Half-yearly report

IMPAX ENVIRONMENTAL MARKETS PLC

Half-yearly Financial Report

FOR THE PERIOD
1 JANUARY 2008 TO 30 JUNE 2008



HALF-YEARLY MANAGEMENT REPORT AND CHAIRMAN'S REVIEW

Although the  first half  of  2008 has  been challenging  for  equity
markets, Impax Environmental Markets plc ("IEM" or "the Company") has
performed well compared with relevant indices. Against a backdrop  of
considerable  uncertainty  in  the   wider  economy,  we  have   been
encouraged that  environmental  issues  have  remained  high  on  the
political agenda and that growth in the markets to which the  Company
is exposed has continued.

Over the six  months period from  1 January until  30 June 2008,  the
Company's diluted net  asset value ("NAV")  decreased from 128.3p  to
123.7p, an overall decline of 3.6%,  while the share price fell 2.2%,
from 128.9p  to  126.0p. Over the same  period, the MSCI World  Index
(priced in Pounds Sterling)  declined by 12.1%.  The warrants in  the
Company that were issued in December 2005 were priced at 45.0p at the
start of 2008 and 40.8p at the end of June. Demand for the  Company's
shares has remained robust, trading at an average 0.9% premium to NAV
during the  period  and, under  its  general authority,  the  Company
issued 2 million new ordinary shares.  In addition, a further 659,168
ordinary shares were issued as a  result of the exercise of  warrants
on 16 June 2008.

Political  and  economic  support   for  environmental  markets   has
continued to  build.  Over  the past  few months,  UN climate  change
talks have made significant progress, and delegates are now aiming to
finalise new international policy by  December 2009. Last month,  the
G8 committed to  'consider and adopt'  a goal of  50% greenhouse  gas
emissions reduction by 2050. This commitment was weakened by the lack
of a baseline date on  which to measure reductions, but  nevertheless
represents a move  in the  right direction. This  goal is  considered
more achievable  given the  forthcoming change  of President  in  the
United States where both candidates have stated policy objectives  on
the environment in general and climate change in particular that  are
significantly   more   positive   than    those   of   the    current
administration.    Meanwhile,   incentives   for   improving   energy
efficiency in industrial sectors and adopting alternatives to  fossil
fuels have continued to increase as the price of oil has risen.

As a result of the introduction of the Companies Act 2006 (the "Act")
a  number  of  changes  to  the  Company's  Articles  of  Association
("Articles") are  proposed.  A  circular on  the subject  accompanies
this report and shareholder approval will be sought for the  adoption
of revised Articles at a General  Meeting to be held on 30  September
2008.  The proposed changes to the Articles are solely in response to
the implementation  of the  Act  and other  changes  in the  law  and
practice applicable to the Company since it was formed in 2002.

Equity markets have  continued to be  volatile since the  end of  the
period under review and, as at  22 August 2008, the MSCI World  Index
had risen 2.4% since 1 July 2008 and is now down 10.0% in the year to
date.  The diluted NAV of IEM had increased 2.0% to 126.2p while  the
share price had retreated  4.7% to 120.1p and  now stands at a  small
discount  to  NAV.   Looking   ahead,  the  Directors  believe   that
uncertainty in global  equity markets  will continue  but that,  with
strong fundamentals,  IEM  shares  continue to  offer  an  attractive
opportunity for investors  seeking exposure to  the long term  growth
potential inherent in environmental markets.

Richard Bernays
28 August 2008





MANAGER'S REPORT

Despite the  decline in  the  Company's NAV  in  the first  half,  we
believe that IEM has performed  relatively well in falling  markets.
The Company has  benefited from  rising commodity  prices and  strong
spending in utility, energy,  infrastructure and industrial  sectors,
as well  a renewed  spate  of merger  and acquisition  activity.  The
principal challenges  have  been  ongoing  weakness  in  housing  and
construction markets in Europe and North America, which has tended to
slow the pace of investment in certain energy efficiency measures and
in related water infrastructure.

Investment Approach & Portfolio Structure
The  Company's  investment  universe  continues  to  expand  and  now
consists of  in  excess  of  750 companies  with  a  combined  market
capitalisation of  over  US$  450  billion.   Not  withstanding  weak
markets, there  have  been  a  number  of  initial  public  offerings
("IPOs") in the  environmental sector, notably  EDP Renovaveis  (wind
farm utility, Portugal), which has a market capitalization of ca. ¤ 9
billion, making it the seventh largest company in the universe.

We began  the year  with  87 companies  in the  portfolio  (excluding
unlisted investments).  Subsequently, 2  of our  holdings were  taken
over, we made  4 new investments  (including one IPO  participation),
and sold  out  of  2  stocks, leaving  87  listed  companies  in  the
portfolio on 30 June 2008, plus 7 "late stage" unlisted  investments,
of which 2 were new during  the period. The principal changes in  the
portfolio structure were firstly an  increase in the exposure to  the
Rest of the  World (principally Asia)  to 11% and  a decrease in  the
holdings in unprofitable companies to 5%.

The Impax investment approach continues to include an ongoing  review
of emerging themes in environmental markets and a detailed  bottom-up
analysis of companies positioned to benefit from these  developments.
The emphasis  remains  on companies  active  in growth  markets  with
profitable business models,  strong management  teams and  attractive
valuations.

Alternative Energy and Energy Efficiency
A number of important  new policies and  regulations were adopted  or
advanced during  the period.   The  European Commission  confirmed  a
proposal for  securing 20%  of overall  EU energy  requirements  from
renewable sources by 2020. In January 2008, the Commission  presented
its country specific  targets for achieving  this goal as  well as  a
raft of  other recommendations,  particularly  a 20%  greenhouse  gas
reduction target, and a 20% increase  in energy efficiency - both  to
be achieved by 2020.  Meanwhile in the US, President Bush signed into
law the  Energy Independence  and Security  Act, with  an  aggressive
national ethanol mandate of 9 billion gallons entering into force  at
the beginning of 2008, rising to 36 billion gallons by 2022.

We have continued to find more interesting opportunities in the  wind
sector than in solar.  In solar, we have seen considerable regulatory
uncertainty first  in  the  German market  (now  resolved),  and  the
Spanish market (still  pending resolution) which  has led to  reduced
visibility of demand, margin uncertainty and share price volatility.
Meanwhile, the more geographically diverse wind markets have remained
strong with the principal  turbine manufacturers (Vestas and  Gamesa)
showing strong growth and margins.

Other   positive   developments    have   included   the    increased
competitiveness of  natural gas  engines due  to the  widening  price
spread between natural gas and gasoline. This has led to rapid growth
in business  for  both  Fuel  Systems  Solutions  (US)  and  Westport
Innovations (Canada).   Also,  in  May, IEM  holding  Chloride  Group
(uninterruptible power supplies,  UK) was the  subject of a  takeover
bid by Emerson Electric which led to a re-rating of its share  price.
Meanwhile,  companies   offering  energy   efficiency  products   for
buildings such as Kingspan (insulation, Ireland) and Nibe  Industries
(ground source heat pumps,  Sweden) have struggled in  the face of  a
continued slowdown in the housing and construction sectors.

Water Treatment and Pollution Control
Several countries  experienced water  scarcity and  pollution  issues
first  during  the  first  half  of  2008.  The  Spanish   government
introduced measures to  relieve the  impact of the  driest winter  in
memory, including diverting water between regions to ensure  supplies
to 2.5 million people in the southeast. Meanwhile, as Australia tried
to recover from the worst drought on record, the government announced
that US$ 12  billion will be  spent over ten  years to improve  water
efficiency and productivity. There have been a number of developments
in China in advance of the  Beijing Olympic Games including a cut  in
sulphur dioxide emissions by 6% in 2008 and an upgrade of  wastewater
treatment capacity by 12 million tones per annum.

In January,  a report  from the  US Environmental  Protection  Agency
(EPA) estimated that US$ 200 billion of capital investment is  needed
in the US to control wastewater pollution and meet the objectives  of
the Clean  Water Act.  The  findings represent  an 8.6%  increase  on
previous estimates reflecting population growth, higher water quality
standards and ageing  infrastructure. Separately,  the UK  government
announced  plans  for  an  independent  review  into  domestic  water
charging, which could lead to compulsory meters in areas of  'serious
water stress' by 2030.

The major  positive contributors  to  performance during  the  period
included   Polypore   International   (filtration   and    separation
technologies, US) and Whatman Plc (filtration products, UK) which was
acquired by General Electric in  April. In contrast, Horiba  (testing
and monitoring, Japan) has had a disappointing start to the year  due
to its exposure to weakening semiconductor and automotive markets.

Waste Technologies and Resource Management
New legislation in  the waste sector  continues to promote  diversion
from landfill, producer responsibility and recycling. In the UK,  the
government announced that spending for recycling and incineration  to
meet EU Landfill Directive requirements  would rise to £ 700  million
in 2010/11. In April,  landfill tax in  the UK increased  by £ 8  per
tonne in  line with  the escalator  proposed in  2007. Meanwhile  the
European Parliament  completed a  significant  revision of  EU  waste
management  rules   including   more  ambitious   goals   to   divert
biodegradable waste  from  landfill.  The  proposed  changes  include
adopting the first  ever EU-wide  recycling target  of 50%  household
waste, and 70% of all waste from construction and demolition activity
by 2020.

Producer responsibility gained ground in the US over the period.  New
York City adopted an electronic waste ("e-waste") recycling standards
bill requiring manufacturers to collect 25% by 2012, rising to 65% by
2018, or  face  financial penalties.  Nine  states now  have  similar
legislation, and pressure is mounting at the Federal level to  tackle
the growing issue of e-waste disposal.

The metals recycling sector  has also seen  strong growth during  the
period driven by rising  commodity prices, recycling legislation  and
sector consolidation. The Company's two investments in this area have
both performed well. Following its merger with Metal Management (US),
Sims Group  (Australia)  has started  to  benefit from  an  increased
market share in the  global scrap market  while Metalico Inc  (metals
recycler, US)  has seen  good performance  in its  recently  acquired
platinum recycling  business, where  pricing has  been very  strong.
However a number  of larger waste  companies have uncomfortably  high
levels of  debt, which  has presented  a challenge  as they  seek  to
refinance in the  face of  rising interest  rates; both  Transpacific
Industries  (Australia)   and  Séché   Environnement  (France)   have
experienced such headwinds during the first half of the year.

Unquoted Investments
The  Company's  portfolio  of  unquoted  investments  has  made  good
progress in  the last  six  months.   We  made new  investments  into
Emergya Wind Technologies Holdings  NV (Euro5m) and Nordic  Windpower
Limited  (£5m)  and  we  added  £1.5m  into  our  portfolio   company
Sterecycle Limited.  At  30  June 2008,  we  held  seven  investments
representing 3 per cent of the IEM portfolio.

With challenging market conditions  for IPO's, we anticipate  several
opportunities to deploy more capital into current portfolio companies
at attractive valuations.  We continue  to see strong  deal flow  and
remain on track towards the target of 6 per cent to 7 per cent of the
IEM portfolio.

Outlook
We believe the  key drivers of  the Company's investment  hypothesis,
namely market  liberalisation, tightening  environmental  legislation
and increased competitiveness of cleaner more efficient  technologies
continue  to  deliver   earnings  growth   and  generate   attractive
investment opportunities.  In  addition, corporate  activity  in  the
sector is likely  to further  enhance returns.  Currently, we  remain
concerned about the  risks of further  financial instability and  the
global economic slowdown turning into a recession; both are likely to
affect valuations of smaller companies as well as the utility, energy
and industrial spending cycles. Nevertheless, we are confident in the
long term drivers of environmental  markets that counter this  effect
and  underpin  superior   growth  rates.   With   this  backdrop,   a
diversified portfolio  and  an  attractive  portfolio  valuation,  we
continue to be positive on the prospects for the Company.

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


Impax Asset Management Ltd.
28 August 2008


TEN LARGEST HOLDINGS

AS AT 30 JUNE 2008

Chloride Group (UK)
Chloride  is  the   leading  specialist  in   the  power   protection
marketplace. The company's  range of  Uninterruptible Power  Supplies
("UPS") and  software  protects mission-critical  applications  in  a
variety of sectors worldwide. As these UPS markets continue to  grow,
Chloride is  also  gaining  market share  through  a  combination  of
superior  technology  and  an  innovative  service-oriented   product
offering. Top line expansion is  expected to support annual  earnings
growth in excess of 20%. In 2007, the company made two  acquisitions:
AST Electronique  Services,  a company  specializing  in  third-party
maintenance in  the UPS  service market  in France;  and Ascor  Power
Systems,  a  supplier  of  critical  power  protection  services   in
Singapore. The Chloride  business remains  an attractive  acquisition
target in a consolidating market.

Clean Harbors (United States)
Clean Harbors is  North America's leading  provider of  environmental
and hazardous waste management  services.  With an infrastructure  of
51  waste  management  facilities,  including  nine  landfills,   six
incineration locations,  six  wastewater treatment  centres  and  two
solvent recovery facilities,  the company provides  services to  over
45,000 corporate and public entities. Headquartered in Massachusetts,
Clean Harbors has more than 100 locations strategically positioned in
36 US states,  six Canadian  provinces, Mexico and  Puerto Rico.  The
company continues  to look  to  expand their  market share  in  North
America and is well  positioned to grow  through closure of  in-house
industrial  waste   treatment  plants   that  are   unable  to   meet
increasingly stringent legislation.

Ormat Technologies (Israel / US)
Ormat is a  leading player in  the geothermal power  markets, with  a
dual  strategy  of  owning  and  operating  power  plants  under  its
deregulated  generation   business   and  also   selling   geothermal
generation equipment to third parties. The company stands to  benefit
from growth driven by increasing governmental support for renewables,
the  particular  appeal  of  geothermal  for  large  scale  base-load
generation and high power prices.  With a huge potential resource,  a
strong pipeline  of  444 MW  of  capacity under  development,  proven
technology and an ability  to execute on  large projects, we  believe
Ormat to be an attractive long term asset for the Company.

Itron (US)
Itron is the  leading global solutions  provider for the  collection,
analysis and application of electric,  gas and water usage data.  The
company employs  a number  of  key technologies  including  automated
meter reading ("AMR"), energy  management systems and transmission  &
distribution software. Building on its leading market position in the
US (where  Itron has  won all  utility projects  announced to  date),
especially in the electrical segment, Itron acquired Actaris in  2007
for US$1.6  billion,  providing a  strong  foothold in  the  European
markets for the gas and  water segments. Following this  acquisition,
and with penetration  rates for  AMR still relatively  low, Itron  is
well positioned to achieve further growth.

Vestas Wind Systems (Denmark)
With a 23% market share in 2007, and cumulative installations of more
than 35,000 wind  turbines worldwide, Vestas  is the world's  largest
manufacturer of  wind turbines.  Strong end  market demand,  together
with a change in  management, has enabled  Vestas to greatly  improve
its profitability and simultaneously  reduce working capital,  issues
which had previously weighed on  the share price. Despite  increasing
competition from Asian players, as well as GE and Siemens, Vestas  is
well positioned to benefit from  sector growth over the medium  term,
especially in the multi-megawatt and offshore sector.

Sims Group (Australia)
Sims Group is a metal recycling company with two primary  businesses:
metal recycling and recycling solutions. The metal recycling business
involves the  collection, processing  and  marketing of  ferrous  and
non-ferrous metals. Sims operates in the metals recycling markets  of
Australasia, the east  and west coasts  of the USA,  and the UK.  The
recycling solutions business involves the e-recycling of  information
technology equipment and  electrical and  electronic consumer  goods,
and has  operations in  Europe, North  America and  Asia Pacific.  In
March 2008, the company completed a merger with Metal Management Inc,
a service  metal  recycler in  the  US,  and in  April  completed  an
acquisition of Life  Cycle Services  in the UK.  The metal  recycling
industry is  an  attractive  investment opportunity  in  the  current
climate of escalating  energy prices, commodity  price inflation  and
scarcity and global  environmental concerns. Recycling  has become  a
necessity for  industrial growth  and stability,  for example  making
aluminium from scrap uses 96% less energy than from virgin materials,
with iron and steel from scrap using 74% less.

Gamesa Corp (Spain)
Gamesa is a leading manufacturer  of wind turbines and developer  and
operator of wind farms.  The company is the  market leader in  Spain,
and had a global  market share of 15%  in 2007. The company  benefits
from a strong strategic relationship with Iberdrola Renovables.  This
was strengthened  in the  first  half of  2008  with a  new  contract
announcement, which provides a guaranteed route to market for turbine
sales  and  a  larger,  good   quality  portfolio  of  projects   for
development. Gamesa has  a portfolio  of more than  21,000MW of  wind
power in  Europe,  America  and  Asia  and  is  well  positioned  for
expansion in growth markets.

Pall Corp (United States)
Pall is  the largest  and most  diverse filtration,  separations  and
purifications company in the world. The company's technologies remove
solid, liquid and gaseous  contaminants from a  range of liquids  and
gases serving the life sciences  and industrial sectors. The  company
has a reputation for targeting  high value added niches, for  product
innovation and aggressive geographical  expansion, resulting in  high
digit sales growth.  As with  all filtration businesses,  Pall has  a
substantial  replacement   parts   business,  which   has   defensive
characteristics in times of economic uncertainty.

Regal Beloit (United States)
Regal Beloit is  a leading US  manufacturer of  commercial/industrial
electric motors,  HVAC (heating,  ventilation and  air  conditioning)
motors, electric  generators  and mechanical  motion  controls.   The
company continues  to benefit  from legislation  which is  forcing  a
shift towards higher efficiency  HVAC motors. This  is an area  where
Regal Beloit has a strong  presence following its acquisition of  the
GE HVAC  businesses. The  GE  acquisitions also  brought in  new  and
ambitious management, and increased economies of scale which has been
positive for the  company. With increasing  emphasis being placed  on
energy efficiency  as  a means  to  combat climate  change  and  with
multiple new products in this area, Regal Beloit looks well-placed to
grow despite a challenging industrial environment.

Polypore International (United States)
Polypore is a global high technology filtration company that develops
manufactures and markets specialized  micro-porous membranes used  in
separation and  filtration processes.  The  company operates  in  two
segments - energy storage and  separations media. The energy  storage
segment produces membranes that separate  the cathode and anode in  a
variety of  battery markets,  including lithium-ion,  industrial  and
transportation applications,  including  for electric  vehicles.  The
separations  media  segment  produces  membranes  used  as  the  high
technology filtration  element  in  various  industrial  and  medical
applications, including ultra-pure water filtration. In May 2008, the
company completed the acquisition of Yurie-Wide Corporation, a  South
Korean company,  further  enhancing their  strategic  expansion  into
Asian markets and expanding the lithium-ion portfolio.




TOP TEN HOLDINGS IN COMPANIES
as at 30 June 2008
All the top ten holdings are of ordinary shares


                          Cost Valuation Percentage of
                         £'000     £'000     Portfolio

Chloride Group           4,528    10,276          2.79
Clean Harbors            6,187     9,253          2.51
Ormat Technologies       7,079     9,229          2.51
Itron                    5,516     9,203          2.50
Vestas Wind Systems      2,959     8,601          2.34
Sims Group               5,138     8,442          2.29
Gamesa Corp              4,485     8,343          2.27
Pall Corp                6,990     8,232          2.24
Regal Beloit             8,646     8,192          2.23
Polypore International   4,259     7,405          2.01

Top ten holdings        55,787    87,176         23.69
Other holdings         276,050   280,771         76.31
Total holdings         331,837   367,947        100.00




STRUCTURE OF PORTFOLIO
as at 30 June 2008


BREAKDOWN BY REGION (country of quotation or in the case of unquoted
investments, country of incorporation)


                  2008 2007
EU & EFTA         46%  49%
North America     42%  41%
Rest of the World 12%  10%



BREAKDOWN BY SECTOR


       2008 2007
Energy 42%  42%
Water  26%  26%
Waste  32%  32%



BREAKDOWN BY PROFITABILITY


                                   2008 2007
Profitable                         94%  92%
Unprofitable (including unquoteds) 6%   8%



BREAKDOWN BY MARKET CAPITALISATION


           2008 2007
> £1bn     35%  25%
£100m-£1bn 58%  66%
< £100m    4%   8%
Unquoted   3%   1%



Note:  The comparative figures are as at 30 June 2007.




DIRECTORS' STATEMENT OF RESPONSIBILITY
FOR THE HALF-YEARLY REPORT

The Directors confirm to the best of their knowledge that:



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




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



Richard Bernays
Chairman



INCOME STATEMENT



                        6 6 months  6 months        6       6       6
                  months         to        to months  months  months
                       to   30 June   30 June      to      to      to
                  30 June      2008      2008 30 June 30 June 30 June
                     2008   Capital     Total    2007    2007    2007
                  Revenue                     Revenue Capital   Total
                    £'000     £'000     £'000   £'000   £'000   £'000

Gains          on       -  (14,146)  (14,146)       -  36,964  36,964
investments

Income
  - from            2,645         -     2,645   1,274       -   1,274
investments
  - bank interest     219         -       219     105       -     105

Investment          (438)   (1,313)   (1,751)   (330)   (989) (1,319)
management fees
Other expenses      (421)         -     (421)   (405)       -   (405)

Return         on
ordinary                             (13,454)                  36,619
activities before
taxation            2,005  (15,459)               644  35,975

Taxation            (272)         -     (272)   (124)       -   (124)
Return         on
ordinary
activities  after                    (13,726)     520  35,975  36,495
taxation            1,733  (15,459)

Return per
Ordinary Share
(see note 8)
- Undiluted         0.57p   (5.11p)   (4.54p)   0.25p  17.62p  17.87p
- Diluted           0.57p   (5.04p)   (4.47p)   0.25p  17.28p  17.53p



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

All capital  and revenue  items in  the above  statement derive  from
continuing operations.  No operations  were acquired or  discontinued
during the period.

A Statement of Total Recognised Gains and Losses is not required,  as
all gains and losses of the Company have been reflected in the  above
statement.



BALANCE SHEET


                        At 30 June 2008 At 30 June 2007     At 31 Dec
                                  £'000           £'000          2007
                                                                £'000

  Fixed assets
  Investments at fair           367,947         274,346       381,703
  value (see note 3)

  Current assets
  Sales for future                  852           1,023         1,799
  settlement
  Other debtors                     206             239           208
  Cash at bank and in            13,615           7,400        12,476
  hand
                                 14,673           8,662        14,483

  Creditors: amounts
  falling due within
  one year
  Purchases for future            (916)           (799)       (2,329)
  settlement
  Accrued liabilities             (528)           (519)       (1,145)
                                (1,444)         (1,318)       (3,474)


  Net current assets             13,229           7,344        11,009

  Total net assets              381,176         281,690       392,712

  Capital and reserves:
  Equity
  Share capital                  30,390          21,741        30,125
  Share premium                 244,857         147,245       242,024
  Share purchase                 44,125          44,125        44,125
  reserve
  Capital reserves               59,768          68,005        75,226
  Revenue reserve                 2,036             574         1,212
  Shareholders' funds           381,176         281,690       392,712

  Net asset value per
  share

  Net asset value per
  share (see note 4)
  -          Undiluted          125.43p         129.57p       130.36p
  -
  -          Diluted            123.69p         126.77p       128.25p
  -

  Ordinary Share price          126.00p         129.25p       128.88p

  Ordinary Shares in        303,905,220     217,407,088 301,246,05222
  issue

  Warrants in issue          19,104,153      19,763,321    19,763,321

  Warrant price                  40.75p          48.00p        45.00p





CASH FLOW STATEMENT


                                             6 months        6 months
                                      to 30 June 2008 to 30 June 2007
                                                £'000           £'000
Operating activities
Cash inflow from investment income              2,877           1,351
and bank interest
Cash outflow from management expenses         (2,793)         (1,761)
Cash inflow from disposal of                   51,335          39,577
investments
Cash outflow from purchase of                (52,103)        (56,359)
investments
Cash outflow from net foreign                    (89)           (104)
exchange losses
Foreign tax paid                                (278)           (124)
Net cash flow from operating                   (1051)        (17,420)
activities

Equity dividends paid                           (908)           (401)

Financing
Issue of share capital (net of                  3,098          21,155
expenses)
Net cash flow from financing                    3,098          21,155

Increase in cash                                1,139           3,334

                                                 2008            2007
                                                £'000           £'000
Opening balance                                12,476           4,066
Cash inflow                                     1,139           3,334
Balance at 30 June                             13,615           7,400





RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS


                                    6 months   6 months Year ended 31
                             to 30 June 2008 to 30 June      Dec 2007
                                                   2007
                                       £'000      £'000         £'000

Profit for year                     (13,726)     36,495        44,355
Final dividend (see note 6)            (908)      (401)         (401)
Issue of new shares* (see              3,098     21,155       124,317
note 7)

Net increase in                     (11,536)     57,249       168,271
shareholders' funds

Opening shareholders' funds          392,712    224,441       224,441

Closing shareholders' funds          381,176    281,690       392,712



* Net of share issue expenses




NOTES TO THE ACCOUNTS

1              Accounting standards

The Half-yearly financial report has been prepared in accordance with
applicable UK accounting standards.

2              Investment company status

These financial statements  have been  presented using  UK GAAP.  The
Company manages its affairs to enable it to qualify as an  investment
trust for  taxation purposes  under  section 842  of the  Income  and
Corporation Taxes Act.  The  Company therefore presents its  accounts
in  accordance  with  the  Statement  of  Recommended  Practice   for
Investment Companies.

3              Investments

Investments have been  classified as "fair  value through profit  and
loss".  Securities of companies  quoted on regulated stock  exchanges
are valued by  reference to  their market  bid prices  at the  period
end.  Unquoted  investments  are  measured at  fair  value  which  is
determined by  the directors  in  accordance with  the  International
Private Equity and Venture Capital guidelines.

Transaction  costs  incurred  on  the  acquisition  and  disposal  of
investments are charged to the Income Statement as a capital item.

4              Net assets per share

Undiluted net assets per share figures are based on the net assets of
the Company attributable to the number of Ordinary Shares in issue at
the end of the period.

Diluted net assets per share figures  are based on the net assets  of
the Company  plus the  amount  which would  have been  subscribed  by
Warrantholders had all the outstanding warrants been exercised at the
end of the  period divided  by the  number of  ordinary shares  which
would have been in issue had  all the Warrants been exercised at  the
end of the period.  No adjustment is made if the potential effect  of
the exercise of Warrants is anti-dilutive.

5              VAT

As a  result  of  the developments  of  a  legal test  case,  VAT  on
management fees paid in previous  years may become recoverable.   The
Company has not  paid any  VAT on  management fees  with effect  from
October 2007.  Since the  Company's launch in  February 2002, it  has
suffered £367,000 of unrecovered  VAT on management fees.   Agreement
has not yet been reached on how much will be recovered and  therefore
no amount in respect of this contingent asset has been recognised  in
these accounts.

6              Dividend

The final dividend for  the year ended 31  December 2007 of 0.3p  per
share was paid on 14 May  2008 (year ended 31 December 2006  dividend
of 0.2p per share was  paid on 10 May  2007).  In accordance with  UK
accounting  standards  the  dividend  has  been  recognised  in   the
Half-yearly financial accounts for the six months ended 30 June 2008.

7              New share issues

On 28 February 2008,  an allotment of  1,500,000 Ordinary Shares  was
made at an issue price of 122.6p per share. On 12 May 2008 a  further
allotment of 500,000 Ordinary  Shares was made at  an issue price  of
131.0p per shares. These shares were issued under the authority given
by shareholders at General Meetings of the Company.

In addition to the above, 659,168 Warrants were exercised on 16  June
2008  resulting  in  the  issue  of  659,168  Ordinary  Shares.   The
subscription price was 96p  per share. The  new ordinary shares  were
admitted to trading on the London Stock Exchange on 23 June 2008.

The number  of  Ordinary Shares  in  issue as  at  30 June  2008  was
303,905,220.

The number of Warrants in issue as at 30 June 2008 was 19,104,153.

8              Return per share

Return per share is based on the net return attributable on  ordinary
activities after  taxation attributable  to the  weighted average  of
302,423,378 (2007: 204,113,779) Ordinary  Shares in issue during  the
period.

Diluted return per share is based  on the net return attributable  on
ordinary  activities  after  taxation  attributable  to  the  diluted
weighted average of 306,760,797  (2007: 208,147,761) Ordinary  Shares
in issue during the period.  The  dilution is caused by the  warrants
in issue during the period.

9              Related party transactions
Fees payable to the Manager are shown in the Income Statement. At 30
June 2008 fees were accrued of £296,443 to the Manager.

10            Status of this report

These financial statements are not the Company's statutory accounts.
They are unaudited.  The Half-yearly financial report will be sent to
shareholders.  Copies will also  be made available  to the public  at
the registered office  of the  Company and on  the Manager's  website
(www.impax.co.uk).

The Half-yearly  financial report  was approved  by the  Board on  28
August 2008.

The Company's statutory accounts for the year ended 31 December  2007
received an unqualified  audit report  and have been  filed with  the
registrar of companies at Companies House.


DIRECTORS, MANAGER AND ADVISERS



DIRECTORS                  INVESTMENT MANAGER
Richard Bernays (Chairman) Impax Asset Management Limited
Dr Robert Arnott           Broughton House
Charles Berry              6-8 Sackville Street
William Brown              London W1S 3DG
Keith Niven

SOLICITOR                  SECRETARY AND ADMINISTRATOR
CMS Cameron McKenna        Cavendish Administration Limited
Mitre House                145-157 St. John Street
160 Aldersgate Street      London EC1V 4RU
London EC1A 4DD
                           REGISTRAR
CUSTODIAN                  Capita Registrars
The Northern Trust Company The Registry
50 Bank Street             34 Beckenham Road
Canary Wharf               Beckenham
London E14 5NT             Kent BR3 4TU

AUDITOR                    BANKER
Ernst & Young LLP          Lloyds TSB Bank Plc
1 More London Place        Moorgate Branch
London SE1 2AF             34 Moorgate
                           London EC2R 6PL

REGISTERED OFFICE*
145-157 St. John Street
London EC1V 4RU




* Registered in England and Wales No. 4348393