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Impax Asian Env Mkt (IAEM)

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Thursday 17 February, 2011

Impax Asian Env Mkt

Half Yearly Report

RNS Number : 4141B
Impax Asian Environmental Mkts Plc
17 February 2011
 



IMPAX ASIAN ENVIRONMENTAL MARKETS PLC

 

HALF-YEARLY FINANCIAL REPORT

 

FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

 

 

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 per cent. of their turnover, profits or invested capital in these markets.

 

 

FINANCIAL INFORMATION

                                                                                                                       

                                                                            


At 31 December 2010

 

At 30 June 2010

 

% change

Net assets

£288.9m

£127.0m

+127.5%





Number of Ordinary Shares in issue

214,915,100

114,949,000

+87.0%





Net asset value ("NAV") per Ordinary Share




·     Undiluted

134.4p

110.5p

+21.6%

·     Diluted

129.1p

108.9p

+18.5%





NAV per Ordinary Share (excluding current period net revenue)




·     Undiluted

134.2p

110.0p

+22.0%

·     Diluted

128.9p

108.4p

+18.9%





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

307.2

255.3

+20.3%

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

 

198.3

 

159.5

 

+24.3%

FTSE Environmental Opportunities Japan Index (sterling)

1.356

 

1.164

 

+16.5%





Ordinary Share price

128.8p

  112.8p

+14.2%

Subscription Share price

34.5p

33.8p

+2.1%





Ordinary Share price (discount) / premium to diluted NAV

(0.2%)

+3.6%

-





 

Sources: Bloomberg, Cavendish Administration Limited

 

 

CHAIRMAN'S REVIEW

 

Following its launch in October 2009, Impax Asian Environmental Markets plc ("IAEM" or the "Company") performed well and attracted a high level of interest from investors. I am pleased to report that this strong performance and investor interest has continued into the six month period ended 31 December 2010 (the "Period").

Price performance and comment

The Company continued to perform well, posting a rise in undiluted net asset value (excluding income) of 22.0% over the Period. The breadth of strong performance across the sub-sectors and countries continued to be encouraging, with energy efficiency and China notable performers.  The Company performed broadly in line with the MSCI AC Asia Pacific (ex-Japan) Index ("MXAPJ") which rose 20.3% in sterling terms, whilst the FTSE Environmental Opportunities Asia Pacific (ex-Japan) Index ("EOAX") and FTSE Environmental Opportunities Japan Index ("EOJP") rose 24.3% and 16.5% in sterling terms respectively. A graph on page 9 shows the undiluted NAV and index movements during the Period.

The Ordinary Share price rose 14.2% from 112.8p to 128.8p over the Period. The IAEM Ordinary Share price has generally traded close to NAV, with a premium/discount range of 4.1%/-4.6% (average -0.03%). The Company's Subscription Shares traded at 34.5p at the end of the Period.

C Share issue

During the Period, the Company raised £131 million through a C Share issue.  This was an excellent result and the Board would like to thank existing and new shareholders for their support. The C Shares commenced trading on the London Stock Exchange on 27 October 2010 and the net proceeds of the C Share issue were invested and managed as a separate pool of assets until 80% of the net proceeds were invested.  The funds were invested broadly in line with the Ordinary Share portfolio.  The C Shares subsequently converted into new Ordinary Shares on 10 December 2010 with a conversion ratio of 0.7631 new Ordinary Shares for each C Share held.  In addition, holders of the new Ordinary Shares arising on conversion received  a bonus issue of 1 Subscription Share for every 5.5 new Ordinary Shares held.

Development of drivers in Asia and comment on market activity

Concerns over rising populations, scarce natural resources, lack of infrastructure and deteriorating environmental quality continue to escalate.  In response to these challenges, the policy backdrop has gained further momentum, particularly in China where the 12th Five Year Plan has established four strategic sectors with an environmental focus - renewable energy, electric vehicles, industrial energy efficiency and light emitting diodes ("LEDs"). This five year plan includes a US$450bn budget for environmental protection, focused on water supply and treatment. Meanwhile, India has started a nine state renewable energy certificate trading program and has announced a Green Investment Bank to support solar development.   With these and other developments the Directors are confident that Asian environmental markets will continue to expand rapidly in the future.

Appointment of new Board member

I am pleased to report that the Board has appointed Richard Franklin as a Director of the Company. Richard is founder & executive chairman of Energy & Carbon GmbH (an environmental advisory and development company, specialising in alternative energy & greenhouse gas emission reduction enterprises) and chairman of ECI Bioenergy Services.  He also has substantial experience of working and investing in the Asia Pacific Region.  We believe that his depth of experience will bring significant benefits to the Company.

Gearing

The Board and the Manager believe that conditions may be favourable for the Company to take on a level of long-term bank debt and we are currently exploring the various options available in this regard.

Update and outlook

Since the end of the Period, equity markets have seen mixed newsflow as growing confidence in the sustainability of the economic recovery in the US and reduced concerns about European sovereign debt issues have coincided with a pickup in inflationary pressures in Asia alongside expectations of further interest rate increases by China and India.  As at 14 February 2011, in sterling terms, the MXAPJ and the EOAX had declined 4.9% and 5.7% respectively since 31 December 2010 whilst the EOJP had risen by 0.4%.  The undiluted NAV (excluding income) of IAEM had fallen 7.2% to 124.5p while the Ordinary Share price had fallen 5.0% to 122.3p.  Notwithstanding these recent short-term negative movements, with positive earnings momentum and portfolio valuation at an attractive level, the Directors continue to believe that IAEM shares offer an attractive long-term proposition for investors seeking to benefit from the growth potential of Asian environmental markets.

 

Allan McKenzie

Chairman

17 February 2011

 

 

 

MANAGER'S REPORT

 

Investment Performance

The Company's performance for the six months ended 31 December 2010 (the "Period") has been robust with contributions coming from a broad range of countries (particularly China and Taiwan) and sectors (particularly energy efficiency and solar). The performance was broadly in line with the MSCI Asia Pacific (ex- Japan) Index.  However, the Company's performance was not as strong as the FTSE Environmental Opportunities Asia (ex-Japan) Index due to the strong performance of a number of large index constituents not owned by the Company.

 

Investment Universe & Portfolio Structure

Impax continues to focus on the bottom-up stock picking of companies with attractive operations and valuations.  We also take into account developments in the environmental market sub-sectors and the wider macro-environment. The universe of Asian environmental companies has continued to grow (ca. 480 companies) following a number of initial public offerings as well as established companies expanding their environmental businesses.

 

The Company ended the period with investments in 53 companies, which is within the expected range of 40-75 and one fewer than at the end of June 2010. The portfolio is diversified by both geography and sub-sector, with a particular focus in China at present followed by Japan, India and South Korea. On a sector basis the portfolio has its largest allocation to Energy Efficiency and smallest allocations to Diversified Environmental and Renewable & Alternative Energy. An analysis of the structure of the portfolio is shown on page 8.

 

Environmental Sub-sectors

There were significant developments in each of the principal environmental subsectors during the period and these are highlighted below:

 

Renewable & Alternative Energy ("RAE")

China continued to see strong growth in renewable energy installation, predominantly in the wind sector which saw 16 gigawatts of installations in 2010. However the price of wind turbines fell substantially due to over capacity in turbine manufacturing and demand in the global wind market remaining subdued.  By contrast, Chinese solar manufacturers benefited from a very strong market driven by exports to Europe with high levels of activity in Germany and Italy ahead of reductions in feed in tariffs (FiTs). Positive contributions came from solar companies ReneSola (solar, China), Trina Solar (solar, China) and OCI (polysilicon, South Korea).  In addition, Aboitiz Power (hydro and geothermal power producer, Philippines) performed strongly as it continues to benefit from the need to development power infrastructure in the Philippines. The Company's RAE weighting fell from 17% to 10% in the Period, as the Company's solar exposure was reduced following a Period of strong performance. Important additions included Goldwind (wind turbines, China), while we exited both Trina Solar (solar, China) and ReneSola (solar, China).  

 

Energy Efficiency ("EE")

EE was supported by the increasing focus on industrial and transport energy efficiency by governments and corporates. In particular, China announced details of the 12th Five Year Plan which included the creation of four strategic environmental industries, one of which is industrial energy efficiency. In addition, rising labour costs in China are driving increased factory automation.  Energy efficient products have also been in demand following growth in the power infrastructure, electronic goods (including LED TVs and lighting) and transport sectors, with roll-out of Chinese rail infrastructure in particular. Positive contributions came from Zhuzhou CSR (efficient rail engines, China) and Delta Thai (power electronics, Thailand). The Company's EE weighting grew from 34% to 41% in the Period as the investment opportunities expanded with the listing of China ITS (transport energy efficiency, China) and Boer Power (high efficiency power distribution, China) and increased exposure to the LED theme with the purchase of Seoul Semiconductor (LED packager, Korea). The Company exited Zhuzhou CSR after strong performance. 

 

Water Infrastructure & Technologies ("WIT") and Pollution Control ("PC")

Water continues to be a key investment priority across many of the large Asian economies, driven by water scarcity and polluted water sources. Water treatment facilities continued to grow rapidly in China through the acceleration of build, own, transfer ("BOT") projects.  There was also growth in India, though towards the end of the period there was increasing uncertainty about the outlook. Growth in the Chinese gas sector (as it replaces coal in the urban environment) continues to be strong and increases in wholesale gas prices appear to have been effectively passed through to customers, particularly commercial clients. In this sector, there were positive contributions from Campbell Brothers (environmental testing, Australia), Thai Tap (water utility, Thailand) and ENN Energy (urban gas supply, China). The Company's WIT and PC weighting was 29% at the start and the end of the Period. Important additions included VA Tech Wabag (water treatment equipment, India) while we exited Sinomem (water treatment equipment, Singapore).

 

Waste Management & Technologies ("WMT")

Continued recovery in commodity prices was the main driver for the waste sector, improving pricing for both metals and paper recyclers. Underlying economic recovery also drove improvements for diversified waste management companies as volumes recovered. The main contributors to performance in this sub-sector came from the recyclers Sims (metal recycling, Australia) and Fook Woo (paper recycling, China) as well as Transpacific Industries (diversified waste, Australia). The Company's WMT weighting grew from 12% to 13% in the Period. Key trades included adding to existing positions in recyclers and exiting OCI Materials (industrial gases, South Korea).

 

Diversified Environmental ("DE")

DE companies, which are reported separately, performed well over the period particularly Formosa Plastics (Taiwan) which reported strong earnings and a growing order book.  Of the IAEM holdings, Xinyi Glass (China) contributed positively following the announcement of capacity expansion in high growth markets.  The Company's DE weighting fell from 8% to 7% in the Period.

 

Macro & Regional Discussion

During the Period the macro-economic news was broadly positive with continued recovery in the global economy and positive data from the United States. Sovereign credit issues continued to be a concern in Europe, particularly for Spain, Portugal and Ireland. China continued to show strong growth but rising inflation means that the Chinese government is likely to maintain a relatively tight monetary policy.  Meanwhile, environmental policies will continue to be a major theme in the 12th Five Year Plan. South East Asian countries saw strong growth in their domestic economies whilst Australia saw growth on the back of strong commodity demand.

 

Outlook

We remain positive on key investment themes within the portfolio, namely the expansion of domestic power, water and waste infrastructure projects, opportunities for Asian low cost manufacturers in key environmental sectors and the transition of companies from traditional industries into higher growth environmental sectors. The momentum of environmental policy and legislation in the Asia Pacific region remains strong with energy efficiency in particular becoming an increasing focus of the Chinese Government. Despite inflation concerns we are confident in the earnings growth expectations for the portfolio and believe that the valuations are at attractive levels. 

 

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

 

 

Impax Asset Management Limited

17 February 2011

 

 

FIVE LARGEST INVESTMENTS

 

As at 31 December 2010

 

 

Xinyi Glass (energy efficiency, China) (3.9% of portfolio) Xinyi Glass is an integrated glass manufacturer specializing in the production of energy efficient glass for application in the automotive, high end construction and solar energy markets. The company also has plans to expand into electronic grade glass. The company is gaining market share through geographic expansion and industry consolidation. 

 

ENN Energy (city gas distribution, China) (3.6%) ENN is the largest privately run city gas distributor in China. The company has long term exclusive concessions in 88 cities covering an urban population of 46m people. The company also operates vehicle gas refuelling stations and a project in Vietnam. ENN is a beneficiary of the Chinese government's target to increase natural gas share of primary energy from 4% to 8% by 2015 in order to reduce pollution.

 

Epistar (LED, Taiwan) (3.4%) - Epistar is one of the largest light emitting diode ("LED") chip manufacturers globally. LEDs are used in the backlighting of many consumer electronic products and are much more energy efficient than the traditional light sources. Volume growth was originally driven by the adoption of LEDs first in mobile phones, then notebooks and in 2010 the LED television market expanded rapidly. Epistar is well placed to benefit from LED general lighting which is set to be the next big growth opportunity.

 

Lee and Man Paper (value added waste, China) (3.4%) - Lee and Man Paper is the second largest containerboard producer in China, with growth driven by rising consumption and packaging demand.  The company exclusively uses recycled paper for its products.  The company is also a prime beneficiary of tightening environmental regulations and high capital investments, which create significant entry barriers and also potential for industry consolidation.

 

Delta Electronics (power supplies, Taiwan) (3.4%) - Delta Electronics is the world's largest manufacturer of high efficiency power supplies for a wide range of electronic devices, ranging from computers to large data centres.  Delta Electronics' power supplies lead the market in energy efficiency and consequently the company is seeing strong growth.

 

 

STRUCTURE OF PORTFOLIO

As at 31 December 2010

 

 

BREAKDOWN BY COUNTRY OF DOMICILE AND QUOTATION

 

 

 

Domicile

Quotation1

China and Hong Kong2

40%

36%

Japan

16%

16%

Taiwan

9%

9%

India

9%

9%

South Korea

7%

7%

Australia

6%

4%

Thailand

5%

5%

Philippines

4%

4%

Singapore

4%

5%

United States

-

4%

United Kingdom

-

1%

Total

100%

100%

 

 

1 Where a participatory note is held, the exposure is reported for the underlying security.  American depositary receipts are included under United States.

2 Companies quoted in Hong Kong represented 35% (by market value) of the Company's portfolio.

 

 

BREAKDOWN BY SECTOR

 


 

Energy Efficiency

41%

Renewable & Alternative Energy

10%

Water Infrastructure & Technologies

17%

Pollution Control

12%

Waste Management & Technologies

13%

Diversified Environmental

7%

Total

100%

 

 

BREAKDOWN BY MARKET CAPITALISATION

 

 

 

>£2bn

67%

£200m - £2bn

33%

Total

100%

 

 

The above breakdowns exclude the 1% net cash position at 31 December 2010.

 

 

UNDLIUTED NET ASSET VALUE PERFORMANCE

 

A graph appears here in the Half-yearly Financial Report.

 

Note on choice of indices: The Company does not have a formal benchmark. However, the MSCI AC Asia Pacific (ex-Japan) and the FTSE Environmental Opportunities Asia Pacific (ex-Japan) Indices are both considered relevant for comparison of performance.  In addition, given the exposure to Japan which the Company expects to maintain, the FTSE Environmental Opportunities Japan Index has also been included.

 

 

INTERIM MANAGEMENT REPORT

 

The Chairman's review on pages 2 to 3 and the Manager's report on pages 4 to 6 provide details on the performance of the Company.  Those reports also include an indication of the important events that have occurred during the first six months of the financial year ending 30 June 2011 and the impact of those events on the condensed set of financial statements included in this Half-yearly financial report.

 

Details of the largest five investments held at the period end are provided on page 7 and the structure of the portfolio at the period end is analysed on page 8.

 

PRINCIPAL RISKS AND UNCERTAINTIES

 

The Board considers that the main risks and uncertainties faced by the Company fall into the categories of (i) Asia Pacific region risks (ii) Market risks and (iii) Corporate governance and internal control risks.  A detailed explanation of these risks and uncertainties can be found in the Company's most recent Annual Report for the period from 11 September 2009 to 30 June 2010.  The risks and uncertainties facing the Company remain unchanged from those disclosed in the Annual Report.

 

RELATED PARTY TRANSACTIONS

 

Details of the investment management arrangements were provided in the Annual Report.  There have been no changes to the related party transactions described in the Annual Report that could have a material effect on the financial position or performance of the Company.  Amounts payable to the investment manager in the period are detailed in the Income Statement on page 12.

 

Board of Directors

17 February 2011

 

 

DIRECTORS' STATEMENT OF RESPONSIBILITY

FOR THE HALF-YEARLY REPORT

 

The Directors confirm to the best of their knowledge that:

 

 

·     The condensed set of financial statements contained within the half yearly financial report has 
been prepared under the guidance issued by the Accounting Standards Board on "Half-yearly financial reports".

 

 

·     The interim management report includes a fair review of the information required by 4.2.7R and 
4.2.8R of the FSA's Disclosure and Transparency Rules.

 

 

Allan McKenzie

Chairman of the Board of Directors

17 February 2011

 

 

INCOME STATEMENT

 

For the six months ended 31 December 2010

 



Six months ended

31 December 2010

Period from 11 September 2009

to 31 December 2009

Period from 11 September 2009

to 30 June 2010



Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total


Note

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000












Gains on investments


 

-

 

34,246

 

34,246

 

-

 

10,627

 

10,627

 

-

 

13,572

 

13,572

Income

3

1,058

-

1,058

124

-

124

1,234

-

1,234

Investment management fees


(189)

(757)

(946)

(42)

(170)

(212)

(171)

(682)

(853)

Other expenses


(281)

-

(281)

(134)

-

(134)

(377)

-

(377)

Return on ordinary











activities before taxation


 

588

 

33,489

 

34,077

(52)

10,457

 

10,405

 

686

 

12,890

 

13,576












Taxation

4

(77)

-

(77)

(8)

-

(8)

(105)

-

(105)

Return on ordinary











activities after taxation


 

511

 

33,489

 

34,000

(60)

10,457

 

10,397

 

581

 

12,890

 

13,471












Return per Ordinary Share

5










- undiluted


0.34p

22.21p

22.55p

(0.05p)

9.86p

9.81p

0.52p

11.53p

12.05p

- diluted


0.33p

21.54p

22.87p

(0.05p)

9.83p

9.78p

0.51p

11.40p

11.91p












 

 

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

 

All capital and revenue 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 is not required, as all gains and losses of the Company have been reflected in the above statement.

 

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

 

BALANCE SHEET

 

As at 31 December 2010

 

 

 




At 31 December 2010

At 31 December 2009

At 30

June

2010



Note

 

£'000

 

£'000

 

£'000








Fixed assets






Investments at fair value through profit and loss

2

286,063

108,626

125,017








Current assets






Income receivable


89

37

169


Sales - future settlements


-

-

587


Other debtors


14

13

9


Cash at bank and in hand


3,989

10,297

5,389




4,092

10,347

6,154


 

 






Creditors: amounts falling due within one year






Purchases - future settlements


948

224

4,009


Accrued liabilities


310

183

185




1,258

407

4,194








Net current assets


2,834

9,940

1,960








Total net assets


288,897

118,566

126,977








Capital and reserves






Share capital


2,188

1,121

1,170


Share premium


9,986

4,698

9,986


Capital redemption reserve


129,982

-

-


Share purchase reserve


102,350

102,350

102,350


Capital reserve


43,759

10,457

12,890


Revenue reserve


632

(60)

581


Shareholders' funds


288,897

118,566

126,977


 

Net asset value per share

 












Net asset value per Ordinary Share - undiluted

6

134.42p

107.79p

110.46p


Net asset value per Ordinary Share - diluted

 

-      

6

129.13p

106.54p

108.85p













RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS

 

 

For the six months ended 31 December 2010

 




Share

Capital

Share






Share

premium

redemption

purchase

Capital

Revenue




capital

account

reserve

reserve

reserve

reserve

Total



£'000

£'000

£'000

£'000

£'000

£'000

£'000











Opening shareholders' funds

1,170

9,986

-

102,350

12,890

581

126,977


C Share issue

131,000

-

-

-

-

-

131,000


Share issue expenses

-

-

-

-

(2,620)

-

(2,620)


Conversion of C Shares into









Ordinary Shares and bonus issue









of Subscription Shares

(129,982)

-

129,982

-

-

-

-


Dividends paid

-

-

-

-

-

(460)

(460)


Profit for the period

-

-

-

-

33,489

511

34,000


Closing shareholders' funds









as at 31 December 2010

2,188

9,986

129,982

102,350

43,759

632

288,897

 

 

For the period from 11 September 2009 to 31 December 2009

 




Share

Share






Share

premium

purchase

Capital

Revenue




capital

account

reserve

reserve

reserve

Total



£'000

£'000

£'000

£'000

£'000

£'000










Opening shareholders' funds

-

-

-

-

-

-


Ordinary Shares issued during








the period

1,100

109,217

-

-

-

110,317


Subscription Shares issued








during the period

21

(21)

-

-

-

-


Share issue expenses

-

(2,148)

-

-

-

(2,148)


Cancellation of share premium

-

(102,350)

102,350

-

-

-


Profit for the period

-

-

-

10,457

(60)

10,397


Closing shareholders' funds








as at 31 December 2009

1,121

4,698

102,350

10,457

(60)

118,566

 

 

For the period from 11 September 2009 to 30 June 2010

 




Share

Share






Share

premium

purchase

Capital

Revenue




capital

account

reserve

reserve

reserve

Total



£'000

£'000

£'000

£'000

£'000

£'000










Opening shareholders' funds

-

-

-

-

-

-


Subscription 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 six months ended 31 December 2010

 


Six months ended 31 December 2010

Period from 11 September 2009 to 31 December 2009

Period from 11 September 2009 to 30 June 2010


£'000

£'000

£'000

Operating activities




Cash inflow from investment income and bank interest

1,138

88

1,065

Cash outflow from management expenses

(1,115)

(176)

(1,054)

Cash inflow from disposal of investments*

153,073

33,350

70,901

Cash outflow from purchase of investments*

(281,841)

(131,079)

(178,719)

Cash outflow from net foreign exchange costs

(498)

(47)

(205)

Cash outflow from taxation

(77)

(8)

(105)

Net cash flow from operating activities

(129,320)

(97,872)

(108,117)









Equity dividends paid

(460)

-

-





Financing




Proceeds of share issues

131,000

110,317

115,708

Expenses of share issues

(2,620)

(2,148)

(2,202)

Net cash flow from financing

128,380

108,169

113,506





Increase / (decrease) in cash

(1,400)

10,297

5,389

Opening balance at start of period

5,389

-

-

Closing balance at end of period

3,989

10,297

5,389

 

                               

* In the six months ended 31 December 2010 the figures include £99.0m of UK Treasury Bills (in comparative periods £30.0m) purchased and subsequently sold, or redeemed, during the period.

 

 

NOTES TO THE ACCOUNTS

 

1              Accounting policies

 

The Half-yearly financial report has been prepared in accordance with applicable UK accounting standards and UK GAAP.  The accounting policies used by the Company are the same as those stated in its most recent Annual Report.  The accounting policy in relation to investments is stated in note 2 below. 

 

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 Company therefore presents its accounts in accordance with the Statement of Recommended Practice for Investment Companies.

 

2              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.

 

3              Income

 



Period from

Period from


Six months

11 Sep 2009

11 Sep 2009


to 31 Dec 2010

to 31 Dec 2009

to 30 June 2010


£'000

£'000

£'000

Income from investments:




Dividends from overseas investments

1,037

112

1,222

Treasury bill income receivable

17

6

6

Total

1,054

118

1,228

Other income:




Interest receivable

4

6

6

Total income

1,058

124

1,234

 

 

4              Taxation

 

The tax charge in the Income Statement is in respect of overseas tax suffered on dividend income.

 

5              Return per share

 

Undiluted return per Ordinary Share is based on the net return attributable on ordinary activities after taxation attributable to the weighted average of 150,806,405 Ordinary Shares in issue during the period (Period to 31 December 2009: 106,021,429; Period to 30 June 2010: 111,762,869).

 

Diluted return per Ordinary Share is based on the net return attributable on ordinary activities after taxation attributable to the diluted weighted average of 155,438,175 (Period to 31 December 2009: 106,355,623; Period to 30 June 2010: 113,130,158) Ordinary Shares during the period. Each Subscription Share carries the right to subscribe for one Ordinary Share at a price of 100p.  The average bid price per Ordinary Share during the period was greater than 100p and consequently the Subscription Shares have a dilutive impact on return per share.  In calculating the diluted weighted average number of Ordinary Shares, 4,631,770 Ordinary Shares were treated as being in issue for nil consideration throughout the period; this being the difference between the number of Ordinary Shares assumed to be issued on subscription of all the Subscription Shares and the number of Ordinary Shares assumed to be bought back at the average bid price from the assumed subscription proceeds.

 

6              Net assets per share

 

The undiluted net assets per Ordinary Share figure is based on the net assets of £288,897,000 at 31 December 2010 (31 December 2009: £118,566,000; 30 June 2010: £126,977,000) divided by 214,915,100 Ordinary Shares in issue at 31 December 2010 (31 December 2009: 110,000,000; 30 June 2010: 114,949,000). 

 

The diluted net assets per Ordinary Share figure is based on net assets of £327,973,000 (31 December 2009: £139,466,000; 30 June 2010: £147,877,000) divided by 253,990,591 diluted Ordinary Shares at 31 December 2010 (31 December 2009: 130,900,000; 30 June 2010: 135,849,000). The diluted figures assume that the 39,075,491 Subscription Shares in issue on 31 December 2010 (31 December 2009: 20,900,000; 30 June 2010: 20,900,000) were converted into Ordinary Shares on that date a price of 100p per Ordinary Share.

 

7              Share issues

 

Pursuant to the prospectus dated 1 October 2010 (the "Prospectus"), the Company issued 131,000,000 C shares of £1 each through a placing, open offer and offer for subscription.  The C Shares were issued on 27 October 2010 and commenced trading on the London Stock Exchange on that date. 

 

On 10 December 2010, the C shares were converted into 99,966,100 new Ordinary Shares of 1p each using the conversion methodology detailed in the Prospectus. The conversion ratio of 0.7631 new Ordinary Shares of 1p each for each C share was calculated by reference to the total net assets of the Company and the net assets of the Company attributable to C Shareholders as at close of business on 30 November 2010. Immediately upon conversion, the holders of new Ordinary Shares received 1 Subscription Share for every 5.5 new Ordinary Shares held, which resulted in 18,175,491 new Subscription Shares being issued.  The new Ordinary Shares and new Subscription Shares carry the same rights and rank pari passu in all respects with the Ordinary Shares and Subscription Shares in issue prior to the conversion.

 

The number of Ordinary Shares in issue at 31 December 2010 was 214,915,100. 

 

The number of Subscription Shares in issue at 31 December 2010 was 39,075,491.

 

8              Related party transactions

 

Fees payable to Impax Asset Management Limited (the "Manager") are shown in the Income Statement. At 31 December 2010 the fee accrual outstanding to the Manager was £240,959 (31 December 2009: £98,897, 30 June 2010: £105,912).  These fees were subsequently paid following the period end.

 

9              Status of this report

 

These financial statements are not the Company's statutory accounts for the purposes of section 434 of the Companies Act 2006.  They are unaudited.  The Half-yearly financial report will be sent to shareholders and copies will be made available to the public at the registered office of the Company.   The report will be available in electronic format on the Manager's website (www.impax.co.uk).

 

The Half-yearly financial report was approved by the Board on 17 February 2011.

 

The Company's statutory accounts for the period from 11 September 2009 to 30 June 2010 received an unqualified audit report and have been filed with the registrar of companies at Companies House.

 

 

DIRECTORS, MANAGER AND ADVISERS

 

 

DIRECTORS  

INVESTMENT MANAGER

Allan McKenzie (Chairman)

Impax Asset Management Limited

Simon Atiyah

Mezzanine Floor

Alan Barber

Pegasus House

Richard Franklin (appointed 3 February 2011)

37-43 Sackville Street

Terence Mahony

London W1S 3EH

 

 

BROKER

INVESTMENT ADVISER

Collins Stewart Europe Limited

Ajia Partners Asset Management (HK) Limited

88 Wood Street

78th Floor, The Center

London EC2V 7QR

99 Queen's Road

 

Central Hong Kong

 

 

SOLICITOR

SECRETARY AND ADMINISTRATOR

CMS Cameron McKenna LLP

Cavendish Administration Limited

Mitre House

145-157 St. John Street

160 Aldersgate Street

London EC1V 4RU

London EC1A 4DD

 

 

REGISTRAR

CUSTODIAN

Capita Registrars

BNP Paribas Securities Services

The Registry

BNP Paribas London Branch

34 Beckenham Road

10 Harewood Avenue

Beckenham

London NW1 6AA

Kent BR3 4TU

 

 

REGISTERED OFFICE*

AUDITOR

145-157 St. John Street

Ernst & Young LLP

London EC1V 4RU

1 More London Place

 

London SE1 2AF

 

 

 

 

 

 

* Registered in England and Wales No. 7016550

 

 

 

17 February 2011

 

Enquiries:

 

Anthony Lee                                         020 7490 4355

Company Secretary

Cavendish Administration Limited

 

END

 


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