Interim Management Statement

JLIF

INTERIM MANAGEMENT STATEMENT

JLIF, the international infrastructure investment company, today announces its Interim Management Statement (IMS) for the period 1 January 2014 to 2 May 2014[1].

Highlights

Paul Lester CBE, Chairman of JLIF, said:

 "JLIF's start to 2014 has been one of continued progress with our portfolio growing in line with our expectations.

The secondary market remains active with JLIF currently reviewing a number of investment opportunities.

We look forward to building on JLIF's solid start to the year and are optimistic about JLIF's prospects for 2014. "

David Marshall, Director of John Laing Capital Management Limited (JLCM), Investment Adviser to JLIF, said:

 "So far this year we have completed three follow-on acquisitions from co-shareholders, demonstrating the value that can be achieved through this source of deal flow. We continue to look to the future, positioning JLIF such that it is strategically placed to address changes to the global infrastructure market. This was evidenced by our changes to our investment policy which were strongly backed by our shareholders."

Acquisitions

In February 2014, JLIF completed the acquisition of the remaining stakes in two assets from Bouygues E&S Infrastructure UK ("Bouygues"). These were a 15% stake in the Barnet Street Lighting project and a 15% stake in the Enfield Street Lighting project. These represented the most recent of five additional stakes acquired from co-shareholder Bouygues, the initial stakes in each asset being acquired as part of the Investors in the Community LLP portfolio in August 2013, and result in 100% ownership of each asset.

In April 2014, JLIF completed the acquisition of an additional 16.7% stake in the Miles Platting Social Housing project from Adactus Housing Group Limited. JLIF's initial stake in the project was acquired as part of the IIC portfolio in August 2013. Following completion of this acquisition JLIF now holds 50% of the equity and 66.7% of the subordinated debt.

These acquisitions are further examples of JLIF effectively adding value to the portfolio through the acquisition of follow-on stakes from co-shareholders.

Portfolio Performance

JLIF's portfolio of 52 operational PPP projects was valued as at 31 March 2014 at £799.0 million. This represents growth of 2.0% on the rebased valuation as at 31 December 2013 (i.e. after accounting for in period acquisitions, distributions, exchange rate movements etc.). The portfolio performed in line with the Investment Adviser's growth expectations based on the portfolio's weighted average discount rate of 8.18%. In absolute terms, the portfolio value increased by £15.3 million on the rebased 31 December 2013 valuation, almost exactly as expected.

Dividends

At the Board meeting held on 21 March 2014 the JLIF Board agreed an increase to the semi-annual dividend of 4.0% from 3.125pps to 3.25pps per annum as a result of the continued strong performance in 2013 whilst retaining a comfortable level of dividend cover. Therefore, a dividend of 3.25pps for the six month period ended 31 December 2013 will be paid on 19 May 2014. JLIF continues to offer a Scrip Dividend Alternative.

Investment Policy

In early February 2014, JLIF's shareholders voted in favour of certain changes to JLIF's Investment Policy. The changes will enable the company to capitalise on changes in the global infrastructure market and allow the company to take advantage of attractive investment opportunities that may otherwise be missed. The changes were the subject of a separate communication to shareholders which is available at www.jlif.com and are summarised below:

· An increase to the limit on investment capital in projects under construction from 15% to 30% of total assets;

· An ability to acquire assets that are not government-backed PPP assets but that have substantially the same risk profile and characteristics, to a limit of 10% of total assets; and

· An amendment to the first offer agreement with John Laing plc to include certain rail sector assets and to release John Laing from its obligation to offer waste sector assets to the company.

Hedging

JLIF continues its strategy of taking a long term view on cross currency exchange rates and not hedging balance sheet values of its portfolio. To reduce its exposure to fluctuation in the Sterling value of 2014 Canadian Dollar cash flows, JLIF is using foreign exchange forward contracts. JLIF has hedged a proportion of the expected Canadian dollar 2015 cash flows using an FX option contract.

Gearing

JLIF's £150 million multi-currency credit facility was undrawn as at 31 December 2013 and remains so at the time of writing, having been unused during the interim period. No drawings on the facility have been made during the interim period. JLIF had a cash balance of £29.3 million as at 31 March 2014 and the remaining balance after paying dividends will be used first when making acquisitions to ensure that shareholder funds are used most efficiently.

Outlook

The UK remains the most developed PPP market in the world and benefits from high levels of regulatory, financial and political stability. To date in 2014 the UK secondary market has been reasonably active with JLIF being invited to bid for stakes in over 40 assets, some offered as part of portfolio transactions. Meanwhile, the primary market seems to be gaining some momentum having seen five projects reach financial close so far, one of which was the second phase of the Intercity Express Programme, which is one of the rail assets included within the new first offer agreement with John Laing.

Looking overseas to JLIF's short term target markets, infrastructure investment in Canada is already underway in 2014, greatly supported by the P3 Canada Fund at a federal level and dedicated P3 agencies at the provincial level. As a key source of P3 expertise, PPP Canada has invested resources to analyse pipeline distribution by jurisdiction, sector and procurement method to help capture the ways in which Canadian jurisdictions are implementing their P3 procurements. Overall there is a growing acceptance of the model across Canada by municipalities as they use the P3 Canada Fund to provide up to 25% funding for their infrastructure deals. It has been successful at promoting the use of the model and ensuring it is considered for projects.

The Australian market continues to enjoy considerable success, as noted with the recent award of Perth Stadium, with political support for the PPP model continuing after the appointment of the Liberal Party which is focusing significantly on infrastructure investment. There remains a strong pipeline of assets across several states with the most active being New South Wales, Queensland, Victoria and Western Australia.

The P3 method of delivery continues to develop on a state by state basis in the USA. States such as Virginia, Florida, Texas, Colorado and Illinois lead the way in terms of number of deals but 28 other states also have legislation in place allowing the use of P3 as a delivery mechanism for infrastructure investment. While the primary market in the USA is gathering pace and occasional secondary opportunities may arise, we expect it to take several years before we see the development of a cohesive secondary market for operational assets.

The other market in which JLIF has an existing presence is Continental Europe. The secondary market is still developing in this area with only minimal activity in 2013 but there are definite signs of growth for 2014, with the Netherlands and Belgium leading the way with announcements of significant future primary deals.

Note:

This IMS aims to give an update of material events and transactions that have taken place during the period from 1 January 2014 to 5 May 2014 and their impact on the financial position of the Investment group. This update reflects JLCM's and the Board's current views. They are subject to a number of risks and uncertainties and could change. Factors which could cause or contribute to such differences include, inter alia, general economic and market conditions and specific factors affecting the financial prospects or performance of individual investments within the portfolio of JLIF.

This IMS contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. Undue reliance should not be placed on any such statements because they speak only as at the dateof this document and, by their very nature, are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and JLIF's actions to differ materially from those expressed or implied in the forward-looking statements.

This IMS has been prepared solely to provide additional information to shareholders as a body to meet the relevant requirements of the FCA's Disclosure and Transparency Rules and this IMS should not be relied on byany other party or for any other purpose.

[3] NAV including the dividend paid in May 2014 was £826.6 million