Take a trial of UK to unlock this pageFind out more
© Stockopedia 22nd November, 2017

John Laing Infrastructure Fund

JLIF 124.5p 0.8  0.6%
12:15pm 3.00k


« All News

John Laing Infra Fd - Preliminary results for the year ended 31 Dec 2016 - Part 1

Announcement: Mon 20th March, 2017 7:00am
RNS Number : 8696Z
John Laing Infrastructure Fund
20 March 2017

John Laing Infrastructure FundLimited

Preliminary results for the year ended 31 December2016

Another year of goodperformance

Today declaring a dividend of 3.48 pence per share for the six months to 31 December 2016, up 2.0%, which is above the Consumer PricesIndex

Today announcing the issue of up to approximately 89.8 million new ordinary shares by way of a shareholder tap issue (see separate announcement for furtherdetails)

Dividends of 6.82 pence per share paid in2016

Net Asset Value ("NAV") of 1,080.6m, representing a NAV per share of 120.2pence

NAV total return of10.9%

Portfolio value of 1,217.6 million, up 40.3% on that as at 31 December2015

Underlying portfolio growth of 8.18%, 1.14% ahead of growth arising from discount rateunwind

93.2m received in cash frominvestments

New investments of approximately 306.0m, including one follow-on interest and interests in seven new projects

Divestment of interests in two projects for 43.4m, representing a c.36% uplift on the carrying value, and resulting in an aggregate realised IRR ofc.16%

Total Shareholder Return of 76.5% since launch (November 2010), 9.8% annualised (simplebasis)

Intending to seek shareholder approval at AGM in May 2017 to widen the geographic limits of the investment policy to include certain other countries that are fiscally strong and have a track-record of using PPP as a procurementmethod

Commenting on today's results, Paul Lester, Chairman of JLIF,said:

"I am pleased to present JLIF's year-end results for the financial year 2016. It was a busy 12 months for JLIF, with investments of 306 million, a record amount in any single year since launch. JLIF also sold its interests in two projects having received offers that the Board considered represented better value for shareholders than could be achieved by retaining the interests. The disposals generated proceeds of 43.4 million that were re- invested almost immediately. During the year JLIF paid dividends of 6.82 pence per share, supported by good Portfolio performance, with underlying growth again ahead of the discount rate unwind. With JLIF's share price benefitting from market volatility in the wake of the EU referendum outcome, JLIF delivered a share price total return of 17.5% over the year. I am confident in the outlook for JLIF's business prospects and look forward to being able to report to you news of another successful year in2017."

For further information, pleasecontact: John Laing CapitalManagement

020 79013326

AndrewCharlesworth


Finsbury

020 72513801

Faeth Birch PhilipWalters


This Announcement contains Inside Information as defined under the Market Abuse Regulation (EU) No. 596/2014.

JLIFisoneofEurope'slargestLondon-listedequityinfrastructurefunds,withaPremiumListingontheLondonStockExchange. JLIF partners with public sector counterparties across the world to provide key local and national infrastructure projects that generate government-backed, inflation-linked revenues. JLIF's success is built on a collaborative approach centred on long term relationshipswithitsclientssuchthat theirchanging
infrastructureneedsaremetinatimelyandcost-effectivemanner.


John Laing Infrastructure FundLimited
Annual Report2016

ACTIVELY GENERATING LONG TERM SUSTAINABLEVALUE CAUTIONARYSTATEMENT

Pages 4 to 37 of this Annual Report (including but not limited to the Chairman's Statement, Risk Committee Report and the Investment Adviser Report, together the "Review Section") have been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. These should not be relied on by any other party or for any otherpurpose.

The Review Section may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "forecasts", "projects", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variationsor comparableterminology.

These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Annual Report and include statements regarding the intentions, beliefs or current expectations of the Directors and the Investment Adviser concerning, amongst other things, the investment objectives and investment policy, financing strategies, investment performance, results of operations, financial condition, liquidity, prospects, opportunities and distribution policy of the Company and the markets in which itinvests.

These forward-looking statements reflect current expectations regarding future events and performance and speak only as at the date of this AnnualReport.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. The Company's actual investment performance, results of operations, financial condition, liquidity, prospects, opportunities, distribution policy and the development of itsfinancing strategies may differ materially from the impression created by the forward-looking statements contained in this AnnualReport.

Subject to their legal and regulatory obligations, the Directors and the Investment Adviser expressly disclaim any obligations to update or revise any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement isbased.

In addition, the Review Section may include target figures for future financial periods. Anysuch figures are targets only and are notforecasts.

This Annual Report has been prepared for the JLIF Group as a whole and therefore givesgreater emphasis to those matters which are significant to John Laing Infrastructure Fund Limited and its subsidiary undertakings when viewed as awhole.

ABOUTUS

JLIF is one of Europe's largest listed infrastructure funds, with a Premium Listing on the London Stock Exchange. JLIF launched in November 2010 via an IPO with a seed portfolio of 19 projects, and a mandate to invest in the equity and sub-ordinated debt issued predominantly with respect to operational Public-Private Partnership ("PPP") projects. With no finite life to the Fund, JLIF aims to own infrastructure assets over the long term. As at 31 December 2016, JLIF's Portfolio comprised investments in 62 infrastructure PPP projects, diversified by both geography and sector. Since launch in November 2010, JLIF has delivered a total shareholder return of 76.5%. In 2016, JLIF paid a total of 6.82 pence per share in dividends, while its Portfolio delivered underlying growth in the period of8.18%.

OVERVIEW

Ourpurpose

JLIF believes that physical infrastructure plays a crucial role in stimulating economic growth, increasing the efficiency and productivity of both industry and individuals, and in providing employment, both during construction and operations. JLIF also believes that private sector participation is key in the development and renewal of infrastructure assets, bringing efficiencies, expertise and improved affordability. JLIF believes that the need for such investment is increasing with pressures from demographic trends such as population growth, urbanisation and an expanding middle class. JLIF's purpose is to support governments, cities and communities in meeting their infrastructure needs, from delivery and financing through to operations and management, as a responsible owner of infrastructureprojects.

Ourobjective

JLIF's objective is to be the private sector partner of choice for public-sector clients in the markets within which it operates, making available for use high-quality infrastructure assets that meet or exceed contractual requirements and specifications. In doing so, JLIF's aim is to provide its shareholders with a source of stable, predictable income and to deliver a shareholder IRR of 7-8% over the long term, by actively managing our portfolio of projects and selectively investing in new value accretiveinvestments.

Keyfacts


2016

2015

MarketCapitalisation

1,166.0m

950.8m

Ordinary shares inissues

899,003,264

814,751,471

Shareprice

129.7p

116.7p

Number ofprojects

62

57

Fair value of investments through profit andloss

1,078.2m

883.1m

PortfolioValue1

1,217.6m

867.8m

NetAssets

1,080.6m

883.1m

NAV pershare

120.2p

108.4p

Dividend per sharepaid

6.82p

6.75p

CompanyCash

5.5m

2.5m

Group1Cash

32.7m

33.8m

Profit beforetax

160.4m

47.0m

ManagementFees

1.1% on APV* upto500m; 1.0% from 500m to1billion; 0.9% above 1billion

Board

Sixindependent

Directors

Sixindependent

Directors

1 See Glossary fordefinition

* Adjusted PortfolioValue


FINANCIAL AND OPERATIONALHIGHLIGHT

(including events after the balance sheetdate)

January

In January 2016, acquired a 40% interest in Barcelona Metro Stations L9T2 fromIridium

February

In February 2016, completed the acquisition of a 100% interest in the British Transport Police project from a member of John Laing Group plcand

The John Laing Pension TrustLimited

March

In March 2016, raised gross proceeds of 92.9 million via a shareholder tap issue, used to repay debt drawn to finance acquisitions earlierin

theyear

May

In May 2016, acquired a 95% interest in the Oldham Social Housing project from a memberof John Laing Groupplc

In May 2016, paid a dividend of 3.41 pence per share relating to the six-month period ended 31 December2015

June

In June 2016, completed the acquisition of a 100% interest in the Connecticut Service Stations project

In June 2016, completed the disposal of JLIF's entire interests in the Newham Hospital and Barnsley Building Schools for the Future projects to Equitix for a combined considerationof

43.4million

In June 2016, signed and agreed the terms of a 150 million three-year accordion facility, increasing the total amount of debt finance available to JLIF to 330million

July

In July 2016, completed the acquisition of an additional 13.5% interest in Barcelona Metro Stations L9T2 and a new 13.5% interest in Barcelona Metro StationsL9T4

October

In October 2016, paid a dividend of 3.41 pence per share relating to the six-month period ended 30 June2016

December

In December 2016, completed the acquisition of a 100% interest in the A55 Holyhead to Llandegai DBFO project and a 6% indirect interest in the Intercity Express Programme Phase 1 project, both from members of John Laing Groupplc


CHAIRMAN'SSTATEMENT

Introduction

I am pleased to report another set of good results for the Company. 2016 was a significant yearfor JLIF in many ways, not least in the area of new investments and markets with the Fund making its first investments in Spain and the US. Continued active management of the existing Portfolio resulted in delivery of a number of value enhancements and underlying Portfolio growth was once again ahead of the discount rate unwind. Overall, distributions from our Portfolio continued to support the ongoing operation of the Company and dividends paid to investors that, together with growth in the share price, resulted in a total shareholder return for the year of17.5%.

For the UK as a whole, 2016 also saw the UK public voting in favour of leaving the European Union, an event that caused disruption to financial markets both in the run up, but particularly in the aftermath. While perhaps not as extreme as some had feared, these times of increased volatility will require the Company to be increasingly adaptable. As at other times of market uncertainty, listed infrastructure stocks are often seen as 'safe havens' and this once againproved true with JLIF's share price peaking for the year in August. With Sterling depreciating, JLIF's balance sheet also benefitted with the valuation of its non-Sterling projects increasing. However, commensurately investing in new overseas projects has become moreexpensive.

Dividends and ShareIssuance

In 2016, JLIF paid dividends to shareholders of 6.82 pence per share, representing adividend yield on the closing share price as at 31 December 2016 of 5.3%, the highest dividend yield amongst the London-listed infrastructure equity funds. Today we are announcing a dividend relating to the

six months ended 31 December 2016 of 3.48 pence per share, representing further progressionof 2.0% on the most recently paid dividend in October2016.

In March 2016, the Company issued a further 81.2 million shares via a shareholder tap issue that was accretive to the Company's Net Asset Value ("NAV"). This resulted in gross proceeds of92.9 million that were used to repay debt drawn in relation to the initial investment made in the Barcelona Metro Stations L9T2 project earlier in the year. As at the end of 2016, JLIF had inissue

899.0 millionshares.

Performance

Over the year, JLIF's share price increased from an opening value of 116.7 pence to a closing value of 129.7 pence. This, together with dividends paid in the year of 6.82 pence per share resulted in a total shareholder return ("TSR") for the 12 months of 17.5% (with dividends re- invested). Since launch through to the end of December 2016, JLIF delivered a TSR of 76.5%, equating to a simple-basis annualised TSR of 9.8%. JLIF's NAV increased from 883.1 millionto

1,080.6 million over the year, a 10.9% increase on a NAV per share basis. In addition, as at 31 December 2016 171.4 million was drawn on the revolving credit facility compared to 17.0 million the previousyear.

The value of JLIF's Portfolio grew significantly in 2016, driven largely by new investments,positive exchange rate movements (unrealised), a reduction in discount rates, discount rate unwind and value enhancementactivities.

As at every balance sheet date, the discount rates used to value the Portfolio are reviewed to ensure they continue to reflect our market experience. While this resulted in a reduction in the discount rates applied to the projects comprising the Portfolio at the start of the year, this was offset by the acquisition of certain projects during the year at higher discount rates. Theweighted average discount rate ("WADR") therefore increased marginally from 7.82% as at 31 December 2015 to 7.87% as at 31 December2016.

Underlying portfolio growth was ahead of discount rate unwind for the sixth consecutive year, the result of active management and value enhancement efforts across the Portfolio. Examplesof


such areas of value enhancement included cost efficiencies (including insurance and SPV management) at both project and Portfolio level, prudent management of lifecycle costs, and reduced margins resulting from the refinancing of senior debt. Additionally, during 2016 JLIF completed the sale of its interests in two projects (Newham Hospital and Barnsley Building Schools for the Future), further details of which are providedbelow.

JLIF's Portfolio at 31 December 2016 was valued at 1,217.6 million, an increase of 349.8million (including underlying growth of 92.0 million) on the valuation as at 31 December 20154. Ofthe

92.0 million of underlying growth, 12.8 million of this represented outperformance; i.e.growth beyond that expected from the simple unwind of the discount rate (adjusted for the timing of acquisitions, disposals and distributions received in the year). The table below shows the underlying growth of the Portfolio for the past four years, and shows that JLIF's Portfolio has consistentlyoutperformed.


2013

2014

2015

2016

Underlying portfoliogrowth

7.24%

9.22%

8.34%

8.18%

Adjusted unwind of the discountrate

6.38%

7.81%

8.12%

7.04%

Outperformance

0.86%

1.41%

0.22%

1.14%

4 See the Investment Adviser Report for further detail on the drivers of thisgrowth.

Investments andDisposals

JLIF made a record 306.0 million of investments in 2016. This included two metro stations projects in Spain, a motorway service stations project in the US, and a rail rolling stock project, road project, social housing project and justice project in the UK. All of the investments were made on a bilateral basis, outside of competitive auctionprocesses.

In June 2016, JLIF sold its entire interests in the Barnsley BSF and Newham Hospital projects. This was having received offers that valued JLIF's interests in both projects at a level significantly above that which the Board considered could be achieved by retaining the interests. It was decided that it was in the best interests of the Company to accept the offers and to redeploy the sale proceeds at better value elsewhere. The disposal proceeds were redeployed almost immediately in July 2016, being used to part-fund the investment in the Connecticut Service Stationsproject.

The sale value represented an uplift on JLIF's valuation of the investments as at 31 March 2016 of approximately 36% and saw JLIF realise an aggregate IRR of approximately 16%. The Board and Investment Adviser will continue to consider and evaluate potential disposals, taking account of the best interests of theCompany.

Gearing

At the Company's AGM in May 2016, shareholders approved an increase in the gearing limit in the articles of association and investment policy from 25% to 35% of JLIF's TotalAssets.

Subsequent to this, JLIF signed the terms of an accordion facility in June 2016, providing it with access to an additional 150 million of debt, with the same financial institutions as those who provide the Company's 180 million revolving credit facility. The margin on the accordion facilityof 175bps is the same as on the mainfacility.

JLIF drew on its revolving credit facility several times throughout the year to financenew investments. In July, JLIF drew on its facility inEuros

(63.0 million) to finance the acquisition of a follow-on interest in the Barcelona Metro Stations L9T2 project and a new interest in the Barcelona Metro Stations L9T4 project. As noted at the time, given the relative weakness of Sterling against the Euro subsequent to last June's referendumon

EU membership by the UK, JLIF intends to use income from its portfolio of Euro-denominated projects to repay this debt so as to providea

naturalhedge.


As at 31 December 2016, JLIF's revolving credit facility was drawn by 171.4 million. We aretoday announcing a proposed share issuance by way of a shareholder tap issue for up toapproximately

89.8 million new ordinary shares, the maximum that can be issued via a shareholder tap issue. The proceeds of the issue will be used to repay most of the outstanding Sterling-borrowings, with the Euro-borrowings remaining drawn as JLIF does not wish to use a historically weak Sterling to repay Euro debt. As at 31 December 2016, the Euro-borrowings totalled 59.0 million (57.0 millionas

at the start of March 2017). With the intention being not to raise against the Euro-borrowings, it was deemed by the Board more cost effective to undertake a shareholder tap issue as opposedto a full open offer and placing which is a more expensive process (and therefore only appropriate when seeking to raise largeramounts).

Governance &Regulation

The Company applies the UK Corporate Governance Code and is required to comply with the EU- wide Alternative Investment Fund Managers Directive ("AIFMD") and the Company remains a self- managed non-EU Alternative Investment Fund ("AIF"). We continue to comply with all of the reporting requirements with respect to AIFMD including quarterly reporting in the jurisdictions in which the Company is marketed, and disclosures contained within the annual and interimreports.

The Board has considered the principles and recommendations of the AIC Code of Corporate Governance, as revised in 2010, ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in Section 1 of the Combined Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company. More information is on page 38 of this report. The Company intends to continue complying withthe

AIC Code in this financialyear.

Risks &Uncertainties

While the Investment Adviser manages the risks facing the Company on a day-to-day basis, the Board retains ultimate responsibility. JLIF's Risk Committee continues to review on a regular basis the principal risks facing the Company and the controls that we have in place tomanage

those risks. An overview of JLIF's risk management strategies, a description of what the Board considers the principal risks, as well as the ways by which these are mitigated, are contained in the Risk Committee report on pages 10 to15.

One of the risks identified in recent reports to shareholders has been in relation to the OECD's Base Erosion and Profit Shifting ("BEPS") initiative. Based on the most recently published draft legislation (in December 2016) we believe that this no longer represents such a significant riskto JLIF, with our analysis meaning that we do not expect introduction of the legislation to have a material impact on the valuation of the Portfolio. While recognising that draft legislation is not enacted legislation, this risk has been downgraded in the Company's riskregister.

Board &AGM

I would once again like to thank my fellow Directors for their regular and meaningful contributionto the Board. We have met a number of times outside of the regular scheduled meetings during the year to support the execution of the Company's business plan and I offer my thanks to the Board for their continuedcommitment.

The Company's Annual General Meeting will be held at 10.30am BST on 19 May 2017 at The Douglas and Dalrymple Rooms, Old Government House Hotel, St Ann's Place, St Peter Port, Guernsey, ChannelIslands.

Market & BusinessOutlook

The markets in which JLIF invests continue to provide opportunities for growth, although increasingly these opportunities are outside of the UK. Consequently, attached to investingin


these markets is exposure to exchange rate risk. While there are diversification benefits that come with holding a portfolio of investments spread across a number of geographies, and there areways to manage exchange rate risk, investing increasingly overseas creates a greater exposure to non- Sterlingincome.

This trend is both a function of a lack of UK greenfield PPP pipeline in recent years and consolidation of the majority of UK operational PPP projects into the ownership of long term investors. While there is discussion around the announcement of a pipeline of PF2 projects, it is likely that most opportunities that do arise will be brought to market via competitive auction processes. These tend to attract very high pricing because of asset scarcity and an attractive investment environment (i.e. strong credit rating of public-sector counterparties, strong legal and regulatory frameworks to support the contractual structures of projectsetc.)

More active PPP markets can be found in parts of Continental Europe, North America and further afield in Australia and Latin America. The US in particular, as a less developed PPP market, is likely to present further good investment opportunities over the next few years, especially with the new Administration's stated policy to use private finance to support infrastructuredevelopment.

The scale of the infrastructure investment need in the US is significant. JLIF was pleased to complete its first investment in the US market in mid-2016, thereby establishing a presence and foothold for furtheracquisitions.

In 2016, each of the seven investments made by JLIF were completed on a bilateral basis. Four of these (31% by value) were acquired from members of John Laing Group plc under the First Offer Agreements, and three (69% by value) from other vendors. JLIF and its Investment Adviser invest significant time and effort into developing and maintaining relationships with primary developers and vendors, as well as sale advisers who often advise vendors on potential investors toapproach. The JLIF Board remains confident about the prospects of the business and is optimistic for the future growth of theCompany.

Paul LesterCBE

Chairman

16 March 2017

STRATEGICREPORT

OBJECTIVE

JLIF's objective is to be the preferred private sector partner of choice for public-sector clients of operational infrastructure PPP projects within the markets in which it operates, making available for use high-quality infrastructure assets that meet or exceed contractual requirements and specifications. To this end, JLIF aims to develop strong working relationships with its public-sector clients, based oncollaboration.

In doing so, JLIF's aim is to provide shareholders with a source of stable, predictable income and to deliver a shareholder IRR of 7-8% over the long term, by actively managing its portfolio of projects and selectively investing in new value accretive investments. JLIF aims to reduce shareholder risk by offering the opportunity to invest in a well-diversified portfolio, with regard to the number of investments, and the mix of public- sector counterparties (both by jurisdiction and sector) and currency exposure, and to provide a degree of inflation protection via inflation-linkedreturns.

To ensure the Portfolio remains well diversified, JLIF's shareholders have approved aninvestment policy that includes the following limits with regard to the composition of thePortfolio:

up to 30% of the Portfolio in assets still in their constructionphase;

up to 10% of the Portfolio in projects that are not classified as PPP projects, but exhibit a substantially similar risk profile andcharacteristics;

up to 15% of the Portfolio in projects that are classified as having a demand-based payment mechanism; and

up to 50% of the Portfolio in overseas jurisdictions, maintaining at least 50% invested in UK assets at alltimes.

Further details of the Investment Policy are found on pages 20 to 21 of this AnnualReport.

JLIF also aims to manage its investments such that they deliver at least the returns expected at the time of acquisition, and to be at the forefront of disclosure and transparency amongst its peer group such that its shareholders remain updated and can understand the performance of the business, the risks facing it and its prospects goingforward.

MARKETOUTLOOK

JLIF's investment policy is to invest predominantly in operational, PPP projects. The PPP model is used by various governments around the world as a way by which to procure infrastructureassets. In certain countries, it has been used for a long time and is an established method with a proven history and political support. Such mature markets include the UK, Canada, much of Western Continental Europe, Australia and Chile. Other markets, including the US, have only more recently started using the PPP model, although have the potential to grow significantly over the coming years.

Globally there is a significant need for infrastructure investment, both in more economically developed economies where existing infrastructure assets require upgrading or replacing, and in less developed economies, where the need is driven by the processes of rapid population growth, urbanisation and increasing levels of economic wealth (e.g. car ownership). For a variety of reasons, many governments see the benefits that derive from private sector involvement and consider private sector participation as key to meeting their infrastructure needs over the coming decades.

With competition for assets in more established, traditional PPP markets, remaining high, it is becoming necessary to broaden where JLIF seeks out investment opportunities in order to find new investments that represent good value. Increasingly this may include slightly more nascent PPP markets, although these will only be considered where the degree of risk is considered reasonable and the Company's interests remain adequatelyprotected.

In the short term, developed markets are expected to continue to present the majority of opportunities. However, over the longer term (as pipelines and regulatory and legal frameworks become more established) the best value opportunities may arise in sectors and jurisdictions outside of those that have historically formed the core of JLIF's Portfolio. JLIF is confident that its investment policy provides sufficient flexibility to be able to target and benefit from such opportunities.

These new opportunities are likely to compliment further investments in JLIF's core markets, providing additional diversification across the Portfolio. To succeed in its core markets, JLIF will need to focus increasingly on originating bilateral deals through developing long-term relationships with greenfield developers/sponsors. The Company believes that the Board and the Investment Adviser have the right resources in play to achievethis.


BUSINESSMODEL

JLIF's business model is to predominantly invest in equity and sub-ordinated debt issued with respect to operational infrastructure PPP projects. While the Company's Investment Policy allows up to 30% of its Total Assets to be invested at any one time in projects stillin their construction phase, JLIF predominantly targets operational projects, as it is ordinarily upon operations commencement that revenues start to be received. This supports the Company's objective, as described above, to deliver income (or yield, as opposed to capital growth) toshareholders.

Revenue

The majority of projects in which JLIF invests (92.5% by value as at 31 December 2016) have an availability-based payment mechanism. This means that the project company receives a pre- agreed payment (usually on a monthly basis) from the public-sector counterparty, known as a unitary payment. This is received in return for making the infrastructure asset (e.g. school, hospital, police station etc.) available for use and in accordance with the contractual specifications. These specifications may include, for example, the requirement for certain areas of a building (e.g. a hospital) to be maintained within a specific temperature range. Where such specifications are not met, certain parts of, or in extreme cases, whole projects, may be deemed by the public-sector client to be unavailable for use. In this event, deductions may be made against the unitary payment received by the project company, thereby incentivising the project company to ensure that this does not happen. Most of this type of operational risk on a project is passed-down to a specialist facilities management company on a back-to-back basis (although liability caps may apply beyond which the risk is retained by the projectcompany).

Other projects include a demand-based payment mechanism, where the amount of revenue received by the project company is based not on the asset being made available for use, but rather on the level of use of the asset. As at 31 December 2016, JLIF held an investment in one asset (the Connecticut Service Stations P3 project) deemed to have demand-based revenue risk. By value, this asset comprised 7.5% of thePortfolio.

Profit

Availability-basedprojects

On availability-based projects the unitary payment is agreed prior to signing of the project agreement at the start of a project, and sized to cover the project company's costs of construction, operation and financing. Given JLIF predominantly invests only in operational projects (i.e. after the construction phase is complete), the main costs incurred by the projects at this time are those relating to maintenance and operation of the asset, and costs associated with how the initial construction was financed. As noted, the unitary payment is fixed (other than in the event of contractually agreed variations to the project or inflationary changes). Therefore, if the project company can manage its operating and financing costs more efficiently (i.e. to a level below that originally anticipated at the time of signing of the project agreement), while continuing to deliverthe required level of service under the project agreement, then it will make an increasedprofit/return.

However, attached to certain cost savings generated by the project company are sharing arrangements. These stipulate that, should cost savings be made, a proportion of these efficiencies be shared with the public-sector client. For other costs - usually those that are uncontrollable by the project company (e.g. change in law) - should these increase above what was originally anticipated when sizing the unitary payment, the 'pain' of such increases are also shared with the public-sectorclient.

Where the risk associated with a particular cost has been passed-down to a sub-contractor, the sub-contractor benefits/suffers from cost savings or increases, as opposed to the projectcompany. Typically, although not always, such costs can include lifecycle and routine maintenancecosts.

Those costs whose risk of variability is typically retained by the project company include insurance costs, project company management costs and senior debt financecosts.

Demand-basedprojects


The cost side of a demand-based project is very similar to that of an availability-based project. The main difference therefore lies on the revenue side. As noted above, in a demand-based project, revenues are based on the level of use of a project, and therefore are inherently less certain (i.e. riskier). The profitability of a demand-based project is therefore as much concerned with managing costs as it is about maximising revenues. Profitability is driven by the project company's ability to encourage higher use of the asset, as well as wider macroeconomic/demographic factors (ofwhich assumptions are made at the time ofinvestment).

FundLevel

Profits made by the underlying project companies in which JLIF invests are ultimately returned to JLIF by way of dividends and sub-ordinated debt interest and principal repayments (collectively known as distributions). Distributions from the projects comprising the Portfolio are aggregated at the Fund level and distributed to JLIF's shareholders by way of dividends, after accounting for costs incurred in managing the Fund. The principal costs incurred in managing the Fund are those related to the Investment Adviser, the Board, the Auditor, the Administrator, fees related to JLIF's corporate credit facility, adviser fees related to capital raising activities and regulatory fees, amongst others. A review of the OngoingCharges

(i.e. costs in managing the Fund) for 2016 can be found in section 2.2 of the InvestmentAdviser Report.

The above description is a representative simplification of JLIF's business model and of the project companies in which it invests. In reality the contracts relating to the projects may be more detailed andcomplex.

OUTCOMES AND KEY PERFORMANCE INDICATORS("KPIS")

There are two categories of KPIs JLIF is measuredagainst:

the performance of the investment in JLIF;and

the compliance of the investments JLIF makes against itspolicy.

Performance basedKPIs

KPI

2015

2015

2014

Yield

Objective: To provide shareholders with a dividend yield of at least 6% on the IPO Issue Price of100p.

Measurement: This is expressed as a ratio of the total annual dividend yield against both the IPO Issue Price and the year-end shareprice.

Total dividend paid within the financial year:6.82pps

Status: 6.82% on the IPO issue price5, being 5.3% yield on share price as at 31 December2016.

Share price at 31/12/16:129.7p

Total dividend paid within the calendar year:6.75pps

Status: 6.75% on the IPO issue price5, being 5.8% yield on share price as at 31 December2015.

Share price at 31/12/15:116.7p

Total dividend paid within the calendar year:6.50pps

Status: 6.50% on the IPO issue price5, being 5.3% yield on share price as at 31 December2014.

Share price at 31/12/14:122.8p

Comments

While there was further progression of the total dividends paidwithin the financial year, the dividendyield

on the closing share price decreased (relative to 2015) as consequence of the increase in share priceover

theperiod.

FundIRR6

Objective: To target an IRR of 7-8% over the longerterm.

Measurement: This is by reference to the IPO Issue Price of 100p, the year-end share price and dividends paid since launch

Fund IRR since launch:

9.8%

Fund IRR since launch:

8.6%

Fund IRR since launch:

10.4%

Comments

The IRR delivered by JLIF to its shareholders over the period from IPO to 31 December 2016 of 8.5% remains above the long term target of7-

8%.

Policy basedKPIs

KPI

2016

2015

2014

The value of any single investment shall not be greater than 25% of the Total Assets of the Group measured postacquisition

Maximum singleasset

%:

13.25% of total asset value

Maximum singleasset

%: 7.71% of total assetvalue

Maximum single asset %:

7.59% of total asset value

The borrowings ofthe

Maximum debtdrawn

Maximum debtdrawn

Maximum debtdrawn

Group, including financial guarantees supporting subscription obligations, shall not exceed 35%7 of the Total Assets of the Group

during the year: 15.81% of total asset value.

during the year: 1.92% of total assetvalue.

during the year: 0% of total assetvalue

The valueof

investments in the construction phase shall not exceed 30% of the totalassets

of theGroup

Value ofinvestments

at the year-end: 3.91% of total asset value

Value ofinvestments

at the year-end: 0% of total assetvalue

Value ofinvestments

at the year-end: 0% of total assetvalue

The value of investmentsreceiving demand-based payments shall not exceed 15% of the Total Assets of the Group

Value of investments at the year-end: 8.45%8 of total asset value

Value of investments at the year-end: 0% of total assetvalue

Value of investments at the year-end: 0% of total assetvalue

The value of investments in non- PPP infrastructure assets (but with substantially similar characteristics andrisk profiles) shall not exceed 10% of the Total Assets of the Group9

Value of investments at the year-end: 0% of total assetvalue

Value of investments at the year-end: 0% of total assetvalue

Value of investments at the year-end: 0% of total assetvalue

5 1 in November2010.

6 Dividends not assumed to bere-invested.

7 Increase from 25% approved by shareholders at AGM in May2016.

8 As noted above, approximately 37% (NPV basis) of the income received by the SPV over the concession for the Connecticut Service Stations P3 project is dependent upon consumer demand, relating to fuel and retail sales. Under JLIF's investment criteria, this project is thereforecategorised asdemand-based.

9 This was the subject of a resolution approved by shareholders in February2014.

RISK COMMITTEEREPORT

Risk is uncertainty of outcome and represents either a threat to or an opportunity for a business's success - its business model, reputation or financial standing. Risk is therefore closely monitored by the Company, and risk management is embedded in its culture and that of its advisers. While is it is not possible to entirely eliminate all risk, it is possible to manage risk through a process of identification, review and mitigation, either to reduce the likelihood of a risk materialising, or in the event that a risk should materialise, to reduce any adverse impact it mayhave.

JLIF has a dedicated Risk Committee to leads its risk management activities. While the Investment Adviser manages the risks facing the Company on a day-to-day basis, the Board (managed via the Risk Committee) retains ultimateresponsibility.

Risk identification, review andmitigation

Risk management is a continuous process as the risks facing the Company evolve. New risks can emerge and risks previously identified can change either in their probability of occurrence or potential impact. With this in mind, the Company maintains a risk register that is reviewed by the Risk Committee on a quarterly basis. This is designed to identify the principal risks facing the Company, and employs a red-amber-green system, which is based on assessment of the probability and impact of each risk identified. The assessment is made for each risk both pre- and post-mitigation.

Risks classified as Red are considered very likely to occur and to have the potential to significantly impact the Company's business prospects in the event of occurrence. Risks classified as Amber are considered to have a medium likelihood of occurrence, with a medium potential impact should they materialise. Risks classified as Green have a low likelihood of occurrence, and a low potential impact should theymaterialise.

The system described above is designed to help JLIF prioritise and focus its riskmitigation strategies andcontrols.

JLIF's risk register covers six main areas ofrisk:

1. Economic;

2. Political;

3. Operational;

4. Financial;

5. Taxation;and

6. Compliance andLegal.


Risk

Pre-

Mitigation Risk Rating

Post-

Mitigation Risk Rating10

Reputational

RiskRating

Economic

Exchangerates

Red

Green

Green


Interest and depositrates

Red

Green

Green


Equity marketsentiment

Red

Green

Amber

Political

Pressures on contract terms and/or earlytermination

Red

Red

Red


Change in political environment affecting PPPprojects

Red

Amber

Amber


UK European Unionmembership

Red

Red

Green

Operational

Competition forassets

Red

Amber

Amber


Counterparty and demandrisk

Red

Green

Red


Supplychain

Red

Amber

Amber


Assetavailability

Red

Red

Amber


Lifecyclerisk

Amber

Green

Green


Performance of the InvestmentAdviser

Amber

Amber

Red



Cyberrisk

Green

Green

Red

Financial

Portfoliovaluation

Red

Green

Amber


Refinancingrisk

Red

Amber

Green

Taxation

Changes to tax legislation andrates

Red

Amber

Amber

Compliance andLegal

Regulatory compliance andchange

Green

Green

Red


ContractualRisk

Amber

Green

Green

10 Mitigating actions are described in further detail in the text thatfollows.

Risk

Description

Pre- Mitigation Rating

Mitigation

Post- Mitigation Rating

Reputational Risk

Economic

Exchange rates

As at31

December 2016, JLIF held eight investments denominated in currencies other than Sterling. The currencies covered are Euro, Canadian Dollar and USDollar.

Together these eight investments comprised 32.4% of the Portfolio Value. There is a risk that fluctuations in exchange rates may reduce the Sterling-value of the cash flows received from the investments, adverselyaffecting the valuation of such projects and JLIF's dividend cash cover.

Red

While JLIF's stated policy since launch in November 2010 has been not to hedge the balance sheet value of its non-Sterling assets, JLIF does make prudent use of foreign exchange hedging instruments to hedge non-Sterling cash flows, typically looking out up to 18 months.

JLIF's investment policy requires at least 50% of the Portfolio to be UK- based at anytime.

JLIF can draw on its revolving credit facility in the local currency and repay borrowings in the same currency from its portfolio of assets denominated in the same currency, thereby creating a naturalhedge.

Green

Green

Interest and deposit rates

JLIF has exposure to interest rate risk through its own cash deposits, the interest payments on debt atthe

Red

JLIF's own long term cash deposits are generally minimal (given its approach to raising newcapital).

Green

Green



underlying projects, borrowings on its revolving credit facility and on cash deposits at the project SPVs in which JLIF is a shareholder.


The senior debt at the underlying projects is typically hedged using interest rateswaps.

JLIF has no long term gearing and the periods in which the revolving credit facility is drawn are typicallyshort.

Sensitivities to changes in deposit rates are included in the Investment AdviserReport.



Equity market sentiment

There is a risk that, due to disruption to equity markets, the Company is unable to raise new capital and therefore be able to repay any debt drawn on its revolving credit facility (used to finance new acquisitions).

Red

The Investment Adviser and JLIF's Corporate Broker monitor market sentiment and will not recommend drawing significantly on JLIF's revolving credit facility if it is considered likely that subsequent capital raising would be problematic.

Furthermore, if JLIF was unable to raise new capital, outstanding borrowings could ultimately be repaid using distributions from JLIF's Portfolio or by disposals of projects.

Green

Amber

Political

Pressures on contract terms and/or early termination

There is a risk that political and financial pressure could result in certain public- sector counterparties seeking to use contractual provisions to extract a financial benefitor

Red

JLIF and the InvestmentAdviser engage regularly with HM Treasury and other governmental PPP units in order to remain aware of policy developments and to represent the interests ofthe

Red

Red



voluntarily to terminate a project.


Company.

In the event of voluntary termination, equity investors benefit from compensation provisions that, in the majority of cases, ensures that market value is received.

The Company is a signatory of the Code of Conduct for Operational PFI/PPP contracts in the UK, which sets out the basis on which public and private sector partners agree to work together to make savings in operational PPP contracts.



Change in political environment affecting PPP projects

Concession based PPP projects form the core of JLIF's investment focus. A shift in political policy away from the PPP model could compromise JLIF's ability to access new projects and impact the way it engages with public-sectors clients.

Red

JLIF closely monitors the political environment in countries in which it invests (or is considering investing) to gauge political support for PPP.

Amber

Amber

UK

European Union membership

In June 2016, the UK voted in favour of leaving the EU. As a result of this outcome, there is likely to be a prolonged period of market uncertainty, which may see greater volatility in macroeconomic indicators.

Red

The mitigation measures for the risks associated with this event are those described above in respect of interest and deposit rates and with respect to inflation rate risk are as follows. Before making any investment, JLIF undertakes sensitivityanalysis

Red

Green





to establish the correlation of such investment to inflation and takes this into consideration in its investment decision and valuation. JLIF discloses to shareholders bi- annually the sensitivity of the Portfolio to inflation, thereby affording the ability to anticipate the likely effect of changes in inflation. JLIF takes a long term view of inflation, both in valuing its current Portfolio and in valuing potential newinvestments.

Where possible, inflation assumptions are benchmarked to independent sources.



Competition forassets

There is an over- supply of capital seeking investment in PPP infrastructure projects and an under-supply of projects to which to deploy that capital, particularly in the UK. This has the effect of increasing asset pricing. There is a risk that JLIF over- pays for an asset or that JLIF's ability to continue to grow its Portfolio is restricted.

Red

JLIF benefits from an experienced Investment Adviser with significant knowledge of the infrastructure market and appoints a team of external advisers to undertake due diligence on assets prior to investment in order to establish a fair market valuation.

The Investment Adviser seeks to establish bi-lateral investment opportunities by developing long term relationships with potential vendors and co- shareholders in order toavoid

Red

Amber





competitive auction processes.

JLIF also benefits from two First Offer Agreements with John Laing Group plc giving it the right of first offer over a significant portfolio of infrastructure projects.

JLIF's investment policy provides it with scope to invest up to 50% of the Portfolio by value in projects located outside of the UK. This gives it the ability to operate in markets that are not characterised by the same degree of competition as the UK, where better value is more readily achievable. The Investment Adviser maintains a global view with respect to originating new investment opportunities.



Operational

Counterparty and demand risk

There is a risk that one of JLIF's clients has financial difficulties and is unable to meet its payment obligations as they fall due under a PPP agreement, thereby adversely affecting the project cashflows.

In respect of JLIF's investment in the Connecticut Service Stations project, where some of the revenue isrelated

Red

With a Portfolio of 62 assets, JLIF's exposure to any single counterparty is considered low, with theimpact

of any single counterparty failing beingreduced.

JLIF's investment policy dictates that JLIF invests only in jurisdictions where public-sector or government-backed obligations carry a satisfactory credit rating and where contractstructures

Green

Red



to the level of usage, there isrisk that, for reasons outside of the control of the project company, this may be less than forecast/assumed at the time of investment.


and their enforceability are reliable.

Prior to making an investment in a project with demand risk, JLIF undertakes detailed review of the key factors that drive demand. JLIF procures the advice of third party experts and believes that its assumptions in respect of future demand are prudent.

JLIF's Investment Policy limits the percentage of Total Assets invested in projects with revenues exposed to demand risk to no more than15%.



Supplychain

The project companies in which JLIF invests have agreements with sub- contractors to provide facilities management and SPV management services. There is a risk of poor performance by such sub- contractors that could adversely affect the project cashflows.

There is a risk in the event of having to replace a sub-contractor that a replacement sub-contractor may only be found at a higher cost, which may not be recoverable.

Red

JLIF's Portfolio provides good diversification, reducing the reliance on any single sub- contractor, and supply chain diversification is considered on a frequent basis by the Company and prior to any new investment.

In the event of poor performance by a sub-contractor, the agreements include provisions allowing the SPVs in which JLIF invests to pass-down performance penalties to sub- contractors and ultimately to terminateand

Amber

Amber





replace with another provider. Thresholds are set such that this can be done prior to any performance penalties (i.e. deductions) are incurred by the SPV itself.



Asset availability

The majority of the revenues received by the SPVs in which JLIF invests are dependent on the relevant asset being available for use and meeting certain performance criteria. In the event an asset is deemed either wholly or partially unavailable, deductions can be enforced by the public-sector counterparty, adversely affecting revenues and project cashflows.

Red

Unavailability can be caused by a number of factors but is most likely to be caused by underperformance of a servicedelivery partner. Through its director representation on each of the SPV boards, JLIF is able to monitor operational performance and to identify and correct any trendsearly.

Contractual provisions allow performance deductions to be passed-down to the sub-contractor at fault, although such provisions may include caps relating

to sub-contractor liability. As discussed above, ultimately a sub- contractor may be terminated for continued poor performance and replaced.

Red

Amber

Lifecyclerisk

During the life of a project, there are a number of items that may need replacing (e.g. elevators, air conditioning equipment, flooringetc.).

There is a riskthat

Amber

While in some projects this risk is passed-down in full to sub-contractors, on other projects this risk is retained by equity shareholders. As part of JLIF's due diligence process,it

Green

Green



the actual cost of replacement is greater than the forecast cost or the actual timing of replacement is sooner than forecast.


appoints experienced technical advisers to opine on the adequacy of the lifecycle cost profile within the financial model (used to derive JLIF's valuation of the asset).

Benchmarking is also undertaken against other similar projects within JLIF's Portfolio to verify further the adequacy of the lifecycle cost profile.



Performance of the investment adviser

The success of the Company depends to a large degree on the skill and ability of the Investment Adviser to identify, acquire and manage JLIF's investments.

Unlike some of the Company's peers, the Investment Adviser is owned by a corporate group, John Laing Group plc, and accordingly, John Laing (not the Investment Adviser team) have ultimate responsibility for setting the Investment Adviser's strategy and remuneration structures for the team as well as being the beneficiary of the profits of the Investment Adviser. A performance deteriorationby

Amber

The Investment Adviser has a strong record of accomplishment of investing and managing infrastructure projects. JLCM, being a wholly- owned subsidiaryof John Laing Group plc, has access to the depth of resource provided by its parent company, as well as robust policies, procedures, compliance systems and risk controls. John Laing Group plc has significant personnel to draw from to provide the services under the Investment Advisory Agreement.

Ultimately, in the event of ongoing underperformance by the Investment Adviser, JLIF has the ability to serve notice andto

Amber

Red



the Investment Adviser, which may be as a result of lack of resource or loss of experienced personnel, would have a material impact on the Company's performance.


replace JLCM as InvestmentAdviser.



Cyberrisk

There exists an increasing threat of

cyber-attack in which a hacker or computer virus may attempt to access the IT systems of the Group, the Investment Adviser or one of the SPVs, and attempt to destroy or use this data for malicious purposes. While JLIF considers it unlikely to be the deliberate target of a cyber-attack, there is a possibility that it could be targeted as part of a random or general act.

Green

JLIF, the Investment Adviser and the SPVs' IT providers have procedures in place to mitigate cyber- attacks and business continuity plans. Data is separately stored on multiple servers, which is backed-up regularly. IT controls are regularly reviewed, including by external specialist IT companies, to ensure they remain robust and provide a sufficient level of protection.

Green

Red

Financial

Portfolio valuation

The principal component of the investments of the Company is its Portfolio of PPP assets. JLCM is responsible for preparing a fair market value of the Portfolio, which is presented to and approved by theBoard.

There is a risk that the valuation isnot a fair reflection of the market valuation (i.e.the

Red

An independent verification exercise of the methodology and assumptions applied by JLCM is performed by a leading accountancy firm and an opinion provided to the Board. Additionally, the methodology and assumptions are subjected to significant external audit scrutiny and challenge.

Green

Amber



Portfolio is over- or under-valued).

This risk is a function of the financial models, both at the Group and underlying project level, on which the valuation is based, which may contain incorrect assumptions, and programming, logic or formulaic errors, thereby resulting

in inaccurate outputs.


The financial models are generally subject to audit by external accountancy firms, which is designed to identify and remove errors. As a control, JLCM also reviews the actual performance of investments against past projected performance, with significant deviations indicating a requirement to review a model for inaccuracies or errors.



Refinancing risk

The majority of projects in JLIF's Portfolio have in place long term debt broadly matching the duration of the concessions.

However, the Connecticut Service Stations project has senior debt maturing in 2023.

In addition, while the two Barcelona Metro Stations projects have long term debt in place, both include terms which require the use of equity distributions to pay down debt. There is a risk that refinancings cannot be achieved at forecast rates and costs, or at all, adversely affecting the distributions received by JLIF and hence the valuation of such projects.

Red

JLIF takes advice from the Investment Adviser (that has good knowledge of project finance and the debt markets) and from independent experts familiar with the relevant debt markets and is confident in the prudence of its forecast assumptions where this riskexists.

However, certain macroeconomic conditions are outside of the control of the Company. Projects with this risk are therefore valued at a higher discount rate to compensate for the additional degree of risk retained byequity.

Amber

Green


Taxation

Changes to tax legislation and rates

There is a risk that changes to the tax rules or rates (e.g. BEPS, cross- border tax treatment etc.) across the jurisdictions in which JLIF invests could result in JLIF, or the SPVs in which JLIF invests, having to pay more tax, adverselyaffecting either the distributions received from the Portfolio or distributions paid to shareholders in JLIF.

Red

JLIF works closely with expert tax advisers and adopts what it believes to be a conservative position with regard to taxplanning.

That said, other than participating in industry consultation process, there is little within the power of the Company that it is able to do to mitigate changes in corporation tax rates and tax legislation. The diversification across jurisdiction offered by JLIF's Portfolio provides an inherent degree of mitigation against thisrisk.

With respect specifically to the OECD's Base Erosion Profit Shifting initiative, the Company continues to monitor and participate in consultation processes with HMRC, and seeks advice from independent tax experts as to the ramifications for JLIF. The final legislation is due to be enacted from April2017.

Amber

Amber

Compliance andLegal

Regulatory compliance and change

JLIF is required to comply with certain UK Listing Rules applicable to 'Premium listings' as wellas

Green

JLIF and the Investment Adviser monitor regulatory developments and seek independent professionaladvice

Green

Red



rules relating to the Guernsey FinancialServices Commission.

There is a risk that failure to comply withany

of the relevant rules could result in a negative reputational or financialimpact.


in order to manage compliance with changing regulatory requirements.

Where appropriate, JLCM participates in consultation processes to ensure that the views of the Company are heard by thelegislature.



Contractrisk

The projects in which JLIF invests rely on complex contractual arrangements in order to operate as intended. There is a risk that such contracts do not operate as intended, are incomplete, contain unanticipated liabilities, are subject to interpretation contrary to JLIF's expectations, or otherwise fail to provide the protection anticipated.

There is a risk that due diligence does not reveal all the facts and circumstances of a particular project, resulting in over- paying for an investment.

Amber

Such contracts have been entered into usually only after lengthy negotiations and with the benefit of external legal advice. JLIF engages legal advisers when undertaking due diligence on potential investments to understand the risks retained by theSPV.

JLIF seeks to mitigate the risk of over-paying by undertaking a structured due diligence process, with the support of independent expert advisers with strong market knowledge, and often with familiarity of the specific project itself.

Green

Green

Long Term ViabilityStatement

The Directors have assessed the viability of the Company over the three-year period to December 2019, taking account of the Company's current position and the potential impact of the principal risks documented in the Risk Committee report. Based on this robust assessment, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to December2019.

In making this statement, the Directors have considered and challenged the reports of the Investment Adviser in relation to the resilienceof


the Company, taking account of its current position, the principal risks facing it in severe but possible scenarios, the effectiveness of any mitigating actions and the Company's risk appetite. Where possible, sensitivity analysis has been undertaken to consider the potential impacts of such risks on the business model, future performance, solvency and liquidity over the period. The sensitivity analysis undertaken considered the impact of a significant proportion of the Portfolio not yielding, which is a plausible consequence of a number of the principal risks should they materialise, either in isolation or inparallel.

The sensitivity analysis was premised on a number of assumptions, including that the Company's revolving credit facility remains in place and is available to provide short term finance for future acquisitions undertaken in the period, that there will be sufficient liquidity within the market toraise new capital as and when required, that the Investment Adviser continues on the same terms as those existing and that there is no annual uplift in dividends paid toshareholders.

The Directors have determined that a three-year look forward to December 2019 is an appropriate period over which to provide its viability statement. This is consistent with the outlook period used in economic and other medium term forecasts regularly prepared for the Board by the Investment Adviser and is the outlook period generally used by the Board in its consideration of any new strategies. These reviews consider both the market opportunity and the associated risks, principally the ability to raise third party funds and investcapital.

The Directors' view on the going concern status of the Company can be found in the Report of the Directors.

BOARD OFDIRECTORS

All members of the JLIF Board have been in post since the Company was incorporated in August 2010, with the exception of Helen Green who was appointed in April2014.

Paul Lester CBE,Chairman

Paul Lester, a resident of the United Kingdom, is currently non-executive Chairman of Greenergy International Ltd and Knight Square HoldingsLtd.

In April 2016 he was appointed non-executive Chairman of Essentra Plc and also Forterra Plc. Paul was chief executive of VT Group plc, the support services company, from July 2002 until its acquisition by Babcock International in July2010.

Mr Lester was group managing director of Balfour Beatty plc, the international engineering, construction and services group, from 1997 to 2002, and chief executive of Graseby plc from 1990 to 1997. Mr Lester has also held senior management positions at Schlumberger and the Dowty Groupplc.

Mr Lester is a former president of the Society of Maritime Industries, the BSA and theEEF.

David MacLellan, Deputy Chairman and Senior IndependentDirector

David MacLellan, a resident of the United Kingdom, is the founder and currently Chairman of RJD Partners, a midmarket private-equity business focussed on the services and leisuresectors.

Previously, Mr MacLellan was an executive director of Aberdeen Asset Managers plc following its acquisition in 2000 of Murray Johnstone where he was latterly Chief Executive having joined the company in 1984. Mr MacLellan has served on the boards of a number of companies and is currently a non-executive director of J&J Denholm Limited. He is a past council member of the British Venture Capital Association and is a member of the Institute of Chartered Accountants of Scotland.

ChristopherSpencer

Christopher Spencer, a resident of Guernsey, qualified as a chartered accountant in London in 1975. Following two years in Bermuda, he moved to Guernsey. Mr Spencer, who specialised in audit and fiduciary work, was Managing Partner/Director of Pannell Kerr Forster (Guernsey) Limited from 1990 until his retirement in May 2000. Mr Spencer is a member of the AIC Offshore Committee, a past President of the Guernsey Society of Chartered and Certified Accountants and a past Chairman of the Guernsey Branch of the Institute of Directors. Mr Spencer also sits on the board of Directors of JPEL Private Equity Limited and SQN Asset Finance Income Fund Limited, each of which is listed on the London Stock Exchange, and Summit Germany Limited, which is listed on the London Stock Exchange's Alternative InvestmentMarket.

Talmai Morgan

Talmai Morgan, a resident of Guernsey, qualified as a barrister in 1976. He holds a MAin Economics and Law from Cambridge University. Hemoved

to Guernsey in 1988 where he worked for Barings and then for the Bank of Bermuda. From 1999 to 2004, he was Director of Fiduciary Services and Enforcement at the Guernsey Financial Services Commission (Guernsey's financial regulatory agency) where he was responsible for the design and subsequent implementation of Guernsey's law relating to the regulation of fiduciaries, administration businesses and company directors. He was also particularly involved in the activities of the Financial Action Task Force and the Offshore Group of BankingSupervisors.

For the last ten years, Mr Morgan has been the non-executive chairman or a non-executive director of a number of publicly listed investment companies. He is presently Chairman ofNB Private Equity Partners Limited, Sherborne Investors (Guernsey) B Limited and Global Fixed Income Realisation Limited. He also sits on the board of BH GlobalLimited.

Guido VanBerkel

Guido Van Berkel, a resident of Luxembourg, started his career in the financial industry more than 40 years ago and has held various senior positions with Bank Sarasin, Rabobank, Robeco Group and Citibank. Over the course of his career, he has worked in The Netherlands, Jersey, Switzerland, Luxembourg andScandinavia.

From 2001 until 2007 Mr Van Berkel was active on the Executive Board of Bank Sarasin in Switzerland and as such he acted as chairman of various Sarasin entities across Europe and Asia. Currently Mr Van Berkel is an independent director in a number of Luxembourg, British, Channel Islands and Dutch investment fund ranges and from the beginning of 2012 until mid-2015 was chairman of BlackRock Luxembourg SA and BlackRock Fund Management S..r.l in Luxembourg as well as chairman of Blackrock Fund NetherlandsBV.

Helen Green

Helen Green, a resident of Guernsey, has been employed by Saffery Champness, a top 15 firm of chartered accountants since 1984. Shequalified

in 1987 and became a partner in the London office in 1997. Since 2000 she has been based in the Guernsey office where she is client liaison director responsible for trust and company administration. Mrs Green is a non-executive director of Acorn Income Fund Limited (of which she has been chairman since 2012), UK Mortgages Limited, Aberdeen Emerging Markets Investment Company Limited and City Natural Resources High Yield Trust Plc all of which are listed on the London Stock Exchange's Main Market and Landore Resources Limited which is listed on the London Stock Exchange's Alternative InvestmentMarket.


GROUP INVESTMENTPORTFOLIO

As at 31 December 2016, JLIF's Portfolio comprised investments in 62 low-risk, infrastructure PPP projects, across seven primary sectors and sixcountries.

Health

Education

Justice&

Emergency Services

Transport

Regeneration

& Social Housing

Government Buildings

Street Lighting

Kingston Hospital 60%

Glasgow Schools20%

Greater Manchester Police Stations 27.08%

E18 Road, Finland 50%

Brockley Social Housing PPP 100%

MoDMain Building, London 26%

Manchester Street Lighting 50%

Forth Valley Royal Hospital, Scotland 100%

South Lanarkshire Schools 15%

Metropolitan Specialist Police Training Centre, Gravesend 27.08%

M40Motorway (UK)

50%

Bentilee Hub Community Centre 100%

Kromhout Barracks PPP Project, The Netherlands 100%

Walsall Street Lighting 100%

Queen Elizabeth Hospital, Greenwich 27.5%

Edinburgh Schools 20%

North East Fire and Rescue 100%

SirhowyWay 100%

Camden Social Housing 50%

Groningen Tax Office, The Netherlands 40%

Wakefield Street Lighting 50%

Abbotsford Regional Hospital and Cancer Centre, Canada 100%

North Swindon Schools

100%

Avon and Somerset Courts 40%

M6/M74

Motorway (Scotland) 11%

Islington Social Housing I 45%


Barnet Street Lighting 100%

Vancouver General Hospital, Canada 100%

Highland School, Enfield 100%

Cleveland Police Station and HQ 50%

LUL Connect (CityLink), London 33.5%

Islington Social Housing II 45%


Enfield Street Lighting 100%

Roseberry Park Hospital, Middlesbrough 100%

Newham Schools 100%

South East London

Police Stations 50%

Barcelona Metro Stations L9T2

53.5%

Miles Platting Social Housing, Manchester 50%


Lambeth Street Lighting 100%

Tunbridge Wells Hospital

37.5%

Enfield Schools 100%

British Transport Police, London 100%

Barcelona Metro Stations L9T4

13.5%

Canning Town Social Housing 100%


Redcar and Cleveland Street Lighting 100%

Newcastle Hospital 15%

Leeds Combined Secondary Schools 100%


Connecticut Service Stations 100%

Kirklees Social Housing

100%


Surrey Street Lighting

50%

Peterborough Hospital

30%

Bexley Schools 100%


A55 Llandegai to Holyhead DBFO

100%

Oldham Social Housing

95%



Realise Health LIFT (Colchester) 60%

Bristol BSF 37.5%


Intercity Express Programme Phase1

6%




Northampton Mental Health 100%

Peterborough Schools 100%






North








Staffordshire Hospital 75%

Kelowna and Vernon Hospitals, Canada

50%

North Birmingham Mental Health 100%

INVESTMENTPOLICY

The following describes JLIF's investment policy which, as noted below, was changed at the Company's AGM in May 2016 to increase the gearing limit from 25% to 35% of Total Assets. At the AGM in May 2017, JLIF intends to put to shareholders an amendment to the investment policy to expand the geographical limits but keeping with the requirement that over 50% of Total Assets (by value)are

UK-based.

General

JLIF's investment policy is to invest predominantly in the equity and subordinated debt issued with respect to infrastructure projects that are predominantly PPP projects. The Company predominantly invests in projects that have completed construction and that are in their operational phase. Investment capital in projects that are under construction is limited to 30% of the Total Assets of the Fund (calculated at the time ofinvestment).

JLIF predominantly invests in projects whose revenuestreams:

are public-sector or government-backed;and

are predominantly availability-based (where payments received by the Project Entities do not generally depend on the level of use of the asset), other projects being "demand-based" (where payments received by the Project Entities depend on the level of use of the project assets). A project is availability-based or demand-based for these purposes if the Investment Adviser deems that 75% or more of payments received by the relevant Project Entity does or does not, as appropriate, generally depend on the level of use of the projectasset.

Whilst it is envisaged that further acquisitions will be of operational PPP projects with availability- based revenues, it may be possible that a limited number of projects in construction and/or with demand-based revenue mechanisms may beacquired.

Investment capital in projects whose revenue streams are predominantly demand-based is limited to 15% of the Total Assets of the Fund (calculated at the time of investment). For the purposes of this restriction, the shadow toll mechanisms for the investments in the M40 and M6/M74 motorway projects and the A55 road project are not regarded as carrying demand risk due to their relative insensitivity to trafficmovement.

In addition, the Company may invest up to 10% of its Total Assets (calculated at the time of investment) in infrastructure assets that are not government-backed PPP assets but that have substantially the same risk profile and characteristics as PPPassets.

Geographicfocus


We believe that attractive opportunities for JLIF to enhance returns for shareholders are likely to arise in areas of the world where PPP is a practiced route for delivering infrastructure investments. The Company may, therefore, make investments in the European Union, other European countries, Canada, the United States of America and the Asia Pacificregion.

The Company will seek to mitigate country risk by concentrating on investment opportunities in jurisdictions where JLCM advises that contract structures and their enforceability are reliable, where (to the extent applicable) JLCM advises that public-sector or government-backed obligations carry a satisfactory credit rating and where financial markets are relatively mature. JLIF will ensure that over 50% of the Company's Total Assets, measured by value, will be in respect of projects based in the UK (although this will not require JLIF to dispose of Investment Capital in respect of non-UK projects if this limit is breached as a result of changes in value of the InvestmentPortfolio).

Single investment limit and diversity of clients andsuppliers

When any new acquisition is made, JLIF will ensure that the investment (or, in the event of an acquisition of a portfolio of investments, each investment in the portfolio) acquired does not have an acquisition value (or, if it is an additional stake in an existing investment, the combined value of both the existing stake and the additional stake acquired is not) greater than 25% of JLIF's Total Assets at the time of investment. In selecting new investments to acquire, JLIF will seek to ensure that its Portfolio comprises a range of public-sector clients and supply chain contractors, in order to avoid over-reliance on any single client orcontractor.

Gearing

JLIF intends to make prudent use of leverage held in JLIF Limited Partnership for financing acquisitions of investments and working capital purposes. Under the company articles, and in accordance with JLIF's Investment Policy, JLIF's outstanding borrowings, excluding intra-group borrowings and the debts of underlying Project Entities, but including any financial guarantees to support subscription obligations, will be limited to 35% of JLIF's Total Assets11. JLIF may borrow in currencies other than Sterling as part of its currency hedgingstrategy.

Origination ofinvestments

All of the investments in the Portfolio have similar characteristics to those set out above andfurther investment opportunities will only be pursued if they also satisfy thesecriteria.

It is expected that further investments will include investments that have been originated and developed by members of John Laing Group and may be acquired from them. JLIF has established procedures to deal with any potential conflicts of interest that may arise in relation to any acquisition of assets from John Laing Group. These proceduresinclude:

complete segregation of JLCM, acting on behalf of JLIF, and the John Laing "sell side"team;

a requirement to conduct asset due diligence through third party suppliers acting for JLIF, andfor an opinion from an independent expert on the Fair Market Value of the Investment Capital to be obtained; and

a requirement for JLIF board approval prior to submitting an offer to John Laing and prior to execution of the Sale and PurchaseAgreement.

JLIF will seek to acquire further investments going forward both from John Laing and from the wider market. In selecting the assets to acquire, JLCM will ensure that these projects havesimilar characteristics to the projects in the current Portfolio and meet JLIF's investmentcriteria.

Any proposed acquisition of assets by JLIF from the John Laing Group that fall within the overall investment parameters set by JLIF, including in relation to funding, will be subject to approvalby the Directors, who are independent of JohnLaing.


The relationship between JLIF and John Laing is governed by the Rules, as defined in the Prospectus. These require that any arrangements between a Relevant Person (as defined in the Rules) and JLIF are at least as favourable to JLIF as would be any comparable arrangement effected on normal commercial terms negotiated at arms' length between the Relevant Person and an independentparty.

JLIF has a contractual right of first offer (in accordance with the Amended Existing FOA and the New FOA) for relevant Investment Capital in UK, European and Canadian accommodation and roads and certain rail projects of which the John Laing Group wishes to dispose and that are consistent with our Investment Policy. It is envisaged that the John Laing Group will periodically make available for sale further portfolios of Investment Capital in infrastructure projects (although there is no guarantee that this will be the case). Subject to due diligence and agreement on price and transaction documentation, JLIF will seek to acquire those projects that fit its Investment Policy.

JLIF will also seek out and review acquisition opportunities from outside the John Laing Group that arise and will, where appropriate, carry out the necessary due diligence. If, in the opinion of JLCM, as Operator of JLIF Limited Partnership (the Partnership), the risk characteristics, valuation and price of the Investment Capital in the project or portfolio of projects for sale is acceptable and is consistent with our Investment Policy, then (subject to JLIF having funds) an offer will be made (without seeking the prior approval of the Board) and, if successful, the Investment Capital in the relevant project or portfolio of projects will be acquired by JLIF, following approval by theBoard.

Potential disposals ofinvestments

Whilst the Directors may elect to retain Investment Capital in the Portfolio and any other further investments made by JLIF over the long term, JLCM will regularly monitor the valuations of such projects and any secondary market opportunities to dispose of Investment Capital and report to the Directors accordingly. The Directors only intend to dispose of Investments where (upon the advice of JLCM) they consider that it would be in the best interest of shareholders. Proceeds from the disposal of investments may be reinvested or distributed at the discretion of theDirectors.

Currency and hedgingpolicy

A portion of JLIF's underlying investments may be denominated in currencies other thanSterling. For example, currently some of the Portfolio is denominated in Canadian Dollars, US Dollars and Euros. However, any dividends or distributions in respect of the Ordinary Shares will be made in Sterling and the market prices and Net Asset Value of the Ordinary Shares will be reported in Sterling. Currency hedging will only be carried out to seek to provide protection to the level of Sterling dividends and other distributions that JLIF aims to pay on the Ordinary Shares, and in order to reduce the risk of currency fluctuations and the volatility of returns that may result from such currency exposure. This may involve the use of foreign currency borrowings to finance foreign currency assets, or forward foreign exchange contracts for up to three years to hedge the income from assets that are exposed to exchange rate risk againstSterling.

Interest rate hedging may also be carried out to seek to provide protection against increasing costs of servicing any debt drawn down by the Company to finance investments. This may involve the use of interest rate derivatives and similar derivativeinstruments.

Currency and interest rate hedging transactions will only be undertaken for the purpose ofefficient Portfolio management and these transactions will not be undertaken for speculativepurposes.

Amendments to and compliance with the InvestmentPolicy

Material changes to JLIF's Investment Policy may only be made in accordance with the approval of the shareholders by way of ordinary resolution and (for so long as the Ordinary Shares are listed on the official list) in accordance with the UKLA ListingRules.

The investment restrictions detailed above apply at the time of the acquisition of Investment Capital. In the ordinary course of business, JLIF will not be required to dispose ofInvestment


Capital and to rebalance its investment Portfolio as a result of a change in the respective valuations of Investment Capital. Minor changes to the Investment Policy must be approved by the JLIF Board, taking into account advice from the Investment Adviser whereappropriate.

11 Increased from 25% following shareholder approval at the Company's AGM in May2016.

THE INVESTMENTADVISER

JLIF is advised by John Laing Capital Management ("JLCM"), a specialist infrastructure manager, which is able to draw upon a wealth of experience in infrastructure investments, management anddevelopment.

AndrewCharlesworth

Andrew Charlesworth is a Director of JLCM and JLCM's Investment Adviser to JLIF, responsible for delivering the JLIF's performance targets. He has more than 21 years of experience in infrastructure development and finance. He has overseen the growth of JLIF's Portfoliofrom

259.0 million at launch to 1,217.6 million. Andrew's broad experience of the PPP market, having acted as advisor to authorities in procuring PPP projects and to senior lenders in funding them, has ensured that the investments JLIF has made have been accretive to shareholder value, delivering above forecastreturns.

Prior to his current role, Andrew led significant parts of the primary investment business within John Laing Group plc, initially as CEO of Regenter (a John Laing social housing PPP joint venture), then as Local Authority PPP Director and lastly as the Financial and CommercialDirector for the global John Laing Investments business. Andrew holds the CFA UK's Investment Management Certificate (Part1).

GianlucaMazzoni

Gianluca Mazzoni is JLCM's Deputy Investment Adviser and Head of Business Development for JLIF, responsible for originating deals globally. He is a Director of JLCM and also sits on the board of the Connecticut Service Stations P3 project, and has more than 19 years' experience working in infrastructureinvestments.

Prior to joining JLCM, Gianluca worked for Socit Gnrale (then Access Capital Partners) developing significant experience in the origination and execution of global investment opportunities in equity infrastructure. Prior to this Gianluca worked in corporate finance, private equity and M&A across a wide range of sectors including infrastructure as part of The Boston Consulting Group and Bain & Co. He holds an MBA from Bocconi University (Italy) and Columbia Business School (USA) and an M.Sc. in Economics and Finance from Universita Politecnica delle Marche(Italy).

JoanneGriffin

Joanne Griffin is JLCM's Director of Investments for JLIF, responsible for the sourcing, valuation and execution of acquisitions, development of JLIF's business into new PPP markets. Joanne has over 13 years' experience in infrastructure investments and serves as a director at both asset and corporatelevels.

Prior to joining JLCM, Joanne led the finance and commercial elements of multiple PPP projects across most sectors of the infrastructure market, both in the UK and internationally. Previously, Joanne worked at Carillion, a construction-to-services company, and gained significant experience in financial modelling for bidding and advising consortia on their investments. Joanne is an Associate member of the Chartered Institute of Securities andInvestment.

Jamie Pritchard

Jamie Pritchard is JLCM's Director of Asset Management for JLIF. His primary focus is valuation of the JLIF Portfolio, ensuring forecast returns from JLIF's investments are delivered and on identification and management of value enhancements. In his role, Jamie also serves as a director on the board of a number of the project companies in which JLIF is a shareholder. With over 16 years' experience in infrastructure investment gained across both the primary and secondary markets, Jamie's extensive portfolio management experience helps deliver value enhancements that underpin underlying growth. Jamie also provides support to JLIF's bidding activities with specific focus on valuation, identifying value enhancementsand

portfoliostructuring.

Prior to joining JLCM, Jamie worked at Serco plc leading the commercial and financial structuring of bids, prior to which he worked at Balfour Beatty Investments for 10 years. He is a member ofthe Institute of Chartered Accountants in England andWales.

MatthewMcLintock

Matthew is JLCM's Senior Analyst for JLIF, responsible for fund and portfolio analysis and reporting to shareholders and to the JLIF Board. Matthew also plays a key role in both reviewing and executing new investments, capital raising and portfolio valuations. Matthew serves as a director on the board of three of the project companies in which JLIF is a shareholder and acts as shadow director on the Intercity Express Programme Phase 1 project. Matthew has over eight years' experience in infrastructure, both in an advisory and investorcapacity.

Prior to joining JLCM, Matthew worked for URS Corporation (now AECOM) as part of their Infrastructure Economics and Strategy team, advising lenders and sponsors in respect of commercial and technical risk. Matthew is a Chartered Member of the Institute for Securities and Investment.

1. ABOUT THE INVESTMENTADVISER

John Laing Capital Management Limited ("JLCM"), a wholly owned subsidiary of John Laing, acts as the Investment Adviser to the Company and as the Operator of JLIF Limited Partnership. JLCM was incorporated in England and Wales on 19 May 2004 under the Companies Act 1985 (registered number 5132286) and has been authorised and regulated in the UK by the Financial Services Authority (now the Financial Conduct Authority) since December 2004. JLCM has the ability to call on and utilise the substantial experience of the John Laing Group in the management of theFund.

2. INVESTMENTPERFORMANCE

2.1 Share PricePerformance

During 2016 JLIF's share price climbed from 116.7p at the start of the year to 129.7p at its close. 6.82p per share of dividends were paid during the year and therefore JLIF delivered a share price total return to shareholders of 17.5% for the year (with dividends re-invested).. Whilst JLIF is not managed with regard to any benchmark, the share price of JLIF, with itsgovernment-backed

and partially inflation-linked revenues should, arguably, broadly track the capital performance of a basket of Gilts (the "Gilt Basket"). JLIF's share price over the year as a whole broadly tracked the Gilt Basket's capital performance. The share price went ex-dividend 3.41p on each of 3 March and 22September.

Overall JLIF's share price remained relatively stable, trading throughout the period at a premium to NAV and growing its dividend versus 2015. JLIF, along with the Gilt Basket, experienced strong performance in the aftermath of the UK Referendum onEU membership, especially following the Bank of England's stimulus measures announced in early August 2016. This was reversed through the autumn with the decline in the capital values of the Gilt Basket partly linked to the election of Donald Trump as the next President of the US, promising tax cuts and a large programme of infrastructure spending. The premium to NAV at which the Company's shares traded over 2016 reflects both the historical performance of the Fund and general market appetite for income and infrastructure stocks such as JLIF. From launch in November 2010 to the end of December 2016, JLIF has delivered total shareholder returns of 76.5%, and an annualised return of 9.8% (simple basis, dividendsre-invested).

2.2 OngoingCharges

Ongoing charges is a measure of the efficiency of managing a fund and takesaccount of day-to-day management costs. It is expressed in terms of percentage impact on shareholder returns, assuming that markets remain static and that the Portfolio is not traded.

JLIF's ongoing charges ratio has been calculated in accordance with the Associationof Investment Companies ("AIC") recommended methodology12. Calculated on a profit and loss basis, JLIF's ongoing charges ratio for 2016 was 1.25% while for 2015 it was 1.24%.

The AIC's recommended methodology does not include acquisition fees in the calculation of the ongoing charges ratio. JLCM earns acquisition fees on acquisitions not deriving from JLIF's First Offer Agreements with John Laing Group. In accordance with the AIC's recommended disclosure we have presented below the impact of these acquisitionfees.

OngoingCharges

2016

(m)

2016

(m)

Investment Adviserfee

10.9

9.6

Group auditfees

0.3

0.3

Directors' fees andexpenses

0.3

0.3

Other ongoingexpenses

0.9

0.8

Totalexpenses

12.5

11.0

Average NAV

1,002.0

884.8

Ongoing charges ratio (using AICrecommended

methodology)

1.25%

1.24%

Acquisitionfees

0.2

0.0

Ongoing charges including acquisitionsfees

1.40%

1.24%

12For further details see http://www.theaic.co.uk/sites/default/files/hidden- files/AICOngoingChargesCalculationMay12.pdf

3. VALUATION

3.1. Valuation of theCompany

The Company accounts for its interest in its wholly owned subsidiary JLIF Luxco 1 S..r.l. as an investment at fair value through profit or loss. The fair value of the Company's investment in JLIF Luxco 1 S..r.l. comprises the fair value of JLIF Luxco 1 S..r.l., all the intermediate holding companies and the Portfolio of PPPinvestments.

The fair value of JLIF Luxco 1 S..r.l. and all the intermediate holding companies is equivalent to their net book value. The investment at fair value through profit and loss of the Company as at 31 December 2016 was 1,078.2 million (31 December2015:

883.1million).

The fair value of the intermediate holding companies is principally comprised of cash, debt drawn on the Company's revolving credit facility and working capital balances, while the principal component of the investments of the Company are its Portfolio of 62 PPP assets. Further details of the value of this Portfolio followbelow.

3.2. PortfolioValue

JLCM is responsible for undertaking a fair market valuation of the JLIF Portfolio (of 62 PPP assets as at 31 December 2016), which is presented to the Board. To provide additional assurance to both the Board and to JLIF's investors, the valuation is independently verified by a leading accountancy firm who provide a valuation opinion to the Directors. Subsequently, the Board approves the valuation of the Portfolio for the year ended 31 December2016.

The valuation methodology is based on discounting forecast future cash flows from the underlying assets in the Portfolio. This is consistent with the methodology used to the value the Portfolio since launch in November2010.


JLIF's Portfolio value increased over the 12 months to 31 December 2015 from 867.8 million to 1,217.6 million. A breakdown of the movements in Portfolio value is provided in the table below, as well as a comparative table for2015.


'000s

%growth

Opening value at 31 December 2015

867,830


Investments

306,042


Disposals

(43,380)


Cash received frominvestments

(93,208)


Discount ratemovements

43,396


Exchange ratemovements

44,919


Opening value rebased at 31 December2015

1,125,599


Growth from discount rateunwind

79,209

7.04

Growth from valueenhancements

12,839

1.14

Value at 31 December2016

1,217,647



'000s

%growth

Opening value at 31 December2014

864,887


Investments

14,363


Disposals

-


Cash received frominvestments

(73,261)


Discount ratemovements

7,462


Exchange ratemovements

(12,435)


Opening value rebased at 31 December2014

801,016


Growth from discount rateunwind

65,064

8.12

Growth from valueenhancements

1,750

0.22

Value at 31 December2015

867,830


After adjusting for investments of 306.0 million, disposals of 43.4 million, cash received from investments of 93.2 million, changes to discount rates of 43.4 million and positive unrealised exchange rate movements of 44.9 million, the rebased valuation as at 31 December 2015 was 1,125.6 million. Therefore, underlyinggrowth in the Portfolio to 31 December 2016 was8.18%.

The weighted average discount rate ("WADR") for the Portfolio was 7.87% as at 31 December 2016. If all 62 assets comprising the Portfolio as at 31 December 2016 had been held for the full year and all cash distributions from the investments had been received at the beginning of the year, the expected growth in the Portfolio due to the unwind of the discount rate would have been the WADR, i.e. 7.87%. In reality, acquisitions and disposals were made and distributions were received at various times throughout the year (see sections 4.1 for details). After adjusting for the actual timing of acquisitions, disposals and distributions, the expected growth (the "Adjusted DRU") was 7.04%. The underlying growth delivered of 8.18% therefore compares favourably, being 1.14% ahead of the Adjusted DRU. The drivers for this outperformance are discussed further in section4.5.

3.3 ValuationAssumptions

3.3.1. DiscountRate

The methodology used by JLCM in determining the appropriate discount rate by which to value each asset in the Portfolio is based on historical five-year rolling average gilt rates (of equal duration to the relevant project concessions). These represent a proxy for the 'risk free rate'. Specific premiums are added to these to reflect the individual project risks and to ensure that the resultant rate is reflective of market conditions. This methodology has been consistently applied each year since JLIF launched in2010.

Since the discount rates used are a key driver of the valuation, they are reviewed byan independent accountancy firm with a long track record in PPP valuation as part of their overall assessment of the Portfolio valuation. An opinion on the appropriateness ofthe


range of discount rates used is provided to the Directors to give themadditional assurance.

The table below shows the range of discount rates used to value the Portfolio versus those used for the 2015 year-end valuation, together with the sensitivity of the Portfolio valuation to movements in discountrates.

Year

2016

2015

Weighted average giltrate

2.73%

2.89%

Weighted average riskpremium

5.14%

4.93%

WADR at 31December

7.87%

7.82%

Range of asset discountrates

7.02% -9.00%

7.19% -8.46%

Number ofassets

62

57

Sensitivity of the Portfolio Valuation to movements in the discountrate



+ 1% (8.87% for2016)

Decreases by 7.9%(96.7m)

Decreases by 7.5%(65.1m)

- 1% (6.87% for2016)

Increases by 9.2%(111.7m)

Increases by 8.6%(74.8m)

The increase in WADR from 7.82% (as at 31 December 2015) to 7.87% is a result of investments in certain projects during the year (Connecticut Service Stations, Intercity Express Programme Phase 1 and Barcelona Metro Stations L9T2 and L9T4) at higher discount rates, partially offset by a reduction in discount rates applied to the projects comprising the Portfolio as at the end of December 2015. The table below shows this in more detail. The reduction in the WADR of projects comprising the Portfolio as at31 December 2015 was a consequence of a reduction in gilt rates over theperiod.


2016

2015

WADR of projects comprising Portfolio asat

31/12/15

7.45%

7.82%

WADR of acquisitions during2016

8.65%

-

WADR at 31December

7.87%

7.82%

3.3.2. Interest rates

Each of the projects in the Portfolio are funded effectively with fixed-rate financing, either through the use of interest rate swaps or through fixed-rate or index-linked bond finance. Changes to interest rates therefore have little impact on the finance costs of the projects and therefore the returns received by JLIF are largely insulated from this risk.

Long term gilt yields in the UK, Continental Europe and North America continued to decrease over 2016 and remain at historically low levels. There is the potential that these could increase over time. Historically, there appears only limited correlation between movements in gilt rates and discount rates used to value PPP projects. The current Portfolio WADR of 7.87% is significantly higher than the Portfolio weighted average gilt rate, a differential that remains at an historic high sincelaunch.

3.3.3 Cash depositrates

Each asset in JLIF's Portfolio holds cash deposits (usually six-month terms) in reserve accounts, typically a requirement of the senior debt providers. As a result, investment income from the Portfolio can vary depending on the interest earned on thesedeposits. The table below shows the deposit rate assumptions used to establish thePortfolio


value as at 31 December 2016. The deposit rate assumptions have been updated based on rates being achieved and the latest market forecasts of future depositrates.


2016

2015

UK

2017 -1.0%

2016 -1.0%


2018 -1.5%

2017 -2.0%


2019 -2.0%

2018 -3.0%


Thereafter2.75%

Thereafter -3.25%

ContinentalEurope

2017 -1.0%

2016 -1.0%

(incl. Finland, the Netherlands andSpain)

2018 -1.0%

2017 -1.5%


2019 -1.5%

Thereafter2.5%


2020 -2.0%



Thereafter2.5%


North America

2017 -1.0%

2016 -1.0%

(incl. Canada &USA)

2018 -1.5%

2017 -2.0%


2019 -2.0%

Thereafter3.0%


Thereafter2.5%


The impact on the Portfolio valuation to changes in deposit rates is shown in the table below.


Portfolio ValueImpact

2016

Portfolio ValueImpact

2015

Increase by 1%

Increases by1.79%

(21.8m)

Increases by2.12%

(18.4m)

Decrease by1%

Decreases by1.77%

(21.5m)

Decreases by2.11%

(18.3m)

If actual deposit rates were to vary from those assumed in the valuation of JLIF's Portfolio for only the next few years, as opposed to the entire remaining life of the projects (average life of the Portfolio was 19.8 years at 31 December 2016), theimpact on Portfolio valuation would consequently be muchreduced.

3.3.4.ForeignExchange

As at the 31 December 2016 the Portfolio comprised nine assets that have exposure to foreign exchange cash flows, being the Euro, the Canadian Dollar and the USDollar.

These projects with non-Sterling denominated cash flows comprised 32.4% of the Portfolio valuation (31 December 2015:12.5%).

JLIF uses the spot rate as at the valuation date to value its Portfolio. The tablebelow illustrates the impact on the Portfolio value (Sterling) resulting from a 10% change in the relevant exchangerates.

Non-Sterling denominated income from JLIF's assets is considered relative to the foreign exchange market to determine whether the potential volatility is material enough to enter into a forward contract to hedge against currencymovements.

Scenario

EUR:GBP

at 31December

2016

CAD:Sterling

at31 December

2016

USD:GBP

at31 December

2016

Portfolio

Valuation

at31 December

2016

Impact

Portfoliovalue

1.1708

1.6565

1.2329

1,217.6m

-

GBP

1.0537

1.4909

1.1096

1,257.1m

+39.5m


depreciates by 10%





((+3.2%)

GBP

appreciates by 10%

1.2879

1.8222

1.3562

1,181.8m

-35.9m (-2.9%)

During 2016, JLIF Limited Partnership did not hedge, or hold any hedges, of any ofits foreign currency income with forward foreign exchange contracts. As at 31 December 2016, JLIF did not hold any open foreign exchange contracts (31 December 2015: none held). However, as noted, in respect of the income received from JLIF's Euro- denominated projects, for the immediate future at least (while Sterling remains at historically low levels versus the Euro), JLIF has chosen to create a natural hedge by using this income to service and repay the Eurodebt.

In line with JLIF's policy since launch, the Balance Sheet value of its non-Sterling denominated assets is not hedged. While in 2016 JLIF's Portfolio benefitted from unrealised positive exchange rate movements of 44.9 million, there is an equal possibility that the value of JLIF's non-Sterling projects may decrease at future valuation dates, should exchange rates move in the oppositedirection.

3.3.5Inflation

Each asset in JLIF's Portfolio receives revenue from its public-sector client that is partially or, in some cases, wholly linked to inflation. The weighted average assumption used for inflation for the Portfolio valuation is 2.52% (31 December 2015:2.67%).

After taking account of the cost indexation arrangements of the project agreements, cash flows from the Portfolio as a whole are positively correlated to inflation, meaningif inflation increases, then the value of the Portfolio increases and viceversa.

The approximate correlation between Portfolio valuation and inflation isapproximately

0.5 (31 December 2015: 0.5); meaning for every one-percentage point increase in inflation above the level assumed in JLIF's Portfolio valuation, returns increase by approximately 0.5%. The correlation is broadly symmetrical and so a fall in inflation would produce a similar but oppositeeffect.

The most significant long term indexation assumptions used to value the Portfolio at 31 December 2016 are set out below. The assumptions are based on the latest long term market forecasts for eachjurisdiction.

Country

Index

2016

2015

Portfolio

Weighted average

2.52%

2.67%

UnitedKingdom

RPI /RPIx

2.75%

2.75%

Canada

CPI

2.10%

2.10%

TheNetherlands

CPI

2.00%

1.90%

Finland

MAKU/

Elpsot

3.0% /2.5%

3.0% /2.5%

Spain

CPI

2.00%

n/a

USA

CPI

2.00%

n/a

Sensitivity analysis has been performed to demonstrate the impact of movementsin inflation on the Portfolio valuation. The results of this analysis is presentedbelow.


Portfolio Value Impact2016

Portfolio Value Impact2015

Increase by 1% (i.e. 3.52%)

Increases by 4.31%(52.5m)

Increases by3.90%

(33.8m)

Decrease by 1%(i.e.

Decreases by 3.88%(47.3m)

Decreases by3.55%


1.52%)

(30.8m)

3.3.6 Corporationtax

The taxable profits of each of the project companies in the Portfolio are subject to corporation tax in their respective jurisdictions and, over their lifetimes, each projectis likely to pay significant amounts oftax.

The amount of tax to be paid over the remaining life of each project has been estimated and included as a negative item in its valuation. JLIF has madecertain assumptions regarding the availability of group relief to reduce the tax payable to HMRC and has includedpart

of the benefit attributable to this within its Portfolio valuation. This benefit arises from the availability of tax losses within the intermediate holding companies to surrenderto profit-making project companies. JLIF believes that its assumptions with respect to group relief rules are prudent. The value of the benefit attributable to group relief is immaterial in the context of the valuation of thePortfolio.

Country

2016

2015

UnitedKingdom

20%, then 19% from 1April

2017,

20%, then 19% fromApril

2017,


then 17% from 1 April2020

onwards

then 18% from 1 April2020

onwards

Canada

26%

26%

TheNetherlands

20% -25%

20% -25%

Finland

20%

20%

Spain

25%

n/a

USA

35%/9%13

n/a

13 Federal tax rate / Connecticut State taxrate.

The long term rate applied across JLIF's UK portfolio has decreased since last year from 18% to 17% from April 2020 onwards reflecting the provisions of the Finance Bill enacted in September 2016. This resulted in an increase in the Portfolio valuation of approximately 4.4 million. The rates assumed in the valuation of the overseas assets reflect the enacted rates in those jurisdictions and are unchanged from those used to value the Portfolio as at 31 December2015.

In December 2016, the UK Government published draft legislation in response to the OECD's Base Erosion Profit Sharing ("BEPS") initiative. Having sought advice from independent tax experts, the Company's assessment of the risk presented by the proposals contained within the draft legislation has resulted in no specific adjustment to be made in the valuation of the Portfolio as at 31 December2016.

3.3.7 Lifecycle

One of the key areas of risk within some of JLIF's projects is major maintenance or lifecycle costs. This is the cost of maintaining or replacing structural installations, building fabric or high value items (e.g. air conditioning, heating units, flooring etc.) that is required to ensure a project continues to meet the contractual specifications. Eachof the financial models used to establish the valuation of JLIF's Portfolio contain allowances for lifecycle costs. On some projects, the risk of actual costs varying from budgeted costs is retained by the project company, while on others this risk is passed down to the Hard Facilities Management ("Hard FM")provider.

As at 31 December 2016, of the 62 projects comprising the Portfolio, lifecycle risk is retained by the project company in 31 instances. For the remaining 31 projectslifecycle risk is passed down to the Hard FM provider, the cost allowances for which are included in the Hard FM service payments, which are fixed in real terms. The HardFM


provider takes the full risk of these payments being adequate. In five of the 31projects, JLIF has an upside only sharing mechanism with the Hard FM provider and in a further two cases the lifecycle risk (upside and downside) is shared between the project company and the Hard FMprovider.


Impact on 24assets

where lifecycle risk retained bySPV

Portfolio Value Impact 2015

Increase in forecast lifecycle expenditure by 10%

Decreases by3.08%

(17.0m)

Decreases by1.40%

(17.0m)

Decrease in forecast lifecycle expenditure by 10%

Increases by2.88%

(16.0m)

Increases by1.31%

(16.0m)

The sensitivity analysis was performed across a sample of the five largest assets by value in which lifecycle risk is retained by the project company. The analysis therefore covered approximately 60% of all assets by value in which lifecycle risk is held in fullat the project company level. The results of the sensitivity were then extrapolated across each of the 24 assets in which lifecycle risk is retained in full by the projectcompany.

4. PORTFOLIOPERFORMANCE

4.1 Investments andDisposals

During the period, JLIF made investments totalling 306.0 million, including interests in seven new projects. Approximately 95.6 million was in UK projects and 210.4 million in overseasprojects.

In January 2016, JLIF acquired a 40% indirect interest in Barcelona Metro Stations L9T2 from Iridium, a wholly-owned subsidiary of GrupoACS;

In February 2016, JLIF acquired a 100% interest in the British Transport Police PPP project from a member of John Laing Group plc and The John Laing Pension Trust Limited;

In May 2016, JLIF acquired a 95% interest in the Oldham Social Housing project from a member of John Laing Groupplc;

In June 2016, JLIF acquired a 100% interest in the Connecticut Service Stations project from The CarlyleGroup;

In July 2016, JLIF acquired an incremental 13.5% interest in the Barcelona Metro Stations L9T2 project and a new 13.5% interest in the Barcelona Metro Stations L9T4 project, both from Acsa, Obras e Infraestructuras, a member of the Sorigugroup;

In December 2016, JLIF acquired a 100% interest in the A55 Holyhead to Llandegai DBFO project from a member of John Laing Group plc;and

In December 2016, JLIF acquired a 6% indirect interest in the Intercity Express Programme Phase 1 project from a member of John Laing Groupplc.

JLIF's investment in the Connecticut Service Stations project saw it acquire a 100% interest in the project company, Project Service LLC, which is the exclusive providerof 23 highway service areas in the State of Connecticut (USA). The project involves the renovation (completed in August 2015), operation and maintenance of 23highway


service areas under a 35-year concession signed in 2009. Project Service LLC is the exclusive provider of on-highway fuel and food facilities along three distinct corridors between New York and Boston. Long term tenant agreements are in place (15-35 years) with major food and fuel providers, including four key anchor tenants - McDonald's, Dunkin' Donuts, Subway Restaurants and Alliance Energy (Mobilbrand).

With respect to the investments made in the two Barcelona Metro Stations projects, it is JLIF's strategy to refinance the senior debt over the next few years. JLIF has included certain assumptions within its valuation of these projects with respect to refinancing. The risks associated with refinancing is discussed in more detail in the Risk Committee report on pages 10 to15.

Also during the period, JLIF sold its entire interests in the Newham Hospital and Barnsley Building Schoolsfor the Future projects for a combined consideration of 43.4 million, an uplift on the carrying value of the investments as at 31 March 2016 of approximately 36%. These realisation values resulted in an aggregate realised IRR of approximately 16%. Given that the Board considered these offers to be significantly ahead of the value that could be achieved by retaining the interests, the decision was made to sell and to re-deploy the capital more effectively and at better value elsewhere.

4.2 Distributions frominvestments

During 2016, JLIF continued to receive cash income from its Portfolio, principally in the form of dividends and interest and repayment of principal on shareholder loans. During the 12-month period ended 31 December 2016, these totalled 93.2 million (31 December 2015:73.3 million). Distributions from the underlying project companies naturally reduce the Portfolio Value since the cash flows have been realised and are no longer included within forecast futureincome.

4.3 Exchange rateimpact

As noted in section 3.3.4, JLIF's policy remains not to hedge the balance sheet value of its non-Sterling denominated assets. As a result, the value of JLIF's overseas assets can vary depending on movements in the Canadian Dollar, Euro and US Dollar exchange rates relative to Sterling. Relative to the opening rates as at 1 January 2016, the Canadian Dollar appreciated by 19.6% from an exchange rate of 2.060 to 1.657 and the Euro appreciated by 13.8% from an exchange rate of 1.359 to 1.171. The investment in the Connecticut Service Stations project made in June 2016 benefitted from a subsequent 10.1% appreciation of the US Dollar against Sterling from a weighted average rate of 1.371 to 1.233. The net impact of these movements was an increase in the Portfolio Value of 44.9million.

The Portfolio Value is the principal component of the Net Asset Value ("NAV"), NAV being Total Assets (including Portfolio Value) minus the liabilities of the Group. To aid clarity, the table below shows the NAV with and without the impact of exchange rate movements, recognised in 2016 and 2015respectively.


Asat

31 December

2016

Asat

31December

2015


Net Asset Valueper

share

NetAsset Valueper

share

Including exchange variations

120.2p

108.4p

Excluding exchange variations

115.3p

109.9p


4.4 Rebased valuation

After taking account of acquisitions and disposals in the period, distributions from investments and changes in both discount rates and exchange rates, therebased valuation as at 31 December 2016 was 1,125.6million.

4.5 Portfoliogrowth

The WADR of the Portfolio as at 31 December 2016 was 7.87% (31 December 2015: 7.82%). If all investments were held throughout the entire year, and all cash income from investments received at the beginning of the year this would be the percentage growth forecast due to the natural unwinding of the discount rate. However, certain acquisitions were made during the course of the year and cash income from investments was received at various times throughout the year. Adjusting for this timing, the expected growth (i.e. the "Adjusted DRU") for 2016 was 7.04% or 79.2 million.

JLIF delivered underlying Portfolio growth that was ahead of that expected from the unwind of the Adjusted DRU by 12.8 million or 1.14% in 2016. This was principally the result of thefollowing:

The disposal of JLIF's interests in the Newham Hospital and Barnsley Building Schools for the Future projects at an uplift to carrying value ofc.36%;

More efficient management of our projects including cost efficiencies identified and delivered both at a Portfolio and individual project level, such as insurance and SPV managementcosts;

Prudent management of lifecycle costs where this risk is retained by theSPV;

Better than forecast traffic performance on UK roadprojects;

Reduced margins from the refinancing of senior debt on our Kirklees Social Housing project;and

The net impact of changes to macroeconomic assumptions, principally being the downside impact of lower than forecast inflation during the year and a reduction in deposit rate assumptions, partially offset by the reduction in UK corporation tax rates to 17% as enacted in the Finance Bill2016.

As a result of this continued asset focus and active management of the Portfolio,every year since it launched in November 2010, JLIF has delivered underlying Portfolio growth in excess of that expected from the unwind of the Adjusted DRU, as detailed below.


2011

2012

2013

2014

2015

2016

Underlying portfolio growth

9.22%

8.49%

7.24%

9.22%

8.34%

8.18%

Adjusted unwind of the discount rate

7.62%

7.20%

6.38%

7.81%

8.12%

7.04%

Excluding exchange variations

1.60%

1.29%

0.86%

1.41%

0.22%

1.14%

As at 31 December 2016, the Portfolio comprised investments in 62 projects. As described above, overall the underlying growth in Portfolio Value exceeded that forecast from the Adjusted DRU. However, as with any portfolio there is a degree of variability in the valuation growth exhibited by each individual project, some growing by more than forecast and others byless.


Those projects for which growth exceeded expectations included the M40 Motorway, Kirklees Social Housing and the Connecticut Service Station project. The increases in value largely resulted from value enhancement activities undertaken during the year including major maintenance cost reviews, refinancing of project finance debt and the reduction of operational maintenancecosts.

Those projects for which growth was below expectations were mainly in the UKHealth sector, where a number of legal disputes have been continuing during 2016, and the Edinburgh Schools project. Performance on the remaining assets in the Portfolio was generally in line with expectations. The paragraphs below describe the status of the projects where major disputes were conducted during2016.

In 2013 a legal dispute arose between the Newcastle Hospital project company (in which JLIF holds a 15% shareholding) and the public-sector client regarding the completion of phase 8 (the clinical office block) of the project, and other operational aspects of the project. This resulted in court action between the construction contractor, the project company and the public-sector client. During 2016, negotiations took place amongst all parties, which resulted in a settlement agreement being reached in August 2016. The outcome of this agreement is broadly in line with our expectations. All legal agreements relating to the dispute have now been executed and the project is operating within the parameters of the settlementagreement.

In 2015, a legal dispute also arose between the Peterborough Hospital project company (in which JLIF holds a 30% shareholding) and the public-sector client regarding certain alleged construction defects relating to fire compartmentationwithin the building and other operational aspects of the project. This dispute is ongoing; however, the outcome is not anticipated to have a material impact on the valuation of the Portfolio or its expected investmentincome.

During 2016, a dispute arose between the Roseberry Park Hospital project company (100% owned by JLIF) and the public-sector client regarding the provision of certain Hard FM services, the operation of the Service Helpdesk at the project as well as certain alleged construction defects. Settlement negotiations between all parties are continuing, the outcome of which is not yetcertain.

During 2016, a dispute arose in respect of the Edinburgh Schools project in which JLIF holds a 20% shareholding, following the identification of material construction defects at the Oxgangs Primary School. Consequently, all of the project's 17 schools were closed pending further surveys, in agreement with the City of Edinburgh Council. All the schools re-opened prior to the start of the academic year in August. Commercial discussions between the private sector parties involved in the project continue, and the exact magnitude of the financial impact will not be known until these areconcluded.

A provision based on our current view of the most likely outcome of these disputes has been included in the Portfolio Valuation at 31 December 2016, none of which are consideredmaterial.

During 2016, John Laing Group plc completed the sale of its Project Management Services activities in the UK to HCP Management Services ("HCP"). As at 31 December 2016 HCP provided management services to 34 of JLIF's UK-based PPP projects.

5. GEARING

JLIF benefits from a 180 million multi-currency revolving credit facility, provided by Royal Bank of Scotland ("RBS"), HSBC Bank plc ("HSBC"), ING Bank NV ("ING") and Commonwealth Bank of Australia ("CBA"). The term of the facility is five years and runsuntil


August 2020. Attached to the facility is a 150 million accordion facility, which was signed in June 2016. The margin on both facilities is 175bps over LIBOR (with commitment fees of 35bps of themargin).

As at 1 January 2016, JLIF's revolving credit facility was drawn by 17.0 million. This was repaid in early January 2016, using distributions received from the Portfolio at the end of December 2015. In late January 2016, JLIF drew on its revolving credit facility in Sterlingto finance the acquisition of a 40% interest in the Barcelona Metro Stations L9T2 project. The facility was repaid in March 2016 using the proceeds of a JLIF shareholder tapissue.

In June 2016, the revolving credit facility was drawn (in Sterling) to part-finance the acquisition of a 100% interest in the Connecticut Service Stations P3 project. In July, the facility was further drawn to finance the acquisition of an incremental 13.5% interest in Barcelona Metro Stations L9T2 and a new 13.5% interest in Barcelona Metro Stations L9T4. On this occasion, the drawing was made in Euros to mitigate the exchange rate risk, providing a naturalhedge.

In December 2016, the facility was drawn to part-finance the acquisition of a 100% interest in the A55 Holyhead to Llandegai DBFO road project and to finance the acquisition of a 6% indirect interest in the Intercity Express Programme Phase 1 project. As at 31 December 2016, the revolving credit facility was drawn by 171.4 million, while the accordion facility wasundrawn.

6. FINANCIALRESULTS

The financial statements of JLIF (or "the Company") for the year ended 31 December 2016 are on pages 55 to86.

The Company prepared the financial statements for the year ended 31 December 2016 in accordance with International Financial Reporting Standards ("IFRS") as published by the EU.

In order to continue providing useful and relevant information to its investors, the financial statements also refer to the "Group" (defined below) which comprises the Company andits intermediate holdingcompanies.

Basis ofaccounting

The Company applies IFRS 10 and Investment Entities - Amendments to IFRS 10, IFRS 12 and IAS 27. The Company accounts for its interest in its 100% owned immediate subsidiary JLIF Luxco 1 S..r.l. as an investment at fair value through profit orloss.

The Company does not consolidate its subsidiaries that provide investment services or its project companies subsidiaries, instead reporting them as investments at fair value. All intermediate holding companies and all the investments in PPP assets are accounted for on the same consistentbasis.

The Group comprises the Company, its two wholly owned Luxembourg subsidiaries (JLIF Luxco 1 S..r.l. and JLIF Luxco 2 S..r.l.), JLIF (GP) Limited (the General Partner), JLIF Limited Partnership (the English Limited Partnership) and 31 (2015: 27) wholly owned subsidiaries of the English LimitedPartnership.

The Company's subsidiaries provide services that relate to the Company's investment activities on its behalf, which are incidental to the management of the investment portfolio. These companies are recognised in the financial statements at their fair value, which is equivalent to their NetAssets.


As at 31 December 2016, the Group held investments in 62 (2015: 57) PPP projects which make distributions comprising returns on investments (interest on subordinated loans and dividends on equity) together with repayments of investments (subordinated loanrepayments and equityredemptions).

Results for the year ended 31 December2016

All amounts presented in 000s (except asnoted)

Year ended

31 December

2016

Year ended

31December

2015

Netassets14

1,080,568

883,096

PPP Assets15,16

1,217,647

867,830

Intermediate Holding companiesassets15

(139,472)

15,302

Operating income (including unrealisedforeign

exchangegains)

175,242

58,359

Net assets per share(pence)

120.2

108.4

Distributions, repayments and fees fromPPP

investments

93,208

73,261

Profit beforetax

160,429

46,966

14 Also referred to as Net Asset Value or"NAV"

15ClassifiedasinvestmentsatfairvaluethroughprofitorlossontheBalanceSheet

16 Also referred to as PortfolioValue

Key points tonote:

Interim dividend of 3.41 pence per share declared in September 2016 and paid in October 2016.

8.18% increase on a rebased Portfolio Value as at 31 December 2016 to 1,217.6 million (2015: 8.34% increase to 867.8million).

Net assets

The Company's Net Assets increased by 197.5 million from 883.1 million to 1,080.6 million at 31 December 2016. During the year, the movement in Net Assets is driven by the equity raise in March 2016 (generating net proceeds of 91.7 million), the increase in Portfolio Value mainly driven by unrealised positive exchange rate movements (44.9 million), lower discount rates (43.4 million), net effect of macroeconomic factors and value enhancement (12.8 million) and unwind of discount (79.2 million), offset by operating and financing cost (19.9 million) and dividend paid to shareholders (54.6 million). The Net Assets include investments at fair value through profit and loss of 1,078.2 million (ofwhich

1,217.6 million relates to the PPP investments, offset by 139.4 million of negative fair value of intermediate holding companies), a cash balance of 5.5 million, offset by other net liabilities of 3.1million.

The intermediate holding companies' negative fair value of 139.4 million comprises ofcash balances of 27.2 million, other net assets of 4.7 million, offset by outstanding debtof

171.4 million drawn on the revolving creditfacility.

Analysis of the Group's netassets

'000s (except asnoted)

2016

2015

Portfoliovalue

1,217,647

867,830

Intermediate holding companiescash

27,228

31,255

Intermediate holding companies credit facilitydebt

(171,393)

(17,000)

Intermediate holding companies other netassets

4,693

1,047

Fair value of the Company's investment inJLIF

Luxco 1S..r.l.

1,078,175

883,132


Company'scash

5,511

2,533

Company's other netliabilities

(3,118)

(2,569)

Net AssetValue

1,080,568

883,096

Number ofshares

899,003,264

814,751,471

Net Asset Value per share(pence)

120.2

108.4

At 31 December 2016, the Group (Company plus intermediate holdings companies) had a total cash balance of 32.7 million comprising 5.5 million in the Company's balance sheet (31 December 2015: 2.5 million) and 27.2 million in the intermediate holding companies, which is included in the Company's balance sheet under Investment at fair value though profit or loss (31 December 2015: 31.3million).

The intermediate holding companies other net liabilities include the outstanding debtof

171.4 million (31 December 2015: 17.0 million) under the Group's revolving creditfacility.

The Portfolio Value is the fair value of the investments in 62 (31 December 2015: 57) PPP projects calculated using the discounted cash flowmethod.

The movement in the valuation of the Portfolio of PPP assets is summarised asfollows:

'000s

Portfolio value at 31 December2015

867,830

Acquisitions

306,042

Disposals

(43,380)

Growth from discount rate unwind Growth from valueenhancements

79,209

12,839

Underlying growth of the PPPinvestments

92,048

Positive exchange ratemovements

44,919

Discount ratemovements

43,396

Subordinated debt and equityrepayments

(7,577)

Increase in movement in accrued interest receivable on subordinated loans

2,000

Distributions received from the PPPinvestments

(87,631)

Portfolio value at 31 December2016

1,217,647

Further details on the Portfolio Valuation and the movements over the period are provided in Section 3 of this Investment Adviser'sReport.

Profit beforetax

The Company's profit before tax ("PBT") for the year ended 31 December 2016 is160.4 million (2015: 47.0 million), generating earnings per share of 18.1p (2015:5.8p).

In 2016, the operating income was 175.2 million (2015: 58.4 million). This increase reflects the underlying growth of the Portfolio Value of 92.0 million (2015: 66.8 million),the impact of discount rate movements of 43.4 million (2015: 7.4 million) and an unrealised foreign exchange gain of 44.9 million (2015: loss of 12.4 million), offset by the intermediate holding companies' expenses and other net costsof

5.1 million (2015: 3.4million).

The operating costs included in the income statement were 14.8 million in the year(2015:

11.4 million) reflecting higher administrative expenses principally arising from the higher investment advisory fee due to the increased value of the Portfolio and Asset OriginationFee paid on acquisitions not acquired from a member of John Laing Groupplc.


Cash flowstatement

The Company had a total cash balance at 31 December 2016 of 5.5 million (31December 2015: 2.5 million). The breakdown of the movements in cash is shownbelow.

Cash flows of the Company for the year (million):


2016

2015

Cash balance as at 1January

2.5

4.3

Capitalraising

92.9

-

Listing/ share issuecost

(1.2)

(0.1)

Loan to JLIF Luxco 1S..r.l.

(91.6)

-

Interest received from JLIF Luxco 1S..r.l.

71.8

60.9

Directors fee andexpenses

(0.4)

(0.3)

Investment Adviser and originationfee

(12.1)

(9.5)

Administrative and otherexpenses

(1.8)

(1.7)

Dividends paid in cash toshareholders

(54.6)

(51.1)

Cash balance at 31December

5.5

2.5

The Group had a total cash balance at 31 December 2016 of 32.7 million (31 December 2015: 33.8 million), and borrowings of 171.4 million (31 December 2015: 17.0million). The breakdown of the movements in cash is shownbelow.

Cash flows of the Group for the year (million):


2016

2015

Cash balance as at 1January

33.8

26.5

Capitalraising

92.9

-

Listing / share issuecosts

(1.2)

(0.1)

Investments inprojects

(306.0)

(14.4)

Disposalproceeds

43.4

-

Acquisitioncosts

(3.8)

(0.1)

Cash received from projects (net of withholdingtax)

93.2

73.3

Administrative and otherexpenses

(15.0)

(13.8)

Proceeds fromborrowings

153.3

17.0

Financing costs (net of interestincome)

(3.3)

(3.5)

Dividends paid in cash toshareholders

(54.6)

(51.1)

Cash balance at 31December

32.7

33.8

During the year, the Group received cash of 93.2 million (2015: 73.3 million) from its Portfolio. The cash received from investments in the year more than sufficiently covers the operating and administrative expenses, financing costs as well as the dividends paid to its shareholders. JLCM anticipates future revenues from the Portfolio will continue to be in line with expectations and therefore will continue to fully cover future costs as well as planned dividends payable toshareholders.

The Company has declared a dividend of 31.3 million (3.48 pence per share) for the second half of 2016, which is an increase of 2.0% (against the most recent dividend paid by the Company in October 2016) and is payable on 16 May 2017. JLIF continues to offers a scrip dividend alternative that is the subject of a separate shareholdercommunication.

7. OUTLOOK

In the UK, while there is increasing optimism that a pipeline of projects may be announced in 2017 (across education, health, justice & emergency, government buildings and transport) under the UK Government's "PF2" programme, it remains to be seen as to whether there is sufficient political support for the delivery of a significant pipeline using privatefinance.


Overall, the UK market remains competitive with a large proportion of operational assets already in the ownership of long term secondary market investors, and a lack of primary projects over the past few years to replenish the portfolios of primary investors and developers. In 2016, JLIF was invited to bid for a portfolio of six street lighting PPP projects, and made four investments in UK projects (all under the First Offer Agreements with John Laing Group plc), but otherwise, its participation in UK market activity was down compared to previous years. JLIF continues to benefit from the First Offer Agreements, giving it the right of first offer over a pipeline of infrastructure projects valued by John Laing at over 400 million over the next threeyears.

With many forecasts of a weakening of the Euro against the pound in 2017, the Eurozone may become relatively more attractive for non-Euro investors. The Netherlands has been one of the most active greenfield markets in recent times with four significant projects currently in procurement, including three roads and a lock project. Further new projects are expected to be launched in 2017, also in the transportation sector. While the Iberian markets have seen little in the way of major greenfield PPP developments in recent years, the two markets have been active for secondary market acquisitions and sales of assets. This is expected to continue in 2017. The Italian market has also been relatively active, and has a reasonable pipeline of greenfield projects at various stages of development (from planning to preferred bidder to financing). The pipeline in Italy primarily covers the road and rail sectors. In Norway, the Ministry of Transport has recently tabled a bill for the first project in the country's upcoming availability-based road PPP pipeline, with parliamentary approval expected shortly. However, there remains political disagreement that must be resolved first around the level of public-sector capital contribution before progress can bemade.

Relative to the UK market, the Canadian greenfield market continues to remain active with a sectoral focus on health and transportation, including an extensive pipeline of light rail PPP projects. In the US, with a new Administration in place, it is expected that spending on infrastructure will increase significantly, and that private finance will be used to play an important role in this. This could see significant, and long-awaited, opportunities for investors in Public-Private Partnerships. To incentivise private sector investment in infrastructure, the new President's plan will offer tax credits to attract greater investment and reduce project finance costs. The plan will also seek to lower project costs by reducing regulatory 'red tape' and the burdens of federal project delivery requirements. JLIF expects the US to present a significant source of investment opportunities over the comingyears.

Both the Australian primary and secondary markets remain active with a number of transactions closing in both in 2016. Similar to other markets, much of the focus here is also on the transport sector, and particularly light rail and metro projects. However, other activity has included prison, student accommodation and road projects. In November 2016, the Australian and New Zealand Governments together launched a combined pipeline of approximately 50 projects, including 32 possible or confirmed PPP projects. In Latin America, Chile, a country with a long track record of using the PPP model, saw the financial close of several PPP transactions in the airports and health sectors and has a number of road PPPs currently inprocurement.


ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)POLICY

The JLIF Board and its Investment Adviser, John Laing Capital Management Limited ("JLCM"), are committed to environmentally and socially responsible investing and understand the need to carry out our activities in a sustainablemanner.

JLIF recognises the environmental, social and economic needs of the communities in which it works and looks for suitable opportunities to engage and support communities, by using the skills, time and financial support of its staff and those of the Investment Adviser. The commitment to corporate social responsibility ("CSR") is delivered through programmes directly supported by JLIF and through the activities of JLCM and JLIF's other partners who manage the projects and provide facilities management services to the Portfolio assets. JLIF actively encourages its partners to engage with the local communities in which our projects are located. It is the engagement of these teams that operate our assets on a daily basis and support the communities in which they operate that makes the greatest difference. A number of the CSR activities that have been undertaken during 2015 are detailed in the followingsection.

CommunityEngagement

At our North Swindon Schools project, the project company continued its sponsorship of the Isambard Community School and the Nova Hreod Academy to the Princes Teaching Institute. The Institute helps teachers rediscover their love of their subject, inspiring them to bring the latest thinking into their classrooms and supporting them to make lasting improvements in how they teach. It re-engages teachers with their specialist subjects, inspiring them to bring renewed enthusiasm into their classrooms and raise the aspirations of theirpupils.

At our Peterborough Hospital project, the project company liaised with the specialist dementia nurse to identify ways by which the hospital environment could be improved to benefit patients suffering from dementia. A number of changes were identified and funded by the project company, including the introduction of blue crockery, new dementia friendly signs on five inpatient wards and Trust-wide plain curtains in calming colours. Research has shown that patients living with dementia find hospital environments less confusing when there are clear directions on signs that support way finding and navigation. Plain coloured curtains and environments, as opposed to patterned ones, help generate a greater feeling ofsafety.

At our Leeds Schools project, the project company sponsored, organised, compered and funded in full a Leed's Got Talent event in which each school (Ralph Thoresby School, John Smeaton Academy, Cooperative Academy, Carr Manor High School, South Leeds Academy and Shakespeare Primary) put forward two acts to perform on the evening, with each act including up to 20 pupils. The venue, the New Dock Hall at the Royal Armouries Museum in Leeds, opened at 2pm to allow the acts to familiarise themselves with the space and their surroundings, and all the children were provided with a healthy option meal before they performed. The event was linked to Leeds City Council's Children and Young People's Plan, and was open to all pupils (including those with special educational needs) and provided the opportunity to participate in an event in front of their peers. The event also helped to instil positive behaviour, promote working as a team, physical activity (a number of the acts included dance routines) and foster relationships between pupils from different schools. Participation in previous events like this have also been shown to help improve the social and emotional well-being of the pupils who take part, helping them to feel that they have a voice and influence. The event received critical acclaim by both those who took part and those forming part of theaudience:

"I just wanted to say thank you for organising the event on Wednesday. It was an amazing opportunity for my students, one that is rare and unforgettable for them. They are still so excitedif not exhausted from the day and have thoroughly enjoyed the experience. We are looking forward to next yearalready!"

John Smeaton AcademyTeacher


"You gave these children an experience that no one can ever take away from them and they will carry it with them for the rest of their lives, that is a great achievement and one you should be very proud of, welldone"

Leeds CityCouncillor

We would like to congratulate every one of the pupils that took part, and particularly 'Dance Legacy' from Carr Manor High School that was awarded first place. 'Lectryx' from the Cooperative Academy came a close second, with 'JSA Choir' from John Smeaton Academy claiming third place.

At our Miles Platting Social Housing, the project company part-funded and helped prepare a successful bid for National Lottery funding for a new community garden designed to help promote informed food choices and healthy eating through a weekly after-school club with pupils from one of the local schools. Surplus produce from the garden is donated to a local church to help provide meals at their homelessshelter.

Greenhouse Gas EmissionsStatement

JLIF is an investment company and as such holds equity and sub-ordinated debt interests in its underlying investments. The approach that it has used to consolidate its greenhouse gas ("GHG") emissions reflects this structure and aggregates JLIF's equity share of emissions from each asset. In collating its data, JLIF has considered the GHG emissions from the facilities that it manages for the public-sector. However, JLIF does not have direct control over the energy usage of the facilities it manages as these are controlled by their public-sector end-users. As such, JLIF has limited ability to directly influence or reduce the energy consumption of thefacilities.

Carbon Trust Certification Limited has verified that John Laing Infrastructure Fund Ltd has reported a carbon footprint of 127,925 tCO2e in accordance with the measurement requirements of the Carbon Trust Standard and in accordance with the principles of the WRI/WBCSD GHGProtocol.

Our footprint has been verified for the period of 1 July 2015 to 30 June 2016 and certification corresponds to the followingboundary:

OrganisationalBoundary

All global investments less socialhousing.

OperationalBoundary

Equity approach over Scope 1 and Scope 2 GHG emissions (Electricity, Gas and FuelOil).

Materiality

Carbon Trust Certification Limited has verified that all material non-conformities identified during the sampling performed on the footprint submitted have been closed and that no material errors, omissions or misrepresentationsremain.

Scope 1 GHG emissions represent JLIF's share of direct emissions from the project facilities, typically through the consumption of gas. Scope 2 emissions are JLIF's share of indirect emissions from the project resulting from the generation of purchasedenergy.

Greenhouse Gas EmissionsSource17

2016 (tC02e)

2016

(tC02e/m)18

Scope 1

29,745

0.03

Scope 2

98,180

0.09

Total

127,925

0.12

Greenhouse Gas EmissionsSource19

2015 (tC02e)

2015

(tC02e/m)18

Scope 1

27,239

0.03


Scope 2

99,346

0.11

Total

126,585

0.14

In demonstrating our environmental stewardship, JLIF also participates in the public reporting of its GHG emissions through CDP (formerly the Carbon Disclosure Project). Our responses from 2013 onwards can be reviewed on the CPD website,www.cdp.net.

APPROVAL OF THE STRATEGICREPORT

Paul LesterCBE

Chairman

20 March2017

17 In order to ensure the accurate collation and verification of data the GHG emissions aboverepresent JLIF's equity share of annual emissions from the underlying asset portfolio for the period 1 July2015 to 30 June 2016. As such, these are not consistent with the time period of the rest of the financial statements being 1 January 2016 to 31 December 2016. Assets acquired during the financial statements period are excluded from the GHG emissions datareported.


18CO


tonnes per m of Net AssetValue.


19 In order to ensure the accurate collation and verification of data the GHG emissions aboverepresent JLIF's equity share of annual emissions from the underlying asset portfolio for the period 1 July2014 to 30 June 2015. As such, these are not consistent with the time period of the rest of thefinancial

statements being 1 January 2015 to 31 December 2015. Assets acquired during thefinancial statements period are excluded from the GHG emissions datareported.


CORPORATEGOVERNANCE

The Board of JLIF has considered the principles and recommendations of the AIC Code of Corporate Governance ("AIC Code") by reference to the AIC Corporate Governance Guide for Investment Companies ("AIC Guide"). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in Section 1 of the Combined Code, as well as setting out additional principles and recommendations on issues that are of specific relevance toJLIF.

Procedures have been put in place to ensure compliance with the UK Corporate Governance code which was published in September 2014 and which applies to reporting periods beginning on or after 1 October2014.

The Board considers that reporting against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the Combined Code), will provide better information toshareholders.

The Company has complied with the recommendations of the AIC Code and therelevant provisions of Section 1 of the Combined Code, except as set outbelow.

The Combined Code includes provisions relatingto:

the role of the chief executive (not applicable toJLIF);

executive Directors' remuneration (not applicable to JLIF);and

the need for an internal auditfunction.

For the reasons set out in the AIC Guide, and in the preamble to the Combined Code, the Board considers these provisions are not relevant to the position of JLIF, being an externally managed investment company. The company has therefore not reported further in respect of these provisions.

THEBOARD

The Board consists of six Non-Executive Directors, all of whom are independent of theCompany's Investment Adviser. As the Company has no Executive Directors, the provision of the UK Corporate Governance Code relating to the combining of the roles of Chairman and Chief Executive Officer does not apply to the Company. Directors' details are contained in pages 16 and 17, which set out the range of investment, financial, and business skills and experience represented. The Chairman is an independent non-executive Director and the Deputy Chairman acts as Senior IndependentDirector.

The Board meets at least four times a year and, should the nature of the activity of the Company require it, additional meetings may be scheduled, sometimes at short notice. Between meetings there is regular contact with the Investment Adviser and the Administrator and the Board requires to be supplied in a timely manner with information by the Investment Adviser, the Company Secretary and other Advisers in a form and of a quality appropriate to enable it to discharge its duties.

The Company intends for all Directors to be subject to annual re-election at the Annual General Meeting of the Company. The Board intends to consider the tenure of each Director after sixyears. The tenure of Directors is expected to be between six and nine years to allow for phased board appointments and retirements. This process will take account of any changes to the Board's composition arising from the need to fill a casualvacancy.

The terms and conditions of appointment of non-executive Directors are available for inspection from the Company's registeredoffice.


During the period the Board was pleased to support the work undertaken by the not-for-profit organisation "Board Apprentice" by welcoming Ms Theresa Grant, Chief Executive of Trafford Council, as an apprentice to JLIF's Board, on an unpaid basis. The initiative is designed to support increasing diversity on company boards by widening the pool of board-ready candidates. Ms Grant's role is to observe and learn from the Board and the work it does. The purpose of the role is educational only (to gain experience of the workings of a company at board level) and does not involve participation in the Board's work. Ms Grant's apprentice placement lasts for one year andis due to finish in April2017.

Performance and Evaluation

The Board has adopted a process to review its performance on a regular basis and such reviews are expected to be carried out internally on an annual basis and through external facilitation every three years. This annual evaluation of the Board, the Audit Committee and individual Directors has taken the form of questionnaires and discussion to determine effectiveness and performance in variousareas.

In November 2015, the Board engaged Optimus Group Limited ("Optimus"), a Guernsey based independent consultancy, to carry out an external evaluation. This involved meeting with the Board of Directors and the completion of a questionnaire by each Director as well as meetings with representatives from JLCM and Heritage International Fund Managers (the Administrator), reviewing key Board documentation, and evaluating Board and committee structures. Optimus reported its findings at the first scheduled Board meeting in 2016, concluding that the JLIF Board has a high standard of Corporate Governance and is compliant with the Codes (being the FRC UK Corporate Governance Code and the Association of Investment Companies Code). The next external evaluation will take place in2018.

Any new Directors will receive an induction from the Investment Adviser. All Directors will receive relevant training asnecessary.

Duties andResponsibilities

The Board is responsible to shareholders for the overall management of the Company. The Board has adopted a set of reserved powers that set out the particular duties of the Board. Such reserved powers include decisions relating to the determination of the Investment Policy and approval of investments, strategy, capital raising, statutory obligations and public disclosure, financial reporting and entering into any material contracts by theCompany.

The Directors have access to the advice and services of the Company Secretary and Administrator, who is responsible to the Board for ensuring that board procedures are followedand that the Board complies with Guernsey Law and applicable rules and regulations of the Guernsey Financial Services Commission and the London Stock Exchange. Where necessary, in carrying out their duties, the Directors may seek independent professional advice at the expense of the Company. The Company maintains appropriate Directors' and Officers' liability insurance in respect of legal action against its Directors on an ongoingbasis.

The Board has responsibility for ensuring that the Company keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and which enable it to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008 as amended. It is the Board's responsibility to present a fair, balanced and understandable assessment, which extends to interim and other price-sensitive publicreports.

Committees of theBoard

The Board has not deemed it necessary to appoint a remuneration committee as, being comprised of six Non-Executive Directors, it considers that such matters may be considered by the whole Board.

The Company has established an Audit Committee, chaired by Mr C Spencer, which operates within clearly-defined terms of reference and comprises five Non-Executive Directors: MrSpencer,


Mr MacLellan, Mr Morgan, Mr Van Berkel and Ms Green, whose qualifications and experience are noted on pages 16 and 17. The Audit Committee meets at least three times a year at times appropriate to the financial reportingcalendar.

The duties of the Audit Committee in discharging its responsibilities include reviewing the Annual Report and Financial Statements; the Interim Report and Financial Statements; the system of internal controls; and the terms of appointment of the Auditor, together with the Auditor's remuneration. It is also the forum through which the Auditor reports to the Board. The Audit Committee also reviews the objectivity of the Auditor along with the terms under which it is engaged to perform non-audit services. The provisions in place to maintain the independence and objectivity of the Auditor include the requirement to replace the lead audit partner every five years, and restrictions on the delivery of non-audit services to the Company with such services and the terms under which these are to be provided, considered by the Audit Committee on a case-by- case basis. Notwithstanding such services, the Audit Committee considers Deloitte LLP independent of the Company and that the provision of such non-audit services is not a threat to the objectivity and independence of the conduct of theaudit.

The Audit Committee, having reviewed the performance of the Auditor, has recommended to the Board that the Auditor be offered for re-appointment at the Annual General Meeting of the Company in May2017.

The Company has also established a Nomination Committee appointed in 2013. This is chaired by Mr D MacLellan and comprises three Non-Executive Directors: Mr MacLellan, Mr Spencer and Mr Morgan.

The duties of the Nomination Committee include regularly reviewing the structure, size and composition of the Board, keeping under review the leadership needs of the Company, leading the process for Board appointments and identifying suitablecandidates.

The Board believes that diversity of experience and approach, including gender diversity, amongst Board members is of great importance and it is the Company's policy to consider carefully issues of Board balance and diversity when making newappointments.

The Company has also a Risk Committee, chaired by Ms H Green and comprising Mr Spencer, Mr Morgan and Mr Van Berkel. The Risk Committee, which reports to the Board, is mandated to review the effectiveness of the Company's (and that of the Investment Adviser, Administrator and other third party service providers as it deems fit) internal control policies and procedures for the identification, assessment and reporting of risks. The Risk Committee liaises with the Audit Committee (and vice versa) asappropriate.

Meetingattendance


Board Meeting max4

Audit

Committee Meeting max3

Nomination

Committee Meeting max1

Risk

Committee Meeting max3

Paul Lester,CBE

4

n/a

n/a

n/a

DavidMacLellan

4

3

1

n/a

Guido VanBerkel

4

3

n/a

4

TalmaiMorgan

4

3

1

4

Christopher Spencer

4

3

-

4

HelenGreen

4

3

n/a

4

A total of eleven other unscheduled Board meetings, ten other unscheduled Committee meetings and three unscheduled Board discussions were held during the year for specific purposes which were attended by some but not all of theDirectors.


INTERNAL CONTROL AND FINANCIALREPORTING

The Board is responsible for the Company's systems of internal control and for reviewing its effectiveness, and has established a set of ongoing processes designed to meet the particular needs of the Company in managing the risks to which it is exposed. These processes have been in place throughout the year ended 31 December 2016 and up until the date of thisReport.

The process is based on a risk-based approach to internal control. It considers the key functions carried out by the Investment Adviser and other key service providers, the various activities undertaken within those functions, the risks associated with each activity and the controls employed to minimise those risks. A residual risk rating is then applied. A regular report is provided to the Board highlighting material changes to risk ratings and then a formal review of these procedures is carried out by the Audit Committee on an annual basis. By their nature, these procedures will provide a reasonable, but not absolute, assurance against material misstatement orloss.

At each Board meeting, the Board also monitors the Group's investment performance and activities since the last Board meeting to ensure that the Investment Adviser and Operator adhere to the agreed Investment Policy and approved investment guidelines. Furthermore, at each Board meeting, the Board receives reports from the Company Secretary and Administrator in respect of compliance matters and duties performed by them on behalf of theCompany.

The Board considers that an internal audit function specific to the Company is unnecessary and that the systems and procedures employed by the Investment Adviser and Operator, including their own internal audit functions, provide sufficient assurance that a sound system of internal control, which safeguards the Company's assets, ismaintained.

Investment Advisory services are provided to the Company by John Laing Capital Management Limited ("JLCM"). The Board is responsible for setting the overall Investment Policy and monitors the action of the Investment Adviser and Operator at regular Board meetings. The Board has also delegated administration and company secretarial services to Heritage International Fund Managers Limited but retains accountability for all functions itdelegates.

RELATIONS WITHSHAREHOLDERS

The Company welcomes the views of shareholders and places great importance on communication with its shareholders. Senior members of the Investment Adviser makethemselves available at all reasonable times to meet with principal shareholders and key sector analysts. The Chairman and other Directors are also available to meet with shareholders ifrequired.

Reports on the views of shareholders are provided to the Board on a regular basis. The Boardis also kept fully informed of all relevant market commentary on the Company by the Investment Adviser.

All shareholders can address their individual concerns to the Company in writing at its registered address, while the Annual General Meeting of the Company provides a forum for shareholders to meet and discuss issues with the Directors and the InvestmentAdviser.

SUMMARY OF THE ROLE OF THE AUDITCOMMITTEE

The Audit Committee is appointed by the Board from the non-executive Directors of the Company. The Audit Committee's terms of reference include all matters indicated by Disclosure and Transparency Rule 7.1 and the UK Corporate Governance Code. The terms of reference are considered annually by the Audit Committee and are then referred to the Board for approval. A copy of the terms of references is available upon request from the CompanySecretary.

The main role and responsibilities of the Audit Committeeare:


monitoring the integrity of the financial statements of the Group and any formalannouncements relating to the Group's financial performance and reviewing significant financial reporting judgements containedtherein;

reviewing the Group's internal financial controls (including liaising with the InvestmentAdviser who reviews the systems and internal controls of service providers) and, unless expressly addressed by the Board itself, the Group's internal control and risk managementsystems;

making recommendations to the Board, for a resolution to be put to the shareholders for their approval in general meeting, on the appointment of the external auditor and the approval of the remuneration and terms of engagement of the externalauditor;

reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatoryrequirements;

reviewing the Group'saccounts;

developing and implementing a policy on the engagement of the external auditor to supply non- audit services, taking into account relevant guidance regarding the provision of non-audit services by the external audit firm;and

reporting to the Board on how it has discharged itsresponsibilities.

The Audit Committee is required to report its findings to the Board, identifying any matters on which it considers that action or improvement is needed, and make recommendations on thesteps to betaken.

COMPOSITION OF THE AUDITCOMMITTEE

The members of the Audit Committeeare:

Christopher Spencer (Chairman) DavidMacLellan

Talmai Morgan Guido Van Berkel Helen Green

See pages 16 to 17 for biographical details of the current Audit Committeemembers.

MEETINGS

The Audit Committee shall meet not less than three times a year and at such other times asthe Audit Committee Chairman shallrequire.

Any member of the Audit Committee may request that a meeting be convened by the Secretary of the Audit Committee. The external auditor may request that a meeting be convened if it is deemed necessary.

Other Directors and third parties may be invited by the Audit Committee to attend meetings as and whenappropriate.

ANNUAL GENERALMEETING

The Audit Committee Chairman shall attend each Annual General Meeting of the Company and shall be prepared to respond to any shareholder questions on the Audit Committee'sactivities.

SIGNIFICANT ACCOUNTINGRISKS

The Audit Committee considers the following significant risk in relation to the financialstatements:


Fair value ofinvestments

JLIF is required to determine the fair value of the investments. Whilst there is an active market for investments of this nature there is not a suitable listed, or other public market in theseinvestments against which their value can benchmarked. As a result, a valuation is performed based on a discounted cash flow methodology in line with IAS 39 Financial Instruments: Recognition and Measurement and IFRS 13 Fair ValueMeasurement.

The calculation of the fair value of the investments carries elements of risk, mainly in relation to the assumptions and judgements made with respectto:

the determination of appropriate macroeconomic assumptions underlying theforecast investment cashflows;

the impact of project specific matters to the forecast cash flows for eachinvestment;

the determination of appropriate discount rates for each investment that is reflective of the current marketconditions;

the determination of appropriate sensitivities to apply to meet the requireddisclosures;

the underlying project financial models may not reflect the underlying performance of the investment;

the cash flows from the underlying financial models may not take into account currentknown issues;

the updates performed on the underlying financial models may result in errors inforecasting;

major maintenance/lifecycle is a significant cost in some investments with judgement around timing and quantum. This can have a significant impact on distributions;and

terms and costs of the future refinancing of senior debt on certainprojects.

The Audit Committee is satisfied that the Investment Adviser's assumptions have been reviewed and challengedfor:

the macroeconomic assumptions, including comparison of these assumptions toobservable market data, actual results and prior year comparatives;and

the build-up of the discount rates for consistency and reasonableness, benchmarking against market data and peers and project-specificitems.

The Audit Committee is also satisfied that the Portfolio valuation and associated disclosures have been appropriately calculated, ensuring that the investments are brought on balance sheet at fair value and that the independent valuation carried out by an independent firm has been reviewed and challenged by the Audit Committee and that the fair value of the investments is challenged by theAuditor.

INTERNALAUDIT

The Audit Committee shall consider at least once a year whether or not there is a need for an internal audit function. Currently, the Audit Committee does not consider there to be a need for an internal audit function at the Group level. However, internal audits of the underlying PPP projects are performed periodically by the Investment Adviser who will report findings to the Audit Committee.

EXTERNALAUDIT


Deloitte LLP has been the Company's external auditor since launch in 2010, and this is its seventh consecutive annual audit. As a result of its work during the year, the Audit Committee has concluded that it has acted in accordance with its terms ofreference.

The Audit Committee has assessed the quality and the effectiveness of the audit process. Todraw its conclusions, the Audit Committeereviewed:

the scope of the audit, the audit fee and the external auditor's fulfilment of the agreed auditplan;

the degree of diligence demonstrated by them in the course of their interaction with theBoard, the Audit Committee and the InvestmentAdviser;

the external auditor's assessment of the Group's financial statement risks;and

the report highlighting the matters that arose during the course of the audit and the recommendations made by the externalauditor.

The Audit Committee has noted the revisions to the UK Corporate Governance Code introduced by the Financial Reporting Council in September 2012 and the AIC Code of CorporateGovernance issued in February 2013 and in particular the recommendation, in each, to put the external audit out to tender every five to ten years. The Audit Committee has also noted the requirements of The Competition and Markets Authority (formerly the UK Competition Commission) with respect to external auditor services andretendering.

The Audit Committee is satisfied with the effectiveness and independence of the audit process and as such recommended to the Board that Deloitte LLP be re-appointed as external auditor for the year ending 31 December 2017. The Audit Committee also recommended the Audit appointmentis retendered every nine years, with the Audit partner changing every fiveyears.

NON-AUDITSERVICES

The Audit Committee considered the extent of non-audit services provided by the external auditor. The external auditor's objectivity and independence is safeguarded through limiting non-audit services such as work pertaining to their role as reporting accountants for capital raisingservices.

ACTIVITIES OF THE AUDITCOMMITTEE

The Audit Committee met on three occasions during the period 1 January 2016 to 31 December 2016. Matters considered at these meetings included but were not limitedto:

review of the appointment of the externalauditor;

review of the effectiveness of the externalauditor;

approval of the external auditfees;

consideration and agreement of the terms of reference of the Audit Committee for approval by theBoard;

review of the proposed accounting policies and format of the FinancialStatements;

review of the audit plan and timetable for the preparation of the Report andFinancial Statements;and

review of the 2015 Annual Accounts Report and Financial Statements and the 2016 Interim report.

APPROVAL

On behalf of the AuditCommittee


ChristopherSpencer

Chairman of the Audit Committee 20 March 2017

STATEMENT OF DIRECTORS'RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable laws and regulations. The Companies (Guernsey) Law 2008 requires the Directors to prepare financial statements for each financial year. Under that law, theDirectors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for thatperiod.

In preparing these financial statements, International Accounting Standard 1 requires that Directors:

properly select and apply accountingpolicies;

present information, including accounting policies, in a manner that provides relevant,reliable, comparable and understandableinformation;

provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance;and

make an assessment of the Company's ability to continue as a goingconcern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and which enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. 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 otherirregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Guernsey and the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in otherjurisdictions.

ResponsibilityStatement

We confirm that to the best of ourknowledge:

The financial statements, prepared in accordance with IFRS, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as awhole;

The strategic report includes a fair review of the development and performance of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that the Company faces;and

The Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model andstrategy.

By order of theBoard

Paul LesterCBE

Chairman

20 March 2017

REPORT OF THEDIRECTORS

The Directors have pleasure in submitting their report and the Audited Financial Statements of the Company and its investments for the year ended 31 December2016.

PRINCIPALACTIVITIES

John Laing Infrastructure Fund Limited ("JLIF") is a company incorporated and registered in Guernsey under the Companies (Guernsey) Law, 2008. JLIF was incorporated on 6 August 2010 with the company register number52256.

As at 31 December 2015, the total number of Ordinary Shares of JLIF in issue was 814.8million. This was increased by 81.2 million shares in March 2016 as a consequence of a shareholder tap issue, by a further 2.3 million shares in May 2016 as a result of certain shareholders electing to take up the Scrip Dividend Alternative option and by a further 0.7 million as a result of the Scrip Dividend Alternative option in October 2016. As at 31 December 2016, the total number of Ordinary Shares in issue was 899.0million.

The Company is a registered fund under the Registered Collective Investment Scheme Rules 2015 and is regulated by the Guernsey Financial Services Commission and, during the period, its principal activity was as an investor in PPP projects in the UK, North America and Continental Europe.

BUSINESSREVIEW

We are required to present a fair review of our business during the year ended 31 December2016, our position at period end and a description of the principal risks and uncertainties that weface.

This information is contained within the Strategic Report over pages 6 to37.

DISCLOSURE OF INFORMATION UNDER LISTING RULE9.8.4

Information on any contract of significance subsisting during the period underreview:

(a) to which the Company, or one of its subsidiary undertakings, is a party and in which a director of the Company is or was materially interested;and

(b) between the Company, or one of its subsidiary undertakings, and a controlling shareholder can be found in note17.

The Directors note that no shareholder has waived or agreed to waive anydividends.

RESULTS ANDDIVIDENDS

The results for the year are set out in the Financial Statements on pages 55 to 86. On 20 March 2017 the Directors declared a dividend in respect of the period 1 July 2016 to 31 December 2016 of 3.48 pence per Ordinary Share to shareholders on the register as at the close of business on 24 March2017.

GOINGCONCERN

The Company's business activities, together with the factors likely to affect its future development, performance and prospects, are set out in the Investment Adviser Report on pages 24 to 35. The financial position of the Company, its cash flows and its liquidity position are also described in the Investment Adviser Report. In particular, the current economic conditions continue to present a number of risks and uncertainties for the Company and these are set out in the Risk Committee Report on pages 10 to 15. The financial risk management objectives and policies of the Company and the exposure of the Company to credit risk, market risk and liquidity risk are discussed in note 18 of the FinancialStatements.

The Company continues to meet its requirements and day-to-day liquidity needs through both its own cash resources and those of the Group, to which it has fullrecourse.

In June 2016, JLIF Limited Partnership, a subsidiary of the Company, signed and agreed the terms of a three-year 150 million multi-currency accordion facility with the same lenders that provide JLIF's five-year 180 million revolving credit facility (signed in August 2015). The signing of this facility means JLIF has access to up to 330 million of debt financing that it can use to finance acquisitions. The margin on the accordion facility of 175bps is the same as that on the revolving credit facility. The facilities are used primarily to finance acquisitions and repaid through raising equity in the market or using distributions from the Portfolio. The facilities are intended to be additional resource and not structuralgearing.

As at 31 December 2016 the Company had a cash balance of 5.5 million, a further 27.2 million within the rest of the JLIF Group and facility headroom of 158.6 million (being drawn by 171.4 million) available for future acquisitions and working capital. The Company has sufficient cash balances to meet other current obligations as they fall due while all key financial covenants are forecast to continue to be compliedwith.

The Directors have reviewed forecasts and projections that cover a period of not less than 12 months from the date of this Annual Report, taking into account reasonably-possible changes in investment and trading performance, which show that the Company has sufficient financial resources. The Group has sufficient financial resources together with long term contracts with various public-sector clients and suppliers across a range of infrastructure projects.Consequently, the Directors believe that the Company is well placed to manage its business riskssuccessfully.

Based on this review, and after making due enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financialstatements.

SHARECAPITAL

The issued Ordinary Share capital of the Company was increased through a shareholder tap issue in March 2016, the offer of a Scrip Dividend Alternative in May 2016 and a second offer of a Scrip Dividend Alternative in October 2016. Further details can be found in note 17 to the financial statements.

The Company has one class of Ordinary Shares that carries no rights to fixed income. On ashow of hands, each memberpresent

in person or by proxy has the right to one vote at our general meetings. On a poll, each memberis entitled to one vote forevery

share held.

The issued nominal value of the Ordinary Shares represents 100% of the total issued nominal value of all share capital. There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of Incorporation and prevailing legislation. The Directors are not aware of any agreements between holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights. No person has any special rights of control over the Company's share capital and all issued shares are fullypaid.

The Company's Memorandum and Articles of Incorporation contain details relating to the rulesthat the Company has about the appointment and removal of Directors or amendment to the Company's Articles of Incorporation that are incorporated into this report byreference.

UCITSELIGIBILITY

The Company has been advised that the ordinary shares should be "transferable securities" and, therefore, should be eligible for investment by authorised funds in accordance with the UCITS Directive ("UCITS") or Non-UCITS retail schemes ("NURS"). This is on the basis that: (a)the

Company is a closed-ended investment company; (b) the ordinary shares are admitted to trading on the Main Market of the London Stock Exchange; (c) the ordinary shares have equal voting rights; and (d) the Company is an internally managed alternative investment fund ("AIF") regulated by the Guernsey Financial Services Commission as a registered fund under the Registered Collective Investment Scheme Rules 2015. However, the manager of the relevant UCITS or NURS should satisfy itself that the ordinary shares are eligible for investment by the relevant UCITS or NURS.

AUTHORITY TO PURCHASE OWNSHARES

A resolution to provide the Company with authority to purchase its own shares will be tabled at the AGM on 19 May 2017. This shareholder authority was renewed at the 2016AGM.

MAJOR INTERESTS IN SHARES AND VOTINGRIGHTS

As at 31 December 2016, the Company had been notified, in accordance with chapter 5 of the Disclosure and Transparency Rules, of the following voting rights as a shareholder in the Company.

Shareholder

Percentage of votingrights

and issued sharecapital

No. of ordinaryshares

The Bank of New York (Nominees)Limited

18.42

165,640,741

State Street NomineesLimited

14.95

134,385,088

Chase NomineesLimited

8.26

74,223,247

HSBC Global Custody Nominee(UK)

4.65

41,846,776

BBHISL NomineesLimited

3.83

34,399,425

Luna NomineesLimited

3.15

28,349,508

Ferlim NomineesLimited

3.11

27,987,997

BOARD OFDIRECTORS

The Board members that served during the year and up until the date of this Report, all ofwhom are non-executive Directors and independent of the Investment Adviser, are listed below. Their biographical details are shown on pages 16 and17.

Name

Function

Paul Lester,CBE

Chairman

DavidMacLellan

Deputy Chairman & SeniorIndependent

Director

TalmaiMorgan

Director

ChristopherSpencer

Director

Guido VanBerkel

Director

HelenGreen

Director

RE-ELECTION OFDIRECTORS

All Directors are standing for election or re-election on an annual basis and each has letters of appointment rather than servicecontracts.

DIRECTORS'INTERESTS

Directors who held office during the period and had interests in the shares of the Company asat 31 December 2016were:



Ordinary shares of 0.01peach

held at 31 December2016

Ordinary shares of 0.01peach

held at 31 December2015

Paul Lester,CBE*

139,379

139,379

DavidMacLellan**

28,125

28,125

TalmaiMorgan

25,000

25,000

ChristopherSpencer

30,000

30,000

Guido VanBerkel

-

-

HelenGreen

-

-

There have been no changes in the Directors' interests from 31 December 2016 to the date of this report.

*139,379 of which is held by hisspouse

**28,125 of which is held by hisspouse

DIRECTORS'REMUNERATION

During the year, the Directors earned the following emoluments in the form of Directors' feesfrom the Company. This followed a benchmarking exercise undertaken by an independent third party during2015.


2016 Directors'fees

2015 Directors'fees

Paul Lester,CBE

73,000

56,000

DavidMacLellan

63,000

46,000

TalmaiMorgan

53,000

38,500

ChristopherSpencer

58,000

41,000

Guido VanBerkel

56,541

45,000

HelenGreen20

53,000

38,500

20HelenGreen'sremunerationispaidviaSafferyChampness.HelenwasappointedtotheBoardin April2014.

ANNUAL GENERALMEETING

JLIF's AGM will be held at 10.30am BST on 19 May 2017 at The Douglas and Dalrymple Rooms, Old Government House Hotel, St Ann's Place, St Peter Port, Guernsey, Channel Islands. Details of the business to be conducted are contained in the Notice ofAGM.

APPOINTMENT OF INVESTMENT ADVISER ANDOPERATOR

John Laing Capital Management ("JLCM") acts as the Investment Adviser to the Company and acts as Operator of the Limited Partnership that holds and manages the Group's investments. A summary of the contract between the Company, its group companies and JLCM in respect of services provided is set out in note 17 to the financial statements. It is in the Directors' opinion that, based upon the performance in the period to 31 December 2016, the continuing appointment of JLCM on the agreed terms is in the best interests of the shareholders as awhole.

EVENTS AFTER BALANCE SHEETDATE

There are no events after the balance sheet date that are required to bedisclosed.

AUDITOR

The Audit Committee reviews the appointment of the external auditor, its effectiveness and its relationship with the Group, which includes monitoring our use of the Auditor for non-audit services and the balance of audit and non-audit fees paid. Following a review of the independenceand


effectiveness of our external auditor, a resolution will be proposed at the 2017 AGM to re-appoint DeloitteLLP.

Each Director believes that there is no relevant information of which our Auditor is unaware. Each has taken all steps necessary, as a Director, to be aware of any relevant audit information and to establish that Deloitte LLP is made aware of any pertinent information. This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of the Companies (Guernsey) Law2008.

By order of theBoard

Paul LesterCBE

Chairman

20 March 2017


INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF JOHN LAING INFRASTRUCTURE FUNDLIMITED

Opinion on financial statements of John Laing Infrastructure Fund Limited In ouropinion:

the financial statements give a true and fair view of the state of the company's affairs as at 31 December 2016 and of its profit for the year thenended;

have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union;and

have been prepared in accordance with the requirements of the Companies (Guernsey)Law, 2008.

The financial statements that we have auditedcomprise:

the IncomeStatement;

the BalanceSheet;

the Cash FlowStatement;

the Statement of Changes in Equity;and

the related notes 1 to22.

The financial reporting framework that has been applied in their preparation is applicable lawand IFRSs as adopted by the EuropeanUnion.

Summary of our auditapproach

Keyrisks

The key risks that we identified in the current yearwere:

valuation of investments at fair value;and

recognition of operatingincome.

Within this report, any new risks are identified with [N] and any risks which are the same as the prior year identified with[P]

Materiality

We determined materiality for the company tobe

21.6m, which is below 2% ofequity.

We have applied a lower materiality thresholdof

3.5 million based on 2% of annual investment income, to administrativecosts.

Scoping

Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control, and assessing the risks of material misstatement. Audit work to respond to the risks of material misstatement was performed directly by the auditengagement

team.


Significant changes in ourapproach

There has been no significant changes inour

approach from the prioryear.

Going concern and the directors' assessment of the principal risks that would threatenthe

solvency or liquidity of thecompany

As required by the Listing Rules we have reviewed the directors' statement regarding the appropriateness of the going concern basis of accounting contained within note 2(c) to the financial statements and the directors' statement on the longer-term viability of the company contained within the strategic report on page15.

We are required to state whether we have anything material to add or draw attention to in relationto:

the directors' confirmation on page 15 that they have carried out a robust assessment of the principal risks facing the company, including those that would threaten its business model, future performance, solvency orliquidity;

the disclosures on pages 10 - 15 that describe those risks and explain how they are being managed ormitigated;

the directors' statement in note 2(c) to the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them and their identification of any material uncertainties to the company's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;and

the directors' explanation on page 15 as to how they have assessed the prospects of the company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications orassumptions.

We confirm that we have nothing material to add or draw attention to in respect of these matters.

We agreed with the directors' adoption of the going concern basis of accounting and we did not identify any such material uncertainties. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company's ability to continue as a goingconcern.

Independence


We are required to comply with the Financial Reporting Council's Ethical Standardsfor

We confirm that we are independent of the company and we have fulfilled ourother


Auditors and confirm that we are independent of the company and we have fulfilled our other ethical responsibilities in accordance with those standards.

ethical responsibilities in accordance with those standards. We also confirm we have not provided any of the prohibited non-audit services referred to in thosestandards.

Our assessment of risks of materialmisstatement

The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of resources in the audit and directing the efforts of the engagementteam.

Valuation of investments at fair value[P]

Riskdescription

The Company holds an investment in JLIF Luxco 1 S..r.l. valued at 1,078.2 million(2015:

833.1 million) and this investment in turn owns indirect investments in intermediate holding companies and equity and subordinated debt interests in PPP infrastructure projects. These investments in PPP projects are valuedat

1,217.6 million (2015: 867.8 million), and the subsidiaries within the intermediate holding structure are in a net liability position of 139.5 million (2015: asset 15.3 million). Refer to Note 10 to the financial statements for the movements in these investments for the financialyear.

As described in the Accounting Policies in Note 2 to the financial statements and Audit Committee Report on page 41, the fair value of investments in PPP infrastructure projects is determined using a discounted cash flow methodology, as there is no liquid market for these projects. The complexity of this methodology, as well as the numerous, significant judgments, mean there is a risk that the fair value of these investments may not be appropriate. The key judgementsare:

Discount rates - the determination of the appropriate discount rate for each investment that is reflective of current market conditions and the specific risks within eachproject;

Macroeconomic assumptions - including corporation tax, inflation and depositrates;

Forecast future cash flows - enhancements made to underlying project cash flows to enhance or change the timings of cashflows from the PPP infrastructureprojects;

Tax considerations - the potential impact of Base Erosion Profit Shifting action 4, and the surrendering of losses within thegroup


structure on the fair value of thePPP infrastructure projects;and

Additional consideration to the effects of the UK's decision to leave the EU on the fair value of PPP investments - the Company's ability to remain competitive in European markets with the weakening of Sterling as well as the potential effect of instable markets on macro- economicassumptions.

Discussing with our valuation specialists the valuation of investments, the appropriateness of management's judgements, discount rates applied, the impact of the EU referendum result on the valuation of the PPP projects and challenging management's independent specialists;

Using our tax specialists to assess the impact of certain tax considerations and then challenging management concerning the impact of those in the fair value of the Company's PPP infrastructure projects;and

Considering the sensitivity of the fair value of investments to key macroeconomic assumptions in light of the volatility notedin

2016, particularly as a result ofBrexit.

How the scope of our audit responded to the risk

We obtained assurance over the appropriateness of management's judgements applied in determining the fair value of PPP infrastructure projectsby:

Testing the operating effectiveness of controls at various service providers, focussing on the financial reporting and treasury cycles and the controls around projectmodels;

Testing the operating effectiveness of controls around the valuation process adopted by management and theBoard;

Challenging management concerning the discount rates applied to individual projects and to each sector, and comparing to relevant peers and recent markettransactions;

Challenging macroeconomic assumptions by reference to observable market data and forecasts;

Reviewing forecast cash flows, in particular movements since acquisition andvalue

enhancements made, particularly byreference


to third partysupport;

Reviewing the historical accuracy of management's cash flow forecasts against actualresults;

Running audit analytics on the valuation model and a sample of project models to test them for integrity and material formulaerrors;

Visiting a selection of sites and holding discussions with the local management on potential project issues which mightaffect

future cashflows;

Keyobservations

We found that management's judgementsand assumptions fall within the reasonable range against comparable marketevidence.

We found that the methodology appliedwas

appropriate in all materialrespects.

Recognition of operating income[P]


Riskdescription

Operating income of 175 million (2015: 58 million) represents the movement in fair valueof JLIF's investment in JLIF Luxco 1 S..r.l. This is determined by reference to the increase in the fair value of PPP infrastructure projects of 94 million (2015: decrease of 7 million) and the increase in the fair value of the intermediate subsidiaries of 81 million (2015: 64million).

There is a risk that there may be double counting of forecast cash flows used in determining the fair value of these investments, with the cash flow included as both areceivable held at fair value and as a discounted forecast cashflow.

The Accounting policies related to this risk can be found in note 2(d) of the financialstatements

How the scope of our audit responded to the risk

As well as the procedures highlighted above for challenging the fair value of investments, we have:

Traced the distributions from the underlying investments through to the valuation model, and into the direct subsidiary and indirect subsidiaries;

Assessed the consistency of the accounting treatment of cash received in the intermediate subsidiary structure to assess whether revenue is recognised in the correct period; and

Reviewed receivables against the fair valueof



investments in PPP infrastructure projects to assess whether there is cash flow receipt included inboth.

Keyobservations

We noted no material instances of inappropriate operating income recognition arising inour

testing.

Our application ofmateriality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changedor influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of ourwork.

Based on our professional judgement, we determined materiality for the financial statements asa whole asfollows:

Materiality

21.6 million (2015: 16.0million)

Basis for determiningmateriality

We determined materiality for the company to be below 2% of equity (2015: below 2% of equity).

We have applied a lower materiality thresholdof

3.5 million (2015: 2.9 million) based on 2% of annual investment income (2015: 5% of annual investment income), to administrative costs.We have reduced the percentage applied to annual investment income as a result of thesignificant

growth of the fair value ofinvestments.

Rationale for the benchmarkapplied

We believe equity is the most appropriate benchmark as it is considered to be one of the principal considerations for members of the Company in assessing its financialperformance.

We have applied a lower materiality thresholdof

3.5 million to administrative costs as amounts less than 21.6m could reasonably be expected to influence the economic decisions of shareholders as they provide the net incometo

support distributions toshareholders.

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of 0.43 million (2015: 0.32 million), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

An overview of the scope of ouraudit

Our scoping has been tailored by assessing the risks of material misstatement for the company. We have applied a risk based approach in scoping the portfolio of investments, considering the cash flows of the company's PPP investments, and grouping assets with similar characteristics and risk profiles together. Based on each level of assessed risk, we have tailored our procedures to respond to theserisks.

JLIF uses a number of service organisations to manage its investments and to support in the preparation of the financial statements. As such, we have assessed the design and implementation, and tested the operating effectiveness of controls at a sample of theseservice


organisations, which gives coverage of 80.2% (2015: 73.8%) of the PPP investments by value. In addition, we have reviewed the competency and capabilities of other service organisations to provide the services for which they areengaged.

Matters on which we are required to report byexception

Adequacy of explanations received and accountingrecords

Under the Companies (Guernsey) Law 2008 we are required to report to you if, in ouropinion:

we have not received all the information and explanations we require for our audit;or

adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us;or

the financial statements are not inagreement

with the accounting records andreturns.

We have nothing to report in respect of these matters.

Corporate GovernanceStatement

Under the Listing Rules we are also required to review part of the Corporate Governance Statement relating to the company's compliance with certain provisions of theUK

Corporate GovernanceCode.

We have nothing to report arising from our review.

Our duty to read other information in the Annual Report

Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:

materially inconsistent with the information in the audited financial statements;or

apparently materially incorrect based on, or materially inconsistent with, our knowledge of the company acquired in the course of performing our audit;or

otherwisemisleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the audit committee whichwe

consider should have beendisclosed.

We confirm that we have not identified any such inconsistenciesor

misleadingstatements.


RESPECTIVE RESPONSIBILITIES OF DIRECTORS ANDAUDITOR

As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Wealso comply with International Standard on Quality Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that our quality control procedures are effective, understood and applied. Our quality controls and systems include our dedicated professional standards review team and independent partnerreviews.

This report is made solely to the company's members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we haveformed.

SCOPE OF THE AUDIT OF THE FINANCIALSTATEMENTS

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for ourreport.

John Clacy,FCA

for and on behalf of DeloitteLLP

Chartered Accountants and Recognised Auditor Guernsey, ChannelIslands

20 March 2017


INCOMESTATEMENT

for the year ended 31December


Notes

2016

'000s

2015

'000s

Operatingincome


175,242

58,359

Administrativeexpenses

5

(14,815)

(11,397)

Operatingprofit


160,427

46,962

Net financeincome

6

2

4

Profit beforetax


160,429

46,966

Tax

7

-

-

Profit for theyear


160,429

46,966

Attributableto:




Owners of theCompany


160,429

46,966



160,429

46,966

Earnings pershare




From continuingoperations




Basic and diluted(pence)

9

18.13

5.78

All results are derived from continuingoperations.

There are no items of Other Comprehensive Income in both the current and preceding year, other than profit for the year and therefore no separate Statement of Comprehensive Income has been presented.


STATEMENT OF FINANCIALPOSITION

as at 31December


Notes

2016

'000s

2015

'000s

Non-currentassets




Investments at fair value through profit orloss

10

1,078,175

883,132

Total non-currentassets


1,078,175

883,132

Currentassets




Trade and otherreceivables

11

163

159

Cash and cashequivalents


5,511

2,533

Total currentassets


5,674

2,692

Totalassets


1,083,849

885,824

Currentliabilities




Trade and otherpayables

12

(3,281)

(2,728)

Total currentliabilities


(3,281)

(2,728)

Totalliabilities


(3,281)

(2,728)

Net assets


1,080,568

883,096

Equity




Share capital

14

90

81

Share premiumaccount

15

946,907

851,459

Retainedearnings

16

133,571

31,556

Equity attributable to owners of theCompany


1,080,568

883,096

Total equity


1,080,568

883,096

Net Asset Value pershare


120.2

108.4

The financial statements were approved by the Board of Directors and authorised for issue on20 March 2017. They were signed on its behalfby:

PLester C Spencer

Chairman Director


STATEMENT OF CHANGES INEQUITY

for the year ended 31December

Statement of Changes in Equity in2016



Share capital

'000s

Share premium account

'000s

Retained earnings

'000s

Total equity

'000s


Notes




Balance at 1 January2016

14 &15

81

851,459

31,556

883,096

Profit for theyear

16

-

-

160,429

160,429

Total comprehensive income for theyear




160,429

160,429

Ordinary sharesissued

14 &15

9

96,685

-

96,694

Cost of sharesissued

15

-

(1,237)

-

(1,237)

Dividendspaid

8

-

-

(58,414)

(58,414)

Balance at 31 December2016


90

946,907

133,571

1,080,568

Statement of Changes in Equity in2015



Share capital

'000s

Share premium account

'000s

Retained reserves

'000s

Total equity

'000s


Notes




Balance at 1 January2015

14 &15

81

847,837

39,411

887,329

Profit for theyear

16

-

-

46,966

46,966

Total comprehensive income for theyear




46,966

46,966

Ordinary sharesissued

14 &15

-

3,707

-

3,707

Cost of sharesissued

15

-

(85)

-

(85)

Dividendspaid

8

-

-

(54,821)

(54,821)

Balance at 31 December2015


81

851,459

31,556

883,096


CASH FLOWSTATEMENT

for the year ended 31December


Notes

2016

'000s

2015

'000s

Operatingprofit


160,427

46,962

Adjustmentsfor:




Decrease in accrued interestincome


(44,320)

(12,361)

Net (gain) / loss on investments at fair value through profit orloss


(59,223)

14,902

Operating cash flows before movements in working capital


56,884

49,503

(Increase) inreceivables


(4)

(86)

Increase inpayables


553

58

Cash inflow fromoperations


57,433

49,475

Net cash inflow from operatingactivities


57,433

49,475

Investingactivities




Loan tosubsidiaries


(91,500)

-

Net cash used in investingactivities


(91,500)

-

Financingactivities




Dividends paid - equityshareholders

8

(54,649)

(51,114)

Net financeincome

6

2

4

Proceeds on issue of share capital (net ofcosts)

15

91,691

(85)

Net cash from financingactivities


37,044

(51,195)

Net increase / (decrease) in cash and cash equivalents


2,977

(1,720)

Cash and cash equivalents at beginning of theyear


2,533

4,253

Effect of exchange ratemovement


1

-

Cash and cash equivalents at end ofyear


5,511

2,533

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets is approximately equal to fairvalue.


NOTES TO THE FINANCIALSTATEMENTS

for the year ended 31 December2016

1. GENERALINFORMATION

John Laing Infrastructure Fund Limited (the "Company", or "JLIF") is a company domiciled and incorporated in Guernsey, Channel Islands, whose shares are publicly traded on the London Stock Exchange under a Premium Listing. The financial statements of the Company as at and for the year ended 31 December 2016 have been prepared on the basis of the accounting policies set out below. The financial statements comprise the Company and its investment in JLIF Luxco 1 S..r.l. The Company and its subsidiaries invest in PPP infrastructure projects in the UK, Europe and NorthAmerica.

The Company accounts for its investment in its direct subsidiary JLIF Luxco 1 S..r.l. at fair value. The Company, together with its direct subsidiary JLIF Luxco 1 S..r.l. and all the intermediate holding subsidiaries compose the Group investing in PPP assets (the"Group").

The net assets of the intermediate holding companies, which at 31 December 2016 principally comprise working capital and outstanding loan balances, are included at fairvalue in the carrying value ofinvestments.

These financial statements are presented in Sterling which is the currency of the primary economic environment in which the Company operates. Foreign operations are included in accordance with the policies set out in note2.

2. SIGNIFICANT ACCOUNTINGPOLICIES

(a) Basis ofaccounting

The financial statements have been prepared in accordance with the Companies (Guernsey) Law 2008 and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU and therefore the Company's financial statements comply with Article 4 of the EU International Accounting Standards("IAS") Regulation.

The Company has not adopted during the year any new and revisedInternational Financial Reporting Standards interpretations andamendments.

At the date of approval of these financial statements, the Company has not applied the following new and revised IFRS standards that have been issued but are not yet effective and have not yet been adopted by theEU:

IFRS 9

FinancialInstruments

IFRS15

Revenue from Contracts withCustomers

IFRS16

Leases

IFRS 2(amendments)

Classification and Measurement of Share-based PaymentTransactions

IAS 7(amendments)

DisclosureInitiative

IAS 12(amendments)

Recognition of Deferred Tax Assets for Unrealised Losses

IFRS 10 and IAS28

(amendments)

Sale or Contribution of Assets between an Investor and its Associate or JointVenture

The Directors do not expect that the adoption of the standards listed above will havea material impact on the financial statements of the Group in future periods.The


Directors intend to perform a detailed analysis of the potential impact ofthese standards on the Company and its investments during2017.

(b) Basis of preparation TheCompany

a) Obtains funds from one or more investors for the purpose of providing those investor(s) with investment managementservices;

b) Commits to its investor(s) that its business purpose is to invest funds solely for returns from investment income, capital appreciation, or both;and

c) Measures and evaluates the performance of substantially all of its investments on a fair valuebasis.

Consequently, the Company does not consolidate its subsidiaries or apply IFRS 3 'Business Combinations' when it obtains control of another entity as it is considered to be an Investment Entity under IFRS. Instead, the Company measures its investmentin its subsidiary at fair value through profit orloss.

The financial statements incorporate the financial statements of the Company only. The Company recognises its investment in its direct subsidiary, JLIF Luxco 1 S..r.l.,at fair value through profit or loss. The fair value estimate of JLIF Luxco 1 S..r.l. includes the fair value of both this company and all of the Company's subsidiaries and PPP investments.

The Company invests solely for capital appreciation, investment income, or both. Consequently, the Company does not plan to hold its investments indefinitely. The Company has an exit strategy for the portfolio of investments heldindirectly.

JLIF Luxco 1 S..r.l. is itself an investment entity. Consequently, the Company need not have an exit strategy for its investment in JLIF Luxco 1 S..r.l. Similarly, any other subsidiaries that are investment entities themselves do not require an exit strategy to meet the definition of an investmententity.

Each investment indirectly held (subordinated debt together with equity) has a finite life. The subordinated debt will mature towards the end of the concession and at the end of the concession the investment will be liquidated. The exit strategy is that investments will normally be held to liquidation at the end of the concession unlessthe Company sees an opportunity in the market to dispose of investments. John Laing Capital Management Limited (the Investment Adviser) and the JLIF Board regularly consider whether any disposals should bemade.

(c) Goingconcern

The Directors, in their consideration of going concern have reviewed comprehensive cash flow forecasts prepared by the Investment Adviser, which are based on prudent market data and past experience and believe, based on those forecasts and an assessment of the Company's and the Group's committed banking facilities, that it is appropriate to prepare the financial statements of the Company on the goingconcern basis. In arriving at their conclusion that the Group has adequate financial resources, the Directors were mindful that the Group had unrestricted cash of 32.7 million (including 5.5 million for the Company) and a five-year banking facility (available for investment in new or existing projects and working capital) of 180.0 million, which expires in August 2020, and an accordion facility of 150.0 million which expires in June2019.

As at 31 December 2016, there was the equivalent of 171.4 million drawn under the facility which was used to acquire investments in the year. All key financialcovenants


are forecast to continue to be complied with. On 20 March 2017 the Company announced a proposed share issuance by way of a shareholder tap issue for up to approximately 89.8 million new ordinary shares. The proceeds of the issue will be used to repay most of the outstanding Sterlingborrowings.

The Company, through its intermediate holding companies, holds investments in 62 infrastructure PPP project companies which yield annual interest, dividends and loan repayments. The cash flow yields from the projects cover the Group's expected cash flow requirements for overheads and targeted dividend distributionpolicy.

The Company and its intermediate holding companies have sufficient financial resources together with their PPP investments' public-sector long-term contracts across a range of infrastructure projects. As a consequence, the Directors consider that the Company and its intermediate holdings companies are well placed tomanage its business riskssuccessfully.

Certain risks and uncertainties, as detailed in note 18 have been considered by the Board. The Board has concluded that these do not represent a significant threat to the Company and the Group as the Group's income is generated from a portfolio of PPP concessions which are supported by government-backed cash flows and are forecast to cover the Group's committedcosts.

The Directors, at the time of approving the financial statements, are satisfied that the Company and the Group have adequate resources to continue in operationalexistence for the foreseeable future, a period of not less than 12 months from the date of this report. Thus, they continue to adopt the going concern basis of accounting in preparing these annual financialstatements.

(d) Revenue recognition - Operatingincome

Operating income in the income statement represents the combination of the income from and the movement in the fair value of the Company's investment in JLIF Luxco1 S..r.l. Refer to note 10 fordetails.

(e) Cash and cashequivalents

Cash and cash equivalents comprise cash balances, deposits held on call with banks and other short-term highly liquid deposits with original maturities of three months or less. Bank overdrafts that are repayable on demand are included as a component of cash and cash equivalents for the purpose of the cash flow statement. Deposits held with original maturities of greater than three months are included in other financial assets.

(f) Foreigncurrencies

The financial statements are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the financial statements, the results and financial position of the Company and the underlying fair valued financial position of JLIF Luxco 1 S..r.l. are expressed in Sterling, which is the functional currency of the Company, and the presentation currency for the financialstatements.

In preparing the financial statements of the Company, transactions in currenciesother than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each Balance Sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are notretranslated.


(g) Taxation

Under the current system of taxation in Guernsey, the Company is exempt from paying taxes on income, profits or capital gains. Dividend income and interest incomereceived by the Group may be subject to withholding tax imposed in the country of origin of such income. The underlying project companies in which the Group invests provide for and pay taxation at the appropriate rates in the countries in which theyoperate.

(h) Financialinstruments

Financial assets and financial liabilities are recognised on the Company's Statement of Financial Position when the Company becomes party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash flows from the instrument expire or the asset is transferred and the transfer qualifies for derecognition in accordance with IAS 39 'Financial Instruments: Recognition and Measurement' and IFRS13 'Fair ValueMeasurement'.

i) Financialassets

The Company classifies its financial assets in the following categories: fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. The Company determines the classification of its financial assets at initialrecognition.

a) Investments at fair value through profit orloss

Investments at fair value through profit or loss are designated upon initial recognition as financial assets at fair value through profit or loss. In these financial statements, investment at fair value through profit or loss is the fair value of the Company's direct subsidiary, JLIF Luxco 1 S..r.l., whichcomprises the fair value of JLIF Luxco 1 S..r.l., all the intermediate holding companies and the PPPinvestments.

JLIF Luxco 1 S..r.l. and the intermediate holding companies' net assets are mainly composed of cash and working capital and an outstanding loanbalance of 171.4 million (comprising 59.0 million and 121.0 million) and are recognised at fair value which is equivalent to their netassets.

The Company's investment in JLIF Luxco 1 S..r.l. comprises both equity and a Profit Participating Agreement ("PPA"). Both elements are exposed to the same primary risk, being performance risk. This performance risk is taken into consideration when determining the discount rate applied to the forecast cash flows. In determining fair value the Board considered observable market transactions and have measured fair value using assumptions that market participants would use when pricing the asset including assumptions regarding risk. The PPA and equity are considered to have the same risk characteristics and as such the PPA and equity form a single class of financial instrument for the purposes of disclosure. The Company measures its investment as a single class of financial asset at fair value in accordance with IFRS 13 'Fair Value Measurement'.

b) Loans andreceivables

Trade receivables, loans and other receivables that are non-derivative financial assets and that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and other receivables'. Loans and other receivables are measured at amortised cost using the effective interest method, less any impairment. They are included in current assets, except where maturities are greater than 12 months after the Balance Sheet date which are classified as Non-Current Assets. The Company's loans andreceivables


comprise 'trade and other receivables' and 'cash and cash equivalents' in the Statement of FinancialPosition.

ii) Financial liabilities andequity

Debt and equity instruments are classified as either financial liabilities or asequity in accordance with the substance of the contractualarrangement.

a) Equity instruments - share capital and sharepremium

Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or associated with the establishment of the Company thatwould otherwise have been avoided are written off against the balance of the Share PremiumAccount.

b) Financialliabilities

Financial liabilities are classified as other financial liabilities, comprisingof:

Loans and borrowings which are recognised initially at fair value of the consideration received, less transaction costs. Subsequent to initial recognition, loan and borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effectiveinterest basis;and

Other non-derivative financial instruments are measured at amortised cost using the effective interest method less any impairmentlosses.

iii) Effective interest ratemethod

The effective interest rate is the rate that exactly discounts estimated futurecash payments or receipts through the expected life of the financial instrument to the relevant asset's carryingamount.

iv) Fair valueestimation

The Company's investments at fair value are not traded in activemarkets.

Investments at fair value through profit or loss are designated upon initial recognition as financial assets at fair value through profit or loss. In these financial statements, investment at fair value through profit or loss is the fair value of the Company's direct subsidiary, JLIF Luxco 1 S..r.l., which comprises the fair valueof JLIF Luxco 1 S..r.l., all the intermediate holding companies and the PPP investments.

Fair value of the PPP investments is calculated by discounting at an appropriate discount rate future cash flows expected to be received by the Group's intermediate holdings, from investments in both equity (dividends and equity redemptions) and subordinated loans (interest and repayments). The discount rates are relevant and in the range of those applied in the market for similar PPP investments. The basis of discount rates are long run average government bond rates adjusted for an appropriate premium to reflect PPP specific risk. Risk premia are then added to this adjusted base gilt rate depending on the phase of the project and any specific risks to which the project is exposed. The discount rates that have been applied to the PPP investments at 31 December 2016 were in the range 7.02% to 9.00% (31 December 2015: 7.19% to 8.46%). Refer to note 10 for details of the areas of estimation in the calculation of the fairvalue.

JLIF Luxco 1 S..r.l. and the intermediate holding companies' net assets are mainly composed of cash and working capital and loan balances and are recognised at fair value which is equivalent to their netassets.


(i) Segmentalreporting

In the financial statements, the Company recognises one investment in its 100% owned subsidiary JLIF Luxco 1 S..r.l. The Directors consider and analyse the performance of the Company by considering the Group's main activity which is to invest into PPP investments through its intermediate holding companies. Information reported to the Company's Directors for the purposes of resource allocation and assessment of segment performance is focused on the sector risk associated within the Group. The Group has investments in the Health, Education, Justice & Emergency Services, Transport, Regeneration & Social Housing, Government Buildings and Street Lighting sectors and therefore these form the Group's reportable segments underIFRS

8. The Directors also consider and analyse the performance of the Group by Geography as the Group predominately invests in the UK, but also has investmentsin Continental Europe, North America as well as administration functions in Guernsey. Geographical segments therefore form part of the Group's reportable segments under IFRS 8.

(j) Statementofcompliance

Pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987 the Company is a Registered Closed-Ended Investment Scheme. As an authorised scheme, the Company is subject to certain ongoingobligations.

3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES ANDASSUMPTIONS

In the application of the Company's accounting policies, which are described in note 2, the Directors are required to make judgements, estimates and assumptions about the fairvalue of assets and liabilities that affect reportedamounts.

Fair value of PPPinvestments

Fair values for those investments for which a market quote is not available are determined using the income approach which discounts the expected cash flows at the appropriaterate.

Estimates such as future cash flows are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. These cash flows also contain various assumptions, most significantly the inflation rate, deposit rate and tax rates used in forecasting the expected cash flows for each period. Sensitivities to these critical assumptions and their impact on the fair value of investments at fair value through profit and loss is disclosed in note10.

In determining the discount rate, management applies their judgement in determining the appropriate risk-free rates and specific risks, and considering the evidence of recent transactions. Management deems the discount rate to be one of the most significant unobservable inputs and any change in it could have a material impact on the fair valueof the investments. Underlying assumptions and discount rates are disclosed in note10.

The Directors have satisfied themselves that the PPP investments share the same investment characteristics and as such constitute a single asset class for IFRS 7 disclosure purposes.

Fair value of intermediate holdingcompanies

The Directors consider that the carrying value of the financial assets and financial liabilities in the underlying holding which are recorded at amortised cost in those financial statements are approximately equal to their fairvalue.


4. OPERATINGSEGMENTS

Information reported to the Company's Board of Directors for the purposes of resource allocation and assessment of segment performance is focused on the sector risk associated within the Group. The Board reviews the Portfolio Valuation analysis by sector and the Directors, Investment Advisers and Asset Management teams monitor the business considering sector split. Currently the Company, via its 100% owned subsidiary JLIF Luxco 1 S..r.l. has investments in the Health, Education, Justice & Emergency Services, Transport, Regeneration & Social Housing, Government Buildings and Street Lighting sectors and therefore these form the Company's reportable segments under IFRS8.

Segmentresults

The following is an analysis of the Company's operating income and results by reportable segment for the year ended 31 December2016.

Year ended 31 December2016


Health

'000s

Education

'000s

Justice& EmergencyServices

'000s

Transport

'000s

Regeneration

& Social Housing

'000s

Government Buildings

'000s

Street Lighting

'000s

Unallocated

'000s

Total

'000s

Operating income

55,893

15,713

4,436

75,710

6,920

11,759

2,024

2,787

175,242

Profit/(loss) beforetax

55,893

15,713

4,436

75,710

6,920

11,759

2,024

(12,026)

160,429

Reportable segment profit/(loss)

55,893

15,173

4,436

75,710

6,920

11,759

2,024

(12,026)

160,429

The following is analysis of the Company's operating income and results byreportable segment for the year ended 31 December2015.

Year ended 31 December2015


Health

'000s

Education

'000s

Justice& EmergencyServices

'000s

Transport

'000s

Regeneration

& Social Housing

'000s

Government Buildings

'000s

Street Lighting

'000s

Unallocate

d

'000s

Total

'000s

Operating income/(loss)

15,570

14,883

4,663

12,744

8,438

5,033

888

(3,860)

58,359

Profit/(loss) before tax

15,570

14,883

4,663

12,744

8,438

5,033

888

(15,253)

46,966

Reportable segment profit/(loss)

15,570

14,883

4,663

12,744

8,438

5,033

888

(15,253)

46,966

The unallocated segment above includes the Company's and subsidiaries' investment adviser fee, general overhead costs and fair value movement of intermediate holding companies.

No inter-segment income was earned in the year ended 31 December 2016 (2015:nil).

The following is an analysis of the Company's assets and liabilities by reportable segment for the year ended 31 December2016.

Year ended 31 December2016


Health

'000s

Education

'000s

Justice& EmergencyServices

'000s

Transport

'000s

Regeneration

& Social Housing

'000s

Government Buildings

'000s

Street Lighting

'000s

Unallocated

'000s

Total

'000s

Totalassets

380,536

121,776

58,462

451,775

106,972

68,020

33,997

(137,689)

1,083,849

Totalliabilities

-

-

-

-

-

-

-

(3,281)

(3,281)

Total net assets

380,536

121,776

58,462

451,775

106,972

68,020

33,997

(140,970)

1,080,568


The following is analysis of the Company's assets and liabilities by reportable segment for the year ended 31 December2015.

Year ended 31 December2015


Health

'000s

Education

'000s

Justice& EmergencyServices

'000s

Transport

'000s

Regeneration

& Social Housing

'000s

Government Buildings

'000s

Street Lighting

'000s

Unallocated

'000s

Total

'000s

Totalassets

354,460

145,700

52,393

125,042

93,018

65,169

34,282

15,760

885,824

Totalliabilities

-

-

-

-

-

-

-

(2,728)

(2,728)

Total net assets

354,460

145,700

52,393

125,042

93,018

65,169

34,282

13,032

883,096

Information about majorcustomers

The Company, via its subsidiaries, has one (31 December 2015: one) investment fromwhich it receives more that 10% of the Company's operating income. The operating income from the major customer was 35.6 million (31 December 2015: 6.9 million) which was reported within the Transport (31 December 2015: Transport) segment. The Company has treated each PPP asset as a separatecustomer.

Analysis by geographicalareas

The following is an analysis of the Group's operating income and results bygeographical area:

Year ended 31 December2016


UK

'000s

Continental

Europe

'000s

North America

'000s

Other - (incl Guernsey)

'000s

Total

'000s

Operatingincome

83,507

50,596

41,139

-

175,242

Profit/(loss) beforetax

83,507

50,596

41,139

(14,813)

160,429

Profit/(loss)

83,507

50,596

41,139

(14,813)

160,249

Year ended 31 December2015


UK

'000s

Continental

Europe

'000s

North America

'000s

Other - (incl Guernsey)

'000s

Total

'000s

Operatingincome/(loss)

61,181

748

(3,570)

-

58,359

Profit/(loss) beforetax

61,181

748

(3,570)

(11,393)

46,966

Profit/(loss)

61,181

748

(3,570)

(11,393)

46,966

The operating income included in the above tables is derived from the distributions from PPP investments and the movements in fair value of investments. No inter-segment income was earned in the year ended 31 December 2016 (31 December 2015:nil).

The following is an analysis of the Group's net assets by geographicalarea:

Year ended 31 December2016


UK

'000s

Continental

Europe

'000s

North America

'000s

Other - (incl Guernsey)

'000s

Total

'000s

Totalassets

683,549

211,357

183,268

5,675

1,083,849

Totalliabilities

-

-

-

(3,281)

(3,281)

Total net assets

683,549

211,357

183,268

2,394

1,080,568


Year ended 31 December2015


UK

'000s

Continental

Europe

'000s

North

America

'000s

Other -(incl

Guernsey)

'000s

Total

'000s

Totalassets

774,659

35,254

73,219

2,692

885,824

Totalliabilities

-

-

-

(2,728)

(2,728)

Total netassets

774,659

35,254

73,219

(36)

883,096

5. ADMINISTRATIVEEXPENSES


2016

'000s

2015

'000s

Investment advisory fees & asset originationfee

12,479

9,573

Directors' fees andexpenses

376

263

Administrationfee

169

169

Otherexpenses

1,791

1,392


14,815

11,397

The Company had no employees other than the Directors for the current year orpreceding year. There was no Directors' remuneration for the year or preceding year other than directors' fees as detailed in note17.

An amount of 145,000 (2015: 134,000) was paid to Deloitte LLP by the Company for the audit of the Company for the year ended 31 December 2016, which included 10,000(2015:

10,000) of other assurance work and 39,000 (2015: 38,000) in respect of non-audit services for the year ended 31 December2016.

6. NET FINANCEINCOME


2016

'000s

2015

'000s

Bank interestincome

2

4

Net financeincome

2

4

7. TAX

The Company has obtained exempt status from income tax in Guernsey under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. The income from its investments is therefore not subject to any further tax in Guernsey, although the underlying project companies in which the Group invests provide for and pay taxation at the appropriate rates in the countries in which they operate, for further details refer to note10.

During 2016, the UK proposed new legislation which is broadly in line with a number of the actions from the OECD / G20's Base Erosion and Profit Shifting ("BEPS") initiative. Based on the most recent draft legislation (in December 2016), we believe that the current response, particularly in relation to the potential restriction of tax deductions for interest, no longer represents such a significant risk to JLIF. We do not expect the introduction of this legislation to have a material impact on the valuation of the Portfolio. While recognising that draft legislation is not enacted legislation, the risk has been downgraded in the Company'srisk


register. We will continue to monitor proposed legislation, both in the UK and otherterritories in which JLIF operates, as governments continue to introduce new legislation aligned with the BEPSactions.

8. DIVIDENDS


2016

'000s

2015

'000s

Amounts recognised as distributions to equityholders during theyear:



Final dividend for the year ended 31 December 2015 of 3.41 pence (final dividend for the year ended 31 December2014:

3.375 pence) pershare

27,783

27,392

Interim dividend for the six months ended 30 June 2016 of 3.41 pence (six months ended 30 June 2015: 3.375 pence) pershare

30,631

27,429


58,414*

54,821*

Approved final dividend for the year ended 31 December 2016of

3.48 pence (2015: 3.41 pence) pershare

31,285

27,783

* Includes two tranches of scrip dividends of 3,765,000 with 3,091,698 newsharesbeing issued (2015: 3,707,000 with 3,150,510 new sharesissued).

The approved final dividend for the year ended 31 December 2016 is 3.48 pence per share, amounting to 31.3 million (2015: 27.8 million) and was approved by the Board on 17 March 2017 and is payable in May 2017. The dividend has not been included as a liabilityat 31 December2016.

9. EARNINGS PERSHARE

The calculation of the basic and diluted earnings per share is based on the followingdata:


2016

'000s

2015

'000s

Earnings



Earnings for the purposes of basic and diluted earnings per share being net profit attributable to owners of theCompany

160,429

46,966

Number ofshares



Weighted average number of ordinary shares for the purposes of basic and diluted earnings pershare

885,116,345

812,680,563

The denominator for the purposes of calculating both basic and diluted earnings per share are the same as the Company had not issued any share options or other instruments that would causedilution.


Pence

Pence

Basic and diluted earnings pershare

18.13

5.78

10. INVESTMENTS AT FAIR VALUE THROUGH PROFIT ORLOSS

1.


As set out in Note 1, the Company accounts for its interest in its 100% owned subsidiary JLIF Luxco 1 S..r.l. as an investment at fair value through profit or loss. JLIF Luxco 1 S..r.l. in turn owns investments in intermediate holding companies and in PPPprojects.

The table below shows the Company's investment in JLIF Luxco 1 S..r.l. in the yearas recorded in the Company Statement of FinancialPosition:


2016

'000s

2015

'000s

Fair value of PPPinvestments

1,217,647

867,830

Fair value of intermediate holdingcompanies

(139,472)

15,302

Fair value at 31December

1,078,175

883,132

Reconciliation of movement in fair value of the portfolio ofassets

The table below shows the movement in the fair value of the Company's portfolio of PPP investments. These investments are held through other intermediate holding companies. The table below also presents a reconciliation of the fair value of the asset portfolio to the Company balance sheet as at 31 December 2016, by incorporating the fair value of these intermediate holdingcompanies.


Portfolio

Value 2016

'000s

Cash and otherFVin intermediateholdings

'000s

Total

'000s

Portfolio Value 2015

'000s

Cashand

otherFV

in intermedia

te holdings

'000s

Total

'000s

Openingbalance

867,830

15,302

883,132

864,887

20,787

885,674

Acquisitions and further loan and equitysubscriptions

306,042

-

306,042

14,363

-

14,363

Disposals

(43,380)

-

(43,380)

-

-


Dividends received from PPPinvestments

(52,500)

52,500

-*

(36,782)

36,782

-*

Interest received from PPPinvestments

(34,423)

34,423

-*

(31,758)

31,758

-*

Loan and equityrepayments

(7,577)

7,577

-

(9,558)

9,558

-

Movement in accruedinterest

2,000

-

2,000

5,200

-

-

Discount ratemovements

43,396

-

43,396*

7,462

-

7,462*

Foreign currency exchange ratemovements

44,919

-

44,919*

(12,435)

-

(12,435)*

Growth invalue

92,048

-

92,048*

66,814

-

66,814*

Other feeincome

(708)

708

-*

(363)

363

-*

Administrativeexpenses

-

(5,121)

(5,121)*

-

(3,482)

(3,482)*

PPA Interest costsdistributed

-

(116,019)

(116,019)

(73,261)

(73,261)


Externalborrowing

-

(154,393)

(154,393)

(17,000)

(17,000)


Difference in timing of capital movements between the Company and the intermediate holdingcompanies

-

25,551

25,551

9,797

9,797


Fair value of the Company's Investment inJLIF Luxco 1 S..r.l. at 31December

1,217,647

(139,472)

1,078,175

867,830

15,302

883,132

* Operating income for the year ended 31 December 2016 is 175.2 million(2015:58.4 million).

The above balances represent the total net movements in the fair value of the Company's investment. The "Cash and other FV in intermediate holdings" balances reflect investment in, distributions from or movement in working capital and are not valuegenerating.

The following table categorises the total net movement in fair value into its component factors:


2016

'000s

2015

'000s

Portfolio valuation at 1January

867,830

864,887


Acquisitions and further loan and equitysubscriptions

306,042

14,363

Disposals

(43,380)

-

Distributions

(93,208)21

(73,261)21

Growth due to discountrate

43,396

7,462

Growth / (Decline) due to exchangerate

44,919

(12,435)

Growth from discount rateunwind

79,20922

65,06422

Growth from valuationenhancements

12,83922

1,75022

Portfolio valuation at 31December

1,217,647

867,830

Fair value of intermediate holdingcompanies

(139,472)

15,302

Fair value of the Company's Investment in JLIF Luxco 1 S..r.l. at 31December

1,078,175

883,132

21 Distributions include dividends, interest, loan stock and equity repayments (including movement in accrued interest) and otherfees.

22 In 2016, the total growth in value of the Portfolio is 92,048,000 (2015:66,814,000).

The fair value of the intermediate holding companies comprises cash of 27.2 million(2015:

31.3 million), working capital balances of 4.7 million (2015: 1.0 million), offset by debt drawn under the JLIF Limited Partnership's revolving credit facility of 171.4 million(2015:

17.0million).

The Investment Adviser has carried out fair market valuations of the PPP investments as at 31 December 2016. The Directors have satisfied themselves as to the methodology used and the discount rates applied for the valuation of the PPP investments. The Directors have also obtained an independent opinion from a third party, with considerable expertise in valuing these type of investments, supporting the reasonableness of the PortfolioValue.

Investments in PPP projects are valued using a discounted cash flow methodology. The valuation techniques and methodologies have been applied consistently with the methodology used to value the Portfolio since launch in 2010. Discount rates applied range from 7.02% to 9.00% (weighted average 7.87%) (2015: 7.19% to 8.46% (weightedaverage

7.82%)).

The following long-term economic assumptions were used in the discounted cash flow valuation are detailedbelow:

Inflationassumptions

Country

Index

2016

2015

UK

RPI /RPIx

2.75%

2.75%

TheNetherlands

CPI

2.00%

1.90%

Finland

MAKU /Elpsot

3.0% /2.5%

3.0% /2.5%

Spain

CPI

2.00%

n/a

Canada

CPI

2.10%

2.10%

USA

CPI

2.00%

n/a

Depositrates

Country

Index

2016

2015

UK


2017 -1.0%

2016 -1.0%



2018 -1.5%

2017 -2.0%



2019 -2.0%

2018 -3.0%


Thereafter2.75%

Thereafter -3.25%


ContinentalEurope

2017 -1.0%

2016 -1.0%


2018 -1.0%

2017 -1.5%


2019 -1.5%

2018 -2.5%


2020 -2.0%

Thereafter2.5%


Thereafter 2.5%


Canada &USA

2017 -1.0%

2016 -1.0%


2018 -1.5%

2017 -2.0%


2019 -2.0%

2018 -3.0%


Thereafter 2.5%

Thereafter3.0%

The prevailing Sterling exchange rate at 31 Decemberwas:


2016

2015

Euro

1.1708

1.3592

CanadianDollar

1.6565

2.0599

USDollar

1.2329

1.4833

The UK Finance Bill enacted in September 2016 reduced the UK corporation tax rate from 18% to 17% from 1 April 2020. This reduction has been included in the valuation at 31 December 2016. The fair value of the Continental European, Canadian and US investments include assumed tax payments at the appropriate local rates which are 20% - 25%, 26% and 35%/9%23respectively.

In December 2016, the UK Government published draft legislation in response to the OECD's Base Erosion Profit Sharing ("BEPS") initiative. Having sought advice from independent tax experts, the Company's assessment of the risk presented by the proposals contained within the draft legislation has resulted in no specific adjustment to be made inthe valuation of the Portfolio as at 31 December2016.

The fair value of the PPP investments would be an estimated 111.7 million higher or 96.7 million lower (2015: estimated 74.8 million higher or 65.1 million lower) if the discount rate used in the discounted cash flow analysis were to differ by an absolute 1% from that used in the fair value calculation. The weighted average discount rate for the PPP portfolio as at 31 December 2016 was 7.87% (2015:7.82%).

23 Federal tax rate / Connecticut State taxrate.

The fair value of the PPP investments would be an estimated 52.5 million higher(2015:

33.8 million higher) if the inflation rate used in the discounted cash flow analysis was an absolute 1% higher than that used in the fair value calculation, and 47.3 million lower(2015:

30.8 million lower) if the inflation rate was an absolute 1%lower.

The fair value of the PPP investments would be an estimated 21.8 million higher or 21.5 million lower (2015: estimated 18.4 million higher or 18.3. million lower) if the deposit rates used in the discounted cash flow analysis were to differ by an absolute 1% from that used in the fair valuecalculation.

The fair value of the PPP investments would be an estimated 39.5 million higher or35.8 million lower (2015: estimated 10.8 million higher or 9.9 million lower) if the exchange rates used in the discounted cash flow analysis were to differ by 10% from that used inthe fair valuecalculation.

Details of PPP assets were asfollows:


%holding

31 December2016

%holding

31 December2015

Investments (project name - see note 21for

furtherdetails)

Equity

Subordinated

loanstock

Equity

Subordinated

loanstock

Abbotsford Regional Hospital and Cancer Centre

100.0%

100.0%

100.0%

100.0%

A55 Holyhead to LlandegaiDBFO

100.0%

100.0%

-

-

Avon and SomersetCourts

40.0%

40.0%

40.0%

40.0%

BarnetLighting

100.0%

100.0%

100.0%

100.0%

BarnsleyBSF

-

-

40.0%

40.0%

Barcelona Metro StationsL9T2

53.5%

53.5%

-

-

Barcelona Metro StationsL9T4

13.5%

13.5%

-

-

Bentilee CommunityCentre

100.0%

100.0%

100.0%

100.0%

BexleySchools

100.0%

100.0%

100.0%

100.0%

BristolBSF

37.5%

36.0%

37.5%

36.0%

Brockley Social HousingPFI

100.0%

100.0%

100.0%

100.0%

British Transport PolicePPP

100.0%

100.0%

-

-

Camden SocialHousing

50.0%

50.0%

50.0%

50.0%

Canning Town SocialHousing

100.0%

100.0%

100.0%

100.0%

Cleveland PoliceHeadquarters

50.0%

50.0%

50.0%

50.0%

Connecticut ServiceStations

100.0%

100.0%

-

-

E18 Road,Finland

50.0%

50.0%

50.0%

50.0%

EdinburghSchools

20.0%

20.0%

20.0%

20.0%

Enfield StreetLighting

100.0%

100.0%

100.0%

100.0%

EnfieldSchools

100.0%

100.0%

100.0%

100.0%

Forth Valley RoyalHospital

100.0%

100.0%

100.0%

100.0%

GlasgowSchools

20.0%

20.0%

20.0%

20.0%

Greater Manchester PoliceStations

27.1%

27.1%

27.1%

27.1%

Groningen TaxOffice

40.0%

40.0%

40.0%

40.0%

Highlands School,Enfield

100.0%

100.0%

100.0%

100.0%

Islington I SocialHousing

45.0%

45.0%

45.0%

45.0%

Islington II SocialHousing

45.0%

45.0%

45.0%

45.0%

Intercity Express Programme Phase1

6.0%

6.0%

-

-

Kelowna and VernonHospitals

50.0%

50.0%

50.0%

50.0%

KingstonHospital

60.0%

60.0%

60.0%

60.0%

Kirklees SocialHousing

100.0%

100.0%

100.0%

100.0%

KromhoutBarracks

40.0%

40.0%

40.0%

40.0%

Lambeth StreetLighting

100.0%

100.0%

100.0%

100.0%

Leeds Combined SecondarySchools

100.0%

100.0%

100.0%

100.0%

LUL Connect(CityLink)

33.5%

33.5%

33.5%

33.5%

M40Motorway

50.0%

50.0%

50.0%

50.0%

M6/M74 Motorway,Scotland

11.0%

11.0%

11.0%

11.0%

Manchester StreetLighting

50.0%

50.0%

50.0%

50.0%

Metropolitan Police TrainingCentre

(Gravesend)

27.1%

27.1%

27.1%

27.1%

Miles Platting SocialHousing

50.0%

66.7%

50.0%

66.7%

Ministry of Defence MainBuilding

26.0%

26.0%

26.0%

26.0%

NewcastleHospital

15.0%

15.0%

15.0%

15.0%

NewhamHospital

-

-

50.0%

50.0%

NewhamSchools

100.0%

100.0%

100.0%

100.0%

North Birmingham MentalHealth

100.0%

100.0%

100.0%

100.0%

North East Fire and RescueAuthority

100.0%

100.0%

100.0%

100.0%

North StaffordshireHospital

75.0%

75.0%

75.0%

75.0%

North SwindonSchools

100.0%

100.0%

100.0%

100.0%

Northampton MentalHealth

100.0%

100.0%

100.0%

100.0%

Oldham SocialHousing

95.0%

95.0%

-

-

PeterboroughHospital

30.0%

30.0%

30.0%

30.0%


PeterboroughSchools

100.0%

100.0%

100.0%

100.0%

Queen Elizabeth Hospital,Greenwich

27.5%

27.5%

27.5%

27.5%

Realise HealthLIFT

60.0%

60.0%

60.0%

60.0%

Redcar and ClevelandLighting

100.0%

100.0%

100.0%

100.0%

Roseberry ParkHospital

100.0%

100.0%

100.0%

100.0%

SirhowyWay

100.0%

100.0%

100.0%

100.0%

South East London PoliceStations

50.0%

50.0%

50.0%

50.0%

South LanarkshireSchools

15.0%

15.0%

15.0%

15.0%

Surrey StreetLighting

50.0%

50.0%

50.0%

50.0%

Tunbridge WellsHospital

37.5%

37.5%

37.5%

37.5%

Vancouver GeneralHospital

100.0%

100.0%

100.0%

100.0%

Wakefield StreetLighting

50.0%

50.0%

50.0%

50.0%

Walsall StreetLighting

100.0%

100.0%

100.0%

100.0%

On 27 January 2016, the Group completed the acquisition of a 40% stake in the Barcelona Metro Stations L9T2 project for approximately 85 million from Iridium Concesiones de Infraestructuras, a subsidiary of GrupoACS.

On 29 February 2016, the Group acquired a 100% interest in the British Transport Police PPP project from a member of John Laing Group plc and The John Laing Pension Trust Limited, and on 30 May 2016 completed the purchase of a 95% interest in the Oldham Social Housing project from a member of John Laing Group plc for a combined amount of approximately 22million.

On 1 June 2016 and 22 June 2016 respectively the Group sold to Equitix its entire 50% equity and subordinated debt interest in the Newham Hospital project and its entire 40% equity and sub-ordinated debt interest in the Barnsley BSF project, for a combined consideration of 43.4million.

On 30 June 2016, the Group completed the acquisition of a 100% interest in Project Service LLC, the provider of 23 motorway service plazas in the State of Connecticut (USA),between New York and Boston. The interest was acquired from Carlyle Infrastructure ServicePlazas,

L.P. (an affiliate of The Carlyle Group), Doctor's Associates Inc. (the parent companyof Subway Restaurants) and Subcon, Inc. (a major Subway franchisee and developer) for approximately 72.5million.

On 20 July 2016 the Group, completed a further acquisition of a 13.5% interest in the Barcelona Metro Stations L9T2 project and a 13.5% interest in the Barcelona Metro Stations L9T4 project for a total consideration of 50 million. The project was acquired from the co- shareholder Acsa, Obras e Infraestructuras, S.A.U. ("Acsa"), a member of the Sorigugroup.

On the 23 December 2016, the Group completed the acquisition of a 100% interest in the A55 Holyhead to Llandegai DBFO project from a member of John Laing Group plc. The consideration for the acquisition was 28.3million.

On the 30 December 2016, the Group completed the acquisition of a 6% interest in the Intercity Express Programme Phase 1 project from a member of John Laing Group plc fora consideration of 42.4million.

There are no future loan stock or capital commitments on investments held at fairvalue through profit orloss.

11. TRADE AND OTHERRECEIVABLES

1.



31December

2016

'000s

31December

2015

'000s

Otherdebtors

76

64

Prepayments and accruedincome

87

95

Balance at 31December

163

159

There were no overdue amounts included in trade and otherreceivables.

12. TRADE AND OTHERPAYABLES


31December

2016

'000s

31December

2015

'000s

Accruals and deferredincome

3,279

2,726

Otherpayables

2

2

Balance at 31December

3,281

2,728

13. LOANS ANDBORROWINGS

On 22 June 2016, the Company's indirect subsidiary, JLIF Limited Partnership agreed and signed the terms of an accordion facility of 150.0 million, thereby increasing the Group's borrowing capability to 330.0million.

At 31 December 2016, the Company had no outstanding loans and borrowings (31 December 2015:nil).

The Company's indirect subsidiary, JLIF Limited Partnership had a 171.4 million outstanding loan under its revolving credit facility (31 December 2015: 17.0 million) comprising 59.0 million and 121.0 million. The outstanding amount is included in the 'Investment at fair value through profit or loss' in the Company's Statement ofFinancial Position.

There were no other outstanding loans and borrowings (31 December 2015:nil).

14. SHARECAPITAL

Issued and fullypaid

2016

'000s

2015

'000s

899,003,264 (31 December 2015: 814,751,471) ordinary shares of 0.01peach

90

81

The Company is authorised to issue an unlimited number ofshares.

On 9 March 2016, the Company placed an additional 81,160,095 new ordinary shares via a shareholder tap issue, raising gross proceeds of 92.9 million, which was primarily used to repay debt drawn for the acquisition of the Barcelona Metro Stations L9T2 and British Transport Police PPPprojects.


On 13 May 2016, 2,357,416 new Ordinary Shares of 0.01 pence each at an Issue Priceof

119.40 pence were issued and fully paid as a scrip dividend alternative in lieu of cash for the final dividend in respect of the year ended 31 December2015.

On 27 October 2016, 734,282 new Ordinary Shares of 0.01 pence each at an Issue Priceof

129.36 pence were issued and fully paid as a scrip dividend alternative in lieu of cash for the interim dividend in respect of the year ended 31 December2016.

All new shares issued rank pari passu with the original ordinary shares of 0.01 pence each in the capital of the Company including the right to receive all future dividends and distributions declared, made orpaid.

At present, the Company has one class of ordinary shares which carry no right tofixed income.

15. SHARE PREMIUMACCOUNT


2016

'000s

2015

'000s

Openingbalance

851,459

847,837

Premium arising on issue of equityshares

96,685

3,707

Expenses of issue of equityshares

(1,237)

(85)

Balance at 31December

946,907

851,459

16. RETAINEDEARNINGS


2016

'000s

2015

'000s

Openingbalance

31,556

39,411

Net profit for theyear

160,429

46,966

Dividends paid (note8)

(58,414)

(54,821)

Balance at 31December

133,571

31,556

17. TRANSACTIONS WITH INVESTMENT ADVISER AND RELATEDPARTIES

Details of transactions between the Company and its related parties are disclosedbelow. This note also details the terms of engagement by the Company with John Laing Capital Management Limited ("JLCM") as Investment Adviser and Operator of JLIF Limited Partnership ("the Limited Partnership") together with the details of further investment acquisitions from members of John Laing Group plc, of which JLCM is a wholly owned subsidiary.

JLCM's appointment as Investment Adviser is governed by an Investment Advisory Agreement (amended and restated on 12 November 2015) which may be terminated by either party giving one year's written notice or (subject to the payment to JLCM of certain termination fees) by the Company by giving JLCM six months' notice. The appointmentmay also be terminated if JLCM's appointment as Operator isterminated.

JLCM is also the Operator of JLIF Limited Partnership, the limited partnership throughwhich the Group holds its investments, by JLIF (GP) Limited ("the General Partner"), General Partner of the partnership. The Operator and the General Partner may each terminatethe


appointment of the Operator, by either party giving one year's written notice. Either the Operator or the General Partner may terminate the appointment of the Operator by written notice if the Investment Advisory Agreement is terminated in accordance with itsterms.

JLCM is entitled to fees equal to: i) a Base fee of a) 1.1% per annum of the AdjustedPortfolio Value* of the Fund up to and including 500 million; b) 1.0% per annum of the Adjusted Portfolio Value of the Fund in excess of 500 million up to and including 1 billion; c) 0.9% per annum of the Adjusted Portfolio Value of the Fund in excess of 1 billion; and ii) an Asset Origination Fee of 0.75% of the purchase price of new investment capital acquired by the Fund that is not sourced from any of John Laing Group plc, its subsidiary undertakings, or funds or holdings managed by John Laing Group plc or any of its subsidiaryundertakings.

The total Investment Adviser, Operator fee and asset origination fee charged to the Income Statement for the year was 12,479,000 (2015: 9,573,000) of which 2,877,000 remained payable at year end (2015:2,453,000).

* Adjusted Portfolio Value is defined in the Investment Advisory Agreementas:

(a) the Fair Value of the Investment Portfolio;plus

(b) any cash owned by or held to the order of the Fund (the Consolidated Group);plus

(c) the aggregate amount of payments made to Shareholders by way of dividend in the period ending on the relevant Valuation Day,less

(i) any borrowings and any other liabilities of the Fund;and

(ii) any UninvestedCash.

During the year, the Group acquired interests in the Oldham Social Housing Project and British Transport Police PPP project from a member of John Laing Group plc under an arm's length sale and purchase agreement. The Group paid approximately 22 million for these interests.

On the 23 December 2016, the Group completed the acquisition of a 100% interest in the A55 Holyhead to Llandegai DBFO project from a member of John Laing Group plc under an arm's length sale and purchase agreement, for a consideration of 28.3million.

On the 30 December 2016, the Group completed the acquisition of a 6% indirect interestin the Intercity Express Programme Phase 1 project from a member of John Laing Group plc under an arm's length sale and purchase agreement, for a consideration of 42.4million.

The Company has loans under a Profit Participating Agreement under which itreceived interest income from its direct subsidiary JLIF Luxco 1S..r.l.

As at 31 December 2016 the Profit Participating Agreement loan balance was 933,872,000 (31 December 2015: 830,011,000) following the interest capitalisation of 12,361,000 in the year (2015:23,413,000).

The balance of interest receivable increases from 12,361,000 on 31 December 2015to

44,319,000 as at 31 December 2016. This is due to the interest earned for the year ended 31 December 2016 of 116,019,000 (2015: 73,261,000), offset by the receiptof

71,700,000 (2015:60,900,000).

The Company accounts for the Profit Participating Agreement as part of its investment into JLIF Luxco 1 S..r.l. which has been fairvalued.


The Directors of the Company, who are considered to be key management, received feesfor their services. Further details are provided in the Report of the Directors on pages 45 to 48. Total fees paid in the year were 356,541 (2015: 253,376). The Directors werepaid

19,405 of expenses in the year (2015: 10,359). The interests of the Directors and their close family members in the shares of the Company as at 31 December 2016 and 31 December 2015 are detailed in the Report of Directors on pages 45 to48.

All of the above transactions were undertaken on an arm's lengthbasis.

The Directors and their close family members were paid dividends in the year of 15,175 (2015:15,019).

18. FINANCIAL INSTRUMENTS CAPITAL RISKMANAGEMENT Capitalmanagement

The Company manages its capital to ensure it will be able to continue as a going concern while maximising the return to stakeholders. The capital structure of the Company consistsof equity comprising issued capital, share premium account, reserves and retained earnings as detailed in notes 14 to16.

The capital structure of the Group, which comprises the Company, its 100% owned subsidiary JLIF Luxco 1 S..r.l. and the intermediate holding companies, principallyconsists of a revolving credit facility (for which the Company is a guarantor), cash and cash equivalents and equity comprising issued capital, share premium account, reserves and retainedearnings.

When required, the Company considers equity raising, mainly to finance acquisitions.Such proceeds from share issues are used to repay any bank debt drawn under the Company's indirect subsidiary's creditfacility.

The Group aims to deliver its objective by investing available cash and using leveragewhilst maintaining sufficient liquidity to meet ongoing expenses and dividend payments. The Group's Investment Policy is set out on pages 20 to 21 of the AnnualReport.

Gearingratio

The Group's Investment Adviser reviews the capital structure of the Company and the Group on a semi-annual basis. The Company and its subsidiaries intend to make prudent use of leverage (leverage in the context of the Group excluding senior debt in place at the PPP investment entities level) for financing acquisitions of investments and working capital purposes. Under the Company's articles, and in accordance with JLIF's Investment Policy, JLIF's outstanding borrowings, excluding intra-group borrowings and the debts of underlying PPP investments but including any financial guarantees to support subscription obligations, will be limited to 25% of JLIF's Total Assets. The Group may borrow in currencies other than Sterling as part of its currency hedgingstrategy.

As at the balance sheet date, the Company had no outstanding debt, however, as set outin note 2 (c), the Company's indirect subsidiary, JLIF Limited Partnership benefits from a revolving credit facility of 180 million and the accordion facility of 150 million of which the Company is a guarantor. As at 31 December 2016, 171.4 million was drawn under the facility (31 December 2015: 17million).

FINANCIAL RISKMANAGEMENT

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency exchange rate risk, interest rate risk and inflation risk), credit risk, liquidity risk, and capital risk. The Group's overall risk management programme focuses on theunpredictability


of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group and its investment entities use derivative financial instruments to hedge certain riskexposures.

For the Company and the intermediate holding companies' subsidiaries, financial risks are managed by the Investment Adviser who operates within the Board approved policies. In relation to the Group's investment in project companies, due to the nature of theinvestments, certain financial risks (typically interest rate and inflation risks) are hedged at the inception of a project. The various types of financial risk are managed asfollows:

Financial risk management - Companyonly

The Company accounts for its investments in its subsidiaries at fair value. To the extent there are changes as a result of the risks set out below, these impact the fair value of the Company'sinvestments.

Capitalrisk

The Company has implemented an efficient financing structure that enables it to manage its capital effectively. The Company's capital structure comprises its equity only (refer to the Statement of Changes in Equity). As at 31 December 2016 the Company had no debt(2015:

nil).

Liquidityrisk

The Directors monitor the Company's liquidity requirements to ensure there is sufficient cash to meet the Company's operating needs. The Company adopts a prudent approach to liquidity management by maintaining sufficient cash and available committed facilities to meet its obligations. Due to the nature of its investments the timing of cash outflows is reasonably predictable and, therefore, is not a major risk to theCompany.

The Company's liquidity management policy involves projecting cash flows andforecasting the level of liquid assets necessary to meetthese.

The Company was in a net cash position and had no outstanding debt at the balance sheet date (2015:nil).

Market risk - foreign currency exchange raterisk

The Company accounts for its investment in JLIF Luxco 1 S..r.l. at fair value in Sterling. The Company's investment in JLIF Luxco 1 S..r.l. and its subsidiaries have a small proportion of their expenses and net assets denominated in Euro. The Company considers that the currency exposure is minimal and as such does not require currencyhedging.

Financial risk management - Company andsubsidiaries

The following risks impact the Company's subsidiaries and in turn may impact the fairvalue of investments held by theCompany.

Liquidityrisk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group adopts a prudent approach to liquidity management by ensuring it maintains adequate cash and available banking facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of the financial assets andliabilities.

Due to the nature of its investments (PPP projects) the timing of cash outflows isreasonably predictable and, therefore, is not a major risk to the Group. The Group's liquidity management policy involves projecting cash flows in major currencies and assuming the level of liquid assets necessary to meetthese.

Creditrisk


Credit risk is the risk that a counterparty of the Company, its intermediate holdingcompanies or its PPP project companies will default on the contractual obligations they enteredinto.

Credit risk is subsumed within the overall Company's performancerisk.

The Company, its 100% owned direct subsidiary and the intermediate holding companies rely on the performance of their main counterparties where credit risk arises, mainly from the Group's investments in PPPprojects.

The performance risk arises from the PPP investments' inability to pay the forecast distributions as the Group relies on its PPP investments project companies toperform adequately and return the expectedyields.

Several factors could hinder this ability such as poor operational performance, exceptional expenditures, major maintenance overspend or an event that would affect the PPPproject company's cover ratios. The Group's PPP investments are also dependent on the performance of their main operational contractors. The Group regularly monitors the contractors' concentration and financialstrength.

The Directors and Investment Adviser regularly assess the returns forecast from PPP investments through the update of cash flow forecasts and by monitoring the operational and financial performance of these investments with regular performancemeetings.

The Group's PPP investments' project companies receive regular, long-term, index-linked revenue from government departments, public-sector or local authority clients or directlyfrom the public via real tolls, providing a stable and low-risk incomestream.

Credit risk also arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. The Group mitigates its risk on cash investments and derivative transactions by only transacting with banking counterparties with high credit ratings assigned by international credit rating agencies (a minimum of Standard and Poor'sA-1).

The Directors believe that the Group is not significantly exposed to credit risk and that its investments' underlying risks are monitored and sufficiently mitigated for the investments to deliver the expected return to theGroup.

The Directors have considered the above factors and the discount rate sensitivities disclosed in note 10 and does not consider it appropriate to present a separate analysis of creditrisk.

Market risk - inflationrisk

Each of the Group's PPP investments will typically have part of its revenue and costs linked to a specific inflation index at inception of the project. In most cases this creates a natural hedge, meaning a derivative does not need to be entered into in order to mitigate inflation risk. However, in a minority of cases where the investment has index-linked cash flows that fall outside of this natural hedge, the inflation risk is hedged using RPI inflation swaps. Fora sensitivity analysis of investments at fair value through profit or loss, refer to note10.

Market risk - foreign currency exchange raterisk

The Company has one investment in its direct subsidiary, JLIF Luxco 1 S..r.l., which has exposure to foreign currency exchange rate risk through holding Euro cash balances and contracting with service providers paid in Euro. The level of these balances and expenditures are marginal and do not pose a significant risk to the value recognised in the Company's Statement of FinancialPosition.

As at 31 December 2016, the fair value of the Company's investment in JLIF Luxco 1S..r.l. includes nine (2015: six) overseas investments. The Company and its subsidiaries'foreign


currency exchange rate risk policy is not to hedge automatically on an individual projectbasis but to determine the total Group exposure to individualcurrencies.

At 31 December 2016, the Company's investment at fair value through profit or loss doesnot includes any foreign exchange forward contract (31 December 2015:nil).

The Company and its subsidiaries are mainly exposed to fluctuations in the Euro, US Dollar and Canadian Dollar exchange rates. The amount of the Company's investment's fair value foreign currency denominated assets and liabilities at the reporting date was asfollows:

FairValue


2016

'000s

2015

'000s

CanadianDollar

91,651

73,219

Euro

211,357

35,254

USDollar

91,617

-


394,625

108,473

The following table details the Company's sensitivity to a 10% increase or decrease in Sterling against relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency-denominated monetary items fair valued within the Company's investment in JLIF Luxco 1 S..r.l. and reflects a 10% change in foreign currency exchange rates. A negative number below indicates a decrease in profit from operations where the relevant currency weakens by 10% against Sterling. For a 10% strengthening of therelevant currency against Sterling, there would be an approximately equal and opposite impact on profit from operations, and the negative balances below would bepositive.

31 December2016

Effect on operating profit and investments at fair value of relevantcurrency weakening by 10% againstSterling:

Profit beforetax

'000s

Investments at fairvalue

'000s

CanadianDollar

9,164

9,164

Euro

21,135

21,135

USDollar

9,162

9,162


39,462

39,462

31 December2015

Effect on operating profit and investments at fair value of relevantcurrency weakening by 10% againstSterling:

Profit beforetax

'000s

Investments at fairvalue

'000s

CanadianDollar

7,322

7,322

Euro

3,525

3,525


10,847

10,847

While JLIF's stated policy since launch in November 2010 has been not to hedge the balance sheet value of its non-Sterling assets, JLIF does make prudent use of foreign exchange hedging instruments to hedge non-Sterling cash flows, typically looking out up to 18 months. Furthermore, JLIF's investment policy requires that at least 50% of the Portfolio be UK-based at any time. JLIF is also able to draw on its revolving credit facility in the local currency and repay borrowings in the same currency from its portfolio of assets denominated in the same currency, thereby creating a naturalhedge.

Market risk - interest raterisk


The Group's interest rate risk arises on the credit facility borrowings and floating rate deposits. Borrowings issued at variable rates expose the Group to variability ofinterest payment cashflows.

Each PPP investment hedges its interest rate risk at the inception of a project. This willeither be done by issuing a fixed rate bond or, if the project is bank financed, with fixed rate bank debt or variable rate debt which will be swapped into fixed rate by the use of interest rate swaps.

The fluctuations in interest rates impact the return from floating rate deposits and hence the income from investments at fair value through profit or loss. A 1% increase or decrease represents the Directors' assessment of the reasonable possible change in interestrates.

The Group was in a net cash position and had outstanding debt of 171.4 million at the balance sheet date (31 December 2015: net cash position, 17.0 million outstanding debt). The interest rate sensitivity of the Group's assets and liabilities does not have a material impact.

For a sensitivity analysis of investments at fair value through profit or loss, refer to note10.

The Company held the following financial instruments at fair value at 31 December 2016. There have been no transfers of financial instruments between levels of the fair value hierarchy. There are no non-recurring fair valuemeasurements.

Financial instruments bycategory

31 December2016


Cashand

bank balances

'000s

Loans and receivables

'000s

Financial assetsat FVTPL*

'000s

Financial liabilitiesat amortised

cost

'000s

Total

'000s

Levels

1

1

3

1


Non-currentassets






Investments at fairvalue through profit orloss

-

-

1,078,175

-

1,078,175

Currentassets






Trade and other receivables

-

163

-

-

163

Cash and cash equivalents

5,511

-

-

-

5,511

Total financialassets

5,511

163

1,078,175

-

1,083,849

Currentliabilities






Trade and otherpayables

-

-

-

(3,281)

(3,281)

Total financialliabilities

-

-

-

(3,281)

(3,281)

Net financial instruments

5,511

163

1,078,175

(3,281)

1,080,568

31 December2015

Cashand

bank balances

'000s

Loans and receivables

'000s

Financial assets at FVTPL*

'000s

Financial liabilities at amortised

cost

'000s

Total

'000s


Levels

1

1

3

1


Non-currentassets






Investments at fairvalue

through profit orloss

-

-

883,132

-

883,132

Currentassets






Trade and otherreceivables

-

159

-

-

159

Cash and cashequivalents

2,533

-

-

-

2,533

Total financialassets

2,533

159

883,132

-

885,824

Currentliabilities






Trade and otherpayables

-

-

-

(2,728)

(2,728)

Total financialliabilities

-

-

-

(2,728)

(2,728)

Net financialinstruments

2,533

159

883,132

(2,728)

883,096

* FVTPL = Fair value through profit orloss

The above table provides an analysis of financial instruments that are measured subsequent to their initial recognition at fair value asfollows:

Level 1: fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets orliabilities;

Level 2: fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);and

Level 3: fair value measurements are those derived from valuation techniques that include inputs to the asset or liability that are not based on observable market data (unobservableinputs).

There were no Level 2 assets or liabilities during the year (2015: none). There were no transfers between Level 1 and 2, Level 1 and 3 or Level 2 and 3 during the year (2015: none).

In the table above, financial instruments are held at carrying value as an approximation to fair value unless statedotherwise.

Reconciliation of Level 3 fair value measurement of financial assets andliabilities

An analysis of the movement between opening to closing balances of the investments at fair value through profit or loss is given in note10.

The investments at fair value through profit or loss, whose fair values include the use of Level 3 inputs, include the fair value of the Company's 100% owned subsidiary JLIF Luxco 1 S..r.l., the intermediate holding companies and the Group's PPPinvestments.

The fair value of the Company's direct subsidiary and the intermediate holdingcompanies mainly comprises cash and working capital and an outstanding loan balance of 171.4 million. The fair values of these companies are equivalent to their NetAssets.

The Group's PPP investments are valued by discounting future cash flows frominvestments in both equity (dividends and equity redemptions) and subordinated loans (interest and repayments) to the Group at an appropriate discount rate. The basis of each discount rate, which is a weighted average cost of capital, is the long run average government bondrates


adjusted by an appropriate premium to reflect PPP specific risk, phase of the PPP project and counterparty credit risk. The weighted average discount rate applied was 7.87% (31 December 2015: 7.82%). The discount rate is considered the most significant unobservable input through which an increase or decrease would have a material impact on the fair value of the investments at fair value through profit or loss. An absolute increase of 1% in the discount rate would cause a decrease in fair value of the PPP investments of 96.7 million (31 December 2015: 65.1 million). An absolute decrease of 1% could cause an increase in fair value of the PPP investments of 111.7 million (31 December 2015: 74.8million).

For a sensitivity analysis of Financial Assets at fair value through profit or loss, refer to note 10.

The Directors consider that the carrying value amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements are approximately equalto their fairvalues.

Foreign currency and interest rate profile of financialliabilities

The Company's financial liabilities at 31 December 2016 were 3.3 million (2015: 2.7 million). These principally compriseaccruals.

31 December 2016 Financialliabilities



Floating

rate

'000s

Fixed rate

'000s

Non- interest bearing

'000s

Total

'000s


Currency




Trade and other payables < 1year

-Sterling

-

-

3,281

3,281

Total


-

-

3,281

3,281

31 December 2015 Financialliabilities



Floating

rate

'000s

Fixed rate

'000s

Non-interest

bearing

'000s

Total

'000s


Currency


Trade and other payables < 1year

-Sterling

-

-

2,728

2,728

Total


-

-

2,728

2,728

19. GUARANTEES AND OTHERCOMMITMENTS

The Company has provided a guarantee under the JLIF Limited Partnership's 180 million multicurrency revolving credit facility which expires in August 2020, and under the accordion facility of 150 million which expires in June 2019. As at 31 December 2016, 171.4 million was drawn on the facility. The fair value of the guarantee is considered to be immaterial to the Company accounts as the probability of the guarantee being called upon is considered to be extremely unlikely. In making this assessment, consideration has been given to the proximity of the current and forecast metrics todefault.

20. EVENTS AFTER BALANCE SHEETDATE

On 20 March 2017 the Company announced a proposed share issuance by way of a shareholder tap issue for up to approximately 89.8 million new ordinary shares, themaximum


that can be issued via a shareholder tap issue. The proceeds of the issue will be used to repay most of the outstandingSterling-borrowings.

21. DISCLOSURE - SERVICE CONCESSIONARRANGEMENTS

The Group holds investments in 62 service concession arrangements in the Health, Education, Justice and Emergency Services, Government Buildings, Regeneration and Social Housing, Transport and Street Lighting sectors. The concessions vary on the obligations required, but typically require the construction and operation of an asset during the concession period. The concession may require the acquisition or replacement of an existing asset or the construction of a new asset. The operation of the asset may include the provision of facilities management services such as cleaning, catering, caretaking, andmajor maintenance. As at 31 December 2016, for all but four (2015: all but two) of the Company's investments, the residual interest will be transferred to the relevant government/public authorities at the end of each concession term. For these four (2015: two) concessions the head lease will be retained by the concession provider at the end of the concession period. The value of these head leases is not considered to be material. As at 31 December 2016 all of the service concessions apart from one (Intercity Express Programme phase 1) were fully operational (31 December 2015:all).

The rights of both the concession provider and concession operator are stated within the specific project agreement. The standard rights of the provider to terminate the project include poor performance and in the event of force majeure. The operator's rights to terminate include the failure of the provider to make payment under the agreement, a material breach of contract and relevant changes of law which would render it impossiblefor the service company to fulfil itsrequirements.

Period ofconcession

Sector

Companyname

Projectname

%

owned

Short description of concessionarrangement

Startdate

End date

No. years

Project capex

Health










Meridian Hospital CompanyLimited

QueenElizabeth

27.5%

Design, build, finance and operate new hospital inthe

08-Jul-

1998

31-Oct-

2031

33

Construction of

hospital costing



Hospital, Greenwich


Greenwich area ofLondon.




96million.


Prime Care Solutions (Kingston)Limited

Kingston Hospital

60%

Design, build, finance and operate extension to Kingston

Hospital.

23-Nov-

2004

22-Jul-

2036

32

Construction of

extension and temporary car park costing 29 million.


AHA Access Health Abbotsford Limited

Abbotsford Regional Hospital and CancerCentre

100%

Design, build, finance and operate new hospital in Abbotsford, British Columbia,Canada.

07-Dec-

2004

06-May-

2038

33

Construction of

hospital costing CAN$355

million.


AHV Access Health Vancouver Limited

Vancouver GeneralHospital

100%

Design, build, finance and operate new outpatient facility in Vancouver, British Columbia,Canada.

02-Sep-

2004

18-Aug-

2036

32

Construction of

outpatient facility Costing CAN$95

million.


Forth Health Limited

Forth Valley RoyalHospital

100%

Design, build, finance and operate new hospital in Larbert.

04-May-

2007

31-Mar-

2042

35

Construction of

hospital









costing

293million.

Three Valleys Healthcare Limited

Roseberry Park Hospital

100%

Design, build, finance and operate a mental health facility inMiddlesbrough.

18-Dec-

2007

23-Mar-

2040

32

Construction of

hospital costing

75million.

Healthcare Support (Newcastle) Limited

Newcastle Hospital

15%

Design, build, finance and operate hospitals in Newcastle.

04-May-

2005

03-May-

2043

38

Refurbishme nt and construction at the Freeman Hospital

and Royal Victoria Infirmary and construction ofa

multi-storey carpark

for the Freeman Hospital, costing

295million.

Kent and East Sussex Weald HospitalLimited

Tunbridge WellsHospital

37.5%

Finance, constriction, operation and maintenance of District General hospital in TunbridgeWells

01-Mar-

2008

25-Sep-

2042

35

Construction of hospital costing

232million.

Peterborough (Progress Health) plc

Peterborough Hospital

30%

Design, build, finance and operate three healthcare premises inPeterborough.

31-Jan-

2007

31-Oct-

2042

36

Construction of three hospitals costing 347 million.

IIC (C&T)Limited

Realise Health LIFT

(Colchester)

60%

Design, build, finance and operate a primary care centre in Colchester and a medical centre inHarwich

31-Jul-

2004

30-Apr-

2031

27

Construction of two medical buildings costing 39 million.

IIC Northampton Limited

Northampton MentalHealth

100%

Design, build, finance and operate a mental health facility inNorthampton

31-Oct-

2007

31-Oct-

2037

30

Construction of hospital costing

39million.

Infusion Health KVH General Partnership

Kelowna & Vernon Hospitals

50%

Design, build, finance and operate three new healthcare premises in Kelowna and Vernon, Canada.

31-Aug-

2008

31-Aug-

2042


Construction of two hospitals costing CAN$342

million.

Healthcare Support (North Staffs)Limited

North Staffordshire Hospital

75%

Design, build, finance and operate new acute hospital at the City General site and a new community hospital in Stoke-on-Trent.

30-Jun-

2007

31-Aug-

2044

37

Construction of two hospitals costing 306 million.

Healthcare Support (Erdington)Limited

North Birmingham Mental Health Hospital

100%

Design, build, finance and operate a 128 bed mental health facility for the North Birmingham Mental Health Trust.

22-Mar-

2002

22-Mar-

2037

35

Construction comprised a mix of new build and refurbishme nt of existing Trust estates costing

16.5

million.


Education








3ED Glasgow Limited

Glasgow Schools

20%

Design, build, finance and operate 29 secondary schools and one primary school inGlasgow.

26-Jul-

2000

30-Jun-

2030

30

Major refurbishme nt and extension of 18 schools-

135 million. Construction of 11 new secondary schools and one new primary school-

90million.

InspirED Education (South Lanarkshire)plc

South Lanarkshire Schools

15%

Design, build, finance and operate 15 new secondary schools and two refurbishments in the South Lanarkshirearea.

28-Jun-

2006

30-Sep-

2039

34

Construction and refurbishme ntcosting

320million.

Education Support (Swindon)Limited

North Swindon Schools

100%

Design, build, finance and operate seven new schools inSwindon.

01-Apr-

2005

30-Jun-

2032

27

Construction costing

70million.

Education Support (Enfield)Limited

Highlands School,Enfield

100%

Design, build, finance and operate one secondary school inEnfield.

25-Feb-

1999

31-Aug-

2025

27

Construction



costing 17 million.

Education Support (Newham)Limited

Newham Schools

100%

Design, build, finance and operate one secondary school inNewham.

24-Sep-

2003

31-Aug-

2029

26

Construction costing 22 million.

Education Support (Enfield 2)Limited

EnfieldSchools

100%

Design, build, finance and operate three schools in Enfield, two primary and one secondary.

24-Sep-

2003

31-Aug-

2029

26

Construction costing 27 million.

The Edinburgh School Partnership Limited

Edinburgh Schools

20%

Design, build, finance and operate 17 schools in total, ten new primaries, two new secondary schools, three refurbished secondary schools and two special schools.

15-Nov-

2001

30-Sep-

2033

32

Refurbishme nt of three secondary schools and one special school - 25 million. New build of ten primary schools, two secondary and one special school -82 million.

Investors in the Community (Bexley Schools) Limited

BexleySchools

100%

Design, build, finance and operate two newsecondary schools in Bexley,Kent.

20-Apr-

2004

31-Oct-

2030

27

New schools construction costing 33 million.

Bristol PFILimited

BristolBSF

37.5%

Design, build, finance and operate four new secondary schools inBristol.

31-Jul-

2006

31-Aug-

2034

28

New schools construction costing

132million.

IIC (Leeds Schools)Limited

Leeds Combined Secondary

100%

Design, build, finance and operate six new secondary schools inLeeds.

30-Apr-

2005

31-Jul-

2033

28

Construction of

six new secondary schools costing

115million.


IIC ByEducation

(Peterborough Schools) Limited

Peterborough

Schools

100%

Design, build, financeand

operate three new secondary

schools inPeterborough.

31-Jul-

2006

30-Sep-

2037

31

Construction

of

three new secondary schools costing

55million.

Justice and EmergencyServices

Service Support (Avon & Somerset) Limited

Avon & Somerset Courts

40%

Design, build, finance and operate two new courts in Worle and Bristol,offices,

a podium and a busstation.

23-Aug-

2004

26-Oct-

2034

30

Construction costing 43 million.

Services Support (Gravesend) Limited

Metropolitan Specialist Police TrainingCentre

27.1%

Design, build, finance and operate firearms training facility inGravesend.

20-Apr-

2001

10-Feb-

2028

27

Newtraining facility

and refurbishme nt

of accommodat ioncosting

40million.

Services Support Manchester (Limited)

Greater Manchester PoliceStations

27.1%

Design, build, finance and operate 16 new police stations inManchester.

04-Dec-

2002

31-Mar-

2030

27

Construction costing 82 million.

Cleveland FM ServicesLimited

Cleveland Police Station &HQ

50%

Design, build, finance and operate five policestations.

31-Mar-

2005

31-Jan-

2032

27

Construction costing 26 million.

Collaborative Services Support NE Limited

North East Fire &Rescue

100%

Design, construction, finance and operation of five community fire stations in North EastEngland.

26-Jun-

2009

16-May-

2035

26

Construction costing 27 million.

Services Support (SEL)Limited

South East London

PoliceStations

50%

Design, build, finance and operate four police stations.

20-Oct-

2001

30-Jan-

2029

27

Construction costing 80 million.

Services Support (BTP)Limited

West Ham and Tottenham Court Road PoliceStations

100%

Design, build, finance and operate two police stations, and operate and maintain five existing stations

29-Mar-

1999

28-Feb-

2022

23

Construction costing 4 million.

GovernmentBuildings








Modus Services Limited

MODMain Building

26%

Design, build, finance and operate Ministry of Defence offices inWhitehall.

04-May-

2000

03-May-

2030

30

Refurbishme nt of

existing buildings costing 416 million

KomfortBV

Kromhout Barracks PPPProject

40%

Design, build, finance and operate Dutch Ministry of Defence HQ inUtrecht.

01-Jul-

2008

30-Sep-

2035

27

Total expenditure of 205 million.

Duo2BV

Groningen Tax OfficeProject

40%

Design, build, finance and operate the Information Management and Tax AuthorityOffice

26-Jun-

2008

28-Feb-

2031

23

Total Expenditure of

135million.


Regeneration and SocialHousing

Regenter LCEP Limited

Canning Town SocialHousing

100%

Refurbish, finance and operate council housing in Newham.

03-Jun-

2005

31-May-

2035

30

Refurbishme nt of

existing buildings costing 20 million.

Regenter B3 Limited

Brockley Social Housing PPP

100%

Refurbish, finance and operate council housing in Brockley.

04-Jun-

2007

30-Apr-

2027

20

Refurbishme nt of

existing buildings costing 74 million.

Regenter Bentilee District Centre Limited

Bentilee Hub Community Centre

100%

Design, build, finance and operate joint services communityfacility.

01-Feb-

2005

31-Jan-

2032

27

Construction costing 8 million.

Partners for Improvement in CamdenLimited

Camden SocialHousing

50%

Refurbish, finance and maintain council housing in five tower blocks inCamden.

02-May-

2006

02-May-

2021

15

Construction Costing 69 million.

Partners for Improvement in IslingtonLimited

Islington Social Housing I

45%

Refurbish, finance and maintain in excess of 2300 council housing properties in Islington

12-May-

2003

31-Mar-

2033

30

Construction costing

39million.

Partners for Improvement in Islington 2Limited

Islington Social HousingII

45%

Refurbish, finance and maintain in excess of 4000 council housing properties in Islington

15-Sep-

2006

07-Jul-

2022

16

Construction costing

151million.

Renaissance Miles PlattingLimited

Miles Platting SocialHousing

50%

Refurbish, maintain and manage in excess of 1500 social housing properties in Manchester.

31-May-

2007

31-Mar-

2037

30

Refurbishme nt of existing buildings costing 89 million in Manchester.

JLW Excellent Homes for Life Limited

Kirklees Social Housing

100%

Design, build, finance and operate 466 social housingunits.

20-Dec-

2011

30-Jun-

2034

23

Construction costing 70 million.

InspiralOldham Limited

Oldham Social Housing

95%

Design, regenerate, finance and operate 633 social housingunits.

30-Nov-

2011

30-Nov-

2036

25

Construction costing 70 million.

Transport








Sirhowy Enterprise WayLimited

SirhowyWay

100%

Design, build, finance and operate improvements to the A4048/A472 Strategic Highway Network between the northof

Blackwood and the east of Ponllanfraith, SouthWales.

21-Jan-

2004

20-Jan-

2034

30

Upgrade and maintain part of existing road and build new carriageway at a costof

44million.

Tiehytio Ykkostie Oy

E18Road

50%

Design, build, finance and operate the E18 Muurla- Lohja Motorway Project in Finland.

27-Oct-

2005

15-Nov-

2029

24

Upgrade and maintain existing road at a costof

327million


UKHighways

M40Limited

M40Motorway

(UK)

50%

Design, build, financeand

operate the M40Motorway.

08-Oct-

1996

07-Dec-

2026

30

Upgrade

and maintain existing motorwayat

a cost of 90 million.

Autolink Concessionaires (M6)plc

M6/M74

Motorway (Scotland)

11%

Design, build, finance and operate project to maintain 90 km of the M6 and M74 (from Gretna, on the Scottish border to Millbank, 30 miles south of Glasgow). Project includes the upgrade of the A74 to a 29 km stretch of dual three lanemotorway.

24-Apr-

1997

29-Jul-

2027

30

Upgrade and maintain existing motorway costing

95million.

Citylink Telecommunicatio nsLimited

LULConnect

33.5%

Upgrade of London Underground's existing radio and telecommunications systems and implementing and operating a newsystem.

21-Nov-

1999

21-Nov-

2019

20

Maintain the existing radio and communicati ons systems and replace at a costof

198million.

Lnia Nou Tram Dos,S.A.

Barcelona Metro StationsL9T2

53.5%

Design, build, finance, operate and maintain 15 metro stationsalong

Section II of the Line 9 metro system in Barcelona,Spain.

26-Nov-

2010

15-Oct-

2042

32

Upgrade and maintain 15 metro stations costing

734million

LniaNou

Tram Quatre,S.A.

Barcelona Metro StationsL9T4

13.5%

Design, construction, operation and maintenance of 13 metro stations along Line 9, Section IV of the Barcelona Metrosystem.

15-Dec-

2008

30-Sept- 2040

32

Upgrade and maintain 13 metro stations costing

605million.

Project Service LLC

Connecticut ServiceStations

100%

Renovation (completed in August 2015, operation and maintenance of 23 highway serviceareas.

7-Dec- 2009

16-Dec-

2044

35

Upgrade and maintain 23 highway service areas costing

$150million.

UKHighways A55Limited

A55 Holyhead to LiandegaiDBFO

100%

Design, construction, operation and maintenance of a 31km section of the A55, O&M of 9km of local roads and maintenance of two historic bridges on the Isle of Anglesey crossing the MenaiStrait.

16-Dec-

2008

23-Dec-

2028

30

Construction costing

101million.

Agility Trains WestLimited

Intercity Express Programme Phase 1

6%

Design, manufacture and maintenance of high speed trains and associated despot for the Great West Mainline route between Paddington andSwansea.

24-Jul-

2012

30-Nov-

2044

28

Construction costing 265 million.

StreetLighting









AmeyHighways

Lighting (Manchester) Limited

Manchester

StreetLighting

50%

Installation andmaintenance

of streetlighting

31-Mar-

2004

30-Jun-

2029

25

Replacemen

t column

programme costing 33 million.

AmeyHighways Lighting (Wakefield) Limited

Wakefield StreetLighting

50%

Installation and maintenance of streetlighting

23-Dec-

2003

02-Feb-

2029

25

Replacemen t







column

programme costing 26 million.

Walsall Public LightingLimited

Walsall

StreetLighting

100%

Installation and maintenance of streetlighting.

28-Mar-

2002

31-Mar-

2028

26

Replacemen t

column programme costing 16 million.

Barnet Lighting ServicesLimited

Barnet

StreetLighting

100%

Installation and maintenance of streetlighting.

30-Apr-

2006

30-Apr-

2031

25

Replacemen t

column programme costing 26 million.

Lambeth Lighting ServicesLimited

Lambeth StreetLighting

100%

Installation and maintenance of streetlighting.

30-Nov-

2005

31-Dec-

2029

24

Replacemen t

column programme costing 16 million.

Enfield Lighting Services

100%

Installation and maintenance of streetlighting.

30-Apr-

2006

30-Apr-

2031

25

Replacemen t

column programme costing 27 million.

Redcar & Cleveland LightingServices

Redcar & Cleveland StreetLighting

100%

Installation and maintenance of streetlighting.

31-Aug-

2007

31-Dec-

2029

22

Replacemen t

column programme costing 22 million.

Surrey Lighting ServicesLimited

Surrey Street Lighting

50%

Installation and maintenance of streetlighting.

27-Nov-

2009

28-Feb-

2035

25

Replacemen t

column programme costing79

million.

22. PRINCIPALSUBSIDIARIES

Details of the Company's subsidiaries at 31 December 2016 are asfollows:

Name

Category

Place of Incorporation

Proportionof

ownership interest

Proportion

of voting powerheld

JLIF Luxco 1S..r.l.

Intermediate holding

Luxembourg

100%

100%

JLIF Luxco 2S..r.l.

Intermediate holding

Luxembourg

100%

100%

JLIF PyreneesS..r.l.

Intermediate holding

Luxembourg

100%

100%


JLIF Pyrenees (GP)S..r.l.

Intermediate

holding

Luxembourg

100%

100%

JLIF LimitedPartnership24

Intermediate holding

United Kingdom

100%

100%

JLIF (GP)Limited25

Intermediate holding

United Kingdom

100%

100%

Palio (No 1)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 2)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 3)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 5)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 6)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 7)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 8)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 9)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 10)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 11)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 12)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 13)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 14)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 15)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 16)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 17)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 18)Limited

Intermediate holding

United Kingdom

100%

100%

Palio (No 19)Limited

Intermediate holding

United Kingdom

100%

100%

JLIF Holdings (Pembury Hospital)Limited

Intermediate holding

United Kingdom

100%

100%

JLIF InvestmentsLimited

Intermediate holding

United Kingdom

100%

100%

JLIF Holdings (Justice and Emergency Services)Limited

Intermediate holding

United Kingdom

100%

100%

JLIF Holdings (Regeneration and Social Housing)Limited

Intermediate holding

United Kingdom

100%

100%

JLIF Holdings (Street Lighting) Limited

Intermediate holding

United Kingdom

100%

100%

JLIF Holdings (Peterborough Hospital)Limited

Intermediate holding

United Kingdom

100%

100%

JLIF Holdings (ProjectService) UKLimited

Intermediate holding

United Kingdom

100%

100%

JLIF Holdings (ProjectService)

Operating

USA

100%

100%


US Inc

Subsidiary




Project ServiceLLC

Operating Subsidiary

USA

100%

100%

JLIF Holdings (Barcelona Metro)Limited

Intermediate holding

United Kingdom

100%

100%

Servicios, Transportes y Equipamientos Pblicos Dos, S.L

Operating Subsidiary

Spain

80%

80%

Linea Nou Tram DosS.A,.

Operating Subsidiary

Spain

53.5%

53.5%

Linea Nou MaintenimentS.L,

Operating Subsidiary

Spain

53.5%

53.5%

Linea Nou Tram QuatreS.A,

Operating Subsidiary

Spain

13.5%

13.5%

JLIF (Holdings) A55Limited

Intermediate holding

United Kingdom

100%

100%

UK Highways A55 (Holdings) Limited

Operating Subsidiary

United Kingdom

100%

100%

UK Highways A55Limited

Operating Subsidiary

United Kingdom

100%

100%

Louise CoLimited

Intermediate holding

United Kingdom

100%

100%

JLIF Holdings (AWT)Limited

Intermediate holding

United Kingdom

100%

100%

AHA Access Health Abbotsford Limited

Operating Subsidiary

Canada

100%

100%

AHA Holdings Abbotsford Limited

Operating Subsidiary

Canada

100%

100%

AHV Access HealthVancouver Limited

Operating Subsidiary

Canada

100%

100%

AHV Holdings Vancouver Limited

Operating Subsidiary

Canada

100%

100%

Barnet Lighting Services Limited**

Operating Subsidiary

United Kingdom

100%

100%

Collaborative Services Support (NE) HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Collaborative Services Support NELimited

Operating Subsidiary

United Kingdom

100%

100%

Education Support (Enfield2) HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Education Support (Enfield2) Limited

Operating Subsidiary

United Kingdom

100%

100%

Education Support(Enfield) HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Education Support(Enfield) Limited

Operating Subsidiary

United Kingdom

100%

100%

Education Support (Newham) HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Education Support (Newham) Limited

Operating Subsidiary

United Kingdom

100%

100%

Education Support (Swindon) HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Education Support (Swindon) Limited

Operating Subsidiary

United Kingdom

100%

100%

Enfield Lighting Services Limited**

Operating Subsidiary

United Kingdom

100%

100%

Equion Health(Newcastle)

Operating

United

18.75%

18.75%


Limited

Subsidiary

Kingdom



Forth Health HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Forth HealthLimited

Operating Subsidiary

United Kingdom

100%

100%

Healthcare Support (Erdington) HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Healthcare Support (Erdington) Limited

Operating Subsidiary

United Kingdom

100%

100%

Healthcare Support(Newcastle) HoldingsLimited

Operating Subsidiary

United Kingdom

15%

15%

Healthcare Support(Newcastle) Limited

Operating Subsidiary

United Kingdom

15%

15%

Healthcare Support(Newcastle) Financeplc

Operating Subsidiary

United Kingdom

15%

15%

Healthcare Support (North Staffs) HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Healthcare Support (North Staffs) FinancePlc

Operating Subsidiary

United Kingdom

100%

100%

Healthcare Support (North Staffs)Limited

Operating Subsidiary

United Kingdom

100%

100%

Support Services (BTP) HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Support Services (BTP)Limited

Operating Subsidiary

United Kingdom

100%

100%

IIC (C&T)Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC (Leeds Schools)Fund InvestmentLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC (Leeds Schools) Subdebt Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Barnet Funding Investment Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Barnet HoldingCompany Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Barnet SubdebtLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Bristol Funding Investment Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Bristol Infrastructure Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Bristol SubdebtLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC By Education (Peterborough Schools)Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Enfield FundingInvestment Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Enfield HoldingCompany Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Enfield SubdebtLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC LambethFunding InvestmentLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Lambeth Holding Company Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Lambeth SubdebtLimited**

Operating Subsidiary

United Kingdom

100%

100%


IIC Miles PlattingEquity

Limited**

Operating

Subsidiary

United

Kingdom

100%

100%

IIC Miles Platting Funding InvestmentLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Miles PlattingSubdebt Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Northampton (Pendereds) Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC NorthamptonFunding InvestmentLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Northampton Holding CompanyLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC NorthamptonLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC NorthamptonSubdebt Limited**

Operating Subsidiary

United Kingdom

100%

100%

IIC PeterboroughFunding InvestmentLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Peterborough Holding CompanyLimited**

OperatingSubsidiary

United Kingdom

100%

100%

IIC Peterborough Subdebt Limited**

OperatingSubsidiary

United Kingdom

100%

100%

IIC Redcar & ClevelandHolding CompanyLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Redcar and Cleveland Funding InvestmentLimited**

Operating Subsidiary

United Kingdom

100%

100%

IIC Redcar and Cleveland SubdebtLimited**

Operating Subsidiary

United Kingdom

100%

100%

Investors in theCommunity (Bexley Schools)Limited**

Operating Subsidiary

United Kingdom

100%

100%

Investors in theCommunity (LeedsSchools)





Holding CompanyLimited**

Operating Subsidiary

United Kingdom

100%

100%

Investors in theCommunity (Leeds Schools)Limited**

Operating Subsidiary

United Kingdom

100%

100%

John Laing Investments KVH HoldingsLimited

Operating Subsidiary

Canada

100%

100%

John Laing Investments KVH Limited

Operating Subsidiary

Canada

100%

100%

JLW Excellent Homes for Life Holdings CompanyLimited

Operating Subsidiary

United Kingdom

100%

100%

JLW Excellent Homes for Life Limited

Operating Subsidiary

United Kingdom

100%

100%

Lambeth Lighting Services Limited**

Operating Subsidiary

United Kingdom

100%

100%

Redcar and Cleveland Lighting ServicesLimited**

Operating Subsidiary

United Kingdom

100%

100%

Regenter B3Limited

Operating Subsidiary

United Kingdom

100%

100%

Regenter B3 (Holdco)Limited

Operating Subsidiary

United Kingdom

100%

100%

Regenter LCEP (Holdco) Limited

Operating Subsidiary

United Kingdom

100%

100%

Regenter LCEPLimited

Operating Subsidiary

United Kingdom

100%

100%

Regenter BentileeDistrict

Operating

United

100%

100%


Centre HoldingsLimited

Subsidiary

Kingdom



Regenter BentileeDistrict CentreLimited

Operating Subsidiary

United Kingdom

100%

100%

Realise HealthLimited

Operating Subsidiary

United Kingdom

60%

60%

Investors in Health (C&T) HoldingsLtd

Operating Subsidiary

United Kingdom

60%

60%

Investors in Health (C&T 1) Limited

Operating Subsidiary

United Kingdom

60%

60%

Investors in Health (C&T 2) Limited

Operating Subsidiary

United Kingdom

60%

60%

Inspiral OldhamHoldings CompanyLimited

Operating Subsidiary

United Kingdom

95%

95%

Inspiral OldhamHoldings CompanyLimited

Operating Subsidiary

United Kingdom

95%

95%

Sirhowy Enterprise Way HoldingsLimited*

Operating Subsidiary

United Kingdom

100%

100%

Sirhowy Enterprise Way Limited*

Operating Subsidiary

United Kingdom

100%

100%

Three Valleys (Healthcare) HoldingsLimited

Operating Subsidiary

United Kingdom

100%

100%

Three Valleys (Healthcare) Limited

Operating Subsidiary

United Kingdom

100%

100%

Walsall Public Lighting Holdings Limited

Operating Subsidiary

United Kingdom

100%

100%

Operating Subsidiary

United Kingdom

100%

100%

All the above subsidiaries are notconsolidated.

Except where indicated, all companies have 31 December yearends.

* Reporting date 31March

** Reporting date 30June

The "Operating subsidiaries" and all the "Intermediate Holding" companies are recognised as investments at fair value through profit orloss.

24 JLIF Limited Partnership (registered office: 1 Kingsway, London, WC2B 6AN) is a limited partnership formed under the Limited Partnership Act 1907. The results of JLIF Limited Partnership are included in the investments at fair value of theCompany.

25 JLIF (GP) Limited (registered office: 1 Kingsway, London, WC2B 6AN) is the General Partnerof the partnership of which JLIF Limited Partnership is the limited partner. The results of JLIF (GP) Limited are also included in the investments at fair value of theCompany.


GLOSSARY

AdjustedDRU

means the natural unwind of the discount rate, adjustedfor

the timing of acquisitions and distributions in theperiod.

Adjusted PortfolioValue

(a) the Fair Value of the Investment Portfolio (see Portfolio Value);plus


(b) any cash owned by or held to the order of the Company (the Group);plus


(c) the aggregate amount of payments made to shareholders by way of dividend in the period ending on the relevant valuation day,less


(i) any borrowings and any other liabilities of theCompany; and


(ii) any uninvestedcash.

Amended ExistingFOA

means the first offer agreement between JLIF, the General Partner for and on behalf of the Partnership and John Laing dated 21 January 2014 amending the First OfferAgreement dated 28 October2010.

Company

means John Laing Infrastructure FundLimited.

First OfferAgreements

means the first offer agreements between JLIF, the General Partner for and on behalf of the Partnership and John Laing dated 29 October 2010, and 21 January2014.

Group

The group of companies comprised of the Company, its two wholly owned Luxembourg subsidiaries (JLIF Luxco 1 S..r.l. and JLIF Luxco 2 S..r.l.), the English Limited Partnership (JLIF Limited Partnership), the General Partner (JLIF (GP) Limited) and the 31 wholly owned subsidiaries of the English Limited Partnership that together held the investments in the 62 assets at 31 December2016.

HMRC

Her Majesty's Revenue andCustoms

Initial Public Offering(IPO)

means JLIF's first sale of stock to the public on 29 November2010.

InvestmentAdviser

John Laing Capital Management Limited, acting in its capacity as Investment Adviser to John Laing Infrastructure Fund Limited pursuant to the Investment Advisory Agreement.

Investment AdvisoryAgreement

The investment advisory agreement between the Investment Adviser and John Laing Infrastructure Fund Limited dated 27 October 2010, as amended on 10 September2014.

Investment/InvestmentCapital

Partnership equity, loans, share capital, trust units, shareholder loans and/or debt interests in or to project entities or any other entities or undertakings in which the fund invests or in which it mayinvest.


John Laing or John LaingGroup

plc

John Laing Group plc and all of its whollyowned

subsidiaries, including John Laing Capital Management Limited.

John Laing Capital Management Limited

Investment Adviser to the John Laing Infrastructure Fund Limited and Operator of JLIF (GP)Limited.

Net Asset Value(NAV)

Total Assets (including Portfolio Value) minus liabilities of the Group.

Net Asset Value (NAV) pershare

Net Asset Value (NAV) divided by the total numberof Ordinary Shares issued as at 31 December2016.

NewFOA

means the new first offer agreement between JLIF, the General Partner for and on behalf of the Partnership and John Laing dated 21 January2014.

OECDcountries

means the member countries of The Organisationfor Economic Co-operation andDevelopment.

Partnership

means JLIF Limited Partnership, a limited partnership registered in England (registered number LP014109),which will hold and manage JLIF'sinvestments.

PPP

Public private partnerships ("PPPs") are arrangements typified by joint working between the public and private sector. In the broadest sense, PPPs can cover all types of collaboration across the interface between the public and private sectors to deliver policies, services and infrastructure. Where delivery of public services involves private sector investment in infrastructure, the mostcommon form of PPP is the Private Finance Initiative("PFI").

Source:http://www.hm-treasury.gov.uk/ppp_index.htm.

Portfolio

The 62 assets in which JLIF had a shareholding as at 31 December2016.

PortfolioValue

The sum of all of the individual assets' net present values ("NPV"). Each asset's NPV is calculated by discounting the future cash flows entitled to be received by JLIF, as shareholder, to the 31 December2016.

ProjectEntity

means a special purpose entity (including any company, partnership or trust) formed to undertake an infrastructure project or projects or provide infrastructureservices.

Prospectus

The Prospectus dated September 2013. The Prospectus can be found atwww.jlif.com.

Special Purpose Vehicle(SPV)

A company that is used to facilitate a PPP contract between the public and private sector. A company is incorporated and shareholders invest equity capital and a subordinated debt into the company. The company enters into financing arrangements with senior lenders or bond providers to finance the development of the asset. The company contracts with the public-sector to design, build, finance and operate an asset. It enters into subcontracts withcontractors



and operating companies to carry out the required worksand

services.

Total Assets of theGroup

means the Fair Value of the investment in JLIF Luxco 1 S..r.l. (which includes the Portfolio Value and the fairvalue of the intermediate holding companies) + the Company's cash + the Company's debtors + other receivables of the Company.

GROUPSTRUCTURE

JLIF has invested in its current Portfolio and will continue to invest in furtherinfrastructure investments indirectly via a series of holding entities, asfollows:

The Company invests in equity and profit participation instruments of JLIF Luxco 1 S..r.l. ('Luxco 1'), a socit responsabilit limite ('S..r.l.') established in Luxembourg, which inturn invests in equity and debt of a similar entity, JLIF Luxco 2 S..r.l. ('Luxco 2'). Both Luxco 1 and Luxco 2 (together 'the Luxcos') are wholly owned subsidiaries of the Company (direct and indirect respectively, with Luxco 2 being wholly owned by Luxco1).

Luxco 2 is the sole limited partner in the Partnership, an English limited partnership which has a special purpose vehicle as its general partner, JLIF (GP) Limited (the 'General Partner'). The General Partner is a wholly owned subsidiary of Luxco 1. The General Partner, on behalf of the Partnership, has appointed JLCM as Operator of thePartnership.

Luxco 2 primarily invests the contributions it receives from Luxco 1 in capital contributions and partner loans to the Partnership, which acquires and holds infrastructure investments directlyor indirectly through intermediate wholly owned companies and/or otherentities.

The Company's infrastructure investments are registered in the name of the General Partner, the Partnership, subsidiaries of the Partnership or their respectivenominees.

Heritage International Fund Managers Limited is the Administrator and Company Secretary to JLIF Limited. All other management functions are fulfilled byJLCM.

Intertrust (Luxembourg) S..r.l (formerly ATC Corporate Services (Luxembourg) S.A) is the Administrator and Company Secretary to the Luxembourgentities.

PricewaterhouseCoopers LLP, in Luxembourg, is supplying the accounting and tax functions to those companies. JLIF Limited Partnership has an Operator Agreement with JLCM to provideall necessary managementfunctions.

JLIF Limited Partnership has an Operator Agreement with JLCM to provide all necessary managementfunctions.


DIRECTORS, AGENTS ANDADVISERS

DIRECTORS (ALLNON-EXECUTIVE)

Paul Lester(Chairman)

David MacLellan (Deputy Chairman & Senior IndependentDirector) HelenGreen

Talmai Morgan Christopher Spencer Guido VanBerkel

INVESTMENT ADVISER ANDOPERATOR

John Laing Capital ManagementLimited

1Kingsway

London WC2B 6AN UnitedKingdom

ADMINISTRATOR TO COMPANY, COMPANYSECRETARY AND REGISTEREDOFFICE

Heritage International Fund ManagersLimited

P.O. Box 225, HeritageHall Le MarchantStreet

St Peter Port Guernsey GY1 4HY ChannelIslands

REGISTRAR

Capita Registrars (Guernsey)Limited

Longue Hougue House StSampson

Guernsey GY2 4JN ChannelIslands

UK TRANSFERAGENT

Capita RegistrarsLimited

TheRegistry

34 Beckenham Road Beckenham

Kent BR3 4TU UnitedKingdom

CORPORATEBROKER

J.P. Morgan SecuritiesLimited

25 Bank Street Canary Wharf London E14 5JP UnitedKingdom

AUDITOR

John Clacy Fca (For An On Behalf Of Deloitte Llp, Chartered Accountants And RecognisedAuditor)

Regency Court Glategny Esplanade St Peter Port Guernsey GY1 3HW ChannelIslands

PUBLICRELATIONS


RLM Finsbury Tenter House 45Moorfields

London EC2Y 9AE UnitedKingdom

CORPORATEBANKERS

Royal Bank Of ScotlandInternational

PO Box55

35 High Street St PeterPort

Guernsey GY14BE


This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXDXFFKXEFF



 
Let’s get you setup so you get the most out of our service
Done, Let's add some stocks
Brilliant - You've created a folio! Now let's add some stocks to it.

  • Apple (AAPL)

  • Shell (RDSA)

  • Twitter (TWTR)

  • Volkswagon AG (VOK)

  • McDonalds (MCD)

  • Vodafone (VOD)

  • Barratt Homes (BDEV)

  • Microsoft (MSFT)

  • Tesco (TSCO)
Save and show me my analysis