Interim Results
Impax Group PLC
18 May 2004
18 May 2004
Impax Group plc
Interim results for the six months ended 31 March 2004
Impax Group plc, the specialised financial services business providing fund
management, corporate finance and advisory services in the environmental
infrastructure and technology ('EIT') sector, today announces its interim
results for the six months ended 31 March 2004.
Highlights
* Turnover has doubled from the same period last year
* Loss reduced to £350,000, after amortisation of goodwill of £141,000
* All American Oil and Gas Inc. announced its intention to exercise option to
acquire Nukern oilfield
* Changes to the Group Board
Commenting on the results, Keith Falconer, Chairman said:
'The interim figures indicate that the corner has been turned. We anticipate the
improvement can be continued in the second half. The disposal of the last
remaining oil interests will leave the group to focus on its core strengths.
Once we have disposed of our oil interests, Impax will be a focused
well-resourced business and we can now concentrate on taking advantage of the
growth opportunities in our chosen sectors'.
For further information please contact:
Keith Falconer, Ian Simm or Nigel Taunt 020 7434 1122
Impax Group plc
Robert Luetchford or John Webb 020 7490 3788
Marshall Securities Limited
Impax Group plc
Chairman's Statement
-----------------------------------------------------
At the beginning of January I joined the Board and assumed the Chair from Stuart
Bickerstaff towards the end of that month. Four months into the job, I am
confident that the environmental infrastructure and technology sector (EIT) in
which we specialise is growing rapidly and that Impax is well-placed to
capitalise on the many opportunities to provide specialised financial
services.
These interim results show considerable growth in revenues from both of our
operating subsidiaries when compared with the same period last year and
demonstrate significant progress in addressing some of the 'legacy' issues that
have plagued Impax in the past. In particular, I am delighted to announce that
All American Oil and Gas Inc. (AAOG) has confirmed that it intends to exercise
its option over the Nukern oilfield. The proceeds will allow Impax to invest
confidently in its core business.
The Impax team is highly experienced and extremely able. We intend to make
further additions to the team in the coming year to allow the group to grow its
revenues at an accelerated rate.
Results for the period
Turnover was £891,000, more than double that earned in the same period last
year. The operating loss for the period of £350,000, is after a £141,000 charge
for the amortisation of goodwill. This loss compares with a loss of £2,281,000
at the interim stage last year, a figure that included a provision of £1,712,000
for impairment of the value of our oil interests.
Corporate Finance
Impax Capital Corporation's (ICC) turnover was £520,000, 132% above the
equivalent figure last year. Not only has the financial environment improved
considerably but there is a growing focus by European governments on renewable
energy and waste management issues. At the same time, ICC has been active in
securing new mandates from a growing client list both in the public and private
sectors. In the public sector we won significant mandates from The Crown Estate
and the EU Commission while continuing our advisory work for the Northern
Ireland government in connection with the Renewables Obligation and carbon
emission permit allocations.
We have had success too in work with private sector clients notably in the waste
management sector where we acted as co-financial advisor to Waste Recycling
Group on its 525,000 tonne per annum Allington waste to energy facility which
achieved financial close at the end of March 2004. We are also advising a
preferred bidder on a 25-year Local Authority waste management contract. In the
wind sector, we have advised Nordex, a wind turbine manufacturer based in
Germany on the restructuring of construction finance for the 50MW Crystal Rig
wind farm.
Corporate advisory fees are difficult to forecast, but the positive trend seen
in 2003 and the first half of 2004 seems to be continuing into the second
half.
Asset Management
Impax Asset Management manages and advises five funds with total assets under
management of around £69m. Revenues rose to £360,000, an increase of 74% over
the corresponding six-month period last year.
Performance across these funds has been good. The net asset value ('NAV') of the
largest fund, Impax Environmental Markets plc, (IEM) rose 21.3% over the year
ending 31 December 2003, an out-performance over the MSCI World Index, which
rose 17.6% over the same period. In the 12 months ending 31 March 2004, the IEM
NAV rose 43.6%, while the MSCI World Index rose 21.7%. The unquoted funds also
performed satisfactorily and we expect to receive our first bonus payment from
the PVMTI fund within the second half.
The EIT sector is growing quickly and many investors want to increase their
exposure to it. Few institutions have the expertise to do this by themselves and
this plays directly to our core competence. We intend to grow our range and the
size of the funds actively in the future in both private and quoted equity.
Oil Interests
It was my hope that we would complete the disposal of the group's oil interests
at the earliest opportunity. I am therefore particularly pleased to report that
AAOG has confirmed that it intends to exercise its option over the Nukern
oilfield.
Impax will shortly receive a non-refundable deposit of US$350,000 (£192,000)
representing the option fee. On exercise of the option, which is due by 31
August 2004, Impax will receive a further US$350,000 (£192,000) in cash and a
US$5.45m (£2.98m) secured production note. The production note is based on
payments of US$4 per barrel, with minimum quarterly payments rising from
US$60,000 (£33,000) in 2005 to $120,000 (£66,000) in 2009 onwards. Any remaining
balance on the note is repayable in full at the end of 2011.
No surplus will be recognised in the profit and loss account until payments
received in aggregate exceed the book value of the Nukern oilfield, currently
US$4.1m (£2.25m). The nature of the transaction means that the oil assets will
become a receivable in the group balance sheet and the production payments as
they are received will be offset against it. Following completion, large amounts
of management time will no longer be spent on managing the oil business. This is
a very positive development.
We continue to receive at least $US25,000 (£14,000) per month from the CSV/
Starks oilfield which we sold last year. The loan created on disposal has
reduced from $US1,195,000 (£759,000) in March 2003 to $US992,000 (£544,000) in
the current period.
Employee share ownership
It is normal for a company such as Impax to have a considerable amount of its
equity owned by its employees. This provides a real incentive and reduces the
risk of key employees being lured away. This interim report shows considerable
progress towards building a profitable business and this is due to a great
effort being made by my colleagues here who have worked very effectively for
you. At present, the degree of equity participation by the senior employees is
negligible and we intend to seek shareholders' approval to establish share based
employee incentives.
Group Board
The disposal of the oil interests leaves Impax able to concentrate on our core
activity with considerable cash resources to accelerate our growth.
The change in our business calls for a different expertise on the main board.
Accordingly, Neville A Brown and Geirr Frostmann will be stepping down as
non-executive directors after the board meeting on 3 June 2004. It is customary
for tribute to be paid to departing directors and I make no exception here.
Impax has been through a number of difficult years and they have proved stoic
and supportive throughout. I thank them on behalf of shareholders.
I am pleased to announce two new non-executive directors will join the board on
3 June 2004. Simon Morris has practised corporate finance for over thirty years,
more recently with his own firm, MSB Corporate Finance and then with Smith &
Williamson. His experience will help us to establish a new growth-based strategy
for the corporate finance business. David Kempton, who has successfully started
and built a number of businesses, will assume the role of Senior Non-Executive
Director in compliance with the Higgs Report.
Prospects
It is a bold chairman who makes confident predictions about the future. The
geopolitical climate is of great concern and rising energy prices and interest
rates are not a golden scenario for equity markets. Higher energy prices should
however help to accelerate investment in renewable energy.
Once we have disposed of our oil interests, Impax will be a focused
well-resourced business. At a time when government and EU legislation and the
commercial impetus from high energy prices are underpinning significant growth
within the EIT sector, I believe that we are well positioned to capture further
opportunities.
I look forward to the challenges and opportunities with enthusiasm.
Keith Falconer
Chairman
18 May 2004
Impax Group
plc
Consolidated Profit and Loss Account for the six months ended 31 March 2004
-------------- ------- -------- ---------- ----- ----- -------- ------ --------
Notes Six months Six months Year ended
ended ended
31 Mar 04 31 Mar 03 30 Sept 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover 2 891 429 1,183
Operating expenses
Amortisation of
goodwill 2 ( 141) ( 141) ( 283)
Impairment in
value of assets 3 - ( 1,712) ( 1,626)
Exchange loss ( 5) ( 2) -
Other operating
expenses 2 ( 1,033) ( 832) ( 1,860)
--------- -------- --------
( 1,179) ( 2,687) ( 3,769)
Operating loss
Continuing
operations ( 288) ( 546) ( 960)
Impairment in
value of assets - ( 1,712) ( 1,626)
--------- -------- --------
( 288) ( 2,258) ( 2,586)
Net interest
payable ( 62) ( 23) ( 41)
--------- -------- --------
Loss on ordinary
activities
before taxation ( 350) ( 2,281) ( 2,627)
Taxation - - ( 33)
--------- -------- --------
Loss
attributable to
the Group ( 350) ( 2,281) ( 2,660)
--------- -------- --------
Basic and
diluted loss per
share 5 (0.98)p (6.43)p (7.50)p
Adjusted loss
per share 5 (0.59)p (1.20)p (2.13)p
--------- -------- --------
Statement of Total Recognised Gains and
Losses
Loss for the
period ( 350) ( 2,281) ( 3,925)
Currency
translation
differences ( 267) ( 11) ( 421)
--------- -------- --------
Total recognised
losses ( 617) ( 2,292) ( 4,346)
--------- -------- --------
All disclosures relate only to continuing
operations.
Impax Group plc
Consolidated Balance Sheet as at 31 March 2004
------------------- -------- ------ ---- -------- ----- -------- ------ --------
Notes As at As at As at
31 Mar 31 Mar 03 30 Sept 03
04
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Fixed assets
Intangible fixed
assets 2,053 2,345 2,194
Tangible fixed
assets 2,288 2,548 2,409
-------- -------- --------
4,341 4,893 4,603
-------- -------- --------
Current assets
Debtors 578 321 569
Loans receivable 544 759 667
Cash at bank and
in hand 7 877 294 1,220
-------- -------- --------
1,999 1,374 2,456
Creditors -
amounts falling
due within one
year ( 492) ( 1,439) ( 617)
-------- -------- --------
Net current
assets/(liabilit
ies) 1,507 ( 65) 1,839
Total assets
less current
liabilities 5,848 4,828 6,442
Creditors -
amounts falling
due after more
than one year ( 2,260) - ( 2,300)
-------- -------- --------
Total net assets 3,588 4,828 4,142
-------- -------- --------
Capital and reserves
Called up share
capital 8 8,885 8,871 8,871
Share premium 8 736 687 687
Exchange
equalisation
reserve 8 ( 767) ( 194) ( 500)
Profit and loss
account 8 ( 5,266) ( 4,536) ( 4,916)
-------- -------- --------
Equity
shareholders'
funds 3,588 4,828 4,142
-------- -------- --------
Impax Group plc
Consolidated Cash Flow Statement for the six months ended 31 March
2004
------------------------ ----- ------- ------ ------- ------ -------
Six months Six months Year ended
ended ended
31 Mar 04 31 Mar 03 30 Sept 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash outflow from
operating activities ( 257) ( 570) ( 876)
Returns on investments and
servicing of finance
Interest received 31 3 20
Interest paid ( 59) ( 26) ( 54)
Taxation ( 33) - -
Capital expenditure and
financial investment
Purchase of tangible
fixed assets ( 90) - ( 5)
Proceeds from sale of
fixed assets 85 64 84
Management of liquid
resources
Cash held on deposit to
support oil activities - 79 75
------- ------- -------
Net cash outflow before
financing ( 323) ( 450) ( 756)
Financing
Increase working capital
loan - 476 656
Repayment of working
capital loan - - ( 1,229)
Net proceeds from
Convertible Unsecured
Loan Stock - - 2,300
------- ------- -------
- 476 1,727
------- ------- -------
(Decrease)/increase in
cash in the period ( 323) 26 971
------- ------- -------
Reconciliation of net
cash flow to movement in
net debt
(Decrease)/increase in
cash in the period ( 323) 26 971
Cash inflow from
increase in net debt - ( 556) ( 1,727)
(Decrease) in cash on
deposit in year - - ( 75)
Translation differences 20 ( 32) ( 56)
------- ------- -------
Movement in net debt in
the period ( 303) ( 562) ( 887)
Net debt at beginning of
period ( 1,080) ( 193) ( 193)
------- ------- -------
Net debt at end of
period ( 1,383) ( 755) ( 1,080)
------- ------- -------
Reconciliation of operating profit/(loss) to net cash flow from operating
activities
Six months Six months Year ended
ended ended
31-Mar-04 31-Mar-03 30-Sep-03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating loss ( 288) ( 2,258) ( 2,586)
Impairment provisions - 1,712 1,570
Goodwill amortisation
charge 141 141 283
Depreciation and
depletion 2 3 6
(Increase)/decrease in
debtors ( 9) 19 ( 267)
(Decrease)/increase in
creditors ( 103) ( 187) 118
------- ------- -------
Net cash flow from
operating activities ( 257) ( 570) ( 876)
------- ------- -------
Impax Group plc
Notes to the Interim Accounts for the six months ended 31 March 2004
---- ------------------- ------- ----- ------- ----- ------- ----- --------
1 The financial information set out in this report does not constitute full
accounts for the purposes of Section 240 of the Companies Act 1985. The
interim accounts for the six months ended 31 March 2004 and 31 March 2003 are
unaudited. The comparative figures for the financial year ended 30 September
2003 are not the Company's statutory accounts for the financial year but are
abridged from those accounts which have been reported on by the Company's
auditors, whose report was unqualified. The interim accounts have been
prepared on the basis of the accounting policies set out in the annual
financial statements of the Group for the year ended 30 September 2003. The
interim accounts were approved by the Directors on 18 May 2004.
2 Segment analysis
Six months Six months Year ended
ended ended
31 Mar 04 31 Mar 03 30 Sept 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover
Financial 880 429 1,177
services
Oil 11 - 6
------- ------- --------
891 429 1,183
------- ------- --------
Operating loss
Financial ( 142) ( 341) ( 506)
services
Oil - ( 62) ( 171)
Exchange loss ( 5) ( 2) -
Amortisation of ( 141) ( 141) ( 283)
goodwill ------- ------- --------
( 288) ( 546) ( 960)
Impairment - ( 1,712) ( 1,626)
provisions ------- ------- --------
( 288) ( 2,258) ( 2,586)
Net interest ( 62) ( 23) ( 41)
payable
------- ------- --------
Loss on ordinary activities ( 350) ( 2,281) ( 2,627)
before taxation
Tax on loss on - - ( 33)
ordinary ------- ------- --------
activities
Loss for the year ( 350) ( 2,281) ( 2,660)
------- ------- --------
3 Exceptional Items
Six months Six months Year ended
ended ended
31 Mar 04 31 Mar 03 30 Sept 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Impairment in value of Nukern - 1,712 1,626
Field -------- -------- -------
In December 2003, the Group entered into an agreement to facilitate the disposal
of the Nukern oilfield. The Directors reviewed the value of this asset and
adjusted its carrying value to US$4,000,000 (£2,400,528). This adjustment was
based on the Directors' belief that any disposal arrangements were likely to
include deferred terms based on long-term production.
4 Amounts denominated in US Dollars have been converted at the closing rate on 31
March 2004 of £1 to $1.82 (31 March 2003: $1.57; 30 September 2003: $1.67). The
results of the US subsidiary undertaking have been translated on a monthly basis
at the average rate ruling during each month.
5 The figures for basic loss per share are based on the loss attributable to the
Group of £350,000 (31 March 2003: £2,281,000; 30 September 2003: £2,660,000) and
on the weighted average number of ordinary shares in issue during the period of
31 March 2004: 35,698,084 (31 March 2003: 35,485,764; 30 September 2003:
35,485,764).
The calculation of diluted loss per share is based on the weighted average number
of shares outstanding adjusted by the dilutive share options and convertible loan
stock. These adjustments give rise to an increase in the weighted average number
of shares outstanding to 31 March 2004: 91,249,098 (31 March 2003: 38,145,858; 30
September 2003: 38,869,864).
In order to show results from operating activities on a comparable basis, an
adjusted loss per share has been calculated which excludes goodwill amortisation
and exceptional items from the results.
6 The Directors do not propose an interim dividend.
7 Cash at bank and in hand
Six months Six months Year ended
ended ended
31 Mar 04 31 Mar 03 30 Sept 03
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash at bank and on hand 822 230 1,159
Cash on deposit 55 64 61
-------- --------- --------
877 294 1,220
-------- --------- --------
8 Reconciliation of movements in
capital and reserves
Share capital Share premium reserve Exchange equilisation reserve Profit &
loss reserve
£'000 £'000 £'000 £'000
At 1 October 8,871 687 ( 500) ( 4,916)
2003
Loss for the - - - ( 350)
period
Conversion of 14 49 - -
Loan Stock
Translation - - ( 267) -
adjustments ------- ------- ------- -------
As at 31 8,885 736 ( 767) ( 5,266)
March 2004 ------- ------- ------- -------
Copies of this interim statement will be sent to shareholders and are available free of charge from the
Company's registered office, Broughton House, 6 - 8 Sackville Street, London W1S 3DG. It is also available
from our website www.impax.co.uk.
This information is provided by RNS
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