C Share issue

IMPAX ENVIRONMENTAL MARKETS PLC

Introduction
On 9  June  2006  the  Company  announced  that  the  Directors  were
considering  proposals  for  a  further  issue  of  Ordinary  Shares.
Proposals have  been announced  today  for a  Placing and  Offer  for
Subscription of C Shares which  will convert into Ordinary Shares  to
raise up to £90 million before expenses. The Placing and Offer is not
being underwritten  and will  not  proceed unless  subscriptions  are
received in aggregate for at least £20 million (or such lesser amount
as the Company and Dresdner Kleinwort may agree).

The Company has convened an Extraordinary General Meeting, to be held
on 14 August 2006, at which Shareholders' approval for the  Proposals
will be sought.

Background
The Company  is  an  investment  trust  whose  Ordinary  Shares  were
admitted to  the Official  List on  22 February  2002. The  Company's
objective is to enable investors to benefit from rapid and  sustained
growth anticipated by  the Directors  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.  The
Company's investment manager is Impax Asset Management Limited.

As at 18 July  2006, the Company had  unaudited net assets of  £127.5
million.  The  Company's  Net  Asset  Value  per  Share   (unaudited)
performance over various periods to 18 July 2006, compared with those
of the FTSE All-Share and MSCI World indices, was as follows:


                         % return % return % return % return % return
                         since    since    since    since    since
                         31       31       31       31       22
                         December December December December February
                         2002     2003     2004     2005     2002*

NAV      per       Share 78.7     46.6     26.7     5.0      (1.1)
(unaudited)

FTSE All-Share Index     52.2     30.5     19.5     1.2      18.2

MSCI     World     Index 40.4     19.3     13.4     (5.7)    4.4
(sterling adjusted)


* The Company was listed on 22 February 2002
Source: Thomson Datastream

In October  2005 the  Board announced  proposals for  an issue  of  C
Shares (the ''2005  C Shares'')  by way of  a placing  and offer  for
subscription sponsored  by Dresdner  Kleinwort  and the  Company  was
successful in raising £60,000,000 before expenses, taking net  assets
to over £100,000,000 for the first time. The Board believe that  this
expansion was a major development  for the Company and indicative  of
the  emergence  of   the  Environmental  Markets   sector  into   the
mainstream. The 2005 C Shares were converted into Ordinary Shares  in
December 2005 with all shareholders  receiving one warrant for  every
five Ordinary Shares held at that  time. The Board believes that  the
2005 C Share issue provided  the Company's shareholders with  several
benefits.  Those  included  increased  liquidity  of  the   Company's
Ordinary Shares and increased size over which the Company can  spread
its fixed costs.

In January and February 2006 strong demand for the Company's Ordinary
Shares continued and
during those months 3,995,000  new Ordinary Shares  were issued at  a
price of 98p per  Share and a further  1,000,000 new Ordinary  Shares
were issued at a price of 104.25p per Share.

On 20  February  2006, a  circular  was sent  to  shareholders  which
contained proposals  to  grant the  directors  authority to  allot  a
further 7,047,390 Ordinary Shares  and those proposals were  approved
by shareholders  on  15  March  2006. On  17  March  2006  a  further
7,047,390 Ordinary Shares were issued at a price of 110p per Ordinary
Share.

On 15  June  2006  subscription rights  conferred  by  Warrants  were
exercised resulting in the issue  of 3,295,508 Ordinary Shares at  an
exercise price of 96p per Ordinary Share.

As at 18 July 2006,  the Ordinary Shares were  trading at a 4.11  per
cent. premium to NAV  per Share (unaudited).  The average premium  on
the Ordinary Shares to  NAV per Ordinary  Share (unaudited) over  the
twelve months to that date was 3.3 per cent.

The Proposals
The Board believes that there continues to be significant demand  for
Ordinary Shares from investors who are unable to purchase  sufficient
shares in the secondary market. Consequently, the Board is taking the
opportunity provided by this demand, the Company's strong performance
since March  2003 and  the premium  to  NAV per  Share at  which  the
Ordinary Shares are trading to expand the Company by making C  Shares
available to Qualifying Shareholders and new investors.

The Proposals involve:
-           a Placing and Offer for Subscription of C Shares to raise
up to £90 million before expenses;
-            adoption of new  Articles to provide for the rights  and
restrictions attaching to the C Shares

Placing and Offer for Subscription
The Company is seeking to raise  up to £90 million, before  expenses,
through the  Placing and  Offer  for Subscription  of C  Shares.  The
Placing and Offer are not being  underwritten and, as a result,  will
not  proceed  unless  aggregate  subscriptions  are  received   which
represent a minimum  of £20  million (or  such lesser  amount as  the
Company and Dresdner Kleinwort may agree).

Dresdner Kleinwort  has agreed,  as  agent for  the Company,  to  use
reasonable endeavours  to procure  placees  for up  to 80  million  C
Shares in the  Placing at a  price of  100p per share.  A further  10
million C Shares  are being  made available to  Shareholders and  new
investors (other than certain  Overseas Investors) through the  Offer
for Subscription at  a price  of 100p per  share. In  the event  that
applications under the Offer in  excess of this amount are  received,
subscriptions under  the Offer  will be  scaled back,  with  existing
Shareholders (other than certain Overseas Investors) being  allocated
C Shares  in preference  to new  investors under  the Offer.  To  the
extent that less than 80 million  C Shares are subscribed for in  the
Placing the surplus C  Shares will be available  under the Offer.  If
less than 10 million C Shares are validly applied for under the Offer
the surplus C Shares may be placed pursuant to the Placing.

The Placing  and  Offer are  conditional  on the  Placing  and  Offer
Agreement becoming unconditional, and not being terminated, Admission
of the C Shares and the passing of the resolutions to be put  forward
at the Extraordinary General Meeting.

The result of the Placing and Offer will be announced on the date  of
the Extraordinary General Meeting.

The Directors intend to apply the Net Proceeds in making  investments
in accordance with  the Company's investment  objective as  described
above and subject to  the Company's investment restrictions.  Pending
investment, the Net  Proceeds will  be invested  in short-term  money
market instruments (including gilts and treasury bills) and cash with
institutions (or wholly owned subsidiaries of institutions) which are
rated A1 (or  above) by  Standard &  Poor's or  an equivalent  rating
agency.


C Shares
The Placing and Offer will be of a new class of shares, C Shares,  at
an issue price of 100p per share. An issue of C Shares is designed to
overcome the potential disadvantages for existing Shareholders  which
could arise  out  of a  conventional  fixed price  issue  of  further
Ordinary Shares for cash. In particular:

-            the assets representing the Net Proceeds from the  issue
of the C Shares will be accounted for and managed as a distinct  pool
of assets  until  the Conversion  Date.  By accounting  for  the  Net
Proceeds separately, holders of existing Ordinary Shares will not  be
exposed to a portfolio containing a substantial amount of  uninvested
cash before the Calculation Date;

-           the Net Asset Value of the existing Ordinary Shares  will
not be diluted by  the expenses associated  with the Proposals  which
will be borne by the subscribers for C Shares; and

-              the basis upon  which the C  Shares will convert  into
Ordinary Shares is such that the  number of Ordinary Shares to  which
holders of C Shares  will become entitled  will reflect the  relative
investment  performance  and  value  of  the  pool  of  new   capital
attributable to the C Shares raised pursuant to the Placing and Offer
up to the Calculation Date as compared to the assets attributable  to
the Ordinary Shares in issue at that time. As a result, the Net Asset
Value attributable to the Ordinary Shares  then in issue will not  be
adversely affected by Conversion.

The Net Proceeds and the investments made with them will be accounted
for and managed as a separate pool of assets until the date on  which
at least  90 per  cent. of  the Net  Proceeds have  been invested  or
committed to  be  invested or,  if  earlier, 31  December  2006.  The
Conversion Ratio will then  be calculated and the  C Shares in  issue
will convert into a number of Ordinary Shares calculated by reference
to the net assets then attributable  to C Shares compared to the  net
assets at  the same  time  attributable to  Ordinary Shares  then  in
issue. Entitlements to Ordinary Shares arising on Conversion will  be
rounded down to the nearest whole number.

The C Shares will  not carry any effective  rights to dividends,  nor
will they carry voting rights, but the consent of C Shareholders as a
class will be required in connection with certain specified  matters.
C Shareholders will be entitled to participate in a winding-up of the
Company or upon a return of capital.

The Ordinary Shares arising on Conversion  of the C Shares will  rank
pari passu with the Ordinary Shares  then in issue and will have  the
rights set out in the Company's new Articles of Association.

Example of Conversion mechanism
The following example illustrates  the basis on  which the number  of
Ordinary Shares arising on Conversion will be calculated. The example
is not,  and is  not intended  to be,  a forecast  of the  number  of
Ordinary Shares which will arise on Conversion.

The example illustrates  the number  of Ordinary  Shares which  would
arise on the  Conversion of  1,000 C  Shares held  at the  Conversion
Date, using assumed Net Asset Values attributable to the C Shares and
Ordinary Shares in  issue at  the Calculation Date.  The assumed  Net
Asset Value attributable to an Ordinary Share is that at the close of
business on 18 July  2006 (the latest practicable  date prior to  the
publication  of  this   document).  The  assumed   Net  Asset   Value
attributable to  each C  Share is  on  the basis  that there  are  no
returns on the Net Proceeds to the Calculation Date.


Example:
Number           of           C           Shares           subscribed
                                                             1,000
Amount                                                     subscribed

£1,000
Net Asset Value  attributable to a  C Share at  the Calculation  Date
             £0.9825
Net Asset Value attributable to an Ordinary Share at the  Calculation
Date £0.9725
Conversion
Ratio
1.0103
Number       of        Ordinary       Shares        arising        on
Conversion                                     1,010

Fractions of Ordinary Shares arising on Conversion will be aggregated
and sold for the benefit of the Company.

Amendment to the Management Agreement
The Company and the Manager have entered into a conditional agreement
to amend the Management Agreement.  This agreement is conditional  on
Admission of the C Shares taking place.

Under the Management  Agreement the Manager  currently receives  from
the Company a management  fee, paid monthly in  arrear, at a rate  of
one twelfth of  one per cent.  (plus VAT, if  applicable) of the  net
assets of the Company calculated on the basis of mid-market prices of
investments. If  the amendment  agreement becomes  unconditional  the
management fee will  be amended so  that the management  fee will  be
calculated at the  current monthly  rate of  one twelfth  of one  per
cent. for net assets  not exceeding £200 million  but at the  reduced
monthly rate of one twelfth of 0.9 per cent. for net assets in excess
of £200 million. In addition, if the agreement becomes unconditional,
for the purposes of calculating  the management fee, net assets  will
be calculated  on the  basis  of bid  prices rather  than  mid-market
prices.

Benefits of the Proposals
The Directors believe that the Proposals have the following principal
benefits:
-                 Shareholders will be able to subscribe for  further
shares in the Company;
-            the  market capitalisation of the Company will  increase
following the Placing and Offer and it is expected that the liquidity
of the Ordinary Shares will  be enhanced through a wider  shareholder
base;
-              the Placing and  Offer will increase  the size of  the
Company and enable it to spread  its fixed operating expenses over  a
larger number of Ordinary Shares; and
-            the rate at  which the management fee is payable by  the
Company to  the  Manager will  be  reduced  to the  extent  that  the
Company's NAV exceeds £200 million.

Extraordinary General Meeting
An EGM of the Company has been  convened for 10.00 a.m. on 14  August
2006 in order to obtain Shareholders' approval for implementation  of
the Proposals.

Adoption of new Articles of Association
Special resolution number  1 in the  notice of EGM  provides for  the
adoption  of  new  Articles  of  Association.  The  new  Articles  of
Association will set out the rights and restrictions attaching to the
C Shares.

Increase in Share Capital, Authority  to Allot and Disapplication  of
Pre-emption Rights
The Company proposes by means of  special resolution number 1 in  the
notice of EGM to increase  the Company's authorised share capital  by
the creation  of 90  million C  Shares and  to seek  authority  under
section 80 of the Companies Act to allot relevant securities with  an
aggregate nominal amount of  up to £90  million which represents  687
per cent. of the Company's ordinary  share capital in issue as at  18
July 2006. This  authority will  only be used  to allot  C Shares  in
accordance with the Proposals. Any unutilised part of this  authority
will lapse on 31 December 2006.

By means of  special resolution number  1 in the  notice of EGM,  the
Company seeks  to  disapply statutory  pre-emption  rights  otherwise
applicable to the C Shares intended to be issued under the Proposals.
The number of C Shares to which this disapplication will apply is  90
million. This  disapplication  will  also lapse  in  respect  of  any
unutilised part of the section 80  authority referred to above on  31
December 2006.

Authority to Repurchase Ordinary Shares
The Company  also proposes  to update  the authority  to make  market
purchases of the Company's Ordinary  Shares which was granted at  the
Annual General Meeting of the Company on  10 May 2006. By means of  a
special resolution, number 2 in the notice of EGM, the Company  seeks
Shareholder approval  for repurchases  of up  to 33,111,014  Ordinary
Shares, subject to the condition that  not more than 14.99 per  cent.
of the Company's issued ordinary share capital immediately  following
Conversion may  be  purchased by  the  Company. Any  repurchase  made
pursuant to the authority will  be made at a  price that is not  less
than 10p per  Ordinary Share (being  the par value  of each  Ordinary
Share) and not more than 105 per  cent. of the average of the  middle
market price per Ordinary Share as taken from the Daily Official List
of the London Stock Exchange for the five business days preceding the
day of purchase. The authority being sought will last until the  date
of the next Annual  General Meeting or, if  less, a period of  twelve
months. Any Ordinary Shares so purchased will be cancelled or, if the
Directors so determine, be held in treasury.

Following the Placing and  Offer, the increased  size of the  Company
will provide the Board  with the opportunity  if required to  utilise
the share buyback powers on a more proactive basis.

Admission and Dealings
Applications have been made to the UK Listing Authority for up to  90
million C  Shares to  be admitted  to the  Official List  and to  the
London Stock Exchange for the same number of C Shares to be  admitted
to  trading  on  the  London  Stock  Exchange's  market  for   listed
securities. It is expected that Admission will become effective,  and
that dealings in the C Shares will commence, on 15 August 2006.

Admission of  the  Ordinary  Shares  arising  on  Conversion  to  the
Official List, and trading on the London Stock Exchange will commence
on the Conversion Date which will be no later than 31 December 2006.

Certificates and CREST
The C Shares and  the Ordinary Shares arising  on Conversion will  be
issued in  registered  form  and  may  be  held  in  certificated  or
uncertificated form.

Temporary documents of title will not be issued pending the  despatch
of definitive  certificates for  C Shares.  Dealings in  C Shares  in
advance of the crediting of the relevant CREST accounts or the  issue
of share certificates will be at the risk of the persons concerned.

Overseas Investors
None of the Ordinary Shares or the C Shares or the Warrants has been,
or will  be, registered  under the  United States  Securities Act  of
1933, as amended  (the ''Securities  Act'') or  under the  securities
legislation of  any  state or  other  political sub-division  of  the
United States and the relevant clearances have not been, and will not
be, obtained  from  the  securities commission  of  any  province  or
territory of Canada, Australia or Japan and they may not, subject  to
certain exceptions, be  offered or  sold directly  or indirectly  in,
into or  within the  USA, Canada,  Australia, the  Republic of  South
Africa or Japan or to, or for the account or benefit of, a US  Person
(as defined  in  the Securities  Act)  or any  national,  citizen  or
resident of the USA, Canada, Australia, the Republic of South  Africa
or Japan.  This document  does not  constitute an  offer to  sell  or
issue, or the solicitation of an offer to purchase or subscribe  for,
Ordinary Shares or C Shares or Warrants in any jurisdiction in  which
such offer or solicitation is unlawful.

The making of the Offer for Subscription to Overseas Investors may be
affected by the laws or regulatory requirements of the  jurisdictions
in which such investors reside. Shareholders and potential  investors
who are  in  any doubt  as  to their  position  in this  respect  are
strongly recommended to  consult their own  professional advisers  as
soon as possible.

Costs and Expenses
The costs of the Placing and Offer will be borne out of the  proceeds
of the Placing and Offer and, accordingly, will effectively be  borne
by those subscribing for C Shares. The total costs of the Placing and
Offer (including any commissions) will be 1.75 per cent. of the gross
proceeds of the Placing and Offer. In the event that the Placing  and
Offer for Subscription does  not proceed, the  Manager has agreed  to
pay for the costs and expenses incurred in respect of the Palcing and
Offer.

Recommendation to Shareholders
The Board considers that the Proposals  are in the best interests  of
Shareholders as a whole. The Board has received financial advice from
Dresdner Kleinwort and, in giving that advice, Dresdner Kleinwort has
placed reliance on the  Board's commercial assessments.  Accordingly,
the Board unanimously recommends that Shareholders vote in favour  of
the Resolutions to be proposed at the EGM.

The Board intends to vote in favour of the Resolutions in respect  of
its own  beneficial  holdings  of Ordinary  Shares  which  amount  in
aggregate to 54,580 Ordinary Shares.

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