Interim Results

Impax Environmental Markets plc

Preliminary announcement of interim results for six months ended 30
June 2006

CHAIRMAN'S STATEMENT

Impax Environmental Markets plc ("IEM" or "the Company") has
performed well in the first half of 2006 in spite of the general
correction in equity markets that we have seen during May and June.
There has been a favourable policy and economic backdrop for
environmental markets and companies have generally delivered strong
earnings growth.

Over the six month period from 1 January until 30 June 2006, the
Company's net asset value ("NAV") per ordinary share (taking into
account the dilution effect of the warrants in issue) increased from
92.6p to 102.2p, equivalent to a rise of 10.3%. On an undiluted basis
the NAV increased by 11.3%.  The share price rose 13.1% from 94.0p at
the start of the year to 106.3p on 30 June 2006, representing an
increase in the premium (to diluted NAV) from 1.5% to 4.1%. Over the
same period, the MSCI World Index (priced in Pounds Sterling) fell
2.6%.

Following the issue of 65.5 million ordinary shares and associated
warrants in December 2005, demand for the Company's shares has
remained robust and they have continued to trade at a premium to net
asset value.  During the interim period, under authority granted by
shareholders in general meeting, the Company issued a further 12.0
million ordinary shares at a premium to NAV.  In addition, 3.3
million warrants were exercised in June 2006 and as a result 3.3
million new ordinary shares were issued.  The total number of
ordinary shares in issue as at 30 June 2006 was 130.9 million, an
increase from 115.5 million at the start of the period and 50 million
as at 30 June 2005.

In July 2006, the directors announced proposals for the issue of new
shares by way of a placing and offer for subscription of C shares
sponsored by Dresdner Kleinwort.  The Company was successful in
raising £66 million before expenses, taking net assets to over £190
million.  Your Board believes that the new share issue has provided
the Company's shareholders with several benefits, particularly an
increased size over which the Company can spread its fixed costs, and
the potential for greater liquidity for its shares.

The interest in environmental markets from large corporates,
governments and the general public continues to grow.  The
alternative energy sector continues to be supported by high oil
prices and concerns about security of supply for energy.  In the
water sector, spending looks set to increase as utilities struggle to
meet ongoing demand for water in the face of high leakage rates and
sustained water shortages.  Finally, new legislation affecting the
waste sector has appeared on the drawing board and there is continued
progress towards advanced technology waste solutions in the UK as
municipalities seek to comply with the legislative targets.

Equity markets have been more volatile recently following the
escalation of fighting in the Middle East coupled with ongoing
concerns about growth and inflation in the major economies.   The NAV
per ordinary share has decreased slightly since 30 June 2006 and as
at 8 September 2006 was 98.4p whilst the share price was 103.8p.
However, the Directors believe that the key drivers of share price
performance in environmental markets, i.e. strong underlying earnings
growth and corporate activity, are robust while the valuations of the
companies in the portfolio remain attractive compared with historic
levels.


Richard Bernays
12 September 2006

                          INCOME STATEMENT
            (incorporating the profit and loss account*)


                    6 months        6       6       6       6       6
                           to months  months  months  months  months
                      30 June      to      to      to      to      to
                         2006 30 June 30 June 30 June 30 June 30 June
                      Revenue    2006    2006    2005    2005    2005
                              Capital   Total Revenue Capital   Total
                        £'000   £'000   £'000   £'000   £'000   £'000

Gains on                    -  12,594  12,594       -   2,457   2,457
investments

Income
  - from                  586       -     586     212       -     212
investments
  - bank interest          41       -      41      11       -      11

Investment              (183)   (547)   (730)    (51)   (155)   (206)
management fees
Other expenses          (244)       -   (244)   (132)       -   (132)

Return on ordinary
activities before                      12,247
tax                       200  12,047              40   2,302   2,342

Taxation                 (52)       -    (52)    (17)       -    (17)

Return after                           12,195
taxation                  148  12,047              23   2,302   2,325

Return per Ordinary
Share
- Basic                 0.12p   9.69p   9.81p   0.05p   4.60p   4.65p
- Diluted               0.12p   9.48p   9.60p   0.05p   4.60p   4.65p



* 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 2006 At 30 June 2005    At 31 Dec
                                   £'000           £'000         2005
                                                                £'000

  Fixed assets
  Investments at market          130,918          39,429      104,241
  value (see note 3)

  Current assets
  Sales for future                   768             196          320
  settlement
  Other debtors                      146              39           69
  Cash at bank and in              6,617           1,140        4,135
  hand
                                   7,531           1,375        4,524

  Current liabilities
  Purchases for future           (3,173)               -      (1,580)
  settlement
  Accrued liabilities              (290)           (133)        (242)
                                 (3,463)           (133)      (1,822)


  Net current assets               4,068           1,242        2,702

  Total net assets               134,986          40,671      106,943

  Capital and reserves
  Share capital                   13,089           5,000       11,555
  Share premium                   66,709               -       52,395
  Share purchase reserve          44,125          44,125       44,125
  Capital reserves                10,817         (8,533)      (1,230)
  Revenue reserve                    246              79           98
  Equity shareholders'           134,986          40,671      106,943
  funds

  Net asset value per
  share

  Net asset value per
  share (see note 4)
  -          Undiluted           103.13p          81.34p       92.55p
  -
  -          Diluted             102.19p          81.34p       92.55p
  -

  Ordinary Share Price           106.25p          78.50p       94.00p

  Ordinary Shares in         130,887,352      50,000,000 115,549,4544
  issue

  Warrants in issue           19,814,382               -   23,109,890



CASH FLOW STATEMENT


                                             6 months        6 months
                                      to 30 June 2006 to 30 June 2005
                                                £'000           £'000
Operating activities
Cash inflow from investment income                613             228
and bank interest
Cash outflow from management expenses         (1,056)           (243)
Cash inflow from disposal of                   15,686           6,791
investments
Cash outflow from purchase of                (28,566)         (6,261)
investments
Cash outflow from net foreign                    (59)            (16)
exchange losses
Net cash flow from operating                 (13,382)             499
activities

Financing
Issue of share capital                         15,863               -
Net cash flow from financing                   15,863               -

Increase in cash                                2,481             499




RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS


                                    6 months   6 months Year ended 31
                                  to 30 June to 30 June      Dec 2005
                                        2006       2005
                                       £'000      £'000         £'000

Profit for year                       12,195      2,325         9,647
Issue of new shares* (see note 5)     15,848          -        58,950

Net increase in shareholders'         28,043      2,325        68,597
funds

Opening shareholders' funds          106,943     38,346        38,346

Closing shareholders' funds          134,986     40,671       106,943



* 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 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 are valued at directors' best estimate of
fair value.

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              New share issues

Year ended 31 December 2005

On 15 November 2006, 60 million C Shares were issued at £1.00 per
share.  At the opening of business on 22 December 2005, the C Shares
of 100p each were subdivided into C Shares of 10p each.  The C Shares
of 10p each were then converted into 65,549,454 Ordinary Shares of
10p each and 534,450,546 Deferred Shares of 10p each.  Immediately
upon conversion all the Deferred Shares were redeemed by the Company
at a consideration of 1p for every 100,000 Deferred Shares.
Investors who subscribed for the C Shares were issued with one Warant
for every five Ordinary Shares arising on conversion.  The aggregate
number of Warrants issued by the Company was 23,109,890.

Six months ended 30 June 2006

During the six months ended 30 June 2006, the following shares were
issued under the authorities given by shareholders at the Annual
General Meeting held on 4 May 2005 and at the Extraordinary General
Meeting held on 15 March 2006.

(i) On 24 January 2006, an allotment of 3,995,000 Ordinary Shares was
made at an issue price of 98p per share.

(ii) On 1 February 2006, an allotment of 1,000,000 Ordinary Shares
was made at an issue price of 104.25p per share.

(iii) On 17 March 2006, an allotment of 7,047,390 Ordinary Shares was
made at an issue price of 110p per share.

In addition to the above, 3,295,508 Warrants were exercised on 15
June 2006 resulting in the issue of 3,295,508 Ordinary Shares.  The
subscription price was 96p per share.

The number of Ordinary Shares in issue as at 30 June 2006 was
130,887,352.

The number of Warrants in issue as at 30 June 2006 was 19,814,382.

On 15 August 2006, a further 66 million C shares were issued at £1.00
per share.  The C shares will convert into Ordinary Shares in
accordance with the terms described in the circular to shareholders
dated 20 July 2006.

6              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 124,284,048 (2005: 50,000,000) Ordinary Shares in issue
during the period.

Diluted returns per Ordinary Share take into account the dilutive
potential arising from the exercise of Warrants.  No adjustment is
made if the potential effect of the exercise of Warrants is
anti-dilutive.

7              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 12 September 2006.

The Company's statutory accounts for the year ended 31 December 2005
received an unqualified audit report and have been filed with the
registrar of companies at Companies House.




SECRETARY, ADMINISTRATOR AND
REGISTERED OFFICE
Cavendish Administration Limited
Crusader House
145-157 St. John Street
London EC1V 4RU



For further information contact:

Bruce Jenkyn-Jones / Ian Simm
Impax Asset Management Limited
Tel: [phone]

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