LEI: 213800RAR6ZDJLZDND86

IMPAX ENVIRONMENTAL MARKETS PLC ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDING
31 DECEMBER 2025

London, 30 March 2026. Impax Environmental Markets plc (LSE: IEM) (the "Company" or "IEM") the UK's only environmental investment trust investing in the transition to a more sustainable economy, today announced its final results for the year ended 31 December 2025.

×       Net asset value ("NAV") per ordinary share of 426.4p (31 Dec 2024: 427.6p)

×       NAV total return increase of 0.9% (2024: -0.4%)

×       Net assets at 31 Dec 2025 of £812m (31 Dec 2024: £1,026m)

×       Ordinary Share price of 396.5p (31 Dec 2024: 385.5p)

×       Total dividend paid in 2025 of 5.1p per ordinary share, an increase of 2.0% (2024: 5.0pps)

×       The Company bought back 49.45 million shares during the year, representing 20.6% of the issued share capital at the start of the year, spending £189m.

Glen Suarez, Chairman of Impax Environmental Markets comments:

"The year under review was characterised by a number of important developments for IEM, both operationally and in the context of an evolving shareholder landscape.

"At our 2025 AGM, shareholders overwhelmingly supported IEM's continuation and its long‑term environmental markets strategy. Since then, Saba, the Company's largest shareholder, has increased its holding to 22.1 per cent and, as it does not support the Company's objectives, this presented a challenge for the Company's stability and mandate, despite sustained engagement by the Board to identify a balanced and responsible solution.

"Following detailed consideration by the Board and its advisers, the Continuation Tender Offer, launched on 26 January 2026, was identified as the most effective means of reconciling differing shareholder objectives, offering an exit at close to NAV while preserving IEM's specialist strategy for those wishing to remain invested.

"Despite continued engagement with Saba during the tender period, including the Board securing a financial contribution from the Manager to enhance the offer, Saba chose not to tender its shares and the conditions of the Continuation Tender Offer were therefore not met, resulting in its cancellation on 27 February 2026.

"Having explored all reasonable alternatives and in the absence of clarity from Saba regarding its intentions, the Board concluded that maintaining the status quo would expose shareholders to unacceptable risks, including the possibility of Saba gaining control of the Company and materially altering its strategy, objectives and mandate, contrary to the wishes of the majority of shareholders. You will have seen that the Board therefore launched the Exit Tender Offer on 17 March 2026, providing all shareholders with an exit from the Company at close to NAV.

"While the decision whether to tender shares is a matter for individual shareholders, the Board unanimously recommends voting in favour of the Resolution to enable the Exit Tender Offer to proceed, so that those shareholders who wish to exit are able to do so, and encourages shareholders to take note of the relevant voting and tender deadlines outlined in the Offer Circular. The Directors will be tendering all of their own shares, underscoring our conviction that this is the right outcome for IEM's shareholders."

 

Contact:             

Camarco	ImpaxEM@camarco.co.uk
Billy Clegg / Jennifer Renwick	+44(0)203 757 4980

 

IEM at a Glance

Overview

Impax Environmental Markets plc ("IEM" or the "Company") is founded on the belief that, with insatiable demand for higher living standards on a finite planet, companies enabling the cleaner and more efficient delivery of basic needs - such as power, water and food - or mitigating environmental risks like pollution and climate change, can grow earnings faster than the global economy over the long-term.

IEM provides its shareholders with exposure to this exciting growth story. The Company invests in a well-researched and diversified portfolio of fast-growing, listed businesses. IEM's Board of Directors (the "Board") believes that investing in these companies can deliver superior risk-adjusted returns over the long-term. IEM continues to benefit from an expanding opportunity set of investable companies harnessing structural drivers. These include the digitalisation of industrial supply chains, rising demand for cost-efficient electricity and the increasingly urgent need for climate change adaptation.

The Manager

The Manager of IEM, Impax Asset Management (AIFM) Limited (the "Manager", or "Impax"), uses a proprietary classification system to define these higher growth 'Environmental Markets'. This approach has been in place since IEM was founded in 2002 and is overseen by a dedicated Impax team.

Today the classification system is made up of six sectors: Energy, Clean and Efficient Transport, Water, Circular Economy, Smart Environment and Sustainable Food. The range of activities included has naturally grown over the years as technologies advance and more industries begin to address the environmental challenges which they face.

To qualify for IEM's investable universe, a company must derive at least 50% of its revenues from these Environmental Markets. The Manager invests across the market capitalisation spectrum. IEM's investments include small and medium sized companies, which tend to focus their business models on fewer activities. However, as Environmental Markets have matured, larger companies are increasingly represented in the opportunity set and portfolio.

The Manager then follows a rigorous, performance-focused process based on bottom-up research to invest in proven and profitable companies. The breadth of the Environmental Markets opportunity set enables Impax to create a diversified portfolio spanning traditional sector boundaries. Once a company is purchased, its share price is continually monitored within the context of a live 'valuation range' which incorporates worst and best-case assumptions.

The Manager also maintains an active dialogue with the companies in which it invests. Doing so is central to optimising shareholder returns, helping to promote greater transparency around corporate issues and risk. Engagement outcomes, company valuations, as well as portfolio risk metrics and the macro outlook, all inform buy and sell decisions.

The Company

IEM's goal is to deliver financial returns for shareholders. It benefits from an active, committed Board, as well as competitive fees. Additionally, the investment managers are personally invested, thus aligning themselves financially with shareholders.

By IEM focusing on Environmental Markets, the portfolio generates outcomes beyond financial returns. Annually, for each £1 million invested, enough clean, renewable energy is generated to power 31 homes, and the equivalent of 345 households' water consumption and 103 tonnes of domestic waste are saved. Whilst the Manager does not target the UN Sustainable Development Goals in the investment process, 81% of portfolio company revenues were aligned with them in 2025.

"IEM continues to benefit from an expanding opportunity set of investable companies harnessing structural drivers."

 

Investment Objective

The investment objective of Impax Environmental Markets plc is to enable investors to benefit from growth in the markets for cleaner or more efficient delivery of basic services of energy, water and waste.

Investments are made predominantly in quoted companies which provide, utilise, implement or advise upon technology-based systems, products or services in environmental markets, particularly those of alternative energy and energy efficiency, water treatment and pollution control, and waste technology and resource management (which includes sustainable food, agriculture and forestry).

Financial Highlights

 

At 31 December	2025	2024
NAV per ordinary share with debt at fair value1	426.4p	427.6p
Net asset value ("NAV") per ordinary share with debt at bookcost	427.1p	428.6p
Ordinary share price	396.5p	385.5p
Ordinary share price discount to NAV1,3	7.0%	9.8%
NAV with debt at fair value1	£812m	£1,026m
Ongoing charges1	0.91%	0.84%

 

Performance Summary²

 

For the year ended 31 December, % change	2025	2024
NAV total return per ordinary share1,3	0.9%	-0.4%
MSCI AC World index4	13.9%	19.6%
Share price total return per ordinary share1	4.3%	-2.6%

 

1         These are alternative performance measures ("APMs").

2         Total returns in sterling for the year to 31 December 2025.

3         With debt at fair value.

4         Source: Bloomberg and FactSet.

Alternative performance measures ("APMs")

The disclosures as indicated in footnote 1 are considered to represent the Company's APMs. Definitions of these APMs and other performance measures used by the Company, together with how these measures have been calculated, can be found within the Annual Report.

 

Chairman's Statement

"IEM offers broad spectrum exposure to one of the most significant and enduring themes of this century."

Dear Shareholder,

The year under review was marked by considerable change for IEM. During this time, we welcomed a new portfolio manager to the Impax investment team, introduced a new benchmark, refinanced the Company's revolving credit facility, and navigated an increasingly complex shareholder landscape. A considerable portion of our time this year has been spent engaging with Saba Capital, the New York hedge fund and IEM's largest shareholder.

You will remember that at our 2025 AGM the Board recommended, and shareholders overwhelmingly approved, IEM's continuation - this reaffirmed their support for its long-term Environmental Markets strategy. The Board's recommendation was made, as I reported last year, after consultation with shareholders and a review of the investment processes at our Manager, Impax Asset Management. In last year's report I drew attention to the Board's wish to put in place a new thematic benchmark to replace the FTSE ET100 and further changes to the investment process of the Manager.

New Benchmark

The Board adopted the new thematic benchmark to work alongside the MSCI All Country World Index ("MSCI ACWI") in the fourth quarter of 2025. This is the Solactive Global Environmental Markets Specialists Index ("GEMS"), further details of which are set out in the Manager's Report. Its introduction as a formal benchmark, alongside that of MSCI ACWI, allows the Board and you, the shareholders, to understand how the Manager is performing against the Environmental Markets opportunity set. It also allows the Manager to calibrate risk more effectively.

Notwithstanding the outcome of the Exit Tender Offer, which I discuss later in this statement, and any review of the Company which may result from this, we expect to include GEMS next year in our assessment of how the portfolio has performed. But its impact is already evident in the review and consolidation of the portfolio, as also explained in the Manager's Report. This work began earlier in the year, but has continued in the second half, in part supported by a change to the investment team.

We know from our regular engagements with Impax that this index has assisted in its portfolio managers' understanding of the opportunities and risks across IEM's investable universe. This in turn better facilitates understanding of risks against wider equity markets, as reflected by the MSCI ACWI, that many shareholders continue to use and adjudge performance against.

The Manager

After the thorough review undertaken by the Board, we welcomed Sanjeev Lakhani to the portfolio management team with effect from 1 October 2025, to work alongside Fotis Chatzimichalakis. Sanjeev has particular expertise in the analysis of Industrial companies, which form a material portion of IEM's portfolio. Fotis meanwhile continues his co-stewardship of the IEM portfolio, having been appointed to the investment team in 2015 and as a portfolio manager for IEM five years ago. The Board is encouraged by the way they have demonstrated the effectiveness of their working relationship so far and this fundamentally supports our confidence in Impax as the Manager.

Following a period of handover, Sanjeev replaced Jon Forster, who stepped away from front line portfolio management responsibilities at Impax in December 2025. Bruce Jenkyn-Jones, Co-Chief Investment Officer, also announced his retirement and stepped back from his responsibilities earlier in the year. I would like to thank Jon and Bruce for their contribution to the Company over many years.

Performance

During the year, the Company's net asset value rose 0.9%, while global equities as measured by the MSCI ACWI rose by 13.9%. This was a disappointing performance. IEM's share price over this period rose by 4.3%, reflecting a narrowing of the Company's discount.

Equity markets in 2025 continued to be characterised by the narrowness of their performance. Mega-cap companies focused on AI have pulled the MSCI ACWI higher, as have Financials. As these stocks fall outside IEM's investable universe, the Company was unable to benefit from this concentrated outperformance. Consequently, IEM underperformed in 2025, as it had in the previous year for similar reasons. This relative underperformance is consistent with many other investment trusts, even those with different investment focuses, that have also reported weaker performance over similar periods.

Discount

Like almost all the investment trust sector, the Company's shares have traded at a discount to NAV. At 31 December 2025, the Company's shares traded at a discount to NAV, with debt at fair value, of 7.0% (2024: 9.8%). During the year the shares traded between a discount of 5.5% and 15.7% with an average discount¹ of 9.7% (2024: the shares traded between a discount of 7.2% to 17.5% with an average discount of 10.3%).

The discount is actively monitored by the Board and the Company's corporate brokers. During the period, the Board asked the Company's broker, Winterflood Securities, to operate a buyback programme targeted at mitigating the level and volatility of the discount on the share price versus net asset values. As a result, the Company spent £189 million buying back 49.5 million shares, or 20.6% of the issued share capital, at the start of the year, and this helped keep the discount at levels which have been in keeping with the average equity investment trust over the period.

Dividends

The Company's distribution policy, as approved by shareholders at the 2025 AGM, is to declare two dividends each year. On 1 August 2025, the Board announced a first interim dividend for this financial year of 1.9 pence per share, which was paid on 28 August 2025. The second interim dividend of 3.2 pence per share was declared on 3 February 2026 and paid on 6 March 2026. The total dividend per share paid for 2025 was therefore 5.1 pence per share, an increase of 2.0% on the 5.0 pence paid in respect of 2024. Noting that the Board does not expect dividends to form a significant proportion of total returns, it remains the Board's intention to pay out substantially all net revenue earnings by way of dividends.

Gearing¹

The Company has continued to utilise gearing throughout the year and has a combination of fixed and floating rate debt with a mix of maturity dates and interest rates. Gearing can be an attractive feature of investment trusts to enhance returns. The Company has used this tool for a number of years.

At the year end the aggregate of the Company's borrowings was £87.0 million, giving net gearing of 10.0% (2024: £83.1 million and 7.6%, respectively).

1          This is an alternative performance measure as detailed within the Annual Report.

The Company has €60 million (equivalent to just over £50 million) of privately placed notes ("Loan Notes"), as set out in the table below:

Loan Note	Loan Note
amount	amount	Maturity
€'million	£'million	30 September	Interest rate
20	17.4	2030	Floating: 6m Euribor +1.35%
30	26.1	2033	Fixed: 4.48%
10	8.7	2035	Fixed: 4.63%

 

The Company refinanced its floating rate multi-currency revolving credit facility ("RCF") following the maturing of its two-year £80 million RCF with Scotiabank in September. The new 360 day rolling multi-currency £35 million RCF is with Bank of America and has a floating interest rate priced at Euribor +0.85%. An amount of €40.1 million (equivalent to £34.9 million) was drawn down at the year end (2024: €40.8 million and £33.7 million, respectively).

Other Changes

The Board made changes to the providers of company secretarial services and administration during the year, bringing onboard Juniper Partners ("Juniper"), the independent investment company specialists. The Board, working with the Manager in an in-depth tender process, was drawn to the breadth and depth of experience in the focus that Juniper has for investment companies like IEM and this was fundamental in their selection.

Similarly, the Board appointed Camarco, a strategic communications consultancy with a specialist team servicing financial services companies and investment trusts, in the fourth quarter.

The Challenge Posed by Saba Capital

Saba Capital acquired a 5% position in the Company in 2024. At the 2025 AGM, shareholders overwhelmingly voted in favour of the Company's continuation, reaffirming their support for IEM's long-term Environmental Markets strategy.

Saba has a history of being active and disruptive in other investment trusts, often causing uncertainty, instability, and significant costs. Recognising the potential risks, the Board consulted with shareholders to better understand their concerns regarding Saba's growing influence.

In the latter part of 2025, Saba began substantially increasing its holding, and now holds 22.1%, making it the Company's largest shareholder. During discussions with the Board, Saba made it explicitly clear that it does not share the Company's objectives or those of the majority of other shareholders. This presented the Board with a significant challenge: reconciling the conflicting objectives of shareholders while avoiding ongoing, destabilising and expensive disputes that the Board has seen elsewhere.

The first proposal, the Continuation Tender Offer (the "CTO"), was designed to allow all shareholders to exit at close to NAV while preserving IEM's specialist Environmental Markets strategy for those wishing to remain invested. The CTO included the specific condition that required Saba to tender all, or materially all, of its shares. This would have resolved the impasse, enabling the Company to move forward with stability. However, despite repeated engagement with Saba throughout the tender period and the inclusion of a substantial financial contribution from the Company's Manager to enhance the offer, Saba declined to tender its shares. As a result, the conditions of the CTO were not met, and the proposal was unable to proceed.

When proposing the CTO, the Board considered that if Saba were to reject it, there would be no choice but to address the significant risks posed to shareholders who wished to remain invested. Without action, Saba could gain control of the Company and unilaterally change its objectives, strategy, and mandate, against the stated wishes of the majority of shareholders. This is how we arrived at the Exit Tender Offer.

The Board believes that maintaining the status quo presents too many risks for shareholders. Doing nothing risks prolonged instability, significant costs, and a much worse outcome for shareholders. As a result, we have now proposed the Exit Tender Offer, which offers all eligible shareholders the opportunity to sell up to 100% of their shares for cash at close to NAV. This allows shareholders to avoid the risk of being trapped in a company where Saba could gain control, with the power to fundamentally alter the Company's strategy, objectives, and even its mandate.

We endorse the position taken by the Association of Investment Companies, which has raised concerns about the risks to shareholder rights across the investment trust sector¹. Saba has targeted a number of investment companies, often focusing on exploiting share price discounts to NAV for short-term profit. However, in IEM's case, Saba's rejection of the CTO, which would have delivered an exit at close to NAV, suggests that its motives may go beyond arbitrage and potentially extend to gaining control over the Company. Unfortunately current law and regulation does not provide an effective mechanism to defend against such situations on behalf of the rest of the shareholder base. The FCA has recently announced a review of the closed ended investment funds listing rules².

The Board remains confident in the compelling growth prospects of Environmental Markets and in Impax Asset Management's deep sector expertise. Combined with the recent strategic reset of the portfolio, the Company is well-placed to deliver on shareholders' financial and environmental objectives. It is therefore a source of considerable regret that Saba's presence and motives may lead to this investment opportunity being lost to shareholders.

Board

Aine Kelly was due to step down at the 2026 AGM, however given the uncertainty caused by Saba's actions, she has agreed to remain on the Board for an additional year to provide continuity and stability. The Board's composition and a replacement for Aine will be considered once the results of the Exit Tender Offer are known.

I would like to take this opportunity to thank the Board for their extraordinary commitment to IEM over the past year. The time and effort required to address the challenges posed by Saba's growing influence have been significant, and I am deeply grateful for their dedication and professionalism during this period. I am also grateful for the guidance and support of our advisers in these difficult times. I especially commend the services of Juniper, which took on a new mandate and was instantly catapulted into the world of corporate events.

Annual General Meeting

The AGM of the Company must be held by the end of June 2026. The Company will convene its AGM after the outcome of the Exit Tender Offer is known. A separate circular, including the Notice of AGM and full details of the resolutions to be proposed, will be sent to shareholders in due course. In the meantime, the Company's website at www.iemplc.co.uk can be used to access more insights and also to subscribe for regular communications.

Outlook

The Board remains confident in the long-term potential of the Environmental Markets sector. Recent geopolitical events, including the Iran war and rising oil prices, have accelerated the global focus on energy policy and energy independence, particularly in Asia and Europe. This has provided a fresh impetus for economies to transition away from hydrocarbons and towards renewable energy and nuclear power, further supporting the sector's growth prospects.

The Board continues to believe that retaining the Manager is in the best interests of shareholders. The Manager has implemented significant changes to the portfolio and enhanced its risk management. These changes, combined with the sector's strong fundamentals, give the Board confidence that the foundations are in place for improved performance going forward. Allowing time for the portfolio's recent strategic adjustments and the new benchmark to deliver their intended benefits is critical to achieving long-term success.

However, the uncertainty caused by conflicting shareholder objectives remains a significant challenge. While many shareholders wish to remain invested in IEM and its focus on Environmental Markets, Saba's presence has introduced considerable instability.

It is with profound regret, therefore, that I write this Chairman's Statement in the knowledge that steps have been required in the form of the Exit Tender Offer, to protect shareholders.

Shareholders have chosen IEM for its focus on Environmental Markets, but circumstances beyond the Board's control, including the presence of a large minority shareholder with conflicting objectives, enabled by insufficient protections under UK regulations, have forced the Board to take action that none of us would otherwise have wished to take.

 

Glen Suarez, Chairman

27 March 2026

 

1          https://www.theaic.co.uk/aic/news/press-releases/aic-welcomes-fca-listing-rules-review

2          https://www.fca.org.uk/news/statements/uk-listing-rules-investment-entities-review

 

Manager's Report

Both IEM and global equity markets saw significant change in 2025. In the case of IEM, we were able to reset the direction of travel. We began the process of portfolio consolidation towards the end of last year.

Doing so recognised that the operating environment for many of our investee companies had changed, at the same time as falling valuations had opened up new opportunities. Moving from 60 towards 50 stocks, whilst also increasing the size of the top ten to approximately 30%, reflected our desire to express greater conviction in this refreshed portfolio.

At the same time, we worked closely with the Board to create the Solactive Global Environmental Markets Specialists Index ("GEMS"). It replaces the FTSE ET100, which had become unrepresentative of IEM's opportunity set as its methodology evolved. This Index provides insight into the opportunity set of investible companies listed around the world which operate within the Environmental Markets theme to which IEM seeks to provide exposure. As the Chairman has observed, it gives us as portfolio managers, and you as shareholders, a more accurate gauge of the portfolio's relative performance and positioning. IEM's portfolio will not be constrained by this new index and the MSCI All Country World Index ("MSCI ACWI") remains key as the long-term performance reference against wider equity markets. However, by focussing on companies which fulfil the Environmental Markets standard, the GEMS has some material differences. The diversification can be seen from significant deviations in stocks and at the sector/regional level. For example, at the time of its introduction Energy was less than 0.2% of GEMS vs 3.4% of MSCI ACWI, while Industrials were 41.6% vs 10.7%. Similarly, the United States account for 55.8% of GEMS vs 64.7% of MSCI ACWI.

The impact of these changes is starting to be felt. In 2025, the portfolio's holdings with exposure to electrification and data centres, to which we have been steadily adding, delivered strong returns. Other poorly performing areas in which we had consolidated, such as renewable energy and bioprocessing, turned a corner. Persistently weak sectors have either been exited entirely, as with packaging, or concentrated into our highest conviction stocks, as with natural ingredients.

Our new team setup has been instrumental to these decisions. Having worked together as portfolio managers on Impax's Climate strategy, as well as on stock research more broadly across Impax, we have an established partnership with complementary areas of expertise. Jon Forster, who has stepped away from his role as co-Portfolio Manager, has also made an invaluable contribution to IEM over the years. Jon will continue to do so in his more focused duties analysing companies.

Global Market Review

MSCI ACWI in GBP delivered solid gains in 2025. In another concentrated year for equity returns, investor attention was dominated by tariffs, AI and fears of a softening globally important US economy. Markets were also shaped by a persistent weakening of the US dollar. As a result, communication services and IT stocks made double digit gains, while both the consumer discretionary and consumer staples sectors barely moved.

Donald Trump's return to the White House ensured that, once again, the US transfixed investors. An eventful year saw the longest government shutdown in history, challenges to US Federal Reserve ("Fed") independence, and the bombing of Iranian nuclear sites. Yet it was 'Liberation Day' tariffs which prompted a 19% pullback in the stock market¹. While US consumer confidence weakened throughout the year² and unemployment rose to 4.6%, the US economy remained relatively healthy, bolstered by three interest rate cuts from the Fed. The administration also quickly showed its willingness to negotiate, prompting the so-called 'TACO trade'³, with equities climbing back up to all-time highs.

Much of the strength of both the US and global stock market has been attributed to AI, or more specifically, investments being made in its development. According to JP Morgan, AI-related capex accounted for over a percentage point of US GDP growth in the first half of 2025, outpacing consumer spending, which is usually the largest driver of US economic growth⁴. Events like the launch of DeepSeek have threatened to derail investors' enthusiasm for AI, but the pace of spending shows no signs of stopping. With the likes of Meta (formerly Facebook - not held) reaching capex to sales ratios of almost 40%, their investments are touching sectors from semiconductors to energy generation, cooling to construction.

However, there were some signs of investor appetites broadening out. Prompted both by a disruptive US administration and low starting valuations, investors were drawn to non-US equities. Europe and Emerging Markets performed strongest, helped further by a weakening US dollar. In Europe, the election of Chancellor Merz in Germany and a focus on rearmament boosted defence stocks. Japanese equities also outperformed, lifted by a combination of robust corporate earnings, shareholder friendly reforms and, latterly, the election of Sanae Takaichi a pro-market Prime Minister.

There were also several sectors impacted by idiosyncratic factors. Materials made some of the strongest gains, as gold prices soared to record levels. Financials - which generate insufficient environmentally-related revenues to it within the opportunity set - recorded yet another year of robust returns, benefiting from the prospect of deregulation, volatility-driven trading, and increased M&A. Lastly, plans by the US government to implement 'most favoured nation' pricing on top of tariffs made the health care sector one of the year's worst performing sectors. This reversed rapidly when, at the end of September 2025, the administration announced a deal to lower the cost of various medicines with Pfizer (not held).

Key Developments and Drivers for Environmental Markets

Global Acceptance of Nuclear Energy

As we look ahead, we see nuclear power growing in its use as a renewable source of energy. In 2025, policymakers moved away from post-Fukushima caution to embrace nuclear as a source of both energy security and clean power. Global momentum gathered pace in late 2024, with the signature of a Declaration to Triple Nuclear Energy by 2050 at COP 29⁵. National initiatives subsequently proliferated: the US issued a series of executive orders⁶ to expand its nuclear fleet and streamline permitting, Germany dropped its opposition to French nuclear power as a source of clean energy⁷, while the UK government announced the development of its first small modular reactors in Wales⁸. Multilateral institutions also opened the door to new nuclear projects, with the World Bank ending its ban on financing new projects⁹.

Rhetoric was matched by tangible measures. According to data from the World Nuclear Association, there are around 70 reactors under construction today, with a further 115 planned. This is a meaningful increase on the 440 reactors operating today, which generate approximately 400 GW of power. At the same time, there has been clear progress made in technology, political support and the mining, as well as disposal of fuel. While China and India have some of the largest buildouts planned, the US has struck several major federal-private partnerships with Westinghouse and Brookfield to deliver new plants¹⁰. In the UK, the government signed off on Sizewell C, its first new nuclear power station since 1995.

Nuclear therefore, will play a growing role in meeting rising demand for clean, affordable and reliable energy. As a result, Impax has begun counting nuclear energy revenues into its Environmental Markets classification system. This is not a change to IEM's investment process, but rather reflects the evolving nature of market themes and the way that we continually reassess our opportunity set. All potential issuers remain subject to our Corporate Resilience (formerly ESG) Analysis.

The One Big Beautiful Bill

Government policy is not the primary driver for stocks within the IEM portfolio. Instead, we search for companies within Environmental Markets whose products and solutions make economic sense, with attractive business models that are undervalued. That said, Donald Trump's One Big Beautiful Bill Act ("OBBBA") contains several policy changes providing short-term stimulus to the US economy. These include extending individual and corporate tax cuts, additional incentives for companies reshoring industrial production and an expansion of activities covered by R&D tax credits. With 49% of the portfolio listed in the US, and almost half of that in industrials, these could provide strong tailwinds going into next year.

While the OBBBA also marked a clear negative shift in US federal policy support for renewable energy, most valuations were already sufficiently pessimistic for the bill to act as a clearing event, boosting share prices.

The primary mechanism for this was accelerating the rollback of clean-energy tax incentives established under the Inflation Reduction Act. Notably, the legislation eliminated electric vehicle ("EV") tax credits outright and brought forward the phase-out of solar and wind investment and production tax credits to the end of 2027. In parallel, the bill tightened so-called Federal Entity of Concern ("FEOC") rules, restricting access to credits for projects with links to China.

IEM's potentially impacted holdings (across renewable energy and EVs) accounted for approximately 10% of the portfolio, with most reacting positively. The final version of the OBBBA was also materially less punitive than earlier drafts. Construction-start deadlines were relaxed, proposed excise taxes on solar and wind were dropped, and important carve-outs were preserved for energy storage, geothermal and nuclear projects. Consequently, our position in Ormat Technologies, a geothermal company, not only continues to benefit from tax credits, but is benefiting from accelerated permitting.

Battery Technology Advances and Falling Costs

Technological progress and falling battery costs are driving rapid growth in electric vehicle and stationary energy storage system ("SESS") markets. Bloomberg New Energy Finance's 2025 annual price survey found that the average price for lithium-ion battery packs dropped 20% in 2024 to $115/kwh, a reduction of more than 10x since 2010. Economies of scale and a highly competitive market means that today, some battery packs made in China cost as little as $94/kwh.

As a result, Chinese EVs are now cheaper than equivalent internal combustion engines and account for more than 50% of new car sales in China¹¹. Furthermore, the export of cheaper battery cells to Europe has enabled a rebound in growth to 30% year-on-year, with EVs making up 17% of all new car sales¹². By contrast, in the heavily protectionist US market EV sales are entering a period of steep declines from an already low base¹³.

Chinese companies already command a market share of over 90% in SESS. This is because the dominant technology in the space is lithium iron phosphate ("LFP"), a battery cell chemistry currently only available from Chinese manufacturers. SESS growth is being driven by utility scale installations which aim to balance the intermittency of renewable energy, with forecasts predicting an annual growth rate of 30% out to 2030¹⁴. As battery technology improves and costs continue to fall, SESS will provide the backbone for energy that is clean, affordable and available whenever it is needed.

Despite its relatively short history, the battery industry has already seen several cycles of 'boom and bust'. These have been compounded by instances where technology has become rapidly obsolete. As a result, scale matters, across R&D, manufacturing and cell chemistry diversification. These criteria underpin IEM's investment in the Chinese battery producer Contemporary Amperex Technology Limited ("CATL"). The company has approximately 40% global market share in both EV and ESS, with leading edge battery technology, manufacturing scale and cost advantage. As a result, CATL is able to earn a 15% operating margin¹⁵ even as its competitors struggle to break even.

In 2025, IEM's portfolio delivered a total return of 0.9%, lagging global equities as measured by the MSCI ACWI, which returned 13.9%. The chart within the Annual Report shows the drivers of returns against MSCI ACWI.

Independent Power Producers ("IPPs") made robust gains thanks to several factors. Having derated significantly from their 2022 peaks, the likes of EDP Renovaveis - a Portuguese renewable energy company - saw their valuations bottom out and inflect upward. This was driven in part by a spate of private equity takeovers, which crystallised value, while tariff-driven uncertainty in an expensive market prompted a rotation into defensive sectors like Utilities. Further, as detailed above, the OBBBA served as a clearing event for all renewable stocks. Consequently, Ormat Technologies, the portfolio's best performer, has benefited from continued tax credits, reduced planning times and increased demand for its stable, baseload geothermal energy. It also reported robust results, with enhanced geothermal system technologies boosting investor expectations for the future.

Water Utilities also benefited from investors seeking attractively valued defensive stocks. In the case of American Water Works, a US-based utility, a substantial rally prompted a disposal of the shares. In the case of France's Veolia Environment and Brazil's SABESP, strong operational delivery has kept them in the portfolio even after very strong runs. Veolia, in particular, reported solid revenue and margin growth, bolstered by the integration of its former peer, Suez. November's acquisition of Clean Earth, a US hazardous waste company, further highlights Veolia's push into both higher value-add activities and international markets.

For over a decade, digital infrastructure stocks have been a steadily growing weight in IEM's portfolio. From bleeding edge semiconductors to process-optimising software, these companies play a pivotal role in improving the resource efficiency of modern economies. The immense build out of data centres for AI has provided many such businesses with a new growth driver, giving IEM exposure to the "picks and shovels" of this modern gold-rush. Among the portfolio's top contributors, Monolithic Power Systems produces highly efficient power management circuits. Its partnership with Nvidia (not held) has been central to its c.25% annualised revenue growth since 2018¹⁶, while a recovery in its broader consumer, automotive and industrial end-markets has further lifted the stock.

Collectively, stocks supporting electrification made one of the biggest positive performance contributions. Ageing infrastructure, technological change and the increasing pressures of climate change mean that investing in grids, cables and transformers is now an existential issue for developed and developing economies alike. Here too, AI has focused investor attention, with power hungry data centres already accounting for over 4% of US electricity demand¹⁷. This shift, alongside strategic M&A, has helped Italian-listed Prysmian transform from a low margin, cyclical cable producer to a robust business with high earnings visibility and a share price to match.

Relative Performance Analysis

	12 Months ended
	31 December 2025
Performance relative to MSCI ACWI	%
NAV total return	0.9
MSCI ACWI total return	13.9
Relative performance	(13.0)
Analysis of relative performance:
Portfolio total return	0.6
MSCI ACWI total return	13.9
Portfolio underperformance	(13.3)
Borrowing:
Gearing effect	-
Finance costs	(0.4)
Management fee	(0.8)
Other expenses	(0.2)
Trading Costs	(0.5)
Share transactions:
Buybacks	2.1
Tax	-
Other	0.1
Total relative NAV performance	(13.0)

 

These areas of strength within the portfolio were set against two sources of relative weakness. The first, and biggest driver of relative underperformance, came from not owning stocks which lie outside the strategy's investable universe because they derive less than 50% of their revenues from Environmental Markets. Continued share price momentum in AI-focused, mega-cap tech stocks, as well as financials accounted for almost 70% of all global equity returns as measured by the MSCI ACWI. Other non-owned stocks outside of Environmental Markets, account for more than the remaining difference between portfolio performance and that of the MSCI ACWI.

Within the portfolio itself, the biggest areas of challenge were companies with exposure to US construction and US consumer spending. Holdings in both sectors waned in the face of tariffs and ensuing economic uncertainty. Trex was the portfolio's weakest performer, with shares dipping around 'Liberation Day' despite having a largely domestic supply chain. Shares in the recycled decking producer fell further in Q4 when management lowered full-year revenue guidance. Carrier Global similarly detracted as the HVAC company reported weaker US residential volumes and a material guidance cut. However, with construction markets near cyclical lows, we believe these are temporary setbacks for attractively priced stocks.

In the consumer space, our verdict has been less sanguine. There has been widespread evidence of customers downtrading to cheaper products impacting revenue growth for companies like Croda, a speciality chemicals producer, and Graphic Packaging, which makes paper-based packaging for higher end consumer goods. Similarly, Corbion, a fermentation specialist, continues to see weak demand, with slim margins failing to justify ambitious capital expenditure decisions. As a result, we sold these holdings, consolidating into the likes of Novonesis and Borregaard, which have demonstrated more pricing power.

A final headwind for the portfolio was its software holdings. These businesses fulfil niche industrial applications such as the management of construction projects (Trimble), or the design of large-scale infrastructure (Bentley Systems). These stocks had performed well throughout the year, delivering robust earnings updates and generally being seen to benefit from incorporating AI technology. Yet by the fourth quarter, large language models were sufficiently sophisticated for some investors to fear it's potential to disrupt or even replace software businesses entirely. This prompted a sharp pullback in software stocks, even as shares in hardware producers made continued gains.

We are following developments in AI closely. There will no doubt be some use cases where AI is good enough to replace dedicated software. However, this is unlikely to be the case in highly regulated markets such as construction, where the cost of failure is a potential loss of life. Given the indiscriminate nature of selling across software, we have taken some profits to insulate the portfolio from downside risk. Nonetheless, our long-term conviction in the space remains and a meaningful pullback in valuations could prompt us to increase exposure.

Portfolio Positioning and Trading

As has already been referenced, over the course of 2025 there was a concerted effort to consolidate into a more focused portfolio of high quality and high conviction holdings. This process began with a wholesale review of the portfolio in the second half of 2024, during which Sanjeev Lakhani, by this time Co-Portfolio Manager on the strategy, was actively involved. Work focused on identifying stocks across three categories:

i        Limited upside available (stocks which were approaching our target valuation range).

ii       Fragile business models (which might struggle in adverse macroeconomic conditions).

iii       "Up or out" (small positions without conviction to add).

At the same time, successive years of narrow equity outperformance had left some companies in Environmental Markets on compelling valuations. Market volatility around Liberation Day further highlighted these opportunities, categorised into:

i           Attractive growth temporarily trading at a discount.

ii          Defensive business models with good upside potential.

Examples of these decisions include:

	Environmental Market
Buys	Sub-Sector	Category	Rationale
KLA	Water Efficiency	Attractive growth opportunity	Semiconductor yield specialist bought at compelling valuation due to fears around
			data centre spending
Novonesis	Sustainable Agriculture	Defensive business model	A specialist in enzymes and biochemical technology with a track record of delivering
			robust margins backed by global scale and
			diversified consumers
	Environmental Market
Sells	Sub-Sector	Category	Rationale
American Water Works	Water Utilities	Limited upside	Economic uncertainty and a defensive rotation drove a rally beyond our target price
Corbion NV	Sustainable Agriculture	Up or out	Weak demand in the context of elevated capex
			prompted an exit on share price strength
Norma	Water Distribution &	Fragile business	Tariff sensitive business model with limited growth
	Infrastructure	model	visibility

 

The result of these trades is that as of 31 December 2025, and compared with the end of 2024, the portfolio has more weight in its top ten (29.6% up from 25.5%) and is higher quality in terms of return on equity (16.1% vs 14.0%). A full breakdown of the portfolio is detailed on the following pages.

Valuation and Growth

As of 31 December 2025, IEM's portfolio had an aggregate next 12 months' (or forward) price-to-earnings (PE) ratio of 21.2x. This is higher than the measures of both the MSCI ACWI (18.7x) and the GEMS (19.8x). IEM's richer valuation reflects a sector and style tilt typical of the investable universe. For example, compared with the MSCI ACWI, IEM owns no financial or energy stocks (which tend to trade at lower multiples of their earnings), as there are very few companies in these sectors which derive 50% of their revenues from Environmental Markets.

Similarly, our preference is for companies with high growth potential and consistent earnings delivery. These typically trade at a PE premium to the broader market. At the end of the year, IEM's forward earnings growth rate¹⁸ was 13.3%, compared to the MSCI ACWI's 9.8% and the GEMS 12.0%. For a rate of growth that is 36% and 11% superior respectively, IEM's portfolio trades at only a 13% and 7% PE premium. In other words, shareholders in IEM are paying less per unit of forecast growth than they are in a broader market index, adding evidence to the opportunity set see in Environmental Markets.

IEM's portfolio PE premium has fluctuated over the course of the past year, but consistently occupied a range well below the Company's ten-year average. This reflects both the extraordinary concentration which has taken hold of equity markets over the past three years and the continued sentiment headwinds across overtly "sustainable" companies. Against this backdrop, we believe the portfolio continues to offer a compelling mix of high active share, robust earnings growth and attractive valuation relative to the broader market.

Outlook

Geopolitical events are once again at the forefront of investors' minds in 2026. Under the so-called 'Donroe Doctrine' (a widely used description of President Trump's reported updating of the US's 19th Century Monroe Doctrine), the US has threatened to acquire Greenland, extracted Venezuela's President Maduro, and invaded Iran. As a result, volatility has increased, energy prices have surged, and the prospect of resurgent inflation is looming.

However, the correlation between wars and longer-term equity performance is modest at best. Moreover, whether on tariffs or Tehran, Donald Trump has repeatedly shown his willingness to walk back from the brink of anything which could inflict meaningful pain on the US economy. Less than two weeks after the death of Ayatollah Khomenei, the President declared war in Iran "very complete, pretty much"¹⁹, reversing much of the previous week's trading.

As long-term investors focused on the opportunities within Environmental Markets, these periods of heightened volatility can create valuation dislocations for us to exploit. Energy price shocks also tend to accelerate investment in areas such as energy efficiency, renewables, and battery storage, where we have both holdings and analytical expertise. With the bulk of Iran's oil going to Asia, these areas in particular remain in focus.

Away from geopolitics, there are signs of a more substantial market shift. Mega-cap technology stocks have pulled back as depreciation costs mount and commensurate returns on investment are less immediately evident. At the same time, with AI spending expected to top $660 billion in 2026, investors are already paying more attention to the 'picks and shovels' of AI - such as power management and cooling - where we naturally have more exposure.

Against this backdrop, we believe IEM's portfolio continues to offer a compelling mix of high active share, robust earnings growth and attractive valuations relative to the broader market. Recent changes also mean the portfolio owns more companies with recurring revenues, bolstering its economic defensiveness despite - as detailed in our Spotlight article - its high level of exposure to ostensibly cyclical sectors like Industrials. This broader appeal is particularly the case when so many investors continue to be concentrated in a limited number of stocks. Such conditions underscore the value of active management and a focus on fundamentals.

 

Investment Managers

Fotis Chatzimichalakis

Sanjeev Lakhani

27 March 2026

1    S&P 500 returns from February 19 to April 8. Source: Bloomberg, as of 31 December 2025.

2    US Consumer Confidence, Source: The Conference Board, 24 February 2026.

3    Acronym: "Trump Always Chickens Out".

4    Is AI already driving U.S. growth?, Source: J.P. Morgan Asset Management, published December 2025.

5    Six more countries endorse the Declaration to triple nuclear energy by 2050 at COP29, Source: World Nuclear News, 13 November 2024.

6    Deploying Advanced Nuclear Reactor Technologies for National Security, Source: The White House, 23 May 2025.

7    Germany drops opposition to nuclear power in rapprochement with France. Source: Financial Times.

8    North Wales to pioneer the UK's first small modular reactors, Source: GOV.UK, 13 November 2025.

9    World Bank Group and IAEA formalise partnership to collaborate on nuclear energy for development, Source: World Bank Group, 26 June 2025.

10  United States Government, Brookfield and Cameco announce transformational partnership, Source: Brookfield Renewable Partners, 28 October 2025.

11  China NEV retail rebounds to 991,000 in March 2025, Source: CnEVPost, 9 April 2025.

12  Europe's EV Boom Was Real in 2025. The Real Fight Starts in 2026, Source: InsideEVs, 31 December 2025.

13  EV Market Monitor - November 2025, Source: Cox Automotive, 15 December 2025.

14  CATL IPO Prospectus, Source: Contemporary Amperex Technology Co., Limited (p.107).

15  CATL FY 2024 results.

16  MPS Investor Overview - Q3 2025, Source: Monolithic Power Systems (MPS), 2025.

17  What we know about energy use at U.S. data centers amid the AI boom, Source: Pew Research Center, 24 October 2025.

18  Next 12 months earnings/last 12 months earnings.

19  Oil and gas prices fall after Trump says war is 'very complete'. Source: BBC News, March 2026.

 

Principal risks and uncertainties

The Board is responsible for the management of risks faced by the Company and, through delegation to the Audit Committee, has established procedures to manage risk, oversee the internal control framework and determine the nature and extent of the principal risks the Company is willing to take in order to achieve its long-term strategic objectives. The Audit Committee carries out, at least annually, a robust assessment of the principal risks and uncertainties and reviews ongoing monitoring of both controls risks and controls. This ensures heightened and emerging risks are identified outside of the normal cycle of Board and Audit Committee meetings.

Risks are documented on a risk register, grouped into four main categories: Strategic and Business Objective Risks; Investment Management Risks; Operations - Service Providers Risks; and Compliance, Regulatory and Corporate Governance Risks. Risks are then rated before and after mitigating controls by impact and likelihood of occurrence, with the assessed ratings charted on risk matrices. The risk register is reviewed on an ongoing basis in an attempt to capture all risks and to ensure appropriate mitigation is in place. Reviews take into account changing factors including, but not restricted to, changes to markets (both macro and micro), stakeholders, operations, regulation and emerging risks.

The top risks identified by this process are set out in the following section, and the Board considers these to be the principal risks of the Company.

The Board considered both global economic and geo-political risks, and those arising from armed conflicts amongst other risks. Updates on market impact and operational resilience were received from the Manager, administrator and other key service providers. The Board is satisfied that the key service providers had, and continue to have, the ability to continue their operations efficiently, including in a remote or virtual working environment.

The Manager continues to provide regular updates to the Board on the financial impacts on the portfolio performance and investee companies, as well as the long-term effects and opportunities for the sectors in which the Company invests.

Emerging risks are considered by the Board at its quarterly meetings and by the Audit Committee as part of its risk management and internal control review. Failure to identify emerging risks may cause reactive actions rather than being proactive and the Company could be forced to change its structure, objective or strategy and, in worst case, could cause the Company to become unviable or otherwise fail.

The experience and knowledge of the Directors is invaluable in consideration of emerging risks, as are update papers and advice received from the Board's key service providers such as the Company's Manager, broker, company secretary and auditor. The AIC also provides regular updates and draws members' attention to forthcoming industry and/or regulatory issues.

Potential risk	Mitigation	Trend
Strategic and business objective risks
Economic and market risks
Price movements of the Company's investments are highly correlated to the performance of global equities in general and small and mid-cap equities in particular. Falls in stock markets are likely to adversely affect the performance of the Company's investments. The changing world order increases uncertainty. Changes in general economic and market conditions, such as currency exchange rates, interest rates, rates of inflation, industry conditions, tax laws, political events and trends can substantially and adversely affect the value of investments. Market risk includes the potential impact of events which are outside the Company's control, such as the ongoing wars in the Middle East and in the Ukraine. The Company holds part of its portfolio in companies with small market capitalisations, which are likely to be subject to higher valuation uncertainties and liquidity risks than larger capitalisation securities. The Company may also invest in unquoted securities which generally have greater valuation uncertainties and liquidity risks than securities listed or traded on a regulated market.	There are inherent risks involved in stock selection. The Manager is experienced and employs its expertise in selecting the stocks in which the Company invests. The Manager spreads the investment risk over a wide portfolio of investments in its three main sectors: energy, water and waste, as well as geographically. At year end, the Company held investments in 54 companies and the largest holding represented 4.4% of net assets. The Manager will not normally hedge against foreign currency movements, but the Manager takes account of the risk when making investment decisions. Further details on financial risks and risk mitigation are disclosed in note 15 to the accounts. The high risk rating remains unchanged; this reflects continued uncertainty in markets, though for changed reasons. Interest rates and inflation have reduced but uncertainty continues to remain high. Reasons include changes in geo-politics (such as policies on net zero and the return of Trumponomics) and the increasing amount and levels of armed conflict. The latter demonstrated post year end by the US strikes on Iran with its subsequent resulting armed conflict throughout the Middle East.	áâ
The Company's objective and strategy do not continue to attract investors
This risk includes, but is not limited to, the risk that the Company's anticipated growth of financial returns from environmental markets does not occur, that the environmental thematic decreases in relevance and that there is reversal of environmental policy. Companies operating in environmental markets carry risks that governments may alter the regulatory and financial support for environmental improvement, costs of technology may not fall, capital spending by their customers is reduced or deferred and their products or services are not adopted. There is the risk that even though the Company's objective and strategy continue to be attractive to investors, a significant minority shareholder, whose interests are not aligned with the interests of other shareholders, could threaten the Company's long-term objectives and viability. This risk was heightened in the year following the Board's communications with Saba both during and after the year end, and the notable increase in Saba's shareholding in the second half of 2025 which continued into 2026.	The Company invests in a broad portfolio of investments which are spread amongst several environmental market sectors. The Manager has a rigorous investment process which takes into account relevant factors prior to investment decisions taking place and thereafter. As well as reviews of the portfolio and relevant industry matters at quarterly Board meetings, the Board has an annual strategy day at which the overall strategy of the Company is discussed. All shareholders have an opportunity to talk with the Board and the Manager at the AGM and can communicate with the Board at any time by writing to the Company's registered address or by email (details are within the Annual Report). The Chairman's Statement sets out how the Board - following lengthy discussions with major shareholders, including Saba - have attempted to address the situation, beginning with the Continuation Tender Offer circular published on 26 January 2026 and the Exit Tender Offer published on 17 March 2026, both of which are available at www.iemplc.co.uk	ã
Share price trades at excessive discount to net asset value
It is in the long-term interests of shareholders that shares do not trade at a significant discount to net asset value. Investor demand for the Company's shares may fall, causing the discount to widen. A wide discount can cause the shares of the Company to become attractive to activist shareholders, who may have a short term agenda which is not in the interests of all shareholders.	The Board monitors the level of premium/discount and receives regular shareholder feedback from the Manager and broker. The Board has the power, granted by shareholders, to buy back shares when in the best interests of the Company, and this should reduce supply of shares and thus reduce or stop widening of the discount and may reduce volatility.	áâ
Investment Management
Underperformance of the Manager
Consistent long-term underperformance by the investment manager may lead to poor performance of the Company compared to its benchmark comparators and peers, a widening of discount to NAV, a reduction in capital and dissatisfied shareholders. With effect from 1 October 2025, the Company's environmental benchmark was changed, with the FTSE Environmental Technology 100 Index being replaced by a new Solactive Global Environmental Markets Specialists Index. The Board considers that the new environmental benchmark provides the Manager with a more suitable reference point for its portfolio construction and risk management, whist at the same time providing the Board with a better benchmark for its evaluation of the Manager's performance.	At each board meeting the Manager reports on the performance of the Company including comparisons to its peers and benchmark comparators. The Board considers various portfolio metrics including top contributors and detractors to performance, sub-sector and regional performance, investment rationale, valuation and growth statistics, key activity in the period, attribution analysis, portfolio positioning and risk, and the Manager's outlook. The Board considers the rationale behind new additions, for which the Manager provides details including the environmental benefit. The Board also considers the macro and geopolitical risks and uncertainties that effect the portfolio and the Company. The Board considers the investment process to ensure this is aligned to the Company's investment objective and policy. The Board considers the capabilities of the Manager, the viability of the Manager's business model and the ongoing investment in resources.	áâ
Operations - service providers risks
Failure or breach of Information Technology (IT) - including cyber-security, and physical security risks
Failure of IT or physical security could potentially lead to breaches of confidentiality, data records being compromised and the inability to make investment decisions. In addition, unauthorised physical access to buildings could lead to damage or loss of equipment. The underlying risks primarily exist in the third party service providers to whom the Company has outsourced its depositary, registration, administration and investment management activities.	The Company's key service providers report periodically to the Board on their procedures to mitigate cyber-security risks including their alignment with industry standards, their physical and data security procedures and their business continuity planning. The Board meets with its key service providers at each Board meeting and Directors engage with service providers frequently between Board meetings.	áâ
Operational risk
The Board has contractually delegated to third party service providers the management of the investment portfolio, and services covering: depositary and custody; registrar; company secretarial and administration, including fund accounting. The security of the Company's assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of these third party service providers. Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the Company's performance. Disruption to the accounting, payment systems or custody records (including cyber security risk) could prevent the accurate reporting and monitoring of the Company's financial position.	Due diligence is undertaken before contracts are entered into with third party service providers, taking into account the quality and cost of services offered, including policies and procedures, and risk management and controls systems in operation in so far as they are relevant to the Company. Thereafter, the performance of the provider is subject to regular review and report to the Board. The Board monitors key persons as part of this oversight. The control of risks related to the Company's business areas is described in detail in the corporate governance report within the Annual Report. During the year the company secretarial and administration service provider was changed due to a noticeable deterioration in the quality of services provided by the former provider. The appointment of the new provider, Juniper Partners Limited ("Juniper"), followed a comprehensive tender and due diligence process led by the Company's Audit Chair. Last year the risk rating was increased, reflecting the above noted deterioration; this year the risk rating has decreased following the smooth transition of the Company's company secretarial and administrative services to Juniper, and its excellent service to date.	ä
Strategic and business objective risks
Gearing risk
The Company may borrow money for investment purposes. If investment markets fall in value, any borrowing will enhance the level of loss. Capacity constraints on the availability of desirable companies for investment may mean the Company is unable to achieve the level of gearing wanted. The Company's significant minority shareholder objective is unknown even following extensive engagement by the Board and its financial adviser. Consequently, this has created a material going concern uncertainty. The tender offer could result in a considerably reduced Company and potentially breach of borrowing covenants. Any early redemption of the loans would result in significant redemption costs.	The Board has authorised the Manager to use its discretion to utilise gearing up to 10% of net assets. Any borrowing above this level requires Board approval. Borrowing facilities are renewed on a cost effective and timely basis. The Manager keeps under regular review the opportunities for enhancing returns by the prudent use of gearing. The Board has established a plan to deal with any required reduction in borrowing in order to ensure covenants are not breached, including appointment of a specialist debt adviser if early redemption is required. Given the uncertainty that has been created for the Company, the risk rating has been increased.	ã
Physical climate change risk
While efforts to mitigate climate change continue, the physical impacts are already emerging in the form of changing weather patterns. Extreme weather events can result in flooding, drought, fires and storm damage, potentially impairing the operations of an investee company at a certain location, or impacting locations of companies within their supply chain.	Physical climate change risk is still an emerging topic for investors as well as for the management teams of investee companies. It has been a focus area of research and engagement by the Manager to identify companies particularly exposed to this risk and to open a dialogue with them on management options. Details of engagement with investee companies are given within the Annual Report. The Company invests in a broad portfolio of companies which are spread geographically, limiting the impact of location specific weather events.	áâ
Financial risk
The Company's investment activities expose it to a variety of financial risks which include foreign currency risk, portfolio liquidity risk and interest rate risk. The Company invests in securities and has borrowings which are not denominated or quoted in sterling. Movements of exchange rates between sterling and other currencies in which the Company's investments are denominated may have an unfavourable effect on the return on the investments made by the Company. The Company's main exposure is its €60 million Loan Notes and its £35 million revolving credit facility, details of which are shown in note 11.	The Manager does not actively hedge against foreign currency movements affecting the value of its investments, although the Manager takes account of this risk when making investment decisions. Non-sterling borrowings will effectively hedge non-sterling investments for matching currencies. The Company invests in range of global listed equities and the Manager monitors the foreign currency exposure and liquidity of holdings within the portfolio and reports on these to the Board at each meeting. Interest rate risk on borrowing was reduced by fixing two of the Loan Notes. Further details on financial risks and risk mitigation are disclosed in note 16 to the accounts.	áâ
Regulatory risks
Loss of investment trust status would lead to the Company being subject to tax on any gains on the disposal of its investments. Breaches of the FCA's rules applicable to listed entities could result in financial penalties or suspension of trading of the Company's shares. Breaches of the Companies Act 2006 could result in financial penalties or legal proceedings against the Company or its Directors. Failure of the Manager to meet its regulatory obligations could have adverse consequences on the Company.	The Company has contracted out relevant services to appropriately qualified professionals, who monitor, and report to the Board on regulatory compliance. In addition, the Company's broker, auditor, company secretary and Manager provide the Board with regulatory updates on a regular basis. The Manager reports on regulatory matters to the Board on a quarterly basis. The assessment of regulatory risks forms part of the Board's risk assessment programme.	áâ

Trend: Increasing  ã     Neutral  áâ     Reducing  ä

 

Viability statement

The continuation of the Company is subject to the approval of shareholders every three years, and approval was last given by shareholders at the Company's 2025 AGM with 89.57% votes in favour of continuation of the Company.

The Directors have assessed the viability of the Company for the period to 31 December 2030 (the "Viability Period"). The Board believes that the Viability Period, being approximately five years, is an appropriate time horizon over which to assess the viability of the Company, particularly when taking into account the long-term nature of the Company's investment strategy, the principal risks outlined above and its gearing. The Board has also assumed that shareholders will approve the continuation of the Company on each continuation resolution proposed during the Viability Period. Based on this assessment, the Directors have a reasonable expectation that the Company will be able to continue to operate and to meet its liabilities as they fall due over the Viability Period.

The Board reviewed the Company's income and expenditure projections and other funding requirements in normal and worst case market conditions. The level of the ongoing charges is dependent to a large extent on the level of net assets, the most significant contributor being the investment management fee. The Company's income from investments and cash from the sale of investments (which are readily realisable) provide substantial cover to the Company's operating expenses, and any other expenditure likely to be faced by the Company over the Viability Period. Such expenditure includes buybacks of shares and repayment of the Company's borrowings, which at the date of this report represented just under 10% of the Company's investments.

In its assessment of the prospects of the Company, the Board considered each of the principal risks and uncertainties, and the liquidity and solvency of the Company.

The Directors' assessment of the viability of the Company also took into account Saba's significant minority shareholding and its communications with Saba both during, and after, the year end. The former included the notable increase in Saba's shareholding in the second half of the year which continued post the year end, and Saba's activity in the investment trust market.

Saba's significant minority shareholding means that it can likely block all special (75%) resolution votes. Therefore, as explained in more detail in the Chairman's Statement within the Annual Report, on 26 January 2026 the Company published its Continuation Tender Offer ("CTO") which set out a clear and decisive choice for the Company's shareholders: to remain invested in the Company and its specialist Environmental Markets mandate, or to exit at close to net asset value per share. The CTO was conditional on Saba tendering all (or materially all) of its shares. However, the tender was cancelled on 27 February 2026 because the condition was not met.

Throughout this period, and subsequently, the Board has been in ongoing dialogue with Saba in an effort to reach a mutually agreeable outcome - one in which shareholders are able to tender up to 100% of their holding. Having exhausted every reasonable alternative to find a solution that balances the interests of all shareholders and ensures the long-term stability of the Company, the Company published an Exit Tender Offer ("ETO") on 17 March 2026. This tender requires only a simple majority for approval but, as highlighted in the ETO circular, Saba could gain the power to change the Company's strategy, objectives and even its mandate. Notwithstanding the possible strategic outcomes of the ETO, the Company's ability to meet its liabilities as they fall due remains, as does its financial and operational ability. However, were an action proposed by the Company to result in the Company changing its investment strategy and/or business model, the period over which it would be reasonable to assess the viability of the Company could be significantly changed, as is also the case were the Company to propose a wind up. These considerations do not affect the underlying viability of the Company.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.

Company law requires the Directors to prepare accounts for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of the year and of the net return for the year. In preparing these accounts, the Directors are required to:

l     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business;

l     select suitable accounting policies and then apply them consistently;

l     make judgements and estimates which are reasonable and prudent;

l     state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts; and

l     prepare a directors' report, a strategic report and directors' remuneration report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the accounts comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The accounts are published on the www.iemplc.co.uk and www.impaxam.com websites which are maintained by the Manager. The work carried out by the auditor does not involve consideration of the maintenance and integrity of these websites and, accordingly, the auditor accepts no responsibility for any changes that have occurred to the accounts since being initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmation statement

The Directors each confirm to the best of their knowledge that:

(a)      the accounts, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b)      this Annual Report includes a fair review of the development and performance of the business and position of the Company, together with a description of the principal risks and uncertainties that it faces.

Having taken advice from the Audit Committee, the Directors consider that the Annual Report and financial statements taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

For and on behalf of the Board

Glen Suarez

Chairman

27 March 2026

 

Income Statement

		Year ended 31 December 2025			Year ended 31 December 2024
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments	2	-	(12,026)	(12,026)	-	(26,676)	(26,676)
Net foreign exchange (losses)/gains		-	(4,723)	(4,723)	-	4,056	4,056
Income	3	15,262	-	15,262	18,776	-	18,776
Investment management fee	4	(1,710)	(5,127)	(6,837)	(2,105)	(6,315)	(8,420)
Other expenses	5	(1,500)	-	(1,500)	(1,351)	-	(1,351)
Return on ordinary activities before
finance costs and taxation		12,052	(21,876)	(9,824)	15,320	(28,935)	(13,615)
Finance costs	6	(1,016)	(3,042)	(4,058)	(1,183)	(3,551)	(4,734)
Return on ordinary activities before
taxation		11,036	(24,918)	(13,882)	14,137	(32,486)	(18,349)
Taxation	7	(683)	31	(652)	(2,042)	(255)	(2,297)
Return on ordinary activities after
taxation		10,353	(24,887)	(14,534)	12,095	(32,741)	(20,646)
Return per ordinary share	8	4.94p	(11.87p)	(6.93p)	4.64p	(12.56p)	(7.92p)

 

The total column of the Income Statement is the profit and loss account of the Company.

The supplementary revenue and capital columns are provided for information purposes in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

Return on ordinary activities after taxation is also the total comprehensive income for the year.

The notes form part of these financial statements.

 

Balance Sheet

		As at	As at
		31 December	31 December
		2025	2024
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	2	892,485	1,099,278
Current assets
Dividends receivable		520	1,763
Sales awaiting settlement		-	1,774
Taxation recoverable		-	52
Other debtors		12	427
Cash and cash equivalents		10,601	13,405
		11,133	17,421
Creditors: amounts falling due within one year
Trade and other payables	10	(3,325)	(5,468)
Revolving credit facility	11	(34,933)	(33,716)
		(38,258)	(39,184)
Net current liabilities		(27,125)	(21,763)
Total assets less current liabilities		865,360	1,077,515
Creditors: amounts falling due after one year
Capital gains tax provision	7	-	(31)
Loan Notes	11	(52,116)	(49,400)
Net assets		813,244	1,028,084
Capital and reserves: equity
Share capital	12	30,562	30,562
Capital redemption reserve		9,877	9,877
Special reserve		181,050	370,043
Capital reserve		578,290	603,177
Revenue reserve		13,465	14,425
Shareholders' funds		813,244	1,028,084
Net assets per ordinary share - debt at bookcost	13	427.1p	428.6p
Net assets per ordinary share - debt at fair value1		426.4p	427.6p

 

1 This is an alternative performance measure as detailed within the Annual Report.

Approved by the Board of Directors and authorised for issue on 27 March 2026 and signed on their behalf by:

Glen Suarez, Chairman

Impax Environmental Market plc incorporated in England with registered number 04348393.

The notes form part of these financial statements.

 

Statement of Changes in Equity

			Share	Capital	Share
		Share	premium	redemption	purchase	Special	Capital	Revenue
Year ended		capital	account	reserve	reserve	reserve	reserve	reserve	Total
31 December 2025	Notes	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening equity as at
1 January 2025		30,562	-	9,877	-	370,043	603,177	14,425	1,028,084
Return for the year		-	-	-	-	-	(24,887)	10,353	(14,534)
Dividends paid	9	-	-	-	-	-	-	(11,313)	(11,313)
Cost of share buybacks	12	-	-	-	-	(188,993)	-	-	(188,993)
Closing equity as at
31 December 2025		30,562	-	9,877	-	181,050	578,290	13,465	813,244
			Share	Capital	Share
		Share	premium	redemption	purchase	Special	Capital	Revenue
Year ended		capital	account	reserve	reserve	reserve	reserve	reserve	Total
31 December 2024	Notes	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Opening equity as at
1 January 2024		30,562	423,098	9,877	52,557	-	691,454	14,936	1,222,484
Return for the year		-	-	-	-	-	(32,741)	12,095	(20,646)
Cancellation of share premium
account*		-	(423,098)	-	-	423,098	-	-	-
Dividends paid	9	-	-	-	-	-	-	(12,606)	(12,606)
Cost of share buybacks	12	-	-	-	(52,557)	(53,055)	(55,536)	-	(161,148)
Closing equity as at
31 December 2024		30,562	-	9,877	-	370,043	603,177	14,425	1,028,084

* The new special reserve arose from the cancellation of the share premium account in 2024. It is distributable, unlike the share premium account.

The notes form part of these financial statements.

 

Statement of Cash Flows

		Year ended	Year ended
		31 December	31 December
		2025	2024
	Notes	£'000	£'000
Operating activities
Return on ordinary activities before finance costs and taxation1		(9,824)	(13,615)
Less: Tax deducted at source on income from investments		(685)	(2,288)
Foreign exchange losses/(gains)		4,770	(4,178)
Adjustment for losses on investments	2	12,026	26,676
Special dividends received as capital		-	3,293
Decrease/(increase) in other debtors		1,708	(1,451)
Increase/(decrease) in other creditors	10	324	(165)
Net cash flow from operating activities		8,319	8,272
Investing activities
Sale of investments		787,618	421,201
Purchase of investments		(591,325)	(256,375)
Net cash flow from investing activities		196,293	164,826
Financing activities
Dividends paid	9	(11,313)	(12,606)
Proceeds from revolving credit facility		35,067	-
Repayment of revolving credit facility		(35,678)	-
Finance costs paid		(4,724)	(4,593)
Cost of share buybacks		(190,721)	(159,420)
Net cash outflow used in financing activities		(207,369)	(176,619)
Decrease in cash		(2,757)	(3,521)
Cash and cash equivalents at start of year		13,405	16,804
Effect of movements in exchange rates on cash held		(47)	122
Decrease in cash		(2,757)	(3,521)
Cash and cash equivalents at end of year		10,601	13,405

 

1 Cash inflow includes dividend income received during the year ended 31 December 2025 of £16,261,000 (2024: £15,070,000) and bank interest of £244,000 (2024: £487,000).

 

Changes in net debt

	Year ended	Year ended
	31 December	31 December
	2025	2024
	£'000	£'000
Net debt at start of year	(69,711)	(70,293)
Decrease in cash and cash equivalents	(2,757)	(3,521)
The effect of changes in foreign exchange rates	(4,631)	4,103
Repayment of revolving credit facility	35,678	-
Proceeds from revolving credit facility	(35,067)	-
Net debt at end of year	(76,488)	(69,711)

 

The notes form part of these financial statements.

Notes to the Financial Statements

1 Accounting policies

The Company is a public limited company incorporated in England and Wales with registered number 04348393. Its registered office is as shown within the Annual Report. The Company's shares are traded on the London Stock Exchange.

The Company is an investment company within the meaning of Section 833 of the Companies Act 2006.

The accounts have been prepared in accordance with applicable UK accounting standards. The particular accounting policies adopted are described below.

(a) Basis of accounting

The accounts are prepared in accordance with UK Generally Accepted Accounting Practice ("UK GAAP") including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Statement of Recommended Practice 'Financial statements of investment trust companies and venture capital trusts' ('SORP') issued by the Association of Investment Companies in July 2022.

The accounts have been prepared on a going concern basis. Details of the Directors' assessment of the going concern status of the Company, which considered the adequacy of the Company's resources and the macroeconomic backdrop such as higher inflation and interest rates and possible recession, are given within the Annual Report. This assessment also considered the position of the Company with respect to Saba as a significant minority shareholder. As a result of that holding and following discussion with Saba and other major shareholders, and as explained in more detail in the Chairman's Statement within the Annual Report, on 26 January 2026 the Company published a Continuation Tender Offer ("CTO") circular. The CTO was conditional on Saba tendering all (or materially all) of its shares. However, the tender was cancelled on 27 February 2026 because the condition was not met.

Throughout this period, and subsequently, the Board has been in ongoing dialogue with Saba in an effort to reach a mutually agreeable outcome - one in which shareholders are able to tender up to 100% of their holding. Having exhausted every reasonable alternative to find a solution that balances the interests of all shareholders and ensures the long-term stability of the Company, the Company published an Exit Tender Offer ("ETO") on 17 March 2026. This tender requires only a simple majority for approval but, as highlighted in the ETO circular, Saba could gain the power to change the Company's strategy, objectives and even its mandate.

Having received no guidance from Saba, the Board does not have any insight into what change(s) in direction the Company could have. On the basis that this raises inherent uncertainties that could potentially call into question the Company's ability to continue as a going concern for at least 12 months from the date of approval of these financial statements, the Board considers that there is a material uncertainty that casts significant doubt on the Company's ability to continue as a going concern, but that it remains appropriate to prepare the financial statements on a going concern basis. The financial statements do not include adjustments that would be necessary if the Company were unable to continue as a going concern.

Amounts in the accounts have been rounded to the nearest £'000 unless otherwise stated.

(b) Investments

Securities of companies quoted on regulated stock exchanges and any holdings in unquoted companies have been classified as 'at fair value through profit or loss' and are initially recognised on the trade date and measured at fair value in accordance with sections 11 and 12 of FRS 102. Investments are measured at subsequent reporting dates at fair value by reference to their market bid prices. Any unquoted investments are measured at fair value which is determined by the Directors in accordance with the International Private Equity and Venture Capital guidelines.

Changes in fair value are included in the Income Statement as a capital item.

(c) Reporting currency

The accounts are presented in Sterling which is the Company's functional and presentational currency and the currency in which the Company's share capital, reserves and expenses are denominated as a UK registered and listed company.

(d) Income from investments

Investment income from shares is accounted for when the Company's right to receive the income is established, which is usually considered to be the ex-dividend date. Overseas income is grossed up at the appropriate rate of tax but UK dividend income is not grossed up for tax credits.

Special dividends are assessed on their individual merits and may be credited to the Income Statement as a capital item if considered to be closely linked to reconstructions of the investee company or other capital transactions. The ordinary element of scrip dividends received in lieu of cash dividends is recognised as revenue. Any enhancement above the cash dividend is treated as capital.

Scrip dividends received in lieu of cash dividends are recognised as revenue except for any excess above the cash dividend, which is recognised as capital.

All other investment income is credited to the Income Statement as a revenue item.

(e) Nature and purpose of equity and reserves

Share capital represents the 10p nominal value of the issued share capital.

The share premium account arose from the net proceeds of new shares and from the excess proceeds received on the sale of shares from treasury over the repurchase cost.

The capital redemption reserve represents the nominal value of shares repurchased for cancellation.

The share purchase reserve was created from the cancellation in full of the share premium account in 2002 and 2009. The cancellation and transfer were approved by shareholders and confirmed by the Court. This reserve can only be used for share repurchases, both into treasury or for cancellation. When shares are subsequently reissued from treasury, the amount equal to their repurchase cost is reflected in this reserve, with any proceeds in excess of the repurchase cost transferred to the share premium account.

The special reserve was created from the cancellation in full of the share premium account in July 2024. The cancellation and transfer were approved by shareholders and confirmed by the Court, and following this £423,098,000 was transferred into this reserve. This reserve is distributable, and can be used for both share repurchases and dividends.

The capital reserve reflects any

l  gains or losses on the disposal of investments;

l  exchange movements of a capital nature;

l   the increases and decreases in the fair value of investments which have been recognised in the capital column of the income statement; and

l  expenses which are capital in nature.

Any gains in the fair value of investments that are not readily convertible to cash are treated as unrealised gains in the capital reserve.

The revenue reserve reflects cumulative income and expenditure recognised in the revenue column of the Income Statement less cumulative dividends paid, and is distributable by way of dividend.

The Company's distributable reserves consist of the share purchase reserve, the special reserve, the capital reserve attributable to realised profits and the revenue reserve. The share purchase reserve may only be used for share repurchases, both into treasury or for cancellation.

(f) Expenses and finance costs

All expenses are accounted for on an accruals basis. Expenses are recognised through the Income Statement as revenue items except as follows:

Management fee

In accordance with the Company's stated policy and the Directors' expectation of the split of future returns, three quarters of the investment management fee are charged as a capital item in the Income Statement. There is no performance fee arrangement with the Manager.

Finance costs

Finance costs include interest payable and direct loan costs. In accordance with Directors' expectation of the split of future returns, three quarters of finance costs are charged as capital items in the Income Statement. Arrangement costs for revolving credit facilities and Loan Notes are amortised over the term of the borrowing.

Transaction costs

Transaction costs incurred on the acquisition and disposal of investments are charged to the Income Statement as a capital item.

(g) Taxation

Irrecoverable taxation on dividends is recognised on an accruals basis in the Income Statement.

Deferred taxation

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the financial reporting date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the financial reporting date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the timing differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise.

(h) Foreign currency translation

All transactions and income in foreign currencies are translated into sterling at the rates of exchange on the dates of such transactions or income recognition. Monetary assets and liabilities and financial instruments carried at fair value denominated in foreign currency are translated into sterling at the rates of exchange at the balance sheet date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the Income Statement as either a capital or revenue item depending on the nature of the gain or loss.

(i) Financial liabilities

Loan Notes and other borrowings are initially recorded at the proceeds received net of direct issue costs and subsequently measured at amortised cost.

(j) Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents include bank overdrafts repayable on demand and short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(k) Estimates and judgements

The preparation of financial statements requires the Directors to make estimates and judgements that affect items reported in the Balance Sheet and Income Statement. Although these estimates are based on management's best knowledge of current facts, circumstances and, to some extent, future events and actions, the Company's actual results may ultimately differ from those estimates, possibly significantly.

Estimates and underlying judgements are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future periods affected. There have been no estimates, judgements or assumptions which have had a significant impact on the financial statements for the year.

(l) Dividend payable

Final dividends payable to equity shareholders are recognised in the financial statements when they have been approved by shareholders and become a liability of the Company. Interim dividends payable are recognised in the period in which they are paid. The capital reserve, revenue reserve and special reserve may be used to fund dividend distributions.

(m) Treasury shares

Treasury shares are recognised at cost as a deduction from equity shareholders' funds. Subsequent consideration received for the sale of such shares is also recognised in equity, with any difference between the sale proceeds and the original cost being taken to share premium account. No gain or loss has been recognised in the financial statements on transactions in treasury shares.

 

2 Investments at fair value through profit or loss

	2025	2024
	£'000	£'000
(a) Summary of valuation
Analysis of closing balance:
UK quoted securities	66,271	257,290
Overseas quoted securities	826,214	841,988
Total investments	892,485	1,099,278
(b) Movements during the year:
Opening balance of investments, at cost	1,007,707	1,151,287
Additions, at cost	590,293	256,280
Disposals, at cost	(778,911)	(399,860)
Cost of investments at 31 December	819,089	1,007,707
Revaluation of investments to fair value:
Opening balance of capital reserve - investments held	91,571	144,560
Unrealised losses on investments held	(18,175)	(52,989)
Balance of capital reserve - investments held at 31 December	73,396	91,571
Fair value of investments at 31 December	892,485	1,099,278
(c) Losses on investments in year (per Income Statement)
Gains on disposal of investments1	7,275	23,213
Net transaction costs	(1,126)	(193)
Special dividends received as capital	-	3,293
Unrealised losses on investments held	(18,175)	(52,989)
Losses on investments	(12,026)	(26,676)

 

1 Gains on bookcost at purchase date upon disposal.

During the year, the Company incurred transaction costs on purchases totalling in aggregate £602,000 (2024: £316,000) and on disposals totalling in aggregate £932,000 (2024: £326,000). Following MiFID II, the Manager has rebated £408,000 (2024: £449,000) in respect of transaction research costs for the year ended 31 December 2025. Transaction costs are recorded in the capital column of the Income Statement.

The Company received £787,618,000 (2024: £433,349,000) from investments sold in the year. The bookcost of these investments when they were purchased was £781,469,000 (2024: £410,329,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.

No special dividends classified as capital were received in the year (2024: £3,293,000).

Classification of financial instruments

FRS 102 requires classification of financial instruments within the fair value hierarchy be determined by reference to the source of inputs used to derive the fair value and the lowest level input that is significant to the fair value measurement as a whole. The classifications and their descriptions are below:

Level 1

The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

Level 2

Holdings in companies with no quoted prices. Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.

Level 3

Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.

All investments at the year ended 31 December 2025 and 2024 were classified as Level 1. The Company held no unquoted investments during the year and at the year end.

3 Income

	2025	2024
	£'000	£'000
Dividends from UK listed investments	2,829	2,340
Dividends from overseas listed investments	12,189	15,949
Total dividend income	15,018	18,289
Bank interest	244	487
Total Income	15,262	18,776

 

No special dividends were received in the year (2024: Dividends from overseas listed investments includes special dividends classified as revenue of £292,000).

4 Investment management fee

	2025			2024
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment management fee	1,710	5,127	6,837	2,105	6,315	8,420

 

Details of the investment management fee are given in the Directors' report within the Annual Report. At 31 December 2025, investment management fees accrued were £2,220,000 (2024: £1,493,000).

5 Other expenses

	2025			2024
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Auditor's fee in respect of 20251	57	-	57	-	-	-
Auditor's fee in respect of 20242	20	-	20	50	-	50
Broker retainer fee	43	-	43	27	-	27
Custody fees	171	-	171	165	-	165
Depositary fees	104	-	104	93	-	93
Directors' fees3	210	-	210	187	-	187
Marketing fees	146	-	146	144	-	144
Registrar's fees	62	-	62	60	-	60
Secretary and administrator fees	262	-	262	267	-	267
Other expenses	425	-	425	358	-	358
	1,500	-	1,500	1,351	-	1,351

 

1    The auditor's fee for the statutory audit of these financial statements was £57,000 (2024: £49,875), excluding VAT of £10,400 (2024: £9,975) and out of pocket expenses. Included in this amount is a non-recurring fee of £5,000 for the work performed over the transfer of administrator and company secretary.

2    An additional audit fee of £20,000 in respect of the 2024 audit work arose due to issues at the Company's former administrator which impacted the audit process. This was offset by a £12,500 fee waiver by the administrator (all figures net of VAT).

3    Full detail of Directors' fees for the year is provided in the Directors' Remuneration Implementation Report within the Annual Report. Employer's National Insurance for Directors' fees is included as appropriate in Directors' other costs. At 31 December 2025, Directors' fees, Directors' expenses and national insurance outstanding were £nil (2024: £nil).

6 Finance costs

	2025			2024
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Interest charges
Interest on revolving credit facility ("RCF")
repaid in 2025	357	1,070	1,427	484	1,451	1,935
Interest on current RCF	83	250	333	-	-	-
Interest on Loan Notes	496	1,487	1,983	665	1,997	2,662
	936	2,807	3,743	1,149	3,448	4,597
Direct finance costs
Repaid RCF	20	55	75	27	82	109
Current RCF	53	159	212	-	-	-
Loan Notes	7	21	28	7	21	28
	80	235	315	34	103	137
Total	1,016	3,042	4,058	1,183	3,551	4,734

 

Full details of the Company's borrowings are set out in note 11. The Company refinanced its revolving credit facility with Scotiabank on the 6 September 2025 with a new RCF with Bank of America (the 'current RCF'). The direct finance costs in relation to the refinancing Loan Notes in 2023 amounted to £252,000. These costs are amortised over the life of the Loan Notes. Direct finance costs of £212,000 were incurred in relation to the current RCF; as the current RCF has no fixed life, these costs have been fully recognised in the year ended 31 December 2025.

 

7 Taxation

(a) Analysis of charge in the year

	2025			2024
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Overseas taxation	683	-	683	2,042	259	2,301
Decrease in CGT provision	-	(31)	(31)	-	(4)	(4)
Taxation	683	(31)	652	2,042	255	2,297

 

(b) Factors affecting total tax charge for the year:

The effective UK corporation tax rate applicable to the Company for the year is 25.0% (2024: 25.0%). The tax charge differs from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The standard rate UK corporation tax rate at 31 December 2025 was 25.0% (2024: 25.0%).

The differences are explained below:

	2025	2024
	£'000	£'000
Return for the year before taxation	(13,882)	(18,349)
Total return for the year before taxation multiplied by the standard rate of
corporation tax of 25% (2024: 25%)	(3,470)	(4,587)
Effects of:
Non-taxable UK dividend income	(708)	(585)
Non-taxable overseas dividend income	(3,047)	(3,779)
Movement in unutilised management expenses	2,084	1,886
Movement on non-trade relationship deficits	954	1,062
Losses on investments not taxable	3,006	7,017
Losses/(gains) in foreign currency movement	1,181	(1,014)
Capital gains tax provision movement	(31)	(4)
Overseas taxation	683	2,301
Total tax charge for the year	652	2,297

 

(c) Investment companies which have been approved by the HM Revenue & Customs under section 1158 of the Corporation Tax Act 2010 are exempt from tax on capital gains. Due to the Company's status as an Investment Trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided for deferred tax on any capital gains or losses arising on the revaluation of investments.

(d) The capital gains tax provision represents an estimate of the amount of tax provisionally payable by the Company on direct investment in Indian equities. It is calculated based on the long-term or short term nature of the investments and the unrealised gain thereon at the applicable tax rate at the year end.

Movements on the capital gains tax provision for the year

	2025	2024
	£'000	£'000
Provision brought forward	31	40
Capital gains tax cash movement	-	(5)
Decrease in provision in year	(31)	(4)
Provision carried forward	-	31

 

(e) The Company has unrelieved excess management expenses and non-trade relationship deficits of £123,234,000 (2024: £111,086,000). It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses and therefore no deferred tax asset has been recognised. The unrecognised deferred tax asset calculated using a rate of 25% (2024: 25%) amounts to £30,809,000 (2024: £27,772,000).

8 Return per share

	Year ended	Year ended
	31 December	31 December
	2025	2024
	£'000	£'000
Revenue return after taxation (£'000)	10,353	12,095
Capital return after taxation (£'000)	(24,887)	(32,741)
Net return (£'000)	(14,534)	(20,646)
Weighted average number of ordinary shares	209,517,789	260,523,018

Net return per ordinary share is based on the above totals of revenue and capital and the weighted average number of ordinary shares in issue during each year.

There is no dilution to return per share as the Company has only ordinary shares in issue.

9 Dividends

(a) Dividends paid in the year

	2025		2024
	Rate	£'000	Rate	£'000
Interim in lieu of final for the previous year	3.20p	7,470	2.90p	7,983
First interim for the current year	1.90p	3,843	1.80p	4,623
	5.10p	11,313	4.70p	12,606

 

(b) Dividends paid and payable in respect of the financial year, which is the basis on which the requirements of s1158-1159 of the Corporation Tax Act 2010 are considered

	2025		2024
	Rate	£'000	Rate	£'000
First interim for the current year	1.90p	3,843	1.80p	4,623
Second interim in lieu of final for the current year	3.20p	6,093	3.20p	7,470
	5.10p	9,936	5.00p	12,093

 

The Board declared two dividends in respect of the year and expects to continue paying two dividends annually.

10 Trade and other payables

	2025	2024
	£'000	£'000
Finance costs payable	813	1,583
Accrued management fee	2,220	1,493
Other accrued expenses	292	664
Amounts due to brokers for shares bought back	-	1,728
Total	3,325	5,468

 

11 Loan Notes and revolving credit facility

The Company has in place the following privately placed notes (the "Loan Notes") issued to funds managed by Pricoa Private Capital:

l  €20 million maturing on 1 September 2030 with a floating coupon of Euribor + 1.35%;

l  €30 million maturing on 1 September 2033 with a fixed coupon of 4.48%; and

l  €10 million maturing on 1 September 2035 with a fixed coupon of 4.63%.

In addition to the Loan Notes referred to above, the Company had in place a two-year £80 million multi-currency floating rate RCF with Scotiabank, which expired on 6 September 2025. The RCF had a non-utilisation fee of 52.5 basis points. The RCF with Scotiabank was replaced by a 360 day rolling £35 million multi-currency RCF with an accordion amount no greater than £35 million with Bank of America, with no fixed expiry date. The RCF has a non-utilisation fee of 22.5 basis points.

The RCF is secured by a floating charge over the assets of the Company and this floating charge has been extended to the Loan Notes, so that the two lenders rank pari passu.

A summary of the Company's borrowings are as follows:

		2025		2024
		Loan		Loan
		currency		currency
		amount	Bookcost	amount	Bookcost
	Interest rate	€'000	£'000	€'000	£'000
Loan Notes - Fixed and floating rate
Series A - Floating 2030	Euribor + 1.35%	20,000	17,372	20,000	16,470
Series B - Fixed 2033	4.48%	30,000	26,058	30,000	24,698
Series C - Fixed 2035	4.63%	10,000	8,686	10,000	8,232
			52,116		49,400
RCF - floating rate
Non-sterling	Six month EURIBOR +1.6%	-	-	40,800	33,716
Non-sterling	Six month EURIBOR +0.85%	40,068	34,933	-	-
			87,049		83,116

 

The maturity profile of the Loan Notes and RCF are as follows:

	2025	2024
	Bookcost	Bookcost
Payable at 31 December	£'000	£'000
RCF payable in less than one year	34,933	33,716
Loan Notes payable after more than one year	52,116	49,400
	87,049	83,116

The Company's Loan Notes and RCF contain the following covenants:

1)   Adjusted asset coverage should not be less than 4:1 in respect of the RCF;

2)   Borrowings expressed as a percentage of adjusted assets shall not exceed 35% in respect of the Loan Notes;

3)   Net Asset Value should not be less than £260,000,000; and

4)   The maximum permitted borrowing should not exceed that permitted in the Company's Articles of Association as described in the Gearing section of the Investment Policy within the Annual Report.

There were no breaches of any covenants either in the year just ended or the prior year.

12 Share capital

		2025		2024
	Number	£'000	Number	£'000
Issued and fully paid shares of 10p each
Brought forward	239,861,519	23,986	281,115,039	28,111
Shares bought back and held in treasury	(49,450,940)	(4,945)	(41,253,520)	(4,125)
Carried forward	190,410,579	19,041	239,861,519	23,986
Treasury shares of 10p each
Brought forward	65,762,020	6,576	24,508,500	2,451
Shares bought back and held in treasury	49,450,940	4,945	41,253,520	4,125
Carried forward	115,212,960	11,521	65,762,020	6,576
Share capital	305,623,539	30,562	305,623,539	30,562

 

During the year, the shares bought back were 20.6% of issued share capital at the start of the year, costing £188,993,000 (2024: 14.7%, £161,148,000). Total costs included the costs of the shares and other purchase costs totalling £1,354,000 (2024: £1,028,000).

As at 25 March 2026, the latest practicable date before publication of this report, no further ordinary shares have been bought back.

13 Net Asset Value per ordinary share

The net asset value per ordinary share at the year end are shown below. These were calculated using 190,410,579 (2024: 239,861,519) ordinary shares in issue at the year end (excluding treasury shares).

	2025		2024
		Net		Net
		asset value		asset value
		attributable		attributable
	£'000	pence	£'000	pence
Net Asset value - Debt at bookcost	813,244	427.1	1,028,084	428.6

 

A reconciliation of shareholders funds with debt at fair value is shown in the Alternative Performance Measures  within the Annual Report.

14 Transactions with the Manager

Details of the management contract can be found in the Directors' Report within the Annual Report. Fees payable to the Manager are detailed in note 4 within the Annual Report. Since 1 January 2018, the Manager has agreed to rebate commission which relates to research fees to the Company with such amount disclosed in note 2.

15 Financial risk management

As an investment trust, the Company invests in equities for the long-term so as to enable investors to benefit from growth in the markets for cleaner or more efficient delivery of basic services of energy, water and waste, as stated in the Company's investment objective which can be found within the Annual Report. In pursuing its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company's net assets or a reduction of the profits available for dividends. These risks include market risk (comprising currency risk, interest rate risk, and other price risk), credit risk and liquidity risk and the Directors' approach to the management of them is set out below. These metrics are monitored by the AIFM. The objectives, policies and processes for managing the risks, and the methods used to measure the risks, are set out below.

Market risks

The potential market risks are (i) currency risk, (ii) interest rate risk, and (iii) other price risk. The following considers each risk in turn.

(i) Currency risk

The Company invests in global equity markets and therefore is exposed to currency risk as it affects the value of the shares in the base currency. These currency exposures are not hedged. The Manager monitors currency exposure as part of its investment process. Currency exposures for the Company as at 31 December 2025 are detailed in the table at the end of this note.

Currency sensitivity

The below table shows the strengthening/(weakening) of sterling against the local currencies over the financial year for the Company's financial assets and liabilities held at 31 December 2025.

	2025	2024
	% change1	% change1
Australian Dollar	(0.2)	8.4
Canadian Dollar	2.8	6.9
Chinese Yuan	3.2	0.8
Danish Krone	(4.9)	4.8
Euro	(5.1)	4.9
Hong Kong Dollar	7.9	(2.5)
Indian Rupee	13.1	1.1
Israeli Shekel	6.2	(1.0)
Japanese Yen	7.3	6.8
Korean Won	5.0	12.3
Norwegian Krone	(4.7)	10.4
Swedish Krona	(10.4)	8.2
Swiss Franc	(5.9)	6.1
Taiwanese Dollar	2.9	5.4
US Dollar	7.7	(1.9)

 

1 Percentage change of Sterling against local currency from 1 January to 31 December.

Based on the financial assets and liabilities at 31 December 2025 and all other things being equal, if sterling had strengthened by 10%, the profit after taxation for the year ended 31 December 2025 and the Company's net assets at 31 December 2025 would have decreased by the amounts shown in the table below. If sterling had weakened by 10% this would have had the opposite effect.

	2025	2024
	Potential	Potential
	effect	effect
	£'000	£'000
Australian Dollar	-	2,876
Canadian Dollar	893	6,813
Chinese Yuan	2,393	3,599
Danish Krone	2,502	-
Euro	12,018	9,991
Hong Kong Dollar	1,296	-
Indian Rupee	7	2,210
Israeli Shekel	-	270
Japanese Yen	1,372	-
Korean Won	1,345	1,656
Norwegian Krone	1,605	2,035
Swedish Krona	1,214	919
Swiss Franc	-	2,559
Taiwanese Dollar	4,271	1,504
US Dollar	45,134	57,985
Total	74,050	92,417

 

(ii) Interest rate risk

The Company had a mix of fixed and floating rate borrowings for both this and the preceding year. The Company's borrowings are shown in note 11, including detailing those borrowings which are floating Loan and subject to interest rate risk.

The Company has £35 million multi-currency revolving credit facility based on a floating reference interest rate plus a margin of 0.85% per annum and a €20 million Loan Note due 2030 at EURIBOR+1.35%.

If rates had increased or decreased by 350 basis points the impact to the Company's profit or loss would be:

	2025			2024
	Profit or loss	Profit or loss
		350 bps	350 bps		350 bps	350 bps
		increase	decrease		increase	decrease
	€'000	£'000	£'000	€'000	£'000	£'000
31 December
Non-sterling Loan Note	20,000	(610)	610	20,000	(579)	579
Non-sterling RCF	40,068	(1,223)	1,223	40,800	(1,180)	1,180

 

(iii) Other price risk

The principal price risk for the Company is the price volatility of shares that are owned by the Company. The Company is well diversified across different sub-sectors and geographies.

At the year end the Company held investments with an aggregate market value of £892,485,000 (2024: £1,099,278,000). All other things being equal, the effect of a 10% increase or decrease in the share prices of the investments held at the year end would have been an increase or decrease of £89,248,500 (2024: £109,927,800) in the profit after taxation for the year ended 31 December 2025 and the Company's net assets at 31 December 2025.

Overall sensitivity

The Manager has used the Parametric VaR to calculate value at risk ('VAR'). This model has been used to estimate the maximum expected loss from the portfolio held at 31 December 2025 over 1 day, 5 day, 10 day and 21 day periods given the historical performance of the fund over the previous five years. The data in the previous five years is analysed under discrete periods to provide 1 in 10, 1 in 20 and 1 in 100 possible outcomes. The results of the analysis are shown below.

	2025		2024
	Expected as		Expected as
	percentage at limit		percentage at limit
	1 in 20	1 in 100	1 in 20	1 in 100
	(95%)	(99%)	(95%)	(99%)
1 day return	1.68	2.38	1.58	2.24
5 day return	3.76	5.32	3.54	5.01
10 day return	5.32	7.52	5.01	7.08
21 day return	7.71	10.90	7.26	10.27

 

The above analysis has been based on the following main assumptions:

l  The distribution of share price returns will be the same in the future as they were in the past.

l  The portfolio weightings will remain as they were at 31 December 2025.

The above results suggest, for example, that there is a 5% or less chance of the NAV falling by 3.76% or more over a 5 day period. Similarly, there is a 1% or less chance of the NAV falling by 2.38% or more on any given day.

Credit risks

BNP Paribas Securities Services (the 'Depositary') has been appointed as custodian and depositary to the Company.

Cash at bank at 31 December 2025 included £2,099,000 (2024: £12,606,000) held in its bank accounts at the Depositary. The Company also held £8,501,000 (2024: £799,000) in its accounts with NatWest Group plc, and a further £1,000 (2024: nil) held in its accounts with Lloyds Banking Group plc. The Board has established guidelines that, under normal circumstances, the maximum level of cash to be held at any one bank should be the lower of: i) 5% of the Company's net assets; and ii) £30 million. These are guidelines and there may be instances when this amount is exceeded for short periods of time.

All of the assets of the Company at the year end were held by the Depositary or sub-custodians of the Depositary. Bankruptcy or insolvency of the Depositary or its sub-custodians may cause the Company's rights with respect to securities held by the Depositary to be delayed or limited. The Depositary segregates the Company's assets from its own assets and only uses sub-custodians on its approved list of sub-custodians. At the year end, the Depositary held £892,485,000 (2024: £1,099,278,000) in respect of quoted investments.

The credit rating of the Depositary, which is a Fitch rating of AA-, was reviewed at the time of appointment and is reviewed on a regular basis by the Manager and/or the Board.

Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be low as trading is almost always done on a delivery versus payment basis.

There is credit risk on dividends receivable during the time between recognition of the income entitlement and actual receipt of dividend.

Liquidity risk

This is the risk that the Company will encounter difficulty in meeting its obligations for financial liabilities as they fall due. This risk is minimised because a majority of the Company's investments are in readily realisable securities which can be sold to meet funding commitments. The maturity profile analysis of the Company's financial liabilities is shown below. The Company does not have derivative financial liabilities and the amounts shown are undiscounted.

Financial liabilities by maturity at the year end are shown below on an undiscounted basis:

	2025				2024
	Within	Within	More than		Within	Within	More than
	1 year	1-3 years	3 years	Total	1 year	1-3 years	3 years	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Loan Notes	-	-	52,116	52,116	-	-	49,400	49,400
RCF	34,933	-	-	34,933	33,716	-	-	33,716
Interest cash flows on
Loan Notes	2,180	4,360	9,893	16,433	2,213	6,669	10,116	18,998
Interest cash flows on RCF	254	-	-	254	1,877	-	-	1,877
Cash flows on other
creditors	2,512	-	-	2,512	2,157	-	-	2,157
	39,879	4,360	62,009	106,248	39,963	6,669	59,516	106,148

 

Financial assets and liabilities

All liabilities carrying amount approximates fair value.

The Company's financial assets and liabilities at 31 December 2025 comprised:

	2025			2024
		Non-			Non-
	Interest	interest		Interest	interest
	bearing	bearing	Total	bearing	bearing	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investments
Australian Dollar	-	-	-	-	28,759	28,759
Canadian Dollar	-	8,932	8,932	-	68,046	68,046
Chinese Yuan	-	23,929	23,929	-	35,986	35,986
Danish Krone	-	25,021	25,021	-	-	-
Euro	-	207,076	207,076	-	183,810	183,810
Hong Kong Dollar	-	12,929	12,929	-	-	-
Indian Rupee	-	-	-	-	22,128	22,128
Israeli Shekel	-	-	-	-	2,700	2,700
Japanese Yen	-	13,724	13,724	-	-	-
Korean Won	-	13,453	13,453	-	16,557	16,557
Norwegian Krone	-	16,054	16,054	-	20,352	20,352
Sterling	-	66,271	66,271	-	96,294	96,294
Swedish Krona	-	12,141	12,141	-	9,187	9,187
Swiss Franc	-	-	-	-	25,243	25,243
Taiwanese Dollar	-	42,620	42,620	-	15,036	15,036
US Dollar	-	450,335	450,335	-	575,180	575,180
	-	892,485	892,485	-	1,099,278	1,099,278
Other assets and liabilities
Cash and cash equivalents
Euro	153	-	153	-	-	-
Chinese Yuan	1	-	1	1	-	1
Indian Rupee	88	-	88	-	-	-
Sterling	9,528	-	9,528	11,262	-	11,262
Taiwanese Dollar	89	-	89	-	-	-
US Dollar	742	-	742	2,142	-	2,142
	10,601	-	10,601	13,405	-	13,405
Short term debtors and creditors
Sterling	-	(3,081)	(3,081)	-	(3,625)	(3,625)
Canadian Dollar	-	-	-	-	86	86
Euro	(34,933)	-	(34,933)	(33,717)	(786)	(34,503)
Hong Kong Dollar	-	30	30	-	-	-
Swiss Franc	-	-	-	-	346	346
US Dollar	-	258	258	-	2,528	2,528
	(34,933)	(2,793)	(37,726)	(33,717)	(1,451)	(35,168)
Long-term creditors
Euro	(52,116)	-	(52,116)	(49,400)	-	(49,400)
Indian Rupee	-	-	-	-	(31)	(31)
	(52,116)	-	(52,116)	(49,400)	(31)	(49,431)
Total	(76,448)	889,692	813,244	(69,712)	1,097,796	1,028,084

 

Capital management

The Company considers its capital to consist of its share capital of Ordinary Shares of 10p each and its reserves. At 31 December 2025 there were 305,623,539 ordinary shares in issue (2024: 305,623,539) of which 115,212,960 ordinary shares were held in treasury (2024: 65,762,020).

The Manager and the Company's broker monitor the demand for the Company's shares and the Directors review the position at Board meetings. Further details on shares bought during the year and the Company's policies for issuing and buying back shares can be found in the Directors' Report.

The Company's policy on borrowings is detailed in note 11 within the Financial Statements.

16 Related Party Transactions

A related party is a company or individual who has direct or indirect control or who has significant influence over the Company. The Company has identified the Directors as related parties. The Directors' emoluments for the year and shareholdings have been disclosed within the Annual Report.

17 Post Balance Sheet Events

At the balance sheet date, Saba held a significant minority shareholding of 19.2% of the Company's issued share capital. At the date of the publication of this annual report, this position had been increased to 22.1% following further purchases by Saba of the Company's shares. The Chairman's Statement sets out the challenge this has created for the Company and how the Board has attempted to address the situation, culminating in the Continuation Tender Offer circular published on 26 January 2026 and the Exit Tender Offer published on 17 March 2026, both of which are available at www.iemplc.co.uk.

Other than the above, there are no significant events after the balance sheet date requiring disclosure.

 

Alternative Performance Measures

APMs are often used to describe the performance of investment companies although they are not specifically defined under FRS 102. The Directors assess the Company's performance against a range of criteria which are viewed as relevant to both the Company and its market sector. APM calculations for the Company are shown below.

Gearing

A way to magnify income and capital returns, but which can also magnify losses. A bank loan is a common method of gearing.

At 31 December		2025	2024
Total assets less cash/cash equivalents (£'000)	a	893,017	1,103,294
Net assets (Debt at fair value) (£'000)	b	811,883	1,025,577
Gearing (net)	(a÷b)-1	10.0%	7.6%

 

Leverage

Under the Alternative Investment Fund Managers Directive ("AIFMD"), leverage is any method by which the exposure of an Alternative Investment Fund ("AIF") is increased through borrowing of cash or securities or leverage embedded in derivative positions.

Under AIFMD, leverage is broadly similar to gearing, but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the Company's positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each other.

Ongoing charges

A measure, expressed as a percentage of daily net asset value (debt at fair value) during the year, of the regular, recurring annual costs of running an investment company.

At 31 December		2025	2024
Investment management fee (£'000)		6,837	8,420
Other expenses* (£'000)		1,500	1,351
Less non-recurring expenses* (£'000)		(212)	(262)
Total Expenses	a	8,125	9,509
Average NAV (£'000)	b	889,016	1,137,050
Ongoing charges	= (a/b)	0.91%	0.84%

 

* Expenses that are not recurring, such as one-off legal and advisory fees, are excluded from other expenses .

Premium/Discount

The amount, expressed as a percentage, by which the share price is more/less than the net asset value per ordinary share.

At 31 December		2025	2024
NAV per ordinary share (Debt at fair value) (p)	a	426.4	427.6
Share price (p)	b	396.5	385.5
(Discount)/premium	(b÷a)-1	(7.0%)	(9.8%)

 

Average Discount to NAV during the year

The average amount, expressed as a percentage, by which the share price is more/ less than the net asset value per ordinary share, in the year to 31 December 2025.

Total return

A measure of performance that includes both income and capital returns. This takes into account capital gains and reinvestment of dividends paid out by the Company into its ordinary shares on the ex-dividend date.

			NAV	NAV
		Share	(Debt at	(Debt at
Year ended 31 December 2025		price	fair value)	bookcost)
Opening at 1 January 2025 (p)	a	385.5	427.6	428.6
Closing at 31 December 2025 (p)	b	396.5	426.4	427.1
Dividend/income adjustment factor1	c	1.014	1.012	1.011
Adjusted closing (d = b x c)	d	402.1	431.5	431.8
Total return	(d÷a)-1	4.3%	0.9%	0.7%
			NAV	NAV
		Share	(Debt at	(Debt at
Year ended 31 December 2024		price	fair value)	bookcost)
Opening at 1 January 2024 (p)	a	400.0	434.3	434.9
Closing at 31 December 2024 (p)	b	385.5	427.6	428.6
Dividend/income adjustment factor1	c	1.011	1.012	1.011
Adjusted closing (d = b x c)	d	389.7	432.6	433.1
Total return	(d÷a)-1	-2.6%	-0.4%	-0.4%

 

1    The dividend adjustment factor is calculated on the assumption that dividends paid out by the Company are reinvested into the shares of the Company at NAV at the ex-dividend date.

 

Net asset value - debt at fair value

The net asset value per ordinary share with debt at fair value at the year end are shown below. These were calculated using 190,410,579 (2024: 239,861,519) ordinary shares in issue.

			2025		2024
			Net asset value		Net asset value
			attributable		attributable
		£'000		pence	£'000	pence
Net asset value - Debt at bookcost (note 13)	a	813,244		427.1	1,028,084	428.6
Add: Loan Notes at bookcost (note 11)	b	52,116		27.4	49,400	20.6
Less : Loan Notes at fair value	c	(53,477)		(28.1)	(51,907)	(21.6)
Net asset value - Debt at fair value	a+b+c	811,883		426.4	1,025,577	427.6

 

The fair value of the Loan Notes is derived by aggregating the discounted value of future cashflows, being the contractual interest payments and the repayment of capital at maturity as each falls due. Discount rates are determined based on the closest available maturity, using the EUR Mid-Swap Rate for fixed-rate tranches and the Euro short-term rate Overnight Index Swap curve for floating-rate tranches. Both rates are adjusted for appropriate credit spreads and illiquidity premia.

The fair value of the Loan Notes is calculated by an independent debt valuation specialist firm and the NAV with debt at fair value uses this value.

The fair value of the Company's RCF is not an adjustment in the reconciliation of NAV with debt at bookcost to NAV with debt at fair value due to the fact that the RCF is valued at bookcost, which approximated to fair value.

 

AIFMD Disclosures

Alternative investment fund managers directive ("AIFMD")

The Company is classified as an Alternative Investment Fund under AIFMD and is therefore required to have an Alternative Investment Fund Manager ("AIFM"). Impax Asset Management (AIFM) Limited is the AIFM of the Company. The AIFM has received its authorisation to act as an AIFM from the FCA. The AIFM must ensure that an annual report containing certain information on the Company is made available to investors each financial year. The investment funds sourcebook of the FCA details the requirements of the annual report. All the information required by those rules is included in this Annual Report or will be made available on the AIFM's website (www.impaxam.com).

The AIFM is required to make certain disclosures on its remuneration in respect of the AIFM's relevant reporting period which is the year ended 30 September 2025. These disclosures are available on the AIFM's website or are available on request from the AIFM.

Leverage (under AIFMD)

The AIFM is required to set leverage limits as a percentage of net assets for the Company utilising methods prescribed under AIFMD (see APMs within the Annual Report). These methods are known as the gross method and the commitment method. A leverage percentage of 100% equates to nil leverage. The Company's leverage under each of these methods at its year end follows.

	Gross	Commitment
	method	method
Maximum leverage limit
(set by the AIFM)	130%	130%
Actual leverage at
31 December 2025	110%	111%

 

Financial Information

This announcement does not constitute the Company's statutory accounts.  The financial information for the year to 31 December 2025 is derived from the statutory accounts for 2025, which will be delivered to the Registrar of Companies. The auditor has reported on the 2025 accounts; their report was unqualified and did not include a statement under Section 498(2) or (3) of the Companies Act 2006.

The Annual Report for the year ended 31 December 2025 was approved on 27 March 2026. It will be made available on the Company's website at www.iemplc.co.uk.

The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism

This announcement contains regulated information under the Disclosure Guidance and Transparency Rules of the FCA.

 

For further information contact:

Camarco	ImpaxEM@camarco.co.uk
Billy Clegg / Jennifer Renwick	+44(0)203 757 4980
Juniper Partners Limited	+44 (0)131 378 0500
Company Secretary

 

 

END