3i Infrastructure 3IN Half Yearly Report

  3i Infrastructure (3IN) - Half Yearly Report

RNS Number : 6051Q
3i Infrastructure PLC
08 November 2012




8 November 2012





Results for the six months to 30 September 2012



Financial highlights

                            Investment basis ^(1) Consolidated IFRS basis ^(2)
                                30 Sep     30 Sep          30 Sep       30 Sep
                                  2012       2011            2012         2011
Total return                    £30.9m     £15.9m          £30.5m       £15.9m
Total return on                   3.0%       1.6%            2.9%         1.6%
shareholders' equity ^(3)
Interim dividend per share       2.97p      2.97p           2.97p        2.97p
Net asset value                 121.6p     119.4p          121.9p       119.9p
("NAV")/share ^(4)
NAV after deducting interim     118.6p     116.4p          118.9p       116.9p
dividend
Portfolio value                £885.8m    £715.8m       £1,172.8m      £979.8m
Cash balances                  £169.9m    £310.1m         £179.2m      £318.7m

(1) The investment basis accounts for majority investments and subsidiaries
formed specifically for investment purposes in the same way as minority
investments and does not consolidate these entities as required by
International Financial Reporting Standards ("IFRS").

(2) For the consolidated IFRS basis, the total return in this measure is the
total comprehensive income attributable to equity holders of the parent and
does not include minority interests. The gross consolidated total return for
the six months to 30 September 2012 was £36.0 million (September 2011: £20.3
million).

(3) In the six months to 30 September 2011, shareholders' equity is the
time-weighted average of (i) opening shareholders' funds, less the final
prior-year dividend paid and (ii) the equity proceeds raised through the
conversion of warrants.

(4) The NAV as at 30 September 2011 was diluted to take into account the
warrants that were outstanding at that date. The warrants expired on 13 March
2012 and no further dilutive securities are outstanding.



Commentary

· Steady NAV growth - total return of £30.9 million, or 3.0% on
shareholders' equity, resulting in an NAV per share of 121.6 pence at 30
September 2012

· Strong performance in European portfolio - growth in EBITDA of
underlying operational investments (including those held in the 3i India
Infrastructure Fund) of 3.1% over the prior corresponding six-month period

· Portfolio income of £30.8 million, in line with expectations

· Interim dividend meets target distribution - interim dividend of 2.97p,
or 2.5% of opening equity



Peter Sedgwick, Chairman of 3i Infrastructure plc, said: "In a volatile market
and macroeconomic environment, the Board and Investment Adviser have remained
focused on driving value from the Company's existing portfolio to deliver
consistent returns to shareholders. Our investments have continued to perform
well in the period, building on our robust track record of returns."



Cressida Hogg, Managing Partner, Infrastructure, 3i Investments plc, added:
"Investing in assets at the appropriate price point remains key to maintaining
a track record of strong returns. We continue to seek opportunities where we
have a competitive advantage over other bidders, where we can engage at an
early stage or leverage our relationships in the market to ensure that the
level of returns to shareholders is maintained."



- ends -





For further information, please contact:



Peter Sedgwick, Chairman, 3i Infrastructure plc Tel: 01534 711 444
Silvia Santoro, investor and press enquiries    Tel: 020 7975 3258



For further information regarding the announcement of results for 3i
Infrastructure plc please see www.3i-infrastructure.com. The analyst
presentation will be made available on this website during the day.



Notes to editors



3i Infrastructure plc is a Jersey-incorporated, closed-ended investment
company that invests in infrastructure businesses and assets and is regulated
by the Jersey Financial Services Commission. The Company is building a
diversified portfolio of infrastructure investments across the globe, with a
focus on Europe and India. As of 30 September 2012, 3i Infrastructure had a
portfolio of 15 assets valued at £886 million, and net assets of £1,071
million. The Company listed on the London Stock Exchange in March 2007,
raising £703 million in an initial public offering and a further £115 million
in a subsequent placing and open offer in July 2008, and is a constituent of
the FTSE 250 index.



3i Investments plc, a wholly-owned subsidiary of 3i Group plc, is authorised
and regulated in the UK by the Financial Services Authority and acts as
Investment Adviser to 3i Infrastructure plc.



This press release is not for distribution (directly or indirectly) in or to
the United States, Canada, Australia or Japan and is not an offer of
securities for sale in or into the United States, Canada, Australia or Japan.
Securities may not be offered or sold in the United States absent registration
under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or
an exemption from registration under the Securities Act. Any public offering
to be made in the United States will be made by means of a prospectus that may
be obtained from the issuer or selling security holder and will contain
detailed information about 3i Group plc, 3i Infrastructure plc, 3i India
Infrastructure Fund and management, as applicable, as well as financial
statements. No public offering in the United States is currently contemplated.



This report of 3i Infrastructure plc for the six months to 30 September 2012
has been drawn up in reliance upon applicable English and Jersey law and the
liabilities of the Company in connection with this report shall be subject to
the limitations and restrictions provided by such law. This report may contain
certain statements about the future outlook for 3i Infrastructure plc.
Although the Company believes its 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.







Chairman's statement





3i Infrastructure plc ("3i Infrastructure" or "the Company") delivered a
stable financial performance for the six months to the end of September 2012,
growing net asset value through good income generation and the consistent
performance of the European portfolio. This growth was partly offset by the
weaker performance of the 3i India Infrastructure Fund and foreign exchange
losses from the exposure to the Indian rupee.





Performance



The total comprehensive income attributable to the equity holders of the
parent (the "total return"), on a consolidated IFRS basis, totalled £30.5
million in the six months to 30 September 2012. On an investment basis, which
the Board also uses to monitor investment performance, the total return
totalled £30.9 million, or 3.0% on shareholders' equity. This return was
supported by value growth across the European portfolio assets, which, in the
period, also generated income of £30.8 million.



The performance of the 3i India Infrastructure Fund continued to suffer from
macroeconomic uncertainty in that market, reflected in the weakness of the
Indian rupee against sterling (our exposure to the rupee is unhedged), and
from issues affecting power producers in the country, which resulted in the
decline in the mark-to-market valuation of Adani Power Limited.





Dividend



Based on the good levels of income generated in the period, the Board proposes
an interim dividend of 2.97 pence per share (September 2011: 2.97 pence per
share), which represents a 2.5% return on shareholders' equity, in line with
the Company's objective of paying an annual dividend of 5% on shareholders'
equity.





Activity in the period



The Investment Adviser assessed a number of investment opportunities in the
period. The Company added one asset to the portfolio in the six months to the
end of September 2012: the £4.9 million investment, through the 3i India
Infrastructure Fund, in a portfolio of road build-operate-transfer companies
of Supreme Infrastructure India Limited.



There was no realisation activity in the period, however the Company received
proceeds of £6.6 million from Eversholt Rail Group from the partial repayment
of a shareholder loan.



In October, after the period end, the Company announced that it had made a
commitment of £15 million to the Dalmore Capital Fund ("Dalmore"), £10 million
of which has already been drawn to fund Dalmore's £89.5 million acquisition of
a 49.9% stake in a portfolio of UK PFI assets from Interserve plc. Dalmore is
managed by Dalmore Capital Limited ("Dalmore Capital") which is run by key
members of the team that managed I^2, a secondary PFI fund in which 3i
Infrastructure previously held an investment and which generated an IRR for
the Company of 23.8% on full exit.



The investment in Dalmore builds on the Company's strong track record in
social infrastructure and provides it with access to the specialist investment
skills of the team at Dalmore Capital in the secondary PFI market. The
investment is also consistent with the Company's objective of maintaining a
degree of exposure to PFI/PPP, following last year's repayment of the residual
I^2 loan notes.





Cash balances



At 30 September 2012 the Company had cash balances of £170 million, broadly
flat compared to £173 million at the end of March 2012. Of this amount, £15
million has since been committed to Dalmore and £26 million will be paid in
January 2013 as interim dividend.





Outlook



As outlined in more detail in the Investment Adviser's review, the market for
infrastructure investment remains competitive. Against this backdrop, the
Board and the Investment Adviser have ensured that investment discipline is
maintained and that any new investment is priced at a level consistent with
maintaining the Company's good track record. In the meantime, we will remain
focused on driving value from the existing portfolio to deliver consistent
returns to our shareholders.





Investment Adviser's review



About the Investment Adviser



3i Investments plc ("3i Investments"), a wholly-owned subsidiary of 3i Group
plc ("3i Group"), acts as the investment adviser (the "Investment Adviser") to
the Company through its infrastructure investment team (the "investment
advisory team"). The investment advisory team provides advice to the Company
on the origination and completion of new investments, on the realisation of
investments and on funding requirements, as well as on the management of the
investment portfolio. The investment advisory team is managed as a separate
business line within 3i Group and operates from hubs in London and India.



3i Group was among the subscribers to 3i Infrastructure's Initial Public
Offering and subsequent Placing and Open Offer and owns 34% of the equity in
the Company.





Market and opportunities



Europe



While there have been attractive assets changing hands in the infrastructure
market over the last six months, relative price points for many deals have
been high. This reflects the strong competition for some types of assets from
investors keen to build exposure in the infrastructure asset class, for
example sovereign wealth funds and specialist infrastructure investment funds.




Most of the transactions completed over the last six months originated from
the disposal of non-core activities by large corporates seeking to deleverage
and refocus their business, or secondary sales by other infrastructure
investors. The promised drive by governments to use infrastructure investment
as an engine for growth, however, has not yet resulted in many opportunities
for the private sector, but we continue to believe that it could in the
future.



The Company's investment in Dalmore emerged from the Investment Adviser's
relationships in the infrastructure market. Dalmore is managed by key members
of the team that managed I^2, one of the investments that comprised the
Company's seed portfolio at IPO which has since been realised. Since the I^2
exit we have maintained a strong relationship with the Dalmore team. The Board
and Investment Adviser believe that the team can replicate its success at I^2
in delivering value enhancements across the portfolio and use its market
presence to source further attractive opportunities. This investment is
consistent with the Company's intention of maintaining some exposure to the
PFI/PPP market, and has the advantage of diversifying risk through an
investment in portfolios, rather than single projects.





India



Transaction activity has declined in India over the past two years, as a
result of a number of factors, including lower GDP growth rates, a growing
fiscal deficit, currency volatility, persistently high inflation and high
interest rates. While the fundamental case for infrastructure development (and
for private involvement in this) remains unaltered, there are challenges in
this market at present. In addition, the Indian power sector generally has
suffered from adverse factors, including a shortfall in domestic coal
production and sharp rises in the cost of imported fuel.



The 3i India Infrastructure Fund (the "Fund") made a new investment in the
period, in the build-operate-transfer road portfolio of Supreme Infrastructure
India Limited. 3i Infrastructure contributed £4.9 million towards that
investment. The Fund is nearing the end of its investment period, and we do
not expect significant new investment activity from the Fund for the remainder
of the year.





Pipeline and outlook



We are currently assessing a number of investment opportunities for the
Company. As part of the XLT consortium (which also includes Siemens and
Innisfree), we continue to progress negotiations with the Department for
Transport to achieve financial close for the Thameslink procurement project,
for which the consortium is preferred bidder.



Investing in assets at the appropriate price point remains key to maintaining
a track record of strong returns in the future, and in this competitive
environment the Board and the Investment Adviser have maintained their pricing
discipline, withdrawing from sale processes on a number of occasions. The
Investment Adviser continues to seek opportunities where it has a competitive
advantage over other bidders, where it can engage at an early stage or
leverage market relationships to ensure that the level of returns to
shareholders is maintained.





Portfolio



Table 1 below summarises the valuation and movements in the portfolio, as well
as the return per asset, for the six months to 30 September 2012, on an
investment basis. Tables 2, 3 and 4 below illustrate the breakdown of the
portfolio by geography, sector and maturity at 30 September 2012. Table 5
illustrates the distribution of the portfolio in the risk/return framework.



Table 1
                                                                                                    
Portfolio summary on an investment basis (£m)
               Directors'                                            Directors'
                valuation Investment Divestment              Foreign  valuation                  Asset
                                                                                                 total
                 31 March     in the     in the    Value    exchange         30   Profit Income return
                                                                      September       on     in     in
Portfolio            2012     period     period movement translation       2012 disposal    the    the
assets                                                                                   period period
Anglian Water       209.4          -          -      6.3           -      215.7        -    7.5   13.8
Group
Elenia              201.0          -          -      7.6       (8.5)      200.1        -      -  (0.9)
Eversholt Rail      154.2          -      (6.6)      2.3           -      149.9        -    9.0   11.3
Group
Oystercatcher       118.2          -          -      1.1       (5.1)      114.2        -   11.2    7.2
3i India            114.2        4.9          -  (7.9)^1       (1.1)      110.1        -      -  (9.0)
Infrastructure
Fund
Elgin                42.0          -      (0.2)      0.8           -       42.6        -    1.3    2.1
Octagon              33.3          -          -      0.5           -       33.8        -    1.0    1.5
Alpha Schools        18.5          -          -      0.9           -       19.4        -    0.8    1.7
T2C                     -          -          -        -           -          -        -      -      -
                    890.8        4.9      (6.8)     11.6      (14.7)      885.8        -   30.8   27.7
1 Includes a £3.8 million negative impact from US$/rupee exchange movements.





Table 2

Portfolio by geography

UK and Ireland     52%
Continental Europe 36%
Asia               12%



Table 3

Portfolio by sector

Utilities             52%
Transportation        37%
Social Infrastructure 11%





Table 4

Portfolio by maturity

Mature             88%
Operational growth 11%
Early stage         1%





Table 5
Risk/return spectrum and asset distribution
Social Infrastructure   Core infrastructure    Hybrid infrastructure
/ PPP/PFI
· Three assets         · Four assets         · 3i Infrastructure has a
                                               US$250 million commitment to
- Elgin: a          - Anglian Water    the 3i India Infrastructure
portfolio of 16 school  Group: the fourth      Fund, 73% drawn at 30 September
and community           largest water supply   2012
healthcare projects     and wastewater
                        company in England     · This is a US$1.2 billion
- Octagon:          and Wales              fund focusing on the port,
concession company to                          airport, road and power sectors
build, operate and      - Elenia: owns
maintain the Norfolk    the second largest     · Seven assets
and Norwich University  electricity
Hospital                distribution network   - three in the power sector
                        and a district
- Alpha Schools: a  heating business in    - three in the roads sector
portfolio of 11         Finland
schools in the                                 - one in the ports sector
Highlands of Scotland   - Eversholt Rail
                        Group: one of the      Of the assets above, one (the
In October 2012 the     three leading rail     Build-Operate-Transfer road
Company made a £15      rolling stock          portfolio of Supreme
million commitment to   companies in the UK    Infrastructure India Limited)
the Dalmore Capital                            was acquired by the Fund in the
Fund, which invests in  - Oystercatcher:   period
secondary PFI projects  holding company
                        through which
                        3i Infrastructure
                        invested in stakes in
                        three oil storage
                        facilities

                        No new additions in
                        the period

                        
         11%                     77%                         12%
 £96m portfolio value   £680m portfolio value    £110m portfolio value at 30
          at                     at                    September 2012
  30 September 2012       30 September 2012





Movements in portfolio value



As set out in Table 6, the portfolio was valued at £885.8 million at 30
September 2012, compared to £890.8 million at 31 March 2012. The value of the
portfolio remained broadly flat due to low levels of investment and divestment
activity, and as value growth of £11.6 million was more than offset by
reported foreign exchange losses of £14.7 million.





Table 6
Reconciliation of the movement in portfolio value on an investment basis (£m)
Opening portfolio value at 1 April 2012                                 890.8
Investment                                                                4.9
Capital proceeds                                                        (6.8)
Unrealised value movement ^(1)                                           11.6
Exchange movement                                                      (14.7)
Closing portfolio value at 30 September 2012                            885.8



(1) Includes a £3.8 million negative impact from US$/rupee exchange movements.
    Exchange movements are described in Table 7.





Investment



There was limited investment activity in the period. At the end of January
2012, the 3i India Infrastructure Fund entered into an agreement to acquire a
minority stake in a portfolio of road build-operate-transfer ("BOT") companies
of Supreme Infrastructure India Limited. The transaction closed on 3 July
2012, with the Fund investing US$35.9 million. 3i Infrastructure invested
US$7.5 million (£4.9 million) through the Fund as its share in this
transaction.





Divestment



There was no realisation activity in the period. However the Company received
proceeds of £6.6 million from Eversholt Rail Group from the partial repayment
of a shareholder loan. In addition, £0.2 million was received from Elgin
following a partial repayment of a shareholder loan.





Unrealised value movement



As shown in Table 1, overall the portfolio generated a total unrealised value
gain of
£11.6 million (September 2011: £18.1 million loss), with the European
portfolio achieving robust returns in the period, increasing in value by £19.5
million. This positive performance was partially offset by weaker performance
in India. The valuation of the Company's holding in the 3i India
Infrastructure Fund declined by £7.9 million in the period.





Core portfolio

The core portfolio generated a good value uplift in the period, with
unrealised value growth of £17.3 million, driven by the continued strong
operational performance of the underlying investments. This was offset in most
cases by income receipts.



The valuation of Anglian Water Group (£215.7 million at the end of September
2012, compared to £209.4 million six months earlier) benefited from a number
of positive factors, including the end of drought conditions following a
period of intense rainfall and the successful refinancing of new debt at
attractive rates. AWG is performing in line with its regulatory settlement,
and is making good progress in the implementation of its capital expenditure
programme.



Elenia (formerly Lakeside Network Investments) was valued at £200.1 million at
30 September 2012 compared to £201.0 million six months earlier. While the
value decreased marginally in sterling terms, the underlying value of the
business increased by £7.6 million in the period, reflecting the resolution,
post acquisition, of a number of outstanding matters with the vendor. Pending
the finalisation of a post-acquisition corporate restructuring, the Company
has not yet accrued or received income from Elenia, which has resulted in a
higher valuation while undistributed cash is retained within the business.
These positive factors were, however, more than offset by an £8.5 million
foreign exchange loss, as the investment is denominated in euro. The Company's
euro exposure is nearly fully hedged, as set out in more detail in Table 7.



Eversholt was valued at £149.9 million at the end of September, which after a
loan repayment of £6.6 million is broadly flat compared to the March valuation
of £154.2 million. The valuation benefits from Eversholt's continued strong
operational performance in the period, which has been balanced by
distributions of income.



The valuation of Oystercatcher (£114.2 million, compared to £118.2 million six
months earlier) reflects a modest value uplift of £1.1 million, which was more
than offset by income paid to 3i Infrastructure in the period, and by foreign
exchange losses of £5.1 million. The three terminals continue to perform well,
in line with expectations.





PFI portfolio

The PFI portfolio achieved unrealised value growth of £2.2 million in the
period (September 2011: £1.6 million). As in previous periods, this was driven
by the continued robust operational performance of the assets, offset by the
income paid to 3i Infrastructure in the period.





3i India Infrastructure Fund

The valuation of the Company's investment in the 3i India Infrastructure Fund
declined from £114.2 million at the end of March 2012 to £110.1 million at 30
September 2012, after new investment of £4.9 million. This movement was driven
principally by a further reduction in the valuation of Adani Power Limited,
following a 23% decline in its share price. In addition to losses from the
depreciation of the rupee, the valuation of the power sector assets in the
portfolio declined in the period, due to factors including the availability
and pricing of fuel, the terms of power purchase agreements with State
Electricity Boards and other market factors. These losses were partially
offset by continued progress in the development of the Fund's port and road
assets (some of which began tolling), which contributed to a net value
increase of £2.4 million in the period. The performance of the assets in the
3i India Infrastructure Fund is described in more detail in the 3i India
Infrastructure Fund asset review.





Foreign exchange impact



As shown in Table 7, the reported foreign exchange loss on investments of
£14.7 million reduced to a net £5.9 million loss after the impact of other
foreign exchange related movements, including the impact of the foreign
exchange hedging programme.



The Indian rupee depreciated by 4.4% against sterling in the period, resulting
in aggregate foreign exchange losses of £4.9 million for the Company, as its
exposure to the Indian rupee through the 3i India Infrastructure Fund remains
unhedged. The Board monitors both the rupee exposure and the cost/benefit of
hedging that exposure on a regular basis.



During the period, the euro also depreciated by 4.2% against sterling, but the
losses were almost entirely offset by the impact of the foreign exchange
hedging programme undertaken to provide mitigation from movements in that
exchange rate, resulting in a net negative impact of only £1.0 million.



Table 7
Impact of foreign exchange movements on portfolio value six months to 30
September 2012 (£m)
                                                                           Net
                                                       £ / rupee  £ / € impact
Translation of assets £ / US$                              (1.1)         (1.1)
Translation of assets £ / €                                      (13.6) (13.6)
Reported foreign exchange losses on investments                         (14.7)
Asset valuation US$ / rupee ^(1)                           (3.8)         (3.8)
Movement in the fair value of derivative financial                 12.6   12.6
instruments (£ / € hedging)
Other foreign exchange movements                                           8.8
Net foreign exchange losses                                (4.9)  (1.0)  (5.9)

(1) Contained within Unrealised profits/(losses) on revaluation of investments
in Table 9.





Underlying asset performance



The fully operational assets owned by the Company performed robustly in the
period.



Earnings before interest, tax, depreciation and amortisation ("EBITDA") across
the portfolio increased by 3.1% for the six months to 30 September 2012
compared to the prior comparable six-month period. This figure is calculated
on a weighted average basis and the assets included in this analysis are those
that have been operational and held by the Company for one year or more: AWG,
Eversholt, Oystercatcher, Elgin, Octagon, Alpha Schools, and within the 3i
India Infrastructure Fund, Adani Power, Krishnapatnam Port and Soma
Enterprise. KMC Roads is excluded from this analysis, as a direct
period-to-period comparison is not possible.



The core investments performed well in the six months. AWG's EBITDA increased
by 3.1%, as the performance of Morrison Facilities Services (a non-regulated
subsidiary) improved. Eversholt's EBITDA increased by 4.1% supported by the
delivery of a new fleet during the last financial year and Oystercatcher's by
9.9%, due to the impact of contract renewals at improved rates and benefits
from foreign exchange rate movements.



For the Indian assets overall, aggregate profitability was lower due to
macroeconomic and market issues affecting their performance. These are
described in more detail in the 3i India Infrastructure Fund review.





Summary of valuation methodology



Investment valuations are calculated at the half year and at the financial
year end by the Investment Adviser and then reviewed and approved by the
Board. Investments are reported at the Directors' estimate of fair value at
the reporting date.



The valuation principles used are based on International Private Equity and
Venture Capital valuation guidelines, generally using a discounted cash flow
("DCF") methodology (except where a market quote is available), which the
Board considers to be the most appropriate valuation methodology for unquoted
infrastructure equity investments.



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

- quoted market comparables

- regulated asset base multiples



The UK government is currently undertaking a review of the methodology used
for calculating RPI. As at the end of September 2012, 37.0% of the portfolio
had revenues directly linked to UK inflation. The Board and Investment Adviser
will continue to monitor the outcome of the RPI review, as ongoing RPI is a
key factor in some asset valuation models.





Discounted cash flow and discount rates



As at 30 September 2012, 96.7% of the portfolio was valued on a DCF basis. The
weighted average discount rate applied at that date was 12.6% (September 2011:
13.1%), deriving from a range of 8.2% (for an operational PFI asset) to 20.6%
(for a project within the 3i India Infrastructure Fund). There were no changes
to individual discount rates in this six-month period. The decrease in the
weighted average discount rate compared to September 2011 is due principally
to the addition of Elenia to the portfolio.



Table 8 shows the movement in the weighted average discount rate applied to
the portfolio at the end of each six-month period since inception.



Table 8
Portfolio weighted average discount rate (%)
September 2007                          13.1
March 2008                              12.4
September 2008                          12.0
March 2009                              13.8
September 2009                          12.8
March 2010                              12.5
September 2010                          12.5
March 2011                              13.2
September 2011                          13.1
March 2012                              12.6
September 2012                          12.6



The discount rate applied to each investment is reviewed at each valuation
date. The rate selected reflects the risk inherent in the business, taking
into account sustained movements in the "risk-free" rates of return in the
relevant country and appropriate risk premia.



Risk-free rates (equating to 10/30-year government bond yields) have declined
moderately since March 2012. In light of current market conditions and asset
specific factors, reflected in our assessment of risk premia and of current
market pricing, the discount rates used to value the assets since the last
valuation at 31 March 2012 have remained unchanged.





3i India Infrastructure Fund



The Company's investment in the 3i India Infrastructure Fund was valued as the
Company's share of net assets held by the Fund. Within the Fund valuation,
Adani Power, which has been a listed company since August 2009, was valued on
a mark-to-market basis using closing bid prices. All other assets were valued
on a DCF basis, with the exception of a portion of Soma Enterprise's
valuation, which was calculated using earnings multiples, and a small element
of the Krishnapatnam Port valuation, derived from the value attributable to a
put option, which provides downside valuation protection.





Activity since the period end



Investment activity



On 4 October 2012 the Company made a commitment of £15.0 million to the
Dalmore Capital Fund ("Dalmore"). Of this commitment, £10.0 million was
advanced in October 2012 to finance Dalmore's £89.5 million acquisition from
Interserve plc of a 49.9% stake in two vehicles that together hold 19 UK PFI
assets, including hospitals and schools.



3i Infrastructure's commitment to Dalmore will not result in the Company
incurring fees above the level normally due to the Company's Investment
Adviser under the Investment Advisory Agreement.



More details on the strategic rationale for the investment are provided in the
Market and Opportunities section.





Investment Advisory Agreement



In November 2012 the Company signed an amendment to its Investment Advisory
Agreement, extending it to give the Company further exclusivity with the
Investment Adviser to cover the cash balances available for investment at 30
September 2012. There were no other amendments to the terms of the agreement.





Review of investments



Anglian Water Group



Cost                             £161.9m
Opening value                    £209.4m
Closing value                    £215.7m
Equity interest                    10.3%
Income in the period               £7.5m
Asset total return in the period  £13.8m
Valuation basis                      DCF

The value on an IFRS basis is £314.9 million.





Description



Anglian Water Group Limited ("AWG") is the parent company of Anglian Water,
the fourth-largest water supply and wastewater company in England and Wales as
measured by regulatory capital value. The majority of the group's revenue is
earned through tariffs regulated by Ofwat and linked to RPI. The group also
includes Morrison Facilities Services, a support services business focused on
the local authority and social housing sectors and a small property business.



The investment is held through 3i Osprey LP, an intermediary limited
partnership whose partners comprise other third parties (including 3i Group,
which has a small interest) and which is separately managed by 3i Investments.





Investment rationale



AWG was taken private in 2006 by a group of investors, including Canada
Pension Plan, Colonial First State, Industry Funds Management and 3i Group,
which "seeded" part of its AWG holding into 3i Infrastructure when it was set
up in 2007. The business has strong infrastructure characteristics:



· a regulated near-monopoly position in its geographical area for the
provision of water supply and wastewater treatment;

· stable and predictable earnings and cash flows through RPI-linked tariffs;
and

· largely predictable operating costs.



In addition, AWG has attractive fundamentals:



· a strong management team;

· a relatively modern asset base; and

· operations in a geographic region with high population growth and
relatively low industrial exposure, limiting cyclical correlation.





What has been achieved in the period of ownership



AWG has flourished under private ownership. It has refocused on its core
business, selling Morrison Utilities Services and much of its property
portfolio. The company has been able to adopt a more efficient capital
structure compared to listed peers, and to distribute a higher proportion of
cash flows to shareholders, resulting in a strong yield. The Regulated Capital
Value ("RCV") has grown steadily, underpinned by a comprehensive capital
expenditure programme, which has been maintained for the 2010-2015 regulatory
period.



A new management incentive scheme was put in place post investment, aligning
compensation with long-term value growth rather than short-term share price
performance. The management now balances long-term planning, for example to
respond to the challenges of climate change, with a clear focus on operational
efficiency.





Developments in the period



AWG has continued to perform robustly during the period. Anglian Water is
making good progress in the implementation of its regulatory settlement, with
a strong focus on its wide-ranging efficiency programme.



The key issue facing Anglian Water at the end of March 2012, when the Company
last reported, was the drought which followed two unusually dry winters. In
response to this situation, AWG had obtained drought permits from the
Environment Agency to allow increased abstraction from waterways, and started
the implementation of incremental capital expenditure to improve the
resilience of water supply and encourage water conservation. In addition, a
hosepipe ban was imposed on 5 April 2012, just at the start of an extended
period of very wet weather. The heavy rains seen between April and June have
relieved the drought conditions, water resources have been replenished, and
the hosepipe ban was lifted on 14 June 2012. However, the incremental capital
expenditure implemented as a result of the drought has meant that the income
received by the Company from AWG in the period was lower than for the first
six months of last year.



Anglian Water continues to perform strongly against its peers, ranking second
in Ofwat's Service Incentive Mechanism survey for the year ending March 2012
and first across the last three quarterly periods to June 2012.



Following the publication of its Water White Paper in December 2011, the
Government published its draft Water bill in July 2012, setting out a number
of changes to the structure of the industry, including the extension of
competition for business customers, changes to the abstraction regime to
encourage more efficient use of water resources and measures to help the
industry manage bad debts. Anglian Water remains pro-active across the broad
range of issues and will continue to engage widely to ensure that it
influences, and is well placed to respond to, the changes that will ensue.



The performance of Morrison Facilities Services, a subsidiary of AWG active
principally in the provision of repairs and maintenance services to the social
housing sector, has stabilised during the period. A number of measures were
implemented by management to respond to lower demand levels from local
authorities and restore profitability.





Elenia (formerly Lakeside Network Investments)





Cost                                  £194.8m
Opening value                         £201.0m
Closing value                         £200.1m
Equity interest                         39.3%
Asset total return in the period ^(1) £(0.9)m
Valuation basis                           DCF

(1) Includes an unrealised foreign exchange loss of £8.5 million.





Description



Elenia holds 100% of two companies: Elenia Verkko Oy ("Elenia Verkko") and
Elenia Lämpö Oy ("Elenia Lämpö").



Elenia Verkko is the second-largest electricity distribution network in
Finland. Headquartered in Tampere, it serves around 400,000 customers in South
West Finland, and has a 12% market share. The business is regulated on a
four-year cycle, delivering a set return on its regulated asset base.



Elenia Lämpö operates 17 local district heating networks, with strong market
shares in their areas, and owns the seventh longest network in Finland.
District heating, which involves the pumping of hot water directly into homes
from central hubs for heating and general purposes, is not regulated in
Finland.



The investment is held through 3i Networks Finland LP, an intermediary limited
partnership with one other third party and which is managed separately by 3i
Investments.





Investment rationale



3i Infrastructure purchased Elenia from Vattenfall AB in January 2012 in
consortium with 3i Group plc, GS Infrastructure Partners and Ilmarinen Mutual
Pension Insurance Company.



Elenia has strong infrastructure characteristics:



· Elenia Verkko operates in a stable and transparent regulatory environment,
with regulatory incentives providing opportunities for value-accretive growth;

· the businesses are profitable, and provide inflation linkage. This is
likely to support a robust yield to 3i Infrastructure over the long term; and

· Finland is an attractive market, providing opportunities for consolidation
over the medium term.





Developments in the period



Elenia's governance was enhanced through the appointment of new independent
chairmen to the boards of each business, as well as through a number of
management appointments to further strengthen the executive teams, including a
new Finance Director for Elenia Verkko.



The businesses, supported by the consortium, have made progress in the
implementation of a post-acquisition corporate reorganisation and merger. This
process is set to complete by the end of the current financial year, which
should allow for distributions to commence from the holding company to
shareholders, including 3i Infrastructure.



The consortium has also engaged with the management team of Elenia Verkko to
update and enhance its capital expenditure plans. A number of acquisition
opportunities were also examined, with the first bolt-on acquisition completed
in August 2012. This was a small distribution company in which Elenia already
owned a 50% holding. Elenia purchased the remaining 50% of the shares from
Lahti Energia. This acquisition reinforces the Company's thesis on
consolidation opportunities in the sector.



Finally, the businesses were rebranded, with the new "Elenia" name
successfully launched in May 2012, reinforcing the separation from Vattenfall
to domestic audiences.





Eversholt Rail Group



Opening cost                     £136.4m
Closing cost                     £129.7m
Opening value                    £154.2m
Closing value                    £149.9m
Equity interest                    33.3%
Capital repayment in the period    £6.6m
Income in the period               £9.0m
Asset total return in the period  £11.3m
Valuation basis                      DCF





Description



Eversholt Rail Group ("Eversholt") is one of the three leading rail rolling
stock companies in the UK, and owns approximately 29% of the current UK
passenger train fleet. Its 19 fleets, predominantly weighted towards electric
trains, are leased to 12 Train Operating Companies ("TOCs"). Although its
primary revenue stream consists of lease payments from TOCs, it also owns a
freight fleet, which accounts for less than 10% of its total value.



The rolling stock companies are not directly regulated, and have instead
entered into codes of practice, monitored by the Office of Rail Regulation,
under which they agree to work fairly and reasonably with their customers.





Investment rationale



3i Infrastructure, in consortium with Morgan Stanley Infrastructure Partners
and STAR Capital Partners, acquired 100% of Eversholt in December 2010.



Eversholt is a well established infrastructure business and fits well with 3i
Infrastructure's

investment mandate:



· it has strong market fundamentals, with its fully utilised fleets likely
to retain value in the long term, due to strong passenger demand and the high
cost of new trains;

· it has high quality cash flows contracted for the medium term through
lease agreements with the TOCs; and

· it has a defensive fleet portfolio, weighted towards electric trains, with
a good operational history, leased to a diversified customer base.





What has been achieved in the period of ownership



The consortium has strengthened Eversholt's governance through the appointment
of several highly experienced non-executive directors to the Irish and UK
boards and the establishment of audit and remuneration committees with
investor representation. Further executive appointments were made to the Irish
and UK businesses to bolster Eversholt's technical, legal and financial
resources, positioning it well to manage the significant increase in workload
during the next two to three years of rail franchise tendering.



Eversholt's capital structure was de-risked through the issuance of three
long-dated public bonds for a total of £1.1 billion, priced on attractive
terms and attracting strong demand from public market investors, significantly
reducing the ongoing debt servicing costs and refinancing risks.



The consortium has engaged closely with the management team to assess a range
of capital investment opportunities, both to add further trains to the overall
fleet and to invest in upgrading existing assets to provide better passenger
experience and improved reliability, at good value for money for operators.





Developments in the period



Eversholt has continued to perform strongly in the period, with its EBITDA
increasing by 4.1% compared to the prior comparable six-month period. This has
allowed Eversholt to repay an additional £6.6 million of its shareholder loan.
The Company also accrued regular interest payments of £9.0 million. The
proceeds of £6.6 million account for the difference between opening and
closing cost in the table above.



The key issue currently affecting the business is the refranchising and
re-leasing of current fleets. In August 2012, the Department for Transport
announced that it had selected FirstGroup to run the new 15-year Intercity
West Coast franchise. Following an internal assessment of the process, the
Department for Transport revoked the award of that franchise and suspended a
number of other refranchising processes, pending a review. While Eversholt
does not currently have rolling stock on lease for the Intercity West Coast
franchise, it does have assets on lease to the other affected franchises. The
delays in the refranchising programme are unfortunate, but should not have a
material impact on Eversholt's valuation or short-term profitability.



Market developments have provided a number of asset management opportunities
for Eversholt. The company signed Heads of Terms to provide asset management
services to the Cross London Trains ("XLT") consortium, the preferred bidder
for the Thameslink rolling stock procurement programme, and is seeking a
similar role for Crossrail.





Oystercatcher





Cost                                                      £84.5m 
Opening value                                            £118.2m 
Closing value                                            £114.2m 
Equity interest                                            45.0% 
Income in the period                                      £11.2m 
Asset total return in the period ^(1)                      £7.2m 
Valuation basis                                              DCF 
(1)                   Includes an unrealised foreign exchange loss of £5.1
                      million.
The value on an IFRS basis is £272.8 million.





Description



Oystercatcher Luxco 2 S.à r.l. ("Oystercatcher") is the holding company
through which 3i Infrastructure invested in 45% stakes in three subsidiaries
of Oiltanking GmbH ("Oiltanking"), located in the Netherlands, Malta and
Singapore. These businesses provide over 3.6 million cubic metres of oil,
petroleum and other oil-related storage facilities and associated services to
a broad range of clients, including private and state oil companies, refiners,
petrochemical companies and traders.



Oiltanking is one of the world's leading independent storage partners for
oils, chemicals and gases, operating 73 terminals in 22 countries with a total
storage capacity of 19.7 million cubic metres.





Investment rationale



The investment was completed in August 2007. The key elements of the
investment case were:



· strong projected demand for oil and oil-related products;

· storage capacity is scarce, and a key component of the oil and oil product
supply chain, resulting in low customer turnover;

· the three terminals are defensively located in key trading hubs in
Amsterdam, Malta and Singapore, and have a strong market position;

· contracts are let on a use-or-pay basis with fixed terms of up to 10
years, often with tariffs linked to local inflation rates, resulting in
reliable cash flows; and

· the transaction allowed 3i Infrastructure to partner with a dominant
player in the oil storage market, with a strong operational reputation.





What has been achieved in the period of ownership



The 2007 investment case has largely been confirmed, with the investment
performing well. All storage capacity has been fully let throughout the period
of investment, and throughput levels have been high. All three terminals have
been largely unaffected by the global economic slowdown, even though the
"flattening" of the forward curve in recent years has squeezed oil trading
margins and increased customers' focus on storage costs during contract
renewal negotiations. However, global trade in petroleum products continues to
increase, leading to further growth in demand for oil storage.



The Investment Adviser has been actively involved in the assessment of a range
of capital expenditure project proposals that have delivered long-term value
accretion.



In Singapore, a 160,000 cubic metre expansion project was approved in 2008 to
accommodate increasing demand from adjacent refineries and petrochemical
industries. This was completed in June 2009, with the capacity let on a
use-or-pay basis under a long-term contract to an existing customer.



In Amsterdam, a 42,000 cubic metre expansion project to provide dedicated
storage for biodiesel products for a new production facility adjacent to the
site was completed in June 2011. This capacity was pre-let on a use-or-pay
basis. Several smaller investments were approved to upgrade throughput and
customer service. In Malta, investment in a new 13,000 cubic metre tank was
approved in 2011, completed in February 2012, and let on a use-or-pay basis to
an existing customer.



Since investment, total capacity at the three terminals has increased by 23%,
while annual throughput has increased by 21%.





Developments in the period



All three terminals have performed in line with expectations in the period.



Market conditions have not been as favourable as in previous years, as trading
margins remain squeezed by a shallower forward curve, as well as by lower
volatility in oil prices. Despite this, all storage capacity has continued to
be fully let throughout the period, with strong contract renewal rates, and
throughput levels have remained high.



In Malta, the construction of an LPG pipeline to transport LPG imports from
Oiltanking's jetty to a new storage facility (owned by GASCO Energy Ltd) was
completed within budget, and the first cargo was received in June. Completion
of this pipeline is important, as a smooth supply of LPG is vital to the
Maltese economy.



In March 2012, the Company increased the discount rate used to value its
holding in Oystercatcher to reflect an increase in the refinancing risk and
greater sensitivity to interest rate and exchange rate movements, as the
acquisition facility and associated hedging instruments approach maturity in
2014. The Investment Adviser has commenced the process to refinance the
acquisition facility and expects to complete the refinancing significantly
before maturity.





PFI portfolio



Cost                             £67.6m
Opening value                    £93.8m
Closing value                    £95.8m
Equity interest
           Elgin                  49.9%
           Octagon                36.8%
           Alpha Schools          50.0%
Income in the period              £3.1m
Asset total return in the period  £5.3m
Valuation basis                     DCF





Description



Elgin Infrastructure Limited ("Elgin") is a portfolio of PFI project
investments, comprising five schools projects and 11 community healthcare
schemes, all of which are fully operational, under concessions of up to 32
years. The portfolio companies receive inflation-linked payments to cover
services and buildings maintenance, which are subject to performance
deductions for service failures and unavailability. Facilities services are
subcontracted to Robertson Facilities Management (in 15 projects) and
Carillion Facilities Management (in one project).



Octagon Healthcare Limited ("Octagon") is a concession company under a 35-year
PFI contract to build, operate and maintain the Norfolk and Norwich University
Hospital. Construction of the hospital was completed in August 2001. Octagon
receives RPI-linked payments from the NHS Trust to cover services and
buildings maintenance, which are subject to performance deductions for service
failures and unavailability. Octagon subcontracts the provision of facilities
services to Serco.



Alpha Schools (Highland) Limited ("Alpha Schools") is a concession company
under a 30-year PFI contract to build, operate and maintain 11 new schools on
10 sites in the Highland region of Scotland. All schools are operational.
Alpha receives RPIX-linked payments from the Highland Council to cover
services and buildings maintenance, which are subject to performance
deductions for service failures and unavailability. Alpha Schools subcontracts
the provision of facilities services to Morrison Facilities Services.





Investment rationale



Exposure to social infrastructure through PFI projects provides the Company's
portfolio with lower risk, index-linked cash flows. All assets in the
Company's PFI portfolio are fully operational and deliver a robust yield.





What has been achieved in the period of ownership



All assets in the PFI portfolio have performed well through their period of
ownership, in line with or ahead of expectations, providing a good return to
the Company since inception. This has been due to engaged portfolio management
on the part of the Investment Adviser and other shareholders, as well as to
more general factors, including higher than expected inflation.



The Investment Adviser generated significant value through the sale of the
Company's holdings in Alma Mater and I^2, which were sold at significant
uplifts over cost in 2008 and 2009 respectively. The exit from I^2, which was
completed in November 2011 through the repayment of the residual vendor loan
notes, generated an IRR of 23.8%.





Developments in the period



All assets in the PFI portfolio performed well operationally during the
period, delivering good levels of income.



All 16 projects in the Elgin portfolio are performing in line with the
investment case. All service providers are performing well, with no
significant operational issues arising at any of the projects during the
period.



Octagon continues to perform well financially and operationally and has
maintained its strong working relationship with the NHS Trust and with Serco.
Serco continues to provide a good level of service to the NHS Trust. In July
2012, the hospital received the top "excellent" rating for standards of
cleanliness, food and privacy and dignity, according to the results of an
annual inspection by patient representatives, members of the public and NHS
staff.



All schools in the Alpha Schools portfolio are operating well and are
providing high standard facilities to primary and secondary school pupils in
the Highland Council region. Financial performance has been in line with
expectations. Some performance deductions had been levied last year, relating
mostly to a number of construction snagging items which remained outstanding.
These deductions were passed through to the contractors. Alpha Schools has
worked closely with the Highland Council, the facilities services provider and
the building contractor to achieve a successful resolution of these issues.
Only one defect remains outstanding, for which a remedy has now been agreed
between all parties.





T2C



Thermal Conversion Compound ("T2C") is a special purpose company established
to build, operate and maintain a waste-to-energy plant on an industrial park
near Frankfurt, Germany. A provision was taken against the value of T2C in
March 2010, due principally to significant delays in the completion of
construction. The asset remains valued at nil, as no return on the Company's
equity investment is foreseen.





3i India Infrastructure Fund



Opening cost                                                           £102.0m
Closing cost                                                           £106.9m
Opening value                                                          £114.2m
Closing value                                                          £110.1m
Partnership interest                                                     20.9%
Investment in the period                                                 £4.9m
Asset total return in the period ^(1)                                  £(9.0)m
Valuation basis                                              LP share of funds
(1)                   Includes a net foreign exchange loss of £4.9 million
                      (sterling / US$ loss of £1.1 million, and US$ / rupee
                      loss of £3.8 million).





Description



The 3i India Infrastructure Fund (the "Fund") is a US$1.2 billion fund which
closed in 2008, investing in a diversified portfolio of equity (or equivalent)
investments in India, focusing on the port, airport, road and power sectors.
3i Infrastructure committed US$250 million to the Fund. As at 30 September
2012, the Fund was 73% invested in a portfolio of seven assets:



Krishnapatnam Port Company Limited ("Krishnapatnam Port") has a concession to
develop, operate and maintain the port of Krishnapatnam in the state of Andhra
Pradesh.



Adani Power Limited ("Adani Power") focuses on the development and operation
of power plants and the sale of power generated. With operational capacity of
4,620MW and a further 4,620MW under construction, it is currently the largest
independent private power producer in India in terms of operating capacity.
Adani Power achieved a successful IPO in August 2009.



GVK Energy is developing a portfolio of power generation projects (4,047MW),
diversified by fuel type, stage of development and geography. In addition, GVK
Energy is developing two mining projects to supply coal to its own thermal
power plants.



KMC Infratech ("KMC Roads") is developing a c.1,000 kilometres portfolio of 10
"build-operate- transfer" ("BOT") road projects, one of the largest portfolios
of its kind in India.



Soma Enterprise Limited ("Soma") is one of the fastest growing infrastructure
developers in India. Its order book, valued at over US$3.2 billion, focuses
mainly on BOT road projects, but also comprises projects in the hydro power,
irrigation, railways, power transmission and urban infrastructure sectors.



Ind-Barath Utkal is building a 700MW coal-fired power plant in the state of
Orissa.



Supreme Infrastructure BOT Holdings Private Limited ("Supreme BOTs"), a
subsidiary of Supreme Infrastructure India Limited, a new US$35.9 million
investment in the period, is building a portfolio of BOT road projects.





Investment rationale



The investment case can be summarised as follows:



· the fundamentals for infrastructure investment in India are attractive,
with the current infrastructure deficit in the country providing much
opportunity for private investment;

· the Indian government actively seeks and encourages private investment in
infrastructure development and is working to mitigate some of the issues which
have affected the sector in recent months;

· the investment in the Fund offers 3i Infrastructure exposure to a
diversified pool of assets and larger investments than the Company could
access on its own account, at no additional cost to the Company; and

· the Fund is well positioned, with an established presence in its market
through its investment manager.





What has been achieved in the period of ownership



The Fund is nearing the end of its investment period, and has now built a
diversified portfolio including assets in the power, ports and roads sectors,
in line with its mandate.



The construction of all projects continues to progress. Several of the
projects, including Adani Power and Krishnapatnam Port, have increased
significantly in size since the Fund's investment. Despite this, the financial
performance and valuation of the Fund's assets has been affected by a number
of market and other external factors.



Overall, the Board is satisfied that appropriate action is being taken to
manage the performance of the Fund's assets within the constraints of the
macroeconomic and market challenges.





Developments in the period



The performance of the assets in the 3i India Infrastructure Fund has been
variable in the period. While the road and port assets have continued to
perform in line with expectations and have increased in value in the six
months to the end of September, the power assets have continued to be affected
by a number of factors, including:



· the availability of domestic coal and gas: Coal India Limited, the largest
coal producer in India, and a nationalised company, has been struggling to
match its output to demand from power producers, and so have many gas
producers;

· the pricing of coal: the domestic coal shortage and the depreciation of
the rupee against most currencies have affected the price of coal; and

· the strain on State Electricity Boards' financial position: SEBs have been
financially constrained for a number of years and as a result banks are now
reluctant to lend to them. This has constrained their ability to enter into
new long-term power purchase agreements (PPAs) with power producers.



In February 2011, the Indian government responded to the issues arising from
coal shortages by directing Coal India to sign fuel supply agreements with
power plants that have a majority of their offtake tied up in long-term PPAs,
with a minimum commitment of 80% of the annual fuel requirement of the plant.
Since then this directive has been strengthened through the implementation of
a more stringent penalty structure for Coal India, should it not honour its
commitments. It is hoped that this should alleviate the coal shortage in the
medium term.



On the positive side, merchant tariffs have remained relatively buoyant, due
to the increasing demand/supply gap, but also due to a reduction in hydro
output as a result of below average monsoon rainfall.



The Fund's port asset, Krishnapatnam Port, has continued to be affected by an
iron ore export ban, which has been lifted, but the impact of which will
affect exports for some time. The company has continued to focus on changing
its cargo mix and has performed well in the period, supported by continued
increases in its general cargo and container volumes.



The road assets are making progress in line with the investment case. All
companies have added to their order books in the period and construction works
are broadly progressing according to the agreed timetables. 55kms of new roads
have begun tolling in the six months to the end of September.



While macroeconomic and political risk factors remain high, with GDP growth
slowing further, it appears that fiscal tightening has eased during the
period. While central bank authorities are unlikely to lower interest rates in
the medium term, any further tightening is unlikely at present.





Returns and risks





Key performance indicators



Total return                           Dividend
Objective   To provide shareholders    Objective   To target an annual
            with a total return of 12%             distribution yield of 5% of
            per annum, to be achieved              the opening NAV^(1).
            over the long term.
Measurement Total return for the       Measurement Dividend for the financial
            period expressed as a                  year, expressed as a
            percentage of opening                  percentage of opening
            shareholders' equity^(1).              shareholders' equity^(1).
Status      3.0% total return for the  Status      Interim dividend of 2.97p
            six months to 30 September             equates to a 2.5%
            2012.                                  distribution on opening
                                                   shareholders' equity for
                                                   the half year.
(1) Opening NAV and opening shareholders' equity are net of the final dividend
paid in the prior year and adjusted to take into account any further equity
issued in the period.





Table 9                                                                 
Summary of total return on an investment basis (£m)                     
                                                                  Consolidated
                                                                    IFRS basis
                                            Six months Six months   Six months
                                             to 30 Sep  to 30 Sep    to 30 Sep
                                                  2012       2011         2012
Realised profits over fair value on the              -        2.1            -
disposal of investments
Unrealised profits/(losses) on the                11.6     (18.1)         15.0
revaluation of investments
Foreign exchange (losses)/gains on              (14.7)        0.7            -
investments
Capital (loss)/return                            (3.1)     (15.3)         15.0
Portfolio income
Dividends                                         17.2       19.4         24.8
Income from loans and receivables                 13.6       16.0         14.7
Income from quoted debt investments                  -        1.4            -
Fees payable on investment activities            (0.8)      (0.7)        (0.8)
Interest receivable                                0.6        0.8          0.6
Investment return                                 27.5       21.6         54.3
Advisory, performance and management fees        (6.3)      (6.2)        (6.9)
payable
Operating expenses                               (1.0)      (1.1)        (1.0)
Finance costs                                    (1.4)      (1.4)        (6.4)
Movements in the fair value of derivative         12.6        2.9         12.9
financial instruments
Other net (expense)/income                       (0.5)        0.1        (0.4)
Profit for the period                             30.9       15.9         52.5
Exchange difference on translation of                -          -       (16.5)
foreign operations
Profit attributable to non-controlling               -          -        (5.5)
interests for the period
Total comprehensive income ("Total Return")       30.9       15.9         30.5





Returns



The commentary in this section analyses the key drivers of the Company's
returns according to the investment basis of preparation, as shown in Table 9.
The basis of preparation for the investment basis is shown later in this
report, along with an analysis of the key differences in accounting treatment
to information prepared in accordance with IFRS.



3i Infrastructure generated a total return for the six months to 30 September
2012 of £30.9 million, representing a 3.0% return on opening shareholders'
equity (September 2011: £15.9 million, 1.6%). The return was driven
principally by income generation of £31.4 million and by continued progress
across the European assets, but was impacted negatively by the weaker
performance of the 3i India Infrastructure Fund and by foreign exchange
losses.





Table 10
Reconciliation of movements in NAV on an investment basis (£m)
Opening NAV at 1 April 2012 ^(1)                       1,040.4
Income including interest receivable                      31.4
Unrealised value growth                                   15.4
Net foreign exchange movement^(2)                        (5.9)
Total costs including advisory fee                      (10.0)
NAV before distributions                               1,071.3
Distributions to shareholders                           (26.2)
Closing NAV at 30 September 2012                       1,045.1



(1) Net of prior year final dividend.
(2) Foreign exchange losses are described in detail in Table 7.





Capital returns



The combined unrealised value gain and foreign exchange impact for the six
months to 30 September 2012 totalled £9.5 million (September 2011: loss of
£14.5 million).



The core and PFI investments generated an unrealised value gain of £19.5
million, reflecting their continued track record of robust performance and a
good level of distributions.



Macro-economic and political issues have continued to weigh on the performance
of the 3i India Infrastructure Fund. The value of the investment in Adani
Power Limited declined by £6.1 million (before foreign exchange losses), as a
result of a 22.6% decline in its share price. The road and port assets, by
contrast, showed a net value increase of £2.4 million following further
development.



The valuation movements are described in more detail in the Movements in
portfolio value section.



Movements in foreign exchange generated overall net losses of £5.9 million on
non-sterling assets (September 2011: net losses of £8.8 million), attributable
principally to the losses incurred on the rupee exposure through the 3i India
Infrastructure Fund. The foreign exchange losses incurred from euro
denominated investments were significantly offset by the hedging programme.
This is set out in more detail in Table 7.



There were no realised capital returns in the period as the divestments were
partial repayments of loans at their carrying values.





Investment return



Portfolio income



The portfolio generated income of £30.8 million in the six-month period
(September 2011: £36.8 million), of which £17.2 million was through dividends
(September 2011: £19.4 million) and £13.6 million through interest on
shareholder loans (September 2011: £17.4 million). The overall level of income
was lower than for the comparable period last year, due to changes in the
composition of the portfolio (eg the sale of the junior debt portfolio and
repayment of the residual I^2 loan notes), and to the underlying variability
of income receivable from the portfolio companies (described below). In
addition, no income was accrued from Elenia during the period, as it is still
undergoing a corporate reorganisation and merger process. Elenia is expected
to contribute to income generation later in the current financial year,
following the completion of that process.



AWG paid a dividend of £5.1 million and interest of £2.4 million in the period
(September 2011: £10.3 million, £2.4 million). As described in the Company's
July Interim Management Statement, the dividend from AWG was lower than last
year, mainly as a result of increased spending on measures to mitigate the
effect of the drought. Further detail is set out in the AWG asset review.



Eversholt is performing well and generating good cash flows, which have
allowed it to pay down £6.6 million of its shareholder loan. The Company also
accrued interest of £9.0 million from Eversholt in the period (September 2011:
£10.4 million).



Oystercatcher paid a dividend of £11.2 million in the period (September 2011:
£7.9 million), reflecting the stable operating performance of the three oil
storage terminals. In the first six months of last year a proportion of
dividends received was retained by Oystercatcher in view of the anticipated
costs of refinancing its debt. This cash remains available to cover these
costs, hence no similar retention was made in this period. This has resulted
in an increase in the dividend flow to the Company.



The PFI assets generated income of £3.1 million, of which £0.9 million from
dividends and £2.2 million from interest on shareholder loans (September 2011:
£4.4 million, £1.2 million, £3.2 million), reflecting their stable operating
and financial performance.



Fees payable for transaction costs in relation to deals which did not reach,
or have yet to reach, final completion totalled £0.8 million in the period
(September 2011: £0.7 million).





Interest receivable



Interest income from cash and cash equivalents totalled £0.6 million
(September 2011: £0.8 million). The Company's cash balances generated interest
at an average rate of 0.6% in the period (September 2011: 0.6%).





Total income



Total income, including interest from cash balances, was £31.4 million
(September 2011: £37.6 million) for the six months to 30 September 2012. This
more than covers the proposed interim dividend of £26.2 million.





Advisory fees, performance fees and other operating and finance costs



During the six months to 30 September 2012, the Company incurred advisory fees
of £6.3 million (September 2011: £6.2 million). The advisory fee, payable to
3i plc, is calculated as 1.5% of the Gross Investment Value, which is based on
the opening portfolio value and the cost of any new investments made during
the period. The advisory fee reduces to 1.25% for any proportion of an asset
held for more than five years. As several of the Company's assets have now
been held for more than five years, the advisory fee rate chargeable has
reduced for those assets, and the overall advisory fee paid to the Investment
Adviser has remained broadly flat in this period, despite the increase in
portfolio value.



No performance fees were accrued relating to this period. For a more detailed
explanation of how fees are calculated, please refer to Note 9.



Operating expenses, comprising Directors' fees, service provider costs and
other professional fees, totalled £1.0 million in the period (September 2011:
£1.1 million).



Finance costs of £1.4 million (September 2011: £1.4 million) comprise the
arrangement and commitment fees for the Company's £200 million revolving
credit facility.



Movements in the fair value of derivatives of £12.6 million (September 2011:
£2.9 million) represent the fair value movements of the euro hedging
programme, and included a £1.5 million gain on the settlement of derivatives
at their maturity.





Balance sheet and cash flows



At 30 September 2012, the Company's net assets totalled £1,071.3 million, or
£1,045.1 million after the deduction of the interim dividend (September 2011:
£1,004.2 million), comprising the asset portfolio, valued at £885.8 million
(September 2011: £715.8 million), cash and cash equivalents of £169.9 million
(September 2011: £310.1 million), net derivative financial instruments of
£12.6 million (September 2011: £(1.8) million) and other current assets of
£6.4 million (September 2011: £8.8 million), primarily relating to accrued
income from portfolio investments and prepayments, offset by accrued operating
and financing costs of £3.4 million (September 2011: £3.2 million). A summary
balance sheet is included in Table 11.





Cash on deposit was managed actively by the Investment Adviser, including
regular reviews of counterparties and their limits, and is principally held in
AAA rated money market funds, as well as in short-term bank deposits.



There were no external borrowings on a recourse basis to the Company.





Revolving credit facility



At 30 September 2012, and at the time of reporting, the £200 million revolving
credit facility held by the Company had not been drawn.





Net asset value per share



The total NAV per share at 30 September 2012 was 121.6p (September 2011:
119.4p). This reduces to 118.6p (September 2011: 116.4p) after the payment of
the proposed interim dividend of 2.97p. There are no dilutive securities in
issue following the expiry of the Company's warrants in the previous financial
year.



Table 11
Summary balance sheet on an investment basis (£m)
                                                     Consolidated
                                                       IFRS basis
                                  As at 30  As at 30     As at 30
                                 September September    September
                                      2012      2011         2012
Assets
Non-current assets
Investment portfolio                 885.8     715.8      1,172.8
Derivative financial instruments       9.7       0.4          9.7
Total non-current assets             895.5     716.2      1,182.5
Current assets
Other current assets                   6.4       8.8          9.8
Derivative financial instruments       3.7       0.2          3.6
Cash and cash equivalents            169.9     310.1        179.2
Total current assets                 180.0     319.1        192.6
Total assets                       1,075.5   1,035.3      1,375.1
Borrowings                               -         -      (151.7)
Derivative financial instruments     (0.6)     (1.9)       (13.7)
Total non-current liabilities        (0.6)     (1.9)      (165.4)
Current liabilities
Trade and other payables             (3.4)     (3.2)        (2.6)
Derivative financial instruments     (0.2)     (0.5)        (1.9)
Total current liabilities            (3.6)     (3.7)        (4.5)
Total liabilities                    (4.2)     (5.6)      (169.9)
Net assets                         1,071.3   1,029.7      1,205.2
Equity
Stated capital account               181.6     159.3        181.6
Retained reserves                    889.7     870.4        874.6
Translation reserve                      -         -         18.2
Total shareholders' equity         1,071.3   1,029.7      1,074.4
Non-controlling interests                -         -        130.8
Total equity                       1,071.3   1,029.7      1,205.2





Risks and uncertainties



The main elements of 3i Infrastructure's risk management framework, together
with a detailed description of the principal risks and uncertainties faced by
the Company, as well as its approach to risk mitigation, are set out in the
Returns and Risk section of the 3i Infrastructure annual report. There has
been no material change to the principal risks and uncertainties faced by the
Company, or to the Company's risk management framework, since the publication
of that report.



The following provides a description of the main inherent risks and
uncertainties that are likely to impact the Company in the second half of the
financial year:



External risks - arising from external factors including political, legal,
regulatory, economic and competitor changes which affect the Company's
operations.



Investment risks - in respect of specific asset investment decisions, the
subsequent performance of an investment or exposure concentrations across the
portfolio.



Strategic risks - arising from the analysis, design and implementation of the
Company's business model and key decisions on investment growth rates and
financing, as well as the impact of the changes to the competitive environment
in which the Company operates.



Financial risks - in relation to changes in market prices and rates, currency
exchange rate volatility, access to capital markets for the refinancing of
individual investments, and the appropriate capital structure for investments.



Operational risks - arising from inadequate or failed processes, people and
systems, or from external factors affecting these.



The Company reviews the effectiveness of its risk management framework and
activities on an ongoing basis, and monitors the management of risks within
its portfolio companies. This half-yearly report makes reference to the
evolution and management of key risks, and related results and outcomes, which
should be viewed in the context of the risk management framework and principal
inherent risk factors.





Basis of preparation



Throughout the Investment Adviser's review, the Review of investments and the
Returns and risks sections, the Investment Adviser has presented the Company's
net asset value and financial results to show the return on a pro forma
investment basis. This information is in addition to the consolidated
financial statements, as required under International Financial Reporting
Standards ("IFRS"). The pro forma investment basis presentation provides an
alternative representation of the Company's net asset value, shows the
Company's cash utilisation for investment and differentiates between
non-recourse borrowings held within asset specific acquisition companies and
borrowings which may be made at the Company level. The investment basis
accounts for majority investments and subsidiaries formed specifically for
investment purposes in the same way as minority investments, by determining a
fair value for the investment, and therefore does not consolidate these
entities line-by-line as is required under IFRS.



Several adjustments to the consolidated financial statements required under
IFRS were made, in order to show returns on an investment basis. The main
adjustments are set out below.



3i Infrastructure holds 68.5% of 3i Osprey LP and 87.3% of 3i Networks Finland
LP, the vehicles through which it holds its investments in AWG and Elenia
respectively. The remaining portions of these entities are held by 3i Group
and other third parties. 3i Infrastructure is required under IFRS to
consolidate the results and balance sheet of these limited partnerships into
its financial statements on a line-by-line basis. In the investment basis
presentation, 3i Infrastructure has recognised only its share of the income
and balance sheet of 3i Osprey LP and 3i Networks Finland LP. This adjustment
has the effect of eliminating the non-controlling interest entitlement shown
on the statement of comprehensive income and the balance sheet on an IFRS
basis.



One subsidiary of the Company, 3i Primary Infrastructure 2005-06 LP, which
holds the investment in Alpha Schools, has investing partners which are
entitled to an 8.75% share of profits, once certain cash hurdle criteria are
met. Amounts due to these investing partners are treated as a non-controlling
interest on a consolidated basis but are accrued as an expense in the
investment basis.



3i Infrastructure holds two wholly-owned subsidiaries, Oystercatcher Luxco 1
S.à r.l. and

Oystercatcher Luxco 2 S.à r.l., ("Oystercatcher Luxco 1" and "Oystercatcher")
to fund the minority investment into three subsidiaries of Oiltanking GmbH.
External borrowings were made by Oystercatcher to partly fund the investments.
These borrowings are non-recourse to 3i Infrastructure. Under IFRS, the
results and balance sheet of the Oystercatcher Luxco 1 and Oystercatcher
subsidiaries are required to be consolidated into 3i Infrastructure's
financial statements on a line-by-line basis. In the investment basis
presentation Oystercatcher is not consolidated but is accounted for as a
portfolio asset held for investment purposes and is fair valued accordingly.



The Company invests in 3i India Infrastructure Holdings Limited through 3i
India Infrastructure Fund A LP, a limited partnership in which the Company is
the sole investor. This limited partnership is required to be consolidated
under the IFRS basis, but has not been consolidated under the investment
basis. It is treated as an investment and is fair valued accordingly.





Financials and other information



Consolidated statement of comprehensive income

for the six months to 30 September 2012



                                         Sixmonthsto Six months to   Year to
                                          30September  30September  31March
                                                  2012          2011      2012
                                           (unaudited)   (unaudited) (audited)
                                   Notes            £m            £m        £m
Realised gains/(losses) over fair                    -           2.1     (4.7)
value on the disposal
of investments
Unrealised gains/(losses) on the                  15.0        (21.7)       8.5
revaluation of investments
Unrealised foreign exchange losses                   -         (0.7)         -
on investments
                                                  15.0        (20.3)       3.8
Portfolio income
    Dividends receivable                          24.8          36.9      68.3
    Income from loans and                         14.7          17.0      32.5
    receivables
    Income from quoted debt                          -           1.4       1.8
    investments
    Fees payable on investment                   (0.8)         (0.7)     (1.3)
    activities
Interest receivable                                0.6           0.8       1.5
Investment return                      1          54.3          35.1     106.6
Advisory, performance and              2         (6.9)         (6.6)    (16.2)
management fees payable
Operating expenses                               (1.0)         (1.1)     (2.4)
Finance costs                                    (6.4)         (6.9)    (13.5)
Unrealised gains/(losses) in the                  11.9         (2.6)     (0.6)
fair value of derivative financial
instruments
Net realised gains over fair value                 1.0           1.0       1.3
on the settlement of derivative
financial instruments
Other income                                       0.1           0.6       0.7
Other expenses                                   (0.5)         (0.1)     (0.3)
Profit before tax                                 52.5          19.4      75.6
Income taxes                           3             -             -     (0.3)
Profit after tax and profit for                   52.5          19.4      75.3
the period
Other comprehensive income
    Exchange (losses)/gains on                  (16.5)           0.9     (4.4)
    translation of foreign
    operations
Total comprehensive income for the                36.0          20.3      70.9
period
Profit after tax and profit for the period attributable to:
    Equity holders of the parent                  45.8          15.0      59.6
    Non-controlling interests                      6.7           4.4      15.7
Total comprehensive income for the period attributable to:
    Equity holders of the parent                  30.5          15.9      55.0
    Non-controlling interests                      5.5           4.4      15.9
Earnings per share
    Basic earnings per share           6           5.2           1.8       7.0
    attributable to equity holders
    of the parent (pence)
    Diluted earnings per share         6           5.2           1.8       7.0
    attributable to equity holders
    of the parent (pence)





Consolidated statement of changes in equity

for the six months to 30 September 2012



                 Stated                              Total        Non-
                capital Retained Translation shareholders' controlling   Total
for the six
months to 30    account reserves     reserve        equity    interest  equity
September 2012
(unaudited)          £m       £m          £m            £m          £m      £m
Opening balance   181.6    855.0        33.5       1,070.1       127.2 1,197.3
Total
comprehensive         -     45.8      (15.3)          30.5         5.5    36.0
income for the
period
Net capital
returned to           -        -           -             -       (1.9)   (1.9)
non-controlling
interests
Dividends paid
to shareholders
of the Company        -   (26.2)           -        (26.2)           -  (26.2)
during the
period
Closing balance   181.6    874.6        18.2       1,074.4       130.8 1,205.2



                 Stated                              Total        Non-
                capital Retained Translation shareholders' controlling   Total
for the six
months to 30    account reserves     reserve        equity    interest  equity
September 2011
(unaudited)          £m       £m          £m            £m          £m      £m
Opening balance   117.2    845.4        38.1       1,000.7        91.3 1,092.0
Total
comprehensive         -     15.0         0.9          15.9         4.4    20.3
income for the
period
Net capital
returned to           -        -           -             -       (4.3)   (4.3)
non-controlling
interests
Conversion of
warrants into      42.1        -           -          42.1           -    42.1
ordinary shares
Dividends paid
to shareholders
of the Company        -   (24.4)           -        (24.4)           -  (24.4)
during the
period
Closing balance   159.3    836.0        39.0       1,034.3        91.4 1,125.7



                 Stated                              Total        Non-
                capital Retained Translation shareholders' controlling   Total
for the year to account reserves     reserve        equity    interest  equity
31 March 2012
(audited)            £m       £m          £m            £m          £m      £m
Opening balance   117.2    845.4        38.1       1,000.7        91.3 1,092.0
Total
comprehensive
income for the
year                  -     59.6       (4.6)          55.0        15.9    70.9
Non-controlling       -        -           -             -        28.4    28.4
interest share
of investment
purchased
during the year
Net capital           -        -           -             -       (8.4)   (8.4)
returned to
non-controlling
interests
Conversion of      64.4        -           -          64.4           -    64.4
warrants into
ordinary shares
Dividends paid        -   (50.0)           -        (50.0)           -  (50.0)
to shareholders
of the Company
during the year
Closing balance   181.6    855.0        33.5       1,070.1       127.2 1,197.3





Consolidated balance sheet

as at 30 September 2012



                                                  As at        As at     As at
                                           30September 30 September  31 March
                                                   2012         2011      2012
                                            (unaudited)  (unaudited) (audited)
                                     Notes           £m           £m        £m
Assets
Non-current assets
Investments
            Unquoted investments        4         946.5        705.5     949.1
            Debt investments held at    4             -         30.0         -
            fair value through profit
            and loss
            Loans and receivables       4         226.3        244.3     233.1
Investment portfolio                            1,172.8        979.8   1,182.2
Derivative financial instruments                    9.7          0.4       1.8
Total non-current assets                        1,182.5        980.2   1,184.0
Current assets
Trade and other receivables                         9.8         13.5       7.1
Derivative financial instruments                    3.6          0.2       0.9
Cash and cash equivalents                         179.2        318.7     183.6
Total current assets                              192.6        332.4     191.6
Total assets                                    1,375.1      1,312.6   1,375.6
Liabilities
Non-current liabilities
Loans and borrowings                            (151.7)    (164.3)     (158.3)
Derivative financial                             (13.7)     (17.8)      (15.8)
instruments
Total non-current liabilities                   (165.4)    (182.1)     (174.1)
Current liabilities
Trade and other payables                          (2.6)    (3.5)         (2.4)
Derivative financial instruments                  (1.9)    (1.3)         (1.8)
Total current liabilities                         (4.5)    (4.8)         (4.2)
Total liabilities                               (169.9)  (186.9)       (178.3)
Net assets                            1         1,205.2  1,125.7       1,197.3
Equity
Stated capital account                          181.6      159.3         181.6
Retained reserves                               874.6      836.0         855.0
Translation reserve                              18.2       39.0          33.5
Total equity attributable to equity           1,074.4    1,034.3       1,070.1
holders of the parent
Non-controlling interests                       130.8       91.4         127.2
Total equity                                  1,205.2    1,125.7       1,197.3



Directors

7 November 2012





Consolidated statement of cash flows

for the six months to 30 September 2012



                                         Sixmonthsto Six months to   Year to
                                          30September  30 September  31 March
                                                  2012          2011      2012
                                           (unaudited)   (unaudited) (audited)
                                                    £m            £m        £m
Cash flow from operating activities
Purchase of investments                          (4.9)             -   (231.3)
Proceeds from realisations of                      6.8          91.2     132.5
investments
Income received from loans and                    10.8          17.6      38.9
receivables
Income from quoted debt investments                  -           1.6       2.1
Dividends received                                24.8          36.9      68.2
Fees paid on investment activities               (0.7)         (0.4)     (0.9)
Operating expenses paid                          (1.3)         (1.5)     (2.8)
Interest received                                  0.5           0.8       1.5
Advisory, performance and management             (6.6)         (9.5)    (19.2)
fees paid
Carried interest paid                                -             -     (1.2)
Income taxes paid                                    -             -     (0.4)
Other income received                              0.2           0.6       0.8
Net cash flow from operations                     29.6         137.3    (11.8)
Cash flow from financing activities
Proceeds from the issue of share capital             -          42.1      64.4
from conversion of warrants
Interest paid                                    (4.6)         (4.9)     (9.7)
Amounts received on the settlement of              1.4           0.1       0.3
derivative contracts
Fees paid on financing activities and            (2.2)         (2.8)     (4.8)
the settlement of derivative contracts
Dividends paid                                  (26.2)        (24.4)    (50.0)
Capital contributed by non-controlling               -             -      28.4
interests
Net capital paid to non-controlling              (1.9)         (4.4)     (8.4)
interests
Net cash flow from financing activities         (33.5)           5.7      20.2
Change in cash and cash equivalents              (3.9)         143.0       8.4
Cash and cash equivalents at the                 183.6         176.3     176.3
beginning of the period
Effect of exchange rate movement                 (0.5)         (0.6)     (1.1)
Cash and cash equivalents at the end of          179.2         318.7     183.6
the period





Notes to the accounts



1 Segmental analysis
The Directors of the Company review the financial performance of the Group on
the "investment basis". However, the Directors also review information on a
regular basis that is analysed by geography and is consistent with the
consolidated accounting basis. In accordance with IFRS 8, the segmental
information provided below uses this geographic analysis of results as it is
the most closely aligned with IFRS reporting requirements. The Group only
operates in one service line, being that of an investment holding company.
Therefore no segmental analysis by service line has been produced. The Group
is an investment holding company and does not consider itself to have any
customers.



The Group received 58% (September 2011: 61%, March 2012: 70%) of its portfolio
income in the period from investments held in the UK and 42% (September 2011:
39%, March 2012: 30%) of portfolio income from investments held in Europe.
During the period, the Group received income from its investment in Oiltanking
of £16.4 million (September 2011: £20.6 million, March 2012: £29.8 million),
AWG of £10.9 million (September 2011: £18.5 million, March 2012: £29.6
million) and Eversholt of £9.0 million (September 2011: £10.4 million, March
2012: £33.0 million), which represents 42% (September 2011: 38%, March 2012:
29%), 28% (September 2011: 34%, March 2012: 29%) and 23% (September 2011: 19%,
March 2012: 33%) respectively of the total portfolio income. There was no
other income entitlement during the period (or in comparative periods) that
represented more than 10% of portfolio income. Given the nature of the Group's
operations, the Group is not considered to be exposed to any operational
seasonality or cyclicality that would impact the financial results of the
Group during the period or the financial position of the Group at 30 September
2012.
                                    UK and     Continental
                               Ireland^(1)      Europe^(2)      Asia     Total
for the six months to 30                £m              £m        £m        £m
September 2012 (unaudited)
Investment return
Unrealised gains/(losses)             13.7             9.6     (8.3)      15.0
on the revaluation of
investments
Portfolio income                      22.6            16.1         -      38.7
Interest receivable                    0.6               -         -       0.6
Investment return /(loss)             36.9            25.7     (8.3)      54.3
Interest payable                         -           (4.6)         -     (4.6)
Other net                              2.9           (0.1)         -       2.8
income/(expenses)
Profit/(loss) before tax              39.8            21.0     (8.3)      52.5

as at 30 September 2012 (unaudited)

Balance sheet
Fair value of investment            560.6        502.1      110.1      1,172.8
portfolio
Cash and cash equivalents           168.2         11.0          -        179.2
Derivative financial                 13.3            -          -         13.3
instruments
Other assets                          8.0          1.7        0.1          9.8
Assets                              750.1        514.8      110.2      1,375.1
Loans and borrowings                    -      (151.7)          -      (151.7)
Derivative financial                (0.8)       (14.8)          -       (15.6)
instruments
Other liabilities                   (2.2)        (0.4)          -        (2.6)
Liabilities                         (3.0)      (166.9)          -      (169.9)
Net assets                          747.1        347.9      110.2      1,205.2
(1)           Including Channel Islands.
(2)           Continental Europe includes all returns generated from and
              investment portfolio value relating to the Group's investment in
              Oiltanking, including those derived from its business in
              Singapore.





1 Segmental analysis (continued)
                                                UK and Continental Asia  Total
                                           Ireland^(1)  Europe^(2)
for the six months to 30 September 2011             £m          £m   £m     £m
(unaudited)
Investment return
Realised gains over fair value on the              2.1        -       -    2.1
disposal of investments
Unrealised gains/(losses) on the                   7.5    (8.0)  (21.2) (21.7)
revaluation of investments
Unrealised foreign exchange losses on                -    (0.7)       -  (0.7)
investments
Portfolio income                                  33.3     21.3       -   54.6
Interest receivable                                0.8        -       -    0.8
Investment return/(loss)                          43.7     12.6  (21.2)   35.1
Interest payable                                     -    (5.0)       -  (5.0)
Other net expenses                               (5.7)    (5.0)       - (10.7)
Profit/(loss) before tax                          38.0      2.6  (21.2)   19.4

as at 30 September 2011 (unaudited)

Balance sheet
Fair value of investment  539.4   322.3 118.1                            979.8
portfolio
Cash and cash equivalents 305.4    12.3   1.0                            318.7
Derivative financial        0.6       -     -                              0.6
instruments
Other assets               10.4     3.1     -                             13.5
Assets                    855.8   337.7 119.1                          1,312.6
Loans and borrowings          - (164.3)     -                          (164.3)
Derivative financial      (1.8)  (17.3)     -                           (19.1)
instruments
Other liabilities         (3.0)   (0.2) (0.3)    The story has been truncated,
                                               
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