Impax Asset Management Regulatory News (IPX)

19 Dec 2007 07:01

Impax Group PLC19 December 2007 IMPAX GROUP PLC PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2007 Impax Group plc, the AIM quoted investment company which focuses exclusively onthe environmental markets sector, today announces its preliminary results forthe year ended 30 September 2007. Highlights • Significant increase in profits to £1,820,654 (2006:£495,680, restated in accordance with International Financial ReportingStandards). • Expansion in funds under management and advisory ("AUM")to £984 million at 30 September 2007 (2006: £434 million; 2005: £170 million).AUM on 14 December 2007 were £1.09 billion. • Peter Gibbs, former Chief Investment Officer of MerrillLynch Investment Managers (outside the United States) and Mark White, formerHead of JPMorgan Fleming Asset Management's International Institutional Groupshortly to join the Board. Commenting on the results, Keith Falconer, Chairman, said: "Companies active in the environmental sector are prospering from demand linkedto long-term drivers, particularly rising energy costs, unusual weather patternsand concerns over climate change. Impax's rising profitability demonstrates ourability to make successful investments in the sector and thereby attractadditional funds to manage." For further information please contact Keith Falconer, Chairman 07747 066 637Impax Group plc Ian Simm, Chief Executive 020 7432 2619Impax Group plc Mark Dickenson, Managing Director 020 7426 9000Landsbanki Securities (UK) Ltd CHAIRMAN'S STATEMENT Impax has once again made strong progress, and I am very pleased to be able toreport that our assets under management and advisory ("AUM") grew substantiallyduring the year, expanding from £434 million on 1 October 2006 to £984 millionon 30 September 2007, and further to £1.09 billion on 14 December 2007. Thisprogress has led to a significant rise in profitability. The drivers of the environmental sector in which we invest continue to besupportive of our business. This year, high fossil fuel prices, sustainedconcerns over energy security, the prevalence of "unusual" weather patterns andheightened awareness of the effects of pollution on health and industrialproductivity have featured in the press almost daily. Similarly, there isplenty of evidence that governments in developed and many less-developedcountries are adopting tougher legislation to address these issues. Talk that "environmental investing" is fashionable and/or temporary is therefore, in ourview, way off the mark. Responding to these drivers, quoted and privately-owned companies continue topresent attractive investment opportunities for our specialist investmentprofessionals. Most of the markets that we are targeting are expected to growat double-digit annual rates over the medium term, and we have typically beenable to back those businesses that can translate this growth into strongexpansion of earnings and/or cash flow. The further development of our business will be based on success in a number ofareas. The attraction and retention of high quality staff is crucial if we areto sustain strong investment performance and develop new, innovative products.As discussed further below, our proposed new long-term incentive scheme is a keycomponent of our planning in this area. In addition, the cost-effectivedistribution of our products in multiple countries is necessary to supportprofitable growth. To this end, we recently established relationships withpartners who will promote our services in Japan, the United States andScandinavia, and, today, we have signed a distribution agreement with BNPParibas Asset Management covering parts of Europe and Asia. Finally, robustback-office arrangements are essential if we are to manage growth within anincreasingly complex regulated environment. During 2007, we have made severaladditional hires in this area, including a full-time Head of Compliance. RESULTS FOR THE YEAR Turnover for the year was £7,114,695 (2006: £3,840,030), an 85% increase overthe year. Profit before tax was £1,820,654 (2006: £495,680, restated inaccordance with IFRS, as explained below). These results include a charge of£357,000 (2006: £316,200) for shares in the Group's long term incentive scheme. The Group has decided to "early adopt" and prepare all future consolidatedfinancial statements in accordance with International Accounting Standards andInternational Financial Reporting Standards (jointly "IFRS"), as adopted by theEuropean Union and applicable to all AIM quoted companies for financialreporting periods beginning on or after 1 January 2007. This statement containsthe Group's first full year results to be published under IFRS. The comparative results at 30 September 2006 have been restated to reflect thechange in accounting treatment under IFRS. ASSET MANAGEMENT Impax should be regarded as a specialist investment boutique as, in future, weexpect to derive our entire turnover from this activity. A very small CorporateFinance activity remains however, which has generated turnover for the year of£465,000 (2006: £327,838) excluding charges made for services provided to otherGroup activities. Quoted Equities Our largest team, led by Bruce Jenkyn-Jones, manages funds that investpredominantly in listed companies. AUM in this division amounted to £881million at the end of September 2007. More detail is provided below: • Impax Environmental Markets plc ("IEM") Performance of the IEM investment trust has remained strong: over the 12 monthsto 30 September 2007, IEM's NAV per share increased by 24.3% while the MSCIWorld Index was up by 9.1% over the same period. To satisfy investor demand,IEM completed a further "C" share issue on 21 September 2007, which raised anadditional £105 million of net assets. IEM's year end AUM was £377 millioncompared to £199 million at the start of the year. • Impax Environmental Markets (Ireland) ("IEMI") The open-ended version of IEM has maintained a similar investment performance tothat of the trust. We have been pleased by the level of inflows into this fund,particularly from UK-based private banks: IEMI's net assets started the year at£56 million and were £180 million at year end. • White Label Funds Our business managing or advising white label funds has also expandedsignificantly during the year. Two of our core clients (the Netherlands-basedASN Environment and Water Fund and the Luxembourg-listed Parworld EnvironmentalOpportunities Fund) reported strong performance and also accepted relativelylarge inflows. As a result, white label funds targeting small cap stocks grewfrom £76 million to £281 million over the year. Many of the investments in these portfolios have liquidity constraints, meaningthat as our AUM grows in this area, it will become more difficult to buy or sellall the shares that we need without impacting performance. However, such hasbeen the growth in environmental markets in recent years that larger quotedcompanies are now entering the sector. This presents an excellent opportunityfor Impax's specialist investment team to capture value from investments in thelarger more liquid stocks that are beginning to drive environmental markets.With these factors in mind, in September 2007 we announced the launch of a newinvestment strategy focusing on larger quoted companies. We believe that thiswill allow us to continue to grow AUM in quoted equity products for theforeseeable future. The first important development in this area was IAM beingappointed investment advisor to the DIAM World Environmental Business Fund, anopen-ended fund available to Japanese investors, which launched on 19 September2007 with £27 million of assets. In addition, in partnership with BNP ParibasAsset Management, we have recently accepted mandates to advise small white labelfunds in Korea and Malaysia. • Index Products As interest worldwide in environmental investing has expanded, particularlyamong institutional investors, we have received many requests for information onthe Impax ET50 Index, a basket of smaller quoted companies active in theenvironmental sector, which we have been running since 1999. Two months ago,encouraged by this interest, we announced a partnership with FTSE tocommercialise this index and develop additional indices to meet demand. Weexpect some limited revenues from this activity during 2008. Private Equity Funds investing exclusively in private equity totalled £100 million at the endof the year. Our principal private equity fund, Impax New Energy Investors LP, which istargeting investments in projects and related assets in the European renewableenergy sector, made further commitments during the year. Against a backdrop ofsupportive regulation and high power prices, our team, which is led by PeterRossbach, reviewed a large number of investment opportunities and is activelyworking to invest the remainder of the fund's capital. Separately, and led by Nigel Taunt, our work to invest development capital(currently sourced from IEM and IEMI) in established private companies made goodprogress. At the end of the period, we were managing investments in four suchcompanies and we expect to conclude additional transactions in the near future. As our private equity track record grows, we will actively review opportunitiesto expand our AUM in this area. Impax Absolute Return Fund As I reported in the interim statement, on 21 May 2007 we launched ImpaxAbsolute Return Fund, an open-ended fund managed by Hubert Aarts that isinvesting long and short in equities in the environmental and related sectors.This fund has performed well in a particularly volatile equity market: betweenlaunch and 31 October 2007, the fund's NAV per share grew by 2.3%, significantlyahead of the MSCI World Index, which rose by 0.3% (in local currency) over thesame period. We are maintaining our dialogue with prospective investors with aview to expanding the fund's capital base. BALANCE SHEET AND CASH FLOW During the year, the Company carried out a balance sheet reorganisation whichwas approved by shareholders in June 2007 and which received High Court approvalon 22 August 2007. As a consequence of past losses, the Company had a large deficit in itsreserves, which, as a result of the reorganisation, it has been able toeliminate by the cancellation of the deferred shares and share premium account.The surplus arising from this cancellation created a special reserve of£3,788,477. The Company gave undertakings to the Court to maintain this special reserveuntil all creditors outstanding on 22 August 2007 had either been paid or giventheir consent to the Company to transfer the balance to revenue reserves. TheCompany has now made creditor payments and obtained the necessary consents toenable it to transfer £3,788,477 from the special reserve to retained earnings.Positive retained earnings have resulted from the reorganisation which will nowpotentially become distributable, enabling Impax to either pay a dividend and/orto buy back shares in future. As detailed in the financial statements, our rising profitability has flowedthrough to positive cash flow. BOARD OF DIRECTORS I believe your Board has been highly effective in guiding the Company'sturnaround and, I hope, positioning it for future growth. To support thedevelopment of our business from here, I am pleased to announce that we willshortly be appointing two experienced non-executive directors, who have bothenjoyed very successful careers within the fund management industry. PeterGibbs has spent more than 30 years in the investment management sector,including 16 years at Merrill Lynch Investment Managers (previously MercuryAsset Management), where, between 2002 and 2005 he was Chief Investment Officerfor MLIM outside the US. Since 2005 he has held a number of non-executivepositions, including Director of Evolution Group plc and Chairman of theTrustees of the Merrill Lynch Pension Fund. Mark White also has over 30 yearsof experience in the sector, mostly with the Fleming group of companies. He wasChief Executive of Jardine Fleming Investment Management in Hong Kong from March1996 until January 2001 and then headed JPMorgan Fleming Asset Management'sInternational Institutional Group. Since March 2005 he has been Chief Executiveof KGR Capital in London, which advises on hedge fund portfolios specialising inthe Asian region. As part of the Board's transition, Simon Morris and Nigel Taunt will be steppingdown at the conclusion of the Company's forthcoming Annual General Meeting. Itis customary to pay tribute to retiring directors and, on this occasion, I wantto express my deepest thanks to them in helping us to secure the bright futurewe face today. Simon, as a non-executive director, has given us both time andsupport well beyond what one would normally expect, while Nigel, who leads ourdevelopment capital activities, continues to make a valuable contribution to theCompany. EMPLOYEE SHARE OWNERSHIP Almost three years ago, following shareholder approval, the Company establisheda long-term incentive scheme in order to reward key employees with shares in theCompany and thereby further align the interests of employees and shareholders.I would like to think that this scheme has been an important component of ourrecent success. We expect all the shares available within our current scheme to have beengranted in early 2008. We have been reviewing options for increasing employeeshare ownership in the Company, and expect to publish a detailed proposal toextend this scheme in the near future. PROSPECTS As I have reported in previous statements, the medium-term economic andpolitical background against which we operate is very supportive of ouractivities. Nevertheless, the events of the past six months have once againillustrated the fragility of equity markets. At the time of writing, there is a great deal of uncertainty as to whethereconomic slowdown in the United States and elsewhere will lead to a sustainedflight of capital from quoted securities. If, indeed, we are alreadyexperiencing a "bear" market, it is unlikely that our business will beunaffected. With this scenario in mind, we are pleased that many of our coreclients are institutional investors who typically are able to take a medium tolong-term view of the potential of our sector. With the support of the Board, Ian Simm, our Chief Executive, has been verysuccessful in building the Impax business. We now have a strong platform onwhich to extend our track record of building AUM and profits, and I remain veryconfident that we can continue to grow shareholder value. J Keith R Falconer 19 December 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNTYear ended 30 September 2007 2007 2006 (restated) Note £ £ REVENUE 7,114,695 3,840,030 Operating costs (5,503,453) (3,383,528) Operating profit 4 1,611,242 456,502 Interest receivable and similar income 209,412 137,699Interest payable and similar charges - (98,521) PROFIT ON ORDINARY ACTIVITIESBEFORE TAXATION 1,820,654 495,680 Taxation 5 (531,275) 388,255 PROFIT FOR THE YEAR ATTRIBUTABLETO EQUITY SHAREHOLDERS 1,289,379 883,935 EARNINGS PER SHARE 8 Basic 1.20p 1.59p Diluted 1.53p 2.16p CONSOLIDATED BALANCE SHEETAs at 30 September 2007 Note 2007 2006 (restated) £ £NON-CURRENT ASSETSGoodwill 9 1,629,097 1,629,097Other intangible fixed assets 34,545 -Property, fixtures and equipment 47,206 24,433Investments 14,357 14,357 1,725,205 1,667,887 CURRENT ASSETSTrade and other receivables due after one year 1,208,531 1,593,507Trade and other receivables due within one year 1,905,711 1,904,235Investments 10 1,619,854 72,752Cash and cash equivalents 4,553,684 2,549,652 9,287,780 6,120,146 TOTAL ASSETS 11,012,985 7,788,033 EQUITY AND LIABILITIES Ordinary shares 1,094,991 9,591,824Share premium 11 18,970 2,723,483Exchange equalisation reserve 11 (1,002,117) (845,410)Treasury shares 11 (167,771) (148,801)Other reserve 11 894,359 487,355Profit and loss account 7,208,738 (5,320,707) 8,047,170 6,487,744 CURRENT LIABILITIESTrade and other payables 2,965,815 1,300,289 TOTAL EQUITY AND LIABILITIES 11,012,985 7,788,033 CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 30 September 2007 Note Share capital Share premium Special reserve Exchange equalisation reserve £ £ £ £Balance at 1 October 2005 8,973,635 835,794 - (713,831)Profit for the year - - - -Exchange differences on - - - (131,579)consolidationConversion of Loan Stock 537,439 1,905,465 - -Loan Stock costs of issue - (93,877) - -written offNet issue of shares to 80,750 76,101 - -Employee Benefit TrustAccrued cash equivalent of - - - -share options receivable byNOMADBalance at 30 September 2006 9,591,824 2,723,483 - (845,410)(restated)Profit for the year - - - -Exchange differences on - - - (156,707)consolidationCancellation of deferred 11 (8,516,583) (2,723,483) 3,788,477 -shares and share premiumaccountTransfer from special reserve 11 - - (3,788,477) -to retained earningsNet issue of shares to 19,750 18,970 - -Employee Benefit TrustAccrued cash equivalent of - - - -share options receivable byNOMADBalance at 30 September 2007 1,094,991 18,970 - (1,002,117) CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 30 September 2007 (continued) Note Treasury shares Other reserve Retained Total Earnings £ £ £ £Balance at 1 October 2005 (72,700) 154,488 (6,204,642) 2,972,744Profit for the year - - 883,935 883,935Exchange differences on - - (131,579)consolidationConversion of Loan Stock - - 2,442,904Loan Stock costs of issue - - - (93,877)written offNet issue of shares to (76,101) 316,200 - 396,950Employee Benefit TrustAccrued cash equivalent of - 16,667 - 16,667share options receivable byNOMADBalance at 30 September 2006 (148,801) 487,355 (5,320,707) 6,487,744(restated)Profit for the year - - 1,289,379 1,289,379Exchange differences on - - - (156,707)consolidationCancellation of deferred 11 - - 7,451,589 -shares and share premiumaccountTransfer from special reserve 11 - - 3,788,477 -to retained earningsNet issue of shares to (18,970) 357,000 - 376,750Employee Benefit TrustAccrued cash equivalent of - 50,004 - 50,004share options receivable byNOMADBalance at 30 September 2007 (167,771) 894,359 7,208,738 8,047,170 CONSOLIDATED CASHFLOW STATEMENTYear ended 30 September 2007 2007 2006 (restated) £ £CASH FLOWS FROM FROM OPERATING ACTIVITIES Operating profit 1,611,242 456,502 Adjustments for:Depreciation of property, fixtures & equipment 16,715 12,323Amortisation of intangible assets 5,998 -Revaluation of investment (40,251) 7,000Movement on treasury shares (18,970) (76,101)Movement on share premium 18,970 76,101Share-based transactions 407,004 332,867Translation differences (156,707) (131,579) OPERATING CASHFLOWS BEFORE MOVEMENT IN WORKING 1,844,001 677,113CAPITAL Decrease in receivables 140,443 201,793Increase in payables 1,381,542 660,299 NET CASH GENERATED BY OPERATING ACTIVITIES 3,365,986 1,539,205 Investing activities:Interest received 209,412 137,699Interest paid - (51,582)Purchase of investments (1,506,851) (255)Purchase of property, fixtures & equipment (80,031) (23,616) NET CASH (USED IN)/GENERATED BY INVESTMENT (1,377,470) 62,246ACTIVITIES Financing activities:Share capital issued 19,750 80,750 NET CASH GENERATED BY FINANCING ACTIVITIES 19,750 80,750 NET INCREASE IN CASH AND CASH EQUIVALENTS 2,008,266 1,682,201 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,545,388 (1,438,901) Non-cash transactions:Conversion of loan stock - 2,302,088 CASH AND CASH EQUIVALENTS AT END OF YEAR 4,553,654 2,545,388 IMPAX GROUP PLCNOTES TO THE PRELIMINARY STATEMENT 1 NATURE OF THE FINANCIAL INFORMATION The financial information set out above does not constitute fullaccounts for the purposes of International Financial Reporting and AccountingStandards. The financial information has been extracted from the Group'saccounts for the year ended 30 September 2007 on which the auditors, Mazars LLP,have given an unqualified opinion. 2 ACCOUNTING POLICIES The 2007 financial statements are the Group's first consolidatedfinancial statements prepared under International Financial Reporting andAccounting Standards. The financial statements have been prepared in accordancewith International Financial Reporting Standards adopted for use by the EuropeanUnion and therefore comply with Article 4 of the EU IAS Regulation. Basis of consolidation The consolidated financial statements incorporate the financialstatements of the Company and enterprises controlled by the Company (itssubsidiaries) made up to 30 September each year. Control is achieved where theCompany has the power to govern the financial and operating policies of asubsidiary. Subsidiaries are accounted for using the acquisition method ofaccounting whereby the Group's results include the results of the acquiredbusiness from the date of acquisition. All intra-group transactions and balances are eliminated onconsolidation. Investments in associates An associate is an entity over which the Group has significant influence and isneither a subsidiary nor an interest in a joint venture. Significant influenceis the power to participate in the financial and operating policy decisions ofthe investee but is not control or joint control. Investments that are held by the Group are carried in the balance sheet at fairvalue even though the Group may have significant influence over those companies.This treatment is permitted by IAS 28, Investment in Associates, which allowsinvestments held by venture capital and similar organisations to be excludedfrom the scope of IAS 28 investments in Associates provided that thoseinvestments upon initial recognition are designated as fair value through profitor loss and accounted for in accordance with IAS 39 Financial Instruments:Recognition and Measurement, with changes in fair value recognised in profit orloss in the period of change. Goodwill Goodwill arising on consolidation represents the excess of the cost ofacquisition over the fair value of the identifiable assets, liabilities andcontingent liabilities of a subsidiary, associate or jointly controlled entityat the date of acquisition. Goodwill is recognised as an asset and is tested forimpairment annually, or on such occasions that events or changes incircumstances indicate that its value might be impaired. On disposal of a subsidiary, the attributable amount of unamortised goodwill,which has not been subject to impairment, is included in the determination ofthe profit or loss on disposal. Positive goodwill arising on acquisitions before the date of the transition toInternational Financial reporting Standards has been retained at the previous UKGAAP amount subject to being tested for impairment at that date. Impairment At the balance sheet date, the Group reviews the carrying amount of its tangibleand intangible assets to determine whether there is any indication that thoseassets have suffered an impairment loss or if events or changes in circumstancesindicate that the carrying value may not be recoverable. If any such indicationexists, the recoverable amount of the asset is estimated in order to determinethe extent of the impairment loss (if any). Where it is not possible to estimatethe recoverable amount of an individual asset, the Group estimates therecoverable 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 carryingamount, the impairment loss is recognised as an expense, unless the relevantasset is land and buildings at a revalued amount, in which case the impairmentloss is treated as a revaluation decrease. When an impairment loss subsequently reverses, the carrying amount of the assetis increased to the revised estimate of its recoverable amount, but so that theincreased carrying amount does not exceed the carrying amount that would havebeen determined had no impairment loss been recognised for the asset. A reversalof an impairment loss is recognised as income immediately, unless the relevantasset is carried at a revalued amount, in which case the reversal of theimpairment loss treated as a revaluation increase. Impairment losses relating togoodwill are not reversed. Employee Benefit Trust In accordance with SIC 12 "Consolidation - special purpose entities", theCompany includes the assets and liabilities of that trust within its balancesheet. In the event of the winding up of the Company, neither the shareholdersnor the creditors would be entitled to the assets of the employee benefit trust. Investment in own shares held in connection with the Group's employee shareschemes are deducted from the shareholders' funds in accordance with IAS 32 "Financial instruments: disclosure and presentation" until such time as they vestunconditionally to participating employees. The fair value of employee services received in exchange for the grant of sharesis recognised as an expense. The total amount to be expensed rateably over theperformance period is determined by reference to the fair value of the sharesdetermined at the grant date. 3 GEOGRAPHICAL ANALYSIS OF REVENUE, OPERATING PROFIT AND NET ASSETS Revenue relates solely to the principal activities of the Group. Consolidated revenue 2007 2006 (restated) £ £ UK 6,772,827 3,540,040Europe 341,868 299,990USA - - 7,114,695 3,840,030 Consolidated operating profit 2007 2006 (restated) £ £ UK 1,611,787 457,482Europe - -USA (545) (980) 1,611,242 456,502 Consolidated net assets 2007 2006 (restated) £ £ UK 6,661,945 4,617,514Europe 913 (10,747)USA 1,384,312 1,880,977 8,047,170 6,487,744 4 OPERATING PROFIT Operating profit is stated after charging £357,000 for a long termincentive scheme charge (2006: £316,200). On 4 February 2005 shareholders approved the establishment by the Company of theImpax Group Employee Benefit Trust (the "EBT") as part of the Company's employeeincentive arrangements. On 14 September 2007 the Company allotted 1,975,000 Ordinary Shares at a priceequal to the nominal value of 1p per share to Sanne Trust Company Limited,trustee of the EBT. The EBT subsequently sold 78,035 Ordinary Shares for £19,750to provide funding relating to the purchase of Ordinary Shares by the EBT.Following the sale the EBT is interested in 16,777,045 Ordinary Sharesrepresenting 15.32% of the Ordinary Shares in issue at 30 September 2007. Thepotential beneficiaries of the EBT include the executive directors and employeesof the Group and their respective families. On 30 September 2007 7,270,000 of the Ordinary Shares held by the EBT vested toemployees and their families. The allocation of Ordinary Shares to employees and their families via the EBT bythe Company in 2005, 2006 and 2007 as part of the long term incentive scheme hasgiven rise to a charge of £357,000 (2006: £316,200) to the income statement forthe year. This forms part of a total charge of £1,069,539, being: - £463,464 evenly spread over the three years to 30 September 2007,which is the performance period for the 2005 share award - £485,143 evenly spread over the three years to 30 September 2008,which is the performance period for the 2006 share award - £120,932 evenly spread over the three years to 30 September 2009which is the performance period for the 2007 share award It is calculated in accordance with the requirements of IFRS 2 "Share basedpayments" by reference to the mid market price of an Ordinary Share of 6.375p onthe approval date of 4 February 2005 and on the Directors' assumption that theEBT performance criteria will be met and all of the shares will vest toemployees and their families. The date of 4 February 2005 has been agreed to bethe grant date for all shares issued to employees and their families as this wasthe date when substantially all terms and conditions of the scheme were agreedby all parties. 5 TAX ON PROFIT ON ORDINARY ACTIVITIES Analysis of charge for the year 2007 2006 £ £Current tax:UK corporation tax on profits for the period 288,218 - Deferred tax:Release/(realisation) of deferred tax asset 243,057 (388,255) Taxation 531,275 (388,255) Factors affecting the tax charge for the year 2007 2006 £ £ Profit on ordinary activities before taxation 1,820,654 495,680 Tax at 30% of profit on ordinary activities before 546,196 148,704Taxation Effects of:Non-deductible expenses 118,713 111,660Capital allowances (9,540) (4,717)Non chargeable income - (3,240)Losses utilised (367,151) (252,407) Current year tax charge 288,218 - The Group has tax losses of approximately £2.7m (2006: £4.0m) available foroffset against future taxable profits in the UK. A deferred tax asset of£145,198 (2006: £388,255) has been recognised in respect of £483,994 (2006:£1,294,183) of such losses due to the predictability of future profit streams. 6 FOREIGN CURRENCIES The results of subsidiary undertakings reporting in foreign currencies aretranslated at the average rate ruling in the accounting year (US$1.98: £1; 2006:US$1.80: £1) and the assets and liabilities at the rate ruling at the balancesheet date (US$2.05: £1; 2006: US$1.87: £1). 7 DIVIDENDS No dividend is proposed. 8 EARNINGS PER SHARE In order to show results from operating activities on a comparable basis, anadjusted profit per share has been calculated which excludes the long termincentive scheme charge of £357,000 (2006: £316,200). Profit for the year Ordinary shares in Earnings per share issue (weighted average) £2007Basic 1,289,379 107,616,084 1.20p Diluted 1,646,379 107,616,084 1.53p 2006 (restated)Basic 883,935 55,592,580 1.59p Diluted 1,200,135 55,592,580 2.16p During 2006 £2,442,906 Convertible unsecured loan stock was converted into53,743,932 ordinary shares. Had this conversion taken place at the beginning ofthat year the earnings per share for 2006 would have been as follows: 2006 (restated)Basic 883,935 100,488,893 0.88p Diluted 1,200,135 100,488,893 1.19p 9 GOODWILL - GROUP Analysis of charge for the year Goodwill (restated) £CostAt 1 October 2006 and 30 September 2007 2,830,097 AmortisationAt 1 October 2006 and 30 September 2007 1,201,000 Net book valueAt 1 October 2006 and 30 September 2007 1,629,097 Goodwill arose on the acquisition of Impax Capital Limited on 18 June 2001.Management assess the carrying value of goodwill annually based on the resultsand forecasts of this company and Impax Asset Management Limited which,combined, are considered to be one cash-generating unit. 10 CURRENT ASSET INVESTMENTS Unlisted Investment Listed Investment Total £ £ £Cost or ValuationAt 1 October 2006 11,344 61,408 72,752 Additions - 1,506,851 1,506,851Revaluations - 40,251 40,251 At 30 September 2007 11,344 1,608,510 1,619,854 Net book valueAt 30 September 2007 11,344 1,608,510 1,619,854 At 30 September 2006 11,344 61,408 72,752 In 1999, the Group received shares in Ensyn Group Inc. ("Ensyn") in lieu ofcorporate finance fees. This unlisted investment was originally valued at£165,000 but in 2002 full provision was made for impairment in value. In April 2005, Ensyn merged with a subsidiary of Ivanhoe Energy Inc.("Ivanhoe"), a listed company. The consideration for this merger took the formof a combination of cash, shares in Ivanhoe and shares in Ensyn renewables. Theimpairment of the Ensyn shares was written back. The Group received £236,609from the cash consideration and part disposal of its holding in Ivanhoe in 2005. 40,096 shares of Ivanhoe were released from escrow account in April 2007. Ofthese, 30,100 were sold in November 2007 for £34,440 realising a profit of£6,056 on the year end valuation. The remaining 40,095 shares, representing 50%of the shares held at year end, are held in an escrow account until April 2008. The listed investment is revalued to market value. The unlisted investment isvalued at the lower of cost and net realisable value. On 21 May 2007, the Company made an investment of €2,200,000 (£1,506,851) in theImpax Absolute Return Fund ("IARF"). The investment took the form of asubscription of 22,000 Euro Class A shares in the IARF, at €100 per share. TheIARF, which is managed by a subsidiary undertaking of the Company, launched on21 May 2007 and had a total net asset value ("NAV") of £3,284,195 at 30September 2007. The Group's investment in the IARF represents 45.88% of the NAVat 30 September 2007. The Directors are of the opinion that this investment doesnot constitute an associate undertaking due to insignificant control andinfluence. This listed investment is revalued to market value. 11 RESERVES During the year, the Company carried out a balance sheet reorganisation whichwas approved by shareholders in June 2007 and which received High Court approvalon 22 August 2007. The result of this reorganisation was to eliminate thedeficit on reserves by cancellation of the deferred shares and share premiumaccount. The surplus arising from this cancellation created a special reserve of£3,788,477. The Company gave undertakings to the Court to maintain this special reserveuntil all creditors outstanding on 22 August 2007 had either been paid or giventheir consent to the Company to transfer the balance to revenue reserves. TheCompany has now made creditor payments and obtained the necessary consents toenable it to transfer £3,788,477 from the special reserve to revenue reserves. In accordance with the requirements of SIC 12 "Consolidation - special purposeentities" and IAS 32, the assets and liabilities of the EBT have been includedin the Company's and Group's accounts resulting in the inclusion of £167,771treasury shares, £18,970 share premium and £827,688 included in other reserves. On 31 May 2006, the Company appointed Landsbanki Securities (UK) Limited ("Landsbanki"), (formerly Bridgewell Securities Limited) as nominated advisor andbroker ("NOMAD") to the Group. For the twelve months following their appointmentthey received an option over 500,000 shares in the Company, exercisable at 20pwithin three years. For the period between twelve and twenty-four monthsfollowing their appointment they will receive a further option over 388,215shares in the Company exercisable at 25.76p within three years. In 2007, £50,004 (2006: £16,667) was charged to the Income statement andcredited to other reserves to reflect the cash equivalent of this compensation. 12 FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS This is the first year that the Group has presented its financial statementsunder International Financial Reporting Standards. The following disclosures arerequired in the year of transition. The last financial statements under UK GAAPwere for the year ended 30 September 2006 and the date of transition toInternational Financial Reporting Standards was therefore 1 October 2005. Effect of the change to IFRS on the Consolidated Balance Sheet at 30 September 2006 UK GAAP IFRS 3 IFRS 30 Sept 06 Goodwill 30 Sept 06 £'000 £'000 £'000Non-current assetsGoodwill 1,346,493 282,604 1,629,097Property, plant and equipment 24,433 - 24,433Fixed asset investments 14,357 - 14,357 1,385,283 282,604 1,667,887 Current assetsTrade and other receivables due after 1,593,507 - 1,593,507one yearTrade and other receivables due within one 1,904,235 - 1,904,235yearInvestments 72,752 - 72,752Cash and cash equivalents 2,549,652 - 2,549,652 6,120,146 - 6,120,146 Current liabilities (1,300,829) - (1,300,829) Net current assets 4,819,857 - 4,819,857 Total net assets 6,205,140 282,604 6,487,744 Capital and reserves attributable to equity holders of the parent Ordinary shares 9,591,824 - 9,591,824Share premium 2,723,483 - 2,723,483Exchange equalisation reserve (845,410) - (845,410)Treasury shares (148,801) - (148,801)Other reserves 487,355 - 487,355Retained earnings (5,603,311) 282,604 (5,320,707) Total Equity 6,205,140 282,604 6,487,744 Effect of the change to IFRS on the Consolidated Income Statement for the year ended 30 September2006 UK GAAP IFRS 3 IFRS 30 Sept 06 Goodwill 30 Sept 06 £'000 £'000 £'000 Revenue 3,840,030 - 3,840,030 Operating expensesGoodwill amortisation (282,604) 282,604 -Long term incentive scheme charge (316,200) - (316,200)Revaluation of investments (7,000) - (7,000)Other operating expenses (3,060,328) - (3,060,328) (3,666,132) 282,604 (3,383,528) Operating profitContinuing operations 173,898 282,604 456,502 Net interest receivable 39,178 - 39,178 Profit on ordinary activities before 213,076 282,604 495,680taxationTaxation 388,255 - 388,255 Profit attributable to the Group 601,331 282,604 883,935 Effect of the change to IFRS on the Consolidated Cashflow Statement for the yearended 30 September 2006 Other than presentational items, there are no differences arising onthe transition to IFRS. Copies of the report and accounts of the Company for the year ended30 September 2007 will be sent to shareholders. Copies will also be available onthe Company's web site www.impax.co.uk and may be collected from the RegisteredOffice. Registered Office:Broughton House6-8 Sackville StreetLondon W1S 3DG This information is provided by RNS The company news service from the London Stock Exchange