Performance at month end

IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 July 2006 and unaudited

DATA AND PERFORMANCE


Data                          Pricing & Performance
                                                  IEM    MSCI  Impax
                                                  Net   World   ET50
Share Price                                      Asset
(pence)                 100.8                    Value
Warrants (pence)           36
Total Fund Size     GBP 129.3        Diluted NAV  98.4   n/a    n/a
(m)                                      (pence)
Market              GBP 131.9   Premium/discount  +2.3
Capitalisation                               (%)
(m)
Management fee            1.0      Undiluted NAV  98.8
(%)                                      (pence)
Established       22 February        Performance
                         2002
Fund structure     Investment        1 month (%)  -4.1   -0.4   -6.4
                        Trust
Number of stocks           75       3 Months (%) -14.1   -5.9  -18.7
held
Exchange               London         1 year (%) +12.0   +5.3   +7.0
Currency                  GBP         3 year (%) +66.0  +28.7  +44.1
ISIN Number      GB0031232498   Year to date (%)  +6.8   -3.0   +3.1
Sedol                 3123249
Reuters RIC Code        IEM.L NB1 Performance data is for undiluted
                              NAV.
                              NB2 To comply with guidelines issued by
Bloomberg Code         IEM LN the AITC, portfolio valuation moved to
                              bid from mid price with effect from 31
                              December 2005.


TOP TEN HOLDINGS


Company             Holding %   Description                   Country
LKQ Corp                  2.8   Automotive recycling          US
Chloride Group            2.6   UPS systems                   UK
Vestas Wind Systems       2.5   Wind                          Denmark
RPS Group Plc             2.5   Environmental consulting      UK
Esco Tech                 2.4   Filtration & meters           US
                                High efficiency electric
Regal Beloit              2.4   motors                        US
Gamesa                    2.4   Wind                          Spain
Canadian Hydro
Developers                2.3   Renewable energy IPP          Canada
Itron Inc                 2.2   Meters & software             US
Kurita Water              2.1   Water treatment               Japan

Total                    24.8


PORTFOLIO ANALYSIS*


+------------------------------------------------+
| Geographical            | Company Size         |
|-------------------------+----------------------|
| North America     | 44% | >£500m         | 44% |
|-------------------+-----+----------------+-----|
| Europe            | 49% | £100-500m      | 40% |
|-------------------+-----+----------------+-----|
| Rest of the World | 7%  | <£100m         | 16% |
|-------------------------+----------------+-----|
|                         |                |     |
|-------------------------+----------------------|
| Sectoral                | Profitability        |
|-------------------------+----------------------|
| Energy            | 40% | Profitable     | 88% |
|-------------------+-----+----------------+-----|
| Water             | 29% | Pre-Profitable | 12% |
|-------------------+-----+----------------+-----|
| Waste             | 31% |                |     |
|------------------------------------------------|
| * of funds invested as of 31 July 2006         |
+------------------------------------------------+














MANAGER'S COMMENTARY (July 2006)


+-------------------------------------------------------------------+
| The Company NAV was down 4.1% over the month compared with the    |
| MSCI World, which declined by 0.4%, and the Impax ET50, which     |
| fell 6.4% over the same period.  In the broader markets,          |
| information technology and industrials were the worst performing  |
| sectors, with small cap stocks particularly affected.             |
|                                                                   |
| During the month, soaring temperatures led to an increased demand |
| for electricity, causing power cuts on both sides of the          |
| Atlantic.  In the US hundreds of thousands of people lost power   |
| for up to two days in California, Missouri and New York.  In the  |
| UK, sections of the West End of London experienced outages.  Both |
| incidents highlight ongoing problems with grid reliability and    |
| strengthen the case for Uninterruptible Power Supply ("UPS") and  |
| distributed generation.  In the US, the Department of Energy      |
| announced a $170 million solicitation for public-private          |
| partnerships as part of the Solar America Initiative, which seeks |
| to promote the solar energy sector through grants, incentives and |
| tax credits.  At the state level Hawaii, Florida and Colorado     |
| introduced tax credits and rebates for customers using            |
| residential photovoltaic systems, bringing the number of states   |
| with renewable portfolio standards to over 20.  In Europe, the    |
| French Minister for Industry, Finance and Economics announced a   |
| tax credit of ¤0.55/kWh for building-integrated photovoltaics.    |
| This compares favourably to the support scheme offered by         |
| Germany, the world leader in installed solar capacity.  In        |
| addition the base tariff for wind has been extended to ten years, |
| alongside a rise in the offshore subsidy, so that France can meet |
| its target of 12,500 megawatts of installed capacity by 2010.  In |
| the water sector, China revealed plans to invest a staggering     |
| US$175 billion in environmental protection over the next five     |
| years, equivalent to about 1.5 percent of GDP.  This includes the |
| construction of sewage treatment plants across ten river valleys, |
| and measures to reduce sulphur dioxide and dust in major cities.  |
| The US EPA announced $1 billion in grant programmes to upgrade    |
| water treatment facilities, storage facilities and distribution   |
| systems.  In the waste sector, new EU regulations came into       |
| effect banning the use of hazardous substances in electrical and  |
| electronic goods, as part of the Restriction of Hazardous         |
| Substances (RoHS) and Waste Electrical and Electronic Equipment   |
| (WEEE) Directives.                                                |
|                                                                   |
| Stocks that contributed to the reduction in the company's NAV     |
| during July included Itron (meters & software, Canada), which     |
| fell by 22% on a reduced order backlog, and Tomra (reverse        |
| vending machines, Norway), which declined by 18% following        |
| earnings downgrades.  In addition Pentair (water treatment, US)   |
| was down 16% after failing to meet Q2 earnings forecasts.  In     |
| contrast, LKQ (automotive recycling, US) gained 18% on the back   |
| of better than expected results.                                  |
|                                                                   |
| During the month we made our third pre-IPO investment in Ensyn,   |
| an innovative bio-oil business based in Canada, building on a ten |
| year relationship between Impax Group and the firm.               |
+-------------------------------------------------------------------+


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

11 August 2006

---END OF MESSAGE---