REG - Impax Environ Mkts - Annual Financial Report
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RNS Number : 5285Y Impax Environmental Markets PLC 30 March 2026
LEI: 213800RAR6ZDJLZDND86
IMPAX ENVIRONMENTAL MARKETS PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDING
31 DECEMBER 2025
London, 30 March 2026. Impax Environmental Markets plc (LSE: IEM) (the
"Company" or "IEM") the UK's only environmental investment trust investing in
the transition to a more sustainable economy, today announced its final
results for the year ended 31 December 2025.
× Net asset value ("NAV") per ordinary share of 426.4p (31 Dec
2024: 427.6p)
× NAV total return increase of 0.9% (2024: -0.4%)
× Net assets at 31 Dec 2025 of £812m (31 Dec 2024: £1,026m)
× Ordinary Share price of 396.5p (31 Dec 2024: 385.5p)
× Total dividend paid in 2025 of 5.1p per ordinary share, an
increase of 2.0% (2024: 5.0pps)
× The Company bought back 49.45 million shares during the year,
representing 20.6% of the issued share capital at the start of the year,
spending £189m.
Glen Suarez, Chairman of Impax Environmental Markets comments:
"The year under review was characterised by a number of important developments
for IEM, both operationally and in the context of an evolving shareholder
landscape.
"At our 2025 AGM, shareholders overwhelmingly supported IEM's continuation and
its long‑term environmental markets strategy. Since then, Saba, the
Company's largest shareholder, has increased its holding to 22.1 per cent and,
as it does not support the Company's objectives, this presented a challenge
for the Company's stability and mandate, despite sustained engagement by the
Board to identify a balanced and responsible solution.
"Following detailed consideration by the Board and its advisers, the
Continuation Tender Offer, launched on 26 January 2026, was identified as the
most effective means of reconciling differing shareholder objectives, offering
an exit at close to NAV while preserving IEM's specialist strategy for those
wishing to remain invested.
"Despite continued engagement with Saba during the tender period, including
the Board securing a financial contribution from the Manager to enhance the
offer, Saba chose not to tender its shares and the conditions of the
Continuation Tender Offer were therefore not met, resulting in its
cancellation on 27 February 2026.
"Having explored all reasonable alternatives and in the absence of clarity
from Saba regarding its intentions, the Board concluded that maintaining the
status quo would expose shareholders to unacceptable risks, including the
possibility of Saba gaining control of the Company and materially altering its
strategy, objectives and mandate, contrary to the wishes of the majority of
shareholders. You will have seen that the Board therefore launched the Exit
Tender Offer on 17 March 2026, providing all shareholders with an exit from
the Company at close to NAV.
"While the decision whether to tender shares is a matter for individual
shareholders, the Board unanimously recommends voting in favour of the
Resolution to enable the Exit Tender Offer to proceed, so that those
shareholders who wish to exit are able to do so, and encourages shareholders
to take note of the relevant voting and tender deadlines outlined in the Offer
Circular. The Directors will be tendering all of their own shares,
underscoring our conviction that this is the right outcome for IEM's
shareholders."
Contact:
Camarco ImpaxEM@camarco.co.uk (mailto:ImpaxEM@camarco.co.uk)
Billy Clegg / Jennifer Renwick +44(0)203 757 4980
IEM at a Glance
Overview
Impax Environmental Markets plc ("IEM" or the "Company") is founded on the
belief that, with insatiable demand for higher living standards on a finite
planet, companies enabling the cleaner and more efficient delivery of basic
needs - such as power, water and food - or mitigating environmental risks like
pollution and climate change, can grow earnings faster than the global economy
over the long-term.
IEM provides its shareholders with exposure to this exciting growth story. The
Company invests in a well-researched and diversified portfolio of
fast-growing, listed businesses. IEM's Board of Directors (the "Board")
believes that investing in these companies can deliver superior risk-adjusted
returns over the long-term. IEM continues to benefit from an expanding
opportunity set of investable companies harnessing structural drivers. These
include the digitalisation of industrial supply chains, rising demand for
cost-efficient electricity and the increasingly urgent need for climate change
adaptation.
The Manager
The Manager of IEM, Impax Asset Management (AIFM) Limited (the "Manager", or
"Impax"), uses a proprietary classification system to define these higher
growth 'Environmental Markets'. This approach has been in place since IEM was
founded in 2002 and is overseen by a dedicated Impax team.
Today the classification system is made up of six sectors: Energy, Clean and
Efficient Transport, Water, Circular Economy, Smart Environment and
Sustainable Food. The range of activities included has naturally grown over
the years as technologies advance and more industries begin to address the
environmental challenges which they face.
To qualify for IEM's investable universe, a company must derive at least 50%
of its revenues from these Environmental Markets. The Manager invests across
the market capitalisation spectrum. IEM's investments include small and medium
sized companies, which tend to focus their business models on fewer
activities. However, as Environmental Markets have matured, larger companies
are increasingly represented in the opportunity set and portfolio.
The Manager then follows a rigorous, performance-focused process based on
bottom-up research to invest in proven and profitable companies. The breadth
of the Environmental Markets opportunity set enables Impax to create a
diversified portfolio spanning traditional sector boundaries. Once a company
is purchased, its share price is continually monitored within the context of a
live 'valuation range' which incorporates worst and best-case assumptions.
The Manager also maintains an active dialogue with the companies in which it
invests. Doing so is central to optimising shareholder returns, helping to
promote greater transparency around corporate issues and risk. Engagement
outcomes, company valuations, as well as portfolio risk metrics and the macro
outlook, all inform buy and sell decisions.
The Company
IEM's goal is to deliver financial returns for shareholders. It benefits from
an active, committed Board, as well as competitive fees. Additionally, the
investment managers are personally invested, thus aligning themselves
financially with shareholders.
By IEM focusing on Environmental Markets, the portfolio generates outcomes
beyond financial returns. Annually, for each £1 million invested, enough
clean, renewable energy is generated to power 31 homes, and the equivalent of
345 households' water consumption and 103 tonnes of domestic waste are saved.
Whilst the Manager does not target the UN Sustainable Development Goals in the
investment process, 81% of portfolio company revenues were aligned with them
in 2025.
"IEM continues to benefit from an expanding opportunity set of investable
companies harnessing structural drivers."
Investment Objective
The investment objective of Impax Environmental Markets plc is to enable
investors to benefit from growth in the markets for cleaner or more efficient
delivery of basic services of energy, water and waste.
Investments are made predominantly in quoted companies which provide, utilise,
implement or advise upon technology-based systems, products or services in
environmental markets, particularly those of alternative energy and energy
efficiency, water treatment and pollution control, and waste technology and
resource management (which includes sustainable food, agriculture and
forestry).
Financial Highlights
At 31 December 2025 2024
NAV per ordinary share with debt at fair value(1) 426.4p 427.6p
Net asset value ("NAV") per ordinary share with debt at bookcost 427.1p 428.6p
Ordinary share price 396.5p 385.5p
Ordinary share price discount to NAV(1,3) 7.0% 9.8%
NAV with debt at fair value(1) £812m £1,026m
Ongoing charges(1) 0.91% 0.84%
Performance Summary(2)
( )
For the year ended 31 December, % change 2025 2024
NAV total return per ordinary share(1,3) 0.9% -0.4%
MSCI AC World index(4) 13.9% 19.6%
Share price total return per ordinary share(1) 4.3% -2.6%
1 These are alternative performance measures ("APMs").
2 Total returns in sterling for the year to 31 December 2025.
3 With debt at fair value.
4 Source: Bloomberg and FactSet.
Alternative performance measures ("APMs")
The disclosures as indicated in footnote 1 are considered to represent the
Company's APMs. Definitions of these APMs and other performance measures used
by the Company, together with how these measures have been calculated, can be
found within the Annual Report.
Chairman's Statement
"IEM offers broad spectrum exposure to one of the most significant and
enduring themes of this century."
Dear Shareholder,
The year under review was marked by considerable change for IEM. During this
time, we welcomed a new portfolio manager to the Impax investment team,
introduced a new benchmark, refinanced the Company's revolving credit
facility, and navigated an increasingly complex shareholder landscape. A
considerable portion of our time this year has been spent engaging with Saba
Capital, the New York hedge fund and IEM's largest shareholder.
You will remember that at our 2025 AGM the Board recommended, and shareholders
overwhelmingly approved, IEM's continuation - this reaffirmed their support
for its long-term Environmental Markets strategy. The Board's recommendation
was made, as I reported last year, after consultation with shareholders and
a review of the investment processes at our Manager, Impax Asset Management.
In last year's report I drew attention to the Board's wish to put in place a
new thematic benchmark to replace the FTSE ET100 and further changes to the
investment process of the Manager.
New Benchmark
The Board adopted the new thematic benchmark to work alongside the MSCI All
Country World Index ("MSCI ACWI") in the fourth quarter of 2025. This is the
Solactive Global Environmental Markets Specialists Index ("GEMS"), further
details of which are set out in the Manager's Report. Its introduction as a
formal benchmark, alongside that of MSCI ACWI, allows the Board and you, the
shareholders, to understand how the Manager is performing against the
Environmental Markets opportunity set. It also allows the Manager to calibrate
risk more effectively.
Notwithstanding the outcome of the Exit Tender Offer, which I discuss later in
this statement, and any review of the Company which may result from this, we
expect to include GEMS next year in our assessment of how the portfolio has
performed. But its impact is already evident in the review and consolidation
of the portfolio, as also explained in the Manager's Report. This work began
earlier in the year, but has continued in the second half, in part supported
by a change to the investment team.
We know from our regular engagements with Impax that this index has assisted
in its portfolio managers' understanding of the opportunities and risks across
IEM's investable universe. This in turn better facilitates understanding of
risks against wider equity markets, as reflected by the MSCI ACWI, that many
shareholders continue to use and adjudge performance against.
The Manager
After the thorough review undertaken by the Board, we welcomed Sanjeev Lakhani
to the portfolio management team with effect from 1 October 2025, to work
alongside Fotis Chatzimichalakis. Sanjeev has particular expertise in the
analysis of Industrial companies, which form a material portion of IEM's
portfolio. Fotis meanwhile continues his co-stewardship of the IEM portfolio,
having been appointed to the investment team in 2015 and as a portfolio
manager for IEM five years ago. The Board is encouraged by the way they have
demonstrated the effectiveness of their working relationship so far and this
fundamentally supports our confidence in Impax as the Manager.
Following a period of handover, Sanjeev replaced Jon Forster, who stepped
away from front line portfolio management responsibilities at Impax in
December 2025. Bruce Jenkyn-Jones, Co-Chief Investment Officer, also announced
his retirement and stepped back from his responsibilities earlier in the year.
I would like to thank Jon and Bruce for their contribution to the Company over
many years.
Performance
During the year, the Company's net asset value rose 0.9%, while global
equities as measured by the MSCI ACWI rose by 13.9%. This was a disappointing
performance. IEM's share price over this period rose by 4.3%, reflecting a
narrowing of the Company's discount.
Equity markets in 2025 continued to be characterised by the narrowness of
their performance. Mega-cap companies focused on AI have pulled the MSCI ACWI
higher, as have Financials. As these stocks fall outside IEM's investable
universe, the Company was unable to benefit from this concentrated
outperformance. Consequently, IEM underperformed in 2025, as it had in the
previous year for similar reasons. This relative underperformance is
consistent with many other investment trusts, even those with different
investment focuses, that have also reported weaker performance over similar
periods.
Discount
Like almost all the investment trust sector, the Company's shares have traded
at a discount to NAV. At 31 December 2025, the Company's shares traded at
a discount to NAV, with debt at fair value, of 7.0% (2024: 9.8%). During the
year the shares traded between a discount of 5.5% and 15.7% with an average
discount(1) of 9.7% (2024: the shares traded between a discount of 7.2% to
17.5% with an average discount of 10.3%).
The discount is actively monitored by the Board and the Company's corporate
brokers. During the period, the Board asked the Company's broker, Winterflood
Securities, to operate a buyback programme targeted at mitigating the level
and volatility of the discount on the share price versus net asset values. As
a result, the Company spent £189 million buying back 49.5 million shares, or
20.6% of the issued share capital, at the start of the year, and this helped
keep the discount at levels which have been in keeping with the average equity
investment trust over the period.
Dividends
The Company's distribution policy, as approved by shareholders at the 2025
AGM, is to declare two dividends each year. On 1 August 2025, the Board
announced a first interim dividend for this financial year of 1.9 pence per
share, which was paid on 28 August 2025. The second interim dividend of 3.2
pence per share was declared on 3 February 2026 and paid on 6 March 2026. The
total dividend per share paid for 2025 was therefore 5.1 pence per share, an
increase of 2.0% on the 5.0 pence paid in respect of 2024. Noting that the
Board does not expect dividends to form a significant proportion of total
returns, it remains the Board's intention to pay out substantially all net
revenue earnings by way of dividends.
Gearing(1)
The Company has continued to utilise gearing throughout the year and has a
combination of fixed and floating rate debt with a mix of maturity dates and
interest rates. Gearing can be an attractive feature of investment trusts to
enhance returns. The Company has used this tool for a number of years.
At the year end the aggregate of the Company's borrowings was £87.0 million,
giving net gearing of 10.0% (2024: £83.1 million and 7.6%, respectively).
1 This is an alternative performance measure as detailed
within the Annual Report.
The Company has €60 million (equivalent to just over £50 million) of
privately placed notes ("Loan Notes"), as set out in the table below:
Loan Note Loan Note
amount amount Maturity
€'million £'million 30 September Interest rate
20 17.4 2030 Floating: 6m Euribor +1.35%
30 26.1 2033 Fixed: 4.48%
10 8.7 2035 Fixed: 4.63%
The Company refinanced its floating rate multi-currency revolving credit
facility ("RCF") following the maturing of its two-year £80 million RCF with
Scotiabank in September. The new 360 day rolling multi-currency £35 million
RCF is with Bank of America and has a floating interest rate priced at
Euribor +0.85%. An amount of €40.1 million (equivalent to £34.9 million)
was drawn down at the year end (2024: €40.8 million and £33.7 million,
respectively).
Other Changes
The Board made changes to the providers of company secretarial services and
administration during the year, bringing onboard Juniper Partners ("Juniper"),
the independent investment company specialists. The Board, working with the
Manager in an in-depth tender process, was drawn to the breadth and depth of
experience in the focus that Juniper has for investment companies like IEM and
this was fundamental in their selection.
Similarly, the Board appointed Camarco, a strategic communications consultancy
with a specialist team servicing financial services companies and investment
trusts, in the fourth quarter.
The Challenge Posed by Saba Capital
Saba Capital acquired a 5% position in the Company in 2024. At the 2025 AGM,
shareholders overwhelmingly voted in favour of the Company's continuation,
reaffirming their support for IEM's long-term Environmental Markets strategy.
Saba has a history of being active and disruptive in other investment trusts,
often causing uncertainty, instability, and significant costs. Recognising the
potential risks, the Board consulted with shareholders to better understand
their concerns regarding Saba's growing influence.
In the latter part of 2025, Saba began substantially increasing its holding,
and now holds 22.1%, making it the Company's largest shareholder. During
discussions with the Board, Saba made it explicitly clear that it does not
share the Company's objectives or those of the majority of other shareholders.
This presented the Board with a significant challenge: reconciling the
conflicting objectives of shareholders while avoiding ongoing, destabilising
and expensive disputes that the Board has seen elsewhere.
The first proposal, the Continuation Tender Offer (the "CTO"), was designed
to allow all shareholders to exit at close to NAV while preserving IEM's
specialist Environmental Markets strategy for those wishing to remain
invested. The CTO included the specific condition that required Saba to tender
all, or materially all, of its shares. This would have resolved the impasse,
enabling the Company to move forward with stability. However, despite repeated
engagement with Saba throughout the tender period and the inclusion of a
substantial financial contribution from the Company's Manager to enhance the
offer, Saba declined to tender its shares. As a result, the conditions of the
CTO were not met, and the proposal was unable to proceed.
When proposing the CTO, the Board considered that if Saba were to reject it,
there would be no choice but to address the significant risks posed to
shareholders who wished to remain invested. Without action, Saba could gain
control of the Company and unilaterally change its objectives, strategy, and
mandate, against the stated wishes of the majority of shareholders. This is
how we arrived at the Exit Tender Offer.
The Board believes that maintaining the status quo presents too many risks for
shareholders. Doing nothing risks prolonged instability, significant costs,
and a much worse outcome for shareholders. As a result, we have now proposed
the Exit Tender Offer, which offers all eligible shareholders the opportunity
to sell up to 100% of their shares for cash at close to NAV. This allows
shareholders to avoid the risk of being trapped in a company where Saba could
gain control, with the power to fundamentally alter the Company's strategy,
objectives, and even its mandate.
We endorse the position taken by the Association of Investment Companies,
which has raised concerns about the risks to shareholder rights across the
investment trust sector(1). Saba has targeted a number of investment
companies, often focusing on exploiting share price discounts to NAV for
short-term profit. However, in IEM's case, Saba's rejection of the CTO, which
would have delivered an exit at close to NAV, suggests that its motives may go
beyond arbitrage and potentially extend to gaining control over the Company.
Unfortunately current law and regulation does not provide an effective
mechanism to defend against such situations on behalf of the rest of the
shareholder base. The FCA has recently announced a review of the closed ended
investment funds listing rules(2).
The Board remains confident in the compelling growth prospects of
Environmental Markets and in Impax Asset Management's deep sector expertise.
Combined with the recent strategic reset of the portfolio, the Company is
well-placed to deliver on shareholders' financial and environmental
objectives. It is therefore a source of considerable regret that Saba's
presence and motives may lead to this investment opportunity being lost to
shareholders.
Board
Aine Kelly was due to step down at the 2026 AGM, however given the uncertainty
caused by Saba's actions, she has agreed to remain on the Board for an
additional year to provide continuity and stability. The Board's composition
and a replacement for Aine will be considered once the results of the Exit
Tender Offer are known.
I would like to take this opportunity to thank the Board for their
extraordinary commitment to IEM over the past year. The time and effort
required to address the challenges posed by Saba's growing influence have been
significant, and I am deeply grateful for their dedication and professionalism
during this period. I am also grateful for the guidance and support of our
advisers in these difficult times. I especially commend the services of
Juniper, which took on a new mandate and was instantly catapulted into the
world of corporate events.
Annual General Meeting
The AGM of the Company must be held by the end of June 2026. The Company will
convene its AGM after the outcome of the Exit Tender Offer is known. A
separate circular, including the Notice of AGM and full details of the
resolutions to be proposed, will be sent to shareholders in due course. In the
meantime, the Company's website at www.iemplc.co.uk can be used to access more
insights and also to subscribe for regular communications.
Outlook
The Board remains confident in the long-term potential of the Environmental
Markets sector. Recent geopolitical events, including the Iran war and rising
oil prices, have accelerated the global focus on energy policy and energy
independence, particularly in Asia and Europe. This has provided a fresh
impetus for economies to transition away from hydrocarbons and towards
renewable energy and nuclear power, further supporting the sector's growth
prospects.
The Board continues to believe that retaining the Manager is in the best
interests of shareholders. The Manager has implemented significant changes to
the portfolio and enhanced its risk management. These changes, combined with
the sector's strong fundamentals, give the Board confidence that the
foundations are in place for improved performance going forward. Allowing time
for the portfolio's recent strategic adjustments and the new benchmark to
deliver their intended benefits is critical to achieving long-term success.
However, the uncertainty caused by conflicting shareholder objectives remains
a significant challenge. While many shareholders wish to remain invested in
IEM and its focus on Environmental Markets, Saba's presence has introduced
considerable instability.
It is with profound regret, therefore, that I write this Chairman's Statement
in the knowledge that steps have been required in the form of the Exit Tender
Offer, to protect shareholders.
Shareholders have chosen IEM for its focus on Environmental Markets, but
circumstances beyond the Board's control, including the presence of a large
minority shareholder with conflicting objectives, enabled by insufficient
protections under UK regulations, have forced the Board to take action that
none of us would otherwise have wished to take.
Glen Suarez, Chairman
27 March 2026
1
https://www.theaic.co.uk/aic/news/press-releases/aic-welcomes-fca-listing-rules-review
2
https://www.fca.org.uk/news/statements/uk-listing-rules-investment-entities-review
Manager's Report
Both IEM and global equity markets saw significant change in 2025. In the case
of IEM, we were able to reset the direction of travel. We began the process of
portfolio consolidation towards the end of last year.
Doing so recognised that the operating environment for many of our investee
companies had changed, at the same time as falling valuations had opened up
new opportunities. Moving from 60 towards 50 stocks, whilst also increasing
the size of the top ten to approximately 30%, reflected our desire to express
greater conviction in this refreshed portfolio.
At the same time, we worked closely with the Board to create the Solactive
Global Environmental Markets Specialists Index ("GEMS"). It replaces the FTSE
ET100, which had become unrepresentative of IEM's opportunity set as its
methodology evolved. This Index provides insight into the opportunity set of
investible companies listed around the world which operate within the
Environmental Markets theme to which IEM seeks to provide exposure. As the
Chairman has observed, it gives us as portfolio managers, and you as
shareholders, a more accurate gauge of the portfolio's relative performance
and positioning. IEM's portfolio will not be constrained by this new index and
the MSCI All Country World Index ("MSCI ACWI") remains key as the long-term
performance reference against wider equity markets. However, by focussing on
companies which fulfil the Environmental Markets standard, the GEMS has some
material differences. The diversification can be seen from significant
deviations in stocks and at the sector/regional level. For example, at the
time of its introduction Energy was less than 0.2% of GEMS vs 3.4% of MSCI
ACWI, while Industrials were 41.6% vs 10.7%. Similarly, the United States
account for 55.8% of GEMS vs 64.7% of MSCI ACWI.
The impact of these changes is starting to be felt. In 2025, the portfolio's
holdings with exposure to electrification and data centres, to which we have
been steadily adding, delivered strong returns. Other poorly performing areas
in which we had consolidated, such as renewable energy and bioprocessing,
turned a corner. Persistently weak sectors have either been exited entirely,
as with packaging, or concentrated into our highest conviction stocks, as with
natural ingredients.
Our new team setup has been instrumental to these decisions. Having worked
together as portfolio managers on Impax's Climate strategy, as well as on
stock research more broadly across Impax, we have an established partnership
with complementary areas of expertise. Jon Forster, who has stepped away from
his role as co-Portfolio Manager, has also made an invaluable contribution to
IEM over the years. Jon will continue to do so in his more focused duties
analysing companies.
Global Market Review
MSCI ACWI in GBP delivered solid gains in 2025. In another concentrated year
for equity returns, investor attention was dominated by tariffs, AI and fears
of a softening globally important US economy. Markets were also shaped by a
persistent weakening of the US dollar. As a result, communication services and
IT stocks made double digit gains, while both the consumer discretionary and
consumer staples sectors barely moved.
Donald Trump's return to the White House ensured that, once again, the US
transfixed investors. An eventful year saw the longest government shutdown in
history, challenges to US Federal Reserve ("Fed") independence, and the
bombing of Iranian nuclear sites. Yet it was 'Liberation Day' tariffs which
prompted a 19% pullback in the stock market(1). While US consumer confidence
weakened throughout the year(2) and unemployment rose to 4.6%, the US economy
remained relatively healthy, bolstered by three interest rate cuts from the
Fed. The administration also quickly showed its willingness to negotiate,
prompting the so-called 'TACO trade'(3), with equities climbing back up to
all-time highs.
Much of the strength of both the US and global stock market has been
attributed to AI, or more specifically, investments being made in its
development. According to JP Morgan, AI-related capex accounted for over
a percentage point of US GDP growth in the first half of 2025, outpacing
consumer spending, which is usually the largest driver of US economic
growth(4). Events like the launch of DeepSeek have threatened to derail
investors' enthusiasm for AI, but the pace of spending shows no signs of
stopping. With the likes of Meta (formerly Facebook - not held) reaching capex
to sales ratios of almost 40%, their investments are touching sectors from
semiconductors to energy generation, cooling to construction.
However, there were some signs of investor appetites broadening out. Prompted
both by a disruptive US administration and low starting valuations, investors
were drawn to non-US equities. Europe and Emerging Markets performed
strongest, helped further by a weakening US dollar. In Europe, the election
of Chancellor Merz in Germany and a focus on rearmament boosted defence
stocks. Japanese equities also outperformed, lifted by a combination of
robust corporate earnings, shareholder friendly reforms and, latterly, the
election of Sanae Takaichi a pro-market Prime Minister.
There were also several sectors impacted by idiosyncratic factors. Materials
made some of the strongest gains, as gold prices soared to record levels.
Financials - which generate insufficient environmentally-related revenues to
it within the opportunity set - recorded yet another year of robust returns,
benefiting from the prospect of deregulation, volatility-driven trading, and
increased M&A. Lastly, plans by the US government to implement 'most
favoured nation' pricing on top of tariffs made the health care sector one of
the year's worst performing sectors. This reversed rapidly when, at the end of
September 2025, the administration announced a deal to lower the cost of
various medicines with Pfizer (not held).
Key Developments and Drivers for Environmental Markets
Global Acceptance of Nuclear Energy
As we look ahead, we see nuclear power growing in its use as a renewable
source of energy. In 2025, policymakers moved away from post-Fukushima caution
to embrace nuclear as a source of both energy security and clean power. Global
momentum gathered pace in late 2024, with the signature of a Declaration to
Triple Nuclear Energy by 2050 at COP 29(5). National initiatives subsequently
proliferated: the US issued a series of executive orders(6) to expand its
nuclear fleet and streamline permitting, Germany dropped its opposition to
French nuclear power as a source of clean energy(7), while the UK government
announced the development of its first small modular reactors in Wales(8).
Multilateral institutions also opened the door to new nuclear projects, with
the World Bank ending its ban on financing new projects(9).
Rhetoric was matched by tangible measures. According to data from the World
Nuclear Association, there are around 70 reactors under construction today,
with a further 115 planned. This is a meaningful increase on the 440 reactors
operating today, which generate approximately 400 GW of power. At the same
time, there has been clear progress made in technology, political support and
the mining, as well as disposal of fuel. While China and India have some of
the largest buildouts planned, the US has struck several major federal-private
partnerships with Westinghouse and Brookfield to deliver new plants(10). In
the UK, the government signed off on Sizewell C, its first new nuclear power
station since 1995.
Nuclear therefore, will play a growing role in meeting rising demand for
clean, affordable and reliable energy. As a result, Impax has begun counting
nuclear energy revenues into its Environmental Markets classification system.
This is not a change to IEM's investment process, but rather reflects the
evolving nature of market themes and the way that we continually reassess our
opportunity set. All potential issuers remain subject to our Corporate
Resilience (formerly ESG) Analysis.
The One Big Beautiful Bill
Government policy is not the primary driver for stocks within the IEM
portfolio. Instead, we search for companies within Environmental Markets whose
products and solutions make economic sense, with attractive business models
that are undervalued. That said, Donald Trump's One Big Beautiful Bill Act
("OBBBA") contains several policy changes providing short-term stimulus to the
US economy. These include extending individual and corporate tax cuts,
additional incentives for companies reshoring industrial production and an
expansion of activities covered by R&D tax credits. With 49% of the
portfolio listed in the US, and almost half of that in industrials, these
could provide strong tailwinds going into next year.
While the OBBBA also marked a clear negative shift in US federal policy
support for renewable energy, most valuations were already sufficiently
pessimistic for the bill to act as a clearing event, boosting share prices.
The primary mechanism for this was accelerating the rollback of clean-energy
tax incentives established under the Inflation Reduction Act. Notably, the
legislation eliminated electric vehicle ("EV") tax credits outright and
brought forward the phase-out of solar and wind investment and production tax
credits to the end of 2027. In parallel, the bill tightened so-called Federal
Entity of Concern ("FEOC") rules, restricting access to credits for projects
with links to China.
IEM's potentially impacted holdings (across renewable energy and EVs)
accounted for approximately 10% of the portfolio, with most reacting
positively. The final version of the OBBBA was also materially less punitive
than earlier drafts. Construction-start deadlines were relaxed, proposed
excise taxes on solar and wind were dropped, and important carve-outs were
preserved for energy storage, geothermal and nuclear projects. Consequently,
our position in Ormat Technologies, a geothermal company, not only continues
to benefit from tax credits, but is benefiting from accelerated permitting.
Battery Technology Advances and Falling Costs
Technological progress and falling battery costs are driving rapid growth in
electric vehicle and stationary energy storage system ("SESS") markets.
Bloomberg New Energy Finance's 2025 annual price survey found that the average
price for lithium-ion battery packs dropped 20% in 2024 to $115/kwh, a
reduction of more than 10x since 2010. Economies of scale and a highly
competitive market means that today, some battery packs made in China cost as
little as $94/kwh.
As a result, Chinese EVs are now cheaper than equivalent internal combustion
engines and account for more than 50% of new car sales in China(11).
Furthermore, the export of cheaper battery cells to Europe has enabled a
rebound in growth to 30% year-on-year, with EVs making up 17% of all new car
sales(12). By contrast, in the heavily protectionist US market EV sales are
entering a period of steep declines from an already low base(13).
Chinese companies already command a market share of over 90% in SESS. This is
because the dominant technology in the space is lithium iron phosphate
("LFP"), a battery cell chemistry currently only available from Chinese
manufacturers. SESS growth is being driven by utility scale installations
which aim to balance the intermittency of renewable energy, with forecasts
predicting an annual growth rate of 30% out to 2030(14). As battery technology
improves and costs continue to fall, SESS will provide the backbone for energy
that is clean, affordable and available whenever it is needed.
Despite its relatively short history, the battery industry has already seen
several cycles of 'boom and bust'. These have been compounded by instances
where technology has become rapidly obsolete. As a result, scale matters,
across R&D, manufacturing and cell chemistry diversification. These
criteria underpin IEM's investment in the Chinese battery producer
Contemporary Amperex Technology Limited ("CATL"). The company has
approximately 40% global market share in both EV and ESS, with leading edge
battery technology, manufacturing scale and cost advantage. As a result, CATL
is able to earn a 15% operating margin(15) even as its competitors struggle to
break even.
In 2025, IEM's portfolio delivered a total return of 0.9%, lagging global
equities as measured by the MSCI ACWI, which returned 13.9%. The chart within
the Annual Report shows the drivers of returns against MSCI ACWI.
Independent Power Producers ("IPPs") made robust gains thanks to several
factors. Having derated significantly from their 2022 peaks, the likes of
EDP Renovaveis - a Portuguese renewable energy company - saw their
valuations bottom out and inflect upward. This was driven in part by a spate
of private equity takeovers, which crystallised value, while tariff-driven
uncertainty in an expensive market prompted a rotation into defensive sectors
like Utilities. Further, as detailed above, the OBBBA served as a clearing
event for all renewable stocks. Consequently, Ormat Technologies, the
portfolio's best performer, has benefited from continued tax credits, reduced
planning times and increased demand for its stable, baseload geothermal
energy. It also reported robust results, with enhanced geothermal system
technologies boosting investor expectations for the future.
Water Utilities also benefited from investors seeking attractively valued
defensive stocks. In the case of American Water Works, a US-based utility, a
substantial rally prompted a disposal of the shares. In the case of France's
Veolia Environment and Brazil's SABESP, strong operational delivery has kept
them in the portfolio even after very strong runs. Veolia, in particular,
reported solid revenue and margin growth, bolstered by the integration of its
former peer, Suez. November's acquisition of Clean Earth, a US hazardous waste
company, further highlights Veolia's push into both higher value-add
activities and international markets.
For over a decade, digital infrastructure stocks have been a steadily growing
weight in IEM's portfolio. From bleeding edge semiconductors to
process-optimising software, these companies play a pivotal role in improving
the resource efficiency of modern economies. The immense build out of data
centres for AI has provided many such businesses with a new growth driver,
giving IEM exposure to the "picks and shovels" of this modern gold-rush. Among
the portfolio's top contributors, Monolithic Power Systems produces highly
efficient power management circuits. Its partnership with Nvidia (not held)
has been central to its c.25% annualised revenue growth since 2018(16), while
a recovery in its broader consumer, automotive and industrial end-markets has
further lifted the stock.
Collectively, stocks supporting electrification made one of the biggest
positive performance contributions. Ageing infrastructure, technological
change and the increasing pressures of climate change mean that investing in
grids, cables and transformers is now an existential issue for developed and
developing economies alike. Here too, AI has focused investor attention, with
power hungry data centres already accounting for over 4% of US electricity
demand(17). This shift, alongside strategic M&A, has helped Italian-listed
Prysmian transform from a low margin, cyclical cable producer to a robust
business with high earnings visibility and a share price to match.
Relative Performance Analysis
12 Months ended
31 December 2025
Performance relative to MSCI ACWI %
NAV total return 0.9
MSCI ACWI total return 13.9
Relative performance (13.0)
Analysis of relative performance:
Portfolio total return 0.6
MSCI ACWI total return 13.9
Portfolio underperformance (13.3)
Borrowing:
Gearing effect -
Finance costs (0.4)
Management fee (0.8)
Other expenses (0.2)
Trading Costs (0.5)
Share transactions:
Buybacks 2.1
Tax -
Other 0.1
Total relative NAV performance (13.0)
These areas of strength within the portfolio were set against two sources of
relative weakness. The first, and biggest driver of relative underperformance,
came from not owning stocks which lie outside the strategy's investable
universe because they derive less than 50% of their revenues from
Environmental Markets. Continued share price momentum in AI-focused, mega-cap
tech stocks, as well as financials accounted for almost 70% of all global
equity returns as measured by the MSCI ACWI. Other non-owned stocks outside of
Environmental Markets, account for more than the remaining difference between
portfolio performance and that of the MSCI ACWI.
Within the portfolio itself, the biggest areas of challenge were companies
with exposure to US construction and US consumer spending. Holdings in both
sectors waned in the face of tariffs and ensuing economic uncertainty. Trex
was the portfolio's weakest performer, with shares dipping around 'Liberation
Day' despite having a largely domestic supply chain. Shares in the recycled
decking producer fell further in Q4 when management lowered full-year revenue
guidance. Carrier Global similarly detracted as the HVAC company reported
weaker US residential volumes and a material guidance cut. However, with
construction markets near cyclical lows, we believe these are temporary
setbacks for attractively priced stocks.
In the consumer space, our verdict has been less sanguine. There has been
widespread evidence of customers downtrading to cheaper products impacting
revenue growth for companies like Croda, a speciality chemicals producer, and
Graphic Packaging, which makes paper-based packaging for higher end consumer
goods. Similarly, Corbion, a fermentation specialist, continues to see weak
demand, with slim margins failing to justify ambitious capital expenditure
decisions. As a result, we sold these holdings, consolidating into the likes
of Novonesis and Borregaard, which have demonstrated more pricing power.
A final headwind for the portfolio was its software holdings. These businesses
fulfil niche industrial applications such as the management of construction
projects (Trimble), or the design of large-scale infrastructure (Bentley
Systems). These stocks had performed well throughout the year, delivering
robust earnings updates and generally being seen to benefit from incorporating
AI technology. Yet by the fourth quarter, large language models were
sufficiently sophisticated for some investors to fear it's potential to
disrupt or even replace software businesses entirely. This prompted a sharp
pullback in software stocks, even as shares in hardware producers made
continued gains.
We are following developments in AI closely. There will no doubt be some use
cases where AI is good enough to replace dedicated software. However, this is
unlikely to be the case in highly regulated markets such as construction,
where the cost of failure is a potential loss of life. Given the
indiscriminate nature of selling across software, we have taken some profits
to insulate the portfolio from downside risk. Nonetheless, our long-term
conviction in the space remains and a meaningful pullback in valuations could
prompt us to increase exposure.
Portfolio Positioning and Trading
As has already been referenced, over the course of 2025 there was a concerted
effort to consolidate into a more focused portfolio of high quality and high
conviction holdings. This process began with a wholesale review of the
portfolio in the second half of 2024, during which Sanjeev Lakhani, by this
time Co-Portfolio Manager on the strategy, was actively involved. Work focused
on identifying stocks across three categories:
i Limited upside available (stocks which were approaching our
target valuation range).
ii Fragile business models (which might struggle in adverse
macroeconomic conditions).
iii "Up or out" (small positions without conviction to add).
At the same time, successive years of narrow equity outperformance had left
some companies in Environmental Markets on compelling valuations. Market
volatility around Liberation Day further highlighted these opportunities,
categorised into:
i Attractive growth temporarily trading at a discount.
ii Defensive business models with good upside potential.
Examples of these decisions include:
Environmental Market
Buys Sub-Sector Category Rationale
KLA Water Efficiency Attractive growth opportunity Semiconductor yield specialist bought at compelling valuation due to fears
around
data centre spending
Novonesis Sustainable Agriculture Defensive business model A specialist in enzymes and biochemical technology with a track record of
delivering
robust margins backed by global scale and
diversified consumers
Environmental Market
Sells Sub-Sector Category Rationale
American Water Works Water Utilities Limited upside Economic uncertainty and a defensive rotation drove a rally beyond our target
price
Corbion NV Sustainable Agriculture Up or out Weak demand in the context of elevated capex
prompted an exit on share price strength
Norma Water Distribution & Fragile business Tariff sensitive business model with limited growth
Infrastructure model visibility
The result of these trades is that as of 31 December 2025, and compared with
the end of 2024, the portfolio has more weight in its top ten (29.6% up from
25.5%) and is higher quality in terms of return on equity (16.1% vs 14.0%). A
full breakdown of the portfolio is detailed on the following pages.
Valuation and Growth
As of 31 December 2025, IEM's portfolio had an aggregate next 12 months' (or
forward) price-to-earnings (PE) ratio of 21.2x. This is higher than the
measures of both the MSCI ACWI (18.7x) and the GEMS (19.8x). IEM's richer
valuation reflects a sector and style tilt typical of the investable universe.
For example, compared with the MSCI ACWI, IEM owns no financial or energy
stocks (which tend to trade at lower multiples of their earnings), as there
are very few companies in these sectors which derive 50% of their revenues
from Environmental Markets.
Similarly, our preference is for companies with high growth potential and
consistent earnings delivery. These typically trade at a PE premium to the
broader market. At the end of the year, IEM's forward earnings growth rate(18)
was 13.3%, compared to the MSCI ACWI's 9.8% and the GEMS 12.0%. For a rate of
growth that is 36% and 11% superior respectively, IEM's portfolio trades at
only a 13% and 7% PE premium. In other words, shareholders in IEM are paying
less per unit of forecast growth than they are in a broader market index,
adding evidence to the opportunity set see in Environmental Markets.
IEM's portfolio PE premium has fluctuated over the course of the past year,
but consistently occupied a range well below the Company's ten-year average.
This reflects both the extraordinary concentration which has taken hold of
equity markets over the past three years and the continued sentiment headwinds
across overtly "sustainable" companies. Against this backdrop, we believe the
portfolio continues to offer a compelling mix of high active share, robust
earnings growth and attractive valuation relative to the broader market.
Outlook
Geopolitical events are once again at the forefront of investors' minds in
2026. Under the so-called 'Donroe Doctrine' (a widely used description of
President Trump's reported updating of the US's 19th Century Monroe Doctrine),
the US has threatened to acquire Greenland, extracted Venezuela's President
Maduro, and invaded Iran. As a result, volatility has increased, energy prices
have surged, and the prospect of resurgent inflation is looming.
However, the correlation between wars and longer-term equity performance is
modest at best. Moreover, whether on tariffs or Tehran, Donald Trump has
repeatedly shown his willingness to walk back from the brink of anything which
could inflict meaningful pain on the US economy. Less than two weeks after the
death of Ayatollah Khomenei, the President declared war in Iran "very
complete, pretty much"(19), reversing much of the previous week's trading.
As long-term investors focused on the opportunities within Environmental
Markets, these periods of heightened volatility can create valuation
dislocations for us to exploit. Energy price shocks also tend to accelerate
investment in areas such as energy efficiency, renewables, and battery
storage, where we have both holdings and analytical expertise. With the bulk
of Iran's oil going to Asia, these areas in particular remain in focus.
Away from geopolitics, there are signs of a more substantial market shift.
Mega-cap technology stocks have pulled back as depreciation costs mount and
commensurate returns on investment are less immediately evident. At the same
time, with AI spending expected to top $660 billion in 2026, investors are
already paying more attention to the 'picks and shovels' of AI - such as power
management and cooling - where we naturally have more exposure.
Against this backdrop, we believe IEM's portfolio continues to offer a
compelling mix of high active share, robust earnings growth and attractive
valuations relative to the broader market. Recent changes also mean the
portfolio owns more companies with recurring revenues, bolstering its economic
defensiveness despite - as detailed in our Spotlight article - its high level
of exposure to ostensibly cyclical sectors like Industrials. This broader
appeal is particularly the case when so many investors continue to be
concentrated in a limited number of stocks. Such conditions underscore the
value of active management and a focus on fundamentals.
Investment Managers
Fotis Chatzimichalakis
Sanjeev Lakhani
27 March 2026
1 S&P 500 returns from February 19 to April 8. Source: Bloomberg, as
of 31 December 2025.
2 US Consumer Confidence, Source: The Conference Board, 24 February
2026.
3 Acronym: "Trump Always Chickens Out".
4 Is AI already driving U.S. growth?, Source: J.P. Morgan Asset
Management, published December 2025.
5 Six more countries endorse the Declaration to triple nuclear energy by
2050 at COP29, Source: World Nuclear News, 13 November 2024.
6 Deploying Advanced Nuclear Reactor Technologies for National Security,
Source: The White House, 23 May 2025.
7 Germany drops opposition to nuclear power in rapprochement with
France. Source: Financial Times.
8 North Wales to pioneer the UK's first small modular reactors, Source:
GOV.UK, 13 November 2025.
9 World Bank Group and IAEA formalise partnership to collaborate on
nuclear energy for development, Source: World Bank Group, 26 June 2025.
10 United States Government, Brookfield and Cameco announce transformational
partnership, Source: Brookfield Renewable Partners, 28 October 2025.
11 China NEV retail rebounds to 991,000 in March 2025, Source: CnEVPost, 9
April 2025.
12 Europe's EV Boom Was Real in 2025. The Real Fight Starts in 2026, Source:
InsideEVs, 31 December 2025.
13 EV Market Monitor - November 2025, Source: Cox Automotive, 15 December
2025.
14 CATL IPO Prospectus, Source: Contemporary Amperex Technology Co., Limited
(p.107).
15 CATL FY 2024 results.
16 MPS Investor Overview - Q3 2025, Source: Monolithic Power Systems (MPS),
2025.
17 What we know about energy use at U.S. data centers amid the AI boom,
Source: Pew Research Center, 24 October 2025.
18 Next 12 months earnings/last 12 months earnings.
19 Oil and gas prices fall after Trump says war is 'very complete'. Source:
BBC News, March 2026.
Principal risks and uncertainties
The Board is responsible for the management of risks faced by the Company and,
through delegation to the Audit Committee, has established procedures to
manage risk, oversee the internal control framework and determine the nature
and extent of the principal risks the Company is willing to take in order to
achieve its long-term strategic objectives. The Audit Committee carries out,
at least annually, a robust assessment of the principal risks and
uncertainties and reviews ongoing monitoring of both controls risks and
controls. This ensures heightened and emerging risks are identified outside of
the normal cycle of Board and Audit Committee meetings.
Risks are documented on a risk register, grouped into four main categories:
Strategic and Business Objective Risks; Investment Management Risks;
Operations - Service Providers Risks; and Compliance, Regulatory and Corporate
Governance Risks. Risks are then rated before and after mitigating controls by
impact and likelihood of occurrence, with the assessed ratings charted on risk
matrices. The risk register is reviewed on an ongoing basis in an attempt to
capture all risks and to ensure appropriate mitigation is in place. Reviews
take into account changing factors including, but not restricted to, changes
to markets (both macro and micro), stakeholders, operations, regulation and
emerging risks.
The top risks identified by this process are set out in the following section,
and the Board considers these to be the principal risks of the Company.
The Board considered both global economic and geo-political risks, and those
arising from armed conflicts amongst other risks. Updates on market impact and
operational resilience were received from the Manager, administrator and other
key service providers. The Board is satisfied that the key service providers
had, and continue to have, the ability to continue their operations
efficiently, including in a remote or virtual working environment.
The Manager continues to provide regular updates to the Board on the financial
impacts on the portfolio performance and investee companies, as well as the
long-term effects and opportunities for the sectors in which the Company
invests.
Emerging risks are considered by the Board at its quarterly meetings and by
the Audit Committee as part of its risk management and internal control
review. Failure to identify emerging risks may cause reactive actions rather
than being proactive and the Company could be forced to change its structure,
objective or strategy and, in worst case, could cause the Company to become
unviable or otherwise fail.
The experience and knowledge of the Directors is invaluable in consideration
of emerging risks, as are update papers and advice received from the Board's
key service providers such as the Company's Manager, broker, company secretary
and auditor. The AIC also provides regular updates and draws members'
attention to forthcoming industry and/or regulatory issues.
Potential risk Mitigation Trend
Strategic and business objective risks
Economic and market risks
Price movements of the Company's investments are highly correlated to the There are inherent risks involved in stock selection. The Manager is áâ
performance of global equities in general and small and mid-cap equities in experienced and employs its expertise in selecting the stocks in which the
particular. Falls in stock markets are likely to adversely affect the Company invests. The Manager spreads the investment risk over a wide portfolio
performance of the Company's investments. of investments in its three main sectors: energy, water and waste, as well as
geographically.
The changing world order increases uncertainty. Changes in general economic
and market conditions, such as currency exchange rates, interest rates, rates At year end, the Company held investments in 54 companies and the largest
of inflation, industry conditions, tax laws, political events and trends can holding represented 4.4% of net assets.
substantially and adversely affect the value of investments. Market risk
includes the potential impact of events which are outside the Company's The Manager will not normally hedge against foreign currency movements, but
control, such as the ongoing wars in the Middle East and in the Ukraine. the Manager takes account of the risk when making investment decisions.
Further details on financial risks and risk mitigation are disclosed in note
The Company holds part of its portfolio in companies with small market 15 to the accounts.
capitalisations, which are likely to be subject to higher valuation
uncertainties and liquidity risks than larger capitalisation securities. The The high risk rating remains unchanged; this reflects continued uncertainty in
Company may also invest in unquoted securities which generally have greater markets, though for changed reasons. Interest rates and inflation have reduced
valuation uncertainties and liquidity risks than securities listed or traded but uncertainty continues to remain high. Reasons include changes in
on a regulated market. geo-politics (such as policies on net zero and the return of Trumponomics) and
the increasing amount and levels of armed conflict. The latter demonstrated
post year end by the US strikes on Iran with its subsequent resulting armed
conflict throughout the Middle East.
The Company's objective and strategy do not continue to attract investors
This risk includes, but is not limited to, the risk that the Company's The Company invests in a broad portfolio of investments which are spread ã
anticipated growth of financial returns from environmental markets does not amongst several environmental market sectors. The Manager has a rigorous
occur, that the environmental thematic decreases in relevance and that there investment process which takes into account relevant factors prior to
is reversal of environmental policy. Companies operating in environmental investment decisions taking place and thereafter. As well as reviews of the
markets carry risks that governments may alter the regulatory and financial portfolio and relevant industry matters at quarterly Board meetings, the Board
support for environmental improvement, costs of technology may not fall, has an annual strategy day at which the overall strategy of the Company is
capital spending by their customers is reduced or deferred and their products discussed.
or services are not adopted.
All shareholders have an opportunity to talk with the Board and the Manager at
There is the risk that even though the Company's objective and strategy the AGM and can communicate with the Board at any time by writing to the
continue to be attractive to investors, a significant minority shareholder, Company's registered address or by email (details are within the Annual
whose interests are not aligned with the interests of other shareholders, Report).
could threaten the Company's long-term objectives and viability. This risk was
heightened in the year following the Board's communications with Saba both The Chairman's Statement sets out how the Board - following lengthy
during and after the year end, and the notable increase in Saba's shareholding discussions with major shareholders, including Saba - have attempted to
in the second half of 2025 which continued into 2026. address the situation, beginning with the Continuation Tender Offer circular
published on 26 January 2026 and the Exit Tender Offer published on 17 March
2026, both of which are available at www.iemplc.co.uk
Share price trades at excessive discount to net asset value
It is in the long-term interests of shareholders that shares do not trade at a The Board monitors the level of premium/discount and receives regular áâ
significant discount to net asset value. shareholder feedback from the Manager and broker.
Investor demand for the Company's shares may fall, causing the discount to The Board has the power, granted by shareholders, to buy back shares when in
widen. the best interests of the Company, and this should reduce supply of shares and
thus reduce or stop widening of the discount and may reduce volatility.
A wide discount can cause the shares of the Company to become attractive to
activist shareholders, who may have a short term agenda which is not in the
interests of all shareholders.
Investment Management
Underperformance of the Manager
Consistent long-term underperformance by the investment manager may lead to At each board meeting the Manager reports on the performance of the Company áâ
poor performance of the Company compared to its benchmark comparators and including comparisons to its peers and benchmark comparators.
peers, a widening of discount to NAV, a reduction in capital and dissatisfied
shareholders. The Board considers various portfolio metrics including top contributors and
detractors to performance, sub-sector and regional performance, investment
With effect from 1 October 2025, the Company's environmental benchmark was rationale, valuation and growth statistics, key activity in the period,
changed, with the FTSE Environmental Technology 100 Index being replaced by a attribution analysis, portfolio positioning and risk, and the Manager's
new Solactive Global Environmental Markets Specialists Index. The Board outlook. The Board considers the rationale behind new additions, for which the
considers that the new environmental benchmark provides the Manager with a Manager provides details including the environmental benefit. The Board also
more suitable reference point for its portfolio construction and risk considers the macro and geopolitical risks and uncertainties that effect the
management, whist at the same time providing the Board with a better benchmark portfolio and the Company. The Board considers the investment process to
for its evaluation of the Manager's performance. ensure this is aligned to the Company's investment objective and policy. The
Board considers the capabilities of the Manager, the viability of the
Manager's business model and the ongoing investment in resources.
Operations - service providers risks
Failure or breach of Information Technology (IT) - including cyber-security,
and physical security risks
Failure of IT or physical security could potentially lead to breaches of The Company's key service providers report periodically to the Board on their áâ
confidentiality, data records being compromised and the inability to make procedures to mitigate cyber-security risks including their alignment with
investment decisions. In addition, unauthorised physical access to buildings industry standards, their physical and data security procedures and their
could lead to damage or loss of equipment. business continuity planning.
The underlying risks primarily exist in the third party service providers to The Board meets with its key service providers at each Board meeting and
whom the Company has outsourced its depositary, registration, administration Directors engage with service providers frequently between Board meetings.
and investment management activities.
Operational risk
The Board has contractually delegated to third party service providers the Due diligence is undertaken before contracts are entered into with third party ä
management of the investment portfolio, and services covering: depositary and service providers, taking into account the quality and cost of services
custody; registrar; company secretarial and administration, including fund offered, including policies and procedures, and risk management and controls
accounting. The security of the Company's assets, dealing procedures, systems in operation in so far as they are relevant to the Company.
accounting records and adherence to regulatory and legal requirements depend Thereafter, the performance of the provider is subject to regular review and
on the effective operation of the systems of these third party service report to the Board. The Board monitors key persons as part of this oversight.
providers. The control of risks related to the Company's business areas is described in
detail in the corporate governance report within the Annual Report.
Failure by any service provider to carry out its obligations to the Company
could have a material adverse effect on the Company's performance. Disruption During the year the company secretarial and administration service provider
to the accounting, payment systems or custody records (including cyber was changed due to a noticeable deterioration in the quality of services
security risk) could prevent the accurate reporting and monitoring of the provided by the former provider. The appointment of the new provider, Juniper
Company's financial position. Partners Limited ("Juniper"), followed a comprehensive tender and due
diligence process led by the Company's Audit Chair.
Last year the risk rating was increased, reflecting the above noted
deterioration; this year the risk rating has decreased following the smooth
transition of the Company's company secretarial and administrative services to
Juniper, and its excellent service to date.
Strategic and business objective risks
Gearing risk
The Company may borrow money for investment purposes. If investment markets The Board has authorised the Manager to use its discretion to utilise gearing ã
fall in value, any borrowing will enhance the level of loss. up to 10% of net assets. Any borrowing above this level requires Board
approval.
Capacity constraints on the availability of desirable companies for investment
may mean the Company is unable to achieve the level of gearing wanted. Borrowing facilities are renewed on a cost effective and timely basis.
The Company's significant minority shareholder objective is unknown even The Manager keeps under regular review the opportunities for enhancing returns
following extensive engagement by the Board and its financial adviser. by the prudent use of gearing.
Consequently, this has created a material going concern uncertainty. The
tender offer could result in a considerably reduced Company and potentially The Board has established a plan to deal with any required reduction in
breach of borrowing covenants. borrowing in order to ensure covenants are not breached, including appointment
of a specialist debt adviser if early redemption is required. Given the
Any early redemption of the loans would result in significant redemption uncertainty that has been created for the Company, the risk rating has been
costs. increased.
Physical climate change risk
While efforts to mitigate climate change continue, the physical impacts are Physical climate change risk is still an emerging topic for investors as well áâ
already emerging in the form of changing weather patterns. Extreme weather as for the management teams of investee companies. It has been a focus area of
events can result in flooding, drought, fires and storm damage, potentially research and engagement by the Manager to identify companies particularly
impairing the operations of an investee company at a certain location, or exposed to this risk and to open a dialogue with them on management options.
impacting locations of companies within their supply chain. Details of engagement with investee companies are given within the Annual
Report.
The Company invests in a broad portfolio of companies which are spread
geographically, limiting the impact of location specific weather events.
Financial risk
The Company's investment activities expose it to a variety of financial risks The Manager does not actively hedge against foreign currency movements áâ
which include foreign currency risk, portfolio liquidity risk and interest affecting the value of its investments, although the Manager takes account of
rate risk. this risk when making investment decisions.
The Company invests in securities and has borrowings which are not denominated Non-sterling borrowings will effectively hedge non-sterling investments for
or quoted in sterling. Movements of exchange rates between sterling and other matching currencies.
currencies in which the Company's investments are denominated may have an
unfavourable effect on the return on the investments made by the Company. The Company invests in range of global listed equities and the Manager
monitors the foreign currency exposure and liquidity of holdings within the
The Company's main exposure is its €60 million Loan Notes and its portfolio and reports on these to the Board at each meeting.
£35 million revolving credit facility, details of which are shown in note
11. Interest rate risk on borrowing was reduced by fixing two of the Loan Notes.
Further details on financial risks and risk mitigation are disclosed in note
16 to the accounts.
Regulatory risks
Loss of investment trust status would lead to the Company being subject to tax The Company has contracted out relevant services to appropriately qualified áâ
on any gains on the disposal of its investments. professionals, who monitor, and report to the Board on regulatory compliance.
In addition, the Company's broker, auditor, company secretary and Manager
Breaches of the FCA's rules applicable to listed entities could result in provide the Board with regulatory updates on a regular basis.
financial penalties or suspension of trading of the Company's shares. Breaches
of the Companies Act 2006 could result in financial penalties or legal The Manager reports on regulatory matters to the Board on a quarterly basis.
proceedings against the Company or its Directors. The assessment of regulatory risks forms part of the Board's risk assessment
programme.
Failure of the Manager to meet its regulatory obligations could have adverse
consequences on the Company.
Trend: Increasing ã Neutral áâ Reducing ä
Viability statement
The continuation of the Company is subject to the approval of shareholders
every three years, and approval was last given by shareholders at the
Company's 2025 AGM with 89.57% votes in favour of continuation of the Company.
The Directors have assessed the viability of the Company for the period to 31
December 2030 (the "Viability Period"). The Board believes that the Viability
Period, being approximately five years, is an appropriate time horizon over
which to assess the viability of the Company, particularly when taking into
account the long-term nature of the Company's investment strategy, the
principal risks outlined above and its gearing. The Board has also assumed
that shareholders will approve the continuation of the Company on each
continuation resolution proposed during the Viability Period. Based on this
assessment, the Directors have a reasonable expectation that the Company will
be able to continue to operate and to meet its liabilities as they fall due
over the Viability Period.
The Board reviewed the Company's income and expenditure projections and other
funding requirements in normal and worst case market conditions. The level of
the ongoing charges is dependent to a large extent on the level of net assets,
the most significant contributor being the investment management fee. The
Company's income from investments and cash from the sale of investments (which
are readily realisable) provide substantial cover to the Company's operating
expenses, and any other expenditure likely to be faced by the Company over the
Viability Period. Such expenditure includes buybacks of shares and repayment
of the Company's borrowings, which at the date of this report represented just
under 10% of the Company's investments.
In its assessment of the prospects of the Company, the Board considered each
of the principal risks and uncertainties, and the liquidity and solvency of
the Company.
The Directors' assessment of the viability of the Company also took into
account Saba's significant minority shareholding and its communications with
Saba both during, and after, the year end. The former included the notable
increase in Saba's shareholding in the second half of the year which continued
post the year end, and Saba's activity in the investment trust market.
Saba's significant minority shareholding means that it can likely block all
special (75%) resolution votes. Therefore, as explained in more detail in the
Chairman's Statement within the Annual Report, on 26 January 2026 the Company
published its Continuation Tender Offer ("CTO") which set out a clear and
decisive choice for the Company's shareholders: to remain invested in the
Company and its specialist Environmental Markets mandate, or to exit at close
to net asset value per share. The CTO was conditional on Saba tendering all
(or materially all) of its shares. However, the tender was cancelled on 27
February 2026 because the condition was not met.
Throughout this period, and subsequently, the Board has been in ongoing
dialogue with Saba in an effort to reach a mutually agreeable outcome - one in
which shareholders are able to tender up to 100% of their holding. Having
exhausted every reasonable alternative to find a solution that balances the
interests of all shareholders and ensures the long-term stability of the
Company, the Company published an Exit Tender Offer ("ETO") on 17 March 2026.
This tender requires only a simple majority for approval but, as highlighted
in the ETO circular, Saba could gain the power to change the Company's
strategy, objectives and even its mandate. Notwithstanding the possible
strategic outcomes of the ETO, the Company's ability to meet its liabilities
as they fall due remains, as does its financial and operational ability.
However, were an action proposed by the Company to result in the Company
changing its investment strategy and/or business model, the period over which
it would be reasonable to assess the viability of the Company could be
significantly changed, as is also the case were the Company to propose a wind
up. These considerations do not affect the underlying viability of the
Company.
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
year. Under that law the Directors have elected to prepare the financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice, including FRS 102 'The Financial Reporting Standard applicable in
the UK and the Republic of Ireland'. 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
year and of the net return for the year. In preparing these accounts, the
Directors are required to:
l prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the company will continue in business;
l select suitable accounting policies and then apply them
consistently;
l make judgements and estimates which are reasonable and prudent;
l state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the accounts;
and
l prepare a directors' report, a strategic report and directors'
remuneration report which comply with the requirements of the Companies Act
2006.
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.
The accounts are published on the www.iemplc.co.uk and www.impaxam.com
websites which are maintained by the Manager. The work carried out by the
auditor does not involve consideration of the maintenance and integrity of
these websites and, accordingly, the auditor accepts no responsibility for any
changes that have occurred to the accounts since being initially presented on
the website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Directors' confirmation statement
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.
Having taken advice from the Audit Committee, the Directors consider that the
Annual Report and financial statements taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to
assess the Company's position and performance, business model and strategy.
For and on behalf of the Board
Glen Suarez
Chairman
27 March 2026
Income Statement
Year ended 31 December 2025 Year ended 31 December 2024
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Losses on investments 2 - (12,026) (12,026) - (26,676) (26,676)
Net foreign exchange (losses)/gains - (4,723) (4,723) - 4,056 4,056
Income 3 15,262 - 15,262 18,776 - 18,776
Investment management fee 4 (1,710) (5,127) (6,837) (2,105) (6,315) (8,420)
Other expenses 5 (1,500) - (1,500) (1,351) - (1,351)
Return on ordinary activities before
finance costs and taxation 12,052 (21,876) (9,824) 15,320 (28,935) (13,615)
Finance costs 6 (1,016) (3,042) (4,058) (1,183) (3,551) (4,734)
Return on ordinary activities before
taxation 11,036 (24,918) (13,882) 14,137 (32,486) (18,349)
Taxation 7 (683) 31 (652) (2,042) (255) (2,297)
Return on ordinary activities after
taxation 10,353 (24,887) (14,534) 12,095 (32,741) (20,646)
Return per ordinary share 8 4.94p (11.87p) (6.93p) 4.64p (12.56p) (7.92p)
The total column of the Income Statement is the profit and loss account of the
Company.
The supplementary revenue and capital columns are provided for information
purposes in accordance with the Statement of Recommended Practice issued by
the Association of Investment Companies. All revenue and capital items in the
above statement derive from continuing operations. No operations were acquired
or discontinued during the year.
Return on ordinary activities after taxation is also the total comprehensive
income for the year.
The notes form part of these financial statements.
Balance Sheet
As at As at
31 December 31 December
2025 2024
Notes £'000 £'000
Fixed assets
Investments at fair value through profit or loss 2 892,485 1,099,278
Current assets
Dividends receivable 520 1,763
Sales awaiting settlement - 1,774
Taxation recoverable - 52
Other debtors 12 427
Cash and cash equivalents 10,601 13,405
11,133 17,421
Creditors: amounts falling due within one year
Trade and other payables 10 (3,325) (5,468)
Revolving credit facility 11 (34,933) (33,716)
(38,258) (39,184)
Net current liabilities (27,125) (21,763)
Total assets less current liabilities 865,360 1,077,515
Creditors: amounts falling due after one year
Capital gains tax provision 7 - (31)
Loan Notes 11 (52,116) (49,400)
Net assets 813,244 1,028,084
Capital and reserves: equity
Share capital 12 30,562 30,562
Capital redemption reserve 9,877 9,877
Special reserve 181,050 370,043
Capital reserve 578,290 603,177
Revenue reserve 13,465 14,425
Shareholders' funds 813,244 1,028,084
Net assets per ordinary share - debt at bookcost 13 427.1p 428.6p
Net assets per ordinary share - debt at fair value(1) 426.4p 427.6p
1 This is an alternative performance measure as detailed within the Annual
Report.
Approved by the Board of Directors and authorised for issue on 27 March 2026
and signed on their behalf by:
Glen Suarez, Chairman
Impax Environmental Market plc incorporated in England with registered number
04348393.
The notes form part of these financial statements.
Statement of Changes in Equity
Share Capital Share
Share premium redemption purchase Special Capital Revenue
Year ended capital account reserve reserve reserve reserve reserve Total
31 December 2025 Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening equity as at
1 January 2025 30,562 - 9,877 - 370,043 603,177 14,425 1,028,084
Return for the year - - - - - (24,887) 10,353 (14,534)
Dividends paid 9 - - - - - - (11,313) (11,313)
Cost of share buybacks 12 - - - - (188,993) - - (188,993)
Closing equity as at
31 December 2025 30,562 - 9,877 - 181,050 578,290 13,465 813,244
Share Capital Share
Share premium redemption purchase Special Capital Revenue
Year ended capital account reserve reserve reserve reserve reserve Total
31 December 2024 Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening equity as at
1 January 2024 30,562 423,098 9,877 52,557 - 691,454 14,936 1,222,484
Return for the year - - - - - (32,741) 12,095 (20,646)
Cancellation of share premium
account* - (423,098) - - 423,098 - - -
Dividends paid 9 - - - - - - (12,606) (12,606)
Cost of share buybacks 12 - - - (52,557) (53,055) (55,536) - (161,148)
Closing equity as at
31 December 2024 30,562 - 9,877 - 370,043 603,177 14,425 1,028,084
* The new special reserve arose from the cancellation of the share premium
account in 2024. It is distributable, unlike the share premium account.
The notes form part of these financial statements.
Statement of Cash Flows
Year ended Year ended
31 December 31 December
2025 2024
Notes £'000 £'000
Operating activities
Return on ordinary activities before finance costs and taxation(1) (9,824) (13,615)
Less: Tax deducted at source on income from investments (685) (2,288)
Foreign exchange losses/(gains) 4,770 (4,178)
Adjustment for losses on investments 2 12,026 26,676
Special dividends received as capital - 3,293
Decrease/(increase) in other debtors 1,708 (1,451)
Increase/(decrease) in other creditors 10 324 (165)
Net cash flow from operating activities 8,319 8,272
Investing activities
Sale of investments 787,618 421,201
Purchase of investments (591,325) (256,375)
Net cash flow from investing activities 196,293 164,826
Financing activities
Dividends paid 9 (11,313) (12,606)
Proceeds from revolving credit facility 35,067 -
Repayment of revolving credit facility (35,678) -
Finance costs paid (4,724) (4,593)
Cost of share buybacks (190,721) (159,420)
Net cash outflow used in financing activities (207,369) (176,619)
Decrease in cash (2,757) (3,521)
Cash and cash equivalents at start of year 13,405 16,804
Effect of movements in exchange rates on cash held (47) 122
Decrease in cash (2,757) (3,521)
Cash and cash equivalents at end of year 10,601 13,405
1 Cash inflow includes dividend income received during the year ended 31
December 2025 of £16,261,000 (2024: £15,070,000) and bank interest of
£244,000 (2024: £487,000).
Changes in net debt
Year ended Year ended
31 December 31 December
2025 2024
£'000 £'000
Net debt at start of year (69,711) (70,293)
Decrease in cash and cash equivalents (2,757) (3,521)
The effect of changes in foreign exchange rates (4,631) 4,103
Repayment of revolving credit facility 35,678 -
Proceeds from revolving credit facility (35,067) -
Net debt at end of year (76,488) (69,711)
The notes form part of these financial statements.
Notes to the Financial Statements
1 Accounting policies
The Company is a public limited company incorporated in England and Wales with
registered number 04348393. Its registered office is as shown within the
Annual Report. The Company's shares are traded on the London Stock Exchange.
The Company is an investment company within the meaning of Section 833 of the
Companies Act 2006.
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 accounts are prepared in accordance with UK Generally Accepted Accounting
Practice ("UK GAAP") including FRS 102 'The Financial Reporting Standard
applicable in the UK and Republic of Ireland' and the Statement of Recommended
Practice 'Financial statements of investment trust companies and venture
capital trusts' ('SORP') issued by the Association of Investment Companies in
July 2022.
The accounts have been prepared on a going concern basis. Details of the
Directors' assessment of the going concern status of the Company, which
considered the adequacy of the Company's resources and the macroeconomic
backdrop such as higher inflation and interest rates and possible recession,
are given within the Annual Report. This assessment also considered the
position of the Company with respect to Saba as a significant minority
shareholder. As a result of that holding and following discussion with Saba
and other major shareholders, and as explained in more detail in the
Chairman's Statement within the Annual Report, on 26 January 2026 the Company
published a Continuation Tender Offer ("CTO") circular. The CTO was
conditional on Saba tendering all (or materially all) of its shares. However,
the tender was cancelled on 27 February 2026 because the condition was not
met.
Throughout this period, and subsequently, the Board has been in ongoing
dialogue with Saba in an effort to reach a mutually agreeable outcome - one in
which shareholders are able to tender up to 100% of their holding. Having
exhausted every reasonable alternative to find a solution that balances the
interests of all shareholders and ensures the long-term stability of the
Company, the Company published an Exit Tender Offer ("ETO") on 17 March 2026.
This tender requires only a simple majority for approval but, as highlighted
in the ETO circular, Saba could gain the power to change the Company's
strategy, objectives and even its mandate.
Having received no guidance from Saba, the Board does not have any insight
into what change(s) in direction the Company could have. On the basis that
this raises inherent uncertainties that could potentially call into question
the Company's ability to continue as a going concern for at least 12 months
from the date of approval of these financial statements, the Board considers
that there is a material uncertainty that casts significant doubt on the
Company's ability to continue as a going concern, but that it remains
appropriate to prepare the financial statements on a going concern basis. The
financial statements do not include adjustments that would be necessary if the
Company were unable to continue as a going concern.
Amounts in the accounts have been rounded to the nearest £'000 unless
otherwise stated.
(b) Investments
Securities of companies quoted on regulated stock exchanges and any holdings
in unquoted companies have been classified as 'at fair value through profit or
loss' and are initially recognised on the trade date and measured at fair
value in accordance with sections 11 and 12 of FRS 102. Investments are
measured at subsequent reporting dates at fair value by reference to their
market bid prices. Any unquoted investments are measured at fair value which
is determined by the Directors in accordance with the International Private
Equity and Venture Capital guidelines.
Changes in fair value are included in the Income Statement as a capital item.
(c) Reporting currency
The accounts are presented in Sterling which is the Company's functional and
presentational currency and the currency in which the Company's share capital,
reserves and expenses are denominated as a UK registered and listed company.
(d) Income from investments
Investment income from shares is accounted for when the Company's right to
receive the income is established, which is usually considered to be the
ex-dividend date. Overseas income is grossed up at the appropriate rate of tax
but UK dividend income is not grossed up for tax credits.
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. The
ordinary element of scrip dividends received in lieu of cash dividends is
recognised as revenue. Any enhancement above the cash dividend is treated as
capital.
Scrip dividends received in lieu of cash dividends are recognised as revenue
except for any excess above the cash dividend, which is recognised as capital.
All other investment income is credited to the Income Statement as a revenue
item.
(e) Nature and purpose of equity and reserves
Share capital represents the 10p nominal value of the issued share capital.
The share premium account arose from the net proceeds of new shares and from
the excess proceeds received on the sale of shares from treasury over the
repurchase cost.
The capital redemption reserve represents the nominal value of shares
repurchased for cancellation.
The share purchase reserve was created from the cancellation in full of the
share premium account in 2002 and 2009. The cancellation and transfer were
approved by shareholders and confirmed by the Court. This reserve can only be
used for share repurchases, both into treasury or for cancellation. When
shares are subsequently reissued from treasury, the amount equal to their
repurchase cost is reflected in this reserve, with any proceeds in excess of
the repurchase cost transferred to the share premium account.
The special reserve was created from the cancellation in full of the share
premium account in July 2024. The cancellation and transfer were approved by
shareholders and confirmed by the Court, and following this £423,098,000 was
transferred into this reserve. This reserve is distributable, and can be used
for both share repurchases and dividends.
The capital reserve reflects any
l gains or losses on the disposal of investments;
l exchange movements of a capital nature;
l the increases and decreases in the fair value of investments which have
been recognised in the capital column of the income statement; and
l expenses which are capital in nature.
Any gains in the fair value of investments that are not readily convertible to
cash are treated as unrealised gains in the capital reserve.
The revenue reserve reflects cumulative income and expenditure recognised in
the revenue column of the Income Statement less cumulative dividends paid, and
is distributable by way of dividend.
The Company's distributable reserves consist of the share purchase reserve,
the special reserve, the capital reserve attributable to realised profits and
the revenue reserve. The share purchase reserve may only be used for share
repurchases, both into treasury or for cancellation.
(f) Expenses and finance costs
All expenses are accounted for on an accruals basis. Expenses are recognised
through the Income Statement as revenue items except as follows:
Management fee
In accordance with the Company's stated policy and the Directors' expectation
of the split of future returns, three quarters of the investment management
fee are charged as a capital item in the Income Statement. There is no
performance fee arrangement with the Manager.
Finance costs
Finance costs include interest payable and direct loan costs. In accordance
with Directors' expectation of the split of future returns, three quarters of
finance costs are charged as capital items in the Income Statement.
Arrangement costs for revolving credit facilities and Loan Notes are amortised
over the term of the borrowing.
Transaction costs
Transaction costs incurred on the acquisition and disposal of investments are
charged to the Income Statement as a capital item.
(g) Taxation
Irrecoverable taxation on dividends is recognised on an accruals basis in the
Income Statement.
Deferred taxation
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the financial reporting date, where
transactions or events that result in an obligation to pay more tax in the
future or right to pay less tax in the future have occurred at the financial
reporting date. This is subject to deferred tax assets only being recognised
if it is considered more likely than not that there will be suitable profits
from which the future reversal of the timing differences can be deducted.
Deferred tax assets and liabilities are measured at the rates applicable to
the legal jurisdictions in which they arise.
(h) 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. Monetary assets and liabilities and financial instruments carried
at fair value denominated in foreign currency 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.
(i) Financial liabilities
Loan Notes and other borrowings are initially recorded at the proceeds
received net of direct issue costs and subsequently measured at amortised
cost.
(j) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents include bank
overdrafts repayable on demand and short term, highly liquid investments that
are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
(k) Estimates and judgements
The preparation of financial statements requires the Directors to make
estimates and judgements that affect items reported in the Balance Sheet and
Income Statement. Although these estimates are based on management's best
knowledge of current facts, circumstances and, to some extent, future events
and actions, the Company's actual results may ultimately differ from those
estimates, possibly significantly.
Estimates and underlying judgements are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which the
estimates are revised and in any future periods affected. There have been no
estimates, judgements or assumptions which have had a significant impact on
the financial statements for the year.
(l) Dividend payable
Final dividends payable to equity shareholders are recognised in the financial
statements when they have been approved by shareholders and become a liability
of the Company. Interim dividends payable are recognised in the period in
which they are paid. The capital reserve, revenue reserve and special reserve
may be used to fund dividend distributions.
(m) Treasury shares
Treasury shares are recognised at cost as a deduction from equity
shareholders' funds. Subsequent consideration received for the sale of such
shares is also recognised in equity, with any difference between the sale
proceeds and the original cost being taken to share premium account. No gain
or loss has been recognised in the financial statements on transactions in
treasury shares.
2 Investments at fair value through profit or loss
2025 2024
£'000 £'000
(a) Summary of valuation
Analysis of closing balance:
UK quoted securities 66,271 257,290
Overseas quoted securities 826,214 841,988
Total investments 892,485 1,099,278
(b) Movements during the year:
Opening balance of investments, at cost 1,007,707 1,151,287
Additions, at cost 590,293 256,280
Disposals, at cost (778,911) (399,860)
Cost of investments at 31 December 819,089 1,007,707
Revaluation of investments to fair value:
Opening balance of capital reserve - investments held 91,571 144,560
Unrealised losses on investments held (18,175) (52,989)
Balance of capital reserve - investments held at 31 December 73,396 91,571
Fair value of investments at 31 December 892,485 1,099,278
(c) Losses on investments in year (per Income Statement)
Gains on disposal of investments(1) 7,275 23,213
Net transaction costs (1,126) (193)
Special dividends received as capital - 3,293
Unrealised losses on investments held (18,175) (52,989)
Losses on investments (12,026) (26,676)
1 Gains on bookcost at purchase date upon disposal.
During the year, the Company incurred transaction costs on purchases totalling
in aggregate £602,000 (2024: £316,000) and on disposals totalling in
aggregate £932,000 (2024: £326,000). Following MiFID II, the Manager has
rebated £408,000 (2024: £449,000) in respect of transaction research costs
for the year ended 31 December 2025. Transaction costs are recorded in the
capital column of the Income Statement.
The Company received £787,618,000 (2024: £433,349,000) from investments sold
in the year. The bookcost of these investments when they were purchased was
£781,469,000 (2024: £410,329,000). These investments have been revalued over
time and until they were sold any unrealised gains/losses were included in the
fair value of the investments.
No special dividends classified as capital were received in the year (2024:
£3,293,000).
Classification of financial instruments
FRS 102 requires classification of financial instruments within the fair value
hierarchy be determined by reference to the source of inputs used to derive
the fair value and the lowest level input that is significant to the fair
value measurement as a whole. The classifications and their descriptions are
below:
Level 1
The unadjusted quoted price in an active market for identical assets or
liabilities that the entity can access at the measurement date.
Level 2
Holdings in companies with no quoted prices. Inputs other than quoted prices
included within Level 1 that are observable (i.e. developed using market data)
for the asset or liability, either directly or indirectly.
Level 3
Inputs are unobservable (i.e. for which market data is unavailable) for the
asset or liability.
All investments at the year ended 31 December 2025 and 2024 were classified as
Level 1. The Company held no unquoted investments during the year and at the
year end.
3 Income
2025 2024
£'000 £'000
Dividends from UK listed investments 2,829 2,340
Dividends from overseas listed investments 12,189 15,949
Total dividend income 15,018 18,289
Bank interest 244 487
Total Income 15,262 18,776
No special dividends were received in the year (2024: Dividends from overseas
listed investments includes special dividends classified as revenue of
£292,000).
4 Investment management fee
2025 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee 1,710 5,127 6,837 2,105 6,315 8,420
Details of the investment management fee are given in the Directors' report
within the Annual Report. At 31 December 2025, investment management fees
accrued were £2,220,000 (2024: £1,493,000).
5 Other expenses
2025 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Auditor's fee in respect of 2025(1) 57 - 57 - - -
Auditor's fee in respect of 2024(2) 20 - 20 50 - 50
Broker retainer fee 43 - 43 27 - 27
Custody fees 171 - 171 165 - 165
Depositary fees 104 - 104 93 - 93
Directors' fees(3) 210 - 210 187 - 187
Marketing fees 146 - 146 144 - 144
Registrar's fees 62 - 62 60 - 60
Secretary and administrator fees 262 - 262 267 - 267
Other expenses 425 - 425 358 - 358
1,500 - 1,500 1,351 - 1,351
1 The auditor's fee for the statutory audit of these financial
statements was £57,000 (2024: £49,875), excluding VAT of £10,400 (2024:
£9,975) and out of pocket expenses. Included in this amount is a
non-recurring fee of £5,000 for the work performed over the transfer of
administrator and company secretary.
2 An additional audit fee of £20,000 in respect of the 2024 audit work
arose due to issues at the Company's former administrator which impacted the
audit process. This was offset by a £12,500 fee waiver by the administrator
(all figures net of VAT).
3 Full detail of Directors' fees for the year is provided in the
Directors' Remuneration Implementation Report within the Annual Report.
Employer's National Insurance for Directors' fees is included as appropriate
in Directors' other costs. At 31 December 2025, Directors' fees, Directors'
expenses and national insurance outstanding were £nil (2024: £nil).
6 Finance costs
2025 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest charges
Interest on revolving credit facility ("RCF")
repaid in 2025 357 1,070 1,427 484 1,451 1,935
Interest on current RCF 83 250 333 - - -
Interest on Loan Notes 496 1,487 1,983 665 1,997 2,662
936 2,807 3,743 1,149 3,448 4,597
Direct finance costs
Repaid RCF 20 55 75 27 82 109
Current RCF 53 159 212 - - -
Loan Notes 7 21 28 7 21 28
80 235 315 34 103 137
Total 1,016 3,042 4,058 1,183 3,551 4,734
Full details of the Company's borrowings are set out in note 11. The Company
refinanced its revolving credit facility with Scotiabank on the 6 September
2025 with a new RCF with Bank of America (the 'current RCF'). The direct
finance costs in relation to the refinancing Loan Notes in 2023 amounted to
£252,000. These costs are amortised over the life of the Loan Notes. Direct
finance costs of £212,000 were incurred in relation to the current RCF; as
the current RCF has no fixed life, these costs have been fully recognised in
the year ended 31 December 2025.
7 Taxation
(a) Analysis of charge in the year
2025 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Overseas taxation 683 - 683 2,042 259 2,301
Decrease in CGT provision - (31) (31) - (4) (4)
Taxation 683 (31) 652 2,042 255 2,297
(b) Factors affecting total tax charge for the year:
The effective UK corporation tax rate applicable to the Company for the year
is 25.0% (2024: 25.0%). The tax charge differs from the charge resulting from
applying the standard rate of UK corporation tax for an investment trust
company. The standard rate UK corporation tax rate at 31 December 2025 was
25.0% (2024: 25.0%).
The differences are explained below:
2025 2024
£'000 £'000
Return for the year before taxation (13,882) (18,349)
Total return for the year before taxation multiplied by the standard rate of
corporation tax of 25% (2024: 25%) (3,470) (4,587)
Effects of:
Non-taxable UK dividend income (708) (585)
Non-taxable overseas dividend income (3,047) (3,779)
Movement in unutilised management expenses 2,084 1,886
Movement on non-trade relationship deficits 954 1,062
Losses on investments not taxable 3,006 7,017
Losses/(gains) in foreign currency movement 1,181 (1,014)
Capital gains tax provision movement (31) (4)
Overseas taxation 683 2,301
Total tax charge for the year 652 2,297
(c) Investment companies which have been approved by the HM Revenue &
Customs under section 1158 of the Corporation Tax Act 2010 are exempt from tax
on capital gains. Due to the Company's status as an Investment Trust, and the
intention to continue meeting the conditions required to obtain approval in
the foreseeable future, the Company has not provided for deferred tax on any
capital gains or losses arising on the revaluation of investments.
(d) The capital gains tax provision represents an estimate of the amount of
tax provisionally payable by the Company on direct investment in Indian
equities. It is calculated based on the long-term or short term nature of the
investments and the unrealised gain thereon at the applicable tax rate at the
year end.
Movements on the capital gains tax provision for the year
2025 2024
£'000 £'000
Provision brought forward 31 40
Capital gains tax cash movement - (5)
Decrease in provision in year (31) (4)
Provision carried forward - 31
(e) The Company has unrelieved excess management expenses and non-trade
relationship deficits of £123,234,000 (2024: £111,086,000). It is unlikely
that the Company will generate sufficient taxable profits in the future to
utilise these expenses and therefore no deferred tax asset has been
recognised. The unrecognised deferred tax asset calculated using a rate of 25%
(2024: 25%) amounts to £30,809,000 (2024: £27,772,000).
8 Return per share
Year ended Year ended
31 December 31 December
2025 2024
£'000 £'000
Revenue return after taxation (£'000) 10,353 12,095
Capital return after taxation (£'000) (24,887) (32,741)
Net return (£'000) (14,534) (20,646)
Weighted average number of ordinary shares 209,517,789 260,523,018
Net return per ordinary share is based on the above totals of revenue and
capital and the weighted average number of ordinary shares in issue during
each year.
There is no dilution to return per share as the Company has only ordinary
shares in issue.
9 Dividends
(a) Dividends paid in the year
2025 2024
Rate £'000 Rate £'000
Interim in lieu of final for the previous year 3.20p 7,470 2.90p 7,983
First interim for the current year 1.90p 3,843 1.80p 4,623
5.10p 11,313 4.70p 12,606
(b) Dividends paid and payable in respect of the financial year, which is the
basis on which the requirements of s1158-1159 of the Corporation Tax Act 2010
are considered
2025 2024
Rate £'000 Rate £'000
First interim for the current year 1.90p 3,843 1.80p 4,623
Second interim in lieu of final for the current year 3.20p 6,093 3.20p 7,470
5.10p 9,936 5.00p 12,093
The Board declared two dividends in respect of the year and expects to
continue paying two dividends annually.
10 Trade and other payables
2025 2024
£'000 £'000
Finance costs payable 813 1,583
Accrued management fee 2,220 1,493
Other accrued expenses 292 664
Amounts due to brokers for shares bought back - 1,728
Total 3,325 5,468
11 Loan Notes and revolving credit facility
The Company has in place the following privately placed notes (the "Loan
Notes") issued to funds managed by Pricoa Private Capital:
l €20 million maturing on 1 September 2030 with a floating coupon of
Euribor + 1.35%;
l €30 million maturing on 1 September 2033 with a fixed coupon of 4.48%;
and
l €10 million maturing on 1 September 2035 with a fixed coupon of 4.63%.
In addition to the Loan Notes referred to above, the Company had in place a
two-year £80 million multi-currency floating rate RCF with Scotiabank, which
expired on 6 September 2025. The RCF had a non-utilisation fee of 52.5 basis
points. The RCF with Scotiabank was replaced by a 360 day rolling
£35 million multi-currency RCF with an accordion amount no greater than £35
million with Bank of America, with no fixed expiry date. The RCF has a
non-utilisation fee of 22.5 basis points.
The RCF is secured by a floating charge over the assets of the Company and
this floating charge has been extended to the Loan Notes, so that the two
lenders rank pari passu.
A summary of the Company's borrowings are as follows:
2025 2024
Loan Loan
currency currency
amount Bookcost amount Bookcost
Interest rate €'000 £'000 €'000 £'000
Loan Notes - Fixed and floating rate
Series A - Floating 2030 Euribor + 1.35% 20,000 17,372 20,000 16,470
Series B - Fixed 2033 4.48% 30,000 26,058 30,000 24,698
Series C - Fixed 2035 4.63% 10,000 8,686 10,000 8,232
52,116 49,400
RCF - floating rate
Non-sterling Six month EURIBOR +1.6% - - 40,800 33,716
Non-sterling Six month EURIBOR +0.85% 40,068 34,933 - -
87,049 83,116
The maturity profile of the Loan Notes and RCF are as follows:
2025 2024
Bookcost Bookcost
Payable at 31 December £'000 £'000
RCF payable in less than one year 34,933 33,716
Loan Notes payable after more than one year 52,116 49,400
87,049 83,116
The Company's Loan Notes and RCF contain the following covenants:
1) Adjusted asset coverage should not be less than 4:1 in respect of the
RCF;
2) Borrowings expressed as a percentage of adjusted assets shall not
exceed 35% in respect of the Loan Notes;
3) Net Asset Value should not be less than £260,000,000; and
4) The maximum permitted borrowing should not exceed that permitted in the
Company's Articles of Association as described in the Gearing section of the
Investment Policy within the Annual Report.
There were no breaches of any covenants either in the year just ended or the
prior year.
12 Share capital
2025 2024
Number £'000 Number £'000
Issued and fully paid shares of 10p each
Brought forward 239,861,519 23,986 281,115,039 28,111
Shares bought back and held in treasury (49,450,940) (4,945) (41,253,520) (4,125)
Carried forward 190,410,579 19,041 239,861,519 23,986
Treasury shares of 10p each
Brought forward 65,762,020 6,576 24,508,500 2,451
Shares bought back and held in treasury 49,450,940 4,945 41,253,520 4,125
Carried forward 115,212,960 11,521 65,762,020 6,576
Share capital 305,623,539 30,562 305,623,539 30,562
During the year, the shares bought back were 20.6% of issued share capital at
the start of the year, costing £188,993,000 (2024: 14.7%, £161,148,000).
Total costs included the costs of the shares and other purchase costs
totalling £1,354,000 (2024: £1,028,000).
As at 25 March 2026, the latest practicable date before publication of this
report, no further ordinary shares have been bought back.
13 Net Asset Value per ordinary share
The net asset value per ordinary share at the year end are shown below. These
were calculated using 190,410,579 (2024: 239,861,519) ordinary shares in issue
at the year end (excluding treasury shares).
2025 2024
Net Net
asset value asset value
attributable attributable
£'000 pence £'000 pence
Net Asset value - Debt at bookcost 813,244 427.1 1,028,084 428.6
A reconciliation of shareholders funds with debt at fair value is shown in the
Alternative Performance Measures within the Annual Report.
14 Transactions with the Manager
Details of the management contract can be found in the Directors' Report
within the Annual Report. Fees payable to the Manager are detailed in note 4
within the Annual Report. Since 1 January 2018, the Manager has agreed to
rebate commission which relates to research fees to the Company with such
amount disclosed in note 2.
15 Financial risk management
As an investment trust, the Company invests in equities for the long-term so
as to enable investors to benefit from growth in the markets for cleaner or
more efficient delivery of basic services of energy, water and waste, as
stated in the Company's investment objective which can be found within the
Annual Report. In pursuing its investment objective, the Company is exposed to
a variety of risks that could result in either a reduction in the Company's
net assets or a reduction of the profits available for dividends. These risks
include market risk (comprising currency risk, interest rate risk, and other
price risk), credit risk and liquidity risk and the Directors' approach to the
management of them is set out below. These metrics are monitored by the AIFM.
The objectives, policies and processes for managing the risks, and the methods
used to measure the risks, are set out below.
Market risks
The potential market risks are (i) currency risk, (ii) interest rate risk, and
(iii) other price risk. The following considers each risk in turn.
(i) Currency risk
The Company invests in global equity markets and therefore is exposed to
currency risk as it affects the value of the shares in the base currency.
These currency exposures are not hedged. The Manager monitors currency
exposure as part of its investment process. Currency exposures for the Company
as at 31 December 2025 are detailed in the table at the end of this note.
Currency sensitivity
The below table shows the strengthening/(weakening) of sterling against the
local currencies over the financial year for the Company's financial assets
and liabilities held at 31 December 2025.
2025 2024
% change(1) % change(1)
Australian Dollar (0.2) 8.4
Canadian Dollar 2.8 6.9
Chinese Yuan 3.2 0.8
Danish Krone (4.9) 4.8
Euro (5.1) 4.9
Hong Kong Dollar 7.9 (2.5)
Indian Rupee 13.1 1.1
Israeli Shekel 6.2 (1.0)
Japanese Yen 7.3 6.8
Korean Won 5.0 12.3
Norwegian Krone (4.7) 10.4
Swedish Krona (10.4) 8.2
Swiss Franc (5.9) 6.1
Taiwanese Dollar 2.9 5.4
US Dollar 7.7 (1.9)
1 Percentage change of Sterling against local currency from 1 January to 31
December.
Based on the financial assets and liabilities at 31 December 2025 and all
other things being equal, if sterling had strengthened by 10%, the profit
after taxation for the year ended 31 December 2025 and the Company's net
assets at 31 December 2025 would have decreased by the amounts shown in the
table below. If sterling had weakened by 10% this would have had the opposite
effect.
2025 2024
Potential Potential
effect effect
£'000 £'000
Australian Dollar - 2,876
Canadian Dollar 893 6,813
Chinese Yuan 2,393 3,599
Danish Krone 2,502 -
Euro 12,018 9,991
Hong Kong Dollar 1,296 -
Indian Rupee 7 2,210
Israeli Shekel - 270
Japanese Yen 1,372 -
Korean Won 1,345 1,656
Norwegian Krone 1,605 2,035
Swedish Krona 1,214 919
Swiss Franc - 2,559
Taiwanese Dollar 4,271 1,504
US Dollar 45,134 57,985
Total 74,050 92,417
(ii) Interest rate risk
The Company had a mix of fixed and floating rate borrowings for both this and
the preceding year. The Company's borrowings are shown in note 11, including
detailing those borrowings which are floating Loan and subject to interest
rate risk.
The Company has £35 million multi-currency revolving credit facility based on
a floating reference interest rate plus a margin of 0.85% per annum and a
€20 million Loan Note due 2030 at EURIBOR+1.35%.
If rates had increased or decreased by 350 basis points the impact to the
Company's profit or loss would be:
2025 2024
Profit or loss Profit or loss
350 bps 350 bps 350 bps 350 bps
increase decrease increase decrease
€'000 £'000 £'000 €'000 £'000 £'000
31 December
Non-sterling Loan Note 20,000 (610) 610 20,000 (579) 579
Non-sterling RCF 40,068 (1,223) 1,223 40,800 (1,180) 1,180
(iii) Other price risk
The principal price risk for the Company is the price volatility of shares
that are owned by the Company. The Company is well diversified across
different sub-sectors and geographies.
At the year end the Company held investments with an aggregate market value of
£892,485,000 (2024: £1,099,278,000). All other things being equal, the
effect of a 10% increase or decrease in the share prices of the investments
held at the year end would have been an increase or decrease of £89,248,500
(2024: £109,927,800) in the profit after taxation for the year ended 31
December 2025 and the Company's net assets at 31 December 2025.
Overall sensitivity
The Manager has used the Parametric VaR to calculate value at risk ('VAR').
This model has been used to estimate the maximum expected loss from the
portfolio held at 31 December 2025 over 1 day, 5 day, 10 day and 21 day
periods given the historical performance of the fund over the previous five
years. The data in the previous five years is analysed under discrete periods
to provide 1 in 10, 1 in 20 and 1 in 100 possible outcomes. The results of the
analysis are shown below.
2025 2024
Expected as Expected as
percentage at limit percentage at limit
1 in 20 1 in 100 1 in 20 1 in 100
(95%) (99%) (95%) (99%)
1 day return 1.68 2.38 1.58 2.24
5 day return 3.76 5.32 3.54 5.01
10 day return 5.32 7.52 5.01 7.08
21 day return 7.71 10.90 7.26 10.27
The above analysis has been based on the following main assumptions:
l The distribution of share price returns will be the same in the future as
they were in the past.
l The portfolio weightings will remain as they were at 31 December 2025.
The above results suggest, for example, that there is a 5% or less chance of
the NAV falling by 3.76% or more over a 5 day period. Similarly, there is a
1% or less chance of the NAV falling by 2.38% or more on any given day.
Credit risks
BNP Paribas Securities Services (the 'Depositary') has been appointed as
custodian and depositary to the Company.
Cash at bank at 31 December 2025 included £2,099,000 (2024: £12,606,000)
held in its bank accounts at the Depositary. The Company also held £8,501,000
(2024: £799,000) in its accounts with NatWest Group plc, and a further
£1,000 (2024: nil) held in its accounts with Lloyds Banking Group plc. The
Board has established guidelines that, under normal circumstances, the maximum
level of cash to be held at any one bank should be the lower of: i) 5% of the
Company's net assets; and ii) £30 million. These are guidelines and there may
be instances when this amount is exceeded for short periods of time.
All of the assets of the Company at the year end were held by the Depositary
or sub-custodians of the Depositary. Bankruptcy or insolvency of the
Depositary or its sub-custodians may cause the Company's rights with respect
to securities held by the Depositary to be delayed or limited. The Depositary
segregates the Company's assets from its own assets and only uses
sub-custodians on its approved list of sub-custodians. At the year end, the
Depositary held £892,485,000 (2024: £1,099,278,000) in respect of quoted
investments.
The credit rating of the Depositary, which is a Fitch rating of AA-, was
reviewed at the time of appointment and is reviewed on a regular basis by the
Manager and/or the Board.
Credit risk arising on transactions with brokers relates to transactions
awaiting settlement. Risk relating to unsettled transactions is considered to
be low as trading is almost always done on a delivery versus payment basis.
There is credit risk on dividends receivable during the time between
recognition of the income entitlement and actual receipt of dividend.
Liquidity risk
This is the risk that the Company will encounter difficulty in meeting its
obligations for financial liabilities as they fall due. This risk is minimised
because a majority of the Company's investments are in readily realisable
securities which can be sold to meet funding commitments. The maturity profile
analysis of the Company's financial liabilities is shown below. The Company
does not have derivative financial liabilities and the amounts shown are
undiscounted.
Financial liabilities by maturity at the year end are shown below on an
undiscounted basis:
2025 2024
Within Within More than Within Within More than
1 year 1-3 years 3 years Total 1 year 1-3 years 3 years Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Loan Notes - - 52,116 52,116 - - 49,400 49,400
RCF 34,933 - - 34,933 33,716 - - 33,716
Interest cash flows on
Loan Notes 2,180 4,360 9,893 16,433 2,213 6,669 10,116 18,998
Interest cash flows on RCF 254 - - 254 1,877 - - 1,877
Cash flows on other
creditors 2,512 - - 2,512 2,157 - - 2,157
39,879 4,360 62,009 106,248 39,963 6,669 59,516 106,148
Financial assets and liabilities
All liabilities carrying amount approximates fair value.
The Company's financial assets and liabilities at 31 December 2025 comprised:
2025 2024
Non- Non-
Interest interest Interest interest
bearing bearing Total bearing bearing Total
£'000 £'000 £'000 £'000 £'000 £'000
Investments
Australian Dollar - - - - 28,759 28,759
Canadian Dollar - 8,932 8,932 - 68,046 68,046
Chinese Yuan - 23,929 23,929 - 35,986 35,986
Danish Krone - 25,021 25,021 - - -
Euro - 207,076 207,076 - 183,810 183,810
Hong Kong Dollar - 12,929 12,929 - - -
Indian Rupee - - - - 22,128 22,128
Israeli Shekel - - - - 2,700 2,700
Japanese Yen - 13,724 13,724 - - -
Korean Won - 13,453 13,453 - 16,557 16,557
Norwegian Krone - 16,054 16,054 - 20,352 20,352
Sterling - 66,271 66,271 - 96,294 96,294
Swedish Krona - 12,141 12,141 - 9,187 9,187
Swiss Franc - - - - 25,243 25,243
Taiwanese Dollar - 42,620 42,620 - 15,036 15,036
US Dollar - 450,335 450,335 - 575,180 575,180
- 892,485 892,485 - 1,099,278 1,099,278
Other assets and liabilities
Cash and cash equivalents
Euro 153 - 153 - - -
Chinese Yuan 1 - 1 1 - 1
Indian Rupee 88 - 88 - - -
Sterling 9,528 - 9,528 11,262 - 11,262
Taiwanese Dollar 89 - 89 - - -
US Dollar 742 - 742 2,142 - 2,142
10,601 - 10,601 13,405 - 13,405
Short term debtors and creditors
Sterling - (3,081) (3,081) - (3,625) (3,625)
Canadian Dollar - - - - 86 86
Euro (34,933) - (34,933) (33,717) (786) (34,503)
Hong Kong Dollar - 30 30 - - -
Swiss Franc - - - - 346 346
US Dollar - 258 258 - 2,528 2,528
(34,933) (2,793) (37,726) (33,717) (1,451) (35,168)
Long-term creditors
Euro (52,116) - (52,116) (49,400) - (49,400)
Indian Rupee - - - - (31) (31)
(52,116) - (52,116) (49,400) (31) (49,431)
Total (76,448) 889,692 813,244 (69,712) 1,097,796 1,028,084
Capital management
The Company considers its capital to consist of its share capital of Ordinary
Shares of 10p each and its reserves. At 31 December 2025 there were
305,623,539 ordinary shares in issue (2024: 305,623,539) of which 115,212,960
ordinary shares were held in treasury (2024: 65,762,020).
The Manager and the Company's broker monitor the demand for the Company's
shares and the Directors review the position at Board meetings. Further
details on shares bought during the year and the Company's policies for
issuing and buying back shares can be found in the Directors' Report.
The Company's policy on borrowings is detailed in note 11 within the Financial
Statements.
16 Related Party Transactions
A related party is a company or individual who has direct or indirect control
or who has significant influence over the Company. The Company has identified
the Directors as related parties. The Directors' emoluments for the year and
shareholdings have been disclosed within the Annual Report.
17 Post Balance Sheet Events
At the balance sheet date, Saba held a significant minority shareholding of
19.2% of the Company's issued share capital. At the date of the publication of
this annual report, this position had been increased to 22.1% following
further purchases by Saba of the Company's shares. The Chairman's Statement
sets out the challenge this has created for the Company and how the Board has
attempted to address the situation, culminating in the Continuation Tender
Offer circular published on 26 January 2026 and the Exit Tender Offer
published on 17 March 2026, both of which are available at www.iemplc.co.uk.
Other than the above, there are no significant events after the balance sheet
date requiring disclosure.
Alternative Performance Measures
APMs are often used to describe the performance of investment companies
although they are not specifically defined under FRS 102. The Directors assess
the Company's performance against a range of criteria which are viewed as
relevant to both the Company and its market sector. APM calculations for the
Company are shown below.
Gearing
A way to magnify income and capital returns, but which can also magnify
losses. A bank loan is a common method of gearing.
At 31 December 2025 2024
Total assets less cash/cash equivalents (£'000) a 893,017 1,103,294
Net assets (Debt at fair value) (£'000) b 811,883 1,025,577
Gearing (net) (a÷b)-1 10.0% 7.6%
Leverage
Under the Alternative Investment Fund Managers Directive ("AIFMD"), leverage
is any method by which the exposure of an Alternative Investment Fund ("AIF")
is increased through borrowing of cash or securities or leverage embedded in
derivative positions.
Under AIFMD, leverage is broadly similar to gearing, but is expressed as a
ratio between the assets (excluding borrowings) and the net assets (after
taking account of borrowing). Under the gross method, exposure represents the
sum of the Company's positions after deduction of cash balances, without
taking account of any hedging or netting arrangements. Under the commitment
method, exposure is calculated without the deduction of cash balances and
after certain hedging and netting positions are offset against each other.
Ongoing charges
A measure, expressed as a percentage of daily net asset value (debt at fair
value) during the year, of the regular, recurring annual costs of running an
investment company.
At 31 December 2025 2024
Investment management fee (£'000) 6,837 8,420
Other expenses* (£'000) 1,500 1,351
Less non-recurring expenses* (£'000) (212) (262)
Total Expenses a 8,125 9,509
Average NAV (£'000) b 889,016 1,137,050
Ongoing charges = (a/b) 0.91% 0.84%
* Expenses that are not recurring, such as one-off legal and advisory fees,
are excluded from other expenses .
Premium/Discount
The amount, expressed as a percentage, by which the share price is more/less
than the net asset value per ordinary share.
At 31 December 2025 2024
NAV per ordinary share (Debt at fair value) (p) a 426.4 427.6
Share price (p) b 396.5 385.5
(Discount)/premium (b÷a)-1 (7.0%) (9.8%)
Average Discount to NAV during the year
The average amount, expressed as a percentage, by which the share price is
more/ less than the net asset value per ordinary share, in the year to 31
December 2025.
Total return
A measure of performance that includes both income and capital returns. This
takes into account capital gains and reinvestment of dividends paid out by the
Company into its ordinary shares on the ex-dividend date.
NAV NAV
Share (Debt at (Debt at
Year ended 31 December 2025 price fair value) bookcost)
Opening at 1 January 2025 (p) a 385.5 427.6 428.6
Closing at 31 December 2025 (p) b 396.5 426.4 427.1
Dividend/income adjustment factor1 c 1.014 1.012 1.011
Adjusted closing (d = b x c) d 402.1 431.5 431.8
Total return (d÷a)-1 4.3% 0.9% 0.7%
NAV NAV
Share (Debt at (Debt at
Year ended 31 December 2024 price fair value) bookcost)
Opening at 1 January 2024 (p) a 400.0 434.3 434.9
Closing at 31 December 2024 (p) b 385.5 427.6 428.6
Dividend/income adjustment factor1 c 1.011 1.012 1.011
Adjusted closing (d = b x c) d 389.7 432.6 433.1
Total return (d÷a)-1 -2.6% -0.4% -0.4%
1 The dividend adjustment factor is calculated on the assumption that
dividends paid out by the Company are reinvested into the shares of the
Company at NAV at the ex-dividend date.
Net asset value - debt at fair value
The net asset value per ordinary share with debt at fair value at the year end
are shown below. These were calculated using 190,410,579 (2024: 239,861,519)
ordinary shares in issue.
2025 2024
Net asset value Net asset value
attributable attributable
£'000 pence £'000 pence
Net asset value - Debt at bookcost (note 13) a 813,244 427.1 1,028,084 428.6
Add: Loan Notes at bookcost (note 11) b 52,116 27.4 49,400 20.6
Less : Loan Notes at fair value c (53,477) (28.1) (51,907) (21.6)
Net asset value - Debt at fair value a+b+c 811,883 426.4 1,025,577 427.6
The fair value of the Loan Notes is derived by aggregating the discounted
value of future cashflows, being the contractual interest payments and the
repayment of capital at maturity as each falls due. Discount rates are
determined based on the closest available maturity, using the EUR Mid-Swap
Rate for fixed-rate tranches and the Euro short-term rate Overnight Index Swap
curve for floating-rate tranches. Both rates are adjusted for appropriate
credit spreads and illiquidity premia.
The fair value of the Loan Notes is calculated by an independent debt
valuation specialist firm and the NAV with debt at fair value uses this value.
The fair value of the Company's RCF is not an adjustment in the reconciliation
of NAV with debt at bookcost to NAV with debt at fair value due to the fact
that the RCF is valued at bookcost, which approximated to fair value.
AIFMD Disclosures
Alternative investment fund managers directive ("AIFMD")
The Company is classified as an Alternative Investment Fund under AIFMD and is
therefore required to have an Alternative Investment Fund Manager ("AIFM").
Impax Asset Management (AIFM) Limited is the AIFM of the Company. The AIFM has
received its authorisation to act as an AIFM from the FCA. The AIFM must
ensure that an annual report containing certain information on the Company is
made available to investors each financial year. The investment funds
sourcebook of the FCA details the requirements of the annual report. All the
information required by those rules is included in this Annual Report or will
be made available on the AIFM's website (www.impaxam.com).
The AIFM is required to make certain disclosures on its remuneration in
respect of the AIFM's relevant reporting period which is the year ended 30
September 2025. These disclosures are available on the AIFM's website or are
available on request from the AIFM.
Leverage (under AIFMD)
The AIFM is required to set leverage limits as a percentage of net assets for
the Company utilising methods prescribed under AIFMD (see APMs within the
Annual Report). These methods are known as the gross method and the commitment
method. A leverage percentage of 100% equates to nil leverage. The Company's
leverage under each of these methods at its year end follows.
Gross Commitment
method method
Maximum leverage limit
(set by the AIFM) 130% 130%
Actual leverage at
31 December 2025 110% 111%
Financial Information
This announcement does not constitute the Company's statutory accounts. The
financial information for the year to 31 December 2025 is derived from the
statutory accounts for 2025, which will be delivered to the Registrar of
Companies. The auditor has reported on the 2025 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 year ended 31 December 2025 was approved on 27 March
2026. It will be made available on the Company's website at www.iemplc.co.uk.
The Annual Report will be submitted to the National Storage Mechanism and will
shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
This announcement contains regulated information under the Disclosure Guidance
and Transparency Rules of the FCA.
For further information contact:
Camarco ImpaxEM@camarco.co.uk (mailto:ImpaxEM@camarco.co.uk)
Billy Clegg / Jennifer Renwick +44(0)203 757 4980
Juniper Partners Limited +44 (0)131 378 0500
Company Secretary
END
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