Interim Results

Impax Group PLC 25 May 2005 25 May 2005 Impax Group plc Interim results for the six months ended 31 March 2005 Impax Group plc, which provides specialised asset management and corporate finance services within the environmental markets sector, today announces its interim results for the six months ended 31 March 2005. Highlights * Successful launch of Impax Environmental Markets (Ireland) * 38% increase in assets under management to £94 million over twelve months * Loss reduced to £250,000, after amortisation of goodwill of £141,000 Commenting on the results, Keith Falconer, Chairman said: 'Last year the Board focused on setting a strategy and establishing a base for growth. In the six months to March we have concentrated on building the Impax business. In December, we raised £16.3m with the successful launch of a Dublin-listed open-ended investment fund that has a similar portfolio of stocks to our investment trust, Impax Environmental Markets plc. We believe we can grow these assets substantially over the coming twelve months. Further fund raisings are underway which, if successful, should enable the Group to generate positive cashflow. During the period, our corporate finance activities again saw a number of new clients and increased net revenue. The environmental markets sector, particularly the energy, water and waste markets on which we concentrate, is growing rapidly, and, with increasing public policy intervention and private sector capital expenditure, should become even more attractive. In the second half we are continuing our efforts to turn this opportunity into growth in assets under management and corporate finance fees.' For further information please contact: Keith Falconer or Ian Simm 020 7434 1122 Impax Group plc John Webb 020 7490 3788 Marshall Securities Limited Impax Group plc Chairman's Statement This time last year, I reflected on a busy programme of changes that we had put in place, including the disposal of our oil interests. Our recent efforts have been focussed on building a solid foundation for earnings which can be grown over the next few years. I believe that the prospects for Impax are excellent as the environmental markets sector in which we specialise is growing rapidly and is increasingly topical. Almost every day, the newspapers report new issues that serve to illustrate commercial opportunities in this area, many of which are driven by a solid legislative framework. Against this backdrop, we are making good progress towards building sustainable revenues and generating positive cash flow. The interim results this year show higher revenues and reduced losses compared with this period last year, reflecting significant progress in both our operating divisions. In December, we raised £16.3m with the successful launch of a Dublin-listed open-ended investment fund that has a similar portfolio of stocks to our investment trust, Impax Environmental Markets plc. We believe we can grow these assets substantially over the coming twelve months. This fund has contributed revenues for only four months of the interim period and it is being actively marketed to new investors. We are also pursuing other fund-raising activities and hope to report success in the near future. Results for the period Turnover for the six months to 31 March 2005 was £951,000 (2004: £891,000). The loss for the period of £250,000 (2004: £350,000) is after a £141,000 (2004: £141,000) charge for the amortisation of goodwill. I am pleased to report that we are steadily growing the net revenue lines in our finance divisions and that the majority of this increase has been added directly to the bottom line, thereby reducing the operating loss before amortisation for the period to £84,000 (2004: £147,000). Our net interest charge has fallen to £25,000 (2004: £62,000) as interest receivable from the production notes on the sale of our oil assets has offset in part the interest charge on our convertible loan stock. Corporate Finance Impax Capital's turnover for the period was £421,000 (2004: £530,000). After deducting project expenses, the division's net revenue was £418,000 (2004: £353,000) an 18% increase over the corresponding six month period last year. In particular, our team was able to close three transactions involving the provision of merger and acquisition advice. In rapidly growing markets, demand for this expertise is high, and we are confident that we can generate further fees in this area. The UK's need to renew its waste management and renewable energy infrastructure is bringing new participants into the market, with attendant opportunities to sell corporate finance services including merger and acquisition advice, finance raising, financial and public policy consulting. Our corporate finance team is well positioned to take advantage of this trend. Asset Management Revenues in Impax Asset Management ('IAM') were £530,000 during the period, a 47% increase over the corresponding six-month period last year. By 31 March 2005, IAM managed or advised six funds with total assets under management of around £94m (2004: £69m). These funds have performed well. The net asset value ('NAV') of the largest fund, Impax Environmental Markets plc, ('IEM') rose 15.9% over the year ending 31 December 2004, an out-performance over the MSCI World Index, which rose 5.2% over the same period. In the twelve months ending 31 March 2005, the IEM NAV rose 13.0%, while the MSCI World Index rose 5.7%. The unquoted funds also performed well; in particular, The Recycling Fund completed its second investment and is expected to announce further investments shortly. We have also secured two new management contracts. On 9 December 2004, as reported above, we completed the fund raising for and commenced management of Impax Environmental Markets (Ireland). On 1 April 2005 (i.e. since the end of the period under review), we started to manage the ASN Milieufonds, an open-ended fund investing in quoted companies in the environmental markets sector to which we had been providing investment advice since July 2001. The environmental markets sector is growing quickly and many investors want to increase their exposure to it. Few institutions have the expertise to do this by themselves and this plays directly to our core competence. We intend to grow our range and the size of the funds actively in the future in both private and quoted equity. Employee share ownership We are grateful to shareholders who approved the establishment of the Employee Benefit Trust. I gave the reasons why I thought it was important to have such a trust last year. Although it does mean potential dilution of shareholders interests, shares are only allocated to employees if they are successful in meeting their objectives and corporate targets as a consequence of which the shares will have been rewarding investments for shareholders in each period. Prospects We operate against a favourable background but our results will depend on how successful we are in exploiting the opportunities presented to us. The asset management division has developed a more solid underpinning to its earnings and we hope that we shall secure higher fees in the second half. We intend to concentrate on growing fund management revenues, which are predictable and are therefore more highly-rated by shareholders. Our corporate finance division is dependant on the outcome of the mandates we have won and our ability to win new business. Our efforts will concentrate on executing these mandates successfully. I hope that we will be able to deliver further positive news in the near future. Keith Falconer Chairman 25 May 2005 Impax Group plc Consolidated Profit & Loss Account for the six months ended 31 March 05 ---------------------------------------------------------------------------------------- Notes Six months Six months ended ended Year ended 31 Mar 05 31 Mar 04 30 Sept 04 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover 2 951 891 1,738 Operating expenses Amortisation of goodwill 2 ( 141) ( 141) ( 283) Other operating expenses ( 1,035) ( 1,038) ( 2,031) -------------- -------------- -------------- ( 1,176) ( 1,179) ( 2,314) Operating loss Continuing operations 2 ( 225) ( 288) ( 576) Net interest payable ( 25) ( 62) ( 102) -------------- -------------- -------------- Loss on ordinary activities before taxation ( 250) ( 350) ( 678) Taxation - - - -------------- -------------- -------------- Loss attributable to the Group ( 250) ( 350) ( 696) -------------- -------------- -------------- Basic loss per share 4 (0.67)p (0.98)p (1.91)p Adjusted loss per share 4 (0.09)p (0.59)p (1.14)p -------------- -------------- -------------- Statement of Total Recognised Gains and Losses Loss for the period ( 250) ( 350) ( 696) Currency translation differences ( 106) ( 267) ( 260) -------------- -------------- -------------- Total recognised losses ( 356) ( 617) ( 955) -------------- -------------- -------------- All disclosures relate only to continuing operations. Impax Group plc Consolidated Balance Sheet as at 31 March 2005 ---------------------------------------------------------------------------------------- Notes As at As at As at 31 Mar 05 31 Mar 04 30 Sept 04 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed assets Intangible fixed assets 1,771 2,053 1,912 Tangible fixed assets 11 2,288 16 ------------- ------------- ------------- 1,782 4,341 1,928 ------------- ------------- ------------- Current assets Debtors 2,891 1,122 3,080 Cash at bank and in hand 6 839 877 1,002 ------------- ------------- ------------- 3,730 1,999 4,082 Creditors - amounts falling due within one year ( 311) ( 492) ( 476) ------------- ------------- ------------- Net current assets 3,419 1,507 3,606 Total assets less current liabilities 5,201 5,848 5,534 Creditors - amounts falling due after more than one year ( 2,279) ( 2,260) ( 2,256) ------------- ------------- ------------- Total net assets 2,922 3,588 3,278 ------------- ------------- ------------- Capital and reserves Called up share capital 7 8,892 8,885 8,892 Share premium 7 759 736 759 Exchange equalisation reserve 7 ( 867) ( 767) ( 761) Profit and loss account 7 ( 5,862) ( 5,266) ( 5,612) ------------- ------------- ------------- Equity shareholders' funds 2,922 3,588 3,278 ------------- ------------- ------------- Impax Group plc Consolidated Cash Flow Statement for the six months ended 31 March 2005 ---------------------------------------------------------------------------------------- Six months Six months ended ended Year ended 31 Mar 05 31 Mar 04 30 Sept 04 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash outflow from operating activities ( 200) ( 257) ( 349) Returns on investments and servicing of finance Interest received 67 31 67 Interest paid ( 61) ( 59) ( 105) Taxation - ( 33) ( 33) Capital expenditure and financial investment Purchase of tangible fixed assets - ( 90) ( 13) Proceeds from sale of fixed assets 84 85 182 Disposal of subsidiary - - 333 Management of liquid resources Cash held on deposit to support oil activities - - 61 ------------- ------------- ------------- (Decrease)/increase in cash in the period ( 110) ( 323) 143 ------------- ------------- ------------- Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the period ( 110) ( 323) 143 (Decrease) in cash on deposit in year - - ( 61) Non cash transaction - convertible loan stock ( 23) 39 44 Translation differences ( 53) ( 19) ( 300) ------------- ------------- ------------- Movement in net debt in the period ( 186) ( 303) ( 174) Net debt at beginning of period ( 1,254) (1,080) ( 1,080) ------------- ------------- ------------- Net debt at end of period ( 1,440) (1,383) ( 1,254) ------------- ------------- ------------- Reconciliation of operating profit/(loss) to net cash flow from operating activities Six months Six months ended ended Year ended 31 Mar 05 31 Mar 04 30 Sept 04 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating loss ( 225) ( 288) ( 576) Goodwill amortisation charge 141 141 283 Depreciation 4 2 6 Decrease/(increase) in debtors 7 ( 9) ( 73) (Decrease)/increase in creditors ( 127) ( 103) 11 ----------- ----------- ----------- Net cash flow from operating activities ( 200) ( 257) ( 349) ----------- ----------- ----------- Impax Group plc Notes to the Interim Accounts for the six months ended 31 March 2005 -------------------------------------------------------------------------------- 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 2005 and 31 March 2004 are unaudited. The comparative figures for the financial year ended 30 September 2004 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 2004. The interim accounts were approved by the Directors on 25 May 2005. 2 Segment analysis Six months Six months ended ended Year ended 31 Mar 05 31 Mar 04 30 Sept 04 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Turnover Financial services 951 880 1,738 Oil - 11 - ------------- ------------- ------------- 951 891 1,738 ------------- ------------- ------------- Operating loss Financial services ( 84) ( 142) ( 293) Oil - - - Exchange loss - ( 5) - Amortisation of goodwill ( 141) ( 141) ( 283) ------------- ------------- ------------- ( 225) ( 288) ( 576) Net interest payable ( 25) ( 62) ( 120) ------------- ------------- ------------- Loss on ordinary activities ( 250) ( 350) ( 696) before taxation Tax on loss on ordinary - - - activities ------------- ------------- ------------- Loss for the year ( 250) ( 350) ( 696) ------------- ------------- ------------- 3 Amounts denominated in US Dollars have been converted at the closing rate on 31 March 2005 of £1 to $1.87 (31 March 2004: $1.82; 30 September 2004: $1.80). The results of the US subsidiary undertaking have been translated on a monthly basis at the average rate ruling during each month. 4 The figures for basic loss per share are based on the loss attributable to the Group of £250,000 (31 March 2004: £350,000; 30 September 2004: £695,771) and on the weighted average number of ordinary shares in issue during the period of 31 March 2005: 37,498,367 (31 March 2004: 35,698,084; 30 September 2004: 36,377,018). The calculation of diluted loss per share is based on the weighted average number of shares outstanding adjusted by the dilutive share options and convertible loan stock. These adjustments give rise to an increase in the weighted average number of shares outstanding to 31 March 2004: 91,249,098 (31 March 2004: 91,249,098; 30 September 2004: 91,249,098). 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. 5 The Directors do not propose an interim dividend. 6 Cash at bank and in hand Six months Six months Year ended ended ended 31 Mar 05 31 Mar 04 30 Sept 04 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash at bank and on hand 839 822 1,002 Cash on deposit - 55 - ------------- ------------- ------------- 839 877 1,002 ------------- ------------- ------------- 7 Reconciliation of movements in capital and reserves Share Share premium Exchange Profit & capital reserve equilisation loss reserve reserve £'000 £'000 £'000 £'000 As at 1 October 2004 8,892 759 ( 761) ( 5,612) Loss for the period - - - ( 250) Conversion of Loan Stock - - - - Translation adjustments - - ( 106) - ----------- ----------- ----------- ----------- As at 31 March 2005 8,892 759 ( 867) ( 5,862) ----------- ----------- ----------- ----------- 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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