Impax Asset Management : results for the year ended 30 September 2022

this diversified strategy as asset owners continued to show their shared conviction in the medium to long-term opportunities presented by the transition to a more sustainable economy.

"It is a pleasure to welcome Karen Cockburn, who in January 2023 will become Chief Financial Officer, succeeding Charlie Ridge. Karen is a highly experienced professional, whose career includes spells in banking, insurance, wealth management and digital platforms. On behalf of my colleagues, I would like to extend my sincere thanks to Charlie for his outstanding leadership over the past 14 years.

"Looking ahead to 2023, for companies exposed to the transition to a more sustainable economy, the current environment is providing positive tailwinds. Over the longer term, we expect the rise in input prices to drive an increased focus on energy- and resource-efficiency and to accelerate the shift to diversify energy supplies and decarbonise economies. At a policy level, energy security concerns are likely to remain high, further prioritising the shift away from fossil fuels, while pressure on investors to demonstrate climate resilience and protect ecosystems are also likely to grow in prominence. Although market volatility is likely to remain elevated, robust companies with correctly designed business strategies should continue to out-perform."

Board Changes

Following 13 years on the Board, Vince O'Brien has notified the Board of his intention to retire as a Director, effective at the AGM in March 2023. He has retired as Senior Independent Director, Chair and member of the Audit & Risk Committee, and member of the Remuneration Committee, effective 30 November 2022. Annette Wilson will succeed Vince as Chair of the Audit & Risk Committee and will assume his role as Board Sponsor of the employee-led Environment Group. Simon O'Regan will succeed Vince as the Senior Independent Director and as the Board's Whistleblowing Champion.

Karen Cockburn will become Chief Financial Officer, succeeding Charlie Ridge, in January 2023. In due course it is anticipated that Karen will join the Impax Board as an Executive Director. This is expected to be following the conclusion of the Company's AGM, subject to receipt of regulatory approval in relation to her appointment as a director of the Company's FCA regulated subsidiaries.

Ends

LEI number: 213800AJDNW4S2B7E680

About Impax Asset Management

Founded in 1998, Impax is a specialist asset manager, with approximately £37.4 billion/$42.9 billion as of 31 October 2022, in both listed and private markets strategies, investing in the opportunities arising from the transition to a more sustainable global economy.

Impax believes that capital markets will be shaped profoundly by global sustainability challenges, including climate change, pollution and essential investments in human capital, infrastructure and resource efficiency. These trends will drive growth for companies that Impax believes are well positioned and create risks for those unable or unwilling to adapt.

The Company seeks to invest in higher quality companies with strong business models that demonstrate sound management of risk. Impax offers a well-rounded suite of investment solutions spanning multiple asset classes seeking superior risk-adjusted returns over the medium to long term.

Impax has approximately 270 staff across its offices in the United Kingdom, the United States, Ireland and Hong Kong, making it one of the investment management sector's largest investment teams dedicated to sustainable development.

www.impaxam.com

Issued in the UK by Impax Asset Management Group plc, whose shares are quoted on the AIM market of the London Stock Exchange. Impax Asset Management Group plc is registered in England

• Wales, number 03262305. AUM relates to Impax Asset Management Limited, Impax Asset Management (AIFM) Limited, Impax Asset Management Ireland Limited and Impax Asset Management LLC. Impax Asset Management Limited and Impax Asset Management (AIFM) Limited are authorised and regulated by the Financial Conduct Authority and are wholly owned subsidiaries of Impax Asset Management Group plc. Please note that the information provided and links from it should not be relied upon for investment purposes.

Chief Executive's Report

BUSINESS UPDATE

Impax has delivered commendable results during a year that started strongly but rapidly developed considerable external headwinds. Despite weak market sentiment, fuelled by rising inflation and geopolitical instability, we continued to attract new business, with total net inflows of £2.9 billion over the 12 months ending 30 September 2022 (the "Period") and positive flows in both halves.

Despite attracting additional clients and subscriptions, the Company's assets under discretionary and advisory management ("AUM") fell over the Period by 4.1% from £37.2 billion to £35.7 billion, driven principally by falling markets and negative, absolute, investment performance. As of 31 October 2022 the Company's AUM had recovered to £37.4 billion.

For more than two decades we have built a robust and well-diversified global client base of institutional and intermediary investors and served both through our own channels and via trusted distribution partners. The Company's performance during the Period demonstrates the benefit of this diversified strategy as asset owners continued to show their shared conviction in the medium to long-term opportunities presented by the transition to a more sustainable economy.

CHALLENGING EXTERNAL ENVIRONMENT

Having reached all-time highs at the end of December 2021, global equity markets fell, initially as a result of rising concerns over inflation, interest rates and monetary tightening. In late February, weak

sentiment was exacerbated by Russia's invasion of Ukraine, which impacted investor confidence for more than seven months of the financial year.

The war has intensified a looming global energy crisis caused by structural under-investment and supply disruption. Policymakers sought to reduce quickly Europe's dependency on Russian gas, bolstering the secular case for renewables. Investors shifted towards value-orientated stocks such as energy and commodities, causing the share prices of companies active in clean energy and energy efficiency markets to suffer on both an absolute and a relative basis: for example, the FTSE Environmental Opportunities All-Share Index dropped 28.1%, in US$ terms, between 1 January and 30 September 2022, compared to the MSCI ACWI Index, which fell by 25.6%.

Meanwhile, evidence of the impact of climate change on weather systems continued to build. During summer in the northern hemisphere, temperature records were broken and the global food crisis was exacerbated by droughts affecting river basins from the Yangtse to the Colorado. Meanwhile, the catastrophic storms and flooding in Pakistan and the devastation caused by Hurricane Ian in the US have further strengthened the case for investing in environmental solutions, especially around climate adaptation.

Amid nature's warning signs, it was encouraging to see the successful adoption into United States law of President Biden's Inflation Reduction Act. This was almost certainly the most significant piece of climate- related federal legislation in US history, allocating more than US$370 billion in incentives and programmes to accelerate action on climate and energy over the next decade. Its progress on limiting methane emissions can be seen as one of the major successes to have emerged from the COP26 Climate Conference in Glasgow. At the COP27 summit in November 2022, more than 150 countries signed up to the Global Methane Pledge and agreed to contribute to reducing global methane emissions by at least 30% from 2020 levels by 2030.

Movements in the Company's AUM for the full year ended 30 September 2022

INVESTMENT PERFORMANCE

Given the challenging external environment, many of our investment strategies, managed by our teams in the UK, US and Hong Kong, lagged their benchmarks over the Period.

Our Environmental Markets strategies in particular - which use a "quality growth at a reasonable price" investment style - were negatively impacted, as market sentiment switched to favour value-oriented stocks. This led in particular to stronger, relative performance of the fossil fuel energy sector, to which Impax strategies typically have no exposure.

Longer term, eight out of the largest ten strategies, accounting for a combined 89% of AUM, have outperformed their benchmarks over three years. Of the nine that have five-year track records, seven have outperformed their benchmarks.

After the Period end, we launched a UCITS fund based on a new Sustainable Infrastructure (active) strategy, which seeks to generate long-term capital growth with income by investing in listed equities,

while seeking to avoid the sustainability risks which dominate the traditional infrastructure universe, for example future carbon taxes on transportation fuels.

Our team investing in privately-held companies operating in the renewable generation sector made eight new investments through our fourth fund, ranging from a solar and energy efficiency investment in Italy to forming a joint venture partnership with a decentralised generation specialist to deploy rooftop solar, battery storage and smart meters at scale in Germany. Meanwhile, the team successfully completed its third exit from the portfolio of our third fund.

CLIENT SERVICE AND BUSINESS DEVELOPMENT

We continue to expand the breadth of our client base, which is already well diversified by channel and geography, with 79% of our AUM coming from clients outside the UK. We are particularly focused on strengthening our direct distribution capabilities and have appointed new Heads of Distribution in North America (October 2021) and in Europe & Asia-Pacific (June 2022).

Inflows over the Period were directed particularly into our Sustainability Lens strategies. Global Opportunities accounted for 58.2% of net inflows, driven principally by our relationship with St James's Place in the UK and by new pension fund mandates in Australia. The US Large Cap strategy was responsible for 10.7% of net inflows, which included the launch of a fund on Lombard Odier's PrivilEdge platform targeted at European investors.

Of our thematic Environmental Markets strategies, Leaders and Climate received the greatest investor interest, and were responsible for 10.7% and 8.9% of net inflows respectively. This included two new Climate strategy mandates in the US and China during the first half of the Period.

From our intermediaries, consultants, and distribution partner channels, amongst others, we also saw positive flows via Principal Global Investors and a private bank in the US, Formuepleje in Denmark, and Fidante in Australia.

Our efforts to increase our direct distribution led to positive flows into our own-label fund ranges. Our Ireland-based UCITS fund range saw net inflows of £150 million, with AUM at £1.9 billion at the Period end, and our investment trust, Impax Environmental Markets plc, registered net inflows of £50 million.

The AUM of US-based Pax World Funds grew by 4% to £6.4 billion, including net inflows of £669 million.

After the Period end, we announced that the Pax World mutual fund range would be renamed under the Impax brand, becoming the Impax Funds, effective 31 December 2022. By renaming the mutual funds while keeping the underlying portfolios and investment processes unchanged, we are emphasising Impax's unified investment approach, offering a consistent brand globally and avoiding confusion in the marketplace.

BEYOND FINANCIAL RETURNS

During the Period, we extended our 'Beyond Financial Returns' programme, an approach to enhancing our investment outcomes and client reporting with activity focused in four areas.

First, our corporate engagement and stewardship activity aims to improve our understanding and management of investment risk. In 2021 we took part in 204 engagements, while in 2022 we were proud to become a signatory to the UK Stewardship Code, a step that requires the demonstration of robust processes in this area.

Second, we disclose through our annual impact report the quantified environmental and social benefits linked to our clients' investments in our portfolio companies. This year we have evolved our reporting to include inter alia a fixed income strategy, and added metrics on social, water, and nature-related impact.

Third, we strive to influence policy outcomes that support solutions to environmental and social challenges. We prioritised four areas during the Period: financing the transition to net-zero emissions; greening the financial system; biodiversity; and human capital, including equity, diversity and inclusion as well as the response to Covid-19. We collaborate closely with a broad network, including the scientific community, industry bodies, and not-for-profit organisations.