Performance at month end

IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 December 2006 and unaudited.

DATA AND PERFORMANCE


Data                          Pricing & Performance
                                                     IEM  MSCI  Impax
                                                     Net  World ET50
Share price                                         Asset
(pence)                 115.4                       Value
Warrants (pence)           40
Total fund size     GBP 224.1   Diluted NAV (pence) 110.4  n/a   n/a
(m)
Market              GBP 231.2  Premium/discount (%) +4.5
capitalisation
(m)
Management fee            1.0 Undiluted NAV (pence) 111.9
(%)
Established       22 February          Performance*
                         2002
Fund structure     Investment           1 month (%) +5.1  +2.5  +3.2
                        Trust
Number of stocks           78          3 months (%) +10.7 +3.1  +10.3
held
Exchange               London            1 year (%) +20.9 +3.5  +18.8
Currency                  GBP           3 years (%) +68.8 +30.9 +53.8
ISIN number      GB0031232498          Since launch +13.9 +14.6 +5.7
                                   (22/02/2002) (%)
Sedol                 3123249
Reuters RIC code        IEM.L
                              * Performance data is for undiluted
Bloomberg code         IEM LN NAV.


TOP TEN HOLDINGS


Company             Holding %   Description                 Country
                                High efficiency electric
Regal Beloit              2.7   motors                      US
Itron Inc                 2.7   Meters & software           US
Chloride Group            2.6   UPS systems                 UK
LKQ Corp                  2.6   Automotive recycling        US
Horiba                    2.3   Environmental testing       Japan
Tomra                     2.3   Reverse vending machines    Norway
Vestas Wind Systems       2.1   Wind                        Denmark
Energy Developments       2.1   Landfill gas development    Australia
Kingspan                  2.1   Insulation materials        Ireland
Abengoa                   2.0   Bioethanol & recycling      Spain

Total                    23.5


PORTFOLIO ANALYSIS*


+------------------------------------------------+
| Geographical            | Company Size         |
|-------------------------+----------------------|
| North America     | 40% | >£500m         | 52% |
|-------------------+-----+----------------+-----|
| Europe            | 51% | £100-500m      | 33% |
|-------------------+-----+----------------+-----|
| Rest of the World | 9%  | <£100m         | 15% |
|-------------------------+----------------+-----|
|                         |                |     |
|-------------------------+----------------------|
| Sectoral                | Profitability        |
|-------------------------+----------------------|
| Energy            | 41% | Profitable     | 91% |
|-------------------+-----+----------------+-----|
| Water             | 30% | Pre-Profitable | 9%  |
|-------------------+-----+----------------+-----|
| Waste             | 29% |                |     |
|------------------------------------------------|
| * of funds invested as of 31 December 2006     |
+------------------------------------------------+













MANAGER'S COMMENTARY (December 2006)


+-------------------------------------------------------------------+
| The Company NAV was up 5.1% over the month compared with the MSCI |
| World, which rose 2.5%, and the Impax ET50, which increased by    |
| 3.2% over the same period.  In the broader markets, industrials,  |
| autos and construction were the best performing sectors, with     |
| healthcare and consumer staples underperforming, and oil and      |
| commodities remaining flat.                                       |
|                                                                   |
| During the month, in an unexpected departure from the Bush        |
| Administration's cautious stance towards climate change, Dirk     |
| Kempthorne, the Interior Secretary singled out global warming as  |
| a grave threat to the Arctic and the polar bear.  The move is     |
| significant, as the addition of polar bears to its endangered     |
| species list would force the Administration to legislate against  |
| climate change.  Earlier in the month, the Production Tax Credit  |
| ("PTC"), which subsidises the development of large scale          |
| renewable energy projects by 1.9 cents per kilowatt hour, was     |
| extended by an additional year to the end of 2008.  A group of 42 |
| senators submitted a petition to the White House to extend the    |
| PTC for renewable energy projects by five years, although the of  |
| head of Vestas' investor and PR unit stated that oil and gas      |
| prices five to ten years from now are now the most important      |
| factor behind developments.  This year wind power generating      |
| capacity in the US is expected to grow by a further 3,000         |
| megawatts.                                                        |
|                                                                   |
| In the water sector, the Environmental Protection Agency          |
| announced the second cycle of the Unregulated Contaminant         |
| Monitoring Rule, which requires 4,000 public water systems to     |
| monitor drinking water for up to 25 unregulated chemicals, which  |
| may lead to further additions to the 90 contaminants regulated    |
| under existing US law.  In Europe, the new Groundwater Directive  |
| was adopted by the European Parliament, which will require member |
| states to monitor and assess groundwater quality and introduce    |
| measures to limit the input of pollutants into groundwater.  The  |
| directive is closely linked to the Landfill Directive.  Within    |
| waste, Gordon Brown's Pre-Budget Report confirmed that the        |
| landfill tax will increase by the standard rate of £3 per tonne   |
| to £24 per tonne, but that the UK government will consider        |
| steeper increases in the tax from 2008.                           |
|                                                                   |
| Stocks that contributed to the increase in the company's NAV      |
| during December included Plant Healthcare (biofertiliser, US),    |
| which rose 35% on progress towards commercial deals, and Bioteq   |
| (mining effluent treatment, Canada), which climbed 33% on new     |
| prospects and successful fundraising.  In addition, Spice         |
| Holdings (utility support services, UK) gained 20% on new         |
| contract wins.  On the downside, Ballard Power (fuel cells,       |
| Canada) retreated 20% following strong performance in early Q4.   |
+-------------------------------------------------------------------+


Latest information available at: www.impax.co.uk/asset/iemdown.htm

24 January 2007

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