruments may be redeemed by the Investor at any time, or subject to a notice period, such that the fund is required to utilise its
assets to buy out the Investor’s share and thereby reduce the net assets of the fund; such an investment is classified as a puttable
interest under IFRS and recorded as a liability (equal to the fair value of the fund’s assets and other liabilities). Upon consolidation
the proportion of the fund attributable to the non-controlling interest is classified as a current liability and shown as “Third-party
interest in consolidated fund” in the statement of financial position and the corresponding profit/loss attributable to the non-
controlling interest as a “Change in third-party interest in consolidated funds”.
In instances where the Group acts as the Manager and General Partner of a fund in a Limited Partnership structure, the Group only
receives compensation for its performance as Manager which is on market terms. Accordingly the Group does not consolidate these
funds as it receives no ownership benefits.
The Company includes certain assets and liabilities of the EBT 2004 and EBT 2012 (together the “EBTs”) within its statement of
financial position. In the event of the winding up of the Company, neither the shareholders nor the creditors would be entitled to the
assets of the EBTs.
43
CLEAR INVESTMENT Financial statements
Notes to the financial statements continued
For the year ended 30 September 2014
22 ACCOUNTING POLICIES continued
Investments in associates
The Group, in common with industry standard practice, seeds new funds with its own resources in order to establish a track
record so that the funds may then be marketed to external investors. As new investors join the fund the Group’s interest will dilute
and ultimately the Group may divest entirely as commercial considerations allow. Investments in associates that are held by the
Group are carried in the statement of financial position at fair value, treatment permitted by IAS 28 Investment in Associates. IAS
28 allows investments held by venture capital and similar organisations to be excluded from the scope of the standard, provided
that those investments upon initial recognition are designated as fair value through profit or loss or held for trading and accounted
for in accordance with IAS 39 Financial Instruments: Recognition and Measurement, with changes in fair value recognised in profit
or loss in the period of change.
Revenue recognition
Revenue represents sales to external customers at invoiced amounts less value added tax or local taxes. Revenue is recognised
in the statement of comprehensive income as follows.
(a) Investment management, administration and advisory fees and transaction fees contractually receivable are recognised in the
period in which the work is performed and the respective fees are earned. Performance fees arising upon the achievement of
specified targets are recognised at the respective fund’s period end, when such performance fees are confirmed as receivable.
(b) Interest income is accrued on a time basis, by reference to the principal outstanding and the interest rate applicable.
Other investment income, including dividends, is recognised when the right to receive payment is established.
Leases
All leases are operating leases. Rentals payable are charged to the income statement on a straight-line basis over the lease term.
Long-term incentive scheme charge
The fair value of employee services received in exchange for the grant of shares or share options is recognised as an expense.
The fair value of the shares and share options awarded is determined at the date the employee is deemed to be fully aware of their
potential entitlement and all conditions of vesting (termed the “grant date”). The expense is charged over the period starting when
the employee commenced the relevant services (termed the “service commencement date”) to the vesting date. In instances where
the grant date occurs after the date of signing these financial statements the fair value is initially estimated by assuming that the
grant date is the reporting date.
Pensions
The Group and Company operate defined contribution personal pension schemes for employees. The assets of the schemes are
held separately from those of the Group and Company in independently administered funds. Payments made in relation to the
schemes are charged as an employee benefit expense to the statement of comprehensive income when they are due.
Taxation
Current tax is based on taxable profits for the year after all potential reliefs available have been utilised. Taxable profits differ from
“profit before tax” as reported in the statement of comprehensive income because it excludes items that are taxable or deductible
in other years and items that are not taxable or deductible in the current year. The Group’s liability for current tax is calculated using
tax rates that have been enacted or substantively enacted at the statement of financial position date. In the UK tax deductions are
available in respect of the award of the Company’s shares. In instances where the tax deduction is greater than the associated
share-based payment charge due to differences in the Company’s share price that amount, tax effected, is recognised in other
comprehensive income.
Deferred tax is provided in full in respect of taxation deferred by temporary differences between the treatment of certain items
for taxation and accounting purposes. Deferred tax assets are not recognised to the extent that their recoverability is uncertain.
The carrying amounts of deferred tax assets are reviewed at each statement of financial position date and regarded as recoverable
and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will
be suitable taxable profits from which the future reversal of the underlying temporary differences can be deducted.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability or the asset is realised.
44
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 22 ACCOUNTING POLICIES continued
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the fair value of the identifiable assets,
liabilities and contingent liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is
recognised as an asset and is tested for impairment annually, or on such occasions that events or changes in circumstances
indicate that its value might be impaired.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Positive goodwill arising on acquisitions before the date of the transition to IFRS has been retained at the previous UK GAAP amount
and is tested for impairment annually.
Intangible assets
The cost of acquiring a management contract is recognised and measured at its fair value at the acquisition date. The fair value
represents the valuation of the expected profits to be earned from the management contract and is determined by discounting the
expected future cash flows.
The intangible assets are carried at cost less accumulated amortisation and any impairments losses. Amortisation is provided
on a straight-line basis over the expected life of the contract which has been assessed up to a maximum of one year.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is provided on a straight-line basis over the estimated useful lives shown below:
Leasehold improvements
Fixtures, fittings and equipment
life of the lease
three years
Intangible fixed assets – software licences
Purchased licences are stated at cost less accumulated depreciation and any accumulated impairment losses and associated
implementation costs.
Amortisation is provided on a straight-line basis over the life of the licence up to a maximum of three years.
Impairment of assets
At the statement of financial position date, the Group reviews the carrying amount of assets to determine whether there is any
indication that those assets have suffered an impairment loss or if events or changes in circumstances indicate that the carrying
value may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the impairment loss is recognised
as an expense.
When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset. A reversal of an impairment loss is recognised as income
immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss treated
as a revaluation increase. Impairment losses relating to goodwill are not reversed.
Current asset investments
Current asset investments are categorised as financial assets at fair value through profit or loss and are designated at fair value
through profit and loss on initial recognition or as held for trading. All gains or losses together with transactions costs are recognised
in the statement of comprehensive income. The investments comprise both listed investments and unlisted investments. The fair
value of the listed investments which are traded in active markets are based on quoted market prices at the statement of financial
position date. The appropriate quoted price for investments held is the current bid price.
The fair value of the unlisted investments which are not traded in an active market is determined by using valuation techniques.
The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date.
Valuation techniques used include the use of comparable recent arm’s length transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis and other valuation techniques commonly used by market participants making
the maximum use of market inputs and relying as little as possible on entity-specific inputs.
45
CLEAR INVESTMENT Financial statements
Notes to the financial statements continued
For the year ended 30 September 2014
22 ACCOUNTING POLICIES continued
Trade and other receivables
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans
and receivables. Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method less provision for impairment.
Other financial assets
Other financial assets are non-derivative financial assets with fixed payments that are not quoted in an active market. They are
included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified
as non-current assets.
Interest income is recognised by applying the effective interest rate and included within “Investment income”.
Placement fees
Placement fees incurred that are directly attributable to securing an investment management contract are deferred and amortised
over the investment period of the related fund.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, short-term deposits and short-term borrowings that are readily convertible
to a known amount of cash and are subject to an insignificant risk of changes in value.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Own shares
Company shares held by the EBTs are deducted from shareholders’ funds and classified as Own Shares until such time as they vest
unconditionally to participating employees and their families.
Trade payables
Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, unless otherwise stated.
Foreign currencies
Foreign currency transactions of individual companies are translated at the rates ruling when they occurred. Foreign currency
monetary assets and liabilities are translated at the rates ruling at the statement of financial position date. Any differences are taken
to the statement of comprehensive income.
On consolidation, the results of overseas operations are translated at the average rates of exchange during the year and their
statement of financial positions are translated into sterling at the rates of exchange ruling on the statement of financial position
date. Exchange differences that arise from translation of the opening net assets and results of foreign subsidiary undertakings are
charged to the exchange translation reserve.
The average rate ruling in the accounting period for US dollars was US$1.66: £1 (2013: US$1.56: £1); the rate ruling at the statement
of financial position date was US$1.62: £1 (2013: US$1.62: £1). The average rate ruling in the accounting period for euros was
€1.22: £1 (2013: €1.19: £1); the rate ruling at the statement of financial position date was €1.28: £1 (2013: €1.20: £1).
Derivatives
The Group uses foreign exchange forward contracts as a hedge against the foreign exchange risk on future income denominated in
foreign currencies. At the statement of financial position date these derivative contracts are recorded at their fair value. In instances
where the hedge accounting criteria are met changes in the fair value are recorded in other comprehensive income. The amounts
recognised in other comprehensive income are reclassified to profit or loss when the hedged item (such as the relevant foreign
exchange income) is recorded in profit.
Critical accounting judgements and key sources of estimation uncertainty
Determining the value of unlisted investments
A number of accounting estimates and judgements are incorporated within current asset investments in respect of the valuation
of unlisted investments, in particular in respect of the investment in Impax New Energy Investors LP, which is subject to significant
uncertainty. The methodology used is described in note 12.
Consolidation of managed funds
In determining whether managed funds should be consolidated key judgements include whether returns received by the Group
constitute an ownership interest and as to whether the Group controls the fund.
46
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 22 ACCOUNTING POLICIES continued
Determining the share-based payment charge
In determining the value of share-based payments, key judgements include the volatility of Impax shares, Impax dividend yield
and the risk free rate.
Determining the value of NIC payments due in respect of share schemes
In determining the value of amounts that will be payable in respect of NIC payments in respect of the Group’s share schemes
the key estimates are the price of the shares at the date when the NIC becomes payable and the NIC rate prevalent at that date.
The Group uses the price/rate at the statement of financial position date as its estimate.
Determining the value of deferred tax assets for tax deductions that will become deductible in respect of
share-based payment charges
We record, or have recorded, share-based payment charges in the current year or prior years. Tax deductions in respect of these
will only be available in future years when the relevant individual exercises options or when the Trustees of the Impax Employee
Benefit Trust decides to move their shares out of the Trust and accordingly we recognise a corresponding deferred tax asset.
In determining the size of the deferred tax asset the key judgements are the price of the shares at the date when the tax or NIC
becomes payable and the tax and NIC rates prevalent at that date. The Group uses the price/rates enacted at the statement of
financial position date as its estimate.
Impairment of goodwill
Goodwill has an indefinite useful life, is not subject to amortisation and is tested annually for impairment. In determining if goodwill
is impaired, the Group determines the recoverable amount of its CGUs by applying a discounted cash flow model. The Group’s
budgeted cash flows were approved by the Directors and use a growth rate of 2 per cent.
47
CLEAR INVESTMENT Financial statements
Company statement of financial position
As at 30 September 2014
Assets
Property, plant and equipment
Investments
Deferred tax asset
Total non-current assets
Trade and other receivables
Investments
Margin account
Cash invested in money market funds
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Ordinary Shares
Share premium
Retained earnings
Total equity
Liabilities
Trade and other payables
Total current liabilities
Total equity and liabilities
Notes
£000
£000
£000
£000
2014
2013
24
25
29
26
27
30
238
19,375
294
1,434
4,889
294
3,614
2,419
1,277
4,093
17,278
28
9,909
447
13,539
183
581
6,262
190
2,606
2,196
1,277
4,093
15,747
4,887
14,169
11,835
26,004
21,117
4,887
26,004
19,907
12,650
32,557
22,648
9,909
32,557
Authorised for issue and approved by the Board on 26 November 2014. The notes on pages 51 to 56 form part of these
financial statements.
Ian R Simm
Chief Executive
48
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT Financial statements
Company statement of changes in equity
For the year ended 30 September 2014
As at 1 October 2012
Profit for the year
Other comprehensive income – tax benefit on long-term
incentive scheme
Transactions with owners
Issue of shares
Dividends paid
Shares acquired by Treasury or EBT 2012
Award of shares on option exercise
Long-term incentive scheme charge
As at 30 September 2013
Profit for the year
Transactions with owners
Dividends paid
Shares acquired by EBT 2012
Award of Own Shares on option exercise
Long-term incentive scheme charge
Note
8
31
Share
capital
£000
1,156
–
–
121
–
–
–
121
1,277
–
–
–
–
–
–
Share
premium
£000
78
–
–
4,015
–
–
–
4,015
4,093
–
–
–
–
–
–
Retained
earnings
£000
14,236
8,284
20
(4,136)
(816)
(2,397)
41
515
(6,793)
15,747
3,064
(1,338)
(619)
47
377
(1,533)
Total
£000
15,470
8,284
20
–
(816)
(2,397)
41
515
(2,657)
21,117
3,064
(1,338)
(619)
47
377
(1,533)
As at 30 September 2014
1,277
4,093
17,278
22,648
The notes on pages 51 to 56 form part of these financial statements.
49
CLEAR INVESTMENT Financial statements
Company statement of cash flows
For the year ended 30 September 2014
Operating activities:
Profit/(loss) before taxation
Adjustments for:
Investment income
Depreciation of property, plant and equipment
Fair value movements in investments
Share-based payment
Other charges related to EIA schemes
Operating cash flows before movement in working capital
(Increase)/decrease in receivables
(Increase) in margin account
Increase/(decrease) in payables
Cash generated from operations
Corporation tax
Net cash generated/used by operating activities
Investing activities:
Interest received
Dividend received
Repayments/proceeds on sale of investments
Purchase of investments
Disposal of investments
Settlement of investment related hedges
Purchase of property, plant and equipment
Net cash (used in)/generated from investing activities
Financing activities:
Dividends paid
Cash received on exercise of Impax share options
(Increase) in cash held in money market funds
Proceeds from borrowings
Shares acquired by Treasury/EBT 2012
Net cash (used in)/generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2014
£000
2013
£000
3,012
8,087
(4,317)
237
1,446
57
–
435
(577)
(103)
4,686
4,441
–
4,441
18
4,300
–
(6,155)
1,809
(1,244)
(28)
(1,300)
(1,338)
47
(1,008)
–
(619)
(2,918)
223
2,196
2,419
(8,524)
266
1,103
25
32
989
(269)
(189)
(7,490)
(6,959)
–
(6,959)
24
8,500
422
(2,496)
48
(1,115)
(27)
5,356
(816)
41
6,988
(33)
(2,397)
3,783
2,180
16
2,196
50
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT Financial statements
Notes to the Company financial statements
For the year ended 30 September 2014
23 SIGNIFICANT ACCOUNTING POLICIES
The separate financial statements of the Company are presented as required by the Companies Act 2006. The principal accounting
policies adopted are the same as those set out in the Group’s financial statements disclosures. In addition note 25 sets out the
accounting policy in respect of investments in subsidiary undertakings.
The Company has taken advantage of the exemption allowed under Section 408 of the Companies Act 2006 and has not presented its
own statement of comprehensive income in these financial statements. The Company’s net profit for the year amounted to £3,064,000
and included dividend income from subsidiaries of £4,300,000 (2013: £8,284,000 including dividend income of £8,500,000).
24 PROPERTY, PLANT AND EQUIPMENT
Cost
As at 1 October 2012
Additions
As at 30 September 2013
Additions
Disposals
As at 30 September 2014
Depreciation
As at 1 October 2012
Charge for the year
As at 30 September 2013
Charge for the year
Disposals
As at 30 September 2014
Net book value
As at 30 September 2014
As at 30 September 2013
As at 30 September 2012
Leasehold
improvements
£000
Fixtures,
fittings and
equipment
£000
657
7
664
–
–
664
154
158
312
157
–
469
195
352
503
482
20
502
28
(38)
492
299
108
407
80
(38)
449
43
95
183
Total
£000
1,139
27
1,166
28
(38)
1,156
453
266
719
237
(38)
918
238
447
686
51
CLEAR INVESTMENT Financial statements
Notes to the Company financial statements continued
For the year ended 30 September 2014
25 NON-CURRENT INVESTMENTS
Investments held by the Company in subsidiary undertakings are held at cost less any provision for impairment.
At 1 October 2012
Additions
Capital contribution
IGRO deconsolidation
Disposals/repayment of invested capital
At 30 September 2013
Additions
Capital contribution
Disposals/repayment of invested capital
At 30 September 2014
The principal subsidiary undertakings are:
Impax Asset Management Limited
Impax Asset Management (AIFM) Limited
Impax New Energy Investors (GP) Limited
Impax New Energy Investors II (GP) Limited
Climate Property GP Limited
Impax New Energy Investors Management SARL
Kern USA Inc
Impax Asset Management (Hong Kong) Ltd
Impax Asset Management (US) LLC
Impax Food & Agriculture Fund
Impax Fundamental Long-term Opportunities in Water Fund
Other
investments
£000
Subsidiary
undertakings
£000
17
–
–
–
–
17
–
–
–
17
14,592
2,000
473
(3,121)
(422)
13,522
5,517
319
19,358
Total
£000
14,609
2,000
473
(3,121)
(422)
13,539
5,517
319
–
19,375
Country of
incorporation
UK
UK
UK
UK
UK
Luxembourg
USA
Hong Kong
USA
Ireland
USA
Proportion
of ordinary
capital held
Nature of
business
100% Financial services
100% Financial services
100% Financial services
100% Financial services
100% Financial services
100% Financial services
100%
Holding company
100% Financial services
100% Financial services
Investment fund
81.1%
Investment fund
83.8%
Charges relating to options over the Company’s shares granted to employees of subsidiary undertakings are accounted for in the
subsidiary undertaking. In the Company financial statements the capital contribution in respect of this charge has been recognised
as an increase in the investment in subsidiaries.
Investments in subsidiary undertakings are divided between interest in shares and capital contributions as follows:
Interest in shares
Capital contribution
2014
£000
9,460
9,898
19,358
2013
£000
3,892
9,630
13,522
The principal other investment for the Company is in the fund Impax New Energy Investors SCA which is incorporated in
Luxembourg. The Company holds 14.24 per cent of the capital of this partnership which represents its subscription capital.
52
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 26 TRADE AND OTHER RECEIVABLES
Amounts owed by Group undertakings
Taxation and other social security
Other receivables
Prepayments and accrued income
Due:
After one year
Within one year
27 CURRENT ASSET INVESTMENTS
At 1 October 2012
Additions
Fair value movements
Repayments/disposals
At 30 September 2013
Additions
Fair value movements
Repayments/disposals
At 30 September 2014
28 TRADE AND OTHER PAYABLES
Trade payables
Amounts owed to Group undertakings
Taxation and other social security
Other payables
Accruals and deferred income
2014
£000
1,075
65
106
188
1,434
–
1,434
1,434
Unlisted
investments
£000
Listed
investments
£000
2,665
496
(790)
(48)
2,323
638
(439)
–
2,522
–
3,121
818
–
3,939
–
237
(1,809)
2,367
2014
£000
31
8,231
759
56
832
9,909
29 DEFERRED TAX
The deferred tax asset included in the Company statement of financial position is as follows:
As at 30 September 2013
Credit/(charge) to the income statement
As at 30 September 2014
Accelerated
capital
allowances
£000
Other
temporary
differences
£000
Excess
management
charges
£000
Share-based
payment
scheme
£000
35
14
49
(16)
(38)
(54)
83
156
239
81
(21)
60
2013
£000
237
57
55
232
581
–
581
581
Total
£000
2,665
3,617
28
(48)
6,262
638
(202)
(1,809)
4,889
2013
£000
19
3,554
594
32
688
4,887
Total
£000
183
111
294
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 Company’s Ordinary Shares, the Company expects to be eligible for a corporation tax deduction equal to the
value of those Ordinary Shares. The Company has not recognised a deferred tax asset in respect of these amounts which would
total £1,047,000. The Company has no unrecognised capital losses (2013: £235,000).
53
CLEAR INVESTMENT Financial statements
Notes to the Company financial statements continued
For the year ended 30 September 2014
30 ORDINARY SHARES
Issued and fully paid
Ordinary Shares of 1 pence each
At 1 October 2013 and 30 September 2014
31 OWN SHARES AND TREASURY SHARES
At 1 October 2012
Treasury purchases
Issue of shares to EBT 2012
EBT 2012 purchase of Treasury Shares
Option exercises
EBT 2012 purchases
At 30 September 2013
Option exercises
EBT 2012 purchases
At 30 September 2014
Number
£000
127,749,098
1,277
Treasury
Shares
Number
4,699,000
275,000
(4,974,000)
–
–
–
–
–
–
Treasury
Shares
£000
Own
Shares
Number
1,932
92
(2,024)
–
–
–
–
–
–
1,888,273
–
12,166,667
4,974,000
(5,341,500)
6,552,329
20,239,769
(5,310,940)
1,263,791
16,192,620
Own
Shares
£000
19
–
4,136
1,692
(1,814)
2,298
6,331
(1,806)
619
5,144
32 FINANCIAL COMMITMENTS
The Group has committed to invest up to €3,756,000 into Impax New Energy Investors LP. At 30 September 2014 the outstanding
commitment was €1,014,000 (2013: €1,014,000) which could be called on in the period to 19 August 2015.
The Group has committed to invest up to €3,298,000 into Impax New Energy Investors II LP. At 30 September 2014 the outstanding
commitment was €1,433,000 (2013: €2,194,000) which could be called on in the period to 22 March 2020.
At 30 September 2014 the Company had commitments under non-cancellable operating leases as follows:
Within one year
Between one and two years
Between two and five years
Offices
2014
£000
440
101
–
541
2013
£000
440
440
101
981
Other
2014
£000
15
1
–
16
2013
£000
15
1
–
16
54
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT 33 FINANCIAL RISK MANAGEMENT
The risk management processes of the Company are aligned to those of the Group as a whole. The Company’s specific risk
exposures are explained below.
Credit risk
The Company’s primary exposure to credit risk relates to cash and deposits that are placed with regulated financial institutions and
amounts due from subsidiaries.
At the statement of financial position date, the credit risk regarding cash and cash equivalent balances of the asset management
business was spread by holding part of the balance with RBS and part with Barclays (Standard & Poor’s credit rating A–1) and the
remainder in a money market fund managed by BlackRock which has a Standard & Poor’s credit rating of AAA. The risk of default
is considered minimal.
Foreign exchange risk
The amount of the Company’s expenses denominated in foreign currencies is minimal.
The Company activities are principally conducted in GBP, EUR and USD. Foreign exchange risk arises from income received in these
currencies together with a limited amount of exposure to costs payable.
The Company’s exposure to foreign exchange rate risk at 30 September 2014 was:
Assets
Non-current asset investments
Current asset investments
Liabilities
Trade and other payables
Net exposure
The Company’s exposure to foreign currency exchange rate risk at 30 September 2013 was:
Assets
Non-current asset investments
Current asset investments
Liabilities
Trade and other payables
Net exposure
EUR/GBP
£000
USD/GBP
£000
23
2,522
2,545
–
–
2,545
–
2,367
2,367
325
325
2,042
EUR/GBP
£000
USD/GBP
£000
24
2,353
2,377
207
207
2,170
–
3,940
3,940
926
926
3,014
The following tables demonstrate the estimated impact on Group post-tax profit and net assets and Company post-tax profit and net
assets caused by a 5 per cent movement in the exchange rate used to revalue significant foreign assets and liabilities, assuming all
other variables are held constant. Post-tax profit either increases or (decreases).
Translation of significant foreign assets and liabilities
GBP strengthens against the USD, up 5 per cent
GBP weakens against the USD, down 5 per cent
GBP strengthens against the EUR, up 5 per cent
GBP weakens against the EUR, down 5 per cent
Post-tax profit
2014
£000
2013
£000
(80)
80
(163)
163
(115)
115
(142)
142
Liquidity risk
Liquidity risk is the risk that the Company does not have sufficient financial resources to meets it obligations when they fall due
or will have to do so at cost. The Company can request to borrow cash through intra-Group loans to maintain sufficient liquidity.
55
CLEAR INVESTMENT Financial statements
Notes to the Company financial statements continued
For the year ended 30 September 2014
33 FINANCIAL RISK MANAGEMENT continued
Interest rate risk
At the reporting date the Company’s cash and cash equivalents, including bank overdrafts and cash held in money market deposits
balance of £6,033,000 (2013: £4,802,000) were its only financial instruments subject to variable interest rate risk. The impact of
0.5 per cent increase or decrease in interest rate on the post tax profit is not material to the Company.
Market pricing risk
The Company has made investments in its own managed funds and the value of these investments are subject to equity market risk.
Fair values of financial assets and liabilities
The Directors consider there to be no difference between the carrying value of the Group’s financial assets and liabilities and their
fair value.
The hierarchical classification of financial assets and liabilities measured at fair value are as follows:
30 September 2014
Current investments
There were no movements between any of the levels in the year.
30 September 2013
Current investments
Level 1
£000
2,367
Level 1
£000
3,939
Level 2
£000
–
Level 2
£000
–
Level 3
£000
2,522
Level 3
£000
2,323
Total
£000
4,889
Total
£000
6,262
The Company had no financial liabilities measured at fair value for 2014 or 2013.
Financial assets and liabilities by category
30 September 2014
Financial assets
Cash and cash equivalents
Cash held in money market funds
Trade and other receivables
Investments
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
1 FVPTL = Fair value through profit and loss.
30 September 2013
Financial assets
Cash and cash equivalents
Cash held in money market funds
Trade and other receivables
Investments
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
56
FVTPL1 –
designated
on initial
recognition
£000
Available
for sale
£000
Loans and
receivables
£000
Financial
liabilities
measured at
amortised
cost
£000
–
–
–
–
–
–
–
–
–
–
4,889
4,889
–
–
2,419
3,614
106
–
6,139
–
–
–
–
–
–
–
(87)
(87)
FVTPL –
designated
on initial
recognition
£000
Financial
liabilities
measured at
amortised cost
£000
Loans and
receivables
£000
Available
for sale
£000
–
–
–
–
–
–
–
–
–
–
6,262
6,262
–
–
2,196
2,606
55
–
4,857
–
–
–
–
–
–
–
(51)
(51)
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Impax Asset Management Group plc (the “Company”) will be held
at the offices of the Company, Norfolk House, 31 St James’s Square, London SW1Y 4JR at 11.00am on 4 February 2015 for the
following purposes:
AS ORDINARY BUSINESS
To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions:
1. To receive and adopt the Company’s annual accounts for the financial year ended 30 September 2014 together with the
Directors’ report and the auditor’s report on those accounts.
2. To re-elect Guy de Froment as a Director.
3. To re-elect Mark B E White as a Director.
4. To reappoint KPMG LLP as auditor of the Company.
5. To authorise the Directors to fix the remuneration of the auditor.
6. To declare a final dividend in respect of the financial year ended 30 September 2014 of 1.1 pence per Ordinary Share payable
to the holders of Ordinary Shares on the register of members at the close of business on 23 January 2015.
AS SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolutions, resolution 7 of which will be proposed as an ordinary resolution and
resolutions 8 and 9 of which will be proposed as special resolutions:
7. THAT, in substitution for any subsisting authorities to the extent unused, the Directors of the Company be generally and
unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the “Act”), to exercise all the powers
of the Company to allot shares in the Company and to grant rights to subscribe for, or to convert any security into, shares
in the Company:
(a) up to an aggregate nominal amount of £425,830.32 (such amount to be reduced by the nominal amount of any equity
securities allotted pursuant to the authority in paragraph (b) below in excess of £425,830.32; and
(b) comprising equity securities (as defined by section 560 of the Act) up to an aggregate nominal amount of £851,660.65
(such amount to be reduced by the nominal amount of any shares allotted or rights granted pursuant to the authority
in paragraph (a) above) in connection with an offer by way of a rights issue:
(i) to holders of Ordinary Shares in proportion (as nearly as may be practicable) to their respective holdings; and
(ii) to holders of other equity securities as required by the rights of those securities or as the Directors otherwise
consider necessary,
but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation
to Treasury Shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory
or the requirements of any regulatory body or stock exchange,
provided that this authority shall, unless renewed, varied or revoked by the Company, expire at the conclusion of the Company’s
next Annual General Meeting (or, if earlier, close of business on 30 April 2016) except that the Company may at any time before
such expiry make any offer or agreement which would or might require shares to be allotted or rights to subscribe for or convert
securities into shares to be granted after such expiry and the Directors may allot shares or grant rights to subscribe for or convert
securities into shares in pursuance of such offer or agreement as if the authority conferred hereby had not expired.
8. THAT, subject to the passing of resolution 7 above, the Directors of the Company be and are hereby empowered pursuant to
section 570 of the Act to allot equity securities (within the meaning of section 560 of the Act) for cash, pursuant to the authority
conferred by resolution 7 above or by way of a sale of Treasury Shares, as if section 561 of the Act did not apply to any such
allotment or sale, provided that the power conferred by this resolution shall be limited to:
(a) the allotment or sale of equity securities, either in connection with an issue or offer of equity securities (including, without
limitation, under a rights issue, open offer or similar arrangement) to holders of equity securities in proportion (as nearly as
may be practicable) to their respective holdings of equity securities, subject only to such exclusions or other arrangements as
the Directors of the Company may consider necessary or expedient to deal with any Treasury Shares, fractional entitlements
or legal or practical problems under the laws of any territory, or the requirements of any regulatory body or stock exchange
in any territory; and
(b) the allotment or sale (otherwise than pursuant to resolution 8(a)) of equity securities up to an aggregate nominal value
of £127,749.09.
The power conferred by this resolution shall expire (unless previously renewed, revoked or varied by the Company in general
meeting) at the conclusion of the Company’s next Annual General Meeting, except that the Company may at any time before
such expiry make any offer or agreement which would or might require equity securities to be allotted or sold after such expiry
and the Directors of the Company may allot or sell equity securities in pursuance of such an offer or agreement as if the authority
conferred hereby had not expired.
57
CLEAR INVESTMENT Notice of Annual General Meeting
continued
9. THAT the Company be and is generally authorised for the purposes of section 701 of the Act to make one or more market
purchases (within the meaning of section 693(4) of the Act) of its Ordinary Shares of 1 pence each provided that:
(a) the maximum aggregate number of Ordinary Shares that may be purchased is 12,774,909;
(b) the minimum price which may be paid for each Ordinary Share is 1 pence;
(c) the maximum price which may be paid for each Ordinary Share is not more than 105 per cent. of the average of the middle
market quotations for an Ordinary Share taken from the London Stock Exchange for the five business days immediately
preceding the day of purchase; and
(d) unless previously renewed, varied or revoked, the authority conferred by this resolution shall expire at the conclusion of the
Company’s next Annual General Meeting save that the Company may make a contract or contracts to purchase Ordinary
Shares under the authority conferred by this resolution prior to the expiry of such authority which will or may be executed
wholly or partly after the expiry of such authority and may make a purchase of Ordinary Shares in pursuance of any such
contract or contracts.
By order of the Board
Zack Wilson
Company Secretary
5 December 2014
Notes:
1 Any member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend, speak and vote in his or her stead. A member may appoint more than
one proxy provided each proxy is appointed to exercise rights attached to different shares. A member may not appoint more than one proxy to exercise rights attached to any one
share. A proxy need not be a member of the Company. A form of proxy is enclosed for use of members. Completion and return of a form of proxy or CREST Proxy Instruction (as
described in note 4) will not preclude a member from attending and voting in person at the meeting should he or she so decide. You can only appoint a proxy using the procedures
set out in these notes and the notes to the form of proxy. If you appoint a proxy and attend the meeting in person, your proxy appointment will automatically be terminated.
2 To be valid, the form of proxy and the power of attorney or other authority (if any) under which it is signed (or a notarially certified copy of such power of authority) must be
deposited at the offices of Capita Asset Services, PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF by 11.00am on 2 February 2015. To change your proxy instructions simply
submit a new proxy appointment using the methods set out above and in the notes to the form of proxy. Note that the cut-off time for receipt of proxy appointments also applies in
relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.
3 To be entitled to attend and vote at the meeting (and for the purpose of the determination by the Company of the number of votes they may cast), members must be entered in the
Register of Members at 6.00pm on 2 February 2015 (or, in the event of any adjournment, 6.00pm on the date which is two days before the time of the adjourned meeting).
4 CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof
by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a
voting service provider(s) should refer to their CREST sponsors or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy
appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance
with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be
transmitted so as to be received by the Company’s agent, Capita Asset Services (CREST Participant ID: RA10), no later than 48 hours before the time appointed for the meeting.
For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the
Company’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. CREST members and, where applicable, their CREST sponsors or
voting service provider(s) should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST
member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s))
such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting service provider(s) are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST
system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) of the Uncertificated Securities Regulations 2001.
58
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT Officers and advisers
DIRECTORS
J Keith R Falconer (Chairman)
Ian R Simm (Chief Executive)
Guy de Froment (Non-Executive)
Vincent O’Brien (Non-Executive)
Mark B E White (Non-Executive)
SECRETARY
Zack Wilson
REGISTERED OFFICE
Norfolk House
31 St James’s Square
London
SW1Y 4JR
AUDITOR
KPMG LLP
15 Canada Square
London
E14 5GL
BANKERS
The Royal Bank of Scotland Group plc
3rd Floor
280 Bishopsgate
London
EC2M 4RB
REGISTRARS
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
NOMINATED ADVISER AND BROKER
Peel Hunt
Moor House
120 London Wall
London
EC2Y 5ET
SOLICITORS
Stephenson Harwood
1 Finsbury Circus
London
EC4M 7SH
59
CLEAR INVESTMENT Notes
60
Impax Asset Management Group plc Annual Report and Accounts 2014CLEAR INVESTMENT This product is completely bio-degradable
and recyclable
It also has the following Ecological Features:
Acid Free
Heavy Metal Absence
Long-Life – ISO 9706
Elemental Chlorine Free Guaranteed
Selected Secondary Fibres
IMPAX ASSET MANAGEMENT GROUP PLC
Norfolk House
31 St James’s Square
London
SW1Y 4JR
United Kingdom
T: +44 (0)20 7434 1122
F: +44 (0)20 7434 1123
E: info@impaxam.com
@ImpaxAM
Impax Asset Management
www.impaxam.com
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