Final Results

Impax Group PLC 16 December 2003 16 December 2003 IMPAX GROUP PLC PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003 Impax Group plc, the AIM quoted company, today announced its preliminary results for the year ended 30 September 2003. Highlights: â€¢ Improved revenues from asset management as a result of higher equity prices and a valuable mandate to manage The Recycling Fund. â€¢ Notable and sustained revenue growth from corporate finance activities starting in the second half. â€¢ Appointment of Keith Falconer as Chairman. Since 1986, Keith has been a main board director of Martin Currie Limited, the Edinburgh-based investment management company. Commenting Stuart Bickerstaff, Non-Executive Chairman, said: 'The Group's progress in expanding financial service operations in the environmental infrastructure and technology sector has been encouraging. The commercial opportunities in asset management and corporate finance are considerable, and we are delighted to have attracted someone of Keith Falconer's experience to lead the development of the business.' For further information please contact: Nigel Taunt or Ian Simm Impax Group plc 020 7434 1122 Robert Luetchford or John Webb Marshall Securities Limited 020 7490 3788 16 December 2003 IMPAX GROUP PLC PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003 CHAIRMAN'S STATEMENT AND OPERATIONAL REVIEW Since my last statement on 30 June 2003, the Group has made significant progress in expanding the financial services operations in the environmental infrastructure and technology sector (the 'Sector'). The last quarter of the financial year to 30 September 2003 saw a continuation of improved revenues and activity, which we have been able to sustain in the first two months of the current year. Asset Management Impax Asset Management Ltd ('IAM') currently manages or advises five funds with assets totalling over Â£65 million. The division has benefited in particular from higher equity prices as well as the award of a valuable mandate to manage The Recycling Fund, which was launched on 1 July 2003. Impax Environmental Markets plc ('IEM'), the largest of the funds under management, recovered strongly during the year. IEM's net asset value increased from Â£27.2 million to Â£31.5 million over the year, a rise of 15.8 per cent., which represents an out-performance against its benchmark, the Morgan Stanley Capital International ('MSCI') World Index, which rose 11.3 per cent. during the same period. IAM continues to provide advisory services to two clients in continental Europe whose net assets also rose over the year: Alm. Brand Invest 6 Environmental Technology Fund in Denmark; and the ASN Milieufonds Fund in the Netherlands. IAM now manages two private equity funds: the US$25 million PVMTI facility targeting the solar electricity sector on behalf of the International Finance Corporation; and the Â£5.5 million Recycling Fund, which is sponsored by the Waste and Resources Action Programme ('WRAP'). To win the mandate to manage the Recycling Fund, IAM competed successfully against six other fund managers and then supported WRAP during the process to raise additional contributions from Wastelink Ltd, Barclays Bank and Partnerships UK. The Recycling Fund is attracting significant interest from a wide range of companies and investors, and we believe it is likely to lead to additional commercial opportunities for the Group. Corporate Finance As anticipated in the Interim Statement, Impax Capital Corporation Ltd ('ICC') achieved significant revenue growth in the second half of the year. The division has made good progress in developing its client base, focusing on work for governmental agencies and larger corporates. The corporate finance team has been further strengthened by the recruitment of an additional senior executive. Our work for private sector clients has expanded considerably over the year. For example, in the waste sector, the extension of the Private Finance Initiative has brought increased demand for project structuring and advisory services, and we were mandated to advise on two waste management developments. In the renewable energy sector, we secured new mandates focusing on financial restructuring and on the valuation of Renewables Obligation Certificates. We have been notably active in advising governmental agencies. In particular, we advised the Department of Enterprise, Trade and Investment, Northern Ireland, in conjunction with Simmons & Simmons, on the roll-out of the Renewables Obligation into the Province. We also advised government on the application of carbon credit allocation methodologies under the European Emissions Trading Scheme, the benefit of which is already reflected in the new financial year. Meanwhile, ICC continues to make a full contribution as a member of the Finance and Investment Working Group of the DTI's Renewables Advisory Board. Oil Interests Progress has been made towards the disposal of the Group's oil assets. On 30 June 2003, we announced the sale of the Starks Oil Field to Temsik Investments Ltd. Subsequently, we have continued to search for opportunities to realise value from the Nukern Oil Field in California, and on 2 December 2003 we announced that the Group had entered into a co-operation agreement with All American Oil and Gas Inc., a company in which Temsik Investments Ltd is an equity investor. The agreement covers maintenance of the field, a small development programme to demonstrate the field's value by re-establishing limited production, and further activity to seek a sale of this asset. In addition, All American Oil and Gas Inc. has been granted an option on terms consistent with our revised carrying value to purchase the field on or before 31 August 2004. Funding On 20 August 2003 the Group announced a fund raising of approximately Â£2.31 million, net of expenses, through a placing of convertible unsecured loan stock. Proceeds are being used to fund the restructuring of the Group's finances, the development of IAM and ICC and for working capital. I would like to thank the Group's advisers and all those who supported us through a period of dark days for the whole financial services sector. Financial results The main feature of our results is improved trading in the second half of the year during which turnover was Â£754,000 (up from Â£429,000 in the first half) and operating loss from continuing operations before amortisation of goodwill was reduced from Â£405,000 to Â£271,000. Turnover for the full year from continuing operations was Â£1,183,000 (2002: Â£828,000) and the operating loss before amortisation of goodwill and exceptional items was Â£676,000 (2002: Â£800,000). As noted in the Interim Statement, the Group made an exceptional provision against the carrying value of the Nukern Field of Â£1,626,000. After net interest charges of Â£40,000 (2002: Â£4,000) the loss before tax for the year was Â£2,627,000 (2002: Â£3,925,000). Board Changes I am delighted to announce that Keith Falconer has agreed to join the Board on 1 January 2004. He will be taking over from me as chairman after the annual general meeting when I will retire from the Board. Keith has spent most of his career with Martin Currie Investment Management Limited, a substantial investment management company based in Edinburgh. During his 24 years there, he has worked as a fund manager, and has successfully managed both investment trusts and bespoke mandates for institutions. Over the past ten years, Keith has concentrated on marketing and selling for the firm with considerable success. He served on the firm's executive committee for many years until his retirement in October 2003. He will remain a non-executive director of Martin Currie. We are delighted to have attracted someone with Keith's experience to lead the development of the business. Following my retirement I will continue to support the Group wherever possible. Outlook Sentiment and commercial activity in the Sector have picked up considerably over the past six months. For example, in July 2003, the Department of Trade and Industry announced plans to grant licences to private companies to build up to six Gigawatt (6 GW) of offshore wind power capacity, which is expected to be one of the largest construction programmes ever undertaken in this country. In the waste sector, consultation on how the private sector should implement the European Directives requiring recovery and recycling of end-of-life vehicles and of electrical and electronic equipment has gathered pace, while in the water sector, utilities have indicated that they foresee a major new investment programme in order to meet performance targets in the fourth asset management period. The Group is well positioned to secure new mandates from both private and public sector clients arising from these and similar developments. After a difficult period for service companies in the financial sector, the business model and strategy we set out for Impax is beginning to demonstrate signs of success. The opportunities for the Group are considerable and I am confident that Keith Falconer and his colleagues will be reporting further strong progress for many years. Stuart Bickerstaff Chairman 16 December 2003 IMPAX GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 30 September 2003 2003 2002 Note Â£ Â£ TURNOVER Continuing operations 1,182,924 827,582 Discontinued operations - 588,498 --------- -------- 2 1,182,924 1,416,080 --------- -------- OPERATING EXPENSES Continuing operations (2,142,833) (1,931,035) Discontinued operations - (567,976) Impairment in value of assets (2,631,434) (2,631,434) --------- -------- (3,769,302) (5,130,445) --------- -------- OPERATING LOSS Continuing operations (959,959) (1,103,453) Discontinued operations - 20,522 Impairment in value of assets 3 (1,626,419) (2,631,434) --------- -------- 2 (2,586,378) (3,714,365) Impairment in value of investments - (215,330) Interest receivable and similar income 20,382 11,427 Interest payable (60,975) (7,140) --------- -------- LOSS ON ORDINARY ACTIVITIES (2,626,971) (3,925,408) BEFORE TAXATION Tax on loss on ordinary activities 4 (32,741) - --------- -------- LOSS FOR THE YEAR (2,659,712) (3,925,408) ========= ======== LOSS PER SHARE 7 Basic (7.50)p (11.06)p ========= ======== Fully diluted (6.84)p (10.29)p ========= ======== Adjusted (2.13)p (2.24)p ========= ======== CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year ended 30 September 2003 2003 2002 Â£ Â£ Loss for financial year (2,659,712) (3,925,408) Currency translation differences (318,612) (420,830) --------- -------- Total recognised gains and losses for the year (2,978,324) (4,346,238) ========= ======== IMPAX GROUP PLC CONSOLIDATED BALANCE SHEET As at 30 September 2003 2003 2002 Â£ Â£ FIXED ASSETS Intangible fixed assets 2,194,305 2,476,909 Tangible fixed assets 2,409,141 5,085,736 Investments - - -------- --------- 4,603,446 7,562,645 -------- --------- CURRENT ASSETS Debtors 1,236,576 329,626 Cash at bank and in hand 1,219,747 380,311 -------- --------- 2,456,323 709,937 CREDITORS - amounts falling due (617,778) (1,152,267) within one year -------- --------- NET CURRENT ASSETS/(LIABILITIES) 1,838,545 (442,330) -------- --------- TOTAL ASSETS LESS CURRENT LIABILITIES 6,441,991 7,120,315 CREDITORS - amounts falling due after more than one year (2,300,000) - -------- --------- 4,141,991 7,120,315 ======== ========= CAPITAL AND RESERVES Called up share capital 8,871,441 8,871,441 Share premium 687,472 687,472 Merger reserve - 2,197,944 Exchange equalisation reserve (501,265) (182,653) Profit and loss account (4,915,657) (4,453,889) -------- --------- EQUITY SHAREHOLDERS' FUNDS 4,141,991 7,120,315 ======== ========= IMPAX GROUP PLC CONSOLIDATED CASHFLOW STATEMENT Year ended 30 September 2003 Note 2003 2002 Â£ Â£ NET CASH (OUTFLOW)/INFLOW FROM 8 (875,594) (820,027) OPERATING ACTIVITIES Returns on investments and servicing of finance 9 (34,482) 4,287 Tax paid - - Capital expenditure and financial investment 9 (4,525) (298,735) Acquisitions and Disposals 9 83,730 - Management of liquid resources 9 75,016 (144,128) Acquisition 9 - - --------- -------- NET CASH OUTFLOW BEFORE FINANCING (755,855) (1,258,603) Financing 9 1,726,743 573,257 --------- -------- INCREASE/(DECREASE) IN CASH 10 970,888 (685,346) ========= ======== RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET DEBT Increase/(Decrease) in cash in year 970,888 (685,346) (Decrease)/increase in cash on deposit in year (75,016) - Cash (inflow) from increase in net debt (1,726,743) (429,129) --------- -------- Changes in net debt resulting from cashflows (830,871) (1,114,475) Non cash transactions - 640,570 Translation differences (56,436) (79,175) --------- -------- Movement in net debt in the year (887,307) (553,080) --------- -------- Net debt at 1 October (192,946) 360,134 --------- -------- Net debt at 30 September (1,080,253) (192,946) ======== ========= 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 section 240 of the Companies Act 1985. The financial information has been extracted from the Company's accounts for the year ended 30 September 2003 on which the auditors, MRI Moores Rowland LLP, have given an unqualified opinion. The auditors in their report refer to the matters described in the paragraph below. 2 Turnover, operating loss and net assets Turnover relates solely to the principal activities of the Group. Turnover 2003 2002 Analysis by class of business Â£ Â£ and geographical market European Markets Corporate finance advisory and asset management services 1,177,224 827,582 US Markets Oil & gas activities - continuing 5,700 - Oil & gas activities - discontinued - 588,498 --------- --------- 1,182,924 1,416,080 ========= ========= Operating loss Net assets 2003 2002 2003 2002 Â£ Â£ Â£ Â£ Analysis by class of business and geographical market European Markets Asset management & corporate finance advisory (261,271) (527,531) 356,352 256,110 Holding company costs (245,556) (241,250) 830,572 1,617,429 Goodwill amortisation (282,604) (282,604) - - US Markets Oil & gas activities - continuing - (52,068) 2,492,123 4,412,728 Oil & gas activities - discontinued (170,528) 20,522 - 836,835 Impairment provisions (1,626,419) (2,631,434) 462,944 (2,787) -------- --------- -------- --------- (2,586,378) (3,714,365) 4,141,991 7,120,315 ======== ========= ======== ========= 3 Exceptional Items 2003 2002 Â£ Â£ Impairment in value of Nukern Oil Field 1,629,419 - ========== ========== Impairment in value of Starks Oil Field - 2,631,434 ========== ========== Impairment in value of unlisted investments - 215,330 ========== ========== As described in the Chairman's Statement, the Group has entered into an agreement to facilitate the disposal of the Nukern Oil Field. During the year, the Directors reviewed the value of this asset and adjusted its carrying value to US$4,000,000 (Â£2,400,528). This adjustment was based on the Directors' belief that any disposal arrangements are likely to include deferred terms based on long-term production. 4 Tax on loss on ordinary activities 2003 2002 Â£ Â£ UK corporation tax - - US corporation tax 32,741 - ---------- ---------- 32,741 - ========== ========== No liability to current year UK corporation tax arises on the results for the year. The Group has tax losses of Â£2,901,688 (2000: Â£2,382,612) available for offset against future taxable profits in the UK. The US tax liability relates to CSV Holdings Inc. a US subsidiary disposed of during the year. 5 Foreign currencies The results of subsidiary undertakings reporting in foreign currencies are translated at the average rate ruling in the accounting period (US$1.60: Â£1; 2002: US$1.46: Â£1) and the assets and liabilities at the rate ruling at the balance sheet date (US$1.67: Â£1; 2002: US$1. 56: Â£1). 6 Dividends No dividend is proposed. 7 Loss per share The calculation of loss per share is based on the loss for the year of Â£2,659,712 and on the weighted average number of ordinary shares in issue of 35,485,764 (2002: Loss of Â£3,925,408, shares in issue 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 38,869,864 (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 of Â£282,604 (2002: Â£282,604) and exceptional items of Â£1,626,419 (2002: Â£ 2,856,764) from the result for the year. 8 Reconciliation of operating loss to net cash outflow from operating activities 2003 2002 Â£ Â£ Operating loss (2,586,378) (3,714,365) Impairment provisions 1,570,545 2,631,434 Depreciation and depletion charges 6,161 154,153 Amortisation charge 282,604 290,104 (Increase) in debtors (267,072) (135,600) Increase/(decrease) in creditors 118,546 (45,753) ---------- ---------- Net cash outflow from operating activities (875,594) (820,027) ========== ========== 9 Analysis of changes in cashflows during the year 2003 2002 Â£ Â£ Returns on investments and servicing of finance Interest received 20,382 11,427 Interest paid (54,864) (7,140) ---------- ---------- 34,482 4,287 ========== ========== Capital expenditure and financial investment Payments to acquire tangible fixed assets (4,525) (298,735) ---------- ---------- (4,525) (298,735) ========== ========== Management of liquid resources Cash held on deposit to support oil activities (75,016) 144,128 ========== ========== Acquisitions and disposals Net proceeds from disposal of subsidiaries 22,159 - Repayments received 61,571 - ---------- ---------- 83,730 - ========== ========== Financing Repayment of working capital loan (1,228,520) - Increase in working capital loan 655,263 - Proceeds from Convertible Loan Stock 2,300,000 573,257 ---------- ---------- 1,726,743 573,257 ========== ========== 10 Analysis of changes in net funds 1 October 2002 Cash Flow Translation 30 September Difference 2003 Â£ Â£ Â£ Â£ Cash at bank and in hand 236,183 970,888 (48,060) 1,159,011 Cash on deposit 144,128 (75,016) (8,376) 60,736 Debt due within one year (573,257) 573,257 - - Debt due after one year - (2,300,000) - (2,300,000) -------- --------- --------- -------- (192,946) (830,871) (56,436) (192,946) ======== ========= ========= ======== Copies of the report and accounts of the Company for the year ended 30 September 2003 will be available on the Company's web site www.impax.co.uk and may be collected from the Registered Office. Copies will be sent to shareholders. 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 WPUPWGCA

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