Impax Asset Management Regulatory News (IPX)

21 May 2007 16:00

Impax Group PLC21 May 2007 Impax Group plc Interim results for the six months ended 31 March 2007 Impax Group plc, the AIM quoted investment company which focuses exclusively onthe environmental sector, today announces its interim results for the half yearended 31 March 2007. Highlights • Strong growth in assets under management from £430m on 30 September 2006 to £637m on 31 March 2007 and to £687m on 15 May 2007. • Continued out-performance against global equity markets of the quoted equity funds that the Company manages. • Significant inflows of capital, providing further evidence that investors are attracted to the environmental sector and are seeking to outsource to focused, experienced investment managers such as Impax. Commenting on the results, Keith Falconer, Chairman said: "Evidence is mounting that global climate change is a pressing internationalissue requiring urgent government attention. Against this backdrop, I ampleased to report that Impax has made further significant progress in buildingon our established reputation as one of the leading investors in theenvironmental sector." For further information please contact Keith Falconer, Chairman 020 7434 1122Impax Group plc Ian Simm, Chief Executive 020 7434 1122Impax Group plc Chairman's Statement Impax has enjoyed an excellent six months. In my statement on 11 December 2006I indicated that we would be focusing on our investment performance and,consequently, our rate of growth was likely to slow. Five months later, I ampleased to report that performance has indeed remained strong, but also that ourdirect and indirect marketing to investors has resulted in substantial inflowsinto the funds that we manage. As a result, our funds under management havegrown from £430m on 30 September 2006 to £637m on 31 March 2007 (the end of theinterim period), and further to £687m on 15 May 2007. As one of the leading investors in the environmental sector, particularlyalternative energy, water and waste, we have been highly encouraged by thestrengthening drivers within our area of expertise. Since my last report, wehave seen further acknowledgement from economists, scientists and policy makersthat global climate change is a pressing international issue requiring urgentgovernment action, and additional evidence that investors are attracted to thehigh and sustainable growth rates of the companies that we follow. Against this backdrop, we intend to remain focused on managing a small number ofscaleable funds and on using third parties to distribute these funds. Ourinvestment teams continue to identify and review a large number of attractiveinvestment opportunities which, I believe, bodes well for the future of Impax. Results for the period The interim results once again are a significant improvement over the comparableperiod last year, and we have kept our costs firmly under control. Turnover forthe six months to 31 March 2007 was £3,179,103 (2006: £1,527,833). Theun-audited net result for the period was a profit before tax of £644,830 (2006:£149,301 (restated in accordance with IFRS as explained below)). 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 announcementcontains the Group's first results to be published under IFRS. The significant difference between IFRS and UK GAAP for Impax relates togoodwill. Under IFRS, goodwill is not amortised but is assessed annually forimpairment. The Balance Sheet at 1st October 2005 becomes the opening Balance Sheet underIFRS and the goodwill arising on consolidation at this date has been included atits deemed cost. Under IFRS, Impax has assessed the carrying value of goodwillfrom this date and has not considered any impairment necessary. The comparative results at 31st March 2006 and 30th September 2006 have beenrestated to reflect the change in accounting treatment under IFRS. Asset Management Our investment management activities remain the principal source of valuecreation for shareholders and all our resources are now focussed on this corebusiness. Revenue from investment management for the interim period was£2,834,009 (2006: £1,446,663). The team again achieved strong performance across the range of funds. In thetwelve months ended 31 March 2007, the net asset value ("NAV") of the largestfund, Impax Environmental Markets plc ("IEM"), rose 5.3% compared with the MSCIWorld Index which was flat. Over a three year period also ending on 31 March2007, IEM's NAV increased 75.1% while the MSCI World Index was up by 34.0%.IEM's share price has continued to trade at a premium to NAV throughout ourinterim period. In addition to IEM there are four other scaleable funds that invest in quotedequities. The largest of these, Impax Environmental Markets (Ireland) ("IEMI"),increased net assets from £55.8m at the end of September 2006 to £130.6m on 31March 2007. Similarly, funds managed on a "white label" basis grew rapidly overthe same period. In particular, the Amsterdam-listed ASN Water and EnvironmentFund expanded from £56.4m to £104.5m, while the Parworld EnvironmentalOpportunities Fund grew from £4.3m to £48.8m. Assuming these funds continue toperform well, we expect further growth in the next year, provided of course thatinvestors continue to have confidence in equities globally. A portion of the assets of IEM and IEMI are invested in pre-IPO opportunitieswhere our investment team has had an active period. Two new investments, inautoclave waste processing and in the aluminium recycling sector, have beencompleted and, in April, the team realised its first exit following the tradesale of Cellex Power, a developer of fuel-cell based drive trains for fork-lifttrucks. This transaction is expected to deliver a 70% IRR when the paymentschedule has been completed. Our team managing Impax New Energy Investors LP, the fund investing in projectsin the renewable energy and related sectors, has also been busy. The Europeanrenewable energy markets are developing rapidly, and we are encouraged by thestrength of the deal flow for this fund. Following its first investment inAirtricity (which I referred to in my last statement), the fund has recentlyinvested in a portfolio of solar project assets in Spain and in a portfolio ofwind assets in Germany. With our investments across energy, water and waste, Impax remains in a strongposition to attract funds from professional investors who like what we do, butlack our specialist understanding of the opportunities. Balance Sheet Restructuring The momentum in our profits has encouraged us to take steps to improve the Groupcompany's balance sheet. As a consequence of losses in the past, the Groupcompany has a deficit on its revenue reserves of £7.3m. The directors propose toeliminate this deficit by the cancellation of the Group's deferred shares andthe share premium account, which would result in the creation of a balance sheet'special reserve' of around £3.7m. Once we have obtained creditors' consent,this reserve will potentially become distributable and Impax will be in aposition to pay a dividend and/or to buy back shares. This restructuring process requires the approval of shareholders and consent ofthe court. The directors will shortly be issuing a notice to shareholdersseeking their approval for the cancellation of the deferred shares and the sharepremium account by a special resolution to be voted at an extraordinary generalmeeting to be held on 18th June. New Product Development As demand for our investment expertise continues to build, we have been activelyexploring opportunities to establish new scaleable investment products. I ampleased to report that today we have launched the Impax Absolute Return Fund, anopen-ended fund that will invest long and short in equities active in theenvironmental and related sectors. At the outset, this fund has US$6 million ofnet assets of which US$3 million has been provided by the Group. I look forwardto reporting on progress with this fund in due course. Prospects A year ago, I drew attention to the foundation we had built, upon which weplanned to grow the business. I am pleased to say that we have been successfulin achieving this growth. Looking forward, assuming stock market conditionsremain favourable and we continue to perform well with the funds entrusted tous, we expect to increase our funds under management. Once again, the Impax team has worked very successfully on shareholders' behalfand I wish to thank them, and our two non-executive directors, for their hardwork over the past six months J Keith R Falconer 21 May 2007 Impax Group plcConsolidated Income Statement for the six months ended 31 March 2007 Notes Six months ended Six months ended Year ended 31 Mar 07 31 Mar 06 30 Sept 06 (restated) (restated) (unaudited) (unaudited) (unaudited) £'000 £'000 £'000 Turnover 3,179 1,528 3,840 Operating expensesLong term incentive scheme charge (315) (163) (316)Revaluation of investments - 58 (7)Other operating expenses (2,313) (1,259) (3,061) (2,628) (1,364) (3,384) Operating profitContinuing operations 551 164 456 Net interest receivable/(payable) 94 (15) 39 Profit on ordinary activities before taxation 645 149 495Taxation (213) - 388 Profit attributable to the Group 432 149 883 Basic profit per share 3 0.40p 0.32p 1.59pFully diluted profit per share 3 0.40p 0.15p 1.59pAdjusted profit per share 3 0.69p 0.68p 2.16p Statement of Total Recognised Gains and Losses Profit for the period 432 149 883Currency translation differences (91) 23 (132) Total recognised profits 341 172 751 All disclosures relate only to continuing operations. Impax Group plcConsolidated Balance Sheet as at 31 March 2007 Notes As at As at As at 31 Mar 07 31 Mar 06 30 Sept 06 (restated) (restated) (unaudited) (unaudited) (unaudited) £'000 £'000 £'000 Non - current assets Goodwill 1,629 1,629 1,629 Property, plant and equipment 73 28 24 Fixed asset investments 14 - 14 1,716 1,657 1,667 Current assets Trade and other receivables due 1,388 1,890 1,593 after one year Trade and other receivables due 2,237 1,013 1,904 within one year Investments 73 138 73 Cash and cash equivalents 3,365 1,379 2,550 7,063 4,420 6,120 Current liabilities (1,531) (444) (1,300) Net current assets 5,532 3,976 4,820 Total assets less current liabilities 7,248 5,633 6,487 Non - current liabilities (80) (2,229) - Total net assets 7,168 3,404 6,487 Capital and reserves attributable to equity holders of the parent Called up share capital 5 9,592 8,995 9,592 Share premium 5 2,723 987 2,723 Exchange equalisation reserve 5 (936) (691) (845) Treasury shares 5 (149) (149) (149) Other reserves 5 827 317 487 Retained earnings 5 (4,889) (6,055) (5,321) Total Equity 7,168 3,404 6,487 Impax Group plcConsolidated Cash Flow Statement for the six months ended 31 March 2007 Six months ended Six months ended Year ended 31 Mar 07 31 Mar 06 30 Sept 06 (restated) (restated) (unaudited) (unaudited) (unaudited) £'000 £'000 £'000 Operating profit 551 164 456Revaluation of investments - (58) 7Depreciation charges 10 6 12(Increase)/decrease in debtors (258) 422 202Increase/(decrease) in creditors 233 (191) 662Conversion of loan stock - issue costs - (23) - amortisedMovement on Other reserves 340 163 409Movement on currency assets - (91) 23 (132)translation differences Net cash flow from operations 785 506 1,616 Interest received 94 59 138Interest paid - (51) (53) Cashflows from investing activitiesPurchase of property, plant and (59) (21) (24)equipment Cashflows from financing activitiesIssue of share capital - - 81Conversion of loan stock - 96 2,302Movement on treasury shares - - (76) Net cashflows from financing activities - 96 2,307 Net increase in cash and cash 820 589 3,984equivalents Cash and cash equivalents at the 2,545 (1,439) (1,439)beginning of the period Cash and cash equivalents at the end of 3,365 (850) 2,545the period Represented by:Cash and cash equivalents 3,365 1,379 2,550Bank overdraft - - (5)Convertible unsecured loan stock - (2,229) - 3,365 (850) 2,545 Notes to the Interim Accounts for the six months ended 31 March 2007 1 Impax Group plc has decided to "early adopt" and prepare all future consolidated financial statements in accordance with International Accounting Standards and International Financial Reporting Standards (jointly "IFRS"), as adopted by the European Union ("EU") and applicable to all AIM quoted companies for financial reporting periods beginning on or after 1 January 2007. This announcement contains the Group's first results to be published under IFRS. The significant difference between IFRS and UK GAAP for Impax Group plc relates to goodwill. Under IFRS, goodwill is not amortised but is assessed annually for impairment. The Balance Sheet at 1st October 2005 becomes the opening Balance Sheet under IFRS and the goodwill arising on consolidation at this date has been included at its deemed cost. Under IFRS, Impax has assessed the carrying value of goodwill from this date and has not considered any impairment necessary. The comparative results at 31st March 2006 and 30th September 2006 have been restated to reflect the change in accounting treatment under IFRS. Note 6 explains the effect on the half year results. The financial information set out in this report does not constitute full accounts for the purposes of Section 240 of the Companies Act 1985. The interim accounts for the six months ended 31 March 2007 and 31 March 2006 are unaudited. The comparative figures for the financial year ended 30 September 2006 are not the Company's statutory accounts for the financial year but are abridged from those accounts which have been reported on by the Company's auditors, whose report on the consolidated financial statements prepared under UK GAAP, was unqualified. The interim accounts have been prepared on the basis of the accounting policies set out in the annual financial statements of the Group for the year ended 30 September 2006 as amended for the adoption of applicable IFRS. The interim accounts were approved by the Directors on 21 May 2007. 2 Amounts denominated in US Dollars have been converted at the closing rate on 31 March 2007 of £1 to $1.96 (31 March 2006: $1.74; 30 September 2006: $1.87). The results of the US subsidiary undertaking have been translated on a monthly basis at the average rate ruling during each month. 3 The figures for basic profit per share are based on the profit attributable to the Group of £432,000 (31 March 2006: profit - £149,000 (restated); 30 September 2006: profit - £883,000 (restated)) and on the weighted average number of ordinary shares in issue during the period ended 31 March 2007: 107,524,098 (31 March 2006: 45,960,882; 30 September 2006: 55,592,580). The figures for fully diluted profit per share include the weighted average number of ordinary shares in issue and, in addition, shares that would arise from a 100% conversion of the convertible unsecured loan stock which would give a total of 97,589,338 shares at 31 March 2006. All of the convertible unsecured loan stock had been converted by 30 September 2006. In order to show results from operating activities on a comparable basis, an adjusted loss per share has been calculated which excludes exceptional items and long term incentive scheme charge from the results. 4 The Directors do not propose an interim dividend. 5 Reconciliation of movements in capital and reserves: 1 October 2005 - 31 March 2006 (restated) Share Share Exchange Treasury Other Profit capital premium equalisation shares reserves and reserve reserve loss account £'000 £'000 £'000 £'000 £'000 £'000 As at 1 October 2005 8,974 836 (714) (73) 154 (6,204) Profit for the period (restated) - - - - - 149 Exchange differences on - - 23 - - - consolidation Conversion of loan stock 21 75 Net issue of shares to Employee - 76 - (76) 163 - Benefit Trust As at 31 March 2006 (restated) 8,995 987 (691) (149) 317 (6,055) 5.1 Reconciliation of movements in capital and reserves: 1 April 2006 - 30 September 2006 (restated) Share Share Exchange Treasury Other Profit capital premium equalisation shares reserves and reserve reserve loss account £'000 £'000 £'000 £'000 £'000 £'000 As at 1 April 2006 (restated) 8,995 987 (691) (149) 317 (6,055) Profit for the period (restated) - - - - - 734 Exchange differences on - - (154) - - - consolidation Conversion of loan stock 597 1,830 - - - - Loan stock costs written off - (94) - - - - Net issue of shares to Employee - - - - 153 - Benefit Trust Accrued cash equivalent of share - - - - 17 - options receivable by NOMAD As at 30 September 2006 9,592 2,723 (845) (149) 487 (5,321) (restated) 5.2 Reconciliation of movements in capital and reserves: 1 October 2006 - 31 March 2007 Share Share Exchange Treasury Other Profit capital premium equalisation shares reserves and reserve reserve loss account £'000 £'000 £'000 £'000 £'000 £'000 As at 1 October 2006 (restated) 9,592 2,723 (845) (149) 487 (5,321) Profit for the period - - - - - 432 Exchange differences on - - (91) - - - consolidation Net issue of shares to Employee - - - - 315 - Benefit Trust Accrued cash equivalent of share - - - - 25 - options receivable by NOMAD As at 31 March 2007 9,592 2,723 (936) (149) 827 (4,889) 6 Early adoption of IFRS As noted above Impax Group plc has now adopted IFRS and this report contains restated numbers to reflect that change 6.1 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 £'000 Non-current assets Goodwill 1,347 282 1,629 Property, plant and equipment 24 - 24 Fixed asset investments 14 - 14 1,385 282 1,667 Current assets Trade and other receivables due after one year 1,593 - 1,593 Trade and other receivables due within one year 1,904 - 1,904 Investments 73 - 73 Cash and cash equivalents 2,550 - 2,550 6,120 - 6,120 Current liabilities (1,300) - (1,300) Net current assets 4,820 - 4,820 Total net assets 6,205 282 6,487 Capital and reserves attributable to equity holders of the parent Called up share capital 9,592 - 9,592 Share premium 2,723 - 2,723 Exchange equalisation reserve (845) - (845) Treasury shares (149) - (149) Other reserves 487 - 487 Retained earnings (5,603) 282 (5,321) Total Equity 6,205 282 6,487 6.2 Effect of the change to IFRS on the Consolidated Balance Sheet at 31 March 2006 (unaudited) UK GAAP IFRS 3 IFRS 31 March 06 Goodwill 31 March 06 £'000 £'000 £'000 Non - current assets Goodwill 1,488 141 1,629 Property, plant and equipment 28 - 28 1,516 141 1,657 Current assets Trade and other receivables due after one year 1,890 - 1,890 Trade and other receivables due within one year 1,013 - 1,013 Investments 138 - 138 Cash and cash equivalents 1,379 - 1,379 4,420 - 4,420 Current liabilities (444) - (444) Net current assets 3,976 - 3,976 Total assets less current liabilities 5,492 141 5,633 Non - current liabilities (2,229) - (2,229) Total net assets 3,263 141 3,404 Capital and reserves attributable to equity holders of the parent Called up share capital 8,995 - 8,995 Share premium 834 - 834 Exchange equalisation reserve (691) - (691) Treasury shares (73) - (73) Other reserves 394 - 394 Retained earnings (6,196) 141 (6,055) Total Equity 3,263 141 3,404 6.3 Effect of the change to IFRS on the Consolidated Income Statement for the year ended 30 September 2006 (unaudited) UK GAAP IFRS 3 IFRS 30 Sept 06 Goodwill 30 Sept 06 £'000 £'000 £'000 Turnover 3,840 - 3,840 Operating expenses Goodwill amortisation (282) 282 - Long term incentive scheme charge (316) - (316) Revaluation of investments (7) - (7) Other operating expenses (3,061) - (3,061) (3,666) 282 (3,384) Operating profit Continuing operations 174 282 456 Net interest receivable 39 - 39 Profit on ordinary activities before taxation 213 282 495 Taxation 388 - 388 Profit attributable to the Group 601 282 883 6.4 Effect of the change to IFRS on the Consolidated Income Statement for the six months ended 31 March 2006 (unaudited) UK GAAP IFRS 3 IFRS 31 March 06 Goodwill 31 March 06 £'000 £'000 £'000 Turnover 1,528 - 1,528 Operating expenses Goodwill amortisation (141) 141 - Long term incentive scheme charge (163) - (163) Revaluation of investments 58 - 58 Other operating expenses (1,259) - (1,259) (1,505) 141 (1,364) Operating profit Continuing operations 23 141 164 Net interest receivable (15) - (15) Profit on ordinary activities before taxation 8 141 149 Taxation - - - Profit attributable to the Group 8 141 149 Copies of this interim statement will be sent to shareholders and are available free of charge from the Company's registered office, Broughton House, 6 - 8 Sackville Street, London W1S 3DG. It is also available from our website www.impax.co.uk. This information is provided by RNS The company news service from the London Stock Exchange