Interim Results
Impax Group PLC
31 May 2006
31 May 2006
Impax Group plc
Interim results for the six months ended 31 March 2006
Impax Group plc, which provides specialised asset management services within the
environmental markets sector, today announces its interim results for the six
months ended 31 March 2006.
Highlights
• Funds under management are now £335m
• The Group has generated a modest profit before tax of £8,000
• Bridgewell Securities Limited has been appointed sole Broker and Nomad
Commenting on the results, Keith Falconer, Chairman said:
'There have been two main drivers to our success. The first is the increasing
attractiveness of the environmental sector, as the fundamentals strengthen,
earnings and multiples rise, and large companies implement new business plans
and deploy capital. Second, against this backdrop, our investment team has been
able to sustain its strong performance. Our activities are seen as a means of
harnessing one of the most attractive growth sectors of the global economy.
Unusually for a group of our size, we have expertise in quoted equities, private
equity and venture capital. Using our specialist knowledge, we are quickly
building scaleable products in these areas and our non-quoted activities give
shareholders some protection from the volatility of global markets.
Corporate finance has become a very small part of our business, but we are
increasingly using this expertise to help us grow our fund management
activities, particularly as we commit more capital to non-quoted opportunities.
Prospects
By concentrating our efforts on fund management we have simplified our business
model and now have an exciting opportunity to grow the business and create value
for shareholders. The key will be to maintain performance, scale up existing
funds and add new products within our area of specialisation.'
For further information please contact:
Keith Falconer 020 7434 1122
Ian Simm
Impax Group plc
Impax Group plc
Chairman's Statement
At the time of the final results in December 2005, I suggested that the
considerable potential for Impax was beginning to be realised. As I write this
interim review, I remain comfortable with that view and can report that the
upward trend in funds under management has continued. Since the end of November
2005, funds under management have grown 46% from £229m to £335m at 26 May 2006.
This has been achieved by the strong performance of our various funds and by new
funds raised. Although there are always concerns that the equity markets may
suffer from corrections, we have a healthy pipeline of new business prospects
and are actively considering ways to grow the business with the launch of new
products. I am delighted to be able to report a profit before tax for the first
time for many years. Whilst very modest, it is a very different story from where
we were a couple of years ago.
There have been two main drivers to our success. The first is the increasing
attractiveness of the environmental sector, as the fundamentals strengthen,
earnings and multiples rise, and large companies implement new business plans
and deploy capital. Second, against this backdrop, our investment team has been
able to sustain its strong performance. Our activities are seen as a means of
harnessing one of the most attractive growth sectors of the global economy, with
investment opportunities around the globe in quoted and private companies. Given
the complexity of these markets, many institutions are happy to sub-contract
their exposure to this area.
Unusually for a group of our size, we have expertise in quoted equities, private
equity and venture capital. Using our specialist knowledge we are quickly
building scaleable products in these areas and our non-quoted activities give
shareholders some protection from the volatility of global markets.
Corporate finance has become a very small part of our business, but we are
increasingly using this expertise to help us grow our fund management
activities, particularly as we commit more capital to non-quoted opportunities.
Results for the period
The interim results show significantly higher turnover compared with this period
last year and I am delighted to report that we have made significant headway
towards profitability. Our continuing challenge is to grow assets under
management whilst controlling costs and maintaining our funds' strong
performance record.
Turnover for the six months to 31 March 2006 was £1,528,000 (2005: £951,000).
The net result for the period was a small profit of £8,000 (2005: a loss of
£250,000) and this was after a £141,000 (2005: £141,000) charge for the
amortisation of goodwill, an accrual of £163,000 for the Employee Benefit Trust
(2005: Nil) and a profit of £58,000 (2005: Nil) arising from the mark-to-market
revaluation of a listed investment at 31 March 2006.
Asset Management
Impax Asset Management ('IAM') was able to expand significantly its funds under
management during the period, and is well positioned for the launch of new
products. Revenue for the interim period was £1,447,000 (2005: £530,000). By 31
March 2006, IAM managed or advised seven funds with total assets of £309m (2005:
£94m). By 26 May 2006, this has risen further to £335m.
The team again achieved strong performance. In the twelve months ended 31 March
2006, the net asset value ('NAV') of the largest fund, Impax Environmental
Markets plc ('IEM'), rose 46.9% while the MSCI World Index grew by 26.3%. IEM's
share price has remained at a premium to NAV for most of this period and, in
response to investor demand, the trust issued an additional 12 million new
shares between January and March.
Other funds investing in quoted equities have grown significantly. Impax
Environmental Markets (Ireland), the open-ended 'sister fund' of IEM, grew net
assets from £26.5m at November 2005 to £40.9m by 31 March 2006 and to £46.1m by
26 May 2006, while the Amsterdam-listed ASN Milieufonds, a fund managed by IAM,
grew from €28.5m to €72.4m over the same period.
As I reported six months ago, Impax New Energy Investors LP, our fund investing
in projects in the renewable energy and related sectors, has been seeking new
additional investors. On 15 May 2006, we reported that this fund had achieved a
second closing, taking capital commitments from €60m to €97m. Fund raising will
continue, with the aim of reaching the target size of €125m. Meanwhile, the
investment team is working hard on a substantial flow of potential investment
opportunities.
With over 80 institutional investors in our funds, we are well positioned to
expand the business further. In addition to scaling up our existing funds, we
expect to be able to announce initiatives to develop and launch new products in
the coming months.
Corporate Finance
Impax Capital's results are inevitably reliant on success fees. There were no
transactions closed in the first half, but agreed deals are moving through the
pipeline and we anticipate that the income for the year will be weighted in
favour of the second half.
Convertible Unsecured Loan Stock
The Loan Stock has a final date for conversion in July this year, and it is
likely that most holders will choose to convert their holding into ordinary
shares. This would significantly improve the Group's balance sheet by converting
borrowings into Shareholders' Equity. It would also reduce the interest burden
on the Group.
Nominated Adviser and Broker
I am pleased to report that we have appointed Bridgewell Securities Limited
('Bridgewell') as nominated adviser and broker to the Group. They will help to
give us wider exposure than we have previously enjoyed and provide further scope
for distribution of our funds. Bridgewell's compensation has been structured to
align its interests closely with shareholders. For the next 12 months they will
receive an option over 500,000 shares in the Group, exercisable at 20p within 3
years. Subsequently, if they remain as nominated adviser and broker to the
Group, they will receive an additional option over such number of ordinary
shares, where the exercise price is equal to the average closing share price
during the four weeks prior to 30th May 2007, which, when multiplied by the
exercise price equates to £100,000. Vesting conditions apply to both options.
Prospects
By concentrating our efforts on fund management, we have simplified our business
model significantly and now have an exciting opportunity to grow the business
and create value for shareholders. The key will be to maintain performance,
scale up existing funds and add new products within our area of specialisation.
As the Group moves into profitability, we harbour ambitions to pay dividends
when the Board considers that the reserves of the Company and the financial
position of the Group enable it to do so.
We are grateful to our shareholders for their support and I hope to be in a
position to update you with news of favourable developments over the rest of the
year.
J Keith R Falconer
31 May 2006
Impax Group plc
Consolidated Profit & Loss Account for the six months ended 31 March 2006
-----------------------------------------------
Notes Six months Six months Year ended
ended ended
31 Mar 06 31 Mar 05 30 Sept 05
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover 1,528 951 1,725
Operating expenses
Goodwill
amortisation (141) (141) (283)
Employee Benefit
Trust charge (163) - (154)
Revaluation of
investments 58 - 22
Write back
impairment of
investment - - 165
Other operating
expenses (1,259) (1,035) (2,132)
------- -------- --------
(1,505) (1,176) (2,382)
Operating profit/(loss)
Continuing
operations 23 (225) (657)
Profit on disposal
of investment - - 129
------- -------- --------
23 (225) (528)
Net interest
payable (15) (25) (65)
------- -------- --------
Profit/(loss) on
ordinary activities
before taxation 8 (250) (593)
Taxation - - -
------- -------- --------
Profit/(loss)
attributable to the
Group 8 (250) (593)
======= ======== ========
======= ======== ========
Basic profit/(loss)
per share 3 0.02p (0.67)p (1.56)p
Fully diluted
profit/(loss) per
share 3 0.01p (0.27)p (0.65)p
Adjusted
profit/(loss) per
share 3 0.68p (0.09)p (0.75)p
======= ======== ========
Statement of Total Recognised Gains and Losses
Profit/(loss) for
the period 8 (250) (593)
Currency
translation
differences 23 (106) 47
------- -------- --------
Total recognised
profits/(losses) 31 (356) (546)
======= ======== ========
========
All disclosures relate only to continuing operations.
Impax Group plc
Consolidated Balance Sheet as at 31 March 2006
---- ----------------- --- ---- -------- --------- --- -------------
Notes As at As at As at
31 Mar 06 31 Mar 05 30 Sept 05
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Fixed assets
Intangible fixed assets 1,488 1,771 1,629
Tangible fixed assets 28 11 13
------- -------- --------
1,516 1,782 1,642
------- -------- --------
Current assets
Debtors due after one year 1,890 2,078 2,042
Debtors due within one year 1,013 813 1,284
Investments 138 - 80
Cash at bank and in hand 1,379 839 863
------- -------- --------
4,420 3,730 4,269
Creditors - amounts falling due
within one year (444) (311) (636)
------- -------- --------
Net current assets 3,976 3,419 3,633
Total assets less current
liabilities 5,492 5,201 5,275
Creditors -
amounts
falling due
after more
than one year (2,229) (2,279) (2,302)
-------- --------
-------
Total net
assets 3,263 2,922 2,973
======= ======== ========
Capital and reserves
Called up share capital 5 8,995 8,892 8,974
Share premium 5 834 759 759
Exchange equalisation reserve 5 (691) (867) (714)
Treasury Shares 5 (73) - (73)
Other reserve 5 394 - 231
Profit and loss account 5 (6,196) (5,862) (6,204)
-------- --------
-------
Equity
shareholders'
funds 3,263 2,922 2,973
======= ======== ========
Impax Group plc
Consolidated Cash Flow Statement for the six months ended 31 March 2006
-----------------------------------------------
Six months Six months Year ended
ended ended
31 Mar 06 31 Mar 05 30 Sept 05
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash inflow/(outflow) from
operating activities 506 (200) (486)
Returns on investments and servicing of finance
Interest received 59 67 131
Interest paid (51) (61) (149)
Capital expenditure and financial investment
Purchase of tangible fixed
assets (21) - (5)
Proceeds from sale of
investments - - 236
Proceeds from sale of fixed
assets - 84 -
Financing
Issue of share capital - - 86
------- -------- --------
Increase/(decrease) in cash
in the period 493 (110) (187)
======= ======== ========
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash
in the period 493 (110) (187)
Non cash transaction
- convertible loan stock -
converted 96 - 1
- convertible loan stock -
issue costs amortised (23) (23) (47)
Translation differences 23 (53) 47
======= ======== ========
Movement in net debt in the
period 589 (186) (186)
Net debt at beginning of
period (1,439) (1,253) (1,253)
------- -------- --------
Net debt at end of period (850) (1,439) (1,439)
======= ======== ========
Impax Group plc
Consolidated Cash Flow Statement for the six months ended 31 March 2006
-----------------------------------------------
Reconciliation of operating profit/(loss) to net cash flow from operating
activities
Six months Six months Year ended
ended ended
31 Mar 06 31 Mar 05 30 Sept 05
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating profit/(loss) 23 (225) (657)
Write back impairment of
unlisted investment - - (165)
Revaluation of investments (58) - (22)
Depreciation charges 6 4 8
Amortisation of goodwill 141 141 283
Employee Benefit Trust
charge 163 - 154
Decrease/(increase) in
debtors 422 7 (246)
(Decrease)/increase in
creditors (191) (127) 159
------- -------- --------
------- -------- --------
Net cash flow from
operating activities 506 (200) (486)
======= ======== ========
------- -------- --------
Impax Group plc
Notes to the Interim Accounts for the six months ended 31 March 2006
-----------------------------------------------
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 2006 and 31 March 2005
are unaudited. The comparative figures for the financial year ended 30
September 2005 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
2005 except for the adoption and impact of FRS21, FRS22, and FRS25. The
interim accounts were approved by the Directors on 25 May 2006.
FRS21: Post balance sheet events
This standard has had no impact on the disclosures presented.
FRS22: Earnings per share
This standard has had no impact on the calculation of earnings per share.
FRS25: Financial Instruments: Disclosure and presentation
Whilst the Group does have convertible unsecured loan stock that would be
affected by the implementation of this standard's requirements, the effect
is not considered material to warrant disclosure. The Group expects the
convertible unsecured loan stock to convert before the next financial year
end at which time there will be no disclosure issues.
2 Amounts denominated in US Dollars have been converted at the closing rate
on 31 March 2006 of £1 to $1.74 (31 March 2005: $1.87; 30 September 2005:
$1.76). The results of the US subsidiary undertaking have been translated
on a monthly basis at the average rate ruling during each month.
3 The figures for basic profit per share are based on the profit attributable
to the Group of £8,000 (31 March 2005: loss - £250,000; 30 September 2005:
loss - £593,000) and on the weighted average number of ordinary shares in
issue during the period ended 31 March 2006: 45,960,882 (31 March 2005:
37,498,367; 30 September 2005: 38,065,022).
The figures for fully diluted profit per share include the weighted average
number of ordinary shares in issue and, in addition, shares that would
arise from a 100% conversion of the convertible unsecured loan stock which
would give a total of 97,589,338 shares at 31 March 2006 (31 March 2005:
91,249,097; 30 September 2005: 91,808,954).
In order to show results from operating activities on a comparable basis,
an adjusted loss per share has been calculated which excludes goodwill
amortisation, exceptional items and EBT charge from the results.
4 The Directors do not propose an interim dividend.
Impax Group plc
Notes to the Interim Accounts for the six months ended 31 March 2006
-----------------------------------------------
5 Reconciliation of movements in capital and reserves
Share capital Share premium
reserve
£'000 £'000
As at 1 October 2005 8,974 759
Conversion of Loan Stock 21 75
------ ------
As at 31 March 2006 8,995 834
====== ======
Exchange Treasury Other Profit and
equalisation shares reserve loss account
reserve
£'000 £'000 £'000 £'000
As at 1 October 2005 (714) (73) 231 (6,204)
Profit/(loss) for the period - - - 8
Exchange differences on 23 - - -
consolidation
Employee Benefit Trust charge - - 163 -
------ ------ ------ ------
As at 31 March 2006 (691) (73) 394 (6,196)
====== ====== ====== ======
====== ====== ====== ======
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. Copies are also available from our website www.impax.co.uk.
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