Final Results

Impax Group PLC 11 December 2006 IMPAX GROUP PLC PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006 Impax Group plc, the AIM quoted investment company which focuses exclusively on the environmental markets sector, today announces its preliminary results for the year ended 30 September 2006. Highlights â€¢ The Group has returned to profitability and funds managed within the asset management division have performed strongly. â€¢ Significant increase in funds under management which, following the recent expansion of Impax Environmental Markets plc, had grown to Â£434m at 30 September 2006 (2005: Â£170m; 2004: Â£69m) and which have further risen to Â£475m as at 30 November 2006. â€¢ Rising energy costs, unusual weather patterns and concerns over climate change have reinforced the strong prospects for the environmental sector. Commenting on the results, Keith Falconer, Chairman said: 'Impax has enjoyed an extraordinary year with funds under management having tripled in the past fifteen months. However, following a period of rapid growth, it is important that we consolidate our position and deliver returns for investors who have recently committed capital to our products. As a consequence, the rate of expansion of our assets under management ('AUM') is likely to slow for a period.' For further information please contact Keith Falconer, Chairman 07747 066637 Impax Group plc Ian Simm, Chief Executive 020 7432 2619 Impax Group plc CHAIRMAN'S STATEMENT Impax has had an excellent year and I am delighted to report that the Group has returned to profitability. This has been the result of a significant increase in assets under management ('AUM') which had grown to Â£434m at 30 September 2006 (2005: Â£170m; 2004: Â£69m) and which have further risen to Â£475m as at 30 November 2006. I provide further analysis of this increase below. The fundamental drivers of the sectors in which we specialise, namely alternative energy, water treatment and waste management, continue to strengthen and there is mounting evidence that institutional investors in many countries are making or preparing to make major allocations of funds to this area of the market. Meanwhile, demand for capital in the sectors is building rapidly and we are seeing significant deal flow, particularly from companies that we have known for many years. As I have reported previously, our business model is to establish scaleable funds to exploit the range of investment opportunities and to use third parties to distribute our products. We have seen considerable success in implementing this model. RESULTS FOR THE YEAR Turnover for the year was Â£3,840,030 (2005: Â£1,725,060), a 123% increase in the year. Profit before tax was Â£213,076 (2005: loss of Â£593,214). This was achieved despite two significant non-cash charges of Â£282,604 for amortisation of goodwill (2005: Â£282,604) and Â£316,200 for shares awarded in the Group's long term incentive scheme (2005: Â£154,488). ASSET MANAGEMENT The strong growth in AUM has led this division to dominate the business, with divisional turnover reaching Â£3,512,192 (2005: Â£1,170,882). As a consequence I would like to expand my normal comments on this division in order to provide shareholders with a better understanding of the products we offer. Quoted Equities Funds investing entirely or predominantly in quoted equities amounted to Â£331m at the end of the year. These funds are focused on the alternative energy, water and waste sectors, and invest in companies that are enjoying premium rates of growth over the market as a whole. In our view, the fundamentals which drive this growth are likely to continue for a considerable period. Our investment managers have demonstrated the skills required to identify such companies and we have invested in expanding this team and its reach, and will continue to do so. Impax Environmental Markets plc ('IEM') IEM is an investment trust quoted on the London Stock Exchange which largely invests in listed companies in our sectors. It is our largest fund with Â£199m of total (net) assets as at 30 September 2006 (Â£47m as at 30 September 2005). Following a sustained period when its shares traded at a premium to net asset value, the trust has completed several placings of new shares, particularly two C Share issues in November 2005 and August 2006 respectively. Such a rapid expansion is unusual in the investment trust sector and we do not expect the trust's assets to continue to expand at this rate. Impax Environmental Markets (Ireland) ('IEMI') This is an open-ended version of IEM and aims to have an identical portfolio. This fund's total (net) assets grew from Â£26m to Â£56m over the year. White Label Funds As I have previously reported, we are also managing the ASN Milieu Waterfonds in the Netherlands and are advising the Danish Alm. Brand Invest MiljoTeknologi fund, both of which are open-ended. The Dutch fund in particular has expanded considerably during this period, and had Â£56m of total (net) assets on 30 September 2006. In addition, we have recently commenced sub-management of Parworld Environmental Opportunities, part of a Luxembourg based fund promoted by BNP Paribas Asset Management ('BNP PAM'). This fund, which also aims to mirror IEM, is registered for distribution in a number of countries within continental Europe. On 30 September 2006, net assets were only â‚¬6.3m, but BNP PAM is now actively promoting the fund. Private Equity Funds investing exclusively in private equity amounted to Â£103m at the end of the year. A year ago I commented on the successful launch of the Impax New Energy Fund (' INEF') which aims to take advantage of the considerable investment opportunities in the European renewable energy sector. This fund, which was launched in August 2005 with â‚¬60m of assets, announced a second closing in May 2006 and a final closing at the target amount of â‚¬125m in August 2006. In addition to fund raising, the team has built a large pipeline of potential investee companies and recently reported its first deal, a â‚¬20m structured participation in the capital of Airtricity UK, a successful and rapidly expanding developer and owner of wind projects. I am pleased to report that, during 2006, Impax has also started to commit development capital to established private companies that expect to provide an exit for investors within two years. This capital is sourced from IEM and IEMI, which are permitted to invest up to 10 per cent of net assets in such opportunities. These funds are currently invested in four companies of this type, and our investment managers report a strong deal flow. CORPORATE FINANCE Last year I mentioned that we had transferred some resource from this division to the asset management side. This process has continued and, as our private equity activities have expanded, the Group has already realised considerable benefits. Turnover in this division during the period was Â£327,838 (2005: Â£554,178), excluding charges made for services provided to other Group activities. BALANCE SHEET AND CASH FLOW At the end of July, all holders of the outstanding balance of the Group's Convertible Unsecured Loan Stock elected to convert their holdings into new shares, thereby transforming the balance sheet and eliminating the Group's interest charge going forward. I am pleased to report that the Group's cash flow is now positive for the first time in many years. BOARD OF DIRECTORS In August 2005, Melville Haggard commenced a period of secondment with the Department of the Environment, Food and Rural Affairs to assist in the development of policy within the waste industry. This secondment was recently extended from one year to two years and as a consequence, we have accepted Melville's resignation from the Group Board with effect from 11 December 2006. Melville has been with Impax since 1999 and I would like to thank him for his contribution to the leadership of the Group. PROSPECTS The background against which we operate is particularly supportive to our cause and after many years of development of the Impax business, I believe that we now have the resources to build on our established platform. In the wake of the storms and droughts of 2005, this year has seen climate change rise to a prominent position on the global political agenda and Environmental Markets seem to be heading for sustained secular growth. However, following a period of rapid growth, it is important that we consolidate our position and deliver returns for investors who have recently committed capital to our products. As a consequence, the rate of expansion of our AUM is likely to slow for a period. Finally I would like to thank my colleagues and the non-executive directors for their very hard work which has led to the uplift in shareholder value seen in the past year. J Keith R Falconer 11 December 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 30 September 2006 2006 2005 Note Â£ Â£ TURNOVER 3 3,840,030 1,725,060 Operating profit/(loss) 3 173,898 (657,475) Profit on disposal of investment 5 - 129,216 173,898 (528,259) Interest receivable and similar income 137,699 131,140 Interest payable and similar charges (98,521) (196,095) PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 213,076 (593,214) Tax on profit/(loss) on ordinary activities 6 388,255 - PROFIT/(LOSS) FOR THE YEAR 601,331 (593,214) EARNINGS PER SHARE 9 Basic 1.08p (1.56)p Adjusted 2.16p (0.75)p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year ended 30 September 2006 2006 2005 Â£ Â£ Profit/(loss) for the financial year 601,331 (593,214) Currency translation differences (131,579) 47,142 Total recognised profits/(losses) for the year 469,752 (546,072) CONSOLIDATED BALANCE SHEET As at 30 September 2006 2006 2005 Â£ Â£ FIXED ASSETS Intangible fixed assets 1,346,493 1,629,097 Tangible fixed assets 24,433 13,140 Fixed asset investments 14,357 14,102 1,385,283 1,656,339 CURRENT ASSETS Debtors due after one year 1,593,507 2,041,998 Debtors due in one year 1,904,235 1,269,282 Investments 72,752 79,752 Cash at bank and in hand 2,549,652 863,187 6,120,146 4,254,219 CREDITORS - amounts falling due within one year (1,300,289) (635,726) NET CURRENT ASSETS 4,819,857 3,618,493 TOTAL ASSETS LESS CURRENT LIABILITIES 6,205,140 5,274,832 CREDITORS - amounts falling due after more than one year - Convertible unsecured loan stock - (2,302,088) 6,205,140 2,972,744 CAPITAL AND RESERVES Called up share capital 9,591,824 8,973,635 Share premium 2,723,483 835,794 Exchange equalisation reserve (845,410) (713,831) Treasury shares (148,801) (72,700) Other reserve 487,355 154,488 Profit and loss account (5,603,311) (6,204,642) EQUITY SHAREHOLDERS' FUNDS 6,205,140 2,972,744 CONSOLIDATED CASHFLOW STATEMENT Year ended 30 September 2006 2006 2005 Note Â£ Â£ NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 10 1,337,917 (640,047) RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 11 86,117 (18,016) TAXATION 11 - - CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 11 (23,871) 231,495 NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 1,400,163 (426,568) FINANCING 11 80,750 82,000 INCREASE/(DECREASE) IN CASH 12 1,480,913 (344,568) RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET DEBT INCREASE/(DECREASE) IN CASH IN YEAR 1,480,913 (344,568) CHANGES IN NET DEBT RESULTING FROM CASHFLOWS 1,480,913 (344,568) NON CASH TRANSACTIONS - conversion of Loan Stock 2,302,088 (46,583) - movement on Treasury reserve (76,101) (72,700) - movement on Other reserve 408,968 231,213 TRANSLATION DIFFERENCES (131,579) 47,142 MOVEMENT IN NET DEBT IN THE YEAR 3,984,289 (185,496) NET DEBT AT 1 OCTOBER 2005 (1,438,901) (1,253,405) NET SURPLUS/(DEBT) AT 30 SEPTEMBER 2006 12 2,545,388 (1,438,901) 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 Group's accounts for the year ended 30 September 2006 on which the auditors, MRI Moores Rowland LLP, have given an unqualified opinion. 2 ACCOUNTING POLICIES The accounting policies used throughout the Group have not differed from those published in last year's financial statements. 3 GEOGRAPHICAL ANALYSIS OF TURNOVER, OPERATING PROFIT AND NET ASSETS Turnover relates solely to the principal activities of the Group. Turnover 2006 2005 Â£ Â£ UK 3,540,040 1,698,515 Europe 299,990 26,545 USA - - 3,840,030 1,725,060 Operating profit/(loss) 2006 2005 Â£ Â£ UK 457,482 (363,629) Europe - - USA (980) (11,242) Goodwill amortisation (282,604) (282,604) 173,898 (657,475) Net assets 2006 2005 Â£ Â£ UK 4,334,910 581,560 Europe (10,747) 73,758 USA 1,880,977 2,317,426 6,205,140 2,972,744 BUSINESS ANALYSIS OF TURNOVER, OPERATING PROFIT AND NET ASSETS Turnover relates solely to the principal activities of the Group. Turnover 2006 2005 Â£ Â£ Investment services 3,512,192 1,170,882 Financial advisory services 327,838 554,178 3,840,030 1,725,060 Operating profit/(loss) 2006 2005 Â£ Â£ Investment services 415,281 (606,124) Financial advisory services 41,221 231,253 Goodwill amortisation (282,604) (282,604) 173,898 (657,475) Net assets 2006 2005 Â£ Â£ Investment services 5,717,881 2,069,910 Financial advisory services 487,259 902,834 (including deferred tax asset) 6,205,140 2,972,744 4 OPERATING PROFIT Operating profit is stated after charging Â£316,200 for a long term incentive scheme charge (2005: Â£154,488). On 4 February 2005, shareholders approved the establishment by the Company of the Impax Group Employee Benefit Trust (the 'EBT') as part of the Company's employee incentive arrangements. The allocation of Ordinary Shares to employees and their families via the EBT by the Company in 2005 and 2006 as part of the long term incentive scheme has given rise to a charge of Â£316,200 (2005: Â£154,488) to the profit and loss account for the year. This forms part of a total charge of Â£948,600, being Â£463,464 evenly spread over the three years to 30 September 2007, which is the performance period for the 2005 share award and being Â£485,136 evenly spread over the three years to 30 September 2008, which is the performance period for the 2006 share award. It is calculated in accordance with the requirements of FRS 20 'Share based payments' by reference to the mid market price of an Ordinary Share of 6.375p on the approval date of 4 February 2005 and on the Directors' assumption that the EBT performance criteria will be met and all of the shares will vest to employees and their families. The date of 4 February 2005 has been agreed to be the grant date for all shares issued to employees and their families as this was the date when substantially all terms and conditions of the scheme were agreed by all parties. 5 EXCEPTIONAL ITEMS 2006 2005 Â£ Â£ Profit on disposal of listed investment - 129,216 - 129,216 In 1999, the Group acquired shares in Ensyn Group Inc. ('Ensyn') with a value of Â£165,000, in consideration for fees. In 2002, full provision was made for impairment of this unlisted investment. In April 2005 Ensyn merged with a subsidiary of Ivanhoe Energy Inc. ('Ivanhoe'), a listed company. The consideration for this merger took the form of a combination of cash, shares in Ivanhoe and shares in Ensyn. Following the merger the Group received the cash element of the consideration and subsequently sold part of its holding in Ivanhoe. These transactions have given rise to a gain of Â£294,216, being Â£165,000 write back of impairment of unlisted investment and Â£129,216 profit on disposal of listed investment for the Group for the year ended 30 September 2005 of which Â£236,609 has been realised. 6 TAX ON PROFIT ON ORDINARY ACTIVITIES 2006 2005 Â£ Â£ UK taxation is based on the profit/(loss) for the year at a rate equivalent to 30% (2005: 30%): - - Current year tax charge - - Deferred tax credit (388,255) - 2006 2005 Â£ Â£ Factors affecting the tax charge for the year Profit/(loss) on ordinary activities before taxation 213,076 (593,214) Tax at 30% of profit/(loss) on ordinary activities before 63,923 (177,964) taxation Effects of: Capital gains - 32,956 Prior year trading losses utilised - (18,269) Current year trading losses utilised - (14,687) Non-deductible expenses 111,660 207,555 Capital allowances (4,717) (3,927) Non chargeable income (3,240) (94,908) Amortisation 84,781 84,781 Losses utilised (252,407) (15,537) Current year tax charge - - The Group has tax losses of approximately Â£4.0m (2005: Â£4.7m) available for offset against future taxable profits in the UK. A deferred tax asset of Â£388,255 (2005: Â£nil) has been recognised in respect of Â£1,294,183 (2005: Â£nil) of such losses due to the predictability of future profit streams. 7 FOREIGN CURRENCIES The results of subsidiary undertakings reporting in foreign currencies are translated at the average rate ruling in the accounting year (US$1.80: Â£1; 2005: US$1.85: Â£1) and the assets and liabilities at the rate ruling at the balance sheet date (US$1.87: Â£1; 2005: US$1.76: Â£1). 8 DIVIDENDS No dividend is proposed. 9 EARNINGS PER SHARE The calculation of profit per share is based on the profit for the year of Â£601,331 and on the weighted average number of ordinary shares in issue of 55,592,580 (2005: loss of Â£593,214 on shares in issue of 38,065,022). In order to show results from operating activities on a comparable basis, an adjusted profit per share has been calculated which excludes goodwill amortisation of Â£282,604 (2005: Â£282,604), exceptional items of Â£nil (2005: Â£129,216) and long term incentive scheme charge of Â£316,200 (2005: Â£154,488). 10 RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2006 2005 Â£ Â£ Operating profit/(loss) 173,898 (657,475) Write back impairment of unlisted investment - (165,000) Revaluation of listed/unlisted investment 7,000 (22,145) Depreciation charges 12,323 7,542 Amortisation of goodwill 282,604 282,604 Decrease/(increase) in debtors 201,793 (245,211) Increase in creditors 660,299 159,638 Net cash inflow/(outflow) from operating activities 1,337,917 (640,047) 11 ANALYSIS OF CHANGES IN CASHFLOWS DURING THE YEAR 2006 2005 RETURNS ON INVESTMENTS Â£ Â£ AND SERVICING OF FINANCE Interest received 137,699 131,140 Interest paid (51,582) (149,156) 86,117 (18,016) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire tangible fixed assets (23,616) (5,114) Proceeds from sale of investments - 236,609 Payments to acquire investments (255) - (23,871) 231,495 FINANCING Issue of share capital 80,750 82,000 80,750 82,000 12 ANALYSIS OF CHANGES IN NET DEBT 1 October Cash Translation Non-cash 30 September 2005 Flow Difference transactions 2006 Â£ Â£ Â£ Â£ Â£ Cash at bank and in hand 863,187 1,485,177 (131,579) 332,867 2,549,652 Bank overdraft - (4,264) - - (4,264) Debt due after one year (2,302,088) - - 2,302,088 - NET (DEBT)/SURPLUS (1,438,901) 1,480,913 (131,579) 2,634,955 2,545,388 13 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2006 2005 Â£ Â£ Profit/(loss) for the financial year 601,331 (593,214) Conversion of Loan Stock 2,442,906 357 Costs of issue - Loan Stock (93,879) - Issue of Shares - EBT 80,750 82,000 Treasury Shares - EBT (76,101) (72,700) Other Reserve - EBT 316,200 154,488 Other Reserve - accrued NOMAD fee 16,667 - Translation adjustments (131,579) 47,142 Share premium on market disposal of shares from EBT 76,101 76,725 Net increase/(reduction) in shareholders' funds 3,232,396 (305,202) Opening shareholders' funds 2,972,744 3,277,946 Closing shareholders' funds 6,205,140 2,972,744 Copies of the report and accounts of the Company for the year ended 30 September 2006 will be sent to shareholders. Copies will also be available on the Company's web site www.impax.co.uk and may be collected from the Registered Office. 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

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