John Laing Infrastructure Fund Ld : Interim results

11 September 2017

John Laing Infrastructure Fund Limited

Interim results for the six-month period to 30 June 2017

Six-months of solid financial performance

·Net Asset Value ('NAV') as at 30 June 2017 of £1,204.4 million, up 11.5% on 31 December 2016, primarily as a result of investments and the shareholder tap issue, which was accretive to NAV per share

·NAV per share of 121.6 pence (excluding the dividend of 3.48 pence paid in May 2017), up 1.2% against that as at 31 December 2016

·6.2% total shareholder return in the period

·Portfolio Value of £1,220.8 million at 30 June 2017, including underlying growth of 3.47% (or £41.0 million) on a rebased Portfolio Value of £1,179.8 million

·Strong cash flows continue from diversified Portfolio of 63 projects

·Profit before tax for the six-month period of £34.7 million (30 June 2016 - £72.3 million)

·Investments of £18.8 million, including post balance sheet date follow-on investment in the North Staffordshire Hospital project

·Today declaring a dividend of 3.48 pence per share relating to the six months to 30 June 2017, payable in October 2017. This represents a 2.0% increase on the same period last year.

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

'I am pleased to report on a period of solid financial performance, with further progression of the dividend and distributions from the Portfolio remaining strong. We remain positive about the outlook for the Company.'

For further information, please contact:

John Laing Capital Management 0207 901 3326

David Hardy

Jamie Pritchard

Gianluca Mazzoni

Finsbury 0207 251 3801

Faeth Birch
Philip Walters

JLIF is one of Europe's largest listed infrastructure funds, trading on the London Stock Exchange. As an equity stakeholder, JLIF partners with public sector counterparties across the world to deliver key local and national infrastructure projects. In return these provide government-backed, inflation-linked revenues. JLIF's success is built on a collaborative approach centred on long-term relationships with its clients, such that their changing infrastructure needs can be met in a timely and cost-effective manner.

JOHN LAING INFRASTRUCTURE FUND LIMITED

INTERIM REPORT 2017

FUND AT A GLANCE

Introduction

JLIF is one of Europe's largest listed infrastructure funds, with a Premium Listing on the London Stock Exchange. JLIF invests in the equity and subordinated debt issued predominantly with respect to operational Public-Private Partnership ('PPP') projects. JLIF's purpose is to support governments, cities and communities in meeting their infrastructure needs, from delivery and financing through to operations and management. Our objective is to make available for use high-quality infrastructure assets that meet or exceed contractual requirements and specifications, and in so doing, provide our shareholders with a source of stable, predictable income.

Key facts and figures

1 Interim dividend per share and Profit before tax both at 30 June 2016.

2 Group is defined as the Company, its two wholly owned Luxembourg subsidiaries (JLIF Luxco 1 S.à.r.l and JLIF Luxco 2 S.à.r.l.), the English Limited Partnership (JLIF Limited Partnership), the General Partner (JLIF (GP) Limited), and the 32 wholly owned subsidiaries of the English Limited Partner that together held the investments in the 63 assets at 30 June 2017.

3 Adjusted Portfolio Value as defined in the Company's Annual Report 2016.

CHAIRMAN'S STATEMENT

I am pleased to report on a period of solid financial performance, seeing further progression of the dividend and distributions from the Portfolio remaining strong.

Introduction

I am pleased to present the Interim Report for the half year to 30 June 2017. We completed the acquisition of a 50% interest in the Croydon and Lewisham Street Lighting project bringing the total number of projects in our Portfolio to 63, and successfully raised gross proceeds of £119.5 million via a value accretive tap issue, with shares issued at a 12.0% premium to Net Asset Value ('NAV'). We continue to actively manage the projects comprising our Portfolio to ensure it continues to generate strong yields.

Dividends

In March 2017, we announced a dividend for the six-month period ended 31 December 2016 of 3.48 pence per share. This represented an increase on the previous dividend paid in October 2016 of approximately 2.0%, broadly in line with inflation for the period to which the dividend related. As in the past, we continued to offer shareholders the option of a scrip dividend alternative. The dividend was paid on 16 May 2017 with the scrip alternative option being elected for by 7.6% of shareholders.

Today we are announcing a dividend for the six months to 30 June 2017 of 3.48 pence per share. This will be paid in October 2017.

Investments

In June 2017, we completed the acquisition of a 50% interest in the Croydon and Lewisham Street Lighting project from John Laing Group plc for £8.2 million. The acquisition was made under the First Offer Agreements between the Company and John Laing Group plc. The project has been fully operational since November 2016 and represents JLIF's ninth UK street lighting PPP investment. The concession is due to run until 2036.

As a post balance sheet event, in July 2017, we also completed the acquisition of an incremental 15% interest in the North Staffordshire Hospital project for £7.5 million. This was acquired from co-shareholder Sodexo on a bilateral basis. JLIF already owned a 75% interest in the project. The acquisition was accretive to the book value of the existing interest.

We continue to monitor a number of investment opportunities and are optimistic for the second half of the year, while remaining selective in our approach to the opportunities we choose to pursue.

Financial and Portfolio Performance

JLIF's share price continued to perform strongly in the first half of 2017 resulting in a total shareholder return for the period of 6.2%. This means that since launch in November 2010, JLIF has delivered to shareholders a total return of 87.4%. This equates to 10.0% on an annualised compound basis. JLIF's profit before tax for the six months to 30 June 2017 was £34.7 million, further detail of which can be found in Section 7 of the Investment Adviser Report.

The majority of projects in the Portfolio continue to perform well, and we were pleased to be able to deliver a number of value enhancements in the period. These primarily related to operational cost savings such as project company management costs, major maintenance costs, an independent review of residual valuations (where this risk is retained by the SPV) and better than forecast actual performance.

As has been widely reported, in June 2017 a tragic fire occurred at the Grenfell Tower in West London. There is understandably significant scrutiny and focus on the safety of residents in the event of a fire at other high-rise social housing accommodation. JLIF takes health and safety matters, including the fire safety of buildings in our Portfolio, very seriously and we are continuing to work closely with our public-sector clients, in particular at projects with high-rise accommodation, to ensure appropriate risk assessments are in place and that residents and users feel safe.

We noted in our full year results for 2016 that a dispute had arisen at our Roseberry Park Hospital project. Throughout the period, we have continued to invest significant effort and resources towards finding a solution, and we will continue to do so. We have included a provision within our valuation based on our view of the current situation.

Capital Raising and Gearing

In March 2017, JLIF raised gross proceeds of approximately £119.5 million via an oversubscribed shareholder tap issue. The issue price represented a discount of just 0.02% to JLIF's share price immediately prior to the announcement of the placing (adjusted for the 3.48 pence dividend declared in mid-March, which went ex-div on 23 March 2017) and a premium of 12.0% to NAV. The proceeds were used to repay the Company's outstanding Sterling debt on its revolving credit facility, giving us flexibility to take advantage of future investment opportunities. We were pleased with the support for the shareholder tap issue that showed the continued strong demand for both our business model and infrastructure as an asset class. Since JLIF launched in November 2010, shareholders have supported the Company in raising over £1 billion.

As at 30 June 2017, JLIF had outstanding Euro-debt equivalent to approximately £43.7 million. JLIF continues to use income from its Euro-denominated projects to repay this debt, thereby creating a natural hedge against its Euro-denominated income. The current headroom on the revolving credit and accordion facilities is approximately £286.4 million, providing JLIF with access to significant finance with which to make new investments.

Going Concern

As explained in note 2(b) of the notes to the condensed set of financial statements, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, we continue to adopt the going concern basis in preparing this interim financial report.

Board and Investment Adviser

We announced in July 2017 that, after almost seven years as Chairman, I will be stepping down from this position and leaving the Company at the end of September. David MacLellan, currently Deputy Chairman, will become Chairman effective from this date. My departure is part of the phased succession programme to replace the five directors who have been on the Board since JLIF's launch in 2010, as previously announced in May 2017. I am pleased with the condition in which I leave the Company and proud of the success we have achieved over the past seven years, having delivered a compound total shareholder return through to 30 June 2017 of 10.0% per annum on the IPO issue price. I have every confidence in David's ability to take JLIF forward as Chairman.

In May 2017, we welcomed Theresa Grant to the Board. Theresa has been Chief Executive of Trafford Council, Manchester since 2011, where her responsibilities have included leading multi-million pound programmes of change for Infrastructure & Transport and Employment & Skills in the Greater Manchester region. Theresa brings with her a wealth of experience and capability and I am sure will prove a valuable addition.

Also in May, David Hardy was appointed by John Laing Capital Management ('JLCM') as lead investment adviser to JLIF. David replaces Andrew Charlesworth who left JLCM at the end of May. David has over 20 years' corporate finance, M&A, fundraising and deal closure experience and we look forward to his contribution.

A reduced Asset Origination Fee of 0.375% (previously 0.75% and incurred only in respect of acquisitions from vendors other than members of John Laing Group plc) was agreed with John Laing Group plc in August 2017, effective from 1 July 2017.

Outlook

At our Annual General Meeting in May 2017, shareholders approved certain amendments to the Company's investment policy. These included an expansion of the geographic limits for future investments. The requirement to maintain at least 50% of Total Assets (by value) in the UK remains. The new approved policy affords the Company greater flexibility to take advantage of attractive investment opportunities that previously it would have been precluded from pursuing and will support the Company's future growth. The amended investment policy allows the Company to make investments globally, but limited to those jurisdictions where the Investment Adviser advises that public sector or government-backed obligations carry a satisfactory credit rating and where financial markets are relatively mature.

The pipeline of new opportunities is promising with deals coming through the First Offer Agreements with John Laing Group plc and from industry relationships. JLIF will selectively participate in auction processes where there is a clear competitive advantage and strategic fit. We will continue to source availability-based PPP projects and at the same time assess opportunities in new geographies and sub-sectors where the risk profile and characteristics are consistent with our investment mandate.

P Lester CBE

Chairman

11 September 2017

FINANCIAL AND OPERATIONAL HIGHLIGHTS

• Net Asset Value ('NAV') as at 30 June 2017 of £1,204.4 million, up 11.5%, primarily as a result of investments and the shareholder tap issue, which was accretive to NAV per share

• NAV per share of 121.6 pence (excluding the dividend of 3.48 pence per share paid in May 2017), up 1.2% against that as at 31 December 2016 of 120.2 pence

• 6.2% total shareholder return in the period (6.9% FTSE All-Share)

• Portfolio Value of £1,220.8 million at 30 June 2017 (£1,217.6 million as at 31 December 2016)

• Underlying growth of 3.47% on a rebased Portfolio Value of £1,179.8 million, 0.32% or £3.8 million below the level of growth that would be expected from the unwind of the discount rate (adjusted for the timing of investments and distributions)

• Strong cash flows continue from the diversified Portfolio of 63 projects

• Profit before tax for the six-month period of £34.7 million (30 June 2016 - £72.3 million)

• Completed the acquisition of a 50% interest in the Croydon and Lewisham Street Lighting project in June 2017 from John Laing Group plc for £8.2 million, representing JLIF's ninth UK street lighting PPP investment

• Acquired a 15% incremental interest in the North Staffordshire Hospital project for £7.5 million from Sodexo in July 2017 as a post balance sheet event, taking JLIF's interest in the project to 90%

• Paid a dividend of 3.48 pence per share in May 2017 relating to the six-month period to 31 December 2016, a 2.0% increase on the most recent dividend paid in October 2016

• Declaring a dividend of 3.48 pence per share relating to the six-months to 30 June 2017, payable in October 2017

See section 7 for further detail

GROUP INVESTMENT PORTFOLIO (as at 30 June 2017)

Health

Abbotsford Regional Hospital and Cancer Centre, Canada

100%

Forth Valley Royal Hospital

100%

Kelowna and Vernon Hospitals, Canada

50%

Kingston Hospital

60%

Newcastle Hospital

15%

North Birmingham Mental Health

100%

North Staffordshire Hospital

90%

Northampton Mental Health

100%

Peterborough Hospital

30%

Queen Elizabeth Hospital, Greenwich

27.5%

Realise Health LIFT (Colchester)

60%

Roseberry Park Hospital, Middlesbrough

100%

Tunbridge Wells Hospital

37.5%

Vancouver General Hospital, Canada

100%

75% as at 30 June 2017, additional 15% interest acquired post the balance sheet date

Education

Bexley Schools

100%

Bristol BSF

37.5%

Edinburgh Schools

20%

Enfield Schools

100%

Glasgow Schools

20%

Highland School, Enfield

100%

Leeds Combined Secondary Schools

100%

Newham Schools

100%

North Swindon Schools

100%

Peterborough Schools

100%

South Lanarkshire Schools

15%

Justice & Emergency Services

Avon & Somerset Courts

40%

British Transport Police, London

100%

Cleveland Police Station and HQ

50%

Greater Manchester Police Stations

27.08%

Metropolitan Specialist Police Training Centre

27.08%

North East Fire and Rescue

100%

South East London Police Stations

50%

Transport

A55 Llandegai to Holyhead DBFO

100%

Barcelona Line 9 Section II Metro Stations, Spain

53.5%

Barcelona Line 9 Section IV Metro Stations, Spain

13.5%

Connecticut Service Stations P3, USA

100%

E18 Road

50%

Intercity Express Programme Phase 1

6%

LUL Connect (CityLink), London

33.5%

M6/M74 Motorway (UK)

11%

M40 Motorway (UK)

50%

Sirhowy Way

100%

Regeneration & Social Housing

Bentilee Hub Community Centre

100%

Brockley Social Housing PPP

100%

Camden Social Housing

50%

Canning Town Social Housing

100%

Islington I Housing

45%

Islington II Housing

45%

Kirklees Social Housing

100%

Miles Platting Social Housing, Manchester

50%

Oldham Social Housing

95%

Government Buildings

Groningen Tax Office, The Netherlands

40%

Kromhout Barracks PPP Project, The Netherlands

40%

MoD Main Building, London

26%

Street Lighting

Barnet Street Lighting

100%

Croydon and Lewisham Street Lighting

50%

Enfield Street Lighting

100%

Lambeth Street Lighting

100%

Manchester Street Lighting

50%

Redcar and Cleveland Street Lighting

100%

Surrey Street Lighting

50%

Wakefield Street Lighting

50%

Walsall Street Lighting

100%

Portfolio Value as at 30 June 2017 £1,220.8 million.

Weighted average remaining concession length is 19.4 years (19.8 years at 31 December 2016).

Figures in the tables above may not sum to 100% due to rounding.

Although the revenue streams for the investments in the M40, M6/M74, Sirhowy Way and A55 road projects include full or partial shadow toll mechanism they are not regarded as carrying demand risk due to their relative insensitivity to traffic movement.

A proportion of the income received by the SPV for the Connecticut Service Stations P3 project is variable, relating to retail and fuel sales. This project is therefore considered to be exposed to demand risk.

INVESTMENT ADVISER REPORT

1. ABOUT THE INVESTMENT ADVISER

JLIF is advised by John Laing Capital Management Limited ('JLCM'). JLCM, a wholly owned subsidiary of John Laing Group plc, acts as the Investment Adviser to the Company and as the Operator of the Partnership. JLCM was incorporated in England and Wales on 19 May 2004 under the Companies Act 1985 (registered number 5132286) and has been authorised and regulated in the UK by the FCA (previously FSA) since December 2004.

2. INVESTMENT PERFORMANCE

2.1 Share Price and Net Asset Value ('NAV')

During the first half of 2017, JLIF's share price increased from 129.7 pence at the start of the year, closing at 134.3 pence. A dividend of 3.48 pence per share was paid during the period, resulting in JLIF delivering a share price total return of 6.2% in the first half of 2017. While JLIF is not managed with regard to any benchmark, the share price of JLIF, with its government-backed and partially inflation-linked revenues, should theoretically broadly track the capital performance of the prevailing 15-year index-linked UK gilt (the 'Gilt'). JLIF's share price over the period as a whole generally outperformed the Gilt capital performance.

In the early part of the year, JLIF's shares outperformed the capital performance of the Gilt, but by around the end of the first quarter the capital performance was similar. The main factors driving this were the announcement of JLIF's equity capital raise on 20 March, and the shares trading ex-dividend on 23 March. Given that the capital raise was oversubscribed, with investor orders being scaled back accordingly, the Company saw a strong period of share price outperformance in the months following the completion of the equity issue on 27 March. Overall, JLIF's share price continued to trade at a premium to NAV throughout the period and performed in-line with broader UK equity markets. For example, the 6.2% total share price return stated above compares to a 6.9% return from the FTSE All-Share.

The premium to NAV at which JLIF's shares traded over the period reflects both the historical performance of the Company and general market appetite for income and infrastructure stocks. From launch in November 2010 to the end of the period, JLIF has delivered a total shareholder return of 87.4%.

JLIF's NAV as at 30 June 2017 was £1,204.4 million, an increase on the NAV of £1,080.6 million as at 31 December 2016. The increase in NAV was primarily driven by the shareholder tap issue in March 2017, offset by dividends paid in cash in the period (£28.9 million). On a per share basis, it increased from 120.2 pence to 121.6 pence.

2.2 Dividends

In recognition of the performance of the Portfolio and of the Company in 2016, JLIF announced an increase of its dividend to 3.48 pence per share in March 2017. This represented an increase of approximately 2.0% on the previous dividend of 3.41 pence per share, a level of growth in-line with average UK RPI over the second half of 2016. The dividend was paid in May 2017, with election for the scrip option resulting in the issue of 1,758,396 new ordinary shares. As at the dividend payment date, the implied dividend yield was 5.0%. With respect to the six-month period ended 30 June 2017, JLIF has today announced that it has maintained the dividend of 3.48 pence per share, which will be paid in October 2017. As on previous occasions, JLIF will continue to offer a scrip dividend alternative to shareholders.

3. VALUATION

3.1 Valuation of the Company

The Company accounts for its interests in its wholly owned subsidiary JLIF Luxco 1 S.à.r.l. as an investment at fair value through profit or loss. The fair value of the Company's investment in JLIF Luxco 1 S.à.r.l. comprises the fair value of JLIF Luxco 1 S.à.r.l., all the intermediate holding companies and the Portfolio of PPP investments. The fair value of JLIF Luxco 1 S.à.r.l. and all the intermediate holding companies is equivalent to their net book value. The investment at fair value through profit or loss of the Company as at 30 June 2017 was £1,204.0 million (31 December 2016: £1,078.2 million).

The fair value of the intermediate holding companies is principally comprised of cash, debt drawn on the Group's revolving credit facility and working capital balances, while the principal component of the investments of the Company is its Portfolio of 63 PPP assets.

3.2 Portfolio Value

JLIF's Portfolio of 63 PPP assets was valued as at 30 June 2017 at £1,220.8 million, compared to £1,217.6 million as at 31 December 2016. The movement of £3.2 million is the net impact of investments, cash distributed from the Portfolio, exchange rate movements, discount rate movements, underlying growth in the Portfolio, and the net of value enhancements and provisions made against certain projects.

A breakdown of the movement in Portfolio value during the period is shown in the table below.

Adjusting for the impact of the timing of acquisitions and distributions received during the period, the expected underlying growth based on the unwind of the discount rate (the Adjusted DRU) in the first half of 2017 was £44.7 million (3.8%). The actual underlying growth in value of the Portfolio during the first half of the year was £41.0 million (or 3.5%), £3.8 million (or 0.3%) lower than expected growth based on the Adjusted DRU. The table below shows a breakdown of the factors affecting the underlying Portfolio growth.

See section 3.4.4 for further details

3.3 Valuation Assumptions

3.3.1 Discount Rates

The projects comprising JLIF's Portfolio are valued by discounting the forecast future cash flows taken from the underlying project financial models to the relevant valuation date.

The discount rates applied to the project cash flows are therefore a key determinant of the valuation. Since launch in 2010, JLIF has used a consistent methodology in determining the discount rate applicable for each asset, based on the representative gilt rate for the project, plus a risk premium that reflects the particular risk profile and characteristics of each project. Using this methodology, the weighted average discount rate ('WADR') of the Portfolio at 30 June 2017 was 7.84%. The small movement in WADR from that as at 31 December 2016 (of 7.87%) is a consequence of a decrease in the discount rates used to value a small number of projects comprising JLIF's Portfolio as at 31 December 2016 (in particular, the Intercity Express Programme Phase 1 project, reflecting progress through the delivery phase), plus the acquisition in the period of an interest in the Croydon & Lewisham Street Lighting project at a discount rate below the previous weighted average. The range of discount rates used in the valuation of the Portfolio as at 30 June 2017 was 7.02% to 9.00%, unchanged from the prior year-end.

JLCM continues to monitor market pricing closely to ensure the discount rates used in the valuation of JLIF's Portfolio remain appropriate. As in previous years, the valuation of JLIF's Portfolio will be appraised by an external independent valuation expert at the year-end.

An analysis of movements in the weighted average risk free rate and risk premium for the Portfolio is shown below.

The sensitivity of the Portfolio Valuation to movements in the discount rate is presented below.

The small change in the sensitivity of the Portfolio to discount rate movements is caused by changes to the profile of the underlying forecast Portfolio cash flows, as a result of acquisitions in the period and value enhancements.

3.3.2 Macroeconomic Assumptions

Long-term inflation and corporation tax rate assumptions used in the valuation of the Portfolio at 30 June 2017 remain unchanged from those used in the valuation at 31 December 2016. The long-term inflation assumptions are based on, albeit slightly below, long-term inflation swap rates currently available in the market.

The long-term UK deposit rate assumption of 2.75% remains unchanged from that used in the valuation at 31 December 2016. However, the date from which this long-term rate is assumed has been amended from 2020 to 2021. The 2017 rate has been reduced to 0.5%, from 1.0%, to reflect the rates that are being achieved across the Portfolio. The deposit rate assumptions for all other geographies remained unchanged.

The long-term assumptions by country are as set out in the table below.

Federal tax rate/Connecticut State tax rate.

3.4 Valuation Drivers

3.4.1 Investments

In June 2017, JLIF completed the acquisition of a 50% interest in the Croydon and Lewisham Street Lighting project from John Laing Investments Limited (a wholly owned subsidiary of John Laing Group plc). The 25-year PPP contract involved the replacement of 90% of the street lighting apparatus in the London Boroughs of Croydon and Lewisham, and the ongoing operations and maintenance of 48,000 lighting points. The project reached financial close in April 2011 and has been operational since November 2016. The acquisition was made under the First Offer Agreements between John Laing Group plc and JLIF and the consideration for the interest was approximately £8.2 million. The investment represented JLIF's ninth UK street lighting PPP project.

In April 2017, following the completion of certain milestones (as agreed in the Sale and Purchase Agreement), JLIF paid the deferred element of the consideration for its 100% interest in the Connecticut Service Stations project. The deferred consideration was the equivalent of approximately £3.3 million.

3.4.2 Cash distributed from the Portfolio

Cash distributed from the Portfolio during the period was £53.6 million, after taking account of exchange rate movements.

3.4.3 Exchange rate impact

As at 30 June 2017, the Portfolio included nine assets that have non-Sterling denominated cash flows. In Canada, the Abbotsford, Vancouver, and Kelowna and Vernon hospital projects have Canadian Dollar cash flows, while the Barcelona Metro Stations L9T2 and L9T4 projects, as well as the E18 Road, Kromhout Barracks, and Groningen Tax Office projects have Euro cash flows. The Connecticut Service Stations P3 project has US Dollar cash flows. As at 30 June 2017, these nine assets represented 32.5% of the Portfolio by value.

During the six months to 30 June 2017, Sterling strengthened against the Canadian Dollar and the US Dollar but depreciated against the Euro, amid continued uncertainty since the EU Referendum and UK general election. JLIF's policy remains not to hedge the balance sheet value of its overseas projects, and, as a consequence, the movements in Sterling resulted in a small decrease in the value of the Portfolio of £0.2 million.

JLIF, under its investment policy, can use currency hedging via forward foreign exchange contracts of up to three years to hedge the income from assets that are exposed to exchange rate risk. This policy enables the Company to manage the exchange rate risk to its dividend distributions. Under its investment policy, JLIF can also use foreign currency borrowings to finance the acquisition of foreign currency assets.

It is the Company's hedging strategy, where possible, to match the currency of its costs and income, thereby creating a natural hedge. During 2017, both the Euro and US Dollar income were hedged in this manner; the Euro income being used to service the Company's Euro borrowings on its revolving credit facility and the US Dollar income being used to settle deferred acquisition payments. As a result, forward foreign exchange contracts to hedge Euro and US Dollar income have not been transacted.

Looking forwards, the Company intends to hedge the majority of its forecast US Dollar and Canadian Dollar income due over the next 24 months using forward foreign exchange contracts. The Board reviews the Company's hedging strategy and its effectiveness on a regular basis.

3.4.4 Portfolio return performance

During the six-month period to 30 June 2017, the Portfolio demonstrated underlying growth of £41.0 million (or 3.5%) on a rebased opening Portfolio Value of £1,179.8 million. The rebased value represents the Portfolio Value after adjusting for investments, cash distributed from the Portfolio during the period, changes to discount rates and unrealised foreign exchange movements. The rebased valuation is an alternative financial measure not defined within IFRS, but which the Directors consider is an important component in measuring the operational performance of the Company.

The underlying growth of 3.47% on the rebased valuation of was below that expected of 3.79% by 0.32% (£3.8 million). The expected growth is the level of growth that would arise solely from the unwind of the discount rate, adjusted to take into account the timing of investments and distributions in the period (the 'Adjusted DRU').

The movement of 0.32% (£3.8 million) below expectations is described under Section 3.2 above, being the result of a reduction in long-term UK deposit rates and cost provisions included within certain project valuations, offset by a number of value enhancements delivered across the Portfolio. In the first half of 2017, these included operational cost savings relating to project company management costs, major maintenance costs, an independent review of residual valuations (where this risk is retained by the SPV), and better than forecast actual performance.

As has been widely reported, in June 2017 a tragic fire occurred at the Grenfell Tower in West London. The safety of residents and users of our buildings is paramount. Following the fire and the issues highlighted regarding cladding systems (particularly the use of Aluminium Composite Material ('ACM')), we have undertaken a review of the use of ACM at all of the buildings across the JLIF Portfolio. ACM is not widely used in the Portfolio. It is present at one project in the Portfolio in application on high-rise buildings. JLIF is working closely with the public-sector client at the project to ensure the safety of the residents. In valuation terms, this project represents approximately 0.5% of the Portfolio.

The paragraphs below describe the status of the projects where disputes were continuing in the first half of 2017 and where JLIF holds a provision against its valuation. The projects are Peterborough Hospital and Roseberry Park Hospital.

We previously noted that in 2015, a dispute arose between the Peterborough Hospital SPV (in which JLIF holds a 30% shareholding) and the public-sector client, regarding certain alleged construction defects relating to fire compartmentation within the building and other operational aspects of the project. In January 2017, the dispute relating to fire compartmentation defects was formally concluded. Discussions over resolution of other operational aspects of the project are ongoing; however, the outcome is not anticipated to have a material impact on the valuation of the Portfolio or its expected investment income. A provision based on what is our current view of the most likely outcome has been included in the Portfolio valuation at 30 June 2017.

We previously noted that in 2016 a dispute arose at the Roseberry Park Hospital project, regarding the provision of certain Hard FM services, the operation of the Service Helpdesk, and certain alleged construction defects. Throughout the period, we have continued to invest significant effort and resources in finding a solution, and we will continue to do so. We have included a provision within our valuation based on our current view of the situation. As at 30 June 2017, the project represented less than 0.5% of the Portfolio Value.

4. INFLATION

Each project in the Portfolio receives a revenue stream from its public-sector counterparty that is fully or partially inflation linked. After taking account of the indexation of the cost base of the assets, cash flows from the Portfolio are positively correlated to inflation. As at 30 June 2017, the approximate correlation of the Portfolio to inflation was 0.49; i.e. for every 1-percentage point increase in inflation, returns from the Portfolio increase by 0.49%. This represents an increase from the Portfolio correlation to inflation as at 30 June 2016 of 0.43.

With the exception of the Connecticut Service Stations P3 project, which receives inflation-linked revenues from corporate counterparties.

5. RISK

There are a number of risks that could have a material impact on the performance of the Company over the remaining six months of 2017, thereby causing actual performance to differ materially from expectations. The Board regularly reviews the principal risks facing the Company, as well as the systems and controls designed to manage and mitigate these. The Board considers that the principal risks and uncertainties have not materially altered from those published in the Annual Report for the year ended 31 December 2016, with the exception of the dispute at the Roseberry Park Hospital project as discussed above. A detailed description of the principal risks and uncertainties, and the way by which each risk is mitigated, can be found on pages 10 to 15 of the Company's 2016 Annual Report.

6. GEARING

JLIF has access to £330 million of debt finance via its £180 million revolving credit facility and £150 million accordion facility. As at 30 June 2017, JLIF's revolving credit facility was drawn by approximately £43.7 million. The debt is held within the group structure by JLIF Limited Partnership.

At the start of 2017, JLIF's revolving credit facility was drawn by £171.4 million, in part following investments in late 2016 in the A55 Holyhead to Llandegai DBFO road project and the Intercity Express Programme Phase 1. Following a successful shareholder tap issue in March 2017 that raised gross proceeds of £119.5 million, JLIF repaid the Sterling debt. The balance that remained as at 30 June 2017 related to the Euro-debt drawn to make the investments in the Barcelona Metro Stations projects in July 2016. As noted previously, JLIF's strategy is to use income from its Euro-denominated projects to service this debt, enabling the Company to avoid using Sterling to finance the investments during the period of sustained Sterling weakness, since the UK public voted in favour of leaving the EU.

7. FINANCIAL RESULTS

The condensed financial statements of JLIF (or 'the Company') for the six months ended 30 June 2017 are on pages 20 to 39.

The Company prepared the condensed financial statements for the six-month period ended 30 June 2017 in accordance with International Financial Reporting Standards ('IFRS') as published by the EU and in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the EU.

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

Basis of accounting

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

These accounting standards are consistent with those adopted by JLIF for the year ended 31 December 2016.

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

The Group comprises the Company, its two wholly owned Luxembourg subsidiaries (JLIF Luxco 1 S.à.r.l. and JLIF Luxco 2 S.à.r.l.), JLIF (GP) Limited (the General Partner), JLIF Limited Partnership (the English Limited Partnership) and 32 (31 December 2016: 31) wholly owned subsidiaries of the English Limited Partnership.

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

As at 30 June 2017, the Group held investments in the 63 (31 December 2016: 62) PPP assets which make distributions comprising returns on investments (interest on subordinated loans and dividends on equity) together with repayments of investments (subordinated loan repayments and equity redemptions).

Results for the six months ended 30 June 2017

Also referred to as Net Asset Value or 'NAV'.

Classified as investments at fair value through profit or loss on the Balance Sheet.

Also referred to as Portfolio Value.

Key points to note:

• Interim dividend of 3.48 pence per share declared in March 2017 and paid in May 2017

• 3.47% underlying growth on a rebased Portfolio Value to £1,220.8 million

Net assets

The movement in net assets since 31 December 2016 is primarily driven by the shareholder tap issue in March 2017.

The Company's Net Assets increased from £1,080.6 million as at 31 December 2016 to £1,204.4 million at 30 June 2017. The Net Assets include investments at fair value through profit or loss of £1,204.0 million (£1,220.8 million relates to the PPP investments less £16.8 million to the intermediate holding companies' fair value) and, a cash balance of £3.6 million, offset by other net liabilities of £3.2 million.

The intermediate holding companies' negative fair value of £16.8 million comprises outstanding debt of £43.7 million drawn on the revolving credit facility offset by cash balances of £20.3 million and other net assets of £6.6 million.

Analysis of the Group's net assets

At 30 June 2017, the Group (Company plus intermediate holdings companies) had a total cash balance of £23.9 million (£3.6 million in the Company's balance sheet (31 December 2016: £5.5 million) and £20.3 million in the intermediate holding companies) (31 December 2016: £27.2 million), which is included in the Company's balance sheet under Investments at fair value though profit or loss.

The intermediate holding companies' other net liabilities include the outstanding debt of £43.7 million (31 December 2016: £171.4 million) under the Group's revolving credit facility.

The Portfolio Value is the fair value of the investments in 63 (31 December 2016: 62) PPP projects calculated using the discounted cash flow method, as described in Section 3.3.1.

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

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

Profit before tax

The Company's profit before tax ('PBT') for the six months ended 30 June 2017 was £34.7 million (six-month period ended 30 June 2016: £72.3 million), generating earnings per share of 3.7 pence (six-month period ended 30 June 2016: 8.4 pence). The profit before tax for the six months to 30 June 2016 was exceptional compared to previous periods, driven by proceeds from disposals, exchange rate gains and a reduction in discount rates.

In the six-month period ended 30 June 2017, the operating income was £41.8 million (six-month period ended 30 June 2016: £79.7 million). This reflects the underlying growth of the Portfolio Value of £41.0 million, the impact of discount rate movements of £4.4 million, offset by negative unrealised foreign exchange rate movements of £0.2 million and the intermediate holding companies' expenses and other net costs of £3.4 million.

The operating costs included in the income statement were £7.2 million in the period (six-month period ended 30 June 2016: £7.5 million).

Cash flow statement

The Company had a total cash balance at 30 June 2017 of £3.6 million (30 June 2016: £2.9 million). The breakdown of the movements in cash is shown below.

Cash flows of the Company for the six-month period ended 30 June (£ million):

The Group had a total cash balance at 30 June 2017 of £23.9 million (31 December 2016: £32.7 million), and borrowings of £43.7 million (31 December 2016: £171.4 million). The breakdown of the movements in cash is shown below.

Cash flows of the Group for the six-month period ended 30 June (£ million):

During the period, the Group received cash of £53.6 million (six-month period to 30 June 2016: £49.1 million) from its Portfolio. The cash distributed from the Portfolio in the six-month period more than sufficiently covers the operating and administrative expenses, financing costs as well as the dividends paid to its shareholders. JLCM anticipates future revenues from the Portfolio will continue to be in line with expectations and therefore will continue to fully cover future costs as well as dividends payable to shareholders.

The Company has declared an interim dividend of £34.5 million (3.48 pence per share) for the six-month period ended 30 June 2017, payable on 31 October 2017. JLIF continues to offers a scrip dividend alternative that is the subject of a separate shareholder communication.

8. OUTLOOK

Despite the continuing uncertainty following the start of the official Brexit negotiations and the snap election called by Prime Minister Theresa May, the UK saw a number of high profile transactions announced during the first half of 2017, particularly in large core infrastructure assets. With interest rates remaining at all-time lows, demand for low-risk assets across sectors including water utilities and transport continues to be strong with recent transactions providing further evidence of highly competitive returns. The UK PPP secondary market has remained relatively quiet, with only a handful of transactions taking place including JLIF's recently announced acquisitions of a 50% interest in the Croydon and Lewisham Street Lighting project and a 15% additional interest in the North Staffordshire Hospital project.

The Continental European PPP infrastructure market has, however, remained active with a number of transactions announced in Spain, Portugal, the Benelux region, and Italy. The bulk liquid/oil storage sector, with assets benefiting from long-term availability-based contracts, has been particularly active with a number of transactions being recorded and others coming to market. JLIF continues to monitor opportunities in the European market that meet its investment objectives and that provide a stable dividend yield and good inflation correlation.

The US remains a mixed market with certain States embracing private capital for infrastructure financing and developing genuine pipelines of projects. On the secondary market, the majority of opportunities remain highly competitive as a result of few operational assets coming to market and significant number of investors willing to deploy capital there. To build on the success of the Connecticut Service Stations investment, JLIF will continue to monitor the market closely and will consider opportunities in PPP assets.

The Canadian market remains relatively active, but as a sought-after destination for private investment, competition is fierce particularly from sophisticated domestic pension fund managers. The Company will continue to seek opportunities there but its strict pricing discipline and the withholding tax applicable to overseas investors is expected to continue to limit the opportunity.

Further afield, JLIF continues to see opportunities in Chile, including actively reviewing a number of projects in the transport sector and has advanced discussions on one opportunity. The Chilean market remains highly sought after by foreign institutional investors trying to gain exposure to the South American country. Similarly, the Australian secondary market has been active, particularly in the social and transport sectors where significant privatisation has taken place.

The pipeline of new opportunities is promising with a few deals coming through the First Offer Agreements with John Laing Group plc, and across industry relationships. JLIF will selectively participate in auction processes where there is a clear competitive advantage and strategic fit. JLIF expects to continue acquiring availability-based PPP projects and at the same time begin to consider opportunities in new countries and in new sub-sectors such as mature transport assets with a long proven traffic history or limited degree of demand risk.

9. EVENTS AFTER BALANCE SHEET DATE

In July 2017, JLIF completed the acquisition of an additional 15% interest in the North Staffordshire Hospital project from co-shareholder Sodexo. This brings JLIF's total shareholding in the project to 90% of the equity and subordinated debt interests, and 100% of the mezzanine debt interest. The consideration was approximately £7.5 million. The acquisition was made on a bilateral basis and at a price that was accretive to the value of the existing interest.

RESPONSIBILITY STATEMENT

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

We confirm that to the best of our knowledge:

• The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

• The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

• The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein); and

• The condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.4R.

By order of the Board

Paul Lester CBE

Chairman

11 September 2017

INDEPENDENT REVIEW REPORT TO JOHN LAING INFRASTRUCTURE FUND LIMITED

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the income statement, the balance sheet, the statement of changes in equity, the cash flow statement and related notes 1 to 18. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review 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, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Statutory Auditor

Guernsey, Channel Islands

11 September 2017

CONDENSED INCOME STATEMENT

six months ended 30 June

All results are derived from continuing operations.

There are no items of Other Comprehensive Income in both the current and preceding period, and therefore no separate Statement of Comprehensive Income has been presented.

CONDENSED STATEMENT OF FINANCIAL POSITION

The financial statements were approved by the Board of Directors and authorised for issue on 11 September 2017. They were signed on its behalf by:

P Lester C Spencer

Chairman Director

CONDENSED STATEMENT OF CHANGES IN EQUITY

six months ended 30 June

CONDENSED CASH FLOW STATEMENT

six months ended 30 June

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.

NOTES TO THE FINANCIAL STATEMENTS

for the six months ended 30 June 2017

1. GENERAL INFORMATION

John Laing Infrastructure Fund Limited (the 'Company', or 'JLIF') is a company domiciled and incorporated in Guernsey, Channel Islands, whose shares are publicly traded on the London Stock Exchange under a Premium Listing. The interim condensed unaudited financial statements of the Company as at and for the six months ended 30 June 2017 have been prepared on the basis of the accounting policies set out in the Company's 2016 Annual Report, available at www.jlif.com. The financial statements comprise the Company and its investment in JLIF Luxco 1 S.à.r.l. The Company and its subsidiaries invest in PPP infrastructure projects in the UK, Continental Europe and North America.

The financial information for the period ended 30 June 2017 and the comparative information for the period ended 30 June 2016 are prepared on a consistent basis with the accounting policies for the year ended 31 December 2016.

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

The net assets of the intermediate holding companies, which at 30 June 2017 principally comprise working capital and outstanding loan balances, are included at fair value in the carrying value of investments.

The condensed set of financial statements is presented in Sterling, which is the currency of the primary economic environment in which the Company operates. Foreign operations are included in accordance with the policies set out in note 2.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The annual financial statements of John Laing Infrastructure Fund Limited are prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union and IFRSs as issued by the IASB using the historical cost basis, except that the financial instruments classified at fair value through profit or loss are stated at their fair value. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting.

The financial information for the most recent Annual Report for the year ended 31 December 2016 is derived from the financial statements delivered to the UK Listing Authority. The financial information for the year ended 31 December 2016 included in this Interim Report does not constitute statutory accounts as defined in The Companies (Guernsey) Law, 2008. The auditors reported on the statutory accounts for the year ended 31 December 2016: their audit report was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under section 263(2) and (3) of the Companies Act (Guernsey) Law 2008.

(b) Going concern

The Directors, in their consideration of going concern have reviewed comprehensive cash flow forecasts prepared by the Investment Adviser, which are based on prudent market data and past experience and believe, based on those forecasts and an assessment of the Company's and the Group's committed banking facilities, that it is appropriate to prepare the financial statements of the Company on the going concern basis.

In arriving at their conclusion that the Group has adequate financial resources, the Directors were mindful that the Group had unrestricted cash of £23.9 million (including £3.6 million for the Company) and a five-year banking facility (available for investment in new or existing projects and working capital) of £180.0 million, which expires in August 2020, and an accordion facility of £150.0 million which expires in June 2019.

As at 30 June 2017, there was the equivalent of £43.7 million drawn under the banking facility, which was used to finance the acquisition of investments.

All key financial covenants are forecast to continue to be complied with.

The Company, through its intermediate holding companies, holds investments in 63 infrastructure PPP project companies, which yield annual interest, dividends and loan repayments. The cash flow yields from the projects cover the Group's expected cash flow requirements for overheads and dividends payable to investors.

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

As reported on pages 10 and 15 of the 2016 Annual Report, the Board has considered the principal risks and uncertainties facing the Company. The Board has concluded that these do not represent a significant threat to the Company and the Group as the Group's income is generated from a portfolio of PPP concessions that are supported by government-backed cash flows and are forecast to cover the Group's committed costs, and the Company has in place mitigation processes to reduce the risks to an acceptable level.

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

(c) Segmental reporting

In the condensed financial statements, the Company recognises one investment in its 100% owned subsidiary JLIF Luxco 1 S.à.r.l. The Directors consider and analyse the performance of the Company by considering the Group's main activity, which is to invest predominantly in PPP investments through its intermediate holding companies. Information reported to the Company's Directors for the purposes of resource allocation and assessment of segment performance is focused on the sector risk associated within the Group. The Group has investments in the Health, Education, Justice & Emergency Services, Transport, Regeneration & Social Housing, Government Buildings and Street Lighting sectors and therefore these form the Group's reportable segments under IFRS 8. The Directors also consider and analyse the performance of the Group by Geography as the Group predominately invests in the UK, but also has investments in Continental Europe and North America, as well as administration functions in Guernsey. Geographical segments therefore form part of the Group's reportable segments under IFRS 8.

(d) Statement of compliance

Pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987 the Company is a Registered Closed-Ended Investment Scheme. As a registered scheme, the Company is subject to certain ongoing obligations, with which it continues to comply.

3. OPERATING SEGMENTS

Segment results

The following is an analysis of the Company's operating income and results by reportable segment for the six-month period ended 30 June 2017.

The following is analysis of the Company's operating income and results by reportable segment for the six-month period ended 30 June 2016.

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

No inter-segment income was earned in the six-month period ended 30 June 2017 (six-month period ended 30 June 2016: £nil).

The following is an analysis of the Company's assets and liabilities by reportable segment for the period ended 30 June 2017.

The following is analysis of the Company's assets and liabilities by reportable segment for the year ended 31 December 2016.

Information about major customers

The Company, via its subsidiaries, has three investments (30 June 2016: two) from which it receives more than 10% of the Company's operating income. The operating income from major customers was £18.5 million (30 June 2016: £22.5 million) which was reported within the Government Buildings and Transport segments (30 June 2016: Health and Transport segments). The Company has treated each PPP asset as a separate customer.

Analysis by geographical areas

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

The operating income included in the above tables is derived from the distributions from PPP investments and the movements in fair value of investments. No inter-segment income was earned in the six-month period ended 30 June 2017 (six-month period ended 30 June 2016: £nil).

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

4. OPERATING EXPENSES

The Company had no employees other than the Directors for the current or preceding periods. There was no Directors' remuneration for the current or preceding periods other than directors' fees as detailed in note 16.

5. TAX

The Company has obtained exempt status from income tax in Guernsey under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. The income from its investments is therefore not subject to any further tax in Guernsey, although the underlying project companies in which the Group invests provide for and pay taxation at the appropriate rates in the countries in which they operate, for further details refer to note 8.

As part of the Finance Bill (No.2) 2017, the UK Government published on 13 July 2017 an updated legislation on Corporate Interest Restriction ('CIR'). It is confirmed that the rules will be included in a Finance Bill to be introduced as soon as possible after Parliament's summer recess and will continue to have a start date of 1 April 2017. JLIF believes that these rules do not represent a significant risk to the group. We do not expect the introduction of this legislation to have a material impact on the valuation of the Portfolio. We will continue to monitor proposed legislations in relation to the OECD / G20's Base Erosion and Profit Shifting ('BEPS') initiative, both in the UK and in other territories in which JLIF operates.

6. DIVIDENDS

* Includes scrip dividends of £2,369,000 with 1,758,396 new shares being issued (2016: £950,000 with 734,282 new shares issued).

The final dividend for the year ended 31 December 2016 of 3.48 pence per share, amounting to £31.3 million, was approved by the Board in February 2017, and paid in May 2017. This dividend has been recognised in the condensed statement of changes in equity for the six months ended 30 June 2017.

An interim dividend for the six-month period ended 30 June 2017 of 3.48 pence per share, amounting to £34.5 million, was approved by the Board on 8 September 2017 and is payable in October 2017. The dividend has not been included as a liability at 30 June 2017.

7. 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 is the same, as the Company has not issued any share options or other instruments that would cause dilution.

8. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

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

The table below shows the Company's investment in JLIF Luxco 1 S.à.r.l. in the period as recorded in the Company Statement of Financial Position:

Reconciliation of movement in fair value of the portfolio of assets

The table below shows the movement in the fair value of the Company's portfolio of PPP investments. These investments are held through other intermediate holding companies. The table below also presents a reconciliation of the fair value of the asset portfolio to the Company balance sheet as at 30 June 2017, by incorporating the fair value of these intermediate holding companies.

* Operating income for the period ended 30 June 2017 is £41.8 million (year ended 31 December 2016: £175.2 million; six months to 30 June 2017: £79.7 million).

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

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

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

In the six-month period ended 30 June 2017, the total growth in value of the Portfolio is £40,952,000 (year ended 31 December 2016: £92,048,000 and six-month period ended 30 June 2016: £39,426,000).

The fair value of the intermediate holding companies comprises cash of £20.4 million (31 December 2016: £27.2 million), working capital balances of £6.6 million (31 December 2016: £4.7 million), offset by debt drawn under the JLIF Limited Partnership's revolving credit facility of £43.7 million (31 December 2016: £171.4 million).

The Investment Adviser has carried out fair market valuations of the PPP investments as at 30 June 2017. The Directors have satisfied themselves as to the methodology used and the discount rates applied for the valuation of the PPP investments. Investments in PPP projects are valued using a discounted cash flow methodology. The valuation techniques and methodologies have been applied consistently with the methodology used to value the Portfolio in previous years. Discount rates applied range from 7.02% to 9.00% (weighted average 7.84%) (year ended 31 December 2016: 7.02% to 9.00% (weighted average 7.87%)).

Valuation assumptions

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

* Federal tax rate / Connecticut State tax rate.

Investment acquisitions

On 1 June 2017, the Group completed the acquisition of a 50% interest in the Croydon and Lewisham Street Lighting project from John Laing Investments Limited, a member of John Laing Group plc, for a consideration of £8.2 million.

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

9. TRADE AND OTHER RECEIVABLES

There were no overdue amounts included in trade and other receivables.

10. TRADE AND OTHER PAYABLES

11. LOANS AND BORROWINGS

At 30 June 2017, the Company had no outstanding loans and borrowings (31 December 2016: £nil).

The Company's indirect subsidiary, JLIF Limited Partnership had the equivalent of £43.7 million outstanding drawn under its revolving credit facility (31 December 2016: £171.4 million) comprising exclusively €49.7 million. The outstanding amount is included in the 'Investment at fair value through profit or loss' in the Company's Statement of Financial Position.

There were no other outstanding loans and borrowings (31 December 2016: £nil).

12. SHARE CAPITAL

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

On 27 March 2017, the Company placed an additional 89,826,897 new ordinary shares via a shareholder tap issue, raising gross proceeds of £119.5 million, which was used to repay debt drawn primarily for the investments made at the end of 2016 in the Intercity Express Programme Phase 1 project and the A55 Holyhead to Llandegai DBFO road project.

On 16 May 2017, 1,758,396 new Ordinary Shares of 0.01 pence each at an Issue Price of 134.72 pence were issued and fully paid as a scrip dividend alternative in lieu of cash for the final dividend in respect of the year ended 31 December 2016.

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

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

13. SHARE PREMIUM ACCOUNT

14. RETAINED EARNINGS

15. FINANCIAL INSTRUMENTS

The Company held the following financial instruments at fair value at 30 June 2017. There have been no transfers of financial instruments between levels of the fair value hierarchy. There are no non-recurring fair value measurements.

Financial instruments by category

* FVTPL = Fair value through profit or 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 Level 2 assets or liabilities during the period (year ended 31 December 2016: none). There were no transfers between Level 1 and 2, Level 1 and 3 or Level 2 and 3 during the period (year ended 31 December 2016: none).

In the table above, financial instruments are held at carrying value as an approximation to fair value unless stated otherwise.

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

An analysis of the movement between opening to closing balances of the investments at fair value through profit or loss is given in note 8.

The investments at fair value through profit or loss, whose fair values include the use of Level 3 inputs, include the fair value of the Company's 100% owned subsidiary JLIF Luxco 1 S.à.r.l., the intermediate holding companies and the Group's PPP investments.

The fair value of the Company's direct subsidiary and the intermediate holding companies mainly comprises cash and working capital and an outstanding loan balance of £43.7 million. The fair values of these companies are equivalent to their Net Assets.

The Group's PPP investments are valued 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 each discount rate, which is a weighted average cost of capital, is the long-run average government bond rates plus an appropriate premium to reflect PPP specific risk, phase of the PPP project and counterparty credit risk. The weighted average discount rate applied was 7.84% (31 December 2016: 7.87%). The discount rate is considered the most significant unobservable input through which an increase or decrease would have a material impact on the fair value of the investments at fair value through profit or loss. An absolute increase of 1% in the discount rate would cause a decrease in fair value of the PPP investments of £94.7 million (31 December 2016: £96.7 million). An absolute decrease of 1% could cause an increase in fair value of the PPP investments of £109.2 million (31 December 2016: £111.7 million).

As at 30 June 2017, there were no material changes to the other sensitivities, which are disclosed in the Company's 2016 Annual Report although there was a marginal increase in the Portfolio's sensitivity to inflation as detailed in Section 4 of the Investment Adviser Report.

The Directors consider that the carrying value amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements are approximately equal to their fair values.

16. TRANSACTIONS WITH INVESTMENT ADVISER AND RELATED PARTIES

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

Transactions with the Investment Adviser

JLCM's appointment as Investment Adviser is governed by an Investment Advisory Agreement (amended and restated on 8 August 2017) which may be terminated by either party giving one year's written notice or (subject to the payment to JLCM of certain termination fees) by the Company by giving JLCM six months' notice. The appointment may also be terminated if JLCM's appointment as Operator is terminated.

JLCM is also the Operator of JLIF Limited Partnership, the limited partnership through which the Group holds its investments, by JLIF (GP) Limited ('the General Partner'), General Partner of the partnership. The Operator and the General Partner may each terminate the appointment of the Operator, by either party giving one year's written notice. Either the Operator or the General Partner may terminate the appointment of the Operator by written notice if the Investment Advisory Agreement is terminated in accordance with its terms.

JLCM is entitled to fees equal to: i) a Base fee of a) 1.1% per annum of the Adjusted Portfolio Value* of the Fund up to and including £500 million; b) 1.0% per annum of the Adjusted Portfolio Value of the Fund in excess of £500 million up to and including £1 billion; c) 0.9% per annum of the Adjusted Portfolio Value of the Fund in excess of £1 billion; and ii) an Asset Origination Fee of 0.375% (amended from 0.75% in August 2017, effective from 1 July 2017) of the purchase price of new investment capital acquired by the Fund that is not sourced from any of John Laing Group plc, its subsidiary undertakings, or funds or holdings managed by John Laing Group plc or any of its subsidiary undertakings.

The total Investment Adviser, Operator fee and asset origination fee charged to the Income Statement for the period was £6,271,000 (six months ended 30 June 2016: £6,482,000) of which £3,145,000 remained payable at the period end (31 December 2016: £2,877,000).

* 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 Consolidated Group); plus

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

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

(ii) any Uninvested Cash.

On the 1 June 2017, the Group completed the acquisition of a 50% interest in the Croydon and Lewisham Street Lighting project from John Laing Investments Limited, a member of the John Laing Group plc, for a consideration of £8.2 million.

Transactions with related parties

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

As at 30 June 2017 the Profit Participating Agreement loan balance was £1,051,872,000 (31 December 2016: £933,872,000).

The balance of interest receivable increased from £44,319,000 on 31 December 2016 to £49,595,000 as at 30 June 2017. This is due to the interest earned for the six-month period ended 30 June 2017 of £39,276,000 (six months ended 30 June 2016: £75,737,000), offset by the receipt of £34,000,000 during the period (six-month period ended 30 June 2016: £31,700,000).

The Company accounts for the Profit Participating Agreement as part of its investment in JLIF Luxco 1 S.à.r.l., which has been fair valued.

The Directors of the Company, who are considered to be key management, received fees for their services. Total fees paid in the period were £155,534 (six-month period ended 30 June 2016: £153,154). The Directors were paid £5,305 of expenses in the period (six-month period ended 30 June 2016: £9,999).

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

The Directors and their close family members were paid dividends in the period of £7,743 (six-month period ended 30 June 2016: £7,587).

17. GUARANTEES AND OTHER COMMITMENTS

The Company has provided a guarantee under the JLIF Limited Partnership's £180 million multi-currency revolving credit facility, which expires in August 2020, and under the accordion facility of £150 million that expires in June 2019. As at 30 June 2017, £43.7 million was drawn on the facility. The fair value of the guarantee is considered to be immaterial to the Company accounts as the probability of the guarantee being called upon is considered to be extremely unlikely. In making this assessment, consideration has been given to the proximity of the current and forecast metrics to default.

18. EVENTS AFTER BALANCE SHEET DATE

On 19 July 2017, the Group completed the acquisition of a further 15% interest in the North Staffordshire Hospital project from Sodexo Investments Limited for a consideration of £7.5 million, taking JLIF's total interest in the project to 90%.

DIRECTORS, AGENTS AND ADVISERS

DIRECTORS (ALL NON-EXECUTIVE)

Paul Lester CBE (Chairman)

David MacLellan (Deputy Chairman & Senior Independent Director)

Theresa Grant

Helen Green

Talmai Morgan

Christopher Spencer

Guido Van Berkel

INVESTMENT ADVISER AND OPERATOR

John Laing Capital Management Limited

1 Kingsway

London WC2B 6AN

United Kingdom

ADMINISTRATOR TO COMPANY, COMPANY SECRETARY AND REGISTERED OFFICE

Heritage International Fund Managers Limited

P.O. Box 225, Heritage Hall

Le Marchant Street

St Peter Port

Guernsey GY1 4HY

Channel Islands

REGISTRAR

Capita Registrars (Guernsey) Limited

Longue Hougue House

St. Sampson

Guernsey GY2 4JN

Channel Islands

UK TRANSFER AGENT

Capita Registrars Limited

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

United Kingdom

CORPORATE BROKER

J.P. Morgan Securities plc

25 Bank Street

Canary Wharf

London E14 5JP

United Kingdom

AUDITOR

Deloitte LLP, Recognised Auditors

Regency Court

Glategny Esplanade

St Peter Port

Guernsey GY1 3HW

Channel Islands

PUBLIC RELATIONS

Finsbury

Tenter House

45 Moorfields

London EC2Y 9AE

United Kingdom

CORPORATE BANKERS

Royal Bank of Scotland International

PO Box 55

35 High Street

St Peter Port

Guernsey GY1 4BE

Channel Islands

CAUTIONARY STATEMENT

Pages 2 to 17 of this report (including but not limited to the Chairman's Statement, the Investment Adviser's Report, together the 'Review Section') have been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. These should not be relied on by any other party or for any other purpose.

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

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

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

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

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

In addition, the Review Section may include target figures for future financial periods. Any such figures are targets only and are not forecasts.

This report has been prepared for the JLIF Group as a whole and therefore gives greater emphasis to those matters that are significant to John Laing Infrastructure Fund Limited and its subsidiary undertakings when viewed as a whole.