REG - Impax Environ Mkts - Half-year Report
Today 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250806:nRSF1228Ua&default-theme=true
RNS Number : 1228U Impax Environmental Markets PLC 06 August 2025
LEI: 213800RAR6ZDJLZDND86
IMPAX ENVIRONMENTAL MARKETS PLC HALF-YEARLY FINANCIAL REPORT ANNOUNCEMENT FOR
THE SIX MONTHS TO 30 JUNE 2025
London 6 August 2025. Impax Environmental Markets plc (LSE: IEM) (the
"Company" or "IEM") the UK's largest environmental markets investment trust,
today announced its half-yearly results for the six months to 30 June 2025.
· Net asset value ("NAV") per ordinary share of 412.6p (31 Dec 2024:
427.6p)
· Net assets at 30 June 2025 of £851m (31 Dec 2024: £1,026m)
· Ordinary share price of 373.25p (31 Dec 2024: 385.5p)
· Ordinary share price discount to NAV at 9.5% (31 Dec 2024: 9.8%)
· 206.1m shares in circulation (reflecting 33.7m bought back)
Glen Suarez, Chairman of Impax Environmental Markets comments:
"The first half of 2025 has seen a market of some volatility with Donald
Trump's tariffs, the threat of stagflation and slower earnings growth
diminishing US economic and market leadership. This has led to a broader
range of companies driving market returns as opposed to previously, where the
so-called "Magnificent Seven" have been so powerful."
"While the Company has continued to face challenging macroeconomic headwinds
and constantly shifting social economic hurdles, the Board is encouraged that
the underlying earnings of our portfolio companies exhibit strong growth.
Underlying fundamentals of IEM's portfolio companies remain robust, with
negative contributions to performance more reflective of short-term factors in
market dynamics."
"Following the Annual General Meeting held on 20 May 2025 I am delighted to
confirm that all resolutions put forward, including the Company's triennial
continuation vote, were passed by overwhelming majorities. The Board, as you
would expect, remains committed to vigilant stewardship and proactive
shareholder engagement. We also continue to recognise the importance of
aligning our strategy with shareholder expectations and ongoing constructive
engagement to deliver long-term value."
"As I have written previously, this is all part of the emerging megatrend of
the coming century; the climate we all inhabit has already changed and may yet
do so further in a way that is indifferent to politics. As a result, companies
that are investing in the transition to a more sustainable world now will be
the long-term financial success stories and the Board feels very confident in
the outlook ahead."
-ENDS-
Contact:
Montfort Communications iem@montfort.london
(mailto:iem@montfort.london) /07471475485
IEM at a Glance
IEM 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. This thesis is borne out in the superior earnings
growth portfolio companies have delivered compared to global equity markets
over the past decade. Looking forward, 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.
This thesis is borne out in IEM's portfolio. Earnings delivered by portfolio
companies over the past decade have surpassed those of broader global equity
markets. However, like all equity investments, IEM's short-term performance
can be influenced by macroeconomic issues and sentiment.
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. As a result, IEM's
investments are predominantly in small and medium-sized companies, which tend
to focus their business models on fewer activities.
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 75 homes, and the equivalent of
558 households' water consumption and 39 tonnes of domestic waste are saved.
Whilst the Manager does not target the UN Sustainable Development Goals in the
investment process, 83% of portfolio company revenues were aligned with them
in 2024.
Investment Objective
The investment objective of Impax Environmental Markets plc ("the Company")
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 Information
At 30 June 2025 and 31 December 2024
As at 30 June 2025 As at 31 December 2024
Net asset value ("NAV") per ordinary share with debt at bookcost 413.7p 428.6p
NAV per ordinary share with debt at fair value(1) 412.6p 427.6p
Ordinary share price discount to NAV(1,2) 9.5% 9.8%
Ordinary share price 373.25p 385.5p
Net assets(1,2) £851m £1,026m
PERFORMANCE SUMMARY
For the six months ended 30 June 2025
% CHANGE
NAV total return per ordinary share(1,2) -3.0%
Share price total return per ordinary share(1) -2.3%
MSCI AC World Index(3) 0.6%
FTSE ET100 Index(3) -4.1%
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 Half-Yearly Report.
1 These are alternative performance measures.
2 With debt at fair value.
3 Source: Bloomberg and FactSet.
Chairman's Statement
"Companies that are investing in the transition to a more sustainable world
now will be the long-term financial success stories."
The first half of 2025 (the "Period") for Impax Environmental Markets plc (the
"Company", or "IEM") has seen a volatile market with Donald Trump's tariffs,
the threat of stagflation and slower earnings growth diminishing US economic
and market leadership. This has led to a broader range of companies driving
market returns - as opposed to previously, where the so-called "Magnificent
Seven" have been so powerful. Consequently, we have seen lower returns and
increased volatility in the US in particular, but the Company's investment
thesis remains strong.
Valuations continue to be attractive and we see an increased focus on
portfolio construction discipline (as can be seen from the Manager's Report in
its reference to efforts in this area). During the Period, the portfolio fell
slightly in value, but the Board remains positive for reasons I set out below.
Following the Annual General Meeting held on 20 May 2025 I am delighted to
confirm that all resolutions put forward, including the Company's triennial
continuation vote, were passed by overwhelming majorities. The Board, as you
would expect, remains committed to vigilant stewardship and proactive
shareholder engagement. We also continue to recognise the importance of
aligning our strategy with shareholder expectations and ongoing constructive
engagement to deliver long-term value.
Benchmarks
I wrote in my Statement in the most recent Annual Report in April that work
was underway to create a new benchmark to reflect the opportunity set of
companies in which IEM may invest. This would allow shareholders to better
objectively understand the nature of returns the Manager has been delivering.
I can confirm that this work is well advanced and I expect to announce this
benchmark very soon.
The background is that the Company currently has two comparator indices - its
global equity comparator index, the MSCI All Country World Index or "MSCI
ACWI", and its environmental markets comparator index, the FTSE Environmental
Technology 100 Index or "FTSE ET100".
I have previously mentioned the imperfections of the FTSE ET100 Index as a
benchmark for IEM, whilst recognising that the broader MSCI ACWI remains
relevant for many of our shareholders when looking at returns against global
markets. The MSCI ACWI of course has aspects and drivers of returns which sit
outside of the opportunity set. Thus the Board has been working with the
Manager to agree an index that would be more representative of the
Environmental Markets opportunity set and against which the Manager's
performance can be assessed and understood. This work is nearly complete.
Performance
For the six months ended 30 June 2025, on a total return basis the Company's
net asset value (with debt at fair value) fell 3.0%, whilst the MSCI ACWI
increased 0.6%. The corresponding share price total return fell 2.3% and the
discount remained steady, moving from 9.8% at the start of the Period to 9.5%
at the end.
While the Company has continued to face challenging macroeconomic headwinds
and constantly shifting social economic hurdles, the Board is encouraged that
the underlying earnings of our portfolio companies exhibit strong growth.
Underlying fundamentals of IEM's portfolio companies remain robust, with
negative contributions to performance more reflective of short-term factors in
market dynamics.
Dividend
The Company's net revenue return for the Period was £7.6 million, compared
with £8.6 million earned in the same period last year. As earnings per share
in the Period have in fact slightly increased to 3.44 pence (compared to
3.20 pence for the six months to 30 June 2024), this reduction in headline
revenue reflects the Company's buying back of shares.
The second interim dividend for the 2024 financial year, of 3.2 pence per
ordinary share, was declared on 30 January 2025 and paid on 7 March 2025. The
aggregate dividend for 2024 was 5.0 pence, an increase of 8.7% from 4.6 pence
for the previous year. It remains the Board's intention to pay out
substantially all earnings by way of dividends, the quantum of which is
affected both by the level of dividends received by the Company and by the
number of shares in issue at the relevant record date.
On 1 August 2025, the Board announced a first interim dividend for this
financial year of 1.9 pence per ordinary share (2024: 1.8p), payable on 28
August 2025 to shareholders who appear on the register at 15 August 2025, with
an ex-dividend date of 14 August 2025.
Gearing
The Board and the Manager believe that gearing, or the ability to borrow
capital to invest, is an attractive feature of investment trusts and can
enhance long-term performance. The Company has used gearing for a number of
years and has a combination of fixed and floating rate debt with a mix of
maturity dates and interest rates.
At the end of the Period, the aggregate of the Company's borrowings was £86.3
million, giving net gearing of 8.9% (31 December 2024: £83.1 million and
7.6%, respectively). A breakdown of the Company's borrowings at 30 June 2025
follows.
The Company has €60 million of privately placed notes ("Loan Notes"), as set
out in the table below.
Loan Loan
amount amount Maturity
€ million £'million 30 September Interest rate
20 17.1 2030 Floating:
EURIBOR +1.35%
30 25.6 2033 Fixed: 4.48%
10 8.5 2035 Fixed: 4.63%
The Company also has a two-year £80 million multi-currency revolving credit
facility ("RCF") which has a floating interest rate priced at reference rate
+1.6%. An amount of €40.9 million (equivalent to £35.0 million) was drawn
down at the period end (31 December 2024: €40.8 million and £33.7 million,
respectively). The facility expires on 6 September 2025 and the Board is in
advanced stages of negotiating a new RCF, details of which will be announced
prior to the expiry date.
At the Period end, the weighted maturity of the Company's borrowings was 4.5
years and the mix of fixed to floating was 40%:60% (31 December 2024: 5.3
years and 40%:60%, respectively).
Discount
The discount at which the shares trade to the underlying net asset value
("NAV") is actively monitored by the Board and the Company's brokers. The
Company's ordinary shares traded at a discount to NAV, with debt at fair
value, of 9.5% on 30 June 2025 - slightly narrower than the discount of 9.8%
on 31 December 2024.
The Company has bought back 33,725,441 shares in the Period, equivalent to
14.1% of the Company's issued share capital at the start of the year. A
positive side effect of a wide discount is the greater accretion to NAV from
share buy backs. So far this year buy backs have enhanced NAV by 1.4%. At a
General Meeting held in February, shareholders approved the renewal of the
permission to buy back shares, ahead of the annual renewal of the permission
at the AGM in May. Both results were welcomed by the Board, as they show
continued support for the provision of liquidity and efforts to reduce share
price volatility.
There were 239.9 million ordinary shares in circulation at the start of the
year. After buy backs, this was reduced to 206.1 million, with 99,487,461
shares held in treasury at 30 June 2025. The Board will continue to exercise
its authority to buy back or issue shares depending on the circumstances, in
the interests of shareholders.
Outlook
As Chairman and a shareholder myself, I recognise how challenging the last
three years have been for shareholders. However, there are many reasons why
I feel excited and optimistic about the future for the Company. IEM's
opportunity set, which requires investee companies to generate at least 50% of
their revenues from products or services in Environmental Markets, is
expanding. The identification process is vigilant in capturing possible new
entrants into that opportunity set and in assessing which of those are worth
including in it.
The world is changing at an incredible pace. The new tariff-centric economic
policy of the US is encouraging countries to revisit and redefine who their
optimal trade partners are. The seemingly evergrowing amount of geopolitical
strife across the world is driving companies to onshore and localise supply
chains.(1) A period of exceptional returns for a narrow segment of the
S&P500 (the Magnificent Seven in particular) has done little to reflect
earnings growth in other areas of the market. It may be time to raise
expectations of growth for countries and companies beyond the US and the Board
notes the relatively low exposure that the portfolio has to American
companies.
Whilst much is uncertain, I view that there are also many reasons for IEM
shareholders to feel positive about their investment in the Company. While
still in its infancy, AI is reducing costs and creating efficiencies across
many industries and I am pleased to see the Manager has made some careful
choices to expand our exposure to this theme. The adoption and implementation
of renewable energy sources have accelerated, even as this has been a more
challenged area of Environmental Markets in recent years and this is why the
Manager retains some exposure in the portfolio.(2)
As I have written previously, this is all part of the emerging megatrend of
the coming century; the climate we all inhabit has already changed and may yet
do so further in a way that is indifferent to politics. As a result, companies
that are investing in the transition to a more sustainable world now will be
the long-term financial success stories(3), and the Board feels very confident
for the outlook ahead.
Glen Suarez, Chairman
5 August 2025
1 S&P Global's Top 10 Sustainability Trends to Watch in 2025 |
S&P Global
2 Predictions 2025: Environmental Sustainability Drivers Shift
3 S&P Global's Top 10 Sustainability Trends to Watch in 2025 |
S&P Global
Manager's Report
Performance Summary
In the first half of 2025, IEM's NAV delivered a total return of -3.0%. Global
equities as measured by the MSCI All Country World Index (MSCI ACWI) returned
0.6% over the same period.
Investor uncertainty and market volatility reached extreme levels in H1,
driven by a complex array of cross-currents. On one hand, IEM benefited from a
broader range of stocks delivering positive returns. Tariffs, the prospect of
stagflation and weaker earnings growth curbed the dominance of US equities,
and mega-cap technology companies in particular. An increasingly defensive and
value-oriented market also boosted IEM's Utilities holdings, as well as
Industrial stocks with more resilient business models. Conversely,
macroeconomic uncertainty detracted from a fundamentally pro-cyclical
portfolio.
One of the biggest tailwinds to IEM's performance in H1 was the break in
strong performance for US mega-cap US technology stocks, which we do not own.
Shares in these companies weakened sharply following the launch of DeepSeek, a
Chinese AI model comparable to US peers, but built for a fraction of the cost.
Earnings growth expectations for the "Magnificent Seven(1)" also fell into
line with those of broader markets, reducing their relative appeal. While some
of IEM's AI-exposed non-tech holdings weakened, the growth potential remains,
as digital infrastructure spending remains unabated and accounts for only a
small but fast-growing part of these companies' operations.
The portfolio's overweight allocation to Europe (31% vs the ACWI's 15%) also
became a positive contributor towards relative returns. European stocks
benefited from low starting valuations, relative political stability and
resurgent economic growth. German equities in particular rallied with the
election of Chancellor Merz, a €500 billion budget targeting infrastructure
(of which €100 billion is for the Climate Transition Fund), the release of
the 'Schuldenbremse' (debt brake) and exemption of defence spending from
budgetary limits. A revitalisation of Germany's economy is likely to benefit
all companies selling into Europe, not just those listed on the continent.
However, the resulting strong performance of European defence stocks, which
are not held in IEM as they fail to meet the 50% Environmental Markets revenue
threshold, has been a source of relative underperformance.
Donald Trump's approach to trade drove market volatility to levels not seen
since the early days of COVID-19. However, by the end of the period most
investors took a more optimistic view, with tariffs paused for negotiations
that are ultimately expected to produce a market-friendly resolution. IEM's
direct exposure to companies with significant tariff impacts is limited and,
those which are, typically have the pricing power to pass on costs.
Accordingly, we took the opportunity to build positions in stocks where
pullbacks looked excessive. More relevant for IEM is the potential for tariffs
to trigger economic weakness, and more cyclical areas of the portfolio such as
construction companies have retreated. Even ahead of the tariffs' formal
announcement ('Liberation Day'), we increased IEM's holdings in companies with
defensive business models and "local for local" supply chains, such as Air
Liquide.
This uncertain economic backdrop has helped drive a performance turnaround for
previously challenged parts of the portfolio. The defensive business models
and historically low valuations of Utilities saw independent power producers
(hereafter referred to as "IPPs") like Boralex and water companies like Veolia
make some of the largest contributions to performance in H1. Natural
ingredients companies such as DSM Firmenich and Borregaard have also rallied,
with stronger sales and improving operational performance.
Lastly, IEM also continues to benefit from M&A. AZEK, a maker of
sustainable decking and outdoor products, announced a takeover offer from
James Hardie Industries, a producer of fibre cement(2). At a 37% premium to
Azek's undisturbed share price, this is the fourth occurrence of M&A in
the portfolio in less than twelve months, a testament to the continuing
attractive valuations and structural growth across Environmental Markets.
1 Microsoft, Amazon, Meta, Alphabet, Nvidia, Apple, Tesla.
2 James Hardie offers $8.8 billion for US building products maker AZEK |
Reuters.
Absolute Performance Contributors and Detractors
Contributors
Amid economic uncertainty, some of the strongest contributors to performance
have been defensive industries with idiosyncratic investment drivers. Coway, a
South Korean producer of water appliances, announced clear plans to return
capital to shareholders, prompting a strong rally in the shares. Brazilian
water utility SABESP is lifting margins over the course of its privatisation,
particularly through the reorganisation of its workforce. The Chinese
industrial automation company Shenzhen Inovance, rallied strongly as the
launch of DeepSeek coincided with more constructive government rhetoric around
national technology champions.
IEM's IPPs holdings rallied as equity investors flocked to the stable revenues
of utility contracts and consumer staple exposure, respectively. Ormat, a
producer of geothermal energy, benefited further from the technology's
continued eligibility for tax credits under the Trump administration. M&A
has also been positive for IPPs, with a crystallisation of value prompting the
likes of Northland Power to rerate from an EV/EBITDA ratio of 8.4x to 9.1x.
Other businesses which performed strongly over the period include Australian
logistics company Brambles and the recently added Synopsys, a producer of chip
design software. While categorised as Industrial and Technology stocks,
respectively, their share price action is testament to the essential nature of
their services and their relatively low reliance on international trade.
Detractors
Negative contributions to performance largely reflected broader weakness in
equity markets. Concerns about economic growth translated into softness in
IEM's positions with exposure to construction, consumer spending and
industrial production. Graphic Packaging sold off after reporting
disappointing earnings and forward guidance. This maker of paper and consumer
packaging has significant exposure to US-branded goods, and a combination of
softer demand and a shift to 'own label' items is denting sales. By contrast,
PTC, a producer of computer-aided design software, delivered successive
earnings beats. In our view, share price weakness confuses the more cyclical
nature of its customers' industrial end markets with the resilience of PTC's
own software-based revenues.
Similarly, IEM's position in Repligen fell in line with the broader Health
Care sector. Despite delivering strong results with healthy growth and limited
tariff impact, shares in the bioprocessing company weakened over concerns of
reduced demand and funding. Yet demand for Repligen's services is underpinned
by the fact it is a key enabler of cost reduction in drug development.
Descartes - a route-mapping and logistics software provider - also weakened.
Descartes ultimately benefits from more complex supply chains, but quarterly
results showed slower growth due to lower US-China trade.
Idiosyncratic issues have also featured on the other side of IEM's performance
ledger. Rayonier, a US timber real estate investment trust (REIT) fell after
quarterly results revealed a strong 2024 hurricane season deferred harvest
activity and drove pricing lower. Similarly, shares in AAON fell after
announcing a poorly handled transition to new refrigerants had limiting
topline growth in its Q1 results. Subsequent guidance was also conservative,
although these appear to be temporary issues given strong growth potential in
areas like data centre cooling.
Relative Performance Analysis
Six months ended
30 June 2025
Performance relative to MSCI ACWI %
NAV total return (3.0)
MSCI ACWI total return 0.6
Relative performance (3.6)
Analysis of relative performance:
Portfolio total return (2.6)
MSCI ACWI total return 0.6
Portfolio underperformance (3.2)
Borrowing:
Gearing effect (0.7)
Finance costs (0.2)
Management fee (0.4)
Other expenses (0.1)
Trading costs (0.3)
Share transactions:
Buy backs 1.4
Tax (0.1)
Total relative NAV performance (3.6)
Six months ended
30 June 2025
Performance relative to FTSE ET100 %
NAV total return (3.0)
FTSE ET100 total return (4.1)
Relative performance 1.1
Analysis of relative performance:
Portfolio total return (2.6)
FTSE ET100 total return (4.1)
Portfolio outperformance 1.5
Borrowing:
Gearing effect (0.7)
Finance costs (0.2)
Management fee (0.4)
Other expenses (0.1)
Trading costs (0.3)
Share transactions:
Buy backs 1.4
Tax (0.1)
Total relative NAV performance 1.1
Portfolio Positioning and Trades
As referenced in the Chairman's Statement, the Company held a diversified
portfolio of 52 listed businesses at the end of the Period. This is down from
60 stocks at the end of last year and reflects a concerted effort to
consolidate into a more focused portfolio of high quality and high conviction
holdings. The process of consolidation began with a wholesale review of IEM's
holdings in H2 2024, looking at the following.
i. Limited upside available - stocks which, through strong performance, had
reached the upper range of our price targets
ii. Pro-cyclical business models - stocks likely to face challenges in
adverse macroeconomic conditions (e.g Norma, Darling Ingredients)
iii. "Up or out" - stocks which had become smaller positions, but to which
we had not added due to increased uncertainty - whether about the company,
industry, or the macroeconomic picture. (e.g. Herc Holdings, Cognex)
The result of this was the exit of 17 stocks. At the same time, we had a
healthy pipeline of new ideas for the portfolio. Successive years of narrow
equity outperformance had left some companies - particularly those in
Environmental Markets - on compelling valuations, even as their long-term
growth drivers remained intact. This only increased as market volatility
picked up in 2025. We thus purchased nine new holdings in H1, categorised
into:
i. High growth opportunities temporarily trading at a discount (e.g. KLA,
Hubbell).
ii. Defensive business models with good upside potential (e.g. Air Liquide,
Veolia)
As a result of these trades and compared with six months ago, IEM's portfolio
has more weight in the top ten (28.5% up from 25.3%), more defensive stocks
(42.1% vs 40.4%) and is higher quality in terms of its return on equity (15.4%
vs 14.0%). Yet the portfolio's geographical and sector tilts remain
consistent.
Key Developments and Drivers of Environmental Markets
US Policy
Trade tariffs are just one way in which the US has influenced equity markets
in 2025. President Trump has also pulled on two other levers: government
budgets and regulation. Yet while policy changes have weighed on some areas of
Environmental Markets, others stand to benefit.
Transport Solutions has been one of the weakest performing sectors during the
period, as 50% tariffs on steel and aluminium(1), combined with a 25% tariff
on non-US cars and automotive content(2) threaten the sector's already slim
margins. At the same time, Donald Trump's 'One Big Beautiful Bill Act" (OBBBA)
phases out federal tax credits for electric vehicles (EVs). Yet IEM has less
than 3% exposure to the sector. This is primarily through CATL, a Chinese
battery maker where our investment case was predicated on its US business
going to zero and which has made a significant positive contribution to
performance since purchase.
The OBBBA is also impacting Alternative Energy with an accelerated phasing
down of investment and production tax credits. IEM's IPP holdings now account
for less than 8% of the portfolio, and either operate outside the US or have
target prices based solely on projects protected by virtue of already being
under construction. Furthermore, tax credits for geothermal energy appear
safe(3), and may still benefit from an accelerated permitting process(4). This
has benefited the position in Ormat Technologies, a geothermal company seeing
rising demand for stable, clean baseload power.
Regulatory changes have been wide ranging. The US has once again withdrawn
from the Paris Agreement, paused Federal approvals for offshore wind and made
it easier for companies to challenge shareholder resolutions. Against this,
IEM's natural ingredients holdings are likely to benefit from tighter
regulations around food processing, while increased US industrial activity is
driving up demand for hazardous waste treatment. The size and breadth of IEM's
investable universe means we can focus on these latter compelling investment
opportunities and avoid others that are more challenged.
The Continued Rise of Climate Change Adaptation
Climate risks can be managed in two ways: mitigation or adaptation. Mitigation
methods aim to tackle risk at the source, such as reducing CO2 emissions by
boosting energy efficiency or increasing renewable energy levels. Adaptation
methods recognise that the environment has already changed and seek to manage
the consequences, as well as the cost, of living within it.
Adaptation methods have risen rapidly up the agenda in recent years, driven by
changing macroeconomic conditions. The challenge persists - 2024 was the ninth
consecutive year in which damages from natural disasters cost the US more than
$300 billion(5). Average global temperatures are also expected to stay at
record levels for the next five years(6). These very real and visible impacts
mean there remains a very strong case for spending that ensures populations
can securely inhabit a more hostile environment.
1 Trump tariffs could wipe out European steel sector, senior industry
figure says | Steel industry | The Guardian.
2
www.brookings.edu/articles/the-impact-of-us-tariffs-on-north-american-auto-manufacturing-and-implications-for-usmca/3
https://www.eenews.net/articles/wright-backs-long-term-tax-credits-for-nuclear-geothermal/
4 US targets geothermal projects for emergency permitting | Reuters.
5 Aon flags 60% protection gap as nat cat losses reach $368 billion in
2024 - Reinsurance News.
6
wmo.int/news/media-centre/global-climate-predictions-show-temperatures-expected-remain-or-near-record-levels-coming-5-years
As a result, adaptation to climate change is an investment theme with high
visibility and a broad opportunity set. These can be thought of in three broad
segments:
i) Higher temperatures create difficult living conditions. This requires
the re-engineering of human environments, whether through efficient air
conditioning supplied by companies like AAON, or environmental consultants.
ii) Warmer weather makes for more volatile water resource, be it droughts or
floods. This is tackled respectively by water utilities like Brazil's SABESP,
or US-based storm drainage company Advanced Drainage.
iii) Finally, a changed climate increases natural disaster risk, driving
demand for solutions which boost resilience, such as Generac's standby
electricity generators or CleanHarbors' emergency waste disposal services.
Battery Technology Advances and Falling Costs
Technological progress and falling battery costs are driving rapid growth in
electric vehicle (EV) and stationary energy storage system (SESS) markets.
Bloomberg New Energy Finance's 2025 annual price survey found that the
volume-weighted average price for lithium-ion battery packs dropped 20% in
2024 to $115/kwh. Some of the cheapest packs made in China cost as little as
$94/kwh. This compares with an estimated average pack price of $1436/kwh in
2010.
Cheap batteries and a highly competitive market, mean Chinese EVs now commonly
cost less than equivalent internal combustion engines (ICE). Consequently,
plug-in hybrids (PHEVs) and battery EVs (BEV) account for more than 50% of new
car sales in China(1). By contrast, EV volumes in the rest of the world have
stagnated, with BEVs accounting for just ~13% of European sales in 2024(2). If
car companies are to meet the 20% BEV sales target mandated by EU regulatory
emissions caps, they will have to produce new, mass-market models that depend
on Chinese batteries.
Chinese companies already command over 90% market share in SESS. This is due
to the near-total dominance of 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(3). As battery technology improves and costs continue
to fall, SESS will help both balance the existing power grid and provide
standalone energy.
The battery industry is one where scale in research and manufacturing matters.
These criteria underpin IEM's investment in the Chinese battery producer CATL.
The company has c.40% global market share in both EV and SESS, with leading
edge battery technology, manufacturing scale and cost advantage. As a result,
CATL is able to earn a 15% operating margin(4) even as its competitors
struggle to break even.
Outlook
Despite a backdrop of geopolitical conflict, trade uncertainty and mixed
economic indicators, global equities remain buoyant. Driving this is the
continued resilience of the US economy. In June, US unemployment data fell to
4.1%, with downward revisions to prior months. Likewise, at 2.4%, US inflation
remains slightly above the Federal Reserve's target, but well below
expectations immediately after Liberation Day.
Yet investors still have plenty of reason to be cautious. While negotiations
are likely to mean a worst-case scenario for global trade is avoided, it is
clear that we are entering a higher tariff (and therefore potentially
inflationary) environment. Donald Trump's One Big Beautiful Bill Act is
expected to raise the US fiscal deficit by around US$3 trillion, similarly
boosting inflationary pressures. Israel's military conflict with Iran has so
far provoked no meaningful market response, but any closure of key oil trading
routes would have an immediate impact on inflation and the global economy.
A fragile balance therefore holds. Against this, the investment team has built
up positions in companies with, on one hand more defensive business models and
on the other, highly visible, structural growth. By contrast, exits have
focused on stocks with less visible upside and limited control of their own
destinies. The team also continues to reduce its cluster risk exposure. Recent
performance is more encouraging for a portfolio which continues to be highly
active, trades below its historic valuation premium (compounded by a 10%
discount to NAV) and offers meaningfully superior earnings growth than global
equities overall.
Jon Forster
Fotis Chatzimichalakis
Bruce Jenkyn-Jones
5 August 2025
1 https://cnevpost.com/2025/04/09/china-nev-retail-mar-2025-cpca/
2 European Automobile Manufacturers' Association.
3 CATL IPO Prospectus p.107 HK Listing Prospectus.pdf.
4 CATL FY 2024 results.
Ten Largest Holdings
As at 30 June 2025 (31 December 2024)
1 WASTE CONNECTIONS - United States | www.wasteconnections.com
3.8% Waste Connections is a US-based waste management company, providing transfer,
treatment and recycling services. By targeting markets where it enjoys
of net assets exclusivity or minimal competition, Waste Connections benefits from high route
density, low capex needs and long-lasting contracts. Waste Connections is
(2024: 1.5%) actively consolidating a highly regulated market, with pricing power to expand
margins.
2 AIR LIQUIDE - France | www.airliquide.com
3.8% Air Liquide is a global supplier of gases for industrial and healthcare
markets. From semiconductors to food production, its products help customers
of net assets improve both energy and water efficiency, as well as cutting emissions. Air
Liquide operates in an oligopoly with deeply embedded customer relationships,
(2024: N/A) and benefits from long-term (10+ years) take-or-pay contracts with cost
pass-through clauses. As a result the business has a uniquely resilient yet
pro-cyclical profile.
3 TRIMBLE - United States | www.trimble.com
3.3% Trimble is a leading provider of software and hardware for the construction
and transportation industries. Trimble's suite of construction software gives
of net assets engineers a central resource from which to design, schedule and execute the
build-out of projects. Its transportation services use GPS data, as well as
(2024: 3.2%) vehicle monitoring systems, to optimise driver safety and route planning. Both
sectors remain highly under-digitised, and in construction Trimble claims that
its solutions can contribute efficiency gains of up to 50%, and cost savings
of up to 30%.
4 SYNOPSYS - United States | www.synopsys.com
3.2% Synopsys creates essential software for designing chips. Its tools empower
customers to design energy-efficient chips and systems, reducing energy
of net assets consumption, manufacturing waste and water use. With booming demand for
AI-focused chip design, strong recurring licensing revenues, limited
(2024: N/A) cyclicality versus chipmakers, and a transformative US$35 billion merger with
Ansys boosting its "silicon-to-systems" moat, Synopsys shares offer solid
growth and attractive valuation potential.
5 DSM-FIRMENICH - Netherlands | www.dsm-firmenich.com
3.1% DSM-Firmenich is a leading producer of specialty chemicals spanning food,
beauty, healthcare and agriculture markets. The business harnesses growth from
of net assets three long-term trends: improving consumer diets; shifting from chemical to
natural/bio-based ingredients; and more sustainable agriculture. Diversified
(2024: 2.5%) end markets and high value-add products support high returns on capital,
strong free cashflow generation and lower earnings volatility.
6 VEOLIA ENVIRONNEMENT - France | veolia.com/veolia.fr
3.1% Veolia is a global leader across essential water, waste and energy services.
As a global operator with top-3 positions across its regions and end-markets,
of net assets the company benefits from an irreplaceable infrastructure network, long-term
customer relationships (90%+ contract renewal rates) and cross-business
(2024: N/A) synergy. After integrating the Suez acquisition, Veolia is well positioned for
an acceleration in growth over the next five years driven by higher margin
parts of the business.
7 XYLEM - United States | www.xylem.com
3.1% Xylem is a "one stop shop" for water infrastructure, treatment, metering and
monitoring solutions. Its products address pressing supply challenges such as
of net assets water scarcity and quality, against a backdrop of increasing demand from
urbanisation and more volatile environmental pressure. Markets are highly
(2024: 1.6%) regulated and have defensive growth characteristics. Following years of
material M&A, Xylem has a strong management team focused on simplifying
the business and boosting margins.
8 ORMAT TECHNOLOGIES - United States | www.ormat.com
2.9% Ormat is a global leader in geothermal power and utility scale energy
storage. Geothermal provides baseload renewable power with no intermittency
of net assets issues, while energy storage enables grid balancing. Both have a critical role
to play in future energy infrastructure. The company is benefiting from
(2024: 2.4%) growing power demand and rising power prices, with a strong pipeline of
projects and continued policy support.
9 KINGSPAN GROUP - Ireland | www.kingspangroup.com
2.6% Kingspan is a global producer of insulation and related products. According to
the International Energy Agency, almost half of energy demand in buildings is
of net assets used for heating. Kingspan's products are directly focused on increasing
energy efficiency within commercial and residential buildings, facilitating
(2024: 2.3%) the transition to a lower carbon economy. Kingspan's growth is driven by a
combination of increased market share, product innovation and strategic
M&A. Kingspan also benefits from tightening regulation around energy
efficiency.
10 PTC - United States | www.ptc.com
2.6% PTC's software helps industrial companies create a digital thread between
designing, manufacturing, and servicing physical products. These solutions
of net assets help to increase resource efficiency and eliminate waste in industrial
processes. Operating in a market with high barriers to entry and low customer
(2024: 3.4%) turnover, PTC is using its established market position to emerge as a leader
in increasing numbers of connectivity platforms and is benefiting from high
recurring revenues (c.80%).
Top Thirty Portfolio Investments
All shares are ordinary shares unless otherwise stated.
Market % of
At 30 June 2025 Country of value net
Company Sector main listing £'000 assets
Waste Connections Resource Efficiency & Waste Management United States 32,215 3.8
Air Liquide Energy Management & Efficiency France 32,111 3.8
Trimble Digital Infrastructure United States 27,716 3.3
Synopsys Digital Infrastructure United States 27,459 3.2
DSM-Firmenich Sustainable Food & Agriculture Netherlands 26,543 3.1
Veolia Environnement Water Infrastructure & Technologies France 26,462 3.1
Xylem Water Infrastructure & Technologies United States 26,224 3.1
Ormat Technologies Alternative Energy United States 25,000 2.9
Kingspan Group Energy Management & Efficiency Ireland 22,522 2.6
PTC Digital Infrastructure United States 21,782 2.6
Top ten holdings 268,034 31.5
Clean Harbors Resource Efficiency & Waste Management United States 21,381 2.5
Borregaard Resource Efficiency & Waste Management Norway 20,195 2.4
Aalberts Water Infrastructure & Technologies Netherlands 20,007 2.3
Brambles Resource Efficiency & Waste Management Australia 19,793 2.3
Mondi Resource Efficiency & Waste Management United Kingdom 19,707 2.3
Contemporary Amperex Transport Solutions China (Hong Kong) 19,160 2.2
Technology
Spirax Group Energy Management & Efficiency United Kingdom 19,141 2.2
Bentley Systems Digital Infrastructure United States 18,480 2.2
Monolithic Power Systems Digital Infrastructure United States 18,420 2.2
Northland Power Alternative Energy Canada 18,253 2.2
Top twenty holdings 462,571 54.3
Pentair Water Infrastructure & Technologies United States 17,935 2.1
Generac Holdings Energy Management & Efficiency United States 17,715 2.1
Advanced Drainage Systems Water Infrastructure & Technologies United States 17,661 2.1
Rational Sustainable Food & Agriculture Germany 17,315 2.0
Boralex Renewable Energy Developers & Ipps Norway 17,141 2.0
KLA Water Infrastructure & Technologies United States 17,132 2.0
DiscoverIE Group Energy Management & Efficiency United Kingdom 16,799 2.0
Littelfuse Energy Management & Efficiency United States 16,607 1.9
Repligen Resource Efficiency & Waste Management United States 16,551 1.9
Coway Co Water Infrastructure & Technologies South Korea 16,509 1.9
Top thirty holdings 633,936 74.3
Other quoted holdings 288,393 33.8
Portfolio total 922,329 108.1
Cash and cash equivalents 21,180 2.5
Other net liabilities (90,707) (10.6)
Net assets 852,802 100.0
The full portfolio is published each month, quarterly in arrears on the
Company's website www.iemplc.co.uk
Interim Management Report
The Directors are required to provide an Interim Management Report in
accordance with the Financial Conduct Authority ("FCA") Disclosure Guidance
and Transparency Rules ("DTR"). The Directors consider that the Chairman's
Statement and the Manager's Report within the Half-yearly Report, provide
details of the important events which have occurred during the six months
ended 30 June 2025 ("Period") and their impact on the financial statements.
The statement on related party transactions and the Directors' Statement of
Responsibility, the Chairman's Statement and the Manager's Report together
constitute the Interim Management Report of the Company for the Period. The
outlook for the Company for the remaining six months of the year ending 31
December 2025 is discussed in the Chairman's Statement and the Manager's
Report.
Details of the largest ten investments held at the Period end and the
structure of the portfolio at the Period end is analysed within the
Half-Yearly Report.
Principal risks and uncertainties
The principal risks and uncertainties facing the Company are summarised below:
(i) economic and market risks - price movements of the Company's investments
are highly correlated to market movements and general economic conditions.
This is even more so for investee companies with small market capitalisation;
(ii) the Company's objective and strategy do not continue to attract investors
- the Company invests in companies operating in environmental markets. There
is a risk in such markets that change to governmental support, technology
costs or customer demand may have an adverse effect;
(iii) share price trades at excessive discount to net asset value - returns to
shareholders may be affected by the level of discount at which the Company's
shares might trade;
(iv) under performance of the investment manager - Consistent long-term
underperformance by the investment manager may lead to poor performance of the
Company compared to its benchmark comparators and peers, a widening of
discount to NAV, a reduction in capital and dissatisfied shareholders;
(v) failure or breach of information security (IT) - including cyber-security
and physical security risks - failure of IT or physical security could
potentially lead to breaches of confidentiality, data records being
compromised and the inability to make investment decisions. In addition,
unauthorised physical access to buildings could lead to damage or lose of
equipment; and
(vi) operational risk - the management of the investment portfolio and other
key services have been delegated to third party service providers. Failure by
any service provider to carry out its obligations to the Company could have a
material adverse effect on the Company's performance or prevent the accurate
reporting and monitoring of the Company's financial position.
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.
Specifically, the risks posed by ongoing economic uncertainties (including
tariffs), geopolitical tensions and armed conflicts continue to be monitored
by the Board. The Manager and other key service providers provide periodic
reports to the Board on market impact and operational resilience to these
events. The Board is satisfied that the key service providers have the ability
to continue their operations efficiently in a remote or virtual working
environment.
The Company's Annual Report for the year ended 31 December 2024 contains more
detail on the Company's principal risks and uncertainties, including the
Board's ongoing process to identify, and where possible mitigate, emerging
risks (within the Half-Yearly Report.). Detail is also provided on other risks
that, whilst not being identified as principal risks after mitigation controls
are applied, are relevant risks to the Company. The Annual Report can be found
on the Company's website at www.iemplc.co.uk.
In the view of the Board, the principal risks and uncertainties facing the
business are broadly the same as those in the published annual report and
financial statements for the year ended 31 December 2024 with the exception of
the reduction of risk of failing the Company's triennial continuation vote
given shareholders voted overwhelmingly for the continuation of the Company at
the May 2025 AGM. These risks and uncertainties remain applicable to the
remaining six months of the year.
Related party transactions
Details of the investment management arrangements are provided in the 2024
Annual Report. There have been no changes to the related party transactions
described in the 2024 Annual Report that could have a material effect on the
financial position or performance of the Company.
Going concern
This Half-yearly Report has been prepared on a going concern basis. The
Directors consider this the appropriate basis as they have a reasonable
expectation that the Company has adequate resources to continue in operational
existence for at least twelve months from the date of this report. In reaching
this conclusion, the Directors considered the liquidity of the Company's
portfolio of investments, as well as its cash position, income and expense
flows. The Company's net assets as at 30 June 2025 were £852.8 million, of
which £922.3 million was in quoted investments and cash totalled £21.2
million. The main liability of the Company is its borrowings of £86.3 million
which is covered 11 times by the adjusted assets, well in excess of the level
of cover required by the borrowing covenants of four times. The total expenses
(excluding finance costs and taxation) for the six months ended 30 June 2025
were £4.3 million, while income was £10.4 million.
The Directors have considered the potential effect of continuing geopolitical
tensions and economic uncertainties on the Company's portfolio of investments
and that any future prolonged and deep market decline would likely lead to
falling values in the Company's investments and/or reduced dividend receipts.
However, as explained above, the Company has more than sufficient liquidity
available to meet its expected future obligations.
Board of Directors
5 August 2025
Directors' Statement of Responsibility
The Directors confirm to the best of their knowledge that:
• the condensed set of financial statements contained within the
Half-Yearly Report has been prepared in accordance with FRS 104 Interim
Financial Reporting and gives a true and fair view of the assets, liabilities,
financial position and return of the Company; and
• the interim management report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the FCA's Disclosure Guidance and
Transparency Rules.
Glen Suarez, Chairman of the Board of Directors
5 August 2025
Condensed Income Statement
Unaudited
Six months ended Six months ended
30 June 2025 30 June 2024
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Losses on investments - (39,368) (39,368) - (20,900) (20,900)
Net foreign exchange (losses)/gains - (5,459) (5,459) - 1,871 1,871
Income 4 10,434 - 10,434 12,667 - 12,667
Investment management fee (869) (2,607) (3,476) (1,233) (3,699) (4,932)
Other expenses (821) - (821) (762) - (762)
Return on ordinary activities before finance
costs and taxation 8,744 (47,434) (38,690) 10,672 (22,728) (12,056)
Finance costs 5 (525) (1,577) (2,102) (566) (1,696) (2,262)
Return on ordinary activities before taxation 8,219 (49,011) (40,792) 10,106 (24,424) (14,318)
Taxation 6 (580) 32 (548) (1,461) (16) (1,477)
Return on ordinary activities after taxation 7,639 (48,979) (41,340) 8,645 (24,440) (15,795)
Return per ordinary share (basic and diluted) 7 3.44p (22.08p) (18.64p) 3.20p (9.05p) (5.85p)
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 period.
Return on ordinary activities after taxation is also the "Total comprehensive
income for the period".
The accompanying notes form part of these financial statements.
Condensed Balance Sheet
Unaudited
As at As at
30 June 31 December
2025 2024(1)
Notes £'000 £'000
Fixed assets
Investments at fair value through profit or loss 3 922,329 1,099,278
Current assets
Dividends receivable 388 1,763
Sales awaiting settlement 3,126 1,774
Taxation recoverable 101 52
Other debtors 221 427
Cash and cash equivalents 21,180 13,405
25,016 17,421
Creditors: amounts falling due within one year
Trade and other payables (8,230) (5,468)
Revolving credit facility 8 (35,038) (33,716)
(43,268) (39,184)
Net current liabilities (18,252) (21,763)
Total assets less current liabilities 904,077 1,077,515
Creditors: amounts falling due after more than one year
Capital gains tax provision - (31)
Loan Notes 8 (51,275) (49,400)
Net assets 852,802 1,028,084
Capital and reserves: equity
Share capital 9 30,562 30,562
Capital redemption reserve 9,877 9,877
Special reserve 243,571 370,043
Capital reserve 554,198 603,177
Revenue reserve 14,594 14,425
Shareholders' funds 852,802 1,028,084
Net asset value per ordinary share with debt at bookcost 2 10 413.71p 428.62p
Net asset value per ordinary share with debt at fair value 2,3 412.64p 427.58p
1 Audited.
2 Basic and diluted.
3 This is an alternative performance measure.
Approved by the Board of Directors and authorised for issue on 5 August 2025.
Glen Suarez, Chairman
Impax Environmental Market plc incorporated in England with registered number
4348393.
The accompanying notes form part of these financial statements.
Condensed Statement of Changes in Equity
Unaudited
Share Capital Share
Share premium redemption purchase Special Capital Revenue
Six months ended capital account reserve reserve reserve* reserve reserve Total
30 June 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 after taxation - - - - - (48,979) 7,639 (41,340)
Cost of share buy backs 9 - - - - (126,472) - - (126,472)
Dividends paid 11 - - - - - - (7,470) (7,470)
Closing equity as at 30 June 2025 30,562 - 9,877 - 243,571 554,198 14,594 852,802
* The special reserve arose from the cancellation of the share premium account
during the year ended 31 December 2024. It is distributable.
Share Capital Share
Share premium redemption purchase Special Capital Revenue
Six months ended capital account reserve reserve reserve reserve reserve Total
30 June 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 after taxation - - - - - (24,440) 8,645 (15,795)
Cost of share buy backs 9 - - - (52,557) - (32,728) - (85,285)
Dividends paid 11 - - - - - - (7,983) (7,983)
Closing equity as at 30 June 2024 30,562 423,098 9,877 - - 634,286 15,598 1,113,421
The accompanying notes form part of these financial statements.
Condensed Statement of Cash Flows
Unaudited
Six months Six months
ended ended
30 June 2025 30 June 2024
Notes £'000 £'000
Operating activities
Return on ordinary activities before finance costs and taxation* (38,690) (12,056)
Less: Tax deducted at source on income from investments (580) (1,461)
Foreign exchange losses/(gains) 3,765 (1,871)
Adjustment for losses on investments 39,368 20,900
Special dividends received as capital - 1,567
Decrease/(increase) in other debtors 1,532 (844)
(Decrease)/increase in other creditors (725) 158
Net cash flow from operating activities 4,670 6,393
Investing activities
Sale of investments 445,945 188,291
Purchase of investments (304,605) (104,750)
Net cash flow from investing activities 141,340 83,541
Financing activities
Dividends paid 11 (7,470) (7,983)
Finance costs paid (1,997) (2,416)
Cost of share buy backs (128,200) (85,285)
Net cash flow used in financing activities (137,667) (95,684)
Increase/(decrease) in cash 8,343 (5,750)
Cash and cash equivalents at start of period 13,405 16,647
Increase/(decrease) in cash 8,343 (5,750)
Effect of movements in exchange rates on cash held (568) 157
Cash and cash equivalents at end of period 21,180 11,054
* Cash inflow includes dividend income received during the period of
£11,667,000 (six months ended 30June 2024: £11,786,000) and bank interest of
£142,000 (2024: £272,000).
Changes in net debt
Six months Six months
ended ended
30 June 2025 30 June 2024
£'000 £'000
Net debt at start of period (69,711) (70,293)
Increase/(decrease) in cash and cash equivalents 8,343 (5,750)
The effect of changes in foreign exchange rates (3,765) 1,934
Net debt at end of period (65,133) (74,109)
The accompanying notes form part of these financial statements.
Notes to the Financial Statements
1 Accounting policies
The Half-yearly Condensed Financial Statements have been prepared in
accordance with FRS 104 'Interim Financial Reporting' issued by the Financial
Reporting Council ('FRC') and the Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies and Venture Capital Trusts' issued by
the Association of Investment Companies in July 2022.
This Half-yearly Financial Report is unaudited and does not include all of the
information required for a full set of annual financial statements. The
Half-yearly Financial Report should be read in conjunction with the Annual
Report and Accounts of the Company for the year ended 31 December 2024. The
Annual Report and Accounts for the year ended 31 December 2024 were prepared
in accordance with FRS 102 'The Financial Reporting Standard applicable in the
UK and Republic of Ireland' ('FRS 102') and received an unqualified audit
report. The financial information for the year ended 31 December 2024 in this
Half-yearly Financial Report has been extracted from the audited Annual Report
and Accounts for the year ended 31 December 2024. The accounting policies in
this Half-yearly Financial Report are consistent with those applied in the
Annual Report for the year ended 31 December 2024.
2 Going concern
Basis of accounting
The Directors have adopted the going concern basis in preparing the accounts.
Details of the Directors' assessment of the going concern status of the
Company, which considered the adequacy of the Company's resources and took
account of continued geopolitical and economic uncertainties, are given within
the Half-Yearly Report.
3 Investments at fair value through profit or loss
Classification of financial instruments
Securities of companies quoted on regulated stock exchanges and any holdings
in unquoted companies are 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 Condensed Income Statement as a
capital item.
The classifications and their descriptions are below:
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
Level 2 investments are 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.
3 Investments at fair value through profit or loss continued
30 June 2025 31 December 2024
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investments at fair value through
profit or loss
- Quoted 922,329 - - 922,329 1,099,278 - - 1,099,278
922,329 - - 922,329 1,099,278 - - 1,099,278
At the period end the Company had no unlisted holding (2024: none).
4 Income
Six months Six months
ended ended
30 June 2025 30 June 2024
£'000 £'000
Dividends from UK listed investments 1,701 910
Dividends from overseas listed investments 8,591 11,485
Total dividend income 10,292 12,395
Bank interest 142 272
Total Income 10,434 12,667
Dividends from overseas listed investments includes special dividends
classified as revenue of £179,000 (2024: £382,000).
5 Finance costs
Six months ended 30 June 2025 Six months ended 30 June 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Interest
Interest on revolving credit
facility ("RCF") 216 649 865 240 749 989
Interest on Notes 293 876 1,169 309 897 1,206
509 1,525 2,034 549 1,646 2,195
Direct finance costs
RCF 13 40 53 14 40 54
Notes 3 12 15 3 10 13
16 52 68 17 50 67
Total 525 1,577 2,102 566 1,696 2,262
The Company's refinancing in 2023 comprised the issuance of Loan Notes and
putting in place a new RCF. The direct finance costs in relation to the Loan
Notes and RCF amounted to £252,000 and £217,000, respectively. These costs
are amortised over the life of the Loan Notes and the RCF on a straight-line
basis.
6 Taxation
Analysis of charge in the period
Six months ended 30 June 2025 Six months ended 30 June 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Overseas taxation 580 - 580 1,461 - 1,461
(Decrease)/increase in CGT provision - (32) (32) - 16 16
Taxation 580 (32) 548 1,461 16 1,477
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
period end.
Movements on the capital gains tax provision for the period
Six months Six months
ended ended
30 June 2025 30 June 2024
£'000 £'000
Provision brought forward 31 40
Capital gains tax cash movement 1 -
(Decrease)/increase in provision (32) 16
Provision carried forward - 56
7 Return per ordinary share
Six months Six months
ended ended
30 June 2025 30 June 2024
£'000 £'000
Revenue return after taxation (£'000) 7,639 8,645
Capital return after taxation (£'000) (48,979) (24,440)
Return after taxation (£'000) (41,340) (15,795)
Weighted average number of ordinary shares in issue during the period 221,753,862 269,884,823
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 period.
There is no dilution to return per share as the Company has only ordinary
shares in issue.
8 Notes and revolving credit facilities
The Company has in place the following privately placed notes (the "Loan
Notes") issued to funds managed by Pricoa Private Capital:
• €20 million maturing on 1 September 2030 with a floating coupon of
Euribor + 1.35%;
• €30 million maturing on 1 September 2033 with a fixed coupon of
4.48%; and
• €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 has in place a
two-year £80 million multi-currency floating rate RCF with Scotiabank,
expiring on 6 September 2025. The RCF has a non-utilisation fee of 52.5 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 follows:
Six months ended Year ended
30 June 2025 31 December 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 17,096 20,000 16,470
Series B - Fixed 2033 4.48% 30,000 25,635 30,000 24,698
Series C - Fixed 2035 4.63% 10,000 8,544 10,000 8,232
51,275 49,400
RCF - floating rate
Non-sterling Six month Euribor +1.6% 40,851 35,038 40,800 33,716
86,313 83,116
The maturity profile of the Loan Notes and RCF are as follows:
Six months Year
ended ended
30 June 31 December
2025 2024
Bookcost Bookcost
£'000 £'000
RCF payable in less than one year 35,038 33,716
Loan Notes payable after more than 1 year 51,275 49,400
Total borrowing 86,313 83,116
The Company's 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 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. There were no breaches of any covenants
either in the period just ended or the prior year.
9 Share capital
Six months ended Six months ended
30 June 2025 30 June 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 (33,725,441) (3,373) (21,774,810) (2,177)
Carried forward 206,136,078 20,613 259,340,229 25,934
Treasury shares of 10p each
Brought forward 65,762,020 6,576 24,508,500 2,451
Shares bought back and held in treasury 33,725,441 3,373 21,774,810 2,177
Carried forward 99,487,461 9,949 46,283,310 4,628
Share capital 305,623,539 30,562 305,623,539 30,562
During the six month period to 30 June 2025, 33,725,441 ordinary shares (2024:
21,774,810) have been bought back and placed into treasury at a total cost of
£126,472,000 (2024: £85,285,000).
Since the period end and up to 31 July 2025, the latest practicable date
before publication of this report, a further 3,090,586 ordinary shares have
been bought back into treasury at a total cost of £12,066,000.
10 Net asset value ("NAV") per ordinary share
Six months ended Year ended
30 June 31 December
2025 2024
Net asset value ("NAV") (£'000) 852,802 1,028,084
Closing balance of shares in issue, excluding shares held in treasury 206,136,078 239,861,519
NAV per share with debt at bookcost 413.71p 428.62p
A reconciliation of shareholders' funds using debt at fair value is shown in
the Alternative Performance Measures within the Half-Yearly Report.
11 Dividends
(a) Dividends paid in the period
30 June 30 June
2025 2024
Rate £'000 Rate £'000
Interim dividend in lieu of final dividend for the previous year 3.20p 7,470 2.90p 7,983
(b) Dividends payable in respect of the period, which is the basis on which
the requirements of s1158-1159 of the Corporation Tax Act 2010 are considered
30 June 30 June
2025 2024
Rate £'000 Rate £'000
First interim for the current year(1) 1.90p 3,858 1.80p 4,623
1 The first interim dividend payable is based upon the 203,045,492
ordinary shares in issue on 31 July 2025, which is the latest practicable date
before the publication of this report.
12 Transactions with the Manager and related party transactions
The Company's transactions with related parties in the period were with the
Directors. There have been no transactions between the Company and its
Directors during the period other than amounts paid to them in respect of
expenses and remuneration for which there are no outstanding amounts payable
at the period end (31 December 2024: nil and 30 June 2024: nil).
Fees payable to the Manager are shown in the Income Statement. At 30 June
2025, the fee outstanding to the Manager was £1,119,000 (31 December 2024:
£1,493,000 and 30 June 2024: £2,196,000).
13 Status of this report
These financial statements are not the Company's statutory accounts for the
purposes of section 434 of the Companies Act 2006. They are unaudited. The
Half-yearly Financial Report will be made available to the public at the
registered office of the Company. The report will be available in electronic
format on the Manager's website (www.impaxam.com) and the Company's website
(www.iemplc.co.uk).
The information for the year ended 31 December 2024 has been extracted from
the last published audited financial statements, unless otherwise stated. The
audited financial statements have been delivered to the Registrar of
Companies. BDO LLP reported on those accounts and their report was
unqualified, did not draw attention to any matters by way of emphasis and did
not contain a statement under sections 498(2) or 498(3) of the Companies Act
2006.
The Half-yearly Financial Report was approved by the Board on 5 August 2025.
For further information contact:
Impax Asset Management p.french@impaxam.com
Paul French 0203 912 3032
Montfort Communications iem@montfort.london
Gay Collins/Nita Shah/Lesley Wang 07798 626282
Apex Listed Companies Services (UK) Limited 020 3327 9720
Company Secretary
END
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FLFIATFIEIIERecent news on Impax Environmental Markets
See all newsREG - Impax Environ Mkts - Transaction in Own Shares
AnnouncementREG - Impax Environ Mkts - Net Asset Value(s)
AnnouncementREG - Impax Environ Mkts - Half-year Report
AnnouncementREG - Impax Environ Mkts - Transaction in Own Shares
AnnouncementREG - Impax Environ Mkts - Net Asset Value(s)
Announcement