Impax Asset Management Regulatory News (IPX)

Impax Asset Management Group plc

Condensed Consolidated Statement of Comprehensive Income

For the Six Months Ended 31 March 2012

Six months ended

Six months ended

Year

ended

31 March 2012

31 March 2011

30 September 2011

Note

£'000

£'000

£'000

Revenue

9,193

9,858

20,931

Operating costs

(6,979)

(6,962)

(14,696)

Share-based payment charge for EIA extension scheme

5

(3,829)

-

(3,647)

Exceptional long-term incentive scheme charge

5

(88)

(1,530)

(1,090)

Other long-term incentive scheme related charges

5

(929)

-

(619)

Fair value (losses)/gains

6

(37)

702

785

Change in third party interest in consolidated funds

7

(97)

(117)

(117)

Investment income

79

102

171

(Loss)/Profit before taxation

(2,687)

2,053

1,718

Taxation

8

529

(454)

(652)

(Loss)/Profit for the period

(2,158)

1,599

1,066

Other comprehensive income

Tax benefit on long-term incentive schemes

177

14

46

Change in value of cash flow hedges

(44)

-

213

Tax arising on change in value of cash flow hedges

15

-

(55)

Exchange differences on translation of foreign operations

(2)

(17)

20

Total other comprehensive income

146

(3)

224

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

(2,012)

1,596

1,290

Basic earnings per share

9

(1.99)p

1.47 p

0.98 p

Diluted earnings per share

9

(1.82)p

1.46 p

0.93 p

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 2012

Note

As at

As at

As at

31 March 2012

31March 2011

30 September 2011

£'000

£'000

£'000

ASSETS

Non-current assets

Goodwill

11

1,629

1,629

1,629

Intangible assets

178

45

39

Property, plant and equipment

776

251

491

Investments

18

19

18

2,601

1,944

2,177

Current assets

Trade and other receivables

3,377

3,104

3,173

Derivative asset

169

-

213

Investments

12

9,361

4,595

3,930

Current tax asset

47

376

47

Margin account

205

-

-

Cash invested in money market funds and long term deposit accounts

12,070

2,525

8,546

Cash and cash equivalents

13

4,222

13,768

12,870

29,451

24,368

28,779

TOTAL ASSETS

32,052

26,312

30,956

EQUITY AND LIABILITIES

Equity

Ordinary shares

1,156

1,156

1,156

Share premium

78

78

78

Exchange translation reserve

(138)

(173)

(136)

Own shares

(59)

(59)

(59)

Hedging reserve

129

-

158

Treasury shares

(923)

(453)

(453)

Retained earnings

21,959

17,427

20,756

TOTAL EQUITY

22,202

17,976

21,500

Current liabilities

Trade and other payables

6,097

6,320

7,858

Third party interest in consolidated fund

2,878

-

-

Short-term borrowings

13

-

677

-

Current tax liability

22

141

12

8,997

7,138

7,870

Non-current liabilities

Deferred tax liability

853

1,198

1,586

TOTAL LIABILITIES

9,850

8,336

9,456

TOTAL EQUITY AND LIABILITIES

32,052

26,312

30,956

Impax Asset Management Group plc

Condensed Consolidated Statement of Changes in Equity

For the Six Months Ended 31 March 2012

Share capital

Share premium

Exchange translation reserve

Own shares

Hedging reserve

Treasury shares

Retained earnings

Total

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

As at 1 October 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

Loss for the period

 -

 -

 -

 -

 -

 -

( 533)

( 533)

Exchange differences on translation of foreign operations

 -

 -

 37

 -

 -

 -

 -

 37

Cash flow hedge

 -

 -

 -

 -

 213

 -

 -

 213

Tax loss on cashflow hedge

 -

 -

 -

( 55)

 -

 -

( 55)

Long-term incentive scheme charge

 -

 -

 -

 -

 -

 -

 3,830

 3,830

Tax benefit on long-term incentive schemes

 -

 -

 -

 -

 -

 -

 32

 32

As at 30 September 2011

 1,156

 78

( 136)

( 59)

 158

( 453)

 20,756

 21,500

Loss for the period

 -

 -

 -

 -

 -

 -

( 2,158)

( 2,158)

Exchange differences on translation of foreign operations

 -

 -

( 2)

 -

 -

 -

 -

( 2)

Treasury shares acquired in the period

 -

 -

 -

 -

 -

( 470)

 -

( 470)

Cash flow hedge

 -

 -

 -

 -

( 44)

 -

 -

( 44)

Tax benefit on cashflow hedge

 -

 -

 -

 -

 15

 -

 -

 15

Long-term incentive scheme charge

 -

 -

 -

 -

 -

 -

 3,943

 3,943

Tax benefit on long-term incentive schemes

 -

 -

 -

 -

 -

 -

 177

 177

Dividends paid

 -

 -

 -

 -

 -

 -

( 759)

( 759)

As at 31 March 2012

 1,156

 78

( 138)

( 59)

 129

( 923)

 21,959

 22,202

All equity is attributable to owners of the parent.

Impax Asset Management Group plc

Condensed Consolidated Statement of Cash Flows

For the Six Months Ended 31 March 2012

Note

Six months ended

Six months ended

Yearended

31 March 2012

31 March 2011

30 September 2011

£'000

£'000

£'000

Cashflows from operating activities

Profit before taxation

(2,687)

2,053

1,718

Adjustments for:

Investment income

(79)

(102)

(171)

Depreciation of property, plant and equipment

163

117

243

Amortisation of intangible assets

27

30

53

Fair value gains

37

(702)

(785)

Share based payment charges

3,943

128

3,958

Exceptional long-term incentive scheme NIC charge

88

1,530

1,054

Other long-term incentive scheme related charges

929

-

619

Change in third party interest in consolidated funds

97

117

117

Operating cash flows before movement in working capital

2,518

3,171

6,806

Decrease/(increase) in receivables

(204)

830

741

Decrease/(increase) in margin account

(205)

-

-

(Decrease)/increase in payables

(2,362)

(2,338)

(931)

Cash generated from operations

(253)

1,663

6,616

Corporation tax (paid)/refunded

-

(197)

162

Net cash generated from operating activities

(253)

1,466

6,778

Investing activities:

Interest received

79

7

77

Settlement of loans receivable

-

2,337

2,337

Settlement of investment related hedges

(308)

-

-

Proceeds on sale of investments

-

358

426

(Purchase)/Sale of investments by consolidated funds

(5,606)

2,843

3,489

Purchase of investments

(95)

(79)

(53)

Purchase of intangible assets

(166)

-

(16)

Purchase of property, plant and equipment

(448)

(71)

(437)

Net cash (used by)/generated from investment activities

(6,544)

5,395

5,823

Financing activities:

Dividends paid

10

(759)

(651)

(651)

Treasury shares acquired

(345)

-

-

Redemption of preference shares issued by consolidated fund

-

(1,623)

(1,623)

Investments by third party into consolidated fund

2,781

-

-

Increase in cash held in money market funds and long term deposit accounts

(3,524)

(7)

(6,028)

Net cash used by financing activities

(1,847)

(2,281)

(8,302)

Net (decrease)/increase in cash and cash equivalents

(8,644)

4,580

4,299

Cash and cash equivalents at the beginning of the period

12,870

8,563

8,563

Effect of foreign exchange rate changes

(4)

(52)

8

Cash and cash equivalents at the end of the period

13

4,222

13,091

12,870

Impax Asset Management Group plc

Notes to the Condensed Consolidated Interim Financial Statements

For the Six Months Ended 31 March 2012

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 2012 comprise the Company and its subsidiaries (together referred to as the "Group").

2

Statement of compliance

This 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 2011.

The comparative figures for the financial year ended 30 September 2011 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 Norfolk House, 31 St James's Square, London, SW1Y 4JR or at the Company's website: www.impaxam.com.

These condensed consolidated interim financial statements were approved by the Board of Directors on 15 May 2012.

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 2011. 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. Certain balances for 2011 have been reclassified to conform with the current period classification.

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; iii) determining the size of the charge for share-based payments, iv) determining the size of the charge for National Insurance Contributions payable on long-term incentive schemes and v) determining the value of deferred tax assets.

5

Long-term incentive scheme charges

Share based payment charges

Under the Employee Incentive Arrangement (Extension Scheme) ("EIA Extension"), share based payment awards were granted in April 2011 to employees when the Trustee of the Impax Group Employee Benefit Trust 2004 ("EBT") agreed to allocate four 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 or nil 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.

The Group accrues for the IFRS 2 'Share-based payment' charge for shares allocated under the EBT and the LTIP options from the date of grant, to the date of vesting. This charge is excluded from the Group's definition of adjusted earnings as explained in Note 9.

The Group has two further share-based payment schemes - the 2009 Share Option Plan and the 2011 Employee Share Option Plan. Under the 2011 Share Option Plan, during the six months ended 31 March 2012, the Group granted 5,000,000 options over the Company's ordinary shares to employees at a strike price of 49.6p. The options will vest on 31 December 2014 subject to continued employment. The Board does not intend to satisfy these awards by a primary issue of shares. Accordingly the share-based payment charge in respect of these schemes, which is offset by an equal reduction in the total cash pool payable to employees, is included in operating costs and in the Group's definition of adjusted earnings.

Exceptional long-term incentive scheme NIC charge

The Income Statement for the year ended 30 September 2011 included an exceptional charge of £1,090,000 in respect of Employer's National Insurance Contributions ("NIC") in connection with the Group's Employee Incentive Arrangement (Original Scheme) ("EIA Original"). The Income Statement for the six months ended 31 March 2012 includes a charge of £88,000 in respect of adjustments to the charge made in 2011 arising from fluctuations in the Group's share price.

Under the EIA Original 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 employees 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 the year ended 30 September 2011, the Government made various changes to taxation of awards delivered and yet to be delivered under employee benefit trusts. In light of these changes the Group expects that some or all of the remaining 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 accrued for these future payments. Given its one-off nature and size, the charge and any subsequent adjustments thereto, are 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 Group's Ordinary Shares, the Group also expects to be eligible for a corporation tax deduction equal to the value of those Ordinary Shares. The Group expects this tax benefit will be up to £1.7m. 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. During the six months ended 31 March 2012 the Trustee transferred 2,850,000 shares out of the EBT giving rise to a total tax benefit of £335,000 with £158,000 recorded in Loss for the period and £177,000 recorded in Other Comprehensive Income. At 31 March 2012 12,228,781 of the Company's shares remained in the EBT.

Other long-term incentive scheme related charges

Six months ended 31 March 2012

Six months ended 31 March 2011

Year ended 30 September 2011

£'000

£'000

£'000

EIA Extension NIC charge

426

-

333

Additional payments

503

-

286

Other long-term incentive scheme related charges

929

-

619

EIA Extension NIC charge

The Group accrues for the Employer's NIC payable in respect of the EIA Extension over the same period as the related share-based payment charge.

Additional Payments

Individuals receiving LTIP Options are eligible for a retention payment payable after the end of the financial year in which each employee exercises his or her LTIP Options. The 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 suffered by the Group on the exercise of the LTIP options.

The Group accrues for these payments over the same period as the related share-based payment charge.The Group has also accrued for payments totalling £203,000 to individuals to whom the Trustee of the EBT distributed Impax shares during the six months ended 31 March 2012.

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 funds (see Note 12) and any gains or losses arising on hedge positions held by the Group and its consolidated funds.

7

Change in third party interest in consolidated funds

This charge removes the fair value gains or losses, other operating costs and investment income recorded in the Group's consolidated funds (see Note 12) which are attributable to third party investors in the funds.

8

Taxation

The tax assessment for the period is lower than the standard rate of corporation tax in the UK for the period (26%). The differences are explained below:

Six

months ended

31 March 2012

Six

months

ended

31

March

2011

Yearended

30 September 2011

£'000

£'000

£'000

(Loss)/Profit before tax

(2,687)

2,053

1,718

Tax (credit)/charge at 26%,28%,27%

(699)

575

464

Effects of:

Non-deductible expenses and charges

397

28

625

Tax effect of previously unrecognised tax losses

(36)

(98)

(45)

Adjustment in respect of prior years

-

-

(224)

Change in UK tax rates

(37)

(57)

(157)

Effect of higher tax rates in foreign jurisdictions

4

11

4

Tax benefits on long-term incentive schemes where charge is recognised in prior years (EIA Original) (see Note 5)

(158)

(5)

(15)

Total income tax (credit)/ expense

(529)

454

652

9

Earnings and earnings per share

Earnings and 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 expected to be satisfied by the issue of new shares (the EIA Original and EIA Extension), and ii) includes the tax benefit recognised in Other Comprehensive Income in respect of transfers out of the EBT and the exercising of LTIP options.

Six months ended 31 March 2012

Six months ended 31 March 2011

Year ended 30 September 2011

£'000

£'000

£'000

Earnings

(2,158)

1,599

1,066

IFRS 2 Share-based payment charge (see Note 5)

3,829

-

3,647

Tax benefit on long-term incentive scheme included in Other Comprehensive Income (see Note 5)

177

14

46

Adjusted earnings

1,848

1,613

4,759

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

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 2012

Basic adjusted

1,848

108,344

1.71p

Diluted adjusted

1,848

127,744

1.45p

Six months ended 31 March 2011

Basic adjusted

1,613

108,454

1.49p

Diluted adjusted

1,613

127,328

1.27p

Year ended 30 September 2011

Basic adjusted

4,759

108,454

4.39p

Diluted adjusted

4,759

127,356

3.74p

The Company has 115,582,431 ordinary shares in issue. The Board intends to only issue a further 12,162,000 shares to satisfy current outstanding share awards with the remaining awards being satisfied through shares currently held in the EBT and in Treasury or through further buy-backs. Accordingly the weighted average number of shares used in the calculation of diluted adjusted earnings per share is calculated as the sum of those shares currently in issue (115,582,431) and the additional shares that the Board plans to issue (12,162,000).

Six months ended 31 March 2012

Six months ended 31 March 2011

Year ended 30 September 2011

'000

'000

'000

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

108,344

108,454

108,454

Weighted average number of Treasury and Own shares intended to be used to satisfy outstanding share awards

7,238

7,128

7,128

Shares in issue

115,582

115,582

115,582

Shares intended to be issued to satisfy outstanding share awards

12,162

11,746

11,774

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

127,744

127,328

127,356

IFRS earnings per share

Earnings for the period

Ordinary shares in issue (weighted average)

Earnings per share

£'000

'000

Six months ended 31 March 2012

Basic

(2,158)

108,344

(1.99)p

Diluted

(2,158)

118,877

(1.82)p

Six months ended 31 March 2011

Basic

1,599

108,454

1.47p

Diluted

1,599

109,280

1.46p

Year ended 30 September 2011

Basic

1,066

108,454

0.98p

Diluted

1,066

114,433

0.93p

The weighted average number of ordinary shares used in the calculation 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 2012

Six months ended 31 March 2011

Year ended 30 September 2011

'000

'000

'000

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

108,344

108,454

108,454

Additional dilutive shares re EIA Extension, 2009 Share Option Plan and 2011 ESOP

24,294

19,290

19,187

Adjustment to reflect future contributions from employees receiving awards

(13,761)

(18,464)

(13,208)

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

118,877

109,280

114,433

10

Dividends

On 26 January 2012, at the Group's Annual General Meeting, payment of a 0.70p per share dividend in respect of the year ended 30 September 2011 (2010: 0.60p per share) was approved. The Trustee of the Impax Employee Benefit Trust waived the Trust's rights to part of this dividend, leading to a total dividend payment of £759,000. This was paid on 6 February 2012.

The Directors do not propose an interim dividend for the six months ended 31 March 2012.

11

Goodwill

12

Current asset investments

Listed investments

Impax Green Markets Fund

In December 2011 the Group launched the Impax Green Markets Fund LP ("IGMF") and invested, from its cash reserves, $5,000,000 into the fund. IGMF invests in listed equities using the Group's Environmental Specialists Strategy. The Group's investment represented 53.8% of the IGMF's NAV from the date of launch to 31 March 2012 and accordingly the IGMF has been consolidated throughout this period with its underlying investments included in listed investments in the table above. 

Impax Absolute Return Fund

On 21 May 2007, the Group made an investment of €2,200,000 (£1,507,000) in the Impax Absolute Return Fund ("IARF"). The investment took the form of a subscription of 22,000 Euro Class A shares in the IARF, at €100 per share. During the financial year ended 30 September 2010 the shares were redominated as Sterling shares. During the period ended 31 March 2011 all investors apart from the Company redeemed the shares they held and accordingly the Group's investment in the IARF represented 100% of the NAV at 31 March 2011. During the period ended 31 March 2012 the fund's trading activity ceased. Throughout the periods presented the IARF has been consolidated and its underlying investments are included in listed investments in the above table.

The investments held by the IARF and IGMF are revalued to market value using quoted market prices that are available at the date of these financial statements. The quoted market price is the current bid price.

Disposals in the period principally represent sales of investments held by the IARF.

Unlisted investments

The Group has a €3.76m commitment to Impax New Energy Investors LP, a partnership based in England and Wales. At the period end the Group had invested a total of €2.74m (73% of the Group commitment). The Group commitment of €3.76m represents 3.76% of the total commitment of all the partners in Impax New Energy Investors LP. The investment is included at the Board's assessment of its fair value.

The Group has a further commitment of €3.3m to Impax New Energy Investors II LP, a partnership based in England and Wales which was established on 22 March 2010. At the period end the Group had invested a total of €204,000. The Group's commitment of €3.3m is equal to 1% of the total commitments made to the fund. The investment's valuation is deemed to equal its cost.

13

Cash and cash equivalents

14

Group risks

The Group's principal risks remain as detailed within the Directors' report of the Group's 2011 Annual Report and Financial Statements and are categorised as financial, investment, and operational.

15

Related party transactions

Impax New Energy Investors LP, Impax New Energy Investors II LP, Impax New Energy Investors II-B LP, Impax New Energy Investors SCA, Impax Green Markets Fund LP, Impax Carried Interest Partners LP and Impax Carried Interest Partners II LP and entities controlled by them are related parties of the Group by virtue of subsidiaries being the General Partners to these funds. BNP Paribas Investment Partners is a related party of the Group by virtue of owning a 28.4% equity holding. Other funds managed by subsidiaries of the Company are also related parties by virtue of their management contracts.

The aggregate related party transactions during the period, and holdings as at the year end, are as shown below. All balances were unsecured. Unless stated otherwise balances outstanding were £nil.