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Impax Asian Env Mkt (IAEM)

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Wednesday 29 September, 2010

Impax Asian Env Mkt

Annual Financial Report

RNS Number : 5385T
Impax Asian Environmental Mkts Plc
29 September 2010
 



IMPAX ASIAN ENVIRONMENTAL MARKETS PLC ("IAEM")

 

Annual Financial Report Announcement

For the period from 11 September 2009 to 30 June 2010

 

·             IAEM to raise additional monies through an Open Offer, Offer for Subscription and Placing of C Shares to satisfy ongoing demand for the Company's share capital

·             Solid NAV performance since launch, with an increase in undiluted net asset value per Ordinary Share of 12.2% over the period ended 30 June 2010

·             Strong outperformance of comparator indices (MSCI AC Asia Pacific ex-Japan Index, FTSE Environmental Opportunities Asia Pacific ex-Japan Index, FTSE Environmental Opportunities Japan Index)

·             Ordinary Shares have traded at a premium to NAV on an almost uninterrupted basis since launch.  10.4m Shares issued by way of tap issue over the period to meet ongoing demand

·             An interim dividend of 0.4p per Ordinary Share for the period to be paid on 22 October 2010 to Shareholders on the register on 8 October 2010

·             The outlook for the Company remains positive, with equity markets showing signs of increased confidence, the drivers of Asia Pacific environmental markets continuing to develop well, and the Company's portfolio showing attractive valuations

 

Allan McKenzie, Chairman, said:

"We are pleased with the progress which the Company has made since its launch in October of last year.  Solid NAV performance, strong ongoing demand for the Company's Shares in the secondary market, and the compelling investment story provided by Asia Pacific environmental companies provide a sound platform for the forthcoming C Share Issue."

 

Bruce Jenkyn-Jones, Co-Manager of IAEM and Managing Director of Listed Equities at Impax, said:

"A broad range of investment opportunities exist across the region as governments and industry work to reduce oil dependency, provide energy security, ensure water availability and mitigate inflationary infrastructure bottlenecks. 

 

"IAEM continues to benefit from the attractive opportunities offered by the expansion of domestic infrastructure, the manufacturing of low cost environmental products for export and the increasing environmental focus of many traditional industrial and manufacturing companies."

 

 

 

 

INVESTMENT OBJECTIVE AND FINANCIAL HIGHLIGHTS

 

INVESTMENT OBJECTIVE

 

The Company's investment objective is to generate long-term capital growth through investment in a diverse portfolio of quoted companies in the markets for cleaner or more efficient delivery of basic services of energy, water and waste in the Asia Pacific Region. To be eligible for investment, such companies must have at least 20% of their turnover, profits or invested capital in these markets.

 

FINANCIAL HIGHLIGHTS

                                                                                                                       

                                                                            


At 30 June 2010

At launch*

% change since launch

Net assets

£127.0m

£102.4m

+24.0%





Number of Ordinary Shares in issue

114,949,000

104,500,000

+10.0%





Net asset value ("NAV") per Ordinary Share




-       Undiluted

110.5p

98.0p

+12.8%

-       Diluted

108.9p

98.0p

+11.1%





NAV per Ordinary Share (excluding current period net revenue)




-       Undiluted

110.0p

98.0p

+12.2%

-       Diluted

108.4p

98.0p

+10.6%





MSCI AC Asia Pacific (ex-Japan) Index (sterling)

255.3

252.4

+1.1%

FTSE Environmental Opportunities Asia Pacific (ex-Japan) Index (sterling)

 

159.5

 

151.2

 

+5.5%

FTSE Environmental Opportunities Japan Index (sterling)

 

1.164

 

1.111

 

+4.8%





Ordinary Share price (mid-market)

112.8p

100.0p

+12.8%

Subscription Share price (mid-market)

33.8p

0.0p

n/a





Ordinary Share price premium to diluted NAV

+3.6%

+2.0%

-





 

* On 23 October 2009

 

 

FINANCIAL CALENDAR

 

Annual General Meeting

25 November 2010 at 11 a.m.                                                               

145-157 St John Street

London EC1V 4RU

 

Dividend

Ex-dividend date: 6 October 2010

Record date: 8 October 2010

Payment date: 22 October 2010

Amount: 0.4p per Ordinary Share

 

 

CHAIRMAN'S STATEMENT

 

I am pleased to present the first Annual Report of Impax Asian Environmental Markets plc ("IAEM" or the "Company") for the period ended 30 June 2010 ("the Period").  The Company was incorporated on 11 September 2009 and subsequently launched on 23 October 2009 when its shares were listed on the London Stock Exchange.  On behalf of your Board I would like to welcome shareholders and, in particular, thank them for their support in the establishment of the Company.

 

At launch, the Company raised gross proceeds of £104.5m in the Placing and Offer for Subscription of Ordinary Shares and bonus issue of Subscription Shares.  During the Period a further 10,449,000 Ordinary Shares were issued at a premium to net asset value ("NAV") and at 30 June 2010 there were 114,949,000 Ordinary Shares and 20,900,000 Subscription Shares in issue.   On 23 July 2010, the Company announced that in light of continued demand for the Company's Ordinary Shares from both existing shareholders and potential new investors, the possibility of raising new monies through an issue of C Shares was being considered.  A prospectus containing details of a Placing, Open Offer and Offer for Subscription of C Shares and bonus issue of Subscription Shares will be sent to shareholders with this document.

 

The Company has had a successful start posting a rise in undiluted net asset value per Ordinary Share (excluding income) of 12.2% between launch and the end of the period. This compares favourably with three relevant indices.  Over the period, in Sterling terms, the MSCI AC Asia Pacific ex-Japan Index ("MXAPJ") has risen by 1.1% while the FTSE Environmental Opportunities Asia Pacific ex-Japan Index ("EOAX") and FTSE Environmental Opportunities Japan Index ("EOJP") have risen 5.5% and 4.8% respectively. The Ordinary Share price rose 12.8% from 100.0p to 112.8p over the Period. On average, the IAEM Ordinary Share price has traded at a 1.6% premium to diluted NAV. The IAEM Subscription Shares traded at 33.8p at the end of the Period.

 

The Company has been established to invest in rapidly expanding environmental markets in the Asia Pacific region. The challenges relating to finite resources and weak infrastructure are exacerbated by expanding populations and rising standards of living; governments are continuing to react to these issues by adopting more ambitious environmental plans and policies. In response to these drivers the universe of investment opportunities has continued to grow following a number of initial public offerings ("IPOs") and the expansion of environmental businesses within established companies.

 

The policy backdrop also continued to develop favourably as China and India both formally agreed to join the international climate change agreement. The Chinese government reiterated its commitment to renewable/alternative energies and the environment, with a promise of significant investment to be included in the 12th Five Year plan, which is expected to be announced over the next six months. Part of the plan could include higher installation targets for wind and solar energy, as well as higher usage of natural gas. Meanwhile, India has committed to reduce its CO2 emissions intensity and has announced a renewable energy target of 10% by 2015. New incentives for wind and solar power have been introduced to attract private investment by independent power producers.

 

The Company's net revenue return for the period was £0.6 million and the directors have today declared an interim dividend for the period of 0.4p per Ordinary Share.  The dividend will be paid on 22 October 2010 to shareholders on the register at the close of business on 8 October 2010.  The dividend has been declared as an interim rather than final dividend to ensure that it is attributed to existing Ordinary Shareholders before any C shares are issued.  It is the Company's intention to generate shareholder returns through capital growth rather than income.  Therefore, it should not be assumed that this level of dividend will be paid in future years.

                                               

Since the end of the period, equity markets have shown signs of increased confidence and this has been generally reflected in the performance of Asian environmental companies.  As of 24 September, the IAEM undiluted NAV (excluding income) had risen by 9.7% (share price had risen 8.0%) compared with a change of 9.2%, 12.0% and -0.2% for the MXAPJ, EOAX and EOJP (in Sterling terms) respectively. Given the ongoing development of environmental markets in the Asia Pacific region and the attractive valuation mentioned in the Manager's Report, we believe that the outlook for the Company remains positive.

 

Allan McKenzie

Chairman

29 September 2010

 

 

MANAGER'S REPORT

 

 

As reported in the Chairman's Statement, following a period of positive equity market and NAV performance in late 2009, IAEM has continued to perform well in spite of concerns over the robustness of economic activity elsewhere in the world.

 

Since the Company's inception, it has been encouraging to see the breadth of performance in the portfolio, with each sub-sector and country (except Australia and Taiwan) contributing positively to performance. The best performing sub-sectors were Water, Renewable Energy and Pollution Control, whilst the best performing countries were India, Philippines, Thailand and Singapore.

 

Overview of Asian Environmental Markets                         

 

Asian environmental markets have continued their rapid growth with strong support from regional governments and rising levels of corporate investment. China has pledged to cut its ratio of carbon dioxide to gross domestic product 40-45% by 2020 and is actively mandating energy efficiency measures and closing inefficient plants to achieve this goal. Reports suggest that the country's next Five Year Plan from 2011 onwards will call for more than USD 450bn investment in environmental protection and USD 700bn in clean energy.

 

Many countries have introduced subsidies for energy efficient products and electric vehicles, and are expanding privatised waste water and waste to energy projects. For example, India has launched its Solar Mission, targeting 20 Gigawatts ("GW") in solar installations by 2022 and expanded wind support including renewable energy certificates and generation based incentives. In addition they have increased programmes targeting development of urban water and rural irrigation infrastructure. South Korea has enacted a law on Low Carbon Green Growth to develop clean technologies and give Korean companies a leading position in international markets for environmental products.

 

The Company continues to benefit from attractive opportunities in key investment themes including expansion of domestic infrastructure across the region, leadership in low cost manufacturing of environmental products for the export market and undervalued companies in transition expanding into the environmental sector.

 

Since the launch of the Company, initial public offerings ("IPOs") have been strong in the Asian environmental sector, particularly in Hong Kong. The Company has participated in a number of these IPOs including China Longyuan, the largest wind farm developer in China. Overall the Asian environmental universe has grown from ca. 350 at the Company's launch to ca. 430 companies.

 

Renewable and Alternative Energy ("RAE") - 17% weighting

 

RAE was the second best performing sector in the portfolio, supported by strong domestic government policies and sound banking systems. The low cost Asian manufacturing theme continued with market share gains in solar equipment, as European solar markets recovered. The wind power generation market, however, was hurt by the soft US wind market and concern about grid constraints in China.

 

Policy developments in China were generally favourable as wind power tariffs were raised and the conventional power surcharge to support renewable energy development was doubled. It is expected the Chinese government will substantially increase its 2020 targets for wind and solar installations during the next Five-year Plan (2011-2015), including 5GW of offshore wind farms. Power grid constraints remain a concern for wind power development, and a national Feed-in-Tariff ("FITs") to create a domestic solar market has yet to be announced.  As discussed previously, India is seeking to expand renewable capacity in the next five years to achieve a 10% renewable proportion of electricity generation by 2015. Japan also extended FITs for wind, hydro and geothermal to meet its target of 10% of primary energy from renewables by 2020.

 

Aboitiz Power (renewable energy developer, Philippines) was the best performer and contributor in the sector, helped by the on-going privatisations in the Philippines power sector as well as surging power prices driven by power shortages. Taewoong (wind turbine components, Korea) was hurt by the slowdown in wind component export orders.

 

In this sub-sector, we took some profit on Aboitiz and reduced our weightings in wind equipment makers in favour of wind farm developers and solar equipment exporters.

 

Energy Efficiency ("EE") - 34% weighting                          

 

The EE sector performed well overall, with industrial and power plant upgrades and railway infrastructure rollout driving strong performances in industrial and transportation stocks. This was somewhat offset by delays in power grid investments impacting power network efficiency stocks and concerns about oversupply in light emitting diodes ("LEDs").

 

The Chinese government raised electricity tariffs for energy intensive industries and penalties for inefficient operators, aiming to consolidate these industries. In addition to forcing inefficient energy intensive plants to shut down, subsidies were announced to encourage energy efficient plant installations as well as electric and compact vehicles. Korea announced plans to invest USD 24bn to develop their smart grid and Electric Vehicle ("EV") roll out, and Japan announced USD1bn smart grid investment during the next five years in four cities.

 

Delta Thailand (power electronics, Thailand) was the best performer in the sector driven by strong exports from Thailand and a global shortage of solar power inverters. Thermax (power generation equipment, India) was the biggest contributor and rallied on a series of strong industrial production numbers in India and the announcement of a joint venture with Babcock and Wilcox. TBEA (power transmission equipment, China) was weak due to delays in power grid investments in China.

 

Due to the potential oversupply of LEDs ahead of their more widespread adoption in general lighting, we have trimmed our weighting in this sector.

 

Waste Technologies and Resource Management - 20% weighting

 

The waste technologies sector tends to have a higher correlation to commodity prices which have been relatively stable over the period. Whilst the paper recyclers have performed well with strong domestic consumption driving packaging demand, the metals recyclers were hurt by concerns that measures to slow the property market in China would impact industrial production as well as real estate construction.

 

In support of the sector, the Chinese government announced plans to establish 30 demonstration bases to promote recycling of scrap metals, with local government support for the construction of these bases.

 

Lee & Man Paper (paper recycler, China) was the best performer and contributor in the sector. The rise in domestic consumption drove up packaging demand and a sharp recovery in paper prices.  Transpacific Industries (integrated waste management, Australia) underperformed due to delays in its restructuring efforts.

 

During the period we took some profits on Lee & Man Paper and Goodpack (waste technology equipment, Singapore), and added Fook Woo (paper recycler, China) and China Metal Recycling (metals recycler, China).

 

Water Treatment and Pollution Control - 29% weighting

 

Water Infrastructure and Pollution Control was the best-performing sector in our portfolio, with positive performances from all but a few of the Company's stocks. This broad performance was driven by the increasing recognition that clean water and air resources are major constraints to social welfare and economic growth and this has prompted governments to put in place supportive policies and funding for the development of irrigation, waste water treatment, and natural gas infrastructure.

 

In China, local water prices continue to rise and the government expects to double investment in environmental protection to USD 450bn in the next Five year plan. The government also announced the intention to increase the use of natural gas from 4% of their energy mix in 2009 to 8% by 2015. The Government of India doubled the national subsidy for Micro Irrigation Systems ("MIS") in the FY 2011 Budget.

 

Jain Irrigation (irrigation, India) was the best performer and contributor in the sector, which benefited from increased visibility and accelerated expansion plan as MIS moves from an annual funding allocation to become part of the Five Year plan. With the delay of the company's dual listing plan in Hong Kong, Sinomem (water infrastructure, China) underperformed despite solid fundamentals and low valuation.

 

During the period we sold out of Guangdong Investments (water utility, China) and Woongjin Coway (water distribution, Korea) as both companies began to shift focus toward non-water related businesses. In addition, we have taken profits in other water companies following outperformance.

 

Portfolio Activity and Current Structure                  

 

The Company started the period investing the initial funds in a portfolio of 46 listed companies. Since that time we have sold out of 10 companies and we have invested in 18 new companies. As a result the Company had investments in a total of 54 listed companies on 30 June 2010.  The structure of the Portfolio is shown on page 7 of the report.

 

China and Hong Kong continue to represent the largest proportion of the portfolio at 36% given its large environmental markets opportunity. We have reduced IAEM's Japanese holdings to 18% due to slower growth rates, and have increased exposure to India and South Korea since the launch of the Company.

 

The Company has maintained its diversified subsector holdings, increasing energy efficiency to 34%, and adding high efficiency industrial automation and power electronics companies. Correspondingly we reduced the weighting in Water to 29% and Renewable Energy to 17%.

 

The majority (77%) of the Company's holdings have market capitalisations of less than £2bn. The main area of addition to the portfolio has been in the larger companies, following the addition of typically Korean, energy efficiency companies.

 

Macro and Regional Perspective

 

At the time of writing, we remain cautious on the outlook for global equity markets given the European sovereign risk and the uncertainty about the sustainability of the pace of economic recovery in developed markets. The moderation in the rate of growth in the US has resulted in a strong Yen, which acts as a headwind for Japanese exporters.

 

Within the Asian region, we are more positive on China as it approaches the end of its tightening cycle; here the environmental sector continues to be a beneficiary of investment and supportive regulation. Korean growth has been higher than expected whilst inflation has remained at manageable levels. Inflation in India is more of a concern, but we are encouraged that the authorities have responded by increasing interest rates, and believe that growth rates will remain strong.

 

IAEM Outlook

 

The drivers of the environmental markets in Asia Pacific continue to develop well and there exists a broad range of investment opportunities across the region and the environmental sub-sectors as investment expands to reduce oil dependency, provide energy security, ensure water availability and mitigate inflationary infrastructure bottlenecks.  In addition, we believe that the valuation of the existing portfolio is attractive.

 

We will continue to post monthly updates on sector news and on the Company's performance at www.impax.co.uk.

 

Impax Asset Management Limited

29 September 2010

 

Principal risks and uncertainties

The Board considers that the main risks and uncertainties faced by the Company fall into the following categories.

 

(i) Asia Pacific Region

 

Generally, investment in emerging markets is suitable only for sophisticated investors who fully appreciate the significance of the risks involved. In particular, in certain countries in which the Company invests:

 

(a) liquidity and settlement risks may be greater than in Western Europe and the United States;

 

(b) accounting standards may not provide the same degree of shareholder protection as would generally apply internationally;

 

(c) national policies may restrict the investment opportunities available to foreign investors, including restrictions on investing in issuers or industries deemed sensitive to relevant national interests;

 

(d) the fiscal and monetary systems remain relatively undeveloped and this may affect the stability of the economic and financial markets of these countries;

 

(e) substantial limitations may exist with respect to the Company's ability to repatriate investment income, capital or the proceeds of sales of securities;

 

(f) brokerage commissions, custody fees and taxes may be higher than in Western Europe or the United States;

 

(g) assets may be subject to increased political and/or regulatory risk;

 

(h) the economic and legal structures in place may be less diverse and mature, and political and regulatory systems may be less stable, than those of more developed countries;

 

(i) corporate governance procedures in certain countries in the Asia Pacific Region may be less extensive or not applied as rigorously due to the associated costs or business customs of a country; and

 

(j) social and religious instability, crime and corruption may adversely affect performance.

 

While the Manager will take these factors into consideration in making investment decisions, there can be no assurance that the Company will be able to avoid these risks.

 

Most of the companies in which the Company invests are located in and conduct their business in the Asia Pacific Region. Accordingly, performance of the Company's investments and the results of its operations are substantially dependent on the economic and political conditions prevailing in the Asia Pacific Region. Certain countries in the Asia Pacific Region have less liquid and developed securities markets than the United States and Western Europe. Given that some of the organised securities markets in the Asia Pacific Region have been established relatively recently, the procedures for settlement, clearing and registration of securities transactions may be subject to legal uncertainties, technical difficulties and delays. Investing in industries in the Asia Pacific Region carries some particular risks:

·     governmental liberalisation of basic services and increased environmental legislation market companies may not occur or may not occur at the rate or in the ways anticipated.

·     the costs of technology in environmental markets may not continue to fall or may not maintain price competitiveness.

·     the performance of investments in Asia Pacific environmental market companies are likely to be adversely affected if industrial and utility capital spending by their customers were to decrease or be deferred in turn affecting energy prices.

·     The Company's portfolio may include newly established companies and companies whose future is dependent on widespread adoption of their products and services.

·     The Company's investments are mainlytraded on the main markets in the Asia Pacific Region and a significant fall and/or a prolonged period of decline in these markets would adversely impact the performance of the Company. This could be triggered by unfavourable developments or events within or outside of the Asia Pacific Region. Poor performance or underperformance may also result from the Manager's country and/or stock selection or the market rating of the Company not reflecting good performance.

 

Furthermore, the performance of some companies in the Asia Pacific Region in which the Company invests may be adversely affected by changes in applicable law and regulation.

 

Although significant developments have occurred in recent years, the sophisticated legal and regulatory frameworks necessary for the efficient functioning of modern capital markets have yet to be fully developed in some countries in the Asia Pacific Region. In particular, legal protections against market manipulation and insider trading are less well-developed in some countries in the Asia Pacific Region, and less strictly enforced, than in the United States and Western European countries and existing laws and regulations may be applied inconsistently with consequent irregularities in enforcement. In addition, less information relating to the proposed target entities and certain investments may be publicly available to investors in securities issued or guaranteed by such entities than is available to investors in entities organised in the United States or Western European countries.

 

Equities that are listed on the main markets in the Asia Pacific Region may be less liquid and may carry a higher risk than an investment in shares listed on markets in the United States and Western Europe.

 

(ii) Market risks

 

The Company invests in companies with a small market capitalisation. Such investments are likely to be subject to higher valuation uncertainties and liquidity risks than those with larger capitalisations. The Company's portfolio is likely to have a higher volatility than main equity indices such as the FTSE 100 Index. Securities in some of the investee companies may be illiquid. Valuations of Asia Pacific environmental companies may remain at current levels or may fall.

 

There are inherent risks involved in stock selection.  The Investment Manager is experienced and employs its expertise in selecting the stocks in which the Company invests.  The Manager spreads the investment risk over a wide portfolio of investments and at the period end the Company held investments in 54 companies.

 

The Company invests in securities that are not denominated or quoted in sterling, the base currency of the Company. The Net Asset Value per Share is reported in sterling and dividends are declared and paid in sterling. The movement of exchange rates between sterling and any other currencies in which the Company's investments are denominated or its borrowings drawn down may have an unfavourable or favourable effect on the return otherwise experienced in the investments made by the Company. The Company will not normally hedge against foreign currency movements affecting the value of its investments, but the Manager will take account of this risk when making investment decisions.

 

(iii) Corporate governance and internal control risks

 

The main risk areas are poor allocation of the Company's assets and stock selection by the Investment Manager, poor governance by the Board and poor compliance or administration including the loss of investment trust status.  These factors could potentially result in unacceptable returns or losses for shareholders.

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable laws and regulations.

 

Company law requires the directors to prepare accounts for each financial period.  Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practices (United Kingdom accounting standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of the period and of the net return for the period.  In preparing these accounts, the directors are required to:

 

·      select suitable accounting policies and then apply them consistently;

·      make judgements and estimates which are reasonable and prudent; and

·      state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts;

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the accounts comply with the Companies Act 2006.  They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Under applicable law and regulations, the directors are also responsible for preparing a Directors' Report, including a formal statement of Corporate Governance and a Directors' Remuneration Report that comply with such law and regulations.

 

The accounts are published on the www.impax.co.uk website which is maintained by the Company's Manager, Impax Asset Management Limited ("IAM"). The maintenance and integrity of the website maintained by IAM is, so far as it relates to the Company, the responsibility of IAM. The work carried out by the auditors does not involve consideration of the maintenance and integrity of this website and, accordingly, the auditors accept no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. The accounts are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.

 

STATEMENT UNDER THE DISCLOSURE & TRANSPARENCY RULES 4.1.12

 

The directors each confirm to the best of their knowledge that:

 

(a)        the accounts, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b)        this Annual Report includes a fair review of the development and performance of the business and position of the Company, together with a description of the principal risks and uncertainties that it faces.

 

 

For and on behalf of the Board

Allan McKenzie

Chairman

29 September 2010

 

 

INCOME STATEMENT

For the period from 11 September 2009 to 30 June 2010

 

 


Revenue

£'000

Capital

£'000

Total

£'000





Gains on investments

-

13,572

13,572

Income

1,234

-

1,234

Investment management fees

(171)

(682)

(853)

Other expenses

(377)

-

(377)

Return on ordinary activities before taxation

 686

 12,890

 13,576

Taxation

(105)

-

(105)

Return on ordinary activities after taxation

 581

 12,890

 13,471





Return per ordinary share - undiluted

0.52p

11.53p

12.05p

Return per ordinary share - diluted

0.51p

11.40p

11.91p

 

 

The total column of the Income Statement is the profit and loss account of the Company.

 

All revenue and capital items in the above statement derive from continuing operations.  No operations were acquired or discontinued during the period.

 

A Statement of Total Recognised Gains and Losses has not been presented as all gains and losses are recognised in the Income Statement.

The Company was incorporated on 11 September 2009 and its business operations commenced when its shares were admitted to trading on the London Stock Exchange on 23 October 2009.

 

 

BALANCE SHEET

At 30 June 2010

 






£'000

Fixed assets



Investments at fair value through profit and loss


125,017




Current assets



Income receivable


169

Sales - future settlements


587

Other debtors


9

Cash at bank and in hand


5,389



6,154




Creditors: amounts falling due within one year



Purchases - future settlements


4,009

Accrued liabilities


185



4,194







Net current assets


1,960







Total net assets


126,977

 

Capital and reserves: equity

 



Share capital


1,170

Share premium account


9,986

Share purchase reserve


102,350

Capital reserve


12,890

Revenue reserve


581

Shareholders' funds


126,977

 

Net assets per Ordinary Share - undiluted

 


 

110.46p

Net assets per Ordinary Share - diluted


108.85p

 

 

Impax Asian Environmental Markets plc is incorporated in England with registered number 7016550.

 

 

RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS

For the period from 11 September 2009 to 30 June 2010

 

 

 


 

Share

Capital

£'000

Share

 Premium

Account

£'000

Share

Purchase

Reserve

£'000

 

Capital

Reserve

£'000

 

Revenue

Reserve

£'000

 

 

Total

£'000








Shares issued during the period

 

1,149

 

114,559

 

-

 

-

 

-

 

115,708

Subscription shares issued during the period

 

21

 

(21)

 

-

 

-

 

-

 

-

Share issue expenses

-

(2,202)

-

-

-

(2,202)

Cancellation of share premium

 

-

 

(102,350)

 

102,350

 

-

 

-

 

-

Profit for the period

-

-

-

12,890

581

13,471

Closing shareholders' funds as at 30 June 2010

 

1,170

 

9,986

 

102,350

 

12,890

 

581

 

126,977

 

 

 

CASH FLOW STATEMENT

For the period from 11 September 2009 to 30 June 2010

 

 

                                                                                                                                               


£'000



Operating activities




Cash inflow from investment income and bank interest

1,065

Cash outflow from management expenses

(1,054)

Cash inflow from disposal of investments

70,901

Cash outflow from purchase of investments

(178,719)

Cash outflow from foreign exchange costs

(205)

Cash outflow from taxation

(105)

Net cash flow from operating activities

(108,117)



Financing


Proceeds of share issues

115,708

Expenses of share issues

(2,202)

Net cash flow from financing

113,506





Increase in cash and closing balance

5,389

                                                               

                                               

NOTES

 

1.             ACCOUNTING POLICIES

 

The accounts have been prepared in accordance with applicable UK accounting standards.  The particular accounting policies adopted are described below.

 

(a)            Basis of Accounting

The Company manages its affairs to enable it to qualify as an investment trust for taxation purposes under section 1158 of the Corporation Tax Act 2010.  The accounts are prepared in accordance with UK Generally Accepted Accounting Practice ("GAAP") and the Statement of Recommended Practice "Financial statements of investment trust companies" ("SORP"), issued by the Association of Investment Companies in January 2009.

 

(b)           Investments

Investments have been classified as "fair value through profit or loss" and are initially recognised on the trade date and measured at fair value.  Investments are measured at subsequent reporting dates at fair value by reference to the following criteria:-

 

·      Any securities of companies quoted on an investment exchange are valued at fair value by reference to market bid price.

 

·      Any investments in derivatives are valued at fair value. In the case of Participatory Notes this is by reference to latest broker quotations or, if unavailable or lower, by reference to the equivalent market bid price valuation of the relevant underlying security.

 

·      Any other investment is valued at best estimate of fair value as determined by the directors.

 

Changes in fair value are included in the Income Statement as a capital item.

 

Transaction costs incurred on the acquisition and disposal of investments are charged to the Income Statement as a capital item.

 

(c)            Income from Investments

Investment income from shares is accounted for on the basis of ex-dividend dates.  Unfranked dividend income is stated gross of withholding tax. 

 

Special Dividends are assessed on their individual merits and may be credited to the Income Statement as a capital item if considered to be closely linked to reconstructions of the investee company or other capital transactions. All other investment income is credited to the Income Statement as a revenue item.  Interest receivable is accrued on a time apportionment basis and reflects the effective interest rate. 

 

(d)           Capital Reserves

The Company is precluded by its articles from distributing its capital profit, except by way of redeeming or purchasing its own shares.  Profits achieved in cash by selling investments are dealt with in the capital reserve.  Changes in fair value arising upon the revaluation of investments that remain in the portfolio are dealt with through the capital reserve. 

 

The Company created a share purchase reserve following the cancellation of its share premium account on 9 December 2009.  This reserve may be used for the buy back of the Company's own shares.

 

(e)            Investment Management Fees

In accordance with the Company's stated policy and the directors' expectation of the split of future returns, 80% of investment management fees, net of attributable tax, are charged as a capital item in the Income Statement.  Tax relief in respect of costs allocated to capital is credited to capital via the capital column of the Income Statement on the marginal basis.

 

(f)            Deferred Taxation

Provision is made for deferred taxation, using the liability method, on all timing differences to the extent that it is probable that a liability will crystallise.  Deferred tax is recorded in accordance with FRS19 'Deferred tax'. Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date.  A deferred tax asset is only recognised to the extent that it is regarded as recoverable.

 

(g)            Foreign currency translation

All transactions and income in foreign currencies are translated into sterling at the rates of exchange on the dates of such transactions or income recognition.  Foreign currency assets and liabilities at the balance sheet date are translated into sterling at the rates of exchange at the balance sheet date.  Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the Income Statement as either a capital or revenue item depending on the nature of the gain or loss.

 

 

2.             INVESTMENT COMPANY STATUS

The Company is an investment company within the meaning of Section 833 of the Companies Act 2006.

 

 

3.             INCOME


2010


£'000

Income from investments:


Unfranked dividends from overseas investments

1,222

Treasury bill income receivable

6

Total

1,228

Other income:


Interest receivable

6

Total income

1,234

         

 

    

4.               ADMINISTRATION EXPENSES



2010



Revenue

Capital

Total


£'000

£'000

£'000

Investment management fees

171

682

853





Secretary and administrator fees

 

94

 

-

 

94

Custodian's fees

61

-

61

Directors' fees

58

-

58

Directors' other employment costs

6

-

6

Auditors remuneration




- for audit services

27

-

27

- for taxation

7

-

7

Broker fees

43

-

43

Miscellaneous expenses

81

-

81


377

-

377

Total administration expenses

548

682

1,230

 

 

Fees of £15,000 were also payable to the auditors for reporting accounting work performed in connection with the launch of the Company.  These fees are included in share issue costs.

 

 

5.             RETURNS PER ORDINARY SHARE

 

Undiluted return per share is based on the net gain on ordinary activities after taxation of £13,471,000 comprising a revenue return of £581,000 and a capital return of £12,890,000 attributable to the weighted average of 111,762,869 Ordinary Shares of 1p in issue during the period from the listing of the Company's Ordinary Shares on the London Stock Exchange on 23 October 2009 to 30 June 2010.  

 

Diluted returns per share are based on the net returns on ordinary activities after taxation above attributable to the diluted weighted average of 113,130,158 Ordinary Shares in issue during the period from the listing of the Company's Ordinary Shares on the  London Stock Exchange on 23 October 2009 to 30 June 2010.  

 

Dilution is caused by the Subscription Shares in issue during the above period.  Each Subscription Share carries the right to subscribe for an Ordinary Share at a price of 100p.

 

 

6.             DIVIDEND

 




2010





£'000


Dividend not reflected in the financial statements:





Interim dividend for the period ended 30 June 2010 of 0.4p per Ordinary Share



 

460


 

The above dividend will be paid on 22 October 2010 to shareholders on the register as at the close of business on 8 October 2010.

 

The revenue return for the period available for distribution by way of dividend was £581,000.

 

 

7.             NET ASSETS PER ORDINARY SHARE

 

Undiluted net assets per Ordinary Share is based on net assets of £126,977,000 divided by 114,949,000 Ordinary Shares in issue at the Balance Sheet date.

 

Diluted net assets per Ordinary Share is based on net assets of £147,877,000 divided by 135,849,000 diluted Ordinary Shares in issue at the Balance Sheet date. The diluted figures are based on the 20,900,000 Subscription Shares in issue at 30 June 2010 being converted into Ordinary Shares on that date at a price of 100p per Ordinary Share.

 

 

8.            RELATED PARTY TRANSACTIONS

 

Fees payable to the Investment Manager are detailed in note 4; the relevant amount outstanding as an accrual at 30 June 2010 was £105,912.

 

 

9.             FINANCIAL INFORMATION

 

This announcement does not constitute the Company's statutory accounts.  The financial information for 2010 is derived from the statutory accounts for 2010, which will be delivered to the registrar of companies following the Company's Annual General Meeting. The auditors have reported on the 2010 accounts; their report was unqualified and did not include a statement under Section 498(2) or (3) of the Companies Act 2006.

 

The Annual Report for the period ended 30 June 2010 was approved on 29 September 2010.  It will be posted to shareholders and will be made available on the Manager's website at www.impax.co.uk

 

This announcement contains regulated information under the Disclosure Rules and Transparency Rules of the FSA.

 

 

29 September 2010

 

Secretary and registered office:

Cavendish Administration Limited

145-157 St John Street

London

EC1V 4RU

 

Tel: 020 7490 4355

 

END

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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