Impax Environmental Markets (IEM) has announced its annual results for the year ending 31 December 2022.
- Over the period IEM reported a NAV total return of -15.0%, and a share price total return of -22.8%. This represents an underperformance relative to IEM’s global equity comparator index, the MSCI ACWI, which generated -8.1%. IEM did outperform its environmental markets comparator, the FTSE Environmental Technology 100 Index, which fell by -20.1% over the year. IEM reported a share price total return of -22.8% over the same period.
- IEM’s investment manager highlighted the main detractors to IEM’s performance as “the market rotation from ‘growth’ towards ‘value’ companies continued throughout the year and has led to a material de-rating of holdings exposed to these style factors”, as well as their exposure to cyclical companies which underperformed “against the backdrop of rising interest rates and increased likelihood of a recession”.
- IEM paid a dividend of 4.0p per share for its 2022 financial year, a 42.9% increase on the year period. This reflected the substantial increase in its revenue return over the year, increasing from £9.4m to £13.6m.
- As of the end of its financial year IEM traded at neither a premium nor discount to its NAV, compared to the 10.2% premium it traded on at the end of its previous financial year. The board intends to keep IEM’s shares trading close to NAV during normal market conditions, and over the year and issued of 7.6m shares, with 3.1m bought back into treasury, and 1.6m reissued from the treasury; a net increase of 6.1m. IEM currently trades on a 2.1% discount, as of 3 April 2023.
IEM’s investment management team commented:
“Equity markets have had a volatile start to 2023, with early strength reversed in March by the sudden collapse of Silicon Valley Bank in the US and forced takeover of Credit Suisse by UBS in Europe. Fears of a new credit crisis have driven material underperformance of small and mid-cap markets in which IEM invests vs MSCI ACWI overall. With this backdrop, the recent focus has been on economically defensive sectors and business models and on companies with strong balance sheets, which are well placed to weather these near-term challenges.
“Notwithstanding the above, with a medium-term perspective we believe that the investment case underpinning IEM remains compelling, and that companies providing innovative solutions to environmental challenges will continue to thrive and experience superior growth relative to the global economy. Continued strong policy support, energy price volatility and a renewed focus on energy security are supportive of opportunities across a wide range of environmental markets. Recent volatility leaves the portfolio valuation in line with long term average levels, which is considered attractive given the strengthening underlying investment case.”