Final Results

4 April 2011

John Laing Infrastructure Fund ("JLIF" or "Company")

First Results for the Period since Listing on 29 November to 31 December 2010

Successful financial and operational performance

John Laing Infrastructure Fund Limited, the international PPP/PFI infrastructure investment company, today announces its first results since its Primary Listing on the London Stock Exchange on 29 November 2010.

Strong Results for Reported Period

·; Portfolio valuation up £5.8million to £264.7million (up £2.1million excluding exchange rate movements)

·; NAV increased 2.6% to 100.8p (1.3% excluding exchange rate movements)

·; Profit before tax of £5.4 million, £4.1 million on an IFRS basis

·; Cash Flow in line with expectations, with cash of £7.6 million at 31 December 2010

·; Initial dividend of 0.5 pence per share, a rate equivalent to an annual dividend of 6.0p, in line with target dividend yield of 6% per annum)

·; Remain in line to achieve an IRR target of 7%-8% over the long term

Successful First Three Months as a Listed Company

·; Launched on 29 November, raising target funds of £270 million

·; Acquisition of seed portfolio of 19 fully operational, quality PFI/PPP assets

·; Strong pipeline of investment opportunities under review

·; Signed three year unsecured £25million Revolving Credit Facility with RBS.

·; Group gearing to remain low: debt free at launch, then limited to a maximum of 25% of total assets

·; Shares traded at a 6.5% premium to issue price; 106.5p on 31 December 2010

·; Entrance to the FTSE SmallCap index in March 2011

Announcement Today of New Acquisitions and Tap Issue

·; Acquisition of 4 assets for £26.226 million from John Laing Group and tap issue for up to 26.73million shares announced today. Full details disclosed in an adjoining announcement, available on the website

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

"It is an exciting and busy time for JLIF. Since 29 November 2010, we have begun life as a new company listed on the London Stock Exchange, acquired a portfolio of nineteen quality PFI/ PPP projects, and had a strong first reported period of trading.

We have a portfolio, which provides stable long term cash flows, rich with asset management potential and an attractive pipeline of acquisition opportunities, which leaves us well placed to create future value for shareholders."

For further information, please contact:

John Laing Infrastructure Fund 020 7901 3326

David Marshall

Andrew Charlesworth

J.P. Morgan Cazenove 020 7588 2828

Laurence Hollingworth

Patrick Magee

Christopher Nicholls

William Simmonds

Finsbury 020 7251 3801

Faeth Birch

Gordon Simpson

Philip Walters

Details of the Analyst Presentation:

There will be an analyst presentation at [08.15] today at J.P. Morgan Cazenove, 10 Aldermanbury, London, EC2V 7RF. Please contact Sara Merrilees on 020 7251 3801, alternatively by email on [email protected].

CHAIRMAN'S STATEMENT

Introduction

This is the first results for John Laing Infrastructure Fund Limited since IPO, covering the period from date of incorporation on 6 August 2010 to the period end 31 December 2010.

JLIF successfully listed on the London Stock Exchange on 29 November 2010, raising £270 million. This was the second largest investment fund raising in 2010 on the London Stock Exchange which, given the financial and economic climate, was a considerable achievement. The funds were used shortly thereafter to acquire a portfolio of nineteen low-risk operational assets procured under the Private Finance Initiative ('PFI') or Public Private Partnership model ('PPP'), which will provide JLIF with a stable yield, enabling it to provide distributions to our shareholders.

The Group will seek to enhance the value of the assets that it owns and aims to grow in size by acquiring further PFI/PPP assets that fit its investment criteria both from John Laing and from other sources.

JLIF has made good progress since launch which can be summarised as follows:-

• Launched 29 November 2010 achieving full target capital raise of £270million

• Proceeds invested shortly afterwards in 19 operational low risk PFI/PPP assets from John Laing

• Portfolio Value increased by £5.8million to £264.7million at 31 December 2010

• First dividend announced February 2011

• Entrance into FTSE SmallCap index March 2011

• Bank facility for £25million signed March 2011

• Announcement of expected acquisition of 4 further stakes in PFI/PPP assets from John Laing for £26.2 million in April 2011

Acquisition of Portfolio

Following the successful launch, the Group acquired 19 stable, low-risk PFI/PPP assets from John Laing. The Portfolio is diversified across three mature PFI/PPP geographic regions: UK, Canada and Finland, and seven sectors: health, roads, street lighting, justice and emergency services, defence, regeneration and schools. All of the projects comprised in the Seed Portfolio have either been originated or developed, or have been acquired in the secondary market, by John Laing.

JLIF's objective is to provide investors with long-term income distributions at levels that are sustainable. The Company will target an initial annualised yield of 6.0%per annum on the Issue Price of its Ordinary Shares in the period from admission to the LSE on 29 November 2010 up to 31 December 2011 and, thereafter, the Company will aim to maintain this distribution. The Company will target an Internal Rate of Return ('IRR') of 7.0% to 8.0% on the Issue Price of its Ordinary Shares to be achieved over the longer term via active management to enhance the value of existing investments, and the acquisition of further investments.

Shareholder Returns and Investment Performance

As of 31 December 2010, JLIF was trading at 106.5p which is a 6.5% premium to the Issue Price. I am delighted to confirm that JLIF has been accepted into the FTSE SmallCap Index, a testament to how the market has welcomed the fund into the infrastructure space. The Company announced its first dividend in line with the launch prospectus on 23 February 2011.

Investment Advisor

I believe that an investment in JLIF offers a differentiated and diversified Portfolio with strong yield characteristics and the potential for ongoing capital growth. The yield from the underlying assets is positively correlated to inflation, and because inflation is currently running above the assumed level in the current assets, this is expected to deliver a positive impact on the yield received from those assets over time. JLIF benefits from access to two experienced fund managers, David Marshall and Andrew Charlesworth, who have significant knowledge and expertise in infrastructure projects. David and Andrew are Directors of John Laing Capital Management Limited ('JLCM') which is the appointed Investment Advisor to JLIF. (JLCM is using its extensive PFI/PPP knowledge to manage the existing portfolio effectively and will seek to deliver further value from the Portfolio by enhancing the value of the assets.

Corporate Governance

Due to JLIF having a Premium Listing on the London Stock Exchange, it is obliged to comply with the new UK Corporate Governance Code. The Board has put in place a framework which will enable the Company to comply with the relevant provisions of the Code. Additionally, I am pleased to confirm the Company has taken up membership of the Association of Investment Companies ('AIC'). The Board considers that it is appropriate to report against the principles and recommendations of the AIC Code, and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code).

Outlook

JLIF is in a strong position for the future. In the short to medium term, the Group is relatively unaffected by the changes in the UK PFI/PPP programme. We are, however, very conscious of the potential for us to deliver cost savings and efficiencies to the benefit of both public and private sector spending. We have therefore instigated a programme of engaging and working with our public sector clients to identify and implement cost savings wherever possible.

In the longer term global population growth, the enactment of recent laws and directives concerning climate change and the natural renewal of assets as they come to the end of their useful lives will all increase the need for new infrastructure delivery. Private sector investment is expected to be an increasing feature in this global delivery of infrastructure and I believe that the procurement method for this will not be too dissimilar to the PFI/PPP projects we see today. In the UK, the government continues to encourage funding for infrastructure projects from the private sector, committing to spend £200 billion pounds over the next five years. This will allow the Group to enjoy a healthy pipeline of assets into the future.

The Group has a valuable First Offer agreement with John Laing for a large and robust pipeline of John Laing assets. This affords the Group significant value in the opportunity to have the first chance to tender for mature de-risked assets. This agreement applies to projects in the accommodation or transportation sectors in the UK, Europe or Canada and waste projects in the UK. Supplementing the John Laing pipeline, JLCM, as Investment Advisor to the Company, is actively pursuing third party opportunities to continue to diversify the Portfolio.

The secondary market for PPP/PFI assets is becoming increasingly active, as infrastructure development companies look to recycle capital by disposing of projects in operational phase, to invest in ones in construction phase. JLIF has the added benefit of the right of first offer to certain assets that John Laing Group would like to sell over the next four years, worth in excess of £300 million.

I look forward to an exciting 2011 in which we will strive to grow and deliver further value to our shareholders.

INVESTMENT ADVISOR REPORT

1. ABOUT THE INVESTMENT ADVISOR

JLIF is advised on a day to day basis by John Laing Capital Management Limited as the Investment Advisor. The Company believes JCLM has a strong track record of investing and operating in the sector and in delivering investment returns and increasing shareholder value.

John Laing provides day to day management services directly to 15 of the Seed Portfolio projects under management services agreements. The remaining four projects are managed by associated companies of co-shareholders. For all of the Seed Portfolio projects which the Fund acquired, JLCM, as Operator, has been fortunate to be able to retain the current John Laing project directors, who will continue to take an active role in managing and reviewing these projects.

2. INVESTMENT PERFORMANCE

Since listing, JLIF's share price has consistently traded at a small premium and has remained relatively stable with limited volatility. JLIF was approved to enter the FTSE SmallCap index on 9 March 2011, and was subsequently included in the index on the 18 March 2011.

JLIF listed with a Net Asset Value ("NAV") per share of 98.2 pence, which increased to 100.8pence by 31 December 2010. The increase can be attributed to the increased value of the Portfolio. The increase in the Portfolio Value is described in section 3 below but can largely be explained by three factors:

(i) Distributions;

(ii) Exchange rate movements; and

(iii) Growth in the value of the underlying assets

JLIF aims to deliver a stable long term yield to its investors. It is able to do this due to the underlying cash flows that it receives from its diverse portfolio of stable operational PFI/PPP projects. The returns that it earns from projects are positively correlated with inflation, which means that enhanced returns will be earned when the actual inflation index is above the assumed long term rate. In the UK for example, the relevant index is the Retail Price Index (RPI) and the assumed long-term level is 2.75%. As RPI is significantly above this level currently this will result in higher returns for JLIF.

JLIF has announced its first dividend of 0.5 pence per share payable on 7 April 2011. Dividend expectations continue to be in line with those communicated in the Prospectus and have sufficient cash covered in the short term.

3. VALUATION

a. Portfolio

The valuation methodology is based on discounted cash flow analysis. JLIF's weighted average discount rate upon acquiring the Seed Portfolio on 29 November 2010 was 8.35%, which was confirmed by an independent valuation expert.

In the month from listing to the year end, there were no material factors that would cause the discount rate or any of the assumptions, other than exchange rates, to be amended. Changes in exchange rates affect those projects in the portfolio with foreign exchange risk. This subsequently impacts their value in the Portfolio and therefore their weight in the calculation of the overall Portfolio discount rate. These changes have resulted in a minor shift in the discount rate from 8.35% to 8.34%.

As at 31 December 2010, the Portfolio was valued at £264.7m compared with £259m at 29 November 2010. This is an increase of 2.13%. The breakdown of how this increase in value has been achieved is in the table below.

JLIF has received £2.1 million of distributions from its underlying assets. This is the sum of £1.7m received by JLIF in the period to 31 December 2010; and £0.4 million received by JLIF from John Laing in January 2011. The latter reflects the distributions John Laing received in the period from 30 September 2010 to 29 November 2010. The acquisition of the Seed Portfolio was predicated on JLIF receiving cash flows from the underlying assets from 30 September 2010. The total distributions received reduce the Portfolio Value as they have been realised and are no longer contained within the assets' future cash flows.

Exchange rates have moved in JLIF's favour and this has boosted the Portfolio Value by £3.6 million. This value is likely to fluctuate in the future as the foreign exchange market moves. JLCM will monitor foreign exchange movements and advise JLIF to implement hedging should that be appropriate. For clarity, JLIF has presented its Net Asset Value ("NAV") per share both with and without exchange rate movements. NAV is not the same as the Portfolio Value. NAV is equal to JLIF's assets (including Portfolio Value) less its liabilities, and this is used to calculate the net asset value per share. Portfolio Value is the total discounted value of each of the underlying assets.

The table above demonstrates uplift in NAV per share of 2.65% including exchange gains and 1.32% excluding exchange gains.

The rebased Portfolio Value taking into account distributions and exchange rate movements, as at 31 December, is £260.5 million. The Portfolio at acquisition was based on future cash flows valued at 30 September 2010. The majority of the £4.2 million increase to £264.7 million demonstrates the effect of the passage of time from the end of September through to the end of December. This represents growth of 1.62% for 3 months based on the rebased Portfolio Value.

b. Discount Rate

The portfolio discount rate will largely be affected by either a move in the market for PPP/PFI assets, or a move in an asset's specific five year average rate for the relevant underlying government bond, which the discount rate is based upon; or a material shift in the risk profile of all of the assets. A change in an individual discount rate of an asset is unlikely to impact the portfolio discount rate given the relative weightings of each asset to the Portfolio.

Given neither of these events has occurred between JLIF listing on the London Stock Exchange and the year end, the small amendment to the discount rate, as described above, is not material. JLIF's discount rate was verified through an independent valuation as part of the acquisition; and JLIF is confident this rate reflects its portfolio and the market.

A material shift in the discount rate would be in excess of 1%. JLCM believe such a shift is unlikely in the short term. JLIF has sensitised the portfolio by adding and subtracting 1% to the discount rate. The results below illustrate the effect on the value of the portfolio.

Discount rates have remained relatively stable over the past year and market expectations suggest rates will start trending downwards, although there has not been a material move yet.

JLIF's portfolio of varying asset maturities goes some way to mitigate fluctuations in value caused by the discount rate. This is because shareholder cash flows from the underlying assets increase over the life of the concession as senior debt in the projects is repaid. In the final years of a project when the senior debt has been repaid, the cash flows to shareholders typically peak. This is because after operating costs, all other cash flow is allocated to repay subordinated debt, dividends, and finally equity upon maturity of the contract, at which point the asset is handed back to the public sector and the project company would be liquidated.

Therefore, because the larger anticipated cash flows from the portfolio assets are expected over a number of years the effect of changing the discount rate has less of an impact than for example another portfolio with a single maturity date.

c. Foreign Exchange

The Portfolio currently contains three assets that are exposed to foreign exchange movements: Abbotsford Hospital and Vancouver Hospital in Canada and the E18 road in Finland. At 31 December 2010, these assets represented 31.2% of the Portfolio.

JLCM has performed two sensitivities to increase and decrease the exchange rates in the Portfolio by 5%.

If the Sterling weakens by 5% against the corresponding foreign currency, the Portfolio Value increases by 1.49%. Conversely, if the Sterling strengthens by 5%, the Portfolio Value decreases by 1.65%. The fluctuations in value are relatively small and this is driven by the proportion of cash flows in the Portfolio subject to foreign exchange, relative to those that are not. JLCM will seek to minimise the impact of exchange rate volatility to preserve the Portfolio Value, and therefore shareholder value.

JLCM recommends that JLIF continues to pursue a multi currency portfolio strategy which provides investors with a level of exposure as described in the Prospectus to the extent that exchange rate volatility is managed within the Portfolio. This can be achieved by managing the foreign exchange weighting in the Portfolio or by adopting a hedging strategy with respect to exchange rates. JLCM will advise JLIF if it believes a hedging transaction would add value to the Portfolio and therefore shareholders.

4. INFLATION

The Portfolio Value is positively correlated with inflation. The approximate correlation to inflation is around 0.6. This is interpreted as meaning for every percentage point increase in inflation above the assumed level, returns increase by approximately 0.6 percentage point. The effect is broadly symmetrical and so a fall in inflation would produce a similar but opposite effect.

The underlying assets in the Portfolio have some exposure to inflation. Each asset receives a Unitary Payment ("UP") from a public sector client. Full UP is paid periodically from the end of construction until the Contract expires, which is typically around 25 years. The UP is calculated to cover the costs of financing the Project (loans are borrowed to finance construction and are then repaid over the contract period) and the operational costs of maintaining and operating the asset. The UP flows in a waterfall through the project to pay for operational costs first, then senior debt and finally equity.

Debt costs on the underlying assets are fixed in some instances through an interest rate swap when the contract is signed; therefore, it is normal to 'fix', i.e. not apply inflation to the portion of the UP related to these fixed costs. The operational costs are indexed by inflation and this is reflected in the revenue from the Client. A proportionate amount of the UP corresponding to those costs that are affected by inflation is, therefore, indexed and this rises or falls with inflation. This creates a '"natural hedge'", meaning a derivative does not need to be entered in to in order to mitigate the effect of inflation.

JLIF's current assumption for long term RPI is 2.75% and RPI is currently at 5.5% (March 2011). JLCM believe JLIF has conservative inflation assumptions in its underlying assets. This is supported by the independent valuation at 29 November 2010. The upside in the higher actual inflation rate to that assumed for the underlying cash flows will be reflected over time in the valuation as opposed to a one off increase or decrease in value.

JLCM has performed two sensitivities to increase and decrease the inflation rates in the Portfolio by 1%.

JLIF does not have a different short term forecast to its long term forecast even when current inflation suggests this might be appropriate. This assumption is prudent.

Inflation contributed to some of the £4.2million underlying valuation growth for the period ending 31 December 2010.

5. GEARING

JLIF had no gearing at launch. As stated in the Prospectus, JLIF has the ability to raise debt up to 25% of the fund value. JLIF has taken advantage of this opportunity and in March 2011 signed a three year unsecured £25m Revolving Credit Facility with National Westminster Bank plc. The margin on the Facility is 2% over LIBOR, and is subject to variation should the Loan to Value change significantly. The Facility is currently available for JLIF for utilisation. This facility will be used primarily to fund third party acquisitions in between capital raisings.

6. FINANCIAL RESULTS

The financial statements on pages 15 to 61 mark the first financial statements of John Laing Infrastructure Limited since its incorporation on 6 August 2010 and its listing on the London Stock Exchange on 29 November 2010.

The financial highlights from this short, first period of activity are -

• Net Asset Value1 (NAV) of £272.3 million at 31 December 2010

• IFRS net assets of £270.8 million at 31 December 2010

• Investment Basis2 profit before tax £5.5 million for the period ended 31 December 2010

• IFRS profit before tax £4.2 million for the period ended 31 December 2010

• First dividend declared in February 2011 as targeted; 0.5 pence per share for the period ended 31 December 2010

• 1.62% increase to £264.7million of rebased Portfolio Value3 since acquisition

1 Net Asset Value is the net assets for the Investment group on the Investment Basis (see note 2 below) as set out in the first column of the consolidated balance sheet in the Financial Statements. This differs from the basis of recording net assets under International Financial Reporting Standards as set out in the third column (Total group) of the consolidated balance sheet. See note 2 (a) to the financial statements for details of the basis of accounting and the key differences between the results in the two columns.

2 Investment Basis is the basis used for reporting the results of the Group as an Investment Group, under which investments in all 19 projects are accounted for in the same way. This differs from the results of the Group under the Total Group basis, in accordance with IFRS, where the accounting treatment for the 5 project subsidiaries is different than that for the 14 projects which are joint ventures of the group. See note 2 (a) to the financial statements for details of the basis of accounting and key differences.

3 Portfolio Value is the fair value of the investments in all 19 projects calculated using the discounted cash flow method. The Portfolio Value on acquisition is rebased for this purpose to reflect any amounts received from the projects in the period between acquisition and 31 December 2010.

Basis of accounting

In November 2010 and December 2010, the Company acquired an initial seed portfolio of 19 PFI/PPP project entities with the investments in these companies comprised of a combination of equity investments in shares and subordinated loans.

The JLIF Group has both recourse and non-recourse parts. The Investment Group, that comprises the Company, its two wholly owned Luxembourg subsidiaries (JLIF Luxco 1 Sàrl and JLIF Luxco 2 Sàrl), the English Limited Partnership (JLIF Limited Partnership) and the seven wholly owned subsidiaries of the English Limited Partnership that together hold the investments in the 19 project entities, forms the recourse part of the Group, whilst the 19 project entities themselves comprise the non-recourse part of the Group. The effect of this is that any cash held by or debt in the 19 project entities is without recourse to the Group. The cash in the underlying project entities only becomes recourse to the Investment Group when the project entities make distributions to their shareholders. These distributions are comprised of returns on investments (interest on subordinated loans and dividends on equity), which are reported in the Income Statement, together with repayments of investments (subordinated loan repayments and equity redemptions).

At 31 December 2010, the Group controlled 5 of these project entities by virtue of having the power, directly or indirectly, to govern the financial and operating policies of the projects. Under International Financial Reporting Standards ("IFRS"), the results of these entities are required to be consolidated as subsidiaries in the Group's financial statements on a line-by-line basis.

The Group does not control the other 14 projects but has significant influence over the financial and operating policies of these projects and along with other shareholders jointly controls these entities. Accordingly, the Company would usually account for these investments in accordance with IAS 31 'Interests in Joint Ventures'. However, the Group has taken the exemption from IAS 31 available to venture capital organisations and similar entities and these 14 investments are designated upon initial recognition to be accounted for at fair value through profit or loss.

Whilst the two groups of investments described are treated differently under IFRS they together form part of a portfolio of similar investments which are held for investment purposes and managed as a whole and there is no distinction made between those investments classified as subsidiaries and those which are not.

In order to provide shareholders with relevant and useful information regarding the Investment Group's performance, its ability to make distributions to its shareholders and its capacity for further investments, the financial results in the Financial Statements have been presented to show the results for the recourse group on an Investment Basis2 (presented as "Investment Group" in the financial statements), before showing those adjustments (presented as "Non-investment adjustments" in the financial statements) required to arrive at the financial results on a consolidated basis ("Total group"), which incorporate the results of the non-recourse group under IFRS.

The financial results under the Investment Basis reflect the Group's activity as an investment company, incorporating the returns from and fair value movements of the entire portfolio regardless of the extent of control or influence the Group can exercise. The financial results under the IFRS consolidated basis replace the Investment Basis results of the 5 project subsidiaries with the underlying operating results of each of these subsidiaries on a line-by-line basis. They also incorporate other IFRS adjustments for fair valuing of the acquired subsidiaries' assets and liabilities as business combinations and on-going fair value movements of derivatives and financial assets both of which do not reflect the Group's investment performance or its ability to pay dividends to shareholders.

Period under review

The key financial results for the period ended 31 December 2010 are:

(i) Under the Investment Basis, profit before tax (PBT), excluding the gain on the portfolio valuation of £4.5m (see (iii) below), was £1m. This comprised returns from investments in projects of £3.4m offset by recourse costs of the Investment Group, including acquisition costs of £1.9m, of £2.4m.

(ii) Under the IFRS consolidated basis, profit before tax, excluding the gain on the portfolio valuation of investments in joint ventures only of £3.1m, was £1.1m. This is different to the results under the Investment Basis due to the results of the 5 project subsidiaries under the Investment Basis being different to the corresponding results under the IFRS consolidated basis. For this period, the aggregate of positive fair value movements on financial instruments less amortisation of intangible assets of £0.8m offset by the PBT on an IFRS consolidated line-by-line basis of the subsidiaries of £0.3m is £0.1m better than the returns the Investment Group earned from its investments in the subsidiaries under the Investment Basis of £1.0m.

(iii) The gain on Portfolio Value of all investments since acquisition was £4.5m. As the period covered by the financial statements between the acquisition date and the period end date was only one month the Directors did not expect a significant movement in the value of the investments. The majority of the increase (£3.5m) was due to foreign currency exchange rate gains on the overseas investments as a result of the strengthening of both the Euro and the Canadian Dollar against Sterling since acquisition. A £1.0m increase in the Portfolio Value as a result of other value enhancements, primarily as a result of higher inflation in the underlying projects in such a short period is, though, an encouraging sign.

(iv) The Portfolio Value has increased from £259m on acquisition to £264.7m at 31 December 2010 (or £208.9m for the investments in joint ventures alone). The increase in Portfolio Value of £5.8m includes the gain of £4.5m in (iii) above, together with interest on subordinated loans accrued at 31 December 2010 of £1.8m included in interest income in the financial statements less repayments of £0.6m in the period. Further details on the Portfolio Valuation is provided in section 3 of this Investment Advisor's Report.

(v) Net Asset Value (NAV) on the Investment Basis has increased from £265m to £272.2m at 31 December 2010, primarily as a result of the increase in the Portfolio Value. The NAV under the Consolidated IFRS Basis at 31 December 2010 of 270.7m is lower than in the Investment Basis due to the Portfolio Value of the 5 project subsidiaries of £55.8m being higher than the net assets on the consolidation of these subsidiaries under IFRS of £54.3m.

The Group has a total cash balance on an Investment Basis of £7.6m and currently no debt. The breakdown of the movements in cash is shown below:

Cash flows of the Investment Group for the period

The Company has declared a total dividend of £1.35m (0.5 pence per share) which is payable on 7 April 2011. The remaining cash balance is available to partially fund further acquisitions of projects that the Company is currently pursuing.

7. ACQUISITIONS

JLIF's priority is to manage its existing assets and to continue to deliver value from its existing assets in order to maximise returns to its shareholders. To supplement this anticipated growth, JLIF will consider further acquisitions in line with its Investment Policy and only undertake acquisitions if new assets will enhance the Portfolio.

 JLIF has announced on 4 April 2011 that it has agreed in principle to acquire three further UK PFI/PPP assets and an increased stake in an existing investment in one project from John Laing for £26.2m. The sale and purchase agreement was signed on 1 April 2011 but completion of all acquisitions remains subject to satisfaction of certain of condition precedents. The secondary market for PFI/PPP assets currently provides several opportunities for JLIF to acquire assets from other market participants, and at the present time, JLCM as Investment Advisor, is reviewing a number of potential acquisitions.

8. OUTLOOK

The PFI model in the UK is well established. Over 700 PFI projects delivering investment of over £49 billion have been signed since 1992 in the UK. PFI has now delivered over 500 operational projects, including 185 new or refurbished health facilities, 230 new or refurbished schools and 43 transport projects. (Source: NAO Report October 2009 "Private Finance Projects). In the UK, whilst there are probably fewer new PFI/PPP projects being procured compared to two years ago, there is still a healthy pipeline of opportunities in the regeneration, social housing and waste sectors.

In the short run, JLIF is relatively insulated from the challenges and uncertainties in the wider PFI/PPP industry brought about by the reduction in government spending.. None of the Seed Portfolio assets will undergo any change as a result of the CSR. In the medium term, it is highly unlikely that JLIF will be impacted given the available pipeline from John Laing. Should the Government wish to change the existing contract this will have to be in agreement with the Special Purpose Vehicle (SPV) .

In the longer term, the structures that PFI/PPP is procured under in the UK may change. However, JLCM is confident that the principle of private sector investment in infrastructure will remain. International projects are still being procured under methods similar to those used in creating the assets in the Seed Portfolio. The international governments using PFI have not announced, and neither does JLCM anticipate, similar PFI austerity initiatives to that adopted in the UK; therefore JLCM anticipates that there will remain significant capacity in those markets to purchase future assets.

JLCM remains confident in the opportunities it sees in JLIF's markets and continues to expect it to perform in line with its expectations.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Financial Statements in accordance with applicable laws and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. Under Company law 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 that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:

• properly select and apply accounting policies;

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

• 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 agoing concern.

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 other irregularities.

The maintenance and integrity of the Company's website is the responsibility of the Directors. The work carried out by the Auditor does not involve consideration of these matters and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Legislation in Guernsey and the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

For financial years beginning on or after 29 June 2010, The Financial Reporting Council has replaced the Combined Code with the UK Corporate Governance Code (the "Code") to help company boards become more effective and more accountable to their shareholders. All companies with a Premium Listing of equity shares in the UK are required under the Listing Rules to report on how they have applied the Code in their annual report and accounts.

The Directors confirm that, so far as they are aware, there is no information relevant to the audit of which the Group's auditor is unaware. The Directors also confirm that, they have taken all steps they ought to have taken as Directors to make themselves aware of any information relevant to the audit and to establish that the Group's auditor is aware of that information.

Each of the Directors confirms that, to the best of their knowledge and belief:

• The financial statements, prepares in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and

• The Directors' report contained in the Annual Report includes a fair review of the development and performance of the Group and of the position of the Company and the Group as a whole, together with a description of the principal risks and uncertainties they face.

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

We have audited the consolidated financial statements of John Laing Infrastructure Fund Limited for the period from date of incorporation on 6 August 2010 to 31 December 2010 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement and the related notes 1 to 32. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards "IFRSs") as adopted by the European Union.

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 have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR

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). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS

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 Group and 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.

OPINION ON FINANCIAL STATEMENTS

In our opinion the financial statements:

• give a true and fair view of the state of the Group's affairs as at 31 December 2010 and of its profit for the period then ended;

• have been properly prepared in accordance with IFRSs as adopted by the European Union; and

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

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

We have nothing to report in respect of the following:

Matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

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

• the financial statements are not in agreement with the accounting records and returns; or

• we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

• the directors' statement, in the Report of Directors, in relation to going concern; and

• the part of the Corporate Governance Statement relating to the Company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review.

Richard Anthony Garrard FCA

For and on behalf of Deloitte LLP

Chartered Accountants and Recognised Auditor

Guernsey

Channel Islands

4 April 2011

CONSOLIDATED INCOME STATEMENT

For the period 6 August 2010 to 31 December 2010

All results are derived from continuing operations.

Supplementary information has been provided analysing the income statement between results on an investment basis ("Investment group") and results on an IFRS consolidated basis ("Total group"). See note 2 (a) for further details.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period 6 August 2010 to 31 December 2010

Supplementary information has been provided analysing the income statement between results on an investment basis ("Investment group") and results on an IFRS consolidated basis ("Total group"). See note 2 (a) for further details.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period 6 August 2010 to 31 December 2010

Supplementary information has been provided analysing the income statement between results on an investment basis ("Investment group") and results on an IFRS consolidated basis ("Total group"). See note 2 (a) for further details.

CONSOLIDATED BALANCE SHEET

as at 31 December 2010

Supplementary information has been provided analysing the income statement between results on an investment basis ("Investment group") and results on an IFRS consolidated basis ("Total group"). See note 2 (a) for further details.

The financial statements were approved by the Board of Directors and authorised for issue on 4 April 2011. They were signed on its behalf by:

P Lester C Spencer

Director Director

CONSOLIDATED CASH FLOW STATEMENT

For the period 6 August 2010 to 31 December 2010

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 fair value.

Supplementary information has been provided analysing the income statement between results on an investment basis ("Investment group") and results on an IFRS consolidated basis ("Total group"). See note 2 (a) for further details.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period 6 August 2010 to 31 December 2010

1. GENERAL INFORMATION

John Laing Infrastructure Fund Limited (the "Company") 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 consolidated financial statements of the Company as at and for the period ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as the "Consolidated Group"). The Consolidated Group invests in PFI/PPP infrastructure projects in the UK, Europe and North America.

Of the Consolidated Group's portfolio of 19 interests at 31 December 2010, 14 have been accounted for as investments (the "Entity Investments"). The 5 remaining investments are deemed to be subsidiaries of the Company (the "Operating Subsidiaries") and the acquisition is treated as a business combination. Certain aspects of the accounting policies apply only to the Operating Subsidiaries. Where applicable, this is noted in the relevant accounting policy.

These financial statements are presented in pounds sterling which is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out in note 2.

In accordance with section 244 (5) of Companies (Guernsey) Law, 2008, as the Directors have prepared consolidated accounts for the period, they have not prepared individual accounts for the Company in accordance with section 243 for the period.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting

The Company was incorporated on 6 August 2010 and was successfully launched and listed on 29 November 2010. The financial statements are for the period from date of incorporation to 31 December 2010 and include results of Operating Subsidiaries from the date of acquisition, which was 29 November 2010 in respect of four of the five subsidiaries and 3 December 2010 in respect of the remaining subsidiary, to 31 December 2010.

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 European Union ("EU") and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation.

The financial statements have been prepared on the historical cost basis, except that the following assets and liabilities are stated at their fair values: derivative financial instruments and financial assets classified at fair value through profit or loss. The principal accounting policies are set out below.

At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue and relevant but not yet effective (and in some cases had not yet been adopted by the EU):

IFRS 9 (November 2009): Financial Instruments: Classification and Measurement

IAS 24 (revised November 2009): Related Party Disclosures

IAS 32 (amended): Classification of Rights Issues

IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments

IFRIC 14 (amended): Prepayments of a Minimum Funding Requirement

Improvements to IFRSs (May 2010)

The Directors anticipate that the adoption of the other standards or interpretations in future periods will have no material impact on the financial statements of the Group when the relevant standards come into effect for periods commencing on or after 1 January 2011.

Supplementary information has been provided analysing the income statement, statement of comprehensive income, balance sheet, cash flow statement and selected notes between results on an investment basis ("Investment group") and results on an IFRS consolidated basis ("Total group"). The results shown as Investment group are the results arising from the investments made by the Group in the 19 PFI/PPP projects that reflect the Group's activity as an investment company, incorporating the returns from and fair value movements of the entire portfolio regardless of the extent of control or influence the Group can exercise. Under the investment basis, the investments in the 5 Operating Subsidiaries are treated in the same way as the investments in the 14 Entity Investments whereas under the IFRS consolidated basis the results of subsidiaries are required to be consolidated in the Group's financial statements on a line-by-line basis in accordance with IAS 27 (revised 2008): Consolidated and Separate Financial Statements ("IAS 27"). There is no distinction made by the Directors as to whether the investment is accounted for as a subsidiary or an investment when assessing the performance of the Company's investment portfolio. The adjustments required to be made to the results under Investment group to reflect the results of the Total group in accordance with IFRS are shown as "Non-investment adjustments". The Non-investment adjustments include adjustments to account for the 5 Operating Subsidiaries in accordance with IAS 27 together with other IFRS adjustments for fair valuing financial assets and liabilities that the Directors do not consider to be relevant or critical in monitoring and determining the performance of the Group.

(b) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. The interests of non-controlling shareholders may be initially measured at fair value or at the non-controlling interests' proportionate share of the fair value of the acquiree's identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. As at 31 December 2010, there are nonon-controlling interests within the Group.

(c) Going concern

The Group has sufficient financial resources together with long-term contracts with various public sector customers and suppliers across a range of infrastructure projects. The Group has secured a Revolving Credit Facility of £25 million on 21 March 2011 of which £2 million can be used for working capital requirements. The Group had net current liabilities as at 31 December 2010 of £6.7 million. Current liabilities of £37.7 million include deferred income of £16.3 million which is not an obligation that the Company is required to settle. Accordingly, the Group has sufficient current assets to meet its current obligations as they fall due.

As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

The Group is invested in 19 operational non-recourse PFI/PPP Project Companies which yield annual interest, dividends and repayments. The cash flow from the project yield reasonably covers the Group's expected cash flow requirements for overheads and targeted dividend

distribution policy.

Note 27 of the financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposure to credit risk and liquidity risk.

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

(d) Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.

Where a business combination is achieved in stages, the Group's previously-held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3(2008) are recognised at their fair value at the acquisition date, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

• liabilities or equity instruments related to the replacement by the Group of an acquiree's share-based payment awards are measured in accordance with IFRS 2 Share-based Payment; and

• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

An intangible arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately as a profit.

(e) Service concessions

The Group invests in 19 PFI/PPP Project Companies and, of these, there are 5 subsidiary Project Companies (Operating Subsidiaries) that are consolidated and apply the following accounting policies. Project Companies which are joint ventures or associates are accounted for at fair value through the Income Statement.

In accordance with IFRIC 12 and the various provisions of IFRS, the Consolidated Group has determined the appropriate treatment of the principal assets of, and income streams from, PFI and similar contracts within the Operating Subsidiaries. Results of all service concessions which fall within the scope of IFRIC 12 conform to the following policies depending on the rights to consideration under the service concession.

The Group restates, where applicable, the results of subsidiary PFI/PPP Project Companies to reflect consistent accounting policies across the Group.

(i) Service concessions treated as financial assets

Where the Consolidated Group, as Operator, has an unconditional right to receive cash or another financial asset from or at the direction of the grantor the asset created and/or provided under the contract is accounted for as a finance receivable.

Revenue is recognised by allocating a proportion of total cash receivable to construction income and services income. The consideration received will be allocated by reference to the relative fair value of the services delivered, when the amounts are separately identifiable.

During the construction phase, revenue is recognised at cost, plus attributable profit to the extent that this is reasonably certain, in accordance with IAS 11. Costs for this purpose includes valuation of all work done by subcontractors whether certified or not, and all overheads other than those relating to the general administration of the relevant companies.

During the operational stage, cash received in respect of the service concession is allocated to services revenue (see part g(i) of this note) based on its fair value, with the remainder being allocated between capital repayment and interest income using the effective interest method (see part g(ii) of this note).

The financial assets are designated as at fair value through profit or loss in accordance with part l of this note. The fair values of the financial assets are determined in a similar manner to that described in part l(i)(a) of this note, with changes recognised in the income statement.

Interest payable

Project specific interest costs are expensed as incurred using the effective interest rate method.

Major maintenance

For financial asset accounted projects, the cost of major maintenance is recorded in cost of sales and an appropriate amount of revenue that would otherwise have been available to amortise the financial asset is transferred to revenue. This has the effect of increasing the financial asset by the cost of major maintenance. No profit margin is likely to be recognised on major maintenance since the principal profit recognition on PFI/PPP projects is derived from the provision of routine services.

Debt

Debt in each Operating Subsidiary, which is non-recourse to the rest of the Group, is initially stated at the amount of the net proceeds after deduction of issue costs. The carrying amount is increased by the finance cost in respect of the accounting period and reduced by payments made in the period.

For all 5 subsidiary Project Companies, the service concession is treated as a financial asset.

(ii) Service concessions treated as intangible assets

Where the Consolidated Group, as Operator, has a contractual right to charge users of the public services the asset created and/or provided under the contract is accounted for as an intangible asset. The intangible asset represents the construction cost of assets which give rise to the contractual right of charge. The intangible asset is amortised to estimated residual value over the remaining life of the service concession on a straight line basis and tested each year for impairment.

Revenue arising in respect of these service concessions is recognised when the services are delivered.

(f) Investment in joint ventures and associates

The Company meets the definition in IAS 31(1) of a venture capital organisation or similar entity and upon initial recognition has designated its investment in joint ventures and associates at fair value through the Income Statement. The Company therefore measures its interest in joint ventures and associates at fair value in accordance with IAS39, with changes in fair value recognised in profit or loss in the period of the change. Refer to note 3 (i) for details of the areas of estimation in the calculation of the fair value.

(g) Revenue recognition

(i) Services revenue

Services revenue (in accordance with IFRIC 12), which relates to Operating Subsidiaries, is comprised of the following components:

• revenues from the provision of services to PFI projects calculated as the fair value of services provided (see part e(i) of this note);

• the fair value of consideration receivable on construction and upgrade services (see note 2e(i));

• third party revenues arising on PFI projects are recognised in accordance with the contractual terms as services are performed.

(ii) Gains on financial assets

Gains on financial assets relate solely to the Operating Subsidiaries and comprise of the following:

• interest income arising on financial assets is recognised in the income statement as it accrues using the effective interest rate of the instrument concerned as calculated at the acquisition or origination date.

• gains or losses on financial assets that arise from the movement in the fair value of the financial asset.

Gains on financial assets are recorded in the Income Statement as other gains/losses within the sub-heading Movement in the fair value of finance receivables designated at fair value through profit or loss.

(iii) Gains on investments

Gains on investments relate solely to the Entity Investments and comprise of the following:

• dividend income from Entity Investments is recognised when the Consolidated Group's rights to receive payment have been established as Investment income within the sub-heading Dividend income from investments.

• interest income arising on Entity Investments is recognised in the income statement as it accrues, using the effective interest rate of the instrument concerned as calculated at the acquisition or origination date.

• gains or losses that arise from the movement in the fair value of the Entity Investments excluding the movements shown as dividends and interest above.

The components of Gains on investments as described above are recorded in Investment income.

Revenue excludes the value of intra-group transactions and VAT.

(h) Intangible assets

Intangible assets are recognised as part of a business combination if they are reliably measurable and separable from the acquired entity or give rise to other contractual/legal rights. Only one category of intangible asset has been recognised as part of a business combination to date, being the fair value of the future service concession profits in Operating Subsidiaries as at the date of acquisition. These assets are being amortised over the life of the concessions concerned on a straight line basis.

For the purposes of impairment testing the present value of the future cash flows of the service concession are calculated. If the present value is lower than the carrying value of the PFI/PPP Project Company then there is an indication that the intangible asset has been impaired and a full impairment review is prepared. Any impairment charges are recognised in the Income Statement.

(i) Foreign currencies

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other 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 not retranslated.

Exchange differences arising in the ordinary course of trading are reflected in the Income Statement; those arising on translation of net equity are transferred to the Group's translation reserve. Such translation differences are recognised as income or expense in the period in which the operation is disposed of.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).

(j) Borrowing costs

The accounting policy for borrowing costs incurred by Operating Subsidiaries is included in part (e) of this note.

All other borrowing costs are recognised in the Income Statement in the period in which they are incurred.

(k) Taxation

Under the current system of taxation in Guernsey, the Company itself is exempt from paying taxes on income, profits or capital gains. Dividend income and interest income received by the Consolidated Group may be subject to withholding tax imposed in the country of origin of such income.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities (other than in a business combination) in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Income Statement except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

(l) Financial instruments

Financial assets and financial liabilities are recognised on the Consolidated Group's balance sheet when the group becomes a 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".

i) Financial assets

The Group 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. Management determines the classification of its financial assets at initial recognition.

a) Financial assets at fair value through profit or loss

The Group has two types of financial assets at fair value through profit or loss.

- PFI/PPP financial assets (finance receivables) in Operating Subsidiaries are recognised initially at fair value. Subsequent to initial recognition, the finance receivables are measured at fair value using the discounted cash flows methodology, with changes recognised within other gains/losses in the income statement. Designating finance receivables at fair value through profit or loss eliminates or significantly reduces the accounting mismatch that would result from fair value movements in the related interest rate swaps. See part e(i) of this note.

- Investments in joint ventures and associates are designated upon initial recognition as financial assets at fair value through profit or loss. The Group's policy is to fair value both the equity and subordinated debt investments in joint ventures and associates together. Subsequent to initial recognition, the investments are measured on a combined basis at fair value using the discounted cash flows methodology, with changes recognised within investment income in the income statement.

b) Loans and receivables

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 Group's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the Balance Sheet.

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

ii) Financial liabilities and equity

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

a) Equity instruments - share capital and share premium

Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or associated with the establishment of the Company that would otherwise have been avoided are written off against the balance of the share premium account.

b) Financial liabilities

Financial liabilities are classified as other financial liabilities, comprising of:

• Loans and borrowings 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 effective interest basis.

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

iii) Effective interest method

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

iv) Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into or the date of acquisition by the Group and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in profit or loss immediately. The Consolidated Group does not apply hedge accounting.

a) Group and recourse subsidiaries

The Group operates a recourse treasury function. There is a Board approved policy for borrowing, investing surplus funds and hedging foreign exchange and interest rate risks.

b) Non-recourse subsidiaries (Operating Subsidiaries)

Due to the nature of PFI/PPP projects, it is important that all financial risks are hedged at the inception of the project, and indeed the funders of projects insist on this. Therefore each PFI/PPP project fixes the interest rate on its debt. This will either 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 at the inception of the project. In addition, and where appropriate, inflation risk is hedged by the use of inflation swaps.

v) Fair value estimation

The fair value of financial instruments traded in active markets is based on quoted market prices at the Balance Sheet date.

The fair value of financial instruments that are not traded in active markets is derived in one of four ways:

i) Financial assets at fair value through profit and loss

a) Finance receivables under service concessions of Operating Subsidiaries

The discount rates used to fair value financial assets under service concessions are calculated by adding an appropriate premium, consistent in proportion to the premium established at the inception of the service concession, to the weighted average cost of the underlying project debt. The discount rates that have been applied to the financial assets at 31 December 2010 were in the range of 6.02% to 8.47%.

b) Investments in joint venture and associates

Fair value is calculated by discounting future cash flows, from investments in both equity (dividends and equity redemptions) and subordinated loans (interest and repayments), to the Group at an appropriate discount rate. The basis of discount rates are long run average government bond rates adjusted for an appropriate premium to reflect PFI specific risk. Risk premia are then added to this adjusted base gilt rate depending on the phase of the project. The discount rates that have been applied to the financial assets at 31 December 2010 were in the range of 8.00% to 8.95%.

ii) Derivatives

The fair values of derivatives as at the Balance Sheet date are obtained from the banks or financial institutions with which the derivatives have been transacted.

Where these are not available the fair value of the derivative is calculated as the present value of the estimated future cash flows. In these calculations the market forward six month LIBOR curve for an interest rate swap or the forward RPI inflation curve for an inflation swap as at the Balance Sheet date are used. All amounts are discounted using the zero coupon yield curve as at the Balance Sheet date.

iii) Loans and receivables, borrowings and payables

Loans and borrowings are held at amortised cost.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values.

(m) Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

(n) Segmental reporting

Information reported to the Group's Board of Directors for the purposes of resource allocation and assessment of segment performance is focused on the geographical risk associated within the Group. This information is centred on the risk free rates and the maturity of the PFI/PPP industry together with foreign exchange and political risk within each country. Currently the projects that the Group has investments in are in the UK, Europe and North America and therefore these form the Group's reportable segments under IFRS 8.

The financial information used by the Board of Directors to allocate resources and manage the group is prepared on an investment basis. The investment basis deconsolidates the subsidiary investments. See note 2 (a) for details concerning supplementary information provided in the financial statements that is consistent with this financial information.

(o) Statement of compliance

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

3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

In the application of the Group's accounting policies, which are described in note 2, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that affect reported amounts. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(i) Investments at fair value through profit or loss

The Consolidated Group has a greater than 50% shareholding in certain entities (see note 13), where in the opinion of the Directors it is unable to govern the financial and operating policies of the entities by virtue of agreements with the other shareholder. These entities are consequently not treated as subsidiaries, and instead they are accounted for as financial assets at fair value through profit or loss, as set out in note 2(f).

By virtue of the Company's status as an investment fund and the exemption provided by IAS 28.1 and IAS 31.1, investments in associates and joint ventures are designated upon initial recognition to be accounted for at fair value through profit or loss.

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 appropriate rate. In determining the discount rate, regard is had to risk free rates, specific risks and the evidence of recent transaction. The Directors have satisfied themselves that the PFI/PPP investments share the same investment characteristics and as such constitute a single asset class for IFRS 7 disclosure purposes.

The carrying amount of the PFI/PPP investments would be an estimated £18.6 million higher or £16.3 million lower if the discount rate used in the discounted cash flow analysis were to differ by 1% from that used in the fair value calculation. The weighted average discount rate for the PFI/PPP portfolio as at 31 December 2010 was 8.34%.

The carrying amount of the PFI/PPP investments would be an estimated £15.3 million higher or £12.4 million lower if the inflation rate used in the discounted cash flow analysis were to differ by 1% from that used in the fair value calculation. The inflation rate assumed for all future periods from 31 December 2010 was 2.75% for all UK projects, 2.1% for Canadian projects and for the Finnish project a rate of 3% was assumed for the MAKU index (Finnish construction price index) and a rate of 2.5% was assumed for the Elspot index (Finnish utilities price index).

The carrying amount of the PFI/PPP investments would be an estimated £3.4 million higher or £3.1m lower if the exchange rates used in the discounted cash flow analysis were to differ by 5% from that used in the fair value calculation.

(ii) Finance receivables at fair value through profit or loss

Fair values are determined using the income approach which discounts the expected cash flows at the appropriate rate. In determining the discount rate, regard is had to risk free rates, specific risks and the evidence of recent transaction.

The carrying amount of the finance receivables would be an estimated £17.5 million higher or £15.4 million lower if the discount rate used in the discounted cash flow analysis were to differ by 1% from that used in the fair value calculation. The discount rates at 31 December 2010 were between 6.02% and 8.47%.

(iii) IFRIC 12

Service concessions fall within the scope of IFRIC 12 where the grantor controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them, and the price; and the grantor controls, through ownership, beneficial entitlement or otherwise, any significant residual interest in the infrastructure at the end of the service agreement. Each subsidiary has been assessed to determine whether they fall within the scope of IFRIC 12. Following this review it was determined that all five subsidiaries controlled at the period end, fall within this scope. Service concessions are determined to be finance receivables where the operator has a contractual right to receive cash or another financial asset from or at the direction of the grantor. Alternatively, service concessions are determined to be intangible assets to the extent the operator has a contractual right to charge users of the public services.

(iv) Intangible assets

Intangible assets represent fair value of customer contracts for operating subsidiary projects recognised on acquisition, which are primarily attributable to the service portion of the project contracts, and intangible assets recognised under IFRIC 12. Fair values are determined using the income approach which discounts the expected cash flows attributable to the services portion of the service concessions acquired at an appropriate rate to arrive at fair values. In determining the appropriate discount rate, regard is had to risk free rates and the specific risks of each project.

4. OPERATING SEGMENTS

Information reported to the Group's Board of Directors for the purposes of resource allocation and assessment of segment performance is focused on the geographical risk associated within the Group. This information is centred on the risk free rates and the maturity of the PFI/PPP industry together with foreign exchange and political risk within each country. Currently the projects that the Group has investments in are in the following geographical areas and therefore these form the Group's reportable segments under IFRS 8:

UK

Europe (non-UK)

North America

For the purposes of any amounts derived directly from the Company in Guernsey that are included in the amounts analysed below, Guernsey is included in the UK segment.

Segment revenues and results

The following is an analysis of the Group's revenue and results by reportable segment for the ended 31 December 2010.

No inter-segment sales were made for the period ended 31 December 2010.

Information about major customers

The Group has four customers which each represent more than 10 per cent of Group revenue. The customers' revenues were respectively £1.1 million reported across the UK segment and £0.3 million reported across the North America segment. The Group has treated each Government entity and/or department as a separate customer.

Segment assets

Information concerning the Group's net assets reported to the Group's Board of Directors for the purposes of resource allocation and assessment of segment performance is primarily focused on the fair value of the investments in the underlying PFI/PPP projects. This is reported for the Investment group on an investment basis whereby this information is provided on all 19 projects irrespective of whether the project is treated as an Operating Subsidiary or as an Entity Investment.

The non-investment adjustment represents the fair value of the investments in the Operating Subsidiaries which for Total group purposes are consolidated in accordance with IAS 27.

5. LOSS FROM OPERATIONS

An amount of £80,000 was also paid to Deloitte LLP by the Company in respect of non-audit services for the period ended 31 December 2010 for work pertaining to their role as reporting accountants for the initial public offering prospectus. These fees were included in issues fees applied to the share premium account.

For the period ended 31 December 2010 the Group had no employees other than directors. There was no Directors' remuneration for the period other than Directors' fees as detailed in note 25.

6. INVESTMENT INCOME

1 On an investment basis this represents the fair value movement on all investments (subsidiaries, joint ventures, associates and passive investments). On a total group basis this represents the fair value movements on joint ventures, associates and passive investments.

7. OTHER GAINS/(LOSSES)

8. FINANCE COSTS

9. (a) INCOME TAX EXPENSE

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 investments provide for taxation at the appropriate rates in the countries in which they operate. A foreign current tax charge of £134,000 arose in the period.

A deferred tax charge of £0.2 million is also recognised in the income statement. This relates to the movement in the fair value of the Group's financial assets, financial liabilities and intangible assets.

In addition, a deferred tax liability of £11.5 million has arisen on the acquisition of the fair value of assets and liabilities of subsidiaries.

(b) DEFERRED TAX

The following are the major deferred tax assets and liabilities recognised by the Group and movements therein for the period ended 31 December 2010.

The Government announced in the Budget on 23 March 2011 that the rate of corporation tax in the UK will be reduced by 2% to 26% with effect from 1 April 2011, rather than the 1% reduction to 27% that was previously announced. The accounts do not reflect the further reduction as this was not substantively enacted at the balance sheet date. Had the reduced rate been in effect at the balance sheet date the deferred tax liability as at 31 December 2011 would have been £294,000 lower than stated above.

10. EARNINGS PER SHARE

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

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 cause dilution.

11. DIVIDENDS

An interim dividend for the period ended 31 December 2010 of 0.5 pence per share, amounting to £1.35 million was approved by the Board on 22 February 2011 and is payable on 7 April 2011. The dividend has not been included as a liability at 31 December 2010.

12. INTANGIBLE ASSETS

Intangible assets represent the fair value of customer contracts for operating subsidiary projects recognised on acquisition, which are primarily attributable to the service portion of the project contracts. See note 3 (iv) for the methods and assumptions used in determining the fair values. Intangibles are being amortised on a straight line basis over the remaining life of the concessions concerned on acquisition of the subsidiaries (remaining lives range from between 16 years and 26 years). Amortisation of £220,000 is included within cost of sales in the consolidated income statement.

13. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

The Investment Advisor has carried out fair market valuations of the investments as at 31 December 2010. The Directors have satisfied themselves as to the methodology used, the discount rates applied and the valuation. The Directors have also satisfied themselves that the valuation as at 31 December 2010 is reasonable compared to the independent valuation from a third party, with considerable expertise in valuing these type of investments, that was performed in November 2010 for the purposes of the prospectus for the initial capital raising and the subsequent acquisition of the initial portfolio. Investments are all investments in PFI/PPP projects and are valued using a discounted cash flow methodology. The valuation techniques and methodologies have been applied consistently with the valuation performed for the purposes of the prospectus for the initial capital raising. Discount rates applied range from 8.00% to 8.95% (weighted average 8.34%) for the entire portfolio under the Investment group.

Details of investments recognised at fair value through profit or loss under Total group were as follows:

Investments in the 5 wholly owned subsidiaries (note 14) are included in the amounts above under Investment group.

There are no future loan stock or capital commitments on investments held at fair value through profit or loss.

14. ACQUISITIONS OF SUBSIDIARIES

In November 2010 the Group acquired the 100% interest in the equity and subordinated loan stock of Sirhowy Enterprise Way Holdings Limited ("Sirhowy Way"), Regenter LCEP (Holdco) Limited ("Canning Town - Newham Housing"), Walsall Public Lighting Holdings Limited (Walsall Street Lighting") and AHV Holdings Vancouver ("Gordon & Leslie Diamond Health Care Centre"). In December 2010 the Group acquired the 100% interest in the equity and subordinated loan stock of Regenter B3 (Holdco) Limited ("Brockley Housing"). These acquisitions were all part of a single transaction covered by a single sale and purchase agreement. The total consideration paid in cash for the interests in these projects was £54.2 million (£39.3 million net of cash acquired). The total transaction cost for the acquisition of all 19 investments that comprises the seed portfolio acquired following the successful launch of the fund and the listing of the Company in November 2010 was £1.9 million which has been recognised in administrative expenses in the income statement.

Fair values were determined using the income approach which discounts the expected cash flows attributable to each asset at an appropriate rate to arrive at fair values.

Intangible assets represent the fair value of customer contracts for Operating Subsidiary projects recognised on acquisition, which are primarily attributable to the future profits of the service portion of the project contracts. Intangible assets are amortised on a straight line basis over the remaining life of the concessions concerned.

The amounts shown below are the aggregate amounts of the acquisition of the 5 subsidiaries.

* The finance receivables in the book value at acquisition under IFRS are valued at amortised cost rather than at fair value through profit or loss and therefore there is a fair value adjustment to reflect the fair value acquired.

The subsidiaries contributed £1,429,000 to the Group's revenue and £257,000 to the Group's profit for the period from acquisition to

31 December 2010. Had the subsidiaries been owned from the date of incorporation of the Company on 6 August 2010 the contribution to revenue and profit for the period would have been £6,777,000 and £1,218,000 respectively.

Brief details regarding each project are provided below:

Sirhowy Way

On 29 November 2010 the Group acquired 100% of the equity and subordinated loan stock in the project. The project is a concession to design, build, finance and operate improvements to the A4048/A472 Strategic Highway Network between the north of Blackwood and the east of Ponllanfraith, South Wales.

Canning Town - Newham Housing

On 29 November 2010 the Group acquired 100% of the equity and subordinated loan stock in the project. The project is a concession to refurbish, finance and operate council housing in Newham.

Brockley Housing

On 3 December 2010 the Group acquired 100% of the equity and subordinated loan stock in the project. The project is a concession to refurbish, finance and operate council housing in Brockley.

Walsall Street Lighting

On 29 November 2010 the Group acquired 100% of the equity and subordinated loan stock in the project. The project is a concession to install and maintain street lighting.

Gordon & Leslie Diamond Health Care Centre

On 29 November 2010 the Group acquired 100% of the equity and subordinated loan stock in the project. The project is a concession to design, build, finance and operate a new outpatient facility in Vancouver, British Columbia, Canada.

15. FINANCE RECEIVABLES AT FAIR VALUE THROUGH PROFIT OR LOSS

The operating subsidiaries' concession contracts with public sector bodies are considered as financial assets. Gain in fair values of financial assets of £1.5 million for the period ended 31 December 2010 are included within other gains and losses in the consolidated income statement. See note 3 (ii) for the methods and assumptions used in determining the fair values. The maximum exposure to credit risk at the reporting date is the fair value of the financial assets in the balance sheet.

16. TRADE AND OTHER RECEIVABLES

Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

The carrying amounts of the Group's trade and other receivables are denominated in the following currencies:

There were no overdue amounts included in trade receivables.

17. CASH AND CASH EQUIVALENTS

The Company's cash and cash equivalents are comprised of cash held at the bank or in hand and cash held on deposit where the Company can withdraw the cash without giving any notice and without suffering a significant penalty.

The effective interest rate on money market deposits of the Total Group was between 0.16% and 0.72%. The deposits had a maturity of between 4 days and 89 days.

The amount of £12,748,000 under 'Non-investment adjustments' represents the cash and cash equivalents of the Operating Subsidiaries and as such is non-recourse to the Investment Group and restricted.

18. TRADE AND OTHER PAYABLES

19. LOANS AND BORROWINGS

All loans and borrowings are within the operating subsidiaries and as such are non-recourse to the Group. The terms of the loans and borrowings and details of key bank covenants are detailed in note 28(c).

20. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are held at fair values in accordance with note 2(l). £17.9 million arises on business combinations and £0.7m arises from a gain in fair value for the period ended 31 December 2010 which is disclosed within other gains and losses in the consolidated income statement.

In order to manage exposure to movements in interest rates, project companies financed by floating rate debt swap their floating rate exposure for fixed rates using interest rate swaps. The notional amounts of the outstanding interest rate swap contracts at 31 December 2010 were £115.8 million. As at 31 December 2010, the fixed interest rates on the swaps range from 4.7% to 5.7%.

21. SHARE CAPITAL

The Company is authorised to issue an unlimited number of shares.

At incorporation, one Share was subscribed by the subscriber to the Memorandum of Incorporation. The subscriber Share was transferred to a member of the John Laing Group on admission to the London Stock Exchange on 29 November 2010 as part of their larger subscription at this time.

On 29 November 2010, 270 million new Ordinary Shares, including the subscriber Share above, of 0.01 pence each at an Issue Price of 100 pence were issued and fully paid up upon successful admission of the Company's shares to the London Stock Exchange.

At present, the Company has one class of Ordinary Shares which carry no right to fixed income.

22. SHARE PREMIUM ACCOUNT

23. TRANSLATION RESERVES

24. RETAINED EARNINGS

25. TRANSACTIONS WITH INVESTMENT ADVISOR AND RELATED PARTIES

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and related parties are disclosed below. This note also details the terms of the engagement by the Company of John Laing Capital Management Limited ("JLCM") as Investment Advisor and Operator of the Limited Partnership together with the details of the acquisition of the initial Seed Portfolio from John Laing plc, of which JLCM is a wholly owned subsidiary.

John Laing Capital Management Limited ("JLCM") is the Company's Investment Advisor. JLCM's appointment as Investment Advisor is governed by an Investment Advisory Agreement which may be terminated after an initial four year term, starting 27 October 2010, by either party giving one year's written notice. The appointment may also be terminated if JLCM's appointment as Operator is terminated.

JLCM has also been appointed as the Operator of JLIF Limited Partnership, the limited partnership through which the Group holds its investments, by the General Partner of the partnership, JLIF GP Limited, a sister subsidiary of JLCM. The Operator and the General Partner may each terminate the appointment of the Operator after an initial four year term, starting on 27 October 2010, 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 its terms. The General Partner's appointment does not have a fixed term, however if JLCM ceases to be the Operator, the Company has the option to buy the entire share capital of the General Partner and the John Laing Group has the option to sell the entire share capital of the General Partner to the Company, in both cases for nominal consideration. The Directors consider the value of the option to be insignificant.

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

The total Investment Advisor and Operator fee charged to the Income Statement for the period to 31 December 2010 was £249,000 which remained payable at period end.

*Adjusted Portfolio Value is defined in the Investment Advisory Agreement as:

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

(b) any cash owned by or held to the order of the Fund (the Investment 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 Uninvested Cash.

The Group acquired 19 PFI/PPP projects from John Laing plc, of which John Laing Capital Management Limited is a wholly owned subsidiary, under an arm's length sale and purchase agreement. The Group paid £259 million in total to John Laing for the 19 projects, of which £205 million related to the acquisition of the 14 joint ventures and associates.

Since acquisition the Group has received amounts of £129,000 of equity redemptions and £171,000 of subordinated loan repayments from joint ventures and associates in addition to the returns in investments detailed in the table below.

1 Interest receivable at 31 December 2010 is included within Investments at fair value through profit or loss (note 13) at the fair value of its future cash flow. The £1,376,000 includes a foreign exchange gain of £13,000.

The Directors of the Consolidated Group, who are considered to be key management, received fees for their services. Total fees for the period were £54,000. No directors' expenses were paid in the period.

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

26. FINANCIAL ASSETS

a) Maturity of financial assets

The maturity profile of the Group's financial assets is as follows:

b) Interest rate profile of financial assets (excluding investments at fair value through profit and loss):

The non-recourse fixed rate financial assets principally represent PFI finance debtors. The weighted average interest rate of the fixed rate financial assets is 7.05% and the weighted average period for which the interest rates are fixed is 21.8 years.

The recourse fixed rate financial assets represent deposits placed with banks or highly rated money market funds at rates related to LIBID.

The non-interest bearing assets represent cash in current accounts as well as trade and other receivables.

c) Foreign currency exposure of investments at fair value through profit and loss:

Joint ventures and associates are valued on a discounted cash flow basis. The weighted average discount rate was 8.34%.

An analysis of the valuation's sensitivity to changes in foreign currency exchange rates has been provided in note 3 (i). The movement in fair value would give rise to an equal increase/decrease in profit before tax.

27. FINANCIAL RISK MANAGEMENT

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 the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.

For John Laing Infrastructure Fund Limited and its recourse subsidiaries financial risks are managed by the fund managers who operate within Board approved policies. For the non-recourse subsidiaries and joint ventures, due to the nature of PFI/PPP projects, financial risks are hedged at the inception of a project. The various types of financial risk are managed as follows:

Market risk - foreign currency exchange rate risk

As at 31 December 2010 the Group has invested in 3 overseas projects (one of which was a subsidiary). The Group's foreign currency exchange rate risk policy is not to automatically hedge on an individual project basis but to determine the total Group exposure to individual currencies.

The Group is mainly exposed to fluctuations in the Euro and Canadian dollar exchange rates. The carrying amount of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date was as follows:

The above table does not include investments in joint venture project companies, which account for a significant proportion of the currency exposure in the Group (refer to Note 26c and note 3(i)).

The following table details the Group's sensitivity to a 5% increase or decrease in Sterling against relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and reflects a 5% change in foreign currency exchange rates. A negative number below indicates an increase in loss from operations where the relevant currency weakens by 5% against Sterling. For a 5% strengthening of the relevant currency against Sterling, there would be an equal and opposite impact on profit from operations, and the negative balances below would be positive.

Market risk - interest rate risk

The Group's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to variability of interest payment cash flows. Borrowings issued at fixed rates expose the Group to revaluation risk of its borrowings.

Each PFI/PPP Project Company hedges its interest rate risk at the inception of a project. This will either 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 Group had no open RPI inflation swaps at 31 December 2010.

John Laing Infrastructure Fund Limited and its subsidiaries were in a net cash position at the balance sheet date. The sensitivity analyses below have been determined based on the interest rates for both derivative and non-derivative instruments as at 31 December 2010. For floating rate assets and liabilities, the analysis has been prepared assuming the amount of an asset or liability outstanding as at 31 December 2010 was outstanding for the whole period then ended. A 1% increase or decrease represents Management's assessment of the reasonable possible change in interest rates.

Effect on the consolidated accounts if interest rates had been 1% higher and all other variables were held constant:

The increase in profit before tax is attributable to the Group's exposure to changes in the fair value of its interest rate swaps.

For a 1% reduction in interest rates, there would be an equal and opposite impact on profit before tax.

The impact of a change in interest rates, which would bring about a 1% change in the discount rate, for investments at fair value through profit or loss and finance receivables at fair value through profit or loss are disclosed in note 3(i) and note 3(ii) respectively. The movement in fair value would give rise to an equal increase/decrease in profit before tax.

Market risk - inflation risk

Each PFI/PPP Project Company will typically have part of its revenue and some of its costs linked to inflation at the inception of a project. In most cases this results in the project being insensitive to inflation. However, in a minority of cases where the project is sensitive to inflation, this risk will be hedged by entering into RPI inflation swaps. The Group had no open RPI inflation swaps at 31 December 2010.

Credit risk

Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers.

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's A-1).

The Group's projects receive revenue from government departments, public sector or local authority clients or directly from the public via real tolls. Therefore these projects are not exposed to significant credit risk.

Given the above factors, the Board does not consider it appropriate to present a detailed analysis of credit risk.

Liquidity risk

The Group adopts a prudent approach to liquidity management by maintaining sufficient cash and available committed facilities to meet its obligations. Due to the nature of PFI/PPP projects the timing of cash outflows is reasonably 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 meet these.

The maturity profile of the Group's financial liabilities is as follows:

The following table details the remaining contractual maturity of the Group's non-derivative financial liabilities. The table reflects the undiscounted cash flows relating to financial liabilities based on the earliest date on which the Group is required to pay and includes only principle cash flows.

The following table details the remaining contractual maturity of the Group's derivative financial instruments. The table reflects the undiscounted net cash flows relating to derivative instruments that settle on a net basis:

Capital risk

The Group has implemented an efficient financing structure that enables it to manage its capital effectively. The Group's capital structure comprises its equity only (refer to the Consolidated Statement of Changes in Equity). As at 31 December 2010 the Group had no recourse debt.

28. FINANCIAL INSTRUMENTS

a) Financial instruments by category:

* FVTPL = Fair value through profit and loss

The above table provides an analysis of financial instruments that are measured subsequent to their initial recognition at fair value as follows:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 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 (unobservable inputs).

There were no transfers between Level 1 and 2 during the period.

Reconciliation of Level 3 fair value measurement of financial assets and liabilities

An analysis of the movement between opening and closing balances of the investments in joint ventures at fair value through profit and loss is given in note 13 and for finance receivables at fair value through profit and loss the analysis is given in note 15. For financial assets at fair value through profit and loss, changing the discount rate used to value the underlying instruments would alter the fair value.

As at 31 December 2010, a 1% increase in the discount rate would have the following effect on profit.

As at 31 December 2010, a 1% decrease in the discount rate would have the following effect on profit.

b) Fair value of derivatives

Financial assets and liabilities have been fair valued in accordance with the Group's accounting policies. The movement in fair value reflects the changes in inflation and interest rates during the period.

Project Companies which are financed by floating rate debt swap their floating rate exposure into fixed rates using interest rate swaps in order to manage their floating rate exposure to movements in interest rates. Four of the five subsidiary Project Companies are financed by floating rate debt and have transacted swaps.

The fixed interest rates on the swaps range from 4.7% to 5.7% and maturities range from 2025 to 2036. The movement in the fair value of the swaps has been recognised in the Income Statement.

c) Foreign currency and interest rate profile of financial liabilities

The Group's financial liabilities at 31 December 2010 were £210.0 million, of which £190.5 million were non-recourse liabilities. These principally comprise borrowings of Project Companies which are consolidated in accordance with IAS 27. In these Project Companies the lenders have recourse solely to the Project Company itself and hence there is no recourse to the Group.

One subsidiary project is funded by bond financing totalling £72.1 million. The bonds have fixed interest coupons ranging from 6.1% to 6.2% and mature in 2036. The interest rates for the remaining projects are fixed using either interest rate swaps or fixed rate debt. The maturities range from 2025 to 2033 and the all-inclusive interest rates vary from 5.6% to 6.6%. The weighted average all-inclusive interest rate for these non-recourse fixed rate financial liabilities is 6.21% and the weighted average period for which interest rates are fixed is 21 years.

The Operating Subsidiaries are required to meet certain bank covenants on its debt, the most significant of which are maintaining debt service cover ratios (cash flows available for debt service as a ratio of debt servicing amounts) of 1.05 for the four UK subsidiaries and 1.0 for the Canadian subsidiary and Loan Life Cover Ratio of 1.10 for the four UK subsidiaries. There were no material events of non-compliance in the Operating Subsidiaries in the period.

The directors consider that the carrying amounts of financial assets and financial liabilities in the financial statements approximate their fair values.

29. GUARANTEES AND OTHER COMMITMENTS

As at 31 December 2010 the Consolidated Group had no commitments.

30. EVENTS AFTER BALANCE SHEET DATE

The Group, with JLIF Limited Partnership as Borrower and the Company as Guarantor, secured a new three year revolving credit facility of £25 million with National Westminster Bank plc on 21 March 2011. The margin on the Facility is 2% over LIBOR, and is subject to variation should the Loan to Value change significantly. The Facility is currently available for JLIF for utilisation. This facility will be used primarily to fund third party acquisitions in between capital raisings.

The Group signed a sale and purchase agreement with John Laing plc on 1 April 2011 with the intention of the Company acquiring interests in a further 3 PFI projects and increasing its interest in one existing investment. As at the date of signing the financial statements no purchases had reached completion and completions are subject to the satisfaction of certain conditions precedent.

31. DISCLOSURE - SERVICE CONCESSION ARRANGEMENTS

The Group holds investments in 19 service concession arrangements in the Accommodation and Transport 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 like cleaning, catering, caretaking and major maintenance. At the end of the concession period on the majority of the concessions the assets are returned to the concession provider. As at 31 December 2010 all of the service concessions were fully operational.