## RM Infrastructure Income PLC ## Annual Report & Accounts for the year ended 31 December 2022 ## Responsible ## investing ## Through active stakeholder ## engagement combined with the ## integration of environmental, ## social and corporate governance ## considerations throughout the ## investment process. RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Contents Strategic report Page About us 1 Portfolio at a glance 2 Market 7 Company objectives 8 Sector objectives 9 Chair’s statement 11 Investment Manager’s report 14 Investment policy, results and other information 17 Risks and risk management 19 Stakeholder engagement 22 Environmental, Social and Governance (“ESG”) 25 Governance Directors’ report 28 Corporate governance 34 Directors’ remuneration report 40 Report of the Audit and Management Engagement Committee 42 Directors’ responsibility statement 44 Independent Auditor’s report 45 Financial statements Company statement of comprehensive income 54 Statement of financial position 55 Statement of changes in equity 56 Statement of cash flows 57 Notes to the financial statements 59 Other information Alternative Performance Measures (“APMs”) 78 Glossary 81 Directors, Investment Manager and Advisers 83 Notice of Annual General Meeting 84 Notes to Notice of Annual General Meeting 86 Form of Proxy 89 ## rm-funds.co.uk Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other information Investment policy, results and other information Risks and risk management Stakeholder engagement ESG ## About us ## RM Infrastructure Income plc (“RMII” or the “Company”) aims 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 on page 17, 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. ## Company highlights (as at 31 December 2022) ## 6.5p 28.0% of GAV £126.1m ### Dividend pence per share CBILS* and RLS** loans Gross assets ## 59.1% of NAV 0.975x 5.0% ### Portfolio exposure to Dividend cover NAV Total Return ### Social & Environmental ### Infrastructure sectors *Coronavirus Business Interruption Loan Scheme ** Recovery Loan Scheme 1 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Portfolio at a glance ## Operational highlights ## > Diversified portfolio with gross assets of £126.1 million invested across 37 loans and one ### wholly owned asset, across 12 sectors and 16 sub-sectors ## > RM Funds further accreditation by the British Business Bank as an accredited lender for the ### RLS with RMII as a funding partner: 28% of the portfolio invested into partially government ### guaranteed CBILS & RLS eligible loans ## > Approximately 59.1% of the portfolio NAV is committed to Social & Environmental ### Infrastructure sectors reflecting an increase of 8.3% over 2022, with a strong pipeline and ### expectation that further allocations to these areas in 2023 will continue to increase as the ### portfolio’s maturing investments are recycled within those core sectors ## > A short dated, high yielding portfolio that has outperformed many other fixed income ### comparables during 2022 ## Financial highlights Year ended Year ended Financial information 31 December 2022 31 December 2021 1 Gross asset value (£’000) £126,076 £130,821 Net Asset Value (“NAV”) (£’000) £108,805 £111,250 NAV per Ordinary Share (pence) 92.49p 94.41p Ordinary Share price (pence) 85.00p 95.00p 1 Ordinary Share price (discount)/premium to NAV (8.1%) 0.6% 1 Ongoing charges 1.86% 1.92% 1 | Gearing (net) | 13.1% 14.6% | | | | --- | --- | --- | --- | | | | 2,4 | 3,4 | | Performance summary % change | | % change | | 1 Total return – Ordinary Share NAV and dividends +5.0% + 7.6% 1 Total return – Ordinary Share price and dividends +3.7% + 16.7% 1. These are Alternative Performance Measures (“APMs”). Alternative Performance Measures (“APMs”) 2. Total returns for the year to 31 December 2022, including dividend reinvestment. The financial information and performance summary data highlighted in the footnote to the 3. Total returns for the year to 31 December 2021, including dividend reinvestment. above tables are considered to represent APMs of the Company. Definitions of these APMs 4.Source: Bloomberg. together with how these measures have been calculated can be found on pages 78 to 80. As at 20 April 2023, the latest date prior to the publication of this document, the Ordinary Share price was 79p per share and the latest published NAV was 92.10p per share as at 31 March 2023. 2 Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other information Investment policy, results and other information Risks and risk management Stakeholder engagement ESG ## Sector breakdown (as at 31 December 2022) ## Fund performance since inception ### % Total returns to date 40 RMII NAV Total Return of: 37% RMII Share Price Total Return of: 25% 30 S&P Global Leveraged Loan Index GBP Hedged Total Return of: 10% 20 10 0 -10 -20 Jan 17 Dec 18 Dec 19 Dec 20 Dec 22Dec 21 | | Distribution record | | | Other | Investment portfolio since inception | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Hotel & Leisure | | Hotel: 26.3% | | | 10% | | | | | | | | | | | Environmental Infrastructure | Hotel & Leisure | | | Accommodation | | Student accommodation: 14.6% | | | | Social Infrastructure | | | | | | | Manufacturing | | | | | 9.3% | 26% Other (Non Core) Healthcare Care home: 17.9% 9% Health and well-being: 7.3% Specialist care: 3.5% | Asset Backed Lending | Asset backed lending: 10.5% | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | 40.00p | | | | | | 51.8% | | | | | 6.50p 37.225p | | | | | 38.9% | | | | | 36.5p | Asset Backed | | | | | Manufacturing | Auto parts manufacturer: 8.0% | | | | | | | | | | | | Lending | 11% | | | Other manufacturing: 0.6% 6.50p 48.2% of portfolio to 30.00p Other Construction: 3.1% date invested in Energy efficiency: 2.8% 6.50p ongoing focus sectors Childcare: 2.4% 20.00p 7.025p 15% Ports business: 1.4% Restaurant: 0.6% 6.50p School: 0.4% 10.00p Wealth management: 0.4% Healthcare Accommodation 3 29% 4.20p Renewable heat incentive: 0.2% 0.00p 2017 2018 2019 2020 20222021 Achieved Target RM Infrastructure Income PLC Annual Report & Accounts 2022 # Portfolio at a glance *continued* ## Portfolio (as at 31 December 2022) Largest 10 loans by drawn amounts across the entire portfolio | Business activity | Investment type (Private/Public/Bond) | Valuation† £'000 | Percentage of gross asset (%) | | --- | --- | --- | --- | | Asset finance | Private Loans | 12,690 | 10.10 | | Hotel | Private Loans | 9,630 | 7.60 | | Automotive parts manufacturing | Private Loans | 8,410 | 6.70 | | Care home | Private Loans | 8,118 | 6.40 | | Gym franchise | Private Loans | 7,820 | 6.20 | | Hotel | Private Loans | 5,479 | 4.30 | | Student Accommodation | Private Loans | 4,955 | 3.90 | | Care home | Private Loans | 4,943 | 3.90 | | Hotel | Private Loans | 4,589 | 3.60 | | Healthcare | Bond | 4,429 | 3.50 | | **Ten largest holdings** | | **71,063** | **56.20** | | Other private loan investments | | 41,105 | 32.70 | | Wholly owned asset | | 3,593 | 2.90 | | Bond investments | | 4,208 | 3.30 | | **Total holdings** | | **119,969** | **95.10** | | Other net current assets | | 6,110 | 4.90 | | **Gross assets*** | | **126,079** | **100.00** | \* The Company's gross assets comprise the net asset values of the Company's Ordinary Shares and the Bank loan, calculation can be found on page 78. † Valuation conducted by external Valuation Agent. # 37 Number of loans # 9.21% Average yield 4 Strategic report > Governance Financial statements Other information Portfolio at a glance Market Company and sector objectives Chain's statement Investment Manager's report Investment policy, results and other information Risks and risk management Stakeholder engagement ESG RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Full portfolio (as at 31 December 2022) | Loan ref# | Borrower name | Deal type | Sector | Business description | Nominal (£) | Market value (£) | Valuer | Payment | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 88 | Private Loan - SPV | Bilateral Loan | Healthcare | Care home | 12,833,220 | 12,689,910 | V Agent | Cash | | 39 | Beinbauer | Syndicated Loan | Manufacturing | Auto Parts Manufacturer | 9,663,522 | 9,629,584 | V Agent | PIK/Cash | | 66 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 8,504,440 | 8,410,122 | V Agent | Cash | | 60 | Private Loan - SPV | Bilateral Loan | Asset Backed Lending | Asset Backed Lending | 8,193,916 | 8,117,971 | V Agent | Cash | | 76 | Gym Franchise | Bilateral Loan | Healthcare | Health and Well-being | 7,962,055 | 7,820,003 | V Agent | Cash | | 67 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 5,540,560 | 5,479,113 | V Agent | Cash | | 15 | Voyage Care | Bond | Healthcare | Specialist Care | 5,000,000 | 4,208,334 | External | Cash | | 80 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 5,000,000 | 4,085,178 | V Agent | Cash | | 82 | Private Loan - SPV | Bilateral Loan | Healthcare | Care home | 5,000,000 | 4,954,904 | V Agent | Cash | | 86 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 5,000,000 | 4,942,918 | V Agent | Cash | | 89 | Private Loan - SPV | Bilateral Loan | Accommodation | Student accommodation | 5,000,000 | 4,589,466 | V Agent | Cash | | 79 | Private Loan - SPV | Bilateral Loan | Construction | Construction | 4,500,000 | 3,676,660 | V Agent | Cash | | 61 | Private Loan - SPV | Bilateral Loan | Asset Backed Lending | Asset Backed Lending | 4,469,939 | 4,428,509 | V Agent | Cash | | 12 | Private Loan - SPV | Bilateral Loan | Accommodation | Student accommodation | 4,422,500 | 4,422,500 | V Agent | Cash | | 73 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 4,000,000 | 3,938,378 | V Agent | Cash | | 84 | Private Loan - SPV | Bilateral Loan | Accommodation | Student accommodation | 4,000,000 | 3,958,630 | V Agent | Cash | | 68 | Equity | Equity | Accommodation | Student accommodation | 3,600,000 | 3,592,800 | V Agent | N/A | | 62 | Trent Capital | Bilateral Loan | Energy Efficiency | Energy Efficiency | 3,011,643 | 2,859,658 | V Agent | PIK | | 83 | Private Loan - SPV | Bilateral Loan | Healthcare | Care home | 2,796,462 | 2,771,240 | V Agent | Cash | | 92 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 2,458,629 | 2,008,787 | V Agent | Cash | | 58 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 2,401,638 | 1,746,076 | V Agent | PIK | | 95a | Private Loan - SPV | Bilateral Loan | Childcare & Education | Childcare | 2,381,061 | 2,376,299 | V Agent | Cash | | 71 | Euroports | Syndicated Loan | Transport Assets | Ports business | 1,770,695 | 1,664,453 | External | Cash | | 69 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 937,500 | 889,924 | V Agent | Cash | | 74 | Private Loan - SPV | Bilateral Loan | Accommodation | Student accommodation | 930,000 | 915,870 | V Agent | Cash | | 87 | Private Loan - SPV | Bilateral Loan | Commercial Property | Restaurant | 782,623 | 773,253 | V Agent | Cash | | 96 | Private Loan - SPV | Bilateral Loan | Manufacturing | Other Manufacturing | 700,000 | 695,881 | V Agent | Cash | | 63 | Trent Capital (Fusion) RF | Bilateral Loan | Energy Efficiency | Energy Efficiency | 699,545 | 199,972 | V Agent | PIK | | 76.1 | Gym Franchise | Bilateral Loan | Healthcare | Health and Well-being | 660,838 | 649,048 | V Agent | PIK | | 97a | Private Loan - SPV | Bilateral Loan | Healthcare | Care home | 680,460 | 680,460 | V Agent | Cash | | 78 | Private Loan - SPV | Bilateral Loan | Energy Efficiency | Energy Efficiency | 500,000 | 398,748 | V Agent | Cash | | 81 | Private Loan - SPV | Bilateral Loan | Finance | Wealth Management | 500,000 | 494,848 | V Agent | Cash | | 95b | Private Loan - SPV | Bilateral Loan | Childcare & Education | Childcare | 476,212 | 475,260 | V Agent | Cash | | 91 | Private Loan - SPV | Bilateral Loan | Childcare & Education | School | 450,000 | 450,000 | V Agent | Cash | | 97b | Private Loan - SPV | Bilateral Loan | Healthcare | Care home | 420,115 | 420,115 | V Agent | Cash | | 94a | Gym Franchise | Bilateral Loan | Healthcare | Health and Well-being | 286,391 | 276,920 | V Agent | Cash | | 52 | Private Loan - SPV | Bilateral Loan | Clean Energy | Renewable heat incentive | 165,121 | 164,256 | V Agent | Cash | | 9 | Private Loan - SPV | Bilateral Loan | Clean Energy | Renewable heat incentive | 114,218 | 113,604 | V Agent | Cash | | **Total** | | | | | **125,813,302** | **119,969,650** | | | 5 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Portfolio at a glance ## continued 1 ## Portfolio statistics (as at 31 December 2022) Senior CBILS/RLS Guarantee Junior Hold Co Ranking 35% 28% 23% 14% Fixed Floating Coupon 87% 13% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ## Portfolio analysis (as at 31 December 2022) Portfolio focused on relatively short dated high yielding fixed rate loans with 95% of the portfolio loan tenor sub 5 years. 1 ### Investments ranking Coupon type ### Annualised yield Weighted average life 1. Including wholly owned asset | Senior: 35% < 7.5% yield: 12% 0-3 years: 92% Fixed: 87% | | | --- | --- | | Junior: 23% 7.5-9.5% yield: 58% 3-5 years: 8% Floating: 13% | | | Hold Co: 14% > 5 years: 0% | Index-linked: 0% | > 9.5% yield: 30% 6 Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other information Investment policy, results and other information Risks and risk management Stakeholder engagement ESG ## Market ## Market environment ### A very challenging macro environment persisted throughout the year. The key driver was inflationary ### pressure which was exacerbated by the Russian invasion of Ukraine in the spring. Central banks then started ### their tightening phase with the Bank of England raising interest rates 9 times during the year to the highest ### levels seen in 14 years. Credit spreads were also volatile with two spikes during the year seen after the initial ### days of the Russian invasion and then after the poorly received “mini–budget” in September. In conjunction ### with widening credit spreads, underlying government bond yields rose dramatically with 5 year UK Gilt ### yields rising from 0.80% to finish the year at circa 3.6%, 280bps higher. This caused fixed income as an ### asset class to have a very poor year as the absolute level of spread and yield widening from such a low initial ### base meant that any instrument with duration and any credit exposure saw material declines in value. ### 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 240bps and widened ### throughout the year, peaking at about 675bps in ### late September before retracing to close at c ### 475bps at the year end. ## Market opportunities ### The focus of the strategy remains on relatively short-dated lending. The widening seen over the last 12 months ### in credit spreads combined with the increase in underlying UK Gilt yields means there are opportunities to ### increase the coupons charged. Such new lending is also targeting senior secured loans thus seeking to improve ### the overall credit quality of the portfolio. 800 700 600 500 400 Spread, basis points 300 7 7 200 Jan 22 Feb 22 Mar 22 Apr 22 M ay 22 Jun 22 Jul 22 Aug 22 Sep 22 Oct 22 N ov 22 Dec 22 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Company objectives ## Financial ### Objectives KPIs ### > Stable income for investors: targeting 6.5 pence > 6.5 pence dividend declared or paid for ### per share dividend annually for investors full year 2022 ### Total dividends paid from inception to date ### 37.225p versus 36.50p target ### > Diversification: the Company shall seek to meet > 37 loans and one wholly owned asset ### its investment objective by investing into a across 12 sectors ### diversified portfolio of Loans ## Environmental, social and governance ### Objectives KPIs ### > Integrate ESG considerations into the > RM Funds have a Responsible Investment ### investment processes Policy and are signatories to the Principles ### for Responsible Investing (“PRI”) ### > Impact Goal: to meet the funding needs > Impact outcomes have increased as ### of quality businesses who make a measured by average portfolio impact ### meaningful, positive contribution towards score rising over time ### social and environmental outcomes that are ### linked to specific Sustainable Development ### Goals (“SDGs”) 8 Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other information Investment policy, results and other information Risks and risk management Stakeholder engagement ESG ## Sector objectives ## Linking ESG & Impact to Investment Sectors | Our focus | Investible impact areas | | --- | --- | | RMII now seeks to focus on two investable | These areas are attractive from a lending | | impact areas with six sectors for new | perspective as they have a combination of | | capital allocations in order to make positive | demographic and regulatory support for their | | contribution to achieving specific SDG outcomes | demand and in addition typically have tangible | | in the UK: to date RMII has committed 59% of | asset backing. There is no specialist debt vehicle | | its capital to these sectors; Social infrastructure | set up to lend into these sectors and the lack of | | and Environmental infrastructure. | funding offers a considerable opportunity. | ## Key sectors ### Social infrastructure Environmental infrastructure Healthcare Childcare & Accommodation Clean Energy Waste Energy Education & Renewables Management Efficiency & Carbon Reduction ## Impact outcomes: Impact outcomes: ### > Improving supply of quality, affordable > Improving availability of sustainable ### housing and accommodation energy solutions ### > Improving quality and availability of > Improving recycling, waste and ### childcare and education services sustainable water use solutions ### > Improving quality and accessibility > Improving sustainability of buildings ### of health and social care services and transport 9 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Case study: Barnes Day Care ## Overview ### RMII provided Utsaha Education (“Utsaha”), an international nursery operator, with a c.£3m ### corporate senior secured facility in June 2022. The Facility enabled Utsaha to acquire its first ### UK-based nursery, Barnes Day Care, a 30-children nursery in South-West London. Utsaha ### holds extensive experience in the nursery sector, having previously invested in south-east ### Asia cities, predominantly in Singapore, and now looking to expand their footprint in the ### under-served UK market. ### Utsaha’s business model is providing high quality childcare in a welcoming homely ### environment and has strategically partnered with RMII to secure its capital requirements ### for its expansionary strategy in the UK market. ## 30 London ### Capacity: 30 children Location Ofsted rating 10 Strategic report > Governance Financial statements Other Information Portfolio at a glance Market Company and sector objectives Chair's statement Investment Manager's report Investment policy, results and other information Risks and risk management Stakeholder engagement ESG RM Infrastructure Income PLC Annual Report & Accounts 2022 # Chair's statement **This year marks the sixth year since the Company's Initial Public Offering ("IPO") on the London Stock Exchange in December 2016 and was particularly challenging given significant movements seen in credit and interest rate markets.** **37.22%** **Inception to 31 December 2022 / NAV Total return** **37.225p** **Total dividend declared or paid / inception to 31 December 2022** **92.49p** **NAV as at 31 December 2022** ## 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 2022. This year marks the sixth year since the Company's Initial Public Offering ("IPO") on the London Stock Exchange in December 2016 and was particularly challenging given significant movements seen in credit and interest rate markets. The rise in energy prices over parts of the year, due to the Russian invasion of Ukraine, was staggering and it is welcome that we are now seeing prices normalise, albeit at elevated levels. Further pressure was put on the UK gilt market in late September by the "mini-budget" and risk-free rates, as represented by UK government bond yields, rose significantly. Our portfolio was structured to mitigate against such interest rate risk, and it is therefore very pleasing to see significant outperformance of the share price percentage total return versus more liquid loan and bond market benchmarks. The year saw the Net Asset Value ("NAV") per Ordinary Share of the Company fall slightly as fair value markdowns were taken during the period. As in 2020 during the Covid period, we believed it was sensible to take fair value markdowns given the heightened levels of risk and the increase in risk free rates as well as credit spreads over the year. Our expectations are that some of these fair value markdowns, will be released during 2023 as the Investment Manager has made good progress with the enhanced monitoring loans, which have reduced over the period from three to one. ## Income generation and NAV performance In the six years since listing, the Company has returned to Shareholders 37.225 pence per Ordinary Share in dividends which have been entirely covered by earnings. During 2022 the dividend was covered by 0.975x with income, and we dipped into accrued revenue reserves in order to pay the dividend. This dividend cover is forecast to increase, as a higher net interest income from the portfolio is expected during 2023. Given the increase in government bond yield and credit spreads the Company can now make new loans at higher coupon rates which will feed through into higher gross revenue. This means that absent of any increase in credit losses, the Company is seeking to pay a higher dividend than the previous stated target of 6.5 pence per Ordinary Share for 2023 and beyond whilst these favourable conditions persist. The current range that the Investment Manager is indicating to the Board is that there will be sufficient income to pay a dividend of at least 7 pence per Ordinary Share which will equate to a current yield of 8.24% versus the year end share price. 11 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Chair's statement *continued* On the 1 March 2023, the Company declared a fourth interim dividend for the year of 1.625 pence per Ordinary Share paid on the 31 March 2023, thus total dividends of 6.5 pence per Ordinary Share were paid for the year ended 31 December 2022. At 31 December 2022, the published NAV per share was 92.49 pence per Ordinary Share (31 December 2021: 94.41 pence). The NAV percentage per Ordinary Share Total Return for the year was +5.0% (2021: 7.6%) and annualised over 2021 and 2022 gives a +6.29% per annum NAV Total Return. Since inception the NAV percentage Total Return on an annualised basis has been +5.49%. ## Returns to Shareholders The closing mid-market share price on 31 December 2022 was 85 pence per Ordinary Share compared with 95 pence per Ordinary Share as of 31 December 2021. The 10 pence per Ordinary Share decrease, combined with dividends, means the total percentage share price return for the year was +3.75% (2021: +16.7% and since IPO to date +24.74%). On 31 December 2022, the share price discount to NAV was 8.1% which is slightly higher than the 6% maximum target and as a result there were share buy backs conducted in December totalling 204,629 Ordinary Shares all of which were bought back at 85 pence per Ordinary Share. After the period end a further 50,000 shares were bought back at 85.5 pence per Ordinary Share. Over the life of the Company a total of 4,638,222 Ordinary Shares have been acquired through buy backs, all which are held in treasury. It is our target during 2023 and the medium term to regain the premium rating of the shares to NAV; and then the Company will divest these treasury shares at a premium to NAV. ## Portfolio overview The overall portfolio size remained largely unchanged during the year, closing out at £126 million of invested capital (2021: £131 million) across 37 loans and 1 wholly owned asset (2021: 34 loans and 1 wholly owned asset). Six new loans were made during the year, alongside further drawdowns from existing facilities, and there were repayments and divestments totalling c.£26m. The weighted average life of the portfolio reduced from 2.3 years to 1.5 years which is reflective of the desire to keep duration relatively short, providing the optionality to redeploy capital at higher yields. The average yield of the portfolio increased by 67bps, rising from 8.54% to 9.21%. Overall, the credit quality of the portfolio improved as the above-mentioned capital received from repayments and divestments which was invested equally between senior secured and junior secured investments was redeployed entirely in senior secured investment loans. Further, these new investment loans generate an additional c.300bps which will increase the dividend cover in the near to medium term. The Investment Manager's report will go into further detail, however, it is pleasing to note that out of the three borrowers that were on the enhanced monitoring list as of the start of the year, two have reached successful resolutions with only one remaining. The Investment Manager is also seeking to monetise the equity stake in Energie Fitness which was received during the restructuring of the business post the initial Covid wave in 2020. This was always scheduled to be a 3-year investment horizon and despite a delayed real start due to extra lockdowns I am pleased to report that this objective is broadly on track. During the year the Board took the opportunity, when Covid restrictions were relaxed, to visit several of the projects funded by Shareholders. In July the Directors visited Trianco (Trent), an energy efficiency manufacturer based in Rotherham and spent several hours with management, discussing the business and touring the factory. Since the Company was launched in 2016, when we were able, the Board has made an annual visit to RM Funds' offices in Edinburgh to meet with staff and members of the investment committee who are responsible for finding and vetting opportunities. This year we took the opportunity to visit the development at Clyde Street in Glasgow and meet the site managers before going on to Edinburgh. In January 2023 the Board made visits to Southport and Lytham to visit two purpose-built care homes managed by Athena Healthcare Group. These two care homes provide 277 beds and will help to address the significant shortfall in adequate bed capacity for the UK's elderly population. The Board then travelled to Milton Keynes to visit the head office of Energie Fitness to discuss the company's performance and strategy. The Board also had the opportunity to visit two gym franchisees nearby, one being the first franchisee to have opened nearly 18 years ago and the second one being a recently opened franchise. In all cases the Directors were impressed by the level of professionalism of all the managers of each of the businesses, their enthusiasm and the relationship they have with RM Funds. In 2023 the Board intends to visit many more of the projects funded by 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. 12 Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other information Investment policy, results and other information Risks and risk management Stakeholder engagement EGG The Board and the Investment Manager seek to understand and report In preparing the financial statements we have considered the to investors on the impact their capital has made to society and the upcoming liquidity opportunity consultation. As this consultation will planet. We have therefore engaged The Good Economy (“ TGE”) as the not conclude until after the approval of these financial statements it impact reporting and assurance partner for RMII . The first Impact means that there is material uncertainty over the going concern of the | Report was released in the Spring of 2022 ( | www | . rm | -funds.co. | uk / | Company. The Board will honour that commitment and our brokers | | --- | --- | --- | --- | --- | --- | | responsible-investing-4/responsible-investing-3/ | | ) and the second | | | will consult with Shareholders shortly. We hope that Shareholders can | | impact report is scheduled for release during | Q | 2 of 2023. | | | take a longer-term view, recognise the increased dividend target, see | the value within the portfolio and allow the Investment Manager to The Company will continue to target social good, and it is pleasing to continue to invest in attractive opportunities on your behalf. see new transactions being committed to over the period contained sustainability-linked lending covenants which incentivise the borrower I look forward to continued engagement with Shareholders. Please do to achieve social and environmental outcomes as measured against not hesitate to contact me through our brokers Singer Capital Markets specific objectives for each loan. or Peel Hunt if any additional information is required. Outlook Due to the increase in credit spreads and higher government bond yields the Investment Manager is making new loans at higher levels Norman Crighton increasing the average portfolio yield. The portfolio average yield rose Chair by 67bps over 2022 and this is set to rise further over 2023 thus 25 April 2023 generating additional net interest income. We therefore expect this to increase the level of dividend cover allowing for higher distributions absent of an increase in credit losses. We are therefore seeking to target distribution for 2023 to be at least 7 pence per Ordinary Share which is a 7.7% increase in income for Shareholders over the distributions received in 2022. Using the share price at the time of writing of 84 pence per share this would equate to a dividend yield more than 8.33% and represents an increase of 68bps over the dividend yield of 7.65% based on the closing share price as at 31 December 2022. Over the course of the financial year, the Company has operated in very challenging conditions. The discount levels at which our shares have traded at have been a function of rising yields. We recognised the issues and are seeking to address them by increasing the portfolio yield to higher, more attractive levels. Given our portfolio and the market backdrop in which we operate, this will naturally take some time. As detailed above, we expect the income yield paid to Shareholders to be higher than previously paid and we hope this increases the attractiveness of the shares, goes some way to addressing the discount we currently trade at and help restore the premium rating I targeted in last year’s report. Notwithstanding that, on the 12 May 2021 the Company announced that if the shares trade at more than an average of zero percent discount for the six-month period to 31 March 2023, that a liquidity consultation process will take place prior to the AGM to be held on 30 May 2023. 13 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Investment Manager's report ## Strong and sustainable NAV & income performance Over the course of the year, the portfolio generated a NAV Total Return of 4.98%, with total dividend distributions attributable to Shareholders for the year totalling 6.5 pence per Ordinary Share. Overall, the NAV per Ordinary Share decreased from 94.41 pence per Ordinary Share at 31 December 2021 to 92.49 pence per Ordinary Share at 31 December 2022. Over the past two years from January 2021 the Company has generated annualized NAV percentage Total Returns of 12.98% per annum and since IPO 5.49%, demonstrating the stable income and capital preservation which the Company is seeking to deliver for Investors. Following the year end, an interim dividend in respect of the period from 1 October 2022 to 31 December 2022 was declared on 1 March 2023 and was paid to Shareholders on the 31 March 2023. These dividends totalling 6.5 pence per Ordinary Share for the year ended 31 December 2022 bring the total distributions since the Company's launch in December 2016 to 37.225 pence per Ordinary Share, exceeding the target set at IPO. The portfolio yield increased by 72bps over the period and this increase is expected to continue over 2023 as any new loans are made with higher coupons. The Investment Manager has recommended to the Board that, absent of any increase in credit losses, the dividend can be increased to at least 7 pence per share for the period of 2023 and beyond if these favourable lending conditions persist. ## Financial performance Total income of £10.8m (2021: £11.2m) was marginally ahead of budget whilst expenses at £2.20m were marginally below budget leading to a profit before interest and tax of £8.6m, £429,000 ahead of budget. Set against this OakNorth Bank RCF costs were higher than budget with high utilisation combined with an increase in the cost of funds due to Bank of England Base Rate increases. Overall this led to a Profit after Interest cost that was £172,000 behind budget, a negative variance of 2.2% to budget. Given the challenging year and the provisions recorded versus income recognition the Investment Manager believes this is a satisfactory result. The split between cash interest and Payment-in-Kind interest was respectively £7.9m and £2.8m, or 74% / 26%. To note that the way construction facilities were underwritten during the reporting period, meant that drawdown under the allocated interest reserve accounts were considered PIK interest, which optically looks less favourable than in previous years, though providing significant benefits regarding the running yield on committed construction facilities. When these above-mentioned construction facilities are removed from the analysis, then the Cash/PIK split looks more favourable versus 2021. ### For the year ended 31 December 2022 | Income | £10,768,337 | | --- | --- | | Total expenses | (£2,201,431) | | Finance costs | (£1,102,169) | | **Total** | **£7,464,737** | | Dividends | (£7,655,526) | | **Loss after interest costs & before tax** | **(£190,789)** | There were four dividends paid or declared in respect of the year ended 31 December 2022 totalling 6.5 pence per Ordinary Share. | Period | Payment date | Dividend proceeds | | --- | --- | --- | | Q1 2022 | 24 June 2022 | £1,914,916 | | Q2 2022 | 30 September 2022 | £1,914,916 | | Q3 2022 | 30 December 2022 | £1,914,916 | | Q4 2022 | 31 March 2023 | £1,910,778 | During the year ended 31 December 2022, £376,949 was treated as income but written down as a bad debt provision, thus not included in the 2022 revenue line item. This provision was taken because the timing of the income receipt is uncertain and there is uncertainty over the recoverability of such income. In total the Company balance sheet now has £1.159m of income provisions. ## Share price performance Negative share price performance combined with the widening of the share price premium to NAV from 0.6% at the year ended 31 December 2021 to -8.10% at the year ended 31 December 2022 meant that there was a negative share price total return of -3.75%. Since IPO the Total percentage share return achieved is 24.74% which is annualised since inception at 3.81% per annum. This performance needs to be set against the wider negative market backdrop for fixed income and comparables to the broader sector peers. ## Market environment In the 2021 annual report outlook we noted 'as we look into 2022 it is likely that there will be further upwards pressure on government bond yields as inflationary pressures remain and central banks move into a tightening phase... negative outlook for general fixed income markets... credit spreads will likely move wider over the coming year.' All of this played out over the course of 2022 which was indeed a very difficult environment for credit, rates, and equities. The RMII portfolio was appropriately positioned with short duration exposure that minimised these wider credit spreads and higher underlying government bond yields. The ITRX Markit Crossover index widened from circa 250 to nearly 700 post the mini budget in September and ended the year materially wider than where it started at circa 450. 2-year UK government bond yields started the year comfortably under 1% and peaked at over 4.5% in late September and closed out the year at over 3.5%. The RMII portfolio did not suffer the volatility seen within these markets, however general fair value mark downs were taken during the year to reflect the widening in credit spreads and the increase in government bond yields. ## Portfolio performance Portfolio credit metrics improved over the year as measured by the proportion of senior loans and CBILS/RLS versus junior debt. As at the year end the portfolio was 63% invested within these types of loans versus 61% at the year ended 31 December 2021. The average life of the loan book reduced to 1.5 years as at the year-end (2021: 2.3 years) reflecting the continued strategic decision for the duration of the portfolio to remain as short as practically possible. As described on the 14 **Strategic report >** Governance Financial statements Other information Portfolio at a glance Market Company and sector objectives Chair's statement **Investment Manager's report** Investment policy, results and other information Risks and risk management Stakeholder engagement ESG **RM Infrastructure Income PLC** Annual Report & Accounts 2022 last annual report such short duration minimises exposure to these continued inflationary pressures described above and is a key reason why RMII should offer an attractive proposition as an alternative credit investment versus more traditional corporate bond funds that typically are lower yielding with longer durations. As at 31 December 2022, the overall number of loans within the portfolio remained relatively stable with 37 loans and 1 wholly owned asset (2021: 34 loans and 1 wholly owned asset) and total invested capital of £126m (2021: £131m). The weighted average yield of the portfolio stood at 9.21% as at 31 December 2022, which is a 67bps uplift versus the previous year of 8.54% as at 31 December 2021. This has been driven by the Company's ability to redeploy loan repayments into higher yielding investments, with new loans over the year earning an additional c.300bps versus the repaid loans. As most of these new investments were made in the second half of 2022 and is ongoing, investors should see the full effect over the course of 2023. It was an active year for the portfolio with new investments totalling c.£5.6m, drawdowns to existing facilities and re-investments totalling c.£15.5m and several repayments and divestments that totalled c.£26m during the year. During the year, the Company completed on its first ESG sustainability-linked investment via a c.£6.2m senior secured investment for the construction of a 45-bed modern purpose-built care home near London. The loan contains a margin ratchet, which is linked to environmental building standards, and operational and governance conditions which align with the Company's ESG reporting framework and its desire to address certain sustainable development goals. Going forward and where applicable, the Company will look to further introduce sustainability and other ESG considerations linkage to the applicable margin. The Company has contributed meaningfully to the provision of modern, purpose built and fit for purpose aged care capacity as two new sites in the northwest of England totalling 277 beds, funded by RMII were satisfactorily completed or nearing completion at the year end. The exposure to core sectors as measured by their commitments has increased to 59.1% as at 31 December 2022 vs 47.5% as of 31 December 2021. This inevitably will further increase over the course of 2023 as non-core sector investments come to maturity and are prepaid, with the most imminent one being the Company's asset-backed investments (c.11% of capital invested as at 31 December 2022). The Company's approach regarding the conservative valuation of its investments remains unchanged with fair value mark downs worth approximately £5.8m or c.5 pence per Ordinary Share. These provisions are driven by what is defined as market risk and idiosyncratic risk. For market risk during 2022 as risk free rates rose and credit spreads widened it was sensible to widen yields across the portfolio to reflect such public market moves. Idiosyncratic risk refers to loan specific information which is reflected within specific loan pricing. Over 2022 provisions were increased to reflect the wider markets and idiosyncratic risks and this was in line with our approach during the Covid Pandemic of 2020 – our view is that fair value mark downs are likely to partially reverse over the course of 2023 as market conditions stabilise. These fair value mark downs are in addition to the income provisions totalling £1.159m, or c.1 pence per Ordinary Share, described above. During the year the number of investments on the enhanced monitoring list dropped from three to one, as outlined below: ### 1. Removed from enhanced monitoring: Trent Capital *(Loan reference 62 & 63)* Reduced leverage with c.£2.2m recovered via revenues from residential properties against which the Company had a secured charge with further modest deleveraging expected over 2023. Performance wise, the operating business Trianco has been performing profitably since the restructuring and is well positioned to thrive on the UK's agenda to meet its net zero objectives. Although the performance of the business has been encouraging, the full credit provisions worth c.£0.7m, or c.0.8 pence per ordinary share have been retained. ### 2. Removed from enhanced monitoring: Coventry PBSA property *(Loan reference 68)* This Coventry-based student accommodation property is fully owned by the Company, post its lender-led administration in 2021. Cladding remedial works have now been fully completed with occupancy at c.65% and expected near full occupancy for the next academic year of 2023/24. Now that this has been rehabilitated the Company is pursuing a legal claim against the former main contractor to recover all costs and loss of income incurred to date, these claims have not been accounted for within the NAV of RMII. ### 3. Still under enhanced monitoring: Hotel Development & Contractor Glasgow *(Loan reference 58, 79, 80 & 92)* This hotel was scheduled to open in June 2022 and has been delayed to April 2023 and is to be operated by Virgin Hotels under a 35-year Hotel Management Agreement. The total market value exposure that is correlated to the outcome of this asset is currently 10.6% of Company net assets. Credit provisions of £2.8m or c.2.4 pence per ordinary share were made. ![img-0.jpeg](img-0.jpeg) ### Responsible investing RM Funds is a signatory to the Principles for Responsible Investment ("PRI"). The PRI defines responsible investment as a strategy and practice to incorporate environmental, social and governance factors in investment decisions. RM Funds incorporates ESG criteria early on as part of the investment process and in addition there is active engagement wherever possible with portfolio Companies to help them improve their ESG processes. In practice this is delivered by the RM Funds Responsible Investing Investment Policy which is integral to RM's business philosophy 15 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Investment Manager’s report ## continued as we believe we can make a difference. This policy framework applies to all investment made by RM Funds and is governed by our principals and our commitments: Our principles > Respect for the internationally proclaimed human rights principles, equal opportunity independent of gender, race or religion; freedom of association and the right to bargain collectively; > Working conditions that surpass basic health and safety standards; > The conduct of good governance practices, in particular in relation to bribery and conflicts of interest; and > Environmental responsibility and responsibility to active climate change engagement. Our commitments > Integrate the above principles into our decision-making process, by carefully considering ESG issues associated with any potential investment during the due diligence phase; > Encourage portfolio companies to follow the above principles by implementing governance structures that provide appropriate level of oversight and by seeking disclosure on ESG issues; > Provide ESG training and support to RM Fund’s employees involved in the investment process, so that they may perform their work Outlook for 2023 in accordance with the above principles and with this policy; As described earlier in the report, 2022 was a very poor year for fixed > Seek to be transparent in our efforts to integrate ESG income markets. The stage is set for a better 2023 and with 2-year UK considerations in investments and annually report on progress government bond yields touching 4% and wider credit spreads and towards implementing the above principles; corporate bond yields look appealing in the short end. The Company is now able to recycle its capital and earn higher returns which absent of > Comply with national and other applicable laws; and an increase in credit losses should allow for greater distributions for > Help promote the implementation of the above principles; consider investors. This is therefore a promising outlook with potentially higher our alignment with other related conventions and standards set by dividends and set against uncertain equity valuations such a stable Invest Europe, the UN Global Compact Initiative and the UN Principles income and NAV as targeted by RMII should appeal to a wide number for Responsible Investment (PRI); continuously strive to improve ESG of investors. performance within RM and our portfolio companies. Investment Manager aligned to investor interests At the IPO RM Funds purchased 500,000 Ordinary Shares and in line RM Capital Markets Limited with the commitment to investors made at IPO has made an ongoing 25 April 2023 commitment and by purchasing RMII shares, the Investment Manager has shown a significant alignment of its interests with Shareholders. Origination & Sourcing In addition to this the management team own additional shares in a personal capacity. Exit / Realisation ESG RM Funds has continued to purchase Ordinary Shares of the Company Refinancing Assessment during the year and at the year-end RM Funds own 1,316,625 Ordinary Shares, which is an increase of 37,500 Ordinary Shares over the year. RM Funds Private Credit Process Monitoring Credit & Control Analysis Due Diligence & Documentation 16 Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other Information Investment policy, results and other information Risks and risk management Stakeholder engagement ESG ## Investment policy, results ## and other information Investment objective > loans will be made across not less than four Market Sectors; The Company aims to generate attractive and regular dividends > not less than 70% of Gross Assets will be represented by loans through investment in secured debt instruments of UK SMEs and mid - denominated in sterling or hedged back to sterling; market corporates and/or individuals including any loan, promissory notes, lease, bond, or preference share (such debt instruments, as > loans made to borrowers in any one Market Sector shall not further described below, being “Loans”) sourced or originated by the exceed 40% of Gross Assets; Investment Manager with a degree of inflation protection through > loans with exposure to project development/construction assets index linked returns where appropriate. shall not exceed 20% of Gross Assets; Investment policy > the Company will not provide loans to borrowers whose principal The Company will seek to meet its investment objective by making business is defence, weapons, munitions or gambling; investments in a diversified portfolio of Loans to UK SMEs and mid > the Company will not provide Loans to borrowers which generate market corporates, special purpose vehicles and/or to individuals. their annual turnover predominantly from tobacco, alcohol or These Loans will generally be, but not limited to, senior, subordinated, pornography; and unitranche and mezzanine debt instruments, documented as loans, notes, leases, bonds or convertible bonds. Such Loans shall typically > the Company will not invest in other listed closed-ended funds. have a life of 2 10 years. In certain limited cases, Loans in which the Company invests may have equity instruments attached, ordinarily any In the event of a breach of the investment guidelines and restrictions such equity interests would come in the form of warrants or options set out above, the Investment Manager shall inform the Board upon attached to a Loan. Typically the Loans will have coupons which may becoming aware of the same and if the Board considers the breach to be fixed, index linked or LIBOR linked. be material, notification will be made to a Regulatory Information Service and the Investment Manager will look to resolve the breach For the purposes of this investment policy, UK SMEs include entities with the agreement of the Board. incorporated outside of the UK provided their assets and/ or principal operations are within the UK. The Company is permitted to make The Company intends to conduct its affairs so as to qualify as an investments outside of the UK to mid market corporates. investment trust for the purposes of section 1158 of the Corporation Tax Act 2010, and its investment activities will therefore be subject to Loans will be directly originated or sourced by the Investment Manager the restrictions set out above. who will not invest in Loans sourced via or participations through, peer to peer lending platforms. Borrowing and gearing The Company intends to utilise borrowings for investment purposes as Loans in which the Company invests will be predominantly secured well as for share buybacks and short term liquidity purposes. Gearing against assets such as real estate or plant and machinery and/or represented by borrowings, including any obligations owed by the income streams such as account receivables. Company in respect of an issue of zero dividend preference shares (whether issued by the Company or any other member of its group) or The Company will make Loans to borrowers in a range of Market any third party borrowings, will not, in aggregate exceed 20% of Net Sectors within certain exposure limits which will vary from time to Asset Value calculated at the time of drawdown. time, according to market conditions and as determined by the Board, subject to the Investment Restrictions set out below. Hedging and derivatives The Company may invest in derivatives for efficient portfolio The Company will at all times invest and manage its assets in a manner management purposes. In particular the Company can engage in which is consistent to the spreading of investment risk. interest rate hedging. Loans will primarily be denominated in sterling, however the Company may make limited Loans denominated in Investment restrictions currencies other than sterling and the Board, at the recommendation The following investment limits and restrictions will apply to the of the Investment Manager, may look to hedge any other currency Company’s Loans and business which, where appropriate, shall back to sterling should they see fit. be measured at the time of investment or once the Company is fully invested: In accordance with the requirements of the UK Listing Authority, any material change to the Company’s investment policy will require > the amount of no single Loan shall exceed 10% of Gross Assets; the approval of Shareholders by way of an ordinary resolution at a > exposure to a single borrower shall not exceed 10% of Gross Assets; general meeting. 17 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Investment policy, results and other information *continued* ## Dividend policy Dividends are expected to be declared by the Directors in May, August, November and February of each year in respect of the preceding quarter with dividends being paid in June, September, December and March. The last dividend in respect of any financial year is declared prior to the relevant annual general meeting. Therefore, it is declared as a fourth interim dividend and no final dividend is payable. The Board understands that this means that Shareholders will not be given the opportunity to vote on the payment of a final dividend. However, the Board believes that the payment of a fourth interim dividend as opposed to a final dividend is in the best interests of Shareholders as it provides them with regularity on the frequency of dividend payments and avoids the delay to payment which would result from the declaration of a final dividend. A resolution will be put forward at the Annual General Meeting to approve the policy of declaring and paying all dividends of the Company as interim dividends. The Company targeted an annualised dividend yield in excess of 6.5% for the financial year to 31 December 2022. Investors should note that the targeted annualised dividends are targets only and not profit forecasts and there can be no assurance that either will be met or that any dividend growth will be achieved. ## Results and dividend The Company's revenue return after tax for the year ended 31 December 2022 amounted to £7,462,000 (2021: £7,742,000). The Company made a capital loss after tax of £2,072,000 (2021: capital profit of £1,263,000). Therefore, the total return after tax for the Company was £5,390,000 (2021: £9,005,000). The first interim dividend of 1.625p per Ordinary Share was declared on 25 May 2022 in respect of the period from January to March 2022. The second interim dividend of 1.625p per Ordinary Share for the quarter ended 30 June 2022 was declared on 3 August 2022 and the third interim dividend of 1.625p per Ordinary Share for the quarter ended 30 September 2022 was declared on 1 November 2022. On 1 March 2023, the Board declared a fourth interim dividend of 1.625p per Ordinary Share for the quarter to 31 December 2022. ## Key performance indicators ("KPIs") The Board measures the Company's success in attaining its investment objective by reference to the following KPIs: ### (i) Dividends A fourth interim dividend for the quarter ending 31 December 2022 of 1.625p per share was paid to Shareholders on the 31 March 2023 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 +4.98% (2021: +7.6%) in the year ended 31 December 2022. ### (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 8.1% discount (2021: premium of 0.6%) to the NAV as at 31 December 2022. To address the discount, 204,629 shares were bought back during the year at 85 pence per share. This added 0.15 pence per Ordinary Share to the NAV. Following the Company's year end, 50,000 shares have been bought back. ### (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 2022, the Company's ongoing charges figure calculated in accordance with the AIC methodology was 1.86% (2021: 1.92%). 18 Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other information Investment policy, results and other information Risks and risk management Stakeholder engagement ESG ## Risks and risk management Principal and emerging risks and uncertainties Market sectors The Board is responsible for the management of risks faced by the Loans will be made to borrowers that operate in different market Company and delegates this role to the Audit and Management sectors each of which will have risks that are specific to that particular Engagement Committee (the “Committee”). The Committee market sector. periodically carries out a robust assessment of principal and emerging risks and uncertainties and monitors the risks on an ongoing basis. Valuation The Committee considers both the impact and the probability of each The Company’s approach regarding the conservative valuation of its risk occurring and ensures appropriate controls are in place to reduce investments remains unchanged, with fair value write downs driven by risk to an acceptable level. The experience and knowledge of the Board market risk and idiosyncratic risk, with idiosyncratic risk relating to is invaluable to these discussions, as is advice received from the loan specific information which is reflected within specific loan pricing. Board’s service providers, specifically the AIFM who is responsible for the risk and portfolio management services and outsources the Management of risks portfolio management to the Investment Manager. The Committee has The Company has appointed an experienced Investment Manager who a dynamic risk matrix in place to help identify key risks in the business directly sources loans. The Company is investing in a wide range of and oversee the effectiveness of internal controls and processes. loan types and sectors and therefore benefits from diversification. During the year under review the Committee was particularly Investment restrictions are relatively flexible giving the Manager ability concerned with the increase in geopolitical risk following the outbreak to take advantage of diverse loan opportunities. of war in the Ukraine. The subsequent rise in global energy prices, inflation and rising interest rates worldwide have led to a more For market risk during 2022 as risk free rates rose and credit spreads uncertain investment environment. The Committee continues to widened, yields were widened across the portfolio to reflect such review the processes in place to mitigate risk; and to ensure that these public market moves. are appropriate and proportionate in the current market environment. Provisions were increased to reflect the wider market and idiosyncratic The principal and emerging risks, together with a summary of the risks and this was in line with the Company’s approach during the processes and internal controls used to manage and mitigate risks Covid-19 pandemic of 2020. Fair value mark downs are expected to where possible are outlined in the following paragraphs. partially reverse over the course of 2023 as market conditions stabilise. (i) Market risks The Investment Manager, AIFM, Brokers and the Board review market Availability of appropriate investments conditions on an ongoing basis. There is no guarantee that loans will be made in a timely manner. (ii) Risks associated with meeting the Company’s Before the Company is able to make or acquire loans, the Investment investment objective or target dividend yield Manager is required to complete necessary due diligence and enter The Company’s investment objective is to generate attractive and into appropriate legal documentation. In addition, the Company may regular dividends through investment in loans sourced or originated become subject to competition in sourcing and making investments. by the Investment Manager and to generate capital appreciation by Some of the Company’s competitors may have greater financial, virtue of the fact that the returns on some loans will be index-linked. technical and marketing resources or a lower cost of capital and the The declaration, payment and amount of any future dividends by the Company may not be able to compete successfully for investments. Company will be subject to the discretion of the Directors and will Competition for investments may lead to the available interest coupon depend upon, amongst other things, the Company successfully on investments decreasing, which may further limit the Company’s pursuing the investment policy and the Company’s earnings, financial ability to generate its desired returns. position, cash requirements, level and rate of borrowings and availability of profit, as well as the provisions of relevant laws or If the Investment Manager is not able to source a sufficient number of generally accepted accounting principles from time to time. suitable investments within a reasonable time frame whether by reason of lack of demand, competition or otherwise, a greater Management of risks proportion of the Company’s assets will be held in cash for longer than The Investment Manager has a well-defined investment policy and anticipated and the Company’s ability to achieve its investment process which is regularly and rigorously reviewed by the independent objective will be adversely affected. To the extent that any investments Board of Directors and performance is reviewed at quarterly Board to which the Company is exposed prepay, mature or are sold it will meetings. The Investment Manager is experienced and employs its seek to reinvest such proceeds in further investments in accordance expertise in making investments in a diversified portfolio of loans. with the Company’s investment policy. 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. 19 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Risks and risk management ## continued (iii) Financial risks Emerging risks The Company’s investment activities expose it to a variety of financial The Board also has robust processes in place to identify and evaluate risks which include liquidity, currency, leverage, interest rate and emerging risks. credit risks. (vi) Business interruption Further details on financial risks and the management of those risks Failure in services provided by key service providers, meaning can be found in note 19 to the financial statements. information is not processed correctly or in a timely manner, resulting in regulatory investigation or financial loss, failure of trade settlement, (iv) Corporate governance and internal control risks or potential loss of investment trust status. The Company has no employees, and the Directors have all been appointed on a non-executive basis. The Company must therefore rely Failure to identify emerging risks may cause reactive actions rather upon the performance of third-party service providers to perform its than being proactive and the Company could be forced to change its executive functions. In particular, the AIFM, the Investment Manager, structure, objective or strategy and, in worst case, could cause the the Administrator, the Company Secretary and the Registrar, will Company to become unviable or otherwise fail. perform services that are integral to the Company’s operations and financial performance. The ongoing impact of COVID-19 on the markets and the Company’s financial position continue to be monitored by the Investment Poor performance of the above service providers could lead to various Manager and the Board. consequences including the loss of the Company’s assets, inadequate returns to Shareholders and loss of investment trust status. Cyber During the year under review the Committee was particularly security risks could lead to breaches of confidentiality, loss of data concerned with the increase in geopolitical risk following the outbreak records and inability to make investment decisions. of war in the Ukraine. The subsequent rise in global energy prices, inflation and rising interest rates worldwide have led to a more Management of risks uncertain investment environment. The Company’s portfolio has no Each of the above contracts was entered into after full and proper direct exposure to Russia or Ukraine and the Company’s cash position consideration of the quality and cost of services offered, including the remains robust, however the impact of sanctions and exposure via the financial control systems in operation in so far as they relate to the underlying businesses of multinational companies can have a material affairs of the Company. All of the above services are subject to ongoing impact on investment returns. oversight of the Board and the performance of the principal service providers is reviewed on a regular basis. The Company’s key service Management of risks providers report periodically to the Board on their procedures to Each service provider has business continuity policies and procedures mitigate cyber security risks. 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. (v) Regulatory risks The Company and its operations are subject to laws and regulations The following is a description of the Company’s service providers who enacted by national and local governments and government policy. assist in identifying the Company’s emerging risks to the Board. Compliance with, and monitoring of, applicable laws and regulations 1. Investment Manager: the Investment Manager provides a report to may be difficult, time consuming and costly. Any change in the laws, the Board at least quarterly on industry trends, insight to future regulations and/or government policy affecting the Company or challenges in the sector, including the regulatory, political and any changes to current accountancy regulations and practice in economic changes likely to impact the Company. The Chair also has the UK may have a material adverse effect on the ability of the contact with the Investment Manager on a regular basis to discuss Company to successfully pursue its investment policy and meet its any pertinent issues; investment objective and/or on the value of the Company and the shares. In such event, the performance of the Company, the NAV, 2. Alternative Investment Fund Manager: the AIFM maintains a the Company’s earnings and returns to Shareholders may be register of identified risks including emerging risks likely to impact materially adversely affected. the Company, which is updated quarterly following discussions with the Investment Manager and other service providers. The risks Management of risks are documented on a risk register, and classified in the following The Company has contracted out relevant services to appropriately categories: Market Risks; Risks associated with Investment qualified professionals. The Secretary and AIFM report on compliance Objective; Financial Risks; Corporate Governance Risks; Regulatory matters to the Board on a quarterly basis and the Board has access Risks and Emerging Risks. Any changes and amendments to the to the advice of its Corporate Broker on a continuing basis. The risk register are highlighted to the Board on a quarterly basis; assessment of regulatory risks forms part of the Board’s risk assessment programme. 20 Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other information Investment policy, results and other information Risks and risk management Stakeholder engagement ESG 3. Brokers: provide advice periodically, specific to the Company on Management of risks the Company’s sector, competitors and the investment company The Company incorporates ESG considerations into its investment market whilst working with the Board and Investment Manager process and more detail can be found on pages 25 and 26 of the to communicate with Shareholders; Annual Report. The Investment Manager also uses its position to engage with and influence companies towards taking positive steps to 4. Company Secretary: briefs the Board on forthcoming legislation contribute to ESG and against climate change. The Company’s ESG and regulatory change that might impact the Company. Policy, which is updated annually is also published on the Company’s The Secretary also liaises with the Company’s Legal Adviser, website and the AIC website. The Board have considered the impact Auditor and the AIC (including other regulatory bodies) to of climate change on the financial statements as documented in the ensure that industry and regulatory updates are brought to the Notes to the financial statements on page 59. Board’s attention. The Company released its first annual Impact Report provided by The The Board regularly reviews the Company’s risk matrix, focussing on Good Economy, an independent advisory firm specialising in impact risk mitigation and ensuring that the appropriate controls are in place. measurement and management. The Report, covering the 12-month Regular review ensures that the Company operates in line with the period to end March 2022, assesses the Company’s 12-month risk matrix, prospectus and investment strategy. Emerging risks are performance against its stated impact objectives relating to UN actively discussed throughout the year to ensure that risks are Sustainable Development Goals: Healthcare, Education, Housing, identified and managed so far as practicable. The experience and Affordable and clean energy, Climate action and Responsible knowledge of the Board is invaluable to these discussions, as is advice consumption and production. received from the Board’s service providers. RM Funds is a signatory to the Principles of Responsible Investment All key service providers produce annual internal control reports for Initiative (“PRI”) and reports annually according to the PRI reporting review by the Audit and Management Engagement Committee. These framework. reviews include consideration of their business continuity plans and the associated cyber security risks. Service providers report on cyber Investment trusts are currently exempt from the Task Force on risk mitigation and management at least annually, which includes Climate-Related Financial Disclosures (“TCFD”) disclosure, however the confirmation of business continuity capability in the event of a Board will continue to monitor the situation. 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, including consideration of the uncertainty resulting from the upcoming liquidity opportunity consultation, is given on page 31. The Investment Manger 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 Manger 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. 21 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Stakeholder engagement Promoting the success of the Company externally managed investment company, the Company does not have This section of the Annual Report covers the Board’s considerations and any employees, rather it employs external suppliers to fulfil a range of activities in discharging their duties under s.172(1) of the Companies Act functions, including investment management, secretarial, 2006, in promoting the success of the Company for the benefit of its administration, custodial, broking, valuation, marketing and banking members as a whole. This statement includes consideration of the likely services. All these service providers help the Board to fulfil its consequences of the decisions of the Board in the longer term, how the responsibility to engage with stakeholders and it should be noted are Board has taken wider stakeholders’ needs into account and the impact also, in turn, stakeholders themselves. of the Company’s operations on the environment. The Board has identified the major stakeholders in the Company’s The Board, together with the Investment Manager, sets an overall business. On an ongoing basis, the Board monitors both potential and investment strategy and reviews this on an ongoing basis. The Board is actual impacts of the decisions it makes in respect of the Company ultimately responsible for all stakeholder engagement, however as an upon those major stakeholders identified. Stakeholder Engagement and key Board decisions Company service The Board believes that positive relationships with each of the Company’s service providers and between service providers providers is important in supporting the Company’s long-term success. In order to foster strong working relationships, the Company’s key service providers (the Investment Manager, AIFM, Broker, Company Secretary and Administrator) are invited to attend quarterly Board meetings to present their respective reports which enables the Board to exercise effective oversight of the Company’s activities. Separately, the Auditor is invited to attend the Audit and Management Engagement Committee meeting at least twice per year. The Audit and Management Engagement Committee Chair maintains regular contact with the Audit Partner to ensure the audit process is undertaken effectively. The Board and advisers seek to maintain constructive relationships with the Company’s suppliers on behalf of the Company through regular communications, meetings and the provision of relevant information and update meetings. The Board has also spent time engaging with the Company’s key service providers outside of scheduled Board meetings to develop its working relationship with those service providers and ensure the smooth operational function of the Company. Since the Company was launched in 2016, the Board has made an annual visit to the Investment Manager’s offices in Edinburgh to meet with staff and members of the investment committee who are responsible for finding and vetting opportunities. One of the most significant service providers for the Company’s long-term success is the AIFM who have engaged the Investment Manager for the purpose of providing investment advisory services to the Company. The Board regularly monitors the Company’s investment performance in relation to its objectives and investment policy and strategy. The Board receives and reviews regular reports and presentations from both the AIFM and Investment Manager and seeks to maintain regular contact to ensure a constructive working relationship. Representatives of the Investment Manager attend Board meetings. The Investment Manager’s remuneration is based on the NAV of the Company which aligns their interests with those of Shareholders. On an annual basis, the Board reviews the continuing appointment of each service provider to ensure re-appointment is in the best interests of the Company’s Shareholders. The Board appoints Joint Corporate Brokers, Peel Hunt and Singer Capital Markets. The Board appreciates and values the Company’s brokers. 22 Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other information Investment policy, results and other information Risks and risk management Stakeholder engagement ESG Stakeholder Engagement and key Board decisions Shareholders The Company offers investors a different asset class, with a substantial yield generated on a sustainable basis from long-term assets with predictable income streams and a strong pipeline. Any lending business needs to correctly assess and manage credit. The Company has all these characteristics. To help the Board in its aim to act as fairly as possible between the Company’s members, it seeks to ensure effective communication is provided to all Shareholders. Meetings with Shareholders help the Board to better understand their needs and concerns and will inform the Board’s decision making. The Board looks to attract long-term investors in the Company and in doing so, it has sought out regular opportunities to communicate with Shareholders through: > Annual and interim reports > Dedicated Company website > Regular market announcements > Monthly factsheets > Investor roadshows and presentations > Dialogue with shareholders > Annual General Meeting > Annual Capital markets day The Board encourages Shareholders to attend and participate in the Company’s Annual General Meeting (“AGM”) in normal circumstances and the Investment Manager attends, providing a presentation on the Company’s performance during the year, challenges and outlook for the future. The Company values any feedback and questions it may receive from Shareholders ahead of and during the AGM. In normal circumstances the Board and Investment Manager, with the help of the Company’s Brokers, organise an annual Capital Markets Day. The event includes presentations by the Company’s Investment Manager and certain borrowers funded by the Company since its launch. The Board believes that Shareholders can only make informed decisions if they have access to relevant information on a timely basis. To provide transparency a variety of methods of communication are used. The Company’s website www.rm-funds.co.uk/rm-infrastructure-income/ is considered an essential communication channel and information hub for Shareholders. As such, it includes full details of the investment objective, along with news, opinions, disclosures, results and key information documents. The Annual and Interim reports and accounts are published on the Company’s website and available as a printed copy on request. The date of the AGM is published in advance (online and within the Annual Report) and the full Board is normally available to meet and speak with all Shareholders who attend it. Directors are also available to meet with Shareholders during the year. In addition, factsheets, providing performance information are published monthly and are also available on the Company’s website. The Company has joint corporate brokers, which allows the Board to successfully market the Company to as broad a range of shareholders as possible, thereby improving the rating the shares currently trade on, increasing secondary market liquidity for existing Shareholders and spreading fixed costs across a greater asset base. 23 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Stakeholder engagement ## continued Stakeholder Engagement and key Board decisions Borrowers During the year the Board took the opportunity, when Covid restrictions allowed, to visit several of the projects funded by Shareholders. In July 2022 the Directors visited Trianco (Trent), an energy efficiency manufacturer based in Rotherham and spent several hours with management, discussing the business and touring the factory. In August 2022, ahead of the Board meeting, the Board also took the opportunity to visit the development at Clyde Street in Glasgow and meet the site managers. Following the year end, the Board visited Southport and Lytham to visit two purpose-built care homes managed by Athena Healthcare Group. The Board also travelled to Milton Keynes to visit the head office of Energie Fitness to discuss the company’s performance and strategy and also two gym franchisees nearby. The Investment Manager ensures that the Company applies the correct approach to credit, limiting the exposure and reducing any loss in the event of default. The Company’s credit risk is well controlled, significantly reducing the risk that impairments will put the dividend under pressure. When considering prospective borrowers, the Investment Manager takes into account two credit considerations: > how much debt can the borrower afford to take on? The Investment Manager will assess the maximum level of the debt the borrower can afford by using internal proprietary models. The exposure of the borrower is determined by the levels of visible net cash-flows the borrower has. The Investment Manager believes that this is the most suitable metric for determining repayment by the borrower rather than simple turnover or sales-based metrics; and > how secure are the assets and/or the cash -flows that the Company has security over? The Investment Manager will assess the assets of the borrower and their likely residual values and/or cash flows and their continued viability. The Investment Manager has long standing relationships with Investment Banks, Commercial Banks, Challenger Banks, Financial Advisory Firms, Sponsors and Borrowers, providing access to investment opportunities. Wider community The Investment Manager, as steward of the Company’s assets engages with the portfolio companies to ensure high and the standards of governance. The investment strategy of the Company is predicated upon the commitment of portfolio Environment companies to act in the interests of all stakeholders. In making investment decisions, the Investment Manager takes into account qualitative measures such as the environmental and social impact of a company as well as financial and operational measures. The Company has articulated its policy on ESG factors involved in the investment decision making and evidence of constructive engagement with investee companies. See pages 25 and 26. The ESG policy is available on both the Company’s website and the AIC’s website. During the year, 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 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. In summary, the Directors are cognisant of their duties enshrined in Section 172 of the Companies Act 2006 to make decisions taking into account the long-term consequences of all the Company’s key stakeholders and reflect the Board’s belief that the long term sustainable success of the Company is linked directly to its key stakeholders. 24 Strategic report > Portfolio at a glance RM Infrastructure Income PLC Market Governance Company and sector objectives Annual Report & Accounts 2022 Chair’s statement Financial statements Investment Manager’s report Other Information Investment policy, results and other information Risks and risk management Stakeholder engagement ESG ## Environmental, Social and ## Governance (“ESG”) In recognition of the need to fulfil the Company’s investment objective RM Funds’ has an extensive Responsible Investment Policy which of generating attractive and regular dividends, the Board works closely negatively screens any investment which does not align with our ESG with the Investment Manager in developing its investment strategy philosophy. In considering ESG issues and factors, RM Funds takes into and underlying policies, in order to fulfil its investment objective, account the requirements of the UN Guiding Principles on Business in an effective and responsible way in the interests of Shareholders, and Human Rights, the factors set out in the SASB Materiality Map, potential investors and the wider community. the targets of the Sustainable Development Goals, and the measures needed to meet the Paris Climate Commitment. Furthermore, RM Funds seek to minimise their operation footprint and in 2022 RMII seeks to positively allocate capital to sectors and investments commissioned a study by BeZero on the firms carbon footprint: that can meaningfully help achieve contributions towards UN www.rm-funds.co.uk/responsible-investing-4/ Sustainable Development Goals 3, 4, 7, 11, 12 & 13 (https://www. un.org/sustainabledevelopment/sustainable-development-goals/). RM Funds wishes to better understand their carbon intensity and develop carbon mitigation and offsetting strategies over the next two years. In partnership with The Good Economy, RM Funds has developed an impact framework that scores transactions according to the ESG and The Board and Investment Manager recognise that investments can Impact outcomes. The scoring framework is designed to assess the have a direct impact on society and the planet and with this comes a core borrower ESG performance in conjunction with the impact responsibility to positively allocate capital to companies who act to outcomes of the capital invested. The approach has been deliberately avoid harm, benefit stakeholders or contribute to solutions. aligned with recognised impact standards, and incorporates a score that is the sum of identifiable Environmental & Social outcomes, Our philosophy is to give investors visibility over the impact of our combined with factors that recognise our capital contribution and investments and to endeavour to report on progress. RM seeks to borrower intentionality towards the desired outcomes. External rigour actively and productively engage with investee companies to achieve is provided by The Good Economy, who act as the impact assurance mutually beneficial outcomes. and reporting partner for our investors. Wherever possible RM seeks to identify investments beneficial for The Company is categorised as a lower energy user under the HMRC contributing towards defined Sustainable Development Goal Environmental Reporting Guidelines March 2019 and is therefore not (“SDG”) outcomes. required to make the detailed disclosures of energy and carbon information set out within the guidelines. The Company’s energy and RM Funds is signatory to the United Nations Principles for Responsible carbon information is not therefore disclosed in this report. Investment (“UN PRI”), is fully committed to the UK Stewardship Code and RM Funds is proud to publicly support the Paris Agreement The Company has no greenhouse gas emissions to report from its and Task Force on Climate-related Financial Disclosures (“TCFD”). operations, nor does it have responsibility for any other emissions The 2021 PRI Scorecard can be reviewed on the Company website: producing sources under the Companies Act 2006 (Strategic Report www.rm-funds.co.uk/wp-content/uploads/2022/10/2021- and Directors’ Reports) Regulations 2013. Assessment-Report-for-RM-Funds-1.pdf Culture The Board and the Investment Manager believe that responsible A company’s culture would typically be defined as the beliefs and investment is important and have long been committed to high ESG behaviours that determine how a company’s employees and standards, integrating ESG factors into the investment process and management interact. As an investment trust, the Company has no ensuring there is active engagement wherever possible with portfolio employees but it recognises the importance of culture and the need to companies to help them improve their ESG processes. align the culture with the Company’s investment policy, values and strategy. The Board’s culture promotes strong governance and debate The UN PRI is a framework of six principles which RM Funds, and the Company is committed to acting professionally, fairly and with as signatory, has incorporated into its business integrity in all its business dealings and relationships in which it (https://www.unpri.org/about-us/what-are-the-principles-for- operates, mindful of the interests of all stakeholders responsible-investment). The UN PRI is a network of those in the investment community who work together to ensure that ESG Employees considerations are integrated into the investment process. Further The Company has no employees. As at 31 December 2022, the details can be found at https://www.unpri.org/PRI. As a signatory to Company had three Directors of whom one is female and two are the Principles, the Investment Manager publicly commits to adopt and male. The Board’s policy on diversity is contained in the Corporate implement them, where consistent with their fiduciary responsibilities. Governance Report (see page 37). The Board is supportive of the Investment Manager’s approach. 25 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Environmental, Social and ## Governance (“ESG”) continued Social, community and human rights issues The Company, as an investment company, has no direct impact on social, community, environmental or human rights matters. Modern slavery disclosure Due to the nature of the Company’s business, being a Company with no employees that does not offer goods or services directly to consumers, the Board considers that it is not within the scope of modern slavery. The Board considers the Company’s supply chains, dealing predominately with professional advisers and service providers in the financial service industry, to be low risk in relation to this matter. Board composition and succession planning The Directors have a broad range of relevant skills required to fulfil their duties as custodians of Shareholders investments. The composition of the Board is reviewed at each board meeting and any issues identified will be addressed as deemed necessary. As the Board approaches its tenth anniversary, it is the intention that by then the existing Directors will have resigned to be replaced by a fresh Board. Further details of this process will be given in the next annual report. Outlook The outlook for the Company is discussed in the Chair’s Statement on page 13. Strategic report The Strategic Report set out on pages 1 to 26 of this Annual Report was approved by the Board of Directors on 25 April 2023. For and on behalf of the Board Norman Crighton Chair 25 April 2023 26 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report ## Governance 27 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Directors' report The Directors present their report and the audited financial statements of the Company for the year ended 31 December 2022. ## Strategic report The Directors' Report should be read in conjunction with the Strategic Report on pages 1 to 26. ## Corporate governance The Corporate Governance Statement on pages 28 to 44 forms part of this report. ## Legal and taxation status The Company is an investment company within the meaning of Section 833 of the Companies Act 2006. The manner in which the Company conducts its affairs meets the requirements for approval as an investment trust under Section 1158 of the Corporation Tax Act 2010. The Company has received approval as an investment trust and the Company must meet eligibility conditions and ongoing requirements in order for investment trust status to be maintained. In the opinion of the Directors, the Company has met the conditions and requirements for approval as an investment trust for the year ended 31 December 2022 and intends to continue to do so. ## Investment Manager RM Capital Markets Limited ("RM Funds") is the Company's Investment Manager and is regulated by the Financial Conduct Authority. The Investment Manager is appointed under a contract subject to 12 months' notice. On 12 May 2020 the Investment Management Agreement (the "IMA"), dated 30 November 2016, between the Company, the Investment Manager and the AIFM was amended. Following the amendment to the IMA, the Investment Manager is entitled to a management fee calculated at the rate of: - a) 0.875 per cent. of the prevailing Net Asset Value ("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 - c) 0.750 per cent. of the prevailing NAV in the event that the prevailing NAV is above £500 million. In addition, the term of the IMA was extended. Initially the IMA was subject to 12 months' notice, provided such notice could not be given earlier than the third anniversary of the initial admission of RMII's shares to trading on the London Stock Exchange's main market for listed securities which took place on 15 December 2016. Following the amendment of the IMA, the appointment of the Investment Manager is subject to 12 months' notice provided such notice cannot be given earlier than 1 April 2023. The Investment Manager continues to purchase shares in the Company on a regular basis and the IMA provides that the Investment Manager must apply up to 10 per cent. of the Management Fee received quarterly (subject to a minimum of £10,000 being so applied) by subscribing and/or purchasing shares in RMII. Although the IPO lock-in period has expired (as at 15 December 2019) any shares that the Investment Manager is issued as part of its management fee are locked-in for a 12 month period from the date of issue and in addition there was a 12 month period (to 15 December 2021) where any disposal of shares needed to be done through the Company's broker so as to create an orderly market in the shares. In accordance with the Directors' policy on the allocation of expenses, 100% of the management fee payable is charged to revenue. The Board reviews this policy on a periodic basis and confirms this allocation remains consistent with their expectations of future returns from the portfolio. ## Alternative Investment Fund Manager ("AIFM") With effect from 2 November 2022, the name of the Company's Alternative Investment Fund Manager ("AIFM") changed from Sanine Fund Management (Guernsey) Limited to FundRock Management Company (Guernsey) Limited. All services provided to the Company by the AIFM remained unchanged. FundRock Management Company (Guernsey) Limited act as AIFM of the Company for the purposes of the Alternative Investment Fund Manager's Directive ("AIFMD") subject to the overall supervision of the Board. The AIFM has delegated responsibility for the management of the Company's portfolio to the Investment Manager through an Investment Management Agreement. Under the terms of the AIFM Agreement and with effect from Admission, the AIFM shall be entitled to receive from the Company a fee to be calculated and accrued monthly in arrears at a rate equivalent to 0.125% of the Company's NAV subject to an annualised minimum of £85,000 applied on a monthly basis. An annual review of the minimum fee will take place on 1 May each year. The AIFM is also entitled to reimbursement of reasonable expenses incurred by it in the performance of its duties. The AIFM Agreement is terminable by either the AIFM or the Company giving to the other not less than six months' written notice. The AIFM Agreement may be terminated with immediate effect on the occurrence of certain events, including insolvency, on a change of control of the AIFM or in the event of a material breach which fails to be remedied within 30 days of receipt of notice. The AIFM Agreement shall terminate immediately if the Investment Management Agreement is terminated for whatever reason. The AIFM must ensure that an annual report containing certain information on the Company is made available to investors for each financial year. 28 Strategic report **Governance >** Financial statements Other information Directors' report Corporate governance Directors' remuneration report Report of the Audit and Management Engagement Committee Directors' responsibility statement Independent Auditor's report RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Leverage (under AIFMD) The AIFM is required to set leverage limits as a percentage of net assets for the Company utilising methods prescribed under AIFMD. These methods are known as the Gross Method and the Commitment Method. Under both methods the AIFM has set current maximum limits of leverage for the Company of 120%. A leverage percentage of 100% equates to nil leverage. The Company's leverage under each of these methods at the year-end is shown below: | | Gross method | Commitment method | | --- | --- | --- | | Maximum leverage limit | 120% | 120% | | Actual leverage at 31 December 2022 | 113% | 116% | ## Management engagement The Board has reviewed the Investment Manager's and AIFM engagement, including its management processes, risk controls and the quality of support provided to the Company and believes that its continuing appointment, on its current terms, remains in the interests of Shareholders at this time. Such a review is carried out on an annual basis. The last review was undertaken at a meeting of the Audit and Management Engagement Committee held on 1 November 2022. ## Special reserve In order to increase the distributable reserves available to facilitate the payment of future dividends, on 15 March 2017, the amount standing to the credit of the share premium account of the Company immediately following completion of the first issue of Ordinary Shares was cancelled and transferred to a Special reserve. The Company may, at the discretion of the Board, pay all or part of any future dividends out of this Special reserve, taking into account the Company's investment objective. Dividends will normally be funded through interest received through investments in Loans sourced or originated by the Investment Manager alternatively by the revenue reserve. ## Share issues The Board recommends that the Company be granted a new authority to allot up to a maximum of 11,758,635 Ordinary Shares (representing approximately 10% of the shares in issue, excluding Shares held in treasury, at the date of this document) and to dis-apply pre-emption rights when allotting those Ordinary Shares and/or selling shares from treasury. Resolutions to this effect will be put to Shareholders at the AGM and are contained in the Notice of AGM. The maximum number of Ordinary Shares which can be admitted to trading on the London Stock Exchange without the publication of a prospectus is 20% of the Ordinary Share Capital on a rolling previous 12 month basis at the time of admission of the shares. ## Treasury shares The Companies Act allows companies to hold shares acquired by way of market purchases as treasury shares, rather than having to cancel them. This would give the Company the ability to re-issue Ordinary Shares quickly and cost effectively, thereby improving liquidity and providing the Company with additional flexibility in the management of its capital base. No Ordinary Shares will be sold from treasury at a price less than the (cum-income) NAV per existing Ordinary Share at the time of their sale unless they are first offered pro rata to existing Shareholders. The Company bought back 204,629 Ordinary Shares into treasury during the year ended 31 December 2022. ## Discount management The Company may seek to address any significant discount to NAV at which its Ordinary Shares of the Company may be trading, through tender offers, buy-backs and the provision of a liquidity opportunity consultation, as appropriate. The Directors will consider repurchasing shares in the market if they believe it to be in Shareholders' interests. The Directors may, at their absolute discretion, use available cash to purchase in the market, shares of a class in issue at any time, subject to having been granted authority to do so, should the shares of such class trade at an average discount to NAV (calculated daily in accordance with the methodology set out below) of more than 6% as measured each month over the preceding six month trading period. The average discount will be calculated by dividing the sum of the discount or premium (as the case may be) on each business day in a calendar month (adjusted for dividends) by the number of such business days. The premium or discount on any given day is to be calculated by reference to the closing share price and the NAV announced for that month. In exercising their powers to buy back shares, the Directors have complete discretion as to the timing, price and volume of shares so purchased. No expectation or reliance should be placed on the Directors exercising such discretion on any one or more occasions. The Directors have the authority to make market purchases of Ordinary Shares. The maximum price (exclusive of expenses) which may be paid for an Ordinary Share must not be more than the higher of: (i) 5% above the average of the mid-market values of the Ordinary Shares for the five Business Days before the purchase is made; or (ii) the higher of the price of the last independent trade and the highest current independent bid for the Ordinary Shares. Ordinary Shares will be purchased only at prices below the prevailing NAV per Ordinary Share, which should have the effect of increasing the NAV per Ordinary Share for remaining Shareholders. 29 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Directors' report Continued It is intended that a renewal of the authority to make market purchases will be sought from Shareholders at each Annual General Meeting ("AGM") of the Company and such a resolution will be put forward at the forthcoming AGM. Purchases of Ordinary Shares will be made within guidelines to be established from time to time by the Board. Any purchase of Ordinary Shares would be made only out of the available cash resources of the Company. Ordinary Shares purchased by the Company may be held in treasury or cancelled. Purchases of Ordinary Shares may be made only in accordance with the Articles of Association, the Companies Act, the Listing Rules and the Disclosure Guidance and Transparency Rules. Since the Company's year end, the Board decided to make use of its share buyback powers as a means of correcting any imbalance between supply of and demand for the Ordinary Shares. The Company began a programme of share buybacks on 7 April 2020. The Company has bought back a total of 4,638,222 Ordinary Shares, representing 9.2% of the opening issued share capital, at an average discount of 9.1%. The effect of these repurchases has been to enhance NAV by 0.15 pence per Ordinary Share. Since the year end the Company has bought back 50,000 Ordinary Shares, which are held in treasury. ## Liquidity opportunity consultation Within its 2020 Annual Report & Accounts issued on the 29 March 2021, the Company announced that in connection with the proposal detailed in its 2016 IPO Prospectus, and in order to offer Shareholders a liquidity opportunity prior to its fourth AGM (held on 8 June 2021), it would engage with Shareholders to consider their liquidity needs and structure a set of proposals that were suitable and cost effective. The Company consulted widely with Shareholders, representing 90% of shares in issue at that time and Shareholders were overwhelmingly supportive of the Company's performance, particularly during the pandemic and its recovery, as well as the updated investment focus and strategy. There was very limited appetite from those Shareholders to participate in a liquidity opportunity. As a result of this positive feedback, the lack of Shareholder demand for a near-term liquidity opportunity, and noting the disproportionate administrative and cost burden of putting together formal liquidity proposals, the Board determined that the next liquidity opportunity would be put to Shareholders in three years' time. Following the extensive consultation exercise with Shareholders the Board confirmed that the weighted average life of the portfolio would not materially exceed three years, immediately prior to the next liquidity opportunity consultation. In addition, should the shares trade at an average discount of more than zero per cent, as measured over the six-month period commencing on 1 October 2022 and ending on 31 March 2023, the Board would seek to bring the liquidity opportunity consultation forward by 12 months, to two years' time i.e. prior to the AGM to be held on 30 May 2023. As outlined in the Chairman's statement on page 13 the Board will honour this commitment and the Company's joint brokers will be consulting with Shareholders shortly. The proposed liquidity opportunity consultation creates uncertainty which is reflected in the going concern assessment on page 31 and notes to the financial statements on page 60. ## Market information The Company's share capital is listed on the London Stock Exchange. The NAV per Share is calculated in sterling for each business month that the London Stock Exchange is open for business. The monthly NAV per Share is published through a regulatory information service. ## Capital structure and voting rights At the year end, the Company's issued share capital comprised 117,636,359 Ordinary Shares of 1 pence nominal value, excluding shares held in treasury. Each holder of Shares is entitled to one vote. All Shares carry equal voting rights and there are no restrictions on those voting rights. Voting deadlines are stated in the Notice of Meeting and Form of Proxy, at the end of this document, and have been set in accordance with the Companies Act 2006. There are no restrictions on the transfer of Ordinary Shares, nor are there any limitations or special rights associated with the Shares. Therefore as at 31 December 2022, there were 117,636,359 Ordinary Shares in issue, minus treasury shares. During the year, the Company has bought 204,629 Ordinary Shares, which are held in treasury. Since the year end, the Company has bought 50,000 Ordinary Shares. ## Significant Shareholders As at 31 December 2022, the Directors have been formally notified of the following interests comprising 3% or more of the issued share capital of the Company: | | Ordinary Shares held | % of voting rights held | | --- | --- | --- | | Hawksmoor Investment Management | 11,817,638 | 10.03% | | CCLA Investment Management | 11,461,152 | 9.72% | | FS Wealth | 6,218,171 | 5.27% | | Quilter plc | 5,568,415 | 4.72% | | Brooks Macdonald Asset Management Limited | 5,375,799 | 4.54% | Since the year end, the Company has not been formally notified of any changes in the above shareholdings. ## Settlement of Ordinary Share transactions Ordinary Share transactions in the Company are settled by the CREST share settlement system. 30 Strategic report **Governance >** Financial statements Other information Directors' report Corporate governance Directors' remuneration report Report of the Audit and Management Engagement Committee Directors' responsibility statement Independent Auditor's report RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Revolving credit facility ("RCF") The Company has a revolving credit facility with OakNorth Bank. On 26 March 2021, the Company renewed and amended its Revolving Credit Facility with OakNorth Bank. Under the terms of the amended Revolving Credit Facility, the Company may draw down loans up to an aggregate value of £10.5 million, on materially similar terms as the Company's previous RCF. During the year, the Company drew cumulative amount of £12.6 million from the revolving credit facility and repaid cumulative amount of £14.9 million. The remaining balance as at 31 December 2022 amounts to £17.3 million. The RCF facility expires on 26 March 2024. ## Custodian US Bank Global Corporate Trust Services act as the Company's custodian. ## Company Secretary & Administrator Apex Listed Companies Services (UK) Limited (formerly Sanne Fund Services (UK) Limited) provide company secretarial and administration services to the Company, including calculation of its daily NAV. Sanne Group acquired the PraxisIFM Funds Business in December 2021 and Sanne Group was subsequently acquired by the Apex Group in August 2022. However, the personnel servicing the Company's business remain largely unchanged including the continuing appointment of the Company Secretary. ## Valuation agent Mazars LLP has been re-appointed as the Company's valuer to value the Company's loan investments in accordance with IFRS. ## Anti-bribery and corruption It is the Company's policy to conduct all of its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery and corruption and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships wherever it operates. The Company's policy and the procedures that implement it are designed to support that commitment. ## Notice of general meetings At least 21 days' notice shall be given to all the members and to the auditors. All other general meetings shall also be convened by not less than 21 days' notice to all those members and to the auditors unless the Company offers members an electronic voting facility and a special resolution reducing the period of notice to not less than 14 days has been passed, in which case a general meeting may be convened by not less than 14 days' notice in writing. A special resolution will be proposed at the Annual General Meeting to reduce the period of notice for general meetings other than the Annual General Meeting to not less than 14 days. The Company would only ever use the shorter notice period where it is merited by the purpose of the meeting and will always endeavour to give shareholders at least 21 days' notice. ## Going concern The Directors have adopted the going concern basis in preparing the financial statements. The following is a summary of the Directors' assessment of the going concern status of the Company, which should be read in conjunction with the viability statement. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least 12 months from the date of this document. In reaching this conclusion, the Directors have considered the Company's portfolio of loan investments of £120.0 million (2021: £126.7 million) as well as its income and expense flows and the cash position of £3.0 million (2021: £3.3 million). The Company's net assets at 31 December 2022 were £108.8 million (2021: £111.3 million). The total expenses (excluding finance costs and taxation) for the year ended 31 December 2022 were £2.2 million (2021: £2.6 million), which represented approximately 1.86% (2021: 1.92%) of average net assets during the year. At the date of approval of this document, based on the aggregate of investments and cash held, the Company has substantial operating expenses cover. The financial markets have experienced considerable turmoil as a result of the ongoing impact of Covid-19 and the conflict in Ukraine that has impacted markets throughout the world, including the United Kingdom. The Board is keeping the development of these situations under close scrutiny. The Board has noted the rise in interest rates. With regards to any further interest rate increases by global central banks, the portfolio remains well positioned through the Investment Manager's focus on creating a portfolio of high yielding and short duration loans that do not hold significant exposure to interest rate movements. The Board does not believe that these situations will affect the Company's going concern status. The Directors have fully considered each of the Company's loans. Income obligations have been met by borrowers and there is a diverse portfolio of Loan investments. However, these loans have a number of specific lender protections (such as loan to value covenants and cashflow or earnings covenants) which are being monitored. A prolonged and deep market decline could lead to falling values to the underlying business or interruptions to cashflow, however the Company currently has more than sufficient liquidity available to meet any future obligations. The Investment Manager has performed stress tests on the Company's income and expenses and the Directors remain comfortable that the Company has substantial operating expenses cover and adequate liquidity. The financial statements have been prepared on the going concern basis. The Directors have concluded that there is a reasonable expectation that the Company will have adequate liquidity and cash balances to meet its liabilities as they fall due and continue in operational existence for the foreseeable future and continue as a going concern for the period to 31 March 2024. ## Material uncertainty regarding liquidity opportunity consultation While the Directors have concluded the Company's financial statements shall be prepared on a going concern basis, the Directors note that the upcoming liquidity opportunity consultation creates material uncertainty. 31 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Directors' report Continued ## Viability statement The Directors have assessed the viability of the Company for the five years to 31 December 2027 (the "Period") as they consider this to be an appropriate time horizon, taking into account the long-term nature of the Company's investment strategy, the principal and emerging risks outlined on pages 17 to 21 and weighted average life of the Company's loan instruments. The 5 year viability period and assessment is prepared on the assumption that the liquidity event (which gives rise to a material uncertainty on going concern as described on page 30) will not result in a significant change in the current strategy of the Company. The Directors have also considered the impact on the Russia/Ukraine conflict. However, the Company's portfolio has no direct exposure to Russia or Ukraine and the Company's business model remains sound. The Directors have also considered that should the Company's shares trade at an average discount of more than zero per cent. as measured over the six-month period commencing on 1 October 2022 and ending on 31 March 2023, the Board will seek to bring forward a liquidity opportunity consultation by 12 months i.e. prior to the AGM in 2023. In their assessment of the prospects of the Company, the Directors have considered each of the principal risks and uncertainties set out above and the liquidity and solvency of the Company. The Directors have considered the Company's income and expenditure projections and believe that they meet the Company's funding requirements. Portfolio activity and market developments are discussed at each quarterly Board meeting. The internal control framework of the Company is subject to a formal review on a regular basis. The Company's income from investments provides substantial cover to the Company's operating expenses and any other costs likely to be faced by the Company over the Period of their assessment. The Chair's Statement and Investment Manager's Report present the positive long-term investment case for secured debt instruments which also underpins the Company's viability for the Period. Based on this assessment, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due in the Period. ## Directors' indemnities Details on the Directors' indemnities in place are provided in the Directors' Remuneration Report. ## Annual General Meeting Resolutions relating to the following items of special business will be proposed at the forthcoming Annual General Meeting ("AGM") to be held on 30 May 2023. ## Issuance of Ordinary Shares and dis-application of pre-emption rights Resolutions 9 and 10 provide authority to issue Ordinary Shares and to dis-apply pre-emption rights. The Directors intend to use the net proceeds of any issuance to invest in loans, predominately secured against assets such as real estate or plant and machinery, in accordance with the Company's investment objective and Investment Policy and for working capital purposes. At the forthcoming AGM, the Board is seeking authority to allot up to a maximum of 11,758,635 Ordinary Shares (representing approximately 10% of the Ordinary Shares in issue at the date of this document) and to dis-apply pre-emption rights when allotting those Ordinary Shares. The authority granted under resolutions 9 and 10 will expire at the conclusion of the Annual General Meeting to be held in 2024. The full text of resolution 1 to 12 are set out in the Notice of Meeting on pages 84 and 85. The authority granted by Shareholders to issue Ordinary Shares will provide flexibility to grow the Company and further expand the Company's assets. Ordinary Shares issued under this authority will only be issued at a premium to the NAV (cum-income) after taking into account the costs of issue. Ordinary Share issues are at the discretion of the Board. ## Authority to purchase own shares At the Company's AGM on 31 May 2022, the Directors were granted authority to make market purchases of up to 14.99% of the Ordinary Shares in issue, equating to a maximum of 17,664,364 Ordinary Shares. During the year ended 31 December 2022, the Company bought back a total of 204,629 Ordinary Shares. The effect of these repurchases has been to enhance NAV by 0.15 pence per Ordinary Share. Since the year end the Company has bought back 50,000 Ordinary Shares, which are held in treasury. The authority to make market purchases expires at the conclusion of the AGM of the Company on 30 May 2023. The Directors recommend that a new authority to purchase up to 17,626,195 Ordinary Shares (subject to the condition that not more than 14.99% of the Ordinary Shares in issue, excluding treasury Shares, at the date of the AGM are purchased) be granted and a resolution to that effect will be put to the AGM. 32 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report Purchases of Ordinary Shares will be made within guidelines to be Auditor information established from time to time by the Board. Any purchase of Ordinary Each of the Directors at the date of the approval of this report Shares would be made only out of the available cash resources of the confirms that: Company. Ordinary Shares purchased by the Company may be held in (i) so far as the Director is aware, there is no relevant audit treasury or cancelled. Purchases of Ordinary Shares may be made only information of which the Company’s auditors are unaware; and in accordance with the Articles of Association, the Companies Act, the Listing Rules and the Disclosure Guidance and Transparency Rules. (ii) the Director has taken all steps that he ought to have taken as Director to make himself aware of any relevant information and to The Companies Act 2006 permits companies to hold shares acquired establish that the Company’s auditors are aware of that information. by way of market purchase as treasury shares, rather than having to cancel them. This provides the Company with the ability to re-issue This confirmation is given and should be interpreted in accordance Ordinary Shares quickly and cost effectively, thereby improving with the provisions of Section 418 of the Companies Act 2006. liquidity and providing the Company with additional flexibility in the management of its capital base. No Ordinary Shares will be sold from In accordance with Section 489 of the Companies Act 2006, an treasury at a price less than the (cum-income) NAV per existing ordinary resolution to re-appoint Ernst & Young LLP as the Company’s Ordinary Share at the time of their sale unless they are first offered auditors will be put forward at the forthcoming Annual General pro rata to existing Shareholders. Meeting and the Board will seek authority to determine their remuneration for the forthcoming year. Unless otherwise authorised by Shareholders, Ordinary Shares will not be issued at less than NAV and Ordinary Shares held in treasury By order of the Board will not be sold at less than NAV. Authority to pay dividends as interim dividends Resolution 8 is an ordinary resolution and provides authority to declare Ciara McKillop and pay all dividends of the Company as interim dividends. For and on behalf of The last dividend in respect of any financial year is declared prior to the Apex Listed Companies Services (UK) Limited AGM therefore, it is declared as a fourth interim dividend and no final Company Secretary dividend is payable. The Board understands that this means that Shareholders will not be given the opportunity to vote on the payment 25 April 2023 of a final dividend. However, the Board believe that the payment of a fourth interim dividend as opposed to a final dividend is in the best interests of Shareholders, as it provides them with regularity on the frequency of dividend payments and avoids the delay to payment which would result from the declaration of a final dividend. A resolution will be put forward at the AGM to approve the policy of declaring and paying all dividends of the Company as interim dividends. The Company targeted an annualised dividend of 6.5p for the financial year to 31 December 2022. 33 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Corporate governance Introduction The Board The Board of the Company has considered the Principles and The Board has overall responsibility for the effective stewardship for Provisions of the 2019 Association of Investment Companies (“AIC”) the Company’s affairs. Its primary responsibility is to promote the long- Code of Corporate Governance. The AIC Code addresses the Principles term sustainable success of the Company, generate value for and Provisions set out in the UK Corporate Governance Code (the shareholders and have regard to stakeholder interests. It also “UK Code”), as well as setting out additional Provisions on issues that establishes the Company’s purpose, values and strategy, and satisfies are of specific relevance to the Company. itself that these and its culture are aligned. It has a number of matters formally reserved for its approval including strategy, investment policy, The Board considers that reporting against the Principles and treasury matters, dividend and corporate governance policy. The Provisions of the AIC Code, which has been endorsed by the Financial Board approves the financial statements, revenue budgets and reviews Reporting Council (“FRC”), provides more relevant information to the performance of the Company. Full and timely information is Shareholders. AIC members who report against the AIC Code fully provided to the Board to enable the Board to function effectively and meet their obligations under The UK Corporate Governance Code and to allow Directors to discharge their responsibilities. the related disclosure requirements contained in the Listing Rules. The Board considers the balance of skills, knowledge, diversity The Company has complied with the Principles and Provisions of the (including gender and ethnicity) and experience, amongst other AIC Code during the financial year ended 31 December 2022. factors when reviewing its composition and encourages applications from candidates from a broad range of background and experience The AIC Code is available on the AIC website (www.theaic.co.uk). and will seek to appoint the most suitable candidate. The Board has It includes an explanation of how the AIC Code adapts the Principles considered the recommendations of the McGregor-Smith and the and Provisions set out in the UK Code to make them relevant for Hampton Alexander reviews as well as the Parker review, but does not investment companies. consider it appropriate to establish targets or quotas in these regards. The Board has considered the new FCA Listing Rule 9.8.6R (9)(a) During the financial year ended 31 December 2022, the Company requirements which apply to accounting periods commencing on or has complied with the recommendations of the AIC Code and the after 1 April 2022 and will report in detail on diversity targets for the year ending 31 December 2023. However, it should be noted that the relevant provisions of The UK Corporate Governance Code, except Board currently comprises three Non-executive Directors of whom as set out below. 33% are female, the Chair of the Audit and Management Engagement Committee is female and all Directors are classified as White British or The UK Corporate Governance Code includes provisions relating to: Other White. All the Directors have served during the entire period (i) the role of the Chief Executive; since their appointment on 13 November 2016. As the Board approaches its tenth anniversary, it is the intention that by then the (ii) the appointment of a Senior Independent Director; existing Directors will have resigned to be replaced by a fresh Board. (iii) executive Directors’ remuneration; and Further details of this process will be given in the next annual report. (iv) the need for an internal audit function. The Directors have a broad range of relevant experience to meet the Company’s requirements and their biographies are given below: The Board considers that these provisions are not relevant to this externally managed investment company. The Company has no Norman Crighton (Non-executive Chair) employees and all the day-to-day management and administrative Norman is currently a Non-executive Chair of Harmony Energy Income functions are outsourced to third parties. Trust plc, Weiss Korea Opportunity Fund and AVI Japan Opportunity Trust. Norman was, until May 2011, an Investment Manager at Metage The Audit and Management Engagement Committee has considered Capital Limited where he was responsible for the management of a the need for an internal audit function and deemed that it is not portfolio of closed-ended funds and has over 30 years’ experience in appropriate given the nature and circumstances of the Company but closed-end funds having worked at Olliff and Partners, LCF Edmond de keeps the needs for an internal audit function under periodic review. Rothschild, Merrill Lynch, Jefferies International Limited and latterly Metage Capital Limited. His experience in investment banking covers analysis and research as well as sales, market making, proprietary trading and corporate finance. 34 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report Guy Heald (Non-executive Director) Tenure Guy has spent most of his career in banking, not only specialising in The Board recognises the benefits to the Company of having longer markets, but also in general management positions overseeing all serving Directors together with progressive refreshment of the Board. aspects of banking, including lending. He worked in London, New The Board does not believe that length of service in itself necessarily York and Tokyo and has an extensive knowledge of companies needs disqualifies a director from seeking reappointment but, when making a for financing and managing interest rate, liquidity and foreign recommendation, the Board will take into account the requirements of exchange risks. During his career he worked for Brown Shipley, the AIC Code. The Board has adopted corporate governance best Chemical Bank and HSBC where he held senior positions including practice and has a succession plan in place. All Directors must stand Head of Global Markets and Chief Executive Officer at HSBC Japan. for annual reappointment. No Director of the Company has served for After leaving banking in 2003 he has served as an adviser, Non- nine years or more and all Directors remain independent of the executive Director and trustee of several charities as well as starting a Company’s Investment Manager. number of successful family companies of his own. The SME market is of particular interest to Guy, specifically the challenges facing In accordance with the Company’s Articles of Association, at each companies in their pursuit for growth, as he invests venture and Annual General Meeting, every Director shall retire from office and growth capital himself. offer themselves for re-election. Resolutions for the re-election of each Director will be proposed as ordinary resolutions at the Annual General Marlene Wood (Non-executive Director and Chair of the Audit Meeting of the Company to be held on 30 May 2023. and Management Engagement Committee) Marlene is a chartered accountant with a broad range of experience in The Directors have appointment letters which do not provide for any both the private and public sector and is currently a Non-executive specific term. Copies of the Directors’ appointment letters are available Director and Chair of the Audit Committee of Atrato Onsite Energy plc on request from the Company Secretary. Upon joining the Board, any and Home REIT plc. She was formerly Non-executive Director and new Directors receive an induction and relevant training is available to Chair of the Audit Committee for GCP Student Living plc. Directors on an ongoing basis. The Board’s policy for the appointment of Non-executive Directors is based on its belief in the benefits of Marlene has over 20 years’ experience in the commercial property having a diverse range of experience, skills, length of service and sector having been finance director for Miller Developments raising backgrounds, including but not limited to gender diversity. finance for major property transactions both in the UK and Europe. Her experience covers governance and risk management as well as The Directors, in order to fulfil their duties, are able to take independent financial oversight and debt raising. professional advice at the expense of the Company. A policy of insurance against Directors’ and officers’ liabilities is maintained by the Company. Composition The Board believes that during the year ended 31 December 2022 its Board committees composition was appropriate for an investment company of the The Company has established an Audit and Management Engagement Company’s nature and size. All of the Directors are independent of the Committee (“Committee”) which is chaired by Marlene Wood and consists Investment Manager and are able to allocate sufficient time to the of all the Directors. A report of the Audit and Management Engagement Company to discharge their responsibilities effectively. Committee is included in this Annual Report on pages 42 and 43. The Board has not appointed a Senior Independent Director (“SID”). The Company has not established a nomination committee or a Given the size and composition of the Board it is not felt necessary to remuneration committee because all of the Directors are Independent separate the roles of Chair and SID. Non-executive Directors of the Company. Therefore, the Board as a whole will consider any further Director appointments, remuneration, length of service and any other relevant matters. 35 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Corporate governance Continued The Audit and Management Engagement Committee meets at least twice > Ensure the Board as a whole has a clear understanding of the a year or more often if required. The Audit and Management Engagement views of Shareholders; Committee’s principal duties are to consider the appointment, > Ensure regular engagement with each service provider; and independence, objectivity, and remuneration of the auditor and to review > Keep up to date with key developments. the annual accounts and half-yearly financial report. The Committee also examines the effectiveness of the Company’s risk management and Role of Audit and Management Engagement Committee Chair internal control systems and receives information from the AIFM and the > Ensure appropriate papers are considered at meetings; Portfolio Manager. In addition the terms of the appointment of the Investment Manager are annually reviewed as well as, the Investment > Review the half-yearly and annual reports; Manager’s performance and the terms of the Investment Management > Review the Company’s internal financial controls and the internal and AIFM Agreements. The Committee also reviews the continued control and risk management systems of the Company and its third appointment and performance of the Company’s other service providers. party service providers; > Make recommendations to the Board in relation to the appointment Meeting attendance of the external auditor and their remuneration; The actual number of formal meetings of the Board and Committee during the year under review is given below, together with individual > Review the scope, results, cost effectiveness, independence and Director’s attendance at those meetings. objectivity of the external auditor; Audit and Management > Develop and implement policy on the engagement of the external Directors Quarterly Board Engagement Committee auditor to supply non-audit services and taking into account Norman Crighton 4/4 3/3 relevant guidance regarding the provision of non-audit services by the external audit firm; and Marlene Wood 4/4 3/3 > Consider the terms of appointment of the Investment Manager and Guy Heald 4/4 3/3 annually review the appointment and the terms of the Investment Management Agreement. There were also a number of other Board and committee meetings to > Ensure committee members views and opinions are appropriately deal with administrative matters and approval of documentation. considered; > Seek engagement with Shareholders on significant matters related Division of responsibilities to their areas of responsibility; and The following sets out the division of responsibilities between the Chair, Board and the Committee Chair. > Maintain relationships with advisers; and > Consider appointing independent professional advice where Role of the Chair deemed appropriate. > Leadership to the Board; > Ensure the Board are provided with sufficient information in order Role of the Board to ensure they are able to discharge their duties; Strategy and management > Responsibility for overall management of the Company > Ensure each Board member’s views are considered and appropriate action taken; > Review of the performance of the AIFM and the investment manager > Ensure that each Committee has the support required to fulfil > Review of the performance of key service providers their duties; > Consideration of any change of investment policy > Engage the Board in assessing and improving its performance; > Support the Board Chair and service providers in fulfilling their role > Oversee the induction and development of Directors; > Provide appropriate opinion, advice and guidance to the Chair and > Support the Investment Manager and other service providers; fellow Board members; > Seek regular engagement with major Shareholders in order to understand their views on governance and performance against the company’s investment objective and investment policy; 36 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report Share capital Board diversity > Changes to the Company’s share capital Whilst having regard to the size of the Company and its cost base, the Company’s policy is that the Board should have an appropriate level of > Changes to the Company’s listing status diversity in the boardroom, taking into account relevant skills, gender, social and ethnic backgrounds, cognitive and personal strengths. Financial reporting > Approval of half-yearly financial reports and results announcements Brief biographies of the Directors are shown on pages 34 and 35. The > Approval of annual report and accounts and any contents therein policy is to ensure that the Company’s Directors bring a wide range of > Approval of initial accounts and interim accounts knowledge, experience skills, backgrounds and perspectives to the Board. There will be no discrimination on the grounds of gender, > Approval of interim dividends and recommendation of final religion, race, ethnicity, sexual orientation, age or physical ability. The dividends (if any) overriding aim of the policy is to ensure that the Board is composed of the best combination of people for ensuring effective oversight of the Internal controls Company and constructive support and challenge to the Investment > Oversight of appropriate system of internal controls Manager. Consideration is given to the recommendations of the AIC > Receiving reports on controls from the AIFM, investment manager Code and the Board supports the recommendations of the Hampton and administrator Alexander Review. > Conducting an annual assessment of the controls of the above The Board appraises its collective set of cognitive and personal service providers strengths, independence and diversity on an annual basis, so as to > Statement on internal controls to be made in Annual Report ensure it is aligned with the Company’s strategic priorities. The performance appraisal process is described below. The Board believes Contract review its composition is appropriate for the Company’s circumstances. > All material contracts entered into or terminated by the Company However, in line with the Board’s succession planning and tenure policy, or should strategic priorities change, the Board will review and, Communication if required, adjust its composition. As at date of this Report, the Board > Approval of all resolutions to be put forward at meetings comprises two male and one female Board member. > Approval of all circulars, prospectuses and listing particulars The Board will take account of the targets set out in the FCA’s Listing Board composition Rules, which are set out below. As an externally managed investment > Changes to structure, size or composition of the Board company, the Board employs no executive staff, and therefore does not have a Chief Executive Officer (“CEO”) or a Chief Financial Officer (“CFO”) – > Succession planning both of which are deemed senior board positions by the FCA. However, > Determining the remuneration of the Directors the Board considers the Chair of the Audit and Management > Determining insurance cover requirements for the Board Engagement Committee to be a senior board position and the following disclosure is made on this basis. Other senior board positions recognised Corporate governance by the FCA are Chair of the Board. In addition, the Board has resolved > Review of the Company’s corporate governance processes that the Company’s year end date be the most appropriate date for and arrangements disclosure purposes. The following information has been provided by each Director. There have been no changes since 31 December 2022. > Considering the performance of the Company’s Directors > Considering the Directors’ independence Other > Any other matters, which the Board deems to be appropriate for its reservation. 37 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Corporate governance Continued Board composition as at 31 December 2022 Internal control The AIC Code requires the Board to review the effectiveness of the Number of Number of Percentage of senior positions Company’s system of internal controls. The Board recognises its ultimate Board members the Board on the Board responsibility for the Company’s system of internal controls and for monitoring its effectiveness. The system of internal controls is designed Men 2 67% 1 to manage rather than eliminate the risk of failure to achieve business Women 1 33% 1 objectives. It can provide only reasonable assurance against material misstatement or loss. The Board has undertaken a review of the aspects Prefer not to say – – – covered by the guidance and has identified risk management controls in the key areas of business objectives, accounting, compliance, operations Number of and secretarial as being matters of particular importance upon which it Number of Percentage of senior positions Board members the Board on the Board requires reports. The Board believes that the existing arrangements, set out below, represent an appropriate framework to meet the internal White British or control requirements. Through these procedures the Directors have kept Other White (including under review the effectiveness of the internal control system throughout minority-white groups) 3 100% 2 the year up to the date of this report. Asian/Asian British – – – Financial aspects of internal control Prefer not to say – – – The Directors are responsible for the internal financial control systems of the Company and for reviewing their effectiveness. These aim to ensure the maintenance of proper accounting records, the reliability Performance appraisal of the financial information upon which business decisions are made A formal annual performance appraisal process is performed on the and which is used for publication and that the assets of the Company Board, the Chair, the Audit and Management Engagement Committee, are safeguarded. As stated above, the Board has contractually the Investment Manager and the Company’s main service providers. delegated to external agencies the services the Company requires and the Board monitors the internal control framework established by the A programme consisting of open and closed ended questions was Investment Manager, the AIFM, the Administrator and the Company’s used as the basis for the appraisal. The results were reviewed by the Custodian to provide reasonable assurance on the effectiveness of Chair and discussed with the Board. A separate appraisal of the Chair internal financial controls. was carried out by the other members of the Board and the results reported back to the Chair of the Board by the Chair of the Audit and These key procedures include review of management accounts and NAV Management Engagement Committee. The results of the performance and monitoring of performance at quarterly Board meetings, valuation evaluation were positive and demonstrated that the Investment of loans by an independent valuer, segregation of the administrative Manager, main service providers, Board, Chair, Committee Chair and function from that of cash, custody and investment management, individual Directors showed the necessary commitment for the maintenance of appropriate insurance and adherence to physical and effective fulfilment of their duties. computer security procedures. In addition, robust procedures have been put in place for authorisation of all expense payments. The Statement of Directors’ Responsibilities in respect of the financial statements is on page 44 and a Statement of Going Concern is on page 31. The Report of the Independent Auditor is on pages 45 to 52. 38 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report Other aspects of internal control In line with the requirements of the Companies Act 2006, the The Board holds quarterly meetings, plus additional meetings as Company will hold an AGM of Shareholders to consider the resolutions required. Between these meetings there is regular contact with the laid out in the Notice of Meeting. The Board encourages Shareholders Investment Manager, the Company Secretary and the Administrator. to attend and participate in the Company’s forthcoming AGM on 30 May 2023 at 6th Floor, 125 London Wall, London EC2Y 5AS. The Board has agreed policies with the Investment Manager on key operational issues. The Investment Manager and/or AIFM report in If Shareholders are unable to attend the meeting in person, they are writing to the Board on all operational and compliance issues. strongly encouraged to vote by proxy and to appoint the “Chairman of the AGM” as their proxy. Details of how to vote, either electronically, by The Directors review management accounts from the Administrator, proxy form or through CREST, can be found in the Notes to the Notice including holdings in the portfolio, transactions and other aspects of of AGM on pages 86 to 88. The lodging of a form of proxy (or an the financial position of the Company. Additional ad hoc reports are appointment of a proxy through CREST) will not however prevent a received as required and Directors have access at all times to the Shareholder from attending the AGM and voting in person if they so advice and services of the Corporate Company Secretary, which is wish (subject to any future restrictions which may be imposed by the responsible to the Board for ensuring that Board procedures are UK Government in response to the COVID-19 pandemic). followed and that applicable rules and regulations are complied with. The Company’s Brokers and Investment Manager, together with the This contact with the Investment Manager and the other key service Chair, seeks regular engagement with major Shareholders in order to providers enables the Board to monitor the Company’s progress towards understand their views on governance and performance against the its objectives and encompasses an analysis of the risks involved. The Company’s investment objective and investment policy. effectiveness of the Company’s risk management and internal controls systems is monitored and a formal review, utilising a detailed risk Exercise of voting powers and stewardship code assessment programme has been completed. This included The Company and the Investment Manager support the UK consideration of the Administrator’s and the Registrar’s internal controls Stewardship Code issued by the Financial Reporting Council, but the report. There are no significant findings to report from the review. UK Stewardship Code has limited applicability to the Company’s circumstances as the Company holds loan investments. Principal risks The Directors confirm that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The principal risks and how they are being managed is set out in the Strategic Report on pages 19 to 21. Shareholder relations The Company seeks to provide a minimum of 20 working days’ notice of the Annual General Meeting. The Notice of Meeting sets out the business of the AGM and any item not of an entirely routine nature is explained in the Directors’ Report. Separate resolutions are proposed for each substantive issue. 39 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Directors' remuneration report This report has been prepared in accordance with Schedule 8 of the Large and Medium-sized Companies and Company's (Accounts and Reports) (Amendment) Regulations 2013. An Ordinary resolution for the approval of this report will be put forward at the forthcoming Annual General Meeting. The Directors' Remuneration Report is put forward for approval by Shareholders on an annual basis. The result of the Shareholder resolution on the Remuneration Report is non-binding on the Company, although it gives Shareholders an opportunity to express their views, which will be taken into account by the Board. The law requires the Company's auditor to audit certain areas of the disclosures provided. Where disclosures are audited they are indicated as such. The auditor's opinion is on page 45. ## Remuneration The Company currently has three Non-executive Directors. As detailed in the Company's prospectus dated 12 March 2018, Directors' fees are payable at the rate of £30,000 per annum for each Director other than the Chair, who is entitled to receive £36,000. The Chair of the Audit and Management Engagement Committee is entitled to additional fees of £3,000 per annum. The Board believes that these fees appropriately reflect prevailing market rates for an investment trust of the Company's complexity and size and will also enable the Company to attract appropriately experienced additional Directors in the future. The Board reviews the fees payable to the Directors on an annual basis. ## Directors' service contracts The Directors do not have service contracts with the Company and are not entitled to compensation on loss of office. The Directors have appointment letters which do not provide for any specific term. However, they are subject to re-election by Shareholders on an annual basis. ## Directors' indemnities Subject to the provisions of the Companies Act, but without prejudice to any indemnity to which a Director might otherwise be entitled, every past or present Director or officer of the Company (except the auditors) may, at the discretion of the Board, be indemnified out of the assets of the Company against all costs, charges, losses, damages and liabilities incurred by him for negligence, default, breach of duty, breach of trust or otherwise in relation or connection to the affairs or activities of the Company. In addition, the Board has purchased and maintains insurance at the expense of the Company for the benefit of such persons indemnifying them against any liability or expenditure incurred by them for acts or omissions as a Director or Officer of the Company. ## Director search and selection fees No Director search and selection fees were incurred in the year ended 31 December 2022. ## Performance The following chart shows the performance of the Company's share price on a total return basis in comparison to the S&P Global Leveraged Loan Index GBP Hedged total return (the Company's comparator) since the Company doesn't have a set benchmark. ![img-1.jpeg](img-1.jpeg) ## Directors' emoluments for the year ended 31 December 2022 (Audited) The Directors who served during the year received the following remuneration for qualifying services. | | Fees for the year ended 31 December 2022 £'000 | Fees for the year ended 31 December 2021 £'000 | | --- | --- | --- | | Norman Crighton | 36 | 36 | | Marlene Wood | 33 | 33 | | Guy Heald | 30 | 30 | There were no taxable benefits claimed during the years ended 31 December 2022 or 31 December 2021. None of the above fees were paid to third parties. | | % change 2019 to 2020 | % change 2020 to 2021 | % change 2021 to 2022 | | --- | --- | --- | --- | | Norman Crighton | Nil | Nil | Nil | | Marlene Wood | Nil | Nil | Nil | | Guy Heald | Nil | Nil | Nil | A non-binding Ordinary resolution to approve the Directors' Remuneration Implementation Report contained in the Annual Report for the year ended 31 December 2021 was put forward at the Annual General Meeting held on 31 May 2022. The resolution was passed with 100% of the proxy votes cast (including discretionary votes) being in favour of the resolution. A non-binding ordinary resolution to approve the Directors' Remuneration Report contained in the Annual Report for the year ended 31 December 2022 will be put forward for approval at the Company's Annual General Meeting to be held on 30 May 2023. 40 Strategic report Governance > Financial statements Other information Directors' report Corporate governance Directors' remuneration report Report of the Audit and Management Engagement Committee Directors' responsibility statement Independent Auditor's report RM Infrastructure Income PLC Annual Report & Accounts 2022 The Directors' Remuneration Policy was last put forward at the Annual General Meeting held on 8 June 2021. The resolution was passed with 99.99% of the proxy votes cast (including discretionary votes) being in favour of the resolution. The Directors' Remuneration Policy will next be put forward for approval at the Annual General Meeting to be held in 2024. The Board takes an active role in shareholder engagement and particularly voting outcomes. Shareholders have the opportunity to express their views and ask questions in respect of the Remuneration Policy and Remuneration Implementation Report at the AGM. ### Relative importance of spend on pay The following table sets out the total level of Directors' remuneration compared to the distributions to Shareholders by way of dividends and share buybacks, and the management fees and other expenses incurred by the Company. | | Fees for the year ended 31 December 2022 £'000 | Fees for the year ended 31 December 2021 £'000 | | --- | --- | --- | | Income | 10,768 | 11,164 | | Directors' fees | 99 | 99 | | Investment management fees and other expenses | 2,201 | 2,512 | | Dividends paid and payable to Shareholders | 7,656 | 7,666 | ### Directors' holdings (Audited) The Directors had the following shareholdings at 31 December 2022 and as at the date of this report, all of which are beneficially owned. | | Ordinary Shares as at 31 December 2022 | Ordinary Shares as at date of this report | Ordinary Shares as at 31 December 2021 | | --- | --- | --- | --- | | Norman Crighton | 29,982 | 29,982 | 29,982 | | Guy Heald | 20,000 | 20,000 | 20,000 | | Marlene Wood | 20,000 | 20,000 | 20,000 | ### Statement On behalf of the Board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies (Accounts and Reports) (Amendment) Regulations 2013, I confirm that the above Report on the Remuneration Policy and Remuneration Report summarises, as applicable, for the financial year ended 31 December 2022: - (a) the major decisions on Directors' remuneration; - (b) any substantial changes relating to Directors' remuneration made during the financial year ended 31 December 2022; and - (c) the context in which the changes occurred and decisions have been taken. **Norman Crighton** Chair 25 April 2023 41 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Report of the Audit and ## Management Engagement Committee Role of the Audit and Management Engagement Committee and the AIFM. The process includes quantitative and qualitative The AIC Code of Corporate Governance recommends that Boards analysis, with the analysis performed on a loan-by-loan basis and the should establish audit committees consisting of at least three, or in the valuation of each loan taking into account the relevant risks and returns case of smaller companies, two independent Non-executive Directors. associated with that loan. The Audit and Management Engagement The Board is required to satisfy itself that at least one member of the Committee reviewed valuation reports and also the procedures in place audit committee has recent and relevant financial experience and the for ensuring accurate valuation and existence of investments and Committee as a whole has experience and knowledge relevant to the recommended these to the Board for review and approval. sector. The main role and responsibilities of the audit committee should be set out in written terms of reference covering certain Recognition of income matters described in the Code. The Company complies with the Code Income may not be accrued in the correct period. The Audit and and the terms of reference of the Audit and Management Engagement Management Engagement Committee reviewed the Administrator’s Committee are available on the Company’s website. procedures for recognition of income and is comfortable that these are appropriate. The Audit and Management Engagement Committee has The Audit and Management Engagement Committee meets formally reviewed the internal controls report of the Company’s Administrator, at least twice a year for the purpose, amongst other things, of which includes controls in relation to the recognition of income, considering the appointment, independence and objectivity, and recoverability of income and provisions made against recoverability of remuneration of the auditor and to review the annual accounts and income. The Audit and Management Engagement Committee also half-yearly financial report. The Audit and Management Engagement reviews investment yields on the quarterly investment manager report Committee also reviews the Company’s internal financial controls and for variations and significant movements. its internal control and risk management systems. In addition, the terms of the appointment of the Investment Manager are annually Geo-politics reviewed as well as, the Investment Manager’s performance and the The Russian invasion of Ukraine at the beginning of the year, and the terms of the Investment Management and AIFM Agreements. The subsequent hike in global energy prices has further shaken a fragile Committee also reviews the continued appointment and performance investment environment. Committee members have also sought of the Company’s other service providers. reassurance that external providers were not in breach of sanctions implemented against Russia following the invasion of Ukraine. Composition In view of the size of the Board, all of the Directors of the Company are Going concern and viability statements members of the Audit and Management Engagement Committee. Having reviewed the Company’s financial position, liabilities principal The Audit and Management Engagement Committee has formal risks and uncertainties, the Audit and Management Engagement written terms of reference and copies of these are available on request Committee recommended to the Directors that it was appropriate for from the Company Secretary. The Audit and Management Engagement the Directors to prepare the financial statements on the going concern Committee collectively has recent and relevant financial experience. basis. While the going concern basis was considered appropriate, the Committee note that the proposed liquidity opportunity consultation Meetings creates a material uncertainty. There have been three Audit and Management Engagement Committee meetings in the year ended 31 December 2022. All Committee members The Going concern assessment and viability statements can be found attended these meetings. on pages 31 and 32. Financial statements and significant accounting matters Conclusion with respect to the Annual Report The Audit and Management Engagement Committee considered the and financial statements following significant accounting issues in relation to the Company’s The Audit and Management Engagement Committee has concluded Financial Statements for the year ended 31 December 2022. that the financial statements for the year ended 31 December 2022, taken as a whole, is fair, balanced and understandable and provides Valuation and existence of bonds the information necessary for Shareholders to assess the Company’s and private loan investments business model, strategy and performance. The Audit and The Company holds assets in bonds and private loan investments. The Management Engagement Committee has reported its conclusions to valuation and existence of these bonds and private loan investments the Board of Directors. The Audit and Management Engagement are the most material matter in the production of the financial Committee reached this conclusion through a process of review of the statements. The bonds and private loan investments are valued by an document and enquiries to the various parties involved in the independent valuer and the valuations at year end were agreed to the production of the Annual Report. valuer’s report. The valuation process has been comprehensively reviewed during the year, and is monitored, by the Board, the Manager 42 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report European Single Electronic Format (“ESEF”) Provision of non-audit services The ESEF regulations which require the Company to publish their The Audit and Management Engagement Committee has put a policy annual financial statements in a common electronic format apply to in place on the supply of any non-audit services provided by the the Company for this accounting year ending 31 December 2022. external auditor. Such services are considered on a case-by-case basis and may only be provided to the Company if the provision of such Internal controls and risk management services is at a reasonable and competitive cost and does not The Directors have a dynamic risk register in place to help identify key constitute a conflict of interest or potential conflict of interest which risks and ensure there are measures in place to manage and mitigate would prevent the auditor from remaining objective and independent. risk; and oversee the effectiveness of internal controls and processes. The risk assessment programme provides a visual reflection of the No non-audit fees were payable to the Auditor in the year ended Company’s identified principal and emerging risks. The Audit and 31 December 2022. Management Engagement Committee carries out, at least annually, a robust assessment of the principal and emerging risks and uncertainties and monitors the risks on an ongoing basis. Marlene Wood The Board has overall responsibility for the Company’s risk Audit and Management Engagement Committee Chair management and systems of internal controls and for reviewing their 25 April 2023 effectiveness. In common with most investment trusts, investment management, accounting, company secretarial, registrar and depositary services have been delegated to third parties. The effectiveness of the internal controls is assessed on a continuing basis and the Committee receives regular reports. Audit tenure Ernst & Young LLP was selected as the Company’s auditor at the time of the Company’s launch following a competitive process and review of the Auditor’s credentials. The auditors provided this service for four years, with Sue Dawe as Audit Partner. In accordance with auditor rotation best practice and the Company’s extended first accounting period, Sue Dawe was replaced as Audit Partner by Ahmer Huda for the audit for the year ended 31 December 2021. The appointment of the external auditor is reviewed annually by the Audit and Management Engagement Committee and the Board and is subject to approval by Shareholders. In accordance with the FRC guidance, the audit will be put out to tender within ten years of the initial appointment of Ernst & Young LLP in November 2017. Effectiveness of external audit The Audit and Management Engagement Committee is responsible for reviewing the effectiveness of the external audit process. The Audit and Management Engagement Committee received a presentation of the audit plan from the external auditor prior to the commencement of the audit and a presentation of the results of the audit following completion of the main audit testing. The Audit and Management Engagement Committee performed a review of the external auditor following the presentation of the results of the audit. The review included a discussion of the audit process and the ability of the external auditor to fulfil its role. Following the above review, the Audit and Management Engagement Committee has agreed that the re-appointment of the Auditors should be recommended to the Board and the Shareholders of the Company. 43 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Directors’ responsibility statement The Directors are responsible for preparing the annual report and the Under applicable law and regulations, the Directors are also financial statements in accordance with applicable United Kingdom responsible for preparing a strategic report, Directors’ report, law and regulations. Directors’ remuneration report and corporate governance statement that comply with that law and those regulations. The Directors are Company law requires the Directors to prepare financial statements for responsible for the maintenance and integrity of the corporate and each financial year. Under that law the Directors have elected to financial information included on the Company’s website. prepare the company financial statements in accordance with UK- adopted international accounting standards. Under company law the Directors’ responsibility statement Directors must not approve the financial statements unless they are The Directors each confirm to the best of their knowledge that: satisfied that they give a true and fair view of the state of affairs of the (a) the financial statements, prepared in accordance with applicable Company and of the profit or loss of the Company for that period. accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and In preparing these financial statements the Directors are required to: (b) this Annual Report, including the strategic report, includes a fair > select suitable accounting policies in accordance with IAS 8 review of the development and performance of the business and Accounting Policies, Changes in Accounting Estimates and Errors position of the Company, together with a description of the and then apply them consistently; principal risks and uncertainties that it faces. > make judgements and accounting estimates that are reasonable and prudent; The Directors consider that the financial statements are fair, balanced and understandable and provide the information necessary for > present information, including accounting policies, in a manner that Shareholders to assess the Company’s performance, business model provides relevant, reliable, comparable and understandable and strategy. information; > provide additional disclosures when compliance with the specific For and on behalf of the Board 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; Norman Crighton Chair > in respect of the financial statements, state whether UK-adopted international accounting standards, have been followed, subject to 25 April 2023 any material departures disclosed and explained in the financial statements; and > prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping 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. 44 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report ## Independent Auditor’s report to the members of RM Infrastructure Income PLC Opinion In auditing the financial statements, we have concluded that the We have audited the financial statements of RM Infrastructure Income Directors’ use of the going concern basis of accounting in the plc (“the Company”) for the year ended 31 December 2022 which preparation of the financial statements is appropriate. Our evaluation comprise the Statement of Comprehensive Income, Statement of of the directors’ assessment of the Company’s ability to continue to Financial Position, Statement of Changes in Equity, Statement of adopt the going concern basis of accounting included: Cash Flows and the related notes 1 to 20, including a summary of > Confirming our understanding of the Company’s going concern significant accounting policies. The financial reporting framework assessment process by engaging with the Directors and the that has been applied in their preparation is applicable law and UK Company Secretary to determine if all key factors were considered adopted international accounting standards. in their assessment. In our opinion, the financial statements: > Inspecting the Directors’ assessment of going concern, including the revenue forecast, for the period to 30 June 2024 which is at least 12 > give a true and fair view of the Company’s affairs as at 31 December months from the date the financial statements were authorised for 2022 and of its profit for the year then ended; issue. In preparing the revenue and expenses forecast, the Company > have been properly prepared in accordance with UK adopted has concluded that it is able to continue to meet its ongoing costs international accounting standards; and as they fall due. > have been prepared in accordance with the requirements of the > Inspecting the Directors’ assessment of the risk of breaching the Companies Act 2006. debt covenants as a result of a reduction in the value of the Company’s portfolio. We recalculated the Company’s compliance Basis for opinion with debt covenants and gearing policy in the scenarios assessed by We conducted our audit in accordance with International Standards on the Directors and performed reverse stress testing in order to Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under identify what factors would lead to the Company breaching the those standards are further described in the Auditor’s responsibilities financial covenants and gearing policy. for the audit of the financial statements section of our report. We > Considering the mitigating factors included in the revenue forecasts believe that the audit evidence we have obtained is sufficient and and covenant calculations that are within control of the Company. appropriate to provide a basis for our opinion. Reviewing the Company’s assessment of the liquidity of investments held and evaluating the Company’s ability to sell those investments Independence to cover working capital requirements of the Company should We are independent of the Company in accordance with the ethical revenue decline significantly requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed We reviewed the Company’s going concern disclosures included in public interest entities, and we have fulfilled our other ethical the annual report in order to assess whether the disclosures were responsibilities in accordance with these requirements. appropriate and in conformity with the reporting standards. The non-audit services prohibited by the FRC’s Ethical Standard were In relation to the Company’s reporting on how they have applied the not provided to the Company and we remain independent of the UK Corporate Governance Code, we have nothing material to add or Company in conducting the audit. draw attention to in relation to: > the Directors’ statement in the financial statements about whether Material uncertainty related to going concern the Directors considered it appropriate to adopt the going concern We draw attention to Note 2c in the financial statements, which basis of accounting; and indicates that the Company is consulting on a potential liquidity opportunity within 12 months. As stated in Note 2c, this event indicates > the Directors’ identification in the financial statements of the that a material uncertainty exists that may cast significant doubt on the material uncertainty related to the entity’s ability to continue as a Company’s ability to continue as a going concern. Our opinion is not going concern over a period to 30 June 2024. modified in respect of this matter. Our responsibilities and the responsibilities of the Directors with We draw attention to the viability statement in the Annual Report on respect to going concern are described in the relevant sections of this page 32, which indicates that an assumption to the statement of report. However, because not all future events or conditions can be viability is that the Company’s strategy and operations will not change predicted, this statement is not a guarantee as to the Company’s following the liquidity opportunity. The Directors consider that the ability to continue as a going concern. material uncertainties referred to in respect of going concern may cast significant doubt over the future viability of the Company should the outcome of the liquidity opportunity consultation impact the Company’s current intentions and strategy. Our opinion is not modified in respect of this matter. 45 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Independent Auditor’s report Continued Overview of our audit approach Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial statements. Key audit matters > Risk of incorrect valuation or ownership of We made enquiries of the manager and the external valuer to the investment portfolio, and the resulting understand the extent of the potential impact of climate change and impact on unrealised gains and losses. related policies on the investment portfolio noting no material impact on the current fair value. We also challenged the Directors’ > Risk of incomplete or inaccurate revenue considerations of climate change in their assessment of viability and recognition from the investment portfolio. associated disclosures. Materiality > Overall materiality of £1.09m which represents 1% of total Shareholders’ funds. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial An overview of the scope of our audit statements of the current period and include the most significant Tailoring the scope assessed risks of material misstatement (whether or not due to fraud) Our assessment of audit risk, our evaluation of materiality and our that we identified. These matters included those which had the allocation of performance materiality determine our audit scope for greatest effect on: the overall audit strategy, the allocation of the Company. This enables us to form an opinion on the financial resources in the audit; and directing the efforts of the engagement statements. We take into account size, risk profile, the organisation team. These matters were addressed in the context of our audit of of the Company and effectiveness of controls, the potential impact the financial statements as a whole, and in our opinion thereon, of climate change and changes in the business environment when and we do not provide a separate opinion on these matters. assessing the level of work to be performed. All audit work was performed directly by the audit engagement team and our unquoted In addition to the matter described in the material uncertainties related investment valuation specialists. to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Climate change There has been increasing interest from stakeholders as to how climate change will impact companies. The Company has determined that the most significant future impacts from climate change on its operations will be from additional costs and risks for portfolio companies. The Company notes that 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 borrowers business. These are explained on pages 19 to 21 in the principal risks and uncertainties, which form part of the “Other information,” rather than the audited financial statements. Our procedures on these disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated. 46 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report Key observations communicated to the Audit and Management Risk Our response to the risk Engagement Committee Risk of incorrect valuation or ownership of the investment portfolio, and the resulting impact on unrealised gains and losses (as described on page 42 in the Report of the Audit and Management Engagement Committee and as per the accounting policy set out on page 60) | The valuation of the investment portfolio at | We performed the following procedures: | The results of our procedures | | --- | --- | --- | | 31 December 2022 was £119.97m (2021: £126.67m) | We obtained an understanding of the processes | identified no material | | consisting primarily of unquoted private loan | | misstatement in relation to the | and controls surrounding investment valuation and investments of £109.49m (2021: £115.73m). The legal title by performing our walkthrough risk of incorrect valuation or remaining investment portfolio consists of quoted procedures with the Investment Manager, ownership of the investment private loans and bond investments of £6.89m Independent Valuer and Administrator in order to portfolio, and the resulting (2021: £7.34m) and unquoted equity assets of evaluate the design and implementation of controls. impact on unrealised gains £3.60m (2021: £3.60m). and losses. The valuation of the assets held in the investment All Investments portfolio is the key driver of the Company’s net > We agreed all investments held at 31 December asset value and total return. Incorrect investment 2022 per the investment portfolio to the valuation pricing, or a failure to maintain proper legal title of report as prepared by the independent valuer. the investments held by the Company could have a > We recalculated the unrealised gains and losses significant impact on the portfolio valuation and the return generated for shareholders. on all investments as at 31 December 2022 using the bookcost reconciliation. Private loans, bonds and equities are recognised > We reviewed the financial statements to ensure at fair value through profit and loss. Unquoted that there are adequate disclosures regarding investments are valued at fair value by the Directors. valuation uncertainty and assumptions made in the valuation, including the fair value hierarchy and The valuation of the unquoted investments, and the resultant impact on the unrealised required sensitivity analysis under IFRS 13 “Fair gains/(losses), is the area requiring the most value measurement”. significant judgement and estimation in the > We agreed the investment valuation and preparation of the financial statements. existence to independent confirmations received from the Custodian, Lawyers and/or borrowers as at 31 December 2022. For the quoted portfolio (level 2 investment) > We agreed the price of the quoted portfolio to independent market sources. > We reviewed the depth of broker quotes as at 31 December 2022 to assess the liquidity of the quoted portfolio to confirm the year end price was a fair value price. > We reviewed the quoted private loan for indicators that the investment was distressed by comparing par value to the traded price. Continued overleaf > 47 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Independent Auditor’s report Continued Key observations communicated to the Audit and Management Risk Our response to the risk Engagement Committee Risk of incorrect valuation or ownership of the investment portfolio, and the resulting impact on unrealised gains and losses Continued For the unquoted portfolio (level 3 investments) We engaged our valuation specialists to perform a detailed quantitative and qualitative review of a sample of unquoted private loans and the equity investment to ascertain whether the valuation is within an expected range. The procedures included: > We discussed the portfolio with the Investment Manager to develop an understanding of the performance of each investment. > We discussed the portfolio with the independent valuer to understand any current year changes to the valuation methods adopted and performed an evaluation of those methods relative to industry best practice. > We performed a qualitative review of a sample of unquoted investment valuations as at 31 December 2022, examining key valuation inputs and assumptions applied. > We performed a quantitative review through the use of discounted cash flow methods using an estimated internal rate of return for each subject investment based on the changes in the price risk and benchmark credit curves. > We performed an analysis of key changes in valuations during the year including a consideration of market trends and interest rate movements. > For the sample of unquoted private loans and the equity investment reviewed by our valuation specialists, we obtained evidence, where available, such as collateral valuation reports and/or legal contracts to verify the value and existence of collateral associated with the secured loans. > Where our testing identified instances where valuations were outside the expected range, we held further discussions with the Investment Manager and Independent Valuer. In those discussions, we discussed market trends and the valuation process and requested further support and justifications for the valuation assumptions. We concluded that all sampled valuations were not materially misstated and communicated where valuations were above our reporting threshold. > We corroborated a sample of inputs used by management’s specialist in the valuation to information which has been substantively tested as part of our audit, such as revenue modelling. 48 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report Key observations communicated to the Audit and Management Risk Our response to the risk Engagement Committee Risk of incomplete or inaccurate revenue recognition from the investment portfolio (as described on page 42 in the Report of the Audit and Management Engagement Committee and as per the accounting policy set out on page 61) | The income received for the year to 31 December | We performed the following procedures: | The results of our procedures | | --- | --- | --- | | 2022 was £10.77m (2021: £11.16m), consisting | > We obtained an understanding of the | identified no material | | primarily of interest income from the | Administrator’s processes and controls | misstatement in relation to the | | investment portfolio. | surrounding revenue recognition by reviewing | risk of incomplete or inaccurate | | | their internal controls report and performing our | revenue recognition from the | | There is a risk of incomplete or inaccurate | walkthrough procedures with the Investment | investment portfolio. | | recognition of income through the failure to | Manager and Administrator to evaluate the | | | recognise proper income entitlements or applying | design and implementation of controls. | | appropriate accounting treatment. > We agreed the recognition and accounting treatment of a sample of interest and payment in kind (“PIK”) income from the income report to the coupon terms or loan agreements. We recalculated the interest amount on a time apportioned basis and applied exchange rates obtained from an independent data vendor, where relevant, and confirmed that the cash received as shown on bank statements was consistent with the recalculated amount. > We agreed a sample of interest payments recorded by the Company to coupon terms available from an independent data vendor or loan agreements to test completeness of the income recorded. > For a sample of accrued interest, we recalculated the accrual and agreed the interest rates and payment dates to the loan documentation or coupon terms, agreed the principal outstanding and recalculated the interest receivable. We confirmed this was consistent with cash received as shown on post year end bank statements, where paid. > We assessed the recoverability of the accrued income to ensure that an appropriate provision is recorded against doubtful receipts. We achieved this by assessing the ageing of accrued income and comparing the size of the accrual to income received in the period to identify any overdue income. We challenged managements policy in order to appraise the rationale for the bad debt provision. 49 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Independent Auditor's report Continued ## Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. ### Materiality *The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.* We determined materiality for the Company to be £1.09m (2021: £1.11m), which is 1% (2021: 1%) of Shareholders' funds. We believe that Shareholders' funds provides us with materiality aligned to the key measurement of the Company's performance. ### Performance materiality *The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.* On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgement was that performance materiality was 50% (2021: 75%) of our planning materiality, namely £0.54m (2021: £0.83m). We have set performance materiality at this percentage given findings raised in the prior year audit. Given the importance of the distinction between revenue and capital for the Company, we have also applied a separate testing threshold for the revenue column of the Statement of Comprehensive Income of £0.37m (2021: £0.39m) being 5% of profit before tax. ### Reporting threshold *An amount below which identified misstatements are considered as being clearly trivial.* We agreed with the Audit and Management Engagement Committee that we would report to them all uncorrected audit differences in excess of £0.05m (2021: £0.06m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion. ## Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The Directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. ## Opinions on other matters prescribed by the Companies Act 2006 In our opinion the part of the Directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: - > the information given in the strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and - > the strategic report and Directors' report have been prepared in accordance with applicable legal requirements. 50 Strategic report Directors’ report RM Infrastructure Income PLC Corporate governance Governance > Directors’ remuneration report Annual Report & Accounts 2022 Report of the Audit and Management Engagement Committee Financial statements Directors’ responsibility statement Other information Independent Auditor’s report Matters on which we are required to report by exception Responsibilities of Directors In the light of the knowledge and understanding of the Company and its As explained more fully in the Directors’ responsibilities statement set environment obtained in the course of the audit, we have not identified out on page 44 the Directors are responsible for the preparation of the material misstatements in the strategic report or Directors’ report. financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is We have nothing to report in respect of the following matters in necessary to enable the preparation of financial statements that are relation to which the Companies Act 2006 requires us to report to you free from material misstatement, whether due to fraud or error. if, in our opinion: In preparing the financial statements, the Directors are responsible for > adequate accounting records have not been kept, or returns assessing the Company’s ability to continue as a going concern, adequate for our audit have not been received from branches not disclosing, as applicable, matters related to going concern and using visited by us; or the going concern basis of accounting unless the Directors either > the financial statements and the part of the Directors’ Remuneration intend to liquidate the Company or to cease operations, or have no Report to be audited are not in agreement with the accounting realistic alternative but to do so. records and returns; or Auditor’s responsibilities for the audit of > certain disclosures of Directors’ remuneration specified by law are the financial statements not made; or Our objectives are to obtain reasonable assurance about whether the > we have not received all the information and explanations we financial statements as a whole are free from material misstatement, require for our audit. whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of Corporate Governance Statement assurance, but is not a guarantee that an audit conducted in We have reviewed the Directors’ statement in relation to going accordance with ISAs (UK) will always detect a material misstatement concern, longer-term viability and that part of the Corporate when it exists. Misstatements can arise from fraud or error and are Governance Statement relating to the Company’s compliance with the considered material if, individually or in the aggregate, they could provisions of the UK Corporate Governance Code specified for our reasonably be expected to influence the economic decisions of users review by the Listing Rules. taken on the basis of these financial statements. Aside from the impact of the matters disclosed in the material Explanation as to what extent the audit was considered uncertainties related to going concern section, based on the work capable of detecting irregularities, including fraud undertaken as part of our audit, we have concluded that each of the Irregularities, including fraud, are instances of non-compliance with following elements of the Corporate Governance Statement is laws and regulations. We design procedures in line with our materially consistent with the financial statements or our knowledge responsibilities, outlined above, to detect irregularities, including obtained during the audit: fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud > Directors’ statement with regards to the appropriateness of may involve deliberate concealment by, for example, forgery or adopting the going concern basis of accounting and any material intentional misrepresentations, or through collusion. The extent to uncertainties identified set out on page 31; which our procedures are capable of detecting irregularities, > Directors’ explanation as to its assessment of the Company’s including fraud is detailed below. prospects, the period this assessment covers and why the period is appropriate set out on page 32; > Directors’ statement on whether it has a reasonable expectation that the group will be able to continue in operation and meets its liabilities set out on page 32; > Directors’ statement on fair, balanced and understandable set out on page 44; > Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 44; > The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 20; and > The section describing the work of the Audit and Management Engagement Committee set out on page 42. 51 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Independent Auditor’s report Continued However, the primary responsibility for the prevention and detection of Other matters we are required to address fraud rests with both those charged with governance of the Company > Following the recommendation from the Audit and Management and management. Engagement Committee, we were appointed by the Company on 15 November 2017 to audit the financial statements for the period > We obtained an understanding of the legal and regulatory ended 31 December 2017 and subsequent financial periods. frameworks that are applicable to the Company and determined that the most significant are UK adopted international accounting > The period of total uninterrupted engagement including previous standards, the Companies Act 2006, Association of Investment renewals and reappointments is six years, covering the periods from Companies Statement of Recommended Practice, the Listing Rules, our appointment through to 31 December 2022 the UK Corporate Governance Code, Miscellaneous Reporting > The audit opinion is consistent with the additional report to the Requirements and Section 1158 of the Companies Act 2010. Audit and Management Engagement Committee. > We understood how the Company is complying with those frameworks by complying with those frameworks through Use of our report discussions with the Audit and Management Engagement This report is made solely to the Company’s members, as a body, in Committee and Company Secretary and through review of the accordance with Chapter 3 of Part 16 of the Companies Act 2006. Company’s documented policies and procedures. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in > We assessed the susceptibility of the Company’s financial an auditor’s report and for no other purpose. To the fullest extent statements to material misstatement, including how fraud might permitted by law, we do not accept or assume responsibility to anyone occur by considering the key risks impacting the financial other than the Company and the Company’s members as a body, for statements. We identified fraud risks with respect to the incomplete our audit work, for this report, or for the opinions we have formed. or inaccurate income recognition from the investment portfolio and incorrect valuation or ownership of the unquoted investments, and the resulting impact on unrealised gains and losses. Further discussion of our approach is set out in the section on key audit Ahmer Huda (Senior Statutory Auditor) matters above. for and on behalf of Ernst & Young LLP, Statutory Auditor > Based on this understanding we designed our audit procedures London to identify non-compliance with such laws and regulations. Our procedures involved review of the reporting to the Directors 25 April 2023 with respect to the application of the documented policies and procedures and review of the financial statements to ensure compliance with the reporting requirements of the Company. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 52 Strategic report Company statement of comprehensive income RM Infrastructure Income PLC Statement of financial position Governance Statement of changes in equity Annual Report & Accounts 2022 Statement of cash flows Financial statements > Notes to the financial statements Other information ## Financial statements 53 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Company statement of comprehensive income For the year ended 31 December 2022 | | Notes | Year ended 31 December 2022 | | | Year ended 31 December 2021 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | (Losses)/gains on investments | 3 | – | (2,072) | (2,072) | – | 1,263 | 1,263 | | Income | 4 | 10,768 | – | 10,768 | 11,164 | – | 11,164 | | Investment management fee | 5 | (971) | – | (971) | (1,013) | – | (1,013) | | Other expenses | 6 | (1,230) | – | (1,230) | (1,598) | – | (1,598) | | **Return before finance costs and taxation** | | 8,567 | (2,072) | 6,495 | 8,553 | 1,263 | 9,816 | | Finance costs | 7 | (1,102) | – | (1,102) | (797) | – | (797) | | **Return on ordinary activities before taxation** | | 7,465 | (2,072) | 5,393 | 7,756 | 1,263 | 9,019 | | Taxation | 8 | (3) | – | (3) | (14) | – | (14) | | **Return on ordinary activities after taxation** | | 7,462 | (2,072) | 5,390 | 7,742 | 1,263 | 9,005 | | **Return per ordinary share (pence)** | 14 | 6.33p | (1.76p) | 1.15p | 6.56p | 1.07p | 7.63p | The total column of this statement is the profit and loss account of the Company. All the revenue and capital items in the above statement derive from continuing operations. 'Return on ordinary activities after taxation' is also the Total comprehensive income for the year. The notes on pages 59 to 76 form an integral part of these financial statements. 54 Strategic report Governance **Financial statements >** Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Statement of financial position | | Notes | As at 31 December 2022 £'000 | As at 31 December 2021 £'000 | | --- | --- | --- | --- | | **Fixed assets** | | | | | Investments at fair value through profit or loss | 3 | 119,970 | 126,674 | | **Current assets** | | | | | Cash and cash equivalents | | 2,993 | 3,310 | | Receivables | 9 | 5,421 | 2,684 | | | | 8,414 | 5,994 | | **Payables: amounts falling due within one year** | | | | | Payables | 10 | (2,308) | (1,847) | | Bank loan – Credit facility | 11 | (17,271) | (19,571) | | | | (19,579) | (21,418) | | **Net current liabilities** | | (11,165) | (15,424) | | **Total assets less current liabilities** | | 108,805 | 111,250 | | **Net assets** | | 108,805 | 111,250 | | **Capital and reserves: equity** | | | | | Share capital | 12 | 1,176 | 1,178 | | Share premium | 13 | 70,168 | 70,168 | | Special reserve | | 44,640 | 44,813 | | Capital reserve | | (10,221) | (8,149) | | Revenue reserve | | 3,042 | 3,240 | | **Total shareholders' funds** | | 108,805 | 111,250 | | **NAV per share – Ordinary Shares (pence)** | 15 | 92.49p | 94.41p | The financial statements of the Company were approved and authorised for issue by the Board of Directors on 25 April 2023 and signed on their behalf by: **Norman Crighton** Chair Registered in England and Wales with registered number 10449530. The notes on pages 59 to 76 form an integral part of these financial statements. 55 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Statement of changes in equity ### For the year ended 31 December 2022 | | Notes | Share capital £'000 | Share premium £'000 | Special reserve £'000 | Capital reserve £'000 | Revenue reserve £'000 | Total £'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) | | Share 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** | ### For the year ended 31 December 2021 | | Notes | Share capital £'000 | Share premium account £'000 | Special reserve £'000 | Capital reserve £'000 | Revenue reserve £'000 | Total £'000 | | --- | --- | --- | --- | --- | --- | --- | --- | | Balance as at beginning of the year | | 1,184 | 70,168 | 45,277 | (9,412) | 3,167 | 110,384 | | Return on ordinary activities | | – | – | – | 1,263 | 7,742 | 9,005 | | Buy back of shares | 12 | (6) | 6 | (464) | – | – | (464) | | Shares buy back costs | | – | (6) | – | – | – | (6) | | Dividend paid | 16 | – | – | – | – | (7,669) | (7,669) | | **Balance as at 31 December 2021** | | **1,178** | **70,168** | **44,813** | **(8,149)** | **3,240** | **111,250** | 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 2021 and 2022 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 on pages 59 to 76 form an integral part of these financial statements. 56 Strategic report Governance **Financial statements >** Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements **RM Infrastructure Income PLC** Annual Report & Accounts 2022 # Statement of cash flows For the year ended 31 December 2022 | | Notes | Year ended 31 December 2022 £'000 | Year ended 31 December 2021 £'000 | | --- | --- | --- | --- | | **Operating activities** | | | | | Return on ordinary activities before finance costs and taxation* | | 6,495 | 9,816 | | *Adjustments for movements not generating an operating cash flow:* | | | | | Adjustment for losses/(gains) on investments | | 1,802 | (823) | | Adjustment to amortisation costs | | – | 114 | | PIK adjustments to the operating cash flow | | (2,466) | (2,539) | | *Adjustments for balance sheet movements:* | | | | | (Increase)/decrease in receivables | | (2,737) | 484 | | Increase/(decrease) in payables | | 458 | (812) | | **Net cash flow from operating activities** | | **3,552** | **6,240** | | **Investing activities** | | | | | Private loan repayments/bonds sales proceeds | | 25,784 | 56,292 | | Realisation of investment in subsidiary – non cash adjustment | | – | 50 | | Private loans issued/bonds purchases | | (18,416) | (44,582) | | Purchase of equity investments | | – | (5,100) | | **Net cash flow from investing activities** | | **7,368** | **6,660** | | **Financing activities** | | | | | Finance costs | | (1,102) | (684) | | ZDP loan principal and accumulated interest paid | | – | (12,056) | | Ordinary Share bought back | 12 | (173) | (464) | | Ordinary Share buyback costs | | (2) | (6) | | OakNorth loan facility drawdown | | 12,550 | 30,071 | | OakNorth loan facility repaid | | (14,850) | (21,000) | | Equity dividends paid | 16 | (7,660) | (7,669) | | **Net cash flow used in financing activities** | | **(11,237)** | **(11,808)** | | **(Decrease)/Increase in cash** | | **(317)** | **1,092** | | **Opening balance at beginning of the year** | | **3,310** | **2,218** | | **Balance as at 31 December 2022** | | **2,993** | **3,310** | \* Cash inflow from interest on investment holdings was £8,396,000 (31 December 2021: £9,561,000). The notes on pages 59 to 76 form an integral part of these financial statements. 57 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Changes in financing liabilities Year ended 31 December 2022 Year ended 31 December 2021 OakNorth facility Intercompany loan OakNorth facility Intercompany loan Movement in financial liabilities £’000 £’000 £’000 £’000 Balance as at beginning of the year 19,571 – 10,500 11,942 Facility drawdowns during the year 12,550 – 30,071 – Facility interest payable during the year 1,102 – 595 – Facility and interest repayments during the year (15,952) – (21,595) – Intercompany finance cost-noncash flow – – – 114 Repayment of intercompany loan – – (12,056) Balance as at 31 December 2022 17,271 – 19,571 – 58 Strategic report Governance **Financial statements >** Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements **RM Infrastructure Income PLC** Annual Report & Accounts 2022 # 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 Company’s investment objective is to generate attractive and regular dividends through investment in secured debt instruments of UK SMEs and mid-market corporates including any loan, promissory notes, lease, bond or preference share sourced or originated by the Investment Manager with a degree of inflation protection through index-linked return where appropriate. The registered office is 6th Floor, 125 London Wall, Barbican, 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 historical basis, except for investments measured at fair value. In preparing these financial statements the directors have considered the impact of climate change as a risk as set out on page 21, and have concluded that there was no further impact of climate change to be taken into account. In line with IAS, investments are 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 April 2021, 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 2022 A number of new standards, amendments to standards and interpretations are effective for the annual periods beginning after 1 January 2022. None of these are expected to have a significant effect on the measurement of the amounts recognised 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: Classification of Liabilities as Current or Non-current In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. #### Definition of Accounting Estimates – Amendments to IAS 8 In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of ‘accounting estimates’. The amendments are effective for annual reporting periods beginning on or after 1 January 2023. #### Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements. The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023. 59 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to the financial statements Continued ## 2. Accounting policies continued ### (c) Going concern The Directors have adopted the going concern basis in preparing the financial statements. In forming this opinion, the directors continue to consider the ongoing impact of the Covid-19 pandemic, the conflict in Ukraine that has impacted markets throughout the world and the rise in interest rates, however the portfolio remains well positioned through the Investment Manager's focus on creating a portfolio of high yielding and short duration loans that do not hold significant exposure to interest rate movements. The Board does not believe that these situations will affect the Company's viability or going concern status. ### Regarding liquidity opportunity consultation In making their assessment, the Directors have also reviewed income and expense projections and the liquidity of the investment portfolio. The Directors have also considered that should the Company's shares trade at an average discount of more than zero per cent, as measured over the six-month period commencing on 1 October 2022 and ending on 31 March 2023, the Board will seek to bring forward a liquidity opportunity consultation by 12 months i.e. prior to the AGM in 2023. In preparing the financial statements we have considered the upcoming liquidity opportunity consultation. As this consultation will not conclude until after the approval of these financial statements means that there is material uncertainty over the going concern of the Company. Details of the Directors assessment of the going concern status of the Company are given on page 31. The material uncertainty has not resulted in any adjustments. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least twelve months from the date of this document. In reaching this conclusion, the Directors have considered the Company's portfolio of loan investments of £120.0 million (2021: £126.7 million) and the cash position of £3.0 million (2021: £3.3 million). The Company's net assets at 31 December 2022 were £108.8 million (2021: £111.3 million). The total expenses (excluding finance costs and taxation) for the year ended 31 December 2022 were £2.2 million (2021: £2.6 million), which represented approximately 1.86% (2021: 1.92%) of average net assets during the year. At the date of approval of this document, based on the aggregate of investments and cash held, the Company has substantial operating expenses cover. The Directors have concluded that there is a reasonable expectation that the Company will have adequate liquidity and cash balances to meet its liabilities as they fall due and continue in operational existence for the foreseeable future and continue as a going concern for the period to 30 June 2024. ### (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. ### (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. 60 Strategic report Company statement of comprehensive income RM Infrastructure Income PLC Statement of financial position Governance Statement of changes in equity Annual Report & Accounts 2022 Statement of cash flows Financial statements > Notes to the financial statements Other information 2. Accounting policies continued (g) Income Interest income (cash interest) is recognised in the revenue column of the Statement of Comprehensive Income on an effective interest rate basis. Payment-in-kind (“PIK”) interest income is recognised on an accruals basis and capitalised to the principal value of the loan. 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. For any income which has an uncertainty, a provision should be considered by the Company to reflect this income as a bad debt. The income is written down and excluded from the Profit & Loss account. This methodology ensures large balances should not accrue with counterparties who are unable to pay. The uncertainty is due to: > Timing – when is this income likely to be received? If the receipt is likely to be paid in the medium to long term due to cash flow issues with the borrower then a provision should be considered. > Collateral – if there is strong collateral then this provision can be reviewed as it would increase the probability of being paid the income over the period being considered. Should there be weak collateral then this would reinforce the provision to be taken. When a bad debt provision is attached to an income line item, the next step is determining the amount of provision as a percentage of revenue due over the period. This is reviewed on a monthly basis including discussion with independent valuers (Mazars LLP) whether the written down amounts and percentage used remain appropriate. (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 at the proceeds received net of direct issue costs and subsequently measured at amortised cost using the effective interest rate. The associated costs of bank loan facility are treated as revenue and amortised over the period of the bank loan facility. (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 61 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to the financial statements Continued ## 2. Accounting policies continued ### (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. ## 3. Investment at fair value through profit or loss | (a) Summary of valuation | Year ended 31 December 2022 £'000 | Year ended 31 December 2021 £'000 | | --- | --- | --- | | **Financial assets held:** | | | | Equity investments | 3,593 | 3,600 | | Bond investments | 4,208 | 7,346 | | Private loan investments | 112,169 | 115,728 | | | 119,970 | 126,674 | | **(b) Movements** | Year ended 31 December 2022 £'000 | Year ended 31 December 2021 £'000 | | Opening valuation | 126,674 | 122,705 | | Opening gains on investments | 5,803 | 8,276 | | Book cost at the beginning of the year | 132,477 | 130,981 | | Private loans issued/bonds purchased at cost | 18,415 | 44,582 | | Purchase in kind interest (PIK) | 2,690 | 3,126 | | Purchase of equity investments | – | 5,100 | | Sales: | | | | – Private loans repayments/bonds sales proceeds | (25,784) | (48,962) | | – losses on investment | (298) | (1,763) | | – Purchase in kind interest (PIK) | (224) | (587) | | Unrealised losses on investments held | (7,306) | (5,803) | | **Closing valuation at year end** | 119,970 | 126,674 | | Book cost at end of the year | 127,276 | 132,477 | | Unrealised losses on investment holdings at the year end | (7,306) | (5,803) | | **Closing valuation at year end** | 119,970 | 126,674 | The Company received £25.5 million (2021: £49.5 million) from investments sold in the year. The book cost of these investments when they were purchased was £25.8 million (2021: £41.6 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. 62 Strategic report Governance Financial statements > Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements RM Infrastructure Income PLC Annual Report & Accounts 2022 ### 3. Investment at fair value through profit or loss continued | (c) Gains/(losses) on investments | Year ended 31 December 2022 £'000 | Year ended 31 December 2021 £'000 | | --- | --- | --- | | Realised (losses)/gains on investments | (298) | (1,763) | | Unrealised gains/(losses) on investments held | (1,503) | 2,473 | | Other capital gains | 217 | – | | Foreign exchange gains/(losses) | (488) | 553 | | **Total gains/(losses) on investments** | **(2,072)** | **1,263** | At the year end, the Company had three unquoted investments, these equity investments meet the criteria within IFRS 10 as an investment entity and are therefore held at fair value. 1. **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. 2. **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, Thorncliffe Industrial Estate, Chapeltown, Sheffield, S35 2PH. The Investment Manager valued holdings in Trent Capital Limited at nil. 3. **Coventry Student Accommodation 1 Limited ("Coventry", wholly owned asset).** The Company holds an unquoted investment in Coventry. As at 31 December 2022, 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 £3.6 million as at 31 December 2022 (2021: £3.6 million). ### 4. Income | | Year ended 31 December 2022 £'000 | Year ended 31 December 2021 £'000 | | --- | --- | --- | | **Income from investments** | | | | Bond and loan – cash interest | 7,895 | 8,581 | | Bond and loan – PIK interest | 2,767 | 2,277 | | Arrangement fees | 43 | 102 | | Delayed Compensation fees received | 2 | 19 | | Other income | 61 | 185 | | **Total** | **10,768** | **11,164** | 63 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to the financial statements Continued ## 5. Investment management fee | | Year ended 31 December 2022 £'000 | Year ended 31 December 2021 £'000 | | --- | --- | --- | | **Basic fee:** | | | | 100% charged to revenue | 971 | 1,013 | | **Total** | **971** | **1,013** | The Company's Investment Manager is RM Capital Markets Limited. Under the amended Investment Management Agreement, effective 1 April 2020, 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 - (c) 0.750 per cent. of the prevailing NAV in the event that the prevailing NAV is above £500 million. 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. ## 6. Other expenses | | Year ended 31 December 2022 £'000 | Year ended 31 December 2021 £'000 | | --- | --- | --- | | **Basic fee charged to revenue:** | | | | Administration Fees | 226 | 246 | | Auditor's remuneration: | | | | Statutory audit fee | 161 | 112 | | Broker Fees | 146 | 141 | | Consultancy Fees | 72 | 138 | | Directors' Fees | 99 | 99 | | AIFM fees | 144 | 151 | | Registrars fees | 32 | 41 | | Valuation Fees | 81 | 87 | | Other Expenses | 269 | 583 | | **Total revenue expenses** | **1,230** | **1,598** | 64 Strategic report Governance **Financial statements >** Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements **RM Infrastructure Income PLC** Annual Report & Accounts 2022 ## 7. Finance costs | | Year ended 31 December 2022 | | | Year ended 31 December 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Loan arrangement fees | – | – | – | 89 | – | 89 | | Loan Interest paid | 1,102 | – | 1,102 | 595 | – | 595 | | ZDP Shares finance costs | – | – | – | 113 | – | 113 | | | 1,102 | – | 1,102 | 797 | – | 797 | The Company has a £10.5 million revolving credit facility with OakNorth Bank. On 9 April 2021, the Company renewed and amended its revolving credit facility with OakNorth Bank. Under the terms of the amended revolving credit facility, the Company may draw down loans up to an aggregate value of £10.5 million, on materially similar terms as the Company's previous revolving credit facility. The revolving credit facility expires on 26 March 2024. ## 8. Taxation | | Year ended 31 December 2022 | | | Year ended 31 December 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | **Analysis of tax charge/(credit) for the year:** | | | | | | | | Corporation tax | – | – | – | 14 | – | 14 | | Corporation tax – prior year adjustment | 3 | – | 3 | | | | | **Total current tax charge (see note 6 (b))** | 3 | – | 3 | 14 | – | 14 | ### (b) Factors Affecting the tax charge for the year: The effective UK corporation tax rate for the period is 19.00% (2021:19.00%). Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2021 (on 24 May 2021). These include increases to the rate to 25% from 1 April 2023. 65 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to the financial statements Continued ## 8. Taxation continued 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 2022 | | | Year ended 31 December 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | **Return on ordinary activities before taxation** | 7,465 | (2,072) | 5,393 | 7,756 | 1,263 | 9,019 | | UK corporation tax at 19.00% (2021:19.00%) | 1,418 | (394) | 1,024 | 1,474 | 240 | 1,714 | | **Effects of:** | | | | | | | | Fair value losses/(gains) not deductible | – | 394 | 394 | – | (240) | (240) | | Interest distributions paid/payable | (1,455) | – | (1,455) | (1,460) | – | (1,460) | | Excess management expenses carried forward | 37 | – | 37 | – | – | – | | Prior year adjustment | 3 | – | 3 | | | | | **Total tax charge** | 3 | – | 3 | 14 | – | 14 | The Company is not liable to tax on capital gains due to its status as an investment trust. ### (c) Deferred tax assets/(liabilities) As at 31 December 2022, the Company had net surplus excess management expenses of £194,927 (2021: £nil) 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 2022 £'000 | Year ended 31 December 2021 £'000 | | --- | --- | --- | | **Amounts falling due within one year:** | | | | Bond and loan interest receivable | 2,372 | 1,603 | | Provided for interest | 1,160 | 783 | | Loan to non-consolidated subsidiary | 1,673 | – | | Prepayments and other receivables | 216 | 298 | | **Total** | **5,421** | **2,684** | ### Provided for interest and Bad debt provisions Provided for interest account is an interest receivable in relation to the loans of the Company but are not guaranteed. The total amount is offset against the bad debt provisions under the liability account (see note 10). 66 Strategic report Governance Financial statements > Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements RM Infrastructure Income PLC Annual Report & Accounts 2022 ## 10. Payables | | Year ended 31 December 2022 £'000 | Year ended 31 December 2021 £'000 | | --- | --- | --- | | **Amounts falling due within one year:** | | | | Loan reserves retained | 270 | 454 | | Taxation payable | 3 | 14 | | Bad debt provision | 1,160 | 783 | | Other creditors | 875 | 596 | | **Total** | **2,308** | **1,847** | ## 11. Bank loan credit facilities | | Year ended 31 December 2022 £'000 | Year ended 31 December 2021 £'000 | | --- | --- | --- | | OakNorth Bank – Credit facilities | 17,271 | 19,571 | | **Total** | **17,271** | **19,571** | 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 £12.6 million (2021: £30.1 million) from the revolving credit facilities and repaid cumulative amount of £14.9 million (2021: £20.0 million). The remaining balance as at 31 December 2022 amounts to £17.3 million (2021: £19.6 million). 67 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to the financial statements Continued ## 12. Share capital | | As at 31 December 2022 | | As at 31 December 2021 | | | --- | --- | --- | --- | --- | | | No. of Shares | £'000 | No. of Shares | £'000 | | **Allotted, issued & fully paid:** | | | | | | Ordinary shares of 1p | 117,636,359 | 1,176 | 117,840,988 | 1,178 | ### Share movement The table below sets out the share movement for the year ended 31 December 2022. | | Opening balance | Shares issued | Shares bought back | Shares in issue at 31 December 2022 | | --- | --- | --- | --- | --- | | Ordinary Shares | 117,840,988 | – | (204,629) | 117,636,359 | At the year end, the Company has 117,636,359 Ordinary Shares in issue with voting rights and 4,588,222 Ordinary Shares held in Treasury. ### Ordinary Share buy backs During the year, the Company bought back 204,629 (2021: 523,294) Ordinary Shares for an aggregate cost of £173,935 (2021: £463,838). Since the year end, 50,000 Ordinary Shares have been bought back for an aggregate cost of £42,750. ## 13. Share premium | | As at 31 December 2022 £'000 | As at 31 December 2021 £'000 | | --- | --- | --- | | Balance as at beginning of the year | 70,168 | 70,168 | | Share buybacks | 2 | 6 | | Share buyback costs | (2) | (6) | | Balance as at 31 December 2022 | 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 £5,390,000 (2021: gain of £9,005,000). Based on the weighted average of number of 117,839,605 (2021: 117,976,668) Ordinary Shares in issue for the year ended 31 December 2022, the returns per share were as follows: | | Year ended 31 December 2022 | | | Year ended 31 December 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Revenue | Capital | Total | Revenue | Capital | Total | | Return per Ordinary Share | 6.33p | (1.76p) | 4.57p | 6.56p | 1.07p | 7.63p | There are no dilutive shares in issue. 68 Strategic report Governance **Financial statements >** Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements **RM Infrastructure Income PLC** Annual Report & Accounts 2022 ## 15. Net asset value per share The NAV per share is based on Company's total shareholders' funds of £108,805,000 (2021: £112,750,000), and on 117,636,359 (2021: 117,840,988) 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 2022 | | As at 31 December 2021 | | | --- | --- | --- | --- | --- | | | Net assets (£) | NAV per Ordinary share (p) | Net assets (£) | NAV per Ordinary share (p) | | 2022 NAV as published on 16 January 2023 (2021 NAV: Published on 15 January 2022) | 108,807,765 | 92.50 | 112,949,700 | 95.85 | | Prior year tax liability adjustments | (2,852) | (0.01) | – | – | | Income adjustment | – | – | (199,500) | (0.17) | | Equity revaluation adjustment | – | – | (1,500,000) | (1.27) | | Share buyback adjustments | – | – | – | – | | **NAV as disclosed in these Financial Statements** | **108,804,913** | **92.49** | **111,250,200** | **94.41** | ## 16. Dividend ### Total dividends paid in the year | | Year ended 31 December 2022 | | | | Year ended 31 December 2021 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Pence per Ordinary share | Revenue £'000 | Capital £'000 | Total £'000 | Pence per Ordinary share | Revenue £'000 | Capital £'000 | Total £'000 | | 2021 Interim – Paid 25 Mar 2022 (2020: 26 Mar 2021) | 1.6250p | 1,915 | – | 1,915 | 1.6250p | 1,918 | – | 1,918 | | 2022 Interim – Paid 24 Jun 2022 (2021: 25 Jun 2021) | 1.6250p | 1,915 | – | 1,915 | 1.6250p | 1,917 | – | 1,917 | | 2022 Interim – Paid 30 Sep 2022 (2021: 24 Sep 2021) | 1.6250p | 1,915 | – | 1,915 | 1.6250p | 1,917 | – | 1,917 | | 2022 Interim – Paid 30 Dec 2022 (2021: 30 Dec 2021) | 1.6250p | 1,915 | – | 1,915 | 1.6250p | 1,917 | – | 1,917 | | **Total** | **6.5000p** | **7,660** | **–** | **7,660** | **6.5000p** | **7,669** | **–** | **7,669** | 69 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to the financial statements Continued ## 16. Dividend continued The dividend relating to the period ended 31 December 2022, 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 2022 | | | | Year ended 31 December 2021 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Pence per Ordinary Share | Revenue £'000 | Capital £'000 | Total £'000 | Pence per Ordinary Share | Revenue £'000 | Capital £'000 | Total £'000 | | 2022 Interim – Paid 24 Jun 2022 (2021: 25 Jun 2021) | 1.6250p | 1,915 | – | 1,915 | 1.6250p | 1,917 | – | 1,917 | | 2022 Interim – Paid 30 Sep 2022 (2021: 24 Sep 2021) | 1.6250p | 1,915 | – | 1,915 | 1.6250p | 1,917 | – | 1,917 | | 2022 Interim – Paid 30 Dec 2022 (2021: 30 Dec 2021) | 1.6250p | 1,915 | – | 1,915 | 1.6250p | 1,917 | – | 1,917 | | 2022 Interim – Paid 31 March 2023 (2021: 25 Mar 2022) | 1.6250p | 1,911 | – | 1,911 | 1.6250p | 1,915 | – | 1,915 | | **Total** | **6.5000p** | **7,656** | **–** | **7,656** | **6.5000p** | **7,666** | **–** | **7,666** | *Not included as a liability in the year ended 31 December 2022 financial statements. ## 17. Related party transactions Fees are payable at an annual rate of £36,000 to the Chairman, £33,000 to the Chairman of the Audit and Management Engagement Committee and £30,000 to the other Director. As at 31 December 2022, there were no Directors' fees outstanding. The Directors' fees are disclosed in note 7 and the Directors' shareholdings are disclosed in the Directors Remuneration Report in the Annual Report for the year ended 31 December 2022. Fees payable to the Investment Manager are shown in the Statement of Comprehensive Income. As at 31 December 2022 the fee outstanding to the Investment Manager was £80,000 (2021: £84,000). 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 2022, the Company received £43,000 (2021: £102,000) in arrangement fees from RM. Borrowers paid the Investment Manager arrangement fees during the year totalling £175,051. The Investment Manager also provides further work and Loan & Security Agency services to some borrowers and during the year charged borrowers £357,298. As at 31 December 2022, the Investment Manager held 1,316,625 (2021: 1,279,125) Ordinary Shares in the Company. Since the year end, the Investment Manager purchased a further 12,500 Ordinary Shares in the Company, and as of the date of this report, the Investment Manager's total holding of Ordinary Shares is 1,329,125 (2021: 1,291,625). During the year the Company has total investments of £3,593,000 (2021: £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 £1,673,000 (2021: £nil) as disclosed in note 9. 70 Strategic report Governance **Financial statements >** Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements **RM Infrastructure Income PLC** Annual Report & Accounts 2022 ## 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 2022 | | | | 31 December 2021 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | **Financial assets:** | | | | | | | | | | Financial assets – | | | | | | | | | | Private loans and bonds | – | 4,208 | – | 4,208 | – | 7,346 | – | 7,346 | | Financial assets – Private loans | – | – | 112,169 | 112,169 | – | – | 115,728 | 115,728 | | Financial assets – Equity investment | – | – | 3,593 | 3,593 | – | – | 3,600 | 3,600 | | Forward contract unrealised (loss)/gain* | – | (162) | – | (162) | 137 | – | 137 | – | | **Net financial assets** | – | 4,046 | 115,762 | 119,808 | – | 7,483 | 119,328 | 126,811 | *The net unrealised loss of £162,475 (2021: net unrealised gain of £136,729) on forwards is recognised within other creditors whereas net unrealised gain on forwards is recognised within prepayments and other debtors in the Statement of Financial Position.* As at 31 December 2022, the fair value of the Company's loans is materially equal to the carrying value. The forward exchange contract has been presented in the fair value hierarchy at net exposure with the net unrealised loss of £162,475 (2021: gain of £136,729) 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 movements between levels during the reporting period. 71 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to the financial statements Continued ## 18. Classification of financial instruments continued Reconciliation of the Level 3 classification investments during the year to 31 December 2022 is shown below: | | 31 December 2022 | | | 31 December 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Equity £'000 | Loan £'000 | Total £'000 | Equity £'000 | Loan £'000 | Total £'000 | | Balance as at beginning of the year | 3,600 | 115,728 | 119,328 | – | 97,692 | 97,692 | | New loans during the year | – | 13,605 | 13,605 | – | 38,253 | 38,253 | | New equity investments during the year | – | – | – | 3,600 | – | 3,600 | | Repayments during the year | – | (15,978) | (15,978) | – | (16,558) | (16,558) | | Realised gains during the year | – | (190) | (190) | – | (832) | (832) | | Unrealised losses during the year on positions held at year end | (7) | (996) | (1,003) | – | (2,827) | (2,827) | | **Closing balance as at 31 December** | **3,593** | **112,169** | **115,762** | **3,600** | **115,728** | **119,328** | ### 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 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. 72 Strategic report Governance **Financial statements >** Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements **RM Infrastructure Income PLC** Annual Report & Accounts 2022 ## 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 page 19 of the Risk and Risk Management report. The Company's financial assets and liabilities at 31 December 2022 comprised: | Investments | Year ended 31 December 2022 | | | Year ended 31 December 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Interest bearing £'000 | Non-interest bearing £'000 | Total £'000 | Interest bearing £'000 | Non-interest bearing £'000 | Total £'000 | | Sterling | 114,713 | 3,593 | 118,306 | 116,674 | – | 116,674 | | Euro | 1,664 | – | 1,664 | 10,000 | – | 10,000 | | **Total investment** | **116,377** | **3,593** | **119,970** | **126,674** | **–** | **126,674** | | Cash and cash equivalents | 2,993 | – | 2,993 | 3,310 | – | 3,310 | | Receivables | – | 5,421 | 5,421 | – | 2,684 | 2,684 | | Payables* | (17,271) | (2,308) | (19,579) | – | (21,418) | (21,418) | | **Total** | **102,099** | **6,706** | **108,805** | **129,984** | **(18,734)** | **111,250** | ### 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 £11,997,000 (2021: £12,667,000) 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 2022 was £2,993,000 and £5,421,000 respectively (2021: £3,310,000 and £2,684,000). None of these amounts are considered past due or impaired and interest is based on the prevailing money market rates. 73 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to the financial statements Continued ## 19. Financial instruments – risk profile continued The table below shows the Company's exposure to credit risks as the year end. | | As at 31 December 2022 | | As at 31 December 2021 | | | --- | --- | --- | --- | --- | | | Fair value £'000 | Maximum exposure £'000 | Fair value £'000 | Maximum exposure £'000 | | Private loan investments | 112,169 | 112,169 | 115,728 | 115,728 | | Bond investments | 4,208 | 4,208 | 7,346 | 7,346 | | Cash and cash equivalent | 2,993 | 2,993 | 3,310 | 3,310 | | Receivables | 5,421 | 5,421 | 2,684 | 2,684 | | **Total** | **124,791** | **124,791** | **129,068** | **129,068** | ### 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 2022, a 1.00% increase/(decrease) (2021: 0.50% 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 2022 | | As at 31 December 2021 | | | --- | --- | --- | --- | --- | | | 1.00% Increase £'000 | 1.00% Decrease £'000 | 0.50% Increase £'000 | 0.50% Decrease £'000 | | Private loans investments | 1,122 | (1,122) | 579 | (579) | | Bond investments | 42 | (42) | 37 | (37) | | Equity investments | 36 | (36) | 18.00 | (18.00) | | Cash and cash equivalent | 30 | (30) | 17 | (17) | | **Total** | **1,230** | **(1,230)** | **651** | **(651)** | ### Management of risks The Investment Manager's investment process takes into account interest rate risk. The investment strategy is to invest in private loans with maturities typically between 2 and 10 years. Exposure to predominantly higher yielding loans and possible floating rate investments can mitigate interest rate risk to some extent. On a monthly basis, Investment Managers review fixed/floating and weighted average life of the portfolio for interest rate risk. 74 Strategic report Governance **Financial statements >** Other information Company statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements **RM Infrastructure Income PLC** Annual Report & Accounts 2022 ## 19. Financial instruments – risk profile continued ### (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 £2,993,000 (2021: £3,310,000). Financial liabilities by maturity at the period end are shown below: | | 31 December 2022 £'000 | 31 December 2021 £'000 | | --- | --- | --- | | Within one month | – | – | | Between one and three months | 2,038 | 1,393 | | Between three months and one year | – | – | | More than one year | 17,541 | 20,025 | | **Total** | **19,579** | **21,418** | 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 managements intentions to use the facilities for liquidity purposes and not long term gearing of the Company. The financial liability of £17,541,000 (2021: £20,025,000) is the OakNorth credit facility. 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 on pages 17 and 18. 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. A liquidity opportunity consultation will be implemented ahead of the Company's 2023 AGM, should the Company's shares trade at an average discount of more than zero per cent. as measured over the six-month period commencing on 1 October 2022 and ending on 31 March 2023. More information is included on page 30. The maturity profile of the Company's portfolio as at the year-end is as follows: | | 31 December 2022 £'000 | 31 December 2021 £'000 | | --- | --- | --- | | Within one month | – | 4,628 | | Between one and three months | – | – | | Between three months and one year | – | 855 | | More than one year | 119,970 | 121,191 | | **Total** | **119,970** | **126,674** | ### (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. 75 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to the financial statements Continued ## 19. Financial instruments – risk profile continued Based on the financial assets and liabilities at 31 December 2022 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 2022 would have been as follows: | | 31 December 2022 £'000 | 31 December 2021 £'000 | | --- | --- | --- | | Euro | 230 | 167 | | US dollar | – | – | | **Total** | **230** | **167** | ### Foreign currency risk profile | | 31 December 2022 | | | 31 December 2021 | | | | --- | --- | --- | --- | --- | --- | --- | | | Investment exposure £'000 | Net monetary exposure £'000 | Total currency exposure £'000 | Investment exposure £'000 | Net monetary exposure £'000 | Total currency exposure £'000 | | Euro | 2,087 | 214 | 2,301 | 1,410 | 262 | 1,672 | | US dollar | – | 7 | 7 | – | 4 | 4 | | **Total** | **2,087** | **221** | **2,308** | **1,410** | **266** | **1,676** | ### 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 included in the statement of financial position at fair value or a reasonable approximation of fair value with no material difference in the carrying amount. ### 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 on pages 29 and 30. During the year the Company bought back 204,629 shares (2021: 523,294) which are held in treasury and bought back a further 50,000 shares following the year end. The Company's policy on borrowing is detailed in the Directors' Report on page 17. The details of the Company's OakNorth facilities are discussed in note 12 ## 20. Post balance sheet events There are no other post period end events other than those disclosed in this report. 76 Strategic report Alternative Performance Measures (“APMs”) RM Infrastructure Income PLC Glossary Governance Directors, Investment Manager and Advisers Annual Report & Accounts 2022 Notice of Annual General Meeting Financial statements Notes to Notice of Annual General Meeting Other information > Form of Proxy ## Other information 77 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## 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. | | Page | 31 December 2022 £'000 | 31 December 2021 £'000 | | --- | --- | --- | --- | | Bank Loan – Credit facility | 55 | 17,271 | 19,571 | | Total borrowings | | 17,271 | 19,571 | | Cash and cash equivalents | 55 | 2,993 | 3,310 | | Total borrowings less cash and cash equivalents | a 55 | 14,278 | 16,261 | | Net assets | b 55 | 108,805 | 111,250 | | **Gearing(net)** | (a+b)*100 | 13.1% | 14.6% | ### 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 2022** | | Page | £'000 | Per Share (Pence) | | --- | --- | --- | --- | --- | | Ordinary Shares – NAV | a | 55 | 108,805 | 92.49 | | Bank Loan – Credit facility | c | 55 | 17,271 | – | | **Gross asset value** | a+b+c | | 126,076 | n/a | | **As at 31 December 2021** | | Page | £'000 | Per Share (Pence) | | Ordinary Shares – NAV | a | 55 | 111,250 | 94.41 | | Bank Loan – Credit facility | c | 55 | 19,571 | – | | **Gross asset value** | a+b+c | | 130,821 | n/a | 78 Strategic report Governance Financial statements **Other information >** Alternative Performance Measures (APMs) Glossary Directors, Investment Manager and Advisors Notice of Annual General Meeting Notes to Notice of Annual General Meeting Form of Proxy RM Infrastructure Income PLC Annual Report & Accounts 2022 ## 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 2022 | | | Page | | | --- | --- | --- | --- | | Average NAV (£'000) | a | n/a | 111,126 | | Annualised recurring expenses | b | n/a | 2,067 | | | b+a | | 1.86% | ### Year ended 31 December 2021 | | | Page | £'000 | | --- | --- | --- | --- | | Average NAV (£'000) | a | n/a | 112,891 | | Annualised recurring expenses* | b | n/a | 2,165 | | | b+a | | 1.92% | *Consists of investment management fees of £971,000 (2021: £1,012,000) and other recurring expenses of £1,096,000 (2021: £1,153,000) 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 2022 | | | Page | | | --- | --- | --- | --- | | NAV per Ordinary Share (p) | a | 2 | 92.49 | | Share price (p) | b | 2 | 85.00 | | **Discount** | (b/a)-1 | | (8.1%) | ### As at 31 December 2021 | | | Page | | | --- | --- | --- | --- | | NAV per Ordinary Share (p) | a | 2 | 94.41 | | Share price (p) | b | 2 | 95.00 | | **Premium** | (b/a)-1 | | 0.6% | 79 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Alternative Performance Measures (“APMs”) Continued ### 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 2022 | | | Page | NAV | Share Price | | --- | --- | --- | --- | --- | | Opening at 1 January 2021 (p) | a | n/a | 94.41 | 95.00 | | Closing at 31 December 2021 (p) | b | 2 | 92.49 | 85.00 | | Dividend payment | c | n/a | 1.0715 | 1.1588 | | Adjusted closing (d = b x c) | d | n/a | 99.1 | 98.5 | | **Total return** | (d/a)-1 | | **5.0%** | **3.7%** | #### As at 31 December 2021 | | | Page | NAV | Share Price | | --- | --- | --- | --- | --- | | Opening at 1 January 2021 (p) | a | n/a | 93.26 | 87.00 | | Closing at 31 December 2021 (p) | b | 2 | 94.41 | 95.00 | | Dividend adjustment factor | c | n/a | 1.0631 | 1.0687 | | Adjusted closing (d = b x c) | d | n/a | 100.37 | 101.53 | | **Total return** | (d/a)-1 | | **7.6%** | **16.7%** | 80 Strategic report Alternative Performance Measures (“APMs”) RM Infrastructure Income PLC Glossary Governance Directors, Investment Manager and Advisers Annual Report & Accounts 2022 Notice of Annual General Meeting Financial statements Notes to Notice of Annual General Meeting Other information > Form of Proxy ## Glossary Admission Admission of the Ordinary Shares to the premium listing segment of the Official List of the UKLA and admission of the Shares to trading on the main market for listed securities of the London Stock Exchange. AIC Association of Investment Companies Alternative Investment Fund or “AIF” An investment vehicle under AIFMD. Under AIFMD (see below) the Company is classified as an AIF. Alternative Investment Fund A European Union directive which came into force on 22 July 2013 and has been implemented Managers Directive or “AIFMD” in the UK. Annual General Meeting or “AGM” A meeting held once a year which Shareholders can attend and where they can vote on resolutions to be put forward at the meeting and ask directors questions about the Company in which they are invested. CTA 2010 Corporation Tax Act 2010. Custodian An entity that is appointed to safeguard a company’s assets. Discount The amount, expressed as a percentage, by which the share price is less than the net asset value per share. Dividend Income receivable from an investment in shares. Ex-dividend date The date from which you are not entitled to receive a dividend which has been declared and is due to be paid to Shareholders. Financial Conduct Authority or “FCA” The independent body that regulates the financial services industry in the UK. Gearing A way to magnify income and capital returns, but which can also magnify losses. A bank loan is a common method of gearing. Index A basket of stocks which is considered to replicate a particular stock market or sector. Investment company A company formed to invest in a diversified portfolio of assets. Investment Trust An investment company which is based in the UK and which meets certain tax conditions which enables it to be exempt from UK corporation tax on its capital gains. The Company is an investment trust. Leverage An alternative word for “Gearing”. Under AIFMD, leverage is any method by which the exposure of an AIF is increased through borrowing of cash or securities or leverage embedded in derivative positions. Under AIFMD, leverage is broadly similar to gearing, but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the Company’s positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each other. Liquidity The extent to which investments can be sold at short notice. 81 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Glossary Continued Loans or Secured Debt Instruments Secured debt instruments of UK SMEs and mid-market corporates and/or individuals including any loan, promissory notes, lease, bond, or preference share such debt instruments. Net assets An investment company’s assets less its liabilities. Net asset value (NAV) per Net assets divided by the number of Ordinary Shares in issue (excluding any shares held in treasury). Ordinary Share Ordinary Shares The Company’s Ordinary Shares of 1 pence each in the capital of the Company. Portfolio A collection of different investments held in order to deliver returns to Shareholders and to spread risk. Share buyback A purchase of a company’s own shares. Shares can either be bought back for cancellation or held in treasury. Share price The price of a share as determined by a relevant stock market. Treasury shares A company’s own shares which are available to be sold by a company to raise funds. Volatility A measure of how much a share moves up and down in price over a period of time. ZDP Share Zero dividend preference Share. 82 Strategic report Alternative Performance Measures (“APMs”) RM Infrastructure Income PLC Glossary Governance Directors, Investment Manager and Advisers Annual Report & Accounts 2022 Notice of Annual General Meeting Financial statements Notes to Notice of Annual General Meeting Other information > Form of Proxy ## Directors, Investment Manager and Advisers | Directors | Custodian | | --- | --- | | Norman Crighton (Non-executive Chair) | US Bank Global Corporate Trust Services | | Guy Heald | 125 Old Broad Street | | Marlene Wood | London | EC2N 1AR Investment Manager | RM Capital Markets Limited | Administrator and Company Secretary | | --- | --- | | 4th Floor | Apex Listed Companies Services (UK) Limited | | 7 Castle Street | 6th Floor | | Edinburgh | 125 London Wall | | EH2 3AH | London | EC2Y 5AS Joint broker | Singer Capital Markets Advisory LLP | AIFM | | --- | --- | | 1 Bartholomew Lane | FundRock Management Company (Guernsey) Limited | | London | Sarnia House | | EC2N 2AX | Le Truchot | St Peter Port Joint broker Guernsey Peel Hunt LLP GY1 4NA 100 Liverpool Street London Auditors EC2M 2AT Ernst & Young LLP 25 Churchill Place | Valuation agent | Canary Wharf | | --- | --- | | Mazars LLP | London | | Tower Bridge House | E14 5EY | Katherine’s Way London Registrar E1W 1DD Link Group Central Square | Registered office* | 29 Wellington Street | | --- | --- | | 6th Floor | Leeds | | 125 London Wall | LS1 4DL | London EC2Y 5AS Legal advisers Gowling WLG (UK) LLP * Registered in England and Wales No. 10449530 4 More London Riverside London SE1 2AU 83 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notice of Annual General Meeting **THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.** If you are in any doubt about the action you should take, you should immediately consult your independent financial adviser authorised under the Financial Services and Markets Act 2000. If you have sold or otherwise transferred all your shares in RM Infrastructure Income plc, please hand this document and the accompanying form of proxy or form of instruction to the purchaser or transferee, or to the stockbroker or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. Notice is hereby given that the Annual General Meeting ("AGM") of RM Infrastructure Income plc (the "Company") will be held at 6th Floor, 125 London Wall, London EC2Y 5AS on 30 May 2023 at 12.00 p.m. for the following purposes. To consider and if thought fit pass the following resolutions of which resolutions 1 to 9 will be proposed as ordinary resolutions and resolutions 10 to 12 will be proposed as special resolutions. ## Ordinary resolutions 1. To receive the Company's Annual Report and Accounts for the year ended 31 December 2022, with the reports of the Directors and auditors thereon. 2. To approve the Directors' Remuneration Report included in the Annual Report for the year ended 31 December 2022. 3. To re-elect Norman Crighton as a Director. 4. To re-elect Guy Heald as a Director. 5. To re-elect Marlene Wood as a Director. 6. To re-appoint Ernst & Young LLP as Auditors to the Company. 7. To authorise the Directors to determine the remuneration of the Auditor until the conclusion of the next Annual General Meeting of the Company. 8. To authorise the Directors to declare and pay all dividends of the Company as interim dividends. ## 9. Authority to allot relevant securities That, without prejudice to any subsisting authorities to the extent unused, the Directors be and are generally and unconditionally authorised pursuant to and in accordance with section 551 of the Companies Act 2006 (the "Act") to exercise all powers of the Company to allot, or grant rights to subscribe for or to convert any security into Ordinary Shares of one pence each in the capital of the Company ("Ordinary Shares") up to an aggregate nominal amount equal to £117,586 (or such other amount as shall be equivalent to 10% of the issued Ordinary Share capital of the Company (excluding shares held in Treasury) at the date of this resolution and that this authority shall expire (unless previously varied, revoked or renewed by the Company in general meeting) at the conclusion of the Annual General Meeting of the Company to be held in 2024, or, if earlier, on the expiry of 15 months from the passing of this resolution but so that the Directors may, at any time prior to the expiry of such power, make an offer or agreement which would or might require Ordinary Shares to be allotted after the expiry of such power and the Directors may allot Ordinary Shares in the pursuance of such an offer or agreement as if the authority granted by this resolution had not expired. ## Special resolutions ### 10. Disapplication of pre-emption rights That, subject to the passing of resolution 9 above, and without prejudice to any subsisting authorities to the extent unused, the Directors be and are empowered, pursuant to section 570 and 573 of that Act, to allot and make offers or agreements to allot Ordinary Shares and/or sell Ordinary Shares held as treasury shares pursuant to the authority referred to in resolution 9 above as if section 561 of the Act did not apply to any such allotment in each case for cash up to an aggregate nominal amount of £117,586 (or such other amount as shall be equivalent to 10% of the issued Ordinary Share capital of the Company (excluding shares held in Treasury) at the date of this resolution) and that this authority shall expire (unless previously varied, revoked or renewed by the Company in general meeting) at the conclusion of the Annual General Meeting of the Company to be held in 2024 or, if earlier, on the expiry of 15 months from the passing of this resolution but so that the Directors may, at any time prior to the expiry of such power, make an offer or agreement which would or might require Ordinary Shares to be allotted after the expiry of such power and the Directors may allot Ordinary Shares in the pursuance of such an offer or agreement as if the authority granted by this resolution had not expired. 84 Strategic report Alternative Performance Measures (“APMs”) RM Infrastructure Income PLC Glossary Governance Directors, Investment Manager and Advisers Annual Report & Accounts 2022 Notice of Annual General Meeting Financial statements Notes to Notice of Annual General Meeting Other information > Form of Proxy 11. Authority to make market purchases That the Company be and is hereby generally and unconditionally authorised in accordance with section 701 of the Act to make market purchases (within the meaning of section 693(4) of the Act) of its Ordinary Shares, provided that: (a) the maximum number of Ordinary Shares hereby authorised to be purchased shall be 17,626,195 (representing 14.99 per cent. of the Company’s issued Ordinary Share capital (excluding shares held in Treasury) at the date of the notice of this meeting); (b) the minimum price (exclusive of any expenses) which may be paid for an Ordinary Share is 1 pence; (c) the maximum price (excluding expenses) which may be paid for an Ordinary Share is not more than the higher of (i) 5 per cent. above the average of the middle market quotations for the Ordinary Shares for the five business days immediately before the day on which it purchases that share and (ii) the higher of the price of the last independent trade and the highest current independent bid for the Ordinary Shares; (d) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company in 2024 or, if earlier, on the expiry of 15 months from the passing of this resolution, unless such authority is renewed prior to such time; and (e) the Company may make a contract to purchase Ordinary Shares under the authority hereby conferred prior to the expiry of such authority, which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of Ordinary Shares pursuant to any such contract. 12. Notice of General Meeting That a general meeting of the Company other than an Annual General Meeting may be called on not less than 14 days’ notice, provided that this authority shall expire at the conclusion of the Company’s next Annual General Meeting after the date of the passing of this resolution. By order of the Board Ciara McKillop For and on behalf of Apex Listed Companies Services (UK) Limited Company Secretary Registered Office: 6th Floor, 125 London Wall, Barbican, London EC2Y 5AS 25 April 2023 85 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Notes to Notice of Annual General Meeting Website address On a poll, all or any of the voting rights of the member may be 1. Information regarding the meeting, including the information required exercised by one or more duly appointed proxies. However, where a by section 311A of the Companies Act 2006, is available from member appoints more than one proxy, Section 285(4) of the https://rm-funds.co.uk/rm-infrastructure-income/ Companies Act does not authorise the exercise by the proxies taken together of more extensive voting rights than could be exercised by Entitlement to attend and vote the member in person. 2. Only those holders of Ordinary Shares registered on the Company’s register of members at close of business on 25 May 2023 or, if this Voting on all Resolutions will be conducted by way of a poll meeting is adjourned, at close of business on the day two days prior to 5. On a poll every holder of Ordinary Shares who is present in person or the adjourned meeting, shall be entitled to vote at the meeting. by proxy shall have one vote for every Ordinary Share held by him/her. As above, Shareholders are strongly urged to appoint the Chair as their Should a shareholder have a question that they would like to raise at proxy to vote on their behalf. As soon as practicable following the the AGM, either of the Board or the Investment Manager, the Board meeting, the results of the voting will be announced via a regulatory would ask that they ask the question in advance of the AGM by information service and also placed on the Company’s website. sending it by email to info@rm-capital.co.uk. Answers to all questions will be published on the Company’s website after the AGM. Voting by corporate representatives In the case of joint holders of a voting right, the vote of the senior who 6. Any corporation which is a member may appoint one or more tenders a vote shall be accepted to the exclusion of the votes of the corporate representative(s) who may exercise on its behalf all of its other joint holders and, for this purpose, seniority shall be determined powers as a member provided that, if it is appointing more than one by the order in which the names stand in the Register of Members in corporate representative, it does not do so in relation to the same respect of the joint holding. shares. It is, therefore, no longer necessary to nominate a designated corporate representative. Representatives should bring to the Appointment of Proxies AGM evidence of their appointment, including any authority under 3. Pursuant to Section 324 of the Companies Act 2006, a member which it is signed. entitled to attend and vote at the meeting may appoint more than one proxy, provided that each proxy is appointed to exercise the rights Receipt and termination of proxies attached to different shares held by him. A proxy need not be a 7. The Form of Proxy and any power of attorney (or a notarially certified member of the Company. copy or office copy thereof) under which it is executed must be received by Link Group by 12.00 p.m. on 25 May 2023 in respect of the If Shareholders are not attending the AGM, Shareholders are strongly meeting. Any Forms of Proxy received before such time will be deemed urged to appoint the Chairman as their proxy to vote on their behalf. to have been received at such time. In the case of an adjournment, Section 324 does not apply to persons nominated to receive the Form of Proxy must be received by Link Group no later than information rights pursuant to Section 146 of the Companies Act 48 hours before the rescheduled meeting. We strongly urge you to 2006. Persons nominated to receive information rights under Section appoint the Chair of the meeting as your proxy. 146 of the Companies Act 2006 have been sent this Notice of Annual On completing the Form of Proxy, sign it and return it to Link Group at General Meeting and are hereby informed, in accordance with Section the address shown on the Form of Proxy in the envelope provided. 149(2) of the Companies Act 2006, that they may have the right under As postage has been pre-paid no stamp is required. A member may an agreement with the registered member by whom they are terminate a proxy’s authority at any time before the commencement nominated to be appointed, or to have someone else appointed, as a of the AGM. proxy for this meeting. If they have such right or do not wish to exercise it, they may have a right under such an agreement to give Termination must be provided in writing and submitted to the instructions to the member as to the exercise of voting rights. Company’s Registrar. In accordance with the Company’s Articles of Association, in determining the time for delivery of proxies, no account Nominated persons should contact the registered member by whom shall be taken of any part of a day that is not a working day. they were nominated in respect of these arrangements. The statement of rights of Shareholders in relation to the appointment of proxies Alternatively, you may appoint a proxy or proxies electronically by does not apply to nominated persons. visiting https://www.signalshares.com/. You will need to register using your investor code and follow the instructions on how to vote. Proxies Completion and return of the form of proxy will not preclude submitted via www.signalshares.com for the AGM must be Shareholders from attending and voting at the meeting should they transmitted so as to be received by the Company’s Registrar, Link wish to do so. Group, no later than 48 hours before the time appointed for the meeting (excluding weekends and public holidays) or any adjournment Proxies’ rights to vote of the meeting. Proxies received after that date will not be valid. 4. On a vote on a show of hands, each proxy has one vote. If you are an institutional investor you may be able to appoint a proxy If a proxy is appointed by more than one member and all such electronically via the Proxymity platform, a process which has been members have instructed the proxy to vote in the same way, the proxy agreed by the Company and approved by the Registrar. For further will only be entitled, on a show of hands, to vote “for” or “against” as information regarding Proxymity, please go to www.proxymity.io. applicable. If a proxy is appointed by more than one member, but such Your proxy must be lodged by 12 p.m. on 25 May 2023 in order to be members have given different voting instructions, the proxy may, on a considered valid. Before you can appoint a proxy via this process you will show of hands, vote both “for” and “against” in order to reflect the need to have agreed to Proxymity’s associated terms and conditions. different voting instructions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. 86 Strategic report Alternative Performance Measures (“APMs”) RM Infrastructure Income PLC Glossary Governance Directors, Investment Manager and Advisers Annual Report & Accounts 2022 Notice of Annual General Meeting Financial statements Notes to Notice of Annual General Meeting Other information > Form of Proxy Appointment of Proxy through CREST Nominated Persons 8. CREST members who wish to appoint a proxy or proxies through the 9. If you are a person who has been nominated under section 146 of the CREST electronic proxy appointment service may do so for the Companies Act 2006 to enjoy information rights: meeting to be held on the above date and any adjournment(s) thereof > You may have a right under an agreement between you and the by using the procedures described in the CREST Manual. CREST member of the Company who has nominated you to have Personal Members or other CREST sponsored members, and those information rights (Relevant Member) to be appointed or to have CREST members who have appointed a voting service provider(s), someone else appointed as a proxy for the meeting. should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. > If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a right under an agreement In order for a proxy appointment or instruction made using the CREST between you and the Relevant Member to give instructions to the service to be valid, the appropriate CREST message (a “CREST Proxy Relevant Member as to the exercise of voting rights. Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the > Your main point of contact in terms of your investment in the information required for such instructions, as described in the CREST Company remains the Relevant Member (or, perhaps, your Manual. The message, regardless of whether it constitutes the custodian or broker) and you should continue to contact them (and appointment of a proxy or an amendment to the instruction given to a not he Company) regarding any changes or queries relating to your previously appointed proxy, must, in order to be valid, be transmitted personal details and your interest in the Company (including any so as to be received by the Company’s agent (ID: RA10) by the latest administrative matters). The only exception to this is where the time(s) for receipt of proxy appointments specified in the notice of Company expressly requests a response from you. meeting. For this purpose, the time of receipt will be taken to be the If you are not a member of the Company but you have been time (as determined by the timestamp applied to the message by the nominated by a member of the Company to enjoy information rights, CREST Applications Host) from which the Company’s agent is able to you do not have a right to appoint any proxies under the procedures retrieve the message by enquiry to CREST in the manner prescribed by set out in the notes to the form of proxy. CREST. After this time any change of instructions to a proxy’s appointee through CREST should be communicated to the appointee through other means. Questions at the Meeting 10. Any member attending the meeting has the right to ask questions. CREST members and, where applicable, their CREST sponsors or voting Under section 319A of the Companies Act 2006, the Company must service providers should note that Euroclear UK & Ireland Limited does answer any question you ask relating to the business being dealt with not make available special procedures in CREST for any particular at the meeting unless: messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility > answering the question would interfere unduly with the preparation of the CREST member concerned to take (or, if the CREST member is a for the meeting or involve the disclosure of confidential information; CREST personal member or sponsored member or has appointed a > the answer has already been given on a website in the form of an voting service provider(s), to procure that his CREST sponsor or voting answer to a question; or service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any > it is undesirable in the interests of the Company or the good order particular time. In this connection, CREST members and, where of the meeting that the question be answered. applicable, their CREST sponsors or voting service providers are referred, As explained in the Notice of Meeting, Shareholders are strongly in particular, to those sections of the CREST Manual concerning practical advised to submit their votes by proxy and appoint the Chair of the limitations of the CREST system and timings. meeting as their proxy. Should a shareholder have a question that they The Company may treat as invalid a CREST Proxy Instruction in the would like to raise at the AGM, either of the Board or the Investment circumstances set out in Regulation 35(5) (a) of the Uncertificated Manager, the Board would ask that they ask the question in advance Securities Regulations 2001. of the AGM by sending it by email to info@rm-capital.co.uk. Answers to all questions will be published on the Company’s website after the All messages relating to the appointment of a proxy or an instruction AGM. Please note all questions should be submitted by close of to a previously appointed proxy, which are to be transmitted through business on 25 May 2023. CREST, must be lodged at 12 p.m. on 25 May 2023 in respect of the meeting. Any such messages received before such time will be deemed to have been received at such time. In the case of an adjournment, all messages must be lodged with Link Group no later than 48 hours before the rescheduled meeting. 87 RM Infrastructure Income PLC Annual Report & Accounts 2022 # Notes to Notice of Annual General Meeting Continued Members' requests under Section 527 of the Companies Act 2006 11. Under Section 527 of the Companies Act 2006, shareholders meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to (i) the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the AGM for the financial year ended 31 December 2022; or (ii) any circumstance connected with an auditor of the Company appointed for the financial year ended 31 December 2022 ceasing to hold office since the previous meeting at which annual accounts and reports were laid. The Company may not require the Shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 (requirements as to website availability) of the Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the Company's Auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the AGM for the relevant financial year includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website. Members' rights under Sections 338 and 338A of the Companies Act 2006 12. Shareholders meeting the threshold under sections 338 and 338A of the Act can instruct the Company: (i) to give shareholders (entitled to receive notice of the AGM) notice of a resolution which may properly be proposed and is intended to be proposed at the AGM, and/or (ii) to include in the business to be dealt with at the AGM any matter (other than a proposed resolution) which may be properly included in the business. A resolution may properly be proposed or a matter may properly be included in the business unless: (a) (in the case of a resolution only) it would, if passed, be ineffective; (b) it is defamatory of any person; or (c) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, must identify the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it, must be received by the Company not later than the date six weeks before the meeting, and (in the case of a matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request. Issued Shares and total voting rights 13. As at the date of this Notice, the total number of shares in issue is 122,224,581 Ordinary Shares of 1p each, with 4,638,222 held in Treasury. The total number of Ordinary Shares with voting rights is 117,586,359. Communication 14. Except as provided above, members who have general queries about the meeting should use the following means of communication (no other methods of communication will be accepted): > calling Link Group's Shareholder helpline (lines are open from 9:00 a.m. to 5:30 p.m. Monday to Friday, excluding public holidays) +44 371 664 0300 (calls cost 12p per minute plus network extras); or > in writing to Link Group. You may not use any electronic address provided either in this notice of meeting or in any related documents (including the Form of Proxy for this meeting) to communicate with the Company for any purposes other than those expressly stated. Documents available for inspection 15. Copies of letters of appointment between the Company and the Non-executive Directors may be inspected during usual business hours on any weekday (public holidays excepted) at the registered office of the Company from the date of this Notice of Annual General Meeting until the date of the AGM and at the place of the AGM from at least 15 minutes prior to the AGM until the AGM's conclusion. 88 Strategic report Alternative Performance Measures (“APMs”) RM Infrastructure Income PLC Glossary Governance Directors, Investment Manager and Advisers Annual Report & Accounts 2022 Notice of Annual General Meeting Financial statements Notes to Notice of Annual General Meeting Other information > Form of Proxy ## Form of Proxy RM Infrastructure Income plc I/We of (BLOCK CAPITALS PLEASE) being (a) member(s) of RM Infrastructure Income plc appoint the Chairman of the meeting, or (see note 1) of as my/our proxy and, on a poll, to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 6th Floor, 125 London Wall, London EC2Y 5AS on 30 May 2023 at 12.00 p.m. and any adjournment thereof. Please indicate with an ‘’ in the spaces provided how you wish your votes to be cast on the resolutions specified. Item Resolution For Against Withheld Discretionary 1. To receive and adopt the Annual Report and Accounts for the year ended 31 December 2022. 2. To approve the Directors’ Remuneration Report. 3. To re-elect Norman Crighton as a Director. 4. To re-elect Guy Heald as a Director. 5. To re-elect Marlene Wood as a Director. 6. To re-appoint Ernst & Young LLP as Auditors to the Company. 7. To authorise the Directors to determine the remuneration of the Auditor. 8. To authorise declaration and payment of all dividends as interim dividends. 9. Authority to allot relevant securities. 10. Authority to disapply pre-emption rights. 11. Authority to make market purchases. 12. Notice of general meeting. Subject to any voting instructions so given the proxy will vote, or may abstain from voting, on any resolution as they may think fit. Signature Dated this day of 2023 Notes 1. If any other proxy is preferred, strike out the words “Chairman of the Meeting” and add the name and address of the proxy you wish to appoint and initial the alteration. The proxy need not be a member. 2. If the appointer is a corporation this form must be completed under its common seal or under the hand of some officer or attorney duly authorised in writing. 3. A vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes for or against a resolution. 4. The signature of any one of joint holders will be sufficient, but the names of all the joint holders should be stated. 5. To appoint more than one proxy you may photocopy this form. Please indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together in the same envelope. 6. To be valid, this form and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power, must reach the registrars of the Company, Link Group not less than forty-eight hours before the time appointed for holding the AGM or adjournment as the case may be. 7. The completion of this form will not preclude a member from attending the Meeting and voting in person. 8. Any alteration of this form must be initialled. Your completed and signed proxy form should be posted, in the enclosed reply paid envelope, to the Company’s Registrars, Link Group, PXS 1, Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL, so as to arrive before 12.00 p.m. on 26 May 2023. RM Infrastructure Income PLC Annual Report & Accounts 2022 RM Infrastructure Income PLC Annual Report & Accounts 2022 ## Contents Strategic report Page About us 1 Portfolio at a glance 2 Market 7 The Good Economy – Impact Report April 2022 8 Company objectives 10 Sector objectives 11 Chair’s statement 12 Investment Manager’s report 14 Investment policy, results and other information 18 Risks and risk management 20 Stakeholder engagement 23 Environmental, Social and Governance (“ESG”) 26 Governance Directors’ report 28 Corporate governance 34 Directors’ remuneration report 38 Report of the Audit and Management Engagement Committee 40 Statement of Directors’ responsibilities 42 Independent Auditor’s report 43 Financial statements Company statement of comprehensive income 52 Statement of financial position 53 Statement of changes in equity 54 Statement of cash flows 55 Notes to the financial statements 57 Other information Alternative Performance Measures (“APMs”) 76 Glossary 79 Directors, Investment Manager and Advisers 81 Notice of Annual General Meeting 82 Printed sustainably in the UK by Pureprint, a CarbonNeutral® Notes to Notice of Annual General Meeting 84 company with FSC® chain of custody and an ISO 14001- | Form of Proxy 87 | | | certified environmental | | --- | --- | --- | --- | | | rm-funds.co.uk | | management system recycling | | | | Designed and produced by | over 99% of alldry waste. | ## RM Infrastructure Income PLC ## Annual Report & Accounts for the year ended 31 December 2022 RM Infrastructure Income PLC Annual Report & Accounts 2022 Edinburgh office 4th Floor ## Responsible 7 Castle Street Edinburgh ## investing EH2 3AH | London office | Through active stakeholder | | --- | --- | | 42 New Broad Street | engagement combined with the | | London | integration of environmental, | EC2M 1JD ## social and corporate governance ## considerations throughout the ## rm-funds.co.uk investment process.