IMPAX ENVIRONMENTAL MARKETS PLC HALF-YEARLY REPORT AND ACCOUNTS FOR THE SIX MONTHS ENDING 30 JUNE 2024
IMPAX ENVIRONMENTAL MARKETS PLC HALF-YEARLY FINANCIAL REPORT ANNOUNCEMENT FOR THE SIX MONTHS TO 30 JUNE 2024
London 12 August 2024. 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 2024.
· Net asset value (“NAV”) per ordinary share of 429.3p (31 Dec 2023: 434.9p)
· Net assets at 30 June 2024 of £1,113m (31 Dec 2023: £1,221m)
· Ordinary share price of 388.0p (31 Dec 2023: 400.0p)
· Ordinary share price discount to NAV at 9.6% (31 Dec 2023: 7.9%)
· 259.3m shares in circulation (reflecting 21.8m bought back)
Glen Suarez, Chairman of Impax Environmental Markets comments:
“The first half of 2024 for IEM has been marked by material volatility. Following our recent full year report, there have been continued challenges and upheavals in the macroeconomic environment which have created an uncertain backdrop generating headwinds for the small- and mid-cap companies in which IEM invests. Consequently, while the Company’s investment thesis remains strong, and valuations have become increasingly attractive, IEM has seen its portfolio fall very slightly in value.
“The investment trust sector at large has experienced challenges in the returns experienced by shareholders. As of 30 June, shares in IEM traded at a discount of 9.6%, a narrower margin than the market average of 14.6% and the Company’s own AIC sector (c.25%). There are also signs that stronger performance for UK equities is tightening discounts across investment trusts. However, history shows that, in the long-term, what matters most for shareholder returns is growth in earnings of the portfolio’s companies and the Manager strongly believes that there is significant potential for the Company to generate very attractive returns for shareholders in the future.
“With upcoming worldwide elections, changing trade policies, continuing conflicts and interest rate cut uncertainty, and the current trend of investor demand pushing investment trusts to discounts, the second half of 2024 will continue to present challenges and opportunities for IEM. I have great confidence that the hypothesis underpinning the Company’s investment strategy – that sustainability pressures create opportunities for companies providing environmental solutions – remains well positioned to deliver financial outperformance over the long term. I am also confident in the skills and experience of the Manager in identifying strong companies with attractive valuations that are well-positioned to generate value from those opportunities.”
Outlook
Political momentum for decarbonisation is gaining traction globally, with several key regions embracing ambitious climate goals. In the US, UK and EU, policies are increasingly aligned with green initiatives, reflecting a strong commitment to reducing carbon emissions. Notably, China’s third plenum has, for the first time, pledged to pursue decarbonisation, signalling a significant policy shift for the world’s largest emitter.1 Meanwhile, Australia is making strides in renewable energy investment and policy frameworks.
With ongoing cost reductions and favourable policies, renewable energy’s economic appeal is growing, accelerating the shift to sustainable energy. Recent examples include Indian energy production offering ongoing (rather than intermittent) solar power at lower rates, reflecting the sector’s increasing cost-competitiveness, while in the U.S., Texas stands out for having the largest renewable market share without state subsidies, highlighting the sector’s market viability. The cost reductions in renewables are driven by economies of scale, improved supply chains and technological advancements.
It is encouraging to learn that according to Bloomberg NEF, the world may have hit a pivotal milestone by reaching peak carbon emissions last year. This suggests that emissions from energy and industry in particular have likely topped out, setting a precedent for a downward trend. This peak is a significant marker in the fight against climate change, indicating a shift towards greener energy sources and more sustainable practices. It reflects the cumulative impact of worldwide efforts in renewable energy adoption, energy efficiency improvements and stringent environmental policies.
With worldwide elections, changing trade policies, continuing conflicts and the current trend of investor demand pushing investment trusts to discounts, the second half of 2024 will continue to present challenges and opportunities. I have great confidence that the hypothesis underpinning the Company’s investment strategy – that sustainability pressures create opportunities for companies providing environmental solutions – remains well positioned to deliver financial outperformance over the long-term. I am also confident in the skills and experience of the Manager in identifying strong companies with attractive valuations that are well-positioned to generate value from those opportunities. To echo the 2023 Annual Report, as Chairman, I will maintain a relentless focus on that performance, and challenge the Manager to ensure we generate positive investment returns for our shareholders over the long‑term.