Interim Results

Impax Group PLC 30 June 2003 30 June 2003 Impax Group plc Interim results for the six months ended 31 March 2003 Impax Group plc, the specialised financial services business providing fund management, corporate finance and advisory services in the environmental infrastructure and technology ('EIT') sector today announces its interim results for the six months ended 31 March 2003 Highlights • Increased revenue and activity from corporate finance advisory business • Increased revenue and new fund launch from asset management division • Completion of the sale of the Starks Field in Louisiana to Temsik Investments Limited Commenting, Stuart Bickerstaff, Non Executive Chairman, said: 'I am pleased to report that our corporate finance and asset management businesses have made encouraging progress in the period. The rising equity markets since the end of our half-year have improved our revenues for the third quarter and the launch of The Recycling Fund will have a positive effect on the final quarter. Our corporate finance fee income in the third quarter is expected to be the highest since September 2001.' For further information please contact: Nigel Taunt 020 7434 1122 Impax Group plc 020 7490 3788 Robert Luetchford Marshall Securities Limited Impax Group plc Chairman's Statement I am pleased to report that, since my last statement on 31 March 2003, the Group has made significant progress. Both our asset management and corporate finance divisions have increased revenues and won new clients. In addition we have successfully completed the sale of Starks Field. Results for the period While the trend is encouraging, the Group's results for the first six months of the financial year show an operating loss of £546,000 before an exceptional cost of £1,712,000 which, as explained below, relates to our decision to reduce the carrying value of Nukern Field. The operating loss is arrived at after charging goodwill amortisation of £141,000. Corporate Finance Impax Capital Corporation, our corporate finance business, has achieved strong revenue growth with income from several high quality clients. Our pipeline of opportunities and list of current mandates give your Board confidence that the second half should see a continuation of this improvement. Our strategic focus on developing relationships with major clients in the UK is bearing fruit. Asset Management Impax Asset Management, our asset management business, has benefited from the recent recovery in stock markets. During the period funds under management and advisory contracts decreased from £55 m to £51 m but have since recovered to £56 m. Impax Asset Management has been successful in winning the management contract for The Recycling Fund, a venture capital fund sponsored by the Waste and Resources Action Programme (WRAP). Oil Interests On 2 June 2003 the Company announced that it had completed the sale of Starks Field to Temsik Investments Limited for a net consideration of US$1,334,000 (£848,000) of which US$1,195,000 (£759,000) was in the form of loan notes. As a result of this disposal the Group is no longer involved in operational oil field activities. However, the Group continues to retain an interest in the non-operational Nukern Field in California and we are pursuing options to dispose of this. We now believe that any disposal arrangements are likely to include deferred terms based on long-term production. Accordingly, we have reviewed the book value of this oil field and have adjusted its carrying value to US$4,000,000 (£2,541,000). Organisation A number of changes to our executive team have been made: • Ian Simm, Managing Director of Impax Asset Management, and Nigel Taunt have been appointed Joint Managing Directors of the Group; • Melville Haggard has been appointed Chairman of Impax Capital Corporation and Nigel Taunt has been appointed Managing Director of that company; • Deborah Fowler has been appointed as Group Company Secretary and she also assumes responsibility for the Group's finance function. I would like to thank the whole Impax team for their commitment, hard work and success in improving the Group's performance and outlook. Prospects The success of our asset management business depends on increasing funds under management, which in turn increases our foundation of recurring income. The rising equity markets since the end of our half-year have improved our revenues for the third quarter and the launch of The Recycling Fund will have a positive effect on the final quarter. Our corporate finance fee income in the third quarter is expected to be the highest since September 2001. We believe that the fundamentals for expansion and development of financial services in the environmental infrastructure and technology sector are good and showing signs of improvement. In order to strengthen our ability to exploit future opportunities, we are in detailed discussions with our advisers about a potential fund raising. I look forward to reporting further progress. Stuart Bickerstaff Chairman 30 June 2003 Impax Group plc Consolidated Profit and Loss Account for the 6 months ended 31 March 2003 Notes 6 months ended 6 months ended Year ended 31 Mar 2003 31 Mar 2002 30 Sept 2002 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover 2 Continued 429 359 828 operations Discontinued - 277 588 operations ------- ------- ------- 429 636 1,416 Operating expenses Continued (832) (980) (1,649) operations Discontinued - (430) (568) operations Amortisation of (141) (142) (282) goodwill Impairment in (1,712) - (2,631) value of assets Exchange (loss)/ (2) 1 - gain ------- ------- ------- (2,687) (1,551) (5,130) Operating loss 2 Continued (546) (783) (1,103) operations Discontinued - (132) 20 operations Impairment in 3 (1,712) - (2,631) value of assets ------- ------- ------- (2,258) (915) (3,714) Impairment in 3 - - (215) value of investments Net interest (23) 12 4 (payable)/ ------- ------- ------- receivable Loss on ordinary (2,281) (903) (3,925) activities before taxation Taxation - - - ------- ------- ------- Loss attributable (2,281) (903) (3,925) to the Group ======= ======= ======= Basic loss per 5 (6.43)p (2.54)p (11.06)p share Diluted loss per 5 (5.98)p (2.37)p (10.29)p share Adjusted loss per 5 (1.20)p (2.14)p (2.24)p share ======= ======= ======= Statement of Total Recognised Gains and Losses Loss for the (2,281) (903) (3,925) period Currency (11) 273 (421) translation ------- ------- ------- differences Total recognised (2,292) (630) (4,346) losses ======= ======= ======= Impax Group plc Consolidated Balance Sheet as at 31 March 2003 6 months ended 6 months ended Year ended 31 Mar 2003 31 Mar2002 30 Sept 2002 Notes (unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed assets Intangible fixed 2,345 2,632 2,477 assets Tangible fixed 2,548 8,660 5,086 assets Investments - 215 - ------- ------- ------- 4,893 11,507 7,563 ------- ------- ------- Current assets Debtors 321 333 330 Loans 7 759 - - receivable Cash at bank and 294 329 380 in hand ------- ------- ------- 1,374 662 710 Creditors - amounts (1,439) (632) (1,153) falling due within one ------- ------- ------- year Net current (65) 30 (443) (liabilities)/assets ------- ------- ------- Total assets less 4,828 11,537 7,120 current liabilities Creditors - amounts - (701) - falling due after more ------- ------- ------- than one year Total net assets 4,828 10,836 7,120 ======= ======= ======= Capital and reserves Called up share 8,871 8,871 8,871 capital Share premium 687 687 687 Merger reserve 8 - 2,198 2,198 Exchange 8 (194) 511 (183) equalisation reserve Profit and loss 8 (4,536) (1,431) (4,453) account ------- ------- ------- Equity shareholders' 4,828 10,836 7,120 funds ======= ======= ======= Impax Group plc Consolidated Cash Flow Statement for the 6 months ended 31 March 2003 6 months ended 6 months ended Year ended 31 Mar 2003 31 Mar 2002 30 Sept 2002 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash (outflow)/inflow from (570) (533) (820) operating activities Returns on investments and servicing of finance Interest received 3 15 11 Interest paid (26) (3) (7) Capital expenditure and financial investment Purchase of tangible - (188) (298) fixed assets Proceeds from sale 64 - - of fixed assets Management of liquid resources Cash held on deposit to 79 - (144) support oil ------- ------- ------- activities ------- Net cash outflow before (450) (709) (1,258) financing Financing Increase working 476 - 573 capital loan ------- ------- ------- Increase/(decrease) in 26 (709) (685) cash in the period ======= ======= ======= Reconciliation of net cash flow to movement in net cash/(debt) Increase/(decrease) 26 (709) (685) in cash in the period Cash inflow from (556) - (429) increase in net debt Non cash - - 640 transactions Translation (32) (23) (79) differences ------- ------- ------- Movement in net debt (562) (732) (553) in the period Net (debt)/cash at (193) 360 360 beginning of ------- ------- ------- period Net (debt)/cash at (755) (372) (193) end of period ======= ======= ======= Reconciliation of operating profit/(loss) to net cash flow from operating activities Operating loss (2,258) (915) (3,714) Impairment 1,712 - 2,631 provisions Goodwill 141 142 282 amortisation charge Depreciation/depletion/ 3 86 162 other amortisation charges Exchange loss (2) (1) - Decrease/(increase) 21 27 (135) in debtors (Decrease)/increase (187) 128 (46) in creditors ------- ------- ------- Net cash flow from (570) (533) (820) operating ======= ======= ======= activities Impax Group plc Notes to the Interim Accounts for the 6 months ended 31 March 2003 1. 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 2003 and 31 March 2002 are unaudited. The comparative figures for the financial year ended 30 September 2002 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 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 2002. The interim accounts were approved by the Directors on 30 June 2003. 2. Segment analysis 6 months ended 6 months ended Year ended 31 Mar 2003 31 Mar 2002 30 Sept 2002 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover Financial services 429 359 828 Oil - discontinued - 277 588 ------ ------ ------ 429 636 1,416 ====== ====== ====== Operating profit/(loss) Financial services (195) (457) (527) Central costs (148) (163) (242) Oil - continued (62) (21) (52) Amortisation of goodwill (141) (142) (282) ------ ------ ------ (546) (783) (1,103) Oil - discontinued - (132) 20 Impairment provisions (1,712) - (2,631) ------ ------ ------ (2,258) (915) (3,714) Impairment in value of - - (215) investments Net interest (payable)/ (23) 12 4 receivable ------ ------ ------ Loss on ordinary activities (2,281) (903) (3,925) before taxation ====== ====== ====== The sector analysis for the six months ended 31 March 2002 has been restated for consistency. 3. Exceptional Items 6 months ended 6 months ended Year ended 31 Mar 2003 31 Mar 2002 30 Sept 2002 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Impairment in value of Nukern 1,712 - - Field Impairment in value of Starks - - 2,631 Field Impairment in value of unlisted - - 215 investments ------ ------ ------ 1,712 - 2,846 ====== ====== ====== The impairment in the value of the Nukern Field is based on the Directors' expectation that disposal arrangements may include deferred terms based on long term production, which would require future expectations to be discounted to present value. The Directors have reviewed the book value of this field and have decided to write down this value to $4,000,000 (£2,541,000). 4. Amounts denominated in US Dollars have been converted at the closing rate on 31 March 2003 of £1 to $1.57 (31 March 2002: $1.43; 30 September 2002: $1.56). The results of the US subsidiary undertaking have been translated on a monthly basis at the average rate ruling during each month. 5. The figures for diluted and basic loss per share are based on the loss attributable to the Group of £2,281,000 (31 March 2002: £903,000; 30 September 2002: £3,925,000) and on the weighted average number of ordinary shares in issue during the period of 31 March 2003: 35,485,764 (31 March 2002: 35,485,764; 30 September 2002: 35,485,764). The calculation of diluted loss per share is based on the weighted average number of shares outstanding adjusted by the dilutive share options. These adjustments give rise to an increase in the weighted average number of shares outstanding to 31 March 2003: 38,145,858 (31 March 2002: 38,145,858; 30 September 2002: 38,145,858). In order to show results from operating activities on a comparable basis, an adjusted loss per share has been calculated which excludes goodwill amortisation and exceptional items from the results. 6. The Directors do not propose an interim dividend. 7. Loans receivable 6 months ended 6 months ended Year ended 31 Mar 2003 31 Mar 2002 30 Sept 2002 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Current 191 - - Non current 568 - - ------ ------ ------ 759 - - ====== ====== ====== These loans were established on the sale of the Starks Field. They have been allocated between current and non current based on the minimum monthly repayment level. The first loan of $840,000 (£534,000) is secured by a first mortgage on the Starks Field and by a pledge of shares and the second is an unsecured loan of $355,000 (£225,000) representing the balance of monies due under a working capital adjustment. The loans are subject to interest at 2% above the Wall Street Journal Prime Rate and are repayable in sequence as follows: i. a minimum monthly payment of $25,000 commencing June 2003; ii. an additional payment of $7.50 for every barrel of oil produced in each discrete month above a base level of 4,500 barrels commencing with May 2003 production; iii. an additional payment of $2.00 for every mcf of gas production in each discrete month above a base level of 2,500 mcf commencing with June 2003 production. 8. Reconciliation of movements in reserves Merger Exchange Profit & loss reserve equalisation reserve reserve £'000 £'000 £'000 At 1 October 2002 2,198 (183) (4,453) Loss for the period - - (2,281) Translation adjustments (11) - Transfer of merger reserve on sale (2,198) - 2,198 of CSV Holdings Inc ------ ------ ------ As 31 March 2003 - (194) (4,536) ====== ====== ====== 9. Going concern The accounts have been prepared on a going concern basis, on the grounds that the Group is able to generate sufficient levels of fee income or to secure future financing in order to meet its working capital requirements. As described in note 7 to these accounts, the Group has disposed of the Starks Field. The resultant loans have a minimum level of future monthly repayments together with additional repayments based on the performance of the field. An acceleration of repayments would improve the Group's working capital position. As described in the Chairman's Statement, the Directors also anticipate raising additional funding to strengthen the ability to exploit future opportunities. If the improvements to the Group's trading position, together with the receipts under the loan arrangements, do not result in positive cash flow, and the Group is unable to secure additional sources of financing, the Directors recognise that there would be uncertainty as to the Group's ability to continue to trade. If the Group were unable to meet its working capital requirements, adjustments would have to be made to reduce the balance sheet value of assets to their recoverable amounts and to provide for further liabilities that might arise. 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

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