Performance at month end

RNS Number : 4450K

Impax Environmental Markets PLC

14 July 2011

 



IMPAX ENVIRONMENTAL MARKETS plc

All information is at Q2 2011 - 30 June 2011 (unless otherwise stated) and unaudited.

DATA AND PERFORMANCE

Pricing
NAV (pence)	137.33
Share price (pence)	116.25
Premium/(discount) (%)	(15.35)
Data
Total fund size (NAV) ( m)		GBP 433.9
Market capitalisation (m)		GBP 367.3
Management fee (%)		1.0
Established		22nd February  2002
Fund structure		Investment Trust
Number of holdings (including unlisted)		82
Exchange		London
Currency		GBP
ISIN Number		GB0031232498
Sedol		3123249
Reuters RIC code		IMPX.L
Bloomberg code		IEM LN

Performance	IEM Net Asset Value*	MSCI World Global Small Cap**	FTSE ET50**
1 month %	+0.5	+0.3	-2.4
3 months %	-3.9	-0.7	-11.4
1 year %	+13.7	+29.0	+4.9
3 year %	+11.5	+52.0	-23.2
5 year %	+35.1	+42.7	+22.6
7 year %	+101.3	+95.6	+76.1

* Performance data incorporates undiluted NAV until exercise of warrants on 25 June 2010

** Total return

TOP TEN HOLDINGS

Company	Holding %		Description	Country
Nibe	2.9		Ground source heat pumps	Sweden
Telvent	2.9		Automated meter reading	Spain
Regal-Beloit	2.9		Electric motors	US
Horiba	2.8		Environmental & engine testing	Japan
Nalco	2.8		Water treatment chemicals	US
LKQ	2.7		Automotive recycling	US
Pall Corp	2.6		Filtration	US
Clean Harbors	2.4		Hazardous waste treatment	US
Vacon	2.2		Power Electronics	Finland
EDP Renovaveis	2.2		Renewable IPP	Spain
TOTAL	26.4

PORTFOLIO ANALYSIS

Geographical US and Canada 38% Europe 38% Japan 6% Asia ex Japan 12% Australia 3% Cash 3%		Company Size >$2bn 36% $200m-2bn 53% <$200m 5% Private 3% Cash 3%
Sectoral Energy efficiency 28% Renewable energy 16% Environmental support services 5% Waste management 25% Pollution control 6% Water infrastructure 17% Cash 3%		PE Ratios >20x 12% 15-20x 41% <15% 39% Unprofitable and private 5% Cash 3% Average 15.5x

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (Q2 2011)

Market Review

Investor concerns over the end of quantitative easing and its effect on liquidity and Asian inflation, and the consequences of monetary policy trends in the Euro zone peripherals, persisted throughout the second quarter.

The latest macroeconomic data shows a deterioration of the leading indicators. However, we are not assuming that the economic cycle is contracting and believe there is currently a normalization of the growth rate in China. Monetary conditions are still favourable, with negative real interest rates in many countries.

In the second half of this year we expect to start to see better growth in the later cycle environmental sub-sectors such as grid, renewable energy independent power producers and testing and monitoring. We believe that European economies will, in the short term, continue to suffer from the sovereign debt issues but expect business and consumer confidence in Japan to improve.

Performance Summary

The post Fukushima sell-off in renewables detracted from performance over the quarter, impacting Vestas (wind turbine manufacturer, Denmark) and Hansen Transmissions (wind turbine gearboxes, Belgium). Ongoing concerns in the LED TV backlighting market led to poor performance from Seoul Semiconductor (LED packager, South Korea).

M&A activity drove strong performance, as Telvent (automated meter reading, Spain) was taken over by Schneider (energy management, France). Environmental consultancies also performed well, as fears over government budget cuts were alleviated (benefitting ICF International, US) and signs of earnings stability emerged (benefitting RPS, UK). Late cyclical testing and monitoring companies, such as Horiba (Japan) also outperformed.

Policy Update

The aftermath of the Fukushima disaster persisted on the energy agenda, with positive implications for the renewable energy and energy efficiency sectors. For example, Japan cancelled plans to expand nuclear from 30 to 50% of the energy mix and Germany decided to close all nuclear plants by 2022. The long term outlook for renewable energy was additionally strengthened due to rising power prices and a renewed focus on energy security and oil alternatives with continued Middle East unrest.

Severe floods in the US and Australia and droughts in Northern Europe focused government and investor attention on the water sector. For example OfWat in the UK increased water quality standards, and the Environmental Protection Agency in the US announced an initiative to renew urban waterways.

Following the finalisation of the Chinese 12th Five Year Plan, which includes targets for investments of up to USD300mn in water conservation, a cut in energy consumption per unit of GDP by 16% and an additional 70GW of wind and 5GW of solar, China announced an additional investment of over 200bn Yuan in rural power grid upgrades and plans for new wastewater treatment and metal recycling plants.

The EU supported its target for a 20% improvement in energy efficiency by 2020 with an energy efficiency directive which includes obligation schemes in all member states to deliver an annual energy reduction of 1.5%.  The UK government committed to halving greenhouse gas emissions from 1990 levels over the period from 2023 to 2027.

In the US, the Obama administration unveiled new vehicle fuel economy labels that allow consumers to compare the costs associated with alternative fuel and traditional vehicles.

Impax Asset Management is supportive of the UK Stewardship Code. Our full Stewardship Code statement, ESG and Proxy Voting policies and the quarterly summaries of our proxy voting activities can be viewed on:

http://www.impax.co.uk/en/investor-relations/governance-csr 

14 July 2011

 

END

 

 

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