3i Infrastructure PLC - Audit Report / Information 2022

Annual report

and accounts 2022

Overview

1 Welcome

2 Performance highlights

3 At a glance

4 Chair’s statement

7 Our approach

10 Energy transition

12 Digital infrastructure

14 Our business model

18 Our strategy

19 Our objectives and KPIs

Investment Manager’s review

21 Review from the Managing Partner

24 New investments

26 Our portfolio

29 Movements in portfolio value

Financial review and Risk report

57 Financial review

67 Risk report

81 Directors’ duties

Accounts and other information

126 Independent auditor’s report

to the members of 3i Infrastructure plc

138 Statement of comprehensive income

139 Statement of changes in equity

140 Balance sheet

142 Cash flow statement

144 Reconciliation of net cash flow

to movement in net debt

145 Significant accounting policies

155 Notes to the accounts

183 Investment policy (unaudited)

184 Portfolio valuation methodology (unaudited)

186 Information for shareholders

187 Glossary

Review of investments

andSustainability report

35 ESVAGT

36 Infinis

37 TCR

38 Tampnet

39 Joulz

40 Ionisos

41 Oystercatcher

42 DNS:NET

43 SRL Traffic Systems

44 Valorem

45 Attero

46 Sustainability report

Governance

84 Introduction to Governance

87 Leadership and purpose

101 Division of responsibilities

105 Composition, succession and evaluation

110 Audit, Risk and Internal Control

117 Relationship with Investment Manager

119 Remuneration

120 Directors’ statement

This Annual report and accounts contains Alternative

Performance Measures (‘APMs’), which are financial

measures not defined in International Financial

Reporting Standards (‘IFRS’). These include Total return

on opening net asset value (‘NAV’), NAV per share,

Total income and non-income cash, Investment value

including commitments and Total portfolio return

percentage. The definition of each of these measures

isshown on page 66. The Total return for the year shown

in the Performance highlights is the total comprehensive

income for the year under IFRS. The Total return on

opening NAV is a Key Performance Indicator (‘KPI’).

In previous years, in addition to the APMs, the Annual

report and accounts showed portfolio information

including cash and other net assets held within

intermediate unconsolidated holding companies.

A reconciliation of this portfolio information to the

information presented in the Financial statements

was provided. Following the partial divestment of the

Oystercatcher investment and a restructure of some

investments previously held through Luxembourg-based

subsidiaries but now held directly by the Company,

wehave aligned the basis of reporting in this section

tothe Financial statements and will no longer report

onan adjusted basis.

The Directors’ statement on pages 120 to 124 for

3i Infrastructure plc (‘3i Infrastructure’, ‘3iN’ or the

‘Company’) for the year to 31 March 2022 has been

drawn up in accordance with applicable English law

and Jersey law and the liabilities of the Company in

connection with this statement shall be subject to

thelimitations and restrictions provided by such law.

This Annual report and accounts contains statements

about the future outlook for 3i Infrastructure.

Although the Directors believe their expectations are

based on reasonable assumptions, any statements

about the future outlook may be influenced by factors

that could cause actual outcomes and results to be

materially different.

The Company is managed by 3i Investments plc

(the‘Investment Manager’ or ’3i’). The Strategic report

comprises pages 1 to 82.

Cover image: SRL Traffic Systems

Page 43

Inside this report

Review from

the Managing

Partner

Financial

review

Review of

investments

3iN Board

values

Legacy

Accountability

Integrity

Objectivity

Chair’s

statement

13i Infrastructure plc Annual report and accounts 2022

Our new digital approach

Welcome to the 2022 Annual report and accounts of 3i Infrastructure plc.

This year, we have taken a digital-first approach to our report. We want

this new structure to make the information that we publish more

accessible to our shareholders and other stakeholders than reading

weighty printed document. We will continue to print copies of the

report

for users who prefer that format, but we have found in recent

years

that fewer printed copies have been required. Reducing the

number of printed copies reduces our carbon footprint, and our printing

and posting costs. We aim to evolve and improve our report each year

and welcome feedback from stakeholders on the structure and content.

We want to

make information

more accessible

to our stakeholders.”

Richard Laing

Chair, 3i Infrastructure plc

Overview

Watch video online

www.3i-infrastructure.com

Our purpose is to invest responsibly

in infrastructure, deliveringlong-term

sustainable returns to shareholders

and having a positive impact

on our portfolio companies and

theirstakeholders.

Positive impactSustainable returnsInvest responsibly

Welcome

Performance highlights

Consistent delivery against our target

return of 8% to 10% per annum.

Total return for the year

£404m

March 2021: £206m

2023 Target dividend per share

11.15p

+6.7%

Total return on opening NAV

2018

2019

2020

2021

2022

28.6%

15.4%

11.4%

9.2%

17.2%

NAV

£2,704m

+13.1%

2018

2019

2020

2021

2022

£1,710m

£1,902m

£2,269m

£2,390m

£2,704m

Full year dividend per share

10.45p

+6.6%

2018

2019

2020

2021

2022

7.85p+

8.65p

9.20p

9.80p

10.45p

NAV per share

303.3p

+13.1%

2018

2019

2020

2021

2022

211.0p

234.7p

254.5p

268.1p

303.3p

+ Special dividend in 2018: 41.40p

Overview

3i Infrastructure plc Annual report and accounts 2022 3

Overview

At a glance

A well-diversified

investment portfolio.

Assets

Portfolio value including commitments*

£3.2bn

2021: £2.0bn

Read more in Review of investments

Pages 35 to 45

Portfolio value by investment including commitments*

17%

10%

Megatrends**

Energy transition 44%

Digitalisation 23%

Globalisation 16%

Renewing social

infrastructure 9%

Demographic change 8%

** Refer to page 8 for details

on megatrends

* All charts at 31 March 2022 and include commitment to invest

in GCX announced on 17 November 2021 (see page 25).

This has been another excellent year,

and

we have confidence in the future

our Company and portfolio.”

Richard Laing

Chair, 3i Infrastructure plc

Chair’s statement

3i Infrastructure continues to meet its

strategicobjectives and deliver its purpose.

The Company aims to provide shareholders

with a total return of 8% to 10% per annum,

to be achieved over the medium term.

I am delighted to report that we achieved

a return of 17.2% in the year ended

31 March 2022, well ahead of our target

and demonstrating the attractiveness of

our portfolio. This is the eighth consecutive

yearthat we have met or exceeded our

return target; and we have increased

thedividend per share in every year

oftheCompany’s existence.

Our portfolio companies have continued

to demonstrate resilience throughout the

Covid-19 pandemic, keeping essential

infrastructure operating and supporting

customers, suppliers, employees and

their communities. None of our portfolio

companies has direct exposure to Russia

or Ukraine.

We have made good progress against

our sustainability objectives and are

pleased with the level of engagement and

enthusiasm that we see across our portfolio

companies. Our report this year includes

information on greenhouse gas (‘GHG’)

emissions for each company, which can be

found in

theSustainability report.

I am grateful to shareholders and the Board

of Directors for their support during the

year, as well as to the Investment Manager’s

team for their hard work in a year when

office life and business travel were again

restricted. We made good use of virtual

means of communication, as well as

meeting in person where possible.

Our purpose

Our purpose, as set out on page 1,

istoinvest responsibly in infrastructure,

delivering long-term sustainable returns

to shareholders and having a positive

impact on our portfolio companies and

their stakeholders. The key elements

ofour purpose are used to structure

our

Strategic report.

Sustainability iscentral to our purpose

and we create value for all stakeholders

by investing in, developing and actively

managing essential infrastructure

which responds to public needs, fosters

sustainable growth and improves the lives

of communities. We invest across a broad

range of infrastructure investment themes,

and are highlighting two in particular in this

report: energy transition and digitalisation.

As the countries in which we invest

increase their focus on climate change,

we see continued opportunities to invest

in energy transition, putting our capital

to work to generate sustainable returns

and to have a positive impact through

mitigating climate change. Similarly,

increasing demand for digital connectivity

brings opportunities to invest in building

the underlying infrastructure required to

meetthat demand.

Performance

The Company generated a total return

of£404 million in the year ended

31 March2022, or 17.2% on opening NAV,

ahead of our target of 8% to 10% per annum

to be achieved over the medium term.

Overview

3i Infrastructure plc Annual report and accounts 2022 5

Overview

20222007

In the 15 years since the initial

public offering (‘IPO’) the Company

has delivered an annualised total

shareholder return of

13.1%

per annum

Chair’s statement continued

The NAV per share increased to

303.3pence. We delivered a Total

Shareholder Return (‘TSR’) of 20.9%

inthe year (FTSE 250: 0.5%). Since IPO,

the Company’s annualised TSR is 13.1%,

comparing favourably with the broader

market (FTSE 250: 7.1% annualised over

thesame period).

Investment activity

This was a busy year for new investments.

In June 2021, we completed the acquisition

of a 60% stake in DNS:NET for £157 million.

DNS:NET is a leading independent

telecommunications provider in Germany.

In November 2021, we agreed to invest

c.$512 million to acquire 100% of Global

Cloud Xchange (‘GCX’). GCX is a leading

global data communications service

provider. Additional acquisition debt

was raised in March 2022, reducing

the Company’s equity commitment

toc.£300 million. The transaction is

expected to complete in summer 2022.

In December 2021, we invested £191 million,

net of a subsequent debt raise, in SRL

Traffic Systems (‘SRL’). SRL is the market

leading traffic management equipment

rental companyin the UK.

We bought out our co-investor,

AMPCapital, purchasing their stake in

ESVAGT for £258 million in February 2022.

We have continued to support growth in

our portfolio companies with an aggregate

£71 million investment into DNS:NET,

Valorem, ESVAGT and Joulz to fund

further growth.

We completed the sale of Oystercatcher’s

four European terminals in October 2021.

This resulted in a distribution of €55 million

to the Company after repaying all

of Oystercatcher’s debt facilities.

Oystercatcher retains its holding of a

45%stake in Oiltanking Singapore. At the

end of the financial year, in March 2022,

we agreed to sell our European Projects

portfolio to 3i European Operational

Projects Fund (‘3i EOPF’) for £103 million.

This transaction is expected to reach

completion by June 2022.

Dividend

Following the payment of the interim

dividend of 5.225 pence per share in

January 2022, the Board is recommending

a final dividend for the year of 5.225 pence

per share, meeting our target for the year

of 10.45 pence per share, 6.6% above

last year’s total dividend. We expect the

final dividend to be paid on 11 July 2022.

Consistent with our progressive dividend

policy, we are announcing a total dividend

target for the year ending 31 March 2023

of 11.15pence per share, representing an

increase of6.7%.

Changes to the Investment

Manager’s team

On 31 March 2022, the Investment Manager

announced that Phil White is stepping down

from his role as Managing Partner and

Headof Infrastructure, 3i Investments plc,

with effect from 1 July 2022. Scott Moseley

and Bernardo Sottomayor will be appointed

as Co-Heads of European Infrastructure

and will take on Phil’s role in relation to

the Company.

Phil has contributed enormously to the

Company’s success over many years.

During his eight-year tenure as Managing

Partner, the Company’s returns have

been consistently ahead of the FTSE 250

benchmark and, under his leadership, the

capabilities of the management team have

grown considerably. We have appreciated

Phil’s experience, wisdom and commitment

and are extremely grateful for all that he has

done for the Company.

We note that Phil will continue with the

Investment Manager on a part-time basis

and will remain a member of the Investment

Committee. We welcome the appointment

of Scott and Bernardo, knowing them well

and having worked with them over many

years. The Board is confident that under

their leadership the team will continue

to provide excellent management of

the Company.

Corporate governance

andCompany domicile

The Company’s Annual General Meeting

(‘AGM’) was held on 8 July 2021 as a purely

functional meeting only conducting the

formal business due to Government

guidance and continued restrictions

relatedto the Covid-19 pandemic

inplaceatthe time.

All resolutions were approved by

shareholders, including the re-election of

the existing Directors. I was pleased with

the high level of shareholder engagement

via proxy voting at that meeting. We also

held an interactive online shareholder

presentation two weeks before the AGM

which enabled shareholders to submit

questions for Directors to answer.

This year’s AGM will be held on 7 July 2022.

Further details are provided in the Notice

of Meeting and on the Company’s website,

www.3i-infrastructure.com. We very much

look forward to seeing shareholders in

person again at this year’s AGM.

In 2021, the UK government consulted

on proposals to implement a simplified

corporate re-domiciliation regime

that would allow overseas companies

tobecome UK domiciled. The Company

responded supporting these proposals.

If implemented, the Company would be

likely to take advantage of this route to

become a UK company. There would

no change in the Company’s status

anapproved UK investment trust.

Directors’ duties

The Directors have a duty to act honestly

and in good faith with a view to the

best interests of the Company and to

exercise the care, diligence and skill that a

reasonably prudent person would exercise

in comparable circumstances.

In accordance with the AIC Code of

Corporate Governance 2019 (the ‘AIC

Code’), the Board does this through

understanding the views of the Company’s

key stakeholders and carefully considering

how their interests and the matters set

out in section 172 Companies Act 2006 of

England and Wales have been considered

in Board discussions and decision making.

More detail can be found in the Directors’

duties and Section 172 Statement sections

later in this document.

Outlook

The Company has remained disciplined

in its investment approach, and has

succeeded in making a number of new

investments during the year. Our portfolio

consists of defensive businesses providing

essential services to their customers and the

communities they serve, often benefitting

from long-term sustainable trends.

We remain confident in our business model.

As our Company has grown, we have

increased the size of the investments we

can hold in our portfolio and the funding

options we have available to us. We are

well-placed to take advantage of new

investment opportunities and to continue to

support and grow our portfolio companies.

Richard Laing

Chair, 3i Infrastructure plc

9 May 2022

Chair’s statement continued

Overview

3i Infrastructure plc Annual report and accounts 2022 7

Overview

Supporting Joulz to evolve

into an integrated energy

transition solutions provider

– with solar, battery and

EVcharging technologies, and

Infinis to diversify its renewable

platform into solar power and

battery storage

Providing management

teams with support

and access to a wide

network of advisers

andindustry experts

Working with portfolio

companies to develop plans

for reducing greenhouse

gas emissions

Supporting ESVAGT in its

transition to servicing the

offshore wind sector

Investing in DNS:NET and

GCX to increase digital

connectivity both locally

and internationally

Supporting TCR in

itscontract win with

KLMRoyal Dutch Airlines

to replace a diesel fleet of

ground support equipment

(‘GSE’) with a new

electrical fleet

Encouraging each portfolio

company to include in its

sustainability strategy

afocus on its employees

and local communities

Our approach

We invest responsibly

and have a positiveimpact

Responsible investing

We believe that a responsible approach to

investment will add value to our portfolio

and that the effective assessment of

Environmental, Social and Governance (‘ESG’)

risks and opportunities has a positive effect

on the value of our investee companies.

Since 2011, the Investment Manager has

been a signatory to the UN Principles for

Responsible Investment and has embedded

a clear and comprehensive Responsible

Investment policy into its investment and

asset management processes. This policy

sets out the businesses in which the

Company will not invest, as well as minimum

standards in relation to ESG matters which

we expect new portfolio companies to

meet, or to commit to meeting over a

reasonable time period. The policy applies

to all of our investments, irrespective

oftheir country or sector.

Our influence

We use our influence as owners and active

managers to ensure that our investee

companies are run responsibly and

that they have a positive impact on the

environment and onthe communities

which they operate.

This includes supporting and empowering

management teams to develop business

strategies that deliver value whilst

mitigating adverse environmental and

social impacts. We create a culture where

there is an ambition to improve our

businesses and where it is known that we

value management teams spending time

and resources on sustainability initiatives.

We also seek to manage all material ESG

risks and opportunities during the period

of the Company’s investment. This includes

enhancing portfolio companies’ corporate

governance and their board reporting.

We seek to invest in opportunities that,

where appropriate, will develop solutions to

sustainability challenges. We make a limited

number of investments each year, allowing

us to be very selective inour approach to

new investment.

Invest

responsibly

Sustainable

returns

Our purpose

Positive

impact

Positive impact

Examples of where we are

makingapositive impact

on our portfolio companies

and their stakeholders:

RCF

Sustainability-linked revolving credit facility (‘RCF’)

During the year, we refinanced the Company’s

revolving credit facility as a sustainability-linked RCF.

The new facility includes stretching targets across

ESG themes aligned withour purpose.

Our approach continued

The infrastructure market

Competitive landscape

Competition for infrastructure assets

remained high with considerable capital

available in the market leading to another

record year of infrastructure assets under

management. This year has seen the

launch of several new UK listed and private

funds targeting economic infrastructure

investment opportunities. This includes

a number of funds with narrow mandates

focused on specific sub-sectors of the

infrastructure market.

Macro environment

Accelerating trends in the macro

environment have also increased investor

appetite for the infrastructure asset class.

This year has seen rising inflation followed

by expectations of rising interest rates

and a tightening of monetary policy from

central banks.

In this environment, demand for

infrastructure assets typically increases

since they can act as a hedge with revenues

directly or indirectly linked to inflation.

These trends, and our response tothem,

are discussed in more detail within the

Riskreport on page 75.

Megatrends

Megatrends are shaping the world around

us, influencing decision making and changing

the demands placed on our economy and

services. Identifying the potential for change

is a key driver of our investment decision

making – from the businesses, sectors and

countries we invest in, to the way we go

about finding opportunities.

As the Company’s portfolio continues to

grow, we seek to diversify our investments

across a range of megatrends that will

provide a supportive environment for

long-term sustainable business growth

and returns to shareholders. We also

continually assess underlying risk factors,

both when considering new investment

opportunities and in managing the existing

portfolio and its exposure to certain risks,

such as commodity prices and foreseeable

technological disruptions.

Global trade and transport

Automation,

digital operations and

increasing connectivity

Renewable energy

generation

Electrification/energy

transition

Shared resources

Waste treatment

and recycling

Demand for healthcare

Investment themeMegatrend Our portfolio

Energy transition –

low-carbon and circular economy

Digitalisation and

technology disruption

Demographic

change

Globalisation

Renewing

social

infrastructure

Urbanisation and smart cities

Overview

3i Infrastructure plc Annual report and accounts 2022 9

Overview

Our approach continued

A disciplined investor

Origination approach

We remain a disciplined investor and where

possible seek opportunities to transact

off-market, only participating in competitive

processes where we believe we have a

distinct advantage.

We have a large and focused investment

team, with a broad network and access

across the geographies in which we invest.

Our reputation, local presence and the

relationships we develop withmanagement

teams provide us with competitive

advantages and allowed us to be successful

in signing our new investments this year in

DNS:NET, SRL and GCX onattractive terms.

Asset management

Throughout the year we maintained a

significant focus on asset management

activities and investment stewardship.

As social restrictions due to Covid-19

began to ease, we ensured that portfolio

companies were able to continue delivering

essential services whilst focusing on the

health and safety of employees, and the

needs of customers and suppliers.

We have increased our focus on

sustainability. During the year we

worked with portfolio companies to

implement processes to collect and

analyse greenhouse gas emissions data

and are pleased to report the results in

our Sustainability report on page 55.

Portfolio companies are now developing

plans for reducing their emissions over time.

In the year we also performed a review

of each portfolio company’s cyber

security. Portfolio company management

teams are now implementing bespoke

recommendations to enhance their

cybersecurity positions.

Unique offering for shareholders

The Company remains unique, providing

shareholders with access to private

infrastructure assets across a variety of

megatrends, sectors and geographies.

£100m-£400m

Typical equity investment

9%-14%

Typical range of gross returns per annum

Whilst listed and private funds compete

against the Company for new investments,

other UK listed infrastructure funds

typically target smaller investments than

the Company or investments in operational

and greenfield Public Private Partnership

(‘PPP’) projects, which are outside our

investment focus.

Our primary investment focus remains

mid-market economic infrastructure

with controlling majority or significant

minority positions and strong governance

rights, whilst adhering to a set of core

investment characteristics and risk factors.

More information on our business model

can be found on page 14.

Market segmentation and investment focus

Operational

PPP projects

Large

core economic

infrastructure

Investment focus

Economic

infrastructure

Return

Risk

Examples

Energy transition

In conversation with Bernardo Sottomayor

onthe energy transition.

Q What is your approach to investing

inthe energy transition and why

doyou believe it will deliver good

risk-adjusted returns?

A The global effort towards

decarbonisation requires huge

investment in underlying energy

infrastructure. This strong demand

for capital and underlying growth

fundamentals create a clear opportunity

to invest and obtain superior returns in

these areas.

3iInfrastructure’s portfolio contains

a range of companies targeting this

theme in a number of different ways.

Q How are companies in the 3iN

portfolio helping to drive the

energytransition forward?

A Many of our portfolio companies

are supporting the energy transition

in some way. Some are doing that

directlyby generating renewable

energy like Infinis, Valorem and

Attero which have almost 900MW of

installed renewable capacity between

them, enough to power 60% of the

households in London.

Others are contributing indirectly

through adapting their business models

to more sustainable practices. Our

portfolio company ESVAGT is a good

example of this. ESVAGT provides

emergency rescue and response vessels

and when we acquired the company

in 2015 almost all of its business was

based around oil and gas. Under

our ownership we have encouraged

ESVAGT tofocus on vessels serving

theoffshore wind sector and today

thatis where themajority of its earnings

come from.

Q As an owner of multiple assets across

different sub-sectors, how are you

encouraging sustainability across

theportfolio as a whole?

A Sustainability is no longer a ‘nice

to have’. It’s an important part of

managing risk, maximising the potential

of an investment and doing the right

thing. All the companies in our portfolio

must have a sustainability strategy.

We encourage our companies to look

at sustainability holistically, focusing

on Social and Governance issues as

well as the Environment. For example,

at Tampnet we have worked with the

management team to further promote

improved health and wellbeing for

theiremployees.

We also facilitate the sharing of best

practice across our portfolio, and

arrange sessions on sustainability topics

with advisers and industry experts,

as many of our companies are facing

similar challenges, so they are able

tolearn from each other.

Q Do you see some infrastructure

sectors having more impact on

theenergy transition than others?

A We encourage all of our portfolio

companies to embrace the energy

transition regardless of sub-sector.

Every contribution matters.

For example, TCR, our airport ground

handling equipment business, actively

researches electrical alternatives to its

traditional diesel-powered equipment

in order to advise and fund its airport

and airline rental customers on this

transition, indirectly supporting their

GHG reduction commitments.

Another example is Joulz, whose

core activity is to install and upgrade

the electrical infrastructure for its

industrial and commercial customers,

enabling their own energy transition

efforts, which in many cases include

the installation of electric vehicle

chargingpoints, solar panels, batteries

and non-fossil fuel heating solutions.

We encourage all of our portfolio

companies to embrace the energy

transition regardless of sub-sector.”

Bernardo Sottomayor

Partner, Co-Head of Economic Infrastructure, Europe

Overview

3i Infrastructure plc Annual report and accounts 2022 11

Overview

Energy transition continued

Joulz is benefitting from the Dutch

government’s commitment to

decarbonise the economy. The energy

transition is further advanced than in

other European countries and leads

to an increased demand for Joulz’s

equipment and services.

Valorem is a leading developer of

renewable energy projects from

wind, solar and hydro. The company

continues to grow its asset base, now

owning 663MW of fully developed

renewable capacity.

Infinis collects environmentally

harmful landfill gas and converts it

into a consistent source of baseload

electricity for the local UK grid.

Infinis is using its platform to make new

investments in activities such as solar

power generation and battery storage.

Under our ownership, ESVAGT has

established a leading position as a

renewable offshore services provider

in the fast growing offshore wind

industry, both in Europe and the

US. ESVAGT’s vessels support the

efficient maintenance of offshore

windfarms, a key contribution to

the

energy transition.

Page 39

Page 44

Page 36

Page 35

In conversation with Scott Moseley

on digital infrastructure.

Q Which digitalisation trends have

beenaccelerated by Covid-19?

A We are all aware of the rapid shift to

a more dynamic way of working and

learning caused by the pandemic.

Many of us have also experienced

transformational growth in e-commerce

and online gaming. Perhaps less

immediately evident to our day-to-

day lives is the increasing emphasis

on industrial process digitalisation.

The consumption of data is growing

exponentially and the architecture of

network connectivity is proliferating

across increasingly diverse routes,

creating investment opportunity in

areas such as mobile communication,

data centres, and subsea and terrestrial

fibre-optic networks.

Q Can you tell us more about your

latest investments in the digital

connectivity space and your rationale

for investing?

A Our most recent investment is

a company called Global Cloud

Xchange, one of the largest private

subsea fibre

optic networks globally.

Its 66,000km of underwater cabling

provides high-bandwidth connectivity

on important routes between Europe,

Asia and North America. Its customers

range from hyper-scalers to content

streaming and telecom carriers,

and

itis well-positioned to provide bulk

transmission of data across continents

along high value routes.

At a more local level, another

recentinvestment is DNS:NET,

whichis rolling out fibre-to-the-

home connectivity in the Berlin area.

Wethink there areparticularly attractive

dynamicsinthe German market, where

fibre-to-the-home coverage at only 14%

is low compared to other markets and it

is really the only technology capable of

future-proofing demandrequirements.

We also own Tampnet, which operates

fibre networks in the North Sea and

Gulf of Mexico, providing offshore

connectivity and smart digitalisation

solutions to energy platforms and

windfarms to enable efficient utilisation

ofour offshore energy resources.

The diversification evident across these

investments helps our shareholders

benefit from digitalisation as a

megatrend in different ways.

Q What’s the outlook for digital

connectivity and what opportunities

are you seeing?

A Communications infrastructure is

arguably now as fundamental to the

prospects of our economies as energy

and water utilities.

Innovation across smart cities, industries

and devices is dependent upon data

transmission. Recent high profile

corporate activity, such as Microsoft’s

acquisition of video game maker

Activision Blizzard and Meta’s push

into the metaverse, provides further

evidence that network infrastructure

facilitating connectivity is going to be

increasingly vital.

We are confident that we are well

placed to take advantage of these

digital opportunities.

66,000km

GCX’s subsea fibre optic network

Communications infrastructure

is arguablynow as fundamental

to the prospects of our economies

as energy andwater utilities.”

Scott Moseley

Partner, Co-Head of Economic Infrastructure, Europe

Digital infrastructure

Overview

3i Infrastructure plc Annual report and accounts 2022 13

Overview

Digital infrastructure continued

Page 25

Page 42

Page 38

GCX owns one of the world’s largest

private subsea fibre optic networks and

is well-positioned to capitalise on the

exponential growth in data usage.

DNS:NET is rolling out the largest

fibre-to-the-home network in the Berlin

area, where demand is growing rapidly,

as consumers normalise data intensive

activities such as cloud-based remote

working, high definition streaming and

online gaming.

Tampnet’s offshore fibre optic network

provides customers with mission-critical

reliable communications in the North

Sea and Gulf of Mexico. The company is

benefitting from the growing requirement for

high speed, high bandwidth and low latency

in data links that allow customers to improve

efficiency through remote operations.

Our business model

We invest responsibly in infrastructure

to create long-term value for stakeholders.

What enables us

to create value

Characteristics we look

for in new investments

How we

create value

Asset intensive

business

Asset bases that

are hard to replicate

Provide essential

services

Established

market position

Good visibility

of future cash flows

An acceptable element

of demand or marketrisk

Opportunities

for further growth

Sustainability

Investment

Manager’s team

3i Group network

Engaged asset

management

Reputation andbrand

High ESG standards

Robust policies

and procedures

Efficient balance sheet

Financial

Total return on opening

netasset value

10.45p

Ordinary dividend

per share

19%

Asset IRR

(since

inception)

Non-financial

Further investments inportfolio

companies tofund growth

New Chair and non-executive

Director appointments in

portfolio companies

+5.5%

Increase in installed

renewable energy capacity

Portfolio companies reporting

greenhouse gas emissions

Buy well

Framed by our

strategic priorities

Strong governance

Define strategy

Execute plan

Realisation

Pages 15 and 16

Page 17

Invest

responsibly

Positive

impact

Sustainable

returns

Our purpose

Value created in the year

Overview

3i Infrastructure plc Annual report and accounts 2022 15

Overview

Our business model explained

What enables us to create value

Investment Manager’s team

3i Group network

Engaged asset management

Strengthen

portfolio company

management

teams

Invest in and

develop companies

to support

a sustainable

future

Growing

our platform

businesses

through

acquisitions

The Company is managed by an

experienced and well-resourced team.

The European infrastructure team was

established by 3i Group in 2005 and now

comprises more than 50 people, including

over30investment professionals.

This is one of the largest and most

experienced groups of infrastructure

investment professionals in Europe,

supported by dedicated finance, tax,

legal,

operations and strategy teams.

We drive value from our investments through the Investment Manager’s engaged asset

management approach. Through this approach, the Investment Manager partners with

our portfolio management teams to develop and execute a strategy to create long-term

value in a sustainable way. Examples of this partnership include developing strategies that

support investment in the portfolio company’s asset base over the long term; continued

improvements in operational performance; and establishing governance models that

promote an alignment of interests between management and stakeholders.

We develop and supplement management teams, often bringing in a non-executive chair

early in our ownership.

Examples of this engaged asset management approach can be found on our website,

www.3i-infrastructure.com.

3i Group has a network of offices,

advisers and business relationships across

Europe. The investment management

team leverages this network to identify,

accessand assess opportunities to invest

in businesses, on a bilateral basis where

possible, and to position the Company

favourably in auction processes.

Our business model explained continued

What enables us to create value continued

Reputation and brand Robust policies and procedures

Efficient balance sheet

High ESG standards

The Investment Manager and the Company

have built a strong reputation and track

record as investors by investing responsibly,

managing their business and portfolio

sustainably and by carrying out activities

according to high standards of conduct

and behaviour. This hasbeen achieved

through upholding the highest standards

ofgovernance, at the InvestmentManager,

the Company and in investee companies.

This in turn has earned the trust of

shareholders, other investors and investee

companies, and has enabled the Investment

Manager to recruit and develop employees

who share those values and ambitions for

the future.

The Board seeks to maintain this strong

reputation through a transparent approach

to corporate reporting, including on

our progress on driving sustainability

through ouroperations and portfolio.

We are committed to communicating in

a clear, open and comprehensive manner

and to maintaining an open dialogue

with stakeholders.

Established investment and asset

management processes are supported by

the Investment Manager’scomprehensive

set of best practice policies, including

governance, conduct, cyber security

and

anti-bribery.

The Company’s flexible funding model

seeks to maintain an efficient balance

sheet with sufficient liquidity to make

newinvestments. In order to capitalise

on emerging opportunities, during the

year we extended our borrowing facilities

from

£300 million to£1 billion.

Since FY15 the Company has raised

equitytwice and returned capital

to shareholders twice following

successful realisations.

Sustainability and ESG standards are discussed throughout this report.

Please refer to Our approach on page 7, theSustainability report on

pages46 to55 and the Risk report on pages 67 to 80.

There is a strong

link between

companies that have

high ESG standards

and those that

are able to achieve

long-term sustainable

business growth.”

Anna Dellis

Partner, 3i Investments plc

”

Overview

3i Infrastructure plc Annual report and accounts 2022 17

Overview

Our business model explained continued

Characteristics we look for in new investments How we create value

We look to build and maintain a diversified portfolio of assets, across a range of

geographies and sectors, whilst adhering to a set of core investment characteristics

andrisk factors.

The Investment Manager has a rigorous process for identifying, screening and selecting

investments to pursue. Although investments may be made into a range of sectors,

theInvestment Manager typically focuses on identifying investments that meet most

orallof the following criteria:

We have a rigorous approach to identify

the best investment opportunities and then

work in close partnership with our portfolio

companies to drive sustainable growth.

Asset intensive business

Owning or having exclusive access under

long-term contracts to assets that are

essentialtodeliver the service

Good visibility

of future cash flows

Long-term contracts or sustainable demand

thatallow us to forecast future performance

withareasonable degree of confidence

Asset bases that

are hard to replicate

Assets that require time and significant

capitalortechnical expertise to develop,

withlow risk oftechnological disruption

Provide essential services

Services that are an integral part of

a customer’s business or operating

requirements, or are essential to everyday life

An acceptable element

of demand or marketrisk

Businesses that have downside protection,

butthe opportunity for outperformance

Opportunities for further growth

Opportunities to grow or to develop the

business into new markets, either organically

or through targeted M&A

Established market position

Businesses that have a long-standing

position,reputation and relationship with

theircustomers – leading to high renewal

andretention rates

Sustainability

Businesses that meet our Responsible

Investing criteria, with opportunities to

improve sustainability and ESG standards

Buy well

• Comprehensive

due diligence

• Consistent with

return/yield targets

• Fits risk appetite

Execute plan

• Ongoing support and advice

• Monitor performance

• Review further investment

• Facilitate M&A

Strong governance

• Make immediate

improvements

• Board representation

• Appropriate

Board composition

• Incentivise management

Realisation

• Long-term view but

will sell tomaximise

shareholder value

Define strategy

• Agree strategic direction

• Develop action plan

• Focus on ESG

• Right capital structure

What we do is

framed by our

strategic priorities

Page 18

Our strategy

Strategic priorities

Our strategy is

to maintain a

balanced portfolio

of infrastructure

investments delivering

an attractive mix of

income yield and

capital appreciation

for shareholders.

* Includes commitment to invest in GCX, net

of debt financing, madeon17 November 2021.

Delivering an attractive mix of income yield

and capital appreciation for shareholders.

Investing in a diversified portfolio in

developed markets, with a focus on

theUKand Europe.

Minimising return dilution to shareholders

from holding excessive cash, while

retaining a good level of liquidity for

future investment.

Ensuring that our investment decisions

and asset management approach consider

both the risks and opportunities presented

by sustainability.

Focusing selectively on investments that

are value enhancing to the Company’s

portfolio and with returns consistent with

our objectives.

Driving value from our portfolio through

our engaged asset management

approach.

Delivering growth through platform

investments.

17%

Largest single investment

by value*

Pages 34 to 45

£484m

Total liquidity less investment

commitments*

Page 63

898MW

Installed renewable

energy capacity

Page 50

£980m

New investments

or commitments

Pages 24, 25 and 34 to 45

Follow-on investments

in portfolio companies

Pages 34 to 45

Portfolio

companies

refinanced*

Maintaining a

balanced portfolio

Maintaining an

efficient balance sheet

Sustainability a key

driver of performance

Disciplined approach

to new investment

Managing the

portfolio intensively

Overview

3i Infrastructure plc Annual report and accounts 2022 19

Overview

Our objectives and KPIs

Our objectives

are to provide

shareholders with:

a total return of

8%to10% per annum,

tobeachieved over

themedium term

a progressive annual

dividend per share

Our KPIs

2018

2019

2020

2021

2022

Target

28.6%

15.4%

11.4%

9.2%

17.2%

8-10%

Target

To provide shareholders with a total return of8%to

10%per annum, to be achieved over themedium term.

Met or exceeded target

for 2022 and every prior year shown

Total return % on opening NAV

2018

2019

2020

2021

2022

2023 Target

7.85p+

8.65p

9.20p

9.80p

10.45p

11.15p

+ Special dividend (2018: 41.40p)

Target

Progressive dividend per share policy.

FY23 full year dividend target of 11.15 pence per share.

Dividend per share increased

every year since IPO

Annual distribution pence per share

Rationale and definition

• Total return is how we measure the overall financial

performance of the Company

• Total return comprises the investment return from

theportfolio and income from any cash balances,

netof management and performance fees and

operating and finance costs. It also includes foreign

exchange movement and movement in the fair value

of derivatives and taxes

• Total return, measured as a percentage, is calculated

against the opening NAV, net of the final dividend for

the previous year, and adjusted (on a time-weighted

average basis) to take into account any equity issued

and capital returned in the year

Performance over the year

• Total return of £404 million in the year, or 17.2%

onopening NAV

• The portfolio showed good resilience overall with

strong performance in particular from Oystercatcher,

TCR and ESVAGT

• The hedging programme continues to reduce the

volatility in NAV from exchange rate movements

• Costs were managed in line with expectations

Rationale and definition

• This measure reﬂects the dividends distributed

toshareholders each year

• The Company’s business model is to generate

returns from portfolio income and capital returns

(through value growth and realised capital profits).

Income, other portfolio company cash distributions

and realised capital profits generated are used to

meet the operating costs of the Company and to

make distributions to shareholders

• The dividend is measured on a pence per share basis,

and is targeted to be progressive

Performance over the year

• Proposed total dividend of 10.45 pence per share,

or £93 million, is in line with the target set at the

beginning of the year

• Income generated from the portfolio and cash

deposits, including non-income cash distributions

and other income from portfolio companies,

totalled£143 million for the year

• Operating costs and finance costs used to assess

dividend coverage totalled £50 million in the year

• The dividend was fully covered for the year

• Setting a total dividend target for FY23 of 11.15 pence

per share, 6.7% higher than for FY22

Investment

Manager’s

review

Joulz

Page 39

Investment Manager’s review

3i Infrastructure plc Annual report and accounts 2022 21

Review from the Managing Partner

We have made attractive new

investments, both in new businesses

and companies we already know

well, and successfully realised

Oystercatcher’s European terminals

and our European projects portfolio.

The portfolio continued to be resilient,

delivering strong operational and

financial performance ahead of the

expectations we set

a year ago.

Competition for new investments

remains intense, leading to high pricing

of assets, and we remain disciplined

invest selectively.

This was a very busy year of investment

activity. Our new investments in SRL and

GCX are both in growth sectors with strong

market positions. Increasing our stake in

ESVAGT to 100% and our injections of

additional capital into DNS:NET, Valorem

and Joulz will benefit the Company

from further growth in those platforms.

The Company has increased its credit

facilities to ensure that it continues to

have ample liquidity to make further

new investments.

The portfolio delivered strong performance

during the year and met our income

expectations. As Europe emerges from

the Covid-19 pandemic, we have seen a

pick-up in growth initiatives in a number

of our portfolio companies and we are

working closely with our portfolio company

management teams to execute on these.

Our portfolio is not immune to the

challenging current macro environment of

higher inflation, interest rate rises, tax rises,

supply side disruptions and heightened

geopolitical risks from Russia’s invasion

of Ukraine. However, theCompany has

awell-diversified portfolio, each business

operating in its established market

position and, in the majority of cases, with

predictable income and some inflation

protection. Over the past six months we

have also further reduced the portfolio’s

exposure to interest rates through extensive

financing activity. We supported five

portfolio companies through refinancing

or additional debt raises, extending debt

maturities and locking in fixed rates on

attractive terms.

It was a very good year for the

Company – a high level of new

investment, excellent realisations,

and a strong portfolio performance.”

Phil White

Managing Partner and Head

of Infrastructure, 3i Investments plc

Review from the Managing Partner continued

Portfolio review

Most portfolio companies performed

materially ahead of expectations.

The sale of Oystercatcher’s 45%

stakes in its four European terminals in

Amsterdam, Terneuzen, Ghent and Malta

drove part of the outperformance in the

year. The majority of the net proceeds

from the sale were used to prepay all

Oystercatcher’s debt.

The balance of the net proceeds to

Oystercatcher, €55 million, was distributed

to the Company. Oystercatcher continues

to own a 45% stake in Oiltanking Singapore

Limited alongside Oiltanking GmbH.

ESVAGT, in which we invested £258 million

to acquire the 50% stake owned by our

co-investor, AMP, had a very good year,

benefitting from higher contract rates and

utilisation levels returning to pre-Covid

levels. It also won a milestone contract

to provide the world’s first green Service

Operation Vessel, powered by batteries and

renewable e-methanol, to

theHornsea 2

wind farm in the UK.

Our French-headquartered companies,

Ionisos and Valorem, were strong

performers in the year. To sustain the

growing demand from the healthcare and

pharma industries, Ionisos is looking at

various expansion opportunities beyond

the construction of a new site at Kleve,

Germany. Valorem is progressing well

with its construction activity with a total

of 105MW of new wind and solar projects

entering into operation during the year.

It also successfully closed Viiatti, a landmark

large-scale wind project in Finland.

Tampnet and Joulz performed well during

the year. At Tampnet, customers continued

to upgrade their bandwidth requirements.

Joulz’s core businesses of Infrastructure

Services and Metering performed in line

with expectations and we saw continued

healthy growth in the order book. This was

offset by some delays in completing new

projects, mainly due to Covid-19 related

staffing issues. The Company invested

£5 million of new equity into Joulz to

support further growth.

Despite new travel restrictions imposed

during the winter, TCR continued to

demonstrate the resilience of its business

model and performed ahead of our

expectations for the year. The business

continues to grow, increasing the number

airports in which it operates and

increasing the number of clients it serves.

Infinis significantly exceeded its budget

due to outperformance in its captured

landfill methane business, higher UK power

prices and the frequent power supply

system imbalances in the UK that benefitted

its power response assets. Attero also

benefitted from high power prices, which,

together with higher than forecast waste

supply volumes and gate fees, helped it

to materially outperform expectations

and the prior year. In March 2022, the

business closed an additional debt raise

onfavourable terms.

Our newest assets, DNS:NET and SRL,

are performing broadly in line with our

investment cases. In February 2022 we

invested a further £33 million in DNS:NET

support its fibre network roll-out.

On 29 March 2022, the Company signed

an agreement to sell its European

projects portfolio, comprising four

Dutch

and two French PPP projects

across transport and social infrastructure,

to 3i EOPF, representing an uplift of

£8 million on the value at September.

Completion is

expected by June 2022 and

proceeds are estimated at £103 million.

This results in a 20% gross IRR and a 1.7x

gross money multiple for the Company.

Finally, we were pleased with the

significant progress made towards

realising

the remaining assets in the

IndiaInfrastructure Fund (the ‘India

Fund’), with the sale of the India Fund’s

stake in

KMC Roads and in GVK Energy at

uplifts to the carrying value.

Investment Manager’s review

3i Infrastructure plc Annual report and accounts 2022 23

Investment activity

During the year, the Company invested

or committed £980 million into its target

markets. In November, we agreed to

invest c.$512 million to acquire 100%

of GCX. GCX is a leading global data

communications service provider and owns

one of the world’s largest private subsea

fibre optic networks. Completion is

subject

to certain regulatory approvals and

is expected mid-2022. In December,

wecompleted the £191 million acquisition

of a 92% stake in SRL and invested a further

£21 million into Valorem and £5 million into

Joulz to fund their growth. In February,

we increased our stake in ESVAGT from

50% to 100% for £258 million and invested

a further £33 million into DNS:NET to

fund the next step of its fibre roll-out.

These new investments have added further

diversification to the Company’s portfolio,

which is well-balanced by size of investment

and has exposure to a range of countries,

sectors and risk factors. This should

strengthen the Company’s ability to

meet

its return and dividend objectives

over

the medium term.

Outlook

It was a very good year for the Company,

with a high level of new investment,

excellent realisations, and a strong

portfolio performance. The market

for newinvestments remains highly

competitivebut we remain very selective

and, as we have shown consistently over

many years, are prepared to sell assets

where that generates exceptional returns

for shareholders. The Company is in

ahealthy position for the future.

Phil White

Managing Partner and Head of Infrastructure,

3i Investments plc

9 May 2022

Throughout the year, we saw an active

investment pipeline that included a

broad range of potential new investment

opportunities. Competition for new

investments was very high, and we are

focused on achieving an appropriate

balance of risk and return.

Sustainability

We took a big step forward on

sustainability during the year. We set

several sustainability-related objectives

and are pleased to have met all of these.

This includes reporting Scope 1 and

Scope 2 greenhouse gas emissions for our

portfolio companies for the first time as well

as implementing policies and entering into

financial agreements that further embed

sustainability throughout our investment

and asset management processes.

In the year ahead, we plan to build on

this progress by working with portfolio

companies to consider potential

opportunities to reduce their greenhouse

gas emissions over time and by assessing

the results of climate scenario analysis.

We will also continue to develop

our approach to sustainability as the

regulatory and commercial frameworks

in which we and our portfolio companies

operate evolve.

Review from the Managing Partner continued

New investments

Investment rationale

• Temporary Traffic Equipment (‘TTE’) is

mission-critical for the safe use of roads

• SRL fits with the Company’s strategy

of investing in companies with leading

market positions and barriers to entry,

yet with operational levers to achieve

attractive returns for shareholders

through active asset management

• SRL has sound market fundamentals

through the increasing emphasis placed

on health and safety, anda growing

propensity to rent rather than own TTE

• Outsourcing ownership of TTE makes

economic sense for traffic management

companies, as it allows them to

manage maintenance and utilisation

more efficiently

• SRL has a market leading reputation

and is trusted by its customers

Asset intensive business

that is hard to replicate

SRL rents a fleet of c.13,000 TTE under full

service contracts. The fleet is deployed

from 30 strategically located depots

throughout the UK.

Good visibility on future cash flows

There is broad political and regulatory

support for increased investment in

UKinfrastructure and TTE will be needed

tosupport this.

Provides essential services

TTE is safety critical equipment needed

to protect highway workers and segregate

traffic, cyclists and pedestrians.

Acceptable element of demand risk

Primary competition for SRL is from

customers with owned assets who often

use their own fleets to serve a baseload

ofwork and then top up with rented TTE.

Established market position

SRL is the only large rental company of

TTEin the UK. It benefits from economies

of scale through being able to provide

access to TTE nationally and 24/7.

Opportunities for further growth

The rental model is expected to increase

penetration and gain market share from

theownership model over time.

Sustainability

TTE, and in particular SRL’s smarter

products, allow for greater control of traffic

flows, which in turn reduces congestion

around roadworks and improves safety.

Characteristics

Invested

£191m

Equity stake

92%

SRL is the UK’s leading

lessor of temporary traffic

management equipment.

Investment Manager’s review

3i Infrastructure plc Annual report and accounts 2022 25

New investments continued

Investment rationale

• GCX owns one of the most

comprehensive subsea cable networks

globally, serving customers in over

180

countries

• Benefits from the rapidly expanding

data market with data usage forecast

grow exponentially

• Operates in a market with high barriers to

entry whilst providing anessential service

• Supported by a highly experienced

management team with astrong track

record in the sector

• Attractive entry valuation following

abilateral process

Asset intensive business

that is hard to replicate

GCX’s 66,000km of cables,spanning from

North America to Asia, would require large

upfront investments and a multi-year lead

time to replicate.

Good visibility on future cash flows

GCX’s core network benefits from high

margins and low maintenance capex

requirements, resulting in an attractive

yield profile for 3i Infrastructure.

Provides essential services

GCX is a key infrastructure provider in the

rapidly expanding data market, in particular

in high growth markets in Asia and the

Middle East.

Acceptable element of demand risk

Over 90% of GCX’s revenue is recurring

in nature, underpinned by a mixture of

medium-term (1-3 years) and long-term

(10years+) contracts.

Established market position

GCX owns one of the few networks

with significant spare capacity to serve

theexponentially growing demand for

datatrafficonthe Europe-Asia and

inter-Asia routes.

Opportunities for further growth

In a relatively fragmented market,

M&A is an upside opportunity to either

accelerate growth or to further strengthen

GCX’snetwork footprint.

Characteristics

Expected equity

commitment

c.£300m

Equity stake

10 0%

GCX owns one of the

most comprehensive subsea

cable networks globally.

The portfolio

comprises a

diversified, defensive

set of businesses

providing essential

services. We are

confident that the

portfolio is well

positioned to deliver

our target returns.

The Company’s portfolio was valued

at £2,873 million at 31 March 2022

(2021: £1,804 million) and delivered a total

portfolio return in the year of £509 million,

including income and allocated foreign

exchange hedging (2021: £232 million).

Table 1 summarises the valuations and

movements in the portfolio, as well as the

return for each investment, for the year.

In accordance with accounting standards,

‘Investments at fair value through profit

or loss’ as reported in the Balance sheet

include, in addition to the portfolio asset

valuation, the cash and other net assets

held within intermediate unconsolidated

holding companies. Due to the change

in basis of accounting described in the

Financial review on page 59, there

is

no longer any difference between

Table

1 and the amounts reported

theFinancial statements.

Our portfolio

Pages 35–45

Investment Manager’s review

3i Infrastructure plc Annual report and accounts 2022 27

Our portfolio continued

Table 1: Portfolio summary (31 March 2022, £m)

Portfolio assets

Directors’

valuation

31 March

2021

Investment

in the year

Divestment

in the year

Accrued

income

movement

Value

movement

Foreign

exchange

translation

Directors’

valuation

31 March

2022

Allocated

foreign

exchange

hedging

Underlying

portfolio

income

in the year

Portfolio

total return

in the year¹

ESVAGT 189 294

2,3

– 3 57 5 548 (5) 28 85

Infinis 300 – – 2 30 – 332 – 17 47

TCR 199 14

2,4

– – 67 (1) 279 1 13 80

Tampnet 230 5

– – – 6 241 (2) 22 26

Joulz 219 10

2,4

– – 14 (2) 241 2 6 20

Ionisos 202 5

– 4 28 (2) 237 2 9 37

Oystercatcher 157 – (56)

1 121 7 230 (5) 5 128

DNS:NET – 193

2,3

– 2 9 (2) 202 2 4 13

SRL – 274 (83)

5 4 – 200 – 7 11

Valorem 107 21

– – 17 (1) 144 1 4 21

Attero 105 – – – 12 (1) 116 1 5 17

Economic infrastructure portfolio 1,708 816 (139) 17 359 9 2,770 (3) 120 485

Projects 93 – (1)

– 12 (1) 103 1 7 19

India Fund 3 – (8) – 4 1 – – – 5

Total portfolio reported in the Financial statements

1,804 816 (148) 17 375 9 2,873 (2) 127 509

1 This comprises the aggregate of value movement, foreign exchange translation, allocated foreign exchange hedging and underlying portfolio income in the year.

2 Capitalised interest totalling £55 million.

3 New investment in ESVAGT of £258 million plus £12 million of follow-on investment and DNS:NET of £157 million plus £33 million of follow-on investment.

4 Follow-on investment in TCR of £1 million, Joulz of £5 million and Valorem of £21 million.

5 Shareholder loan repaid. The SRL divestment amount relates to the repayment of a bridge loan following the raising of a third-party acquisition debt facility.

6 Cash and other net assets held in unconsolidated subsidiaries of £2 million were distributed to the Company during the year. Due to these distributions and the change in basis of accounting described in the Financial review

onpage59, there is no longer any difference between Table 1 and the amounts reported in the Financial statements.

Our portfolio continued

Total portfolio return

SVAGT

Infinis

TCR

Tampnet

Joulz

Ionisos

Oystercatcher

DNS:NET*

SRL*

Valorem

Attero

Projects

Chart 1: Portfolio return by asset (year to 31 March 2022)

19.8%

18.5%

15.7%

40.0%

81.5%

6.7%

16.4%

4.0%

20.4%

16.2%

11.3%

18.3%

8.9%

The total portfolio return in the year of

£509 million is 19.8% (2021: £232 million,

13.7%) of the aggregate of the opening

value of the portfolio and investments

theyear (excluding capitalised interest),

which total £2,565 million.

Performance was strong across the

portfolio, driven principally by the

realisation of the European storage

terminals held by

Oystercatcher for a price

above their opening valuation and by

outperformance from a number of portfolio

companies but particularly TCR and ESVAGT.

Chart 1 below shows the portfolio return

the year for each asset as a percentage

the aggregate of the opening value of

the asset and investments in the asset in

the

year (excluding capitalised interest).

Note that this measure does not time-weight

for investments in the year.

* Acquired during the year and portfolio return not annualised.

Investment Manager’s review

3i Infrastructure plc Annual report and accounts 2022 29

Movements in portfolio value

The movements in portfolio value were

driven principally by the delivery of planned

cash flows and other asset outperformance

as well as new and follow-on investments

made during the year. A reconciliation of

the movement in portfolio value is shown

in Chart 2 below. The portfolio summary

shown in Table 1 details the analysis of

these movements by asset. Changes to

portfolio valuations arise due to several

factors, as shown in Table 2.

The value increase in TCR of £67 million

reflects: the outperformance of the

business during the year; cost savings

delivered and expected from its cost

optimisation programme; and a reduction

in the discount rate to remove the Covid-19

premium previously applied. This increased

valuation is further supported by increased

interest in TCR’s full service rental model and

our confidence in the long-term value of its

asset base and market opportunity.

Economic infrastructure portfolio

The economic infrastructure portfolio

generated a value gain of £359 million in

the

year, alongside income of £120 million.

The £121 million value increase in

Oystercatcher reflects: the uplift achieved

from the sale of the European terminals;

the

prepayment of Oystercatcher’s debt;

and a reduced discount rate to reflect

higher quality cash flows from Singapore

and low leverage.

ESVAGT increased in value by £57 million,

we revised our investment case following

the completion of the acquisition of

our co-investor’s 50% stake in ESVAGT.

We revised our growth assumptions for

the business and made a small reduction

in the discount rate to reflect the reduction

in risk following the signing of significant

new contracts and the

completion of

the newbuild programme for three

new MHIVestas Service Operation

Vessels. In March 2022 we completed

arefinancing on improved terms to

supportfuture growth.

Infinis generated a value gain of £30

million

in the year and contributed £15 million

of cash distributions. This was due to a

combination of business outperformance,

the continued progress of its solar

development programme and changes

forecast futurepower prices.

Ionisos experienced a £28 million gain due

to significant outperformance, particularly

from strong demand in the medical devices

and pharmaceuticals sectors.

Chart 2: Reconciliation of the movement in portfolio value (year to 31 March 2022, £m)

3,000

2,500

2,000

1,500

1,000

500

Value

movement

Accrued

income

movement

Exchange

movement

Opening

portfolio value at

1 April 2021

Closing

portfolio value at

31 March 2022

Divestment/

capital repaid

Investment

2,873

1,804

(148)

816

375

1 Includes capitalised interest.

2 Excludes movement in the foreign exchange hedging programme (see Chart 7 in the Financial review).

Table 2: Components of value movement (year to 31 March 2022, £m)

Value movement component

Value movement

in the year Description

Planned growth 109 Net value movement resulting from the passage of time, consistent

with

the discount rate and cash flow assumptions at the beginning of

the year less distributions received and capitalised interest in the year.

Other asset performance 188 Net value movement arising from actual performance in the year

and changes to future cash flow projections, including financing

assumptions and changes to regulatory assumptions. Includes the

uplift on the sale of Oystercatcher’s European terminals and the

Projects

portfolio.

Discount rate movement 43 Value movement relating to changes in the discount rate applied

theportfolio cash flows.

Macroeconomic assumptions 35 Value movement relating to changes to macroeconomic out-turn or

assumptions, eg power prices, inflation, interest rates and taxation

rates. This includes changes to regulatory returns

that are directly

linked

to macroeconomic variables.

Total value movement before exchange 375

Foreign exchange retranslation 9 Movement in value due to currency translation to year end date.

Total value movement 384

Movements in portfolio value continued

Projects portfolio

The value gain in the Projects portfolio of

£12 million reflects the proceeds expected

from the agreement to sell the holdings to

3i EOPF which is expected to complete by

June 2022.

India Fund

During the year we divested KMC Roads

and GVK Energy at

an uplift to the

carrying value.

Summary of portfolio

valuation methodology

Investment valuations are calculated at the

half-year and at the financial year end by

the Investment Manager and then reviewed

by the Board. Investments are reported at

the Directors’ estimate of fair value at the

relevant reporting date.

The valuation principles used are

based on International Private Equity

and Venture Capital (‘IPEV’) valuation

guidelines, generally using a discounted

cash flow (‘DCF’) methodology (except

where a market quote is available),

whichthe Investment Manager considers

to be the most appropriate valuation

methodology for unquoted infrastructure

equity investments.

Investment Manager’s review

3i Infrastructure plc Annual report and accounts 2022 31

Movements in portfolio value continued

Where the DCF methodology is used,

the resulting valuation is checked against

other valuation benchmarks relevant

to the particular investment, including,

for example:

• earnings multiples;

• recent transactions; and

• quoted market comparables.

In determining a DCF valuation, we

consider

and reflect changes to the two principal

inputs, being forecast cash flows from the

investment and discount rates. We consider

both the macroeconomic environment

and investment-specific value drivers when

deriving a balanced base case of cash flows

and selecting an appropriate discount rate.

A prevalent theme this year has been

inflationary pressures on supply chain costs

and employee costs. The ability to pass cost

inflation to customers varies by portfolio

company so we took a granular approach

modelling the effects of inflation.

As a ‘through the cycle’ investor with

a strong balance sheet we consider

valuations in the context of the longer-term

value of the investments. This includes

consideration of climate change risk and

stranded asset risk. Factors considered

include physical risk, litigation risk linked

to climate change and transition risk

(for

example, assumptions on the timing

and extent of decommissioning of

North

Sea oil fields, which affects Tampnet

and ESVAGT). We take a granular approach

to these risks, for example each relevant

offshore oil and gas field has been assessed

individually to forecast the market over the

long term and a low terminal value has been

assumed at the end of the forecast period.

In the case of stranded asset risk,

we consider long-term threats that

may impact value materially over our

investment horizon, for example,

technological evolution, climate change,

societal change.

The current impact on the portfolio of

the war in Ukraine is, in our assessment,

not material.

The volatility in power prices has

positively affected our energy generating

portfolio companies, although the

majority of our power price exposure

was

hedged in the short to medium term.

Future power price

projections are taken

from independent forecasters and changes

in these assumptions will affect the future

value of these investments.

TCR operates in the aviation sector,

which

has been severely affected by travel

restrictions. The value of TCR assumes a full

recovery in air

traffic to pre-Covid-19 levels

in 2024, consistent with the assumptions

made in the prior year.

For ESVAGT, which operates Emergency

Rescue and Response Vessels (‘ERRVs’) in

the North Sea servicing sectors including

the oil and gas market, we do not

assume any new vessels or replacement

vessels in our valuation for that

segment

the business.

However, a number of our portfolio

companies are set to benefit from these

changes. Digitalisation in the offshore

oil and gas sector in order to reduce

costs is benefitting Tampnet. The energy

transition in the Netherlands, with a focus

on electrification, is benefitting Joulz.

The base case for each of our valuations

takes a balanced view of potential factors

that we estimate are as likely to result in

underperformance as outperformance.

Movements in portfolio value continued

Discount rate

Chart 3 shows the movement in the

weighted average discount rate applied to

the portfolio at the end of each year since

the Company’s inception and the position

as at March 2022. During the year, the

weighted average discount rate increased

modestly as the introduction of the new

investments in SRL and DNS:NET to the

portfolio at a higher than average discount

rate was mostly offset by small reductions

in discount rates for

Oystercatcher, TCR,

ESVAGT and Valorem.

During the year, we witnessed an increase

in risk-free rates across Europe as central

banks started to take action in response

to higher inflation. The increase in risk-free

rates was offset by reductions in equity

risk premia, the implied excess return over

a risk-free rate of return, in the countries

in which we invest. We are not yet seeing

any upward pressure on discount rates

aresult of higher interest rates.

Investment track record

As shown in Chart 4, since its launch in 2007,

3i Infrastructure has built a portfolio that

has provided:

• significant income, supporting the

delivery of a progressive annual dividend;

• consistent capital growth; and

• strong capital profits from realisations.

These have contributed to a 19% annualised

asset Internal Rate of Return (‘IRR’) since

the Company’s inception. The European

portfolio has generated strong returns,

in line with, or in many cases ahead of,

expectations.

These returns were underpinned by

substantial cash generation in the

form

ofincome or capital profits.

13.8

12.4

12.5

12.0

10.2

9.9

10.0

10.5

11.8

13.2

12.6

11.3

10.8

Chart 3: Portfolio weighted average discount rate (31 March, %)

Mar

10.9

The value created through this robust

investment performance has been

crystallised

ina number of instances

through well-managed realisations, shown

as ‘Realised assets’ in Chart 4. While the

Company is structured to hold investments

over the long term, it has sold assets where

compelling offers will generate additional

shareholder value.

This was the case with WIG in 2019 which

generated an IRR of 27%, Eversholt Rail in

2015 and XLT in 2019 which both generated

IRRs in excess of 40% and Elenia and AWG

in 2018, which generated IRRs of 31% and

16%

respectively.

Portfolio asset returns in Chart 4 include an

allocation of FX hedging where applicable.

Investment Manager’s review

3i Infrastructure plc Annual report and accounts 2022 33

Chart 4: Portfolio asset returns throughout holding period (since inception, £m)

Existing portfolio (Total return) Realised assets (Total return)

Multiple Multiple IRR

1.3x

1.5x

1.9x

1.4x

1.3x

3.1x

1.1x

2.0x

1.6x

1.7x

5.9x

4.5x

3.3x

1.9x

1.2x

0.6x

27%

40%

31%

16%

41%

22%

(6%)

Total cost Value including accrued income

Proceeds on disposals/capital returns Cash income

Portfolio asset returns include allocation of FX hedging

where applicable. Dates of asset realisations refer

to completion dates.

1 Others includes junior debt portfolio, T2C and Novera.

548

332 80 85

279 224

241

2 20

237 6

241

230 47 157

202 3

200 2

191

190

139

186

195

187

156

144

116 25

322

417

265

21431

38332

195

173

151

289

138

766 106

154

114391

24145

446

410

103

ESVAGT

Infinis

TCR

Tampnet

Ionisos

Joulz

Oystercatcher

DNS:NET

SRL

Valorem

Attero

WIG

(realised December 2019)

Elenia

(realised February 2018)

XLT

(realised March 2019)

AWG

(realised February 2018)

Eversholt

(realised April 2015)

Projects

(realised assets)

Others

103

252

Projects

108

India Fund

Asset IRR to 31 March 2022

19%

Since inception

Total cost Value including accrued income

Proceeds on disposals/capital returns Cash income

Portfolio asset returns include allocation of FX hedging

where applicable. Dates of asset realisations refer

to completion dates.

1 Others includes junior debt portfolio, T2C and Novera.

548

332 80 85

279 224

241

2 20

237 6

241

230 47 157

202 3

200 2

191

190

139

186

195

187

156

144

116 25

322

417

265

21431

38332

195

173

151

289

138

766 106

154

114391

24145

446

410

103

ESVAGT

Infinis

TCR

Tampnet

Ionisos

Joulz

Oystercatcher

DNS:NET

SRL

Valorem

Attero

WIG

(realised December 2019)

Elenia

(realised February 2018)

XLT

(realised March 2019)

AWG

(realised February 2018)

Eversholt

(realised April 2015)

Projects

(realised assets)

Others

103

252

Projects

108

India Fund

Movements in portfolio value continued

Review of

investments and

Sustainability

Valorem

Page 44

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 35

Review of investments

Developments in the year

Following the acquisition of our

co-investor AMP’s 50% stake in ESVAGT,

3i Infrastructure now owns 100% of

the business. ESVAGT has established

a leading position in the offshore

wind service operation vessels (‘SOV’)

market. Despite increasing interest

from competitors, the business recently

signed a contract with Ørsted for the

world’s first green SOV which will service

the Hornsea 2 wind park in the UK.

In the US, ESVAGT and its joint venture

partner, Crowley, are exploring several

SOV opportunities to service existing

European customers.

ESVAGT’s emergency rescue and

response

vessel segment is also

generating momentum due to

increasingly attractive supply/demand

dynamics and a renewed focus on

security of energy supply in Europe.

An important multi-vessel contract was

signed with Total Energies in Denmark

the year.

We recently appointed Soren Poulsgaard

Jensen, ex-CEO of Scandlines, to the

ESVAGT Board. He brings significant

experience in the maritime sector and

knowledge of

working with 3i.

Sustainability

ESVAGT is maintaining its market position

as the leading offshore wind service

vessel provider. It has clear emissions

reductions goals which tie back to the

company’s aim of becoming CO

-neutral

by 2035. ESVAGT’s strategy has been

further advanced by the latest SOV

design, powered by batteries and dual fuel

engines, capable of sailing on renewable

e-methanol.

Ownership

100%

Megatrend

Energy Transition

Country

Denmark, Norway,

UK and USA

Management

team HQ

Esbjerg, Denmark

Currency

DKK

Date invested

September 2015 and

February 2022

Performance (£m)

417

548

Total cost Closing value Cash distributions

Review of investments continued

Developments in the year

Infinis performed strongly in the year,

thanks to good operating performance,

higher power prices and price volatility

which benefitted the power response

assets in particular. It has faced some

challenges in its Captured Mineral

Methane business due to lower engine

availability and reliability. Infinis’s

cashflows are positively correlated

with UK RPI inflation through the

index-linked Renewables Obligations

Certificate regime.

Infinis continues to deliver on its strategy

to grow into a diversified and low-carbon

renewable energy player: on the solar

front Infinis now has 117MW of consented

sites with 97MW expected to commence

construction in FY23.

An additional 100MW is currently in

the

planning process with a longer-term

potential for

afurther 200MW+. It has

experienced some delays in solar project

development together with higher

development costs.

In parallel, Infinis is developing a

complementary pipeline of potential

battery sites to capitalise on expected

continued power price volatility. Infinis has

36MW of projects expected to commence

construction in FY23.

Sustainability

Infinis continues to make good progress

its sustainability agenda. Its targets have

been aligned to its ambition to meet the

growing energy demand whilst reducing

industry emissions, support the transition

to new renewable energy sources and grow

a clean low-carbon economy whilst also

taking care to safeguard biodiversity and

manage natural resources responsibly.

Ownership

100%

Megatrend

Energy Transition

Country

Management

team HQ

Northampton, UK

Currency

GBP

Date invested

December 2016

Performance (£m)

322

332 165

Total cost Closing value Cash distributions

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 37

Review of investments continued

Developments in the year

TCR’s good performance in the year

continues to evidence the resilience

of its business model. Despite further

travel restrictions during the winter

season, TCR performed ahead of our

expectations, although equipment

off

lease is still above pre-Covid levels.

Its footprint has continued to grow,

now covering 164 airports globally.

New contracts were signed in the year,

including with important new customers

such as Finnair and Gate Gourmet as

well as more recent sale and rent back

contracts in Europe and Australia.

TCR has a very active pipeline of new

projects with a variety of airlines, airports

and ground handlers, confirming our

thesis that the Covid-induced crisis in

the aviation industry should increase

the attractiveness of the leasing model

for GSE.

Sustainability

A key part of TCR’s sustainability strategy

is the transition to electrical or green

GSE, both in terms of managing its fleet’s

residual value risk and as a significant

market opportunity to win new business

and to strengthen and extend its business

model. TCR recently signed an agreement

with long-term customer KLM to replace

diesel equipment with electrical.

TCR has also established itself as a market

leader in providing pooled GSE at airports,

which can enable material reductions in

the amount of equipment operated on an

airfield, thereby reducing overall emissions.

Performance (£m)

156

279 26

Total cost Closing value Cash distributions

Ownership

48%

Megatrend

Globalisation

Currency

EUR

Date invested

July 2016

Country

13 European countries, Malaysia,

Middle East, Australasia and USA

Management

team HQ

Brussels, Belgium

Review of investments continued

Developments in the year

Tampnet performed strongly in the year

and materially above 2021 levels. Its core

business in the North Sea performed

well as customers continued to upgrade

their bandwidth requirements and

invest in digital initiatives. Furthermore,

we are seeing increasing momentum

in the basin due to the higher oil price

and a renewed focus on security of

energy supply from European nations.

During the year, Tampnet renewed

an important contract with Equinor,

providing long-term visibility and

de-risking future cashflows.

Beyond its historic oil and gas customers,

Tampnet is developing a number of new

initiatives to provide digital connectivity

to other players in the region such

as government services, offshore

agriculture and carbon capture.

In the Gulf of Mexico, Tampnet is seeing

good momentum. There were some delays

in installations, due to Covid-19 and severe

weather conditions, but the management

team is in discussions on several new

projects and data demand is

continuing

increase steadily.

Sustainability

The core of Tampnet’s approach to

sustainability is to make a positive

contribution to the underlying industry,

enabling oil and gas producers to extract

more efficiently from existing resources.

Tampnet is also providing connectivity

and digital services in the offshore

wind segment.

Ownership

45%

Megatrend

Digitalisation

Country

Norway and USA

Management

team HQ

Stavanger, Norway

Currency

NOK

Date invested

March 2019

Performance (£m)

187

241 13

Total cost Closing value Cash distributions

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 39

Review of investments continued

Developments in the year

Financial performance for Joulz was

broadly in line with expectations in the

year. The carve-out from Stedin and

implementation of a new ERP system

are now complete. The Infrastructure

Services business is seeing strong order

intake ahead of expectations, which

is partially offset by some delays to

project completions and by some churn

in the Metering business. A new head

of Metering was appointed during the

year, and

performance has improved

inrecent

months.

Following the innovative micro-grid

solution developed for a customer

near Schiphol Airport, Joulz continues

to see strong interest in the larger

integrated projects which bring together

Infrastructure Services, Metering, Solar

and other storage/generation products

to solve customers’ increasingly complex

power requirements.

In December 2021, the Company invested

£5 million of further equity in Joulz to fund

growth projects, including the acquisition

of further commercial transformers

from Stedin.

Sustainability

Sustainability is a key element of Joulz’s

business strategy: it has expanded

its customer offering into new energy

transition solutions with solar and

charging products, and is exploring

opportunities in low-carbon heating

solutions and energy storage.

Ownership

99%

Megatrend

Energy Transition

Country

Netherlands

Management

team HQ

Delft, Netherlands

Currency

EUR

Date invested

April 2019

Performance (£m)

195

241 22

Total cost Closing value Cash distributions

Review of investments continued

Developments in the year

Ionisos delivered strong performance in

the year, exceeding expectations with

market growth outperforming and with

a favourable product mix. The business

is working on plans to increase capacity

to meet the additional demand, through

a combination of expanding existing

facilities, exploring further greenfield

investments and monitoring potential

M&A opportunities. The construction

of the new sterilisation site in Kleve,

Germany, is progressing in line with

budget and is expected to start

operating in Summer 2022.

In January 2022, we appointed Michel

Darnaud as Independent Chair of the

board of Ionisos. Michel is the former

President of Europe for Baxter and

Boston Scientific, and Chair of

MedTech

Europe. Ionisos will benefit from his

expertise and network to continue

its

European development.

Sustainability

As part of its sustainability strategy,

Ionisos

aims to reduce its GHG footprint

over the next five years through green

initiatives. The other key priorities to its

sustainability strategy include providing a

great place to work for its employees: the

board is focused on promoting a good

culture and awareness of health and safety

across the business. Ionisos is also striving

to build valuable partnerships with its

stakeholders, through an active engagement

programme with customers, key suppliers,

regulators and local authorities.

Ownership

96%

Megatrend

Demographic Change

Country

France, Spain,

Germany, Estonia

Management

team HQ

Dagneux, France

Currency

EUR

Date invested

September 2019

Performance (£m)

186

237 6

Total cost Closing value Cash distributions

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 41

Review of investments continued

Developments in the year

The Company and Oiltanking (our

co-shareholder and operating partner)

completed the sale of their stakes in

four European terminals at an attractive

price during the year. The transaction

generated a strong return for the

Company, increasing Oystercatcher’s

unrealised money multiple to 3.1x

and unrealised IRR to 13.9% over the

Company’s 14 year ownership period.

Our investment now consists of a

45%

stake in Oiltanking Singapore.

Market conditions for oil storage were

mixed in the past year: high oil prices

have

resulted in a backwardated market.

On the other hand a resumption in

demand has meant increased levels of

customer activity at storage terminals.

In the year Oiltanking Singapore

renewed contracts, maintaining its high

utilisation levels and increasing storage

rates secured, but accepting shorter

contract

tenors in some instances.

Financial performance for the year was in

line with expectations and, looking ahead,

we remain confident that, as demand for

oil

products in the Asia Pacific region grows

post Covid, the supply/demand balance for

oil storage will tighten and storage rates will

step up.

Sustainability

Oiltanking has long placed significant focus

on sustainability, including high standards

of environmental management and a strong

focus on health and safety. During the year

it has announced the results of a strategic

review which will see the company rebranded

and focusing on supporting its customers

in the energy industry to achieve their

sustainability ambitions, for example by

supporting them to grow their renewable

fuels businesses.

Performance (£m)

139

230 204

Total cost Closing value Cash distributions

Ownership

45%

Megatrend

Globalisation

Country

Singapore

Management

team HQ

Singapore

Currency

SGD

Date invested

August 2007 and

June 2015

Review of investments continued

Developments in the year

Following our initial investment,

Infrastructure injected £33 million

of further equity in DNS:NET to fund

the next phase of its fibre network

build-out. The Company’s stake in

the business increased to 64% as a

result, the

remainder being owned

Alexander Lucke, founder and

CEO

ofthe business.

Since our investment, DNS:NET has

performed in line with our expectations.

Although the roll-out began slower than

anticipated initially, the management

team has since accelerated the build

programme, signing agreements with

two contractors to increase capacity.

Customer take up remains high

and build

costs are in line with our

expectations. More broadly, German

market fundamentals continue to

favourable, with a 30% growth

fibre-to-the-home connections

the year.

In line with our best practice for newer

investments, we have strengthened

the

board with the appointment of a

non-executive Chair, Charles Frankl,

who brings a background in sales and

technology management functions

for larger corporates and of scaling

growth businesses.

Sustainability

DNS:NET’s business has a very low GHG

footprint once the network is deployed.

Fibre is a greener alternative to copper,

requiring significantly less energy to

transport data and less repair work

to maintain. Additionally, enhanced

connectivity can lead to a reduction in

GHG emissions related to business travel

and commuting as well as enable smart

building energy management systems,

which will further drive energy efficiency

and GHG reduction.

Ownership

64%

Megatrend

Digitalisation

Country

Germany

Management

team HQ

Berlin, Germany

Currency

EUR

Date invested

June 2021

Performance (£m)

190

202 3

Total cost Closing value Cash distributions

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 43

Review of investments continued

Developments in the year

SRL has performed in line with our

investment case to date, both financially

and operationally. The fundamentals

addressing the road network

maintenance backlog and strategic

initiatives such as the UK fibre roll-out

plan continue to provide a strong

underpinning rationale for further

expansion of the equipment as a

service model.

On acquisition, the Company provided

an £83 million bridge loan. This was

repaid in February 2022, when we

secured a third-party acquisition

debt facility.

Sustainability

Sustainability and safety form a cornerstone

of our value creation plan. TTE allows for

greater segregation and control of traffic

flows, which in turn reduces congestion

around roadworks. Greater rigour is being

placed on health and safety through the

use of more sophisticated methods of

traffic management to protect highway

workers and segregate traffic, cyclists

and pedestrians.

Ownership

92%

Megatrend

Renewing

Social Infrastructure

Country

Management

team HQ

Cheshire, UK

Currency

GBP

Date invested

December 2021

Performance (£m)

191

200 2

Total cost Closing value Cash distributions

Review of investments continued

Developments in the year

Valorem’s asset base has continued to

increase, with 663MW of fully owned

capacity having reached financial close,

compared to 179MW at acquisition.

Despite lower than anticipated revenue

from electricity generation due to low

wind conditions in the year, the core

business in France continues to perform

in line with expectations. The successful

closing of the Viiatti wind project in

Finland represents a key milestone for

the company. It is over four times the size

of Valorem’s previous project in Finland

and almost 10 times its largest project in

France. Approximately half of this project

was sold in the year.

In December 2021, the Company

completed a follow-on investment of

£21 million in Valorem and increased its

equity stake in the company to 33.1%

order to continue funding the pipeline

across Valorem’s fast growing markets.

In France, both the solar and wind pipelines

are progressing well, with an increased focus

on larger projects, and Valorem is trialling

projects in the hydrogen sector, with two

projects in Rouen and Saint-Brieux. In Finland,

Valorem will focus on the construction of the

Viiatti project and progress planning for the

MegatuuIi wind project (313MW), expected

to be financed by 2024. A first wind project

Greece is expected to close this year.

Sustainability

As a producer of renewable energy, the

business is net carbon negative. Beyond its

core mission as a contributor to the energy

transition and GHG emissions reduction,

Valorem strives to promote protecting

biodiversity, sustainable procurement and

employee wellbeing. This was demonstrated

by Valorem becoming an Entreprise à Mission

in December 2021.

Ownership

33%

Megatrend

Energy Transition

Country

France, Finland

Management

team HQ

Bègles, France

Currency

EUR

Date invested

September 2016

Performance (£m)

144 16

Total cost Closing value Cash distributions

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 45

Review of investments continued

Developments in the year

Attero outperformed expectations in

the year, on the back of higher waste

volumes, gate fees and power prices.

The core Energy from Waste business

unit benefitted from these favourable

market conditions and was able to renew

and extend a number of key commercial

and industrial waste supply contracts,

and lock-in current high electricity

prices for the coming year. Organics and

Plastics also outperformed expectations,

while Minerals slightly underperformed

due to

lower construction activity due

Covid-19 in the second half of 2021.

The company is currently looking at a

number of investment opportunities,

including a new post-separation recycling

line, a new anaerobic digestion (biogas)

facility and solar installations at its closed

landfill sites.

On the back of several years of strong

growth and highly resilient performance,

despite Covid-19, Attero raised additional

long-term debt on attractive terms and

refinanced existing facilities.

Sustainability

Attero’s activities primarily relate to recycling

and recovery of energy from waste produced

by society, and as such it plays a key role in

helping to deliver on the Netherlands’ and

European environmental and sustainability

objectives. Since 2019, Attero has fully offset

its CO

emissions by the volume of emissions

avoided. It is committed to increase its

avoided emissions to one million tonnes

by 2025 by increasing the production

of renewable energy and recycled materials.

Attero is also

exploring CO

capture at its

main facilities.

Ownership

25%

Megatrend

Energy Transition

Country

Netherlands

Management

team HQ

Apeldoorn,

Netherlands

Currency

EUR

Date invested

June 2018

Performance (£m)

116 26

Total cost Closing value Cash distributions

Sustainability report

The Board of Directors is responsible for

sustainability with day-to-day accountability

resting with the Investment Manager.

We are rigorous in assessing and managing

sustainability-related risks in our portfolio

and identifying opportunities to improve

the sustainability of the businesses we

invest in. Equally, we are keen to invest in,

and actively seek, opportunities arising

from the development of solutions to global

sustainability challenges. These long-term

trends are aligned with our strategy and

investment mandate.

We continue to see a strong link between

companies with high ESG standards and

those that are able to achieve long-term

sustainable business growth. As owners

of a portfolio of infrastructure assets,

we recognise our ability to influence our

portfolio companies, their

management

teams, employees, customers

and suppliers.

The Company has made significant

progress on ESG topics during the year.

The policy applies to all ofour

investments, irrespective of their

countryor sector.

For more information on the

InvestmentManager’s sustainability

policies, pleaserefer to the 3i Group

website: www.3i.com/sustainability.

The Board has reviewed these policies

and is satisfied that the adoption

of thesepolicies by the Investment

Manager meets the Company’s

objectives in this area.

The Company has a long track record

of investing in sustainable businesses

and of working with portfolio company

management teams to improve

governanceand operating standards

and to develop growth strategies that

align with long-term trends. Long-term

trends such as the energy transition or

climate change are considered both a

risk and an opportunity for the portfolio,

and are an increasingly important part

ofdecision making for the Company.

We have a responsibility to our shareholders

to deliver long-term sustainable returns,

and to the communities and environment

in which we operate to manage essential

infrastructure in a responsible manner.

We operate with the highest level of

stewardship standards and use our position

as a shareholder in the businesses we own

to influence and support management

tooperate responsibly.

Through our engaged asset management

approach and representation on the boards

of our investee companies we integrate

stewardship and investment, including

the consideration of material ESG and

climate change issues, to make decisions

that balance the requirements ofall

stakeholders. We require our businesses

to review regularly their approach to,

andambition for, sustainability.

Investing responsibly

We believe that a responsible approach

to investment will add value to our

portfolio. Responsibility starts when

wefirst consider investing in a company.

It isvital that we seek to identify all

material ESG risks and opportunities

at the point we invest, and that we put

in place appropriate and robust plans

to mitigate risks or capitalise on the

opportunities. The Investment Manager

is a signatory to the UN Principles

for Responsible Investment and has

embedded a Responsible Investment

policy into its investment and asset

management processes. This sets

out the types of business in which the

Company will not invest, as well as

minimum standards in relation to ESG

matters which we expect new portfolio

companies to meet, or to commit to

meeting over a reasonable time period.

This matters to us as individuals, to the people

managing and working within ourportfolio

companies and to their customers, suppliers

and local communities. As investors,

wedepend onall of these stakeholders

for

our investments to be successful.

We act as a conduit for institutional and

retail savings into these assets, helping our

shareholders to achieve their own return

objectives in a sustainable way with low

levels of volatility and little correlation

towider equity markets.

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 47

Sustainability report continued

Our influence and approach

ESG management

Individual portfolio company ESG-related

performance is monitored on a regular

basis and progress towards a broad set of

objectives is reviewed in detail each year

using the Investment Manager’s proprietary

ESG assessment tool, as shown on page 48.

The Investment Manager completes this

assessment for all economic infrastructure

investments in the portfolio and prepares

and prioritises, alongside management,

anaction plan for the business based on

therecommendations from this assessment.

ESG value creation opportunities are

also reviewed and prioritised with the

portfolio company management teams.

Management incentives are aligned

with achievement of these plans,

where appropriate.

At the start of this financial year the Board

of Directors and the Investment Manager

setseveral specific sustainability objectives,

with the desire to take a big step forward

inthis area. We are pleased to have met

allof these objectives, as set out in the

table opposite.

For further information

www.3i-infrastructure.com/sustainability

Category Outcome

Greenhouse

gas emissions

We supported portfolio companies with implementing GHG emissions reporting and worked with a third-party

specialist firm to review and refine the data and calculations, ensuring the methodologies and results are robust,

consistent across the portfolio and reflect best practice for GHG accounting. Scope 1 and Scope 2 GHG emissions

for each portfolio company are presented in our TCFD disclosures on page 55. We are now working with portfolio

companies to consider potential opportunities to reduce their GHG emissions over time.

Investment

process

The Investment Manager introduced an ESG assessment earlier in its investment process in order to assess

thepotential ESG risk of early-stage investment opportunities and identify where specialist due diligence may

berequired.

Climate scenario

analysis

The Investment Manager developed its approach to climate scenario analysis, in line with the TCFD’s

recommendations, tohelp it assess the impacts on our portfolio companies from different climate-related

scenarios. This analysis is discussed in more detail in our TCFD disclosures on pages 51 to 55.

Governance

and reporting

We continued to assess ESG and climate-related reporting frameworks and evolved the Company’s risk

governance to incorporate different climate-related risks.

Suppliers We set a policy outlining the minimum sustainability standards the Company will expect from its suppliers and

assessed our current key suppliers against these criteria.

Financial

agreements

In November 2021 we refinanced the Company’s revolving credit facility (‘RCF’) as a sustainability-linked RCF.

Thenew facility follows the Loan Market Association’s Sustainability Linked Loan Principles and includes stretching

targets across Environmental, Social and Governance themes aligned with our purpose.

During the year, the Company also entered into sustainability-linked FX hedging agreements with some of

its hedge counterparties. The Company can receive ‘sustainability rebates’ dependent on meeting the same

sustainability targets as set for the Company’s RCF.

We are also considering the appropriateness of sustainability-linked credit facilities across the portfolio. ESVAGT

has recently signed a facility with ESG targets across several themes aligned with its sustainability strategy.

Assessment

completion

Deal team

Proprietary

Assessment Tool

Developed over

a number of years.

Regularly refined and

benchmarked against

external tools

and research

Aggregation &

Analysis

Developed and calibrated

against historic

portfolio performance

Comparison to 3i

minimum standards

Trend analysis

Risk scoring

and categorisation

Investment decision

support

Output

Asset review

dashboard

Action log

Portfolio dashboard

3i-wide output

Feedback loop

Action plan and strategy development

Assessment

databank

Investment case

Risk log

We aim to act lawfully and with integrity,

including complying with all regulatory

and statutory obligations and disclosure

requirements. We maintain open and

constructive relationships with regulators,

including the UK Financial Conduct

Authority (‘FCA’) and the Jersey Financial

Services Commission. We require that

ourportfolio companiescomply with

their legalandregulatory obligations.

Details of the Company’s policies relating

to the UK Bribery Act, Modern Slavery

Act, Procurement, Prompt Payment,

Whistleblowing and EqualOpportunities

and Diversity canbe found on our

website www.3i-infrastructure.com.

Sustainability report continued

ESG assessment framework

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 49

Sustainability report continued

UN Sustainable

Development Goals

In order to assess the impact of our

portfolio companies on the environment

and the communities in which they operate,

the Board and the Investment Manager

reference a number of frameworks,

including the UN’s Sustainable

Development Goals (‘SDGs’).

The Board and the Investment Manager

consider each of the portfolio companies

against the SDGs periodically and

soon after we acquire a new company.

This process, alongside the conversations

between the portfolio companies and the

Investment Manager around sustainability,

helps us to understand the impact that

each of the investments makes, to identify

improvements and to help develop their

sustainability objectives.

Many of our portfolio companies have

embraced this framework, conducting

their own assessment against the SDGs

and incorporating that assessment in their

sustainability strategies. Where relevant

wehave incorporated those assessments

inthe table opposite.

We believe that each of our portfolio

companies is able to make a positive

contribution to one or more of the SDGs.

In particular our approach to governance,

and to labour and health and safety, makes

a positive contribution to the employees,

customers, suppliers and the local

communities in which they operate.

Additionally, through their operations,

several of our businesses also make

positive contributions to the provision of

renewable energy, to the development of

infrastructure to support economic growth,

to managing and minimising the waste

of precious resources and to providing

high

quality and safe healthcare.

Our assessment of where we are having the

biggest impact through the portfolio is also

shown in the table opposite. We believe the

work we do to ensure that comprehensive

and high quality policies are implemented

by our portfolio companies is a step

towards the objectives of SDG 16 Peace,

Justice and Strong Institutions. We also

believe our focus on health and safety

governance and employee engagement

at our portfolio companies is aligned with

the objectives of SDG 3 Good Health and

Well-being.

Where we are having

the biggest impact

Sustainability report continued

Climate change and the transition

to a low-carbon economy

Through its investment portfolio the

Company supports the transition towards

a low-carbon economy. Since 2016, the

Company has invested in three businesses

(Infinis, Attero and Valorem) that generate

electricity from renewable resources.

The installed capacity across these

businesses is now almost 900MW, enough

to power more than 60% of the households

in London.

We have a strong pipeline of new

potential generatingcapacity for future

development. The chart shows the growth

in renewable energy generating capacity

over the last six financial years, since we

firstinvested in Valorem and Infinis.

Infinis is the UK’s leading generator of

low-carbon power from captured methane

and has begun installing solar panels across

its sites to further expand its renewable

energy generation capabilities. By capturing

methane from landfill sites, Infinis is not

only able to generate renewable electricity,

butit also prevents methane from escaping

into the atmosphere, a greenhouse gas

which is 25 times more potent than CO

In GHG footprint terms, it prevents

emissions equivalent to 7.1 million tonnes

of CO

annually, which is comparable

to that of over 750,000 UK households.

Infinis generates nearly 1,300 GWh of

electricity a year and is developing battery

projects to store energy for usage during

periods of low supply.

Valorem, our renewable energy

development company, has grown its

renewable assets base from 179MW to

663MW (of which 483MW is in operation)

since our acquisition in September 2016.

Under our ownership, Valorem has moved

from solely owning wind farms in France

to now developing wind, solar and hydro

assets in France, Finland and Greece.

Attero, one of the largest waste treatment

companies in Europe, produces renewable

electricity for 350,000 households by

recovering energy from waste. Attero’s

recycling activities also help avoid GHG

emissions by reducing the need for

extraction or mining of virgin materials.

Valorem Infinis

Attero

Mar 2018Mar 2017 Mar 2019 Mar 2020 Mar 2021 Mar 2022

Renewable energy installed capacity

(at 31 March, MW)

157

287

216

294

177

483

238

177

233

304

350

289

177

387

287

1,000

900

800

700

600

500

400

300

200

100

1 Excludes Infinis Power Response business which is not deemed to be renewable for these purposes.

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 51

Sustainability report continued

The Company is making good progress

in its voluntary climate-related financial

disclosures as recommended by the

TCFD. As a listed investment company,

these are not required by the UK Listing

Rules. We expect that the Company’s

reporting of TCFD disclosures will

evolve over time, consistent with the

forthcoming requirement for the

Investment Manager to publish a

TCFD product report in respect of

the Company.

The following should be

read

inconjunction with the rest

theAnnualreport and accounts.

We have cross-referenced the relevant

sections under each of the headings below.

As an investment company, the majority

of the disclosures relate to the Company’s

portfolio of investments rather than to the

Company itself.

Governance

The Board’s oversight of

climate-related risks and opportunities

The Board is responsible for the Company’s

overall approach to sustainability, ESG and

related policies. The Board has adopted

the Responsible Investment policy of the

Investment Manager.

The Board discharges its responsibilities

for the assessment and monitoring of

sustainability and climate-related risks

and opportunities through the Company’s

Audit and Risk Committee. The Audit and

Risk Committee, amongst other areas,

responsible for internal controls and risk

management, including the assessment

and management of ESG risks and

opportunities in the portfolio, considering

physical and transition climate change risks

including on terminal value assumptions,

and for ensuring compliance with

applicable ESG legislation and regulation.

The Audit and Risk Committee is also

responsible for reviewing and approving

theCompany’s voluntary disclosures under

the TCFD framework.

Day-to-day accountability for sustainability,

including climate change-related issues,

rests with the Investment Manager.

Further detail on risk governance can be

found in the Risk report on page 67.

The Investment Manager’s role in

assessingandmanaging climate-

related risksand opportunities

The Investment Manager is responsible

for

the implementation of the Responsible

Investment policy, as well as being

responsible for making decisions concerning

the acquisition, management, ongoing

monitoring and sale of investments,

and

formaking decisions concerning

major

investments made by our portfolio

companies. In evaluating new and existing

investments, the Investment Manager takes

account of climate-related risks, including

the impact of climate change on the

markets each company serves and

demand

for its products; the climate

change resilience of each company’s

assets

and supply chain; and, in the caseof

emissions-intensive industries, the feasibility

and potential cost of greenhouse gas

emissions abatement. The 3i Group

Risk

Committee oversees the Investment

Manager’s risk management framework.

TCFD disclosures

This section of the Strategic report sets out

how we incorporate climate-related risks and

opportunities into our governance, strategy,

risk management and targets, and is guided

by the recommendations of the TCFD.

Sustainability report continued

Strategy

Climate-related risks and opportunities

identified over the short, medium,

and long term and the

impact on

businesses, strategy, and financial

planning

Climate-related risk and climate regulation

risk have been identified as key risks as well

as investment themes for

the Company.

This is further discussed in our Risk report

on page 71. There are physical risks that

arise directly

from changing climate

conditions and transition risks that occur

as a result of the necessary transition

alower-carbon economy. These risks

exist for the Company and its portfolio.

The Board and the Investment Manager

are increasingly considering the impact

of climate-related risks and opportunities

on our portfolio companies, investment

strategy and financial planning.

Our investment strategy is to make a

limited number of new investments each

year, selected within our target sectors

and geographies on the basis of their

compatibility with our return targets

and

fit with the existing portfolio.

Whilst the Company does not

operate

asustainability-driven

investment strategy, it does seek to

identify investments that benefit from

long-term trends, many of which link

to sustainability themes including the

energy transition. As set out earlier in

this section the Company, through its

Investment Manager, carries out its

investment activities under 3i Group’s

Responsible Investment policy, which is

embedded in the Investment Manager’s

investment and portfolio management

processes and is considered rigorous

by industry standards. We will not invest

in businesses that have unsustainable

environmental practices or an

unsustainable impact on the society

inwhich they operate.

Once invested, we use our influence at

portfolio companies to encourage the

monitoring of environmental impacts,

development of more environmentally

sustainable behaviours and investments

to mitigate portfolio companies’

environmental impacts. We are

continuously evolving our approach as

a responsible investor by undertaking

initiatives to improve our assessment

of sustainability risks and opportunities

within our investment and portfolio

management processes.

Each of the portfolio companies we

owned at the start of the year has set

formal sustainability strategy and

identified a responsible individual to

drive

the strategy and to set and

measure

objectives for the company.

Having a sustainability strategy in

place

provides a framework for setting specific

objectives, and driving performance

toachieve them.

During the year, the Investment

Manager worked with portfolio

companies to implement GHG

emissions reporting and worked

with a third-party specialist firm

to review and refine the data and

calculation methodologies.

We are now working with portfolio

companies to consider potential

opportunities to reduce their

GHG

emissions over time.

Resilience of the organisation’s

strategy, taking into consideration

different climate-related scenarios,

including a2°Corlower scenario

As a company that invests over the

medium to long term we recognise

the

importance of investing in the

low-carbon energy transition and that

this will ultimately impact all sectors

in which we invest. The Investment

Manager has recently completed

its first climate scenario analysis

to help it assess the impact on

portfolio companies from

different

climate scenarios.

TCFD disclosures continued

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 53

Sustainability report continued

TCFD disclosures continued

The approach was developed with the

support of a third-party climate modelling

specialist firm and

considers three climate

pathways:

i) Orderly net zero by 2050,

ii)Disorderly net zero by 2050 and iii)

Failed

transition. The pathways differ in terms of

policy and technological changes, physical

risks and pricing-in mechanisms. The inputs,

assumptions and macroeconomic

modelling utilised draw from established

academic and industry sources.

The assessment of the results from climate

scenario analysis will be a focus for the

Investment Manager in the coming year.

This includes understanding how different

climate scenarios will impact each portfolio

company’s strategy and help prioritise our

areas of focus and engagement.

3i Infrastructure itself has no employees

and a very limited direct impact on the

environment and is not a significant

producer of greenhouse gas emissions.

We continue to monitor this position and

will consider reporting if the emissions

footprint increases materially.

Risk management

Processes for identifying and assessing

climate-related risks

The Investment Manager monitors

all

relevant portfolio risks, including

climate-related risks and changing

consumer preferences in response to

environmental issues, through its rigorous

investment assessment and portfolio

monitoring processes and using its

proprietary ESG assessment tool. This is

critical to protecting and enhancing the

value of our assets and is at the core of

our

investment management process.

The Investment Manager always

undertakesESG due diligence, including

environmental due diligence, before

making new investments, and monitors ESG

risks throughout the life of our investments.

If appropriate this includes the engagement

of specialist external firms to provide advice

on specific sectors or topics.

During the year, the Investment Manager

introduced an ESG assessment earlier in its

investment process in order to assess the

potential ESG risk of early-stage investment

opportunities and identify where specialist

due diligence may be required.

We continue to develop our governance and

risk management framework to ensure that

sustainability-related risks in our portfolio

are treated as a priority by our portfolio

company management teams.

We also assess the potential financial

impact of climate change on the Company

through our annual viability assessment

(see page 79). Our analysis shows that the

Company remains viable over the medium

term from a climate change stress scenario

on our portfolio.

As the regulatory environment is constantly

evolving, the Investment Manager

actively considers and monitors existing

and emerging regulatory requirements

to climate change (eg limits on

emissions and carbon taxes) as these

requirements may pertain both to the

Company and to our portfolio companies.

Processes for managing climate-

related risks and integration into

overall risk management

The processes for managing

climate-related risks are determined

the Audit and Risk Committee.

The main focus area for the Committee

and the Investment Manager is the

development and integration of the

data, tools and capabilities needed to

support disclosure, risk identification

and monitoring

for ESG-related risks,

including climate-related risks across

the

whole portfolio.

3i Infrastructure itself is not exposed

to material environmental risks.

The Company has no employees.

The business of the Company is

conducted through the Investment

Manager and Jersey administrator

who do not have any office locations

dedicated to the Company.

The Company has a comprehensive risk

governance framework and compliance

processes and procedures to ensure

that all risks, including ESG risks, are

monitored and managed with due care

and diligence and that the Company is fully

compliant with all applicable environmental

legislation. This is further described in the

Risk report on pages 67 to 69.

Metrics and targets

Metrics used to assess climate-related

risks and opportunities

We manage the environmental

sustainability of each portfolio company

as we would any other critical business

activity in an integrated and consistent

manner. Due to the changing nature of our

portfolio, the Company does not carry out

portfolio level scenario analyses, and we do

not publish aggregated resource intensity

GHGintensity data.

Sustainability report continued

As the portfolio is subject to continuous

change as a result of investment and

divestment activity, such portfolio level

scenario analyses and data aggregation

would

notbe meaningful or comparable

year-on-year. The Investment Manager

monitors the environmental performance

our portfolio companies, and uses its

influence as an investor to promote a

commitment in our

portfolio companies

minimise their environmental footprint,

invest in the mitigation of their environmental

impact and implement energy efficiency

measures. This is an important part not

only

of our portfolio risk management

procedures, but

also of the value creation

plan for each

of our investments.

During the year, the Investment Manager

worked with all of our portfolio

company

management teams to identify and report

their GHG footprint. There is a legal

requirement for UK

listedcompanies

and UK large unquoted companies to

provide certain climate-related disclosures,

including in relation to GHG emissions.

This applies to Infinis, which provides this

reporting as part of its own annual report

and accounts, which can be found on

www.infinis.com.

Our portfolio companies include in

their sustainability strategies long-term

objectives for reducing GHG intensity.

The objectives for each portfolio company

will differ depending on the sector in

which

they operate.

Emissions reporting

As noted above, 3i Infrastructure itself

has a very limited direct impact on the

environment and is not a significant

producer of greenhouse gas emissions.

The Company consumed less than

40,000

kilowatt hours of energy in the

financial year and is therefore exempt from

the UK Streamlined Energy and Carbon

Reporting disclosure requirements.

We are pleased to report Scope 1 and

Scope 2 GHG emissions for our portfolio

companies below for the first time.

These are being disclosed voluntarily in

order to provide a useful view on emissions

across our portfolio.

We supported portfolio companies with

implementing GHG emissions reporting

and worked with a third-party specialist

firm during the year to

review and refine

the data and calculations, ensuring that

the methodologies and results are robust,

consistent across the portfolio and reflect

best practice for GHG accounting.

TCFD disclosures continued

Review of investments and Sustainability

3i Infrastructure plc Annual report and accounts 2022 55

We expect to continue to work with

portfolio company management teams to

refine their data collection and calculation

methodologies over time, including the

calculation of Scope 3 emissions. We are

also working with portfolio companies

to consider potential opportunities to

reduce

their GHG emissions over time.

The work performed to collect Scope 1

and

Scope 2 emissions helped identify

several potential areas for reduction across

the portfolio.

Emissions data are not currently available

for

our two most recent investments:

SRL

Traffic Systems, which was signed

and completed in December 2021, and

Global Cloud Xchange, which was signed in

November 2021 and has not yet completed.

Sustainability report continued

We will work with their management teams

to implement processes for emissions data

collection in order to report their emissions

in the next Annual Report.

Tonnes of CO

equivalent Scope 1 Scope 2

Oystercatcher

14 1,717

ESVAGT 99,248 331

TCR 1,656 2,031

Infinis 66,591 2,822

Valorem 13 106

Attero 792,245 37,72 9

Tampnet 31 103

Joulz 533 98

Ionisos 3,502 1,952

DNS:NET 418 1,880

1 Represents GHG emissions from Oystercatcher’s

terminal in Singapore. Excludes GHG emissions

fromOystercatcher’s European terminals,

whichweredivested during the year.

2 Location-based, using grid-average

emissions factors.

3 Market-based, using contract-specific

emissions factors.

The most significant sources of Scopes

1 and 2 emissions across the portfolio

relate to specific operations that support

the essential nature of the businesses in

our portfolio.

Attero is the largest direct emitter in the

portfolio. Its emissions are primarily a result

of Attero’s waste processing activities

and from the landfills that Attero owns

and operates. However, Attero’s recycling

operations help to avoid waste being sent

to landfills and emitting more greenhouse

gases than Attero emits through its own

processing activities, thereby reducing

netGHG emissions in the Netherlands.

Attero’s operations help further to

avoid emissions through its production

of renewable energy from the waste it

processes and from the sale of secondary

materials. During calendar year 2021, the

emissions that these two activities helped

offset its Scope 1 and Scope 2 emissions.

ESVAGT’s Scope 1 emissions relate to the

fuels used in its vessels. ESVAGT aims to

transition its vessels to renewable sources

of fuel and electrical power, and has set

itself an environmental goal to become

carbon neutral by 2035 and to have zero

carbon emissions by 2050.

ESVAGT has several innovations in

progress, including a recent agreement

with Ørsted for a new SOV powered

by dual-fuel engines capable of sailing

on renewable e-methanol as well

as batteries.

Infinis’s Scope 1 emissions primarily

relate

to the natural gas used in its

Power

Response business, which

provides highly responsive power during

times of peak demand. This is a critical

activity to help overcome the current

gaps in supply from renewable power

sources. Infinis has begun developing

battery projects that will allow renewable

energy to be stored in order to meet

peaks in demand. This will lessen the

reliance on natural gas to fill gaps in

supply. In addition, Infinis’s Captured

Landfill Methane (‘CLM’) and Captured

Mineral Methane (‘CMM’) operations

contributed to the capture of 258,000

tonnes of methane in FY22, equivalent

to preventing the emission of

6,400,000

tonnes of CO

TCFD disclosures continued

ESVAGT

Page 35

Financial

review and

Risk report

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 57

Financial review

The Company has continued to

grow

income and NAV per share

alongside managing liquidity

fundnewinvestments.”

James Dawes

CFO, Infrastructure

The Company delivered another year of

outperformance which was underpinned

by strong income and capital returns

from the portfolio. A total of £980 million

of new investments and commitments

were made and the Company actively

managed its liquidity position through

its RCF and an additional £600 million

committed facilities.

The portfolio has the income-generating

capacity to support the progressive

dividend policy, and the dividend was

covered by net income this year despite

some drag from uninvested cash earlier

inthe year. The target dividend for

FY23of11.15 pence per share is an

increaseof 6.7% over FY22.

Returns

Total return

The Company generated a total return

for the year of £404 million, representing

a 17.2% return on opening NAV net of the

prior year final dividend (2021: £206 million,

9.2%). This performance is significantly

ahead of the target return of 8% to

10%per annum to be achieved over

themedium term.

This outperformance was driven by

the strong return from the sale of

Oystercatcher’s four European terminals

and good performance across the

economic infrastructure portfolio,

particularly from TCR and ESVAGT.

Changes in the valuation of the Company’s

portfolio assets are described in the

Movements in portfolio value section

oftheInvestment Manager’s review.

The Company delivered another

year of outperformance.

Key financial measures

(year to 31 March) 2022 2021

Total return

£404m £206m

NAV £2,704m £2,390m

NAV per share 303.3p 268.1p

Total income £133m £110m

Total income and non-income cash £143m £117m

Portfolio asset value £2,873m £1,802m

Cash balances £17m £463m

Total liquidity

£786m £763m

1 Prior year figures contain non-material adjustments to the Financial statements as reported in the prior year

Annual report and accounts. These adjustments are no longer required as explained on page 59.

2 IFRS Total comprehensive income for the year.

3 Includes cash balances of £17 million (2021: £463 million) and £769 million (2021: £300 million) undrawn

balances available under the Company’s revolving credit facility including additional committed facilities

which total £1 billion.

Total income and non-income cash of

£143 million in the year was higher than last

year, due to income from new investments

and some portfolio companies resuming

distributions after preserving liquidity in

the previous year due to Covid-19 risks

(2021: £117 million).

Non-income cash receipts reflect

distributions from underlying portfolio

companies, which would usually be income

to the Company, but which are distributed

as a repayment of investment for a variety

of reasons. Whilst non-income cash does

not form part of the total return shown in

Table 3, it is included when considering

dividend coverage.

An analysis of the elements of the total

return for the year is shown in Table 3.

Financial review continued

Derivatives

£18m

Loans and

borrowings

£231m

Other net

liabilities

£68m

Portfolio

assets

£2,873m

Derivatives

£26m

Other

net assets

£105m

Cash

£17m

Shareholders’

equity

£2,704m

Capital return

£375m

Portfolio income

£127m

Movements

in derivatives

£2m

Costs

£111m

Total return

£404m

Dividends

£90m

Available for

reinvestment

when realised

£314m

Other

income

£6m

Foreign

exchange

£9m

Balance sheet (as at 31 March 2022) Income statement (year to 31 March 2022)

Composition of balance sheet and income statement (year to 31 March 2022)

Portfolio return

Composition of balance sheet and income statement (year to 31 March 2022)

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 59

The Financial statements’ classification of

these components of total return includes

transactions within unconsolidated

subsidiaries as the Company adopts

the Investment Entities (Amendments

to IFRS 10, IFRS 12 and IAS 27) basis for

its reporting. In previous years we have

shown the non-material adjustments

required to reconcile this analysis to

theFinancial statements.

Following the partial divestment of the

Oystercatcher investment and a restructure

of some investments previously held

through Luxembourg-based subsidiaries

but now held directly by the Company,

wehave aligned the basis of reporting in

this section to the Financial statements and

willno longer report on anadjusted basis.

Capital return

The capital return is the largest element

ofthe total return. The portfolio generated

a value gain of £375 million in the year to

31 March 2022 (2021: £135 million), as shown

in Chart 5. There was a positive contribution

across the majority of the portfolio and

the largest contributor was Oystercatcher

which generated £121 million.These value

movements are described in the

Movements in portfolio value section

oftheInvestment Manager’s review.

Table 3: Summary total return (year to 31 March, £m)

2022 2021

Capital return (excluding exchange) 375 135

Foreign exchange movement in portfolio 9 (24)

Capital return (including exchange) 384 111

Movement in fair value of derivatives (2) 22

Net capital return 382 133

Total income 133 110

Costs (111) (37)

Total return 404 206

Financial review continued

3,000

2,800

2,600

2,400

2,200

2,000

1,800

Chart 5: Reconciliation of the movement in NAV (year to 31 March 2022, £m)

Opening NAV at

1 April 2021

Capital

return

Net foreign

exchange

movement

Total

income

Net costs

including

management fees

NAV

before

distributions

Distribution

to shareholders

Closing NAV at

31 March 2022

2,346

375

133

(111)

2,750

(46)

2,704

1 Opening NAV of £2,390 million net of final dividend of £44 million for the prior year.

2 Foreign exchange movements are described in Chart 7.

3 Includes non-portfolio related exchange movements of £3 million.

Financial review continued

Table 4: Total income and non-income cash

(year to 31 March, £m)

2022 2021

Total income 133 110

Non-income cash 10 7

Total 143 117

Income

The portfolio generated income of

£127 million in the year (2021: £99 million).

Of this amount, £24 million was through

dividends (2021: £20 million) and

£103 million through interest on

shareholderloans (2021: £79 million).

An additional £6 million of interest was

accrued on the vendor loan notes issued

in lieu of WIG proceeds (2021: £10 million)

together with a further £0.1 million

of interest receivable on deposits

(2021: £0.4 million). Total income and

non-income cash is shown in Table 4.

A strong income contribution from Tampnet

and higher non-income cash receipts offset

the reduction in income fromOystercatcher

following divestment of the European

terminals. A breakdown of portfolio income

is provided in Chart 8, together with an

explanation of the change from prior year.

Interest income from the portfolio was

significantly higher than prior year due

to the new investments in SRL, DNS:NET

and ESVAGT.

Dividend and non-income cash distributions

increased this year as liquidity preserved for

risks associated with the Covid-19 pandemic

in the prior year was released.

Foreign exchange impact

The portfolio is diversified by currency as

shown in Chart 6. We aim to deliver steady

NAV growth for shareholders, and the

foreign exchange hedging programme

helps us to do this by reducing our

exposure to fluctuations in the foreign

exchange markets.

Portfolio foreign exchange movements,

after accounting for the hedging

programme, increased the net capital

return by £7 million (2021: reduced by

£2 million).

As shown in Chart 7, the reported foreign

exchange gain on investments of £9 million

(2021: loss of £24 million) included a gain

of £1 million from the Company’s exposure

to the Indian rupee, which is not hedged.

This was partially offset by a £2 million loss

on the hedging programme (2021: gain of

£22 million).

Chart 6: Portfolio value by currency

(

at 31 March 2022)

EUR 54%

19%

DKK

GBP

NOK

Hedged assets (€/SGD/DKK/NOK)

Unhedged assets (£/rupee)

Chart 7: Impact of foreign exchange (‘FX’) movements

onportfolio value

(year to 31 March 2022, £m)

FX gain before hedging FX gain after hedging

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 61

Financial review continued

517

ESVAGT

Infinis

Tampnet

SRL

TCR

Ionisos

Joulz

Oystercatcher

Attero

Projects Portfolio

Chart 8: Breakdown of portfolio income (year to 31 March, £m)

Explanation of variances

Further investment in February 2022

Divestment of European terminals

New investment in FY22

Liquidity retained in prior year

Interest (FY22) Interest (FY21)Dividend (FY22) Dividend (FY21)

DNS:NET

New investment in FY22

Valorem

Liquidity retained in prior year

Financial review continued

Costs

Management and performance fees

During the year to 31 March 2022, the

Company incurred management fees,

including transaction fees of £10 million,

of £43 million (2021: £24 million). The fees,

payable to 3i plc, consist of a tiered

management fee, and a one-off transaction

fee of 1.2% payable in respect of new

investments. The management fee tiers

range from 1.4%, reducing to 1.2% for any

proportion of gross investment value above

£2.25 billion.

An annual performance fee is also payable

by the Company, amounting to 20% of

returns above a hurdle of 8% of the total

return. This performance fee is payable in

three equal annual instalments, with the

second and third instalments only payable

if certain future performance conditions

are met. This hurdle was exceeded for

the year ended 31 March 2022 resulting

in a performance fee payable to 3i plc in

respect of the year ended 31 March 2022

of£54 million (2021: £7 million).

The first instalment, of £18 million, will be

paid in May 2022 along with the second

instalment of £2 million relating to the

previous year’s performance fee and

thethird instalment of £6 million relating

tothe FY20 performance fee.

For a more detailed explanation of how

management and performance fees are

calculated, please refer to Note 18 to

the accounts.

Fees payable

Fees payable on investment activities

include costs for transactions that did not

reach, or have yet to reach, completion and

the reversal of costs for transactions that

have successfully reached completion and

were subsequently borne by the portfolio

company. For the year to 31 March

2022,

fees payable totalled £3 million

(2021:

lessthan £1 million).

Other operating and finance costs

Operating expenses, comprising Directors’

fees, service provider costs and other

professional fees, totalled £3 million in

the

year (2021: £3 million).

Finance costs of £5 million (2021: £2 million)

in the year comprised arrangement and

commitment fees for the Company’s RCF.

Finance costs were higher than in FY21

as the size of the RCF was increased and

drawn in the year.

Ongoing charges ratio

The ongoing charges ratio measures annual

operating costs, as disclosed in Table 5

below, against the average NAV over the

reporting period.

The Company’s ongoing charges ratio

is calculated in accordance with the

Association of Investment Companies

(‘AIC’) recommended methodology and

was 1.41% for the year to 31 March 2022

(2021: 1.16%). The ongoing charges ratio

ishigher in periods where new investment

levels are high and new equity is raised

or capital is returned to shareholders.

Realisation of assets reduces the

ongoingcharges ratio. The cost items

thatcontributed to the ongoing charges

ratio are shown below.

The AIC methodology does not

include transaction fees, performance

fees or finance costs. However, the

AIC recommends that the impact of

performance fees on the ongoing charges

ratio is noted, where performance fees

are payable. The ratio including the

performance fee was 3.52% (2021: 1.45%).

The total return of 17.2% for the year is

after deducting this performance fee

andongoing charges.

Table 5: Ongoing charges (year to 31 March, £m)

2022 2021

Investment Manager’s fee 32.6 23.7

Auditor’s fee 0.6 0.5

Directors’ fees and expenses 0.5 0.5

Other ongoing costs 2.4 2.2

Total ongoing charges 36.1 26.9

Ongoing charges ratio 1.41% 1.16%

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 63

Balance sheet

The NAV at 31 March 2022 was

£2,704 million (2021: £2,390 million).

The principal components of the NAV

arethe portfolio assets, cash holdings and

borrowings under the RCF, the vendor loan

notes from the sale of WIG, thefair value

of derivative financial instruments and

other net assets and liabilities. A summary

balance sheet is shown in Table 6.

At 31 March 2022, the Company’s net assets

after the deduction of the final dividend

were £2,657 million (2021: £2,346 million).

Cash and other assets

Cash balances at 31 March 2022 totalled

£17 million (2021: £463 million).

Cash on deposit was managed actively

by the Investment Manager and there are

regular reviews of counterparties and their

limits. Cash is principally held in AAA-rated

money market funds.

The decrease in Other net assets is due to

an increase in

the performance fee payable.

Borrowings

The Company has a £400 million RCF in

order to maintain a good level of liquidity

for further investment whilst minimising

returns dilution from holding excessive

cash balances. This is a three-year facility,

with a maturity date of November 2024.

In December 2021, the Company increased

its existing facility by £200 million to

£600 million and in January 2022 an

additional one-year credit facility of

£400 million was agreed. Aggregate credit

facilities totalled £1 billion at 31 March 2022.

At 31 March 2022 the total amount drawn

was £231 million.

NAV per share

The total NAV per share at 31 March 2022

was 303.3 pence (2021: 268.1 pence).

This reduces to 298.1 pence (2021: 263.2

pence) after the payment of the final

dividend of 5.225 pence (2021: 4.9 pence).

There are no dilutive securities in issue.

Dividend and dividend cover

The Board has proposed a dividend for the

year of 10.45 pence per share, or £93 million

in aggregate (2021: 9.8 pence; £87 million).

This is in line with the Company’s target

announced in May last year.

When considering the coverage of the

proposed dividend, the Board assesses

the income earned from the portfolio,

interest received on cash balances and any

additional non-income cash distributions

from portfolio assets which do not follow

from a disposal of the underlying assets,

as well as the level of ongoing operational

costs incurred in the year. The Board also

takes into account any surpluses retained

from previous years, and net capital profits

generated through asset realisations,

whichit considers available as dividend

reserves for distribution.

Financial review continued

Table 6: Summary balance sheet (year to 31 March, £m)

2022 2021

Portfolio assets 2,873 1,802

Cash balances 17 463

Derivative financial instruments 8 37

Borrowings (231) –

Other net assets (including vendor loan notes) 37 88

NAV 2,704 2,390

Financial review continued

Table 7: Dividend cover (year to 31 March, £m)

2022 2021

Total income, other income and non-income cash 143 117

Operating costs including management fees (50) (30)

Dividends paid and proposed (93) (87)

Dividend surplus for the year – –

Dividend reserves brought forward from prior year 868 876

Realised loss over cost on disposed assets (20) (1)

Performance fees (54) (7)

Dividend reserves carried forward 794 868

Table 7 shows the calculation of dividend

coverage and dividend reserves.

The dividend was fully covered for the

year

with no surplus (2021: no surplus).

The retained amount available for

distribution, following the payment

of the final dividend, the realised loss

over cost relating to the India Fund

that was previously unrealised and the

performance fee will be £794 million

(2021: £868 million). This is a substantial

surplus, which is available to support the

Company’s progressive dividend policy,

particularly should dividends not be

fully covered by income in a future year.

A shortfall could arise, for example, due

to holding substantial uninvested cash or

through lower distributions being received

from portfolio companies in order to

preserve liquidity.

Chart 9 shows that the Company has

consistently covered the dividend over

the

lastfive years.

116

165

105

87 87

Chart 9: Dividend cover (five years to 31 March 2022, £m)

March 2018

March 2019 March 2020 March 2021 March 2022

1 Net income is Total income, other income and non-income cash less operating costs.

2 A return of capital to shareholders in 2018 reduced the FY18 final dividend payment.

Net income

Dividend

93 93

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 65

Sensitivities

The sensitivity of the portfolio to key inputs

to our valuations is shown in Chart 10 and

described in more detail in Note 7 to the

accounts. The portfolio valuations are

positively correlated to inflation. The

longer-term inflation assumptions beyond

two years remain consistent with central

bank targets, eg UK CPI at 2%.

The sensitivities shown in Chart 10 are

indicative and are considered in isolation

holding all other assumptions constant.

Timing and quantum of price increases

will vary across the portfolio and the

sensitivity may differ from that modelled.

Changing the inflation rate assumption

may necessitate consequential changes

toother assumptions used in the valuation

ofeach asset.

Alternative Performance

Measures (‘APMs’)

We assess our performance using a variety

of measures that are not specifically defined

under IFRS and are therefore termed APMs.

The APMs that we use may not be directly

comparable with those used by other

companies. These APMs provide additional

information of how the Company has

performed over the year and are all financial

measures ofhistorical performance.

The APMs are consistent with those

disclosed in prior years.

• Total return on opening NAV reflects

the performance of the capital

deployed by the Company during the

year. This measure is not influenced

by movements in share price or

ordinary dividends to shareholders.

This is a common APM used by

investment companies.

• The NAV per share is a measure of the

underlying asset base attributable to

each ordinary share of the Company

and is a useful comparator to the share

price. This is a common APM used by

investment companies.

Chart 10: Portfolio sensitivities (year to 31 March 2022)

Discount rate

Inflation

(for two years)

Interest rate

£(158m) (5.5%)

£156m 5.4%

£43m 1.5%

£(46m) (1.6%)

£(258m) (9.0%)

£297m 10.3%

+1%

-1%

+1%

-1%

+1%

-1%

8%0 2%-2%-4%-6%-8% 4% 6%

Financial review continued

• Total income and non-income cash is

used to assess dividend coverage based

on distributions received and accrued

from the investment portfolio.

• Investment value including commitments

measures the total value of shareholders’

capital deployed by the Company.

• Total portfolio return percentage reflects

the performance of the portfolio assets

during the year.

The definition and reconciliation to IFRS

ofthe APMs is shown below.

The table below defines our APMs.

APM Purpose Calculation Reconciliation to IFRS

Total return on

opening NAV

A measure of the overall financial

performance of the Company.

For further information see the

KPIsection.

It is calculated as the total return

of £404 million, as shown in the

Statement of comprehensive income,

as a percentage of the opening

NAV of £2,390 million net of the

finaldividend for the previous year

of£44 million.

The calculation uses IFRS measures.

NAV per share A measure of the NAV per share

intheCompany.

It is calculated as the NAV divided

bythe total number of shares in

issueat the balance sheet date.

The calculation uses IFRS measures and is set out in Note 14 to the accounts.

Total income and

non-income cash

A measure of the income and other

cash receipts by the Company which

support the payment of expenses

and dividends.

It is calculated as the total income

from the underlying portfolio and

other assets plus non-income cash

being the repayment of shareholder

loans not resulting from the disposal

of an underlying portfolio asset.

Total income uses the IFRS measures Investment income and Interest

receivable. The

non-income cash, being the proceeds from partial

realisations of investments are shown in the Cashflow statement.

Therealisation proceeds which result from a partial sale of an underlying

portfolio asset are not included within non-income cash.

Investment

value including

commitments

A measure of the size of the

investment portfolio including

the value of further contracted

future investments committed

bytheCompany.

It is calculated as the portfolio

asset value plus the amount of

thecontracted commitment.

The portfolio asset value uses IFRS measures. The value of future

commitments is set out in Note 16 to the accounts.

Total portfolio

return percentage

A measure of the financial

performance of the portfolio.

It is calculated as the total portfolio

return in the year of £509 million,

asshown in Table 1, as a percentage

of the sum of the opening value of

the portfolio and investments in the

year (excluding capitalised interest)

of£2,565 million.

The calculation uses capital return (including exchange), movement in fair

value of derivatives, underlying portfolio income, opening portfolio value

and investment in the year. The reconciliation of all these items to IFRS

shown in Table 1 including in the footnotes.

Financial review continued

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 67

Risk report

Introduction

At the start of the year, the Audit and Risk

Committee (the ‘Committee’), alongside

the Investment Manager, began a new

three-year cycle of risk reviews to identify

and consider the impact and likelihood of

the key, principal and emerging risks facing

the Company today. A number of risks

were reassessed to reﬂect developments

in the year, and the list of emerging risks

was refreshed. The Committee updated

the risk register and risk matrix as a result

of the analysis conducted during the

year, and considered the alignment of the

principal risks identiﬁed to the Company’s

strategic objectives.

The following sections explain how we

identify and manage risks to the Company.

We outline the key risks, our assessment

of their potential impact on the Company

and our portfolio in the context of the

current environment and how we seek

tomitigate them.

Approach to risk governance

The Board is ultimately responsible for

the risk management of the Company.

It seeks to achieve an appropriate balance

between mitigating risk and generating

long-term sustainable risk-adjusted returns

for shareholders. Integrity, objectivity

and accountability are embedded in the

Company’s approach to risk management.

The Board exercises oversight of the

risk framework, methodology and

process through the Committee.

The risk frameworkis designed to provide

a structured and consistent process for

identifying, assessing and responding to

risks. The Committee ensures that there

is a consistent approach to risk across the

Company’s strategy, business objectives,

policies and procedures.

The Company is also reliant on the risk

management frameworks of the Investment

Manager and other key service providers,

aswell as on the risk management

operations of each portfolio company.

The Board manages risks through

reports from the Investment Manager

and other service providers and through

representation on portfolio companies’

boards by the Investment Manager’s

team members.

Risk framework

Risk related reporting

Internal

• Monthly

management accounts

• Internal and external

audit reports

• Service provider

control reports

• Risk logs

• Compliance reports

• Risk related reporting

External – Annual report

• Risk appetite

• Viability statement

• Internal controls

• Going concern

• Statutory/accounting

disclosures

ective risk management

isatthe heart o

everything

we

o as a Boar

.”

Wendy Dorman

Chair

Audit and Risk Committee

strat

The

iden

and

curr

tom

Risk report continued

Risk appetite

During the year, the Committee discussed

the Company’s risk appetite and concluded

that it remained broadly stable. As an

investment company, the Company seeks

to take investment risk. The appetite for

investment risk is described previously

in the Our approach section, and in the

Investment policy towards the end of

this document. Investments are made

subject to the Investment Manager’s

Responsible Investment policy, which

addresses an important element of our

appetite for investment risk. Given the

strong competition for new investments,

investment discipline remains a key

consideration. The target risk-adjusted

objective of delivering 8% to 10% return

per annum over the medium term remains

consistent with our current portfolio

investment cases, including our

recent

new investments. It is expected that

as the

portfolio expands, the range

ofexpected returns in individual

investmentcases may also expand to

include higher risk/return ‘value add’ cases

and lower risk/return ‘core’ investments.

We recognise that this has the potential

to result in greater volatility in returns

onanindividual asset basis.

The beneﬁts of diversiﬁcation across

sectors, countries and types of underlying

economic risk will mitigate this volatility,

and the Company has sought to build

a diverse portfolio while considering

carefully the underlying risks to which

our portfolio companies are exposed.

The Committee concluded that the risk

appetite of the Company for economic

infrastructure investments has not changed,

and remains appropriate for our investment

mandate and target returns. The Covid-19

pandemic provided a severe test of

the appropriateness of the Company’s

risk appetite, and its attractiveness to

investors. The portfolio overall has been

resilient, and beneﬁtted from diversiﬁcation

across

infrastructure subsectors and types

of underlying risks.

The key tools used by the Committee to

deﬁne the Company’s risk appetite and

to determine the appetite for key risks

are the risk register and the risk matrix.

The process of creating and reviewing the

risk register and risk matrix is described

below, together with a discussion of the

Company’s appetite for each of the key

risks. Beyond the appetite for investment

risk discussed above, the Company seeks

tolimit or manage exposure to other risks

to acceptable levels.

Risk review process

The Company’s risk review process includes

the monitoring of key strategic and ﬁnancial

metrics considered to be indicators

potential changes in its risk proﬁle.

The review includes, but is not limited to,

the following:

• infrastructure and broader

market overviews;

• key macroeconomic indicators and their

impact on the performance and valuation

of portfolio companies;

• regular updates on the operational

and ﬁnancial performance of

portfolio companies;

• experience of investment and

divestment processes;

• compliance with regulatory obligations,

including climate-related regulation;

• analysis of new and emerging

regulatory initiatives;

• liquidity management;

• assessment of climate risks to the

portfolio, including physical, transition

and litigation risks;

• consideration of scenarios that may

impact the viability of the Company;

• assessment of emerging risks; and

• review of the Company’s risk log.

Risk register review process

October 2021

Directors identify and score

the principal, key and

emerging risks facing 3iN

December 2021

Analysis and

interpretation

of responses

January 2022

Impact and likelihood

of the identiﬁed

risks considered

April 2022

Risk register and

risk matrix updated

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 69

Risk report continued

The Committee uses the risk framework

to identify emerging and key risks, and

to evaluate changes in risks over time.

Developments during the year in the more

signiﬁcant key risks or ‘principal risks’ are

discussed later in this document. These are

risks that the Committee considers to

have the potential to materially impact

the

delivery of our strategic objectives.

The Committee evaluates the probability

of each identiﬁed risk materialising and the

impact it may have, with reference to the

Company’s strategy and business model.

An emerging risk is one that may in future

be likely to have a material impact on the

performance of the Company and the

achievement of our long-term objectives,

but that is not yet considered to be a

key risk.

A key risk is considered currently to

pose the risk of a material impact on

theCompany. Risks may be identiﬁed as

emerging risks and subsequently become

key risks. Identiﬁed key risks may cease

tobe considered key over time.

The Committee maintains a risk matrix,

onto which the key risks are mapped by

impact and likelihood. The principal risks

are identiﬁed on the risk matrix as those

with the highest combination of impact

and likelihood scores.

Emerging risks Key risks Principal risks

Risk categorisation

The Committee uses the following categorisation to describe risks that are identiﬁed during the risk review process.

The review process was updated this year

to assess the likelihood and impact of each

risk over two timeframes, within threeyears

and beyond three years. The evaluation

of these key risks is then presented on a

risk matrix. Mitigating controls have been

developed for each risk and the adequacy

of the mitigation is then assessedand,

if necessary, additional controls are

implemented and reviewed by the

Committee at a subsequent meeting.

The Committee considers the identiﬁed

principal risks in greater detail in the

assessment of the Company’s viability.

A number of scenarios have been

developed to reﬂect plausible outcomes

should the principal risks be experienced,

as well as consideration of stressed

scenarios that could result in the

Company

ceasing to be viable.

As the Company is an investment

company, the stressed scenarios reﬂect

reduced cash ﬂows from the Company’s

investment portfolio, such that debt

covenants are breached and liabilities

not

met. Following the invasion of Ukraine,

a scenario was developed this year for a

new emerging risk of an escalation of this

conﬂict in Europe.

The Investment Manager models the

impact of these scenarios on the Company

and reports the results to the Committee.

The resulting assessment of viability is

included in this Risk report.

Review during the year

Early in the ﬁnancial year, the Committee

engaged EY to benchmark the Company’s

risk review process and to facilitate

a workshop with the Committee to

consider improvements to the process.

Presentation of the results of the

benchmarking exercise and the workshop

took place in September 2021. The risk

review process was subsequently updated

to consider the likelihood and impact

ofthe key risks over two timeframes.

The‘blank sheet of paper’ element of

the risk review process, conducted at the

start of each three-year cycle of reviews,

wasconsidered to be best practice against

the benchmarking undertaken.

Risk report continued

In October 2021, the Committee instigated

a process designed to identify and score

the key risks and update the list of emerging

risks currently facing the Company.

This started with the ‘blank sheet of paper’

exercise where each Director, and several

members of the Investment Manager’s

team, identiﬁed the top risks facing the

Company. In December 2021, the Committee

analysed the data collected and identiﬁed

the principal risks facing the Company,

scoring each for impact and likelihood

(within a three-year period and

beyond a

three-year period). In January

2022, the

results of the principal risk scoring were

considered and assessed and additional

changes made.

In March and April 2022, the Committee

reviewed the updated risk register and risk

matrix and the Company’s appetite for each

of the key risks.

We have a relatively diverse spread of

assets in the portfolio and it is important

that risk diversity is maintained as we evolve

the portfolio through new investments

and realisations.

Future realisations may continue the

evolution of risk in the portfolio in line

with our strategy and allow the Company

to manage its exposure to more sensitive

assets, or to take account of where the risk

proﬁle of an asset has changed over time.

We are conﬁdent that the portfolio remains

defensive and resilient, and in a position

beneﬁt from asymmetric returns in rising

or declining markets (taking more of the

upside in a rising market, and beneﬁtting

from protection in a downside). We believe

the current appetite for risk is appropriate.

Emerging risks

The Company is a long-term investor and

therefore needs to consider the impact of

both identiﬁed key risks, as detailed below,

and risks that are considered emerging or

longer-term. Risk categorisation, including

the deﬁnition of emerging risk, is shown

page 69.

The Board and the Investment Manager

consider these factors when reviewing

the

performance of the portfolio and when

evaluating new investments, seeking to

identify which factors present a potential

risk and can either be mitigated or

converted into opportunities.

As part of the ongoing risk identiﬁcation

and management of the Company, the

Committee considers whether these

emerging risks should be added to the

Company’s risk register. The risk register

is a ‘live’ document that is reviewed and

updated regularly by the Committee

as new risks emerge and existing risks

change. Examples of emerging risks that

were considered during the year include

the impact of changes in technology

on our portfolio companies, a future

pandemic, divergence between the

UK and the EU

regulation increasing

friction over trade

in goods and services,

and escalating

regulatory reporting

requirements. The risk

of an escalation

the war in Ukraine was added to the

list of emerging risks this year.

Key risks

Key risks are mapped by impact and

likelihoodon a risk matrix. During the

year, the Committee considered the

development of all the key risks in detail.

Within the category of key risks, the

principal risks identiﬁed by the Committee

in the ﬁnancial year are set out in the

Principal risks and mitigation table on pages

72 to 74, alongside how the Company seeks

to mitigate these risks.

Market and economic risk was considered

the top risk facing the Company.

This includes the consequences of

sanctions on Russia and Russian companies,

the recovery from the Covid-19 pandemic,

increased commodity and energy prices,

rising inﬂation and interest rates, supply

chain constraints and a heightened risk

of recession.

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 71

Risk report continued

The risk review showed a high level of

consistency with the prior year, with a

small number of changes in the key risks

identiﬁed. The assessment of likelihood

and impact of the key risks resulted in

some changes to the principal risks facing

the Company.

The risk of having an unbalanced portfolio

is considered to have decreased following

the new investments made in the year

which have increased the diversity of the

portfolio. Following that high level of new

investment, the management of liquidity

risk is considered to have increased and

become a principal risk.

The risk of poor investment performance

is considered to have increased such that

it is now a principal risk, reﬂecting the

risk at individual portfolio company level

of increased market and economic risk

alongside the evolution of underlying

risks in our portfolio consistent with

our investment strategy to focus on

economic infrastructure assets. The risk

of an inappropriate rate of investment

is considered to have decreased this

year, with a good ﬂow of new investment

opportunities through the pipeline which

converted into a good number of new and

follow-on investments.

Exposure to competition risk is considered

to have increased further reﬂecting the level

of fund raising by other asset managers

including several new listed funds.

These changes are reﬂected in the

Principal

risks and mitigations table

pages 72 to 74.

Covid-19

The Covid-19 pandemic was a major test

of the business models of all companies.

The resilient response of our portfolio

companies was consistent with our

strategy and with the characteristics that

we look for in infrastructure investments.

We are encouraged by the strength of the

performance of our portfolio this year as

Europe recovers from the pandemic and

restrictions are eased in the countries in

which we invest. More detail can be found

in the Investment Manager’s review and

elsewhere in this Risk report.

Climate risk

There is an increased focus on

sustainability and ESG amongst our

shareholders and in the wider market.

Although there is still much uncertainty

around the extent and timing of the

impact of climate change, government

and societal action, and future regulations,

we recognise that climate-related risk is a

key risk as well asaninvestment theme for

the Company. In our review this year, we

decided to separate climate-related risk

into two distinct but related risks.

Climate regulation risk has been added

tothe risk register, to address the

regulatory risk to the Company and the

portfolio associated with the transition

to alow-carbon economy. The existing

climate risk was amended to address the

physical and transition risks from climate

change on the portfolio.

We have increased our disclosures

and reporting on climate risk and our

Investment Manager has evolved its

proprietary ESG tool to allow us to

assess this and other risks in more

detail across the portfolio. This year, the

Investment Manager added consideration

of ESGrisks, including climate risks,

earlierintheinvestment process.

Our progress in TCFD reporting is

described on pages 51 to 55, and this

nowincludes GHG emissions reporting for

scopes 1 and 2 for our portfolio companies.

All of the companies in our portfolio

recognise the importance of considering

climate change and of evolving a

sustainable business model. As discussed

in the Sustainability report, the physical

and transition climate-related risks are also

seen as opportunities for all companies in

our portfolio.

There are no acute physical nor transition

risks identiﬁed in the portfolio that would

suggest that climate risk is a principal

risk, although an example of the impact

of a transition risk is the introduction of a

tax on imported waste or a carbon tax in

the Netherlands, which impacts Attero,

and the risk of early decommissioning of

oil and gas assets which impacts some

customers of Tampnet and ESVAGT.

We consider that the mitigating controls at

the Company and the Investment Manager

over climate regulation risk prevent this from

being a principal risk at the moment.

Risk report continued

Principal risks and mitigations

Our Strategic priorities

Invest

responsibly

Disciplined

approach

Efficient

balance sheet

Manage portfolio

intensively

Sustainability

key driver

External

Principal risk Risk description Risk mitigation

Market/economic

• Macroeconomic or market volatility, such as may arise from the consequences

of the invasion of Ukraine and from the effects on economies of the Covid-19

pandemic, ﬂows through to pricing, valuations and portfolio performance

• Fiscal tightening impacts market environment

• Risk of sovereign default lowers market sentiment and increases volatility

• Misjudgement of inﬂation and/or interest rate outlook

• Resources and experience of the Investment Manager on deal-making,

asset

management and hedging solutions to market volatility

• Periodic legal and regulatory updates on the Company’s markets and in-depth

market and sector research from the Investment Manager and other advisers

• Portfolio diversiﬁcation to mitigate the impact of a downturn in any geography

or sector or portfolio company-specific effects

• The permanent capital nature of an investment trust allows us to look through

market volatility and the economic cycle

Risk exposure

movement in

the year

Increased

Link to Strategic

priorities

Manage portfolio

intensively

Competition

• Increased competition for the acquisition of assets in the Company’s

strategicfocus areas

• Deal processes become more competitive and prices increase

• New entrants compete with a lower cost of capital

• Continual review of market data and review of Company return target

comparedto market returns

• Origination experience and disciplined approach of Investment Manager

• Strong track record and strength of 3i Infrastructure brand

Risk exposure

movement in

the year

Increased

Link to Strategic

priorities

Disciplined approach

Debt markets deteriorate

• Debt becomes increasingly expensive, eroding returns

• Debt availability is restricted

• The Company’s RCF or portfolio company debt cannot be reﬁnanced

due

tolack of appetite from banks

• The Investment Manager maintains close relationships with a number of banks

and monitors the market through transactions and advice

• Regular reporting of Company liquidity and portfolio company

reﬁnancing requirements

• Investment Manager has extensive experience in raising debt finance for

portfolio companies, alongside an in-house Treasury team to provide advice

ontreasury issues

• Active management of portfolio company debt facilities, with fixed rates and

long duration of debt

Risk exposure

movement in

the year

No significant

change

Link to Strategic

priorities

Manage portfolio

intensively

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 73

Risk report continued

Principal risks and mitigations continued

Our Strategic priorities

Invest

responsibly

Disciplined

approach

Efficient

balance sheet

Manage portfolio

intensively

Sustainability

key driver

Strategic

Principal risk Risk description Risk mitigation

Management of liquidity

• Failure to manage the Company’s liquidity, including cash and available

credit facilities

• Insufficient liquidity to pay dividends and operating expenses or to make

new investments

• Hold excessive cash balances, introducing cash drag on the Company’s returns

• Regular reporting of current and projected liquidity

• Investment and planning processes consider sources of liquidity

• Flexible funding model, where liquidity can be sought from available cash

balances including reinvestment of proceeds from realisations, committed

credit facilities which can be increased with approval from our lenders,

andtheissue of new share capital

Risk exposure

movement in

the year

Increased

Link to Strategic

priorities

Disciplined approach

Deliverability

ofreturn target

• Failure to ensure the investment strategy can deliver the return target and

dividend policy of the Company

• Failure to adapt the strategy of the Company to changing market conditions

• Market returns are reviewed regularly

• The Investment Manager and other advisers to the Company report on

market positioning

• Investment process addresses expected return on new investments and the

impact on the portfolio

• Consideration of risks, including ESG and climate risks, in the

investment process

Risk exposure

movement in

the year

No significant

change

Link to Strategic

priorities

Invest responsibly

Sustainability

key driver

Operational

Principal risk Risk description Risk mitigation

Loss of senior

Investment Manager staff

• Members of the deal team at the Investment Manager leave and

‘deal-doing’ and portfolio management capability in the short to

medium term is restricted

• Benchmarked compensation packages and deferred remuneration

• Notice periods within employment contracts

• Strength and depth of the senior team and strength of the 3i Group brand

• Careful management of senior management transition

Risk exposure

movement in

the year

No significant

change

Link to Strategic

priorities

Invest responsibly

Sustainability

key driver

Risk report continued

Principal risks and mitigations continued

Our Strategic priorities

Invest

responsibly

Disciplined

approach

Efficient

balance sheet

Manage portfolio

intensively

Sustainability

key driver

Investment

Principal risk Risk description Risk mitigation

Security of assets

• An incident, such as a cyber or terrorist attack

• Unauthorised access of information and operating systems

• Regulatory and legal risks from failure to comply with cyber related laws

andregulations, including data protection

• Regular review of the Company and key service providers

• Regular review and update of cyber due diligence for potential investments

• Review of portfolio companies for cyber risk management and

incident readiness

Risk exposure

movement in

the year

No significant

change

Link to Strategic

priorities

Invest responsibly

Sustainability

key driver

Poor investment

performance

• Misjudgement of the risk and return attributes of a new investment

• Material issues at a portfolio company

• Poor judgement in the realisation of an asset

• Robust investment process with thorough challenge of the investment case

supported by detailed due diligence

• Investment Manager’s active asset management approach including proactive

management of issues arising at portfolio company level

• Experience of the Investment Manager’s team in preparing for and executing

realisations of investments

Risk exposure

movement in

the year

Increased

Link to Strategic

priorities

Invest responsibly

Sustainability

key driver

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 75

Risk report continued

Development of signiﬁcant

keyrisks in the year

The disclosures in the Risk report are not

an exhaustive list of risks and uncertainties

faced by the Company, but rather a

summary of signiﬁcant key risks which

are under active review by the Board.

These signiﬁcant key risks have the potential

to affect materially the achievement of the

Company’s strategic objectives and impact

its ﬁnancial performance. This disclosure

shows developments in these signiﬁcant

keyrisks for the year. The risks that have

been identiﬁed as principal risks are

described in more detail in the Principal

risks and mitigations table.

External risks – market

and competition

The markets in which the Company

seeks to invest, and in particular the

European economic infrastructure market,

are more competitive than ever, with

strong demand for new investments.

Competition continued to increase as

the

infrastructure sector has demonstrated

its resilience during the pandemic.

Central bank base rates increased during

the year, and these increases are likely to

continue in the coming year. This would

increase debt ﬁnancing costs for our

portfolio companies and could also lead

to increases in required rates of return

on equity, both of which would decrease

portfolio company valuations. Long-term

ﬁxed rate debt is in place across the

majority of our portfolio which mitigates the

risk from interest rate changes in the shorter

term. The increase in competition noted

above has led to required rates of return

equity remaining at historic low levels.

The Company is exposed to movements

sterling exchange rates against a number

of currencies, most signiﬁcantly the

euro. The Company operates a hedging

programme which substantially offsets

volatility in returns from exchange rate

movements. The Board monitors the

effectiveness of the Company’s hedging

policy on a regular basis.

In this environment, the Investment Manager

continues to leverage its network and skills

to look forinvestments that can deliver

attractive and sustainable risk-adjusted

returns to the Company’s shareholders.

The Company achieved a high level of

new investment in the year, while avoiding

the most heavily competed processes in

the market.

Inﬂation in the UK and Europe has risen

sharply in the year, driven by rising energy

costs, supply chain bottlenecks, labour and

raw material shortages and the reopening

of economies from pandemic-related

lockdowns. Higher inﬂation is generally

positive for the Company, particularly for

assets which have revenues at least partially

linked to inﬂation, although higher inﬂation

may also result in increased costs.

There are actual and potential indirect

effects on portfolio companies of the

Russian invasion of Ukraine and the

imposition of sanctions on Russia and

Russian businesses, including increasing

cost and wage inﬂation, availability of

resources and disruptions to normal market

activities. However, the impact to date on

portfolio companies has been limited.

The valuation of our portfolio companies

that generate electricity, Inﬁnis, Valorem

and Attero, is affected by the evolution

of long-term power price forecasts and

by ﬂuctuations in the spot power price.

Volatility in prices is expected to continue

as thermal and nuclear plants are retired,

there is growth in intermittent renewables

and increasing demand due to the

electriﬁcation of transport and heating,

and due to the the war in Ukraine. Inﬁnis’s

electricity offtake arrangements include

contracts with Gazprom Marketing &

Trading Ltd, a large supplier in the UK

non-domestic energy market. Whilst these

contracts are not currently affected by

sanctions, Inﬁnis is actively replacing

contracts where permitted and others

will

run off over time.

Risk report continued

We do not expect Inﬁnis to be adversely

affected by any extension of sanctions or an

insolvency process for Gazprom Marketing

& Trading Ltd.

Sanctions on Russia and Russian companies,

together with the recovery from the

Covid-19 pandemic, has led to an increase

in oil prices. For Oystercatcher, the increase

in oil prices has led to a backwardation

market structure which, together with

recent market volatility, may maintain some

short-term downward pressure on pricing

ofcontract renewals.

Ionisos is a provider of cold sterilisation

andionising radiation treatment services

tothe medical, pharmaceutical, plastics

andcosmetics industries. Gamma radiation,

one of the three methods of cold sterilisation

used, relies on the radioactivedecay of

Cobalt-60, a scarce resource. Ionisos’s

Estonian business has inthe past sourced

Cobalt-60 from a Russian-owned company,

JSC. Whilst JSC is not currently subject

tosanctions, Ionisos will not source new

Cobalt-60 from JSC for the foreseeable

future and is seeking alternative sources

ofsupply. The capacity of the Estonian

business would reduce over time until

new

Cobalt-60 is sourced.

Ofgem is progressing a series of reviews

and consultations following its recent

Signiﬁcant Code Review, resulting

ina

degree of regulatory uncertainty

for

theforeseeable future.

The unprecedented ﬁscal stimulus that we

have seen during the Covid-19 pandemic

has increased sovereign debt levels and

consequence of this is likely to be higher

taxes to balance the deﬁcit. The increase

in the UK corporation tax rate from

April2023 is reﬂected in the valuations of

Inﬁnis, SRLand Tampnet and the increase

in theDutch corporation tax rate from

April2022 is reﬂected in the valuations

ofJoulz and Attero.

Strategic risks

The Company manages its balance sheet

and liquidity position actively, seeking

to maintain adequate liquidity to pursue

new investment opportunities, while not

diluting shareholder returns by holding

surplus cashbalances. At 31 March 2022

there was £17 million available in cash,

with

drawings of £231 million under the

RCF. The Company increased the size of the

committed credit facilities during the year,

with aggregate facilities of £1 billion at the

date of this report.

Air trafﬁc movements and passenger

numbers remain substantially below the

levels seen before the Covid-19 pandemic,

although they are now showing signs of

recovery. The timing and extent of future

recovery remains uncertain. This affects

TCR more than other companies in our

portfolio, although we are pleased with the

performance of TCR over the duration of

the pandemic and the strong performance

this year as the industry starts to recover.

We have maintained our assumption

ofalonger-term return to pre-pandemic

levels of air travel by 2024.

External risks – regulatory and tax

The Company’s investment in Inﬁnis is

exposed to electricity market regulation

risk around the future of network access

and charging arrangements. It is possible

that this could affect the valuation of Inﬁnis,

and we are closely monitoring the position.

The direction of network access charging

reform is for more location-based charging

which in principle should beneﬁt generators

such as Inﬁnis with sites predominantly in

demand-dominated areas.

The portfolio is diversiﬁed across sector

and geography with no investment above

17% of portfolio value.

Investment risks

Portfolio companies continue to experience

fraud attempts, some of which are successful,

but none of which has had a material impact

on any of our companies. In the year the

Investment Manager commissioned a

review of cyber controls by an independent

IT security provider, building upon a

previous review by the same company.

No signiﬁcant weaknesses in cyber security

were identiﬁed and the majority of more

minor issues noted in the review have been

addressed. We remain vigilant and continue

to focus on effective operations of controls

against possible cyber-attack, particularly

as this risk continues to increase following

the outbreak of war in Ukraine.

Further to the announcement in March

2021 that the facilities of Steril Milano,

subsidiary of Ionisos, had been closed,

Steril Milano was placed into voluntary

liquidation during the period. This was fully

provided for in the March 2021 valuation

Ionisos. Steril Milano represented c.3%

Ionisos’s 2020 EBITDA.

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 77

Risk report continued

Operational risks

The key areas of operational risk include

attracting and retaining key personnel at

the Investment Manager, and whether the

Investment Manager’s team can continue

to support the delivery of the Company’s

objectives. The team has strength

and depth and the transition in senior

management has been carefully managed.

The Board monitors the performance

of the Investment Manager through the

Management Engagement Committee.

It also monitors the performance of key

service providers, receiving reports of

anysigniﬁcant control breaches.

Resilience statement

Our resilience comes from the effective

implementation of our business model,

described on pages 14 to 17. Key elements

of our business model relating to resilience

include the Investment Manager’s

disciplined approach to new investment

and engaged asset management, the

defensive characteristics of our portfolio

of investments, high ESG standards, our

ﬂexible funding model and efﬁcient balance

sheet, and the capability of

the Investment

Manager’s team.

The resilience of key suppliers, including

the Investment Manager, is considered

annually or more frequently if appropriate.

The Audit and Risk Committee is provided

with relevant extracts of reports from the

Investment Manager’s internal audit team,

which includes an annual report on the

European infrastructure investment team.

Further detail is included in the Governance

section on page 115.

The Directors manage the Company’s

liquidity actively, reviewing reports

on current and forecast liquidity from

the Investment Manager, alongside

recommendations for seeking

additional liquidity when appropriate.

Further discussion on the RCF can be found

in the Financial review section on page 63.

The identiﬁcation of material uncertainties

that could cast signiﬁcant doubt over the

ability of the Company to continue as

a going concern forms the basis of the

Goingconcern statement below.

This is underpinned by the strong

institutional culture and values of our

Investment Manager, high standards

of corporate governance, and effective

risk management.

Over the life of the Company, the

Investment Manager has built a resilient

and diversiﬁed portfolio with good growth

potential and downside protection that

delivers an attractive mix of income yield

and capital appreciation for shareholders.

This has been achieved through consistent

delivery of our strategic priorities,

described on page 18.

Short-term resilience

The Directors assess the Company’s

short-term resilience through monitoring

portfolio, pipeline and ﬁnance reports.

These are prepared monthly, and discussed

at quarterly scheduled Board meetings and

Board update calls held between scheduled

meetings. Six-monthly detailed investment

reviews are prepared by the Investment

Manager and discussed with the Board, as

part of the half-yearly and annual valuation

and reporting processes. These reviews

describe sources of risk at portfolio

company level, and mitigating actions

being taken or considered.

Risk report continued

Going concern

The Company’s business activities,

together with the factors likely to affect

its future development, performance

and position are set out in the Strategic

report and in the Financial statements

and related Notes to our Annual

report and accounts to 31 March 2022.

The ﬁnancial position of the Company,

its cash ﬂows, liquidity position and

borrowing facilities are described in the

Financial statements and related Notes

to the accounts. In addition, Note 9 to

the accounts includes the Company’s

objectives, policies and processes for

managing its capital, its ﬁnancial risk

management objectives, details of

its ﬁnancial instruments and hedging

activities, and its exposures to credit risk

and liquidity risk.

The Directors have made an assessment

of going concern, taking into account the

Company’s cash and liquidity position,

current performance and outlook, which

considered the impact of the Covid-19

pandemic and the war in Ukraine, using

the information available up to the date

of issue of these Financial statements.

The Company has liquid ﬁnancial

resourcesand a strong investment

portfolioproviding a predictable income

yield and an expectation of medium-term

capital growth. The Company manages

andmonitors liquidity regularly, ensuring

that it is sufﬁcient.

At 31 March 2022, liquidity remained

strong at £786 million (2021: £763 million).

Liquidity comprised cash and deposits

of £17 million (2021: £463 million)

and undrawn facilities of £769 million

(2021: £300 million). The £200 million

accordion and £400 million additional

facility both mature within 12 months

of the date of this report. In addition,

the Company is able to call the second

tranche of the deferred consideration

fromthe realisation of WIG,

£98 million

with sixweeks’ notice and, in June 2022,

expecting to receive £103 million from

thesale of

its Projects portfolio.

The Company had an expected

investmentcommitment of c.£300 million

at 31 March 2022, relating to the equity cost

for the acquisition of GCX expected to

in the summer. The Company expects to

receive the WIG deferred consideration

and the proceeds from the sale of the

Projects portfolio prior to the completion

ofthis investment.

The Company had ongoing charges

of£36 million in the year to 31 March2022,

detailed in Table 5 in the Financial review,

which are indicative of the ongoing run

rate in the short term. In addition, the

FY22 performance fee of £54 million

(2021: £7 million) is due in three equal

instalments with the ﬁrst instalment payable

in the next 12 months along with the second

instalment of FY21’s performance fee and

the third instalment of FY20’s performance

fee, and a proposed ﬁnal dividend for

FY22

of £47 million which is expected

be paid in July.

Although not a commitment, the

Companyhas announced a dividend

target for FY23 of 11.15 pence per share.

Income and non-income cash is expected

to be received from the portfolio

investments during the coming year, some

of which will be required to support the

payment of this dividend target and the

Company’s other ﬁnancial commitments.

The Directors have acknowledged

theirresponsibilities in relation to

the Financial statements for the year

to 31 March 2022. After making the

assessment on going concern, the Directors

considered it appropriate to prepare

theFinancial statements of the Company

on a going concern basis.

The Company has sufﬁcient

ﬁnancial

resources and liquidity and is

well-positioned to manage business risks

in the current economic environment

and can continue operations for a

period of at least 12 months from the

date of this report. This is supported by

the scenario analysis and stress testing

described in the medium-term resilience

section and the viability statement on

page 79. Accordingly, the Directors

continue to adopt the going concern

basis in preparing the Annual report

and accounts.

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 79

Risk report continued

Medium-term resilience

The assessment of medium-term

resilience, which includes modelling of

stressed scenarios and reverse stress tests,

considers the viability and performance

of the Company in the event of speciﬁc

stressed scenarios which are assumed to

occur over a three-year horizon. This stress

testing forms the basis of the Viability

statement below.

The Directors consider that a three-year

period to March 2025 is an appropriate

period to review for assessing the

Company’s viability. This reﬂects greater

predictability of the Company’s cash

ﬂows over that time period and increased

uncertainty surrounding economic,

political and regulatory changes over

thelonger term.

The stress testing focuses on the principal

risks, but also reﬂects those new and

emerging risks that are considered to

be of sufﬁcient importance to require

active monitoring by the Audit and Risk

Committee. The scenarios used are

described in the Viability statement

below. The medium-term resilience of the

Company is assessed through analysing

the impact of these scenarios on key

metrics such as total return, income yield,

net asset value, covenants on the RCF

andavailable liquidity.

The Directors have considered the potential

impact on the Company of a number of

scenarios in addition to the Company’s

business plan and recent forecasts, which

quantify the ﬁnancial impact of the principal

risks occurring. These scenarios represent

severe yet plausible circumstances that the

Company could experience, including a

signiﬁcant impairment in the value of the

portfolio and a reduction in the cash ﬂows

available from portfolio companies from

avariety of causes.

The assessment was conducted over

several months, during which the proposed

scenarios were evaluated by the Board,

the assumptions set, and the analysis

produced and reviewed. Analysis included

the impact of an escalation of the war in

Ukraine on our portfolio companies and the

impact of a resulting economic downturn.

Other considerations included the possible

impact of climate-related events and

transition risks, widespread economic

turmoil, a reduction in cash distributions

from portfolio companies to the Company,

a tightening of debt markets and the failure

of a large investment.

Viability statement

The Directors consider the medium-term

prospects of the Company to be favourable.

The Company has a diverse portfolio of

infrastructure investments, producing

good and reasonably predictable levels of

income which cover the dividend and costs.

The defensive nature of the portfolio and of

the essential services that the businesses in

which we invest provide to their customers

are being demonstrated in the current

climate. The Investment Manager has a

strong track record of investing in carefully

selected businesses and projects and of

driving value through an engaged asset

management approach. The Directors

consider that this portfolio can continue

tomeet the Company’s objectives.

The Directors have assessed the viability

of the Company over a three-year period

to March 2025. The Directors have taken

account of the current position of the

Company, including its strong liquidity

position with £17 million of cash and

£769 million of undrawn credit facilities,

its

commitment of c.£300 million to

the new

investment in GCX described

in the Going concern section above,

and the principal risks it faces which

are

documented in this Risk report.

The assumptions used to model these

scenarios included a fall in value of some or

all of the portfolio companies, a reduction

in cash ﬂows from portfolio companies,

areduction in the level of new investment,

the imposition of additional taxes on

distributions from, or transactions in, the

portfolio companies, an increase in the cost

of debt and restriction in debt availability,

and an inability for the Company to raise

equity. The implications of changes in the

inﬂation, interest rate and foreign exchange

environment were also considered,

separately and in combination.

The results of this stress testing showed that

the Company would be able to withstand

the impact of these scenarios occurring

over the three-year period. The Directors

also considered scenarios that would

represent a serious threat to its liquidity and

viability in that time period. These scenarios

were considered to be remote, such as

a fall in equity value of the portfolio of

materially more than 50% whilst being fully

drawn on the RCF including the accordion,

oranequivalent fall in income.

Based on this assessment, the Directors

have a reasonable expectation that the

Company will be able to continue in

operation and meet its liabilities as they

fall due over the three-year period to

March 2025.

Risk report continued

Long-term resilience

As described above, the long-term

resilience of the Company, beyond the

Viability statement period, comes from the

effective implementation of our business

model and consistent delivery of our

strategic objectives.

Our approach to origination and portfolio

construction, focus on price discipline and

engaged asset management approach

enable us to adapt in response to new and

emerging risks and challenges including

climate change and developments

in megatrends.

The characteristics that we look for in

infrastructure investments, described on

page 17, support the long-term resilience

ofthe Company. The performance

of the portfolio through the Covid-19

pandemic provided good evidence of this.

The underlying megatrends supporting

the longer-term resilience of each portfolio

company are identiﬁed in the Our approach

section on page 8.

We have a long-term investment time

horizon made possible by our permanent

capital base that is unconstrained

by the ﬁxed investment period and

fundraising cycle seen in private limited

partnership funds.

Although the scenarios and stress testing

to support the viability statement are

modelled over a three-year time horizon,

the resilience shown by the Company, and

its ability to recover from these stressed

situations, supports the assessment of

our resilience over a longer term than

three years.

Financial review and Risk report

3i Infrastructure plc Annual report and accounts 2022 81

Directors’ duties

Section 172 statement

The Directors are obliged to act

honestly and in good faith with a view

to the best interests of the Company;

and to exercise the care, diligence

andskill that a reasonably prudent

person would exercise in

comparable circumstances.

The Directors fulﬁl their duties through

theCompany’s governance framework and

through their delegation of discretionary

investment management authority to the

Investment Manager.

The Company adheres to the AIC Code and

it is the intention of the AIC Code thatthe

matters set out in section 172 Companies

Act 2006 (‘s172’) arereported on to the

extent they do not conﬂict with Jersey

law. The Directors exercise their duties by

understanding the views of the Company’s

key stakeholders and considering all of

the matters set out ins172 in both their

discussions and in decision making.

Under s172 a director of a company must act in a way they consider in good faith would be most likely to promote the success

of the company for the beneﬁt of its members as a whole, and in doing so have regard to:

The likely consequences of

any decision in the long term

Our purpose and strategy combined

withtheresponsible investment approach

ofthe Investment Manager focuses

onsustainable returns and outcomes.

Pages 4 to 6 and 67 to 80

The impact of the Company’s operations

on the community and theenvironment

We use our inﬂuence to promote a

commitment in our portfolio companies

tomitigate any adverse environmental

andsocial impacts, and to enhance

positiveeffects on their communities

andthe environment.

Pages 46 to 55

The interests of the

Company’s employees

Whilst we do not have any employees,

ourpurpose includes the intention to

havea positive impact on our portfolio

companies and their stakeholders,

whichincludes the employees of those

portfolio companies.

Pages 35 to 45

The desirability of maintaining

areputation for high standards

ofbusiness conduct

Our success relies on maintaining a strong

reputation and our values and ethics are

aligned to our purpose, our strategy and

ourways of working.

Pages 15 and 17

The need to foster the Company’s

business relationships with suppliers,

customers and others

We engage with all our stakeholders

eitherdirectly or through the

Investment Manager.

Pages 97 to 100

The need to act fairly towards

allmembers of the Company

The Board actively engages with its

shareholders and balances their interests

when implementing our strategy.

Pages 97 to 100

Directors’ duties continued

Section 172 statement continued

Our s172 approach

Outcomes of

decisions assessed.

Board performance evaluated

annually to ensure Board

has performed effectively,

in accordance with its values.

Further engagement

and dialogue with stakeholders

where appropriate.

Actions taken to implement

Board decisions.

Board culture and values,

along with Investment Manager

input, facilitate discussion

on the impact of decisions.

Board challenges the quality

and fullness of information received

and receives appropriate assurance

prior to taking decisions.

s172 factors considered in

discussions and in relation to the

overall delivery of the Company’s

purpose and strategy.

Chair ensures discussion and

decision making takes into account

relevant s172 factors.

Ongoing engagement

with stakeholders, including

the Investment Manager.

Board papers and Investment

Manager presentations take into

account relevant s172 factors

for consideration.

Board Information

Board Decisions

Director induction programme,

ongoing Director training

and individual Director skills

and experience.

Board Meetings

andDiscussion

This Strategic report, on pages 1 to 82,

is approved by order of the Board.

Authorised signatory

3i plc

Company Secretary

9 May 2022

Board decisions are guided by the

Company’s purpose. The Board

acknowledges that not every decision

made will necessarily result in a positive

outcome for every stakeholder group.

Board decisions often involve complex

interactions of factors and require Directors

to understand and have regard to a range

of stakeholder interests and concerns.

By considering the Company’s purpose

together with its strategic priorities

and having a clear process in place for

decision making, we can ensure that Board

discussion has regard to the potential

impact of our decisions on each stakeholder

group in accordance with s172.

Governance structure

Pages 84 to 124

Financial review and Risk report

Governance

DNS NET

Page 42

Introduction to Governance

The Board has continued its focus

on strong and effective corporate

governance. A key part of this

is our stakeholder engagement

which remains fundamental to the

Company’s purpose of investing

responsibly in infrastructure,

delivering long-term sustainable

returns to shareholders and having

a positive impact on our portfolio

companies and their stakeholders.

Our corporate governance framework

underpins the Company’s purpose and

the delivery of our strategy. This section of

our Annual report provides details of our

corporate governance framework and the

approach the Board has taken over the last

12 months to promote the standards of

good corporate governance that are rightly

expected by all our stakeholders. This year

we have continued to face a number of

pandemic-related challenges, but the

return

to the office and in-person meetings

in the summer of 2021 was welcomed.

The Board and its Committees have been

able to meet in person since July 2021

and

prior to that met through video

conferencing for all of our meetings.

This has worked well but nothing can quite

replace in-person meetings and we hope

that as the pandemic subsides, we can

continue to do so whilst using video

conferencing for ad hoc meetings.

How we have engaged with our stakeholders

Pages 97 to 100

With economic, geopolitical and societal

challenges ahead, the Board is mindful

of its responsibilities to a wide group of

stakeholders and seeks to manage those

responsibilities and support the long-term

success of the Company through strong

corporate governance.”

Richard Laing

Chair, 3i Infrastructure plc

Governance

3i Infrastructure plc Annual report and accounts 2022 85

Introduction to Governance continued

Principal governance

activities during the year

Meetings

During the year, there were six scheduled

meetings of the Board of Directors and two

additional ad hoc Board meetings arranged

at short notice. Further details can be found

on page 96. In addition, the Board held two

standalone Strategy sessions (in addition

to the strategy issues which are considered

at every Board meeting) where the Board

worked with the Investment Manager

toconsider matters of a strategic or

wide-ranging nature. The Board has regular

telephone or video calls with the Investment

Manager which provides updates on

activities between Board meetings.

Decisions and s172

When making decisions, the Directors

consider the requirements of s172 and

further details of this are set out in our

Section 172 Statement on pages 81 and

82. The Directors are also reminded of

their s172 duties in the papers for each

scheduledBoard meeting.

The Board reviewed its key decisions during

the year to ensure that lessons are learnt

from such decisions and this acts as a way

of ensuring continuous improvement.

The Board monitors and assesses the

manner in which it reached such decisions

and provides feedback to the Investment

Manager on how it engaged with the Board

and kept them informed throughout the

process that led to a decision.

Investment Manager

3i Investments plc acts as the Investment

Manager of the Company and has

discretionary investment management

authority other than in respect of certain

transactions which must be referred to the

Board. The Management Engagement

Committee oversees the relationship with

the Investment Manager and monitors

its performance. Further details on the

Investment Management Agreement

(‘IMA’), theleadership of the Investment

Manager and the oversight by the

Management Engagement Committee can

be found onpages 91, 92, 98, 117 and 118.

Compliance with the AIC Code

The Board confirms that the Company has

continued to meet all of its obligations

under the AIC Code and inrespect of the

associated disclosures under the applicable

provisions ofparagraph 9.8.6 of the Listing

Rules. Details of how the Company has

complied with the relevant principles and

provisions of

theAIC Code are setout below.

Board leadership and purpose

The Board is responsible for leading the

business in a way which supports its purpose

of investing responsibly in infrastructure,

delivering long-term sustainable returns

to shareholders and having a positive

impact on our portfolio companies

andtheir stakeholders.

Pages 87 to 100

Division of responsibilities

We ensure we have the right combination

ofChair and non-executive Directors to

leadthe Company effectively, supported

byboth strong governance arrangements

andthe workof the Investment Manager.

Pages 101 to 104

Composition, succession

and evaluation

We aim to have a balanced Board with the

appropriate skills and experience to govern

the business. We have an effective board

evaluation process anda succession plan

monitored bytheNomination Committee.

Pages 105 to 109

Audit, Risk and Internal Control

The Audit and Risk Committee, supported

by the Investment Manager and other key

stakeholders, identifies potential risks and

how best to mitigate them. The Audit and

Risk Committee is appointed to oversee

thisprocess on behalf of the Board.

Pages 110 to 116

Remuneration

The Remuneration Committee

ensures afair reward structure

forthenon-executive Directors.

Page 119

Board values

The Board’s values of Integrity, Objectivity,

Accountability and Legacy underpin its

open and collaborative culture and are

supplemented by the skills and experience

that each individual Director brings to

the Company. For further information

seethe Nomination Committee report on

pages108 and 109. The values support the

delivery of the Company’s purpose and

reflect the commitment of the Board to

the success of the Company for the benefit

of its members as a whole, whilst taking

into account the views of stakeholders.

The Investment Manager applies the

3iGroup plc values as the basis of how

itdoes business (see

www.3i.com).

The values of the Board and the

Investment Manager are complementary

and consistent.

Stakeholders

The Board recognises the importance

of engaging with stakeholders and

details of that engagement programme

are set out on pages 98 and 99. As an

investment trust, shareholders are one of

our key stakeholders and it is the Chair’s

responsibility to ensure that there is the

opportunity for shareholders to engage

with the Board on strategy, corporate

governance and any other matters they

wish to raise. The Chair welcomes the

opportunity to meet with shareholders as

required. Day-to-day engagement with

shareholders is managed by the Investment

Manager through a comprehensive annual

engagement programme. This year, the

Board commissioned an Investor Perception

Study and further details on this can be

found on page 98. The Board is grateful to

all shareholders for their continued support

and to those who have given feedback.

Where shareholders have expressed

concern over particular issues, the Board

seeks to understand those concerns and

address them where appropriate.

Introduction to Governance continued

3iN

Board

values

Legacy

Accountability

Integrity

Objectivity

Integrity

The Board acts with honesty, dedication

and consistency, with the courage to

do the right thing in every situation.

The Board manages its relationships

based on trust and respect.

Objectivity

The Board applies a fair, transparent and

balanced approach to decision making.

The Board values diversity of opinion

and encourages different perspectives

to bring constructive challenge as it

discharges its responsibilities.

Accountability

The Board acts in the interest of all

stakeholders of the Company, ensuring

that obligations to shareholders are

understood and met. It is mindful of its

responsibility to act as a good steward

of its portfolio and of the influence and

impact that the Company can have on

society, the communities in which it

operates and the environment.

Legacy

The Board seeks to develop a company

and portfolio that delivers long-term,

sustainable value for our shareholders

and society.

Governance

3i Infrastructure plc Annual report and accounts 2022 87

Leadership and purpose

Board of Directors

In 2021, due to uncertainty on the next

steps of the UK government’s easing

of lockdown restrictions, the Company

held an online interactive shareholder

engagement event two weeks before

holding a purely functional AGM (where

shareholders were encouraged not

to attend and to vote by proxy) which

conducted the business of the meeting

and where there were no presentations.

The Board recognises that this limited the

ability of some shareholders, in particular

retail shareholders, to engage with the

Directors and the Company but we did not

feel it appropriate to encourage travel to

and attendance at an indoor meeting at

that stage of the pandemic. This year, we

anticipate returning to the more usual form

of AGM where shareholders will be able to

attend in person and ask questions directly

of the

Board and the Investment Manager.

Committees

The Board, working with the Audit and

Risk

Committee, is responsible for ensuring

that its Annual report and accounts are

fair, balanced and understandable, and for

establishing, maintaining and exercising

oversight over the risk management

and internal control frameworks.

Further detailson the work of the Audit

andRisk Committee can be found on

pages110 to 116.

The role of the Remuneration Committee

is to determine and maintain a fair reward

structure for Directors to attract and retain

the right talent to deliver the Company’s

strategic objectives. Further details on the

work of the Remuneration Committee can

be found on page 119.

The Nomination Committee has continued

to develop the Board succession plan.

The Board will ensure that in making

appointments it, and any search firm that

assists it, will consider a wide range of

candidates from different backgrounds

while making appointments on merit and

which meet the objectives ofits policy

on diversity, including gender, social and

ethnic background, cognitive and personal

strengths. Further details on the work of

theNomination Committee can be found

on pages 108 and 109.

Having the right balance of skills and

experience amongst the Directors ensures

that the Board can be responsible to

shareholders for the overall management

and oversight of the Company, for agreeing

its strategy, monitoring its financial

performance, setting and monitoring

its

riskappetite and maintaining an

effective

system of internal controls.

This year, Robert Jennings stepped down

from the Board and we thank him for

his contribution.

Board evaluation

During the year, a Board performance

evaluation was conducted by Satori,

anexternal Board evaluator and the findings

provided a further opportunity to continue

to enhance the Board’s contribution to

the long-term success of theCompany.

Further details of the evaluation can be

found on page 105.

I hope that this Governance section

provides you with an insight into our work

as a Board on your behalf. The Board

welcomes feedback on all our activities,

governance being a key one of those.

Richard Laing

Chair, 3i Infrastructure

9 May 2022

Leadership and purpose continued

Board of Directors continued

From left to right:

Wendy Dorman

Paul Masterton

Richard Laing

Samantha Hoe-Richardson

Doug Bannister

Ian Lobley

Governance

3i Infrastructure plc Annual report and accounts 2022 89

Richard Laing

Appointed January 2016. Chair of Nomination,

Disclosure and Management Engagement Committees,

and member of Remuneration Committee. UK resident.

Skills and experience contributing to the Board

• As an experienced non-executive Director and

seniorexecutive, has broad strategic insights

• Long-standing experience of investing in

international infrastructure

• Deep knowledge of investment companies

• As a previous CFO, understands complex financial

and funding matters

• Fellow of the Institute of Chartered Accountants

inEngland and Wales.

Current roles

• Non-executive Director of Tritax Big Box REIT plc

• Non-executive Director of JP Morgan Emerging

Markets Investment Trust plc

• Trustee and Deputy Chair of Leeds

Castle Foundation.

Past roles

• Non-executive Director and Chair of Perpetual

Income and Growth Investment Trust plc

• Non-executive Director of Murray Income Trust plc

• Non-executive Director and Chair of Miro Forestry

Company Limited

• Non-executive Director of London Metal Exchange

• 11 years at CDC Group plc with the last seven years

asChief Executive

• 15 years at De La Rue latterly as Group

Finance Director

• Commercial roles in agribusiness and Marks & Spencer

• Chartered accountant at PricewaterhouseCoopers

(‘PwC’).

Paul Masterton

Senior Independent Director

Appointed April 2013. Chair of the Remuneration

Committee and member of Audit and Risk,

Management Engagement, Nomination and Disclosure

Committees. Jersey resident.

Skills and experience contributing to the Board

• Extensive experience in leading and developing large

companies, and of mergers and acquisitions

• Particularly experienced from an international

business perspective

• Knowledge of digital technology

• Deep experience as a non-executive director,

including board governance and remuneration

• Leadership and team development, including

coaching and mentoring

• Focus on corporate social responsibility.

Current roles

• Chair of Insurance Corporation CI

• Chair of States of Jersey Development Company

• Senior Independent Director of Jersey Competition

& Regulatory Authority

• Trustee of Digital Jersey

• Chair of Governors for Jersey College of Higher

Education and University of Jersey.

Past roles

• Over 25 years at RR Donnelley including as president

of company’s businesses in Europe, Russia and India

• Chief Executive of Durrell Wildlife Conservation Trust.

Wendy Dorman

Appointed March 2015. Chair of the Audit and Risk

Committee and member of Management Engagement,

Nomination, Remuneration and Disclosure

Committees. Jersey resident.

Skills and experience contributing to the Board

• Over 27 years’ experience as a chartered accountant

and tax adviser

• Particular expertise in the taxation of UK and offshore

investment funds, including the tax aspects of

fund structuring

• Extensive knowledge of risk mitigation, compliance

and corporate governance.

Current roles

• Non-executive Director and Chair of Audit & Risk

Committee of Jersey Electricity plc

• Non-executive Director and Chair of Audit &

Risk Committee of CQS New City High Yield

Fund Limited.

Past roles

• Head of PwC Channel Islands tax practice for

seven years

• Non-executive Director of Jersey Finance Limited

• President of Jersey Society of Chartered and

Certified Accountants

• Chair of Jersey Institute of Directors.

Chair Independent non-executive Directors

Leadership and purpose continued

Board of Directors continued

Leadership and purpose continued

Board of Directors continued

Doug Bannister

Appointed January 2015. Member of Audit and

Risk, Management Engagement, Remuneration

andDisclosure Committees. UK resident.

Skills and experience contributing to the Board

• Over 30 years’ experience in the international

transportation and distribution sectors

• In-depth knowledge of leading asset intense

operational businesses

• Experienced senior executive with broad

international experience

• Knowledge in turnaround, mergers and acquisition

integration, restructuring and transformation

ofcapital intensive businesses.

Current roles

• Chief Executive of Dover Harbour Board

• Council Member of British Ports Association.

Past roles

• Group CEO of Ports of Jersey (Airports & Harbours)

• Commercial roles at P&O Nedlloyd and Maersk Line.

Samantha Hoe-Richardson

Appointed February 2020. Member of Audit and

Risk, Management Engagement, Remuneration

andDisclosure Committees. UK resident.

Skills and experience contributing to the Board

• Senior executive with 18 years’ experience in global

mining and infrastructure

• In-depth understanding of environmental and

sustainability issues

• Broad based non-executive Director experience

• Chartered accountant.

Current roles

• Non-executive Director of Assured Guaranty UK Ltd

• Independent Group Adviser on Climate Change &

Sustainability to Laing O’Rourke.

Past roles

• Non-executive Director and Chair of the Audit

Committees at Lancashire Holdings Limited and

Lancashire Insurance UK Limited

• Non-executive Director and Chair of Audit

Committee of Unum Limited

• Head of Environment and Sustainable Development

of Network Rail

• Head of Environment at Anglo American plc

• Trustee of the Royal School of Needlework.

Ian Lobley

Appointed May 2014 as the 3i Group plc nominated

Director. UK resident.

Skills and experience contributing to the Board

• Valuable experience and insight into the assessment

of new investments and management of the portfolio

• Extensive knowledge on ESG matters

• Experienced non-executive Director across sectors,

continents and ownership models

• Significant experience, as an investor and engineer,

ofdisruptive technologies across multiple

end markets.

Current roles

• 3i Group plc Managing Partner – Asset Management

• Non-executive Director of AES Engineering Ltd

• Non-executive Director of Cirtec Medical Holdco LLC

• Non-executive Director BSI Group

• Non-executive Director of Tato Holdings Ltd

• Non-executive Director of Boketto Holdco Limited

(Audley Travel).

Past roles

• Long-term member of 3i Group plc

Investment Committee

• Active investor and experienced board member

in a variety of companies across Europe, Asia and

the USA

• Leadership of technology investing and portfolio

management activities

• Engineer at BOC Speciality Gases.

Independent non-executive Directors Non-executive Director

Governance

3i Infrastructure plc Annual report and accounts 2022 91

Leadership and purpose continued

Investment Management team

From left to right:

Phil White

Matt Barker

James Dawes

John Cavill

Tim Short

Anna Dellis

Aaron Church

Stéphane Grandguillaume

Bernardo Sottomayor

Thomas Fodor

Scott Moseley

Leadership and purpose continued

Investment Management team continued

Phil White

Joined 3i Group plc in 2007. Managing Partner and

Head of 3i’s Infrastructure business. Phil will step down

as Head of Infrastructure from 1 July 2022 and become

Vice Chair of 3i’s Infrastructure business.

Current roles

• Member of 3i Group’s Executive Committee,

Investment Committee and Group Risk Committee

• Non-executive Director of Ionisos.

Past roles

• Division Director of Macquarie’s Infrastructure

Funds business managing investments in the

transport sector

• Over 25 years of experience of infrastructure

investment, advisory and finance fromroles at

Barclays and WestLB.

James Dawes

Joined 3i Group in 2016. CFO of 3i’s

Infrastructure business.

Current roles

• Performs CFO duties for 3i Infrastructure

• Manages the operational, financial and reporting

requirements for 3i Group’s infrastructure business.

Past roles

• Finance Director of LGV Capital from 2007-2015

• Senior finance roles with Legal & General

Investment Management.

Scott Moseley

Joined 3i Group in 2007 and is a currently a partner and

Co-Head of Economic Infrastructure, Europe. He will

become Managing Partner and Co-Head of European

Infrastructure from 1 July 2022.

Current roles

• With Bernardo leads the team’s origination and

execution platform

• Extensive experience in European infrastructure,

spanning utilities, transportation and

social infrastructure

• Investments include Global Cloud Xchange,

Tampnet, ESVAGT, Elenia, CrossLondon Trains and

Eversholt Rail Group

• Led the successful divestments of Elenia and XLT

as well as previously being responsible for junior

debt investments in Arqiva, Associated British Ports,

Télédiffusion de France, Thames Water and Viridian

• Non-executive Director of Tampnet and ESVAGT.

Bernardo Sottomayor

Joined 3i Group in 2015 and is a currently a partner and

Co-Head of Economic Infrastructure, Europe. He will

become Managing Partner and Co-Head of European

Infrastructure from 1 July 2022.

Current roles

• With Scott leads the team’s origination and

execution platform

• Led or co-led investments by the Company in Joulz,

TCR, Infinis, Attero, Alkane Energy, Ionisos and SRL

Traffic Systems

• Non-executive Director of TCR and 3i board observer

at Attero and Joulz.

Past roles

• Over 20 years’ experience of investing and advising

in infrastructure

• Partner at Antin Infrastructure, which managed

funds investing in infrastructure opportunities

across Europe

• Managing Director, Head of Acquisitions for

Deutsche Bank’s European infrastructure fund

• Head of M&A at Energias de Portugal public

utilities company

• M&A advisory with UBS and Citigroup.

Managing Partners CFO

Governance

3i Infrastructure plc Annual report and accounts 2022 93

Matt Barker

Joined 3i Group in 2010 and is a partner in the London

infrastructure business.

Current roles

• Focuses on new investments and the asset

management of a number of 3i Infrastructure’s

portfolio assets

• Senior team member on 3i Infrastructure’s current

investments in SRL Traffic Systems, DNS:NET,

TCRand Tampnet

• Led the successful divestments of WIG, AWG

and Eversholt

• Non-executive Director of SRL Traffic Systems,

TCRand Tampnet.

Past roles

• Team member at Macquarie’s Infrastructure Funds

business and part of the team responsible for the

management of the Australian Stock Exchange listed

fund, Macquarie Airports.

John Cavill

Joined 3i Group in 2013 and is a partner in the London

infrastructure business.

Current roles

• Non-executive Director of SRL Traffic Systems.

• Leads the assets management activity for the

Projects portfolio

• Responsible for setting the strategy oversight of

asset management activities

• Overseas the implementation of value protection and

enhancement activities, and performance reporting.

Past roles

• Non-executive Director of WIG and XLT

• Director at Barclays Infrastructure, St Modwen

Properties plc, Land Securities Trillium and

Vinci Investments.

Aaron Church

Joined 3i Group in 2013 and is a partner in the London

infrastructure business.

Current roles

• Focuses on origination, execution and asset

management of economic infrastructure investments

• Extensive infrastructure investing experience across

the transport, utilities, energy and waste sectors

• Senior deal team member on the acquisitions

ofJoulz, Attero, Tampnet, Infinis and ESVAGT,

andthe sale of the Oystercatcher European terminals

• Non-executive Director of Joulz, Attero and

Oiltanking Singapore.

Past roles

• Infrastructure investor at HRL Morrison & Co

inEurope and Australasia

• Started career at Boston Consulting Group.

Stéphane Grandguillaume

Joined 3i Group in 2013 and is a partner in the Paris

infrastructure business.

Current roles

• Leads 3i’s Infrastructure business in France

• Responsible for origination, execution and

fundraising in relation to project opportunities

across Europe

• Non-executive Director of Valorem and Ionisos.

Past roles

• Headed Barclays Infrastructure in Paris

• Headed Egis Investment Partners.

Anna Dellis

Joined 3i Group in 2006 and is a partner in the London

infrastructure business.

Current roles

• Leads asset management for the portfolio of

economic infrastructure investments

• Led the successful exit of Oystercatcher’s

investments in Oiltanking terminals in Amsterdam,

Terneuzen, Ghent and Malta

• Non-executive Director of Oiltanking Singapore

• Focused on new deals over the period 2006–2017,

prior to assuming current portfolio focus.

Past roles

• Advised on infrastructure transactions and financing

at PwC in London

• Fellow of the Institute of Chartered Accountants

ofEngland and Wales.

Thomas Fodor

Joined 3i Group in 2016 and is a partner in the London

infrastructure business.

Current roles

• Leads investor relation and fundraising efforts across

the 3i European infrastructure business

• First point of contact for shareholders in

3iInfrastructure plc

• Oversees co-investment activities in the

3iinfrastructure portfolio.

Past roles

• Private Capital Advisory at HSBC

• Started career at Lehman Brothers.

Tim Short

Joined 3i Group in 2007 and is a partner in the London

infrastructure business.

Current roles

• Focuses on the origination, execution and debt

financing of infrastructure investments

• Transaction experience includes the acquisitions

and financing of Attero, Elenia, ESVAGT, Global

Cloud Xchange, Infinis, Ionisos, Joulz, Oystercatcher,

Tampnet, TCR and WIG

• Non-executive Director of Infinis.

Past roles

• Financial restructuring at Houlihan Lokey.

Partners

Leadership and purpose continued

Investment Management team continued

Leadership and purpose continued

Role of the Board

Overview

The Board is ultimately accountable

to our shareholders and the Directors

ensure that both their decisions and the

actions ofthe Investment Manager are

aligned withthe Company’s and wider

stakeholders’interests.

The Board’s role is to lead the Company

in achieving its purpose of investing

responsibly in infrastructure, delivering

long-term sustainable returns to

shareholders and having a positive impact

on our portfolio companies and their

stakeholders. The Board is also responsible

for overseeing the implementation of 3iN’s

strategy of maintaining a balanced portfolio

of infrastructure investments delivering an

attractive mix of income yield and capital

appreciation to shareholders.

The Company has no employees and

its investment and portfolio monitoring

activities have been delegated by the

Board to 3i Investments plc in its role

Investment Manager.

The Board ensures that the Investment

Manager has the resources and capabilities

to support the delivery of the Company’s

purpose and strategy. The Board’s

core values of Integrity, Accountability,

Objectivity and Legacy underpin its

open and collaborative culture and are

supplemented by the skills that each

individual Director brings to the Company,

for further information see pages 89 and

90.

The Chair is responsible for the leadership

of the Board and ensuring its effectiveness.

In addition to the Chair, there are currently

four independent non-executive Directors

and one 3i Group plc nominated Director,

who is not considered independent.

As detailed below, under the terms of

the IMA investment and divestment

decisions which exceed certain thresholds

are reserved for decision to the Board.

The IMA also includes a schedule of matters

reserved for decision of the Board which are

considered significant to the Company due

to their strategic, financial or reputational

implications and consequences. Details of

key Board decisions and how the interests

of stakeholders were considered by the

Board when making these decisions are

setout on pages 97 to 100 and 104.

As explained in the Introduction to

Governance, during the pandemic the

Board has adapted its ways of working in

order to continue to operate effectively and

to ensure effective corporate governance.

As the world has emerged from the

pandemic the Board and the Investment

Manager will continue to focus on ways

of working which align with the corporate

governance framework and ensure that

operates effectively.

The Board has direct access to the Company’s

external advisers, including the Company’s

external auditor (Deloitte LLP), corporate

brokers (JP Morgan Cazenove and

RBCCapital Markets), financial adviser

(Rothschild & Co), financial corporate

communications adviser (Headland

Consultancy), UK tax adviser

(PricewaterhouseCoopers LLP) and legal

advisers (Hogan Lovells International LLP

and other law firms as appropriate).

The Board receives advice on a range of

subjects, but particularly on

the

infrastructure market, taxation, ESG

issues,

UK and Jersey legal and compliance

matters and equity market issues.

Board committees

The Board is assisted in its activities

by a number of standing committees

of the Board and, in undertaking its

duties, it

delegates certain authorities

and decisions to these committees.

The Board reviews the membership of these

committees on a regular basis. The Board

committee structure, together with a

summary of the roles and composition

of the committees, is outlined in the

table onpage 95. All committees have

terms of reference, which are available on

www.3i-infrastructure.com. The Board,

on the advice of the Company Secretary,

annually reviews the committees’ terms

of reference and the Schedule of Matters

Reserved to the Board to ensure they

remain appropriate and compliant with

thelegal and regulatory environment.

Further details on the areas of focus of

the Board Committees, as well as details

of attendance at scheduled full Board

meetings, are set out on pages 95, 101

to103 and 108to 119.

Changes to the Board of Directors

In July 2021 Robert Jennings stepped down

from the Board.

Governance

3i Infrastructure plc Annual report and accounts 2022 95

The Board’s responsibilities

andprocesses

The Board is responsible to shareholders

for the overall strategy and management

of the Company. It determines the

investment policy, the appointment of

theInvestment Manager, financial strategy

and planning, approval of the results and

dividends, and oversees the maintenance of

internal controls and the risk management

framework, membership of the Board,

Director remuneration and adherence

the corporate governance framework.

The Investment Manager has sole discretion

to make decisions on investments and

divestments, other than those decisions

which relate to transactions which reach

certain financial thresholds, in particular

in relation to investments or divestments

which represent 15% or more of the gross

assets of the Company, which require

Board approval. The Investment Manager

prepares reports and papers that are

circulated to the Directors electronically

advance of Board and Board Committee

meetings. These papers are supplemented

by information specifically requested by

the Directors and additional papers the

Investment Manager provides to the Board.

3i Infrastructure plc

Audit and Risk

Committee

Remuneration

Committee

Nomination

Committee

Management

Engagement Committee

Disclosure

Committee

Financial reporting,

risk and

internal controls

Director

remuneration

Board appointments

and size and

composition of the Board

Monitoring of the

performance of the

Investment Manager

Monitoring compliance

with disclosure

requirements

Wendy Dorman

(Chair)

Doug Bannister

Samantha Hoe-Richardson

Paul Masterton

(Chair)

Doug Bannister

Wendy Dorman

Samantha Hoe-Richardson

Richard Laing

(Chair)

Wendy Dorman

Paul Masterton

Richard Laing

(Chair)

Doug Bannister

Wendy Dorman

Samantha Hoe-Richardson

Paul Masterton

Richard Laing

(Chair)

Doug Bannister

Wendy Dorman

Samantha Hoe-Richardson

Paul Masterton

All committee members listed above served throughout the year, other than Robert Jennings who stood down from the relevant Committees when he left the Board in

July 2021.

Board

Committees

Leadership and purpose continued

Role of the Board continued

Leadership and purpose continued

Role of the Board continued

Meetings of the Board

The table below sets out the attendance of the Directors at the scheduled Board meetings (excluding ad hoc Board meetings) and the attendance of Committee members at the

relevant Committee meetings held during the financial year. In addition, two ad hoc Board meetings were held at short notice.

Board

Audit and Risk

Committee

Remuneration

Committee

Nomination

Committee

Management

Engagement

Committee

Richard Laing 6 (6) – 1 (1) 3 (3) 2 (2)

Doug Bannister 6 (6) 3 (3) 1 (1) – 2 (2)

Wendy Dorman 6 (6) 3 (3) 1 (1) 3 (3) 2 (2)

Samantha Hoe-Richardson 6 (6) 3 (3) 1 (1) – 2 (2)

Robert Jennings* 3 (3) 1 (1) – – 1 (1)

Ian Lobley 6 (6) – – – –

Paul Masterton 6 (6) 3 (3) 1 (1) 3 (3) 2 (2)

The table above indicates the number of meetings attended and in brackets, the number of meetings the Director was eligible to attend. Non-executive Directors also attended a number of the other meetings, strategy sessions

and telephone calls to increase their understanding of the principal risks in, and activities of, the business and the Investment Manager. Richard Laing and Ian Lobley are invited to attend the Audit and Risk Committee. No Disclosure

Committee meetings were convened during the year as relevant matters were considered in Board Meetings.

* Robert Jennings left the Board in July 2021.

Governance

3i Investments plc

(Investment Manager)

3i plc

(Company Secretary)

3i Infrastructure plc

Shareholders

Brokers

External auditor

Financial advisers

Government and

regulatory bodies

Lenders

Registrars

Apex Financial Services

Alternative Funds Ltd

(Jersey administrator)

Citibank UK Limited

(Depositary)

Portfolio companies

Communities

Governance

3i Infrastructure plc Annual report and accounts 2022 97

As explained in the Introduction to Governance, the Board recognises the importance of engaging with its stakeholders

and has identified its key stakeholders, as shown in the diagram below:

Shareholders

Shareholders are keystakeholders in the

Company. The Board recognises the

importance of maintaining a purposeful

relationship with shareholders through

a comprehensive Investor Relations

programme led by the Investment Manager.

This programme provides existing and

potential investors with relevant information

to enable them to understand the

Company’s activities, strategy and financial

performance. The Investment Manager

briefs the Board on a regular basis on the

implementation of the Investor Relations

programme and on feedback received from

analysts and investors. Major shareholders

are invited to meet with the Chair and

the Senior Independent Director in order

to share their views on governance and

the Company’s performance against its

purpose and strategy. Any significant

concern raised by shareholders in relation

to the Company is communicated to the

Board. Directors are invited to attend the

Company’s presentations to analysts and in

normal circumstances have the opportunity

to meet shareholders at the AGM.

Leadership and purpose continued

Engaging with stakeholders

Leadership and purpose continued

Engaging with stakeholders continued

Investment Manager

The key service provider to the Company

isthe Investment Manager. Senior members

of the Investment Manager’s team present

to the Board and Board Committees

on regular agenda items and the Board

also receives presentations from a wider

group of the Investment Manager’s team.

Through this engagement the Board is

able to evaluate the Investment Manager’s

performance against the Company’s

strategy and to understand any risks

and opportunities this may present to

the Company. The relationship with,

and the performance of, the Investment

Manager is monitored by the Management

Engagement Committee, for further details

see pages 117 and 118.

Outcomes – this engagement ensures

that the Company and its portfolio of

investments is well-managed, adheres to

its strategy and that the Board receives

appropriate and timely management

and support services from the

Investment Manager.

Portfolio companies

The companies in which we invest are

the source of returns to shareholders.

We drive value though our engaged asset

management approach as detailed in our

Business model on page 14.

Annual General Meeting – the Company

uses its AGM as an opportunity to

communicate with its shareholders. At the

meeting, business presentations are made

by the Chair and the Investment Manager.

The Senior Independent Director and

chairof the Audit and Risk Committee

are also generally available to answer

shareholders’ questions.

The Board recognised that holding the

2021 AGM as a functional meeting only

for conducting the formal business of

the meeting limited communication

opportunities between shareholders and

Directors and so held an interactive online

shareholder presentation two weeks

before the AGM. This gave shareholders

the opportunity to submit questions

in advance or during the presentation,

which Directors were then able to answer.

Further information regarding the proposed

arrangements for the 2022 AGM (which

will return to a full AGM with shareholders

able to attend) can be found in the

Chair’s

statement on page 6 and in the

Notice ofAnnual General Meeting 2022.

Annual and half-yearly results

presentations – the Chair and Investment

Manager present the annual and

half-yearly results to a broad group of

analysts and in the past year these have

been presented both in person and virtually

ascircumstances have allowed.

Individual investors – individual investors

are encouraged to engage with the

Company and provide feedback through

the Investor Relations team, who can be

contacted at [email protected] or

bytelephone on +44 (0)20 7975 3469.

Institutional investors – in May following

the release of the Company’s annual results

and in November following the release

of the half-year results, the Investment

Manager meets with existing and potential

investors in the UK and internationally to

communicate the performance and strategy

of the Company. These meetings continue

throughout the year as required.

The Board seeks to hold more detailed

engagement with its institutional

shareholders on a periodic basis and these

views inform the Board on the development

of its strategy and performance.

This year Rothschild & Co (Investor

Advisory) (“Rothschild”) organised an

investor perception study where they held

in depth discussions with 15 investors

representing 23.4% of the Company’s

sharecapital and including seven of the

top10 shareholders.

The feedback received was extremely

positive with investors supportive of

the Company’s strategy, its unique

differentiated approach and delivery

ofattractive returns. Investors noted

theCompany’s good stewardship by the

Investment Manager in overseeing the

evolution of the portfolio to include assets

that aligned with increased investor focus

on ESG and sustainability.

In October 2021, the Investment Manager

organised a Capital Markets Event for

institutional shareholders where they

received presentations on the Company’s

approach to sustainability and investing in

the current market, along with presentations

from the senior management of two portfolio

companies – Oystercatcher and DNS:NET.

The Company’s website provides details

of forthcoming events for shareholders

and analysts. In addition, videos of results

presentations and presentations from

the Capital Markets Event are on the

Company’s website which all shareholders

can access and view.

Outcomes – this extensive engagement

means that investors are able to make

informed decisions about their investment

in the Company.

Governance

3i Infrastructure plc Annual report and accounts 2022 99

The Company is committed to achieving

its investment objectives in a sustainable

way and our success as an investor relies

on us maintaining a strong reputation

for managing our portfolio sustainably.

Further details are contained in the

Sustainability report on pages 46 to

55. The principal engagement with

the portfolio companies is through the

Investment Manager’s team. One or more

of its investment professionals sits on the

board of each portfolio company (or acts

as a board observer) and engagement

with a portfolio company takes place both

formally at board level and informally by

the Investment Manager’s team on an

ongoing basis.

Outcomes – this engagement enhances

the value of the portfolio companies for

the

benefit of their, and our, stakeholders.

Communities

The Company is committed to contributing

positively to the communities in which it

operates and details of this are contained in

the Sustainability report on pages 46 to55.

Outcomes – by investing in, developing and

actively managing essential infrastructure

which responds to public needs, we foster

sustainable growth and improve the lives

of the communities in which our portfolio

companies operate.

Third-party service providers

The Company contracts with third parties

for other services including the external

auditor, the depositary, legal advisers, the

financial adviser, the financial PR adviser,

the Registrar, the Jersey administrator

and with 3i plc for company secretarial,

treasury, accounting and internal audit

services. Provision of these services is

necessary to ensure the Company’s

compliance with its legal and regulatory

obligations. The key third-party service

providers work closely day-to-day with

the Investment Manager. This interaction

provides an environment where issues can

be dealt with efficiently. The Board reviews

annually both the arrangements that are

in place with all key third-party service

providers and monitors their performance.

In addition, the Audit and Risk Committee

reviews the performance and services

provided by the external auditor and the

Jersey administrator. Key service providers

attend Board and Committee meetings

as appropriate to advise the Board on

specific matters.

Outcomes – the work of the key third-party

service providers ensures compliance by

the Company with its legal and regulatory

obligations in addition to the maintenance

of the Company’s reputation and high

standards of business conduct.

Brokers

The Board and the Investment Manager

work with the brokers to provide access

to markets and liquidity in the Company’s

shares. The brokers meet the Board at

least annually to advise on all aspects of

their remit and reports from the brokers,

particularly in relation to feedback from

shareholders and potential investors, are

presented to the Board. The Investment

Manager meets regularly with the

brokers who keep them up to date on

both Company and wider market-related

matters. This year the brokers have

provided advice to the Board and the

Investment Manager on the Company’s

access to liquidity as it moved from having

significant cash available for investment to

having made a number of acquisitions and

utilising its revolving credit facility.

Outcomes – the brokers promote the

Company as an attractive investment

trust and work to ensure liquidity in the

Company’s shares.

Lenders

The Investment Manager’s treasury team

manages the engagement with the lenders

in the Company’s revolving credit facility.

This year, with the support of its lenders,

the Company was able to renew its existing

revolving credit facility on favourable terms

and put in place an additional committed

facility to support the acquisition pipeline.

For further details see page 122.

Outcomes – access to bank borrowing

provides important flexibility and resilience

to the Company’s financial structure and

helps the Company to maintain an efficient

balance sheet.

Government and

regulatorybodies

The Company works in a regulated

environment and through the Jersey

administrator the Company engages with

the Jersey regulators to ensure compliance.

In addition, the Company adheres to the

AIC Code and so engages with the AIC on

matters related to corporate governance.

Outcomes – the Company continues to

operate in compliance with relevant law

and regulation and ensures the highest

standards of corporate governance.

Leadership and purpose continued

Engaging with stakeholders continued

Leadership and purpose continued

Engaging with stakeholders continued

How stakeholder interests have influenced decision making and areas of focus in the year

The Board carefully considers the interests of all of its stakeholders as well as the other factors referred to in section 172 Companies Act 2006 in deciding what actions would

belikely

topromote the success of the Company for the benefit of its members as a whole. Set out below are examples of the Board’s key decisions and areas of focus over the

lastyear with

details of how the interests of stakeholders were taken into account.

Decision/Area of focus: Liquidity Management

Context Over the course of the year the Company was able to invest in a number of new portfolio companies. These investments utilised the Company’s existing funds available to invest and required a drawdown under

the revolving credit facility (‘RCF’) and accordion feature. It was therefore appropriate to approach the lending banks to refinance and extend the RCF. In addition, as further investment opportunities become

available, it was considered appropriate to put in place an additional one-year tranche embedded into the new RCF.

Stakeholder

considerations

The Board considered the Company’s overall balance sheet strategy along with the terms of the RCF and the additional facility. Having appropriate levels of liquidity available supports the Company

in delivering on its purpose for the benefit of all stakeholders.

Impact on the success

of the Company

The Company was able to complete the acquisitions of DNS:NET and SRL, agree to invest in GCX, buy out our co-investors stake in ESVAGT and make further investments in DNS:NET, Valorem,

ESVAGT and Joulz.

Outcome Access to bank borrowing provides important flexibility and resilience to the Company’s financial structure and helps the Company to maintain an efficient balance sheet.

Decision/Area of focus: Stakeholder Engagement through the Investor Perception Study

Context The Company wished to engage with its largest shareholders in order to understand their views more fully.

Stakeholder

considerations

This study was focused on the Company’s key stakeholders, its shareholders and it was appropriate that those investors who were asked to participate in the study were those representing thelargest holdings.

The Board and the Investment Manager worked with Rothschild to create an appropriate set of questions in order to seek the fullest answers from investors.

Impact on the success

of the Company

Understanding the views of investors enables the Company to take account of such views when developing future strategy. It is vital for the success of the Company to have the support of itsshareholders

and this engagement enables those shareholders who participated in the study to express their views on a range of topics, including the Company’s differentiated approach toinvestment, its return target,

the strength of the Investment Management team, its portfolio of investments, the approach to sustainability and the Company’s balance sheet strategy.

Outcome The feedback received was extremely positive with investors supportive of the Company’s strategy, its unique differentiated approach and delivery of attractive returns. Investors noted the Company’s

good stewardship by the Investment Manager in overseeing the evolution of the portfolio to include assets that aligned with increased investor focus on ESG and sustainability.

Decision/Area of focus: Sustainability

Context The Board is responsible for sustainability, with day-to-day accountability resting with the Investment Manager. At the beginning of the year, the Board of Directors and the Investment Manager setseveral

specific sustainability objectives, with the desire to take a big step forward in this area.

Stakeholder

considerations

As owners of infrastructure assets, the Board recognises the Company’s ability to influence our portfolio companies, their management teams, employees, customers and suppliers. The Board has

a responsibility toshareholders to deliver long-term sustainable returns, and to communities and the environment in which we operate to manage essential infrastructure in a responsible manner.

Impact on the success

of the Company

The Company is now reporting Scope 1 and Scope 2 greenhouse gas emissions for its portfolio companies and has implemented policies and entered into financial agreements that embed sustainability

throughout our investments and asset management processes.

Outcome Having high sustainability standards helps us achieve long-term sustainable business growth for the benefit of all our stakeholders.

Governance

100

Governance

3i Infrastructure plc Annual report and accounts 2022 101

Division of responsibilities

The Chair of the Board

The Chair, Richard Laing, leads the Board

in the determination and implementation

of its purpose and strategy, and ensures

that the views of all stakeholders are

understood and considered appropriately

in Board discussions and decision making.

The Chair is responsible for organising

the business of the Board, ensuring its

effectiveness and setting its agenda.

He facilitates the effective contribution of

all the Directors and constructive relations

between the Company’s advisers, the

Investment Manager, and the Directors.

The Chair maintains direct links with the

Company’s advisers and ensures that

regular reports from them are circulated

to the Directors to enable the Directors

to consider their views. The Chair and the

Senior Independent Director are available

to meetwith shareholders throughout the

course ofthe year.

The Chair also acted as the Company’s

appointed member to the Advisory

Board for the India Fund. He received

additional remuneration for this role.

Senior Independent Director

Paul Masterton is the Senior Independent

Director who supports the Chair in the

delivery of his objectives. The Senior

Independent Director leads the appraisal

of the Chair’s performance with the

non‑executive Directors.

Any shareholder concerns can be conveyed

to the Senior Independent Director and

his contact details are available on the

Company’s website.

Directors

The Board comprises the Chair and five

non‑executive Directors. All Directors,

other than Robert Jennings, served

throughout the year under review and were

re‑elected at the Company’s AGM in 2021.

Robert Jennings stepped down from the

Board in July 2021.

The Directors monitor the delivery of

the Company’s strategy set by the Board

and constructively challenge and assist

in the development of that strategy.

They bring independent judgement to

the consideration of issues of strategy,

performance, investment appraisal,

communication matters and standards

of conduct.

They are also expected to ensure high

standards of financial probity on the part of

the Company. As well as papers for Board,

Board Committees and strategy meetings,

the Directors receive monthly management

accounts, reports and information which

enable them to scrutinise the Company’s

performance against agreed objectives.

Each of the Directors has an appointment

letter and these were updated in July 2019,

with the subsequent appointment letter

for Samantha Hoe‑Richardson on the same

terms as those agreed in 2019. No Director

has a contract of employment with the

Company, nor are any such contracts

proposed. Copies of the appointment

letters are available from the Company

Secretary upon request.

Following the formal appraisal process of

Directors, and in accordance with Provision

7.2, paragraph 23 of the AIC Code, the

re‑election of all current Directors will be

proposed at the forthcoming 2022 AGM.

The Directors’ appointments can be

terminated, without compensation for loss

of office, in accordance with the Company’s

Articles of Association (the ‘Articles’).

Under the Articles, their appointments can

be terminated by an ordinary resolution

of the Company, on notice signed by all

the other Directors, or on ceasing to be

a Director if they fail to be re‑elected

at any AGM. The office of director is

vacated if (i)the Director resigns, becomes

bankrupt or is prohibited by law from

being a Director; or (ii) where the Board so

resolves following the Director suffering

from ill health or being absent from Board

meetings for sixmonths without the

Board’s permission.

Directors’ independence

All the Directors, with the exception of the

Chair and Ian Lobley, who is the 3i Group

nominated Director, are considered by the

Board to be independent for the purposes

of the AIC Code. The Board assesses and

reviews the independence of each of the

Directors at least annually, having regard

tothe potential relevance and materiality

ofa

Director’s interests and relationships.

Division of responsibilities continued

The Chair was considered independent

on appointment and has no relationships

which might create a conflict of interest

between his interests and those of the

shareholders. No Director, other than

IanLobley, was materially interested in any

contract or arrangement subsisting during

or at the end of the financial year in relation

to the business of the Company. Ian Lobley,

as3iGroup’s nominated Director has a

pre‑approved conflict in relation to the IMA.

The Board has noted that Paul Masterton,

who is a Jersey resident Director, will, at

the time of the 2022 AGM, have served

a term beyond nine years from the date

of his appointment. The Board and the

Nominations Committee have carefully

reviewed provision 13 of the AIC Code and

considered factors which are likely to impair

or could appear to impair a non‑executive

Director’s independence.

As the Company is considering transferring

its domicile from Jersey to the UK and the

UK Government has recently published a

consultation on corporate redomiciliation

(which the Investment Manager has

responded to), retaining Paul on the

Board provides continuity whilst the Board

considers these changes, which, if taken

forward, would mean that the Company

no longer required two Jersey resident

directors. This would allow any future

director to be selected from a much wider

pool of candidates. The Board agreed

that staying beyond nineyears from the

date of his appointment does not impair

Paul’s independence and that retaining

Paul on the Board for an additional period

is in the best interests of the Company.

For further details see the Nomination

Committee report on page 109. The Board

is recommending toshareholders at the

2022 AGM that Paulbe re‑elected for

further year.

Ian Lobley is a non‑independent Director

who is not a member of the Management

Engagement Committee, and so did not

participate in the Board’s evaluation of the

performance of the Investment Manager.

The Company Secretary

3i plc serves as the Company Secretary

under the terms of the Investment

Management Agreement. 3i plc’s Group

Secretariat has a fully qualified company

secretarial team with sufficient resources

tosupport the Company. All Directors have

access to the advice and services of the

Company Secretary, who advises the Board,

through the Chair, on governance and

related matters. The Company’s Articles

and the schedule of matters reserved to

theBoard provide that the appointment

and removal of the Company Secretary

would be a matter for Board approval.

Disclosure Committee report

The Disclosure Committee’s role is

toconsider matters within its remit,

inparticular in relation to the treatment

price sensitive information during the

half‑year and year end accounts process.

This year it was convenient for the Board

itself to consider matters relating to the

treatment of price sensitive information

during certain Board meetings, rather

than convening a separate Disclosure

Committee meeting.

Internal control

The Board has overall responsibility for

the Company’s risk management and

internal control framework, including

the determination of the nature and

extent of the principal risks it is willing to

take to achieve its strategic objectives.

The Company’s overall risk management

and internal control process is regularly

reviewed by the Audit and Risk Committee

and complies with the Guidance on

Risk Management, Internal Control and

Related Financial and Business Reporting

issued by the Financial Reporting Council.

The process has been in place for the year

under review and up to the date of approval

of this Annual report and accounts 2022.

For further details see the Audit and Risk

Committee report on pages 115 and 116.

The Board has contractually delegated

investment management and support

services to its key service providers and

their contractual obligations encompass

the implementation of systems of internal

control, including financial, operational and

compliance controls and risk management.

Governance

102

Governance

3i Infrastructure plc Annual report and accounts 2022 103

Division of responsibilities continued

The Audit and Risk Committee receives

presentations and reports on the control

systems and their operation from its

main service providers, including from

the Investment Manager and the Heads

of Internal Audit and Compliance of the

Investment Manager.

The risk log contains a description of events

that have occurred and relevant actions/

mitigants taken. The Committee tracks

open internal audit actions and receives

reports on their progress to closure.

The Company’s Compliance Officer,

Money Laundering Reporting Officer and

Money Laundering Compliance Officer is

an employee of Apex Financial Services

(Alternative Funds) Limited (the Jersey

administrator) (‘Apex’). He presents a report

at every Audit and Risk Committee meeting

and the Committee is responsible for the

assessment and evaluation of these reports

in the context of the delegated investment

management and support services and

for monitoring the effectiveness of those

internal controls.

Apex maintains an annual Compliance

Monitoring Plan and reports to the

Committee on the results of its tests on the

Company, the Directors, the Investment

Manager and the Company’s suppliers,

amongst others. Apex has not identified

any areas of concern during the course

of the year. On the recommendation of

the Compliance Officer and the Money

Laundering Compliance Officer, the Board

approved further updates to its Conduct of

Business Manual, Anti‑Money Laundering

Manual, Business Risk Assessment and

customer due diligence processes during

the year.

In addition, as part of the internal control

framework, the Company Secretary reports

to the Board on updates to those policies

which do not form part of the Conduct

of Business Manual and Anti‑Money

Laundering Manual, namely the Non‑audit

Services Policy, the Whistleblowing Policy

and 3i Group’s Equal Opportunities

and Diversity Policy (in so far as this

particular policy applies to the Directors

ofthe Company).

The Chair of the Audit and Risk Committee

meets with the Compliance Officer, and

the Investment Manager’s Head of Internal

Audit and Head of Compliance periodically

to receive updates on the internal audit and

compliance processes and procedures of

the Investment Manager.

The Company does not have a separate

internal audit function, as it is not

considered appropriate given the structure

of the Company. This is reviewed annually

by the Audit and Risk Committee and was

approved by the Board for FY22.

As a result of these reviews, the Audit and

Risk Committee was able to confirm to

the Board that the internal controls were

working effectively and no weaknesses

orinefficiencies had been identified.

Division of responsibilities continued

Key Board activities and decisions during the year

In addition to all matters reserved to the Board for decision, the key matters considered by the Board were:

Approval of the FY21 final dividend

of 4.9 pence pershare, meeting our

target for the year of 9.8 pence per

share, and of a target dividend for

FY22

of 10.45 pence per share.

10.45p

FY22 Target dividend per share

Consideration of the external

evaluationsof the Board, the Chair

andthe Audit and Risk Committee.

Approval of the entry into a £400 million

additional credit facility.

Review of the portfolio asset valuation

process and methodology.

Detailed risk review and focus on risk

management framework.

Review of the Company’s corporate

structure and domicile.

Regular reviews of the Company’s

strategy, investment opportunities

andorganic growth initiatives.

Focus on stakeholder engagement with

an Investor Perception Study including

analysis of the key sustainability positions

of the Company’s largest shareholders.

Approval of the Annual report

and accounts 2021.

Ongoing consideration of the impact

the Covid-19 pandemic on the

Company and its portfolio assets.

Annual report

and accounts 2021

Approval of the FY22 interim

dividend of 5.225 pence per share.

5.225p

FY22 interim dividend

Approval of the renewal of the

£400 million revolving credit facility

witha£200 million accordion feature.

Setting and reviewing progress

against sustainability objectives.

Governance

104

Governance

3i Infrastructure plc Annual report and accounts 2022 105

Composition, succession and evaluation

Evaluation and Director Training

Board and Committees

This year an external review of the

performance of the Board, the Audit

and Risk Committee and the Chair

was conducted by a third party, Satori.

Satori has no other connection to the

Company. The review provided an

opportunity for the

Board to consider the

structure, function and composition of the

Board and its sub‑committees, balanced

against the strategic direction of the

Company. The Satori team were able to

bring their broader perspectives in relation

to best practices in other boards and areas

of specific interest were highlighted in the

discovery process. An externally facilitated

evaluation was last conducted in 2019

and

evaluations in 2020 and 2021 had been

undertaken by the Company Secretary.

The evaluation involved the completion

of a questionnaire by all Directors,

Clare

Calderwood (representing the

Company Secretary), and the Investment

Manager’s Managing Partner, Phil White,

and CFO, James Dawes followed by

individual interviews with the Satori team.

The anonymity of all respondents to the

questionnaire was maintained in the report

on the survey data in order to promote the

open and frank exchange of views.

Reports were subsequently prepared

Satori and presented to the Board for

consideration and extensive discussion.

The Board was rated highly on a number

aspects which included the following:

• Board structure and operations;

• Collaborative and constructive dynamics;

• Chairing of both the Board and

its Committees;

• The relationship with the

Investment Manager;

• The Board’s impact on specific topics

such as ESG matters; and

• That Directors actively enjoyed being

members of this Board and cited it as

an exemplar.

The Board considered that the evaluation

had been both challenging and provocative

in a positive way. The key themes

highlighted on the 2022 evaluation were

focused on Board purpose. Following the

development of the Company’s purpose

last year, now was an appropriate time to

more fully articulate the Board’s purpose

in order to deliver maximum value, inform

Board function, form, composition and

its agenda. Satori recommended a range

of further themes related to Talent,

Operations and Performance. The Board

has agreed that it would consider how to

take these forward following completion

ofthe work on Board purpose.

The evaluation concluded that overall the

Board was considered very effective.

Composition, succession and evaluation continued

Evaluation and Director Training continued

It was noted that good progress had been seen against the recommendations made in the 2021 Board evaluation, as follows:

Evaluation Actions 2021 Progress

Strategy: Work with the Investment

Manager todevelop the Company’s

approach to sustainability and to consider

how itinfluenceslong-term strategy

The Board considered a range of issues related to sustainability including decarbonisation: the role of hydrogen, the portfolio companies’

approach to engaging with their stakeholders, and understanding investors views on sustainability as part of the investor perception study.

The Board also receives regular ESG updates from the Investment Manager on the portfolio companies and on topical issues. Inaddition

the Board received an update from Anthesis, external advisers engaged by the Company to work with portfolio companies on the collation

and reporting of GHG emissions and compliance with TCFD. All of these feed into the Board’s approach to sustainability as part of its

long‑term strategy.

Investors and Stakeholders: further

consideration of directors’ duties and

how to fulfil these in relation to wider

stakeholder engagement

An in‑depth investor perception study was carried out and provided an opportunity to seek investor views on a wide range of topics,

including ESG as mentioned above. Thisengagement demonstrates the Board’s commitment to engaging in a meaningful way with its

keystakeholders.

Oversight of risk management The Directors received an externally facilitated risk management workshop which demonstrated that the risk review process followed

bythe Company aligned with bestpractice and provided some helpful suggestions to further improve the process.

Board succession planning and

wideningBoarddiversity

The Board continues to work on its succession plan and currently the composition of the Board satisfies the target set by the

Hampton‑Alexander review. The Directors continue to be mindful, when looking at the longer‑term succession plan, of the recommendations

for both gender and ethnic diversity, while also considering diversity ofsocial background, and cognitive andpersonalstrengths.

Governance

106

Governance

3i Infrastructure plc Annual report and accounts 2022 107

Composition, succession and evaluation continued

Evaluation and Director Training continued

Director training

and development

The Company has developed a framework

within which training for Directors is

planned, with the objective of ensuring

that the Directors understand the duties

and responsibilities of being a director

of a listed company and the business

environment of the Company. All Directors

are required continually to update their

skills and maintain their familiarity with the

Company and its business. In accordance

with Jersey regulations the Directors are

expected to undertake sufficient, relevant

and appropriate training and development

each year. Presentations on different

aspects of the Company’s business are

made regularly to the Board, usually by

the

Investment Manager, but on occasion

by other advisers, including the Company’s

corporate brokers, external auditor,

tax

adviser, financial adviser, depositary,

Jersey

administrator and legal advisers.

The Directors have the opportunity

to request additional training and

development where they feel that

wouldbe appropriate.

During the year, the Directors received

presentations on the following:

• aspects of the infrastructure market,

sector reviews and infrastructure assets;

• briefings in relation to changes to laws

and regulations in Jersey and the UK;

• changes and updates to

corporate governance;

• maintenance of the investment

trust status and UK corporation

tax compliance;

• the Investment Manager’s

valuations process;

• directors and officers’ liability insurance

market update;

• Decarbonisation: the role of hydrogen;

• Risk management – an externally

facilitateworkshop provided by EY

which included a review of the existing

processes, a focus on risk management

processes and reporting for investment

trusts; and

• ESG risk and litigation.

On appointment, all Directors have

discussions with the Chair and Company

Secretary, following which they receive

briefings on the responsibilities of Directors,

the Company’s business and the Company’s

procedures. Briefings on the infrastructure

market and each of the portfolio companies

are arranged with the Investment Manager

and other experts. The Company provides

opportunities for Directors to obtain a

thorough understanding of the Company’s

business and the industry it operates in

by meeting regularly with senior members

of the Investment Manager’s team and by

meeting the executive management teams

of portfolio companies.

The Company has procedures for

Directorsto take independent legal

orother professional advice about the

performance

of their duties.

Composition, succession and evaluation continued

Nomination Committee report

The Committee has continued

its focus on succession planning

and the steps the Board intends

to take to promote both gender

and ethnic diversity amongst

itsDirectors.”

Richard Laing

Chair, Nomination Committee

The Committee plays a key role

supporting the Board in reviewing

the composition of the Board and its

Committees. The Committee has a formal

and rigorous appointments process

led by the Committee and involving all

Board members. When requested by

the Board, the Committee is responsible

for recommending any new Director

appointment based on merit whilst

ensuring that the recruitment process

considers diversity in its widest sense,

as well as seeking an appropriate

balance of expertiseand experience

and having regard to the Company’s

strategic objectives.

The 2022 Board evaluation continued

previous years’ focus on succession

planning and widening Board diversity.

The composition of the Board now

satisfies

the target set by the Hampton‑Alexander

Review with 33% female Directors.

The Directors continue to be mindful,

whenlooking at the longer term, of the

recommendations for both gender and

ethnic diversity, while also considering

diversity of social background,

andcognitive and personal strengths.

Matters reviewed in the year

During the year the Committee reviewed

its compliance with the AIC Code and its

Terms of Reference and confirmed that it

remained compliant with all of its corporate

governance responsibilities.

Succession planning

The Committee has undertaken succession

planning so that when Directors retire at the

end of their term, recruitment processes

are in place to ensure that both gender and

ethnic diversity are considered alongside

the candidates’ skills and experience.

The Committee reviewed an updated

Board skills and experience matrix and the

Chair discussed with each Director their

future intentions as part of thesuccession

planning programme.

Details of each of the Director’s skills

and experience which contribute to the

effective functioning of the Board and the

success of the Company can be found in

their biographies on pages 89 and 90 and

inthe Skills Matrix on page 109.

Female (33%) 2

Male (67%) 4

Board members by gender

0‑3 years 1

4‑6 years 1

7+ years 4

Non-executive Directors’ tenure

Governance

108

Governance

3i Infrastructure plc Annual report and accounts 2022 109

Composition, succession and evaluation continued

Nomination Committee report continued

The Board has previously stated that it had

agreed a maximum term for any Director

of nine years, subject to any exceptional

circumstances that might arise at the

relevant time. The Board is considering

redomiciling the Company to the UK and

this is an exceptional circumstance which

impacts succession planning. As a Jersey

registered Company it is required to have

least two Jersey resident directors,

one

ofwhom is Paul Masterton.

The Board has asked Paul to serve as a

Director of the Company for an additional

period whilst it awaits the outcome of

the UK Government’s consultation on

Corporate Redomiciliation. In these

circumstances, the Board believes that it

is in the best interests of the Company for

Paul to serve beyond the usual term of nine

years, as detailed on page 102. Should the

Company transfer its

domicile it will no

longer require two Jersey resident directors

which will allow any future director to be

sought from a much wider candidate pool.

Paul is standing

for re‑election at the AGM

in 2022.

Diversity

The Board has adopted 3i Group plc’s

Equal Opportunities and Diversity Policy in

so far as it is relevant to the Company with

non‑executive Directors and no employees.

This can be found at www.3i.com.

The Board supports the principles of the

Hampton‑Alexander Review (now replaced

by the FTSE Women Leaders Review)

and Parker Review on gender and ethnic

diversity. The Committee notes the new

recommendation of the FTSE Women

Leaders Review of achieving 40% female

representation on the Board by the end of

2025. The Committee continues to develop

its succession plan in line with these targets

and the wider diversity requirements of the

AIC Code and other relevant requirements.

Richard Laing

Chair, Nomination Committee

9 May 2022

Risk Management/Compliance

Technology

Fund Management

Financial/Accounting/Audit

Legal/Regulatory/Governance

Listed Company

Investment Trust

International

Remuneration

Infrastructure

ESG

M&A/Capital Markets

Directors’ Skills Matrix

Audit, Risk and Internal Control

Audit and Risk Committee report

This year the Audit and Risk

Committee has continued its

focus on financial reporting

which included an additional

focus on the risk management

framework.”

Wendy Dorman

Chair, Audit and Risk Committee

The Company, through the Investment

Manager, has in place internal control and

risk management arrangements to support

the financial and narrative reporting process

and to provide assurance that the Financial

statements are prepared in accordance with

applicable standards.

All the members of the Audit and Risk Committee

are independent non‑executive Directors who

have the necessary range of financial, risk, internal

control and commercial experience required

to provide effective challenge.

The Audit and Risk Committee Chair, Wendy Dorman,

is a CharteredAccountant, and the Board is satisfied

that she has recent and relevant financial experience.

The Chair of the Board is not a member of the Committee

but attends meetings by invitation. The Committee Chair

meets regularly with the external auditor.

The Committee also manages the

relationship with the external auditor.

The Committee and its members act in

a way that they consider to be likely to

promote the best interests of the Company,

ensuring that the interests of shareholders

and the wider stakeholder group are

properly considered and reflected in their

decision making processes, see page 100

for further details.

The annual evaluation of the performance

of the Committee was conducted by

Satori, for further details see page

105. Overall the Committee continued

to perform well and was effective

discharging its responsibilities.

Financial and narrative reporting

The Committee reviewed and made

recommendations to the Board regarding

significant accounting matters and the

accounting disclosures in the Half‑yearly

report and Annual report and accounts

the Company.

The role of the Audit and Risk Committee

is to assist the Board by establishing,

reviewing and monitoring policies

andprocedures to ensure the integrity

of financial and narrative reporting, the

independence and effectiveness of

the external auditor, the effectiveness

of thesystem of internal controls and

oftherisk management framework.

Governance

110

Governance

3i Infrastructure plc Annual report and accounts 2022 111

Audit, Risk and Internal Control continued

Audit and Risk Committee report continued

Fair, balanced and

understandable (‘FBU’) reporting

The Committee considered the

requirements of the AIC Code and

specifically reviewed this Annual report and

accounts to conclude whether the financial

reporting is fair, balanced, understandable,

comprehensive and consistent with how

the Board assesses the performance of the

Company’s business during the financial

year. As part of this review, the Committee

considered whether the Annual report

and accounts provided the information

necessary to shareholders to assess

the Company’s position, performance,

strategy and business model and reviewed

the description of the Company’s

KeyPerformance Indicators.

How the Committee satisfies itself that

the

Board can make the FBU statement

set out in the chart opposite.

The Committee reviewed the Annual report

atan early stage, and throughout the process,

toenable sufficient time for comment and review

and ensure overall balance and consistency.

The Investment Manager and Company

Secretary oversaw a verification process for

allfactual content and reported back to the

Committee on its assessment and findings.

The Committee approved the process in place

to support the FBU assessment and reviewed

the findings of the process. The Committee was

satisfied that all key events andissues reported

to the Board by the Investment Manager had

been adequately referenced or reflected within

the Report.

The external auditor presented the results of

itsaudit work. The significant issues considered

by the Committee were consistent with those

identified by the external auditor in its report

(see

pages 126 to 137 for further information).

The Board approved the Committee’s

recommendation that the FBU statement could

bemade and this can be found in the Directors’

Statement on pages 123 and 124.

The following statements show how

the Committee was able to make its

FBU assessment:

Recommendation

to the Board by

the Committee

FBU

assessment

Investment

Manager

and Company

Secretary review

process

Regular

Audit

Committee

review

External

auditor

review

FBU Reporting

Valuation of the

investment portfolio

The Committee noted that this year there were no changes to the principles of valuation

which have been consistently applied. All unquoted assets have been valued on a

discounted cash flow (’DCF’) basiswith the exception of the Projects portfolio which is

valued based on the agreed sales price and the 3i India Infrastructure Fund where the

valuation is taken as the Company’s shareof the Fund’s net assets. Within the India Fund,

the remaining investment in Supreme Infrastructure is valued at nil.

The WADR of the portfolio was slightly higher at 10.9% (10.8% at March 2021), with the new

investments in SRLand DNS:NET being mostly offset by small reductions in a number

ofinvestments including Oystercatcher, TCR,ESVAGT and Valorem.

The Committee considered the effect of a higher inflation environment on cost and

revenue assumptions. Factors considered include the impact of cost inflation on

operating costs and capital expenditure, the ability to pass cost inflation to customers

andcompany specific factors such as the impact on the ROC buyout price for Infinis.

These factors are reflected in the cash flow projections of the portfolio companies.

The Investment Manager, as the Company’s Alternative Investment Fund Manager,

isresponsible for providing a valuation of the investment portfolio that has been prepared

properly and independently challenged. The Committee noted that 3i Investments

plc’s infrastructure valuations committee is considered independent of the Investment

Manager’s fund management activity and that it had approved the investment portfolio

valuation as at 31 March 2022. The Committee discussed in detail the portfolio company

valuations with the Investment Manager and the external auditor, including the external

auditor’s valuation expert, and considered that the principles of valuation applied

bythe Investment Manager to the investment portfolio hadbeen applied correctly

andconsistently and recommended the valuations to the Board for approval.

Audit, Risk and Internal Control continued

Audit and Risk Committee report continued

Interest streaming For an approved investment trust that has taxable profits arising from net interest income,

the UK tax rules provide an option to treat a part of the dividends it pays as interest.

TheAnnual report and accounts have been prepared on the assumption that the

Company will not designate any of its final dividend as interest.

Investment entity

consideration

The Committee reviewed the assessment that the Company continues to meet the

criteria of an investment entity.

Calculation of

the management

andperformance

fees payable

totheInvestment

Manager

The Committee undertook a detailed review of the management and performance

fee calculation. The Committee also had access to a review ofthe calculation of the

management and performance fee carried out by the internal audit function of the

Investment Manager and engaged theexternal auditor to perform additional agreed‑

upon‑procedures work in relation totheinputs to the management and performance

fee calculation.

Valuation of derivative

financial instruments,

other receivables

and recognition of

contingent amounts

The Committee considered and agreed with the Investment Manager’s valuations

in relation to derivative financial instruments, other receivables and recognition

ofcontingent amounts.

Key accounting estimates and judgements

An important responsibility of the Committee is to review and agree the key estimates, judgements and assumptions which impact theFinancial statements.

The key areas of judgement are set out below. After receiving reports on the significant estimates and matters of judgement from the Investment Manager,

and after considering the report on the audit from Deloitte, the Committee agreed that the judgements made were appropriate and correctly reflected and

presented in the Annual report. More detailed information on the Company’s accounting policies can be found on pages 145 to 154.

Governance

112

Governance

3i Infrastructure plc Annual report and accounts 2022 113

Audit, Risk and Internal Control continued

Audit and Risk Committee report continued

In addition to the above matters, the

Committee reviewed the following areas:

• the use of Alternative Performance

Measures (‘APMs’) and the balance of

APMs and GAAP measures in the Annual

Report and accounts;

• the appropriateness of the sensitivity

rates applied in Note 9 of the

Financial statements;

• post balance sheet events; and

• other changes in presentation within

the

report to improve clarity for users.

The Committee presented its conclusions

on the above areas to the Board and

advised the Board that it considered

the Annual report and accounts,

taken as a whole, to be fair, balanced

and understandable.

The Committee further advised that so

far as it was aware, there was no relevant

audit information of which the external

auditor was unaware; that the Committee

had taken all reasonable steps to ascertain

any relevant audit information and ensure

that the external auditor was aware of such

information; and that the Annual report

and accounts provided the information

necessary for the shareholders to assess

the

Company’s position, performance,

business model and strategy.

External auditor

The Committee has primary responsibility

for overseeing the relationship with

Deloitte LLP (‘Deloitte’), the external

auditor, including assessing annually

its performance, effectiveness and

independence. Shareholders approved

the re‑appointment of Deloitte as external

auditor for the year ended 31 March 2022

at the Company’s July 2021 AGM following

a competitive external auditor selection

process in 2017.

Jacqueline Holden has been the audit

partner for Deloitte since first appointment

in the year to 31 March 2018 following

full audit tender. Jacqueline will rotate

off the audit at the conclusion of this

year’s audit and Stephen Craig has been

selected as her replacement. Stephen is

familiar with auditing investment trusts.

The Committee considers that the Deloitte

lead audit partner rotation provides fresh

perspective and thanks Jacqueline for

her work with the Company over the last

five years. The Committee reviewed and

monitored Deloitte’s execution of the audit

plan. The Committee considered Deloitte’s

report on its review of the half‑yearly

results and its report on the FY22 audit.

It discussed all significant matters identified

in Deloitte’s final report on the FY22 audit

including key accounting judgements

taken by the Investment Manager and the

Investment Manager’s responses to any

audit findings.

Audit, Risk and Internal Control continued

Audit and Risk Committee report continued

External auditor effectiveness

The Audit and Risk Committee reviewed

the effectiveness of the FY21 external

audit process, considering performance,

objectivity, independence and relevant

experience demonstrated by reports and

presentations from the external audit

team and discussion with the Investment

Manager. The Committee monitors the

external auditor’s independence and

objectivity, taking into consideration

relevant professional and regulatory

requirements, the quality of the audit

process, and the use of Deloitte’s

valuation practice to support the

audit of the portfolio valuations, the

technical knowledge of the team and

staff turnover within the Deloitte audit

team. The Committee considered a

memorandum from the Investment

Manager regarding the external auditor’s

effectiveness, independence and

objectivity. The Committee considered

the Financial Reporting Council’s (‘FRC’)

2016 guidance to Audit Committees when

assessing the effectiveness of the whole

audit process.

The Committee noted the following

respect of the external auditor:

Assessment against the audit plan

• the FY21 audit was again conducted

remotely due to the continued Covid‑19

stay at home restrictions and whilst this

provided a number of challenges for both

Deloitte and the Investment Manager,

the

audit was efficient and effective,

and

all deadlines were met;

• there were no areas where the Investment

Manager or Company’s views of the

accounting treatment differed from

that

of the external auditor;

• the level of engagement from the

audit partner was high throughout the

audit process;

• the continuity of the audit team was

predominantly retained from the previous

year; and

• the audit matched the process set out

the audit plan.

Evaluation of audit quality

Following the FRC’s Practice Aid for

audit committees on audit quality (2019)

the Committee considered the four key

elements that are necessary to support

theauditor in making sound judgement–

(i)Judgement, (ii) Mindset and Culture,

(iii)Skills, Character and Knowledge, and

(iv)Quality Control. In making its evaluation

the Committee noted the following in

respect of the external auditor:

• the work undertaken by the external

auditor to address the risks identified in

their plan and any subsequent risks that

had later been identified;

• the external auditor’s focus on valuation

assumptions particularly for Ionisos due

to the valuation impact of the fraudulent

activity in Steril Milano, and for TCR as an

asset impacted by the pace and extent

the recovery in the aviation sector;

• the detailed audit work completed on

the calculation of the Management and

Performance Fees;

• the additional disclosures and sensitivities

sought concerning Ionisos and the

updated assumptions on Covid‑19

restrictions, particularly inrelation to TCR;

• the use of data analytic tools tosupport

the conduct of the audit;

• the level and quality of challenge

received from the external auditor;

• a good knowledge of accounting

standards, governance requirements

and

the infrastructure market;

• the robust and perceptive handling of the

key accounting and audit judgements;

• the support received by the external

auditor from the external auditor’s

technical team;

• the focus of the external auditor on

compliance with the UK Investment

Trust Regulations and AIC Statement

ofRecommended Practice; and

• the final report was presented based on

a good understanding of the Company’s

business and included granularity around

the valuation assumptions.

Governance

114

Governance

3i Infrastructure plc Annual report and accounts 2022 115

Audit, Risk and Internal Control continued

Audit and Risk Committee report continued

Non-audit services and External

auditor independence

The Committee monitors the Company’s

policy for non‑audit services to ensure

that the provision of such services by

the external auditor does not impair

the external auditor’s independence or

objectivity. The Committee reviewed and

updated the Company’s policy on the

provision of non‑audit services which is

compliant with the provisions applicable

to public interest entities in the Revised

Ethical Standard 2019 published by the

Financial Reporting Council. In order to

safeguard external auditor objectivity and

independence, the chair of the Audit and

Risk Committee is required to approve in

advance all non‑audit work undertaken

by the external auditor for the Company

and its subsidiaries, and as a general rule

the external auditor will not be engaged

on investment‑related work. However,

exceptions to this may be permitted if the

work is (i) for an affiliate of the Company

and an indirect service to the Company or

(ii) reporting accountant work, for example

in the case of a capital raise.

Deloitte and their associates provided

non‑audit services to the Company

forfeestotalling £104,635 for the year

to31 March 2022 (2021: £52,700).

This related to agreed‑upon procedures

onthe management and performance fees

(£7,560), agreed‑upon procedures work in

respect of Sustainability KPIs for the RCF

reporting (£27,000), a review of the interim

financial statements (£55,575) and reporting

accountant work (£14,500). In this financial

year, in line with the Company’s policy,

Deloitte provided non‑audit services in

relation to certain non‑consolidated investee

companies. The fees for these services are

ordinarily borne by the underlying investee

companies or unconsolidated subsidiaries,

and therefore are not included in the

expenses of the Company.

In assessing the external auditor’s

independence, the Committee reviews

thetotal amount of fees paid to the

external auditor in accordance with

the

stated policy on non‑audit services,

regardless ofwhether they are borne by

theCompanyor by the investee companies.

The Committee concluded that the external

auditor remained independent and the

audit was effective, and that a resolution be

proposed to shareholders recommending

the re‑appointment of Deloitte at the

2022 AGM.

Risk management

and internalcontrol

The Committee is responsible on behalf of

the Board for overseeing the effectiveness

of the Company’s risk management and

internal control systems. During the year,

the Committee:

• carried out a a full review of the risk

new three year risk review cycle with the

objectives of (i) identifying the principal,

key and emerging risks facing the

Company; (ii) considering the impact

and likelihood of these risks; (iii)ensuring

that risks identified were linked to the

Company’s strategic objectives; and

(iv)updating the risk register and risk

matrix as appropriate;

• conducted risk reviews as detailed in

theRisk report on pages 67 to 77;

• carried out horizon scanning to identify

new and emerging risks;

• reviewed the risk log at each Committee

meeting, and discussed the management

of risks noted on the log with the

Investment Manager;

• considered reports from the Company’s

Compliance Officer, Money Laundering

Compliance Officer and Money

Laundering Reporting Officer;

• on the advice of Apex, considered and

approved updates to (i) the customer due

diligence procedures for shareholders

related to off‑market transactions,

(ii)

theconduct of business manual;

(iii)

theanti‑money laundering manual

and

(iv) the business risk assessment;

• considered the presentation of

risk‑related matters in the Annual report

and accounts;

• considered the viability statement and

the reverse stress test analysis (for more

detail see pages 79 and 80);

• considered reports and presentations on

the controls systems and their operation

from the main service providers,

including from the Investment Manager,

the Jersey Administrator, the Registrar

and the Heads of Internal Audit and

Compliance of the Investment Manager

and determined the effectiveness of the

internal controls; and

• reviewed the fact that the Company

does not have a separate internal audit

function and recommended to the Board

that it was not considered appropriate

to have one given the structure of

the Company.

Audit, Risk and Internal Control continued

Audit and Risk Committee report continued

Prior to the start of the full review

of the risk

register in October 2021,

the

Committee and Investment Manager

participated in a risk management

workshop facilitated by EY. The purpose

of the workshop was to look at risk

management best practice and consider

what, if any, changes should be made to

the

Company’s risk management framework

and risk review process. The current

three‑year cycle was considered to be in

line with market practice for investment

trusts. The ‘blank sheet of paper’ element

at the very start of the risk review process

was considered best practice. EY offered

suggestions to enhance the current process

along with advice on best practice for

external reporting.

The risk register is reviewed regularly

by the Committee and managed on

a day‑to‑day basis by the Investment

Manager. The Investment Manager brings

to the Committee’s attention events or

circumstances which may impact the

full

range of risks on the risk register.

Examples of this include the following:

• In the previous three‑year risk review

cycle Climate risk was identified as a

new

key risk and identified as such in

the

2021 Annual report.

• This year Climate risk was reassessed

based on the physical risk from climate

change and the transition risk associated

with a move towards a low‑carbon

economy on the portfolio.

• In addition Climate regulation has

been

identified as a regulatory risk

for the

Company and the portfolio

associated with the transition to a

low‑carbon economy.

• Market and economic risk now

includes

the risks associated with the

Russia/Ukraine conflict, including the risks

resulting from increases in commodity

and energy prices and the heightened

risk of recession.

These examples illustrate the dynamic

nature of the risk register. For further details

see the Risk Report on pages 67 to 77.

Other matters

Other matters reviewed by the Committee

during the year were:

• the coverage of the proposed interim

and

final dividends, including a review

of the coverage of dividend payments

through income generated by the

Company, non‑income cash distributions

received from portfolio companies, net

capital profits generated from the sale of

portfolio assets and retained reserves; and

• the Company’s compliance with its

regulatory obligations in the UK as

a listed entity and in Jersey where it

is registered.

The Committee reported to the

Board on how it has discharged its

responsibilities and reported to the Board

the key matters arising at each meeting.

All recommendations were accepted by

the Board.

Wendy Dorman

Chair, Audit and Risk Committee

9 May 2022

Governance

116

Governance

3i Infrastructure plc Annual report and accounts 2022 117

Relationship with Investment Manager

Management Engagement Committee report

Management of the

performanceof and relationship

with the Investment Manager

remains key to the continuing

success of the Company.”

Richard Laing

Chair, Management Engagement Committee

The principal function of the Management

Engagement Committee is to consider,

and recommend to the Board, whether the

continued appointment of the Investment

Manager is in the best interests of the

Company and its shareholders and to

give reasons for its recommendation.

Its remit includes managing all aspects of

the performance of and relationship with

the Investment Manager. The Committee

also reviews the terms of the Investment

Management Agreement.

Investment Manager

On 15 October 2018, the Company

appointed 3i Investments plc as its

Investment Manager (it having previously

acted as the Company’s investment adviser)

with discretionary investment management

authority. The Investment Manager is

responsible for the implementation of

the agreed investment policy and for

investment or divestment decisions,

subject to the investments or divestments

remaining below an agreed threshold.

Where the value of investments or

divestments is above the agreed threshold,

the Board is responsible for approving

these transactions.

The Investment Manager keeps the Board

regularly updated on the progress of

the

deal pipeline, and proposed and

completed transactions. The Investment

Manager discusses with the Board potential

investment opportunities and proposed

divestments, whether or not they are within

the Investment Manager’s delegated

authority.The Investment Manager

undertakes origination activities,

manages

the Company’s funding and

hedging requirements, and manages

funding requirements of the investment

portfolio, all of which is governed by the

terms of the IMA.

The IMA includes an exclusivity

arrangement in respect of investment

opportunities within the Company’s

Investment policy.

Fees under the IMA consist of a tiered

management fee and time weighting of

the management fee calculation, a one‑off

transaction fee of 1.2% payable in respect

of new investments, and the payment of

a performance fee on a phased basis and

subject to future performance tests.

The applicable tiered rates are shown in

the

table below:

Gross investment value Applicable tier rate

Up to £1.25bn 1.4%

£1.25bn to £2.25bn 1.3%

Above £2.25bn 1.2%

The IMA is terminable on service of

12 months’ notice by either party.

Further details on the management and

performance fees and the relationship

between the Company, 3i Investments plc

and 3i Group plc are described in more

detail in Note 18 in the Financial statements

on pages 176 and 177.

The Committee monitored the overall

relationship with the Investment

Manager and:

• monitored and reviewed the Investment

Manager’s performance against the

Company’s strategy and the general

market conditions;

• reviewed the quality, timeliness, accuracy

and relevance of the information

provided to the Board, including

recommendations on new investments

and divestments and reviews of portfolio

company performance;

• reviewed reports from industry analysts,

comparing the performance of listed

infrastructure investment companies,

including an analysis of the terms

of their management agreements

and fees charged relative to their

investment objectives;

• reviewed the fees charged to the

Company by the Investment Manager for

the provision of its management services;

and

• reviewed non‑investment services

provided by the Investment Manager.

Following its assessment, and based on

the continued good performance of the

Investment Manager, the Committee

recommended to the Board, and the Board

agreed, that the continued appointment of

the Investment Manager on the terms set

out in Note 18 in the Financial statements

on pages 176 and 177 is in the interest of

shareholders as a whole.

Richard Laing

Chair, Management Engagement Committee

9 May 2022

Relationship with Investment Manager continued

Management Engagement Committee report continued

Governance

118

Governance

3i Infrastructure plc Annual report and accounts 2022 119

Remuneration

Remuneration Committee report

The Remuneration Committee,

comprising the independent

non-executive Directors, sets

theremuneration of the Chair

and members of the Board.”

Paul Masterton

Chair, Remuneration Committee

The Remuneration Committee is charged

with reviewing the scale and structure of

thenon‑executive Directors’ remuneration.

Remuneration policy

The remuneration of each of the Directors

is subject to fixed fee arrangements

and none of the Directors received any

additional remuneration or incentives in

respect of his or her services as a Director

of the Company. The Directors’ fees

were reduced in April 2019 following the

Company becoming a managed alternative

investment fund, which led to a reduced

time commitment for Directors.

The Committee conducted its annual

review of the Directors’ fees and recognised

that there had been no increase in fees

for a number of years. At the time of

the fee reduction in 2019 the Board had

agreed that regular increases to Directors’

fees was more appropriate than larger

infrequent increases.

The Remuneration Committee reviewed

the current level of the Directors’ fees

taking account of the time spent including

but not limited to attendance at meetings,

Board calls with the Investment Manager,

the strategy sessions and attending ad hoc

meetings. The Committee also reviewed

external benchmarking reports on Director

remuneration for both FTSE 250s and,

particular, investment trusts.

After careful consideration the Committee

recommended to the Board that the fees

for Directors, the Chair, the Chair of the

Audit and Risk Committee and the Senior

Independent Director be increased as

set out below and this was subsequently

approved by the Board to take effect from

1 April 2022.

The Directors’ fees for the financial year to 31 March 2022 and fee increases from

1 April

2022 are as follows:

Directors’ fees

Amount per annum

to be paid from

1 April 2022

Amount paid in

the year ended

31 March 2022

Amount paid in

the year ended

31 March 2021

Richard Laing 124,000 120,000 120,000

Doug Bannister 47,5 0 0 46,000 46,000

Wendy Dorman 58,500 56,000 56,000

Samantha Hoe‑Richardson 47,5 0 0 46,000 46,000

Robert Jennings

n/a 15,333 46,000

Ian Lobley

47,5 0 0 46,000 46,000

Paul Masterton 55,000 53,000 53,000

1 Fees paid for the period from April‑July 2021.

2 Fee payable to 3i plc.

Paul Masterton

Chair, Remuneration Committee

9 May 2022

Directors’ statement

Principal activity

The Company is a closed‑ended

UK investment trust that invests in

infrastructure businesses and assets.

The Directors do not anticipate any change

in the principal activity of the Company in

the foreseeable future. Its unconsolidated

subsidiaries are shown in Note 19 in the

Financial statements on pages178 to 182.

Investment trust status

The management and tax domicile of the

Company moved from Jersey to the UK

on 15 October 2018, and the Company

was granted, with effect from that date,

UK approved investment trust status.

The affairs of the Company are directed

to enable it to maintain its UK tax domicile

and its approved investment trust company

status, which it did during the course of the

year. This is managed on an ongoing basis

by the Investment Manager and monitored

by Audit and Risk Committee.

Corporate Governance

The Company is committed to upholding

the highest standards of corporate

governance. The Company observes the

requirements of the AIC Code, a copy of

which is available from The Association

of Investment Companies website

(www.theaic.co.uk).

The provisions of the AIC Code are more

appropriate for a closed ended investment

trust than the UK Corporate Governance

Code (the ‘UK Code’) because, amongst

other things, it has no executive directors.

The Association of Investment Companies

website includes an explanation of how

the AIC Code adapts the principles and

provisions set out in the UK Code to make

them relevant for investment companies.

The Company complied with all the

provisions of the AIC Code for the

financial

year ended 31 March 2022.

Directors’ duties

Details of compliance by Directors with

theirDirectors’ duties are set out on

pages81 and 82.

Appointment and re-election

ofDirectors

The appointment and re‑election of

Directors is governed by the Articles,

the Companies (Jersey) Law 1991 and

related legislation. The Articles provide

that at each AGM of the Company all the

Directors at the date of notice convening

the AGM shall retire from office and each

Director may offer himself or herself for

election or re‑election. In addition, under

the AIC

Code, all Directors should be

subject

toannual election by shareholders.

As a result, all Directors will retire and stand

for re‑election at the next AGM to be held

on 7 July 2022.

The Board regularly considers the

independence of non‑executive Directors

as detailed on pages 101 to 102.

Board’s responsibilities

andprocesses

The composition of the Board and its

Committees, as well as the Board’s key

responsibilities and the way in which it

and its Committees work, are described

on pages 94 to 96 and pages 108 to 119.

The Board is responsible to shareholders

for

the overall management of the

Company and may exercise all the powers

of the Company subject to the provisions

of relevant statutes, the Company’s Articles

of Association and any directions given

byspecial resolution of the shareholders.

Matters reserved for the Board

The Board has approved a formal schedule

of matters reserved to it and its duly

authorised Committees for decision,

asdetailed on page 94.

Portfolio management

and votingpolicy

In relation to unquoted investments, the

Company’s approach is to seek to add value

to the businesses in which it invests through

the extensive experience, resources and

contacts of the Investment Manager’s team.

In relation to quoted equity investments,

the Company’s policy is to exercise voting

rights on matters affecting the interests

ofthe Company.

Regulation

The Company is incorporated in Jersey and

is regulated by the Jersey Financial Services

Commission as a collective investment

fund under the Collective Investment

Funds (Jersey) Law 1988. It has a Premium

Listing on the London Stock Exchange’s

Main Market.

Alternative Investment

Fund Managers Directive

For the purposes of the Alternative

Investment Fund Managers Regulations

2013 (the ‘Regulations’) and the EU

Alternative Investment Fund Managers

Directive, the Company is an alternative

investment fund (‘AIF’). The Investment

Manager is approved as an alternative

investment fund manager (‘AIFM’) by the

Financial Conduct Authority (the ‘FCA’)

for the purposes of the Regulations and is

the Company’s AIFM. The Depositary is

currently Citibank UK Limited.

The Investment Manager is a subsidiary

of 3i Group plc and the Remuneration

Policy of 3i Group plc (which applies to

the

Investment Manager) was approved

Governance

120

Governance

3i Infrastructure plc Annual report and accounts 2022 121

Directors’ statement continued

by 3i Group plc’s shareholders in 2020.

Details of the Remuneration Policy are set

out in the 3i Group plc Annual report and

accounts for 2021.

The disclosures required by the Investment

Manager as an AIFM are contained in the

Annual report and accounts of 3i Group plc

(www.3i.com). These disclosures include the

remuneration (fixed and variable) of all staff

and all AIFM Identified Staff of the Investment

Manager. Due to 3i Group plc’s operational

structure, the information needed to provide

a further breakdown of remuneration

attributable to the staff and the AIFM

Identified Staff of the Investment Manager

as the Company’s AIFM is not readily available

and would not be relevant or reliable.

Although certain investor disclosures

required by the FCA’s Investment

Funds sourcebook are made in this

Annual report, further disclosures are

summarised on the Company’s website

at www.3i‑infrastructure.com. There have

been no material changes to these

disclosures during the financial year.

In accordance with Part 5 of the Regulations

and the relevant requirements of the

EUAlternative Investment Fund Managers

Directive, the Investment Manager, as

an AIFM, requires all relevant controlled

portfolio companies to make available to

employees an annual report which meets

the applicable disclosure requirements.

These are available either on the portfolio

company’s website or through filing with

the relevant local authorities.

NMPI

As a UK investment trust, the Company’s

shares are excluded from the FCA rules

regarding the restrictions on the retail

distribution of unregulated collective

investment schemes and close substitutes

(‘non‑mainstream pooled investments’,

or ‘NMPIs’) and therefore the restrictions

relating to NMPIs do not apply to its shares.

It is the Board’s intention that the Company

will continue to conduct its affairs in such

a manner that it maintains its approved

investment trust company status and that,

accordingly, the Company’s shares will

continue to be excluded from the FCA’s

rules relating to NMPIs.

Results and dividends

The Directors recommend that a final

dividend of 5.225 pence per share

(2021: 4.9pence) be paid in respect of the

year to 31 March 2022 to shareholders on

the register at the close of business on

17 June 2022. The Company has chosen

not

to designate any of its final dividend

an interest distribution.

The Company chose to designate 38%

of the interim dividend as an interest

distribution (2.0 pence per share of the total

dividend of 5.225 pence per share). For UK

tax purposes the effect of the designation

was that shareholders were treated in

respect of the designated part as though

they had received a payment of interest,

whilst being treated as having received

payment of dividend in respect of the

non‑designated part.

The distribution of the dividend payments

between interim and final dividends

is evaluated by the Board each year,

according to the Company’s performance,

portfolio income generation and other

factors, such as profits generated on the

realisation of portfolio assets. The Company

will be targeting a dividend for FY23 of

11.15pence per share.

Strategy, performance and

principal risks

The Strategic report on pages 1 to 82

provides a review of the performance and

position of the Company, together with

a description of the principal risks and

uncertainties that it faces.

Operations and management

arrangements

Details of the role and responsibilities of the

Investment Manager under the Investment

Management Agreement are set out in the

Management Engagement Committee

report on pages 117 and 118.

Other significant service

arrangements

In addition to the investment management

arrangements, 3i plc and 3i Investments

plc (both subsidiaries of 3i Group plc),

in relation to certain regulatory services,

have been appointed by the Company to

provide support services, including treasury

and accounting services, investor relations

and other support services. The amounts

payable under these arrangements are

described in more detail in Note 18 in the

Financial statements on page 176 and 177.

3i plc acts as Company Secretary to the

Company and Apex Financial Services

(Alternative

Funds) Limited acts, in a limited

capacity, as the Company’s Jersey fund

administrator, which includes provision

of the Company’s Compliance Officer,

Money

Laundering Compliance Officer

andMoney Laundering Reporting Officer.

Revolving credit facility

The Company has a £400 million sustainability‑linked revolving credit facility (‘RCF’).

The RCF has a margin of 1.50% and a non‑utilisation fee. The RCF has a maturity date of

November 2024 and includes two one‑year extension options. The RCF has a £200 million

accordion feature. This gives the Company a right to request an increase in the size of the

RCF on a temporary basis. The £200 million accordion was activated in December 2021

for

one year.

In January 2022, the Company raised an additional credit facility of £400 million

embedded

into the existing RCF with a margin of 1.2%. This tranche has a maturity

date

ofJanuary 2023. Aggregate credit facilities therefore total £1 billion.

Share capital

The issued share capital of the Company as at 31 March 2022 was 891,434,010 ordinary

shares (2021: 891,434,010). The Company does not hold any ordinary shares in treasury.

Major interests in ordinary shares

As at 31 March 2022 and 30 April 2022, the Company has received notification in

accordance with Chapter 5 of the FCA’s Disclosure Guidance and Transparency Rules of the

following notifiable interests in the voting rights in the Company’s ordinary share capital:

Interest in ordinary shares

Number of

ordinary

as at

31 March 2022

% of issued

share capital

Number of

ordinary

as at

30 April 2022

% of issued

share capital

3i Group plc (and subsidiaries) 269,242,685 30.20% 269,242,685 30.20%

Schroders plc 47, 693,9 72 5.35% 47,591,515 5.34%

1 Each ordinary share carries the right to one vote.

Directors’ statement continued

Directors’ and Persons Closely Associated interests

The Board adopted a code for Directors’ dealings in ordinary shares following the

implementation of the EU Market Abuse Regulation (‘MAR’) on 3 July 2016. The Board

responsible for taking all proper and reasonable steps to ensure compliance with

the

UKversion of MAR bythe Directors.

In accordance with FCA Listing Rule 9.8.6(R)(1), Directors’ interests in the shares of

the

Company (in respect of which transactions are notifiable to the Company under

the

UKversion of MAR as at 31 March 2022) are shown below:

Directors’ interests and beneficial interests

Ordinary shares

at 31 March

2022

Ordinary shares

at 31 March

2021

Richard Laing 35,000 35,000

Doug Bannister 20,000 20,000

Wendy Dorman 21,947 21,947

Samantha Hoe‑Richardson 1,339 1,339

Robert Jennings

n/a 55,000

Ian Lobley 0 0

Paul Masterton 29,194 29,194

1 No options have been granted since the inception of the Company.

2 Stepped down from the Board on 16 July 2021.

Governance

122

Governance

3i Infrastructure plc Annual report and accounts 2022 123

Directors’ statement continued

Directors’ authority to buy

backshares

The Company did not purchase any of its

own shares 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 at the 2022

AGM. The Company will seek to renew such

authority until the end of the AGM in 2023,

specifying the maximum and minimum

price at which shares can be bought back.

Any buy back of ordinary shares will be

made in accordance with Jersey law and the

making and timing of any buy backs will be

at the discretion of the Directors.

Such purchases will also only be made in

accordance with the Listing Rules of the

FCA which provide that the price paid must

not be more than the higher of: (i) 5% above

the average middle market quotations for

the ordinary shares for the five business

days before the shares are purchased;

and (ii) the higher of the last independent

trade and the highest current independent

bid on

the London Stock Exchange at

such time.

Directors’ conflicts of interests

The Directors have a statutory duty to avoid

conflicts of interest with the Company.

The Company’s Articles enable the

Directors to approve conflicts of interest

and include other conflict of interest

provisions. The Company has implemented

processes to identify potential and actual

conflicts of interest. Such conflicts are

then

considered for approval by the Board,

subject, if necessary, to appropriate

conditions. No conflicts arose during

the year, other than the pre‑approved

conflict of Ian Lobley as the 3i Group plc

nominated Director.

Directors’ indemnities

The Articles provide that, subject to the

provisions of the Statutes, every Director

of the Company shall be indemnified out

of the assets of the Company against all

liabilities and expenses incurred by him or

her in the actual or purported execution

or discharge of his or her duties. ‘Statutes’

here refers to the Companies (Jersey) Law

1991 and every other statute, regulation or

order for the time being in force concerning

companies registered under the Companies

(Jersey) Law 1991.

In addition, the Company has entered into

indemnity agreements for the benefit of its

Directors and these remain in force at the

date of this report.

The Company also had directors’ and

officers’ liability insurance in place in

the year.

Political donations

During the year to 31 March 2022 no

donations were made to political parties

or organisations, or independent election

candidates and no political expenditure

was incurred.

Information included in

theStrategic report

The following information has been

included in the Strategic report: risk

management objectives and policies;

likely

future developments of the business;

greenhouse gas emissions; and section

172 statement. The Directors’ Viability

statement is also shown in the Strategic

report on page 79.

Statement of Directors’

responsibilities

The Directors are responsible for

preparing the Annual report and accounts

in accordance with applicable law and

regulations and those International Financial

Reporting Standards (‘IFRSs’) which have

been adopted by the United Kingdom.

As a company listed on the London Stock

Exchange’s Main Market, 3i Infrastructure

plc is subject to the FCA’s Listing Rules and

Disclosure Guidance and Transparency

Rules, as well as to all applicable laws

and regulations of Jersey, where it

is incorporated.

Jersey company law requires the Directors

to prepare financial statements for each

financial period in accordance with

generally accepted accounting principles.

The Financial statements of the Company

are required by law to give a true and fair

view of the state of affairs of the Company

at the period end and of the profit or loss of

the Company for the period then ended.

In preparing these Financial statements,

the

Directors should:

• select suitable accounting policies and

then apply them consistently;

• make judgements and estimates that

are reasonable;

• specify which generally accepted

accounting principles have been adopted

in their preparation; and

• prepare the Financial statements on

the going concern basis, unless it is

inappropriate to presume that the

Company will continue in business.

The Directors are responsible for keeping

accounting records which are sufficient

to show and explain the Company’s

transactions and are such as to disclose

with reasonable accuracy at any time the

financial position of the Company and

enable them to ensure that the Company’s

Financial statements comply with the

requirements of the Companies (Jersey)

Law 1991.

They are also responsible for safeguarding

the assets of the Company and hence

for taking reasonable steps for the

prevention and detection of fraud

and

other irregularities.

The Directors are also responsible for

preparing the Annual report and accounts

and the Directors confirm that they

consider that, taken as a whole, the Annual

report and accounts are fair, balanced

and understandable and provide the

information necessary for shareholders

to assess the Company’s performance,

business model and strategy.

In accordance with the FCA’s Disclosure

Guidance and Transparency Rules, the

Directors confirm to the best of their

knowledge that:

• the Financial statements, prepared in

accordance with applicable accounting

standards, give a true and fair view of the

assets, liabilities, financial position and

profit or loss of the Company taken as

whole; and

• the Annual report and accounts include

a fair review of the development and

performance of the business and the

position of the Company taken as a

whole, together with a description

theprincipal risks and uncertainties

faced by the Company.

The Directors of the Company and their

functions are listed on pages 89, 90, 94 to 96

and pages 101 to 103.

The Directors have acknowledged their

responsibilities in relation to the Financial

statements for the year to 31 March 2022.

By order of the Board

Authorised signatory

3i plc

Company Secretary

9 May 2022

Registered Office:

12 Castle Street

St. Helier

Jersey JE2 3RT

Channel Islands

Directors’ statement continued

Governance

124

125

Attero

Page 00

Accounts

and other

information

Independent auditor’s report to the members

of 3i Infrastructure plc

Report on the audit of the Financial statements

1 Opinion

In our opinion the Financial statements of 3i Infrastructure plc (the ‘Company’):

• give a true and fair view of the state of the Company’s affairs as at 31 March 2022 and of the Company’s profit for the year then ended;

• have been properly prepared in accordance with United Kingdom adopted international accounting standards; and

• have been properly prepared in accordance with Companies (Jersey) Law, 1991.

We have audited the Financial statements which comprise:

• the Statement of comprehensive income;

• the Statement of changes in equity;

• the Balance sheet;

• the Cash flow statement;

• the Reconciliation of net cash flow to movement in net debt;

• the Statement of significant accounting policies; and

• the related notes 1 to 19.

The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted international accounting standards.

Accounts and other information

126

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 127

Independent auditor’s report to the members

of 3i Infrastructure plc continued

2 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.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the Financial statements in the UK, including the Financial Reporting

Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

The non-audit services provided to the Company for the year are disclosed in Note 3 to the Financial statements. We confirm that we have not provided any non-audit services prohibited

by the FRC’s Ethical Standard to the Company.

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

3 Summary of our audit approach

Key audit matters The key audit matter that we identified in the current year was the fair value of investments.

Within this report, key audit matters are identified as follows:

Similar level of risk

Materiality The materiality that we used for the Financial statements was £25.9 million which was determined on the basis of approximately 1% of the Company’s

net assets.

A lower materiality threshold of £2.4 million based upon approximately 2% of investment income was applied to certain balances in the Statement

ofcomprehensive income and Balance sheet, excluding fair value of investments and derivatives balances and their associated fair value movements.

Scoping Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team.

Significant changes

inourapproach

There have been no significant changes in our audit approach compared with the prior year.

Independent auditor’s report to the members

of 3i Infrastructure plc continued

4 Conclusions relating to going concern

In auditing the Financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the Financial statements is appropriate.

Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included:

• Assessment of the financial position of the Company, including the cash balance of £17 million and undrawn financing facilities of £769 million, of which £600 million expires during

thenext 12 months;

• Review of the Directors’ liquidity forecast for the next 12 months, including the ability to fund committed investments of c.£300 million and to meet its obligations under the Investment

Management Agreement;

• Assessment of the ability of the Company’s investments to generate cash income for the Company and the robustness of those cash flows to key risks;

• Performance of sensitivity analysis, including the consideration of a ‘reverse stress test’; and

• Assessment of the model used to prepare the forecasts, testing of mathematical accuracy of those forecasts and our assessment of the historical accuracy of forecasts prepared

bytheInvestment Manager.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt

ontheCompany’s ability to continue as a going concern for a period of at least 12 months from when the Financial statements are authorised for issue.

In relation to reporting on how the Company has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’

statement in the Financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Accounts and other information

128

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 129

Independent auditor’s report to the members

of 3i Infrastructure plc continued

5 Key audit matters

Key audit matters are those matters that, in our professional judgement, 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 forming our opinion thereon, and we do not provide a separate opinion on

these matters.

5.1 Fair value of Investments

Key audit

matter

description

At 31 March 2022, the Company held investments totalling £2,873 million (2021: £1,804 million) in unquoted companies which are recognised at fair value

through profit and loss. These investments are classified at Level 3 within the IFRS 7 fair value hierarchy and, for Economic Infrastructure investments,

their valuation requires significant judgement and estimation.

Certain assumptions used in the determination of fair value are a key source of estimation uncertainty, which is why we consider there to be a significant

risk of material misstatement as well as a potential fraud risk. As a liquid market does not exist for the investments, they are generally measured using

a discounted cash flow methodology. The complex nature of this methodology, combined with the number of significant judgements and estimates,

means there is a risk that the fair value of the investments could be misstated.

The key assumptions and estimates used in the determination of fair value for Economic Infrastructure investments have been summarised as:

• Discount rates – the determination of the appropriate discount rate for each investment that is reflective of current market conditions and the specific

risks of the investment;

• Macroeconomic assumptions – primarily in respect of forecast inflation rates; and

• Forecasted future cash flows – specific investments contain certain assumptions in the cash flow forecasts that are particularly complex and judgemental.

This key audit matter is also discussed on page 112 in the Audit and Risk Committee report and disclosed in the significant accounting policies as a key

source of estimation uncertainty on pages 148 and 149 and in the portfolio valuation methodology on pages 30 and 31.

5.1 Fair value of Investments continued

How the scope

of our audit

responded

to the key

audit matter

In response to the key audit matter identified, we performed the following procedures:

• Tested the controls in respect of the valuation process adopted by the Investment Manager and the Board, including the review and approval processes

undertaken by the Investment Manager’s valuation committee;

• Tested that the valuation methodology is compliant with IFRS 13 requirements;

• Met with the Investment Manager’s Managing Partner, CFO and analysts responsible for preparing the valuations to understand the underlying performance

of the businesses being valued and how the year-end valuation has been prepared, including key valuation assumptions;

• Involved our valuation experts to assess discount rates applied in the valuations by benchmarking to relevant peers and transactions and considering

theinherent risk profile of the underlying cash flows specific to each investment;

• Tested and challenged the macroeconomic assumptions included in the forecasts with reference to observable market data and external forecasts;

• Assessed the forecasted cash flows and related assumptions for all investments, including movements since acquisition or the prior year and, where

applicable, used third-party evidence to challenge key assumptions;

• Engaged with our valuation experts to apply an additional level of challenge to the investments identified as containing more judgemental forecast

cashflow assumptions;

• Evaluated the Investment Manager’s identification of climate change-related risks and considered how material risks are accounted for in the

valuation assumptions;

• Evaluated the Investment Manager’s assessment of the risks related to the ongoing war in Ukraine, including supply chain continuity, customer base

exposure and the monitoring of sanctions compliance;

• Reviewed industry news and other external sources of information to identify evidence that may contradict the assumptions adopted by the

Investment Manager;

• Assessed the historical accuracy of the cash flow forecasts through comparison to actual results in order to assess the reliability of the forecasts;

• Compared historical data included in the valuation to audited financial statements to check that forecasts are based on actual results where applicable;

• Employed analytics to assess the integrity of the valuation models;

• Evaluated whether the estimates made were, individually and in aggregate, reasonable and free of bias; and

• Assessed the disclosures made in the notes to the Financial statements regarding the key sources of estimation uncertainty.

Key observations We consider the judgements and assumptions utilised in determining the fair value of the Company’s investments to be within an acceptable range.

We have not identified any material misstatements in respect of the fair value of the Company’s investments at 31 March 2022.

Independent auditor’s report to the members

of 3i Infrastructure plc continued

5 Key audit matters continued

Accounts and other information

130

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 131

6 Our application of materiality

6.1 Materiality

We define materiality as the magnitude of misstatement in the Financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would

bechanged or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the Financial statements as a whole as follows:

Materiality £25.9 million (2021: £23.1 million).

Basis for determining materiality Materiality is determined using approximately 1% of net asset value (‘NAV’).

Rationale for the benchmark applied We consider NAV to be the key financial statement benchmark used by shareholders of the Company in assessing financial performance.

NAV

Materiality

£25.9m

Audit Committee

reporting threshold

£1.3m

NAV

£2,704m

A lower materiality threshold of £2.4 million (2021: £2.0 million) based on approximately 2% (2021: 2%) of investment income has also been used. This has been applied to certain balances

in the Statement of comprehensive income and Balance sheet, excluding fair value of investments and derivatives balances and their associated fair value movements, due to qualitative

factors of stakeholder interest.

Independent auditor’s report to the members

of 3i Infrastructure plc continued

6 Our application of materiality continued

6.2 Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for

the Financial statements as a whole. Performance materiality was set at 70% of materiality for the 2022 audit (2021: 70%). In determining performance materiality, we considered the

following factors:

• The quality of internal control in existence at the Company and the Investment Manager;

• The stability of the business;

• The low level of errors identified in prior years;

• The willingness of the Investment Manager to correct errors identified; and

• The stability and competence of the finance team.

6.3 Error reporting threshold

We agreed with the Audit and Risk Committee that we would report to the Committee all audit differences in excess of £1.3 million (2021: £1.1 million), as well as differences below that

threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit and Risk Committee on disclosure matters that we identified when assessing the overall

presentation of the Financial statements.

7 An overview of the scope of our audit

7.1 Scoping

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

to the risks of material misstatement was performed directly by the audit engagement team.

7.2 Our consideration of the control environment

We have obtained an understanding of the control environment and the relevant controls to address our significant risks and other key account balances and transactions including

thevaluation of investments, performance and management fees, investment income, investment and divestment, and financial reporting. This has included the control environment

andrelevant controls operating at the Investment Manager as a key service provider to the Company.

We tested the controls in respect of the valuation process adopted by the Investment Manager and the Board, including the review and approval processes undertaken by the

Investment Manager’s valuation committee.

Independent auditor’s report to the members

of 3i Infrastructure plc continued

Accounts and other information

132

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 133

7 An overview of the scope of our audit continued

7.3 Our consideration of climate-related risks

The Company has identified climate risk as a key risk as detailed in the Climate risk section of the Risk report on page 71. The primary area where climate risks could impact the

Financialstatements is in respect of the fair value of investments as the investment portfolio companies face a range of climate change-related risks and opportunities.

In preparing the valuations, the Company has considered the impact of climate change. We have assessed the identification and evaluation of climate change risk and the potential

impact on the fair value of investments as highlighted in section 5. This assessment considered the risks and opportunities associated with the impact of energy transition, extreme

weather patterns and regulatory environments and their impact on the determination of fair value.

8 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 contained within the Annual report.

Our opinion on the Financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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 course of 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 this gives rise to a material misstatement in the Financial

statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Independent auditor’s report to the members

of 3i Infrastructure plc continued

9 Responsibilities of Directors

As explained more fully in the Statement of Directors’ responsibilities, 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 Company’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 Company or to cease operations, or have no realistic alternative but to do so.

10 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 FRC’s website. This description forms part of our auditor’s report.

11 Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material

misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

11.1 Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

• the nature of the industry and sector, control environment and business performance including the design of the Investment Manager’s fee structure and performance targets;

• results of our enquiries of the Investment Manager, the Investment Manager’s internal audit function, and the Audit and Risk Committee about their own identification and assessment

of the risks of irregularities;

• any matters we identified having obtained and reviewed the Company’s documentation of their policies and procedures relating to:

– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

• the matters discussed among the audit engagement team and relevant internal specialists, including tax and valuations regarding how and where fraud might occur in the

Financial

statements and any potential indicators of fraud.

Independent auditor’s report to the members

of 3i Infrastructure plc continued

Accounts and other information

134

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 135

11 Extent to which the audit was considered capable of detecting irregularities, including fraud continued

11.1 Identifying and assessing potential risks related to irregularities continued

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the

valuation of the investment portfolio. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect

on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the Companies (Jersey) Law,

Listing Rules, and UK Investment Trust tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the

Company’s ability to operate or to avoid a material penalty. The key laws and regulations we considered in this context included the Alternative Investment Fund Managers Directive

asapproved by the Financial Conduct Authority.

11.2 Audit response to risks identified

As a result of performing the above, we identified the fair value of investments as a key audit matter related to the potential risk of fraud. The key audit matters section of our report

explains the matter in more detail and also describes the specific procedures we performed in response to that key audit matter.

In addition to the above, our procedures to respond to risks identified included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having

adirect effect on the Financial statements;

• enquiring of management, the Audit and Risk Committee, the Investment Manager’s in-house legal counsel concerning actual and potential litigation and claims;

• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

• reading minutes of meetings of those charged with governance, reviewing the Investment Manager’s internal audit reports pertaining to the Company’s activities, and reviewing

anycorrespondence with HMRC and the Financial Conduct Authority; and

• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements

made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal

course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, including internal specialists, and remained alert to any

indications of fraud or non-compliance with laws and regulations throughout the audit.

Independent auditor’s report to the members

of 3i Infrastructure plc continued

Independent auditor’s report to the members

of 3i Infrastructure plc continued

Report on other legal and regulatory requirements

12 Corporate Governance Statement

The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the

Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the

Financial statements and our knowledge obtained during the audit:

• the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 78;

• the Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate set out on page 79;

• the Directors’ statement on fair, balanced and understandable set out on page 124;

• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 115 and 116;

• the section of the Annual report that describes the review of effectiveness of risk management and internal control systems set out on page 115; and

• the section describing the work of the Audit and Risk committee set out on pages 110 to 116.

13 Matters on which we are required to report by exception

13.1 Adequacy of explanations received and accounting records

Under the Companies (Jersey) Law, 1991 we are required to report to you if, in our opinion:

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

• proper accounting records have not been kept, 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 accounting records and returns.

We have nothing to report in respect of these matters.

Accounts and other information

136

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 137

Independent auditor’s report to the members

of 3i Infrastructure plc continued

14 Other matters which we are required to address

14.1 Auditor tenure

Following the recommendation of the Audit and Risk Committee, we were appointed by the shareholders on 6 July 2017 at the Annual General Meeting to audit the Financial statements for

the year ending 31 March 2018 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is fiveyears,

covering the years ending 31 March 2018 to 31 March 2022.

14.2 Consistency of the audit report with the additional report to the Audit and Risk Committee

Our audit opinion is consistent with the additional report to the Audit and Risk Committee we are required to provide in accordance with ISAs (UK).

15 Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Article 113A of the Companies (Jersey) Law, 1991. Our audit work has been undertaken so that we

might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not

accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Jacqueline Holden, FCA

For and on behalf of Deloitte LLP

Recognised Auditor

London, United Kingdom

9 May 2022

Statement of comprehensive income

For the year to 31 March

Notes

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Net gains on investments 7 384 118

Investment income 7 127 92

Fees payable on investment activities (3) (1)

Interest receivable 6 11

Investment return 514 220

Movement in the fair value of derivative financial instruments 5 (2) 22

Management and performance fees payable 2 (97) (31)

Operating expenses 3 (3) (3)

Finance costs 4 (5) (2)

Exchange movements (3) –

Profit before tax 404 206

Income taxes 6 – –

Profit after tax and profit for the year 404 206

Total comprehensive income for the year 404 206

Earnings per share

Basic and diluted (pence) 14 45.3 23.1

Accounts and other information

138

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 139

Statement of changes in equity

For the year to 31 March

For the year to 31 March 2022 Notes

Stated

capital

account

£m

Retained

reserves

£m

Capital

reserve

£m

Revenue

reserve

£m

Total

shareholders’

equity

£m

Opening balance at 1 April 2021 779 1,282 330 (1) 2,390

Total comprehensive income for the year – – 324 80 404

Dividends paid to shareholders of the Company during the year 15 – – (11) (79) (90)

Closing balance at 31 March 2022 779 1,282 643 – 2,704

For the year to 31 March 2021 Notes

Stated

capital

account

£m

Retained

reserves

£m

Capital

reserve

£m

Revenue

reserve

£m

Total

shareholders’

equity

£m

Opening balance at 1 April 2020 779 1,282 196 12 2,269

Total comprehensive income for the year – – 134 72 206

Dividends paid to shareholders of the Company during the year 15 – – – (85) (85)

Closing balance at 31 March 2021 779 1,282 330 (1) 2,390

1 The Retained reserves, Capital reserve and Revenue reserve are distributable reserves. Retained reserves relate to the period prior to 15 October 2018. Further information can be found in Accounting policy H.

Balance sheet

As at 31 March

Notes

2022

£m

2021

£m

Assets

Non-current assets

Investments at fair value through profit or loss 7 2,873 1,804

Derivative financial instruments 10 6 18

Total non-current assets 2,879 1,822

Current assets

Derivative financial instruments 10 20 25

Trade and other receivables 8 104 106

Cash and cash equivalents 17 462

Total current assets 141 593

Total assets 3,020 2,415

Liabilities

Non-current liabilities

Derivative financial instruments 10 (6) (2)

Trade and other payables 12 (38) (10)

Loans and borrowings 11 (231) –

Total non-current liabilities (275) (12)

Current liabilities

Derivative financial instruments 10 (12) (4)

Trade and other payables 12 (29) (9)

Total current liabilities (41) (13)

Total liabilities (316) (25)

Net assets 2,704 2,390

Accounts and other information

140

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 141

Balance sheet continued

Notes

2022

£m

2021

£m

Equity

Stated capital account 13 779 779

Retained reserves 1,282 1,282

Capital reserve 643 330

Revenue reserve – (1)

Total equity 2,704 2,390

Net asset value per share

Basic and diluted (pence) 14 303.3 268.1

The Financial statements and related Notes were approved and authorised for issue by the Board of Directors on 9 May 2022 and signed on its behalf by:

Richard Laing

Chair

Cash flow statement

For the year to 31 March

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Cash flow from operating activities

Purchase of investments (761) (43)

Proceeds from other financial assets 12 104

Proceeds from partial realisations of investments 140 14

Proceeds from full realisations of investments 8 30

Investment income

54 51

Fees paid on investment activities (4) –

Operating expenses paid (4) (3)

Interest received – 1

Management and performance fees paid (50) (29)

Amounts received on the settlement of derivative contracts 27 6

Distributions from transfer of investments from unconsolidated subsidiaries

– 5

Net cash flow from operating activities (578) 136

1 Investment income includes dividends of £24 million (2021: £6 million), interest of £30 million (2021: £43 million) and no distributions (2021: £2 million) received from unconsolidated subsidiaries.

2 Following the change of tax residence of the Company from Jersey to the UK, several of the investments held in unconsolidated subsidiaries domiciled outside the UK have been transferred to be

held directly by the Company.

Accounts and other information

142

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 143

Cash flow statement continued

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Cash flow from financing activities

Fees and interest paid on financing activities (6) (2)

Dividends paid (90) (85)

Drawdown of revolving credit facility 955 –

Repayment of revolving credit facility (724) –

Net cash flow from financing activities 135 (87)

Change in cash and cash equivalents (443) 49

Cash and cash equivalents at the beginning of the year 462 413

Effect of exchange rate movement (2) –

Cash and cash equivalents at the end of the year 17 462

Reconciliation of net cash flow to movement in net debt

For the year to 31 March

Notes

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Change in cash and cash equivalents (443) 49

Drawdown of revolving credit facility 11 (955) –

Repayment of revolving credit facility 11 724 –

Change in net (debt)/cash resulting from cash flows (674) 49

Movement in net (debt)/cash (674) 49

Net cash at the beginning of the year 462 413

Effect of exchange rate movement (2) –

Net (debt)/cash at the end of the year (214) 462

In the above reconciliation there were no non-cash movements.

Accounts and other information

144

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 145

Significant accounting policies

Corporate information

3i Infrastructure plc (the ‘Company’) is a company incorporated in Jersey, Channel Islands. The Financial statements for the year to 31 March 2022 comprise the Financial statements

ofthe Company as defined in IFRS 10 Consolidated Financial Statements.

The Financial statements were authorised for issue by the Board of Directors on 9 May 2022.

Statement of compliance

These Financial statements have been prepared in accordance with United Kingdom adopted International Financial Reporting Standards (‘IFRS’) and International

Accounting Standards.

These Financial statements have also been prepared in accordance with and in compliance with the Companies (Jersey) Law 1991.

Basis of preparation

In accordance with IFRS 10 (as amended), entities that meet the definition of an investment entity are required to fair value certain subsidiaries through profit or loss in accordance with

IFRS 9 Financial Instruments, rather than consolidate their results. The Company does not have any consolidated subsidiaries, which would include subsidiaries that are not themselves

investment entities and provide investment-related services to the Company.

The Financial statements of the Company are presented in sterling, the functional currency of the Company, rounded to the nearest million except where otherwise indicated.

The preparation of financial statements in conformity with IFRS requires the Board to make judgements, estimates and assumptions that affect the application of policies and reported

amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on experience and other factors that are believed to be reasonable under

the circumstances, the results of which form the basis of determining the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ

from these estimates.

Going concern

The Financial statements are prepared on a going concern basis as disclosed in the Risk report, as the Directors are satisfied that the Company has the resources to continue in business

for the foreseeable future. The Directors have made an assessment of going concern, taking into account a wide range of information relating to present and future conditions,

including the Company’s cash and liquidity position, current performance and outlook, which has considered the impact of the recovery from the Covid-19 pandemic, ongoing

geopolitical uncertainties and current and expected financial commitments using information available to the date of issue of these Financial statements. As part of this assessment

theDirectors considered:

• the analysis of the adequacy of the Company’s liquidity, solvency and capital position. The Company manages and monitors liquidity regularly ensuring it is adequate and sufficient.

At 31 March 2022, liquidity remained strong at £786 million (2021: £763 million). Liquidity comprised cash and deposits of £17 million (2021: £463 million) and undrawn facilities of

£769 million (2021: £300 million).The £200 million accordion and £400 million additional facility both mature within 12 months of the date of this report. In addition, the Company

isableto call the second tranche of the deferred consideration from the realisation of WIG of £98 million with six weeks’ notice and, in June 2022, is expecting to receive £103 million

fromthe sale of its Projects portfolio. Income and non-income cash is expected to be received from the portfolio investments during the coming year, a portion of which will be

required to support the payment of the dividend target and the Company’s other financial commitments;

• uncertainty around the valuation of the Company’s assets as set out in the Key estimation uncertainties section. The valuation policy and process was consistent with prior years.

This year a key focus of the portfolio valuations at 31 March 2022 was an assessment of the impact of the macroeconomic environment on the operational and financial performance

of each portfolio company. In particular this focused on increasing inflationary pressures, tightening debt markets, volatility in power prices, recovery from the Covid-19 pandemic

andongoing geopolitical uncertainties. We have incorporated into our cash flow forecasts a balanced view of future income receipts and expenses; and

• the Company’s financial commitments. The Company had one investment commitment at 31 March 2022 totalling c.£300 million in GCX, a global data communications service

provider. The Company had ongoing charges of £36 million in the year to 31 March 2022, detailed in Table 5 in the Financial review, which are indicative of the ongoing run rate in the

short term. The Company has a FY22 performance fee accrual of £54 million, a third of which is payable within the next 12 months. The Company has a FY21 performance fee accrual

of £4 million relating to the second and third instalments of the FY21 fee, the second instalment being due within the next 12 months, an accrual of £12 million relating to the third

instalment of the FY20 fee due within the next 12 months and a proposed final dividend for FY22 of £47 million. In addition, while not a commitment at 31 March 2022, the Company

has a dividend target for FY23 of 11.15 pence per share. In order to meet the commitment to invest in GCX, the Company expects to receive the WIG deferred consideration and the

proceeds from the sale of the Projects portfolio prior to the completion of this investment.

In addition to the considerations listed above there are a number of mitigating actions within management control to enhance available liquidity. These include seeking to extend the

maturity of available credit facilities, the timing of certain income receipts from the portfolio and the level and timing of new investments or realisations.

Having performed the assessment of going concern, the Directors considered it appropriate to prepare the Financial statements of the Company on a going concern basis.

The Company has sufficient financial resources and liquidity and is well placed to manage business risks in the current economic environment and can continue operations for a period

ofat least 12 months from the date of these Financial statements.

Significant accounting policies continued

Accounts and other information

146

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 147

Key judgements

The preparation of financial statements in accordance with IFRS requires the Directors to exercise judgement in the process of applying the accounting policies defined below.

The following policies are areas where a higher degree of judgement has been applied in the preparation of the Financial statements.

(i) Assessment as investment entity – Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at fair value through profit or loss

rather than consolidate them unless they provided investment-related services to the Company. To determine that the Company continues to meet the definition of an investment entity,

the Company is required to satisfy the following three criteria:

(a) the Company obtains funds from one or more investors for the purpose of providing those investor(s) with investment management services;

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

The Company meets the criteria as follows:

• the stated strategy of the Company is to deliver stable returns to shareholders through a mix of income yield and capital appreciation;

• the Company provides investment management services and has several investors who pool their funds to gain access to infrastructure related investment opportunities that they

might not have had access to individually; and

• the Company has elected to measure and evaluate the performance of all of its investments on a fair value basis. The fair value method is used to represent the Company’s performance

in its communication to the market, including investor presentations. In addition, the Company reports fair value information internally to Directors, who use fair value as the primary

measurement attribute to evaluate performance.

The Directors are of the opinion that the Company has all the typical characteristics of an investment entity and continues to meet the definition in the standard. This conclusion will be

reassessed on an annual basis.

(ii) Assessment of investments as structured entities – A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding

who controls the entity. Additional disclosures are required by IFRS 12 for interests in structured entities, whether they are consolidated or not. The Directors have assessed whether the

entities in which the Company invests should be classified as structured entities and have concluded that none of the entities should be classified as structured entities as voting rights

are the dominant factor in deciding who controls these entities.

(iii) Assessment of consolidation requirements – The Company holds significant stakes in the majority of its investee companies and must exercise judgement in the level of control

ofthe underlying investee company that is obtained in order to assess whether the Company should be classified as a subsidiary.

Significant accounting policies continued

The Company must also exercise judgement in whether a subsidiary provides investment-related services or activities and therefore should be consolidated or held at fair value through

profit or loss. Further details are shown in significant accounting policy ‘A Classification’ below.

During the year, the Company set up seven wholly owned subsidiary entities for new investments in SRL and GCX. The Directors have assessed whether any of these entities provide

investment-related services and have concluded that they should not be consolidated and that they should all be held at fair value through profit or loss.

The adoption of certain accounting policies by the Company also requires the use of certain critical accounting estimates in determining the information to be disclosed in the

Financial statements.

Key estimation uncertainties

Valuation of the investment portfolio

The key area where estimates are significant to the Financial statements and have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within

the next financial year is in the valuation of the investment portfolio. The portfolio is well-diversified by sector, geography and underlying risk exposures. The key risks to the portfolio are

discussed in further detail in the Risk report.

The majority of assets in the investment portfolio are valued on a discounted cash flow basis which requires assumptions to be made regarding future cash flows, terminal value and the

discount rate to be applied to these cash flows. The methodology for deriving the fair value of the investment portfolio, including the key estimates, is set out in the Portfolio valuation

methodology section. Refer to Note 7 for further details of the valuation techniques, significant inputs to those techniques and sensitivity of the fair value of these investments to the

assumptions that have been made.

The discount rate applied to the cash flows in each investment portfolio company is a key source of estimation uncertainty. The acquisition discount rate is adjusted to reflect changes

in company-specific risks to the deliverability of future cash flows and is calibrated against secondary market information and other available data points, including comparable

transactions. The discount rates applied to the investment portfolio at 31 March 2022 range from 10.0% to 13.2% (2021: 7% to 12%) and the weighted average discount rate applied to

the investment portfolio is 10.9% (2021: 10.8%). The increase in the year is due to the introduction of the new investments in SRL and DNS:NET to the portfolio at a higher than average

discount rate, mostly offset by small reductions in discount rates for Oystercatcher, TCR, ESVAGT and Valorem. The Projects portfolio is now valued on a sales basis and therefore this

investment has been removed from the discount rate range.

The cash flows on which the discounted cash flow valuation is based are derived from detailed financial models. These incorporate a number of assumptions with respect to individual

portfolio companies, including: forecast new business wins or new orders; cost-cutting initiatives; liquidity and timing of debtor payments; timing of non-committed capital expenditure

and construction activity; the terms of future debt refinancing; and macroeconomic assumptions such as inflation and oil and power prices. Future power price projections are taken from

independent forecasters and changes in these assumptions will affect the future value of our energy generating portfolio companies. The Summary of portfolio valuation methodology

section on pages 30 and 31 provides further details on some of the assumptions that have been made in deriving a balanced base case of cash flows.

Significant accounting policies continued

Accounts and other information

148

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 149

The terminal value attributes a residual value to the portfolio company at the end of the projected discrete cash flow period based on market comparables. The terminal value

assumptions consider climate change risk and stranded asset risk. The valuation of each asset has significant estimation in relation to asset specific items but there is also consideration

given to the impact of wider megatrends such as the transition to a lower-carbon economy and climate change. The effects of climate change, including extreme weather patterns or

rising sea levels in the longer term could impact the valuation of the assets in the portfolio in different ways. The Summary of portfolio valuation methodology section earlier in this

document provides further details on some of the assumptions that have been made in deriving terminal values and some of the risk factors considered in the cash flow forecasts,

forexample in relation to the inflationary headwinds currently being experienced.

New and amended standards adopted for the current year

Standards and amendments to standards applicable to the Company that became effective during the year and were adopted by the Company on 1 April 2021 are listed below.

Interest Rate Benchmark Reform — Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) (1 January 2021)

This amendment has not had a material impact on the Financial statements.

Standards and amendments issued but not yet effective

As at 31 March 2022, the following new or amended standards, which have not been applied in these Financial statements, had been issued by the International Accounting Standards

Board (‘IASB’) but are yet to become effective.

Amendments to IAS 1 Classification of Liabilities as Current or Non-current (1 January 2023)

Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (1 January 2023)

Amendments to IAS 16 Property, Plant and Equipment – Proceeds before Intended Use (1 January 2022)

Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets – Onerous Contracts (1 January 2022)

Amendments to IFRS 3 Business Combinations (1 January 2022)

Amendments to IFRS 17 Insurance contracts (1 January 2022)

Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 resulting from Annual Improvements to IFRS 2018-2020 Cycle (1 January 2022)

The Company intends to adopt these standards when they become effective, however does not currently anticipate the standards will have a significant impact on the Company’s

financial statements. Current assumptions regarding the impact of future standards will remain under consideration in light of interpretation notes as and when they are issued.

Significant accounting policies continued

A Classification

(i) Subsidiaries – Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed, or has rights, to variable returns from its involvement with the

subsidiary entity and has the ability to affect those returns through its power over the subsidiary entity. In accordance with the exception under IFRS 10 Consolidated Financial

Statements, the Company only consolidates subsidiaries in the Financial statements if they are deemed to perform investment-related services and do not meet the definition of an

investment entity. Investments in subsidiaries that do not meet this definition are accounted for as Investments at fair value through profit or loss with changes in fair value recognised

in the Statement of comprehensive income in the year. The Directors have assessed all entities within the structure and concluded that there are no subsidiaries of the Company that

provide investment-related services or activities.

(ii) Associates – Associates are those entities in which the Company has significant influence, but not control, over the financial and operating policies. Investments that are held as

partof the Company’s investment portfolio are carried in the Balance sheet at fair value even though the Company may have significant influence over those entities.

(iii) Joint ventures – Interests in joint ventures that are held as part of the Company’s investment portfolio are carried in the Balance sheet at fair value. This treatment is permitted

byIFRS11 and IAS 28, which allows interests held by venture capital organisations where those investments are designated, upon initial recognition, as at fair value through profit

orloss and accounted for in accordance with IFRS 9 with changes in fair value recognised in the Statement of comprehensive income in the year.

B Exchange differences

Transactions entered into by the Company in a currency other than its functional currency are recorded at the rates ruling when the transactions occur. Foreign currency monetary

assetsand liabilities are translated to the functional currency at the exchange rate ruling at the balance sheet date. Foreign exchange differences arising on translation to the functional

currency are recognised in the Statement of comprehensive income. Foreign exchange differences relating to investments held at fair value through profit or loss are shown within the

line Net gains on investments. Foreign exchange differences relating to other assets and liabilities are shown within the line Exchange movements.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transactions. Non-monetary

assets and liabilities denominated in foreign currencies that are stated at fair value are translated to the functional currency using exchange rates ruling at the date the fair value was

determined with the associated foreign exchange difference being recognised within the unrealised gain or loss on revaluation of the asset or liability.

C Investment portfolio

Recognition and measurement – Investments are recognised and de-recognised on a date where the purchase or sale of an investment is under a contract whose terms require the

delivery or settlement of the investment. The Company manages its investments with a view to profiting from the receipt of investment income and obtaining capital appreciation

fromchanges in the fair value of investments. Therefore, all quoted investments and unquoted investments are measured at fair value through profit or loss upon initial recognition

andsubsequently carried in the Balance sheet at fair value, applying the Company’s valuation policy. Acquisition related costs are accounted for as expenses when incurred.

Net gains or losses on investments are the movement in the fair value of investments between the start and end of the accounting period, or investment disposal date, or the investment

acquisition date and the end of the accounting period, including divestment related costs where applicable, converted into sterling using the exchange rates in force at the end of the

period; and are recognised in the Statement of comprehensive income.

Accounts and other information

150

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 151

Significant accounting policies continued

Income

Investment income is that portion of income that is directly related to the return from individual investments. It is recognised to the extent that it is probable that there will be an

economic benefit and the income can be reliably measured.

The following specific recognition criteria must be met before the income is recognised:

• dividends from equity investments are recognised in the Statement of comprehensive income when the Company’s rights to receive payment have been established. Special dividends

are credited to capital or revenue according to their circumstances;

• interest income from loans that are measured at fair value through profit or loss is recognised as it accrues by reference to the principal outstanding and the effective interest rate

applicable, which is the rate that exactly discounts the estimated future cash flows through the expected life of the financial asset to the asset’s carrying value or principal amount.

The remaining changes in the fair value movement of the loans are recognised separately in the line Net gains on investments in the Statement of comprehensive income;

• distributions from investments in Limited Partnerships are recognised in the Statement of comprehensive income when the Company’s rights as a Limited Partner to receive payment

have been established; and

• fees receivable represent amounts earned from investee companies on completion of underlying investment transactions and are recognised on an accruals basis once entitlement

to the revenue has been established.

D Fees

(i) Fees – Fees payable represent fees incurred in the process of acquiring an investment and are measured on the accruals basis.

(ii) Management fees – A management fee is payable to 3i plc, calculated as a tiered fee based on the Gross Investment Value of the Company and is accrued in the period it is incurred.

Further details on how this fee is calculated are provided in Note 18.

(iii) Performance fee – The Investment Manager is entitled to a performance fee based on the total return generated in the period in excess of a performance hurdle of 8%. The fee is

payable in three equal annual instalments and is accrued in full in the period it is incurred. Further details are provided in Note 18.

(iv) Finance costs – Finance costs associated with loans and borrowings are recognised on an accruals basis using the effective interest method.

Significant accounting policies continued

E Treasury assets and liabilities

Short-term treasury assets and short- and long-term treasury liabilities are used to manage cash flows and the overall costs of borrowing. Financial assets and liabilities are recognised

inthe Balance sheet when the relevant company entity becomes a party to the contractual provisions of the instrument.

(i) Cash and cash equivalents – Cash and cash equivalents in the Balance sheet and Cash flow statement comprise cash at bank, short-term deposits with an original maturity

ofthreemonths or less and AAA rated money market funds. Money market funds are accounted for at amortised cost under IFRS 9. However due to their short-term and liquid

nature, this is the same as fair value. Interest receivable or payable on cash and cash equivalents is recognised on an accruals basis.

(ii) Bank loans, loan notes and borrowings – Loans and borrowings are initially recognised at the fair value of the consideration received, net of issue costs associated with the

borrowings. Where issue costs are incurred in relation to arranging debt finance facilities these are capitalised and disclosed within Trade and other receivables and amortised over

the life of the loan. After initial recognition, loans and borrowings are subsequently measured at amortised cost using the effective interest method, which is the rate that exactly

discounts the estimated future cash flows through the expected life of the liabilities. Amortised cost is calculated by taking into account any issue costs and any discount or premium

on settlement.

(iii) Derivative financial instruments – Derivative financial instruments are used to manage the risk associated with foreign currency fluctuations in the valuation of the investment

portfolio. This is achieved by the use of forward foreign currency contracts. Such instruments are used for the sole purpose of efficient portfolio management. All derivative financial

instruments are held at fair value through profit or loss.

Derivative financial instruments are recognised initially at fair value on the contract date and subsequently remeasured to the fair value at each reporting date. All changes in the fair

value of derivative financial instruments are taken to the Statement of comprehensive income. The maturity profile of derivative contracts is measured relative to the financial contract

settlement date of each contract and the derivative contracts are disclosed in the Financial statements as either current or non-current accordingly.

F Other assets

Assets, other than those specifically accounted for under a separate policy, are stated at their consideration receivable less impairment losses. Such assets are short-term in nature

and the carrying value of these assets is considered to be approximate to their fair value. Assets are reviewed for recoverability and impairment using the expected credit loss

model simplified approach. The Company will recognise the asset’s lifetime expected credit losses at each reporting period where applicable in the Statement of comprehensive

income. An impairment loss is reversed at subsequent financial reporting dates to the extent that the asset’s carrying amount does not exceed its carrying value, had no impairment

been recognised.

Assets with maturities less than 12 months are included in current assets, assets with maturities greater than 12 months after the Balance sheet date are classified as non-current assets.

G Other liabilities

Liabilities, other than those specifically accounted for under a separate policy, are stated based on the amounts which are considered to be payable in respect of goods or services

received up to the financial reporting date. Such liabilities are short-term in nature, the carrying value of these liabilities is considered to be approximate to their fair value.

Accounts and other information

152

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 153

Significant accounting policies continued

H Equity and reserves

(i) Share capital – Share capital issued by the Company is recognised at the fair value of proceeds received and is credited to the Stated capital account. Direct issue costs net of tax

arededucted from the fair value of the proceeds received.

(ii) Equity and reserves – The Stated capital account of the Company represents the cumulative proceeds recognised from share issues or new equity issued on the conversion of

warrants made by the Company net of issue costs and reduced by any amount that has been transferred to Retained reserves, in accordance with Jersey Company Law, in previous

years. Share capital is treated as an equity instrument, on the basis that no contractual obligation exists for the Company to deliver cash or other financial assets to the holder of the

instrument.

On 15 October 2018, the Company became UK tax domiciled and, with effect from that date, was granted UK approved investment trust status. Financial statements prepared under

IFRS are not strictly required to apply the provisions of the Statements of Recommended Practice issued by the UK Association of Investment Companies for the financial statements

of Investment Trust Companies (the ‘AIC SORP’). However, where relevant and appropriate, the Directors have looked to follow the recommendations of the SORP. From this date,

theretained profits of the Company have been applied to two new reserves being the Capital reserve and the Revenue reserve. These are in addition to the existing Retained reserves

which incorporate the cumulative retained profits of the Company (after the payment of dividends) plus any amounts that have been transferred from the Stated capital account of the

Company to 15 October 2018.

The Directors have exercised their judgement in applying the AIC SORP and a summary of these judgements are as follows:

• Net gains on investments are applied wholly to the Capital reserve as they relate to the revaluation or disposal of investments.

• Dividends are applied to the Revenue reserve except under specific circumstances where a dividend arises from a return of capital or proceeds from a refinancing, when they are

applied to the Capital reserve.

• Fees payable are applied to the Capital reserve where the service provided is, in substance, an intrinsic part of an intention to acquire or dispose of an investment.

• Movement in the fair value of derivative financial instruments is applied to the Capital reserve as the derivative hedging programme is specifically designed to reduce the volatility

ofsterling valuations of the non-sterling denominated investments.

• Management fees are applied to the Revenue reserve as they reflect ongoing asset management. Where a transaction fee element is due on the acquisition of an investment

itisapplied to the Capital reserve.

• Performance fees are applied wholly to the Capital reserve as they arise mainly from capital returns on the investment portfolio.

• Operating costs are applied wholly to the Revenue reserve as there is no clear connection between the operating expenses of the Company and the purchase and sale of

an investment.

• Finance costs are applied wholly to the Revenue reserve as the existing borrowing is not directly linked to an investment.

• Exchange movements are applied to the Revenue reserve where they relate to exchange on non-portfolio assets.

(iii) Dividends payable – Dividends on ordinary shares are recognised in the period in which the Company’s obligation to make the dividend payment arises and are deducted from

Retained reserves for the period to 15 October 2018 and from the Revenue reserve for subsequent periods.

Significant accounting policies continued

I Income taxes

Income taxes represent the sum of the tax currently payable, withholding taxes suffered and deferred tax. Tax is charged or credited in the Statement of comprehensive income,

exceptwhere it relates to items charged or credited directly to equity, in which case the tax is also dealt with in equity.

The tax currently payable is based on the taxable profit for the year. This may differ from the profit included in the Statement of comprehensive income because it excludes items

ofincome or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

To enable the tax charge to be based on the profit for the year, deferred tax is provided in full on temporary timing differences, at the rates of tax expected to apply when these

differences crystallise. Deferred tax assets are recognised only to the extent that it is probable that sufficient taxable profits will be available against which temporary differences can be

set off. In practice, some assets that are likely to give rise to timing differences will be treated as capital for tax purposes. Given capital items are exempt from tax under the Investment

Trust Company rules, deferred tax is not expected to be recognised on these balances. All deferred tax liabilities are offset against deferred tax assets, where appropriate, in accordance

with the provisions of IAS 12.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available

toallow all or part of the asset to be recovered.

Accounts and other information

154

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 155

Notes to the accounts

1 Operating segments

The Directors review information on a regular basis that is analysed by portfolio segment; being Economic infrastructure businesses, the Projects portfolio and the India Fund, and

by geography. These segments are reviewed for the purpose of resource allocation and the assessment of their performance. In accordance with IFRS 8, the segmental information

provided below uses these segments for the analysis of results as it is the most closely aligned with IFRS reporting requirements. The Company is an investment holding company

anddoes not consider itself to have any customers.

The following is an analysis of the Company’s investment return, profit before tax, assets, liabilities and net assets by portfolio segment for the year to 31 March 2022:

For the year to 31 March 2022

Economic

infrastructure

businesses

£m

Projects

portfolio

£m

India

Fund

£m

Unallocated

£m

Total

£m

Investment return 486 18 5 5 514

Profit/(loss) before tax 483 19 5 (103) 404

For the year to 31 March 2021

Investment return 196 8 5 11 220

Profit/(loss) before tax 215 11 5 (25) 206

As at 31 March 2022

Assets 2,796 105 – 119 3,020

Liabilities (18) (1) – (297) (316)

Net assets/(liabilities) 2,778 104 – (178) 2,704

As at 31 March 2021

Assets 1,748 96 3 568 2,415

Liabilities (6) – – (19) (25)

Net assets 1,742 96 3 549 2,390

1 Unallocated includes cash, management and performance fees payable, RCF drawn and other payables and receivables (including vendor loan notes) which are not directly attributable to the investment portfolio.

Notes to the accounts continued

1 Operating segments continued

The following is an analysis of the Company’s investment return, profit before tax, assets, liabilities and net assets by geography for the year to 31 March 2022:

For the year to 31 March 2022

UK and

Ireland

£m

Continental

Europe

£m

Asia

£m

Total

£m

Investment return 63 446 5 514

(Loss)/profit before tax (45) 444 5 404

For the year to 31 March 2021

Investment return 53 162 5 220

Profit before tax 17 184 5 206

As at 31 March 2022

Assets 653 2,367 – 3,020

Liabilities (298) (18) – (316)

Net assets 355 2,349 – 2,704

As at 31 March 2021

Assets 868 1,544 3 2,415

Liabilities (19) (6) – (25)

Net assets 849 1,538 3 2,390

1 Including Channel Islands. All centrally incurred costs have been deemed to be incurred in the UK and Ireland while recognising these costs support allocations across geographies.

2 Continental Europe includes all returns generated from, and investment portfolio value relating to, the Company’s investments in Oystercatcher, including those derived from its underlying business in Singapore.

The Company generated 12% (2021: 24%) of its investment return in the year from investments held in the UK and Ireland and 87% (2021: 74%) of its investment return from investments

held in continental Europe. During the year, the Company generated 95% (2021: 94%) of its investment return from investments in Economic infrastructure businesses, 4% (2021: 4%)

frominvestments in Projects and 1% (2021: 2%) from its investment in the India Fund. Given the nature of the Company’s operations, the Company is not considered to be exposed

toanyoperational seasonality or cyclicality that would impact the financial results of the Company during the year or the financial position of the Company at 31 March 2022.

Accounts and other information

156

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 157

Notes to the accounts continued

2 Management and performance fees payable

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Management fee 43 24

Performance fee 54 7

97 31

Total management and performance fees payable by the Company for the year to 31 March 2022 were £97 million (2021: £31 million). Note 18 provides further details on the calculation

ofthe management fee and performance fee.

3 Operating expenses

Operating expenses include the following amounts:

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Audit fees 0.6 0.4

Directors’ fees and expenses 0.5 0.5

In addition to the fees described above, audit fees of £0.05 million (2021: £0.07 million) were paid by unconsolidated subsidiary entities for the year to 31 March 2022 to the Company’s auditor.

Notes to the accounts continued

3 Operating expenses continued

Services provided by the Company’s auditor

During the year, the Company obtained the following services from the Company’s auditor, Deloitte LLP.

Audit services

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Statutory audit

Company 0.40 0.30

UK unconsolidated subsidiaries

0.05 0.04

Overseas unconsolidated subsidiaries

– 0.03

0.45 0.37

1 Amounts exclude VAT.

2 These amounts were paid from unconsolidated subsidiary entities and do not form part of operating expenses but are included in the net gains on investments.

Non-audit services

Deloitte LLP and their associates provided non-audit services for fees totalling £104,635 for the year to 31 March 2022 (2021: £52,700). This related to agreed-upon procedures work

inrespect of the management and performance fees (£7,560), agreed-upon procedures work in respect of Sustainability KPIs for the RCF reporting (£27,000), the review of the interim

financial statements (£55,575) and reporting accountant work (£14,500). In line with the Company’s policy, Deloitte LLP provided non-audit services to certain investee companies.

The fees for these services are ordinarily borne by the underlying investee companies or unconsolidated subsidiaries, and therefore are not included in the expenses of the Company.

Details on how such non-audit services are monitored and approved can be found in the Governance section of the Annual report and accounts.

Accounts and other information

158

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 159

Notes to the accounts continued

4 Finance costs

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Finance costs associated with the debt facilities 3 2

Professional fees payable associated with the arrangement of debt financing 2 –

5 2

The finance costs associated with the debt facilities have increased in the year ended 31 March 2022 as a result of higher average drawings and increases in the total available facilities.

The average monthly drawn position during the year was £80 million (2021: nil) and the average monthly total available facilities was £508 million (2021: £300 million).

5 Movement in the fair value of derivative financial instruments

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Movement in the fair value of forward foreign exchange contracts (2) 22

The movement in the fair value of derivative financial instruments is included within profit before tax but not included within investment return.

6 Income taxes

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Current taxes

Current year – –

Total income tax charge in the Statement of comprehensive income – –

Notes to the accounts continued

6 Income taxes continued

Reconciliation of income taxes in the Statement of comprehensive income

The tax charge for the year is different from the standard rate of corporation tax in the UK, currently 19% (2021: 19%), and the differences are explained below:

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Profit before tax 404 206

Profit before tax multiplied by rate of corporation tax in the UK of 19% (2021: 19%) 77 39

Effects of:

Non-taxable capital profits due to UK approved investment trust company status (70) (26)

Non-taxable dividend income (5) (1)

Dividends designated as interest distributions (3) (12)

Temporary differences on which deferred tax is not recognised 1 –

Total income tax charge in the Statement of comprehensive income – –

The Company’s affairs are directed so as to allow it to meet the requisite conditions to continue to operate as an approved investment trust company for UK tax purposes. The approved

investment truststatus allows certain capital profits of the Company to be exempt from tax in the UKand alsopermits the Company to designate the dividends it pays, wholly or partly,

as interest distributions.These features enable approved investment trust companies to ensure that theirinvestorsdo notultimately suffer double taxation of their investment returns,

ieonce at the level of the investment fund vehicle and then again in the hands of the investors.

Under the UK Finance Act 2021, the UK corporation tax rate will increase for large companies from the current rate of 19% to 25% with effect from 1 April 2023.Should the Company

recognise any deferred tax assets and liabilities, a rate of 19% or 25% would be used depending on when the assets and liabilities are expected to be crystallised.

Accounts and other information

160

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 161

Notes to the accounts continued

7 Investments at fair value through profit or loss and financial instruments

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is

significant to the fair value measurement as a whole:

Level Fair value input description Financial instruments

Level 1 Quoted prices (unadjusted and in active markets) Quoted equity investments

Level 2 Inputs other than quoted prices included in Level 1 that are observable in

themarketeither directly (ie as prices) or indirectly (ie derived from prices)

Derivative financial instruments held at fair value

Level 3 Inputs that are not based on observable market data Unquoted investments and unlisted funds

For assets and liabilities that are recognised in the Financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy

byreassessing the categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) for each reporting period.

The table below shows the classification of financial instruments held at fair value into the fair value hierarchy at 31 March 2022. For all other assets and liabilities, their carrying value

approximates to fair value. During the year ended 31 March 2022, there were no transfers of financial instruments between levels of the fair value hierarchy (2021: none).

Trade and other receivables in the Balance sheet includes £2 million of deferred finance costs relating to the arrangement fee for the revolving credit facility and additional facilities

(2021: £1 million). This has been excluded from the table below as it is not categorised as a financial instrument.

Notes to the accounts continued

7 Investments at fair value through profit or loss and financial instruments continued

Financial instruments classification

As at 31March 2022

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Financial assets

Investments at fair value through profit or loss – – 2,873 2,873

Trade and other receivables – 102 – 102

Derivative financial instruments – 26 – 26

– 128 2,873 3,001

Financial liabilities

Derivative financial instruments – (18) – (18)

– (18) – (18)

As at 31March 2021

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Financial assets

Investments at fair value through profit or loss – – 1,804 1,804

Trade and other receivables – 105 – 105

Derivative financial instruments – 43 – 43

– 148 1,804 1,952

Financial liabilities

Derivative financial instruments – (6) – (6)

– (6) – (6)

Accounts and other information

162

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 163

Notes to the accounts continued

7 Investments at fair value through profit or loss and financial instruments continued

Reconciliation of financial instruments categorised within Level 3 of fair value hierarchy

Level 3 fair value reconciliation

As at

31 March

2022

£m

As at

31 March

2021

£m

Opening fair value 1,804 1,652

Additions 816 91

Disposal proceeds and repayment (148) (48)

Movement in accrued income 17 (9)

Fair value movement (including exchange movements) 384 118

Closing fair value 2,873 1,804

The fair value movement (including exchange movements) is equal to the Net gains on investments showing in the Statement of comprehensive income. All unrealised movements on

investments and foreign exchange movements are recognised in profit or loss in the Statement of comprehensive income during the year and are attributable to investments held at

theend of the year.

The holding period of the investments in the portfolio is expected to be greater than one year. Therefore, investments are classified as non-current unless there is an agreement

to dispose of the investment within one year and all relevant regulatory or other third-party approvals have been received. It is not possible to identify with certainty whether any

investments may be sold withinone year.

Investment income of £127 million (2021: £92 million) comprises dividend income of £24 million (2021: £6 million), interest of £103 million (2021: £83 million) and no distributions

(2021: £3 million) from unconsolidated subsidiaries.

Unquoted investments

The Company invests in private companies which are not quoted on an active market. These are measured in accordance with the International Private Equity Valuation guidelines with

reference to the most appropriate information available at the time of measurement. Further information regarding the valuation of unquoted investments can be found in the Portfolio

valuation methodology section.

The Company’s policy is to fair value both the equity and shareholder debt investments in infrastructure assets together where they will be managed and valued as a single investment,

were invested at the same time and cannot be realised separately. The Directors consider that equity and debt share the same characteristics and risks and they are therefore treated as a

single unit of account for valuation purposes and a single class for disclosure purposes. As at 31 March 2022, the fair value of unquoted investments was £2,873 million (2021: £1,802 million).

Individual portfolio asset valuations are shown in the Portfolio summary on page 27.

Notes to the accounts continued

7 Investments at fair value through profit or loss and financial instruments continued

The fair value of the investments is sensitive to changes in the macroeconomic assumptions used as part of the portfolio valuation process. As part of its analysis, the Board has

considered the potential impact of a change in a number of the macroeconomic assumptions used in the valuation process. By considering these potential scenarios, the Board is

wellpositioned to assess how the Company is likely to perform if affected by variables and events that are inherently outside of the control of the Board and the Investment Manager.

The majority of the assets held within Level 3 are valued on a discounted cash flow basis, hence, the valuations are sensitive to the discount rate assumed in the valuation of each asset.

Other significant unobservable inputs include the inflation rate assumption, the interest rates assumption used to project the future cash flows and the forecast cash flows themselves.

The sensitivity to the inflation rate and interest rates is described below and the sensitivity to the forecast cash flows is captured in the Market risk section in Note 9.

A discussion of discount rates applied can be found in the Summary of portfolio valuation methodology section. Increasing the discount rate used in the valuation of each asset by

1% would reduce the value of the portfolio by £258 million (2021: £152 million). Decreasing the discount rate used in the valuation of each asset by 1% would increase the value of the

portfolio by £297 million (2021: £176 million).

The majority of assets held within Level 3 have revenues that are linked, partially linked or in some way correlated to inflation. The long-term inflation rate assumptions for the country

of domicile of the investments in the portfolio range from 5.0% (India) (2021: 5.0%) to 2.0% (the Netherlands) (2021: 2.0%). The long-term RPI assumption for the UK is 2.5% (2021: 2.5%).

The impact of increasing the inflation rate assumption by 1% for the next two years would increase the value of the portfolio by £43 million (2021: £25 million). Decreasing the inflation rate

assumption used in the valuation ofeachasset by 1% for the next two years would decrease the value of the portfolio by £46 million (2021: £25 million). The timing and quantum of price

increases will vary across the portfolio and the sensitivity may differ from that modelled. Changing the inflation rate assumption may result in consequential changes to other assumptions

used in the valuation of each asset.

The valuations are sensitive to changes in interest rates, which may result from: (i) unhedged existing borrowings within portfolio companies; (ii) interest rates on uncommitted future

borrowings assumed within the asset valuations; and (iii) cash deposits held by portfolio companies. These comprise a wide range of interest rates from short-term deposit rates to

longer-term borrowing rates across a broad range of debt products. Increasing the cost of borrowing assumption for unhedged borrowings and any future uncommitted borrowing

andthe cash deposit rates used in the valuation of each asset by 1% would reduce the value of the portfolio by £158 million (2021: £88 million). Decreasing the interest rate assumption

forunhedged borrowings used in the valuation of each asset by 1% would increase the value of the portfolio by £156 million (2021: £82 million). This calculation does not take account

ofany offsetting variances which may be expected to prevail if interest rates changed, including the impact of inflation discussed above.

Intermediate holding companies

The Company invests in a number of intermediate holding companies that are used to hold the unquoted investments, valued as referred to above. All other assets and liabilities of the

intermediate holding companies are held either at fair value or a reasonable approximation to fair value. The fair value of these intermediate holding companies therefore approximates

to their NAV and the Company classifies the fair value as Level 3. As at 31 March 2022, the fair value of the other assets and liabilities within these intermediate holding companies was

£nil (2021: £2 million).

Accounts and other information

164

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 165

Notes to the accounts continued

7 Investments at fair value through profit or loss and financial instruments continued

Over-the-counter derivatives

The Company uses over-the-counter foreign currency derivatives to hedge foreign currency movements. The derivatives are held at fair value which represents the price that would be

received to sell or transfer the instruments at the balance sheet date. The valuation technique incorporates various inputs including foreign exchange spot and forward rates, and uses

present value calculations. For these financial instruments, significant inputs into models are market observable and are included within Level 2.

Valuation process for Level 3 valuations

The valuations on the Balance sheet are the responsibility of the Board of Directors of the Company. The Investment Manager provides a valuation of unquoted investments,

debtandunlisted funds held by the Company on a half-yearly basis. This is performed by the valuation team of the Investment Manager and reviewed by the valuation committee

oftheInvestment Manager. The valuations are also subject to quality assurance procedures performed within the valuation team. The valuation team verifies the major inputs applied

in thelatest valuation by agreeing the information in the valuation computation to relevant documents and market information. The valuation committee of the Investment Manager

considers the appropriateness of the valuation methods and inputs, and may request that alternative valuation methods are applied to support the valuation arising from the method

chosen. On ahalf-yearly basis, the Investment Manager presents the valuations to the Board. This includes a discussion of the major assumptions used in the valuations, with an emphasis

on the more significant investments and investments with significant fair value changes. Any changes in valuation methods are discussed and agreed with the Audit and Risk Committee

before the valuations on the Balance sheet are approved by the Board.

8 Trade and other receivables

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Current assets

Vendor loan notes 100 105

Other receivables including prepayments 2 –

Capitalised finance costs 2 1

104 106

Vendor loan notes (‘VLNs’) of £98 million plus interest are due from the purchaser following the sale of WIG in December 2019. These can be called on by giving notice and carry an

interest rate of 6%. These are measured at amortised cost using the effective interest method. Accrued interest on the VLNs is included in the table above.

Notes to the accounts continued

9 Financial risk management

A full review of the Company’s objectives, policies and processes for managing and monitoring risk is set out in the Risk report. This Note provides further detail on financial risk

management, cross-referring to the Risk report where applicable and providing further quantitative data on specific financial risks.

Each investment made by the Company is subject to a full risk assessment through a consistent investment approval process. The Board’s Management Engagement Committee,

Auditand Risk Committee and the Investment Manager’s investment process are part of the overall risk management framework of the Company.

The funding objective of the Company is that each category of investment ought to be broadly matched with liabilities and shareholders’ funds according to the risk and maturity

characteristics of the assets, and that funding needs are to be met ahead of planned investment.

Capital structure

The Company has a continuing commitment to capital efficiency. The capital structure of the Company consists of cash held on deposit and in AAA rated money market funds,

borrowing facilities and shareholders’ equity. The Company’s Articles require its outstanding borrowings, including any financial guarantees to support subsequent obligations, to be

limited to 50%of the gross assets of the Company. The type and maturity of the Company’s borrowings are analysed in Note 11 and the Company’s equity is analysed into its various

components in the Statement of changes in equity. Capital is managed so as to maximise the return to shareholders, while maintaining a strong capital base that ensures that the

Company can operate effectively in the marketplace and sustain future development of the business. The Board is responsible for regularly monitoring capital requirements to ensure

that the Company is maintaining sufficient capital to meet its future investment needs.

The Company is regulated by the Jersey Financial Services Commission under the provisions of the Collective Investment Funds (Jersey) Law 1988 as a listed closed-ended collective

investment fund and is not required as a result of such regulation to maintain a minimum level of capital.

Capital is allocated for investment in infrastructure across the UK and continental Europe. As set out in the Company’s investment policy, the maximum exposure to any one investment

is25% of gross assets (including cash holdings) at the time of investment.

Accounts and other information

166

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 167

Notes to the accounts continued

9 Financial risk management continued

Credit risk

The Company is subject to credit risk on the debt component of its unquoted investments, cash, deposits, derivative contracts and receivables. The maximum exposure to credit

risk asaresult of counterparty default equates to the current carrying value of these financial assets. Throughout the year and the prior year, the Company’s cash and deposits were

held with a variety of counterparties, principally in AAA rated money market funds, as well as in short-term bank deposits and notice accounts with a minimum of a A credit rating.

The counterparties selected for the derivative financial instruments were all banks with a minimum of a BBB+ credit rating with at least one major rating agency. Following the sale

ofWIGin December 2019, the Company received VLNs from the purchaser, Brookfield Infrastructure Fund IV, that are reported within Trade receivables. The credit risk on these VLNs

has been assessed through calculating an expected credit loss using the credit ratings of underlying investors in the Brookfield fund and the amount of undrawn commitments to the

fund to calculate a probability of default.

The credit quality of unquoted investments, which are held at fair value and include debt and equity elements, is based on the financial performance of the individual portfolio companies.

The credit risk relating to these assets is based on their enterprise value and is reflected through fair value movements. This incorporates the impact of the recovery from the Covid-19

pandemic, the volatility in the oil prices and power prices and other macroeconomic factors such as inflation and interest rate rises. The performance of underlying investments is

monitored by the Board to assess future recoverability.

For those assets and income entitlements that are not past due, it is believed that the risk of default is small and capital repayments and interest payments will be made in accordance

with the agreed terms and conditions of the investment. If the portfolio company has failed and there is no expectation to recover any residual value from the investment, the Company’s

policy is to record an impairment for the full amount of the loan. When the net present value of the future cash flows predicted to arise from the asset, discounted using the effective

interest rate method, implies non-recovery of all or part of the Company’s investment a fair value movement is recorded equal to the valuation shortfall.

As at 31 March 2022, the Company had no loans or receivables or debt investments considered past due (2021: nil).

The Company actively manages counterparty risk. Counterparty limits are set and closely monitored by the Board and a regular review of counterparties is undertaken by the Investment

Manager and reported to the Board. As at 31 March 2022, the Company did not consider itself to have a significant exposure to any one counterparty and held deposits and derivative

contracts with a number of different counterparties to reduce counterparty risk (2021: same).

Due to the size and nature of the investment portfolio there is the potential for concentration risk. This risk is managed by diversifying the portfolio by sector and geography.

Notes to the accounts continued

9 Financial risk management continued

Liquidity risk

Further information on how liquidity risk is managed is provided in the Risk report. The table below analyses the maturity of the Company’s contractual liabilities.

2022

Payable

on demand

£m

Due within

1 year

£m

Due between

1 and 2 years

£m

Due between

2 and 5 years

£m

Total

£m

Liabilities

Loans and borrowings

– (7) (5) (234) (246)

Trade and other payables (4) (26) (20) (18) (68)

Derivative contracts – (12) (3) (3) (18)

Financial commitments

(302) – – – (302)

Total undiscounted financial liabilities (306) (45) (28) (255) (634)

1 Loans and borrowings relate to undrawn commitment fees and interest payable on the RCF referred to in Note 11.

2 Financial commitments are described in Note 16 and are not recognised in the Balance sheet.

2021

Payable

on demand

£m

Due within

1 year

£m

Due between

1 and 2 years

£m

Due between

2 and 5 years

£m

Total

£m

Liabilities

Loans and borrowings

– (2) (2) – (4)

Trade and other payables (9) – (8) (2) (19)

Derivative contracts – (4) (2) – (6)

Financial commitments

(38) – – – (38)

Total undiscounted financial liabilities (47) (6) (12) (2) (67)

1 Loans and borrowings relate to undrawn commitment fees and interest payable on the RCF and additional facilities referred to in Note 11.

2 Financial commitments are described in Note 16 and are not recognised in the Balance sheet.

The derivative contracts liability shown is the net cash flow expected to be paid on settlement.

In order to manage the contractual liquidity risk the Company has free cash and debt facilities in place, is able to call the VLNs referred to in Note 8 with six weeks’ notice and, in June 2022,

is expecting to receive £103 million from the sale of its Projects portfolio.

Accounts and other information

168

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 169

Notes to the accounts continued

9 Financial risk management continued

Market risk

The valuation of the Company’s investment portfolio is largely dependent on the underlying trading performance of the companies within the portfolio, but the valuation of the portfolio

and the carrying value of other items in the Financial statements can also be affected by interest rate, currency and market price fluctuations. The Company’s sensitivities to these

fluctuations are set out below.

(i) Interest rate risk

Further information on how interest rate risk is managed is provided in the Risk report.

An increase of 100 basis points in interest rates over 12 months (2021: 100 basis points) would lead to an approximate decrease in net assets and net profit of the Company of £2million

(2021: increase of £5 million). This exposure relates principally to changes in interest payable on the drawn RCF balance at the year end (2021: in interest receivable on cash on deposit

held at the year end). The average cash balance of the Company, whichis more representative of the cash balance during the year, was £269 million (2021: £405 million) and the

weighted-average interest earned was 0.04% (2021: 0.1%).

In addition, the Company has indirect exposure to interest rates through changes to the financial performance of portfolio companies caused by interest rate fluctuations as disclosed

in Note 7. This risk is considered a component of market risk described in section (iii). The Company does not hold any fixed rate debt investments or borrowings and is therefore not

exposed to fair value interest rate risk.

(ii) Currency risk

Further information on how currency risk is managed is provided in the Risk report. The currency denominations of the Company’s net assets are shown in the table below. The sensitivity

analysis demonstrates the exposure of the Company’s net assets to movements in foreign currency exchange rates. The hedging strategy is discussed in the Financial review.

Notes to the accounts continued

9 Financial risk management continued

As at 31 March 2022

Sterling

£m

Euro

£m

NOK

£m

DKK

£m

US dollar

£m

Total

£m

Net assets 456 1,457 243 548 – 2,704

Sensitivity analysis

Assuming a 10% appreciation in sterling against the euro, NOK, DKK and US dollar exchange rates:

Impact of exchange movements on net profit and net assets 139 (132) (22) (50) – (65)

1 Sterling impact relates to the impact of fair value movement in derivatives held by the Company to hedge foreign currency fluctuations in the valuation of the investment portfolio. The notional amount of the derivatives is disclosed

inNote 10.

As at 31 March 2021

Sterling

£m

Euro

£m

NOK

£m

DKK

£m

US dollar

£m

Total

£m

Net assets 848 1,116 234 189 3 2,390

Sensitivity analysis

Assuming a 10% appreciation in sterling against the euro, NOK, DKK and US dollar exchange rates:

Impact of exchange movements on net profit and net assets 109 (101) (21) (17) – (30)

Note 10.

The impact of an equivalent depreciation in sterling against the euro, NOK, DKK and US dollar exchange rates has the inverse impact on net profit and net assets from that shown above.

There is an indirect exposure to the rupee through the investment in the India Fund which is denominated in US dollars but it is only the direct exposure that is considered here. The risk

exposure at the year end is considered to be representative of this year as a whole.

Accounts and other information

170

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 171

Notes to the accounts continued

9 Financial risk management continued

(iii) Market risk

Further information about the management of external market risk and its impact on price or valuation, which arises principally from unquoted investments, is provided in the Risk report.

A 10% increase in the fair value of those investments would have the following direct impact on net profit and net assets. The impact of a change in all cash flows has an equivalent impact

on the fair value, as set out below.

As at

31 March

2022

Investments

at fair value

£m

As at

31 March

2021

Investments

at fair value

£m

Increase in net profit and net assets 287 180

The impact of a 10% decrease in the fair value of those investments would have the inverse impact on net profit and net assets from that shown above. The risk exposure at the year end

is considered to be representative of this year as a whole.

By the nature of the Company’s activities, it has large exposures to individual assets that are susceptible to movements in price. This risk concentration is managed within the Company’s

investment strategy as discussed in the Risk report.

(iv) Fair values

The fair value of the investment portfolio is described in detail in the Portfolio valuation methodology section and in Note 7. The fair values of the remaining financial assets and liabilities

approximate to their carrying values (2021: same).

The sensitivity analysis in respect of the interest rate, currency and market price risks is considered to be representative of the Company’s exposure to financial risks throughout the period

to which they relate (2021: same).

Notes to the accounts continued

10 Derivative financial instruments

As at

31 March

2022

£m

As at

31 March

2021

£m

Non-current assets

Forward foreign exchange contracts 6 18

Current assets

Forward foreign exchange contracts 20 25

Non-current liabilities

Forward foreign exchange contracts (6) (2)

Current liabilities

Forward foreign exchange contracts (12) (4)

Forward foreign exchange contracts

The Company uses forward foreign exchange contracts to minimise the effect of fluctuations in the investment portfolio from movements in exchange rates and also to fix the value of

certain expected future cash flows arising from distributions made by investee companies.

The fair value of these contracts is recorded in the Balance sheet. No contracts are designated as hedging instruments and consequently all changes in fair value are taken through profit

or loss.

As at 31 March 2022, the notional amount of the forward foreign exchange contracts held by the Company was £1,555 million (2021: £1,090 million).

11 Loans and borrowings

On 3 November 2021, the Company refinanced its £300 million RCF as a new £400 million sustainability-linked RCF with a maturity date of November 2024 and two one-year extension

options. The Company has the right to increase the size of the new RCF by a further £200 million, provided that existing lenders have a right of first refusal. This right was exercised on

16 December 2021 for a one-year period. On 31 January 2022 an additional £400 million facility was agreed for a one-year period. Total available debt facilities at 31 March 2022 were

£1 billion (2021: £300 million).

The new RCF is secured by a floating charge over the bank accounts of the Company. Interest is payable at SONIA or EURIBOR plus a fixed margin on the drawn amount. This fixed margin

is subject to a small adjustment annually based upon performance against agreed sustainability metrics. As at 31 March 2022, theCompany had drawn cash of £231 million from the RCF

(2021: nil). The new RCF has certain loan covenants, including a loan to value ratio.

Accounts and other information

172

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 173

Notes to the accounts continued

12 Trade and other payables

Year to

31 March

2022

£m

Year to

31 March

2021

£m

Non-current liabilities

Performance fee 38 10

Current liabilities

Management and performance fees 27 8

Accruals and other creditors 2 1

67 19

The carrying value of all liabilities is representative of fair value (2021: same).

13 Issued capital

As at 31 March 2022 As at 31 March 2021

Number £m Number £m

Authorised, issued and fully paid

Opening balance 891,434,010 1,496 891,434,010 1,496

Closing balance 891,434,010 1,496 891,434,010 1,496

Aggregate issue costs of £24 million arising from IPO and subsequent share issues have been offset against the stated capital account in previous years. In addition, the stated capital

account was reduced by Court order on 20 December 2007 with an amount of £693 million transferred to a new, distributable reserve which has been combined with retained reserves

inthese accounts. Therefore, as at 31 March 2022, the residual value on the stated capital account was £779 million.

Notes to the accounts continued

14 Per share information

The earnings and net assets per share attributable to the equity holders of the Company are based on the following data:

Year to

31 March

2022

Year to

31 March

2021

Earnings per share (pence)

Basic and diluted 45.3 23.1

Earnings (£m)

Profit after tax for the year 404 206

Number of shares (million)

Weighted average number of shares in issue 891.4 891.4

Number of shares at the end of the year 891.4 891.4

As at

31 March

2022

As at

31 March

2021

Net assets per share (pence)

Basic and diluted 303.3 268.1

Net assets (£m)

Net assets 2,704 2,390

Accounts and other information

174

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 175

Notes to the accounts continued

15 Dividends

Declared and paid during the year

Year to 31 March 2022 Year to 31 March 2021

Pence per share £m Pence per share £m

Interim dividend paid on ordinary shares 5.225 46 4.900 44

Prior year final dividend paid on ordinary shares 4.900 44 4.600 41

10.125 90 9.500 85

The Company proposes paying a final dividend of 5.225 pence per share (2021: 4.9 pence) which will be payable to those shareholders that are on the register on 17 June 2022. On the basis

of the shares in issue at year end, this would equate to a total final dividend of £47 million (2021: £44 million).

The final dividend is subject to approval by shareholders at the AGM in July 2022 and has therefore not been accrued in these Financial statements.

16 Commitments

As at

31 March

2022

£m

As at

31 March

2021

£m

Unquoted investments 302 38

As at 31 March 2022, the Company was committed to invest $398 million (£302 million) in GCX. Following the end of the 3i India Infrastructure Fund (the ‘India Fund’) life at the end of

March 2022, the India Fund has now moved into liquidation and the outstanding US$38 million (£27 million) commitment is no longer callable. During the year, the Company invested

inESVAGT and as a result, the prior year commitment of DKK 100 million (£11 million) was extinguished.

17 Contingent liabilities

As at 31 March 2022, the Company had no contingent liabilities (2021: nil).

Notes to the accounts continued

18 Related parties

Transactions between 3i Infrastructure and 3i Group

3i Group plc (‘3i Group’) holds 30.2% (2021: 30.2%) of the ordinary shares of the Company. This classifies 3i Group as a ‘substantial shareholder’ of the Company as defined by the Listing

Rules. During the year, 3i Group received dividends of £27 million (2021: £26 million) from the Company.

In 2007 the Company committed US$250 million to the India Fund to invest in the Indian infrastructure market. 3i Group also committed US$250 million to the India Fund.

No commitments (2021: nil) were drawn down by the India Fund from the Company during the year. In total, commitments of US$184 million or £140 million re-translated (2021:

US$184 million or £133 million) had been drawn down at 31 March 2022 by the India Fund from the Company. As the India Fund has reached the end of its life andmoved into liquidation,

the outstanding commitment at 31 March 2022 is no longer callable (2021: US$38 million or £27 million).

3i Investments plc, a subsidiary of 3i Group, is the Company’s Alternative Investment Fund Manager and provides its services under an Investment Management Agreement (‘IMA’).

3i Investments plc also acts as the investment manager of the India Fund. 3i plc, another subsidiary of 3i Group, together with 3i Investments plc, provides support services to the

Company (which are ancillary and related to the investment management service) which it is doing pursuant to the terms of the IMA.

Fees under the IMA consist of a tiered management fee and time weighting of the management fee calculation and a one-off transaction fee of 1.2% payable in respect of new

investments. The applicable tiered rates are shown in the table below. The management fee is payable quarterly in advance.

Gross investment value Applicable tier rate

Up to £1.25bn 1.4%

£1.25bn to £2.25bn 1.3%

Above £2.25bn 1.2%

For the year to 31 March 2022, £43 million (2021: £25 million) was payable, including one-off transaction fees payable in respect of new investments and advance payments of £42 million

were made resulting in an amount due to 3i plc of £1 million at 31 March 2022 (2021: less than £1 million due from 3i plc). In consideration of the provision of support services under the

IMA, the Company pays the Investment Manager an annual fixed fee. The cost for the support services incurred for the year to 31 March 2022 was £1 million (2021: £1 million). There was

no outstanding balance payable as at 31 March 2022 (2021: nil).

Under the IMA, a performance fee is payable to the Investment Manager equal to 20% of the Company’s total return in excess of 8%, payable in three equal annual instalments.

The second and third instalments will only be payable if either (a) the Company’s performance in the year in which that instalment is paid also triggers payment of a performance fee

inrespect of that year, or (b) if the Company’s performance over the three years starting with the year in which the performance fee is earned exceeds the 8% hurdle on an annual basis.

There is no high water mark requirement.

Accounts and other information

176

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 177

Notes to the accounts continued

18 Related parties continued

The performance hurdle requirement was exceeded for the year to 31 March 2022 and therefore a performance fee of £54 million was recognised (2021: £7 million). The outstanding

balance payable as at 31 March 2022 was £64 million (2021: £18 million), which includes the second and third instalments of the prior year fee and the third instalment of the FY20 fee.

Year Performance fee (£m)

Outstanding balance at

31 March (£m) Payable in FY23 (£m)

FY22 54 54 18

FY21 7 4 2

FY20 17 6 6

Under the IMA, the Investment Manager’s appointment may be terminated by either the Company or the Investment Manager giving the other not less than 12 months’ notice in writing,

but subject to a minimum term of four years from 15 October 2018, unless 3i Investments plc has previously ceased to be a member of 3i Group, or with immediate effect by either party

giving the other written notice in the event of insolvency or material or persistent breach by the other party. The Investment Manager may also terminate the agreement on two months’

notice given within two months of a change of control of the Company.

Regulatory information relating to fees

3i Investments plc acts as the Alternative Investment Fund Manager (‘AIFM’) to the Company. In performing the activities and functions of the AIFM, the AIFM or another 3i company

maypay or receive fees, commissions or non-monetary benefits to or from third parties of the following nature:

• Payments for third-party services: The Company may retain the services of third-party consultants; typically this is for an independent director or other investment management

specialist expertise. The amount paid varies in accordance with the nature of the service and the length of the service period and is usually, but not always, paid or reimbursed

by theportfolio companies. The payment may involve a flat fee, retainer or success fee. Such payments, where borne by the Company, are included within Operating expenses.

In somecircumstances, the AIFM may retain the services of third-party consultants which are paid for by the AIFM and not recharged to the Company.

• Payments for services from 3i companies: Other 3i companies may provide investment advisory and other services to the AIFM or other 3i companies and receive payment for

such service.

Notes to the accounts continued

19 Unconsolidated subsidiaries and related undertakings

Name Place of incorporation and operation Ownership interest

3i Infrastructure (Luxembourg) S.à r.l. Luxembourg 100%

3i Infrastructure (Luxembourg) Holdings S.à r.l. Luxembourg 100%

Oystercatcher Luxco 1 S.à r.l. Luxembourg 100%

Oystercatcher Luxco 2 S.à r.l. Luxembourg 100%

Oystercatcher Holdco Limited UK 100%

3i Osprey LP UK 69%

3i India Infrastructure Fund A LP UK 100%

BIF WIP LP (dissolved during the year) UK 100%

BIF WIP Dutch Holdco B.V. (dissolved during the year) The Netherlands 100%

3i Infrastructure (Netherlands) B.V. (formerly Heijmans Capital B.V.) (dissolved during the year) The Netherlands 100%

NMM Company B.V. The Netherlands 100%

Heijmans A12 B.V. The Netherlands 100%

3i ERRV Denmark Limited Jersey 100%

ERRV Luxembourg Holdings S.à r.l. Luxembourg 100%

3i WIG Limited Jersey 100%

3i Envol Limited Jersey 100%

3i Tampnet Holdings Limited UK 100%

3iN Attero Holdco Limited UK 100%

3i Amalthea Topco Limited UK 100%

Reef Topco Limited UK 100%

Reef Midco Limited UK 100%

Reef Bidco Limited UK 100%

Accounts and other information

178

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 179

Notes to the accounts continued

19 Unconsolidated subsidiaries and related undertakings continued

Name Place of incorporation and operation Ownership interest

Joulz Group:

Joulz Holdco B.V. The Netherlands 99%

Joulz Bidco B.V. The Netherlands 99%

Joulz Diensten B.V. The Netherlands 99%

Joulz Meetbedrijf B.V. The Netherlands 99%

Joulz Infradiensten B.V. The Netherlands 99%

Joulz Laadoplossingen B.V. The Netherlands 99%

Ionisos Group:

Epione Holdco SAS France 96%

Epione Bidco SAS France 96%

Ionisos Mutual Services SAS France 96%

Ionisos SAS France 96%

Ionisos GmbH Germany 96%

Ionmed Esterilizacion SA Spain 96%

Scandinavian Clinics Estonia OÜ Estonia 96%

Steril Milano Srl Italy 96%

Infinis Group:

3i LFG Topco Limited Jersey 100%

Infinis Energy Group Holdings Limited UK 100%

Infinis Energy Management Limited UK 100%

Infinis Limited UK 100%

Infinis (Re-Gen) Limited UK 100%

Novera Energy (Holdings 2) Limited UK 100%

Novera Energy Generation No. 1 Limited UK 100%

Novera Energy Operating Services Limited UK 100%

Notes to the accounts continued

19 Unconsolidated subsidiaries and related undertakings continued

Name Place of incorporation and operation Ownership interest

Infinis Group:

Gengas Limited UK 100%

Novera Energy Generation No. 2 Limited UK 100%

Renewable Power Generation Limited UK 100%

Novera Energy Generation No. 3 Limited UK 100%

Costessey Energy Limited UK 100%

Mayton Wood Energy Limited UK 100%

Infinis Alternative Energies Limited UK 100%

Infinis Energy Services Limited UK 100%

Novera Energy Services UK Limited UK 100%

Infinis China (Investments) Limited UK 100%

Infinis (COE) Limited UK 100%

Infinis Energy Storage Limited UK 100%

Novera Energy Pty Limited UK 100%

Barbican Holdco Limited UK 100%

Barbican Bidco Limited UK 100%

Alkane Energy Limited UK 100%

Alkane Biogas Limited UK 100%

Alkane Energy UK Limited UK 100%

Alkane Services Limited UK 100%

Seven Star Natural Gas Limited UK 100%

Regent Park Energy Limited UK 100%

Leven Power Limited UK 100%

Rhymney Power Limited UK 100%

Alkane Energy CM Holdings Limited UK 100%

Alkane Energy CM Limited UK 100%

Accounts and other information

180

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 181

19 Unconsolidated subsidiaries and related undertakings continued

Name Place of incorporation and operation Ownership interest

Infinis Solar Holdings Limited

UK 100%

Infinis Solar Developments Limited UK 100%

Infinis Solar Limited

UK 100%

ND Solar Enterprise Limited UK 100%

Aura Power Solar UK6 Limited UK 100%

DNS:NET Group:

DNS Holdings GmbH Germany 64%

DNS Bidco GmbH Germany 64%

DNS:NET Internet Service GmbH Germany 64%

SRL Traffic Systems Group:

Amalthea Holdco Limited UK 92%

Amalthea Midco Limited UK 92%

Amalthea Bidco Limited UK 92%

Jupiter Bidco Limited UK 92%

SRL Traffic Systems Limited UK 92%

SRL GmbH Germany 92%

SRL Traffic Systems Limited Ireland 92%

ESVAGT Group:

ERRV Holdings ApS Denmark 100%

ERRV ApS Denmark 100%

ESVAGT Holdings Inc US 100%

ESVAGT A/S Denmark 100%

ESVAGT Norge AS Norway 100%

ESVAGT Holdings Ltd UK 100%

P/F ESVAGT-Thor Faroe Islands 51%

ESVAGT UK Ltd UK 100%

Notes to the accounts continued

19 Unconsolidated subsidiaries and related undertakings continued

The list above comprises the unconsolidated subsidiary undertakings of the Company as at 31 March 2022.

There are no current commitments or intentions to provide financial or other support to any of the unconsolidated subsidiaries, including commitments or intentions to assist

thesubsidiaries in obtaining financial support except for those disclosed in Note 16 (2021: none). No such financial or other support was provided during the year (2021: none).

Accounts and other information

182

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 183

Investment policy (unaudited)

The Company aims to build a diversified

portfolio of equity investments in entities

owning infrastructure businesses and

assets. The Company seeks investment

opportunities globally, but with a focus

onEurope, North America and Asia.

The Company’s equity investments will

often comprise share capital and related

shareholder loans (or other financial

instruments that are not shares but that,

in combination with shares, are similar in

substance). The Company may also invest

in junior or mezzanine debt in infrastructure

businesses or assets.

Most of the Company’s investments are

in unquoted companies. However, the

Company may also invest in entities owning

infrastructure businesses and assets whose

shares or other instruments are listed on

any stock exchange, irrespective of whether

they cease to be listed after completion

of the investment, if the Directors judge

that such an investment is consistent with

the Company’s investment objectives.

The Company will, in any case, invest no

more than 15% of its total gross assets in

other investment companies or investment

trusts which are listed on the Official List.

The Company may also consider investing

in other fund structures (in the event that

it considers, on receipt of advice from

the Investment Manager, that that is the

most appropriate and effective means

of investing), which may be advised or

managed either by the Investment Manager

or a third party. If the Company invests

in another fund advised or managed by

3i Group, the relevant proportion of any

advisory or management fees payable

by the investee fund to 3i plc will be

deducted from the annual management

fee payable under the Investment

Management Agreement and the relevant

proportion of any performance fee will be

deducted from the annual performance

fee, if payable, under the Investment

Management Agreement.

For the avoidance of doubt, there will be no

similar set-off arrangement where any such

fund is advised or managed by a third party.

For most investments, the Company seeks

to obtain representation on the board

of directors of the investee company

(orequivalent governing body) and in cases

where it acquires a majority equity interest

in a business, that interest may also be a

controlling interest.

No investment made by the Company will

represent more than 25% of the Company’s

gross assets, including cash holdings,

atthe time of making the investment. It is

expected that most individual investments

will exceed £50 million. In some cases,

thetotal amount required for an individual

transaction may exceed the maximum

amount that the Company is permitted

to commit to a single investment. In such

circumstances, the Company may consider

entering into co-investment arrangements

with 3i Group (or other investors who may

also be significant shareholders), pursuant

to which 3i Group and its subsidiaries

(orsuch other investors) may co-invest on

the same financial and economic terms

as the Company. The suitability of any

such co-investment arrangements will be

assessed on a transaction-by-transaction

basis. Depending on the size of the

relevant investment and the identity of the

relevant co-investor, such a co-investment

arrangement may be subject to the related

party transaction provisions contained in

the Listing Rules and may therefore require

shareholder consent.

The Company’s Articles require its

outstanding borrowings, including any

financial guarantees to support subsequent

obligations, to be limited to 50% of the

gross assets of the Company (valuing

investments on the basis included in the

Company’s accounts).

In accordance with Listing Rules

requirements, the Company will only make

a material change to its investment policy

with the approval of shareholders.

Portfolio valuation methodology (unaudited)

A description of the methodology used

to value the investment portfolio of the

Company is set out below in order to

provide more detailed information than is

included within the accounting policies and

the Investment Manager’s review for the

valuation of the portfolio. The methodology

complies in all material aspects with the

International Private Equity and Venture

Capital valuation guidelines which are

endorsed by the British Private Equity

and Venture Capital Association and

Invest Europe.

Basis of valuation

Investments are reported at the Directors’

estimate of fair value at the reporting

date in compliance with IFRS 13 Fair Value

Measurement. Fair value is defined as

‘theprice that would be received to sell

an asset or paid to transfer a liability in

an orderly transaction between market

participants at the measurement date’.

General

In estimating fair value, the Directors

seek to use a methodology that is

appropriate in light of the nature, facts

and circumstances of the investment

and its materiality in the context of the

overall portfolio. The methodology that is

the most appropriate may consequently

include adjustments based on informed

and experience-based judgements, and

will also consider the nature of the industry

and market practice. Methodologies are

applied consistently from period to period

except where a change would result in a

better estimation of fair value. Given the

uncertainties inherent in estimating fair

value, a degree of caution is applied

in exercising judgements and making

necessary estimates.

Investments may include portfolio assets

and other net assets/liabilities balances.

The methodology for valuing portfolio

assets is set out below. Any net assets/

liabilities within intermediate holding

companies are valued in line with the

Company accounting policy and held

atfairvalue or approximate to fair value.

Quoted investments

Quoted equity investments are valued at

the closing bid price at the reporting date.

In accordance with International Financial

Reporting Standards, no discount is applied

for liquidity of the stock or any dealing

restrictions. Quoted debt investments will

be valued using quoted prices provided

by third-party broker information where

reliable or will be held at cost less fair

value adjustments.

Unquoted investments

Unquoted investments are valued using

oneof the following methodologies:

• Discounted Cash Flow (‘DCF’);

• Proportionate share of net assets;

• Sales basis; and

• Cost less any fair value

adjustments required.

DCF

DCF is the primary basis for valuation.

In using the DCF basis, fair value is

estimated by deriving the present value

of the investment using reasonable

assumptions and estimation of expected

future cash flows, including contracted

and uncontracted revenues, expenses,

capital expenditure, financing and taxation,

and the terminal value and date, and the

appropriate risk-adjusted discount rate

that quantifies the risk inherent to the

investment. The terminal value attributes

a residual value to the investee company

at the end of the projected discrete cash

flow period. The discount rate will be

estimated for each investment derived from

the market risk-free rate, a risk-adjusted

premium and information specific to the

investment or market sector.

Accounts and other information

184

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 185

Portfolio valuation methodology (unaudited) continued

Proportionate share of net assets

Where the Company has made investments

into other infrastructure funds, the value

of the investment will be derived from

the Company’s share of net assets of the

fund based on the most recent reliable

financial information available from the

fund. Where the underlying investments

within a fund are valued on a DCF basis,

the discount rate applied may be adjusted

by the Company to reflect its assessment

of the most appropriate discount rate

for the nature of assets held in the fund.

In measuring the fair value, the net asset

value of the fund is adjusted, as necessary,

to reflect restrictions on redemptions,

future commitments, illiquid nature of the

investments and other specific factors of

the fund.

Sales basis

The expected sale proceeds will be used

to assign a fair value to an asset in cases

where offers have been received as part

of an investment sales process. This may

either support the value derived from

another methodology or may be used as

the primary valuation basis. A marketability

discount is applied to the expected

sale proceeds to derive the valuation

where appropriate.

Cost less fair value adjustment

Any investment in a company that has failed

or, in the view of the Board, is expected

to fail within the next 12 months, has the

equity shares valued at nil and the fixed

income shares and loan instruments

valued at the lower of cost and net

recoverable amount.

Information for shareholders

Designation of dividends as

interest distributions

As an approved Investment Trust,

theCompany is permitted to designate

dividends wholly or partly as interest

distributions for UK tax purposes.

Dividends designated as interest in this

way are taxed as interest income in the

hands of shareholders and are treated as

tax deductible interest payments made

bythe Company. The Company expects to

make such dividend designations in periods

in which it is able to use the resultant tax

deduction to reduce the UK corporation tax

it would otherwise pay on the interest income

it earns from its investments. The Board

is not designating any of the 5.225 pence

finaldividend payable in respect of the year

as an interest distribution.

Registrars

The Company’s registrar is Link Market

Services (Jersey) Limited (the ‘Registrar’).

The Registrar’s main responsibilities

include maintaining the shareholder

Their registered address is as follows:

Link Market Services (Jersey) Limited

PO Box 532

St. Helier

Jersey JE4 5UW

Channel Islands

If you have any queries relating to your

3iInfrastructure plc shareholding you

should contact the Registrar as follows:

Online: www.signalshares.com. From here

you will be able to securely email Link with

your query.

Telephone: 0371 664 0300

Overseas enquiries: +44 371 664 0300

By post: Link, Central Square,

29 Wellington Street, Leeds, LS1 4DL

* Calls from outside the United Kingdom

willbe charged at the applicable

international rate. Lines are open between

9.00am-5.30pm, Monday to Friday

excluding public holidays in England

and Wales.

Investor relations and

general enquiries

For all investor relations and general

enquiries about 3i Infrastructure plc,

please contact:

Thomas Fodor

Investor Relations

3i Infrastructure plc

16 Palace Street

London, SW1E 5JD

email: [email protected]

Telephone +44 (0)20 7975 3469

or for full up-to-date investor relations

information including the latest share

price, recent reports, results presentations

and financial news, please visit the

investor relations page on our website

www.3i-infrastructure.com.

If you would prefer to receive shareholder

communications electronically,

including your Annual reports and

notices of meetings, please go to

www.3i-infrastructure.com/investors/

shareholder-centre for details of how

to register.

Frequently used Registrars’ forms

can be found on our website at

www.3i-infrastructure.com/investors/

shareholder-centre.

3i Infrastructure plc

Registered Office

12 Castle Street

St. Helier

Jersey JE2 3RT

Channel Islands

www.3i-infrastructure.com

Financial calendar

Ex-dividend date for final dividend 16 June 2022

Record date for final dividend 17 June 2022

Annual General Meeting 7 July 2022

Final dividend expected to be paid 11 July 2022

Half-yearly results November 2022

Accounts and other information

186

Accounts and other information

3i Infrastructure plc Annual report and accounts 2022 187

Glossary

Alternative Investment Fund (’AIF’)

3i Infrastructure plc is an AIF managed

by3iInvestments plc.

Alternative Investment Fund Manager

(‘AIFM’) is the regulated manager of

anAIF. For 3i Infrastructure plc, this is

3iInvestments plc.

Approved Investment Trust Company

This is a particular UK tax status maintained

by 3i Infrastructure plc. An approved

Investment Trust company is a UK tax

resident company which meets certain

conditions set out in the UK tax rules which

include a requirement for the company

toundertake portfolio investment activity

that aims to spread investment risk and for

the company’s shares to be listed on an

approved exchange. The ‘approved’ status

for an investment trust must be agreed by

the UK tax authorities and its benefit is that

certain profits of the company, principally

itscapital profits, are not taxable in the UK.

Association of Investment Companies

(‘AIC’) The Association of Investment

Companies is a UK trade body for

closed-ended investment companies.

Board The Board of Directors of

the Company.

Capital reserve recognises all profits that

are capital in nature or have been allocated

to capital. These profits are distributable

byway of a dividend.

Company 3i Infrastructure plc.

Discounting The reduction in present value

at a given date of a future cash transaction

at an assumed rate, using a discount factor

reflecting the time value of money.

External auditor The independent auditor,

Deloitte LLP.

Fair value through profit or loss (‘FVTPL’)

is an IFRS measurement basis permitted

for assets and liabilities which meet

certain criteria. Gains and losses on

assetsand liabilities measured as

FVTPLarerecognised directly in the

Statement ofcomprehensive income.

FY15, FY20, FY21, FY22, FY23 refers

to the financial years to 31 March 2015,

31 March 2020, 31 March 2021, 31 March 2022

and 31 March 2023 respectively.

Initial Public Offering (‘IPO’) is the

mechanism by which a company admits its

stock to trading on a public stock exchange.

3i Infrastructure plc completed its IPO

inMarch 2007.

International Financial Reporting

Standards (‘IFRS’) are accounting

standards issued by the International

Accounting Standards Board (‘IASB’).

The Company’s financial statements are

required to be prepared in accordance

withIFRS, as adopted by the UK.

Investment income is that portion

ofincome that is directly related to the

return from individual investments and is

recognised as it accrues. It is comprised

ofdividend income, income from loans and

receivables and fee income. It is recognised

to the extent that it is probable that there

will be an economic benefit and the income

can be reliably measured.

Key Performance Indicator (‘KPI’)

isa measure by reference to which the

development, performance or position of

the Company can be measured effectively.

Money multiple is calculated as the

cumulative distributions or realisation

proceeds plus any residual value divided

byinvested or paid-in capital.

Net asset value (‘NAV’) is a measure

ofthe fair value of all the Company’s

assetsless liabilities.

Glossary continued

Net assets per share (‘NAV per share’)

is the NAV divided by the total number

ofshares in issue.

Net gains on investments is the movement

in the fair value of investments between the

start and end of the accounting period, or

investment disposal date, or the investment

acquisition date and the end of the

accounting period, including divestment

related costs where applicable, converted

into sterling using the exchange rates in

force at the end of the period.

Ongoing charges A measure of the annual

recurring operating costs of the Company,

expressed as a percentage of average NAV

over the reporting period.

Public Private Partnership (’PPP’) is a

government service or private business

venture which is funded and operated

through a partnership of government

andone or more private sector companies.

Retained reserves recognise the

cumulative profits to 15 October 2018,

together with amounts transferred from

theStated capital account.

Revenue reserve recognises all profits

that are revenue in nature or have been

allocated to revenue.

Revolving credit facility (‘RCF’) A

£400 million facility provided by the

Company’s lenders with a maturity date

inNovember 2024, together with a further

£200 million of commitments maturing

in December 2022 and £400 million of

commitments maturing in January 2023.

SORP means the Statement of

Recommended Practice: Financial

Statements of Investment Trust Companies

and Venture Capital Trusts.

Stated capital account The Stated capital

account of the Company represents the

cumulative proceeds recognised from

share issues or new equity issued on

the conversion of warrants made by the

Company net of issue costs and reduced

by any amount that has been transferred

to Retained reserves, in accordance with

Jersey Company Law, in previous years.

Sustainability KPIs Sustainability metrics

in relation to the Sustainability-linked

revolving credit facility. The facility includes

targets across ESG themes aligned with

our purpose.

TCFD is the Task Force on Climate-related

Financial Disclosures.

Total return measured as a percentage,

iscalculated against the opening NAV,

netof the final dividend for the previous

year, and adjusted (on a time weighted

average basis) to take into account any

equity issued and capital returned in

the year.

Total shareholder return (‘TSR’)

isthe measure of the overall return to

shareholders and includes the movement

in the share price and any dividends paid,

assuming that all dividends are reinvested

on their ex-dividend date.

Accounts and other information

188

For further information see our website

www.3i-infrastructure.com

This report is printed on Revive 100 made from

100% FSC

Recycled certified fibre sourced from

de-inked post-consumer waste. Revive 100 isa

Carbon balanced paper which means that the

carbon emissions associated with its manufacture

have been measured and offset using the

WorldLand Trust’s Carbon Balanced scheme.

This report has been printed sustainably in the UK by

Pureprint, a CarbonNeutral

company and certified

to ISO 14001 environmental management system.

It has been digitally printed without the use of

filmseparations, plates and associated processing

chemicals, and 99% of all the dry waste associated

with this production has been recycled.

Designed and produced by Radley Yeldar

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3i Infrastructure plc

Registered office:

12 Castle Street

St. Helier, Jersey JE2 3RT

Channel Islands

T +44 (0)371 664 0445

Annual report and accounts online

To receive shareholder

communications electronically

in future, including Annual

reports and notices of

meetings, please go to:

www.3i-infrastructure.com

3i Infrastructure plc Annual report and accounts 2022

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