INPP International Public Partnerships Ld

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                                                                          100% Risk 
                                                                           Capital(2) 
  Strathclyde                                                              and 100% 
   Police Training   Strathclyde,         Police                           senior 
   Centre             Scotland             Authority       Operational     debt                 2.34%          2.99% 
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  Tower Hamlets      London,                                              100% Risk 
   Schools            England             Education        Operational     Capital(2)           1.99%          2.46% 
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(1) Lincs OFTO was acquired by the Group in November 2014.

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

(3) Northern Diabolo project revenues are dependent on availability but also include an element of linkage to passenger numbers. All other investments receive entirely availability based revenues.

Dear Shareholders,

It is with great pleasure that I am able to report to you on another successful year for the Company.

The year has been an active one with all our assets performing well and record levels of new investment being made. The Company's market capitalisation at year end of over GBP1.1 billion very much reflects the ongoing positive development of our portfolio of infrastructure projects.

Dividend Growth

The Board understands that the Company's ability to deliver consistent and growing dividends is a key factor in many of our shareholders' decisions to invest in the Company. It is therefore pleasing to report to you that the Company was again able to deliver its dividend target for the year of 6.30p per share or c.2.5% growth, a rate of growth that has been consistent since the Company's inception eight years ago.

We remain focused on the ability of the Company to continue to grow fully covered cash dividends and we are confident that this can be achieved. The Board have therefore once again published a minimum dividend target being 6.45p per share for 2015 and new guidance of 6.65p per share for the 2016 dividend, an average increase of c.2.5% per annum, to give additional clarity to shareholders as to our intentions in the future.

Investment Activity and Capital Raising

The markets in which the Company operates continue to be very buoyant. This is positive for our existing assets as the rates at which comparable assets are traded provide evidence of the value of our own assets. However, as we have previously noted, the strength in the market also provides a challenge for sourcing value-enhancing investments on an ongoing basis. This is particularly the case for assets which are traded in the 'secondary market' where competition for such assets has pushed pricing to levels that we believe would not be accretive to our portfolio.

The Company believes that its differentiated strategy of preferring to acquire investments off-market, by exercising pre-emption rights in existing investments and via the origination activities of its Investment Adviser, Amber Fund Management Limited ('Amber') continues to be the most effective way to secure new assets for the portfolio - these avenues often have reduced levels of competition and through these better value can be achieved for shareholders. Indeed the five investments made during the period, representing investment of GBP188.2million (2013: GBP36.5 million), were all made on this basis. A further GBP18.2 million has been committed to the first two of five batches of schools being delivered through the Priority Schools Building Programme's 'Aggregator' funding vehicle earlier this month.

This preferred access to new opportunities should be further enhanced through the recently announced link up between Amber and the Hunt Companies (more details of which are referred to below). This has resulted in the grant to the Company of additional rights of first look in respect of certain new investments, of a type consistent with our existing portfolio, within the United States and we look forward to an enhanced flow of projects from this source in the medium term.

New investments in 2014 were funded through a mix of the Company's existing resources, including its corporate debt facility, together with share capital raised (by means of a tap issue) in November 2014. This capital issuance was extremely well supported and closed oversubscribed with a mix of existing and new investors, raising GBP95 million, well in excess of the GBP70 million originally targeted. The capital was immediately fully deployed in reducing the balance of the Company's revolving debt facility. We would like to thank all those shareholders who participated in the offer for their support.

Despite the record level of investment in 2014 the Company remains very focused on adding to its portfolio in a measured way, choosing to do so only where it considers an investment represents good value. The addition of such a large volume of investment in 2014 contrasts with the position in 2013 and is reflective of the many years of work that are often required to develop and execute these transaction opportunities. The timing of the completion of these projects is often difficult to predict.

In addition to the acquisitions made during the period, the Company disposed of a number of minority interests within its portfolio generating proceeds of GBP22.3 million (being substantially in excess of the carrying value of these stakes at the time of their disposal). While the Company does not expect to trade assets regularly, preferring instead to retain the long-term income generation potential of its holdings, these 'secondary market' pricing levels validate the increased popularity and attractions of the asset class in which the Company is invested.

Portfolio Performance

The operational performance of the Company's portfolio continues to be excellent. Significant progress was made during the year in the ongoing management of the portfolio where we continue to focus on delivering our expected returns, managing our public sector customer relationships and enhancing the investments through efficient management and contract variations requested by our public sector clients.

Our control over the operational performance of our investments is a key point of differentiation - other investment vehicles in the sector often outsource responsibility for such asset level management activity to unrelated third party construction/facilities management contractor parties. However, we believe that strong asset-level relationships with public sector clients are a key factor in both protecting our reputation and safeguarding investment performance. The Company continues to benefit from our relationship with Amber in this respect, particularly for the majority of investments where Amber is responsible for the detailed day-to-day delivery of management services and relationships with our public sector clients. Evidence of this is the successful conclusion of a number of construction projects, which were finished on budget and on time, in part because of Amber's oversight of key contractors.

The macro economic environment continues to be of relevance to our performance. Long term inflation expectations continue to run at levels above our base case assumptions but short term inflation rates are low and the prospect of deflation exists in some Eurozone countries. We receive regular enquiries from investors as to how we estimate our portfolio would perform in various inflationary or deflationary scenarios. To assist shareholders we have provided some additional sensitivity forecasts focusing on this point in this report (refer page 24). I am pleased to say we estimate our performance is likely to remain robust in such scenarios.

We are very aware that most of our investors hold our stock with a view to the long term income that we expect to generate and we continue to focus on improving the certainty and quality of this income as much as we can.

Corporate Governance and Regulation

The Board is required by the UK Corporate Governance Code to commission periodic external assessment of its procedures and corporate governance. The first such formal review took place in 2014 and I am pleased to advise that the Board was found to be performing extremely well. Only minor improvements were suggested and all have been implemented.

Two new Board Committees were formed during the period - the Investment Committee and the Nominations and Remuneration Committee. Previously these functions were performed by the full Board (absent the representative of the Investment Adviser as appropriate). However, the new committees reflect the increased importance the Board believe should be given to the process governing these matters and to provide additional transparency to shareholders. Further details of all the Board's committees can be found in the Corporate Governance section and terms of references are available on the Company's website.

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