Final Results

RM Infrastructure Income PLC

23 April 2024

RM INFRASTRUCTURE INCOME PLC

(the ''Company'' or "RMII")

ANNUAL REPORT AND ACCOUNTS

For the year ended 31 December 2023

LEI: 213800RBRIYICC2QC958

About us

At a General Meeting held on 20 December 2023, RM Infrastructure Income plc ("RMII" or the "Company") adopted a revised Investment Objective in order to facilitate a managed wind-down of the Company.

The Company aims to conduct an orderly realisation of the assets of the Company, to be effected in a manner that seeks to achieve a balance between returning cash to Shareholders promptly and maximising value.

Prior to this, the Company's investment objective was to generate attractive and regular dividends through investment in secured debt instruments of UK Small and Medium sized Enterprises ("SMEs") and mid-market corporates including any loan, promissory notes, lease, bond, or preference share (such debt instruments, as further described in the annual report, being "Loans") sourced or originated by RM Capital Markets Limited (the "Investment Manager") with a degree of inflation protection through index-linked returns where appropriate.

PORTFOLIO AT A GLANCE

Operational highlights

· Diversified portfolio with gross assets of £104.5m invested across 31 loans and one wholly owned asset, across 8 sectors and 14 sub-sectors.

· A low interest rate sensitivity portfolio, with an average duration of circa 1.69 years and a weighted average yield of 10.91%.

· NAV Total Return over the last twelve months of 3.16% and inception to date of 41.56%.

· As at 31 December 2023, all outstanding debt has been fully repaid with the company now being completely ungeared.

Financial highlights

Financial information	Year ended 31 December 2023	Year ended 31 December 2022
Gross asset value (£'000)1	£104,516	£126,076
Net Asset Value ("NAV") (£'000)	£104,516	£108,805
NAV per Ordinary Share (pence)	88.88p	92.49p
Ordinary Share price (pence)	74.25p	85.00p
Ordinary Share price discount to NAV1	(16.46%)	(8.1%)
Ongoing charges1	1.84%	1.86%
Gearing (net)1	nil	13.1%
Performance summary	% change2,4	% change3,4
Total return - Ordinary Share NAV and dividends1	+3.16%	+5.0%
Total return - Ordinary Share price and dividends1	-4.63%	+3.7%

1. These are Alternative Performance Measures ("APMs").

2. Total returns for the year to 31 December 2023, including dividend reinvestment.

3. Total returns for the year to 31 December 2022, including dividend reinvestment.

4. Source: Bloomberg

As at 19 April 2024, the latest date prior to the publication of this document, the Ordinary Share price was 77p per share and the latest published NAV was 89.18p per share as at 31 March 2024.

Alternative Performance Measures ("APMs")

The financial information and performance summary data highlighted in the footnote to the above table is considered to represent APMs of the Company. Definitions of these APMs together with how these measures have been calculated can be found below.

Portfolio (as at 31 December 2023)

Largest 10 loans by drawn amounts across the entire portfolio

Business activity	Investment type (Private/Public/Bond)	Valuation⁺ £'000	Percentage of gross asset (%)
Healthcare	Private Loans	12,994	12.40
Manufacturing	Private Loans	9,980	9.50
Healthcare	Private Loans	8,799	8.40
Hotel & Leisure	Private Loans	8,115	7.80
Hotel & Leisure	Private Loans	5,287	5.10
Asset Backed Lending	Private Loans	4,707	4.50
Accommodation	Private Loans	4,434	4.20
Hotel & Leisure	Private Loans	4,178	4.00
Hotel & Leisure	Private Loans	3,691	3.50
Healthcare	Private Loans	3,654	3.50
Ten largest holdings		65,839	62.90
Other private loan investments		25,127	24.10
Wholly owned asset		2,966	2.80
Total holdings		93,932	89.80
Other net current assets		10,584	10.20
Gross assets*		104,516	100.00

* The Company's gross assets comprise the net asset values of the Company's Ordinary Shares and the Bank loan, which had been repaid at the year end. The calculation can be found below.

⁺ Valuation of private loans conducted by external Valuation Agent.

Number of loans: 31

Average yield: 10.91%

Full portfolio (as at 31 December 2023)

Loan ref#	Borrower name	Deal type	Sector	Business description	Nominal (£)	Market value (£)	Valuer	Payment
88	Private Loan - SPV	Bilateral Loan	Healthcare	Care home	12,871,346	12,994,338	V Agent	Cash
39	Beinbauer	Syndicated Loan	Manufacturing	Auto Parts Manufacturer	10,022,097	9,980,275	V Agent	PIK/Cash
76	Gym Franchise	Bilateral Loan	Healthcare	Health and Well-being	8,553,696	8,798,765	V Agent	Cash
66	Private Loan - SPV	Bilateral Loan	Hotel & Leisure	Hotel	8,504,440	8,115,336	V Agent	Cash
67	Private Loan - SPV	Bilateral Loan	Hotel & Leisure	Hotel	5,540,560	5,287,063	V Agent	Cash
15	Voyage Care	Bond	Healthcare	Specialist Care	5,000,000	3,654,167	External	Cash
80	Private Loan - SPV	Bilateral Loan	Hotel & Leisure	Hotel	5,000,000	3,690,514	V Agent	Cash
60	Private Loan - SPV	Bilateral Loan	Asset Backed Lending	Asset Backed Lending	4,693,916	4,707,150	V Agent	Cash
79	Private Loan - SPV	Bilateral Loan	Construction	Construction	4,500,000	3,321,462	V Agent	Cash
12	Private Loan - SPV	Bilateral Loan	Accommodation	Student accommodation	4,430,000	4,434,438	V Agent	Cash
73	Private Loan - SPV	Bilateral Loan	Hotel & Leisure	Hotel	4,000,000	4,178,126	V Agent	Cash
68	Equity	Equity	Accommodation	Student accommodation	3,600,000	2,966,261	V Agent	N/A
62	Trent Capital	Bilateral Loan	Energy Efficiency	Energy Efficiency	3,259,437	3,026,936	V Agent	PIK
58	Private Loan - SPV	Bilateral Loan	Hotel & Leisure	Hotel	3,107,657	2,697,306	V Agent	PIK
99	Private Loan - SPV	Bilateral Loan	Hotel & Leisure	Hotel	2,881,472	2,907,875	V Agent	Cash
92	Private Loan - SPV	Bilateral Loan	Hotel & Leisure	Hotel	2,458,629	1,814,721	V Agent	Cash
95a	Private Loan - SPV	Bilateral Loan	Childcare & Education	Childcare	2,349,061	2,132,123	V Agent	Cash
71	Euroports	Syndicated Loan	Transport Assets	Ports business	1,733,853	1,681,838	External	Cash
96	Private Loan - SPV	Bilateral Loan	Energy Efficiency	Energy Efficiency	1,539,700	1,601,159	V Agent	Cash
97a	Private Loan - SPV	Bilateral Loan	Healthcare	Care home	1,258,536	1,286,099	V Agent	Cash
74	Private Loan - SPV	Bilateral Loan	Accommodation	Student accommodation	930,000	0	V Agent	Cash
87	Private Loan - SPV	Bilateral Loan	Commercial Property	Restaurant	782,623	796,761	V Agent	Cash
76.1	Gym Franchise	Bilateral Loan	Healthcare	Health and Well-being	747,017	765,684	V Agent	PIK
98	Private Loan - SPV	Bilateral Loan	Childcare & Education	Childcare	742,500	791,403	V Agent	Cash
63	Trent Capital (Fusion) RF	Bilateral Loan	Energy Efficiency	Energy Efficiency	612,844	0	V Agent	PIK
97b	Private Loan - SPV	Bilateral Loan	Healthcare	Care home	566,036	568,330	V Agent	Cash
81	Private Loan - SPV	Bilateral Loan	Finance	Wealth Management	500,000	501,839	V Agent	Cash
95b	Private Loan - SPV	Bilateral Loan	Childcare & Education	Childcare	468,212	444,630	V Agent	Cash
91	Private Loan - SPV	Bilateral Loan	Childcare & Education	School	450,000	448,467	V Agent	Cash
94a	Gym Franchise	Bilateral Loan	Healthcare	Health and Well-being	228,170	239,265	V Agent	Cash
52	Private Loan - SPV	Bilateral Loan	Clean Energy	Renewable heat incentive	13,496	13,665	V Agent	Cash
				Total	101,345,298	93,931,896

MARKET

Market environment

For interest rate products, the market was very weak for the first half of the year with UK government bond yields rising from January 2023 and peaking during late June 2023, with 5-year UK yields touching circa 4.9%. The remaining three months of the year saw a sustained rally with 5-year UK yields closing at circa 3.5%. Credit spreads were strong during the reporting period with the Markit iTraxx Crossover Index opening at circa 400 and closing at circa 310 - although the journey was not linear as spreads widened to circa 500 in March 2023, before tightening over the summer to then widen into the autumn before a strong year end saw spreads tighten from 460 in October to close the year at 310.

Overall, whilst the market environment for credit was relatively benign, the high level of the Sterling Overnight Average "SONIA" is providing tighter financial conditions. Borrowers who are seeking a refinance are seeing SONIA levels above 5% currently, which will affect their ability to refinance. In the US markets in particular, we are starting to see this affecting Commercial Real Estate "CRE" and we expect this to continue whilst front end interest rates remain elevated.

Markit iTraxx Europe Crossover index

The Markit iTraxx Europe Crossover index comprises 75 equally weighted credit default swaps on the most liquid sub-investment grade European corporate entities. This is the most liquid reference point for high yield credit in Europe. Spreads opened the year at 460bps and softened throughout the year, tightening down to 310bps end of December 2023.

COMPANY OBJECTIVES

Although the Company has demonstrated strong NAV total return performance over the longer term the discount to NAV per Share at which the Shares trade has been both wide and persistent despite measures taken by the Board to seek to address this through the use of buybacks and the provision of a periodic realisation opportunity. This, coupled with the small scale of the Company and the low levels of liquidity in the Company's shares has restricted the Company's ability to grow.

As set out in the Company's announcement on 23 May 2023, in April 2023 the Board received a non-binding indicative proposal which involved a combination of all the Company's assets with another investment company managed by Gravis Capital Partners (as disclosed on 11 August 2023). The combination was proposed to be structured under section 110 of the Insolvency Act 1986 with no option, partial or otherwise, for you as a shareholder to elect to receive cash.

The proposal was considered alongside a wide array of potential options under a broader review of the Company's future strategy: a potential continuation of the Company's existing investment policy and strategy, a full or partial exit opportunity, a combination of the Company's assets with another suitable investment company or fund and a managed wind-down. The Board consulted with Shareholders on these options and concluded that a partial exit opportunity would only exacerbate the challenges the Company faces, as it would further reduce the size of the Company.

Following the receipt of the first proposal, the Board received two additional business combination proposals, as described in the Company's announcement on 10 July 2023.

Having considered the various proposals in detail, the Board concluded that no better option existed which was likely to receive the required Shareholder consent, and on 6 September 2023, the Board

announced its decision to put forward a proposal for a managed wind-down of the Company. Consequently, on 20 December 2023, the Company revised its objective to implement a managed wind-down of the company. Its revised objective is as follows:

Revised objective

The managed wind-down process is monitored closely by the Board further details can be found in the Directors' report in the annual report. The Investment Manager keeps the Board updated on latest developments as the managed wind-down process progresses which is also discussed at each of the Company's quarterly Board meetings.

CHAIR'S STATEMENT

Introduction

On behalf of the board of Directors ("the Board"), I am pleased to present RM Infrastructure Income plc's ("RMII" or "the Company") Annual Report & Accounts for the year ended 31 December 2023.

This year marks the seventh year since the Company's Initial Public Offering ("IPO") on the London Stock Exchange in December 2016 and was significant as the Board of Directors proposed the implementation of a managed wind-down of the Company which was unanimously approved by Shareholders at a General Meeting convened on 20 December 2023.

Our focus now moves to the realisation of the Company's assets and return of capital to Shareholders.

Income generation and NAV performance

In the seven years since listing, the Company has returned to Shareholders 43.73 pence per Ordinary Share in dividends.

On the 29 February 2024 the Company declared a fourth interim dividend for the year of 1.625 pence per Ordinary Share which was paid on the 2 April 2024, thus total dividends of 6.5 pence per Ordinary Share were declared or paid for the year ended 31 December 2023.

At 31 December 2023 the audited NAV per share was 88.88 pence per Ordinary Share (31 December 2022: 92.50 pence). The NAV percentage per Ordinary Share Total Return for the year was 3.16% (2022: 4.98%) and annualised over 2022 and 2023 gives a 4.15% per annum NAV Total Return. Since inception the NAV percentage Total Return on an annualised basis has been 5.15%.

Returns to Shareholders

In common with most of the investment trust sector, discounts to net asset values increased sharply over the year. The closing mid-market share price on 31 December 2023 was 74.25 pence per Ordinary Share compared with 85 pence per Ordinary Share and as of 31 December 2022. The 10.75 pence per Ordinary Share decrease, combined with dividends, means the total percentage share price return for the year was -4.63% (2022: -3.75% and since IPO to date 18.97%).

Portfolio overview

The loan portfolio reduced in size as borrowers repaid and no new loans were made during the latter half of the year, instead capital was used to repay borrowing facilities so that at year end these were undrawn. The portfolio size closed at £94m (2022: £126m) of invested capital across 31 loans (38 loans 2022).

The year was much quieter than previous years in terms of investment activity with one new loan made during the year to a children's nursery and one refinance of an existing transaction. There were several smaller drawdowns to existing facilities.

The Investment Manager is now targeting a reduction of the portfolio and an expedient return of capital to Shareholders. No new loans will be made save for the funding of committed facilities and any follow-on funding required to protect value for RMII Shareholders.

Committed to responsible investing

The Board and the Investment Manager have long been committed to high ESG standards and to responsible investing. The refreshed investment focus towards social and environmental infrastructure sectors enhances this commitment through investment in assets at the forefront of providing essential services to society. RM Funds' Responsible Investing Investment Policy ensures that these considerations are integrated into each individual investment process and the alignment of the portfolio to achieving contributions towards outcomes linked to UN Sustainable Development Goals 3,4,7,11,12&13.

Outlook

The Investment Manager is targeting a significant return of capital to shareholders during 2024 and 2025 and is aiming to return a majority of shareholder capital by year end 2025.

The Investment Manager believes the key risks to this repayment schedule relate to several factors linked to either recovery or the ability to refinance for the larger borrowers:

1. The speed and amounts of recovery to the loans secured on the Clyde Street asset which went into administration in December 2023.

2. The ability of the borrower to refinance loans 66 & 67 secured over a portfolio of hotels. To maximise recovery these two loans will likely require to be extended.

3. The ability of the borrower of loan 88, secured over a modern, purpose built operating aged care asset, to secure a refinancing during 2024.

4. The ability of the gym franchise to be able to achieve a refinance or sale during 2025.

I look forward to continued engagement with Shareholders. Please do not hesitate to contact me through our broker Singer Capital Markets if any additional information is required.

Norman Crighton

Chair

22 April 2024

INVESTMENT MANAGER'S REPORT

Strong and sustainable NAV & income performance

Over the course of the year, the portfolio generated a NAV Total Return of 3.16% with total dividend distributions attributable to Shareholders for the year totalling 6.5 pence per Ordinary Share. Overall, the NAV per Ordinary Share decreased by 3.61 pence per Ordinary Share, from 92.50 pence per Ordinary Share at 31 December 2022 to 88.88 pence per Ordinary Share at 31 December 2023.

For the year ended 31 December 2023

Net interest income	+6.30p
Change in portfolio valuations	-1.94p
Payment of 2023 Dividends	-6.50p
Forecasted Liquidation Expenses	-1.47p
Net NAV Movement	-3.61p

Following the year end, an interim dividend in respect of the period from 1 October 2023 to 31 December 2023 was declared on 29 February 2024 and paid to Shareholders on 2 April 2024. These dividends totalling 6.5 pence per Ordinary Share for the year ending 31 December 2023 bring the total distributions since the Company's launch in December 2016 to 42.10 pence per Ordinary Share, exceeding the target set at IPO.

Share price performance

Negative share price performance combined with the widening of the share price discount to NAV from -8.10% at 31 December 2022 to -16.46% at 31 December 2023 meant that there was a negative share price total return of -4.63%. Since IPO the total percentage share return achieved is 18.97% which, if annualised, since inception brings it to 2.54% per annum.

Market environment

For interest rate products, the market was very weak for the first half of the year with UK government bond yields rising from January 2023 and peaking during late June 2023, with 5-year UK yields touching circa 4.9%. The remaining six months of the year saw a sustained rally with 5-year UK yields closing at circa 3.5%. Credit spreads were strong during the reporting period with the Markit ITraxx Crossover Index opening at circa 400 and closing at circa 310, although the journey was not linear as spreads widened to circa 500 in March 2023, before tightening over the summer to then widen into the autumn before a strong year end saw spreads tighten from 460 in October to close the year at 310.

Overall, whilst the market environment for credit was relatively benign, the high level of the Sterling Overnight Average ("SONIA") is providing tighter financial conditions. Borrowers who are seeking a refinance are seeing SONIA levels above 5% currently, which will affect their ability to refinance. In the US markets in particular, we are starting to see this affecting Commercial Real Estate ("CRE") and we expect this to continue whilst front end interest rates remain elevated.

Financial performance

All debt facilities held with OakNorth Bank were repaid during the year.

Total income generation for the year was £10.9m (2022: £10.8m) and this was split between cash interest £10.6m and £0.3m of Payment In Kind ("PIK"), (2022: £8.0m and £2.8m).

Total operating costs were £5.0m (2022: £3.3m).

Revolving Credit Facility ("RCF") and other finance charges were £1.0m (2022: £1.1m).

For the year ended 31 December 2023

Income	£10,875,596
Total expenses	(£1,521,054)
Finance costs	(£1,003,658)
Total	£8,350,884
Dividends	(£7,643,116)
Profit after interest costs & before tax	£707,768

There were four dividends paid or declared in respect of the year ending 31 December 2023 totaling 6.5 pence per Ordinary Share.

Period	Payment date	Dividend proceeds
Q1 2023	30 June 2023	£1,910,779
Q2 2023	29 September 2023	£1,910,779
Q3 2023	29 December 2023	£1,910,779
Q4 2023	2 April 2024	£1,910,779

Portfolio performance

As of 31 December 2023, the number of loans in the portfolio reduced over the reporting period as there were several repayments over the year. The number of loans fell to 31 from 38 and the invested capital reduced materially to £94m (2022: £126m).

The overall yield on the portfolio increased over the reporting period by 176bps to 10.91%, from 9.15%.

Only one new investment loan was funded (Loan reference 98), secured on a children's nursery. There was a further transaction (Loan reference 99) which refinanced an existing RMII mezzanine loan secured against a hotel (Loan reference 69). This transaction was structured to reduce the overall leverage within the transaction as the borrower injected cash equity and RMII moved from the junior position to the senior position by providing additional funding that refinanced the senior lender.

There were 18 drawdowns against existing facilities which totaled £1.6m. As of 31 December 2023, the remaining commitments to fund totaled approximately £6m.

There were 15 borrowers that repaid over the period which totaled £33.1m, the significant repayments were:

> Asset Finance, Ref #60: £3.5m

> Asset Finance, Ref #61 £4.5m

> Healthcare, Ref #82: £5m

> Accommodation, Ref #84: £4m

> Healthcare, Ref #83: £2.8m

> Hotel & Leisure, Ref 86: £5m

The portfolio is now going into a realisation phase with no new loans being originated and cash being returned to Shareholders as loans repay. Further loans could be made to existing borrowers to preserve the value of an existing loan and loan maturities can be extended if that is deemed in the best interests of the Company. The initial repayments were used to pay down the leverage facilities of the Company and to retain some liquidity to fund committed but undrawn facilities.

The Company has been pursuing a legal claim against the former main contractor of investment loan reference 68, a wholly owned 79 beds student accommodation located in the city centre of Coventry, UK, since September 2022 via an adjudication process. This claim related to the provision of cladding and other areas of the construction the main contractor took responsibility for. Post Period end, on the 2nd of January 2024, RMII was successfully awarded circa £1.2m by the adjudicator.

The enhanced monitoring watchlist had four assets as of 30 June 2023. Three of these groups of loans were off the enhanced monitoring at year end as described below:

> Loan reference 84 to a purpose-built student accommodation developer was successfully refinanced.

> Loan reference 89 to 5 operational purpose-built student accommodation assets claimed against its CBILS guarantee, successfully recovering the mark.

> Loan references 82, 83 and 88 to purpose built aged care assets were taken off the watchlist as accrued and outstanding balances were paid. Loan references 82 & 83 were subsequently repaid.

> Loan references 58,79,80 & 92 secured on the hotel development and contractor in Glasgow. In December the senior lender appointed an administrator, so these loans are now in workout and remain on the watchlist. The investment manager believes these loans are appropriately marked.

As at 31 December 2023 the enhanced monitoring list was:

> Loan references 58,79,80 & 92 secured on the hotel development and contractor in Glasgow as described above.

> Loan references 66 and 67 secured on two portfolios of 5 operational hotels. Whilst these loans have paid their interest in cash on time since inception in 2019, it is doubtful that the borrower will be able to achieve a successful refinancing ahead of their maturity in April 2024. RM are liaising with the senior lender and borrower about an appropriate solution that protects value for RMII and it is likely this will be some form of amendment and extension of the existing loan facility.

Construction exposure within the portfolio has been closely monitored. During the period three loans (Loan references 82, 83 & 88) which were facilities for the provision of construction funding for new purpose-built aged care homes saw the assets exit the construction phase and enter their operational phase. Loans 82 & 83 were refinanced, and loan 88 saw its maturity extended by 12 months, to April 2025.

The portfolio has exposure to two other construction loans (Loan references 97a & 97b) which is to a separate borrower and relate to the final construction allocations within the portfolio. These Loans have a combined drawn balance of circa £2.2m at the period end with a combined committed balance of circa £6.3m. This is expected to be fully utilised during 2024.

Outlook for 2024

The Investment Manager is focused on realising the portfolio and returning capital to investors as quickly as possible. It is currently expected that material progress will be made during 2024.

Key risks to the realisation of the portfolio are the ability of existing borrowers to be able to refinance RMII loans. Our expectation is that Bank of England rates and the SONIA will come down during 2024 which will be helpful for borrowers in facilitating their refinancing processes. Set against this, we see the tighter financial conditions of the last year affecting credit markets and in particular CRE loans during 2024 in a negative way which could restrict the availability and willingness of other lenders to make property backed loans.

RM Capital Markets Limited

22 April 2024

INVESTMENT POLICY, RESULTS AND OTHER INFORMATION

Revised Investment Objective and Investment Policy

At a General Meeting held on 20 December 2023 the following new investment objective and investment policy were adopted:

Revised Investment Objective

Revised Investment Policy

The assets of the Company will be realised in an orderly manner, returning cash to Shareholders at such times and in such manner as the Board may, in its absolute discretion, determine. The Board will endeavour to realise all of the Company's investments in a manner that achieves a balance between maximising the net value received from those investments and making timely returns to Shareholders.

The Company may not make any new investments save for:

a) further secured debt instruments of UK SMEs and mid-market corporates and/or individuals including any loan, promissory note, lease, bond, or preference share ("Loans"), such debt instruments being to an existing borrower which is expected to preserve the value of an existing Loan; or

b) extending the maturity or repayment date or any interest payment date if that is in the best interests of the Company.

The Company will continue to comply with all the investment restrictions imposed by the Listing Rules in order to maintain the Company's admission to the Official List under Chapter 15 of the Listing Rules.

In the event of a breach of the investment guidelines and restrictions, the Investment Manager shall inform the Board upon becoming aware of the same and if the Board considers the breach to be material, notification will be made to a Regulatory Information Service and the Investment Manager will look to resolve the breach with the agreement of the Board.

The Company intends to conduct its affairs in order to qualify as an investment trust for the purposes of section 1158 of the CTA 2010, and its investment activities will therefore be subject to the restrictions set out above.

Borrowing and gearing

The Company may utilise borrowings for short term liquidity purposes. The Company may also, from time to time, use borrowing for investment purposes on a short term basis where it expects to repay those borrowings from realisation of investments. Gearing represented by borrowings will not exceed 20 per cent. of Net Asset Value calculated at the time of drawdown.

Hedging and derivatives

The Company may invest in derivatives for efficient portfolio management purposes. In particular the Company can engage in interest rate hedging.

In accordance with the requirements of the FCA, any material change to the Company's investment policy will require the approval of Shareholders by way of an ordinary resolution at a general meeting.

Dividend policy

Since the commencement of the managed wind-down process, the Company expects not to be able to keep paying dividends at the rate of 6.5 pence per share per annum as was previously the case. The Company will instead pay dividends only as required to maintain investment trust status. As the Company's portfolio reduces in size its fixed costs will become a greater proportion of its income.

The Company intends to maintain its investment trust status and listing during this managed realisation process prior to the Company's eventual liquidation. Maintaining the listing would allow Shareholders to continue to trade Shares during the managed wind- down of the Company.

Results and dividend

The Company's revenue return after tax for the year ended 31 December 2023 amounted to £7,407,000 (2022: £7,462,000). The Company made a capital loss after tax of £4,008,000 (2022: capital loss after tax of £2,072,000). Therefore, the total return after tax for the Company was £3,399,000 (2022: £5,390,000).

The first interim dividend of 1.625p per Ordinary Share was declared on 23 May 2023 in respect of the period from 1 January to 31 March 2023. The second interim dividend of 1.625p per Ordinary Share for the quarter ended 30 June 2023 was declared on 14 August 2023 and the third interim dividend of 1.625p per Ordinary Share for the quarter ended 30 September 2023 was declared on 31 October 2023. On 29 February 2024, the Board declared a fourth interim dividend of 1.625 pence per Ordinary Share for the quarter to 31 December 2023.

Key performance indicators ("KPIs")

During the year under review, the Board measured the Company's success in attaining its investment objective that was in place for the year by reference to the following KPIs:

(i) Dividends

A fourth interim dividend for the quarter ending 31 December 2023 of 1.625p per share was paid to Shareholders on the 2 April 2024 bringing total payments for the year to 6.5p per share, thus meeting the annual target.

(ii) Total return

The Company's total return is monitored by the Board. The Ordinary Shares generated a NAV total return of 3.16% (2022: +4.98%) in the year ended 31 December 2023.

(iii) Discount/premium to NAV

The discount/premium relative to the NAV per share represented by the share price is closely monitored by the Board. The Ordinary Share price closed at a 16.46% discount (2022: 8.1% discount) to the NAV as at 31 December 2023. To address the discount, 50,000 shares were bought back during the year at 85.5 pence per share.

(iv) Control of the level of ongoing charges

The Board monitors the Company's operating costs. Based on the Company's average net assets for the year ended 31 December 2023, the Company's ongoing charges figure calculated in accordance with the AIC methodology was 1.84% (2022: 1.86%).

Since the Company's investment objective changed on 20 December 2023 the Board measured the Company's success of the managed wind-down process through its regular engagement with the Investment Manager and at its quarterly Board meetings.

RISK AND RISK MANAGEMENT

Principal and emerging risks and uncertainties

The Board is responsible for the management of risks faced by the Company and delegates this role to the Audit and Management Engagement Committee (the "Committee"). The Committee periodically carries out a robust assessment of principal and emerging risks and uncertainties and monitors the risks on an ongoing basis. The Committee considers both the impact and the probability of each risk occurring and ensures appropriate controls are in place to reduce risk to an acceptable level. The experience and knowledge of the Board is invaluable to these discussions, as is advice received from the Board's service providers, specifically the AIFM who is responsible for the risk and portfolio management services and outsources the portfolio management to the Investment Manager. The Committee has a dynamic risk matrix in place to help identify key risks in the business and oversee the effectiveness of internal controls and processes.

During the year under review the Committee continued to monitor geopolitical risks, particularly with the ongoing war in Ukraine and increased tensions in the Middle East following the conflict in Gaza. The Committee continues to review the processes in place to mitigate risk; and to ensure that these are appropriate and proportionate in the current market environment.

During the year the Company amended its investment objective/policy in order to conduct an orderly realisation of the assets of the Company, to be effected in a manner that seeks to achieve a balance between returning cash to Shareholders promptly and maximizing value.

The principal and emerging risks, together with a summary of the processes and internal controls used to manage and mitigate risks where possible are outlined in the following paragraphs.

(i) Market risks

Inability of the Company's Investment Manager to realise the Company's assets in accordance with the Company's managed wind-down

The Investment Manager may struggle to meet its obligation to realise the Company's assets in accordance with the company's newly adopted investment policy.

Market sectors

Loans are made to borrowers that operate in different market sectors each of which will have risks that are specific to that particular market sector. Idiosyncratic risks coupled with a downward turning market may increase refinancing risk with actions leading to a loss in value and recoverability in junior and mezzanine positions.

Valuation

The Company's approach regarding the valuation of its investments remains unchanged albeit the methodology to reach said valuation has become more substantive. Fair value write downs continue to be driven by market risk and idiosyncratic risk, with idiosyncratic risk relating to loan specific information which is reflected within specific loan pricing.

Management of risks

The Company has appointed an experienced Investment Manager who directly sourced loans and advise on the management there of. The Company has a portfolio of a wide range of loan types and sectors and therefore benefits from diversification.

Investment restrictions have been revised now that the Company is in managed wind-down and are relatively flexible giving the Investment Manager ability to take advantage of exit opportunities as they arise.

The Investment Manager, AIFM, Brokers and the Board review market conditions on an ongoing basis.

(ii) Risks associated with meeting the Company's investment objective or target dividend yield

The Company's updated investment objective is to conduct an orderly realisation of the assets of the Company, to be effected in a manner that seeks to achieve a balance between returning cash to Shareholders promptly and maximizing value. The declaration, payment and amount of any future dividends by the Company will be subject to the discretion of the Directors and will depend upon, amongst other things, the Company successfully pursuing the investment policy and the Company's earnings, financial position, cash requirements, level and rate of borrowings and availability of profit, as well as the provisions of relevant laws or generally accepted accounting principles from time to time.

Management of risks

The Investment Manager has a clearly defined investment policy and process which is regularly and rigorously reviewed by the independent Board of Directors and performance is reviewed at quarterly Board meetings. The Investment Manager is experienced and has employed its expertise in making investments in a diversified portfolio of loans. The Investment Manager has a target portfolio yield which covers the level of dividend targeted by the Company. The Board reviews the position at Board meetings.

(iii) Financial risks

The Company's investment activities expose it to a variety of financial risks which include liquidity, currency, leverage, interest rate and credit risks.

Further details on financial risks and the management of those risks can be found in note 19 to the financial statements.

(iv) Corporate governance and internal control risks

The Company has no employees, and the Directors have all been appointed on a non-executive basis. The Company must therefore rely upon the performance of third-party service providers to perform its executive functions. In particular, the AIFM, the Investment Manager, the Administrator, the Company Secretary and the Registrar, will perform services that are integral to the Company's operations and financial performance.

Poor performance of the above service providers could lead to various consequences including the loss of the Company's assets, inadequate returns to Shareholders and loss of investment trust status. Cyber security risks could lead to breaches of confidentiality, loss of data records and inability to make investment decisions.

Management of risks

Each of the above contracts was entered into after full and proper consideration of the quality and cost of services offered, including the financial control systems in operation in so far as they relate to the affairs of the Company. All of the above services are subject to ongoing oversight of the Board and the performance of the principal service providers is reviewed on a regular basis. The Company's key service providers report periodically to the Board on their procedures to mitigate cyber security risks.

(v) Regulatory risks

The Company and its operations are subject to laws and regulations enacted by national and local governments and government policy. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Any change in the laws, regulations and/or government policy affecting the Company or any changes to current accountancy regulations and practice in the UK may have a material adverse effect on the ability of the Company to successfully pursue its investment policy and meet its investment objective and/or on the value of the Company and the shares. In such event, the performance of the Company, the NAV, the Company's earnings and returns to Shareholders may be materially adversely affected.

Management of risks

The Company has contracted out relevant services to appropriately qualified professionals. The Secretary and AIFM report on compliance matters to the Board on a quarterly basis and the Board has access to the advice of its Corporate Broker on a continuing basis. The assessment of regulatory risks forms part of the Board's risk assessment program.

Emerging risks

The Board also has robust processes in place to identify and evaluate emerging risks.

(vi) Business interruption

Failure in services provided by key service providers, meaning information is not processed correctly or in a timely manner, resulting in regulatory investigation or financial loss, failure of trade settlement, or potential loss of investment trust status.

Failure to identify emerging risks may cause reactive actions rather than being proactive and the Company could be forced to change its structure, objective or strategy and, in worst case, could cause the Company to become unviable or otherwise fail.

Management of risks

Each service provider has business continuity policies and procedures in place to ensure that they are able to meet the Company's needs and all breaches of any nature are reported to the Board.

The following is a description of the Company's service providers who assist in identifying the Company's emerging risks to the Board.

1. Investment Manager: the Investment Manager provides a report to the Board at least quarterly on industry trends, insight to future challenges in the sector, including the regulatory, political and economic changes likely to impact the Company. The Chair also has contact with the Investment Manager on a regular basis to discuss any pertinent issues;

2. Alternative Investment Fund Manager: the AIFM maintains a register of identified risks including emerging risks likely to impact the Company, which is updated quarterly following discussions with the Investment Manager and other service providers. The risks are documented on a risk register, and classified in the following categories: Market Risks; Risks associated with Investment Objective; Financial Risks; Corporate Governance Risks; Regulatory Risks and Emerging Risks. Any changes and amendments to the risk register are highlighted to the Board on a quarterly basis;

3. Broker: provides advice periodically, specific to the Company on the Company's sector, competitors and the investment company market whilst working with the Board and Investment Manager to communicate with Shareholders;

4. Company Secretary: briefs the Board on forthcoming legislation and regulatory change that might impact the Company. The Secretary also liaises with the Company's Legal Adviser, Auditor and the AIC (including other regulatory bodies) to ensure that industry and regulatory updates are brought to the Board's attention.

The Board regularly reviews the Company's risk matrix, focusing on risk mitigation and ensuring that the appropriate controls are in place. Regular review ensures that the Company operates in line with the risk matrix, prospectus and investment strategy. Emerging risks are actively discussed throughout the year to ensure that risks are identified and managed so far as practicable. The experience and knowledge of the Board is invaluable to these discussions, as is advice received from the Board's service providers.

All key service providers produce annual internal control reports for review by the Audit and Management Engagement Committee. These reviews include consideration of their business continuity plans and the associated cyber security risks. Service providers report on cyber risk mitigation and management at least annually, which includes confirmation of business continuity capability in the event of a cyberattack. Penetration testing is carried out by the Investment Manager and key service providers at least annually. Details of the Directors' assessment of the going concern status of the Company can be found in the annual report. The Investment Manager complies with all sanctioning regimes and presently views Russia as uninvestable.

(vii) ESG and Climate Change

The impact of climate change has come increasingly into focus and is considered an emerging risk by both the Board and its Investment Manager. While the Company itself faces limited direct risk from climate change, the Company's underlying holdings selected by the Investment Manager are impacted. While efforts to mitigate climate change continue, the physical impacts are already emerging in the form of changing weather patterns. Extreme weather events can result in flooding, drought, fires, storm damage, potentially impairing the operations of a portfolio company at a certain location, or impacting locations of companies within their supply chain. Significant changes in climate, or the Government measures to combat it, could present a material risk to the Company. There is also potential reputational damage from non-compliance with regulations or incorrect disclosures.

Management of risks

The Company incorporates ESG considerations into its investment process and more detail can be found in the Annual Report. The Investment Manager also uses its position to engage with and influence companies towards taking positive steps to contribute to ESG and against climate change. The Company's ESG Policy, which is updated annually is also published on the Company's website and the AIC website. The Board have considered the impact of climate change on the financial statements as documented in the Notes to the financial statements.

The Company released its first annual Impact Report provided by The Good Economy, an independent advisory firm specialising in impact measurement and management. The Report, covering the 12-month period to end March 2022, assesses the Company's 12-month performance against its stated impact objectives relating to UN Sustainable Development Goals: Healthcare, Education, Housing, Affordable and clean energy, Climate action and Responsible consumption and production.

RM Funds is a signatory to the Principles of Responsible Investment Initiative ("PRI") and reports annually according to the PRI reporting framework.

Investment trusts are currently exempt from the Task Force on Climate-Related Financial Disclosures ("TCFD") disclosure, however the Board will continue to monitor the situation.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable United Kingdom law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Company financial statements in accordance with UK- adopted international accounting standards. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements the Directors are required to:

> select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

> make judgements and accounting estimates that are reasonable and prudent;

> present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

> provide additional disclosures when compliance with the specific requirements of UK-adopted international accounting standards is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the financial position and financial performance;

> in respect of the financial statements, state whether UK-adopted international accounting standards, have been followed, subject to any material departures disclosed and explained in the financial statements;

> prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

> for the reasons stated in the Directors'/Strategic Report and note 2, the financial statements have not been prepared on a going concern basis.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies' Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a strategic report, Directors' report, Directors' remuneration report and corporate governance statement that comply with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.

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

(a) the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

(b) this Annual Report, including the strategic report, includes a fair review of the development and performance of the business and position of the Company, together with a description of the principal risks and uncertainties that it faces.

The Directors consider that the financial statements are fair, balanced and understandable and provide the information necessary for Shareholders to assess the Company's performance, business model and strategy.

For and on behalf of the Board

Norman Crighton

Chair

22 April 2024

FINANCIAL STATEMENTS

Company statement of comprehensive income

For the year ended 31 December 2023

	Year ended 31 December 2023				Year ended 31 December 2022
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
(Losses) on investments	3	-	(2,441)	(2,441)	-	(2,072)	(2,072)
Income	4	10,876	-	10,876	10,768	-	10,768
Investment management fee	5	(944)	-	(944)	(971)	-	(971)
Other expenses	6	(1,521)	(1,567)	(3,088)	(1,230)	-	(1,230)
Return before finance costs and taxation		8,411	(4,008)	4,403	8,567	(2,072)	6,495
Finance costs	7	(1,004)	-	(1,004)	(1,102)	-	(1,102)
Return on ordinary activities before taxation		7,407	(4,008)	3,399	7,465	(2,072)	5,393
Taxation	8	-	-	-	(3)	-	(3)
Return on ordinary activities after taxation		7,407	(4,008)	3,399	7,462	(2,072)	5,390
Return per ordinary share (pence)	14	6.30p	(3.41p)	2.89p	6.33p	(1.76p)	1.15p

The total column of this Statement represents the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance issued by the Association of Investment Companies.

'Return on ordinary activities after taxation' is also the Total comprehensive income for the year.

A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return on ordinary activities after taxation is both the profit and total comprehensive income for the year.

The notes form an integral part of these financial statements.

Statement of financial position

	Notes	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Fixed assets Investments at fair value through profit or loss	3	93,932	119,970
Current assets Cash and cash equivalents		7,791	2,993
Receivables	9	7,969	5,421
		15,760	8,414
Payables: amounts falling due within one year Payables	10	(5,176)	(2,308)
Bank loan - Credit facility	11	-	(17,271)
		(5,176)	(19,579)
Net current liabilities		10,584	(11,165)
Total assets less current liabilities		104,516	108,805
Net assets		104,516	108,805
Capital and reserves: equity Share capital	12	1,175	1,176
Share premium	13	70,168	70,168
Special reserve		44,597	44,640
Capital reserve		(14,229)	(10,221)
Revenue reserve		2,805	3,042
Total shareholders' funds		104,516	108,805
NAV per share - Ordinary Shares (pence)	15	88.88p	92.49p

The financial statements of the Company were approved and authorised for issue by the Board of Directors on 22 April 2024 and signed on their behalf by:

Norman Crighton

Chair

Registered in England and Wales with registered number 10449530.

The notes form an integral part of these financial statements.

Statement of changes in equity

For the year ended 31 December 2023
		Share	Share	Special	Capital	Revenue
		capital	premium	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at beginning of the year		1,176	70,168	44,640	(10,221)	3,042	108,805
Return on ordinary activities		-	-	-	(4,008)	7,407	3,399
Buy back of shares	12	(1)	-	(42)	-	-	(43)
Share buy back costs		-	-	(1)	-	-	(1)
Transfer to capital reserves reserve		-	-	-	-	-	-
Dividend paid	16	-	-	-	-	(7,644)	(7,644)
Balance as at 31 December 2023		1,175	70,168	44,597	(14,229)	2,805	104,516

For the year ended 31 December 2022
			Share
		Share	premium	Special	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at beginning of the year		1,178	70,168	44,813	(8,149)	3,240	111,250
Return on ordinary activities		-	-	-	(2,072)	7,462	5,390
Buy back of shares	12	(2)	2	(173)	-	-	(173)
Shares buy back costs		-	(2)	-	-	-	(2)
Dividend paid	16	-	-	-	-	(7,660)	(7,660)
Balance as at 31 December 2022		1,176	70,168	44,640	(10,221)	3,042	108,805

Distributable reserves comprise: the revenue reserve; capital reserve attributable to realised profits; and the special reserve.

The capital reserves attributable to realised profits for the year ended 31 December 2022 and 2023 are in a net loss position.

Share capital represents the nominal value of shares that have been issued. The share premium includes any premiums received on the issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.

The notes form an integral part of these financial statements.

Statement of cash flows For the year ended 31 December 2023
	Notes	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Operating activities
Return on ordinary activities before finance costs and taxation*		4,403	6,495
Adjustments for movements not generating an operating cash flow:
Adjustment for losses on investments		2,247	1,802
PIK adjustments to the operating cash flow		(2,637)	(2,466)
Finance costs		1,004	1,102
Adjustments for balance sheet movements:
Increase in receivables		(2,548)	(2,737)
Increase in payables		2,868	458
Net cash flow from operating activities		4,333	3,552
Investing activities
Private loan repayments/bonds sales proceeds		33,494	25,784
Private loans issued/bonds purchases		(7,066)	(18,416)
Net cash flow from investing activities		26,428	7,368
Financing activities
Finance costs		(1,004)	(1,102)
Ordinary Share bought back	12	(43)	(173)
Ordinary Share buyback costs		(1)	(2)
OakNorth loan facility drawdown		6,621	12,550
OakNorth loan facility repaid		(23,892)	(14,850)
Equity dividends paid	16	(7,644)	(7,660)
Net cash flow used in financing activities		(25,963)	(11,237)
Increase/(Decrease) in cash		4,798	(317)
Opening balance at beginning of the year		2,993	3,310
Balance as at year end		7,791	2,993

* Cash inflow from interest on investment holdings was £8,743,000 (2022: £8,396,000).

* Included in return on ordinary activities before finance costs and taxation was finance costs of £1.00m (2022: £1.10m).

The notes form an integral part of these financial statements.

Changes in financing liabilities

	Year ended 31 December 2023		Year ended 31 December 2022
Movement in financial liabilities	OakNorth facility	Intercompany loan	OakNorth facility	Intercompany loan
	£'000	£'000	£'000	£'000
Balance as at beginning of the year	17,271	-	19,571	-
Facility drawdowns during the year	6,621	-	12,550	-
Facility interest payable during the year	1,004	-	1,102	-
Facility and interest repayments during the year	(24,896)	-	(15,952)	-
Balance as at 31 December 2023	-	-	17,271	-

NOTES TO THE FINANCIAL STATEMENTS

1. General information

RM Infrastructure Income plc (the "Company") was incorporated in England and Wales on 27 October 2016 with registered number 10449530, as a closed-ended investment company. The Company commenced its operations on 15 December 2016. The Company intends to carry on business as an investment trust within the meaning of Chapter 4 of Part 24 of the Corporation Tax Act 2010.

The registered office is 6th Floor, 125 London Wall, London EC2Y 5AS.

2. Accounting policies

The principal accounting policies followed by the Company are set out below:

(a) Basis of accounting

The financial statements have been prepared in accordance with UK-adopted international accounting standards. The financial statements have been prepared on a realisation basis, except for investments measured at recoverable value (being fair value less cost to sell).

In preparing these financial statements the directors have considered the impact of climate change as a risk as set out in the annual report and have concluded that there was no further impact of climate change to be taken into account. In line with IAS, investments are initially valued at fair value and climate change risk is taken into consideration in the valuation of the investments we hold.

The Board has determined by having regard to the currency of the Company's share capital and the predominant currency in which the Company operates, that sterling is the functional and presentational currency. Where presentational recommendations set out in the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP"), issued in the UK by the AIC in July 2022, do not conflict with the requirements of UK-adopted international accounting standards ("IFRS"), the directors have prepared the financial statements on a basis consistent with the recommendations of the SORP, in the belief that this will aid comparison with similar investment companies incorporated in the United Kingdom.

In accordance with the SORP, the Statement of Comprehensive Income has been analysed between a revenue return (dealing with items of a revenue nature) and a capital return (relating to items of a capital nature). Revenue returns include, but are not limited to, investment related income, operating expenses, income related finance costs and taxation (insofar as they are not allocated to capital). Net revenue returns are allocated via the revenue return to the Revenue reserve.

Capital returns include, but are not limited to, profits and losses on the disposal and the valuation of non-current investments, derivative instruments, cash (including effect on foreign currency translation), operating costs and finance costs (insofar as they are not allocated to revenue). Net capital returns are allocated via the capital return to Capital reserves.

Dividends on Ordinary Shares may be paid out of Revenue reserve, Capital reserve and Special reserve.

(b) Adoption of new IFRS standards

New standards, interpretations and amendments adopted from 1 January 2023

A number of new standards, amendments to standards and interpretations are effective for the annual periods beginning after 1 January 2023. None of these are expected to have a significant effect on the measurement of the amounts recognized in the financial statements of the Company.

New standards and amendments issued but not yet effective

The relevant new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company's financial statements are disclosed below. These standards are not expected to have a material impact on the entity in future reporting periods and on foreseeable future transactions.

Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current

The amendments to IAS 1 clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of settlement to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments are applied retrospectively for annual periods beginning on or after 1 January 2024, with early application permitted.

Amendments to IAS 1 Presentation of Financial Statements - Non-current Liabilities with Covenants

The amendments specify that only covenants that an entity is required to comply with on or before the end of the reporting period affect the entity's right to defer settlement of a liability for at least twelve months after the reporting date (and therefore must be considered in assessing the classification of the liability as current or non-current). Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date (e.g. a covenant based on the entity's financial position at the reporting date that is assessed for compliance only after the reporting date). The amendments are applied retrospectively for annual reporting periods beginning on or after 1 January 2024. Earlier application of the amendments is permitted.

Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures - Supplier Finance Arrangements

The amendments add a disclosure objective to IAS 7 stating that an entity is required to disclose information about its supplier finance arrangements that enables users of financial statements to assess the effects of those arrangements on the entity's liabilities and cash flows. In addition, IFRS 7 was amended to add supplier finance arrangements as an example within the requirements to disclose information about an entity's exposure to concentration of liquidity risk. The amendments, which contain specific transition reliefs for the first annual reporting period in which an entity applies the amendments, are applicable for annual reporting periods beginning on or after 1 January 2024. Earlier application is permitted.

The Directors, as at the date of this report, are required to consider whether they have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Following the General Meeting held on 20 December 2023 at which shareholders unanimously voted in favour of a change in the Company's Objective and Investment Policy in order to facilitate a managed wind- down, the process for an orderly realisation of the Company's assets and a return of capital to shareholders has begun. The Company is therefore preparing its financial statements on a basis other than going concern due to the Company being in a managed wind-down.

The Board will endeavour to realise all of the Company's investments in a manner that achieves a balance between maximising the net value received from those investments and making timely returns to Shareholders.

Whilst the Directors are satisfied that the Company has adequate resources to continue in operation throughout the winding down period and to meet all liabilities as they fall due, given the Company is now in a managed wind-down the Directors considered it appropriate to adopt a basis other than a going concern in preparing the financial statements. No material adjustments to accounting policies or the valuation basis have arisen as a result of ceasing to apply the going concern basis. All of the balance sheet items have been recognised on a recoverable basis, which is not materially different from the carrying amount. The Directors have also made appropriate provisions in order to bring about the orderly wind- down of the Company and its operations.

(d) Assessment as an Investment Entity

The Company meets the definition of an investment entity on the basis of the following criteria:

1. the Company obtains funds from multiple investors for the purpose of providing those investors with investment management services;

2. the Company commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

3. the Company measures and evaluates the performance of substantially all of its investments on a fair value basis.

To determine that the Company meets the definition of an investment entity, further consideration is given to the characteristics of an investment entity, which are that:

- it should have more than one investment, to diversify the risk portfolio and maximise returns;

- it should have multiple investors, who pool their funds to maximise investment opportunities;

- it should have investors that are not related parties of the entity; and

- it should have ownership interests in the form of equity or similar interests.

The Directors are of the opinion that the Company meets the essential criteria and typical characteristics of an Investment Entity.

(e) Investments

Investments consist of private loans and bonds, which are classified as fair value through profit or loss as they are included in the Company's financial assets that are managed and their performance evaluated on a fair value basis. They are initially and subsequently measured at fair value and gains and losses are attributed to the capital column of the Statement of Comprehensive Income. Investments are recognised on the date that the Company becomes a party to the contractual provisions of the instrument and are derecognised when their term expires, or on the date they are sold, repaid or transferred.

Unquoted investments are valued at fair value by the Board which is established with regard to the International Private Equity and Venture Capital Valuation Guidelines by using, where appropriate, latest dealing prices, valuations from reliable sources and other relevant factors. Due to the Company's wind-down status, investments have been recognised at recoverable value, which has been determined as fair value less cost to realise. The difference between the investment's fair value and recoverable value was not material.

(f) Foreign currency

Transactions denominated in foreign currencies are translated into sterling at actual exchange rates as at the date of the transaction. Monetary assets and liabilities and non-monetary assets held at fair value denominated in foreign currencies are translated into sterling using London closing foreign exchange rates at the year end. Any gain or loss arising from a change in exchange rates is included as an exchange gain or loss to capital or revenue in the Statement of Comprehensive Income as appropriate. Foreign exchange movements on investments are included in the Statement of Comprehensive Income within gains and losses on investments. The financial statements are presented in pounds sterling, which is the Company's functional and presentation currency.

(g) Income

Fair value movements attributable to PIK interest and Cash Interest on the investment portfolio are recorded under Income in the Statement of Comprehensive Income.

All other income including deposit interest is accounted for on an accruals basis and early settlement fees received are recognised upon the early repayment of the loan.

Arrangement fees earned on private loan investments are recognised as an income over the term of the private loans.

A simplified credit loss provision has been applied against uncertain interest receivables.

(h) Cash and cash equivalents

Cash and cash equivalents include deposits held at call with banks and other short-term deposits with original maturities of three months or less.

(i) Capital reserves

Realised and unrealised gains and losses on the Company's investments are recognised in the capital column of the Statement of Comprehensive Income and allocated to the capital reserve.

(j) Expenses

All expenses are accounted for on an accruals basis.

Management fees and finance costs

The Company is expecting to derive its returns predominantly from interest income. Therefore, the Board has adopted a policy of allocating all management fees and finance costs to the revenue column of the Statement of Comprehensive Income.

Other expenses are recognised in the revenue column of the Statement of Comprehensive Income, unless they are incurred in order to enhance or maintain capital profits.

(k) Taxation

The charge for taxation is based upon the net revenue for the year. The tax charge is allocated to the revenue and capital columns of the Statement of Comprehensive Income according to the marginal basis whereby revenue expenses are first matched against taxable income arising in the revenue account.

Deferred taxation will be recognised as an asset or a liability if transactions have occurred at the initial reporting date that give rise to an obligation to pay more taxation in the future, or a right to pay less taxation in the future. An asset will not be recognised to the extent that the transfer of economic benefit is uncertain.

(l) Financial liabilities

Bank loan facility and overdrafts are initially recorded as the proceeds received net of direct issue costs and subsequently measured at amortised cost using the effective interest rate. The associated costs of the bank loan facility are amortised over the period of the bank loan facility. The Directors have also made appropriate provisions in order to bring about the orderly wind-down of the Company and its operations.

(m) Dividends

Interim dividends to the holders of shares are recorded in the Statement of Changes in Equity on the date that they are paid. Final dividends would be recorded in the Statement of Changes in Equity when they are approved by Shareholders, however the Company currently declares four interim dividends as opposed to any final dividends.

(n) Judgements, estimates and assumptions

The preparation of financial statements requires the directors to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Although these estimates are based on management's best knowledge of current facts, circumstances and, to some extent, future events and actions, the Company's actual results may ultimately differ from those estimates, possibly significantly.

The Company recognises loan investments at fair value through profit or loss and disclosed in note 3 to the financial statements. The significant assumptions made at the point of valuation of loans are the discounted cash flow analysis and/or benchmarked discount/interest rates, which are deemed appropriate to reflect the risk of the underlying loan. These assumptions are monitored to ensure their ongoing appropriateness. The sensitivity impact on the measurement of fair value of loan investments due to price is discussed in note 19.

As per AIC SORP, where an Investment Company is approaching a wind-up and a provision for liquidation expenses has been made, the Board needs to consider why those expenses have been/are going to be incurred and whether the circumstances meet the maintenance or enhancement test for allocating them to capital. It may also be the case that certain of the costs should be treated as being related to the disposal of the Investment Company's assets. Certain expenses, such as brokerage fees and stamp duty, are incurred as part of the process of buying and selling Investments and, for Investment Companies, it is considered that such expenses are capital in nature.

The liquidation expenses provided for in the accounts are in relation to the disposal of the Company's assets and the ultimate costs of returning the shareholders capital. Thus, these have been included within the Capital section of the Statement of Comprehensive Income.

3. Investment at fair value through profit or loss

(a) Summary of valuation	31 December 2023 £'000	31 December 2022 £'000
Financial assets held:
Equity investments	2,966	3,593
Bond investments	3,654	4,208
Private loan investments	87,312	112,169
	93,932	119,970
	Year ended	Year ended
(b) Movements	31 December 2023 £'000	31 December 2022 £'000
Opening valuation	119,970	126,674
Opening losses on investments	7,306	5,803
Book cost at the beginning of the year	127,276	132,477
Private loans issued/bonds purchases at cost	7,066	18,415
Purchase in kind interest ("PIK")	2,637	2,690
Purchase of equity investments	-	-
Sales:
- Private loans repayments/bonds sales proceeds	(33,121)	(25,784)
- Losses on investment	(373)	(298)
- Purchase in kind interest ("PIK")	-	(224)
Unrealised losses on investments held	(9,553)	(7,306)
Closing valuation at year end	93,932	119,970
Book cost at end of the year	103,485	127,276
Unrealised losses on investment holdings at the year end	(9,553)	(7,306)
Closing valuation at year end	93,932	119,970

The Company received £33.5 million (2022: £25.5 million) from investments sold in the year. The book cost of these investments when they were purchased was £33.1 million (2022: £25.8 million). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. The Company's investments are UK-based with the exception of Beinbauer which is based in Germany. The fair value of the investment in Beinbauer amounted to £10.0 million (2022: £9.6 million).

(c) Gains/(losses) on investments	31 December 2023 £'000	31 December 2022 £'000
Realised gains/(losses) on investments	10	(298)
Unrealised gains/(losses) on investments held	(2,247)	(1,503)
Other capital gains	-	217
Foreign exchange losses	(204)	(488)
Total losses on investments	(2,441)	(2,072)

At the year end, the Company had three unquoted investments, which are recorded at fair value as the Company meets the definition of an investment entity within IFRS 10.

- Esprit Holdco Limited (Energie Fitness). The Company participated in a management buyout during 2020 and owns 28% of the business, the registered office and principal of business of Energie Fitness is 1 Pitfield Kiln Farm, Milton Keynes, United Kingdom, MK11 3LW. The Investment Manager valued holdings in Energie Fitness at nil.

- Trent Capital Limited. The Company structured a Loan in 2019, which also offered equity within Trent Capital Limited. The Company has a 70% net equity holding within the business which is registered at 17 Walkergate, Berwick Upon Tweed, Northumberland, TD15 1DJ and the principal business address is Unit 7 Newton Chambers Way, Thornecliffe Industrial Estate, Chapeltown, Sheffield, S35 2PH. The Investment Manager valued holdings in Trent Capital Limited at nil.

- Coventry Student Accommodation 1 Limited ("Coventry", wholly owned asset). The Company holds an unquoted investment in Coventry. As at 31 December 2023, the Company owns 100% of the business. The registered office and principal place of business of Coventry is 6th Floor, 125 London Wall, London, EC2Y 5AS. The Investment Manager's valuation of the holdings in Coventry is £3.0 million as at. 31 December 2023 (2022: £3.6 million). A credit loss has been recognised under the simplified approach for interest income in note 10.

4. Income

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Income from investments
Bond and loan - cash interest	10,352	7,895
Bond and loan - PIK interest	294	2,767
Arrangement fees	42	43
Delayed Compensation fees received	-	2
Other income	188	61
Total	10,876	10,768

5. Investment management fee

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Basic fee:
100% charged to revenue	944	971
Total	944	971

The Company's Investment Manager is RM Capital Markets Limited. Under the amended Investment Management Agreement, effective 1 April 2020 which was in place for the year under review, the Investment Manager is entitled to receive a management fee payable monthly in arrears or as soon as practicable after the end of each calendar month an amount one-twelfth of;

(a) 0.875 per cent. of the prevailing NAV in the event that the prevailing NAV is up to or equal to £250 million; or

(b) 0.800 per cent. of the prevailing NAV in the event that the prevailing NAV is above £250 million but less than £500 million; or

The management fee shall be payable in Sterling on a pro-rata basis in respect of any period which is less than a complete calendar month.

There is no performance fee payable to the Investment Manager.

Following the General Meeting held on 20 December 2023 at which shareholders voted to place the Company into managed wind-down, the IMA was amended so that the management fee will continue to be calculated at the rate of 0.875 per cent. of NAV per annum (payable monthly in arrears), but subject to a minimum fee of £33,300 payable monthly in arrears, subject to renegotiation with the Board, until the earlier of:

> the Company's liquidation;

> the value of the Company's portfolio (excluding cash and other liquid assets) being less than or equal to £35 million; or

> 31 December 2026.

Additionally, an incentive fee will be accrued from 20 December 2023, being the date the Company entered managed wind-down, on any loan that is repaid or sold at or above the NAV as at that date, save for those loans where the capital is used to repay any leverage or held as a cash balance for future commitments, of 1.375 per cent. on loans repaid or sold from now until 31 December 2024 and 1.125 per cent. on loans repaid during 2025.

To incentivise the Investment Manager to continue to work on the tail of the portfolio, the Incentive Fee will be subject to the following escrow and payment mechanism: (i) 50 per cent. of the fee will be paid in cash to the Investment Manager at the end of each month when a loan is repaid or sold and (ii) the remaining 50 per cent. will, so long as the Shares trade at a discount to the latest published NAV, be used by the company to buy back Shares on the market, and otherwise held by the company in escrow.

The newly acquired Shares purchased as a result of the payment of the Incentive Fee under (ii) above will be held by the Company in treasury until the company is liquidated, and, together with cash amounts held in escrow will vest to the Investment Manager in the following proportions depending on the amount of aggregated net proceeds distributed to shareholders:

> 100 per cent. at or above the Reference NAV; or

> 90 per cent. at or greater than 99 per cent. and less than 100 per cent. of the Reference NAV; or

> 80 per cent. at or greater than 98 per cent. and less than 99 per cent. of the Reference NAV; or

> 70 per cent. at or greater than 97 per cent. and less than 98 per cent. of the Reference NAV; or

> 60 per cent. at or greater than 96 per cent. and less than 97 per cent. of the Reference NAV; or

> 50 per cent. at or greater than 95 per cent. and less than 96 per cent. of the Reference NAV; or

> 40 per cent. at or greater than 94 per cent. and less than 95 per cent. of the Reference NAV; or

> 30 per cent. at or greater than 93 per cent. and less than 94 per cent. of the Reference NAV; or

> 20 per cent. at or greater than 92 per cent. and less than 93 per cent. of the Reference NAV; or

> 10 per cent. at or greater than 91 per cent. and less than 92 per cent. of the Reference NAV; or

> 0 per cent. below 91 per cent. of the Reference NAV.

Any shares held in treasury which vest to the Investment Manager will be transferred to it to settle the Company's obligation to pay the remaining part of the Incentive Fee. The Board notes that for companies with a premium listing, the Investment Associations preference is for no more than 10 per cent. of their shares to be held in treasury but, given the special use of treasury shares in this case, believes the use of treasury shares in this manner is in the best interests of the Company. To the extent that the number of treasury shares to be transferred to the Investment Manager would otherwise be equal to or greater than 20 per cent. of the Company's issued share capital at the time, the Company will deliver such number of treasury Shares as represents one Share less than 20 per cent of the Company's issued share capital and instead shall pay the Investment Manager upon the liquidation of the Company an amount equal to the number of undelivered Shares multiplied by the amount distributed upon every Share in the liquidation, with such liability to be paid pro rata alongside all other distributions to shareholders.

In the event that the Shares are trading at a premium to the prevailing NAV, the remaining 50 per cent. of the fee under (ii) above will be held in escrow in liquid funds by the Company. Any dividends paid or declared in respect of the Shares acquired under (ii), together with any capital distributions made to shareholders, will be held by the Company in escrow until the incentive vests as set out above.

6. Other expenses

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Basic fee charged to revenue:
Administration Fees	220	226
Auditor's remuneration:
- Statutory audit fee	122	161
Broker fees	150	146
Consultancy fees	18	72
Custody fees	15	-
Directors' fees	124*	99
AIFM fees	146	144
Registrars fees	40	32
Valuation fees	107	81
Other expenses	579	269
Total revenue expenses	1,521	1,230
Expenses charged to capital:
Wind-down costs*	1,567	-
Total expenses	3,088	1,230

* Includes additional one off fees paid to each Board member (£10,000 paid to the Chair and £7,500 paid to each of the other Board members). The Company has estimated the costs of the managed wind-down process and accordingly made a provision during the year amounting to £1.6 million.

7. Finance costs

Year ended 31 December 2023 Year ended 31 December 2022

	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Loan Interest paid	1,004	-	1,004	1,102	-	1,102
	1,004	-	1,004	1,102	-	1,102

Refer to Note 11 for the details of the Company's revolving credit facility.

8. Taxation

Year ended 31 December 2023 Year ended 31 December 2022

	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Analysis of tax charge/(credit) for the year: Corporation tax	-	-	-	-	-	-
Corporation tax - prior year adjustment	-	-	-	3	-	3
Total current tax charge (see note 6 (b))	-	-	-	3	-	3

(b) Factors Affecting the tax charge for the year:

The effective UK corporation tax rate for the year is 23.50% (2022:19.00%).

In the Spring Budget 2020, the UK Government announced that from 1 April 2023 the rate of corporation tax will increase to 25% from 19%. A blended rate of 23.5% is used.

The tax charge differs from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The differences are explained below:

Year ended 31 December 2023 Year ended 31 December 2022

	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return on ordinary activities before taxation	7,407	(4,008)	3,399	7,465	(2,072)	5,393
UK corporation tax at 23.50% (2022:19.00%)	1,741	(942)	799	1,418	(394)	1,024
Effects of: Fair value losses not deductible	-	574	574	-	394	394
Non-deductible expenses	-	368	368	-	-	-
Interest distributions paid/payable	(1,796)	-	(1,796)	(1,455)	-	(1,455)
Excess management expenses carried forward	55	-	55	37	-	37
Prior year adjustment	-	-	-	3	-	3
Total tax charge	-	-	-	3	-	3

The Company is not liable to tax on capital gains due to its status as an investment trust.

As at 31 December 2023, the Company had net surplus excess management expenses of £426,902 (2022: £194,927) in respect of which a deferred tax asset has not been recognised. This is because the Company is not expected to generate taxable income in a future period in excess of deductible expenses of deductible expenses of that future period and, accordingly, it is unlikely that the Company will be able to reduce future liabilities.

9. Receivables

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Amounts falling due within one year:
Bond and loan interest receivable	2,133	2,372
Bond and interest receivable with credit loss fully provided	2,741	1,160
Coventry Street Loan	2,686	1,673
Prepayments and other receivables	409	216
	7,969	5,421

Bond and interest receivable with credit loss fully provided

Bond and interest receivable with credit loss fully provided is an interest receivable in relation to the loans of the Company but are not guaranteed. The total amount is offset against the credit loss under the liability account (see note 10).

10. Payables

	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Amounts falling due within one year:
Loan reserves retained	270	270
Taxation payable	-	3
Credit loss provision on interest receivable	2,741	1,160
Other payables	2,165	875
	5,176	2,308

11. Bank loan credit facilities

Year ended 31 December 2023

£'000

Year ended 31 December 2022

£'000

OakNorth Bank - Credit facilities

17,271

Total

17,271

On 26 March 2021, the Company renewed and amended its revolving credit facility with OakNorth. The Company had entered into an uncommitted 90-day notice revolving loan of £10,500,000 ("Facility A") and a committed term revolving loan of £11,942,000 ("Facility B"), together with Facility A the ("Facilities") with OakNorth for the purposes set out in the credit facility agreement.

Facility A will be provided to be applied in or towards:

> repaying all amounts due from the Company to the OakNorth under its existing loan agreement;

> funding by the Company of customer loans;

> refinancing (where applicable) any customer loans made by the Company;

> purchasing investments by the Company;

> the provision of liquidity to the Company; and

> payment of finance costs (including fees) payable under the loan.

Facility B will be provided to be applied in or towards:

> repaying sums due from the Company to RM ZDP plc;

> funding by the Company of customer loans;

> refinancing (where applicable) any customer loans made by the Company;

> purchasing investments by the Company;

> the provision of liquidity to the Company; and

> payment of finance costs (including fees) payable under the loan agreement.

The rate of interest on the Facilities are the aggregate of the applicable margin and base rate (subject to a base rate floor of 0.10%). The margin is 4.65% p.a. The Facilities expire on 26 March 2024.

During the year, the Company drew cumulative amount of £6.6 million (2022: £12.6 million) from the revolving credit facilities and repaid cumulative amount of £23.9 million (2022: £14.9 million). The remaining balance as at 31 December 2023 amounts to nil (2022: £17.3 million).

12. Share capital

As at 31 December 2023

As at 31 December 2022

No. of Shares

£'000

No. of Shares

£'000

Allotted, issued & fully paid:

Ordinary shares of 1p

117,586,359

1,175

117,636,359

1,176

Share movement

The table below sets out the share movement for the year ended 31 December 2023.

Opening balance

Shares issued

Shares bought back

Shares in issue at 31 December 2023

Ordinary Shares

117,636,359

(50,000)

117,586,359

At the year end, the Company has 117,586,359 Ordinary Shares in issue with voting rights and 4,638,222 Ordinary Shares held in Treasury.

Ordinary Share buy backs

During the year, the Company bought back 50,000 (2022: 204,629) Ordinary Shares for an aggregate cost of £42,750 (2022: £173,935). Since the year end no shares have been bought back.

13. Share premium

	As at 31 December 2023 £'000	As at 31 December 2022 £'000
Balance as at beginning of the year	70,168	70,168
Share buybacks	-	2
Share buyback costs	-	(2)
Balance as at the end of the year	70,168	70,168

14. Return per ordinary share

Total return per Ordinary Share is based on the gain on ordinary activities after taxation of £3,399,000 (2022: gain of £5,390,000).

Based on the weighted average of number of 117,587,862 (2022: 117,839,605) Ordinary Shares in issue for the year ended 31 December 2023, the returns per share were as follows:

Year ended 31 December 2023 Year ended 31 December 2022

	Revenue	Capital	Total	Revenue	Capital	Total
Return per Ordinary Share	6.30p	(3.41p)	2.89p	6.33p	(1.76p)	4.57p
There are no dilutive shares in issue.

15. Net asset value per share

The NAV per share is based on Company's total shareholders' funds of £104,516,000 (2022: £108,805,000), and on 117,586,359 (2022: 117,636,359) Ordinary Shares in issue at the year end.

NAV per ordinary share reconciliation

The table below is a reconciliation between the NAV per Ordinary Share of the Company as announced on the London Stock Exchange and the NAV per Ordinary Share disclosed in these financial statements.

	As at 31 December 2023		As at 31 December 2022
	Net assets (£)	NAV per Ordinary share (p)	Net assets (£)	NAV per Ordinary share (p)
2023 NAV as published on 16 January 2024 (2022 NAV: Published on 16 January 2023)	106,235,896	90.35	108,807,765	92.50
Revaluation adjustment	(153,000)	(0.13)	-	-
Wind-up cost accrual adjustments	(1,566,581)	(1.34)	-	-
Prior year tax liability adjustments	-	-	(2,852)	(0.01)
NAV as disclosed in these Financial Statements	104,516,315	88.88	108,804,913	92.49

16. Dividend

Total dividends paid in the year

Year ended 31 December 2023

Year ended 31 December 2022

Pence per Ordinary

Revenue

Capital

Total

Pence per Ordinary

Revenue

Capital

Total

£'000

2022 Interim - Paid 31 Mar 2023

(2021: 25 Mar 2022)

1.6250p

1,911

1.6250p

1,915

2023 Interim - Paid 30 Jun 2023

(2022: 24 Jun 2022)

1.6250p

1,911

1.6250p

1,915

2023 Interim - Paid 29 Sep 2023

(2022: 30 Sep 2022)

1.6250p

1,911

1.6250p

1,915

2023 Interim - Paid 29 Dec 2023

(2022: 30 Dec 2022)

1.6250p

1,911

1.6250p

1,915

Total

6.5000p

7,644

6.5000p

7,660

The dividend relating to the period ended 31 December 2023, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered is detailed below:

Total dividends declared in the year

Year ended 31 December 2023

Year ended 31 December 2022

Pence per Ordinary

Revenue

Capital

Total

Pence per Ordinary

Revenue

Capital

Total

£'000

2023 Interim - Paid 30 Jun 2023

(2022: 24 Jun 2022)

1.6250p

1,911

1.6250p

1,915

2023 Interim - Paid 29 Sep 2023

(2022: 30 Sep 2022)

1.6250p

1,911

1.6250p

1,915

2023 Interim - Paid 29 Dec 2023

(2022: 30 Dec 2022)

1.6250p

1,911

1.6250p

1,915

2023 Interim - Paid 2 April 2024

(2022: 31 Mar 2023)

1.6250p

1,911

1.6250p

1,911

Total

6.5000p

7,644

6.5000p

7,656

*Not included as a liability in the year ended 31 December 2023 financial statements.

17. Related party transactions

Fees are payable at an annual rate of £36,000 to the Chair, £33,000 to the Chair of the Audit and Management Engagement Committee and £30,000 to the other Director. During the year an additional one-off payment was made of £10,000 to the Chair, £7,500 to the Audit and Management Engagement Chair and £7,500 to the other Director in recognition of the extra work undertaken to consider the Company's various strategic issues and to progress the wind-down. As at 31 December 2023, there were no Directors' fees outstanding. During the year under review the Board agreed to an increase on their fees to £32,500 for Board members and by 8% for the Chair and Audit Chair with effect from 1 January 2024. The Directors' fees are disclosed in note 6 and the Directors' shareholdings are disclosed in the Directors Remuneration Report in the Annual Report for the year ended 31 December 2023.

Fees payable to the Investment Manager are shown in the Statement of Comprehensive Income. As at 31 December 2023 the fee outstanding to the Investment Manager was £155,000 (2022: £80,000).

Arrangement fees are paid by some borrowers to the Investment Manager. The amount the Investment Manager can retain from borrowers in most cases is capped at 1.25% and agreed with the Board. The Company receives any arrangement fees from the Investment Manager in excess of the 1.25% or otherwise agreed with the borrower. During the year to 31 December 2023, the Company received £42,000 (2022: £43,000) in arrangement fees from RM.

Borrowers paid the Investment Manager arrangement fees during the year totalling £286,084. The Investment Manager also provides further work and Loan & Security Agency services to some borrowers and during the year charged borrowers £185,958.

As at 31 December 2023, the Investment Manager held 1,329,125 (2022: 1,316,625) Ordinary Shares in the Company. Since the year end, the Investment Manager purchased a further 52,211 Ordinary Shares in the Company, and as of the date of this report, the Investment Manager's total holding of Ordinary Shares is 1,381,336 (2022: 1,329,125).

During the year the Company has total investments of £3,119,000 (2022: £3,593,000) in Coventry Student Accommodation 1 Limited for which investment details can be found in Note 3. During the year, the Company provided Coventry Student Accommodation 1 Limited an intercompany loan of £2,686,000 (2022: £1,673,000) as disclosed in note 9.

18. Classification of financial instruments

IFRS 13 requires the Company to classify its investments in a fair value hierarchy that reflects the significance of the inputs used in making the measurements. IFRS 13 establishes a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The three levels of fair value hierarchy under IFRS 13 are as follows:

Level 1

Using unadjusted quoted prices for identical instruments in an active market.

Level 2

Using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on market data).

Level 3

Using inputs that are unobservable (for which market data is unavailable).

The classification of the Company's investments held at fair value through profit or loss is detailed in the table below:

		31 December 2023			31 December 2022
	Level 1	Level 2 Level 3	Total	Level 1	Level 2 Level 3	Total
	£'000	£'000 £'000	£'000	£'000	£'000 £'000	£'000
Financial assets:
Financial assets - Bond investments	-	3,654 -	3,654	-	4,208 -	4,208
Financial assets - Private loans	-	- 87,312	87,312	-	- 112,169	112,169
Financial assets - Equity investment	-	- 2,966	2,966	-	- 3,593	3,593
Forward contract unrealised loss	-	47 -	47		(162) -	(162)
Net financial assets	-	3,701 90,278	93,979	-	4,046 115,762	119,808

The forward exchange contract has been presented in the fair value hierarchy at net exposure with the net unrealised loss of £47,360 (2022: gain of £162,475) recognised within prepayments and other debtors in the Statement of Financial Position.

Investments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2.

Level 3 holdings are valued using a discounted cash flow analysis and benchmarked discount/interest rates appropriate to the nature of the underlying loan and the date of valuation.

There have been no transfers between levels during the reporting period (2022: none).

Reconciliation of the Level 3 classification investments during the year to 31 December 2023 is shown below:

		31 December 2023			31 December 2022
	Equity	Loan	Total	Equity	Loan		Total
	£'000	£'000	£'000	£'000	£'000		£'000
Balance as at beginning of the year	3,593	112,169	115,762	3,600	115,728	119,328
New loans during the year	-	9,703	9,703	-	13,605	13,605
Repayments during the year	-	(33,121)	(33,121)	-	(15,978)	(15,978)
Realised gains during the year	-	(373)	(373)	-	(190)	(190)
Unrealised losses during the year on positions held at year end	(597)	(1,096)	(1,693)	(7)	(996)	(1,003)
Closing balance as at 31 December	2,996	87,282	90,278	3,593	112,169	115,762

Valuation and existence of bonds and private loan investments

The Company holds assets in bonds and private loan investments. The valuation and existence of these bonds and private loan investments are the most material matter in the production of the financial statements.

The bonds and private loan investments are valued by an independent valuer (Mazars LLP) and the valuations at year end were agreed to the valuers report. The valuation process has been comprehensively reviewed during the year, and is monitored, by the Board, the Manager and the AIFM. The process includes quantitative and qualitative analysis, with the analysis performed on a loan-by-loan basis and the valuation of each loan taking into account the relevant risks and returns associated with that loan. The Audit and Management Engagement Committee reviewed valuation reports and also the procedures in place for ensuring accurate valuation and existence of investments and recommended these to the Board for review and approval.

The Board has appointed a third-party service provider (Mazars LLP) to value the Company's loan investments on a monthly basis, in accordance with IFRS. The Directors have satisfied themselves as to the methodology used, the discount rates and key assumptions applied and the overall valuation of the investments.

19. Financial instruments - risk profile

The Company invests in private loan and bond investments. The following describes the risks involved and the applied risk management.

The Investment Manager reports regularly both verbally and formally to the Board, and its relevant committees, to allow them to monitor and review all the risks noted below.

(i) Market risks

The Company is subject to a number of Market risks in relation to economic conditions. The Company's approach regarding the conservative valuation of its investments remains unchanged, with fair value write downs driven by market risk and idiosyncratic risk, with idiosyncratic risk relating to loan specific information which is reflected within specific loan pricing. Further detail on these risks and the management of these risks are included in the Investment Manager's Report and the Risk and Risk Management report.

The Company's financial assets and liabilities at 31 December 2023 comprised:

Year ended 31 December 2023 Year ended 31 December 2022

Investments	Interest bearing £'000	Non-interest bearing £'000	Total £'000	Interest bearing £'000	Non-interest bearing £'000	Total £'000
GBP Sterling	89,284	2,966	92,250	114,713	3,593	118,306
Euro	1,682	-	1,682	1,664	-	1,664
Total investment	90,966	2,966	93,932	116,377	-	119,970
Cash and cash equivalents	7,791	-	7,791	2,993	-	2,993
Receivables	-	7,969	7,969	-	5,421	5,421
Payables	-	(5,176)	(5,176)	(17,271)	(1,148)	(19,579)
Total	98,757	5,759	104,516	102,099	4,273	108,805

Price risk sensitivity

The effect on the portfolio of a 10.0% increase or decrease in the value of the loans would have resulted in an increase or decrease of £9,393,000 (2022: £11,997,000) in the investments held at fair value through profit or loss at the period end date. This analysis assumes that all other variables remain constant.

(ii) Credit risks

The Company's investments will be predominantly in the form of private loans whose revenue streams are secured against contracted, predictable medium to long-term cash flows and/or physical assets, and whose debt service payments are dependent on such cash flows and/or the sale or refinancing of the physical assets. The key risks relating to the private loans include risks relating to counterparty default, senior debt covenant breach risk, bridge loans, delays in the receipt of anticipated cash flows and borrower default, and collateral risks.

The Company is also exposed to the risk of default on cash held at the bank and other trade receivables. The maximum exposure to credit risk on cash at bank and other trade receivables at 31 December 2023 was £7,791,000 and £7,969,000 respectively (2022: £2,993,000 and £5,421,000). None of these amounts are considered past due or impaired and interest is based on the prevailing money market rates.

The table below shows the Company's exposure to credit risks as the year end.

As at 31 December 2023 As at 31 December 2022

	Fair value	Maximum exposure	Fair value	Maximum exposure
	£'000	£'000	£'000	£'000
Private loan investments	87,312	87,312	112,169	112,169
Bond investments	3,654	3,654	4,208	4,208
Cash and cash equivalent	7,791	7,791	2,993	2,993
Receivables	7,969	7,969	5,421	5,421
Total	106,726	106,726	124,791	124,791

Management of risks

The Investment Manager reports a number of key metrics on a monthly basis to its Credit Committee including pipeline project information, outstanding loan balances, lending book performance and early warning indicators. The Investment Manager monitors ongoing credit risks in respect of the loans. Typically, the Company's loan investments are private loans and would usually exhibit credit risk classified as 'non-investment grade' if a public rating agency was referenced.

The Company's main cash balances are held with The Royal Bank of Scotland plc ("RBS"). Bankruptcy or insolvency of the bank holding cash balances may cause the Company's rights with respect to the cash held by them to be delayed or limited. The Company manages its risk by monitoring the credit quality of RBS on an ongoing basis.

(iii) Interest rate risks

Private Loans

The Company may make loans based on estimates or projections of future interest rates because the Investment Manager expects that the underlying revenues and/or expenses of a borrower to whom the Company provides loans will be linked to interest rates, or that the Company's returns from a loan are linked to interest rates. If actual interest rates differ from such expectation, the net cash flows of the borrower or payable to the Company may be lower than anticipated.

Interest rate sensitivity

Interest Income earned by the Company is primarily derived from fixed interest rates. The interest earned from the floating element of loan and debt security investments is not significant. Based on the Company's private loan investments, bond investments, cash and cash equivalents as at 31 December 2023, a 1% increase/(decrease) (2022: 1.00% increase/(decrease)) in interest rates, all other things being equal, would lead to a corresponding increase/(decrease) in the Company's income as follows.

As at 31 December 2023 As at 31 December 2022

	1.00% Increase £'000	1.00% Decrease £'000	0.50% Increase £'000	0.50% Decrease £'000
Private loans investments	873	(873)	1,122	(1,122)
Bond investments	37	(37)	42	(42)
Equity investments	30	(30)	36	(36)
Cash and cash equivalent	78	(78)	30	(30)
Total	1,018	(1,018)	1,230	(1,230)

Management of risks

(iv) Liquidity risks

Liquidity risk is defined as the risk that the Company will encounter difficulties in realising assets or otherwise raising funds to meet financial commitments. The cash and cash equivalent balance at the year end was £7,791,000 (2022: £2,993,000).

Financial liabilities by maturity at the period end are shown below:
	31 December 2023 £'000	31 December 2022 £'000
Within one month	-	-
Between one and three months	598	2,038
Between three months and one year	-	-
More than one year	4,578	17,541
Total	5,176	19,579

Notwithstanding the contractual maturity of the credit facilities, which is 26 March 2024, the loans have been presented as a current liability in the statement of financial position which reflects management's intentions to use the facilities for liquidity purposes and not long term gearing of the Company.

The Investment Manager manages the Company's liquidity risk by investing in a diverse portfolio of loans and secured debt instruments in line with the Company's Investment Policy and Investment restrictions. The Investment Manager may utilise other measures such as borrowing, share issues including treasury shares for liquidity purposes. The Investment Manager performs stress tests on the Company's income and expenses and the Directors, and the Manager remain comfortable that the Company has substantial operating expenses cover and adequate liquidity.

The maturity profile of the Company's portfolio as at the year-end is as follows:
	31 December 2023 £'000	31 December 2022 £'000
Within one month	1,700	-
Between one and three months	-	-
Between three months and one year	26,927	-
More than one year	65,305	119,970
Total	93,932	119,970

(v) Foreign currency risks

Foreign currency risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign currency exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company's functional currency. The Company invests in debt security instruments that are denominated in currencies other than sterling.

Accordingly, the value of the Company's assets may be affected favourably or unfavourably by fluctuations in currency rates and therefore the Company will necessarily be subject to foreign exchange risks.

Based on the financial assets and liabilities at 31 December 2023 and all other things being equal, if sterling had weakened against the local currencies by 10%, the impact on the Company's net assets at 31 December 2023 would have been as follows:

31 December 2023

£'000

31 December 2022

£'000

Euro

266

230

Total

266

230

Foreign currency risk profile

		31 December 2023			31 December 2022
	Investment	Net monetary	Total currency	Investment	Net monetary	Total currency
	exposure	exposure	exposure	exposure	exposure	exposure
	£'000	£'000	£'000	£'000	£'000	£'000
Euro	2,362	302	2,664	2,087	214	2,301
US dollar	-	7	7	-	7	7
Total	2,362	309	2,671	2,087	221	2,308

Management of currency risks

The Company's Investment Manager monitors the currency risk of the Company's portfolio on a regular basis. Foreign currency exposure is regularly reported to the Board by the Investment Manager. The Investment Manager may hedge any currency back to sterling as they see fit.

Fair values of financial assets and liabilities

All financial assets and liabilities of the Company are either recorded at fair value in the statement of financial position, or, where they are recorded at amortised cost, such carrying amounts are a reasonable approximation of fair value.

Capital management

The Company considers its capital to consist of its share capital of Ordinary Shares of 1 pence each, its distributable reserves, which comprise Revenue reserve, Capital reserve and the Special reserve. In accordance with accounting standards, the Company's Ordinary Shares are considered to be equity.

The Company has a stated discount control policy. The Investment Manager and the Company's brokers monitor the demand for the Company's shares and the Directors review the position at Board meetings. Further details on share issues during the year and the Company's policies for issuing further shares and buying back shares (including the Company's discount management) can be found in the Directors' Report.

During the year the Company bought back 50,000 shares (2022: 204,629) which are held in treasury. The Company's policy on borrowing is detailed in the Directors' Report. The details of the Company's OakNorth facilities are discussed in note 11.

20. Post balance sheet events

Dividend Declaration

On 29 February 2024, the Company declared a dividend of 1.625 pence per ordinary share in respect of the period from 1 October 2023 to 31 December 2023 to shareholders who appear on the register on 8 March 2024. The ex-dividend date is 7 March 2024. This was paid on 2 April 2024.

Legal Claim

The Company has been pursuing a legal claim against the former main contractor of a 79 bed student accommodation based in Coventry since September 2022. This was undertaken via an adjudicator (or circa 1 pence per ordinary share), with circa 90% of said sums now having been received in cleared funds. As of January 2024, the Company has received proceeds totalling £823,980.

Investment Manager's Holdings

On 28 February 2024 RM Capital Markets Limited (the "Investment Manager") acquired 52,211 Ordinary Shares at a price of 76 pence per share. Following the purchase, the Investment Manager's total holding of Ordinary Shares was 1,381,336.

Alternative Performance Measures ("APMs")

APMs are often used to describe the performance of investment companies although they are not specifically defined under IFRS. APM calculations for the Company are shown below.

Gearing

A way to magnify income and capital returns, but which can also magnify losses. A bank loan is a common method of gearing.

		31 December 2023 £'000	31 December 2022 £'000
Bank Loan - Credit facility		-	17,271
Total borrowings		-	17,271
Cash and cash equivalents		7,791	2,993
Total borrowings less cash and cash equivalents	a	(7,791)	14,278
Net assets	b	104,516	108,805
Gearing(net)	(a÷b)*100	nil	13.1%

Gross asset

The Company's gross assets comprise the net asset values of the Company's Ordinary Shares, and the Bank loan breakdown as follows:

As at 31 December 2023		£'000	Per Share (Pence)
Ordinary Shares - NAV	a	104,516	88.88
Bank Loan - Credit facility	c	-	-
Gross asset value	a+b+c	104,516	n/a
As at 31 December 2022		£'000	Per Share (Pence)
Ordinary Shares - NAV	a	108,805	92.49
Bank Loan - Credit facility	c	17,271	-
Gross asset value	a+b+c	126,076	n/a

Ongoing charges

A measure, expressed as a percentage of average net assets, of the regular, recurring annual costs of running an investment company.

Year ended 31 December 2023
Average NAV (£'000)	a	107,826
Annualised recurring expenses*	b	1,984
	b÷a	1.84%
Year ended 31 December 2022		£'000
Average NAV (£'000)	a	111,126
Annualised recurring expenses*	b	2,067
	b÷a	1.86%

* Consists of investment management fees of £944,000 (2022: £971,000) and other recurring expenses of £1,040,000 (2022:£1,096,000). Prospectus issue and capital transactions are not considered to be recurring costs and therefore have not been included.

(Discount)/premium
The amount, expressed as a percentage, by which the share price is (less)/more than the NAV per share.
As at 31 December 2023
NAV per Ordinary Share (p)	a	88.88
Share price (p)	b	74.25
Discount	(b/a)-1	(16.46%)
As at 31 December 2022
NAV per Ordinary Share (p)	a	92.49
Share price (p)	b	85.00
Discount	(b/a)-1	(8.1%)

Total return

A measure of performance that includes both income and capital returns. This takes into account capital gains and reinvestment of dividends paid out by the Company into its Ordinary Shares on the ex-dividend date.

As at 31 December 2023		NAV	Share Price
Opening at 1 January 2023 (p)	a	92.49	85.00
Closing at 31 December 2023 (p)	b	88.88	74.25
Dividend payment	c	1.0731	1.0918
Adjusted closing (d = b x c)	d	95.38	81.06
Total return	(d/a)-1	3.16%	(4.63%)
As at 31 December 2022		NAV	Share Price
Opening at 1 January 2022 (p)	a	94.41	95.00
Closing at 31 December 2022 (p)	b	92.49	85.00
Dividend adjustment factor	c	1.0715	1.1588
Adjusted closing (d = b x c)	d	99.1	98.5
Total return	(d/a)-1	5.0%	3.7%

FINANCIAL INFORMATION

This announcement does not constitute the Company's statutory accounts. The financial information is derived from the statutory accounts, which will be delivered to the registrar of companies and will be put forward for approval at the Company's Annual General Meeting. The statutory accounts for the year ended 31 December 2023 have been delivered to the registrar of companies. The auditors have reported on the accounts for the year ended 31 December 2023 and the year ended 31 December 2022, their reports were unqualified and did not include a statement under Section 498(2) or (3) of the Companies Act 2006.

The Annual Report for the year ended 31 December 2023 was approved on 22 April 2024. It will be made available on the Company's website at https://rm-funds.co.uk/rm-infrastructure-income/investor-relations/

The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism

This announcement contains regulated information under the Disclosure Rules and Transparency Rules of the FCA.

ANNUAL GENERAL MEETING

The Annual General Meeting will be held on 30 May 2024 at 10:00 a.m. at 6th Floor, 125 London Wall, London, EC2Y 5AS.

For further information contact:

Jennifer Thompson

Apex Listed Companies Services (UK) Limited

Tel: 020 3327 9720

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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RM Infrastructure Income (RMII)

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