Final Results

RNS Number : 9282J

Impax Group PLC

11 December 2008

 



IMPAX GROUP PLC

PRELIMINARY STATEMENT OF RESULTS

FOR THE YEAR ENDED 30 SEPTEMBER 2008

Impax Group plc, the AIM quoted investment manager which focuses exclusively on the environmental and related energy markets sector, today announces its preliminary results for the year ended 30 September 2008.

Highlights

• Significant increase in pre-tax profits to £3,857,448 (2007: £1,820,654).

• Expansion in funds under management and advisory ('AUM') to £1,098 million at 30 September 2008 (2007: £984 million; 2006: £434 million). 

• Strong progress in building core business, particularly investment processes, new product launches, distribution channels and support systems.

• Successful retention of clients notwithstanding weak equity markets. AUM was £898 million on 28 November 2008.

• Maiden final proposed dividend of 0.35 pence per share (for approval by shareholders at forthcoming AGM).

Commenting on the results, Keith Falconer, Chairman said:

'Impax has taken several major steps forward this year and I'm delighted that we are in a position to recommend our first dividend.  In spite of very weak equity markets, the environmental sector continues to offer investors excellent opportunities for out-performance over the medium to long term.'

For further information please contact

Keith Falconer, Chairman Impax Group plc	07747 066637
Ian Simm, Chief Executive Impax Group plc	020 7432 2619
John Riddell, Director Noble & Company Limited	020 7763 2200

CHAIRMAN'S STATEMENT

A year ago I warned that we might be about to experience a slowing economy and, quite possibly, a bear market. I was, however, not expecting either extreme stress in the banking system or the likelihood of a serious global recession. Against this background, Impax has made solid progress, countering the effect of falling markets with new mandates, and maintaining our track record of strong performance relative to benchmark.

Our assets under management and advisory ('AUM') started the year at £984 million on 1 October 2007 and rose to a peak of £1,258 million in May 2008 before finishing the year at £1,098 million on 30 September 2008. Subsequently, at a time when equity markets have fallen sharply, we have avoided significant redemptions by investors in our funds; on 28 November 2008, AUM were £898 million.

During 2008 there have been several positive developments in the drivers of the environmental sector which have further strengthened the attractions of this area for our investors. Government commitment to increasing the adoption of renewable energy has advanced considerably, in particular through the development of a new Renewable Energy Directive in the European Union and the extension of tax credits in the United States. In parallel, several governments have taken significant steps forward in the development of policy to reduce greenhouse gas emissions, notably Australia which ratified the Kyoto Protocol in March 2008. Furthermore, positive statements from President-elect Obama suggest that the United States may follow the EU in implementing a cap-and-trade scheme for carbon dioxide emissions during his first term.

In spite of concerns that economies world-wide are heading for a deep recession and that the environmental sector will not be immune, the breadth of our investment mandates allows us to reduce exposure to areas where news has been less encouraging. For example, although the decline in the price of fossil fuels raises the bar for investment in energy efficiency measures and biofuels, renewable energy power utilities will continue to benefit from falling interest rates and lower equipment costs. Similarly, while in a slowing economy industrial capital expenditure is likely to be reined in, many environmental sectors (such as water treatment and waste treatment) are experiencing robust demand underpinned by mandatory targets.  

RESULTS FOR THE YEAR AND PROPOSED DIVIDEND

Turnover for the year was £11,389,264 (2007: £7,114,695), a 60% increase over the year. Profit before tax was £3,857,448 (2007: £1,820,654). These results include a charge of £427,333 (2007: £357,000) relating to the Group's long-term employee incentive scheme. 

Given a strong balance sheet and significant free cash flow, I am delighted to announce a proposal from the Board that Impax pay a maiden dividend on the back of these results. In light of the current uncertainty in global equity markets, the Board recommends that the dividend be a modest 0.35 pence per share, a level that, I hope, can be increased when more normal market conditions return.

The dividend proposal will be submitted for formal approval by shareholders at the forthcoming Annual General Meeting. In line with International Financial Reporting Standards, these financial statements do not reflect the dividend payable, which will be accounted for in shareholders' equity as an appropriation of retained earnings in the year ended 30 September 2009. 

INVESTMENT MANAGEMENT

Our business model remains focused on building shareholder value over the medium to long term by investing in both quoted and private companies. 

Quoted Equities

As I reported in the Interim results for the six month period ended 31 March 2008 ('Interims'), our quoted equities business is now segmented into 'pure play' funds investing in specialist companies active in the environmental sector, and 'all cap' funds which have a broader mandate and invest both in specialists and also in more diversified companies. In order to further strengthen our platform for growth, we have continued to develop our investment processes and to engage with the leading consultants and gatekeepers in the institutional market.  

• Pure Play Funds

Although not immune to falling stock markets, our 'pure play' funds once again out-performed the markets during the year. Between 1 October 2007 and 30 September 2008, the net asset value ('NAV') of Impax Environmental Markets plc ('IEM'), the investment trust that we have managed since its launch in February 2002, fell 11.3%, while the MSCI World Index declined 17.0%. Our other 'pure play' funds had similar performance. Over the five years ending 30 September 2008, IEM's NAV has increased by 77.1% while the increase in the MSCI World Index has been only 21.4%; this track record is particularly compelling to potential new investors in our funds.

Investor confidence in these funds has remained high. Flows into 'pure play' open-ended funds have been positive and, at the end of the period, we were managing or advising £876 million in funds with a 'pure play' strategy (compared to £836 million at the start of the period).

In August, we were delighted to commence management of a £35 million segregated account investing in our 'pure play' portfolio for the Environment Agency Pension Fund following a tender for new global equities managers. We believe that this is an important endorsement of Impax's capabilities and should enhance our credibility with other prospective institutional clients.

• All Cap Funds 

As I reported at the Interims, investor interest in our more recently established quoted equities strategy has been strong and we are now managing or advising six pooled vehicles with an 'all cap' strategy as well as a segregated account for Russell Investments Japan. During the year, total assets in All Cap funds or accounts grew from £43 million to £106 million.

Broadly speaking, these funds have performed in line with global equity markets. For example, between 1 May 2008 and 30 November 2008, Impax Environmental Leaders Fund, our UK-domiciled open-ended fund, was down 26.0% while the MSCI World Index (in Sterling) was down 24.4%.

• Index Products

Our partnership with FTSE to build and promote a series of environmental indices is developing well. In January 2008, FTSE and Impax launched the FTSE ET50 index, a basket of the 50 largest 'pure play' stocks active in environmental markets. Subsequently in June 2008, we established the FTSE Environmental Opportunities All Share Index, which comprises those stocks in Impax's 'all cap' universe that pass FTSE's standard liquidity requirements. In November 2008, FTSE announced the launch of nine additional indices covering inter alia the water, waste, renewable energy and energy efficiency sub-sectors. We believe that this partnership will continue to raise Impax's profile worldwide in the institutional investor community.

Hedge Fund

As I have reported in previous statements, our research in listed equities has provided a very interesting stream of 'short ideas' alongside our core longs, and we have continued to exploit these in our hedge fund. Although the past 12 months have been one of the worst on record for long-short equity funds, this product has performed well in 2008. We are in dialogue with potential investors in this product with the aim of raising additional capital once markets re-open.

Private Equity

Investment in private companies remains an important component of our business and a source of revenue that is uncorrelated with equity markets.

Our team managing Impax New Energy Investors LP, a fund investing in renewable energy projects and related assets, has made excellent progress this year. With €125 million of capital at its disposal, we have made eleven investments and committed almost €100 million. Many of these investments are in entities generating power from solar energy, a sector in which power prices remain very attractive.

Given the strong public sector support for these markets, we believe that renewable energy projects and the developers of such projects will absorb a significant amount of capital for the foreseeable future, and that opportunities for private equity will remain attractive, particularly for institutional investors. Accordingly, we are developing plans to raise additional capital for this strategy and I hope to be able to report favourable news next year.

Separately, we continue to invest capital from IEM and its sister fund IEM (Ireland) in 'late stage' private companies. As the track record for this activity grows we will explore with investors the potential for raising additional capital. 

INFRASTRUCTURE AND SUPPORT SYSTEMS

I am pleased to report that we have made good progress in extending our infrastructure in order to underpin further expansion. Our support team has expanded from six to fifteen staff with key hires in marketing, finance, compliance and operations functions, and the recruitment of Charlie Ridge as Chief Operating Officer in September 2008.  

In order to accommodate a larger team, we recently moved to larger premises. Our new offices (which are also in Sackville Street, London) have a floor plan of ca. 5,000 square feet, which represents approximately 70% more space and should give us room for expansion for several years.

EMPLOYEE SHARE OWNERSHIP

In January this year shareholders approved an extension to the Company's long-term incentive scheme in order to reward key employees with shares in the Company and thereby further align the interests of employees and shareholders. The extension provides for a further 18.25 million shares to be issued to employees over the three years ended 30 September 2011.

BOARD OF DIRECTORS

Earlier this year, I announced the appointment of three new directors, each of whom brings significant experience of the fund management industry. I am delighted that all three are making an important contribution to the Company. As part of the Board's transition, David Kempton will be stepping down at the conclusion of the Company's forthcoming Annual General Meeting. Since he joined the Board in June 2004, David has provided valuable support in the development of the Company's growth plans and the oversight of their implementation. I wish him well in his future endeavours.

PROSPECTS

I believe that Impax's strategy of developing and managing scalable investment products targeting the high-growth environmental sector should enable us to deliver significant value for our shareholders over the medium to long term. In the short term, we will not escape sustained bearish sentiment in equity markets and will be paying particular attention to the management of our cost base. At the same time, we intend to make the most of the opportunity to engage with the key investors that are either exposed to or have expressed interest in our funds, sharing our insights into the dynamics of environmental markets and, all being well, paving the way for further significant inflows into current and new products.  

In the medium term, provided that we continue to build on our excellent track record in multiple products, we should be well positioned to leverage our strong distribution network and grow rapidly.

As usual, I must pay tribute to Ian Simm and the executive team who have managed the company prudently through more than one cycle, and of course to my boardroom colleagues for their support and vision.

J Keith R Falconer

11 December 2008

CONSOLIDATED INCOME STATEMENT

Year ended 30 September 2008

		2008		2007
	Note	£		£
REVENUE		11,389,264		7,114,695
Operating costs		(7,813,648)		(5,503,453
Operating profit	4	3,575,616		1,611,242
Investment income		281,832		209,412
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION		3,857,448		1,820,654
Taxation	5	(1,069,049)		(531,275)
PROFIT FOR THE YEAR ATTRIBUTABLE
TO EQUITY SHAREHOLDERS		2,788,399		1,289,379

EARNINGS PER SHARE	8
Basic		2.54p		1.20p
Diluted		2.54p		1.19p

CONSOLIDATED BALANCE SHEET

As at 30 September 2008

	Note	2008		2007
ASSETS:		£		£
Non-Current Assets
Goodwill		1,629,097		1,629,097
Intangible assets		72,816		34,545
Property, plant and equipment		537,004		47,206
Other financial assets		1,045,618		1,208,531
Investments		13,567		14,357
		3,298,102		2,933,736
Current Assets
Trade and other receivables		65,094		65,094
due after one year
Trade and other receivables		2,096,620		1,664,836
due within one year
Other financial assets		247,671		175,781
Investments	9	3,005,845		1,619,854
Cash and cash equivalents		7,028,619		4,553,684
		12,443,849		8,079,249
TOTAL ASSETS		15,741,951		11,012,985
EQUITY AND LIABILITIES:
Capital and Reserves attributable
to equity shareholders
Ordinary shares		1,155,824		1,094,991
Share premium	10	239,670		18,970
Exchange equalisation reserve		(861,317)		(1,002,117)
Treasury shares	10	(222,072)		(167,771)
Other reserve	10	1,251,944		894,359
Retained earnings		9,997,137		7,208,738
		11,561,186		8,047,170
Current Liabilities
Trade and other payables		4,180,765		2,965,815
		4,180,765		2,965,815
TOTAL EQUITY AND
LIABILITIES		15,741,951		11,012,985

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 30 September 2008

	Note	Share capital		Share premium		Special reserve		Exchange equalisation Reserve
		£		£		£		£
Balance at 1 October 2006		9,591,824		2,723,483		-		(845,410)
Profit for the year		-		-		-		-
Exchange differences on consolidation		-		-		-		(156,707)
Cancellation of deferred shares and share premium account		(8,516,583)		(2,723,483)		3,788,477		-
Transfer from special reserve to retained earnings		-		-		(3,788,477)		-
Net issue of shares to Employee Benefit Trust		19,750		18,970		-		-
Accrued cash equivalent of share options receivable by NOMAD		-		-		-		-
Balance at 30 September 2007		1,094,991		18,970		-		(1,002,117)
Profit for the year		-		-		-		-
Exchange differences on consolidation		-		-		-		140,800
Net issue of shares to Employee Benefit Trust		60,833		58,863		-		-
Net sale of shares from Employee Benefit Trust		-		161,837		-		-
Accrued cash equivalent of share options receivable by NOMAD		-		-		-		-
Accrued cash equivalent of share options cancelled by NOMAD		-		-		-		-
Balance at 30 September 2008		1,155,824		239,670		-		(861,317)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 30 September 2008 (continued)

	Note	Treasury shares		Other reserve		Retained Earnings		Total
		£		£		£		£
Balance at 1 October 2006		(148,801)		487,355		(5,320,707)		6,487,744
Profit for the year		-		-		1,289,379		1,289,379
Exchange differences on consolidation		-		-		-		(156,707)
Cancellation of deferred shares and share premium account		-		-		7,451,589		-
Transfer from special reserve to retained earnings		-		-		3,788,477		-
Net issue of shares to Employee Benefit Trust		(18,970)		357,000		-		376,750
Accrued cash equivalent of share options receivable by NOMAD		-		50,004		-		50,004
Balance at 30 September 2007		(167,771)		894,359		7,208,738		8,047,170
Profit for the year		-		-		2,788,399		2,788,399
Exchange differences on consolidation		-		-		-		140,800
Net issue of shares to Employee Benefit Trust		(58,863)		427,333		-		488,166
Net sale of shares from Employee Benefit Trust		4,562		(3,077)		-		163,322
Accrued cash equivalent of share options receivable by NOMAD		-		33,336		-		33,336
Accrued cash equivalent of share options cancelled by NOMAD		-		(100,007)		-		(100,007)
Balance at 30 September 2008		(222,072)		1,251,944		9,997,137		11,561,186

CONSOLIDATED CASHFLOW STATEMENT

Year ended 30 September 2008

	Note	2008		2007
		£		£
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit		3,575,616		1,611,242
Adjustments for:
Depreciation of property, plant & equipment		45,631		16,715
Amortisation of intangible assets		21,355		5,998
Revaluation of investments		38,617		(40,251)
Profit on sale of investments		(46,846)		-
Share-based transactions		632,488		407,004
Translation differences		140,800		(156,707)
OPERATING CASH FLOWS BEFORE
MOVEMENT IN WORKING CAPITAL		4,407,661		1,844,001
(Increase)/decrease in receivables		(397,562)		140,443
Increase in payables		1,160,154		1,381,542
CASH GENERATED FROM OPERATIONS		5,170,253		3,365,986
Corporation tax paid		(956,631)		-
NET CASH GENERATED BY
OPERATING ACTIVITIES		4,213,622		3,365,986
Investing activities:
Interest received		281,834		209,412
Share-based transactions		(108,505)		-
Proceeds on sale of investments		1,622,236		-
Purchase of investments		(3,000,000)		(1,506,851)
Purchase of property, fixtures & equipment		(595,055)		(80,031)
NET CASH USED IN
INVESTMENT ACTIVITIES		(1,799,490)		(1,377,470)
Financing activities:
Share capital issued		60,833		19,750
NET CASH GENERATED BY FINANCING
ACTIVITIES		60,833		19,750
NET INCREASE IN CASH AND		2,474,965		2,008,266
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS		4,553,654		2,545,388
AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS		7,028,619		4,553,654
AT END OF YEAR

IMPAX GROUP PLC

NOTES TO THE PRELIMINARY STATEMENT

1          BASIS OF PREPARATION

The preliminary results were approved by the Board of Directors on 11 December 2008. The financial information set out above does not comprise the Group's statutory accounts for the year ended 30 September 2008 or 30 September 2007, but is derived from those accounts. The auditors have reported on the 2008 and 2007 accounts and their report was unqualified. 

These preliminary results have been prepared in accordance with the accounting policies normally adopted by the Group and which are consistent with those adopted in the audited accounts for the year ended 30 September 2008. Where relevant the provisions of International Financial Reporting Standards have been applied in the preparation of this preliminary announcement.

2          ACCOUNTING POLICIES

The financial statements have been prepared in accordance with International Financial Reporting Standards adopted for use by the European Union. Key accounting policies are:

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. 

Subsidiaries are accounted for using the acquisition method of accounting whereby the Group's results include the results of the acquired business from the date of acquisition. 

All intra-group transactions and balances are eliminated on consolidation.  

 As permitted under IAS 27, Consolidated and Separate Financial Statements, investments in funds are not consolidated where the Group does not exercise control over the operation or financial operations of an entity or has no power to appoint members of the board of directors. These investments are designated as fair value through profit and loss or available for sale on initial recognition in accordance with IAS 39, Financial Instruments: Recognition and Measurement.

Investments in associates

An associate is an entity over which the Group has significant influence and is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control.

Investments that are held by the Group are carried in the balance sheet at fair value even though the Group may have significant influence over those companies. This treatment is permitted by IAS 28, Investment in Associates, which allows investments held by venture capital and similar organisations to be excluded from the scope of IAS 28 investments in Associates provided that those investments upon initial recognition are designated as fair value through profit or loss or available for sale and accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement, with changes in fair value recognised in profit or loss or equity in the period of change.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is recognised as an asset and is tested for impairment annually, or on such occasions that events or changes in circumstances indicate that its value might be impaired.

On disposal of a subsidiary, the attributable amount of unamortised goodwill, which has not been subject to impairment, is included in the determination of the profit or loss on disposal.

Positive goodwill arising on acquisitions before the date of the transition to International Financial Reporting Standards has been retained at the previous UK GAAP amount and is tested for impairment annually.

Impairment

At the balance sheet date, the Group reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss or if events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the impairment loss is recognised as an expense, unless the relevant asset is land and buildings at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss treated as a revaluation increase. Impairment losses relating to goodwill are not reversed.

Employee Benefit Trust

In accordance with SIC 12 'Consolidation - special purpose entities', the Company includes the assets and liabilities of that trust within its balance sheet. In the event of the winding up of the Company, neither the shareholders nor the creditors would be entitled to the assets of the employee benefit trust.

Investment in own shares held in connection with the Group's employee share schemes are deducted from the shareholders' funds in accordance with IAS 32 'Financial instruments: disclosure and presentation' until such time as they vest unconditionally to participating employees.

The fair value of employee services received in exchange for the grant of shares is recognised as an expense. The total amount to be expensed rateably over the performance period is determined by reference to the fair value of the shares determined at the grant date.

3    GEOGRAPHICAL ANALYSIS OF REVENUE, OPERATING PROFIT AND NET ASSETS

    Revenue relates solely to the principal activities of the Group.

		Consolidated revenue
		2008		2007
		£		£
UK		10,998,245		6,772,827
Europe		391,019		341,868
USA		-		-
		11,389,264		7,114,695

		Consolidated operating profit
		2008		2007
		£		£
UK		3,627,363		1,611,787
Europe		(379)		-
USA		(51,368)		(545)
		3,575,616		1,611,242

		Consolidated net assets
		2008		2007
		£		£
UK		10,267,210		6,661,945
Europe		687		913
USA		1,293,289		1,384,312
		11,561,186		8,047,170

4    OPERATING PROFIT

Operating profit is stated after charging £427,333 for a long term incentive scheme charge (2007: £357,000).

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 scheme provided for the issue of up to 18.25 million shares to employees over the three years ended 20 September 2008.

On 31 January 2008 shareholders approved an extension to the existing EBT whereby a further 18.25 million shares can be issued to employees over the three years ended 20 September 2011.

On 24 September 2008 the Company allotted 6,083,333 Ordinary Shares at a price equal to the nominal value of 1p per share to Sanne Trust Company Limited, trustee of the EBT. The EBT subsequently sold 197,025 Ordinary Shares for £60,833 to provide funding relating to the purchase of Ordinary Shares by the EBT. Following the sale the EBT is interested in 22,207,054 Ordinary Shares representing 19.21% of the Ordinary Shares in issue at 30 September 2008. The potential beneficiaries of the EBT include the executive directors and employees of the Group and their respective families.

On 30 September 2008 7,610,080 of the Ordinary Shares held by the EBT vested to employees and their families. 

P&L charge - three years ended 30 September 2007

The allocation of Ordinary Shares to employees and their families via the EBT by the Company for the three years ended 30 September 2007 as part of the long term incentive scheme has given rise to a charge of £1,069,539 as follows:

-	£463464 evenly spread over the three years to 30 September 2007 which is the performance period for the 2005 share award
-	£485143 evenly spread over the three years to 30 September 2008 which is the performance period for the 2006 share award
-	£120932 evenly spread over the three years to 30 September 2009 which is the performance period for the 2007 share award

This charge has been calculated in accordance with the requirements of IFRS 2 '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.

P&L charge - three years ended 30 September 2010

The allocation of Ordinary Shares to employees and their families via the EBT by the Company for the three years ended 30 September 2010 as part of the long term incentive scheme will give rise to a charge of £1,060,964 as follows:

-	£545,705 evenly spread over the three years to 21 December 2010, which is the performance period for the 2008 share award
-	£309,155 evenly spread over the four years to 21 December 2011, which is the performance period for the 2009 share award
-	£206,103 evenly spread over the five years to 21 December 2012 which is the performance period for the 2010 share award

This charge has been calculated in accordance with the requirements of IFRS 2 'Share based payments' by reference to the mid market price of an Ordinary Share of 38.5p on the approval date of 31 January 2008. The charge has been calculated using the Monte Carlo simulation method. The date of 31 January 2008 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    TAXATION

Analysis of charge for the year		2008		2007
		£		£
Current tax:
UK corporation tax on profits for the period		923,851		288,218
Deferred tax:
Release of deferred tax asset		145,198		243,057
Taxation		1,069,049		531,275
		2008		2007
		£		£
Factors affecting the tax charge for the year
Profit on ordinary activities before taxation		3,857,448		1,820,654
Tax at 28% of profit on ordinary activities before		1,080,085		546,196
Taxation (2007: 30%)
Effects of:
Non-deductible expenses		63,543		118,713
Capital allowances		(24,533)		(9,540)
Non chargeable income		(13,117)		-
Losses utilised		(163,978)		(367,151)
Prior year over-provision		(18,149)		-
Total current tax		923,851		288,218

The Group has tax losses of approximately £1.6m (2007: £2.7m) available for offset against future taxable profits in the UK.  No deferred tax asset has been recognised at 30 September 2008 (2007: £145,198).

There are timing differences of £351,406 (2007: £248,306) in respect of EBT charges of £1,255,021 (2007: £827,688) that have been recognised in the Group accounts but which have been disallowed for tax purposes. No tax benefit is expected to arise in the near future in respect of these charges.

6    FOREIGN CURRENCIES

The results of subsidiary undertakings reporting in foreign currencies are translated at the average rate ruling in the accounting year and the assets and liabilities at the rate ruling at the balance sheet date.

The average rate ruling in the accounting period for US Dollars was US$ 1.97: £1 (2007: US$1.98: £1); the rate ruling at the balance sheet date was US$ 1.82: £1 (2007: US$2.05: £1). 

The average rate ruling in the accounting period for Euros was € 1.30: £1 (2007: €1.48: £1); the rate ruling at the balance sheet date was €1.26: £1 (2007: €1.44: £1).

7    DIVIDEND

The directors propose a dividend of 0.35p per share (totalling £404,539) for the year ended 30 September 2008. The dividend will be submitted for formal approval at the Annual General Meeting to be held on 2 February 2009. 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 ending 30 September 2009.

No dividend was paid during the year.

8    EARNINGS PER SHARE

In order to show results from operating activities on a comparable basis, an adjusted profit per share has been calculated which excludes the long term incentive scheme charge of £427,333 (2007: £357,000).

	Profit for the year		Ordinary shares in issue (weighted average)		Earnings per share
	£
2008
Basic and diluted	2,788,399		109,615,764		2.54p
Adjusted	3,215,732		109,615,764		2.93p
2007
Basic	1,289,379		107,616,084		1.20p
Diluted	1,289,379		108,504,299		1.19p
Adjusted	1,646,379		107,616,084		1.53p

There are no potential dilutive instruments (2007: 888,215 options granted to the Company's former nominated advisor and broker ('NOMAD'), Landsbanki Securities (UK) Limited).

9    CURRENT ASSET INVESTMENTS 

	Unlisted Investment		Listed Investment		Total
	£		£		£
Cost or Valuation
At 1 October 2007	11,344		1,608,510		1,619,854
Additions	-		3,000,000		3,000,000
Revaluations	-		(38,617)		(38,617)
Disposals			(1,575,392)		(1,575,392)
At 30 September 2008	11,344		2,994,501		3,005,845
Net book value
At 30 September 2008	11,344		2,994,501		3,005,845
At 30 September 2007	11,344		1,608,510		1,619,854

On 21 May 2007, the Company made an investment of €2,200,000 (£1,506,851) in the Impax Absolute Return Fund ('IARF'). The investment took the form of a subscription of 22,000 Euro Class A shares in the IARF, at €100 per share. The IARF, which is managed by a subsidiary undertaking of the Company, launched on 21 May 2007 and had a total net asset value ('NAV') of £3,807,166 at 30 September 2008. The Group's investment in the IARF represents 44.2% of the NAV at 30 September 2008. The Directors are of the opinion that this investment does not constitute an associate undertaking due to insignificant influence.

On 3 March 2008, the Company made an investment of £1,500,000 in the Impax Environmental Leaders Fund ('IEL'). The investment took the form of 1,500,000 £1 accumulation Retail A shares. This investment was subsequently sold on 26 June 2008 and on the same day the Company made a new investment in IEL of £1,500,000 consisting of 1,500,000 £1 accumulation Institutional B shares.

IEL, which is managed by a subsidiary undertaking of the Company, launched on 3 March 2008 and had a total net asset value ('NAV') of £2,491,104 at 30 September 2008. The Group's investment in the IEL represents 53.8% of the NAV at 30 September 2008. These shares are held in custody under the control of the fund's depository and the Directors are therefore of the opinion that this investment does not constitute a subsidiary undertaking as it is not controlled by the Group.

These listed investments are revalued to market value.

The Group disposed of its only other listed investment, Ivanhoe Energy Inc. ('Ivanhoe'), during the year for £108,736 giving rise to a profit of £33,346.

The unlisted investment is valued at the lower of cost and net realisable value. 

10    RESERVES

 In accordance with the requirements of SIC 12 'Consolidation - special purpose entities' and IAS 32, the assets and liabilities of the EBT have been included in the Company's and Group's accounts resulting in the inclusion of £222,072 treasury shares, £239,670 share premium, £4,025 retained earnings and £1,251,944 included in other reserves.

During the year ended 30 September 2007, the Company carried out a balance sheet reorganisation which was approved by shareholders in June 2007 and which received High Court approval on 22 August 2007.  The result of this reorganisation was to eliminate the deficit on reserves by cancellation of the deferred shares and share premium account. The surplus arising from this cancellation created a special reserve of £3,788,477. 

The Company gave undertakings to the Court to maintain this special reserve until all creditors outstanding on 22 August 2007 had either been paid or given their consent to the Company to transfer the balance to revenue reserves. The Company made creditor payments and obtained the necessary consents to enable it to transfer £3,788,477 from the special reserve to revenue reserves.  

On 31 May 2006, the Company appointed Landsbanki Securities (UK) Limited ('Landsbanki'), (formerly Bridgewell Securities Limited) as nominated advisor and broker ('NOMAD') to the Group. For the twelve months following their appointment they received an option over 500,000 shares in the Company, exercisable at 20p within three years. For the period between twelve and twenty-four months following their appointment they received a further option over 388,215 shares in the Company exercisable at 25.76p within three years.

In 2008, £33,336 (2007: £50,004) was charged to the Income Statement and credited to other reserve to reflect the cash equivalent of this compensation.

On 30 June 2008, Landsbanki and the Company agreed to cancel the warrants on the payment in cash of £108,505 by the Company to Landsbanki. To reflect this transaction, £8,498 was charged to the Income Statement and £100,007 was debited to other reserves.

Copies of the report and accounts of the Company for the year ended 30 September 2008 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:

Mezzanine Floor

Pegasus House

37-43 Sackville Street

London W1S 3EH

 

END

 

 

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