Impax Asset Management Regulatory News (IPX)

MHP Communications

Gay Collins

Sylvie Szoke

Impax Asset Management Group plc

Ian Simm, Chief Executive

Espirito Santo

John Riddell, Director

020 3128 8582 impax@mhpc.com

07798 626 282

020 3128 8573 impax@mhpc.com

020 7434 1122

020 7456 9191

Impax Asset Management Group plc

Condensed Consolidated Statement of Comprehensive Income

For the Six Months Ended 31 March 2011

Note

Six monthsended31 March2011£'000

Six monthsended31 March2010£'000

Yearended30 September2010£'000

Revenue

9,858

6,313

15,339

Operating costs:

5

Exceptional long-term incentive scheme NIC charge

(1,530)

-

-

Share based payment charge

-

-

-

Other operating costs

(6,962)

(4,787)

(11,512)

Fair value gains

6

702

168

3

Change in third party interest in consolidated fund

7

(117)

(55)

152

Profit from operations

1,951

1,639

3,982

Investment income

102

31

1,195

Profit before taxation

2,053

1,670

5,177

Taxation

8

(454)

(468)

(1,378)

Profit for the period

1,599

1,202

3,799

Other comprehensive income

Tax benefit on long-term incentive schemes

14

-

-

Exchange differences on translation of foreign operations

(17)

(4)

1

Total other comprehensive income

(3)

(4)

1

Total comprehensive income for the period attributable to equity holders of the parent

1,596

1,198

3,800

Basic earnings per share

9

1.47 p

1.10 p

3.50 p

Diluted earnings per share (restated*)

9

1.46 p

1.10 p

3.49 p

* See Note 3

All profit for the period is derived from continuing operations.

Impax Asset Management Group plc

Condensed Consolidated Statement of Financial Position

As at 31 March 2011

Note

As at31 March

2011

As at31 March 2010

As at30 September

2010

£'000

£'000

£'000

ASSETS

Non-current assets

Goodwill

11

1,629

1,629

1,629

Intangible assets

45

108

76

Property, plant and equipment

251

354

297

Other financial assets

12

-

759

-

Investments

19

17

16

Trade and other receivables

-

65

-

Deferred tax asset

-

279

-

1,944

3,211

2,018

Current assets

Trade and other receivables

3,104

3,957

3,919

Other financial assets

12

-

478

2,242

Investments

13

4,595

5,043

7,007

Current tax asset

376

-

217

Cash and cash equivalents

14

16,293

6,054

11,729

24,368

15,532

25,114

TOTAL ASSETS

26,312

18,743

27,132

EQUITY AND LIABILITIES

Equity

Ordinary shares

1,156

1,156

1,156

Share premium

78

78

78

Exchange translation reserve

(173)

(161)

(156)

Own shares

(59)

(59)

(59)

Treasury shares

(453)

(453)

(453)

Retained earnings

17,427

13,600

16,337

TOTAL EQUITY

17,976

14,161

16,903

Current liabilities

Trade and other payables

6,320

1,484

7,128

Third party interest in consolidated fund

-

1,987

1,506

Short-term borrowings

14

677

1,065

648

Current tax liability

141

46

142

7,138

4,582

9,424

Non-current liabilities

Deferred tax liability

1,198

-

805

TOTAL LIABILITIES

8,336

4,582

10,229

TOTAL EQUITY AND LIABILITIES

26,312

18,743

27,132

Impax Asset Management Group plc

Condensed Consolidated Statement of Changes in Equity

For the Six Months Ended 31 March 2011

Share capital

Share premium

Exchange translation reserve

Own shares

Treasury shares

Retained earnings

Total

£'000

£'000

£'000

£'000

£'000

£'000

£'000

As at 1 October 2009

1,156

78

( 157)

( 59)

-

12,832

13,850

Profit for the period

-

-

-

-

-

1,202

1,202

Exchange differences on translation of foreign operations

-

-

( 4)

-

-

-

( 4)

Share buy back

-

-

-

-

( 453)

-

( 453)

Dividends paid

-

-

-

-

-

( 434)

( 434)

As at 31 March 2010

1,156

78

( 161)

( 59)

 (453)

13,600

14,161

Profit for the period

-

-

-

-

-

2,596

2,596

Exchange differences on translation of foreign operations

-

-

5

-

-

-

5

Long-term incentive scheme charge

-

-

-

-

-

141

141

As at 30 September 2010

1,156

78

( 156)

( 59)

( 453)

16,337

16,903

Profit for the period

-

-

-

-

-

1,599

1,599

Exchange differences on translation of foreign operations

-

-

( 17)

-

-

-

( 17)

Long-term incentive scheme charge

-

-

-

-

-

128

128

Tax benefit on long term incentive schemes

-

-

-

-

-

14

14

Dividends paid

-

-

-

-

-

( 651)

( 651)

As at 31 March 2011

1,156

78

( 173)

( 59)

( 453)

17,427

17,976

Impax Asset Management Group plc

Condensed Consolidated Statement of Cash Flows

For the Six Months Ended 31 March 2011

Note

Six months ended

Six months ended

Year

ended

31 March

2011

31 March 2010

30 September 2010

£'000

£'000

£'000

Cashflows from operating activities

Profit before taxation

2,053

1,670

5,177

Adjustments for:

Investment income

(102)

(31)

(1,195)

Depreciation of property, plant and equipment

117

100

206

Amortisation of intangible assets

30

35

75

Fair value gains

(702)

(171)

(3)

Long-term incentive scheme charge

128

-

141

Change in third party interest in consolidated fund

117

-

(152)

Translation differences

-

20

-

Operating cash flows before movement in working capital

1,641

1,623

4,249

Decrease/(increase) in receivables

830

(1,241)

(1,115)

(Decrease)/increase in payables

(808)

(2,825)

2,559

Cash generated from operations

1,663

(2,443)

5,693

Corporation tax paid

(197)

(315)

(261)

Net cash generated from operating activities

1,466

(2,758)

5,432

Investing activities:

Interest received

7

31

56

Settlement of loans receivable

12

2,337

-

-

Proceeds on sale of investments

358

-

1,195

Proceeds on sale of investments held by the consolidated fund

2,843

1,213

(2,107)

Purchase of investments

(79)

(2,161)

(2,134)

Purchase of intangible assets

-

-

(8)

Purchase of property, plant and equipment

(71)

(33)

(82)

Net cash generated from/(used by) investment activities

5,395

(950)

(3,080)

Financing activities:

Dividends paid

10

(651)

(434)

(435)

Purchase of Treasury shares

-

(453)

(453)

Redemption of preference shares issued by the consolidated fund

(1,623)

-

(1,885)

Issue of preference Shares by the consolidated fund

-

-

1,854

Net cash used by financing activities

(2,274)

(887)

(919)

Net increase/(decrease) in cash and cash equivalents

4,587

(4,595)

1,433

Cash and cash equivalents at the beginning of the period

11,081

9,600

9,600

Effect of foreign exchange rate changes

(52)

(16)

48

Cash and cash equivalents at the end of the period

14

15,616

4,989

11,081

Impax Asset Management Group plc

Notes to the Condensed Consolidated Interim Financial Statements

For the Six Months Ended 31 March 2011

1

Reporting entity

Impax Asset Management Group plc is a public limited company that is incorporated and domiciled in the United Kingdom, and is listed on the Alternative Investment Market (AIM). The condensed consolidated interim financial statements of the Company for the six months ended 31 March 2011 comprise the Company and its subsidiaries (together referred to as the "Group").

2

Statement of compliance

The interim report is unaudited and does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and the AIM rules. They do not include all the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2010.

The comparative figures for the financial year ended 30 September 2010 are not the Company's statutory accounts for that financial year. Those accounts, prepared in accordance with IFRSs as adopted by the EU, 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 Mezzanine Floor, Pegasus House, 37 - 43 Sackville Street, London W1S 3EH or at the Company's website: www.impax.co.uk.

These condensed consolidated interim financial statements were approved by the Board of Directors on 1 June 2011.

3

Significant 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 2010. The Group has adopted no new accounting standards that have had an impact on the Statement of Comprehensive Income or the Statement of Financial Position. Whilst preparing the interim accounts it became apparent that the deferred tax liability of £805,000 as at 30 September 2010 had been included as a current liability instead of a non-current liability. The reclassification had no effect on the net assets as at 30 September 2010.

Adjustments for the period ended 31 March 2010

Earnings per share

The weighted average number of shares used in the calculation of diluted earnings per share for the period to 31 March 2010 has been adjusted to exclude shares held in the EBT. These shares should not be included as the price condition for their award had not been met at 31 March 2010. The impact of this adjustment is to increase diluted earnings per share as shown in the table below:

Six Months Ended 31 March 2010

The weighted average number of shares used in the calculation of diluted earnings per share as previously reported (000s)

114,696

Adjustment (000s)

(5,747)

The weighted average number of shares used in the calculation of diluted earnings per share as restated (000s)

108,949

Diluted earnings per share as previously reported (pence)

1.05 p

Adjustment (pence)

0.05 p

Diluted earnings per share as restated (pence)

1.10 p

4

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.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were: i) judgements and estimates made in the valuation of unlisted current asset investments; ii) determining whether managed funds should be consolidated; and iii) determining the size of the charge for National Insurance Contributions payable on long-term incentive schemes.

5

Operating costs

Operating costs for the six months ended 31 March 2011 include an exceptional charge of £1,530,000 in respect of Employer's National Insurance Contributions ("NIC") now considered payable in connection with the Group's Employee Incentive Arrangement (Original Scheme).

The Group has three long-term incentive scheme arrangements, the Employee Incentive Arrangement (Original Scheme) ("EIA Original"), the Employee Incentive Arrangement (Extension Scheme) ("EIA Extension") and the 2009 Share Option Plan.

EIA Original

Under this scheme a total of 16,777,045 shares were allocated to sub-funds for the benefit of employees and their families under the Impax Group Employee Benefit Trust 2004 (the "EBT"). These shares ceased to be subject to the risk of revocation for the employee ceasing employment on 30 September 2007, 2008 and 2009. The Group recorded an IFRS 2 'Share based payment' charge in the periods to 30 September 2009 in respect of these awards. During December 2010 HM Revenue & Customs issued a consultation paper proposing various changes to taxation of awards delivered and yet to be delivered under employee benefit trusts. Subsequently both HMRC and the Chancellor of the Exchequer have provided further clarification. In light of these changes the Group now expects that some or all of the EBT beneficiaries will, at some stage, request the EBT Trustee, at its discretion, to transfer Impax Ordinary shares or other assets held in the name of employees and their families from the EBT to one or more of the beneficiaries, whereupon the Group would be required to pay Employer's NIC on the value of the shares or other assets removed. In line with requirements of International Financial Reporting Standards the Group has provided for these future payments. Given the one off nature and size of the charge it has been classified as exceptional.

If and when the EBT Trustee agrees to transfer assets held in the EBT to beneficiaries and if the assets transferred are in the form of the Company's Ordinary shares, the Group also expects to be eligible for a corporation tax deduction equal to the value of those Ordinary Shares. Where the Trustee has transferred Ordinary shares out of the Trust in the period from December 2010 to the date of this report the benefit of the tax deduction has been recognised in these financial statements. If the amount of the tax deduction exceeds the cumulative share based payment expense the excess of the associated tax benefit is recognised in other comprehensive income. Any amount included in other comprehensive income is included in the Group's definition of adjusted earnings as explained in Note 9. At the date of this report the Trustee had transferred 100,000 shares out of the EBT giving rise to a total tax benefit of £19,000 with £5,000 recorded in profit after taxation and £14,000 in other comprehensive income. At the date of this report 15,368,781 shares remained in the EBT.

EIA Extension

Under this scheme, which was approved by shareholders on 31 January 2008, awards in respect of 18.25 million of the Company's Ordinary shares could be allocated to employees subject to performance conditions for each of the three years ended 30 September 2008, 2009 and 2010. On 16 March 2011 the Group announced that the conditions in respect of the year ended 30 September 2010 had been met. On 1 April 2011, the awards were granted when the Trustee of the EBT agreed to allocate 4 million Ordinary Shares to a sub-fund of the EBT of which Ian Simm, the Company's Chief Executive, and his family are beneficiaries and when 14.05 million Long Term Incentive Plan ("LTIP") options were awarded to other employees.

The awards allocated to the EBT sub-fund for Ian Simm and his family are subject to revocation in certain circumstances including Ian Simm ceasing to be employed prior to 30 September 2012.

The LTIP options have a 1p exercise price and will vest to individuals remaining employed on 30 September 2012. They may then be exercised over a period from 1 October 2012 to 31 December 2020.

Individuals receiving LTIP Options are also eligible for an additional retention payment (the "Additional Payment") payable six months after the end of the financial year in which each employee exercises his or her LTIP Options. The Additional Payment will be equal to the corporation tax benefit realised by the Group on the exercise of the LTIP Options, minus the amount of the Employer's NIC charge suffered by the Group on the exercise of the LTIP Options.

The Group will accrue for the IFRS 2 'Share based payment' charge for shares allocated under the EBT and the LTIP options from the date of grant, which is deemed to be 1 April 2011, to the date of vesting which is deemed to be 30 September 2012. This charge will be excluded from the Group's definition of adjusted profit after tax as explained in Note 9.

The Group will accrue for the Employer's NIC, the Additional Payment and the related tax benefits over the same period.

2009 Share Option Plan

In December 2009 1,240,000 zero exercise price options over the Company's shares were granted to certain employees. The awards do not have performance conditions but do have a time vesting condition such that the options vest on 30 September 2012 subject to the continued employment of the participant.

6

Fair value gains

Fair value gains include those arising on revaluation of listed and unlisted investments held by the Group including those held by the Group's consolidated fund (see Note 13) and any gains or losses arising on short positions held by the Group's consolidated fund and shown within trade and other payables.

7

Change in third party interest in consolidated fund

This entry removes the fair value gains or losses and other operating costs recorded in the Group's consolidated fund (see Note 13) which are attributable to third party investors in the fund.

8

Taxation

The tax assessment for the period is lower than the standard rate of corporation tax in the UK for the period (28%). The differences are explained below

9

Earnings and Earnings per share

Adjusted earnings

In order to better reflect the underlying economic performance of the Group an adjusted earnings has been calculated. The adjustment i) excludes the IFRS 2 'Share based payment' charge in respect of schemes where shares awarded are satisfied by the issue of new shares (the EIA Original and EIA Extension), and ii) includes the tax benefit recognized in other comprehensive income in respect of transfers out of the EBT and the exercising of LTIP options.

Six months ended

31 March 2011

Six months ended

31 March 2010

Year

 ended

 30 September

2010

£'000

£'000

£'000

Earnings

1,599

1,202

3,799

IFRS 2 Share based payment charge (see Note 5)

-

-

-

Tax benefit on long term incentive scheme included in other comprehensive income (see Note 5)

14

-

-

Adjusted earnings

1,613

1,202

3,799

The earnings per share on an IFRS and adjusted basis are as shown below.

IFRS earnings per share

Earnings for the period

Ordinary shares in issue (weighted average)

Earnings per share

£'000

'000

Six months ended 31 March 2011

Basic

1,599

108,454

1.47p

Diluted

1,599

109,280

1.46p

Six months ended 31 March 2010

Basic

1,202

108,810

1.10p

Diluted

1,202

108,949

1.10p

Year ended 30 September 2010

Basic

3,799

108,632

3.50p

Diluted

3,799

108,828

3.49p

The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:

Six months ended

 31 March 2011

Six months ended

31 March 2010

Year

ended

30 September 2010

'000

'000

'000

Weighted average number of ordinary shares used in the calculation of basic earnings per share

108,454

108,810

108,632

Additional dilutive shares re EIA Extension and 2009 Share Option Plan

19,290

1,240*

 1,240*

Adjustment to reflect unexpensed IFRS 2 charge**

(18,464)

(1,101)

(1,044)

Weighted average number of ordinary shares used in the calculation of diluted earnings per share

109,280

108,949

108,828

* There were no dilutive shares in respect of the EIA Extension Scheme for the six months ended 31 March 2010 or the year ended 30 September 2010 as the price condition in respect of this scheme had not been met at 31 March 2010 or at 30 September 2010.

** This adjustment is required under IFRS to reflect the fact that there is an unexpensed IFRS 2 'Share based payment' charge to be made in earnings in respect of the dilutive share awards.

Adjusted earnings per share

Adjusted earnings for the period

Ordinary shares in issue (weighted average)

Earnings per share

£'000

'000

Six months ended 31 March 2011

Basic adjusted

1,613

108,454

1.49p

Diluted adjusted

1,613

127,328

1.27p

Six months ended 31 March 2010

Basic adjusted

1,202

108,810

1.10p

Diluted adjusted

1,202

108,949

1.10p

Year ended 30 September 2010

Basic adjusted

3,799

108,632

3.50p

Diluted adjusted

3,799

108,828

3.49p

The weighted average number of ordinary shares for the purposes of adjusted diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic adjusted earnings per share as follows:

Six months ended

31 March 2011

Six months ended

31 March 2010

Year

ended

 30 September 2010

'000

'000

'000

Weighted average number of ordinary shares used in the calculation of basic adjusted earnings per share

108,454

108,810

108,632

Additional dilutive shares re EIA Extension and 2009 Share Option Plan

19,290

1,240

1,240

Adjustment to reflect unexpensed IFRS 2 charge**

(416)

(1,101)

(1,044)

Weighted average number of ordinary shares used in the calculation of diluted adjusted earnings per share

127,328

108,949

108,828

* There were no dilutive shares in respect of the EIA Extension Scheme for the six months ended 31 March 2010 or the year ended 30 September 2010 as the price condition in respect of this scheme had not been met at 31 March 2010 or at 30 September 2010.

** This adjustment is required to reflect the fact that there is an unexpensed IFRS 2 'Share based payment charge' to be made in earnings in respect of the 2009 Share Option Plan (this scheme is not satisfied through issue of primary shares).

10

Dividends

On 2 March 2011, at the Group's Annual General Meeting, payment of a 0.60p per share dividend in respect of the year ended 30 September 2010 (2009: 0.40p per share) was approved. The Trustee of the Impax Employee Benefit Trust waived their rights to part of this dividend, leading to a total dividend payment of £651,000. This was paid on 4 March 2011.

The directors do not propose an interim dividend for the six months ended 31 March 2011.

11

Goodwill

Cost

£'000

At 31 March 2010, 30 September 2010 and 31 March 2011

1,629

Goodwill arose on the acquisition of Impax Capital Limited on 18 June 2001.

The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill may be impaired.

12