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01 Highlights
02 At a Glance
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03 Our Investment Approach
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CELEBRATING
20
YEARS
INVESTING IN THE
TRANSITION TO A
MORE SUSTAINABLE
GLOBAL ECONOMY
Click here to go directly
to the Strategic Report.
GOVERNANCE AND FINANCIAL REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Click here to go directly
to the Governance and
Financial Report.
1998
2018
1998
2018
CELEBRATING
Click here to print the
Strategic Report.
20
YEARS
INVESTING IN THE
TRANSITION TO A
MORE SUSTAINABLE
GLOBAL ECONOMY
Click here to print
the Governance and
Financial Report.
1998
2018
CELEBRATING
20
YEARS
INVESTING IN THE
TRANSITION TO A
MORE SUSTAINABLE
GLOBAL ECONOMY
IMPAX SPECIALISES IN INVESTING
IN THE TRANSITION TO A MORE
SUSTAINABLE GLOBAL ECONOMY
OUR MISSION
Our mission is to generate superior, risk-adjusted investment returns from opportunities arising
from the transition to a more sustainable economy for clients with a medium to long-term horizon.
We provide a stimulating, collaborative and supportive work-place for our staff, and make a
contribution to the development of a sustainable society, by supporting or undertaking relevant
research and engaging or collaborating with others.
20 YEARS AS
PIONEERS IN
OUR FIELD
ONE OF THE
LARGEST
INVESTMENT
MANAGERS
INVESTING IN THE
SUSTAINABLE
GLOBAL
ECONOMY
PROVIDING
ACCESS TO
A BROAD
RANGE OF
INVESTMENT
STRATEGIES
A STRONG
COMMITMENT TO
GOING BEYOND
INVESTMENT
RETURNS
More on page 07
More on page 10
More on page 12
More on page 13
CONTENTS
Overview
01 Highlights
02 At a Glance
03 Our Investment Approach
Strategic Report
04 Our Key Strengths
06 Chief Executive’s Report
14 Q&A with the Chief Executive
16 Our Approach to Creating
Shareholder Value
17 Key Performance Indicators
18 Financial Review
21 Our People
24 Senior Management Team
26 Our Commitment to
Corporate Responsibility
Naming of companies in this document
For simplicity we use the following short forms in the place of the legal company
entity names in this document and the Governance and Financial Report.
Impax Asset Management Group plc is referred to throughout as “Impax”
or the “Company”.
In January 2018, Pax World Management LLC was acquired by Impax and has been
re-named Impax Asset Management LLC. This company is based in Portsmouth, New
Hampshire and we refer to it as “Impax NH”. Impax NH is the manager of Pax World Funds.
Impax Asset Management Ltd and Impax Asset Management (AIFM) Ltd manage or
advise listed equity funds and accounts, and the Real Assets division. The majority of
this business is based in London so we refer to it as “Impax LN”.
31 Risk Management and Control
31 Principal Risks and Uncertainties
34 Auditor’s Statement
2018 HIGHLIGHTS
| 01
FINANCIAL HIGHLIGHTS
BUSINESS HIGHLIGHTS
AUM1
£12.5BN
+72%
(2017: £7.3BN)
2018
2017
£12.5bn
£7.3bn
ADJUSTED
OPERATING
PROFIT
£20.0M
+114%
(2017: £9.3M)
PROFIT
BEFORE TAX
£14.6M
+147%
(2017: £5.9M)
SHAREHOLDERS’
EQUITY
CASH
RESERVES
£52.6M
+48%
£24.6M
+20%
(2017: £35.6M)
(2017: £20.4M)
1 Assets under management and advice as at 30 September 2018
REVENUE
£65.7M
+101%
(2017: £32.7M)
ADJUSTED
EARNINGS PER
SHARE2
12.4P
+110%
(2017: 5.9p)
DIVIDEND
PER SHARE4
DIVIDEND
SPECIAL
+2.6P
4.1P
+41%
(2017: 2.9p)
CELEBRATING
20 YEARS of
success as pioneers
of investing in
the transition to a
more sustainable
economy
Integration
of Impax NH
and STRONG
ORGANIC
GROWTH in
North America
Continuing
LONG-TERM OUT-
PERFORMANCE
of our major
investment
strategies3
Continuing
NET INFLOWS
and encouraging
mandate pipeline
FINAL CLOSE
of our third
private equity
infrastructure fund
WINNER
“Best Company
To Work For
In Investment
2018 Awards” by
Investment Week
2 Adjusted operating profit is shown after removing the effects of non-recurring acquisition costs, ongoing amortisation of
intangibles acquired, one-off tax credits and mark-to-market effects of National Insurance on equity award schemes. A
reconciliation of the International Financial Reporting Standards (“IFRS”) and adjusted KPIs are provided in note 5 of the
financial statements
3 Versus environmental indices
4 Proposed
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 02
AT A GLANCE
WHO WE ARE
OUR INVESTMENT PHILOSOPHY
WHAT WE DO
Impax is a specialist asset
manager investing in the
opportunities arising from the
transition to a more sustainable
global economy.
Impax Asset Management was
founded in 1998 and has been a
pioneer in the development of
investing in the transition to a
more sustainable global economy.
The Company now manages or
advises on £12.5 billion (US$16.3
billion)1 of assets in both listed and
real asset strategies which makes
us one of the largest investment
managers dedicated to investing
in these markets globally.
FIGURE 1: Our distribution network
At Impax, we believe that
capital markets will be shaped
profoundly by global sustainability
challenges, including climate
change, pollution and essential
investments in human
capital, infrastructure and
resource efficiency.
These trends will drive growth
for well-positioned companies
and create risks for those unable
or unwilling to adapt.
Fundamental analysis which
incorporates long-term risks,
including environmental, social
and governance (ESG) factors,
enhances investment decisions.
We invest in companies and
assets that are well positioned to
benefit from the shift to a more
sustainable global economy.
We offer a well-rounded suite of
investment solutions spanning
multiple asset classes seeking
superior risk-adjusted returns over
the medium to long-term.
Across our investment portfolios,
we seek higher quality companies
with strong business models that
demonstrate sound management
of risk.
Portland
London
Portsmouth
New York
Impax LN
Impax NH
Hong Kong
1
Assets under management and
advice as at 30 September 2018
ACCESSING OUR INVESTMENT
STRATEGIES
We have an established global
network of products and
distributors, for example:
NORTH AMERICA
Pax World Funds
Impax funds platform (Delaware)
NEI Investments
Desjardins Global Asset
Management
Mackenzie Investments
UK/IRELAND
Impax UCITS platform (Ireland)
IEM plc
White label accounts (Private
wealth managers)
EUROPE
ASN Bank
BNP Paribas
Absalon Capital
ASIA PACIFIC
BNP Paribas in Hong Kong
and Australia
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY OUR INVESTMENT APPROACH
OVERVIEW
Specialist manager,
20 years’ experience
52 investment team
members (UK, US, HK)
Global distribution and
client relations
High quality investment
solutions for institutional
and individual investors
Partnership approach
with clients
Thematic Equities £9bn
Unconstrained
Equities £1.2bn
£12.5BN
AUM1
Smart Beta £995m
Fixed Income £835m
Real Assets £450m
London Managed
US Managed2
THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
FROM…
A DEPLETIVE
ECONOMIC MODEL
FINANCIAL RETURNS BY
EXTERNALISING SOCIAL
AND ENVIRONMENTAL
COSTS
FRAGILE BUSINESS
MODELS
TECHNOLOGY
REGULATION
CUSTOMER
PREFERENCES
SOCIAL FACTORS
| 03
PARTNERSHIP APPROACH
IMPAX OFFERS SOLUTIONS IN:
We seek to work in partnership
with our clients to go beyond
the delivery of long-term
superior financial returns.
To do this we offer:
Dedicated client service and
financial reporting
Thought leadership research to
continue building our industry
Collaborative engagement and
stewardship
Impact reporting
TO...
A SUSTAINABLE
ECONOMIC MODEL
GROWTH WITH
IMPROVED SOCIETAL
AND ENVIRONMENTAL
OUTCOMES
EQUITIES
Thematic equities: investing
in environmental solutions
Unconstrained equities:
durable companies identified
by the Impax Lens
Smart beta
FIXED INCOME
Core Bonds
High Yield Bonds
DURABLE BUSINESS
MODELS WHICH CAPTURE
OPPORTUNITIES OR AVOID
EMERGING RISKS
REAL ASSETS
Renewable energy
infrastructure
1
As at 30 September 2018. Assets under advice represent approximately 3%. Total of asset classes may differ due to rounding
2 US managed AUM refers to Pax World Funds. Impax acquired Pax World Management LLC on 18 January 2018. Company and AUM history includes
private equity/sustainable property funds, and non-discretionary accounts which are not included as part of Impax’s GIPS compliant business
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 04
OUR KEY STRENGTHS
20 YEARS OF SUCCESS
Our business growth and milestones1
One of the largest
global asset managers
specialising in investing
in the transition to a more
sustainable economy.
Clear investment
philosophy and rigorous
process.
The successful acquisition
of Impax NH in 2018
significantly enhances our
footprint in the US.
£12.5BN
ASSETS UNDER
MANAGEMENT
More on
page 07
Establishing
the business
Scale up to
critical mass
Consolidation
and investment
Next stage
of AUM growth
With Impax NH
acquisition
1998 15
1999 20
2000 39
2001 38
2002 55
2003 66
2004 69
2005
214
2006
429
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
982
1,099
1,265
1,823
1,896
1,828
2,197
2,755
2,823
4,502
7,261
3,0152
12,515
1 AUM shown as at end of financial years to 2018
2 AUM of Impax NH at acquisition on 18 January 2018 (no double count of Pax World Global Environmental Markets fund)
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY AN ACKNOWLEDGED
GLOBAL BRAND
LEADER
Large, experienced,
stable specialist
investment team.
Managing assets for
some of the world’s
largest investors.
Offices in UK, US and
Hong Kong for effective
global coverage.
PARTNERSHIPS WITH
OUR CLIENTS TO
DELIVER MORE THAN
SUPERIOR INVESTMENT
RETURNS
Commitment to client
service and clear and
transparent reporting.
Continuing development
of our thought leadership
work including focused
collaborative engagement
activities, impact reporting
and stewardship services.
A SCALABLE BUSINESS
WITH A WIDE RANGE
OF INVESTMENT
STRATEGIES
Our strategies are scalable
and have significant
capacity for expansion.
In 2018 the Global
Opportunities strategy
achieved a strong three
year track record and
is attracting significant
investor attention.
New strategies through the
acquisition of Impax NH.
In the UK and US we
have our own sales
teams which sell our
funds to institutional
and intermediary clients.
Throughout Europe,
Asia and also in the US
and Canada, we have
effective long-term
relationships with several
distribution partners.
| 05
A SUCCESSFUL
GLOBAL DISTRIBUTION
NETWORK
BUILDING VALUE
FOR ALL OUR
STAKEHOLDERS
We continue to deliver
compelling financial
results against our KPIs,
which has enabled us to
increase our dividend per
share significantly over
the last 10 years.
High levels of staff
engagement and
a commitment to
retaining talent.
Increasing our financial
support and growing
participation with our
philanthropy partners.
12.4PENCE
EARNINGS PER SHARE1
52
MEMBERS IN
OUR SPECIALIST
INVESTMENT TEAM
More at
www.impaxam.com/
about-us/team/impax-
asset-management-
group-plc/listed-equity
109
CORPORATE
ENGAGEMENTS
IN 2018
More on
page 28
1 Diluted adjusted
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018
15
INVESTMENT
STRATEGIES
30+
COUNTRIES
More at
www.impaxam.com/
strategies-funds
More on
page 09
More at
www.impaxam.com/
investor-relations
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 06
CHIEF EXECUTIVE’S REPORT
I’m pleased to report another period of strong
growth, underpinned by significant net inflows.
Asset owners around the world are increasingly
seeking investment exposure to the sustainable
economy, and Impax continues to build an
encouraging mandate pipeline.”
Ian R Simm
Chief Executive Officer
AUM
£12.5BN
(2017: £7.3BN)
STRONG GROWTH IN 2018
2018 has been a particularly exciting
year for Impax, and the Company
has grown considerably. Notably,
we completed the acquisition of Pax
World Management LLC (“Impax
NH”) which significantly enhanced
our presence in the US, and which
we believe makes Impax one of
the largest investment managers
globally, focused on the transition to
a more sustainable economy.
During the twelve months ending
30 September 2018 (the “Period”),
Impax’s assets under discretionary
and advisory management
(“AUM”) increased by 72 per cent
to reach £12.5 billion. For the third
consecutive year we have achieved
a significant increase against all our
key performance indicators (“KPIs”)
which are detailed on page 17 of the
Strategic Report.
At 30 November 2018, AUM were
£12.2 billion, reflecting the fall in
equity markets in October. However,
our funds have performed well
over the last two months and we
have continued to see new inflows
from investors.
CELEBRATING 20 YEARS
AND MAJOR MILESTONES
Since our inception in 1998 we
have established a global brand
and pioneered investing in the
transition to a more sustainable
global economy, with the objective
to deliver superior, long-term
investment returns. We see many
compelling investment opportunities
arising from disruptions through
technology innovation and falling
costs, regulation to incorporate the
costs of social and environmental
factors in business models and, not
least, shifts in consumer preferences
for more transparent, authentic and
healthier products. Our expertise
has given us insights across large
swathes of private sector activity and
our long performance record and
large, specialist investment team have
proved attractive for asset owners
seeking exposure to these rapidly
growing markets. Over the Period we
took on a significant number of new
client accounts.
Our investment thesis has evolved from
a focus in the late 1990s on micro/
small cap “Environmental Technology”
stocks to, by 2007, a broader review
of all sizes of company across
“Environmental Markets”, and then
progressing to “Resource Efficiency”,
spanning the energy, water, waste and
sustainable food industries from 2012.
We place high importance on investing
to develop our research and thought
leadership collaborations to help
leverage our “early mover” position
in these markets.
As the global economy shifts to
become more sustainable, the set
of related investment opportunities
is expanding rapidly; in 2015 we
launched our Global Opportunities
strategy to provide our clients with
access to this broader investment
universe. This strategy has now
achieved an impressive three year
track record and has already attracted
significant interest from clients.
Since our inception in
1998 we have established
a global brand and
pioneered investing
in the transition to a
more sustainable global
economy.”
| 07
2018
2016
2015
2014
2013
2012
2010
2008
2007
2005
2002
2001
1999
1998
Impax acquired Pax World Management LLC (Impax NH)
AUM surpassed £10bn milestone
Final close of third private equity infrastructure fund, Impax New Energy Investors Fund III
Winner: Investment Week’s “Best Place To Work In Investment 2018” Award
Impax surpassed £5bn AUM, Smart Carbon research published
Impact methodology launched
Portland, Oregon office established
Impax received a Queen’s Award for Enterprise: Sustainable Development
Impax named Sustainable Investor of the Year at FT/IFC Sustainable Finance Awards
New York office established
Launch of second private equity infrastructure fund, Impax New Energy Investors Fund II
SEC registration and launch of first fund for US investors
BNP Paribas Asset Management Holding became a shareholder; Hong Kong team established
Launch of first private equity infrastructure fund, Impax New Energy Investors Fund I
First own-label listed equity fund launched: Impax Environmental Markets plc
Floated on the London Stock Exchange’s Alternative Investment Market (AIM) subsequently
renamed Impax Asset Management Group plc
First listed equity strategy launched with advisory contract for Alm. Brand Invest in Denmark
Impax Asset Management founded with mandate from
the International Finance Corporation (IFC)*
As we celebrate our
20th anniversary we review
the notable milestones we
have achieved, and how
we can build on these
for future success.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018
CHIEF EXECUTIVE’S REPORT CONTINUED
| 08
The 20 year transformation
of Environmental Markets
>50% revenue exposure to Environmental Markets
20% – 50% revenue exposure to Environmental Markets
>20% revenue exposure to Sustainable Food
FIGURE 1: The development of Environmental Markets1 (number of stocks)
2018
2012
1,100
400
500
2,000
900
400
200
1,500
2007
450
250
700
1999
250
9
DRIVERS AND OPPORTUNITIES
The long-term drivers of the transition
to a more sustainable global economy,
namely the expanding global
population, rising living standards,
natural resource constraints and
climate change continue to underpin
our investment approach.
Climate change is likely to be one of
the most serious risks to the long-
term value of investment portfolios.
The five warmest years on record
have all occurred in this decade2 and
the oceans also appear to be warming
at an alarming rate. In 2018 we
witnessed many more severe weather
events around the world, with
devastating forest fires in California
and Australia, while the 2017–18
hurricane season was one of most
catastrophic on record.
It is estimated that three billion
people currently live in regions
where water is scarce, a figure that
is projected to rise to five billion by
20503. There is an urgent need to
conserve, treat and recycle limited
and increasingly polluted water
supplies. Meanwhile, we face a global
public health crisis posed by obesity
and diabetes.
Air pollution also continues to
dominate headlines, both in Asia and
much closer to home, where many of
the UK’s cities now regularly report
levels of pollution that are damaging
to human health. Furthermore, in the
last quarter of 2017, the acclaimed
BBC documentary Blue Planet
2, brought the shocking levels of
plastic pollution in the oceans to the
public’s attention.
1 As defined by FTSE
2 National Oceanic & Atmospheric Administration
3 United Nations
The demand for products and
services that are providing solutions
to the challenges of climate change,
pollution and public health issues
is growing rapidly. Impax aims to
provide investors with access to the
best companies that are positioned to
benefit from these global shifts.
We have always aimed to sustain
an excellent working environment
based on effective engagement, so
we were proud to be one of only
three asset managers to be awarded
the prestigious accolade of “Best
Company To Work For In Investment
2018” by Investment Week.
OUR DEDICATED TEAM
Our success is attributable to the
expertise and dedication of our staff.
We have one of the most experienced,
specialist, global teams in the sector.
We believe in the importance of long-
term incentives for our employees and
will continue to encourage significant
share ownership through the use of
employee share schemes. In January,
we were delighted to welcome
our former distribution partners in
Portsmouth, New Hampshire, as our
new colleagues at Impax NH.
More on page 23
Our growth and US expansion will
further enhance our ability to offer
exciting career opportunities for our
staff.
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
FUND FLOWS AND DISTRIBUTION
As set out in Figure 2 below, we continued to see strong net inflows from investors around the world into our
investment strategies. During the Period we received £1.5 billion in net new client allocations. In January 2018
the Global Opportunities strategy reached an important milestone of a strong three-year performance record, and
consequent interest from several institutional investment consultants.
FIGURE 2: AUM and fund flows
Impax Asset Management Ltd
Impax Asset Management AIFM Ltd
(Impax LN)
Impax Asset
Management LLC
(Impax NH)
AUM movement 12 months
to 30 September 2018
Total AUM at 30 September 2017
Impax LLC acquisition
Net flows
Market movement, FX and performance
Total AUM at 30 September 2018
1 Real Assets comprise Private Equity and Property funds
Thematic
equity funds
£m
Real
asset funds1
£m
6,788
–
1,721
515
9,024
473
–
(27)
4
450
Fixed income,
smart beta, US
equity funds
£m
–
3,474
(118)
288
3,644
Reconcilliation2
£m
Total firm
£m
–
(459)
(117)
(27)
7,261
3,015
1,459
781
(603)
12,515
2 Avoidance of double count of Pax World Global Environmental Markets Fund and Pax World Global Opportunities Fund
| 09
We continued to see
strong net inflows
from investors around
the world.”
In June, we launched a new US
mutual fund on the Pax World
Funds platform based on this
strategy; and the following month, St
James’s Place, a leading UK wealth
manager, announced that it would
switch its existing ethical fund to
the Global Opportunities strategy.
We have also recently launched a
segregated mandate based on Global
Opportunities for an Australian
pension fund.
In the UK we have seen renewed
interest from investors in our Irish
UCITS fund platform, with material
growth in both our Asia and Leaders
strategies. The growth of this Leaders
Fund has enabled us to redeem the
seed capital we allocated at launch
less than three years ago. Towards
the end of the Period, the share price
of our UK investment trust, Impax
Environmental Markets plc, returned
to a premium to net asset value
reflecting increasing demand from
private wealth managers and retail
investors. We continue to see strong
flows into the funds we manage in
Continental Europe for BNP Paribas
Asset Management, particularly the
Water strategy which had net inflows
of over £740 million during the year
and at Period end reported an AUM
of some £3.3 billion. We have also
taken on the sub-management of the
Parvest Green Tigers fund, a BNP
Paribas Asset Management sponsored
SICAV targeting Asian environmental
markets. In September, Impax was
awarded a new mandate based on the
Leaders strategy to advise on Better
World, a new fund established by
Absalon Capital in Denmark.
In North America we received
significant inflows from the
institutional channel and our white
label relationships in Canada.
However, the Pax World Funds range
saw slightly negative net flows in
spite of strong inflows into the Pax
Global Environmental Markets Fund
and the Pax Ellevate Global Women’s
Leadership Fund.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 FIGURE 3: Growth in US assets
2018
2017
2016
£898m
£583m
2015
£174m
2014
£248m
£4,193m
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
THE BIG LEAP
FORWARD IN
THE US
We have marketed our products
in the US for over a decade,
and since 2011 have focused on
steadily building our team and
resources. This year we have
made a big leap forward there
with both strong organic growth
and the acquisition of Impax
NH. This acquisition, which
completed this January, added
£3.0 billion to our AUM, and
has expanded our investment
capabilities, particularly in fixed
income and smart beta.
The acquisition was predicated
not on cost savings but on
expanding our offering to current
and potential new clients. The
integration plan was designed
to enhance the effectiveness of
the combined team. Initially we
have focussed on establishing
strong communication between
the Client Service and Support
teams. Over time, we also
anticipate closer collaboration
and knowledge sharing between
the investment teams.
Impax now has a significantly
enhanced footprint in North
America and Europe in terms
both of our staff (47% of whom
are now based in the US in our
offices in Connecticut, Portland,
Oregon and Portsmouth,
New Hampshire), and in the
geographical breakdown of our
AUM. This critical mass gives
us a broad view of regional
investment opportunities and
more extensive resources to
support client service.
We continue to see significant
and growing interest from
investors in the US in investing
in the transition to a more
sustainable economy.
CHIEF EXECUTIVE’S REPORT CONTINUED
INVESTMENT PERFORMANCE
Listed Equity
We continue to build on the strong,
long-term investment performance
in the Impax Listed Equity division.
Over three and five years our major
strategies have out-performed their
global benchmark, the MSCI All
Country World Index (“ACWI”). During
the Period our listed equity strategies
delivered strong performance versus
their environmental benchmarks but
lagged the ACWI. Our stock selections
generally proved successful and
relative underperformance (versus
ACWI) was mainly attributable to
the sectors that are not part of our
investment universe; for example, IT
and consumer discretionary stocks
were particularly strong, as were
traditional energy companies as the
oil price rose.
Our Global Opportunities strategy,
with its exposure to a number of
strongly performing sectors including
IT, healthcare and some financials,
returned 20.4%1 over the Period,
outperforming the ACWI which
was up by 12.9%2. Since launching
in December 2014, this strategy
has generated returns of 75.6%1
(ACWI: 62.1%2).
During the Period, performance of
the Pax World Funds, the mutual
fund strategies managed by Impax
NH, was mixed. For example, the Pax
Large Cap Fund and Pax Ellevate
Global Women’s Leadership Fund
outperformed their respective
benchmarks, while the Small Cap
and Mid Cap funds underperformed.
Real Assets
Our private equity infrastructure
business focused on renewable
energy continues to produce
attractive returns for investors.
The planned wind down of our
second fund, Impax New Energy
Investors II (“NEF II”) has progressed
well. During the Period we sold this
fund’s operating assets in Ireland
and Italy, as well as a development
business in France, generating €109
million. We plan to sell the remaining
portfolio assets over the next year
and wind up the fund.
With a successful track record for
NEF II and an attractive investment
case over the coming decade, we
concluded the fund raising for Impax
New Energy Investors III (“NEF
III”), which held its final close on 31
May 2018 with total assets of €357
million (£313 million). This fund is
implementing the same value-added
strategy as NEF II. We have already
committed over €140 million to new
wind projects in France and Germany
and hydro power in Norway and
are reviewing a strong pipeline of
interesting opportunities.
1
2
As at 30 September 2018, cumulative gross returns in sterling
As at 30 September 2018, cumulative total net return in sterling (net dividend reinvested)
DELIVERING A PARTNERSHIP
BEYOND INVESTMENT RETURNS
Impax’s investment philosophy
leads us to focus on opportunities
emerging over the medium to long-
term, particularly those whose
asset prices do not yet reflect
their potential.
We believe that long
term investing is
enhanced by proactive
stewardship of assets
and in a partnership
approach between the
asset manager and
asset owner.”
Increasingly, our clients are
acknowledging the value of our work
in engagement, impact reporting
and thought leadership. This year
we also have increased our funding
for a small number of closely aligned
environmental charities (see pages
26–27) as we have seen how valuable
this involvement can be, for both
staff development opportunities and
engagement, as detailed on page 21
and for our brand.
| 11
DEVELOPMENTS AFFECTING
THE INVESTMENT MANAGEMENT
SECTOR
We are preparing for the Senior
Managers & Certification Regime
(“SM&CR”), which will apply to Impax
from 9 December 2019. We believe
that our governance arrangements
are well positioned and will only
require modest enhancement.
In order to prepare for the Brexit
scenarios that appear plausible at the
time of writing, we are in advanced
discussions with the Central Bank
of Ireland to establish a locally-
regulated, Irish subsidiary, through
which some of our EU business may
be routed. Post Brexit we estimate
that less than 10% of our AUM
would be re-contracted through
this subsidiary; we believe that the
operational impact of Brexit on the
business would be manageable and
that the financial impact, including
foreign exchange exposure, would
be immaterial.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 12
MARKETING OUR GLOBAL
OPPORTUNITIES STRATEGY
As the shift to a more sustainable
economy has gained momentum
in recent years, we have continued
to expand our search for compelling
investment prospects. For example,
the growth in consumer preference
for more natural food ingredients,
rapidly rising financial inclusivity
in developing countries, and the
transition towards diagnostic tools
and more personalised medical care
is giving rise to numerous interesting
investment opportunities.
In 2014 we launched our Global
Opportunities strategy offering
clients access to a broader
investment universe across markets
and sectors in companies possessing
sustainable competitive advantages.
Now that the strategy can
demonstrate a three-year track
record of out-performance versus
its benchmark, the MSCI All Country
World Index (“ACWI”), we are
expanding our communications with
potential investors and we expect to
receive initial significant allocations
to the strategy by the end of 2018.
CHIEF EXECUTIVE’S REPORT CONTINUED
OUTLOOK
Impax is well-positioned to continue
to deliver long-term value to clients
and shareholders. In the shorter-
term we expect a somewhat softer
global economy and steadily rising
interest rates in many regions, a
situation that may impact global
equity markets. Over 20 years we
have managed capital through
two major downturns; we believe
that many of our clients are taking
a long-term view when investing
with us, and we therefore expect
our business to be resilient as
asset allocators respond to
new information about shorter-
term trends.
Since Impax’s inception in 1998,
the transition to a more sustainable
global economy has accelerated as
demand for products and services
that address the consequences of a
more crowded planet has expanded
dramatically. With over 20 years of
experience, there is now compelling
evidence that our investment
philosophy can enhance the
discovery of attractive investments.
Against this backdrop, we are
confident that Impax can continue
to deliver excellent results for all our
stakeholders over decades to come.
Ian R Simm
5 December 2018
| 13
BEYOND INVESTMENT RETURNS
COLLABORATIVE ENGAGEMENT:
we seek to improve the companies
and markets in which we invest
through our engagement and policy
work. This year we published our first
Engagement Report, highlighting
our main engagement themes and
milestones. We also work with
companies to help them develop
processes and improve disclosure to
address sustainability challenges. Our
engagement work is often undertaken
in collaboration with others, including
our clients.
IMPACT REPORTING: over the
last four years we have advanced
our methodology and published
quantitative metrics to demonstrate
the environmental outcomes of several
of our investment portfolios. In 2017
we extended the scope of this work
to show clients how their investments
are aligned with the United Nations
Sustainable Development Goals.
In 2018, as well as continuing to
report metrics for our small/mid cap
(“Specialists”) and all cap (“Leaders”)
strategies, we reported the impact
metrics of our Asia-Pacific strategy
for the first time.
THOUGHT LEADERSHIP WORK ON
CLIMATE RISK: we continue to refine
our Smart CarbonTM methodology,
a scenarios-based approach to
identifying and measuring climate
risk in investment portfolios
which we launched in 2015. This
methodology is well aligned with
the recommendations of the Task
Force on Climate-related Financial
Disclosure (“TCFD”), which reported
in 2017. We encourage companies
to develop consistent climate-
related financial risk disclosures
to their stakeholders.
SUPPORTING OTHERS IN OUR
COMMUNITY: we believe that
targeted, philanthropic giving can
be highly beneficial for our staff and
brand as well as for the recipients.
Our two major commitments are
to Ashden, a charity that works
in the fields of sustainable energy
and development and ClientEarth,
a not for profit law firm which uses
the power of the law to protect
people and the planet. We detail our
charitable involvement with these
organisations on pages 26–27.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
Q&A WITH THE CHIEF EXECUTIVE
| 14
Q How has your investment
philosophy and approach
changed over the last 20 years?
Q Why do you believe there has
been such a significant growth
in investor interest in the transition
to a more sustainable economy? Do
you think this will continue?
AAlthough we continually refine
and evolve our investment
process, our investment philosophy
has essentially remained the same
over two decades. As the global
economy shifts to become more
sustainable, the set of related
investment opportunities is
broadening and deepening. This
larger universe provides greater
opportunities for active investment
management.
A Over the last 20 years we have
seen rapidly growing interest
and appreciation of both the risks of
investing in the traditional, depletive
economy, as well as new investment
opportunities across many market
sectors. The drivers of a rapidly
expanding population, rising living
standards and climate change are
indisputable. Investors also recognise
many catalysts for investment,
including new environmental policies,
the higher incidence of catastrophic
weather events and regular media
coverage of severe air pollution in our
cities and plastics in our oceans.
Yes, I believe momentum in this
area will continue to build. Investors
understand that many companies
offering solutions to environmental,
public health and related issues in
both developed and developing
countries should deliver superior,
long- term growth compared to
broader equity markets.
Q What was the strategic rationale
for acquiring Pax World
Management LLC (Impax NH)?
A The acquisition brought together
two pioneering firms with
highly complementary investment
capabilities and built on a successful
ten year relationship and similar
business cultures. The combined
business is now one of the largest
investment managers focused on
the transition to a more sustainable
economy. We believe that the
acquisition, which has been earnings-
enhancing in the first year, will
underpin value over the long-term
for all our stakeholders.
Q Your financial accounts are
complex this year following the
acquisition of Impax NH, can you
explain the “reconciliation”?
A The acquisition has enhanced our
earnings significantly. However,
we incurred a number of “one off”
costs related to the transaction which
have had an impact on our operating
profit, profit before tax and earnings
per share. We are reporting these
financial results on both a non-
adjusted and an adjusted basis. The
latter excludes the non-recurring
items so it gives our shareholders a
consistent measure of performance
over time. More details are given in
note 5 on page 31 of the Financial
and Governance Report.1
Q How much has the acquisition
added to the bottom line
this year?
A Impax NH has contributed
adjusted operating profit of
£2.3 million and has added 1.7p to
adjusted earnings per share.2
further acquisitions?
Q Do you have plans to make any
A We believe that our current range
of investment strategies has
significant growth potential and there
are no plans for additional acquisitions.
In future, we may consider adding teams
or small units from other firms if they
could enhance our offering to clients.
1
In addition, when reporting AUM we avoid double counting of Pax World Global Environmental Markets Fund and Pax World Global Opportunities Fund
2 Net of finance costs
Q Investors will undoubtedly be
pleased by your increasing
dividend, what are your plans for
future dividend growth?
A Since we paid our first dividend
in 2008, the success of the
business has enabled us to increase
our dividend per share every year.
We are committed to continuing
this trend.
Q How does your 2018 AUM
growth split between
investment performance and new
client money?
A Investment performance across
our investment strategies added
£781 million to our AUM (2017: £655
million). 2017 was a record year for
inflows which totalled £2.1 billion,
while this year new allocations totalled
£1.5 billion. The acquisition of Impax
NH added £3.0 billion to our AUM on
completion in January.
Q Which have been your strongest
performing investment
strategies and why?
A We are long-term investors.
Over three and five years all
our major thematic equity strategies
have out-performed their global
benchmarks. For the Period, our best
performing equity strategy was Global
Opportunities which delivered returns
of 20.4%1 compared to its benchmark
the MSCI All Country World Index
(“ACWI”) which returned 12.9%2. This
“unconstrained” strategy invests in
a broader investment universe than
our thematic equity products and
the strong performance was largely
attributable to successful stock
selection in high growth companies
that are clearly benefiting from the
transition to a more sustainable
economy. For example some of our
best performing holdings were in
companies supplying components
for electric and hybrid vehicles,
digital payments systems and cyber
security companies.
scalable?
Q Are your investment strategies
A Yes, we have focused on a
small number of scalable
strategies. This allows us to expand
our business without a proportional
increase in costs and reflects clients’
preference that the investment team
is paying close attention to running
their money.
Q Which investment strategies
are attracting the most
investor interest and from which
geographical regions?
A In Europe we continue to receive
major new allocations to our
Leaders (global, all cap) strategy and
Water strategy. Investors around the
world are also showing significant
interest in our Global Opportunities
strategy. Within less than a year of
marketing this strategy proactively
we have seen commitments from
a number of major investors, and
current AUM3 of the strategy was £317
million. We have also expanded our
institutional client base in the US.
Q Do you have plans to launch
any of the Impax NH strategies
outside the US?
A In the medium to longer-term,
we expect to see investor
demand outside the US for products
based on the expertise and
experience of the Impax NH team.
the real assets business?
Q What are your plans for
A Our third private equity
infrastructure fund closed to
further investor allocations in May
2018. We raised €357 million in this
fund and our current focus is to deploy
this money in attractive assets in the
target European countries. This fund
will, like its predecessors, have a life of
ten years. In time we’d expect to return
to the market for a fourth fund.
1
2
As at 30 September 2018, gross cumulative returns in sterling
As at 30 September 2018, total net returns in sterling (net divided reinvested)
3 As at 4 December 2018
Q What have been the key
regulatory announcements and
market trends that have affected
your investments this year?
A We continue to see an increasing
number of tighter environmental
regulations announced by governments
around the world.
This year there were a number of
initiatives to curb single use plastics
from governments in developed and
developing countries. For example, the
European Commission set out initiatives
to increase recycling of plastic
packaging in a “plastics strategy”,
while in the UK, the Prime Minister also
declared a “war on plastic waste” as
part of a 25-year environmental plan.
In a major move to reducing CO2
emissions, we saw the State of
California approve a bill which aims
to make the state carbon neutral by
2045. Meanwhile, the EU has agreed
that 32% of its energy will come from
renewable sources by 2030. In July,
China’s State Council issued a three
year “Blue Skies” air pollution action
plan. This aims to make significant
improvements in air quality by
curbing harmful pollutant gases and
particulates by 2020.
These changes will be favourable for
companies active in areas of the market
in which we invest such as energy
efficiency, pollution control, recycling
and alternative materials.
| 15
Q How well positioned is Impax
to weather a significant global
recession?
A Given that our equity and fixed
income products are broadly
correlated with the market, we would
probably see a reduction in our AUM
and earnings in a recession.
However, the companies in which
we invest are well-managed and
the majority have low levels of debt,
and therefore should be able to
outperform their peers in a recession
or a climate of rising interest rates.
In addition most of our clients take
a medium to long-term view of
their investments and accordingly,
we would expect outflows to be
relatively modest.
Q Are you confident that you
have the appropriate business
culture and corporate values across
the business to continue to grow the
Company in the coming years?
A Very much so. We are committed
to sustaining and further
developing our strong culture.
Our key asset is our staff, and staff
engagement is a high priority.
Recent staff surveys and ongoing
feedback are very positive, and
we were proud to be one of only
three asset managers awarded the
accolade of “Best Company To
Work For In Investment” in 2018 by
Investment Week.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 16
OUR APPROACH TO CREATING SHAREHOLDER VALUE
OUR APPROACH
PROGRESS THIS YEAR
OUR PLANS FOR THE FUTURE
Invest by seeking price
inefficiencies in high growth
markets.
Development of deep expertise in investing in
companies set to benefit from the transition to
a more sustainable global economy.
Focus on a small number of
highly scalable investment
strategies.
Fundamental analysis which incorporates long-
term risks, including environmental, social and
governance (ESG) factors.
With the integration of Impax NH, we now offer
strategies across five areas – Thematic Equities
(Active), Equities (Smart Beta), Unconstrained
Equities, Fixed Income and Real Assets. We
would consider launching a small number of
complementary strategies.
We continue to deliver strong long-term
investment performance. For example, Impax
New Energy Investors II has now realised
over 95 per cent of its portfolio and reported
strong returns.
Focus on sharing investment
expertise and best ideas across
all strategies.
Continued significant interest from investors
around the world, £1.7 billion of net inflows.
Global Opportunities strategy now established;
St James’s Place announced an initial allocation
of £286 million.
Impax NH launched a US mutual fund based on
the strategy.
Roll out existing strategies.
Further develop Smart Beta
offering. Extend Fixed Income
strategies.
Build and extend a flexible
distribution architecture.
Continuous development of our marketing and
client service capabilities in the UK and US to
ensure effective communication with our clients and
maximise opportunities for new business.
The activities of the sales and marketing teams
of Impax LN and Impax NH are coordinated.
A new corporate brand identity developed for
the combined firm.
Continued investment into
marketing and client service
capabilities. Establish new
partnerships to complement our
successful existing relationships.
Attract and retain highly
qualified individuals.
We prioritise investment in our staff and aim to
empower team members to reach their full potential.
Ongoing improvements around staff
development and talent management.
Significant increase to expenditure on staff
training. Winner of “Best Company to Work
For In Investment 2018” award.
Continue to measure, review and
improve our global employee
engagement, seeking to maintain
and further motivate our staff.
Balance tight cost control
with the needs of an
expanding business.
Manage and optimise a scalable platform for growth,
including a core team, business systems
and processes, and infrastructure.
Common IT platforms implemented across
investment management, finance and HR.
Strong cost controls contributing to a rising
operating margin.
Invest to support business
expansion.
KEY PERFORMANCE INDICATORS
We use a number of key performance indicators (“KPIs”) to measure our performance.
| 17
AUM
£12.5BN
REVENUE
£65.7M
2018
2017
2016
£12.5bn
£7.3bn
£4.5bn
2015
£2.8bn
2014
£2.8bn
2018
2017
2016
2015
2014
£32.7m
£21.1m
£19.7m
£20.4m
ADJUSTED OPERATING PROFIT1
ADJUSTED DILUTED EARNINGS
PER SHARE1
DIVIDEND
£20.0M
£65.7m
2018
2017
£20.0m
£9.3m
2016
£4.2m
£12.4P
2018
2017
2016
5.9p
3.6p
2015
£3.1m
2015
3.1p
2
4.1P
INTERIM
3
+2.6P
FINAL
SPECIAL
12.4p
2018
1.1
3.0p
2.6p
6.7p
2017
2016
2015
2.9p
2.1p
0.5p3
2.1p
2014
£5.3m
2014
2.8p
2014
1.4p
Revenue represents the fees
we have earned for services
provided in the year.
Adjusted operating earnings
reflects the performance of
our core business. It takes into
account our operating efficiency,
investments made to grow our
business and how we reward and
retain our staff.
Adjusted diluted earnings per
share (“EPS”) reflects the overall
financial performance of the
Company for the year and takes
into account the dilutive effect of
our share option and restricted
share awards.
The Company is committed to a
progressive dividend policy as a
demonstration of commitment to
increasing shareholder value.
AUM represents our total assets
under management and advice.
The movement between opening
and closing AUM provides an
indication of the overall success
of the business during the year in
terms of both net subscriptions and
investment performance. It also
provides a good lead indicator of
revenue and profitability.
HOW WE PERFORMED IN 2018
The KPIs all benefit from the inclusion of Impax NH for eight and a half months.
AUM grew by 72% during the
year to £12.5 billion, our highest
ever AUM. The growth was
mainly due to the inclusion of
Impax NH (£3.0bn) and net
inflows (£1.5bn).
Revenue more than doubled
to £65.7 million. Impax NH
contributed £16.0 million. Impax
LN was boosted by £9.8 million
from inflows and £7.2 million
from performance.
Adjusted operating earnings
grew to £20.0 million as a result
of the increased revenue.
Adjusted diluted EPS grew by
110% to 12.4 pence, with Impax
NH contributing 1.7 pence, and
after issuance of 2.67 million
shares (2.1%).
1 A reconciliation from the IFRS numbers is provided in Note 5 of the Governance and Financial Report
2 Proposed
3 Special dividend
The Board is recommending a final
dividend of 3.0 pence per share
bringing the total dividend for the
year to 4.1 pence per share. This
represents growth of 41% and is
the tenth consecutive year that
we have grown the dividend. In
addition, we have paid a special
dividend to reflect the receipt of
carried interest.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 18
FINANCIAL REVIEW
Impax’s rising AUM and the acquisition of
Impax NH has enabled us to report growth
in revenues and profitability.”
EARNINGS PER
SHARE1
12.4P
(2017: 5.9p)
Charles D Ridge
Chief Financial Officer
FIGURE 4: Financial highlights for financial year 2018 versus financial year 2017
2018
2017
IFRS
Adjusted
IFRS
Adjusted
AUM
Revenue
Operating profit
Profit before tax
£12.5 billion
£65.7m
£15.5m
£20.0m
£14.6m
£19.2m
Diluted earnings per share
8.9p
12.4p
Shareholders’ equity
Cash reserves
Seed investments
Dividend per share
£52.6m
£24.6m
£3.8m
1.1p interim
+ 3.0p proposed
+ 2.6p special
£7.3 billion
£32.7m
£6.2m
£5.9m
6.2p
£9.3m
£8.7m
5.9p
£35.6m
£20.4m
£8.1m
2.9p
In previous years, in order to facilitate
comparison of performance with
previous time periods and to provide
for an appropriate comparison with
our peers, the Board has encouraged
shareholders to focus on operating
earnings, profit before tax and
earnings per share after adjusting for
the accounting treatment of Employer
National Insurance contribution
(“NIC”) arising from historic share
awards. For this Period, for similar
reasons, the Board recommends
further adjustments, principally the
elimination of the one-off acquisition
costs of Impax NH, and the
amortisation of the intangible asset
arising from the acquisition.
In our financial statements we
consolidate the financial results of
Impax NH for eight and a half months
from the date of acquisition (18
January 2018). A reconciliation of
the International Financial Reporting
Standards (“IFRS”) and adjusted
numbers is provided in note 5 of the
Governance and Financial report.
1 Diluted Adjusted
REVENUE
Revenue for the period
increased to £65.7 million,
including £16 million from
Impax NH. Impax LN
revenue increased by
£17 million.”
The key drivers of this growth were
the strong inflows and investment
performance recorded over the
Period and prior year in the Listed
Equity division, the receipt of carried
interest payments following the
strong performance of the second
renewable energy infrastructure
fund NEF II, and the additional
capital in NEF III. There is potential
for additional NEF II carried interest
payments to be received in future
years but these are likely to be of a
significantly smaller magnitude.
Our run rate1 revenue at the end of
the Period was £69.6 million, giving
a weighted average run rate revenue
margin of 56.4 basis points on the
£12.5 billion of AUM.
OPERATING COSTS
Adjusted operating costs increased
to £45.7 million of which £13.8 million
related to Impax NH. Impax LN costs
1 Run rate is calculated as the month of September 2018’s
result extrapolated for 12 months. Adjustments are also
made to remove the effects of one off transactions.
increased to £31.9 million mainly due
to higher profit-related remuneration
and staff headcount.
The IFRS operating costs showed
additional increases due to the
requirement to “mark to market” NIC
and other charges related to share
awards which increase in line with
Impax’s share price, the amortisation
of intangible assets arising on the
Impax NH acquisition and share-
based payment charges relating to
the acquisition. The NIC and other
charges related to the share awards
are more than offset by tax credits
reported in equity.
As a result of the strong growth of
the business and our expectations
that this will continue, we intend to
recruit additional staff in 2019 to
improve our operating efficiency,
increase our marketing efforts
and respond to further regulatory
change. In the near term, this
expenditure may have an impact on
the growth in operating margin.
The adjusted operating margin
increased to 30.4%. This was despite
Impax NH having a lower operating
margin as its business model allows
it to charge higher management fees
in return for bearing various fund-
related costs. Run-rate operating
earnings were £18.4 million at the end
of the Period, equivalent to a run rate
operating margin of 26.0%.
TAX
£2.7 million of tax credits related to
share incentive schemes are recorded
partly within profit before tax and
£2.4 million within reserves.
DILUTED EARNINGS PER SHARE
The IFRS diluted earnings per share
have increased 44% to 8.9p.
Adjusted diluted earnings
per share have increased
by 110%.”
PROFITS
The IFRS operating profits of £15.5
million have more than doubled from
£6.2 million.
This is driven by the significant
increase in operating earnings
for Impax LN and the Impax
NH acquisition.
Impax NH’s operating earnings at this
stage are lower than we expected at
the time of the acquisition as a result
of a moderate level of aggregate net
outflows from the funds it manages.
The adjusted operating
profits more than doubled
to £20.0 million with
Impax NH contributing
£2.3 million.”
| 19
IMPAX NH ACQUISITION
The acquisition of Impax NH
completed on 18 January 2018. The
initial consideration comprised £26.2
million of cash, which was part funded
by debt, and 2.67 million of Impax
shares. Impax NH management has
initially retained 16.7% of the shares
but these are subject to a put and
call arrangement, and we expect
that they will be converted to Impax
shares and/or cash as Impax elects in
January 2021.
Additionally, if triggered, Contingent
Consideration will be determined
based on Impax NH’s average AUM as
at 30 June 2020, 30 September 2020
and 31 December 2020. The sum
payable will rise linearly from zero,
if Impax NH’s AUM is US$5.5 billion
or less, to US$37.5 million if AUM is
$8 billion or more. Up to $8.3 million
of this Contingent Consideration will
become payable on 15 July 2019 if
these AUM targets are met based on
the average at 31 December 2018,
31 March 2019 and 30 June 2019.
As a result of the acquisition we have
recognised £9.9 million of goodwill
and £25.6 million of intangible
assets. The intangible assets relate to
investment management contracts. As
is normal for acquisitions of this size,
the acquisition has put us into a capital
deficit position. We have agreed a
waiver with the Financial Conduct
Authority which allows us a period of
four years to make good the deficit.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 FINANCIAL REVIEW CONTINUED
FINANCIAL MANAGEMENT
Impax is a strongly cash generative
business. The Company had £24.6
million of cash resources at the year
end and £10.0 million of debt.
In order to part-fund the acquisition
of Impax NH, the Company entered
into a US$26 million debt facility with
the Royal Bank of Scotland plc. This
facility comprised a US$13 million
term loan facility, repayable annually
over a three year term, and a US$13
million five year term revolving
facility (the “RCF”). The Company
initially drew down the term loan in
full and US$12 million of the RCF. The
Company’s strong cash generation
has already allowed full repayment of
the RCF. The RCF however remains
available to the Company and may
be used in January 2021 to part-pay
the Contingent Consideration arising
from the Impax NH acquisition, or for
the general corporate purposes of
the Group.
During the Period, the Company
exited its successful seed investment
in its UCITS fund based on the
Leaders strategy, realising £4.7
million. We made a further seed
investment of US$2 million into a
US mutual fund on the Pax World
Funds platform based on our Global
Opportunities strategy, and expect
to continue to make new seed
investments in the future.
SHARE MANAGEMENT
As part of the initial consideration
for the acquisition of Impax NH, the
Company issued 2.67 million of new
Ordinary shares in January 2018 with
a value of $6.1 million.
The Board intends to continue to buy
back the Company’s shares from time
to time after due consideration of
attractive alternatives for the use of
the Company’s cash resources. Shares
purchased may be used to satisfy
obligations linked to share based-
payment awards for employees.
During the Period, the Company’s
Employee Benefit Trusts (“EBTs”)
spent £2.5 million buying 1.5 million of
the Company’s shares at an average
price of 174 pence. The EBTs delivered
10.7 million shares and restricted
shares to staff in respect of option
exercises. The company allocated
675,000 shares against awards of
Restricted Shares made in December
2017. At 30 September 2018 the
EBTs held a total of 9.7 million shares
of which 8.4 million were held for
Restricted Shares.
Further equity issuance may arise in
respect of staff option exercises that
have not been previously matched by
share buybacks, and also to satisfy
Impax NH management’s conversion
into Impax shares of their remaining
16.7% interest in Impax NH in 2021.
DIVIDENDS
Impax has followed a
progressive dividend
policy since 2008, and
the Board intends this
to continue.”
The Company paid an interim
dividend of 1.1 pence per share in
July 2018. The Company also paid
a special dividend of 2.6 pence per
share at the same time in light of
the receipt of the carried interest for
NEF II. The Board now recommends
payment of a final dividend of 3.0
pence per share. If this is approved by
shareholders the aggregate dividend
for the year would be 4.1 pence per
share (6.7 pence including the special
dividend), which represents a 41%
increase over the dividend for the
previous year.
This dividend proposal will be
submitted for formal approval by
shareholders at the Annual General
Meeting on 7 March 2019. If approved,
the dividend will be paid on or around
15 March 2019. The record date for the
payment of the proposed dividend
will be 8 February 2019 and the ex-
dividend date will be 7 February 2019.
| 20
The Board expects to give further
guidance on the Company’s dividend
policy in 2019.
The Company operates a dividend
reinvestment plan (“DRIP”). The final
date for receipt of elections under the
DRIP will be 22 February 2018. For
further information and to register
and elect for this facility, please visit
www.signalshares.com and search for
information related to the Company.
GOING CONCERN
The Financial Reporting Council
requires all companies to perform a
rigorous assessment of all the factors
affecting the business when deciding
to adopt a “going concern” basis
for the preparation of the accounts.
The Board has reviewed the Group’s
financial plans, budget and stress
testing. Impax has a strong balance
sheet and a predicable operating cost
profile. After taking these factors
into consideration the Directors
consider that the adoption of a “going
concern” basis, covering a period of
at least 12 months from the date of
this report, is appropriate.
Charles D Ridge
5 December 2018
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY OUR PEOPLE
| 21
FIGURE 5: Staff numbers year ended 30 September 2018
2018
85
48
10
143
2017
38
29
9
76
2016
35
26
9
70
Support staff
Investment staff
Senior management
OUR COMMITMENT TO OUR STAFF
We recognise that our colleagues’
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 culture.
We believe that the diversity of our
team and the promotion of equal
opportunities are key to enhancing
our success.
DIVERSITY
Impax is committed to promoting
inclusion and diversity. Diversity
in the workplace is an important
aspect of good management and
strong governance.
We value everyone in the Impax
community as an individual. We
do not tolerate discrimination
on the grounds of any Protected
Characteristics.
We believe that diversity has a
positive impact on the Company’s
performance. It enhances creativity,
problem-solving, the quality of risk
management and decision making.
It also improves recruitment and
retention of the most talented people,
strengthens our client understanding
and orientation and increases
staff engagement.
We measure key aspects of our
diversity and continually seek to
develop and improve our approach
to inclusion and diversity, our
practices and measurement.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 22
OUR PEOPLE CONTINUED
FIGURE 6: Gender diversity year ended 30 September 2018
2018
55%
2017
66%
2016
69%
45%
34%
31%
Male
Female
GENDER PAY GAP REPORTING
Impax has always believed in
providing equality of opportunity
and in compensating employees
for the role they do on an equal
basis, regardless of gender or any
other differences.
As a smaller company, with fewer
than 250 employees, Impax is
not required to report its gender
pay gap information under the
UK’s Gender Equality Act 2010,
which came into force last year.
However, we are committed to
analysing this issue for all our staff.
This is a complex process and
we are currently researching and
preparing our 2018 data which will
be published on our website during
H1 2019.
PEOPLE DEVELOPMENT
WORKING GROUP
The three work streams of our
Personal Development Working
Group, which were set up in 2015,
continue to advance and refine their
work across personal development,
staff appraisals and recruitment
and on-boarding. For example, all
staff now have both short-term and
longer-term personal development
plans identifying their goals and
training requirements. We have also
progressed our staff well-being
programme with a number of new
initiatives to promote optimum health
in the workplace.
| 23
WINNER BEST COMPANY TO
WORK FOR IN INVESTMENT 2018
We were delighted to be named as one of only three
winners in Investment Week’s first “Best Company To
Work For In Investment 2018” Awards.
We recognise that employees who are engaged,
motivated and enjoy their work will perform well. This
award acknowledged the quality of our policies, benefits,
communication and engagement with all our UK staff.
The judges utilised a rigorous survey detailing company
policies, practices, benefits and demographics to shortlist
contenders for the award. At the second stage all our staff
were asked to complete an in-depth survey on how they
felt as Impax employees. This included seven demographic
and two open-ended questions.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 SENIOR MANAGEMENT TEAM
| 24
IAN SIMM
HUBERT AARTS
BRUCE JENKYN-JONES
JOE KEEFE
ROZ REID
Co-head of the Listed
Equity business
Bruce has 24 years’
experience of 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).
Co-head of the Listed
Equity business
Hubert started his career
in the investment industry
in 1990 and joined Impax
in January 2007. He has
extensive experience
investing in Pan-European
equities as a portfolio
manager at MeesPierson
and Merrill Lynch Investment
Managers, where he
chaired the European
Sector Strategy Group.
Hubert joined Impax from
Cambrian Capital Partners
LLP where he was a partner
and portfolio manager of
the Curalium fund, and
Incremental Leveraged
hedge funds. Hubert
has a Master’s degree in
Economics and Business
Administration from
Maastricht University.
Chief Executive
Ian is the Founder and Chief
Executive of Impax Asset
Management Group plc.
Ian has been responsible
for building the company
since its launch in 1998, and
continues to head the Listed
Equities and Real Assets
investment committees.
Prior to Impax, Ian was
an engagement manager
at McKinsey & Company
advising clients on
environmental strategy.
Between 2013 and 2018
Ian was also a member of
the Natural Environment
Research Council (NERC),
the UK’s leading funding
agency for environmental
science; he is currently a
member of the Steering
Committee of the UK’s
Green Finance Institute. Ian
has a first-class honours
degree in physics from
Cambridge University
and a Master’s in Public
Administration from Harvard
University.
President of Impax
Asset Management LLC
Joe is President of Impax NH
and heads the Portsmouth
office. He is responsible for
Pax World Funds and its
underlying strategies.
Prior to joining Pax in May
2005, Joe was President
of the strategic consulting
and communications firm
NewCircle Communications.
He served as Senior Advisor
for Strategic Social Policy at
Calvert Group from 2003-
2005 and as Executive
Vice President and General
Counsel of Citizens Advisers
from 1997–2000.
Joe holds a Bachelor of
Arts in Philosophy from the
College of the Holy Cross,
and a Juris Doctor degree
from the University of
Virginia School of Law.
Head of Human
Resources
Roz joined Impax in October
2014 and is responsible for
all staff matters and HR
strategic initiatives in the
UK and overseas. She has
over 20 years’ experience
in Financial Services having
worked for Westpac, BNP
Paribas and Chase JP
Morgan. Roz has a BSc in
Clinical Psychology from
Oxford University and an
MSc in Human Resource
Management.
Information and
biographies on our
Board can be found in
the Governance section.
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 25
DAVID RICHARDSON
CHARLIE RIDGE
PETER ROSSBACH
DANIEL VON PREYSS
ZACK WILSON
Global Head of
Marketing and
Client Service
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.
Chief Financial Officer
Charlie has 30 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.
Managing Director,
Private Equity
Infrastructure
Peter joined Impax in 2000.
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, and within the
energy project finance
teams at Catalyst Energy,
Lowrey Lazard and Standard
and Poor’s utility debt
ratings services.
Peter holds a Bachelor’s
degree and a Master’s in
Public Policy from Harvard
University.
Head of Private Equity
Infrastructure (Europe)
Daniel is both involved in
investments and is Head of
Asset Management for the
Private Equity business.
Prior to joining Impax
he was responsible for
Babcock & Brown’s Northern
European infrastructure
activities where he focused
on regulated utilities, gas
storage and broader power
generation.
Daniel was previously
Director of Corporate
Finance for the European
Energy and Utilities team at
Deutsche Bank with a strong
focus on M&A activity in
Europe and has also worked
in Citigroup’s Utilities team.
Group General Counsel
Zack serves as Group
General Counsel for Impax
Asset Management Group
plc and is also Company
Secretary.
Prior to joining Impax in
2011, Zack was Director
& General Counsel
for the investment
management and corporate
finance advisory group
Development Capital
Management. Previously
he was Corporate Counsel
for Telewest Global Inc
(renamed Virgin Media
Inc), where he played a
leading role in managing
the successful execution
of high profile transactions
including the Group’s $10bn
financial restructuring.
Zack qualified as a solicitor
at the global law firm
Norton Rose, specialising in
Corporate Finance.
He holds a Master of Arts in
Jurisprudence from Oxford
University.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 OUR COMMITMENT TO
CORPORATE RESPONSIBILITY
| 26
We review our corporate responsibility
under the categories of People, Community,
Environment and Marketplace.
Impax is committed to the highest standards
of responsible business practice and this is
embedded in our Values.
COMMUNITY
Impax aims to support organisations
that are aligned with our values.
In the UK, Impax promotes tax
efficient payroll giving for staff
through the Charities Aid Foundation
Give as You Earn scheme. In 2018
we achieved Platinum status for the
first time, with more than 20% of
staff participating in the scheme,
donating to a range of charities on
a regular basis. Impax matches all
staff donations.
This year we continued our charitable
support of Ashden and ClientEarth.
We believe that we have strong
synergies with both these charities
and our financial support, which
we have increased year on year,
not only helps the work of these
two outstanding organisations,
but helps to build on both our
thought leadership work and staff
development and engagement.
We give all staff at least one working
day a year to participate in an
environment-related volunteering
activity organised by the Company.
We encourage staff to
play an active role in the
community for the benefit
of both our business
and society.”
Upside Energy
Upside Energy instructs
internet-connected
devices to be turned
on or off
23 MW of capacity
signed up to Upside
Energy as of May 2018
Saving over 13,800
tonnes CO2 per year
Ashden champions practical,
local energy solutions that cut
greenhouse gas emissions, protect
the environment, reduce poverty
and improve people’s lives.
We have just commenced our seventh
year of partnership with Ashden and
are proud supporters of the Impax
Ashden Award for Energy Innovation.
Every year several of our staff are
involved in the evaluation and judging
of the award submissions, as well
as on-going mentoring and support
work with previous award winners. Ian
Simm also sits on the Ashden judging
panel for the Liveable Cities awards.
The 2018 winner of our award was
Upside Energy. This young company
has developed innovative software
which aims to reduce stress on the
National Grid through its cloud-
based Virtual Energy Store™. This
aggregates flexible demand from
systems such as domestic energy
storage, heat pumps, electric
vehicles and un-interruptable power
supplies, which it sells to National
Grid, network operators and energy
suppliers to help balance supply and
demand. System owners and Upside
Energy share in the revenue created.
Upside Energy’s innovative
approach to flexibility has the
potential to revolutionise the
sector, making it practical to
involve millions of devices
in homes and businesses in
keeping the grid stable.”
Ashden judging panel
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 27
COMMITTING TO ENSURING
A HEALTHY PLANET
Since 2016, Impax has supported
ClientEarth, a not for profit
environmental law organisation which
uses the power of the law to protect
people and the planet. ClientEarth is
well known for its stand against the
UK government on urban air pollution
and, more recently, for their work
with the European Commission to
reduce single use plastics through the
implementation of plastic taxes.
This year ClientEarth has been
involved in a number of our popular
educational events on carbon risk
which we run for our pension fund
clients in the UK and the US. Their
insight into how asset owners should
interpret the law on their fiduciary
duty on climate and carbon risk
has made a valuable contribution
to our thought leadership work on
identifying and measuring carbon risk
in investment portfolios.
The environment cannot be
protected by environmental
laws alone. At ClientEarth
we are developing innovative
legal strategies using
company and financial laws to
drive companies, investors and
directors towards sustainable
and environmentally sound
modes of governance and
decision-making.”
Alice Garton
Senior Lawyer,
Head of Climate, ClientEarth.
ENVIRONMENT
We acknowledge and measure
our impacts, recognise our
responsibilities and take action to
improve wherever possible.
As an office-based business,
our direct environmental impact
is relatively limited. The main
impact of our operations is energy
consumption, water use, travel and
materials use. We are committed to
reducing these across our working
practices through a culture of energy
and resource efficiency.
Our Environment Committee has
responsibility for coordinating and
reporting all our environmental
initiatives including maintenance
of our Environmental Management
System (EMS) for our UK operations.
The EMS was launched in 2014 and
is based on the ISO 14001 standard.
Impax has reported its CO2 emissions
to the Carbon Disclosure Project
since 2009. Vince O’Brien is the
Non-Executive Director responsible
for the Company’s environmental
performance and targets. He
attends the quarterly Environment
Committee meetings.
There has been an increase in energy
use in the new building and increased
air travel especially to the USA. Scope
2 emissions increased by 15%, while
the Scope 3 emissions increased in
absolute terms, but were flat year on
year, at the per employee level.
Our move to new premises and the
acquisition of Impax NH have had
significant impact on both our Scope
2 (electricity use per employee) and
3 carbon emissions from air travel.
We are currently reviewing plans
to reduce our Scope 2 and Scope 3
carbon emissions. We also intend to
set long-term reduction targets which
we will publish next year.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018
OUR COMMITMENT TO CORPORATE RESPONSIBILITY CONTINUED
| 28
MARKETPLACE
Impax aspires to best practice across
all aspects of the management of its
listed and real asset investments.
ENGAGEMENT AND VOTING
We focus our investment in
companies with robust governance.
Environmental Social and Governance
(“ESG”) considerations are embedded
within our rigorous investment
processes for all our investments.
For listed equity investments we
have a ten step investment process
and failure of a company to reach
the required level of ESG quality will
prevent our investment.
Impax engages with
investee companies and is
committed to long-term
engagement to improve
practices and disclosure
across their governance
and sustainability
activities.”
We measure our success by
outcomes rather than the number of
engagements. However, the work in
this area is increasing, as shown in
Figure 7.
We often work in collaboration with
other organisations and investors as
this can result in a more significant
impact.
This year our main engagement
themes were:
Smaller companies’ ESG processes
and disclosures
Governance issues including
entrenched or classified boards and
separation of the roles of Chair and
CEO
Directors’ remuneration
Cybersecurity
Climate and GHG emissions related
(extent to which companies satisfied
the recommendations of the TCFD).
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. During the Period we voted at
186 company meetings (96% of all
applicable), on over 2,245 resolutions.
We voted against management on 170
(8%) of these. We disclose a summary
of our proxy voting activity on our
website on a quarterly basis.
FIGURE 7: Our annual engagement initiatives
109
70
2018
2017
2016
2015
2014
36
31
23
A+
WE SCORE A+
FOR OUR OVER-
ARCHING APPROACH
TO RESPONSIBLE
INVESTMENT IN THE
2018 UN PRI SURVEY.
PROXY VOTING
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 MANY
OF OUR GOVERNANCE
ENGAGEMENTS.
#1
IMPAX IS RANKED AS
A TIER 1 SIGNATORY
TO THE FINANCIAL
REPORTING COUNCIL’S
THREE TIER UK
STEWARDSHIP CODE.
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY | 29
MEASURING THE POSITIVE ENVIRONMENTAL IMPACT OF OUR INVESTMENT STRATEGIES
Many investors are not only interested
in making superior, long-term, risk-
adjusted returns, but in also ensuring
that their investments have a positive
impact on the environment.
We started reporting quantified
impact metrics for our global small
cap strategy four years ago. Judging
from the positive feedback we have
received, clients are finding it helpful
to understand the link between our
investments in companies delivering
environmental products and services
and the environmental outcome of
their business activities.
This year we reported our impact
metrics for our Asia Pacific strategy
for the first time, as well as results
for the Impax Specialists and
Leaders strategies.
FIGURE 8: Environmental impact for a £10 million investment
In our Specialists strategy
In our Leaders strategy
In our Asia-Pacific strategy
Net CO2 emissions
avoided
7,850 tCO2
(2017: 7,740 tCO2)
1
Total renewable
electricity generated
2,090 MWh
(2017: 2,920 MWh)
Total water treated,
saved or provided
2,390 MEGALITRES
(2017: 3,030 megalitres)
Total materials
recovered/
waste treated
1,300 TONNES
(2017: 780 tonnes)
Equivalent to
taking
4,130
cars off the road
for a year in 2018
Equivalent
to
550
households’ electricity
consumption in 2018
Equivalent
to
18,200
households’ water
consumption in 2018
Equivalent
to
1,340
households’ waste arising
in 2018
Net CO2 emissions
avoided
170 tCO2
(2017: 170 tCO2)
Total renewable
electricity generated
2,640 MWh
(2017: 2,210 MWh)
Total water treated,
saved or provided
640 MEGALITRES
(2017: 2,670 megalitres)
Total materials
recovered/
waste treated
2,690 TONNES
(2017: 2,470 tonnes)
Equivalent
to taking
90
cars off the road
for a year in 2018
Equivalent
to
700
households’ electricity
consumption in 2018
Equivalent
to
4,890
households’ water
consumption in 2018
Equivalent
to
2,720
households’ waste arising
in 2018
Net CO2 emissions
avoided
7,560 tCO2
Coal displaced in
Asian cities
5,430 MWh
Total water treated,
saved or provided
9,010 MEGALITRES
Total materials
recovered/
waste treated
3,950 TONNES
Equivalent
to taking
3,390
cars off the road
for a year in 2018
Air quality
improvement
equivalent to taking
4,270
diesel trucks off the
road for a year
Equivalent
to
57,100
households’ water
consumption in 2018
Equivalent
to
23,200
households’ waste arising
in 2018
1 Relates to the Asia-Pacific strategy
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY
| 30
OUR COMMITMENT TO CORPORATE RESPONSIBILITY CONTINUED
OUR COMMITMENT TO CORPORATE RESPONSIBILITY CONTINUED
We were an early signatory to the Montreal Pledge
which requires investors to commit to measure
and publicly disclose the carbon footprint of
their investment portfolios on an annual basis.
We believe our positive impact reporting takes
this measurement to the next level.
HELPING CLIENTS CONSIDER
THE ALIGNMENT OF THEIR
INVESTMENTS WITH SDGS
As part of its sustainable
development agenda, in 2015
the UN developed 17 Sustainable
Development Goals (“SDGs”), a series
of targets the UN has challenged
the world’s economies to achieve by
2030. These cover topics ranging
from healthcare, education and
environmental protection, to equality.
We have identified the SDGs that
are most relevant to the products,
services, and long-term strategies
of our investee companies.
Asset owners are increasingly
adopting the UN SDGs as a useful
framework for allocating capital
towards positive impact investments.
Our mapping exercise helps to
explain how our broader thematic
listed equity strategies align with
these goals. Further details on
our methodology and results of
this mapping can be found in our
Impact Report.
PARTICIPATION AND MEMBERSHIPS
We are active members of several
trade and industry organisations
that are dedicated to promoting
the transition to a more sustainable
economy and the efficient use of
natural resources.
Impax is member of, or signatory
to the following organisations:
Council of Institutional Investors
(“CII”)
Task Force for Climate-Related
Financial Disclosures (“TCFD”)
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
Intentional Endowments Network
Global Impact Investing Network
(“GIIN”).
| 31
HOW RISK IS MANAGED
BOARD
CHIEF EXECUTIVE
AUDIT AND RISK COMMITTEE
SENIOR MANAGEMENT
RISK MANAGEMENT FUNCTION
RISK MANAGEMENT AND CONTROL
Impax has adopted a risk
management framework which
takes into account the key
principles of risk identification,
risk measurement, risk mitigation,
risk monitoring and reporting. The
Board 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 Risk Officer is responsible
for maintaining a risk register and for
an on-going programme to monitor
internal controls and processes
designed to 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
face are described in this section.
Further information on financial
risk is given in note 32 to the
financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
RISK
DESCRIPTION
HOW WE MITIGATE THE RISK
REPUTATIONAL
RISK
Reputational risk can arise from any of the key risks described below
and relates to the Impax brand and relationships with our stakeholders.
Integrity and appropriate conduct are an integral part of the Impax
culture and values, and all our business dealings. In addition, the
controls below help to mitigate the risk of incidents that may have
a reputational impact.
MARKET
RISK
The Group’s Listed Equity business charges management fees based on
AUM and accordingly its revenue is exposed to market risk.
The Group operates a number of different strategies which
themselves are diversified by geography and industry.
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 also invests in its own Private Equity funds and is therefore
exposed to the performance of these funds.
The Group’s investments teams have to follow defined investment
processes. All investments are overseen by The Group’s Investment
Committees. 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.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
| 32
RISK
DESCRIPTION
HOW WE MITIGATE THE RISK
CURRENCY
RISK
For the London-centred Impax LN business a significant percentage of
its income is based on assets denominated in foreign currencies whilst the
majority of costs are in sterling.
For the New Hampshire, USA-based Impax NH business the majority of income
is based on assets denominated in US dollars and all costs are in US dollars.
Goodwill and intangible assets arising on the Impax LLC acquisition are held
in US dollars and the Group’s debt is held in US dollars.
For the year ended 30 September 2018, and on an on-going basis,
the Group’s strategy for the Impax LN business 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 foreign currency income is converted
to sterling as soon as practically possible after receipt.
BUSINESS
EXPANSION
The acquisition in Q1 2018 of Impax Asset Management LLC (Impax NH), has
resulted in the firm taking on the inherent risks of this US business, and the
introduction of new integration risks.
The existing management and internal control frameworks
have remained in place following the acquisition and have been
incorporated into Group-wide governance structures.
LIQUIDITY
RISK
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, in the event
that cash resources are insufficient to meet liabilities as they fall due.
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. The Group’s management and Board review these
forecasts. As shown in note 23 to the financial statements the Group
has adequate cash reserves.
CREDIT
RISK
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 seeks to manage this risk by only depositing cash with
institutions with high credit ratings and by allocating its cash holdings
to at least four institutions at any time.
REGULATORY
RISK
The Group’s operations are subject to financial services legislation and
regulations, including minimum capital requirements and compliance
procedures, in each of the jurisdictions in which it operates.
The Group seeks to manage these risks 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 permanent and independent compliance function. In
particular, the Group is actively monitoring Brexit negotiations and
a new legal entity has been created in Ireland to mitigate potential
disruption to our business model and clients.
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY RISK
DESCRIPTION
HOW WE MITIGATE THE RISK
| 33
PEOPLE
RISK
The success of the Group depends on the support and experience of its
key employees, and in particular the most senior managers. 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 corporate infrastructure.
CYBER
RISK
Cyber attacks against financial services firms are growing in number and
sophistication and would result in business disruption and/or data loss.
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 and enjoyable
working environment. We also seek to put in place sustainable
succession and development plans. The UK senior investment team
has been stable since the Company’s inception.
The Group has established control frameworks 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” for the 12
months ended 30 September 2018, for its UK Listed Equity business.
Impax also maintains plans to manage operational business risks in
the case of an emergency. These involve specific responses to enable
business contingency and recovery procedures.
The Group has insurance cover which is reviewed each year prior to
policy renewal.
The Group has put in place measures to minimise and manage
possible technology risks and to ensure the safety of data and
General Data Protection Regulation compliance. Information and
cyber security is enforced throughout the business. This ensures
hardware such as laptops and mobile devices are fully protected.
All staff globally receive regular cyber awareness training. In addition,
external and internal penetration tests are carried out globally on an
annual basis. We also carry out company-wide phishing tests, and
have global security certifications.
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018 AUDITOR’S STATEMENT
CONTACT DETAILS
| 34
The auditor’s report on the
financial statements and the
auditors’ statement under
section 496 of the Companies
Act on whether the information
given in the Strategic Report and
Directors’ report (for the financial
year ended 30 September 2018)
is consistent with the Group
financial statements were both
unqualified and can be found on
pages 17–22 of the Governance
and Financial Report.
SECRETARY
Zack Wilson
REGISTERED OFFICE
7th Floor
30 Panton Street
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SW1Y 4AJ
T: +44 (0)20 3912 3000
F: +44 (02) 3912 3001
REGISTRARS
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Beckenham
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BR3 4TU
NOMINATED ADVISER AND BROKER
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London
EC2Y 5ET
SPECIALISTS IN THE TRANSITION TO A MORE SUSTAINABLE ECONOMY | 35
IMPAX ASSET MANAGEMENT GROUP PLC STRATEGIC REPORT 2018
WWW.IMPAXAM.COM
IMPAX ASSET MANAGEMENT GROUP PLC
7th Floor
30 Panton Street
London
SW1Y 4AJ
United Kingdom
T: +44 (0)20 3912 3000
E: info@impaxam.com
@ImpaxAM
Impax Asset Management
GOVERNANCE AND FINANCIAL REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2018
1998
2018
CELEBRATING
20
YEARS
INVESTING IN THE
TRANSITION TO A
MORE SUSTAINABLE
GLOBAL ECONOMY
IMPAX SPECIALISES IN
INVESTING IN THE TRANSITION
TO A MORE SUSTAINABLE
GLOBAL ECONOMY
OUR MISSION
Our mission is to generate superior, risk-adjusted investment returns from
opportunities arising from the transition to a more sustainable economy for
clients with a medium to long-term horizon.
We seek to provide a stimulating, collaborative and supportive work-place
for our staff, and make a contribution to the development of a sustainable
society, by supporting or undertaking relevant research and engaging or
collaborating with others.
This report contains details of members of the Board of Directors and the Senior Management team, reports
on the Group’s Corporate Governance and Remuneration and presents the full financial statements including
the independent auditor’s report.
Our separate Strategic Report contains information about Impax, how we make money and how we run
the business. It includes an overview of our main markets, our strategy, business model, key performance
indicators and main areas of risk, as well as our progress during 2018. A copy of the Strategic Report can be
downloaded from www.impaxam.com. This report also describes our approach to organisation and culture,
governance and sustainability, and includes a summary of our financial strategy.
Naming of companies in this document
For simplicity we use the following short forms in the place of the legal company entity names in this
document and Strategic Report.
Impax Asset Management Group plc is referred to throughout as “Impax” or the “Company”.
In January 2018, Pax World Management LLC was acquired by Impax and has been re-named Impax Asset
Management LLC. This company is based in Portsmouth, New Hampshire and we refer to it as “Impax NH”.
Impax NH is the manager of Pax World Funds.
Impax Asset Management Ltd and Impax Asset Management (AIFM) Ltd manage or advise listed equity funds
and accounts, and the Real Assets division. The majority of this business is based in London so we refer
to it as “Impax LN”.
CONTENTS
Governance
Financial Statements
01 Chairman’s Introduction
23 Financial Statements
04 Board of Directors
27 Notes to the Financial Statements
06 Corporate Governance
64 Company Financial Statements
09 Directors Report
67 Notes to the Company Financial
12 Audit and Risk Committee Report
14 Remuneration Committee Report
17 Independent Auditor’s Report
Statements
74 Notice of Annual General Meeting
78 Officers and Advisers
CHAIRMAN’S INTRODUCTION
2018 was a year of significant
growth and progress for Impax.
The acquisition of the US based
Impax Asset Management LLC has
enhanced our earnings and I am
pleased to report another year
of progress against all our Key
Performance Indicators (“KPIs”).”
Keith Falconer
Chairman
During the 12 months to 30 September 2018
(the “Period”), Impax continued to see strong
flows into its Listed Equity strategies from clients
around the world. Our pipeline for new mandates
is also very encouraging and we expect to receive
allocations from both existing and new clients in
the coming months.
The acquisition of Impax Asset Management
LLC, which completed in January 2018, cements
Impax’s position as a leading asset manager
focused on the transition to a more sustainable
global economy. We now have an almost equal
footprint in the US and Europe both in terms of
staff numbers and assets under management
(“AUM”)1. Combining the two companies
extends our view of investment opportunities
and enhances our ability to offer exciting career
opportunities to our staff.
Impax has a strong business
culture: our well-established values
reflect our philosophy, behaviour
and commitments to our clients,
staff, and responsible citizenship.”
Following the acquisition of Impax NH we have
enhanced our internal communications with our
teams around the world and are pleased with
the high levels of staff engagement across all
regions.
FIGURE 1: Impax Asset Management group plc organisation chart
Impax Asset
Management group plc
Impax Asset
Management Ltd
Impax Asset
Management (AIFM) Ltd
IAM US Holdco, Inc.
Impax LN
Impax Asset
Management LLC
Impax NH
1 AUM – assets under management and advice
IMPAX ASSET MANAGEMENT GROUP PLC
01
CHAIRMAN’S INTRODUCTION CONTINUED
BOARD STRUCTURE AND COMPOSITION
As Chairman, I am responsible for leading the
Board and ensuring that the Company has in
place the strategy, people, governance structure
and culture to deliver value to shareholders and
other stakeholders of the Group over the medium
to long-term.
The Group comprises several subsidiary
companies as shown in figure 1.
The Board is assisted by two committees,
Remuneration and Audit & Risk, which have
clearly defined terms of reference. Further
details on the membership and role of these
committees are provided on pages 12–14. Other
tasks, such as nominations, succession planning,
environmental performance and the review of
wider governance issues, are addressed during
regular Board meetings.
During the Period, the Board comprised myself as
Non-Executive Chairman, the Chief Executive and
four other Non-Executive directors supported by
the Group Company Secretary. Our Non-Executive
Director group has a diverse mix of skills and
experience gained through their many years in senior
positions across the global financial services sector.
Guy de Froment stepped down as a non-
executive director of the Company in June this
year. I would like to thank him for his dedication
and valuable contribution to the development
of Impax’s business over the last 10 years.
At the same time we welcomed Arnaud de
Servigny to the Board. Arnaud brings a wealth
of experience in investment management. He is
currently a non-executive director of BNP Paribas
Asset Management, France, and has worked at
Deutsche Bank, Barclays Wealth and Standard
& Poor’s. He sits on the Company’s Audit & Risk
and Remuneration Committees.
CORPORATE GOVERNANCE
The Quoted Company Alliance
(“QCA”) Code
The Directors recognise the
importance of strong corporate
governance and the need for
continual development of our
processes and practices in this
rapidly evolving area.”
Over the last year, companies quoted on the
Alternative Investment Market (“AIM”) have been
required to provide details of the recognised
corporate governance code that they have
decided to apply, how they comply with that
code, and, where they depart from their chosen
corporate governance code, an explanation
of the reasons for doing so. The Board has
chosen to follow The Quoted Company
Alliance (“QCA”) Code, which was developed
by the QCA in consultation with a number of
significant institutional investors focused on
smaller companies. The underlying principle
of the QCA Code is that “the purpose of good
corporate governance is to ensure that the
company is managed in an efficient, effective and
entrepreneurial manner for the benefit of all
shareholders over the longer-term”.
To see how Impax addresses the key governance
principles defined in the QCA Code, please refer
to the detailed table on our website. In the few
instances where our practices depart from the
expectations of the QCA Code, we have clearly
highlighted these and given an explanation.
02
GOVERNANCE AND FINANCIAL STATEMENTS 2018
OUTLOOK
On behalf of the Board I would like to thank all
our staff for their extraordinary commitment to
the Company and their contributions to Impax’s
results during another successful year.
We are confident of continuing strong growth
and delivering shareholder value through
exploiting new opportunities in the transition to
a more sustainable global economy and building
further on the solid foundations laid down over
many years.
J Keith R Falconer
5 December 2018
Our commitment to the highest
governance standards
Impax has pioneered methods to include
Environmental Social and Governance principles,
as well as Stewardship best practice, across the
business. We aim to demonstrate the same levels
of commitment and disclosure here as we look
for in the companies in which we invest.
We seek to act with the highest standards
across all our operations, recognising our
responsibilities to all stakeholders. Our Non-
Executive Directors are engaged in the
oversight of the integration of responsible
business practices throughout our operations.
For example, Vince O’Brien is the Director
responsible for our environmental impact and
policies and attends the management team’s
quarterly environmental committee meetings
as an observer, while both Sally Bridgeland and
Lindsey Brace Martinez have led meetings of
our recently formed “Women at Impax” Group.
Further details on our inclusivity and diversity,
human capital and environmental activities are
outlined in our Corporate Responsibility section
on pages 26–30 of the Strategic Report.
2018 BOARD STRATEGY AND PROGRAMME
The Board held nine formal meetings during
the Period, with significant time devoted
to strategic discussion. The Non-Executive
Directors also attended an annual strategy day
with the executive team; this year the agenda
was principally to review the progress of the
integration and consider the advancement
of business opportunities arising from the
acquisition of Impax Asset Management LLC.
IMPAX ASSET MANAGEMENT GROUP PLC
03
BOARD OF DIRECTORS
KEITH FALCONER
Chairman
IAN SIMM
Chief Executive
LINDSEY BRACE
MARTINEZ
Non-Executive Director
SALLY
BRIDGELAND
Non-Executive Director
Joined the board
2004
Joined the board
2001
Joined the board
2015
Joined the board
2015
Previous
roles and
experience
Keith joined Martin
Currie, the independent
Edinburgh-based
investment firm in
1979. 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 in 2003.
Ian has been
responsible for building
the Company since its
launch in 1998, and
he continues to head
the listed equities and
real assets investment
committees.
Prior to joining Impax
Ian was an engagement
manager at McKinsey
& Company advising
clients on resource
efficiency issues.
Current
external
appointments
Director of Baillie Gifford
Japan Trust and the
Adelphi Distillery.
In 2013-2018 Ian was a
board member of the
Natural Environment
Research Council
(NERC), the UK’s
leading funding agency
for environmental
science. He is currently a
member of the Steering
Committee of the UK’s
Green Finance Initiative.
Qualifications
and
experience
Qualified as a chartered
accountant in 1979.
Portfolio management
and institutional sales
and marketing.
First class honours
degree in physics from
Cambridge University
and a Master’s in Public
Administration from
Harvard University.
04 GOVERNANCE AND FINANCIAL STATEMENTS 2018
Sally qualified as a
Fellow of the Institute of
Actuaries with consultants
Bacon & Woodrow (now
Aon Hewitt) and was CEO
of the BP Pension Fund
from 2007 to 2014. She
has served as Chair of the
Management Board of the
Faculty and Institute of
Actuaries.
Non-executive director
of Royal London and
the Local Pensions
Partnership. Trustee of
Lloyds Bank’s Pension
Schemes, NEST
Corporation and the
Nuclear Liabilities Fund.
Honorary Group Captain
with 601 Squadron of the
Royal Auxiliary Air Force
and a trustee of RAF
Central Fund. Strategic
adviser to Darwin
Property. Investment
Consultant with Avida
International.
Fellow of the Institute of
Actuaries.
30 years’ experience
in the UK pensions and
actuarial sector.
Lindsey served as
a member of the
Executive Team and
was a Managing
Director at Cambridge
Associates. She held
multiple roles during
her 15-year tenure
including, Global Head
of Consulting Services
and External Relations.
Prior to this, Lindsey
was a portfolio analyst
and manager for
the Hancock Natural
Resource Group and
a senior consultant at
Booz Allen.
Founder and CEO,
StarPoint Advisors, LLC.
Member of the Advisory
Board for the Yale Center
for Business and the
Environment. Member
of the Investment
Committee for the
National Geographic
Society. Chair of the
Board, Novatus Energy,
LLC. Trustee of Pax
World Funds Series
Trust 1, Board member
of Seven Islands Land
Company.
MBA and Master of
Environmental Studies
from Yale University. Over
25 years’ experience in
investment advisory,
natural resources
portfolio management,
institutional marketing
and sales, and
management consulting.
Committee membership
Remuneration
Audit & Risk
GUY DE FROMENT 1
Non-Executive Director
ARNAUD DE
SERVIGNY 2
Non-Executive Director
VINCENT
O’BRIEN
Non-Executive Director
ZACK WILSON
Group General Counsel
and Company Secretary
Joined the board
2008 (Retired 2018)
Joined the board
2018
Joined the board
2009
Assumed roles
2011
Arnaud was previously
a Managing Director at
Deutsche Bank Asset
Management and has
also worked at Barclays
Wealth, Standard &
Poors and BIM private
equity fund.
Vince served as a
director of Montagu
Private Equity for over
23 years. He was part
of the core team which
lead the buyout of
Montagu from HSBC in
2003.
Prior to that he worked
in audit and corporate
finance for Coopers &
Lybrand, now PWC.
Guy joined Paribas in
1997 as head of Asset
Management; he then
co-headed BNP Paribas
Asset Management
after the merger with
BNP until 2005. He was
Vice-Chairman of BNP
Paribas Investment
Partners until his
retirement in 2010.
Prior to this, he spent
over 20 years with
Indosuez in various
market related activities
including as head of
Asset Management.
Prior to joining Impax in
2011, Zack was Director
& General Counsel
for the investment
management group
Development Capital
Management.
Previously he was
Corporate Counsel
for Telewest Global
Inc (renamed Virgin
Media Inc), where
he played a leading
role in managing the
successful execution
of a number of high
profile transactions.
Zack is a non-executive
director of Impax
Funds (Ireland) plc.
Trustee of the Paribas
London. Pension
Fund and director of
Parvest and Parworld
Luxembourg SICAVs.
Elected member of the
Committee of the Wine
Society.
Non-executive
directorships of
BNP Paribas Asset
Management France,
Bramham Gardens
Investments Limited,
Bramham Gardens SARL
and Fondation Pour
l’Ecole.
Chair of the Investment
Committee at Nesta
Impact Investments,
Chair of Quest Fund
Placement LLP.
Member of the Advisory
Board of Prime
Advocates Limited.
Guy is a graduate of
the Ecole des Hautes
Etudes Commerciales
(HEC Paris).
Some 40 years in global
investment management.
Arnaud has been
a visiting Adjunct/
Professor of Finance
at Imperial College
Business School since
2005 and is the author
of several books on
finance, economics and
investment management.
Chartered accountant,
former chairman of the
British Venture Capital
Association.
Over 30 years’
experience in the
private equity industry.
Qualified as a solicitor in
2000 at the global law
firm Norton Rose.
Master of Arts in
Jurisprudence from
Oxford University.
1 Retired 12 June 2018 2 Appointed 12 June 2018
IMPAX ASSET MANAGEMENT GROUP PLC
05
CORPORATE GOVERNANCE
COMPLIANCE WITH QUOTED COMPANIES ALLIANCE CODE
The Directors recognise the importance of good corporate governance and have chosen to apply
the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”).
The correct application of the QCA code requires the Company to apply its ten principles and also to
publish certain related disclosures either on our website or in this Annual Report or a combination of
both. We have chosen to use a combination of both. Our website includes disclosure considering each
principle in turn and references where the appropriate disclosure is given.
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.
Board composition
The Board consists of a Non-Executive Chairman, four Non-Executive Directors and the Chief
Executive. Details of the current Board members are given on pages 4 and 5 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. Guy de Froment resigned
on 12 June 2018 and was replaced by Arnaud de Servigny on the same day.
The Board has appointed one of the Non-Executive Directors (Vince O’Brien) to act as the Senior
Independent Director. The Board considers that three of the Non-Executive Directors (Vince O’Brien,
Sally Bridgeland, Lindsey Brace Martinez) are independent as envisaged by the QCA Code. Arnaud
de Servigny 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.
The Company anticipates a time commitment from the Non-Executive Directors of twenty days
per annum. This includes attendance at regular Board meetings, service on the Audit and Risk and
Remuneration Committees and a number of regular meetings to review and discuss progress with
the executive team. The Chief Executive works full time in the business and has no other significant
outside business commitments.
Board Committees
The Board has two standing Committees; the Audit and Risk Committee and the Remuneration
Committee. The Board may appoint other committees from time to time to consider specific matters.
The Audit and Risk Committee is responsible for overseeing financial reporting, risk management
and internal controls and external audit. Sally Bridgeland chairs this committee. The Committee
report is provided on pages 12 and 13.
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. Vince O’Brien
chairs this committee. The Committee’s report is provided on pages 14–16.
The Board considers the skills and knowledge of individual members of each committee upon
appointment and periodically, to ensure that each committee includes members with appropriate
expertise and who are able to offer an independent outlook.
These committees report to the Board on a regular basis. They have clearly defined terms of
reference which are published on the Company’s website.
06 GOVERNANCE AND FINANCIAL STATEMENTS 2018
Meetings
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 sufficiently in advance of meetings to enable
a proper review 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.
Details of the number of meetings of the Board (and any committees) during the year, together with
the attendance record of each Director, are shown in the table below:
Meeting attendance
Total number of meetings
Keith Falconer
Ian Simm
Vince O’Brien
Sally Bridgeland
Lindsey Brace Martinez1
Guy de Froment2
Arnaud de Servigny3
Board
Audit & Risk
Committee
Remuneration
Committee
9
6
9
9
8
8
6
1
5
4
5
3
2
4
4
3
3
1
1 Appointed to Audit & Risk Committee 7 December 2017
2 Resigned 12 June 2018
3 Appointed 12 June 2018. Arnaud attended all Board meetings he was eligible to attend
Appointment of new Directors
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.
Where new Board appointments are considered, the search for candidates will be conducted, and
appointments made, on merit, against objective criteria and with due regard for the benefits of
diversity on the Board, including gender. The Board also considers succession planning.
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.
Performance evaluation
The Board carries out an evaluation of its performance annually.
Formal evaluations are carried out to assess the performance of the Board and the individual
Directors which is led by the Chairman. The Board also completes an evaluation of the Chairman’s
performance which is led by the Senior Independent Director. The process this year followed the
same format as the prior year. Directors completed questionnaires which were followed up with
one to one meetings and a summary report of overall findings from the Chairman. The evaluations
confirmed a high rating for performance.
Areas of focus arising from this year’s evaluation include addressing added complexities arising
from completion of the acquisition of Pax World Management LLC, overseeing diversification of
the Group’s client base and reviewing Board composition to reflect the Group’s recent and planned
business growth. In September 2018, the Board also visited the Group’s office in New Hampshire to
meet with senior management.
The Board will continue to monitor its approach to the evaluation of effectiveness including the use
from time to time of external facilitation.
IMPAX ASSET MANAGEMENT GROUP PLC
07
CORPORATE GOVERNANCE CONTINUED
Board members maintain their skillsets through practice in day-to-day roles, enhanced with
attending specific training where required. This is a combination of in-house company arranged
briefings and external training.
The Company Secretary and UK Head of Compliance supports the Chairman in addressing the
training and development needs of Directors.
Resources
The Board uses external advisors where necessary to enhance knowledge or to gain access to
particular skills or capabilities. Accountants and lawyers are used for diligence work on acquisitions,
for example in relation to the acquisition of Pax World Management LLC. An external specialist
employment consultant was commissioned to conduct a staff engagement survey across the
Company in 2017. Specialist advisors have also been used by the Board in areas such as internal
audit and regulatory compliance.
Indemnity
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.
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
“FCA”), 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 31–33 of the Strategic Report.
Grant Thornton provide internal audit services to the Group.
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.
Culture
Integrity and appropriate conduct are an integral part of the Impax culture and values, and all our
business dealings. The Company undertakes regular review and monitoring of its policies in specific
areas such as anti-bribery and corruption, anti-money laundering, Code of Ethics compliance,
conflicts of interest, whistleblowing and information security.
We enjoy a strong collegial culture which we continue to evolve. We value meritocracy, openness,
fairness and transparency. The Company’s Culture and Values Committee, which has a rotating
membership open to all staff, meets regularly to assess progress and advance new initiatives
(the Board receives reports on key initiatives). Culture and values are also considered as part of
staff appraisals.
In 2017 the Board supported the executive team’s commissioning of a comprehensive staff
engagement survey. Relative to comparable companies the results were very positive and we are
working on those areas that can be improved. We plan to repeat this survey in future to ensure
that high levels of staff engagement and motivation are sustained, and to maintain a positive and
aspirational working environment which will enable the Company to continue to thrive and expand.
Impax is committed to promoting inclusion and diversity. During 2017 we formed a working group,
“Diversity Matters”, comprising individuals from across the Company. This group’s initial objective
was to refine our diversity statement to ensure that diversity was a top priority across the business
and that we aspire to best practice.
08 GOVERNANCE AND FINANCIAL STATEMENTS 2018
DIRECTORS’ REPORT
For the year ended 30 September 2018
DIVIDENDS
The Directors propose a final dividend of 3.0 pence per share (2017: 2.2 pence) which together
with the interim dividend of 1.1 pence per share (2017: 0.7 pence) and the special dividend of
2.6 pence already declared and paid, makes a total for the year ended 30 September 2018 of
6.7 pence per share (2017: 2.9 pence). The dividend will be submitted for formal approval at the
Annual General Meeting. These financial statements do not reflect the final dividend payable,
which will be accounted for in shareholders’ equity as an appropriation of retained earnings in
the year ending 30 September 2019.
The final dividend for the year ended 30 September 2017 was paid on 17 March 2018, being
2.2 pence per share. The trustees of the Impax Employee Benefit Trusts (“EBT”) waived their
rights to part of these dividends, leading to a total dividend payment of £2,752,107. The interim
dividend of 1.1 pence and the special dividend of 2.6 pence for the year ended 30 September 2018
was paid on 17 July 2018 and totalled £4,634,000. These payments are reflected in the statements
of changes in equity.
SHARES
The Company issued a total of 2,665,989 shares during the period as part of the acquisition of Impax
NH bringing total shares in issue to 130,415,087. The Impax Asset Management Group plc Employee
Benefit Trust 2012 and the Impax Group plc Employee Benefit Trust 2004 (together the “EBTs”)
made market purchases of 1,454,065 of the Company’s shares during the year and satisfied option
exercises in respect of 10,489,000 shares.
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 2018 and 30 September 2017 were:
Keith Falconer1
Ian Simm1
Vince O’Brien
Guy de Froment
Sally Bridgeland
Lindsey Brace Martinez
Arnaud de Servigny
30 September
2018
30 September
2017
6,637,775
9,545,919
110,000
10,489,290
9,486,002
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 2018.
Ian Simm has a 5.88 per cent interest in the capital of Impax Carried Interest Partner LP, a 5 per cent
interest in the capital of Impax Carried Interest Partner II LP, and a 4 per cent interest in the capital
of INEI III CIP LP, entities in which the Company holds an investment.
Ian Simm has been granted options over the Company’s Ordinary Shares which have not yet been
exercised as shown in the table below.
Year granted
2013 (options)
2014 (options)
Options
held
100,000
100,000
Exercise
price
47.9p
56.9p
Earliest to
exercise date
Latest to exercise
date
01/01/16
01/01/17
31/12/19
31/12/20
In addition, Ian Simm was granted 60,000 Restricted Share Awards in December 2017 which vest in
three equal tranches between December 2020 and 2022.
IMPAX ASSET MANAGEMENT GROUP PLC
09
DIRECTORS’ REPORT CONTINUED
For the year ended 30 September 2018
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 5 December 2018:
BNP Paribas Asset Management Holding
Ian R Simm1
Impax Asset Management Group plc Employee Benefit Trust 2012
Hargreave Hale Limited
Blackrock Investment Management
J Keith R Falconer1
Asset Management One
Hargreaves Lansdown Asset Management
Rathbone Investment Managers
Bruce Jenkyn-Jones2
Number
Percentage
31,920,000
24.5
9,545,919
9,107,873
7,302,500
7,031,271
6,637,775
5,474,955
5,199,113
5,129,149
4,951,699
7.3
7.0
5.6
5.4
5.1
4.2
4.0
3.9
3.8
1 Includes vested shares within sub-funds of the EBT 2004 from which the individual and their families may benefit.
2 Includes vested shares within sub-funds of the EBT 2004 from which the individual and their families may benefit
and vested but unexercised options.
In addition the EBT 2004 has a legal interest in a further 13,950,080 shares which have transferred
to sub-funds from which individuals and their families may benefit and holds 815,273 shares directly.
RISK
A description of the key risks facing the Group and policies and procedures in place to monitor or
mitigate the risk is provided on pages 31–33 of the Group’s Strategic Report.
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.
CREDITOR PAYMENT POLICY
The Group seeks to maintain good terms with its trading partners. 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 2018 were 29 (2017: 31).
CHARITABLE DONATIONS
During the year the Group has made donations to charities totalling £63,993.
10
GOVERNANCE AND FINANCIAL STATEMENTS 2018
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the Group and Parent Company
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, relevant and reliable;
• state whether they have been prepared in accordance with IFRS as adopted by the EU;
• assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or the
Parent Company or to cease operations, or have no realistic alternative but to do so.
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 are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error and 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.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic
Report and a Directors’ Report that complies with that law and those regulations.
AUDITOR
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 the Company’s auditor is aware of
that information. This confirmation is given pursuant to the section 418 of the Companies Act 2006
and should be interpreted in accordance therewith.
By order of the Board
Zack Wilson
Company Secretary
5 December 2018
Registered office
7th Floor, 30 Panton Street, London SW1Y 4AJ
IMPAX ASSET MANAGEMENT GROUP PLC
11
AUDIT AND RISK COMMITTEE REPORT
For the year ended 30 September 2018
COMMITTEE MEMBERS
The Audit and Risk Committee is comprised of
the following Non-Executive Directors: Sally
Bridgeland (Chairman), Vince O’Brien, Lindsey
Brace-Martinez and Arnaud de Servigny. Guy de
Froment was a member but resigned on 12 June
2018 and was replaced by Arnaud de Servigny.
MEETINGS
The Committee generally meets four times per
year. During the year the Committee met five
times, the fifth meeting being in relation to the
Pax acquisition. Details of attendance at the
meetings are shown on page 7.
ROLE AND RESPONSIBILITIES
The Committee’s responsibilities include:
Financial reporting
• monitoring the integrity of the financial
statements and formal announcements
relating to the Company’s and Group’s
financial performance;
• the implementation of new accounting
standards and policies;
Risk management and internal control
• reviewing the Group’s risk management
processes and risk reports;
• monitoring of the internal financial control
procedures;
• reviewing and recommending to the Board
for approval the Company’s Internal Capital
Adequacy Process (“ICAAP”);
• engagement and oversight of internal audit;
External auditors
• considering appointment, re-appointment
and removal of the external auditors and
approving the remuneration of the external
auditors;
• 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.
CHAIRMAN
SALLY BRIDGELAND
AUDIT AND RISK COMMITTEE MEMBERS
VINCENT O’BRIEN | LINDSEY BRACE MARTINEZ
| ARNAUD DE SERVIGNY
MEETINGS HELD
5
FOCUS FOR THE YEAR
• Reviewed and approved the acquisition
accounting for Impax NH
• Considered and approved the
governance arrangements and
financial reporting processes and
controls for the combined group
• Reviewed the controls in place for
strong cyber security of all our
systems, and the plans in place to
react to cyber attacks
• Evaluated the implementation of the
GDPR
12
GOVERNANCE AND FINANCIAL STATEMENTS 2018
EXTERNAL AUDITOR
KPMG LLP has acted as the auditor of the Group
since 2010 following a competitive tender. Jatin
Patel is the current audit partner and this is the
first year that he has signed the audit report.
Ethical standards would require him to rotate
off following the audit of the year ended 30
September 2022. The Committee considered
and agreed to the reappointment of the auditor
during the period.
Details of fees paid to the Company’s auditor
are shown in note 8 to the financial statements.
The Committee considered and agreed the
audit fee during the Period. Total fees paid for
non-audit services were £86,000. Other non-
audit work included tax advice and non-audit
fees as a percentage of total fees paid were 23
per cent. In the opinion of the Board, none of
the non-audit services provided any concern
as to the auditor’s independence or objectivity.
The Committee also considered if there were
any other factors impacting the auditor’s
independence and objectivity and concluded
that there were none. As part of this assessment
the committee received and considered a report
from KPMG which confirmed that in their view
they were independent.
INTERNAL AUDIT
The Group uses Grant Thornton to provide
Internal Audit services and complete internal
audits of areas suggested by management and
approved by the Committee. Two audits were
completed during the year. The Committee
are considering expanding the number of
audits completed.
Sally Bridgeland
Chairman of the Audit and Risk Committee
5 December 2018
FINANCIAL REPORTING
The Committee has reviewed the Group’s Interim
Report and the Annual Report and Accounts and
recommended them to the Board for approval.
The Committee has considered whether suitable
accounting policies have been adopted and
whether management have made appropriate
estimate and judgements when preparing the
financial statements.
The Committee received reports from the
external auditor, KPMG on the audit scope and
strategy and their independent assessment of
the management conclusion on key areas of
judgements and estimates. KPMG attended the
Committee meetings following the half and full
year ends and met privately with the Committee.
The key accounting estimates and judgements
considered by the Committee during the period
were as follows:
• Accounting for the acquisition of Impax NH
The acquisition required estimates to be made
in respect of the fair value of management
contracts acquired with the acquisition and
of the contingent consideration payable for
the acquisition. The Committee considered
reports from the Finance function which
described the key assumptions used and was
satisfied with the values determined.
RISK MANAGEMENT AND INTERNAL CONTROL
The Company’s risk management process and
the risks which are considered to be the key
risks facing the Group are described on pages
31–34 of the Strategic Report. The committee
has received and considered a report from
the Chief Risk Officer at each of its meetings
and reviewed the Group risk assessment. The
Committee also received specific presentations
from management on cyber security and on the
implementation of the GDPR regulations.
Prior to the completion of the acquisition of
Pax the Committee reviewed the proposed
governance arrangements and the financial
reporting processes and controls for the
combined group.
The Committee has also reviewed and approved
the Group’s ICAAP and the Group’s capital
arrangements following the acquisition of Pax.
IMPAX ASSET MANAGEMENT GROUP PLC
13
REMUNERATION COMMITTEE REPORT
For the year ended 30 September 2018
COMMITTEE MEMBERS
The Remuneration Committee is comprised of
the following Non-Executive Directors: Vince
O’Brien (Chairman), Sally Bridgeland, Lindsey
Brace Martinez and Arnaud de Servigny. Guy de
Froment was a member but resigned on 12 June
2018 and was replaced by Arnaud de Servigny.
REMUNERATION ACTIVITIES DURING THE YEAR
During the past year, the Committee met four
times to undertake the following:
• review and recommend the remuneration
and terms and conditions of service of the
Directors and senior employees;
• approve the overall remuneration policy to
ensure that this is designed to be in line with
the business strategy, objectives and long-
term interests of the wider group;
• approve all share-based awards including the
new Impax Asset Management Group plc UK
Share Incentive Plan; and
• ensure that the Company’s policies and
practices are compliant with the FCA
Remuneration Code and associated
remuneration related Regulations.
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. The Committee recognise the
importance of providing a remuneration package
that will, without promoting undue risk, attract,
retain and incentivise as well as encourage
increased shareholder value in the short and
longer-term.
For the year ended 30 September 2018 there
are potentially three 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.
CHAIRMAN
VINCENT O’BRIEN
REMUNERATION COMMITTEE MEMBERS
LINDSEY BRACE MARTINEZ | ARNAUD
DE SERVIGNY | SALLY BRIDGELAND
MEETINGS HELD
4
FOCUS FOR THE YEAR
• Considered and recommended
the implementation of a new long
term incentive scheme which
encourages retention of shares
over a 10 year period
• Reviewed and approved the
remuneration arrangements
for Impax NH employees
14
GOVERNANCE AND FINANCIAL STATEMENTS 2018
(ii) Variable remuneration
Variable remuneration consists of a cash bonus and share-based awards. For Impax LN aggregate
variable remuneration will typically be capped at 45 per cent of operating earnings before variable
remuneration, interest and taxes. Impax NH senior employees receive a bonus and may also be eligible to
share in a cash bonus capped at 10% of Impax NH’s EBITDA (reduced by a charge to reflect the cost
of Restricted Stock Units awarded to Impax NH employees).
(A) Cash bonus
For Impax LN the cash bonus is determined based on the profitability of the relevant area where
the employee works and on the individual’s personal performance. For Impax NH the cash bonus is
based solely on the individual’s performance.
(B) Share-based awards
The Group has approved the award of 478,250 restricted shares to Impax LN employees under
the Group Restricted Share Scheme (“RSS”) and 500,000 options under the Group’s Long-term
Employee Share Ownership Plan (“LTOP”) in respect of services during the Period. The award of
these shares and options will be communicated to the relevant employees following announcement
of the Group’s results for the year ended 30 September 2018.
Under the RSS, shares awarded to employees are initially held by a nominee and the employee only
gains unfettered access to the shares after three, four and five year periods (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 but will not be able to sell them.
Options awarded under the LTOP have a 100p exercise price and vest after five years subject to
continuous employment and are then subject to a holding period of a further five years.
The Chief Executive and other Impax LN employees continue to benefit from share-based payment
awards made under the previous share-based incentive plans (the EIA Extension, ESOP 2011-15
and RSS 2014-2015, 2017) as more fully described in note 10 of the financial statements. Impax NH
senior employees benefit from the award of Restricted Share Units that were made at the time of the
acquisition. Certain senior managers hold shares in Impax NH. These shares were originally acquired
using loans from Impax NH which in part remain outstanding and the shares remain subject to
employment restrictions (see note 4 of the financial statements for further information).
The Chief Executive and other employees continue to benefit from share-based payment awards
made under the previous share-based incentive plans (the EIA Extension, ESOP 2011-15 and RSS
2014-2015, 2017) as more fully described in note 10 to the financial statements.
In addition, the Chief Executive and certain senior employees have been awarded interests in the
partnerships, Impax Carried Interest Partner LP, Impax Carried Interest Partner II LP and INEI III CIP
LP. These partnerships will receive payments from the Group’s private equity funds depending on
the fund’s performance.
(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.
IMPAX ASSET MANAGEMENT GROUP PLC
15
REMUNERATION COMMITTEE REPORT CONTINUED
For the year ended 30 September 2018
DIRECTORS’ REMUNERATION DURING THE YEAR
Details of each Director’s remuneration are shown below.
Fees/salary
£
Benefits in kind
£
Keith Falconer
Ian Simm
Guy de Froment
Arnaud de Sevigny
Vince O’Brien
Sally Bridgeland
Lindsey Brace Martinez
70,000
246,164
20,808
10,000
40,000
40,000
37,276
Bonus
£
–
–
7,440
700,000
–
–
–
–
–
–
–
–
–
–
2018 Total
2017 Total
£
70,000
953,604
20,808
10,000
40,000
40,000
37,276
£
67,500
852,546
30,000
–
37,500
37,500
39,237
464,248
7,440
700,000
1,171,688
1,064,283
The Company paid £76,750 to Lindsey Brace Martinez during the year for consultancy services
provided (2017: £nil). Lindsey Brace Martinez is also a Director of Board of the Pax World Funds
Series Trust 1 acting as the Group’s representative on this Board. The Company paid her £36,237
for this service.
Ian Simm exercised options over a total of 450,000 shares during the Period generating a profit
of £415,800.
Ian Simm received a distribution of €1,147,037 from Impax Carried Interest Partner II LP during the
period being his share of the carried interest paid by the Group’s second private equity fund.
Ian Simm was granted 60,000 Restricted Share Awards in December 2017 which vest in three
equal tranches between December 2020 and 2022.
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 are terminable 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.
Vince O’Brien
Chairman, Remuneration Committee
5 December 2018
16
GOVERNANCE AND FINANCIAL STATEMENTS 2018
INDEPENDENT AUDITOR’S REPORT
1. OUR OPINION IS UNMODIFIED
We have audited the financial statements of Impax Asset Management Group plc (“the Company”)
for the year ended 30 September 2018 which comprise the consolidated income statement,
consolidated statement of comprehensive income, consolidated and Company statement of financial
position, consolidated and Company statement of changes in equity, consolidated and Company
cash flow statements and the related notes, including the accounting policies in note 34.
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 2018 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the European Union (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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical
responsibilities under, and are independent of the Group in accordance with, UK ethical requirements
including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence
we have obtained is a sufficient and appropriate basis for our opinion.
Overview
Materiality:
£731k (2017:£308k)
Group financial statements as a whole
5% (2017: 5%) of Group profit before tax
Coverage
Risks of material misstatements:
100 % (2017: 100%) of Group profit before tax
vs 2017
New Group risks
Acquisition of Impax LLC
Recurring Parent Company risks
Investment in subsidiary undertakings
IFRS 2 charges in respect of the
acquisition of Impax LLC
IMPAX ASSET MANAGEMENT GROUP PLC
17
INDEPENDENT AUDITOR’S REPORT CONTINUED
2. KEY AUDIT MATTERS: OUR ASSESSMENT OF RISKS OF MATERIAL MISSTATEMENT
Key audit matters are those matters that, in our professional judgement, were of most significance
in the audit of the financial statements and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by us, including those which had the greatest
effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. In arriving at our audit opinion above, the key audit matters, in decreasing
order of audit significance, were as follows:
Acquisition of Impax LLC
Subjective valuation
Our procedures included:
The risk
Our response
£25.7 million fair value of
intangible assets and £3.0
million fair value of contingent
consideration.
Small changes in the assumptions
used in determining contingent
consideration and intangible
assets could have a material
impact on their valuation.
Refer to pages 12 and 13 (Audit
Committee Report), page 58
(accounting policy) and page
28 (financial disclosures).
Contingent consideration
— Test of detail: Obtained the Sale and
Purchase Agreement to understand
what consideration was payable in
respect of the acquisition and the terms
of the contingent consideration.
— Benchmarking assumptions: We
challenged the key assumptions in
calculating the contingent consideration
payable. These included fund
performance, net flows and discount
rate. Our challenge was based on
historical experience and market
comparable data obtained publicly or
through internally derived data.
— Sensitivity analysis: We performed
sensitivity analysis on the key
assumptions above.
Intangible assets
— Benchmarking assumptions: We
challenged the assumptions made by
management in calculating the fair value
of intangible assets. These included
fund performance, net flows, discount
rate, operating margin and fund life.
Our challenge was based on historical
experience and market comparable data
obtained publicly or through internally
derived data.
— Sensitivity analysis: We performed
sensitivity analysis on the key
assumptions above.
18
GOVERNANCE AND FINANCIAL STATEMENTS 2018
IFRS 2 charges in respect of
the acquisition of Impax LLC
(£1.8 million; 2017: nil)
Refer to pages 12 and 13 (Audit
Committee Report), page 58
(accounting policy) and page
28 (financial disclosures).
The risk
Our response
Subjective estimate
Our procedures included:
The accounting for the
replacement share awards
in Impax LLC, including the
assumptions included in the
fair value of the awards and the
allocation between acquisition
price and on going employment
expense, is complex.
— Tests of detail: We obtained and
inspected the share exchange
agreement for evidence of the
conditions of the agreement and
the value of the share agreement on
acquisition, we assessed whether the
excess of the fair value of the put/call
options used the appropriate inputs
and re-calculated in accordance with
accounting standards.
— Tests of detail: We assessed the
adequacy of the Group’s disclosures
about the replacement share awards.
Recoverability of parent
company’s investment in
subsidiaries:
(£34.4 million; 2017: £21.2
million)
Refer to pages 12 and 13 (Audit
Committee Report), page 61
(accounting policy) and page
68 (financial disclosures).
Low risk, high value
Our procedures included:
The carrying amount of the
Parent Company’s investments
in subsidiaries represents 49%
(2017: 63%) of the Company’s
total assets. The recoverability is
not considered to contain a high
risk of significant misstatement
or be subject to significant
judgement. However, given the
size of the balance in the context
of the Parent Company financial
statements this is considered to
be the area that had the greatest
effect on our overall parent
company audit.
— Test of detail: We compared the carrying
amount of investment balances to net
assets in the respective subsidiary’s
trial balance to identify whether their
net assets, being an approximation of
their minimum recoverable amount,
were in excess of their carrying amount
and inspected that the subsidiaries had
historically been profit making.
— Assessing subsidiary auditors: Assessed
the work performed by the subsidiary
audit team on the subsidiary audits and
considered the results of that work on
the subsidiary’s profits and net assets.
Through disposals, the Group no longer has material holdings in unlisted investments and therefore,
it is not separately identified in our report this year.
3. OUR APPLICATION OF MATERIALITY AND AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Materiality for the group financial statements as a whole was set at £731k (2017: £308k), determined
with reference to a benchmark of Group profit before taxation (of which it represents 5% (2017: 5%).
Materiality for the Parent Company financial statements as a whole was set at £701k (2017: £307k),
determined with reference to a benchmark of total assets (of which it represents 1%).
We agreed to report to the Audit Committee any corrected and uncorrected identified
misstatements exceeding £35k (2017: £15k) in addition to other identified misstatements that
warranted reporting on qualitative grounds.
IMPAX ASSET MANAGEMENT GROUP PLC
19
INDEPENDENT AUDITOR’S REPORT CONTINUED
Of the group’s 2 (2017: 1) reporting components, we subjected 2 (2017: 1) to full scope audits for
group purposes. The components within the scope of our work accounted for the percentages
illustrated in the charts below. The Group team instructed component auditors as to the significant
areas to be covered and the information to be reported back. The Group team approved the
component materialities, which ranged from £375k to £726k (2017: n/a), having regard to the mix
of size and risk profile of the Group across the components. The work on 1 of the 2 components
(2017: 0 of the 1 component) was performed by component auditors and the rest, including the
audit of the parent company, was performed by the Group team. The Group team visited 2 (2017: 1)
component location to assess the audit risk and strategy. Telephone conference meetings were also
held with the component auditors. At these meetings, the findings reported to the Group team were
discussed in more detail, and any further work required by the Group team was then performed by
the component auditors.
Group Profit before tax
£14.6m (2017: £5.9m)
Group Materiality
£731k (2017: £308k)
£731k
Whole financial statements materiality
(2017: £308k)
£548k
Range of materiality at 2 components
(£375K – £726K) (2017: n/a)
Group Profit before tax
Group materiality
£35k
Misstatements reported
to the audit committee
(2017: £15k)
Group revenue
Group profit before tax
Group total assets
100%
100
100
Full scope for Group audit purposes 2018
Full scope for Group audit purposes 2017
100%
100
100
100%
100
100
20
GOVERNANCE AND FINANCIAL STATEMENTS 2018
4. WE HAVE NOTHING TO REPORT ON GOING CONCERN
We are required to report to you if we have concluded that the use of the going concern basis of
accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant
doubt over the use of that basis for a period of at least twelve months from the date of approval of
the financial statements. We have nothing to report in these respects.
5. WE HAVE NOTHING TO REPORT ON THE OTHER INFORMATION IN THE ANNUAL REPORT
The Directors are responsible for the other information presented in the Annual Report together
with the financial statements. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our
financial statements audit work, the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Strategic Report and Directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the Strategic Report and the Directors’ report;
•
in our opinion the information given in those reports for the financial year is consistent with the
financial statements; and
•
in our opinion those reports have been prepared in accordance with the Companies Act 2006.
6. WE HAVE NOTHING TO REPORT ON THE OTHER MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
Under the Companies Act 2006, we are required 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.
We have nothing to report in these respects.
IMPAX ASSET MANAGEMENT GROUP PLC
21
INDEPENDENT AUDITOR’S REPORT CONTINUED
7. RESPECTIVE RESPONSIBILITIES
Directors’ responsibilities
As explained more fully in their statement set out on page 11, the Directors are responsible for: the
preparation of the financial statements including being satisfied that they give a true and fair view;
such internal control as they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error; assessing the Group and
Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern; and using the going concern basis of accounting unless they either intend to liquidate
the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue our opinion in an
auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/
auditorsresponsibilities.
8. THE PURPOSE OF OUR AUDIT WORK AND TO WHOM WE OWE OUR RESPONSIBILITIES
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.
Jatin Patel (Senior Statutory Auditor)
for and on behalf of KPMG LLP,
Statutory Auditor
Chartered Accountants
15 Canada Square,
London
5 December 2018
22
GOVERNANCE AND FINANCIAL STATEMENTS 2018
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Revenue
Operating costs
Fair value (losses)/gains on investments and
other financial (expense)/income
Interest expense
Non-controlling interest
Change in third-party interests in consolidated funds
Profit before taxation
Taxation
Profit after taxation
Earnings per share
Basic
Diluted
Dividends per share
Special dividend paid
Interim dividend paid and final dividend declared for the year
Notes
7
8
11
12
29
13
14
15
15
16
16
2018
£000
65,683
2017
£000
32,694
(50,200)
(26,461)
(337)
(670)
184
(40)
14,620
(3,219)
11,401
9.0p
8.9p
2.6p
4.1p
(141)
–
–
(239)
5,853
1,814
7,667
6.5p
6.2p
–
2.9p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Profit for the year
Change in value of cash flow hedges
Tax on changing value of cash flow hedges
Exchange differences on translation of foreign operations
Total other comprehensive income
Total comprehensive income for the year attributable to
equity holders of the parent
2018
£000
11,401
(74)
14
1,212
1,152
Restated*
2017
£000
7,667
157
(25)
(44)
88
12,553
7,755
*
Total other comprehensive income for the year has been restated to exclude the tax credit on long-term incentive schemes which is now being
recognised within the transaction with owners section within the consolidated changes of equity as required by IFRSs.
All amounts in other comprehensive income may be reclassified to income in the future.
The statement has been prepared on the basis that all operations are continuing operations.
Adjusted results are provided in Note 5.
The notes on pages 27–63 form part of these financial statements.
IMPAX ASSET MANAGEMENT GROUP PLC
23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2018
Company No: 03262305
Assets
Goodwill
Intangible assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Trade and other receivables
Investments
Current tax asset
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
Equity attributable to owners of the Company
Non-controlling interests
Total equity
Trade and other payables
Loans
Third-party interest in consolidated funds
Current tax liability
Total current liabilities
Accruals
Loans
Deferred tax liability
Total non-current liabilities
Total equity and liabilities
2018
2017
Notes
£000
£000
£000
£000
17
18
19
14
20
21
23
23
27
29
24
25
26
25
14
12,171
25,565
1,836
4,450
15,858
4,349
890
11,211
15,529
1,304
9,291
1,014
(44)
41,054
24,755
3,326
87
130
228
6,652
3,164
1,681
17
461
1,947
44,022
4,106
11,732
13,013
2,720
7,780
12,932
47,837
91,859
48,177
52,283
52,619
898
53,517
1,277
4,093
(198)
16
30,456
11,282
–
4,846
180
35,644
–
35,644
28,298
16,308
331
–
–
10,044
91,859
331
52,283
Authorised for issue and approved by the Board on 5 December 2018. The notes on pages 27–63
form part of these financial statements.
Ian R Simm
Chief Executive
24
GOVERNANCE AND FINANCIAL STATEMENTS 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Share
capital
£000
Share
premium
£000
Exchange
translation
reserve
£000
Hedging
reserve
£000
Retained
earnings
£000
Total
Equity
£000
1,277
4,093
(154)
(116)
21,645
26,745
Notes
16
Balance at 1 October 2016
Transactions with owners:
Dividends paid
Acquisition of own shares
Cash received on option exercises
Tax credit on long-term incentive
schemes (restated*)
Share based payment charge
10
Total transactions with owners (restated*)
Profit for the year
Other comprehensive income:
Change in value of cashflow hedges
Tax on changes in value of cashflow
hedges
Exchange differences on translation
of foreign operations
Total other comprehensive Income
(restated*)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 30 September 2017
1,277
4,093
16
4
10
Transactions with owners:
Shares issued
Dividends paid
Acquisition of own shares
Cash received on option exercises
Impax NH Management equity
scheme – value assigned to
pre-acquisition service
Tax credit on long-term incentive schemes
Fair value of put option over
non-controlling interest
Share based payment charges
Total transactions with owners
Profit for the year
Other comprehensive income:
Change in value of cashflow hedges
Tax on changes in value of cashflow
hedges
Exchange differences on translation
of foreign operations
Total other comprehensive income
27
5,198
–
–
–
–
–
–
–
–
–
–
–
–
–
–
27
5,198
–
–
–
–
–
–
–
–
–
–
Balance at 30 September 2018
1,304
9,291
–
–
–
–
–
–
–
–
–
(44)
(44)
(198)
–
–
–
–
–
–
–
–
–
–
–
–
1,212
1,212
1,014
–
–
–
–
–
–
–
157
(25)
–
132
16
–
–
–
–
–
–
–
–
–
–
(2,672)
(2,672)
(950)
(950)
1,096
1,096
2,540
2,540
1,130
1,130
(1,144)
(1,144)
7,667
7,667
–
–
–
–
157
(25)
(44)
88
30,456 35,644
–
5,225
(7,386)
(7,386)
(2,534)
(2,534)
4,477
4,477
1,917
1,917
2,352
2,352
(1,451)
(1,451)
1,822
1,822
(803)
4,422
11,401
11,401
(74)
14
–
(60)
(44)
–
–
–
–
(74)
14
1,212
1,152
41,054 52,619
* See consolidated statement of comprehensive income on page 23 for details of the restatement.
The notes on pages 27–63 form part of these financial statements.
IMPAX ASSET MANAGEMENT GROUP PLC
25
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Operating activities
Cash generated from operations
Corporation tax refund/(payment)
Net cash generated from operating activities
Investing activities
Notes
31
2018
£000
23,436
1,583
25,019
Acquisition of subsidiary (Impax NH), net of cash acquired
4
(23,893)
Deconsolidation of investment fund
Net acquisition of property plant & equipment and intangible assets
Net investments redemptions from unconsolidated Impax funds
Net investment disposals from consolidated Impax funds*
Settlement of investment related hedges
(Increase)/decrease in cash held in money market funds and long-term deposit
accounts
Investment income received
Net cash used by investing activities
Financing activities
Proceeds from bank borrowings
Repayment of bank borrowings
Interest paid on bank borrowings
Dividends paid
Acquisition of own shares
Cash received on exercise of Impax share options
Investments made by third-party investors into consolidated funds*
Net cash generated by financing activities
(255)
(1,690)
3,938
932
(987)
(3,431)
279
(25,107)
17,616
(8,779)
(464)
(7,386)
(2,534)
4,477
17
2,947
2017
£000
8,384
(3,070)
5,314
–
–
(367)
455
658
(1,460)
5,111
639
5,036
–
–
–
(2,672)
(950)
1,096
2,482
(44)
Net increase 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
2,859
10,306
12,932
(262)
15,529
2,804
(178)
12,932
23
* The Group consolidates certain funds which it manages, these represent cash flows of these funds.
Cash and cash equivalents under IFRS does not include deposits in money market funds and cash
held in deposits with more than an original maturity of three months. The Group however considers
its total cash reserves to include these amounts. Cash held by consolidated funds and cash in
research payment accounts are not included in cash reserves.
Movements on cash reserves are shown in the table below:
Cash and cash equivalents
Cash invested in money market funds
and long-term deposit accounts
Cash in RPAs
Cash held by consolidated funds
Total Group cash reserves
At the
beginning
of the year
£000
12,932
7,780
–
(348)
20,364
Cashflow
£000
2,859
3,431
(2,074)
281
4,497
Foreign
exchange
£000
At the end
of the year
£000
(262)
15,529
–
–
–
11,211
(2,074)
(67)
(262)
24,599
26
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
1 REPORTING ENTITY
Impax Asset Management Group plc (the “Company”) is incorporated and domiciled in the UK
and is listed on the Alternative Investment Market (“AIM”). These consolidated financial statements
comprise the Company and its subsidiaries (together referred to as the “Group”). The Company’s
separate financial statements are shown on pages 64–73.
2 BASIS OF PREPARATION
These financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRSs”) adopted for use by the European Union. At the time of approving the financial
statements, the Directors have 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.
Details of the significant accounting policies adopted by the Group are shown in note 34.
The financial statements are presented in sterling. All amounts have been rounded to the nearest
thousand unless otherwise indicated.
3 USE OF JUDGEMENTS AND ESTIMATES
In preparing these financial statements management has made judgements and estimates that affect
the reported amounts of assets, liabilities, income and expenses. Actual results may differ from
estimates. Revisions to estimates are recognised prospectively. The most significant judgements
and estimates are described below.
A) Judgements
– Consolidation of managed funds (only significant for the year ended 30 September 2017)
The Group invests in certain funds that it manages. In such cases we have to determine whether
these funds should be consolidated and therefore record the funds underlying investments on our
balance sheet along with their cash and other assets and liabilities. The key judgements made in
determining whether these funds are consolidated include whether returns received by the Group
constitute an ownership interest and whether the Group controls the fund. Further information
provided on the judgements made is given in Note 21.
B) Estimates
– Determining the value of acquired management contracts and their useful economic life (see note 4)
The Group acquired contracts to manage the Pax World funds as part of the acquisition of Impax
NH. We have used a discounted cashflow model to value the contracts which requires us to estimate
future inflows into, and the performance of, the funds along with costs incurred in managing the
contracts. If these funds perform below expectations and actual and expected flows or performance
are less than these estimates we may be required to impair the value of these assets. The key
assumptions used were annual fund performance of five per cent, inflows averaging US$220
million per year and an operating margin of 20%. Changes in the assumptions would give rise to
impairments as follows: a consistent ten per cent decrease in inflows – impairment of £0.3 million;
a 100 basis point annual reduction in performance each year – impairment of £1.6 million; a one per
cent annual reduction in operating margin – impairment of £1.1 million.
IMPAX ASSET MANAGEMENT GROUP PLC
27
3 USE OF JUDGEMENTS AND ESTIMATES CONTINUED
– Determining the amount of contingent consideration payable for the acquisition of Impax NH (see
note 4)
As described in Note 4 contingent consideration is payable on the acquisition based on the AUM
at certain dates in the future. We are required to estimate the amount payable which involves
estimating the inflows into Impax NH funds and their performance. The estimates used were annual
inflows of US$360 million and annual performance of five per cent. If actual inflows and performance
are higher than these estimates this would result in a charge to the income statement or, if lower, a
credit to the income statement. A consistent ten per cent increase in annual inflows gives rise to a
charge to the income statement of £0.7 million. A 100 basis point increase in annual performance
would give rise to a charge of £1.0 million.
– Determining the value of unlisted investments (see note 21)
The Ensyn investment and the Private Equity investments held by the Group are recorded at fair
value. The investments are not listed and accordingly estimates are required to determine their fair
value. The actual sales price of these investments may be higher or lower than the estimate made
with the difference being recorded in fair value gains or losses in the future. The methodology used
to determine the fair values are described in note 21.
– Determining the share-based payment charge (see note 10)
The Group makes share based payments (share options, restricted share awards and other share
awards) to staff. The value of these is estimated using the Black-Scholes-Merton or binomial model.
Key estimates include the volatility of Impax shares (which is determined based on historical
volatility), Impax’s dividend yield and the risk free rate.
4 ACQUISITION OF PAX WORLD MANAGEMENT LLC
On 18 January 2018, the Group completed the acquisition of Pax World Management LLC (“Pax”).
Pax is a recognised leader in the field of sustainable investing in the United States. Based in
Portsmouth, New Hampshire, Pax manages 11 mutual funds and at the date of acquisition had
assets under management of £3.5 billion. This business combination creates scale for the Group’s
operations in North America and broadens the range of investment strategies the Group offers
clients, including fixed income and passive equity.
Following completion of the acquisition Pax was renamed Impax Asset Management LLC (“Impax NH”).
From the date of acquisition, Impax NH has contributed £17,421,000 of revenue and £2,271,000 of
the adjusted operating profit of the Group. If the acquisition had taken place at the beginning of the
year, revenue for the Group would have been £73,031,000 and the adjusted operating profit would
have been £21,465,000.
The Group has initially acquired an ca. 83.3 per cent interest of Pax’s share capital from the selling
shareholders (the “Selling Shareholders”) in exchange for initial cash payable of of $36.2 million,
2,665,989 Impax shares and up to $31.3m of contingent payments (“Contingent Consideration”).
Pax’s management and staff shareholders (the “Management Shareholders”), representing
the remaining ca.16.7 per cent of Pax’s issued share capital will retain their shareholding until
2021 when if either Impax or the Pax Management Shareholders exercise a put and call option
arrangement, the Group would acquire their entire holding for US$8.3 million and up to $6.3
million of Contingent Consideration. This would be paid in 2021 in Impax equity and/or cash, as the
Group elects.
The cash payable on acquisition was determined as US$38.1 million less US$1.9 million of balance
sheet adjustments for working capital.
The number of Group shares issued to the Selling Shareholders was determined using an agreed
value of US$6.1 million, the 20 day average of the Group’s share price to 12 January 2018 being 170.19
pence and a US$/GBP exchange rate of 0.7403. The fair value of these shares used to determine
the total consideration in the table below was determined to be 196 pence, using the Group’s mid-
market closing share price on 17 January 2018.
28
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 The contingent consideration will be determined based on Impax NH’s average AUM as at 30 June
2020, 30 September 2020 and 31 December 2020 and will rise linearly from zero, if Impax NH’s
average AUM is not more than US$5.5 billion, to US$37.5 million for the entire share capital of Impax
NH, if Impax NH’s average AUM is $8 billion or above. To the extent that Impax NH has achieved
these performance targets, based on Impax NH’s average AUM as at 31 December 2018, 31 March
2019 and 30 June 2019, up to $8.3 million of Contingent Consideration will become payable to the
Selling Shareholders within 45 days of 30 June 2019. The fair value of the Contingent Consideration
payable to the Selling Shareholders has been estimated as $4.2 million at the acquisition date. As
with the initial consideration, settlement of any Contingent Consideration payable to Impax NH’s
Management Shareholders is expected to be made in 2021 in the Group’s ordinary shares at the
share price prevailing at the time and or in cash if Impax so elects.
Prior to the acquisition, Management Shareholders acquired their stake in Impax NH using loans
provided by Impax NH with part of the distributions made by Impax NH being used to repay the
loan and interest. The shares were subject to certain restriction linked to the employment of the
individual. On acquisition the Group agreed to extend the period of these loans until 2021 in line
with the put and call arrangements over the shares and have retained certain of the employment
restrictions on the shares. The original arrangement is considered to be a share based payment for
the individuals which has been replaced by a new share based payment in the Group’s shares. The
fair value of this equity scheme assigned to pre-acquisition service of £1.8 million is included as part
of the consideration on acquisition and a charge for new share based payment award is included in
the income statement over the period from acquisition to 31 December 2021, when the employment
restriction over the shares ends. Accordingly, the value of this at 30 September is £1.9 million due to
changes in foreign exchange.
The acquisition has been accounted for using the acquisition method. These consolidated financial
statements include the results of Impax NH for the 8.5 month period from the acquisition date.
An analysis of the consideration paid, the recognised amounts of asset acquired and liabilities
assumed and the resulting goodwill is provided below.
Consideration
Cash and cash equivalents
Group shares – 2,665,989 shares
Contingent Consideration
Value assigned to management equity scheme
Recognised amounts of identifiable assets acquired and liabilities assumed
Assets
Property, plant and equipment
Intangible assets – management contracts
Cash
Trade receivables
Total assets
Liabilities
Trade and other payables
Total liabilities
Total identifiable net assets at fair value
Non-controlling interest
Goodwill arising on acquisition
Total
£000
26,209
5,225
3,039
1,806
36,279
£000
67
25,669
2,316
3,041
31,093
(3,763)
(3,763)
27,330
(982)
9,931
36,279
IMPAX ASSET MANAGEMENT GROUP PLC
29
4 ACQUISITION OF PAX WORLD MANAGEMENT LLC CONTINUED
Goodwill and intangible assets
The goodwill recognised is primarily attributed to the expected synergies and other benefits
from combining the assets and activities of Impax NH with those of the Group.
The intangible assets acquired on acquisition represent investment management contracts.
These are amortised over an 11 year life.
The acquired intangible assets and goodwill are deductible for US tax purposes.
Minority interest
Impax NH owns 51% of Pax Ellevate Management LLC with the remaining shares being held by
Ellevate Asset Management LLC (“EAM”). EAM has a put right to sell its Pax Ellevate units to Impax
NH at any time. A liability is recorded for the value of this put within Trade and other payables with
a corresponding charge to equity. The 49% non controlling interest is determined based on the fair
value of the Pax Ellevate Management net assets (including intangible assets).
Transaction Costs
Transaction costs have been expensed in the income statement and are part of operating cash flows.
Pre-existing relationships
Impax LN sub managed Impax NH’s Pax Global Environmental Markets Fund prior to the acquisition
and continues to carry out this activity. The contract was and continues to be at fair value and
accordingly no adjustment has been made to the acquisition accounting.
Analysis of cash flows on acquisition:
Cash acquired with subsidiary
Cash paid
Net cash flow on acquisition
£000
2,316
(26,209)
(23,893)
30
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 5 ADJUSTED PROFITS AND EARNINGS
The reported operating earnings, profit before tax and earnings per share are substantially affected
by non-recurring acquisition costs, business combination affects and other items. The Directors have
therefore decided to report an Adjusted operating profit, Adjusted profit before tax and Adjusted
earnings per share which exclude these items in order to enable comparison with peers and provide
consistent measures of performance over time. A reconciliation of the adjusted amounts to the IFRS
reported amounts is shown below.
Year ended 30 September 2018
Adjustments
Non-
recurring
acquisition
costs
£000
Business
combination
effects
£000
Reported –
IFRS
£000
65,683
(50,200)
Other
£000
Adjusted
£000
65,683
(45,696)
866
1,676
(170)
236
Income statement
Revenue
Operating costs
Acquisition costs
Amortisation of intangibles arising
on acquisition (see Note 4)
Credit from contingent consideration
adjustment
Acquisition equity incentive scheme
charges (see Note 4)
Mark to market charge on equity awards
1,896*
1,896
Operating Profit
15,483
866
1,742
Fair value (losses)/gains on investments
and other financial (expense)/income
Interest payable
Non-controlling interest
Change in third-party consolidated funds
Profit before taxation
Taxation
Tax credit on adjustments
Profit after taxation
Diluted earnings per share
(337)
(670)
184
(40)
14,620
(3,219)
11,401
8.9p
254
(170)
866
1,996
1,726
(120)
746
0.6p
1,996
1.7p
(328)
1,398
1.2p
* This charge is offset by £2,352,000 of tax credits shown in the statement of changes in equity.
19,987
(253)
(670)
184
(40)
19,208
(3,667)
15,541
12.4p
IMPAX ASSET MANAGEMENT GROUP PLC
31
5 ADJUSTED PROFITS AND EARNINGS CONTINUED
Year ended 30 September 2017
Adjustments
Non-
recurring
acquisition
costs
£000
Reported –
IFRS
£000
32,694
(26,461)
999
Other
£000
Adjusted
£000
32,694
(23,365)
6,233
999
2,097
2,097
9,329
(141)
(214)
(355)
(239)
5,853
1,814
7,667
6.2p
999
1,883
(239)
8,735
(1,074)
(2,888)
999
0.9p
(1,005)
7,661
(1.2)p
5.9p
Income statement
Revenue
Operating costs
Acquisition costs
Amortisation of intangibles arising
on acquisition (see Note 4)
Acquisition equity incentive scheme
charges (see Note 4)
Mark to market charge on equity awards
Operating Profit
Fair value (losses)/gains on investments
and other financial (expense)/income
Interest payable
Non-controlling interest
Change in third-party consolidated funds
Profit before taxation
Taxation
Tax credit on adjustments
Profit after taxation
Diluted earnings per share
The adjusted diluted earnings per share is calculated using the adjusted profit after taxation shown
above with a further adjustment for profit attributable to owners of restricted shares of £738,000
(see Note 15). The diluted number of shares is the same as used for the IFRS calculation of earnings
per share (see Note 15).
32
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 Mark to market charge on equity incentive awards
The group has awarded employees in prior years and in the current period options over the Group’s
shares, some of which are either unvested or unexercised at the balance sheet date. The Group has
also made awards of restricted shares (“RSS awards”) the majority of which have not vested at the
balance sheet date. Employers’ National Insurance Contributions (“NIC”) are payable on the option
awards when they are exercised and on the RSS awards when they vest, based on the valuation of
the underlying shares at that point. The Group does however receive a corporation tax credit equal
to the value of the awards at the date they are exercised (options) or vest (RSS awards). A charge is
accrued for the NIC within IFRS operating profit based on the share price at the balance sheet date.
Similarly a credit for the corporation tax is accrued within Equity.
An additional retention payment is made to holders of legacy LTIP awards (“LTIP”) when they are
exercised, all of which are fully vested at the balance sheet date. The payment will be equal to the
corporation tax benefit the Group receives on the exercise of the options minus the amount of NIC
payable on exercise. This charge is accrued based on the share price at the balance sheet date.
These two charges vary based on the Group’s share price (together referred to as mark to market
charge on equity incentive schemes) and are not linked to the operating performance of the Group.
They are therefore eliminated when reporting adjusted profit.
6 SEGMENTAL REPORTING
(a) Operating segments
Following the acquisition of IAM NH the group reports two reporting segments being Impax Ldn
and Impax NH. Impax LN represents the group’s business prior to the acquisition of Impax NH. It
manages and advises listed equity and private equity funds and accounts. Impax NH operates and
manages the Pax World mutual funds in the US. Impax LN itself has three operating 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 Impax LN as though there is one operating unit.
Segment information is presented on the same basis as that provided for internal reporting purposes
to the Group’s chief operating decision maker, the Chief Executive.
Year ended 30 September 2018
Revenue
External customers
Inter-segment
Total revenue
Segment profit – adjusted operating profit
Impax LN
£000
Impax NH
£000
Adjustments
£000
Total
£000
48,262
1,459
49,721
17,716
17,421
–
17,421
2,271
–
65,683
(1,459)
(1,459)
–
–
65,683
19,987
For the year ended 30 September 2017 there was only one segment being Impax LN.
IMPAX ASSET MANAGEMENT GROUP PLC
33
6 SEGMENTAL REPORTING CONTINUED
(b) Geographical analysis
An analysis of revenue by the location of client is presented below:
UK
North America
France
Luxembourg
Netherlands
Ireland
Other
Revenue
2018
£000
18,781
22,638
7,436
11,104
2,752
2,045
927
2017
£000
11,190
4,611
6,720
5,554
2,094
1,694
831
65,683
32,694
The Group’s non-current assets (property plant and equipment, goodwill, intangible assets) are
located in the following countries:
UK
United States
Hong Kong
Non-current assets
2018
£000
3,397
36,153
22
39,572
(c) Non-cash items
Operating expenses include the following non-cash items:
Year ended 30 September 2018
Share based payments
Depreciation and amortisation
Impax LN
£000
Impax NH
£000
1,546
270
1,816
276
1,727
2,003
2017
£000
2,142
3
15
2,159
Total
£000
1,822
1,997
3,819
34
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018
7 REVENUE
See accounting policy at note 34 (D)
The Group’s main source of revenue is investment management and advisory fees. The Group may
also earn carried interest from its Private Equity funds. Management and advisory fees are generally
based on an agreed percentage of the valuation of AUM for Listed Equity funds. For Private Equity
and Property funds they are generally based on an agreed percentage of commitments made
to the fund by investors during the fund’s investment period and thereafter on the cost price of
investments made and not exited. Carried interest may be earned from Private Equity funds if the
cash returned to investors exceeds an agreed return.
Investment management and advisory
Transaction fees
2018
£000
65,555
128
65,683
2017
£000
32,474
220
32,694
None of the Group’s funds individually represented more than 10% of Group revenue (2017: three
funds with revenue of £5,243,000, £4,275,000 and £3,428,000).
Revenue includes £65,513,000 (2017: £32,654,000) from related parties.
8 OPERATING COSTS
The Group’s largest operating cost is staff costs. Other significant costs include fund costs, premises
costs (rent payable on office building leases, rates and service charge), IT, placement agent fees and
telecommunications costs.
See accounting policy at note 34 (E) for leases and note 34 (F) for placement fees.
Staff costs (note 9)
Direct fund expenses
Premises costs
Research costs
Professional fees
IT and communications
Depreciation and amortisation
Acquisition costs
Mark to market charges on share awards
Other costs
2018
£000
30,587
4,024
2,002
1,079
2,242
1,693
1,997
526
2,137
3,913
50,200
2017
£000
18,017
–
1,171
–
1,276
1,311
167
999
2,097
1,423
26,461
Operating costs includes £312,000 in respect of placement agent fees paid to related parties.
As described in note 21 the Group consolidates certain funds in which it invests and therefore include
their operating costs in the table above. An analysis of the total cost between operating entities and
consolidated funds is shown in the table below.
Operating costs of operating entities of the Group
Operating costs of consolidated funds
2018
£000
50,117
83
50,200
2017
£000
26,260
201
26,461
IMPAX ASSET MANAGEMENT GROUP PLC
35
8 OPERATING COSTS CONTINUED
Other costs includes £284,000 (2017: £400,000) paid to the Group’s auditors which is
analysed below:
Audit of the Group’s Parent Company and
consolidated financial statements
Audit of subsidiary undertakings
Tax compliance
Other non-audit services
2018
£000
91
107
22
64
284
2017
£000
46
53
21
280
400
The comparative operating expenses amount now includes certain share based payment and
acquisition related expenses which were shown separately in the Consolidated Income Statement in
the prior year.
9 STAFF COSTS AND EMPLOYEES
Salaries and variable bonuses
Social security costs
Pensions
Share-based payment charge (see note 10)
Other staff costs
2018
£000
23,672
2,443
633
1,822
2,017
30,587
2017
£000
13,397
1,743
413
1,130
1,334
18,017
Staff costs include salaries, a variable bonus, social security cost (principally UK Employers’ National
Insurance on salary, bonus and share awards), the cost of contributions made to employees’ pension
schemes and share-based payment charges. Further details of the Group’s remuneration policies,
including how the total variable bonus pool is determined, are provided in the Remuneration Report.
Share-based payment charges are offset against the total cash bonus pool paid to employees.
National Insurance charges on share-based payments are accrued based on the share price at the
balance sheet date.
See accounting policy for pensions in note 34 (G)
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 £12,137 (2017: £34,000)
were payable to the funds at the year end and are included in trade and other payables.
Other staff costs include the cost of providing health and other insurances for staff, Non-Executive
Directors’ fees, contractor fees, recruitment fees and redundancy costs.
Directors and key management personnel
Details related to emoluments paid to Directors and Directors’ rights to share awards are included in
the Remuneration Report.
Key management personnel are related parties and are defined as members of the Board and/or
the Executive Committee. The remuneration of key management personnel during the year was
£6,886,184 plus £580,387 of share-based payments (2017: £4,632,161 plus £481,356 of share-based
payments).
36
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 Employees
The average number of persons (excluding Non-Executive Directors and including temporary staff),
employed during the year was 137 (2017: 73).
Listed Equity
Private Equity
Client Service and Business Development
Group
10 SHARE-BASED PAYMENT CHARGES
See accounting policy at note 34 (H)
2018
No.
51
12
36
38
137
2017
No.
24
12
16
21
73
The total expense recognised for the year arising from share-based payment transactions was
£1,822,000 (2017: £1,130,000). The charges arose in respect of the Group’s Restricted Share Scheme
(“RSS”), the Group’s Employee Share Option Plan (“ESOP”) and the Group’s Restricted Share Units
scheme (“RSU”) which are described below. Share based payment charges also arose in respect of
the Put and Call arrangement made with Impax NH Management to acquire their shares in Impax
NH. These are described in note 4. Options are also outstanding in respect of the Group’s Long-Term
Incentive Plan (“LTIP”) which fully vested on 30 September 2012. Details of all outstanding options
are provided at the end of this note.
Restricted Share Scheme
Restricted shares have been granted to employees in prior years under the 2014, 2015 and 2017
plans. Post year end the Board approved the grant of a further 478,250 restricted shares under
the 2018 plan. Details of the awards granted along with their valuation and the inputs used in the
valuation are described in the table below. The valuation was determined using the Black-Scholes-
Merton model with an adjustment to reflect that dividends are received during the vesting period.
Following grant, the shares are held by a nominee for employees - who are then immediately entitled
to receive dividends. After a period of three years continuous employment the employees will
receive unfettered access to one third of the shares, after four years a further third and after five
years the final third. The employees are not required to make any payment for the shares on grant or
when the restrictions lapse.
The expected volatility was determined by reviewing the historical volatility of the Company and that
of comparator companies. The expected dividend rate is determined using the Company share price
and most recent full year dividend to grant date.
Awards originally granted
In respect of services
provided for period from
Option award value
Weighted average share price
on grant
Expected volatility
Weighted average option life on
grant
Expected dividend rate
Risk free interest rate
2014 RSS
1,250,000
1 Oct 2013
49.9p
52.5p
32%
5.3yrs
3%
1.2%
2015 RSS
2017 RSS
3,140,000/
1,000,000
2,550,000/
500,000/ 675,000
1 Oct 2014/
9 Feb 2016
14 Dec 2016/11 May
2017/1 Oct 2016
42.1p/41.5p
52.2p/87.7p/161.6p
41.4p
77.4p
32%/31%
29%/29%/29%
4.9yrs
4.3yrs
3%
4%/2%/2%
1.2%/0.8%
0.6%/0.6%/0.7%
2018 RSS
478,250
1 Oct 2017
239.6p
241.0p
30%
5.3yrs
1%
1.2%
IMPAX ASSET MANAGEMENT GROUP PLC
37
10 SHARE-BASED PAYMENT CHARGES CONTINUED
Restricted shares outstanding
Outstanding at 1 October 2017
Granted during the year
Vested during the year
Outstanding at 30 September 2018
2018
7,940,000
675,000
(250,251)
8,364,749
Employee share option plan
Under this Plan options over the Company’s shares were granted to employees between 2012 and
2015 and in 2017. Details of the options granted along with their valuation and the inputs used in
the valuation are described 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 (2015 and 2017 ESOP: five days) following the
announcement of the results for each of the respective preceding financial years. The 2012–2015
ESOP options have vested. The 2017 options do not have performance conditions but do have a
time vesting condition such that they vest subject to continued employment on 31 December 2020.
The valuation was determined using the Black-Scholes-Merton model.
In December 2018 the Board also approved the grant of a further 500,000 options under a new 2018
plan. The strike price of these options will be £1. 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 2023. Vested shares are restricted from being sold until after 31 December 2028 (other
than to settle any resulting tax liability).
The valuation was determined using the binomial model.
Options outstanding
An analysis of the options over the Company’s shares is provided below:
Options outstanding at 1 October 2017
Options granted
Options forfeited
Options exercised
Options expired
Options outstanding at 30 September 2018
Options exercisable at 30 September 2018
Number
13,464,500
1,300,000
–
(10,489,000)
–
4,275,500
2,975,500
Weighted average
exercise price p
37.5
180.2
–
41.9
–
69.6
21.3
Exercise prices for the options outstanding at the end of the period were 1p for the LTIPs, 37.6p for
the ESOP 2012, 47.9p/54.0p for the ESOP 2013, 56.9p for the ESOP 2014, 45.4p for the ESOP 2015
and 180.2p for the ESOP 2017. The weighted average remaining contractual life was 3.06 years.
Restricted stock units
The Group awarded Restricted Stock Units (“RSUs”) to Impax NH staff and management on 18
January 2018. The RSUs entitle holders to receive Impax shares with a total value equal to 10% of the
Contingent Consideration paid for the Impax NH acquisition (see note 4). The number of shares that
each individual will receive under the RSUs is determined on 15 January 2021 after the amount of
Contingent Consideration payable is finalised using the Impax share price on 20 consecutive trading
days ending 15 January 2021. There is a further two-year restriction on the holders’ ability to sell the
shares. The shares are forfeited if the individual leaves at any time before the restricted period ends.
38
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 The charge to the income statement for these awards is determined each year by estimating the
total value of shares that will be awarded (using the estimate of Contingent Consideration – see Note
4) and spreading this over the five year period until the restrictions cease. The estimates are updated
each year and the charge adjusted accordingly.
Based on the current valuation 119,000 shares will be issued.
Impax NH put and call arrangement
As detailed in note 4 the schemes put in place whereby Impax NH management acquired their
holding in Impax NH and the put and call options which will require Impax to purchase those stakes
using Impax shares represent a share based payment. The charge is spread over a three year period
from the date of acquisition.
11 FAIR VALUE (LOSSES)/GAINS ON INVESTMENTS AND OTHER FINANCIAL (EXPENSE)/INCOME
Fair value losses represent those arising on the revaluation of listed and unlisted investments held
by the Group including those held by the Group’s consolidated funds (see note 21) and any gains or
losses arising on related hedge instruments held by the Group.
Fair value losses
Interest
Other investment income
Unwinding of discount on contingent consideration (see note 4)
Foreign exchange gains losses
2018
£000
(233)
109
170
(254)
(129)
(337)
2017
£000
(52)
64
400
–
(553)
(141)
Fair value losses represent those arising on the revaluation of listed and unlisted investments held
by the Group including those held by the Group’s consolidated funds (see note 21) and any gains or
losses arising on related hedge instruments held by the Group.
The fair value loss comprises of unrealised gains of £576,000 and realised losses of £809,000
(2017:£760,000 of unrealised gains and £812,000 of realised losses).
12 INTEREST EXPENSE
Interest is payable on the loans from RBS which were used to fund the acquisition of Impax NH (see
note 4).
See accounting policy at note 34 (J)
13 THIRD-PARTY INVESTOR’S SHARE OF CONSOLIDATED FUNDS
See accounting policy regarding consolidation at note 34 (A)
This charge removes the fair value gains or losses, other operating costs and investment income
recorded in the Group’s consolidated funds which are attributable to third-party investors in the funds.
IMPAX ASSET MANAGEMENT GROUP PLC
39
14 TAXATION
See accounting policy at note 34 (K)
The Group is subject to taxation in the countries in which it operates (the UK, the US and Hong
Kong) at the rates applicable in those countries. The total tax charge includes taxes payable for the
reporting period (current tax) and also charges relating to taxes that will be payable in future years
due to income or expenses being recognised in different periods for tax and accounting periods
(deferred tax).
(a) Analysis of charge for the year
Current tax expense:
UK corporation tax
Foreign taxes
Adjustment in respect of prior years
Total current tax
Deferred tax expense/(credit):
Charge for the year
Adjustment in respect of prior years
Total deferred tax
Total income tax expense
2018
£000
–
325
(116)
209
2,792
218
3,010
3,219
2017
£000
–
432
(2,038)
(1,606)
167
(375)
(208)
(1,814)
A tax credit of £2,353,000 is also recorded in equity in relation to tax deductions on share awards
arising due to the share price increase.
(b) Factors affecting the tax charge for the year
The UK tax rate for the year is 19%. The tax assessment for the period is higher than this rate (2017:
lower). The differences are explained below:
Profit before tax
Tax charge at 19% (2017: 19.5%)
Effects of:
Increase in tax deductions re share awards from share price increases
Non-taxable income
Non-deductible expenses and charges
Adjustment in respect of historical tax charges
Effect of higher tax rates in foreign jurisdictions
Tax deductibility of goodwill
Utilisation of tax losses brought forward and not recognised
Change in UK tax rates
Total income tax expense
2018
£000
14,620
2,778
–
(24)
248
98
240
(66)
(55)
–
2017
£000
5,853
1,141
(462)
(472)
200
(2,413)
180
–
–
12
3,219
(1,814)
The adjustment in respect of historical tax charges in 2017 primarily reflects tax credits due following
a clarification of the tax treatment of income from private equity funds recorded in prior years.
40 GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 (c) Deferred tax
The deferred tax asset/(liability) included in the consolidated statement of financial position is
as follows:
As at 1 October 2016
Credit/(charge) to equity
Exchange differences on consolidation
Credit/(charge) to the income statement
Income not
yet taxable
£000
Other
liabilities
Total
liabilities
(1,040)
(526)
(1,566)
–
(19)
(601)
–
–
–
(19)
(95)
(696)
As at 30 September 2017
(1,660)
(621)
(2,281)
Credit to equity
Exchange differences on consolidation
Credit/(charge) to the income statement
As at 30 September 2018
–
(11)
(1,180)
(2,851)
–
–
–
(11)
308
(872)
(2,326)
(313)
(3,164)
3,613
Share-
based
payment
scheme
£000
Other
assets
£000
661
2,540
–
386
3,587
2,352
–
Total
assets
£000
809
2,514
–
905
4,228
2,360
–
(2,138)
4,450
148
(26)
–
519
641
8
–
188
837
A reduction in the UK corporation tax rate to 17% (effective 1 April 2020) was substantively enacted
on 6 September 2016. The deferred tax liability at 30 September 2018 has been calculated taking
this into account.
15 EARNINGS PER SHARE
Basic earnings per share (“EPS”) is calculated by dividing the profit for the year attributable to
ordinary equity holders of the Parent Company by the weighted average number of ordinary shares
outstanding during the year, less the weighted average number of own shares held. Own shares are
held in Employee Benefit Trusts (“EBTs”).
Earnings are reduced by £738,000 for the year ended 30 September 2018 (2017: £461,000) to
reflect the profit attributable to holders of restricted shares, which are considered to be contingently
returnable shares.
Diluted EPS includes an adjustment to reflect the dilutive impact of option awards and restricted
share plan awards.
Impax NH’s AUM is below the threshold for shares to be issued under the RSU so they are not
considered to be dilutive. The put and call arrangement to acquire Impax NH management shares
(see note 4) is currently anti-dilutive.
2018
Basic
Diluted
2017
Basic
Diluted
Earnings
for the year
£000
Shares
000
Earnings
per share
10,663
10,663
7,206
7,206
118,758
119,581
111,251
115,396
9.0p
8.9p
6.5p
6.2p
IMPAX ASSET MANAGEMENT GROUP PLC
41
15 EARNINGS PER SHARE CONTINUED
The weighted average number of shares is calculated as shown in the table below:
Weighted average issued share capital
2018
£000
129,612
2017
£000
127,749
Less own shares held not allocated to vested LTIP options
(10,854)
(16,498)
Weighted average number of ordinary shares
used in the calculation of basic EPS
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 EPS
118,758
2,550
111,251
10,495
(1,727)
(6,349)
119,581
115,397
The basic and diluted EPS includes vested LTIP option shares on the basis that these have an
inconsequential exercise price (1p or 0p).
16 DIVIDENDS
Dividends are recognised as a reduction in equity in the period in which they are paid or in the
case of final dividends when they are approved by shareholders. The reduction in equity in the
year therefore comprises the prior year final dividend and the current year interim dividend.
Dividends declared/proposed in respect of the year
Interim dividend declared per share
Special dividend, 2.6p, 0p
Final dividend proposed per share
Total
2018
pence
1.1
2.6
3.0
6.7
2017
pence
0.7
–
2.2
2.9
The proposed final dividend of 3.0p will be submitted for formal approval at the Annual General
Meeting to be held on 7 March 2019. No special dividend is proposed for payment in respect of the
current year. Based on the number of shares in issue at the date of this report and excluding own
shares held the total amount payable for the final dividend would be £3,872,000.
Dividends paid in the year
Prior year final dividend – 2.2p, 1.6p
Special dividend – 2.6p, 0p
Interim dividend – 1.1p, 0.7p
2018
£000
2,752
3,256
1,378
7,386
2017
£000
1,856
–
816
2,672
42
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 17 GOODWILL
See accounting policy at note 34 (L)
Cost
At 1 October 2016 and 30 September 2017
Acquisition of Impax NH (see note 4)
Impairment
Foreign exchange
At 30 September 2018
Goodwill
£000
1,681
9,931
(52)
611
12,171
The goodwill balance within the Group at 30 September 2017 arose from the acquisition of Impax
Capital Limited on 18 June 2001 (Listed Equity and Private Equity operating segment) and the
acquisition of a Property fund management business in 2014 (Property operating segment), with
a further addition recorded in 2015. Goodwill also arose on the acquisition of Impax NH during
the Period.
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 2019, which was approved by the
Directors in September 2018 and thereafter from the Group’s business plan which was approved by
the Board in May 2018. The key assumptions used to calculate the cash flows in the budget were
expected fund flows for each CGU (based on an aggregation of flows by product) and a discount
rate of 12.5 per cent. The discount rate was derived from the Group’s weighted average cost of
capital which we consider is reflective of a market participant’s discount rate.
The goodwill for the property division has been fully written off in the period. There has been no
impairment of goodwill related to the Listed Equity and Private Equity segment 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.
Impax NH consists of only one CGU. Goodwill is allocated between CGU’s at 30 September 2018 as
follows – £10,542,000 to Impax NH and £1,629,000 to the Listed Equity and Private Equity CGU’s.
IMPAX ASSET MANAGEMENT GROUP PLC
43
18 INTANGIBLE ASSETS
See accounting policy at note 34 (M)
Intangible assets mainly represents the management contracts acquired as part of the acquisition of
Impax NH (see note 4).
Cost
As at 1 October 2016
Additions
Disposals
As at 30 September 2017
Addition through Impax NH acquisition (see note 4)
Additions
Foreign exchange
As at 30 September 2018
Accumulated depreciation
As at 1 October 2016
Charge for the year
Disposals
As at 30 September 2017
Charge for the year
Disposals
Foreign exchange
As at 30 September 2018
Net book value
As at 30 September 2018
As at 30 September 2017
As at 30 September 2016
Management
contracts
£000
Software
£000
112
–
–
112
25,669
–
1,600
27,381
112
–
–
112
1,722
–
56
1,890
25,491
–
–
354
29
(41)
342
–
76
–
418
310
37
(22)
325
19
–
–
344
74
17
44
Total
£000
466
29
(41)
454
25,669
76
1,600
27,799
422
37
(22)
437
1,741
–
56
2,234
25,565
17
44
44 GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 19 PROPERTY, PLANT AND EQUIPMENT
See accounting policy at note 34 (N)
Property, plant and equipment mainly represents the costs of fitting out the Group’s leased London
office (leasehold improvements) and office furniture and computers (fixtures, fitting and equipment).
Cost
As at 1 October 2016
Additions
Disposals
As at 30 September 2017
Addition through Impax NH acquisition (see note 4)
Additions
Disposals
Foreign exchange
As at 30 September 2018
Accumulated depreciation
As at 1 October 2016
Charge for the year
Disposals
As at 30 September 2017
Charge for the year
Disposals
Foreign exchange
As at 30 September 2018
Net book value
As at 30 September 2018
As at 30 September 2017
As at 30 September 2016
Leasehold
improvements
£000
Fixtures, fittings
and equipment
£000
713
191
–
904
5
1,150
–
–
664
252
(12)
904
62
462
(46)
5
2,059
1,387
704
8
–
712
115
–
–
827
1,232
192
9
565
82
(12)
635
168
(19)
(1)
783
604
269
99
Total
£000
1,377
443
(12)
1,808
67
1,612
(46)
5
3,446
1,269
90
(12)
1,347
283
(19)
(1)
1,610
1,836
461
108
IMPAX ASSET MANAGEMENT GROUP PLC
45
20 TRADE AND OTHER RECEIVABLES
See accounting policy at note 34 (N)
Trade receivables
Other receivables
Prepayments and accrued income
2018
£000
3,432
1,799
10,627
15,858
2017
£000
1,550
1,682
8,500
11,732
Accrued income relates to accrued management fees and arises where bills are raised in arrears.
An analysis of the aging of Group trade receivables is provided below:
0–30 days
Past due but not impaired:
31–60 days
61–90 days
2018
£000
2,576
363
493
3,432
2017
£000
768
95
687
1,550
At the date of this report, all of the trade receivables above have been received. There were no
amounts that were impaired at the reporting date.
£12,200,789 of trade and other receivables and accrued income were due from related parties (2017:
£8,994,000). £407,000 included in other receivables was due from non-consolidated sub funds of
the EBT 2004 (2017: £523,000).
21 CURRENT ASSET INVESTMENTS
See accounting policy at note 34 (O)
The Group makes seed investments into its own Listed Equity funds and also invests in its Private
Equity funds. Where the funds are consolidated the underlying listed investments are shown in the
table below as part of Listed Investments. Investments made in unconsolidated funds are shown
as part of Unlisted investments. Further details of when funds are consolidated are described in
note 34 (A).
At 1 October 2016
Additions
Fair value movements
Repayments/disposals
At 30 September 2017
Additions
Fair value movements
IEL Deconsolidation
Repayments/disposals
At 30 September 2018
46
GOVERNANCE AND FINANCIAL STATEMENTS 2018
Unlisted
investments
£000
Listed
investments
£000
1,568
14
(57)
(458)
1,067
1,525
367
4,670
(5,463)
2,166
11,246
4,977
1,358
(5,635)
11,946
811
439
(9,270)
(1,743)
2,183
Total
£000
12,814
4,991
1,301
(6,093)
13,013
2,336
806
(4,600)
(7,206)
4,349
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 Listed investments
Impax Global Equity Opportunities Fund (consolidated)
On 23 December 2014 the Group launched the Impax Global Equity Opportunities Fund (“IGEO”)
and invested from its own resources £2,000,000 in the fund. IGEO invests in listed equities using the
Group’s Global Equity Strategy. During the Period the Group redeemed £930,000 of its investment.
The Group’s investment represented more than 50 per cent of IGEO’s Net Asset Value (“NAV”) from
the date of launch to 30 September 2018 and the fund has been consolidated throughout this period
with its underlying investments included in listed investments in the table above.
Unlisted investments
Pax Global Opportunities Fund (not consolidated)
On 27 June 2018 the Group launched the Pax Global Opportunities Fund (“Pax GO”) and invested
US$2,000,000 from its own resources into the fund. Pax GO invests in listed equities using the
Group’s Global Equity Strategy. The level of the Group’s investment has meant that consolidation is
not required and accordingly the investment is recorded as an unlisted investment.
Impax Environmental Leaders Fund (Not consolidated)
On 11 January 2016 the Group launched the Impax Environmental Leaders (Ireland) Fund (“IEL”)
and invested from its own resources £3,000,000 in the fund. IEL invests in listed equities using the
Group’s Leaders Strategy. The Group consolidated this fund for the period from the date of its initial
investment to 30 September 2017 with its underlying investments included in listed investment in the
table above. During the current period investments made by third parties meant that consolidation
was no longer required and the fund was deconsolidated with the investment shown in Unlisted
investments. The Group fully redeemed its investment in the Fund on 28 September 2018 for
£4,870,000.
Private equity funds (not consolidated)
The Group has invested in its private equity funds, Impax New Energy Investors LP, Impax New
Energy Investors II LP and Impax New Energy Investors III LP (“INEI”, “INEI II” and “INEI III”). The
investments represent 3.76 per cent, 1.14 per cent and 1.12 per cent respectively of these funds.
Further details of the Group’s commitments to these partnerships are disclosed in note 31.
The INEI investment is recorded at a fair value of £nil. The fund held investments in Spanish solar
assets which were adversely affected by the Spanish government’s changes to tariffs earnt by these
investments. A claim for compensation from the Spanish government is currently being considered
by the European Court of Arbitration. In the event that the claims for compensation are successful
the Group would receive its share of the compensation.
The carrying value of the investments in INEI II is recorded at a fair value of £115,000. The majority of
the investments held by this fund are subject to sales processes. The fair value is set at a discount to
the bids received as part of these processes.
The Group has a 1.12 per cent partnership share in Impax New Energy Investors III LP, a private equity
partnership managed by the Group. The Group has made an investment of £19,000 at the reporting
date. The Group has a commitment to invest up to €4,000,000 into this partnership.
Ensyn Corporation (not consolidated)
The Group has an investment in the Ensyn Corporation which is recorded at a fair market value of
£452,000. The valuation is determined based on the price of the latest fair market transaction in this
entity.
The unlisted investments include £97,582 in related parties of the Group (2017: £628,000).
IMPAX ASSET MANAGEMENT GROUP PLC
47
21 CURRENT ASSET INVESTMENTS CONTINUED
Hierarchical classification of investments
The hierarchical classification of the investments as considered by IFRS 13 Financial Instruments:
Disclosures are shown below:
At 1 October 2017
Additions
Fair value movements
Deconsolidation
Repayments/disposals
At 30 September 2018
Level 1
£000
11,946
811
439
(9,270)
(1,743)
2,183
Level 2
£000
–
1,506
313
4,670
(4,870)
1,619
Level 3
£000
1,067
19
54
–
(593)
547
Total
£000
13,013
2,336
806
(4,600)
(7,206)
4,349
Market risk and investment hedges
See accounting policy for derivatives at note 34 (Q)
The investment in the IGEO and Pax GO funds at 30 September 2018 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.
22 INTERESTS IN UNCONSOLIDATED STRUCTURED ENTITIES
See accounting policy at note 34 (A) and note 34 (X)
The Group’s interest in structured entities is reflected in the Group’s AUM. The Group is exposed
to movements in AUM of structured entities through potential loss of fee income as a result of
client withdrawals or market falls. Outflows from funds are dependent on market sentiment, asset
performance and investor considerations. Further information on these risks can be found in the
strategic review. Considering the potential for changes in AUM of structured entities, management
has determined that the Group’s unconsolidated structured entities include segregated mandates
and pooled funds vehicles. Disclosure of the Group’s exposure to unconsolidated structured entities
has been made on this basis.
At 30 September 2018 AUM managed within unconsolidated structured entities was £12.51 billion
(2017: £6.9 billion) and within consolidated structured entities was £2.21 million (2017: £12.2 million).
£65,286,420 in revenue was earned from unconsolidated structured entities.
The total exposure to unconsolidated structured entities in the statement of financial position is
shown in the table below:
Management fees receivable (including accrued income)
Investments
2018
£000
8,680
2,166
10,846
2017
£000
7,072
628
7,700
The main risk the Group faces from its interest in unconsolidated structured entities are decreases in
the value of seed capital investments. Details on this are provided in note 21.
48
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 23 CASH AND CASH EQUIVALENTS, CASH INVESTED IN MONEY MARKET FUNDS
AND LONG-TERM DEPOSITS
See accounting policy for cash at note 34 (R)
Cash and cash equivalents under IFRS does not include deposits in money market funds or cash
held in deposits with an original maturity of more than three months. However the Group considers
its total cash reserves to include these amounts. Cash held by consolidated funds is not considered
to be available to the Group so it is not included in cash reserves. Cash held in Research Payment
Accounts (“RPAs”) is collected from funds managed by the Group and can only be used towards
the cost of researching stocks. A liability of an equal amount is included in trade and other payables.
This cash is also excluded from cash reserves. A reconciliation is shown below:
Cash and cash equivalents
Cash invested in money market funds and long-term deposit accounts
Less: cash and cash equivalents held by consolidated funds
: cash held in RPAs
Cash reserves
2018
£000
15,529
11,211
(67)
(2,074)
24,599
2017
£000
12,932
7,780
(348)
–
20,364
The Group is exposed to interest rate risk on the above balances as interest income fluctuates
according to the prevailing interest rates. The average interest rate on the cash balances during
the year was 0.5 per cent (2017: 0.4 per cent). A 0.5 per cent increase in interest rates would have
increased Group profit after tax by £133,000 (2017: £89,000). An equal change in the opposite
direction would have decreased profit after tax by £119,000 (2017: £89,000).
The credit risk regarding cash balances of the operating entities of the Group is spread by holding
parts of the balance with RBS, Lloyds, Citizens and the Bank of New Hampshire Bank (with Standard
& Poor’s credit rating A-2, A-2, A-1 and A-2 respectively) and the remainder in money market
funds managed by BlackRock and Goldman Sachs (both with a Standard & Poor’s credit rating of
AAA).
24 TRADE AND OTHER PAYABLES
See accounting policy at note 34 (R)
Trade payables
Taxation and other social security
Other payables
Accruals and deferred income
2018
£000
914
2,404
7,063
14,374
24,755
2017
£000
260
2,246
281
8,495
11,282
The most significant accrual at the year end relates to staff bonuses. Other payables includes
estimated amounts payable for contingent consideration (see Note 4). This is measured at fair value
and is classified as Level 3 for the hierarchical classification purposes of IFRS 13.
25 LOANS
See accounting policy at note 34 (T)
To part fund the acquisition of Impax NH the Group signed a debt facility with RBS. The facility
consists of a US$13 million term loan repayable annually over a three year term and a US$13 million
revolving credit facility (“RCF”) with a five year tenor. The term loan incurs interest at US LIBOR
plus 2.9 per cent and the revolving credit facility at US LIBOR plus 3.3%. On completion of the
acquisition the Group drew down the term loan in full and US$12 million of the revolving credit
facility. At 30 September 2018 the RCF had been repaid in full.
IMPAX ASSET MANAGEMENT GROUP PLC
49
25 LOANS CONTINUED
Amounts due within one year
Amounts due after more than one year
2018
£000
3,326
6,652
9,978
A reconciliation of the movements on the loan is provided in the table below
Proceeds from bank borrowings
Repayments of bank borrowings
Foreign exchange
At 30 September
The above amounts do not include transaction costs.
26 THIRD-PARTY INTEREST IN CONSOLIDATED FUNDS
At fair value
2018
£000
18,080
(8,779)
677
9,978
2018
£000
87
2017
£000
–
–
–
2017
£000
–
–
–
–
2017
£000
4,846
Third-party interest in consolidated funds represents the net assets of the consolidated fund IGEO
which are not attributable to the Group. As described in note 21, IGEO is a subsidiary of the Group
and its net assets and operating results are consolidated into the Group’s results at year end. At 30
September 2018 the Group’s interest in IGEO is 96.6 per cent (2017: 98.9%). This balance is classified
as Level 1 for the hierarchical classification purposes of IFRS 13. The reduction in the balance during
the year is due to the de-consolidation of the Impax Environmental Leaders fund of £4,816,000 (see
note 21), offset by the share of profits of this fund and new subscriptions.
27 ORDINARY SHARES
See accounting policy at note 34 (S)
Issued and fully paid
At 1 October
Shares issued/1p
At 30 September
2018
No of
shares/000s
2017
No of
shares/000s
127,749
2,666
130,415
127,749
–
127,749
2018
£000
1,277
27
1,304
2017
£000
1,277
–
1,277
The shares were issued as part of the acquisition of Impax NH (see note 4) at a price of 196 pence
giving rise to an increase in the share premium account of £5,198,000.
50
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 28 OWN SHARES
See accounting policy at note 34 (T)
At 1 October 2016
Satisfaction of option exercises
EBT 2012 purchases
At 30 September 2017
Satisfaction of option exercises and RSS vesting
EBT 2012 purchases
At 30 September 2018
No of
shares/000s
21,387,839
(3,845,000)
1,466,493
19,009,332
(10,739,251)
1,454,065
9,724,146
Included within own shares are 8,365,000 shares held in a nominee account in respect of the
Restricted Share Scheme as described in note 10.
29 NON-CONTROLLING INTERESTS
See accounting policy at note 34
At 30 September 2017
Acquisition of Impax NH
Minority interest loss
Foreign exchange
At 30 September 2018
49% of the Group’s subsidiary Pax Elevate Management LLC is owned by a third party and
accordingly a non-controlling interest arises.
The following table provides financial information for Pax Elevate Management LLC.
NCI percentage
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Net assets attributable to NCI
Revenue
Loss for the year
Total comprehensive income
Loss allocated to NCI
Cash flows from operating activities
Cash flows from investment activities
Cash flows from financing activities (dividends to NCI: nil)
Cashflow
£000
7,131
(1,448)
950
6,633
(3,747)
2,534
5,420
£000
–
982
(184)
100
898
2018
£000
49%
2,087
138
–
(392)
1,833
898
729
(376)
(376)
(184)
(45)
–
–
(45)
IMPAX ASSET MANAGEMENT GROUP PLC
51
29 NON-CONTROLLING INTERESTS CONTINUED
The non-controlling interest has a put arrangement under which it can require the Group to acquire
its share. A liability is recorded within other payables for the cost of acquiring the stake. Changes in
this liability are recorded through equity.
30 FINANCIAL COMMITMENTS
At 30 September 2018 the Group has outstanding commitments to invest up to the following
amounts into private equity funds that it manages.
–
–
–
€203,000 (2017: €203,000) into INEI; this amount could be called on in the period to
17 August 2019;
€672,000 (2017: €672,000) into INEI II; this amount could be called on in the period to
22 March 2020; and
€3,981,000, into INEI III (2017: €4,000,000); this amount could be called on in the period
to 31 December 2026.
At 30 September the Group had commitments under non-cancellable operating leases as follows:
Within one year
Between one and five years
Later than five years
Offices
2018
£000
1,110
6,496
8,295
15,901
2017
£000
142
3,914
5,030
9,086
Other
2018
£000
16
16
–
32
2017
£000
11
42
–
53
The material operating leases for 2018 are for office space at 7th Floor, 30 Panton Street London
SW1Y 4AJ and for office space in Portsmouth, New Hampshire, USA. The London lease is for ten
years expiring 30 June 2027. The New Hampshire lease is for 12.5 years expiring 31 March 2031.
52
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 31 RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES
This note should be read in conjunction with the Consolidated cashflow statement. It provides a
reconciliation to show how profit before tax, which is based on accounting rules, translates to cashflows.
Profit before taxation
Adjustments for income statement non-cash charges:
Depreciation of property, plant and equipment
and amortisation of intangible assets
Fair value gains and losses
Share-based payment charges
Minority interest
Adjustments for which the cash effects are investing
or financing activities
Investment income
Interest payable
Changes in third party interests in consolidated funds
Adjustment for statement of financial position movements
Increase in trade and other receivables
Increase in trade and other payables
Net cash flow from operating activities
2018
£000
14,620
2,051
616
1,822
(184)
(279)
670
40
(2,011)
6,091
23,436
2017
£000
5,853
167
52
1,130
–
(464)
–
239
(4,196)
5,603
8,384
32 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.
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
(see note 23). The Group is also exposed to credit risk on trade receivables, representing investment
management fees due. An analysis of the ageing of these is provided in note 20.
Foreign exchange risk
Foreign exchange risk is the risk that the fair value of future cash flows of financial instruments
will fluctuate because of changes in foreign exchange rates. For Impax LN a significant amount of
the Group’s income is denominated in euros and US dollars whilst the majority of expenses are in
Sterling. For Impax NH all income and all expenditure is in US dollars. Impax NH’s assets along with
the goodwill and intangible assets arising on its acquisition are denominated in US dollars. Debt held
to finance the acquisition of NH is denominated in US dollars.
IMPAX ASSET MANAGEMENT GROUP PLC
53
32 FINANCIAL RISK MANAGEMENT CONTINUED
The strategy for Impax LN for the year ended 30 September 2018 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 2018, and January, April
and July 2018. The fair value of these instruments at 30 September 2018 was (£54,000) which is
recognised in equity. £13,000 was reclassified from equity to the income statement during the year
on maturity of the hedges.
The Group also held USD at 30 September 2017 to cover the consideration for the acquisition of
Impax NH that was funded from cash reserves.
The Group’s exposure to foreign exchange rate risk, including that arising from consolidated funds,
at 30 September 2018 was:
Assets
Current asset investments
Trade and other receivables
Cash and cash equivalents
Liabilities
Trade and other payables
Loans
Third-party interest in consolidated funds
Net exposure
EUR/GBP
£000
USD/GBP
Other/GBP
£000
£000
115
1,247
11
1,373
3,096
–
17
3,113
(1,740)
2,067
16,975
3,482
22,524
23,729
9,978
45
33,752
(11,228)
–
52
2,744
2,796
594
–
15
609
2,187
The Group’s exposure to foreign exchange rate risk at 30 September 2017 was:
Assets
Current asset investments
Trade and other receivables
Cash and cash equivalents
Liabilities
Trade and other payables
Third-party interest in consolidated funds
Net exposure
EUR/GBP
£000
USD/GBP
£000
Other/GBP
£000
3,116
4,804
309
8,229
3,137
1,020
4,157
4,072
6,804
1,627
8,398
16,829
1,131
2,492
3,623
13,206
2,154
23
295
2,472
33
864
897
1,575
54
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 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.
Translation of significant foreign assets and liabilities
GBP strengthens against the USD, up 5%
GBP weakens against the USD, down 5%
GBP strengthens against the EUR, up 5%
GBP weakens against the EUR, down 5%
Post-tax profit
2018
£000
452
(452)
70
(70)
2017
£000
(531)
531
(164)
164
Liquidity risk and regulatory capital requirements
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its
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 32) 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 capital or liquid capital resources to comply with the capital
requirements of the Financial Conduct Authority (the “FCA”). As a result of the acquisition of Impax
NH the Group moved into a capital deficit position and agreed a waiver for a four year period.
At 30 September 2018, the Group had cash and cash equivalents and cash in money market funds
and long-term deposit accounts of £26,740,000. This is £1,985,000 in excess of trade and other
payables. The Group in addition had other current assets of £21,097,000.
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 loans and 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 investments in its
managed funds. See note 21 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.
IMPAX ASSET MANAGEMENT GROUP PLC
55
32 FINANCIAL RISK MANAGEMENT CONTINUED
Financial assets and liabilities by category
*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
–
–
–
3
3
–
–
-
–
–
–
–
2,116
2,116
3,313
-
87
3,400
–
–
–
2,183
2,183
–
–
-
–
15,529
11,211
5,231
-
31,971
–
–
–
-
–
–
–
-
–
4,664
9,978
-
14,642
*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
–
–
–
3
3
–
–
–
–
–
–
–
–
–
1,067
1,067
11,943
11,943
–
4,846
4,846
–
–
–
12,932
7,780
2,702
–
23,414
–
–
–
–
–
–
–
529
–
529
30 September 2018
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
Loans
Third-party interest in consolidated funds
Total financial liabilities
30 September 2017
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
* FVTPL = Fair value through profit and loss
33 RELATED PARTY TRANSACTIONS
Private Equity Funds managed by the Group, entities controlled by these funds and the Impax Global
Resource Optimization Fund LP are related parties of the Group by virtue of subsidiaries being the
General Partners to these funds. The Group earns management fees from these entities.
BNP Paribas Asset Management Holding is a related party of the Group by virtue of owning a 24.5
per cent equity holding. The Group sub-manages certain funds for BNP for which it earns fees.
Other funds managed by subsidiaries of the Group are also related parties by virtue of its
management contracts.
56
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 Fees earned from the above related parties have been disclosed in note 7 and amounts receivable are
disclosed in note 20. Any amounts paid to them are dislcosed in Note 8. The Group also invests in certain
funds that it manages which is disclosed in note 21.
The transactions with the EBT 2004 described in note 20 are also considered to be related
party transactions.
Impax NH granted it’s President a US$$1.6 million loan to enable them to purchase their original
shares in Impax NH.
During the year loan facilities were provided to two executives for the sole purpose of investment
in a fund managed by the Group. The loans are provided at an interest rate of LIBOR plus 2.9%
per annum on amounts drawn, calculated on a daily basis. The balance on the loans to the two
executives is £2,000 each at the reporting date.
34 ACCOUNTING POLICIES
(A) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its
subsidiaries. All intra-Group transactions and balances are eliminated in full on consolidation.
Subsidiaries are those entities, including investment funds, over which the Group has control. The
Group is deemed to have control if it is exposed to, or has rights to, variable returns from involvement
with the entity and has the ability to affect those returns through its power over the entity.
The entities included in the consolidation may vary year on year due to restructuring of the
Group (including acquisition and disposals) and the level of investments made in investment
funds (see below).
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.
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.
Investment funds and structured entities
The Group acts as a fund manager to investment funds that are considered to be structured entities
under IFRS. Structured entities are entities that have been designed so that voting or similar rights
are not the dominant factor in deciding which party has control: for example, when any voting
rights relate to administrative tasks only and the relevant activities of the entity are directed by
means of contractual arrangements. The Group has interests in structured entities as a result of the
management of these investment funds.
Where the Group holds a direct interest in an investment fund it manages, the interest is accounted
for either as a consolidated structured entity or as a financial asset, depending on whether the Group
has control over the fund or not. Control is determined in accordance with IFRS 10, based on an
assessment of the level of power and aggregate economic interest that the Group has over the fund,
relative to third-party investors. Power is normally conveyed to the Group through the existence of an
investment management agreement and/or other contractual arrangements. Aggregate economic
interest is a measure of the Group’s exposure to variable returns in the fund through a combination of
direct interest, carried interest and expected management fees (including performance fees).
The Group concludes that it acts as a principal when the power it has over the fund is deemed to be
exercised for self-benefit, considering the level of aggregate economic exposure in the fund and the
assessed strength of third-party investors’ kick-out rights. The Group concludes that it acts as an
agent when the power it has over the fund is deemed to be exercised for the benefit of third-party
investors. The Group concludes that it has control and, therefore, will consolidate a fund as if it were
a subsidiary where the Group acts as a principal. If the Group concludes that it does not have control
over the fund, the Group accounts for its interest in the fund as a financial asset.
In cases where investment funds are consolidated, the third-party interest is recorded as a financial
liability. The consolidation has no net effect on the income statement. The treatment continues until
the Group loses control as defined by IFRS.
IMPAX ASSET MANAGEMENT GROUP PLC
57
34 ACCOUNTING POLICIES CONTINUED
Details of funds that are recorded as a financial asset are provided in note 21.
(B) Business combinations
The Group accounts for business combinations using the acquisition method when control is
transferred to the Group. The consideration transferred in the acquisition is measured at fair value,
as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment
(see note 17). Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction
costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation
to pay contingent consideration that meets the definition of a financial instrument is classified as
equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other
contingent consideration is remeasured at fair value at each reporting date and subsequent changes
in the fair value of the contingent consideration are recognised in profit or loss.
If share-based payment awards (replacement awards) are required to be exchanged for awards
held by the acquiree’s employees (acquiree’s awards), then all or a portion of the amount of the
acquirer’s replacement awards is included in measuring the consideration transferred in the business
combination. This determination is based on the market-based measure of the replacement awards
compared with the market-based measure of the acquiree’s awards and the extent to which the
replacement awards relate to pre-combination service.
Non-controlling interests are measured initially at their proportionate share of the acquiree’s
identifiable net assets at the date of acquisition.
In instances where the non-controlling interests holds an option enabling it to require the Group to
purchase its interests the Group uses the present access method to account for this. A liability is
recognised for the estimated cost of acquiring the non-controlling interest and charged to equity.
Subsequent changes in the value of the liability are recognised through equity.
(C) Foreign currency
(i) Functional and presentational currency
The financial information of each of the Group’s entities are initially recorded in the currency of
the primary economic environment in which the entity operates (the “functional currency”). This
is mainly sterling but for some entities it is the euro and the US dollar. The consolidated financial
statements are presented in sterling which is both the Company’s functional and presentational
currency as well as the currency in which the majority of the Group’s revenue streams, assets and
liabilities are recorded.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency 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. Foreign currency gains or losses resulting from the settlement
of such transactions and their translation at year end rates are recorded in the income statement.
(iii) Consolidation
On consolidation, the results and financial position of all Group entities that have a functional
currency different from sterling (the “presentational currency”) are translated into sterling as follows:
–
–
–
assets and liabilities are translated at the closing rate at the date of the statement of financial
position;
income and expenses are translated at the date of the transaction or at average exchange rate
for the year; and
any resulting exchange differences are recognised as a separate component of the statement
of comprehensive income.
58
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 (D) Revenue
Management fee revenues are calculated as a percentage of net fund assets managed or of
commitments made to a fund in accordance with individual management agreements. Management
fees are accrued over the period for which the management service is provided and only when we
consider it probable that the fee will be received. Where management fees are received in advance,
they are recognised over the period of the provision of the asset management service.
Performance fees are recognised when the quantum of the fee can be estimated reliably and it is
probable that the fee will crystallise. This is usually at the end of the performance period. For private
equity funds carried interest income is recognised when the cash is received.
(E) Leases
Rental payments on operating leases are charged to the income statement on a straight-line basis
over the lease term. The Group has no finance leases.
(F) 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. Such charges
are included in other costs in note 8 – Operating costs.
(G) Pensions
Pension contributions made to defined contribution schemes by the Group are charged to the
consolidated income statement as they become payable.
(H) Share-based payments
The fair value of employee services received in exchange for the grant of restricted 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.
Investment income
(I)
Interest income is accrued on a time basis by reference to the principal outstanding and the
interest rate applicable. Other investment income is recognised when the right to receive
payment is established.
Interest expense
(J)
Interest expense is recognised using the effective interest method.
(K) 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 income statement 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
United Kingdom 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 equity.
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.
IMPAX ASSET MANAGEMENT GROUP PLC
59
34 ACCOUNTING POLICIES CONTINUED
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.
(L) 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.
Changes in contingent consideration are recorded through the income statement unless they are
measurement period adjustments, in which case they adjust goodwill.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of
the profit or loss on disposal.
(M) Intangible assets
Intangible assets are stated at cost (fair value for assets acquired via a business combination) less
accumulated depreciation and any accumulated impairment losses.
Amortisation is provided on a straight-line basis over the estimated useful lives shown below:
Management contracts
Other items
11 years
4 years
(N) 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
life of the lease
Fixtures, fittings and equipment
3 years
(O) 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.
(P) Current asset investments
Current asset investments are categorised as financial assets at fair value through profit or loss either
because they are designated at fair value through profit and loss on initial recognition or because
they are held for trading. All gains or losses together with transaction costs are recognised in the
income statement. 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.
60 GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018
(Q) Derivatives
The Group uses foreign exchange contracts as a hedge against 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 (disclosed as derivative asset or liability) on the
statement of financial position. In instances where the hedge accounting criteria is met, changes
in the fair value are recorded in other comprehensive income. The amounts recognised in other
comprehensive income are reclassified to income when the hedged item (such as the relevant
foreign exchange income) is recorded.
The Group also uses forward derivative contracts to hedge the market risk on seed investments
made. These are also recorded at their fair value in the statement of financial position with any
changes recorded in the income statement as part of fair value gains and losses.
(R) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and short-term deposits with an original maturity
period of three months or less.
(S) Trade and other payables
Trade and other payables are initially recognised at cost and subsequently remeasured at amortised
cost using the effective interest rate method. Accruals are based on the latest information and
therefore require a degree of estimation.
(T) Loans
Loans are initially recognised at fair value (net of transaction costs) and subsequently carried at
amortised cost.
(U) Ordinary shares
Ordinary shares issued by the Group are recorded at the proceeds received, net of direct issue costs.
(V) Own shares
Company shares held by the Group’s Employee Benefit Trusts are deducted from shareholder’s
funds and classified as Own shares until such time as they vest unconditionally to participating
employees and their families.
(W) 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.
IMPAX ASSET MANAGEMENT GROUP PLC
61
34 ACCOUNTING POLICIES CONTINUED
(X) Interests in unconsolidated structured entities
The Group classifies the following investment funds as unconsolidated structured entities:–
Segregated mandates and pooled funds managed where the Group does not hold any direct
interest. In this case, the Group considers that its aggregate economic exposure is insignificant,
and, in relation to segregated mandates and certain pooled funds, the third-party investor has
the practical ability to remove the Group from acting as fund manager, without cause. As a result
the Group concludes that it acts as an agent for third-party investors. Pooled funds managed by
the Group where the Group holds a direct interest, for example seed capital investments, and the
Group’s aggregate economic exposure in the fund relative to third-party investors is less than
20 per cent (i.e. the threshold established by the Group for determining agent versus principal
classification). Here, the Group concludes that it is an agent for third-party investors and therefore
accounts for its beneficial interest in the fund as a financial asset. The disclosure of the AUM in
respect of consolidated and unconsolidated structured entities is provided in note 22.
35 NEW ACCOUNTING STANDARDS
New standards, interpretations and amendments adopted during the year
No new accounting standards, interpretation or amendments were adopted during the year.
New standards not yet adopted
The following new standards issued have not been early adopted. The Group is currently assessing
their impact on its consolidated financial statements.
Standard
IFRS 9
IFRS 15
IFRS 16
Topic
Financial instruments
Revenue from Contracts with Customers
Leases
Effective for annual periods
beginning on/after
1 January 2018
1 January 2018
1 January 2019
IFRS 9 Financial instruments was issued in July 2014. IFRS 9 replaces the classification and
measurement models for financial instruments in IAS 39 Financial Instruments: Recognition with
three classification categories: amortised cost, fair value through profit or loss and fair value through
other comprehensive income. Under IFRS 9, the Group’s business model and the contractual
cash flows arising from its investments in financial instruments will determine the appropriate
classification. All equity investments within the scope of IFRS 9 are measured at fair value, with
gains or losses reported either in the statement of comprehensive income or, by election, through
other comprehensive income. However, where fair value gains and losses are recorded through
other comprehensive income there will no longer be a requirement to transfer gains or losses to
the statement of comprehensive income on impairment or disposal. In addition, IFRS 9 introduces
an expected loss model for the assessment of impairment. The current incurred loss model under
IAS 39 requires the Group to recognise impairment losses when there is objective evidence that
an asset is impaired. Under the expected loss model, impairment losses are recorded if there is an
expectation of credit losses, even in the absence of a default event. The Group does not anticipate
that this will have a material impact on its results.
62
GOVERNANCE AND FINANCIAL STATEMENTS 2018
NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 SEPTEMBER 2018 – IFRS 15 Revenue from Contracts with Customers deals with revenue recognition and establishes
a single, principle-based model to be applied to all contracts with customers, to recognise revenue
in a manner that reflects the pattern of transfer of services to the customer. IFRS 15 replaces IAS
18 Revenue and IAS 11 Construction Contracts and related interpretations. The Standard provides
guidance on topics such as the point at which revenue is recognised, accounting for variable
consideration, costs of fulfilling and obtaining a contract and various related matters. New
disclosures about revenue are also introduced. The Group does not anticipate that this will have a
material impact on its results.
– IFRS 16 Leases was issued on 13 January 2016 and replaces IAS17 Leases. IFRS 16 requires all
operating leases in excess of one year, where the Group is the lessee, to be included on the Group’s
statement of financial position and recognised as a right-of-use asset and a related lease liability
representing the obligation to make lease payments. The right-of-use asset will be amortised on
a straight-line basis with the lease liability being amortised using the effective interest method.
Certain optional exemptions are available under IFRS 16 for short-term leases (lease term of less
than 12 months) and for small-value leases. The Group is currently assessing the impact of this new
accounting standard.
No other standards or interpretations issued and not yet effective are expected to have an impact on
the Group’s consolidated financial statements.
IMPAX ASSET MANAGEMENT GROUP PLC
63
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2018
Company No: 03262305
Assets
Property, plant and equipment
Investments
Deferred tax assets
Total non-current assets
Trade and other receivables
Investments
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
Retained earnings
Total equity
Trade and other payables
Loans
Total current liabilities
Loans
Total non-current liabilities
Total equity and liabilities
2018
2017
Notes
£000
£000
£000
£000
37
38
42
39
40
27
41
1,695
34,375
183
25,974
1,714
233
6,917
1,304
9,291
31,967
18,551
3,326
6,652
445
21,181
177
36,253
21,803
34,838
71,091
2,453
629
232
8,429
1,277
4,093
14,160
11,743
33,546
42,562
19,530
14,016
–
–
14,016
–
33,546
21,877
6,652
71,091
Authorised for issue and approved by the Board on 5 December 2018. The notes on pages 67–73
form part of these financial statements.
Ian R Simm
Chief Executive
64 GOVERNANCE AND FINANCIAL STATEMENTS 2018
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Note
16
16
28
As at 1 October 2016
Profit for the year
Transactions with owners
Dividends paid
Acquisition of own shares
Cash received on option exercises
Tax credit on long-term incentive
schemes (Restated*)
Long-term incentive scheme charge
Total transactions with owners
(Restated*)
As at 30 September 2017
Profit for the year
Transactions with owners
Shares issued
Dividends paid
Acquisition of own shares
Management equity scheme – value
assigned to pre-acquisition service
Cash received on option exercises
Tax credit on long-term incentive
schemes
Long-term incentive scheme charge
Total transactions with owners
As at 30 September 2018
Share
capital
£000
1,277
Share
premium
£000
4,093
–
–
–
–
–
–
–
1,277
–
27
–
–
–
–
–
–
–
–
–
–
–
–
4,093
–
5,198
–
–
–
–
–
27
1,304
5,198
9,291
Retained
earnings
£000
14,317
753
(2,672)
(950)
1,096
486
1,130
(910)
14,160
18,967
–
(7,386)
(2,534)
1,917
4,477
544
1,822
(1,160)
31,967
Total
£000
19,687
753
(2,672)
(950)
1,096
486
1,130
(910)
19,530
18,967
5,225
(7,386)
(2,534)
1,917
4,477
544
1,822
4,065
42,562
The notes on pages 67–73 form part of these financial statements.
* Restated to show tax credit on long term incentive schemes within Transactions with owners
IMPAX ASSET MANAGEMENT GROUP PLC
65
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
Notes
Operating activities:
Profit before taxation
Adjustments for:
Investment income
Depreciation of property, plant & equipment
37
Fair value movements and other financial income/expense
Interest payable
Share-based payment
Operating cash flows before movement in working capital
Decrease/increase in receivables
Decrease/increase in payables
Decrease/increase in margin account
Cash used by operations
Corporation tax
Net cash generated from operating activities
Investing activities:
Interest received
Dividend received
Investments in new subsidiaries
Loans to new subsidiaries
Repayments from/proceeds on sale of investments
Investments made into Impax managed funds
Settlement of investment related hedges
Decrease in cash held in money market funds
Purchase of property, plant & equipment
Net cash used by investing activities
Financing activities:
Proceeds from bank borrowings
Repayment of bank borrowings
Interest paid on bank borrowings
Dividends paid
Acquisition of own shares
Cash received on exercise of Impax share options
Net generated from financing activities
Net 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
66
GOVERNANCE AND FINANCIAL STATEMENTS 2018
2018
£000
20,094
(13,000)
242
(3)
670
229
8,232
(4,147)
4,200
(144)
8,141
–
8,141
–
13,000
(8,095)
(19,232)
6,011
(1,526)
(987)
–
(1,492)
(12,321)
17,616
(8,779)
(464)
(7,386)
(2,534)
4,477
2,930
(1,250)
8,429
(262)
6,917
2017
£000
885
(11)
81
393
–
144
1,492
1,676
3,343
77
6,588
–
6,588
11
–
–
–
3,508
(14)
(1,580)
1,697
(350)
3,272
–
–
–
(2,672)
(950)
1,096
(2,526)
7,334
1,273
(178)
8,429
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018
36 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 38 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 £18,967,000 (2017: £753,000).
37 PROPERTY, PLANT AND EQUIPMENT
Cost
As at 1 October 2016
Additions
As at 30 September 2017
Additions
Disposals
As at 30 September 2018
Depreciation
As at 1 October 2016
Charge for the year
As at 30 September 2017
Charge for the year
Disposals
As at 30 September 2018
Net book value
As at 30 September 2018
As at 30 September 2017
As at 30 September 2016
Leasehold
improvements
£000
Fixtures, fittings
and equipment
£000
709
189
898
1,131
–
2,029
698
8
706
113
–
819
1,210
192
11
619
237
856
387
(46)
1,197
530
73
603
129
(20)
712
485
253
89
Total
£000
1,328
426
1,754
1,518
(46)
3,226
1,228
81
1,309
242
(20)
1,531
1,695
445
100
IMPAX ASSET MANAGEMENT GROUP PLC
67
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 30 SEPTEMBER 2018
38 NON-CURRENT INVESTMENTS
Investments held by the Company in subsidiary undertakings are held at cost less any provision
for impairment.
At 1 October 2016
Additions
Capital contribution
Disposals/repayment of invested capital
At 30 September 2017
Additions
Capital contribution
Transfer to current asset investments
Disposals/repayment of invested capital
At 30 September 2018
The subsidiary undertakings are:
Other
investments
£000
Subsidiary
undertakings
£000
14
–
–
(11)
3
–
–
–
(3)
–
22,228
–
986
(2,036)
21,178
15,237
1,593
(3,000)
(633)
34,375
Total
£000
22,242
–
986
(2,047)
21,181
15,237
1,593
(3,000)
(636)
34,375
Country of
incorporation
Proportion
of ordinary
capital held
100%
100%
83.3%
51%
Impax Asset Management Limited*
Impax Asset Management (AIFM) Limited*
Impax Asset Management LLC
Pax Elevate Management LLC
INEI I GP (UK) LLP
INEI II GP (UK) LLP
INEI III GP (UK) LLP
Climate Property (GP) Limited
INEI III Team Co-Investment LP
Impax Carried Interest Partner (GP) Limited
Impax Carried Interest Partner II (GP) Limited
Impax Global Resource Optimization (GP) Ltd
Impax US Holdings Limited
Impax New Energy Investors (GP) Limited
Impax New Energy Investors II (GP) Limited
Impax Capital Limited
Impax New Energy Investors
Management SARL
Kern USA Inc
UK
UK
USA
USA
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
USA
Impax Asset Management (Hong Kong) Ltd** Hong Kong
Impax Asset Management (US) LLC
Impax Global Equity Opportunities Fund
IAM US Holdco, Inc.
* FCA regulated
** Hong Kong SFC regulated
USA
Ireland
USA
68
GOVERNANCE AND FINANCIAL STATEMENTS 2018
Nature of business
Fund management
Fund management
Fund management
Fund management
100% General partner to private equity fund
100% General partner to private equity fund
100% General partner to private equity fund
100%
80%
General partner to property fund
Investment Partnership
100% General partner to private equity fund
100% General partner to private equity fund
100%
General partner to listed equity fund
100%
100%
100%
100%
Holding company
Holding company
Holding company
Dormant
100%
100%
100%
96.6%
100%
Holding company for US assets
Fund management
Fund management
Investment Fund
Holding company
Luxembourg
100% General partner to private equity fund
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
2018
£000
20,985
13,390
34,375
2017
£000
9,381
11,797
21,178
The principal other investment for the Company is in the fund Impax New Energy Investors SCA
which is incorporated in Luxembourg.
39 TRADE AND OTHER RECEIVABLES
Due within one year:
Amounts owed by Group undertakings
Taxation and other social security receivable
Other receivables
Prepayments and accrued income
40 CURRENT ASSET INVESTMENTS
At 1 October 2016
Additions
Fair value movements
Repayments/disposals
At 30 September 2017
Additions
Transfer from non-current investments
Fair value movements
Repayments/disposals
At 30 September 2018
41 TRADE AND OTHER PAYABLES
Trade payables
Amounts owed to Group undertakings
Taxation and other social security
Other payables
Accruals and deferred income
2018
£000
23,924
855
521
674
25,974
2017
£000
182
519
1,065
687
2,453
Investments
£000
1,116
14
(43)
(458)
629
1,526
3,000
1,933
(5,374)
1,714
2017
£000
175
10,602
341
78
2,820
14,016
2018
£000
–
14,416
239
214
3,682
18,551
IMPAX ASSET MANAGEMENT GROUP PLC
69
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 30 SEPTEMBER 2018
42 DEFERRED TAX
The deferred tax asset included in the Company statement of financial position is as follows:
Accelerated
capital
allowances
£000
Other
temporary
differences
£000
Excess
management
charges
£000
As at 30 September 2017
Credit/(charge) to the income statement
As at 30 September 2018
9
(50)
(41)
(536)
354
(182)
144
(144)
–
Share-
based
payment
scheme
£000
560
(154)
406
Total
£000
177
6
183
A reduction in the UK corporation tax rate to 17 per cent (effective 1 April 2020) was substantively
enacted on 6 September 2016. This will reduce the Company’s future tax charge accordingly. The
deferred tax charge at 30 September 2018 has been calculated taking this into account.
43 FINANCIAL COMMITMENTS
At 30 September 2018 the Company has outstanding commitments to invest up to the following
amounts into private equity funds that it manages:
–
–
€203,000 (2017: €203,000) into INEI; this amount could be called on in the period to
17 August 2018;
€672,000 (2017: €672,000) into INEI II; this amount could be called on in the period to
22 March 2020; and
–
€3,981,000 into INEI III; this amount could be called on in the period to 31 December 2026.
At 30 September the Company had commitments under non-cancellable operating leases as follows:
Within one year
Between one and five years
Later than five years
Offices
2018
£000
606
4,235
3,971
8,812
2017
£000
77
3,706
5,030
8,813
Other
2018
£000
16
31
–
47
2017
£000
16
31
–
47
The material operating lease for 2018 and 2017 is for office space at 7th Floor, 30 Panton Street
London SW1Y 4AJ. The lease is for ten years expiring 30 June 2027.
44 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-2) and the remainder in a money market
funds managed by BlackRock and Goldman Sachs which both have a Standard & Poor’s credit rating
of AAA. The risk of default is considered minimal.
70
GOVERNANCE AND FINANCIAL STATEMENTS 2018
Foreign exchange risk
The amount of the Company’s expenses denominated in foreign currencies is minimal.
The Company activities are principally conducted in sterling, euro, and US dollars. 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 2018 was:
Assets
Current asset investments
Trade and other receivables
Cash and cash equivalents
Liabilities
Trade and other payables
Loans
Net exposure
EUR/GBP
£000
USD/GBP
Other/GBP
£000
£000
98
–
–
98
286
–
286
(188)
–
19,715
270
19,985
779
9,978
10,757
9,228
–
–
–
–
–
–
–
–
The Company’s exposure to foreign currency exchange rate risk at 30 September 2017 was:
Assets
Non-current asset investments
Current asset investments
Trade and other receivables
Cash and cash equivalents
Liabilities
Trade and other payables
Net exposure
EUR/GBP
£000
USD/GBP
Other/GBP
£000
£000
3
628
–
–
631
947
947
(316)
–
1
–
8,118
8,119
778
778
7,341
–
–
–
–
–
11
11
(11)
IMPAX ASSET MANAGEMENT GROUP PLC
71
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 30 SEPTEMBER 2018
44 FINANCIAL RISK MANAGEMENT CONTINUED
The following table demonstrates 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%
GBP weakens against the USD, down 5%
GBP strengthens against the EUR, up 5%
GBP weakens against the EUR, down 5%
Post-tax profit
2018
£000
(369)
369
8
(8)
2017
£000
(295)
295
13
(13)
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.
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 £7,150,000 (2017: £8,661,000) 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:
At 1 October 2017
Transfer from non-current investments
Additions
Fair value
Disposals
At 30 September 2018
Level 2
2018
£000
–
3,000
1,506
1,981
(4,872)
1,615
Level 3
2017
£000
629
–
20
(48)
(503)
98
The Company did not have any investments classified as Level 1 in 2018 (2017: £nil).
There were no movements between any of the levels in the year (2017: £nil).
The Company had no financial liabilities measured at fair value for 2018 (2017: £nil).
72
GOVERNANCE AND FINANCIAL STATEMENTS 2018
Financial assets and liabilities by category:
30 September 2018
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
Loans
Total financial liabilities
30 September 2017
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
* FVPTL = Fair value through profit and loss
Available
for sale
£000
*FVTPL –
designated
on initial
recognition
£000
Financial
liabilities
measured at
amortised cost
£000
Loans and
receivables
£000
–
–
–
–
–
–
–
–
–
–
–
1,615
1,615
–
–
–
6,917
233
24,445
–
31,595
–
–
–
–
–
–
–
–
14,630
9,978
24,608
Available
for sale
£000
*FVTPL –
designated
on initial
recognition
£000
Financial
liabilities
measured at
amortised cost
£000
Loans and
receivables
£000
–
–
–
–
–
–
–
–
–
–
629
629
–
–
8,429
232
718
–
9,379
–
–
–
–
–
–
–
10,855
10,855
IMPAX ASSET MANAGEMENT GROUP PLC
73
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, 7th floor, 30 Panton Street, London SW1Y 4AJ
at 2pm on 7 March 2019 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
2018 together with the Directors’ report and the auditor’s report on those accounts.
2. To elect Arnaud de Servigny as a Director.
3. To re-elect Lindsey Brace Martinez as a Director.
4. To re-elect Vince O’Brien as a Director.
5. To reappoint KPMG LLP as auditor of the Company.
6. To authorise the Directors to fix the remuneration of the auditor.
7.
To declare a final dividend in respect of the financial year ended 30 September 2018 of
3.0 pence per Ordinary Share payable to the holders of Ordinary Shares on the register of
members at the close of business on 8 February 2019.
AS SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolutions, resolution 8 of which will be proposed
as an ordinary resolution and resolutions 9, 10 and 11 of which will be proposed as special resolutions:
8.
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 £434,716.95 (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 £434,716.95) and
(b) comprising equity securities (as defined by section 560 of the Act) up to an aggregate
nominal amount of £869,433.91 (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)
(ii)
to holders of Ordinary Shares in proportion (as nearly as may be practicable) to their
respective holdings; and
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 7 June 2020) 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.
74
GOVERNANCE AND FINANCIAL STATEMENTS 2018
9.
THAT, subject to the passing of resolution 8 above dealing with the authority to allot pursuant
to section 551 of the Companies Act 2006 (the “Act”), 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
8 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 9(a)) of equity securities or sale
of Treasury Shares up to an aggregate nominal value of £65,207.54,
the power conferred by this resolution shall expire at the conclusion of the Company’s next
Annual General Meeting (or, if earlier, at the close of business on 7 June 2020), 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 (and Treasury Shares to be sold) after such
expiry and the Directors of the Company may allot equity securities (and sell Treasury Shares) in
pursuance of such an offer or agreement as if the authority conferred hereby had not expired.
10.
THAT, subject to the passing of resolution 8 above, the Directors of the Company be and are
hereby empowered in addition to any authority granted under resolution 9(b) to allot equity
securities (within the meaning of section 560 of the Act) for cash under the authority given by
that resolution and/or to sell ordinary shares held by the Company as Treasury Shares for cash
as if section 561 of the Act did not apply to any such allotment or sale, such authority to be:
(a) limited to the allotment of equity securities or sale of Treasury Shares up to a nominal
amount of £65,207.54; and
(b) used only for the purposes of financing (or refinancing, if the authority is to be used within
six months after the original transaction) a transaction which the Directors determine to
be an acquisition or other capital investment of a kind contemplated by the Statement of
Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption
Group prior to the date of this notice,
the power conferred by this resolution shall expire at the conclusion of the Company’s next
Annual General Meeting (or, if earlier, at the close of business on 7 June 2020), 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 (and Treasury Shares to be sold) after such
expiry and the Directors of the Company may allot equity securities (and sell Treasury Shares) in
pursuance of such an offer or agreement as if the authority conferred hereby had not expired.
IMPAX ASSET MANAGEMENT GROUP PLC
75
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
11.
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 13,041,508;
(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
17 December 2018
76
GOVERNANCE AND FINANCIAL STATEMENTS 2018
Notes:
1
2
3
4
5.
6.
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.
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 Link Asset Services, PXS1, 34
Beckenham Road, Beckenham, Kent BR3 4ZF by 2.00 pm on 5 March 2019. 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.
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 close of business on 5
March 2019 (or, in the event of any adjournment, close of business on the date which is two days before the time of the
adjourned meeting).
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, Link
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.
As at 5 December 2018 (being the last practicable date prior to the publication of this notice) the total number of
Ordinary Shares in the Company in issue was 130,415,087 and the Company held no Shares in treasury. The total number
of voting rights on that date was therefore 130,415,087.
Members have a right under section 319A of the Companies Act 2006 to require the Company to answer any question
raised by a member at the annual general meeting, which relates to the business being dealt with at the meeting,
although no answer need be given: (a) if to do so would interfere unduly with the preparation of the meeting or involve
disclosure of confidential information; (b) if the answer has already been given on the Company’s website; or (c) if it is
undesirable in the best interests of the Company or the good order of the meeting.
7.
A copy of this notice of annual general meeting and other information required by section 311A of the Companies Act
2006, can be found at www.impaxam.com.
IMPAX ASSET MANAGEMENT GROUP PLC
77
REGISTRARS
Link Asset Services3
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
NOMINATED ADVISER AND BROKER
Peel Hunt
Moor House
120 London Wall
London
EC2Y 5ET
SOLICITOR
Stephenson Harwood LLP
1 Finsbury Circus
London
EC2M 7SH
OFFICERS AND ADVISERS
DIRECTORS
J Keith R Falconer (Chairman)
Ian R Simm (Chief Executive)
Guy de Froment (Non-Executive)1
Arnaud de Servigny (Non-Executive)2
Vincent O’Brien (Non-Executive)
Sally Bridgeland (Non-Executive)
Lindsey Brace Martinez (Non-Executive)
SECRETARY
Zack Wilson
REGISTERED OFFICE
7th Floor
30 Panton Street
London
SW1Y 4AJ
AUDITOR
KPMG LLP
15 Canada Square
London
E14 5GL
BANKERS
The Royal Bank of Scotland International
London Branch
1 Princes Street
London
EC2R 8BP
1 Resigned 12 June 2018
2 Appointed 12 June 2018
3 Previously known as Capita Asset Services
78
GOVERNANCE AND FINANCIAL STATEMENTS 2018
IMPAX ASSET MANAGEMENT GROUP PLC
79
IMPAX ASSET MANAGEMENT GROUP PLC
7th Floor
30 Panton Street
London
SW1Y 4AJ
United Kingdom
T: +44 (0)20 3912 3000
E: info@impaxam.com
@ImpaxAM
Impax Asset Management