Impax Environmental beats its benchmark in 2015

For the 12 months ended 31 December 2015 the net asset value per share of Impax Environmental Markets achieved a total return of 6.0% and ended the year at 178.6p.   During 2015, IEM’s share price total return was 5.8% and it ended the year at 160p. The directors are recommending a dividend for the year ended 31 December 2015 of 1.45p per share (2014: 1.4p). During the year, the discount to NAV at which the company’s ordinary Shares traded ranged from 6% to 14% and ended the year at 10.4%.

The company outperformed its global comparator index, the MSCI All Countries World Index, which rose 3.3% (total return, GBP) over the Period.  IEM’s environmental comparator index, the FTSE ET100, returned 5.0% over the period.

Performance was broadly positive across regions and sectors. Renewables companies delivered the strongest positive performances, with favourable market developments as outlined above, supplemented by stock picking.  For example, SMA Solar (Germany) more than doubled on recovery of its end markets and the successful execution of an extensive turnaround plan.

Buildings Energy Efficiency companies continued to thrive on the combination of recovering construction markets and tightening efficiency standards.  Kingspan (Ireland) and Nibe (Sweden) also benefitted from increasing market penetration of their products together with the successful integration of recent acquisitions.

Merger and acquisition activity continued to highlight the attractiveness of Environmental Markets, with Pall Corp (as mentioned in the interim report) acquired by US industrial group Danaher at approximately a 28% premium to the share price prior to the takeover.

On the downside, Light Emitting Diode (“LED”) markets weakened further during the Period, with industry commoditisation weighing on margins for chip manufacturer Epistar (Taiwan), and delaying capex plans which impacted Aixtron (Germany).  They expect these challenging trends will continue and so have cut exposure to these markets.

Companies with exposure to oil and gas were weak, especially water holdings Pentair and Franklin Electric (both US), and hazardous waste company Clean Harbors (US) which treats waste oil.  They believe oil and gas exposures in these holdings represent a relatively small part of these businesses and that valuations are attractive relative to the long term prospects of these strong franchises.

IEM : Impax Environmental beats its benchmark in 2015


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