Half-yearly report

Preliminary announcement of interim results of Impax Environmental Markets plc for the six months ended 30 June 2007 CHAIRMAN'S STATEMENT Impax Environmental Markets plc ("IEM" or "the Company") has performed well in the first half of 2007. Against a backdrop of reminders that the environment remains under threat, companies active in environmental markets have continued to deliver value for shareholders. Over the interim period from 1 January until 30 June 2007, the Company's diluted net asset value ("NAV") increased from 110.6p to 126.8p, an overall rise of 14.6%, while the share price rose 12.0% from 115.4p to 129.3p. Over the same period, the MSCI World Index (priced in Pounds Sterling) rose 5.4%. In addition, the warrants in the Company that were issued in December 2005 were priced at 40p at the start of 2007 and 48p at the end of June. Demand for the Company's shares has remained robust with the Company continuing to trade at a premium to net asset value. In July, after the end of the interim period, the directors announced proposals for the issue of C Shares by way of a placing, open offer and offer for subscription sponsored by Dresdner Kleinwort. I am pleased to report that the Company has been successful in raising £105 million before expenses, taking net assets to over £370 million. Your Board believes that the C Share issue has provided the Company's shareholders with several benefits, particularly an increased size over which the Company can spread its costs, and the potential for greater liquidity for its shares. The drivers of environmental markets continue to strengthen. The political and economic debate around global climate change is rarely out of the newspapers, and there is renewed momentum to introduce legislation to stem this change. Meanwhile, during 2007 there has been further evidence that rainfall patterns have changed significantly around the world, with sustained, acute drought conditions in much of Australia followed by extreme weather in Europe. Elsewhere, concern about the impact of local air pollution has heightened, particularly in China, where the authorities in Beijing are experimenting with measures to prevent smog in time for the 2008 Olympics. In the second half of the year equity markets have experienced a sharp correction as concerns about sub-prime loans in the United States have impacted a broad range of financial markets. As at 19 September, the NAV was 124.3p and the share price was 128.8p. Looking ahead, the directors believe that uncertainty in global equity markets may continue over the coming months, and this is likely to lead to further volatility. However, for investors that are prepared to take a medium to long-term perspective, the valuations of these holdings appear attractive at current levels. Richard Bernays 21 September 2007 INCOME STATEMENT 6 months 6 6 6 6 6 to months months months months months 30 June to to to to to 2007 30 June 30 June 30 June 30 June 30 June Revenue 2007 2007 2006 2006 2006 Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on - 36,964 36,964 - 12,594 12,594 investments Income - from 1,274 - 1,274 586 - 586 investments - bank interest 105 - 105 41 - 41 Investment (330) (989) (1,319) (183) (547) (730) management fees Other expenses (405) - (405) (244) - (244) Return on ordinary activities before 36,619 12,247 tax 644 35,975 200 12,047 Taxation (124) - (124) (52) - (52) Return after 36,495 12,195 taxation 520 35,975 148 12,047 Return per Ordinary Share (see note 7) - Basic 0.25p 17.62p 17.87p 0.12p 9.69p 9.81p - Diluted 0.25p 17.28p 17.53p 0.12p 9.48p 9.60p 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 2007 At 30 June 2006 At 31 Dec £'000 £'000 2006 £'000 Fixed assets Investments at fair 274,346 130,918 219,994 value (see note 3) Current assets Sales for future 1,023 768 1,462 settlement Other debtors 239 146 167 Cash at bank and in 7,400 6,617 4,066 hand 8,662 7,531 5,695 Current liabilities Purchases for future (799) (3,173) (735) settlement Accrued liabilities (519) (290) (513) (1,318) (3,463) (1,248) Net current assets 7,344 4,068 4,447 Total net assets 281,690 134,986 224,441 Capital and reserves Share capital 21,741 13,089 20,036 Share premium 147,245 66,709 127,796 Share purchase reserve 44,125 44,125 44,125 Capital reserves 68,005 10,817 32,030 Revenue reserve 574 246 454 Equity shareholders' 281,690 134,986 224,441 funds Net asset value per share Net asset value per share (see note 4) - Undiluted 129.57p 103.13p 112.02p - - Diluted 126.77p 102.19p 110.58p - Ordinary Share price 129.25p 106.25p 115.38p Ordinary Shares in 217,407,088 130,887,352 200,356,027 issue Warrants in issue 19,763,321 19,814,382 19,814,382 Warrant price 48.00p 35.50p 40.00p CASH FLOW STATEMENT 6 months 6 months to 30 June 2007 to 30 June 2006 £'000 £'000 Operating activities Cash inflow from investment income 1,351 613 and bank interest Cash outflow from management expenses (1,885) (1,056) Cash inflow from disposal of 39,577 15,686 investments Cash outflow from purchase of (56,359) (28,566) investments Cash outflow from net foreign (104) (59) exchange losses Net cash flow from operating (17,420) (13,382) activities Financing Issue of share capital 21,155 15,863 Equity dividends paid (401) - Net cash flow from financing 20,754 15,863 Increase in cash 3,334 2,481 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS 6 months 6 months Year ended 31 to 30 June to 30 June Dec 2006 2007 2006 £'000 £'000 £'000 Profit for year 36,495 12,195 33,616 Final dividend for year ended 31 (401) - - December 2006 (see note 5) Issue of new shares* (see note 6) 21,155 15,848 83,882 Net increase in shareholders' 57,249 28,043 117,498 funds Opening shareholders' funds 224,441 106,943 106,943 Closing shareholders' funds 281,690 134,986 224,441 * Net of share issue expenses NOTES 1 Accounting standards These interim accounts have been prepared in accordance with applicable UK accounting standards. 2 Investment company status 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 Trust Companies issued by the Association of Investment Companies in December 2005. 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 have been valued at cost at the period end, which was deemed to be their fair value at that time. 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 Dividend The final dividend for the year ended 31 December 2006 of 0.2p per share was paid on 10 May 2007. In accordance with UK accounting standards the dividend has been recognised in the interim accounts for the six months ended 30 June 2007. 6 New share issues On 22 May 2007, an allotment of 17,000,000 Ordinary Shares was made at an issue price of 125.5p per share. These shares were issued under the authority given by shareholders at the Annual General Meeting held on 3 May 2007. In addition to the above, 51,061 Warrants were exercised on 15 June 2007 resulting in the issue of 51,061 Ordinary Shares. The subscription price was 96p per share. The new ordinary shares were admitted to trading on the London Stock Exchange on 28 June 2007. The number of Ordinary Shares in issue as at 30 June 2007 was 217,407,088. The number of Warrants in issue as at 30 June 2007 was 19,763,321. On 21 September 2007, a further 105 million C shares were issued at £1 per share. The C shares will convert into Ordinary Shares in accordance with the terms described in the circular to shareholders dated 15 August 2007. 7 Return per share Basic returns per share are based on the net return attributable on ordinary activities after taxation attributable to the weighted average of 204,113,779 (2006: 124,284,048) Ordinary Shares in issue during the period. Diluted returns per share are based on the net return attributable on ordinary activities after taxation attributable to the diluted weighted average of 208,147,761 (2006: 127,102,524) Ordinary Shares in issue during the period. 8 Status of this report These financial statements are not the Company's statutory accounts for the purposes of section 240 of the Companies Act 1985. They are unaudited. The interim report will be sent to shareholders and copies will be made available to the public at the registered office of the Company. The interim report was approved by the Board on 21 September 2007. The Company's statutory accounts for the year ended 31 December 2006 received an unqualified audit report and have been filed with the registrar of companies at Companies House. 21 September 2007 Secretary and registered office: Cavendish Administration Limited 145-157 St John Street London EC1V 4RU Tel: 020 7490 4355 ---END OF MESSAGE---

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