Employee Incentive Arrangemt

Impax Group PLC
17 January 2007

This announcement replaces the previous RNS announcement reference 6974P
released at 16:02 on 17 January 07. Amendment was made to the heading from 
'Employee Incentive Argreemnt' to 'Employee Incentive Arrangemt'. All other
information remains unchanged.


Impax Group plc ('Impax' or the 'Company')

The Company has today issued a circular seeking shareholder approval to increase
the number of Ordinary Shares, in respect of which awards may be made under the
Impax Group Employee Benefit Trust 2005 ('EBT' or 'Incentive Arrangement'), to
24,250,000 Ordinary Shares.

Background

In January 2005 Shareholders approved the establishment by the Company of the
Incentive Arrangement for the purposes, inter alia, of the grant of awards of
Ordinary Shares to employees of the Group.  The purpose of establishing the
Incentive Arrangement was to motivate and incentivise eligible participants to
achieve value for Shareholders.  Under the Incentive Arrangement, as approved by
Shareholders, the maximum number of Ordinary Shares that may be the subject of
awards was limited to 18,250,000 Ordinary Shares.  The remuneration committee is
proposing that the limit on the maximum number of Ordinary Shares that may be
the subject of awards under the Incentive Arrangement be increased to 24,250,000
Ordinary Shares.

The Incentive Arrangement

The Incentive Arrangement was implemented in 2005 by means of an employee
benefit trust, known as the 'Impax Group Employee Benefit Trust 2005'.  Full
details of the Incentive Arrangement were set out in the circular to
Shareholders dated 11 January 2005.  The purpose of the Incentive Arrangement
was and remains to motivate and incentivise eligible participants to achieve
value for Shareholders.

Under the Incentive Arrangement the Company issues new Ordinary Shares at
nominal value to the trustee of the EBT for the purpose of making share awards
to eligible participants.  The trustee of the EBT funds the purchase of such
Ordinary Shares by the sale of existing shares in the trust.

Key employees (including executive directors) are eligible to participate in the
Incentive Arrangement.  The Incentive Arrangement, as approved by Shareholders,
provided for awards of Ordinary Shares to be made in respect of the three
financial years ending 30 September 2005, 30 September 2006 and 30 September
2007, each with demanding performance criteria:

The First Period: Year ended 30 September 2005

For awards in respect of the financial year ended 30 September 2005, the Company
performance target required that the average mid-market share price increased to
at least 9.5 pence per share for the 60 business days following the announcement
of the results for that financial year ending 30 September 2005 and that Total
Shareholder Return over the year exceeded that of the FTSE All Share Index over
the same period.

The Second Period: Year ended 30 September 2006

For awards in respect of the financial year ended 30 September 2006, the Company
performance target requires that the average mid-market share price increase to
at least 12 pence per share for the 60 business days following the announcement
of the results for that financial year and that Total Shareholder Return over
the year exceeded that of the FTSE All Share Index over the same period.

The Third Period: Year ending 30 September 2007

For awards in respect of the financial year ending 30 September 2007, the
Company performance target requires that the average mid-market share price
increases to at least 14 pence per share for the 60 business days following the
announcement of the results for that financial year and that Total Shareholder
Return over the year exceeds that of the FTSE All Share Index over the same
period.

On 4 February 2005, being the date on which the Incentive Arrangement was
approved by Shareholders, the closing mid-market price of an Ordinary Share was
6.375p.

Each award made under the Incentive Arrangement to an eligible participant is
also subject to demanding targets in relation to his or her own performance.
Such performance targets are determined by the remuneration committee of the
Company taking into account the employee's position and role in the Group.  The
remuneration committee bases these targets on the Company's agreed business
plan, with the individual components of achieving this plan assigned to the
appropriate employees of the Group.

In addition, generally any Ordinary Shares held by the trustees of the EBT for
the benefit of the family of any employee revert to the EBT for distribution to
other employees and their families if the employee leaves employment with the
Group within 2 years of the end of the relevant period.  For example, Ordinary
Shares awarded in respect of the financial year ended 30 September 2005 will
generally revert to the trustees of the EBT if the employee ceases to be
employed by the Group before 30 September 2007.

The trustee of the EBT currently holds 14,800,080 Ordinary Shares, representing
13.8% of the issued ordinary share capital of the Company.  Awards over
7,270,000 Ordinary Shares were made by the trustee of the EBT for the benefit of
employees and their families in respect of the financial year ended 30 September
2005.  The Company intends to make recommendations to the trustee of the EBT
that awards over 7,610,080 Ordinary Shares be made for the benefit of employees
and their families in respect of the financial year ended 30 September 2006,
subject to the Company performance target relating to the financial year ended
30 September 2006, set out above, being satisfied. In addition, the EBT has sold
1,394,920 Ordinary Shares to fund the purchase of these Ordinary Shares leaving
1,975,000 out of a total of 18,250,000 Ordinary Shares available for allocation
in the third performance period, i.e. the current financial year.

Larger than anticipated awards have been recommended in these periods as a
result of the following:

-    Since the EBT was originally put in place in February 2005, employees have 
     significantly out-performed against the Company's business plan and 
     performance targets. This out-performance is reflected in the Company's 
     share price, which has averaged approximately 20 pence since 1 October 2006
     (compared to a Company performance target of 12 pence for the second 
     performance period which applies to the average mid-market share price for 
     the 60 business days following the announcement of the Company's results 
     for the year ended 30 September 2006, which was made on 11 December 2006).  
     The Company's shares are currently trading at 21.75 pence.

-    As part of this out-performance, the Company has recruited more senior 
     staff than had been expected, and there are therefore more individual 
     beneficiaries of the EBT than had been envisaged in February 2005.

Extension of Incentive Arrangement

In order to be able to incentivise staff who are contributing significantly to
the Company's further growth, the remuneration committee believes that it is
necessary to top up the existing scheme in the current financial year.

The remuneration committee is proposing that awards under the EBT of the
additional 6,000,000 Ordinary Shares would be subject to a Company performance
target requiring the average mid-market share price to increase to at least 24
pence per share for the 60 business days following the announcement of the
results for the financial year ending 30 September 2007 and that Total
Shareholder Return over the year exceeds that of the FTSE All Share Index over
the same period.  In addition, awards will only be made where employees have
satisfied demanding targets in relation to his or her own performance, as
explained above.

The Company has not yet made any decisions to implement a new employee incentive
scheme after September 2007 and will notify Shareholders of its intentions in
due course.

The award of Ordinary Shares under the Incentive Arrangement will impact
distributable reserves. Ordinary Shares issued to the EBT are initially regarded
for accounting purposes as not having totally left the Company's control and are
accounted for as Treasury Shares. The allocation of the Ordinary Shares for the
benefit of the family of a specific employee will result in a charge to the
profit and loss account based on the mid market price of the Ordinary Shares at
the 'grant date' as defined by FRS 20 'Share based payments' which is defined as
the date of approval of the proposals. Full details of the accounting treatment
can be found in Notes 19 and 32 of the Report and Accounts of the Company for
the year ended 30 September 2006.

Extraordinary General Meeting

An extraordinary general meeting of the Company is being convened on 9 February
2007 for the purpose, inter alia, of considering a resolution to approve the
increase in the number of Ordinary Shares that may be the subject of awards
under the EBT and is set out at the end of this document.  In addition to the
resolution relating to the approval of the increase in the maximum number of
Ordinary Shares in respect of which awards may be made under the EBT to
24,250,000 Ordinary Shares, special resolutions will be proposed at the
Extraordinary General Meeting:-

(a)  granting an authority to the Directors pursuant to section 80 Companies Act
     1985 to allot up to 6,000,000 Ordinary Shares to the trustee of the EBT for
     the purposes of the Incentive Arrangement;

(b)  disapplying the statutory pre-emption rights that would otherwise require 
     such Ordinary Shares to be offered pro rata to all Shareholders;

(c)  approving the amendment of the Subscription Agreement between the Company 
     and the trustee of the EBT for the purpose of making awards of the 
     additional Ordinary Shares; and

(d)  approving the agreement pursuant to which the trustee of the EBT will grant 
     to the Company the option to repurchase any of the increased number of 
     Ordinary Shares which the trustee of the EBT does not hold for the benefit 
     of the family of a specific employee as a result of the performance 
     conditions not being satisfied.

Recommendation

The Directors believe that it is in the best interests of the Company and its
Shareholders for the maximum number of Ordinary Shares which may be the subject
of awards under the EBT to be increased to 24,250,000 Ordinary Shares and the
Directors to be granted the authorities described in the document so as to
permit the award of Ordinary Shares pursuant to the EBT.

Accordingly, the Directors recommend Shareholders to vote in favour of the
resolutions set out in the notice convening the Extraordinary General Meeting.
In view of their potential interest in the EBT, Ian Simm, Nigel Taunt and Keith
Falconer have undertaken to abstain from voting on the resolutions to be
proposed at the Extraordinary General Meeting.


For further information please contact

Keith Falconer, Chairman
Impax Group plc


Copies of the circular may be obtained from the Company's registered office,
Broughton House, 6-8 Sackville Street, London W1S 3DG


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