Final Results

Impax Group PLC 19 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 on the environmental markets sector, today announces its preliminary results for the year ended 30 September 2007. Highlights • Significant increase in profits to £1,820,654 (2006: £495,680, restated in accordance with International Financial Reporting Standards). • 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 Merrill Lynch Investment Managers (outside the United States) and Mark White, former Head of JPMorgan Fleming Asset Management's International Institutional Group shortly to join the Board. Commenting on the results, Keith Falconer, Chairman, said: 'Companies active in the environmental sector are prospering from demand linked to long-term drivers, particularly rising energy costs, unusual weather patterns and concerns over climate change. Impax's rising profitability demonstrates our ability to make successful investments in the sector and thereby attract additional funds to manage.' For further information please contact Keith Falconer, Chairman 07747 066 637 Impax Group plc Ian Simm, Chief Executive 020 7432 2619 Impax Group plc Mark Dickenson, Managing Director 020 7426 9000 Landsbanki Securities (UK) Ltd CHAIRMAN'S STATEMENT Impax has once again made strong progress, and I am very pleased to be able to report that our assets under management and advisory ('AUM') grew substantially during the year, expanding from £434 million on 1 October 2006 to £984 million on 30 September 2007, and further to £1.09 billion on 14 December 2007. This progress has led to a significant rise in profitability. The drivers of the environmental sector in which we invest continue to be supportive of our business. This year, high fossil fuel prices, sustained concerns over energy security, the prevalence of 'unusual' weather patterns and heightened awareness of the effects of pollution on health and industrial productivity have featured in the press almost daily. Similarly, there is plenty of evidence that governments in developed and many less-developed countries are adopting tougher legislation to address these issues. Talk that ' environmental investing' is fashionable and/or temporary is therefore, in our view, way off the mark. Responding to these drivers, quoted and privately-owned companies continue to present attractive investment opportunities for our specialist investment professionals. Most of the markets that we are targeting are expected to grow at double-digit annual rates over the medium term, and we have typically been able to back those businesses that can translate this growth into strong expansion of earnings and/or cash flow. The further development of our business will be based on success in a number of areas. The attraction and retention of high quality staff is crucial if we are to sustain strong investment performance and develop new, innovative products. As discussed further below, our proposed new long-term incentive scheme is a key component of our planning in this area. In addition, the cost-effective distribution of our products in multiple countries is necessary to support profitable growth. To this end, we recently established relationships with partners who will promote our services in Japan, the United States and Scandinavia, and, today, we have signed a distribution agreement with BNP Paribas Asset Management covering parts of Europe and Asia. Finally, robust back-office arrangements are essential if we are to manage growth within an increasingly complex regulated environment. During 2007, we have made several additional 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 over the year. Profit before tax was £1,820,654 (2006: £495,680, restated in accordance 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 consolidated financial statements in accordance with International Accounting Standards and International Financial Reporting Standards (jointly 'IFRS'), as adopted by the European Union and applicable to all AIM quoted companies for financial reporting periods beginning on or after 1 January 2007. This statement contains the Group's first full year results to be published under IFRS. The comparative results at 30 September 2006 have been restated to reflect the change in accounting treatment under IFRS. ASSET MANAGEMENT Impax should be regarded as a specialist investment boutique as, in future, we expect to derive our entire turnover from this activity. A very small Corporate Finance activity remains however, which has generated turnover for the year of £465,000 (2006: £327,838) excluding charges made for services provided to other Group activities. Quoted Equities Our largest team, led by Bruce Jenkyn-Jones, manages funds that invest predominantly in listed companies. AUM in this division amounted to £881 million 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 months to 30 September 2007, IEM's NAV per share increased by 24.3% while the MSCI World 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 an additional £105 million of net assets. IEM's year end AUM was £377 million compared 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 to that 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 expanded significantly during the year. Two of our core clients (the Netherlands-based ASN Environment and Water Fund and the Luxembourg-listed Parworld Environmental Opportunities Fund) reported strong performance and also accepted relatively large inflows. As a result, white label funds targeting small cap stocks grew from £76 million to £281 million over the year. Many of the investments in these portfolios have liquidity constraints, meaning that as our AUM grows in this area, it will become more difficult to buy or sell all the shares that we need without impacting performance. However, such has been the growth in environmental markets in recent years that larger quoted companies are now entering the sector. This presents an excellent opportunity for Impax's specialist investment team to capture value from investments in the larger more liquid stocks that are beginning to drive environmental markets. With these factors in mind, in September 2007 we announced the launch of a new investment strategy focusing on larger quoted companies. We believe that this will allow us to continue to grow AUM in quoted equity products for the foreseeable future. The first important development in this area was IAM being appointed investment advisor to the DIAM World Environmental Business Fund, an open-ended fund available to Japanese investors, which launched on 19 September 2007 with £27 million of assets. In addition, in partnership with BNP Paribas Asset Management, we have recently accepted mandates to advise small white label funds in Korea and Malaysia. • Index Products As interest worldwide in environmental investing has expanded, particularly among institutional investors, we have received many requests for information on the Impax ET50 Index, a basket of smaller quoted companies active in the environmental sector, which we have been running since 1999. Two months ago, encouraged by this interest, we announced a partnership with FTSE to commercialise this index and develop additional indices to meet demand. We expect some limited revenues from this activity during 2008. Private Equity Funds investing exclusively in private equity totalled £100 million at the end of the year. Our principal private equity fund, Impax New Energy Investors LP, which is targeting investments in projects and related assets in the European renewable energy sector, made further commitments during the year. Against a backdrop of supportive regulation and high power prices, our team, which is led by Peter Rossbach, reviewed a large number of investment opportunities and is actively working 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 good progress. At the end of the period, we were managing investments in four such companies and we expect to conclude additional transactions in the near future. As our private equity track record grows, we will actively review opportunities to expand our AUM in this area. Impax Absolute Return Fund As I reported in the interim statement, on 21 May 2007 we launched Impax Absolute Return Fund, an open-ended fund managed by Hubert Aarts that is investing long and short in equities in the environmental and related sectors. This fund has performed well in a particularly volatile equity market: between launch and 31 October 2007, the fund's NAV per share grew by 2.3%, significantly ahead of the MSCI World Index, which rose by 0.3% (in local currency) over the same period. We are maintaining our dialogue with prospective investors with a view to expanding the fund's capital base. BALANCE SHEET AND CASH FLOW During the year, the Company carried out a balance sheet reorganisation which was approved by shareholders in June 2007 and which received High Court approval on 22 August 2007. As a consequence of past losses, the Company had a large deficit in its reserves, which, as a result of the reorganisation, it has been able to eliminate 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 reserve until all creditors outstanding on 22 August 2007 had either been paid or given their consent to the Company to transfer the balance to revenue reserves. The Company has now made creditor payments and obtained the necessary consents to enable it to transfer £3,788,477 from the special reserve to retained earnings. Positive retained earnings have resulted from the reorganisation which will now potentially become distributable, enabling Impax to either pay a dividend and/or to buy back shares in future. As detailed in the financial statements, our rising profitability has flowed through to positive cash flow. BOARD OF DIRECTORS I believe your Board has been highly effective in guiding the Company's turnaround and, I hope, positioning it for future growth. To support the development of our business from here, I am pleased to announce that we will shortly be appointing two experienced non-executive directors, who have both enjoyed very successful careers within the fund management industry. Peter Gibbs has spent more than 30 years in the investment management sector, including 16 years at Merrill Lynch Investment Managers (previously Mercury Asset Management), where, between 2002 and 2005 he was Chief Investment Officer for MLIM outside the US. Since 2005 he has held a number of non-executive positions, including Director of Evolution Group plc and Chairman of the Trustees of the Merrill Lynch Pension Fund. Mark White also has over 30 years of experience in the sector, mostly with the Fleming group of companies. He was Chief Executive of Jardine Fleming Investment Management in Hong Kong from March 1996 until January 2001 and then headed JPMorgan Fleming Asset Management's International Institutional Group. Since March 2005 he has been Chief Executive of KGR Capital in London, which advises on hedge fund portfolios specialising in the Asian region. As part of the Board's transition, Simon Morris and Nigel Taunt will be stepping down at the conclusion of the Company's forthcoming Annual General Meeting. It is customary to pay tribute to retiring directors and, on this occasion, I want to express my deepest thanks to them in helping us to secure the bright future we face today. Simon, as a non-executive director, has given us both time and support well beyond what one would normally expect, while Nigel, who leads our development capital activities, continues to make a valuable contribution to the Company. EMPLOYEE SHARE OWNERSHIP Almost three years ago, following shareholder approval, the Company established a long-term incentive scheme in order to reward key employees with shares in the Company and thereby further align the interests of employees and shareholders. I would like to think that this scheme has been an important component of our recent success. We expect all the shares available within our current scheme to have been granted in early 2008. We have been reviewing options for increasing employee share ownership in the Company, and expect to publish a detailed proposal to extend this scheme in the near future. PROSPECTS As I have reported in previous statements, the medium-term economic and political background against which we operate is very supportive of our activities. Nevertheless, the events of the past six months have once again illustrated the fragility of equity markets. At the time of writing, there is a great deal of uncertainty as to whether economic slowdown in the United States and elsewhere will lead to a sustained flight of capital from quoted securities. If, indeed, we are already experiencing a 'bear' market, it is unlikely that our business will be unaffected. With this scenario in mind, we are pleased that many of our core clients are institutional investors who typically are able to take a medium to long-term view of the potential of our sector. With the support of the Board, Ian Simm, our Chief Executive, has been very successful in building the Impax business. We now have a strong platform on which to extend our track record of building AUM and profits, and I remain very confident that we can continue to grow shareholder value. J Keith R Falconer 19 December 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT Year 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 209,412 137,699 Interest payable and similar charges - (98,521) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1,820,654 495,680 Taxation 5 (531,275) 388,255 PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY SHAREHOLDERS 1,289,379 883,935 EARNINGS PER SHARE 8 Basic 1.20p 1.59p Diluted 1.53p 2.16p CONSOLIDATED BALANCE SHEET As at 30 September 2007 Note 2007 2006 (restated) £ £ NON-CURRENT ASSETS Goodwill 9 1,629,097 1,629,097 Other intangible fixed assets 34,545 - Property, fixtures and equipment 47,206 24,433 Investments 14,357 14,357 1,725,205 1,667,887 CURRENT ASSETS Trade and other receivables due after one year 1,208,531 1,593,507 Trade and other receivables due within one year 1,905,711 1,904,235 Investments 10 1,619,854 72,752 Cash 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 9,591,824 Share premium 11 18,970 2,723,483 Exchange equalisation reserve 11 (1,002,117) (845,410) Treasury shares 11 (167,771) (148,801) Other reserve 11 894,359 487,355 Profit and loss account 7,208,738 (5,320,707) 8,047,170 6,487,744 CURRENT LIABILITIES Trade and other payables 2,965,815 1,300,289 TOTAL EQUITY AND LIABILITIES 11,012,985 7,788,033 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year 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) consolidation Conversion of Loan Stock 537,439 1,905,465 - - Loan Stock costs of issue - (93,877) - - written off Net issue of shares to 80,750 76,101 - - Employee Benefit Trust Accrued cash equivalent of - - - - share options receivable by NOMAD Balance at 30 September 2006 9,591,824 2,723,483 - (845,410) (restated) Profit for the year - - - - Exchange differences on - - - (156,707) consolidation Cancellation of deferred 11 (8,516,583) (2,723,483) 3,788,477 - shares and share premium account Transfer from special reserve 11 - - (3,788,477) - to retained earnings Net issue of shares to 19,750 18,970 - - Employee Benefit Trust Accrued cash equivalent of - - - - share options receivable by NOMAD Balance at 30 September 2007 1,094,991 18,970 - (1,002,117) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year 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) 2,972,744 Profit for the year - - 883,935 883,935 Exchange differences on - - (131,579) consolidation Conversion of Loan Stock - - 2,442,904 Loan Stock costs of issue - - - (93,877) written off Net issue of shares to (76,101) 316,200 - 396,950 Employee Benefit Trust Accrued cash equivalent of - 16,667 - 16,667 share options receivable by NOMAD Balance at 30 September 2006 (148,801) 487,355 (5,320,707) 6,487,744 (restated) Profit for the year - - 1,289,379 1,289,379 Exchange differences on - - - (156,707) consolidation Cancellation of deferred 11 - - 7,451,589 - shares and share premium account Transfer from special reserve 11 - - 3,788,477 - to retained earnings Net issue of shares to (18,970) 357,000 - 376,750 Employee Benefit Trust Accrued cash equivalent of - 50,004 - 50,004 share options receivable by NOMAD Balance at 30 September 2007 (167,771) 894,359 7,208,738 8,047,170 CONSOLIDATED CASHFLOW STATEMENT Year 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 12,323 Amortisation of intangible assets 5,998 - Revaluation of investment (40,251) 7,000 Movement on treasury shares (18,970) (76,101) Movement on share premium 18,970 76,101 Share-based transactions 407,004 332,867 Translation differences (156,707) (131,579) OPERATING CASHFLOWS BEFORE MOVEMENT IN WORKING 1,844,001 677,113 CAPITAL Decrease in receivables 140,443 201,793 Increase in payables 1,381,542 660,299 NET CASH GENERATED BY OPERATING ACTIVITIES 3,365,986 1,539,205 Investing activities: Interest received 209,412 137,699 Interest 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) 62,246 ACTIVITIES 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 PLC NOTES TO THE PRELIMINARY STATEMENT 1 NATURE OF THE FINANCIAL INFORMATION The financial information set out above does not constitute full accounts for the purposes of International Financial Reporting and Accounting Standards. The financial information has been extracted from the Group's accounts 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 consolidated financial statements prepared under International Financial Reporting and Accounting Standards. The financial statements have been prepared in accordance with International Financial Reporting Standards adopted for use by the European Union and therefore comply with Article 4 of the EU IAS Regulation. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and enterprises controlled by the Company (its subsidiaries) made up to 30 September each year. Control is achieved where the Company has the power to govern the financial and operating policies of a subsidiary. Subsidiaries are accounted for using the acquisition method of accounting whereby the Group's results include the results of the acquired business from the date of acquisition. All intra-group transactions and balances are eliminated on consolidation. Investments in associates An associate is an entity over which the Group has significant influence and is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control. Investments that are held by the Group are carried in the balance sheet at fair value even though the Group may have significant influence over those companies. This treatment is permitted by IAS 28, Investment in Associates, which allows investments held by venture capital and similar organisations to be excluded from the scope of IAS 28 investments in Associates provided that those investments upon initial recognition are designated as fair value through profit or loss and accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement, with changes in fair value recognised in profit or loss in the period of change. Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is recognised as an asset and is tested for impairment annually, or on such occasions that events or changes in circumstances 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 of the profit or loss on disposal. Positive goodwill arising on acquisitions before the date of the transition to International Financial reporting Standards has been retained at the previous UK GAAP amount subject to being tested for impairment at that date. Impairment At the balance sheet date, the Group reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss or if events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable 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 carrying amount, the impairment loss is recognised as an expense, unless the relevant asset is land and buildings at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss treated as a revaluation increase. Impairment losses relating to goodwill are not reversed. Employee Benefit Trust In accordance with SIC 12 'Consolidation - special purpose entities', the Company includes the assets and liabilities of that trust within its balance sheet. In the event of the winding up of the Company, neither the shareholders nor 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 share schemes are deducted from the shareholders' funds in accordance with IAS 32 ' Financial instruments: disclosure and presentation' until such time as they vest unconditionally to participating employees. The fair value of employee services received in exchange for the grant of shares is recognised as an expense. The total amount to be expensed rateably over the performance period is determined by reference to the fair value of the shares determined 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 3,540,040 Europe 341,868 299,990 USA - - 7,114,695 3,840,030 Consolidated operating profit 2007 2006 (restated) £ £ UK 1,611,787 457,482 Europe - - USA (545) (980) 1,611,242 456,502 Consolidated net assets 2007 2006 (restated) £ £ UK 6,661,945 4,617,514 Europe 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 term incentive scheme charge (2006: £316,200). On 4 February 2005 shareholders approved the establishment by the Company of the Impax Group Employee Benefit Trust (the 'EBT') as part of the Company's employee incentive arrangements. On 14 September 2007 the Company allotted 1,975,000 Ordinary Shares at a price equal 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 £19,750 to provide funding relating to the purchase of Ordinary Shares by the EBT. Following the sale the EBT is interested in 16,777,045 Ordinary Shares representing 15.32% of the Ordinary Shares in issue at 30 September 2007. The potential beneficiaries of the EBT include the executive directors and employees of the Group and their respective families. On 30 September 2007 7,270,000 of the Ordinary Shares held by the EBT vested to employees and their families. The allocation of Ordinary Shares to employees and their families via the EBT by the Company in 2005, 2006 and 2007 as part of the long term incentive scheme has given rise to a charge of £357,000 (2006: £316,200) to the income statement for the 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 2009 which is the performance period for the 2007 share award It is calculated in accordance with the requirements of IFRS 2 'Share based payments' by reference to the mid market price of an Ordinary Share of 6.375p on the approval date of 4 February 2005 and on the Directors' assumption that the EBT performance criteria will be met and all of the shares will vest to employees and their families. The date of 4 February 2005 has been agreed to be the grant date for all shares issued to employees and their families as this was the date when substantially all terms and conditions of the scheme were agreed by 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 546,196 148,704 Taxation Effects of: Non-deductible expenses 118,713 111,660 Capital 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 for offset 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 are translated 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 balance sheet 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, an adjusted profit per share has been calculated which excludes the long term incentive scheme charge of £357,000 (2006: £316,200). Profit for the year Ordinary shares in Earnings per share issue (weighted average) £ 2007 Basic 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 into 53,743,932 ordinary shares. Had this conversion taken place at the beginning of that 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) £ Cost At 1 October 2006 and 30 September 2007 2,830,097 Amortisation At 1 October 2006 and 30 September 2007 1,201,000 Net book value At 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 results and 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 Valuation At 1 October 2006 11,344 61,408 72,752 Additions - 1,506,851 1,506,851 Revaluations - 40,251 40,251 At 30 September 2007 11,344 1,608,510 1,619,854 Net book value At 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 of corporate 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 form of a combination of cash, shares in Ivanhoe and shares in Ensyn renewables. The impairment of the Ensyn shares was written back. The Group received £236,609 from 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. Of these, 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 is valued 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 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. The IARF, which is managed by a subsidiary undertaking of the Company, launched on 21 May 2007 and had a total net asset value ('NAV') of £3,284,195 at 30 September 2007. The Group's investment in the IARF represents 45.88% of the NAV at 30 September 2007. The Directors are of the opinion that this investment does not constitute an associate undertaking due to insignificant control and influence. This listed investment is revalued to market value. 11 RESERVES During the year, the Company carried out a balance sheet reorganisation which was approved by shareholders in June 2007 and which received High Court approval on 22 August 2007. The result of this reorganisation was to eliminate the deficit on reserves by 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 reserve until all creditors outstanding on 22 August 2007 had either been paid or given their consent to the Company to transfer the balance to revenue reserves. The Company has now made creditor payments and obtained the necessary consents to enable it to transfer £3,788,477 from the special reserve to revenue reserves. In accordance with the requirements of SIC 12 'Consolidation - special purpose entities' and IAS 32, the assets and liabilities of the EBT have been included in the Company's and Group's accounts resulting in the inclusion of £167,771 treasury 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 and broker ('NOMAD') to the Group. For the twelve months following their appointment they received an option over 500,000 shares in the Company, exercisable at 20p within three years. For the period between twelve and twenty-four months following their appointment they will receive a further option over 388,215 shares in the Company exercisable at 25.76p within three years. In 2007, £50,004 (2006: £16,667) was charged to the Income statement and credited 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 statements under International Financial Reporting Standards. The following disclosures are required in the year of transition. The last financial statements under UK GAAP were for the year ended 30 September 2006 and the date of transition to International 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 £'000 Non-current assets Goodwill 1,346,493 282,604 1,629,097 Property, plant and equipment 24,433 - 24,433 Fixed asset investments 14,357 - 14,357 1,385,283 282,604 1,667,887 Current assets Trade and other receivables due after 1,593,507 - 1,593,507 one year Trade and other receivables due within one 1,904,235 - 1,904,235 year Investments 72,752 - 72,752 Cash 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 - 9,591,824 Share premium 2,723,483 - 2,723,483 Exchange equalisation reserve (845,410) - (845,410) Treasury shares (148,801) - (148,801) Other reserves 487,355 - 487,355 Retained 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 September 2006 UK GAAP IFRS 3 IFRS 30 Sept 06 Goodwill 30 Sept 06 £'000 £'000 £'000 Revenue 3,840,030 - 3,840,030 Operating expenses Goodwill 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 profit Continuing operations 173,898 282,604 456,502 Net interest receivable 39,178 - 39,178 Profit on ordinary activities before 213,076 282,604 495,680 taxation Taxation 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 year ended 30 September 2006 Other than presentational items, there are no differences arising on the transition to IFRS. Copies of the report and accounts of the Company for the year ended 30 September 2007 will be sent to shareholders. Copies will also be available on the Company's web site www.impax.co.uk and may be collected from the Registered Office. Registered Office: Broughton House 6-8 Sackville Street London W1S 3DG This information is provided by RNS The company news service from the London Stock Exchange

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