Final Results

RNS Number : 1422Z

Impax Asset Management Group plc

10 January 2011

 



IMPAX ASSET MANAGEMENT GROUP PLC

FINAL AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2010

London, 10 January 2011 - Impax Asset Management Group plc, ("Impax" or the "Company"), the AIM listed investment manager focused on the environmental sector, today announces its final audited results for the year ended 30 September 2010.

·      Assets under management ("AUM") up 44% to £1,823 million (2009: £1,263 million)

·      Post year end, further increase in AUM to £2,251 million by 31 December 2010

·      Revenues up 48% to £15.3 million (2009: £10.4 million)

·      Profit before tax of £5.2 million (2009: £2.5 million), boosted by £1.0 million from the redemption of a loan note

·      Earnings per share (adjusted) up 33% to 3.50 pence (2009: 2.63 pence)

·      Long-only listed equity strategies managed by Impax have, on average, returned 69.3% over 5 years to 31 December 2010 (in Sterling), compared to 23.6% for the MSCI World Index

·      Proposed dividend of 0.60 pence per share (2009: 0.40 pence per share), with a record date of 11 February 2011 and payment on or around 11 March 2011

·      Shareholder's equity up 22%, from £13.9 million to £16.9 million

Keith Falconer, Chairman, commented:

"The backdrop to environmental investing has continued to strengthen over the past 12 months as governments around the world have declared ambitious policies to reduce pollution, improve energy security and stimulate the growth of domestic clean technology sectors.

"Evidence continues to build that the environmental sector is growing more rapidly than the overall economy, and Impax is ideally positioned to build its base of institutional clients who are interested in allocating capital to this area."

Ian Simm, Chief Executive, commented:

"Impax is one of the few investment managers with a successful, long-term track record of investing in the environmental sector.  With over £2 billion of assets under management, a scalable business model and a network of powerful distribution partners, we are well positioned for further growth." 

Analysts' briefing

There will be a conference call for analysts at 9.00am on Monday, 10 January. A copy of the presentation will be available on the Impax website at www.impax.co.uk.

Enquiries:

Impax Asset Management Group plc

Keith Falconer, Chairman

Ian Simm, Chief Executive                             020 7434 1122

Execution Noble & Co

John Riddell, Director                                    0203 429 1426

MHP Communications

Gay Collins                                                  0203 128 8582    [e-mail]

      07798 626 282

Lisa Haines                                                  0203 128 8571    [e-mail]

                                                                  07841 293 949

Chairman's Statement

Since my statement for the year ended December 2009, the world economy and financial markets have continued to recover and the investment management sector has emerged leaner and, I hope, in a more sober frame of mind.  Against this backdrop, I am pleased to report that Impax has sustained its strong track record and once again delivered healthy growth for shareholders.

Over Impax's financial year (the "Period") from 1 October 2009 to 30 September 2010, assets under discretionary and advisory management ("AUM") expanded from £1,263 million to £1,823 million, an increase of 44 per cent.  Since the end of the Period we have assumed responsibility for management of an additional £131 million of assets raised by our investment trust focused on the Asia-Pacific region and €134 million of further capital commitments to our second private equity fund.  On 31 December 2010, inclusive of these amounts, AUM was £2,251 million.

Over the past 12 months, the backdrop to environmental investing has continued to strengthen.  Weather analysts expect that 2010 will turn out to be one of the hottest years on record, while extreme weather events in Pakistan (floods), Russia (heat waves and drought), China (floods) and elsewhere reinforced fears that significant climate change is already upon us.  The trend of increasingly unpredictable weather has motivated voters and policy makers in the European Union, Australia and California to press ahead with policy to reduce greenhouse gas emissions and helped to create a sense of urgency at December's climate conference in Cancún, Mexico.  Similarly, during 2010 governments in several emerging market economies declared ambitious policies to reduce pollution, improve energy security and stimulate the growth of domestic clean technology sectors.

Results for the year end and proposed dividend 

Turnover for the year was £15,339,000 (2009: £10,391,000), a 48 per cent increase over the year. 

Profit before tax was £5,177,000 (2009: £2,473,000, including a charge in respect of the Group's long-term, share-based incentive scheme of £552,000).  The profit included £1,002,000 arising from full repayment at face value of a loan note issued to the Company in 2004 when Impax exited from a legacy oil business.

The effective tax rate for the Period was 27 per cent; for the financial year ending 30 September 2009 the tax rate was substantially lower (8 per cent) as a result of credits arising from the recognition of deferred tax assets.

The Board regards the most relevant measure of the year's earnings to be earnings per share ("EPS") as adjusted to exclude the charges for our long-term incentive scheme settled from the issuance of primary shares. On this basis, EPS were 3.50 pence (adjusted), a 33 per cent increase compared to last year (2.63 pence (adjusted)). The 2010 EPS result included 0.79 pence attributable to the uplift in value of the loan note; the 2009 EPS result included 0.65 pence attributable to one off tax benefits.

The Group's balance sheet also strengthened during the Period and cash generation has increased significantly.  At the end of the financial year, shareholders' equity had increased to £16,903,000 (2009: £13,850,000) and cash reserves available to shareholders were £8,339,000 (2009: £6,694,000).  The Group remained debt free during the Period.

In view of the Group's strong financial position, I am pleased to report that the Board recommends an increased dividend of 0.60 pence per share (2009: 0.40 pence per share).  The dividend proposal will be submitted for formal approval by shareholders at the forthcoming Annual General Meeting on 2 March 2011.  If approved, the dividend will be paid on or around 11 March 2011.  The Board does not currently intend to recommend the payment of interim dividends.

Prospects

Over recent years institutional investors have generally been disappointed by investment returns from mainstream products, which have fallen well behind levels required to deliver on stated objectives.  As a consequence, many are revisiting their asset allocation models and examining whether new strategies and asset classes can improve expected risk-adjusted returns.  In this context, it is encouraging that many are reviewing in detail the credentials of investment portfolios in the environmental sector, Impax's chosen area of focus. Evidence continues to build that this sector is growing more rapidly than the overall economy, and I anticipate that allocations to strategies such as those run by Impax will grow considerably.

Chief Executive's Report

After a year of considerable uncertainty in the global economy and financial markets, it is encouraging to report that equity markets appear to have stabilised and are positioned for expansion.   As described below, Impax has continued to make significant progress in developing its status as a leading investment manager in the environmental sector and has further demonstrated the attractions of its business model.

Sector developments

Just over a year ago, the international community was riveted by the prospects for an agreement in Copenhagen on limiting greenhouse gas emissions.  Risk appetite was starting to return to equity markets, and many investors were betting on a strong year ahead for the environmental sector.  However, the actual performance during 2010 of Impax's chosen sector was largely driven by a number of unconnected factors.  Between January and June, concerns about the health of European economies undermined valuations of all stocks with regional exposure, and environmental markets, with their relatively high dependence on public sector expenditure, were particularly badly affected.  In addition, the rapid adoption by power generators in the United States of low cost shale gas reduced power prices significantly, undermining the prospects for companies in the domestic renewable power generation and energy efficiency sectors.

Over the same timescale, Asian environmental markets continued to develop rapidly, particularly on the back of positive policy statements from governments in the region.  China reconfirmed its commitment to securing 15 per cent of its electric power from renewable energy sources by 2020, a target that is expected to require at least US$180 billion of capital expenditure.  Meanwhile, India announced a similar target of 10 per cent of power from renewables by 2015, and Japan introduced tariff support as part of its policy to source 10 per cent of primary energy from renewables by 2020.

Notwithstanding weakness earlier in the year, environmental sector stocks have again out-performed general equity markets:  during calendar year 2010 the FTSE Environmental Opportunities All Share Index grew 22 per cent, while the MSCI World Index expanded by 15 per cent (both priced in Sterling).  Stocks exposed to the Asia Pacific region, stocks of larger companies and stocks in the water sector were typically strong contributors, while small cap stocks and those in the renewable energy sector tended to under-perform.

Assets under management and fund flows

The Company's principal divisions, Listed Equity and Private Equity, have made substantial contributions to Impax's increase in AUM since 1 October 2009.

During the Period, Listed Equity funds that we manage or advise secured net inflows of £401 million, comprising £151 million into "Impax-Label" funds, which we typically manage for UK investors, and £250 million into Third Party Funds/Accounts. 

In the former category, our second investment trust, Impax Asian Environmental Markets plc ("IAEM"), launched in October 2009 with £104.5 million of assets. IAEM subsequently attracted £131 million of additional capital in a C Share completed on 22 October 2010, i.e. after the Period end. 

In the latter category, the development of our Institutional and Segregated Accounts business has been particularly encouraging.  In October 2009 we commenced management of a second account for Russell Investments, a further endorsement of our reputation among international investors.  In April 2010 we received the final tranche of funding for a €150 million mandate from a European institutional investor, and in August 2010 we began to manage a A$50 million account for Local Government Super, our first major client in Australia. In November i.e., after the end of the Period, we announced that Lønmodtagernes Dyrtidsfond Pension Fund of Denmark had appointed us to manage €75 million in a segregated account following our Environmental Leaders strategy; we expect this mandate to commence later this month. 

Our Third Party Funds business has also made progress.  In June, Skandia Investment Group appointed us manager of the £74 million Skandia Ethical Fund, which was refocused on our Environmental Leaders strategy, albeit with an additional ethical screen.  In view of Skandia's powerful distribution capabilities in the UK retail market, we decided to wind up the IFSL Impax Environmental Leaders Fund, which had attracted ca. £7 million of capital.  

Our Private Equity division has also had a very successful year.  In March we held a first closing of Impax New Energy Investors II LP ("Fund II") with €141m of capital from ten limited partners, the majority of whom had invested in Fund I.  Fund II has a similar objective to Fund I, i.e. to provide strong capital growth by investing in renewable energy power generation and related assets in Europe.  Subsequently, we have raised additional capital for Fund II, taking total commitments to €275 million and we expect to expand this fund further before its final closing, which is scheduled for March 2011.  As described further below, we made the first investment for Fund II in December.

Cash flow

Operating cash flow before movements in working capital increased over the Period to £4.3 million (2009: £2.7 million), which was equivalent to £354,000 per month on average (2009: £225,000).  Given the recent increase in AUM, monthly operating cash flow has improved further.

As reported in the Interim results for the six month period ended 31 March 2010, the Group disbursed additional funds to Impax New Energy Investors LP, and to date has paid in €2,750,000 out of its total commitment of €3,756,000. 

The closure of the IFSL Impax Environmental Leaders Fund released £1.4 million of seed capital to the Group.

Final redemption proceeds of $3,695,000 were received after the period end in respect of a secured loan note from All American Oil and Gas Incorporated ("AAOG").  The note, which was payable in full on or before 31 July 2011, was issued to Impax by AAOG in July 2004 as part of AAOG's purchase of Impax's legacy oil operations.  The proceeds represent £1,241,000 more than the previous book value of the note on Impax's balance sheet; in accordance with IFRS, £1,002,000 has been included in the profit before tax for the year ended 30 September 2010.

Investment performance

Listed equity

We continue to see strong investment performance as a top priority, and I am pleased to report that, as described below our track record of long-term out-performance has continued.  During the Period, we completed our adoption of Global Investment Performance Standards ("GIPS"), which enhances considerably our ability to report investment performance with a methodology that is accepted worldwide by institutional investors.

Over the past few years we have widened our range of listed equity strategies to capitalise on new investment opportunities and respond to demand from clients.  We now have four distinct long-only investment strategies: Environmental Specialists, which focuses on companies that have a majority of their business in the environmental sector; Environmental Leaders, which comprises specialists plus more diversified companies; Asia-Pacific, with stocks based in the region; and Water. 

As shown in Table 1, we remain very encouraged by the investment performance of the portfolios that we manage.  Over five years, our Environmental Specialists strategy has delivered an annualised performance, measured in Sterling, of 10.6 per cent, significantly ahead of the MSCI World Index, which has returned 4.3 per cent (annualised).

Table 1:  Performance of Environmental Specialists, Environmental Leaders, Asia-Pacific and Water strategies versus peers (Sterling)

	2006	2007	2008	2009	2010	5 yr annualised		5 yr     volatility
Environmental Specialists strategy	22.2%	17.4%	-20.3%	29.1%	12.0%	10.6%		22.0%
Environmental Leaders strategy			-9.0%†	21.9%	15.1%
Water strategy				24.9%	20.3%
MSCI World	5.3%	7.2%	17.9%	15.7%	15.3%	4.3%		16.8%
MSCI Small Cap	2.8%	-0.9%	19.5%	28.3%	30.1%	6.5%		20.3%
Asia-Pacific strategy				10.9%††	26.4%
MSCI AC Asia-Pacific ex Japan				8.7%††	21.8%
Morningstar equity ecology sector average	23.2%	12.3%	30.0%	21.1%	5.9%	5.8%		19.9%
Morningstar alternative energy sector average	14.7%	56.9%	40.7%	26.9%	-8.2%	3.3%		28.2%
†Represents partial year since March 2008 to 31 December 2008
††Represents partial year since November 2009 to 31 December 2009

In order to prepare for future growth, we have also been working hard to generate out-performance in more recently established long-only strategies.  As discussed in previous statements, our Environmental Leaders strategy is designed to capture the upside from our full investment universe of stocks; the resulting portfolio typically has a lower volatility and tracking error against global equity indices than the Environmental Specialists strategy, and is therefore suitable for an investor seeking broad exposure to environmental markets. The Environmental Leaders strategy has an annualised performance of 18.4 per cent over 2 years which is ahead of the MSCI World Index, up 15.5 per cent over the same period, with a very similar measure of risk (as measured by volatility). The strategy will have a three year track record in March 2011, after which we expect it to be of interest to a wider group of investors.

Private equity

During the Period, we completed the investment programme for Impax New Energy Investors LP ("Fund I"), our first private equity fund, which has €125 million of commitments, by allocating capital to a multi-project solar investment programme in Italy.  During August, Fund I acquired an Italian project company with the right to build 9MW in the Lazio region, while in November, the Fund invested in a company developing 10.9MW in Puglia.  These commitments have provided the portfolio with further diversification. 

In parallel, during calendar 2010 Fund I's portfolio of Spanish solar projects again beat its budget and produced an attractive cash yield.  At the time of writing, we are analysing the implications for Fund I of a new Royal Decree passed unexpectedly in Spain on 23 December 2010, which, if formally ratified by the Spanish parliament later in January 2011, will cap the subsidies to solar power generators.  Meanwhile, we expect to complete Final Acceptance Testing for these assets during the first half of 2011.

In December we completed the first investment for Fund II through the purchase from the German company Conergy AG of 23MW of operating wind farms as well as a business with a development pipeline of 93MW in Germany and 285MW in France, some of which we expect to be ready target for construction in 2011.  We expect to use the business as a platform for growth in these markets.

Distribution

During the Period, our external distribution network has developed significantly in line with our policy of focusing internal resources on our core skill of investment management.  The merger of BNP Paribas Investment Partners ("BNPP IP") with Fortis Investment Management, which was completed in April 2010, has extended the sales team that is able to promote Impax's products. For example, the expanded BNPP IP now has much stronger coverage in the Scandinavian and Benelux regions, both of which have historically shown a willingness to commit capital to environmental markets.  BNPP IP is now able to represent Impax in most parts of continental Europe and the Asia-Pacific region.  At the end of the Period, funds raised by or managed for BNPP IP represented 21 per cent of our total AUM.

In the United States, we have continued to support Titanium Asset Management, who have been acting as our non-exclusive distributor since January 2010.  In recognition of the structure of the US investment management sector, we have been focusing on educating leading investment consultants in the characteristics of and potential for the environmental sector, logging our credentials and track record on key databases and engaging with receptive asset owners.  We expect this systematic approach to produce results during 2011.  Meanwhile, the fund that we sub-advise for Pax World, which currently has ca. US$31 million of assets, has sustained its strong investment performance. Once this fund reaches its third anniversary in March 2011, we expect it to pick up positive independent ratings and to attract additional capital.

In the United Kingdom we have continued our long and successful partnership with Collins Stewart's closed ended companies team. Collins Stewart helped us to launch IAEM in October 2009, and then, as described above, to expand the same trust in October 2010.  Separately, since May 2010 we have been directly promoting an open ended version of IAEM to UK investors (through our funds platform in Ireland).

In parallel, we are continuing to engage with representatives of the major investment consultants around the world.  After many years of dialogue, we believe we are well regarded by many of these "gatekeepers", and several of them actively recommend one or more of our investment strategies to their clients.  In particular, we have secured all of our Segregated Account clients after positive endorsement by consultants.

Infrastructure and support

Behind any successful investment management team is an experienced and well resourced support team.  As our business has expanded, we have continued to invest in this key area. During the Period, we hired additional staff into our compliance, operations, marketing, and finance teams, taking the headcount in this area from 17 to 20.

In consultation with some of our larger clients, we decided during summer 2010 to seek external validation of the internal controls for our listed equities investment activity using the widely recognised SAS-70 format.  KPMG are currently finalising their reports, and we expect to be able to share the results with investors and prospective investors in the near future.

At the end of the Period, our total headcount was 40 permanent and four temporary staff, up from 34 permanent and four temporary staff at the start of the Period.

Hong Kong subsidiary

In recognition of the rapidly growing demand for our investment expertise in the Asia-Pacific region, during summer 2010, we decided, in consultation with our local partner Ajia Partners Asset Management ("APAM"), to incorporate a subsidiary in Hong Kong.  Impax Asset Management (Hong Kong) Limited ("Impax Hong Kong"), which was incorporated in October and is 100 per cent owned by Impax Asset Management Group plc, is currently applying to the Hong Kong Securities and Futures Commission for a licence as an asset manager.  Subject to regulatory approval, we expect that, for the foreseeable future, Impax Hong Kong will employ a small number of investment analysts and will share an office with APAM, who will continue to provide regional expertise and oversight.

Outlook

After a volatile year for equity markets, expectations for 2011 are positive, although there is significant downside risk, particularly over financial stress in the euro area, stagflation in developed countries and over-heating in China.  Against this backdrop, although a handful of sub-sectors, particularly renewable energy, are struggling to recover, environmental markets, in general, are well positioned for sustained growth. 

I am delighted to be able to report on such a strong year for Impax. With over a decade of experience and a robust investment process, we are confident of being able to generate compelling returns for clients, and with our scalable structure and network of distribution partners we are in an excellent position to create significant further value for shareholders.

	IMPAX ASSET MANAGEMENT GROUP plc
	CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
	FOR THE YEAR ENDED 30 SEPTEMBER 2010
							2010			2009
							£'000			£'000
			Note							(restated*)
	Revenue		2				15,339			10,391
	Operating costs:
	Long term incentive scheme charges		9				(141)			(552)
	Other operating costs		3				(11,371)			(7,842)
	Fair value gains on investments						3			326
	Change in third party interest in consolidated funds						152			(112)
	Profit from operations						3,982			2,211
	Investment income		4				1,195			262
	Profit before taxation						5,177			2,473
	Taxation		5				(1,378)			(192)
	Profit for the year						3,799			2,281
	Other comprehensive income
	Exchange differences on translation of foreign operations						1			(3)
	Total other comprehensive income						1			(3)
	Total comprehensive income for the period attributable to equity holders of the parent						3,800			2,278
	Basic earnings per share		6				3.50p			2.12p
	Diluted earnings per share (restated)						3.49p			2.08p
	* See Note 1
	The Statement has been prepared on the basis that all operations are continuing operations.
IMPAX ASSET MANAGEMENT GROUP plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2010
								2010				2009
						£'000		£'000			£'000	£'000
												(restated*)
ASSETS
Non-Current Assets
Goodwill						1,629					1,629
Intangible assets						76					143
Property, plant and equipment						297					422
Other financial assets						-					792
Investments						16					14
Trade and other receivables						-					65
Deferred tax asset						-					364
								2,018				3,429
Current Assets
Trade and other receivables						3,919					2,716
Other financial assets						2,242					452
Investments						7,007					3,927
Current tax asset						217					22
Cash and cash equivalents						11,729					10,284
								25,114				17,401
TOTAL ASSETS								27,132				20,830
EQUITY AND LIABILITIES
Equity
Ordinary shares						1,156					1,156
Share premium						78					78
Exchange translation reserve						(156)					(157)
Own shares						(59)					(59)
Treasury shares						(453)					-
Retained earnings						16,337					12,832
TOTAL EQUITY								16,903				13,850
Current Liabilities
Trade and other payables						7,128					4,610
Third party interest in consolidated funds						1,506					1,686
Short-term borrowings						648					684
Current tax liability						142					-
Deferred tax liability						805					-
								10,229				6,980
TOTAL EQUITY AND LIABILITIES								27,132				20,830
Authorised for issue and approved by the Board on 7 January 2011.
Ian R Simm, Chief Executive

	IMPAX ASSET MANAGEMENT GROUP plc
	CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
	FOR THE YEAR ENDED 30 SEPTEMBER 2010
				Share capital		Share premium			Exchange translation reserve				Own shares		Treasury shares			Retained earnings				Minority Interest			Total
				£'000		£'000			£'000				£'000		£'000			£'000				£'000			£'000
	Balance at 1 October 2008 as previously reported			1,156		78			(154)				(78)		-			10,395				1,165			12,562
	Prior year adjustment			-		-			-				-		-			-				(1,165)			(1,165)
	As at 1 October 2008 as restated			1,156		78			(154)				(78)		-			10,395				-			11,397
	Dividends paid			-		-			-				-		-			(377)				-			(377)
	Long term incentive scheme charge			-		-			-				-		-			552				-			552
	Exchange differences on consolidation			-		-			(3)				-		-			-				-			(3)
	Profit for the year			-		-			-				-		-			2,281				-			2,281
	Shares vested to employees from Employee Benefit Trust			-		-			-				19		-			(19)				-			-
	As at 30 September 2009			1,156		78			(157)				(59)		-			12,832				-			13,850
	Dividends paid			-		-			-				-		-			(435)				-			(435)
	Share buyback			-		-			-				-		(453)			-				-			(453)
	Long term incentive scheme charge			-		-			-				-		-			141				-			141
	Exchange differences on consolidation			-		-			1				-		-			-				-			1
	Profit for the year			-		-			-				-		-			3,799				-			3,799
	As at 30 September 2010			1,156		78			(156)				(59)		(453)			16,337				-			16,903
	Own shares relate to the holding of 5,888,273 (2009: 5,886,308) unallocated and unvested ordinary shares in the Company by the EBT, representing 5.1% (2009: 5.1%) of the ordinary shares in issue at 30 September 2010.
	During the period the Company purchased 1,240,000 of its own shares and transferred them to Treasury.
IMPAX ASSET MANAGEMENT GROUP plc
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2010
													2010				2009
													£'000				£'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit from operations													3,982				2,211
Adjustments for:
Depreciation of property, plant & equipment													206				185
Amortisation of intangible assets													75				51
Fair value movements in investments													(3)				(326)
Long term incentive scheme charge													141				552
Change in third party interest in consolidated fund													(152)				112
Translation differences													-				(87)
OPERATING CASH FLOWS BEFORE													4,249				2,698
MOVEMENT IN WORKING CAPITAL
Increase in receivables													(1,115)				(726)
Increase/(decrease) in payable													2,559				(848)
CASH GENERATED FROM OPERATIONS													5,693				1,124
Corporation tax paid													(261)				(835)
NET CASH GENERATED FROM													5,432				289
OPERATING ACTIVITIES
Investing activities:
Interest received													56				149
Cash acquired on consolidation of investment													-				2,906
Proceeds on sale of investments													1,195				-
Proceeds on sale of investments - Hedge Fund													16,935				-
Purchase of investments													(2,134)				(289)
Purchase of investments - Hedge Fund													(19,042)				-
Purchase of intangible assets													(8)				(121)
Purchase of property, plant & equipment													(82)				(70)
NET CASH USED BY INVESTMENT ACTIVITIES													(3,080)				2,575
Financing activities:
Dividends paid													(435)				(377)
Share buy back													(453)				-
Preference share buy back - Hedge Fund													(1,885)				-
Preference shares issued - Hedge Fund													1,854				-
NET CASH (USED BY)/GENERATED FROM FINANCING													(919)				(377)
ACTIVITIES
NET INCREASE IN CASH AND													1,433				2,487
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS													9,600				7,029
AT BEGINNING OF YEAR
Effect of foreign exchange rate changes													48				84
CASH AND CASH EQUIVALENTS													11,081				9,600
AT END OF YEAR

	NOTES TO THE FINANCIAL STATEMENTS
1	ACCOUNTING POLICIES
	Basis of accounting
	The financial statements have been prepared in accordance with International Financial Reporting Standards adopted for use by the European Union.
	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 so as to obtain benefits from its activities.
	Prior year adjustment
	The Group has made the following adjustment for the year ended 30 September 2009.
	Earnings per share
	The weighted average number of shares used in the calculation of diluted earnings per share has been adjusted to exclude shares held in the EBT.  These shares should not be included as the price condition for their award had not been met at 30 September 2009.  The impact of this adjustment is to increase diluted earnings per share as shown in the table below.
	The weighted average number of shares used in the calculation of diluted earnings per share as previously reported (000s)							115,582
	Adjustment (000s)							(5,886)
	The weighted average number of shares used in the calculation of diluted earnings per share as restated (000s)							109,696
	Diluted earnings per share as previously reported							1.97p
	Adjustment							0.11p
	Diluted earnings per share as restated							2.08p
	Minority interest
	Amounts previously classified in the Statement of Comprehensive Income and the Statement of Financial Position as 'Minority Interest' have been classified as 'Third party interest in consolidated funds' as they represent investments by third parties in puttable instruments as defined by IAS 32 - Financial instruments: Presentation.  The effect of this adjustment on the 30 September 2009 comparative figures is as follows:
	Effect on the Statement                                        Effect on the Statement Of comprehensive income                                              Of Financial Position
	Minority interest					-		1,686
	Third party interest in consolidated funds					-		(1,686)
	Minority interest					112		-
	Change in third party interest in consolidated funds					(112)		-

2	ANALYSIS OF REVENUE
	An analysis of revenue by type of service is shown below.
																							2010							2009
																							£'000							£'000
	Investment management (including private equity)																						15,078							10,017
	Transaction fees																						-							66
	Advisory fees																						261							308
																							15,339							10,391
	An analysis of revenue by the location of customers is as shown below.
																							2010							2009
																							£'000							£'000
	UK																						9,594							6,018
	Rest of the world																						5,745							4,373
																							15,339							10,391
	Rest of the world customer location is further analysed as shown below.																						2010							2009
																							£'000							£'000
	Ireland																						2,136							1,692
	France																						1,920							928
	Luxembourg																						420							637
	Netherlands																						743							572
	Other																						526							544
																							5,745							4,373
	Revenue from two of the Group's customers individually represented more than 10% of Group revenue (2009: two), equating to £3,636,000 and £2,127,000 (2009: £2,548,000 and £1,692,000).
3	OTHER OPERATING COSTS																												2010		2009
																													£'000		£'000
	Employment costs																												7,170		5,138
	Other staff costs including contractors and Non-Executive Director's fees																												792		524
	Depreciation of property, fixtures and equipment																												206		185
	Amortisation of intangible assets																												76		51
	Auditors' remuneration - subsidiary undertakings audit fees																												60		40
	Auditors' remuneration - parent company audit fees																												45		30
	Auditors' remuneration - tax compliance																												51		32
	Auditors' remuneration - other																												-		34
	Other costs																												2,971		1,808
																													11,371		7,842
4	INVESTMENT INCOME																												2010		2009
																													£'000		£'000
	Bank interest																												9		149
	Other investment income																												1,186		113
																													1,195		262
	2010 Other investment income includes the reversal of impairment charges previously recorded on the Group's other financial assets.  The other financial assets are a loan to All American Oil and Gas which was issued in 2004 as part of the consideration for the disposal of the Company's US subsidiary, Kern River Holdings Inc, which held and operated the Nukern Field.  The loan was originally recorded at its discounted value.  At 30 September 2009 an impairment provision was held against the loan due to concerns over its recoverability.  The remaining balance was repaid in full on 17 December 2010.  Accordingly at 30 September 2010 the impairment provision was reversed.
5	TAXATION																												2010		2009
																													£'000		£'000
	(a) Analysis of charge for the year
	Current tax expense:
	UK corporation tax																												56		423
	Adjustment in respect of previous years																												1		133
																													57		556
	Foreign taxes																												152		-
	Total current tax																												209		556
	Deferred tax expense:
	Charge/(credit) for the year																												1,169		(364)
	Total deferred tax																												1,169		(364)
	Total income tax expense																												1,378		192
	(b) Factors affecting the tax charge for the year
	The tax assessment for the period is lower than the standard rate of corporation tax in the UK of 28%, (2009 lower). The differences are explained below:
																										2010			2009
																										£'000			£'000
	Profit before tax																									5,177			2,473
	Effective tax charge at 28%																									1,450			692
	Effects of:
	Non-deductible expenses and charges																									51			148
	Tax effect of previously unrecognised tax losses																									(177)			(623)
	Tax effect of other previously unrecognised deferred tax assets																									-			(158)
	Adjustment in respect of previous years																									1			133
	Effect of higher tax rates in foreign jurisdictions																									46			-
	Other																									7			-
	Total income tax expense																									1,378			192
	(c) Deferred tax
	The deferred tax asset/(liability) included in the Consolidated Statement of Financial Position is as follows:
				ACAs  Other temporary differences							Excess management charges								Income not yet taxable							Share based payment scheme			Total
				£000				£'000					£'000								£'000							£'000		£'000
	As at 1 October 2008			-				-					-								-							-		-
	Charge to the Income Statement			30				64					270								-							-		364
	As at 30 September 2009			30				64					270								-							-		364
	Charge/(credit) to the Income statement			24				-					74								1,110							(39)		1,169
	As at 30 September 2010			6				64					196								(1,110)							39		(805)
	The Group has tax losses of £700,000 (2009: £960,000) available for offset against future taxable profits in the UK which have been fully recognised because forecasts indicate these will be fully recoverable within two years. The Group also has unrecognised capital losses of £1,662,000.
6	EARNINGS PER SHARE
	Earnings per share (EPS) on a basic and diluted basis are as follows:
								Profit for the year										Ordinary shares in issue (weighted average)											Earnings per share
								£'000										'000
	2010
	Basic							3,799										108,632											3.50p
	Diluted							3,799										108,828											3.49p
	2009
	Basic							2,281										107,799											2.12p
	Diluted (Restated*)							2,281										109,696											2.08p
	The weighted average number of ordinary shares for diluted earnings per share reconciles to the weighted average number of ordinary shares for basic earnings per share as follows:
																		2010											2009
																		'000											'000
	Weighted average number of ordinary shares used in the calculation of basic earnings per share
																		108,632											107,799
	Dilutive effect of EBT and other share schemes (Restated*)																	196											1,897
	Weighted average number of ordinary shares used in the calculation of diluted earnings per share (Restated*)
																		108,828											109,696
	* See Note 1
	In order to show results from operating activities on a comparable basis, an adjusted profit after tax per share has been calculated which excludes the long term incentive scheme charge where the relevant shares are satisfied by issues of new shares:
																		2010											2009
																		£'000											£'000
	Profit for the year
																		3,799											2,281
	Long-term incentive scheme charge																	-											552
																		3,799											2,833
								Adjusted profit for the year										Ordinary shares in issue (weighted average)											Earnings per share
								£'000										'000
	2010
	Basic adjusted							3,799										108,632											3.50p
	Diluted adjusted							3,799										108,828											3.49p
	2009
	Basic adjusted							2,833										107,799											2.63p
	Diluted adjusted (Restated)							2,833										109,696											2.58p
7	DIVIDEND
	The Directors propose a dividend of 0.60p per share for the year ended 30 September 2010 (2009: 0.40p per share).  The dividend will be submitted for formal approval at the Annual General Meeting to be held on 2 March 2011.  These financial statements do not reflect this dividend payable, which will be accounted for in shareholders' equity as an appropriation of retained earnings in the year ended 30 September 2011.
	The dividend for the year ended 30 September 2009 was paid on 11 February 2010, being 0.40p per share. The trustees of the Employee Benefit Trust waived their rights to part of this dividend, leading to a total dividend payment of £435,000. This payment is reflected in the Statement of Changes in Equity.

8	CURRENT ASSET INVESTMENTS
	GROUP
							Unlisted investments			Listed investments			Total
							£'000			£'000			£'000
	At 1 October 2008						11			4,161			4,172
	Additions						289			-			289
	Disposal of IEL as a subsidiary						-			(1,166)			(1,166)
	Transfer of investment in IARF to subsidiary undertaking on consolidation						-			(1,817)			(1,817)
	Acquisition of listed investments on consolidation of IARF						-			2,123			2,123
	Fair value movements						-			326			326
	At 30 September 2009						300			3,627			3,927
	Additions						2,132			19,042			21,174
	Repayments/disposals						(61)			(18,069)			(18,130)
	Fair value movements						148			(183)			(35)
	Foreign exchange						(38)			109			71
	At 30 September 2010						2,481			4,526			7,007
	Listed investments Listed investments held at 30 September 2010 and 2009 include those held by the consolidated subsidiary Impax Absolute Return Fund (IARF) and the Groups investment in the IFSL Impax Environmental Leaders Fund (IEL).  At 1 October 2008 listed investments included the Groups investment in IARF and investments held by the consolidated subsidiary IEL.  These listed investments are recorded at market value using quoted market prices that are available at the Statement of Financial Position date. The quoted market price is the current bid price.
	Impax Absolute Return Fund ("IARF")
	On 21 May 2007, the Company made an investment of €2,200,000 (£1,507,000) in the IARF. The investment took the form of a subscription of 22,000 Euro Class A shares in the IARF, at €100 per share.  During the current financial year the shares were redenominated as sterling shares.  The IARF, which is managed by a subsidiary undertaking of the Company had a total net asset value ("NAV") of £3,271,000 at 30 September 2010. The Group's investment in the IARF represents 53.95% of the NAV at 30 September 2010 (2009: 52.98%). At 30 September 2010 and 30 September 2009 this investment has been reported as a subsidiary and the underlying investments consolidated.  The investment has been consolidated from April 2009 when the Group's ownership rose above 50%.
	The consolidation of IARF at April 2009, the date ownership exceeded 50 per cent, has been accounted for as follows
												Fair value
												£'000
	Listed investments											2,123
	Bank balances											2,906
	Trade and other payables											(1,526)
	Third party interest in IARF											(1,686)
												1,817
	As the deemed purchase price at acquisition was the asset value, no goodwill arose.
	Impax Environmental Leaders ("IEL")
	On 3 March 2008, the Group made an investment of £1,500,000 in the IFSL Impax Environmental Leaders Fund ("IEL"). The 53.8% investment in IEL at 1 October 2008 was recorded as a consolidated subsidiary at 30 September 2008. During October 2008 the holding reduced below 50% to 28.11% and has remained below 50% and therefore has not been consolidated at 30 September 2009 and 30 September 2010. Instead the Group has applied exemptions from IAS 28 "Associates" available to Venture Capital and Hedge fund businesses not to equity account for this investment as an associate.
	The disposal of IEL at the date ownership reduced below 50% has been accounted for as follows:
												Fair value
												£'000
	Listed investments											(1,166)
	Third party interest in consolidated funds											1,166
												-
	During the period the Group redeemed £1,134,000 of its investment in IEL following receipt of a notice of closure of the fund.
	Unlisted investments
	Unlisted investments principally represent the Group's investment in Impax New Energy Investors LP and Impax New Energy Investors II LP.
	The Group has a €3,760,000 commitment to Impax New Energy Investors LP, a partnership based in England and Wales (INEI). The addition in unlisted investments in the year includes £2,110,000 representing loan calls of €2,406,000 (64% of the Group commitment) on this investment.  The disposal represent the first distribution from INEI which is classified as a part repayment of the outstanding loans.  This investment is recorded at fair value which is calculated as the Group's share of the net assets of INEI.  The principal assets of INEI, being investments made, are valued using a discounted cash flow approach.
	The Group has a further commitment of €2,000,000 to Impax New Energy Investors II LP ('INEI II'), a partnership based in England and Wales which was established on 22 March 2010. The Group's commitment of €2,000,000 represents 1.42% of the total commitment of all the partners in Impax New Energy Investors II LP.  The additions in unlisted investments in the year include £22,000 representing loan calls of €30,000 (1.4% of the Group commitment).  This investment is recorded at fair value which is considered to be cost.
9	SHARE BASED PAYMENTS
	LONG TERM INCENTIVE SCHEME - EMPLOYEE BENEFIT TRUST
	Original scheme
	On 4 February 2005 shareholders approved the establishment by the Company of the Impax Group Employee Benefit Trust (the "EBT") and associated share scheme as part of the Company's employee incentive arrangements. The scheme provided for the issue of up to 18.25 million shares to employees in respect of the three years ended 30 September 2007 for nil consideration.   The shares vested to employees on 30 September 2007, 2008 and 2009.  A total of 16,777,045 vested to employees under the scheme including 1,895,000 on 30 September 2009 (2010: Nil).
	Extension
	On 31 January 2008 shareholders approved an extension to the existing EBT scheme whereby a further 18.25 million shares can be issued to employees.   The granting of shares to employees is subject to performance conditions for each of the three years ended 30 September 2008, 2009 and 2010. The condition for the year ended 30 September 2010 is that the average mid-market price of the ordinary shares of the Company increases to at least 152.09 per cent of the reference price (38.5p) for the 45 business days following the announcement of the results for the financial year ended 30 September 2010 and that Total Shareholder Return over the financial year ending 30 September 2010 exceeds that of the FTSE All Share Index over the same period.  In addition awards will only be made where an employee has satisfied demanding targets in relation to his or her own performance.
	No shares have been granted to employees to date.  Any shares that might be granted to employees would vest subject to continued employment at 30 September 2012. Accordingly there is no charge to the income statement for the year ended 30 September 2010.
	Income statement charge
								2010			2009
								£'000			£'000
	Original scheme							-			552
								-			552
	For the original scheme the charge is in respect of shares that vested on 30 September 2009 that were granted on 30 September 2008.  The fair value of services received in return for the shares awarded is deemed to be the market value of the shares awarded at the date of grant.
	LONG TERM INCENTIVE SCHEME - 2009 SHARE OPTION PLAN
	In December 2009 1,240,000 zero strike price options over the Company's shares were granted to certain employees.  The awards do not have performance conditions but do have a time vesting condition such that the options vest on 30 September 2012 subject to the continued employment of the participant.  The fair value of services received in return for the share options awarded was deemed to be 40.25p being the Company's share price on the grant date.  The charge to the Income Statement in respect of the awards for the current year is £141,000.  This charge is offset by an equal reduction in the total bonus pool paid to employees.
	Income statement charge
								2010			2009
								£'000			£'000
	Charge							141			-
								141			-
10	CASH AND CASH EQUIVALENTS
	For the purposes of the cash flow statement, cash and cash equivalents includes the following:
								2010			2009
								£'000			£'000
	Cash at bank and in hand
		Readily available for the principal operating activities of the Group						8,339			6,694
		Not available for the Group						3,390			3,590
								11,729			10,284
	Short-term borrowings
		Readily available for the principal operating activities of the Group						-			-
		Not available for the Group						(648)			(684)
								(648)			(684)
	Cash and cash equivalents							11,081			9,600

-Ends-

 

END

 

 

FR UBVARAAAARUR