International Public Partnerships Regulatory News (INPP)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL OR TO U.S. PERSONS. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION.

21 March 2018

INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED

("INPP" or the "Company")

FULL YEAR RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2017

· Another solid year of progress with strong dividend yield and significant new investment activity totalling £464 million, generating considerable prospects for further NAV growth.

· Carillion-related issues substantially resolved with estimated overall impact projected to be less than £1.5 million. No increased costs are anticipated for the public sector nor any job losses for site-based former Carillion employees.

· While noting recent political debate about the merits of private capital in financing public infrastructure, INPP believes substantial protections to shareholder value exist. Nevertheless, INPP acknowledges its continued responsibility to demonstrate the value for money it delivers to the assets under its management and to their end-users.

· Continued focus on harder-to-access opportunities with 73% of assets in the portfolio developed or originated in the primary market as an early stage investor and 12% of assets currently in construction.

· Two-year forward dividend growth guidance with 2018 and 2019 projecting annual dividend increases of c.2.5% - continuing trend since IPO in 2006.

· Total Shareholder Return since IPO, in 2006, is now 165.4%, an average compound growth rate of 9.2% per annum, ahead of the long-term 8-9% returns target.1

· NAV per share growth of 2% in 2017 reflects steady progression throughout the year but does not capture the future value of recent acquisitions that are expected to bring growth to the portfolio once 'bedded down'.

· Successful completion of two capital raisings in 2017, securing a total £410 million, before issue costs, fully deployed into new opportunities.

FINANCIAL HIGHLIGHTS2

· Net Asset Value ('NAV') growth to £2.0 billion (2016: £1.6 billion)

· NAV per share growth to 145.0 pence (2016: 142.2 pence) 

· Full-year dividend increase of c.2.5% to 6.82 pence per share (2016: 6.65 pence per share)

· Profit before tax of £106.4 million (2016: £175.3 million) - 2016 reflected exceptional foreign exchange gains consequent on Brexit

· Strong inflation linkage - projected increase in return of 0.79% p.a. for each 1.00% p.a. increase in inflation (2015: 0.78%)3

· Target 2018 and 2019 full-year dividends of 7.00 and 7.18 pence per share respectively

· 2017 cash dividend cover of 1.2x4

PORTFOLIO UPDATE

In 2017, the Company continued to pursue its proven long-term strategy of value-focused portfolio development, active asset management and effective financial management in high quality, predictable, long-duration assets including:

· Selective exposure to stable, inflation-linked regulated assets

o £272.5 million investment in National Grid's gas distribution networks, Cadent.

o £78.2 million follow-on and final investment in London's new super sewer, the Thames Tideway Tunnel.

· Growth of leadership position in UK offshore transmission ("OFTO") investment

o Appointed preferred bidder on seventh OFTO project with c.£50 million investment in connection to 402MW Dudgeon Offshore Wind Farm.

· Continued global portfolio diversification

o A$154 million (£86.8 million) additional interest in Australian rolling stock project, Reliance Rail.

o c.€8 million (£7 million) commitment to new German police centre, Offenbach.

o A$35.6 million (£20.8 million) investment in Australian schools project, Victoria New Schools.

· Strategic use of pre-emption rights to increase stakes in existing assets

o £1.5 million investment to acquire further interest in Wolverhampton Building Schools for Future ("BSF") project, increasing the Company's stake to 90%.

o Proportion of a further 14% interest in Cadent subject to put and call options between a consortium of leading long-term UK and international investors, Quad Gas Group, and National Grid.

· Early mover into emerging low-risk core infrastructure asset classes

o £45 million commitment to invest alongside HM Government in UK digital infrastructure and fibre-to-the-home broadband connections via the National Digital Infrastructure Fund (NDIF).

Rupert Dorey, Chairman of International Public Partnerships Limited, commented: "I am pleased to report another successful year for all our stakeholders where we continued to exceed our dividend return targets and prove our commitment to delivering sustainable, long-term, inflation-linked returns to our shareholders. We continue to believe in the strong risk mitigation that exists across our portfolio and as facilitators of public services through the long-term private investment we provide, we continue to have a responsibility to demonstrate the public benefit of all our activities, to all our stakeholders."

http://www.rns-pdf.londonstockexchange.com/rns/3572I_1-2018-3-20.pdf

ENDS.

INPP will be holding an analyst and investor presentation and conference call at 9.30am on the day of announcement (21 March 2017).

For those analysts or investors who cannot attend in person, a conference call facility will also be available by dialling +44 (0)330 336 9105 and using the confirmation code 3321121. Please note the conference call is not open to the media or third-party representatives thereof.

A copy of the results presentation can be downloaded from the Company's website:

www.internationalpublicpartnerships.com

NOTES TO EDITORS

Important Information

This announcement contains information that is inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014.

This announcement is an advertisement. It does not constitute a prospectus relating to the Company and does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor.

Forward-looking statements are subject to risks and uncertainties and accordingly the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These forward-looking statements speak only as at the date of this announcement. The Company, Amber and Numis Securities expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Prospectus Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.

About International Public Partnerships:

International Public Partnerships ('INPP') is a listed infrastructure investment company which invests in global public infrastructure projects developed under the public private partnerships ('PPP'), private finance initiative ('PFI'), regulated asset and other similar procurement methods.

Listed in 2006, INPP is a long-term investor in 129 social and transport infrastructure projects, including schools, hospitals, courts, police headquarters, transport and utility and transmission projects in the UK, Europe, Australia and North America. INPP seeks to provide its shareholders with both a long-term yield and capital growth through investment across both construction and operational phases typically of 25-40 year concessions.

Amber Infrastructure Group ('Amber') is the Investment Adviser to INPP and has over 100 dedicated staff who manage, advise on and originate projects for INPP.

Visit the INPP website at www.internationalpublicpartnerships.com for more information.

Notes:

1. Bloomberg - share price appreciation plus dividends assumed to be reinvested - from IPO in November 2006 to 31 December 2017.

2. For the year ended 31 December 2017 unless otherwise stated.

3. Projected increase in portfolio return for a 1.00% p.a. increase in the inflation rate assumed in the current valuation analysis for each asset in the portfolio.

4. Cash dividend payments to investors are paid from net operating cash flow before non-recurring operating costs.

International Public Partnerships Limited

Annual Report and Financial Statements for the year ended 31 December 2017

Registered number: 45241

www.internationalpublicpartnerships.com

Note: Page references in this announcement refer to the full formatted Annual Financial Report for the period ended 31 December 2017 that can be found on the Company's website. Certain charts cannot be reproduced for the RNS format and can also be seen in the PDF version of this document available on the Company's website.

COMPANY FACTS

- London Stock Exchange trading code: INPP.L

- Member of the FTSE 250 and FTSE All Share indices

- £2.2 billion market capitalisation at 31 December 2017

- 1,405 million shares in issue at 31 December 2017

- Eligible for ISA/PEPs and SIPPs

- International Public Partnerships ('The Company', 'INPP') shares are excluded from the Financial Conduct Authority's ('FCA') restrictions, which apply to non-mainstream investment products, and can be recommended by independent financial advisers to their clients

COVER IMAGE:

Manchester Cadent, U.K., Cadent (Gas Distribution Network), U.K.

HIGHLIGHTS

We aim to provide our investors with sustainable, long-term and inflation-linked returns.

We expect to do this through growing our dividend and by creating the potential for capital appreciation.

Our approach is supported by robust investment cash flows.

DIVIDENDS

6.82p - 2017 full-year distribution1 per share

7.00p - 2018 full-year distribution target2 per share

7.18p - 2019 full-year distribution target2 per share

2.5% - Average annual dividend increase2

1.2x - Cash dividend covered3

NET ASSET VALUE ('NAV')

£2.0bn - NAV at 31 December 20174 (2016: £1.6bn)

145.0p - NAV per share at 31 December 20174 (2016: 142.2p)

27.1% - Increase in NAV

2.0% - Increase in NAV per share

PORTFOLIO ACTIVITY

£464.0m - Cash investments made during 2017

TOTAL SHAREHOLDER RETURN ('TSR')

165.4% - TSR since inception5

9.2% - Compound annual growth in TSR since inception5

PROFIT

£106.4m - Profit before tax (2016: £175.3m)

1 The forecast date for payment of the dividend relating to the six months to 31 December 2017 is 15 June 2018.

2 Future profit projection and dividends cannot be guaranteed. Projections are based on current estimates and may vary in future.

3 Cash dividend payments to investors are paid from net operating cash flow before non-recurring operating costs as detailed on pages 22 to 23.

4 The methodology used to determine investment fair value is incorporated within the NAV as described in detail on pages 24 to 30.

5 Since inception November 2006. Source: Bloomberg. Share price plus dividends assumed to be reinvested.

COMPANY OVERVIEW

TRACK RECORD OF STABLE AND GROWING RETURNS TO INVESTORS

INPP Dividend Payments

[Diagram can be found in PDF version of this document on the Company's website].

Compound annual growth rate in TSR of 9.2% p.a.1

Since listing, INPP has grown from £300m market capitilisation to £2.2bn (December 2017)

Dividend growth has averaged 2.5% since inception2

High degree of inflation linkage

A WELL DIVERSIFIED PORTFOLIO

Sector Breakdown

129 investments in infrastructure projects across a variety of sectors

Geographic Split

Invested in selected global regions that meet INPP's specific risk and return requirements

Investment Type

Invested across the capital structure, taking into account appropriate risks to returns

Mode of Acquisition/Asset Status

Early stage investment gives first mover advantage maximises capital growth opportunities

Project Ownership

Preference to hold majority stakes

Investment Life

Weighted average portfolio life of 37 years7

International Public Partnerships invests in high quality, predictable, long-duration infrastructure projects.

PREDICTABLE, SECURE, LONG-TERM CASHFLOWS

INPP Projected Cash Flow Profile3

[Diagram can be found in PDF version of this document on the Company's website].Note: This chart is not intended to provide any future profit forecast. Cash flows shown are projections based on the current individual asset financial models and may vary in the future. Only investments committed as at 31 December 2017 included.

Strong: long-dated, contractual, predictable cash flows

Secure: mainly from regulated or government backed counterparties

Investments focused on high-quality, OECD countries

INTERNATIONAL PUBLIC PARTNERSHIPS WITH AMBER INFRASTRUCTURE - A STRONG PARTNERSHIP

- Experienced independent Board and strong corporate governance

- INPP's Investment Adviser, Amber Infrastructure, is a leading originator, asset and fund manager

- Amber has one of the largest independent teams in the sector with over 100 employees working internationally managing our assets

- We have a long-standing relationship - Amber has managed INPP's assets since its inception in 2006

- Amber has a strong track record of originating and developing opportunities for new investment

- Amber's active management approach to underlying asset investments supports sustainable performance

- INPP has first right over qualifying infrastructure assets developed by Amber and for U.S. investments, its main shareholder, U.S. Group, Hunt Companies LLC.

Relationship with the Investment Adviser and its Group

[Diagram can be found in PDF version of this document on the Company's website].

1. Since inception November 2006. Source: Bloomberg. Share price plus dividends assumed to be reinvested.

2. Future dividends cannot be guaranteed. Projections based on current estimates and may vary in the future.

3. There are many factors that may influence the actual achievement of long-term cash flows to the Company. These include both internal as well as external factors and investors should not treat the chart above as being more than an indicative profile and not a projection, estimate or profit forecast. The actual achieved profile will almost certainly be different and may be higher or lower than indicated.

4. Investments where the Company holds the Risk Capital and the senior debt or the senior debt has been repaid.

5. 'Early Stage Investor' - asset developed or originated by the Investment Adviser or predecessor team in primary or early phase investments.

6. 'Later stage investor' - asset acquired from a third party investor in the secondary market.

7. Includes non-concession entities which have potentially a perpetual life but assumed to have finite lives for this illustration.

TOP 10 INVESTMENTS

International Public Partnerships' ('INPP's) top ten investments by fair value at 31 December 2017 are summarised below.

A complete listing of the Group's investments is in note 21 of the financial statements, with further information available on the Company's website (www.internationalpublicpartnerships.com).

1. These projects contain revenues that are not solely dependent on availability but also include an element of linkage to other factors such as passenger numbers, rolling stock releasing assumptions, occupancy and/or have regulatory periodic reviews. All other investments receive entirely availability based revenues.

2. Risk Capital includes both project level equity and subordinated shareholder debt.

3. Includes two tranches of investment into U.S. military housing.

Significant movements in the Group's portfolio for the year ended 31 December 2017 can be found on page 13 of the Strategic Report.

CHAIRMAN'S LETTER

Dear Shareholders,

I am pleased to report that 2017 was a strong year for the Company. It delivered robust financial performance in addition to making over £460 million of new investment, committing to invest up to a further £225 million and raising over £400 million of additional capital.

Since listing in 2006, the Company has generated a Total Shareholder Return of 165.4%. This is equivalent to an average annual return of 9.2% and is ahead of our long-term target of an 8-9% return1. We remain positive about the Company's future ability to deliver predictable, inflation-linked returns to our shareholders.

The Company's combination of strong and sustained performance, growth in capital deployed into complementary assets and continued robust investor demand for new stock resulted in an increase of INPP's market capitalisation to over £2.2 billion at the end of 2017 - up from £1.7 billion at the end of the previous year.

GROWTH IN INVESTOR RETURNS

The Company was once again able to achieve annual growth in dividend distributions, broadly in line with longer-term inflation expectations at an average rate of approximately 2.5%. We achieved our targeted dividend of 6.82 pence per share for 2017, representing a c.2.5% growth over 2016 (6.65 pence per share).

The Board is pleased to reaffirm its minimum dividend target for 2018 of 7.00 pence per share and to provide new guidance of 7.18 pence per share for 2019. We have good forward visibility of investment cash flows and, given the continued predictability of the Company's investments, we are confident of our longer-term prospects to continue to increase our dividend. By disclosing two-year forward guidance, we hope to provide shareholders with additional clarity of our future intentions2.

INVESTMENT ACTIVITY

During 2017, INPP completed a record level of new investment activity, making £464 million of new cash investments into four new and four follow-on investments and entered into up to £225 million of new investment commitments and binding offers across the energy distribution, waste water, education and transport infrastructure sectors.

Our ability to access high-quality infrastructure investments is testament to the collective expertise of INPP and that of our Investment Adviser, Amber Fund Management Limited ('Amber'). We continue to capitalise on the combination of our origination capability, leading technical expertise and strong industry relationships that allow us to deliver real value for money to both our shareholders and our clients. All opportunities are appraised on a case-by-case basis and pursued in a disciplined fashion. We aim to ensure that INPP's strong platform, which has been carefully developed over the eleven years since listing continues to be enhanced.

The largest investment in 2017 was £272.5 million, as part of a consortium which acquired a 61% stake in Cadent (formerly known as National Grid's gas distribution networks). This landmark acquisition was originated along with a group of leading, long-term U.K. and international institutional investors. In addition, the acquisition of a further 14% interest in Cadent was negotiated between the consortium and National Grid and is subject to put and call options between the parties, exercisable from 2019. This investment illustrates our ability to convert strong industry relationships and technical expertise to augment further the Company's projected returns.

Progress on the Thames Tideway Tunnel ('Tideway') is continuing in line with our expectations, with construction scheduled to complete in 2022. A further £78.2 million of scheduled investment was made into the Tideway project during 2017, including the Company's final commitment to the project which was invested in December.

In November 2017, the Company invested approximately A$154 million (£86.8 million) to acquire an additional interest in the Australian rolling stock public private partnership, known as the Reliance Rail Project. The additional investment was part of a broader asset refinancing which will also provide an attractive level of return compared to the existing portfolio.

CAPITAL RAISING AND CORPORATE CREDIT FACILITY

To support portfolio growth, we conducted capital raisings in May 2017 and December 2017 in which we secured £330 million and £80 million respectively (before costs). Both placings were oversubscribed with demand from existing and new investors.

The Company's £400 million corporate credit facility continued to provide additional capacity to support the strong pipeline of potential new investment opportunities in regulated and other public infrastructure. It acts as a bridging facility between capital raising rather than serving as long-term, structural leverage. The net proceeds of the 2017 issuances were used to reduce the drawn element of the debt facility as well as finance new acquisitions. At year end, the corporate credit facility was largely undrawn, providing the Company with some financial flexibility to consider new investments.

PORTFOLIO PERFORMANCE

As well as new asset acquisitions, we continue to focus on achieving consistently strong performance from our existing portfolio. The Board believes that an active asset management approach is fundamental to INPP's long-term success, as well as ensuring that we maintain strong relationships with partners and clients. This strength of relationship translates into high rates of client satisfaction with facilities and services delivered. We continue to ensure that the existing portfolio meets or exceeds performance metrics.

The value of this approach, together with the capital raising undertaken in 2017, is demonstrated by INPP's strong growth in Net Asset Value ('NAV'), which increased 27.1% to £2,038.3 million, or 2.0% to 145.0 pence on a NAV per share basis in 2017.

The Company had an exposure to Carillion plc where the Company received construction/facilities management services from Carillion subsidiaries on 3% of the portfolio, across 24 projects. Carillion entered liquidation in January 2018 and following its collapse Amber implemented contingency plans to transition projects to new providers and manage broader project-level relationships. Services have now been transitioned on 17 of these projects and there is a high level of confidence of successful transition on the remainder. Full transition is expected to occur on all projects over the following six months to new providers on substantially the same terms as the existing contracts. Pleasingly all on-site ex-Carillion personnel will be offered continuity of employment on the same terms and all projects have been fully operational throughout the period. The Company's expectation is that the cost of transitioning to these new arrangements will be immaterial to the Company (up to c.£1.5m although likely to be substantially less), overall there will be minimal impact on the Company's valuation and the expectation is that there will no additional cost to the public sector.

CORPORATE GOVERNANCE

The Board values good corporate governance and continues to comply with the Association of Investment Companies Code of Corporate Governance and the U.K. Corporate Governance Code as set out on page 48. During the year, the Board undertook an external-facilitated evaluation of its own practices and the Management Engagement Committee formally reviewed the performance of the Investment Adviser and other key service providers to the Company. As part of the Board's ongoing review of operation processes, we also procured an external review of the process for monitoring and reporting of asset availability, as this is an important metric both for our public sector clients and for the Board.

To ensure that there is continuity of board oversight and sufficient resource, the Board undertook a search for an additional director, resulting in Ms. Julia Bond being appointed on 1 September 2017. Ms Bond has 27 years' experience in the financial capital markets and has held senior management positions, including at Credit Suisse. After a successful career in financial services, Julia brings a wealth of board experience in Investment Trusts, the public sector, professional bodies as well as the voluntary sector. Julia's skills and knowledge are complementary to the current Board and will allow for an orderly process of Board succession in due course.

In anticipation of my retirement from the Board, we are actively seeking a candidate for the Chairmanship of the Company. While this process is ongoing, my fellow Board members and I have agreed that I should continue in the role until a suitable replacement has been identified and an appropriate transition taken place. We are confident that there are a number of high quality candidates with the relevant experience and we look forward to updating our shareholders in due course.

In addition, further information on INPP's corporate governance developments and operational reviews over the year can be found in the Corporate Governance section of this report.

OUTLOOK

The market outlook for the Company remains positive as enhanced capital investment into infrastructure continues to rank highly on government agendas globally as a key economic driver. We anticipate that this will over time generate more investment opportunities in the developed countries in which the Company invests.

INPP also remains focused on the completion of its committed investments while continuing to develop, track and appraise other potential opportunities that are at various stages of development. Amber has identified a pipeline of potential opportunities that meet the Company's risk-return profile in sectors such as regulated utilities (including offshore transmission), health, judicial, waste, and other accommodation and transport projects, that may be progressed as investment opportunities for the Company.

The Company continues to closely monitor the market reaction during the U.K.'s planned withdrawal from the European Union ('EU'). Whilst the immediate market-related volatility has not persisted to the scale widely anticipated by many industry participants, there remains uncertainty about the true impact of Brexit on the U.K. economy. As outlined in our 2016 Annual Report, we do not anticipate there will be significant impact on the Company's existing investments, however given the high degree of uncertainty the Board continues to monitor developments as the Brexit negotiations progress.

The Company also notes the heightened attention in the U.K. paid to the assessment of the economic and social value that private sector investment brings to public infrastructure projects, including suggestions by the Labour party to seek to renationalise key public infrastructure assets, companies and private finance contracts operating in the U.K. As a long-standing and leading originator, investor and operator of public infrastructure projects internationally, the Company firmly believes that the close partnerships between public clients and private investment brings significant benefits to the public sector and ultimately the end-users and relevant parties. We also recognise that it is incumbent upon project owners and the broader investment industry to demonstrate the value we bring, not only to our investors but the communities in which our projects serve.

Overall, we believe that the nature of INPP's investment portfolio and the active approach we have adopted to asset management both provide a firm foundation from which to react to any emerging risks and that we remain well positioned to add high-quality investments to the portfolio in the short-to-medium term.

More information and a detailed pipeline of opportunities is set out in the Current Market Environment and Future Opportunities section. The Company's approach to Corporate, Social and Environmental Responsibility is set out in more detail on page 41.

I would like to take this opportunity to thank our shareholders for their support for the Company throughout 2017 and we look forward to this continuing in the coming year.

Rupert Dorey

Chairman

20 March 2018

1 Since inception. Source: Bloomberg. Share price plus dividends assumed to be reinvested.

2 Future dividends cannot be guaranteed. Projections are based on current estimates and many vary in the future.

STRATEGIC REPORT

BUSINESS MODEL - DELIVERING INVESTOR RETURNS

OUR OBJECTIVES

International Public Partnerships (INPP) invests in high-quality, predictable, long-duration public infrastructure projects internationally

We aim to provide our investors with sustainable long-term returns through progressive dividends with the potential for capital appreciation

This is supported by a robust investment cash flow with inflation linkage

Through the active management of our existing asset portfolio, new investments and the prudent use of gearing, we target an internal rate of return ('IRR') equal to or greater than 8% per annum1 

See Company Investment Policy

OUR STRENGTHS

APPROACH

- Long-term alignment of interests between INPP, Amber and other key suppliers

- A vertically-integrated model with direct relationships with public sector customers

- One of the largest independent teams of over 100 people, experts in all aspects of infrastructure development, investment and management

- Physical presence in all the major countries in which we invest which provides local insights and relationships

- 'Hands-on' approach to asset management - the breadth and depth of our experience makes us a specialist among asset managers

STRONG RELATIONSHIPS

Public Sector Client

Construction Contractor

Debt Providers

Facilities Management Contractor

Consortium Partners

sTABLE PROJECTED CASHFLOW2

[Diagram can be found in PDF version of this document on the Company's website].

OUR OPERATING MODEL

INTERNATIONAL PUBLIC PARTNERSHIP LIMITED

Strong independent Board leadership and governance

VALUE-FOCUSED PORTFOLIO DEVELOPMENT

- Governance

- Strategy setting

- Investment decisions

- Risk management

We seek new investments that:

- enhance secure, long-term cash flow

- provide opportunities for capital appreciation

- exhibit low risk relative to returns

IDENTIFY

The insights, knowledge and relationship of Amber's local teams are used to identify attractive new investments.

We also monitor opportunities to grow the existing portfolio.

ASSESS

We seek investments with low risks relative to returns, taking into account financial, macroeconomic, regulatory and country risks.

ACCESS

Amber's strong origination team develops unique investment opportunities that can lead to enhanced returns.

APPROVAL

Our rigorous framework includes substantive input from Amber and external advisers, with the INPP Board providing final approval.

OPTIMISE RETURNS

We seek to balance risk and return, using detailed research and analysis to optimise returns from each investment.

ACTIVE ASSET MANAGEMENT

We actively manage investments to:

- deliver target returns

- enhance prospects for growth

- maintain client satisfaction

ENTITY MANAGEMENT

Where possible, through Amber we manage the day-to-day activities of each of our projects internally to ensure we have line of sight over project cash flows.

DRIVE GROWTH

We actively work with our public sector clients to ensure that projects are being managed in an efficient manner - optimising returns for our investors.

MONITOR PERFORMANCE

Extensive monitoring includes asset level board and management meetings, reviewing data and following industry trends, and obtaining formal and informal feedback through Amber.

REPORT

We robustly measure and report our performance to key stakeholders to inform and feed back into our decision-making process and operating model.

effective financial management

- Ensuring cash covered dividends

- Hedging against short-term foreign exchange rate movements

- Managing investment capital flows

effective risk management

- Managing risks throughout the investment cycle

- Robust risk assessment and mitigation process

OUR VALUE CREATION

investor returns

We focus on the following Key Performance Indicators to track the value we provide to shareholders:

- Maintain and enhance distributions to shareholders

- Total Shareholder Returns

- Net Asset Value and Net Asset Value per Share

6.82p - 2017 dividends per share (2016: 6.65p)

0.79% - Real returns, Portfolio inflation linkage3

145.0p - NAV per share4 (2016: 142.2p)

2.5% - Average dividend growth since IPO5

9.2%p.a. - Annualised Total Shareholder Return6 since inception

£106.4m - Profit before tax (2016: £175.3m)

Broader value creation

Our investments enable the development and ongoing operation of valuable infrastructure for the public and end users

£8.1bn - Development value7

129 - Number of investments

>99.6% - Asset availability

1,050mw - Energy transported

336 - Number of Schools and Public Building sites

>1Mm2 - Total floor area under management

1. On the Initial Public Offer issue price of 100 pence per ordinary share.

2. There are many factors that may influence the actual achievement of long-term cash flows to the Company. These include both internal as well as external factors and investors should not treat the chart as being more than an indicative profile and not a projection, estimate or profit forecast. The actual achieved profile will almost certainly be different and may be higher or lower than indicated.

3. See pages 28 to 29 for information relating to the Company's use of sensitivity analysis.

4. See pages 24 to 30 for the methodology used to determine NAV.

5. Future profit projection and dividends cannot be guaranteed. Projections are based on current estimates and may vary in future.

6. Source: Bloomberg. Share price plus dividends assumed to be reinvested.

7. Assets under management represents INPP's proportional ownership of each project's Total Development Value at inception.

STRATEGIC REPORT

PERFORMANCE AGAINST STRATEGIC PRIORITIES

INPP's strategy covers three interlinked areas of focus. This three-pronged approach helps us to manage our assets and finances throughout the investment cycle and also to identify new opportunities that meet our investment objectives. We link Key Performance Indicators to these Strategic Priorities and review our performance against these KPIs twice a year. We also assess the risks relating to each KPI (as identified in the Risk Management section of this Report).

STRATEGIC REPORT

CASE STUDY

DIFFERENTIATION OF THE OPERATING MODEL

Our key differentiator is that the Company's Investment Adviser, Amber, supports INPP (and its investment portfolio entities) with project origination and financial and asset management services to deliver the best value for its shareholders. Amber employs over 100 experienced professionals focused on development, financing and investment in public infrastructure. Collectively, we identify, develop and originate investment opportunities that meet INPP's risk-return profile. Amber can research and track investment opportunities from conception through to development and consultation stages, often in advance of an investment formally coming to market. In managing the whole lifecycle of the Company's investment in any one asset, Amber delivers a consistent level of oversight and control over the projects the Company invests in.

In addition, Amber's experience and ability in forming partnerships with other long-term investors, both U.K. and international, enables INPP to participate in large scale infrastructure projects providing access to opportunities which broaden the base for new investments. Under the terms of the Investment Advisory Agreement with Amber, INPP has the right of 'first look' at investments that are being realised by Amber, including opportunities identified by Hunt Companies (a U.S. based group and 50% shareholder in Amber) that meet INPP's investment criteria.

INPP - CONTINUED ABILITY TO SOURCE ATTRACTIVELY VALUED CORE INFRASTRUCTURE ASSETS

As part of the Company's diversification and move away from traditional PFI models, INPP has grown its exposure within the portfolio to regulated assets, including Cadent.

INPP is part of a consortium, including other leading U.K. and international investors, which acquired a 61% interest in Cadent, a gas distribution company formerly wholly owned by National Grid plc. The Company invested £272.5 million into the project for a 4.4% stake with the remaining risk capital funded by consortium partners.

Cadent spans over four gas distribution networks (GDNs) each with the right to distribute gas in the East and North West of England, North London and the West Midlands, respectively. The networks service approximately 50% of the country's connected households through 130,000km of gas pipeline. The GDNs are well-established, predictable and strongly cash yielding business whose characteristics are consistent with and complementary to other regulated and non-regulated assets in the Company's portfolio. The key attributes include:

- Stable, RPI linked revenues deriving from a regulated asset base with long-term cashflows expected to enhance the degree of inflation linkage inherent in the Company's overall portfolio;

- Critical elements of the U.K.'s infrastructure base;

- Proven, well established, highly stable and transparent regulatory regime overseen by Ofgem;

- A mature underlying asset base with an established operating history and no exposure to commodity or consumer demand risk; and

- An experienced management team and a strong minority shareholder partner in National Grid

INPP's investment in GDNs, through Cadent, strengthens the Company's focus on regulated assets which deliver long-term, sustainable, inflation-linked revenues. This began with INPP's ongoing investment programme investing in the offshore transmission (OFTO) sector and continued with INPP's investment into the Tideway project in 2015. These assets operate in an established, highly respected and predictable regulatory regime, overseen by Ofgem and Ofwat, respectively.

STRATEGIC REPORT

OPERATING REVIEW

Value -Focused Portfolio Development

New investments that meet the Company's Investment Policy are made after assessing their risk and return profile relative to the existing portfolio. In particular, we seek investments to complement the existing portfolio through enhancing long-term, predictable cash flows and/or to provide the opportunity for higher capital growth. Desirable key attributes include:

1. Long-term, stable returns

2. Inflation-linked investor cash flows

3. Early stage investor (e.g. the Company is an early stage investor in a new asset developed by Amber)

4. Preferential access (e.g. sourced through pre-emptive rights or through the activities of our Investment Adviser)

5. Enhanced capital attributes (e.g. potential for additional capital growth through construction "de-risking" or the potential for residual / terminal value growth)

During the year to 31 December 2017, INPP invested a record £464.0 million. The majority of these projects were sourced by Amber, the Investment Adviser, either from the start of the project (i.e. early stage developments in response to an initial government procurement process) through increasing its interest in existing assets; or as part of a larger consortium, building on the Company's experience and credibility to participate in multi-billion pound regulated infrastructure transactions.

These three procurement approaches are INPP's preferred route to market; as they avoid bidding in the competitive secondary PPP market.

Details of investment activity during 2017 are provided below.

1 GBP translated value of investment.

2 A subsidiary affiliated with the project construction contractor will assume responsibility for financing the construction of the Offenbach Police Centre. As such INPP's financial commitment is not due until satisfactory construction completion, anticipated to occur in mid-2020. £0.1 million was invested at financial close.

3 An investment commitment of up to £45.0million was made to the National Digital Infrastructure Fund. During the period £0.2 million pre-investment was called by the fund.

In addition, up to £225 million of investment commitments or binding offers were made during the period including into the Offenbach Police Centre, Germany, the National Digital Infrastructure Fund, Dudgeon OFTO and a further investment in the Cadent gas distribution networks. Further details for each of these transactions are provided below.

CADENT (GAS DISTRIBUTION NETWORK), U.K.

The Company is part of a consortium which includes other leading U.K. and international institutional investors which acquired a 61% interest in Cadent (owner of gas distribution networks ('GDNs')). In 2017, the Company invested £272.5 million into the project for a 4.4% stake with the remaining risk capital funded by consortium partners. In addition to the 61% interest acquired by the consortium, a further 14% interest in the GDNs has been negotiated with the National Grid and is subject to put and call options between National Grid and the consortium. The consortium also has pre-emption arrangements over the residual 25% investment that National Grid will continue to hold after the exercise of the 14% option. The investment demonstrates the Company's performance in originating regulated assets with long-term, sustainable, inflation linked revenues.

THAMES TIDEWAY TUNNEL, U.K.

The Tideway investment relates to the design, build and operation of a 25-kilometre 'super-sewer' under the River Thames in London. The Company is part of a consortium committed to investing £4.2 billion in developing this asset which is regulated by Ofwat.

Construction of the Thames Tideway Tunnel is continuing with work having started ahead of schedule at the key drive sites and overall construction completion is scheduled for 2022. During the period an additional £1,050 million of long-term financing was successfully raised by Tideway to support its construction activities bringing total long-term financing raised since the project reached financial close to £2.2 billion. During 2017, the Company invested a further £78.2 million into the project, completing the c.£207 million investment commitment it made when the consortium was awarded the licence to own and finance the project in 2015.

ADDITIONAL INVESTMENT IN BUILDING SCHOOLS FOR THE FUTURE ('BSF') PROJECTS, U.K.

BSF is a former U.K. Government programme for the redevelopment of secondary schools in the U.K. financed using a combination of design and build contracts and private finance type arrangements. The programme for further developments was cancelled in July 2010.

In 2017, the Company acquired an additional interest in the Wolverhampton BSF schools project committing a further £1.5 million to acquire a further 8% indirect investment in the scheme. As a result, the Company's existing 82% investment in the project grew to 90%.

ADDITIONAL INVESTMENT IN GOLD COAST LIGHT RAIL, AUSTRALIA

In April 2016, the Company committed to invest c.£4.8 million into the second stage of the Gold Coast Light Rail PPP concession project in Queensland, Australia, the first stage of which was already part of the portfolio. £3.9 million of investment was made directly into the project during the period with an additional £0.7 million supported by letter of credit. Construction of the 7.3km extension reached completion ahead of schedule and opened for passenger services in December 2017, in time for the opening of the Gold Coast Commonwealth Games in April 2018.

VICTORIA SCHOOLS PROJECT, AUSTRALIAIn October 2015, the Company as part of a consortium, was selected to design, build, finance and maintain the New Schools Public Private Partnership Project in Victoria, Australia. The project comprises the delivery of 15 schools across 12 sites. The Company provides 100% of the project risk capital and in 2017, £20.8 million of investment was made into the project and construction completed in December 2017.

ADDITIONAL INVESTMENT IN RELIANCE RAIL, AUSTRALIA

The Reliance Rail Project is a public private partnership with Transport for New South Wales, an executive agency of the New South Wales government relating to the provision of rolling stock. In November 2017, INPP invested c.A$154 million (£86.8 million) and now owns a 33% interest in the project.

INPP has held a small minority interest in the project since 2006, but since 2012 this has been carried at nominal value only. Whilst the operational performance of the project has been excellent, equity value had been suppressed by the complexity of the project's original structure. The 2017 investment and associated refinancing restores the original value of the Company's existing investment, and on a blended basis of the new and existing capital is expected to provide the Company with an attractive return in comparison with other operational PPP projects in the portfolio.

OFFENBACH POLICE CENTRE, GERMANY

The Company has committed to invest in the new public private partnership police centre of South-East Hesse in Offenbach which is approximately 5km from Frankfurt, Germany. It is anticipated that the project will take two and a half years to construct after which it will have a 30-year operational term. INPP has committed to invest c.€8 million for a 45% shareholding in the project. A subsidiary affiliated with the project's construction contractor will assume responsibility for financing during the construction period. As such, aside from a small initial investment, INPP's financial commitment is not due until satisfactory construction completion, anticipated to occur in mid-2020.

DIGITAL INFRASTRUCTURE, U.K.

The Company committed jointly with HM Government to make an investment in digital infrastructure and particularly fibre optic broadband connections through the National Digital Infrastructure Fund ('NDIF'), a vehicle also managed by Amber. The Company sees the prospect of long-term parallels between the essential nature of broadband connectivity to the home and workplace, and the established businesses of gas and electricity distribution and transmission with which it already has experience. INPP has committed up to £45 million into NDIF, with HM Government committing up to £150 million.

DUDGEON OFFSHORE TRANSMISSION PROJECT (OFTO), U.K.

Transmission Capital Partners, the consortium comprising INPP, Amber Infrastructure and Transmission Investment was appointed in November 2017 as preferred bidder for the long-term licence and operation of its seventh OFTO project. The project relates to the transmission cable connection to the offshore wind farm located 32km off the coast of Cromer in North Norfolk, U.K. The Company takes no exposure to electricity production or price risk but is paid a pre-agreed, availability-based revenue stream over 20 years which is fully linked to U.K. inflation ('RPI'). The Company expects to invest c.£50 million, with financial close estimated in the second quarter of 2018.

CURRENT MARKET ENVIRONMENT AND FUTURE OPPORTUNITIES

UNITED KINGDOM

The U.K. Government remains committed to the development of public infrastructure as a key component of its long-term economic policy.

The U.K. Government recognises infrastructure as a central pillar of its Industrial Strategy, and in 2017 it updated the National Infrastructure and Construction Pipeline (NICP). The NICP details £460 billion of planned infrastructure investment across the public and private sectors, projecting total public and private investment in U.K. infrastructure to be around £600 billion over the next ten years. This is enhanced by the U.K. Government increasing the National Productivity Investment Fund to £31 billion at the end of 2017 which will support private sector investment in transport, housing and digital infrastructure, in particular.

In December 2017, the Infrastructure and Projects Authority (IPA) launched the Transforming Infrastructure Performance (TIP) programme to help improve the delivery and performance of social and economic infrastructure and boost construction sector productivity. A ten-year programme, the TIP is designed to enhance the way infrastructure is designed, procured, delivered and operated to help drive efficiency and productivity gains. This is not only about benchmarking capital efficiency - which the Company and its Investment Adviser, as long-term investors, have always been actively engaged in and how to drive better asset performance over the whole lifecycle - but what role technology can also play in maximising the benefits of public infrastructure in daily life.

Whilst infrastructure spending and procurement has remained a constant policy objective, it has increasingly become a political imperative, too. The Company notes the increasing public attention paid to the assessment of the value for money private sector investment in U.K. public infrastructure provides. Whilst the greater volume of commentary has been levelled at historical PFI projects associated with large, acute hospitals in the U.K. - to which the Company has no exposure - the Company continues to believe that PFI/PF2 brings significant benefits to the project's public sectors partners, and ultimately their end-users. These include the benefits of contracts covering the whole of the life of the asset and the risk transfer to the private sector arising through detailed payment mechanisms imposing penalties where standards fall below those required by the project contracts. Such arrangements have demonstrated the effectiveness of incentives for the private sector to build new infrastructure on time and to budget and to lower the overall cost of capital through the competitive procurement process.

Whilst political uncertainty will likely continue to pose potential economic risk and potential market-wide challenges, the strength of the Company's geographically and sector diversified portfolio gives the Board confidence in its position as a long-term custodian on public infrastructure projects in the face of enhanced public scrutiny in the U.K. As it invests into differentiated areas of infrastructure including regulated assets, the Company notes that as at 31 December 2017 only 8% of its assets were PFIs in the UK with a further 16% having similar characteristics but were developed under different programmes. More information on the Company's evolution into regulated assets is set out in the Case Study on page 12.

EUROPE - EXCLUDING UNITED KINGDOM

Investment into European infrastructure continues to be strong and is supported by broader EU frameworks. As part of the Investment Plan for Europe, known as the "Juncker Plan", which was announced in November 2014, the European Fund for Strategic Investment was launched by the European Investment Bank and the European Commission. Its initial focus was on infrastructure, including energy, digital, transport and social infrastructure with a current investment target to the end of 2020 of €500 billion.

Demand for the PPP asset class also remains strong, with steady volumes of transactions in the European market. In 2017, the European PPP Expertise Centre reported 42 PPP transactions had reached financial close in the European market (including the U.K.), totalling investment of €14.4 billion. While the U.K. is the largest market in Europe by number of transactions, Germany and France continue to see substantial deal flow.

In Europe (excluding the U.K.), INPP is focusing on stable and well-structured Northern European economies including Belgium, the Netherlands, Germany, Austria and Ireland. These jurisdictions offer a steady flow of new primary market opportunities across a range of sectors, including accommodation, schools, police facilities and transportation. Benelux, Germany and Austria are particularly attractive investment opportunities, given INPP's expertise and relationships with likely partners in those markets. Moreover, existing investments in central Europe allow for attractive and partly exclusive secondary opportunities, providing an additional source of growth to strengthen INPP's position in those markets.

Future success will depend on securing opportunities through bid processes in primary and secondary markets, while ensuring that every opportunity fits within the Company's risk and reward parameters.

AUSTRALIA AND NEW ZEALAND

Australia has a history of private sector organisations providing and financing public sector infrastructure. It has a well-developed market for infrastructure investment and debt finance, with an active pool of domestic and overseas investors and banks.

Over the medium to long-term, much of Australia's infrastructure development will be undertaken within the strategic and policy framework of Infrastructure Australia's 'Australian Infrastructure Plan' (updated February 2017). Australia's population is expected to grow to more than 30 million people by 2031 and this plan has become the reference point for the most important infrastructure investments over the next 15 years, with a total capital value of around A$60 billion. Many are large-scale (multi-billion A$) transport projects, responding to population growth in Australia's biggest cities. This projected growth in major transport projects is consistent with the current trends in Australia with A$3.0 billion of PPP transport projects closed in 2016 and A$7.8 billion during 2017.

Australian states are also developing smaller scale social infrastructure projects in health, social housing and education sectors. In keeping with policy recommendations in the Infrastructure Plan, some states are also adopting infrastructure procurement models that outsource operator services to the private sector, as well as seeking private sector capital to develop the asset.

New Zealand remains an important market although the recent change in government is expected to limit the number of PPP projects and government privatisations. Amber, the Investment Adviser, continues to monitor projects as they come to market, and would resource the pursuit of these opportunities from its Australian offices should they offer enhanced returns.

INPP is positive about the prospects for further investments in the region and, whilst mindful of the recent improvement in the value of Sterling since the announcement of Brexit, will continue to monitor currency volatility in respect to new transactions. Although INPP remains cautious of the refinancing risk prevalent within Australia's current primary PPP market, there is an increasing appetite in the debt markets for longer tenor debt compared to previous years.

NORTH AMERICA

Infrastructure in the U.S. continues to come under pressure and is significantly underfunded. The American Society of Civil Engineers ('ASCE') gave America's infrastructure a grade D+ on its 2017 report card, falling to twelfth in the world according to the World Economic Forum, estimating that the United States needed to spend US $4.6 trillion by 2025, with a funding gap of US $1.5 trillion, to rebuild the United States public infrastructure from its current state of disrepair.

To address this, infrastructure has been flagged as a top priority and an agenda item of the 2018 budget, as part of President Donald Trump's 'Rebuild America's Infrastructure' plan seeking reforms for how infrastructure projects are regulated, funded, delivered and maintained. Over the next 10 years, the President's target is to invest US$1.5 trillion into national infrastructure including US$200 billion of federal funding commitment with the remainder to be funded by state and local governments and private investors. There are also initiatives to shorten the process for approving projects to two years or less (White House Infrastructure Proposal, 2018). The funds will be allocated to various projects to not only address traditional infrastructure but other needs such as drinking and wastewater systems, waterways, resources, energy, rural infrastructure, public lands and veterans' hospitals.

Increasing private investment to reach the targets proposed is a theme that runs throughout the Infrastructure Plan in addition to incentives and amendments to existing limitations to encourage private investment. The plan encourages a move away from financing the country's infrastructure through government and tax-advantage schemes to using public private partnerships as the principal method of funding.

The ability for the private sector to participate in more U.S. infrastructure projects provides INPP with a broad variety of investment opportunities. It is well-positioned to capitalise on these developments through its relationship with Hunt (described in more detail on page 3), where it has 'right of first look' over investment opportunities in the U.S. originated or sold by Hunt, which meet the Company's investment criteria.

Canada has a strong track record of infrastructure investment and in 2017, they expanded on the commitments made in the 2016 budget and the 2016 Fall Economic Statement by proposing an additional C$81 billion through to 2027-28 in public transit, green and social infrastructure, transportation infrastructure to support trade and rural and northern communities. The Investing in Canada long-term infrastructure plan expects C$180 billion of infrastructure investment to be made over 12 years. One element of the 2017 budget will be delivered through integrated bilateral agreements between the federal government and each of the provinces and territories across four funding streams: public transit, green infrastructure, community, culture and recreation infrastructure and rural and northern communities. INPP has an ongoing presence in the country through two operational projects. The continued focus on expanding the infrastructure plan over the next decade allows INPP to capitalise on this opportunity and develop the already existing relationships.

CURRENT PIPELINE

INPP's performance does not depend upon additional investments to deliver projected returns. Further investment opportunities will be judged by their anticipated contribution to overall portfolio returns relative to risk. Selected opportunities that may be considered for investment in due course as identified by Amber are outlined below.

1 Represents the current estimate total future investment commitment by the Company.

2 Project has reached financial close. Commitment to invest once construction has completed, expected to be mid 2020.

3 Represents the estimated current unaudited value of the project and includes both debt and equity.

The above includes commitments and potential opportunities currently under review by the Investment Adviser including current bids, preferred bidder opportunities and the estimated value of opportunities to acquire additional investments including under pre-emption/first refusal rights. There is no certainty that these will translate to actual investment opportunities for the Company. The value referenced in relation to the pre-emption opportunities represents the estimated potential investment value which reflects the current estimate of the total likely acquisition value at that time. In relation to opportunities where the current estimated gross value of the relevant project is given (which includes an estimate of both debt and equity), the estimates provided are not necessarily indicative of the eventual acquisition price for, or the value of, any interest that may be acquired.

ACTIVE ASSET MANAGEMENT

The Company's focus has, and will continue to be, to procure and manage assets which carry little demand-based risk, however increasingly the Company has shifted away from pure availability based assets recognising the value in risk-adjusted returns regulated assets can drive. The delivery of expected outcomes for all parties to our investments is critical, whether this is a courthouse cleaned to the specified contractual standards or the delivery of a 'super sewer' under London on time and within budget.

Through Amber, as a long-term, responsible private investor, we closely monitor relationships between our service providers and our clients, the Regulator and the operating business, and the operating business and the end user. Amber has the flexibility and experience to quickly respond to the changing requirements of all its clients and counterparties.

We are not a passive investor and where possible manage project origination, financial and asset management in-house through our Investment Adviser. We are actively involved in managing service providers and operating businesses to deliver the expected outcomes and in the event the assets under our management require remedial or improvements works, we work collectively with our service providers, operating businesses and clients to ensure end-users receive the outcomes they expect.

OPERATIONAL PORTFOLIO DEVELOPMENT

Amber continues to engage with its public sector clients to manage variations to the existing scheme to support positive business change. During 2017, INPP's public sector clients commissioned over 903 contract variations in its projects resulting in over c.£8.6 million of additional project work, with individual variations ranging in value from £200 to over £1 million. These project variations were overseen by Amber as part of its day-to-day asset management activities, in conjunction with the relevant project facilities manager and each public sector client. Amber assesses each case on its individual merits and ensures there is no material change to the risk profile or financial return, whilst assisting their client to achieve their operational or facilities objectives.

Amber seeks to actively manage and add value to the portfolio where it is able to do so. For instance, the Company undertook two debt refinancings of its education assets under the BSF programme in 2017, with others planned over the course of 2018. The refinancings generate improved financial returns which are shared with the public sector counterparty and demonstrate an important pillar of our active asset management approach - delivering benefits to our clients and the end-users, whilst not increasing the charge paid by the public sector.

Amber works with its public sector counterparties to deliver ongoing value and operational savings. In 2017, nine benchmarking exercises were performed in its social accommodation projects, which included reviewing facilities management services delivered on the projects in order to assess value for money for the public sector. Amber also continued to focus on energy efficiency, resulting in savings to public sector counterparties.

Safety is at the core of Amber's approach to asset management. Following the tragic events at the Grenfell Tower in June 2017, Amber carried out a review of INPP's portfolio of assets to assess whether it had construction elements of a similar nature. This review focussed on whether the INPP facilities were clad and insulated in the same materials as the Grenfell Tower. The findings of the review confirmed that the specific combination of cladding and insulation material used at Grenfell Tower was not present on any of the assets managed on behalf of INPP. The review also considered the height of facilities, whether the facilities have more than one means of escape, times of use of the facilities, and whether the facilities had sprinklers. The outcome of the review indicated that the facilities INPP invests in are suitable for their intended use.

As noted in the Chairman's letter, the Company has paid particular attention to the portion of the portfolio where subsidiaries of Carillion plc provided construction and or facilities management services; 3% of the portfolio (across 24 projects) received construction/facilities management services from Carillion. Following the collapse of Carillion in January this year, Amber implemented its contingency plan to transition projects to new providers and manage broader project-level relationships. 17 of these projects have now been transitioned to new facilities managers on an interim basis. Full transition is expected to occur over the following six months and will be on substantially the same terms as the original Carillion contracts and all on-site ex-Carillion personnel will be offered continuity of employment on the same terms.

PROJECTS UNDER CONSTRUCTION

Four projects, representing approximately 12% of the Company's portfolio were under construction at 31 December 2017.

Tideway continued to make good progress in line with its scheduled construction programme. Works commenced in April 2017 to enable the tunnel boring machines ('TBMs') to be located ahead of the tunnelling commencing in 2018. One of the drive sites, Chambers Wharf, once completed will create the largest new public outdoor area in London for over a decade.

During 2017 the construction works on the New Schools PPP Project in Australia (Victorian Schools 2) progressed in line with expectations with the remaining seven schools achieving construction completion during 2017.

The seven kilometre Gold Coast Phase 2 light rail project extension reached completion and opened for passenger services on 17 December approximately two weeks earlier than the planned completion date.

Construction on the first three of the Priority Schools Building Programme projects are complete although some post completion works remain. While all the new schools on the fourth batch were completed by September 2017, a sports hall at one of the schools is due to be completed towards the end of 20182. Batch five is on schedule to complete construction in April 2018.

Projects under construction as at 31 December 2017 are set out in the table below.

1 Two batches are behind schedule at 31 December 2017. INPP is a debt only provider and the programme is largely determined by equity providers and their management supply chain.

2 Subject to a new construction provider being appointed to replace Carillion.

EFFECTIVE FINANCIAL MANAGEMENT

The Company aims to manage its finances effectively by minimising its unutilised cash holdings, while maintaining the financial flexibility to pursue new investment opportunities. This is achieved through active monitoring of cash held and generated from operations, appropriate hedging strategies, and prudent use of the Company's corporate debt facility ('CDF').

SUMMARY OF CASH FLOWS

1 Net operating cash flows as disclosed above (c.£83.0 million) include net repayments from investments at fair value through profit and loss (c.£25.8 million), and finance costs paid (c.£4.1 million) which are not included in the net cash inflows from operations (c.£61.3 million) as disclosed in the statutory cash flow statement on page 74 of the financial statements.

SUMMARY OF CORPORATE EXPENSES AND ONGOING CHARGES

1 The Ongoing Charges ratio was prepared in accordance with the Association of Investment Companies' ('AIC') recommended methodology, noting this excludes non-recurring costs.

2 Average of published NAVs for the relevant period.

The Company's cash balance of £33.9 million at 31 December 2017 was £37.1 million lower than the cash held at 31 December 2016 of £71.0 million. This reflected the volume of investment activity in the year, as opening cash included proceeds from capital raised of £41.7 million that were used to part-fund investment during the first quarter of 2017. In comparison, the 31 December 2017 cash balance included only £1.2 million remaining from the December 2017 capital raising.

Cash receipts from investments increased by £24.2 million, reflecting the further growth of the portfolio. This was partially offset by higher ongoing charges and net financing costs. Management fees paid to the investment adviser totalled £19.4 million (2016: £14.4 million), with increases over the prior year amount driven mainly by portfolio growth as well as a contractual alignment of the timing of fee payments in the year (see also below). The Company was able to achieve a £17 million positive increase in operating cash flows before non-recurring operating costs compared with 2016.

Higher net financing costs reflect higher investment activity and a larger corporate debt facility following an increase in November 2016 from £300 million to £400 million. The benefits of the larger facility were seen during the year, as the Company was able to part-fund the investment in Cadent whilst continuing to support investment commitments under letters of credit. The facility is intended to be drawn only as a short-term arrangement to fund acquisitions, and in line with this policy, the facility was repaid following the Cadent investment. This was achieved by utilising proceeds of a £330 million (before issues costs) capital raise in May 2017, whilst a further capital raising of £80 million (before issue costs) in December 2017, enabled the Company to repay further amounts that had been drawn to part-fund cash investments during the second half of the year.

During 2017 the timing of management fee payments was aligned with the contractual quarterly payment cycle (rather than the previous biannual payment practice). This resulted in a £2.9 million additional payment being made during 2017 to accommodate this change. This differential is shown within non-recurring operating costs given it reflects a one-off adjustment year with five quarterly payments rather than four. The one-off costs in 2017 did not impact the reported cash dividend coverage of 1.2x. Other non-recurring operating costs were predominantly transaction costs, £6.8 million (2016: £3.2 million) settled during the year related to new investments, with total non-recurring costs amounting to £10.3 million (2016: £4.0 million).

Cash investments made during 2017 (detailed in note 12) totalled £464.0 million (2016: £209.9 million). Funds advanced to affiliate entities (£2.1 million) relate to monies used to fund investments that reached financial close around the year end.

Cash dividends paid in the year of £76.2 million (2016: £81.9 million) were in respect of the six-month periods ended 31 December 2016 and 30 June 2017, the reduction being due to higher scrip uptake by investors in the current year. INPP seeks to generate dividends paid to investors through its operating cash flows, and in all periods shown above cash dividends were at least 1.2 times covered by the Company's net cash flow from operations before non-recurring operating costs. The Company remains confident of its ability to continue to grow dividends going forward as demonstrated through its forward guidance of 7.00 pence in 2018 and 7.18 pence in 2019.

INVESTOR RETURNS

INPP has continued to deliver consistent dividend growth, NAV growth and inflation linkage from underlying cash flows.

DIVIDEND GROWTH AND PERFORMANCE

INPP targets predictable and, where possible, growing dividends. During the year, the Company delivered a 6.82 pence per share dividend (2016: 6.65 pence) and forecasts to pay 7.00 pence per share and 7.18 pence per share for 2018 and 2019 respectively. Since inception, the Company has delivered a c.2.5% per annum average dividend increase. INPP's dividend growth is illustrated in the chart on page 2.

Profit before tax was £106.4 million, reduced from the previous year (2016: £175.3 million) which saw one-off valuation gains mainly as a result of foreign exchange movements following the U.K. referendum to leave the European Union. Earnings per Share were 8.36 pence (2016: 17.18 pence).

Returns from portfolio investments (investment income) in the year were £139.8 million (2016: £206.8 million) including fair value movements, dividends and interest. These returns were partially offset by operating expenses (including finance costs) of £34.0 million (2016: £24.6 million) and other operating income of £0.6 million (2016: other operating expense of £6.8 million) as shown in the Consolidated Statement of Comprehensive Income.

TOTAL SHAREHOLDER RETURN

INPP's Total Shareholder Return (share price growth plus reinvested distributions) for investors since its Initial Public Offering ('IPO') in November 2006 to 31 December 2017 is 165.4% (9.2% on an annualised basis). This compares to a FTSE All-Share index total return over the same period of 97.1% (6.3% on an annualised basis). INPP has exhibited relatively low levels of volatility compared to the market, as evidenced by the graph below showing the Company's share price since IPO against the price performance of the major FTSE indices.

INPP Share Price Performance

[Diagram can be found in PDF version of this document on the Company's website].

Inflation linked cash flows

In an environment where investors are increasingly focused on achieving long-term real rates of return on their investments, inflation protection is an important consideration for the Company. At 31 December 2017, the majority of assets in the portfolio had some degree of inflation linkage and, in aggregate, the weighted average return of the portfolio (before fund-level costs) would be expected to increase by 0.79% per annum in response to a 1.00% per annum increase in the currently assumed inflation rates across the whole portfolio1.

1. Calculated by running a 'plus 1.00%' inflation sensitivity for each investment and solving each investment's discount rate to return the original valuation. The inflation linkage is the increase in the portfolio weighted average discount rate

Net asset valuation and NAV per share

The Company reported a 27.1% increase in NAV, up to £2,038.3 million at 31 December 2017 (2016: £1,603.7 million). This represented an increase of 2.0% in the NAV per share, increasing to 145.0 pence at 31 December 2017 (2016: 142.2 pence). The NAV represents the fair value of the Company's investments plus the value of cash and other net assets held within the Company's consolidated group.

The key drivers of the change to the NAV between 31 December 2016 and 31 December 2017 are highlighted in the graph that follows and are described in more detail below.

Net Asset Value Movement (£m)

[Diagram can be found in PDF version of this document on the Company's website].

1. Represents movements in the forward rates used to translate forecast non-GBP investment cash flows and the spot rates used to translate non-GBP cash balances.

2. The NAV return represents amongst other things, (i) variances in both realised and forecast investment cash flows, (ii) the unwinding of the discount factor applied to those cash flows, and (iii) changes in the Company's net assets.

During 2017:

- Over £400 million of new capital was raised (before costs). The proceeds of the capital raisings were used to repay the cash drawn balance of the corporate debt facility and acquire new investments

- Government bond yields increased in all countries in which INPP holds investments, with the exception of Italy and the U.S., resulting in a net negative impact on NAV. This was more than offset by an unwinding of the investment premia, reflecting a lack of observable market-based evidence to justify revaluing the investments in line with the net increase in government bonds and a reduction in the risk profile of certain investments

- The portfolio also benefited from a reduction in discount rate risk premia applied to assets that moved out of the construction/defects liability phase and into full operations

- Sterling weakened against the Australian dollar and the euro but strengthened against the Canadian and U.S. dollars. The net impact was a positive impact on NAV, with the most significant impact on euro-denominated investments

- In line with forward guidance provided previously, two cash dividends were paid to INPP shareholders totalling £76.2 million

The NAV Return of £90.3 million captured the impact from the following:

- Unwinding of the discount factor - the movement of the valuation date and the receipt of forecast distributions

- Optimisation of cash flows - actual distributions received above the forecast amount due to active management of the Company's portfolio, including negotiating and optimising investment cash flows and utilisation of Group tax loss relief

- Updated cash flow forecasts - updated operating and macroeconomic assumptions to reflect current expectations of future cash flows

- Movements in the Company's working capital position

INVESTMENT VALUATION

Projected Future Cash Flows

The Company's investments are expected to continue to exhibit predictable cash flows. As the Company has a large degree of visibility over the forecast cash flows of its current investments, the chart below sets out the Company's forecast investment receipts from its current portfolio before fund-level costs. The majority of the forecast investment receipts are in the form of dividends or interest and principal payments from senior and subordinated debt investments.

The Company's portfolio comprises both investments with finite lives (determined by concession or licence terms) and perpetual investments (including, for example ownership, interests in regulated trading companies), that may be held for a much longer term before being sold. Over the life of concession-based investments, the Company's receipts from these investments represent a return of capital as well as income. The fair value of the Company's concession-based investments is expected to reduce to zero over time.

INPP Projected Cash Flow

[Diagram can be found in PDF version of this document on the Company's website].

Note: There are many factors that may influence the actual achievement of long-term cash flows to the Company. These include both internal as well as external factors and investors should not treat the chart above as being more than an indicative profile and not a projection, estimate or profit forecast. The actual achieved profile will almost certainly be different and may be higher or lower than indicated. No new investments other than those committed as at 31 December 2017 have been included.

Portfolio Performance and Return

The valuation of the Company's investment portfolio is determined by the Board, with the benefit of advice from the Investment Adviser and review by the Company's auditors. It is considered quarterly for approval by the Company's Directors. Investments at fair value as at 31 December 2017 were £2,005.3 million, an increase of 32.3% since 31 December 2016 (£1,515.2 million).

Investments at Fair Value Movements (£m)

[Diagram can be found in PDF version of this document on the Company's website].

1. The Portfolio Return represents, amongst other things, (i) variances in both realised and forecast investment cash flows and (ii) the unwinding of the discount factor applied to those future investment cash flows.

2. Represents movements in the forward rates used to translate forecast non-GBP investment receipts and the spot rates used to translate non-GBP cash balances.

The Portfolio Return of £108.7 million represents a 5.8% increase in the rebased Investments at fair value and can be attributed to:

- Unwinding of the discount factor - the movement of the valuation date and the receipt of forecast distributions

- Optimisation of cash flows - actual distributions received above the forecast amount due to active management of the Company's portfolio, including optimising investment cash flows and utilisation of Group tax loss relief

- Updated cash flow forecasts - updated operating and macroeconomic assumptions to reflect current expectations of future cash flows

In addition, there was:

- An increase of £464.0 million in the Investments held at Fair Value owing to new investments made during the year

- A decrease of £118.9 million due to investment cash flows that were paid out of the portfolio as distributions of interest, principal and dividends

- A net decrease in the weighted average discount rates across jurisdictions in which the Company invests, leading to a £11.5 million increase in the fair value of investments

- An increase of £18.6 million which reflects the changes made to the macroeconomic assumptions

- A net increase of £4.1 million due to foreign exchange rate movements in all four currencies the Company is exposed to

Macroeconomic Assumptions

The Company reviews the macroeconomic assumptions underlying its forecasts on a regular basis and, following a thorough market assessment during the period, certain adjustments have been made to some of the assumptions used to derive the Company's portfolio valuation.

The key assumptions used as the basis for deriving the Company's portfolio valuation are summarised below with further details provided in note 11. Across the portfolio, the weighted average long-term inflation assumption as at 31 December 2017 was 2.60% (2016: 2.58%) and the weighted average deposit rate assumption was 2.11% (2016: 2.07%). The Net Asset Valuation section above provides further details on the impact of these assumptions on the valuation during the period.

1 The portfolio valuation assumes actual current deposit rates are maintained until 31 December 2019 before adjusting to the long-term rates noted in the table above.

2 The Company's U.S. investments are in the form of subordinated debt and therefore not directly impacted by inflation, deposit and tax rate assumptions.

3 The reduction in U.K. tax rates reflects the latest substantively enacted rates at 31 December 2017 and therefore captures the reduction to 17.00% from 1 April 2020.

Discount Rates

The discount rate used to value each investment comprises the appropriate long-term government bond yield plus an investment-specific risk premium. The risk premia take into account the perceived risks and opportunities associated with each investment.

The majority of the Company's portfolio (91%) comprises Risk Capital investments (comprising equity and subordinated debt investments), with the remaining portfolio (9%) comprising senior debt investments. To provide investors with a greater level of transparency, the Company publishes both a Risk Capital weighted average discount rate and a portfolio weighted average discount rate, which captures the discount rates of all investments including the senior debt interests.

The weighted average discount rates are presented in the table below. These rates need to be considered against the assumptions and projections upon which the Company's forecast cash flows are based.

1 Risk Capital includes both equity and subordinated debt investments.

In the Company's view, comparisons of average discount rates between competitor investment portfolios or funds are only meaningful if there is a comparable level of confidence in the quality of forecast cash flows (and assumptions) the rates are applied to; the risk and return characteristics of different investment portfolios are understood; and the depth and quality of asset management employed to manage risk and deliver expected returns are identical across the compared portfolios. As such, assumptions are unlikely to be homogenous, and any focus on average discount rates without an assessment of these and other factors would be incomplete and could therefore derive misleading conclusions. For transparency and to aid comparability, the Company's approach to such cash flows is set out below.

Portfolio Level Cash Flow Assumptions Underlying NAV Calculation

The Company is aware that there are subtle differences in approach to the valuation of portfolios of investments among different infrastructure funds. INPP regards its key cash flow and broad valuation assumptions and principles as:

- Key macroeconomic variables (outlined in the section above) continue to be applicable

- Concession contracts under which payments are made to the Company and its subsidiaries remain on track and are not terminated before their contractual expiry date

- Any deductions suffered under such contracts are fully passed down to subcontractors

- Lifecycle costs/risks are either not borne by the Company and are passed down to a third party such as a facilities management contractor or where borne by the Company are incurred per current expectations

- Cash flows from and to the Company's subsidiaries and the infrastructure asset-owning entities in which it has invested will be made and are received at the times anticipated

- Where assets are in construction they are either completed on time or any costs of delay are borne by the contractors not the Company

- Where the operating costs of the Company or the infrastructure asset-owning entities in which it has invested are fixed by contract such contracts are performed, and where such costs are not fixed, that they remain within projected budgets

- Where the Company or the infrastructure asset-owning entities in which it has invested owns the residual property value in an asset that the projected amount for this value is realised

- Foreign exchange rates remain consistent with 31 December 2017 four-year forward rates

- There are no tax or regulatory changes in the future which negatively impact cash flow forecasts

- Perpetual investments are assumed to have a finite life and therefore residual/terminal value

SENSITIVITIES FOR KEY MACROECONOMIC ASSUMPTIONS AND DISCOUNT RATES

The Company's NAV is based on the factors outlined above including discount rates. The Company has also provided sensitivity analysis showing an indication of the impact on NAV per share from changes in key assumptions and discount rates, as set out [below]. Further details can be found in note 11. This analysis is provided as an indication of the likely impact of these variables on the NAV per share on the basis that they apply uniformly across the portfolio whereas in practice the impact is unlikely to be uniform. These sensitivities should be used only for general guidance and not as accurate predictors of outcomes.

Impact of Changes in Key Macroeconomic Variables to 31 December 2017 NAV 145.0p per Share

[Diagram can be found in PDF version of this document on the Company's website].

Inflation

Forecasting the impact of possible future inflation/deflation on projected returns and NAV in isolation cannot be relied on as an accurate guide to the future performance of the Company as actual inflation is unlikely to follow any of these scenarios exactly and invariably, many other factors and variables will combine to determine what actual future returns are available. The analysis provided above should therefore be treated as being indicative only and not as providing any form of profit or dividend forecast. Additional inflation sensitivities (by region) are provided in note 11.5 of the Financial Statements.

Foreign Exchange

The Company has a geographically varied portfolio and therefore revenues are subject to foreign exchange rate risk. The impact of a 10% increase or decrease in these rates is provided for illustration. The Company does not hedge exposure to foreign exchange rate risk on long-term cash flows and therefore changes in NAV are to be expected from changes in the foreign exchange forward curve against euros, Australian dollars, Canadian dollars and U.S. dollars.

Deposit Rates

The long-term weighted average deposit rate assumption across the portfolio is 2.11% per annum. While operating cash balances tend to be low given the structured nature of the investments, project finance structures typically include reserve accounts to mitigate certain costs and therefore variations to deposit rates may impact the portfolio. The impact of a 1% increase or decrease in these rates is provided for illustration.

Tax Rates

The Company has a geographically varied portfolio and therefore post-tax investment cash inflows are impacted by tax rates across all relevant jurisdictions. The impact of a 1% increase or decrease in these rates is provided for illustration. Other potential tax changes are not covered by this scenario.

Lifecycle Spend

There is a process of renewal required to keep physical assets fit for use and at the standard required of them under the agreements with the relevant public sector bodies. The proportion of total cost that represents this 'lifecycle spend' will depend on the nature of the asset. To enhance the certainty around cash flows, and excluding the Company's regulated investments, around 76% of the Company's assets (by value) are currently structured such that lifecycle cost risk is taken by a subcontractor for a fixed price (isolating equity investors from such downside risk). As a result, the impact of any changes to the Company's lifecycle cost profile is relatively small.

Regulated assets, such as Tideway and Cadent are treated differently, due to the protections offered by the regulatory regime under which they operate. Regulated assets have their revenues determined for a known regulatory period and each settlement includes revenue sufficient to allow the owner to undertake the efficient lifecycle of its assets due in that regulatory period. It is common practice to employ reputable subcontractors to undertake lifecycle work under contracts which include incentive and penalty regimes aligned with equity's own regulatory targets. This approach ensures an alignment of interest and helps to mitigate the risk of increased lifecycle costs falling on the equity investor.

Future Group Tax Loss Relief

Under current U.K. group tax loss relief rules, losses within the U.K. group companies can be, subject to U.K. tax law, offset against taxable profits in other U.K. group companies (including controlled project entities). This group tax loss relief can reduce the overall tax charge across the portfolio and potentially reduce taxable profits substantially below the levels currently modelled by the Company. The Company has taken a conservative approach to the valuation of future tax losses and, to date, has not incorporated these into the NAV. Changes to U.K. tax loss relief rules came into force retrospectively from April 2017, limiting the amount of loss carry forward but increasing the ability to utilise losses across the Group. We have not needed to adjust our portfolio valuation approach for this.

By order of the Board

RISK MANAGEMENT

EFFECTIVE RISK MANAGEMENT

RISK MANAGEMENT AND INTERNAL CONTROLS

The Board is responsible for overall risk management, with delegation provided to the Audit and Risk Committee. The system of risk management and internal control has been designed to manage, rather than eliminate, the risk of failure to meet the business objectives. Regard is given to the materiality of relevant risks in designing systems of internal control but no system of control can provide absolute assurance against the incidence of risk, misstatement or loss.

INPP has in place a risk management framework, with a risk register that is reviewed and updated by the Board and Audit and Risk Committee on a quarterly basis. The Audit and Risk Committee considers the risks facing the Company and controls and other measures in place to mitigate the impact of risks.

There is an ongoing process for identifying, evaluating and managing the most significant risks faced by the Company. The process has been in place through 2017 and up to the date of approval of the Annual Report and financial statements.

Risk Management Process

The Company's risk management process as overseen by the Board can be summarised as:

[Diagram can be found in PDF version of this document on the Company's website].

Risk Framework and Systems of Internal Control

The Board recognises the importance of identifying and actively monitoring the financial and non-financial risks facing the business. While responsibility for risk management rests with the Board, the aim is that the management of risk is embedded as part of the everyday business and culture of the Company and its principal advisers.

The Board has considered the need for an internal audit function but because of the internal controls systems in place at the key service providers, and the external controls process reviews performed annually, it has decided instead to place reliance on those control and assurance processes.

The overall risk governance framework is the responsibility of the Board, overseen by the Audit and Risk Committee with input from the Management Engagement Committee. It is implemented through the following risk control processes.

Risk Identification

The Board and Audit and Risk Committee ('ARC') identify risks with additional input from the Company's Investment Adviser and Administrator. The Board also receives detailed quarterly asset management reports highlighting performance and potential risk issues on an investment-by-investment basis. The ARC also has an open dialogue with its advisers to assist with assessment of significant risks, if any, that might arise between reporting periods.

Risk Assessment

Each identified risk is assessed in terms of probability of occurrence, potential impact on financial performance and movements in the relative significance of each risk from period to period. A robust assessment of the principal risks facing the Company is performed. In terms of risks that might impact viability these are separately considered. See the viability statement on page 40 for more information of this assessment.

Action Plans to Mitigate Risk

Where new risks are identified or existing risks increase in terms of likelihood or impact, the Audit and Risk Committee assists the Company in developing an action plan to mitigate the risk and put in place enhanced monitoring and reporting.

Re-assessment and Reporting of Risk

Such risk mitigation plans are reassessed by the Audit and Risk Committee, where applicable with the relevant key service providers and reported to the Board on a quarterly basis.

[Diagram can be found in PDF version of this document on the Company's website].

Direct communication between the Company and its Investment Adviser, and the entity level asset manager, is a key element in the effective management of risk (and performance) at the underlying investment level.

The risk framework is applied holistically across the Company and the underlying investment portfolio as illustrated in the Business Model on pages 8 to 9.

PRINCIPAL RISKS AND MITIGATION

The key risks affecting the Company and the investment portfolio have not, in the view of the Board, materially changed year to year, largely due to the contractual and long-term nature of the investments with similar risk profiles. Changes in the macroeconomic environment and broader global regulatory and tax environment can impact on fund returns and are a permanent feature of the risk appraisal process.

The Board notes the evolving political and economic environment, where certain risks are more pronounced in the period under review. Whilst the U.K. opposition party has publicly threatened to nationalise privately owned infrastructure include UK PFI, the Company believes that significant compensation would be required in order to do this legitimately within existing contractual arrangements.

Counterparty risk has been closely monitored over the year following issues affecting certain service providers to the Group, and contingency plans developed by the Investment Adviser in the event of counterparty failure. Following the collapse of Carillion plc in early 2018, the Company announced that the costs of transitioning to new facilities management providers and other associated costs would be up to c. £1.5 million. The Investment Adviser continues to closely monitor other service providers within the portfolio.

The U.K.'s departure from the EU also continues to be monitored for any associated risk to the Company, however there are no 'Brexit' specific clauses in INPP's underlying project contracts. Nevertheless, a certain degree of uncertainty remains at this stage over the eventual regulation which will cover the future relationship between the U.K. and the EU, in particular the approach to cross-border AIFMD regulation and taxation of cross-border financing. We continue to monitor this on an ongoing basis.

As noted in the Audit and Risk Committee report (pages 58 to 61), the Board also considered the Company's controls and processes relating to asset availability reporting. Asset availability reporting was considered an important non-financial KPI for a number of the Company's investments, as there are consequential implications on returns if such assets become unavailable for public use. The review concluded that the Company had sufficient controls in operation for the accurate capture and reporting of such information and no weaknesses or control deficiencies were identified.

The Board's view of principal risks and how the relative significance may have changed in the period are set out on the following pages.

This section is not intended to highlight all the potential risks to the business. There may be other risks that are currently unknown or regarded as less material, which could turn out to materially impact the performance of the Company, its assets, capital resources and reputation.

We note the potential impact of, and heightened focus on cybersecurity, which continues to be an issue of relevance across all businesses as a response to the growing levels of sophistication being used in carrying out cyber-attacks. The Company recently procured an external independent review of its cybersecurity control enforcement and continues to monitor resilience to these threats. Following careful consideration, it is not believed that cybersecurity represents a specific risk to the Company and is instead managed as a general risk to all businesses accordingly.

A description of broader risk factors relevant to investors is disclosed in the latest Company prospectus available on the website www.internationalpublicpartnerships.com.

While the Company has applied mitigation processes (set out below) it is unlikely that the techniques applied will fully mitigate the risk.

The chart below provides a summary of the Board's view of the probability and potential impact of the Company's principal risks:

Risk Heat Map

[Diagram can be found in PDF version of this document on the Company's website].

The following key is used in the table below to highlight the Board's view on movement of risk exposures during the period:

RISK TYPE

1 Inflation

2 Foreign Exchange Movements

3 Interest rates

4 Tax and accounting

5 Political Policy

6 Law and Regulation

7 Asset Performance

8 Counterparty Risk

9 Physical Asset Risk

10 Contract Risk

11 Financial Forecasts

VIABILITY STATEMENT

In accordance with provision C2:2 of the 2014 revision of the U.K. Code of Corporate Governance, we have considered the Company's viability as summarised below. Due to the long-term and/or contractual nature of our investments, we have a significant level of confidence over the endurance and longevity of our business, however it is difficult to assess the regulatory, tax and political environment on a long-term basis. While we consider the valuation of investment cash flows for the purposes of NAV over a considerably longer period than five years, we view five years as an appropriate timeframe for assessing the Company's viability given these inherent uncertainties.

The viability assessment process is embedded within the Company's annual risk review cycle and involves the following:

1 An Audit and Risk Committee review and assessment of the risks facing the Company. A summary of the review process is detailed on pages 30 to 31.

2 Identification of those principal risks that are deemed more likely to occur and have a potential impact on the Company's viability over the viability period. This exercise has included consideration of a persistent low inflation rate environment (noting that a high rate environment would be positive for the Company's investment cash flows), large currency fluctuations impacting on receipts from overseas investments, and the impact from the loss of income from investments (whether due to key sub-contractor default or other asset underperformance). We note that a number of risks identified during the risk review process in step one above may have implications for the Company's valuation but may be considered insignificant from a five-year viability perspective

3 Quantification analysis of the potential impact of those principal risks occurring in isolation and under plausible combined sensitivity scenarios over the viability period

4 Assessment of potential mitigation strategies to mitigate the potential impact of principal risks over the viability period. This exercise has considered the potential to liquidate investments and/or refinance investments if necessary

The viability assessment is approved by the Board. Following the assessment, the Board has a reasonable expectation that the Company will be able to continue in operation and meet all its liabilities as they fall due up to March 2023. This assessment is based on the following assumptions which are not within the Company's control:

- No retrospective changes to government policy, laws and regulations affecting the Company or its investments

- Continued availability of sufficient capital and market liquidity to allow for the refinancing/repayment of any short-term recourse debt facility obligations as they become due

CORPORATE GOVERANCE

CORPORATE SOCIAL AND ENVIRONMENTAL RESPONSIBILITY

Social responsibility and corporate citizenship are core to our business, creating value for clients, investors, shareholders, communities and society alike. This is achieved by taking responsibility for our actions, outcomes and reputation and is fully embedded into INPP's core business objectives and day-to-day business culture and operations.

Our most material impacts are indirect, relating to the environmental and social performance of the construction and operation of the buildings and infrastructure that make up the Company's portfolio. This ranges from the social utility derived from modern school environments for children to learn; to quality public buildings such as libraries and local health practices; to new efficient trains and light rail systems providing better connectivity; and to offshore power networks enabling the transmission of green energy from offshore wind farms for wider distribution to homes and businesses. Additionally, we recognise the importance of managing our relationship with Amber, our Investment Adviser, (and associated asset management operations) including the energy and resources used within all our operations and our contribution to the local and international community.

INPP relies upon Amber and its Sustainability Policy to promote best practice and continued improvement in environmental management and social responsibility. Amber's Sustainability Policy looks beyond legislative and regulatory requirements and has three principles as its core:

1. Supporting projects which contribute to the long-term sustainable development of an area

2. Factoring the socio-economic and environmental impacts of its assets and their supply chain is embedded in its development and management decision making; and

3. Encouraging and promoting sustainable practices within Amber for its people, at its place of work and in the communities that it serves.

Over the course of 2017, Amber has expanded and enhanced its Sustainability outlook by developing a clear set of aims that are measurable through its Key Performance Indicators ('KPIs') that are embedded across the business and the projects that it manages. Amber uses the UN Sustainable Development Goals ('UNSDGs') as the overarching sustainability framework to inform its strategies and target setting and has chosen to focus on seven of the 17 UNSDGs to prioritise its goals.

Amber is certified to The Planet Mark, an internationally-recognised and trusted sustainability certification programme, and is committed to measuring and reducing its carbon footprint and wider sustainability metrics. More information is available on Amber's website: www.amberinfrastructure.com.

Our values are based on the principles of responsible investment and finance that supports sustainable economic development, enhances quality of life and safeguards the environment. A selection of the social responsibility and environmental initiatives provided through our investment portfolio are described below demonstrating that wherever we operate, we seek to integrate within the neighbourhood, supporting the local community, its business and workforce.

INVESTING IN THE COMMUNITY

INPP seeks, through its projects, to work collaboratively with the local communities where it invests, recognising the economic benefits and contribution the projects can bring to the area, particularly as the Company is typically investing for in excess of 20 years. Examples of community engagement during the year are given below.

The Thames Tideway Tunnel project leads the construction industry in demonstrating how a large capital construction project should integrate into and deliver real benefits to adjacent communities. The project team are helping deliver their vision of 'Reconnecting London and Londoners with the River Thames' through supporting community activities in the boroughs where works are to be delivered. Specific events have included education programmes, support of local clubs and societies working in partnership with local schools and colleges.

Salford and Wigan BSF worked with their local authority partners to identify specific areas of need. Walkden school was assisted in the purchase of books that specifically target encouraging fathers to read to their children and the provision of transportation to parents' evening to encourage participation and partnership between the school and parents. Additionally, Moorside High School pupils were assisted by the facilities manager ('FM') provider to create videos warning of the dangers of drug and alcohol abuse.

We continue to support the Community Partnerships Programme at the Royal Children's Hospital ('RCH'), an investment in Melbourne, Australia, which aims to provide partnerships and attractions to reflect the RCH's standing as one of the world's great children's hospitals. The initiative includes bringing the community into the RCH and creating partnerships with iconic local intuitions, supporting the 'pain free experience for children' through entertainment and distraction, integrating education outcomes with entertainment and incorporate evidence based outcomes in developing the programme of events and activities.

COMMITMENT TO THE ENVIRONMENT

We continue to consider the environmental impact of our portfolio and have taken various steps to increase our commitment. This is illustrated by some of the initiatives set out below. We proactively work with the commissioning authorities and constructing partners to achieve high standards in sustainability, including building certifications such as BREEAM, LEED and Green Star.

A scheme at Olga School, one of the schools in the Tower Hamlets Grouped Schools project, was successfully completed this year. The project involved the entire demolition of the existing one form entry school and the creation of a new three form entry school. The new school achieved a BREEAM Excellent status overall and was accredited with ISO 14001, an internationally recognised environmental management standard which monitors factors such as reduction in energy consumption, waste disposal and material use throughout the supply chain. The construction also incorporated the installation of photovoltaic panels, which met a 30% renewable energy target and will have an ongoing contribution towards sustainable energy generation.

Oakfield School in Nottingham (part of our Nottingham BSF 1 project) received a Gold Award in the annual Nottingham in Bloom competition, a nationwide gardening competition across Britain that helps bring the community together and show environmental responsibility. Staff of the facilities management provider give un-paid support to the school to help promote the scheme. The school has been commended for horticultural excellence and its contribution to the environment, local landscape and character of Nottingham. Additionally, the school is currently evaluating the potential to reuse cooking oil from the kitchen in the CHP plant to power and heat the school, reducing both emissions and waste.

At the Royal Children's Hospital in Melbourne, project staff have worked with their project partners to develop a joint strategy for energy conservation. To date, 52 initiatives have been implemented; these initiatives are projected to reduce 60,000 tonnes of C02 emissions and could result in a saving of over A$8M. One such project includes the installation of an organic waste dehydrator in the commercial retail section of the facility which saves 55,000kg of waste from landfill and 87.6 tonnes of CO2 emissions annually.

INPP's investment into OFTOs enables the transmission of green energy generated by offshore windfarms to the National Grid. In addition, INPP's investment into the Thames Tideway Tunnel will have a significant environmental impact on the water quality of the River Thames in London, as a result of sewage and waste water being diverted away from the Thames and directly to a water facility.

SUPPORTING PUBLIC SECTOR PARTNERS

INPP investments by their very nature support public sector partners' engagement with the wider communities throughout the construction and operational phases of the portfolio's assets, some examples of this are set out below.

Lewisham BSF project has provided over £10,000 of sponsorship to CSR initiatives across the project. Bonus Pastor School was supported in holding two awards evenings to celebrate success and encourage attainment. With a specific focus on sports and arts, the students displayed their work and were awarded trophies for individual success. Drumbeat School (for students with special needs) benefitted from the installation of external surfacing and play equipment enabling safe outdoor play and motor skill development at no cost to the school. Similarly, Prendergast Vale School received a donation towards the purchase of play equipment. The project has received outstanding feedback from the public sector partner for tangibly enhancing the educational development of the young people who use the facilities.

The Waltham Forest project supported an 'Eco Garden' at Frederick Bremner School. The financial sponsorship provided facilities for an 'Outdoor Classroom' providing flowers, plants, vegetables and shrubs, and implements such as wheel barrows, hand tools and protective clothing. It enhanced curriculum delivery in a number of areas such as healthy eating, employability and the natural environment. It was noted as being particularly beneficial for students with additional support needs who find traditional classroom environments challenging.

Stepney Green Sixth Form Centre, a large variation in the Tower Hamlets Schools project is nearing completion. As part of the scheme the building contractor supported the local educational community to provide careers talks and mock interviews at local schools to inspire the next generation of construction industry professionals. This led to the contractor employing six apprentices as part of the workforce, of which 23% lived in the local area. In addition, the contractor provided business support to ensure 400 SME's were encouraged to bid for the project and were subsequently encouraged to bid for future construction opportunities in the local area. The programme comprised of an engagement and brokerage service for main contractors and buying organisations to help diversify their supply chains.

PROMOTING SUCCESSFUL PARTNERSHIPS

Our long-term partnerships with the operational business, construction firms and facilities managers who build and operate the investments within the portfolio are critical to the overall success of those projects. We work hand-in-hand with those firms and are pleased to provide examples of how they have engaged with the projects and their local communities during the year.

The facilities management provider staff at St Thomas More have been particularly proactive in partnering with the local community. Examples include charity support such as collecting Easter eggs for a local children's hospital and supporting the local homeless through clothing and financial donations. The wellbeing of staff has also been a particular focus with the establishment of an in-house health club which promotes healthy eating and exercise, including the participation of FM staff in a local running event.

Staff from the facilities management provider at Bootle Government offices have partnered with the local Authority to offer work experience placements for young people. The fortnight long placements offered five young people in the area an insight into the world of work and increased their employability. In addition, the facilities management provider supported a local building training college with materials, expertise and work placements on local building sites through their construction division.

Cadent continues to offer a reliable, valued and trusted presence in local communities. Their strategy, 'Our Contribution' details specifically how the company will do business and create a sustainable legacy. Highlights from 2017 include:

· Employees continue to share time, skills and expertise through volunteering- in 2017 over 14,000 hours were dedicated to community projects.

· Establishing the Alzheimer's Society as their first charity partnership following a staff vote in September 2016. To date, over £600,000 has been raised by staff to assist with the aim of assisting those living with dementia and their families.

· Where assets are renewed, consideration is given to reducing costs, carbon and emissions. As an example, Bishops Wood Substation in the U.K. was refurbished resulting in an electricity consumption saving of 60%.

OVERVIEW

INPP invests in public or social infrastructure assets and related businesses located in the U.K., Australia, Europe, North America and other parts of the world where the risk profile meets the Company's risk and return requirements.

The Company has a long-term view and invests in operational and construction phase assets for the life of the asset or concession, unless there is a strategic rationale for earlier realisation. INPP seeks to enhance the capital value and the income derived from its investments to optimise returns for its investors. The Investment Policy is summarised below and available in full at www.internationalpublicpartnerships.com.

INVESTMENT parameters

Maintaining the performance of the existing portfolio is the Company's key focus. However, it will also seek attractive opportunities to expand its portfolio, including:

- Investments with characteristics similar to the existing portfolio

- Investments in other assets or concessions having a public or social infrastructure character with either availability, property rental or user paid payment mechanisms

- Investments in infrastructure assets or concessions characterised by high barriers to entry and expected to generate an attractive total rate of return over the life of the investment

PORTFOLIO COMPOSITION

The Company will, over the long-term, maintain a spread of investments both geographically and across industry sectors in order to achieve a broad balance of risk in the Company's portfolio. It does not expect to invest in projects in non-OECD countries, unless it can get comfortable with the risk-return profile.

Asset allocation will depend on the maturity of the local infrastructure investment market, wider market conditions and the judgement of the Investment Adviser and the Board on the suitability of the investment from a risk and return perspective. The Company Overview on page 2 has details of the current composition of the investment portfolio.

INVESTMENT RESTRICTIONS

The Company's Investment Policy restricts it from making any investment of more than 20% of the total assets in any one investment in order to limit the risk of any one investment to the overall portfolio.

As a London Stock Exchange-listed Company, INPP is also subject to certain restrictions pursuant to the UKLA Listing Rules.

MANAGING CONFLICTS OF INTEREST

Further investments will continue to be sourced by the Investment Adviser, Amber Fund Management Limited. Some of these investments will have been originated and developed by, and in certain cases may be acquired from, members of the Amber Infrastructure Group.

The Company has established detailed procedures to deal with conflicts of interest that may arise and manage conduct in respect of any such acquisition. The Corporate Governance Report sets out more details on the conflicts management process.

Financial management

The Company may also make prudent use of leverage to enhance returns to investors, to finance the acquisition of investments in the short-term and to satisfy working capital requirements.

Under the Company's Articles, outstanding borrowings at the Company level, including any financial guarantees to support subscription obligations in relation to investments, are limited to 50% of the Gross Asset Value ('GAV') of the Company's investments and cash balances. The Company has the ability to borrow in aggregate up to 66% of such GAV on a short-term basis (i.e. less than 365 days) if considered appropriate. Details of the Company's corporate debt facility can be found on page 22.

Changes to investment policy

Material changes to the Investment Policy summarised in this section may only be made by ordinary resolution of the shareholders in accordance with the U.K. Listing Rules.

CORPORATE GOVERANCE

BOARD OF DIRECTORS

The table below details all Directors of the Company at the date of this report.

CORPORATE GOVERANCE

CORPORATE GOVERNANCE REPORT

Introduction

The Board of Directors is committed to high standards of corporate governance and has put in place a framework for corporate governance which it believes is appropriate for an investment company that is a constituent of the FTSE 250 Share Index.

The Board is responsible to shareholders for the overall management and oversight of the Company, for agreeing its strategy, monitoring its financial performance, and setting and monitoring its risk appetite.

This section describes how INPP is governed. It explains how the Board is organised and operates, including the roles and composition of each of its Committees, and provides details on our Board members and how they are remunerated. As an investment company, the Company has no employees and relies on the advice and expertise of its key suppliers, notably its Investment Adviser, Amber Fund Management Limited ('Amber'). This section therefore also explains the nature of the Company's relationship with Amber, and how this is managed including the remuneration of the Adviser.

Compliance with Corporate Governance Codes AND REGULATIONS

All companies with a Premium Listing on the London Stock Exchange are required to confirm their compliance with (or explain departures from) the U.K. Corporate Governance Code issued in April 2016 (the 'U.K. Code'). This requirement applies regardless of where the company is incorporated.

The Company is a member of the Association of Investment Companies (the 'AIC'). The Financial Reporting Council acknowledges that the AIC Corporate Governance Code issued in July 2016 (the 'AIC Code') can assist externally managed companies in meeting their obligations under the U.K. Code in areas that are of specific relevance to investment companies.

The Guernsey Financial Services Commission has also confirmed that companies that report against the U.K. Code or AIC Code are deemed to meet the Guernsey Code of Corporate Governance.

The AIC Code is available from the Association of Investment Companies website (www.theaic.co.uk). The U.K. Code is available from the Financial Reporting Council website (www.frc.co.uk).

The Company has complied throughout the year with all the provisions of the AIC Code and as such also meets the requirements of the U.K. Code. However, as an investment company, most of the Company's day-to-day responsibilities are delegated to third parties. The Company does not have any Executive Directors. The U.K. Code's two separate principles of setting out the responsibilities of the chief executive and disclosing the remuneration of executive directors (Section A.2 of the U.K. Code) are therefore not applicable.

The Company is subject to a new European Union Regulation (2017/653) ('the Regulation') which deems it to be a packaged retail and insurance-based investment product ('PRIIPS'). In accordance with the requirements of the Regulation, the Company published its first standardised three-page Key Information Document ('KID') on 22 December 2017. The KID is available on the Company's website www.internationalpublicpartnerships.com/investors and will be updated at least every 12 months.

Board and Committees

The Board sets the strategy for the Company and makes decisions on changes to the portfolio (including approvals of acquisitions, disposals and valuations). Through Committees and the use of external independent advisers it manages risk and governance of the Company. The Board has a majority of Independent Directors - currently six of the seven Directors are independent.

Board of Directors

The Board of Directors consists of seven Non-Executive Directors, whose biographies, on pages 47 to 48, demonstrate a breadth of investment and business experience.

On 1 September 2017 the Board was pleased to announce that following an external recruitment process it had appointed Ms Julia Bond as an additional Non-Executive Director of the Board. Ms Bond brings a wealth of board experience in Investment Trusts, the public sector, professional bodies as well as the voluntary sector. Ms Bond's skills and knowledge are complementary to the current Board. As mentioned in the Chairman's Letter, the Board is actively seeking a candidate for Chairmanship following Mr Dorey's planned retirement from this role and the Board.

The Board consists solely of Non-Executive Directors and, for the period of this report, was chaired by Mr Dorey, who is responsible for leadership of the Board and ensuring its effectiveness in all aspects of its role. The Board considered that Mr Dorey was independent upon appointment and remained independent throughout his term of service for the purposes of the AIC Code. For the period of this report, Mr Whittle held the role of Senior Independent Director. He is an alternative point of contact for shareholders and leads in matters where it is inappropriate for the Chairman to do so.

For the purposes of the AIC Code, Mr Frost is treated as not being an Independent Director, due to his relationship with the Company's Investment Adviser. In accordance with the AIC Code, all other Non-Executives are independent of the Company's Investment Adviser.

Board Tenure and Re-election

Directors do not have service contracts. Directors are appointed under letters of appointment, copies of which are available at the registered office of the Company. All Directors offer themselves for re-election on an annual basis. The Board considers its composition and succession planning on an ongoing basis.

In accordance with the AIC Code, when and if any Director has been in office (or on re-election would at the end of that term of office have been in office) for more than nine years, the Company will consider further whether there is a risk that such a Director might reasonably be deemed to have lost independence through such long service.

Mr Dorey has been a Board member since August 2006 and in August 2015 had served as a Board member for over nine years. The Board is confident that Mr Dorey remains independent and offers himself for re-election on an annual basis. Mr Dorey intends to retire following the successful search for a new Chairman and completion of a reasonable transition period. More information is available on page 6.

Directors' Duties and Responsibilities

The Directors have adopted a set of Reserved Powers, which establish the key purpose of the Board and detail its major duties. These duties cover the following areas of responsibility:

- Statutory obligations and public disclosure

- Approval of investment decisions

- Strategic matters and financial reporting

- Board composition and accountability to shareholders

- Risk assessment and management, including reporting, compliance, monitoring, governance and control

- Other matters having material effects on the Company

These reserved powers of the Board have been adopted by the Directors to demonstrate clearly the importance with which the Board takes its fiduciary responsibilities and as an ongoing means of measuring and monitoring the effectiveness of its actions.

The Board monitors the Company's share price and NAV and regularly considers ways in which shareholder value may be enhanced. These may include implementing marketing and investor relations activities, appropriate management of share price premium/discount and the relative positioning and performance of the Company to its competitors. The Board is also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Individual Directors may, at the expense of the Company, seek independent professional advice on any matter that concerns them in the furtherance of their duties. The Company maintains appropriate Directors' and Officers' liability insurance in respect of legal action against its Directors on an ongoing basis and the Company has maintained appropriate cover throughout the period.

All new Directors receive introductory support and education about the infrastructure sector and the Company from the Investment Adviser on joining the Board and, in consultation with the Chairman, all Directors are entitled to receive other relevant ongoing training as necessary.

Board Diversity

The Board is committed to maintaining the appropriate balance of skills, gender, knowledge and experience among its members to ensure strong leadership of the Company. When appointing Board members, its priority will always be based on merit, but will be influenced by the strong desire to maintain Board diversity. The Board has two female Directors.

Board Remuneration

The Nomination and Remuneration Committee considers matters relating to the Directors' remuneration, taking into account benchmark information (including fees paid to directors of comparable companies, although such a review does not necessarily result in any changes to the fees paid) and based upon the amount of work performed by the Board members. In 2017 no advice or services were provided by any external persons in respect of its consideration of Directors' remuneration.

All fees payable to the Directors should reflect the time spent by the Directors on the Company's affairs and the responsibilities borne by the Directors and be sufficient to attract, retain and motivate Directors of a quality required to run the Company successfully. The Chairman of the Board is paid a higher fee in recognition of additional responsibilities, as is the Chairman of the Audit and Risk Committee. The Chairmen of the Nomination and Remuneration, Management Engagement, and Investment Committees respectively do not receive additional fees for these roles.

There are no long-term incentive schemes provided by the Company and no performance fees, or bonuses paid to Directors. Any changes to Directors remuneration are considered at the Annual General Meeting of the Company. The base remuneration, approved at the 2017 Annual General Meeting, for each director role is set out below:

1 Includes £10,000 fee payable to Board members with respect to the May 2017 share issue.

2 Mr Dorey became Chairman of the Board on 31 December 2013 for which he receives a higher fee.

3 Mr Whittle became Chairman of the Audit and Risk Committee on 31 December 2013 for which he receives a higher fee.

4 Ms Bond joined the Board on 1 September 2017.

5 The emoluments for Mr Frost are paid to his employer Amber Infrastructure Limited, a related company of the Company's Investment Adviser.

Mr Frost is also a director of a number of other companies in which the Company directly or indirectly has an investment, although he does not control or receive remuneration in relation to these entities.

In addition to director fees above, following Mr Whittle's appointment as Director to the five Luxembourg subsidiary entities of International Public Partnerships, he received fees of £3,000 per entity for the year ended 2017.

Directors' Interests

Directors, who held office at 31 December 2017, had the following interests in the shares of the Company:

1 All shares are beneficially held.

2 Included in this number are 200,000 shares owned by Mr Dorey's spouse and 43,927 shares are held by another close family member.

3 Holds shares through a Retirement Annuity Trust Scheme.

4 Holds shares through a Retirement Annuity Trust Scheme jointly with Ms Whittet's spouse.

5 Ms Bond joined the Board on 1 September 2017.

There have been no changes to any of the above holdings between 31 December 2017 and the date of this report.

Committees of the Board

[Diagram can be found in PDF version of this document on the Company's website].

The Board has established four Committees consisting of the independent Non-Executive Directors. The responsibilities of these Committees are described below. Terms of reference for each Committee have been approved by the Board and are available on the Company's website.

Audit and Risk Committee

The Audit and Risk Committee is comprised of the full Board, with the exception of Mr Frost as the Non-Independent Director.

Mr Whittle is the current Chairman of the Audit and Risk Committee and Mr Stares has lead responsibility for risk within the Risk Sub-Committee. As a consequence, the Company Chairman is a member of the Audit and Risk Committee, which the Board believes is appropriate as Mr Dorey brings significant independent expertise in investment trusts and finance for the benefit of that Committee.

The duties of the Audit and Risk Committee in discharging its responsibilities are outlined in the Audit and Risk Committee Report.

In respect of its risk management function, the Audit and Risk Committee is also responsible for reviewing the Company's risk management framework including the acquisition and disposal of assets, the valuation of assets and ensuring that the risk management function of the Investment Adviser, Administrator and other third-party service providers are adequate and to seek assurance of the same.

The Audit and Risk Committee satisfied that the key risks that could impact the Company and its investments were effectively mitigated and reported upon and were broadly in line with those of the Company's relevant industry peers.

Management Engagement Committee

The Management Engagement Committee is comprised of the full Board, with the exception of Mr Frost as the Non-Independent Director, and is chaired by Ms Whittet. The duties of the Management Engagement Committee in discharging its responsibilities are outlined in the diagram on page 52.

The Management Engagement Committee carries out its review of the Company's advisers through consideration of a number of objective and subjective criteria and through a review of the terms and conditions of the advisers' appointments; with the aim of evaluating performance, identifying any weaknesses and ensuring value for money for the Company's shareholders.

During the year, the Management Engagement Committee formally reviewed the performance of the Investment Adviser and other key service providers to the Company and no material weaknesses were identified. Overall the Committee confirmed its satisfaction with the services and advice received.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee is comprised of the full Board, with the exception of Mr Frost as the Non-Independent Director, and is chaired by Mr Stares.

The Committee is formally charged by the Board to consider the structure, size, remuneration and composition of the Board. It also oversees the appointment and re-appointment of Directors, taking into account the expertise of the candidates and their independence (see page 52 for more detail on the Committee).

In accordance with the Corporate Governance Code for FTSE 350 companies, the Company undertakes externally facilitated evaluation every three years. During the period the Board commissioned Trust Associates to facilitate an external evaluation of the Board's performance. The evaluation included interviews with members of the Investment Adviser's team, other external advisers including the Company's broker and discussions with several of the Company's largest investors. The report concluded the relationship between Amber and the Board continues to be very strong. It also acknowledged that the composition and practices of the Board were strong and there was a need to continue to plan for growth and replacement of skills as directors retire.

Ahead of the anticipated changes in chairmanship role of the existing Board following Mr Dorey's retirement as Chairman, the Board also discussed succession planning. An active search for a new Chairman is in process.

Investment Committee

The Investment Committee is comprised of the full Board, with the exception of Mr Frost as the Non-Independent Director, and is chaired by Mr Dorey, as Chairman of the Company. The Committee considers proposals relating to the acquisition and disposal of investments and, if thought fit, approves those proposals. Details of the transactions invested in during the period are outlined on page 13 of the Report.

Board and Committee Meeting Attendance

The full Board meets at least four times per year and in addition there is regular contact between the Board, the Investment Adviser, the Administrator and the Company Secretary. The agenda and supporting papers are distributed in advance of quarterly Board and Committee meetings to allow time for appropriate review and to facilitate full discussion at the meetings.

The table below lists Directors' attendance at Board and Committee meetings during the year, to the date of this report.

1. Ms Bond joined the Board on 1 September 2017. Ms Bond joined the Committees of the Board on 1 December 2017.

2. Mr Frost is not a member of the Audit and Risk Committee, Management Engagement Committee or Investment Committee. While Mr Frost attended the majority of ad-hoc Board and Committee meetings, as these meetings considered recommendations from the Investment Advisers his presence does not count towards the quorum so has been excluded from this tally.

Relationship with Administrator and Company Secretary

Estera International Fund Managers (Guernsey) Limited, formerly Heritage International Fund Managers Limited, acts as Administrator and Company Secretary, and is responsible to the Board under the terms of the Administration Agreement. The Administrator is also responsible for ensuring compliance with Guernsey Company Law, London Stock Exchange listing requirements, the regulatory requirements of the Guernsey Financial Services Commission, anti-money laundering regulations and observation of the Reserved Powers of the Board and in this respect the Board receives detailed quarterly reports.

The Directors have access to the advice and services of the Company Secretary, who is responsible to the Board for ensuring that Board procedures are followed and that it adheres to applicable legislation, rules and regulations under Guernsey law, the Guernsey Financial Services Commission and the London Stock Exchange.

Relationship with the Investment Adviser

The Directors are responsible for the overall management and direction of the affairs of the Company. Under the Investment Advisory Agreement ('IAA'), Amber Fund Management Limited (a member of the Amber Infrastructure Group Holdings Limited group of companies) acts as Investment Adviser to the Company to review and monitor investments and to advise the Company in relation to strategic management of the investment portfolio.

Contractual arrangements and fees

The IAA allows for the provision of investment advisory and certain other financial services to the Board. In return, the Investment Adviser receives fees based on the Gross Asset Value ('GAV') and composition of the investment portfolio as well as a contribution to expenses. The annual base fees are detailed in note 17 to the financial statements and calculated at the following rates:

- 1.2% for that part of the portfolio that bears construction risk (i.e. the asset has not fully completed all construction stages including any relevant defects period and achieved certification by the relevant counterparty and senior lender)

- For fully operational assets:

> 1.2% for the first £750 million of GAV of the portfolio

> 1.0% for that part of the portfolio that exceeds £750 million in GAV but is less than £1.5 billion

> 0.9% for that part of the portfolio that exceeds £1.5 billion in GAV

In addition, GAV excludes uncommitted cash from capital raisings.

The Company has a long-standing relationship with the Investment Adviser and the Board believes that the continuation of this relationship, on a long-term basis, is in the Company's best interest. The current Investment Advisory Agreement ('IAA') was renegotiated in 2013 and has a ten-year fixed term with a five-year notice period. The Board considers that, given the long-term nature of the Company's investments, its responsibility for the detailed day-to-day delivery of management services and relationships with public sector clients, it is important that it benefits from the continuity of service provided by a long-term advisory partner. To ensure that shareholder interests are protected, termination provisions have been put in place to ensure that, in the event of poor investment performance, the Company has the flexibility to remove the Investment Adviser.

The Investment Adviser is also entitled to receive an asset origination fee of 1.5% of the value of new investments acquired by the Group. It should be noted that, generally, the Investment Adviser bears the risk of abortive transaction origination costs and that this fee has been waived or reduced by agreement in the past where it has been deemed appropriate to do so for the transaction in question.

Cash receipts from capital raisings and tap issuances are not included in the GAV for the purposes of the calculation of base fees until such receipts are invested for the first time.

Making New Investments

As outlined above, the Investment Committee, comprised of independent Directors of the Company, make investment decisions with respect to new investments after reviewing recommendations made by the Company's Investment Adviser. The Investment Adviser has a detailed set of procedures and approval processes in relation to the recommendation of new investments to the Board.

It is expected that further investments will be sourced by the Investment Adviser. It is likely that some of these investments will have been originated and developed by, and in certain cases may be acquired from, other members of the Investment Adviser's Group. Where that is the case the conflicts management process summarised below is followed.

Managing Conflicts of Interest

The Company has established detailed procedures to deal with conflicts of interest that may arise on investments acquired from the Investment Adviser's Group, and manage conduct in respect of any such acquisitions. As previously mentioned, the Company's Board has a majority of independent members and a Chairman who is independent of the Investment Adviser. Each Director is required to inform the Board of any potential or actual conflicts of interest prior to Board discussions.

The potential conflicts of interest that may arise include when an Amber entity is an existing investor in the target entity while an associated company, AFML, acts on the 'buyside' as Investment Adviser to the Company. The Investment Advisory Agreement contains procedures with the intention of ensuring that the terms on which the vendors of such assets dispose of their assets are fair and reasonable to the vendors; and on the 'buyside' the Company as Investment Adviser must be satisfied as to the appropriateness of the terms for and the price of the acquisition.

Key features of these procedures include:

- The creation of separate committees representing the interests of the vendors on the one hand (the 'Sellside Committee') and the Company on the other (the 'Buyside Committee'), to ensure arm's length recommendation and approval processes. The membership of each Committee is restricted in such a way as to ensure its independence and to minimise conflicts of interest arising

- A requirement for the Buyside Committee to conduct and report to the Company on an independent due diligence process on the assets proposed to be acquired prior to making an offer

- A requirement for any offer made for the assets to be supported by advice on the fair market value for the transaction from an independent expert

- The establishment of 'information barriers' between the Buyside and Sellside Committees to ensure information is kept confidential to one or the other side

- The provision of a 'release letter' to each employee of the relevant associate of the Investment Adviser, who is a member of the Buyside and Sellside Committees. The release letter confirms that the employee shall be treated as not being bound by his/her duties as an employee to the extent that such duties conflict with any actions or decisions which are in the employee's reasonable opinion necessary for him/her to carry out as a member of the Buyside Committee or Sellside Committee

- Individuals with material direct or indirect economic interests in the relevant assets will not participate in Buyside Committee and Sellside Committee discussions regarding the relevant assets

- A requirement that the financial statements, policies and records of any such asset offered to the Company be compliant with the Company's accounting policies and procedures

The acquisition of all assets, including those from any associate of the Investment Advisers is considered and approved in advance by the Investment Committee. In considering any such acquisition, the Committee will, as it deems necessary, review and ask questions of the Buyside Committee of the Investment Adviser and the Group's other advisers and the acquisition will be approved by the Committee on the basis of this advice. The purpose of these procedures is to ensure that the terms upon which any investment is acquired from a member of the Amber group is on an arm's length basis.

Risk Management and Internal Controls

The Board is responsible for overall risk management with delegation provided to the Audit and Risk Committee. The system of risk management and internal control has been designed to manage, rather than eliminate, the risk of failure to meet the business objectives. Regard is given to the materiality of relevant risks and therefore the system of internal control cannot provide absolute assurance against material misstatement or loss.

This process is outlined in further detail in the Risk Report found on pages 31 to 40.

Relations with Shareholders

The Board welcomes shareholders' views and places great importance on communication with shareholders. It has responsibility for communication with the investor base and is directly involved in major communications and announcements.

The Board receives regular reports on the views of shareholders and the Chairman and other Directors, including the Chairman of the Remuneration and Nomination Committee, are available to meet shareholders as required.

In addition to more formal investor events, such as Results Presentations, the Investment Adviser conducts the day-to-day investor relations activities for the Company. It meets with major shareholders on a regular basis and reports to the Board on these meetings. During 2017, the Investment Adviser and members of the Board held formal meetings with over 70 individual shareholders in addition to day-to-day interaction, including calls and other forms of correspondence. In addition, major investors were approached as part of the external-facilitated Board evaluation process. The Company also has an active programme of sell side engagement and the Board is also informed on a regular basis of all relevant market commentary on the Company by the Investment Adviser, Administrator and the Company's Broker.

The Annual General Meeting ('AGM') of the Company provides a forum for shareholders to meet and discuss issues with the Directors and with the Investment Adviser of the Company. It is the Board's policy to publish the results of the voting at the AGM via RNS at the completion of the meeting.

To promote a clear understanding of the Company, its objectives and financial results, the Board aims to ensure that information relating to the Company is disclosed in a timely manner. During 2017 the Company significantly upgraded its website (www.internationalpublicpartnerships.com) enabling investors to easily find publicly disclosed documents including Annual Reports and RNS announcements, together with additional background information on its assets and corporate practice. Investors can register to receive notification (via email) of RNS announcements the Company issues. The Board encourages investors to utilise this useful online resource.

Any shareholder issues of concern including on corporate governance or strategy can be addressed in writing to the Company at its registered office address (see back cover).

AUDIT AND RISK COMMITTEE REPORT

The Audit and Risk Committee (the 'Committee' for the purposes of this report) is an essential part of the Company's governance framework. The Board has delegated oversight of the Company's financial reporting, internal controls, compliance and external audit to the Committee. An overview of the Committee's work during the year and details of how we have discharged our duties is set out below.

The terms of reference for the Committee, together with details of the standard business considered by the Committee, have been approved by the Board and are available on the Company's website.

Committee Meetings

Our Committee meetings during the year were attended by the Investment Adviser and Administrator by invitation. A representative of the Company's external Auditor, Ernst and Young LLP ('EY'), also attended those meetings considering financial reporting planning, the Annual Report and financial statements, and the half-yearly financial report.

All Committee members are considered to be appropriately experienced to fulfil their role, having significant, recent and relevant financial experience in line with the AIC Code. Biographies of the Committee members can be found on pages 46 to 47.

Committee Agenda

The Committee's agenda during the year included:

- Review of the Annual Report and financial statements and half-yearly financial report and matters raised by management and external auditors (including significant financial reporting judgements therein)

- Review of the appropriateness of the Company's accounting policies

- Consideration and challenge of the draft valuation of the Company's investments prepared by the Investment Adviser and recommendations made to the Board on the appropriateness of the valuation

- Review of the effectiveness of the Company's internal control systems, including specific focus on asset availability and tax policy reviews in the year

- Review of the Company's risk profile, specific risks and mitigation practices

- Review of the effectiveness, objectivity and independence of the external auditors, and the terms of engagement, cost effectiveness and the scope of the audit

- Approving the external auditor's plan for the current year end

- Review of the policy on the provision of non-audit services by the external auditor

- Review of the regulatory environment the Company operates within

Key activities considered during the year

The Committee undertook the following activities in discharging our responsibilities during the year:

Financial Reporting

We reviewed the Company's Annual Report and financial statements, the half-yearly financial report and interim management reports prior to approval by the Board and advised the Board with respect to meeting the Company's financial reporting obligations. We reviewed the Company's accounting policies and practices, including: approval of critical accounting policies; consideration of the appropriateness of significant judgements and estimates; and advising the Board as to its views on whether the Annual Report and financial statements, taken as a whole, was fair, balanced and understandable.

We considered the most significant accounting judgements exercised in preparing the financial statements continued to be: the application of investment entity amendments as required by IFRS 10 (Applying the Consolidation Exception); and the basis for determining the fair value of the Company's investments as detailed below.

Investment entity and service entities accounting considerations

A company that qualifies as an investment entity in accordance with IFRS 10 is required to prepare financial statements on an investment basis; carry underlying investments (including controlled, jointly controlled or entities over which it has significant influence) in its accounts at fair value.

Service entities that provide services in connection with the investment entity's activities but that are not themselves investment entities under IFRS 10 continue to be consolidated within the investment entity's group accounts rather than accounted for at fair value.

We considered reports from the Investment Adviser setting out the basis on which the Company continues to meet the investment entity definition and certain subsidiary entities continue to meet the service entity definition of IFRS 10 (but are not themselves investment entities), and agreed this with the Company's auditor. We accordingly recommended that the Board approve the financial statements on this basis (i.e. that investee entities are accounted for at fair value and service entities are consolidated). Further details on the application of investment entity amendments and service entity considerations are detailed in note 1 to the financial statements.

Fair Value of Investments

The Company's investments are typically in unlisted securities, including shares and debt, hence market prices for such investments are not typically readily available. Instead the Company uses a discounted cash flow methodology and benchmarks to market comparables to derive the Directors' valuation of investments.

This methodology requires a series of judgements to be made as explained in note 11 to the financial statements.

The valuation process and methodology were discussed with the Investment Adviser regularly during the year and with the Auditor as part of the year-end audit planning and interim review processes. We challenged the Investment Adviser on the year-end fair value of investments as part of our consideration of the audited statements.

During the period, we reviewed the Investment Adviser's quarterly valuation reports, reports on the performance of the underlying assets and the Investment Adviser's assessment of macroeconomic assumptions. The Investment Adviser confirmed that the valuation methodology has been applied consistently with prior years. We also reviewed and challenged the valuation assumptions (discount rates, interest rates, foreign exchange rates, inflation rates and tax rates).

The external auditor explained the results of its review of the valuations, including its assessment of management's underlying cash flow projections and assumptions; macroeconomic assumptions; and discount rate methodology and output. On the basis of its audit work the auditor confirmed no material adjustments were proposed.

The Committee concluded that a consistent valuation methodology has been applied throughout the year and any forecast assumptions applied were appropriate.

Revenue Recognition

We have considered the risk of inappropriate accounting recognition of revenue to be a relatively low risk given the nature of the Company's activities.

Internal Controls over Financial Reporting

The Committee satisfied itself that the system of internal control and compliance over financial reporting was effective, through consideration of regular reports from the Investment Adviser and Administrator.

We also considered the adequacy of resources, qualifications and experience of staff in the finance function and had direct access and independent discussions with the external auditor during the course of the year.

Fair, Balanced and Understandable

Following extensive dialogue with management, we reviewed the Company's 2017 Annual Report and financial statements. We advised the Board that, in our opinion, the Annual Report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary to assess the Company's performance, operating model and strategy.

CONTROLS REVIEW

Asset Availability Review

In the year an external review of the Company's controls and processes relating to asset availability reporting was concluded. Asset availability reporting was considered an important non-financial KPI for a number of our investments, as there are consequential implications on returns if such assets become unavailable for public use. The review concluded the Company had sufficient controls in operation for the accurate capture and reporting of such information, with no weaknesses or control deficiencies identified.

Tax compliance and reporting

Companies are increasingly required to manage tax risk by integrating greater process and controls to meet new and more stringent reporting requirements, increased regulatory demands, and audit activity. A critical aspect is the Company's ability to streamline and strategically manage the end-to-end core processes underlying all tax activities with a focus on managing risk. It was therefore agreed that the next annual controls and process review will focus on the Company's tax policies and procedures.

Viability Assessment 

We carried out a robust assessment of the principal risks facing the Company with a view to identify risks which may impact the Company's viability. Detailed stress tests, including impact assessment on the Company's forecasted cash flows, showed significant resilience in the Company's ability to remain viable. The results of the risk assessment process are detailed in the Viability Statement on page 40.

External Auditor

We recommended to the Board the scope and terms of engagement of the external auditor. We considered auditor objectivity and independence, audit tenure and audit tendering and auditor effectiveness as detailed below.

Objectivity and independence

In assessing the objectivity of the auditor, we considered the terms under which the external auditor may be appointed to perform non-audit services. Work expected to be completed by an external auditor includes formal reporting for shareholders, regulatory assurance reports and work in connection with new investments.

Under the policy there is a specific list of services for which the external auditor cannot be engaged, as we consider that the provision of such services would impact its independence. Any potential services to be provided by the external auditor with an expected value of up to £50,000, and which are not prohibited by the policy, must be pre-approved by the Chairman of the Committee; any services above this value require pre-approval by the full Audit and Risk Committee. Non-audit fees represented 31.3% of total audit fees.

EY undertook its standard independence and objectivity procedures in relation to non-audit engagements and confirmed compliance with these to the Committee. Further details on the amounts of non-audit fees paid to EY are set out in note 7 to the financial statements. These were reported to us and were not considered to be a significant risk impacting the objectivity and independence of EY external Auditors.

Audit Tendering and tenure

The Committee considers the reappointment of the external auditor, including rotation of the audit partner. The external auditor is required to rotate the audit partner responsible for the Group audit every five years and the year to 31 December 2017 was the second year for the current lead audit partner. We continue to challenge EY on its process for transitioning other key current audit team members reaching the end of their rotation terms and continue to be actively engaged in the developments in this area and in ensuring an appropriate level of continuity of the team.

In October 2010, the Company put out to full tender the audits of the Group and its controlled investee entities. In addition to complying with good practice and satisfying new corporate governance requirements, the tender enabled the Board to benchmark competitiveness and value for money. Following the tender, EY was appointed auditor of the Company. In line with the new auditor rotation requirements for listed companies, the next full tender is expected to commence by 2020.

Since 2010, a number of investee level audits have been awarded to alternative audit firms, notably KPMG.

Review of Auditor effectiveness

As part of our annual review of the objectivity and effectiveness of the audit, the Committee conducted an in-depth review in 2017 of the auditor's performance and we were satisfied in this regard. This was facilitated through the completion of a questionnaire by relevant stakeholders (including members of the Committee and senior members of the Investment Adviser's finance team), review and challenge of the audit plan for consistency with the Company's financial statement risks, and review of the audit findings report. There were no significant matters arising which require the service to be immediately retendered.

In accordance with the relevant Corporate Governance Code principles, the Committee will continue to review the effectiveness of the external auditor and seek to retender in line with best practice.

Review of Auditor's remuneration

The Committee carried out a review of the proposed audit fees for 2017. There was an increase at Group level, driven by general cost inflation. We consider that the audit fees for 2017 present good value for money for the Company's shareholders.

Regulatory and Tax Environment

We received regular reports from the Administrator and Investment Adviser on regulation and regulatory developments.

Taxation

We continue to monitor tax regulation and tax policy developments, in particular developments around the OECD-led BEPS initiative, across our geographies. During the year the U.K. and Belgium enacted substantial pieces of new tax legislation, containing provisions relating to corporate interest deductibility and group losses carried forward. These rules and the number of potential elections available in the U.K. make the assessment of impact of the rules complex and subject to a degree of judgement. Whilst no material net adverse valuation impacts have currently been noted, there can be no guarantee that responses to the OECD proposals by other governments or changes in approach to these rules as a consequences of changes in guidance or recognised industry practice will not have a negative impact on the Company's performance.

Common Reporting Standard

All qualifying entities are now required to comply with the requirements of the Common Reporting Standard ('CRS'). The Company through its registrar (Capita) has implemented appropriate systems and procedures for compliance with these regulations. CRS reporting for the end of 2017 is on course to be submitted by June 2018.

Tax Strategy reporting

Legislation requiring large businesses to publish a Tax Strategy document became effective from 1 January 2017. Whilst it is not clear the legislation should directly capture the Company, the Company has chosen to publish its Tax Strategy document for the purposes of transparency and good governance and will continue to monitor compliance going forward.

Retail distribution of unregulated collective investment schemes

Financial Conduct Authority ('FCA') rules came into force on 1 January 2014 relating to the restrictions on the retail distribution of unregulated collective investment schemes and close substitutes came into effect. The Company continues to confirm its shares qualify as an 'excluded security' under these rules and will therefore be excluded from the FCA's restrictions, which apply to non-mainstream pooled investment products. As such, the Company's shares can continue to be recommended by independent financial advisers ('IFAs') to ordinary retail investors in accordance with the FCA's rules.

The Company is advised that the basis of being excluded from these restrictions is principally due to the Company conducting its affairs in such a manner that it would have qualified for approval by HMRC as an investment that had been resident in the U.K. in its previous accounting periods. The Company intends to conduct its affairs so that this remains the case for the foreseeable future.

Focus for 2018

Alongside routine matters, this year the Committee will progress the independent review of the Company's tax policies and procedures, as well as continue to monitor any political, tax and regulatory developments in its applicable geographies.

John Whittle

Chairman, Audit and Risk Committee

20 March 2018

DIRECTORS' REPORT

Introduction

The Directors present their Annual Report on the performance of the Company and Group for the year ended 31 December 2017.

Principal Activity

The Company is a limited liability, Guernsey-incorporated, authorised closed-ended investment company under Companies (Guernsey) Law, 2008. The Company's shares have a premium listing on the Official List of the U.K. Listing Authority and are traded on the main market of the London Stock Exchange.

The Chairman's Letter and Strategic Report contain a review of the business during the year. A Corporate Governance Report is provided on pages 48 to 57.

Directors' Indemnities

The Company has made qualifying third-party indemnity provisions for the benefit of its Directors, which were made during the period and remain in force at the date of this report.

Substantial Shareholdings

As at 31 December 2017, the Company had been notified, in accordance with Chapter five of the Disclosure and Transparency Rules, of the following interests in 5% or more of the Company's Ordinary Shares to which voting rights are attached:

As at 20 March 2018, being the most current information available, the following additional notices had been received.

Directors' Authority to Buy Back Shares and Treasury Shares

The Company did not purchase any shares for treasury or cancellation during the year.

The current authority of the Company to make market purchases of up to 14.99% of the issued Ordinary Share Capital expires on 7 June 2017. The Company will seek to renew such authority at the Annual General Meeting to take place on 11 June 2018. Any buyback of Ordinary Shares, will be made subject to Guernsey law and within any guidelines established from time to time by the Board and the making and timing of any buy backs will be at the absolute discretion of the Board.

Purchases of Ordinary Shares will only be made through the market at prices below the prevailing NAV of the Ordinary Shares (as last calculated) where the Directors believe such purchases will enhance shareholder value. Such purchases will also only be made in accordance with the Listing Rules of the U.K. Listing Authority, which provide that the price to be paid must not be more than 5% above the average of the middle market quotations for the Ordinary Shares for the five business days before the shares are purchased (unless previously advised to shareholders). No such shares were bought back by the Company in the period from 2 June 2016. Up to 10% of the Company's shares may be held as treasury shares.

Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report on pages 8 to 40. The financial position of the Group, its cash flows, liquidity position and borrowing are described in the financial statements from page 71.

The Directors have considered significant areas of possible financial risk and comprehensive financial forecasts have been prepared and submitted to the Board for review. The Directors have, based on the information contained in these forecasts and the assessment of the committed banking facilities in place, formed a judgement, at the time of approving the financial statements, that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future.

After consideration, the Directors are satisfied that it is appropriate to adopt the going concern basis in preparing the financial statements.

Director Declaration

Each person who is a Director at the date of approval of this Annual Report confirms that:

So far as the Director is aware, there is no relevant audit information of which the Company's external auditor is unaware.

Each Director has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of the Companies (Guernsey) Law, 2008.

By order of the Board

DIRECTORS' RESPONSIBILITIES STATEMENT

The Directors are responsible for preparing financial statements for each year which give a true and fair view, in accordance with applicable Guernsey law and International Financial Reporting Standards ('IFRS') as adopted by the European Union, of the state of affairs of the Group and of the profit or loss of the Group for that year. In preparing those financial statements, the Directors are required to:

- Select suitable accounting policies and then apply them consistently

- Make judgements and estimates that are reasonable

- State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements

- Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the Group and to 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 Group and hence for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law and regulations.

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 considerations, of these matters and, accordingly, the auditor accepts no responsibility for any change that may have occurred to the financial statements since they were initially presented on the website. Legislation in Guernsey governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Responsibility Statement of the Directors' in respect of the Consolidated Annual Report and Financial Statements

The Directors each confirm to the best of their knowledge that:

- The consolidated financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and net return of Group

- The Annual Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties faced.

Directors' Statement under the U.K. Corporate Governance Code

The Board, as advised by the Audit and Risk Committee, has considered the Annual Report and financial statements and, taken as a whole, consider it to be fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

By order of the Board

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED

Opinion

In our opinion:

- International Public Partnerships Limited (the 'Group') financial statements give a true and fair view of the state of the Group's affairs as at 31 December 2017 and of its profit for the year then ended;

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

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

What we have audited

We have audited the financial statements of International Public Partnerships Limited ('the Group') which comprise:

- Consolidated statement of comprehensive income for the year ended 31 December 2017;

- Consolidated balance sheet as at 31 December 2017;

- Consolidated statement of changes in equity for the year ended 31 December 2017;

- Consolidated cash flow statement for the year ended 31 December 2017; and

- Related notes 1 to 21 to the consolidated financial statements, including a summary of significant accounting policies.

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.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report below. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

USE OF OUR REPORT

This report is made solely to the Group'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 Group'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 Group and the Group's members as a body, for our audit work, for this report, or for the opinions we have formed.

CONCLUSIONS RELATING TO PRINCIPAL RISKS, GOING CONCERN AND VIABILITY STATEMENT

We have nothing to report in respect of the following information in the Annual Report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to:

- the disclosures in the annual report set out on page 31 that describe the principal risks and explain how they are being managed or mitigated;

- the Directors' confirmation set out on page 32 in the annual report that they have carried out a robust assessment of the principal risks facing the entity, including those that would threaten its business model, future performance, solvency or liquidity;

- the Directors' statement set out on page 64 in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the entity's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;

- whether the Directors' statement in relation to going concern required under the Listing Rules is materially inconsistent with our knowledge obtained in the audit; or

- the Directors' explanation set out on page 40 in the annual report as to how they have assessed the prospects of the entity, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the entity will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Overview of our audit approach

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

AN OVERVIEW OF THE SCOPE OF OUR AUDIT

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the Group. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of the Group and effectiveness of controls, including controls and changes in the business environment when assessing the level of work to be performed. 

The Group consists of the Company consolidated service entities as explained in note 2 of the financial statements. All audit work performed for the purposes of the audit was undertake by the Group audit team.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.

Materiality

Materiality is the magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Group to be £20.4 million (2016: £16 million), which is 1% (2016: 1%) of equity. We believe that total equity provides us with an appropriate basis for audit materiality as net asset value is a key published performance measure and is a key metric used by management in assessing and reporting on the overall performance of the Group.

During the course of our audit, we reassessed initial materiality and noted that total equity had increased from approx. £1,953 million at 30 June 2017 to £2,038 million as at 31 December 2017 mainly due to capital raise in December 2017. This resulted in a higher materiality of £20.4 million compared to £19.5 million that was originally determined at the audit planning stage.

A lower materiality of £2.8 million (2016: £2.2 million) has been applied to interest income, Dividend income and related party fees to be responsive to the expectations of the users of the financial statements with regard to misstatements in these balances of a lesser amount than the Group materiality.

Performance materiality

'Performance materiality' is the application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. On the basis of our risk assessments, together with our assessment of the Group's overall control environment, our judgement was that overall performance materiality (i.e., our tolerance for misstatement in an individual account or balance) for the Group should be 75% of materiality, namely £15.3 million (2016: 50% of materiality, namely £8 million). We have set performance materiality based on our understanding of the entity and the past history of no misstatements (corrected and uncorrected).

Reporting threshold

Reporting threshold is an amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £1 million (2016: £0.8 million), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

OTHER INFORMATION

The other information comprises the information included in the Annual Report, other than the financial statements and our auditor's report thereon. The Directors are responsible for the other information.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:

- Fair, balanced and understandable statement set out on page 59 by the Directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or

- Audit Committee reporting set out on page 58; or

- Directors' statement of compliance with the UK Corporate Governance Code set out on page 48 the parts of the directors' statement required under the Listing Rules relating to the Company's compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R (2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

We have nothing to report in respect of the following matters in relation to which the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

- proper accounting records have not been kept by the Company, or proper 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 Company's accounting records and returns; or

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

responsibilities of directors

As explained more fully in the Directors' responsibilities statement set out on page 64, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Richard Le Tissier

for and on behalf of Ernst & Young LLP,

Guernsey

Channel Islands

20 March 2018

Notes:

1. The maintenance and integrity of the International Public Partnerships Limited web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2017

All results are from continuing operations in the year.

All income is attributable to the equity holders of the parent. There are no non-controlling interests within the Consolidated Group.

There are no other Comprehensive Income items in the current year (2016: nil). The profit for the year represents the Total Comprehensive Income for the year.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 DECEMBER 2017

YEAR ENDED 31 DECEMBER 2016

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2017