## Annual Report & Accounts ## For the year ended 31 December 2024 ## Contents Strategic Report IEM at a Glance 1 Investment Objective 2 Financial Information, Performance Summary 3 Chairman ’s Statement 4 Manager’s Report 11 Ten Largest Investments 22 Details of Individual Holdings 24 Structure of the Portfolio 26 Environmental Markets 27 Why are Environmental Markets Likely to Outperform? 27 The Impax Environmental Markets Classification System 27 How the Manager Invests in Environmental Markets 28 Annual Spotlight: AI’s Double-edged Role in the Sustainability Revolution 32 IEM Environmental Impact Reporting 34 IEM Environmental Impact Report 35 IEM Mapped to the UN Sustainable Development Goals 36 IEM Climate-Related Disclosures 37 Transition Alignment of IEM Portfolio 39 IEM Stewardship, Engagement and Proxy Voting 40 Investment Policy, Results and Other Information 42 Engaging with IEM Stakeholders 50 Other Information 53 Governance Board of Directors 55 Directors’ Report 57 Corporate Governance 62 Directors’ Remuneration Policy 66 Directors’ Remuneration Implementation Report 67 Report of the Audit Committee 70 Statement of Directors’ Responsibilities 72 Independent Auditor’s Report 73 Financial Statements Income Statement 79 Balance Sheet 80 Statement of Changes in Equity 81 Statement of Cash Flows 82 Notes to the Financial Statements 83 Investor Information 10 Year Financial Record 99 Alternative Performance Measures 100 Glossary 102 Directors, Manager and Advisers 103 Strategic report ## 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 ecient 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-ecient 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 Ecient 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 70homes, and the equivalent of 422 households’ water consumption and 17 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 2024. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 1 Strategic report ## 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). 2 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report Scan here for access to Impax Environmental ## Financial Information Market plc's ### At 31 December 2024 website, which will have the Company's latest Annual Report and the Circular ## 428.6p 427.6p and Notice for the | Net asset value (“NAV”) | NAV per ordinary share | | 2025 Annual | | --- | --- | --- | --- | | | | 1 | General Meeting. | | per ordinary share with | with debt at fair value | | | | debt at book cost | (2023: 434.3p) | | | (2023: 434.9p ) ## 9.8% 385.5p Ordinary share price Ordinary share price 1,3 discount to NAV (2023: 400.0p) (2023: Discount 7.9%) ## £1,026m ## 0.84% 1 Net assets with debt at Ongoing charges 1,3 fair value (2023: 0.83%) (2023: £1, 221m) 2 ## Performance Summary ### For the year ended 31 December 2024 ### % change Alternative performance measures ## –0.4% –2.6% (“APMs”) The disclosures as indicated in footnote 1 NAV total return per Share price total return are considered to represent the Company’s 1,3 1 ordinary share per ordinary share APMs. Definitions of these APMs and other (2023: 4.5%) (2023: -3.7%) performance measures used by the Company, together with how these measures have been calculated, can be ### Comparator Benchmarks found on page 100. | 19.6% | | 16.8% | | | --- | --- | --- | --- | | | 4 | | 4 | | MSCI AC World index | | FTSE ET100 index | | 1 These are alternative performance measures (“APMs”). (2023: 15.3%) (2023: 18.3%) 2 Total returns in sterling for the year to 31December 2024. 3 With debt at fair value. 4 Source: Bloomberg and FactSet. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 3 Strategic report ## Chairman’s Statement ## “IEM offers broad spectrum ## exposure to one of the ## most significant and ## enduring themes of this Glen Suarez Chairman ## century.” underlined continued investor appetite for its unique ## Dear Shareholder, proposition as a diversified Environmental Markets ### The business of investment is never investment which provides exposure to global opportunities. This recognises that it is uncorrelated to the ‘Magnificent ### straightforward and so 2024 has proved. Seven’, which have disproportionately skewed the 2 performance of the equity markets over the past few years. ### But while the last twelve months have ### seen challenges, future opportunities The Magnificent Seven, fossil fuel and most financial businesses are not eligible for inclusion in our portfolio as ### firmly present themselves for IEM. they do not meet IEM’s key criterion – portfolio companies should be “pure play” companies which derive at least 50% of Over the course of the year, the Board undertook a thorough their revenues from the environmental markets as we have review of IEM’s investment proposition and strategy. We defined them. Despite this, at the sector level there were concluded that the fundamental investment hypothesis on robust gains in construction and digital infrastructure. which the Company’s strategy is based, namely that 1 When considering shareholder returns over time, we see a companies operating in “Environmental Markets” will outperform the broader market over the long term regardless dierent picture to the one when looking at a single snapshot of public policy, remains robust. To give you just one example, such as this annual report’s one year time period. As an increasing air temperatures, particularly in summer, are example, the graph below, showing rolling 5-year returns over boosting demand for air-conditioning globally and that the last 10 years, demonstrates something else – a much demand will continue regardless of politics and public policy. more consistent picture where investors have enjoyed 3 market-beating returns 70% of the time: The Company’s goal is to produce long-term returns and it is only to be expected that there will be temporary periods when returns fluctuate either side of those of global equities. Investing ultimately is a long term game of hard work and patience. ## Performance For the year ended 31 December 2024, the Company’s net asset value fell 0.4%, while the global equities comparator index (the MSCI All Country World Index, “MSCI ACWI”) returned 19.6%. The share price total return decreased by 2.6%. This reflected the widening of the Company’s discount during the year by 1.9%, as discussed in the “Discount” section below. The Board acknowledges IEM’s short-term share price performance over the period, but we are encouraged that the underlying earnings of our portfolio companies are growing faster than the benchmark. Our review of IEM’s oering IEM share price return vs. MSCI ACWI 10 8.7 8.8 9.1 8.2 7.7 8 6.8 6.2 6 5.0 1 As set out on page 27. 4.2 2 The “Magnificent Seven” are identified as Microsoft, Amazon, Meta, Apple, Nvidia, Alphabet and Tesla. 3.7 3.6 4 3.1 2.7 3 Source: Morningstar, showing rolling 5 year returns ending over the last 5 years. This shows how returns over dierent time periods have fluctuated 2 and provides a clearer picture as to how the Manager has delivered against the Company’s objective over time. 1.0 0 –1.5 –1.1 -2 -4 –3.5 –4.5 | -6 | | | | | | | | | | | | | | | | –5.3 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | -8 | | | | | | | | | | | | | | | | | –7.4 | | | | Jun 20 | 4 \| Impax Environmental Markets plc \| Annual Report and Accounts 2024 | Mar 21 | Jun 21 | Sep 21 | Dec 21 | Mar 22 | Jun 22 | Sep 22 | | Mar 23 | Jun 23 | Sep 23 | | Mar 24 Jun 24 | | | | Mar 20 | | Sep 20 Dec 20 | | | | | | | | Dec 22 | | | | Dec 23 | | Sep 24 Dec 24 | Source: MSCI and Bloomberg. As at 31 December 2024. Strategic report The other relevant point is that the earnings of portfolio None of these companies oer pure play exposure to companies have been growing faster than the earnings of Environmental Markets. The key is to position the portfolio to companies in the index, as we can see in the chart below. benefit from themes that will be in play as the market moves into the next cycle. Market sentiment around this concentration in these mega- cap technology stocks has moved around over the past year. Mixed earnings reports and declining interest rates are driving a change in that sentiment as the technology these companies are delivering plays its role in the successful transition to a more sustainable economy. As a result, the market is moving to focus on companies embracing the use of that technology to deliver their aims, seeing them as being much better placed to deliver returns. ## Benchmark One of the issues shareholders have faced in understanding This also supports the Manager’s contention that the very low the performance of IEM is that a large percentage of the valuation levels of companies in the Environmental Markets MSCI ACWI benchmark is made up of stocks that cannot be represent a huge opportunity especially given the turn in the held in the IEM portfolio. And, as referenced in the Company’s global markets since the start of the year. latest half-yearly financial report, the FTSE Environmental Technology 100 Index ("FTSE ET100"), which we have Thus, we have a very buoyant view of the potential that IEM historically used, no longer represents the best reflection of oers. The portfolio’s dierentiation versus mainstream the opportunity set. To improve the standard of our reporting equity markets is a significant part of its appeal and the and to understand more objectively the nature of returns and Board notes the very high (c.99%) active share that IEM the performance of the Manager, the Board is working with 1 oers against wider global markets. the Manager to introduce a new benchmark to reflect the As the below chart exhibits, one clear market trend is the opportunity set. I will have more to share on this in the concentration we currently see in the US stock market, which coming period and expect to be updating shareholders on an forms such a large proportion of global markets. By way of alternative, after thoroughly testing it as a comparator example, the top ten stocks by market cap of the S&P 500 measure of success. account for 32.4% of the index’s total market capitalisation, 2 as set out below. This has been a feature of recent years, ## Discount reflecting the popularity of mega-cap technology stocks like Alphabet (Google), Meta (Facebook) and Microsoft. Like almost all the investment trust sector, the Company’s shares have traded at a discount to NAV. This reflects a A reflection of recent stock market concentration number of dierent factors, including negative sentiment Share of global stocks outperforming the index towards the UK market as a whole, dierences in the direction of interest rates globally and within the UK and the (MSCI ACWI) by year perceived performance of the Company relative to its Figures refer to the past. Past performance does not gurantee results. benchmark. 60 60 Calendar year % Average The discount is actively monitored by the Board and the 50 50 Company’s corporate brokers. Although your Board sees discounts as an opportunity to invest, it also takes the view 40 40 that buybacks are useful to dampen share price volatility. At 29% 30 30 31 December 2024, the Company’s shares traded at a 24% discount to NAV, with debt at fair value, of 9.8%. At the 20 20 previous year end, shares were trading at a 7.9% discount to NAV. During the year the shares traded between a discount 10 10 of 8.1% and 17.2% with an average of 11.1%. 0 0 Against this backdrop, the discount widened in the second | | | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | | 2021 | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2009 | | | | | | | | | | | 2020 | | 2022 | 2023 | 2024 | half of this period as the market became nervous as investors | | Source: Impax analysis/Bloomberg data, 31 December 2024 | | | | | | | | | | | | | | | | | digested the implications of Rachel Reeves’ first Budget. This | aected almost all investment trusts, which saw the 1 Against MSCI ACWI. Source: MSCI as at 31 December 2024. 10 Year Implied Earnings Growth – Growth Returns 2 Morningstar, MSCI, Standard & Poor's. Weights shown by issue, and they are the sum of the top 10 holdings of each index on a monthly basis. As at 31August 2024. 6 Change in P/E ratio Contraction in dividend yield Potential earnings growth 5 4 20.1 3 Log return 2 1 0 Impax Environmental Markets plc | Annual Report and Accounts 2024 | 5 MSCI ACWI Implied earnings growthIEM Implied earnings growth Source: Bloomberg and Impax. As at 31 December 2024. Strategic report “Earnings of companies in our portfolio have been growing faster than those of the broader market and there is every reason to think that this trend will accelerate over the next decade.” discounts across all trusts on average widen from 13.7% to 15.2% during 2024.¹ During the year, the Company bought back some 41.25 million shares, representing 14.7% of the issued share capital at the start of the year, in order to support shareholders and mitigate this price volatility. The Board will continue to exercise its authority to buy back or issue shares depending on the circumstances in the interests of shareholders. Following this year’s buybacks, there were 239.9 million shares in circulation at the year-end (2023: 281.1 million), excluding 65.76 million shares held in treasury (2023: 24.5 million). The Board believes that the current level of the discount – taken with the potential for NAV outperformance, as discussed, offers investors an attractive entry point given the turn in the markets. Recent research from the Association of Investment Companies² shows how previous periods of elevated discounts have ended with those discounts narrowing, contributing to strong returns – indeed, the average investment trust returned 86.5% in five-year periods that began with double-digit discounts, compared to the 53.8% return achieved over five years when investing at discounts narrower than 10%.³ IEM’s discount is 10.7% as at 31 March 2025, the latest practicable date prior to publication of this report and the figures above and chart below suggest a clear correlation between a greater potential for returns and historically elevated levels of trust discounts (as is the case now): Average Investment Trust Discount 2008-2024 ![img-0.jpeg](img-0.jpeg) Source: Bloomberg as at 31 December 2024. ## Dividend IEM’s net revenue return for the year was £12 million, compared with £14.4 million in 2023. 1 Investment trust 2024 review (updated) | The AIC. 2 “Longest period of double-digit discounts for 30 years presents investors with opportunity” AIC, 3rd February 2025. 3 As defined by AIC as excluding 3i and venture capital trusts. IEM’s distribution policy, as approved by shareholders at the 2024 AGM, is to declare two dividends each year. On 7 August 2024, the Board announced a first interim dividend for this financial year of 1.8 pence per share, which was paid on 5 September 2024. The second interim dividend of 3.2 pence per share was declared on 30 January 2025 and paid on 7 March 2025. The total dividend per share paid for 2024 was therefore 5.0 pence per share, an increase of 8.7% on the 4.6 pence paid in respect of 2023. 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. The Board does not expect dividends to form a significant proportion of total return in the near future. ## 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 year end the aggregate of the Company’s borrowings was £83.1 million, giving net gearing of 7.6% (2023: £87.1 million and 6.2%, respectively). A breakdown of the Company’s borrowings at 31 December 2024 follows. The Company has €60 million of privately placed notes (“Loan Notes”), as set out in the table below. | Loan amount € million | Loan amount £'million | Maturity 30 September | Interest rate | | --- | --- | --- | --- | | 20 | 16.5 | 2030 | Floating: 6m EURIBOR +1.35% | | 30 | 24.7 | 2033 | Fixed: 4.48% | | 10 | 8.2 | 2035 | Fixed: 4.63% | The Company also has a two-year £80 million multi-currency revolving credit facility which has a floating interest rate priced at reference rate +1.6%. An amount of €40.8 million (equivalent to £33.7 million) was drawn down at the year end (2023: €40.9 million and £35.3 million, respectively). 6 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report At the year end, the weighted maturity of the Company’s I would like to thank my fellow directors for the time, borrowings was 5.3 years and the mix of fixed to floating was contribution and the judgement they have brought to bear 40%:60% (2023: 6.4 years and 40%:60%, respectively). on the issues aecting the Company this year. The Board recognises the importance and value of diversity ## Sustainability label on the Board. I am pleased to report that the Board meets the UK Listing Rules targets on gender diversity, female In November, the Manager and the Board agreed to apply the representation in a senior role, and ethnic representation on “Sustainability Impact” label to the Company, within the the Board. FCA’s Sustainability Disclosure Requirements. The label reflects the fact that the Manager applies an investment ## process which derives, as a function of its workings, a range The Manager of clear impacts, which we set out on pages 35 to 40. But I would like to remind shareholders that the Board is fully shareholders should not doubt that the business of independent of the Manager and one of the functions of the investment for long term financial returns is the clear priority Board is to evaluate its performance and to decide whether of the Manager and of IEM. The Sustainability Impact label the interests of the Company and its shareholders are best oers shareholders a clear view on what they are supporting served by the continuing appointment of the Manager. when investing in the Company. The Board has a strong track record of holding managers to account. As Chair of another UK listed investment trust, I ## Consultation with shareholders have previously replaced the manager, and this Board would The Board has taken the view that the upcoming follow the same course of action should it lose faith in the Continuation Vote (see below) represents an opportunity to Manager’s investment process and did not believe the challenge the Company and its investment proposition. Manager was the right party to deliver the long-term goals of IEM’s shareholders. With this in mind, in the third quarter of the year, the Board took the opportunity to consult with a large proportion of the As such, during the year, the Board undertook both a shareholder base representing over half of the issued share qualitative and quantitative review of the Manager, its capital to listen and discuss the Company’s thematic mandate performance and processes. as well as understand their perceptions of the Company, its As far as the qualitative review is concerned, the Board asked performance, fees, capital structure, the Manager and the role the Manager to explain its investment process over a series of that the Company plays in their portfolio. The results of this meetings in considerable detail. We went through the process extensive engagement were supportive of the Company and of stock selection, portfolio composition, risk management, its strategy and I outline the Board’s reasoning to challenge and oversight, buy-sell discipline, the management shareholders on the specifics of the Continuation Vote below. of leverage risk and opportunity and geographical and factor The Board is committed to continuing a high level of exposure. shareholder communications during 2025. As far as the quantitative review is concerned, the thesis of the strategy is that over the long-term companies in the ## The Board Environmental Markets will outperform the broader market indices. We looked for evidence that the earnings of the IEM has a Board with considerable collective knowledge, portfolio picks were growing faster than the market as a balanced across activities in the investment arena. The Board whole and that the portfolio was being constructed in way altogether has the experience and skill to support and that captured that opportunity set. challenge the Manager, as well as assess and put in place measures to mitigate enterprise risks that arise beyond the The Board noted the Manager’s loss of its St James’s Place investment process. mandate in November and endeavoured to scrutinise it on behalf of shareholders on the reasons for, and implications of, On 1 January 2024, we welcomed Elizabeth ("Liz") Surkovic this loss. This was to assess whether the Manager has the to the Board as an independent non-executive director. Liz depth of research and financial capability to continue to brings with her a wealth of experience in environmental provide the level of portfolio management services that policy making and regulation in the private and public shareholders are entitled to expect at reasonable fee levels. sectors. A short biography is set out on page 55. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 7 Strategic report Chairman’s Statement continued As part of our ongoing assessment, the Board has supported ## Reporting the Manager’s evolution of the structure around IEM’s portfolio management team, with succession planning having I am pleased to report that last year’s edition was awarded been an important consideration throughout. This planning the Best Report & Accounts – Specialist Awards at the AIC has been several years in the making and includes the Shareholder Communications Award 2024. The AIC judges Manager’s appointment of Co-Chief Investment Ocer, highlighted the appealing design and eective combination Charles French, and significant enhancements such as the of graphics and text which brought the report to life. They build-out of Impax’s global equities research function, which praised the chairman’s statement, describing it as fresh and now includes 20 analysts with specialist expertise in engaging. They commended the environmental impact Environmental Markets. reporting which struck a good balance between 1 comprehensive detail and clear analysis. Within this context, Bruce Jenkyn-Jones has informed the Board that he plans to retire as a co-Investment Manager of IEM on 1 July 2026. Jon Forster and Fotis Chatzimichalakis ## Annual General Meeting (‘AGM’) will continue as co-Investment Managers following Bruce’s retirement next year. The Board expects a seamless transition, We are pleased to invite shareholders to attend the AGM in aided by the long notice period that Bruce has provided and person to meet the Board and the investment managers. the fact that Jon and Fotis have worked together on the There will be a presentation and the opportunity to ask portfolio for eight years, with Jon having been in place since questions. Shareholders are welcome to join through our 2004. website at www.impaxenvironmentalmarkets.co.uk. As is our normal practice, there will be live voting for those physically We will have a chance to mark Bruce’s contribution in full present at the AGM. We are not able to oer live voting via over the coming year, but for now, I’d like to take this the website, and we therefore request all shareholders, and opportunity to thank him for his continued support and particularly those who cannot attend physically, to submit ongoing commitment to the Company. their votes by proxy, ahead of the deadline of 3.00pm on 16 May 2025, to ensure that their vote counts at the AGM. In addition, as discussed in the Manager’s Report, the Manager conducted its own review of its investment process. Shareholders' questions for either the Board or the investment managers should be submitted to These extensive reviews – whether the Manager’s own or clientservices@impaxenvironmentalmarkets.co.uk by 3.00pm derived from the Board’s questioning – have led to some on 16 May 2025. The Company’s website at portfolio changes being made which the Manager references www.impaxenvironmentalmarkets.co.uk can be used to in its report and which the Board has welcomed. The access more insights and also subscribe for regular Manager’s investment process is dynamic and continuously communications. evaluated and it has evolved over the 23 years of the Company’s life (and the 27 years since the Manager’s Continuation Vote foundation). In addition to the normal business of the meeting, In light of this increased level of scrutiny through the various shareholders are being asked to consider as an ordinary reviews, the Board has concluded that the Manager has a resolution the continuation of the Company as an investment unique investment approach with substantial research depth trust. The Company’s Articles of Association provide for the and skill in this area of the market and, put simply, continues Company’s shareholders to vote, once every three years, on to be the right Manager for the Company. whether the Company should continue operating in its current form. The Company oers long-term investors an unrivalled prospect of outperformance over the long term from an As I have referred to above, your Company is the only uncorrelated set of underlying companies from around the investment trust giving access to both shareholders and world. potential investors to this unique and exciting growth story. It has generated strong returns since inception, as well as over an assortment of longer term time periods. 1 Winners of the AIC Shareholder Communication Awards 2024 Press Release. 8 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategi c c report Annual Report and Circular and Notice of the The Board believes that the Company is one of the few AGM (“AGM Circular”) investment propositions in the UK market that oers broad spectrum exposure to one of the most significant and The Company has published a separate annual report and enduring themes of this century. AGM Circular. The AGM Circular contains the notice of the AGM and detailed explanations for each resolution, including We can be sure that society will adapt to changes in the resolution 12 for the continuation vote. environment driven by climate change and that these eorts will drive stock market returns, regardless of policy The Directors strongly recommend that shareholders vote in development and political rhetoric. Opportunities for IEM will favour of the continuation resolution, as the Directors intend abound and increase as the impact of climate change to do so in respect of their shareholdings, as well as in favour develops. The thoughtful investor will take advantage of the of all the other resolutions. mispriced risks and potential, whatever shorter term political Shareholders in receipt of this annual report and AGM noise exists, with analysis, conviction and patience. Circular directly from Company will receive a Form of Proxy in order to vote. Shareholders who are invested in the Company via third party platforms or intermediaries who hold shares on their Glen Suarez, Chair man behalf very commonly possess the right to instruct the platform on how they wish their shares to be voted. The 2 April 2025 Directors similarly urge these investors to exercise their rightsand details on how to make your instruction can beobtained from your platform or intermediary. More information on voting can also be obtained from theAssociation of Investment Companies at: https://www.theaic.co.uk/how-to-vote-your-shares. ## Outlook Since the start of the year it has become increasingly clear that the markets are undergoing a re-pricing, with for example the Magnificent 7, NASDAQ, and the US markets underperforming other companies and markets. The market appears to be focusing increasingly on corporate fundamentals, and the most important driver of market returns in the long term is earnings. The good news is that earnings of companies in our portfolio have been growing faster than the earnings of the broader market indices over long periods and there is every reason to think that this trend will accelerate over the next decade, regardless of politics and policy. It remains our conviction that investors focused on these transformations can target attractive risk-adjusted returns as the transition to a more sustainable economy accelerates, and your Company represents the ideal way to capitalise on that. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 9 Strategic report 10 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report X # Manager's Report ![img-1.jpeg](img-1.jpeg) Jon Forster ![img-2.jpeg](img-2.jpeg) Fotis Chatzimichalakis ![img-3.jpeg](img-3.jpeg) Bruce Jenkyn-Jones The fundamental trends which underpin Environmental Markets remain intact. These include rising power demand and electrification, digitalisation and AI, as well as climate change adaptation. These markets are driven by pure economics, not public opinion. The companies within IEM's portfolio continue to be well-positioned for long-term growth. Recent performance has not reflected this, in large part thanks to a highly concentrated equity market. As investment managers, we increased our weight in high conviction names and bought positions in great companies at attractive valuations. We believe the resulting combination of robust earnings growth, relative value, and significant differentiation from broader markets, makes IEM a compelling proposition heading into the decade ahead. ## Global Equities in 2024 Global equity markets continued to challenge active equity investors in 2024. At a headline level, returns as measured by the MSCI All Country World Index ("MSCI ACWI") came in at 19.6%. Yet this robust gain masks stark differences across sectors and market capitalisations, as well as inconsistency over the year. For Environmental Markets the re-election of Donald Trump to the White House further complicated the picture. Investors entered the new year expecting a swift start to interest rate cuts from the US Federal Reserve ("Fed"). On 2 January 2024, market consensus forecast the Fed would cut twice by May 2024, with six cuts ultimately bringing rates to 4% by the end of the year.¹ In reality, both the European Central Bank and the Bank of England beat the Fed to the punch, with investors having to wait until 30 September 2024 for a 0.5% cut to US interest rates. Relatively volatile economic data drove the Fed's cautious approach. While US consumer price inflation cooled and unemployment ticked up, they refused to do so uniformly. Equity investors eager to price in a world of more accommodative monetary policy thus experienced several false starts. Instead, the year was confirmed as one in which US interest rates really would remain "higher for longer". Ultimately, US economic performance remained strong. By contrast, growth in Europe and China continued to be lacklustre. Both regions failed to recapture pre-pandemic levels of growth, with Europe hit by higher energy prices and the loss of Chinese demand to support its export market. By way of response, China launched successive stimulus announcements towards the end of the year, including a US$1.4 trillion package for local governments to reduce debt burdens and ramp up public spending.² Despite a cut to interest rates, Eurozone manufacturing PMI data ended in contraction at 45.2.³ Geopolitical issues further complicated the macro picture. The resurgence of open conflict in the Middle East renewed oil price volatility and stoked fears of resurgent inflation, with Brent Crude peaking at $91 in April 2024.⁴ Similar concerns surrounded shipping costs, which threatened to spike as companies avoided Houthi incursions in the Red Sea. Even before Donald Trump's re-election, new and higher China tariffs from both President Biden and the European Commission set the tone for more difficult trade relations. With over 50% of the world's population going to the polls in 2024, investors also faced several periods of electoral uncertainty. In the US, a late Democrat candidate switch from Joe Biden to Kamala Harris added to an already fractious and divided contest. The advance of right-wing parties in Germany and France led to fresh elections being called, mirroring victories in the European parliament. India and the UK also elected national governments, although here the outcomes were more expected. With elections now largely consigned to the rear-view mirror, markets can focus on how the victors acquit themselves in power. Amid this uncertainty, equity investors mostly stuck with what served them well in 2023. Larger stocks continued to outperform smaller companies deemed to be labouring under a higher cost of debt. The Magnificent Seven⁵ and other related technology stocks benefitted from greater AI uptake and enthusiasm. Financials similarly powered 1 Source: Bloomberg Fed Funds Futures as at 2 January 2024. 2 China unveils $1.4tn debt swap program to ease local government pain - Nikkei Asia. 3 PMI - Purchasing Manager Index. Source: Bloomberg 31 December 2024. 4 Source: Bloomberg, 31 December 2024. 5 Microsoft, Amazon, Meta, Apple, Nvidia, Alphabet, Tesla. Impax Environmental Markets plc | Annual Report and Accounts 2024 11 Strategic report Manager’s Report continued on, thanks to elevated US interest rates and the prospect meant IEM outperformed the MSCI ACWI over the course of a more permissive mergers and acquisitions regime of Donald Trump’s last term in oce. under Donald Trump. As a result, around half the MSCI Going into the election the investment managers ACWI’s returns in 2024 came from just ten stocks. explored various scenarios to determine potential There were periods of stronger performance outside repercussions. The investment managers were able to these areas. The prospect of rate cuts led to a sharp – leverage this across the portfolio. This activity has since albeit unsustained - momentum reversal in Q3, with continued, particularly given the sharp reaction in some utilities, real estate and small-caps all outperforming. stocks despite no concrete policy. Likewise, China’s stimulus boosted local equity markets, Key priorities in the US included establishing what as well as stocks with greater exposure to the region. changes, if any, might be made to the Inflation Reduction However, this was not enough to oset US Act (“IRA”), Infrastructure Investment and Jobs Act outperformance with its growing line-up of trillion-dollar (“IIJA”) and Chips & Science Act. Impax’s base case is that companies. Consequently, global equity markets total repeal for these three key pieces of legislation presented several challenges for IEM, which holds most of remains unlikely given broad-based Republican support. its portfolio in mid and small-caps, holds no financial Slower investments, higher taris, and the removal of tax stocks and owns fewer US companies than the MSCI credits for renewables and electric vehicles (“EVs”) ACWI. remain a risk. Consequently, the investment managers take a ## Key Developments and Drivers for sector-specific approach. Where downward moves look ## Environmental Markets overdone, there are buying opportunities; where near-term visibility is reduced and the longer-term The Re-Election of Donald Trump outlook is uncertain, investment cases must be reviewed. The prospect and ultimate re-election of Donald Trump The table on the next page sets out how we currently see was a constant theme for 2024. Yet while not an ideal this Trump Presidency – based on statements made at the outcome for Environmental Markets, it is far from time of writing – will aect each thematic area of the universally negative. portfolio. Under the “Impact” column, red means The actions of one Presidency will not derail the structural apotentially less favourable set of circumstances for the demand for greater resource eciency which underpins portfolio; amber means circumstances requiring care, with IEM’s investment thesis. Even in areas where Trump is the potential for good opportunities; while green actively unsympathetic, such as renewables, the breadth represents the areas we see most likely to benefit. Further of IEM’s investable universe is sucient to avoid either detail is set out in the paragraphs below the table. In exposure to the US, or potentially the sector altogether. short, we see some real potential opportunity in the years This, combined with disciplined portfolio construction ahead of this Presidency. 12 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report Analysing medium-term implications for keythematic areas Donald Trump has been a vocal critic of renewables, and Robert Kennedy’s stance on food processing. Similarly, the the alternative energy sector sold o sharply following his potential repeal of federal regulations in favour of victory. While not our base case, there is now incremental state-level decrees creates opportunities for risk to both the Investment and Production Tax Credits environmental consultancies able to navigate them. (“ITC” & “PTC”), as well as less enthusiasm for oshore 7 Ultimately, the structural trends which underpin IEM’s core wind. However, PE multiples across the sector had already investment thesis will not change over the course of contracted, both anticipating a Trump win and reflecting 8 Trump’s presidency. Indeed, policies which do not address higher interest rates. At 7.0% of the portfolio, the or even exacerbate environmental issues will eventually investment managers reduced IEM’s already low wind and lead to greater demand for adaptation solutions, be they solar exposure, in favour of consolidated positions in amore resilient electrical grid, greater storm drainage or independent power producers (“IPPs”) trading below cooling solutions. Similarly, governments have little operating asset values. influence over the very real economic incentives driving Beyond alternative energy, the takeaways across the uptake of more ecient technologies by businesses Environmental Markets, and the IEM portfolio, are more and consumers. The investment managers are mixed. Trump is expected to prioritise domestic economic continuously searching for additional investment growth and to continue Biden’s policy of reshoring opportunities which harness these growth drivers. manufacturing. This would be favourable for names exposed to construction and industry across energy Recovery of Disrupted Supply Chains management and water infrastructure. While the COVID-19 pandemic now feels like a distant memory, global patterns of supply and demand are only In addition, stocks in resource eciency & waste now normalising after the unprecedented disruption. management are likely to be net beneficiaries. A US pivot Companies which built up inventory levels during the towards more conventional energy would also generate pandemic have had to work through them as demand high value waste streams for hazardous waste holding stabilised, or in some cases weakened. The consequence Clean Harbors, and could provide further tailwinds for of this for the suppliers however, is that demand equipment rental names, as well as the portfolio’s Portfolio meaningfully decreased. industrial software names in digital infrastructure. | Thematic Area | Weight (%) | Impact Election Implication Investment Action | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 1 | 2 | There are now positive signs that this protracted process | 3 | | | | | •Incremental risk to PTC | /ITC | subsidies. •Increased IPPs | | trading below operating asset value. | The new administration’s priorities are less clear-cut across •Historically negative views on offshore wind development. •Reduced already low wind and solar exposure. is coming to an end and the opportunity is becoming Alternative Energy 7 the areas of Transport Solutions, Sustainable Food & •Operating assets not impacted. more clear. In Natural Ingredients, companies like Agriculture, and Environmental Services & Resources. For •Mixed impact on biofuels mandates. 4 DSM-Firmenich and Croda are reporting a return to 4 example, EV tax credits may be at risk but any fallout •EV Tax credits at risk, with potential roll back of sales targets. •EV exposure manageable across diversified holdings. Transport Solutions 3 demand growth across most of their key markets. In Life could well be balanced by Elon Musk’s influence over •Improved outlook for transport pollution control. •Read-across to farmer incomes from tariffs. •Limited exposure to theme. Sciences, bioprocessing companies like Repligen are government policy. In Sustainable Food & Agriculture, the Sustainable Food & Agriculture 13 5 •Adding to Natural Ingredients recovery story. •RFK stance on food processing positive for natural ingredients. seeing sustained strength across large pharma and negative impact of taris has to be weighed against the •Construction tailwinds positive for sustainable forestry, subject to rates. Contract Development and Manufacturing Organizations Environmental Services & likely tailwinds for Natural Ingredients companies of •Onshoring an ongoing opportunity for environmental consultants. •Researching beneficiaries of onshoring/infra buildout. 3 | Resources | | | •Mixed impact from roll back/replacement of Federal regulations. | | | --- | --- | --- | --- | --- | | Energy Management & | 1 Production Tax Credit. | | •“Pro-growth” policies support Industrial and Construction exposure. •Maintain s ignificant exposure | | | | | 22 | | 6 | | Efficiency | 2 Investment Tax Credit. | | •Further grid investment likely to support AI | development. | | Water Infrastructure & | 3 Independent Power Producer. | | •Tailwinds industrial reshoring and increased construction. •Adding to existing exposure. | | | | 4 Electric Vehicle. | 15 | | | | Technologies | | | •Likely acceleration of water utility M&A on de-regulation. | | 5 Robert F Kennedy. •Accelerating economic growth positive for general waste volumes. •Recently added new waste holding. 6 Artificial Intelligence. | Resource Efficiency & Waste | | | •Increased onshoring and oil/gas activity positive for | •Maintaining existing waste and equipment exposure. | | --- | --- | --- | --- | --- | | | 7 Price to next 12-month earnings per share. | 21 | | | | Management | 8 As at 31 December 2024. | | hazardous waste. | | •Tailwinds for equipment rental names from economic growth. •Onshoring positive for industrial software holdings. •Continued research into further holdings. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 13 Digital Infrastructure 14 •Neutral impact on data centres and AI. Positive Neutral Negative Strategic report Manager’s Report continued (“CDMOs”). In Industrials, UK-listed DiscoverIE rallied carbon reduction commitments. Small modular reactors sharply towards the end of the year as the maker of (“SMRs”) in particular have garnered significant interest, as specialised industrial components reported similarly they promise enhanced safety, eciency and scalability; strong numbers. although their current use is limited. Most tangibly, in September Microsoft (not held) signed a deal to reopen These holdings demonstrate the tremendous recovery of 5 Three Mile Island. We continue our search for other potential holdings when market dynamics change. At the innovative portfolio additions in this space. same time, these organisations have been improving their operational eciency, emerging leaner and more Mergers and Acquisitions (“M&A”) profitable at the other end. There is a long history of M&A in Environmental Markets. Power Demand – Grids, AI and Nuclear Large corporates and private equity (“PE”) are drawn to the structural growth potential that these companies oer Global electricity demand is set to triple between now and as IEM seeks to do. Activity typically picks up when 2050 thanks to a combination of increasing electrification 1 asector is viewed as ripe for consolidation or valuations and higher economic growth in developing economies. In become particularly attractive. the latter, the switch away from fossil fuel energy generation is likely to be most pronounced in the In the early 2000s, the water treatment and waste 2 residential and transportation sectors. Electrifying management sectors experienced such episodes. The industrial processes such as steel production would industrial conglomerate General Electric purchased increase this still further. In addition, the rise of AI means several water treatment companies including Ionics and 6 that the International Energy Agency expects data centre Osmonics. UK-based PE company Terra Firma was energy consumption will reach 1,000 TWh by 2026, similarly drawn to the waste sector’s strong and stable roughly equivalent to the entire energy consumption of cashflows, purchasing Waste Recycling Group in 2003 2 Japan. The arrival of the “Deepseek” AI technology in the and Shanks in 2004, before combining and ultimately 7 opening weeks of 2025 has challenged, but not changed, selling them on. this thinking. In recent years there have been fewer takeovers in To cope with this, electricity grids need to expand. The Environmental Markets. Maturing companies have instead introduction of renewables and the growth of energy focused on consolidating existing business and growing storage means they must also become more flexible, with their own franchises. However, the combination of higher more interconnections to manage the intermittency of interest rates, negative sentiment on sustainability solar and wind generation (the output of which can be oriented stocks and concentrated performance in mega- more variable). Electricity networks are also becoming cap tech has left many valuations well below their historic bidirectional, as users start to both consume and produce averages. The eect is most pronounced in some of IEM’s electricity. Yet grid investment has largely been static over IPP holdings, where companies like Boralex trade at 10x the past 14 years, at around US$300billion globally each EV/EBITDA – amultiple which discounts not only the 3 year. Consequently, around two-fifths of Europe’s grids pipeline, but existing operational assets. By contrast, are more than 40 years old. In the US, the average age of transactions for similar companies in the private markets – a large power transformer is of a similar age, which is the such as Brookfield’s acquisition of NEOEN – are taking 3 8 end of its typical lifespan. place at multiples of c.17x EV/EBITDA. Aging cables, accelerating electricity demand and the This discrepancy is driving up M&A across sectors. Within needs relying on a more intermittent supply mean systems the IEM portfolio there have been three instances in 2024. are becoming increasingly fragile, with a greater risk of As disclosed in the half-yearly financial report, Greek IPP 4 blackouts. To combat this, annual global investment in Terna Energy announced a takeover by Masdar, an Abu electricity grids will need to rise commensurately, with Dhabi owned renewables developer. Most recently, in annual spending of some US$900billion between now October the simulation software company Altair and 2050, plus an additional US$200billion directed Engineering announced an agreement to be acquired by towards expanding energy storage capacity. This long- the German technology conglomerate Siemens (not held). term trend underpins IEM’s holding in electrical cable At $113 per share, the takeover represents a 19% premium 9 manufacturer Prysmian. to the undisturbed share price. The deal was unanimously approved by Altair’s Board, and is expected to close in the Aligned with these developments is the renewed interest second half of 2025, following regulatory approval. As in nuclear energy. Big tech companies in particular have 10 Siemens’ second biggest acquisition ever, the transaction become high profile proponents, driven by their need to reflects the transformational role data analysis, software support massive energy requirements while also meeting and AI are having on the industrial value chain. 1 Energy Transition Commission, 22 November 2023: Barriers to Clean Electrification – Grids: the critical gap, presentation to Commissioner meeting. 2 Executive summary – Electricity 2024 – Analysis - IEA. 3 Executive summary – Electricity Grids and Secure Energy Transitions – Analysis - IEA. 4 North American Electric Reliability Corporation, December 2023. 5 Three Mile Island nuclear site to reopen in Microsoft deal - BBC News. 6 GE Infrastructure Completes Acquisition of Ionics, Inc. | GE News; GE Power Systems to Acquire Osmonics, aLeader in Water Purification and Filtration; New Unit to Become Partof GE Water | GE News. 7 Terra Firma sells waste business for £1.4bn (infrastructureinvestor.com). 8 Brookfield to acquire Neoen for €6.1 billion - Energy-Storage.News. 9 Siemens strengthens leadership in industrial software and AI with acquisition of Altair Engineering | Press | Company | Siemens. 10 Siemens’ $10.6 billion Altair deal strengthens its industrial software oering | Reuters. 14 | Impax Environmental Markets plc | Annual Report and Accounts 2024 “the combination of higher interest rates, negative sentiment on sustainability oriented stocks and concentrated performance in mega-cap tech has left many valuations well below their historic averages... This discrepancy is driving up M&A across sectors.” ![img-4.jpeg](img-4.jpeg) ## Absolute Performance Contributors and Detractors The Company’s net asset value (“NAV”) delivered absolute returns of -0.4% in 2024. Global equity markets, as measured by the MSCI All Country World Index (“MSCI ACWI”), delivered 19.6% over the same period. The primary driver of IEM’s performance lag relative to the MSCI ACWI were stocks which – due to the Manager’s 50% Environmental Markets revenue requirement – fall outside of the investable universe. The portfolio has remained true to label and this is not at odds with IEM’s investment thesis, which is long-term in nature. Rather it reflects that amid economic uncertainty, high interest rates and geopolitical tensions, investors have continued to take shelter in mega-cap stocks where mass enthusiasm for AI underpins investor momentum. In 2024, over 50% of the MSCI ACWI’s returns came from just 10 stocks. As well as the so-called Magnificent Seven, these included semiconductor companies **Broadcom** and **TSMC**, and online streaming platform **Netflix**. While their earnings growth has doubtless been robust, a significant part of performance has been driven by multiple appreciation. Even so, this was not sustained uniformly throughout the year, with a sharp – albeit temporary – rotation in Q3 towards mid and small-caps, illustrating the speed at which high momentum dynamics can reverse. Higher for longer interest rates also drove the outperformance of Financials in 2024. Despite increasing initiatives around environmental finance, most of the sector falls outside IEM’s investable universe on revenue grounds. The prospect of Donald Trump’s re-election further boosted Financials given his “pro-growth” stance. Investors anticipated inflationary tariffs, looser fiscal policy and a lengthy period of higher interest rates. The new regime’s permissive stance on M&A is also viewed as a boost for dealmaking investment banks, as well as increasing the likelihood of regional US bank consolidation. ## Relative Performance Analysis | Performance relative to MSCI ACWI | 12 Months ended 31 December 2024 % | | --- | --- | | NAV total return | (0.4) | | MSCI ACWI total return | 19.6 | | Relative performance | (20.0) | | Analysis of relative performance: | | | Portfolio total return | (0.5) | | MSCI ACWI total return | 19.6 | | Portfolio underperformance | (20.1) | | Borrowing: | | | Gearing effect | (0.1) | | Finance costs | (0.4) | | Management fee | (0.8) | | Other expenses | (0.1) | | Trading Costs | (0.2) | | Share transactions: | | | Buybacks | 1.9 | | Tax | (0.2) | | **Total relative NAV performance** | **(20.0)** | | Performance relative to FTSE ET100 | 12 Months ended 31 December 2024 % | | --- | --- | | NAV total return | (0.4) | | FTSE ET100 total return | 16.8 | | Relative performance | (17.2) | | Analysis of relative performance: | | | Portfolio total return | (0.5) | | FTSE ET100 total return | 16.8 | | Portfolio underperformance | (17.3) | | Borrowing: | | | Gearing effect | (0.1) | | Finance costs | (0.4) | | Management fee | (0.8) | | Other expenses | (0.1) | | Trading Costs | (0.2) | | Share transactions: | | | Buybacks | 1.9 | | Tax | (0.2) | | **Total relative NAV performance** | **(17.2)** | Impax Environmental Markets plc | Annual Report and Accounts 2024 | 15 Strategic report Manager’s Report continued IEM Performance Waterfall 2024: Bridging the Gap from MSCI ACWI to NAV Total Return Positive contributions to performance were broadly sales growth within its commercial business. While the spread across IEM’s portfolio. In addition to several long-term investment cases for these, and IEM’s other acquisitions (see Key Developments and Drivers) many construction holdings, remain intact, we have managed companies delivered consistently strong returns over the position by taking profits, bearing in mind the the year, such as Clean Harbors – a US industrial waste industry’s cyclical nature. specialist, CATL – a Chinese battery producer, and IEM’s Digital Infrastructure stocks also boosted Brambles – an Australian pallet and logistics company. performance. With a shared focus on operational Despite all being categorised as ‘Industrials’, the eciency, and consequently environmental companies have highly dierentiated business models, performance, its customers have continued to invest in sources of revenue and geographical exposure. solutions which boost their bottom line. Within this Furthermore, where CATL was added to the portfolio segment, software companies include the likes of early this year due to a compelling valuation transportation management platform Descartes and opportunity given its competitive advantage, Clean design and simulation specialist PTC, whose dominance Harbors is a long-term holding which continues to of a niche and subscription-based revenues enable demonstrate how quality management can drive up steady growth. By comparison, Trimble – a producer of earnings by capitalising on captive demand, structural geolocation software and equipment – rallied growth and ever-tighter regulation. substantially after repeated engagement and an activist One specific area of strength within the portfolio was shareholder produced a strategic update and earnings companies with exposure to construction, particularly in upgrades. the US. These delivered positive returns in 2023 and In hardware, the strongest contribution has come from continued to do so in 2024. At a headline level, high Monolithic Power Systems a producer of thermally 25 interest rates have done little to weaken residential ecient power semiconductors. The shares performed demand, while infrastructure investment and strongly thanks to sustained growth in data centres, commercial spending continues apace. where Monolithic is sole supplier to Nvidia (not held). 20 Exemplifying these trends are two of IEM’s top Concerns this relationship could be at risk prompted | | | contributors for the year: Pentair and Lennox | | | apullback in the shares towards the end of the year but | | --- | --- | --- | --- | --- | --- | | 15 | | International, a producer of water flow technology and | | | appear overdone. Management has long trailed Nvidia’s | | | | | 1 –11.1 | | | | | | HVAC | solutions, respectively. Pentair steadily drove | | desire for another supplier and has factored this into | | | | margins up over the year, with growing sales from its | | | guidance. Equally, growth is returning to Monolithic’s | | 10 | 19.6 | Pool division and further synergies from its Manitowoc | | | other business segments which have experienced | | | | Ice acquisition. Lennox delivered a series of “beat and | | | temporary weakness, such as autos, consumer | | | | raise” earnings updates, citing market share gain and | | –4.3 | electronics and industrials. | | Percent 5 | | | | | | –4.4 –0.4 0 1.4 MSCI Mega Cap Financials Renewables –2.7 IEM plc NAV ACWI 1 Heating, ventilation & air conditioning. Tech 1.8 M&A –1.5 Destocking –5 –1.9 2.7 Digital Life Infra Sciences Other Construction 16 | Impax Environmental Markets plc | Annual Report and Accounts 2024 –10 Source: Bloomberg, MSCI and Apex as at 31 December 2024. Strategic report Lastly, the portfolio also benefited from its positions in Conversely, the trajectory of IEM’s Life Sciences companies related to the energy grid. These include companies provided an almost exact mirror image. long-term holding Generac, as well as Prysmian. The Repligen, a maker of products and solutions for the former, a maker of standby electrical generators, bioprocessing industry, entered the year assuming experienced resurgent demand in its home standby continued sales weakness would prevent it being able to division thanks to a particularly active hurricane season raise prices. Yet by Q3, more supportive demand, and its continued penetration of US distributors. By combined with product dierentiation and a push into contrast, Prysmian – an Italian producer of electrical and more commercial customers, enabled the company to fibre optic cables – is at the centre of long-term boost its operating margin by 1%. investment in grid infrastructure. At the time of its Shares in Spirax Group, a supplier of specialised purchase in October 2023, the investment managers industrial heat solutions, also inflected towards year also saw evidence of a business turnaround at an end. Sustained weakness in Watson Marlow – its attractive valuation. This thesis has played out rapidly in peristaltic pump division with significant bioprocessing 2024, with the acquisition of US company Encore Wire exposure – had been compounded by softer industrial helping management to boost margins, deliver cash demand, particularly in China. Here too though, a flow, and deleverage the balance sheet. November trading update indicated a return to growth The bulk of IEM’s negative returns came from holdings despite these challenges. in a handful of sectors with compelling long-term Industrial production remains weak globally, and growth that have been experiencing temporary companies which experienced super-normal demand headwinds. The portfolio’s renewables holdings account during COVID have faced lengthy inventory destocking for the largest of these. Excepting Terna Energy which periods. While some of these are now normalising, was taken over (see Developments and Drivers), holdings with weak cyclical end markets accounted for averaged out across the full year this 8.6% allocation the second largest source of negative returns. These spans four IPPs, two solar positions and a manufacturer include manufacturers of electrical components such as of wind turbines. From a sentiment perspective, Littelfuse (a maker of circuit protection), LEM (maker of sustained higher interest rates and Donald Trump’s transducers) and DiscoverIE (a specialist industrial re-election weighed on the P/E multiples of all seven manufacturer). Amid weaker demand for their products, companies. these companies have been active in cutting costs to IPPs were further impacted by low European power protect margins. More optimistic forward guidance in prices, themselves driven by soft industrial production Q4, notably from DiscoverIE, provided a late boost to and plentiful US gas. Yet here the investment managers the shares, demonstrating their recovery potential when are seeing consistent evidence of new long-dated market dynamics change. contracts being priced at higher rates with inflation protection, particularly where the source of demand is ## Portfolio Positioning and Activity Big Tech. At the same time, holdings such as Northland Power are navigating medium-term uncertainty by As at 31 December 2024, the Company holds a focusing on project execution and cash generation, diversified portfolio of 60 listed companies. Since the while companies like Ormat Technologies continue to half-yearly financial report was published, the receive vocal support for their geothermal energy and investment managers have focused on upscaling the battery storage solutions. This is creating a range of weight of its top ten holdings, consolidating into high attractive valuation opportunities across the space. conviction positions and exiting sub-scale positions with limited near-term visibility. Doing so has proved In wind and solar, there were more fundamental issues. beneficial, with a 22.6% turnover over the full year In solar, sustained weak demand combined with poor making a 1.1% positive contribution to performance. capital discipline from Chinese producers resulted in weak performance and ultimately a loss of conviction for both SolarEdge Technologies and Xinyi Solar. The latter had also rallied meaningfully following Chinese stimulus. Similarly, Vestas, a maker of wind turbines, reported successive results with disappointing margins. These were driven by accounting adjustments from its services division, historically seen as a superior quality business relative to peers. With lingering questions about margin recovery, increased Chinese competition and management quality, the managers exited the position. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 17 Strategic report Manager’s Report continued 1 Manager exited its position in Indraprastha Gas, an New holdings Holdings sold Indian provider of natural gas. Regulatory changes are Bentley Systems Inc Dialight increasingly pushing for electrification of IPG’s key Boralex Inc Cryoport transportation end-market, fundamentally changing the Cognex Corp Eurofins Scientific investment thesis. CATL Indraprastha Gas Further consolidation took place across IEM’s nVent Electric Plc Shimano Inc renewables holdings. This consisted of selling holdings Waste Connections Inc SolarEdge Technologies where lower than expected business quality has added Xylem Inc Stericycle Inc to the pressure of sustained high interest rates and soft power prices. Proceeds were reallocated to IPPs which, Terna Energy similar to when Contemporary Amperex Technology Vestas Wind Systems (“CATL”) was purchased in February, traded on low Xinyi Solar Holdings valuations relative to history and were not reliant on Badger Meter USgrowth for their investment case. Thus Vestas Wind Systems (a wind turbine manufacturer), Xinyi Solar In general, the investment managers aim to strike (amaker of solar glass) and SolarEdge Technologies abalanced weighting between cyclicals and defensives, (aproducer of solar optimisers) were sold to initiate even if the nature of IEM’s investable universe skews aposition in Boralex. Shares in the latter, a Canadian- towards the former. Since the half-yearly financial listed IPP, pulled back in the wake of Donald Trump’s report, the weight in defensives has moderately election in November, despite the USaccounting for increased. Rather than any concerted macro call, the arelatively small amount of its 6.4GW pipeline, which is move reflects an ability to source ideas from across spread across Canada, France and the Northeastern US. Impax’s platform of analysts and investment managers. The Manager sold its position in Eurofins Scientific, an Given attractive valuations across Environmental environmental testing company listed in France. Due to Markets, many of these are stable businesses a changing business mix, company revenues fell below harnessing long-term growth which typically trade at a Impax’s 50% environmental markets revenue threshold. premium but are currently presenting opportunities to initiate. The Manager’s third series of transactions focused on increasing IEM’s exposure to digital infrastructure. The first group of transactions were related by virtue of Having purchased Cognex, a maker of machine vision the investment managers’ valuation discipline. In July, systems in the first half of the year, the investment IEM exited its position in Shimano. Shares in the managers initiated a position in Bentley Systems. They Japanese maker of bicycle components had risen are a provider of software for the planning, sharply, presenting limited medium-term upside. This construction, and maintenance of infrastructure. The calculus was partly informed by a product malfunction company’s relatively low cost to clients and and allegations of forced labour at a company supplier. subscription-based business model ensures a high level Taken together, this presented an unfavourable of retention, with construction one of the sectors least combination of risk and reward. penetrated by software adoption. Valuation discipline also informed the exit of water Separately, nVent Electric, a provider of electrical meter company Badger Meter. Badger was held in products and solutions, was bought. Following the IEM’s portfolio for over two decades, delivering disposal of its Thermal Management business, the consistently strong contributions to performance. company is split 60/40 between two divisions: However, its valuation reached a point where the Enclosures, and Electrical & Fastening Solutions. The investment managers saw little further upside. The former provides storage and cooling products for data proceeds were used to initiate a position in Xylem, centres, where the latter connects electrical awater infrastructure provider with some product components in buildings. With strong market leadership overlap. Shares in Xylem weakened sharply after across several niche segments, nVent has a track record Q3results, trading at circa 40% below its peak multiple of delivering robust margins. The shares traded well set in 2021. This created an entry point in a company below peers and in line with broader industrials at the which continues to expect stable revenue growth and time of purchase. robust cash flows. Finally, the investment managers also made several Longer than expected inventory destocking has changes to the portfolio following strong share price weighed on industrial stocks like Dialight, a lighting rallies driven by M&A. While the proceeds of Terna specialist, as well as IEM’s bioprocessing companies. Energy’s disposal were reallocated across the portfolio, Inaddition, conversations with the management of profits from Stericycle were used to initiate a position Cryoport raised concerns around capital allocation. As in Waste Connections . This is a US-based solid waste a result, the investment managers sold the position in disposal and r ecycling company that has also moved favour of existing holding Repligen, a company focused into renewable natural gas. By targeting markets where on bioprocessing equipment and solutions. The 1 Holdings fully disposed of. 18 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report it enjoys exclusivity or minimal competition. It benefits from high route density, low capex needs and long-lasting contracts. It targets a defensive growth model through a combination of pricing and asset acquisition. As a result, the stock trades at a justified premium to peers. ## Valuation, Growth and Gearing Over the course of 2024, IEM's portfolio occupied a relatively narrow valuation range as measured by its next 12 months' (or forward) price-to-earnings ("PE") ratio. Indeed, having started the year at 20.7x, the portfolio ended on 20.2x. This is only slightly above IEM's historical ten-year average, despite IEM having steadily increased its holdings in more highly valued sectors such as Technology and Health Care. The investment manager's view this as evidence that not only are global equity markets pricing in sentiment headwinds across overtly "sustainable" companies, but that markets also continue to overly discount smaller companies relative to their larger peers. Sector headwinds notwithstanding, over the past ten years the portfolio's implied annualised earnings growth (or estimated future growth rate) of 4.9% is ahead of the MSCI ACWI's 4.2%. However, the portfolio's tilt towards pro-cyclical, mid and small-cap stocks means that when macroeconomic conditions place these segments of the market out of favour, short-term relative returns can be impacted. This is reflected in the sharp contraction of IEM's P/E multiple over the year, even as that of the MSCI ACWI has expanded. While the fundamental performance of IEM's holdings has been robust, this has not been rewarded by broader equity markets. While past performance does not predict future returns and forecasts are not always certain, the bar chart below shows the potential earnings growth (green bars) of the companies in which IEM is invested over the next 10 years, as suggested by movements in share prices of those companies.$^{1}$ This in turn suggests that IEM has a higher potential upside following the recent strong performance of the MSCI ACWI. ### 10 Year Implied Earnings Growth – Gross returns ![img-5.jpeg](img-5.jpeg) Source: Bloomberg and Impax. As at 31 December 2024. Further proof of this can be seen in the relative premium at which the portfolio trades relative to the MSCI ACWI. The forward PE for this index rose steadily over the course of the year, reaching 17.9x by December. As a result, IEM's valuation premium has steadily declined to 13.3% by the end of 2024, even as forward earnings growth remains meaningfully higher than the broader market. With shares in IEM trading at a further discount, the investment managers believe this makes a compelling offering for prospective shareholders, as well as those looking to increase existing positions. Since the most recent renewal of the Company's borrowings (as referenced in the Chairman's Statement), gearing has been a modest 0.16% detractor from performance but has enabled the portfolio to more fully participate in the breadth of opportunities across Environmental Markets as a whole, with the potential upside to come. Overall, the investment managers remain comfortable operating within a gearing framework of up to 10% of net assets. 1 This is derived from a "log return" refers to a method of calculating the percentage change in an asset's value over a period of time by taking the natural logarithm of the ratio between its current price and its previous price, essentially representing a continuously compounded rate of return, where the compounding effect is fully accounted for; this makes it a more accurate measure compared to simple returns when analysing price changes over time. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 19 Strategic report Manager’s Report continued 3 interest rates twice. A possible end to the ## Outlook Russian/Ukraine war may also lower energy prices and 4 There has been a clear shift in the market narrative. instigate a c.$486 billion rebuilding programme. Lastly, Performance has broadened beyond a narrow group of US isolationism has galvanised European political mega-cap technology stocks. US exceptionalism has action, with Germany advocating a 500bn EUR given way to stronger performance for Europe and infrastructure fund (of which 20% will likely be allocated China. Notably, shares in electric vehicle manufacturer to Environmental Markets), looser state debt rules and Tesla – the only "Magnificent Seven" stock which falls a150bn EUR EU-wide rearmament package. These within IEM's investable universe – have fallen more than actions have potential to accelerate economic growth in 40%. The move reflects some of the investment the EU, where IEM is c.18% overweight vs MSCI ACWI. managers' concerns about valuation and governance The events of 2025 so far this year are testament to the risk, which drove their decision not to invest. At the limited value of macroeconomic prognostication. Within time of writing, this is favourable to IEM's portfolio, IEM, the investment managers focus on purchasing which is overweight Europe, has 99% active share and well-run companies, harnessing structural trends driven holds many attractively valued stocks recovering from by economic need, at reasonable valuations. Long-term cyclical headwinds. Current volatility is also creating themes such as electrification, digitalisation and opportunities for active managers to initiate positions in adaptation to climate change are transitions which cut companies harnessing long-term structural trends. across sectors and will continue regardless of which Artificial Intelligence remains a powerful force that will political party is in oce. This is a compelling time to be shape many industries. However, some companies invested in an investment trust that is highly delivering that change are spending hundreds of dierentiated from concentrated global equity indices billions to do so, without the earnings growth to justify and continues to trade at a c.10% discount to NAV. it. Elevated valuations, and the prospect of falling interest rates, means investors are tactically reallocating to cheaper areas of the market with comparable Investment Managers earnings potential. Jon Forster US economic confidence is weakening. Donald Trump's Fotis Chatzimichalakis willingness to deploy taris for geopolitical, as well as economic ends is driving up consumer and Bruce Jenkyn-Jones manufacturing uncertainty. As a result, Conference 2 April 2025 1 Board indicators are falling to recessionary levels , PMIs 2 are pulling back and growth expectations are weakening. The outlook for taris and trade wars remains volatile and uncertain. We remain in close contact with portfolio holdings on plans and scenarios to navigate this uncertain period but – like them – are avoiding knee jerk reactions until more clarity emerges. Conversely, European stocks are benefiting from multiple tailwinds. Valuations were and remain more attractive, with Europe’s Stoxx 600 trading at 14.2x forward price to earnings (PE) at the start of the year, compared to the S&P 500’s 24.0x. Inflation in the EU is at 2.4%, trending downwards, and the ECB has cut 1 US Consumer Confidence. 2 February 2025 Manufacturing ISM® Report On Business®. 3 Source: Bloomberg as at 11 March 2025. 4 Pricing Ukrainian Reconstruction | German Marshall Fund of the United States. 20 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report ## “ This is a compelling time ## to be invested in an ## investment trust that is ## highly differentiated from ## concentrated global ## equity indices.” Impax Environmental Markets plc | Annual Report and Accounts 2024 | 21 Strategic report # Ten Largest Investments As at 31 December 2024 1 **3.4%** of net assets (2023: 2.6%) 2 **3.2%** of net assets (2023: 1.6%) 3 **2.9%** of net assets (2023: 2.3%) 4 **2.8%** of net assets (2023: 2.1%) 5 **2.8%** of net assets (2023: 2.2%) PTC - United States | www.ptc.com PTC produces industrial software used in computer-aided design and product lifecycle management, with leading market shares in both segments. PTC's software is a critical day-to-day tool for product engineers and deeply embedded in the digital backbone and processes of many companies. Research suggests that a product's lifetime environmental impact is largely determined during the design stage. At the same time, by removing the need for physical prototypes, the environmental impact of the design process itself is minimised. TRIMBLE - United States | www.trimble.com Trimble is a leading provider of software and hardware for the construction and transportation industries. Through its joint venture with AgCo, the company is also involved in sustainable agriculture. Trimble's suite of construction software gives 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 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%. Correspondingly, this translates to improved resource consumption by end clients. CLEAN HARBORS INC - United States | www.cleanharbors.com Clean Harbors is a market leader in the US hazardous waste sector with a strong market position and pricing power. The company provides collection, transportation, recycling, treatment and disposal services as well as holding dominant positions in waste to energy plants. In the latter, new permits are increasingly rare creating high barriers to entry. It is also a leading responder to emergency clean-ups, for example following extreme weather events such as hurricanes, fires and flooding. BRAMBLES LTD - Australia | www.brambles.com Brambles is an Australian logistics solutions company which focuses on the outsourced management of reusable pallets, crates and containers. It is the global leader in the pallet and container pooling business, with over 850 service centres and dominant market share in most global markets, which gives Brambles scale benefits and creates significant barriers of entry to its competitors. REPLIGEN CORP - United States | www.repligen.com Repligen Corporation is a bioprocessing company focused on the development, production, and commercialisation of innovative products used to manufacture biologic drugs. Biological drug manufacturing is one of the fastest growing areas of healthcare, and Repligen's products improve the flexibility and resource efficiency of this process. The Company's customers include life sciences companies, global biopharmaceutical companies, and contract manufacturers worldwide. 22 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report X 6 2.5% of net assets (2023: 1.5%) 7 2.5% of net assets (2023: 2.2%) 8 2.4% of net assets (2023: 2.1%) 9 2.4% of net assets (2023: 2.2%) 10 2.4% of net assets (2023: 2.0%) DESCARTES SYSTEMS - Canada | www.descartes.com Descartes is a software technology company with solutions to help companies better manage logistics and supply chains. High recurring revenue percentages, low capital intensity, consistent earnings growth, strong cash flow generation, and impressive returns on capital make Descartes an attractive solution provider. DSM-FIRMENICH - Netherlands | www.dsm-firmenich.com DSM-Firmenich is a leading producer of specialty chemicals spanning consumer products, healthcare and agriculture. Its products cater to end-users looking for more natural ingredients, a superior nutritional profile, and/or more sustainable agriculture. Historically, the company's diversified end markets and high value-add products have supported high returns on capital, strong free cashflow generation and lower earnings volatility. LITTELFUSE INC - United States | www.littlefuse.com Littelfuse sells fuses, and other circuit protection devices, for use in the automotive, electronics and general industrial markets. As the global economy becomes increasingly electrified, Littelfuse's products have a vital role to play in ensuring the safety and precision of its systems. Improving the sensitivity, control and protection within circuits can enhance their long-term efficiency. ORMAT TECHNOLOGIES INC - United States | www.ormat.com Ormat is a leading provider of geothermal technology and plant operations, with a track record spanning over 55 years. The company's low-temperature technology has competitive advantage for the exploitation of future geothermal resources worldwide. As an energy source, geothermal is appealing for base load generation, especially – although not exclusively – in those countries focused on lower greenhouse gas emissions. ALTAIR ENGINEERING INC - United States | www.altair.com Altair is a leading provider of design and simulation software. The company has a subscription-based revenue model. Combined with its relatively low cost to clients, and high value-add, this ensures sticky sales and pricing power. The company recently announced it would be acquired by Siemens. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 23 Strategic report ## Details of Individual Holdings All shares are ordinary shares unless otherwise stated. Market  of A t  December  Country of value net Company Sector main listing ’ assets PTC Ecient IT United States   Trimble Ecient IT United States   Clean Harbors Hazardous Waste Management United States   Brambles Resource Circularity & Eciency Australia   Repligen Resource Circularity & Eciency United States   Descartes Systems Group Ecient IT Canada   DSM-Firmenich Sustainable Agriculture Netherlands   Littelfuse Industrial Energy Eciency United States   Ormat Technologies Renewable Energy Developers & IPPS United States   Altair Engineering Ecient IT United States   Top ten holdings   Aalberts Water Distribution & Infrastructure Netherlands   Spirax Group Industrial Energy Eciency United Kingdom   Kingspan Group Buildings Energy Eciency Ireland   Mondi Food Safety & Packaging United Kingdom   Pentair Water Distribution & Infrastructure United States   Prysmian Smart & Ecient Grids Italy   Rayonier Sustainable Forestry United States   Generac Holdings Power Storage & Ups United States   Dabur India Recycled Recyclable Products & Biomaterials India   Stericycle Resource Circularity & Eciency United States   Top twenty holdings   American Water Works Water Utilities United States   Rational Technology & Logistics Germany   Monolithic Power Systems Ecient IT United States   DiscoverIE Group Industrial Energy Eciency United Kingdom   Borregaard Recycled Recyclable Products & Biomaterials Norway   Contemporary Amperex Advanced Road Vehicles & Devices China   Graphic Packaging Food Safety & Packaging United States   AZEK Recycled Recyclable Products & Biomaterials United States   Advanced Drainage Systems Water Distribution & Infrastructure United States   Corbion Sustainable Agriculture Netherlands   Top thirty holdings   Northland Power Renewable Energy Developers & Ipps Canada   Bentley Systems Ecient IT United States   Bucher Industries Technology & Logistics Switzerland   EDP Renovaveis Renewable Energy Developers & Ipps Portugal   CIA Saneamento Basico Water Utilities Brazil   Veralto Environmental Testing & Monitoring United States   Croda International Recycled Recyclable Products & Biomaterials United Kingdom   Xylem Water Distribution & Infrastructure United States   Shenzhen Inovance Industrial Energy Eciency China   Watts Water Technologies Water Distribution & Infrastructure United States   Top forty holdings   24 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report Market  of A t  December  Country of value net Company Sector main listing ’ assets Coway Water Treatment South Korea   Lennox International Buildings Energy Eciency United States   Waste Connections General Waste Management United States   Advantech Industrial Energy Eciency Taiwan   Boralex Renewable Energy Developers & Ipps Canada   Signify Ecient Lighting Netherlands   Darling Ingredients Recycling & Waste Technologies United States   Donaldson Transport Pollution Reduction United States   Herc Resource Circularity & Eciency United States   nVent Electric Smart & Ecient Grids United States   Top fifty holdings   Cognex Industrial Energy Eciency United States   Porvair Pollution Control Solutions United Kingdom   Blackline Safety Environmental Testing & Monitoring Canada   NIBE Industrier Buildings Energy Eciency Sweden   Norma Group Water Distribution & Infrastructure Germany   Lenzing Resource Circularity & Eciency Austria   Lem Industrial Energy Eciency Switzerland   Amiad Water Systems Water Treatment Israel   Shoals Technologies Group Solar Energy Generation Equipment United States   Zurn Elkay Water Solutions Water Distribution & Infrastructure United States   Portfolio total (sixty holdings)   Cash 13,405 1.3 Net current liabilities excluding cash (35,168) (3.4) Non-current liabilities (49,431) (4.8) Net assets   Impax Environmental Markets plc | Annual Report and Accounts 2024 | 25 Strategic report ## Structure of the Portfolio As at 31 December 2024 Breakdown by environmental s ector IEM Classification 2024 2023 | | Breakdown | | Breakdown by | | | --- | --- | --- | --- | --- | | Alternative Energy | | 7% | | Energy | | | by region | | market capitalisation | | 14% Energy Management 22% & Eciency 17% Transport Solutions Clean & Ecient 3% transport 6% | | Environmental | | 3% | | | | Smart | | --- | --- | --- | --- | --- | --- | --- | --- | | Services & Resources | | | | | | Environment | | | | | Asia Pacific, 11% | | 4% | Micro Cap | | | (less than US$ 0.5 bn), 3% Europe, 30% Digital Infrastructure 14% North America, 57% Small Cap (US$ 0.5 bn to US$ 5bn), 21% Rest of World, 2% 9% Mid Cap | | | | (US$ 5bn to US$ 20bn), 55% | Water | | --- | --- | --- | --- | --- | | Water Infrastructure | | 15% | | | | | & Technologies | | Large Cap | | 16% (US$ 20bn to US$ 200bn), 20% Circular Resource Eciency & 21% Economy Waste Management 22% Sustainable 13% Sustainable 26 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Food Food & Agriculture 12% Strategic report ## E nvironmental M arkets ## Why are e nvironmental m arkets likely to outperform? The world is facing growing environmental challenges. develops, regulations tighten, and consumer preferences The Manager, Impax Asset Management (AIFM) Limited accelerate demand. The Board and the Manager believe (the “AIFM” or “Impax”), and the Board both believe that this can deliver superior risk-adjusted returns over the companies providing solutions to help deliver basic needs long-term. in a cleaner, more ecient manner and mitigate negative To identify companies operating in these higher growth environmental impact will grow faster than the global areas, the Manager uses a clearly defined and proprietary economy over the long-term. classification system. This has been in place since IEM There is evidence that long-term performance is driven was founded in 2002 and has naturally evolved as more by sales and earnings growth rather than interest rates. industries look to address material environmental This suggests that while temporary headwinds can challenges. impact short-term returns, these can be weathered by Today, the classification system comprises of six shareholders focused on long-term value. Additionally, “Environmental Market” sectors spanning Energy, Clean sectors like environmental markets that have long-term and Ecient Transport, Water, Circular Economy, Smart sustained earnings growth, should ultimately outperform Environment and Sustainable Food. These are the sectors other sectors. which the Manager believes have the highest potential for The Company oers shareholders a way to benefit from earnings growth. The breadth of this opportunity set this theme. IEM invests in a well-researched and enables the Manager to create a diversified portfolio diversified portfolio of fast-growing, listed companies spanning traditional sector boundaries. improving resource eciency or providing innovative IEM portfolio’s exposure to these environmental sectors solutions to environmental challenges. IEM’s investment can be found on the page opposite. opportunity set is also expanding as technology ## The Impax Environmental Markets Classification System Energy Clean and Ecient Transport Energy Management Transport Solutions Alternative Energy & Eciency Advanced aviation Buses & coaches Hydrogen Smart grids Advanced shipping Road vehicles & devices Industrial, consumer & Biofuels buildings eciency Railways Pollution reduction Power storage and Wind E-bikes & bicycles Shared mobility uninterruptible power supply Solar Lighting Developers & independent power producers Smart Environment Water Environmental Services Water Infrastructure & Technologies Digital Infrastructure & Resources Distribution & infrastructure R&D & consultancies Ecient IT Treatment Finance & investment Cloud computing Eciency Testing & monitoring Digital collaboration solutions Utilities Pollution control Environmental resources Adaptation healthcare Circular Economy Sustainable Food Resource Eciency & Waste Management Sustainable Food & Agriculture General & hazardous waste management Organic & Alternative Agri- & Aquaculture Recycling & waste technologies Technology & logistics Forestry Recycled products & biomass Safety & packaging Resource circularly & eciency Impax Environmental Markets plc | Annual Report and Accounts 2024 | 27 Strategic report – Environmental Markets ## How the Manager invests in Environmental Markets In pursuit of its investment objective IEM aims to generate long-term outperformance of global equity markets in arisk-controlled manner. To achieve this, the Manager uses the Environmental Markets classification system to identify innovative companies providing pure-play solutions to environmental challenges. The Manager then follows a rigorous, performance focused process based on bottom-up research to invest in proven and profitable companies. Engagement is a key tool for informing investment decisions as well as stewarding client capital. ‘A- Idea Fundamental List’ Portfolio Portfolio ## Key steps 1 generation 2 analysis 3 construction 4 management approval (‘10-steps’) & stewardship • Impax Environmental • Financial statement • Upside to target price • Sell discipline Mark ets taxonomy & returns analysis • Risk limits • Ideas bench • % revenue exposure • Operational profile & competitive analysis • Macro framework • Risk monitoring Work Work to Environmental undertaken undertaken Markets • Non financial analysis • Stock-specific catalysts • Non financial factor • Financial modelling, • Engagement outcomes scenarios & valuation Number circa circa 55-65 of stocks 1,500 220 Data as at 31 December 2024. The first step in the Manager’s investment process performance, valuation and other non financial factors. isIdea Generation. This consists of defining the The latter is a key tool for identifying quality businesses Environmental Markets opportunity set and sectors, and managing material risks, conducted in accordance followed by creating a universe of listed companies with IEM’s Policy. This can be found on the website serving these sectors. w ww.impaxenvironmentalmarkets.co.uk. To qualify for IEM’s investable universe, companies This analysis is then subject to peer review. Stocks which must generate at least 50% of their revenues from successfully pass this stage are included on the Manager’s products or services in Environmental Markets as “A-list” of investable companies. Investment managers are detailed above. This “pure play” threshold means that free to buy positions from this list subject to upside to investments are typically made in small and mid-cap target price and relevant portfolio requirements. companies, which tend to have a greater degree of Portfolio Construction is the responsibility of the focus within their business models. As at 31 December investment managers who have ultimate decision making 2024, the IEM portfolio’s weighted average revenue authority and accountability. The core focus is on “bottom exposure to Environmental Markets was up” stock picking, supported by a team of analysts, with approximately76%. aview to identifying long-term winners and investing in Once a company within the investable universe is them for the long-term, subject to valuation. In addition, identified as being of interest, it is subject to Impax’s the Manager uses “top down” overlays considering the “10-step analysis”. This follows a time-tested macro environment and developments in Environmental investment process to identify profitable companies Markets. The aim is to create a balanced and diversified with robust business models that demonstrate sound portfolio where upside to target price is considered management of risk. This includes bottom-up alongside risk profile. fundamental research of market structure, competitive advantage, business model and strategy, financial 28 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report The Manager has a range of soft and hard limits on Stewardship at Impax means being actively engaged individual position sizes, and exposures to volatile sectors investors. The Manager engages with the companies and regions, all with a view to managing risk. held in the IEM portfolio, encouraging them to adopt best practices, improve disclosures and address other Once a company is purchased, portfolio management and concerns raised. As long-term shareholders the Manager stewardship are central both to mitigate risk and enhance helps ensure investee companies are attuned to the shareholder value. Each investee company is continually opportunities oered by the transition to a more monitored within the context of a live ‘valuation range’ sustainable economy. which incorporates worst and best case assumptions. Sell 1 discipline is based on company valuations, portfolio risk Impax is a proud signatory to the UK Stewardship Code, metrics, the macro-outlook and engagement outcomes. which sets high stewardship standards for those investing money on behalf of savers and pensioners, | Stewardship, engagement and exercise of | and those that support them. As a successful applicant | | --- | --- | | voting powers at Impax | again in 2024, Impax demonstrated commitment to the | | Impax maintains an active dialogue with the executive | Codes’ principles. The Impax Stewardship Code | | management of all companies held in the portfolio. | Statement can be found on the website | | Stewardship through active engagement and proxy | w ww.impaxenvironmentalmarkets.co.uk. | voting are an important component of the investment Impax’s voting statistics for IEM are shown on page 40. process. Impax believes that it is in investors’ interests to promote greater transparency around sustainability issues. Engagement and exercise of voting powers: Stewardship and Advocacy Framework Pursuing real-world outcomes and impact through stewardship and advocacy activities Outcomes Impact Activities Outputs (examples) (examples) Company outreach, Company- followed by meetings New company GHG Reduced company specific to encourage reduction target GHG emissions engagement improvements as per set objectives ### STEWARDSHIPADVOCACY Combined company Engaging with S&P 500 Better reporting and policy outreach companies and Systematic enabling eective on structural petitioning the SEC engagement analysis of physical market barriers to on geolocation climate risks the transition data reporting Impax led development of Climate Financial Risk Greening Helping regulators More informative Forum Climate Disclosure the financial design fit-for-purpose disclosures on Dashboard, referenced system financial regulation climate-related risks in UK Financial Conduct Authority guidance 1 Annually firms must submit a Stewardship Report explaining how the Code has been applied over the past 12 months. Once the report is approved by the Financial Reporting Council, firms become signatories to the code. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 29 Strategic report – Environmental Markets How the Manager invests in Environmental Markets continued Impax believes that significant, real-world impact can be achieved through disciplined and well-structured Impax Reports and Insights stewardship and advocacy eorts. To speed up the pace of change, Impax increasingly combines company REPORTS engagement and policy advocacy, seeking to shape Impax publishes IEM specific reports that can be regulatory or policy change in what is called ‘systematic found on the IEM website. These include the engagement’. Impax has developed the Stewardship and following: Advocacy Framework summarised on page 40 to – Impax Environment Markets TCFD Report – illustrate how the resources, activities and approaches Whilst IEM has produced its own Environmental that may be used to achieve positive outcomes and, Impact Report containing emissions and ultimately, real-world impact. transition data for the last several years, 2024 marked the first year that Impax, as the Manager, In addition to engaging directly with investee companies was required to publish an IEM specific TCFD and voting at AGM’s, Impax works with other investors report. This report has a wealth of information and organisations to increase our influence. This and metrics on sustainability particular to IEM advocacy work ranges from collective action alongside including further information on the impact peers and direct intervention on policy, to taking the lead metrics provided on pages 35 to 40 in this by steering industry groups and sharing innovative report. insights and ideas. See page 40 for engagement statistics for the Company. – Sustainability Report – This report focuses on IEM’s impact on the environment and society. It has been developed to provide shareholders Impax’s net-zero initiatives with a view on how the Manager thinks about sustainability holistically across both risks and Impax remains a committed member of the Net Zero opportunities. More information on how the Asset Managers (“NZAM”) initiative since 2021, Manager defines impact can be found on which reflects a formal commitment by signatories page35. to support the goal of net-zero GHG emissions by 2050 or sooner, in line with global eorts to limit Insights warming to 1.5°C. Impax aims for 100% of committed Impax also publishes white papers relevant to IEM AUM to be climate resilient and for investee on it’s website. Topics over the last year covered companies to be ‘transition aligned’ or ‘transition areas such as AI, the tech boom in Asia and aligning’ in their climate management and processes investing in the addressing of biodiversity loss. by 2030. In this context, ‘transition aligned’ also includes the need to adapt to climate impacts. In 2024 Impax updated its guidance on assessing net zero alignment of companies, as part of its proprietary approach to assessing transition climate risk management. The updated guidance reflects and aligns with the Net Zero Investment Framework2.0 and is informed by latest industry guidance on assessing corporate climate transitions. This guidance will form the basis of how Impax will report on progress towards its net zero commitment under the NZAM initiative in future years. Further information on how Impax views environmental metrics can be found on page 37. 30 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report ## Engagement with Clean Harbors, US – ## Climate Risk Net Zero Transition Impax has engaged with Clean Harbors (2.9% of the portfolio) since 2018 on a wide range of sustainability issues and business risks. In line with Impax’s NZAM commitment, Impax targeted several investee companies with material climate-related risks to improve their management processes. The Manager has communicated to IEM’s investee companies the intention to increase expectations in coming years. ## Objectives 1. Calculate and disclose Scope 1 & 2 emissions (achieved) 2. Calculate and disclose Scope 3 emissions (in progress) 3. Establish science-based emissions reduction targets (in progress) Clean Harbors has made progress in disclosing its GHG emissions and is currently establishing a more holistic Scope 3 baseline. The company has achieved emissions intensity reductions (Scope 1+2/revenues) since 2019, with a focus on improving resource and energy eciency at its new incinerators and sites. Impax continues to discuss the establishment of science-based emissions reduction targets with the company but given recent acquisitions, management’s current focus is on improving ‘net climate benefit’ (avoided emissions) by 2030 while reducing emissions intensity. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 31 X Strategic report - Environmental Markets ## Annual Spotlight: ## AI's Double-edged Role in the Sustainability Revolution The development of artificial intelligence ("AI") is already disrupting entire sectors. It is also creating many wide-ranging opportunities for investors, from the makers of chips to software companies, to almost every company, including the industrial giants, harnessing its power. Yet AI's rapid growth has come at a high cost in terms of increased electricity and water consumption, with a direct impact on global aspirations to conserve the earth's resources. Investors have the potential to benefit from the structural growth opportunities of both AI's direct application and the solutions it presents. ### The scale and scope of the AI revolution The AI revolution is driven by three key factors: First, the explosion of digital data from various sources (including social media, the internet of things and business transactions) has provided the raw material needed to train complex AI models. According to McKinsey, the amount of digital data in the world doubles every three years, and global data creation is projected to reach more than 394 zettabytes by 2028. \( ^{12} \) Second, advances in graphics processing units ("GPUs"), technology, cloud computing and specialised AI hardware have made it possible to train large-scale models that were previously unimaginable. GPUs are becoming ever more efficient and less costly – a 2022 GPU was able to manage approximately 64 times as many calculations per second, per dollar, as a 2008 model. Third, innovations in AI, such as transformers and large language models, have drastically enhanced its ability to understand and generate realistic human-like content. ### AI's role in enabling climate solutions Although as a society we have only scratched the surface of potential use cases for AI, it is already proving invaluable in enabling climate solutions. This brings a number of high-growth companies with robust margins across sectors into IEM's investable universe. Below, this article focusses on three examples: energy efficiency, environmental technologies and weather forecasting. For the first two, AI can help reduce emissions and resource use, while for the latter it can contribute to climate adaptation and resilience. #### 1) Energy efficiency Understanding the complex dynamics that determine building energy use is crucial to the efficient operating of heating, ventilation and air conditioning systems. AI tools can also help to simulate how building occupancy, structure, design and the weather interact to affect thermal flow, and to predict how it may change. The essential nature of these operations also creates a tendency for revenue to recur (or "stickiness") which is highly attractive to long-term shareholders. Bentley Systems (United States, 1.7% of portfolio) leverages AI to build digital twin models for infrastructure assets and help manage them during their lifecycle. These models can overlay the design blueprints with real-time data around building occupancy, structural integrity and weather conditions. By utilising vast data from connected sensors, Bentley Systems software can unlock operational efficiencies and energy savings. Source: Bentley Systems, 2024 Meanwhile, in transport, AI is being used to optimise routing for global logistics. Descartes Systems (Canada, 2.5% of portfolio), for example, uses AI and machine-learning techniques to reduce miles and emissions, whilst predictive analytics and dynamic scheduling allow for same-day delivery promises and adjustments. Companies using their software can also enhance fleet performance, leading to cost savings, improved operational efficiency and ultimately greater margins. \( ^{3} \) #### 2) Environmental technologies Research suggests that a product's lifetime environmental impact is largely determined during the design stage. \( ^{4} \) AI is helping to develop more efficient clean technologies and to reduce the impact of existing technologies. Altair Engineering and PTC (United States, 2.4% and 3.4% of portfolio, respectively) are leading computer assisted design and simulation companies. By integrating AI-driven predictive analytics and data management into their existing software, customers can further optimise product performance and sustainability throughout their lifecycle. At the same time, by removing the need for physical prototypes, the environmental impact of the design process itself is minimised. Predictive analytics can similarly help maintain equipment by predicting failures before they occur, reducing downtime and maintenance costs. \( ^{5} \) These capital light software companies are therefore central to their clients' operations. Combined with their subscription-based business models and low relative cost, the stocks give IEM's portfolio valuable exposure to above GDP growth through economic cycles. #### 3) Weather forecasting AI is proving particularly powerful in forecasting the behaviour of complex systems. In weather forecasting, 1 Over the next five years up to 2028. 2 Reinsel, D. et al, November 2018: The Digitization of the World From Edge to Core, IDC. To put that another way, one zettabyte is one billion trillion bytes, equivalent to over 12 million 4K videos. 3 Descartes, 2024: 6 Ways Machine Learning Can Improve Fleet Performance. 4 https://www.mckinsey.com/capabilities/operations/our-insights/product-sustainability-back-to-the-drawing-board. 5 Furbush, J., 2020: Artificial Intelligence Helps Boost Manufacturing Capabilities, Cognex. 32 Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report X AI models have proved more able than supercomputers to accurately predict weather events, and in a fraction of the time. \( ^{1} \) Such forecasting has applications across the economy, but particularly in improving areas such as insurance pricing and agricultural productivity. AI models can also help better predict the long-term impacts of climate change, and so guide decisions on adaptation-related investments. These models are being increasingly adopted by insurance and reinsurance companies. Over time, as climate-related activities become a greater proportion of their total business, these financial stocks will grow within IEM's investable universe. # Meeting the resource efficiency challenge The benefits promised by AI must be weighed against the sectors own environmental impact. Morgan Stanley estimates that demand from generative AI will grow at an annual average of 70% to 2027, by which point it will account for approximately 25% of all data centre energy consumption, which will itself roughly equate to that of Japan by 2026. \( ^{2,3} \) # AI's growing resource appetite Estimated data centre electricity consumption in selected regions in 2022 and 2026 ![img-6.jpeg](img-6.jpeg) Source: International Energy Agency, 2024. Industry is responding to the resource efficiency challenge by building hyperscale data centres. Having made sizeable commitments to net zero, many of their operators are also some of the largest investors in renewable energy. This is providing multi-year, structural growth drivers for independent power producers like EDPR (Portugal, 1.7% of portfolio), which generate the bulk of their power from offshore and onshore wind, as well as solar and hydroelectric plants. Continued innovation in chip design will meanwhile be critical as AI's computational demands continue to grow. As a result, hardware companies providing the most energy efficient solutions present some of the clearest opportunities for Environmental Markets investors, both in terms of their sustainability impact, but also their prospects for shareholder return potential. Monolithic Power Systems (United States, 2.1% of portfolio) specialises in creating thermally efficient semiconductors, which form part of power management solutions for various electronic systems. These include data centres, as well as industrial and consumer electronics, telecoms and autos. By providing solutions with high power density and efficiency, the company can reduce both electricity demand and carbon emissions. Source: Monolithic Power Systems, 2024. AI is also a thirsty business: its data centres need cooling and fabrication sites are water intensive. We expect demand for water-efficient and new cooling technologies to increase commensurately. \( ^{4} \) This rationale underpins the recent addition of nVent Electric (United States, 1.2% of portfolio) to the portfolio. With roughly 60% of the company focused on storage and efficient cooling products for data centres, the investment case combines robust margins, with a structural growth story predicated on resource efficiency. # Opportunities for economy-wide solutions AI's positive applications and its rising consumption of power are intertwined with the broader challenge of decarbonising and building out power systems. AI is increasingly being used to optimise the integration of renewable energy sources into the grid. For instance, AI algorithms can predict energy production from solar and wind sources more accurately, allowing for better load balancing and energy storage management. As AI and other energy-intensive technologies grow, the existing energy grid will require significant upgrades to handle increased demand. Impax expects this to provide a strong source of structural demand growth for the likes of Prysmian (Italy, 2.2% of portfolio), a multinational producer of electrical cables and fibre optics that has dominant positions across high, medium and low voltage segments of the market. Investments in smart grid technologies, such as AI-powered demand response systems and decentralised energy distribution, will also be essential to ensure the grid's reliability and efficiency in the face of these new challenges. # Conclusion AI promises to make a significant contribution to developing the materials, technologies and business models needed to put the global economy on a sustainable footing. It is also likely to help drive innovative resource efficiency, as sector leaders reward chip makers and data centre operators whose products and services use less energy and water. Impax believes selective investors can look to tap into the structural growth opportunities arising from AI's direct applications, as well as the solutions it enables. 1 World Economic Forum, December 2023: AI can now outperform conventional weather forecasting – in under a minute, too. 2 Morgan Stanley, March 2024: Powering the AI Revolution. 3 International Energy Agency, January 2024: Electricity 2024: Analysis and forecast to 2026. 4 Impax Asset Management, January 2023: Quenching the semiconductor industry's thirst. Impax Environmental Markets plc | Annual Report and Accounts 2024 33 Strategic reportStrategic report – IEM Environmental Impact Reporting ## IEM Environmental ## Impact Reporting ## Beyond the pursuit of financial returns, IEM also ## monitors the impact that investee companies ## have on the environment . To enable us to do this ## in a systematic way a number of polices and ## processes have been created by the Manager. ## These include monitoring greenhouse gasses, ## calculating the Weighted Average Carbon Intensity ## and monitoring exposure across the UN Sustainable ## Development Goals. 34 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report ## IEM Environmental Impact Report Whilst it is crucial to monitor the environmental impact of IEM’s investee companies, there are no impact targets around which the Manager seeks to build the portfolio. The environmental impacts noted below are the measurable output of IEM’s investment objective implemented using Impax’s investment process. The focus on companies delivering environmental solutions naturally results in environmental benefits which Impax quantifies at the end of each year on the basis of the most recent portfolio company disclosures available. 1 Environmental impact of investee companies in 2023 Based on £1m invested, companies held in the IEM portfolio contributed to: Total Equivalent nnual mpact Renewable electricity generated Materials recovered/ Ȇȍ Ȇȍ waste treated Households’ waste output tonnes Water provided/saved/ ȋȊˏ Ȋȇȇ treated megalitres Households’ water consumption 2 Typically, Impax gathers Scope 1, 2, and 3 monitoring greenhouse gases (“GHG”) emission data directly from company disclosures and/or via the Climate Disclosure Project (“CDP”). Where sucient information is not available, companies are contacted to request additional information, which in some cases produces enhanced data. Impax uses third party estimates for missing Scope 1 and 2 GHG emissions. Impax does not use estimates for Scope 3 GHG emissions. Avoided GHG emissions arise from the portfolio companies’ products and services. This data is sourced from the company directly or is calculated at the relevant individual company product level using a number of inputs to produce a conservative avoidance of GHG emissions figure. Such inputs may include volumes of products sold, product-level eciency indicators vs regional baselines and regional grid eciency factors. 1 GHG emissions impact of portfolio companies in 2023 (tCO) Based on £1m invested, companies held in the IEM portfolio contributed to: Total Total GHG emissions Ȋȏȇ tCO 2 Scope 1 & 2 Ȇȇȏ tCO 2 Scope 3 ȈȌȈ tCO 2 Avoided GHG emissions ȌȊȌ tCO 2 ȍȅ ȇȋȈ Households’ electricity MWh consumption ȊȌȆ cars taken o the road 1 Latest year available. 2 Scope 1: Direct emissions that are owned by a company; Scope 2: emissions released into the atmosphere from the use of purchased energy Scope 3: emissions include all other indirect emissions that occur across the value chain and are outside a company’s direct control. Avoided GHG emissions equivalent to: Impax Environmental Markets plc | Annual Report and Accounts 2024 | 35 X Strategic report - IEM Environmental Impact Reporting # ENVIRONMENTAL IMPACT - COMPANY EXAMPLE # Trimble # Efficient IT, United States (3.2% of portfolio) Trimble is a leading provider of software and hardware for the construction and transportation industries. Through its joint venture with AgCo, the company is also involved in sustainable agriculture. After several divestments, Trimble is increasingly focused on growing high margin, sticky software revenues. Capital allocation is also becoming more disciplined, complemented by smaller M&A deals. Trimble's products are designed to improve efficiency and enhance productivity in notably underpenetrated areas with high environmental footprints such as construction and agriculture. This can dramatically aid resource allocation as well as lowering energy consumption and emissions. Trimble continues to strengthen its sustainability efforts and disclosures, particularly with respect to climate and diversity. Following SBTi¹ approval of targets in August 2022, the company published its first TCFD² report, addressing physical risk and scenario analysis for the first time. Through use of Trimble's products, customers cumulatively avoid emitting circa 700,000 tonnes of CO₂ each year. Source: Trimble Carbon Disclosure Project 2023 and Impax estimates. # IEM Mapped to UN Sustainable Development Goals³ The UN Sustainable Development Goals ("SDGs") encompass 17 sets of targets to be met by the world's economies by 2030. The SDGs have been increasingly adopted by investors as a tool for evaluating impact outcomes. The nature of Impax's investment philosophy results in meaningful exposure to the SDGs as an intrinsic effect of the investment process. Impax's investment process does not analyse alignment with SDGs as an investment objective or component of portfolio construction. Instead, the SDG framework is used to understand which portfolio companies are involved in activities that contribute towards addressing these critical global challenges, as a mapping and reporting exercise. Reporting standards for environmental markets are continuously evolving. From 2025 the International Sustainability Standards Board (ISSB), which is an independent body that develops and approves environmental reporting standards issued its inaugural standards - IFRS S1 and IFRS S2 - for implementation in 2025. These will facilitate standardising climate-related risk and opportunities disclosures. The bar chart illustrates the mapping of exposure to SDGs based on revenue exposure to environmental markets. At 31 December 2024, IEM's greatest linkage was to goals 6, 9 and 12. IEM has 81% revenue exposure to SDGs: ![img-7.jpeg](img-7.jpeg) - Goal 6, Clean Water & Sanitation, which relates to holdings in water utilities and infrastructure; - Goal 9, Industry Innovation & Infrastructure, which relates to holdings in industrial energy efficiency; and - Goal 12, Responsible Consumption & Production, which relates to holdings in sustainable and efficient agriculture, and recycling and value-added waste processing. 1 Science-Based Targets Initiative. 2 Taskforce for Climate-related Financial Disclosures. 3 Source: Impax Asset Management. IEM holdings as at 31 December and UNSDG classification metrics as at 31 December 2024. Figures are based on Impax internal data. Impax's investment process does not identify alignment with SDGs as a specific objective. Instead, the nature of Impax's investment philosophy results in some meaningful revenue exposure within IEM. Numbers may not sum up due to rounding. For further information, please visit https://www.un.org/sustainabledevelopment/sustainable-development-goals. 36 Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report Strategic report ## IEM Climate-Related Disclosure Task Force on Climate-related Financial The strategy is not only about addressing risks, but also about identifying opportunities. Impax’s work in this area disclosures (“TCFD”) is described on page s 27 to 29, and also within Impax’s As an Investment Trust, IEM is not currently subject to the own TCFD report. The near and long -term risks, and Listing Rule requirement regarding TCFD reporting. opportunities for environmental investing as they relate However, Impax, as the Manager, is now required to to IEM, are discussed in the Chairman’s Statement and publish an IEM specific TCFD report. This report can be Manager’s Report. found on the IEM website, The Board reviews the Manager’s process in assessing www.impaxenvironmentalmarkets.co.uk . the impact and resilience of IEM’s investments and their IEM continues to be a keen supporter of the disclosure operations, as well as the operations of IEM’s key service ambitions of both the TCFD and the Financial Reporting providers, and uses these to shape strategy to ensure the Council (“FRC”). This, IEM’s fourth annual Climate potential risk impact and likelihood are within IEM’s risk Disclosure, reports what is relevant for IEM under each of appetite. the four pillars of TCFD. This voluntary disclosure is designed to help asset owners, including IEM and its 3. Risk management shareholders, better assess these risks and support sound investment decisions. As the Manager, Impax seeks to identify, assess and manage physical and transition risks that could 1. Governance undermine the performance of IEM’s investee companies. The assessment and management of climate-related risks Climate risk assessment and opportunities are underpinned by extensive in-house Impax assesses climate and other material risks through expertise and appropriate governance structures of the integrated company-level analysis that informs Manager. investment decisions. More information on this can be The IEM Board is responsible for the oversight of climate found on the Company’s website risks and opportunities. However, the control and www.impaxenvironmentalmarkets.co.uk . management of climate-related investment activities is Climate risk management delegated to Impax as the M anager. The Manager recognises that climate-related data is During 2024, the Board’s Sustainability Reporting frequently based on estimates or proxy data and, as a Committee met three times. The Committee receives result, provides an imperfect view of portfolio exposures reporting from Impax regarding its sustainability activities or risks. The data relied on can also change materially as they relate to IEM, the outcomes of such activities and from one year to the next, as data quality and availability sustainability metrics, as well as proposed IEM reporting. improves, or estimation methods change. The Manager Additionally, the Board and the Manager agreed that the continues to engage companies on public disclosures investment strategy which the Manager operates for IEM that are relevant to investment decisions, advocate for met the qualifying criteria of the FCA’s Sustainability harmonisation and greater standardisation of reporting Impact label, which was applied by the Manager in practices within the financial industry, and work to make November 2024. More information on the label can be sure that the data used is as accurate as possible. found on page 61. 4. Metrics and targets 2. Strategy IEM believes that the asset management sector can IEM is founded on the investment opportunities arising contribute to the goal of net zero greenhouse gas from the transition to a more sustainable economy. These emissions by 2050 or sooner, in line with global eorts to investment opportunities arise from the belief that, with limit warming to 1.5 degrees Celsius, through the insatiable demand for higher living standards on a finite accurate pricing of climate risk in investment decisions, planet, companies enabling the cleaner and more through engagement and advocacy work, and by ecient delivery of basic needs – such as power, water investing in climate solutions. and food – or mitigating environmental risks like Financing the transition pollution and climate change, can grow earnings faster Measuring the GHG emissions and avoided emissions than the global economy over the long-term. This associated with the products and services of IEM’s includes the transition to a net-zero climate resilient investee companies demonstrates their contributions to economy. 1 the transition to a lower-carbon economy. More Environmental, including climate -related risks and information can be found on page 38. opportunities have been at the core of IEM’s investment Emissions are separated into Scopes 1 and 2 – which strategy for two decades. The majority of the include direct and indirect emissions from energy environmental solutions oered by IEM’s investee produced and consumed by investee companies – and companies focus on climate-related challenges, like Scope 3 – which includes indirect emissions from climate mitigation or adaptation solutions. investee companies’ supply chains and products in use. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 37 Strategic reportStrategic report – IEM Environmental Impact Reporting IEM Climate-Related Disclosure continued | Financed emissions | | | | The Manager has gathered all GHG emissions data | | --- | --- | --- | --- | --- | | Financed emissions impact can be analysed through | | | | disclosed by IEM’s investee companies, estimating Scope | | | | | 2 | 1 and 2 emissions where those are not reported. Impax | | weighted average carbon intensity (“WACI”) | | | and | | | through CO | 2 emissions, which are viewed through the | | | does not use estimates for Scope 3 emissions, for which | | | | 3 | | data disclosed by companies remains patchy. | lens of Scopes 1, 2 and 3. The table below sets out the WACI of IEM. Impax Asset Management CO2 Emissions Weighted Average Carbon Intensity (WACI) – IEM     attributable to attributable to WACI (Scope 1, 2) tCOeUSm revenue  IEM plc IEM plc Source: As at 31 December 2024. Emissions data sourced from KgCOe KgCOe Sustainalytics and revenue data from Bloomberg. CO2 emissions have been reported by IEM since 2015 Scope 1&2 63  andare shown in the Environmental Impact Report on Scope 3 0  page35. TOTAL 63  Impax Proprietary Methodology for planetary impact Source: Impax Asset Management, as at 31 December 2024. The measurement of impact, including carbon IEM has Scope 3 emissions due to business travel. The impact, is an evolving discipline in the financial CO 2 emissions for 2024 were 5,204 Kg CO e (2023: 5,120 industry. Since 2014, Impax has developed and Kg CO e). enhanced its proprietary methodology to measure the planetary impact of investee companies. The Details of the methodology used distinguishing characteristics of Impax’s approach Reporting according to the GHG Protocol: Scope 2 are 1) to consider and include avoided emissions emissions figure stated above follows the market-based from the use of products and services by investee accounting methodology. Source of emission factors companies, and 2) the Impax investment team uses applied to calculate emissions from electricity consumption a process of direct engagement with companies to obtain additional data and context for impact is IEA (2021) UK electricity grid mix emission factor. Scope 3 metrics, as mentioned on page 29. (travel) emissions figure stated above follows the distance- based methodology. Source of emission factors applied to While the revenue denominator for WACI is a calculate emissions of travel is the UK Government relatively easy and publicly available figure for each 4 Greenhouse Gas Reporting: Conversion Factors 2024 . company, the emissions picture in the numerator is still evolving. Variance in this part of the fraction, TARGETS: Operations related targets particularly with Scope 3 emissions, but in some The Board is pleased that Impax’s London oce is cases also within Scope 1 and 2 data, or availability acertified ‘green’ building rated ‘excellent’ by the Building of any of these, accounts for the broad range of Research Establishment Environmental Assessment WACI numbers among those providers and Method (BREEAM) and managed by an ISO 14001 aligned investment managers who calculate it. Building Management System. The Board’s other key service providers have begun to report on their Scope 1 and 2 emissions at least annually, including any steps taken to METRICS: Operation related climate and carbon reduce emissions. This will continues to enhance IEM’s metrics operations-related climate and carbon metrics. IEM has no Scope 1 (direct emissions) or Scope 2 (emissions related to electricity consumption) emissions. However, in the course of operating its business, key service providers have Scope 1 and 2 emissions. As such, the Board has set out below the Scope 1 and 2 emissions attributable to its main service provider, Impax. This attribution apportions the Manager’s London oce emissions to IEM, based on IEM’s net asset value as a percentage of the Manager’s London-managed assets. No Scope 3 emissions were attributable from Impax because it hosts all board meetings at its oces. 1 To evaluate the real-world impact of climate solutions, Impax looks to compare the GHG emissions arising from the use of companies’ products or services with the GHG emissions generated in a world where that product does not exist. The Manager looks to use companies’ own estimates of avoided emissions as a starting point, where available. Impax mostly relies on companies’ own reporting assumptions and methodologies on avoided emissions, where disclosed, but evaluate whether they are rigorous in their use of baseline scenarios, life-cycle emissions approaches and value chain attribution method. Where companies’ avoided emissions are estimated by the Manager, the assumptions broadly align with the five steps highlighted by the recently published guidelines on assessing avoided emissions by the World Business Council for Sustainable Development. 2 WACI is the ratio of: tons of CO 2 equivalent carbon emitted (tCO2)/revenues. 3 Scope 1: Direct emissions that are owned by a company; Scope 2: emissions released into the atmosphere from the use of purchased energy Scope 3: emissions include all other indirect emissions that occur across the value chain and are outside a company’s direct control. 4 https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2024 . 38 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report ## Transition Alignment of IEM portfolio As discussed on page 30, as part of Impax’s commitments as a signatory to the NZAM initiative, Impax has   assessed the alignment of IEM’s portfolio with the transition to a net-zero economy. Impax has defined three 1 categories of companies’ climate management and processes: ### • ‘Transition aligned’ climate management processes of investee companies include appropriate climate risk pricing, robust climate target-setting, for example, adopted the Science Based Targets Initiative (SBTi) and TCFD-aligned climate reporting. These processes align with the highest scoring tiers for climate as part of the Manager’s analysis. ### • ‘Transition aligning’ are companies with moderate climate resilience and climate transition management and 2 processes that have been committed to or initiated but have not been fully developed. This aligns with the Transition Aligned _____% 29% middle scoring tier for climate as part of the analysis. ### • ‘Transition non-aligned ’ companies have weaker climate resilience and weak or non-existent climate transition management processes. This aligns with the lower scoring tiers for climate. 1 IEM’s portfolio in these categories    Transition Aligned   Transition Aligning _____% 51% 51 Transition Aligning   Total Transition Aligned/Aligning   Transition Non-Aligned   Source: Impax Asset Management analysis, as at 31 December. Portfolio weights excluding cash. May not sum to 100% due to rounding. 2022 percentages have been changed from the figures reported previously, reflecting an enhancement to the methodology employed. In the latest assessment of IEM’s holdings’ net-zero alignment, higher levels of ‘non-alignment’ were found among Total Transition Aligned/Aligning _____% 80% smaller companies and companies based in Asia, compared to the benchmark assessment. This is due to their climate risk management processes and disclosures often being less mature, in contrast to a general trend of gradual improvement in climate risk management practices. Results at the portfolio level over shorter time horizons may also vary due to portfolio construction and turnover. Impax believes that climate action by financial institutions (including the adoption of net-zero targets) should focus on how to accelerate the climate transition in the real economy (for example, by encouraging companies to reduce emissions from their operations and supply chains), rather than on portfolio-level Transition Non-Aligned _____% 20% Tra decarbonisation, which may not result in any reduction in global GHG emissions. Stewardship, including engagement with investee companies and eective proxy voting, is therefore a critical tool in pursuing real-economy decarbonisation. Engagement: Impax’s engagement strategy has an enhanced eort in objective-led engagements with companies that do not yet have robust climate resilient and transition-aligned climate management and processes. The Manager increasingly seeks more systematic engagement opportunities; collaborative engagements, engagements with elements of policy advocacy, where relevant, to further enhance positive outcomes. Proxy Voting: Impax believes that oversight of climate risk resides primarily with the portfolio companies board committees and directors responsible for risk and audit. When companies are identified to have not yet taken meaningful steps to address climate risks with resilient and transition-aligned management processes, the Manager will generally vote against members of the Audit Committee. 1 See Impax’s Sustainability Centre for more information on methodology https://impaxam.com/impax-sustainability-centre/. 2 Latest data available. | | | Impax Environmental Markets plc \| Annual Report and Accounts 2024 \| 39 Impax Environmental Markets plc \| Annual Report and Accounts 2024 \| 39 | | --- | --- | --- | | Al /Al ne __% Tra si nin ni ne ned ned ned ns 29% n __ nin    ed /Al lig i ig g g ign __ _ _ __ g ___ lig tio tio ned tio Tra ra t ___ lig n lig i    d A t lig in  lig lig lig lig g ing ng ng ing gne g g ___ ___ _ _ _ _ ___ _ _ _ _ ig g Tra Tra nsinsi _ lig lig li li ng _ Tra Tr nsi ns n n A ig nin lig lig Tot Tot n A n A ned e nsi nsi l l d d d d n- n A li n n    29% 29% 80% 20% 20% 2 lig n lig lig d 2 n n n n Tot d g g g lig /Al ignign ign ig _ __%__%__% __ __% __% __% _ _ ______ __% __% _ __ __% _ _ _ g g __ tiotio tiotio n A n An A n A n A n ned _ ___ g _ _ tio tio n An An A n A n A nin ni n n n n al al Tra Tra Tra nsi nsi tiotio tio tio Ali Ali n N n N on- on- n        n ned ni | A ig % | | | A 0 nin n nsi A % ne e  tio  g % ig i % e ig lig li  e 20 i  A A A d i  d 9% g lig l A A ig l n g l A g  n A n Ali ne io al l  li  | % o % % % | | | A A A A n ot A A A N io % l n i li    | % o A | | Strategic report ## IEM Stewardship, Engagement and Proxy ## Voting | 33 engagement dialogues with 25 portfolio companies. | | | | portfolio companies | | | --- | --- | --- | --- | --- | --- | | | Rest of World | North America | Europe | | Asia Pacific | | | 2 | 9 | 9 | | 5 | ### By region ### By theme Climate Nature People Corporate 12 6 17 Governance 16 More than one theme was covered in some meetings, therefore the total sum of engagements will equal more than 33. ## Engagement Themes Climate: to encourage companies to hone their management of climate-related risks. Nature: to engage with companies on their dependencies and impacts on biodiversity and nature. People: to engage with companies about the diversity of their boards of directors, senior management teams, and workforces, as well as pay equity, employee health and wellness, and talent recruitment and development. Governance: to engage with companies on governance structures. Topics covered include board independence, executive compensation and shareholder rights. Proxy Voting Impax, on behalf of IEM, voted at all meetings where they were able to exercise IEM’s vote, voting at 72 meetings and on 827 management resolutions and 7 shareholder resolutions. The Board regularly reviews the voting decisions made by Impax on IEM’s behalf. Summary statistics  SUMMARY STATISTICS 2024 Total number of meetings where it was possible to vote 72 Number of meetings in which Impax voted  Number of meetings in which Impax voted (percentage)  Number of management resolutions in which Impax voted  Number of management resolutions in which Impax voted against andor abstained andor withheld  Number of management resolutions in which Impax voted against andor abstained andor withheld (as a percentage of management resolutions voted)  Number of shareholder resolutions in which Impax voted  Number of shareholder resolutions in which Impax supported  Number of shareholder resolutions in which Impax supported (as a percentage of shareholder resolutions voted)  In the majority of cases Impax will decide to vote in line with investee companies’ resolutions, Impax will vote against and/ or abstain from resolutions which are not consistent with Impax’s, and the Company’s, stewardship position. Examples in the year included: the board or committees not meeting independence standards, insucient diversity on the board and remuneration concerns. 40 | Impax Environmental Markets plc | Annual Report and Accounts 2024 ## 25 . Strategic report Engagement examples Progress and outcomes On long-term incentive plans ## Governance targets are only partially Having previously engaged on LEM (Switzerland, 0.8% disclosed, and individual these topics, Impax escalated portfolio) is a producer of remuneration is only disclosed discussions to involve LEM’s transducers, devices used to for the CEO, there are no Chair of the Board. convert and measure electrical recovery provisions for the STIP, LEM acknowledged that gender and there are no deferral energy. The company occupies diversity is poor, although provisions. As a result of market-leading positions across added that a small board size Management’s stance, Impax its industrial and automotive and limited pool of candidates voted against LEM’s end-markets. complicated the issue. Despite Compensation Report at its Objectives: this, LEM appointed its first September AGM. 1 Improve board gender female board director in 2024. In 2024, LEM appointed its first diversity; On compensation, LEM Head of Sustainability. In this 2 Improve remuneration confirmed its view that current role, Rodolphe Boschet is disclosure; and disclosures are sucient. improving oversight of | 3 Incorporate sustainability | | However, payout limits for | sustainability risk management, | | --- | --- | --- | --- | | | targets into remuneration. | short-term incentive plans | setting up Sustainability | | | | (“STIP”) are not disclosed, with | committees and enhancing | | | | limited detail around | reporting. LEM has also | | | | performance metrics and | incorporated greenhouse gas | | | | targets. There are also no | performance metrics into STIPs. | recovery or deferral provisions. Progress and outcomes examples. It will also disclose ## Nature high level findings and areas of DSM-Firmenich revealed that DSM Firmenich (Netherlands, focus in the first quarter of having initially focused on 2.5% portfolio) is a leading 2025. A more detailed climate following its 2023 producer of specialty chemicals action/implementation plan will merger, management will spanning consumer products, follow. Impax will review these prioritise nature going forward. healthcare and agriculture. on their release. This is exemplified by the Impax has a lengthy history of appointment of their new VP, DSM- Firmenich also committed engagement with the company Head of Climate & Nature. to delineating more clearly the due to its material dependencies responsibility for nature at The company has committed to and impacts on the board and executive levels. undertake a holistic assessment environment, and has had good of its nature-related results from those earlier dependencies and impacts. engagements. While the company is not Objective: currently committing to align To secure greater disclosure with any specific nature-related from DSM around its nature- reporting frameworks, it is related risks/opportunities. engaging with other companies and looking at best practice Objective: Unintended gas leaks from ## Climate landfills account for most of the To gain greater understanding Waste Connections (United company’s Scope 1 emissions. about Waste Connections’ plans States, 1.5% portfolio) is asolid Similar to peers in the waste to manage climate transition risk waste disposal and recycling industry, Waste Connections in future. company that has also moved struggles with measurement, into renewable natural gas. As Progress and outcomes although it is exploring research arecent addition to the In Impax's first engagement with and tools to mitigate this. These portfolio, this marked Impax’s Waste Connections, discussion include methane gas recovery first engagement with primarily centred on target systems. management. setting and initiatives to advance emissions reductions. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 41 Strategic report ## Investment Policy, Results ## and Other Information Alternative energy and energy eciency ## Company purpose and values In the alternative energy and energy eciency sector, the The Company’s core values are integrity, accountability Company may invest in businesses that are principally, and transparency. These values are the cornerstone of but not exclusively, exposed to the following areas: creating and preserving shareholder value through ### • wind turbine manufacturing; investing in companies delivering solutions to ### environmental challenges. • solar panel manufacturing and integration; ### • renewable energy developers and independent power ## Strategy and business model producers; ### • biofuels; Impax Environmental Markets plc is an investment ### company and its investment objective and policy are set • meters, utility software and demand side out below. Any material change to the investment policy management; requires shareholder approval. ### • industrial energy eciency; The Company is governed by a Board of Directors (the ### • buildings energy eciency; “Board”), all of whom are non-executive, and it has no ### employees. The business model adopted by the Board to • transport energy eciency; achieve the Company’s objective has been to contract the ### • businesses relating to the trading of carbon and other services of Impax Asset Management (AIFM) Limited environmental assets; and (the“Manager” ) as its alternative investment fund ### • fuel cells, flywheels, superconductors, supercapacitors manager to manage the portfolio in accordance with the and other new energy technologies. Board’s strategy and under its oversight. The investment managers responsible for the day-to-day management of Waste technologies and resource management the portfolio are Jon Forster, Bruce Jenkyn-Jones and In the waste technologies and resource management Fotis Chatzimichalakis. The Board monitors adherence to sector, the Company may invest in businesses that are the Company’s investment policy and regularly reviews principally, but not exclusively, exposed to the following the Company’s performance in meeting its investment areas: objective. ### • recycling equipment and systems; All administrative support is provided by third parties ### under the oversight of the Board. Company secretarial • recycling of commodities including metals, plastics, and administration services have been delegated to Apex oils, paper and vehicles; Listed Companies Services (UK) Limited (“Apex” or the ### • integrated waste management; “Administrator”); depositary and custody services to BNP ### • hazardous waste management; Paribas Securities Services (“BNP Paribas”); registrar services to MUFG Corporate Markets (formerly known as sustainable food, agriculture and forestry; and ### • the Link Group) (“MUFG”); and the Company’s broker is ### • environmental consultancy. Winterflood Securities. The Board reviews the performance of the Manager and Water treatment and pollution control its other key service providers on an ongoing basis. In the water treatment and pollution control sector, the Company may invest in businesses that are principally, but not exclusively, exposed to the following areas: ## Investment objective and policy ### • water treatment technologies involved in filtration, The Company’s objective is to enable investors to benefit purification and separation; from growth in the markets for cleaner or more ecient ### • water infrastructure including pumps, valves and delivery of basic services of energy, water and waste. actuators; Investments are made predominantly in quoted ### companies which provide, utilise, implement or advise • environmental sensing, testing and monitoring; and upon technology-based systems, products or services in ### • air pollution control technologies. environmental markets, particularly those of alternative energy and energy eciency, water treatment and (ii ) Risk diversification pollution control, and waste technology and resource The Company has the following maximum exposures in management (which includes sustainable food, place in order to ensure that there is a reasonable agriculture and forestry). diversification of risk in the Company’s portfolio: (i ) Investment Process Asset allocation (a) not more than 10% of the Company’s net assets will be Investments are selected on an individual basis, but each invested in any one company at the time of investment is categorised according to three primary investment; and environmental markets that are the focus of the Company’s investment policy. 42 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report X (b) the Company will not make an investment if as a consequence of that investment individual holdings of 5% or more would in aggregate represent more than 40% of net assets. The Company does not have prescriptive limits on the maximum amounts that can be invested in the sub-sectors listed above. The Directors believe that the imposition of such limits could impact on efficient portfolio management. ### (iii) Gearing The Board has authorised the Manager to utilise short-term borrowings of up to 10% of net assets in order to provide liquidity for efficient portfolio management where the Manager sees fit. The Company has the flexibility to enable it to take out long-term borrowings in appropriate circumstances. Any long-term borrowings and any borrowings in excess of 10% of net assets require the separate authorisation of the Board. The borrowings of the Company shall not at any time, without the previous sanction of an ordinary resolution of the Company, exceed an amount equal to one third of the aggregate of: - (a) the amount paid up on the issued share capital of the Company; and - (b) the total of the capital and revenue reserves of the Company, including any share premium account, capital redemption reserve and credit balance on the profit loss account as shown in the latest audited balance sheet and income statement of the Company subject to certain adjustments detailed in the Company's Articles of Association. ## Asset allocation at year end The breakdown of the structure of the portfolio at the Company's year-end is shown on page 26. ## Dividend policy and dividends ### Dividend policy The Directors typically expect the Company to generate returns in the form of capital gains rather than revenue. It is the Company's policy to pay out substantially all earnings by way of dividend for each year, with dividends mainly financed from current year net income and, since 2020, to declare two dividends each year. In accordance with regulation 19 of the Investment Trust (Approved Company) (Tax) Regulations 2011, the Company will not (except to the extent permitted by those regulations) retain more than 15% of its income (as calculated for UK tax purposes) in respect of an accounting period. ### Dividends declared for the year ended 31 December 2024 The Board recognises that as the Company issues and/or buys back shares through the year, this has an effect on earnings per share if a single dividend is paid annually, irrespective of timing. In order to be fair to all shareholders the Board paid an interim dividend at the half-year stage, and declared a second interim dividend, in lieu of final, paid shortly after the year end. This also has the advantage that shareholders receive their dividends earlier than when a final dividend is paid after the AGM. It is the Board's intention to continue with the declaration of two dividends each year. Shareholders will be given an opportunity to vote on the Company's dividend policy at the forthcoming AGM. The vote is advisory and is set out as ordinary resolution 3 in the separate Circular and Notice of AGM. ## Results and dividend The Company's revenue return after tax for the year amounted to £12,095,000 (2023: £14,416,000). During the year, the Company paid a first interim dividend of 1.8 pence per share ("pps") (2023: 1.7 pps), totalling £4,623,000. On 30 January 2025, the Directors declared that the Company would pay on 7 March 2025 a second interim dividend of 3.20 pps (2023: 2.9 pps), totalling £7,470,000 based on the ordinary shares in issue at the record date, 7 February 2025. In total, the dividend paid for the year is 5.0 pps, an increase of 8.7% on the prior year total dividend of 4.6 pps. The Company made a capital loss after tax of £32,741,000 (2023: capital gain of £34,081,000). Therefore, the total return after tax for the Company was a loss of £20,646,000 (2023: profit of £48,497,000). ## Cancellation of share premium account Following shareholder approval at the AGM on 20 May 2024 the Court pronounced the share premium account cancelled on 16 July 2024. This resulted in the amount of £423,098,334 being moved to distributable reserves. ## Key performance indicators ("KPIs") The Board measures the Company's success in attaining its investment objective by reference to the following KPIs: ### (i) Achievement of NAV and share price growth over the long-term The Board monitors both the absolute and relative NAV and share price performance and compares the performance of the Company against the MSCI ACWI and FTSE ET100 indices on a total return basis. A review of performance is undertaken at each quarterly Board meeting and the reasons for relative under and over performance against various comparators is discussed. The Chairman's Statement on pages 4 to 9 incorporates a review of the highlights during year. The Manager's Report on pages 11 to 20 highlights investments made during the year and how performance has been achieved. Impax Environmental Markets plc | Annual Report and Accounts 2024 43 **X**Strategic report Investment Policy, Results and Other Information continued ### (ii) Maintenance of a reasonable level of premium or discount of share price to NAV The Manager and the Company's broker monitor the premium or discount and keep the Board updated as and when appropriate. At quarterly Board meetings, the Board reviews the premium or discount in the period since the previous meeting on both an absolute basis and in comparison with other investment trusts with a similar mandate. The Board has issued a statement on premium/discount control on page 58. The Board sets parameters under which the Company's shares can be sold or bought back. The Company's shares traded at an average discount to NAV of 10.3% during the year ended 31 December 2024 and within the discount range 7.2% to 17.5%. At the year end the shares traded at a discount of 9.8%. Since the year end to 31 March 2025, the latest practicable date prior to the publication of this report, the Company's shares have traded in the discount range of 7.9% to 11.5% with an average discount of 10.3%. Details of any ordinary shares issued and bought back since the year end are shown in note 12. ### (iii) Maintenance of reasonable level of ongoing charges The Board also reviews expenditure formally at its quarterly Board meetings. The Board reviews the fees payable to the Company's main service providers on an annual basis. The Board considers the ongoing charge to be reasonable in comparison to peers. The Company's ongoing charges figure was 0.84% (2023: 0.83%). This is calculated in accordance with the AIC methodology and disclosed as an APM on page 100. ## Investment performance to 31 December 2024 | | 1 Year | 3 Years | 5 Years | 10 Years | | --- | --- | --- | --- | --- | | NAV of the Company^{1,2} | -0.4% | -11.4% | 40.7% | 177.7% | | Share price of the Company^{1,2} | -2.6% | -27.6% | 21.3% | 177.2% | | MSCI ACWI^{2} | 19.6% | 26.8% | 70.8% | 201.1% | | FTSE ET100^{2} | 16.8% | 10.3% | 137.5% | 325.2% | Note: MSCI index is total net return (dividends reinvested net of withholding tax), FTSE index is total return (dividends reinvested gross of withholding tax), both in sterling terms. 1 These are considered to be Alternative Performance Measures. 2 Total return. ## 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. 44 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report Trend: Increasing Neutral Reducing Potential risk Mitigation Trend Strategic and business objective risks Economic and market risks Price movements of the Company’s investments are There are inherent risks involved in stock selection. highly correlated to the performance of global The Manager is experienced and employs its equities in general and small and mid-cap equities expertise in selecting the stocks in which the in particular. Falls in stock markets are likely to Company invests. The Manager spreads the adversely aect the performance of the Company’s investment risk over a wide portfolio of investments 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, At year end, the Company held investments in such as currency exchange rates, interest rates, rates 60companies and the largest holding represented of inflation, industry conditions, tax laws, political 3.2% of net assets. events and trends can substantially and adversely The Manager will not normally hedge against foreign aect the value of investments. Market risk includes the potential impact of events which are outside the currency movements, but the Manager takes account Company’s control, such as the ongoing wars in the of the risk when making investment decisions. Middle East and in the Ukraine. Further details on financial risks and risk mitigation are disclosed in note 16 to the accounts. The Company holds a significant part of its portfolio in companies with small market The high risk rating remains unchanged; this reflects capitalisations, which are likely to be subject to continued uncertainty in markets, though for higher valuation uncertainties and liquidity risks changed reasons. Interest rates have stabilised and than larger capitalisation securities. The Company inflation reduced but geo-political uncertainty may also invest in unquoted securities which continues to remain high . generally have greater valuation uncertainties and liquidity risks than securities listed or traded on aregulated market. 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 invests in a broad portfolio of the C ompany’s anticipated growth of financial investments which are spread amongst several returns from environmental markets does not occur, environmental market sectors. The Manager has a that the environmental thematic decreases in rigorous investment process which takes into account relevance and that there is reversal of relevant factors prior to investment decisions taking environmental policy. Companies operating in place and thereafter. As well as reviews of the environmental markets carry risks that portfolio and relevant industry matters at quarterly governments may alter the regulatory and financial Board meetings, the Board has an annual strategy support for environmental improvement, costs of day at which the overall strategy of the Company is technology may not fall, capital spending by their discussed. customers is reduced or deferred and their All shareholders have an opportunity to talk with the products or services are not adopted. Board and the Manager at the AGM and can There is the risk that even though the Company’s communicate with the Board at any time by writing objective and strategy continues to be attractive to to the Company’s registered address or by email investors, a significant minority shareholder, whose (details on page 103). interests are not aligned with the interests of other shareholders, could threaten the Company’s long- term objectives. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 45 Strategic report Investment Policy, Results and Other Information continued Potential risk Mitigation Trend Strategic and business objective risks Share price trades at excessive discount to net asset value It is in the long-term interests of shareholders that The Board monitors the level of premium/discount shar es do not trade at a significant discount to net and receives regular shareholder feedback from the asset value. Company’s Manager and broker. Investor demand for the Company’s shares may fall, The Board has the power, granted by shareholders, to causing the discount to widen . buy back shares when in the best interests of the Company, and this should reduce supply of shares A wide discount can cause the shares of the and thus reduce or stop widening of the discount and Company to become attractive to activist may reduce volatility. The power taken at the AGM is shareholders, who may have a short term agenda for a maximum of 14.99% of shares to be bought which is not in the interests of all shareholders. back. However, the Board has the option (which it exercised subsequent to the year end) to ask shareholders to authorise an additional number of shares be bought back. The risk rating was increased to reflect the widening of the discount; this occurring even though the Company bought back 14.7% of its share capital during the year. Continuation vote risk The risk that the continuation vote fails to be The Board, the Company’s broker and the Manager pas sed by shareholders. Additionally, that the vote engage with major shareholders on an ongoing basis. is passed but there is a major vote against, All shareholders have an opportunity to talk with the potentially indicating that a significant minority of Board and the Manager at the AGM, and to submit shareholders are dissatisfied with the Company. questions to the Board throughout the year by writing to the Company’s registered address or by The risk that if the Company had a significant email (details on page 103). The risk rating was minority shareholder, this shareholder’s vote could increased to reflect this year's tri-annual vote. disproportionately aect the outcome of the vote if shareholder voting numbers were to be low. The Board seeks to ensure all shareholders, including those whose shares are held indirectly on platforms, are informed of the upcoming AGM and of their opportunity to vote. For platform shareholders, specific guidance on how to vote will be advised and the availability of general guidance on the AIC website has been highlighted in the Chairman’s Statement and the separate Circular and notice of AGM. 46 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report Potential risk Mitigation Trend Investment Management Underperformance of the Investment Manager Consistent long -t erm underperformance by the At each board meeting the investment manager investment manager may lead to poor performance reports on the performance of the Company of the Company compared to its benchmark including comparisons to its peers and benchmark comparators and peers, a widening of discount to comparators. NAV, a reduction in capital and dissatisfied The Board considers various portfolio metrics shareholders. including top contributors and detractors to performance, sub-sector and regional performance, investment rationale, valuation and growth statistics, key activity in the period, attribution analysis, portfolio positioning and risk, and the Manager’s outlook. The Board considers the rationale behind new additions, for which the Manager provides details including the environmental benefit. The Board also considers the macro and geopolitical risks and uncertainties that eect the portfolio and the Company. The Board considers the investment process to 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. The risk rating increased as the likelihood of long -term underperformance increased following a third year of underperformance. 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 The Company’s key service providers report lead to breaches of confidentiality, data records periodically to the Board on their procedures to being compromised and the inability to make mitigate cyber security risks including their alignment investment decisions. In addition, unauthorised with industry standards, their physical and data physical access to buildings could lead to damage security procedures and their business continuity or loss of equipment. planning. The underlying risks primarily exist in the third The Board meets with its key service providers at party service providers to whom the Company has each Board meeting and Directors often engage with outsourced its depositary, registration, service providers intraboard. administration and investment management activities. Operational risk The Board has contractually delegated to Due diligence is undertaken before contracts are thir dparty service providers the management of entered into with third party service providers, taking the investment portfolio, and services covering: into account the quality and cost of services oered, depositary and custody; registrar; company including policies and procedures, and risk secretarial and fund accounting. The security of the management and controls systems in operation in so Company’s assets, dealing procedures, accounting far as they are relevant to the Company. Thereafter, records and adherence to regulatory and legal the performance of the provider is subject to regular requirements depend on the eective operation of review and report to the Board. The Board monitors the systems of these third party service providers. key persons as part of this oversight. Failure by any service provider to carry out its The control of risks related to the Company’s obligations to the Company could have a material business areas is described in detail in the corporate adverse eect on the Company’s performance. governance report on page 65 . Disruption to the accounting, payment systems or The risk rating was increased due to organisational custody records (including cyber security risk) and personnel changes at Apex, the Company’s could prevent the accurate reporting and company secretarial and administrative service monitoring of the Company’s financial position. provider. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 47 Strategic report Investment Policy, Results and Other Information continued Whilst not being identified as principal risks after mitigation controls are applied, other relevant risks to the Company include the following: Potential risk Mitigation Trend Strategic and business objective risks Financing risk The Company may borrow money for investment The Board has authorised the Manager to use its purposes. If investment markets fall in value, any discretion to utilise gearing up to 10% of net assets. borrowing will enhance the level of loss. Any borrowing above this level requires Board approval. Capacity constraints on the availability of desirable companies for investment may mean the Company Borrowing facilities are renewed on a cost eective is unable to achieve the level of gearing wanted. and timely basis. The Manager keeps under regular review the opportunities for enhancing returns by the prudent use of gearing. The risk rating decreased following the successful refinancing of the Company’s revolving credit facility. Global pandemic risk The rapid spread of infectious disease may cause The Manager spreads the investment risk over a wide governments to implement policies to restrict the portfolio of investments. Risk analysis includes gathering, interaction or movement of people and scenario analysis of possible negative market events. take other measures as deemed appropriate to The Company’s key service providers report prevent its spread, causing disruption to markets periodically to the Board on their business continuity generally, investee companies, the operations of the plans and procedures. The Board monitors the Company and its key service providers. adequacy of controls in place at the key service providers and their planned response to an extended period of disruption, to ensure that the impact to the Company is limited. During times of elevated volatility and market stress, the Company’s closed-end fund structure protects it from the liquidity requirements that can arise for open-ended funds. Physical climate change risk While eorts to mitigate climate change continue, Physical climate change risk is still an emerging topic the physical impacts are already emerging in the for investors as well as for the management teams of form of changing weather patterns. Extreme investee companies. It has been a focus area of weather events can result in flooding, drought, fires research and engagement by the Manager to identify and storm damage, potentially impairing the companies particularly exposed to this risk and to operations of an investee company at a certain open a dialogue with them on management options. location, or impacting locations of companies Details of engagement with investee companies are within their supply chain. given on page 51. The Company invests in a broad portfolio of companies which are spread geographically, limiting the impact of location specific weather events. 48 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report Potential risk Mitigation Trend Investment management risks Financial risks The Company’s investment activities expose it to The Manager does not actively hedge agains t foreign avariety of financial risks which include foreign currency movements aecting the value of its currency risk, portfolio liquidity risk and interest investments, although the Manager takes account of rate risk. this risk when making investment decisions. The Company invests in securities and has Non-sterling borrowings will eectively hedge borrowings which are not denominated or quoted non-sterling investments for matching currencies. in sterling. Movements of exchange rates between The Company invests in range of global listed equities sterling and other currencies in which the and the Manager monitors the foreign currency Company’s investments are denominated may have exposure and liquidity of holdings within the portfolio an unfavourable eect on the return on the and reports on these to the Board at each meeting. investments made by the Company. Interest rate risk on borrowing was reduced by fixing The Company’s main exposure are its €60million two of the Loan Notes. floating-rate Loan Notes and its £80million Further details on financial risks and risk mitigation revolving credit facility expiring in 2025, details of are disclosed in note 16 to the accounts. which are shown in note 11. Regulatory risks Loss of investment trust status would lead to the The Company has contracted out relevant services Company being subject to tax on any gains on the to appropriately qualified professionals, who monitor, disposal of its investments. and report to the Board on regulatory compliance. In addition, the Company’s broker, auditor, Company Breaches of the FCA’s rules applicable to listed Secretary and Manager provide the Board with entities could result in financial penalties or regulatory updates on a regular basis. suspension of trading of the Company’s shares. Breaches of the Companies Act 2006 could result The Manager reports on regulatory matters to the in financial penalties or legal proceedings against Board on a quarterly basis. The assessment of the Company or its Directors. 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. ## Viability statement The continuation of the Company is subject to the approval during the Viability Period. Based on this assessment, the of shareholders every three years, and approval was last Directors have a reasonable expectation that the Company given by shareholders at the Company’s 2022 AGM with will be able to continue to operate and to meet its liabilities 99.99% votes in favour of continuation of the Company. as they fall due over the Viability Period. The Board consulted with shareholders both during the The Board reviewed the Company’s income and year and subsequent to the year end. Following this, and expenditure projections and other funding requirements in advise from the Board’s brokers who have also consulted normal and worst case market conditions. The level of the with major shareholders, the Directors confirm that they ongoing charges is dependent to a large extent on the level have a reasonable basis to believe that the resolution to of net assets, the most significant contributor being the continue will be passed by shareholders at the forthcoming investment management fee. The Company’s income from AGM on 20 May 2025. Details of the continuation investments and cash from the sale of investments (which resolution is set out in the separate Circular and Notice of are readily realisable) provide substantial cover to the Annual General Meeting. Company’s operating expenses, and any other expenditure The Directors have assessed the viability of the Company likely to be faced by the Company over the Viability Period. for the period to 31 December 2028 (the “Viability Period”). Such expenditure includes buybacks of shares and The Board believes that the Viability Period, being repayment of the Company’s borrowings, which at the date approximately five years, is an appropriate time horizon of this report represented less than 7.6 % of the Company’s over which to assess the viability of the Company, investments. particularly when taking into account the long-term nature In its assessment of the prospects of the Company, the of the Company’s investment strategy, the principal risks Board considered each of the principal risks and outlined above and its gearing. The Board have also uncertainties, including the upcoming continuation vote, assumed that shareholders will approve the continuation of and the liquidity and solvency of the Company. the Company on each continuation resolution proposed Impax Environmental Markets plc | Annual Report and Accounts 2024 | 49 Strategic report # Engaging with IEM Stakeholders Section 172 of the Companies Act 2006 requires the Board to act in the way that they consider would most likely promote the success of the Company for the benefit of all stakeholders, taking into consideration the interests of stakeholders in their decision-making and to share how they have discharged this duty. The Company's mission is to help its shareholders benefit from growth in companies operating in the fast growing Environmental and Resource Efficiency Markets. The Company's values – integrity, accountability and transparency – mean that the Board has always worked hard to communicate effectively with the Company's stakeholders. This is a two-way process and the feedback received from our stakeholders is highly valued and factored into our decision making. The Company has a range of stakeholders and this section maps out who they are and what the Board believe their key interests to be, how the Company enables engagement with stakeholders and highlights results that have consequently arisen during the year. ## Shareholders & financial advisers During the Period the Board has engaged on the following topics: **Investment performance ("NAV")** - Investment performance is monitored in relation to the Company's objective and to the investment policy and strategy (further information can be found on page 41 describing the Key Performance Indicators). The Board receives regular reports from the Manager on the composition, investment activities and performance of the portfolio and the wider marketplace in which the Company operates. The Board discusses the portfolio at each Board meeting and maintains a constructive dialogue between meetings as well. A representative of the Manager additionally attends quarterly Board meetings. **2024 Highlights:** The Company's NAV per share on a total return basis decreased by 0.4%, compared to a rise in the MSCI ACWI of 19.6%, the Company's equity comparator index. The Company's NAV underperformed its environmental markets comparator, the FTSE ET100, which rose by 16.8% over the year. **Share Price, Liquidity & Premium/Discount** - The Board also reviews and discusses detailed reports from the Manager and other key service providers, including the broker and financial advisers, in relation to the Company's share performance, trading and liquidity as well as the register of shareholders composition and changes. The Board takes a proactive approach to managing the premium and discount. **2024 Highlights:** The Company's share price total return fell by 2.6% for the year. This fall was primarily a result of the discount widening by 1.9% during the year, while the NAV total return decreased 0.4%. The share price traded at a discount of between 7.2% and 17.5% during the year. The Board has acted regularly to limit the volatility of the share price by buying back shares as and when appropriate. At 31 December 2024, the Company's share price was 385.5p and the shares traded at a 9.8% discount to NAV. **Sustainability** - The Manager conducts fundamental analysis which incorporates long-term risks, including sustainability factors. Its reporting to the Board goes beyond financial returns to include environmental impact, corporate engagement and stewardship. The Manager maintains regular dialogue with both investee and potential investee companies and reports back on these conversations to the Board. As described on page 49, the Board and Manager believe engagement with the investee companies is positive, beneficial and welcomed and that consistent exercise of voting rights is a key activity in the dialogue with companies invested. The Board has oversight of the quality of non-financial risk management in its quarterly Board meetings. **2024 Highlights:** The Sustainability Reporting Committee ("SRC") met three times during the year. Further details on the Committee and its activities are given on page 61. As set out on page 61, the Manager has produced a Task Force on Climate-Related Financial Disclosures ("TCFD") Report specific to the Company. In addition, the SRC considered a proposal from the Manager for the Manager to apply the Sustainability Impact label within the FCA's Sustainability Disclosure Requirements. Details of this are disclosed in the SRC section on page 63, with the labelling of the Company announced on 27 November 2024. This can be found on the Company's website: www.impaxenvironmentalmarkets.co.uk. **Strategy** - The strategy of the Company is reviewed by the Board on a continuing basis at every Board meeting. In addition, once a year the Board undertakes a strategy day, inviting representatives from key service providers, as well as its PR company, to look ahead and present new ideas and improvements that the Board can consider. Whilst feedback from shareholders is sought on a continual basis, the Board requests the Company's broker and Manager to provide detailed analysis and feedback from shareholders in order that it can be addressed during this meeting. The Board's strategy and performance is validated by shareholders through a triennial vote on the continuation of the Company and the Board encourages shareholders to take part in this vote. **2024 Highlights:** During the year, the Board discussed with the Manager current headwinds to performance as well as the continuing discount to NAV. Additionally the Board reviewed the Manager's investment process to ensure it remained robust and appropriate. Different marketing and sales strategies were considered with a view to supporting the narrowing of the discount to NAV. **Regular Communication** - Meetings with financial advisers and our shareholders help us to understand their needs and concerns. As described under Shareholder Relations and Annual General Meeting on page 58, the Board welcomes direct feedback from shareholders throughout the year. Additionally, the Board maintains regular contact with shareholders 50 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report through the Manager and broker’s programme of ## Investment manager shareholder and financial adviser meetings, who report back to the Board on shareholder sentiment, questions, Partnership - The Board has developed a strong or concerns for the Board’s consideration. relationship with the Manager, aligned in the mission to seek to deliver consistent outcomes for our clients and The Board believes that shareholders and financial superior financial returns over the long -term. advisers can make informed decisions only if they have access to relevant information on a timely basis. To 2024 Highlights: The Board has worked closely with provide the transparency that the Board seeks with the Manager to enhance messaging and transparency. shareholders, a variety of communication channels and Most importantly, the Manager has applied the FCA’s methods of communication are used. Sustainability Impact label to the Company. More details of this are disclosed in the Sustainability The Company’s website – Reporting Committee section on page 63, which work www.impaxenvironmentalmarkets.co.u k is considered thereon led to the Board agreeing with the Manager’s an essential communication channel and information conclusion that the strategy around IEM meets the hub for shareholders. As such, it includes full details of qualifying criteria of this label. The Company remains the investment objective, supporting philosophy and focused on seeking sustainable, above market investment performance along with news, opinions, investment returns from companies providing disclosures, results and key information documents, as innovative solutions to environmental challenges or well as information about the Board, its Committees improving resource eciency. The Company seeks to and other governance matters. capture, measure, and achieve, the positive The annual and interim reports and accounts are environmental impact provided by its portfolio published on the Company’s website and are available companies, rather than limiting investment in hard copy on request. The date of the Annual General opportunities to those companies delivering on specific Meeting is published in advance (online and within the environmental targets. There were no changes to the annual report). Shareholders are encouraged to raise investment process in the application of this label and questions either at or in advance of this meeting. the Board continues to believe that the investment process will deliver superior risk-adjusted returns over Factsheets and market commentary, which provided the long term. The label simply serves to illustrate the performance information, inclusive of geographic and nature of the investment. sector exposure and the top ten holdings, are published monthly. The full portfolio holdings are made available Impact on the wider community and environment - quarterly in arrears; both are available on the The Board and the Manager support the transition to Company’s website. alow-carbon economy, primarily through investment decisions, company engagement and collaboration with The Company continues to expand and enhance the stakeholders. content of its engagement and advocacy results, and on the environmental impact of its investment strategy. 2024 Highlights: The Company’s Environmental Impact Reporting has continued to be developed in partnership 2024 Highlights: The Board held the AGM in person with the Manager. This is set out on pages 36 to 37 and with an option to listen in online. Shareholders were includes the Company’s Climate-related reporting and welcome to attend, to meet the Board and the mapping to UN Sustainable Development Goals . investment manager and to ask any questions. In addition to continuing to publish a monthly Under the FCA’s Consumer Duty rules, the Manager performance commentary which includes a market must complete an annual assessment of value review, portfolio review and outlook, the Manager assessment for the Company. This assessment looks at released IEM specific TCFD and Sustainability reports. the value the Company provides to investors in the year These can be found on the IEM website at and must be shared annually with the distributors of the www.impaxenvironmentalmarkets.co.uk . Company. Board Succession Planning - The composition of the ## Board and succession planning is led by the Nomination Investee companies Committee with changes managed in order to provide Long-term Investment, Collaboration, Engagement- regular refreshment, good diversity and a high level of The Manager is a long-term investor and develops relevant skills as set out in its report on page 63. strong relationships with many of our investee 2024 Highlights: Mrs Elizabeth Surkovic was appointed companies, including access to key individuals. This to the Board with eect from 1 January 2024, and on engagement is collaborative, with investee companies 28January 2025 became the Chair of the Sustainability having access to the sustainability expertise of the Reporting Committee replacing Mr Glen Suarez. Manager’s Global Head of Sustainability & Stewardship. The Manager maintains regular dialogue with both investee and potential investee companies and reports back on these conversations to the Board. The Board and the Manager believe engagement with the investee companies is positive, beneficial and welcomed, and that consistent exercise of voting rights is a key activity in the dialogue with companies invested. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 51 Strategic report Engaging with IEM Stakeholders continued Sustainability & Stewardship Considerations - The Reputation Management - The Board has high Board has oversight of the Manager’s non-financial risk standards and looks to maintain its reputation for management at its quarterly Board meetings, along delivering to those standards for its shareholders. with meetings with the Global Head of Sustainability & Monitoring and reviews have an integral role in Stewardship twice a year. The Manager engages with providing oversight and informing the Board’s decision companies to minimise risks, protect shareholder value, making. Reviews include updates in relation to the promote greater transparency and encourage provider and their operations, their policies and control companies to become more resilient over time. The environment, new regulations from the auditor and Manager takes a supportive rather than activist company secretary, changes to market sentiment and approach and, as a leader in the field of environmental practice from the broker and changes to the portfolio impact, often works in collaboration with other asset and broader market performance from the Manager. managers or organisations. Communications - Service providers are also 2024 Highlights: During 2024, the Manager continued responsible for monitoring the markets in which they to have regular dialogue with management of investee operate and communicating updates to the Board; for and potential investee companies in person, virtually or instance, the company secretary will monitor regulatory a hybrid of both. The engagement, proxy voting and changes and make the Board aware of these. Regular stewardship activities undertaken, including examples meetings with our service providers, in particular the of outcomes of the Manager’s engagement with Manager, are essential if we are to monitor and seek investee companies, are published on page 51. feedback from them. Impact on the wider community and environment- In ## Service providers line with the Board’s intention to report under the TCFD framework, the Board encouraged its key service Productive and Collaborative Working Relationships - providers to consider and evaluate their environmental The Board, either directly or through the Manager, impact, and has reported the Manager’s CO 2 emissions seeks to develop deep relationships and regularly for the third time this year. engages with our service providers, including ensuring that they reflect our values around social inclusion, 2024 Highlights: The Board undertook an in depth sustainability, and the environment. The performance of review of marketing following which there were some our key service providers is regularly monitored and set changes to the service providers used and established a against KPIs. The Company wants to ensure, and plan to engage with both major shareholders and assesses on a regular basis, that appointments remain shareholders who hold shares on platforms. in the best interests of our stakeholders. 52 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Strategic report ## Other Information ## Modern slavery disclosure Anti-bribery and corruption The Company aims to act to the highest standards and is It is the Company’s policy to conduct all of its business in committed to integrating responsible business practices an honest and ethical manner. The Company takes a throughout its operations. The prevention of modern zero-tolerance approach to bribery and corruption and is slavery is an important part of corporate good committed to acting professionally, fairly and with governance. integrity in all its business dealings and relationships wherever it operates. The Company’s policy and the As an investment trust the Company does not oer goods procedures that implement it are designed to support that or services to consumers and deals predominantly with commitment. professional advisers and service providers in the financial services industry. As such the Board considers that the ## Company is out of scope of the Modern Slavery Act 2015. Prevention of the facilitation of tax A statement by the Manager under the Act has been ## evasion published on the website at www.impaxenvironmentalmarkets.co.uk The Board has a zero-tolerance approach to the criminal facilitation of tax evasion. ## Environmental matters ## Employees The Company has no employees, physical assets, property or operations of its own, does not provide The Company has no employees. As at 31 December 2024, goods or services and does not have its own customers. the Company had five Directors, of whom two are male and It follows that the Company has little to no direct three female. environmental impact. Consequently, the Company consumed less than 40,000 kWh of energy during the ## Outlook year in respect of which the Directors’ Report is prepared and therefore is exempt from the disclosures The outlook for the Company is discussed in the required under the Streamlined Energy and Carbon Chairman’s Statement on pages 4 to 9. Reporting criteria. As an investment trust the fundamental environmental ## Strategic R eport impact the Company makes is indirectly through the investments in its portfolio. Further details can be found The Strategic Report set out on pages 1 to 53 of this above under the heading IEM Environmental Impact Annual Report was approved by the Board of Directors on Report . 2 April 2025. For and on behalf of the Board ## Social, community and human ## rights issues The Manager screens the Company’s investable universe Glen Suarez as part of the Environmental Social and Governance Chairman analysis for any breaches of the principles of the 2 April 2025 UNGlobal Compact, including human rights, labour rights, environmental breaches and corruption. Any non-compliant companies are excluded from investment. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 53 Governance ## Governance In this section Board of Directors 55 Directors’ Report 57 Corporate Governance 62 Directors’ Remuneration Policy 66 Directors’ Remuneration Implementation Report 67 Report of the Audit Committee 70 Statement of Directors’ Responsibilities 72 Independent Auditor’s Report 73 54 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance ## Board of Directors Glen Suarez Aine Kelly Stephanie Eastment Elizabeth Surkovic Chairman of the Board, Senior Independent Director Chairman of the Audit Non-executive Director Management Engagement and Chairman of the Committee Committee and Sustainability Nomination Committee Reporting Committee | Appointed 1 October 2022 | Appointed 15 November 2016 | Appointed 1 July 2019 | Appointed 1 January 2024 | | --- | --- | --- | --- | | Appointed Chairman on 17 May | Appointed as Senior | Appointed as Audit Chair on | | | 2023 | Independent Director on | 21May 2020 | | 21May2020 Mr Suarez is currently chairman | of Knight Vinke Asset | Miss Kelly is an Independent | Mrs Eastment is a Fellow of the | Mrs Surkovic has over 30 years | | --- | --- | --- | --- | | Management, having previously | Impact Investing Consultant. | Institute of Chartered | experience in environmental | | held the roles of CIO and | Miss Kelly worked as Head of | Accountants in England and | policy making and regulation in | | Deputy CEO. He is a non- | Financial Sector and Investor | Wales and a Fellow of the | the private and public sectors. | | executive director of BlackRock | Engagement at Big Society | Chartered Governance Institute | Her background and | | Throgmorton Trust plc and a | Capital from 2013-2016, | with over 30 years’ experience | experience provides her with a | | senior adviser to FMAP Limited, | followed by four years as | of the financial services | deep knowledge of many of | | a consultancy founded by Lord | aconsultant on The Impact | industry. She qualified with | the areas supporting | | Maude which advises | Management Project. She | KPMG and worked at Wardley | environmental technology | | governments on the | spent the previous five years at | and UBS in finance and | investments. During her career, | | implementation of public sector | Barclays Wealth and prior to | corporate governance before | she has been at the forefront | | reform. | that she worked 16 years in | moving to Invesco, where she | of developing and delivering | | | investment banking at | worked for 22 years ending as | environmental policy in Europe | Mr Suarez was chairman of The Kleinwort Benson, JP Morgan Head of Accounts and and the UK as well as working Edinburgh Investment Trust plc and Citigroup. Miss Kelly has Company Secretariat for globally with groups such as from 2017 to 2022, having awide experience of Specialist Funds, which OECD. joined the board in 2013. He was | | introducing new investment | included investment trusts. She | | | --- | --- | --- | --- | | co-chair of the Capital Markets | | | Mrs Surkovic was most recently | | | opportunities to investors and | retired from Invesco in 2018 to | | | Advisory Committee, an | | | at The Royal Society, where | | | has covered UK, European and | pursue a non-executive | | | independent body advising on | | | she was head of policy, prior to | | | Asian equity markets. Miss | director career using her wide | | | accounting issues and standards | | | that she was a senior civil | | | Kelly has worked in London, | knowledge and experience. She | | | between 2014 and 2020. Before | | | servant for HM Government | | | New York and Zurich and is | is also a member of the AIC’s | | | this, he was a Partner in Soditic | | | working in several | | | currently based in Ireland. | Technical Committee. | | | Limited and head of European | | | Departments. In prior years, | | energy, infrastructure and | Miss Kelly is a member of the | Mrs Stephanie Eastment is | Mrs Surkovic was a Director of | | utilities investment banking | External Board of Advisors of | anon-executive director and | the Chemical Industries | | business at Morgan Stanley . | Cork University Business | audit committee chair of Herald | Association. She works with | | | School. | Investment Trust plc and | the University of Cambridge’s | He is a Fellow of the Institute of Alternative Income REIT plc, Centre for Science and Policy Chartered Accountants in Miss Kelly’s background and anon-executive director and and is amember of its England and Wales and a expertise brings a dierent senior independent director of admission board. member of the Royal Society of approach to the boardroom Murray Income Trust plc, and a Arts. with a focus on both the Mrs Surkovic holds a B.Sc. in non-executive director of RBS financial integrity of investment Biochemistry from Birmingham Mr Suarez brings significant Collective Investment Funds decisions and their long-term University. investment trust experience to Limited. impact. the Board as well as a deep Mrs Surkovic’s background and Mrs Eastment’s financial, knowledge of markets and of expertise enable her to provide technical and oversight the investment process. guidance to the Board on ESG experience and knowledge and environmental technology strengthens the Board’s matters in particular. financial and risk oversight not only as a director, but as the audit committee chairman. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 55 Governance Board of Directors continued ## Investment Managers Guy Walker Jon Forster Fotis Chatzimichalakis Bruce Jenkyn-Jones Chairman of the Remuneration Senior Portfolio Manager, Portfolio Manager Co-Chief Investment Ocer, Committee Managing Director Listed Equities, Executive Director | Appointed 17 May 2023 | Jon co-manages Impax Asset | Fotis is a member of Impax | Bruce serves as Impax’s | | --- | --- | --- | --- | | Appointed as Remuneration | Management’s Specialists and | Asset Management’s portfolio | Co-Chief Investment Ocer, | | Committee Chair on | Climate strategies. Specialising | management team, where he | Listed Investments. Bruce is | | 9November 2023. | in new energy, water, and waste | researches stocks globally, | one of Impax Asset | | | support services, he researches | focusing on the information | Management’s longest-serving | MrWalker is currently senior stocks globally with a focus on technology and industrials employees. He developed the independent director at sectors. the industrials and utilities firm’s listed equities business JPMorgan European Growth & sectors. Fotis originally joined Impax as and the division’s investment Income plc, having joined | | | an intern in 2015, initially | thesis. He is responsible for | | --- | --- | --- | --- | | them in 2021. He was | He has been part of the Impax | | | | | | working in the listed equities | overseeing and enhancing all | | previously managing director | team for over twenty years, | | | | | | team. He has held his current | aspects of the listed | | UK & European Equities at | having first joined in 2000 from | | | | | | role since 2021. Prior to joining | investments business, including | | UBS Asset Management and | Alchemy Partners where he | | | | | | the firm, he had an internship | monitoring performance, | | before that he held various | had spent two years providing | | | | | | at Barchester Green | ensuring regulatory | | roles at Schroder Investment | consultancy work to their | | | | | | Investment. | compliance, and spearheading | | Management, including as | portfolio management team. | | | | | | A CFA Charterholder, Fotis also | product design. Bruce is a co- | | non-executive director of | He began his career in 1994 at | | | | | | holds the Investment | Portfolio Manager of the | | Schroder Pension Trustee | HSBC Investment Bank | | | | | | Management Certificate. He | Specialists and Climate strateg | | Limited, global head of ESG | working on their acquisitions | | | | | | has master’s degree in Civil | ies. | | investment and head of equity | team. | | | Engineering from the National | research. He helped to set up | | | Before joining Impax in 1999, | | --- | --- | --- | --- | | | Jon has a bachelor’s degree in | Technical University of Athens | | | the Investor Forum in 2014 | | | Bruce worked as a utilities | | | German and Management | and a master’s degree in | | | and still acts as a senior | | | analyst at Bankers Trust and as | | | Studies from Leeds University. | Sustainable Energy Systems | | | adviser to it. | | | an environmental consultant for | from the University of Environmental Resources Mr Walker holds an MBA from Edinburgh. Management. the London Business School, an MA in Finance and An Oxford graduate with a Investment and a BSc in bachelor’s degree in Chemistry, Engineering Science from the Bruce also holds a master’s in University of Exeter. Environmental Engineering Technology, and an MBA from Mr Walker’s experience and IESE Business School in abilities enables him to Barcelona. challenge both the Board and the Manager on the rigour of their processes and thinking, especially on long -term matters. All Directors are members of the Audit, Nomination, Remuneration, Management Engagement and Sustainability Reporting Committees. All Directors are considered independent by the Board. 56 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance X # Directors' Report The Directors present their report and accounts for the year ended 31 December 2024. ## Strategic report The Directors' Report should be read in conjunction with the Strategic Report on pages 1 to 53. ## Corporate governance The Corporate Governance Statement on pages 62 to 65 forms part of this report. ## Legal and taxation status The Company is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company conducts its affairs in order to meet the requirements for approval as an investment trust under section 1158 of the Corporation Tax Act 2010. The Company has received initial approval as an investment trust and the Company must meet eligibility conditions and ongoing requirements in order for investment trust status to be maintained. In the opinion of the Directors, the Company has met the conditions and requirements for approval as an investment trust for the year ended 31 December 2024. ## Market information The Company's Ordinary Shares are listed on the London Stock Exchange ("LSE"). The NAV per ordinary share is calculated in sterling for each business day that the LSE is open for business. The daily NAV per ordinary share is published through a regulatory information service. ## Retail distribution of investment company shares via financial advisers and other third party promoters As a result of the Financial Conduct Authority ("FCA") rules determining which investment products can be promoted to retail investors, certain investment products are classified as "non-mainstream pooled investment products" and face restrictions on their promotion to retail investors. The Company has concluded that the distribution of its shares, being shares in an investment trust, is not restricted as a result of the FCA rules described above. The Company currently conducts its affairs so that the shares issued by the Company can be recommended by financial advisers to retail investors and intends to continue to do so for the foreseeable future. ## 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 2024. These disclosures are available on the AIFM's website or are available on request from the AIFM. ## Manager Impax Asset Management (AIFM) Limited ("Impax") has been appointed as the Company's Investment Manager (the "Manager"). The Manager is appointed under a contract subject to twelve months' notice. The Manager is entitled to remuneration each month at a rate equivalent to one-twelfth of 0.9% on the Company's net assets up to and including the first £475 million; 0.65% on net assets between £475 million and £1.4 billion; and 0.45% on net assets in excess of £1.4 billion. The third tier level of 0.45% on net assets in excess of £1.4 billion was introduced on 1 January 2024. The Board confirms that it has reviewed whether to retain Impax as the Manager of the Company. It has been concluded that, given the Manager's depth of knowledge in the sector and the long-term growth and strong performance record of the Company, it is in the best interests of shareholders as a whole to continue with Impax's engagement. ## Consumer Duty The FCA's Consumer Duty rules comprise a fundamental component of the FCA's consumer protection strategy and aim to improve outcomes for retail customers across the entire financial services industry through the assessment of various outcomes, one of which is an assessment of whether a product provides value. Under the Consumer Duty, the Manager is the product manufacturer of the Company. The Manager completed a fair value assessment during the year which is an assessment of the value it provides to investors. The Manager concluded that the Company should be given its top rating of "Highest Fair Value Achieved". Impax Environmental Markets plc | Annual Report and Accounts 2024 57 X Governance Directors' Report continued ## 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 on pages 100 to 101). 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 method | Commitment method | | --- | --- | --- | | Maximum leverage limit (set by the AIFM) | 130% | 130% | | Actual leverage at 31 December 2024 | 107% | 108% | ## Borrowings Details of the Company's borrowings can be found in note 11 to the financial statements. ## Shareholder relations and annual general meeting The Board encourages all shareholders to attend the AGM and generally seeks to provide twenty one clear days' notice of that meeting. The Notice of the AGM sets out the business of the AGM and any item not of an entirely routine nature is explained in the Directors' Report. Separate resolutions are proposed for each substantive issue. The Manager has a programme of meetings with shareholders and reports back to the Board on its findings. The Board also welcomes direct feedback from shareholders. The Chairman is available to meet shareholders and may be contacted by email at chairman@impaxenvironmentalmarkets.co.uk. This year's AGM will be held at 3pm on 20 May 2025 and the Chairman's Statement on page 4 sets out the arrangements for the meeting. Shareholders are encouraged to attend the AGM and will have the opportunity to hear a presentation from the Manager, and ask questions of the Board and the Manager. The Manager's presentation will be available to view on the Company's website after the AGM. All shareholders are advised to submit their proxy forms in advance of the AGM. Details of how shareholders can cast their votes can be found in the separate Circular and Notice of AGM which will be sent to all shareholders entitled to receive such notice along with Annual Report. The notice of the AGM will also be made available on the Company's website at www.impaxenvironmentalmarkets.co.uk. Shareholders' questions for either the Board or the Managers should be submitted to clientservices@impaxenvironmentalmarkets.co.uk by midday on 16 May 2025. ## Special business of the AGM ### Continuation vote The Articles of Association require that an ordinary resolution be proposed at every third AGM of the Company that the Company should continue as an investment trust for a further three-year period. Accordingly, resolution 12 proposes the continuation of the Company. In the event that such a resolution is not passed, the Directors are required to draw up proposals for shareholders' approval for the reorganisation, winding-up or reconstruction of the Company, which would require a special resolution of shareholders. For the reasons set out in the Chairman's Statement, your Board strongly recommends that shareholders vote in favour of the resolution. The Directors intend to vote their own shareholdings in favour. ### Authority to issue and purchase own shares The Board remains fully committed to using its powers, including those to issue and buyback shares, in a proactive manner with the aim of seeing the shares, in normal market conditions, trading close to NAV on a consistent and long-term basis. The Board intends to continue to exercise its powers if approved by shareholders as part of its premium/discount policy. The authority to allot shares granted at the last AGM held on 20 May 2024 will expire at the conclusion of the forthcoming AGM. The Board recommends that the Company be granted a new authority to allot up to a maximum of 22,066,013 ordinary shares (representing approximately 10% of the shares in issue at 31 March 2025, the latest practicable date before publication of this report) and to dis-apply pre-emption rights when allotting those ordinary shares and/or selling shares from treasury. Ordinary resolution 11 and special resolution 13 will be put to shareholders at the AGM and can be found in the separate Circular and Notice of AGM. Shares will be issued under this authority only at the Board's discretion and when it is deemed to be in the best interests of shareholders as a whole to do so. The advantages are to lower the Company's ongoing charges as expenses are diluted and, in the short term, to address volatility in the share price. No shares were issued during the year. The maximum number of ordinary shares which can be admitted to trading on the London Stock Exchange without the publication of a prospectus is 20% of the ordinary shares on a rolling previous 12-month basis at the time of admission of the shares. The authority for the Company to purchase 40,371,073 of its own shares was granted at the AGM held on 20 May 2024. This authority had been substantially used by the start of 2025. With the Board continuing to utilise buy backs to reduce the volatility and the absolute level of discount, a new authority was sought from shareholders on 18 February 2025 for 14.99% of the shares in issue 58 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance (excluding treasury shares). Consequent to the passing of Special resolution 15 seeks such approval, which would be that resolution a new authority for 34,558,573 shares eective until the Company’s next AGM, when it is intended resulted which expires at the conclusion of the that a similar resolution will be proposed. forthcoming AGM. The Company will ensure that it oers the facility for During the year ended 31 December 2024, 41,253,520 shareholders to vote by electronic means, and that this ordinary shares , representing 14.7% of issued share capital facility is accessible to all shareholders, if it is to call general at the start of the year, were repurchased into treasury. meetings on 14 days’ notice. Short notice of this kind will be The Company has also bought back 19,201,391 shares used by the Board only under appropriate circumstances. subsequent to the year end (to the date of this report). The Directors therefore recommend that anew authority ## Capital structure and voting rights to purchase up to 33,076,953 ordinary shares (subject to the condition that not more than 14.99% of the ordinary At the year end, the Company’s issued share capital shares in issue at the date of the AGM are purchased) be comprised 305,623,539 ordinary shares, with 65,762,020 granted and special resolution 14 to that eect will be put ordinary shares held in treasury. to the AGM. Any ordinary shares purchased will either be Since the year end, the Company bought back into cancelled or, if the Directors so determine, held in treasury. treasury 19,201,391 ordinary shares. At 31 March 2025, the Shares are purchased at the discretion of the Board and latest practicable date before publication of this report, when it is deemed to be in the best interests of there were 305,623,539 ordinary shares in issue with shareholders. Shares will be purchased for cancellation or 84,963,411 ordinary shares held in treasury. for treasury only when the shares are trading at a discount to the Net Asset Value. Each ordinary share held entitles the holder to one vote. All shares carry equal voting rights and there are no The Companies Act 2006 allows companies to hold shares restrictions on those voting rights. acquired by way of market purchases as treasury shares, rather than having to cancel them. This gives the Voting deadlines are stated in the separate Circular and Company the ability to sell ordinary shares quickly and Notice of AGM and Form of Proxy and are in accordance cost eectively, thereby improving liquidity and providing with the Companies Act 2006. the Company with additional flexibility in the management There are no restrictions on the transfer of shares, nor are of its capital base. At the year end, 65,762,020 shares there any limitations or special rights associated with the were held in treasury and at the date of this report ordinary shares. 84,963,411shares were held in treasury. Notice of general meetings ## Notifiable interest Special resolution 15 in the notice to the AGM is required to As at 31 December 2024 and 31 March 2025, the Directors reflect the requirements of the Shareholder Rights have been formally notified of the following shareholdings Directive. The Company is currently able to call General comprising 3% or more of the issued share capital of the Meetings, other than an AGM, on 14 clear days’ notice and Company. would like to preserve this ability. In order to be able to do so, shareholders must have given their prior approval. Holding of Holding of ordinary  Holding - ordinary  Holding - shares - as at as at shares - as at as at  December  December  March  March Company     | | 1 | 2 | | --- | --- | --- | | Rathbones Investment Management Ltd  .04 |  .48 | | | | 1 | 2 | | Saba Capital Management, L.P.   |   | | | | 1 | 2 | | Joseph Rowntree Charitable Trust   |   | | | | 1 | 2 | | Brewin Dolphin   |   | | | 1 The percentage holding is based on the issued share capital (excluding treasury shares) as at 31 December 2024. | | | | 2 The percentage holding is based on the issued share capital (excluding treasury shares) as at 31 March 2025. | | | All of the above shares were notified as being held directly by the above companies, except for Saba Capital Management L.P., which held all its shares indirectly. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 59 X Governance Directors' Report continued ## Political donations There were no political donations made during the financial year to 31 December 2024 (2023: nil). ## Disclosure required by listing rule UKLR 6.6.1 The above rule requires listed companies to report certain information in a single identifiable section of their annual financial reports. The Company confirms that all such reporting applied only to non-applicable events for the year ended 31 December 2024. ## Financial instruments Further information regarding the Company's financial instruments and related policies and a consideration of its liquidity and other financing risks are in notes 2 and 16 to the financial statements. ## Future trends Details of the main trends and factors likely to affect the future development, performance and position of the Company's business can be found in the Manager's Report section of this Strategic Report on pages 1 to 53. Further details as to the risks affecting the Company are set out in the 'Principal Risks and Uncertainties' on pages 44 to 49. ## Directors' indemnities Subject to the provisions of the Companies Act 2006 and certain provisions contained in the deeds of indemnity issued by the Company, the Company has indemnified each of the Directors against all liabilities which each director may suffer or incur arising out of or in connection with any claim made or proceedings taken against them, or any application made under sections 661(3), 661(4) or 1157 of the Companies Act 2006 by them, on the grounds of their negligence, default, breach of duty or breach of trust, in relation to the Company or any Associated Company. The indemnities would provide financial support from the Company after the level of cover provided by the Company's Directors' and Officers' insurance policy has been fully utilised. ## Going concern The Directors have adopted the going concern basis in preparing the accounts. The following is a summary of the Directors' assessment of the going concern status of the Company. The Directors 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 document. In reaching this conclusion, the Directors have considered the liquidity of the Company's portfolio of investments as well as its cash position, income and expense flows. As at 31 December 2024, the Company held £13.4 million (2023: £16.8 million) in cash and £1,099.3 million (2023: £1,295.8 million) in quoted investments. The Board has considered the Company's debt and related covenants. The main liability of the Company is its borrowings of £83.1 million (2023: £87.1 million) which is covered 12 times (2023: 14 times) by the net assets, and is well in excess of the level of cover required by the borrowing covenants (see note 11 to the financial statements). In advance of the RCF expiry in September 2025, the Company intends to renegotiate an extension of the facility, if required. However, should terms not be forthcoming, any outstanding borrowing would be repaid through a combination of available cash and the proceeds of equity sales. The total ongoing expenses (excluding taxation and finance costs) for the year ended 31 December 2024 were £9.8 million (2023: £10.4 million), which represented 0.84% (2023: 0.83%) of average net assets during the year. The Board considered the Company's estimated income in both normal and worst case market conditions and concluded that the Company had sufficient liquidity to meet its ongoing expenses. The Board also considered the liquidity of the Company's investments and it is estimated that approximately 94% (2023: 92%) by value of the investments held at the year end, none of which are unquoted, could be realised in one month under normal market conditions. At the date of approval of this document, based on the aggregate of investments and cash held, the Company has substantial operating expenses cover. The Directors have considered the impact of the ongoing macroeconomic political and geopolitical environment including the uncertainty surrounding the conflicts in the Ukraine and the Middle East, inflation and interest rates, the increase in political tension between the US and China and any likely effects upon the Company's portfolio of investments. However, as explained above, the Company has more than sufficient liquidity available to meet its expected future obligations. An explanation of the market, liquidity and credit risks and how they are managed is contained in note 15 to the financial statements. The continuation of the Company is subject to the approval of shareholders every three years. The next continuation resolution will be held at the forthcoming AGM on 20 May 2025 and, as explained in the Viability Statement, the Board has considered the long-term prospects of the Company and has no reason to believe that the continuation resolution will fail. 60 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance ## Auditor information Each of the Directors at the date of the approval of this report confirms that: (i) so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and (ii) the Director has taken all steps that he or she ought to have taken as director to make himself or herself aware of any relevant information and to establish that the Company’s auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006. ## Appointment of auditor In accordance with Section 489 of the Companies Act2006, a resolution to re-appoint BDO LLP as the Company’s auditor will be put forward at the forthcoming AGM on 20 May 2025. By order of the Board Helen J Coyne For and on behalf of Apex Listed Companies Services (UK) Limited Company Secretary 2 April 2025 Impax Environmental Markets plc | Annual Report and Accounts 2024 | 61 Governance ## Corporate Governance All of the Directors are independent of the Manager and ## Introduction are able to allocate sucient time to the Company to This Corporate Governance statement forms part of the discharge their responsibilities eectively. Directors’ Report. The Directors have a broad range of relevant experience The UK Listing Rules and the Disclosure Guidance and to meet the Company’s requirements and their Transparency Rules of the UK Listing Authority require biographies are given on pages 55 to 56. listed companies to disclose how they have applied the In line with the AIC Code, the Board has decided that principles and complied with the provisions of The UK each Director should be subject to annual re-election by Corporate Governance Code 2018 (the “UK Code”), as shareholders. As such, the Board recommends all the issued by the Financial Reporting Council (“FRC”). The Directors for re-election for the reasons highlighted above UK Code can be viewed on the FRC’s website. and in the performance appraisal section of this report. The Board has considered the principles and provisions of The Directors have appointment letters which do not the AIC Code of Corporate Governance 2019 (the “AIC provide for any specific term. Copies of the Directors’ Code”) which addresses those set out in the UK Code, as appointment letters are available on request from the well as setting out additional provisions on issues that are Company Secretary. Upon joining the Board, any new of specific relevance to the Company, as an investment trust. Director will receive an induction and relevant training is available to Directors on an ongoing basis. The Board considers that reporting against the AIC Code, which has been endorsed by the Financial Reporting A policy of insurance against Directors’ and Ocers’ Council, provides more relevant information to liabilities is maintained by the Company. shareholders. A procedure has been adopted for Directors, in the The AIC Code is available on the AIC website (www. furtherance of their duties, to take independent theaic.co.uk). It includes an explanation of how the AIC professional advice at the expense of the Company. Code adapts the Principles and Provisions set out in the UK Code to make them relevant for investment ## Board committees companies. The Board decides upon the membership and The Company has complied with the AIC Code and the chairmanship of its committees. As the Board is small relevant provisions of the UK Code, except as set out and comprises of only non-executive Directors, all below. Directors sit on each of the Board Committees. The UK Code includes provisions relating to: EachCommittee has adopted formal terms of reference, which are reviewed at least annually, and copies of ### • the role of the chief executive (provision 14); these are available on the Company’s website or on ### • the need for an internal audit function (provision 25); request from the Company Secretary. and Audit committee ### • executive Directors’ remuneration (provision 33). A report on pages 70 to 71 provides details of the role The Board considers these provisions are not relevant to and composition of the Audit Committee together with the Company, being an externally managed investment adescription of the work of the Audit Committee in company with no employees. The Company has therefore discharging its responsibilities. not reported further in respect of these provisions, other than the need for an internal audit function specific to the Remuneration committee Company, which has been addressed on page 71. All of the Directors are members and Guy Walker is the Chairman. The Remuneration Committee has been established to meet formally on at least an annual basis ## The Board to review the remuneration policy of the Company and Composition consider the fees of the non-executive Directors. No changes were proposed to the Company’s remuneration At the date of this report the Board consists of five policy. Following its review of fees, the Committee non-executive Directors. Glen Suarez is the Chairman, recommended an increase in the Directors’ fees in order Aine Kelly is the Senior Independent Director and the to ensure market rate remuneration. Details of the review other Directors are: Stephanie Eastment, Liz Surkovic and conducted of the fees of non-executive Directors is given Guy Walker. on page 66. All the above Directors served throughout the year. The Directors’ Remuneration Implementation Report is The Board believes that during the year ended included on pages 67 to 69. 31December 2024 its composition was appropriate for an investment company of the Company’s nature and size. 62 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance Management Engagement Committee (“MEC”) Sustainability reporting committee All of the Directors are members and Glen Suarez is the All of the Directors are members and Glen Suarez was Chairman of the MEC. The MEC has been established to chairman throughout the year. Subsequent to the year conduct a formal annual review of the Manager, assessing end, the members recommended the appointment of investment and other performance, the level and method LizSurkovic as Chair which the Board subsequently of the Manager’s remuneration and the continued approved on 28 January 2025. appointment of the Manager as Manager to the Company. The Sustainability Reporting Committee receives The MEC met and reviewed the Manager’s performance reports from the Manager regarding its sustainability and remuneration structure. In conclusion the Committee’s activities as they relate to the Company’s portfolio, the recommendation to the Board was that it was in the best outcomes of such activities and its sustainability interests of shareholders as a whole to continue with the metrics. The Committee reviews and discusses the Manager’s engagement and that the current management relevance of such activities and metrics in meeting the fee structure remained appropriate. (See page 57 for Company’s sustainability reporting obligations and further details). stakeholders’ expectations, makes recommendations to the Board, and oversees the Company’s regulatory and Nomination committee voluntary sustainability reporting. All of the Directors are members and Aine Kelly is the During the year, the Committee considered the Chairman. The Nomination Committee reviews the disclosures made in the Half-yearly financial report and structure, size and composition of the Board and it proposed significant changes to the disclosures to be identifies and puts forward candidates for the oce of made in the annual report. director of the Company. The Nomination Committee considers job specifications and assesses whether Also during the year, the Committee considered a candidates have the necessary skills and time available to proposal from the Manager for the Manager to apply the devote to the job. Sustainability Impact label within the FCA’s Sustainability Disclosure Requirements. The label reflects the fact that The Board has formulated a succession plan which is the Manager applies an investment process which derives, reviewed and maintained through the Nomination as a function of its workings, a range of clear impacts. Committee to promote regular refreshment and diversity, Having reviewed documentation from the Manager to whilst maintaining stability and continuity of skills and ensure that the strategy of the Company met the knowledge on the Board. qualifying criteria of the label, the proposal was recommended by the Committee and subsequently approved by the Board. Meeting attendance The following table sets out the scheduled meetings Directors attended in the year to 31 December 2024. In addition to the meetings shown below, a Board strategy meeting was held and there were also a significant number of Board and committee ad-hoc meetings to deal with, amongst other things, administrative matters and the formal approval of documents. Management Sustainability Audit Remuneration engagement Nomination reporting Board committee committee committee committee committee Number of meetings       Glen Suarez       Stephanie Eastment       Aine Kelly       Guy Walker       Elizabeth Surkovic       Impax Environmental Markets plc | Annual Report and Accounts 2024 | 63 Governance Corporate Governance continued ## Board diversity The Board’s policy on diversity is based on its belief in the benefits of having a diverse range of experience, skills, length of service and backgrounds, including but not limited to gender diversity and ethnicity. The policy is always to appoint the best person for the job and there will be no discrimination on the grounds of gender, race, ethnicity, religion, sexual orientation, age or physical ability. The overriding aim of the policy is to ensure that the Board is composed of the best combination of people for ensuring eective oversight of the Company and constructive support and challenge to the Manager. Directors have a range of business, financial and asset management skills as well as experience relevant to the direction and control of the Company. The Board appraises its collective set of cognitive and personal strengths, independence and diversity on an annual basis, and especially during the recruitment process, so as to ensure it is aligned with the Company’s strategic priorities. The performance appraisal process is described below. The Board believes its composition is appropriate for the Company’s circumstances. In line with the Board’s succession planning and tenure policy, or should strategic priorities change, the Board will review and, if required, adjust its composition. ## Implementation of the Board’s Diversity Policy The targets set out in the UK Listing Rules 6.6.1(9)(a) require that at least 40% of individuals on the board are women; at least one individual on the board is from a minority ethnic background; and at least one of the senior board positions of Chairman, SID, CEO and CFO is held by a woman. At the year end the Board comprised five non-executive Directors. All three of the targets were met: there were three women on the Board (60%); one director is ethnically diverse; and the SID is a woman. Even though the targets have been met, the Board had followed AIC guidance such that the tables below record ‘not applicable’ under the senior positions target. This guidance is relevant as the Company is externally managed and does not have any executive sta – specifically it does not have either a CEO or CFO. It is also noted that the Board considers that the Chairman of the Audit Committee of an investment company is a senior position, and this is held by a woman. Thus, the Board considers that the Company has two women in senior board positions. Board as at 31 December 2024 The following information has been provided by each director. As the Company has no employees, no information is included for executive management. The Board has resolved that the Company’s year end date be the most appropriate date for disclosure purposes. Number of senior Number of positions Board Percentage of on the members the Board Board Men   na Women   na Number of senior Number of positions Board Percentage of on the members the Board Board White British or other White (including minority-white groups   na Minority ethnic   na 64 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance The Board believes that the existing arrangements, ## Tenure policy including those set out below, represent an appropriate It is the Board’s policy that all Directors, including the framework to meet the internal control requirements. By Chairman, shall normally have tenure limited to nine years these procedures the Directors have kept under review the from the date of their election by shareholders at the eectiveness of the internal control system throughout the AGM following their appointment to the Board, except year and up to the date of this report. that the Board may determine otherwise if it is considered that the continued participation on the Board of an ## Financial aspects of internal control individual Director is in the best interests of the Company and its shareholders. This is also subject to the Director’s These are detailed in the Report of the Audit Committee. re-election annually by shareholders. The Board considers that this policy encourages regular refreshment and is Other aspects of internal control conducive to fostering diversity. The Board holds at least four regular meetings each year, plus additional meetings as required. Between these meetings there is regular contact with the Manager and ## Performance appraisal the Company’s Administrator and the Company Secretary. In accordance with the AIC Code, an external Board The Board has agreed policies with the Manager on key evaluation is carried out every three years, with operational issues. The Manager reports in writing to the intervening years seeing internal evaluations by means of Board on operational and compliance issues, and a questionnaire. otherwise as necessary. The Manager reports direct to the During the year, the Board undertook an external Board Audit Committee concerning the internal controls performance evaluation process, which was led by the applicable to the Manager’s dealing, investment and Nomination Committee and designed to assess the general oce procedures. performance of the Chairman, individual Directors and its The Directors receive and consider monthly reports from Board Committees. The Committee engaged with the Administrator, giving details of all holdings in the Lintstock Limited, a specialist consultancy firm portfolio, investment transactions and the financial independent of the Company and the Manager to carry position of the Company. The Administrator reports out the external evaluation. Following its completion, the separately in writing to the Board concerning risks and results of the evaluation were presented to and discussed internal control matters within its purview, including with the Nomination Committee and subsequently to the internal financial control procedures and company Board. The results were scored as very high, both secretarial matters. Additional ad hoc reports are received absolutely and relative to the consultancy firm’s as required and Directors have access at all times to the comprehensive database, and demonstrated that the advice and services of the Company Secretary, which is Directors showed the necessary commitment, had responsible to the Board for ensuring that Board sucient time (taking into account their other roles) and procedures are followed, and that applicable rules and possessed the required skill sets for the eective regulations are complied with. fulfilment of their duties. The contacts with the Manager and the Administrator enable the Board to monitor the Company’s progress ## Internal control towards its objectives and encompasses an analysis of the The Board is responsible for establishing the Company’s risks involved. The eectiveness of the Company’s risk system of internal controls and for monitoring their management and internal controls systems is monitored eectiveness. The system of internal controls is designed regularly and a formal review, utilising a detailed risk to manage rather than eliminate the risk of failure to assessment programme, takes place at least annually. This achieve business objectives. It can provide only reasonable includes consideration of relevant service provider internal assurance against material misstatement or loss. The controls reports. There are no significant findings to report Board, through the Audit Committee, regularly reviews the from the review. eectiveness of the internal control systems to identify, evaluate and manage the Company’s significant risks. If ## Principal risks any significant failings or weaknesses are identified the Board, and where required the Manager, ensure that The Directors confirm that they have carried out a robust necessary action is taken to remedy the failings. During the assessment of the Company’s emerging and principal year the Board – through the Audit Committee – risks, including those that would threaten its business undertook a comprehensive review of the Company’s risk model, future performance, solvency or liquidity. The management framework and controls. Risks are principal risks and how they are being managed are set documented into four main risk categories and the top out in the Strategic Report. risks schedule together with emerging risks, are considered at every Board meeting. Following its review, the Board is not aware of any significant failings or weaknesses arising in the year under review. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 65 Governance ## Director s’ Remuneration Policy Directors are not eligible for bonuses, pension benefits, ## Background share benefits, share options, long-term incentive The remuneration policy (the “Policy”) must be put schemes or other benefits. forward for shareholder approval at a maximum interval Directors’ fees are paid at fixed annual rates and do not of three years. The Policy was last approved by have any variable elements. Directors are also entitled to shareholders at the AGM held on 20 May 2024. be reimbursed for all reasonable out-of-pocket expenses Accordingly, the Policy will continue in force until the incurred in performance of their duties. These expenses AGM to be held in 2027. are unlikely to be of a significant amount. The provisions set out in the Policy apply until they are Fees are payable from the date of appointment as next submitted for shareholder approval. In the event of aDirector of the Company and cease on the date of any proposed material variation to the Policy, shareholder termination of appointment. New Directors will be paid at approval will be sought for the proposed new policy prior the same rate as existing Directors. Directors are not to its implementation. The Policy sets out the principles entitled to compensation for loss of oce, and there is no the Company follows in remunerating Directors and the notice period upon early termination of appointment. result of the shareholder vote on the Policy is binding on the Company. The Remuneration Committee will take No incentive fees will be paid to any person to encourage account of any views expressed by shareholders in them to become a Director of the Company. The formulating this policy. Company may, however, pay fees to external agencies to assist the Board in the search and selection of Directors All the Directors are non-executive Directors and the or in reviewing remuneration. Where a consultant is Company has no other employees. appointed, the consultant shall be identified in the annual report alongside a statement about any other connection ## The remuneration policy it has with the Company or individual Directors. Independent judgement will be exercised when Service contracts evaluating the advice of external third parties. The Directors do not have service contracts with the Statement of consideration of conditions Company. The Directors have appointment letters and, elsewhere in the Company following initial election by shareholders, are subject to annual re-election. As stated above, the Company has no employees. Therefore, the process of consulting with employees on Fees the setting of the Remuneration Policy is not applicable. Directors’ fees should be reviewed annually; such review Review of the Policy may not result in any change. The annual review should ensure remuneration supports the strategic objectives of This Policy will be reviewed on an annual basis by the the Company, reflects Directors’ duties and Remuneration Committee and any changes approved by responsibilities, and the time commitment required by the Board. As part of the review, the Remuneration each Director to carry out their roles eectively. In setting Committee will consider whether the Policy supports the fees, the Board has regard to the need to recruit and long-term success of the Company and takes into retain Directors with appropriate knowledge and consideration all relevant regulatory requirements. Any experience, the fees paid to Directors of the Company’s material change to the Policy must be approved by peers and industry practice. shareholders. Directors’ fees are subject to the aggregate annual limit Eective date set out in the Company’s Articles of Association (the The Policy is eective from the date of approval by “Articles”), of £250,000. The aggregate limit of Directors’ shareholders. fees in the Articles can be amended only by an ordinary resolution put to shareholders at a general meeting. Current and future policy Component Director Purpose of reward Operation Annual fee Chairman of the Board For services as Chairman of a plc Determined by the Board Annual fee Other Directors For services as non-executive Determined by the Board Directors of a plc Additional fee Chairman of the Audit For additional responsibility and time Determined by the Board Committee commitment Additional fee Senior Independent Director For additional responsibility and time Determined by the Board commitment Expenses All Directors Reimbursement of expenses incurred Submission of appropriate in the performance of duties supporting documentation 66 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance X # Directors' Remuneration Implementation Report This Directors' Remuneration Implementation Report (the "Report") has been prepared in accordance with Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulation 2013. An ordinary resolution for the approval of this Report will be put forward at the forthcoming AGM. The Report is put forward for approval by shareholders on an annual basis. The result of the shareholder resolution on the Report is non-binding on the Company, although it gives shareholders an opportunity to express their views, which will be taken into account by the Board and the Remuneration Committee. The law requires the Company's auditor to audit certain of the disclosures provided. Where disclosures are audited they are indicated as such. The auditor's opinion is shown on page 73. ## Remuneration Committee The Remuneration Committee comprises the whole Board. Further detail on the duties of the Remuneration Committee can be found in the Corporate Governance statement on pages 62 to 65. The Board carried out a review of Directors' annual fees during the year with regard to the latest inflation rates, measured by the increase in the Consumer Prices Index, and taking into account peer group comparisons by sector and market capitalisation. Following this review, it was agreed that with effect from 1 January 2025, annual fees would be increased to £51,000 for the Chairman, and £34,000 for the Directors of the Company, with additional amounts of £8,500 and £3,400 payable to the Audit Committee Chairman and the Senior Independent Director, respectively, to reflect the extra responsibility and work required by those roles. The Remuneration Committee believes that the level of increase and resulting fees appropriately reflects prevailing market rates for an investment trust of the Company's complexity and size, the increasing complexity of regulation and resultant time spent by the Directors on Company matters, and will also enable the Company to attract appropriately experienced additional Directors in the future. Due to the size and nature of the Company, it was not deemed necessary to use a remuneration consultant although the Remuneration Committee did review peer group information on Directors' fees and took this into account in its deliberations. The maximum level of fees payable, in aggregate, to the Directors of the Company is £250,000 per annum. This maximum was approved by shareholders at the Company's AGM held in 2022. The Company's Remuneration Policy, which was approved by shareholders at the AGM held on 20 May 2024, states that the remuneration of Directors should be fair and reasonable in relation to the duties, responsibilities and time commitment of Directors; be sufficient to retain and motivate appointees, as well as ensure that candidates of a high calibre are recruited to the Board. ## Directors' appointment letters and shareholding rights The Directors have appointment letters which do not provide for any specific term. The Directors are not entitled to compensation on loss of office. There are no restrictions on transfers of the Company's shares held by the Directors or any special rights attached to such shares. ## Performance The following chart shows the performance of the Company's share price by comparison to two relevant indices on a total return basis. The Company does not have a specific benchmark but has deemed the MSCI ACWI Index and the FTSE ET100 Index to be the most appropriate comparators for this report. ## Total return performance ![img-8.jpeg](img-8.jpeg) $^{1}$ These are alternative performance measures. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 67 **X**Governance # **Directors' Remuneration Implementation Report continued** # **Directors' emoluments for the year (audited)** The Directors who served during the year received the following remuneration for qualifying services. | | 2024 | | | 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Fees £ | Taxable benefits £ | Total £ | Fees £ | Taxable benefits £ | Total £ | | Glen Suarez | 48,000 | 6,584 | 54,584 | 39,596 | 8,121 | 47,717 | | Stephanie Eastment | 40,000 | 771 | 40,771 | 37,500 | 520 | 38,020 | | Aine Kelly | 35,200 | 929 | 36,129 | 33,000 | 2,330 | 35,330 | | Guy Walker – appointed 17 May 2023 | 32,000 | – | 32,000 | 18,769 | – | 18,769 | | Elizabeth Surkovic – appointed 1 January 2024 | 32,000 | – | 32,000 | – | – | – | | John Scott – retired 16 May 2023 | – | – | – | 17,077 | – | 17,077 | | Vicky Hastings – retired 16 May 2023 | – | – | – | 11,385 | – | 11,385 | | **Total** | **187,200** | **8,284** | **195,484** | **157,327** | **10,971** | **168,298** | # **Annual percentage change in Directors' remuneration** The table below sets out the annual percentage change in Directors' fees for the past five years. | | Year ended 31 December 2024 % | Year ended 31 December 2023 % | Year ended 31 December 2022 % | Year ended 31 December 2021 % | Year ended 31 December 2020 % | | --- | --- | --- | --- | --- | --- | | Glen Suarez – appointed 1 October 2022 | 21.2 | 465.7^{1} | Note A | – | – | | Stephanie Eastment^{2} | 6.7 | 7.1 | 5.1 | 11.0 | 155.6 | | Aine Kelly | 6.7 | 7.1 | 5.1 | 12.75^{3} | 10.6 | | Guy Walker – appointed 17 May 2023 | 70.5 | Note A | – | – | – | | Elizabeth Surkovic – appointed 1 January 2024 | Note A | – | – | – | – | | John Scott – retired 16 May 2023 | – | Note A | 5.2 | 2.5 | 10.6 | | Vicky Hastings – retired 16 May 2023 | – | Note A | 5.1 | 2.5 | 10.6 | Note A: No annual percentage change is presented in year of appointment or year of retirement/resignation. 1 The 2023 increase in fee reflects the fact that Mr Suarez joined the Board part way through 2022 and became Chairman of the Board part way through 2023. Mr Suarez's fee increase would have been 7.1% had he been Chairman of the Board for the whole of the period from 2022 to 2023. 2 The increases for 2020 and 2021 reflect the fact that Mrs Eastment joined the Board part way through 2019 and became Chairman of the Audit Committee part way through 2020. Mrs Eastment's fee increase in 2021 and 2020 would have been 2.5% and 13.5%, respectively, had she been Chairman of the Audit Committee for the whole of the period from 2019 to 2021. 3 The increase for 2021 reflects the fact that an additional fee for the Senior Independent Director of £2,665 was introduced from 1 January 2021. Without the additional fee, Miss Kelly's fee increase would have been 2.5%. There are no other taxable benefits payable by the Company save for certain expenses which may be deemed to be taxable such as travel expenses. Percentage changes for taxable benefits have not been shown in the table above. None of the above fees was paid to third parties. The resolution to approve the Remuneration Report contained in the Annual Report for the year ended 31 December 2023 was put forward at the AGM held on 20 May 2024. The resolution was passed with 99.91% of the shares voted (representing 114,177,967 ordinary shares) being in favour of the resolution, 0.09% against (representing 107,184 ordinary shares) and 63,979 votes withheld. The Directors' Remuneration Policy was last put forward at the AGM held on 20 May 2024. The resolution was passed with 99.91% of the shares voted (representing 114,181,528 ordinary shares) being in favour, against 0.09% (representing 104,307 ordinary shares) and votes withheld 63,295. 68 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance Relative importance of spend on pay The following table sets out the total level of Directors’ remuneration compared to the distributions to shareholders by way of dividends and the management fees and other expenses incurred by the Company.   Dierence ’ ’  Spend on Directors’ fees    Management fees and other expenses   () Dividends paid to shareholders – note 9 to the financial statements   () The disclosure of the information in the table above is required under The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 with the exception of management fees and other expenses which have been included to show the total operating expenses of the Company. Directors’ shareholdings (audited) At 31 December 2024 the Directors had the following holdings in the Company (beneficial unless stated). Ordinary Ordinary shares at shares at   December December   Glen Suarez   Stephanie Eastment*   Aine Kelly   Elizabeth Surkovic  – Guy Walker   * 8,500 held non-beneficially; shares held by connected person. There have been no purchases of shares by any of the other Directors since the year end. Statement On behalf of the Board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, I confirm that the above Remuneration Report and Remuneration Policy summarises, as applicable, for the year to 31 December 2024: (a) the major decisions on Directors’ remuneration; (b) any substantial changes relating to Directors’ remuneration made during the year; and (c) the context in which the changes occurred and decisions have been taken. Guy Walker Chairman of the Remuneration Committee 2 April 2025 Impax Environmental Markets plc | Annual Report and Accounts 2024 | 69 Governance ## Report of the Audit Committee ## The Audit Committee Financial statements and ## As Chairman of the Audit Committee (the “Committee”), significant accounting matters Iam pleased to present the Committee’s report to The Committee reviewed the financial statements and shareholders for the year ended 31 December 2024. considered the following significant accounting matters in relation to the Company’s financial statements for the Composition year ended 31 December 2024. All of the Directors are members of the Committee. Valuation and existence of investments In accordance with the UK Code, the Chairman of the The accuracy of the valuation of the investment portfolio Board should not be a member. However, the AIC Code and verification of ownership of the investments is the permits the Chairman to be a member of, but not chair, most material matter in the production of the financial the Committee if they were independent on appointment statements. The Company holds all of its assets in listed - which the Chairman was and in the Board’s view investments. Listed investments are valued using stock continues to be. In view of the size of the Board the exchange prices provided by independent pricing Directors feel it is appropriate for him to continue as a sources. The Depositary confirmed that at the year end member, so that the Committee can continue to benefit the accounting records recorded all investment holdings from his experience and knowledge. and that these had been agreed to custodian records. The members of the Committee consider that they have The Depositary is responsible for financial restitution for the requisite skills and experience to fulfil the the loss of financial investments held in custody, and the responsibilities of the Committee. As a Chartered Committee received assurance from the Depositary that Accountant, the Chairman of the Committee has recent all investments were held in custody. and relevant financial experience, and the Committee as awhole has competence relevant to the sector. Recognition of income Income may not be accrued in the correct period and/or Role and responsibilities incorrectly allocated to revenue or capital. The The main role and responsibilities of the Committee are Committee reviewed the Administrator’s procedures for set out in the Committee’s terms of reference. The terms recognition of income in the year including the treatment are updated annually and are available on the Company’s of special dividends. website or on request from the Company Secretary. Going Concern The Committee meets formally at least twice a year for In the light of the Company’s triannual continuation the purpose, amongst other things, of advising the Board resolution which will be voted on by shareholders at the on the appointment, eectiveness, independence, upcoming AGM, the Committee considered the objectivity and remuneration of the external auditor. Company’s ability to continue as a going concern for a The Committee monitors the integrity of the financial period of at least 12 months from the date of approval of statements of the Company and any formal the financial statements. Further detail about the announcements relating to the Company’s financial continuation vote is contained in the Viability Statement performance, reviewing significant financial reporting on page 49 concern. judgements contained in them. The Committee also In addition to the above, during the year the Committee reviews the Company’s risk management, internal financial reviewed the half-yearly report. controls and internal control systems and reviews the The Committee reported the results of this work, Manager’s whistleblowing arrangements. including its assessment that the annual report is fair, The provision of non-audit services by the auditor are balanced and understandable, to the Board. reviewed against the Committee’s policy described below. ## Meetings Annual report review There were four Committee meetings during the year As part of the annual report review, the Committee: ended 31 December 2024. In addition, the Committee met the auditor, without any other party present, for a – obtained assurances from the Manager and the private discussion and the Chairman of the Committee Administrator that the financial statements had been met with the auditor prior to the half-yearly and annual prepared appropriately; Committee meetings. – reviewed the procedures in place for the calculation of management fees; Committee evaluation – reviewed the basis of allocating management fees and The Committee’s activities fell within the scope of the finance costs to capital and agreed that allocating 75% review of Board eectiveness performed in the year. of such costs to capital remained an appropriate basis. Details of this process can be found under ‘Performance The assessment involved an analysis of the expected Appraisal’ on page 65. split of the Company’s future long-term returns as well as a review of past returns; – reviewed the consistency of, and any changes to, accounting policies; 70 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance X - reviewed the tax compliance of the Company during the year with the eligibility conditions and ongoing requirements in order for investment trust status to be maintained; - reviewed the Company's financial resources and concluded that it is appropriate for the Company's financial statements to be prepared on a going concern basis as described in the Directors' Report on page 60; and - concluded that the annual report for the year ended 31 December 2024, 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. The Committee reached this conclusion through a process of review of the document and enquiries to the various parties involved in the production of the annual report, and the external auditor's report thereon. ## External auditor This year's audit was the sixth performed by BDO LLP ("BDO") since its appointment on 21 May 2019 following an audit tender process earlier in 2019. Following the completion of a five-year term, Peter Smith was replaced by Gary Fensom as the engagement partner. ### Effectiveness of audit The next competitive audit tender will occur prior to the financial year ending 31 December 2029 in line with legal requirements. The Committee reviewed the audit planning and the standing, skills and experience of the firm and the audit team. Other than in respect of a matter noted in the Independence section of the auditor's report on page 73, which is also disclosed in the provision of non-audit services section which follows, BDO has confirmed that it remains independent of the Company and has complied with relevant auditing standards. No significant modifications were required to the external audit approach. The Committee received a presentation of the audit plan from the external auditor prior to the commencement of the 2024 audit and a presentation of the results of the audit following completion of the main audit testing. Additionally, the Committee received feedback from the Manager and Administrator regarding the effectiveness of the external audit process. The Committee is satisfied that BDO has provided effective independent challenge in carrying out its responsibilities. After due consideration, the Committee recommended the re-appointment of BDO and their re-appointment will be put forward to the Company's shareholders at the 2025 AGM. The Committee is satisfied that it has met the requirements of the Financial Reporting Council's new standard 'Audit Committees and the External Audit: Minimum Standard' issued in May 2024 during the year. ### Provision of non-audit services The Committee has a policy on the supply of any non-audit services provided by the external auditor. This was reviewed during the year and no changes were required. Under the policy, non-audit services are considered on a case-by case basis and may only be provided to the Company if such services meet the requirements of the standard, including: at a reasonable and competitive cost; do not constitute a conflict of interest for the auditor; and all non-audit services must be approved in advance. No non-audit services were provided by the auditor during the year. In respect of 2023, no non-audit services were provided except for the development of a model to calculate the fair value of the Loan Notes. Further details about this are contained in the Report of the Audit Committee and Independent Auditor's Report in the 2023 annual report (pages 68 and 70, respectively), and in the Independent Auditors' Report on page 73. No further instances have been recorded since this one off event. ## Internal audit The Committee has considered the need for an internal audit function and considered that this is not appropriate given the nature and circumstances of the Company. The Committee keeps the need for an internal function under annual review. The Manager reports the key conclusions of its internal audit report to the Company's Committee. The Committee obtains an understanding of the internal controls in place at both the Manager and Administrator by reviewing the relevant internal control reports issued by their independent auditors. Stephanie Eastment Audit Committee Chairman 2 April 2025 Impax Environmental Markets plc | Annual Report and Accounts 2024 | 71 Governance ## Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Directors’ confirmation statement Report and the financial statements in accordance with The Directors each confirm to the best of their knowledge applicable laws and regulations. that: Company law requires the Directors to prepare (a) the accounts, prepared in accordance with applicable accounts for each financial year. Under that law the accounting standards, give a true and fair view of the Directors have elected to prepare the financial assets, liabilities, financial position and profit or loss of statements in accordance with United Kingdom the Company; and Generally Accepted Accounting Practice, including FRS102 ‘The Financial Reporting Standard applicable in (b) this Annual Report includes a fair review of the the UK and the Republic of Ireland’. Under company law development and performance of the business and the Directors must not approve the financial statements position of the Company, together with a description unless they are satisfied that they give a true and fair of the principal risks and uncertainties that it faces. view of the state of aairs of the Company as at the end Having taken advice from the Audit Committee, the of the year and of the net return for the year. In Directors consider that the Annual Report and financial preparing these accounts, the Directors are required to: statements taken as a whole, is fair, balanced and ### • select suitable accounting policies and then apply understandable and provides the information necessary them consistently; for shareholders to assess the Company’s position and performance, business model and strategy. ### • make judgements and estimates which are reasonable and prudent; and For and on behalf of the Board ### • state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts. Glen Suarez The Directors are responsible for keeping adequate Chairman accounting records that are sucient to show and explain the Company’s transactions and which disclose 2 April 2025 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.impaxenvironmentalmarkets.co.uk and www.impaxam.com websites which are maintained by the Company’s Manager, Impax Asset Management (AIFM) Limited (“Impax”). 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 dier from legislation in other jurisdictions. 72 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance X # Independent Auditor's Report to the members of Impax Environmental Markets plc ## Opinion on the financial statements In our opinion the financial statements: - give a true and fair view of the state of the Company's affairs as at 31 December 2024 and of its loss for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and - have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Impax Environmental Markets plc (the "Company") for the year ended 31 December 2024 which comprise the Income Statement, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows and notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). ## Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee. ## Independence Following the recommendation of the audit committee, we were appointed by the Board of Directors on 21 May 2019 to audit the financial statements for the year ended 31 December 2019 and subsequent financial periods. The period of total uninterrupted engagement including retenders and reappointments is six years, covering the years ended 31 December 2019 to 31 December 2024. We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Company. As disclosed in the prior year's Independent Auditor's Report, BDO USA, a separate BDO Member Firm, provided a valuation service to the Company, through the Administrator, Apex Listed Companies Services (UK) Limited and Apex Fund Holdings LLC. As such, this constituted a service which was not permitted to be provided to a Public Interest Entity under paragraph 5.40 and 5.42 of the FRC Ethical Standard (2019). The service was provided during the financial year ended 31 December 2023 ("FY23"), however, was billed in the financial year ended 31 December 2024 ("FY24") and had fees of less than $14,500. As a safeguard to the Audit, the valuation model that was produced by BDO USA was disregarded by the Company and was not used in the preparation of the FY23 Financial Statements and Annual Report. As such, the service provided by BDO USA had no effect on the Company's Financial Statements. As disclosed previously, we therefore removed any threats to independence arising from the provision of this non-audit service and, in our professional judgement, we confirm that based on our assessment of the breach and additional safeguards implemented following the identification of the breach, our integrity and objectivity as Auditor was not compromised. We believe that an Objective, Reasonable and Informed Third Party would also conclude that the provision of this service would not impair our integrity or objectivity for any of the impacted financial years. Those charged with governance at the Company have concurred with this view. Other than the matter noted above, we remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. No other non-audit services prohibited by the FRC's Ethical Standard (2019) were provided to the Company. ## Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included: - Evaluating the appropriateness of the Directors' method of assessing going concern in light of economic and market conditions by inspecting the information used by the Directors in completing their assessment; - Assessing the appropriateness of the Directors' assumptions and judgements made by comparing the prior year forecasted costs to the actual costs incurred to check that the projected costs are reasonable; - Assessing the projected management fees for the going concern period to check that they are in line with the current asset levels of the Company and any projected forecasts of asset levels over the following year; - Assessing the appropriateness of the Directors' assessment of the impact of significant downside scenarios and their consideration of the available resources relative to forecast expenditure and commitments over the going concern period; and - Challenging the Directors' assessment and conclusions by assessing the impact of a significant reduction in the valuation of investments and the implications for the Company's debt covenants and performing an independent analysis of the liquidity of the year end investment portfolio. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast Impax Environmental Markets plc | Annual Report and Accounts 2024 | 73 Governance Independent Auditor’s Report to the members of Impax Environmental Markets plc (the “Company”) continued significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Overview Key audit matters   Valuation and ownership of quoted investments 3 3 Materiality Company financial statements as a whole £10.3m (2023: £12.2m) based on 1% (2023: 1%) of net assets An overview of the scope of our audit Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest eect on: the overall audit strategy, the allocation of resources in the audit, and directing the eorts of the engagement team. The key audit matter is summarised below. This matter was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. Key audit matter How the scope of our audit addressed the key audit matter Valuation and ownership of investments (note 1(b) on We responded to this matter by testing the valuation and page 83 and Not e 2 on pages 85 to 86) ownership of 100% of quoted investments in the portfolio by performing the following procedures: The investment portfolio at the year-end comprised ### wholly of quoted investments. • Confirmed the year-end bid price was used by agreeing to externally quoted prices; There is a risk that the prices used for the quoted ### investments held by the Company are not reflective of • Assessed if there were contra indicators, such as liquidity fair value and the risk that errors made in the recording of considerations, to suggest bid price is not the most investment holdings result in the incorrect reflection of appropriate indication of fair value by considering the investments owned by the Company. realisation period for individual holdings; ### Therefore we considered valuation and ownership of • Recalculated the valuation by multiplying the number of shares quoted investments to be the most significant audit area held per the statement obtained from the Custodian by the as the quoted investments also represent the most valuation per share; and significant balance in the financial statements and ### • Obtained direct confirmation of the number of shares held per underpin the principal activity of the Company. investment from the Custodian regarding all investments held For these reasons and the materiality of the balance in at the balance sheet date. relation to the financial statements as a whole, we Key observations considered this to be a key audit matter. Based on the procedures carried out, we found the valuation and ownership of the quoted investments to be appropriate in the context of our audit of the financial statements as a whole. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the eect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use alower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their eect on the financial statements as a whole. 74 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Company financial statements   Materiality m m Materiality 10.3 12.2 Basis for determining materiality 1% of Net assets 1% of Net assets Rationale for the benchmark applied As an investment trust, the net asset value is the key measure of performance for users of the financial statements. Performance materiality 7.7 9.1 Basis for determining performance materiality 75% of materiality 75% of materiality Rationale for the percentage applied for The level of performance materiality applied was set after having performance materiality considered several factors including the expected total value of known and likely misstatements and the level of transactions in the year. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit dierences in excess of £205,000 (2023: £244,000). We also agreed to report dierences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report & accounts other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to amaterial misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement The UK Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability andthat part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit. ### Going concern and • The Directors' statement with regards to the appropriateness of adopting the longer-term viability going concern basis of accounting and any material uncertainties identified set out on page 60; and ### • The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate set out on page49. ### Other Code provisions • Directors’ statement on fair, balanced and understandable set out on page 70; ### • Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 65; ### • The section of the annual report that describes the review of eectiveness of risk management and internal control systems set out on page 65; and ### • The section describing the work of the audit committee set out on page 70. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 75 Governance Independent Auditor’s Report to the members of Impax Environmental Markets plc (the “Company”) continued Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic Report and In our opinion, based on the work undertaken in the course of the audit: ### Directors’ Report • the information given in the Strategic report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ### • the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report. Directors’ remuneration In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we are We have nothing to report in respect of the following matters in relation to which required to report by exception the Companies Act 2006 requires us to report to you if, in our opinion: ### • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or ### • the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or ### • certain disclosures of Directors’ remuneration specified by law are not made; or ### • we have not received all the information and explanations we require for our audit. Responsibilities of Directors Extent to which the audit was capable of detecting irregularities, including fraud As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the Irregularities, including fraud, are instances of preparation of the financial statements and for being non-compliance with laws and regulations. We design satisfied that they give a true and fair view, and for such procedures in line with our responsibilities, outlined above, internal control as the Directors determine is necessary to to detect material misstatements in respect of enable the preparation of financial statements that are irregularities, including fraud. The extent to which our free from material misstatement, whether due to fraud procedures are capable of detecting irregularities, orerror. including fraud is detailed below: In preparing the financial statements, the Directors are Non-compliance with laws and regulations responsible for assessing the Company’s ability to Based on: continue as a going concern, disclosing, as applicable, ### matters related to going concern and using the going • Our understanding of the Company and the industry concern basis of accounting unless the Directors either in which it operates; intend to liquidate the Company or to cease operations, or Discussion with the Investment Manager and the ### • have no realistic alternative but to do so. Directors; and ### Auditor’s responsibilities for the audit of the • Obtaining and understanding of the Company’s financial statements policies and procedures regarding compliance with laws and regulations. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from We considered the significant laws and regulations to material misstatement, whether due to fraud or error, and bethe Companies Act 2006, the FCA’s UK Listing and to issue an auditor’s report that includes our opinion. DTR rules, the principles of the AIC Code of Corporate Reasonable assurance is a high level of assurance, but is Governance, industry practice represented by the not a guarantee that an audit conducted in accordance AICSORP, the applicable accounting framework, and with ISAs (UK) will always detect a material misstatement qualification as an Investment Trust under UK tax when it exists. Misstatements can arise from fraud or error legislation as any non-compliance of this would lead to and are considered material if, individually or in the the Company losing various deductions and exemptions aggregate, they could reasonably be expected to from corporation tax. influence the economic decisions of users taken on the basis of these financial statements. 76 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Governance Our procedures in respect of the above included: We also communicated relevant identified laws and regulations and potential fraud risks to all engagement ### • Agreement of the financial statement disclosures to team members who were all deemed to have appropriate underlying supporting documentation; competence and capabilities and remained alert to any ### • Enquiries of the Investment Manager and the indications of fraud or non-compliance with laws and Directors relating to the existence of any regulations throughout the audit. non-compliance with laws and regulations; Our audit procedures were designed to respond to risks ### • Reading minutes of meetings of the Board and the of material misstatement in the financial statements, Audit Committee throughout the period for instances recognising that the risk of not detecting a material of non-compliance with laws and regulations; and misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve ### • Reviewing the calculation in relation to Investment deliberate concealment by, for example, forgery, Trust compliance to check that the Company was misrepresentations or through collusion. There are meeting its requirements to retain their Investment inherent limitations in the audit procedures performed Trust Status. and the further removed non-compliance with laws and Fraud regulations is from the events and transactions reflected We assessed the susceptibility of the financial statement in the financial statements, the less likely we are to to material misstatement including fraud. become aware of it. Our risk assessment procedures included: A further description of our responsibilities is available on the Financial Reporting Council’s website at: ### • Enquiries of the Manager and the Directors regarding www.frc.org.uk/auditorsresponsibilities. This description any known or suspected instances of fraud; forms part of our auditor’s report. ### • Obtaining an understanding of the Company’s policies and procedures relating to: Use of our report This report is made solely to the Company’s members, as ### • Detecting and responding to the risks of fraud; and a body, in accordance with Chapter 3 of Part 16 of the ### • Internal controls established to mitigate risks Companies Act 2006. Our audit work has been related to fraud. undertaken so that we might state to the Company’s Reading minutes of meetings of the Board and the members those matters we are required to state to them ### • Audit Committee throughout the period for any in an auditor’s report and for no other purpose. To the known or suspected instances of fraud; and fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company ### • Discussion amongst the engagement team as to how and the Company’s members as a body, for our audit and where fraud might occur in the financial work, for this report, or for the opinions we have formed. statements including our assessment of the segregation of duties in place between the Directors, the Administrator and the Investment Manager; Based on our risk assessment, we considered the fraud risk area to be management override of controls. Gary Fensom (Senior Statutory Auditor) Our procedures in respect of the above included: For and on behalf of BDO LLP, Statutory Auditor London ### • Considered the opportunity and incentive to 2 April 2025 manipulate accounting entries and assessed the appropriateness of any post-closing adjustments made in the period end financial reporting process; BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). ### • Inspected any estimates and judgements applied by the Directors in the preparation of the financial statements to assess appropriateness and indicators of systematic bias; ### • Recalculating investment management fees in total; ### • Considered the existence of any significant transactions outside the normal course of business; and ### • Assessed adjusted and unadjusted audit dierences, if any, for indicators of management bias. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 77 Financials ## Financial Statements In this section Income Statement 79 Balance Sheet 80 Statement of Changes in Equity 81 Statement of Cash Flows 82 Notes to the Financial Statements 83 78 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials ## Income Statement Year ended Year ended  December   December  Revenue Capital Total Revenue Capital Total Notes ’ ’ ’ ’ ’ ’ (Losses)/gains on investments 2 – () () –   Net foreign exchange gains/(losses) –   – () () Income 3  –   –  Investment management fee 4 () () () () () () Other expenses 5 () – () () – () Return on ordinary activities before finance costs and taxation  () ()    Finance costs 6 () () () () () () Return on ordinary activities before taxation  () ()    Taxation 7 () () () ()  () Return on ordinary activities after taxation  () ()    Return per ordinary share 8 p (p) (p) p p p 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 on pages 83 to 97 form part of these financial statements. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 79 Financials ## Balance Sheet As at As at  December  December   Notes ’ ’ Fixed assets Investments at fair value through profit or loss 2   Current assets Dividends receivable   Sales awaiting settlement  – Taxation recoverable   Other debtors   Cash and cash equivalents     Creditors: amounts falling due within one year Trade and other payables 10 () () Revolving credit facility 11 () – () () Net current (liabilities)/assets ()  Total assets less current liabilities   Creditors: amounts falling due after more than one year Capital gains tax provision 7 () () Loan Notes 11 () () Revolving credit facility 11 – () Net assets   Capital and reserves: equity Share capital 12   Share premium account –  Capital redemption reserve   Share purchase reserve –  Special reserve  – Capital reserve   Revenue reserve   Shareholders’ funds   Net assets per ordinary share - debt at bookcost 13 p p 1 Net assets per ordinary share - debt at fair value p p 1 This is an alternative performance measure. Approved by the Board of Directors and authorised for issue on 2 April 2025 and signed on their behalf by: Glen Suarez, Chairman Impax Environmental Market plc incorporated in England with registered number 4348393. The notes on pages 83 to 97 form part of these financial statements. 80 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials ## 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  December  Notes ’ ’ ’ ’ ’ ’ ’ ’ Opening equity as at 1 January 2024     –    Return for the year – – – – – ()  () Cancellation of share premium account* – () – –  – – – Dividends paid 9 – – – – – – () () Cost of share buybacks 2 – – – () () () – () Closing equity as at 31 December 2024  –  –     * The new special reserve arose from the cancellation of the share premium account during the year as explained in note1(e) and in the Directors’ Report. It is distributable, unlike the share premium account. Share Capital Share Share premium redemption purchase Special Capital Revenue Year ended capital account reserve reserve reserve reserve reserve Total  December  Notes ’ ’ ’ ’ ’ ’ ’ ’ Opening equity as at 1 January 2023     –    Return for the year – – – – –    Dividends paid 9 – – – – – – () () Cost of share buybacks  – – – () – – – () Closing equity as at 31 December 2023     –    The notes on pages 83 to 97 form part of these financial statements. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 81 Financials ## Statement of Cash Flows Year ended Year ended  December  December   Notes ’ ’ Operating activities 1 Return on ordinary activities before finance costs and taxation ()  Less: Tax deducted at source on income from investments () () Foreign exchange (gains)/losses () () Adjustment for losses/(gains) on investments 2  () Special dividends received as capital   Scrip dividend received – () Increase in other debtors () () (Decrease)/increase in other creditors ()  Net cash flow from operating activities   Investing activities Sale of investments   Purchase of investments () () Net cash flow from investing activities   Financing activities Dividends paid 9 () () Proceeds from Loan Notes and revolving credit facility –  Repayment of revolving credit facility and bank loan – () Finance costs paid () () Cost of share buybacks () () Net cash outflow used in financing activities () () Decrease in cash () () Cash and cash equivalents at start of year   Eect of movements in exchange rates on cash held   Decrease in cash () () Cash and cash equivalents at end of year   1 Cash inflow includes dividend income received during the year ended 31 December 2024 of £15,070,000 (2023: £19,285,000) and bank interest of £487,000 (2023: £646,000). Changes in net debt Year ended Year ended  December  December   ’ ’ Net debt at start of year () () Decrease in cash and cash equivalents () () The eect of changes in foreign exchange rates   Proceeds from Loan Notes and revolving credit facility – () Repayment of revolving credit facility and bank loan –  Net debt at end of year () () The notes on pages 83 to 97 form part of these financial statements. 82 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials ## Notes to the Financial Statements Special dividends are assessed on their individual merits ## 1 Accounting policies and may be credited to the Income Statement as a The Company is a public limited company incorporated capital item if considered to be closely linked to in England and Wales with registered number 4348393. reconstructions of the investee company or other capital Its registered oce is as shown on page 103. The transactions. The ordinary element of scrip dividends Company’s shares are traded on the London Stock received in lieu of cash dividends is recognised as Exchange. revenue. Any enhancement above the cash dividend is treated as capital. The Company is an investment company within the meaning of Section 833 of the Companies Act 2006. Scrip dividends received in lieu of cash dividends are recognised as revenue except for any excess above the The accounts have been prepared in accordance with cash dividend, which is recognised as capital. applicable UK accounting standards. The particular accounting policies adopted are described below. All other investment income is credited to the Income Statement as a revenue item. (a) Basis of accounting (e) Nature and purpose of equity and reserves The accounts are prepared in accordance with UK Generally Accepted Accounting Practice (“UK GAAP”) Share capital represents the 10p nominal value of the including FRS 102 ‘The Financial Reporting Standard issued share capital. applicable in the UK and Republic of Ireland’ and the Statement of Recommended Practice ‘Financial The share premium account arose from the net proceeds statements of investment trust companies and venture of new shares and from the excess proceeds received on capital trusts’ (‘SORP’) issued by the Association of the sale of shares from treasury over the repurchase cost. Investment Companies in July 2022. The capital redemption reserve represents the nominal The accounts have been prepared on a going concern value of shares repurchased for cancellation. basis. Details of the Directors assessment of the going The share purchase reserve was created from the concern status of the Company, which considered the cancellation in full of the share premium account in 2002 adequacy of the Company’s resources and the and 2009. The cancellation and transfer were approved macroeconomic backdrop such as higher inflation and by shareholders and confirmed by the Court. This interest rates and possible recession, are given on reserve can only be used for share repurchases, both page60. This assessment also highlights the Directors into treasury or for cancellation. When shares are consideration of the shareholders’ continuation vote at subsequently reissued from treasury, the amount equal the forthcoming AGM. to their repurchase cost is reflected in this reserve, with | Amounts in the accounts have been rounded to the | any proceeds in excess of the repurchase cost | | --- | --- | | nearest £’000 unless otherwise stated. | transferred to the share premium account. | | (b) Investments | The special reserve was created from the cancellation in | full of the share premium account in July 2024. The Securities of companies quoted on regulated stock cancellation and transfer were approved by shareholders exchanges and any holdings in unquoted companies and confirmed by the Court, and following this have been classified as ‘at fair value through profit or £423,098,000 was transferred into this reserve. This loss’ and are initially recognised on the trade date and reserve is distributable, and can be used for both share measured at fair value in accordance with sections 11 and repurchases and dividends. 12 of FRS 102. Investments are measured at subsequent reporting dates at fair value by reference to their market The capital reserve reflects any bid prices. Any unquoted investments are measured at ### • gains or losses on the disposal of investments; fair value which is determined by the Directors in ### • exchange movements of a capital nature; accordance with the International Private Equity and Venture Capital guidelines. the increases and decreases in the fair value of ### • investments which have been recognised in the Changes in fair value are included in the Income capital column of the income statement; and Statement as a capital item. ### • expenses which are capital in nature. (c) Reporting currency Any gains in the fair value of investments that are not The accounts are presented in Sterling which is the readily convertible to cash are treated as unrealised Company’s functional and presentational currency and gains in the capital reserve. the currency in which the Company’s share capital, reserves and expenses are denominated as an UK The revenue reserve reflects cumulative income and registered and listed company. expenditure recognised in the revenue column of the Income Statement less cumulative dividends paid, and is (d) Income from investments distributable by way of dividend. Investment income from shares is accounted for when The Company’s distributable reserves consist of the share the Company’s right to receive the income is established, purchase reserve, the special reserve, the capital reserve which is usually considered to be the ex-dividend date. attributable to realised profits and the revenue reserve. Overseas income is grossed up at the appropriate rate of The share purchase reserve may only be used for share tax but UK dividend income is not grossed up for tax repurchases, both into treasury or for cancellation. credits. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 83 Financials Notes to the Financial Statements continued (i) Financial liabilities ## 1 Accounting policies continued Loan Notes and other borrowings are initially recorded (f) Expenses and finance costs at the proceeds received net of direct issue costs and All expenses are accounted for on an accruals basis. subsequently measured at amortised cost. Expenses are recognised through the Income Statement (j) Cash and cash equivalents as revenue items except as follows: Cash comprises cash in hand and demand deposits. Management fee Cash equivalents include bank overdrafts repayable on In accordance with the Company’s stated policy and the demand and short term, highly liquid investments that Directors’ expectation of the split of future returns, three are readily convertible to known amounts of cash and quarters of the investment management fee are charged which are subject to an insignificant risk of changes in as a capital item in the Income Statement. There is no value. performance fee arrangement with the Manager. (k) Estimates and assumptions Finance costs The preparation of financial statements requires the Finance costs include interest payable and direct loan Directors to make estimates and assumptions that aect costs. In accordance with Directors’ expectation of the items reported in the Balance Sheet and Income split of future returns, three quarters of finance costs are Statement. Although these estimates are based on charged as capital items in the Income Statement. management’s best knowledge of current facts, Arrangement costs for revolving credit facilities and circumstances and, to some extent, future events and Loan Notes are amortised over the term of the actions, the Company’s actual results may ultimately borrowing. dier from those estimates, possibly significantly. Transaction costs Estimates and underlying assumptions are reviewed on Transaction costs incurred on the acquisition and an on-going basis. Revisions to accounting estimates are disposal of investments are charged to the Income recognised in the year in which the estimates are revised Statement as a capital item. and in any future periods aected. There have been no estimates, judgements or assumptions which have had a (g) Taxation significant impact on the financial statements for the Irrecoverable taxation on dividends is recognised on an year. accruals basis in the Income Statement. (l) Dividend payable Deferred taxation Final dividends payable to equity shareholders are Deferred taxation is recognised in respect of all timing recognised in the financial statements when they have dierences that have originated but not reversed at the been approved by shareholders and become a liability of financial reporting date, where transactions or events the Company. Interim dividends payable are recognised that result in an obligation to pay more tax in the future in the period in which they are paid. The capital reserve, or right to pay less tax in the future have occurred at the revenue reserve and special reserve may be used to fund financial reporting date. This is subject to deferred tax dividend distributions. assets only being recognised if it is considered more likely than not that there will be suitable profits from (m) Treasury shares which the future reversal of the timing dierences can Treasury shares are recognised at cost as a deduction be deducted. Deferred tax assets and liabilities are from equity shareholders’ funds. Subsequent measured at the rates applicable to the legal consideration received for the sale of such shares is also jurisdictions in which they arise. recognised in equity, with any dierence between the sale proceeds and the original cost being taken to share (h) Foreign currency translation premium account. No gain or loss has been recognised All transactions and income in foreign currencies are in the financial statements on transactions in treasury translated into sterling at the rates of exchange on the shares. 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. 84 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials X ## 2 Investments at fair value through profit or loss | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | **(a) Summary of valuation** | | | | Analysis of closing balance: | | | | UK quoted securities | 257,290 | 107,156 | | Overseas quoted securities | 841,988 | 1,188,691 | | **Total investments** | **1,099,278** | **1,295,847** | | **(b) Movements during the year:** | | | | Opening balance of investments, at cost | 1,151,287 | 1,122,306 | | Additions, at cost | 256,280 | 428,182 | | Disposals, at cost | (399,860) | (399,201) | | **Cost of investments at 31 December** | **1,007,707** | **1,151,287** | | Revaluation of investments to fair value: | | | | Opening balance of capital reserve – investments held | 144,560 | 180,299 | | Unrealised losses on investments held | (52,989) | (35,739) | | Balance of capital reserve – investments held at 31 December | 91,571 | 144,560 | | **Fair value of investments at 31 December** | **1,099,278** | **1,295,847** | | **(c) (Losses)/gains on investments in year (per Income Statement)** | | | | Gains on disposal of investments^{1} | 23,213 | 79,982 | | Net transaction costs | (193) | (608) | | Special dividends received as capital | 3,293 | 132 | | Unrealised losses on investments held | (52,989) | (35,739) | | **(Losses)/gains on investments** | **(26,676)** | **43,767** | $^{1}$ Gains on bookcost at purchase date upon disposal. During the year, the Company incurred transaction costs on purchases totalling in aggregate £316,000 (2023: £685,000) and on disposals totalling in aggregate £326,000 (2023: £453,000). Following MiFID II, the Manager has rebated £449,000 (2023: £530,000) in respect of transaction research costs for the year ended 31 December 2024. Transaction costs are recorded in the capital column of the Income Statement. The Company received £433,349,000 (2023: £478,935,000) from investments sold in the year. The bookcost of these investments when they were purchased was £410,329,000 (2023: £399,201,000). 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. During the year special dividends of £3,293,000 (2023: £132,000) were recognised on an ex-dividend basis and treated as capital. ### 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: Impax Environmental Markets plc | Annual Report and Accounts 2024 | 85 Financials Notes to the Financial Statements continued ## 2 Investments at fair value through profit or loss continued 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. The classification of the Company’s investments held at fair value is detailed in the table below:  December   December  Level  Level  Level  Total Level  Level  Level  Total         Investments at fair value through profit or loss - Quoted  – –   – –   – –   – –  The Company held no unquoted investments during the year and at the year end. ## 3 Income     Dividends from UK listed investments   Dividends from overseas listed investments   Scrip dividends received –  Total dividend income   Bank interest   Total Income   Dividends from overseas listed investments includes special dividends classified as revenue of £292,000 (2023: £75,000). ## 4 Investment management fee   Revenue Capital Total Revenue Capital Total       Investment management fee       Details of the investment management fee are given in the Directors’ report on page 57. At 31 December 2024, investment management fee accrued were £1,493,000 (2023: £2,225,000). 86 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials X ## 5 Other expenses | | 2024 | | | 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Auditor's fee^{1} | 50 | - | 50 | 48 | - | 48 | | Broker retainer fee | 27 | - | 27 | 24 | - | 24 | | Custody fees | 165 | - | 165 | 179 | - | 179 | | Depository fees | 93 | - | 93 | 95 | - | 95 | | Directors' fees^{2} | 187 | - | 187 | 157 | - | 157 | | Marketing fees | 144 | - | 144 | 68 | - | 68 | | Registrar's fees | 60 | - | 60 | 64 | - | 64 | | Secretary and administrator fees | 267 | - | 267 | 266 | - | 266 | | Other expenses | 358 | - | 358 | 242 | - | 242 | | | **1,351** | **-** | **1,351** | **1,143** | **-** | **1,143** | 1 The auditor's fee for the statutory audit of these financial statements was £49,875 (2023: £47,500), excluding VAT of £9,975 (2023: £9,500) and out of pocket expenses. 2 Full detail of Directors' fees for the year is provided in the Directors' Remuneration Implementation Report on page 67. Employer's National Insurance for Directors' fees is included as appropriate in Directors' other costs. At 31 December 2024, Directors' fees, Directors' expenses and national insurance outstanding were £nil (2023: £nil). ## 6 Finance costs | | 2024 | | | 2023 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | **Interest charges** | | | | | | | | Interest on bank loans and repaid revolving credit facility ('RCF') | - | - | - | 426 | 1,276 | 1,702 | | Interest on current RCF | 484 | 1,451 | 1,935 | 155 | 463 | 618 | | Interest on Loan Notes | 665 | 1,997 | 2,662 | 205 | 616 | 821 | | | **1,149** | **3,448** | **4,597** | **786** | **2,355** | **3,141** | | **Direct finance costs** | | | | | | | | Bank loans and repaid RCF | - | - | - | 3 | 9 | 12 | | RCF | 27 | 82 | 109 | 9 | 29 | 38 | | Loan Notes | 7 | 21 | 28 | 1 | 2 | 3 | | | **34** | **103** | **137** | **13** | **40** | **53** | | **Total** | **1,183** | **3,551** | **4,734** | **799** | **2,395** | **3,194** | Full details of the Company's borrowings are set out in note 11. 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. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 87 **X** Financials Notes to the Financial Statements continued ## 7 Taxation ### (a) Analysis of charge in the year | | Revenue £'000 | Capital £'000 | 2024 Total £'000 | Revenue £'000 | Capital £'000 | 2023 Total £'000 | | --- | --- | --- | --- | --- | --- | --- | | Overseas taxation | 2,042 | 259 | 2,301 | 1,601 | - | 1,601 | | Decrease in CGT provision | - | (4) | (4) | - | (133) | (133) | | **Taxation** | **2,042** | **255** | **2,297** | **1,601** | **(133)** | **1,468** | ### (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% (2023: 23.5%). 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 2024 was 25.0% (2023: 23.5%). The differences are explained below: | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Return on ordinary activities before taxation | (18,349) | 49,965 | | Corporation tax at 25.0% (2023: 23.5%) | (4,587) | 11,742 | | **Effects of:** | | | | Non-taxable UK dividend income | (585) | (329) | | Non-taxable overseas dividend income | (3,779) | (3,989) | | Movement in unutilised management expenses | 1,886 | 2,153 | | Movement on non-trade relationship deficits | 1,062 | 599 | | Losses/(gains) on investments not taxable | 7,017 | (10,285) | | (Gains)/losses in foreign currency movement | (1,014) | 109 | | Capital gains tax provision movement | (4) | (133) | | Overseas taxation | 2,301 | 1,601 | | **Total tax charge for the year** | **2,297** | **1,468** | (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 | | 2024 £'000 | 2023 £'000 | | --- | --- | --- | | Provision brought forward | 40 | 169 | | Capital gains tax cash movement | (5) | 4 | | Decrease in provision in year | (4) | (133) | | **Provision carried forward** | **31** | **40** | (e) The Company has unrelieved excess management expenses and non-trade relationship deficits of £111,078,000 (2023: £99,282,000). 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% (2023: 25%) amounts to £27,770,000 (2023: £24,821,000). 88 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials ## 8 Return per share Year ended Year ended  December  December     Revenue return after taxation (£’000)   Capital return after taxation (£’000) ()  Net return (£’000) ()  Weighted average number of ordinary shares   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   Rate  Rate  Interim in lieu of final for the previous year p  p  First interim for the current year p  p  p  p  (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   Rate  Rate  First interim for the current year p  p  Second interim in lieu of final for the current year p  p  p  p  The Board declared two dividends in respect of the year and expects to continue paying two dividends annually. ## 10 Trade and other payables     Finance costs payable   Accrued management fee   Other accrued expenses   Amounts due to brokers for shares bought back  – Total   Impax Environmental Markets plc | Annual Report and Accounts 2024 | 89 X Financials Notes to the Financial Statements continued ## 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: - €20m maturing on 1 September 2030 with a floating coupon of Euribor + 1.35%; - €30m maturing on 1 September 2033 with a fixed coupon of 4.48%; and - €10m 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 are as follows: | | Interest rate | Loan currency amount €'000 | 2024 Bookcost £'000 | Loan currency amount €'000 | 2023 Bookcost £'000 | | --- | --- | --- | --- | --- | --- | | **Loan Notes - Fixed and floating rate** | | | | | | | Series A - Floating 2030 | Euribor + 1.35% | 20,000 | 16,470 | 20,000 | 17,263 | | Series B - Fixed 2033 | 4.48% | 30,000 | 24,698 | 30,000 | 25,892 | | Series C - Fixed 2035 | 4.63% | 10,000 | 8,232 | 10,000 | 8,630 | | | | | **49,400** | | **51,785** | | **RCF - floating rate** | | | | | | | Non-sterling | Six month EURIBOR +1.6% | 40,800 | 33,716 | 40,943 | 35,312 | | | | | **83,116** | | **87,097** | The maturity profile of the Loan Notes and RCF are as follows: | Payable at 31 December | 2024 Bookcost £'000 | 2023 Bookcost £'000 | | --- | --- | --- | | RCF payable in less than one year | 33,716 | - | | RCF payable after more than one year | - | 35,312 | | Loan Notes payable after more than one year | 49,400 | 51,785 | | | **83,116** | **87,097** | 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 on page 43. There were no breaches of any covenants either in the year just ended or the prior year. 90 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials X ## 12 Share capital | | Number | 2024 £'000 | Number | 2023 £'000 | | --- | --- | --- | --- | --- | | **Issued and fully paid shares of 10p each** | | | | | | Brought forward | 281,115,039 | 28,111 | 304,167,039 | 30,416 | | Shares bought back and held in treasury | (41,253,520) | (4,125) | (23,052,000) | (2,305) | | **Carried forward** | **239,861,519** | **23,986** | **281,115,039** | **28,111** | | **Treasury shares of 10p each** | | | | | | Brought forward | 24,508,500 | 2,451 | 1,456,500 | 146 | | Shares bought back and held in treasury | 41,253,520 | 4,125 | 23,052,000 | 2,305 | | **Carried forward** | **65,762,020** | **6,576** | **24,508,500** | **2,451** | | **Share capital** | **305,623,539** | **30,562** | **305,623,539** | **30,562** | During the year, the total cost of shares bought back was £161,148,000 (2023: £89,315,000), of which £1,728,000 (2023: nil) was payable at the year end. Total costs included the costs of the shares and other purchase costs totalling £1,028,000 (2023: £452,000). As at 31 March 2025, the latest practicable date before publication of this report, a further 19,201,391 ordinary shares have been bought back at a total cost of £73,957,000, including purchase costs of £441,000. ## 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 239,861,519 (2023: 281,115,039) ordinary shares in issue at the year end (excluding treasury shares). | | 2024 Net asset value attributable | | 2023 Net asset value attributable | | | --- | --- | --- | --- | --- | | | £'000 | pence | £'000 | pence | | **Net Asset value – Debt at bookcost** | **1,028,084** | **428.62** | **1,222,484** | **434.87** | A reconciliation of shareholders funds with debt at fair value is shown in the Alternative Performance Measures on page 100. ## 14 Transactions with the Manager and related party transactions Details of the management contract can be found in the Directors' Report on pages 55 to 56. Fees payable to the Manager are detailed in note 4 on page 86. 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. 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 in pages 67 to 69. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 91 Financials Notes to the Financial Statements continued ## 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 ecient delivery of basic services of energy, water and waste, as stated in the Company’s investment objective which can be found on page 41. 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. Each is considered in turn below. (i) Currency risk The Company invests in global equity markets and therefore is exposed to currency risk as it aects 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 2024 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 2024.      change  change Australian Dollar   Canadian Dollar   Chinese Yuan   Danish Krone   Euro   Hong Kong Dollar ()  Indian Rupee   Israeli Shekel ()  Japanese Yen   Korean Won   Norwegian Krone   Swedish Krona   Swiss Franc  () Taiwanese Dollar   US Dollar ()  1 Percentage change of Sterling against local currency from 1 January to 31 December. 92 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials Based on the financial assets and liabilities at 31 December 2024 and all other things being equal, if sterling had strengthened by 10%, the profit after taxation for the year ended 31 December 2024 and the Company’s net assets at 31 December 2024 would have decreased by the amounts shown in the table below. If sterling had weakened by 10% this would have had the opposite eect.   Potential Potential eect eect ’ ’ Australian Dollar   Canadian Dollar   Chinese Yuan   Danish Krone -  Euro   Hong Kong Dollar -  Indian Rupee   Israeli Shekel   Japanese Yen -  Korean Won   Norwegian Krone   Swedish Krona   Swiss Franc   Taiwanese Dollar   US Dollar   Total   (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 a two-year £80 million multi-currency revolving credit facility based on a floating reference interest rate plus a margin of 1.60% per annum and a €20 million Loan Note due 2030 at EURIBOR+1.35%. Prior to 6 September 2023, the Company had in place a £20 million multi-currency revolving credit facility based on a floating reference interest rate plus a margin of 1.70% per annum. If rates had increased or decreased by 350 basis points the impact to the Company’s profit or loss would be:   Profit or loss Profit or loss  bps  bps  bps  bps  increase decrease  increase decrease 31 December Non-sterling Loan Note  ()   ()  Non-sterling RCF  ()   ()  Impax Environmental Markets plc | Annual Report and Accounts 2024 | 93 X Financials Notes to the Financial Statements continued ## 15 Financial risk management continued ### (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 £1,099,278,000 (2023: £1,295,847,000). 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 £109,927,800 (2023: £129,584,700) in the profit after taxation for the year ended 31 December 2024 and the Company's net assets at 31 December 2024. ### 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 2024 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. | | 2024 Expected as percentage at limit | | 2023 Expected as percentage at limit | | | --- | --- | --- | --- | --- | | | 1 in 20 (95%) | 1 in 100 (99%) | 1 in 20 (95%) | 1 in 100 (99%) | | 1 day return | 1.58 | 2.24 | 1.83 | 2.59 | | 5 day return | 3.54 | 5.01 | 4.10 | 5.80 | | 10 day return | 5.01 | 7.08 | 5.80 | 8.20 | | 21 day return | 7.26 | 10.27 | 8.40 | 11.89 | The above analysis has been based on the following main assumptions: - The distribution of share price returns will be the same in the future as they were in the past. - The portfolio weightings will remain as they were at 31 December 2024. The above results suggest, for example, that there is a 5% or less chance of the NAV falling by 3.54% or more over a 5 day period. Similarly, there is a 1% or less chance of the NAV falling by 2.24% or more on any given day. ### Credit risks BNP Paribas Securities Services (the 'Depository') has been appointed as custodian and depositary to the Company. Cash at bank at 31 December 2024 included £12,606,000 (2023: £16,095,000) held in its bank accounts at the Depository. The Company also held £799,000 (2023: £709,000) in its accounts with NatWest 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. Substantially all of the assets of the Company at the year end were held by the Depository or sub-custodians of the Depository. Bankruptcy or insolvency of the Depository or its sub-custodians may cause the Company's rights with respect to securities held by the Depository to be delayed or limited. The Depository 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 Depository held £1,099,278,000 (2023: £1,295,847,000) in respect of quoted investments. 94 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials The credit rating of the Depositary, which is a Fitch rating of A+, 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 diculty 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:   Within Within More than Within Within More than  year - years  years Total  year - years  years Total         Loan Notes – –   – –   RCF  – –  –  –  Interest cash flows on Loan Notes         Interest cash flows on RCF  – –    –  Cash flows on other creditors  – –   – –          Impax Environmental Markets plc | Annual Report and Accounts 2024 | 95 Financials Notes to the Financial Statements continued ## 15 Financial risk management continued Financial assets and liabilities All liabilities carrying amount approximates fair value. The Company’s financial assets and liabilities at 31 December 2024 comprised:   Non- Non- Interest interest Interest interest bearing bearing Total bearing bearing Total       Investments Australian Dollar –   –   Canadian Dollar –   –   Chinese Yuan –   –   Danish Krone – – – –   Euro –   –   Hong Kong Dollar – – – –   Indian Rupee –   –   Israeli Shekel –   –   Japanese Yen – – –   Korean Won –   –   Norwegian Krone –   –   Sterling –   –   Swedish Krona –   –   Swiss Franc –   –   Taiwanese Dollar –   –   US Dollar –   –   –   –   Other assets and liabilities Cash and cash equivalents Sterling  –   –  Taiwanese Dollar – – –  –  Chinese Yuan  –  – – – US Dollar  –   –   –   –  Short term debtors and creditors Sterling – () () – () () Canadian Dollar –   –   Euro () () () – () () Japanese Yen – – – –   Swiss Franc –   – – – US Dollar –   –   () () () – () () Long-term creditors Euro () – () () – () Indian Rupee – () () – – – () () () () – () Total ()   ()   96 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Financials 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 2024 there were 305,623,539 ordinary shares in issue (2023: 305,623,539) of which 65,762,020 ordinary shares were held in treasury (2023: 24,508,500). 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 on page 90 of the Financial Statements. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 97 Investor information ## Investor Information In this section 10 Year Financial Record 99 Alternative Performance Measures 100 Glossary 102 Directors, Manager and Advisers 103 98 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Investor information ## 10 Year F inancial R ecord (unaudited) As at  December           Net assets (Debt at fair 1,2 value) (£ millions)            NAV (Debt at fair value ) per 1,2 ordinary share p p p p p p p p  p p Share price p p p p p p p p p p 1, 2 Premium/(discount) () () ()      () () Year ended  December           NAV ( Debt at fair value) 1, 2,3 return    ()    ()  () 1, 3 Share price return    ()    () () () 4 MSCI ACWI Index    ()    ()   FTSE ET100 4    ()    ()   Revenue return per 5 Ordinary share p p p p p p p p p p 6 Dividends p p p p p p p p p p 2 Ongoing charges            Notes 1 These are considered to be APMs. 2 Net asset value with debt at fair value from 2023. Prior to 2023, debt was valued at book cost which approximated fair value. 3 Total return (discrete annual returns) – source: Morningstar up to 2016, Bloomberg 2017 thereafter (except year 2018). 4 Net total return (dividends reinvested net of withholding tax) for MSCI indices and total return for FTSE indices (discrete annual returns). 5 Revenue return/ordinary share is based upon the revenue return for the year to 31 December and the weighted average number of ordinary shares in issue (excluding Treasury shares) during the year. 6 Total dividends payable in respect of the year. Total returns to 31 December 2024 Cumulative Annualised Share MSCI ACWI FTSE ET Share MSCI ACWI FTSE ET     NAV price Index Index NAV price Index Index Year () () () () () () () () 1 year () ()   () ()   2 years  ()    ()   3 years () ()   () ()   4 years  ()    ()   5 years         6 years         7 years         8 years         9 years         10 years         Notes 1 These are considered to be APMs. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 99 Investor information ## A lternative P erformance M easures ## (“APMs”) (unaudited) 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  December Page   Total assets less cash/cash equivalents (£'000) a na   Net assets (Debt at fair value) (£'000) b    Gearing (net) (ab)-   ## 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 oset 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  December Page   Average NAV (£'000) a na   Investment management fee (£'000) b    Other expenses* (£'000) c    (bc)a   * Expenses that are not recurring, such as one-o legal fees and director recruitment 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  December Page   NAV per ordinary share (Debt at fair value) (p) a    Share price (p) a    (Discount)/premium (ba)- () () 100 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Investor information ## 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  December  Page price fair value) bookcost) Opening at 1 January 2024 (p) a na    Closing at 31 December 2024 (p) b     1 Dividend/income adjustment factor c na    Adjusted closing (d = b x c) d na    Total return (da)- – – – NAV NAV Share (Debt at (Debt at Year ended  December  Page price fair value) bookcost) Opening at 1 January 2023 (p) a na    Closing at 31 December 2023 (p) b     1 Dividend/income adjustment factor c na    Adjusted closing (d = b x c) d na    Total return (da)- -   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 239,861,519 (2023: 281,115,039) ordinary shares in issue.   Net asset value Net asset value attributable attributable  pence  pence Net asset value – Debt at bookcost (note 13) a     Add: Loan Notes at bookcost (note 11) b     Less : Loan Notes at fair value c () () () () Net asset value – Debt at fair value abc     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. For 2023, the discount rate for each tranche reflects the yield from the Euro Benchmark curve of similar maturity for each tranche and the spread of similar credit rated loans as observed via the ICE Bank of America Merrill Lynch Fixed Income Index. 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. For 2023, the valuer’s mid point valuation was used and was not materially dierent from the NAV with debt at fair value in the table above, 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. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 101 Investor information ## Glossary AIC Association of Investment Companies. Alternative Investment Fund or An investment vehicle under AIFMD. Under AIFMD (see below) Impax Environmental “AIF” Markets plc is classified as an AIF. Alternative Investment Fund A European Union directive which came into force on 22 July 2013 and has been Managers Directive or “AIFMD” implemented in the UK. Annual General Meeting or A meeting held once a year which shareholders can attend and where they can vote “AGM” on resolutions to be put forward at the meeting and ask Directors questions about the company in which they are invested. the Company Impax Environmental Markets plc (“IEM”). Custodian An entity that is appointed to safeguard a company’s assets. Discount/premium The amount, expressed as a percentage, by which the share price is less/more than the net asset value per share. Depositary Certain AIFs must appoint depositaries under the requirements of AIFMD. A depositary’s duties include, inter alia, safekeeping of a company’s assets and cash monitoring. Under AIFMD the depositary is appointed under a strict liability regime. Dividend Income receivable from an investment in shares. Ex-dividend date The date from which you are not entitled to receive a dividend which has been declared and is due to be paid to shareholders. Financial Conduct Authority or The independent body that regulates the financial services industry in the UK. “FCA” FTSE ET100/FTSE ET50 FTSE ET100/FTSE ET50 is a combination of the FTSE ET100 and FTSE ET50 indices. FTSE ET50 data is used for the period to 31 December 2013 and FTSE ET100 data is used for the period from 1 January 2014. The FTSE ET (Environmental Technology) 50and 100 indices comprise, respectively, the 50 and 100 largest pure play (i.e.deriving at least 50% of their business from environmental markets and technologies) environmental technology companies globally, by full market capital. Gearing eect The eect of borrowing on a company’s returns. Index A basket of stocks which is considered to replicate a particular stock market or sector. Investment company A company formed to invest in a diversified portfolio of assets. Investment trust An investment company which is based in the UK and which meets certain tax conditions which enables it to be exempt from UK corporation tax on its capital gains. The Company is an investment trust. Liquidity The extent to which investments can be sold at short notice. Net assets or net asset value An investment company’s assets less its liabilities. (“NAV”) Ordinary shares The Company’s ordinary shares in issue. Portfolio A collection of dierent investments held in order to deliver returns to shareholders and to spread risk. Relative performance Measurement of returns relative to an index. Share buyback A purchase of a company’s own shares. Shares can either be bought back for cancellation or held in treasury. Share price The price of a share as determined by a relevant stock market. Tracking error A measure, expressed as a percentage, of how closely a portfolio follows an index over a period of time. Treasury shares A company’s own shares which are available to be sold by a company to raise funds. Volatility A measure of how much a share moves up and down in price over a period of time. 102 | Impax Environmental Markets plc | Annual Report and Accounts 2024 Investor information ## D irectors, M anager and A dvisers DIRECTORS INVESTMENT MANAGER Glen Suarez (Chairman) Impax Asset Management (AIFM) Limited Stephanie Eastment (Audit Committee Chair) 7th Floor Aine Kelly (Senior Independent Director) 30 Panton Street Elizabeth Surkovic London Guy Walker SW1Y 4AJ BROKER REGISTERED OFFICE Winterflood Securities Limited 4th Floor Riverbank House 140 Aldersgate Street 2 Swan Lane London London EC1A 4HY EC4R 3GA Registered in England no. 4348393 Website: www.impaxenvironmentalmarkets.co.uk DEPOSITARY AND CUSTODIAN SECRETARY & ADMINISTRATOR BNP Paribas Securities Services Apex Listed Companies Services (UK) Limited 10 Harewood Avenue 4th Floor London 140 Aldersgate Street NW1 6AA London EC1A 4HY REGISTRAR AUDITOR MUFG Corporate Markets BDO LLP Central Square 55 Baker Street 29 Wellington Street London W1U 7EU Leeds LS1 4DL MUFG Corporate Markets (a division of MUFG Pension & Market Services) may be able to provide you with a range of services relating to your shareholding. To learn more about the services available to you please download the Investor Centre app or visit at uk.investorcentre.mpms.mufg.com or email on shar[email protected]g.com or call +44 (0) 371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. MUFG Corporate Markets are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales. You can also write to MUFG Corporate Markets at the address above. Details of how to contact the Registrar in regards to the Annual General Meeting are given the Notes to the notice of the AGM which will be sent to all shareholders entitled to receive such notice along with the Annual Report. The notice of AGM will also be made available on the Company’s website. Impax Environmental Markets plc | Annual Report and Accounts 2024 | 103 ### Annual Report & Accounts For the year ended 31 December 2024 Scan here for access to Impax Environmental Market plc's website, which will have the Company's latest Annual Report and the Circular and Notice for the 2025 Annual General Meeting. IMPAX ENVIRONMENTAL MARKETS PLC ###  clientservices@impaxenviron- mentalmarkets.co.uk Impax Environmental Markets plc ## impaxenvironmental ## markets.co.uk IMPAX ASSET MANAGEMENT ###  clientservices@impaxam.com Impax Asset Management ## impaxam.com