Interim results to 31 March 2022

About this update from Impax Asset Management Group Plc

Impax Asset Management Group plc Interim results to 31 March 2022   London, 1 June 2022 - Impax Asset Management Group plc ('Impax' or the 'Company'), the specialist investor focused on a more sustainable global economy, today announces interim results for the six months to 31 March 2022 (the 'Period').   H1 Business highlights · Positive net inflows of £2.5 billion during the Period, well diversified by channel and geography · Continued long-term out-performance of Impax's strategies versus benchmarks, despite market rotation towards value during the Period · Strengthened investment capabilities, distribution and resilience · Recent geopolitical events underscore the importance of energy security and tackling climate change, both key areas for Impax's investments · AUM £37.0 billion as at 30 April 2022   H1 Financial highlights · AUM £38.0 billion as at 31 March 2022 (31 March 2021: £30.0 billion) · Revenue increased to £88.6 million (H1 2021: £60.6 million) · Adjusted operating profit of £34.0 million (H1 2021: £20.7 million) · Shareholders' equity increased to £112.3 million (H1 2021 £81.0 million) · Adjusted diluted earnings per share increased to 21.5 pence (H1 2021: 11.8 pence) · Profit before tax of £32.7 million (H1 2021: £14.4 million) · Interim dividend per share of 4.7 pence (H1 2021: 3.6 pence)   Ian Simm, Chief Executive commented: "Impax has delivered a solid first half to its financial year, with revenue up 46% and adjusted operating profit up 64% on the comparable period in 2021. We have benefitted from net inflows of £2.5 billion that were well diversified both geographically and across a wide range of sales channels.   "Our investment approach, with its careful attention to risk and resilience, continues to attract asset owners that are seeking to build robust portfolios with attractive returns, focused on the transition to a more sustainable economy.   "Amid considerable market volatility surrounding recent geopolitical events, we continue to be pleased with the long-term performance of our investment strategies."   The presentation for shareholders and analysts will be available to view on the Company's website later this morning: https://www.impaxam.com/investor-relations/reports-and-presentations   Enquiries:   Impax Asset Management Group plc Ian Simm, Chief Executive Paul French, Head of Corporate Communications     +44 (0)20 3912 3000 Montfort Communications Gay Collins Jack Roddan [email protected]     +44 (0)77 9862 6282 +44 (0)78 2567 0695 Peel Hunt LLP, Nominated Adviser and Joint Broker James Britton or Rishi Shah   Berenberg, Joint Broker Alex Reynolds   +44 (0)20 7418 8900     +44 (0)20 3207 7800     LEI number: 213800AJDNW4S2B7E680 About Impax Founded in 1998, Impax is a specialist asset manager, with approximately £37.0bn / US$46.5bn as of 30 April 2022 in both listed and private markets strategies, investing in the opportunities arising from the transition to a more sustainable global economy. Impax believes that capital markets will be shaped profoundly by global sustainability challenges, including climate change, pollution and essential investments in human capital, infrastructure and resource efficiency. These trends will drive growth for well-positioned companies and create risks for those unable or unwilling to adapt. The company seeks to invest in higher quality companies with strong business models that demonstrate sound management of risk. Impax offers a well-rounded suite of investment solutions spanning multiple asset classes seeking superior risk-adjusted returns over the medium to long term. Impax has ca. 230 staff across six offices in the United Kingdom, the United States, Ireland and Hong Kong, making it one of the investment management sector's largest investment teams dedicated to sustainable development. www.impaxam.com CHIEF EXECUTIVE'S REPORT BUSINESS UPDATE Impax delivered a solid first half to its financial year, which includes the six months to 31 March 2022 ("the Period"). Amid considerable market volatility surrounding the Russian invasion of Ukraine, the business once again demonstrated its resilience. Meanwhile, our investment approach, with its careful attention to risk and a focus on quality companies, continues to attract asset owners that are seeking to build robust portfolios focused on the transition to a more sustainable economy. During the Period, Impax's assets under management and advice ("AUM") rose by 2.2% to reach £38.0 billion. This was driven by positive net flows of £2.5 billion, which were offset by a decline of £1.7 billion due to market movements, investment performance and the impact of foreign exchange. By 30 April 2022, our AUM had fallen slightly to £37.0 billion. MARKETS During the six months of the Period, underlying market concern switched from focusing on the impact of COVID-19 to gauging the impact of rising inflation and the deteriorating geopolitical situation. Initially, global equity markets posted gains, backed by robust economic data and strong corporate earnings. However, t he strength of the post COVID-19 recovery coupled with localised lockdowns led to supply chain constraints across numerous industries, which in turn fuelled inflation globally. The Bank of England and the US Federal Reserve Bank ("the Fed") responded by raising rates, with the Fed signalling further hikes this year, noting improving labour conditions. The Fed also brought its quantitative easing programme to a close in March 2022. In early 2022, the unexpected instigation, followed by the horrifying reality, of a war in Ukraine contributed to market volatility. Global equity markets fell as investor concerns about the wider implications of Russia's invasion combined with inflationary, interest rate, and monetary tightening pressures, were amplified. The war intensified an already-looming global energy crisis with a rise in oil, gas and soft commodities prices, while the invasion caused policymakers urgently to turn their attention to reducing Europe's dependency on Russian gas, bolstering the secular case for renewables. As investors shifted towards value-orientated stocks such as commodities and financials, the share prices of companies at the vanguard of the sustainable economy suffered more than average: for example, the FTSE Environmental Opportunities All-Share Index dropped 4.5% between 1 January and 31 March 2022, compared to the MSCI ACWI Index, which fell by 2.6%.   Movements in the Company's AUM for the Period 1 Listed equities £m Fixed income £m Private markets £m Total firm £m Total AUM at 30 September 2021 35,637 1,257 318 37,211 Net flows 2,256 48 168 2,472 Market movement, FX and performance -1,624 -36 -7 -1,667 Total AUM at 31 March 2022 36,269 1,268 479 38,016   1  Figures may not add up due to rounding Percentage returns for Environmental Markets strategies (GBP) 1 AUM The Period  1 year 3 years 5 years Leaders £8.0bn -4.5 5.0 48.0 70.2 Water £6.2bn -2.1 12.0 61.4 84.9 Specialists £3.9bn -5.8 6.5 64.8 88.0 Climate £3.1bn -6.0 5.2 63.2 N/A Sustainable Food £1.4bn -2.3 2.3 30.0 45.1 MSCI ACWI Index 2 3.4 12.4 45.7 64.7 Asian Environmental £1.8bn -8.6 -1.6 35.3 54.6 MSCI Asia-Pacific Composite Index 3 -5.1 -5.8 18.2 30.7   Percentage returns for Sustainability Lens strategies (GBP) 1 AUM The Period  1 year 3 years 5 years Global Opportunities £7.3bn -1.4 12.5 56.7 104.6 MSCI ACWI Index 2 3.4 12.4 45.7 64.7 US Large Cap £1.2bn 6.0 18.8 84.3 122.8 S&P 500 Index 8.5 21.2 66.5 99.4 US Small Cap £550m -3.1 7.4 44.6 45.8 Russell 2000 Index -3.3 -1.3 38.1 51.2   Percentage returns for Sustainability Lens Fixed Income strategies (GBP) 1 AUM The Period  1 year 3 years 5 years High Yield Bond £590m -1.9 3.6 15.0 20.1 ICE BofA US Cash Pay High Yield Constrained (BB-B) -1.6 4.3 12.6 18.8 Core Bond £560m -3.2 1.1 5.2 6.8 Bloomberg Barclays US Aggregate -3.7 0.4 4.1 5.6   Past performance is not necessarily a guide to future performance. The value of investments can fall as well as rise and you may get back less than you invested. All data as at 31 March 2022 1.  AUM (GBP as at 31 March 2022). The strategy returns are calculated including the dividends re-invested, net of withholding taxes, gross of management fee, and are represented in sterling. 2.  MCSI indices are total net return (net dividend re-invested). S&P, Russell, ICE BofA, and Bloomberg Barclays indices are all total gross return. 3.  MSCI AC AP Composite is a custom-made benchmark made up of 80% MSCI AC Asia Pacific ex-Japan and 20% MSCI Japan rebalanced daily. MSCI indices are total net return (net dividend re-invested).   INVESTMENT PERFORMANCE Impax offers actively managed Listed Equities strategies in Environmental Markets and Sustainability Lens segments as well as strategies in Fixed Income, Systematic Equities, and Private Markets. On an absolute and relative basis, Impax strategies largely performed positively during the first three months of the Period. However, during the second half of the Period our Environmental Markets strategies in particular - which use a quality growth at a reasonable price investment style - were negatively impacted, as market sentiment switched in favour of value-oriented stocks. This has led to strong performance, for example, in the fossil fuel energy sector, to which Impax strategies typically have no exposure. Consequently, for the six-month Period, our thematic Environmental Markets strategies underperformed their benchmarks, with Water lagging the MSCI All Country World Index ("ACWI") by 5.5%; Sustainable Food by 5.7%; Leaders by 7.9%; Specialists by 9.2%; and the Climate strategy by 9.4%. The Asian Environmental strategy also trailed its benchmark, the MSCI AC AP Composite, by 3.5%. Amongst our Sustainability Lens strategies, the US Large Cap strategy trailed the S&P 500 by 2.5%; the US Small Cap strategy lagged the Russell 2000 Index by 0.2%; and Global Opportunities trailed the ACWI by 4.8%. Meanwhile, in Fixed Income, the Core Bond strategy and the High Yield strategy both performed broadly in line with their benchmarks. We continue to be pleased with the long-term performance of our investment strategies. Eight out of our ten largest strategies have continued to outperform their benchmarks over three years and seven out of nine strategies with five-year track records also outperformed. CLIENT SERVICE AND BUSINESS DEVELOPMENT The positive net flows of £2.5 billion during the Period reflected both new mandates and increased investments into existing accounts across North America, Europe, and Asia-Pacific. The growth was well diversified via our distribution partner network and direct sales channels. Of the latter, by the end of the Period, the US-based Pax World funds' AUM grew by 4.9% to US$8.7 billion and our UCITS fund range (based in Ireland) grew by 9.8% to £2.3 billion. We saw increased net inflows via intermediaries, consultants and our distribution partners including Desjardins, NEI Investments and Principal Global Investors in North America and BNP Paribas Asset Management, Fidante and St James's Place in Europe and Asia-Pacific. In the wake of the UN COP26 climate conference in Glasgow in November 2021, we continued to see strong investor interest in our Climate strategy. Part of our Environmental Markets range, this strategy focuses on investing in companies providing solutions to the challenges linked to climate change. The Climate strategy accounted for 12.9% of net inflows during the Period and we secured two new mandates for this strategy in the US and China. Also part of our thematic Environmental Markets range, and with AUM of £8.0 billion, Leaders maintained its position as our largest strategy. Highlights included a global consulting firm choosing the strategy for distribution into the New Zealand market, while in the US, the Pax Global Environmental Markets fund enjoyed significant net inflows over the Period. Utilising our Specialists strategy, Impax Environmental Markets plc, which celebrates its 20th anniversary this year, was named "Environmental Company of the Year" in Investment Week's Investment Company awards in November. In the Sustainability Lens segment, Global Opportunities registered 36.6% of Impax's total net inflows for the Period and reached an AUM of £7.3 billion. This included strong inflows via St James's Place, and into our Ireland-based Impax Global Equity Opportunities fund. In October 2021 our Private Markets team investing in renewable power generation held the first close of Impax New Energy Investors IV, with €238 million raised. By the Period end, the team had invested, reserved or committed nearly all the first close capital with projects signed in Poland, Greece, Italy and Germany during the Period. Meanwhile the team continues to make good progress with Impax New Energy Investors III having progressed the sale process for both its French and Spanish operating solar portfolios and completed add-on acquisitions in France. Finally, we recently announced that we would be strengthening our distribution, product and marketing capabilities with a number of senior appointments announced during the Period. We are focusing on deepening our distribution capabilities across our target markets, accelerating our product development and ensuring that our clients enjoy a consistent experience globally. OPERATIONS AND CORPORATE SERVICES Within corporate services, we are continuing to invest in our systems, infrastructure, risk and compliance capabilities to increase our operational resilience as the business expands. Impax continues to have no direct holdings in either Russian or Ukrainian equities or fixed income securities and very limited direct revenue exposure to those countries in companies held within our portfolios. We have reviewed our clients, suppliers and vendors to confirm compliance with sanctions and have found no areas of concern. In light of the recent market volatility, we have moderated the rate of our hiring, but continue to build our team to support our previously stated growth ambitions. FINANCIAL RESULTS FOR THE PERIOD Revenue for the six months to 31 March 2022 grew to £88.6 million (H1 2021: £60.6 million, H2 2021: £82.5 million) driven by the positive net flows across the business offset in part by the market falls in the second half of the Period. At the end of the Period the weighted average run rate revenue margin was 47 basis points (30 September 2021: 47 basis points) on the £38.0 billion of AUM. Adjusted operating costs for the Period increased to £54.7 million (H1 2021: £39.8 million, H2 2021: £47.5 million), reflecting a full six months of costs from hires made throughout 2021 as well as the cost of further hires in the Period to support continued growth. IFRS operating costs includes £2.0 million, (H1 2021: £4.3 million, H2 £4.0 million) of charges that do not reflect the operating performance of the Group which have been removed for adjusted measures. A reconciliation of adjusted to IFRS measures is provided in Note 3. Adjusted operating profit for the period was £34.0 million (H1 2021: £20.7 million, H2 2021: £35.1 million). The decrease from H2 2021 is a result of the increase in adjusted operating costs discussed above offset in part by the growth in revenue. Run rate annualised adjusted operating profit was £65.2 million at the end of the Period (H1 2021: £51.7m, H2 2021: £67.5m). Adjusted operating profit margin was 38% (H1 2021: 34%, H2 2021: 43%). Adjusted profit before tax of £34.6 million (H1 2021: £18.7 million, H2 2021: £35.3 million) includes net finance income of £0.7 million (H1 2021: (£2.0 million), H2 2021: £0.2 million). IFRS profit before tax for the Period was £32.7 million (H1 2021: £14.4 million, H2 2021: £31.4 million). Adjusted diluted earnings per share for the Period were 21.5 pence (H1 2021: 11.8 pence, H2 2021: 22.1 pence). IFRS earnings per share were 20.1 pence (H1 2021: 10.9 pence, H2 2021: 19.4 pence). FINANCIAL RESOURCES The Company continues to be a strongly cash generative business with high levels of cash and no debt. Our cash reserves were £67.4 million at the Period end (H1 2021: £34.4 million). We retain access to a US$13 million revolving credit facility which remains unutilised. We continue to hold seed investments in our own Listed Equities funds and to invest in our Private Equity funds, and these investments were in total valued at £6.2 million at the Period end. DIVIDENDS A final dividend for 2021 of 17.0 pence per share was paid in March 2022, following approval at the Annual General Meeting. This took the total dividend paid for 2021 to 20.6 pence per share. As described above the business has continued to perform strongly in the Period and to reflect this we are pleased to announce a 31% increase in the interim dividend to 4.7 pence (2021: 3.6 pence per share). This dividend per share will be paid on 22 July 2022 to Ordinary Shareholders on the shareholder register at the close of business on 17 June 2022. The Company operates a dividend reinvestment plan ("DRIP"). The final date for receipt of elections under the DRIP will be 1 July 2022. For further information and to register and elect for this facility, please visit www.signalshares.com and search for information related to the Company. SHARE MANAGEMENT During the Period the Group's Employee Benefit Trust ("EBT") purchased 367,000 ordinary shares. The EBT holds shares for Restricted Share awards until they vest or will use them to settle option exercises. The Board will consider purchasing the Company's shares from time to time after due consideration of alternative uses of the Company's cash resources. Share purchases are usually made by the EBTs (subject to the trustees' discretion), using funding provided by the Company. At the Period end the EBTs held a total of 2.8 million shares, 2.2 million of which were held for Restricted Share awards leaving up to 0.6 million available for option exercises and future share awards. There were 2.9 million options outstanding at the Period end, of which 0.9 million were exercisable. KEITH FALCONER Earlier this month we were very sad to hear the news that Keith Falconer had died unexpectedly at the age of 67. Keith played an integral role in Impax's growth during his time as Chairman from 2004 until 2020 and the Impax leadership team benefitted greatly from his sage advice based on decades of asset management experience. Sadly, we must continue Impax's journey without him. OUTLOOK The invasion of Ukraine by Russia, higher inflation data and supply chain disruptions have complicated the global macroeconomic outlook. Nevertheless, companies whose business plans are aligned with a more sustainable economy should continue to offer compelling opportunities for investors. The recent heightened focus on energy security and the sobering reports from the Intergovernmental Panel on Climate Change have reinforced the drivers behind many of the markets in which Impax invests, including renewable power generation, zero-emissions transportation, climate resilience, resource efficiency and ecosystem protection. Meanwhile, the emergence of mandatory "sustainable finance" disclosure requirements on fund managers and the adoption by governments of green taxonomies is likely to raise the attractiveness of investments that are consistent with the transition to a more sustainable economy. Given this backdrop, we believe that Impax continues to be well positioned to provide continued value to all of our stakeholders. Ian Simm 31 May 2022 Condensed Consolidated Income Statement For the six months ended 31 March 2022 Note Unaudited Six months ended 31 March 2022 £000 Unaudited  Six months ended 31 March 2021 £000 Audited Year ended 30 September 2021 £000 Revenue 88,640 60,591 143,056 Operating costs (56,680) (44,150) (95,622) Finance income 5 1,130 110 286 Finance expense 6 (403) (2,103) (1,971) Profit before taxation 32,687 14,448 45,749 Taxation 7 (6,046) (91) (5,504) Profit after taxation 26,641 14,357 40,245 Earnings per share Basic 8 20.6p 11.1p 31.5 Diluted 8 20.1p 10.9p 30.3   Adjusted results are provided in Note 3.   Consolidated Statement of Comprehensive Income For the six months ended 31 March 2022   Unaudited Six months ended 31 March 2022 £000 Unaudited Six months ended 31 March 2021 £000 Audited Year ended 30 September 2021 £000 Profit for the Period 26,641 14,357 40,245 Change in value of cash flow hedges - 288 137 Tax on change in value of cash flow hedges - (54) (26) Exchange differences on translation of foreign operations 64 (1,277) (1,075) Total other comprehensive income 64 (1,043) (964) Total comprehensive income for the Period attributable to equity holders of the parent 26,705 13,314 39,281   All amounts in other comprehensive income may be reclassified to income in the future. All profit for the Period is derived from continuing operations.   Condensed Consolidated Statement of Financial Position As at 31 March 2022 Note Unaudited As at 31 March 2022 £000 Unaudited As at 31 March 2021 £000 Audited As at 30 September 2021 £000 Assets Non-current assets Goodwill 10 12,063 11,622 11,816 Intangible assets 10 16,714 18,338 17,473 Property, plant and equipment 11 9,020 9,805 9,435 Deferred tax assets 7,265 6,099 11,895 Total non-current assets 45,062  45,864  50,619 Current assets Trade and other receivables 39,496 26,750 39,800 Investments 12 6,246 6,537 7,564 Current tax asset 558 1,601 134 Cash invested in money market funds and long term deposit accounts 13 40,451 11,357 38,066 Cash and cash equivalents 13  31,574 26,896 36,172 Total current assets 118,325 73,141 121,736 Total assets 163,387  119,005  172,355 Equity and liabilities Equity Ordinary shares 15 1,326 1,326 1,326 Share premium 9,291 9,291 9,291 Merger reserve 1,533 1,533  1,533 Exchange translation reserve 438 172 374 Hedging reserve - 123 - Retained earnings 99,758 68,652 97,998 Total equity 112,346  81,097  110,522 Current liabilities Trade and other payables 41,365 27,570 50,107 Lease liabilities 11 1,311 1,403 1,330 Current tax liability 409 127 1,923 Total current liabilities 43,085  29,100  53,360 Non-current liabilities Lease liabilities 11 7,585 8,378 8,102 Deferred tax liability 371 430 371 Total non-current liabilities 7,956  8,808  8,473 Total liabilities 51,041  37,908  61,833 Total equity and liabilities  163,387  119,005  172,355   Condensed Consolidated Statement of Changes in Equity For the six months ended 31 March 2022   Share capital £000 Share premium £000 Merger reserve £000 Exchange translation reserve £000 Hedging reserve £000 Retained earnings £000 Total equity £000 As at 1 October 2020 1,304 9,291 - 1,449 (111) 59,515 71,448 Transactions with owners of the Company New shares issued 22 - 1,533 - - (20) 1,535 Dividends paid - - - - - (8,871) (8,871) Cash received on option exercises - - - - - 597 597 Purchase of Impax NH shares -  -  - - - (2,239) (2,239) Tax credit on long-term incentive schemes -  -  - - - 3,570 3,570 Share based payment charge  -  -  - - - 1,743 1,743 Total transactions with owners 22  - 1,533  - - (5,220) (3,665) Profit for the Period  -  -  -  -  - 14,357 14,357 Other comprehensive income Change in value of cash flow hedge  -  -  -  - 288  - 288 Tax on change in value of cashflow hedges  -  -  -  - (54)  - (54) Exchange differences on translation of foreign operations  -  -  - (1,277)  -  - (1,277) Total other comprehensive income  -  -  - (1,277) 234  - (1,043) As at 31 March 2021 1,326 9,291 1,533 172 123 68,652 81,097 Transactions with owners of the Company New shares issued  -  -  -  -  -  -  - Dividends paid  -  -  -  -  - (4,745) (4,745) Cash received on option exercises  -  -  -  -  -  -  - Purchase of Impax NH shares  -  -  -  -  -  -  - Tax credit on long-term incentive schemes  -  -  - - - 5,064 5,064 Share based payment charge  -  - - - - 3,139 3,139 Total transactions with owners -  -  - - - 3,458 3,458 Profit for the Period - - - - - 25,888 25,888 Other comprehensive income Change in value of cash flow hedge - - - - (151) - (151) Tax on change in value of cashflow hedges - - - - 28 - 28 Exchange differences on translation of foreign operations - - - 202 - - 202 Total other comprehensive income - - - 202 (123) - 79 As at 30 September 2021 1,326 9,291 1,533 374 - 97,998 110,522 Transactions with owners of the Company Dividends paid - - - - - (22,475) (22,475) Cash received on option exercises - - - - - 180 180 Tax charge on long-term incentive schemes - - - - - (1,269) (1,269) Share based payment charge - - - - - 2,558 2,558 Acquisition of own shares - - - - - (3,875) (3,875) Total transactions with owners - -  -  -  - (24,881) (24,881) Profit for the Period - - - - - 26,641 26,641 Other comprehensive income Change in value of cash flow hedge - - - - - - - Tax on change in value of cashflow hedges - - - - - - - Exchange differences on translation of foreign operations - - - 64 - - 64 Total other comprehensive income - - - 64 - - 64 As at 31 March 2022 1,326 9,291 1,533 438  - 99,758 112,346   Condensed Consolidated Statement of Cash Flows For the six months ended 31 March 2022   Note Unaudited Six months ended 31 March 2022 £000 Unaudited Six months ended 31 March 2021 £000 Audited Year ended 30 September 2021 £000 Operating activities: Cash generated from operations 17 28,149 13,275 59,812 Corporation tax paid (4,624) (1,532) (4,445) Net cash generated from operating activities 23,525 11,743 55,367 Investing activities: Net acquisition of property plant and equipment and intangible assets (407) (33) (257) Net redemptions/(investments) from unconsolidated Impax funds 1,229 (1,973) (2,529) Purchase of Impax NH shares - (704) (704) Settlement of investment related hedges (97) (120) (455) Investment income received 145 54 93 (Increase)/decrease in cash held by money market funds and long-term deposit accounts (2,385) 7,159 (19,550) Net cash generated (used by)/from investment activities (1,515) 4,383 (23,402) Financing activities: Acquisition of non-controlling interest - - (191) Interest paid on bank borrowings (59) (64) (129) Payment of lease liabilities (846) (832) (1,691) Acquisition of own shares (3,875) - - Cash received on exercise of Impax share options 180 597 597 Dividends paid (22,475) (8,871) (13,616) Net cash used by financing activities (27,075) (9,170) (15,030) Net (decrease)/increase in cash and cash equivalents (5,065) 6,956 16,935 Cash and cash equivalents at the beginning of the Period 36,172 20,245 20,245 Effect of foreign exchange rate changes 467 (305) (1,008) Cash and cash equivalents at the end of the Period 13 31,574 26,896 36,172   Notes to the Condensed Consolidated Interim Financial Statements For the six months ended 31 March 2022   1 Basis of preparation This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the AIM Rules. The annual financial statements of the Group for the year ended 30 September 2022 will be prepared in accordance with UK-adopted international accounting standards.  The condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 30 September 2021 which were prepared in accordance with the requirements of the Companies Act 2006 ("Adopted IFRS") and applicable law. The comparative figures for the financial year ended 30 September 2021 are not the Company's statutory accounts for that financial year. Those accounts, prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, have been reported on by the Company's auditors and delivered to Companies House. The report of the auditors was (i) unqualified, (ii) did not include a reference to matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. Copies of these accounts are available upon request from the Company's registered office at 7th floor, 30 Panton St, London, SW1Y 4AJ or at the Company's website: www.impaxam.com. Going concern The Board has made an assessment covering a period of 12 months from the date of approval of these financial statements which indicates that, taking account of reasonably possible downside assumptions in relation to asset inflows, market performance and costs, the Group will have sufficient funds to meet its liabilities as they fall due and regulatory capital requirements for that period. The Group has sufficient cash balances and no debt and, at the Period-end market levels, is profitable. A significant part of the Group's cost basis is variable as bonuses are linked to profitability. The Group can also preserve cash through dividend reduction and through issuance of shares to cover share option exercises/restricted share awards (rather than purchasing shares). Consequently, the Directors are confident that the Group will  have sufficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis. Accounting policies The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 30 September 2021. New and forthcoming accounting standards applicable to the Group No new accounting standards or interpretations issued or not yet effective are expected to have an impact on the Group's condensed consolidated financial statements.   2 Estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The Group has not identified any significant judgements and estimates at the end of the reporting period. However the key areas that include judgement and/or estimates are set out in note 10.   3 Adjusted profits and earnings The reported operating earnings, profit before tax and earnings per share are substantially affected by business combination effects 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 in the following tables. Six months ended 31 March 2022 Adjustments Reported IFRS £000 Business combination effects £000 Other £000 Adjusted £000 Income statement Revenue 88,640 88,640 Operating costs (56,680) (54,688) Amortisation of intangibles arising on acquisition 1,200 Acquisition equity incentive scheme charges  669 Mark to market charge on equity awards 123 Operating Profit 31,960 1,869 123 33,952 Finance income 1,130 (32) 1,098 Finance expense (403) (403) Profit before taxation 32,687 1,869 91 34,647 Taxation (6,046) Tax credit on adjustments (17) (6,063) Profit after taxation 26,641 1,869 74 28,584 Diluted earnings per share 20.1p 1.4p 0.1p 21.5p     Six months ended 31 March 2021 Adjustments Reported IFRS £000 Business combination effects £000 Other £000 Adjusted £000 Income statement Revenue 60,591 60,591 Operating costs (44,150) (39,849) Amortisation of intangibles arising on acquisition 1,196 Acquisition equity incentive scheme charges 986 Contingent consideration adjustment 167 Mark to market charge on equity awards 1,952 Operating Profit 16,441 2,349 1,952 20,742 Finance income 110 (42) 68 Finance expense (2,103) (2,103) Profit before taxation 14,448 2,349 1,910 18,707 Taxation (91) Adjustment re historical tax charges (2,803) Tax credit on adjustments (363) (3,257) Profit after taxation 14,357 2,349 (1,256) 15,450 Diluted earnings per share 10.9p 1.8p (1.0)p 11.8p   The adjusted diluted earnings per share is calculated using the adjusted profit after taxation shown above. The diluted number of shares is the same as used for the IFRS calculation of earnings per share (see Note 8). Similar adjustments have been made, where relevant, for the year ended 30 September 2021 to give adjusted operating profit of £55,784,000, adjusted profit before tax of £54,010,000 and adjusted diluted earnings per share of 33.9 pence. Amortisation of intangibles Management contracts, which are classified as intangible assets, were acquired as part of the acquisition of Impax NH and are amortised over their 11 year life. This charge is not linked to the operating performance of the Impax NH business so is excluded from adjusted profit. Acquisition equity incentive scheme charges Impax NH staff have been awarded share-based payments in respect of the acquisition of Impax NH. Charges in respect of these relate to the acquisition rather than the operating performance of the Group and are therefore excluded from adjusted profit. Mark to market charge on equity incentive awards The Group has in prior years and the current period awarded employees options over the Group's shares, some of which are either unvested or unexercised at the balance sheet date. The Group has also made awards of restricted shares ("RSS awards") some 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. 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. Taxation The IFRS tax charge for 2021 included a credit in respect of historical tax charges related to private equity income. This does not reflect the performance of the Group and is therefore excluded from adjusted profit. Contingent consideration adjustment Until the time it was settled, the Group was required to review and adjust its estimate of the contingent consideration payable in respect of the Impax NH acquisition. Adjustments were recorded through income but excluded from adjusted profit. These adjustments are not linked to the operating performance of the Impax NH business and are therefore eliminated from operating costs.   4 Segment Information The Group is managed on an integrated basis and there are no reportable segments.   5 Finance income 31 March 2022 £000 31 March 2021 £000 30 September 2021 £000 Fair value gains - 57 161 Interest income 53 12 36 Other investment income 32 41 89 Foreign exchange gains 1,045 - - 1,130 110 286 Foreign exchange gains mainly arise on the retranslation of intercompany loans and cash balances held in USD.   6 Finance expense 31 March 2022 £000 31 March 2021 £000 30 September 2021 £000 Interest on lease liabilities 217 242 468 Finance costs on bank loans 59 64 85 Foreign exchange losses - 1,797 1,418 Fair value losses 127 - - 403 2,103 1,971   Fair value losses represent those arising on the revaluation of investments held by the Group (see note 12) and any gains or losses arising on related hedge instruments held by the Group. Commitment fees are payable on the revolving credit facility which the Group retains.   7 Taxation The UK tax rate for the Period is 19%. The tax assessment for the Period is lower than this rate. The differences are explained below: Six months ended 31 March 2022 £000 Six months ended 31 March 2021 £000 Year ended 30 September 2021 £000 Profit before tax 32,687 14,448 45,749 Tax charge at 19% 6,211 2,745 8,692 Effects of: Non-taxable income (13) - (18) Non-deductible expenses and charges 1 1 316 Adjustment in respect of historical tax charges (65) (2,803) (2,795) Effect of higher tax rates in foreign jurisdictions 123 83 22 Tax losses not recognised 2 65 - Recognition of prior year tax losses (213) - (713) Total income tax expense 6,046 91 5,504   8 Earnings per share Six months ended 31 March 2022 Earnings for the Period £'000 Shares '000 Earnings per share Basic 26,641 129,259 20.6p Diluted 26,641 132,743 20.1p Six months ended 31 March 2021 Basic 14,029 126,804 11.1p Diluted 14,029 128,429 10.9p Year ended 30 September 2021 Basic 40,245 127,644 31.5p Diluted 40,245 132,669 30.3p   The weighted average number of shares is calculated as shown in the table below. Six months ended  31 March 2022 '000 Six months ended 31 March 2021 '000 Year ended  30 September 2021 '000 Weighted average issued share capital 132,597 130,942 131,772 Less own shares (3,338) (4,138) (4,128) Weighted average number of ordinary shares used in the calculation of basic earnings per share 129,259 126,804 127,644 Additional dilutive shares regarding share awards 5,120 2,660 5,983 Adjustment to reflect option exercise proceeds and future service from employees receiving awards/shares (1,636) (1,035) (958) Weighted average number of ordinary shares used in the calculation of diluted eps 132,743 128,429 132,669   9 Dividends On 29 March 2022, at the Company's Annual General Meeting, payment of a 17.0 pence per share final dividend for the year ended 30 September 2021 (2020: 6.8 pence per share) was approved. Combined with an interim payment of 3.6 pence this gave total dividends for the year ended 30 September 2021 of 20.6 pence. The Trustee of the Impax Employee Benefit Trusts waived the Trusts' rights to part of the final dividend, leading to a total dividend payment of £27,220,113 which was paid on 24 March 2022. The Board has declared an interim dividend for the Period of 4.7 pence per ordinary share (2021: 3.6 pence). This dividend will be paid on 22 July 2022 to Ordinary Shareholders on the register at close of business on 17 June 2022.   10 Goodwill and Intangible assets The goodwill and intangible assets held by the Group primarily relate to the acquisition of Impax NH in January 2018. Goodwill £000 Cost At 1 October 2020 12,306 Foreign exchange movement (684) At 31 March 2021 11,622 Foreign exchange movement 194 At 30 September 2021 11,816 Foreign exchange movement 247 At 31 March 2022 12,063   There were no brought forward impairment losses at 1 October 2021 or impairment charges during the Period. Intangible assets  Management contracts £000 Software £000 Total £000 Cost At 1 October 2020 27,707 529 28,236 Foreign exchange movement (1,767) 1 (1,766) At 31 March 2021 25,940 530 26,470 Foreign exchange movement 501 (1) 500 At 30 September 2021 26,441 529 26,970 Additions - 57 57 Foreign exchange movement 640 - 640 At 31 March 2022 27,081 586 27,667 Accumulated amortisation and impairment At 1 October 2020 6,907 458 7,365 Amortisation 1,196 29 1,225 Foreign exchange movement (458) - (458) At 31 March 2021 7,645 487 8,132 Amortisation 1,162 22 1,184 Foreign exchange movement 181 - 181 At 30 September 2021 8,988 509 9,497 Amortisation 1,200 14 1,214 Foreign exchange movement 242 - 242 At 31 March 2022 10,430 523 10,953 Net book value At 31 March 2022 16,651 63 16,714 At 30 September 2021 17,453 20 17,473 At 31 March 2021 18,295 43 18,338   The management contracts were acquired with the acquisition of Impax NH in January 2018 and are amortised over an 11 year life. An impairment test was completed on this asset for the year ended 30 September 2021 and showed no impairment was required. The test used the following key assumptions - inflows of new assets of $US0.34bn per annum on average, future equity fund performance of 5%, an average operating margin of 20% and a discounted cost of capital of 13.5%. The assumptions that we would use in an impairment test performed at 31 March 2022 remain the same as at 30 September 2021. Long term fund performance, asset inflows and operating margin are in excess of those assumed in the valuation, accordingly there are no indicators of impairment.   11 Property, plant & equipment Property plant and equipment 31 March 2022 £000 31 March 2021 £000 30 September 2021 £000 Right-of-use assets 7,531 8,432 8,065 Property, plant and equipment owned by the Group 1,489 1,373 1,370 9,020 9,805 9,435   The carrying value of the Group's right of use assets, associated lease liabilities and the movements during the Period are set out below. Lease arrangements Right of use asset £000 Lease liabilities £000 At 1 October 2021 8,065 9,432 Lease payments - (846) Interest expense - 217 Depreciation charge (619) - Foreign exchange movement 85 93 At 31 March 2022 7,531 8,896   12 Current asset investments The Group makes seed investments into its own Listed Equity funds and also invests in its Private Equity funds. Where the funds are consolidated the underlying investments are shown in the table below. Investments made in unconsolidated funds are also included. £000 At 1 October 2020 4,387 Additions 2,662 Fair value movements 177 Repayments/disposals (689) At 31 March 2021 6,537 Additions 170 Fair value movements 471 Repayments/disposals 386 At 30 September 2021 7,564 Additions 125 Fair value movements (89) Repayments/disposals (1,354) At 31 March 2022 6,246   An analysis of the investment by valuation technique hierarchy is disclosed below. 31 March 2022 £000 31 March 2021 £000 30 September 2021 £000 Level 1 3,880 3,895 4,090 Level 2 - - - Level 3 2,366 2,642 3,474 6,246 6,537 7,564   Level 1 means that valuation is made by reference to quoted prices in active markets for the relevant securities. Level 2 assets do not have regular market pricing but can be given a fair value based on quoted prices in active markets. Level 3 assets are those where there is no readily available market information to value them and the asset value are based on models. They represent investments in our private equity funds. 13 Cash reserves 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 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: 31 March  2022 £000 31 March 2021 £000 30 September 2021 £000 Cash and cash equivalents 31,574 26,896 36,172 Cash held in money market funds and long-term deposit accounts 40,451 11,357 38,066 Less: cash held in RPAs (4,673) (3,777) (4,089) Total cash reserves 67,352 34,476 70,149   14 Loans The Group retains a US$13 million revolving credit facility ("RCF") with RBS International which expires in January 2023. No amounts were drawn down or repaid in the current period or in the prior year.   15 Share capital and own shares 31 March 2022 31 March 2021 30 September 2021 Issued and fully paid ordinary shares of 1 pence each Number 132,596,554 132,596,554 132,596,554 £000s 1,326 1,326 1,326 31 March 2022 31 March 2021 30 September 2021 Own shares Number 2,792,373 4,165,214 4,103,395 £000s 2,802 3,030 4,117   Own shares represents those held by the Impax Asset Management Group plc Employee Benefit Trust 2012 (the "EBT") which are typically used to fund exercise of options or awards of restricted shares. 0.4 million shares were purchased by the EBT in the six months ended 31 March 2022. The number of own shares held by the EBT fell in the Period as it transferred 1.7 million shares to option/restricted share holders on exercise of options or to holders of restricted shares when the restrictions lapsed. As at 31 March 2022 there were a total of 2.9 million options outstanding over the Group's shares of which 0.9 million were exercisable. As at 31 March 2022 employees also held 2.2 million Restricted Shares over which the restrictions lapse from December 2022 through to January 2027. These Restricted Shares are held in the EBT and included in the own shares numbers shown above.   16 Related party transactions Private Equity Funds managed by the Group, entities controlled by these funds and certain other funds 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 Holdings is a related party of the Group by virtue of owning a significant stake in the Group. The Group also 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. A loan facility has been provided to an executive for the sole purpose of investment in a fund managed by the Group. The loan is provided at an interest rate of LIBOR plus 2% per annum on amounts drawn, calculated on a daily basis. Interest of €1,952 was accrued on the loan during the Period. The balance on the loan is €91,789 at the reporting date. Revenue earned from and operating costs for related parties of the Group are as shown in the table below: Six months ended 31 March 2022 £000 Six months ended 31 March 2021 £000 Year ended 30 September 2021 £000 Revenue  88,595  59,634  73,120 Operating costs  509  497  898 Investments in related parties of the Group and trade and other receivables due from related parties are as shown in the table below: 31 March 2022 £000 31 March 2021 £000 30 September 2021 £000 Current asset investments  2,366  2,642  3,474 Trade and other receivables  33,460 23,577  34,685   17 RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM OPERATIONS This note should be read in conjunction with the condensed consolidated cash flow statement. It provides a reconciliation of how profit before tax, which is based on accounting rules, translates to cashflows. 31 March 2022 £000 31 March 2021 £000 30 September 2021 £000 Profit before taxation 32,687 14,448 45,749 Adjustments for: Depreciation and amortisation 2,069 2,032 4,057 Finance income (1,130) (110) (286) Finance expense 403 2,103 1,971 Share-based payment charges 2,558 1,743 4,882 Adjustment for statement of financial position movements: Decrease/(increase) in trade and other receivables 304 (6,664) (19,021) (Decrease)/increase in trade and other payables (8,742) (277) 22,460 Cash generated from operations 28,149 13,275 59,812   18 Group risks The Group's principal risks remain as detailed within the Directors' Report of the Group's 2021 Strategic Report. Alternative Performance Measures The Group uses the following Alternative Performance Measures ("APMs"). ADJUSTED OPERATING PROFIT, ADJUSTED PROFIT BEFORE TAX AND ADJUSTED PROFIT AFTER TAX These APMs exclude the impact of the following items: · amortisation of intangible assets which arose on the acquisition of Impax NH; · charges in respect of equity incentive scheme related to the acquisition of Impax NH; · fair value movements in contingent consideration payable on the acquisition of Impax NH; · significant tax credits related to the prior year; and · mark-to-market charges in respect of National Insurance payable on share awards. These performance measures are reported as they facilitate comparison with prior periods and provide an appropriate comparison with our peers. Excluding amortisation of intangible assets arising from acquisitions is consistent with peers and therefore aids comparability. It also aids comparison to businesses which have grown organically, and do not have such charges. Fair value movements on contingent consideration are excluded as they are one-off items and not representative of the operating performance of the Group. Mark to market charges in respect of National Insurance are excluded as they arise due only to changes in the share price and therefore do not reflect the operating performance of the Group. A reconciliation to the relevant IFRS terms is provided in Note 3 of the financial statements. ADJUSTED OPERATING MARGIN This is calculated as the ratio of adjusted operating profit to revenue. This number is reported as it gives a good indication of the underlying profitability of the company and how this has changed year on year. ADJUSTED EARNINGS PER SHARE AND ADJUSTED EARNINGS PER SHARE This is calculated as the adjusted profit after tax divided by the diluted number of shares used in the calculation of IFRS diluted earnings per share. This is used to present a measure of profitability per share in line with adjusted profits. A reconciliation to IFRS diluted earnings per share is shown in note 3 of the financial statements. RUN RATE REVENUE AND RUN RATE ADJUSTED OPERATING PROFIT Run rate revenue is the revenue that the Group would report if the AUM for the year remained static at that shown at 31 March and fee rates were those at 31 March. Run rate revenue margin is the ratio of run rate revenue to AUM. Run rate adjusted operating profit is the run rate revenue less adjusted operating costs for the month of March extrapolated for 12 months. Adjustments are made to exclude any one off items. Run rate numbers are reported as they give a good indication of the current profitability of the Group. CASH RESERVES Cash reserves is the sum of cash and cash equivalents and cash held in money market accounts or fixed term deposit accounts less cash held in research payment accounts and cash held by consolidated funds. The calculation of cash reserves is shown in note 13 to the financial statements. Cash reserves are reported as they give a good indication of the total cash resources available to the Group.    

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