Performance at month end

RNS Number : 4457M

Impax Environmental Markets PLC

17 September 2012

 



IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 August 2012 (unless otherwise stated) and unaudited.

DATA AND PERFORMANCE

Pricing
NAV (pence)	119.41
Share price (pence)	96.63
Premium/(discount) (%)	(19.08)
Data
Total fund size (NAV) ( m)		GBP 328.0
Market capitalisation (m)		GBP 265.4
Management fee (%)		1.0
Established		22nd February 2002
Fund structure		Investment Trust
Number of holdings (excluding unlisted)		76
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 %	+3.2	+1.9	+2.4
3 months %	+1.3	+3.5	-0.7
YTD %	+3.0	+7.3	-3.4
1 year %	-2.3	+8.0	-14.4
3 year %	+6.4	+40.5	-24.5
5 year %	-2.3	+30.0	-35.1
7 year %	+34.0	+51.3	+4.2
10 year %	+92.9	+159.3	+35.2

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

** Total return

TOP TEN HOLDINGS

Company	Holding %	Description	Country
Nibe	3.6	Ground source heat pumps	Sweden
Regal-Beloit	2.9	Electric motors	US
Kingspan	2.8	Insulation products	Ireland
Clean Harbors	2.7	Hazardous waste treatment	US
Spirax-Sarco	2.7	Steam based energy efficiency	UK
Watts Water	2.6	Water control products	US
Pall	2.5	Filtration	US
RPS Group	2.4	Environmental consulting	UK
Vacon	2.4	Power electronics	Finland
Clarcor	2.4	Air pollution control	US
TOTAL	27.0

PORTFOLIO ANALYSIS

Geographical US and Canada 41% Europe 40% Japan 5% Asia ex Japan 12% Australia 1% Cash 1%		Company Size >$2bn 34% $500m-2bn 47% <$500m 14% Private 4% Cash 1%
Sectoral Energy efficiency 32% Alternative energy 13% Environmental support services 6% Waste management 22% Pollution control 7% Water infrastructure 19% Cash 1%		PE Ratios* >20x 15% 15-20x 25% <15% 53% Private and other** 6% Cash 1% Average 14.6x

*forward 12 months

*where analyst estimates unavailable or stocks unprofitable

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (August 2012)

Markets rose after 2 August, following the launch of a Conditional Government Bond Purchase Programme (CGBPP) by the ECB Governing Council. This program drove down sovereign bond yields by over 100 basis points and is regarded as progress in the European sovereign-debt crisis. Overall, deteriorating Asian and European manufacturing and GDP data led to a lacklustre performance from global equity markets.

Performance & Environmental Markets Update

The Fund relatively outperformed during August, driven by a recovery in cyclical holdings, particularly within the buildings energy efficiency and water infrastructure sub-sectors. Perceived progress in resolving the European sovereign debt crisis and strong Q2 results also drove performance. European holdings Kingspan (insulation products, Ireland) and Nibe (ground source heat pumps, Sweden) both reported strong earnings driven by better than expected margins, proving that high quality businesses can continue to thrive in a challenging environment. Abengoa (bioethanol and recycling, Spain) rose following the announcement of a dual share listing in the US that will increase liquidity, reflecting increased appetite for European equities.

Underperformance was stock specific and driven by companies reporting poor Q2 results. Horiba (environmental and engine testing, Japan) underperformed on disappointing earnings and reduced full year guidance, especially in relation to its                 semi-conductor business. Clean Harbors (hazardous waste treatment, US) fell as Q2 results missed expectations due to weakness in the company's energy business.

There were several positive developments in environmental markets, which will underpin continuing long term growth. Germany passed a draft bill to enable more effective grid development for the build-out of offshore wind farms. If passed this would provide more certainty both for developers and manufacturers. Wind turbine OEMs' share prices recovered driven by on-going signs of consolidation and in the case of Vestas announcement of a potential collaboration with Mitsubishi Heavy Industries. Other notable policy developments included the coming into force of the EU Waste Electrical and Electronic Equipment (WEEE) Directive that will see 45% of WEEE recycled by 2016, the finalisation of the US fuel efficiency rule that will approximately double miles per gallon requirements by 2025, and the announcement of Japan's ambitious renewable energy targets as it moves away from nuclear power generation post-Fukushima.

Positioning and Outlook

The portfolio reflects a focus on high quality businesses with proven business models and strong management teams. Energy efficiency remains a key positive sub-sector bias and we continue to favour hazardous waste and filtration due to their defensive characteristics. We remain cautious on renewables given current uncertainties although we continue to monitor the long-term prospects for this sub-sector. The earnings season was relatively positive overall and, with valuations below the historical range, we remain positive on the long term prospects for the fund although mindful of the current macroeconomic uncertainties.

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 

17 September 2012

 

END

 

 

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